[Federal Register Volume 63, Number 35 (Monday, February 23, 1998)]
[Rules and Regulations]
[Pages 9068-9069]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4306]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 39

[FAC 97-04; FAR Case 96-605; Item XV]
RIN 9000-AH55


Federal Acquisition Regulation; Modular Contracting

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed on a final rule amending 
the Federal Acquisition Regulation (FAR) to implement Section 5202 of 
the Information Technology Management Reform Act (ITMRA) of 1996, which 
encourages maximum practicable use of modular contracting in acquiring 
information technology. ITMRA is part of the Clinger-Cohen Act of 1996 
(Public Law 104-106). This regulatory action was not subject to Office 
of Management and Budget review under Executive Order 12866, dated 
September 30, 1993, and is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: April 24, 1998.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, 1800 F 
Street, NW, Washington, DC 20405 (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Linda Nelson, Procurement Analyst at (202) 501-
1900. Please cite FAC 97-04, FAR case 96-605.

SUPPLEMENTARY INFORMATION:

A. Background

    A proposed rule with request for comment and notice of public 
meeting was published in the Federal Register (62 FR 14756) on March 
27, 1997. Comments were received from four respondents. All comments 
were considered in the development of the final rule. The final rule 
differs from the proposed rule by adding in paragraph 39.103(d) ``task 
order contracts'' as another example.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because, while it may affect 
the structure of certain information technology (IT) acquisition 
programs, it will not impose any specific cost burden on small 
entities. The modular contracting approach should slightly benefit 
small entities, because use of modular contracting techniques should 
increase the number of business opportunities available to them. When a 
modular contracting approach is used, large, complex IT systems 
acquisitions will be divided into smaller, discrete increments that may 
subsequently be made available to small entities for competition.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 39

    Government procurement.

    Dated: February 13, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
    Therefore, 48 CFR Part 39 is amended as set forth below:

PART 39--ACQUISITION OF INFORMATION TECHNOLOGY

    1. The authority citation for 48 CFR Part 39 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

    2. Section 39.002 is amended by adding in alphabetical order the 
definition of ``Modular contracting'' to read as follows:


39.002  Definitions.

    Modular contracting, as used in this part, means use of one or more 
contracts to acquire information technology systems in successive, 
interoperable increments.
* * * * *
    3. Section 39.103 is added to read as follows:


39.103  Modular contracting.

    (a) This section implements Section 5202, Incremental Acquisition 
of Information Technology, of the Clinger-Cohen Act of 1996 (Public Law 
104-106). Modular contracting is intended to reduce program risk and to 
incentivize contractor performance while meeting the Governments need 
for timely access to rapidly changing technology. Consistent with the 
agency's information technology architecture, agencies should, to the 
maximum extent practicable, use modular contracting to acquire major 
systems (see 2.101) of information technology. Agencies may also use 
modular contracting to acquire non-major systems of information 
technology.
    (b) When using modular contracting, an acquisition of a system of 
information technology may be divided into several smaller acquisition 
increments that--
    (1) Are easier to manage individually than would be possible in one 
comprehensive acquisition;
    (2) Address complex information technology objectives incrementally 
in order to enhance the likelihood of achieving workable systems or 
solutions for attainment of those objectives;
    (3) Provide for delivery, implementation, and testing of workable 
systems or solutions in discrete increments, each of which comprises a 
system or solution that is not dependent on any subsequent increment in 
order to perform its principal functions;
    (4) Provide an opportunity for subsequent increments to take 
advantage of any evolution in technology or needs that occur during 
implementation and use of the earlier increments; and
    (5) Reduce risk of potential adverse consequences on the overall 
project by

[[Page 9069]]

isolating and avoiding custom-designed components of the system.
    (c) The characteristics of an increment may vary depending upon the 
type of information technology being acquired and the nature of the 
system being developed. The following factors may be considered:
    (1) To promote compatibility, the information technology acquired 
through modular contracting for each increment should comply with 
common or commercially acceptable information technology standards when 
available and appropriate, and shall conform to the agency's master 
information technology architecture.
    (2) The performance requirements of each increment should be 
consistent with the performance requirements of the completed, overall 
system within which the information technology will function and should 
address interface requirements with succeeding increments.
    (d) For each increment, contracting officers shall choose an 
appropriate contracting technique that facilitates the acquisition of 
subsequent increments. Pursuant to Parts 16 and 17 of the Federal 
Acquisition Regulations, contracting officers shall select the contract 
type and method appropriate to the circumstances (e.g., indefinite 
delivery, indefinite quantity contracts, single contract with options, 
successive contracts, multiple awards, task order contracts). 
Contract(s) shall be structured to ensure that the Government is not 
required to procure additional increments.
    (e) To avoid obsolescence, a modular contract for information 
technology should, to the maximum extent practicable, be awarded within 
180 days after the date on which the solicitation is issued. If award 
cannot be made within 180 days, agencies should consider cancellation 
of the solicitation in accordance with 48 CFR 14.209 or 15.206(e). To 
the maximum extent practicable, deliveries under the contract should be 
scheduled to occur within 18 months after issuance of the solicitation.

[FR Doc. 98-4306 Filed 2-20-98; 8:45 am]
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