[Federal Register Volume 63, Number 216 (Monday, November 9, 1998)]
[Proposed Rules]
[Pages 60256-60268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29838]


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DEPARTMENT OF VETERANS AFFAIRS

48 CFR Parts 801, 806, 812, 837, 852, and 873

RIN 2900-AI71


VA Acquisition Regulations: Simplified Acquisition Procedures for 
Health Care Resources

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Department of Veterans 
Affairs Acquisition Regulations (VAAR) to establish simplified 
procedures for the competitive acquisition of health-care resources, 
consisting of commercial services or the use of medical equipment or 
space, pursuant to 38 U.S.C. 8151-8153. Presently, the VAAR does not 
contain simplified procedures. In the absence of such procedures, the 
Department of Veterans Affairs (VA) follows the Federal Acquisition 
Regulation (FAR) and the current VAAR. Public Law 104-262, the 
Veterans' Health Care Eligibility Reform Act of 1996, authorized VA to 
prescribe simplified procedures for the procurement of health-care 
resources. This proposed rule prescribes those procedures.

DATES: Comments on the proposed rule should be submitted on or before 
January 8, 1999, to be considered in the formulation of the final rule.

ADDRESSES: Mail or hand-deliver written comments to: Director, Office 
of Regulations Management (02D), Department of Veterans Affairs, 810 
Vermont Avenue, NW, Room 1154, Washington, DC 20420. Comments should 
indicate that they are submitted in response to ``RIN 2900-AI71.'' All 
written comments received will be available for public inspection at 
the above address in the Office of Regulations Management, Room 1158, 
between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday 
(except holidays).

FOR FURTHER INFORMATION CONTACT: Dennis Foley, (202) 273-9225, Office 
of the General Counsel, Professional Staff Group V; or Don Kaliher, 
(202) 273-8819, Acquisition Resources Service, Office of Acquisition 
and Materiel Management, Department of Veterans Affairs, 810 Vermont 
Avenue, NW, Washington, DC 20420.

SUPPLEMENTARY INFORMATION: Currently, the acquisition of health-care 
resources that consist of commercial services or the use of medical 
equipment or space is governed by the Department of Veterans Affairs 
Acquisition Regulations (VAAR) and the Federal Acquisition Regulation 
(FAR). Statutory provisions at 38 U.S.C. 8153 (Pub. L. 104-262) 
specifically authorize the Secretary of Veterans Affairs, after 
consultation with the Administrator for Federal Procurement Policy, to 
establish simplified procedures for the competitive procurement of such 
health-care resources. VA has consulted with the Administrator for 
Federal Procurement Policy and VA proposes to establish simplified 
procedures as set forth in this document.
    Under the provisions of the law, procurements under the simplified 
procedures may be conducted ``without regard to any law or regulation 
that would otherwise require the use of competitive procedures.'' 
Accordingly, the competitive procedures of any laws and regulations 
(including the competitive procedures of FAR and VAAR and their 
underlying laws) would be superseded by the simplified

[[Page 60257]]

procedures. However, under the provisions of the law, with certain 
exceptions, the simplified procedures are required to ``permit all 
responsible sources, as appropriate, to submit a bid, proposal, or 
quotation (as appropriate) for the resources to be procured and provide 
for the consideration by the Department of bids, proposals, or 
quotations so submitted.'' This allows VA to limit competition to the 
extent it determines reasonable for the circumstances of each 
particular acquisition. Consistent with the principles set forth above, 
this document proposes to establish a new VAAR Part 873 setting forth 
such simplified procedures.
    Under the provisions of 38 U.S.C. 8153, health-care resources 
consisting of commercial services, the use of medical equipment or 
space, or research, acquired from an institution affiliated with VA in 
accordance with 38 U.S.C. 7302, including medical practice groups and 
other approved entities associated with affiliated institutions 
(entities will be approved if determined legally to be associated with 
affiliated institutions), blood banks, organ banks, or research 
centers, may be procured without regard to any law or regulation that 
would otherwise require the use of competitive procedures. The 
provisions at new VAAR Part 873.104 contain a statement explaining this 
sole source acquisition authority.
    Proposed Sec. 873.101, Policy, would provide that the procedures 
set forth in Part 873 would apply to the acquisition of health-care 
resources consisting of commercial services or the use of medical 
equipment or space. These procedures would be used in conjunction with 
FAR, but VAAR Part 873 would take precedence over FAR and other Parts 
of VAAR. Currently, VAAR implements and supplements FAR. However, 
Public Law 104-262 grants VA authority to procure health-care resources 
consisting of commercial services or the use of medical equipment or 
space ``without regard to any other law or regulation that would 
require the use of competitive procedures. * * *'' Therefore, it is 
necessary to have Part 873 of VAAR take precedence over FAR and any 
other part of VAAR.
    Proposed Sec. 873.102 would add definitions for ``health-care 
resource,'' ``commercial service,'' and ``health-care providers.'' 
These definitions restate provisions of 38 U.S.C. 8152 and 8153. 
Previously, because of limitations under 38 U.S.C. 8153, procurements 
of commercial services or the use of medical equipment or space were 
limited to ``specialized medical resources.'' Consistent with the new 
definitions, the simplified procedures would govern procurements of 
commercial services or the use of medical equipment or space.
    FAR 8.001(a)(2) sets forth three levels of priority, above the base 
level, for the acquisition of services. The base level is Federal 
Prison Industries or commercial sources. Proposed Sec. 873.103 would 
exempt VA from the provisions of FAR 8.001(a)(2) regarding two of these 
levels of priority, mandatory and optional use Federal Supply Schedule 
(FSS) contracts. FSS contracts ensure prices associated with volume 
buying and should be used, if determined to provide best value, but 
would not have a higher priority than any other source. It is not 
proposed to affect the priority status for the acquisition of services 
available from the Committee for Purchase from People Who Are Blind or 
Severely Disabled, as required by the Javits-Wagner-O'Day (JWOD) Act. 
JWOD Act programs offer a valuable source of services for VA and have 
proved to be highly beneficial for both VA and program participants. 
The JWOD Act programs support VA's and other Federal Government 
agencies' procurement needs, and generate employment and training 
opportunities for people who are blind or have other severe 
disabilities. It is in the best interest of the Government to continue 
to support these valuable programs.
    Proposed Sec. 873.104, paragraphs (a) and (b), would restate the 
authority provided in the Act to acquire commercial services or the use 
of medical equipment or space from entities affiliated with VA, in 
accordance with 38 U.S.C. 7302, or approved entities associated with an 
affiliate (entities will be approved if determined legally to be 
associated with affiliated institutions), on a sole source basis 
without public notice and without further justification. Proposed 
Sec. 873.104, paragraph (c), would provide that, on VA acquisitions of 
commercial services or the use of medical equipment or space from other 
sources, contracting officers would be required to seek competition to 
the maximum extent practicable rather than using full and open 
competition. This is consistent with provisions of the Act which 
provide that procurements may be conducted without regard to any law or 
regulation that would otherwise require use of competitive procedures. 
Competition to the maximum extent practicable is required to ensure 
that VA's acquisitions of commercial services or the use of medical 
equipment or space are conducted in an efficient and expeditious 
manner. Proposed Sec. 873.104, paragraph (d), restates the requirements 
of the Act that sole source acquisitions from sources other than 
affiliates or approved associates of affiliates (entities will be 
approved if determined legally to be associated with affiliated 
institutions) be justified and approved.
    Proposed Sec. 873.105 would exempt VA acquisitions of commercial 
services or the use of medical equipment or space from the acquisition 
planning procedures in FAR Part 7. However, the section emphasizes the 
indispensable importance of acquisition planning when acquiring health-
care resources and imposes a requirement to form a team to assure a 
comprehensive plan. The proposed section also would impose a 
requirement on the team to conduct market research. This proposed 
section is necessary to simplify and streamline the acquisition 
process.
    Proposed Sec. 873.106 would exempt VA acquisitions of commercial 
services or the use of medical equipment or space from the market 
research requirements of FAR Part 10 but would provide optional market 
research techniques tailored specifically for use in acquiring 
commercial services or the use of medical equipment or space. This 
information is necessary to simplify market research while ensuring 
that contracting officers have a full range of techniques available for 
use in conducting market research when acquiring commercial services or 
the use of medical equipment or space.
    Proposed paragraph (a) of Sec. 873.107 would require acquisitions 
of commercial services or the use of medical equipment or space to be 
set aside for small business concerns if, through market research, the 
contracting officer determines that there is a reasonable expectation 
that reasonably priced offers would be received from two or more 
responsible small business concerns. This proposed section would also 
provide additional authority, over and above that found at FAR 19.502, 
for waiving the requirement for small business set-asides. FAR 19.502 
currently provides that contracting officers can elect to not set aside 
a procurement if, generally, the contracting officer determines that 
there is not a reasonable expectation of obtaining offers from two or 
more responsible small business concerns at fair market prices. Under 
this proposed new section, in addition to that authority in FAR, the 
Head of the Contracting Activity would have the authority to approve a 
waiver from the requirement to set aside any procurement of commercial 
services or the use of medical equipment or space

[[Page 60258]]

based on a determination that it is in the best interest of the 
Government. Also, this proposed section provides that acquisitions of 
commercial services or the use of medical equipment or space valued 
between $2,500 and $100,000 would be exempt from the automatic 
reservation of acquisitions for small business concerns. These 
provisions are necessary to ensure that VA can procure commercial 
services or the use of medical equipment or space from the highest 
quality sources while still supporting small business concerns to the 
maximum practicable extent.
    The rule would make certain changes to the administration of VA's 
small business program as it applies to the acquisition of health-care 
resources to reflect the fast-moving health-care market. For example, 
proposed paragraph (b) of Sec. 873.107 would establish a streamlined 
process for handling disagreements between VA and the Small Business 
Administration regarding whether a procurement should be set aside for 
small business. These streamlined procedures would not alter VA's 
ongoing commitment to strong small business participation in its 
acquisition of health-care resources. Nor would they affect efforts to 
mitigate any potential negative impacts of contract consolidations on 
small businesses' ability to secure work. VA's Office of Small and 
Disadvantaged Business Utilization and Office of Acquisition and 
Materiel Management would jointly monitor the impact of the new 
procedures on small business participation to ensure opportunities are 
available for competitive small businesses.
    Paragraph (c) of Sec. 873.107 restates VA's intent to follow the 
FAR regarding the SBA 8(a) program. Paragraph (d) provides that VA's 
Office of Small and Disadvantaged Business Utilization and SBA's Office 
of Industrial Assistance shall serve as ombudsmen to assist VA 
contracting officers on any issues relating to Certificates of 
Competency.
    FAR 5.101 currently requires, with certain exceptions, that 
acquisitions with values exceeding $25,000 be announced in the Commerce 
Business Daily (CBD) for specified periods of time and states what must 
be included in the announcement. Proposed Sec. 873.108 would exempt VA 
acquisitions of commercial services or the use of medical equipment or 
space below $100,000 from this requirement; would modify the 
requirement for publication of acquisitions above $100,000 to only 
require public announcement, utilizing a medium designed to obtain 
competition to the maximum extent practicable; would set the time 
requirements for announcement to be a ``reasonable time''; and would 
modify what must be included in the announcement. The medium to be used 
for announcements could be the CBD, the Internet, or any other means, 
as appropriate, depending on the complexity of the acquisition. This 
section also proposes, in accordance with authority provided in the 
Act, to conduct procurements for commercial services or the use of 
medical equipment or space without regard to any law or regulation that 
would otherwise require the use of competitive procedures and to exempt 
acquisitions from affiliates and entities associated with affiliates 
and sole source acquisitions from other sources from the requirement 
for publication of notice in the CBD. These provisions would streamline 
and simplify VA's acquisitions of commercial services or the use of 
medical equipment or space.
    Proposed paragraphs (a) and (b) of Sec. 873.109 would emphasize 
that the contracting officer (rather than the team) is the selecting 
official and would provide simplified guidance to contracting officers 
on statements of work and specifications. FAR requires certain 
documentation in contract files. Proposed paragraph (c) would provide 
simplified documentation requirements to be used in lieu of the FAR 
requirements. FAR requires specific time frames for announcing 
solicitations and procurement opportunities to the public and provides, 
for commercial solicitations, that quotations, bids, or proposals 
received late shall not be considered. Proposed paragraph (d)(1) would 
replace FAR announcement time requirements with a ``reasonable'' time 
requirement and paragraph (d)(2) would allow the contracting officer to 
accept late quotations or proposals if late receipt is determined by 
the contracting officer to be in the best interest of the Government. 
Late bids received in response to an Invitation for Bid (IFB) would not 
be considered. FAR provides certain minimum requirements that a 
contracting officer must meet before a solicitation can be canceled. 
Proposed paragraph (e) would exempt VA acquisitions of commercial 
services or the use of medical equipment or space from those minimum 
requirements and would provide that a contracting officer can cancel a 
solicitation if cancellation is determined to be in the best interest 
of the Government. All of these changes are proposed for the purpose of 
streamlining and simplifying VA's acquisitions of commercial services 
or the use of medical equipment or space.
    Proposed Sec. 873.110, paragraphs (a) through (e), would provide 
guidance to contracting officers on when to use the provisions and 
clauses in Part 852 of VAAR in VA acquisitions for commercial services 
or the use of medical equipment or space. Paragraph (f) would propose 
to require use of FAR clause 52.207-3, Right of First Refusal, in a 
solicitation in which current VA employees might be displaced as a 
result of contract award. This FAR clause ensures that those employees 
have a right of first refusal to any employment openings created with 
the contractor as a result of the contract award. This requirement is 
necessary to protect VA employees and to reduce the cost of contract 
award by reducing or avoiding unemployment compensation costs.
    FAR places certain restrictions on when each type of acquisition 
procedure can be used. For instance, a request for quotation (RFQ) can 
be used for non-commercial service acquisitions costing up to $100,000 
or for commercial service acquisitions costing up to $5 million. 
Proposed Sec. 873.111 would remove all such restrictions, allowing use 
of the RFQ process for any acquisition of commercial services or the 
use of medical equipment or space, regardless of dollar value. This 
change is necessary to simplify VA's acquisition of commercial services 
or the use of medical equipment or space and to provide maximum 
flexibility to contracting officers.
    For non-commercial service acquisitions exceeding the simplified 
acquisition threshold (SAT) (currently $100,000) or for commercial 
service acquisitions exceeding $5 million, FAR requires the use of full 
and open competition unless other statutory authority exists to limit 
competition. Paragraph (a)(1) of Sec. 873.111 would provide, for 
acquisitions of commercial services or the use of medical equipment or 
space using the RFQ process, regardless of the dollar value of the 
acquisition, that competition to the maximum extent practicable may be 
used in lieu of full and open competition. FAR provides, for 
acquisitions below $25,000, that three quotations are considered 
sufficient to promote competition to the maximum extent practicable. 
Proposed paragraph (a)(2) would provide, for acquisitions of commercial 
services or the use of medical equipment or space below the SAT, that 
two quotations would be considered sufficient to promote competition to 
the maximum extent practicable. Proposed paragraph (a)(2) would also 
exempt VA acquisitions of commercial services or the use of medical 
equipment or space from any dollar value restrictions in FAR on the

[[Page 60259]]

use of RFQs, allowing VA to use the RFQ process for all acquisitions of 
commercial services or the use of medical equipment or space, 
regardless of the dollar value of the procurement. These changes are 
necessary to simplify and streamline VA's acquisition of commercial 
services or the use of medical equipment or space by allowing use of 
the RFQ process in any circumstance.
    Proposed paragraph (b) of Sec. 873.111 would provide that the 
procedures of FAR Part 14 would be used for VA sealed bid acquisitions 
of commercial services or the use of medical equipment or space. 
Proposed paragraph (c) of Sec. 873.111 would provide that the 
negotiation procedures of FAR Parts 12, 13, and 15 would be used for 
negotiated acquisitions of commercial services or the use of medical 
equipment or space, except as modified in VAAR Part 873. These two 
paragraphs are informational only.
    Proposed paragraph (d) of Sec. 873.111 would provide an alternative 
negotiation procedure using a multiphase negotiation technique. This 
will supersede current FAR provisions for an advisory multi-step 
process that does not allow the Government to exclude offerors that are 
unlikely to be viable competitors. Multiphase acquisitions may be 
appropriate when the submission of full proposals at the beginning of 
an acquisition would be burdensome for offerors to prepare and for 
Government personnel to evaluate. Under a multiphase acquisition, VA 
would seek limited information on vendors' first submissions, make one 
or more down-selects based on the initial information, and request full 
proposals from the offerors remaining. This technique would ensure that 
only those firms most likely to receive awards would be required to 
expend the time and effort to prepare a full proposal. It would 
simplify and streamline the acquisition process and would save both 
vendors and the Government time and money.
    Proposed paragraph (e) of Sec. 873.111 would provide two additional 
alternative negotiation techniques, neither of which are currently 
provided for in FAR, for use by VA in acquiring commercial services or 
the use of medical equipment or space. The first technique would allow 
the contracting officer to indicate to all offerors, or to one or more 
offerors, a price, contract term or condition, commercially available 
feature, or other requirement that the offeror or offerors will have to 
improve upon or meet, as appropriate, in order to remain competitive. 
The second technique would allow contracting officers to post prices 
received on offers electronically or otherwise, without disclosing the 
identity of the offerors, and allow offerors to revise their prices 
based on the posted information. These procedures are necessary to 
assist contracting officers in procuring the highest quality health-
care services at best value prices.
    Proposed Sec. 873.112 sets forth the evaluation requirements that 
VA contracting officers must place in solicitations. Currently, FAR has 
rigid requirements that evaluation factors and subfactors, as 
appropriate, be spelled out in a solicitation. In particular, there is 
a requirement, over certain dollar thresholds, to include vendor past 
performance as an evaluation factor. The contracting officer must 
document the reasons why past performance would not be included in an 
evaluation. This proposed section relieves contracting officers from 
these rigid requirements and allows them the flexibility to fashion 
their own acquisition-specific evaluation scheme with whatever 
information they deem to be in the best interest of the Government. 
However, this proposed section retains the requirement from FAR that 
price or cost to the Government still must be included in any 
evaluation.
    Proposed Sec. 873.113 sets forth a new standard for exchanges with 
offerors in negotiated acquisitions. Currently, under FAR, any contact 
with a vendor about the vendor's proposal that goes to the substance of 
the offer constitutes ``discussions.'' This causes a set of rules to go 
into effect, including a requirement that the Government hold 
``discussions'' with every offeror, even if there is no need for 
discussions with those other offerors. Less important contact is 
referred to as ``clarification'' under existing rules. Moreover, there 
is another category called ``communications'' which goes to 
establishment of a competitive range. Under proposed Sec. 873.113, the 
Government can have contact, called ``exchanges,'' at any time with any 
vendor, as required. However, as with the current regulations, the 
Government cannot improperly disclose information contained in another 
offeror's proposal (except see proposed at Sec. 873.111(e), Alternative 
negotiation techniques).
    Proposed Sec. 873.114 sets forth a new concept of the ``best value 
pool.'' This is the ``pool'' of offeror(s) that, after initial 
evaluation, have the most highly rated proposals with the greatest 
likelihood of award. Although this is similar in concept to the 
``competitive range'' of current regulation, the differences are that 
the contracting officer may limit the best value pool to a specific 
number of offerors among which an efficient competition can be 
conducted. Under the existing rules, the Government must consider every 
offeror that is acceptable or capable of being made acceptable. 
Therefore, the Government is forced to keep any number of marginal 
proposals in the competition even though they may have little real 
chance of securing an award. This proposed rule would eliminate this 
requirement and simplify the procurement process for both VA and 
vendors.
    Proposed Sec. 873.115 sets forth new procedures governing proposal 
revisions. Currently, once a ``competitive range'' has been developed, 
all offerors therein must be given a chance to revise their proposals. 
All revisions must be requested and received at the same time. Finally, 
at the close of ``discussions,'' all offerors remaining in the 
competition must be requested to submit a ``best and final offer.'' 
Under this proposed section, contracting officers may request proposal 
revisions as often as needed during the acquisition process. There is 
no need to have a common cutoff for submission of these revisions. 
Moreover, there is no need for a requirement to request a ``best and 
final offer'' from each and every offeror in every acquisition. The 
proposed section ensures that proposal submissions will be safeguarded 
against improper disclosures.
    Proposed Sec. 873.116 would provide guidance to contracting 
officers on source selection. FAR 15.308 contains specific requirements 
for documenting the source selection decision. This proposed section 
provides a less onerous procedure for documenting source selection than 
is described in FAR at 15.308.
    Proposed Sec. 873.117 would provide additional guidance to 
contracting officers on contract award, over and above that contained 
in FAR at 15.504, specifically on the differences between awarding RFQs 
and requests for proposals.
    FAR 15.505 currently requires the contracting officer to provide a 
preaward debriefing if a written request for a debriefing is received 
from the offeror no later than 3 days after receipt by the offeror of 
notice of exclusion from the competitive range. Proposed Sec. 873.118 
would make preaward debriefings optional on the part of the contracting 
officer when determined to be in the best interest of the Government. 
This is necessary to

[[Page 60260]]

simplify and streamline the acquisition process.

Miscellaneous Changes

    Currently, VAAR 801.602-70(a)(4) provides that proposed contracts 
for the mutual use or exchange of use of ``specialized medical 
resources'' above specified dollar thresholds be submitted to VA 
Central Office for review. This proposed rule would revise the term 
``specialized medical resources'' to ``health-care resources'' pursuant 
to 38 U.S.C. 8152. The review threshold levels specified in VAAR have 
been changed by class deviation in accordance with 801.404. This 
document proposes to incorporate that class deviation and to raise the 
review thresholds. This is necessary to allow streamlined and expedited 
processing of proposed contracts and to reduce the administrative 
burden on contracting officers.
    This proposed rule would make minor editorial changes to 801.602-71 
and 801.601-72 to correspond with the new language used in this 
proposed rule.
    VAAR 806.302-5(b) currently provides that contracts for the mutual 
use or exchange of use of specialized medical resources to be acquired 
from health-care facilities are approved for other than full and open 
competition, but requires justification and approval in accordance with 
FAR 6.303 and VAAR 806.303. Section 301 of Public Law 104-262 revised 
38 U.S.C. 8153(a)(3)(A), restricting and modifying this authority. 
Under this new authority, only those acquisitions of health-care 
resources consisting of commercial services, the use of medical 
equipment or space, or research, to be acquired from institutions 
affiliated with the Department in accordance with 38 U.S.C. 7302, from 
medical practice groups and other approved entities associated with 
affiliated institutions (entities will be approved if determined 
legally to be associated with affiliated institutions), or from blood 
banks, organ banks, or research centers, are approved for other than 
full and open competition. However, justification and approval is not 
required for contracts with these entities. This rule proposes to 
revise 806.302-5, paragraph (b), to incorporate this new authority into 
VAAR.
    In addition, Sec. 301 of Public Law 104-262 revised 38 U.S.C. 
8153(a)(3)(B)(i) to provide that contracts for the acquisition of 
commercial services or the use of medical equipment or space, not 
procured from affiliated institutions or approved entities associated 
with affiliated institutions (entities will be approved if determined 
legally to be associated with affiliated institutions), may be procured 
without regard to any law or regulation that would otherwise require 
the use of competitive procedures, provided the procurement is 
conducted in accordance with the simplified procedures proposed in this 
rule. Public Law 104-262 revised 38 U.S.C. 8153(a)(3)(B)(ii) to require 
that such acquisitions permit all responsible sources, as appropriate, 
to submit a bid, proposal, or quotation (as appropriate) and revised 38 
U.S.C. 8153(a)(3)(D) to require that such acquisitions, if conducted on 
a sole source basis, shall be justified and approved. This rule 
proposes to renumber current 806.302-5, paragraph (c), as paragraph (d) 
and to add new paragraph (c) to incorporate these new authorities into 
VAAR.
    Currently, VAAR Part 812 addresses the acquisition of commercial 
services. This rule proposes to list the Part 52.273 clauses contained 
herein in Part 812 for use in commercial service acquisitions, as 
authorized by FAR 12.301(f). This action is necessary, and is proposed 
based on the reasons set forth below, to permit use of these Part 
52.873 clauses in VA's commercial service acquisitions.
    This rule proposes to add VAAR clause 852.237-7, Indemnification 
and Medical Liability Insurance, as shown below in full text, to 
Sec. 812.302(f) for use in VA commercial service solicitations and 
contracts issued under the authority of 38 U.S.C. 8151-8153. VAAR 
clause 852.237-7 is currently set forth in 48 CFR Part 852. VA 
acquisitions under the authority of 38 U.S.C. 8151-8153 are considered 
to be for commercial services and clause 852.237-7 is necessary for use 
in such acquisitions to ensure that VA contractors providing 
nonpersonal health-care services have adequate medical liability 
insurance. This insurance is required to protect both VA and veterans 
from medical malpractice.
Indemnification and Medical Liability Insurance (Oct 1996)
    (a) It is expressly agreed and understood that this is a 
nonpersonal services contract, as defined in Federal Acquisition 
Regulation (FAR) 37.101, under which the professional services rendered 
by the Contractor or its health-care providers are rendered in its 
capacity as an independent contractor. The Government may evaluate the 
quality of professional and administrative services provided but 
retains no control over professional aspects of the services rendered, 
including by example, the Contractor's or its health-care providers' 
professional medical judgment, diagnosis, or specific medical 
treatments. The Contractor and its health-care providers shall be 
liable for their liability-producing acts or omissions. The Contractor 
shall maintain or require all health-care providers performing under 
this contract to maintain, during the term of this contract, 
professional liability insurance issued by a responsible insurance 
carrier of not less than the following amount(s) per specialty per 
occurrence: [Contracting Officer insert the dollar amount value(s) of 
standard coverage(s) prevailing within the local community as to the 
specific medical specialty, or specialties, concerned, or such higher 
amount as the Contracting Officer deems necessary to protect the 
Government's interests].
    However, if the Contractor is an entity or a subdivision of a State 
that either provides for self-insurance or limits the liability or the 
amount of insurance purchased by State entities, then the insurance 
requirement of this contract shall be fulfilled by incorporating the 
provisions of the applicable State law.
    (b) An apparently successful offeror, upon request of the 
Contracting Officer, shall, prior to contract award, furnish evidence 
of the insurability of the offeror and/or of all health-care providers 
who will perform under this contract. The submission shall provide 
evidence of insurability concerning the medical liability insurance 
required by paragraph (a) of this clause or the provisions of State law 
as to self-insurance, or limitations on liability or insurance.
    (c) The Contractor shall, prior to commencement of services under 
the contract, provide to the Contracting Officer Certificates of 
Insurance or insurance policies evidencing the required insurance 
coverage and an endorsement stating that any cancellation or material 
change adversely affecting the Government's interest shall not be 
effective until 30 days after the insurer or the Contractor gives 
written notice to the Contracting Officer. Certificates or policies 
shall be provided for the Contractor and/or each health-care provider 
who will perform under this contract.
    (d) The Contractor shall notify the Contracting Officer if it, or 
any of the health-care providers performing under this contract, change 
insurance providers during the performance period of this contract. The 
notification shall provide evidence that the Contractor and/or health-
care providers will meet all the requirements of this clause, including 
those concerning liability insurance and endorsements. These 
requirements may be met either

[[Page 60261]]

under the new policy, or a combination of old and new policies, if 
applicable.
    (e) The Contractor shall insert the substance of this clause, 
including this paragraph (e), in all subcontracts for health-care 
services under this contract. The Contractor shall be responsible for 
compliance by any subcontractor or lower-tier subcontractor with the 
provisions set forth in paragraph (a) of this clause.

(End of Clause)

    VAAR 837.403 currently requires the use of the above clause 
852.237-7, Indemnification and Medical Liability Insurance, in lieu of 
FAR clause 52.237-7, in solicitations and contracts for nonpersonal 
health-care services. This rule proposes to clarify at 837.403 that 
this same VAAR clause must also be used in solicitations and contracts 
for nonpersonal health-care services awarded under the authority of 38 
U.S.C. 8151-8153 and VAAR Part 873. The clause is necessary for use in 
VA solicitations and contracts to ensure that VA contractors providing 
nonpersonal health-care services have adequate medical liability 
insurance. This insurance is required to protect both VA and veterans 
from medical malpractice.
    VAAR Part 852 does not currently contain any provisions 
specifically relating to the acquisition of commercial services under 
the simplified acquisition authority of 38 U.S.C. 8151-8153. This rule 
proposed to add four provisions to the VAAR, as set forth herein in 
Part 852. The following is an explanation of these proposed provisions.
    The proposed provision at 852.273-70, Late offers, would replace 
paragraph (f) of FAR provision 52.212-1 in acquisitions for commercial 
services conducted in accordance with VAAR Part 873. Paragraph (f) of 
FAR provision 52.212-1 currently provides that offers or modifications 
of offers received after the exact time specified in the solicitation 
for receipt of offers will not be considered. VAAR provision 852.273-70 
proposes to allow consideration of quotations, proposals, or 
modifications of proposals received after the time set forth in the 
request for quotations or request for proposals at the discretion of 
the contracting officer, if determined to be in the best interest of 
the Government. This will ensure that VA will be able to accept the 
best offer submitted on a solicitation, even if that offer is received 
after the time set forth in the solicitation.
    Neither FAR nor VAAR currently contains provisions allowing 
alternative negotiation techniques. The provision at 852.273-71, 
Alternative negotiation techniques, proposes to allow the use of the 
alternative negotiation techniques set forth at 873.111(e). The 
techniques listed therein include (1) allowing the contracting officer 
to indicate to an offeror how the offeror must improve its offer in 
order to be considered for award and (2) allowing the contracting 
officer to post prices and permit revisions of offers based on that 
information. We believe these alternative negotiation techniques will 
allow VA to conduct acquisitions on a basis more in line with 
commercial practices and will result in the acquisition of improved 
services at reduced prices.
    The proposed provision at 852.273-72, Alternative evaluation, would 
implement the provision at 852.273-71, Alternative negotiation 
techniques, by advising offerors how prices would be posted and by 
providing guidance to offerors on how to submit offers. In addition, 
this proposed provision would advise offerors on how options would be 
evaluated, i.e., by adding the total price of all options to the total 
price for the basic requirement. It would also advise offerors that the 
Government is not obligated to exercise the options. The ``options'' 
paragraph is included in this proposed provision because this provision 
might be used alone, without a separate ``options'' provision.
    The proposed provision at 852.273-73, Evaluation--health-care 
resources, would replace FAR provision 52.212-2 in acquisitions for 
commercial services conducted in accordance with VAAR Part 873. FAR 
provision 52.212-2 provides guidance to offerors on what factors the 
Government will use to evaluate offers and on how those factors are 
weighted. Under proposed VAAR 873, VA would not be required to use 
factors to evaluate offers. Rather, VA would include information in the 
solicitation on how offers will be evaluated. In addition, VA would not 
be required to state how the evaluation information is weighted. This 
proposed provision is written to replace FAR 52.212-2 with these 
authorities in mind. Also, paragraph (c) has been drafted to clarify 
that notice of acceptance of an offer will create a binding contract if 
the solicitation is a request for proposals. If the solicitation is a 
request for quotations, that would not be the case, as notice of 
acceptance would not create a binding contract.
    Provision at 852.273-74, Award without exchanges, is proposed to be 
added to VAAR to advise offerors that VA intends to evaluate proposals 
and award a contract without exchanges with offerors. This provision is 
necessary in order to avoid any misunderstanding regarding award and to 
help ensure that offerors provide their best prices and terms with 
their initial offer.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), 
collections of information are contained in clause 852.237-7, 
Indemnification and Medical Liability Insurance, as set forth in the 
Supplementary Information portion of this proposed rule. Although this 
document proposes to add this clause for commercial item solicitations 
and contracts, this Paperwork Reduction Act notice of this document 
seeks approval for collections of information for both commercial and 
non-commercial item and service contracts for this clause. The clause 
can be used in both commercial and non-commercial item and service 
solicitations and contracts. As required under Sec. 3507(d) of the Act, 
VA has submitted a copy of this proposed rulemaking action to the 
Office of Management and Budget (OMB) for its review of the collection 
of information.
    OMB assigns control numbers to collections of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number.
    Comments on the collection of information should be submitted to 
the Office of Management and Budget, Attention: Desk Officer for the 
Department of Veterans Affairs, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Director, Office of 
Regulations Management (02D), Department of Veterans Affairs, 810 
Vermont Avenue, NW, Washington, DC 20420. Comments should indicate that 
they are submitted in response to ``RIN 2900-AI71.''
    Title and Provision/Clause Number: Clause 852.237-7, 
Indemnification and Medical Liability Insurance.
    Summary of collection of information: This clause is used in 
solicitations for nonpersonal health-care services in lieu of FAR 
clause 52.237-7. It requires the apparent successful bidder/offeror, 
prior to contract award, to furnish evidence that the firm possesses 
the types and amounts of insurance required by the solicitation and to 
notify the contracting officer if there are any changes in the firm's 
insurance coverage during the contract period. Prior to award, this 
evidence is in the form of a certificate from the firm's insurance 
company. After award, it is in the form of a letter or other 
correspondence, plus additional certificates.

[[Page 60262]]

    Description of need for information and proposed use of 
information: The information is required to protect VA by ensuring that 
the firm to which award will be made possesses the types and amounts of 
insurance required by the solicitation. It helps ensure that VA will 
not be held liable for any negligent acts of the contractor and ensures 
that VA beneficiaries and the public are protected by adequate 
insurance coverage.
    Description of likely respondents: Apparent successful bidders/
offerors on solicitations for nonpersonal health-care services.
    Estimated number of respondents: 10,000.
    Estimated frequency of responses: Once for each contract awarded, 
plus once each time a contractor changes its insurance coverage.
    Estimated average burden per collection: 30 minutes.
    Estimated total annual reporting and recordkeeping burden: 5000 
hours.
    The Department considers comments by the public on proposed 
collections of information in--
     Evaluating whether the proposed collections of information 
are necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the proposed collections of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collections of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    OMB is required to make a decision concerning the proposed 
collection of information contained in this proposed rule between 30 
and 60 days after publication of this document in the Federal Register. 
Therefore, a comment to OMB is best assured of having its full effect 
if OMB receives it within 30 days of publication. This does not affect 
the deadline for the public to comment on the proposed regulation.

Regulatory Flexibility Act

    The Secretary hereby certifies that the adoption of this proposed 
rule would not have a significant economic impact on a substantial 
number of small entities as they are defined in the Regulatory 
Flexibility Act (RFA), 5 U.S.C. 601-612. This proposed rule would 
establish simplified procedures for the acquisition of health-care 
resources by VA. Costs, if any, to comply with the provisions of the 
proposed rule would be minimal. Therefore, pursuant to 5 U.S.C. 605(b), 
this proposed rule is exempt from the initial and final regulatory 
flexibility analysis requirements of Secs. 603 and 604.

List of Subjects

48 CFR Parts 801 and 852

    Government Procurement, Reporting and recordkeeping requirements.

48 CFR Parts 806, 812, 837, and 873

    Government Procurement.

    Approved: November 2, 1998.
Togo D. West, Jr.,
Secretary of Veterans Affairs.

    For the reasons set forth in the preamble, 48 CFR chapter 8 is 
proposed to be amended as follows:

PART 801--VETERANS AFFAIRS ACQUISITION REGULATIONS SYSTEM

    1. The authority citations for Part 801 continues to read as 
follows:

    Authority: 38 U.S.C. 501 and 40 U.S.C. 486(c).


801.602-70   [Amended]

    2. In Sec. 801.602-70, paragraphs (a)(4)(vi) and (a)(4)(vii) are 
proposed to be revised to read as follows:


801.602-70   Legal/technical review requirements to be met prior to 
contract execution.

    (a) * * *
    (4) * * *
    (vi) Except as specified in paragraph (a)(4)(vii), competitive 
contracts exceeding $1.5 million and noncompetitive contracts exceeding 
$500,000 for scarce medical specialist services negotiated under the 
authority of 38 U.S.C. 7409 or for health-care resources acquired under 
the authority of Part 873 and 38 U.S.C. 8151-8153.
    (vii) Any contract or agreement negotiated under the authority of 
38 U.S.C. 8151-8153 for VA to provide inpatient services, 
administrative resources, the use of medical equipment or space, 
prosthetics, supplies, or laundry services.
* * * * *
    3. In Sec. 801.602-71, paragraph (b)(2) is proposed to be revised 
to read as follows:


801.602-71   Processing contracts for legal/technical review.

* * * * *
    (b) * * *
    (2) Proposed contracts and agreements for scarce medical specialist 
services or for the mutual use or exchange of use of health-care 
resources, as specified in 801.602-70(a)(4)(vi) and (a)(4)(vii), will 
be forwarded to Central Office in accordance with VHA Directive 97-015 
and VA Manual M-1, Part 1, Chapter 34, for review and submission to the 
Office of the General Counsel (025).
* * * * *
    4. In Sec. 801.602-72, paragraph (b) is proposed to be revised to 
read as follows:


801.602-72   Documents to be submitted for legal review.

* * * * *
    (b) For proposed contracts and agreements for scarce medical 
specialist services or for the mutual use or exchange of use of health-
care resources, as specified in 801.602-70(a)(4)(vi) and (a)(4)(vii), 
the documents referred to in VA Manual M-1, Part 1, Chapter 34.
* * * * *

PART 806--COMPETITION REQUIREMENTS

    5. The authority citations for Part 806 continues to read as 
follows:

    Authority: 38 U.S.C. 501 and 40 U.S.C. 486(c).

    6. In Sec. 806.302-5, paragraph (b) is proposed to be revised to 
read as follows:


806.302-5   Authorized or required by statute.

* * * * *
    (b) Contracts or agreements for the mutual use or exchange of use 
of health-care resources, consisting of commercial services, the use of 
medical equipment or space, or research, negotiated under the authority 
of 38 U.S.C. 8151-8153, are approved for other than full and open 
competition only when such contracts or agreements are with 
institutions affiliated with the Department of Veterans Affairs, 
pursuant to 38 U.S.C. 7302, with medical practice groups or other 
approved entities associated with affiliated institutions (entities 
will be approved if determined legally to be associated with affiliated 
institutions), or with blood banks, organ banks, or research centers. 
The justification and approval requirements of FAR 6.303 and VAAR 
806.304 do not apply to such contracts or agreements.
* * * * *

[[Page 60263]]

    7. In Sec. 806.302-5, paragraph (c) is proposed to be redesignated 
as paragraph (d) and a new paragraph (c) is proposed to be added to 
read as follows:


806.302-5  Authorized or required by statute.

* * * * *
    (c) Contracts or agreements for the mutual use or exchange of use 
of health-care resources, consisting of commercial services or the use 
of medical equipment or space, negotiated under the authority of 38 
U.S.C. 8151-8153, and not acquired under the authority of paragraph (b) 
of this section, may be conducted without regard to any law or 
regulation that would otherwise require the use of competitive 
procedures for procuring resources, provided the procurement is 
conducted in accordance with the simplified procedures contained in 
part 873. The justification and approval requirements of FAR 6.303 and 
VAAR 806.304 shall apply to such contracts or agreements conducted on a 
sole source basis.
* * * * *

PART 812--ACQUISITION OF COMMERCIAL ITEMS

    8. The authority citations for Part 812 continues to read as 
follows:

    Authority: 38 U.S.C. 501 and 40 U.S.C. 486(c).


812.301  [Amended]

    9. In Sec. 812.301, paragraph (g) is proposed to be added to read 
as follows:


812.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (g) When soliciting for commercial services or the use of medical 
equipment or space under the authority of part 873 and 38 U.S.C. 8151-
8153, the provisions and clauses in the following VAAR sections may be 
used in accordance with the prescriptions contained in parts 837 and 
873:
    (1) 852.237-7, Indemnification and Medical Liability Insurance.
    (2) 852.273-70, Late offers.
    (3) 852.273-71, Alternative negotiation techniques.
    (4) 852.273-72, Alternative evaluation.
    (5) 852.273-73, Evaluation--health-care resources.
    (6) 852.273-74, Award without exchanges.

PART 837--SERVICE CONTRACTING

    10. The authority citations for Part 837 continues to read as 
follows:

    Authority: 38 U.S.C. 501 and 40 U.S.C. 486(c).


837.403  [Amended]

    11. Section 837.403 is proposed to be amended by adding, at the end 
of the first sentence, ``, including solicitations and contracts for 
nonpersonal health-care services awarded under the authority of 38 
U.S.C. 8151-8153 and VAAR Part 873''.

PART 852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    12. The authority citations for Part 852 continues to read as 
follows:

    Authority: 38 U.S.C. 501 and 40 U.S.C. 486(c).

    13. Section 852.273-70 is proposed to be added to read as follows:


852.273-70  Late offers.

    As prescribed in 873.110(a), insert the following provision:

Late Offers (Date)

    This provision replaces paragraph (f) of FAR Provision 52.212-1. 
Offers or modifications of offers received after the time set forth 
in a request for quotations or request for proposals may be 
considered, at the discretion of the contracting officer, if 
determined to be in the best interest of the Government. Late bids 
submitted in response to an Invitation for Bid (IFB) will not be 
considered.

(End of provision)

    14. Section 852.273-71 is added to read as follows:


852.273-71  Alternative negotiation techniques.

    As prescribed in 873.110(b), insert the following provision:

Alternative Negotiation Techniques (Date)

    The contracting officer may elect to use the alternative 
negotiation techniques described in section 873.111(e) in conducting 
this procurement. If used, offerors may respond by maintaining 
offers as originally submitted, revising offers, or submitting an 
alternative offer. The Government may consider initial offers unless 
revised or withdrawn, revised offers, and alternative offers in 
making the award. Revising an offer does not guarantee an offeror an 
award.

(End of provision)

    15. Section 852.273-72 is added to read as follows:


852.273-72  Alternative evaluation.

    As prescribed in 873.110(c), insert the following provision:

Alternative Evaluation (Date)

    (a) The Government will award a contract resulting from this 
solicitation to the responsible offeror submitting the lowest priced 
offer that conforms to the solicitation. During the specified period 
for receipt of offers, the amount of the lowest offer will be posted 
and may be viewed by--[Contracting officer insert description of how 
the information may be viewed electronically or otherwise]. Offerors 
may revise offers anytime during the specified period. At the end of 
the specified time period for receipt of offers, the responsible 
offeror submitting the lowest priced offer will be in line for 
award.
    (b) Except when it is determined not to be in the Government's 
best interest, the Government will evaluate offers for award 
purposes by adding the total price for all options to the total 
price for the basic requirement. The Government may determine that 
an offer is unacceptable if the option prices are materially 
unbalanced. Evaluation of options shall not obligate the Government 
to exercise the option(s).

(End of provision)

    16. Section 852.273-73 is added to read as follows:


852.273-73  Evaluation--health-care resources.

    As prescribed in 873.110(d), in lieu of FAR provision 52.212-2, the 
contracting officer may insert a provision substantially as follows:

Evaluation--Health-Care Resources (Date)

    (a) The Government will award a contract resulting from this 
solicitation to the responsible offeror whose offer, conforming to 
the solicitation, will be most advantageous to the Government, price 
and other factors considered. The following information or factors 
shall be used to evaluate offers: [Contracting officer insert 
evaluation information or factors, such as technical capability to 
meet the Government's requirements, past performance, or such other 
evaluation information or factors as the contracting officer deems 
necessary to evaluate offers. Price shall be evaluated in every 
acquisition. The contracting officer may include the evaluation 
information or factors in their relative order of importance, such 
as in descending order of importance.]
    (b) Except when it is determined not to be in the Government's 
best interest, the Government will evaluate offers for award 
purposes by adding the total price for all options to the total 
price for the basic requirement. The Government may determine that 
an offer is unacceptable if the option prices are materially 
unbalanced. Evaluation of options shall not obligate the Government 
to exercise the option(s).
    (c) If this solicitation is a Request for Proposals (RFP), a 
written notice of award or acceptance of an offer, mailed or 
otherwise furnished to the successful offeror within the time for 
acceptance specified in the offer, shall result in a binding 
contract without further action by either party. Before the offer's 
specified expiration time, the Government may accept an offer (or 
part of an offer), whether or not there are negotiations after its 
receipt, unless a written notice of withdrawal is received before 
award.

(End of Provision)


[[Page 60264]]


    17. Section 852.273-74 is added to read as follows:


852.273-74  Award without exchanges.

    As prescribed in 873.110(e), insert the following provision:

Award Without Exchanges (Date)

    The Government intends to evaluate proposals and award a 
contract without exchanges with offerors. Therefore, each initial 
offer should contain the offeror's best terms from a cost or price 
and technical standpoint. However, the Government reserves the right 
to conduct exchanges if later determined by the contracting officer 
to be necessary.

(End of provision)

    18. Part 873 is added to read as follows:

PART 873--SIMPLIFIED ACQUISITION PROCEDURES FOR HEALTH-CARE 
RESOURCES

Sec.
873.101  Policy.
873.102  Definitions.
873.103  Priority sources.
873.104  Competition requirements.
873.105  Acquisition planning.
873.106  Presolicitation exchanges with industry.
873.107  Socioeconomic programs.
873.108  Publicizing contract actions.
873.109  General requirements for acquisition of health-care 
resources.
873.110  Solicitation provisions.
873.111  Acquisition strategies for health-care resources.
873.112  Evaluation information.
873.113  Exchanges with offerors.
873.114  Best value pool.
873.115  Proposal revisions.
873.116  Source selection decision.
873.117  Award to successful offeror.
873.118  Debriefings.

    Authority: 38 U.S.C. 8151-8153.


873.101  Policy.

    The simplified acquisition procedures set forth in this VAAR part 
apply to the acquisition of health-care resources consisting of 
commercial services or the use of medical equipment or space. These 
procedures shall be used in conjunction with the Federal Acquisition 
Regulation (FAR). However, when a policy or procedure in FAR or another 
part of VAAR is inconsistent with the procedures contained in this 
part, this part shall take precedence. These procedures contain more 
flexibility than provided in FAR or elsewhere in VAAR.


873.102  Definitions.

    Commercial service means a service, except construction exceeding 
$2,000, that is offered and sold competitively in the commercial 
marketplace, is performed under standard commercial terms and 
conditions, and is procured using firm-fixed price contracts.
    Health-care providers includes health-care plans and insurers and 
any organizations, institutions, or other entities or individuals who 
furnish health-care resources.
    Health-care resource includes hospital care and medical services 
(as those terms are defined in Sec. 1701 of title 38 United States Code 
(U.S.C.)), any other health-care service, and any health-care support 
or administrative resource, including the use of medical equipment or 
space.


873.103  Priority sources.

    Without regard to FAR 8.001(a)(2), except for the acquisition of 
services available from the Committee for Purchase From People Who Are 
Blind or Severely Disabled, pursuant to the Javits-Wagner-O'Day Act (41 
U.S.C. 46-48c) and FAR Subpart 8.7, there are no priority sources for 
the acquisition of health-care resources consisting of commercial 
services or the use of medical equipment or space.


873.104  Competition requirements.

    (a) Without regard to FAR Part 6, if the health-care resource 
required is a commercial service, the use of medical equipment or 
space, or research, and is to be acquired from an institution 
affiliated with the Department in accordance with Sec. 7302 of title 38 
U.S.C., including medical practice groups and other approved entities 
associated with affiliated institutions (entities will be approved if 
determined legally to be associated with affiliated institutions), or 
from blood banks, organ banks, or research centers, the resource may be 
acquired on a sole source basis.
    (b) Acquisition of health-care resources identified in paragraph 
(a) are not required to be publicized as otherwise required by 
Sec. 873.108 or FAR 5.101. In addition, written justification, as 
otherwise set forth in Sec. 303(f) of the Federal Property and 
Administration Services Act of 1949 (41 U.S.C. 253(f)) and FAR Part 6, 
is not required.
    (c) Without regard to FAR 6.101, if the health-care resource 
required is a commercial service or the use of medical equipment or 
space, and is to be acquired from an entity not described in paragraph 
(a) of this section, contracting officers shall seek competition to the 
maximum extent practicable and shall permit all responsible sources, as 
appropriate under the provisions of this part, to submit a bid, 
proposal or quotation (as appropriate) for the resources to be procured 
and provide for the consideration by the Department of bids, proposals, 
or quotations so submitted.
    (d) Without regard to FAR 5.101, acquisition of health-care 
resources identified in paragraph (c) of this section shall be 
publicized as otherwise required by Sec. 873.108. Moreover, for any 
such acquisition described in paragraph (c) of this section to be 
conducted on a sole source basis, the contracting officer must prepare 
a justification that includes the information and is approved at the 
levels prescribed in Sec. 303(f) of the Federal Property and 
Administration Services Act of 1949 (41 U.S.C. 253(f)) and FAR Part 6.


873.105  Acquisition planning.

    (a) This section shall be used in lieu of FAR Part 7. Acquisition 
planning is an indispensable component of the total acquisition 
process. Acquisition planning may involve identifying requirements, 
available funding, and sources, and development of a statement or 
description of work, a Government estimate, and/or evaluation 
information.
    (b) Within VA and for the acquisition of health-care resources 
consisting of commercial services or the use of medical equipment or 
space, an acquisition team shall be assembled. The team shall be 
tailored by the contracting officer for each particular acquisition and 
include the appropriate mix of contracting, fiscal, legal, 
administrative, and technical personnel, the small business advocate 
representing the contracting activity or a higher level designee, an 
SBA Procurement Center Representative, if available, and such other 
expertise to assure a comprehensive acquisition plan.
    (c) Prior to determining whether a requirement is suitable for 
acquisition using these simplified acquisition procedures, the 
acquisition team shall conduct market research to identify interested 
businesses. It is the responsibility of the contracting officer to 
ensure the requirement is appropriately publicized and information 
about the procurement opportunity is adequately disseminated as set 
forth in Sec. 873.108.


873.106  Presolicitation exchanges with industry.

    (a) This section shall be used in lieu of FAR Part 10. In 
conducting market research, exchange of information by all interested 
parties involved in an acquisition, from the earliest identification of 
a requirement through release of the solicitation, is encouraged. 
Interested parties include potential offerors, end users, Government 
acquisition and support personnel, and

[[Page 60265]]

others involved in the conduct or outcome of the acquisition. The 
nature and extent of presolicitation exchanges between the Government 
and industry shall be a matter of the acquisition team's discretion, as 
coordinated by the contracting officer.
    (b) Techniques to promote early exchange of information include--
    (1) Industry or small business conferences;
    (2) Public hearings;
    (3) Market research;
    (4) One-on-one meetings with potential offerors;
    (5) Presolicitation notices;
    (6) Draft Requests for Proposals (RFPs);
    (7) Requests for Information (RFIs);
    (8) Presolicitation or preproposal conferences;
    (9) Site visits;
    (10) Electronic notices (e.g., Internet); and
    (11) Use of the Procurement Marketing and Access Network (PRO-NET).


873.107   Socioeconomic programs.

    (a) Implementation. This paragraph provides additional authority, 
over and above that found at FAR 19.502, to waive small business set-
asides. If, through market research, there is reasonable expectation 
that reasonably priced bids, proposals, or quotations will be received 
from two or more responsible small businesses, a requirement for 
health-care resources shall be reserved for small business 
participation. The Head of the Contracting Activity may approve a 
waiver from the requirement for any set-aside for small business 
participation when it is determined to be in the best interest of the 
Government. For acquisitions between $2,500 and $100,000, the automatic 
reservation for small business concerns, as provided in FAR 19.502-
2(a), is not applicable.
    (b) Rejecting Small Business Administration (SBA) Recommendations. 
(1) HCA's shall consider and respond to a recommendation from an SBA 
representative to set a procurement aside for small business within 5 
working days. If the recommendation is rejected by the HCA and if SBA 
intends to appeal that determination, SBA shall, within 1 working day 
after receipt of the HCA's determination, notify the contracting 
officer of SBA's intention to appeal.
    (2) Upon receipt of the notification of SBA's intention to appeal 
and pending issuance of a final appeal decision to SBA, the contracting 
officer shall suspend action on the acquisition unless a determination 
is made in writing by the contracting officer that proceeding to 
contract award and performance is in the public interest. The 
contracting officer shall promptly notify SBA of the determination to 
proceed with the solicitation and/or contract award and shall provide a 
copy of the written determination to SBA.
    (3) SBA shall be allowed 10 working days after receiving the 
rejection notice from the HCA for acquisitions not exceeding $5 
million, or 15 working days after receiving the rejection notice for 
acquisitions exceeding $5 million, to file an appeal. SBA shall notify 
the contracting officer within this 10 or 15 day period whether an 
appeal has, in fact, been taken. If notification is not received by the 
contracting officer within the applicable period, it shall be deemed 
that an appeal was not taken.
    (4) SBA shall submit appeals to the Secretary. Decisions shall be 
made by the Procurement Executive, whose decisions shall be final.
    (c) Contracting with the Small Business Administration (the 8(a) 
Program). The procedures of FAR Part 19.8 shall be followed where a 
responsible 8(a) contractor has been identified.
    (d) Determinations of Responsibility and Small Business. The 
Director, Office of Small and Disadvantaged Business Utilization 
(OSDBU), Department of Veterans Affairs (VA), and Director, Office of 
Industrial Assistance, Small Business Administration (SBA) shall serve 
as ombudsmen to assist VA contracting officers on any issues relating 
to Certificates of Competency (COC). Copies of all COC referrals to SBA 
shall be submitted to the Director, OSDBU.


873.108   Publicizing contract actions.

    (a) Without regard to FAR 5.101, all acquisitions under this Part 
873 for dollar amounts in excess of the simplified acquisition 
threshold (SAT), as set forth in FAR Part 13, shall be publicly 
announced utilizing a medium designed to obtain competition to the 
maximum extent practicable and to permit all responsible sources, as 
appropriate under the provisions of this Part, to submit a bid, 
proposal, or quotation (as appropriate).
    (1) The publication medium may include the Commerce Business Daily; 
the Internet; and local, regional or national publications or journals, 
as appropriate, at the discretion of the contracting officer, depending 
on the complexity of the acquisition.
    (2) Without regard to FAR 5.101 or 14.202-1, notice shall be 
published for a reasonable time prior to issuance of a request for 
quotations (RFQ) or a solicitation, depending on the complexity or 
urgency of the acquisition, in order to afford potential offerors a 
reasonable opportunity to respond. If the notice includes a complete 
copy of the RFQ or solicitation, a prior notice is not required, and 
the RFQ or solicitation shall be considered to be announced and issued 
at the same time.
    (3) The notice may include contractor qualification parameters, 
such as time for delivery of service, credentialing or medical 
certification requirements, small business or other socio-economic 
preferences, the appropriate small business size standard, and such 
other qualifications as the contracting officer deems necessary to meet 
the needs of the Government.
    (b) The requirement for public announcement does not apply to sole 
source acquisitions, described in 873.104(a), from institutions 
affiliated with the Department in accordance with Sec. 7302 of title 38 
U.S.C., including medical practice groups and other approved entities 
associated with affiliated institutions (entities will be approved if 
determined legally to be associated with affiliated institutions), or 
from blood banks, organ banks, or research centers, or to sole source 
acquisitions of hospital care and medical services (as those terms are 
defined in Sec. 1701 of title 38 U.S.C.) or any other health-care 
services.
    (c) For acquisitions below the SAT, a public announcement is 
optional.
    (d) Each solicitation issued under these procedures shall 
prominently identify that the requirement is being solicited under the 
authority of 38 U.S.C. 8153 and VAAR Part 873.


873.109  General requirements for acquisition of health-care resources.

    (a) Source Selection Authority. Contracting officers shall be the 
source selection authority for acquisitions of health-care resources, 
consisting of commercial services or the use of medical equipment or 
space, utilizing the guidance contained in this VAAR Part 873.
    (b) Statement of work/Specifications. Statements of work or 
specifications may define the requirement and include qualifications or 
limitations such as time limits for delivery of service, medical 
certification or credentialing restrictions, small business or other 
socio-economic preferences, or any other such terms as the contracting 
officer deems appropriate for each specific acquisition.
    (c) Documentation. Without regard to FAR 13.106-3(b), 13.501(b), or 
14.408-

[[Page 60266]]

7(a) and (b), the contract file shall include:
    (1) A brief written description of the procedures used in awarding 
the contract;
    (2) The market research, including the determination that the 
acquisition involves health-care resources;
    (3) The number of offers received; and
    (4) An explanation, tailored to the size and complexity of the 
acquisition, of the basis for the contract award decision.
    (d) Time for receipt of quotations or offers.  (1) Without regard 
to FAR 5.203, contracting officers shall set a reasonable time for 
receipt of quotations or proposals in requests for quotations (RFQs) 
and solicitations.
    (2) Without regard to FAR 15.208 or 52.212-1(f), quotations or 
proposals received after the time set forth in a RFQ or request for 
proposals (RFP) may be considered at the discretion of the contracting 
officer if determined to be in the best interest of the Government. 
Contracting officers shall document the rationale for accepting 
quotations or proposals received after the time specified in the RFQ or 
RFP. This paragraph (d)(2) shall not apply to RFQs or RFPs if 
alternative evaluation techniques described in VAAR 873.111(e)(ii) are 
used. This paragraph (d)(2) does not apply to invitations for bid 
(IFBs).
    (e) Cancellation of procurements. Any acquisition may be canceled 
by the contracting officer at any time during the acquisition process 
if cancellation is determined to be in the best interest of the 
Government.


873.110  Solicitation provisions.

    (a) As provided in 873.109(d), contracting officers shall insert 
the provision at 852.273-70, Late offers, in all requests for 
quotations (RFQs) and requests for proposals (RFPs) exceeding the 
micro-purchase threshold.
    (b) The contracting officer shall insert a provision in RFQs and 
solicitations, substantially the same as the provision at 852.273-71, 
Alternative negotiation techniques, when either of the alternative 
negotiation techniques described in 873.111(e)(1) will be used.
    (c) The contracting officer shall insert the provision at 852.273-
72, Alternative evaluation, in lieu of the provision at 52.212-2, 
Evaluation--Commercial Items, when the alternative negotiation 
technique described in 873.111(e)(1)(ii) will be used.
    (d) When evaluation information, as described in 873.112, is to be 
used to select a contractor under an RFQ or RFP for health-care 
resources consisting of commercial services or the use of medical 
equipment or space, the contracting officer may insert the provision at 
852.273-73, Evaluation--health-care resources, in the RFQ or RFP in 
lieu of FAR provision 52.212-2.
    (e) As provided at 873.113(f), if award may be made without 
exchange with vendors, the contracting officer shall include the 
provision at 852.273-74, Award without exchanges, in the RFQ or RFP.
    (f) The contracting officer shall insert the clauses at FAR 52.207-
3, Right of First Refusal of Employment, and at VAAR 852.207-70, Report 
of employment under commercial activities, in all RFQs, solicitations, 
and contracts issued under the authority of 38 U.S.C. 8151-8153 which 
may result in a conversion, from in-house performance to contract 
performance, of work currently being performed by Department of 
Veterans Affairs employees.


873.111   Acquisition strategies for health-care resources.

    Without regard to FAR 13.003 or 13.500(a), the following 
acquisition processes and techniques may be used, singly or in 
combination with others, as appropriate, to design acquisition 
strategies suitable for the complexity of the requirement and the 
amount of resources available to conduct the acquisition. These 
strategies should be considered during acquisition planning. The 
contracting officer shall select the process most appropriate to the 
particular acquisition. There is no preference for sealed bid 
acquisitions.
    (a) Request for quotations. (1) Without regard to FAR 6.1 or 6.2, 
contracting officers should solicit a sufficient number of sources to 
promote competition to the maximum extent practicable and to ensure 
that the purchase is advantageous to the Government, based, as 
appropriate, on either price alone or price and other factors (e.g., 
past performance and quality). RFQs should notify vendors of the basis 
upon which the award is to be made.
    (2) Without regard to FAR 13.104(b), for acquisitions under the 
simplified acquisition threshold (SAT), two quotes meet the requirement 
for competition to the maximum extent practicable. For acquisitions in 
excess of the SAT, procedures set forth in FAR Part 13 concerning RFQs 
may be utilized without regard to the dollar thresholds contained 
therein.
    (b) Sealed bidding. FAR Part 14 provides procedures for sealed 
bidding.
    (c) Negotiated acquisitions. The procedures of FAR Parts 12, 13, 
and 15 shall be used for negotiated acquisitions, except as modified in 
this VAAR part.
    (d) Multiphase acquisition technique--(1) General. Without regard 
to FAR 15.202, multiphase acquisitions may be appropriate when the 
submission of full proposals at the beginning of an acquisition would 
be burdensome for offerors to prepare and for Government personnel to 
evaluate. Using multiphase techniques, the Government may seek limited 
information initially, make one or more down-selects, and request a 
full proposal from an individual offeror or limited number of offerors. 
Provided that the notice notifies offerors, the contracting officer may 
limit the number of proposals during any phase to the number that will 
permit an efficient competition among proposals offering the greatest 
likelihood of award. The contracting officer may indicate in the notice 
an estimate of the greatest number of proposals that will be included 
in the down-select phase. The contracting officer may down-select to a 
single offeror.
    (2) First phase notice. In the first phase, the Government shall 
publish a notice (see 873.108) that solicits responses and that may 
provide, as appropriate, a general description of the scope or purpose 
of the acquisition and the criteria that will be used to make the 
initial down-select decision. The notice may also inform offerors of 
the evaluation criteria or process that will be used in subsequent 
down-select decisions. The notice shall contain sufficient information 
to allow potential offerors to make an informed decision about whether 
to participate in the acquisition. The notice shall advise offerors 
that failure to participate in the first phase will make them 
ineligible to participate in subsequent phases. The notice may be in 
the form of a Commerce Business Daily notice or a narrative letter or 
other appropriate method that contains the information required by this 
paragraph.
    (3) First phase responses. Offerors shall submit the information 
requested in the notice described in paragraph (d)(2) of this section. 
Information sought in the first phase may be limited to a statement of 
qualifications and other appropriate information (e.g., proposed 
technical concept, past performance information, limited pricing 
information).
    (4) First phase evaluation and down-select. The Government shall 
evaluate all offerors' submissions in accordance with the notice and 
make a down-select decision.
    (5) Subsequent phases. Additional information shall be sought in 
the

[[Page 60267]]

second phase so that a down-select can be performed or an award made 
without exchanges, if necessary. The contracting officer may conduct 
exchanges with remaining offeror(s), request proposal revisions, or 
request best and final offers, as determined necessary by the 
contracting officer, in order to make an award decision.
    (6) Debriefing. Without regard to FAR 15.505, contracting officers 
shall debrief offerors as required by 873.118 when they have been 
excluded from the competition.
    (e) Alternative negotiation techniques--(1) Contracting officers 
may utilize alternative negotiation techniques for the acquisition of 
health-care resources. Alternative negotiation techniques may be used 
when award will be based on either price or price and other factors. 
Alternative negotiation techniques include but are not limited to:
    (i) Indicating to offerors a price, contract term or condition, 
commercially available feature, and/or requirement (beyond any 
requirement or target specified in the solicitation) that offerors will 
have to improve upon or meet, as appropriate, in order to remain 
competitive.
    (ii) Posting offered prices electronically or otherwise (without 
disclosing the identity of the offerors) and permitting revisions of 
offers based on this information.
    (2) Except as otherwise permitted by law, contracting officers 
shall not conduct acquisitions under this section in a manner that 
reveals the identities of offerors, releases proprietary information, 
or otherwise gives any offeror a competitive advantage (see FAR 3.104).


873.112  Evaluation information.

    (a) Without regard to FAR 15.304, the criteria, factors, or other 
evaluation information that apply to an acquisition, and their relative 
importance, are within the broad discretion of agency acquisition 
officials as long as the evaluation information is determined to be in 
the best interest of the Government.
    (b) Price or cost to the Government shall be evaluated in every 
source selection.
    (c) The quality of the product or service may be addressed in 
source selection through consideration of information such as past 
performance, compliance with solicitation requirements, technical 
excellence, management capability, personnel qualifications, and prior 
experience. The information required from quoters, bidders, or offerors 
shall be included in notices or solicitations, as appropriate.
    (d) The relative importance of any evaluation information included 
in a solicitation shall be set forth therein.


873.113  Exchanges with offerors.

    (a) Without regard to FAR 15.201 or 15.306, negotiated acquisitions 
generally involve exchanges between the Government and competing 
offerors. Open exchanges support the goal of efficiency in Government 
by providing the Government with relevant information (in addition to 
that submitted in the offeror's initial proposal) needed to understand 
and evaluate the offeror's proposal. The nature and extent of exchanges 
between the Government and offerors is a matter of contracting officer 
judgment. Clarifications, communications, and discussions, as provided 
for in the FAR, are concepts not applicable to acquisitions under this 
VAAR part 873.
    (b) Exchanges with all potential offerors may take place throughout 
the source selection process. Exchanges may start in the planning 
stages and continue through contract award. Exchanges should occur most 
often with offerors determined to be in the best value pool (see 
873.114). The purpose of exchanges is to ensure there is mutual 
understanding between the Government and the offerors on all aspects of 
the acquisition, including offerors' submittals/proposals. Information 
disclosed as a result of oral or written exchanges with an offeror may 
be considered in the evaluation of an offeror's proposal.
    (c) Exchanges may be conducted, in part, to obtain information that 
explains or resolves ambiguities or other concerns (e.g., perceived 
errors, perceived omissions, or perceived deficiencies) in an offeror's 
proposal.
    (d) Exchanges shall only be initiated if authorized by the 
contracting officer and need not be conducted with all offerors.
    (e) Improper exchanges. Except for acquisitions based on 
alternative negotiation techniques contained in 873.111(e)(1), the 
contracting officer and other Government personnel involved in the 
acquisition shall not disclose information regarding one offeror's 
proposal to other offerors without consent of the offeror in accordance 
with FAR Parts 3 and 24.
    (f) Award may be made on initial proposals without exchanges if the 
solicitation states that the Government intends to evaluate proposals 
and make award without exchanges, unless the contracting officer 
determines that exchanges are considered necessary.


873.114  Best value pool.

    (a) Without regard to FAR 15.306(c), the contracting officer may 
determine the most highly rated proposals having the greatest 
likelihood of award based on the information or factors and subfactors 
in the solicitation. These vendors constitute the best value pool. This 
determination is within the sole discretion of the contracting officer. 
Competitive range determinations, as provided for in the FAR, are not 
applicable to acquisitions under this VAAR part 873.
    (b) In planning an acquisition, the contracting officer may 
determine that the number of proposals that would otherwise be included 
in the best value pool is expected to exceed the number at which an 
efficient, timely, and economical competition can be conducted. In 
reaching such a conclusion, the contracting officer may consider such 
factors as the results of market research, historical data from 
previous acquisitions for similar supplies and services, and the 
resources available to conduct the source selection. Provided the 
solicitation notifies offerors that the best value pool can be limited 
for purposes of making an efficient, timely, and economical award, the 
contracting officer may limit the number of proposals in the best value 
pool to the greatest number that will permit an efficient competition 
among the proposals offering the greatest likelihood of award. The 
contracting officer may indicate in the solicitation the estimate of 
the greatest number of proposals that will be included in the best 
value pool. The contracting officer may limit the best value pool to a 
single offeror.
    (c) If the contracting officer determines that an offeror's 
proposal is no longer in the best value pool, the proposal shall no 
longer be considered for award. Written notice of this decision shall 
be provided to unsuccessful offerors at the earliest practicable time.


873.115  Proposal revisions.

    (a) Without regard to FAR 15.307, the contracting officer may 
request proposal revisions as often as needed during the proposal 
evaluation process at any time prior to award from vendors remaining in 
the best value pool. Proposal revisions shall be submitted in writing. 
The contracting officer may establish a common cutoff date for receipt 
of proposal revisions. Contracting officers may request best and final 
offers. In any case, contracting officers and acquisition team members 
shall safeguard proposals, and revisions

[[Page 60268]]

thereto, to avoid unfair dissemination of an offeror's proposal.
    (b) If an offeror initially included in the best value pool is no 
longer considered to be among those most likely to receive award after 
submission of proposal revisions and subsequent evaluation thereof, the 
offeror may be eliminated from the best value pool without being 
afforded an opportunity to submit further proposal revisions.
    (c) Requesting and/or receiving proposal revisions do not 
necessarily conclude exchanges. However, requests for proposal 
revisions should advise offerors that the Government may make award 
without obtaining further revisions.


873.116  Source select decision.

    (a) An integrated comparative assessment of proposals should be 
performed before source selection is made. The contracting officer 
shall independently determine: which proposal(s) represents the best 
value, consistent with the evaluation information or factors and 
subfactors in the solicitation; and that the prices are fair and 
reasonable. The contracting officer may determine that all proposals 
should be rejected if it is in the best interest of the Government.
    (b) The source selection team, or advisory boards or panels, may 
conduct comparative analysis(es) of proposals and make award 
recommendations, if the contracting officer requests such assistance.
    (c) The basis for the source selection decision shall be documented 
and shall reflect the rationale for any cost/technical tradeoffs. 
Specific tradeoffs that cannot be reasonably quantified need not be 
described in terms of cost/price impacts.


873.117  Award to successful offeror.

    (a) The contracting officer shall award a contract to the 
successful offeror by furnishing the contract or other notice of the 
award to that offeror.
    (b) If a request for proposal (RFP) process was used for the 
solicitation and if award is to be made without exchanges, the 
contracting officer may award a contract without obtaining the 
offeror's signature a second time. The offeror's signature on the offer 
constitutes the offeror's agreement to be bound by the offer. If a 
request for quotation (RFQ) process was used for the solicitation, the 
contracting officer must obtain the offeror's acceptance signature on 
the contract to ensure formation of a binding contract.
    (c) If the award document includes information that is different 
than the latest signed offer, both the offeror and the contracting 
officer shall sign the contract award.
    (d) When an award is made to an offeror for less than all of the 
items that may be awarded and additional items are being withheld for 
subsequent award, each notice shall state that the Government may make 
subsequent awards on those additional items within the offer acceptance 
period.


873.118  Debriefings.

    Offerors excluded from multiphase acquisitions or best value pools 
may make a written request for a debriefing. Without regard to FAR 
15.505, preaward debriefings will be conducted by the contracting 
officer when determined to be in the best interest of the Government. 
Post-award debriefings shall be conducted in accordance with FAR Part 
15.506.

[FR Doc. 98-29838 Filed 11-6-98; 8:45 am]
BILLING CODE 8320-01-P