[Federal Register Volume 64, Number 178 (Wednesday, September 15, 1999)]
[Notices]
[Pages 50108-50111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23998]


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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy


Proposed Rescission of Various Policy Letters

AGENCY: Office of Management and Budget, Office of Federal Procurement 
Policy.

ACTION: Proposed rescission of Office of Federal Procurement Policy 
(OFPP) Policy Letters 77-2, 78-2, 78-3, 78-4, 79-1, 79-2, 80-3, 80-6, 
80-8, 81-1, 81-2, 82-1, 83-1, 83-2, 83-3, 84-1, 85-1, 89-1, 91-2, 91-4, 
92-5, and 95-1.

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SUMMARY: OMB is undertaking a thorough review of its government-wide 
procurement issuances. Based on this review, OMB requests comments on 
the proposed rescission of the following Office of Federal Procurement 
Policy (OFPP) Policy Letters: 77-2, Section 502(c) of P.L. 95-89; 78-2, 
Preventing ``Wage Busting'' for Professionals: Procedures for 
Evaluating Contractor Proposals for Service Contracts; 78-3, Requests 
for Disclosure of Contractor-Supplied Information Obtained in the 
Course of a Procurement; 78-4, Field Contract Support Cross-Servicing 
Program; 79-1, Implementation of Section 15(k) of the Small Business 
Act, as amended: Office of Small and Disadvantaged Business 
Utilization; 79-2, Boards of Contract Appeals: Position Allocation 
Pursuant to Public Law 95-563; 80-3, Regulatory Guidance on P.L. 95-
563, the Contract Disputes Act of 1978; 80-6, Regulatory Guidance on 
Section 221 of Public Law 95-507; 80-8, Establishment of Procurement 
Data Reporting Requirements to Comply with Public Law 96-39 (as amended 
by Transmittal Memoranda Nos. 1, 2, and 3); 81-1, Procurement 
Procedures, Advance Procurement Planning, and Review of End-of-Year 
Purchases; 81-2, Policy Guidance for the Labor Surplus Area Programs; 
82-1, Policy Guidance Concerning Government-wide

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Debarment, Suspension, and Ineligibility; 83-1, Withholding of Funds 
from Construction Contract Progress Payments; 83-2, Publicizing the 
Development of Procurement Policies and Regulations; 83-3, Procurement 
of Architect-Engineer Services; 84-1, Federally Funded Research and 
Development Centers; 85-1, Federal Acquisition Regulations System; 89-
1, Conflict of Interest Policies Applicable to Consultants; 91-2, 
Service Contracting; 91-4, Use of Irrevocable Letters of Credit; 92-5, 
Past Performance Information; and 95-1, Subcontracting Plans for 
Companies Supplying Commercial Items.
    There have been substantial changes to the body of acquisition law 
and regulations since many of these policy documents were issued. As 
indicated in the SUPPLEMENTARY INFORMATION below, the requirements and 
provisions of the OFPP Policy Letters listed above have been 
incorporated in the Federal Acquisition Regulation (FAR), 48 CFR 1, or 
for other reasons have either been superseded or are no longer 
necessary.

DATES: Persons who wish to comment on the proposed rescission of any of 
the OFPP Policy Letters should submit their comments no later than 
November 24, 1999.

ADDRESSES: Comments should be addressed to Michael Gerich, Office of 
Federal Procurement Policy, Room 9013, New Executive Office Building, 
Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Michael Gerich, Office of Federal 
Procurement Policy, 202-395-3501. Copies of the OFPP Policy Letters can 
be obtained at the ARNet world wide website, http://www.arnet.gov/
References/Fwd__Index.html.

SUPPLEMENTARY INFORMATION: OFPP has been a leader in overall 
acquisition reform. One theme of acquisition reform is less reliance on 
regulation and more reliance on streamlined, customer-oriented, 
acquisition practices to improve support for agency missions. In 
keeping with this overall theme, OFPP is reviewing all of its policy 
letters, memoranda, and other issuances with the intent to: rescind 
those that are essentially covered by other regulations or policy 
documents; issue new policy letters and similar documents sparingly and 
only when necessary; and issue ``best practices'' instead. There have 
been substantial changes to the body of acquisition law and regulations 
since many of these policy documents were issued.
    OFPP has recently completed a review of all of its policy issuances 
for possible rescission, by comparing them with relevant statutory 
provisions and sections of the Federal Acquisition Regulation (FAR). 
The rescissions proposed in this notice reflect OFPP's preliminary 
conclusion that the FAR, as written, contains the current policy. Any 
policy embodied in the policy letters proposed for rescission by this 
notice that is not reflected in the current FAR has been either 
superseded by subsequent statutory changes or is otherwise no longer 
necessary. No substantive FAR change is required by this action.
    Earlier this year, OFPP rescinded Policy Letter 79-4, Contracting 
for Motion Picture Productions and Videotape Productions. 64 FR 8631 
(February 22, 1999). On April 2, 1999, OFPP published notice in the 
Federal Register requesting comments on two proposed policy letters: 
Policy Letter 99-X, Policy on Promoting Subcontracting Opportunities 
and Administering Subcontracting Plans (64 FR 16001); and Policy Letter 
99-1, Government-Wide Small Business, HUBZone Small Business, Small 
Disadvantaged Business, and Women-Owned Small Business Goals for 
Procurement Contracts (64 FR 16003). Those two proposed policy letters 
would supersede OFPP Policy Letters 80-1, 80-2, 80-4, and 91-1. In this 
notice, OFPP is proposing to rescind an additional 22 policy letters, 
for the reasons explained below.

OFPP Policy Letter 77-2, Section 502(c) of P.L. 95-89

    Section 502(c) of Public Law 95-89 amended the Small Business Act 
(15 U.S.C. 631 et seq.) to allow certain nonprofit agencies employing 
people who are blind or severely disabled to compete for agency 
procurements conducted during fiscal year 1978 that would otherwise 
have been reserved exclusively for competition among small businesses. 
Policy Letter 77-2 implemented section 502(c). Similar statutory 
provisions were enacted in subsequent years. For example, section 133 
of Public Law 100-590 (November 3, 1988) (102 Stat. 3005) authorized 
such nonprofit agencies to compete in procurements otherwise set aside 
for small businesses in fiscal years 1989 through 1993. Section 305 of 
Public Law 103-403, the Small Business Administration Reauthorization 
and Amendments Act of 1994, revived this authority to compete for 
fiscal year 1995. The statutory authority has expired.

OFPP Policy Letter 78-2, Preventing ``Wage Busting'' for 
Professionals: Procedures for Evaluating Contractor Proposals for 
Service Contracts

    OFPP Policy Letter 78-2 addressed ``wage busting'' practices of 
government contractors who employ professional employees who 
traditionally have not been represented by union collective bargaining 
agreements. 78-2 required contracting agencies to evaluate applicable 
proposals from offerors by taking into account the cost realism of the 
contractor's proposed personnel compensation plan. Unrealistically low 
labor rates proposed for professional employees could indicate a lack 
of understanding of the resources required to perform high quality 
contract work on an uninterrupted basis. 78-2 was superseded, in 
purpose, by the provisions of 10 U.S.C. 2331 (Contracts for 
professional and technical services) which is implemented in FAR 37.115 
(Uncompensated overtime) and FAR 52.237-10 (Identification of 
Uncompensated Overtime).

OFPP Policy Letter 78-3, Requests for Disclosure of Contractor-
Supplied Information Obtained in the Course of a Procurement

    OFPP Policy Letter 78-3 prescribed a uniform approach to handling 
requests filed under the Freedom of Information Act for information 
disclosed by government contractors and offerors. 78-3 was superseded, 
in purpose, by FAR Subpart 24.2, which implements statutory provisions 
at 10 U.S.C. 2305(g) and 41 U.S.C. 253b(m).

OFPP Policy Letter 78-4, Field Contract Support Cross-Servicing 
Program

    Policy Letter 78-4 encouraged agencies that require contract 
support services (e.g., contract administration, audit services) from 
field offices to use cross-servicing arrangements with existing 
contract administration and contract audit organizations of other 
agencies. The Policy Letter was intended to treat contractors more 
consistently and, where possible, preclude duplication of effort 
attributable to multiple agency reviews, inspections, and examination 
of contractor records. The provisions of the Policy Letter were 
incorporated in FAR Subpart 42.1.

OFPP Policy Letter 79-1, Implementation of Section 15(k) of the 
Small Business Act, as Amended: Office of Small and Disadvantaged 
Business Utilization

    Section 15(k) of the Small Business Act (15 U.S.C. 644(k)) 
established an Office of Small and Disadvantaged

[[Page 50110]]

Business Utilization (OSDBU) in each contracting agency to implement 
and execute the functions and duties under sections 8 and 15 of the 
Small Business Act which relate to such agency. Policy Letter 79-1 
provided guidance on the organization and function of the OSDBUs. The 
provisions of Policy Letter 79-1 were incorporated in FAR subsections 
19.201(c) and (d).

OFPP Policy Letter 79-2, Boards of Contract Appeals: Position 
Allocation Pursuant to Public Law 95-563

    Policy Letter 79-2 made an initial allocation of positions for 
agency boards of contract appeals pursuant to Public Law 95-563, the 
Contract Disputes Act of 1978. Section 8(a) of the Contract Disputes 
Act of 1978, as amended, (41 U.S.C. 607(a)) states that a board of 
contract appeals may be established within an executive agency, when 
the agency head, after consultation with the Administrator for Federal 
Procurement Policy, determines from a workload study that the volume of 
contract claims justifies the establishment of a full-time agency 
board. Since issuance of Policy Letter 79-2 over 20 years ago, there 
has been little need for guidance in this area. OFPP will issue new 
guidance, if necessary.

OFPP Policy Letter 80-3, Regulatory Guidance on P.L. 95-563, the 
Contract Disputes Act of 1978

    Policy Letter 80-3 provided guidance on developing regulations to 
implement provisions of the Contract Disputes Act of 1978, including 
resolution of contract claims, contractor certification requirements, 
payment of interest on contractor claims, and a contract disputes 
clause. The provisions of Policy Letter 80-3 were incorporated in FAR 
Subpart 33.2 and the contract disputes clause at FAR 52.233-1.

OFPP Policy Letter 80-6, Regulatory Guidance on Section 221 of 
Public Law 95-507

    Policy Letter 80-6 provided regulatory guidance on section 15(j) of 
the Small Business Act (15 U.S.C. 644(j)), which set aside small 
purchase procurements for small businesses. Section 15(j) was amended 
to apply the set aside provisions to agency purchase of goods or 
services that have an anticipated value greater than $2,500 but not 
greater than $100,000. The regulatory guidance in Policy Letter 80-6, 
as amended by the statutory changes, is implemented by the provisions 
of FAR 19.502-2.

OFPP Policy Letter 80-8, Establishment of Procurement Data 
Reporting Requirements to Comply with Public Law 96-39 (as amended 
by Transmittal Memoranda Nos. 1, 2, and 3)

    Policy Letter 80-8 established procurement data reporting 
requirements. Transmittal Memoranda Nos. 1, 2, and 3 amended those 
reporting requirements. The provisions of Policy Letter 80-8 and the 
Transmittal Memoranda are implemented in FAR Subpart 4.6 and the FPDS 
Reporting Manual described therein.

OFPP Policy Letter 81-1, Procurement Procedures, Advance 
Procurement Planning, and Review of End-of-Year Purchases

    Policy Letter 81-1 required agencies to establish advance 
procurement planning procedures to allow sufficient lead time to 
prepare procurement solicitations, obtain and evaluate bids or 
proposals, audit, negotiate, and make contract awards in an orderly 
manner. The Policy Letter also required agencies to develop procedures 
for review of procurements, particularly major procurements, made in 
the last quarter to assure they are consistent with advance procurement 
plans. The provisions of Policy Letter 81-1 were essentially 
incorporated in FAR Part 7 and partially superseded by procedures found 
in Part 3 of OMB Circular A-11, Planning, Budgeting, and Acquisition of 
Capital Assets, and the Capital Programming Guide which further 
integrate the budget and procurement processes.

OFPP Policy Letter 81-2, Policy Guidance for the Labor Surplus Area 
Programs (as amended by Supplement No. 1)

    Policy Letter 81-2, as amended by Supplement No. 1, provided 
guidance on implementing subsections 15(d), (e), and (f) of the Small 
Business Act (as amended and added by section 117 of Public Law 96-302, 
July 2, 1980) that gave priority in awarding contracts and subcontracts 
to firms performing in areas of unemployment or underemployment known 
as labor surplus areas. Subsection 7101(a) of the Federal Acquisition 
Streamlining Act of 1994 (Public Law 103-355, October 13, 1994) deleted 
subsections 15(e) and (f) from the Small Business Act, thus removing 
the labor surplus area set-aside and subcontracting programs. The 
statutory changes were implemented in FAR Part 19. For more 
information, see the final rule amendment to the FAR published in the 
Federal Register on September 18, 1995 (60 FR 48258).

OFPP Policy Letter 82-1, Policy Guidance Concerning Government-wide 
Debarment, Suspension, and Ineligibility

    Policy Letter 82-1 established policies and procedures for 
debarment and suspension of persons from contracting with Federal 
Departments and agencies. The provisions of Policy Letter 82-1 are 
implemented in FAR Subpart 9.4.

OFPP Policy Letter 83-1, Withholding of Funds from Construction 
Contract Progress Payments

    Policy Letter 83-1 provided guidance on retention or withholding of 
funds from progress payments made under Federal construction contracts. 
The provisions of the Policy Letter are implemented in FAR section 
32.103.

OFPP Policy Letter 83-2, Publicizing the Development of Procurement 
Policies and Regulations

    Policy Letter 83-2 established uniform criteria and procedures for 
soliciting the views of all interested parties in the development by 
executive Departments and agencies of procurement policies, 
regulations, procedures and forms. The provisions of Policy Letter 83-2 
were codified in section 22 of the OFPP Act, as amended (41 U.S.C. 
418b), and implemented in FAR Subpart 1.5.

OFPP Policy Letter 83-3, Procurement of Architect-Engineer Services

    Policy Letter 83-3 provided guidance on procurement of architect-
engineer services under the Brooks Architect-Engineers Act (Public Law 
92-582, 40 U.S.C. 541 et seq.). The Policy Letter delineated the type 
of services to be procured using source selection procedures prescribed 
by the Brooks Architect-Engineers Act versus using standard source 
selection procedures. The provisions of Policy Letter 83-3 were 
implemented by FAR section 36.601.

OFPP Policy Letter 84-1, Federally Funded Research and Development 
Centers

    Policy Letter 84-1 established policy for the establishment, use, 
periodic review, and termination of sponsorship of Federally Funded 
Research and Development Centers (FFRDCs). The provisions of Policy 
Letter 84-1 were implemented by FAR section 35.017.

OFPP Policy Letter 85-1, Federal Acquisition Regulations System

    Policy Letter 85-1 implemented provisions of the OFPP Act (Public 
Law 93-400 as amended, 41 U.S.C. 401 et seq.) concerning the single 
system of

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simplified Government-wide procurement regulations now known as the 
Federal Acquisition Regulation (FAR) (48 CFR 1). The Policy Letter 
covered establishment of the FAR System, FAR maintenance, and 
resolution of differences among executive agencies in development of 
FAR provisions. The provisions of Policy Letter 85-1 were codified in 
sections 6 and 25 of the OFPP Act (41 U.S.C. 405 and 41 U.S.C. 421, 
respectively) and incorporated in FAR Subparts 1.1, 1.2, and 1.3.

OFPP Policy Letter 89-1, Conflict of Interest Policies Applicable 
to Consultants

    Policy Letter 89-1 established policy and procedures on applying 
conflict of interest standards to persons who provide consulting 
services to the government, pursuant to section 8141 of the 1989 
Department of Defense Appropriations Act, Public Law 100-463, 102 Stat. 
2270-47 (October 1, 1988). The provisions of Policy Letter 89-1 were 
incorporated in FAR Subpart 9.5.

OFPP Policy Letter 91-2, Service Contracting

    OFPP Policy Letter 91-2 established policy for acquiring services 
by contract. It encouraged the use of ``performance-based 
contracting,'' which uses standards to measure quality and timeliness 
of contractor performance and surveillance plans to assure that the 
standards are met. Policy Letter 91-2 is implemented in FAR Subpart 
37.6. For more information on this subject, see OFPP's ``A Guide to 
Best Practices for Performance-Based Service Contracting'' (October 
1998) at the ARNet world wide website, http://www.arnet.gov/BestP/
PPBSC/BestPPBSC.html.

OFPP Policy Letter 91-4, Use of Irrevocable Letters of Credit

    OFPP Policy Letter 91-4 established policy for use of irrevocable 
letters of credit in lieu of sureties for Federal construction 
contracts requiring Miller Act bonds. The Miller Act (40 U.S.C. 270a et 
seq.) requires the use of performance and payment bonds for Federal 
construction contracts in excess of $25,000. Policy Letter 91-4 
determined that: irrevocable letters of credit serve much of the same 
function and provide the same redeemable value as bonds, postal orders, 
and certified checks; Federal agencies are authorized to accept such 
letters; and their usage in lieu of sureties would help to achieve 
greater access by small and small disadvantaged businesses to Federal 
construction contracts. The Policy Letter permitted agencies to use 
irrevocable letters of credit in lieu of sureties for Federal 
construction contracts requiring Miller Act bonds. Policy Letter 91-4 
is implemented in FAR section 28.204-3.

OFPP Policy Letter 92-5, Past Performance Information

    Policy Letter 92-5 established requirements for evaluating 
contractor performance and for using past performance information in 
the contractor selection process. The provisions of Policy Letter 92-5 
have been implemented in FAR Subpart 42.15 and FAR sections 15.304 and 
15.305. For more information on this subject, see ``A Guide to Best 
Practices for Past Performance'' (May 1995) at the ARNet world wide 
website, http://www.arnet.gov/BestP/BestPract.html.

OFPP Policy Letter 95-1, Subcontracting Plans for Companies 
Supplying Commercial Items

    Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) requires 
that each contract that exceeds $500,000 ($1 million in the case of 
construction) and that offers subcontracting opportunities include a 
requirement that the apparently successful offeror negotiate a 
subcontracting plan which shall become a material part of the contract. 
Policy Letter 95-1 revised the policy on subcontracting plans to reduce 
the burden of government-unique requirements on prime contractors and 
subcontractors that supply commercial items. The Policy Letter allows 
such contractors and subcontractors to meet the requirements of Section 
8(a) of the Small Business Act by submitting an annual ``commercial 
plan'' rather than an individual contract-by-contract or subcontract-
by-subcontract plan. A commercial plan is a subcontracting plan that 
covers a contractor's or subcontractor's fiscal year and that applies 
to the entire production of commercial items sold by either the entire 
company or a portion thereof (e.g., division, plant, or product line). 
The provisions of Policy Letter 95-1 were implemented in FAR sections 
19.701, 19.704(d), and 19.705-7.

    OFPP requests comments on these proposed rescissions.
Deidre A. Lee,
Administrator.
[FR Doc. 99-23998 Filed 9-14-99; 8:45 am]
BILLING CODE 3110-01-P