[Federal Register Volume 65, Number 80 (Tuesday, April 25, 2000)]
[Rules and Regulations]
[Pages 24317-24320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-10131]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 16, and 37

[FAC 97-17; FAR Case 1999-014; Item I]
RIN 9000-AI53


Federal Acquisition Regulation; Competition Under Multiple Award 
Contracts

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

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on a final rule 
amending the Federal Acquisition Regulation (FAR) to clarify what 
contracting officers should consider when planning for multiple awards 
of indefinite-delivery contracts and clarify how orders should be 
placed against the resultant contracts.

DATES: Effective Date: April 25, 2000.
    Applicability Date: The FAR, as amended by this rule, is applicable 
to solicitations issued on or after April 25, 2000.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Mr. Ralph De Stefano, Procurement Analyst, at (202) 
501-1758. Please cite FAC 97-17, FAR case 1999-014.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule, FAR case 1999-014, amends FAR Part 16 to provide 
guidance on multiple award task and delivery order contracts and amends 
FAR Part 37 to delete a definition and amends FAR Part 2 to insert the 
definition that was deleted from Part 37. FAR case 1999-014 is one of 
two cases that implement subsections 804(a) and (b) of the National 
Defense Authorization Act for Fiscal Year 2000 (Pub. L. 106-65). The 
other case, FAR Case 1999-303, Task Order and Delivery Order Contracts, 
has been developed and promulgation is awaiting final review and 
analysis of the Report Number GAO/NSIAD-00-56, B-281493, March 20, 
2000, recently issued by the GAO regarding multiple award contracts. 
The Councils will evaluate the GAO report, in conjunction with the 
Office of Federal Procurement Policy, to determine what additional 
changes are needed.
    FAR case 1999-014--
     Clarifies what contracting officers should consider when 
planning for multiple awards of indefinite-delivery contracts and 
clarifies how orders should be placed against the resultant contracts;
     Requires that all awardees be given a fair opportunity to 
compete on every task or delivery order placed under multiple-award 
contracts, unless a specific exception applies;
     Emphasizes key things the contracting officer should 
consider when placing orders, including streamlined procedures; and
     Reorganizes and revises the FAR text for ease of use.
    The rule is written using plain language in accordance with the 
White House memorandum, Plain Language in Government Writing, dated 
June 1, 1998.
    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 64 FR 70158, December 15, 1999. Fourteen respondents 
provided public comments. We considered twelve public comments in 
finalizing the rule. We received the other two public comments more 
than two weeks after the closing date for comments and after the ad hoc 
committee had analyzed public comments. We did not consider these 
comments in the finalization of the rule.
    This rule was not subject to Office of Management and Budget review 
under Section 6(b) of Executive Order 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final

[[Page 24318]]

rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because the rule only clarifies 
what the contracting officer should consider when planning for and 
placing orders under multiple award contracts.

Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

List of Subjects in 48 CFR Parts 2, 16, and 37

    Government procurement.

    Dated: April 13, 2000.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 16, and 37 as 
set forth below:
    1. The authority citation for 48 CFR parts 2, 16, and 37 continues 
to read as follows:

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

PART 2--DEFINITIONS OF WORDS AND TERMS

    2. Amend section 2.101 by adding, in alphabetical order, the 
definition ``Advisory and assistance services'' to read as follows:


2.101  Definitions.

* * * * *
    Advisory and assistance services means those services provided 
under contract by nongovernmental sources to support or improve: 
Organizational policy development; decision-making; management and 
administration; program and/or project management and administration; 
or R&D activities. It can also mean the furnishing of professional 
advice or assistance rendered to improve the effectiveness of Federal 
management processes or procedures (including those of an engineering 
and technical nature). In rendering the foregoing services, outputs may 
take the form of information, advice, opinions, alternatives, analyses, 
evaluations, recommendations, training and the day-to-day aid of 
support personnel needed for the successful performance of ongoing 
Federal operations. All advisory and assistance services are classified 
in one of the following definitional subdivisions:
    (1) Management and professional support services, i.e., contractual 
services that provide assistance, advice or training for the efficient 
and effective management and operation of organizations, activities 
(including management and support services for R&D activities), or 
systems. These services are normally closely related to the basic 
responsibilities and mission of the agency originating the requirement 
for the acquisition of services by contract. Included are efforts that 
support or contribute to improved organization of program management, 
logistics management, project monitoring and reporting, data 
collection, budgeting, accounting, performance auditing, and 
administrative technical support for conferences and training programs.
    (2) Studies, analyses and evaluations, i.e., contracted services 
that provide organized, analytical assessments/evaluations in support 
of policy development, decision-making, management, or administration. 
Included are studies in support of R&D activities. Also included are 
acquisitions of models, methodologies, and related software supporting 
studies, analyses or evaluations.
    (3) Engineering and technical services, i.e., contractual services 
used to support the program office during the acquisition cycle by 
providing such services as systems engineering and technical direction 
(see 9.505-1(b)) to ensure the effective operation and maintenance of a 
weapon system or major system as defined in OMB Circular No. A-109 or 
to provide direct support of a weapon system that is essential to 
research, development, production, operation or maintenance of the 
system.
* * * * *

PART 16--TYPES OF CONTRACTS

    3. Revise section 16.500 to read as follows:


16.500  Scope of subpart.

    (a) This subpart prescribes policies and procedures for making 
awards of indefinite-delivery contracts and establishes a preference 
for making multiple awards of indefinite-quantity contracts.
    (b) This subpart does not limit the use of other than competitive 
procedures authorized by part 6.
    (c) Nothing in this subpart restricts the authority of the General 
Services Administration (GSA) to enter into schedule, multiple award, 
or task or delivery order contracts under any other provision of law. 
Therefore, GSA regulations and the coverage for the Federal Supply 
Schedule program in subpart 8.4 and part 38 take precedence over this 
subpart.
    (d) The statutory multiple award preference implemented by this 
subpart does not apply to architect-engineer contracts subject to the 
procedures in subpart 36.6. However, agencies are not precluded from 
making multiple awards for architect-engineer services using the 
procedures in this subpart, provided the selection of contractors and 
placement of orders are consistent with subpart 36.6.


16.501-1  [Amended]

    4. Amend section 16.501-1 by removing the definition ``Advisory and 
assistance services''.
    5. Revise section 16.504 to read as follows:


16.504    Indefinite-quantity contracts.

    (a) Description. An indefinite-quantity contract provides for an 
indefinite quantity, within stated limits, of supplies or services 
during a fixed period. The Government places orders for individual 
requirements. Quantity limits may be stated as number of units or as 
dollar values.
    (1) The contract must require the Government to order and the 
contractor to furnish at least a stated minimum quantity of supplies or 
services. In addition, if ordered, the contractor must furnish any 
additional quantities, not to exceed the stated maximum. The 
contracting officer should establish a reasonable maximum quantity 
based on market research, trends on recent contracts for similar 
supplies or services, survey of potential users, or any other rational 
basis.
    (2) To ensure that the contract is binding, the minimum quantity 
must be more than a nominal quantity, but it should not exceed the 
amount that the Government is fairly certain to order.
    (3) The contract may also specify maximum or minimum quantities 
that the Government may order under each task or delivery order and the 
maximum that it may order during a specific period of time.
    (4) A solicitation and contract for an indefinite quantity must--
    (i) Specify the period of the contract, including the number of 
options and the period for which the Government may extend the contract 
under each option;
    (ii) Specify the total minimum and maximum quantity of supplies or 
services the Government will acquire under the contract;
    (iii) Include a statement of work, specifications, or other 
description, that reasonably describes the general scope,

[[Page 24319]]

nature, complexity, and purpose of the supplies or services the 
Government will acquire under the contract in a manner that will enable 
a prospective offeror to decide whether to submit an offer;
    (iv) State the procedures that the Government will use in issuing 
orders, including the ordering media, and, if multiple awards may be 
made, state the procedures and selection criteria that the Government 
will use to provide awardees a fair opportunity to be considered for 
each order (see 16.505(b)(1));
    (v) Include the name, address, telephone number, facsimile number, 
and e-mail address of the agency task and delivery order ombudsman (see 
16.505(b)(5)) if multiple awards may be made;
    (vi) Include a description of the activities authorized to issue 
orders; and
    (vii) Include authorization for placing oral orders, if 
appropriate, provided that the Government has established procedures 
for obligating funds and that oral orders are confirmed in writing.
    (b) Application. Contracting officers may use an indefinite-
quantity contract when the Government cannot predetermine, above a 
specified minimum, the precise quantities of supplies or services that 
the Government will require during the contract period, and it is 
inadvisable for the Government to commit itself for more than a minimum 
quantity. The contracting officer should use an indefinite-quantity 
contract only when a recurring need is anticipated.
    (c) Multiple award preference--(1) Planning the acquisition. (i) 
Except for indefinite-quantity contracts for advisory and assistance 
services as provided in paragraph (c)(2) of this section, the 
contracting officer must, to the maximum extent practicable, give 
preference to making multiple awards of indefinite-quantity contracts 
under a single solicitation for the same or similar supplies or 
services to two or more sources.
    (ii)(A) The contracting officer must determine whether multiple 
awards are appropriate as part of acquisition planning. The contracting 
officer must avoid situations in which awardees specialize exclusively 
in one or a few areas within the statement of work, thus creating the 
likelihood that orders in those areas will be awarded on a sole-source 
basis; however, each awardee need not be capable of performing every 
requirement as well as any other awardee under the contracts. The 
contracting officer should consider the following when determining the 
number of contracts to be awarded:
    (1) The scope and complexity of the contract requirement.
    (2) The expected duration and frequency of task or delivery orders.
    (3) The mix of resources a contractor must have to perform expected 
task or delivery order requirements.
    (4) The ability to maintain competition among the awardees 
throughout the contracts' period of performance.
    (B) The contracting officer must not use the multiple award 
approach if--
    (1) Only one contractor is capable of providing performance at the 
level of quality required because the supplies or services are unique 
or highly specialized;
    (2) Based on the contracting officer's knowledge of the market, 
more favorable terms and conditions, including pricing, will be 
provided if a single award is made;
    (3) The expected cost of administration of multiple contracts 
outweighs the expected benefits of making multiple awards;
    (4) The projected orders are so integrally related that only a 
single contractor can reasonably perform the work;
    (5) The total estimated value of the contract is less than the 
simplified acquisition threshold; or
    (6) Multiple awards would not be in the best interests of the 
Government.
    (C) The contracting officer must document the decision whether or 
not to use multiple awards in the acquisition plan or contract file. 
The contracting officer may determine that a class of acquisitions is 
not appropriate for multiple awards (see subpart 1.7).
    (2) Contracts for advisory and assistance services. (i) Except as 
provided in paragraph (c)(2)(ii) of this section, if an indefinite-
quantity contract for advisory and assistance services exceeds 3 years 
and $10 million, including all options, the contracting officer must 
make multiple awards unless--
    (A) The contracting officer or other official designated by the 
head of the agency determines in writing, as part of acquisition 
planning, that multiple awards are not practicable. The contracting 
officer or other official must determine that only one contractor can 
reasonably perform the work because either the scope of work is unique 
or highly specialized or the tasks so integrally related;
    (B) The contracting officer or other official designated by the 
head of the agency determines in writing, after the evaluation of 
offers, that only one offeror is capable of providing the services 
required at the level of quality required; or
    (C) Only one offer is received.
    (ii) The requirements of paragraph (c)(2)(i) of this section do not 
apply if the contracting officer or other official designated by the 
head of the agency determines that the advisory and assistance services 
are incidental and not a significant component of the contract.

    6. Revise section 16.505 to read as follows:


16.505  Ordering.

    (a) General. (1) The contracting officer does not synopsize orders 
under indefinite-delivery contracts.
    (2) Individual orders must clearly describe all services to be 
performed or supplies to be delivered. Orders must be within the scope, 
period, and maximum value of the contract.
    (3) Performance-based work statements must be used to the maximum 
extent practicable, if the contract is for services (see 37.102(a)).
    (4) Orders may be placed by using any medium specified in the 
contract.
    (5) Orders placed under indefinite-delivery contracts must contain 
the following information:
    (i) Date of order.
    (ii) Contract number and order number.
    (iii) For supplies and services, contract item number and 
description, quantity, and unit price or estimated cost or fee.
    (iv) Delivery or performance schedule.
    (v) Place of delivery or performance (including consignee).
    (vi) Any packaging, packing, and shipping instructions.
    (vii) Accounting and appropriation data.
    (viii) Method of payment and payment office, if not specified in 
the contract (see 32.1110(e)).
    (6) No protest under subpart 33.1 is authorized in connection with 
the issuance or proposed issuance of an order under a task-order 
contract or delivery-order contract, except for a protest on the 
grounds that the order increases the scope, period, or maximum value of 
the contract (10 U.S.C. 2304c(d) and 41 U.S.C. 253j(d)).
    (b) Orders under multiple award contracts--(1) Fair opportunity. 
(i) The contracting officer must provide each awardee a fair 
opportunity to be considered for each order exceeding $2,500 issued 
under multiple delivery-order contracts or multiple task-order 
contracts, except as provided for in paragraph (b)(2) of this section.
    (ii) The contracting officer may exercise broad discretion in 
developing

[[Page 24320]]

appropriate order placement procedures. The contracting officer should 
keep submission requirements to a minimum. Contracting officers may use 
streamlined procedures, including oral presentations. In addition, the 
contracting officer need not contact each of the multiple awardees 
under the contract before selecting an order awardee if the contracting 
officer has information available to ensure that each awardee is 
provided a fair opportunity to be considered for each order. The 
competition requirements in part 6 and the policies in subpart 15.3 do 
not apply to the ordering process. However, the contracting officer 
must--
    (A) Develop placement procedures that will provide each awardee a 
fair opportunity to be considered for each order and that reflect the 
requirement and other aspects of the contracting environment;
    (B) Not use any method (such as allocation or designation of any 
preferred awardee) that would not result in fair consideration being 
given to all awardees prior to placing each order;
    (C) Tailor the procedures to each acquisition;
    (D) Include the procedures in the solicitation and the contract; 
and
    (E) Consider price or cost under each order as one of the factors 
in the selection decision.
    (iii) The contracting officer should consider the following when 
developing the procedures:
    (A)(1) Past performance on earlier orders under the contract, 
including quality, timeliness and cost control.
    (2) Potential impact on other orders placed with the contractor.
    (3) Minimum order requirements.
    (B) Formal evaluation plans or scoring of quotes or offers are not 
required.
    (2) Exceptions to the fair opportunity process. The only exceptions 
to the requirement to provide each awardee a fair opportunity to be 
considered for each order exceeding $2,500 are--
    (i) The agency need for the supplies or services is so urgent that 
providing a fair opportunity would result in unacceptable delays;
    (ii) Only one awardee is capable of providing the supplies or 
services required at the level of quality required because the supplies 
or services ordered are unique or highly specialized;
    (iii) The order must be issued on a sole-source basis in the 
interest of economy and efficiency as a logical follow-on to an order 
already issued under the contract, provided that all awardees were 
given a fair opportunity to be considered for the original order; or
    (iv) It is necessary to place an order to satisfy a minimum 
guarantee.
    (3) Pricing orders. If the contract did not establish the price for 
the supply or service, the contracting officer must establish prices 
for each order using the policies and methods in subpart 15.4.
    (4) Decision documentation for orders. The contracting officer must 
document in the contract file the rationale for placement and price of 
each order.
    (5) Task and Delivery Order Ombudsman. The head of the agency must 
designate a task-order contract and delivery-order contract ombudsman. 
The ombudsman must review complaints from contractors and ensure they 
are afforded a fair opportunity to be considered, consistent with the 
procedures in the contract. The ombudsman must be a senior agency 
official who is independent of the contracting officer and may be the 
agency's competition advocate.
    (c) Limitation on ordering period for task-order contracts for 
advisory and assistance services. (1) Except as provided for in 
paragraphs (c)(2) and (c)(3), the ordering period of a task-order 
contract for advisory and assistance services, including all options or 
modifications, normally may not exceed 5 years.
    (2) The 5-year limitation does not apply when--
    (i) A longer ordering period is specifically authorized by a 
statute; or
    (ii) The contract is for an acquisition of supplies or services 
that includes the acquisition of advisory and assistance services and 
the contracting officer, or other official designated by the head of 
the agency, determines that the advisory and assistance services are 
incidental and not a significant component of the contract.
    (3) The contracting officer may extend the contract on a sole-
source basis only once for a period not to exceed 6 months if the 
contracting officer, or other official designated by the head of the 
agency, determines that--
    (i) The award of a follow-on contract is delayed by circumstances 
that were not reasonably foreseeable at the time the initial contract 
was entered into; and
    (ii) The extension is necessary to ensure continuity of services, 
pending the award of the follow-on contract.

    7. Amend section 16.506--
    a. In paragraphs (a), (b), (c), (d)(1), and (e) by removing the 
words ``The contracting officer shall insert'' and adding, in their 
place, the word ``Insert'';
    b. In paragraphs (d)(2), (d)(3), and (d)(4) by removing the words 
``the contracting officer shall''; and
    c. By revising paragraphs (d)(5), (f), and (g) to read as follows:


16.506  Solicitation provisions and contract clauses.

* * * * *
    (d) * * *
    (5) If the contract--
    (i) Includes subsistence for Government use and resale in the same 
schedule and similar products may be acquired on a brand-name basis; 
and
    (ii) Involves a partial small business set-aside, use the clause 
with its Alternate IV.
* * * * *
    (f) Insert the provision at 52.216-27, Single or Multiple Awards, 
in solicitations for indefinite-quantity contracts that may result in 
multiple contract awards. Modify the provision to specify the estimated 
number of awards. Do not use this provision for advisory and assistance 
services contracts that exceed 3 years and $10 million (including all 
options).
    (g) Insert the provision at 52.216-28, Multiple Awards for Advisory 
and Assistance Services, in solicitations for task-order contracts for 
advisory and assistance services that exceed 3 years and $10 million 
(including all options), unless a determination has been made under 
16.504(c)(2)(i)(A). Modify the provision to specify the estimated 
number of awards.

PART 37--SERVICE CONTRACTING


37.201  Definition.

    8. Amend section 37.201 by revising the section heading to read as 
set forth above, and by removing the definition ``Advisory and 
assistance services''.
[FR Doc. 00-10131 Filed 4-24-00; 8:45 am]
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