[Federal Register Volume 65, Number 251 (Friday, December 29, 2000)]
[Proposed Rules]
[Pages 83292-83293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33153]



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Part VII





Department of Defense

General Services Administration

National Aeronautics and Space Administration





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48 CFR Parts 12 and 16



Federal Acquisition Regulation; Contract Types for Commercial Item 
Acquisitions; Proposed Rule

  Federal Register / Vol. 65, No. 251 / Friday, December 29, 2000 / 
Proposed Rules  

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 12 and 16

[FAR Case 2000-013]
RIN 9000-AJ03


Federal Acquisition Regulation; Contract Types for Commercial 
Item Acquisitions

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

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to provide clarification on what 
contract-types are authorized for commercial item acquisitions.

DATES: Interested parties should submit comments in writing on or 
before February 27, 2001 to be considered in the formulation of a final 
rule.

ADDRESSES: Submit written comments to: General Services Administration, 
FAR Secretariat (MVR), 1800 F Street, NW, Room 4035, ATTN: Laurie 
Duarte, Washington, DC 20405.
    Submit electronic comments via the Internet to: 
[email protected].
    Please submit comments only and cite FAR case 2000-013 in all 
correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, at (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Victoria Moss, Procurement Analyst, at (202) 501-
4764. Please cite FAR case 2000-013.

SUPPLEMENTARY INFORMATION:

A. Background

    This proposed rule amends FAR 12.207 and 16.2 to more closely 
parallel the contract-type requirements in Section 8002(d) of FASA 
(Pub. L. 103-355). FASA states that agencies must use firm-fixed price 
(FFP) contracts and fixed-price contracts with economic price 
adjustments (FP/EPA) to the maximum extent practicable for commercial 
item acquisitions. FASA also prohibits the use of cost-type contracts. 
The rule revises FAR 12.207 to--
     Reflect the ``to the maximum extent practicable'' caveat 
in FASA.
     Authorize the use of noncost-based incentives such as 
award fees and performance or delivery incentives.
     Add language that discusses pricing mechanisms for 
acquiring commercial services available on a time-and-material or 
labor-hour basis within the Part 12 contract type restrictions.
     Revise FAR 16.202 and 16.203 to indicate that noncost-
based award fee and performance or delivery incentives may be used in 
conjunction with FFP contracts and FP/EPA without changing the FFP or 
FP/EPA nature of the contract.
    The changes made in this rule are intended to facilitate greater 
use of FAR Part 12 for commercial services acquisitions by providing 
the contract type flexibility embodied in statute.
    This is not a significant regulatory action and, therefore, was not 
subject to 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 Councils do not expect this proposed rule to 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 changes made by the rule primarily clarify language pertaining 
to the contract types currently authorized by statute for commercial 
item acquisitions and does not change existing policy. An Initial 
Regulatory Flexibility Analysis has, therefore, not been performed. We 
invite comments from small businesses and other interested parties. The 
Councils will consider comments from small entities concerning the 
affected FAR parts 12 and 16 in accordance with 5 U.S.C. 610. 
Interested parties must submit such comments separately and should cite 
5 U.S.C. 601, et seq. (FAR case 2000-013), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
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 12 and 16

    Government procurement.

    Dated: December 22, 2000.
Al Matera,
Acting Director, Federal Acquisition Policy Division.
    Therefore, DoD, GSA, and NASA propose that 48 CFR parts 12 and 16 
be amended as set forth below:
    1. The authority citation for 48 CFR parts 12 and 16 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 12--ACQUISITION OF COMMERCIAL ITEMS

    2. In section 12.207, remove the undesignated paragraph.
    3. Add sections 12.207-1 and 12.207-2 to read as follows:


12.207-1  Authorized contract types.

    (a) Agencies must use, to the maximum extent practicable, firm-
fixed-price contracts or fixed-price contracts with economic price 
adjustment for the acquisition of commercial items. These contract 
types may be used in conjunction with an award fee incentive and 
performance or delivery incentives when the award fee or incentive is 
based solely on factors other than cost (see 16.202-1 and 16.203-1).
    (b) Agencies may use indefinite-delivery contracts (see 16.5) when 
the task or delivery orders are issued under one of the authorized 
contract types in paragraph (a) of this subsection. Contracting 
officers must follow the procedures in 16.505 when placing orders.
    (c) Use of cost-type contracts or contracts with incentives based 
on cost is prohibited.


12.207-2  Commercial services available on a time-and-material or 
labor-hour basis.

    Some services are available in the commercial market on a time-and-
material or labor-hour basis. Contracting officers may acquire these 
types of services under part 12 by using the following pricing 
strategies when cost-effective and consistent with commercial practice:
    (a) An indefinite-delivery contract with established fixed hourly 
rates that permit negotiating orders (including any required material) 
under one of the authorized contract types in 12.207-1.
    (b) Sequential contract actions that acquire the requirement in 
modular components using the authorized contract types in 12.207-1 
(e.g., a preliminary firm-fixed-price ``diagnostic'' effort allowing 
the contractor to understand the scope of work sufficiently to propose 
the large requirement on a firm-fixed-price basis).

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PART 16--TYPES OF CONTRACTS

    4. In section 16.202-1, add the following sentences to the end of 
the paragraph to read as follows:


16.202-1  Description.

    * * * The contracting officer may use a fixed-price contract in 
conjunction with an award-fee incentive (see 16.404) and performance or 
delivery incentives (see 16.402-2 and 16.402-3) when the award fee or 
incentive is based solely on factors other than cost. The contract type 
remains firm-fixed-price when used with these incentives.
    5. In section 16.203-1, redesignate the introductory text as 
paragraph (a), and paragraphs (a) through (c) as (1) through (3), 
respectively; and add paragraph (b) to read as follows:


16.203-1  Description.

* * * * *
    (b) The contracting officer may use a fixed-price contract with 
economic price adjustment in conjunction with an award-fee incentive 
(see 16.404) and performance or delivery incentives (see 16.402-2 and 
16.402-3) when the award fee or incentive is based solely on factors 
other that cost. The contract type remains fixed-price with economic 
price adjustment when used with these incentives.
[FR Doc. 00-33153 Filed 12-28-00; 8:45 am]
BILLING CODE 6820-EP-P