[Federal Register Volume 68, Number 17 (Monday, January 27, 2003)]
[Rules and Regulations]
[Pages 4047-4051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1687]



[[Page 4047]]

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Part VI





Department of Defense

General Services Adminstration

National Aeronautics and Space Administration





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48 CFR Parts 2, 10, et al.



Federal Acquisition Regulations; Interim and Final Rules

Federal Register / Vol. 68, No. 17 / Monday, January 27, 2003 / Rules 
and Regulations

[[Page 4048]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 10, 12, 13, 19, and 25

[FAC 2001-12; FAR Case 2002-026]
RIN 9000-AJ54


Federal Acquisition Regulation; Procurements for Defense Against 
or Recovery From Terrorism or Nuclear, Biological, Chemical or 
Radiological Attack

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

ACTION: Interim rule with request for comments.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on an interim 
rule amending the Federal Acquisition Regulation (FAR) to implement 
Sections 852 through 856 and Section 858 of the Homeland Security Act 
(Pub. L. 107-296). Those sections increase the amount of the micro-
purchase threshold and, in certain situations, the simplified 
acquisition threshold and provide streamlined procedures for 
procurements of supplies or services by or for an executive agency that 
are to be used to facilitate defense against or recovery from terrorism 
or nuclear, biological, chemical, or radiological attack. The Act text 
covers solicitations issued during the one-year period starting on the 
date of enactment (November 25, 2002), but the Act does not become 
effective until 60 days after enactment (January 24, 2003).

DATES: Effective Date: January 24, 2003.
    Comment Date: Interested parties should submit comments to the FAR 
Secretariat at the address shown below on or before March 28, 2003, to 
be considered in the formulation of a final rule.

ADDRESSES: Submit written comments to--General Services Administration, 
FAR Secretariat (MVA), 1800 F Street, NW., Room 4035, Attn: Ms. Laurie 
Duarte, Washington, DC 20405.
    Submit electronic comments via the Internet to--farcase.2002-
[email protected]
    Please submit comments only and cite FAC 2001-12, FAR case 2002-
026, in all correspondence related to this case.

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 Ms. Victoria Moss, Procurement Analyst, at (202) 501-
4764. Please cite FAC 2001-12, FAR case 2002-026.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule implements Sections 852 through 856 and Section 
858 of the Homeland Security Act (Pub. L. 107-296)). These provisions, 
which are set forth in Title VIII, Subtitle F of the Act, provide 
Federal emergency procurement flexibilities.
    Section 852 specifies that the authorities granted in the subtitle 
apply to acquisitions of supplies or services by or for an executive 
agency that, as determined by the head of the executive agency, are to 
be used to facilitate defense against or recovery from terrorism or 
nuclear, biological, chemical, or radiological attack, but only if a 
solicitation of offers for the procurement is issued before November 
25, 2003.
    Section 853 increases the simplified acquisition threshold to 
$200,000 ($300,000 for contracts awarded and performed outside the 
United States) for acquisitions referred to in section 852 that are 
carried out in support of a humanitarian or peacekeeping operation or a 
contingency operation. The definition of simplified acquisition 
threshold in FAR 2.101 has been revised to reflect this change. As 
further required by section 853, FAR 19.502-2(a) has been amended to 
increase the small business reservation to mirror these increased 
thresholds.
    Section 854 increases the micro-purchase threshold to $7,500 for 
acquisitions referred to in section 852. To implement this change, the 
rule modifies (1) the definition of micro-purchase threshold at FAR 
2.101, (2) guidance on the use of micro-purchase authority at FAR 
13.201, and (3) coverage at FAR 19.502-1 addressing the applicability 
of set-aside requirements.
    Section 855 allows agencies to treat acquisitions referred to in 
section 852 as commercial items and removes the $5,000,000 limitation 
for the Test Program for Certain Commercial Items for these 
acquisitions. FAR 12.102(f), addressing the applicability of commercial 
item policies, and FAR Subpart 13.5 on the use of the commercial items 
test authority, have been revised accordingly.
    Section 856 provides for the use of streamlined acquisition 
authorities and procedures authorized by law for a procurement referred 
to in section 852 and waives the dollar limitations on sole source 8(a) 
acquisitions and HUBZone Sole Source awards for these acquisitions. 
Changes have been made at FAR 19.805-1 and 19.1306.
    Section 858 calls for market research on an ongoing basis to 
identify effectively the capabilities, including the capabilities of 
small businesses and new entrants into Federal contracting, that are 
available in the marketplace for meeting the requirements of the 
executive agency in furtherance of defense against or recovery from 
terrorism or nuclear, biological, chemical, or radiological attack. 
This requirement is reflected in FAR 10.001.
    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 changes may 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. The Councils prepared an Initial 
Regulatory Flexibility Analysis (IRFA), and it is summarized as 
follows:

    The increased thresholds are limited to apply to acquisitions of 
supplies or services by or for an executive agency that are to be 
used to facilitate defense against or recovery from terrorism or 
nuclear, biological, chemical, or radiological attack. There are no 
data available on the number of procurements that will be eligible. 
We expect the increased thresholds to this limited class of 
procurements will apply to a very small number of small entities.
    This interim rule does not impose any data collection 
requirements on small business concerns. The rule does not 
duplicate, overlap, or conflict with other relevant Federal rules. 
There are no significant alternatives to the interim rule that would 
accomplish the stated beneficial objective.

    The FAR Secretariat has submitted a copy of the IRFA to the Chief 
Counsel for Advocacy of the Small Business Administration. Interested 
parties may obtain a copy from the FAR Secretariat. The Councils will 
consider comments from small entities concerning the affected FAR 
subparts 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. 
(FAC 2001-12, FAR Case 2002-026), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the

[[Page 4049]]

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.

D. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because the FAR coverage implements Sections 852 through 
856 and Section 858 of the Homeland Security Act (Pub. L. 107-296), 
signed on November 25, 2002, which provides for urgently needed 
authorities to be used in the fight against, and recovery from 
terrorism.
    However, pursuant to Public Law 98-577 and FAR 1.501, the Councils 
will consider public comments received in response to this interim rule 
in the formation of the final rule.

List of Subjects in 48 CFR Parts 2, 10, 12, 13, 19, and 25

    Government procurement.

    Dated: January 16, 2003.
Al Matera,
Director, Acquisition Policy Division.

Federal Acquisition Circular

    Federal Acquisition Circular (FAC) 2001-12 is issued under the 
authority of the Secretary of Defense, the Administrator of General 
Services, and the Administrator for the National Aeronautics and Space 
Adminstration.
    Unless otherwise specified, all Federal Acquisition Regulation 
(FAR) and other directive material contained in FAC 2001-12 are 
effective January 24, 2003.

    Dated: January 16, 2003.

Deidre A. Lee,
Director, Defense Procurement and Acquisition Policy.

    Dated: January 16, 2003.

David A. Drabkin,
Deputy Associate Administrator, Office of Acquisition Policy, 
General Services Administration.

    Dated: January 16, 2003.

Tom Luedtke,
Assistant Administrator for Procurement, National Aeronautics and 
Space Adminstration. 


    Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 10, 12, 13, 19, 
and 25 as set forth below:
    1. The authority citation for 48 CFR parts 2, 10, 12, 13, 19, and 
25 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 
definitions ``Contingency operation'' and ``Humanitarian or 
peacekeeping operation''; and revising the definitions ``Micro-purchase 
threshold'' and ``Simplified acquisition threshold'' to read as 
follows:


2.101  Definitions.

* * * * *
    Contingency operation (10 U.S.C. 101(a)(13)) means a military 
operation that--
    (1) Is designated by the Secretary of Defense as an operation in 
which members of the armed forces are or may become involved in 
military actions, operations, or hostilities against an enemy of the 
United States or against an opposing military force; or
    (2) Results in the call or order to, or retention on, active duty 
of members of the uniformed services under section 688, 12301(a), 
12302, 12304, 12305, or 12406 of 10 U.S.C., chapter 15 of 10 U.S.C, or 
any other provision of law during a war or during a national emergency 
declared by the President or Congress.
* * * * *
    Humanitarian or peacekeeping operation means a military operation 
in support of the provision of humanitarian or foreign disaster 
assistance or in support of a peacekeeping operation under chapter VI 
or VII of the Charter of the United Nations. The term does not include 
routine training, force rotation, or stationing (10 U.S.C. 2302(8) and 
41 U.S.C. 259(d)).
* * * * *
    Micro-purchase threshold means $2,500, except it means--
    (1) $2,000 for construction subject to the Davis Bacon Act; and
    (2) $7,500 for acquisitions of supplies or services that, as 
determined by the head of the agency, are to be used to facilitate 
defense against or recovery from terrorism (defined at Public Law 107-
296, Sec. 2) or nuclear, biological, chemical, or radiological attack, 
as described in 13.201(g)(1)(i), except for construction subject to the 
Davis Bacon Act (Public Law 107-296, Sec. 854). The threshold is 
$15,000 for acquisitions by or for the Department of Defense as 
described in 13.201(g)(1)(ii) (Public Law 107-107, Sec. 836(a)(1)(A)).
* * * * *
    Simplified acquisition threshold means $100,000, except that--
    (1) In the case of any contract to be awarded and performed, or 
purchase to be made outside the United States in support of a 
contingency operation or a humanitarian or peacekeeping operation, the 
term means $200,000; or
    (2) For acquisitions of supplies or services that, as determined by 
the head of the agency are to be used to facilitate defense against or 
recovery from terrorism (defined at Public Law 107-296, Sec. 2) or 
nuclear, biological, chemical, or radiological attack--
    (i) For any agency, in support of a humanitarian or peacekeeping or 
a contingency operation if initiated by a solicitation issued from 
January 24, 2003, to November 24, 2003 (Public Law 107-296, Sec. 
853(a)), the term means--
    (A) $200,000 for any contract to be awarded and performed, or 
purchase to be made, inside the United States; and
    (B) $300,000 for any contract to be awarded and performed, or 
purchase to be made, outside the United States.
    (ii) By or for the Department of Defense in support of a 
contingency operation if award is made and funds are obligated on or 
before September 30, 2003 (Public Law 107-107, Sec. 836(a)(1)(B)), the 
term means--
    (A) $250,000 for any contract to be awarded and performed, or 
purchase to be made, inside the United States; and
    (B) $500,000 for any contract to be awarded and performed, or 
purchase to be made, outside the United States.
* * * * *

PART 10--MARKET RESEARCH

    3. Amend section 10.001 by removing the word ``and'' at the end of 
paragraph (a)(2)(iii); and adding paragraph (a)(2)(v) to read as 
follows:


10.001  Policy.

    (a) * * *
    (2) * * *
    (v) Agencies shall conduct market research on an ongoing basis, and 
take advantage to the maximum extent practicable of commercially 
available market research methods, to identify effectively the 
capabilities, including the capabilities of small businesses and new 
entrants into Federal contracting, that are available in the 
marketplace for meeting the requirements of the agency in furtherance 
of defense against or recovery from terrorism or nuclear, biological, 
chemical or radiological attack (Public Law 107-296, Sec. 858); and
* * * * *

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PART 12--ACQUISITION OF COMMERCIAL ITEMS

    4. Amend section 12.102 by revising paragraph (f) to read as 
follows:


12.102  Applicability.

* * * * *
    (f)(1) Contracting officers may treat any acquisition of supplies 
or services that, as determined by the head of the agency, are to be 
used to facilitate defense against or recovery from terrorism or 
nuclear, biological, chemical, or radiological attack, as an 
acquisition of commercial items. This paragraph applies to 
solicitations issued by any agency from January 24, 2003, through 
November 24, 2003 (Public Law 107-296, Sec. 856).
    (2) Acquisition of biotechnology supplies or services, for use to 
facilitate the defense against terrorism or biological attack against 
the United States, by or for the Department of Defense shall be 
considered as an acquisition of commercial items when award is made and 
funds are obligated on or before September 30, 2003 (Public Law 107-
107, Sec. 836(a)(2)). The authority of this paragraph is in addition to 
and does not limit the authority of paragraph (f)(1) of this section. 
Nothing in this paragraph shall preclude a contracting officer from 
treating an acquisition described in this paragraph as one for a non-
commercial item if a determination is made by the contracting officer 
that the purchase cannot be made at a fair and reasonable price using 
the policies of this part.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

    5. Amend section 13.003 by revising paragraph (b)(1) to read as 
follows:


13.003  Policy.

* * * * *
    (b)(1) Each acquisition of supplies or services that has an 
anticipated dollar value exceeding $2,500 ($7,500 for acquisitions as 
described in 13.201(g)(1)(i) and $15,000 for acquisitions as described 
in 13.201(g)(1)(ii)) and not exceeding $100,000 ($200,000 for 
acquisitions described in paragraph (2)(i) of the Simplified 
Acquisition Threshold definition at 2.101) is reserved exclusively for 
small business concerns and shall be set aside (see 19.000 and subpart 
19.5). See 19.502-2 for exceptions.
* * * * *

    6. Amend section 13.105 by revising the first sentence of paragraph 
(b) to read as follows:


13.105  Synopsis and posting requirements.

* * * * *
    (b) When acquiring commercial items or supplies or services 
procured in accordance with 12.102(f)(1) and (f)(2), the contracting 
officer may use a combined synopsis and solicitation. * * *

    7. Amend section 13.201 by revising paragraph (g) to read as 
follows:


13.201  General.

* * * * *
    (g)(1) For acquisitions of supplies or services that, as determined 
by the head of the agency, are to be used to facilitate defense against 
or recovery from terrorism or nuclear, biological, chemical, or 
radiological attack, the temporary micro-purchase thresholds are
    (i) $7,500 for acquisitions by or for any agency if the award is 
made from January 24, 2003, through November 24, 2003; and
    (ii) $15,000 for acquisitions by or for the Department of Defense 
if award is made and funds are obligated on or before September 30, 
2003.
    (2) Purchases using this authority must have a clear and direct 
relationship to defense against or recovery from terrorism or nuclear, 
biological, chemical, or radiological attack.

    8. Amend section 13.500 in paragraph (a) by removing the period 
from the end of the first sentence and adding 1``, except as provided 
in paragraph (e) of this section.'' in its place; and adding paragraph 
(e) to read as follows:


13.500  General.

* * * * *
    (e) The $5,000,000 limitation provided in this subpart 13.5 does 
not apply to acquisitions of supplies or services using the authority 
provided by 12.102(f)(1). Notwithstanding the expiration of the test 
program specified in paragraph (d) of this section, authority to use 
simplified procedures under this paragraph applies to an acquisition 
when the solicitation is issued by any agency from January 24, 2003, 
through November 24, 2003.

    9. Amend section 13.501 by--
    a. Removing from paragraph (a)(1)(i) the phrase ``paragraphs 
(a)(2)(i) and (a)(2)(ii)'' and adding ``paragraph (a)(2)'' in its 
place;
    b. Revising paragraph (a)(1)(ii);
    c. In paragraph (a)(2)(ii) by adding ``but not exceeding 
$10,000,000,'' after ``$500,000,''; and
    d. Adding paragraphs (a)(2)(iii) and (a)(2)(iv). The revised and 
added text reads as follows:


13.501  Special documentation requirements.

    (a) * * *
    (1) * * *
    (ii) Prepare sole source justifications using the format at 6.303-
2, modified to reflect an acquisition under the authority of the test 
program for commercial items (section 4202 of the Clinger-Cohen Act of 
1996) or the authority of the Homeland Security Act (Public Law 107-
296, section 856) as implemented at 12.102(f)(1).
    (2) * * *
    (iii) For a proposed contract exceeding $10,000,000 but not 
exceeding $50,000,000, the head of the procuring activity or the 
official described in 6.304(a)(3) or (a)(4) must approve the 
justification and approval. This authority is not delegable.
    (iv) For a proposed contract exceeding $50,000,000 the official 
described in 6.304(a)(4) must approve the justification and approval. 
This authority is not delegable except as provided in 6.304(a)(4).
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

    10. Amend section 19.502-1 by revising paragraph (b) to read as 
follows:


19.502-1  Requirements for setting aside acquisitions.

* * * * *
    (b) This requirement does not apply to purchases of $2,500 or less 
($7,500 or less for acquisitions as described in 13.201(g)(1)(i) or 
$15,000 or less for acquisitions as described in 13.201(g)(1)(ii)), or 
purchases from required sources of supply under Part 8 (e.g., Federal 
Prison Industries, Committee for Purchase From People Who are Blind or 
Severely Disabled, and Federal Supply Schedule contracts).

    11. Amend section 19.502-2 by revising the first sentence of 
paragraph (a) to read as follows:


19.502-2  Total small business set-asides.

    (a) Except for those acquisitions set aside for very small business 
concerns (see subpart 19.9), each acquisition of supplies or services 
that has an anticipated dollar value exceeding $2,500 ($7,500 for 
acquisitions as described in 13.201(g)(1)(i) or $15,000 for 
acquisitions as described in 13.201(g)(1)(ii)), but not over $100,000 
($200,000 for acquisitions described in paragraph (2)(i) of the 
Simplified Acquisition Threshold definition at 2.101), is automatically 
reserved exclusively for small business concerns and shall be set aside 
for small business unless the contracting officer

[[Page 4051]]

determines there is not a reasonable expectation of obtaining offers 
from two or more responsible small business concerns that are 
competitive in terms of market prices, quality, and delivery. * * *
* * * * *

    12. Amend section 19.805-1 in paragraph (b)(1) by removing from the 
end of the sentence ``or''; in paragraph (b)(2) by removing the period 
at the end of the sentence and adding ``; or'' in its place; and adding 
paragraph (b)(3) to read as follows:


19.805-1  General.

    (b) * * *
    (3) The acquisition is conducted under the authority of the 
Homeland Security Act (Public Law 107-296) and--
    (i) The acquisition is for supplies or services that, as determined 
by the head of the agency, are to be used to facilitate defense against 
or recovery from terrorism or nuclear, biological, chemical, or 
radiological attack;
    (ii) The solicitation is issued during the period of January 24, 
2003, through November 24, 2003; and
    (iii) There is either an approved 13.501 justification for sole 
source acquisition, or an approved 6.303 justification using one of the 
authorities at 6.302-1, 6.302-2, 6.302-6, or 6.302-7.
* * * * *

    13. Amend section 19.903 by removing from the end of paragraph 
(b)(2) ``or''; redesignating paragraph (b)(3) as (b)(4); adding a new 
paragraph (b)(3); and by removing from newly designated paragraph 
(b)(4) ``13.201(g)'' and adding ``13.201(g)(1)(ii)'' in its place. The 
added text reads as follows:


19.903  Applicability.

* * * * *
    (b) * * *
    (3) Acquisitions of $7,500 or less for acquisitions of supplies or 
services that, as determined by the head of the agency, are to be used 
to facilitate defense against or recovery from terrorism or nuclear, 
biological, chemical, or radiological attack as described in 
13.201(g)(1)(i); or
* * * * *

    14. Amend section 19.1306 by revising the introductory text of 
paragraph (a)(2); and adding paragraph (c) to read as follows:


19.1306  HUBZone sole source awards.

    (a) * * *
    (2) Except as provided in paragraph (c) of this section, the 
anticipated price of the contract, including options, will not exceed--
* * * * *
    (c) The contracting officer may award contracts exceeding the 
limits in paragraph (a)(2) of this section to HUBZone small business 
concerns on a sole source basis if the acquisition is conducted under 
the authority of the Homeland Security Act (Public Law 107-296, Sec. 
856(b)) and--
    (1) The acquisition is for supplies or services that, as determined 
by the head of the agency, are to be used to facilitate defense against 
or recovery from terrorism or nuclear, biological, chemical, or 
radiological attack;
    (2) The solicitation is issued, during the period of January 24, 
2003, through November 24, 2003; and
    (3) There is either an approved 13.501 justification for sole 
source acquisition, or an approved 6.303 justification using one of the 
authorities at 6.302-1, 6.302-2, 6.302-6, or 6.302-7.

PART 25--FOREIGN ACQUISITION

    15. Amend section 25.1101 by revising the introductory text of 
paragraph (a)(1) to read as follows:


25.1101  Acquisition of supplies.

* * * * *
    (a)(1) Insert the clause at 52.225-1, Buy American Act--Supplies, 
in solicitations and contracts with a value exceeding $2,500 ($7,500 
for acquisitions as described in 13.201(g)(1)(i) or $15,000 for 
acquisitions as described in 13.201(g)(1)(ii)) but not exceeding 
$25,000; and in solicitations and contracts with a value exceeding 
$25,000, if none of the clauses prescribed in paragraphs (b) and (c) of 
this section apply, except if--
* * * * *

    16. Amend section 25.1103 by revising paragraph (a) to read as 
follows:


25.1103  Other provisions and clauses.

    (a) Restrictions on certain foreign purchases. Insert the clause at 
52.225-13, Restrictions on Certain Foreign Purchases, in solicitations 
and contracts with a value exceeding $2,500, $7,500 for acquisitions as 
described in 13.201(g)(1)(i), or $15,000 for acquisitions as described 
in 13.201(g)(1)(ii), unless an exception applies (see 25.701(a)(2)).
* * * * *
[FR Doc. 03-1687 Filed 1-24-03; 8:45 am]
BILLING CODE 6820-EP-P