[Federal Register Volume 68, Number 52 (Tuesday, March 18, 2003)]
[Proposed Rules]
[Pages 13212-13214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6458]



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Part V





General Services Administration





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48 CFR Parts 501, 538, and 552



General Services Administration Acquisition Regulation; Consolidation 
of Industrial Funding Fee and Sales Reporting Clauses; Reduction in 
Amount of Industrial Funding Fee; Proposed Rule

  Federal Register / Vol. 68, No. 52 / Tuesday, March 18, 2003 / 
Proposed Rules  

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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 501, 538, and 552

[GSAR Case 2002-G507]
RIN 3090-AH79


General Services Administration Acquisition Regulation; 
Consolidation of Industrial Funding Fee and Sales Reporting Clauses; 
Reduction in Amount of Industrial Funding Fee

AGENCY: Office of Acquisition Policy, General Services Administration 
(GSA).

ACTION: Proposed rule.

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SUMMARY: The General Services Administration (GSA) is proposing to 
amend the General Services Administration Acquisition Regulation (GSAR) 
to give GSA the unilateral right to change the percentage rate of the 
Industrial Funding Fee (IFF) in Multiple Award Schedule (MAS) 
contracts. The proposed rule also sets forth GSA's intent to modify and 
combine two existing General Services Administration (GSA) clauses that 
implement collection of the IFF by the Federal Supply Service (FSS) on 
sales from all Federal Supply Schedule contracts. These clauses are 
Industrial Funding Fee and Contractor's Report of Sales. Additionally, 
the proposed rule provides notice of the method FSS intends to utilize 
to modify each contract subject to the IFF. While the GSAR does not 
specify the percentage rate of the IFF, GSA intends to lower the 
current IFF rate from 1.0 percent to 0.75 percent of reported sales, 
effective January 1, 2004. The Administrator of GSA has the authority 
to change the IFF; GSA will consult with OMB prior to effecting any 
future changes to the IFF.

DATES: Interested parties should submit comments in writing on or 
before April 17, 2003, to be considered in the formulation of a final 
rule.

ADDRESSES: Submit written comments to--General Services Administration, 
Regulatory Secretariat (MVA), 1800 F Street, NW., Room 4035, Attn: Ms. 
Laurie Duarte, Washington, DC 20405.
    Submit electronic comments via the Internet to--gsarcase.2002-
[email protected].
    Please submit comments only and cite GSAR case 2002-G507 in all 
correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT: The Regulatory Secretariat, Room 4035, 
GS Building, Washington, DC 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Vonda J. Sines, Procurement Analyst, at (703) 305-
7542, or Linda Nelson, Procurement Analyst, at (202) 501-1900. Please 
cite GSAR Case 2002-G507. The TTY Federal Relay Number for further 
information is 1-800-877-8973.

SUPPLEMENTARY INFORMATION:

A. Background

    On April 18, 1995, GSA implemented an Industrial Funding Fee (IFF) 
for Federal Supply Schedules. Two clauses, 552.238-76, Industrial 
Funding Fee, and 552.238-74, Contractor's Report of Sales, are included 
in the solicitation for each Federal Supply Schedule contract and 
provide instructions for the submission of quarterly sales reported by 
contractors.
    GSA utilizes the IFF to fund the cost of providing supplies and 
services through the Federal Supply Schedule program, eliminating 
operating expenses formerly funded with appropriated monies.
    Fees are included in the Schedule prices charged to ordering 
activities; all contract award prices include the total amounts 
charged. Federal Supply Schedule contractors remit fees to GSA based on 
quarterly contract sales. GSA recoups its costs from the ordering 
activities through the contractor's quarterly remittance to FSS. The 
GSAR does not specify the percentage rate of the IFF. Rather, the 
initial 1 percent IFF rate was set via Acquisition Letter and has not 
changed since its inception.
    GSA proposes to change the GSAR to provide that effective January 
1, 2004, GSA will have the unilateral right to change the IFF rate.
    The agency also proposes consolidation of the two foregoing clauses 
into a single clause, Industrial Funding Fee and Sales Reporting, under 
the number 552.238-74. The number 552.238-76 will become ``reserved.'' 
The new clause eliminates duplicative information in the two current 
clauses, clarifies sales reporting procedures, and describes the 
procedures FSS will utilize to unilaterally effect future IFF rate 
changes.
    GSA also intends to reduce the IFF from its current rate of 1 
percent of sales to 0.75 percent effective January 1, 2004. GSA 
proposes to implement this change by means of a bilateral contract 
modification to be executed electronically. As consideration to Federal 
Supply Schedule contractors for any potential costs incurred as the 
direct result of this change, GSA proposes to allow these vendors to 
continue to include the 1 percent IFF in their contract prices until 
December 31, 2003, but to forward to FSS an IFF of 0.75 percent for 
reported sales for the period of October 1, 2003, through December 31, 
2003. Examples of the type of costs GSA anticipates contractors could 
incur include reprinting price lists and modifying accounting systems. 
The Administrator of GSA has the authority to change the IFF; GSA will 
consult with OMB prior to effecting any future changes to the IFF.

B. Executive Order 12866

    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.

C. Regulatory Flexibility Act

    The General Services Administration does 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 the purpose of the proposed rule is to 
assign to GSA the sole discretion to set the rate of the IFF and to 
clarify for contractors how to handle changes in the IFF. The rule also 
proposes to modify and consolidate the provisions of two existing GSAR 
clauses in terms of sales reporting and procedural changes when the IFF 
rate changes. While some 78 percent of the Federal Supply Schedule 
contracts represent small business concerns, all contractors holding 
Federal Supply Schedules are already required to report quarterly sales 
and to periodically submit the Industrial Funding Fee to FSS. The 
proposed rule does not change these two requirements. It does require 
both small and large businesses to execute appropriate bilateral 
contract modifications and to make changes to existing price lists and 
accounting systems. GSA intends to mitigate the anticipated cost to 
contractors for these changes via offering consideration as described 
under paragraph A. An Initial Regulatory Flexibility Analysis has, 
therefore, not been performed. We invite comments from small businesses 
and other interested parties. GSA will consider comments from small 
entities concerning the affected GSAR parts 501, 538, and 552 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. (GSAR 2002-
G507), in correspondence.

D. Paperwork Reduction Act

    The current clause, 552.238-74, Contractor's Report of Sales, 
contains an

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information collection requirement that is subject to the Paperwork 
Reduction Act (44 U.S.C. 3501 et seq.) that has been previously 
approved by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act and assigned control number 3090-0121. Current 
clause 552.238-76, Industrial Funding Fee, also contains an information 
collection requirement that is subject to the Paperwork Reduction Act 
(44 U.S.C. 3501 et seq.). However, the estimated burden for this clause 
has been determined to be zero, and GSA has a blanket approval under 
control number 3090-0250 from OMB for information collections with a 
zero burden estimate.
    The consolidation of information from these two clauses into a 
single clause results in no additional burden and, therefore, no 
additional approval from OMB is required.

List of Subjects in 48 CFR Parts 501, 538, and 552

    Government procurement.

    Dated: March 12, 2003.
David A. Drabkin,
Deputy Associate Administrator, Office of Acquisition Policy.

    Therefore, GSA proposes amending 48 CFR parts 501, 538, and 552 as 
set forth below:

    1. The authority citation for 48 CFR parts 501, 538, and 552 
continues to read as follows:

    Authority: 40 U.S.C. 486(c).

PART 501--GENERAL SERVICES ADMINISTRATION ACQUISITION REGULATION 
SYSTEM


501.106  [Amended]

    2. In section 501.106 at GSAR reference 552.238-74, remove the OMB 
Control Number ``3090-0121'' and add ``3090-- 0121 & 3090-0250'' in its 
place.

PART 538--FEDERAL SUPPLY SCHEDULE CONTRACTING

    3. Amend section 538.273 by revising paragraph (b)(1); and by 
removing paragraph (b)(3). The revised text reads as follows:


538.273  Contract clauses.

* * * * *
    (b) * * *
    (1) 552.238-74, Industrial Funding Fee and Sales Reporting.
* * * * *

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    4. Amend section 552.212-71 by revising the date of the clause; and 
in paragraph (b) by revising entry 552.238-74 to read as follows:


552.212-71  Contract Terms and Conditions Applicable to GSA Acquisition 
of Commercial Items.

* * * * *

Contract Terms and Conditions Applicable to GSA Acquisition of 
Commercial Items (Date)

    (b) Clauses.
* * * * *
    --552.238-74 Industrial Funding Fee and Sales Reporting
* * * * *


552.212-72  [Amended]

    5. Amend section 552.212-72 by revising the date of the clause to 
read ``(Date)''; and by removing from the end of paragraph (b) `` --
552.238-76 Industrial Funding Fee''.
    6. Revise section 552.238-74 to read as follows:


552.238-74  Industrial Funding Fee and Sales Reporting.

    As prescribed in 538.273(b)(1), insert the following clause:

Industrial Funding Fee and Sales Reporting (Date)

    (a) Reporting of Federal Supply Schedule Sales. The Contractor 
shall report all contract sales under this contract as follows:
    (1) The Contractor shall accurately report the dollar value, in 
U.S. dollars and rounded to the nearest whole dollar, of all sales 
under this contract by calendar quarter (January 1--March 31, April 
1--June 30, July 1--September 30, and October 1--December 31). The 
dollar value of a sale is the price paid by the Schedule user for 
products and services on a Schedule task or delivery order. The 
reported contract sales value shall include the Industrial Funding 
Fee (IFF). The Contractor shall maintain a consistent accounting 
method for sales reporting, based on the Contractor's established 
commercial accounting practice. The acceptable points at which sales 
may be reported include--
    (i) Receipt of order;
    (ii) Shipment or delivery, as applicable;
    (iii) Issuance of an invoice; or
    (iv) Payment.
    (2) Reportable sales under the contract are those resulting from 
sales of contract items to authorized users unless the purchase was 
conducted pursuant to a separate contracting authority such as a 
Governmentwide Acquisition Contract (GWAC), or a separately awarded 
FAR Part 12, FAR Part 13, or FAR Part 15 procurement.
    (3) The Contractor shall electronically report the quarterly 
dollar value of sales, including ``zero'' sales, by utilizing the 
automated reporting system at an Internet website designated by the 
Federal Supply Service (FSS). Prior to using this automated system, 
the Contractor shall complete contract registration with the FSS 
Vendor Support Center (VSC). The website address, as well as 
registration instructions and reporting procedures, will be provided 
at the time of award. The Contractor shall report sales separately 
for each National Stock Number (NSN), Special Item Number (SIN), or 
sub-item.
    (4) The Contractor shall convert the total value of sales made 
in foreign currency to U.S. dollars using the ``Treasury Reporting 
Rates of Exchange'' issued by the U.S. Department of Treasury, 
Financial Management Service. The Contractor shall use the issue of 
the Treasury report in effect on the last day of the calendar 
quarter. The report is available from--Financial Management Service, 
International Funds Branch, Telephone: (202) 874-7994, Internet: 
http://www.fms.treas.gov/intn.html.
    (5) Contract sales shall be reported to FSS within 30 calendar 
days following the completion of each reporting quarter. The 
Contractor shall continue to furnish quarterly reports, including 
``zero'' sales, until physical completion of the last outstanding 
task order or delivery order.
    (b) The Contractor shall remit the IFF at the rate set by FSS.
    (1) The Contractor shall remit the IFF to FSS in U.S. dollars 
within 30 calendar days after the end of the reporting quarter; 
final payment shall be remitted within 30 days after physical 
completion of the last outstanding task order or delivery order of 
the contract.
    (2) The IFF represents a percentage of the total quarterly sales 
reported. This percentage is set at the discretion of the General 
Services Administration (GSA). The Commissioner of GSA's Federal 
Supply Service, or the Commissioner's delegated representative, has 
the unilateral right to change the percentage at any time, but not 
more than once per year. FSS will provide reasonable notice prior to 
the effective date of the change. The statutorily based IFF 
reimburses FSS for the costs of operating the Federal Supply 
Schedules Program and recoups its operating costs from ordering 
activities. Offerors must include the IFF in their prices. The fee 
is included in the award price(s) and reflected in the total amount 
charged to ordering activities. FSS will post notice of the current 
IFF at http://72a.fss.gsa.gov/ or successor website as appropriate.
    (c) Within 60 days of award, an FSS representative will provide 
the Contractor with specific written procedural instructions on 
remitting the IFF. FSS reserves the unilateral right to change such 
instructions from time to time, following notification to the 
Contractor.
    (d) Failure to remit the full amount of the IFF within 30 
calendar days after the end of the applicable reporting period 
constitutes a contract debt to the United States Government under 
the terms of FAR 32.6. The Government may exercise all rights under 
the Debt Collection Act of 1982, including withholding or setting 
off payments and interest on the debt (see FAR 52.232-17, Interest). 
Should the Contractor

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fail to submit the required sales reports, falsify them, or fail to 
timely pay the IFF, this is sufficient cause for the Government to 
terminate the contract for cause.
    (End of clause)


552.238-76  [Reserved]

    7. Remove and reserve section 552.238-76.
[FR Doc. 03-6458 Filed 3-17-03; 8:45 am]
BILLING CODE 6820-BR-P