[Federal Register Volume 69, Number 117 (Friday, June 18, 2004)]
[Rules and Regulations]
[Pages 34231-34239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13622]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 8, 38, and 53

[FAC 2001-24; FAR Case 1999-603; Item V]
RIN 9000-AJ63


Federal Acquisition Regulation; Federal Supply Schedules Services 
and Blanket Purchase Agreements (BPAs)

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 incorporate 
policies for services and to strengthen the procedures for establishing 
Blanket Purchase Agreements under the Federal Supply Schedules.

DATES: Effective Date: July 19, 2004.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755 
for information pertaining to status or publication schedules. For 
clarification of content, contact Ms. Linda Nelson, Procurement 
Analyst, at (202) 501-1900. Please cite FAC 2001-24, FAR case 1999-603. 
The TTY Federal Relay Number for further information is 1-800-877-8973.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 68 FR 19294, April 18, 2003, with request for comments. 
Thirty-four respondents submitted public comments. A discussion of the 
comments is provided below. The differences between the proposed rule 
and final rule are addressed in the Councils' response to comments 1 
through 9. General changes made to FAR Subpart 8.4 by this rulemaking 
are provided in the list below. Of particular note, the rule--
     Adds language to make it clear that the contracting 
officer placing an order on another agency's behalf is responsible for 
applying that agency's regulatory and statutory requirements; and that 
the requiring activity is required to provide information on the 
applicable regulatory and statutory requirements to the contracting 
officer;
     Adds new coverage on use of statements of work when 
acquiring services from the schedules;
     Requires that when an agency awards a task order requiring 
a statement of work, that if the award is based on other than price 
(best value), the contracting officer shall provide a brief explanation 
of the basis for the award decision to any unsuccessful contractor that 
requests such information;
     Refines guidance regarding the use of Governmentwide BPAs;
     Adds language to require the ordering activity to document 
the results of its BPA review; and
     Reinforces documentation requirements generally and adds 
new guidance addressing the documentation of orders for services and 
sole source orders.
    In addition, the rule also--
     Adds a definitions section;
     Adds information regarding the Department of Veterans 
Affairs delegated authority to establish medical supply schedules;
     Adds language to clarify the differences between an 
Authorized Federal Supply Schedules (FSS) Pricelist and a FSS 
publication;
     Adds additional information regarding e-Buy, GSA's 
electronic quote system for the schedules program;
     Clarifies that competition shall not be sought outside the 
Federal Supply Schedules;
     Adds language stating that the performance period of 
Blanket Purchase Agreements (BPA) established under the schedules 
program may cross option periods on the base contracts;
     Adds language that encourages or reminds agencies that 
they can seek a price reduction at any time, not just when an order 
exceeds the maximum order threshold;
     Adds additional language to allow for consideration of 
socio-economic status when identifying the potential competitors for an 
order;
     Adds new coverage to allow agencies to make payment for 
oral or written orders by any authorized means, including the 
Governmentwide commercial purchase card;
     Reserves the ordering procedures for Mandatory Use 
Schedules section;
     Clarifies the procedures for termination for cause and 
convenience; and
     Reorganizes and revises the subpart text for ease of use.

B. Summary and Discussion of Significant Public Comments

    1. Comment: Ordering offices need not seek further competition. 
Several respondents stated that the phrase
    ``Ordering offices shall not seek further competition'' is 
confusing or misleading. In addition, the requirement that agencies 
need not seek further competition, synopsize the requirement, or 
consider small business programs when placing orders or issuing Blanket 
Purchase Agreements under the schedule ordering procedures did not seem 
fair.
    Councils' response: Partially concur. The Councils determined that 
although the language was clear, an additional explanation would be 
added. The Councils clarified the language at 8.404(a) to indicate that 
ordering activities need not seek competition outside of the Federal 
Supply Schedules. Agencies must follow the procedures of Subpart 8.4 to 
ensure compliance with the requirement for full and open competition as 
implemented under the Multiple Award Schedules program.
    2. Comment: Use of the term ``appropriate number.'' Concern was 
raised regarding the use of the term ``appropriate number'' at FAR 
8.404-1(d)(1) and FAR 8.404-2(c)(2)(ii) of the proposed rule. The term 
``appropriate number'' pertains to the number of

[[Page 34232]]

contractors to be considered or contacted as part of the order 
evaluation and placement process. In general, the respondents were 
concerned that the language was too vague and did not provide 
sufficient guidance as to the number of contractors that should be 
considered or contacted. Further, there was a recommendation that ``an 
appropriate number'' be changed to state a specific number or delete 
the requirement.
    Councils' response: The Councils partially concur. The rule 
identifies factors that ordering activities might consider in 
determining the appropriate number of additional schedule contractors 
to consider. The intent is to leave it to the discretion of the 
contracting officer to determine the number of additional contractors 
to be considered or contacted. The recommendation that a specific 
number of contractors be identified in place of an ``appropriate 
number'' would unnecessarily limit the discretion of the contracting 
officer. A final note, proposed rule FAR 8.404-1(d)(1) is renumbered in 
the final rule as FAR 8.405-1(d)(1). Proposed rule FAR 8.404-
2(c)(2)(ii) is renumbered FAR 8.405-2(c)(3)(i) in the final rule.
    3. Comment: Price reductions. A respondent commented that the 
ordering procedures should be revised to remind agencies that price 
reductions could be requested at any time for any size order.
    Councils' response: Concur. Language was added to the final rule at 
FAR 8.404(d) reminding agencies that they can ask for price reductions 
prior to placing an order.
    4. Comment: Quality Assurance Surveillance Plans. Several 
respondents raised concerns regarding the guidance on the use of 
Quality Assurance Surveillance Plans (QASP). The respondents felt that 
QASP should be required for all service orders regardless of whether 
the Statement of Work (SOW) is performance based or not. In addition, 
another respondent indicated that the proposed rule contains two 
different sections pertaining to QASP, which is redundant and confusing 
(see 8.404-2(c)(1) and (c)(4) of the proposed rule).
    Councils' response: The Councils generally agreed with the 
observation that the mention of QASPs in two different places was, in 
fact, redundant and confusing. As a result, the rule was revised to 
include a reference to FAR Subpart 37.6. See FAR 8.405-2(b) of the 
final rule. With regard to the suggestion that QASPs be required for 
all service orders regardless of type, the Councils rejected this 
suggestion. There is no FAR requirement that QASPs be developed for all 
service orders. The FAR only requires the development of QASPs for 
performance-based service orders.
    5. Comment: Blanket Purchase Agreements. Several respondents 
commented that the requirement for each agency to be a signatory when 
establishing a multi-agency BPA was confusing.
    Councils' response: The Councils agreed that the requirement for 
each agency using a multi-agency BPA to be a signatory to the BPA was 
unnecessary. The Councils revised the language to state that the 
agencies and their requirements must be identified in the BPA. The 
purpose of this change was two-fold; it eliminated the requirement that 
each agency actually sign the BPA while at the same time ensuring that 
the planned potential users of the BPA are reflected by including the 
user agencies' estimated requirements. Additionally, including 
information regarding the various agencies' estimated requirements 
fosters better pricing and enhances competition.
    The Councils also added a new paragraph at 8.405-3(c) regarding the 
duration of BPAs. Over time, it has become apparent that additional 
guidance was needed on the length of BPAs. The underlying schedule 
contracts include a clause that allows BPAs to extend for the life of 
the contract. The supplemental guidance in the final rule advises 
agencies that a BPA should generally run for no longer than five years. 
However, BPAs may exceed five years to meet agency program 
requirements. The guidance further provides that a BPA can extend 
beyond the current term of the contract so long as there are option 
periods remaining on the underlying contract that, if exercised, will 
cover the BPA's period of performance. The rule requires that an 
ordering activity review the BPA at least once per year.
    6. Comment: Small business. Several respondents raised concerns 
regarding the ability of agencies to focus their consideration of 
contractors and their competitions for orders on small businesses. In 
particular, the Federal Office of Small Disadvantaged Business 
Utilization (OSDBU) Directors Interagency Council commented that the 
rule of two should apply to schedule orders and that all orders between 
$2,500 and $100,000 be restricted to small businesses. In addition, 
another respondent stated that the language regarding the applicability 
of Part 19 of the FAR needed to be clarified. Another respondent 
suggested that a 10 percent price evaluation advantage be given to 
small businesses when agencies are placing orders.
    Councils' response: The Councils do not concur with the comment 
that the rule of two should apply to orders under the schedules 
program. Further, the Councils do not concur with the suggestion that 
all orders under $100,000 be set-aside for small business. The Councils 
concluded that these suggestions would fundamentally alter the 
schedules program in terms of the efficiency and effectiveness of the 
overall program by increasing the administrative burden on agencies 
without having demonstrated that the changes would, in fact, benefit 
small business over the long term. In addition, the basic statutory 
authority for the program provides that contracts and orders be open to 
all sources. Creating a set-aside for all such orders would be 
inconsistent with the program's basic operating authorities. In 
addition, the Councils, for the same general reasons, do not agree with 
the request for a 10 percent evaluation preference for small business.
    However, the Councils did examine ways in which the rule could 
foster even greater small business participation than that which 
already exists. The Councils added language at FAR 8.405-5(b) that 
provides that ``Ordering activities may consider socio-economic status 
when identifying contractor(s) for consideration or competition for 
award of an order or BPA.'' This language provides the flexibility for 
agencies to conduct their market research focusing on small business 
concerns and providing them greater opportunity to compete for orders.
    The Councils also clarified the language at FAR 8.405-5(a) 
regarding the applicability of FAR Part 19 and added language that 
reminds agencies that when reporting an order for purposes of credit 
towards their socio-economic goals, the ordering agency may only take 
credit if the awardee meets the size standard that corresponds to the 
work performed.
    7. Comments: Documentation requirements. Several respondents 
indicated that the documentation requirements at FAR 8.404-6 of the 
proposed rule were confusing.
    Councils' response: The Councils agreed with these comments and 
revised the rule accordingly. The Councils moved the documentation for 
services requiring a statement of work from the end of the section to 
the beginning consolidating minimum documentation requirements for 
services under FAR 8.405-7(a) and (b) of the final rule. In addition, 
the sole source document

[[Page 34233]]

requirements were placed in a separate heading at FAR 8.405-6 of the 
final rule. A final note, proposed rule FAR 8.404-6 is renumbered in 
the final rule as FAR 8.405-7.
    8. Comment: Inspection and acceptance. One respondent raised 
significant concerns regarding the inspection and acceptance guidance 
at FAR 8.405-3 of the proposed rule. The respondent commented that the 
new provisions regarding the inspection rights of the Government for 
services were overly broad and unduly burdensome. The provisions 
provided in part that the Government had the right to inspect services 
performed at any time and any place, including the contractor's 
facilities. The respondent indicated that inspection and acceptance are 
typically negotiated based on the type of service to be provided and 
are not left so open-ended in the Government's favor.
    Councils' response: The Councils essentially agreed with the 
respondent's observations. As a result, the Councils revised the final 
rule at FAR 8.406-2(b) to state that inspection shall be in accordance 
with the contract and order terms. The order terms can be negotiated as 
part of a Quality Assurance Surveillance Plan for an order.
    9. Comment: Remedies for inadequate performance. One respondent 
raised several concerns regarding the remedies for inadequate 
performance guidance included in the proposed rule. In cases where a 
contractor fails to correct earlier nonperformance of an order, FAR 
8.405-4(c) of the proposed rule provided, in part, that the contracting 
office could reduce the order price to reflect the contractor 
nonperformance. The respondent commented that FAR 8.405-4(c) of the 
proposed rule would inappropriately grant agencies the unilateral right 
to reduce the order price without any mechanisms by which the 
contracting officer determines the amount of any such price reduction 
or any mechanism by which the contractor could challenge such a price 
reduction.
    Councils' response: The Councils agreed with this comment. The 
Councils replaced the term ``inadequate performance'' in the heading 
with ``nonconformance'' and revised the rule at FAR 8.406-3(a) to state 
that the ordering activity shall take appropriate action for 
nonconformance in accordance with the inspection and acceptance clause 
of the contract as supplemented by the order.
    10. Comment: Outline factors to consider for services. Section 
8.404-1(c) outlines factors to consider when comparing schedule 
contractors, which mainly apply to supplies. Recommend that a factor be 
added for services.
    Councils' response: Do not concur. The language of section 8.405-
1(c) is sufficient for purposes of a best value evaluation of basic 
services such as repair, maintenance, and installation. Section 8.405-1 
lists various factors as examples of what may be considered in 
determining best value. The list is written to be inclusive and not 
exclusive. Therefore, agencies have the discretion to consider any 
other factor that may be important to their best value decision. In 
addition, the ordering procedures for services requiring a statement of 
work require that agencies include the evaluation criteria for 
selection in the Request for Quotation. Under these ordering 
procedures, the agencies have the discretion to develop the evaluation 
criteria that will best meet their needs in determining best value for 
their requirements.
    11. Comment: Other direct costs. One respondent commented that the 
ordering procedures should include guidance regarding the acquisition 
and evaluation of other direct costs as part of an order.
    Councils' response: The Councils agree that this is an area that 
may need additional guidance. However, GSA is currently reviewing the 
structure for other direct costs under its contracts and will be 
developing additional training and guidance in this area for agencies. 
Upon completion of this review, the Councils may revisit the issue as a 
follow-up to the final rule.
    12. Comment: Time-and-materials and labor-hour orders. Several 
respondents raised concerns regarding the lack of clear guidance on the 
use of time-and-materials or labor-hour orders. The general comment was 
that the rule failed to fully address whether an order could be issued 
on a time-and-material or labor-hour basis and the circumstances when 
the use of such order types was appropriate. In addition, one 
respondent raised a concern regarding a potential conflict between the 
FAR and GSA ordering procedures regarding the type of contract that may 
be used for commercial items. Yet another respondent commented that 
time-and-materials contracts should not be used unless impossible to 
estimate accurately the extent or duration of the work or anticipate 
costs reasonably when placing the order.
    Councils' response: The Councils agree with the comments that this 
area requires additional guidance. Currently, the Councils are working 
on a number of FAR cases to implement various sections of the Services 
Acquisition Reform Act of 2003 (Title XIV of Public Law 108-136). The 
rule resulting from one of these FAR cases will implement Section 1432 
(Authorization of additional commercial contracts types), which 
addresses the use of time-and-material and labor-hour contracts for 
commercial services. When Section 1432 has been implemented, the 
Councils will address the time-and-materials/labor-hour issue as it 
pertains to the Multiple Award Schedules Program as a follow-up to the 
final rule.
    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 Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to 
this final rule. The Councils prepared a Final Regulatory Flexibility 
Analysis (FRFA), and it reads as follows:

    This Final Regulatory Flexibility Analysis has been prepared in 
accordance with 5 U.S.C. 604.
    1. Statement of need for, and objectives of, the rule. The 
Multiple Award Schedules (MAS) program, directed and managed by the 
General Services Administration (GSA), provides Federal agencies 
with a simplified process for obtaining commercial supplies and 
services at prices associated with volume buying. For much of its 
history, the MAS focused on the sale of products. In recent years, 
however, GSA has sought to facilitate broad access to service 
contractors. This general transformation of the schedules program 
has coincided with a trend in Federal procurement towards acquiring 
managed solutions from the marketplace. The amount of services 
acquisition from the MAS has grown steadily as agencies increasingly 
turn to schedule contractors to meet their needs.
    To assist its customers, GSA developed ``special ordering 
procedures'' that address the acquisition of services. However, 
because FAR Subpart 8.4 has remained primarily geared towards 
products, agencies have been inconsistent in adhering to certain 
basic acquisition requirements when buying services off the MAS, 
such as in their use of statements of work, effective pricing of 
orders, application of competition, and proper documentation of 
award decisions.
    The purpose of the rule is to significantly improve the 
application of acquisition basics on MAS purchases for services and 
reinforce sound MAS practices generally. To achieve this result, the 
rule is amending the Federal Acquisition Regulation to incorporate 
policies for services and to strengthen the procedures for 
establishing Blanket Purchase Agreements under the Federal Supply 
Schedules.
    2. Summary of significant issues raised by the public comments 
in response to the Initial Regulatory Flexibility Analysis (IRFA),

[[Page 34234]]

a summary of the assessment of the agency of such issues, and a 
statement of any changes made in the proposed rule as a result of 
such comments. An Initial Regulatory Flexibility Analysis was not 
performed because the proposed rule did not have significant 
economic impact on a substantial number of small entities. Thirty-
four respondents submitted public comments in response to the 
proposed rule. None of the comments received identified or addressed 
any adverse impact on small businesses.
    However, the final rule does makes an amendment to the FAR that 
could foster even greater small business participation than that 
which already exists. The amendment provides the flexibility for 
agencies to conduct their market research focusing on small business 
concerns and providing them greater opportunity to compete for 
orders.
    The rule also reminds agencies that when reporting an order for 
purposes of credit towards their socio-economic goals, the ordering 
agency may only take credit if the awardee meets the size standard 
that corresponds to the work performed. This final rule is intended 
to be beneficial in expanding small business access to an increased 
number of orders. We see no negative impact on small businesses.
    3. Description of, and an estimate of the number of, small 
entities to which the rule will apply or an explanation of why no 
such estimate is available. This rule will apply to all large and 
small business concerns under the Federal Supply Schedule Program. 
Although the rule pertains to internal Government procedures, it may 
increase the number of orders for supplies and services placed by 
the Government with small business concerns. The net effect of the 
rule is unknown at this time.
    As of fiscal year 2003, according to statistical data maintained 
by GSA's Federal Supply Service, out of a population of 14,169 
national scope schedule contracts, 11,300 Federal Supply Schedule 
contracts are in effect with small business concerns. Approximately 
80 percent of the schedule contractors are small business concerns. 
In fiscal year 2003, small business schedule contractors received 
approximately $9 billion, or 36 percent of total schedule sales. 
Whereas, in 2002, 8,963 small businesses held contracts out of a 
population of 11,426 national scope schedule contracts. Small 
business sales in 2002 were $7.2 billion, or 34 percent of total 
schedule sales. The number of small businesses holding Federal 
Supply Schedules increased 26 percent and sales increased 26.4 
percent.
    The procedures give small business contractors the opportunity 
to fairly compete within the broader universe of schedule 
contractors. These changes ensure that ordering activities have the 
broad discretion and effective and flexible business solutions to 
meet agency requirements.
    4. Description of the projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of 
the classes of small entities which will be subject to the 
requirement and the type of professional skills necessary for 
preparation of the report or record. There are no projected 
reporting, recordkeeping, or other compliance requirements.
    5. Description of steps the agency has taken to minimize 
significant economic impact on small entities consistent with the 
stated objectives of applicable statutes, including a statement of 
the factual, policy, and legal reasons for selecting the alternative 
adopted in the final rule and why each of the other significant 
alternatives to the rule considered by the agency was rejected. 
There are no known significant alternatives that will accomplish the 
objectives of the rule. No alternatives were proposed during the 
public comment period. The impact of the rule is unknown at this 
time. The rule could benefit small business concerns holding 
schedule contracts by permitting those concerns to compete for 
awards that offer products and services that meet the needs of the 
requiring agency.

    The FAR Secretariat has submitted a copy of the FRFA to the Chief 
Counsel for Advocacy of the Small Business Administration.

D. 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 8, 38, and 53

    Government procurement.

    Dated: June 10, 2004.
Ralph De Stefano,
Acting Director, Acquisition Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 8, 38, and 53 as set 
forth below:
0
1. The authority citation for 48 CFR parts 8, 38, and 53 is revised to 
read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

0
2. Revise Subpart 8.4 to read as follows:
Subpart 8.4--Federal Supply Schedules
Sec.
8.401 Definitions.
8.402 General.
8.403 Applicability.
8.404 Use of Federal Supply Schedules.
8.405 Ordering procedures for Federal Supply Schedules.
8.405-1 Ordering procedures for supplies, and services not requiring 
a statement of work.
8.405-2 Ordering procedures for services requiring a statement of 
work.
8.405-3 Blanket purchase agreements (BPAs).
8.405-4 Price reductions.
8.405-5 Small business.
8.405-6 Sole source justification and approval.
8.405-7 Documentation.
8.405-8 Payment.
8.406 Ordering activity responsibilities.
8.406-1 Order placement.
8.406-2 Inspection and acceptance.
8.406-3 Remedies for nonconformance.
8.406-4 Termination for cause.
8.406-5 Termination for the Government's convenience.
8.406-6 Disputes.


8.401  Definitions.

    As used in this subpart--
    Ordering activity means an activity that is authorized to place 
orders, or establish blanket purchase agreements (BPA), against the 
General Services Administration's (GSA) Multiple Award Schedule 
contracts. A list of eligible ordering activities is available at 
http://www.gsa.gov/schedules (click ``For Customers Ordering from 
Schedules'' and then ``Eligibility to Use GSA Sources'').
    Multiple Award Schedule (MAS) means contracts awarded by GSA or the 
Department of Veterans Affairs (VA) for similar or comparable supplies, 
or services, established with more than one supplier, at varying 
prices. The primary statutory authority for the MAS program is derived 
from both Title III of the Administrative Services Act of 1949 (41 
U.S.C. 251, et seq.) and Title 40 U.S.C., Public Buildings, Property 
and Works.
    Requiring agency means the agency needing the supplies or services.
    Schedules e-Library means the on-line source for GSA and VA Federal 
Supply Schedule contract award information. Schedules e-Library may be 
accessed at http://www.gsa.gov/elibrary.
    Special Item Number (SIN) means a group of generically similar (but 
not identical) supplies or services that are intended to serve the same 
general purpose or function.


8.402  General.

    (a) The Federal Supply Schedule program is also known as the GSA 
Schedules Program or the Multiple Award Schedule Program. The Federal 
Supply Schedule program is directed and managed by GSA and provides 
Federal agencies (see 8.002) with a simplified process for obtaining 
commercial supplies and services at prices associated with volume 
buying. Indefinite delivery contracts are awarded to provide supplies 
and services at stated prices for given periods of time. GSA may 
delegate certain responsibilities to other agencies (e.g., GSA has 
delegated authority to the VA to procure medical supplies under the VA 
Federal Supply Schedules program). Orders issued under the VA

[[Page 34235]]

Federal Supply Schedule program are covered by this subpart. 
Additionally, the Department of Defense (DoD) manages similar systems 
of schedule-type contracting for military items; however, DoD systems 
are not covered by this subpart.
    (b) GSA schedule contracts require all schedule contractors to 
publish an ``Authorized Federal Supply Schedule Pricelist'' 
(pricelist). The pricelist contains all supplies and services offered 
by a schedule contractor. In addition, each pricelist contains the 
pricing and the terms and conditions pertaining to each Special Item 
Number that is on schedule. The schedule contractor is required to 
provide one copy of its pricelist to any ordering activity upon 
request. Also, a copy of the pricelist may be obtained from the Federal 
Supply Service by submitting a written e-mail request to 
schedules.infocenter@gsa.gov or by telephone at 1-800-488-3111. This 
subpart, together with the pricelists, contain necessary information 
for placing delivery or task orders with schedule contractors. In 
addition, the GSA schedule contracting office issues Federal Supply 
Schedules publications that contain a general overview of the Federal 
Supply Schedule (FSS) program and address pertinent topics. Ordering 
activities may request copies of schedules publications by contacting 
the Centralized Mailing List Service through the Internet at http://www.gsa.gov/cmls, submitting written e-mail requests to CMLS@gsa.gov; 
or by completing GSA Form 457, FSS Publications Mailing List 
Application, and mailing it to the GSA Centralized Mailing List Service 
(7SM), P.O. Box 6477, Fort Worth, TX 76115. Copies of GSA Form 457 may 
also be obtained from the above-referenced points of contact.
    (c)(1) GSA offers an on-line shopping service called ``GSA 
Advantage!'' through which ordering activities may place orders against 
Schedules. (Ordering activities may also use GSA Advantage! to place 
orders through GSA's Global Supply System, a GSA wholesale supply 
source, formerly known as ``GSA Stock'' or the ``Customer Supply 
Center.'' FAR Subpart 8.4 is not applicable to orders placed through 
the GSA Global Supply System.) Ordering activities may access GSA 
Advantage! through the GSA Federal Supply Service Home Page (http://www.gsa.gov/fss) or the GSA Federal Supply Schedule Home Page at http://www.gsa.gov/schedules.
    (2) GSA Advantage! enables ordering activities to search specific 
information (i.e., national stock number, part number, common name), 
review delivery options, place orders directly with Schedule 
contractors and pay for orders using the Governmentwide commercial 
purchase card.
    (d) e-Buy, GSA's electronic Request for Quotation (RFQ) system, is 
a part of a suite of on-line tools which complement GSA Advantage!. E-
Buy allows ordering activities to post requirements, obtain quotes, and 
issue orders electronically. Ordering activities may access e-Buy at 
http://www.ebuy.gsa.gov. For more information or assistance on either 
GSA Advantage! or e-Buy, contact GSA at Internet e-mail address 
gsa.advantage@gsa.gov.
    (e) For more information or assistance regarding the Federal Supply 
Schedule Program, review the following Web site: http://www.gsa.gov/schedules. Additionally, for on-line training courses regarding the 
Schedules Program, review the following Web site: http://fsstraining.gsa.gov.
    (f) For administrative convenience, an ordering activity 
contracting officer may add items not on the Federal Supply Schedule 
(also referred to as open market items) to a Federal Supply Schedule 
blanket purchase agreement (BPA) or an individual task or delivery 
order only if--
    (1) All applicable acquisition regulations pertaining to the 
purchase of the items not on the Federal Supply Schedule have been 
followed (e.g., publicizing (Part 5), competition requirements (Part 
6), acquisition of commercial items (Part 12), contracting methods 
(Parts 13, 14, and 15), and small business programs (Part 19));
    (2) The ordering activity contracting officer has determined the 
price for the items not on the Federal Supply Schedule is fair and 
reasonable;
    (3) The items are clearly labeled on the order as items not on the 
Federal Supply Schedule; and
    (4) All clauses applicable to items not on the Federal Supply 
Schedule are included in the order.


8.403  Applicability.

    (a) Procedures in this subpart apply to--
    (1) Individual orders for supplies or services placed against 
Federal Supply Schedules contracts; and
    (2) BPAs established against Federal Supply Schedule contracts.
    (b) GSA may establish special ordering procedures for a particular 
schedule. In this case, that schedule will specify those special 
ordering procedures. Unless otherwise noted, special ordering 
procedures established for a Federal Supply Schedule take precedence 
over the procedures in 8.405.


8.404  Use of Federal Supply Schedules.

    (a) General. Parts 13 (except 13.303-2(c)(3)), 14, 15, and 19 
(except for the requirement at 19.202-1(e)(1)(iii)) do not apply to 
BPAs or orders placed against Federal Supply Schedules contracts (but 
see 8.405-5). BPAs and orders placed against a MAS, using the 
procedures in this subpart, are considered to be issued using full and 
open competition (see 6.102(d)(3)). Therefore, when establishing a BPA 
(as authorized by 13.303-2(c)(3)), or placing orders under Federal 
Supply Schedule contracts using the procedures of 8.405, ordering 
activities shall not seek competition outside of the Federal Supply 
Schedules or synopsize the requirement.
    (b) The contracting officer, when placing an order or establishing 
a BPA, is responsible for applying the regulatory and statutory 
requirements applicable to the agency for which the order is placed or 
the BPA is established. The requiring agency shall provide the 
information on the applicable regulatory and statutory requirements to 
the contracting officer responsible for placing the order.
    (c) Acquisition planning. Orders placed under a Federal Supply 
Schedule contract--
    (1) Are not exempt from the development of acquisition plans (see 
subpart 7.1), and an information technology acquisition strategy (see 
Part 39);
    (2) Must comply with all FAR requirements for a bundled contract 
when the order meets the definition of ``bundled contract'' (see 
2.101(b)); and
    (3) Must, whether placed by the requiring agency, or on behalf of 
the requiring agency, be consistent with the requiring agency's 
statutory and regulatory requirements applicable to the acquisition of 
the supply or service.
    (d) Pricing. Supplies offered on the schedule are listed at fixed 
prices. Services offered on the schedule are priced either at hourly 
rates, or at a fixed price for performance of a specific task (e.g., 
installation, maintenance, and repair). GSA has already determined the 
prices of supplies and fixed-price services, and rates for services 
offered at hourly rates, under schedule contracts to be fair and 
reasonable. Therefore, ordering activities are not required to make a 
separate determination of fair and reasonable pricing, except for a 
price evaluation as required by 8.405-2(d). By placing an order against 
a schedule contract using the procedures in 8.405, the ordering 
activity has

[[Page 34236]]

concluded that the order represents the best value (as defined in FAR 
2.101) and results in the lowest overall cost alternative (considering 
price, special features, administrative costs, etc.) to meet the 
Government's needs. Although GSA has already negotiated fair and 
reasonable pricing, ordering activities may seek additional discounts 
before placing an order (see 8.405-4).


8.405  Ordering procedures for Federal Supply Schedules.

    Ordering activities shall use the ordering procedures of this 
section when placing an order or establishing a BPA for supplies or 
services. The procedures in this section apply to all schedules.


8.405-1  Ordering procedures for supplies, and services not requiring a 
statement of work.

    (a) Ordering activities shall use the procedures of this subsection 
when ordering supplies and services that are listed in the schedules 
contracts at a fixed price for the performance of a specific task, 
where a statement of work is not required (e.g., installation, 
maintenance, and repair).
    (b) Orders at or below the micro-purchase threshold. Ordering 
activities may place orders at, or below, the micro-purchase threshold 
with any Federal Supply Schedule contractor that can meet the agency's 
needs. Although not required to solicit from a specific number of 
schedule contractors, ordering activities should attempt to distribute 
orders among contractors.
    (c) Orders exceeding the micro-purchase threshold but not exceeding 
the maximum order threshold. Ordering activities shall place orders 
with the schedule contractor that can provide the supply or service 
that represents the best value. Before placing an order, an ordering 
activity shall consider reasonably available information about the 
supply or service offered under MAS contracts by surveying the GSA 
Advantage! on-line shopping service, or by reviewing the catalogs or 
pricelists of at least three schedule contractors (see 8.405-5). In 
addition to price, when determining best value, the ordering activity 
may consider, among other factors, the following:
    (1) Past performance.
    (2) Special features of the supply or service required for 
effective program performance.
    (3) Trade-in considerations.
    (4) Probable life of the item selected as compared with that of a 
comparable item.
    (5) Warranty considerations.
    (6) Maintenance availability.
    (7) Environmental and energy efficiency considerations.
    (8) Delivery terms.
    (d) Orders exceeding the maximum order threshold. Each schedule 
contract has a maximum order threshold established on a SIN-by-SIN 
basis. Although a price reduction may be sought at any time, this 
threshold represents the point where, given the dollar value of the 
potential order, the ordering activity shall seek a price reduction. In 
addition to following the procedures in paragraph (c) of this section 
and before placing an order that exceeds the maximum order threshold or 
establishing a BPA (see 8.405-3), ordering activities shall--
    (1) Review the pricelists of additional schedule contractors (the 
GSA Advantage! on-line shopping service can be used to facilitate this 
review);
    (2) Based upon the initial evaluation, seek price reductions from 
the schedule contractor(s) considered to offer the best value (see 
8.404(d)); and
    (3) After seeking price reductions (see 8.405-4), place the order 
with the schedule contractor that provides the best value. If further 
price reductions are not offered, an order may still be placed.


8.405-2  Ordering procedures for services requiring a statement of 
work.

    (a) General. Ordering activities shall use the procedures in this 
subsection when ordering services priced at hourly rates as established 
by the schedule contracts. The applicable services will be identified 
in the Federal Supply Schedule publications and the contractor's 
pricelists.
    (b) Statements of Work (SOWs). All Statements of Work shall include 
the work to be performed; location of work; period of performance; 
deliverable schedule; applicable performance standards; and any special 
requirements (e.g., security clearances, travel, special knowledge). To 
the maximum extent practicable, agency requirements shall be 
performance-based statements (see subpart 37.6).
    (c) Request for Quotation procedures. The ordering activity must 
provide the Request for Quotation (RFQ), which includes the statement 
of work and evaluation criteria (e.g., experience and past 
performance), to schedule contractors that offer services that will 
meet the agency's needs. The RFQ may be posted to GSA's electronic RFQ 
system, e-Buy (see 8.402(d)).
    (1) Orders at, or below, the micro-purchase threshold. Ordering 
activities may place orders at, or below, the micro-purchase threshold 
with any Federal Supply Schedule contractor that can meet the agency's 
needs. The ordering activity should attempt to distribute orders among 
contractors.
    (2) For orders exceeding the micro-purchase threshold, but not 
exceeding the maximum order threshold. (i) The ordering activity shall 
develop a statement of work, in accordance with 8.405-2(b).
    (ii) The ordering activity shall provide the RFQ (including the 
statement of work and evaluation criteria) to at least three schedule 
contractors that offer services that will meet the agency's needs.
    (iii) The ordering activity should request that contractors submit 
firm-fixed prices to perform the services identified in the statement 
of work.
    (3) For proposed orders exceeding the maximum order threshold or 
when establishing a BPA. In addition to meeting the requirements of 
8.405-2(c)(2), the ordering activity shall--
    (i) Provide the RFQ (including the statement of work and evaluation 
criteria) to additional schedule contractors that offer services that 
will meet the needs of the ordering activity. When determining the 
appropriate number of additional schedule contractors, the ordering 
activity may consider, among other factors, the following:
    (A) The complexity, scope and estimated value of the requirement.
    (B) The market search results.
    (ii) Seek price reductions.
    (4) The ordering activity shall provide the RFQ (including the 
statement of work and the evaluation criteria) to any schedule 
contractor who requests a copy of it.
    (d) Evaluation. The ordering activity shall evaluate all responses 
received using the evaluation criteria provided to the schedule 
contractors. The ordering activity is responsible for considering the 
level of effort and the mix of labor proposed to perform a specific 
task being ordered, and for determining that the total price is 
reasonable. Place the order, or establish the BPA, with the schedule 
contractor that represents the best value (see 8.404(d)). After award, 
ordering activities should provide timely notification to unsuccessful 
offerors. If an unsuccessful offeror requests information on an award 
that was based on factors other than price alone, a brief explanation 
of the basis for the award decision shall be provided.


8.405-3  Blanket purchase agreements (BPAs).

    (a)(1) Establishment. Ordering activities may establish BPAs under 
any schedule contract to fill repetitive needs for supplies or 
services. BPAs may be

[[Page 34237]]

established with one or more schedule contractors. The number of BPAs 
to be established is within the discretion of the ordering activity 
establishing the BPAs and should be based on a strategy that is 
expected to maximize the effectiveness of the BPA(s). In determining 
how many BPAs to establish, consider--
    (i) The scope and complexity of the requirement(s);
    (ii) The need to periodically compare multiple technical approaches 
or prices;
    (iii) The administrative costs of BPAs; and
    (iv) The technical qualifications of the schedule contractor(s).
    (2) Establishment of a single BPA, or multiple BPAs, shall be made 
using the same procedures outlined in 8.405-1 or 8.405-2. BPAs shall 
address the frequency of ordering, invoicing, discounts, requirements 
(e.g. estimated quantities, work to be performed), delivery locations, 
and time.
    (3) When establishing multiple BPAs, the ordering activity shall 
specify the procedures for placing orders under the BPAs.
    (4) Establishment of a multi-agency BPA against a Federal Supply 
Schedule contract is permitted if the multi-agency BPA identifies the 
participating agencies and their estimated requirements at the time the 
BPA is established.
    (b) Ordering from BPAs--(1) Single BPA. If the ordering activity 
establishes one BPA, authorized users may place the order directly 
under the established BPA when the need for the supply or service 
arises.
    (2) Multiple BPAs. If the ordering activity establishes multiple 
BPAs, before placing an order exceeding the micro-purchase threshold, 
the ordering activity shall--
    (i) Forward the requirement, or statement of work and the 
evaluation criteria, to an appropriate additional number of BPA 
holders, as established in the BPA ordering procedures; and
    (ii) Evaluate the responses received, make a best value 
determination (see 8.404(d)), and place the order with the BPA holder 
that represents the best value.
    (3) BPAs for hourly rate services. If the BPA is for hourly rate 
services, the ordering activity shall develop a statement of work for 
requirements covered by the BPA. All orders under the BPA shall specify 
a price for the performance of the tasks identified in the statement of 
work.
    (c) Duration of BPAs. BPAs generally should not exceed five years 
in length, but may do so to meet program requirements. Contractors may 
be awarded BPAs that extend beyond the current term of their GSA 
Schedule contract, so long as there are option periods in their GSA 
Schedule contract that, if exercised, will cover the BPA's period of 
performance.
    (d) Review of BPAs. (1) The ordering activity that established the 
BPA shall review it at least once a year to determine whether--
    (i) The schedule contract, upon which the BPA was established, is 
still in effect;
    (ii) The BPA still represents the best value (see 8.404(d)); and
    (iii) Estimated quantities/amounts have been exceeded and 
additional price reductions can be obtained.
    (2) The ordering activity shall document the results of its review.


8.405-4  Price reductions.

    In addition to seeking price reductions before placing an order 
exceeding the maximum order threshold (see 8.405-1(d)), or in 
conjunction with the annual BPA review, there may be other reasons to 
request a price reduction. For example, ordering activities should seek 
a price reduction when the supply or service is available elsewhere at 
a lower price, or when establishing a BPA to fill recurring 
requirements. The potential volume of orders under BPAs, regardless of 
the size of individual orders, offers the opportunity to secure greater 
discounts. Schedule contractors are not required to pass on to all 
schedule users a price reduction extended only to an individual 
ordering activity for a specific order.


8.405-5  Small business.

    (a) Although the mandatory preference programs of Part 19 do not 
apply, orders placed against schedule contracts may be credited toward 
the ordering activity's small business goals. For purposes of reporting 
an order placed with a small business schedule contractor, an ordering 
agency may only take credit if the awardee meets a size standard that 
corresponds to the work performed. Ordering activities should rely on 
the small business representations made by schedule contractors at the 
contract level.
    (b) Ordering activities may consider socio-economic status when 
identifying contractor(s) for consideration or competition for award of 
an order or BPA. At a minimum, ordering activities should consider, if 
available, at least one small business, veteran-owned small business, 
service disabled veteran-owned small business, HUBZone small business, 
women-owned small business, or small disadvantaged business schedule 
contractor(s). GSA Advantage! and Schedules e-Library at http://www.gsa.gov/fss contain information on the small business 
representations of Schedule contractors.
    (c) For orders exceeding the micro-purchase threshold, ordering 
activities should give preference to the items of small business 
concerns when two or more items at the same delivered price will 
satisfy the requirement.


8.405-6  Sole source justification and approval.

    Orders placed under Federal Supply Schedules are exempt from the 
requirements in Part 6. However, ordering activities shall--
    (a) Procure sole source requirements under this subpart only if the 
need to do so is justified in writing and approved at the levels 
specified in paragraph (b) of this section; and
    (b) Prepare sole source justifications using the information at 
6.303-2, modified to cite that the acquisition is conducted under the 
authority of Section 201 of the Federal Property and Administrative 
Services Act of 1949 (40 U.S.C. 501).
    (1) For proposed orders exceeding the micro-purchase threshold, but 
not exceeding the simplified acquisition threshold, the ordering 
activity contracting officer may solicit from one source, if the 
ordering activity contracting officer determines that the circumstances 
deem only one source is reasonably available (e.g., urgency, exclusive 
licensing agreement, industrial mobilization). The contracting officer 
shall approve the justification unless a higher approval level is 
established in accordance with agency procedures.
    (2) For proposed orders exceeding the simplified acquisition 
threshold, but not exceeding $500,000, the ordering activity 
contracting officer's certification that the justification is accurate 
and complete to the best of the ordering activity contracting officer's 
knowledge and belief will serve as approval, unless a higher approval 
level is established in accordance with agency procedures.
    (3) For a proposed order exceeding $500,000, but not exceeding $10 
million, the competition advocate for the procuring activity, 
designated pursuant to 6.501, or an official described in 6.304(a)(3) 
or (a)(4) must approve the justification. This authority is not 
delegable.
    (4) For a proposed order exceeding $10 million but not exceeding 
$50 million, the head of the procuring activity or an official 
described in 6.304(a)(3)(i) or (ii) shall approve the

[[Page 34238]]

justification. This authority is not delegable.
    (5) For a proposed order exceeding $50 million, the official 
described in 6.304(a)(4) shall approve the justification. This 
authority is not delegable, except as provided in 6.304(a)(4).


8.405-7  Documentation.

    (a) Minimum documentation. The ordering activity shall document--
    (1) The contracts considered, noting the contractor from which the 
supply or service was purchased;
    (2) A description of the supply or service purchased;
    (3) The amount paid; and
    (4) If applicable, the circumstances and rationale for restricting 
consideration of schedule contractors to fewer than that required in 
8.405-1 or 8.405-2 (see 8.405-6). Justifications for such restrictions 
may include--
    (i) Only one source is capable of responding due to the unique or 
specialized nature of the work;
    (ii) The new work is a logical follow-on to an existing order 
provided that the original order was placed in accordance with 8.405-1 
or 8.405-2 (excluding orders placed previously under sole source 
requirements);
    (iii) The item is peculiar to one manufacturer. A brand name item, 
available on various schedule contracts, is an item peculiar to one 
manufacturer; or
    (iv) An urgent and compelling need exists and following the 
ordering procedures would result in unacceptable delays.
    (b) Additional documentation for services. In addition to the 
documentation requirements of paragraph (a) of this section, when 
acquiring services using the procedures at 8.405-2, the ordering office 
shall also document--
    (1) The evaluation methodology used in selecting the contractor to 
receive the order;
    (2) The rationale for any tradeoffs in making the selection;
    (3) The price reasonableness determination required by 8.405-2(d); 
and
    (4) The rationale for using other than--
    (i) A firm-fixed price order; or
    (ii) A performance-based order.


8.405-8  Payment.

    Agencies may make payments for oral or written orders by any 
authorized means, including the Governmentwide commercial purchase 
card.


8.406  Ordering activity responsibilities.


8.406-1  Order placement.

    Ordering activities may place orders orally (except for services 
requiring a statement of work (SOW)) or use Optional Form 347, an 
agency-prescribed form, or an established electronic communications 
format to order supplies or services from schedule contracts. The 
ordering activity shall place an order directly with the contractor in 
accordance with the terms and conditions of the pricelists (see 
8.402(b)). Prior to placement of the order, the ordering activity shall 
ensure that the regulatory and statutory requirements of the requiring 
agency have been applied. Orders shall include the following 
information in addition to any information required by the schedule 
contract:
    (a) Complete shipping and billing addresses.
    (b) Contract number and date.
    (c) Agency order number.
    (d) F.o.b. delivery point; i.e., origin or destination.
    (e) Discount terms.
    (f) Delivery time or period of performance.
    (g) Special item number or national stock number.
    (h) A statement of work for services, when required, or a brief, 
complete description of each item (when ordering by model number, 
features and options such as color, finish, and electrical 
characteristics, if available, must be specified).
    (i) Quantity and any variation in quantity.
    (j) Number of units.
    (k) Unit price.
    (l) Total price of order.
    (m) Points of inspection and acceptance.
    (n) Other pertinent data; e.g., delivery instructions or receiving 
hours and size-of-truck limitation.
    (o) Marking requirements.
    (p) Level of preservation, packaging, and packing.


8.406-2  Inspection and acceptance.

    (a) Supplies. (1) Consignees shall inspect supplies at destination 
except when--
    (i) The schedule contract indicates that mandatory source 
inspection is required by the schedule contracting agency; or
    (ii) A schedule item is covered by a product description, and the 
ordering activity determines that the schedule contracting agency's 
inspection assistance is needed (based on the ordering volume, the 
complexity of the supplies, or the past performance of the supplier).
    (2) When the schedule contracting agency performs the inspection, 
the ordering activity will provide two copies of the order specifying 
source inspection to the schedule contracting agency. The schedule 
contracting agency will notify the ordering activity of acceptance or 
rejection of the supplies.
    (3) Material inspected at source by the schedule contracting 
agency, and determined to conform with the product description of the 
schedule, shall not be reinspected for the same purpose. The consignee 
shall limit inspection to kind, count, and condition on receipt.
    (4) Unless otherwise provided in the schedule contract, acceptance 
is conclusive, except as regards latent defects, fraud, or such gross 
mistakes as amount to fraud.
    (b) Services. The ordering activity has the right to inspect all 
services in accordance with the contract requirements and as called for 
by the order. The ordering activity shall perform inspections and tests 
as specified in the order's quality assurance surveillance plan in a 
manner that will not unduly delay the work.


8.406-3  Remedies for nonconformance.

    (a) If a contractor delivers a supply or service, but it does not 
conform to the order requirements, the ordering activity shall take 
appropriate action in accordance with the inspection and acceptance 
clause of the contract, as supplemented by the order.
    (b) If the contractor fails to perform an order, or take 
appropriate corrective action, the ordering activity may terminate the 
order for cause or modify the order to establish a new delivery date 
(after obtaining consideration, as appropriate). Ordering activities 
shall follow the procedures at 8.406-4 when terminating an order for 
cause.


8.406-4  Termination for cause.

    (a)(1) An ordering activity contracting officer may terminate 
individual orders for cause. Termination for cause shall comply with 
FAR 12.403, and may include charging the contractor with excess costs 
resulting from repurchase.
    (2) The schedule contracting office shall be notified of all 
instances where an ordering activity contracting officer has terminated 
for cause an individual order to a Federal Supply Schedule contractor, 
or if fraud is suspected.
    (b) If the contractor asserts that the failure was excusable, the 
ordering activity contracting officer shall follow the procedures at 
8.406-6, as appropriate.
    (c) If the contractor is charged excess costs, the following apply:

[[Page 34239]]

    (1) Any repurchase shall be made at as low a price as reasonable, 
considering the quality required by the Government, delivery 
requirement, and administrative expenses. Copies of all repurchase 
orders, except the copy furnished to the contractor or any other 
commercial concern, shall include the notation:

Repurchase against the account of -------- [insert contractor's 
name] under Order -------- [insert number] under Contract -------- 
[insert number].

    (2) When excess costs are anticipated, the ordering activity may 
withhold funds due the contractor as offset security. Ordering 
activities shall minimize excess costs to be charged against the 
contractor and collect or set-off any excess costs owed.
    (3) If an ordering activity is unable to collect excess repurchase 
costs, it shall notify the schedule contracting office after final 
payment to the contractor.
    (i) The notice shall include the following information about the 
terminated order:
    (A) Name and address of the contractor.
    (B) Schedule, contract, and order number.
    (C) National stock or special item number(s), and a brief 
description of the item(s).
    (D) Cost of schedule items involved.
    (E) Excess costs to be collected.
    (F) Other pertinent data.
    (ii) The notice shall also include the following information about 
the purchase contract:
    (A) Name and address of the contractor.
    (B) Item repurchase cost.
    (C) Repurchase order number and date of payment.
    (D) Contract number, if any.
    (E) Other pertinent data.
    (d) Only the schedule contracting officer may modify the contract 
to terminate for cause any, or all, supplies or services covered by the 
schedule contract. If the schedule contracting officer has terminated 
any supplies or services covered by the schedule contract, no further 
orders may be placed for those items. Orders placed prior to 
termination for cause shall be fulfilled by the contractor, unless 
terminated for the convenience of the Government by the ordering 
activity contracting officer.


8.406-5  Termination for the Government's convenience.

    (a) An ordering activity contracting officer may terminate 
individual orders for the Government's convenience. Terminations for 
the Government's convenience shall comply with FAR 12.403.
    (b) Before terminating orders for the Government's convenience, the 
ordering activity contracting officer shall endeavor to enter into a 
``no cost'' settlement agreement with the contractor.
    (c) Only the schedule contracting officer may modify the schedule 
contract to terminate any, or all, supplies or services covered by the 
schedule contract for the Government's convenience.


8.406-6  Disputes.

    (a) Disputes pertaining to the performance of orders under a 
schedule contract. (1) Under the Disputes clause of the schedule 
contract, the ordering activity contracting officer may--
    (i) Issue final decisions on disputes arising from performance of 
the order (but see paragraph (b) of this section); or
    (ii) Refer the dispute to the schedule contracting officer.
    (2) The ordering activity contracting officer shall notify the 
schedule contracting officer promptly of any final decision.
    (b) Disputes pertaining to the terms and conditions of schedule 
contracts. The ordering activity contracting officer shall refer all 
disputes that relate to the contract terms and conditions to the 
schedule contracting officer for resolution under the Disputes clause 
of the contract and notify the schedule contractor of the referral.
    (c) Appeals. Contractors may appeal final decisions to either the 
Board of Contract Appeals servicing the agency that issued the final 
decision or the U.S. Court of Federal Claims.
    (d) Alternative dispute resolution. The contracting officer should 
use the alternative dispute resolution (ADR) procedures, to the maximum 
extent practicable (see 33.204 and 33.214).

PART 38--FEDERAL SUPPLY SCHEDULE CONTRACTING

0
3. Revise section 38.000 to read as follows:


38.000  Scope of part.

    This part prescribes policies and procedures for contracting for 
supplies and services under the Federal Supply Schedule program, which 
is directed and managed by the General Services Administration (see 
Subpart 8.4, Federal Supply Schedules, for additional information). GSA 
may delegate certain responsibilities to other agencies (e.g., GSA has 
delegated authority to the Department of Veterans Affairs (VA) to 
procure medical supplies under the VA Federal Supply Schedules 
Program). The VA Federal Supply Schedules Program is covered by this 
subpart. Additionally, the Department of Defense manages a similar 
system of schedule contracting for military items; however, the 
Department of Defense systems are not a part of the Federal Supply 
Schedule program.

0
4. Amend section 38.101 by revising paragraph (a) to read as follows:


38.101  General.

    (a) The Federal Supply Schedule program, pursuant to 41 U.S.C. 
259(b)(3)(A), provides Federal agencies with a simplified process of 
acquiring commercial supplies and services in varying quantities while 
obtaining volume discounts. Indefinite-delivery contracts are awarded 
using competitive procedures to firms. The firms provide supplies and 
services at stated prices for given periods of time, for delivery 
within a stated geographic area such as the 48 contiguous states, the 
District of Columbia, Alaska, Hawaii, and overseas. The schedule 
contracting office issues Federal Supply Schedule publications that 
contain a general overview of the Federal Supply Schedule (FSS) program 
and address pertinent topics.
* * * * *

PART 53--FORMS


53.213  [Amended]

0
5. Amend section 53.213 in paragraph (f)(4) by removing ``8.405-2'' and 
adding ``8.406-1'' in its place.

[FR Doc. 04-13622 Filed 6-17-04; 8:45 am]
BILLING CODE 6820-EP-P