[Federal Register Volume 71, Number 75 (Wednesday, April 19, 2006)]
[Rules and Regulations]
[Pages 20299-20300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3689]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 5, 7, 14, 37, and 52

[FAC 2005-09; FAR Case 2004-021; Item III; Docket FAR-2006-0020]
RIN 9000-AK25


Federal Acquisition Regulation; FAR Case 2004-021, OMB Circular 
A-76

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 provide language 
that is consistent with OMB Circular A-76 (Revised), Performance of 
Commercial Activities, dated May 29, 2003.

DATES: Effective Date: May 19, 2006.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Mr. Gerald Zaffos, Procurement Analyst, at (202) 208-6091. Please cite 
FAC 2005-09, FAR case 2004-021. For information pertaining to status or 
publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 70 FR 43107, July 26, 2005. One commenter submitted two 
comments in response. The first comment is that ``7.302(a)(4) [sic] and 
52.207-1(d) reference `contest(s)'... Should that be protests?'' The 
word ``contest'' was meant, not ``protest.'' The A-76 Circular created 
an additional procedure called a ``contest'', discussed at Attachment 
B, paragraph F.
    The second comment says that there is a conflict between the 
language in paragraph (c) of the provision at FAR 52.207-1 which states 
that, if a performance decision resulting from standard competition 
favors a private sector offeror, a contract will be awarded, and 
paragraph (c) of the provision at FAR 52.207-2 which states that, if a 
performance decision resulting from a streamlined competition favors 
private sector performance, the contracting officer will either award a 
contract or issue a competitive solicitation. The Councils see no 
conflict and note that the language is consistent with the Circular. In 
a streamlined competition, an agency may estimate the cost of private 
sector performance by conducting market research or by soliciting cost 
proposals in accordance with the FAR (OMB Circ. A-76, Att. B, para. 
C.1.b.). If the performance decision favors private sector performance, 
the contracting officer may either award a contract resulting from the 
solicitation of cost proposals or issue a competitive solicitation to 
determine a private sector provider (OMB Cir. A-76, Att. B, para. 
C.3.d.(1).) Therefore, the final rule adopts the proposed rule language 
without change.
    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 Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because the rule does not 
impose any costs on either small or large businesses.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 96-511) does not apply because 
the changes to the FAR do not impose information collection 
requirements that require the approval of the Office of Management and 
Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 2, 5, 7, 14, 37, and 52

    Government procurement.

    Dated: April 12, 2006.
Gerald Zaffos,
Director, Contract Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 5, 7, 14, 37, and 
52 as set forth below:
0
1. The authority citation for 48 CFR parts 2, 5, 7, 14, 37, and 52 
continues 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 2--DEFINITIONS OF WORDS AND TERMS


2.101  [Amended]

0
2. Amend section 2.101 in paragraph (b), in the definition ``Inherently 
governmental function'', by removing the last sentence in paragraph 
(2).

PART 5--PUBLICIZING CONTRACT ACTIONS

0
3. Amend section 5.205 by revising paragraph (e) to read as follows:


5.205  Special situations.

* * * * *
    (e) Public-private competitions under OMB Circular A-76. (1) The 
contracting officer shall make a formal public announcement for each 
streamlined or standard competition. The public announcement shall 
include, at a minimum, the agency, agency component, location, type of 
competition (streamlined or standard), activity being competed, 
incumbent service providers, number of Government personnel performing 
the activity, name of the Competitive Sourcing Official, name of the 
contracting officer, name of the Agency Tender Official, and projected 
end date of the competition.
    (2) The contracting officer shall announce the end of the 
streamlined or standard competition by making a formal public 
announcement of the performance decision. (See OMB Circular A-76.)
* * * * *

PART 7--ACQUISITION PLANNING

0
4. Amend section 7.105 by revising paragraph (b)(9) to read as follows:


7.105  Contents of written acquisition plans.

* * * * *
    (b)* * *
    (9) Inherently governmental functions. Address the consideration 
given to Subpart 7.5.
* * * * *
0
5. Revise Subpart 7.3 to read as follows:

Subpart 7.3--Contractor Versus Government Performance

Sec.
7.300 [Reserved]
7.301 Definitions.
7.302 Policy.


[[Page 20300]]

7.303 [Reserved]
7.304 [Reserved]
7.305 Solicitation provisions and contract clause.


7.300  [Reserved]


7.301  Definitions.

    Definitions of ``inherently governmental activity'' and other terms 
applicable to this subpart are set forth at Attachment D of the Office 
of Management and Budget Circular No. A-76 (Revised), Performance of 
Commercial Activities, dated May 29, 2003 (the Circular).


7.302  Policy.

    (a) The Circular provides that it is the policy of the Government 
to--
    (1) Perform inherently governmental activities with Government 
personnel; and
    (2) Subject commercial activities to the forces of competition.
    (b) As provided in the Circular, agencies shall--
    (1) Not use contractors to perform inherently governmental 
activities;
    (2) Conduct public-private competitions in accordance with the 
provisions of the Circular and, as applicable, these regulations;
    (3) Give appropriate consideration relative to cost when making 
performance decisions between agency and contractor performance in 
public-private competitions;
    (4) Consider the Agency Tender Official an interested party in 
accordance with 31 U.S.C. 3551 to 3553 for purposes of filing a protest 
at the Government Accountability Office; and
    (5) Hear contests in accordance with OMB Circular A-76, Attachment 
B, Paragraph F.
    (c) When using sealed bidding in public-private competitions under 
OMB Circular A-76, contracting officers shall not hold discussions to 
correct deficiencies.


7.303  [Reserved]


7.304  [Reserved]


7.305  Solicitation provisions and contract clause.

    (a) The contracting officer shall, when soliciting offers and 
tenders, insert in solicitations issued for standard competitions the 
provision at 52.207-1, Notice of Standard Competition.
    (b) The contracting officer shall, when soliciting offers, insert 
in solicitations issued for streamlined competitions the provision at 
52.207-2, Notice of Streamlined Competition.
    (c) The contracting officer shall insert the clause at 52.207-3, 
Right of First Refusal of Employment, in all solicitations which may 
result in a conversion from in-house performance to contract 
performance of work currently being performed by the Government and in 
contracts that result from the solicitations, whether or not a public-
private competition is conducted. The 10-day period in the clause may 
be varied by the contracting officer up to a period of 90 days.


7.500  [Amended]

0
6. Amend section 7.500 by removing the last sentence.

PART 14--SEALED BIDDING


14.203-2  [Amended]

0
7. Amend section 14.203-2 by removing the paragraph designation ``(a)'' 
and by removing paragraph (b).

PART 37--SERVICE CONTRACTING

0
8. Amend section 37.503 by revising paragraph (c) to read as follows:


37.503  Agency-head responsibilities.

* * * * *
    (c) Specific procedures are in place before contracting for 
services to ensure that inherently governmental functions are performed 
by Government personnel; and
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
9. Revise section 52.207-1 to read as follows:


52.207-1  Notice of Standard Competition.

    As prescribed in 7.305(a), insert the following provision:

    NOTICE OF STANDARD COMPETITION (MAY 2006)
    (a) This solicitation is part of a standard competition under 
Office of Management and Budget Circular No. A-76 (Revised), 
Performance of Commercial Activities, dated May 29, 2003 (hereafter 
``the Circular''), to determine whether to accomplish the specified 
work under contract or by Government performance.
    (b) The Government will evaluate private sector offers, the 
agency tender, and public reimbursable tenders, as provided in this 
solicitation and the Circular.
    (c) A performance decision resulting from this standard 
competition will be publicly announced in accordance with the 
Circular. If the performance decision favors a private sector 
offeror, a contract will be awarded. If the performance decision 
favors an agency or a public reimbursable tender, the Contracting 
Officer shall establish, respectively, either a Most Efficient 
Organization letter of obligation or a fee-for-service agreement, as 
those terms are defined in the Circular.
    (d) As provided in the Circular, directly interested parties may 
file contests, which are governed by the procedures in Federal 
Acquisition Regulation 33.103. Until resolution of any contest, or 
the expiration of the time for filing a contest, only legal agents 
for directly interested parties shall have access to the certified 
standard competition form, the agency tender, and public 
reimbursable tenders.
(End of provision)
0
10. Revise section 52.207-2 to read as follows:


52.207-2  Notice of Streamlined Competition.

    As prescribed in 7.305(b), insert the following provision:

    NOTICE OF STREAMLINED COMPETITION (MAY 2006)
    (a) This solicitation is part of a streamlined competition under 
Office of Management and Budget Circular No. A-76 (Revised), 
Performance of Commercial Activities, dated May 29, 2003 (hereafter 
``the Circular''), to determine whether to accomplish the specified 
work under contract or by Government performance.
    (b) The Government will evaluate the cost of private sector and 
Agency or public reimbursable performance, as provided in this 
solicitation and the Circular.
    (c) A performance decision resulting from this streamlined 
competition will be publicly announced in accordance with the 
Circular. If the performance decision favors private sector 
performance, the Contracting Officer shall either award a contract 
or issue a competitive solicitation for private sector offers. If 
the performance decision favors Agency or public reimbursable 
performance, the Agency shall establish, respectively, either a 
letter of obligation or a fee-for-service agreement, as those terms 
are defined in the Circular.
(End of provision)


52.207-3  [Amended]

0
11. Amend section 52.207-3 by revising the date of the clause to read 
``(MAY 2006)''; and by removing from paragraphs (a) and (b) of the 
clause the word ``employees'' and adding ``personnel'' in its place.
[FR Doc. 06-3689 Filed 4-18-06; 8:45 am]
BILLING CODE 6820-EP-S