[Federal Register Volume 75, Number 135 (Thursday, July 15, 2010)]
[Rules and Regulations]
[Pages 41093-41097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-17140]


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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 516 and 552

[GSAR Amendment 2010-03; GSAR Case 2006-G504 (Change 46) Docket 2008-
0007; Sequence 12]
RIN 3090-AI58


General Services Administration Acquisition Regulation; Rewrite 
of GSAR Part 516, Types of Contracts

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

ACTION: Final rule.

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SUMMARY: The General Services Administration (GSA) is amending the 
General Services Administration Acquisition Regulation (GSAR) to update 
GSAR Part 516, Types of Contracts. GSAR part 516 has been revised to 
add and/or clarify policy pertaining to requirements for types of 
contracts.

DATES: Effective Date: August 16, 2010.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Mr. Warren J. Blankenship, Procurement Analyst, at (202) 501-1900. For 
information pertaining to status or publication schedules, contact the 
Regulatory Secretariat (MVCB), Room 4041, 1800 F Street, NW., 
Washington, DC, 20405, (202) 501-4755. Please cite Amendment 2010-03, 
GSAR Case 2006-G504 (Change 46).

SUPPLEMENTARY INFORMATION:

[[Page 41094]]

A. Background

The GSAM Rewrite and Project and Process

    This rule is part of the GSA Acquisition Manual (GSAM) Rewrite 
Project to revise the regulation in order to maintain consistency with 
the Federal Acquisition Regulation (FAR), update regulations, and 
implement streamlined and innovative acquisition procedures. The GSAM 
incorporates the GSAR as well as internal agency acquisition policy.
    The GSA published an Advance Notice of Proposed Rulemaking (ANPR) 
in the Federal Register at 71 FR 7910 on February 15, 2006, with a 
request for comments on the entire GSAM. As a result, six comments were 
received on GSAR part 516. In addition, applicable statutes, GSA 
Acquisition Letters, Federal Acquisition Service (FAS) (formerly the 
Federal Supply Service (FSS)) and Public Building Service (PBS) 
Acquisition Letters, and GSA delegations of authority were considered 
in developing the initial draft. Prior to publication of a proposed 
rule, there was extensive internal review and comment.
    A proposed rule for GSAR part 516 was published in the Federal 
Register at 73 FR 39275 on July 9, 2008. The public comment period for 
GSAR part 516 closed on September 8, 2008. A total of 11 comments were 
received by the close of the public comment period.
    The proposed rule aligned GSAR part 516 to the structure of FAR 
part 16; revised the prescriptions for clauses included in GSAR 
516.203-4, Contract clauses; and GSAR 516.506, Solicitation Provisions 
and Contract Clauses; and made changes to the title and numbering of 
GSAR 516.603-3, Limitations. Additionally, the associated clauses 
located in GSAR 552.216 were amended to: relocate GSAR 552.216-70, 
Economic Price Adjustment--FSS Multiple Award Schedule Contracts, to 
GSAR 552.238; retain and revise GSAR 552.216-71, Economic Price 
Adjustment--Special Order Program Contracts, revise GSAR 552.216-72, 
Placement of Orders; make minor edits to GSAR 552.216-73, Ordering 
information; and include a new GSAR 552.216-74, Task-Order and 
Delivery-Order Ombudsman.
    The following subparts were retained:


Subpart Number Subpart Title

516.2 Fixed-Price Contracts.
516.4 Incentive Contracts.
516.5 Indefinite-Delivery
 Contracts.
516.6 Time-and-Materials,
 Labor-Hour, and
 Letter Contracts.

    In the final rule, these four subparts are retained. Additionally, 
other important changes include the addition of the verbiage 
``Additional'' at the beginning of the title to GSAR 516.603-70, 
Limitations on the use of letter contracts for architect-engineer (A-E) 
services and the addition of the verbiage ``under the PBS Design 
Excellence Program'' added at the end of the title; revision of 
paragraph (a) in GSAR 516.603-70 to clarify that a complete price 
proposal is required prior to definitization of a contract in 
accordance with FAR 52.216-25; removal of GSAR 516.603-70 from 
regulatory to non-regulatory because it provides guidance to the 
contracting officer; and revisions to proposed GSAR 552.216-74, Task-
Order and Delivery-Order Ombudsman, to clarify the Ombudsman's role and 
responsibilities, as well as, to provide contact information.
    Discussion of Comments
    There were six public comments received in response to the ANPR 
published in the Federal Register at 71 FR 7910 on February 15, 2006. A 
proposed rule was published in the Federal Register at 74 FR 4596 on 
July 9, 2008. The comment period closed September 8, 2008, with 11 
comments received.
    Comment: One commenter noted that the rule is unnecessarily broad 
in scope. It would relax requirements for the use of sinking lines that 
are already in place and being used by many New England lobster 
fisherman. Moreover, the proposed rule would leave no protections in 
place for whales during the delay, except for the requirement to use 
weak links. The National Marine Fisheries Service (NMFS) has determined 
that weak links alone are inadequate to prevent entanglements of 
whales.
    Response: The team does not concur with the commenter. This comment 
had no relevance to the case therefore, no further action was 
necessary.
    Comment: The next commenter noted that GSA needs to remind 
contracting officers under GSAR subpart 516.2 that, in order for a 
contract to be procured on a firm fixed-price basis, the solicitation 
must be based on reasonably definite functional or detailed 
specification when the contracting officer can establish fair and 
reasonable prices at the outset.
    Response: The team does not concur with the commenter. The team 
reviewed FAR subpart 16.2 and found that this topic was adequately 
covered.
    Comment: The next commenter noted that GSA should require 
contracting officers to include the fixed-price basis for the 
requirements (e.g., performance period, man-hours), in a solicitation/
request for quotation if it is to be awarded and reported as a fixed-
price contract. In other words, the GSAM should forbid contracting 
officers from procuring or reporting the action as a fixed-price 
contract award.
    Response: The team does not concur with the commenter. Though the 
team concurs with the intent of the comment, the comment has more to do 
with coding and reporting of contract types. Thus, this is not 
appropriate for this GSAR part. The use of time-and-management (T&M)/
labor-hour vs. fixed-price contracts is adequately covered in FAR 
sections 16.601, 16.602, and 16.202-2, respectively.
    Comment: The next commenter noted that the GSAM should prohibit GSA 
contracting officers from unilaterally reducing any hours or contract 
price on GSAR subpart 516.6 not-to-exceed contracts, or de-obligating 
awarded funds without a bilateral supplemental agreement. It may be 
more appropriate to address this in GSAR part 543, but the violations 
seem to occur only on not-to-exceed (T&M/labor-hour) contracts that are 
being awarded and reported by GSA contracting officers as fixed-price 
contracts.
    Response: The team concurs with the commenter; however, proper 
placement of the referenced action should be made in GSAR Part 543, 
Contract Modifications.
    Comment: The next commenter noted that GSA should consider adding 
the word ``Additional'' at the beginning of the GSAR 516.603-70, 
Limitations on the use of letter contracts for architect-engineer (A-E) 
services. This could serve as a simple reminder that there are other 
``limitations'' that must be considered in accordance with FAR 16.603-
3. In particular, the vast majority of contracting officers fail to 
obtain the written determination from the Head of the Contracting 
Activity (HCA), or designee, that ``no other contract is suitable.''
    Response: The team concurs with the commenter. The text has been 
revised accordingly.
    Comment: The next commenter noted that restriction placed on 
contractors to submit a ``price proposal before award'' of a letter 
contract, at FAR 16.603-3(c), requires contracting officers to include 
in the mandated clause at FAR 52.216-25 a ``definitization schedule'' 
including ``(1) dates for submission of the contractor price 
proposal.'' Similarly, the FAR clause 52.216-25 itself

[[Page 41095]]

includes notes to the contracting officer to insert ``dates for 
submission of proposal.'' Isn't this requirement inconsistent with the 
flexibilities demanded throughout the FAR, especially in FAR part 1, in 
addition to the FAR 16.6 regulations?
    Response: The team does not concur with the commenter. A full 
proposal is required prior to definitization in accordance with FAR 
52.216-25. Paragraph (a) of GSAR 516.603-70 has been revised for 
clarification of this point.
    Comment: The next commenter noted a concern with the prohibition 
placed on contracting officers to ``not authorize the A-E to begin the 
design effort before the letter contract is definitized.'' The 
commenter feels that this may defeat the whole purpose of a letter 
contract which, according to FAR 16.603-1, is to authorize ``the 
contractor to begin immediately to perform the services. If this is so, 
then the determination should support any decision to not award a 
letter contract if contracting officers comply with FAR 16.603-3. 
Therefore, the commenter's recommendation is to delete GSAR 516.603-70 
in its entirety from the GSAM/GSAR. Alternatively, GSA should consider 
incorporating oversight requirements into this section to review all 
determinations that authorize letter contracts to ensure decisions are 
being made appropriately. The GSA should also consider auditing all 
unilateral/administrative modifications that involve any change in 
funding/costs.
    Response: The team does not concur with the commenter. The team 
will retain GSAR 516.603-70 because it speaks to those services that 
can be performed outside of the actual design effort. This section has 
been revised to clarify that only those services independent of the 
design effort can commence without definitization. Otherwise, the 
contracting officer shall not commence the design effort until 
definitization of the contract.
    Comment: The next commenter noted that the proposed clause GSAR 
552.216-74, Task-Order and Delivery-Order Ombudsman, allows GSA to 
comply with FAR 16.505(b)(5), which requires each agency to designate 
such an Ombudsman. However, the clause, as written, is imprecise and 
could be confusing to contractors and GSA acquisition teams. The 
commenter suggests adding the following: ``GSA has designated a Task-
Order and Delivery-Order Ombudsman who will review complaints from 
contractors and ensure that they are afforded a fair opportunity for 
consideration in the award of task or delivery orders under Indefinite 
Delivery/Indefinite Quantity (ID/IQ) contracts, consistent with the 
procedures in the contract.''
    Response: The team concurs with the commenter. The text has been 
revised to incorporate the commenter's suggested language for 
clarification.
    Comment: The next commenter noted that the proposed clause GSAR 
552.216-74, Task-Order and Delivery-Order Ombudsman, is not clear, as 
written, as to whether a contractor with a complaint should go through 
the contracting officer to reach the Ombudsman (with a copy to the 
contracting officer), or whether a contractor could do either. The 
commenter suggests adding the following: ``Written complaints shall be 
submitted to the Ombudsman, with a copy to the Contracting Officer.''
    Response: The team concurs with the commenter. The text has been 
revised to incorporate the commenter's suggested language for 
clarification.
    Comment: The next commenter noted that GSAR 552.216-74, Task-Order 
and Delivery-Order Ombudsman, is not clear as to whether the Ombudsman, 
should he or she find that fair opportunity is not being provided to a 
contractor, is going to direct the contracting activity to provide fair 
opportunity in the future; is going to direct that an order be 
withdrawn from the firm that received it; or change the decision of the 
acquisition team (if such an order has not yet been placed). Although, 
this information does not need to go into the clause, the GSAR should 
spell out the actual role of the Ombudsman so that acquisition teams 
are aware.
    Response: The team partially concurs with the commenter. The 
Ombudsman's jurisdiction covers all actions as they pertain to task- 
and delivery-order actions. As such, the team more appropriately 
revised GSAR Subpart 516.5, Indefinite-Delivery Contracts, to add a new 
section GSAR 516.505, Task-Order and Delivery-Order Ombudsman, to 
outline this in paragraph (b). Additionally, since this is being 
directed to contracting officers, it was added to the non-regulatory 
portion of this subpart.
    Comment: The next two commenters noted that the proposed clause 
GSAR 552.216-74, Task-Order and Delivery-Order Ombudsman, as written, 
is too broad in nature when it states ``The GSA Ombudsman will exercise 
jurisdiction on any matters pertaining to ID/IQ contracts awarded by 
GSA.'' The commenters recommend that the first sentence be deleted in 
its entirety and that the clause sets forth who actually is designated 
as Ombudsman.
    Response: The team concurs with the commenter. As such, the team 
has revised the clause to conform to the commenter's concerns regarding 
the GSA Ombudsman's authority and to outline the exact designation of 
the GSA Ombudsman, inclusive of contact information.
    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 General Services Administration certifies 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 revisions are not considered 
substantive. The revisions only update and reorganize existing 
coverage.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does apply; however, these changes do 
not impose additional information collection requirements to the 
paperwork burden previously approved under OMB Numbers 3090-0243 and 
3090-0248.

List of Subjects in 48 CFR Parts 516 and 552

    Government procurement.

    Dated: May 6, 2010.
Rodney P. Lantier,
Acting Senior Procurement Executive, Office of Acquisition Policy, 
General Services Administration.

0
Therefore, GSA amends 48 CFR parts 516 and 552 as set forth below:
0
1. The authority citation for 48 CFR parts 516 and 552 continues to 
read as follows:

    Authority:  40 U.S.C. 121(c).

PART 516--TYPES OF CONTRACTS

0
2. Revise section 516.203-4 to read as follows:


516.203-4  Contract clauses.

    (a) Special Order Program Contracts. In multiyear solicitations and 
contracts, after making the determination required by FAR 16.203-3, use 
552.216-71, Economic Price Adjustment Special Order Program Contracts, 
or a clause prepared as authorized in paragraph (a)(3) of this 
subsection.
    (1) If the contract includes one or more options to extend the term 
of the contract, use the clause with its Alternate I or a clause 
substantially the

[[Page 41096]]

same as 552.216-71 with its Alternate I suitably modified.
    (2) In a contract requiring a minimum adjustment before the price 
adjustment mechanism is effectuated, use the basic clause with 
Alternate II or with Alternate I and Alternate II.
    (3) If the Producer Price Index is not an appropriate indicator for 
price adjustment, modify the clause to use an alternate indicator for 
adjusting prices. Similarly, if other aspects of 552.216-71 are not 
appropriate, use an alternate clause following established procedures.
    (b) Adjustments based on cost indexes of labor or material. (1) If 
the contracting officer decides to provide for adjustments based on 
cost indexes of labor or material, prepare a clause that defines each 
of the following elements:
    (i) The type of labor and/or material subject to adjustment;
    (ii) The labor rates, including any fringe benefits and/or unit 
prices of materials that may be increased or decreased;
    (iii) The index(es) that will be used to measure changes in price 
levels and the base period or reference point from which changes will 
be measured; and
    (iv) The period during which the price(s) will be subject to 
adjustment.
    (2) The contracting director must approve use of this clause.

0
3. Revise section 516.506 to read as follows:


516.506  Solicitation provisions and contract clauses.

    (a) In solicitations and contracts for Special Order Program items, 
when the contract authorizes FAS and other activities to issue delivery 
or task orders, insert the clause at 552.216-72, Placement of Orders. 
If only FAS will issue delivery or task orders, insert the clause with 
its Alternate I.
    (b) In solicitations and contracts for GSA awarded ID/IQ contracts, 
insert clause 552.216-74, Task-Order and Delivery-Order Ombudsman.
    (c) If the clause at 552.216-72 is prescribed, insert the provision 
at 552.216-73, Ordering Information, in solicitations for Special Order 
Program items and in other FAS Program solicitations.

Subpart 516.6 [Removed]

0
4. Remove subpart 516.6, consisting of sections 516.603 and 516.603-3.

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Amend section 552.216-71 by revising the section heading, the 
introductory text, the clause heading, the date of the clause, and the 
first sentence of paragraph (b); the date of Alternate I, the Alternate 
I introductory text, and the introductory text of Alternate I (b); the 
date of Alternate II, the Alternate II introductory text, and Alternate 
II paragraph (g) to read as follows:


552.216-71  Economic Price Adjustment--Special Order Program Contracts.

    As prescribed in 516.203-4(a), insert the following clause:
    ECONOMIC PRICE ADJUSTMENT--SPECIAL ORDER PROGRAM CONTRACTS (AUG 
2010)
* * * * *
    (b) During the term of the contract, the award price may be 
adjusted once during each 12-month period upward or downward. However, 
if an upward adjustment, a maximum of ------*------ percent shall 
apply. * * *
* * * * *
    Alternate I. (AUG 2010). As prescribed in 516.203-4(a)(1) and (2), 
substitute the following paragraphs (b), (e), and (f) for paragraphs 
(b), (e), and (f) of the basic clause:
    (b) Once during each 12-month period, the contract price may be 
adjusted upward or downward a maximum of ------*------ percent.
* * * * *
    Alternate II. (AUG 2010). As prescribed in 516.203-4(a)(2), add the 
following paragraph (g) to the basic clause.
    (g) No price adjustment will be made unless the percentage change 
in the PPI is at least ------*------ percent.
    The Contracting Officer should insert a lower percent than the 
maximum percentage stated in paragraph (b) of the clause.
0
6. Amend section 552.216-72 by--
0
a. Revising the introductory text, the date of the clause, and 
paragraphs (c) and (g);
0
b. Revising the date of Alternate I, the Alternate I introductory text, 
and the first sentence of Alternate I paragraph (a);
0
c. Removing from Alternate I paragraphs (c) and (d) the word ``FSS'' 
and adding ``FAS'' in its place; and
0
d. Removing Alternates II, III, and IV.
0
The revised text reads as follows:


552.216-72  Placement of Orders.

    As prescribed in 516.506(a), insert the following clause:
    PLACEMENT OF ORDERS (AUG 2010)
* * * * *
    (c) If the Contractor agrees, General Services Administration's 
Federal Acquisition Service (FAS) will place all orders by EDI using 
computer-to-computer EDI. If computer-to-computer EDI is not possible, 
FAS will use an alternative EDI method allowing the Contractor to 
receive orders by facsimile transmission. Subject to the Contractor's 
agreement, other agencies may place orders by EDI.
* * * * *
    (g) The basic content and format of the TPA will be provided by: 
General Services Administration, Office of the Chief Information 
Officer (QI), 2100 Crystal Drive, Arlington, VA 22202, Telephone: (703) 
605-9444.
    Alternate I. (AUG 2010). As prescribed in 516.506(a), substitute 
the following paragraphs (a), (b), (c), and (d) for paragraphs (a), 
(b), (c), and (d) of the basic clause:
    (a) All delivery orders (orders) under this contract will be placed 
by the General Services Administration's Federal Acquisition Service 
(FAS). * * *
* * * * *

0
7. Amend section 552.216-73 by--
0
a. Revising the introductory paragraph and the date of the clause;
0
b. Removing from paragraph (a) ``Federal Supply Service (FSS)'' and 
adding ``Federal Acquisition Service (FAS)'' in its place;
0
c. Adding paragraph (e);
0
d. Removing from Alternate I ``516.506(e)'' and adding ``516.506(c)'' 
in its place; and
0
e. Removing Alternate II.
0
The revised and added text reads as follows:


552.216-73  Ordering Information.

    As prescribed in 516.506(c), insert the following provision:
    ORDERING INFORMATION (AUG 2010)
* * * * *
    (e) Offerors marketing through dealers are requested to indicate 
below whether those dealers will be participating in the proposed 
contract.
    Yes ( ) No ( )
    If ``yes'' is checked, ordering information to be inserted above 
shall reflect that in addition to offeror's name, address, and 
facsimile transmission telephone number, orders can be addressed to the 
offeror's name, c/o nearest local dealer. In this event, two copies of 
a list of participating dealers shall accompany this offer, and shall 
also be included in Contractor's Federal Supply Schedule pricelist.
* * * * *

0
8. Add section 552.216-74 to read as follows:


552.216-74  Task-Order and Delivery-Order Ombudsman.

    As prescribed in 516.506(b), insert the following clause:

[[Page 41097]]

    TASK-ORDER AND DELIVERY-ORDER OMBUDSMAN (AUG 2010)
    GSA has designated a Task-Order and Delivery-Order Ombudsman who 
will review complaints from contractors and ensure that they are 
afforded a fair opportunity for consideration in the award of task or 
delivery orders under Indefinite Delivery/Indefinite Quantity (ID/IQ) 
contracts, consistent with the procedures in the contract. Written 
complaints shall be submitted to the Ombudsman, with a copy to the 
Contracting Officer.
    In the case that the contractor is not satisfied with the 
resolution of the complaint by the GSA Task-Order and Delivery-Order 
Ombudsman, the contractor may follow the procedures outlined in subpart 
33.1.
    The GSA Ombudsman is the Director, Office of Acquisition Integrity 
located at: General Services Administration (GSA), Office of 
Governmentwide Policy (OGP), Office of Acquisition Policy (MV), 
Acquisition Integrity Division (MVA), 1800 F Street, NW., Room 4014, 
Washington, D.C. 20405, Telephone: (202) 219-3454, Fax: (202) 219-3615, 
E-mail:[email protected].
[FR Doc. 2010-17140 Filed 7-14-10; 8:45 am]
BILLING CODE 6820-61-S