[Federal Register Volume 78, Number 251 (Tuesday, December 31, 2013)]
[Rules and Regulations]
[Pages 80376-80379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31149]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 7, 8, 9, and 52

[FAC 2005-72; FAR Case 2009-024; Item II; Docket No. 2011-0086, 
Sequence No. 1]
RIN 9000-AM07


Federal Acquisition Regulation; Prioritizing Sources of Supplies 
and Services for Use by the Government

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

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to update and clarify the priority 
of sources of supplies and services for use by the Government.

DATES: Effective: January 30, 2014.

FOR FURTHER INFORMATION CONTACT: Mr. Karlos Morgan, Procurement 
Analyst, at 202-501-2364, for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAC 2005-72, FAR Case 2009-
024.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 76 FR 34634 on June 14, 2011, to amend the Federal 
Acquisition Regulation (FAR) to limit the section of the FAR addressing 
the priorities for use of Government supply sources to a discussion of 
the mandatory Government sources of supplies and services. Seventy-nine 
respondents submitted comments. Most respondents requested that an 
Initial Regulatory Flexibility Analysis (IRFA) be performed. Based on 
the comments, the Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (the Councils) performed an IRFA after 
the initial publication of the proposed rule. The IRFA was published in 
the Federal Register at 77 FR 54872 on September 6, 2012. Six 
respondents submitted comments in response to the Notice of Correction.

II. Discussion and Analysis

    The Councils reviewed the comments in the development of the final 
rule. A discussion of the comments and the changes made to the rule as 
a result of those comments are provided as follows:

A. Summary of Significant Changes

     Language was added at FAR 7.102(a) to require 
consideration of existing contracts before creating new contracts.
     FAR 8.002(a)(1)(i) was revised to read ``Inventories of 
the requiring agency'' for clarification.
     FAR 8.003(d) has been revised to note that the Defense 
National Stockpile Center has been renamed ``DLA Strategic Materials''.
     FAR 8.004 was revised to note that the sources listed in 
8.004(a) are not listed in any order of priority.
     A sentence was added to FAR 8.004 reminding users that 
when satisfying requirements from non-mandatory sources, they should 
refer to FAR 7.105(b) and part 19 regarding consideration of small 
business, veteran-owned small business, service-disabled veteran-owned 
small business, HUBZone small business, small disadvantaged business 
(including 8(a) participants), and women-owned small business concerns. 
Use of these sources can be counted towards an agency's small business 
contracting goals.

B. Analysis of Public Comments

1. Federal Strategic Sourcing Initiative (FSSI) Blanket Purchase 
Agreement (BPA) for Office Supplies
    Comment: Most respondents believe the rule is both unnecessary and 
damaging to competition from small businesses throughout their 
industry. The FSSI program has curtailed their Federal market business 
which led to reduction in employees' hours.
    Response: The purpose of the rule is to update and clarify the 
order of priority at FAR 8.002, and add a new section to encourage 
agencies to give consideration to using certain existing non-mandatory 
sources to leverage agency buying power and achieve administrative 
efficiencies that reduce costs and produce savings for our taxpayers. 
The rule does not change how agencies are purchasing supplies and/or 
services under Federal Supply Schedules.
    No new mandatory sources are proposed for consideration, only 
existing sources were included for informational purposes. The existing 
non-mandatory sources are being listed prior to commercial sources, but 
agencies remain free to compete their requirements among commercial 
sources of supply, where it is in their

[[Page 80377]]

best interest to meet their needs through open-market procurement.
2. Competition
    Comment: Respondents indicated that the proposed rule would 
severely hamper competition in the Federal market place.
    Response: This rule does not impede competition. No new mandatory 
sources are proposed for consideration under this rule. Existing 
sources were included for informational purposes, as a means of 
supporting market research, which is required by law (41 U.S.C. 
3301(a)(2)) for the procurement of supplies and services. Competition 
in the open market will continue if it is in an agency's best interests 
to meet its needs through open-market procurement.
3. Federal Supply Schedule (FSS) Contracts
    Comment: A respondent stated that the proposed rule is not clear 
about whether the contracting officer must check and use contracts 
under FSS if there is an FSS holder that can meet the agency's needs.
    Response: The use of FSS is not required. However, under FAR 
7.102(a)(4) of the final rule, agencies are encouraged to consider 
using FSS and other existing vehicles before considering sources in the 
open market.
4. The Murray Benjamin Electric Company Protest
    Comment: One respondent indicated that use of FSS is mandatory if 
the schedule holder is able to meet the agency's needs. The respondent 
stated that the Murray Benjamin case is ambiguous and the Government 
interpretation is faulty.
    Response: The final rule amends FAR part 8 to clarify that use of 
FSS is not mandatory. Rather, as part of good market research, agencies 
are encouraged to consider using FSS and other existing vehicles before 
considering sources in the open market.
5. FAR Case 2008-003
    Comment: One respondent indicated that the proposed rule undermines 
the intent behind the rule change from FAR Case 2008-003. According to 
the respondent, 2008-003 final rule requires competition within the FSS 
for contracts over the simplified acquisition threshold. The respondent 
believed that the proposed rule requires competition to the open 
market, not just within FSS.
    Response: Final rule 2008-003, ``Public Disclosure of Justification 
and Approval Documents for Noncompetitive Contracts,'' which required 
posting justification and approval documents for noncompetitive 
contracts, did not apply to placement of orders under the FSS. FAR Case 
2007-012, ``Requirements for Acquisitions Pursuant to Multiple-Award 
Contracts,'' which implemented section 863 of the Duncan Hunter 
National Defense Act for Fiscal Year 2009, required posting of sole 
source task or delivery orders in excess of the simplified acquisition 
threshold that are placed against multiple award contracts. This rule 
is consistent with the intent of FAR Case 2007-012 to provide enhanced 
competition.
6. Other Requested Changes to FAR Part 8
    Comment: A respondent indicated that the rule should not include 
Governmentwide Acquisition Contracts (GWACs) in FAR part 8 and give 
them the same level of priority as FSS contracts.
    Response: The inclusion of GWACs in FAR part 8 is appropriate as 
they are existing contract vehicles available for use by multiple 
agencies. Agencies are encouraged to consider existing vehicles prior 
to awarding new contracts.
    Comment: A respondent recommended that FAR 8.004 be revised to 
include text that explains that the enumerated contracts are not, as 
the preamble to the proposed rule notes, listed in any order of 
priority.
    Response: The language of the final rule was revised to include 
this clarification.
7. Comments Submitted on the IRFA
    Comment: Several respondents expressed their disappointment with 
the rule and suggested further study of the negative impacts of the 
rule.
    Response: Because the rule reflects existing policy and practices, 
there is no need to conduct additional economic impact analysis and 
other research called for by the respondents.
    Comment: Various respondents expressed dissatisfaction with FSSI, 
due to a perceived impediment to competition.
    Response: The reference to FSSI agreements in FAR 8.004(a)(1) of 
the final rule is provided as an example of existing non-mandatory 
sources that agencies are encouraged to consider as part of their 
market research before considering open market sources.
    Comment: One respondent recommended requiring documentation in the 
contract file to reflect why an existing source does not meet the 
Government's needs.
    Response: This type of documentation may be appropriate as part of 
the market research process detailed in FAR part 10, Market Research, 
and, in many cases, is already required by agency supplements to FAR 
part 10.
    Comment: One respondent recommended that the Government require 
agencies to consider the use of existing sources rather than merely 
encouraging them to do so.
    Response: The final rule amends FAR 7.102(a) to require, as part of 
acquisition planning, appropriate consideration of the use of pre-
existing contracting (including interagency and intra-agency contracts) 
to fulfill requirements before awarding new contracts.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The FRFA is summarized as follows:

    Considerable concern was expressed by small business entities 
with the concept and practice of strategic sourcing as evidenced 
through FSSI agreements. However, the rule itself only references 
FSSI agreements as an example of existing contract sources that 
agencies, as part of good market research, are encouraged to 
consider using before considering sources in the open market. After 
due consideration of pre-existing contracts, agencies remain free to 
compete their requirements among commercial sources of supply.
    No significant changes were made from the proposed rule in 
response to comments on the IRFA.
    No comments were submitted by the Chief Counsel for Advocacy of 
the Small Business Administration.
    This rule deals with the order of preference for sources that 
must be considered, and to distinguish them from sources that should 
be considered where an agency is unable to satisfy requirements for 
supplies and services from mandatory sources. This rule will not

[[Page 80378]]

affect how many small businesses are awarded this type of contract.
    This rule does not add any new information collection 
requirements.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy 
of the FRFA to the Chief Counsel for Advocacy of the Small Business 
Administration.

V. Paperwork Reduction Act

    The final rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 7, 8, 9, and 52

    Government procurement.

    Dated: December 19, 2013.
William Clark,
Acting Director, Office of Government-wide Acquisition Policy, Office 
of Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 7, 8, 9, and 52 as 
set forth below:

0
1. The authority citation for 48 CFR parts 7, 8, 9, and 52 continues to 
read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 7--ACQUISITION PLANNING

0
2. Amend section 7.102 by revising paragraph (a) to read as follows:


7.102  Policy.

    (a) Agencies shall perform acquisition planning and conduct market 
research (see part 10) for all acquisitions in order to promote and 
provide for--
    (1) Acquisition of commercial items or, to the extent that 
commercial items suitable to meet the agency's needs are not available, 
nondevelopmental items, to the maximum extent practicable (10 U.S.C. 
2377 and 41 U.S.C. 251, et seq.);
    (2) Full and open competition (see part 6) or, when full and open 
competition is not required in accordance with Part 6, to obtain 
competition to the maximum extent practicable, with due regard to the 
nature of the supplies or services to be acquired (10 U.S.C. 2301(a)(5) 
and 41 U.S.C. 253a(a)(1));
    (3) Selection of appropriate contract type in accordance with part 
16; and
    (4) Appropriate consideration of the use of pre-existing contracts, 
including interagency and intra-agency contracts, to fulfill the 
requirement, before awarding new contracts. (See 8.002 through 8.004 
and subpart 17.5).
* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

0
3. Revise section 8.000 to read as follows:


8.000   Scope of part.

    This part deals with prioritizing sources of supplies and services 
for use by the Government.

0
4. Revise section 8.002 to read as follows:


8.002   Priorities for use of mandatory Government sources.

    (a) Except as required by 8.003, or as otherwise provided by law, 
agencies shall satisfy requirements for supplies and services from or 
through the mandatory Government sources and publications listed below 
in descending order of priority:
    (1) Supplies. (i) Inventories of the requiring agency.
    (ii) Excess from other agencies (see subpart 8.1).
    (iii) Federal Prison Industries, Inc. (see subpart 8.6).
    (iv) Supplies that are on the Procurement List maintained by the 
Committee for Purchase From People Who Are Blind or Severely Disabled 
(see Subpart 8.7).
    (v) Wholesale supply sources, such as stock programs of the General 
Services Administration (GSA) (see 41 CFR 101-26.3), the Defense 
Logistics Agency (see 41 CFR 101-26.6), the Department of Veterans 
Affairs (see 41 CFR 101-26.704), and military inventory control points.
    (2) Services. Services that are on the Procurement List maintained 
by the Committee for Purchase From People Who Are Blind or Severely 
Disabled (see subpart 8.7).
    (b) Sources other than those listed in paragraph (a) of this 
section may be used as prescribed in 41 CFR 101-26.301 and in an 
unusual and compelling urgency as prescribed in 6.302-2 and in 41 CFR 
101-25.101-5.
    (c) The statutory obligation for Government agencies to satisfy 
their requirements for supplies or services available from the 
Committee for Purchase From People Who Are Blind or Severely Disabled 
also applies when contractors purchase the supplies or services for 
Government use.

0
5. Revise section 8.003 to read as follows:


8.003   Use of other mandatory sources.

    Agencies shall satisfy requirements for the following supplies or 
services from or through specified sources, as applicable:
    (a) Public utility services (see part 41).
    (b) Printing and related supplies (see subpart 8.8).
    (c) Leased motor vehicles (see subpart 8.11).
    (d) Strategic and critical materials (e.g., metals and ores) from 
inventories exceeding Defense National Stockpile requirements (detailed 
information is available from the DLA Strategic Materials, 8725 John J. 
Kingman Rd., Suite 3229, Fort Belvoir, VA 22060-6223.
    (e) Helium (see subpart 8.5--Acquisition of Helium).

0
6. Redesignate section 8.004 as section 8.005; and add a new section 
8.004 to read as follows:


8.004   Use of other sources.

    If an agency is unable to satisfy requirements for supplies and 
services from the mandatory sources listed in 8.002 and 8.003, agencies 
are encouraged to consider satisfying requirements from or through the 
non-mandatory sources listed in paragraph (a) of this section (not 
listed in any order of priority) before considering the non-mandatory 
source listed in paragraph (b) of this section. When satisfying 
requirements from non-mandatory sources, see 7.105(b) and part 19 
regarding consideration of small business, veteran-owned small 
business, service-disabled veteran-owned small business, HUBZone small 
business, small disadvantaged business (including 8(a) participants), 
and women-owned small business concerns.
    (a)(1) Supplies. Federal Supply Schedules, Governmentwide 
acquisition contracts, multi-agency contracts, and any other 
procurement instruments intended for use by multiple agencies, 
including blanket purchase agreements (BPAs) under Federal Supply 
Schedule contracts (e.g., Federal Strategic Sourcing Initiative (FSSI) 
agreements accessible at http://www.gsa.gov/fssi (see also 5.601)).
    (2) Services. Agencies are encouraged to consider Federal Prison 
Industries, Inc., as well as the sources listed in paragraph (a)(1) of 
this section (see subpart 8.6).
    (b) Commercial sources (including educational and non-profit 
institutions) in the open market.


8.402   [Amended]

0
7. Amend section 8.402 by removing from paragraph (a) ``(see 8.002)'' 
and adding ``(see 8.004)'' in its place.

[[Page 80379]]

PART 9--CONTRACTOR QUALIFICATIONS


9.405-1   [Amended]

0
8. Amend section 9.405-1 by removing from paragraph (b)(2) ``optional 
use''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


52.208-9   [Amended]

0
9. Amend section 52.208-9 by removing from the introductory paragraph 
``8.004'' and adding ``8.005'' in its place.

[FR Doc. 2013-31149 Filed 12-30-13; 8:45 am]
BILLING CODE 6820-EP-P