[Federal Register Volume 83, Number 67 (Friday, April 6, 2018)]
[Proposed Rules]
[Pages 14833-14836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04004]


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DEPARTMENT OF VETERANS AFFAIRS

48 CFR Parts 844 and 845

RIN 2900-AQ05


Revise and Streamline VA Acquisition Regulation--Parts 844 and 
845

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) is proposing to amend 
and update its VA Acquisition Regulation (VAAR) in phased increments to 
revise or remove any policy that has been superseded by changes in the 
Federal Acquisition Regulation (FAR), to remove any procedural guidance 
that is internal to the VA into the VA Acquisition Manual (VAAM), and 
to incorporate new regulations or policies. These changes seek to 
streamline and align the VAAR with the FAR and remove outdated and 
duplicative requirements and reduce burden on contractors. The VAAM 
incorporates portions of the removed VAAR as well as other internal 
agency acquisition policy. VA will rewrite certain parts of the VAAR 
and VAAM, and as VAAR parts are rewritten, we'll publish them in the 
Federal Register. VA will combine related topics, as appropriate. In 
particular, this rulemaking revises VAAR Parts 844--Subcontracting 
Policies and Procedures, and Part 845--Government Property.

DATES: Comments must be received on or before June 5, 2018 to be 
considered in the formulation of the final rule.

ADDRESSES: Written comments may be submitted through 
www.Regulations.gov; by mail or hand-delivery to Director, Regulation 
Policy and Management (00REG), Department of Veterans Affairs, 810 
Vermont Avenue NW, Room 1063B, Washington, DC 20420; or by fax to (202) 
273-9026. Comments should indicate that they are submitted in response 
to ``RIN 2900-AQ05--Revise and Streamline VA Acquisition Regulation 
Parts 844 and 845).'' Copies of comments received will be available for 
public inspection in the Office of Regulation Policy and Management, 
Room 1063B, between the hours of 8:00 a.m. and 4:30 p.m., Monday 
through Friday (except holidays). Please call (202) 461-4902 for an 
appointment. (This is not a toll-free number.) In addition, during the 
comment period, comments may be viewed online through the Federal 
Docket Management System (FDMS) at www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Rafael Taylor, Senior Procurement 
Analyst, Procurement Policy and Warrant Management Services, 003A2A, 
425 I Street NW, Washington, DC 20001, (202) 382-2787. (This is not a 
toll-free telephone number.)

SUPPLEMENTARY INFORMATION:

Background

    This rulemaking is issued under the authority of the Office of 
Federal Procurement Policy (OFPP) Act, which provides the authority for 
an agency head to issue agency acquisition regulations that implement 
or supplement the FAR.
    VA is proposing to revise the VAAR to add new policy or regulatory 
requirements and to remove any redundant guidance and guidance that is 
applicable only to VA's internal operating processes or procedures. 
Codified acquisition regulations may be amended and revised only 
through rulemaking. All amendments, revisions, and removals have been 
reviewed and concurred with by VA's Integrated Product Team of agency 
stakeholders.
    The VAAR uses the regulatory structure and arrangement of the FAR 
and headings and subject areas are consistent with FAR content. The 
VAAR is divided into subchapters, parts (each of which covers a 
separate aspect of acquisition), subparts, sections, and subsections.
    The Office of Federal Procurement Policy Act, as codified in 41 
U.S.C. 1707, provides the authority for the Federal Acquisition 
Regulation and for the issuance of agency acquisition regulations 
consistent with the FAR.
    When Federal agencies acquire supplies and services using 
appropriated funds, the purchase is governed by the FAR, set forth at 
Title 48 Code of Federal Regulations (CFR), chapter 1, parts 1 through 
53, and the agency regulations that implement and supplement the FAR. 
The VAAR is set

[[Page 14834]]

forth at Title 48 CFR, chapter 8, parts 801 to 873.

Discussion and Analysis

    The VA proposes to make the following changes to the VAAR in this 
phase of its revision and streamlining initiative. For procedural 
guidance cited below that is proposed to be deleted from the VAAR, each 
section cited for removal has been considered for inclusion in VA's 
internal agency operating procedures in accordance with FAR 
1.301(a)(2). Similarly, delegations of authorities that are removed 
from the VAAR will be included in the VA Acquisition Manual (VAAM) as 
internal agency guidance. The VAAM is being created in parallel with 
these revisions to the VAAR and is not subject to the rulemaking 
process as they are internal VA procedures and guidance. Therefore, the 
VAAM will not be finalized until corresponding VAAR parts are 
finalized, and is not yet available on line.

VAAR Part 844--Subcontracting Policies and Procedures

    We propose to add part 844 to the VAAR. The authorities to be cited 
are: 40 U.S.C. 121(c) and 41 U.S.C. 1702, which address the overall 
direction of procurement policy, acquisition planning and management 
responsibilities of VA's Chief Acquisition Officer; and 48 CFR 1.301-
1.304, which is the delegation of authority for agencies to issue 
regulations that implement and supplement the FAR.
    This new part 844, Subcontracting Policies and Procedures, 
implements FAR part 44 by making public VA's additional requirements 
for providing its consent to subcontract, items that should be 
evaluated as a part of a Contractor's Purchasing Systems Review (CPSR), 
and establishing that contractors should determine whether subcontract 
items meet the FAR definition of a commercial item. Under this new 
part, we propose to add subpart 844.2, Consent to Subcontracts, and 
section 844.202-2, Considerations. We propose to add one paragraph to 
this section, (a)(14), which would require, before a contracting 
officer consents to a subcontract where other than the lowest price is 
the basis for selection, that the contractor has substantiated the 
selection as being fair, reasonable, and representing the best value to 
the Government.
    We propose to add subpart 844.3, Contractor's Purchasing Systems 
Reviews, and section 844.303, Extent of review. We included three 
paragraphs to this section, paragraphs (f), (l), and (m). The 
paragraphs included in this section would require that contractor 
purchasing system reviews focus special attention, respectively, on:
    Policies and procedures pertaining to the use of VA-verified 
Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and Veteran-
Owned Small Businesses (VOSBs) and utilization in accordance with 
subpart 819.70 and the Veterans First Contracting Program;
    Documentation of commercial item determinations to ensure 
compliance with the definition of ``commercial item'' in FAR 2.101; and
    For acquisitions involving electronic parts, whether the contractor 
has implemented a counterfeit electronic part detection and avoidance 
system to ensure that counterfeit electronic parts do not enter the 
supply chain.
    We propose to add subpart 844.4, Subcontracts for Commercial Items 
and Commercial Components, and section 844.402, Policy requirements. 
Under section 844.402, we add paragraph ``(a)(3)'' which would require 
that contractors determine whether a particular subcontract item meets 
the FAR definition of a commercial item. This requirement does not 
affect the contracting officer's responsibilities or determinations 
made under FAR 15.403-1(c)(3).

VAAR Part 845--Government Property

    We propose to add subpart 845.4, Title to Government Property. The 
authorities to be cited are: 40 U.S.C. 121(c) which provides that the 
Administrator of the General Services Administration may prescribe 
regulations to carry out responsibilities under the Federal Property 
and Administrative Services subtitle of Title 40, and, additionally, 
that the head of each executive agency shall issue orders and 
directives that the agency head considers necessary to carry out the 
prescribed regulations issued by the Administrator; and 41 U.S.C. 1702, 
which address the overall direction of procurement policy, acquisition 
planning and management responsibilities of VA's Chief Acquisition 
Officer; and 48 CFR 1.301-1.304, which is the delegation of authority 
for agencies to issue regulations that implement and supplement the 
FAR.
    We propose to add section 845.402, Title to contractor-acquired 
property (no text), and section, 845.402-70, Policy. This implements 
and supplements the FAR by addressing procedures for contractors to 
document their acquisition of property for use in the service of VA 
contracts; to address the transfer of title to the Government of 
contractor-acquired property; and to outline the procedures for the use 
of such property on a successor contract. This new section proposes the 
following:
    Paragraph (a) would provide that, for other than firm-fixed-price 
contracts, contractor-acquired property items not anticipated at time 
of contract award, or not otherwise specified for delivery on an 
existing line item, would be delivered to the Government on a contract 
line item. The value of that item would be recorded at the original 
purchase cost or best estimate.
    Paragraph (b) would provide that, upon delivery and acceptance by 
the Government of contractor-acquired property items, and when retained 
by the contractor for continued use under a successor contract, such 
items would become Government-furnished property (GFP). The items would 
be added to the successor contract as GFP by contract modification.
    Paragraph (c) would provide that individual contractor-acquired 
property items would be recorded in the contractor's property 
management system at the contractor's original purchase cost or best 
estimate.
    Paragraph (d) would provide that all other contractor inventory 
that is excess to the needs of the contract would be disposed of in 
accordance with FAR subpart 45.6.

Effect of Rulemaking

    Title 48, Federal Acquisition Regulations System, Chapter 8, 
Department of Veterans Affairs, of the Code of Federal Regulations, as 
proposed to be revised by this rulemaking, would represent VA's 
implementation of its legal authority and publication of the Department 
of Veterans Affairs Acquisition Regulation (VAAR) for the cited 
applicable parts. Other than future amendments to this rule or 
governing statutes for the cited applicable parts, or as otherwise 
authorized by approved deviations or waivers in accordance with Federal 
Acquisition Regulation (FAR) subpart 1.4, Deviations from the FAR, and 
as implemented by VAAR subpart 801.4, Deviations from the FAR or VAAR, 
no contrary guidance or procedures would be authorized. All existing or 
subsequent VA guidance would be read to conform with the rulemaking if 
possible or, if not possible, such guidance would be superseded by this 
rulemaking as pertains to the cited applicable VAAR parts.

[[Page 14835]]

Executive Orders 12866, 13563 and 13771

    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. 
E.O. 12866, Regulatory Planning and Review, defines ``significant 
regulatory action'' to mean any regulatory action that is likely to 
result in a rule that may: ``(1) Have an annual effect on the economy 
of $100 million or more or adversely affect in a material way the 
economy, a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive order.''
    VA has examined the economic, interagency, budgetary, legal, and 
policy implications of this regulatory action, and it has been 
determined not to be a significant regulatory action under E.O. 12866.
    VA's impact analysis can be found as a supporting document at 
http://www.regulations.gov, usually within 48 hours after the 
rulemaking document is published. Additionally, a copy of the 
rulemaking and its impact analysis are available on VA's website at 
http://www.va.gov/orpm by following the link for VA Regulations 
Published from FY 2004 Through Fiscal Year to Date.
    This proposed rule is not expected to be an E.O. 13771 regulatory 
action because this proposed rule is not significant under E.O. 12866.

Paperwork Reduction Act

    This proposed rule contains no provisions constituting a collection 
of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3521).

Regulatory Flexibility Act

    This proposed rule would not have a significant economic impact on 
a substantial number of small entities as they are defined in the 
Regulatory Flexibility Act, 5 U.S.C. 601-612. The overall impact of the 
proposed rule would be of benefit to small businesses owned by Veterans 
or service-disabled Veterans as the VAAR is being updated to remove 
extraneous procedural information that applies only to VA's internal 
operating procedures. VA is merely adding existing and current 
regulatory requirements to the VAAR and removing any guidance that is 
applicable only to VA's internal operation processes or procedures. VA 
estimates no cost impact to individual business would result from these 
rule updates. This rulemaking does not change VA's policy regarding 
small businesses, does not have an economic impact to individual 
businesses, and there are no increased or decreased costs to small 
business entities. On this basis, the proposed rule would not have an 
economic impact on a substantial number of small entities as they are 
defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. Therefore, 
under 5 U.S.C. 605(b), this regulatory action is exempt from the 
initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal Governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This proposed rule would have no such 
effect on State, local, and tribal Governments or on the private 
sector.

List of Subjects

48 CFR Part 844

    Government procurement, Reporting and recordkeeping requirements.

48 CFR Part 845

    Government procurement, Government property, Reporting and 
recordkeeping requirements.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. Gina S. 
Farrisee, Deputy Chief of Staff, Department of Veterans Affairs 
approved this document on October 20, 2017, for publication.

    Dated: February 22, 2018.
Consuela Benjamin,
Office of Regulation Policy & Management, Office of the Secretary, 
Department of Veterans Affairs.


0
For the reasons set out in the preamble, VA proposes to amend 48 CFR, 
chapter 8 by adding parts 844 and 845 to read as follows:

PART 844--SUBCONTRACTING POLICIES AND PROCEDURES

Sec.
Subpart 844.2--Consent to Subcontracts
844.202-2 Considerations.
Subpart 844.3--Contractors' Purchasing Systems Reviews
844.303 Extent of review.
Subpart 844.4--Subcontracts for Commercial Items and Commercial 
Components
844.402 Policy requirements.

    Authority: 40 U.S.C. 121(c); 41 U.S.C. 1702 and 48 CFR 1.301-
1.304.

Subpart 844-2--Consent to Subcontracts


844.202-2   Considerations.

    (a)(14) Where other than lowest price is the basis for 
subcontractor selection, has the contractor adequately substantiated 
the selection as being fair, reasonable, and representing the best 
value to the Government?

Subpart 844.3--Contractors' Purchasing Systems Reviews


844.303   Extent of review.

    (f) Policies and procedures pertaining to the use of VA-verified 
Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and Veteran-
Owned Small Businesses (VOSBs) and utilization in accordance with 
subpart 819.70 and the Veterans First Contracting Program.
    (l) Documentation of commercial item determinations to ensure 
compliance with the definition of ``commercial item'' in FAR 2.101; and
    (m) For acquisitions involving electronic parts, that the 
contractor has implemented a counterfeit electronic part detection and 
avoidance system to ensure that counterfeit electronic parts do not 
enter the supply chain.

[[Page 14836]]

Subpart 844.4--Subcontracts for Commercial Items and Commercial 
Components


844.402   Policy requirements.

    (a)(3) Determine whether a particular subcontract item meets the 
definition of a commercial item. This requirement does not affect the 
contracting officer's responsibilities or determinations made under FAR 
15.403-1(c)(3).

PART 845--GOVERNMENT PROPERTY

Sec.
Subpart 845.4--Title to Government Property
845.402 Title to contractor-acquired property.
845.402-70 Policy.

    Authority:  40 U.S.C. 121(c); 41 U.S.C. 1702 and 48 CFR 1.301-
1.304.

Subpart 845.4--Title to Government Property


845.402   Title to contractor-acquired property.


845.402-70   Policy.

    (a) For other than firm-fixed-price contracts, contractor-acquired 
property items not anticipated at time of contract award, or not 
otherwise specified for delivery on an existing line item, shall, by 
means of a contract modification, be specified for delivery to the 
Government on an added contract line item. The value of such 
contractor-acquired property item shall be recorded at the original 
purchase cost. Unless otherwise noted by the contractor at the time of 
delivery to the Government, the placed-in-service date shall be the 
date of acquisition or completed manufacture, if fabricated.
    (b) Following delivery and acceptance by the Government of 
contractor-acquired property items, if these items are to be retained 
by the contractor for continued use under a successor contract, these 
items become Government-furnished property (GFP). The items shall be 
added to the successor contract as GFP by contract modification.
    (c) Individual contractor-acquired property items should be 
recorded in the contractor's property management system at the 
contractor's original purchase cost.
    (d) All other contractor inventory that is excess to the needs of 
the contract shall be disposed of in accordance with FAR subpart 45.6.

[FR Doc. 2018-04004 Filed 4-5-18; 8:45 am]
 BILLING CODE 8320-01-P