[Federal Register Volume 83, Number 247 (Thursday, December 27, 2018)]
[Proposed Rules]
[Pages 66662-66665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27591]



48 CFR Parts 817 and 852

RIN 2900-AQ19

VA Acquisition Regulation: Special Contracting Methods

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.


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revise or remove any policy superseded by changes in the Federal 
Acquisition Regulation (FAR), to remove any procedural guidance that is 
internal to 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streamline and align the VAAR with the FAR and remove outdated and 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, VA will publish them in the 
Federal Register. VA will combine related topics, as appropriate. In 
particular, this rulemaking revises VAAR concerning Special Contracting 
Methods and Solicitation Provisions and Contract Clauses.

DATES: Comments must be received on or before February 25, 2019 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-AQ19--VA Acquisition Regulation: Special Contracting 
Methods.'' 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.

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 number.)



    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 
    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, and sections.
    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 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 is being 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 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 it is not yet 
available on line.

VAAR Part 817--Special Contracting Methods

    Under part 817, we propose to add 41 U.S.C. 1702 which addresses 
the acquisition planning and management responsibilities of Chief 
Acquisition Officers and Senior Procurement Executives, to include 
implementation of unique procurement policies, regulations and 
standards of the executive agency, as an authority to the publishing of 
this part. We also propose to add 38 U.S.C. 8128 as the authority for 
the Veterans First Contracting Program which applies to this part. We 
also propose to add 41 U.S.C. 1303 which provides that executive 
agencies may issue regulations essential to implement Government-wide 
policies and procedures within the agency and additional policies and 
procedures required to satisfy the specific and unique needs of the 
agency. We also propose to add 48 CFR 1.301-1.304 as the basic 
authority for agencies to issue supplemental regulations and procedures 
to the FAR. The authorities cited for this part are 38 U.S.C. 8127-
8128; 41 U.S.C. 1303; 41 U.S.C. 1702 and 48 CFR 1.301-1.304.
    We propose to remove subpart 817.1, Multi-year Contracting, in its 
entirety since it deals with internal procedures about the uses of 
multi-year contracting and internal approvals to be obtained.
    We propose to remove subpart 817.2 in its entirety by removing 
817.202, Use of options, and 817.204, Contracts. 817.202 consists of 
internal procedures to develop solicitations and cost comparisons under 
Office of Management and Budget Circular A-76. Since there is currently 
a moratorium on A-76 contracts this will not be moved to the VAAM. 
817.204, Contracts, contains internal procedures and approvals to be 
obtained for contracts with option periods greater than five years, and 
this coverage will be moved to the VAAM.
    We propose removing subpart 817.4, Leader Company Contracting, and 
817.402, Limitations, since they include internal procedures and 
approval requirements for leader company

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contracts. The coverage will be moved to the VAAM.
    We propose to revise the title of subpart 817.5 to read 
``Interagency Acquisitions.'' In the newly added 817.501, General, we 
propose to require any governmental entity that acquires goods and 
services on behalf of the Department of Veterans Affairs shall comply, 
to the maximum extent feasible, with the provisions of 38 U.S.C. 8127 
and 8128, and the Veterans First Contracting Program as implemented at 
subpart 819.70.
    We propose to remove 817.502, General, which is replaced with 
updated policy in 817.501. The coverage was moved to comport with the 
numbering in the FAR.
    We propose to add subpart 817.70, Undefinitized Contract Actions, 
to provide policy and procedures for use of this type of action. 
Coverage is proposed as undefinitized contract actions (UCAs) are a 
high-risk method of procurement; accordingly, we propose to add 
guidance to mitigate the risks associated with UCAs.
    We proposed to add 817.7000, Scope, which describes the material 
being introduced in this subpart.
    We propose to add 817.7001, Definitions, to provide definitions of 
four terms used in the subpart: contract action, definitization, 
definitization proposal, and undefinitized contract action.
    We propose to add 817.7002, Exceptions, to exempt simplified 
acquisitions and congressionally mandated long-lead procurement 
contracts from this policy, but to require the contracting officer to 
apply the policy and procedures to the maximum extent practicable.
    We propose to add 817.7003, Policy, which limits undefinitized 
contract actions to situations where it is not possible to negotiate a 
definitive contract action in time to meet the government's 
requirements, and where the interests of the government demand that the 
contractor be given a commitment so that contract performance can begin 
    We propose to add 817.7004, Limitations, with no text, and the 
following sections: 817.7004-1, Authorization, which provides guidance 
as to when the contracting officer must obtain approval to use an 
undefinitized contract action; and 817.7004-2, Price ceiling, which 
requires all undefinitized contract actions to include not-to-exceed 
price ceilings.
    We propose to add 817.7004-3, Definitization schedule, which sets 
parameters for establishing definitization schedules and requires 
submission of a definitization proposal in accordance with the 
definitization schedule as a material element of the contract, where 
non-compliance may result in suspension or reduction of progress 
payments under FAR 32.503-6 or other appropriate action.
    We propose to add 817.7004-4, Limitations on obligations, which 
provides guidance on setting limits on the obligations on undefinitized 
contract actions.
    We propose to add 817.7004-5, Final price negotiation--profit, 
which provides guidance on negotiating profit that reflects the 
contractor's reduced cost risk prior to definitization.
    We propose to add 817.7005, Contract clause, which prescribes new 
clause 852.217-70, Contract Action Definitization, for all UCAs, 
solicitations associated with UCAs, BOAs, IDIQ contracts, or any other 
type of contract providing for the use of UCAs.

VAAR Part 852--Solicitation Provisions and Contract Clauses

    In subpart 852.2, Text of Provisions and Clauses, we propose to add 
clause 852.217-70, Contract Action Definitization, to provide specific 
procedures required to definitize UCAs.

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 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 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.

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. 

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 as the VAAR is 
being updated to remove extraneous procedural information that applies 
only to VA's internal operating

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procedures. VA estimates no cost impact to individual business would 
result from these rule updates. This rulemaking 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 

List of Subjects

48 CFR Part 817

    Government procurement.

48 CFR Part 852

    Government procurement, Reporting and recordkeeping requirements.

Signing Authority

    The Secretary of Veterans Affairs 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. Robert L. 
Wilkie, Secretary, Department of Veterans Affairs, approved this 
document on December 17, 2018, for publication.

    Dated: December 17, 2018.
Consuela Benjamin,
Regulations Development Coordinator, Office of Regulation Policy & 
Management, Office of the Secretary, Department of Veterans Affairs.

    For the reasons set out in the preamble, VA is proposing to amend 
48 CFR parts 817 and 852 as follows:


1. The authority citation for part 817 is revised to read as follows:

    Authority: 38 U.S.C. 8127-8128; 41 U.S.C. 1303; 41 U.S.C. 1702; 
and 48 CFR 1.301-1.304.

2. The Table of Contents is revised to read as follows:


Subpart 817.1 [RESERVED]
Subpart 817.2 [RESERVED]
Subpart 817.4 [RESERVED]
Subpart 817.5 Interagency Acquisitions
817.501 General.
Subpart 817.70 Undefinitized Contract Actions
817.7000 Scope.
817.7001 Definitions.
817.7002 Exceptions.
817.7003 Policy.
817.7004 Limitations.
817.7004-1 Authorization.
817.7004-2 Price ceiling.
817.7004-3 Definitization schedule.
817.7004-4 Limitations on obligations.
817.7004-5 Final price negotiation--profit.
817.7005 Contract clause.

Subpart 817.1 [Removed and Reserved]

3. Subpart 817.1 is removed and reserved.

Subpart 817.2 [Removed and Reserved]

4. Subpart 817.2 is removed and reserved.

Subpart 817.4 [Removed and Reserved]

5. Subpart 817.4 is removed and reserved.
6. Subpart 817.5 is revised to read as follows:

817.5--Interagency Acquisitions

817.501   General.

    (d) Any contract, agreement, or other arrangement with any 
governmental entity to acquire goods and services, including 
construction, that permits the governmental entity to acquire goods and 
services on behalf of the Department of Veterans Affairs shall include 
a requirement that the entity will comply, to the maximum extent 
feasible, with the provisions of 38 U.S.C. 8127 and 8128, and the 
Veterans First Contracting Program as implemented at subpart 819.70. 
Accordingly, the governmental entity shall award contracts (see FAR 
2.101 for the definition of contracts) to eligible service-disabled 
veteran-owned small businesses (SDVOSBs) and veteran-owned small 
businesses (VOSBs) listed in the VA Vendor Information Pages (VIP) 
database to the maximum extent feasible.

817.502  [Removed]

7. Section 817.502 is removed.
8. Subpart 817.70 is added to read as follows:

Subpart 817.70--Undefinitized Contract Actions

817.7000  Scope.

    This subpart prescribes policies and procedures for use of 
undefinitized contract actions.

817.7001  Definitions.

    As used in this subpart--
    (a) Contract action includes:
    (1) Contracts and contract modifications for supplies or services.
    (2) Task orders and delivery orders.
    (3) It does not include change orders, administrative changes, 
funding modifications, or any other contract modifications that are 
within the scope and under the terms of the contract, e.g., engineering 
change proposals and value engineering change proposals.
    (b) Definitization means the agreement on, or determination of, 
contract terms, specifications, and price, which converts the 
undefinitized contract action to a definitive contract.
    (c) Definitization proposal means a proposal containing sufficient 
data for the VA to do complete and meaningful analyses and audits of 
    (1) Data in the proposal; and
    (2) Any other data that the contracting officer has determined VA 
needs to review in connection with the contract.
    (d) Undefinitized contract action means any contract action for 
which the contract terms, specifications, or price are not agreed upon 
before performance is begun under the action. Examples are letter 
contracts and orders under basic ordering agreements for which the 
final price has not been agreed upon before performance has begun.

817.7002  Exceptions.

    (a) The following undefinitized contract actions (UCAs) are not 
subject to this subpart:
    (1) Purchases at or below the simplified acquisition threshold.
    (2) Congressionally mandated long-lead procurement contracts.
    (b) However, the contracting officer shall apply the policy and 
procedures to the contract actions in paragraph (a) to the maximum 
extent practicable.

817.7003  Policy.

    Undefinitized contract actions shall--
    (a) Be used only when--
    (1) The negotiation of a definitive contract action is not possible 
in sufficient time to meet the Government's requirements; and
    (2) The Government's interest demands that the contractor be given 

[[Page 66665]]

binding commitment so that contract performance can begin immediately.
    (b) Be as complete and definite as practicable.

817.7004  Limitations.

817.7004-1  Authorization.

    The contracting officer shall obtain approval one level above the 
contracting officer before--
    (a) Entering into a UCA. The request for approval must fully 
explain the need to begin performance before definitization, including 
the adverse impact on the VA resulting from delays in beginning 
    (b) Including requirements for non-urgent items and equipment in a 
UCA. The request should show that inclusion of the non-urgent items is 
consistent with good business practices and in the best interest of the 
    (c) Modifying the scope of a UCA when performance has already 
begun. The request should show that the modification is consistent with 
good business practices and in the best interests of the Government.

817.7004-2  Price ceiling.

    UCAs shall include a not-to-exceed price.

817.7004-3  Definitization schedule.

    (a) UCAs shall contain definitization schedules that provide for 
definitization by the earlier of--
    (1) The date that is 180 days after issuance of the action (this 
date may be extended but may not exceed the date that is 180 days after 
the contractor submits a definitization proposal); or
    (2) The date on which the amount of funds paid to the contractor 
under the contract action is equal to more than 50 percent of the not-
to-exceed price.
    (b) Submission of a definitization proposal in accordance with the 
definitization schedule is a material element of the contract. If the 
contractor does not submit a timely definitization proposal, the 
contacting officer may suspend or reduce progress payments under FAR 
32.503-6, or take other appropriate action.

817.7004-4  Limitations on obligations.

    The Government shall not obligate more than 50 percent of the not-
to-exceed price before definitization.

817.7004-5  Final price negotiation--profit.

    Before the final price of a UCA is negotiated, contracting officers 
shall ensure the profit agreed to and documented in the contract 
negotiation memorandum reflects consideration of any risks incurred in 
performance of the work under the UCA.

817.7005  Contract clause.

    (a) Use the clause at 852.217-70, Contract Action Definitization, 
    (1) All UCAs;
    (2) Solicitations associated with UCAs;
    (3) Orders against basic ordering agreements;
    (4) Indefinite delivery task orders; and
    (5) Any other type of contract providing for the use of UCAs.
    (b) Insert the applicable information in paragraphs (a), (b), and 
(d) of the clause.
    (c) If, at the time of entering into the UCA, the contracting 
officer knows that the definitive contract action will meet the 
criteria of FAR 15.403-1, 15.403-2, or 15.403-3 for not requiring 
submission of certified cost or pricing data, the words ``and certified 
cost or pricing data'' may be deleted from paragraph (a) of the clause.


9. The authority citation for part 852 continues to read as follows:

    Authority: 38 U.S.C. 8127-8128, and 8151-8153; 40 U.S.C. 121(c); 
41 U.S.C. 1121(c)(3); 41 U.S.C. 1303; 41 U.S.C. 1702; and 48 CFR 

10. Section 852.217-70 is added to read as follows:

852.217-70  Contract Action Definitization.

    As prescribed in 817.7005(a), insert the following clause:

Contract Action Definitization (Date)

    (a) A__[Insert specific type of contract action] is 
contemplated. The Contractor agrees to begin promptly negotiating 
with the Contracting Officer the terms of a definitive contract 
action that will include (1) all clauses required by the Federal 
Acquisition Regulation (FAR) on the date of execution of the 
undefinitized contract action, (2) all clauses required by law on 
the date of execution of the definitive contract action, and (3) any 
other mutually agreeable clauses, terms, and conditions. The 
Contractor agrees to submit a__[Insert type of proposal, e.g., 
fixed-price, or cost-and-fee] proposal with cost or pricing data, as 
appropriate, supporting it.
    (b) The schedule for definitizing this contract action is as 
follows [Insert target date for definitization of the contract 
action and dates for submission of proposal, beginning of 
negotiations, and, if appropriate, submission of the make-or-buy 
plans, subcontracting plans, and cost or pricing data].

    (c) If agreement on a definitive contract action to supersede 
this undefinitized contract action is not reached by the target date 
in paragraph (b) of this clause, or within any extension of it 
granted by the Contracting Officer, the Contracting Officer may, 
with the approval of a Contracting Officer one level above, 
determine a reasonable price or fee in accordance with FAR subpart 
15.4 and FAR part 31, subject to Contractor appeal as provided in 
the Disputes clause. In any event, the Contractor shall proceed with 
completion of the contract, subject only to FAR 52.216-24, 
Limitation of Government Liability.
    (1) After the Contracting Officer's determination of price or 
fee, the contract shall be governed by--
    (i) All clauses required by the FAR on the date of execution of 
this undefinitized contract action for either fixed-price or cost-
reimbursement contracts, as determined by the Contracting Officer 
under this paragraph (c);
    (ii) All clauses required by law as of the date of the 
Contracting Officer's determination; and
    (iii) Any other clauses, terms, and conditions mutually agreed 
    (2) To the extent consistent with paragraph (c)(1) of this 
clause, all clauses, terms, and conditions included in this 
undefinitized contract action shall continue in effect, except those 
that by their nature apply only to an undefinitized contract action.
    (d) The definitive contract action resulting from this 
undefinitized contract action will include a negotiated__[Insert 
``cost/price ceiling'' or ``firm-fixed-price''] in no event to 
exceed__[Insert the not-to-exceed amount].

(End of clause)

[FR Doc. 2018-27591 Filed 12-26-18; 8:45 am]