[Federal Register Volume 84, Number 121 (Monday, June 24, 2019)]
[Rules and Regulations]
[Pages 29391-29394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12759]
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DEPARTMENT OF VETERANS AFFAIRS
48 CFR Parts 817 and 852
RIN 2900-AQ19
VA Acquisition Regulation: Special Contracting Methods
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: The Department of Veterans Affairs (VA) is amending and
updating 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revise or remove any policy superseded by changes in the Federal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 procedural guidance internal to
VA into the VA Acquisition Manual (VAAM), and to incorporate any new
agency specific regulations or policies. These changes seek to 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the VAAR with the FAR and remove outdated and duplicative requirements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. In particular,
this rulemaking revises VAAR coverage concerning Special Contracting
Methods as well as an affected part covering Solicitation Provisions
and Contract Clauses.
DATES: This rule is effective on July 24, 2019.
FOR FURTHER INFORMATION CONTACT: Mr. Rafael N. 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 number.)
SUPPLEMENTARY INFORMATION: On December 27, 2018, VA published a
proposed rule in the Federal Register (83 FR 66662) which announced
VA's intent to amend regulations for VAAR Case RIN 2900-AQ19--VA
Acquisition Regulation: Special Contracting Methods. VA provided a 60-
day comment period for the public to respond to the proposed rule and
submit comments. The comment period for the proposed rule ended on
February 25, 2019 and VA received one comment. VA makes no changes to
this final rule as a result of the one comment received. However, this
rule adopts as a final rule, the proposed rule that published in the
Federal Register on December 27, 2018, along with two technical non-
substantive changes to the proposed rule and minor formatting and/or
grammatical edits. The two technical non-substantive changes to the
proposed rule are described below.
In particular, this final rule revises part 817, Special
Contracting Methods. This final rule removes 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. This final rule also removes subpart 817.2 in its entirety by
removing 817.202, Use of options, and 817.204, Contracts. 817.202
consisted 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 public-private competitions this
will not be moved to the VAAM. 817.204, Contracts, contained internal
procedures and approvals to be obtained for contracts with option
periods greater than five years, and this coverage was moved to the
VAAM.
This rule removes subpart 817.4, Leader Company Contracting, and
817.402, Limitations, since they included internal procedures and
approval requirements for leader company contracts. The coverage was
moved to the VAAM.
This final rule revises the title of subpart 817.5 to read
``Interagency Acquisitions,'' and adds 817.501, General, which requires
that 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.
This regulatory action removes 817.502, General, which is replaced
with updated policy in 817.501. The coverage was moved to comport with
the numbering in the FAR.
This rule adds subpart 817.70, Undefinitized Contract Actions, to
provide policy and procedures for the use of undefinitized contract
actions (UCAs) as UCAs are a high-risk method of procurement. This
final rule adds 817.7000, Scope, which describes the material being
introduced in this subpart, and 817.7001, Definitions, to provide
definitions of four terms used in the subpart: contract action,
definitization, definitization proposal, and undefinitized contract
action.
This final rule also adds 817.7002, Exceptions, which exempts
simplified acquisitions and congressionally mandated long-lead
procurement contracts from this policy but requires the contracting
officer to apply the policy and procedures to the maximum extent
practicable.
817.7003, Policy, was added to clearly convey that undefinitized
contract actions should be limited 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 immediately.
This final rule adds 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
[[Page 29392]]
contract actions to include not-to-exceed price ceilings.
This regulatory action also adds 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.
This rule adds 817.7004-4, Final price negotiation--profit, which
provides guidance on negotiating profit that reflects the contractor's
reduced cost risk prior to definitization.
This final rule also adds 817.7005, Contract clause, which
prescribes new clause 852.217-70, Contract Action Definitization, for
all UCAs, solicitations associated with UCAs, basic ordering
agreements, indefinite-delivery contracts, or any other type of
contract providing for the use of UCAs.
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.
Technical Non-Substantive Changes to the Proposed Rule
This rule makes two non-substantive changes to the proposed rule to
provide clarity, eliminate confusion, and to ensure compliance with
statute and VA's authority.
1. Under section 817.501, General, VA is making a revision to the
language to provide clarity regarding the applicability of the Veterans
First Contracting Program to interagency acquisitions. VA has
simplified the section to use plain language to make clear that when an
entity acquires goods and services on behalf of VA, a notice will be
included in the agreement stating 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. This language was already included in the proposed rule
but the rephrase provides clarity and does not otherwise significantly
change the meaning and intent of the section.
2. Under section 817.7004-4, Limitations on obligations, which was
proposed as added language in the proposed rule, VA is removing the
section in its entirety. The proposed language potentially created a
conflict with 817.7004-3(a)(2) and is unnecessary. Accordingly, with
the removal of 817.7004-4, Limitations on obligations, the remaining
proposed section at 817.7004-5, Final price negotiation--profit, is
renumbered 817.7004-4.
VA provided a 60-day comment period for the public to respond to
the proposed rule. As stated previously, VA received one comment. The
single comment consisted of one word: ``Good.'' VA appreciates the
comment which doesn't warrant any substantive changes to be made to the
final rule.
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 final rule will have no such effect on
State, local, and tribal Governments or on the private sector.
Paperwork Reduction Act
This final 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 final rule does 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
rule is 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
processes or procedures. VA estimates no cost impact to individual
businesses will result from these rule updates. On this basis, the
final rule does 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. 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.
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 be a significant regulatory action under E.O. 12866
because it does not 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'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 rule is not an
E.O. 13771 regulatory action because this rule is not significant under
E.O. 13771.
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, 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. Robert L.
Wilkie, Secretary, Department
[[Page 29393]]
of Veterans Affairs, approved this document on April 17, 2019, for
publication.
Dated: June 12, 2019.
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 revises 48 CFR parts
817 and 852 as follows:
PART 817--SPECIAL CONTRACTING METHODS
0
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.
Subpart 817.1--[Removed and Reserved]
0
2. Subpart 817.1, consisting of sections 817.105 and 817.105-1, is
removed and reserved.
Subpart 817.2--[Removed and Reserved]
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3. Subpart 817.2, consisting of sections 817.202 and 817.204, is
removed and reserved.
Subpart 817.4--[Removed and Reserved]
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4. Subpart 817.4, consisting of section 817.402, is removed and
reserved.
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5. Subpart 817.5 is revised to read as follows:
Subpart 817.5--Interagency Acquisitions
817.501 General.
(d) Agreements pursuant to FAR subpart 17.5, including
construction, shall include a requirement, that, when acquiring goods
and services on behalf of the Department of Veterans Affairs, 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.
0
6. Subpart 817.70 is added to read as follows:
Subpart 817.70--Undefinitized Contract Actions
Sec.
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 Final price negotiation--profit.
817.7005 Contract clause.
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
the--
(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
a 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
performance.
(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
Government.
(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
contracting officer may suspend or reduce progress payments under FAR
32.503-6, or take other appropriate action.
817.7004-4 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,
in--
(1) All UCAs;
(2) Solicitations associated with UCAs;
[[Page 29394]]
(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.
PART 852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
7. 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 1.301-1.304.
0
8. 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 (Jul 2019)
(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 all clauses required by the Federal Acquisition
Regulation (FAR) on the date of execution of the undefinitized
contract action, all clauses required by law on the date of
execution of the definitive contract action, and 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].
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(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
upon.
(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. 2019-12759 Filed 6-21-19; 8:45 am]
BILLING CODE 8320-01-P