[Federal Register Volume 85, Number 205 (Thursday, October 22, 2020)]
[Proposed Rules]
[Pages 67327-67329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22518]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 16
[FAR Case 2020-004; Docket No. FAR-2020-0004, Sequence No. 1]
RIN 9000-AO04
Federal Acquisition Regulation: Application of Micro-Purchase
Threshold To Task and Delivery Orders
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to implement a section of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020 that raises
the threshold for fair opportunity on certain task and delivery orders
to the micro-purchase threshold.
DATES: Interested parties should submit written comments at the address
shown below on or before December 21, 2020 to be considered in the
formation of the final rule.
ADDRESSES: Submit comments in response to FAR Case 2020-004 to http://www.regulations.gov. Submit comments via the Federal eRulemaking portal
by searching for ``FAR Case 2020-004''. Select the link ``Comment Now''
that corresponds with ``FAR Case 2020-004.'' Follow the instructions
provided on the screen. Please include your name, company name (if
any), and ``FAR Case 2020-004'' on your attached document. If your
comment cannot be submitted using https://www.regulations.gov, call or
email the points of contact in the FOR FURTHER INFORMATION CONTACT
section of this document for alternate instructions.
Instructions: Please submit comments only and cite ``FAR Case 2020-
004'' in all correspondence related to this case. All comments received
will be posted without change to http://www.regulations.gov, including
any personal and/or business confidential information provided. To
confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
Mr. Michael O. Jackson, Procurement Analyst, at 202-208-4949 or by
email at [email protected]. For information pertaining to status
or publication schedules, contact the Regulatory Secretariat Division
at 202-501-4755. Please cite ``FAR Case 2020-004''.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA are proposing to amend the FAR to implement
section 826 of the NDAA for FY 2020 (Pub. L. 116-92) which increases
the threshold for requiring fair opportunity on orders under multiple-
award contracts from $2,500 to the ``micro-purchase threshold''. The
fair opportunity to compete at FAR 16.505(b)(1) applies to orders over
the threshold unless an exception at FAR 16.505(b)(2) applies. The FAR
threshold at 16.505 is currently $3,500, as a result of inflation
adjustments in accordance with FAR 1.109. This change applies the word-
based threshold to ensure continued alignment with any future changes
to the thresholds.
FAR Case 2018-004 was published July 2, 2020 (85 FR 40064) with an
effective date of August 31, 2020. It raised the micro-purchase
threshold, as defined at FAR 2.101, to $10,000.
II. Discussion and Analysis
FAR section 16.505 currently requires contracting officers to
provide each awardee a fair opportunity to be considered for each order
exceeding $3,500 under multiple-award delivery-order or task-order
contracts unless an exception applies. This rule proposes to change the
threshold for requiring fair opportunity from $3,500 to the ``micro-
purchase threshold'' at FAR 16.505(b)(1)(i), 16.505(b)(2)(i), and
16.505(b)(2)(ii)(A). While the rule does not prohibit a contracting
officer from providing fair opportunity to each awardee at or below the
micro-purchase threshold, the rule requires contracting officers to
provide fair opportunity for orders exceeding the micro-purchase
threshold unless an exception applies.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Items, Including Commercially
Available Off-the-Shelf (COTS) Items
This proposed rule does not create any new provisions or clauses,
nor does it change the applicability of any existing provisions or
clauses included in solicitations and contracts valued at or below the
SAT, or for commercial items, including COTS items.
IV. Expected Cost Savings
DoD, GSA and NASA have performed a regulatory cost analysis for
this proposed rule. This rule is expected to reduce the public burden
because the threshold increase will reduce costs to submit an offer for
the unsuccessful awardees who participate in fair opportunity
competitions for orders under FAR part 16. DoD, GSA, and NASA recognize
some awardees may be impacted by a reduction in the number of
opportunities an awardee may have to receive an award of a delivery or
task order through fair opportunity. Using Federal Procurement Data
System (FPDS) data from FY 2017 through FY 2019 for FAR part 16 task
and delivery orders awarded using fair opportunity between $3,500 and
$10,000, the average number of fair opportunity task or delivery orders
under FAR part 16 procedures is approximately 9,800 orders annually. We
estimate that the Government receives an average of three offers for
each of the 9,800 task or delivery orders, resulting in an estimated
19,600 (9,800 x 2) unsuccessful offers. We assume there are costs to
submit the offers for the estimated 19,600 unsuccessful offers, which
will be eliminated by this rule. We estimate the public cost savings to
be $266,070 annually using a fully burdened GS-12 step 5 salary from
2019 (19,600 offers x 0.25 hour x $54.30).
DoD, GSA and NASA recognize that the increase in the micro-purchase
threshold (MPT) in FAR Case 2018-004 (84 FR 52420 on October 2, 2019)
has resulted in an increased use of the Governmentwide commercial
purchase card and a general reduction in the number of FAR part 16
delivery and task orders awarded between $3,500 and $10,000. According
to FPDS, there were 12,911 fair opportunity FAR part 16 awards between
$3,500 and $10,000 in FY 2017. In contrast, there were 6,421 awards in
FY 2019; a drop by almost 50%. This decrease can be attributed to the
preference given to the Governmentwide commercial purchase card for
procurements under the MPT. While it's unclear whether there will be
[[Page 67328]]
further decreases in the number of FAR part 16 fair opportunity awards,
it is clear that the increased MPT implemented by FAR Case 2018-004 has
already reduced the public and Government burden by approximately 50%
by shifting procurements from FAR part 16 delivery and task orders to
Governmentwide commercial purchase cards.
DoD, GSA and NASA expect the rule to also reduce burden on the
Government and streamline procurements for FAR part 16 orders below the
MPT, or $10,000. Contracting officers will not be required to review
multiple offers to make award. It is estimated that on average an hour
would be saved per order awarded since the contracting officer would no
longer need to review multiple offers to award the order. We estimate
the Government cost savings to be $532,140 annually using a fully
burdened GS-12 step 5 salary from 2019 (9,800 awards x 1 hour x
$54.30).
The following is a summary of the estimated cost savings calculated
in 2016 dollars at a 7% discount rate and in perpetuity.
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Summary Public Government Total
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Present Value Cost Savings...................................... -$3,801,000 -$7,602,000 -$11,403,000
Annualized Cost Savings......................................... -266,070 -532,140 -798,210
Annualized Value Cost Savings as of 2016 if Year 1 is 2020...... -202,984 -405,967 -608,951
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DoD, GSA and NASA invite comments from the regulated community on
both the methodology and the analysis provided in this rule.
V. 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 not a significant regulatory action and, therefore, was not
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.
VI. Executive Order 13771
This proposed rule is expected to be an E.O. 13771 deregulatory
action. Information on the estimated cost savings of this rule are
discussed in the ``Expected Cost Savings'' section of the preamble.
VII. Regulatory Flexibility Act
DoD, GSA, and NASA do not expect this rule to 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.
However, an initial regulatory flexibility analysis (IRFA) has been
performed and is summarized as follows:
This proposed rule amends the Federal Acquisition Regulation to
implement section 826 of the National Defense Authorization Act
(NDAA) for 2020 (Pub. L. 116-92) which raises the threshold for fair
opportunity on certain task and delivery orders to the word-based,
``micro-purchase threshold''.
The objective of the rule is to increase the threshold for
requiring fair opportunity on FAR part 16 orders under multiple-
award contracts from $2,500 to the word-based, ``micro-purchase
threshold'' for consistency of application and alignment with future
adjustments. The legal basis for the rule is section 826 of the NDAA
for FY 2020 (Pub. L. 116-92).
This rule will likely affect small business entities that
participate in fair opportunity competitions for FAR part 16 task
and delivery orders under multiple award contracts conducted by the
Federal Government between $3,500 and $10,000. The rule is not
expected to have a significant economic impact on small business
entities because DoD, GSA, and NASA do not expect a significant
change in the number of orders awarded to small entities; however,
in certain circumstances it is expected to reduce the costs
associated with developing and submitting a response to task and
delivery order competitions for actions up to $10,000. To assess the
impact of the threshold increase, data was obtained from FPDS. For
FY 2017 through FY 2019, there was an average of 9,803 FAR part 16
task and delivery orders awarded using fair opportunity between
$3,500 and $10,000. Of these actions, an average of 5,852 were
awarded to 843 unique small business entities. As a result of this
rule, it is assumed that approximately 843 small business entities
may experience a reduction in proposal costs on task and delivery
orders valued between $3,500 and $10,000.
The proposed rule does not impose any Paperwork Reduction Act
reporting or recordkeeping requirements on any small entities.
The proposed rule does not duplicate, overlap, or conflict with
any other Federal rules.
There are no known significant alternative approaches to the
proposed rule that would meet the proposed objectives.
The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. DoD, GSA and NASA invite comments from small
business concerns and other interested parties on the expected impact
of this rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by this rule
consistent with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2020-004) in
correspondence.
VIII. Paperwork Reduction Act
The 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 Part 16
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA are proposing to amend 48 CFR part 16
as set forth below:
PART 16--TYPES OF CONTRACTS
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1. The authority citation for 48 CFR part 16 continues to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
16.505 [Amended]
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2. Amend section 16.505 by--
0
a. Removing from paragraph (b)(1)(i) introductory text ``$3,500'' and
adding ``the micro-purchase threshold'' in its place;
[[Page 67329]]
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b. Removing from paragraph (b)(2)(i) introductory text ``delivery-order
or task-order exceeding $3,500'' and adding ``delivery order or task
order exceeding the micro-purchase threshold'' in its place; and
0
c. Removing from the intro text paragraph (b)(2)(ii)(A) ``$3,500'' and
adding ``the micro-purchase threshold'' in its place.
[FR Doc. 2020-22518 Filed 10-21-20; 8:45 am]
BILLING CODE 6820-EP-P