[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

0
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]

0
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]]

0
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