[Federal Register Volume 87, Number 185 (Monday, September 26, 2022)]
[Proposed Rules]
[Pages 58300-58302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20766]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 1

[FAR Case 2022-002; Docket No. 2022-0002; Sequence No. 1]
RIN 9000-AO39


Federal Acquisition Regulation: Exemption of Certain Contracts 
From the Periodic Inflation Adjustments to the Acquisition-Related 
Thresholds

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 for Fiscal Year 2022 that provides a 
statutory exception to the periodic inflation adjustments of 
acquisition-related thresholds for certain bond requirements.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat Division at the address shown below on or before 
November 25, 2022 to be considered in the formation of the final rule.

ADDRESSES: Submit comments in response to FAR Case 2022-002 to the 
Federal eRulemaking portal at https://www.regulations.gov by searching 
for ``FAR Case 2022-002''. Select the link ``Comment Now'' that 
corresponds with ``FAR Case 2022-002''. Follow the instructions 
provided on the ``Comment Now'' screen. Please include your name, 
company name (if any), and ``FAR Case 2022-002'' 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 2022-
002'' in all correspondence related to this case. Comments received 
generally will be posted without change to https://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: Ms. Marissa Ryba, Procurement Analyst, 
at 314-586-1280 or by email at [email protected], for clarification 
of content. For information pertaining to status or publication 
schedules, contact the Regulatory Secretariat Division at 202-501-4755 
or [email protected]. Please cite FAR Case 2022-002.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA are proposing to amend the FAR at section 1.109 
to implement section 861 of the National Defense Authorization Act 
(NDAA) for Fiscal Year (FY) 2022 (Pub. L. 117-81), which provides a 
statutory exception to the periodic inflation adjustments of 
acquisition-related thresholds under 41 U.S.C. 1908.

A. What is an acquisition-related threshold?

    41 U.S.C. 1908 is applicable to ``a dollar threshold that is 
specified in law as a factor in defining the scope of the applicability 
of a policy, procedure, requirement, or restriction provided in that 
law to the procurement of property or services by an executive agency, 
as the [Federal Acquisition Regulatory] Council determines.''

B. What acquisition-related thresholds are not subject to escalation 
adjustment?

    41 U.S.C. 1908 does not permit escalation of acquisition-related 
thresholds established by the Construction Wage Rate Requirements 
statute (Davis Bacon Act), the Service Contract Labor Standards 
statute, or the United States Trade Representative pursuant to the 
authority of the Trade Agreements Act of 1979.

C. Revisions to 41 U.S.C. 1908

    Section 861 of the NDAA for FY 2022 modifies 41 U.S.C. 1908(b)(2) 
to add performance and payment bond requirements for construction in 40 
U.S.C. chapter 31 to the already established list of acquisition-
related thresholds that are not subject to escalation. The list appears 
in the FAR at 1.109(c).
    40 U.S.C. chapter 31, subchapter III, Bonds (formerly known as the 
Miller Act) requires certain performance and payment bonds for 
construction contracts. Sections 3131 through 3134 are the subject of 
the changes required by section 861.
     40 U.S.C. 3131 requires performance and payment bonds for 
any construction contract exceeding $100,000, unless otherwise waived.
     40 U.S.C. 3132 requires alternatives to payment bonds as 
payment protections for certain types of construction contracts. For 
construction contracts greater than $25,000, but not greater than 
$100,000, the contracting officer must select one or more payment 
protections.
     40 U.S.C. 3133 requires agencies to provide a certified 
copy of the payment bonds referenced in section 3131 to any person 
(e.g., subcontractor) who has not been paid or is being sued on the 
bond.
     40 U.S.C. 3134 provides waivers from the subchapter for 
certain contracts issued by the Military Departments, Department of 
Transportation, and the National Oceanic and Atmospheric 
Administration.
    The FAR threshold for performance and payment bonds at 28.102 is 
currently $150,000 as a result of one escalation adjustment in 
accordance with FAR 1.109. FAR Case 2008-024, published on August 30, 
2010, at 75 FR 53129, raised the threshold by $50,000 from the $100,000 
reflected in 40 U.S.C. 3131. The threshold was added to 52.228-11, 
Individual Surety--Pledge of Assets, after the most recent escalation, 
by FAR case 2017-003, published on January 14, 2021, at 86 FR 3682.
    The FAR threshold for alternatives to payment bonds at 28.102 is 
currently $35,000, as a result of two escalation adjustments in 
accordance with FAR 1.109. FAR Case 2004-033, published on September 
28, 2006, at 71 FR 57363 and 2014-022 published on July 2, 2015, at 80 
FR 38293, each raised the threshold by $5,000 from the $25,000 
reflected at 40 U.S.C. 3132.

II. Discussion and Analysis

    The proposed rule adds the statutory exception provided by section 
861 to the list of acquisition-related thresholds that are not subject 
to escalation under 41 U.S.C. 1908 at FAR 1.109(c). Section 1908 does 
not permit the escalation of acquisition-related thresholds established 
by the following:
     40 U.S.C. 31, subchapter IV, Wage Rate Requirements 
(Construction).
     41 U.S.C. 67, Service Contract Labor Standards.
     The United States Trade Representative under the Trade 
Agreements Act.
    The rule proposes to restructure FAR 1.109(c), by consolidating the 
citation for 40 U.S.C. chapter 31, subchapter III,

[[Page 58301]]

Bonds, with the existing citation for subchapter IV, Wage Rate 
Requirements (Construction). Since section 861 requires the thresholds 
to remain at the current escalated values, no other changes are 
required for implementation.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Services and Commercial Products, 
Including Commercially Available Off-the-Shelf (COTS) Items

    This rule does not create new solicitation provisions or contract 
clauses or revise the text of any existing provisions or clauses. The 
rule does not change any current requirements in the provisions or 
clauses but does prevent future periodic inflation adjustments to an 
acquisition-related threshold.

IV. Expected Impact of the Rule

    This rule is not expected to have a significant impact on the 
Government or industry because this rule maintains acquisition-related 
thresholds that have been in the FAR for several years without 
significant change.
    The FAR threshold for performance and payment bonds at 28.102 had 
one escalation adjustment in 2010, which raised the threshold by 
$50,000 from $100,000 and has since remained unchanged. The FAR 
threshold for alternatives to payment bonds at 28.102 is currently 
$35,000; it was escalated twice, one in 2006 and again in 2015. Each 
adjustment raised the threshold by $5,000 starting from $25,000. Since 
the second adjustment, this threshold has also remained unchanged.
    Because the acquisition-related thresholds under 28.102 have 
remained mostly unchanged, there is little expectation for future 
increases or changes that would affect Government and industry. There 
is also no expected cost impact of this rule since the acquisition-
related thresholds will remain the same. There may be some benefit of 
consistency to the public by ensuring that the thresholds remain the 
same.

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.

VI. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD, GSA, and NASA will 
send the rule and the ``Submission of Federal Rules Under the 
Congressional Review Act'' form to each House of the Congress and to 
the Comptroller General of the United States. A major rule cannot take 
effect until 60 days after it is published in the Federal Register. 
This rule is not anticipated to be a major rule under 5 U.S.C. 804.

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. 601-612, because 
the rule maintains the status quo. However, an Initial Regulatory 
Flexibility Analysis (IRFA) has been performed and is summarized as 
follows:

    DoD, GSA, and NASA are proposing to amend the Federal 
Acquisition Regulation (FAR) to implement section 861 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 
(Pub. L. 117-81) that provides a statutory exception to the periodic 
inflation adjustments of acquisition-related thresholds for certain 
bond requirements.
    The objective of the proposed rule is to retain the current 
dollar thresholds for performance and payments bonds as well as the 
threshold for alternatives to such bonds until changed by statute. 
The legal basis for the rule is Section 861 of the NDAA for FY 2022 
(Pub. L. 117-81).
    The proposed rule will apply to small entities performing 
construction services for the Government; however, the impact is 
expected to be de minimis. Contract actions with a value between 
$35,000 and $150,000 will still require an alternative to payment 
bonds for payment protection, and those with a value exceeding 
$150,000 will still require performance and payment bonds. The rule 
makes permanent the thresholds that have been in place for several 
years, resulting in no changes for any entity performing 
construction services.
    Data obtained from the Federal Procurement Data System (FPDS) 
for FY 2019, 2020, and 2021 indicates that an average of 678 unique 
small entities received an estimated 1,219 awards annually that 
require alternatives to payment bonds. FPDS data also indicates that 
an average of 1,340 unique small entities received an estimated 
2,706 awards that are subject to performance and payment bonds 
annually. Approximately 2,018 (678 + 1,340) unique small entities 
will continue to comply with current bond requirements as a result 
of this proposed rule.
    The proposed rule does not include additional reporting or 
record keeping requirements.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no available alternatives to the proposed rule to 
accomplish the desired objective of the statute.

    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 the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2022-002), 
in correspondence.

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. 3501-3521) applies to the 
information collection described in this rule; however, these changes 
to the FAR do not impose additional information collection requirements 
to the paperwork burden previously approved under OMB Control Number 
9000-0045, Bid Guarantees, Performance and Payment Bonds, and 
Alternative Payment Protection.

List of Subjects in 48 CFR Part 1

    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 propose amending 48 CFR part 1 as set 
forth below:

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

0
1. The authority citation for 48 CFR part 1 continues to read as 
follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

0
2. Amend section 1.109 by revising paragraph (c)(1) to read as follows:


1.109  Statutory acquisition--related dollar thresholds--adjustment for 
inflation.

* * * * *
    (c) * * *

[[Page 58302]]

    (1) 40 U.S.C. chapter 31--
    (i) Subchapter III, Bonds; and
    (ii) Subchapter IV, Wage Rate Requirements (Construction);
* * * * *
[FR Doc. 2022-20766 Filed 9-23-22; 8:45 am]
BILLING CODE 6820-EP-P