[Federal Register Volume 89, Number 168 (Thursday, August 29, 2024)]
[Proposed Rules]
[Pages 70157-70160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19024]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 17, 36, and 52

[FAR Case 2023-003; Docket No. FAR-2023-0003; Sequence No. 1]
RIN 9000-AO51


Federal Acquisition Regulation: Prohibition on the Use of Reverse 
Auctions for Complex, Specialized, or Substantial Design and 
Construction Services

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 Construction 
Consensus Improvement Act of 2021 that prohibits the use of reverse 
auctions for certain construction services.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat Division at the address shown below on or before 
October 28, 2024, to be considered in the formation of the final rule.

ADDRESSES: Submit comments in response to FAR Case 2023-003 to the 
Federal eRulemaking portal at https://www.regulations.gov by searching 
for ``FAR Case 2023-003''. Select the link ``Comment Now'' that 
corresponds with ``FAR Case 2023-003''. Follow the instructions 
provided on the ``Comment Now'' screen. Please include your name, 
company name (if any), and ``FAR Case 2023-003'' 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 2023-
003'' 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. Public comments may be submitted as an individual, as an 
organization, or anonymously (see frequently asked questions at https://www.regulations.gov/faq). 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 202-821-9776 or by 
email at [email protected]. For information pertaining to 
status, publication schedules, or alternate instructions for submitting 
comments if https://www.regulations.gov cannot be used, contact the 
Regulatory Secretariat Division at 202-501-4755 or [email protected]. 
Please cite FAR Case 2023-003.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA are proposing to revise the FAR to implement 
section 2 of the Construction Consensus Procurement Improvement Act of 
2021 (Pub. L. 117-28). Section 2 of the Construction Consensus 
Procurement Improvement Act of 2021 amended section 402 of Title IV of 
Division U of the Consolidated Appropriations Act, 2021 (Pub. L. 116-
260) entitled the Construction Consensus Procurement Improvement Act of 
2020 to require rulemaking to promulgate a definition of ``complex, 
specialized, or substantial design and construction services'', which 
includes site planning and design; architectural and engineering 
services (as defined in 40 U.S.C. 1102); interior design; performance 
of substantial construction work for facility, infrastructure, and 
environmental restoration projects; and construction or substantial 
alteration of public buildings or public works. The statute prohibits 
the use of reverse auctions for such services having a value that 
exceeds the simplified acquisition threshold (SAT).

II. Discussion and Analysis

    The proposed rule establishes a new definition at FAR 2.101 for 
``complex, specialized, or substantial design and construction 
services'' that reflects the statutory definition to support its use at 
FAR 17.803 and 36.103. In addition, the definition of ``reverse 
auction'' in FAR 2.101 is revised to better reflect the statutory 
definition provided in the Construction Consensus Procurement 
Improvement Act of 2021.

[[Page 70158]]

    The proposed rule implements the prohibition against using reverse 
auctions for the procurement of complex, specialized, or substantial 
design and construction services exceeding the SAT at FAR 36.103, 
Methods of contracting. This placement will reinforce to contracting 
officers the need to comply with the statutory prohibition. While the 
statute does not prohibit the use of reverse auctions for the subject 
services at or below the SAT, a reverse auction may only be used if 
market research indicates it is appropriate (see FAR 17.802(a)) and not 
prohibited by regulation or statute (see FAR 17.803, 36.104, and 
36.601).
    The FAR identifies two types of procurements for which reverse 
auctions may not be used, regardless of dollar value:

--Procurements for the design and construction of a public building, 
facility or work using the two-phase design-build selection procedures 
authorized by 10 U.S.C. 3241 and 41 U.S.C. 3309, as implemented at FAR 
36.104, may not be conducted using a reverse auction.
--Procurements for architectural and engineering services subject to 40 
U.S.C. chapter 11, commonly known as the Brooks Architect Engineer Act, 
may not be awarded using reverse auctions because reverse auctions do 
not comply with the qualifications-based selection processes required 
by statute and implemented at FAR subpart 36.6.

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

    This proposed rule does not impose any new requirements on 
contracts at or below the simplified acquisition threshold, for 
commercial products including commercially available off-the-shelf 
items, or for commercial services.

IV. Expected Impact of the Proposed Rule

    The proposed rule is not expected to have a significant impact on 
the public or the Government because the rulemaking does not supersede 
current statutory direction on the use of FAR part 36 procedures for 
construction. Contracting officers are still required to conduct market 
research to determine the most appropriate contracting method for the 
particular procurement. Requirements for sealed bidding, design-build 
construction, and architect-engineering services remain unchanged.
    Offerors participating in competitive procurements that are valued 
at or below the SAT will still be provided advance notices and 
solicitations in accordance with FAR 36.211 and for actions anticipated 
to be awarded to a small business, 15 U.S.C. 644(w). Use of a reverse 
auction as the method of obtaining pricing does not impact these 
requirements.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 (as amended by E.O. 14094) 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. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this proposed 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 rulemaking is not expected to change how construction 
services valued above the SAT are conducted while providing some 
flexibility for certain awards valued at or below the SAT. 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 2 of the 
Construction Consensus Procurement Improvement Act of 2021 (Pub. L. 
117-28), which prohibits the use of reverse auctions for complex, 
specialized, or substantial design and construction services 
exceeding the simplified acquisition threshold (SAT). DoD, GSA, and 
NASA published FAR case 2015-038, Reverse Auction Guidance, as a 
final rule at 89 FR 61327 on July 30, 2024, with an effective date 
of August 29, 2024. The final rule added policy on the use of 
reverse auctions to the FAR.
    The objective of the proposed rule is to establish a definition 
for complex, specialized, or substantial design and construction 
services and to implement the statutory prohibition against using 
reverse auctions for such services that are valued above the SAT. 
The legal basis for the rule is the Construction Consensus 
Procurement Improvement Act of 2021 (Pub. L. 117-28). Promulgation 
of the FAR is authorized by 40 U.S.C. 121(c); 10 U.S.C. chapter 4 
and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); 
and 51 U.S.C 20113.
    The proposed rule will apply to all entities submitting offers 
in response to solicitations for construction services pursuant to 
FAR part 36; however, the impact of the rule on construction 
services valued above the SAT is expected to be de minimis because 
the rule maintains current direction.
    The rule may impact entities submitting offers in response to 
solicitations for construction services valued at or below the SAT, 
if a contracting officer determines that market research supports 
the use of a reverse auction and the use of a reverse auction is not 
otherwise prohibited by statute (i.e., 40 U.S.C. chapter 11, 
commonly known as the Brooks Architect Engineer Act).
    Since the Government does not currently collect data on the 
number of awards that utilized a reverse auction to obtain pricing, 
the burden estimates are based upon data obtained from the Federal 
Procurement Data System (FPDS) for all construction services. The 
Government assumes that reverse auctions are not widely used for 
construction services, so the actual number of procurements 
utilizing reverse auctions is estimated to be only a small fraction 
of the total awards described below.
    Data obtained from FPDS for fiscal years 2020, 2021, and 2022 
indicates that an average of 1,318 unique small entities were 
awarded an estimated 2,644 construction service awards valued above 
the SAT annually. Data obtained from FPDS for the same period 
indicates that an average of 1,277 unique small entities were 
awarded an estimated 3,064 construction service awards valued at or 
below the SAT annually. Of those actions, approximately 122 small 
entities were awarded an estimated 577 construction service awards 
annually using procedures other than FAR part 36. For awards at or 
below the SAT, the use of reverse auctions to obtain pricing may be 
appropriate.
    The proposed rule does not include additional reporting or 
recordkeeping requirements.
    The proposed 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.

    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 proposed rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in

[[Page 70159]]

subparts affected by the proposed 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 2023-003), in correspondence.

VII. Paperwork Reduction Act

    This proposed 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. 3501-3521).

List of Subjects in 48 CFR Parts 2, 17, 36, and 52

    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 parts 2, 17, 
36, and 52 as set forth below:

0
1. The authority citation for 48 CFR parts 2, 17, 36, and 52 continues 
to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. 
chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 
20113.

PART 2--DEFINITIONS OF WORDS AND TERMS

0
2. Amend section 2.101 by--
0
a. Adding in alphabetic order the definition of ``Complex, specialized, 
or substantial design and construction services''; and
0
b. Revising the definition of ``Reverse auction''.
    The addition and revision read as follows:


2.101  Definitions.

* * * * *
    Complex, specialized, or substantial design and construction 
services (section 2 of the Construction Consensus Procurement 
Improvement Act of 2021 (Pub. L. 117-28)) means--
    (1) Site planning and landscape design;
    (2) Architectural and engineering services (as defined in 40 U.S.C. 
1102);
    (3) Interior design;
    (4) Performance of substantial construction work for facility, 
infrastructure, and environmental restoration projects; or
    (5) Construction or substantial alteration of public buildings or 
public works.
* * * * *
    Reverse auction means a real-time auction generally conducted 
through an electronic medium among two or more offerors who compete by 
submitting bids for an award of a supply contract, service contract, 
purchase order, or blanket purchase agreement, or for an award of an 
order under a contract or blanket purchase agreement, with the ability 
to submit revised lower bids at any time before the closing of the 
auction (section 2 of the Construction Consensus Procurement 
Improvement Act of 2021 (Pub. L. 117-28)).
* * * * *

PART 17--SPECIAL CONTRACTING METHODS

0
3. Amend section 17.803 by--
0
a. Revising paragraph (a);
0
b. Removing paragraph (b); and
0
c. Redesignating paragraphs (c) and (d) as paragraphs (b) and (c).
    The revision reads as follows:


17.803  Applicability.

* * * * *
    (a) Complex, specialized, or substantial design and construction 
services as defined in 2.101, valued above the simplified acquisition 
threshold (see 36.103(c));
* * * * *

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

0
4. Amend section 36.103 by adding paragraph (c) to read as follows:


36.103  Methods of contracting.

* * * * *
    (c) Contracting officers shall not use reverse auctions for an 
award of a contract, blanket purchase agreement, or order if the award 
is anticipated to exceed the simplified acquisition threshold for 
complex, specialized, or substantial design and construction services 
in accordance with the Construction Consensus Procurement Improvement 
Act of 2021 (Pub. L. 117-28). Contracting officers may use reverse 
auctions for procurements for complex, specialized, or substantial 
design and construction services at or below the simplified acquisition 
threshold--
    (1) If market research indicates it may be appropriate (see 
17.802(a)); and
    (2) Use of a reverse auction is not otherwise prohibited by 
regulation or statute (see 17.803, 36.104, and 36.601).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Amend section 52.217-10 by--
0
a. Revising the date of the provision; and
0
b. In paragraph (a), revising the definition of ``Reverse auction''.
    The revisions read as follows:


52.217-10  Reverse Auction.

* * * * *

Reverse Auction (DATE)

    (a) * * *
    Reverse auction means a real-time auction generally conducted 
through an electronic medium among two or more offerors who compete by 
submitting bids for an award of a supply contract, service contract, 
purchase order, or blanket purchase agreement, or for an award of an 
order under a contract or blanket purchase agreement, with the ability 
to submit revised lower bids at any time before the closing of the 
auction (Section 2 of the Construction Consensus Procurement 
Improvement Act of 2021 (Pub. L. 117-28)).
* * * * *
0
6. Amend section 52.217-11 by--
0
a. Revising the date of the clause; and
0
b. In paragraph (a), revising the definition of ``Reverse auction''.
    The revisions read as follows:


52.217-11  Reverse Auction-Orders.

* * * * *

Reverse Auction--Orders (DATE)

    (a) * * *
    Reverse auction means a real-time auction generally conducted 
through an electronic medium among two or more offerors who compete by 
submitting bids for an award of a supply contract, service contract, 
purchase order, or blanket purchase agreement, or for an award of an 
order under a contract or blanket purchase agreement, with the ability 
to submit revised lower bids at any time before the closing of the 
auction (Section 2 of the Construction Consensus Procurement 
Improvement Act of 2021 (Pub. L. 117-28)).
* * * * *
0
7. Amend section 52.217-12 by--
0
a. Revising the date of the clause; and
0
b. In paragraph (a), revising the introductory text and the definition 
of ``Reverse auction''.
    The revisions read as follows:


52.217-12  Reverse Auction Services.

* * * * *

Reverse Auction Services (DATE)

    (a) Definitions. As used in this clause--
* * * * *
    Reverse auction means a real-time auction generally conducted 
through an electronic medium among two or more offerors who compete by 
submitting bids for an award of a supply contract, service contract, 
purchase order, or blanket purchase agreement, or for an

[[Page 70160]]

award of an order under a contract or blanket purchase agreement, with 
the ability to submit revised lower bids at any time before the closing 
of the auction (Section 2 of the Construction Consensus Procurement 
Improvement Act of 2021 (Pub. L. 117-28)).
* * * * *
[FR Doc. 2024-19024 Filed 8-28-24; 8:45 am]
BILLING CODE 6820-EP-P