[Federal Register: July 26, 2000 (Volume 65, Number 144)]
[Rules and Regulations]               
[Page 46051-46053]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[[Page 46051]]


Part II

Department of Defense

General Services Administration

National Aeronautics and Space Administration


48 CFR Ch. 1

Federal Acquisition Regulations (FAR); Final and Interim Rules

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48 CFR Chapter 1

Federal Acquisition Circular 97-19; Introduction

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Summary presentation of final and interim rules.


SUMMARY: This document summarizes the Federal Acquisition Regulation 
(FAR) rules agreed to by the Civilian Agency Acquisition Council and 
the Defense Acquisition Regulations Council (Councils) in this Federal 
Acquisition Circular (FAC) 97-19. The Councils drafted these FAR rules 
using plain language in accordance with the White House memorandum, 
Plain Language in Government Writing, dated June 1, 1998. The Councils 
wrote all new and revised text using plain language. A companion 
document, the Small Entity Compliance Guide (SECG), follows this FAC. 
The FAC, including the SECG, is available via the Internet at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.arnet.gov/far.

DATES: For effective dates and comment dates, see separate documents 
which follow.

Building, Washington, DC 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact the analyst whose name appears in the table below in 
relation to each FAR case or subject area. Please cite FAC 97-19 and 
specific FAR case numbers. Interested parties may also visit our 
website at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.arnet.gov/far.

      Item               Subject            FAR case        Analyst
I..............  Contract Bundling......     1997-306  De Stefano.
II.............  North American Industry     2000-604  Moss.
                  Classification System
                  (NAICS) (Interim).
III............  Liquidated Damages.....     1999-003  Moss.
IV.............  Service Contract Act,       1998-605  Klein.
                  Commercial Item
V..............  Small Business              1999-012  Moss.
                  Demonstration Program.
VI.............  Construction Industry       1999-302  De Stefano.
                  Payment Protection Act
                  of 1999.
VII............  Deferred Research and       1999-013  Nelson.
                  Development (R&D)
VIII...........  Time-and-Materials or       1999-606  Klein.
                  Labor Hours.
IX.............  Repeal of Reporting         2000-006  Klein.
                  Requirements under
                  Public Law 85-804.
X..............  Technical Amendments...

SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the 
actual revisions and/or amendments to these FAR cases, refer to the 
specific item number and subject set forth in the documents following 
these item summaries.
    Federal Acquisition Circular 97-19 amends the FAR as specified 

Item I--Contract Bundling (FAR Case 1997-306 (97-306))

    This final rule converts the interim rule published as Item III of 
FAC 97-15 to a final rule with minor changes. The rule amends the FAR 
to implement Sections 411-417 of the Small Business Reauthorization Act 
of 1997. Sections 411-417 amend Title 15 of the United States Code to 
define ``contract bundling,'' and to require agencies to avoid 
unnecessary bundling that precludes small business participation in the 
performance of Federal contracts.
    This rule affects all contracting officers that may combine 
requirements that were previously awarded to a small business or 
requirements for which a small business could have competed. In 
accordance with the statute and Small Business Administration 
regulations, agencies must establish procedures for processing bundled 
requirements to ensure maximum small business participation in bundled 
acquisitions. Specifically, agencies and contracting officers must--
     Perform market research when bundled requirements are 
     Justify bundling in acquisition strategies;
     Meet specific estimated benefit thresholds before bundling 
     Assess the impact of bundling on small businesses;
     Submit solicitations containing bundled requirements to 
the Small Business Administration (SBA) procurement center 
representatives for review; and
     Include, in negotiated competitions for bundled 
requirements, a source selection factor for the offerors' proposed use 
of small businesses as subcontractors and their past performance in 
meeting subcontracting goals.

Item II--North American Industry Classification System (NAICS) (FAR 
Case 2000-604)

    This interim rule revises the FAR to convert size standards and 
other programs in the FAR that are currently based on the Standard 
Industrial Classification (SIC) system to the North American Industry 
Classification System (NAICS). NAICS is a new system that classifies 
establishments according to how they conduct their economic activity. 
It is a significant improvement over the SIC because it more accurately 
identifies industries. Beginning October 1, 2000, NAICS will be used to 
establish the size standards for acquisitions. In addition, the interim 
rule converts the designated industry groups in FAR 19.1005 to NAICS 
and requires agencies to report contract actions using the NAICS code 
rather than the SIC code.

Item III--Liquidated Damages (FAR Case 1999-003)

    This final rule clarifies coverage on liquidated damages. This rule 
will make it easier for contracting officers to understand the policy 
for administering liquidated damages. The only substantive change is at 
FAR 11.501(d). The authority to approve reductions in or waivers to 
liquidated damages was changed from the Comptroller General to the 
Commissioner, Financial Management Service.

Item IV--Service Contract Act, Commercial Item Subcontracts (FAR 
Case 1998-605)

    This final rule deletes the Service Contract Act of 1965 from the 
list of laws inapplicable to subcontracts for commercial items. FAR 
12.504(a) contains this list.

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Item V--Small Business Competitiveness Demonstration Program (FAR 
Case 1999-012)

    This final rule converts the interim rule published as Item I of 
FAC 97-16 to a final rule without change.
    The rule amends FAR Part 19 to clarify language pertaining to the 
Competitiveness Demonstration Program, consistent with revisions to the 
Program that were required by the OFPP and SBA joint final policy 
directive dated May 25, 1999. The rule revises FAR Subpart 19.10 to--
    1. Advise the contracting officer to consider the 8(a) Program and 
HUBZone Program when there is not a reasonable expectation that offers 
will be received from two or more emerging small businesses; and
    2. Add a new section 19.1006, Exclusions, to reflect the exclusions 
of orders under the Federal Supply Schedule Program and contract awards 
to educational and nonprofit institutions or governmental entities.

Item VI--Construction Industry Payment Protection Act of 1999 (FAR 
Case 1999-302)

    This final rule amends FAR 28.102-2 and the clauses at 52.228-13, 
52.228-15, and 52.228-16 to implement the Construction Industry Payment 
Protection (CIPP) Act of 1999. The CIPP Act amends the Miller Act to 
provide that the amount of a payment bond must equal the total amount 
payable by the terms of the contract, unless the contracting officer 
determines that a payment bond in that amount is impractical. The final 
rule also provides enhanced payment protection for Government contracts 
not subject to the Miller Act. The contracting officer must determine 
the appropriate amount of payment protection in each construction 
contract that exceeds $25,000, and in any other contract that requires 
a performance bond in accordance with FAR 28.103-2.

Item VII--Deferred Research and Development (R&D) Costs (FAR Case 

    This final rule amends the FAR by clarifying and simplifying the 
``deferred research and development costs'' cost principle at FAR 
31.205-48. The rule will only affect contracting officers that price 
contracts using cost analysis, or that are required by a contract 
clause to use cost principles for the determination, negotiation, or 
allowance of contractor costs.

Item VIII--Time-and-Materials or Labor Hours (FAR Case 1999-606)

    This final rule clarifies the requirements regarding changes to 
time-and-materials and labor-hour contracts. The rule changes the 
clause at FAR 52.243-3, Changes--Time-and-Materials or Labor-Hours, to 
be consistent with Alternate II of the clause at FAR 52.243-1, 
Changes--Fixed-Price. Alternate II is used in service contracts and 
most of the work performed under time-and-materials or labor-hour 
contracts also involves services.

Item IX--Repeal of Reporting Requirements under Public Law 85-804 
(FAR Case 2000-006)

    This final rule amends the FAR to implement paragraph 901(r)(1) of 
the Federal Reports Elimination Act of 1998 (Pub. L. 105-362). 
Paragraph 901(r)(1) repealed section 4 of Public Law 85-804 (50 U.S.C. 
1434). Section 4 required each department and agency to report annually 
to Congress any contract action in excess of $50,000 issued under the 
authority of this law. The rule revises FAR 50.000 to update the 
reference to Public Law 85-804 and eliminates the reporting 
requirements at FAR Part 50.104. Agencies are no longer required to 
submit to Congress annually a report of actions taken on requests for 
relief under the authority of Public Law 85-804.

Item X--Technical Amendments

    These amendments update references and make editorial changes at 
sections 3.104-5, 4.803 and 22.400.

    Dated: July 19, 2000.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

Federal Acquisition Circular

    Federal Acquisition Circular (FAC) 97-19 is issued under the 
authority of the Secretary of Defense, the Administrator of General 
Services, and the Administrator for the National Aeronautics and Space 
    All Federal Acquisition Regulation (FAR) changes and other 
directive material contained in FAC 97-19 are effective [insert date 60 
days after publication in the Federal Register], except for the 
following items:
    Items I, V, VI, and X are effective [insert date of publication in 
the Federal Register].
    Item IV is effective [insert date 30 days after publication in the 
Federal Register].
    Item II is effective October 1, 2000.
    Each rule is applicable to solicitations issued on or after the 
rule's effective date.

    Dated: July 19, 2000.

Deidre A. Lee,
Director, Defense Procurement.

Federal Acquisition Circular

    Dated: July 19, 2000.

David A. Drabkin,
Deputy Associate Administrator, Office of Acquisition Policy, 
General Services Administration.

Federal Acquisition Circular

    Dated: July 18, 2000.

R. Scott Thompson,
Acting Associate Administrator for Procurement, National Aeronautics 
and Space Administration.

[FR Doc. 00-18667 Filed 7-25-00; 8:45 am]