[Federal Register: May 2, 2001 (Volume 66, Number 85)]
[Rules and Regulations]
[Page 22082-22084]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02my01-19]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2 and 37
[FAC 97-25; FAR Case 2000-307; Item I]
RIN 9000-AJ12
Federal Acquisition Regulation; Preference for Performance-Based
Contracting
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Interim rule with request for comments.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on an interim
rule amending the Federal Acquisition Regulation (FAR) to implement
Section 821 of the Floyd D. Spence National Defense Authorization Act
for Fiscal Year 2001. The FAR rule explicitly establishes a preference
for performance-based contracting when acquiring services.
DATES: Effective Date: May 2, 2001.
Comment Date: Interested parties should submit comments to the FAR
Secretariat at the address shown below on or before July 2, 2001 to be
considered in the formulation of a final rule.
ADDRESSES: Submit written comments to: General Services Administration,
FAR Secretariat (MVP), 1800 F Street,
[[Page 22083]]
NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405.
Submit electronic comments via the Internet to: farcase.2000-
307@gsa.gov.
Please submit comments only and cite FAC 97-25, FAR case 2000-307
in all correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC 20405, (202) 501-4755, for information
pertaining to status or publication schedules. For clarification of
content, contact Ms. Julia Wise, Procurement Analyst, at (202) 208-
1168. Please cite FAC 97-25, FAR case 2000-307.
SUPPLEMENTARY INFORMATION:
A. Background
Section 821(a) of the Floyd D. Spence National Defense
Authorization Act for Fiscal Year 2001 (Public Law 106-398)
establishes, Governmentwide, the following order of precedence when
acquiring services--
1. A firm-fixed-price performance-based contract or task order.
2. A performance-based contract or task order that is not firm-
fixed-price.
3. A contract or task order that is not performance-based.
Section 821(e)(1) provides a definition for ``performance-based''
that applies to Section 821(a): ``The term ``performance-based,'' with
respect to a contract, a task order, or contracting means that the
contract, task order, or contracting, respectively, includes the use of
performance work statements that set forth contract requirements in
clear, specific, and objective terms with measurable outcomes.''
This interim FAR rule--
1. Moves the existing definition ``performance-based contracting''
at FAR 37.101 to FAR 2.101, Definitions, and revises it to include the
substance of the Section 821(e) definition; and
2. Revises FAR 37.102, Policy, to explicitly state that
performance-based contracting is the preferred method for acquiring
services and to enumerate the order of precedence established by
statute.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The interim rule is not expected 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., because the rule
does not impose a new policy requirement on small entities. The FAR
currently promotes the use of performance-based service contracting and
the use of firm-fixed-price type of contracts and task orders when it
is appropriate to do so. For example, in the current FAR--
1. Paragraph (a) of 37.102, policy, states ``Agencies shall use
performance-based contracting methods * * * to the maximum extent
practicable, for the acquisition of services. * * *''
2. Subpart 37.6, Performance-Based Contracting, exclusively
addresses performance-based contracting; and
3. Subpart 16.1, Selecting Contract Types, addresses a preference,
under certain conditions, for a firm-fixed-price type of contract that
best utilizes the basic profit motive of business enterprise.
Therefore, an Initial Regulatory Flexibility Analysis has not been
performed. The Councils will consider comments from small entities
concerning the affected FAR Parts 2 and 37 in accordance with 5 U.S.C.
610. Interested parties must submit such comments separately and should
cite 5 U.S.C. 601, et seq. (FAC 97-25, FAR case 2000-307), in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose information collection requirements that require
the approval of the Office of Management and Budget under 44 U.S.C.
3501, et seq.
D. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense (DoD), the Administrator of General Services (GSA), and the
Administrator of the National Aeronautics and Space Administration
(NASA) that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. The Councils
have been tasked with publishing an interim rule to implement Section
821 of the Floyd D. Spence National Defense Authorization Act for
Fiscal Year 2001 (Public Law 106-398), which is effective 180 days
after the date of enactment (October 30, 2000) of Public Law 106-398.
However, pursuant to Public Law 98-577 and FAR 1.501, the Councils will
consider public comments received in response to this interim rule in
the formation of the final rule.
List of Subjects in 48 CFR Parts 2 and 37
Government procurement.
Dated: April 27, 2001.
Al Matera,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2 and 37 as set
forth below:
1. The authority citation for 48 CFR parts 2 and 37 continues to
read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 2--DEFINITIONS OF WORDS AND TERMS
2. Amend section 2.101 by adding, in alphabetical order, the
definition ``Performance-based contracting'' to read as follows:
2.101 Definitions.
* * * * *
(b) * * *
Performance-based contracting means structuring all aspects of an
acquisition around the purpose of the work to be performed with the
contract requirements set forth in clear, specific, and objective terms
with measurable outcomes as opposed to either the manner by which the
work is to be performed or broad and imprecise statements of work.
* * * * *
PART 37--SERVICE CONTRACTING
37.101 [Amended]
3. Amend section 37.101 by removing the definition ``Performance-
based contracting.''
4. Amend section 37.102 by revising paragraph (a) to read as
follows:
37.102 Policy.
(a) Performance-based contracting (see Subpart 37.6) is the
preferred method for acquiring services (Public Law 106-398, section
821). When acquiring services, including those acquired under supply
contracts, agencies must--
(1) Use performance-based contracting methods to the maximum extent
practicable, except for--
(i) Architect-engineer services acquired in accordance with 40
U.S.C. 541-544 (see part 36);
(ii) Construction (see part 36);
(iii) Utility services (see part 41); or
(iv) Services that are incidental to supply purchases; and
(2) Use the following order of precedence (Public Law 106-398,
section 821(a));
(i) A firm-fixed price performance-based contract or task order.
[[Page 22084]]
(ii) A performance-based contract or task order that is not firm-
fixed price.
(iii) A contract or task order that is not performance-based.
* * * * *
[FR Doc. 01-11008 Filed 5-1-01; 8:45 am]
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