[Federal Register: December 18, 2001 (Volume 66, Number 243)]
[Rules and Regulations]               
[Page 65347-65349]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[[Page 65347]]


Part III

 Department of Defense

 General Services Administration

 National Aeronautics and Space Administration


48 CFR Chapter 1 et al.

Federal Acquisition Circular 2001-02; Introduction and Federal 
Acquisition Regulation; Energy-Efficiency of Supplies and Services and 
Prompt Payment and the Recovery of Overpayment, et al.; Final Rules

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48 CFR Chapter 1

Federal Acquisition Circular 2001-02; Introduction

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

ACTION: Summary presentation of final 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 in this Federal Acquisition 
Circular (FAC) 2001-02. 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 
that 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 2001-02 and specific FAR case number(s). 
Interested parties may also visit our web site 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                  Definitions of             2000-015  Davis
                    ``Component'' and
                    ``End Product''.
II                 Energy Efficiency of       1999-011  Smith
                    Supplies and Services.
III                Prompt Payment and the     1999-023  Olson
                    Recovery of
IV                 Javits-Wagner-O'Day        1999-017  Nelson
                    Act Subcontract
                    Preference Under
                    Service Contracts.
V                  Discussion                 1999-022  DeStefano
VI                 Definition of              2000-017  Olson
                    Subcontract in FAR
                    Subpart 15.4.
VII                North American             2000-604  Cundiff
                    Classification System.
VIII               Iceland--Newly             2001-025  Davis
                    Designated Country
                    under Trade
                    Agreements Act.
IX                 Contractor Personnel       2000-609  Nelson
                    in the Procurement of
                    Technology Services.

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. FAC 2001-02 amends the FAR as specified below:

Item I--Definitions of ``Component'' and ``End Product'' (FAR Case 

    This final rule amends the FAR to restore the unique Part 25 
definitions of ``component'' and ``end product'' for acquisition of 
supplies. In addition, the Councils have made minor revisions to the 
definitions of ``component'' and ``cost of components'' for acquisition 
of construction. These definitions are used by offerors to determine 
whether offered end products or construction material meet the 
requirements of the Buy American Act and Balance of Payments Program or 
trade agreements.

Item II--Energy Efficiency of Supplies and Services (FAR Case 1999-

    This final rule amends the FAR to implement Executive Order 13123, 
Greening the Government through Efficient Energy Management. The rule--
     Requires contracting officers, when acquiring energy-using 
products, to buy energy-efficient products if life-cycle cost-effective 
and available;
     Directs contracting officers to Internet sources for more 
detailed information on ENERGY STAR and other energy-efficient 
products; and
     Provides guidance on energy-savings performance contracts 
(ESPCs), including--
     An explanation of what they are and when they should be 
used; and
     Procedures for the solicitation and award of ESPCs, and 
the evaluation of unsolicited proposals for ESPCs.
    The rule will only affect contracting officers that--
     Acquire energy-using products or services;
     Contract for design, construction, renovation, or 
maintenance of a public building that will include energy-using 
products; or
     Use an energy-savings performance contract to reduce 
energy use and cost in an agency's facilities or operations.

Item III--Prompt Payment and the Recovery of Overpayment (FAR Case 

    This final rule revises prompt payment policies at FAR part 32, 
Contract Financing, and related contract provisions at FAR part 52. The 
rule is applicable to--
     Government payment offices and contractors since it 
revises the information that must be on an invoice for the document to 
be considered a proper invoice with respect to the prompt payment 
provisions of the FAR;
     Contracting officers and contractors since it establishes 
the requirement in the prompt payment clauses for contractors to notify 
the contracting officer if the contractor becomes aware of an 
overpayment of an invoice; and
     All Government contracts (including contracts at or below 
the simplified acquisition threshold) except contracts with payment 
terms and late payment penalties established by other governmental 
authority (e.g., tariffs).

Item IV--Javits-Wagner-O'Day Act Subcontract Preference under 
Service Contracts (FAR Case 1999-017)

    This final rule amends the FAR to add a new preference for award of 
subcontracts under service contracts to nonprofit workshops designated 
by the Committee for Purchase From People Who Are Blind or Severely 
Disabled (Javits-Wagner-O'Day Act (JWOD) (41 U.S.C. 48)). The final 
rule applies to all service contracts. The rule--
     Requires that contractors that provide services for the 
Government's use and subcontract for those services must give 
preference in awarding subcontracts to nonprofit workshops, if the 
services are on the Committee for Purchase From People Who Are Blind or 
Severely Disabled procurement list;
     Requires that contracting officers must consider the 
preference for subcontracting with nonprofit workshops when reviewing a 
subcontract for services that is subject to the procedures at FAR 
Subpart 44.2, Consent to Subcontracts; and
     Amends the clause at FAR 52.208-9, Contractor Use of 
Mandatory Sources of Supply, to inform offerors and contractors that 
certain services to be

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provided for use by the Government are required by law to be obtained 
from the Committee for Purchase From People Who Are Blind or Severely 

Item V--Discussion Requirements (FAR Case 1999-022)

    The rule amends FAR 15.306(d) to clarify that, although the 
contracting officer must discuss deficiencies, significant weaknesses, 
and adverse past performance information to which the offeror has not 
yet had an opportunity to respond and is encouraged to discuss other 
aspects of the offeror's proposal, the contracting officer is not 
required to discuss every area where the proposal could be improved. 
This clarifies the existing policy that any discussions beyond the 
minimum elements stated in the FAR are a matter of contracting officer 

Item VI--Definition of Subcontract in FAR Subpart 15.4 (FAR Case 

    This final rule amends FAR 15.401 to exclude section 15.407-2, 
Make-or-buy programs, from application of the expanded definition of 
``subcontract'' at FAR 15.401. This rule is a clarification and does 
not change any policy in Subpart 15.4, Contract Pricing.

Item VII--North American Industry Classification System (FAR Case 

    This rule finalizes, with minor changes, the interim rule which 
amended the FAR to convert size standards and other programs in the FAR 
that were 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 system because it more accurately identifies industries. Since 
October 1, 2000, NAICS is to be used to establish the size standards 
for acquisitions. In addition, the designated industry groups in FAR 
19.1005 have been converted to NAICS and contract actions will be 
reported using the NAICS code rather than the SIC code.

Item VIII--Iceland Newly Designated Country under Trade Agreements 
Act (FAR Case 2001-025)

    This final rule amends the definition of ``Designated country'' at 
FAR 25.003, and the clause at 52.225-5, Trade Agreements, and the 
clause at 52.225-11, Buy American Act--Balance of Payments Program--
Construction Materials under Trade Agreements, to add Iceland to the 
list of designated countries under the Trade Agreements Act (TAA). 
Contracting officers may now consider offers of end products or 
construction materials from Iceland in acquisitions subject to the TAA. 
The current TAA threshold for acquisition of supplies is $177,000 and 
for acquisition of construction is $6,806,000.
    In addition, if the TAA applies, Executive Order 13126 of June 12, 
1999, Prohibition of Acquisition of Products Produced by Forced or 
Indentured Child Labor, does not apply to contracts for the acquisition 
of products from foreign countries that are party to the Agreement on 
Government Procurement. Therefore, this final rule also adds Iceland to 
the list of excepted countries of origin at 22.1503(b)(4) and the 
associated clause at 52.222-19, Child Labor--Cooperation with 
Authorities and Remedies.

Item IX--Contractor Personnel in the Procurement of Information 
Technology Services (FAR Case 2000-609)

    This final rule converts the interim rule published in FAC 97-25, 
in the Federal Register at 66 FR 22084, May 2, 2001, to a final rule 
without change. The rule added a new section to subpart 39.1 to 
implement section 813 of the Floyd D. Spence National Defense 
Authorization Act for fiscal year 2001 (Pub. L. 106-398). Section 813 
prohibits the use of minimum experience or education requirements for 
contractor personnel in solicitations for the acquisition of 
information technology services, unless (1) the contracting officer 
first determines that the needs of the agency cannot be met without 
such requirement; or (2) the needs of the agency require the use of a 
type of contract other than a performance-based contract.

    Dated: December 5, 2001.
Al Matera,
Director, Acquisition Policy Division.

Federal Acquisition Circular

    Federal Acquisition Circular (FAC) 2001-02 is issued under the 
authority of the Secretary of Defense, the Administrator of General 
Services, and the Administrator for the National Aeronautics and Space 
    Unless otherwise specified, all Federal Acquisition Regulation 
(FAR) and other directive material contained in FAC 2001-02 is 
effective February 19, 2002, except for Items VII through IX, which are 
effective December 18, 2001.

    Dated: December 5, 2001.
Carolyn M. Balven,
Deputy Director, Defense Procurement.
Patricia A. Brooks,
Acting Deputy Associate Administrator, Office of Acquisition Policy, 
General Services Administration.
Tom Luedtke,
Associate Administrator for Procurement, National Aeronautics and Space 
[FR Doc. 01-30537 Filed 12-17-01; 8:45 am]