[Federal Register: April 30, 2002 (Volume 67, Number 83)]
[Rules and Regulations]               
[Page 21533-21534]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[[Page 21533]]





48 CFR Parts 2, 7, and 37

[FAC 2001-07; FAR Case 2000-307; Item I]
RIN 9000-AJ12

Federal Acquisition Regulation; Preference for Performance-Based 

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

ACTION: Final rule.


SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on a final rule 
amending the Federal Acquisition Regulation (FAR) to implement Section 
821 of the Floyd D. Spence National Defense Authorization Act. The FAR 
rule explicitly states that performance-based contracting is the 
preferred method for acquiring services, enumerates an order of 
precedence, and further clarifies the documentation required in an 
acquisition plan when acquiring services.

DATES: Effective Date: May 15, 2002.

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 2001-07, FAR case 2000-307.


A. Background

    DoD, GSA, and NASA published an interim rule in the Federal 
Register at 66 FR 22082, May 2, 2001. The interim rule explicitly 
stated that performance-based contracting is the preferred method for 
acquiring services and enumerated the order of precedence established 
by Section 821 of the Floyd D. Spence National Defense Authorization 
Act for Fiscal Year 2001 (Pub. L. 106-398). The coverage contained in 
the final rule is the same as that in the interim rule except that the 
final rule amends paragraph (b)(4) of FAR 7.105 to clarify that 
contracting officers must provide rationale if a performance-based 
contract will not be used or if a performance-based contract for 
services is contemplated on other than a firm-fixed price basis (see 
37.102(a) and 16.505(a)(3)).
    Two respondents submitted comments on the interim rule. The first 
comment suggested that the language changes in FAR Parts 2 and 37 in 
this rule should be incorporated into FAR Part 8. While the Councils do 
not believe added references in Part 8 are needed as a general matter 
with respect to this rulemaking, revisions to Subpart 8.4 regarding use 
of the Federal Supply Schedules for the acquisition of services are 
under development and references to Part 37 policies on performance-
based service contracting will be considered for incorporation as 
appropriate as part of that regulatory initiative.
    The second comment stated that the FAR Part 2 definition for 
performance-based contracting is internally inconsistent because it 
calls for requirements to be set forth in clear, specific, and 
objective terms with measurable outcomes but also dictates the use of 
``broad and imprecise'' statements of work. The Councils disagree. As 
revised, the definition of performance-based contracting, consistent 
with section 821(e) of the Defense Authorization Act for FY 01, 
explains what performance-based contracting should not include (e.g., 
broad and imprecise work statements, a structure centering on the 
manner that the work should be performed), and what it should contain 
(e.g., a work statement that has clear, specific, and objective terms 
with measurable outcomes).
    This commenter further suggested that the regulations do not need 
to be changed, but acquisition personnel need to be trained in 
developing performance-based requirements. The regulatory changes in 
this rule are not meant as a substitute for training that will enhance 
the knowledge and skills of acquisition personnel in performance-based 
contracting. Guidance is available at the following websites:
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://oamweb.osec.doc.gov/pbsc/index.html, or
    Finally, the Office of Federal Procurement Policy has advised the 
FAR Council that it is establishing an inter-agency group to ensure a 
common understanding among the agencies regarding performance-based 
contracting requirements.
    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 Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not 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 and documentation 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. Therefore, a Final Regulatory 
Flexibility Analysis (FRFA) was not performed. The Councils invite 
comments from small businesses and other interested parties. The 
Councils will also consider comments from small entities concerning the 
affected FAR subparts 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 2001-07, 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.

List of Subjects in 48 CFR Parts 2, 7, and 37

    Government procurement.

    Dated: April 23, 2002
Al Matera,
Director, Acquisition Policy Division.

Interim Rule Adopted as Final with One Change

    Accordingly, DoD, GSA, and NASA adopt the interim rule amending 48 
CFR parts 2 and 37 that was published in the Federal Register at 66 FR 
22082, May 2, 2001, as a final rule with the following change:


    1. The authority citation for 48 CFR part 7 continues to read as 

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

[[Page 21534]]

    2. Amend section 7.105 by adding a sentence to the end of paragraph 
(b)(4) to read as follows:

7.105  Contents of written acquisition plans.

* * * * *
    (b) * * *
    (4) * * * Provide rationale if a performance-based contract will 
not be used or if a performance-based contract for services is 
contemplated on other than a firm-fixed price basis (see 37.102(a) and 
* * * * *
[FR Doc. 02-10369 Filed 4-29-02; 8:45 am]