81 FR 62445 - General Services Administration Acquisition Regulation (GSAR); Federal Supply Schedule, Order-Level Materials

GENERAL SERVICES ADMINISTRATION

Federal Register Volume 81, Issue 175 (September 9, 2016)

Page Range		62445-62448
FR Document		2016-21610

The General Services Administration (GSA) is proposing to amend the General Services Administration Acquisition Regulation (GSAR) to clarify the authority to acquire order-level materials when placing a task order or establishing a Blanket Purchase Agreement (BPA) against a Federal Supply Schedule (FSS) contract. This proposed rule seeks to provide clear and comprehensive implementation of the ability to acquire order-level materials through the FSS program to create parity between FSS contracts and commercial indefinite-delivery/indefinite- quantity (IDIQ) contracts, reduce the need to conduct less efficient procurement transactions, lower barriers of entry to the federal marketplace and make it easier to do business the federal government.

Federal Register, Volume 81 Issue 175 (Friday, September 9, 2016)

[Federal Register Volume 81, Number 175 (Friday, September 9, 2016)]
[Proposed Rules]
[Pages 62445-62448]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2016-21610]

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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 515, 538, and 552

[GSAR Case 2016-G506; Docket No. 2016-0016; Sequence No. 1]
RIN 3090-AJ75

General Services Administration Acquisition Regulation (GSAR);
Federal Supply Schedule, Order-Level Materials

AGENCY: Office of Acquisition Policy, General Services Administration.

ACTION: Proposed rule.

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SUMMARY: The General Services Administration (GSA) is proposing to
amend the General Services Administration Acquisition Regulation (GSAR)
to clarify the authority to acquire order-level materials when placing
a task order or establishing a Blanket Purchase Agreement (BPA) against
a Federal Supply Schedule (FSS) contract. This proposed rule seeks to
provide clear and comprehensive implementation of the ability to
acquire order-level materials through the FSS program to create parity
between FSS contracts and commercial indefinite-delivery/indefinite-
quantity (IDIQ) contracts, reduce the need to conduct less efficient
procurement transactions, lower barriers of entry to the federal
marketplace and make it easier to do business the federal government.

DATES: Interested parties should submit written comments to the
Regulatory Secretariat Division at one of the addressees shown below on
or before November 8, 2016 to be considered in the formation of the
final rule.

ADDRESSES: Submit comments in response to GSAR Case 2016-G506 by any of
the following methods:
Regulations.gov: http://www.regulations.gov. Submit
comments by searching for ``GSAR Case 2016-G506.'' Select the link
``Comment Now'' that corresponds with GSAR Case 2016-G506. Follow the
instructions provided on the screen. Please include your name, company
name (if any), and ``GSAR Case 2016-G506'' on your attached document.
Mail: General Services Administration, Regulatory
Secretariat Division (MVCB), ATTN: Ms. Flowers, 1800 F Street NW., 2nd
Floor, Washington, DC 20405.
Instructions: Please submit comments only and cite GSAR Case 2016-
G506, in all correspondence related to this case. All comments received
will generally be posted without change to http://www.regulations.gov,
including any personal and/or business confidential information
provided. To confirm receipt of your comment(s), please check
www.regulations.gov, approximately two to three days after submission
to verify posting (except allow 30 days for posting of comments
submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Leah Price, Procurement Analyst,
at 703-605-2558, or Mr. Curtis Glover, Sr., Procurement Analyst, at
202-501-1448, for clarification of content. For information pertaining
to status or publication schedules, contact the Regulatory Secretariat
Division at 202-501-4755. Please cite GSAR Case 2016-G506.

SUPPLEMENTARY INFORMATION:

I. Background

GSA is proposing to amend the General Services Administration
Acquisition Regulation (GSAR) to establish special ordering procedures
(per FAR 8.403(b)). These special ordering procedures clarify the
authority to acquire order-level materials when placing an order or
establishing a BPA against an FSS contract. Currently, most commercial
indefinite-delivery/indefinite-quantity (IDIQ) contracts provide the
flexibility to easily acquire order-level materials; however the FSS
program does not. This proposed rule aims to create parity between the
FSS program and other commercial IDIQs while also ensuring an
appropriate set of controls or safeguards are put in place.
Improving the acquisition of order level materials through the FSS
program was expressly cited in the Office of Federal Procurement
Policy's roadmap for simplifying the federal procurement process. (See
Transforming the Marketplace: Simplifying Federal Procurement to
Improve Performance, Drive Innovation, and Increase Savings, available
at https://www.whitehouse.gov/sites/default/files/omb/procurement/memo/simplifying-federal-procurement-to-improve-performance-drive-innovation-increase-savings.pdf.) Providing the same flexibilities in
the FSS program that are currently authorized for commercial IDIQ
vehicles will help to reduce contract duplication and the associated
administrative costs and inefficiencies for agencies. Simultaneously,
it will reduce transaction costs for contractors, including small
businesses, by eliminating the need for FSS contract holders to compete
for and enter into additional contracts for this ancillary work. The
Government Accountability Office (GAO) reports the costs of being on
multiple contract vehicles ranged from $10,000 to $1,000,000 due to
increased bid and proposal, and administrative costs.
This proposed rule would achieve parity for the FSS program by
providing further clarification in the GSAR of regulatory changes made
by the Federal Acquisition Regulatory Council in years past to overcome
the holdings in a Court of Federal Claims decision, ATA Defense
Industries, Inc. v. United States, 38 Fed. Cl. 489 (1997) and a GAO
opinion, Pyxis Corporation, B-282469; B-282469.2. These decisions were
issued at a time when there was no guidance in the FAR about open
market items and served as impetus for opening Federal Acquisition
Regulation (FAR) Case 1999-614, bringing the guidance from the FSS
Contractor Guide into the FAR. The FAR Case stated:

[[Page 62446]]

It had been common practice to add ``incidental'' non-FSS items
to FSS orders for administrative convenience. However, on July 15,
1999, the General Accounting Office (GAO) ruled in a protest that
agencies ``may no longer rely on the `incidentals' test to justify
the purchase of non-FSS items in connection with an FSS buy; where
an agency buys non-FSS items, it must follow applicable acquisition
regulations'' (Pyxis Corporation, B-282469; B-282469.2). Therefore,
it is proposed that a paragraph (d) be added to FAR 8.401, General,
which would permit the addition of ``open market (noncontract)''
items to a FSS blanket purchase agreement or task or delivery order
only if ``(1) all applicable acquisition regulations have been
followed (e.g., publicizing ([FAR] Part 5), competition requirements
([FAR] Part 6), acquisition of commercial items ([FAR] Part 12), and
contracting methods ([FAR] Parts 13, 14, and 15)); (2) the ordering
office contracting officer has determined the price for the open
market items is reasonable; and (3) the items are clearly labeled as
open market (noncontract) items on the order.''

This FAR Case was finalized and included in Federal Acquisition
Circular 2001-08, effective July 29, 2002. With subsequent changes,
this text moved from FAR 8.401 to its present location in FAR 8.402.
Separately, FAR case 2003-027, Additional Commercial Contract
Types, published in the Federal Register at 71 FR 74667 on December 12,
2006, expressly provided the authority to acquire order-level materials
under commercial contracts. The case extended this authority to all
commercial IDIQ contract vehicles, including contracts awarded pursuant
to FAR part 12 and orders awarded pursuant to FAR subparts 16.5 and
8.4.
Alternate I of FAR clause 52.212-4 Contract Terms and Conditions--
Commercial Items was explicitly developed for contract vehicles where
Time and Materials (T&M) or Labor-Hour (L-H) orders are contemplated.
It defines ``materials'' to include direct materials, other direct
costs, subcontracts, and indirect costs, and provides a means to
acquire these materials within the scope of the FSS contract. It
includes detailed instructions for the handling of each, none of which
involves the competitive procedures required by FAR 8.402(f).
Despite this clarification, FAR 8.402(f), which addresses ``open
market items'' that are not on FSS, has been widely interpreted to mean
that ordering activity Contracting Officers must conduct a separate
open market competition for any and all materials not specifically
awarded on the underlying FSS contract. As a result, FSS ordering
activities have struggled with how to properly handle orders for which
the exact items and quantities of materials is unknown. Years of
confusion have, in turn, led to the creation of elaborate workarounds
and the application of inconsistent policies and procedures.
Providing clear and comprehensive implementation of this authority
in the GSAR will result in parity regarding the ability to acquire
order level materials from the FSS program and other commercial IDIQs.
As a result, agencies will be able to further utilize the FSS program
to meet their requirements rather than conducting separate open market
procurements or further contributing to contract duplication through
creating new commercial IDIQs that have a similar scope to existing FSS
offerors, but that allow for order level materials.

II. Discussion and Analysis

Amendments to GSAR parts 515, 538, and 552 are proposed by this
rule. Specifically, GSA is proposing the following amendments:
Add to GSAR 515.408(c) that ``offerors are not required to
complete the commercial sales practices disclosure for order-level
materials.
Add a new GSAR subpart 538.71, Order-Level Materials,
which clarifies the authority to acquire order-level materials when
placing a task order or establishing a BPA against an FSS contract.
This subpart defines order-level materials and lists the applicable
Federal Supply Schedules that authorized the use of order-level
materials. GSA will issue guidance to its contracting officers
outlining the procedures for structuring these Federal Supply Schedules
and how to administer FSS contracts where order-level materials are
authorized.
Add instructions in new GSAR subpart 538.71 for GSA
contracting officers to use FAR clause 52.212-4 Alternate I in Federal
Supply Schedules authorizing the use of order-level materials, with the
following instructions for the clause fill-ins:
[cir] Insert ``Each order must list separately subcontracts for
services excluded from the FSS Schedule Hourly Rates'' in FAR clause
52.212-4(e)(iii)(D).
[cir] Insert ``Each order must list separately elements of other
direct charge(s) for that order.'' in FAR clause 52.212-
4(i)(1)(ii)(D)(1).
[cir] Insert ``none'' in FAR clause 52.212-4(i)(1)(ii)(D)(2).
[cir] GSA is especially interested in comments on the clause fill-
in instructions.
Add a new GSAR clause 552.238-XX, Special Ordering
Procedures for the Acquisition of Order-Level Materials, which
clarifies the authority to acquire order-level materials when placing a
task order or establishing a BPA against an FSS contract. This new
clause should be read as a special ordering procedure, as authorized in
FAR 8.403(b). Operationally, it should be understood as an addition to
the ordering procedures outlined in FAR 8.404(h). This new clause
includes the special ordering procedures to be used when order-level
materials are authorized controls that GSA is establishing when
authorizing the use of ``order-level materials''. These controls
include--
Prohibiting order-level materials from being the primary
basis of the order;
Limiting the total value of order-level materials to 33
percent of the overall order value;
Requiring order-level materials to be purchased under a
separate Special Item Number (SIN) to enable GSA to monitor the sales
for order-level materials and evaluate the appropriate usage;
Requiring the ordering activity to follow FAR 8.404(h)
prior to placing an order including order-level materials;
Requiring contractors proposing order-level materials as
part of a solution to submit a minimum of three quotes for each order-
level material above the micro-purchase threshold. One of these three
quotes may include materials furnished by the contractor under FAR
52.212-4 Alternate I (i)(1)(ii)(A). The contractor shall submit the
information to the ordering activity contracting officer or provide
rationale for why three quotes cannot be obtained;
Requiring the ordering activity contracting officer to
determine all prices for order-level materials are fair and reasonable
prior to placing an order; and
Including controls to ensure any ceiling increase has been
appropriately justified and approved in accordance with FAR 8.405-6.

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to 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

[[Page 62447]]

Review, dated September 30, 1993. This proposed rule is not a major
rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

GSA does 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. 601, et seq., because
the rule merely clarifies the authority to acquire order-level
materials when placing a task order or establishing a BPA against an
FSS contract; however, an Initial Regulatory Flexibility Analysis
(IRFA) has been prepared consistent with 5 U.S.C. 603, and is
summarized as follows:

This proposed rule amends the GSAR to clarify the authority to
acquire order-level materials when placing a task order or
establishing a BPA against an FSS contract. Currently, most
commercial indefinite-delivery/indefinite-quantity (IDIQ) contracts
provide the flexibility to easily acquire order-level materials;
however the FSS program does not.
Currently there are 13,850 small businesses that have GSA
Schedule contracts. While the rule is expected to have a beneficial
impact on these contractors by reducing bid and proposal preparation
costs and simplifying the process for selling order-level materials
to FSS customers, GSA does 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, et seq., because the rule merely clarifies the authority
to acquire order-level materials when placing a task order or
establishing a BPA against an authorized FSS contract.
The proposed rule imposes no reporting, recordkeeping, or other
information collection requirements.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no known significant alternatives to the rule. The
impact of this rule on small business is not expected to be
significant.

The Regulatory Secretariat Division will be submitting a copy of
the Initial Regulatory Flexibility Analysis (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. GSA invites
comments from small business concerns and other interested parties on
the expected impact of this rule on small entities.
GSA will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C. 610 (GSAR Case 2016-G506) in
correspondence.

V. Paperwork Reduction Act

The 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. chapter 35).

List of Subjects in 48 CFR Parts 515, 538, and 552

Government procurement.

Dated: September 2, 2016.
Jeffrey A. Koses,
Senior Procurement Executive, Office of Acquisition Policy, Office of
Government-wide Policy, General Services Administration.

Therefore, GSA proposes to amend 48 CFR parts 515, 538, and 552 as
set forth below:

0
1. The authority citation for 48 CFR parts 515, 538, and 552 continues
to read as follows:

Authority: 40 U.S.C. 121(c).

PART 515--CONTRACTING BY NEGOTIATION

0
2. Amend section 515.408 by adding a sentence to the end of paragraph
(c) introductory text to read as follows:

515.408 Solicitation provisions and contract clauses.

* * * * *
(c) * * * Offerors are not required to complete the commercial
sales practices disclosure for order-level materials (See subpart
538.71).
* * * * *

PART 538--FEDERAL SUPPLY SCHEDULE CONTRACTING

0
3. Add subpart 538.71 to read as follows:
Subpart 538.71--Order-Level Materials
538.7100 Definitions.
538.7101 Applicability.
538.7103 Contract clauses.

Subpart 538.71--Order-Level Materials

538.7100 Definitions.

Order-level materials means supplies and/or services acquired in
direct support of an individual task or delivery order placed against a
Federal Supply Schedule (FSS) contract, when the supplies and/or
services are not known at the time of Schedule contract award. The
prices of order-level materials are not established in the FSS
contract. Order-level materials are not open market items discussed in
FAR 8.402(f).

538.7101 Applicability.

Order-level materials are authorized under all of the following:
(a) Federal Supply Schedule 03 FAC.
(b) Federal Supply Schedule 56.
(c) Federal Supply Schedule 70.
(d) Federal Supply Schedule 71.
(e) Federal Supply Schedule 84.
(f) Professional Services Schedule 99.
(g) Federal Supply Schedule 738X.

538.7103 Contract clauses.

(a) Use FAR clause 52.212-4 Alternate I in all Federal Supply
Schedules authorized for the acquisition of order-level materials (see
538.7101). Use the following language for the clause fill-in:
(1) Insert ``Each order must list separately subcontracts for
services excluded from the FSS Hourly.
(2) Insert ``Each order must list separately the elements of other
direct charge(s) for that order'' in (i)(1)(ii)(D)(1).
(3) Insert ``none'' in (i)(1)(ii)(D)(2).
(b) Use 552.238-XX, Special Ordering Procedures for the Acquisition
of Order-Level Materials in all Federal Supply Schedules authorized for
the acquisition of order-level materials (see 538.7101).

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Add section 552.238-XX to read as follows:

552.238-XX Special Ordering Procedures for the Acquisition of Order-
Level Materials.

As prescribed in 538.7103(b), insert the following clause:

Special Ordering Procedures for the Acquisition of Order-Level
Materials (DATE)

(a) Order-level materials means supplies and/or services
acquired in direct support of an individual task or delivery order
placed against a Federal Supply Schedule (FSS) contract or FSS BPA,
when the supplies and/or services are not known at the time of
Schedule contract award. The prices of order-level materials are not
established in the FSS contract. Order-level materials that are
acquired following the procedures in paragraph (d) of this clause
are not open market items discussed in FAR 8.402(f).
(b) FAR 8.403(b) provides that GSA may establish special
ordering procedures for a particular FSS or for some Special Item
Numbers (SINs) within a Schedule.
(c) The procedures in FAR Subpart 8.4 apply to this contract,
with the exceptions listed in this clause. If a requirement in this
clause is inconsistent with FAR Subpart 8.4, this clause takes
precedence.
(d) Procedures for including order-level materials when placing
an individual task or delivery order against an FSS contract or FSS
Blanket Purchase Agreement (BPA).
(1) The procedures discussed in FAR 8.402(f) do not apply when
placing task and delivery orders for order-level materials.
(2) Order-level materials are included in the definition of the
term ``materials'' in

[[Page 62448]]

GSAR clause 552.212-4 Alternate I, and therefore all provisions of
clause 552.212-4 Alternate I that apply to ``materials'' also apply
to order-level materials. The ordering activity shall follow
procedures under the Federal Travel Regulation and FAR Part 31 when
order-level materials include travel.
(3) Order-level materials shall only be acquired in direct
support of an order and not as the primary basis.
(4) The cumulative value of order-level materials awarded under
an FSS order shall not exceed 33 percent of the total value of the
order.
(5) All order-level materials shall be placed under the Order-
Level Materials SIN.
(6) Prior to the placement of an order that includes order-level
materials, the ordering activity shall follow procedures in FAR
8.404(h).
(7) To support the price reasonableness of order-level
materials, the contractor proposing order-level materials as part of
a solution shall submit a minimum of three quotes obtained by the
contractor for each order-level material above the micro-purchase
threshold. One of these three quotes may include materials furnished
by the contractor under FAR 52.212-4 Alternate I (i)(1)(ii)(A) If
the contractor cannot obtain three quotes, the contractor shall
provide the rationale for why they cannot obtain three quotes to
support the contracting officer's determination in (d)(7) of this
section.
(8) The ordering activity contracting officer must make a
determination that prices for all order-level materials are
determined fair and reasonable. The ordering activity contracting
officer may base their determination on a comparison of the quotes
received in response to the task or delivery order solicitation or
other relevant pricing information available.
(9) Prior to an increase in the ceiling price of order-level
materials above the micro-purchase threshold, the ordering activity
contracting officer shall--
(i) Conduct an analysis of pricing and other relevant factors to
determine if the action is in the best interest of the Government
and obtain the approval at the levels described in FAR 8.405-6(d);
or
(ii) Follow the procedures at FAR 8.405-6 for a change that
modifies the general scope of the order.
(10) In accordance with GSAR clause 552.215-71 Examination of
Records by GSA, GSA has the authority to examine the contractor's
records for compliance with the pricing provisions in FAR clause
52.212-4 Alternate I, to include examination of any books,
documents, papers, and records involving transactions related to the
contract for overbillings, billing errors, and compliance with the
IFF and the Sales Reporting clauses of the contract.
(11) Order-level materials are exempt from the following
clauses:
(i) 552.216-70 Economic Price Adjustment--FSS Multiple Award
Schedule Contracts.
(ii) 552.238-71 Submission and Distribution of Authorized FSS
Schedule Pricelists.
(iii) 552.238-75 Price Reductions.

(End of Clause)

[FR Doc. 2016-21610 Filed 9-8-16; 8:45 am]
BILLING CODE 6820-61-P

62446 Federal Register / Vol. 81, No. 175 / Friday, September 9, 2016 / Proposed Rules

It had been common practice to add which the exact items and quantities of which clarifies the authority to acquire
‘‘incidental’’ non-FSS items to FSS orders for materials is unknown. Years of order-level materials when placing a
administrative convenience. However, on confusion have, in turn, led to the task order or establishing a BPA against
July 15, 1999, the General Accounting Office an FSS contract. This new clause should
creation of elaborate workarounds and
(GAO) ruled in a protest that agencies ‘‘may
no longer rely on the ‘incidentals’ test to the application of inconsistent policies be read as a special ordering procedure,
justify the purchase of non-FSS items in and procedures. as authorized in FAR 8.403(b).
connection with an FSS buy; where an Providing clear and comprehensive Operationally, it should be understood
agency buys non-FSS items, it must follow implementation of this authority in the as an addition to the ordering
applicable acquisition regulations’’ (Pyxis GSAR will result in parity regarding the procedures outlined in FAR 8.404(h).
Corporation, B–282469; B–282469.2). ability to acquire order level materials This new clause includes the special
Therefore, it is proposed that a paragraph (d) from the FSS program and other ordering procedures to be used when
be added to FAR 8.401, General, which commercial IDIQs. As a result, agencies order-level materials are authorized
would permit the addition of ‘‘open market
(noncontract)’’ items to a FSS blanket
will be able to further utilize the FSS controls that GSA is establishing when
purchase agreement or task or delivery order program to meet their requirements authorizing the use of ‘‘order-level
only if ‘‘(1) all applicable acquisition rather than conducting separate open materials’’. These controls include—
regulations have been followed (e.g., market procurements or further • Prohibiting order-level materials
publicizing ([FAR] Part 5), competition contributing to contract duplication from being the primary basis of the
requirements ([FAR] Part 6), acquisition of through creating new commercial IDIQs order;
commercial items ([FAR] Part 12), and that have a similar scope to existing FSS • Limiting the total value of order-
contracting methods ([FAR] Parts 13, 14, and offerors, but that allow for order level level materials to 33 percent of the
15)); (2) the ordering office contracting officer overall order value;
materials.
has determined the price for the open market • Requiring order-level materials to
items is reasonable; and (3) the items are II. Discussion and Analysis be purchased under a separate Special
clearly labeled as open market (noncontract)
items on the order.’’ Amendments to GSAR parts 515, 538, Item Number (SIN) to enable GSA to
and 552 are proposed by this rule. monitor the sales for order-level
This FAR Case was finalized and Specifically, GSA is proposing the materials and evaluate the appropriate
included in Federal Acquisition following amendments: usage;
Circular 2001–08, effective July 29, • Add to GSAR 515.408(c) that • Requiring the ordering activity to
2002. With subsequent changes, this ‘‘offerors are not required to complete follow FAR 8.404(h) prior to placing an
text moved from FAR 8.401 to its the commercial sales practices order including order-level materials;
present location in FAR 8.402. disclosure for order-level materials. • Requiring contractors proposing
Separately, FAR case 2003–027, • Add a new GSAR subpart 538.71, order-level materials as part of a
Additional Commercial Contract Types, Order-Level Materials, which clarifies solution to submit a minimum of three
published in the Federal Register at 71 the authority to acquire order-level quotes for each order-level material
FR 74667 on December 12, 2006, materials when placing a task order or above the micro-purchase threshold.
expressly provided the authority to establishing a BPA against an FSS One of these three quotes may include
acquire order-level materials under contract. This subpart defines order- materials furnished by the contractor
commercial contracts. The case level materials and lists the applicable under FAR 52.212–4 Alternate I
extended this authority to all Federal Supply Schedules that (i)(1)(ii)(A). The contractor shall submit
commercial IDIQ contract vehicles, authorized the use of order-level the information to the ordering activity
including contracts awarded pursuant to materials. GSA will issue guidance to its contracting officer or provide rationale
FAR part 12 and orders awarded contracting officers outlining the for why three quotes cannot be
pursuant to FAR subparts 16.5 and 8.4. procedures for structuring these Federal obtained;
Alternate I of FAR clause 52.212–4 Supply Schedules and how to • Requiring the ordering activity
Contract Terms and Conditions— administer FSS contracts where order- contracting officer to determine all
Commercial Items was explicitly level materials are authorized. prices for order-level materials are fair
developed for contract vehicles where • Add instructions in new GSAR and reasonable prior to placing an order;
Time and Materials (T&M) or Labor- subpart 538.71 for GSA contracting and
Hour (L–H) orders are contemplated. It officers to use FAR clause 52.212–4 • Including controls to ensure any
defines ‘‘materials’’ to include direct Alternate I in Federal Supply Schedules ceiling increase has been appropriately
materials, other direct costs, authorizing the use of order-level justified and approved in accordance
subcontracts, and indirect costs, and materials, with the following with FAR 8.405–6.
provides a means to acquire these instructions for the clause fill-ins:
materials within the scope of the FSS III. Executive Orders 12866 and 13563
Æ Insert ‘‘Each order must list
contract. It includes detailed separately subcontracts for services Executive Orders (E.O.s) 12866 and
instructions for the handling of each, excluded from the FSS Schedule Hourly 13563 direct agencies to and, if
none of which involves the competitive Rates’’ in FAR clause 52.212–4(e)(iii)(D). regulation is necessary, to select
procedures required by FAR 8.402(f). Æ Insert ‘‘Each order must list regulatory approaches that maximize
Despite this clarification, FAR separately elements of other direct net benefits (including potential
8.402(f), which addresses ‘‘open market charge(s) for that order.’’ in FAR clause economic, environmental, public health
items’’ that are not on FSS, has been 52.212–4(i)(1)(ii)(D)(1). and safety effects, distributive impacts,
widely interpreted to mean that and equity). E.O. 13563 emphasizes the
ehiers on DSK5VPTVN1PROD with PROPOSALS

Æ Insert ‘‘none’’ in FAR clause
ordering activity Contracting Officers 52.212–4(i)(1)(ii)(D)(2). importance of quantifying both costs
must conduct a separate open market Æ GSA is especially interested in and benefits, of reducing costs, of
competition for any and all materials comments on the clause fill-in harmonizing rules, and of promoting
not specifically awarded on the instructions. flexibility. This is not a significant
underlying FSS contract. As a result, • Add a new GSAR clause 552.238– regulatory action and, therefore, was not
FSS ordering activities have struggled XX, Special Ordering Procedures for the subject to review under section 6(b) of
with how to properly handle orders for Acquisition of Order-Level Materials, E.O. 12866, Regulatory Planning and

VerDate Sep<11>2014 15:27 Sep 08, 2016 Jkt 238001 PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 E:\FR\FM\09SEP1.SGM 09SEP1

Federal Register / Vol. 81, No. 175 / Friday, September 9, 2016 / Proposed Rules 62447

Review, dated September 30, 1993. This V. Paperwork Reduction Act (b) Federal Supply Schedule 56.
proposed rule is not a major rule under The proposed rule does not contain (c) Federal Supply Schedule 70.
5 U.S.C. 804. any information collection requirements (d) Federal Supply Schedule 71.
that require the approval of the Office of (e) Federal Supply Schedule 84.
IV. Regulatory Flexibility Act (f) Professional Services Schedule 99.
Management and Budget under the
GSA does not expect this proposed Paperwork Reduction Act (44 U.S.C. (g) Federal Supply Schedule 738X.
rule to have a significant economic chapter 35). 538.7103 Contract clauses.
impact on a substantial number of small
List of Subjects in 48 CFR Parts 515, (a) Use FAR clause 52.212–4 Alternate
entities within the meaning of the
538, and 552 I in all Federal Supply Schedules
Regulatory Flexibility Act, 5 U.S. 601, et
Government procurement. authorized for the acquisition of order-
seq., because the rule merely clarifies
level materials (see 538.7101). Use the
the authority to acquire order-level Dated: September 2, 2016. following language for the clause fill-in:
materials when placing a task order or Jeffrey A. Koses, (1) Insert ‘‘Each order must list
establishing a BPA against an FSS Senior Procurement Executive, Office of separately subcontracts for services
contract; however, an Initial Regulatory Acquisition Policy, Office of Government- excluded from the FSS Hourly.
Flexibility Analysis (IRFA) has been wide Policy, General Services Administration. (2) Insert ‘‘Each order must list
prepared consistent with 5 U.S.C. 603,
Therefore, GSA proposes to amend 48 separately the elements of other direct
and is summarized as follows:
CFR parts 515, 538, and 552 as set forth charge(s) for that order’’ in
This proposed rule amends the GSAR to below: (i)(1)(ii)(D)(1).
clarify the authority to acquire order-level ■ 1. The authority citation for 48 CFR (3) Insert ‘‘none’’ in (i)(1)(ii)(D)(2).
materials when placing a task order or (b) Use 552.238–XX, Special Ordering
parts 515, 538, and 552 continues to
establishing a BPA against an FSS contract. Procedures for the Acquisition of Order-
Currently, most commercial indefinite-
read as follows:
Level Materials in all Federal Supply
delivery/indefinite-quantity (IDIQ) contracts Authority: 40 U.S.C. 121(c).
Schedules authorized for the acquisition
provide the flexibility to easily acquire order-
level materials; however the FSS program PART 515—CONTRACTING BY of order-level materials (see 538.7101).
does not. NEGOTIATION
Currently there are 13,850 small businesses
PART 552—SOLICITATION
that have GSA Schedule contracts. While the ■ 2. Amend section 515.408 by adding PROVISIONS AND CONTRACT
rule is expected to have a beneficial impact a sentence to the end of paragraph (c) CLAUSES
on these contractors by reducing bid and introductory text to read as follows:
■ 4. Add section 552.238–XX to read as
proposal preparation costs and simplifying
the process for selling order-level materials to
515.408 Solicitation provisions and follows:
contract clauses.
FSS customers, GSA does not expect this 552.238–XX Special Ordering Procedures
proposed rule to have a significant economic * * * * * for the Acquisition of Order-Level Materials.
impact on a substantial number of small (c) * * * Offerors are not required to
entities within the meaning of the Regulatory complete the commercial sales practices As prescribed in 538.7103(b), insert
Flexibility Act, 5 U.S.C. 601, et seq., because disclosure for order-level materials (See the following clause:
the rule merely clarifies the authority to subpart 538.71). Special Ordering Procedures for the
acquire order-level materials when placing a * * * * * Acquisition of Order-Level Materials
task order or establishing a BPA against an
(DATE)
authorized FSS contract. PART 538—FEDERAL SUPPLY
The proposed rule imposes no reporting, SCHEDULE CONTRACTING (a) Order-level materials means supplies
recordkeeping, or other information and/or services acquired in direct support of
collection requirements. ■ 3. Add subpart 538.71 to read as an individual task or delivery order placed
The rule does not duplicate, overlap, or follows: against a Federal Supply Schedule (FSS)
conflict with any other Federal rules. contract or FSS BPA, when the supplies and/
There are no known significant alternatives Subpart 538.71—Order-Level Materials
or services are not known at the time of
to the rule. The impact of this rule on small 538.7100 Definitions. Schedule contract award. The prices of order-
business is not expected to be significant. 538.7101 Applicability. level materials are not established in the FSS
538.7103 Contract clauses. contract. Order-level materials that are
The Regulatory Secretariat Division acquired following the procedures in
will be submitting a copy of the Initial Subpart 538.71—Order-Level Materials paragraph (d) of this clause are not open
Regulatory Flexibility Analysis (IRFA) market items discussed in FAR 8.402(f).
538.7100 Definitions.
to the Chief Counsel for Advocacy of the (b) FAR 8.403(b) provides that GSA may
Small Business Administration. A copy Order-level materials means supplies establish special ordering procedures for a
of the IRFA may be obtained from the and/or services acquired in direct particular FSS or for some Special Item
Regulatory Secretariat Division. GSA support of an individual task or delivery Numbers (SINs) within a Schedule.
invites comments from small business order placed against a Federal Supply (c) The procedures in FAR Subpart 8.4
Schedule (FSS) contract, when the apply to this contract, with the exceptions
concerns and other interested parties on listed in this clause. If a requirement in this
the expected impact of this rule on supplies and/or services are not known
at the time of Schedule contract award. clause is inconsistent with FAR Subpart 8.4,
small entities. this clause takes precedence.
The prices of order-level materials are (d) Procedures for including order-level
GSA will also consider comments
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not established in the FSS contract. materials when placing an individual task or
from small entities concerning the Order-level materials are not open
existing regulations in subparts affected delivery order against an FSS contract or FSS
market items discussed in FAR 8.402(f). Blanket Purchase Agreement (BPA).
by this rule in accordance with 5 U.S.C. (1) The procedures discussed in FAR
610. Interested parties must submit such 538.7101 Applicability. 8.402(f) do not apply when placing task and
comments separately and should cite 5 Order-level materials are authorized delivery orders for order-level materials.
U.S.C. 610 (GSAR Case 2016–G506) in under all of the following: (2) Order-level materials are included in
correspondence. (a) Federal Supply Schedule 03 FAC. the definition of the term ‘‘materials’’ in

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62448 Federal Register / Vol. 81, No. 175 / Friday, September 9, 2016 / Proposed Rules

GSAR clause 552.212–4 Alternate I, and (End of Clause) Each submission must include
therefore all provisions of clause 552.212–4 [FR Doc. 2016–21610 Filed 9–8–16; 8:45 am] FMCSA and docket number FMCSA–
Alternate I that apply to ‘‘materials’’ also 2005–23151. Note that DOT posts all
BILLING CODE 6820–61–P
apply to order-level materials. The ordering comments received without change to
activity shall follow procedures under the
www.regulations.gov, including any
Federal Travel Regulation and FAR Part 31
when order-level materials include travel.
personal information included in a
DEPARTMENT OF TRANSPORTATION comment. Please see the Privacy Act
(3) Order-level materials shall only be
acquired in direct support of an order and Federal Motor Carrier Safety heading below.
not as the primary basis. Docket: For access to the docket to
Administration
(4) The cumulative value of order-level read background documents or
materials awarded under an FSS order shall comments, go to www.regulations.gov at
49 CFR Part 391
not exceed 33 percent of the total value of the any time or visit Room W12–140 on the
order. [Docket No. FMCSA–2005–23151] ground level of the West Building, 1200
(5) All order-level materials shall be placed New Jersey Avenue SE., Washington,
under the Order-Level Materials SIN. RIN 2126–AA95 DC, between 9 a.m. and 5 p.m., ET,
(6) Prior to the placement of an order that Monday through Friday, except Federal
includes order-level materials, the ordering Medical Review Board Task Report on
holidays. The on-line FDMS is available
activity shall follow procedures in FAR Insulin Treated Diabetes Mellitus and
8.404(h).
24 hours each day, 365 days each year.
Commercial Motor Vehicle Drivers
(7) To support the price reasonableness of If you want acknowledgment that we
order-level materials, the contractor AGENCY: Federal Motor Carrier Safety received your comments, please include
proposing order-level materials as part of a Administration (FMCSA), DOT. a self-addressed, stamped envelope or
solution shall submit a minimum of three ACTION: Notice of availability; request postcard or print the acknowledgement
quotes obtained by the contractor for each for comments. page that appears after submitting
order-level material above the micro- comments on-line.
purchase threshold. One of these three quotes SUMMARY: In May 2015, FMCSA Privacy Act: In accordance with 5
may include materials furnished by the published a notice of proposed U.S.C. 553(c), DOT solicits comments
contractor under FAR 52.212–4 Alternate I from the public to better inform its
rulemaking (NPRM) in the Federal
(i)(1)(ii)(A) If the contractor cannot obtain rulemaking process. DOT posts these
three quotes, the contractor shall provide the Register to allow drivers with stable,
well-controlled insulin-treated diabetes comments, without edit, including any
rationale for why they cannot obtain three
quotes to support the contracting officer’s mellitus (ITDM) to be qualified to personal information the commenter
determination in (d)(7) of this section. operate commercial motor vehicles provides, to www.regulations.gov, as
(8) The ordering activity contracting officer (CMVs) in interstate commerce. The described in the system of records
must make a determination that prices for all comment period closed on July 6, 2015 notice (DOT/ALL–14 FDMS), which can
order-level materials are determined fair and and the Agency received over 1,250 be reviewed at www.dot.gov/privacy.
reasonable. The ordering activity contracting comments. In that same month, FMCSA FOR FURTHER INFORMATION CONTACT: Ms.
officer may base their determination on a requested the Medical Review Board Christine A. Hydock, 1200 New Jersey
comparison of the quotes received in Ave. SE., Washington, DC 20590, or by
(MRB) to provide the Agency with
response to the task or delivery order phone at (202) 366–4001 or by email at
solicitation or other relevant pricing advice by reviewing and analyzing the
comments and providing FMCSAMedical@dot.gov. If you have
information available.
(9) Prior to an increase in the ceiling price recommendations to FMCSA for its questions on viewing or submitting
of order-level materials above the micro- consideration. The Agency announces material to the docket, contact Docket
purchase threshold, the ordering activity the availability of the MRB’s report and Services, telephone (202) 366–9826.
contracting officer shall— requests comments on the MRB SUPPLEMENTARY INFORMATION:
(i) Conduct an analysis of pricing and other recommendations. The Final MRB Task
relevant factors to determine if the action is I. Public Participation and Request for
15–01 Report is posted in the docket at Comments
in the best interest of the Government and FMCSA–2005–23151.
obtain the approval at the levels described in FMCSA encourages you to participate
FAR 8.405–6(d); or DATES: Comments must be received on
by submitting comments and related
(ii) Follow the procedures at FAR 8.405– or before November 8, 2016.
materials.
6 for a change that modifies the general scope ADDRESSES: You may submit comments
of the order. bearing the Federal Docket Management Submitting Comments
(10) In accordance with GSAR clause System (FDMS) Docket No. FMCSA– If you submit a comment, please
552.215–71 Examination of Records by GSA, 2005–23151 using any of the following include the docket number for this
GSA has the authority to examine the
methods: notice (FMCSA–2005–23151), indicate
contractor’s records for compliance with the
pricing provisions in FAR clause 52.212–4 • Federal eRulemaking Portal: Go to the specific section of this document to
Alternate I, to include examination of any www.regulations.gov. Follow the on-line which each comment applies, and
books, documents, papers, and records instructions for submitting comments. provide a reason for each suggestion or
involving transactions related to the contract • Mail: Docket Management Facility; recommendation. You may submit your
for overbillings, billing errors, and U.S. Department of Transportation, comments and material online or by fax,
compliance with the IFF and the Sales Room W12–140, 1200 New Jersey mail, or hand delivery, but please use
Reporting clauses of the contract. Avenue SE., Washington, DC 20590– only one of these means. FMCSA
(11) Order-level materials are exempt from 0001.
ehiers on DSK5VPTVN1PROD with PROPOSALS

recommends that you include your
the following clauses: • Hand Delivery or Courier: West name and a mailing address, an email
(i) 552.216–70 Economic Price
Building Ground Floor, Room W12–140, address, or a phone number in the body
Adjustment—FSS Multiple Award Schedule
Contracts. 1200 New Jersey Avenue SE., of your document so that FMCSA can
(ii) 552.238–71 Submission and Washington, DC, between 9 a.m. and 5 contact you if there are questions
Distribution of Authorized FSS Schedule p.m., ET, Monday through Friday, regarding your submission.
Pricelists. except Federal Holidays. To submit your comment online, go to
(iii) 552.238–75 Price Reductions. • Fax: 1–202–493–2251. http://www.regulations.gov, put the

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Document Created: 2018-02-09 13:15:01
Document Modified: 2018-02-09 13:15:01

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Proposed rule.
Dates		Interested parties should submit written comments to the
Contact		Ms. Leah Price, Procurement Analyst, at 703-605-2558, or Mr. Curtis Glover, Sr., Procurement Analyst, at 202-501-1448, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755. Please cite GSAR Case 2016-G506.
FR Citation		81 FR 62445
RIN Number		3090-AJ75
CFR Citation		48 CFR 515 48 CFR 538 48 CFR 552