[Federal Register Volume 63, Number 210 (Friday, October 30, 1998)]
[Rules and Regulations]
[Pages 58590-58594]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28956]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 4, 5, 13, 14, and 32
[FAC 97-09; FAR Case 97-304; Item II]
RIN 9000-AI10
Federal Acquisition Regulation; Electronic Commerce in Federal
Procurement
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council have agreed on an interim rule amending
the Federal Acquisition Regulation (FAR) to implement Section 850 of
the National Defense Authorization Act for Fiscal Year 1998 by removing
Federal Acquisition Computer Network (FACNET) specific terms and
requirements and replacing them with more flexible electronic commerce
policies. This regulatory action was not subject to Office of
Management and Budget review under Executive Order 12866, dated
September 30, 1993, and is not a major rule under 5 U.S.C. 804.
EFFECTIVE DATE: October 30, 1998.
Comment Date: Comments should be submitted to the FAR Secretariat
at the address shown below on or before December 29, 1998, to be
considered in the formulation of a final rule.
ADDRESSES: Interested parties should submit written comments to:
General Services Administration, FAR Secretariat (MVR), 1800 F Street,
NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405.
E-Mail comments submitted over the Internet should be addressed to:
farcase.97-304@gsa.gov
Please cite FAC 97-09, FAR case 97-304, 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. Linda K. Nelson, Procurement Analyst, at (202)
501-1900. Please cite FAC 97-09, FAR case 97-304.
SUPPLEMENTARY INFORMATION:
[[Page 58591]]
A. Background
This interim rule revises FAR Subpart 4.5 and makes associated
changes to FAR Parts 2, 5, 13, 14, and 32 to implement Section 850 of
the National Defense Authorization Act for Fiscal Year 1998 (Pub. L.
105-85). Section 850 amends Titles 10, 15, 40, and 41 of the United
States Code to eliminate the preference for electronic commerce within
Federal agencies to be conducted on the Federal Acquisition Computer
Network (FACNET) Architecture. Additionally, Section 850 provides a
more flexible electronic commerce policy by promoting the use of cost-
effective procedures and processes that employ electronic commerce in
the conduct and administration of Federal procurement systems and the
use of nationally and internationally recognized standards that broaden
interoperability and ease the electronic interchange of information. In
order to facilitate access to Federal procurement opportunities,
Section 850 mandates that a single, Governmentwide point of entry be
used that will provide universal public access to procurement
opportunities Governmentwide. In the report submitted to Congress by
the President's Management Council Electronic Processes Initiatives
Committee entitled ``Electronic Commerce For Buyers and Sellers,'' the
Committee endorsed a World Wide Web-based electronic system that would
provide the private sector direct access to Federal procurement
opportunities at a single location.
In an effort to distribute acquisition-related information to
industry more quickly and economically, an electronic posting system is
now being tested by several Federal agencies. This system will permit
buyers to post solicitations and other pertinent information, in
addition to notices, directly to the Internet, thus giving sellers
access to this information through a single, Governmentwide point of
entry. If testing demonstrates that this electronic posting system is
capable of providing effective access to notices and solicitations
through a single point of entry, consideration will be given by the
Administrator of OFPP to designating it as the ``single, Governmentwide
point of entry,'' and the FAR will be changed accordingly.
In the meantime, FACNET is the Governmentwide system that provides
universal user access, employs nationally and internationally
recognized data formats, and allows the electronic data interchange of
acquisition information between the private sector and the Federal
Government. FACNET qualifies as the single, Governmentwide point of
entry until the Administrator of the Office of Federal Procurement
Policy designates the single, Governmentwide point of entry.
B. Regulatory Flexibility Act
This interim rule is not expected to have a significant negative
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
is more flexible than the current FAR policy regarding the Federal
electronic commerce architecture. It may be easier for some small
entities to conduct business with the Federal Government over the World
Wide Web, for instance, than using a value-added network to conduct
business over FACNET. Since this may result in a positive impact on
small entities, an Initial Regulatory Flexibility Analysis (IRFA) has
been performed and is summarized as follows:
The objectives of the rule are (1) to promote the use of cost-
effective procedures and processes that employ electronic commerce
in the conduct and administration of Federal procurement systems,
and (2) to apply nationally and internationally recognized standards
that broaden interoperability and ease the electronic interchange of
information. These objectives are stated in Section 850 of Public
Law 105-85. The legal authority to use electronic commerce for
Government contracting actions was confirmed in General Accounting
Office (GAO) Advisory Opinion B-238449. The opinion concluded that
electronic transactions can create legally binding contractual
obligations in accordance with 31 U.S.C. 1501. The interim rule
applies to all large and small entities that do business or are
planning to do business with the Government. The ability to use
electronic architectures other than FACNET, such as the World Wide
Web, to conduct electronic commerce will increase competition by
improving access to Federal contracting opportunities for the more
than 72,995 vendors currently doing business with the Government,
particularly small businesses, as well as many other vendors that
find access to bidding opportunities difficult under the current
system.
A copy of the IRFA has been submitted to the Chief Counsel for
Advocacy of the Small Business Administration and may be obtained from
the FAR Secretariat. Comments are invited. Comments from small entities
concerning the affected FAR subparts also will be considered in
accordance with 5 U.S.C. 610. Such comments must be submitted
separately and should cite 5 U.S.C. 601, et seq. (FAC 97-09, FAR Case
97-304), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose recordkeeping requirements or collections of
information from offerors, contractors, or members of the public 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. This action
is necessary to implement Section 850 of Public Law 105-85, which
eliminates the preference for electronic commerce within Federal
agencies to be conducted on the Federal Acquisition Computer Network
(FACNET) Architecture. Section 850 became effective on May 17, 1998.
However, pursuant to Public Law 98-577 and FAR 1.501, public comments
received in response to this interim rule will be considered in the
formation of the final rule.
List of Subjects in 48 CFR Parts 2, 4, 5, 13, 14, and 32
Government procurement.
Dated: October 22, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, 48 CFR Parts 2, 4, 5, 13, 14, and 32 are amended as set
forth below:
1. The authority citation for 48 CFR Parts 2, 4, 5, 13, 14, and 32
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. Section 2.101 is amended by adding, in alphabetical order, the
definition ``Electronic commerce''; revising the definition ``Federal
Acquisition Computer Network (FACNET) Architecture''; and removing the
definitions ``Full FACNET'', ``Governmentwide FACNET'', and ``Interim
FACNET'' to read as follows:
2.101 Definitions.
* * * * *
Electronic commerce means electronic techniques for accomplishing
business transactions including electronic mail or
[[Page 58592]]
messaging, World Wide Web technology, electronic bulletin boards,
purchase cards, electronic funds transfer, and electronic data
interchange.
* * * * *
Federal Acquisition Computer Network (FACNET) Architecture is a
Governmentwide system that provides universal user access, employs
nationally and internationally recognized data formats, and allows the
electronic data interchange of acquisition information between the
private sector and the Federal Government. FACNET qualifies as the
single, Governmentwide point of entry pending designation by the
Administrator of the Office of Federal Procurement Policy (OFPP).
* * * * *
PART 4--ADMINISTRATIVE MATTERS
3. Subpart 4.5, consisting of sections 4.500 through 4.502, is
revised to read as follows:
Subpart 4.5--Electronic Commerce in Contracting
Sec.
4.500 Scope of subpart.
4.501 Definitions.
4.502 Policy.
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
4.500 Scope of subpart.
This subpart provides policy and procedures for the establishment
and use of electronic commerce in Federal acquisition as required by
Section 30 of the Office of Federal Procurement Policy (OFPP) Act (41
U.S.C. 426).
4.501 Definitions.
Electronic data interchange (EDI), as used in this subpart, means a
technique for electronically transferring and storing formatted
information between computers utilizing established and published
formats and codes, as authorized by the applicable Federal Information
Processing Standards.
Single, Governmentwide point of entry, as used in this subpart,
means the one point of entry to be designated by the Administrator of
OFPP that will allow the private sector to electronically access
procurement opportunities Governmentwide.
4.502 Policy.
(a) The Federal Government shall use electronic commerce whenever
practicable or cost-effective. The use of terms commonly associated
with paper transactions (e.g., ``copy,'' ``document,'' ``page,''
``printed,'' ``sealed envelope,'' and ``stamped'') shall not be
interpreted to restrict the use of electronic commerce. Contracting
officers may supplement electronic transactions by using other media to
meet the requirements of any contract action governed by the FAR (e.g.,
transmit hard copy of drawings).
(b) Agencies may exercise broad discretion in selecting the
hardware and software that will be used in conducting electronic
commerce. However, as required by Section 30 of the OFPP Act (41 U.S.C.
426), the head of each agency, after consulting with the Administrator
of OFPP, shall ensure that systems, technologies, procedures, and
processes used by the agency to conduct electronic commerce--
(1) Are implemented uniformly throughout the agency, to the maximum
extent practicable;
(2) Are implemented only after considering the full or partial use
of existing infrastructures, (e.g., the Federal Acquisition Computer
Network (FACNET));
(3) Facilitate access to Government acquisition opportunities by
small business concerns, small disadvantaged business concerns, and
women-owned small business concerns;
(4) Include a means of providing widespread public notice of
acquisition opportunities through the single, Governmentwide point of
entry and a means of responding to notices or solicitations
electronically; and
(5) Comply with nationally and internationally recognized standards
that broaden interoperability and ease the electronic interchange of
information, such as standards established by the National Institute of
Standards and Technology.
(c) Before using electronic commerce, the agency head shall ensure
that the agency systems are capable of ensuring authentication and
confidentiality commensurate with the risk and magnitude of the harm
from loss, misuse, or unauthorized access to or modification of the
information.
PART 5--PUBLICIZING CONTRACT ACTIONS
4. Section 5.101 is amended by revising paragraph (a)(2)(ii) and
the last sentence of (a)(2)(iv) to read as follows:
5.101 Methods of disseminating information.
* * * * *
(a) * * *
(2) * * *
(ii) The contracting officer need not comply with the display
requirements of this section when the exemptions at 5.202(a)(1), (a)(4)
through (a)(9), or (a)(11) apply, when oral or FACNET solicitations are
used, or when providing access to a notice of proposed contract action
through the single, Governmentwide point of entry and the notice
permits the public to respond to the solicitation electronically.
* * * * *
(iv) * * * Contracting offices using electronic systems for public
posting that are not accessible outside the installation shall
periodically publicize the methods for accessing such information.
* * * * *
5. Section 5.102 is amended by revising paragraphs (a)(2) and
(a)(7) to read as follows:
5.102 Availability of solicitations.
(a) * * *
(2) Provide copies of a solicitation issued under other than full
and open competition to firms requesting copies that were not initially
solicited, but only after advising the requester of the determination
to limit the solicitation to a specified firm or firms as authorized
under Part 6 of the FAR;
* * * * *
(7) If electronic commerce is employed in the solicitation process,
availability of the solicitation may be limited to the electronic
medium.
* * * * *
6. Section 5.202 is amended by revising paragraph (a)(13), by
removing (a)(14), and by redesignating (a)(15) as (a)(14). The revised
text reads as follows:
5.202 Exceptions.
* * * * *
(a) * * *
(13) The proposed contract action--
(i) Is for an amount not expected to exceed the simplified
acquisition threshold;
(ii) Will be made through FACNET or another means that provides
access to the notice of proposed contract action through the single,
Governmentwide point of entry; and
(iii) Permits the public to respond to the solicitation
electronically; or
* * * * *
7. Section 5.203 is amended by revising paragraph (b) to read as
follows:
5.203 Publicizing and response time.
* * * * *
(b) The contracting officer shall establish a solicitation response
time that will afford potential offerors a reasonable opportunity to
respond to--each proposed contract action (including actions via FACNET
or for which the notice of proposed contract action is accessible
through the single,
[[Page 58593]]
Governmentwide point of entry), in an amount estimated to be greater
than $25,000, but not greater than the simplified acquisition
threshold; or each contract action for the acquisition of commercial
items in an amount estimated to be greater than $25,000. The
contracting officer should consider the circumstances of the individual
acquisition, such as the complexity, commerciality, availability, and
urgency, when establishing the solicitation response time.
* * * * *
5.202, 5.203, 5.205, 5.207 [Amended]
8. In addition to the amendments set forth above, in Subpart 5.2,
remove the term ``contract action'' or ``contract actions'' and add
``proposed contract action'' or ``proposed contract actions'',
respectively, in the following places:
a. Section 5.202(a)(2), (a)(3), (a)(4), (a)(5), (a)(6), (a)(7),
(a)(8) (twice), (a)(9), (a)(10), (a)(11) (twice), (a)(12) (4 times),
and (a)(14);
b. Section 5.203 introductory paragraph, (a) introductory text,
(c), (d), (e) (twice), and (g);
c. Section 5.205(d)(2);
d. Section 5.207(c)(2)(xi), (e)(3) (twice), and (h).
9. Section 5.301 is amended by revising paragraph (b)(7) to read as
follows:
5.301 General.
* * * * *
(b) * * *
(7) The contract action--
(i) Is for an amount not greater than the simplified acquisition
threshold;
(ii) Was conducted by using FACNET, or access to the notice of
proposed contract action was provided through the single,
Governmentwide point of entry; and
(iii) Permitted the public to respond to the solicitation
electronically; or
* * * * *
10. Section 5.503 is amended by revising paragraph (a)(2) to read
as follows:
5.503 Procedures.
(a) * * *
(2) The contracting officer shall use the SF 1449 for paper
solicitations. The SF 1449 shall be used to make awards or place orders
unless the award/order is made by using electronic commerce or by using
the Governmentwide commercial purchase card for micropurchases.
* * * * *
PART 13--SIMPLIFIED ACQUISITION PROCEDURES
11. Section 13.003 is amended by removing paragraph (c);
redesignating paragraphs (d) through (i) as (c) through (h),
respectively; and revising newly redesignated paragraphs (f) and (h)(3)
to read as follows:
13.003 Policy.
* * * * *
(f) Agencies shall maximize the use of electronic commerce when
practicable and cost-effective (see Subpart 4.5). Drawings and lengthy
specifications can be provided off-line in hard copy or through other
appropriate means.
* * * * *
(h) * * *
(3) Consider all quotations or offers that are timely received. For
evaluation of quotations or offers received electronically, see 13.106-
2(b)(3); and
* * * * *
12. Section 13.102 is amended by revising the introductory text of
paragraph (a) to read as follows:
13.102 Source list.
(a) Each contracting office should maintain a source list (or
lists, if more convenient). A list of new supply sources may be
obtained from the Procurement Marketing and Access Network (PRO-Net) of
the Small Business Administration. The list should identify the status
of each source (when the status is made known to the contracting
office) in the following categories:
* * * * *
13. Section 13.104 is amended by revising the first sentence of
paragraph (b) to read as follows:
13.104 Promoting competition.
* * * * *
(b) If using simplified acquisition procedures and not using either
FACNET or providing access to the notice of proposed contract action
through the single, Governmentwide point of entry, maximum practicable
competition ordinarily can be obtained by soliciting quotations or
offers from sources within the local trade area. * * *
14. Section 13.105 is amended by revising paragraph (a)(1) to read
as follows:
13.105 Synopsis and posting requirements.
(a) * * *
(1)(i) FACNET is used for an acquisition at or below the simplified
acquisition threshold; or
(ii) The single, Governmentwide point of entry is used at or below
the simplified acquisition threshold for providing widespread public
notice of acquisition opportunities and offerors are provided a means
of responding to the solicitation electronically; or
* * * * *
15. Section 13.106-1 is amended by revising paragraphs (c)(1)(ii)
and (f) to read as follows:
13.106-1 Soliciting competition.
* * * * *
(c) * * *
(1) * * *
(ii) Oral solicitation is more efficient than soliciting through
available electronic commerce alternatives; and
* * * * *
(f) Inquiries. An agency should respond to inquiries received
through any medium (including FACNET) if doing so would not interfere
with the efficient conduct of the acquisition. For an acquisition
conducted through FACNET, an agency must respond to telephonic or
facsimile inquiries only if it is unable to receive inquiries through
FACNET.
16. Section 13.106-2 is amended by revising the introductory text
of paragraph (b)(3) to read as follows:
13.106-2 Evaluation of quotations or offers.
* * * * *
(b) * * *
(3) For acquisitions conducted using FACNET or a method that
permits electronic response to the solicitation, the contracting
officer may--
* * * * *
17. Section 13.106-3 is amended by revising paragraph (c) to read
as follows:
13.106-3 Award and documentation.
* * * * *
(c) Notification. For acquisitions that do not exceed the
simplified acquisition threshold and for which automatic notification
is not provided through FACNET or an electronic commerce method that
employs widespread electronic public notice, notification to
unsuccessful suppliers shall be given only if requested or required by
5.301.
* * * * *
13.307 [Amended]
18. Section 13.307 is amended in paragraph (b)(1) by removing
``other electronic means,'' and inserting ``electronically,''.
PART 14--SEALED BIDDING
19. Section 14.205-1 is amended by revising the second sentence of
paragraph (a) to read as follows:
[[Page 58594]]
14.205-1 Establishment of lists.
(a) * * * This rule need not be followed, however, when the
requirements of the contracting office can be obtained through use of
simplified acquisition procedures (see part 13); the requirements are
nonrecurring; or electronic commerce methods are used that transmit
solicitations or notices of procurement opportunities automatically to
all interested sources. * * *
* * * * *
14.400 [Amended]
20. Section 14.400 is amended by removing ``contract'' and
inserting ``contracts''.
PART 32--CONTRACT FINANCING
32.1103 [Amended]
21. Section 32.1103 is amended in paragraph (a) by removing
``13.003(f)'' and inserting ``13.003(e)''.
[FR Doc. 98-28956 Filed 10-29-98; 8:45 am]
BILLING CODE 6820-EP-U
