[Federal Register Volume 62, Number 124 (Friday, June 27, 1997)]
[Rules and Regulations]
[Pages 34872-34873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16636]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
48 CFR Parts 917 and 970
[1991-AB-09]
Acquisition Regulation; Department of Energy Management and
Operating Contracts
AGENCY: Department of Energy.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Energy (DOE) is adopting as final an interim
rule amending its Acquisition Regulation to set forth its policy
regarding the competition and extension of the Department's management
and operating contracts. Under its policy, the Department affirms its
commitment to provide for full and open competition in the award of its
management and operating contracts, except where the Department
determines that competitive procedures should not be used pursuant to
one of the circumstances authorized by the Competition in Contracting
Act of 1984 (41 U.S.C. 254), as implemented in Part 6 of the Federal
Acquisition Regulation. This rulemaking implements one of the key
recommendations of the Department's contract reform initiative to
improve its acquisition system.
DATES: This final rule is effective June 27, 1997.
FOR FURTHER INFORMATION CONTACT: Connie P. Fournier, Office of Policy
(HR-51), Department of Energy, 1000 Independence Avenue, SW,
Washington, D.C. 20585; (202) 586-8245; (202) 586-0545 (facsimile);
connie.fournier@hq.doe.gov (Internet).
SUPPLEMENTARY INFORMATION:
I. Background
II. Disposition of Comments
III. Procedural Requirements
A. Review Under Executive Order 12866
B. Review Under Executive Order 12988
C. Review Under the Regulatory Flexibility Act
D. Review Under the Paperwork Reduction Act
E. Review Under Executive Order 12612
F. Review Under the National Environmental Policy Act
I. Background
The Department of Energy published an interim final rule in the
Federal Register on June 24, 1996 (61 FR 32584). The public comment
period closed August 23, 1996. The Department received comments from
three companies. Copies of all written comments are available for
public inspection at the Department's Freedom of Information Reading
Room, Room 1E-190, Forrestal Building, 1000 Independence Avenue, SW,
Washington, DC 20585, (202) 586-6020.
Today's final rule adopts as final the amendments in the interim
final rulemaking.
II. Disposition of Comments
The Department has considered and evaluated the comments received
during the public comment period. The following discussion describes
the comments received and provides the Department's responses to the
comments.
A. Comment: One commenter believes that the policy statement in
917.602 is inconsistent with the remainder of DEAR 917 and FAR Part 17.
The commenter believes that the concept of a noncompetitive
``extension'' apparently synonymous with a contract ``option'' and
concludes that our policy goes beyond intent of CICA and FAR. Specific
inconsistency is between 970.1702-1(b) and FAR 17.605.(b).
Response: As explained in the preamble of the interim rule, the
Department's intent in adopting its new policy on competition for its
management and operating contracts is to move away from past policies
which established noncompetitive extensions as the preferential norm to
a new policy which establishes competition as the preferential norm.
The key component of this change in policy is to adopt the Government
wide standards for competition as statutorily provided under the
Competition in Contracting Act (CICA) and implemented in FAR Part 6.
Accordingly, the Department will seek competition for its management
and operating contracts unless a noncompetitive extension can be
justified in accordance with one of the permissible authorities under
CICA. The regulatory language of 917.602 and 970.1702 is consistent
with both FAR Part 6 and Part 17.
Regarding the distinction between an ``option to extend'' and an
``noncompetitive extension'' under one of the seven authorities of
CICA, DEAR 970.1702-1(a) provides clear language that distinguishes the
two mechanisms. In addition, the clear language of this section directs
that any extension, other than an option included in the basic
contract, can only be accomplished when justified under CICA and when
authorized by the Head of the Agency.
B. Comment: Two commenters believe that the Department's adoption
of a policy that mandates competition after a 10 year contract term
detracts from the Department's flexibility in making management
decisions regarding retaining an incumbent contractor particularly
where the contractor's performance has been excellent or the contractor
operates a Federally Funded Research and Development Center. One of the
commenters recommends that DOE, instead, rely on annual performance
appraisal results and criteria for ``options'' to determine whether
competition should be sought.
Response: The Department believes that the new policy provides
adequate management flexibility in determining whether competing a
management and operating contract is in the best interests of the
Department. The Competition in Contracting Act provides 7 circumstances
under which an agency may seek other than full and open competition in
the award of a contract. The Department intends to rely on these
Governmentwide authorities in cases where the Department intends to
extend a contract with in incumbent contractor or otherwise intends to
limit competition.
A detailed list of changes in this final rule follows.
1. 917.602, Policy. This section is added to prescribe the
Department's policy to provide for full and open competition and the
use of competitive procedures in the award of management and operating
contracts, except as authorized by law and the Head of the Agency.
2. 917.605, Award, renewal, and extension. This section is amended
to remove the existing coverage at 917.605(b) that prescribes the
Department's internal processing and documentation requirements for
extend/compete decisions. This nonregulatory subject matter will be
reflected in internal Department guidance. A new section 917.605(d) is
added to provide for the conditional approval of any noncompetitive
extension (other than an extension accomplished by the exercise of an
option) subject to the successful achievement of the Government's
negotiation objectives. This section also permits adequate time to
compete the contract in the event that the negotiations cannot be
successfully concluded.
[[Page 34873]]
3. 970.0001, Renewal of management and operating contracts. This
section is amended to delete the Department's previous policy that
competition generally would be used only when it appeared likely that
the Government's position might be meaningfully improved in terms of
cost or performance, unless it was determined that to change a
contractor would be contrary to the best interest of the Government.
This section is removed and reserved for future use.
4. 970.17, Special Contracting Methods. This subpart is added to
provide for coverage concerning contract term and options to extend
management and operating contracts.
5. 970.1702-1, Contract term and option to extend. This section is
added to provide policy guidance on (1) the total period of performance
permitted under a management and operating contract and (2) the
requirements governing the exercise of an option to extend the term of
an existing contract. Paragraph (a) of the section states that
management and operating contracts may provide for a base period of up
to 5 years and may include an option to extend the period of
performance for up to an additional total of 5 years. The purpose of
permitting the inclusion of an option to extend the term of the
contract is to facilitate long-term contractual relationships where the
mission of the Department is best served by such an extension and to
reward contractors for superior performance under the contract.
Regarding the exercise of options under paragraph (b), the
contracting officer may exercise an option to extend a competitively
awarded contract only after assessing certain factors, including the
contractor's past performance. The decision of the contracting officer
must be approved by the Head of the Contracting Activity and the
cognizant Assistant Secretary(s).
6. 970.1701-2, Solicitation provision and contract clause. This
section is added to provide instruction to the contracting officer on
the application of the solicitation provision and contract clause
pertaining to the use of options in management and operating contracts.
7. 970.5204-73, Notice regarding option. This section is added to
subpart 970.52, Contract clauses for management and operating
contracts, to provide a solicitation provision for options to extend
the term of the contract.
8. 970.5204-74, Option to extend the term of the contract. This
section is added to subpart 970.52, Contract clauses for management and
operating contracts, to provide a contract clause for options to extend
the term of the contract.
III. Procedural Requirements
A. Review Under Executive Order 12866
This regulatory action has been determined not to be a
``significant regulatory action'' under Executive Order 12866,
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993).
Accordingly, this action was not subject to review, under that
Executive Order, by the Office of Information and Regulatory Affairs of
the Office of Management and Budget (OMB).
B. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. DOE has completed the
required review and determined that, to the extent permitted by law,
the interim final regulations meet the relevant standards of Executive
Order 12988.
C. Review Under the Regulatory Flexibility Act
This rule is not subject to review under the Regulatory Flexibility
Act of 1980, 5 U.S.C. 601, et seq., because it is not subject to a
legal requirement to publish a general notice of proposed rulemaking.
D. Review Under the Paperwork Reduction Act
No new information collection or record keeping requirements are
imposed by this rule. Accordingly, no Office of Management and Budget
clearance is required under the Paperwork Reduction Act of 1980 (44
U.S.C. 3501, et seq.).
E. Review Under Executive Order 12612
Executive Order 12612, entitled ``Federalism,'' 52 FR 41685
(October 30, 1987), requires that regulations, rules, legislation, and
any other policy actions be reviewed for any substantial direct effects
on States, on the relationship between the Federal Government and the
States, or in the distribution of power and responsibilities among
various levels of government. If there are sufficient substantial
direct effects, then the Executive Order requires preparation of a
federalism assessment to be used in all decisions involved in
promulgating and implementing a policy action. The Department has
determined that this rule will not have a substantial direct effect on
the institutional interests or traditional functions of States.
F. Review Under the National Environmental Policy Act
Pursuant to the Council on Environmental Quality Regulations (40
CFR 1500-1508), the Department has established guidelines for its
compliance with the provisions of the National Environmental Policy Act
(NEPA) of 1969 (42 U.S.C. 4321, et seq.). Pursuant to Appendix A of
Subpart D of 10 CFR 1021, National Environmental Policy Act
Implementing Procedures (Categorical Exclusion A6), the Department has
determined that this rule is categorically excluded from the need to
prepare an environmental impact statement or environmental assessment.
List of Subjects in 48 CFR Parts 917 and 970
Government procurement.
Issued in Washington, D.C., on June 13, 1997.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management.
Accordingly, the interim rule amending Chapter 9 of Title 48 of the
Code of Federal Regulations which was published at 61 FR 32584 on June
24, 1996, is adopted as a final rule without change.
[FR Doc. 97-16636 Filed 6-26-97; 8:45 am]
BILLING CODE 6450-01-P
