06-2640. Defense Federal Acquisition Regulation Supplement; Competition Requirements for Federal Supply Schedules and Multiple Award Contracts

AGENCY:

Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION:

Final rule.

SUMMARY:

DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update and clarify requirements for competition in the placement of orders under Federal Supply Schedules and multiple award contracts.

DATES:

Effective Date: March 21, 2006.

FOR FURTHER INFORMATION CONTACT:

Ms. Robin Schulze, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone [phone]; facsimile [phone]. Please cite DFARS Case 2004-D009.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule revises procedures for use of Federal Supply Schedules and multiple award contracts to promote competition in the placement of orders for supplies or services. The final rule—

• Revises approval requirements for placement of noncompetitive orders exceeding $100,000 under Federal Supply Schedules for consistency with those at FAR 8.405-6, and extends those requirements to orders under multiple award contracts;
• Applies the same ordering procedures to both supplies and services; and
• Makes additional changes to DFARS Subpart 208.4 for consistency with the policy in FAR Subpart 8.4.

DoD published a proposed rule at 70 FR 32280 on June 2, 2005. Four sources submitted comments on the proposed rule. A discussion of the comments is provided below.

1. Comment: Recommend relocating the last sentence of 208.405-70(c)(2), which references the General Services Administration's electronic quote system “e-Buy”, to DoD's Procedures, Guidance, and Information (PGI) resource, to be consistent with DFARS Transformation.

DoD Response: DoD agrees and has relocated the referenced text to PGI, at http://www.acq.osd.mil/​dpap/​dars/​pgi.

2. Comment: Recommend removing the requirement to obtain three proposals when ordering supplies under GSA's Federal Supply Schedule program, because the requirement is unduly burdensome and administratively wasteful.

DoD Response: Do not agree. DoD has adopted this policy to place the appropriate emphasis on competition and to ensure that DoD can continue to use Federal Supply Schedules to meet future requirements.

3. Comment: The requirement at FAR 8.405-6 for the senior procurement executive to approve proposed orders exceeding $50,000,000 for DoD, NASA, and the Coast Guard is different from the policy at FAR 6.304(a)(4) for non-schedule buys, which only requires senior procurement executive approval for orders exceeding $75,000,000.

DoD Response: Federal Acquisition Circular 2005-05 dated July 27, 2005 (70 FR 43576), amended the FAR to make the thresholds at 8.405-6 consistent with those at 6.304(a)(4).

4. Comment: Recommend clarifying the justification approval level for waivers of competition when establishing blanket purchase agreements (BPAs), because BPAs may have no estimated value, and the existing requirements are based on estimated dollar value.

DoD Response: An estimated value should be established for a BPA as part of acquisition planning, and the approval level for the BPA should be based on that estimated value.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

DoD certifies 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 strengthens and clarifies existing requirements for competition in the placement of orders under Federal Supply Schedules and multiple award contracts.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply, because the rule does not impose any 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 208 and 216

• Government procurement

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 208 and 216 are amended as follows:

1. The authority citation for 48 CFR parts 208 and 216 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 208—REQUIRED SOURCES OF SUPPLIES AND SERVICES

208.404

[Amended]

2. Section 208.404 is amended by removing paragraphs (b) and (S-70).

208.404-1 through 208.405-2

[Removed]

3. Sections 208.404-1, 208.404-2, 208.404-70, 208.405, and 208.405-2 are removed.

4. Sections 208.405-70, 208.406, and 208.406-1 are added to read as follows:

208.405-70

Additional ordering procedures.

(a) This subsection—

(1) Implements Section 803 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107) for the acquisition of services, and establishes similar policy for the acquisition of supplies;

(2) Applies to orders for supplies or services under Federal Supply Schedules, including orders under blanket purchase agreements established under Federal Supply Schedules; and

(3) Also applies to orders placed by non-DoD agencies on behalf of DoD.

(b) Each order exceeding $100,000 shall be placed on a competitive basis in accordance with paragraph (c) of this subsection, unless this requirement is waived on the basis of a justification that is prepared and approved in accordance with FAR 8.405-6 and includes a written determination that—

(1) A statute expressly authorizes or requires that the purchase be made from a specified source; or

(2) One of the circumstances described at FAR 16.505(b)(2)(i) through (iii) applies to the order. Follow the procedures at PGI 216.505-70 if FAR 16.505(b)(2)(ii) or (iii) is deemed to apply.

(c) An order exceeding $100,000 is placed on a competitive basis only if the contracting officer provides a fair notice of the intent to make the purchase, including a description of the supplies to be delivered or the services to be performed and the basis upon which the contracting officer will make the selection, to—

(1) As many schedule contractors as practicable, consistent with market research appropriate to the circumstances, to reasonably ensure that offers will be received from at least three contractors that can fulfill the requirements, and the contracting officer—

(i)(A) Receives offers from at least three contractors that can fulfill the requirements; or

(B) Determines in writing that no additional contractors that can fulfill the requirements could be identified despite reasonable efforts to do so (documentation should clearly explain efforts made to obtain offers from at least three contractors); and

(ii) Ensures all offers received are fairly considered; or

(2) All contractors offering the required supplies or services under the applicable multiple award schedule, and affords all contractors responding to the notice a fair opportunity to submit an offer and have that offer fairly considered.

(d) See PGI 208.405-70 for additional information regarding fair notice to contractors and requirements relating to the establishment of blanket purchase agreements under Federal Supply Schedules.

§ 208.406

Ordering activity responsibilities.

§ 208.406-1

Order placement.

Follow the procedures at PGI 208.406-1 when ordering from schedules.

PART 216—TYPES OF CONTRACTS

5. Section 216.505-70 is revised to read as follows:

§ 216.505-70

Orders under multiple award contracts.

(a) This subsection—

(1) Implements Section 803 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107) for the acquisition of services, and establishes similar policy for the acquisition of supplies;

(2) Applies to orders for supplies or services exceeding $100,000 placed under multiple award contracts;

(3) Also applies to orders placed by non-DoD agencies on behalf of DoD; and

(4) Does not apply to orders for architect-engineer services, which shall be placed in accordance with the procedures in FAR Subpart 36.6.

(b) Each order exceeding $100,000 shall be placed on a competitive basis in accordance with paragraph (c) of this subsection, unless this requirement is waived on the basis of a justification that is prepared and approved in accordance with FAR 8.405-6 and includes a written determination that—

(1) A statute expressly authorizes or requires that the purchase be made from a specified source; or

(2) One of the circumstances described at FAR 16.505(b)(2)(i) through (iv) applies to the order. Follow the procedures at PGI 216.505-70 if FAR 16.505(b)(2)(ii) or (iii) is deemed to apply.

(c) An order exceeding $100,000 is placed on a competitive basis only if the contracting officer—

(1) Provides a fair notice of the intent to make the purchase, including a description of the supplies to be delivered or the services to be performed and the basis upon which the contracting officer will make the selection, to all contractors offering the required supplies or services under the multiple award contract; and

(2) Affords all contractors responding to the notice a fair opportunity to submit an offer and have that offer fairly considered.

(d) When using the procedures in this subsection—

(1) The contracting officer should keep contractor submission requirements to a minimum;

(2) The contracting officer may use streamlined procedures, including oral presentations;

(3) The competition requirements in FAR part 6 and the policies in FAR Subpart 15.3 do not apply to the ordering process, but the contracting officer shall consider price or cost under each order as one of the factors in the selection decision; and

(4) The contracting officer should consider past performance on earlier orders under the contract, including quality, timeliness, and cost control.