FAC 2005-13

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

Part IV

48 CFR Parts 1, 2, 3, et. al.

Federal Acquisition Regulations; Final Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

Federal Acquisition Regulation; Federal Acquisition Circular 2005-13; Introduction

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

ACTION: Summary presentation of final and interim rules, and technical amendments and corrections.

SUMMARY: This document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in this Federal Acquisition Circular (FAC) 2005-13. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, is available via the Internet at http://www.regulations.gov.

DATES: For effective dates and comment dates, see separate documents which follow.

FOR FURTHER INFORMATION CONTACT: The analyst whose name appears in the table below in relation to each FAR case or subject area. Please cite FAC 2005-13 and specific FAR case number(s). For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.

List of Rules in FAC 2005-13

Item

Subject

FAR case

Analyst

I

Implement OMB Policy on the Use of Brand Name Specifications (Interim).

2005-037

Davis

II

Information Technology Security

2004-018

Davis

III

Online Representations and Certifications Application (ORCA) Archiving Capability (Interim).

2005-025

Woodson

IV

Inflation Adjustment of Acquisition-Related Thresholds

2004-033

Jackson

V

Trade Agreements-Thresholds

2005-030

Parnell

VI

Reporting of Purchases from Overseas Sources (Interim)

2005-034

Olson

VII

Exception to the Buy American Act for Commercial Information Technology

2005-022

Olson

VIII

Technical Amendments

   

SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the actual revisions and/or amendments to these FAR cases, refer to the specific item number and subject set forth in the documents following these item summaries.

FAC 2005-13 amends the FAR as specified below:

Item I--Implement OMB Policy on the Use of Brand Name Specifications (Interim) (FAR Case 2005-037)

This interim rule amends the Federal Acquisition Regulation (FAR) to implement the memoranda issued by the Office of Management and Budget dated April 11, 2005 and April 17, 2006, requiring agencies to publish on the Governmentwide point of entry (GPE) or e-Buy the documentation required by the FAR to support the use of a brand name specification. The rule is intended to limit the use of brand name specifications and provide for maximum competition.

Item II--Information Technology Security (FAR Case 2004-018)

This final rule amends the interim rule published September 30, 2005, as corrected on November 14, 2005, to a final rule without change. The interim rule amended FAR Parts 1, 2, 7, 11, and 39 to implement the Information Technology (IT) Security provisions of the Federal Information Security Management Act of 2002 (FISMA), (Title III of Public Law 107-347, the E-Government Act of 2002 (E-Gov Act)). The rule focuses on the importance of system and data security by contracting officials and other members of the acquisition team. The intent of adding specific guidance in the FAR is to provide clear, consistent guidance to acquisition officials and program managers; and to encourage and strengthen communication with IT security officials, chief information officers, and other affected parties.

Item III--Online Representations and Certifications Application (ORCA) Archiving Capability (Interim)(FAR Case 2005-025)

This interim rule amends FAR Parts 4, 12, 14, and 15 to address the record retention policy where the Online Representations and Certifications Application (ORCA) is used to submit an offeror's representations and certifications. Under FAR Subpart 4.12, prospective contractors are required to submit Annual Representations and Certifications via the ORCA. Data in ORCA is archived and electronically retrievable. Therefore, when a prospective contractor has completed representations and certifications electronically via ORCA, the contracting officer may reference the date of ORCA verification in the associated Government contract file rather than including a paper copy of the electronically-submitted representations and certifications in the file. Such a reference satisfies contract file documentation requirements of 4.803(a)(11). However, if an offeror identifies changes to ORCA data pursuant to the FAR provisions at 52.204-8(c) or 52.212-3(k), the contracting officer must include a copy of the changes in the contract file.

Item IV--Inflation Adjustment of Acquisition-Related Thresholds (FAR Case 2004-033)

This final rule adjusts acquisition-related thresholds in the FAR for inflation. It implements Section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 807 provides for adjustment every 5 years of acquisition-related thresholds, except for Davis-Bacon Act, Service Contract Act, and trade agreements thresholds. This rule also escalates some nonstatutory acquisition-related thresholds. Often any impact of these threshold increases will be beneficial, by preventing burdensome requirements from applying to more and more small dollar value acquisitions, which are the acquisitions in which small businesses are most likely to participate. One threshold change in this rule which may temporarily impact small business is the increase of the micro-purchase threshold (FAR 2.101) from $2,500 to $3,000, because the simplified acquisition threshold will not be raised at this time. Other frequently used thresholds that are adjusted include--

-The FPDS reporting threshold (FAR 4.602(c)) will be raised from $2,500 to $3,000.

-Commercial Items test program ceiling (FAR 13.500) will be raised from $5,000,000 to $5,500,000.

-The cost and pricing data threshold (FAR 15.403-4) will be raised from $550,000 to $650,000.

-The prime contractor subcontracting plan (FAR 19.702) floor will be raised from $500,000 to $550,000, but for construction ($1,000,000) is unchanged.

Item V--Trade Agreements-Thresholds (FAR Case 2005-030)

This final rule converts the interim rule published at 71 FR 864, January 5, 2006, to a final rule without change. This rule changes the thresholds for application of the World Trade Organization Government Procurement Agreement and the other Free Trade Agreements with Canada, Mexico, Chile, Singapore, and Australia. These threshold increases occur every two years in order to keep pace with inflation.

Item VI--Reporting of Purchases from Overseas Sources (Interim) (FAR Case 2005-034)

This interim rule amends FAR Part 25 and adds a provision in FAR 52.225 to implement Section 837 of Division A of the Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006 (Pub. L. 109-115). Section 837 requires the head of each Federal agency to submit a report to Congress relating to acquisitions of articles, materials, or supplies that are manufactured outside the United States. The new provision requests from offerors necessary data regarding place of manufacture. The new provisions will require an offeror to indicate whether the place of manufacture of the end products it expects to provide in response to the solicitation is predominantly inside or outside the United States. Whenever the place of manufacture for a contract is coded outside the United States, the contracting officer will be required to enter into Federal Procurement Data System (FPDS) the reason for buying items manufactured outside the United States.

Item VII--Exception to the Buy American Act for Commercial Information Technology (FAR Case 2005-022)

This final rule converts the interim rule published at 71 FR 223, January 3, 2006, to a final rule without change. This final rule amends FAR 25.103 and Subpart 25.11 to implement Section 535(a) of Division F of the Consolidated Appropriations Act, 2004, and similar sections in subsequent appropriations acts. Section 535(a) authorizes an exception to the Buy American Act for acquisitions of information technology that are commercial items. The final rule applies to all offerors responding to solicitations for commercial information technology where the Buy American Act previously applied (generally, acquisitions between the micro-purchase threshold and $193,000). The effect of this exemption is that the following clauses are no longer applicable in acquisition of commercial information technology:

FAR 52.225-1, Buy American Act-Supplies,

FAR 52.225-2, Buy American Act Certificate,

FAR 52.225-3, Buy American Act-Free Trade Agreements-Israeli Trade Act,

FAR 52.225-4, Buy American Act-Free Trade Agreements-Israeli Trade Act Certificate.

This is because the Buy American Act no longer applies. The Free Trade Agreement non-discriminatory provisions are no longer necessary since all products now are treated without the restrictions of the Buy American Act.

The Trade Agreements provision and clause at FAR 52.225-5 and FAR 52.225-6 are still necessary when the Trade Agreements Act applies (acquisitions above $193,000). The Trade Agreements provision and clause already waive applicability of the Buy American Act for eligible products and are needed to implement the restrictions on procurement of noneligible end products. Section 535 and subsequent similar sections waived only the Buy American Act, not all restrictions on the purchase of foreign information technology.

Item VIII--Technical Amendments

Editorial changes are made at FAR 1, 3, 4, 5, 7, 13, 26, 33, 49, 50, 52, and 53 in order to update references.

Dated: September 19, 2006.Ralph De Stefano,Director, Contract Policy Division.

Federal Acquisition Circular

Federal Acquisition Circular (FAC) 2005-13 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration.

Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2005-13 is effective September 28, 2006.

Dated: September 19, 2006.Roger D. Waldron, Acting Senior Procurement Executive, General Services Administration.

Dated: September 8, 2006.Shay D. Assad, Director, Defense Procurement and Acquisition Policy.

Dated: September 12, 2006.Thomas Luedtke, Assistant Administrator for Procurement, National Aeronautics and Space Administration.

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 5, 6, 8, 11, and 13

[FAC 2005-13; FAR Case 2005-037; Item I;

FAR Case 2005-037, Implement OMB Policy on the Use of Brand Name Specifications

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 (Councils) have agreed to amend the Federal Acquisition Regulation (FAR) to require agencies to publish on the Governmentwide point of entry (GPE) or e-Buy the documentation required by the FAR to support the use of brand name specifications.

DATES: Effective Date: September 28, 2006.

Comment Date: Interested parties should submit written comments to the FAR Secretariat on or before November 27, 2006 to be considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-13, FAR case 2005-037, by any of the following methods: Federal eRulemaking Portal: http://www.regulations.gov. Search for this document at the

``Federal Acquisition Regulation'' agency and review the ``Document Title'' column; click on the Document ID number. Click on ``Add Comments''.

You may also search for any document using the ``Advanced search/document search'' tab, selecting from the agency field ``Federal Acquisition Regulation'', and typing the FAR case number in the keyword field.

Fax: 202-501-4067.

Mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405.

Instructions: Please submit comments only and cite FAC 2005-13, FAR case 2005-037, in all correspondence related to this case. All comments received will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information

provided.

FOR FURTHER INFORMATION CONTACT For clarification of content, contact Ms. Cecelia L. Davis, Procurement Analyst, at (202) 219-0202. Please cite FAC 2005-13, FAR case 2005-037. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202)

501-4755.

SUPPLEMENTARY INFORMATION:

A. Background On April 11, 2005, the Office of Management and Budget (OMB) issued a memorandum on the use of brand name specifications to reinforce the need to maintain vendor and technology neutral contract specifications. To provide for maximum competition, solicitations should limit the use of brand name specifications. As a general rule, contract specifications should emphasize the necessary physical, functional, and performance characteristics of a product - ;not brand names. OMB encouraged agencies to take steps to mitigate brand name usage and requested agencies to publicize the justification for use of brand name with the contract solicitation. While the justifications are generally available upon request, posting the brand name justifications will improve the overall transparency of the acquisition process. Contracting officers must be sensitive when dealing with proprietary information when posting justifications. FAR 6.305 requires contracting officers to carefully screen all justifications for contractor proprietary information and remove such information before making available to the public. Contracting officers are to adhere to the exemptions on disclosure of information contained in the Freedom of Information Act (5 U.S.C. 552) and the prohibitions against disclosure in FAR 24.202 in determining the information that should be removed.

The OMB memorandum applies to all acquisitions exceeding $25,000 that use brand name specifications, including open market purchases, purchases from the Federal Supply Schedules (FSS) program, and sole source procurements. Contracting officers should not use other contract vehicles instead of the FSS program when it is not in the best interest of the Government to do so, just to circumvent the brand name posting requirement.

To implement the OMB memorandum, the Councils are amending the FAR to add a requirement to publish on the GPE or e-Buy the documentation required by the FAR to support the use of brand name specifications. The proposed changes require--

For brand name orders against the FSS program, posting to e-Buy the documentation or justification required by FAR 8.405-6. The rule also restricts the use of oral orders over $25,000 against the FSS that contain brand specifications.

For non-FSS acquisitions, including simplified acquisitions, posting to the Federal Business Opportunities website (http://www.fedbizopps.gov) the justification or documentation required by FAR 11.105.

OMB issued a second memorandum on April 17, 2006 to provide additional implementation guidance to agencies when publicizing the brand name justification which reflects the approach above. In response to OMB's memoranda, agencies submitted several comments and questions on the posting requirement and the requirement for the brand name justifications. The questions and comments are summarized below and the Councils invite interested parties to comment on these questions.

1. The OMB memorandum requires agencies to post the brand name justification to e-Buy with the request for quotation (RFQ) when using the FSS. However, some agencies use commercial companies such as FedBid to post the RFQs for FSS purchases and FedBid posts the RFQ to FedBizOpps instead of e-Buy. Should agencies be allowed to post the brand name justification to FedBizOpps instead of e-Buy when they use FedBid or another commercial company to post an RFQ for FSS purchases? If an alternative posting solution is used, will OMB be able to obtain a report on the use of these brand name justifications, if necessary?

2. The OMB memorandum requires agencies to post brand name justifications for orders against the FSS but not for orders against indefinite-delivery contracts including GWACS. Agencies can avoid the posting requirement simply by purchasing on an indefinite-delivery contract instead of the FSS. Should agencies be required to post brand name justifications for orders against indefinite-delivery contracts? If yes, where is the best place to post the justification?

3. Should agencies be required to post brand name justifications for orders issued on the SmartBuy program and other strategic sourcing vehicles?

4. Should agencies be required to post brand name justifications to renew software license agreements that are required to receive software updates?

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act The interim rule is not expected 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 adds no new requirements for contractors. The rule requires agencies to post documentation required by the FAR to the GPE or e-Buy. An Initial Regulatory Flexibility Analysis (IRFA) has therefore not been prepared. The Councils will consider comments from small entities concerning the affected FAR Parts 5, 6, 8, 11, and 13 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 601, et seq. (FAC 2005-13, FAR case 2005-037), in correspondence.

C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the changes to the FAR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

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 limit the use of brand name specifications and provide for maximum competition. However, pursuant to Public Law 98-577 and FAR 1.501, the Councils will consider public comments received in response to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 5, 6, 8, 11, and 13.

Government procurement.

Dated: September 19, 2006.Ralph De Stefano, Director, Contract Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 5, 6, 8, 11, and 13 as set forth below:

1. The authority citation for 48 CFR parts 5, 6, 8, 11, and 13 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

PART 5--PUBLICIZING CONTRACT ACTIONS

2. Amend section 5.102 by adding paragraph (a)(6) to read as follows:

5.102 Availability of solicitations.

(a)(1) * * *

* * * * *

(6) When an acquisition contains brand name specifications, the contracting officer shall include with the solicitation the justification or documentation required by 6.302-1(c), 13.106-1(b), or 13.501, redacted as necessary (see 6.305).

* * * * *

PART 6--COMPETITION REQUIREMENTS

3. Amend section 6.302-1 in paragraph (c) by adding a new sentence before the last sentence to read as follows:

6.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements.

* * * * *

(c) * * * See 5.102(a)(6) for the requirement to post the brand name justification. * * *

* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

4. Amend section 8.402 by--

a. Adding to paragraph (c)(2) ``(except see 8.405-6)'' after ``contractors''; and

b. Adding to paragraph (d) a new sentence after the second sentence to read as follows:

8.402 General.

* * * * *

(d)* * * Ordering activities shall post an RFQ to e-Buy when an order contains brand name specifications (see 8.405-6). * * *

* * * * *

5. Amend section 8.405-1 by revising paragraphs (c) and (d)(1) to read as follows:

8.405-1 Ordering procedures for supplies, and services not requiring a statement of work.

* * * * *

(c) Orders exceeding the micro-purchase threshold but not exceeding the maximum order threshold. (1) Ordering activities shall place orders with the schedule contractor that can provide the supply or service that represents the best value. Before placing an order, an ordering activity shall consider reasonably available information about the supply or service offered under MAS contracts by surveying at least three schedule contractors through the GSA Advantage! on-line shopping service, or by reviewing the catalogs or pricelists of at least three schedule contractors (see 8.405-5).

(2) When an order contains brand name specifications, the contracting officer shall post the Request for Quote (RFQ) along with the justification or documentation as required by 8.405-6. (3) In addition to price, when determining best value, the ordering activity may consider, among other factors, the following:

(i) Past performance.

(ii) Special features of the supply or service required for effective program performance.

(iii) Trade-in considerations.

(iv) Probable life of the item selected as compared with that of a

comparable item.

(v) Warranty considerations.

(vi) Maintenance availability.

(vii) Environmental and energy efficiency considerations.

(viii) Delivery terms.

(d)* * *;

(1) Review (except see (c)(2) of this subsection) the pricelists of

additional schedule contractors (the GSA Advantage! on-line shopping

service can be used to facilitate this review);

* * * * *

6. Amend section 8.405-6 by--

a. Revising paragraph (a) and the introductory text of paragraph (b);

b. Removing paragraph (b)(3);

c. Redesignating paragraph (b)(4) as (b)(3);

d. Revising paragraph (c);

e. Redesignating paragraphs (d), (e), and (f) as (f), (g) and (h) respectively;

f. Adding new paragraphs (d) and (e);

g. Removing from the newly designated paragraph (f) ``of schedule contractors to fewer than required in 8.405-1 or 8.405-2'';

h. Removing from newly designated paragraph (g)(2)(iv) ``8.405-6(b)'' and adding ``8.405-6(a) and (b)'' in its place;

i. Revising newly designated paragraph (g)(2)(viii);

j. Removing from newly designated paragraph (h)(2) ``(f)(3) or (f)(4)'' and adding ``(h)(3) or (h)(4)'' in its place; and

k. Removing from newly designated paragraph (h)(3)(iii) ``(f)(4)'' and adding ``(h)(4)'' in its place. The revised and added text reads as follows:

8.405-6 Limited sources justification and approval.

(a) Orders placed under Federal Supply Schedules are exempt from the requirements in Part 6. However, an ordering activity must justify its action when restricting consideration--

(1) Of schedule contractors to fewer than required in 8.405-1 or 8.405-2; or

(2) To an item peculiar to one manufacturer (e.g., a particular brand name, product, or a feature of a product, peculiar to one manufacturer). A brand name item, whether available on one or more schedule contracts, is an item peculiar to one manufacturer. Brand name specifications shall not be used unless the particular brand name, product, or feature is essential to the Government's requirements, and market research indicates other companies' similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency's needs.

(b) Circumstances that may justify restriction cited in paragraph (a)(1) of this subsection include--* * * * *

(c) Ordering activities shall procure such requirements only if the need to do so is justified in writing and approved at the levels specified in paragraphs (f) and (h) of this subsection.

(d) Except as provided in paragraph (e) of this subsection, when an order contains brand name specifications, the ordering activity shall post the following information along with the Request for Quotation (RFQ) to e-Buy (http://www.ebuy.gsa.gov):

(1) For proposed orders exceeding $25,000, but not exceeding the simplified acquisition threshold, the documentation required by paragraph (f) of this subsection.

(2) For proposed orders exceeding the simplified acquisition threshold, the justification required by paragraph (g) of this subsection.

(e) The posting requirement of paragraph (d) of this subsection does not apply when--

(1) Disclosure would compromise the national security (e.g., would result in disclosure of classified information) or create other security risks. The fact that access to classified matter may be necessary to submit a proposal or perform the contract does not, in itself, justify use of this exception;

(2) The nature of the file (e.g., size, format) does not make it cost-effective or practicable for contracting officers to provide access through e-Buy; or

(3) The agency's senior procurement executive makes a written determination that access through e-Buy is not in the Government's interest.

* * * * *

(g) * * *

(2) * * *

(viii) A statement of the actions, if any, the agency may take to remove or overcome any barriers that led to the restricted consideration before any subsequent acquisition for the supplies or services is made.

* * * * *

7. Amend section 8.406-1 by revising the first sentence of the introductory text to read as follows:

8.406-1 Order placement.

Ordering activities may place orders orally (except for services requiring a statement of work (SOW) or orders containing brand name specifications that exceed $25,000) or use Optional Form 347, an agency-prescribed form, or an established electronic communications format to order supplies or services from schedule contracts. * * *

* * * * *

PART 11--DESCRIBING AGENCY NEEDS

8. Amend section 11.105 by--

a. Redesignating paragraphs (a), (b), and (c) as (a)(1), (a)(2)(i), and (a)(2)(ii) respectively; and adding new paragraphs (a)(3) and (b);

b. Amending newly redesignated paragraph (a)(2)(i) by removing ``and'' from the end of the paragraph and adding ``or'' in its place; and

c. Revising newly redesignated paragraph (a)(2)(ii). The revised and added text reads as follows:

11.105 Items peculiar to one manufacturer.

* * * * *

(a)(1) * * *

(2)(i) * * *

(ii) The basis for not providing for maximum practicable competition is documented in the file (see 13.106-1(b)) or justified (see 13.501) when the acquisition is awarded using simplified acquisition procedures.

(3) The documentation or justification is posted for acquisitions over $25,000. (See 5.102(a)(6).)

(b) For multiple award schedule orders, see 8.405-6.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

9. Amend section 13.105 by adding paragraph (c) to read as follows:

13.105 Synopsis and posting requirements.

* * * * *

(c) See 5.102(a)(6) for the requirement to post a brand name justification or documentation required by 13.106-1(b) or 13.501.

10. Amend section 13.106-1 by--

a. Amending paragraph (b)(1) by adding ``brand name'' after ``agreements,'';

b. Amending paragraph (b)(2) by adding ``(including brand name)'' after ``For sole source''; and

c. Adding a new paragraph (b)(3) to read as follows--

13.106-1 Soliciting competition.

* * * * *

(b) * * *

(3) See 5.102(a)(6) for the requirement to post the brand name justification or documentation.

* * * * *

13.106-3 [Amended]

11. Amend section 13.106-3 in paragraph (b)(3)(i) by adding ``(see 13.106-1 for brand name purchases)'' after ``competition''.

13.501 [Amended]

12. Amend section 13.501 by--0

a. Amending the paragraph heading in paragraph (a) by adding ``(including brand name)'' after ``Sole source'';

b. Amending paragraph (a)(1)(i) by adding ``(including brand name)'' after ``2.101,''; and

c. Amending paragraphs (a)(1)(ii) and (a)(2) by adding ``(including brand name)'' after ``sole source''.

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 2, 7, 11, 31, and 39

[FAC 2005-13; FAR Case 2004-018; Item II

Federal Acquisition Regulation; FAR Case 2004-018, Information Technology Security

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed to adopt as final without change, the interim rule amending the Federal Acquisition Regulation (FAR) to implement the Information Technology (IT) Security provisions of the Federal Information Security Management Act of 2002 (FISMA) (Title III of Public Law 107-347, the E-Government Act of 2002 (E-Gov Act)).

DATES: Effective Date: September 28, 2006.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact Ms. Cecelia Davis, Procurement Analyst, at (202) 219-0202. Please cite FAC 2005-13, FAR case 2004-018. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background DoD, GSA, and NASA published an interim rule in the Federal Register at 70 FR 57449, September 30, 2005 to implement the Information Technology (IT) Security provisions of the Federal Information Security Management Act of 2002 (FISMA) (Title III of Public Law 107-347, the E-Government Act of 2002 (E-Gov Act)). There was a correction published in the Federal Register at 70 FR 69100, November 14, 2005, deleting the definition at FAR 2.101 of``Sensitive But Unclassified (SBU) information.'' The Councils received five public comments in response to the interim rule. A discussion of the comments is provided below:

One commenter stated ``no comment'' in response to the data call. The remaining comments are shown below with the response. Comment: Two commenters disagreed with the term ``Sensitive But Unclassified (SBU) Information''. The commenters stated that SBU is defined but not found in the text of the interim rule. The commenters recommended deleting the term SBU or adding the language to support the definition.

Response: A technical amendment was published on November 14, 2005 to delete the SBU terminology from the definition. The councils have, therefore, excluded the term from the final rule.

Comment: One commenter requested including revisions to FAR 52.239-1(b) to the interim rule to include a specific reference to ``security programs under FISMA''.

Response: Paragraph (b) of the FAR clause at 52.239-1 includes a broad reference to programs, including security, which includes FISMA. Therefore, the councils do not concur with adding a specific reference for programs under FISMA.

Comment: One commenter stated the new FAR regulation is stimulating interest among the suppliers looking to maximize their security offerings and data center offerings. A major issue is the lack of recognition of a simple process that can be adopted by all agencies to allow suppliers to leverage their facility and personnel clearances across multiple Federal agencies. Another major issue is that the FAR regulation inhibits those still struggling to obtain or be sponsored for clearances. The commenter stated that the winners are those who have clearance today and this may stifle acquisition competition.

Response: Adding requirements to sponsor companies for clearances is outside the scope of this rule. The commenter should express the concern to agencies responsible for adjudicating clearances.

Comment: One commenter stated that it is essential that in implementing information security requirements for contractors, each agency strive for an approach that leverages its contractors' existing policies and practices and is also consistent with the approach of other Federal agencies. The commenter stated that agency policy makers should be mindful of recent steps taken in private industry, and should seek to leverage the additional security measures many companies have already adopted by allowing those measures to be a foundation for ensuring the protection of non-public agency information that a contractor may possess or control. The commenter recommended that FAR 39.101(d) be revised to read as follows:

``(d) In acquiring information technology, agencies shall include the appropriate information technology security policies and requirements. The security policies and requirements included by agencies shall (i) be consistent with applicable guidelines provided by the Commerce Department's National Institute of Standards and Technology, and (ii) to the maximum practicable extent, accommodate contractors' existing policies and practices for preventing the unauthorized access or disclosure of non-public information.''

Response: FISMA requires agencies to follow National Institute of Standards and Technology (NIST) guidance, but it does not state agencies must collaborate to establish procedures. In Fiscal Year 2005, OMB worked with agencies to determine whether there is unnecessary duplication of resources used to achieve common Governmentwide security requirements. The leveraging benefits were described in the FISMA 2004 Report to Congress by OMB dated March 1, 2005, which states that consolidation of commonly used information technology security process and technologies may reduce costs and increase security consistency and effectiveness across Government. The final rule requires agency planners to comply with the requirements in the Federal Information Security Management Act (44 U.S.C. 3544) in FAR 7.103(u), which includes evaluating private sector information security policies and practices, and this requirement does not need to be added to FAR 39.101. Furthermore, agencies are required to comply with the Federal Information Processing Standards Publications (FIPS PUBS), managed by NIST for IT standards and guidance in FAR 11.102. The Councils agreed to convert the interim rule to a final rule without change. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to this final rule. The Councils prepared a Final Regulatory Flexibility Analysis (FRFA), and it is summarized as follows:

This rule amends the Federal Acquisition Regulation to implement the information technology security provisions of the Federal Information Security Management Act of 2002 (FISMA), (Title III of Public Law 107-347, the E-Government Act of 2002 (E-Gov Act)). FISMA requires agencies to identify and provide information security protections commensurate with security risks to federal information collected or maintained for agency and information systems used or operated on behalf of an agency by a contractor.

The Councils considered all of the comments in finalizing the rule. An Initial Regulatory Flexibility Analysis (IRFA) was performed. The Councils did not receive any public comments on this issue from small business concerns or other interested parties in response to the IRFA. As stated in the IRFA, the FAR rule will itself have no direct impact on small business concerns. FISMA requires that agencies establish IT security policies that are commensurate with agency risk and potential for harm and that meet certain minimum requirements. The real implementation of this will occur at the agency level. The impact on small entities will, therefore, be variable depending on the agency implementation. The bulk of the policy requirements for information security are expected to be issued as either change to agency supplements to the FAR or as internal IT policies promulgated by the agency Chief Information Officer (CIO), or equivalent, to assure compliance with agency security policies. These agency supplements and IT policies may affect small business concerns in terms of their ability to compete and win federal IT contracts. The extent of the effect and impact on small business concerns is unknown and will vary from agency to agency due to the wide variances among agency missions and functions.

An interim rule was published in the Federal Register on September 30, 2005 (70 FR 57449), and a technical amendment was published in the Federal Register on November 14, 2005 (70 FR 69100). Five public comments were received in response to the interim rule. The public disagreed with the use of the term ``Sensitive But Unclassified (SBU) Information''. The technical amendment published on November 14, 2005, deleted the term from the final rule.

This rule imposes no additional reporting, recordkeeping, or other compliance requirements for firms under this rule.

There are no known significant alternatives that will accomplish the objectives of the rule. No alternatives were proposed during the public comment period.

Interested parties may obtain a copy of the FRFA from the FAR Secretariat. The FAR Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the changes to the FAR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 1, 2, 7, 11, 31, and 39

Government procurement.

Dated: September 19, 2006.Ralph De Stefano, Director, Contract Policy Division.

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR parts 1, 2, 7, 11, 31, and 39, which was published at 70 FR 57449, September 30, 2005, and a correction published at 70 FR 69100, November 14, 2005, is adopted as a final rule without change.

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 12, 14, and 15

[FAC 2005-13; FAR Case 2005-025; Item III;

Federal Acquisition Regulation; FAR Case 2005-025, Online Representations and Certifications Application (ORCA) Archiving Capability

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 (Councils) have agreed on an interim rule amending the Federal Acquisition Regulation (FAR) to address the record retention policy where the Online Representations and Certifications Application (ORCA) is used to submit an offeror's representations and certification.

DATES: Effective Date: September 28, 2006.

Comment Date: Interested parties should submit written comments to the FAR Secretariat on or before November 27, 2006 to be considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-13, FAR case 2005-025, by any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Search for this document at the ``Federal Acquisition Regulation'' agency and review the ``Document Title'' column; click on the Document ID number. Click on ``Add Comments''.

You may also search for any document using the ``Advanced search/document search'' tab, selecting from the agency field ``Federal Acquisition Regulation'', and typing the FAR case number in the keyword field.

Fax: 202-501-4067.

Mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405.

Instructions: Please submit comments only and citeFAC 2005-13, FAR case 2005-025, in all correspondence related to this case. All comments received will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact Mr. Ernest Woodson, Procurement Analyst, at (202) 501-3775. The TTY Federal Relay Number for further information is 1-800-877-8973. Please cite FAC 2005-13, FAR case 2005-025. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background Under FAR Subpart 4.12 prospective contractors are required to submit Annual Representations and Certifications via the Online Representations and Certifications Application (ORCA), a part of the Business Partner Network. Using ORCA eliminates the administrative burden for contractors of submitting the same information to various contracting offices, and establishes a common source for this information to procurement offices throughout the Government.

FAR 4.803(a)(11) requires contracting officers to include contractor representations and certifications in the contract file. Given ORCA's capability to archive a contractor's representations and certifications by date, contracting officers no longer need to file a paper copy of a contractor's representations and certifications in the contracting office contract files, but should incorporate archived ORCA records by reference, along with any changes submitted in the FAR provisions at 52.204-8 or 52.212-3, in the contract file to satisfy the contract file documentation requirements.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act The interim rule is not expected 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 management of the contract file is not accomplished by the vendor community, only by government contracting entities. Therefore, an Initial Regulatory Flexibility Analysis has not been performed. The Councils will consider comments from small entities concerning the affected FAR Parts 4, 12, 14, and 15 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 601, et seq. (FAC 2005-13, FAR case 2005-025), in correspondence.

C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the changes to the FAR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

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 because the rule addresses policy regarding the filing of proper documentation in the contract file by the contracting officer, which is internal to the Government, and not accomplished by the vendor community. However, pursuant to Public Law 98-577 and FAR 1.501, the Councils will consider public comments received in response to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 4, 12, 14, and 15

Government procurement.

Dated: September 19, 2006.Ralph De Stefano, Director, Contract Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 4, 12, 14, and 15 as set forth below:

1. The authority citation for 48 CFR parts 4, 12, 14, and 15 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

PART 4--ADMINISTRATIVE MATTERS

2. Amend section 4.803 by revising paragraph (a)(11) to read as follows:

4.803 Contents of contract files.

* * * * *

(a) * * *

(11) Contractor's representations and certifications (see 4.1201(c)).

* * * * *

3. Amend section 4.1201 by adding paragraph (c) to read as follows:

4.1201 Policy.

* * * * *

(c) Data in ORCA is archived and is electronically retrievable. Therefore, when a prospective contractor has completed representations and certifications electronically via ORCA, the contracting officer may reference the date of ORCA verification in the associated Government contract file, rather than including a paper copy of the electronically-submitted representations and certifications in the file. Such a reference satisfies contract file documentation requirements of 4.803(a)(11). However, if an offeror identifies changes to ORCA data pursuant to the FAR provisions at 52.204-8(c) or 52.212-3(k), the contracting officer must include a copy of the changes in the contract file.

PART 12--ACQUISITION OF COMMERCIAL ITEMS

4. Amend section 12.301 by revising the first sentence of paragraph (b)(2) to read as follows:

12.301 Solicitation provisions and contract clauses for the acquisition of commercial items.

* * * * *

(b)(2) * * * This provision provides a single, consolidated list of representations and certifications for the acquisition of commercial items and is attached to the solicitation for offerors to complete. * *

*

* * * * *

PART 14--SEALED BIDDING

5. Amend section 14.201-1 by adding to paragraph (c) a parenthetical following the third sentence to read as follows:

14.201-1 Uniform contract format.

* * * * *

(c) * * * (See 4.1201(c).) * * *

* * * * *

PART 15--CONTRACTING BY NEGOTIATION

6. Amend section 15.102 by revising the second sentence of paragraph (b) to read as follows:

15.102 Oral presentations.

* * * * *

(b) * * * However, representations and certifications shall be submitted as required in the FAR provisions at 52.204-8(c) or 52.212-3(k), and a signed offer sheet (including any exceptions to the Government's terms and conditions) shall be submitted in writing.* * * * *

7. Amend section 15.204-1 by adding to paragraph (b) a parenthetical following the second sentence to read as follows:

15.204-1 Uniform contract format.

* * * * *

(b) * * * (See 4.1201(c).) * * *

* * * * *

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 2, 4, 5, 6, 7, 8, 9, 12, 13, 15, 16, 17, 19, 22, 25, 28, 32, 36, 42, 48, 49, 50, 52, and 53

[FAC 2005-13; FAR Case 2004-033; Item IV;

Federal Acquisition Regulation; FAR Case 2004-033, Inflation Adjustment of Acquisition-Related Thresholds

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed on a final rule amending the Federal Acquisition Regulation (FAR) to adjust acquisition-related thresholds for inflation, in accordance with 41 U.S.C. 431a as added by section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). This rule also amends some acquisition-related thresholds that are based on policy rather than statute. Inflation adjustment of cost accounting standards (CAS) thresholds will be addressed in a separate case.

DATES: Effective Date: September 28, 2006.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact Mr. Michael Jackson, Procurement Analyst, at (202) 208-4949. Please cite FAC 2005-13, FAR case 2004-033. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

Statute. This final rule implements 41 U.S.C. 431a as added by Section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). 41 U.S.C. 431a provides for adjustment every 5 years of acquisition-related thresholds, except for Davis-Bacon Act, Service Contract Act, and trade agreements thresholds. This rule also escalates some nonstatutory acquisition-related thresholds. The statute does not permit escalation of acquisition-related thresholds established by the Davis Bacon Act, the Service Contract Act, or trade agreements. The statute does not authorize the FAR to escalate thresholds originating in executive order or the implementing agency (such as the Department of Labor or the Small Business Administration), unless the executive order or agency regulations are first amended.

Public Comments. DoD, GSA, and NASA published a proposed rule in the Federal Register at 70 FR 73415, December 12, 2005. We received eight responses to the proposed rule (available at http://www.regulations.gov/). All the responses were from Government personnel. Almost all the responses related to the proposed increase in the micro-purchase threshold. The Councils did not agree to any changes to the proposed rule based on the public comments. However, as addressed below, some of the thresholds have changed in the final rule.

Concur with rule

Comment: Two respondents concur with the rule without further comment.

Response: None required.

Micro-purchase threshold

Comment: Increase is not enough. One respondent is concerned that the increase in the micro-purchase threshold is totally insufficient. Response: The statute dictates the amount of the inflation adjustment, specifying the index to be used, and only allows inflation for a five-year period for those statutes that were in effect before October 1, 2000.

Comment: Concern for impact on small business. One respondent expressed concerns over negative impact on small business. The respondent did not favor the pending increase in the micro-purchase threshold from $2,500 to $3,000 because there is not a simultaneous increase in the simplified acquisition threshold (SAT), thereby reducing the number of acquisitions automatically set aside for small business. The respondent proposed that the SAT should be raised at the

same time as the increase in the micro-purchase threshold.

Response: The Councils addressed this issue in the Federal Register notice and the Initial Regulatory Flexibility Analysis. The increase in the micro-purchase threshold is required by statute. The statute does not provide flexibility in its application to acquisition-related thresholds. The escalation in accordance with the procedures set forth in the statute is mandatory. Following these procedures resulted in an escalation of $500 at this time for the micro-purchase threshold, and no escalation for the SAT, because of rounding as required by the statute. However, it is expected that the SAT will increase in year 2010, increasing the range for small business set-asides.

Discrepancy with Service Contract Act (SCA) is a problem

Comment: Three respondents are concerned that an increase in the micro-purchase threshold to $3,000 while the SCA threshold remains at $2,500 creates problems. Problems cited include--

This discrepancy will result in increased risk of purchase card holders violating the SCA. Monitoring the different thresholds adds to the overburdened purchase card program which was supposed to be a simple process;

The discrepancy poses a great burden on contracting as well as the credit card program and may have an adverse impact. The respondent understands that the statute prohibited increase in the SCA, but considers it logical to promote an initiative to amend the SCA to coincide with the micro-purchase threshold; and

This discrepancy is inviting violation of the provisions of the SCA, because many, if not most, of these purchases are made by non-contracting personnel who have no knowledge of the provisions of the SCA.

Response: As stated in the above response, the increase in the micro-purchase threshold is required by law, while the increase in the SCA threshold is prohibited by the law. Considering the specific prohibition of any increase in the SCA, the Councils consider it highly unlikely that any initiative to amend the SCA would meet with success.

The Councils have limited use of the purchase card for services valued in excess of $2,500 that are subject to the Service Contract Act, by adding a restriction to the definition of ``Micro-purchase threshold'' at FAR 2.101, so that it remains at $2,500 for services subject to the Service Contract Act. The Councils also recommend training for cardholders so that they will be able to identify which service contracts are subject to the Act.

Increase the Davis-Bacon Act threshold

Comment: One respondent recommended increase in the Davis-Bacon Act threshold.

Response: The statute specifically excludes the Davis-Bacon Act from any adjustment.

Increase the third party draft transaction threshold

Comment: One respondent recommends that, unless Treasury restrictions take precedence over FAR changes, this $2,500 threshold at FAR 13.305-3(b) also be raised to $3,000, consistent with other changes to the micro-purchase threshold in the proposed rule.

Response: The Treasury restrictions do take precedence. The statute does not authorize the FAR to escalate non-statutory thresholds originating in another agency unless the agency regulations are first amended.

Escalation. The inflation adjustment factors in the proposed rule were calculated on the basis of December 2004 data. For the final rule, data through October 2005 has been used. This resulted in a slight increase in the calculated inflation adjustment factors. For the five-year period October 2000 through October 2005, the inflation adjustment factor increased from 13 to 14.5 percent. However, due to rounding, most thresholds in the proposed rule did not actually change.

The following frequently used thresholds are the same in the final rule as in the proposed rule:

Micro-purchase threshold at FAR 2.101: ``$3,000''.

FPDS reporting threshold at FAR 4.602(c): ``$3,000''.

Commercial Items test program ceiling at FAR 13.500: ``$5,500,000''.

Prime contractor subcontracting plan floor at FAR 19.702: ``$550,000'' (but for construction ($1,000,000) is unchanged).

The following thresholds further increased from the proposed to the final rule:

Major system (DoD) at FAR 2.101: ``$173,500,000 and $814,500,000''.

J&A approval levels at FAR 6.304, 8.405-6, 13.501: ``$57,000,000 and $78,500,000''.

Bundling at FAR 7.107: ``$86,000,000 and $8,600,000''.

Treatment as a commercial item at FAR 12.102, 12.203, 13.000, 13.303-5, 13.500, 15.403-1(c)(3)(i): ``$11,000,000, $16,000,000, and $27,000,000''.

TINA cost and pricing data at FAR 15.403, 15.403-4, 42.7: ``$650,000''.

Multiyear cancellation ceiling notice to Congress, DoD at FAR 17.108(b): ``$114,500,000''.

The threshold of $5 million at FAR 19.1406(a)(2)(i) is the only threshold in the matrix of FAR thresholds that was not included in the text of the proposed rule, but is now included in the final rule, because the calculated threshold now rounds up to $5.5 million.

A matrix of the thresholds considered in the drafting of the final rule is available via the Internet at http://acquisition.gov/far/facsframe.html

Right to Petition

The Councils note that the statute provides the right to petition. If a dollar threshold adjustable under the statute is not included in this notice of adjustment, any person may request adjustment of that dollar threshold by submitting a petition for adjustment to the Administrator for Federal Procurement Policy. Please note, however, that due to rounding requirements, many thresholds that were considered for adjustment were not actually changed at this time because the inflation was insufficient to overcome the rounding requirements (e.g., thresholds of $1,000, $10,000, $100,000, and $1,000,000). These thresholds will probably be adjusted in year 2010, if inflation continues at a rate comparable to the current rate of inflation.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to this final rule. The Councils prepared a Final Regulatory Flexibility Analysis (FRFA), and it is summarized as follows:

Most of the threshold changes proposed in this rule will not have any significant economic impact on small business because they are intended to maintain the status quo by adjusting for changes in the value of the dollar. For example, the prime contractor subcontracting plan floor at FAR 19.702 for other than construction contacts will be raised from $500,000 to $550,000. This is just keeping pace with inflation.

Often any impact will be beneficial by preventing burdensome requirements from applying to more and more small dollar value acquisitions, which are the acquisitions in which small businesses are most likely to participate.

One respondent was specifically concerned about the impact on the small business community of the increase in the micro-purchase threshold without a corresponding increase in the simplified acquisition threshold, thereby temporarily narrowing the range of automatic set-asides for small business.

To assess the impact of the increase in the micro-purchase threshold from $2,500 to $3,000, data was requested from FPDS-NG. For Fiscal Year 2004, actions between $2,500 and $3,000, there is a total of 25,212 contract actions with a value of $13,732,445. Of this total, 16,031 (value of $8,083,900) of these actions went to small businesses. We expect that many of these awards will still go to small businesses, even if there is no longer a requirement to automatically set the procurement aside for small business.

The simplified acquisition threshold is expected to increase by a much greater amount five years from now when the thresholds are next adjusted, thereby increasing the range of automatic set-asides for small business.

The Councils did not make any changes in the final rule as a result of these comments, because the increases are dictated by statute.

Interested parties may obtain a copy from the FAR Secretariat. The FAR Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act The Paperwork Reduction Act does apply; however, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Numbers 9000-0006, 9000-0007, 9000-0013, 9000-0026, 9000-0027, 9000-0028, 9000-0029, 9000-0037, 9000-0043, 9000-0045, 9000-0065, 9000-0066, 9000-0070, 9000-0078, 9000-0094, 9000-0115, 9000-0138, 9000-0145, 9000-0150, and 1215-0072. They maintain the current information collection requirements at the status quo by adjusting the thresholds for inflation.

List of Subjects in 48 CFR Parts 1, 2, 4, 5, 6, 7, 8, 9, 12, 13, 15, 16, 17, 19, 22, 25, 28, 32, 36, 42, 48, 49, 50, 52, and 53

Government procurement.

Dated: September 19, 2006.Ralph De Stefano, Director, Contract Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 2, 4, 5, 6, 7, 8, 9, 12, 13, 15, 16, 17, 19, 22, 25, 28, 32, 36, 42, 48, 49, 50, 52, and 53 as set forth below:

1. The authority citation for 48 CFR parts 1, 2, 4, 5, 6, 7, 8, 9, 12, 13, 15, 16, 17, 19, 22, 25, 28, 32, 36, 42, 48, 49, 50, 52, and 53 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

2. Add section 1.109 to read as follows:

1.109 Statutory acquisition-related dollar thresholds--adjustment for inflation.

(a) 41 U.S.C. 431a requires that the FAR Council periodically adjust all statutory acquisition-related dollar thresholds in the FAR for inflation, except as provided in paragraph (c) of this section. This adjustment is calculated every 5 years, starting in October 2005, using the Consumer Price Index (CPI) for all-urban consumers, and supersedes the applicability of any other provision of law that provides for the adjustment of such acquisition-related dollar thresholds.

(b) The statute defines an acquisition-related dollar threshold as a dollar threshold that is specified in law as a factor in defining the scope of the applicability of a policy, procedure, requirement, or restriction provided in that law to the procurement of supplies or services by an executive agency, as determined by the FAR Council.

(c) The statute does not permit escalation of acquisition-related dollar thresholds established by the Davis-Bacon Act (40 U.S.C. 3141 through 3144, 3146, and 3147), the Service Contract Act of 1965 (41 U.S.C. 351, et seq.), or the United States Trade Representative pursuant to the authority of the Trade Agreements Act of 1979 (19 U.S.C. 2511 et seq).

(d) A matrix showing calculation of the most recent escalation adjustments of statutory acquisition-related dollar thresholds is available via the Internet at http://acquisition.gov/far/facsframe.html

.

PART 2--DEFINITIONS OF WORDS AND TERMS

3. Amend section 2.101 in paragraph (b) by--

a. Revising paragraph (1) of the definition ``Major system'', and removing from paragraph (2) ``$750,000 (based on fiscal year 1980 constant dollars)'' and adding ``$1.8 million'' in its place; and

b. Amending the definition ``Micro-purchase threshold'', by removing from the introductory paragraph ``2,500'' and adding ``3,000'' in its place; revising paragraph (1); redesignating paragraph (2) as paragraph

(3); and adding a new paragraph (2).

The revised text reads as follows:

2.101 Definitions.

* * * * *

(b) * * *

Major system * * *

(1) The Department of Defense is responsible for the system and the total expenditures for research, development, test, and evaluation for the system are estimated to be more than $173.5 million or the eventual total expenditure for the acquisition exceeds $814.5 million;

* * * * *

Micro-purchase threshold * * *

(1) For acquisitions of construction subject to the Davis-Bacon Act, $2,000;

(2) For acquisitions of services subject to the Service Contract Act, $2,500; and

* * * * *

PART 4--ADMINISTRATIVE MATTERS

4.601 [Amended]

4. Amend section 4.601 by removing from paragraph (a) and the introductory text of paragraph (d) ``$25,000'' and adding ``$3,000'' in their place; and by removing from paragraph (e) ``$5,000,000'' and adding ``$5.5 million'' in its place.

4.602 [Amended]

5. Amend section 4.602 by removing from paragraphs (c)(1) and (c)(3) ``$2,500'' and adding ``$3,000'' in their place; and by removing paragraph (c)(4).

PART 5--PUBLICIZING CONTRACT ACTIONS

6. Amend section 5.303 by revising paragraph (a) to read as follows:

5.303 Announcement of contract awards.

(a) Public announcement. Contracting officers shall make information available on awards over $3.5 million (unless another dollar amount is specified in agency acquisition regulations) in sufficient time for the agency concerned to announce it by 5 p.m. Washington, DC, time on the day of award. Agencies shall not release information on awards before the public release time of 5 p.m. Washington, DC time. Contracts excluded from this reporting requirement include--

(1) Those placed with the Small Business Administration under section 8(a) of the Small Business Act;

(2) Those placed with foreign firms when the place of delivery or performance is outside the United States and its outlying areas; and

(3) Those for which synopsis was exempted under 5.202(a)(1).* * * * *

PART 6--COMPETITION REQUIREMENTS

6.304 [Amended]

7. Amend section 6.304 by--

a. Removing from paragraph (a)(1) ``$500,000'' and adding ``$550,000'' in its place;

b. Removing from paragraph (a)(2) ``$500,000'' and ``$10,000,000'' and adding ``$550,000'' and ``$11.5 million'', respectively, in their place;

c. Removing from paragraph (a)(3) $10,000,000'', ``$50,000,000'', and ``$75,000,000'' and adding ``$11.5 million'', ``$57 million'', and ``$78.5 million'', respectively, in their place; and

d. Removing from paragraph (a)(4) ``$50,000,000'' and ``75,000,000'' and adding ``$57 million'' and ``$78.5 million'', respectively, in their place.

PART 7--ACQUISITION PLANNING

7.104 [Amended]

8. Amend section 7.104 by removing from paragraph (d)(2)(i)(A) ``$7 million'' and adding ``$7.5 million'' in its place; and removing from paragraph (d)(2)(i)(B) ``$5 million'' and adding ``$5.5 million'' in its place.

7.107 [Amended]

9. Amend section 7.107 by removing from paragraph (b)(1) ``$75 million'' and adding ``$86 million'' in its place; and removing from paragraph (b)(2) ``$7.5 million'' and ``75 million'' and adding ``$8.6 million'' and ``$86 million'', respectively, in their place.

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

8.405-6 [Amended]

10. Amend section 8.405-6 by--

a. Removing from paragraph (h)(1) ``$500,000'' and adding ``$550,000'' in its place;

b. Removing from paragraph (h)(2) ``$500,000, but not exceeding $10 million'' and adding ``$550,000, but not exceeding $11.5 million'' in its place;

c. Removing from the introductory text of paragraph (h)(3) ``$10 million'', ``$50 million'', and ``$75 million'', and adding ``$11.5 million'', ``$57 million'', and ``$78.5 million'', respectively, in

their place; and

d. Removing from the first sentence of paragraph (h)(4) ``$50 million'' and ``$75 million'' and adding ``$57 million'' and ``$78.5 million'', respectively, in their place.

PART 9--CONTRACTOR QUALIFICATIONS

9.405-2 [Amended]

11. Amend section 9.405-2 in the second sentence of the introductory text of paragraph (b) by removing ``$25,000'' and adding ``$30,000'' in its place.

9.409 [Amended]

12. Amend section 9.409 in paragraph (b) by removing ``$25,000'' and adding ``$30,000'' in its place.

PART 12--ACQUISITION OF COMMERCIAL ITEMS

12.102 [Amended]

13. Amend section 12.102 by removing from the introductory text of paragraph (f)(2) ``$15,000,000'' and adding ``$16 million'' in its place; and removing from paragraph (g)(1)(ii) ``$25 million'' and adding ``$27 million'' in its place.

12.203 [Amended]

14. Amend section 12.203 by removing from the last sentence ``$5 million'' and ``$10 million'' and adding ``$5.5 million'' and ``$11 million'', respectively, in their place.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

13.000 [Amended]

15. Amend section 13.000 by removing from the second sentence ``$5 million'' and ``$10 million'' and adding ``$5.5 million'' and ``$11 million'', respectively, in their place.

13.003 [Amended]

16. Amend section 13.003 by--

a. Removing from the first sentence of paragraph (b)(1) ``$2,500'' and adding ``$3,000'' in its place; and in the second sentence, by adding ``19.000(b) and'' after the word ``See''; and

b. Removing from paragraphs (c)(1)(ii) and (g)(2) ``$5 million'' and ``$10 million'' and adding ``$5.5 million'' and ``$11 million'', respectively, in their place.

13.005 [Amended]

17. Amend section 13.005 in paragraph (a)(2) by removing ``$25,000'' and adding ``$30,000 (40 U.S.C. 3132)'' in its place.

13.106-1 [Amended]

18. Amend section 13.106-1 by removing from paragraph (c)(2) and the first sentence of paragraph (d) ``$25,000'' and adding ``$30,000'' in their place.

13.303-5 [Amended]

19. Amend section 13.303-5 by removing from paragraph (b)(1) ``$5,000,000'' and ``$10,000,000'' and adding ``$5.5 million'' and ``$11 million'', respectively, in their place; and removing from paragraph (b)(2) ``$5 million'' and ``$10 million'' and adding ``$5.5 million'' and ``$11 million'', respectively, in their place.

13.402 [Amended]

20. Amend section 13.402 by removing from paragraph (a) ``$25,000'' and adding ``30,000'' in its place.

13.500 [Amended]

21. Amend section 13.500 by removing from the first sentence of paragraph (a) ``$5 million ($10 million'' and adding ``$5.5 million ($11 million'', respectively, in its place; and removing from the introductory text of paragraph (e) ``$10 million'' and adding ``$11 million'', respectively, in its place.

13.501 [Amended]

22. Amend section 13.501 by removing from paragraph (a)(2)(i) ``$500,000'' and adding ``$550,000'' in its place; removing from paragraph (a)(2)(ii) ``$500,000'' and ``$10,000,000'' and adding ``$550,000'' and ``$11.5 million''; respectively, in their place; removing from paragraph (a)(2)(iii) ``10,000,000'', ``50,000,000'', and ``75,000,000'' and adding ``11.5 million'', ``57 million'', and ``78.5 million'', respectively, in their place; and removing from paragraph (a)(2)(iv) ``50,000,000'' and ``75,000,000'' and adding ``57 million'', and ``78.5 million'', in its place.

PART 15--CONTRACTING BY NEGOTIATION

23. Amend section 15.304 by removing paragraph (c)(3)(i); redesignating paragraphs (c)(3)(ii), (c)(3)(iii), and (c)(3)(iv) as (c)(3)(i), (c)(3)(ii), and (c)(3)(iii), respectively; and revising the newly designated paragraph (c)(3)(i); and removing from paragraph (c)(4) ``$500,000'' and adding ``$550,000'' in its place. The revised text reads as follows:

15.304 Evaluation factors and significant subfactors.

* * * * *

(c) * * *

(3)(i) Except as set forth in paragraph (c)(3)(iii) of this section, past performance shall be evaluated in all source selections for negotiated competitive acquisitions expected to exceed the simplified acquisition threshold.

* * * * *

15.403-1 [Amended]

24. Amend section 15.403-1 by removing from paragraph (c)(3)(iii) ``$15,000,000'' and adding ``$16 million'' in its place.

25. Amend section 15.403-4 by removing from the third sentence of the introductory text of paragraph (a)(1) ``$550,000'' and adding ``$650,000'' in its place; and revising the second sentence of paragraph (a)(1)(iii) to read as follows:

15.403-4 Requiring cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 254b).

(a)(1) * * *

(iii) * * * Price adjustment amounts must consider both increases and decreases (e.g., a $200,000 modification resulting from a reduction of $500,000 and an increase of $300,000 is a pricing adjustment exceeding $650,000. * * *

* * * * *

15.404-3 [Amended]

26. Amend section 15.404-3 by removing from paragraph (c)(1)(i) ``$10,000,000'' and adding ``$11.5 million'' in its place.

15.407-2 [Amended]

27. Amend section 15.407-2 by removing from paragraphs (c)(1) and the introductory text of paragraph (c)(2) ``$10 million'' and adding ``$11.5 million'', respectively, in their place.

15.408 [Amended]

28. Amend section 15.408 in Table 15-2 following paragraph (m), in section II, Cost Elements, in the third sentence of paragraph (A)(2), by removing ``$10,000,000'' and adding ``$11.5 million'' in its place.

PART 16--TYPES OF CONTRACTS

16.503 [Amended]

29. Amend section 16.503 by removing from paragraph (d)(1) ``$10,000,000'' and adding ``$11.5 million'' in its place.

16.504 [Amended]

30. Amend section 16.504 by removing from the introductory text of paragraph (c)(2)(i) ``$10 million'' and adding ``$11.5 million'' in its place.

16.505 [Amended]

31. Amend section 16.505 by removing from paragraph (b)(1)(i) and the introductory text of paragraph (b)(2) ``$2,500'' and adding ``$3,000'' in its place.

16.506 [Amended]

32. Amend section 16.506 by removing from paragraphs (f) and (g) ``$10 million'' and adding ``$11.5 million'' in its place.

16.601 [Amended]

33. Amend section 16.601 by removing from paragraph (b)(3)(i) ``$25,000'' and adding ``$30,000'' in its place.

PART 17--SPECIAL CONTRACTING METHODS

17.108 [Amended]

34. Amend section 17.108 in paragraph (a) by removing ``$10 million'' and adding ``$11.5 million'' in its place; and in paragraph (b) by removing ``$100 million'' and adding ``$114.5 million'' in its place.

PART 19--SMALL BUSINESS PROGRAMS

19.502-1 [Amended]

35. Amend section 19.502-1 by removing from paragraph (b) ``$2,500'' and adding ``$3,000'' in its place.

19.502-2 [Amended]

36. Amend section 19.502-2 by removing from the first sentence of paragraph (a) ``$2,500'' and adding ``$3,000'' in its place; and removing from paragraph (d) ``$25,000'' and adding ``$30,000'' in its place.

19.702 [Amended]

37. Amend section 19.702 by removing from paragraphs (a)(1) and (a)(2) ``$500,000'' and adding ``$550,000'' in their place.

19.704 [Amended]

38. Amend section 19.704 by removing from paragraph (a)(9) ``$500,000'' and adding ``$550,000'' in its place.

19.708 [Amended]

39. Amend section 19.708 by removing from the first sentence of paragraph (b)(1) ``$500,000'' and adding ``$550,000'' in its place.

19.805-1 [Amended]

40. Amend section 19.805-1 by removing from paragraph (a)(2) ``$5,000,000'' and ``$3,000,000'' and adding ``$5.5 million'' and ``$3.5 million'', respectively, in their place.

19.1002 [Amended]

41. Amend section 19.1002 by removing from paragraph (1) of the definition ``Emerging small business reserve amount'', ``$25,000'' and adding ``$30,000'' in its place.

19.1007 [Amended]

42. Amend section 19.1007 by removing from paragraphs (c)(1)(i) and (c)(1)(ii) ``$25,000'' and adding ``$30,000'' in its place.

19.1008 [Amended]

43. Amend section 19.1008 by removing from paragraph (c) ``$25,000'' and adding ``$30,000'' in its place.

19.1202-2 [Amended]

44. Amend section 19.1202-2 by removing from paragraph (a) ``$500,000'' and adding ``$550,000'' in its place.

19.1306 [Amended]

45. Amend section 19.1306 by removing from paragraph (a)(2)(i) ``$5,000,000'' and adding ``$5.5 million'' in its place; and removing from paragraph (a)(2)(ii) ``$3,000,000'' and adding ``$3.5 million'' in its place.

19.1406 [Amended]

46. Amend section 19.1406 by removing from paragraph (a)(2)(i) ``$5 million'' and adding ``$5.5 million'' in its place.

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

22.103-4 [Amended]

47. Amend section 22.103-4 in paragraph (b) by removing the last sentence.

22.103-5 [Amended]

48. Amend section 22.103-5 in the introductory text of paragraph (b) by removing ``be over $100,000;'' and adding ``exceed the simplified acquisition threshold;'' in its place.

22.305 [Amended]

49. Amend section 22.305 by removing from paragraph (a) ``the simplified acquisition threshold;'' and adding ``$100,000;'' in its place.

22.1103 [Amended]

50. Amend section 22.1103 by removing from the second sentence ``$500,000'' and adding ``$550,000'' in its place.

22.1303 [Amended]

51. Amend section 22.1303 by removing from paragraphs (a) and (c) ``$25,000'' and adding ``$100,000'' in its place.

22.1310 [Amended]

52. Amend section 22.1310 by removing from the introductory text of paragraph (a)(1) ``$25,000'' and adding ``$100,000'' in its place.

PART 25--FOREIGN ACQUISITION

53. Amend section 25.1101 in the introductory text of paragraph (a)(1) by removing ``$2,500 ($15,000 for acquisitions as described in 13.201(g)(1))'' and adding ``the micro-purchase threshold'' in its place; and by revising paragraphs (e)(1) and (e)(2) to read as follows:

25.1101 Acquisition of supplies.

* * * * *

(e) * * *

(1) Exceeds the simplified acquisition threshold; or

(2) Does not exceed the simplified acquisition threshold, but the savings from waiving the duty is anticipated to be more than the administrative cost of waiving the duty. When used for acquisitions that do not exceed the simplified acquisition threshold, the contracting officer may modify paragraphs (c)(1) and (j)(2) of the clause to reduce the dollar figure.

* * * * *

25.1103 [Amended]

54. Amend section 25.1103 in paragraph (a) by removing ``with a value exceeding $2,500, $15,000 for acquisitions as described in 13.201(g)(1)''.

PART 28--BONDS AND INSURANCE

28.102-1 [Amended]

55. Amend section 28.102-1 by removing from the introductory text of paragraph (b)(1) ``$25,000'' and adding ``$30,000'' in its place.

28.102-2 [Amended]

56. Amend section 28.102-2 by removing from the heading of paragraph (c) ``$25,000'' and adding ``$30,000'' in its place.

28.102-3 [Amended]

57. Amend section 28.102-3 in the first sentence of paragraph (b) by removing ``$25,000'' and adding ``$30,000'' in its place.

PART 32--CONTRACT FINANCING

32.104 [Amended]

58. Amend section 32.104 by removing from paragraphs (d)(2)(i) and (d)(2)(ii) ``$2 million'' and adding ``$2.5 million'' in their place.

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

36.201 [Amended]

59. Amend section 36.201 by removing from paragraph (a)(1)(i) ``$500,000'' and adding ``$550,000'' in its place.

60. Amend section 36.203 by revising paragraph (a) to read as follows:

36.203 Government estimate of construction costs.

(a) An independent Government estimate of construction costs shall be prepared and furnished to the contracting officer at the earliest practicable time for each proposed contract and for each contract modification anticipated to exceed the simplified acquisition threshold. The contracting officer may require an estimate when the cost of required work is not anticipated to exceed the simplified acquisition threshold. The estimate shall be prepared in as much detail as though the Government were competing for award.

* * * * *

61. Amend section 36.213-2 by revising paragraph (a) to read as follows:

36.213-2 Presolicitation notices.

(a) Unless the requirement is waived by the head of the contracting activity or a designee, the contracting officer shall issue presolicitation notices on any construction requirement when the proposed contract is expected to exceed the simplified acquisition threshold. Presolicitation notices may also be used when the proposed contract is not expected to exceed the simplified acquisition threshold. These notices shall be issued sufficiently in advance of the invitation for bids to stimulate the interest of the greatest number of prospective bidders.

* * * * *

36.604 [Amended]

62. Amend section 36.604 by removing from the introductory text of paragraph (a) ``$25,000'' each time it appears (twice) and adding ``$30,000'' in its place.

36.605 [Amended]

63. Amend section 36.605 by removing from the first sentence of paragraph (a) ``$100,000'' and adding ``the simplified acquisition threshold'' in its place.

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

42.705-3 [Amended]

64. Amend section 42.705-3 by removing from the fourth sentence of the introductory text of paragraph (b)(4)(ii) ``(e.g., $100,000 or less)'' and adding ``(i.e., contracts that do not exceed the simplified acquisition threshold)'' in its place.

42.709 [Amended]

65. Amend section 42.709 by removing from paragraph (b) ``$550,000'' and adding ``$650,000'' in its place.

42.709-6 [Amended]

66. Amend section 42.709-6 by removing from the first sentence ``$550,000'' and adding ``$650,000'' in its place.

67. Amend section 42.1502 by revising the first sentence of paragraph (a) to read as follows:

42.1502 Policy.

(a) Except as provided in paragraph (b) of this section, agencies shall prepare an evaluation of contractor performance for each contract that exceeds the simplified acquisition threshold at the time the work under the contract is completed. * * *

* * * * *

PART 48--VALUE ENGINEERING

48.201 [Amended]

68. Amend section 48.201 by removing from the first sentence of the introductory text of paragraph (a) ``be $100,000 or more,'' and adding ``exceed the simplified acquisition threshold,'' in its place.

48.202 [Amended]

69. Amend section 48.202 by removing from the first sentence ``be $100,000 or more,'' and adding ``exceed the simplified acquisition threshold,'' in its place.

PART 49--TERMINATION OF CONTRACTS

70. Amend section 49.502 by revising the heading of paragraph (a) and the introductory text of paragraph (a)(1); revising the heading of paragraph (b), removing from the introductory text of paragraph (b)(1)(i) and paragraph (b)(2)(ii) ``be over $100,000,'' and adding ``exceed the simplified acquisition threshold''.

The revised text reads as follows:

49.502 Termination for convenience of the Government.

(a) Fixed-price contracts that do not exceed the simplified acquisition threshold (short form)--(1) General use. The contracting officer shall insert the clause at 52.249-1, Termination for Convenience of the Government (Fixed-Price) (Short Form), in solicitations and contracts when a fixed-price contract is contemplated and the contract amount is not expected to exceed the simplified acquisition threshold, except--

* * * * *

(b) Fixed-price contracts that exceed the simplified acquisition threshold--(1)(i) General use. * * *

* * * * *

PART 50--EXTRAORDINARY CONTRACTUAL ACTIONS

50.201 [Amended]

71. Amend section 50.201 by removing from paragraph (b) ``$50,000'' and adding ``$55,000'' in its place.

50.203 [Amended]

72. Amend section 50.203 by removing from paragraph (b)(4) ``$25 million'' and adding ``$28.5 million'' in its place; and removing from paragraphs (e)(1)(i) and (e)(1)(ii) ``$50,000'' and adding ``$55,000'' in its place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

52.203-6 [Amended]

73. Amend section 52.203-6 by revising the date of the clause to read ``(SEP 2006)''; and removing from paragraph (c) ``$100,000'' and adding ``the simplified acquisition threshold'' in its place.

52.209-6 [Amended]

74. Amend section 52.209-6 by revising the date of the clause to read ``(SEP 2006)''; and removing from paragraphs (a) and (b) ``$25,000'' and adding ``$30,000'' in its place.

52.212-1 [Amended]

75. Amend section 52.212-1 by revising the date of the clause to read ``(SEP 2006)''; and removing from the first sentence of paragraph (j) ``$25,000'' each time it appears (twice) and adding ``$3,000'' in its place.

52.212-5 [Amended]

76. Amend section 52.212-5 by--

a. Revising the date of the clause to read ``(SEP 2006)'';

b. Removing from paragraph (b)(1) ``(OCT 1995)'' and adding ``(SEP 2006)'' in its place;

c. Removing from paragraph (b)(8)(i) of the clause ``(JULY 2005)'' and adding ``(SEP 2006)'' in its place;

d. Removing from paragraphs (b)(18) and (b)(20) of the clause ``(DEC 2001)'' and adding ``(SEP 2006)'' in its place; and0

e. Removing from paragraph (e)(1)(i) ``$500,000'' and adding ``$550,000'' in its place; and removing from paragraph (e)(1)(iii) ``(DEC 2001)'' and adding ``(SEP 2006)'' in its place.

52.213-4 [Amended]

77. Amend section 52.213-4 by--

a. Revising the date of the clause to read ``(SEP 2006)'';

b. Removing from paragraph (a)(2)(vi) ``(FEB 2006)'' and adding ``(SEP 2006)'' in its place; and

c. Removing from paragraphs (b)(1)(iii) and (b)(1)(v) ``(DEC 2001)'' and ``$25,000'' and adding ``(SEP 2006)'' and ``$100,000'', respectively, in their place; and removing from paragraph (b)(2)(i) ``(JAN 2005)'' and ``$25,000'' and adding ``(SEP 2006)'' and ``$30,000'', respectively, in their place.

52.219-9 [Amended]

78. Amend section 52.219-9 by revising the date of the clause to read ``(SEP 2006)''; and removing from paragraph (d)(9) ``$500,000'' and adding ``$550,000'' in its place.

52.222-35 [Amended]

79. Amend section 52.222-35 by revising the date of the clause to read ``(SEP 2006)''; and removing from the first sentence of paragraph (g) ``$25,000'' and adding ``$100,000'' in its place.

52.222-37 [Amended]

80. Amend section 52.222-37 by revising the date of the clause to read ``(SEP 2006)''; and removing from paragraph (f) ``$25,000'' and adding ``$100,000'' in its place.

81. Amend section 52.236-1 by revising the introductory paragraph to read as follows:

52.236-1 Performance of Work by the Contractor.

As prescribed in 36.501(b), insert the following clause: [Complete the clause by inserting the appropriate percentage consistent with the complexity and magnitude of the work and customary or necessary specialty subcontracting (see 36.501(a)).]

* * * * *

82. Amend section 52.243-7 by revising the introductory paragraph to read as follows:

52.243-7 Notification of Changes.

As prescribed in 43.107, insert the following clause:

* * * * *

52.244-6 [Amended]

83. Amend section 52.244-6 by revising the date of the clause to read ``(SEP 2006)''; removing from paragraph (c)(1)(i) ``$500,000'' and adding ``$550,000'' in its place, and removing from paragraph (c)(1)(iii) of the clause ``(DEC 2001)'' and adding ``(SEP 2006)'' in its place.

52.248-3 [Amended]

84. Amend section 52.248-3 by revising the date of the clause to read ``(SEP 2006)''; and removing from the first sentence of paragraph (h) ``$50,000'' and adding ``$55,000'' in its place.

85. Amend section 52.249-1 by revising the introductory paragraph to read as follows:

52.249-1 Termination for Convenience of the Government (Fixed-Price) (Short Form).

As prescribed in 49.502(a)(1), insert the following clause:

* * * * *

PART 53--FORMS

53.219 [Amended]

86. Amend section 53.219 by removing from paragraphs (a) and (b) ``(Rev. 10/01)'' and adding ``(Rev. SEP 2006)'' in its place.

87. Amend section 53.301-294 by revising the form to read as follows:

(See PDF Version of FAC)

53.301-294 Subcontracting Report for Individual Contracts.

88. Amend section 53.301-295 by revising the form to read as follows:

(See PDF Version of FAC)

53.301-295 Summary Subcontract Report.

(See PDF Version of FAC)

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 22, 25, and 52

[FAC 2005-13; FAR Case 2005-030; Item V;

Federal Acquisition Regulation; FAR Case 2005-030, Trade Agreements--Thresholds

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have adopted as final, without change, an interim rule amending the Federal Acquisition Regulation (FAR) to implement the increased thresholds for the World Trade Organization Government Procurement Agreement and Free Trade Agreements.

DATES: Effective Date: September 28, 2006.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact Ms. Jeritta Parnell, Procurement Analyst, at (202) 501-4082. Please cite FAC 2005-13, FAR case 2005-030. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background The Councils published an interim rule in the Federal Register at 71 FR 864, January 5, 2006, to implement the increased thresholds for the World Trade Organization Government Procurement Agreement and Free Trade Agreements. Every two years, the trade agreements thresholds are escalated according to a pre-determined formula set forth in the agreements. The United States Trade Representative published the new thresholds in the Federal Register at 70 FR 73510 to 73511, December 12, 2005. No comments were received by the close of the public comment period on March 6, 2006, therefore, the Councils agreed to convert the interim rule to a final rule.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act The Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration certify that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the threshold changes are in line with inflation and only maintain the status quo.

C. Paperwork Reduction Act The Paperwork Reduction Act does apply, because the final rule affects the certification and information collection requirements in the provisions at FAR 52.212-3, 52.225-4, 52.225-6, and 52.225-11 currently approved under OMB clearances 9000-0136, 9000-0130, 9000-0025, and 9000-0141 respectively. There is, however, no change to these clearances because the threshold changes are due to inflation and only maintain the status quo. As a result, these FAR changes do not impose additional information collection requirements.

List of Subjects in 48 CFR Parts 22, 25, and 52

Government procurement.

Dated: September 19, 2006 Ralph De Stefano, Director,Contract Policy Division.

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR parts 22, 25 and 52, which was published at 71 FR 864, January 5, 2006, is adopted as a final rule without change.

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 25 and 52

[FAC 2005-13; FAR Case 2005-034; Item VI;

Federal Acquisition Regulation; FAR Case 2005-034, Reporting of Purchases from Overseas Sources

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 (Councils) have agreed on an interim rule amending the Federal Acquisition Regulation (FAR) to implement Section 837 of Division A of the Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006 (Pub. L. 109-115) and similar sections in subsequent appropriations acts. Section 837 requires the head of each Federal agency to submit a report to Congress relating to acquisitions of articles, materials, or supplies that are manufactured outside the United States. This rule amends the FAR to request from offerors necessary data regarding place of manufacture.

DATES: Effective Date: September 28, 2006.

Applicability Date: This amendment is mandatory for solicitations issued and contracts awarded on or after October 1, 2006. To meet the congressionally mandated reporting requirement, agencies may incorporate the new FAR provision 52.225-18 or corresponding requirement at 52.212-3 in solicitations issued or contracts awarded prior to October 1, 2006.

Comment Date: Interested parties should submit written comments to the FAR Secretariat on or before November 27, 2006 to be considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-13, FAR case 2005-034, by any of the following methods:

FederaleRulemaking Portal: http://www.regulations.gov. Search for this document at the ``Federal Acquisition Regulation'' agency and review the ``Document Title'' column; click on

the Document ID number. Click on ``Add Comments''.

You may also search for any document using the ``Advanced search/document search'' tab, selecting from the agency field ``Federal Acquisition Regulation'', and typing the FAR case number in the keyword field.

Fax: 202-501-4067.

Mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405.

Instructions: Please submit comments only and cite FAC 2005-13, FAR case 2005-034, in all correspondence related to this case. All comments received will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information

provided.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact Mr. Jeremy Olson at (202) 501-3221. Please cite FAC 2005-13, FAR case 2005-034. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755. Please cite FAR case 2005-034.

SUPPLEMENTARY INFORMATION:

A. Background

Section 837 of Division A of the Fiscal Year 2006 Consolidated Appropriations Act (Pub. L. 109-115) requires the head of each Federal agency to submit a report to Congress on the dollar value of acquisitions made by the agency of articles, materials, or supplies that are manufactured outside the United States. The law also requests an itemized list of all waivers granted with respect to such articles, materials, or supplies under the Buy American Act and a summary of the total procurement funds spent on goods manufactured in the United States. Similar requirements were contained in the Fiscal Year 2004 and 2005 Consolidated Appropriations Acts (Section 645 of Division F, Pub. L. 108-199 and Section 641 of Division H, Pub. L. 108-447, respectively), and the Councils anticipate that this requirement will continue for at least several years into the future.

For purposes of this report, the criteria established in the law is only whether an end product is manufactured in the United States or outside the United States, without regard to the origin of the components (see 25.001(c)). FAR Part 25 defines the ``United States'' to include the 50 States, the District of Columbia, and the outlying areas. ``Outlying areas'' are defined in FAR Subpart 2.1 to include commonwealths, territories, and minor outlying islands of the United States.

Agency reporting will be geared to collection of data at the acquisition level, rather than the line item level. All data in the Federal Procurement Data System is currently collected at the acquisition level. The Councils considered the possibility of requiring the reporting to be on a line item basis, but rejected this approach because the excessive reporting burden far outweighed any additional accuracy of reporting that might be achieved. Since reporting is to be provided at the level of each acquisition, over-reporting is avoided by reporting only those acquisitions that are predominantly for the acquisition of manufactured end products.

Likewise, the offeror will report manufacture inside or outside the United States and its outlying areas based on the predominance of the manufactured goods offered, and the contracting officer will select the predominant reason for acquiring the foreign manufactured end products, if more than one reason applies.

Using this total acquisition approach, the Councils therefore adopt the following minimum requirements for the report:

1. Provide dollar value of acquisitions of predominantly manufactured end products, broken down into--

a. Place of manufacture is outside the United States and its outlying areas;

b. Place of manufacture is inside the United States or its outlying areas; and

c. Total of a. and b.

2. For acquisitions in paragraph 1.a., provide the number of acquisitions in each exception category, and the total number of such acquisitions. The exception categories are--

Use outside the United States;

Resale;

Commercial information technology;

Public interest determination;

Trade agreements;

Domestic nonavailability;

Unreasonable cost; and

Qualifying country - For DoD only, the foreign manufactured end products are predominantly qualifying country end products (DFARS 225.003 and 225.872-1).

In order to fulfill these minimum reporting requirements, the agencies will need additional data--

From offerors, as to whether manufactured end products are predominantly manufactured in the United States or its outlying areas, or outside the United States and its outlying areas; and

From contracting officers, as to the predominant reason for acquisition of foreign manufactured end products.

This interim rule adds a FAR provision 52.225-18, Place of Manufacture, in order to collect the necessary data on place of manufacture. A corresponding requirement has been added to FAR 52.212-

3, Offeror Representations and Certifications--Commercial Items. The contracting officer determines the use of 52.225-18 based on estimation of whether the solicitation is predominantly for the acquisition of manufactured end products (i.e., the estimated value of the manufactured end products equals or exceeds the estimated value of other items to be acquired as a result of the solicitation.) The provision defines a ``manufactured end product'' to include any product code purchased by the Government except for certain Federal Supply Groups or Classes that are excluded from the definition. The provision also defines ``place of manufacture'' to mean the place where an end product is assembled out of components, or otherwise made or processed from raw materials into the finished product that is to be provided to the Government. If a product is disassembled and reassembled, the place of reassembly is not the place of manufacture.

The Councils will coordinate with Federal Procurement Data System (FPDS) personnel, so that the data system can accommodate the data set forth in this notice as necessary to meet the statutory reporting requirement. FPDS will provide a standardized report of purchases from sources outside the United States based on the required fields. It is anticipated that a standardized report will facilitate the ability of agencies to meet the reporting requirement.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act The interim rule is not expected 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 this interim rule does not change the rules for buying, it only adds an information collection requirement. It will not have a significant economic impact to ask offerors of manufactured end products to check off a box to indicate whether products offered to the Government are predominantly manufactured in the United States or outside the United States. The offeror is not even required to identify the country of manufacture if the product is manufactured outside the United States. Therefore, an Initial Regulatory Flexibility Analysis has not been performed. The Councils will consider comments from small entities concerning the affected FAR Parts 25 and 52 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 601, et seq. (FAC 2005-13, FAR case 2005-034), in correspondence.

C. Paperwork Reduction Act The Paperwork Reduction Act (Pub. L. 104-13) applies because the interim rule contains information collection requirements. Accordingly, a request for approval of a new information collection requirement concerning FAR 52.225-18 was forwarded to the Office of Management and Budget under 44 U.S.C. 3501, et seq. Public comments concerning this request will be invited through a subsequent Federal Register notice.

There will be an estimated 38,146 burden hours for the new provision 52.225-18, Place of Manufacture. Accordingly, in accordance with 5 CFR 1320.13, the FAR Secretariat has obtained an emergency approval of a new information collection requirement concerning OMB Control Number 9000-0161, FAR Case 2005-034, Reporting of Purchases from Overseas Sources, from the Office of Management and Budget under 44 U.S.C. 3501, et seq.

Annual Reporting Burden:

We estimate the annual total burden hours as follows:

Based on the FPDS data for Fiscal Year 2004 on number of contract actions for Federal supplies and equipment (summary by PSC group), we estimate the number of solicitations predominantly for manufactured supplies and equipment equals 762,920 and the number of responses to the solicitations equals 3,814,600 (average of 5 responses per solicitation). We further estimate the number of respondents at 95,365, based on an estimate of 40 responses per respondent. The total response burden hours equals 38,146 hours (3,814,600 responses x average of .01 hours per response).

Respondents: 95,365

Responses per respondent: 40

Total annual responses: 3,814,600

Preparation hours per response: .01

Total response burden hours: 38,146

D. Request for Comments Regarding Paperwork Burden

Submit comments, including suggestions for reducing this burden, not later than November 27, 2006 to: FAR Desk Officer, OMB, Room 10102, NEOB, Washington, DC 20503, and a copy to the General Services Administration, FAR Secretariat (VIR), 1800 F Street, NW, Room 4035, Washington, DC 20405.

Public comments are particularly invited on: whether this collection of information is necessary for the proper performance of functions of the FAR, and will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.

Requester may obtain a copy of the justification from the General Services Administration, FAR Secretariat (VIR), Room 4035, Washington, DC 20405, telephone (202) 501-4755. Please cite OMB Control Number 9000-0161, FAR Case 2005-034, Reporting of Purchases from Overseas Sources, in all correspondence.

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 because the report for Fiscal Year 2006 is due within 180 days after the end of the fiscal year and it is particularly important that this rule be implemented before the beginning of the next fiscal year in order to start collecting data in this fiscal year and to have data covering the entire Fiscal Year 2007. However, pursuant to Public Law 98-577 and FAR 1.501, the Councils will consider public comments received in response to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 25 and 52

Government procurement.

Dated: September 19, 2006 Ralph De Stefano, Director, Contract Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 25 and 52 as set forth below:

1. The authority citation for 48 CFR parts 25 and 52 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

PART 25--FOREIGN CONTRACTING

2. Revise section 25.001(c) to read as follows:

25.001 General.

* * * * *

(c) The test to determine the country of origin for an end product under the Buy American Act (see the various country ``end product'' definitions in 25.003) is different from the test to determine the country of origin for an end product under the trade agreements, or the criteria for the report on end products manufactured outside the United States (see 25.004).

(1) The Buy American Act uses a two-part test to define a ``domestic end product'' (manufacture in the United States and a formula based on cost of domestic components).

(2) Under the trade agreements, the test to determine country of origin is ``substantial transformation'' (i.e., transforming an article into a new and different article of commerce, with a name, character, or use distinct from the original article).

(3) For the reporting requirement at 25.004, the only criterion is whether the place of manufacture of an end product is in the United States or outside the United States, without regard to the origin of the components.

3. Add section 25.004 to read as follows:

25.004 Reporting of acquisition of end products manufactured outside the United States.

(a) In accordance with the requirements of Section 837 of Division A of the Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006 (Pub. L. 109-115) and similar sections in subsequent appropriations acts, the head of each Federal agency must submit a report to Congress on the amount of the acquisitions made by the agency from entities that manufacture end products outside the United States in that fiscal year.

(b) This report will be partially based on information collected from offerors using solicitation provision 52.225-18, Place of Manufacture (and its commercial item equivalent in 52.212-3, Offeror Representations and Certifications-Commercial Items). For purposes of this report, the criteria established in the law is only whether the place of manufacture of an end product is in the United States or outside the United States, without regard to the origin of the components (see 25.001(c)).0

4. Amend section 25.1101 by adding paragraph (f) to read as follows:

25.1101 Acquisition of supplies.

* * * * *

(f) Insert the provision at 52.225-18, Place of Manufacture, in solicitations that are predominantly for the acquisition of manufactured end products, as defined in the provision at 52.225-18 (i.e., the estimated value of the manufactured end products exceeds the estimated value of other items to be acquired as a result of the solicitation).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Amend section 52.212-3 by--

a. Revising the date of the provision;

b. Amending the introductory paragraph of the provision by removing from the first sentence ``paragraph (j)'' and adding ``paragraph (k)'' in its place; and by removing from the second sentence ``paragraphs (b) through (i)'' and adding ``paragraphs (b) through (j)'' in its place;0

c. Amending paragraph (a) by removing from the end of the introductory paragraph the colon and adding an em dash in its place; and by adding in alphabetical order, the definitions ``Manufactured end product'' and ``Place of manufacture'';

d. Redesignating paragraph ``j'' as paragraph ``k''; and adding new paragraph ``j'';

e. In the newly designated paragraph (k)(1), removing ``paragraph (j)'' and adding ``paragraph (k)(2)'' in its place; and

f. In the newly designated paragraph (k)(2), in the bracketed paragraph, removing ``(b) through (i)'' and adding ``(b) through (j)'' in its place.

The revised text reads as follows:

52.212-3 Offeror Representations and Certifications--Commercial Items.

* * * * *

OFFEROR REPRESENTATIONS AND CERTIFICATIONS-COMMERCIAL ITEMS (SEP 2006)

* * * * *

(a) * * *

Manufactured end product means any end product in Federal Supply Classes (FSC) 1000-9999, except--

(1) FSC 5510, Lumber and Related Basic Wood Materials;

(2) Federal Supply Group (FSG) 87, Agricultural Supplies;

(3) FSG 88, Live Animals;

(4) FSG 89, Food and Related Consumables;

(5) FSC 9410, Crude Grades of Plant Materials;

(6) FSC 9430, Miscellaneous Crude Animal Products, Inedible;

(7) FSC 9440, Miscellaneous Crude Agricultural and Forestry Products;

(8) FSC 9610, Ores;

(9) FSC 9620, Minerals, Natural and Synthetic; and

(10) FSC 9630, Additive Metal Materials.

Place of manufacture means the place where an end product is assembled out of components, or otherwise made or processed from raw materials into the finished product that is to be provided to the Government. If a product is disassembled and reassembled, the place of reassembly is not the place of manufacture.

* * * * *

(j) Place of manufacture. (Does not apply unless the solicitation is predominantly for the acquisition of manufactured end products.) For statistical purposes only, the offeror shall indicate whether the place of manufacture of the end products it expects to provide in response to this solicitation is predominantly--

(1) [square] In the United States (Check this box if the total anticipated price of offered end products manufactured in the United States exceeds the total anticipated price of offered end products manufactured outside the United States); or

(2) [ ] Outside the United States.

* * * * *

(End of provision)

6. Add section 52.225-18 to read as follows:

52.225-18 Place of Manufacture.

As prescribed in 25.1101(f), insert the following solicitation provision:

PLACE OF MANUFACTURE (SEP 2006)

(a) Definitions. As used in this clause--

Manufactured end product means any end product in Federal Supply Classes (FSC) 1000-9999, except--

(1) FSC 5510, Lumber and Related Basic Wood Materials;

(2) Federal Supply Group (FSG) 87, Agricultural Supplies;

(3) FSG 88, Live Animals;

(4) FSG 89, Food and Related Consumables;

(5) FSC 9410, Crude Grades of Plant Materials;

(6) FSC 9430, Miscellaneous Crude Animal Products, Inedible;

(7) FSC 9440, Miscellaneous Crude Agricultural and Forestry Products;

(8) FSC 9610, Ores;

(9) FSC 9620, Minerals, Natural and Synthetic; and

(10) FSC 9630, Additive Metal Materials.

Place of manufacture means the place where an end product is assembled out of components, or otherwise made or processed from raw materials into the finished product that is to be provided to the Government. If a product is disassembled and reassembled, the place of reassembly is not the place of manufacture.

(b) For statistical purposes only, the offeror shall indicate whether the place of manufacture of the end products it expects to provide in response to this solicitation is predominantly--

(1) [square] In the United States (Check this box if the total anticipated price of offered end products manufactured in the United States exceeds the total anticipated price of offered end products manufactured outside the United States); or

(2) [ ] Outside the United States.

(End of provision)

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 25

[FAC 2005-13; FAR Case 2005-022; Item VII;

Federal Acquisition Regulation; FAR Case 2005-022, Exception to the Buy American Act for Commercial Information Technology

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed to convert to a final rule without change, an interim rule amending the Federal Acquisition Regulation (FAR) to implement Section 535(a) of Division F of the Consolidated Appropriations Act, 2004, and similar sections in subsequent appropriations acts. Section 535(a) authorizes an exception to the Buy American Act for acquisitions of information technology that are commercial items.

DATES: Effective Date: September 28, 2006.

FOR FURTHER INFORMATION CONTACT For clarification of content, contact Mr. Jeremy Olson, at (202) 501-3221. Please cite FAC 2005-13, FAR case 2005-022. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background This final rule amends the Federal Acquisition Regulation to implement annual appropriations act provisions that exempt acquisitions of information technology that are commercial items from the Buy American Act, including--

Section 535(a) of Division F, Consolidated Appropriations Act, 2004 (Pub. L. 108-199);

Section 517 of Division H, Title V of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447); and

Section 717 of Division A, Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006 (Pub. L. 109-115).

This exception was initially implemented through deviations by the individual agencies, until it became clear that it was not just for one year. The Councils now expect this exception to continue to appear in future appropriations acts. If the exception does not appear in a future appropriations act, the Councils will promptly change the FAR to limit applicability of the exception to the fiscal years to which it applies. DoD, GSA, and NASA published an interim rule in the Federal Register at 71 FR 223, January 3, 2006 and the public comment period closed on March 6, 2006.

Public comments. The Councils addressed the two public comments as follows:

Agree with rule

One respondent concurs with the rule as written. The respondent views this rule as a positive first step in recognizing the Government's need for quicker, cheaper access to commercial-off-the-shelf information technology.

Response: None required.

Rule should not apply to DoD

The other respondent believes that the exception should not apply to DoD due to the security risk associated with foreign entities potentially gaining access to DoD information systems.

Response: This rule implements statute. The statutes that the Councils are implementing do not exempt DoD. Each fiscal year statute states that the restrictions of the Buy American Act shall not apply to the acquisition by the Federal Government of information technology that is a commercial item.

Although DoD uses DoD-unique Buy American Act/Free Trade Agreement provisions and clauses, this exception has already been implemented by DoD for Fiscal Years 2004 through 2006 by class deviations signed by the Director of Defense Procurement and Acquisition Policy (2004-O0003, 2005-O0004, 2005-O0010).

Regardless of the applicability of the Buy American Act, Defense FAR Supplement (DFARS) Subpart 239.71, Security and Privacy for Computer Systems, requires defense agencies to ensure that information assurance is provided for information technology in accordance with current policies, procedures, and statutes. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to this final rule. The Councils prepared a Final Regulatory Flexibility Analysis (FRFA), and it is summarized as follows:

The objective of this rule is to promote Government access to commercial information technology. As a result of this exception, the Buy American Act will no longer apply to acquisitions of commercial information technology. The Free Trade Agreement non-discriminatory provisions are no longer necessary, since all products will be treated without the restrictions of the Buy American Act. The final rule applies to all offerors responding to solicitations for commercial information technology where the Buy American Act previously applied (generally, acquisitions between the micro-purchase threshold and $193,000). This impact analysis does not include the Department of Defense, which applies this exception to DoD-unique Buy American Act/Free Trade Agreement provisions and clauses under a separate case (DFARS Case 2005-D011). This exception will allow small entities to compete without meeting the Buy American Act domestic end product requirements.

It is anticipated that small business concerns will continue to receive the same number of awards in the range of the micro-purchase threshold to $100,000, because these awards are generally set-aside for small business concerns. It is also expected that small business concerns will continue to receive awards in the range of $100,000 to $193,000, but in this range they will face competition from foreign end products.

This rule will not have an effect on small businesses affected by the ``non-manufacturer rule,'' which means that a contractor under a small business set-aside or 8(a) contract shall be a small business under the applicable size standard and shall provide either its own product or that of another domestic small business manufacturing or processing concern. If there is a small business set-aside, and there is no SBA waiver of the nonmanufacturer rule, then FAR 52.219-6(c) and/or FAR 52.219-18(d) require that a domestic product must be furnished. In this case, the rule will have no effect on small businesses because the nonmanufacturer rule is not changed. If SBA did waive the nonmanufacturer rule, then there is no requirement to purchase a domestic product but an evaluation preference would apply. The rule could have an impact on small businesses when there is no small business set-aside because small businesses may lose the evaluation preference for acquisitions between $25,000 and $193,000.

Interested parties may obtain a copy of the FRFA from the FAR Secretariat. The FAR Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act The Paperwork Reduction Act does apply because the changes to the FAR will slightly reduce the information collection requirements currently approved by the Office of Management and Budget OMB Clearances 9000-0024 and 9000-0130. We estimate a reduction of approximately 300 hours to OMB Clearance 9000-0024 and 50 hours to 9000-0130.

List of Subjects in 48 CFR Part 25

Government procurement.

Dated: September 19, 2006. Ralph De Stefano, Director, Contract Policy Division.

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR part 25, which was published in the Federal Register at 71 FR 223, January 3, 2006, is adopted as a final rule without change.

[Federal Register: September 28, 2006 (Volume 71, Number 188)]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 3, 4, 5, 7, 13, 26, 33, 49, 50, 52, and 53

[FAC 2005-13; Item VIII;

Federal Acquisition Regulation; Technical Amendments

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

ACTION: Final rule.

SUMMARY: This document makes amendments to the Federal Acquisition Regulation (FAR) in order to make editorial changes.

DATES: Effective Date: September 28, 2006.

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. Please cite FAC 2005-13, Technical Amendments.

List of Subjects in 48 CFR Parts 1, 3, 4, 5, 7, 13, 26, 33, 49, 50, 52, and 53

Government procurement.

Dated: September 19, 2006 Ralph De Stefano, Director, Contract Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 3, 4, 5, 7, 13, 26, 33, 49, 50, 52, and 53 as set forth below:

1. The authority citation for 48 CFR parts 1, 3, 4, 5, 7, 13, 26, 33, 49, 50, 52, and 53 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

1.602-3 [Amended]

2. Amend section 1.602-3 by removing from paragraphs (b)(4) and (d) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

3.502-2 [Amended]

3. Amend section 3.502-2 by removing from paragraph (h) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 4--ADMINISTRATIVE MATTERS

4.602 [Amended]

4. Amend section 4.602 by removing from paragraph (a)(1) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 5--PUBLICIZING CONTRACT ACTIONS

5.503 [Amended]

5. Amend section 5.503 by removing from paragraph (c) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 7--ACQUISITION PLANNING

7.503 [Amended]

6. Amend section 7.503 by removing from paragraph (c)(20) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

13.305-1 [Amended]

7. Amend section 13.305-1 by removing ``General Accounting Office'' and adding ``GAO'' in its place.

PART 26--OTHER SOCIOECONOMIC PROGRAMS

26.202 [Amended]

8. Amend section 26.202 by removing from paragraph (b) ``(See 6.603).'' and adding ``(See 6.603.)'' in its place.

26.203 [Amended]

9. Amend section 26.203 by removing from paragraph (c) ``insert'' and adding ``insert the'' in its place.

PART 33--PROTESTS, DISPUTES, AND APPEALS

33.102 [Amended]

10. Amend section 33.102 by removing from paragraphs (a) and (b)(1) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 49--TERMINATION OF CONTRACTS

49.603-3 [Amended]

11. Amend section 49.603-3 by removing from paragraph (b)(7)(x) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 50--EXTRAORDINARY CONTRACTUAL ACTIONS

50.203 [Amended]

12. Amend section 50.203 by removing from paragraph (e)(1)(iii) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

50.303-1 [Amended]

13. Amend section 50.303-1 by removing from paragraph (d)(4) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

52.212-1 [Amended]

14. Amend section 52.212-1 by revising the date of the clause to read ``(SEP 2006)''; and by removing from paragraph (b)(8) ``52.212-3(j)'' and adding ``52.212-3(k)'' in its place.

52.233-2 [Amended]

15. Amend section 52.233-2 by revising the date of clause to read ``(SEP 2006)''; and by removing from paragraph (a) ``General Accounting Office'' and adding ``Government Accountability Office'' in its place.

PART 53--FORMS

53.109 [Amended]

16. Amend section 53.109 by removing ``General Accounting Office'' and adding ``Government Accountability Office'' in its place

END OF FAC 2005-13