[Federal Register Volume 78, Number 251 (Tuesday, December 31, 2013)]
[Rules and Regulations]
[Pages 80369-80376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31148]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 4, 8, 17, 37, and 52
[FAC 2005-72; FAR Case 2010-010; Item I; Docket 2010-0010, Sequence 1]
RIN 9000-AM06
Federal Acquisition Regulation; Service Contracts Reporting
Requirements
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) to implement a section of the
Consolidated Appropriations Act, 2010. This final rule amends the FAR
to require service contractors for executive agencies, except where DoD
has fully funded the contract or order, to submit information annually
in support of agency-level inventories for service contracts.
DATES: Effective: January 30, 2014.
Applicability: The changes in this rule apply to solicitations
issued and contracts awarded on or after January 30, 2014. Contracting
officers will modify existing indefinite-delivery contracts, on a
bilateral basis in accordance with FAR 1.108(d)(3), within six months
of the effective date of the final rule, if the remaining period of
performance extends beyond October 1, 2013, and $2.5 million or more
remains to be obligated.
FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb, Procurement Analyst,
at 202-501-0650, for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at 202-501-4755. Please cite FAC 2005-72, FAR Case 2010-
010.
SUPPLEMENTARY INFORMATION:
I. Background
Section 743(a) of Division C of the Consolidated Appropriations
Act, 2010 (Pub. L. 111-117) requires executive agencies covered by the
Federal Activities Inventory Reform (FAIR) Act (Pub. L. 105-270),
except DoD, to submit to the Office of Management and Budget (OMB)
annually an inventory of activities performed by service contractors.
To allow review by the agency and any necessary correction by the
contractor, Office of Federal Procurement Policy (OFPP) agreed to
change the deadline for agencies to submit a service contract inventory
to OMB from December 30 to January 15, even though section 743 of P.L.
111-117 establishes December. DoD is exempt from this reporting
requirement because 10 U.S.C. 2462 and 10 U.S.C. 2330a(c) already
require DoD to develop an annual service contract inventory.
Specifically, FAR 4.1703 establishes service contractor reporting
requirements based on type of contract and dollar amount as stated
below:
Contract types (e.g., cost-reimbursement, time-and-
materials, and labor-hour contracts), which already require contractors
to track labor hours closely in order to invoice the Government, will
have lower dollar thresholds than fixed-price contracts. Contractors
will now be required to report on all cost-reimbursement, time-and-
materials, and labor-hour contracts and orders above the simplified
acquisition threshold (SAT).
Contractors will be required to report on new fixed-price
definite-delivery contracts at or above the following--
[cir] $2.5 million in Fiscal Year 2014;
[cir] 1 million in Fiscal Year 2015; and
[cir] $500,000 from Fiscal Year 2016 onwards.
For indefinite-delivery contracts including, but not
limited to, indefinite-delivery indefinite-quantity (IDIQ) contracts,
Federal Supply Schedule (FSS) contracts, Governmentwide Acquisition
contracts (GWACs), and multi-agency contracts, reporting requirements
will be determined based on the expected dollar amount and type of the
orders issued under the contracts.
First-tier subcontracts for services will be reported
using the phase-in thresholds.
Existing indefinite-delivery contracts will be bilaterally
modified within six months of the effective date of the final rule if
sufficient time and value remain on the base contract, which is defined
as--
(i) A performance period that extends beyond October 1, 2013; and
(ii) $2.5 million or more remaining to be obligated to the
indefinite-delivery contract.
The threshold for existing indefinite-delivery contracts is
consistent with the threshold for new fixed-price contracts. Agencies
placing orders on these existing contracts after the effective date of
this final rule will be required to report this information if the
order meets the thresholds established in FAR 4.1703 (e.g., above the
SAT for cost-reimbursement, time-and-materials, and labor-hour
contracts, and fixed-price contracts at or above $2.5 million in Fiscal
Year 2014 and phased-in thresholds thereafter).
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 76 FR 22070 on April 20, 2011, to implement section 743(a).
The section of the preamble discussing coverage for existing contracts
was included in the correction published in the Federal Register at 76
FR 24443 on May 2, 2011.
On June 20, 2011, the period for public comment ended. Twelve
respondents submitted comments on the proposed rule.
II. Determinations
The Federal Acquisition Regulatory (FAR) Council has made the
following
[[Page 80370]]
determination with respect to the rule's applicability to contracts for
the acquisition of commercial items.
Applicability to Contracts for the Acquisition of Commercial Items
Pursuant to 41 U.S.C. Sec. 1906, the FAR is required to include
a list of provisions of law that are inapplicable to acquisitions of
commercial items (other than acquisitions of commercially available
off-the-shelf items, which are addressed in 41 U.S.C. Sec. 1907).
Recently enacted laws that set forth policies, procedures,
requirements, or restrictions for the acquisition of property or
services by the Federal Government shall be included on the list,
unless the law--
1. Provides for criminal or civil penalties;
2. Specifically refers to 41 U.S.C. Sec. 1906 and states that
the law applies to acquisitions of commercial items; or
3. Is applicable because the FAR Council makes a written
determination that it would not be in the best interest of the
Federal Government to exempt acquisitions of commercial items from
this law.
Given the requirements of section 743(a) of Division C of the
Consolidated Appropriations Act, 2010, for service contract reporting,
the FAR Council has determined the rule should apply to contracts for
the acquisition of commercial items, as defined at FAR 2.101, in order
to fulfill the intended result of the statutory requirement for
increased visibility of contracted services to determine whether the
agency has the right balance of contractor and in-house resources
needed to accomplish its mission.
III. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule.
The following changes from the proposed rule were made in the final
rule:
The subpart has been renumbered from FAR 4.16 to 4.17.
The definition of ``first-tier subcontract'' has been
modified slightly to conform to the definition at FAR 52.204-10,
Reporting Executive Compensation and First-Tier Subcontract Awards. In
addition, the definition of ``service contract'' has been deleted
because the cross reference to the definition of service contract at
FAR 37.101, did not include construction services, to which this rule
is applicable.
FAR 4.1702 is modified to add ``as specified in 4.1705.''
This is done to clarify that the clauses at FAR 52.204-14 and 52.204-15
are not applicable to actions entirely funded by DoD.
The thresholds in FAR 4.1703(a)(2)(ii) are updated to
begin in Fiscal Year 2014. This change results from internal review and
the anticipated publication date for the final rule. The only existing
contracts that are covered by this rule are existing indefinite-
delivery contracts if sufficient time and value remain on the base
contract. The stipulation ``for services'' was added at FAR
4.1703(a)(1) and 4.1703(a)(3) to clarify that first-tier subcontract
for services reporting is only required for subcontractors that are
primarily providing services.
FAR 4.1703(a)(3) was changed from the proposed rule to
clarify that first-tier subcontract reporting thresholds are the same
as the prime contract reporting thresholds in 4.1703(a)(2)(i) and
4.1703(a)(2)(ii).
FAR 4.1703(b). The responsibility of the agency for
reviewing the contractor reported data was changed as a result of
internal review to provide for the respective agency to review the
contractor's report for reasonableness and consistency and to advise
the contractor of possible errors. The contractor is to revise the
report, unless the contractor believes the report was accurate, and so
advises the agency. These changes have been incorporated into the
clauses that are included within this rule.
FAR 4.1705 is modified to add ``for actions entirely
funded by DoD or''. This is done to clarify that the clauses at FAR
52.204-14 and 52.204-15 are not applicable to DoD funded actions.
A definition of ``first-tier subcontract'' has been added
to FAR 52.204-14 and 52.204-15.
FAR 52.204-14(c) is renumbered as (d) and revised to
remove ``[to] the online Service Contract Reporting Portal and will be
publicly available at www.acquisition.gov''; information will be found
and reporting will be made at www.sam.gov (See section 3.10 of the SAM
User Guide at https://www.sam.gov/sam/SAM_Guide/SAM_User_Guide.htm.
The reported information will be publicly available as required by
section 743.
FAR 52.204-14(d)(1)(i) is renumbered, and revised to
change ``Subcontractor DUNS number, or if DUNS number is unavailable,
subcontractor name'' to ``subcontract number (including subcontractor
name and DUNS number)'' because contracts at this threshold already
require a DUNS number.
The stipulation ``providing services'' was added at FAR
52.204-14(f)(1) and 52.204-15(f)(1) to clarify that first-tier
subcontract reporting is only required for subcontractors that are
primarily providing services.
FAR 52.204-14, Alternate I is changed to ``52.204-15,
Service Contract Reporting Requirements for Indefinite Delivery
Contracts''. References in FAR subpart 4.17 were conformed. Paragraph
(c) from FAR 52.204-14, now renumbered as (d), is added to the new
clause at 52.204-15. FAR 52.204-14(d)(1)(i) is renumbered as (f)(1)(i),
and the words ``Subcontractor DUNS number, or if DUNS number is
unavailable, subcontract name'' are changed to ``subcontract number
(including subcontractor name and DUNS number)'' because contracts at
this threshold already require a DUNS number.
FAR 52.212-5 is added for applicability to commercial
items for contractor reporting requirements.
A discussion of the comments and the changes made to the rule as a
result of those comments are provided as follows:
A. Application to Fixed-Price Performance-Based Services
Comments: Three respondents commented that this requirement could
cause contractors to change their internal accounting processes for
firm-fixed-price contracts. Another respondent gave the example that in
test scenarios, labor hours may not be easily assigned, since analysts
work on batches of samples at a time, which may include samples for
both Government and non-Governmental contracts. This respondent
recommended clarifying whether the threshold applies to fixed unit
prices on IDIQ services. Similarly, another respondent commented that
the reporting does not take into account how software and maintenance
fixed-price contract costs and labor can significantly fluctuate each
year or how this type of labor can be comingled between government and
non-government work on a contract. Lastly, another respondent stated
that limiting the definition of ``service contracts'' to the FAR part
37 definition would exclude reporting and evaluation of billions of
dollars of services that are included in supply, maintenance and
repair, and construction contracts.
Response: Section 743(a) requires agencies to compile service
contract inventories for all service contracts, regardless of contract
type. Therefore, this rule requires contractors to submit the
information for fixed price contracts as well as for other contract
types. To alleviate the reporting burden, the case establishes higher
reporting thresholds for fixed-price contracts, where the information
may not be as readily available. The same thresholds apply at the
contract and task order level. The
[[Page 80371]]
rule does not mandate how contractors track labor hours, but simply
requires the reporting of aggregated number of hours for each year of
contract performance. The statute specifies that reporting is required
for service contracts.
Comment: One respondent stated that ``requiring the disclosure of
direct labor hours expended on the services performed is extremely
concerning, particularly in a Firm Fixed Price scenario. Pricing data
is exceptionally sensitive information . . . and is routinely protected
under Exemption 4 under FOIA''.
Response: The statute requires the agency to report the number of
contractor employees expressed as full-time equivalents for direct
labor, compensated under the contract. To relieve burden on the
contractor, the clause requires direct labor hours to be reported
rather than the full-time equivalent. The statute also requires the
reporting and that the agency's service contract inventory be publicly
available. The number of hours is the total for the entire fiscal year
and is not broken down by type of employee.
B. Type of Information Collected
Comments: One respondent commented that this rule would not provide
agency officials with enough information to determine whether services
are excessively costly and should be insourced, so more information
should be required from the contractor. Five other respondents stated
that the rule places additional burden on contractors, especially
considering information is already reported in contractor proposals or
invoices. One of these respondents recommended deleting FAR 52.204-
14(b)(2) from the clause because the information is already collected.
Response: This rule requires the collection of information that
will supplement existing data available to the Government in order to
fulfill the requirements mandated in section 743(a) of Division C of
the Consolidated Appropriations Act, 2010 (Pub. L. 111-117). The
statute requires reporting of incurred direct labor hours, not proposal
information. While reporting of direct labor hours currently may be
required for some payment processes, the information collected pursuant
to this requirement is not required at the same level of detail for all
contract types or submitted in the same format for all agencies. In
other words, this rule requires contractors to report information that
is not readily available to the Government.
C. Small Business Impact
Comments: Two respondents stated that the rule would impose
additional reporting burden on small businesses, thereby increasing
overhead rates and eventually passing the cost of implementation on to
the Government.
Response: The rule attempts to minimize burden on small businesses
by implementing contract value thresholds and phasing in the reporting
requirement.
D. Increased Cost for Contractors and the Government
Comment: Two respondents questioned whether the value of this
information will be worth the additional contract costs associated with
collecting the information. Another respondent stated that even though
DoD is exempt from section 743, it is required to compile service
contract inventories, and DoD should be covered by this rule to avoid
burdening contractors with separate reporting processes, definitions,
and locations when they provide identical information for civilian and
DoD contracts.
Response: This rule implements the requirements of section 743(a)
of Division C of the Consolidated Appropriations Act, 2010, (Pub. L.
111-117), which specifically excludes DoD.
E. Subcontractor Data
Comments: Three respondents commented on subcontractor data. One
respondent questioned why the data needs to be broken down to the
subcontractor level, since the Government appears to be interested in
the total dollars being expended for all non-Government performed work,
not whether it is prime contractors or subcontractors. Another
respondent stated that the exclusion of lower-tier subcontracts is an
improper interpretation of the statute, which requires the reporting of
all subcontractor employees, not just first-tier subcontractor
employees. A third respondent recommended changing the word
``subcontract'' to ``subcontractor'' in FAR 52.204-14, Alternate I
paragraph (d)(1)(i) since the work is being performed by subcontractors
under the subcontract.
Response: Section 743(a) requires the reporting of both contractor
and subcontractor labor hours, and the rule limits the reporting to
first-tier subcontracts for services to alleviate the burden on
contractors. The recommendation to change the text of the clauses to
state `subcontractor name' instead of `subcontract name' has been
incorporated into the final rule.
F. Reporting Direct Labor Hours Versus Full-Time Equivalent (FTE)
Comments: Two respondents questioned why direct labor hours are
being collected instead of FTE. One of these respondents also stated
that the rule should include a requirement for contractors to report
the work location for each FTE. In addition, this respondent stated
that the total dollar amount invoiced for services performed during the
previous fiscal year may not always represent the number of direct
labor hours expended on services performed during the previous fiscal
years, so the Councils should consider changing the requirement to
direct labor hours invoiced, instead of number of direct labor hours
expended.
Response: The rule requires contractors to submit an aggregated
number of hours for each year of contract performance. The Government
will calculate FTEs based on the number of labor hours submitted, so
contractors should not submit FTE information. The service contract
inventories are utilizing the place of performance data currently
available in the Federal Procurement Data System (FPDS), so this rule
is not requiring contractors to submit that information. The rule will
continue to capture direct labor hours expended, as required by section
743(a).
G. Reporting Time-Frame
Comments: Two respondents stated that reporting within 30-days
after the end of the fiscal year is too tight a reporting timeframe.
Response: Section 743(a) requires agencies submit inventories to
OMB by December 30 annually. In order for agencies to be able to
compile inventories and provide for a review and possible correction,
contractors need to submit this information by the end of October. The
Councils have determined that this reporting timeframe is adequate, but
have modified the rule to allow up to November 30th of each year for
review by the agency and any necessary corrections by the contractor.
H. Reporting Thresholds
Comments: Two respondents commented on reporting thresholds. One
respondent recommends implementing the same thresholds for all contract
types by the end of FY 2014 and aligning the thresholds with OFPP
guidance on Service Contract Inventories. Another respondent commented
that unsupported reporting thresholds were included in the proposed
rule, which do not exist in
[[Page 80372]]
section 743 and will exclude billions of dollars in service contracts
annually.
Response: The rule minimizes the burden on contractors, especially
for contract types that do not typically require this type of detailed
reporting of labor hours, by implementing contract value thresholds and
the phase-in of the reporting requirement. The thresholds for
determining if a contract or order should include this clause have been
revised to reflect the thresholds beginning as of FY 2014, since that
is now when the reporting will begin.
I. Generic Data Universal Numbering System (DUNS)
Comment: One respondent cited to the proposed rule, which stated
that contracts reported using the generic DUNS number allowed at FAR
4.605(c) will interfere with the contractor's ability to comply with
this reporting requirement, because the data will not pre-populate from
FPDS. The respondent recommended adding an Alternate II to FAR 52.204-
14 for contractors using the generic DUNS number that identifies the
additional data these contractors will have to provide manually.
Response: Contractors awarded a contract with a generic DUNS number
will not be able to report information. Contracting officers should
only use generic DUNS numbers under the very specific conditions in FAR
4.605(c).
J. OFPP Guidance
Comments: Two respondents raised issues that related to OFPP
guidance. One respondent recommended consolidating the reporting
requirements of section 743(a) and section 736 with OFPP guidance
documents to simplify the reporting process for contractors and
agencies. Another respondent stated that the rule does not establish
whether functions performed by contractors will be determined based on
Office of Personnel Management (OPM) job series codes, the GSA Product
and Service Codes (PSC) Manual, or FAIR inventory function codes. The
rule should adopt a services classification system that reflects the
broad spectrum of occupational services recognized in the real world
and that tailors that system to be compatible with the OPM
classification system so that compensation standards can be compared
across comparable service clusters.
Response: OFPP guidance supplements this rule, which implements
section 743(a). This rule requires contractors to submit information
that will supplement existing contract information, so it does not
create a new classification system for services.
K. Failure To Report
Comment: One respondent recommended adding the following language
to FAR 52.204-14(d)(2): ``The Contractor shall advise the subcontractor
that the information reported, or the failure to report, will be made
available to the public.'' The respondent also recommended adding the
following to FAR 52.204-14(b)(4) (Alternate I): ``Data reported by
subcontractors under paragraph (d) of this clause, and any failure of
subcontractors to submit reports as required''.
Response: In the event that a contractor fails to comply with this
reporting requirement, the contracting officer is required to document
the failure in the contractor's performance evaluation (see FAR 4.1704
``Contracting officer responsibilities''). This is the most appropriate
enforcement tool for dealing with noncompliance.
L. Interagency Acquisitions
Comment: One respondent stated that the proposed FAR language is
unclear as to whether the applicability is based on which agency is
issuing the contract versus which agency is funding the action,
especially if a contract is supporting multiple agencies.
Response: Applicability is based on the funding agency. FAR 4.1705
is modified to add ``for actions entirely funded by DoD or''. This is
done to clarify that the clauses are not applicable to DoD-funded
actions.
M. Definition of ``Classified Contracts''
Comment: One respondent questioned whether the use of the term
``classified contract'' in proposed FAR 4.1705 references the
definition of the same from FAR part 2.
Response: Yes. FAR 1.108, ``FAR Conventions'' states that the
definitions of words and terms used in part 2 apply throughout the FAR,
unless specifically defined in another part, subpart, section,
provision, or clause.
N. Effect on Competition
Comment: One respondent stated that the rule will create a
significant barrier for commercial companies to participate in the
Government market.
Response: While this rule might be one factor of a commercial
contractor choosing not to participate in the Government market, the
Councils have determined the rule's overall impact to be minimal, and
do not consider that it will have a significant effect on such
participation.
O. Public Burden
Comment: One respondent questioned the methodology used to
calculate the hours needed to prepare responses and considered the
reporting requirement estimates in the Paperwork Reduction Act
submission to be grossly underestimated.
Response: Two hours is the estimated time to report per contract,
one hour to calculate the data and one hour to enter the data at
www.sam.gov. The burden estimate is based on the average burden
experienced under all contract types, including cost-reimbursement,
time-and-materials, and labor-hour contracts, which already require
contractors to track labor hours closely in order to invoice the
Government, and will therefore require less additional effort to meet
this reporting requirement. This new paperwork burden is approved under
OMB control number 9000-0179.
P. Existing Contracts
Comment: One respondent stated that the proposed rule contains no
requirement to modify existing contracts or task orders to require
reporting, meaning that more than 10 years could pass before these
provisions are applicable to many contracts or task orders. The statute
clearly states that the reporting requirements become effective at the
exercise of an option year.
Response: The May 2, 2011, correction to the Federal Register at 76
FR 24443 states applicability to existing contracts in the preamble.
``Existing indefinite-delivery contracts will be bilaterally
modified within six months of the effective date of the final rule if
sufficient time and value remain on the base contract, which is defined
as--
1. A performance period that extends beyond October 1, 2012; and
2. $5 million or more remaining to be obligated to the indefinite-
delivery contract.''
This is repeated in the final rule, in the DATES section, updated
to show the year as 2013 and the dollar threshold as $2.5 million.
IV. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the
[[Page 80373]]
importance of quantifying both costs and benefits, of reducing costs,
of harmonizing rules, and of promoting flexibility. This is a
significant regulatory action and, therefore, was 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.
V. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared a Final Regulatory Flexibility
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is summarized as follows:
This rule amends the FAR to implement section 743(a) of Division
C of the Consolidated Appropriations Act, 2010 (Pub. L. 111-117).
Section 743(a) requires agencies covered by the Federal Activities
Inventory Reform (FAIR) Act, except for the Department of Defense
(DoD), to submit annual agency inventories of their service
contracts. DoD is exempt because DoD was already required to do
annual service contract reporting under 10 U.S.C. 2462 and 10 U.S.C.
2330a(c). Section 743(a) calls for agencies to develop annually an
inventory that reports, for each service contract, the following:
(1) A description of the services purchased by the executive
agency and the role the services played in achieving objectives,
regardless of whether such a purchase was made through a contract or
task order.
(2) The organizational component of the executive agency
administering the contract, and the organizational component of the
agency whose requirements are being met through contractor
performance of the service.
(3) The total dollar amount obligated for services under the
contract and the funding source for the contract.
(4) The total dollar amount invoiced for services under the
contract.
(5) The contract type and date of award.
(6) The name of the contractor and place of performance.
(7) The number and work location of contractor and subcontractor
employees, expressed as full-time equivalents for direct labor,
compensated under the contract.
(8) Whether the contract is a personal services contract.
(9) Whether the contract was awarded on a noncompetitive basis,
regardless of date of award.
DoD, GSA, and NASA attempted to minimize the information-
collection requirement for contractors by requiring agencies to
obtain as much of the data as possible from existing sources, such
as the FPDS. However, certain minimum data must be collected from
service contractors in order for agencies to meet the annual
statutory service contract inventory requirement.
Therefore, contractors will be required to report annually the
following information on each service contract or order in
accordance with the thresholds established, excluding actions
entirely funded by DoD:
(1) Contract number and, as applicable, task order number.
(2) The total dollar amount invoiced for services performed
during the previous Government fiscal year under the contract or
order.
(3) The number of contractor direct labor hours expended on the
services performed during the previous Government fiscal year.
(4) The number of first-tier subcontractor direct labor hours
expended on the services performed during the previous Government
fiscal year.
In order to invoice the Government, contractors track labor
hours worked for cost-reimbursement, time-and-materials and labor-
hour contracts. Therefore, a lower reporting threshold was
established for these types of contracts. Contractors are not
required to track or report labor hour information for fixed price
contracts, so higher thresholds and a phased-in implementation
schedule were developed to minimize the burden for contractors.
In addition, the final rule will require service contractor
reporting to include first-tier subcontracts for services only. The
same reporting thresholds will apply to both first-tier subcontracts
and prime contracts. First-tier subcontract reporting of direct
labor hours and amount invoiced will be done electronically by the
prime contractor. Further lessening the reporting requirement,
service contractors will not be asked to convert the number of
direct labor hours into full-time equivalents.
Two comments were received stating that there would be an impact
on small business, in addition to large businesses, but the two
respondents did not include specific supporting data.
Each contractor will be required to report once annually on the
services provided during the previous Government fiscal year. The
information will be input to a Government-managed data system. There
is no hard-copy reporting required, nor is there an agency
certification or approval requirement.
When providing a proper invoice to the Government for cost-
reimbursement, time-and-materials, and labor-hour contracts, the
information on the number of direct labor hours worked is already
compiled by contractors, so the information collected should be
minimal for these types of contracts. Currently, the information on
the number of employee hours worked must already be compiled by
prime and subcontractors in order to (a) pay employees and (b)
properly invoice for services provided.
There are no additional professional skills necessary in this
area on the part of small businesses. If the small business has the
personnel needed to account for and invoice the Government in
compliance with preexisting financial data regulations and
procedures, then compliance with the new reporting requirement
should be transparent. In fact, the Contractors are already
collecting the data. Therefore, since the data would already have
been collected for paying employees and monthly invoicing, a
reasonable average is that two additional hours of labor per
contract per year is required. One hour has been allotted to adding
the total labor hours for twelve monthly invoices and one hour to
input the data.
Since both large and small entities already prepare monthly
billing and collect and pay hourly wages as a standard business
practice, it is not considered to be any greater burden for small
entities. In fact, the cost is estimated to be primarily an
additional two hour labor burden for an employee such as a payroll
clerk at a cost of approximately $60/contract/year.
To minimize the burden on small businesses, the following
alternatives were considered and included in the FAR rule:
Minimizing the inventory data elements collected by
using existing systems, such as FPDS.
Minimizing the reporting to once a year.
Enabling electronic reporting by the contractor.
Requiring contractors to provide only the number of
direct labor hours and developing the system to automatically
generate the number of full-time equivalents.
Limiting the reporting requirement to first-tier
subcontractors for services in lieu of all subcontractors.
Establishing a phased-in approach based on contract
type and estimated total dollar amount, from 2014 to 2016.
Interested parties may obtain a copy of the FRFA from the
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy
of the FRFA to the Chief Counsel for Advocacy of the Small Business
Administration.
VI. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The
rule contains information collection requirements. The Office of
Management and Budget (OMB) has cleared this information collection
requirement under OMB Control Number 9000-0179, titled: Service
Contractor Reporting Requirements.
List of Subjects in 48 CFR Parts 1, 4, 8, 17, 37, and 52
Government procurement.
Dated: December 19, 2013.
William Clark,
Acting Director, Office of Government-wide Acquisition Policy, Office
of Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 4, 8, 17, 37,
and 52 as set forth below:
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1. The authority citation for 48 CFR parts 1, 4, 8, and 17 continues to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
[[Page 80374]]
PART 1--FEDERAL ACQUISITION REGULATION SYSTEM
1.106 [Amended]
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2. Amend section 1.106 in the table following the introductory text, by
adding in numerical sequence, FAR segments ``4.17'', ``52.204-14'', and
``52.204-15'' and their corresponding OMB Control Number ``9000-0179''.
PART 4--ADMINISTRATIVE MATTERS
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3. Add subpart 4.17 to read as follows:
Subpart 4.17--Service Contracts Inventory
Sec.
4.1700 Scope of subpart.
4.1701 Definitions.
4.1702 Applicability.
4.1703 Reporting requirements.
4.1704 Contracting officer responsibilities.
4.1705 Contract clauses.
Subpart 4.17--Service Contracts Inventory
4.1700 Scope of subpart.
This subpart implements section 743(a) of Division C of the
Consolidated Appropriations Act, 2010 (Pub. L. 111-117), which requires
agencies to report annually to the Office of Management and Budget
(OMB) on activities performed by service contractors. Section 743(a)
applies to executive agencies, other than the Department of Defense
(DoD), covered by the Federal Activities Inventory Reform Act (Pub. L.
105-270) (FAIR Act). The information reported in the inventory will be
publicly accessible.
4.1701 Definitions.
As used in this subpart--
FAIR Act agencies means the agencies required under the FAIR Act to
submit inventories annually of the activities performed by Government
personnel.
First-tier subcontract means a subcontract awarded directly by the
contractor for the purpose of acquiring supplies or services (including
construction) for performance of a prime contract. It does not include
the contractor's supplier agreements with vendors, such as long-term
arrangements for materials or supplies that benefit multiple contracts
and/or the costs of which are normally applied to a contractor's
general and administrative expenses or indirect costs.
4.1702 Applicability.
(a) This subpart applies to--
(1) All FAIR Act agencies, except DoD as specified in 4.1705;
(2) Solicitations, contracts, and orders for services (including
construction) that meet or exceed the thresholds at 4.1703; and
(3) Contractors and first-tier subcontractors.
(b) Procedures for compiling and submitting agency service contract
inventories are governed by section 743(a)(3) of Division C of Pub. L.
111-117 and Office of Federal Procurement Policy (OFPP) guidance. The
guidance is available at the following Web site: http://www.whitehouse.gov/omb/procurement-service-contract-inventories.
(c) This subpart addresses requirements for obtaining information
from, and reporting by, agency service contractors.
4.1703 Reporting requirements.
(a) Thresholds. (1) Except as exempted by OFPP guidance, service
contractor reporting shall be required for contracts and first-tier
subcontracts for services based on type of contract and estimated total
value. For indefinite-delivery contracts, reporting shall be determined
based on the type and estimated total value of the orders issued under
the contract. Indefinite-delivery contracts include, but are not
limited to, contracts such as indefinite-delivery indefinite-quantity
(IDIQ) contracts, Federal Supply Schedule contracts (FSSs),
Governmentwide acquisition contracts (GWACs), and multi-agency
contracts.
(2) Reporting is required according to the following thresholds:
(i) All cost-reimbursement, time-and-materials, and labor-hour
service contracts and orders with an estimated total value above the
simplified acquisition threshold.
(ii) All fixed-price service contracts awarded and orders issued
according to the following thresholds:
(A) Awarded or issued in Fiscal Year 2014, with an estimated total
value of $2.5 million or greater.
(B) Awarded or issued in Fiscal Year 2015, with an estimated total
value of $1 million or greater.
(C) Awarded or issued in Fiscal Year 2016, and subsequent years,
with an estimated total value of $500,000 or greater.
(3) Reporting is required for all first-tier subcontracts for
services as prescribed in paragraphs (a)(2)(i) and (ii) of this
section.
(b) Agency reporting responsibilities. (1) Agencies shall ensure
that contractors comply with the reporting requirements of 52.204-14,
Service Contract Reporting Requirements and 52.204-15, Service Contract
Reporting Requirements for Indefinite-Delivery Contracts. Agencies
shall review contractor reported information for reasonableness and
consistency with available contract information. The agency is not
required to address data for which the agency would not normally have
supporting information. In the event the agency believes that revisions
to the contractor reported information are warranted, the agency shall
notify the contractor no later than November 15. By November 30, the
contractor shall revise the report, or document its rationale for the
agency. Authorized agency officials may review the reports at
www.sam.gov.
(2) Agencies are required to compile annually an inventory of
service contracts performed for, or on behalf of, the agency during the
prior fiscal year in order to determine the extent of the agency's
reliance on service contractors. Agencies shall submit a service
contract inventory to OMB by January 15 annually. Then, each agency
must post the inventory on its Web site and publish a Federal Register
Notice of Availability by February 15 annually.
(3) Most of the required information is already collected in the
Federal Procurement Data System (FPDS). Information not collected in
FPDS will be provided by the contractor, as specified in 52.204-14,
Service Contract Reporting Requirements and 52.204-15, Service Contract
Reporting Requirements for Indefinite-Delivery Contracts.
4.1704 Contracting officer responsibilities.
(a) For other than indefinite-delivery contracts, the contracting
officer shall ensure that 52.204-14, Service Reporting Requirement, is
included in solicitations, contracts, and orders as prescribed at
4.1705. For indefinite-delivery contracts, the contracting officer who
awarded the contract shall ensure that 52.204-15, Service Contract
Reporting Requirements for Indefinite-Delivery Contracts, is included
in solicitations and contracts as prescribed at 4.1705. The contracting
officer at the order level shall verify the clause's inclusion in the
contract.
(b) If the contractor fails to submit a report in a timely manner,
the contracting officer shall exercise appropriate contractual
remedies. In addition, the contracting officer shall make the
contractor's failure to comply with the reporting requirements a part
of the contractor's performance information under subpart 42.15.
4.1705 Contract clauses.
(a) The contracting officer shall insert the clause at 52.204-14,
Service Contract Reporting Requirements, in solicitations and contracts
for services
[[Page 80375]]
(including construction) that meet or exceed the thresholds at 4.1703,
except for indefinite-delivery contracts. This clause is not required
for actions entirely funded by DoD, contracts awarded with a generic
DUNS number, or in classified solicitations, contracts, or orders.
(b) The contracting officer shall insert the clause at 52.204-15,
Service Contract Reporting Requirements for Indefinite-Delivery
Contracts, in solicitations and indefinite-delivery contracts for
services (including construction) where one or more orders issued
thereunder are expected to each meet or exceed the thresholds at
4.1703. This clause is not required for actions entirely funded by DoD,
contracts awarded with a generic DUNS number, or in classified
solicitations, contracts, or orders.
PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES
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4. Amend section 8.404 by adding paragraph (i) to read as follows:
8.404 Use of Federal Supply Schedules.
* * * * *
(i) Ensure that service contractor reporting requirements are met
in accordance with subpart 4.17, Service Contracts Inventory.
PART 17--SPECIAL CONTRACTING METHODS
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5. Revise section 17.504 to read as follows:
17.504 Reporting requirements.
(a) The senior procurement executive for each executive agency
shall submit to the Director of OMB an annual report on interagency
acquisitions, as directed by OMB.
(b) The contracting officer for the servicing agency shall ensure
that service contractor reporting requirements are met in accordance
with subpart 4.17, Service Contracts Inventory.
PART 37--SERVICE CONTRACTING
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6. The authority citation for 48 CFR part 37 is revised to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
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7. Amend section 37.103 by adding paragraph (e) to read as follows:
37.103 Contracting officer responsibility.
* * * * *
(e) Ensure that service contractor reporting requirements are met
in accordance with subpart 4.17, Service Contracts Inventory.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
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8. The authority citation for 48 CFR part 52 continues to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
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9. Add sections 52.204-14 and 52.204-15 to read as follows:
52.204-14 Service Contract Reporting Requirements.
As prescribed in 4.1705(a), insert the following clause:
Service Contract Reporting Requirements (Jan 2014)
(a) Definition.
First-tier subcontract means a subcontract awarded directly by
the Contractor for the purpose of acquiring supplies or services
(including construction) for performance of a prime contract. It
does not include the Contractor's supplier agreements with vendors,
such as long-term arrangements for materials or supplies that
benefit multiple contracts and/or the costs of which are normally
applied to a Contractor's general and administrative expenses or
indirect costs.
(b) The Contractor shall report, in accordance with paragraphs
(c) and (d) of this clause, annually by October 31, for services
performed under this contract during the preceding Government fiscal
year (October 1-September 30).
(c) The Contractor shall report the following information:
(1) Contract number and, as applicable, order number.
(2) The total dollar amount invoiced for services performed
during the previous Government fiscal year under the contract.
(3) The number of Contractor direct labor hours expended on the
services performed during the previous Government fiscal year.
(4) Data reported by subcontractors under paragraph (f) of this
clause.
(d) The information required in paragraph (c) of this clause
shall be submitted via the internet at www.sam.gov. (See SAM User
Guide). If the Contractor fails to submit the report in a timely
manner, the contracting officer will exercise appropriate
contractual remedies. In addition, the Contracting Officer will make
the Contractor's failure to comply with the reporting requirements a
part of the Contractor's performance information under FAR subpart
42.15.
(e) Agencies will review Contractor reported information for
reasonableness and consistency with available contract information.
In the event the agency believes that revisions to the Contractor
reported information are warranted, the agency will notify the
Contractor no later than November 15. By November 30, the Contractor
shall revise the report, or document its rationale for the agency.
(f)(1) The Contractor shall require each first-tier
subcontractor providing services under this contract, with
subcontract(s) each valued at or above the thresholds set forth in
4.1703(a)(2), to provide the following detailed information to the
Contractor in sufficient time to submit the report:
(i) Subcontract number (including subcontractor name and DUNS
number); and
(ii) The number of first-tier subcontractor direct-labor hours
expended on the services performed during the previous Government
fiscal year.
(2) The Contractor shall advise the subcontractor that the
information will be made available to the public as required by
section 743 of Division C of the Consolidated Appropriations Act,
2010.
(End of clause)
52.204-15 Service Contract Reporting Requirements for Indefinite-
Delivery Contracts.
As prescribed in 4.1705(b), insert the following clause:
Service Contract Reporting Requirements for Indefinite-Delivery
Contracts (January 30, 2014)
(a) Definition.
First-tier subcontract means a subcontract awarded directly by
the Contractor for the purpose of acquiring supplies or services
(including construction) for performance of a prime contract. It
does not include the Contractor's supplier agreements with vendors,
such as long-term arrangements for materials or supplies that
benefit multiple contracts and/or the costs of which are normally
applied to a Contractor's general and administrative expenses or
indirect costs.
(b) The Contractor shall report, in accordance with paragraphs
(c) and (d) of this clause, annually by October 31, for services
performed during the preceding Government fiscal year (October 1-
September 30) under this contract for orders that exceed the
thresholds established in 4.1703(a)(2).
(c) The Contractor shall report the following information:
(1) Contract number and order number.
(2) The total dollar amount invoiced for services performed
during the previous Government fiscal year under the order.
(3) The number of Contractor direct labor hours expended on the
services performed during the previous Government fiscal year.
(4) Data reported by subcontractors under paragraph (f) of this
clause.
(d) The information required in paragraph (c) of this clause
shall be submitted via the internet at www.sam.gov. (See SAM User
Guide). If the Contractor fails to submit the report in a timely
manner, the Contracting Officer will exercise appropriate
contractual remedies. In addition, the Contracting Officer will make
the Contractor's failure to comply with the reporting requirements a
part of the Contractor's performance information under FAR subpart
42.15.
(e) Agencies will review Contractor reported information for
reasonableness and consistency with available contract information.
In the event the agency believes that revisions to the Contractor
reported information are warranted, the agency will notify the
Contractor no later than November 15. By November 30, the Contractor
shall
[[Page 80376]]
revise the report, or document its rationale for the agency.
(f)(1) The Contractor shall require each first-tier
subcontractor providing services under this contract, with
subcontract(s) each valued at or above the thresholds set forth in
4.1703(a)(2), to provide the following detailed information to the
Contractor in sufficient time to submit the report:
(i) Subcontract number (including subcontractor name and DUNS
number), and
(ii) The number of first-tier subcontractor direct-labor hours
expended on the services performed during the previous Government
fiscal year.
(2) The Contractor shall advise the subcontractor that the
information will be made available to the public as required by
section 743 of Division C of the Consolidated Appropriations Act,
2010.
(End of clause)
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10. Amend section 52.212-5 by--
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a. Revising the date of the clause;
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b. Redesignating paragraphs (b)(6) through (b)(51) as paragraphs (b)(8)
through (b)(53), respectively; and
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c. Adding new paragraphs (b)(6) and (b)(7).
The revised and added text reads as follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
Contract Terms and Conditions Required to Implement Statutes or
Executive Orders--Commercial Items (JAN 2014)
* * * * *
(b) * * *
---- (6) 52.204-14, Service Contract Reporting Requirements (JAN
2014) (Pub. L. 111-117, section 743 of Div. C).
---- (7) 52.204-15, Service Contract Reporting Requirements for
Indefinite-Delivery Contracts (JAN 2014) (Pub. L. 111-117, section
743 of Div. C).
* * * * *
[FR Doc. 2013-31148 Filed 12-30-13; 8:45 am]
BILLING CODE 6820-EP-P