[Federal Register Volume 67, Number 124 (Thursday, June 27, 2002)]
[Rules and Regulations]
[Pages 43514-43516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15941]





48 CFR Parts 8 and 51

[FAC 2001-08; FAR Case 1999-614; Item II]
RIN 9000-AJ01

Federal Acquisition Regulation; Federal Supply Schedule Order 
Disputes and Incidental Items

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 incorporate 
policies for disputes in schedule contracts and the handling of 
incidental items, and to remove the requirement to notify GSA when a 
schedule contractor refuses to honor an order placed by a Government 

DATES: Effective Date: July 29, 2002.

Building, Washington, DC, 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501-
1900. Please cite FAC 2001-08, FAR case 1999-614.

[[Page 43515]]


A. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 65 FR 79702, December 19, 2000. Nine respondents submitted 
comments in response to the Federal Register notice. The public 
comments were received from contractors, professional associations, and 
Federal agencies. Clarifying revisions have been made to FAR 8.401(d) 
and 8.405-7(d) of the rule as a result of the public comments. A 
summary of the significant comments and concerns expressed by 
respondents is summarized below.
     Addition of Open Market, Noncontract Items on a Schedule 
Order. Some respondents believed that the intent regarding the 
incorporation of open market, noncontract items on a schedule order 
needed further clarification and recommended alternative language. The 
Councils agreed that absent a definition of ``open market'' or 
``noncontract'' items in the FAR further clarification is needed. 
Accordingly, it has substituted the expression ``items not on the 
Federal Supply Schedule'' to best characterize what these items mean.
     Inclusion of FAR Part 19 in the Listing of Applicable 
Acquisition Regulations. One respondent expressed concern regarding the 
omission of a reference to FAR Part 19, Small Business Programs, in the 
proposed language in FAR 8.401(d) for adding open market, noncontract 
items to a Federal Supply Schedule BPA. The respondent believes that 
the omission of FAR Part 19 in the list of applicable acquisition 
regulations an agency must follow will allow ordering offices to 
circumvent the requirement that all procurements valued between $2,500 
and $100,000 be set aside for small business concerns.
    The Councils agreed that FAR Part 19 should be included in the list 
of applicable regulations in FAR 8.401(d)(1). Even though FAR 
13.003(b)(1) addresses small business set-asides for acquisitions above 
the micro-purchase threshold, the inclusion of FAR Part 19, in addition 
to FAR Part 13, further emphasizes that ordering offices must consider 
small business programs when acquiring items not on the Federal Supply 
     FAR Reference to Alternative Dispute Resolution (ADR) 
Procedures for Schedule Disputes. One respondent suggested that in lieu 
of the proposed language in FAR 8.405-7(d) (``The contracting officer 
should use the alternative dispute resolution (ADR) procedures, when 
appropriate (see 33.214)''), the language should be revised to cite the 
policy statement as it is set forth in FAR 33.204, that ADR should be 
used ``to the maximum extent practicable.'' The respondent further 
suggested that either FAR 33.204 be cited alone, or that 33.204 be 
cited in addition to 33.214. Since the language in FAR 33.204 speaks to 
policy regarding the use of ADR, while 33.214 provides additional 
information regarding ADR, the Councils agreed that, for clarity, both 
citations be included in the final rule, and that the language in FAR 
8.405-7(d) be revised.
    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 rule addresses 
internal Government administrative procedures and does not impose any 
additional requirements on Government offerors or contractors.

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 8 and 51

    Government procurement.

    Dated: June 19, 2002.
Al Matera,
Director, Acquisition Policy Division.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 8 and 51 as set 
forth below:
    1. The authority citation for 48 CFR parts 8 and 51 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


    2. Amend section 8.401 by adding paragraph (d) to read as follows:

8.401  General.

* * * * *
    (d) For administrative convenience, an ordering office contracting 
officer may add items not on the Federal Supply Schedule (also referred 
to as open market items) to a Federal Supply Schedule blanket purchase 
agreement (BPA) or an individual task or delivery order only if--
    (1) All applicable acquisition regulations pertaining to the 
purchase of the items not on the Federal Supply Schedule have been 
followed (e.g., publicizing (Part 5), competition requirements (Part 
6), acquisition of commercial items (Part 12), contracting methods 
(Parts 13, 14, and 15), and small business programs (Part 19));
    (2) The ordering office contracting officer has determined the 
price for the items not on the Federal Supply Schedule is fair and 
    (3) The items are clearly labeled on the order as items not on the 
Federal Supply Schedule; and
    (4) All clauses applicable to items not on the Federal Supply 
Schedule are included in the order.

    3. Revise section 8.405-7 to read as follows:

8.405-7  Disputes.

    (a) Disputes pertaining to the performance of orders under a 
schedule contract. (1) Under the Disputes clause of the schedule 
contract, the ordering office contracting officer may--
    (i) Issue final decisions on disputes arising from performance of 
the order (but see paragraph (b) of this section); or
    (ii) Refer the dispute to the schedule contracting officer.
    (2) The ordering office contracting officer shall notify the 
schedule contracting officer promptly of any final decision.
    (b) Disputes pertaining to the terms and conditions of schedule 
contracts. The ordering office contracting officer shall refer all 
disputes that relate to the contract terms and conditions to the 
schedule contracting officer for resolution under the Disputes clause 
of the contract and notify the schedule contractor of the referral.
    (c) Appeals. Contractors may appeal final decisions to either the 
Board of Contract Appeals servicing the agency that issued the final 
decision or the U.S. Court of Federal Claims.
    (d) Alternative dispute resolution. The contracting officer should 
use the alternative dispute resolution (ADR) procedures, to the maximum 
extent practicable (see 33.204 and 33.214).

[[Page 43516]]


51.103  [Amended]

    4. Amend section 51.103 by removing paragraph (b); and by 
redesignating paragraph (c) as (b).

[FR Doc. 02-15941 Filed 6-26-02; 8:45 am]