General Services Acquisition Regulation; Federal Supply Schedule Contracts-Recovery Purchasing by State and Local Governments Through Federal Supply Schedules

AGENCY:

Office of the Chief Acquisition Officer, Contract Policy Division, General Services Administration (GSA).

ACTION:

Interim rule with request for comments.

SUMMARY:

The General Services Administration (GSA) is amending the General Services Administration Acquisition Regulation (GSAR) to implement Section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364). Section 833 amends 40 U.S.C. 502 to authorize the Administrator of General Services to provide to State and local governments the use of Federal Supply Schedules of the GSA for purchase of products and services to be used to facilitate recovery from a major disaster, terrorism or nuclear, biological, chemical, or radiological attack.

DATES:

Effective Date: February 1, 2007.

Comment Date: Interested parties should submit comments in writing to the Regulatory Secretariat at the address shown below on or before April 2, 2007 to be considered in the formulation of a final rule.

ADDRESSES:

Submit comments identified by Amendment 2007-01, GSAR case 2006-G522, by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Search for any document by first selecting the proper document types and selecting “General Services Administration” as the agency of choice. At the “Keyword” prompt, type in the GSAR case number (for example, GSAR case 2006-G522) and click on the “Submit” button. Please include any personal and/or business information inside the document.

You may also search for any document by clicking on the “Advanced search/document search” tab at the top of the screen, selecting from the agency field “General Services Administration,” and typing the GSAR case number in the keyword field. Select the “Submit” button.

• 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 GSAR case 2006-G522, 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:

Mr. William Clark, Procurement Analyst, at (202) 219-1813, for clarification of content. Please cite Amendment 2007-01, GSAR case 2006-G522. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Supply Schedule Program, which is directed and managed by GSA, is designed to provide Federal agencies with a simplified process of acquiring commonly used commercial supplies and services at prices associated with volume buying. Ordering activities conduct streamlined competitions among a number of schedule contractors, issue orders directly with the selected contractor, and administer orders.

This interim rule amends GSAR Parts 511, 516, 532, 538, 546, and 552 to implement Section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364). Section 833 amends 40 U.S.C. 502 to authorize the Administrator of General Services to provide to State and local governments the use of Federal Supply Schedules of the GSA for purchase of products and services to be used to facilitate recovery from a major disaster declared by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) or to facilitate recovery from terrorism or nuclear, biological, chemical, or radiological attack. Section 833 requires the Secretary of Homeland Security to determine which products and services qualify before the Administrator provides for the use of the Federal Supply Schedules. House Report 109-452 of the Committee on Armed Services indicates that Section 833 builds on the implementation of the Cooperative Purchasing Program authorized in Section 211 of the E-Government Act of 2002 (Pub. L. 107-347), which opened GSA's information technology schedule, Schedule 70, for use by State and local governments.

“State and local government entities,” means the states of the United States, counties, municipalities, cities, towns, townships, tribal governments, public authorities (including public or Indian housing agencies under the United States Housing Act of 1937), school districts, colleges and other institutions of higher education, council of governments (incorporated or not), regional or interstate government entities, or any agency or instrumentality of the preceding entities (including any local educational agency or institution of higher education), and including legislative and judicial departments. The term does not include contractors of, or grantees of, State or local governments.

(1) “Local educational agency” has the meaning given that term in section 8013 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7713).

(2) “Institution of higher education” has the meaning given that term in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)).

(3) “Tribal government” means—

(i) The governing body of any Indian tribe, band, nation, or other organized group or community located in the continental United States (excluding the State of Alaska) that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians; and

(ii) Any Alaska Native regional or village corporation established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.).

Eligible state or local government ordering activities are encouraged to use the ordering procedures outlined in Federal Acquisition Regulation (FAR) Subpart 8.4 (48 CFR Chapter 1, Subpart 8.4) when placing an order against Federal Supply Schedules contracts.

This interim rule establishes a new GSAR Subpart 538.71 and amends associated clauses to address recovery purchasing from supply schedules by eligible non-federal organizations. Among other things, the rule defines the scope of recovery purchasing, its usage, and applicable terms and conditions, including payment and the handling of disputes.

Scope. State and local governments are authorized to use Federal Supply Schedules to procure products and services determined by the Secretary of Homeland Security to facilitate recovery from major disasters, terrorism, or nuclear, biological, chemical, or radiological attack. This authority is limited to GSA's Multiple Award Schedule contracts and does not include any other GSA programs. A listing of the Federal Supply Schedules for the products and services is available in GSA's Schedules e-Library at Web site http://www.gsaelibrary.gsa.gov. The State or local government ordering activity is responsible for ensuring that only authorized representatives of their governments place orders and that purchased products or services are used to facilitate recovery from major disasters or attacks for the purposes stated in Section 833.

Voluntary use. The authority provided in this rule is available for use on a voluntary (i.e., non-mandatory) basis. In other words, businesses with schedule contracts which contain items for recovery purchasing have the option of deciding whether they will accept orders placed by State or local government buyers. Existing schedule contracts which contain items for recovery purchasing may be modified only by mutual agreement of the parties. After an existing contract has been modified, a schedule contractor still retains the right to decline orders by State or local government buyers on a case-by-case basis. Future schedule contractors will also be able to decline orders on a case-by-case basis. Schedule contractors may decline any order, for any reason, within a 5-day period of receipt of the order (See GSAR 552.238-78). Similarly, the rule places no obligation on State and local government buyers. They will have full discretion to decide if they wish to make a Federal Supply Schedule purchase, subject, however, to any limitations that may be established under State and local law and procedures.

Defined terms and conditions. Under new GSAR clause 552.238-80, Use of Federal Supply Schedule Contracts by Certain Entities-Recovery Purchasing, which will be incorporated into covered schedule contracts of participating contractors, a new contract will be formed when the schedule contractor accepts an order from a State or local government. However, with certain exceptions provided in this rule, terms and conditions of the underlying schedule contract will be incorporated by reference into the new contract between the State or local government and the contractor. A State and local government ordering activity may include terms and conditions required by statute, ordinance, regulation, or order to the extent that these terms and conditions do not conflict with the terms and conditions of the Schedule contract.

With respect to payment, this rule amends the GSAR to make the clause at 552.232-81, Payments by Non-Federal Ordering Activities, applicable to Federal Supply Schedules for recovery purchasing. The clause provides that the terms and conditions of a State's prompt payment law apply to orders placed by eligible non-Federal ordering activities. If the ordering activity is not otherwise subject to a State prompt payment law, the activity would be covered by the Federal Prompt Payment Act, 31 U.S.C. 3901, et seq., as implemented in FAR Subpart 32.9, in the same manner as Federal ordering activities.

The Federal Government will not be liable for the performance or nonperformance of contracts established under the authority of this rule between schedule contractors and eligible non-federal entities. Disputes that cannot be resolved by the parties to the new contract can be litigated in any State or Federal court with jurisdiction over the parties, using principles of Federal procurement law and the Uniform Commercial Code, as applicable and appropriate.

The prices of supplies and services available on schedule contracts include an industrial funding fee. The fee covers the administrative costs incurred by GSA to operate the Schedules program. The fee will be periodically adjusted as necessary to recover the cost of operating the program.

Advance Purchasing. State and local governments may use the Federal Supply Schedule contracts to purchase products or services in advance of a major disaster declared by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) or terrorist, nuclear, biological, chemical, or radiological attack. In the aftermath of emergency events, State or local governments' systems may be disrupted. Thus, use of Federal Supply schedule contracts prior to these events to acquire products or services to be used to facilitate recovery is authorized. The State or local government will be responsible for ensuring that purchased products or services are to be used to facilitate recovery.

Transactional data. GSA anticipates a need for specific information regarding recovery purchasing. Quality transactional data will allow for effective program measurement and improvement. GSA is interested in comments on the schedule contractors' ability to report data elements such as items and quantities sold, prices, and State or local government placing the order. GSA also is interested in hearing industry's perspective on the best way to capture this data.

B. Unfunded Mandates Reform Act and Executive Order 13132

The following statutes and Executive orders do not apply to this rulemaking: Unfunded Mandates Reform Act of 1995; Executive Order 13175, Consultation and Coordination with Indian Tribal Governments; and Executive Order 13132, Federalism.

C. Regulatory Flexibility Act

The changes may 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 interim rule will affect large and small entities including small businesses that are awarded schedule contracts for recovery purchasing, under the GSA Federal Supply Schedule program; non-schedule contractors, including small businesses, contracting with State or local governments; and small governmental jurisdictions that will be eligible to place orders under schedule contracts for recovery purchasing.

An Initial Regulatory Flexibility Analysis (IRFA) has been prepared. The analysis is summarized as follows:

1. Description of the reasons why action by the agency is being considered.

To implement section 833, Use of Federal Supply Schedules by State and Local Governments for Goods and Services for Recovery from Natural Disasters, Terrorism, or Nuclear, Biological, Chemical, or Radiological Attack, of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364). Section 833 amends section 502 of title 40, United States Code, to authorize the Administrator to provide for use by State or local governments of Federal Supply Schedules of the General Services Administration for products or services that are to be used to facilitate recovery from a major disaster declared by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) or to facilitate recovery from terrorism or nuclear, biological, chemical, or radiological attack. The rule opens Federal Supply Schedule contracts for recovery purchasing, for use by other governmental entities to enhance intergovernmental cooperation.

2. Succinct statement of the objectives of, and legal basis for the interim rule.

The interim rule will implement section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364) with the objective of opening Federal Supply Schedule contracts for use by other governmental entities to enhance intergovernmental cooperation. The goal of the new rule is to make “government” (considering all levels) more efficient by reducing duplication of effort and utilizing volume purchasing techniques for the acquisition products and services determined by the Secretary of Homeland Security to facilitate recovery from a major disaster, terrorism, or nuclear, biological, chemical, or radiological attack.

3. Description of, and where feasible, estimate of the number of small entities to which the interim rule will apply.

The rule will affect large and small entities including small businesses that are awarded schedule contracts for recovery purchasing, under the GSA Federal Supply Schedule program; non-schedule contractors, including small businesses, contracting with State or local governments; and small governmental jurisdictions that will be eligible to place orders under schedule contracts for recovery purchases. Approximately 80 percent (12,494) of GSA Schedule contractors are small businesses and they accounted for 37 percent of the sales under the Schedules program for Fiscal Year 2005. All of the small business contractors under the Schedules for recovery purchasing will be allowed, at the schedule contractor's option, to accept orders from State and local governments. Obviously, the expanded authority to order from Schedule contracts for recovery purchasing could increase the sales of small business schedule contractors. It is difficult to identify the number of non-schedule small businesses that currently sell directly to State and local governments. The ability of governmental entities to use Schedule contracts for recovery purchasing, may affect the competitive marketplace in which those small businesses operate. State and local government agencies could realize lower prices on some products and services, less administrative burden and shortened procurement lead times. The rule does not affect or waive State or local government preference programs. Finally, small governmental jurisdictions will also be affected Counties, incorporated municipalities, minor subdivisions, public housing authorities, school districts, public educational institutions of higher learning, and Indian tribal governments would be among those affected if they chose to order from Schedule contracts for recovery purchasing. Federal Supply Schedule contracts are negotiated as volume purchase agreements, with generally very favorable pricing. The ability of small governmental entities to order from Schedule contracts for recovery purchasing holds out the potential for significant cost savings for those organizations as well as providing alternative sources of goods and services in case their usual and customary sources of supply are interrupted in the aftermath of the disaster.

4. Description of projected reporting, recordkeeping, and other compliance requirements of the rule, including an estimate of the classes of small entities that will be subject to the requirement and the type of professional skills necessary for preparation of the report or record.

The interim rule makes changes in certain provisions or clauses in order to recognize the fact that authorized non-federal ordering activities may place orders under the contract. The Office of Management and Budget under the Paperwork Reduction Act has previously approved these clauses and the changes do not impact the information collection or recordkeeping requirements.

5. Identification, to the extent practicable, of all relevant Federal rules that may duplicate, overlap or conflict with the rule.

The interim rule does not duplicate, overlap, or conflict with any other Federal rules.

6. Description of any significant alternatives to the interim rule that accomplish the stated objectives of applicable statutes and that minimize any significant economic impact of the rule on small entities.

There are no practical alternatives that will accomplish the objective of this rule.

The Regulatory Secretariat has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. Interested parties may obtain a copy from the Regulatory Secretariat. The Councils will consider comments from small entities concerning the affected GSAR Parts 511, 516, 532, 538, and 552 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. (Amendment 2007-01, GSAR case 2006-G522), in correspondence.

D. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 104-13) applies because the interim rule contains information collection requirements. The new clause at 552.238-80, Use of Federal Supply Schedule Contracts by Certain Entities-Recovery Purchasing, provides for the contractor to report the quarterly dollar value of all sales under the contract to State and local governments, which includes any State, local, regional or tribal government or any instrumentality thereof (including any local educational agency or institution of higher learning). The records required for reporting are the same as those normally maintained by a contractor in the commercial world and do not represent a Government-unique recordkeeping requirement. Therefore, the estimated burden for this clause under the Paperwork Reduction Act is zero. GSA has a blanket approval under OMB Control Number 3090-0250 from Office of Management and Budget for information collections with a zero burden estimate.

E. Determination To Issue an Interim Rule

A determination has been made under the authority of the Administrator of General Services (GSA) that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comment. This action is necessary to implement Section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), signed by the President on October 17, 2006. The law requires the Administrator of General Services to establish procedures to implement Section 833 not later than 30 days after the date of the enactment of the Act. GSA wishes to obtain public comments on the changes. Due to the statutory deadline, the rule is being issued as an interim rule rather than as a proposed rule.

Comments received in response to the publication of this interim rule will be considered in formulating the final rule.

List of Subjects in 48 CFR Parts 511, 516, 532, 538, 546, and 552

• Government procurement

Therefore, GSA amends 48 CFR parts 511, 516, 532, 538, 546, and 552 as set forth below:

1. The authority citation for 48 CFR parts 511, 516, 532, 538, 546, and 552 continues to read as follows:

Authority: 40 U.S.C. 121(c).

PART 511—USING AND MAINTAINING REQUIREMENTS DOCUMENTS

2. Revise paragraphs (c)(3) and (d) of section 511.204 to read as follows:

PART 516—INDEFINITE-DELIVERY CONTRACTS

3. Amend section 516.506 by—

a. Redesignating paragraph (d) as (e);

b. Adding a new paragraph (d); and

c. Amending the newly designated paragraph (e) by revising the last sentence.

The added and revised text reads as follows:

PART 532—CONTRACT FINANCING

4. Amend section 532.206 by revising paragraphs (a) and (b) to read as follows:

5. Amend section 532.7003 by revising paragraphs (b) and (c) to read as follows:

PART 538—FEDERAL SUPPLY SCHEDULE CONTRACTING

6. Amend section 538.273 by revising paragraphs (a)(2) and (b)(2) to read as follows:

7. Add Subpart 538.71, consisting of sections 538.7100 thru 538.7104, to read as follows:

Subpart 538.71—Recovery Purchasing

PART 546—QUALITY ASSURANCE

8. Amend section 546.710 by revising paragraph (b) to read as follows:

PART 552—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

9. Amend section 552.216-72 by—

(a) Removing from the introductory text of Alternate II “516.506(c)” and adding “516.506(b)” in its place; and

(b) Adding Alternate IV.

The added text reads as follows:

10. Amend section 552.216-73 by—

(a) Removing from the introductory text “516.506(c)” and adding “516.506(e)” in its place; and

(b) Removing from the introductory text of Alternates I and II “516.506(b)” and adding “516.506(e)” in its place, respectively.

11. Add section 552.238-76 to read as follows:

12. Amend section 552.238-78 by adding Alternate I to read as follows:

13. Add new section 552.238-80 to read as follows: