Federal Acquisition Regulation: Application of Micro-Purchase Threshold To Task and Delivery Orders

Published date22 October 2020
Citation85 FR 67327
Record Number2020-22518
SectionProposed rules
CourtGeneral Services Administration,National Aeronautics And Space Administration
Federal Register, Volume 85 Issue 205 (Thursday, October 22, 2020)
[Federal Register Volume 85, Number 205 (Thursday, October 22, 2020)]
                [Proposed Rules]
                [Pages 67327-67329]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-22518]
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                DEPARTMENT OF DEFENSE
                GENERAL SERVICES ADMINISTRATION
                NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
                48 CFR Part 16
                [FAR Case 2020-004; Docket No. FAR-2020-0004, Sequence No. 1]
                RIN 9000-AO04
                Federal Acquisition Regulation: Application of Micro-Purchase
                Threshold To Task and Delivery Orders
                AGENCY: Department of Defense (DoD), General Services Administration
                (GSA), and National Aeronautics and Space Administration (NASA).
                ACTION: Proposed rule.
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                SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
                Acquisition Regulation (FAR) to implement a section of the National
                Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020 that raises
                the threshold for fair opportunity on certain task and delivery orders
                to the micro-purchase threshold.
                DATES: Interested parties should submit written comments at the address
                shown below on or before December 21, 2020 to be considered in the
                formation of the final rule.
                ADDRESSES: Submit comments in response to FAR Case 2020-004 to http://www.regulations.gov. Submit comments via the Federal eRulemaking portal
                by searching for ``FAR Case 2020-004''. Select the link ``Comment Now''
                that corresponds with ``FAR Case 2020-004.'' Follow the instructions
                provided on the screen. Please include your name, company name (if
                any), and ``FAR Case 2020-004'' on your attached document. If your
                comment cannot be submitted using https://www.regulations.gov, call or
                email the points of contact in the FOR FURTHER INFORMATION CONTACT
                section of this document for alternate instructions.
                 Instructions: Please submit comments only and cite ``FAR Case 2020-
                004'' 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. To
                confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission
                to verify posting.
                FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
                Mr. Michael O. Jackson, Procurement Analyst, at 202-208-4949 or by
                email at [email protected]. For information pertaining to status
                or publication schedules, contact the Regulatory Secretariat Division
                at 202-501-4755. Please cite ``FAR Case 2020-004''.
                SUPPLEMENTARY INFORMATION:
                I. Background
                 DoD, GSA, and NASA are proposing to amend the FAR to implement
                section 826 of the NDAA for FY 2020 (Pub. L. 116-92) which increases
                the threshold for requiring fair opportunity on orders under multiple-
                award contracts from $2,500 to the ``micro-purchase threshold''. The
                fair opportunity to compete at FAR 16.505(b)(1) applies to orders over
                the threshold unless an exception at FAR 16.505(b)(2) applies. The FAR
                threshold at 16.505 is currently $3,500, as a result of inflation
                adjustments in accordance with FAR 1.109. This change applies the word-
                based threshold to ensure continued alignment with any future changes
                to the thresholds.
                 FAR Case 2018-004 was published July 2, 2020 (85 FR 40064) with an
                effective date of August 31, 2020. It raised the micro-purchase
                threshold, as defined at FAR 2.101, to $10,000.
                II. Discussion and Analysis
                 FAR section 16.505 currently requires contracting officers to
                provide each awardee a fair opportunity to be considered for each order
                exceeding $3,500 under multiple-award delivery-order or task-order
                contracts unless an exception applies. This rule proposes to change the
                threshold for requiring fair opportunity from $3,500 to the ``micro-
                purchase threshold'' at FAR 16.505(b)(1)(i), 16.505(b)(2)(i), and
                16.505(b)(2)(ii)(A). While the rule does not prohibit a contracting
                officer from providing fair opportunity to each awardee at or below the
                micro-purchase threshold, the rule requires contracting officers to
                provide fair opportunity for orders exceeding the micro-purchase
                threshold unless an exception applies.
                III. Applicability to Contracts at or Below the Simplified Acquisition
                Threshold (SAT) and for Commercial Items, Including Commercially
                Available Off-the-Shelf (COTS) Items
                 This proposed rule does not create any new provisions or clauses,
                nor does it change the applicability of any existing provisions or
                clauses included in solicitations and contracts valued at or below the
                SAT, or for commercial items, including COTS items.
                IV. Expected Cost Savings
                 DoD, GSA and NASA have performed a regulatory cost analysis for
                this proposed rule. This rule is expected to reduce the public burden
                because the threshold increase will reduce costs to submit an offer for
                the unsuccessful awardees who participate in fair opportunity
                competitions for orders under FAR part 16. DoD, GSA, and NASA recognize
                some awardees may be impacted by a reduction in the number of
                opportunities an awardee may have to receive an award of a delivery or
                task order through fair opportunity. Using Federal Procurement Data
                System (FPDS) data from FY 2017 through FY 2019 for FAR part 16 task
                and delivery orders awarded using fair opportunity between $3,500 and
                $10,000, the average number of fair opportunity task or delivery orders
                under FAR part 16 procedures is approximately 9,800 orders annually. We
                estimate that the Government receives an average of three offers for
                each of the 9,800 task or delivery orders, resulting in an estimated
                19,600 (9,800 x 2) unsuccessful offers. We assume there are costs to
                submit the offers for the estimated 19,600 unsuccessful offers, which
                will be eliminated by this rule. We estimate the public cost savings to
                be $266,070 annually using a fully burdened GS-12 step 5 salary from
                2019 (19,600 offers x 0.25 hour x $54.30).
                 DoD, GSA and NASA recognize that the increase in the micro-purchase
                threshold (MPT) in FAR Case 2018-004 (84 FR 52420 on October 2, 2019)
                has resulted in an increased use of the Governmentwide commercial
                purchase card and a general reduction in the number of FAR part 16
                delivery and task orders awarded between $3,500 and $10,000. According
                to FPDS, there were 12,911 fair opportunity FAR part 16 awards between
                $3,500 and $10,000 in FY 2017. In contrast, there were 6,421 awards in
                FY 2019; a drop by almost 50%. This decrease can be attributed to the
                preference given to the Governmentwide commercial purchase card for
                procurements under the MPT. While it's unclear whether there will be
                [[Page 67328]]
                further decreases in the number of FAR part 16 fair opportunity awards,
                it is clear that the increased MPT implemented by FAR Case 2018-004 has
                already reduced the public and Government burden by approximately 50%
                by shifting procurements from FAR part 16 delivery and task orders to
                Governmentwide commercial purchase cards.
                 DoD, GSA and NASA expect the rule to also reduce burden on the
                Government and streamline procurements for FAR part 16 orders below the
                MPT, or $10,000. Contracting officers will not be required to review
                multiple offers to make award. It is estimated that on average an hour
                would be saved per order awarded since the contracting officer would no
                longer need to review multiple offers to award the order. We estimate
                the Government cost savings to be $532,140 annually using a fully
                burdened GS-12 step 5 salary from 2019 (9,800 awards x 1 hour x
                $54.30).
                 The following is a summary of the estimated cost savings calculated
                in 2016 dollars at a 7% discount rate and in perpetuity.
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                 Summary Public Government Total
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                Present Value Cost Savings...................................... -$3,801,000 -$7,602,000 -$11,403,000
                Annualized Cost Savings......................................... -266,070 -532,140 -798,210
                Annualized Value Cost Savings as of 2016 if Year 1 is 2020...... -202,984 -405,967 -608,951
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                 DoD, GSA and NASA invite comments from the regulated community on
                both the methodology and the analysis provided in this rule.
                V. 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 importance of quantifying both costs and benefits,
                of reducing costs, of harmonizing rules, and of promoting flexibility.
                This is not a significant regulatory action and, therefore, was not
                subject to review under section 6(b) of E.O. 12866, Regulatory Planning
                and Review, dated September 30, 1993. This rule is not a major rule
                under 5 U.S.C. 804.
                VI. Executive Order 13771
                 This proposed rule is expected to be an E.O. 13771 deregulatory
                action. Information on the estimated cost savings of this rule are
                discussed in the ``Expected Cost Savings'' section of the preamble.
                VII. Regulatory Flexibility Act
                 DoD, GSA, and NASA do not expect this rule 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.
                However, an initial regulatory flexibility analysis (IRFA) has been
                performed and is summarized as follows:
                 This proposed rule amends the Federal Acquisition Regulation to
                implement section 826 of the National Defense Authorization Act
                (NDAA) for 2020 (Pub. L. 116-92) which raises the threshold for fair
                opportunity on certain task and delivery orders to the word-based,
                ``micro-purchase threshold''.
                 The objective of the rule is to increase the threshold for
                requiring fair opportunity on FAR part 16 orders under multiple-
                award contracts from $2,500 to the word-based, ``micro-purchase
                threshold'' for consistency of application and alignment with future
                adjustments. The legal basis for the rule is section 826 of the NDAA
                for FY 2020 (Pub. L. 116-92).
                 This rule will likely affect small business entities that
                participate in fair opportunity competitions for FAR part 16 task
                and delivery orders under multiple award contracts conducted by the
                Federal Government between $3,500 and $10,000. The rule is not
                expected to have a significant economic impact on small business
                entities because DoD, GSA, and NASA do not expect a significant
                change in the number of orders awarded to small entities; however,
                in certain circumstances it is expected to reduce the costs
                associated with developing and submitting a response to task and
                delivery order competitions for actions up to $10,000. To assess the
                impact of the threshold increase, data was obtained from FPDS. For
                FY 2017 through FY 2019, there was an average of 9,803 FAR part 16
                task and delivery orders awarded using fair opportunity between
                $3,500 and $10,000. Of these actions, an average of 5,852 were
                awarded to 843 unique small business entities. As a result of this
                rule, it is assumed that approximately 843 small business entities
                may experience a reduction in proposal costs on task and delivery
                orders valued between $3,500 and $10,000.
                 The proposed rule does not impose any Paperwork Reduction Act
                reporting or recordkeeping requirements on any small entities.
                 The proposed rule does not duplicate, overlap, or conflict with
                any other Federal rules.
                 There are no known significant alternative approaches to the
                proposed rule that would meet the proposed objectives.
                 The Regulatory Secretariat Division has submitted a copy of the
                IRFA to the Chief Counsel for Advocacy of the Small Business
                Administration. A copy of the IRFA may be obtained from the Regulatory
                Secretariat Division. DoD, GSA and NASA invite comments from small
                business concerns and other interested parties on the expected impact
                of this rule on small entities.
                 DoD, GSA, and NASA will also consider comments from small entities
                concerning the existing regulations in subparts affected by this rule
                consistent with 5 U.S.C. 610. Interested parties must submit such
                comments separately and should cite 5 U.S.C. 610 (FAR Case 2020-004) in
                correspondence.
                VIII. Paperwork Reduction Act
                 The rule does not contain any information collection requirements
                that require the approval of the Office of Management and Budget under
                the Paperwork Reduction Act (44 U.S.C. chapter 35).
                List of Subjects in 48 CFR Part 16
                 Government procurement.
                William F. Clark,
                Director, Office of Government-wide Acquisition Policy, Office of
                Acquisition Policy, Office of Government-wide Policy.
                 Therefore, DoD, GSA, and NASA are proposing to amend 48 CFR part 16
                as set forth below:
                PART 16--TYPES OF CONTRACTS
                0
                1. The authority citation for 48 CFR part 16 continues to read as
                follows:
                 Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
                U.S.C. 20113.
                16.505 [Amended]
                0
                2. Amend section 16.505 by--
                0
                a. Removing from paragraph (b)(1)(i) introductory text ``$3,500'' and
                adding ``the micro-purchase threshold'' in its place;
                [[Page 67329]]
                0
                b. Removing from paragraph (b)(2)(i) introductory text ``delivery-order
                or task-order exceeding $3,500'' and adding ``delivery order or task
                order exceeding the micro-purchase threshold'' in its place; and
                0
                c. Removing from the intro text paragraph (b)(2)(ii)(A) ``$3,500'' and
                adding ``the micro-purchase threshold'' in its place.
                [FR Doc. 2020-22518 Filed 10-21-20; 8:45 am]
                BILLING CODE 6820-EP-P
                

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