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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: May 7, 2003

SUBJECT: General Services Administration Acquisition Regulation (GSAR) Amendment 2003-01; Acquisition of Information Technology by State and Local Governments Through Federal Supply Schedules

SOURCE: Federal Register, May 7, 2003, Vol. 68, No. 88, page 24372

AGENCIES: Office of Governmentwide Policy, General Services Administration (GSA)

ACTION: Interim Rule

SYNOPSIS: GSA is adding GSAR Subpart 538.70, Cooperative Purchasing, and making other related changes to the GSAR to implement Section 211 of the E-Government Act of 2002 (Public Law 107-347), which authorizes GSA to permit state and local governments to use its Federal Supply Schedules for "automated data processing equipment (including firmware), software, supplies, support equipment, and services (as contained in Federal Supply Classification Code Group 70)."

EDITOR'S NOTE: The GSAR is the shaded part of the GSA Acquisition Manual, which is available on the Internet at http://www.acqnet.gov/GSAM/gsam.html.

DATES: The effective date for this interim rule is May 7, 2003. Comments on the interim rule are to be submitted by July 7, 2003.

ADDRESSES: Send comments on the interim rule to General Services Administration, Regulatory Secretariat (MVA), 1800 F Street, NW, Room 4035, Attn: Laurie Duarte, Washington, DC 20405, or by e-mail to: gsarcase.2002-505@gsa.gov. Cite "GSAR case 2002-G505" in all correspondence related to this interim rule.

FOR FURTHER INFORMATION CONTACT: Linda Nelson at 202-501-1900.

SUPPLEMENTAL INFORMATION: Section 211 of the E-Government Act of 2002 amends the Federal Property and Administrative Services Act to allow the GSA Administrator to authorize "cooperative purchasing" to permit state, local, regional, or tribal governments to acquire automated data processing equipment (including firmware), software, supplies, support equipment, and services from Federal Supply Schedule Group 70, General Purpose Commercial Information Technology Equipment, Software, and Services.

On January 23, 2003, GSA published a proposed rule to establish a new GSAR Subpart 538.70 and associated clauses to address cooperative purchasing from supply schedules by eligible non-federal organizations (for more on the proposed rule, see the January 23, 2003, FEDERAL CONTRACTS DISPATCH "General Services Administration Acquisition Regulation (GSAR); Acquisition of Information Technology by State and Local Governments Through Federal Supply Schedules").

GSA received 24 comments on the proposed rule, and GSA concluded that the proposed rule should be converted to an interim rule with substantive changes. The interim rule modifies the proposed rule to:

• Incorporate Schedule 70 information technology (IT) special item numbers (SINs) that are included in IT "corporate" schedule contracts;
  
  
• Permit authorized state and local governments to add terms and conditions as part of the statement of work (SOW) or statement of objectives (SOO) required by the state or local government statutes, ordinances, regulations or orders to the extent that they do not conflict with the schedule contract terms and conditions (paragraph (a)(3) of GSAR 552.238-79, Use of Federal Supply Schedule Contracts by Certain Entities -- Cooperative Purchasing); and
  
  
• Revise the disputes language in proposed GSAR 552.238-79 to encourage the use of Alternative Dispute Resolution (ADR).

The introduction to the interim rule lists the IT products and services from Schedule 70 and the Corporate Schedule contracts that state and local governments are authorized to procure. GSAR 538.7002, General, states that the listing of Special Item Numbers (SINs) is also available in GSA's Schedules e-Library at http://fss.gsa.gov/elibrary -- a "COMM PURCH" logo will identify all the participating contractors and SINs available for purchase by eligible non-federal ordering activities.

The following is the list of SINs:

The following are the key provisions of the interim rule:

• GSAR 538.7001, Definitions, defines "state and local government entities," as "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." (EDITOR'S NOTE: The interim rule introduction states that the 50 states, 3139 counties, 19,365 incorporated municipalities, 30,386 minor subdivisions, 3,200 public housing authorities, 14,178 school districts, 1,625 public educational institutions of higher learning, and 550 Indian tribal governments are eligible under this definition.)
  
  
• GSAR 538.7003, Policy, requires the GSA contracting officer to modify the following clauses to delete "Government" and substitute "ordering activity" when preparing solicitations and contracts to be awarded under FSS Schedule 70 and the Corporate Schedule containing information technology SINs:
  • FAR 52.212-4, Contract Terms and Conditions -- Commercial Items
  • FAR 52.216-18, Ordering
  • FAR 52.216-19, Order Limitations
  • FAR 52.229-1, State and Local Taxes
  • FAR 52.229-3, Federal, State, and Local Taxes
  • FAR 52.232-7, Payments Under Time-and-Materials and Labor-Hour Contracts
  • FAR 52.232-17, Interest
  • FAR 52.232-19, Availability of Funds for the Next Fiscal Year
  • FAR 52.232-34, Payment by Electronic Funds Transfer -- Other than Central Contractor Registration
  • FAR 52.232-36, Payment by Third Party
  • FAR 52.237-3, Continuity of Services
  • FAR 52.246-4, Inspection of Services-Fixed Price
  • FAR 52.246-6, Inspection-Time-and-Material and Labor-Hour
  • FAR 52.247-34, F.O.B. Destination
  • FAR 52.247-38, F.O.B. Inland Carrier Point of Exportation
  
  
• GSAR 552.232-81, Payments by Non-Federal Ordering Activities, is added. It states that the terms of any state prompt payment law applies to an order by a non-federal ordering activity. If no state prompt payment law applies, then the Federal Prompt Payment Act as reflected in FAR 52.232-25, Prompt Payment, or FAR 52.212-4, Contract Terms and Conditions -- Commercial Items, applies.
  
  
• GSAR 552.238-79, Use of Federal Supply Schedule Contracts by Certain Entities -- Cooperative Purchasing, provides for the following:
  
  
  • Paragraph (a)(1): When a schedule contractor accepts an order from an "eligible ordering activity" (the contractor does not have to accept an order -- see paragraph (a)(5)), a new contract is formed, and the terms and conditions of the basic schedule contract are incorporated by reference into the new contract between the state or local government and the contractor (with certain exceptions, such as FAR 52.233-1, Disputes). "Disputes which cannot be resolved by the parties to the new contract may be litigated in any state or federal court with jurisdiction over the parties, applying federal procurement law, including statutes, regulations and case law, and, if pertinent, the Uniform Commercial Code. To the extent authorized by law, parties to this new contract are encouraged to resolve disputes through Alternative Dispute Resolution."
    
    
  • Paragraph (a)(3): As a condition of using this contract, eligible ordering activities must abide by all terms and conditions of the schedule contract, except those deleted clauses mentioned in paragraph (a)(1). "Ordering activities may include terms and conditions required by statute, ordinance, regulation or order as a part of a statement of work (SOW) or statement of objective (SOO) to the extent that these terms and conditions do not conflict with the terms and conditions of the schedule contract. The ordering activity and the contractor expressly acknowledge that, in entering into an agreement for the ordering activity to purchase goods or services from the contractor, neither the ordering activity nor the contractor will look to, primarily or in any secondary capacity, or file any claim against the United States or any of its agencies with respect to any failure of performance by the other party." (EDITOR'S NOTE: The proposed paragraph (a)(3) stated, "Ordering activities may not modify, delete or add to the terms and conditions of the Schedule contract. To the extent that orders placed by such ordering activities may include additional terms and conditions not found in the schedule contract, those terms and conditions are null, void, and of no effect.")
    
    
  • Paragraph (a)(4): "The ordering activity is responsible for all payments due the contractor under the contract formed by acceptance of the ordering activity's order, without recourse to the agency of the U.S. Government, which awarded the schedule contract."
    
    
  • Paragraph (a)(5): "The contractor is encouraged, but not obligated, to accept orders from such [eligible ordering activities]. The contractor may, within 5 days of receipt of the order, decline to accept any order, for any reason. The contractor shall fulfill orders placed by such entities, which are not declined within the 5-day period."
    
    
  • Paragraph (a)(6): The supplies or services purchased must be used for governmental purposes only and not resold for personal use.
    
    
  • Paragraph (c): The contractor must report the quarterly dollar value of all sales under the FSS contract in accordance with GSAR 552.238-74, Contractor's Report of Sales. When submitting sales reports, the contractor must report two dollar values for each SIN: sales to federal government agencies, and sales to eligible ordering activities.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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