DATE: July 21, 2004

SUBJECT: Federal Acquisition Regulation (FAR); Performance-Based Service Acquisition

SOURCE: Federal Register, July 21, 2004, Vol. 69, No. 139, page 43711

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR Subpart 37.6, Performance-Based Contracting, be amended to broaden the scope of "performance-based acquisition" (PBA) and give agencies more flexibility in applying "performance-based service acquisition" (PBSA) methods to contracts and orders of varying complexity, thus reducing the tendency to force PBA on contracts and orders when it is not appropriate.

DATES: Comments should be submitted on or before September 20, 2004.

ADDRESSES: Submit comments, identified by "FAR Case 2003-018," to: (1) http://www.regulations.gov; (2) http://www.acqnet.gov/far/ProposedRules/proposed.htm; (3) e-mail: farcase.2003-018@gsa.gov; (4) fax: 202-501-4067; or (5) mail: General Services Administration, Regulatory Secretariat (MVA), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405.


SUPPLEMENTAL INFORMATION: Under a performance-based contract, an agency describes its needs in terms of what is to be achieved, not how it is to be done. Various laws, including Section 821(a) of the National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398), and Sections 1431 and 1433 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136), state that agencies should (1) use performance-based contracting methods to the maximum extent practicable when acquiring services, and (2) carefully select acquisition and contract administration strategies, methods, and techniques that best accommodate the requirements. (EDITOR'S NOTE: For more on the implementation of Section 821 of Public Law 106-398, see the May 2, 2001, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 97-25, Performance-Based Contracting and Information Technology Contractor Personnel," Item I. For more on the implementation of Sections 1431 and 1433 of Public Law 108-136, see the June 18, 2004, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-24, Miscellaneous Amendments," Item (1).)

Agencies have made moderate progress in implementing performance-based contracting methods on service contracts but have experienced difficulties in applying them effectively. In April 2002, the Office of Federal Procurement Policy (OFPP) convened an interagency working group to establish a broader understanding of the requirements of performance-based service contracting, and identify ways to increase its use. The group focused its efforts on three areas of change:

  1. Modifying the FAR to give agencies flexibility in applying performance-based service contracting;
  2. Modifying reporting requirements to ensure that applying performance-based service contracting is applied appropriately; and
  3. Improving the quality, currency, and availability of guidance.

In July 2003, the working group reported its findings, and this proposed rule reflects most of the group's recommendations. The following are the major changes being proposed:

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

Copyright 2004 by Panoptic Enterprises. All Rights Reserved.

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