OF MANAGEMENT AND BUDGET
of Federal Procurement Policy
Office of Management and Budget, Office of Federal Procurement Policy
Proposed rescission of Office of Federal Procurement Policy (OFPP)
Policy Letters 77-2, 78-2, 78-3, 78-4, 79-1, 79-2, 80-3, 80-6, 80-8,
81-1, 81-2, 82-1, 83-1, 83-2, 83-3, 84-1, 85-1, 89-1, 91-2, 91-4,
92-5, and 95-1.
OMB is undertaking a thorough review of its government-wide procurement
issuances. Based on this review, OMB requests comments on the proposed
rescission of the following Office of Federal Procurement Policy
(OFPP) Policy Letters: 77-2, Section 502(c) of P.L. 95-89; 78-2,
Preventing "Wage Busting" for Professionals: Procedures for Evaluating
Contractor Proposals for Service Contracts; 78-3, Requests for Disclosure
of Contractor-Supplied Information Obtained in the Course of a Procurement;
78-4, Field Contract Support Cross-Servicing Program; 79-1, Implementation
of Section 15(k) of the Small Business Act, as amended: Office of
Small and Disadvantaged Business Utilization; 79-2, Boards of Contract
Appeals: Position Allocation Pursuant to Public Law 95-563; 80-3,
Regulatory Guidance on P.L. 95-563, the Contract Disputes Act of
1978; 80-6, Regulatory Guidance on Section 221 of Public Law 95-507;
80-8, Establishment of Procurement Data Reporting Requirements to
Comply with Public Law 96-39 (as amended by Transmittal Memoranda
Nos. 1, 2, and 3); 81-1, Procurement Procedures, Advance Procurement
Planning, and Review of End-of-Year Purchases; 81-2, Policy Guidance
for the Labor Surplus Area Programs; 82-1, Policy Guidance Concerning
Government-wide Debarment, Suspension, and Ineligibility; 83-1,
Withholding of Funds from Construction Contract Progress Payments;
83-2, Publicizing the Development of Procurement Policies and Regulations;
83-3, Procurement of Architect-Engineer Services, 84-1, Federally
Funded Research and Development Centers; 85-1, Federal Acquisition
Regulations System; 89-1, Conflict of Interest Policies Applicable
to Consultants; 91-2, Service Contracting; 91-4, Use of Irrevocable
Letters of Credit; 92-5, Past Performance Information; and 95-1,
Subcontracting Plans for Companies Supplying Commercial Items.
have been substantial changes to the body of acquisition law and
regulations since many of these policy documents were issued.
As indicated in the Supplementary Information below, the requirements
and provisions of the OFPP Policy Letters listed above have been
incorporated in the Federal Acquisition Regulation (FAR), 48 C.F.R.
1, or for other reasons have either been superseded or are no
Persons who wish to comment on the proposed rescission of any
of the OFPP Policy Letters should submit their comments no later
than November 24, 1999.
Comments should be addressed to Michael Gerich, Office of Federal
Procurement Policy, Room 9013 New Executive Office Building,
Washington, DC 20503.
FURTHER INFORMATION CONTACT: Michael Gerich, Office
of Federal Procurement Policy, 202-395-3501. Copies of the OFPP
Policy Letters can be obtained at the ARNet world wide website,
INFORMATION: OFPP has been a leader in overall acquisition
reform. One theme of acquisition reform is less reliance on
regulation and more reliance on streamlined, customer-oriented,
acquisition practices to improve support for agency missions.
In keeping with this overall theme, OFPP is reviewing all of
its policy letters, memoranda, and other issuances with the
intent to: rescind those that are essentially covered by other
regulations or policy documents; issue new policy letters and
similar documents sparingly and only when necessary; and issue
"best practices" instead. There have been substantial changes
to the body of acquisition law and regulations since many of
these policy documents were issued.
has recently completed a review of all of its policy issuances
for possible rescission, by comparing them with relevant statutory
provisions and sections of the Federal Acquisition Regulation
(FAR). The rescissions proposed in this notice reflect OFPP's
preliminary conclusion that the FAR, as written, contains the
current policy. Any policy embodied in the policy letters proposed
for rescission by this notice that is not reflected in the current
FAR has been either superseded by subsequent statutory changes
or is otherwise no longer necessary. No substantive FAR change
is required by this action.
this year, OFPP rescinded Policy Letter 79-4, Contracting for
Motion Picture Productions and Videotape Productions. 64 FR 8631
(February 22, 1999). On April 2, 1999, OFPP published notice in
the Federal Register requesting comments on two proposed
policy letters: Policy Letter 99-X, Policy on Promoting Subcontracting
Opportunities and Administering Subcontracting Plans (64 FR 16001);
and Policy Letter 99-1, Government-Wide Small Business, HUBZone
Small Business, Small Disadvantaged Business, and Women-Owned
Small Business Goals for Procurement Contracts (64 FR 16003).
Those two proposed policy letters would supersede OFPP Policy
Letters 80-1, 80-2, 80-4, and 91-1. In this notice, OFPP is proposing
to rescind an additional 22 policy letters, for the reasons explained
Policy Letter 77-2, Section 502(c) of P.L. 95-89Section
502(c) of Public Law 95-89 amended the Small Business Act (15
U.S.C. 631 et seq.) to allow certain nonprofit agencies employing
people who are blind or severely disabled to compete for agency
procurements conducted during fiscal year 1978 that would otherwise
have been reserved exclusively for competition among small businesses.
Policy Letter 77-2 implemented section 502(c). Similar statutory
provisions were enacted in subsequent years. For example, section
133 of Public Law 100-590 (November 3, 1988) (102 Stat. 3005)
authorized such nonprofit agencies to compete in procurements
otherwise set aside for small businesses in fiscal years 1989
through 1993. Section 305 of Public Law 103-403, the Small Business
Administration Reauthorization and Amendments Act of 1994, revived
this authority to compete for fiscal year 1995. The statutory
authority has expired.
Policy Letter 78-2, Preventing "Wage Busting" for Professionals:
Procedures for Evaluating Contractor Proposals for Service ContractsOFPP
Policy Letter 78-2 addressed "wage busting" practices of government
contractors who employ professional employees who traditionally
have not been represented by union collective bargaining agreements.
78-2 required contracting agencies to evaluate applicable proposals
from offerors by taking into account the cost realism of the contractor's
proposed personnel compensation plan. Unrealistically low labor
rates proposed for professional employees could indicate a lack
of understanding of the resources required to perform high quality
contract work on an uninterrupted basis. 78-2 was superseded,
in purpose, by the provisions of 10 U.S.C. 2331 (Contracts for
professional and technical services) which is implemented in FAR
37.115 (Uncompensated overtime) and FAR 52.237-10 (Identification
of Uncompensated Overtime).
Policy Letter 78-3, Requests for Disclosure
of Contractor-Supplied Information Obtained in the Course of
Policy Letter 78-3 prescribed a uniform approach to handling requests
filed under the Freedom of Information Act for information disclosed
by government contractors and offerors. 78-3 was superseded, in
purpose, by FAR Subpart 24.2, which implements statutory provisions
at 10 U.S.C. 2305(g) and 41 U.S.C. 253b(m).
Policy Letter 78-4, Field Contract Support Cross-Servicing ProgramPolicy
Letter 78-4 encouraged agencies that require contract support
services (e.g., contract administration, audit services) from
field offices to use cross-servicing arrangements with existing
contract administration and contract audit organizations of other
agencies. The Policy Letter was intended to treat contractors
more consistently and, where possible, preclude duplication of
effort attributable to multiple agency reviews, inspections, and
examination of contractor records. The provisions of the Policy
Letter were incorporated in FAR Subpart 42.1.
Policy Letter 79-1, Implementation of Section 15(k) of the Small
Business Act, as amended: Office of Small and Disadvantaged
15(k) of the Small Business Act (15 U.S.C. 644(k)) established
an Office of Small and Disadvantaged Business Utilization (OSDBU)
in each contracting agency to implement and execute the functions
and duties under sections 8 and 15 of the Small Business Act which
relate to such agency. Policy Letter 79-1 provided guidance on
the organization and function of the OSDBUs. The provisions of
Policy Letter 79-1 were incorporated in FAR subsections 19.201(c)
Policy Letter 79-2, Boards of Contract Appeals:
Position Allocation Pursuant to Public Law 95-563Policy
Letter 79-2 made an initial allocation of positions for agency
boards of contract appeals pursuant to Public Law 95-563, the
Contract Disputes Act of 1978. Section 8(a) of the Contract Disputes
Act of 1978, as amended, (41 U.S.C. 607(a)) states that a board
of contract appeals may be established within an executive agency,
when the agency head, after consultation with the Administrator
for Federal Procurement Policy, determines from a workload study
that the volume of contract claims justifies the establishment
of a full-time agency board. Since issuance of Policy Letter 79-2
over 20 years ago, there has been little need for guidance in
this area. OFPP will issue new guidance, if necessary.
Policy Letter 80-3, Regulatory Guidance on P.L. 95-563, the
Contract Disputes Act of 1978Policy
Letter 80-3 provided guidance on developing regulations to implement
provisions of the Contract Disputes Act of 1978, including resolution
of contract claims, contractor certification requirements, payment
of interest on contractor claims, and a contract disputes clause.
The provisions of Policy Letter 80-3 were incorporated in FAR
Subpart 33.2 and the contract disputes clause at FAR 52.233-1.
Policy Letter 80-6, Regulatory Guidance on Section 221 of Public
Letter 80-6 provided regulatory guidance on section 15(j) of the
Small Business Act (15 U.S.C. 644(j)), which set aside small purchase
procurements for small businesses. Section 15(j) was amended to
apply the set aside provisions to agency purchase of goods or
services that have an anticipated value greater than $2,500 but
not greater than $100,000. The regulatory guidance in Policy Letter
80-6, as amended by the statutory changes, is implemented by the
provisions of FAR 19.502-2.
Policy Letter 80-8, Establishment of Procurement Data Reporting
Requirements to Comply with Public Law 96-39 (as amended by
Transmittal Memoranda Nos. 1, 2, and 3).Policy
Letter 80-8 established procurement data reporting requirements.
Transmittal Memoranda Nos. 1, 2, and 3 amended those reporting
requirements. The provisions of Policy Letter 80-8 and the Transmittal
Memoranda are implemented in FAR Subpart 4.6 and the FPDS Reporting
Manual described therein.
Policy Letter 81-1, Procurement Procedures,
Advance Procurement Planning, and Review of End-of-Year PurchasesPolicy
Letter 81-1 required agencies to establish advance procurement
planning procedures to allow sufficient lead time to prepare procurement
solicitations, obtain and evaluate bids or proposals, audit, negotiate,
and make contract awards in an orderly manner. The Policy Letter
also required agencies to develop procedures for review of procurements,
particularly major procurements, made in the last quarter to assure
they are consistent with advance procurement plans. The provisions
of Policy Letter 81-1 were essentially incorporated in FAR Part
7 and partially superseded by procedures found in Part 3 of OMB
Circular A-11, Planning, Budgeting, and Acquisition of Capital
Assets, and the Capital Programming Guide which further integrate
the budget and procurement processes.
Policy Letter 81-2, Policy Guidance for the
Labor Surplus Area Programs (as amended by Supplement No. 1)Policy
Letter 81-2, as amended by Supplement No. 1, provided guidance
on implementing subsections 15(d), (e), and (f) of the Small Business
Act (as amended and added by section 117 of Public Law 96-302,
July 2, 1980) that gave priority in awarding contracts and subcontracts
to firms performing in areas of unemployment or underemployment
known as labor surplus areas. Subsection 7101(a) of the Federal
Acquisition Streamlining Act of 1994 (Public Law 103-355, October
13, 1994) deleted subsections 15(e) and (f) from the Small Business
Act, thus removing the labor surplus area set-aside and subcontracting
programs. The statutory changes were implemented in FAR Part 19.
For more information, see the final rule amendment to the FAR
published in the Federal Register on September 18, 1995
(60 FR 48258).
Policy Letter 82-1, Policy Guidance Concerning Government-wide
Debarment, Suspension, and IneligibilityPolicy
Letter 82-1 established policies and procedures for debarment
and suspension of persons from contracting with Federal Departments
and agencies. The provisions of Policy Letter 82-1 are implemented
in FAR Subpart 9.4.
Policy Letter 83-1, Withholding of Funds from
Construction Contract Progress PaymentsPolicy
Letter 83-1 provided guidance on retention or withholding of funds
from progress payments made under Federal construction contracts.
The provisions of the Policy Letter are implemented in FAR section
Policy Letter 83-2, Publicizing the Development
of Procurement Policies and RegulationsPolicy
Letter 83-2 established uniform criteria and procedures for soliciting
the views of all interested parties in the development by executive
Departments and agencies of procurement policies, regulations,
procedures and forms. The provisions of Policy Letter 83-2 were
codified in section 22 of the OFPP Act, as amended (41 U.S.C.
418b), and implemented in FAR Subpart 1.5.
Policy Letter 83-3, Procurement of Architect-Engineer
Letter 83-3 provided guidance on procurement of architect-engineer
services under the Brooks Architect-Engineers Act (Public Law
92-582, 40 U.S.C. 541 et seq.). The Policy Letter delineated the
type of services to be procured using source selection procedures
prescribed by the Brooks Architect-Engineers Act versus using
standard source selection procedures. The provisions of Policy
Letter 83-3 were implemented by FAR section 36.601.
Policy Letter 84-1, Federally Funded Research
and Development CentersPolicy
Letter 84-1 established policy for the establishment, use, periodic
review, and termination of sponsorship of Federally Funded Research
and Development Centers (FFRDCs). The provisions of Policy Letter
84-1 were implemented by FAR section 35.017.
Policy Letter 85-1, Federal Acquisition Regulations
Letter 85-1 implemented provisions of the OFPP Act (Public Law
93-400 as amended, 41 U.S.C. 401 et seq.) concerning the single
system of simplified Government-wide procurement regulations now
known as the Federal Acquisition Regulation (FAR) (48 C.F.R. 1).
The Policy Letter covered establishment of the FAR System, FAR
maintenance, and resolution of differences among executive agencies
in development of FAR provisions. The provisions of Policy Letter
85-1 were codified in sections 6 and 25 of the OFPP Act (41 U.S.C.
405 and 41 U.S.C. 421, respectively) and incorporated in FAR Subparts
1.1, 1.2, and 1.3.
Policy Letter 89-1, Conflict of Interest Policies
Applicable to ConsultantsPolicy
Letter 89-1 established policy and procedures on applying conflict
of interest standards to persons who provide consulting services
to the government, pursuant to section 8141 of the 1989 Department
of Defense Appropriations Act, Public Law 100-463, 102 Stat. 2270-47
(October 1, 1988). The provisions of Policy Letter 89-1 were incorporated
in FAR Subpart 9.5.
Policy Letter 91-2, Service ContractingOFPP
Policy Letter 91-2 established policy for acquiring services by
contract. It encouraged the use of "performance-based contracting,"
which uses standards to measure quality and timeliness of contractor
performance and surveillance plans to assure that the standards
are met. Policy Letter 91-2 is implemented in FAR Subpart 37.6.
For more information on this subject, see OFPP's "A Guide to Best
Practices for Performance-Based Service Contracting" (October
1998) at the ARNet world wide website, http://www.arnet.gov/BestP/PPBSC/BestPPBSC.html.
Policy Letter 91-4, Use of Irrevocable Letters
Policy Letter 91-4 established policy for use of irrevocable letters
of credit in lieu of sureties for Federal construction contracts
requiring Miller Act bonds. The Miller Act (40 U.S.C. 270a et
seq.) requires the use of performance and payment bonds for Federal
construction contracts in excess of $25,000. Policy Letter 91-4
determined that: irrevocable letters of credit serve much of the
same function and provide the same redeemable value as bonds,
postal orders, and certified checks; Federal agencies are authorized
to accept such letters; and their usage in lieu of sureties would
help to achieve greater access by small and small disadvantaged
businesses to Federal construction contracts. The Policy Letter
permitted agencies to use irrevocable letters of credit in lieu
of sureties for Federal construction contracts requiring Miller
Act bonds. Policy Letter 91-4 is implemented in FAR section 28.204-3.
Policy Letter 92-5, Past Performance InformationPolicy
Letter 92-5 established requirements for evaluating contractor
performance and for using past performance information in the
contractor selection process. The provisions of Policy Letter
92-5 have been implemented in FAR Subpart 42.15 and FAR sections
15.304 and 15.305. For more information on this subject, see "A
Guide to Best Practices for Past Performance" (May 1995) at the
ARNet world wide website, http://www.arnet.gov/BestP/BestPract.html.
Policy Letter 95-1, Subcontracting Plans for Companies Supplying
8(d) of the Small Business Act (15 U.S.C. 637(d)) requires that
each contract that exceeds $500,000 ($1 million in the case of
construction) and that offers subcontracting opportunities include
a requirement that the apparently successful offeror negotiate
a subcontracting plan which shall become a material part of the
contract. Policy Letter 95-1 revised the policy on subcontracting
plans to reduce the burden of government-unique requirements on
prime contractors and subcontractors that supply commercial items.
The Policy Letter allows such contractors and subcontractors to
meet the requirements of Section 8(a) of the Small Business Act
by submitting an annual "commercial plan" rather than an individual
contract-by-contract or subcontract-by-subcontract plan. A commercial
plan is a subcontracting plan that covers a contractor's or subcontractor's
fiscal year and that applies to the entire production of commercial
items sold by either the entire company or a portion thereof (e.g.,
division, plant, or product line). The provisions of Policy Letter
95-1 were implemented in FAR sections 19.701, 19.704(d), and 19.705-7.
requests comments on these proposed rescissions.