General Services Administration
FAR Secretariat (VRS)
18th & F Streets, N.W.
Room 4037
Washington, DC 20405
Dear FAR Secretariat:
This concerns a final rule published in the Federal Register on July 26, 1996 entitled "Federal Acquisition Regulation; Task & Delivery Order Contracts [FAR Case 94-711]."
The Office of Advocacy, in accordance with its responsibility to ensure that federal agencies consider the impact of their rules and policies on small business, finds the subject rule to be deficient in satisfying the requirements of the Regulatory Flexibility Act (RFA). Specifically, the final rule does not contain a proper final regulatory flexibility analysis (FRFA), nor does it satisfactorily address concerns raised by the Office of Advocacy or the small business community.
Advocacy's concerns regarding this final regulation are heightened by the recent passage of the Small Business Regulatory Enforcement Fairness Act which is intended to provide additional regulatory relief for small businesses, including judicial review of agency compliance with the law.
Advocacy provided comments on the changes proposed in this rule in a May 15, 1995 letter to the FAR Secretariat. Specifically, Advocacy stated "....the [proposed] rule expands the use of task order contracts, especially in the areas of advisory and assistance services. The Office of Advocacy and the small business community are concerned that these provisions will only further encourage bundling of contract requirements in a manner that will effectively prevent small firms from competing."
In addition, Advocacy found the initial regulatory flexibility analysis (IRFA) to be deficient noting, "....the analysis provides very limited information, conflicts with statements in the body of the rule and does not paint an accurate picture regarding how the rule will impact small firms."
Further, Advocacy's May 1995 letter suggested "....the [rule] should be sensitive to the bundling issue and the growing problem in this area. It should caution agencies and guide against the unnecessary aggregation of contracts." It should "....include provisions that would make subcontract participation by small, minority and women-owned firms a substantial factor in the award of such contracts."
No changes were made to the final rule as a result of Advocacy's comments. In addition, the final regulatory flexibility analysis does not explain, describe or quantify the impact the rule will have on small firms. Advocacy notes the following specific deficiencies with the FRFA:
Part 2 does not summarize the significant issues raised by the public comments. It appears to acknowledge only Advocacy's May 1995 comments, yet quickly refutes them without offering a substantive explanation as to why.
For instance, Advocacy found the IRFA not to be in compliance with the RFA. The FRFA simply claims it was. Advocacy said the IRFA didn't assess the small business impact. The FRFA claims it did, but does not provide an explanation. Advocacy said the rule will increase "bundling" of contract requirements, the FRFA acknowledges such potential, yet suggests "....any such impact may be mitigated by an increase in opportunities for small businesses to receive subcontracts." No further explanation or proof was provided.
Further, the initial regulatory flexibility analysis was not published in the Federal Register or summarized as required in the proposed or interim rules. As a result, the public never had a meaningful opportunity to comment.
The interim rule, published on September 26, 1995, and the final rule do not even mention Advocacy's comments or concerns. The only way the public could have learned of Advocacy's concerns or comments is by requesting a copy of the IRFA or the FRFA from the FAR Secretariat. This clearly is not the intent of the law.
Part 3 does not provide an accurate description of and estimate of the number of small businesses to which the final rule will apply. The FRFA, like the IRFA, indicates only that "...the rule will apply to all large and small entities who are interested in participating in government acquisitions."
Part 5 does not outline any steps taken to minimize the significant economic impact this rule will have on the small business community. Rather, the analysis includes the statement "....issuing agencies continue to believe that there are no alternatives to the rule that can be considered" and references an existing program where some contracts are reviewed by Procurement Center Representatives.
Besides not describing steps taken to minimize the small business impact, as required by the RFA, the analysis does not even mention the two alternatives suggested by Advocacy in its May letter; (1) limit the consolidation of contract requirements under task and delivery order arrangements, such that small firms are not precluded from participating; and (2) require task and delivery order solicitations to include a significant evaluation factor that would measure prospective bidders' past and planned utilization of small, minority and women-owned firms as subcontractors.
Advocacy provided significant comments on this rule. It is disappointing that its comments, especially concerning RFA compliance, were not taken seriously. The recent reforms articulated in SBREFA, mandating regulatory relief for small businesses, should give agencies ample cause to make RFA compliance a top priority.
Sincerely,
Jere W. Glover
Chief Counsel
Office of Advocacy
Jim O'Connor
Assistant Advocate
Office of Advocacy
Enclosures:
May 15, 1995 regulatory comment letter from Jere Glover to the FAR Secretariat concerning the proposed rule; Task and Delivery Order Contracts.
cc: The Honorable Sally Katzen, OIRA
The Honorable Steven Kelman, OFPP