Federal Acquisition Regulation: Prohibition on the Use of Reverse Auctions for Complex, Specialized, or Substantial Design and Construction Services

DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION <CFR>48 CFR Parts 2, 17, 36, and 52</CFR> <DEPDOC>[FAR Case 2023-003; Docket No. FAR-2023-0003; Sequence No. 1]</DEPDOC> <RIN>RIN 9000-AO51</RIN> <SUBJECT>Federal Acquisition Regulation: Prohibition on the Use of Reverse Auctions for Complex, Specialized, or Substantial Design and Construction Services</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to implement a section of the Construction Consensus Improvement Act of 2021 that prohibits the use of reverse auctions for certain construction services. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Interested parties should submit written comments to the Regulatory Secretariat Division at the address shown below on or before October 28, 2024, to be considered in the formation of the final rule. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Submit comments in response to FAR Case 2023-003 to the Federal eRulemaking portal at <E T="03">https://www.regulations.gov</E> by searching for “FAR Case 2023-003”. Select the link “Comment Now” that corresponds with “FAR Case 2023-003”. Follow the instructions provided on the “Comment Now” screen. Please include your name, company name (if any), and “FAR Case 2023-003” on your attached document. If your comment cannot be submitted using <E T="03">https://www.regulations.gov,</E> call or email the points of contact in the <E T="02">FOR FURTHER INFORMATION CONTACT</E> section of this document for alternate instructions. <E T="03">Instructions:</E> Please submit comments only and cite “FAR Case 2023-003” in all correspondence related to this case. Comments received generally will be posted without change to <E T="03">https://www.regulations.gov,</E> including any personal and/or business confidential information provided. Public comments may be submitted as an individual, as an organization, or anonymously (see frequently asked questions at <E T="03">https://www.regulations.gov/faq</E> ). To confirm receipt of your comment(s), please check <E T="03">https://www.regulations.gov,</E> approximately two to three days after submission to verify posting. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For clarification of content, contact Mr. Michael O. Jackson, Procurement Analyst, at 202-821-9776 or by email at <E T="03">michaelo.jackson@gsa.gov.</E> For information pertaining to status, publication schedules, or alternate instructions for submitting comments if <E T="03">https://www.regulations.gov</E> cannot be used, contact the Regulatory Secretariat Division at 202-501-4755 or <E T="03">GSARegSec@gsa.gov.</E> Please cite FAR Case 2023-003. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> DoD, GSA, and NASA are proposing to revise the FAR to implement section 2 of the Construction Consensus Procurement Improvement Act of 2021 (Pub. L. 117-28). Section 2 of the Construction Consensus Procurement Improvement Act of 2021 amended section 402 of Title IV of Division U of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) entitled the Construction Consensus Procurement Improvement Act of 2020 to require rulemaking to promulgate a definition of “complex, specialized, or substantial design and construction services”, which includes site planning and design; architectural and engineering services (as defined in 40 U.S.C. 1102); interior design; performance of substantial construction work for facility, infrastructure, and environmental restoration projects; and construction or substantial alteration of public buildings or public works. The statute prohibits the use of reverse auctions for such services having a value that exceeds the simplified acquisition threshold (SAT). <HD SOURCE="HD1">II. Discussion and Analysis</HD> The proposed rule establishes a new definition at FAR 2.101 for “complex, specialized, or substantial design and construction services” that reflects the statutory definition to support its use at FAR 17.803 and 36.103. In addition, the definition of “reverse auction” in FAR 2.101 is revised to better reflect the statutory definition provided in the Construction Consensus Procurement Improvement Act of 2021. The proposed rule implements the prohibition against using reverse auctions for the procurement of complex, specialized, or substantial design and construction services exceeding the SAT at FAR 36.103, Methods of contracting. This placement will reinforce to contracting officers the need to comply with the statutory prohibition. While the statute does not prohibit the use of reverse auctions for the subject services at or below the SAT, a reverse auction may only be used if market research indicates it is appropriate (see FAR 17.802(a)) and not prohibited by regulation or statute (see FAR 17.803, 36.104, and 36.601). The FAR identifies two types of procurements for which reverse auctions may not be used, regardless of dollar value: <FP SOURCE="FP-1">—Procurements for the design and construction of a public building, facility or work using the two-phase design-build selection procedures authorized by 10 U.S.C. 3241 and 41 U.S.C. 3309, as implemented at FAR 36.104, may not be conducted using a reverse auction.</FP> <FP SOURCE="FP-1">—Procurements for architectural and engineering services subject to 40 U.S.C. chapter 11, commonly known as the Brooks Architect Engineer Act, may not be awarded using reverse auctions because reverse auctions do not comply with the qualifications-based selection processes required by statute and implemented at FAR subpart 36.6.</FP> <HD SOURCE="HD1">III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT) and for Commercial Products (Including Commercially Available Off-the-Shelf (COTS) Items) or for Commercial Services</HD> This proposed rule does not impose any new requirements on contracts at or below the simplified acquisition threshold, for commercial products including commercially available off-the-shelf items, or for commercial services. <HD SOURCE="HD1">IV. Expected Impact of the Proposed Rule</HD> The proposed rule is not expected to have a significant impact on the public or the Government because the rulemaking does not supersede current statutory direction on the use of FAR part 36 procedures for construction. Contracting officers are still required to conduct market research to determine the most appropriate contracting method for the particular procurement. Requirements for sealed bidding, design-build construction, and architect-engineering services remain unchanged. Offerors participating in competitive procurements that are valued at or below the SAT will still be provided advance notices and solicitations in accordance with FAR 36.211 and for actions anticipated to be awarded to a small business, 15 U.S.C. 644(w). Use of a reverse auction as the method of obtaining pricing does not impact these requirements. <HD SOURCE="HD1">V. Executive Orders 12866 and 13563</HD> Executive Orders (E.O.s) 12866 (as amended by E.O. 14094) 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. <HD SOURCE="HD1">VI. Regulatory Flexibility Act</HD> DoD, GSA, and NASA do not expect this proposed 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. 601-612, because the rulemaking is not expected to change how construction services valued above the SAT are conducted while providing some flexibility for certain awards valued at or below the SAT. However, an Initial Regulatory Flexibility Analysis (IRFA) has been performed and is summarized as follows: <EXTRACT> DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to implement section 2 of the Construction Consensus Procurement Improvement Act of 2021 (Pub. L. 117-28), which prohibits the use of reverse auctions for complex, specialized, or substantial design and construction services exceeding the simplified acquisition threshold (SAT). DoD, GSA, and NASA published FAR case 2015-038, Reverse Auction Guidance, as a final rule at 89 FR 61327 on July 30, 2024, with an effective date of August 29, 2024. The final rule added policy on the use of reverse auctions to the FAR. The objective of the proposed rule is to establish a definition for complex, specialized, or substantial design and construction services and to implement the statutory prohibition against using reverse auctions for such services that are valued above the SAT. The legal basis for the rule is the Construction Consensus Procurement Improvement Act of 2021 (Pub. L. 117-28). Promulgation of the FAR is authorized by 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C 20113. The proposed rule will apply to all entities submitting offers in response to solicitations for construction services pursuant to FAR part 36; however, the im ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 20k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━