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APPENDIX TEMPORARY FEDERAL PROCUREMENT REGULATION 4 7 TO: Heads of Federal agencies SUBJECT: Major system acquisitions for automatic data processing (ADP) and telecommunications. Purpose: This FPR temporary regulation clarifies the relationship between Office of Management and Budget (OMB) Circular No. 109, Major System Acquisitions, the Federal Procurement Regulations (FPR), and the Federal Property Management Regulations (FPMR) governing major ADP/telecommunications system procurements. The temporary regulation also provides interim policies and procedures concerning such acquisitions. Effective date: This regulation is effective October 16, 1978, but may be observed earlier. 4 3. Expiration date. This regulation will continue in effect until canceled. Background: a. The Commission on Government Procurement studied the Government's major system acquisition practices and recommended basic changes to promote economy, efficiency, and effectiveness in the management of the major system acquisition process. OMB Circular A-109 which implements these recommendations, was issued April 5, 1976. This OMB Circular establishes specific policy and procedural requirements for implementation by executive branch agencies. Basically, the Circular provides for: (1) Top level management attention to the determination of mission needs and goals; (2) An integrated systematic approach for establishing mission needs, and for budgeting, contracting, and managing programs; (3) Improved opportunities for innovative private sector contributions to national needs; and 39

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40 (4) Early communication with the Congress and OMB in the acquisition process by relating major system acquisi- tions to agency mission needs and goals. OMB Circular A-10 relating to budget estimates establishes requirements that should be followed in the communica- tion to the Congress. OMB Circular A-ll relating to ADP and telecommunication requirements establishes requirements that should be followed in the prepara- tion and submission of budget estimates to OMB. b. The decision whether ADP and/or telecommunications major systems are required is the responsibility of the using agency. Under OMB Circular A-109 the using agency head establishes dollar thresholds for the determination of which agency programs are to be considered major system acquisitions for that agency. c. The fact that the acquisitions of major systems are made in accordance with OMB Circular A-109 does not alleviate the need for compliance with the applicable provisions of the FPR and/or FPMR. Accordingly, this temporary regulation describes the responsibilities of the using agency after the agency's decision is made to acquire under the A-109 policies. In addition, this temporary regulation describes the responsibilities of the General Services Administration (GSA) when GSA procures the major ADP or telecommunication system for the using agency or delegates the authority to the using agency to conduct the procurement. d. In August 1976, the Office of Federal Procurement Policy (OFPP) published pamphlet No. 1, titled "Major System Acquisitions, A Discussion of the Application of OMB Circular No. 109". An OFPP pamphlet setting forth the application of A-109 policies to the acquisition of major ADP and telecommunications systems is being developed by GSA and OFPP. The new pamphlet will supplement the provisions of this temporary regulation. 5. Policy: The major system acquisition procedures described in OMB Circular A-109 are designed to maximize competition and encourage innovative solutions to agency mission needs. Accordingly, major ADP and/or telecommunications systems shall be acquired in accordance with this regulation, other applicable provisions of the FPR and/or FPMR, the OFPP pamphlet and agency A-109 implementing procedures to meet agency mission requirements. 6. Agency action: a. Using agency responsibilities prior to the contracting phases of the acquisition. (1) The using agency shall perform an analysis of mission needs. However, the advice and assistance of GSA may be requested in performing the analysis, particularly in regard to contemporary experience which may be'

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41 applicable to the agency need. Requests for assistance should be addressed to the General Services Administra- tion, Agency Services Division (CDS), Washington, D. C. 20405. (2) The agency shall advise GSA upon agency head approval of the mission need statement (Key Decision I) and of the assignment of the program manager when major ADP/ telecommunications equipment or services (systems) are to be acquired in accordance with A-109. (3) The agency is responsible for the development of the system acquisition strategy and plan. However, since this plan will become the blueprint for the procure- ment, it should be developed in coordination with GSA. Participation by GSA may be arranged by contacting the Agency Service Division. (4) The agency program manager shall forward the approved major system procurement request to GSA (CDS). The request shall include applicable data required in the agency procurement request (APR) as required by FPR # 1-4.1104 or the GSA Form 2068. Request for ADP Service as required by FPMR #101-36.203-2. In addition, the request should include: (a) The user mission need statement, approved in accordance with applicable directives (Key Decision I--Approval of Need); (b) The name and telephone number of the designated program manager together with the approved charter outlining the manager's responsibilities, authority, and accountability; and (c) The system acquisition strategy and plan, approved by the program manager. b. GSA responsibilities prior to the contracting phases of the acquisition. (1) GSA will advise the agency, as requested, in their mission analysis efforts to the maximum practicable extent. (2) GSA will participate, in an advisory role to the using agency program manager, in the development of the system acquisition strategy and plan, upon request. (3) Based on the major system procurement request, GSA will: (a) Delegate authority to the using agency to conduct the procurement; (b) Delegate authority to the using agency to conduct the procurement action subject to GSA participation to the extent specified in the delegation; or Conduct the procurement on behalf of the using agency. (c) c. Contracting under A-109 procedures. When A-109 policies are applicable, normally only one solicitation at the beginning of the

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42 exploration of alternative system design concepts will be used. The scope and basis for selection of the solicitation may, however, vary depending on the complexity of the mission need and the acquisition strategy. For example, in complex situations the solicitation may request proposals which describe the contractor's capabilities, understanding of the mission need, approach to developing a system design concept to meet the need, and identify the personnel which would be assigned to the contract; or in less complex situations the solicitation may request proposals which define the contractor's recommended system design concept. In either situation, the evaluation of the proposals will result in the selection of two or more contractors to develop or further define recommended system design concepts. When evaluation of the contracted efforts shows sufficient definition of concepts, program manager recommendations will go forward for using agency head Key Decision II, Approval of concepts for Demonstration, or Key Decision III, Approval of Full Implementation. If a demonstration of concept phase is approved, two or more of the remaining contractors in the competition will be selected to verify their concepts and design. Evaluation and select- ion of the final contractor will be based on this phase. However, it does not necessarily follow that the system contractor would be responsible for all aspects of the full implementation. For example, the Government could acquire ADPE and software in accordance with the system contractor's performance specifications and furnish it to the contractor for incorporation into his system implementation. The using agency head Key Decision IV--Approval for Production, will apply in the case where a multiple quantity of systems are required to meet the agency need. d. Using agency responsibilities when GSA delegates contracting action to the using agency. When the agency is acting under a dele- gation of procurement authority pursuant to paragraphs 6b(3~(a) or (b) of this temporary regulation, the agency shall conduct the pro- curement in compliance with applicable procurement policies, regula- tions, and, in particular, the specific terms of the delegation. e. Using agency responsibilities when GSA procures for the using agency. (1) When GSA elects to conduct the procurement under para- graph 6b(3~(c) of this temporary regulation, the procurement is a joint endeavor. Agency responsibil- ities shall be as set forth in FPR #1-4.1105-1, as modified and supplemented in this subparagraph be. (2) The agency shall submit its determination and findings to support the authorization to procure by negotiation. (3) With reference to paragraph (b) of #1-4.11-5-1, the technical portion of the soliciation document should cover the statement of work, the functional specifica- tion addressing the mission need statement, limita- tions and constraints, environment, facilities, and

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43 work force, urgency and priorities, transitioning, changes, growth potential, and other requirements that must be met by the offerors. Other information that the offerors need in order to properly construct their proposal shall be provided. The solicitation should outline the overall acquisition strategy, the specific evaluation criteria for the initial contracting phase, and criteria for follow-on phases. If the initial contracts will be for system design concepts, the technical, judgmental, and total cost criteria to be used in the evaluation of alternative system design concepts should be provided to assist offerors in preparing the the subsequent phases of the acquisition. (4) The agency shall provide for the necessary personnel for evaluation of the concept designs and demonstration contracts and for the selection of alternatives for further consideration. (5) The agency shall provide copies of agency head approvals (Key Decisions). f. GSA responsibilities when GSA procures for the using agency. (i) When conducting the procurement, GSA's responsibilities will be as set forth in FPR #1-4.11-5-2, as modified and supplemented in this subparagraph 6f. When evaluation criteria includes technical considera- tions (or points), GSA will insure that the evaluations criteria for selecting the succcessful offeror from the final acceptable alternatives will result in meeting the using agency's need at the lowest ultimate overall cost, price and other factors considered. 7. Effect on other issuances. Notwithstanding any limitations of . applicability of the FPR or the FPMR, the provisions referenced in this temporary regulation apply to all ADP and telecommunications major system acquisitions by executive branch agencies subject to the provisions of OMB Circular No. A-109. Solicitation of comments. Notwithstanding the provisions of this temporary regulation, the views of agencies and other interested parties are invited regarding the policy and procedures that should be adopted in the future. All comments received on or before December 13, 1978, will be considered. JAY SOLOMON, Administrator General Services September 12, 1978 FEDERAL REGISTER, VOL. 43, NO. 179-THURSDAY, SEPTEMBER 14, 1978