Federal Acquisition Regulations: Uniform Use of Line Items; FAR Case 2013-014

This Proposed Rule document was issued by the Federal Acquisition Regulation (FAR)

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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 3, 4, 5, 7, 8, 14, 15, 16, and 52
[FAR Case 2013-014; Docket No. 2013-0014; Sequence No. 1]
RIN 9000-AM73

Federal Acquisition Regulation; Uniform Use of Line Items

Agencies

Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

Action

Proposed rule.

Summary

DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to establish a uniform line item identification structure in Federal procurement. The system is designed to improve the accuracy, traceability, and usability of procurement data.

Dates

Interested parties should submit written comments to the Regulatory Secretariat at one of the addressees shown below on or before October 6, 2014 to be considered in the formation of the final rule.

Addresses

Submit comments in response to FAR Case 2013-014 by any of the following methods:

  • Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by searching for “FAR Case 2013-014”. Select the link “Comment Now” that corresponds with “FAR Case 2013-014.” Follow the instructions provided at the “Comment Now” screen. Please include your name, company name (if any), and “FAR Case 2013-014” on your attached document.
  • Fax: 202-501-4067.
  • Mail: General Services Administration, Regulatory Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW., 2nd Floor, Washington, DC 20405.

Instructions: Please submit comments only and cite FAR Case 2013-014, in all correspondence related to this case. All comments received will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information provided.

For Further Information Contact

Mr. Edward Loeb, Procurement Analyst, at 202-501-0650, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755. Please cite FAR Case 2013-014.

Supplementary Information

I. Background

DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to establish a uniform line item identification structure for the Federal procurement system, planned for implementation during the Fiscal Year (FY) 2016 timeframe. The uniform line item identification structure is designed to improve the accuracy, traceability, and usability of procurement data. This case continues Federal procurement efforts to more robustly implement the objectives of the Federal Funding Accountability and Transparency Act of 2006, including promoting achievement of rigorous accountability of procurement dollars and processes.

Currently, funding traceability is limited to contract-level information in agency contract writing systems which limits the capability to implement and effectively conduct and benefit from initiatives, such as strategic sourcing, on a Federal-wide basis. Use of such a line item identification structure will support efficiency in the tracking of goods and services through identification of key attributes, such as unit pricing on fixed price contracts, which will support tracing of funding from obligation through expenditure.

With this proposed rule, the Federal procurement community continues to improve standardization of a unique instrument identifier, moving the procurement community in the direction of enhancing the uniformity and consistency of data. This, in turn, will promote the achievement of rigorous accountability of procurement dollars and processes previously mentioned and compliance with regulatory and statutory acquisition requirements such as those of the Federal Funding Accountability and Transparency Act of 2006. The proposed FAR coverage is adapted and revised from the Defense Federal Acquisition Regulation Supplement, 48 CFR subpart 204.71, Uniform Contract Line Item Numbering System.

II. Proposed Changes to FAR

The coverage dealing with uniform line item identification has been significantly expanded. The rule provides for the following:

(1) Definitions of “line item” and “subline item” have been added to FAR subpart 2.1.

(2) At FAR 4.1001, a revised policy statement has been added to require the use of line items, and as necessary, subline items, in order to improve the accuracy, traceability and usability of procurement data.

(3) At FAR 4.1002, a section on applicability of the policies on line item identification to virtually all contract actions has been added.

(4) At FAR 4.1003, a section on establishing line items was added. The policy is that deliverables with the following characteristics should have separate line or subline items; separately identifiable, single unit price or total price; single accounting classification citation; separate delivery schedule, destination, period or place of performance, and same or different contract pricing types.

(5) At FAR 4.1004, a section on establishing subline items was formulated. The coverage distinguishes between deliverable and informational subline items and identifies the circumstances when each should be used.

(6) At FAR 4.1005-1, the required data elements for inclusion with each line item or subline item in the procurement instrument are identified. At 4.1005-2, circumstances are identified when certain required data elements are not necessary.

(7) At FAR 4.1006, coverage is included regarding modifications.

(8) FAR 4.1007 discusses allowing offerors to propose an alternative line item structure.

(9) At FAR 4.1008, the prescription for the solicitation provision allowing an alternative line item structure is detailed.

(10) At FAR parts 5, 7, 14, and 15, cross references to contract line items (CLINS) and subline items are conformed with this rule.

(11) At FAR subpart 8.4, coverage is revised to address application of line items and subline items to Federal Supply Schedules.

(12) At FAR 16.505, coverage is revised to address line items for indefinite-delivery contracts.

(13) At FAR 52.204-YY, the proposed provision prescribed at 4.1008 is delineated.

(14) At 52.212-1, Instructions to Offerors Commercial Items, and 52.212-4, Contract Terms and Conditions-Commercial Items, the provision for commercial items has been revised to address alternative line item identification structure.

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costsand 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 under section 6(a)(3)(A) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. Therefore, this rule was not subject to Office of Information and Regulatory Affairs review under section 6(b) of E.O. 12866. This rule is not a major rule under 5 U.S.C. 804.

III. Regulatory Flexibility Act

The change may 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, et seq. The Initial Regulatory Flexibility Analysis (IRFA) is summarized as follows:

The proposed rule establishes a uniform line item identification structure for the Federal procurement system. The uniform line item identification structure is designed to improve the accuracy, traceability, and usability of procurement data. This proposed rule continues Federal procurement efforts to more robustly implement the objectives of the Federal Funding Accountability and Transparency Act of 2006, including promoting achievement of rigorous accountability of procurement dollars and processes.

The requirements in the proposed rule have the potential to have an impact on any entity, small or large, that does business with the Federal Government because the proposed rule would apply to purchases of items, including commercial items and commercially available off-the-shelf items, and purchases under the simplified acquisition threshold. However, line item pricing is a common commercial practice, therefore the impact on a number of entities may not be significant.

Any small business that contracts with a Federal agency could be impacted to at least some extent. Using data from the Federal Procurement Data System (FPDS), there were 107,172 such small entities in FY 2010, 97,626 in FY 2011, 85,749 in FY 2012, and 73,987 small entities in FY 2013, doing business with the Federal Government.

The proposed rule could require some contractors to restructure their proposal pricing process as well as their systems to accommodate the line item identification system. This change may also require contractors to make changes to their pricing and electronic systems. Contractors may also have to develop more extensive pricing data to conform to a new line item structure. However, this consistent line item identification policy should be beneficial to contractors doing business with executive branch agencies. This is especially true if contractors already have contracts with the Department of Defense (DoD), because these identification standards are already in use. Accordingly, contractors that currently contract with DoD will not be impacted. The FAR system does not have data at this time as to the net cost/benefit to contractors in making this change.

The Regulatory Secretariat has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (FAR Case 2013-014), in correspondence.

V. Paperwork Reduction Act

This rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 2 3 4 5 7 8 14 15 16 and 52

Government procurement.

Dated: July 31, 2014.
William Clark,
Acting Director, Office of Government-wide Acquisition Policy,Office of Acquisition Policy, Office of Government-wide Policy.

Therefore, DoD, GSA, and NASA proposes to amend 48 CFR parts 2, 3, 4, 5, 7, 8, 14, 15, 16, and 52 as set forth below:

1. The authority citation for 48 CFR parts 2, 3, 4, 5, 7, 8, 14, 15, 16, and 52 continues to read as follows:

Authority

40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.

Part 2 Definition of Words and Terms

2. Amend section 2.101 in paragraph (b)(2) by adding, in alphabetical order, the definitions “Line item” and “Subline” to read as follows:

2.101
Definitions.

* * * * *

(b) * * *

(2) * * *

Line item means the basic structural element in a procurement instrument that describes and organizes the required product or service for pricing, delivery, inspection, acceptance, invoicing, and payment.

* * * * *

Subline item means a subset of a line item.

* * * * *

Part 3 Improper Business Practices and Personal Conflicts of Interest

3.302
[Amended]

3. Amend section 3.302 by removing the definition “Line item”.

Part 4 Administrative Matters

4. Revise subpart 4.10 to read as follows:

Subpart 4.10 Uniform Use of Line Items

Sec.
4.1000
Scope of subpart.
4.1001
Policy.
4.1002
Applicability.
4.1003
Establishing line items.
4.1004
Establishing subline items.
4.1005
Data elements for line items and subline items.
4.1005-1
Required schedules.
4.1005-2
Exceptions.
4.1006
Modifications.
4.1007
Solicitation alternative line item structure.
4.1008
Solicitation provision.
4.1000
Scope of subpart.

This subpart prescribes policies and procedures for assigning line item and subline items and their identifiers.

4.1001
Policy.

In order to improve the accuracy, traceability, and usability of procurement data, procurement instruments shall identify the supplies or services to be acquired as separately identified line items and, as needed, subline items.

(a) Line items are established to define deliverables or organize information about deliverables. Each line item describes characteristics for the item purchased, e.g., pricing, delivery, and funding information.

(b) Each line item may be subdivided into separate unique subsets (called subline items) to ease administration. If a line item has deliverable subline items, the line item is informational. Subline items differentiate between or among certain characteristics of the line item, such as colors or sizes, dates of delivery, destinations, or places of performance. Subline items are established to define deliverables or organize information about deliverables.

4.1002
Applicability.

The policies of this subpart shall apply to the following procurement instruments, to include amendments, modifications, and change orders thereto:

(a) Solicitations.

(b) Contracts, including, but not limited to, Government-wide Acquisition Contracts (GWACs), multi-agency contracts (MACs), Federal Supply Schedule (FSS) contracts, agency indefinite-delivery contracts, and purchase orders.

(c) Agreements that include pre-priced supplies or services.

(d) Task and delivery orders.

4.1003
Establishing line items.

Characteristics. Establish separate line items for deliverables that have the following characteristics. A deliverable line item or deliverable subline item must have each characteristic except as provided at 4.1005-2:

(a) Separately identifiable. (1) A supply is separately identifiable if it has its own identification (e.g., national stock number (NSN), item description, manufacturer's part number).

(2) Services are separately identifiable if they have no more than one statement of work or performance work statement.

(3) If the procurement instrument involves a first article (see subpart 9.3), establish a separate line item for each item that will be approved separately. If the first article consists of a lot composed of a mixture of items that will be approved as a lot, a single line item may be used.

(b) Single unit price or total price.

(c) Single accounting classification citation.

(d) Separate delivery schedule, destination, period of performance, or place of performance.

(e) Single contract pricing type (e.g., fixed price or cost reimbursement.

4.1004
Establishing subline items.

Subline items may be used to facilitate tracking of performance and deliverables, payment, contract funds accounting or for other management purposes. Subline items may be either deliverable or informational. A line item with subline items shall contain only that information that is common to all subline items thereunder. All subline items under one line item shall be the same contract type as the line item.

(a) Deliverable subline items. Deliverable subline items may be used for several related items that require separate identification. For example, instead of establishing multiple separate line items, subline items may be established for—

(1) Items that are basically the same, except for minor variations such as—

(i) Size or color;

(ii) Accounting classification but see also 4.1005-1(a);

(iii) Date of delivery, destination, period or place of performance;

(2) Separately priced collateral functions that relate to the primary product, such as packaging and handling, or transportation;

(3) Items to be separately identified at the time of shipment or performance.

(b) Informational subline items.

(1) Informational subline items may be used by agencies for administrative purposes. This type of subline item identifies information that relates directly to the line item and is an integral part of it (e.g., parts of an assembly or parts of a kit).

(2) Position informational subline items within the line item description, not in the quantity or price fields. Informational subline items shall not have prices or delivery schedules.

4.1005
Data elements for line items and subline items.
4.1005-1
Required data elements.

(a) Except as provided in subsection 4.1005-2, each line item or subline item shall include in the schedule (described at 14.201-2, 15.204-2, Block 20 of the SF 1449 (see 12.303(b)(4) or in a comparable section of the procurement instrument), at a minimum, the following information as separate, distinct data elements:

(1) Line item or subline item numeric or alphanumeric unique identifier established in accordance with agency procedures.

(2) Short description of what is being purchased.

(3) Product or Service Code (PSC).

(4) Accounting classification citation. Multiple accounting classifications may be identified using informational subline items. If there are multiple accounting classification citations for a single item, include the dollar amount by accounting classification in the schedule (or a comparable section of the procurement instrument).

(5)(i) For fixed-price line items:

(A) Unit of measure.

(B) Quantity.

(C) Unit price.

(D) Total price.

(ii) For cost-reimbursement line items:

(A) Unit of measure.

(B) Quantity.

(C) Estimated cost.

(D) Fee (if any).

(E) Total estimated cost plus any fee.

(b) If a contract contains a combination of fixed-price, time-and-materials, labor-hour, or cost-reimbursable line items, identify the contract type for each line item in the schedule (or a comparable section of the procurement instrument) to facilitate payment.

(c) Each deliverable line item or deliverable subline item shall have its own delivery schedule, destination, period of performance, or place of performance expressly stated in the appropriate section of the procurement instrument. (“As required” constitutes an expressly stated delivery term.) When a line item has deliverable subline items, the delivery schedule, destination, period of performance, or place of performance should be identified at the subline item level, rather than the line item level.

(d) Terms and conditions in other sections of the contract (such as contract clauses, or payment instructions) shall also specify applicability to individual line items if not applicable to the contract as a whole.

4.1005-2
Exceptions.

(a) Indefinite-delivery contracts. (1) General. The following required specific data elements are not known at time of issuance of an indefinite-delivery contract, and will be provided in each order at the time of issuance: accounting classification, delivery date and destination, or period and place of performance.

(2) Indefinite delivery-indefinite quantity (IDIQ) and requirements contracts. IDIQ and requirements contracts may omit the quantity at the line item level for the base award provided that the total contract minimum and maximum, or the estimate, respectively, is stated.

(b) Item description and PSC. These data elements are not required in the line item if there are associated deliverable subline items that include the actual detailed identification. When this exception applies, use a general narrative description for the line item.

(c) Single unit price or single total price. The requirement for a single unit price or single total price at the line item level does not apply if any of the following conditions are present:

(1) There are associated deliverable subline items that are priced.

(2) The line item or subline item is not separately priced.

(3) The supplies or services are being acquired on a cost-reimbursement basis, time-and-materials, or labor-hour basis.

(4) The procurement instrument is for services and firm prices have been established for elements of the total price but the actual number of the elements is not known untilperformance (e.g., a labor-hour contract for maintenance/repair). The contracting officer may structure these procurement instruments to reflect a firm or estimated total amount for each line item.

4.1006
Modifications.

(a) When a new item (such as an added quantity) is added to the procurement instrument, assign a new line or subline item identifier.

(b) If the modification relates to existing line items, the modification shall refer to those items.

4.1007
Solicitation alternative line item structure.

Solicitations should be structured to allow offerors to propose an alternative line item structure (see 4.1008 and 52.212-1(e)). For example, when soliciting certain items using units of measure such as kit, set, or lot, the offeror may not be able to group and deliver all items in a single shipment.

4.1008
Solicitation provision.

Insert the provision at 52.204-YY, Alternative Line Item Structure, in all solicitations for supplies or services, including construction.

Part 5 Publicizing Contract Actions

5. Amend section 5.207 by revising paragraph (a)(13) to read as follows:

5.207
Preparation and transmittal of synopses.

(a) * * *

(13) Contract Line items and, if applicable subline items.

* * * * *

Part 7 Acquisition Planning

6. Amend section 7.105 by revising the second sentence of paragraph (b)(5)(iv) to read as follows:

7.105
Contents of written acquisition plans.

* * * * *

(b) * * *

(5) * * *

(iv) * * * During the requirements development stage, consider structuring the contract requirements, e.g., line and subline items identifiers, in a manner that will permit some, if not all, of the requirements to be awarded on a firm-fixed-price basis, either in the current contract, future option years, or follow-on contracts. * * *

* * * * *

Part 8 Required Sources of Supplies and Services

7. Amend section 8.402 by revising paragraph (f)(3) to read as follows:

8.402
General.

* * * * *

(f) * * *

(3) The line or subline items are clearly labeled on the order as items not on the Federal Supply Schedule and they conform to the rules for numbering line and subline items at subpart 4.10; and

* * * * *

8. Amend section 8.404 by adding paragraph (j) to read as follows:

8.404
Use of Federal Supply Schedules.

* * * * *

(j) Line items. When placing orders or establishing BPAs, ordering activities shall reference the Special Item Number (SIN) and the corresponding line or subline item awarded (established per 4.1005) in the schedule. If an ordering activity contracting officer adds an item not on the Federal Supply Schedule in accordance with 8.402(f), establish a new line or subline item in accordance with subpart 4.10.

9. Amend section 8.406-1 by—

a. Redesignating paragraphs (d)(8) through (d)(16) as paragraphs (d)(9) through (d)(17);

b. Adding a new paragraph (d)(8); and

c. Revising the newly redesignated paragraph (d)(9).

The revised and added text reads as follows:

8.406-1
Order placement.

* * * * *

(d) * * *

(8) Line item or subline item unique identifier.

(9) A statement of work for services, when required, or a brief, complete description of each line or subline item (when ordering by model number, features and options such as color, finish, and electrical characteristics, if available, must be specified).

10. Amend section 8.406-4 by revising paragraph (c)(3)(i)(C) to read as follows:

8.406-4
Termination for cause.

* * * * *

(c) * * *

(3) * * *

(i) * * *

(C) National stock or special item number(s), line item or subline item unique identifier, and a brief description of the item(s).

* * * * *

Part 14 Sealed Bidding

11. Amend section 14.201-2 by revising the last sentence of paragraph (b) to read as follows:

14.201-2
Part 1—The Schedule

* * * * *

(b) * * * Include a brief description of the supplies or services; e.g., line item or subline item unique identifier, national stock number/part number if applicable, title or name identifying the supplies or services, and quantities (see Part 11). * * *

* * * * *

12. Amend section 14.201-9 by revising paragraph (b)(1) to read as follows:

14.201-9
Simplified contract format.

* * * * *

(b) * * *

(1) Line item or subline item unique identifier.

* * * * *

Part 15 Contracting by Negotiation

15.203
[Amended]

13. Amend section 15.203 by removing from paragraph (a)(2)(ii) “alternative CLIN” and adding “alternative line and subline item” in its place.

15.204-2
[Amended]

14. Amend section 15.204-2 by removing from paragraph (b) “e.g., item number” and adding “e.g., line item or subline item unique identifiers,” in its place.

15.408
[Amended]

15. Amend section 15.408 in Table 15-2, which follows paragraph (n), by—

1. Revising paragraph D. of the I. General Instructions and removing from paragraph E. “contract”;

2. Removing from the first sentence of paragraph A. of the II. Cost Elements,“contract”; and

3. Adding to the second sentence of paragraph B.(3) of the III. Formats for Submission of Line Item Summaries.

The revised and added text reads as follows:

15.408
Solicitation provisions and contract clauses.

* * * * *

Table 15-2—Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data Are Required

* * * * *

I. General Instructions

* * * * *

D. You must show the relationship between line or subline item prices and the total contract price. You must attach cost-element breakdowns for each proposed line or subline item, using the appropriate format prescribed in the “Formats for Submission of Line Item Summaries” section of this table. You must furnish supporting breakdowns for each cost element, consistent with your cost accounting system.

* * * * *

III. Formats for Submission of Line Item Summaries

* * * * *

B. * * *

* * * * *

(3) * * * Attach a detailed inventory of work, materials, parts, components, and hardware already purchased, manufactured, or performed and deleted by the change, indicating the cost and proposed disposition of each line or subline item.

* * * * *

Part 16 Types of Contracts

16. Amend section 16.505 by revising paragraph (a)(7)(iii) to read as follows:

16.505
Ordering.

(a) * * *

(7) * * *

(iii) For supplies and services, contract line item number unique identifier(s), subline item unique identifier, if applicable, and description, quantity, and unit price or estimated cost or fee. The corresponding line item unique identifier(s) and subline item unique identifier(s) from the base contract shall also be included.

* * * * *

Part 52 Solicitation Provisions and Contract Clauses.

17. Add section 52.204-YY to read as follows:

52.204-YY
Alternative Line Item Structure.

As prescribed in 4.1008, insert the following provision:

Alternative Line Item Structure (Date)

(a) Line items are the basic structural elements in a solicitation or contract that provide for the organization of contract requirements to facilitate pricing, delivery, inspection, acceptance and payment. Line items are organized into line and subline items. Separate line items should be established to account for separate pricing, identification, deliveries, or funding. The Government recognizes that the line item structure in this solicitation may not conform to the Offeror's practices. Failure to correct these issues can result in difficulties in accounting for deliveries and processing payments. Therefore, the Offeror is invited to propose an alternative line item structure for items on which bids, proposals, or quotes are requested in this solicitation to ensure that the resulting contract line item structure is economically and administratively advantageous to the Government and the Offeror.

(b) The Offeror may propose one or more additional, alternative line item structures provided that each structure is consistent with subpart 4.10 of the Federal Acquisition Regulation. However, acceptance of the alternative structure is a unilateral decision made solely at the discretion of the Government. Offers that do not comply with the line item structure specified in this solicitation may be determined to be nonresponsive or unacceptable.

(End of provision)

18. Amend section 52.212-1 by revising the date of the provision; and paragraph (e) to read as follows:

52.212-1
Instructions to Offerrors—Commercial Items.

* * * * *

Instructions to Offerrors—Commercial Items (Date)

* * * * *

(e) Multiple offers. Offerors are encouraged to submit multiple offers presenting alternative terms and conditions, including alternative line item structures (provided that each line item structure is consistent with subpart 4.10 of the Federal Acquisition Regulation), or alternative commercial items for satisfying the requirements of this solicitation. Each offer submitted will be evaluated separately.

* * * * *

[FR Doc. 2014-18509 Filed 8-4-14; 8:45 am]
BILLING CODE 6820-EP-P
 
 
Comment Period Closed
Oct 6 2014, at 11:59 PM ET
ID: FAR-2013-0014-0001
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Date Posted: Aug 5, 2014
RIN: 9000-AM73
CFR: 48 CFR Parts 2, 3, 4, 5, 7, 8, 14, 15, 16, 52
Federal Register Number: 2014-18509
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Comments

3
Comments Received*
See attached comments regarding FAR Case 2013-014 Proposed Rule.
Thank you for the opportunity to comment. Structured CLIN guidance in the FAR is welcome and the guidance is appreciated to that point. However a significant...
In the current FAR, the acronym "CLIN" (i.e. Contract Line Item) appears 4 times in 3 separate parts of the FAR: (4.105, 7.105 and 15.203). The proposed rule...

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