Source: http://www.fedgovcontracts.com/newsltr/fcp16-12.htm
Timestamp: 2018-08-20 10:25:29
Document Index: 340894184

Matched Legal Cases: ['art 12', 'art 15', 'art 12', 'art 4', 'art 4', 'art 4', 'art 32']

December 2015 Federal Contracts Perspective
FY 2016 Defense Authorization Act Undertakes “Multi-Year Effort”
DUNS Number Proposed for Removal from FAR
DOD Picks Up Pace of Revisions to DFARS
NASA Finalizes Two Rules
FY 2016 Defense Authorization Act
Undertakes “Multi-Year Effort”
On November 25, President Obama signed the National Defense Authorization Act for Fiscal Year 2016. Title VIII, Acquisition Policy, Acquisition Management, and Related Matters, contains the sections that are significant to the defense and civilian acquisition communities. Instead of making changes to the rules and regulations that govern how the Department of Defense (DOD) acquires needed supplies and services, Congress decided to embark “on a multi-year effort to improve the underlying structure and process that delivers warfighting capability to the nation...The defense acquisition system itself increasingly poses a threat to our future military technological dominance. For this reason, the United States must create better incentives for innovation by removing unnecessary legislative, regulatory, and cultural barriers to new commercial competition.”
There are four themes running through Title VIII: (1) establish effective accountability for results; (2) increase access to commercial innovation and competition; (3) deregulate and streamline to reduce costs and gain efficiencies; and (4) reinvigorate the acquisition workforce. The following are some of the sections that are intended to address these themes and “improve the underlying structure and process” of the DOD acquisition system:
Section 805, Use of Alternative Acquisition Paths To Acquire Critical National Security Capabilities: This requires the Secretary of Defense to establish procedures and guidelines for alternative acquisition pathways to acquire capital assets and services that meet critical national security needs. These procedures shall: (1) be separate from existing acquisition procedures; (2) be supported by streamlined contracting, budgeting, and requirements processes; (3) establish alternative acquisition paths based on the capabilities being bought and the time needed to deploy these capabilities; and (4) maximize the use of flexible authorities and programs in existing law and regulation.
Section 806, Secretary of Defense Waiver of Acquisition Laws to Acquire Vital National Security Capabilities: This allows the Secretary of Defense to waive acquisition law or regulation for the purpose of acquiring a capability that is in the vital interest of the United States and is not otherwise available to the Armed Forces.
Section 807, Acquisition Authority of the Commander of United States Cyber Command: This authorizes the Commander of United States Cyber Command (CYBERCOM) to develop and acquire cyber operations-peculiar equipment and capabilities and the acquisition of cyber capability-peculiar equipment, capabilities, and services.
Section 809, Advisory Panel on Streamlining and Codifying Acquisition Regulations: This requires the Undersecretary of Defense for Acquisition, Technology and Logistics to establish an advisory panel on streamlining acquisition regulations. The panel is to be composed of at least nine individuals who are recognized experts in acquisition laws, regulations, and policy who would prepare a pragmatic, workable set of recommended changes to current acquisition regulations.
Section 816, Amendment to Acquisition Threshold for Special Emergency Procurement Authority: This increases the simplified acquisition threshold for supplies or services that are to be used to support a contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack to: (1) $750,000 for contracts to be awarded and performed, or purchase to be made, in the United States [from $250,000]; and (2) $1,500,000 for contracts to be awarded and performed, or purchase to be made, outside the United States [from $1,000,000].
Section 828, Penalty for Cost Overruns: This requires each military department to pay an annual 3% penalty of the cumulative cost overrun on all of its major defense acquisition programs (MDAPs). The annual penalty will be assessed as an across-the-board reduction to the research, development, test, and evaluation account of the military department.
Section 853, Use of Recent Prices Paid by the Government in the Determination of Price Reasonableness: This requires a contracting officer to consider evidence provided by an offeror of recent purchase prices paid by the government for the same or similar commercial items in establishing price reasonableness if the contracting officer is satisfied the prices previously paid remain a valid reference for comparison after considering the totality of other relevant factors such as time elapsed since prior purchase and any difference in quantities purchased or applicable terms and conditions.
Section 855, Market Research and Preference for Commercial Items: Concerned that the market research being conducted to determine the existence of suitable commercial items is perfunctory and that the preference for the use of commercial items is being ignored throughout DOD, this requires the Undersecretary of Defense for Acquisition, Technology and Logistics to issue guidance that will ensure commercial information technology products and services are determined to be unsuitable to the government’s needs before a non-commercial item is purchased and that market research be conducted and used to inform price reasonableness determinations.
Section 856, Limitation on Conversion of Procurements from Commercial Acquisition Procedures: Prior to converting a procurement of commercial items or services valued at more than $1,000,000 from commercial acquisition procedures under Federal Acquisition Regulation (FAR) part 12, Acquisition of Commercial Items, to noncommercial acquisition procedures under FAR part 15, Contracting by Negotiation, this requires the contracting officer to determine that either: (1) the earlier use of FAR part 12 procedures was in error or was based on inadequate information; and (2) the DOD will realize a cost savings compared to the cost of procuring a similar quantity or level of such item or service using commercial acquisition procedures.
Section 857, Treatment of Goods and Services Provided by Nontraditional Defense Contractors as Commercial Items: This allows items and services provided by nontraditional defense contractors (that is, commercial companies that either do not do business with DOD or do so exclusively through commercial terms and conditions) may be treated as commercial items.
Section 866, Modifications to Requirements for Qualified Historically Underutilized Business Zone (HUBZone) Small Business Concerns Located in a Base Closure Area: This extends the length of time covered base closure areas may participate in the HUBZone program to either eight years or until the Small Business Administration announces which areas will qualify for the HUBZone program after the next decennial census data is released. In addition, it authorizes the inclusion of qualified disaster areas to the HUBZone program.
Section 867, Joint Venturing and Teaming: This requires agencies to evaluate the capabilities and past performances of the small businesses that submit offers as teams or joint ventures when the contract is bundled, consolidated, or for a multiple award contract.
For decades, the government has required its contractors to obtain and report a unique Data Universal Numbering System (DUNS®) number from Dun and Bradstreet as a condition for receiving a contract award. This proprietary number permits the government to track its spending by standardizing the identification of federal contractors. The DUNS number must identify the successful offeror’s name and address as stated in the offer and resulting contract, and it must be registered in the System for Award Management (SAM) database (https://www.sam.gov).
However, the Federal Funding Accountability and Transparency Act of 2006 (FFATA) (Public Law 109-282) established requirements for federal agencies to report information on awards to a single searchable, publicly accessible website – https://www.USAspending.gov. FFATA was amended in 2014 by the Digital Accountability and Transparency Act of 2014 (DATA Act) (Public Law 113-101) to require that summary financial data be reported by federal agencies in addition to federal award data, and to establish standards for the data reported on USAspending.gov or any successor site. The DATA Act requirements specifically state that the data standards shall, to the extent reasonable and practicable, “incorporate a widely accepted, nonproprietary, searchable, platform-independent computer-readable format” and “include unique identifiers for federal awards and entities receiving federal awards that can be consistently applied government-wide”.
To comply with the FFATA and DATA Act, a proposed rule has been issued that would amend FAR 2.101, Definitions; FAR subpart 4.6, Contract Reporting; FAR subpart 4.11, System for Award Management; FAR subpart 4.18, Commercial and Government Entity Code; FAR 52.204-6, Data Universal Numbering System Number; and other miscellaneous sections to replace “Data Universal Numbering System (DUNS) number” and “Data Universal Numbering System +4 (DUNS+4) number” with “unique entity identifier” (“a number or other identifier used to identify a specific commercial, non-profit, or government entity”) and “Electronic Funds Transfer (EFT) indicator” (“a four-character suffix to the unique entity identifier. The suffix is assigned at the discretion of the commercial, non-profit, or government entity to establish additional System for Award Management records for identifying alternative Electronic Funds Transfer (EFT) accounts (see [FAR] subpart 32.11) for the same entity”).
Comments on this proposed rule must be submitted no later than January 19, 2016, identified as “FAR Case 2015-022,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
The Department of Defense (DOD) increased the tempo of its revisions to the Defense FAR Supplement (DFARS), issuing two final rules and six proposed rules in November.
Photovoltaic Devices from the United States: This final rule amends DFARS 225.7017, Utilization of Domestic Photovoltaic Devices, DFARS 252.225-7017, Photovoltaic Devices, and DFARS 252.225-7018, Photovoltaic Devices – Certificate, to implement Section 858 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Public Law 113-291), which addresses utilization of domestic photovoltaic devices.
The previous regulations on the acquisition of photovoltaic devices implemented Section 846 of the NDAA for FY 2011 (Public Law 111-383). While Section 858 of the FY 2015 NDAA does not contain specific language rescinding or superseding Section 846 of the FY 2011 NDAA, DOD conducted a detailed comparison of the two statutes and determined that compliance with Section 858 will meet or exceed the requirements of Section 846.
The following are the significant changes made by this final rule to implement Section 858:
Section 846 had stated that “the Department of Defense is deemed to own a photovoltaic device if the device is (1) installed on Department of Defense property or in a facility owned by the Department of Defense; and (2) reserved for the exclusive use of the Department of Defense for the full economic life of the device.” This was reflected in the “covered contract” definition in DFARS 225.7017-1, Definitions. However, Section 858 states that “the term ‘covered contract’ means a contract awarded by the Department of Defense that provides for a photovoltaic device to be – (A) installed inside the United States on Department of Defense property or in a facility owned by the Department of Defense; or (B) reserved for the exclusive use of the Department of Defense in the United States for the full economic life of the device” (italics indicate differences between the two sections). Therefore, the definition of “covered contract” is revised to add “inside the United States,” and change “and” to “or” (so either condition is sufficient to make Section 858 applicable, whereas both conditions had to be present to make Section 846 applicable).
Section 846 had required that “photovoltaic devices provided under the contract comply with the Buy American Act (41 USC 10a et seq.), subject to the exceptions to that Act provided in the Trade Agreements Act of 1979 (19 USC 2501 et seq.) or otherwise provided by law.” This was reflected in DFARS 225.7017-2, Restriction. However, Section 858 requires that “any photovoltaic device installed under the contract be manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States, unless the head of the department or independent establishment concerned determines, on a case-by-case basis, that the inclusion of such requirement is inconsistent with the public interest or involves unreasonable costs, subject to exceptions provided in the Trade Agreements Act of 1979 (19 USC 2501 et seq.) or otherwise provided by law.” Therefore, DFARS 225.7017-2 is revised to reflect Section 858.
DFARS 225.7017-4, Waiver, is added. It describes the circumstances in which the head of the contracting activity can waive the restriction in DFARS 225.7017-2: “(a) Inconsistent with the public interest. For example, a public interest waiver may be appropriate to allow: (1) utilization of U.S.-made photovoltaic devices if the aggregate value of the photovoltaic devices to be utilized under the contract exceeds $204,000 [the threshold for the application of the World Trade Organization Government Procurement Agreement]; or (2) utilization of photovoltaic devices from a qualifying country, regardless of dollar value. (b) Unreasonable cost. A determination that the cost of a domestic photovoltaic device is unreasonable may be appropriate if: (1) the aggregate value of the photovoltaic devices to be utilized under the contract does not exceed $204,000; and (2) the offeror documents that the price of the foreign photovoltaic devices plus 50 percent is less than the price of comparable domestic photovoltaic devices.”
DFARS 252.225-7017, Photovoltaic Devices, is revised as follows:
The definition of “domestic photovoltaic device,” which had been defined as one “manufactured in the United States,” is changed to add that “the cost of its components that are mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all components.”
The restrictions in paragraph (c)(5) are amended to remove qualifying country photovoltaic devices and U.S.-made photovoltaic devices from being automatically acceptable unless the contractor specified their use in its offer.
The $3,500 micro-purchase threshold is removed from paragraph (c)(1) because the threshold is associated with the Buy American Act, not Section 858. (Section 858 does not provide for exceptions for acquisitions below the micro-purchase threshold.)
DFARS 252.225-7018, Photovoltaic Devices – Certificate, is revised to: (1) change the definition of “domestic photovoltaic device” to match that in DFARS 252.225-7017; (2) amend paragraph (b) to accommodate the requirement for case-by-case determinations to allow contractors to utilize qualifying country or U.S.-made photovoltaic devices, or to determine that the price of a domestic photovoltaic device is unreasonable; and (3) remove the micro-purchase threshold from paragraph (b)(1).
Eliminate Data Collection Requirement: This final rule removes DFARS 216.401-70, Data Collection [for incentive contracts], to eliminate a requirement for military departments and defense agencies to collect and report relevant data on award and incentive fees paid to contractors.
Section 814 of the NDAA for FY 2007 (Public Law 109-364) required DOD to collect relevant data on award and incentive fees paid to contractors, and that it has mechanisms in place to evaluate such data on a regular basis. DFARS 216.401-70 specified this requirement.
To comply with Section 814 and DFARS 216.401-70, DOD collected award and incentive fee data semiannually by a manual data call from the DOD components, a very labor-intensive process. Since DOD can now obtain relevant data through peer reviews and other sources (such as the Contract Business Analysis Repository), this final rule removes DFARs 216.401-70 because there is no longer a need to collect data directly from the contracting officer or other members of the contracting community in the military departments or defense agencies.
Promoting Voluntary Post-Award Disclosure of Defective Pricing: This proposed rule would add DFARS 215.407, Special Cost or Pricing Areas, which would consist of DFARS 215.407-1, Defective Certified Cost or Pricing Data, to stipulate that contracting officers request a limited-scope audit when a contractor voluntarily discloses defective pricing after contract award unless a full-scope audit is appropriate for the circumstances.
This proposed rule would add DFARS 215.407-1(c), which would:
Require, when a contractor voluntarily discloses defective pricing after contract award, that the contracting officer “request a limited-scope audit (e.g., limited to the affected cost elements of the defective pricing disclosure) unless a full-scope audit is appropriate for the circumstances (e.g., nature or dollar amount of the defective pricing disclosure).”
Recommend that the contracting officer consult with the Defense Contract Audit Agency (DCAA) to determine the appropriate scope of the audit.
Clarify that a contractor’s voluntary disclosure of defective pricing does not waive government entitlement to the recovery of any overpayment plus interest on the overpayments, or to the government’s rights to pursue defective pricing claims.
Comments on this proposed rule must be submitted no later than January 19, 2016, identified as “DFARS Case 2015-D030,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Mark Gomersall, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
Long-Haul Telecommunications: This proposed rule would add the following definition of “long-haul telecommunications” to DFARS 239.7401, Definitions [for telecommunications services]: “all general and special purpose long-distance telecommunications facilities and services (including commercial satellite services, terminal equipment and local circuitry supporting the long-haul service) to or from the post, camp, base, or station switch and/or main distribution frame (except for trunk lines to the first-serving commercial central office for local communications services).”
In addition, this proposed rule would amend DFARS 239.7402, Policy, to add paragraph (d), which would reference Procedures, Guidance, and Information (PGI) 239.7402(d), which will identify the Defense Information Systems Agency as the sole procurement activity for long-haul telecommunications requirements as addressed in DOD Directive 5105.19, Defense Information Systems Agency.
Comments on this proposed rule must be submitted no later than January 19, 2016, identified as “DFARS Case 2015-D023,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Kyoung Lee, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
Contract Authority for Advanced Component Development and Prototype Units: This proposed rule would amend DFARS 234.005-1, Competition [in major system acquisition], to implement Section 811 of the NDAA for FY 2015 (Public Law 113-291), which extends and modifies contract authority for advanced component development and prototype units.
The proposed rule would amend DFARS 234.005-1(1) to add “or initial production” to the text. The text now states: “A contract that is initially awarded from the competitive selection of a proposal resulting from a general solicitation may contain a contract line item or contract option for the provision of advanced component development or prototype of technology developed under the contract or the delivery of initial or additional prototype items if the item or a prototype thereof is created as the result of work performed under the contract...” The proposed rule would replace “component development or prototype of technology” with “component development, prototype, or initial production of technology,” and replace “additional prototype items” with “additional items.” The revised paragraph would state: “A contract that is initially awarded from the competitive selection of a proposal resulting from a general solicitation may contain a contract line item or contract option for the provision of advanced component development, prototype, or initial production of technology developed under the contract or the delivery of initial or additional prototype items if the item or a prototype thereof is created as the result of work performed under the contract...” (edited for clarity). This would allow for the inclusion of a contract line item (possibly an option) to go to initial production without further competition.
In addition, paragraph DFARS 234.005-1(2) would be revised to extend this authority from September 30, 2014, to September 30, 2019.
Finally, paragraph (2) of DFARS 217.202, Use of Options, which is a cross-reference to DFARS 234.005-1, would be revised to read as follows: “See 234.005-1 for limitations on the use of contract options for the provision of advanced component development, prototype, or initial production of technology developed under the contract or the delivery of initial or additional prototype items” (edited for clarity).
Comments on this proposed rule must be submitted no later than January 19, 2016, identified as “DFARS Case 2015-D008,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Janetta Brewer, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
Duty-Free Entry Threshold: This proposed rule would revise paragraph (3) of DFARS 225.901, Policy [on customs and duties], and paragraph (b)(3) of DFARS 252.225-7013, Duty-Free Entry, to increase the duty-free entry threshold on nonqualifying country supplies and ineligible foreign supplies from $200 to $300. The $200 threshold was established on April 30, 2003, based on the estimated cost to process a duty-free entry certificate at the time. This proposed rule would make an upward adjustment of the $200 threshold to $300 based on the U.S. Consumer Price Index (CPI) located at http://www.bls.gov/CPI/.
Comments on this proposed rule must be submitted no later than January 19, 2016, identified as “DFARS Case 2015-D036,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Kyoung Lee, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
Contract Term Limit for Shared Energy Savings Contract Services: This proposed rule would amend DFARS 241.103, Statutory and Delegated Authority [for utility services], to clarify the contract term for contracts awarded under the statutory authority of Title 10 of the U.S. Code, Section 2913, Energy Savings Contracts and Activities (10 USC 2913). 10 USC 2913 requires DOD to “develop a simplified method of contracting for shared energy savings contract services that will accelerate the use of these contracts...” DOD is authorized by 10 USC 2913 to contract with gas and electricity utilities to implement energy conservation measures on military installations. However, 10 USC 2913 does not indicate a term limit for contracts executed under this authority.
This proposed rule would add a new paragraph (2) to DFARS 241.103, which would state that contracting officers may enter into a shared energy savings contract under 10 USC 2913 for a period not to exceed 25 years. The introduction of the proposed rule states, “Experience has indicated that a period of less than 25 years is frequently insufficient to amortize the capital cost. Twenty-five years allows a greater volume and variety of energy conservation measures, and is consistent with non-DOD agency practice for similar contracts.”
Comments on this proposed rule must be submitted no later than January 19, 2016, identified as “DFARS Case 2015-D018,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Janetta Brewer, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
Buy American and Balance of Payments Program Clause Prescription: This proposed rule would amend DFARS 225.1101, Acquisition of Supplies, to clarify when it is appropriate not to include DFARS 252.225-7001, Buy American and Balance of Payments Program. The prescription in DFARS 225.1101(2)(i)(C) for use of DFARS 252.225-7001 does not clearly make a distinction with regard to when an exception to the Buy American statute or Balance of Payments Program applies. As written, contracting officers may inaccurately believe that it is permissible to use FAR 52.225-1, Buy American – Supplies instead of DFARS 252.225-7001 if either “an exception to the Buy American statute or Balance of Payments Program applies.” However, DFARS 252.225-7001 is required to be included in solicitations and contracts unless (1) the acquisition is for supplies for use within the United States and an exception to the Buy American statute applies (for example, nonavailability or public interest), or (2) the acquisition is for supplies for use outside the United States and an exception to the Balance of Payments Program applies. Therefore, this proposed rule would split (2)(i)(C) into two paragraphs as follows:
(2)(i)(C) The acquisition is for supplies for use within the United States and an exception to the Buy American statute applies, e.g., nonavailability or public interest (see FAR 25.103 [Exceptions] and [DFARS] 225.103); or
(2)(1)(D) The acquisition is for supplies for use outside the United States and an exception to the Balance of Payments Program applies (see [DFARS] 225.7501 [Policy])...
Comments on this proposed rule must be submitted no later than January 19, 2016, identified as “DFARS Case 2015-D037,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Tresa Sullivan, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
The National Aeronautics and Space Administration (NASA) has finalized an interim rule and a proposed rule to amend the NASA FAR Supplement (NFS).
Capitalization Threshold: This finalizes, without change, the interim rule that increased the NASA capitalization threshold from $100,000 to $500,000 in NFS 1845.7101-1, Property Classification; NFS 1845.7101-2, Transfers of Property; NFS 1845.7101-3, Unit Acquisition Cost; NFS 1852.245-70, Contractor Requests for Government-Provided Equipment; and NFS 1852.245-78, Physical Inventory of Capital Personal Property.
There were no comments on the interim rule, so it is finalized without changes. For more on the interim rule, see the September 2015 Federal Contracts Perspective article “NASA Increases Capitalization Threshold.”
Safety and Health Measures and Mishap Reporting: This finalizes, with minor changes, the proposed rule that would amend NFS 1852.223-70, Safety and Health, to: (1) change the title to “Safety and Health Measures and Mishap Reporting” to emphasize the purpose of the clause: (2) narrow the clause’s application by decreasing the reporting burden on contractors; and (3) reinforce the measures contractors at NASA facilities must take to protect the safety of their workers, NASA employees, the public, and high value assets.
No comments were submitted on the proposed rule. However, during internal deliberations a couple of minor changes were made to the final rule: (1) in NFS 1852.223-70(f)(1), the phrase “the contracting officer shall” is changed to “the contracting officer will”; and (2) in NFS 1852.223-70(f)(2), “in addition to other remedies available to the government” is replaced with “the contracting officer may”.
For more on the proposed rule, see the September 2015 Federal Contracts Perspective article “NASA Increases Capitalization Threshold.”