Source: https://www.fedgovcontracts.com/newsltr/fcp20-11.htm
Timestamp: 2019-12-10 00:02:54
Document Index: 363776415

Matched Legal Cases: ['art 13', 'art 13', 'art 12', 'art 22', 'art 10', 'art 252', 'art 19', 'art 13']

November 2019 Federal Contracts Perspective
FAC 2020-01 Makes Changes to “Commercial Item” Definition
Four FAR Rules Proposed
DFARS Clauses and Provisions All Scrambled Up
GSA Consolidating Schedules, Retiring FedBizOpps
FAC 2020-01 Makes Changes to
“Commercial Item” Definition
Federal Acquisition Circular (FAC) 2020-01 consists of a single final rule: one that amends the definition of “commercial item” in Federal Acquisition Regulation (FAR) 2.101, Definitions, to implement the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Public Law 115-91), Section 847, Revision of Definition of Commercial Item, which expands the universe of nondevelopmental items (NDIs) that qualify as commercial items to include items sold in substantial quantities on a competitive basis to multiple foreign governments.
Title 41 of the U.S. Code, Section 103, Commercial Item (41 USC 103), provides a definition of “commercial item” that is broad and covers a wide range of products and services. 41 USC 103 consists of eight categories of products and services that are considered commercial items. Of those eight, the one in paragraph (8) covers “nondevelopmental items” (NDIs). 41 USC 103(8) stated that “a nondevelopmental item [is considered a commercial item] if the procuring agency determines, in accordance with conditions in the Federal Acquisition Regulation, that the item was developed exclusively at private expense and has been sold in substantial quantities, on a competitive basis, to multiple state and local governments.” This definition was included almost verbatim as the definition of “commercial item” in FAR 2.101. (EDITOR’S NOTE: NDI has its own definition in FAR 2.101, which states that NDI includes “any previously developed item of supply used exclusively for governmental purposes by a federal agency, a state or local government, or a foreign government with which the United States has a mutual defense cooperation agreement...”)
Section 847 of the NDAA for FY 2018 amended 41 USC 103(8) by adding the phrase “or to multiple foreign governments” to the end of the NDI category, so that it now reads: “a nondevelopmental item [is considered a commercial item] if the procuring agency determines, in accordance with conditions in the Federal Acquisition Regulation, that the item was developed exclusively at private expense and has been sold in substantial quantities, on a competitive basis, to multiple state and local governments or to multiple foreign governments” (emphasis added).
To implement Section 847, the NDI category of the “commercial item” definition in FAR 2.101 is modified from “‘commercial item’ means...(8) a nondevelopmental item, if the procuring agency determines the item was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple state and local governments” to “‘commercial item’ means...(8) a nondevelopmental item, if the procuring agency determines the item was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple state and local governments or to multiple foreign governments” (emphasis added).
Besides the FAC that revised the definition of “commercial item” (see above article), the FAR Council has issued proposed rules amending the micro-purchase threshold, the simplified acquisition threshold, and the certified cost or pricing data threshold. In addition, a proposed rule was issued that would restrict the use of the lowest price technically acceptable (LPTA) source selection process, and another proposed rule that exempts employees involved in seasonal recreational services on federal lands from the minimum wage applicable to federal contractors.
Increased Micro-Purchase and Simplified Acquisition Thresholds: This rule proposes to amend the definitions of “micro-purchase threshold” and “simplified acquisition threshold” in FAR 2.101, Definitions, to implement the NDAA for FY 2018 (Public Law 115-91), Section 805, Increased Simplified Acquisition Threshold, and Section 806, Requirements Related to the Micro-Purchase Threshold. Section 805, which applies to acquisitions conducted under FAR part 13, Simplified Acquisition Procedures, increased the simplified acquisition threshold from $150,000 to $250,000. Section 806, which applies to acquisitions conducted under FAR subpart 13.2, Actions At or Below the Micro-Purchase Threshold, increased the micro-purchase threshold from $3,500 to $10,000. (EDITOR’S NOTE: Both the Civilian Agency Acquisition Council [CAAC] and the Department of Defense [DOD] have issued class deviations authorizing civilian agencies and the DOD, respectively, to increase these thresholds pending incorporation into the FAR. For more information on these deviations, see the March 2018 Federal Contracts Perspective article “CAAC Authorizes Deviation Increasing Simplified Acquisition and Micro-Purchase Thresholds,” and the October 2018 Federal Contracts Perspective article “DOD Continues Cleaning Up the DFARS.”)
In addition, this proposed rule would further amend the “micro-purchase threshold” definition in FAR 2.101 to implement paragraph (b) of the NDAA for FY 2017 (Public Law 114-328), Section 217, Increased Micro-Purchase Threshold for Research Programs and Entities, which increases the micro-purchase threshold for acquisitions from institutions of higher education or related or affiliated nonprofit entities, or from nonprofit research organizations or independent research institutes, from $3,500 to $10,000, or a higher amount as determined appropriate by the head of the agency and consistent with clean audit findings under Title 31 of the U.S. Code, Chapter 75 (31 USC Chapter 75), Requirements for Single Audits, an internal institutional risk assessment, or state law. (EDITOR’S NOTE: Paragraph (a) of Section 217 made these changes applicable to the Department of Defense [DOD], and DOD amended the “micro-purchase threshold” definition in Defense FAR Supplement [DFARS] 202.101, Definitions, accordingly – see the June 2018 Federal Contracts Perspective article “DOD Unleashes a Torrent of Rules, Removes Unnecessary DFARS Clauses and Provisions.”)
Finally, paragraph (b) of the definition of “simplified acquisition threshold” in FAR 2.101, which states, “Acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a humanitarian or peacekeeping operation..., the term means $300,000 for any contract to be awarded and performed, or purchase to be made, outside the United States”, would be amended by increasing the $300,000 to $500,000. This is because this particular threshold is based on 41 USC 153, Simplified Acquisition Threshold for Contract in Support of Humanitarian or Peacekeeping Operation, which states, “in the case of a contract to be awarded and performed, or purchase to be made, outside the United States in support of a humanitarian or peacekeeping operation, the term means an amount equal to two times the amount specified for that term...”
This proposed rule would change most instances of “$3,500” to “micro-purchase threshold” and “$150,000” to “simplified acquisition threshold.” However, there are certain $3,500 and $150,000 thresholds that are not being changed. The following are additional changes proposed to be made to the FAR in response to the changed thresholds:
FAR 3.502-3, Contract Clause [for subcontractor kickbacks], would be amended to replace “simplified acquisition threshold” with $150,000 to conform to the requirement in paragraph (i) of FAR 3.502-2, Subcontractor Kickbacks, which “requires each contracting agency to include in each prime contract exceeding $150,000 for other than commercial items (see [FAR] part 12 [Acquisition of Commercial Items]), a requirement that the prime contractor shall have in place and follow reasonable procedures designed to prevent and detect violations of the Kickbacks statute...” [the Anti-Kickback Act of 1986, which is in 41 USC Chapter 87, Kickbacks].
In paragraph (a)(2) of FAR 9.104-5, Representation and Certifications Regarding Responsibility Matters, “$3,500” would be changed to “$10,000.” When an offeror indicates in its representations and certifications a delinquency in excess of the $10,000 threshold, a contracting officer must report that information to the agency’s suspending or debarring official. In addition, the federal tax delinquency threshold in paragraph (b)(1)(v) of FAR 9.406-2, Causes for Debarment, and paragraph (a)(7) of FAR 9.407-2, Causes for Suspension, paragraph (a)(1)(i)(D) of FAR 52.209-5, Certification Regarding Responsibility Matters, and paragraph (h)(4) of FAR 52.212-3, Offeror Representations and Certifications – Commercial Items, would be changed from “$3,500” to “the threshold at [FAR] 9.104-5(a)(2)”.
In FAR 13.005, List of Laws Inapplicable to Contracts and Subcontracts At or Below the Simplified Acquisition Threshold, several laws that have thresholds set at a specific dollar amount (that is, $150,000) must be removed from the list because their dollar thresholds no longer correspond to the simplified acquisition threshold ($250,000). The statutes are in FAR 13.005(a)(1), 41 USC 8703, Contractor Responsibilities [for preventing and detecting subcontractor kickbacks]; (a)(2), 40 USC 3131, Bonds of Contractors of Public Buildings or Works; (a)(3), 40 USC Chapter 37, Contract Work Hours and Safety Standards; and (a)(5), 42 USC 6962, Federal Procurement [involving solid waste management].
In paragraph (a)(2)(ii) of FAR 13.501, Special Documentation Requirements [for acquisitions of commercial items between the simplified acquisition threshold and $700,000], “$700,000” would be replaced with “$700,000 or the thresholds in paragraph (1) of the definition of simplified acquisition threshold in FAR 2.101”. This change would be made to clarify the procedures to be used for justifications of other than full and open competition when contingency operations or for emergencies or major disasters (among other circumstances) authorize an increase of the simplified acquisition threshold to $750,000 for contracts awarded and performed in the U.S., or $1,500,000 for contracts awarded and performed outside the U.S.
In paragraph (a)(2) of FAR 25.703-2, Iran Sanctions Act, “$3,500” would be replaced by “$10,000” as the “significant transaction” amount an offeror may not exceed when engaging with Iran’s Revolutionary Guard Corps or any of its officials, agents, or affiliates. In addition, in paragraph (o)(2)(iii) of FAR 52.212-3, Offeror Representations and Certifications – Commercial Items, and paragraph (c)(3) of FAR 52.225-25, Prohibition on Contracting with Entities Engaging in Certain Activities or Transactions Relating to Iran – Representation and Certifications, “$3,500” would be replaced by “the threshold at [FAR] 25.703-2(a)(2).”
Comments on this proposed rule must be submitted no later than December 2, 2019, identified as “FAR Case 2018-004,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory Secretariat Division (MVCB), ATTN: Lois Mandell, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
Modifications to Cost or Pricing Data Reporting Requirements: This rule proposes to amend FAR 15.403-4, Requiring Certified Cost or Pricing Data (10 USC 2306a and 41 USC chapter 35), and FAR 30.201-4, Contract Clauses [for cost accounting standards and practices], to increase the threshold for requesting certified cost or pricing data from $750,000 to $2,000,000. This would implement the NDAA for FY 2018 (Public Law 115-91), Section 811, Modifications to Cost or Pricing Data and Reporting Requirements.
10 USC 2306a, Cost or Pricing Data: Truth in Negotiations, and 41 USC 3502, Required Cost or Pricing Data and Certification, require that the government obtain certified cost or pricing data for contract actions listed in FAR 15.403-4(a)(1), such as negotiated contracts, certain subcontracts, and certain contract modifications that exceed the certified cost or pricing data threshold. The threshold had been $750,000, but Section 811 amended the threshold to $2,000,000 effective July 1, 2018.
To implement Section 811, the rule proposes to make the following changes:
In FAR 15.403-4, amend paragraph (a)(1) to remove “The threshold for obtaining certified cost or pricing data is $750,000” and replace it with “The threshold for obtaining certified cost or pricing data is $750,000 for prime contracts awarded before July 1, 2018, and $2 million for prime contracts awarded on or after July 1, 2018.” Also, in paragraph (a)(1)(iii), revise the example provided of a price adjustment to reflect the increased threshold.
In paragraph (b)(1) of FAR 30.201-4, replace “$750,000” with “$2,000,000.” Paragraph (b)(1) currently requires the inclusion of FAR 52.230-3, Disclosure and Consistency of Cost Accounting Practices, in negotiated contracts when the contract amount is over $750,000 but less than $50,000,000 and the offeror certifies it is eligible for and elects to use modified Cost Accounting Standards coverage.
In FAR 52.230-1, Cost Accounting Standards Notices and Certification; FAR 52.230-2, Cost Accounting Standards; FAR 52.230-3, Disclosure and Consistency of Cost Accounting Practices; FAR 52.230-4, Disclosure and Consistency of Cost Accounting Practices – Foreign Concerns; and FAR 52.230-5, Cost Accounting Standards – Educational Institution, the Cost Accounting Standards applicability threshold is changed from “$750,000” to “$2,000,000.” The threshold for Cost Accounting Standards applicability is required by paragraph (b)(1)(B) of 41 USC 1502, Cost Accounting Standards, to be the same as the threshold in FAR 15.403-4(a)(1).
Comments on this proposed rule must be submitted no later than December 2, 2019, identified as “FAR Case 2018-005,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory Secretariat Division (MVCB), ATTN: Lois Mandell, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
Lowest Price Technically Acceptable (LPTA) Source Selection Process: The rule proposes to amend FAR 15.101-2, Lowest Price Technically Acceptable Source Selection Process, to implement the NDAA for FY 2019 (Public Law 115-232), Section 880, Use of Lowest Price Technically Acceptable Source Selection Process, which makes it “the policy of the United States government to avoid using lowest price technically acceptable source selection criteria in circumstances that would deny the government the benefits of cost and technical tradeoffs in the source selection process.”
Section 880 requires that the FAR be revised to require that “lowest price technically acceptable source selection criteria are used only in situations in which:
“(1) an executive agency is able to comprehensively and clearly describe the minimum requirements expressed in terms of performance objectives, measures, and standards that will be used to determine acceptability of offers;
“(2) the executive agency would realize no, or minimal, value from a contract proposal exceeding the minimum technical or performance requirements set forth in the request for proposal;
“(3) the proposed technical approaches will require no, or minimal, subjective judgment by the source selection authority as to the desirability of one offeror's proposal versus a competing proposal;
“(4) the executive agency has a high degree of confidence that a review of technical proposals of offerors other than the lowest bidder would not result in the identification of factors that could provide value or benefit to the executive agency;
“(5) the contracting officer has included a justification for the use of a lowest price technically acceptable evaluation methodology in the contract file; and
“(6) the executive agency has determined that the lowest price reflects full life-cycle costs, including for operations and support.”
Section 880 goes on to state that, “to the maximum extent practicable, the use of lowest price technically acceptable source selection criteria shall be avoided in the case of a procurement that is predominately for the acquisition of: (1) information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, audit or audit readiness services, health care services and records, telecommunications devices and services, or other knowledge-based professional services; (2) personal protective equipment; or (3) knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.”
Finally, Section 880 defines “executive agency” as having the meaning given “that term in section 102 of title 40, United States Code [40 USC 102, Definitions], except that the term does not include the Department of Defense” (emphasis added). (EDITOR’S NOTE: The definition of “executive agency” in 40 USC 102 is: “(A) an executive department or independent establishment in the executive branch of the government; and (B) a wholly owned government corporation.”)
The Department of Defense (DOD) is exempt from Section 880 and this proposed rule because the NDAA for FY 2017 (Public Law 114-328), Section 813, Use of Lowest Price Technically Acceptable Source Selection Process, and the NDAA for FY 2018 (Public Law 115-91), Section 822, Use of Lowest Price Technically Acceptable Source Selection Process, establish a similar, but not the same, set of criteria for DOD procurements to meet in order to use LPTA source selection criteria in solicitations. A separate Defense FAR Supplement (DFARS) proposed rule implementing these NDAA sections is in process (see the January 2019 Federal Contracts Perspective article “DOD Holds Year-End Regulations Clearance”).
To implement Section 880, this proposed rule would amend FAR 15.101-2 by adding two paragraphs: paragraph (c) would list the six conditions for use of LPTA, and paragraph (d) would list the types of procurements for which LPTA must be avoided to the maximum extent possible. Both paragraphs would start with “Except for DOD...”
Comments on this proposed rule must be submitted no later than December 2, 2019, identified as “FAR Case 2018-016,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory Secretariat Division (MVCB), ATTN: Lois Mandell, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
For more on Section 880 of the NDAA for FY 2019, see the September 2018 Federal Contracts Perspective article “$717 Billion Defense Authorization Act Addresses DOD Micro-Purchase Threshold, Commercial Items.”
Recreational Services on Federal Lands: This rule proposes to amend FAR subpart 22.19, Establishing a Minimum Wage for Contractors, and FAR 52.222-55, Minimum Wages Under Executive Order 13658, to conform to a Department of Labor (DOL) rule that implemented Executive Order (EO) 13838, Exemption From Executive Order 13658 for Recreational Services on Federal Lands, which exempted certain contracts from the requirements of EO 13658, Establishing a Minimum Wage for Contractors.
EO 13658 established hourly minimum wages to be paid to workers performing on federal contracts (currently $10.80/hour – see the October 2019 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.80/Hour for 2020”). EO 13838 exempts from the EO 13658 mandated hourly minimum wage “contracts or contract-like instruments entered into with the federal government in connection with seasonal recreational services or seasonal recreational equipment rental for the general public on federal lands, but this exemption shall not apply to lodging and food services associated with seasonal recreational services. Seasonal recreational services include river running, hunting, fishing, horseback riding, camping, mountaineering activities, recreational ski services, and youth camps.”
Section 1 of EO 13838 provides the following explanation for exempting these service contracts from EO 13658: “Executive Order 13658...established a minimum wage to be paid by parties who contract with the federal government and applies to outfitters and guides operating on federal lands. These individuals often conduct multiday recreational tours through federal lands, and may be required to work substantial overtime hours. The implementation of Executive Order 13658 threatens to raise significantly the cost of guided hikes and tours on federal lands, preventing many visitors from enjoying the great beauty of America’s outdoors. Seasonal recreational workers have irregular work schedules, a high incidence of overtime pay, and an unusually high turnover rate, among other distinguishing characteristics. As a consequence, a minimum wage increase would generally entail large negative effects on hours worked by recreational service workers. Thus, applying Executive Order 13658 to these service contracts does not promote economy and efficiency in making these services available to those who seek to enjoy our federal lands. That rationale, however, does not apply with the same force to lodging and food services associated with seasonal recreational services, which generally involve more regular work schedules and normal amounts of overtime work. Executive Order 13658 therefore should continue to apply to lodging and food services associated with seasonal recreational services.”
To implement EO 13838, DOL amended its regulations at Title 29 of the Code of Federal Regulations (CFR), Part 10, Establishing a Minimum Wage for Contractors, Section 10.4, Exclusions (29 CFR 10.4), by adding paragraph (g): “Contracts in connection with seasonal recreational services and seasonal recreational equipment rental offered for public use on federal lands. This part shall not apply to contracts or contract-like instruments entered into with the federal government in connection with seasonal recreational services or seasonal recreational equipment rental for the general public on federal lands, but this exemption shall not apply to lodging and food services associated with seasonal recreational services. Seasonal recreational services include river running, hunting, fishing, horseback riding, camping, mountaineering activities, recreational ski services, and youth camps.” (For more on EO 13838 and the implementing DOL rule, see the October 2018 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.60/Hour for 2019.”)
To bring the FAR into conformance with EO 13838, this rule proposes to amend the FAR as follows:
Amend FAR 22.1901, Definitions, to add the following definition of “seasonal recreational services”: “Seasonal recreational services, as used in this subpart, means services that include river running, hunting, fishing, horseback riding, camping, mountaineering activities, recreational ski services, and youth camps.”
Amend FAR 22.1903, Applicability, by adding as paragraph (b)(2)(iii) the following exemption to EO 13658: “Seasonal recreational services or seasonal recreational equipment rental for the general public on federal lands, except for lodging and food services associated with seasonal recreational services, in accordance with Executive Order 13838, Exemption from Executive Order 13658 for Recreational Services on Federal Lands...as implemented by the U.S. Department of Labor regulations at 29 CFR 10.4(g).”
Amending FAR 52.222-55 to add the definition of “seasonal recreational services” in FAR 22.1901 to paragraph (a), Definitions; and add the exemption in FAR 22.1903(b)(2)(iii) as new paragraph (c)(2)(iii).
Comments on this proposed rule must be submitted no later than December 20, 2019, identified as “FAR Case 2019-002,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory Secretariat Division (MVCB), ATTN: Lois Mandell, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
For more on EO 13658, see the March 2014 Federal Contracts Perspective article “President Issues Executive Order Mandating $10.10/Hour Minimum Wage.”
The Department of Defense (DOD) spent October engaged in a clean-up the DOD FAR Supplement (DFARS) by modifying or proposing to modify six clauses and removing one provision in DFARS part 252, Solicitation Provisions and Contract Clauses. In addition, DOD amended the DFARS to implement a section of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 involving weapon system design.
Modification of “Obligation of the Government” Clause: This finalizes, with an editorial change, the rule that proposed to combine DFARS 252.239-7013, Obligation of the Government, DFARS 252.239-7014, Term of Agreement, and DFARS 252.239-7015, Continuation of Communication Service Authorizations, into one clause: DFARS 252.239-7013, Term of Agreement and Continuation of Services. All three clauses are included in all basic agreements for telecommunications services, and they all provide terms and conditions that pertain to basic agreements for telecommunications services.
This rule proposed that the new DFARS 252.239-7013 basic clause be used in basic agreements that do not supersede an existing basic agreement with the contractor, and that new Alternate I be used in basic agreements that supersede an existing basic agreement with the contractor.
The proposed paragraph (a) of the basic clause would consist of the text of the original DFARS 252.239-7013 (“This basic agreement is not a contract. The government incurs liability only upon issuance of a communication service authorization, which is a contract that incorporates the terms and conditions of this basic agreement”).
The proposed paragraph (b) of the basic clause would consist of the text of original DFARS 252.239-7014 (“This agreement shall continue in force from year to year, unless terminated by either party by 30 days’ written notice. Termination of this basic agreement does not terminate or cancel any communication service authorizations issued under this basic agreement prior to the termination”). (EDITOR’S NOTE: The termination notification timeframe would be changed from 60 to 30 days to align with the requirement in paragraph (b)(2) of FAR 16.702, Basic Agreements: “Each basic agreement shall provide for discontinuing its future applicability upon 30 days’ written notice by either party.”)
The proposed Alternate I would consist of paragraphs (a) and (b) of the basic clause, but new paragraph (c) would consist of the original DFARS 252.239-7015 text, which identifies the basic agreement that is being superseded and specifies that all communication service authorizations (which are contracts used to acquire telecommunication services under a basic agreement) issued under the previous basic agreement will be modified to incorporate the terms and conditions of the new basic agreement.
Finally, DFARS 252.239-7014 and DFARS 252.239-7015 would be removed.
No comments were submitted in response to the proposed rule, so it is finalized with a minor editorial change. For more on the proposed rule, see the July 2019 Federal Contracts Perspective article “DOD Eases Off the Gas – For a Month.”
Modification of “Protection Against Compromising Emanations” Clause: This final rule amends DFARS 252.239-7000, Protection Against Compromising Emanations, to update a reference to the current TEMPEST standard.
DFARS 252.239-7000 is included in solicitations and contracts involving information technology that requires protection against compromising emanations. The clause requires contractors to provide or use only information technology that has been accredited to meet the appropriate information assurance requirements of the National Security Agency National TEMPEST standards or other standards specified by the contract. Paragraph (a)(1) of the clause identified NACSEM No. 5100 and NACSEM No. 5100A, Compromising Emanations Laboratory Test Standard, Electromagnetics (U), as examples of TEMPEST Standards. However, NSTISSAM TEMPEST 1-92, Compromising Emanations Laboratory Test Requirements, Electromagnetics (U) is the most current TEMPEST standard and supersedes the NACSEM standards, so this rule updates the example to reflect the current standard.
Repeal of “Limitations on Use or Disclosure of Information by Litigation Support Contractors” Provision: This final rule removes DFARS 252.204-7013, Limitations on the Use or Disclosure of Information by Litigation Support Contractors, and its associated prescription at DFARS 204.7403, Solicitation Provision and Contract Clauses [for the release of information to litigation support contractors]. because the clause is unnecessary.
DFARS 252.204-7013 was included in solicitations for the acquisition of litigation support services. It included a representation that, by submission of its offer, the offeror agreed to handle and protect all litigation information and documentation, indemnify the government from any liability or claim that arose from the offeror’s misuse of the litigation information, and ensure its employees were subject to the same use and nondisclosure obligations stated in the provision prior to accessing any litigation information. In addition, DFARS 252.204-7013 notified offerors that third parties holding proprietary rights or any other legally protectable interest in the provided litigation information had the right of direct action against the offeror for any unauthorized use or disclosure by the offeror.
DFARS 252.204-7013 is unnecessary because the same information is provided to offerors by DFARS 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors, which is required to be included in all solicitations and contracts for the acquisition of litigation support services. Therefore, this final rule removes DFARS 252.204.7013 and its prescription in DFARS 204.7403(a).
Nonmanufacturer Rule for 8(a) Participants: This finalizes, with an editorial change, the rule that proposed to amend paragraph (d) of DFARS 252.219-7010, Notification of Competition Limited to Eligible 8(a) Concerns – Partnership Agreement, to conform to changes made by the Small Business Administration (SBA) to its regulations to implement the NDAA for FY 2013 (Public Law 112-239), Section 1651, Limitations on Subcontracting, which revised and standardized the limitations on subcontracting, including the nonmanufacturer rule, that apply to small business concerns, including 8(a) Program participants, in procurements conducted under FAR part 19, Small Business Programs.
Small business concerns must meet certain requirements when they offer the government an end item they did not manufacture, process, or produce. These requirements are known as the “nonmanufacturer rule.” For example, a small business nonmanufacturer must offer an end item that a small business manufactured, processed, or produced in the United States or its outlying areas. The nonmanufacturer rule is covered in paragraph (f) of FAR 19.102, Size Standards.
DFARS 252.219-7010(d)(1)(ii) had provided an exemption from the nonmanufacturer rule for 8(a) contracts valued at or below $25,000 that were awarded under FAR part 13, Simplified Acquisition Procdures. For those contracts, an 8(a) participant was permitted to offer end items manufactured or produced by any domestic firm.
The SBA, in implementing Section 1651, revised its regulations to apply the nonmanufacturer rule to 8(a) contracts at any dollar value. In addition, the revised SBA regulations now require that the 8(a) small business nonmanufacturer must be “primarily engaged in the retail or wholesale trade and normally sells the type of item being supplied...[and] takes ownership or possession of the item(s) with its personnel, equipment, or facilities in a manner consistent with industry practice...”
DOD issued a proposed rule that would amend DFARS 252.219-7010(d) to replace the outdated text regarding the nonmanufacturer rule with updated text that implements Section 1651 and SBA’s final rule, and is consistent with the proposed FAR rule that would bring the FAR into conformance with the revised SBA regulations (see the January 2019 Federal Contracts Perspective article “Amendments Proposed to Limitations on Subcontracting”). The proposed rule’s DFARS 252.219-7010(d) would require a small business concern that provides an end item it did not manufacture, process, or produce to “(i) provide an end item that a small business has manufactured, processed, or produced in the United States or its outlying areas...; (ii) be primarily engaged in the retail or wholesale trade and normally sell the type of item being supplied; and (iii) take ownership or possession of the item(s) with its personnel, equipment, or facilities in a manner consistent with industry practice; for example, providing storage, transportation, or delivery.” In addition, the revised clause would provide that “when the end item being acquired is a kit of supplies, at least 50 percent of the total cost of the components of the kit shall be manufactured, processed, or produced by small businesses in the United States or its outlying areas.” Finally, it would exempt construction or service contracts from the provisions of DFARS 252.219-7010.
Two respondents submitted comments on the proposed rule, but neither’s comments were adopted. Therefore, the proposed rule is finalized with only a minor editorial change. For more on the proposed rule, see the May 2019 Federal Contracts Perspective article “DOD Shakes Up the DFARS.”
Reliability and Maintainability in Weapon System Design: This finalizes, without changes, the rule that proposed to amend various DFARS sections to implement the NDAA for FY 2018 (Public Law 115-91), Section 834, Requirement to Emphasize Reliability and Maintainability in Weapon System Design, which amended Title 10 of the U.S. Code to add Section 2443 (10 USC 2443), Sustainment Factors in Weapon System Design, to require program managers to ensure that reliability and maintainability are included in the performance attributes of the key performance parameters on sustainment during the development of capabilities requirements for major weapon systems design and contracts for the “(1) engineering and manufacturing development of a weapon system, including embedded software; or (2) for production of a weapon system, including embedded software.”
The proposed rule would add appropriate paragraphs to DFARS 207.106, Additional Requirements for Major Systems; DFARS 215.304, Evaluation Factors and Significant Subfactors; DFARS 216.402-2, Technical Performance Incentives [for incentive contracts]; and DFARS 234.004, Acquisition Strategy [for major system acquisition], addressing applicable portions of Section 834. No comments on the proposed rule were submitted, so it is finalized without changes. For more on the proposed rule, see the July 2019 Federal Contracts Perspective article “DOD Eases Off the Gas – For a Month.”
Modification of “Notification of Anticipated Contract Termination or Reduction” Clause: This rule proposes to amend DFARS 249.7003, Notification of Anticipated Contract Terminations or Reductions, and DFARS 252.249-7002, Notification of Anticipated Contract Termination or Reduction, to conform the text to the current DFARS convention regarding the use of dollar thresholds in contract clauses, update legal and DFARS citations, and remove text that is no longer needed to implement the underlying statutory language.
DFARS 252.249-7002 is included in all contracts under a major defense program and implements the requirements of the 10 USC 2501, National Security Strategy for National Technology and Industrial Base, note “Notice to Contractors and Employees Upon Proposed and Actual Termination or Substantial Reduction in Major Defense Programs.” The 10 USC 2501 note requires contractors, upon receiving notice of contract termination or a substantial reduction in funding resulting from an appropriations act, to provide notice of the anticipated termination or substantial reduction to first-tier subcontractors with a subcontract of $700,000 or more, and flow down the notification to lower-tier subcontractors with a subcontract of $150,000 or more. The 10 USC 2501 note is implemented by DFARS 249.7003 and DFARS 252.249-7002.
Within the DFARS, statutory acquisition-related dollar thresholds that are subject to inflation adjustment under 41 USC 1908, Inflation Adjustment of Acquisition-Related Dollar Thresholds, are identified in the applicable DFARS policy section. Any clause that relies on such a threshold will reference the threshold in the applicable DFARS policy section instead of citing the actual dollar value. This drafting convention ensures that inflation adjustments of statutory acquisition-related thresholds apply to existing contracts and subcontracts in effect on the date of the adjustment.
To implement the dollar thresholds of the 10 USC 2501 note in accordance with the current DFARS drafting convention, the proposed rule would add the relevant dollar thresholds ($700,000 and $150,000) to DFARS 249.7003(c) and update DFARS 252.249-7002(d)(2)(i) and (d)(2)(ii) to refer to the thresholds in DFARS 249.7003(c).
Also, this rule proposes to amend DFARS 249.7003(a) and DFARS 252.249-7002(b), (c)(1)(iii), and (c)(2) to cite the Workforce Innovation and Opportunity Act, which is the current statute under which employee employment and training opportunities apply. The current DFARS 252.249-7002 advises contractors of the benefits that may be available to affected employees through the Job Training Partnership Act (Public Law 97-300). The Job Training Partnership Act was repealed and superseded by the Workforce Investment Partnership Act (Public Law 105-220), which was later repealed and superseded by the Workforce Innovation and Opportunity Act (Public Law 113-128; codified at 29 USC Chapter 32, Workforce Innovation and Opportunity). This rule proposes to modify DFARS 249.7003 and DFARS 252.249-7002 to reflect the current statute associated with the 10 USC 2501 note.
Comments on this proposed rule must be submitted no later than December 30, 2019, identified as “DFARS Case 2019-D019,” 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: Carrie Moore, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
Modification of “Advanced Payment Pool” Clause: This rule proposes to modify DFARS 252.232-7000, Advance Payment Pool, to incorporate the information currently included in DFARS 252.232-7001, Disposition of Payments, and make minor changes to simplify the clause.
FAR 32.408, Application for Advance Payments, requires a contractor that is applying for advance payments to provide the name and address of the financial institution (also referred to as the “disbursing office”) at which the contractor will establish a special account to serve as the depository for the advance payments. Paragraph (b) of FAR 32.406, Letters of Credit, requires the government to use either a letter of credit or a direct Treasury check to make advance payments to a contractor, unless a waiver is obtained from the Treasury Department.
A letter of credit is issued by the government “if the contracting agency expects to have a continuing relationship with the contractor for a year or more, with advances totaling at least $120,000 a year” (FAR 32.406(b)(1)). The letter of credit enables the contractor to withdraw government funds from the special account to cover the contractor’s own disbursements of cash for contract performance. If the contract and/or contractor cannot meet the criteria for establishment of a letter of credit, a letter of credit is not issued and the contractor must submit a properly certified invoice or voucher to the government for approval. Upon approval of the invoice or voucher, a dual Treasury check is issued to the disbursing office for dissemination to the contractor’s special account.
FAR 52.232-12, Advanced Payments, is included in all solicitations and contracts under which the government will provide advance payments. The clause advises contractors that advance payment will be made via a letter of credit or submission of a properly certified and approved invoice. DFARS 252.232-7000, which supplements FAR 52.232-12, is included in all contracts that will be subject to an advance payment pool agreement with a nonprofit organization or educational institution (see DFARS 232.470, Advance Payment Pool), and notifies contractors that “advance payments will be made in accordance with the findings, determinations, and authorization for advance payment...[and the] terms and conditions of the advance payment pool agreement...”
DFARS 252.232-7001, Disposition of Payments, is also included in contracts that will be subject to an advanced payment pool agreement with a nonprofit organization or educational institution, but only when advance payments will be made by the disbursing office not designated in the advance payment pool agreement (that is, when a letter of credit has not been issued under the contract and the contractor must submit an invoice of voucher in accordance with FAR 52.232-12). DFARS 252.232-7001, which supplements FAR 52.232-12, clarifies for contractors that advance payments will be made by a dual Treasury check forwarded to the disbursing office for distribution to the contractor.
This rule proposes to amend DFARS 252.232-7000 by adding the following as paragraph (c): “When a letter of credit has not been issued to the contractor in conjunction with the contract, payment will be by a dual payee Treasury check made payable to the contractor or the disbursing office in the advance payment pool agreement and will be forwarded to that disbursing office for appropriate disposition.” Since this new paragraph (c) is essentially the complete text of DFARS 252.232-7001, DFARS 252.232-7001 would be unnecessary and may be removed.
Comments on this proposed rule must be submitted no later than December 30, 2019, identified as “DFARS Case 2019-D013,” 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: Carrie Moore, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
Modification of “Payment for Subline Items Not Separately Priced” Clause: This rule proposes to amend DFARS 252.204-7002, Payment for Subline Items Not Separately Priced, to simplify it and conform it to current government contract line item structure terminology.
DFARS 252.204-7002(b) states, “The contractor shall not invoice the government for any portion of a contract line item or exhibit line item which contains an NSP until: (1) the contractor has delivered the total quantity of all related contract subline items or exhibit subline items; and (2) the government has accepted them.” This can be interpreted as meaning the contractor is prohibited from billing for any portion of a contract line or subline item that is associated with an NSP item until all of the NSP items have also been delivered to and accepted by the government.
It is not the intent of the government to prohibit any and all payment on such contract line or subline items until all deliveries have been made and accepted for both the priced and NSP items. This proposed rule would clarify the text of DFARS 252.204-7002(b) as follows: “The contractor shall not invoice the government for an item that includes in its price an NSP item until: (1) the contractor has also delivered the NSP item included in the price of the item being invoiced; and (2) the government has accepted the NSP item.”
Finally, the rule proposes to amend paragraph (b)(3)(iv) of DFARS 204.7104-1, Criteria for Establishing [contract subline items], to replace “contract line item” with “contract line or subline item,” and add a prescription for DFARS 252.204-7002 to DFARS 204.7109, Contract Clauses, as paragraph (a).
Comments on this proposed rule must be submitted no later than December 30, 2019, identified as “DFARS Case 2018-D050,” 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: Carrie Moore, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
The General Services Administration (GSA) is undertaking efforts to improve and streamline the federal acquisition process by merging multiple awards schedules into a single schedule, requesting proposals for commercial e-commerce portals, and retiring FedBizOpps and transitioning its functions to the System for Award Management (SAM).
Solicitation Issued for Merging 24 Multiple Awards Schedules into Single Schedule: The GSA has released its consolidated Multiple Award Schedule (MAS) solicitation on FedBizOpps (https://www.fbo.gov/notices/d8dfc87dd4cb246f4c5fae066d0b0ef9). The new solicitation (Request for Proposals [RFP] 47QSMD20R0001) modernizes federal acquisition by consolidating and streamlining the existing 24 MAS into a single schedule for products, services, and solutions.
A commonly cited problem with the MAS system was that each MAS has different terms and conditions, making it difficult for contractors with products and services in different MAS schedules, such as a contractor that sells information technology software under Schedule 70 and information technology professional services under Schedule 00CORP. Another problem is that many products and services don’t fit neatly into a single schedule, and this can lead to similar products or services being placed in different schedules.
Only new contracts will be placed on the consolidated schedule solicitation, which streamlines and simplifies the order process for new contractors. Contractors already on one of the 24 MAS will not be affected by the new solicitation until the mass modification takes effect in 2020. Federal agencies should see no disruptions to their purchasing practices during the transition.
The new Schedule solicitation is organized by large categories and subcategories. It features a simplified format, streamlined terms and conditions, and new categories and Special Item Numbers. This new format will make it easier for contractors to offer products, services, and solutions, and for agency partners to find them.
For more on the MAS consolidation effort, see the December 2018 Federal Contracts Perspective article “GSA Announces Transformation of Multiple Award Schedules.”
Solicitation Issued for Participation in the Commercial e-Commerce Portals Implementation: The GSA issued a solicitation (RFP 47QSCC20R0001 – see https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=29315c37e21af1200422aaed6f524705) requesting proposals from e-marketplace portal providers for commercial e-marketplace platforms that can provide business-to-business (B2B) e-commerce capabilities for federal agencies using the Government Purchase Card (GPC) for the purchase of commercial off-the-shelf (COTS) items. The solicitation is expected to result in two or more no-cost contracts with commercial e-marketplace providers for initial proof of concept, each with a period of performance of one-year with two one-year option years. However, GSA reserves the right to award as many contracts as determined appropriate by the contracting officer.
This solicitation is authorized by the NDAA for FY 2018 (Public Law 115-91), Section 846, Procurement Through Commercial E-Commerce Portals. Section 846 requires the GSA, which operates the MAS program so federal agencies can obtain commercial supplies and services at prices associated with volume pricing, to “establish a program to procure commercial products through commercial e-commerce portals for purposes of enhancing competition, expediting procurement, enabling market research, and ensuring reasonable pricing of commercial products. The administrator [of GSA] shall carry out the program…through multiple contracts with multiple commercial e-commerce portal providers, and shall design the program to be implemented in phases with the objective of enabling government-wide use of such portals...The head of a department or agency may procure, as appropriate, commercial products for the department or agency using the program.” The use of commercial e-commerce portals (such as those operated by Amazon and Staples) would be restricted to acquisitions not exceeding the simplified acquisition threshold ($250,000). Acquisitions made using the approved e-commerce portals “shall be made, to the maximum extent practicable, under the standard terms and conditions of the portal relating to purchasing on the portal.” The commercial e-commerce portals approved by GSA will be available to all government agencies.
The closing date for this solicitation is November 15, 2019.
FedBizOpps to Be Retired, Transitioned to beta.SAM.gov: FedBizOpps, the “governmentwide point-of-entry” for notices of upcoming solicitations and contract awards over $25,000, is being retired in November and transitioned to the System for Award Management (SAM – https://beta.sam.gov/), which is the website that has been consolidating all governmentwide acquisition systems into a single unified system that will provide users one login for access to all the capabilities previously found in the old systems, eliminate data overlap by sharing the data throughout the award lifecycle, and have a standardized format across all webpages to make it easier to navigate and find information. FedBizOpps is the latest system to make the transition to beta.SAM.gov.
Contractors and federal employees will need a login.gov account (https://login.gov/) to access beta.SAM.gov. They may either link an existing login.gov account to beta.SAM.gov, or create a new login.gov account.
The transition is scheduled to take place over the Veterans’ Day weekend and be complete on November 12, 2019.