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Barry McVay's

FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


NOVEMBER 2000
Vol. I, No. 11

CONTENTS

FAC 97-20 Implements Veterans Entrepreneurship Act, Raises Cost or Pricing Threshold to $550,000
OMB Announces Availability of FAIR Act Inventories
DOD Issues Revised 5000 Series Documents
Navy Proposes to Issue New NAPS
Executive Order Increasing SDB Opportunities Issued
Justice Seeking Comments on Two ADR Documents
SBA Proposes Improvements to HUBZone Program
Changes to NFS on Indirect Rates, Training Services, NAICS
Protest Based on Postponed Debriefing Dismissed
OFPP Seeks Information on Non-Fee Contract Incentives
Comments Sought on Post-Retirement Benefits CAS



FAC 97-20 Implements Veterans Entrepreneurship Act,
Raises Cost or Pricing Threshold to $550,000

Federal Acquisition Circular (FAC) 97-20, published October 11, is short and sweet: it implements the Veterans Entrepreneurship and Small Business Act of 1999 (Public Law 106-50) by requiring small business subcontracting plans submitted by large contractors to establish subcontracting goals for veteran-owned small businesses, and it increases the Truth in Negotiations Act threshold for obtaining cost or pricing data from $500,000 to $550,000.

The following are the most noteworthy changes being made to the Federal Acquisition Regulation (FAR) by FAC 97-20:



OMB Announces Availability of FAIR Act Inventories

On October 3, the Office of Management and Budget (OMB) announced the availability of the first group of Year 2000 "commercial activities inventories" compiled and submitted by several government agencies in compliance with the Federal Activities Inventory Reform (FAIR) Act of 1998 (Public Law 105-270). The FAIR Act requires that agencies submit an "annual list of government activities not inherently governmental in nature," and these commercial activities inventories are subject to challenge by interested parties within 30 working days of their announced availability -- that is, by November 15.

In 1999, OMB made three separate announcements regarding inventories availability, and it is expected that OMB will make three announcements this year.

The Office of Federal Procurement Policy (OFPP), which is part of OMB, has prepared a summary FAIR Act User's Guide and is making it available on its Internet site at http://www.whitehouse.gov/OMB/procurement/fair-index.html. The Guide is intended to help interested parties review the Year 2000 FAIR Act inventories, and it includes the web site addresses to access agency inventories.



DOD Issues Revised 5000 Series Documents

On October 23, the Department of Defense (DOD) posted on its acquisition reform website http://www.acq.osd.mil/ar the revised 5000 series of acquisition system documents: DOD Directive 5000.1, The Defense Acquisition System; DOD Instruction 5000.2, Operation of the Defense Acquisition System; and DOD Interim Regulation 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs (MDAPs) and Major Automated Information System (MAIS) Acquisition Programs. These documents replace the old DOD Directive 5000.1 and DOD Regulation 5000.2-R, both of which were dated March 15, 1996, and subsequently revised. (EDITOR'S NOTE: The DOD Interim Regulation 5000.2-R is a marked-up version of the old DOD Regulation 5000.2-R that reflects the provisions of the new DOD Directive 5000.1 and DOD Instruction 5000.2, and will be in effect until a new DOD Regulation 5000.2-R is finalized.)

The new 5000 documents establish policies that are more consistent with current rapid technology cycles and replace those that helped to drive the 15 to 20 year development cycles for systems and often caused DOD to spend significant portions of it budget for relatively small increments in performance. The new policies emphasize flexibility by allowing reasonable tradeoffs between cost and performance. Proposed programs may enter the acquisition process at various decision points, depending on the concept and technological maturity, and program managers (PM) are encouraged to tailor their acquisition strategies to fit the particular conditions of their program and to reflect sound business management practices.

The policies also place increased emphasis on interoperability; the use of commercial products, services, and technologies; the benefits of competition to innovation and cost reduction; and the integration of logistics and systems acquisition to produce more reliable, longer-lived, and cost-effective systems.

"The PM shall require prime contractors and subcontractors at all levels to incorporate commercial and non-developmental items as components of items supplies," paragraph 3.3.2.1 of DOD Interim Regulation 5000.2-R states. "Preference shall be given to the use of commercial items first and non-developmental items second. The overriding concern is to use the most cost-effective source of supply throughout a system's life-cycle."



Navy Proposes to Issue New NAPS

The Navy has posted a draft of an entirely new version of the Navy Acquisition Procedures Supplement (NAPS) on the Navy Internet site http://www.abm.rda.hq.navy.mil. This would be the first complete reissuance of the NAPS since 1997.

While there are changes throughout the draft NAPS, most are either editorial or designate a particular official as responsible for certain activities. In addition, the following subparts would be added to the NAPS to supplement various FAR and Defense FAR Supplement (DFARS) subparts:

Comments should be submitted to Peter Chase at e-mail: Chase.Peter@hq.navy.mil or fax: 703-602-2117. The Navy is particularly interested "in identifying areas where either existing coverage is considered unnecessary, or additional coverage would be beneficial."



Executive Order Increasing SDB Opportunities Issued

On October 6, President Clinton issued Executive Order 13170, Increasing Opportunities and Access for Disadvantaged Businesses, directing agencies "to take all necessary steps, as permitted by law, to increase contracting between the federal government and SDBs [small disadvantaged businesses], 8(a)s, and MBEs [minority business enterprises]."

Among the actions each department and agency are ordered to perform are:

In addition, the executive order directs the General Services Administration (GSA) and the Small Business Administration (SBA) to "act promptly to expand inclusion of 8(a)s and SDBs on GSA Schedules, and provide greater opportunities for 8(a) and SDB participation in orders under such schedules."



Justice Seeking Comments on Two ADR Documents

The Department of Justice is soliciting comments on two documents designed to help federal agencies develop alternative dispute resolution (ADR) programs: "Confidentiality in Federal Alternative Dispute Resolution Programs," which describes the nature and limits of confidentiality in federal ADR programs; and "Evaluation of Federal Alternative Dispute Resolution Programs," which contains detailed guidance for agencies to use when conducting evaluations of their ADR programs. These documents, which are available on page 59200 of the October 4, 2000, Federal Register, were prepared by the Federal ADR Steering Committee, which was established to assist federal agencies in the use of ADR as required by the Administrative Dispute Resolution Act of 1996.

Send comments by November 1, 2000, to Jeffrey M. Senger, Deputy Senior Counsel for Dispute Resolution, United States Department of Justice, 950 Pennsylvania Ave. NW, Room 4328, Washington, DC 20530.



SBA Proposes Improvements to HUBZone Program

In 1998, the Small Business Administration (SBA) issued regulations implementing Title VI of the Small Business Reauthorization Act of 1997 (Public Law 105-135), which established the Historically Underutilized Business Zone (HUBZone) program to provide federal contract assistance to qualified small business concerns in distressed communities. More than 7,000 urban census tracts and 900 rural counties currently qualify as HUBZones, as do all federally-recognized Native American reservations.

Since 1998, SBA has become aware of certain amendments that it believes will clarify the regulations, streamline the operation of the HUBZone program, and ease eligibility requirements that are thought to be overly burdensome to businesses. Therefore, it is proposing to make the following changes to its regulations in Title 13 of the Code of Federal Regulations (CFR), Part 126, HUBZone Program:

Comments on the proposed rule must be submitted by November 2, 2000, to Michael McHale, Associate Administrator for the HUBZone Program, 409 Third Street, SW, Washington, DC 20416.

EDITOR'S NOTE: The FAR addresses the HUBZone program in Subpart 19.13, Historically Underutilized Business Zone (HUBZone) Program.



Changes to NFS on Indirect Rates, Training Services, NAICS

The National Aeronautics and Space Administration (NASA) was busy during October, cleaning up the NASA FAR Supplement (NFS) by issuing the following final rules:



Protest Based on Postponed Debriefing Dismissed

The General Accounting Office (GAO) dismissed as untimely a protest based on information obtained during post-award debriefing where protester who was excluded from competitive range requested that the debriefing be delayed until after award (United International Investigative Services, Inc., B-286327, October 25, 2000).

The solicitation involved a U.S. Marshals Service requirement for court security services in the 7th and 9th judicial circuits. United International Investigative Services (UIIS) submitted a proposal which the Marshals Service excluded from the competitive range because of various deficiencies regarding contract management and past performance. On June 9, 2000, UIIS requested a debriefing and requested that the debriefing be delayed until after award as permitted by paragraph (a)(2) of FAR 15.505, Preaward Debriefing of Offerors.

The Marshals Service awarded contracts to another offeror on September 13 and provided a written debriefing to UIIS, which was received by UIIS on September 19. On September 22, UIIS filed its protest challenging the evaluation of its proposal. The Marshals Service requested that UIIS' proposal be dismissed as untimely because "by specifically requesting that the [Marshals Service] delay any debriefing until after a contract had been awarded, UIIS failed to diligently pursue the information on which its protest is based." The Marshals Service also noted that FAR 15.505(a)(2), which UIIS specifically referenced in its request, warns offerors that such requests for delayed debriefings "could affect the timeliness of any protest filed subsequent to the debriefing."

The GAO agreed with the Marshals Service, citing 41 U.S.C. 253b(f), which states: "When the contracting officer excludes an offeror...from the competitive range...the excluded offeror may request in writing, within 3 days after the date on which the excluded offeror receives notice of its exclusion, a debriefing prior to award...The contracting officer is required to debrief an excluded offeror in accordance with subsection (e) [which provides for post-award debriefings] only if that offeror requested and was refused a preaward debriefing..." GAO's protest regulations at 4 CFR 21.2, Time of Filing, state, "Protests...shall be filed not later than 10 days after the basis of protest is known or should have been known (whichever is earlier), with the exception of protests challenging a procurement conducted on the basis of competitive proposals under which a debriefing is requested and, when requested, is required."

GAO decided that "UIIS expressly requested that its debriefing be delayed until after award. Accordingly, we do not view the debriefing provided by the agency on September 19 as being 'required' as contemplated by the controlling statute and our Bid Protest Regulations. Thus, UIIS may not properly rely on its own decision to request a delayed debriefing as a basis to extend the period for filing its protest by more than 3 months after UIIS received notification of its exclusion from the competitive range."



OFPP Seeks Information on Non-Fee Contract Incentives

Though recent acquisition streamlining efforts have dramatically increased the options available to contracting officers in the conduct of acquisitions and the construction of contracts, research by the Army and studies by the Office of Federal Procurement Policy (OFPP) and industry have found that innovative contracting methods are not being used sufficiently, and effective incentives exist which are not being considered. Incentives are typically limited to fee/profit to the detriment of other incentives that contractors would find more appropriate and meaningful, such as a consistent revenue flow and the promise of future business. Also, profit is not an effective incentive for non-profit entities such as universities and research laboratories.

Therefore, OFPP is developing a new initiative to fundamentally examine the manner by which the government develops and applies incentives to its contractual vehicles. It is seeking "any experiences and literature regarding non-fee type incentives," including recommendations, practices, and lessons learned on what works in industry, the non-profit environment, and state and local governments. In addition, it will conduct consultations with the private, non-profit, and public sectors, and will conduct a review of current policy, regulatory, and statutory guidance to determine whether there are any barriers to achieving its objective.

Comments should be submitted by December 26, 2000, to Stanley Kaufman, Deputy Associate Administrator, Office of Management and Budget, OFPP, 725 17th Street NW, Washington, DC 20503, 202-395-6810.



Comments Sought on Post-Retirement Benefits CAS

The Cost Accounting Standards Board (CASB) is inviting public comments on a proposed Cost Accounting Standard (CAS) 419, Cost Accounting Standard for Measurement, Assignment, Allocation, and Adjustment of Post-Retirement Benefit Cost. Essentially, the proposed CAS would require accrual accounting for post-retirement benefits (such as health care, tuition assistance, or legal services) that are documented in writing, communicated to employees, nonforfeitable once earned, and legally enforceable. The cost of any post-retirement benefits that fail to meet these criteria would have to be accounted using the pay-as-you-go method.

Comments must be submitted by December 19, 2000, to Eric Shipley, Project Director, Cost Accounting Standards Board, Office of Federal Procurement Policy, 725 17th Street, NW, Room 9013, Washington, DC 20503, Attn: CASB Docket No. 96-02A. Include an electronic copy of your comments in a format readable by MicroSoft Word.



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