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Barry McVay's

FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


FEBRUARY 2000
Vol. I, No. 2

CONTENTS

FAR Changes on Property, Liquidated Damages
EPA Adds 18 Items Mandatory Purchase List
FTR Amendments on Mileage Reimbursement
DFARS Rules on ROTC Recruiting, MTP
NFS Addresses Foreign Proposals, HUBZones
Miscellaneous Revisions Made to HUDAR
SBA "Answer Desk" Offers E-Mail Service

FAR Changes Would Simplify Government Property, Liquidated Damages, Deferred R&D Costs Language

During January, five proposed changes to the Federal Acquisition Regulation (FAR) were published for public comment. The most significant of these proposed changes is the second attempt at rewriting FAR Part 45, Government Property. The other proposed FAR changes would rewrite the FAR guidance on liquidated damages in plain language, clarify and simplify the guidance on deferred research and development costs, clarify the requirements regarding changes to time-and-materials and labor-hour contracts, and add FAR drafting conventions.

Rewrite of FAR Part 45: The proposed FAR Part 45 rewrite effort began in 1994, and a proposed rewritten FAR Part 45 was published for comment in 1997. Over 1000 comments were received, and public meetings were held on February 8, 1998, and May 18, 1999, to discuss proposed changes to the 1997 proposed rewrite. Based on those comments and meetings, a new revised and restructured FAR Part 45 is published for comment.

The following are the most significant differences between the 1997 FAR Part 45 rewrite and the 2000 FAR Part 45 rewrite:

Comments must be submitted by March 10, 2000, to General Services Administration, FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, and cite FAR case 1995-013.

Based on the nature of the comments received, the final FAR Part 45 rewrite might contain the standard government property material only, the alternate government property material only, or both.


Liquidated Damages: To simplify and clarify the confusing FAR guidance on liquidated damages (and to comply with President Clinton's June 1, 1998, memorandum "Plain Language in Government Writing"), FAR Subpart 11.5, Liquidated Damages, would be rewritten, as would the associated clauses at FAR 52.211-11, Liquidated Damages -- Supplies, Services or Research and Development, FAR 52.211-12, Liquidated Damages -- Construction, and FAR 52.211-13, Time Extensions. Also, several other FAR sections would be rewritten, such as FAR 22.302, Liquidated Damages and Overtime Pay, and FAR 22.406-9, Withholding From or Suspension of Contract Payments.

Comments must be submitted by March 13, 2000, to the General Services Administration address listed above. Cite FAR case 1999-013 in all comments.


Deferred Research and Development Costs: To simplify and clarify FAR 31.205-48, Deferred Research and Development Costs, the second sentence (which addresses precontract costs) would be deleted because it duplicates FAR 31.205-32, Precontract Costs, and the rest of FAR 31.205-48 would be rewritten to read: "Research and development, as used in this subsection, means the type of technical effort described in 31.205-18 [Independent Research and Development and Bid and Proposal Costs] but sponsored by a grant or required in the performance of a contract. When costs are incurred in excess of either the price of a contract or amount of a grant for research and development effort, such excess is unallowable under any other government contract."

Comments must be submitted by March 17, 2000, to the General Services Administration address listed above. Cite FAR case 1999-003 in all comments.


Time-and-Materials or Labor-Hours Contracts: FAR 52.243-3, Changes -- Time-and-Materials or Labor-Hours, authorizes the contracting officer to make changes to (1) drawings, designs, or specifications; (2) method of shipment or packing; (3) place of delivery; and (4) amount of government-furnished property. Alternate II of FAR 52.243-1, Changes -- Fixed-Price, which is required to be included in service contracts when supplies are to be furnished, authorizes the contracting officer to make the changes in FAR 52.243-3 and to the (1) description of services to be performed; (2) time of performance; and (3) place of performance of the services. Since most time-and-materials and labor-hours contracts involve services, the proposed rule would revise FAR 52.243-3 to conform to Alternate II of FAR 52.243-1.

Comments must be submitted by March 24, 2000, to the General Services Administration address listed above. Cite FAR case 1999-606 in all comments.


FAR Drafting Principles: FAR 1.108, FAR Conventions, would be added to provide guidance for interpreting the FAR so all members of the acquisition community may have a common understanding of the FAR. FAR 1.108 would address words and terms (definitions in FAR Part 2 apply unless a term is specifically defined elsewhere); delegation of authority (each authority is delegable unless otherwise stated); dollar thresholds (a specific dollar threshold is the final anticipated dollar value of the action, including all options); application of FAR changes (FAR changes apply to all solicitations issued after the effective date, but contracting officers may include the changes in existing solicitations and, with appropriate consideration, in any contract); statutory citations (statutory citations include all applicable amendments, unless specified); and imperative sentences (when an imperative sentence directs action, the contracting officer is responsible unless another party is expressly cited).

Comments must be submitted by March 27, 2000, to the General Services Administration address listed above. Cite FAR case 1999-610 in all comments.



EPA Adds 18 Items with Recovered Materials to Mandatory Purchase List

On January 19, the Environmental Protection Agency (EPA) amended its regulations in Title 40 of the Code of Federal Regulations, Part 247, Comprehensive Procurement Guideline for Products Containing Recovered Materials, to add 18 new items to its Comprehensive Procurement Guideline (CPG) as being made, or capable of being made, with recovered materials. Any federal agency, any state or local agency that uses appropriated federal funds, or any contractor that procures these items for work under covered contracts, that procures more than $10,000 worth of an item in the CPG in a given year must purchase the item made of the highest percentage of recovered materials practicable.

The 18 items are (by category):

In addition, EPA has published a Recovered Materials Advisory Notice (RMAN) which contains recommended materials content levels for these items and provides other purchasing recommendations. EPA's web site at http://www.epa.gov/cpg has the CPG, the RMANs, and lists of manufacturers and vendors of these items.



FTR Amendments on Mileage Reimbursement, Conference Planning, Travel Charge Card

During January, the General Services Administration (GSA) issued three Federal Travel Regulation (FTR) amendments of interest to federal employees and federal contractors:


Privately Owned Automobile Mileage Reimbursement: FTR 301-10.303, What am I reimbursed when use of a POV [privately owned vehicle] is determined by my agency to be advantageous to the government?, is amended to increase the mileage reimbursement rate for privately owned automobiles from 31 cents to 32.5 cents (the mileage rates for motorcycles (26 cents) and airplanes (88 cents) remain unchanged). The rate had been 32.5 cents until April 1, 1999, when the Internal Revenue Service (IRS) decreased the reimbursement rate to 31 cents (GSA is prohibited by law from authorizing a reimbursement rate that is greater than the IRS rate). Since the IRS announced that it was increasing the reimbursement rate back to 32.5 cents effective January 1, 2000, GSA promptly increased the rate, too.


Conference Planning: FTR Part 301-74, Conference Planning, is revised to institute a "conference lodging allowance" for travellers of up to 25% of the lodging portion of the local per diem rate. This is considered necessary because GSA's per diem rate setting process is based on the local market room rate for transient travelers, but it is often difficult to find a conference facility that meets the room rate because not all surveyed properties have adequate facilities and meeting rooms to host a conference (typically, conference facilities are larger and more upscale than the average facility surveyed by GSA).

In addition, a new Appendix E, Guidance on Conference Planning, is added to the FTR. It addresses such subjects as establishing milestone schedules, preparing specification sheets, budgeting, conference site selection (geographic location, types of facilities, date selection), breaks and refreshments, announcements and invitations, training certificates, and thank you notes to participants.


Mandatory Use of Travel Charge Card: Public Law 105-264, Travel and Transportation Reform Act of 1998, requires GSA to issue regulations requiring federal employees to use the government contractor-issued travel charge card (Section 2, Requiring Use of the Travel Charge Card). On July 16, 1999, GSA issued an interim rule that completely rewrote FTR Part 301-51, Paying Travel ExPenses, to state that the travel charge card was no longer the "preferred" method of paying for travel expenses, but the required method unless exempted by the head of the agency or designee, except for laundry/dry cleaning, parking, local transportation systems, taxis, and tips. GSA received comments from 82 commenters, and has decided to exempt the following in addition to the exemptions in the interim rule: (1) expenses incurred at a vendor that does not accept the government contractor-issued travel charge card; (2) meals when use of the card is impractical, for example, group meals, or the travel charge card is not accepted; (3) phone calls when a government calling card is available for use in accordance with agency policy; (4) an employee who has an application pending for the travel charge card; (5) individuals traveling on invitational travel; and (6) new appointees.

In addition, FTR Part 301-52, Claiming Reimbursement, now contains time periods for processing and paying claims, as well as calculating and paying any late fees and penalties for violating the Prompt Payment Act, and how the late fees and penalties will be treated by the IRS. Also, FTR Part 301-54, Collection of Undisputed Delinquent Amounts Owed on Behalf of the Contractor Issuing the Government Contractor-Issued Individually Billed Travel Charge Card, which was added by the interim rule, authorizes the agency to deduct up to 15% of a delinquent employee's disposable pay.



New DFARS Rules on ROTC Recruiting, Utility Privatization, Manufacturing Technology, and FPI Exceptions

As usual, the Department of Defense (DOD) has been busy, mainly implementing various provisions of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106-65). In addition, DOD has published two proposed rules, obtained from Federal Prisons Industries (FPI) an increase in the required order threshold, and issued a memorandum regarding actions that will be taken by the Defense Finance and Accounting Service (DFAS) to ensure compliance with the Debt Collection Improvement Act of 1996 (Public Law 104-134).


Reserve Officer Training Corps (ROTC) and Military Recruiting on Campus: Section 549 of the FY00 Defense Authorization Act recodifies the prohibitions in previous years' authorization acts against using DOD funds for contracts or grants to any institution of higher education that has an anti-ROTC policy or prevents DOD from obtaining entry to campuses or access to students. In addition, Section 549 changes the prohibition so that it covers the entire institution, not just the violating "subordinate elements" of the institution, and exempted institutions with a longstanding policy of pacifism based on historical religious affiliation. So DOD has issued an interim rule to amend the subsections of DFARS 209.470, Reserve Officer Training Corps and Military Recruiting on Campus, and the corresponding clause at DFARS 252.209-7005, to reflect these changes.

The interim rule went into effect January 13, 2000. Comments on the interim rule must be submitted by March 13, 2000, to Defense Acquisition Regulations Council, Attn: Ms. Amy Williams, PDUSD (AT&L) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Cite DFARS Case 99-D303.


Utility Privatization: Section 2812 of the FY00 Defense Authorization Act gives DOD the authority to enter into utility service contracts related to the conveyance of a utility system for a period not to exceed 50 years. To implement this, DOD has issued an interim rule to add DFARS 241.103, Statutory and Delegated Authority, to state that the contracting office may enter into such contracts.

The interim rule went into effect January 13, 2000. Comments on the interim rule must be submitted by March 13, 2000, to the above address, Attn: Ms. Melissa Rider, and cite DFARS Case 99-D309.


Manufacturing Technology Program (MTP): Section 216 of the FY00 Defense Authorization Act removes the mandatory cost-sharing requirements of the MTP and replaces them with the requirement that each MTP proposal be evaluated on the extent of the offeror's proposed cost sharing. To implement this, DOD has issued an interim rule to modify DFARS 235.006-70, Manufacturing Technology Program, accordingly.

The interim rule went into effect January 13, 2000. Comments on the interim rule must be submitted by March 13, 2000, to the above address, Attn: Ms. Amy Williams, and cite DFARS Case 99-D302.


Paid Advertisements: DOD has decided that the DD Form 1535, Request/Approval for Authority to Advertise, which was used to document the approval of the head of the contracting activity or designee to publish paid advertisements in newspapers, is no longer needed. Therefore, it has removed DD Form 1535 from DFARS Part 253, and revised DFARS 205.502, Authority, to state that the contracting officer must obtain written approval from the head of the contracting activity or designee.


Transportation Acquisition Policy: This proposed rule would amend DFARS Part 247, Transportation, to revise the DOD policy pertaining to the acquisition of transportation, transportation-related services, and transportation in supply contracts. Proposed DFARS 247.206, Preparation of Solicitations and Contracts, would state that contracting officers soliciting for transportation or transportation-related services should consider using an evaluation factor or subfactor that rates the offeror's record of claims involving loss or damage, provider availability, and support for DOD readiness programs (such as the Civil Reserve Air Fleet (CRAF) and the Voluntary Intermodal Sealift Agreement (VISA)). Proposed DFARS 247.301-71, Evaluation Factor or Subfactor, would require contracting officers soliciting contracts that include a significant requirement for transportation of items outside the U.S. to use an evaluation factor or subfactor that favors suppliers, third-party logistics providers, and integrated logistics managers that commit to using carriers that participate in one of the readiness programs such as the CRAF or VISA.

Comments must be submitted by March 13, 2000, to the above address, Attn: Ms. Amy Williams, and cite DFARS Case 99-D009.


Production Surveillance and Reporting: This proposed rule would amend DFARS 242.1104, Surveillance Requirements, to replace the requirement that contract administration offices perform pre-delivery on-site production surveillance for certain contracts with a requirement that the contract administration office (1) conduct a risk assessment of each contractor to determine the degree of production surveillance needed for contracts awarded to the contractor, (2) develop a contract production surveillance plan based on the risk level determined during the risk assessment, and (3) monitor contract progress in accordance with the contract surveillance program. In addition, it would delete DD Form 375, Production Progress Report, DD Form 375c, Production Progress Report (Continuation), and DD Form 375-2, Delay in Delivery, which are obsolete. DOD now accomplishes production progress reporting through an automated computer system called ALERTS.

Comments must be submitted by March 13, 2000, to the above address, Attn: Mr. Rick Layser, and cite DFARS Case 99-D026.


Raised Threshold for FPI Exceptions: The FPI Chief Operating Officer issued a memorandum for DOD procurement personnel announcing that FPI is granting DOD an administrative waiver to paragraph (e) of FAR 8.606, Exceptions, which authorizes agencies to forgo FPI clearances when orders for items listed in the Schedule of Products Made in Federal Penal and Correctional Institutions total $25 or less and require delivery within 10 days. The FPI waiver increases the threshold from $25 to $250 for DOD only.


Mandatory Electronic Funds Transfer (EFT) and Central Contractor Registration (CCR): The DOD Comptroller issued a memorandum to the secretaries of the military departments and other high-level DOD officials stating that the Defense Finance and Accounting Service (DFAS) would take action to ensure compliance with the Debt Collection Improvement Act of 1996 (Public Law 104-134) and the implementing FAR Subpart 32.11, Electronic Funds Transfer. Effective February 1, 2000, DFAS will return contracts that do not contain the required EFT clause to the contracting office if the contractor is not registered in the CCR, charge the DOD component an additional amount equal to the charge for processing a payment, and charge interest for any payments delayed beyond 30 days. If a contractor's invoice does not contain the necessary EFT information and the contractor is not registered in the CCR, DFAS will charge the DOD component and additional amount equal to the charge for processing a payment, and assess the DOD component further charges if the contractor does not voluntarily provide the required information or register in the CCR.



NASA Revises Regs on Foreign Proposals, Implements HUBZone Reporting, Proposes IT Security Changes

The National Aeronautics and Space Administration (NASA) has taken a little break, merely finalizing an interim rule on foreign proposals to research announcements, instituting reporting procedures for reporting awards under $25,000 to historically underutilzed business zone (HUBZone) small businesses, and proposing security requirements for unclassified information technology (IT) resources.


Foreign Proposals to Research Announcements: The September 7, 1999, interim rule that revised NASA FAR Supplement (NFS) Part 1835, Research and Development Contracting, and NFS Part 1872, Acquisition of Investigations, is finalized with changes. The interim rule made the changes to implement NASA's policy that requires foreign research to be conducted on a no-exchange-of-funds basis. This policy was in effect for foreign proposals submitted in response to an Announcement of Opportunity (AO) but not for foreign proposals submitted in response to a NASA Research Announcement (NRA), so the interim rule standardized the treatment of foreign proposals under both methods.

The difference between the interim and final rules involved the removal of the requirement in NFS 1852.235-72, Instructions for Responding to NASA Research Announcements, and NFS 1872.705-2, Appendix B: Guidelines for Proposal Preparation, that copies of foreign proposals and related documents be sent to the Office of External Affairs. Instead, foreign proposers are notified to write directly to the official designated in the AO or NRA.


Procurement Information Circular (PIC) 00-01, HUBZone Small Business Reporting for Awards Under $25,000: On awards under $25,000, the Federal Procurement Data Center (FPDC) does not require reporting of each award, but summary data on all awards under $25,000 made during the covered period. With the implementation of the HUBZone program, agencies must report each of these awards to the FPDC. Since the NASA Form 507, Individual Procurement Action Report (New Awards), is used for awards over $25,000, each NASA center will have to manually collect and report the data to NASA headquarters on a quarterly basis. "Reports shall be sent to Code HS, NASA Headquarters, by the 10th work day after the end of each quarter."


Security Requirements for Unclassified IT Resources: Because NASA contractors do not have a definitive contractual requirement to comply with NASA policy on safeguarding unclassified NASA data in IT systems, NASA is proposing to amend NFS 1804.470, Security Requirements for Unclassified Automated Information Resources, and NFS 1852.204-76, Security Requirements for Unclassified Information Technology Resources, to delete references to NASA Management Instruction (NMI) 2410.7, Assuring the Security and Integrity of NASA Automated Information Resources, and NASA Handbook (NHB) 2410.9, NASA Automated Information Security Handbook, and require contractors and subcontractors working with NASA IT systems to comply with the security requirements in NASA Policy Directive (NPD) 2810.1, Security of Information Technology, NASA Procedures and Guidelines (NPG) 2810.1, Security of Information Technology, and other requirements. Also, NFS 1852.204-76 would require that foreign nationals obtain special authorization from the NASA Center Chief of Security before being granted access to NASA IT resources, and that contractor employees receive annual IT security awareness training.

Comments on the proposed rule must be submitted no later than March 6, 2000, to Karl Beisel, NASA Headquarters Office of Procurement, Analysis Division (Code HC), Washington DC 20546, or by e-mail to Karl.Beisel@hq.nasa.gov.



Miscellaneous Revisions Made to HUDAR

The Department of Housing and Urban Development (HUD) has finalized, with minor technical changes, the August 23, 1999, interim rule that revised the HUD Acquisition Regulation (HUDAR) to bring it up-to-date and in conformance with all the changes made to the FAR since 1996, the last time the HUDAR was revised. In addition, HUD is adopting as final, without changes, other proposed HUDAR changes that were also published on August 23, 1999. Among the significant proposed changes being finalized are:


• HUDAR 2442.1106, Reporting Requirements, is revised to allow contractors with contracts for professional or technical services of a developmental or advisory nature that exceed $500,000 to use "systematic project planning and progress reporting" instead of HUD Form 441.1, Project Management System Baseline Plan, and HUD Form 661.1, Project Management System Progress Report, both of which are deleted.


• HUDAR 2452.203-71, Certification Regarding Federal Employment, is removed.


• HUDAR 2452.209-70 is retitled "Potential Conflicts of Interest," and removes the burden for identifying and describing organizational conflicts of interest from the offeror and places it on the contracting officer.


• HUDAR 2452.209-71 is retitled "Limitation on Future Contracts," and requires the contracting officer to identify the restrictions imposed on the contractor to remedy the conflict of interest. It also prohibits the contractor or first-tier subcontractor from performing as a prime contractor or first-tier subcontractor on any future contracts that use specifications or statements of work developed by the contractor or first-tier subcontractor.



SBA Answer Desk Offers E-Mail Service

On January 28, 2000, the Small Business Administration (SBA) announced that it is expanding its Answer Desk service from strictly telephone (1-800-UASK-SBA or 1-800-827-5722) to include e-mail and Internet access. Small businesses can now e-mail their questions about starting or expanding their business to answerdesk@sba.gov, or access the Answer Desk on the Internet at http://www.sba.gov/answerdesk.html. Spanish-speaking business specialists are available.

Among the most popular questions asked are: how do I get a small business loan? how do I get a grant? what classifies a business as "small"? How do I get my business certified as woman- or minority-owned?


Copyright 2000 by Panoptic Enterprises. All Rights Reserved.

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