FedGovContracts.com

Barry McVay's

FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

SEPTEMBER 2000
Vol. I, No. 9

CONTENTS

FedBizOpps Proposed as "Single Face"
DOD Adds 3 Data Elements to CCR
DOD Requires Purchase Card Up to $2,500
ADR Guides Available
Freight and Cargo Size Standards Revised
DOT DBE Size Standard Increased
FAR Prompt Payment Coverage Simplified
NFS Changes on BAA, Bundling, CAS, CCR

FedBizOpps.gov Proposed as "Single Face to Industry"
For Procurement Opportunities

If the Federal Acquisition Regulation (FAR) Council has its way, federal contractors will be able to see all solicitations over $25,000 and related information by going to FedBizOpps.gov (http://www.fedbizopps.gov). FedBizOpps.gov would be the government's long sought "single face to industry" (or "governmentwide point of electronic entry" (GPE)), and would not require significant investments by prospective contractors, as was the case with the Federal Acquisition Computer Network (FACNET), which FedBizOpps.gov would supersede (though FACNET would remain in existence).

FedBizOpps.gov is the new name for the General Services Administration's (Electronic Posting System (EPS)), which is used by 20 agencies to post electronically their solicitations. The Office of Federal Procurement Policy (OFPP) studied the advantages and disadvantages of EPS, FACNET, and the Commerce Business Daily Network (CBDNet), and settled on EPS/FedBizOpps as the best vehicle for providing sellers with a central point for electronic access to business opportunities and providing government buyers a streamlined method of preparing and issuing solicitation information without undue disruption. Agencies would have until October 1, 2001, to complete their transitions to FedBizOpps.gov.

To implement OFPP's decision to designate FedBizOpps.gov as the single GPE, the following are the significant changes that would be made to FAR Part 5, Publicizing Contract Actions:

• FAR 5.101, Methods of Disseminating Information, would continue to require agencies to publish synopses of upcoming contract actions over $25,000 in the Commerce Business Daily (CBD), but agencies with the capability to access the GPE would be required to submit their synopses to the GPE and direct the GPE to forward them to the CBD. While almost all agencies are capable of accessing the GPE, the few without the capability would be authorized to send their synopses direct to CBD until October 1, 2001.
  
  
• FAR 5.102, Availability of Solicitations, would require the contracting officer to make available through the GPE "solicitations synopsized through the GPE, including specifications and other pertinent information", and would encourage the contracting officer to provide other additional information related to the solicitation. In addition, solicitations posted on the FACNET would be required to be transmitted to the GPE as well.
  
  
• FAR 5.203, Publicizing and Response Time, would retain the requirement that solicitations be published in the CBD "at least 15 days before issuance of a solicitation" (the current exemption for acquisitions of commercial items and the others currently in FAR 5.203 would be retained). However, "contracting officers may, unless they have evidence to the contrary, presume that notice has been published 10 days (6 days if electronically transmitted through the GPE or other means) following transmittal of the synopsis to the CBD."
  
  
• FAR 5.207, Preparation and Transmittal of Synopses, would require synopses transmitted to the GPE to be in the same format as currently required for synopses to the CBD, except that format items for the place of contract performance and set-aside status would be added.

Comments must be submitted on or before October 20, 2000, to General Services Administration, FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405; e-mail: farcase.1997-304@gsa.gov. Cite FAR Case 1997-304 in all correspondence related to this proposed rule.

DOD Adds 3 Data Elements to CCR

On Aug. 21, 2000, the Department of Defense (DOD) announced that it is adding three data elements to its Central Contractor Registration (CCR) system to aid its migration to e-commerce and help CCR users get accurate information more quickly. (EDITOR'S NOTE: All DOD contractors must be registered in the CCR before receiving a contract award, and some of the information provided by the contractors is used by DOD to make electronic payments. Other federal agencies using the CCR are National Aeronautics and Space Administration (NASA) and the Departments of Interior, Treasury, Transportation, Commerce, and Energy. The CCR is on the Internet at http://www.ccr2000.com.)

The three new data elements are: (1) company points of contact (POC) for electronic business, contracting and marketing, and past performance; (2) whether the contractor is a small business; and (3) whether the company accepts credit cards. In addition, the database of CCR companies is capable of searching by geographic location, industry, and socio-economic factors. And the CCR now includes a data field, the Marketing Partner Identification Number, where vendors can set their own password for other partner applications -- current partner applications are the on-line bidding systems associated with DODBusOpps (http://dodbusopps.com) and the Past Performance Automated Information System.

The electronic business POC is the company's employee who will administer the approval process for vendor employees accessing DOD's e-business systems; the government business POC is the company's contracting and/or marketing representative who will need access to on-line bidding systems that are part of the DOD business operations application; and the past performance POC is the company's designated person with approval to access and interact with the DOD past performance system.

DOD Requires Purchase Card For Buys Up To $2,500

To prepare for the glut of rules that will be required to comply with provisions of the fiscal year 2001 defense authorization and appropriations acts, the Department of Defense issued several rules that finalized outstanding proposals and "tied up" loose ends.

• Streamlined Payment Practices: To speed up acquisitions and payments of purchases $2,500 or less, DOD is adding Defense FAR Supplement (DFARS) Subpart 213.2, Actions At of Below the Micro-Purchase Threshold, to require the use of the governmentwide commercial purchase card for purchases of $2,500 or less unless one of 11 exceptions apply (such as the acquisition is made outside the U.S. for use outside the U.S.). In addition, DFARS Subpart 232.11, Electronic Funds Transfer, is added, and it states "the governmentwide commercial purchase card is the mandatory EFT [electronic funds transfer] payment method for purchases valued at or below the micro-purchase threshold" unless one of the 11 exceptions apply. Finally, DFARS 252.232-7009, Mandatory Payment by Governmentwide Commercial Purchase Card, is required to be included in solicitations, contracts, and agreements above $2,500. It requires the contractor to accept the governmentwide commercial purchase card as the method of payment for orders or calls valued at or below $2,500 under the contract or agreement.
  
  
• Repeal of Public Law 85-804 Reporting Requirements: DFARS 250.104, Reports, is removed. It contained requirements for the preparation of reports to Congress regarding actions taken on contractor requests for relief under Public Law 85-804. However, the requirement was repealed by the Federal Reports Elimination Act of 1998 (Public Law 105-362). (EDITOR'S NOTE: Federal Acquisition Circular (FAC) 97-19 removed FAR 50.104. For more on FAC 97-19, see the August 2000 Federal Contracts Perspective article "FAC 97-19 Applies SCA to Commercial Subcontracts, Revises Construction Payment Rules.")
  
  
• Transportation Acquisition Policy: On January 13, 2000, DOD published a proposed rule amending DFARS Part 247, Transportation, to revise its policy pertaining to the acquisition of transportation, transportation-related services, and transportation in supply contracts. DOD is finalizing the proposed rule with minor editorial changes.
  
  For contracts for transportation or transportation-related services, new DFARS 247.206, Preparation of Solicitations and Contracts, states that contracting officers should consider using, as evaluation factors or subfactors, 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).
  
  For contracts that include a significant requirement for transportation of items outside the continental U.S., new DFARS 247.301-71, Evaluation Factor or Subfactor, requires the use of 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 CRAF and VISA.
  
  Many other changes are made throughout DFARS Part 247, particularly to replace references to the "Defense Traffic Management Regulations" (DTRM) with references to the "DOD 4500.9-R, Defense Transportation Regulation" (DTR).
  
  EDITOR'S NOTE: For more on the proposed rule, see the February 2000 Federal Contracts Perspective article "New DFARS Rules on ROTC Recruiting, Utility Privatization, Manufacturing Technology, and FPI Exceptions."
  
  
• North American Industry Classification System (NAICS): The Small Business Administration (SBA) converted its small business size standards from the Standard Industrial Classification (SIC) system to the NAICS effective October 1, 2000 (see the June 2000 Federal Contracts Perspective article "SBA Publishes NAICS-Based Size Standards, to Replace SIC-Based Standards on October 1, 2000"). FAC 97-19 contained an interim rule which revised the FAR to conform to the NAICS-based size standards effective October 1, 2000. This interim rule makes corresponding changes to the DFARS.
  
  Comments on the interim rule must be submitted by October 16, 2000, to Defense Acquisition Regulations Council, Attn: Ms. Susan Schneider, OUSD (AT&L)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062; cite DFARS case 2000-D015.
  
  
• Mentor-Protege Program Improvements: On February 10, 2000, DOD issued an interim rule that amended DFARS Subpart 219.71, Pilot Mentor-Protege Program, and DFARS Appendix I, Policy and Procedures for the DOD Pilot Mentor-Protege Program, to extend the program for three years (until September 30, 2002, to enter into mentor-protege agreements, and until September 30, 2005, for the mentor to incur costs assisting the protege). Three commentors responded, and DOD is finalizing the interim rule with two changes: (1) DFARS 219.7106, Performance Reviews, which requires the Defense Contract Management Command to conduct annual reviews of all mentor-protege programs, is revised to add the following sentence: "The determinations made in these reviews should be a major factor in determinations of amounts of reimbursement, if any, that the mentor firm is eligible to receive in the remaining years of the program participation term under the agreement." (2) Paragraph (b) of DFARS I-111, Reporting Requirements, clarifies that progress reports from protege firms may be submitted as part of the mentor firm's annual report. (EDITOR'S NOTE: For more on the interim rule, see the March 2000 Federal Contracts Perspective article "DOD Extends Mentor-Protege Program and FAR Deviations on Screening, Proposes Profit Policy Change.")
  
  
• Construction and Service Contracts in "Noncontiguous States": On March 16, 2000, DOD published an interim rule which revised DFARS Subpart 222.70, Restrictions on the Employment of Personnel for Work on Construction and Service Contracts in Noncontiguous States, and DFARS 252.222-7000, Restrictions on Employment of Personnel, to change the coverage of the restrictions from "Alaska and Hawaii" to "noncontiguous states," which was defined by the interim rule as "Alaska, Hawaii, Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S. Virgin Islands, and any minor outlying island of the United States." Based on the single comment received, "any minor outlying island" is revised to "Baker Island, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, Midway Islands, Navassa Island, Palmyra Atoll, and Wake Island." (EDITOR'S NOTE: For more on the interim rule, see the April 2000 Federal Contracts Perspective article "DOD Cargo Preference for Commercial Items Clarified.")
  
  
• Special Procedures for Negotiation of Construction Contracts: DFARS Subpart 236.4, Special Procedures for Negotiation of Construction Contracts, is removed because it contained obsolete text that addressed special procedures for fee negotiation under cost-reimbursement construction contracts. FAC 90-45, published January 2, 1997, had redesignated FAR 36.403, Cost-Reimbursement Contracts, as FAR 36.215, Special Procedure for Cost-Reimbursement Contracts for Construction, and simplified the language. DOD has concluded that the DFARS Subpart 236.4 is no longer needed.
  
  
• Contract Drawings and Specifications: On February 10, 2000, DOD proposed revising DFARS 252.236-7001, Contract Drawings, Maps, and Specifications, to allow the government to furnish drawings and specifications to construction contractors in electronic form and to require the contractors to reproduce and print the drawings and specifications as needed. Three comments were received, and the proposed change is finalized with minor editorial changes. In addition, the word "Maps" is removed from the clause title because maps are not mentioned in the clause. (EDITOR'S NOTE: For more on the proposed rule, see the March 2000 Federal Contracts Perspective article "DOD Extends Mentor-Protege Program and FAR Deviations on Screening, Proposes Profit Policy Change.")
  
  
• Waiver of Limitations on Certain Defense Items Produced in the United Kingdom: Undersecretary of Defense (Acquisition, Technology, and Logistics) Jacques Gansler has extended for another year (until August 19, 2001) the waiver of the limitation on procurement of the following products from the UK: welded shipboard anchor and mooring chain with a diameter of four inches or less; air circuit breakers; ball and roller bearings; totally enclosed lifeboats; gyrocompasses; electronic navigation chart systems; steering controls; pumps; and propulsion and machinery control systems.
  
  
• FAR Class Deviation on Service Contract Act Application to Commercial Item Subcontracts: FAC 97-19, issued July 26, 2000, removed the Service Contract Act (SCA) from the list of laws in FAR 12.504, Applicability of Certain Laws to Subcontracts for the Acquisition of Commercial Items, that do not apply to subcontracts for commercial items. However, the Department of Labor (DOL), the administrator of the SCA, has proposed to exempt certain commercial contracts and subcontracts from SCA coverage (particularly in industries where commercial firms are reluctant to contract with the government, such as vehicle maintenance services and real estate services). To prevent any disruption that would be caused to the subcontractors in these industries by being "SCA exempt-SCA not exempt-SCA exempt again", DOL issued a temporary rule to continue the SCA exempt status of these subcontractors during the processing of the proposed rule change (not to exceed one year). Therefore, Director of Defense Procurement Deidre Lee issued a FAR deviation which added an explanation of the DOL temporary SCA exemption as paragraphs (c) and (d) of FAR 22.1003-4, Administrative Limitations, Variations, Tolerances, and Exceptions, and added cross-references to FAR 22.1003-4(c) and (d) in FAR 12.504 and FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders -- Commercial Items. (EDITOR'S NOTE: For more on the removal of the SCA exemption and the DOL proposed and temporary exemptions, see the August 2000 Federal Contracts Perspective article "FAC 97-19 Applies SCA to Commercial Subcontracts, Revises Construction Payment Rules.")

ADR Guides Available

On August 16, 2000, the Federal Alternative Dispute Resolution (ADR) Council, a group of high level government agency officials chaired by Attorney General Janet Reno, published in the Federal Register (at page 50005) two documents to assist federal agencies in developing ADR programs: "Core Principles for Non-Binding Workplace ADR Programs" (which describes 10 key elements that are essential in any fair and effective ADR program), and "Developing Guidance for Binding Arbitration -- A Handbook for Federal Agencies" (which provides information and assistance for agencies on the use of binding arbitration).

Freight and Cargo Transportation Size Standards Revised

Effective September 8, the Small Business Administration (SBA) is changing the way average annual receipts are calculated for brokers and agents in the Arrangement of Transportation of Freight and Cargo industry (Standard Industrial Classification (SIC) code 4731) to allow pass-through of funds held in trust for unaffiliated third parties. As a result of the change in calculation method, the small business size standard for SIC 4731 is reduced from $18.5 million to $5 million, with two significant exceptions: the size standard will remain $18.5 million for non-vessel owning common carriers and for household goods forwarders.

About half of the establishments in SIC 4731 are freight forwarders and customs brokers that act as agents, and they collect money from their clients to make sure customs, shippers, and other expenses are paid. Because most firms in the industry do not consider these "pass-through" funds as receipts (and do not report them as such for tax purposes), many have complained that establishing the small business size standard based, in large part, on the presence of these pass-through funds means that some firms receive SBA assistance that should not be receiving it. SBA agreed, and it proposed on July 26, 1999, that pass-through funds not be counted in the average annual receipts, and that the small business size standard be adjusted to $5 million.

Twelve comments were submitted in response to the proposed change. Nine of the comments came from household goods forwarders and non-vessel owning common carriers, and all opposed the change because they do not receive pass-through funds; three of the comments came from freight forwarders and customs brokers, and all favored the change. SBA recognized that there are two major types of firms in the industry, so it decided to split the size standard: $5 million for SIC 4731 except $18.5 million for household goods forwarders and non-vessel owning common carriers.

This split will be clarified on October 1, 2000, when SBA switches from the SIC-based small business size standards to the North American Industry Classification System (NAICS)-based small business size standards (see the June 2000 Federal Contracts Perspective article "SBA Publishes NAICS-Based Size Standards, to Replace SIC-Based Standards on October 1, 2000"). Household movers will be classified in NAICS 484210, Used Household and Office Goods Moving, and will have an $18.5 million size standard. Freight rate auditors, tariff consultants, freight consolidators, and shipping documents preparers will be classified as NAICS 541614, Process, Physical Distribution, and Logistics Consulting, and will have a $5.0 million size standards. All other activities in SIC 4731 will be classified in NAICS 488510, Freight Transportation Arrangement, and have a $5.0 million size standard.

DOT DBE Size Standard Increased to $17,420,000

The Department of Transportation has decided to adjust the size standard for participants in its Disadvantaged Business Enterprise (DBE) program from $16,600,000 to $17,420,000 to compensate for inflation since enactment of the Transportation Equity Act for the 21st Century (Public Law 105-178) (TEA-21) on July 22, 1998, which set $16,600,000 as the statutory limit on participation in the DBE program.

The DBE program requires that concerns be certified as eligible and qualified for contracting opportunities in projects by state and local highway, transit, airport, and port authorities. To be eligible for participation in the DBE program, a firm's average annual receipts for the previous three years must be no more than $17,420,000.

Guidance on the DBE program (including application procedures) is on the Internet at http://osdbuweb.dot.gov/business/dbe/index.html.

FAR Prompt Payment Coverage to be Simplified

On August 28, 2000, a proposal was published to simplify and clarify the FAR's prompt payment coverage (particularly FAR Subpart 32.9, Prompt Payment), and to conform the FAR to reflect the 1999 rescission of Office of Management and Budget (OMB) Circular A-125, Prompt Payment, and the codification of the A-125 rules and guidance in Title 5 of the Code of Federal Regulations (CFR), Part 1315, Prompt Payment. In addition, the proposal would require contractors to notify the contracting officer of any overpayments it receives and request disposition instructions. (EDITOR'S NOTE: The regulations in 5 CFR Part 1315 are available at http://www.fms.treas.gov/prompt/.)

The Debt Collection Improvement Act of 1996, which requires that all federal payments to vendors be made electronically, along with the increased use of electronic commerce in the federal government and the private sector, necessitated the update of OMB Circular A-125. In 1999, OMB made the necessary revisions, codified the revised text as 5 CFR Part 1315, and rescinded OMB Circular A-125. Since all the references to OMB Circular A-125 needed to be replaced with references to 5 CFR Part 1315, and portions of the FAR needed to be revised to conform to 5 CFR Part 1315, the FAR Council took the opportunity to rewrite all the affected portions in "plain language". Besides the reference replacements and the rewrite, the following are the major changes that would be made by this proposed rule:

• A detailed explanation of payment due dates would be included in FAR 32.904, Determining Payment Due Dates, and would address various types of supplies and services, such as construction and food products.
  
  
• The requirements for a proper invoice would be detailed in FAR 32.905, Payment Documentation, with particular emphasis on the information required for electronic funds transfer (EFT).
  
  
• The discussion of the interest penalty calculation in FAR 32.907-1, Late Invoice Payments; FAR 52.232-25, Prompt Payment; FAR 52.232-26, Prompt Payment for Fixed-Price Architect-Engineer Contracts; and FAR 52.232-27, Prompt Payment for Construction Contracts, would be replaced with a reference to 5 CFR Part 1315.

Also, in 1999 the General Accounting Office (GAO) published "Greater Attention Needed to Identify and Recover Overpayments" (GAO/NSIAD-99-131), which pointed out that "under current law, there is no requirement for contractors who have been overpaid to notify the government of overpayments or to return overpayments prior to the government issuing a demand letter." To rectify this situation, the following proposed paragraph would be added to FAR 52.232-25, FAR 52.232-26, and FAR 52.232-27:

"Overpayments. If the Contractor becomes aware of a duplicate payment or that the Government has otherwise overpaid on an invoice payment, the Contractor shall immediately notify the Contracting Officer and request instructions for disposition of the overpayment."

Comments on the proposed rule should be submitted no later than October 27, 2000, to General Services Administration, FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.1999-023@gsa.gov. Cite FAR case 1999-023 in all correspondence related to this proposed rule.

NFS Changes on BAAs, Bundling, CAS Waivers, CCR

The National Aeronautics and Space Administration (NASA) has been busy revising the NASA FAR Supplement (NFS) on a number of topics:

• To conform the NFS to the recently-revised NASA Grants Handbook, which permits actions resulting from a blanket agency announcement (BAA) to be completed as a purchase order if less than $100,000, NFS 1813.000, Scope of Part, is revised to state that "awards resulting from NRAs [NASA Research Announcement] or AOs [Announcement of Opportunities] that are to be made as procurement instruments can be made as either a contract or a purchase order."
  
  
• Because FAC 97-15 added coverage on avoiding "contract bundling" as FAR 7.107, Additional Requirements for Acquisitions Involving Bundling of Contract Requirements (see the January 2000 Federal Contracts Perspective article "FAC 97-15 Addresses Foreign Acquisition, Contract Bundling, Award Fee Determinations" for the interim rule, and the August 2000 Federal Contracts Perspective article "FAC 97-19 Applies SCA to Commercial Subcontracts, Revises Construction Payment Rules" for the final rule), NFS 1819.202-170, Contract Consolidations, is removed since it duplicated FAR 7.107. However, to supplement FAR 7.107, NFS 1807.107 is added to provide internal administrative procedures for justifying contract bundling.
  
  
• FAC 97-18 included an interim rule on the applicability, thresholds, and waivers of the cost accounting standards (CAS) (see the July 2000 Federal Contracts Perspective article "FAC 97-18 Revises Trade Agreements Thresholds and CAS Applicability, Addresses Recycled Products"). To implement the CAS waiver authority, NFS 1830.201-5, Waiver, is revised to designate "the Associate Administrator for Procurement [as] the only individual authorized to approve CAS waivers."
  
  
• Since NASA is converting to a new accounting software system which requires that each vendor be identified by a specific vendor number, NASA has decided to require that its vendors register in the Department of Defense's Central Contractor Registration (CCR) system because each CCR registrant is assigned a distinct Commercial and Government Entity (CAGE) code. To implement this new requirement, NFS Subpart 1804.74 and NFS 1852.204-74, both titled "Central Contractor Registration" are added. These duplicate the corresponding coverage in DFARS Subpart 204.73 and DFARS 252.204-7004.

Return to the Newsletters Library.

Return to the Main Page.