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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

February 2009
Vol. X, No. 2

CONTENTS

Publication of Justifications Required
For Noncompetitive Contracts

To implement Section 844 of the National Defense Authorization Act of Fiscal Year 2008 (Public Law 110-181), Federal Acquisition Circular (FAC) 2005-30 amends the Federal Acquisition Regulation (FAR) to require agencies to post on FedBizOpps all justifications for contracts awarded through other than full and open competition. In addition, FAC 2005-30 contains rules addressing commercially available off-the-shelf items, the Support Anti-Terrorism by Fostering Effective Technologies (SAFETY) Act, trafficking in persons, and several other topics.

• Public Disclosure of Justification and Approval (J&A) Documents for Noncompetitive Contracts: This interim rule amends FAR 6.305, Availability of the Justification, to require agencies to post all J&As for acquisitions conducted under other than full and open competition on FedBizOpps (http://www.fbo.gov) and their own websites within 14 days after contract award. There is one exception: J&As acquisitions conducted under the authority provided by FAR 6.302-2, Unusual and Compelling Urgency, must be published on FedBizOpps and the agency’s website within 30 days after contract award.
  
  Comment on this interim rule must be submitted no later than March 16, 2009, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail to: General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC 20405. Identify comments as “FAR Case 2008-003.”
  
  
• Commercially Available Off-the Shelf (COTS) Items: This final rule provides a definition of COTS and waives two laws with regard to acquisitions of COTS: (1) the component test of the Buy American Act (see FAR Subpart 25.1, Buy American Act – Supplies, and FAR Subpart 25.2, Buy American Act – Construction Materials); and (2) the Estimate of Percentage of Recovered Material Act (see FAR 52.223-4, Recovered Material Certification) (see new FAR 12.505, Applicability of Certain Laws to Contracts for the Acquisition of COTS Items).
  
  The following definition of a COTS item is added to paragraph (b)(2) of FAR 2.101, Definitions: “any item of supply (including construction material) that is – (i) a commercial item (as defined in paragraph (1) of the definition in this section); (ii) sold in substantial quantities in the commercial marketplace; and (iii) offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace...” COTS does not include bulk cargo, such as agricultural products and petroleum products. It should be noted that this definition differs slightly from the COTS definition in FAR 22.1801, Definitions [Employment Eligibility Verification] in that the phrase “under a contract or subcontract at any tier” is not in the FAR 22.1801 definition. However, the introduction to the rule states, “the COTS definition in 22.1801 is solely applicable to issues arising under Subpart 22.18...”
  
  To further implement the two statutory COTS exemptions, corresponding changes are made to FAR Part 23, Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and Drug-Free Workplace; FAR Part 25, Foreign Acquisitions; and the Buy American Act clauses and provisions.
  
  The introduction to FAC 2005-30 states, “This rule will reduce the burden on contractors that provide commercially available off-the-shelf [Environmental Protection Agency]-designated products that contain recovered materials and contractors that provide construction material or end products that are COTS items manufactured in the United States. Contracting officers will need to become acquainted with the new definition of ‘commercially available off-the-shelf item’ and understand the revised definitions of ‘domestic end product’ and ‘domestic construction material.’”
  
  Fifty-six respondents submitted comments on the proposed rule, primarily with regard to which statutes should be waived for COTS, although a significant number addressed the COTS definition. For more on the proposed rule, see the February 2004 Federal Contracts Perspective article “Proposed FAR Rules on Electronic Reps and Certs, COTS.”
  
  
• Implementation of Department of Homeland Security Regulations on the SAFETY Act: This finalizes, with editorial changes, the interim rule in FAC 2005-21 that added FAR Subpart 50.2, Support Anti-Terrorism by Fostering Effective Technologies Act of 2002 [the SAFETY Act], to furnish liability protections for providers of certain anti-terrorism technologies. Seven respondents submitted comments on the interim rule, primarily providing suggestions to improve clarity of the SAFETY Act regulations, such as revising “the requiring activity shall inform the contracting officer to notify offerors” to “the requiring activity shall request that the contracting officer notify offerors” in paragraph (a)(1) of FAR 50.205-1, SAFETY Act Considerations.
  
  For more on the interim rule, see the December 2007 Federal Contracts Perspective article “FAC 2005-21 Rewrites FAR Part 27 in Plain English.” For more on the SAFETY Act, go to http://www.SAFETYAct.gov.
  
  
• Federal Procurement Data System (FPDS): This finalizes, with one minor change, the interim rule in FAC 2005-25 that amended FAR Subpart 4.6, Contract Reporting, to update and clarify the process for reporting contract actions to the FPDS (https://www.fpds.gov).
  
  Four respondents submitted comments on the interim rule. As a result, one minor change is made to the definition of “indefinite delivery vehicle” in FAR 4.601, Definitions. The definition is changed from “an indefinite delivery contract that has one or more of the following clauses” to “an indefinite delivery contract or agreement that has one or more of the following clauses.”
  
  For more on the interim rule, see the May 2008 Federal Contracts Perspective article “FAC 2005-25 Requires Tax Delinquency Reporting, Mandates Electronic Subcontract Reporting.”
  
  
• Exemption of Certain Service Contracts from the Service Contract Act: This finalizes, with changes, the interim rule in FAC 2005-21 that amended FAR 22.1003-4, Administrative Limitations, Variations, Tolerances, and Exemptions, to add exemptions to the Service Contract Act (SCA) for certain industries. To implement the SCA exemptions, the rule revised FAR 52.222-48, Exemption from Application of the Service Contract Act to Contracts for Maintenance, Calibration, or Repair of Certain Equipment Certification; and added FAR 52.222-51, Exemption from Application of the Service Contract Act to Contracts for Maintenance, Calibration, or Repair of Certain Equipment – Requirements, FAR 52.222-52, Exemption from Application of the Service Contract Act to Contracts for Certain Services – Certification, and FAR 52.222-53, Exemption from Application of the Service Contract Act to Contracts for Certain Services – Requirements.
  
  Four respondents submitted comments on the interim rule. One comment triggered the most far-reaching change to the final rule, one that doesn't address SCA specifically but rather a characteristic of the Online Representations and Certifications Application (ORCA) (https://orca.bpn.gov). Paragraph (a)(2) of FAR 22.1006, Solicitation Provisions and Contract Clauses, states:
  
  

  "If the solicitation includes the provision at [FAR] 52.222-48, Exemption from Application of the Service Contract Act to Contracts for Maintenance, Calibration, or Repair of Certain Equipment – Certification, or [FAR] 52.222-52, Exemption from Application of the Service Contract Act to Contracts for Certain Services – Certification, the contracting officer shall not insert the clause at [FAR] 52.222-41 [Service Contract Act of 1965] (or any of the associated Service Contract Act clauses prescribed in this section for possible use when 52.222-41 applies) in the resultant contract..."

  
  A commenter noted that this paragraph does not provide useful guidance because FAR 52.222-48 and 52.222-52 must be completed in ORCA, so those certifications are not included in solicitations. Since this inability to tie contract clauses to the corresponding ORCA representations and certifications affects more than just the SCA, FAR 52.204-8, Annual Representations and Certifications (which addresses the use of ORCA) has been revised to indicate the general applicability of each ORCA representation and certification. However, if the general applicability statement does not provide adequate guidance for a particular representation or certification, the contracting officer is required to indicate whether the representation or certification applies to the solicitation.
  
  In the revised FAR 52.204-8, the contracting officer is required to check the appropriate box if either FAR 52.222-48 or FAR 52.222-52 applies to the solicitation. In addition, the contracting officer must check the appropriate boxes when the following provisions and certifications apply:
  
  
  • FAR 52.219-19, Small Business Concern Representation for the Small Business Competitiveness Demonstration Program
  • FAR 52.219-21, Small Business Size Representation for Targeted Industry Categories Under the Small Business Competitiveness Demonstration Program
  • FAR 52.219-22, Small Disadvantaged Business Status
    • Basic
    • Alternate I
  • FAR 52.222-18, Certification Regarding Knowledge of Child Labor for Listed End Products
  • FAR 52.223-9, with its Alternate I, Estimate of Percentage of Recovered Material Content for EPA-Designated Products (Alternate I only)
  • FAR 52.223-13, Certification of Toxic Chemical Release Reporting
  • FAR 52.227-6, Royalty Information
    • Basic
    • Alternate I
  • FAR 52.227-15, Representation of Limited Rights Data and Restricted Computer Software
  
  For more on the interim rule, see the December 2007 Federal Contracts Perspective article “FAC 2005-21 Rewrites FAR Part 27 in Plain English.”
  
  
• Electronic Products Environmental Assessment Tool (EPEAT): This finalizes, without change, the interim rule in FAC 2005-23 that amended FAR Subpart 23.7, Contracting for Environmentally Preferable Products and Services, to require the use of the EPEAT when acquiring personal computer products such as desktops, laptops, and monitors. The EPEAT website is http://www.epeat.net.
  
  Two respondents submitted comments on the interim rule, but none of the comments were adopted. For more on the interim rule and EPEAT, see the January 2008 Federal Contracts Perspective article “95% EPEAT-Registered Electronic Products Mandated.”
  
  
• Combating Trafficking in Persons: This finalizes, with changes, the interim rules in FAC 2005-09 and FAC 2005-19 that added FAR Subpart 22.17, Combating Trafficking in Persons, and the corresponding clause at FAR 52.222-20 to allow the contracting agency to take remedial action, including termination of the contract, if the employees of a contractor or subcontractor engages in severe forms of trafficking in persons or has procured a commercial sex act, or used forced labor in the performance of the contract.
  
  The first interim rule added FAR Subpart 22.17 and FAR 52.222-20, but exempted commercial service contracts under FAR Part 12, Acquisition of Commercial Items. Upon reviewing the comments from the six respondents that were submitted on the first interim rule, and a reexamination of the pertinent statutes (the Trafficking Victims Protection Act of 2000, the Trafficking Victims Protection Reauthorization Act of 2003, and the Trafficking Victims Protection Reauthorization Act of 2005), it was decided that Congress intended the prohibition to apply to all contracts, including commercial supplies and services. Therefore, it was decided to issue a second interim rule and request additional comments.
  
  Five respondents submitted comments on the second interim rule, primarily on whether Congress really intended the prohibition to apply to all contracts. While the final rule still reflects the application of the prohibition to all contracts, several other changes are made to the final rule, including:
  
  
  • The addition of the following definition of “forced labor” to FAR 22.1702, Definitions: “knowingly providing or obtaining the labor or services of a person – (1) by threats of serious harm to, or physical restraint against that person or another person; (2) by means of any scheme, plan, or pattern intended to cause the person to believe that, if the person did not perform such labor or services, that person or another person would suffer serious harm or physical restraint; or (3) by means of the abuse or threatened abuse of law or the legal process.”
    
    
  • The addition of the website for the Department of State’s Office to Monitor and Combat Trafficking in Persons to FAR 22.1703, Policy (http://www.state.gov/g/tip).
    
    
  • The addition of the following sentence to FAR 22.1704, Violations and Remedies: “The contracting officer may take into consideration whether the contractor had a Trafficking in Persons awareness program at the time of the violation as a mitigating factor when determining the appropriate remedies.”
    
    
  • FAR 52.222-20 is added to FAR 52.244-6, Subcontracts for Commercial Items, as a clause that must be flowed-down to subcontracts for commercial items.
  
  For more on the first interim rule, see the May 2006 Federal Contracts Perspective article “FAC 2005-09 Revises A-76 Rules, Provides FedTeDS Guidance, Addresses Trafficking in Persons.” For more on the second interim rule, see the September 2007 Federal Contracts Perspective article “FAC 2005-19 Addresses Personal Identity Verification Products, Free Trade Agreements.”
  
  
• Trade Agreement Thresholds: This finalizes, without change, the interim rule in FAC 2005-24 that amended paragraph (b) of FAR 25.402, General, to reflect the biennial threshold adjustments made by the U.S. Trade Representative for the various trade agreements.
  
  No comments were received on the interim rule, so it is finalized without change. For more on the interim rule, see the March 2008 Federal Contracts Perspective article “FAC 2005-24 Removes Numbered Notes From Synopses, Mandates Common Security Configurations.”

E-Verify Put on Hold Until May 21

The effective date of FAC 2005-29, which requires most contractors to use the free website E-Verify (http://www.dhs.gov/e-verify) to determine whether their employees are authorized to work in the United States, has been postponed twice in one month: from January 15, 2009, to February 20, 2009, in response to pending litigation; then from February 20, 2009, to May 21, 2009, at the request of President Obama to give his new administration time to review it.

As of May 21, 2009, FAR 52.222-54, Employment Eligibility Verification, must be included in contracts exceeding $100,000 that are 120 days or longer in duration. The clause requires the contractor to use E-Verify for all its employees working on the contract in the United States, and all of its newly-hired employees regardless of whether they are working on the contract or not. There are some exceptions to this: (1) contracts for “commercial off-the-shelf” (COTS) items and services, or items that would be COTS except for minor modifications (see FAR 22.1801, Definitions, for the definition of COTS – contracts for commercial items that do not meet the COTS definition are subject to E-Verify); and (2) contracts that will be performed outside the United States.

Contracting officers are not to use FAR 52.222-54 in any solicitation or contract prior to May 21, 2009.

However, on or after May 21, 2009, the rule states that contracting officers “should modify, on a bilateral basis, existing indefinite-delivery/indefinite-quantity contracts...to include the clause for future orders if the remaining period of performance extends beyond November 21, 2009, and the amount of work or number of orders expected under the remaining performance period is substantial.”

For more on E-Verify and FAC 2005-29, see the December 2008 Federal Contracts Perspective article “FAC 2005-29 Requires Contractors to Verify Workers’ Eligibility for Employment.”

Fifteen DFARS Rules for the New Year

The Department of Defense (DOD), in an apparent move to clear the decks of pending regulations while the Bush administration was still in office, issued 15 rules amending the Defense FAR Supplement (DFARS) five days before leaving office.

• Clean Air Act and Clean Water Act Exemptions: This final rule amends DFARS 209.405, Effect of Listing, to address the procedures that apply when it is necessary to award to a contractor that is excluded from federal procurement programs due to a violation of the Clean Air Act or the Clean Water Act.
  
  The Excluded Parties List System (EPLS) (http://epls.gov) identifies contractor facilities where no part of a federal contract or subcontract may be performed due to a violation of the Clean Air Act or the Clean Water Act. In accordance with Executive Order 11738, the head of an agency may grant an exemption permitting award to a contractor using an otherwise “Code ‘H’ ineligible facility” if the head of the agency determines that the exemption is in the paramount interest of the United States. This final rule amends DFARS 209.405 to make the processing procedures of such an exemption more closely align with the requirements of Executive Order 11738 by requiring the official granting the exemption to promptly notify the Environmental Protection Agency (EPA) suspending and debarring official of the exemption and the corresponding justification (paragraph (b)(ii)(B)(1)). Paragraph (b)(ii)(B)(2) requires the granting official to consult with the EPA suspending and debarring official before granting a class exemption. Paragraph (b)(ii)(C) restricts these exemptions to no more than one year in duration. “The continuing necessity for each exemption shall be reviewed annually and, upon the making of a new determination, may be extended for periods not to exceed one year.”
  
  
• Contract Actions Supporting Contingency Operations or Facilitating Defense Against or Recovery From Nuclear, Biological, Chemical, or Radiological Attack: This final rule lowers the DOD level of approval for determinations to use emergency acquisition flexibilities for contract actions supporting contingency operations or facilitating defense against or recovery from nuclear, biological, chemical, or radiological attack from “head of the agency” to “head of the contracting activity.” This is accomplished by the addition of DFARS 218.270, Head of Contracting Activity Determinations, which specifies that this change applies to the definitions of “micro-purchase threshold” and “simplified acquisition threshold” in FAR 2.101, Definitions; paragraph (f) of FAR 12.102, Applicability [Commercial Items]; paragraph (g) of FAR 13.201, General [Micro-Purchases]; paragraph (e) of FAR 13.500, General [Use of Simplified Procedures Up to $11 Million]; and FAR Subpart 18.2, Emergency Acquisition Flexibilities.
  
  
• Delegation of Authority for Single Award Task or Delivery Order Contracts: FAC 2005-27 included an interim rule that implements Section 843 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), which prohibits the award of a task or delivery order contract in an amount exceeding $100 million to a single source unless the head of the agency determines either that: (1) the task or delivery orders expected under the contract are so integrally related that only a single source can reasonably perform the work; (2) the contract provides only for firm-fixed-price task or delivery orders; (3) only one source is qualified and capable of performing the work at a reasonable price to the government; or (4) it is necessary in the public interest to award the contract to a single source due to exceptional circumstances.
  
  This final rule amends DFARS 216.504, Indefinite-Quantity Contracts, to specify that the head of the agency may not delegate this authority to make a single source public interest determination below the level of the senior procurement executive. In addition, DFARS 216.504 requires that a copy of any determination authorizing the award of a single source task or delivery order contract exceeding $100 million be submitted to the Deputy Director, Defense Procurement (Contract Policy and International Contracting).
  
  For more on the interim rule in FAC 2005-27, see the October 2008 Federal Contracts Perspective article “FAC 2005-27 Requires ‘Enhanced Competition’ for Task and Delivery Orders.”
  
  
• Whistleblower Protections for Contractor Employees: This interim rule adds DFARS Subpart 203.9, Whistleblower Protections for Contractor Employees, to implement Section 846 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181) and Section 842 of the National Defense Authorization Act for Fiscal Year 2009 (Public Law 110-417), to address protections for contractor employees who disclose information to government officials with regard to waste or mismanagement, danger to public health or safety, or violation of law related to a DOD contract.
  
  FAR Subpart 3.9, Whistleblower Protections for Contractor Employees, prohibits contractors from discharging, demoting, or otherwise discriminating against employees as a reprisal for disclosing to government officials information on a substantial violation of law related to a contract. Section 846 of Public Law 110-181 and Section 842 of Public Law 110-417 amended the laws implemented by FAR Subpart 3.9 to establish protections for DOD contractor employees that differ from those specified in FAR Subpart 3.9. Therefore, this interim rule adds DFARS Subpart 203.9, Whistleblower Protections for Contractor Employees, to address these differences.
  
  The primary differences between FAR Subpart 3.9 and DFARS Subpart 203.9 are that DFARS Subpart 203.9:
  
  
  • Expands the types of information to which the protections apply (“evidence of gross mismanagement of a DOD contract, a gross waste of DOD funds, a substantial and specific danger to public health or safety, or a violation of law related to a DOD contract (including the competition for or negotiation of a contract)”) (paragraph (1) of DFARS 203.903, Policy).
    
    
  • Expands the categories of government officials to whom information may be disclosed without reprisal (“(i) a member of Congress; (ii) a representative of a committee of Congress; (iii) an Inspector General that receives funding from or has oversight over contracts awarded for or on behalf of DOD; (iv) the Government Accountability Office [GAO]; (v) a DOD employee responsible for contract oversight or management; [or] (vi) an authorized official of an agency or the Department of Justice”) (DFARS 203.903(1)).
    
    
  • Requires the Inspector General to submit, within 180 days after receiving the complaint, a report of findings regarding a complaint filed by a contractor employee (paragraph (3)(i) of DFARS 203.905, Procedures for Investigating Complaints).
    
    
  • Requires the head of the agency to take appropriate action, within 30 days after receiving the Inspector General’s report within 30 days (paragraph (1) of DFARS 203.906, Remedies).
    
    
  • Establishes a de novo right of action in federal district court for contractor employees who have exhausted their administrative remedies (DFARS 203.906(2)).
    
    
  • Adds DFARS 252.203-7002, Requirement to Inform Employees of Whistleblower Rights, which requires contractors to inform employees in writing of their whistleblower rights and protections.
  
  Comments on the interim rule must be submitted no later than March 16, 2009, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) e-mail: dfars@osd.mil; (3) fax: 703-602-7887; (4) mail: Defense Acquisition Regulations System, Attn: Angie Sawyer, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062; or (5) hand-delivery/courier: Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402. Identify comments as “DFARS Case 2008-D024.”
  
  
• Steel for Military Construction Projects: This interim rule amends DFARS Part 236, Construction and Architect-Engineer Contracts, to implement Division E, Section 108 of the Military Construction and Veterans Affairs Appropriations Act for Fiscal Year 2009 (Public Law 110-329), which requires that American steel producers, fabricators, and manufacturers be given the opportunity to compete for contracts and subcontracts for the acquisition of steel for use in military construction projects or activities.
  
  New DFARS 236.274, Restriction on Acquisition of Steel for Use in Military Construction Projects, states, “Do not acquire, or allow a contractor to acquire, steel for any construction project or activity for which American steel producers, fabricators, or manufacturers have been denied the opportunity to compete for such acquisition of steel.” To enforce this direction, solicitations and contracts using funds appropriated by Public Law 110-329 and may require the acquisition of steel as a construction material must include new DFARS 252.236-7013, Requirement for Competition Opportunity for American Steel Producers, Fabricators, and Manufacturers. The clause states, “The Contractor shall provide American steel producers, fabricators, and manufacturers the opportunity to compete when acquiring steel as a construction material (e.g., steel beams, rods, cables, plates).”
  
  The introduction to the rule states, “The objective of the rule is to ensure that American steel producers, fabricators, and manufacturers are given the opportunity to compete for contracts and subcontracts for the acquisition of steel for use in military construction projects and activities. Existing Buy American Act and Balance of Payments Program requirements, implemented in FAR Subpart 25.2 [Buy American Act – Construction Materials] and DFARS Subpart 225.75 [Balance of Payments Program] respectively, already provide for DOD acquisition of domestic construction materials, including steel. However, this DFARS rule will prohibit use of the exceptions to Buy American Act/Balance of Program requirements otherwise permitted by FAR/DFARS, with regard to the acquisition of steel, unless American steel producers, fabricators, and manufacturers are first provided the opportunity to compete. The rule is expected to benefit American steel producers, fabricators, and manufacturers by ensuring they are provided an opportunity to compete for contracts and subcontracts for the acquisition of steel for use in military construction projects and activities.”
  
  Comments on the interim rule must be submitted no later than March 16, 2009, by any of the means mentioned above, except mail should be sent to the attention of Amy Williams, and comments should be identified as “DFARS Case 2008-D038.”
  
  
• Responsible Prospective Contractors: This final rule amends DFARS 209.105-1, Obtaining Information, to address use of the Past Performance Information Retrieval System (PPIRS) (http://www.ppirs.gov) in determining contractor responsibility.
  
  DFARS 209.105-1(2) is added, which states, “A satisfactory performance record is a factor in determining contractor responsibility (see FAR 9.104-1(c) [General Standards]). One source of information relating to contractor performance is the Past Performance Information Retrieval System (PPIRS), available at www.ppirs.gov. Information relating to contract terminations for cause and for default is also available through PPIRS...This termination information is just one consideration in determining contractor responsibility.”
  
  
• DOD Law of War Program: This finalizes, with changes, the proposed rule that would amend DFARS 252.225-7040, Contractor Personnel Authorized to Accompany U.S. Armed Forces Deployed Outside the United States, to address requirements for DOD contractors to institute effective programs to prevent violations of law of war by contractor personnel authorized to accompany U.S. Armed Forces deployed outside the U.S. The rule requires that deploying contractor personnel receive appropriate law of war training, and that contractor personnel report any violations of the law of war to the appropriate authorities. The rule is consistent with DOD Directive 2311.01E, DOD Law of War Program, dated May 9, 2006.
  
  DFARS 252.225-7040 is amended as follows:
  
  
  • The following definition of “law of war” is added to paragraph (a): “That part of international law that regulates the conduct of armed hostilities. The law of war encompasses all international law for the conduct of hostilities binding on the United States or its individual citizens, including treaties and international agreements to which the United States is a party, and applicable customary international law.”
    
    
  • Paragraph (d) is revised to require that deploying contractor personnel receive appropriate training in “provisions of the law of war, as well as any other applicable treaties and international agreements” (paragraph (d)(1)(ii)). Also added is the following: “The Contractor shall institute and implement an effective program to prevent violations of the law of war by its employees and subcontractors, including law of war training” (paragraph (d)(2)).
    
    
  • Paragraph (e), Pre-Deployment Requirements, is revised to state that the contractor is responsible for ensuring that its deploying personnel receive basic law of war training and “advanced training, commensurate with their duties and responsibilities...”
    
    
  • Subparagraph (h)(3) is added to require that contractor personnel report any violations of the law of war to “the Combatant Commander or a designee, or through other channels such as the military police, a judge advocate, or an inspector general.”
  
  Four respondents submitted comments on the proposed rule. In response to the comments, some of the wording has been clarified in the final rule.
  
  The most significant difference between the proposed and final rules is the addition of DFARS 225.7402-4, Law of War Training. It describes what constitutes basic law of war training and where it may be obtained (paragraph (a)). Also, it specifies the types of personnel that must obtain advanced law of war training (paragraph (b)): “(i) private security contractors; (ii) security guards in or near areas of military operations; (iii) interrogators, linguists, interpreters, guards, report writers, information technology technicians, or others who will come into contact with enemy prisoners of war, civilian internees, retained persons, other detainees, terrorists, or criminals who are captured, transferred, confined, or detained during or in the aftermath of hostilities; [and] (iv) other personnel when deemed necessary by the contracting officer."
  
  For more on the proposed rule, see the February 2008 Federal Contracts Perspective article “Lots of DFARS Rules Saved for the New Year.”
  
  
• Security-Guard Functions: This finalizes, without changes, the interim rule that amended DFARS 237.102-70, Prohibition on Contracting for Firefighting or Security-Guard Functions, to implement Section 343 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), which extends, through September 30, 2012, the period during which contractor performance of security-guard functions at military installations or facilities is authorized to fulfill additional requirements resulting from the terrorist attacks on the United States on September 11, 2001.
  
  No comments were received on the interim rule, so it is finalized without change. For more on the interim rule, see the October 2008 Federal Contracts Perspective article “DFARS Implements 2008 Defense Authorization Act.”
  
  
• Senior DOD Officials Seeking Employment with Defense Contractors: This interim rule implements Section 847 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), which addresses requirements for senior DOD officials to obtain a post-employment ethics opinion before accepting a position from a DOD contractor within two years after leaving DOD service.
  
  The interim rule adds DFARS 203.171, Senior DOD Officials Seeking Employment with Defense Contractors, and DFARS 252.203-7000, Requirements Relating to Compensation of Former DOD Officials, to require that a DOD official who left service on or after January 28, 2008, and who has participated personally and substantially in a DOD acquisition exceeding $10 million or who has held a key acquisition position (that is, program manager, deputy program manager, procuring contracting officer, administrative contracting officer, source selection authority, member of the source selection evaluation board, or chief of a financial or technical evaluation team), must obtain a written opinion from a DOD ethics counselor regarding the activities that the official may undertake on behalf of a DOD contractor within two years after leaving DOD service. In addition, a DOD contractor is prohibited from providing compensation to such a DOD official without first determining that the official has received or appropriately requested a post-employment ethics opinion. Failure by the contractor to do so may subject the contractor to rescission of the contract, suspension, or debarment.
  
  Comments on the interim rule must be submitted no later than March 16, 2009, by any of the means mentioned above. Comments should be identified as “DFARS Case 2008-D007.”
  
  
• List of Firms Owned or Controlled by the Government of a Terrorist Country: DOD is required to develop and maintain a list of all firms, and subsidiaries of firms, that are owned or controlled by the government of a terrorist country and that are subject to a prohibition on DOD contract awards. This final rule amends DFARS 209.104-1, General Standards, and DFARS 209.104-70, Solicitation Provisions, to address DOD procedures for forwarding, to the appropriate office, any information indicating that a firm or a subsidiary of a firm may be owned or controlled by the government of a terrorist country.
  
  The following is added as DFARS 209.104-1(g)(i)(C): “Forward any information indicating that a firm or a subsidiary of a firm may be owned or controlled by the government of a terrorist country, through agency channels, to: Deputy Director, Defense Procurement (Contract Policy and International Contracting, OUSD(AT&L)DPAP(CPIC)), 3060 Defense Pentagon, Washington, DC 20301-3060.” In DFARS 209.104-70(a), a cross-reference to the instructions in DFARS 209.104-1(g)(i)(C) replaces the instruction to forward such information “through the head of the agency to the Director of Defense Procurement and Acquisition Policy...”
  
  
• Removal of North Korea From the List of Terrorist Countries: This final rule removes North Korea from the list of terrorist countries subject to a prohibition on DOD contract awards in paragraph (a)(2) of DFARS 252.209-7001, Disclosure of Ownership or Control by the Government of a Terrorist Country. This change is in response to the State Department’s removal of North Korea from the list of countries designated as state sponsors of terrorism.
  
  
• U.S.-International Atomic Energy Agency Additional Protocol: This finalizes, with minor changes, the proposal to add DFARS 204.470, U.S.-International Atomic Energy Agency Additional Protocol, and DFARS 252.204-7010, Requirement for Contractor to Notify DOD If the Contractor's Activities are Subject to Reporting Under the U.S.-International Atomic Energy Agency Additional Protocol, to require a contractor to notify DOD if it is required to report its activities under the U.S.-International Atomic Energy Agency Additional Protocol (US-IAEA AP). DFARS 252.204-7010 is to be included in contracts for research and development or major defense acquisition programs involving fissionable materials (such as uranium, plutonium, neptunium, thorium, and americium), other radiological source materials, or technologies directly related to nuclear power production.
  
  No comments were received on the proposed rule, so it is adopted as final with minor clarifying changes and to update references to DOD Instruction 2060.03, Application of the National Security Exclusion to U.S.-IAEA Safeguards.
  
  For more on the proposed rule, see the September 2008 Federal Contracts Perspective article “DFARS Amended to Address Competition For Purchases from Federal Prison Industries.”
  
  
• Separation of Senior Roles in Source Selection: This final rule amends DFARS 203.170, Business Practices, to address requirements for the separation of functions in source selection. DFARS 203.170(a) prohibits DOD senior leaders from performing multiple roles in major source selections. To reinforce this policy, the following is added to DFARS 203.170(a): “Departments and agencies shall certify every 2 years that no senior leader has performed multiple roles in the acquisition of a major weapon system or major service. Completed certifications shall be forwarded to the Director, Defense Procurement...”
  
  
• Statutory Waiver for Commercially Available Off-the-Shelf Items: This interim rule amends the series of clauses and provisions addressing the Buy American Act and Balance of Payments program to waive the Buy American Act component test for acquisitions of commercially-available off-the-shelf (COTS) items. This rule parallels the rule in FAC 2005-30 (see the article above). For example, the COTS definition of “COTS item” in DFARS 252.225-7001, Buy American Act and Balance of Payments Program, DFARS 252.225-7036, Buy American Act–Free Trade Agreements – Balance of Payments Program, DFARS 252.225-7044, Balance of Payments Program – Construction Material, and DFARS 252.225-7045, Balance of Payments Program – Construction Material Under Trade Agreements, is “any item of supply (including construction material) that is (A) a commercial item (as defined in paragraph (1) of the definition of ‘commercial item’ in section 2.101 of the Federal Acquisition Regulation); (B) sold in substantial quantities in the commercial marketplace; and (C) offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace...” The definition excluded bulk cargo, just like FAC 2005-30.
  
  NOTE: Because Congress has passed so many laws addressing how DOD is to implement the Buy American Act and Balance of Payments program, DOD had to develop DFARS coverage that is substantially different from the FAR coverage. That is why DOD cannot rely on FAC 2005-30 but must have a separate rule amending the DFARS.
  
  Comments on the interim rule must be submitted no later than March 16, 2009, by any of the means mentioned above, except mail should be sent to the attention of Amy Williams, and comments should be identified as “DFARS Case 2008-D009.”
  
  
• Pilot Program for Transition to Follow-On Contracting After Use of Other Transaction Authority: This interim rule amends DFARS 212.7002, Pilot Program, to implement Section 824 of the National Defense Authorization Act for Fiscal Year 2009 (Public Law 110-417), which establishes a new program expiration date for the pilot program and includes items developed under research projects within the scope of the program.
  
  The changes are in DFARS 212.7002-1, Contracts Under the Program, and DFARS 212.7002-2, Subcontracts Under the Program. DFARS 212.7002-1 is amended to change the deadline for awarding the follow-on contract from September 30, 2013, to September 30, 2010. Both DFARS 212.7002-1 and DFARS 212.7002-2 are expanded to include “a follow-on contract for the production of an item or process begun as a prototype project under an other transaction agreement or as a research project carried out in accordance with 10 U.S.C. 2371 [Research Projects: Transactions Other than Contracts and Grants].”
  
  Comments on the interim rule must be submitted no later than March 16, 2009, by any of the means mentioned above. Comments should be identified as “DFARS Case 2008-D030.”

Labor Clauses Proposed for Inclusion in T&M Contracts

To achieve consistency throughout government and resolve potential inequities, a proposed rule has been published that would specifically require the inclusion of FAR 52.222-43, Fair Labor Standards Act and Service Contract Act – Price Adjustment (Multiple Year and Option Contracts), and FAR 52.222-44, Fair Labor Standards Act and Service Contract Act – Price Adjustment, in time-and-materials and labor-hour service contracts that are subject to the Service Contract Act.

FAR 52.222-41, Service Contract Act of 1965, requires that service employees be paid minimum monetary wages and fringe benefits, and those wages and fringe benefits may be subject to adjustment, under wage determinations issued by the Department of Labor. FAR 52.222-43 and FAR 52.222-44 establish a consistent manner for making those adjustments. By not including either FAR 52.222-43 or FAR 52.222-44 in time-and-materials and labor-hour service contracts, contracting officers have to resort to other methods of making the adjustments, such as allowing for wage and benefit escalation, equitable adjustment, or economic price adjustment. However, using these methods usually permit the contractors to include profit, overhead, and general and administrative expenses in addition to the wage or fringe benefit increases.

Many contracting officers throughout the government already use either FAR 52.222-43 or FAR 52.222-44 in their time-and-materials and labor-hour contracts. The proposed revision of paragraphs (c)(1) and (c)(2) of FAR 22.1006, Solicitation Provisions and Contract Clauses, would replace the requirement that the clauses be included in “fixed-price service contracts” with the requirement that the clauses be included in “fixed-price, time-and-materials, or labor-hour service contracts.” This change would achieve consistency throughout the government acquisition community and resolve potential inequities where the clauses have not been applied.

In addition, FAR 52.222-43 and FAR 52.222-44 would be amended to provide for changes to “fixed hourly labor rates (if this is a time-and-materials or labor-hour contract)” in addition to changes to the contract price or contract unit price labor rates already provided by the clauses.

Comments on this proposed rule must be submitted no later than March 10, 2009, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail to: General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC 20405. Identify comments as “FAR Case 2007-021.”

GSA Proposes Rewriting Federal Supply Schedule Rules

As part of its General Services Administration (GSA) Acquisition Regulation (GSAR) rewrite project, GSA is proposing to rewrite GSAR Part 538, Federal Supply Schedule [FSS] Contracting, by abandoning the FAR format and employing subparts that correspond to individual FAR parts. Currently, GSAR Part 538 consists of three subparts: Subpart 538.2, Establishing and Administering Federal Supply Schedules; Subpart 538.70, Cooperative Purchasing; and GSAR Subpart 538.71, Recovery Purchasing. The proposed rule would retain GSAR Subparts 538.70 and 538.71, but would remove GSAR Subpart 538.2. However, most of the text in GSAR Subpart 538.2 would be retained in the following new subparts:

• GSAR Subpart 538.9, Contractor Qualifications (corresponds to FAR Part 9 and GSAR Part 509, Contractor Qualifications). This subpart would consist of GSAR 538.906-3, Roles and Responsibilities of a Contractor Partnering Arrangement.
  
  
• GSAR Subpart 538.12, Acquisition of Commercial Items – FSS (corresponds to FAR Part 12 and GSAR Part 512, Acquisition of Commercial Items). GSAR 538.273, Contract Clauses, would become part of GSAR 538.1203, Solicitation Provisions and Contract Clauses, which would consist of the prescriptions for the 96 GSAR provisions and clauses that are to be included in FSS solicitations and contracts when applicable. Some of the provisions and clauses are new, some are being retained, and others are being relocated from other GSAR parts.
  
  
• GSAR Subpart 538.15, Negotiation and Award of Contracts (corresponds to FAR Part 15 and GSAR Part 515, Contracting by Negotiation). It would consist of two sections from GSAR Subpart 538.2: GSAR 538.270, Evaluation of Multiple Award Schedule (MAS) Offers, would become GSAR 538.1504, Evaluation of Commercial Pricing Practices (slightly modified for clarity); and GSAR 538.272, MAS Price Reductions, would become GSAR 538.1508, Price Reductions (slightly modified for clarity).
  
  
• GSAR Subpart 538.25, Requirements for Foreign Entities (corresponds to FAR Part 25 and GSAR Part 525, Foreign Acquisition), would consist of GSAR 538.2502, English Language and U.S. Dollar Requirements, which would advise contractors to submit commercial price lists in English and to allow for payments in local currency.
  
  
• GSAR Subpart 538.42, Contract Administration (corresponds to FAR Part 42 and GSAR Part 542, Contractor Administration and Audit Services), would consist of GSAR 538.4201-3, IFF [Industrial Funding Fee] and Contractor Partnering Arrangements, which would advise the contractor to abide by the terms and conditions of the IFF and Sales Reporting Requirements when entering into Contractor Partnering Arrangements; and GSAR 538.4206-1, Processing Cancellation of a Contractor Request, which would explain the process and procedures that should be followed when cancelling a contract at the contractor’s request.
  
  
• GSAR Subpart 538.43, Contract Modifications (corresponds to FAR Part 43 and GSAR Part 543, Contract Modifications), which would consist of GSAR 538.4303-3, Contractor Initiated Modifications, which would provide guidance to the contractor when initiating a modification request to the government.

Comment on this proposed rule must be submitted no later than March 27, 2009, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail to: General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC 20405. Identify comments as “GSAR Case 2007-G507.”

Two Rewritten GSAR Parts Finalized

Besides proposing to revise GSAR Part 538, GSA has finalized two GSAR parts as part of its GSAR rewrite effort: Part 542, Contract Administration and Audit Services, and Part 543, Contract Modifications.

• GSAR Part 542: This part had consisted of two sections: GSAR 542.1107, Contract Clause, consisting of the prescription for GSAR 552.242-70, Status Report of Orders and Shipments, and GSAR 542.1503-1, Information to Collect, which specified what the system for collecting contractor performance data should be include. GSA proposed to amend GSAR 542.1107 to emphasize the contracting officer’s responsibilities (by changing “insert 552.242-70” to “the contracting officer shall insert 552.242-70”), and to delete GSAR 542.1503-1 and move the text to the GSA Acquisition Manual (GSAM) because it is guidance to contracting officers and not requirements for contractors. One respondent submitted comments, but the comments addressed GSAR 542.1503 which is being removed. Therefore, this finalizes the proposed rule without changes.
  
  
• GSAR Part 543: This part, consisting of GSAR 543.205, Contract Clauses, and the associated clauses were proposed for revision as follows:
  
  
  • Delete GSAR 552.243-70, Pricing of Adjustments, and its prescription in GSAR 543.205(a)(1) because its information would be incorporated into GSAR 552.243-71, Equitable Adjustments.
    
    
  • Relocate GSAR 552.243-72, Modifications (Multiple Award Schedule), and its prescription in GSAR 543.205(b) to GSAR Part 538, Federal Supply Schedule Contracting.
  
  Two respondents submitted comments on the proposed rule, and one recommended adding the phrase “impacted by the change” to paragraph (e) of GSAR 552.243-71 to limit the equitable adjustment to only the work affected by the change. This recommendation was adopted.

For more on these two proposed rules, see the July 2008 Federal Contracts Perspective article “GSAR Undergoing Rewrite.”

Mileage Reimbursement Set at 55¢/Mile for Private Autos

The Federal Travel Regulation (FTR) is amended to decrease the mileage reimbursement rate for use of a privately owned automobile on official travel from 58.5¢ per mile to 55¢ per mile, and the rate for use of a motorcycle on official travel from 58.5¢ per mile to 52¢ per mile. Also, GSA is reducing the reimbursement rate for use of a privately owned aircraft from $1.26 per mile to $1.24 per mile. These revised rates are effective for travel performed on or after January 1, 2009. Travel performed before January 1, 2009, will be reimbursed at the earlier rates.

By law, the automobile reimbursement rate cannot exceed the single standard mileage rate established by the Internal Revenue Service (IRS). The IRS announced a new mileage rate for automobiles of 55¢ per mile effective January 1, 2009, so GSA took action to decrease the automobile reimbursement rate as of January 1, 2009. The change reflects the drop in gasoline price from $4 a gallon in the summer to below $2 a gallon this winter.

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