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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


March 2009
Vol. X, No. 3

CONTENTS


$787 Billion Stimulus Package Passed, Spending To Be “Transparent and Accountable”
FEHBAR Rate Setting Process Clarified
Termination of Nonmanufacturer Rule Waiver Proposed
DOD Suspends SDB Evaluation Adjustment One More Year
Obama Issues Four Labor-Related Executive Orders



$787 Billion Stimulus Package Passed,
Spending To Be “Transparent and Accountable”

On February 17, President Obama signed Public Law 111-5, the American Recovery and Reinvestment Act of 2009 (Recovery Act), which provides $787 billion in tax relief, loans, and spending “for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and state and local fiscal stabilization...” The next day, the Office of Management and Budget Director Peter Orszag issued “Initial Implementing Guidance for the American Recovery and Reinvestment Act of 2009,” the first installment of governmentwide guidance for carrying out programs and activities enacted in the Recovery Act. “The [Obama] Administration is committed to investing Recovery Act dollars with an unprecedented level of transparency and accountability so Americans know where their tax dollars are going and how they are being spent,” writes Mr. Orszag. “Of particular note, the guidance addresses federal agency requirements to provide spending and performance data to the ‘Recovery.gov’ website. To deliver a website that allows citizens to hold the government accountable for every dollar spent, the law and guidance require federal agencies to implement mechanisms to accurately track, monitor, and report on taxpayer funds.”

The following are key provisions of the Recovery Act:

The following are key provisions of OMB’s Recovery Act guidance:



FEHBAR Rate Setting Process Clarified

The Office of Personnel Management (OPM) has amended paragraph (b) of Federal Employees Health Benefits Program Acquisition Regulation (FEHBAR) 1652.216-70, Accounting and Price Adjustment, to clarify the rate setting process for community rated carriers with respect to Similarly Sized Subscriber Groups (SSSG), and remove the ban on adjustments based on rate reconciliation for the final year of Federal Employees Health Benefits Program (FEHBP) contracts. Because information technology and electronic transmission and storage of data now make it possible to efficiently perform rate reconciliation for the final contract year, OPM will begin conducting such rate reconciliation on community rated contracts that terminate after January 1, 2009.

One FEHBP carrier submitted comments on the proposed rule, and a minor editorial change was made. For more on the proposed rule, see the October 2008 Federal Contracts Perspective article “FEHBAR Would Clarify Rate Setting Process.”



Termination of Nonmanufacturer Rule Waiver Proposed

The Small Business Administration (SBA) is proposing to terminate a waiver of the nonmanufacturer rule for warehouse trucks and tractors, self-propelled, under North American Industry Classification System (NAICS) code 333319, product service code (PSC) 3930, based on SBA’s recent discovery of small business manufacturers for items within this class of product. SBA granted the waiver for PSC 3930 on September 13, 1990.

Terminating this waiver will require recipients of contracts set aside for small businesses, service-disabled veteran-owned small businesses, or participants in SBA’s 8(a) Business Development Program to provide the products of small business manufacturers or processors on such contracts.

SBA is inviting the public to comment on this proposed waiver termination by February 27, 2009, to Edith G. Butler, Program Analyst, Small Business Administration, Office of Government Contracting, 409 3rd Street, SW, Suite 8800, Washington, DC 20416.

The SBA regulation on the nonmanufacturer rule is in Title 13 of the Code of Federal Regulations (CFR), Business and Credit Administration; Part 121, Small Business Size Standards; under paragraph (b) of 121.406, How Does a Small Business Concern Qualify to Provide Manufactured Products Under Small Business Set-Aside or MED [Minority Enterprise Development] Procurements? The SBA regulation on the waiver of the nonmanufacturer rule is 13 CFR 121.1202, When Will a Waiver of the Nonmanufacturer Rule Be Granted for a Class of Products?

A complete list of products for which the nonmanufacturer rule has been waived is available at http://www.sba.gov/idc/groups/public/documents/sba_program_office/gcbd_ non_mfg_approved.pdf.



DOD Suspends SDB Evaluation Adjustment One More Year

To comply with Section 801 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261), which prohibits the Department of Defense (DOD) from granting to small disadvantaged businesses (SDBs) a 10% price evaluation adjustment in certain acquisitions for a one-year period when it achieves the 5% goal for contract awards to SDBs, DOD is suspending the 10% SDB price evaluation adjustment from March 13, 2009, to March 12, 2010, because it exceeded the 5% SDB goal in Fiscal Year 2008. For more on the SDB price evaluation adjustment, see FAR Subpart 19.11, Price Evaluation Adjustment for Small Disadvantaged Business Concerns.

EDITOR'S NOTE: DOD’s 10% evaluation adjustment for SDBs was found to be unconstitutional by the United States Court of Appeals for the Federal Circuit (see the January 2009 Federal Contracts Perspective article “Court Strikes Down DOD’S Small and Disadvantaged Business Contract Goal”). The DOD memorandum announcing the suspension states, “On November 4, 2008, in the case of Rothe Development Corp. v. Dept. of Defense, the U.S. Court of Appeals for the Federal Circuit found 10 United States Code (U.S.C.) §2323 unconstitutional. The appellate court returned the case to the U.S. District Court for the Western District of Texas with orders to enter judgment. The scope of the District Court’s final decision, expected in the near future, will affect the future viability of section 2323. Additional guidance will be provided at that time.” Section 801 of Public Law 105-261 amended 10 U.S.C. §2323.



Obama Issues Four Labor-Related Executive Orders

President Obama got off to a quick start tackling federal acquisition by issuing four executive orders addressing labor issues within the first two weeks of office – three of which overturned executive orders issued by President George W. Bush, which had overturned President Clinton executive orders.



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