FedGovContracts.com

Panoptic Enterprises'

FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

April 2009
Vol. X, No. 4

CONTENTS

Obama Directs More Fixed-Price Contracts
and Fewer Sole Source Contracts

On March 4, President Obama issued a memorandum to the heads of departments and agencies decrying the “significant increase in the dollars awarded without full and open competition and increase in the dollars obligated through cost-reimbursement contracts” in the past eight years, and directing the Office of Management and Budget (OMB) to develop and issue guidance by September 30, 2009, to “maximize the use of full and open competition and other competitive procurement processes” and “govern the appropriate use and oversight of all contract types...”

While acknowledging that spending contracts has more than doubled since 2001, reaching over $500 billion in 2008, the President noted “dollars obligated under cost-reimbursement contracts nearly doubled, from $71 billion in 2000 to $135 billion in 2008.” Cost-reimbursement contracts and sole-source contracts create "a risk that taxpayer funds will be spent on contracts that are wasteful, inefficient, subject to misuse, or otherwise not well designed to serve the needs of the federal government or the interests of the American taxpayer.” He goes on to state that “there shall be a preference for fixed-price type contracts.”

Besides calling for restraint on sole-source and cost-reimbursement contracts, the President targeted the outsourcing of services under OMB Circular A-76, Performance of Commercial Activities. “The line between inherently governmental activities that should not be outsourced and commercial activities that may be subject to private sector competition has been blurred and inadequately defined. As a result, contractors may be performing inherently governmental functions. Agencies and departments must operate under clear rules prescribing when outsourcing is and is not appropriate...[T]he federal government must ensure that those functions that are inherently governmental in nature are performed by executive agencies and are not outsourced.”

To rectify the situation, President Obama has directed OMB, the Department of Defense (DOD), the National Aeronautics and Space Administration (NASA), the General Services Administration (GSA), the Office of Personnel Management (OPM), and any other agencies selected by OMB to develop and issue, by July 1, 2009, guidance to assist agencies in reviewing existing contracts to identify those contracts “that are wasteful, inefficient, or not otherwise likely to meet the agency’s needs, and to formulate appropriate corrective action in a timely manner. Such corrective action may include modifying or canceling such contracts...”

Finally, the President has directed OMB, DOD, NASA, GSA, OPM, and other agencies selected by OMB, with input from the public, to develop and issue, by September 30, 2009, governmentwide guidance to:

• “Govern the appropriate use and oversight of sole-source and other types of noncompetitive contracts and to maximize the use of full and open competition and other competitive procurement processes;
  
  
• “Govern the appropriate use and oversight of all contract types, in full consideration of the agency's needs, and to minimize risk and maximize the value of Government contracts...;
  
  
• “Assist agencies in assessing the capacity and ability of the federal acquisition workforce to develop, manage, and oversee acquisitions appropriately; and
  
  
• “Clarify when governmental outsourcing for services is and is not appropriate...”

FAC 2005-32 Implements Recovery Act

Less than six weeks after President Obama signed into law the $787 billion American Recovery and Reinvestment Act of 2009 (Recovery Act) (Public Law 111-5), Federal Acquisition Circular (FAC) 2005-32 added five interim rules amending the Federal Acquisition Regulation (FAR) to implement provisions of the act, and one complementary rule that applies to non-Recovery Act contract actions. All six rules are effective March 31, 2009, and all solicitations issued, and contracts awarded, on or after March 31, 2009, regardless of dollar amount, are subject to the rules. This includes contracts and subcontracts for commercial items and commercial off-the-shelf items. (EDITOR'S NOTE: For more on the Recovery Act, see the March 2009 Federal Contracts Perspective article “$787 Billion Stimulus Package Passed, Spending To Be ‘Transparent and Accountable’”).

• Item I – Buy American Requirements for Construction Material: This rule prohibits, with some exceptions, the use of funds appropriated or provided by the Recovery Act for construction, alternation, maintenance, or repair of a public building or public work unless all the iron, steel, and manufactured goods used in the project are produced in the United States. It adds a new FAR Subpart 25.6, American Recovery and Reinvestment Act – Buy American Act – Construction Materials, and two provisions and two clauses for use when appropriate in place of existing Buy American Act provisions and clauses that address construction materials.
  
  Comments 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.”
  
  
• Item II – Whistleblower Protections: This adds FAR 3.907 and FAR clause 52.203-15, both titled “Whistleblower Protections Under the American Recovery and Reinvestment Act of 2009 (Recovery Act),” to prohibit non-Federal employers from discharging, demoting, or discriminating against employees as a reprisal for disclosing evidence of gross mismanagement or waste of Recovery Act funds to certain categories of officials. FAR 52.203-15 requires contractors to post notice of employees’ rights and remedies for whistleblower protections.
  
  NOTE: Existing whistleblower procedures in FAR Subpart 3.9, Whistleblower Protections for Contractor Employees (FAR 3.901 through 3.906) do not apply to transactions funded under the Recovery Act.
  
  Comments on this interim rule must be submitted no later than June 1, 2009, by any of the means identified above, except identify the comments as “FAC 2005-32, FAR case 2009-008.”
  
  
• Item III – Publicizing Contract Actions: This adds FAR Subpart 5.7, Publicizing Requirements Under the American Recovery and Reinvestment Act of 2009, to implement the unique requirements in the Office of Management and Budget (OMB) Memorandum M-09-10, “Initial Implementing Guidance for the American Recovery and Reinvestment Act of 2009,” for reporting actions that use Recovery Act funds. The unique requirements are:
  
  
  • FAR 5.704, Publicizing–Preaward, requires that notices of all actions of $25,000 or more that are funded in whole or in part by the Recovery Act be posted on FedBizOpps (https://www.fbo.gov). This requirement applies to orders issued under task or delivery order contracts, including Federal Supply Schedule contracts; modifications; and blanket purchase agreements (BPAs) and orders placed under them. However, notices of orders under task or delivery order contracts are for “informational purposes only,” so FAR 5.203, Publicizing and Response Time, does not apply.
    
    
  • FAR 5.705, Publicizing–Post-Award, requires that post-award notices be posted on FedBizOpps of: (1) any contract action exceeding $500,000, including modifications and orders under task or delivery order contracts; and (2) any contract action regardless of dollar value, including modifications and orders under task or deliver order contracts, if the action is not both fixed-price and competitively awarded – such notice must include the rationale for using other than a fixed-price and/or competitive approach. The table in FAR 5.705(b) lists noncompetitive 8(a) awards as an example of an acquisition that must be posted on FedBizOpps along with the rationale for using a non-competitive approach.
    
    
  • FAR 4.605, Procedures, is modified to require the Contracting Officer to follow the instructions at https://www.fpds.gov (the Federal Procurement Data System (FPDS) website) to identify the action as one using Recovery Act funds.
  
  Comments on this interim rule must be submitted no later than June 1, 2009, by any of the means identified above, except identify the comments as “FAC 2005-32, FAR case 2009-010.”
  
  For more on OMB Memorandum M-09-10, see the March 2009 Federal Contracts Perspective article “$787 Billion Stimulus Package Passed, Spending To Be ‘Transparent and Accountable’.”
  
  
• Item IV – Reporting Requirements: This rule adds FAR Subpart 4.15 and FAR 52.204-11, both titled “American Recovery and Reinvestment Act-Reporting Requirements,” to require contractors to report quarterly on their use of Recovery Act funds (except for classified solicitations and awards). The information is to be reported to http://www.FederalReporting.gov, which will be operational on or about July 10, 2009, when the first quarterly reports will be due for invoices submitted prior to June 30, 2009. The reporting requirement applies to all prime and first-tier subcontract awards, including governmentwide acquisition contracts (GWACs), Federal Supply Schedule awards, and indefinite-delivery/indefinite-quantity (IDIQ) contracts that use Recovery Act funds.
  
  Comments on this interim rule must be submitted no later than June 1, 2009, by any of the means identified above, except identify the comments as “FAC 2005-32, FAR case 2009-009.”
  
  
• Item V – Government Accountability Office (GAO)/Inspector General (IG) Access: This rule provides for the audit and review of contracts and subcontracts with Recovery Act funds by GAO and IG staff. Also, the rule permits the GAO to interview contractor and subcontractor personnel regarding transactions containing Recovery Act funds, and permits the IG to interview contractor personnel regarding transactions containing Recovery Act funds (but not subcontractor personnel). Alternate clauses are added to FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders – Commercial Items; FAR 52.214-26, Audit and Records–Sealed Bidding; and FAR 52.215-2, Audits and Records–Negotiation.
  
  Comments on this interim rule must be submitted no later than June 1, 2009, by any of the means identified above, except identify the comments as “FAC 2005-32, FAR case 2009-011.”
  
  
• Item VI – GAO Access to Contractor Employees: This implements Section 871 of the National Defense Authorization Act for Fiscal Year 2009 (Public Law 110-417) by amending FAR 52.214-26, Audit and Records – Sealed Bidding, and FAR 52.215-2, Audit and Records – Negotiation, to allow the GAO to interview current contractor employees when conducting audits of Contractors’ records when Recovery Act funds are not used. The appropriate clause is to be included in all solicitations issued on or after March 31, 2009, except solicitations for commercial items (the NDAA is added to the list of laws at FAR 12.503(a)) that do not apply to acquisitions of commercial items). Contracting Officers may, at their discretion, include the appropriate clause in solicitations issued before March 31, 2009.
  
  Comments on this interim rule must be submitted no later than June 1, 2009, by any of the means identified above, except identify the comments as “FAC 2005-32, FAR case 2008-026.”
  
  For more on Public Law 110-417 and Section 871, see the November 2008 Federal Contracts Perspective article “2009 Defense Authorization Act Includes Clean Contracting Act.”)

FAC 2005-31 Finalizes Size Rerepresentation Rule

FAC 2005-31 is one of those collection of housekeeping rules that gets issued every once in a while. It consists of five rules that probably won't matter to most federal contractors, but they could be very important to those contractors affected by them.

• Item I – Small Business Size Rerepresentation: This finalizes, with editorial changes, FAC 2005-18, which added FAR 52.219-28, Post-Award Small Business Program Rerepresentation (see the August 2007 Federal Contracts Perspective article “FAC 2005-18 Requires Contractors to Rerepresent Small Business Size Status”). FAR 52.219-28 requires contractors that represented themselves as small businesses to rerepresent their size status after: (1) execution of a novation agreement; (2) after a merger or acquisition that does not require a novation; and (3) for long-term contracts (that is, those that are longer than five years in duration, including options), before the end of the fifth year of the contract, then again before the exercise date specified in the contract for any subsequent option.
  
  FAC 2005-18 did not set a deadline for agencies to amend long-term small business contracts entered into prior to June 30, 2007, and many agencies have not done so. Therefore, the preamble to Item I includes the following: “All long-term contracts awarded to small business concerns prior to June 30, 2007, that have not yet been modified to include FAR 52.219–28, must be modified to include FAR 52.219–28 within 90 days after the effective date of this final rule.” This means the deadline for amending long-term small business contracts entered into prior to June 30, 2007, is July 19, 2009.
  
  
• Item II – Clarification of Submission of Cost or Pricing Data on Non-Commercial Modifications of Commercial Items: This interim rule harmonizes the thresholds for cost or pricing data related to non-commercial modifications of commercial items with the Truth In Negotiation Act (TINA) threshold for cost and pricing data. For acquisitions funded by the Department of Defense, the National Aeronautics and Space Administration, and the Coast Guard, paragraphs (c)(3)(ii)(B) and (C) of FAR 15.403-1, Prohibition on Obtaining Cost or Pricing Data (10 U.S.C. 2306a and 41 U.S.C. 254b), had set $500,000 as the threshold for the submission of cost or pricing data for non-commercial modifications of commercial items. However, the current Truth In Negotiation Act (TINA) threshold for cost or pricing data in FAR 15.403-4 Requiring Cost or Pricing Data (10 U.S.C. 2306a and 41 U.S.C. 254b), is $650,000. This rule substitutes a cross-reference to the cost or pricing data threshold in FAR 15.403-4 for the $500,000 threshold, so when the TINA threshold is adjusted in the future the threshold for obtaining cost or pricing data on non-commercial modifications of commercial items will be adjusted, too.
  
  Comments on this interim rule must be submitted no later than May 18, 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 “FAC 2005-31, FAR case 2008-012.”
  
  
• Item III – Amendments to Incorporate New Wage Determinations: This final rule corrects an inconsistency between paragraph (c) of FAR 15.206, Amending the Solicitation, and paragraph (c)(3) of FAR 22.404-5, Expiration of Project Wage Determinations. FAR 22.404-5(c)(3) requires the contracting officer to furnish a modified wage determination as a solicitation amendment to all offerors that submitted proposals if the modified wage determination is received after the solicitation closing date, or if a general wage determination that is published on the Wage Determination Online (http://www.wdol.gov) is modified after the solicitation closing date. This requirement conflicts with FAR 15.206(c), which states that amendments issued after the solicitation closing date are to be issued to “all offerors that have not been eliminated from the competition.” Because the incorporation of an updated wage determination into the solicitation could cause an unnecessary and counterproductive reevaluation of proposals already eliminated from competition, FAR 22.404-5(c)(3) is amended by replacing “all offerors that submitted proposals” with “all offerors that have not been eliminated from the competition.”
  
  
• Item IV – Least Developed Countries that are Designated Countries: This final rule adds Liberia to, and removes Cape Verde from, the definition of “least developed country” in FAR 52.225-5, Trade Agreements, and FAR 52.225-11, Buy American Act–Construction Materials Under Trade Agreements.
  
  
• Item V – Federal Food Donation Act of 2008: This interim rule adds FAR Subpart 26.4, Food Donations to Nonprofit Organizations, and FAR 52.226-6, Promoting Excess Food Donation to Nonprofit Organizations, to encourage federal agencies and their contractors to donate excess food to nonprofit organizations serving the needy. FAR 52.226-6 is to be included in all solicitations and contracts greater than $25,000 for the provision, service, or sale of food in the United States. However, FAR 31.205-1, Public Relations and Advertising Costs, is amended to make all costs associated with such donations unallowable.
  
  Comments on this interim rule must be submitted no later than May 18, 2009, by any of the means identified above, except identify the comments as “FAC 2005-31, FAR case 2008-017.”

GAO Seeks Help in Fighting Recovery Act Waste, Fraud

The Government Accounting Office (GAO) is urging private citizens, government workers, contractors, and others to assist in fighting waste, fraud, abuse, or mismanagement of Recovery Act funds by reporting to FraudNet. FraudNet is available at http://www.gao.gov/fraudnet/fraudnet.htm; by calling 1-800-424-5454 (an automated answering system); by sending an e-mail to fraudnet@gao.gov; by sending a fax to 202-512-3086; or by writing to GAO FraudNet, 441 G Street, NW, Mail Stop 4T21, Washington, DC 20548.

“Congress and the President have insisted on accountability and transparency over Recovery Act funds, and we at GAO are taking steps to help ensure that accountability. The public can help to identify improper activities or weaknesses in programs that warrant scrutiny. FraudNET can play an important role in alerting GAO, potentially early on, to questionable uses of Recovery Act funds,” said Gene L. Dodaro, Acting Comptroller General of the United States and head of the GAO.

Evidence or suspicions of abuse may be provided anonymously and GAO treats all inquiries confidentially. Internet information is transmitted over a secure connection. Tipsters are asked to provide as much detail as possible about their allegations. GAO may refer allegations for follow-up to its own investigative units, appropriate inspector general offices, or to the Justice Department. Past reports of alleged mismanagement and wrongdoing have covered topics as varied as the misappropriation of funds, security violations, and contractor fraud.

Omnibus Appropriations Act Addresses Insourcing

Public Law 111-8, the Omnibus Appropriations Act of 2009, which provided $410 billion to fund most civilian agencies through the rest of fiscal year 2009, contains three provisions that address federal contracting issues:

• Section 522 of Division D, Title V, prohibits the Small Business Administration (SBA) from implementing “the rule relating to women-owned small business federal contract assistance procedures published in the Federal Register on October 1, 2008 (see the November 2008 Federal Contracts Perspective article “Women-Owned Business Assistance Program Instituted”).
  
  
• Section 736 of Division D, Title IV, requires agencies to “devise and implement guidelines and procedures to ensure that consideration is given to using, on a regular basis, federal employees to perform new functions and functions that are performed by contractors and could be performed by federal employees.” These guidelines and procedures are to give special consideration to using federal employees to perform any function that:
  
  

  	“(A) is performed by a contractor and—
  		“(i) has been performed by federal employees at any time during the previous 10 years;
  		“(ii) is a function closely associated with the performance of an inherently governmental function;
  		"(iii) has been performed pursuant to a contract awarded on a non-competitive basis; or
  		“(iv) has been performed poorly, as determined by a contracting officer during the 5-year period preceding the date of such determination, because of excessive costs or inferior quality; or
  	"(B) is a new requirement, with particular emphasis given to a new requirement that is similar to a function previously performed by federal employees or is a function closely associated with the performance of an inherently governmental function.”

  
  
• Section 737 of Division D, Title IV, prohibits the beginning or announcing of “a study or public-private competition regarding the conversion to contractor performance of any function performed by federal employees pursuant to Office of Management and Budget (OMB) Circular A-76 [Performance of Commercial Activities] or any other administrative regulation, directive, or policy.”

DOD Ordered to Cease Giving Preference to SDBs

Upon receiving the final decision from the U.S. District Court for the Western District of Texas in the case Rothe Development Corporation v. Department of Defense and Department of the Air Force, the Department of Defense (DOD) Under Secretary for Acquisition, Technology and Logistics (AT&L) John Young, Jr. directed that any action that relies “exclusively on the authority of 10 U.S.C. §2323 should cease” as of February 26, 2009, the date of the District Court’s final decision.

DOD was authorized to give small disadvantaged businesses (SDBs) a 10% evaluation preference by 10 U.S.C. §2323. However, this provision was found to be unconstitutional by the United States Court of Appeals for the Federal Circuit, which returned the case to the District Court with orders to enter judgment. The District Court ordered that the application of 10 U.S.C. §2323 cease, and the Under Secretary issued the memo directing immediate cessation.

For more information on the Rothe Development case, see the January 2009 Federal Contracts Perspective article “Court Strikes Down DOD’s Small and Disadvantaged Business Contract Goal,” and the March 2009 Federal Contracts Perspective article “DOD Suspends SDB Evaluation Adjustment One More Year.”

Labor Rescinds Regs on Notification of Employees

To comply with President Obama’s Executive Order 13296, Notification of Employee Rights Under Federal Labor Laws, which rescinded President Bush’s Executive Order 13201, the Department of Labor (DOL) has rescinded Title 29 of the Code of Federal Regulations, Part 470, Obligations of Federal Contractors and Subcontractors; Notice of Employee Rights Concerning Payment of Union Dues or Fees. Executive Order 13201, and the implementing 29 CFR Part 470, required contractors and subcontractors to post notices alerting nonunion employees that they cannot be forced to pay fees to unions to support activities not related to collective bargaining, such as contributions to support political candidates. However, because Executive Order 13296 rescinded Executive Order 13201, DOL no longer had authority to enforce those regulations, so DOL has removed those regulations.

Besides rescinding Executive Order 13201, Executive Order 13296 directs that a clause be included in all contracts exceeding the simplified acquisition threshold ($100,000), and all subcontracts of such contracts, that requires the contractor (or subcontractor) “to post a notice, of such size and in such form, and containing such content as the Secretary of Labor shall prescribe, in conspicuous places in and about its plants and offices where employees covered by the National Labor Relations Act engage in activities relating to the performance of the contract...” The National Labor Relations Act gives workers the right to organize and bargain collectively.

For more on Executive Order 13296, see the March 2009 Federal Contracts Perspective article “Obama Issues Four Labor-Related Executive Orders.” For more on Executive Order 13201, see the March 2001 Federal Contracts Perspective article “Bush Issues Three Acquisition-Related Orders Involving Labor Issues in FAR Part 22.”

Approved Nonmanufacturer Rule Waivers to be Reviewed

The Small Business Administration (SBA) is conducting a periodic review of approved class waivers from the Nonmanufacturer Rule for products in effect as of March 17, 2009, to determine if there are any small business manufacturers or processors for the products on the list of approved class waivers. Nonmanufacturer waivers are granted when no small business manufacturers are supplying the classes of products to the government. When a nonmanufacturer waiver is granted, small businesses dealers are allowed to supply the products of any manufacturer on a federal contract set aside for small businesses, service-disabled veteran-owned small businesses or participants in SBA’s 8(a) program.

A list of products on SBA’s List of Approved Class Waivers is included in the March 26, 2009, Federal Register notice at http://edocket.access.gpo.gov/2009/pdf/E9-6741.pdf.

Comments and source information must be submitted by April 27, 2009, to Edith G. Butler, Program Analyst, by telephone at 202-619–0422; by FAX at 202-481–1788; or my e-mail at Edith.Butler@sba.gov.

One Nonmanufacturer Rule Waiver Terminated

The SBA is terminating 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.

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

For more on the proposal to terminate the waiver, see the March 2009 Federal Contracts Perspective article “Termination of Nonmanufacturer Rule Waiver Proposed.”

Several Nonmanufacturer Rule Waivers Proposed

On the other hand, the SBA is proposing to waive the nonmanufacturer rules for the following industries:

• Conductor and cable (aluminum), North American Industry Classification System (NAICS) code 331319, product service code (PSC) 6145
  
  
• Conductor and control cable (copper), NAICS code 331422, PSC 6145
  
  
• Truck trailer manufacturing, NAICS code 336212, PSC 2330
  
  
• All-terrain vehicles (ATVs), wheeled or tracked, manufacturing; snowmobiles and parts; off-road all terrain vehicles (ATVs); and wheeled or tracked Manufacturing, NAICS code 336999, PSC 2330
  
  
• Noncurrent-carrying wiring device manufacturing – dead end tees and connectors, guy strain and link assemblies, bolts, washers, turnbuckles, twisted clips, steel angle assemblies, yoke plates, compression T connectors, press dies, anchor shackles, and clevis ball and clevis sockets, yoke plates and grounding clamps, NAICS code 335932, PSC 5975

SBA is inviting the public to comment on these proposed waivers by March 24, 2009, to Edith G. Butler, Program Analyst, Small Business Administration, Office of Government Contracting, 409 3rd Street, SW, Suite 8800, Washington, DC 20416.

One Rewritten GSAR Part Finalized, Another Proposed

The General Services Administration (GSA) continues its GSA Acquisition Regulation (GSAR) rewrite, finalizing GSAR Part 509, Contractor Qualifications, and proposing a rewritten GSAR Part 523, Environment, Conservation, Occupational Safety and Drug-Free Workplace.

• GSAR Part 509: This final rule revises GSAR Part 509 to make the following changes:
  
  
  • GSAR 509.105-1, Obtaining Information, is revised to remove the explanation of “auditor” because it is partly duplicative (credit and finance) and too restrictive (it does not allow use of the Defense Contract Audit Agency (DCAA).
    
    
  • GSAR 509.106, Preaward Surveys, and GSAR 509.106-2, Requests for Preaward Surveys, are removed because GSA Form 353, Performance Evaluation and Facilities Report, is deletion so that FAR forms SF 1403 through 1406 are used instead.
    
    
  • The following are deleted because they are unnecessary: GSAR Subpart 509.2, Qualifications Requirements; paragraph (b) of GSAR 509.405-1, Continuation of Current Contracts; GSAR 552.209-70, Product Removal from Qualified Products List; GSAR 552.209-71, Waiver of First Article Testing and Approval Requirement; GSAR 552.209-72, Supplemental Requirements for First Article Approval – Contractor Testing; and GSAR 552.209-73, Supplemental Requirements for First Article Approval – Government Testing. Also, because GSAR 552.209-72 and GSAR 552.209-73 are removed, GSAR 509.308, Contract Clauses, is removed since it consists of prescriptions for those clauses.
    
    
  • GSAR 509.401, Applicability, is revised to update the debarment legal authorities.
    
    
  • Paragraph (b)(7) of GSAR 509.406-3, Procedures, is deleted as duplicative of paragraph (b)(5).
    
    
  • GSAR 509.406-3(d) is rewritten to incorporate the procedures for conducting fact-finding in a debarment or suspension case from GSA Acquisition Letter V-08-06, Changes to Procedures for Conducting Fact-Finding in a Debarment/Suspension Case Under GSAM Subpart 509.4, June 20, 2008. This acquisition letter was after the publication of the proposed rule, so it was incorporated into the final rule without public comments.
    
    
  • The term “Suspension and Debarment Official” is used throughout GSAR Part 509.
  
  Five respondents submitted comments on the proposed rule, but no changes were made to the final rule as a result of those comments. The most significant difference between the proposed and final versions of GSAR Part 509 was the incorporation of GSA Acquisition Letter V-08-06. For more on the proposed rule, see the July 2008 Federal Contracts Perspective article “GSAR Undergoing Rewrite.”
  
  
• GSAR Part 523: This proposed rule would revise GSAR Part 523 as follows:
  
  
  • The title of GSAR Part 523 would be changed from “Environment, Conservation, Occupational Safety and Drug-Free Workplace” to “Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and Drug-Free Workplace” to correspond to the title of FAR Part 23.
    
    
  • The title of GSAR Subpart 523.3 would be changed from “Hazardous Materials Identification and Material Safety Data” to “Hazardous Material Identification and Material Safety Data” to correspondent to the title of FAR Subpart 23.3.
    
    
  • GSAR 552.223-70, Hazardous Substances, would be replaced by two new hazardous materials clauses: GSAR 552.223-70, Preservation, Packaging, Packing, Marking and Labeling of Hazardous Materials (HAZMAT) for Export Shipment, and GSAR 552.223-73, Preservation, Packaging, Packing, Marking and Labeling of Hazardous Materials (HAZMAT) for Domestic Shipment. GSAR 552.223-72 would require compliance by contractors with the International Maritime Dangerous Goods (IMDG) Code, the Occupational Safety and Health Regulation, and the applicable Modal Regulation. Also, the clause would require contractors to comply with the requirements of the Air Force Inter-Service Manual (AFIM) 24-204 for military aircraft shipments. GSAR 552.223-73 would require compliance by contractors with the U.S. Department of Transportation Hazardous Material Regulation and the Occupational Safety and Health Administration Regulation.
    
    
  • GSAR 552.212-72, Contract Terms and Conditions Required to Implement Statutes or Executive Orders Applicable to GSA Acquisition of Commercial Items, would be updated to include GSAR 552.223-72 and GSAR 552.223-73.
  
  Comments on the proposed rule must be submitted by May 19, 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 2006-G506.”

DOE Issues Rule Promoting Energy-Efficient Products

The Department of Energy (DOE) has issued a final rule that establishes guidelines for compliance by federal agencies with the provisions of the Energy Policy Act of 2005 (Public Law 109-58), which added Section 553 to the National Energy Conservation Policy Act (NECPA). Section 553 requires federal agencies to procure ENERGY STAR qualified and Federal Energy Management Program (FEMP) designated products in procurements involving energy consuming products and systems. NECPA Section 553 authorizes the head of agency to invoke either of two exceptions to this requirement: (1) an ENERGY STAR qualified product or FEMP designated product is not cost-effective over the life of the product taking energy cost savings into account; or (2) no ENERGY STAR qualified product or FEMP designated product is reasonably available that meets the functional requirements of the agency.

The final rule amends Title 10 of the Code of Federal Regulations (CFR), Energy; Chapter 436, Federal Energy Management and Planning Programs, to add Subpart C, Agency Procurement of Energy Efficient Products, which consists of Sections 436.40, Purpose and Scope; 436.41, Definitions; 436.42, Evaluation of Life-Cycle Cost Effectiveness; and 436.43, Procurement Planning.

• Section 436.42 states that ENERGY STAR qualified and FEMP designated products may be assumed to be life-cycle cost-effective, and suggests that agencies making a determination that a covered product is not life-cycle cost-effective should rely on the life-cycle cost analysis method in 10 CFR Part 436, Subpart A, Methodology and Procedures for Life Cycle Cost Analyses (Sections 436.10 though 436.24).
  
  
• Section 436.43 states that:
  
  
  1. Agencies should consider the procurement planning requirements of Section 553 of the NECPA as applying to: (1) design, design/build, renovation, retrofit and services contracts; facility maintenance and operations contracts; (2) energy savings performance contracts and utility energy service contracts; and (3) if applicable, lease agreements for buildings or equipment, including build-to-lease contracts.
     
     
  2. Agencies should require the procurement of ENERGY STAR and FEMP designated products in new service contracts and other existing service contracts as they are recompeted and should, to the extent possible, incorporate such requirements and preferences into existing contracts as they are modified or extended through options.
     
     
  3. Agencies should include criteria for energy efficiency that are consistent with the criteria used for rating qualified products in the factors for the evaluation of: (1) offers received for procurements involving covered products, and (2) offers received for construction, renovation, and services contracts that include provisions for covered products.
     
     
  4. Agencies should notify their vendors of the requirements for energy efficient purchasing.

Thirteen respondents submitted comments on the proposed rule. The most significant difference between the proposed and final rules is the final rule does not include a requirement for each agency to report on its progress toward implementing the procurement requirements of Section 553 in its annual report on energy management to the president. The report would have been required to include: (1) the number of covered products excepted by the head of the agency; (2) the value of the excepted procurements; (3) a description of the products for which exceptions were granted; and (4) the reasons the exceptions were granted. However, after considering comments opposing the reporting requirement, “DOE recognizes that there are several existing reporting requirements through which DOE can obtain information on exceptions found under Section 533 of NECPA, without the need to establish a separate reporting requirement through regulation. Specifically, federal agencies are currently required to provide information for DOE's annual report on energy use and the Office of Federal Procurement Policy’s annual report on green purchasing requirements. DOE will coordinate with the Office of Management and Budget to incorporate information regarding the finding of exemptions under Section 533 of NECPA as part of the data collected for the these annual reports. By relying on existing reporting schemes, DOE avoids any potential redundancy in reporting requirements for Federal agencies. Therefore, DOE is not establishing a reporting requirement in today's final rule.”

For more on the proposed rule, see the July 2007 Federal Contracts Perspective article “DOE Proposes Regs for Energy Efficient Products.”

DHS Proposes Prohibiting Guard Services by Felons

The Department of Homeland Security (DHS) is proposing to amend its Homeland Security Acquisition Regulation (HSAR) to add HSAR 3009.171 and HSAR 3052.209-XX, both titled “Prohibition on Federal Protective Service [FPS] Guard Services Contracts with Business Concerns Owned, Controlled, or Operated by an Individual Convicted of a Felony,” to implement the Federal Protective Service Guard Contracting Reform Act of 2008 (Public Law 110-356).

The rule proposes that serious felonies that cast doubt on the integrity or business ethics of a business concern will disqualify a business from being awarded an FPS contract for guard services. HSAR 3009.171-5, Serious Felonies Prohibiting Award, provides the following as examples of serious felony convictions: fraud arising out of a contract with the federal, state or local government; bribery, graft or a conflict of interest; threatened or actual harm to a government official, family member or government property; crimes of violence; threat to national security; commercial bribery; counterfeiting, forgery, or trafficking in vehicles in vehicles the identification numbers of which have been altered; obstruction of justice, perjury or subornation of perjury, or bribery of a witness; felony for attempt to evade or defeat federal tax or felony for willful failure to collect or pay over federal tax.

HSAR 3052.209-XX(f) would require the offeror to disclose whether it is or is not a business concern owned, controlled, or operated by an individual convicted of a felony. If an offeror represents that it is owned, controlled, or operated by an individual convicted of a felony, it will need to submit an “award request” providing the basis for the request and details regarding the felony conviction (paragraph (d)). The information in the award request would include: the name and date of birth of the individual convicted of a felony; the age of the conviction, nature, and circumstances surrounding the conviction; protective measures taken by the individual or business concern to reduce or eliminate the risk of further misconduct, whether the individual has made full restitution for the felony; and whether the individual has accepted responsibility for past misconduct resulting in the felony conviction (paragraph (d)(4)). “If the contracting officer, in his or her sole discretion, is unable to affirmatively determine that the subject felony is not a serious felony as defined by this regulation, or that such individual no longer owns, controls or operates the business concern, the contracting officer shall deny the award request” (paragraph (d)(2)).

In addition, paragraph (h) of the clause would provide that, after award of an indefinite delivery/indefinite quantity (IDIQ) contract, blanket purchase agreement (BPA), or other contractual instrument that may result in the issuance of task orders, calls, or exercise of options to extend the term of the contract, the contractor must provide notice of a felony conviction of any person who owns, controls, or operates the business concern. The contracting officer would review the conviction and make a new determination of eligibility prior to the issuance of any task order, call, or exercise of any option.

Finally, paragraph (e) of HSAR 3009.171-6, Guidelines for Contracting Officers, would allow the contracting officer to review the basis for the award request and assess the risk associated with the felony conviction. The contracting officer could award a contract for guard services to a business concern owned, controlled, or operated by an individual convicted of a felony if the contracting officer determines “that the conviction of an otherwise serious felony is of such age, or committed under such circumstances, that the underlying felonious misconduct no longer calls into question the individual or business concern's integrity or business ethics, or that it is not inconsistent with the mission of the Federal Protective Service.” Prior to such an award, the contracting officer would have to obtain the approval of the Head of the Contracting Activity for U.S. Immigration and Customs Enforcement (ICE).

Comments on the proposed rule must be submitted no later than April 17, 2009, by either of the following means: (1) eRulemaking Portal: http://www.regulations.gov; or (2) by mail to: Department of Homeland Security, Office of the Chief Procurement Officer, Acquisition Policy and Legislation, ATTN: Gloria Sochon, 245 Murray Drive, Bldg. 410 (RDS) Washington, DC 20528. Identify comments as “DHS-2009-0017.”

Return to the Newsletters Library.

Return to the Main Page.