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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


August 2009
Vol. X, No. 8

CONTENTS


OMB Issues Five Memos Providing Contracting Guidance
FAC 2005-34 Addresses Past Performance Information
Prohibition on Project Labor Agreements Rescinded
Tidal Wave of DFARS Changes in July
DOD Issues Four Memos on Contracting Topics
DOD Establishes Policy on Private Security Contractors
DOD Seeks Input on Commercial Item Handbook
VA to Encourage Electronic Submission of Invoices
Prompt Payment Interest Rate Set at 4 7/8%
Safavian Conviction Upheld
HHS Proposes Mentor-Protégé Program
Nonmanufacturer Waiver Approved for 13 Watt Lamps
Technical Amendments Made to DEAR
EPA Amends Technical Direction Clause



OMB Issues Five Memos
Providing Contracting Guidance

The Office of Management and Budget (OMB) issued five memoranda on various aspects of federal contracting, several of which are follow-ups to President Obama’s March 4 memorandum on “Government Contracting.” The five memoranda provide guidance on the relationship among the 8(a) business development program, the Historically Underutilized Business Zone (HUBZone) program, and the service-disabled veteran-owned small business (SDVOSB) programs; contractor performance information; communicating with lobbyists; achieving contract savings; and managing a workforce consisting of federal employees and private contractors.



FAC 2005-34 Addresses Past Performance Information

Federal Acquisition Circular (FAC) 2004-34 consists of three rules revising the Federal Acquisition Regulation (FAR), the most significant being the one that revises the contractor performance information process.



Prohibition on Project Labor Agreements Rescinded

FAC 2005-35 implements Executive Order 13502, Use of Project Labor Agreements for Federal Construction Projects, by deleting references to the revoked Executive Order 13202. Executive Order 13202 prohibited executive departments and agencies from requiring or prohibiting federal contractors and subcontractors’ entrance into project labor agreements.

The removed references were in paragraph (c) of FAR 17.603, Limitations; paragraph (b) of FAR 22.101-1, General; and paragraph (d) of FAR 36.202, Specifications.

Executive Order 13502 encourages executive agencies to consider requiring the use of project labor agreements in connection with large scale construction projects to promote economy and efficiency in federal procurement. The term “project labor agreement” means a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project.”

Concurrently with the issuance of FAC 2005-35 was the publication of a proposed rule that would add FAR Subpart 22.5, Use of Project Labor Agreements for Federal Construction Projects, to encourage federal departments and agencies to consider requiring the use of project labor agreements for federal construction projects where the total cost to the government is more than $25 million. In addition, a new provision FAR 52.222-XX, Notice of Requirement for Project Labor Agreement, and a new clause FAR 52.222-YY, Project Labor Agreements, would be required to be included in all solicitations and contracts associated with a project if the agency determines that a project labor agreement will be required.

Comments on the proposed rule must be submitted no later than August 13, 2009, by any of the following means: (1) http://www.regulations.gov (input “FAR Case 2009-005” under the heading “Comment or Submission”; select the link “Send a Comment or Submission” that corresponds with FAR Case 2009-005; follow the instructions provided to complete the “Public Comment and Submission Form”); (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC 20405. Cite “FAR Case 2009-005” in all correspondence.

For more on Executive Order 13502, see the March 2009 Federal Contracts Perspective article “Obama Issues Four Labor-Related Executive Orders.” For more on Executive Order 13202, see the March 2001 Federal Contracts Perspective article “Bush Issues Three Acquisition-Related Orders Involving Labor Issues in FAR Part 22.”



Tidal Wave of DFARS Changes in July

A dam must have broken in July, because the Department of Defense (DOD) released 18 different rule changes to the Defense Federal Acquisition Regulation Supplement (DFARS) in July – nine final rules, five interim rules, two sets of technical amendments, and two proposed rules.



DOD Issues Four Memos on Contracting Topics

Besides issuing 18 DFARS rule changes, DOD issued four memoranda to provide direction and guidance on various contracting issues and to provide deviations to the FAR and DFARS.



DOD Establishes Policy on Private Security Contractors

DOD is adding a new 32 CFR Part 159, Private Security Contractors [PSCs] Operating in Contingency Operations, that establishes policy, assigns responsibilities and provides procedures for the selection, accountability, training, equipping, and conduct of personnel performing private security functions under a covered contract during contingency operations. It also assigns responsibilities and establishes procedures for incident reporting, use of and accountability for equipment, rules for the use of force, and a process for administrative action or the removal, as appropriate, of PSCs and PSC personnel. New 32 CFR Part 159 supplements DOD Instruction 3020.41, Contractor Personnel Authorized to Accompany the U.S. Armed Forces (http://www.dtic.mil/whs/directives/corres/pdf/302041p.pdf), which provides guidance for all DOD contractors operating in contingency operations.

DOD is publishing 32 CFR Part 159 because there is insufficient policy and guidance regulating the actions of DOD and other governmental PSCs and their movements in the operational area. It will procedurally close existing gaps in the oversight of PSCs, ensure compliance with laws and regulations pertaining to inherently governmental functions, and ensure proper performance by armed contractors. The expansion of troops in Afghanistan will result in a corresponding increase in the number of PSCs performing in that area of operations.

This part is being published as an interim final rule because of its importance. Comments on the interim final rule must be submitted no later than August 31, 2009, by either of the following means: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: Federal Docket Management System Office, 1160 Defense Pentagon, Washington, DC 20301-1160. Include “DOD-2008-OS-0125/RIN 0790-AI38” on all comments.



DOD Seeks Input on Commercial Item Handbook

DOD is in the process of updating its Commercial Item Handbook. The purpose of the Handbook is to help acquisition personnel develop sound business strategies for procuring commercial items. DOD is seeking industry input on the contents of the draft handbook, a copy of which is available at http://www.acq.osd.mil/dpap/cpic/cp/docs/draftcihandbook_06172009.doc.

Comments on the draft must be submitted no later than July 31, 2009, by either of the following means: (1) mail: Office of the Director, Defense Procurement and Acquisition Policy, Attn: OUSD(AT&L)DPAP(CPIC), 3060 Defense Pentagon, Washington, DC 20301-3060; or (2) e-mail: CI_Handbook@osd.mil.



VA to Encourage Electronic Submission of Invoices

The Department of Veterans Affairs (VA) has issued a class deviation to FAR 32.905, Payment Documentation and Process, to require the inclusion of an interim VA Acquisition Regulation (VAAR) clause in all contracts managed by VA’s Financial Services Center in Austin, TX, that allows vendors to submit invoices electronically.

FAR 32.905 states that “payment will be based on receipt of a proper invoice and satisfactory contract performance.” The phrase “receipt of a proper invoice” has generally been interpreted to mean a paper invoice. However, paper invoices are prone to errors, and the handling of paper invoices is much slower than electronic invoices. Therefore, VA has invoked the authority of the E-Government Act of 2002 to give contractors a choice of submitting invoices electronically using one of three transmission methods: (1) Electronic Invoice Presentment and Payment System; (2) American National Standards Institute (ANSI) X.12 electronic data interchange (EDI) formats; and (3) other electronic form as specified by the contract administration office and the designated agency office.

The text of the interim VAAR 852.273-76, Electronic Invoice Submission, is as follows:

     “(a) To improve the timeliness of payments and lower overall administrative costs, VA strongly encourages contractors to submit invoices using its electronic invoicing system. At present, electronic submission is voluntary and any nominal registration fees will be the responsibility of the contractor. VA intends to mandate electronic invoice submission, subject to completion of the federal rulemaking process. At present, VA is using a 3rd party agent to contact contractors regarding this service. During the voluntary period, contractors interested in registering for the electronic system should contact the VA's Financial Services Center at http://www.fsc.va.gov/einvoice.asp.”


Prompt Payment Interest Rate Set at 4 7/8%

The Treasury Department has established 4 7/8% (4.87%) as the interest rate for the computation of payments made between July 1 and December 31, 2009, under the Prompt Payment Act and the Contracts Disputes Act. This rate is also used in facilities capital cost of money calculations. The interest rate for the prior six-month period (January 1, 2009, through June 30, 2009, was 5 5/8% (5.625%). The interest rate for July 1, 2008, through December 31, 2008, was 5 1/8% (5.125%).

All prompt payment interest rates since 1980 (in six-month increments) are available at http://www.treasurydirect.gov/govt/rates/tcir/tcir_opdprmt2.htm.

FAR Subpart 32.9, Prompt Payment; FAR Subpart 33.2, Disputes and Appeals; FAR 31.205-10, Cost of Money; and Cost Accounting Standard (CAS) 9904.414, Cost of Money as an Element of the Cost of Facilities Capital, are affected by this interest rate.



Safavian Conviction Upheld

David Safavian, the former Office of Federal Procurement Policy (OFPP) administrator and former General Services Administration (GSA) chief of staff, was denied a new trial by the U.S. District Court for the District of Columbia (USDC 05-0370, July 21, 2009) on his December 2008 conviction for obstructing a GSA internal investigation and making false statements regarding his relationship with Washington lobbyist Jack Abramoff. Abramoff had provided Safavian with free transportation on a chartered jet.

The charges against Safavian involved a 2002 golf trip to Scotland on which Abramoff provided Safavian with free transportation on a chartered jet. He had asked a GSA ethics officer for an opinion on the propriety of accepting the free transportation. When asked whether Abramoff had any “business before GSA,” he said that Abramoff did not, even though Abramoff had asked Safavian for information and advice on obtaining two GSA-controlled properties. However, Safavian said this statement was true because he had interpreted “business before GSA” as pertaining to contracts.

He was convicted in 2006 and sentenced to 18 months in prison, but that conviction was overturned in June 2008, and he was retried and reconvicted in December 2008. Safavian subsequently moved that either he be acquitted or granted a new trial, but both motions were denied by the U.S. District Court. “The Court finds that there was no miscarriage of justice, that no substantial error was committed and that the defendant’s substantial rights were not affected by the admission of evidence concerning the cost of the charter flight.”

For more on Safavian and his case, see the see the December 2004 Federal Contracts Perspective article "Safavian Confirmed to Head OFPP"; the October 2005 Federal Contracts Perspective article "OFPP Chief Arrested for Making False Statements"; the November 2005 Federal Contracts Perspective article "Former OFPP Chief Indicted for Obstruction, False Statements"; the February 2006 Federal Contracts Perspective article "Abramoff Pleads Guilty to Fraud, Tax Evasion"; the July 2006 Federal Contracts Perspective article "Former OFPP Chief Safavian Convicted, Faces Up to 20 Years in Prison"; the November 2006 Federal Contracts Perspective article “Safavian Sentenced to 18 Months in Prison”; the December 2006 Federal Contracts Perspective article “Safavian Out on Bond Pending Appeal”; the July 2008 Federal Contracts Perspective article “Safavian Conviction Overturned”; and the January 2009 Federal Contracts Perspective article “Safavian Convicted for Second Time.”



HHS Proposes Mentor-Protégé Program

The Department of Health and Human Services (HHS) Office of Small and Disadvantaged Business Utilization (OSDBU) is proposing to institute a mentor-protégé program to assist for small businesses, small disadvantaged businesses, veteran-owned small businesses, service-disabled veteran-owned small businesses, Historically Underutilized Business Zone (HUBZone) small businesses, and woman-owned small businesses to obtain HHS contracts. The program would be similar to those established by other federal agencies, such as the Department of Homeland Security and Department of Treasury.

The mentor-protégé program would motivate and encourage large business prime contractor firms to provide mutually beneficial developmental assistance with covered small businesses. Mentors would have to be large businesses, and would be required to provide appropriate developmental assistance to their protégés. In return, mentors would be eligible for the following:

Mentors would be permitted to provide the following forms developmental assistance to its protégé:

Comments on the proposed mentor-protégé program, identified as “HHS Mentor-Protégé Program”, must be received no later than 5:00 pm on August 24, 2009, by any of the following methods: (1) fax: 202-260-4872; (2) e-mail to: sbmail@hhs.gov; (3) express or overnight mail to: Department of Health and Human Services, Office of Small and Disadvantaged Business Utilization, 200 Independence Ave., SW., Hubert H. Humphrey Building, Room 360G, Washington, DC 20201; or (4) regular mail to: Department of Health and Human Services, Office of Small and Disadvantaged Business Utilization, 200 Independence Ave. SW, Hubert H. Humphrey Building, Room 360G, Washington, DC 20201.



Nonmanufacturer Waiver Approved for 13 Watt Lamps

The SBA is waiving the nonmanufacturer rule for 13 watt compact fluorescent lamps (CFLs), 26 watt CFLs, and occupancy sensors dual technology, NAICS code 335110, PSC 6240. SBA invited the public to comment on this proposed waiver or to provide information on potential small business sources for these products. No comments were submitted in response to the proposed waiver, so the waiver is granted. For more on the proposed waiver, see the July 2009 Federal Contracts Perspective article “One Nonmanufacturer Waiver Approved, One Proposed.”

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/class_waiver.pdf.



Technical Amendments Made to DEAR

The Department of Energy (DOE) is amending the DOE Acquisition Regulation (DEAR) to make technical and administrative changes, including changes to conform to the FAR’s naming and numbering conventions, correct typographical errors, remove outdated references and citations, add missing words, spell out acronyms that need to be spelled out, correct other errors of a technical nature, and improve stylistic consistency. None of these changes alter substantive rights or obligations under current law, and none will cause any added expense for DOE or its contractors.



EPA Amends Technical Direction Clause

The Environmental Protection Agency (EPA) is amending EPA Acquisition Regulation (EPAAR) 1552.237-71, Technical Direction, and its prescription at EPAAR 1537.110, Solicitation Provisions and Contract Clauses, to incorporate and supersede several class deviations to the EPAAR and to update terminology and procedures related to issuing technical direction.

This rule amends EPAAR 1552.237-71 as follows:


The clause prescription at EPAAR 1537.110 had stated that EPAAR 1552.237-71 was to be used in cost-reimbursement solicitations and contracts. The revised EPAAR 1537.110 allows contracting officers to use the clause, or a clause substantially the same, in solicitations and contracts where the contracting officer will delegate authority to issue technical direction to the COTR.

No comments were submitted in response to the proposed rule, so it is finalized without changes. For more on the proposed rule, see the April 2008 Federal Contracts Perspective article “EPA Proposes Revision to Technical Direction Clause.”





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