Panoptic Enterprises'


Federal Acquisition Developments, Guidance, and Opinions

January 2010
Vol. XI, No. 1


FAC 2005-38 Mandates IPv6, Addresses Postretirement Benefits and Travel Costs
Thresholds for Trade Agreements Adjusted
Prompt Payment Interest Rate Set At 3 1/4%
Slew of DOD Memos and DFARS Changes
OMB Issues More Guidance on Recovery Act Reporting
Sole Source Contracts for Veteran-Owned Businesses

FAC 2005-38 Mandates IPv6, Addresses
Postretirement Benefits and Travel Costs

Federal Acquisition Circular (FAC) 2005-38 makes several important changes to the Federal Acquisition Regulation (FAR), the most significant probably being the mandate that the government use Internet Protocol Version 6 (IPv6) products. Two of the changes in FAC 2005-38 address cost principles: postretirement benefits and travel costs. The three other changes involve the removal of FAR Subpart 22.16, address governmentwide commercial purchase card restrictions for Treasury Offset Program (TOP) debts, and finalize the interim rule that implemented the Federal Food Donation Act of 2008.

Thresholds for Trade Agreements Adjusted

The United States Trade Representative (USTR) is required to set U.S. dollar thresholds for the application of various trade agreements. The USTR has decided to increase the following thresholds for trade agreements (see FAR Subpart 25.4, Trade Agreements) (previous thresholds in parentheses):

Prompt Payment Interest Rate Set At 3 1/4%

The Treasury Department has established 3 1/4% (3.25%) as the interest rate for the computation of payments made between January 1 and June 30, 2010, 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 (July 1, 2009, through December 31, 2009), was 4 7/8% (4.875%). The interest rate for January 1, 2009, through June 30, 2009, was 5 5/8% (5.625%).

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.

Slew of DOD Memos and DFARS Changes

The Department of Defense (DOD) was busy during December, issuing four final rules, two Defense FAR Supplement (DFARS) deviations, one FAR deviation, and four memoranda providing direction or making announcements.

OMB Issues More Guidance on Recovery Act Reporting

The Office of Management and Budget (OMB) issued a memorandum addressing reporting under Section 1512 of the American Recovery and Reinvestment Act (Public Law 111-5). With the subject “Improving Compliance in Recovery Act Recipient Reporting,” this memorandum from the OMB Director states:

“While the response rate for the first quarter of required reporting demonstrates that a significant majority of recipients reported timely and complete reports, a preliminary review of FederalReporting.gov data indicates that a number of recipients have not filed as required by Section 1512 of the Recovery Act and OMB guidance. In order to provide the public with the transparency and accountability envisioned by the Recovery Act, we must take steps to ensure all recipients understand their reporting obligations and the consequences of non-compliance.

“Recipients who have failed to submit a Section 1512 report as required by the terms of their award are considered to be non-compliant. Non-compliant recipients, including those who are persistently late or negligent in their reporting obligations, are subject to federal action, up to and including the termination of federal funding or the ability to receive federal funds in the future...Beginning immediately, and consistent with these existing terms and polices, federal departments and agencies must take the following actions to improve compliance with Section 1512 recipient reporting:
           “1. Identify non-compliant recipients…
           “2. Determine an appropriate outreach method and establish contact with each recipient who failed to report by the quarterly deadline…
           “3. Assess the severity of the non-compliance and the circumstances surrounding the non-compliance. From this assessment, federal departments and agencies are to determine the need, if any, for future action regarding each non-filing recipient…

“If the non-compliance appears to be fraudulent, federal departments and agencies are to refer the matter to other appropriate agency officials such as the officer responsible for criminal investigation.”

Sole Source Contracts for Veteran-Owned Businesses

The Department of Veteran Affairs (VA) issued a final rule implementing portions of the Veterans Benefits, Health Care and Information Technology Act of 2006 (Public Law 109-461), and Executive Order 13360, Providing Opportunities for Service-Disabled Veteran Businesses To Increase Their Federal Contracting and Subcontracting. The act and the executive order authorize the VA to establish special methods for contracting with service-disabled veteran-owned small businesses (SDVOSBs) and veteran-owned small businesses (VOSB). Under this final rule, a VA contracting officer may restrict competition to contracting with SDVOSBs or VOSBs under certain conditions. Likewise, sole source contracts with SDVOSBs or VOSBs are permissible under certain conditions. In addition, a mentor-protégé program in which the protégés are restricted to SDVOSBs and VOSBs is established.

New VA Acquisition Regulation (VAAR) Subpart 819.70, Service-Disabled Veteran-Owned and Veteran-Owned Small Business Acquisition Program, consists of the following:

New VAAR Subpart 819.71, VA Mentor-Protégé Program, consists of the following:

Ninety-seven (97) respondents submitted comments on the proposed rule. As a result, the following changes were made to the final rule:

Finally, proposed VAAR 819.307, Protests, stated that VA would utilize SBA to consider and decide SDVOSB and VOSB status protests. This requires VA and SBA to execute an interagency agreement. However, negotiations of this interagency agreement have not yet been finalized, so VA has amended VAAR 819.307 (now titled “SDVOSB/VOSB Small Business Status Protests”) with an interim rule to provide that VA’s Executive Director, OSDBU, will consider and decide SDVOSB and VOSB status protests until the interagency agreement is executed by the agencies.

For more on the proposed rule, see the September 2008 Federal Contracts Perspective article “VA Proposes Veteran-Owned Small Business Set-Asides.”

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