Panoptic Enterprises'


Federal Acquisition Developments, Guidance, and Opinions

June 2010
Vol. XI, No. 6


DOD Implements Restriction on Contractor Use of Mandatory Arbitration Agreements
DOD Publishes Five Proposed Rules, Two Deviations
FAR Changes Proposed on Terminations, ID Verifications
Information on Enhancing Transparency Sought
One Nonmanufacturer Rule Waiver Proposed, One Denied

DOD Implements Restriction on Contractor Use
of Mandatory Arbitration Agreements

The Department of Defense (DOD) is amending the Defense Federal Acquisition Regulation Supplement (DFARS) to add DFARS Subpart 222.74, Restrictions on the Use of Mandatory Arbitration Agreements, to implement Section 8116 of the DOD Appropriations Act for Fiscal Year 2010 (Public Law 111-118). Section 8116 restricts the use of mandatory arbitration agreements when using funds appropriated by Public Law 111-118 to award contracts that exceed $1,000,000 (including task or delivery orders and bilateral modifications adding new work), if the contractor restricts its employees or independent contractors to arbitration for claims “under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” This rule does not apply to the acquisition of commercial items, including commercially available off-the-shelf items.

Among the key provisions of DFARS Subpart 222.74 are the following:

The following are examples included in the preface to the interim rule intended to provide help determining applicability of the rule:

Comments on the interim rule must be submitted no later than July 19, 2010, identified as “DFARS Case 2010-D004,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) e-mail: dfars@osd.mil; (3) fax: 703-602-0350; or (4) mail: Defense Acquisition Regulations Council, Attn: Julian E. Thrash, OUSD (AT&L) DPAP (DARS), 3060 Defense Pentagon, Room 3B855, Washington, DC 20301-3060.

DOD Publishes Five Proposed Rules, Two Deviations

The Department of Defense proposed five changes to the Defense FAR Supplement (DFARS) during May, issued one FAR deviation and proposed another, and issued a memorandum regarding compliance with the Small Business Administration’s (SBA’s) regulations providing “parity” among small business programs. In addition, the Navy is proposing to implement a “preferred supplier program.”

FAR Changes Proposed on Terminations, ID Verifications

The Civilian Agency Acquisition Council (CAAC) and the Defense Acquisition Regulations Council (DARC) have issued proposed revisions to the FAR that would clarify the use of the termination for convenience clause and reinforce the requirement of collecting identifications from contractor personnel once they are no longer supporting a contract.

Information on Enhancing Transparency Sought

The CAAC and the DARC are seeking information that will assist in determining how best to amend the FAR to enable public posting of contract actions without compromising contractors’ proprietary and confidential commercial or financial information should such posting become a requirement in the future. This transparency effort is intended to promote efficiency in government contracting through an open acquisition process and improve federal spending accountability consistent with the president’s January 21, 2009, memorandum to agency heads titled “Transparency and Open Government.”

The two councils anticipate that, in the future, a requirement to post the text of contracts and task and delivery orders on-line will be instituted. The councils are considering how best to revise the FAR to facilitate such posting without violating statutory and regulatory prohibitions against disclosing protected information belonging to the government or contractors.

The councils are particularly interested in suggestions that will facilitate uniform, consistent processing methods that are fair and equitable as well as cost effective and efficient, while at the same time simplifying access to acquisitions once posted. The councils are mindful of the need to protect the government’s classified information (see FAR Subpart 4.4, Safeguarding Classified Information Within Industry), the protections afforded contractor information under the Freedom of Information Act (FOIA) procedures (see FAR Subpart 24.2, Freedom of Information Act), and FAR 3.104-4, Disclosure, Protection, and Marking of Contractor Bid or Proposal Information and Source Selection Information, which addresses the marking of contractor information.

“It may not be practical to apply FOIA procedures before posting in every case. The councils are looking into methods for identifying the types of information that should not be posted or released to the public, as well as means for electronic processing and posting, and development of provision or clause requirements for successful offerors to provide a redacted copy of the contract. The councils are also requesting suggestions for how best to protect the types of information through redacting, locating all such information in a standard place in the contract, or other possible methods to be considered.”

Comments on the proposed rulemaking must be submitted no later than July 12, 2010, identified as “FAR Case 2009-009,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail: General Services Administration, FAR Secretariat (MVCB), 1800 F Street, NW, Room 4041, Attn: Hada Flowers, Washington, DC 20405. Respondents are encouraged to address the benefits of this transparency effort as well as possible impacts on offerors’ and the government’s business systems, dollar thresholds for application, and other cost impacts, especially on proposal preparation. Also, responses to this notice should address whether a public meeting on this topic would be beneficial and, if so, what issues should be addressed.

One Nonmanufacturer Rule Waiver Proposed, One Denied

The Small Business Administration (SBA) is proposing to waive the nonmanufacturer rule for herbicides, insecticides, and fungicides under North American Industry Classification System (NAICS) code 325320, Pesticide and Other Agricultural Chemical Manufacturing, Product Service Code (PSC) 6840, Pest Control Agents and Disinfectants. SBA is inviting the public to comment on this proposed waiver or to provide information on potential small business sources for these products by June 3, 2010, to Amy Garcia, Program Analyst, Small Business Administration, Office of Government Contracting, 409 3rd Street, SW, Suite 8800, Washington, DC 20416.

In addition, the SBA has decided not to issue a nonmanufacturer rule waiver for improved outer tactical vests and related accessories under NAICS code 339113, Surgical Appliance and Supplies Manufacturing, PSC 8470, Armor Personal, because SBA received multiple comments from small business manufacturers and distributors that have been awarded prime contracts or have submitted offers within the past 24 months (for more on the proposal to waive the nonmanufacturer rule for improved outer tactical vests, see the May 2010 Federal Contracts Perspective article “Tactical Vest Nonmanufacturer Rule Waiver 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 Section 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.

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