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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


July 2010
Vol. XI, No. 7

CONTENTS


FAC 2005-42 Addresses Disclosure of Noncompetitive Contract Justifications, Recovery Act
A Plethora of Changes to DFARS in June
Nonmanufacturer Rule Waived for LPG
Prompt Payment Interest Rates Set at 3 1/8%
DOE Proposes to Update DEAR
DHS Finalizes Textiles Rule, Proposes Emergency Limits
OMB Orders Halt to Financial Systems Acquisitions



FAC 2005-42 Addresses Disclosure of Noncompetitive
Contract Justifications, Recovery Act

Federal Acquisition Circular (FAC) 2005-42 is a big hodgepodge with 11 rules: three finalize interim rules addressing Public Law 111-5, the American Recovery and Reinvestment Act (Recovery Act); three address Cost Accounting Standards and allowable costs; two address foreign acquisitions; and the other three address the Electronic Subcontracting Reporting System, market research, and public disclosure of justifications for noncompetitive contracts.



A Plethora of Changes to DFARS in June

The Department of Defense (DOD) was very busy during June. Besides finalizing the interim rule that added Taiwan as a “designated country” to the list of World Trade Organization Government Procurement Agreement countries in the Defense FAR Supplement (DFARS) (see the previous article), it issued four other final rules amending the DFARS, five interim rules, two proposed rules, one FAR class deviation, and four memoranda providing guidance, instruction, and directions on DOD acquisition-related matters.



Nonmanufacturer Rule Waived for LPG

The Small Business Administration (SBA) is waiving the nonmanufacturer rule for liquid propane gas (LPG), North American Industry Classification System (NAICS) code 325120, Product Service Code (PSC) 6830, Compressed and Liquefied Gases.

There were two requests for comments on the proposed waiver. The first request was made on January 12, 2010 (see the February 2010 Federal Contracts Perspective article “Nonmanufacturer Rule Waiver Proposed for Liquified Gases”), but it stated the nonmanufacturing rule waiver was being considered for “compressed and liquefied gases.” After reviewing the responses to the January 12, 2010, request, SBA concluded that it should have been more specific, so it issued a second request for comments on the proposed waiver of the nonmanufacturing rule for LPG (see the April 2010 Federal Contracts Perspective article “Liquid Propane Gas Nonmanufacturer Waiver Proposed”). No comments were submitted in response to the second request, so the waiver is granted.

In addition, the SBA is proposing a class waiver of the nonmanufacturer rule for configured tape library storage equipment under North American Industry Classification System (NAICS) code 334112, Computer Storage Device Manufacturing, Product Service Code (PSC) 7025, Automated Data Processing (ADP) Input/Output and Storage Devices, PSC 7035, ADP Support Equipment, and PSC 7045 ADP Supplies. 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 22, 2010, to Edith 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 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.



Prompt Payment Interest Rates Set at 3 1/8%

The Treasury Department has established 3 1/8% (3.125%) as the interest rate for the computation of payments made between July 1 and December 31, 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 (January 1, 2010, through June 30, 2010), was 3 1/4% (3.25%). The interest rate for July 1, 2009, through December 31, 2009, was 4 7/8% (4.875%).

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.



DOE Proposes to Update DEAR

The Department of Energy (DOE) is proposing to update the DOE Acquisition Regulation (DEAR) to make changes to conform to the FAR, remove out-of-date coverage, and to update references.

The DEAR parts that would be affected by these two proposed rules are:

In addition, a new DEAR Part 924, Protection of Individual Privacy, would be added.

None of these changes are substantive or of a nature to cause any significant expense for DOE or its contractors.

Also, DEAR Parts 919 and 926 will have another proposed rule to cover additional changes.

Comments on the proposed changes to DEAR Parts 919 through 952 must be submitted no later than July 15, 2010, identified as “DEAR: Subchapter I and RIN 1991-AB91,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) e-mail: DEARrulemaking@hq.doe.gov; or (3) mail: Mail to: U.S. Department of Energy, Office of Procurement and Assistance Management, MA-611, 1000 Independence Avenue, SW, Washington, DC 20585.

Comments on the proposed changes to DEAR Part 970 must be submitted no later than July 9, 2010, identified as “DEAR: Subchapter D and RIN 1991-AB87,” by any of the methods mentioned above.



DHS Finalizes Textiles Rule, Proposes Emergency Limits

The Department of Homeland Security (DHS) is finalizing, without changes, the interim rule that implemented restrictions on its acquisition of certain clothing and other textile products directly related to the national security interests of the United States. In addition, DHS is proposing to implement a statutory requirement limiting the use of subcontractors on cost-reimbursement type contracts to facilitate the response to or recovery from a natural disaster or act of terrorism or other man-made disaster.



OMB Orders Halt to Financial Systems Acquisitions

Peter Orszag, the director of the Office of Management and Budget (OMB), has directed most federal agencies to refrain from awarding new task orders or contracts for financial system modernization projects pending review and approval by OMB.

“Federal Information Technology (IT) projects too often cost more than they should, take longer than necessary to deploy, and deliver solutions that do not meet our business needs,” wrote Orszag. “Although these problems exist across our IT portfolio, financial systems modernization projects in particular have consistently underperformed in terms of cost, schedule, and performance.”

The memorandum applies to agencies subject to the Chief Financial Officers (CFO) Act: the Cabinet agencies; Agency for International Development; Environmental Protection Agency; General Services Administration; National Aeronautics and Space Administration; National Science Foundation; Nuclear Regulatory Commission; Office of Personnel Management; Small Business Administration; and Social Security Administration.

The memorandum states that OMB’s reviews of financial projects will be based on the following principles:

Attached to the memorandum is a financial system template that all covered agencies will use to provide revised project plans that clearly outline the project’s strategy for reducing costs, shortening the project timeline, and reducing risks.

The following is the schedule for financial system reviews:



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