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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


September 2010
Vol. XI, No. 9

CONTENTS


Federal Acquisition-Related Thresholds Adjusted for Inflation
Defense Acquisition-Related Thresholds Adjusted, Too
Rule on Procurement Instrument Identifiers Proposed
Nonmanufacturer Rule Waiver Issued for Lab Equipment
Court of Federal Claims Upholds HUBZone Precedence
DIAR Rewrite Adopted as Final
GSAR Part 541 Added for Utility Services
Department of Education Proposes Reissuing EDAR



Federal Acquisition-Related Thresholds
Adjusted for Inflation

Federal Acquisition Circular (FAC) 2005-45 has one big rule and two small ones amending the Federal Acquisition Regulation (FAR). The big rule is the five-year adjustment of acquisition-related thresholds for inflation. The other two redefine “cost or pricing data” and prohibit the use of Recovery Act funds for construction materials unless all the iron, steel, and manufactured goods used in the project are produced in the United States.



Defense Acquisition-Related Thresholds Adjusted, Too

Just like the FAR, the Department of Defense (DOD) is required by Section 807 of the National Defense Authorization Act for Fiscal Year 2005 (Public Law 108-375) to adjust the acquisition-related thresholds that pertain only to the DOD every five years (these thresholds are in the Defense FAR Supplement (DFARS)). In addition, DOD issued five other rules, one proposed rule, and three memoranda on acquisition-related topics.



Rule on Procurement Instrument Identifiers Proposed

A FAR rule is being proposed that would standardize the use of unique procurement instrument identifiers (PIID) throughout the government, and would extend the requirement for using PIIDs to all solicitations, contracts, and related procurement instruments across the federal government.

Paragraph (a) of FAR 4.605, Procedures [for contract reporting], requires that “agencies must have in place a process that ensures that each PIID reported to FPDS [Federal Procurement Data System] is unique, governmentwide, and will remain so for at least 20 years from the date of contract award.” However, FAR 4.605(a) does not clearly articulate the specific policies and procedures necessary to ensure standardization of contract data beyond FPDS. This failure means there is nothing preventing one agency from using the same identification number for a financial record that another agency uses to identify its contracts in FPDS. The duplication of identification numbers would produce duplications, errors, discrepancies, and conflicting information. This problem increases for contract vehicles that are used by more than one agency.

To alleviate this potential problem, the proposed rule would add FAR Subpart 4.16, Unique Procurement Instrument Identifiers, and corresponding definitions in new FAR 4.001, Definitions:

Comments on the proposed rule must be submitted no later than October 18, 2010, identified as “FAR Case 2009-023,” 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, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC 20405.



Nonmanufacturer Rule Waiver Issued for Lab Equipment

The Small Business Administration (SBA) is waiving the nonmanufacturer rule for liquid chromatography mass spectrometry systems (CS-MS), high performance liquid chromatography (HPLC) systems, gas chromatography mass spectrometry (GC-MS) systems, and inductively coupled plasma mass spectrometry (ICP-MS) systems under NAICS code 334516, Analytical Laboratory Instrument Manufacturing, Product Service Code (PSC) 6640, Laboratory Equipment and Supplies. SBA invited the public to comment on the 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 August 2010 Federal Contracts Perspective article “Nonmanufacturer Rule Waived for Tape Library Storage.”

In addition, the SBA is proposing to waive the nonmanufacturer rule for: (1) woven and knit impregnated with flat dipped rubber/plastic gloves under North American Industry Classification System (NAICS) code 315992, Glove and Mitten Manufacturing; and (2) GEN II and GEN III image intensifier tubes, under NAICS code 333314, Optical Instrument and Lens Manufacturing, PSC 5855, Night Vision Equipment, Emitted and Reflected Radiation. SBA is inviting the public to comment on these proposed waivers or to provide information on potential small business sources for these products by September 13, 2010, to Amy Garcia, 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.



Court of Federal Claims Upholds HUBZone Precedence

The United States Court of Federal Claims (COFC) has upheld a protest that the Historically Underutilized Business Zone (HUBZone) program is granted statutory precedence over the SBA’s 8(a) program.

The case, DGR Associates, Inc. v. United States and General Trade & Services, Inc. (No. 10-396C, August 13, 2010), was an appeal by DGR of the Air Force’s refusal to comply with the Government Accountability Office (GAO) decision that the Air Force had to consider whether it could expect two or more qualified HUBZone small business concerns to submit proposals at a fair market price and, if the Air Force could expect two or more qualified HUBZone small business concerns to submit proposals at a fair market price, then it must cancel the 8(a) solicitation issue a new solicitation as a HUBZone set-aside (B-402494, DGR Associates, Inc., May 14, 2010). Because the GAO is part of the legislative branch or government and the Air Force is part of the executive branch, GAO decisions are not binding on the Air Force. The Air Force informed GAO that it would not comply with its decision sustaining DGR’s protest, and this appeal to the COFC was filed.

This is the latest in a series of GAO and COFC decisions that rest on the contrasting language in the statutes authorizing the two programs (emphasis added):

Both the GAO and the COFC have ruled that this language gives the HUBZone program precedence over the 8(a) program (and the service-disabled veteran-owned small business (SDVOSB) program, which is authorized by a statute that contains language similar to that authorizing the 8(a) program). However, both SBA and the Office of Management and Budget (OMB) have issued memoranda to contracting officers stating that the HUBZone and 8(a) programs (and the SDVOSB program) are equal – the programs have “parity.”

While the Air Force is not required to comply with GAO decisions, it is required to comply with COFC decisions. In its DGR Associates, Inc. decision, the COFC rules that “the Air Force violated the Small Business Act by complying with the SBA’s regulations, which fail to prioritize the HUBZone program over other small business programs as provided in the plain language of the Act...If the Air Force had followed the HUBZone provision as it was obligated to do by the plain statutory language, it would have found there was a reasonable expectation that at least two qualified HUBZone small business concerns could submit offers at fair market prices. DGR would have been given an opportunity to compete... Because the Air Force acted in violation of the law when it issued the second solicitation under the 8(a) program, it is in the public interest for the Court to correct the illegality that occurred and stop the contract from proceeding. The illegal contract must be cancelled and a new solicitation issued. DGR does not automatically become the contract awardee, but DGR will be able to compete for the award.”

For more GAO’s DGR decision, see the June 2010 Federal Contracts Perspective article “DOD Publishes Five Proposed Rules, Two Deviations.”

For more on the earlier decisions by GAO and the COFC, see the August 2009 Federal Contracts Perspective article “OMB Issues Five Memos Providing Contracting Guidance”; the September 2009 Federal Contracts Perspective article “Department of Justice Reaffirms SBA’s Small Business Program Parity Regulations”; and the April 2010 Federal Contracts Perspective article “HUBZone Preference Upheld by Court of Federal Claims.”



DIAR Rewrite Adopted as Final

The Department of the Interior (DOI) is adopting as final, without changes, the interim rule that rewrote the DOI Acquisition Regulation (DIAR) to update references to other federal and departmental directives, remove obsolete material and references, and clarify and streamline internal policies and procedures. This rewrite does not impose any new requirements on DOI contractors, and no DIAR clauses are being changed, with the exception of the removal of obsolete clauses.

No comments were submitted in response to the interim rule, so it is adopted as final without changes. For more on the interim rule, see the May 2010 Federal Contracts Perspective article “DIAR Rewritten.”



GSAR Part 541 Added for Utility Services

The General Services Administration (GSA) is amending the GSA Acquisition Regulation (GSAR) to add Part 541, Acquisition of Utility Services, to consolidate in one GSAR part material relevant to utilities contracts.

GSAR Part 541 consists of a single subpart – GSAR Subpart 541.5, Solicitation Provision and Contract Clauses – which consists of the prescriptions for two new clauses: GSAR 552.241-70, Availability of Funds for the Next Fiscal Year or Quarter, and GSAR 552.241-71, Disputes (Utility Contracts). GSAR 552.241-70 is to be included all GSA utility solicitations and contracts instead of FAR 52.232-19, Availability of Funds for the Next Fiscal Year. GSAR 552.241-71 is to be included in solicitations and contracts for utility services subject to the jurisdiction and regulation of a utility rate commission. GSAR 552.241-71 is added because there are no FAR clauses that adequately address disputes involving utility contracts.

Two respondents submitted comments on the proposed rule, but GSA decided not to adopt either of the comments, so the proposed rule is adopted as final without changes. For more on the proposed rule, see the June 2009 Federal Contracts Perspective article “GSAR Rewrite Picking Up Momentum.”



Department of Education Proposes Reissuing EDAR

The Department of Education is proposing to revise and reissue the Department of Education Acquisition Regulation (EDAR), which has not been updated since 1987. “In the years since then, the FAR has changed substantially. These changes caused a need for the department to update the EDAR so that it correctly implements the FAR and reflects department policy.” Among the significant changes that have taken place since 1987 are the enactment of the Federal Acquisition Streamlining Act, the Clinger-Cohen Act, and the Service Acquisition Reform Act; the establishment of the HUBZone and SDVOSB programs; and the advent of the Internet and electronic commerce. The most noteworthy changes in the proposed EDAR address the procurement flexibility authorized in 1998 by 20 U.S.C. 1018a for the department’s performance-based organization, the Office of Federal Student Aid (FSA).

Comments on the proposed rule must be submitted no later than September 22, 2010, by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail, or commercial or hand delivery: Nicole Evans, U.S. Department of Education, 400 Maryland Avenue, SW, Room 7164, Potomac Center Plaza, Washington, DC 20202-4200.



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