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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


December 2011
Vol. XII, No. 12

CONTENTS


FAC 2005-54 Permits Small Business Set-Asides For Multiple-Award Contracts
Limitation on Generic DUNS Number Substitutes Proposed
SBA Proposes Increasing Small Business Size Standards
3% Payment Withholding Repealed
President, OFPP Order Spending Reductions



FAC 2005-54 Permits Small Business Set-Asides
For Multiple-Award Contracts

Federal Acquisition Circular (FAC) 2005-54 provides agencies the authority to set aside or reserve for small businesses multiple-award contracts (MACs) and orders. In addition, FAC 2005-54 adopts as final several interim and proposed rules, including those requiring notification of employee rights under the National Labor Relations Act, implementing a policy preventing personal conflicts of interest for contractor employees performing acquisition functions, and permitting small disadvantaged businesses to self-certify.



Limitation on Generic DUNS Number Substitutes Proposed

Changes to FAR Subpart 4.6, Contract Reporting, and FAR Subpart 4.11, Central Contractor Registration, are being proposed that would limit the use of generic substitutes instead of Data Universal Numbering System (DUNS) numbers, and update the policies and procedures associated with reporting in the Federal Procurement Data System (FPDS) (https://www.fpds.gov/).

For decades, the DUNS number provided by Dun & Bradstreet (D&B) has been the government's unique identifier for contractors – like a Social Security number for individuals. However, generic DUNS numbers that do not identify the contractor are sometimes used in overseas contracting – for example, foreign local contractors where D&B registration is impracticable, or foreign contractors when identification may endanger the contractor. When a generic DUNS number is used, the identity of the contractor is masked beyond the local contracting office. The contractor is identified as “Miscellaneous Foreign Vendor,” along with all other contractors using the generic DUNS number.

The use of generic DUNS numbers makes it almost impossible to differentiate a contractor from others with the same generic DUNS number, and the contractor is not able to access various databases to perform its own reporting requirements. Because a generic DUNS number should be limited to those actions where it is truly necessary, the proposed rule would make the following changes to FAR Subparts 4.6 and 4.11 to more strictly limit the use of the generic DUNS number to foreign contract actions valued at or below $25,000:

In addition, the following clauses and provisions would be revised or added:

Comments on this proposed rule must be submitted no later than January 30, 2012, identified as “FAR Case 2010-014,” 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), ATTN: Hada Flowers, 1275 First Street, NE, 7th Floor, Washington, DC 20417.



SBA Proposes Increasing Small Business Size Standards

The Small Business Administration (SBA) is proposing to increase the small business size standards for 20 industries and one sub-industry in North American Industry Classification System (NAICS) Sector 53, Real Estate and Rental and Leasing, and nine industries in NAICS Sector 61, Educational Services.

The following are the industries, their current small business size standards, and their proposed small business size standards:

NAICS Code Industry Title Current Size Standard
($ million)
Proposed Size Standard
($ million)
Sector 53
531110 Lessors of Residential Buildings and Dwellings $7.0 $25.5
531120 Lessors of Nonresidential Buildings (except Miniwarehouses) $7.0 $25.5
531190 Lessors of Other Real Estate Property $7.0 $25.5
      except Leasing of Building Space to Federal Government by Owners $20.5 $35.5
531210 Offices of Real Estate Agents and Brokers $2.0 $7.0
531311 Residential Property Managers $2.0 $7.0
531312 Nonresidential Property Managers $2.0 $7.0
531320 Offices of Real Estate Appraisers $2.0 $7.0
531390 Other Activities Related to Real Estate $2.0 $7.0
532111 Passenger Car Rental $25.5 $35.5
532112 Passenger Car Leasing $25.5 $35.5
532120 Truck, Utility Trailer, and RV (Recreational Vehicle) Rental and Leasing $25.5 $35.5
532210 Consumer Electronics and Appliances Rental $7.0 $35.5
532220 Formal Wear and Costume Rental $7.0 $19.0
532230 Video Tape and Disc Rental $7.0 $25.5
532291 Home Health Equipment Rental $7.0 $30.0
532411 Commercial Air, Rail, and Water Transportation Equipment Rental and Leasing $7.0 $30.0
532412 Construction, Mining and Forestry Machinery and Equipment Rental and Leasing $7.0 $30.0
532420 Office Machinery and Equipment Rental and Leasing $25.0 $30.0
532490 Other Commercial and Industrial Machinery and Equipment Rental and Leasing $7.0 $30.0
533110 Lessors of Nonfinancial Intangible Assets (except Copyrighted Works) $7.0 $35.5
                    
Sector 61
611110 Elementary and Secondary Schools $7.0 $10.0
611210 Junior Colleges $7.0 $19.0
611310 Colleges, Universities and Professional Schools $7.0 $25.5
611420 Computer Training $7.0 $10.0
611430 Professional and Management Development Training $7.0 $10.0
611519 Other Technical and Trade Schools $7.0 $14.0
611630 Language Schools $7.0 $10.0
611699 All Other Miscellaneous Schools and Instruction $7.0 $10.0
611710 Educational Support Services $7.0 $14.0

Comments on the proposed changes to Sector 53 are to be submitted no later than January 17, 2012, identified as “RIN 3245-AG28,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail/hand-delivery/courier to: Khem R. Sharma, PhD, Chief, Size Standards Division, 409 Third Street, SW, Mail Code 6530, Washington, DC 20416.

Comments on the proposed changes to Sector 61 are to be submitted no later than January 12, 2012, identified as “RIN 3245-AG29,” by either of the methods for submitting comments on the proposed changes comments on Sector 53.



3% Payment Withholding Repealed

On November 21, 2011, President Obama signed into law the Three Percent Withholding Repeal and Job Creation Act (Public Law 112-56). The law removes subsection (t) of Section 3402 of the Internal Revenue Code of 1986 (Title 26 of the United States Code, Section 3402, Income Tax Collected at Source). Subsection (t) had imposed a 3% withholding requirement on all government contract payments: “The government of the United States, every State, every political subdivision thereof, and every instrumentality of the foregoing (including multi-State agencies) making any payment to any person providing any property or services (including any payment made in connection with a government voucher or certificate program which functions as a payment for property or services) shall deduct and withhold from such payment a tax in an amount equal to 3 percent of such payment.”

Subsection (t) was added by Tax Increase Prevention and Reconciliation Act of 2005 (Public Law 109-222), and it was supposed to reduce the amount of unpaid taxes. However, its implementation was postponed twice by Congress because of complaints from state and local governments and contractors that the 3% withholding requirement would impose an accounting burden on both governments and contractors, would create cashflow problems for contractors (especially small businesses), and “keep capital out of the hands of job creators” according to President Obama. Even the Internal Revenue Service (IRS) delayed enforcement of subsection (t) for one year. Finally, enough bipartisan momentum got behind the repeal, and both the House of Representatives and the Senate voted unanimously to repeal subsection (t).

Other parts of the statute address veterans’ retraining assistance program, transition assistance, apprenticeship programs, training and rehabilitation for veterans with service-connected disabilities, veterans’ placement program, appointment of honorably discharged veterans, and priority of veterans for job training programs.



President, OFPP Order Spending Reductions

Both President Obama and the Office of Federal Procurement Policy (OFPP) have directed the federal government to reduce spending in various products and services.



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