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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


June 2011
Vol. XII, No. 6

CONTENTS


FAC 2005-52 Requires Agencies to Leverage Acquisitions to Foster Sustainable Technologies
Transportation Size Standard Increases Proposed
Nonmanufacturer Rule Waived for Intensifier Tubes
NASA Proposes Rule on Anchor Tenancy
Labor Revises Products on Child Labor List
State to Allow Non-Citizen Contracting Officers



FAC 2005-52 Requires Agencies to Leverage
Acquisitions to Foster Sustainable Technologies

Federal Acquisition Circular (FAC) 2005-52 consists of a rule requiring the government to use acquisitions to encourage technologies that “create and maintain conditions (1) under which humans and nature can exist in productive harmony; and (2) that permit fulfilling the social, economic, and other requirements of present and future generations.” In addition, FAC 2005-52 includes rules addressing information technology that is purchased as construction material, contract closeout procedures, prohibition on contracting with inverted domestic corporations, and oversight of contractor ethics programs.



Transportation Size Standard Increases Proposed

The Small Business Administration (SBA) is proposing to increase the small business size standards for 22 industries in North American Industry Classification System (NAICS) Sector 48, Transportation.

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)
481219 Other Non-Scheduled Air Transportation 7.0 14.0
485111 Mixed Mode Transit Systems 7.0 14.0
485112 Commuter Rail Systems 7.0 14.0
485113 Bus and Other Motor Vehicle Transit Systems 7.0 14.0
485119 Other Urban Transit Systems 7.0 14.0
485210 Interurban and Rural Bus Transportation 7.0 14.0
485310 Taxi Service 7.0 14.0
485320 Limousine Service 7.0 14.0
485410 School and Employee Bus Transportation 7.0 14.0
485510 Charter Bus Industry 7.0 14.0
485991 Special Needs Transportation 7.0 14.0
485999 All Other Transit and Ground Passenger Transportation 7.0 14.0
486210 Pipeline Transportation of Natural Gas 7.0 25.5
488111 Air Traffic Control 7.0 30.0
488119 Other Airport Operations 7.0 30.0
488190 Other Support Activities for Air Transportation 7.0 30.0
488210 Support Activities for Rail Transportation 7.0 14.0
488310 Port and Harbor Operations 25.5 35.5
488320 Marine Cargo Handling 25.5 35.5
488330 Navigational Services to Shipping 7.035.5
488390 Other Support Activities for Water Transportation 7.0 35.5
488510 Freight Transportation Arrangement 7.0 14.0

Comments on this proposed rule must be submitted no later than July 12, 2011, identified as “RIN 3245-AG08,” by one of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail/hand delivery/courier: Khem R. Sharma, PhD, Chief, Size Standards Division, 409 Third Street, SW, Mail Code 6530, Washington, DC 20416.



Nonmanufacturer Rule Waived for Intensifier Tubes

The Small Business Administration (SBA) is waiving the nonmanufacturer rule for GEN II and GEN III image intensifier tubes under North American Industry Classification System (NAICS) code 333314, Optical Instrument and Lens Manufacturing, Product Service Code (PSC) 5855, Night Vision Equipment. SBA invited the public to comment on the proposed waiver or to provide information on potential small business sources for these products. Fourteen comments were received – one from a large manufacturer of GEN III image intensifier tubes, and 13 from small business suppliers, distributors, or integrators of GEN II and/or GEN III image intensifier tubes, night vision systems, and/or related equipment. Upon further investigation, SBA determined that there are no small business manufacturers of these classes of products. Therefore, SBA has determined that there are no small business manufacturers of this class of products, and it is therefore granting the nonmanufacturing rule waiver. For more on the proposed nonmanufacturing rule waiver, see the September 2010 Federal Contracts Perspective article “Nonmanufacturer Rule Waiver Issued for Lab Equipment.”

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/sites/default/files/05262011_class_waivers.pdf.



NASA Proposes Rule on Anchor Tenancy

The National Aeronautics and Space Administration (NASA) is proposing to replace NASA FAR Supplement (NFS) 1812.7000, Prohibition on Guaranteed Customer Bases for New Commercial Space Hardware or Services, which incorrectly prohibits NASA from awarding “a contract with an expected duration of more than one year if the primary effect of the contract is to provide a guaranteed customer base for, or establish an anchor tenancy in, new commercial space hardware or services,” with NFS 1812.7000, Anchor Tenancy Contracts, which would permit NASA to enter into multi-year anchor tenancy contracts for commercial space goods or services.

“Anchor tenancy” is “an arrangement in which the United States government agrees to procure sufficient quantities of a commercial space product or service needed to meet government mission requirements so that a commercial venture is made viable.” It is authorized by Section 401 of the Commercial Space Competitiveness Act (CSCA) of 1992.

According to proposed NFS 1812.7000, NASA may enter into multi-year anchor tenancy contracts for the purchase of a good or service if the NASA administrator determines that:

  1. The good or service meets the mission requirements of NASA;

  2. The commercially procured good or service is cost effective;

  3. The good or service is procured through a competitive process;

  4. Existing or potential customers for the good or service other than the United States government have been specifically identified;

  5. The long-term viability of the venture is not dependent upon a continued government market or other nonreimbursable government support; and

  6. Private capital is at risk in the venture.

There are limitations on the use of anchor tenancy:

  1. Contracts entered into under this section shall not exceed 10 years in duration;

  2. Such contracts shall provide for delivery of the good or service on a firm-fixed-price basis;

  3. To the extent practicable, reasonable performance specifications shall be used to define technical requirements in such contracts; and

  4. The NASA administrator shall reserve the right to completely or partially terminate the contract without payment of such termination liability because of the contractor’s actual or anticipated failure to perform its contractual obligations.

Comments on this proposed rule must be submitted no later than July 25, 2011, identified as “RIN 2007-AD64,” by one of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) e-mail: leigh.pomponio@nasa.gov.



Labor Revises Products on Child Labor List

The Department of Labor (DOL) has revised the list required by Executive Order 13126, Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor, to add hand-woven textiles from Ethiopia to the list of products that might have been mined, produced, or manufactured by forced or indentured child labor. In addition, charcoal from Brazil has been removed from the list because there is a reasonable basis to believe that the use of forced or indentured child labor has been significantly reduced.

The following is a list of products that might have been mined, produced, or manufactured by forced or indentured child labor, and the respective countries of origin (available at http://www.dol.gov/ILAB/regs/eo13126/main.htm):

PRODUCT COUNTRY
Bamboo Burma
Beans (green, soy, yellow) Burma
Brazil Nuts/Chestnuts Bolivia
Bricks Burma
Bricks China
Bricks India
Bricks Nepal
Bricks Pakistan
Carpets Nepal
Carpets Pakistan
Coal Pakistan
Coca (stimulant plant) Colombia
CocoaCote d’Ivoire
CocoaNigeria
CoffeeCote d’Ivoire
CottonBenin
CottonBurkina Faso
Cotton China
Cotton Tajikistan
Cotton Uzbekistan
Cottonseed (hybrid) India
Diamonds Sierra Leone
Electronics China
Embroidered Textiles (zari) India
Embroidered Textiles (zari) Nepal
Garments Argentina
Garments India
Garments Thailand
Gold Burkina Faso
GraniteNigeria
Gravel (crushed stones) Nigeria
Pornography Russia
Rice Burma
Rice India
Rice Mali
Rubber Burma
Shrimp Thailand
Stones India
Stones Nepal
Sugarcane Bolivia
Sugarcane Burma
Teak Burma
Textiles (hand-woven) Ethiopia
Tilapia (fish) Ghana
Tobacco Malawi
Toys China


State to Allow Non-Citizen Contracting Officers

The Department of State (DOS) is amending DOS Acquisition Regulation (DOSAR) 601.603-3, Appointment [of contracting officers], to allow the appointment of selected non-U.S. citizen locally employed staff (that is, Foreign Nationals and Third Country Nationals) as contracting officers for acquisitions at $25,000 and below. This change will permit streamlined procurement processes at selected DOS overseas posts.

DOS considered expanding contracting authority at applicable overseas posts (Embassies and Consulates) to selected non-U.S. citizen locally employed staff (LES) for acquisitions at $25,000 and below. DOS conducted a pilot program at 15 overseas posts in the following locations: Bridgetown, Barbados; Brussels, Belgium; Ljubljana, Slovenia; Melbourne, Australia; Munich, Germany; Nicosia, Cyprus; Oslo, Norway; Paris, France; Seoul, Korea; Singapore; Tallinn, Estonia; The Hague, Netherlands; Tokyo, Japan; Valletta, Malta; and Vienna, Austria. The pilot program was a success, but the DOSAR requires that all contracting officers must be U.S. citizens, so this change to DOSAR 601.603-3 is being made.

Paragraph (c) of DOSAR 601.603-3 is revised to the following:

            (c) Non-Federal employees. Only United States Government employees shall be appointed as contracting officers. For acquisitions at $25,000 and below only, this includes locally employed staff (i.e., Foreign Service Nationals and Third Country nationals). Personal services contractors are not eligible for appointment as DOS contracting officers.

According to the preamble to the rule, “appropriate enhanced management controls, including review of LES transactions by a U.S. citizen contracting officer, will be imposed. For example, these controls will incorporate the following mandatory requirements:

            “Available only at posts with a score of least 5.0 on the Transparency International Corruption Perceptions Index;
            “Available only to selected LES staff with a minimum of five years of Department of State experience, unquestioned integrity, and one week of specified simplified acquisition training;
            “Review of LES transactions on a monthly basis by a U.S. citizen contracting officer; and
            “Periodic evaluation of LES delegated procurement by the Office of the Procurement Executive.”


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