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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


August 2012
Vol. XIII, No. 8

CONTENTS


FAC 2005-60 Finalizes Rules on Compensation Reporting, Payments Under T&M Contracts
Changes to 27 Size Standards Proposed
Additional Guidance on T&M and LH Contracts Proposed
Phase I of SAM Implemented
FAR to Address Personnel Performing Security



FAC 2005-60 Finalizes Rules on Compensation Reporting,
Payments Under T&M Contracts

Federal Acquisition Circular (FAC) 2005-60 performs some housekeeping of by finalizing interim and proposed rules on reporting executive compensation, payments under time-and-materials (T&M) contracts and labor-hour (LH) contracts, a tax agreement between the Defense Advanced Research Projects Agency and New Mexico, and computer generation of forms. In addition, FAC 2005-60 extends the sunset date for protests of task and delivery orders exceeding $10,000,000.

The following is a summary of the rules included in FAC 2005-60:



Changes to 27 Size Standards Proposed

The Small Business Administration (SBA) is proposing to increase the small business size standards for 27 industries and one sub-industry in North American Industry Classification System (NAICS) Sector 22, Utilities; NAICS Sector 23, Construction; and NAICS Sector 71, Arts, Entertainment, and Recreation.

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 except where
otherwise noted)
Proposed Size Standard
($ million except where
otherwise noted)
Sector 22
221111 Hydroelectric Power Generation 4 million megawatt hours 500 employees
221112 Fossil Fuel Electric Power Generation 4 million megawatt hours 500 employees
221113 Nuclear Electric Power Generation 4 million megawatt hours 500 employees
221119 Other Electric Power Generation 4 million megawatt hours 500 employees
221121 Electric Bulk Power Transmission and Control 4 million megawatt hours 500 employees
221122 Electric Power Distribution 4 million megawatt hours 500 employees
221310 Water Supply and Irrigation Systems $7.0 $25.5
221320 Sewage Treatment Facilities $7.0 $19.0
221330 Steam and Air-Conditioning Supply $12.5 $14.0
                    
Sector 23
237210 Land Subdivision $7.0 $25.5
      except Dredging and Surface Cleanup Activities $20.0 $30.0
                    
Sector 71
711110 Theater Companies and Dinner Theaters $7.0 $19.0
711120 Dance Companies $7.0 $10.0
711130 Musical Groups and Artists $7.0 $10.0
711190 Other Performing Arts Companies $7.0 $25.5
711211 Sports Teams and Clubs $7.0 $35.5
711212 Race Tracks $7.0 $35.5
711219 Other Spectator Sports $7.0 $10.0
711310 Promoters of Performing Arts, Sports and Similar Events With Facilities $7.0 $30.0
711320 Promoters of Performing Arts, Sports and Similar Events Without Facilities $7.0 $14.0
711410 Agents and Managers for Artists, Athletes, Entertainers and Other Public Figures $7.0 $10.0
712110 Museums $7.0 $25.5
712130 Zoos and Botanical Gardens $7.0 $25.5
713110 Amusement and Theme Parks $7.0 $35.5
713210 Casinos (except Casino Hotels) $7.0 $25.5
713290 Other Gambling Industries $7.0 $30.0
713910 Golf Courses and Country Clubs $7.0 $14.4
713920 Skiing Facilities $7.0 $25.5

SBA is proposing to replace the current 4 million megawatt hours size standard for all six industries in NAICS Industry Group 2211 with a 500 employee size standard. SBA is inviting comments on whether replacing the current megawatt hours based size standard with an employee based size standard is appropriate or whether it will have any adverse effect on small businesses. Comments that the employee based size standard would have an adverse impact or that it is not appropriate should explain how it could impact small businesses and why a standard based on megawatt hours is preferable to one based on number of employees.

Comments on the proposed changes to Sector 22 are to be submitted no later than September 17, 2012, identified as “RIN 3245-AG25,” 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. SBA will not accept comments by e-mail.

Comments on the proposed changes to Sector 23 are to be submitted no later than September 17, 2012, identified as “RIN 3245-AG37,” by either of the methods for submitting comments on the proposed changes to Sector 22.

Comments on the proposed changes to Sector 71 are to be submitted no later than September 17, 2012, identified as “RIN 3245-AF36,” by either of the methods for submitting comments on the proposed changes to Sector 22.

In a related development, the U.S. Nuclear Regulatory Commission (NRC) is amending the size standard that it uses to qualify an NRC licensee as a “small entity” under the Regulatory Flexibility Act of 1980. The NRC is increasing its receipts-based, small business size standard from $6.5 million to $7.0 million to conform to the standard set by the Small Business Administration (SBA). This size standard reflects the most commonly used SBA size standard for nonmanufacturing industries.

The change will become effective on August 22, 2012, unless significant comments are received by August 2, 2012. Comments on the change are to be submitted no later than August 2, 2012, identified as “NRC-2012-0062,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) e-mail: Rulemaking.Comments@nrc.gov; (3) fax: 301-415-1101; (4) mail to: Secretary, U.S. Nuclear Regulatory Commission, Attn: Rulemakings and Adjudications Staff, Washington, DC 20555-0001; or (5) hand-delivery to: 11555 Rockville Pike, Rockville, Maryland 20852, between 7:30 a.m. and 4:15 p.m. (Eastern Time) on federal workdays.



Additional Guidance on T&M and LH Contracts Proposed

A proposed rule has been published which would provide additional guidance on actions that are required when raising the ceiling price or otherwise changing the general scope of a time-and-material (T&M) or labor-hour (LH) contract or order.

The Competition in Contracting Act (CICA) requires agencies to “obtain full and open competition through the use of competitive procedures” when procuring their requirements. The Government Accountability Office (GAO) stated in a protest that “in determining whether a task or delivery order (or modification) is outside the scope of the underlying contract, and thus falls within CICA’s competition requirement, our Office [GAO] examines whether the order is materially different from the original contract. Evidence of a material difference is found by reviewing the circumstances attending the original procurement; any changes in the type of work, performance period, and costs between the contract as awarded and the order as issued; and whether the original solicitation effectively advised offerors of the potential for the type of orders issued. Overall, the inquiry is whether the order is one which potential offerors would have reasonably anticipated.” (See Specialty Marine, Inc., B-293871, B-293871.2, June 17, 2004.)

Therefore, to ensure proper consideration, FAR 8.404, Use of Federal Supply Schedules, FAR 12.207, Contract Type [authorized for acquisition of commercial items], and FAR 16.601, Time-and-Materials Contracts [that are indefinite-delivery], would be revised to require analysis and documentation for changes in T&M or LH orders and to clarify that changes in the general scope of the contract or order should be justified as non-competitive new work.

Comments on this proposed rule must be submitted no later than September 24, 2012, identified as “FAR Case 2011-025,” 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.



Phase I of SAM Implemented

On July 29, 2012, Phase I of the System for Award Management (SAM) was implemented. SAM is a free website that consolidates various federal procurement systems and the Catalog of Federal Domestic Assistance, eliminating the need to enter the same data multiple times and consolidating hosting to make the process of doing business with the government more efficient.

Phase I includes the capabilities found previously in Central Contractor Registration (CCR)/Federal Agency Registration (FedReg), Online Representations and Certifications Application (ORCA), and the Excluded Parties List System (EPLS). The three remaining phases of the SAM implementation will include the capabilities found today in the electronic Subcontracting Reporting System (eSRS)/Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS), the Catalog of Federal Domestic Assistance (CFDA), Federal Business Opportunities (FBO), Wage Determinations On Line (WDOL), Federal Procurement Data System (FPDS), and the combination of Past Performance Information Retrieval System (PPIRS), Contractor Performance Assessment Reporting System (CPARS), and the Federal Awardee Performance and Integrity Information System (FAPIIS).

SAM is accessible at https://www.sam.gov.



FAR to Address Personnel Performing Security

A proposed rule have been issued that would amend the FAR to establish minimum processes and requirements for the selection, accountability, training, equipping, and conduct of personnel performing private security functions outside the United States.

The proposed rule would add FAR 25.302 and the implementing clause FAR 52.225-XX, both titled “Contractors Performing Private Security Functions Outside the United States.” These would implement the relevant policy document, Title 32 of the Code of Federal Regulations, Part 159 (32 CFR Part 159), Private Security Contractors Operating in Contingency Operations (see the August 2009 Federal Contracts Perspective article “DOD Establishes Policy on Private Security Contractors”). 32 CFR Part 159 reflects the governmentwide requirements contained in several National Defense Authorization Acts.

FAR 25.302 would apply to Department of Defense (DOD) contracts performed in areas of contingency operations outside the United States; to DOD and non-DOD contracts performed in areas of combat operations as designated by the Secretary of Defense; to DOD contracts performed in areas of other significant military operations as designated by the Secretary of Defense; and to non-DOD contracts performed in areas of other significant military operations as designated by the Secretary of Defense and agreed to by the Secretary of State. However, FAR 25.302 would not apply “to contracts entered into by elements of the intelligence community in support of intelligence activities, and temporary arrangements entered into by non-DOD contractors for the performance of private security functions by individual indigenous personnel not affiliated with a local or expatriate security company...” (FAR 25.302-2, Applicability).

FAR 25.302-4, Policy, would assign contractor responsibilities for the selection, accountability, training, equipping, and conduct of personnel performing private security functions under contracts in the covered areas. Also, it would assign responsibilities and establish procedures for incident reporting, use of and accountability for equipment, and rules for the use of force.

FAR 25.302-5, Remedies, would allow the contracting officer to direct the contractor to remove or replace any personnel who fail to comply with, or violate, applicable requirements of FAR 52.225-XX. Such corrective actions would be required to be taken at the contractor’s expense and without prejudice to any other contractual rights. FAR 25.302-5 includes additional remedies as follows: (1) contracting officers must include a contractor’s failure to comply in appropriate past-performance databases; (2) if the contract is an award-fee contract, the contracting officer must include performance failure in the assessment of award fees for the relevant period, and to treat of such failures as a basis for reducing or denying award fees for the relevant period or recovering all or part of award fees previously paid for such period; and (3) if the contractor’s performance failures are severe, prolonged, or repeated, the contracting officer shall refer the matter to the appropriate suspension and debarment official.

FAR 52.225-XX reflects the requirements of 32 CFR Part 159 and FAR 25.302.

Comments on this proposed rule must be submitted no later than September 21, 2012, identified as “FAR Case 2011-029,” 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.



Copyright 2012 by Panoptic Enterprises. All Rights Reserved.

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