Panoptic Enterprises’


Federal Acquisition Developments, Guidance, and Opinions

August 2013
Vol. XIV, No. 8
[pdf version]


GSA Reverse Action Site Introduced, To Compete with FedBid
SBA Amends Small Business Subcontracting Rules
Rescission of Nonmanufacturer Rule Waiver for Electrical Equipment Proposed
Labor Revises Products on Child Labor List
OMB Extends Small Subcontractors Payment Policy
State Proposes Government Property Clauses

GSA Reverse Action Site Introduced,
To Compete with FedBid

The General Services Administration (GSA) has unveiled GSA Reverse Auction (http://www.reverseauctions.gsa.gov) to deliver increased savings for federal agencies on the most commonly purchased office products, equipment, and services, while making it easier for small businesses to compete for the government’s business.

In a reverse auction, sellers compete to win business from agencies – prices typically decrease as the competitive auction progresses. The GSA Reverse Auction is intended to be an efficient and cost effective platform for buying non-complex commodities and simple services. It is expected to reduce federal agencies’ acquisition processing time and costs, drive prices and costs down, and allow for small business set-asides.

Federal agencies now may use this platform to conduct reverse auctions through select GSA Multiple Award Schedules and blanket purchase agreements (BPAs) for commodities like office supplies, laptops, tablets, and monitors, and for simple services like warranty, training, and installation. In addition, the platform will allow federal customers to set aside auctions for small business, increasing opportunities for small and disadvantaged companies to bid easily for government business.

GSA Reverse Auction is a self service tool. Available on the site are buyer user guides, online help documentation, and context sensitive help. Buyers that need assistance can contact the GSA Reverse Auction helpdesk.

GSA is not planning to charge fees for products purchased through GSA Reverse Auction against GSA contract vehicles, such as IT commodity BPAs, Federal Strategic Sourcing BPAs, and Multiple Award Schedules.

According to GSA, its customers have saved as much as 17% through use of reverse auctions. With GSA not charging fees for the use of GSA Reverse Auction, the reverse auction approach will provide additional savings to the government.

GSA Reverse Auction will be in direct competition with FedBid (http://www.fedbid.com), which is a privately-held company that conducts reverse auctions. FedBid has been conducting reverse auctions since 2004, and charges a fee to the seller. Some have questioned why GSA invested in a platform that essentially duplicates that of a successful private enterprise, but GSA is restricting GSA Reverse Auction to its own contract vehicles.

Additional information on reverse auctions is available from the Reverse Auction Research Center at http://www.reverseauctionresearch.org/.

SBA Amends Small Business Subcontracting Rules

The Small Business Administration (SBA) is amending its small business subcontracting regulations at Title 13 of the Code of Federal Regulations, subpart 125.3 (13 CFR 125.3), Subcontracting Assistance, to implement provisions of the Small Business Jobs Act of 2010 (Public Law 111-240) that pertain to “covered contracts” – contracts for which a small business subcontracting plan is required, currently valued above $1,500,000 for construction and $650,000 for all other contracts; small businesses are exempt from this requirement.

The following are the primary changes SBA is making to its regulations:

SBA received 105 comments on the proposed rule. In response to those comments, SBA made the following significant changes when finalizing the rule:

For more on the proposed rule, see the November 2011 Federal Contracts Perspective article “SBA Proposes Rules Implementing Small Business Jobs Act.”

Rescission of Nonmanufacturer Rule Waiver for Electrical Equipment Proposed

The Small Business Administration (SBA) is proposing to rescind the class waiver of the nonmanufacturer rule for all other miscellaneous electrical equipment and component manufacturing, North American Industry Classification System (NAICS) code 335999. This proposed rescission is the product of information submitted by a small business manufacturer of the various supplies listed under NAICS code 335999 that has conducted business with the federal government within the previous 24 months. Also, SBA’s independent research resulted in discovery of other small business manufacturers for the various items listed under NAICS code 335999.

Comments must be submitted no later than August 1, 2013, by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail/hand delivery/courier: Edward Halstead, Procurement Analyst, Small Business Administration, 409 3rd Street SW, Suite 8022, Washington, DC 20416.

EDITOR’S NOTE: Public Law 100-656, enacted November 15, 1988, requires those with federal contracts that are set-aside for small businesses or awarded through the 8(a) program to provide the product of a small business manufacturer or processor if the recipient is not the actual manufacturer or processor (see paragraph (f) of FAR 19.102, Size Standards). This is called the “nonmanufacturer rule.” However, SBA may waive this requirement if there are no small business manufacturers or processors.

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 121.406, How does a small business concern qualify to provide manufactured products or other supply items under a small business set-aside, service-disabled veteran-owned small business set-aside, WOSB [women-owned small business] or EDWOSB [economically disadvantaged women-owned small business] set-aside, or 8(a) contract? 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/class_waiver.pdf.

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 cattle from South Sudan, dried fish from Bangladesh, fish from Ghana, garments from Vietnam, and gold and wolfamite from the Democratic Republic of Congo to the list of products that might have been mined, produced, or manufactured by forced or indentured child labor.

The following is the 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) (the newly added products are in italics):

Product Countries
Bamboo Burma
Beans (green, soy, yellow) Burma
Brazil Nuts/Chestnuts Bolivia
Bricks Afghanistan, Burma, China, India, Nepal, Pakistan
Carpets Nepal, Pakistan
Cattle South Sudan
Cassiterite Democratic Republic of Congo
Coal Pakistan
Coca (stimulant plant) Colombia
Cocoa Cote d’Ivoire, Nigeria
Coffee Cote d’Ivoire
Coltan Democratic Republic of Congo
Cotton Benin, Burkina Faso, China, Tajikistan, Uzbekistan
Cottonseed (hybrid) India
Diamonds Sierra Leone
Dried Fish Bangladesh
Electronics China
Embroidered Textiles (zari) India, Nepal
Fish Ghana
Garments Argentina, India, Thailand, Vietnam
Gold Burkina Faso, Democratic Republic of Congo
Granite Nigeria
Gravel (crushed stones) Nigeria
Pornography Russia
Rice Burma, India, Mali
Rubber Burma
Stones India, Nepal
Sugarcane Bolivia, Burma
Textiles (hand-woven) Ethopia
Tilapia (fish) Ghana
Tobacco Malawi
Toys China
Wolframite Democratic Republic of Congo

OMB Extends Small Subcontractors Payment Policy

On July 11, 2013, Office of Management and Budget (OMB) Acting Deputy Director for Management Steven VanRoekel issued OMB memorandum M-13-15, which extended until July 11, 2014, the temporary policy that agencies should accelerate payments to all prime contractors, with a goal of paying them within 15 days of receipt of proper invoices, to allow them to provide prompt payments to small business subcontractors.

The temporary policy was originally established September 14, 2011, by OMB memorandum M-11-32, and extended by OMB memorandum M-12-16 until July 11, 2013.

To assist in this effort, OMB requested that the Federal Acquisition Regulatory Council (FAR Council) develop standard wording for a clause that would be included in the agency’s contract with the prime contractor. The FAR Council developed a standard clause, FAR 52.232-XX, Providing Accelerated Payments to Small Business Subcontractors, issued it as a proposed rule, and requested comments.

While awaiting the proposed FAR rule to be published and finalized, both the Department of Defense (DOD) and the Civilian Agency Acquisition Council (CAAC) issued class deviations mandating the use of FAR 52.232-99, Providing Accelerated Payment to Small Business Subcontractors (Deviation), “in all new solicitations and resultant contracts and, to the extent feasible, modify[ing] existing solicitations to insert the attached clause.” While the CAAC has issued an extension of its class deviation to conform with the extension in OMB memorandum M-13-15, DOD has decided to discontinue the practice of accelerating payments to all prime contractors.

For more on OMB memorandum M-12-16, see the September 2012 Federal Contracts Perspective article “OMB Orders Prompt Payment to Small Subcontractors.” For more on the proposed FAR implementation of OMB memorandum M-12-16, see the January 2013 Federal Contracts Perspective article “Accelerated Subcontractor Payments Proposed.”

State Proposes Government Property Clauses

The Department of State (DOS) is proposing to add DOS Acquisition Regulation (DOSAR) 652.245-70, Status of Property Management System, and DOSAR 652.245-71, Accounting for Government Property, to implement DOS policies regarding government property.

DOSAR 652.245-70 would be included in solicitations when any of the following are provided by the government or acquired by the contractor for the government:

DOSAR 652.245-70 would request information from offerors regarding their property management systems to comply with paragraph (c) of FAR 45.201, Solicitation [where government-furnished property is anticipated], which states that the solicitation shall require all offerors to submit a description of the offeror’s property management system, plan, and any customary commercial practices, voluntary consensus standards, or industry-leading practices and standards to be used by the offeror in managing government property.

DOSAR 652.245-71 would be required in all solicitations and contracts than contain DOSAR 652.245-70, and it would require the contractor to establish and maintain a property management system that is in accordance with FAR 52.245-1, Government Property. The contractor would be required to submit one annual report and three quarterly reports electronically in the format specified in paragraph (d) of the clause, which requires 19 data elements on each unit of property, to each of the individuals identified in paragraph (i) of the clause (on an quarterly report, the contractor may either provide a full property report or an update to the annual report).

In addition, the contractor must submit the following affirmation, signed by the contractor’s managerial personnel, with the annual report:

                 I hereby affirm that a physical inventory of the government property (as defined in Federal Acquisition Regulation (FAR) 45.101 [Definitions]) of Department of State contract number (insert contract number) has been completed as of (insert date), the inventory has been reconciled to our records and the property information in our report, and that to the best of my knowledge and belief, this inventory is accurate, current, and complete.

Comments on the proposed rule must be submitted no later than September 27, 2013, identified as “RIN 1400-AC33,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: RamirezIM2@state.gov; (3) mail: Ella Ramirez, Senior Procurement Analyst, Policy Division, Department of State, Office of the Procurement Executive, 2201 C Street NW, Suite 900, State Annex Number 27, Washington, DC 20522-0602; or (4) fax: 703-875-6155.

Copyright 2013 by Panoptic Enterprises. All Rights Reserved.

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