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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


January 2014
Vol. XV, No. 1
[pdf version]

CONTENTS


FY 2014 National Defense Authorization Act Establishes $625,000 as Compensation Amount (Maybe)
FAC 2005-72 Revises Trade Agreements Thresholds
Lots of Revisions (and Proposed Revisions) to the DFARS
SBA Revises Size Standards for Utilities, Construction
SBA Waives Nonmanufacturing Rule for Ovens
Higher-Level Contract Quality Requirements Proposed
OFPP Revises Value Engineering Guidance
OFPP Refreshes PM Certification Program
Government Property Provision, Clause Added to DOSAR



FY 2014 National Defense Authorization Act
Establishes $625,000 as Compensation Amount (Maybe)

On December 26, 2013, President Obama signed into law the $633 billion National Defense Authorization Act for Fiscal Year (FY) 2014 (Public Law 113-66). Title VIII, Acquisition Policy, Acquisition Management, and Related Matters, is very small this year; it contains only a single section that is significant to the defense and civilian acquisition communities – Section 811, Government-Wide Limitations On Allowable Costs For Contractor Compensation (though another law may establish a different limitation). In addition, Title XVI, Industrial Base Matters, Subtitle B, Matters Relating to Small Business Concerns, contains a couple of sections that will affect certain defense contractors.



FAC 2005-72 Revises Trade Agreements Thresholds

Federal Acquisition Circular (FAC) 2005-72 updates Federal Acquisition Regulation (FAR) part 25, Foreign Acquisition, to reflect the United States Trade Representative’s (USTR) biannual revision of thresholds for application of the various trade agreements into which the United States has entered with other countries. In addition, FAC 2005-72 addresses service contracts reporting requirements, prioritizing government sources of supplies and services, and prohibits the use of open-ended indemnification clauses in acquisitions for social media applications.



Lots of Revisions (and Proposed Revisions) to the DFARS

The Department of Defense (DOD) decided to clear it’s desk for the holidays by issuing three final DOD FAR Supplement (DFARS) rules, an interim rule, and three proposed rules.



SBA Revises Size Standards for Utilities, Construction

The Small Business Administration (SBA) has revised 13 small business size standards in North American Industry Classification System (NAICS) Sector 22, Utilities, and increased two small business size standards in NAICS Sector 23, Construction.

In 2012, SBA proposed changing nine small business size standards in NAICS Sector 22, converting six from “4 million megawatt hours” to “500 employees.” However, after reviewing the comments from eight respondents on the proposed revisions, SBA decided to increase the size standards for NAICS 221112, Fossil Fuel Electric Power Generation, and NAICS 221113, Nuclear Electric Power Generation, to 750 employees, and NAICS 221122, Electric Power Distribution, to 1,000 employees.

In addition, when SBA published the proposed rule on NAICS Sector 22, the SBA’s table of size standards was based on the 2007 version of the NAICS. A month after the proposed rule was published, SBA adopted the Office of Management and Budget’s (OMB) 2012 NAICS amendments, which created 76 new industry codes (see the September 2012 Federal Contracts Perspective article “SBA Adopts 2012 NAICS for Small Business Size Standards”). Among the new industry codes were five renewable electric power generation industries which had been lumped into NAICS 221119, Other Electric Power Generation: NAICS 221114, Solar Electric Power Generation; NAICS 221115, Wind Electric Power Generation; NAICS 221116, Electric Power Generation; NAICS 221117, Biomass Electric Power Generation; and NAICS 221118, Other Electric Power Generation. With the incorporation of these five new industries, NAICS 221119 was deleted from NAICS 2012. Therefore, SBA has deleted NAICS 221119 from its small business size standards.

Regarding Sector 23, 25 respondents submitted comments on the proposed changes. In response to those comments, SBA has decided to increase the size standard for Dredging and Surface Cleanup Activities, a sub-industry category (“exception”) under NAICS 237990, Other Heavy and Civil Engineering Construction, from $20 million to $25.5 million instead of to $30.0 million as proposed.

The following are the industries, their previous small business size standards, the proposed changes to those small business size standards, and the revised small business size standards:

NAICS Code Industry Title Previous Size Standard
($ million except where
otherwise noted)
Proposed Size Standard
($ million except where
otherwise noted)
Revised Size Standard
($ million except where
otherwise noted)
Sector 22
221111 Hydroelectric Power Generation 4 million megawatt hours 500 employees 500 employees
221112 Fossil Fuel Electric Power Generation 4 million megawatt hours 500 employees 750 employees
221113 Nuclear Electric Power Generation 4 million megawatt hours 500 employees 750 employees
221114 Solar Electric Power Generation 4 million megawatt hours* 250 employees
221115 Wind Electric Power Generation 4 million megawatt hours* 250 employees
221116 Geothermal Electric Power Generation 4 million megawatt hours* 250 employees
221117 Biomass Electric Power Generation 4 million megawatt hours* 250 employees
221118 Other Electric Power Generation 4 million megawatt hours* 250 employees
221119 Other Electric Power Generation 4 million megawatt hours 500 employees
221121 Electric Bulk Power Transmission and Control 4 million megawatt hours500 employees 500 employees
221122 Electric Power Distribution 4 million megawatt hours 500 employees 1,000 employees
221310 Water Supply and Irrigation Systems $7.0 $25.5 $25.5
221320 Sewage Treatment Facilities $7.0 $19.0 $19.0
221330 Steam and Air-Conditioning Supply $12.5 $14.0 $14.0
                    
Sector 23
237210 Land Subdivision $7.0 $25.5 $25.5
237990 Other Heavy and Civil Engineering Construction
      Except Dredging and Surface Cleanup Activities $20.0 $30.0 $25.5

*Industries that were incorporated after the proposed rule was published.

For more on the proposed rules, see the August 2012 Federal Contracts Perspective article “Changes to 27 Size Standards Proposed.”



SBA Waives Nonmanufacturing Rule for Ovens

The Small Business Administration (SBA) is waiving the nonmanufacturer rule for Commercial-Type Ovens, Gas Ranges, and Ranges, Product Service Code (PSC) 7310 (Food Cooking, Baking, and Serving Equipment), under the North American Industry Classification System (NAICS) code 333318, Other Commercial and Service Industry Machinery Manufacturing). SBA invited the public to comment on the proposed waiver or to provide information on potential small business sources for these products. Two comments were received supporting the waiver, and the SBA used the Dynamic Small Business Search (DSBS) database (http://dsbs.sba.gov) to conduct independent market research that did not reveal any small business manufacturers that participated in the federal market during the previous 24 months. Therefore, SBA has determined that there are no small business manufacturers of this class of products, and it is granting the nonmanufacturing rule waiver. For more on the proposed nonmanufacturing rule waiver, see the June 2013 Federal Contracts Perspective article “SBA Proposes Waiving Nonmanufacturing Rule for Ovens.”

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/NMR CLASS WAIVER LIST-AS OF 12-31-2013-VERSION 10.pdf.



Higher-Level Contract Quality Requirements Proposed

According to a proposed rule, FAR 46.202-4, Higher-Level Contract Quality Requirements, would be amended to clarify when to use higher-level quality standards in solicitations and contracts, and to update the examples of higher-level quality standards by revising obsolete standards and adding two new industry standards that pertain to quality assurance for avoidance of counterfeit items. These standards will be used to help minimize and mitigate counterfeit items or suspect counterfeit items in government contracting.

Section 818 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81), “Detection and Avoidance of Counterfeit Electronic Parts,” requires DOD to issue regulations addressing contractor responsibilities for detecting and avoiding the use or inclusion of counterfeit electronic parts or suspect counterfeit electronic parts. However, because of the globalization of the marketplace, the problem of counterfeits extends far beyond DOD and electronic parts, posing a supply chain challenge to both government and industry. Globalization raises the risk because of the variations in laws related to commerce and fragments the quality assurance process.

To implement Section 818, the following changes would be made by this rule:

Comments on this proposed rule must be submitted no later than February 3, 2014, identified as “FAR Case 2012-032,” 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, 1800 F Street NW, 2nd Floor, Washington, DC 20405-0001.



OFPP Revises Value Engineering Guidance

The Office of Federal Procurement Policy (OFPP) is finalizing, with changes, the revisions it proposed to Office of Management and Budget (OMB) Circular A-131, Value Engineering, to clarify the role of value engineering (VE) in helping agencies meet 21st century demands and deliver better value to the taxpayer. (EDITOR’S NOTE: VE is addressed in FAR part 48, Value Engineering.)

In June 2012, OFPP proposed the following significant revisions to OMB Circular A-131:

Thirteen respondents submitted comments on the proposed A-131 revisions. In response to those comments, the following changes and additional refinements are made to the final version:

For more on the proposed revisions to OMB Circular A-131, see the July 2012 Federal Contracts Perspective article “OFPP Proposes Value Engineering Revisions.”



OFPP Refreshes PM Certification Program

Joseph Jordan, OFPP Administrator, has issued a memorandum to all chief acquisition officers (CAO) and senior procurement executives (SPE) announcing the refreshment and improvement of the Federal Acquisition Certification for Program and Project Managers (FAC-P/PM).

The initial FAC-P/PM was issued in April 2007 (see the May 2007 Federal Contracts Perspective article “Certification Required for Program Managers of Major Acquisitions”). The revisions are intended to strengthen civilian agency P/PMs to improve program outcomes, and they reflect the need to improve the management of high-risk, high-impact programs.

The following are the changes that have been made to strengthen the P/PM workforce:


FAC-P/PM of April 25, 2007 Refreshed FAC-P/PM
Applicability:
At a minimum, P/PMs assigned to programs considered major acquisitions must be senior-level certified. All acquisition P/PMs must be certified at the appropriate level, as determined by their agency. Considerations for determining the appropriate level have been added.
Allowability of Waivers:
The CAO could waive all or part of the FAC-P/PM requirements. Extensions to the required certification date by the CAO are allowed, but waivers are not.
Competencies:
Competencies were provided for each certification level. Competencies have been updated for each of the three certification levels, and performance outcomes for competencies at each level have been defined, which better describes the required knowledge, skills and abilities needed for successful performance.
Training Requirements:
Inflexible minimum hours of training and learning outcomes areas were tied to various functional areas. Training requirements are more flexible with requirements ranging from approximately 80 to 120 hours collectively for each of the three levels, depending upon the instructional design and method of training delivery. Training can be tailored more to the individual and his/her competency gaps. Performance outcomes have been added.
Training Classes:
FAI developed a P/PM training blueprint to guide P/PM candidates to appropriate training vendors and classes. FAI has developed and identified more certification training making it easier for agencies and P/PM candidates to determine which classes are available. Sample curricula are provided along with various training options from the Federal Acquisition Institute (FAI), the Defense Acquisition University (DAU), the Department of Veterans Affairs (VA) Acquisition Academy, and commercial vendors.
Senior-Level Experience:
P/PMs were required to have four years of program and project management experience on Federal projects and/or programs. Senior-level P/PMs are required to have four years of program and project management experience, which shall include a minimum of one year of experience on federal programs and/or projects, within the last ten years. This experience can be obtained as either a federal employee or a contractor.
Core-Plus Specialized Certification:
None available. General core-plus requirements have been added to the core FAC-P/PM certification along with specific requirements for a core-plus information technology (IT) certification.
Management Information System:
The Acquisition Career Management Information System (ACMIS) was the official system of records for the FAC-P/PM program. The Federal Acquisition Institute Training Application System (FAITAS) is the official system of records for the FAC-P/PM program. All acquisition P/PMs are required to be registered in FAITAS by January 1, 2014.

Those with questions or suggestions regarding the FAC-P/PM program should contact Joanie Newhart at 202-395-4821 or email: jnewhart@omb.eop.gov.



Government Property Provision, Clause Added to DOSAR

The Department of State (DOS) is finalizing, with changes, the proposed addition of provision DOS Acquisition Regulation (DOSAR) 652.245-70, Status of Property Management System, and clause DOSAR 652.245-71, Special Reports of Government Property, to conform to changes made to the FAR since the last update to DOSAR part 645, Government Property, in 1999 (see the June 2007 Federal Contracts Perspective article “FAR Coverage on Government Property Simplified, Clarified, Trimmed,” and the April 2012 Federal Contracts Perspective article “FAC 2005-56 Finalizes Rules on Women-Owned Business Set-Asides, Use of Cost-Reimbursement Contracts”).

The proposed 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.

The proposed 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.

Two respondents submitted comments on the proposed rule and, as a result, several editorial changes have been made to the final rule.

For more on the proposed rule, see the August 2013 Federal Contracts Perspective article “State Proposes Government Property Clauses.”



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