December 2014
Federal Acquisition Circular (FAC) 2005-78 addresses a nagging problem that has bedeviled federal acquisitions for years: the inconsistent incorporation in contract awards of Section K, Representations, Certifications, and Other Statements of Bidders/Offerors or Respondents. In addition, FAC 2005-78 amends the Federal Acquisition Regulation (FAR) to reflect the transfer of authority to process claims for the payment of workers who were not paid appropriate wages; to clarify when to use higher-level quality standards in solicitations and contracts; and to remove the last vestiges of “year 2000 compliance” (“Y2K”). Every five years, statutory-based acquisition-related thresholds are required to be adjusted for inflation except for the Construction Wage Rate Requirements statute (the Davis-Bacon Act), the Service Contract Labor Standards statute (the Service Contract Act), and trade agreements thresholds. This requirement is in Section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year (FY) 2005 (Public Law 108-375), and it requires an adjustment every five years (“on October 1 of each year that is evenly divisible by five”) using the Consumer Price Index for all urban consumers. This proposed rule would make the required adjustments to the statutory-based acquisition thresholds on October 1, 2015. In addition, this proposed rule would use the same methodology to adjust nonstatutory acquisition-related thresholds – that is, those thresholds in the FAR that have their origin in executive orders or regulations. However, this proposed rule does not address those thresholds that are not considered “acquisition-related,” such as those related to claims, penalties, withholding, payments, required levels of insurance, small business size standards, liquidated damages, etc. Finally, changes to cost accounting standards (CAS) thresholds will be dealt with separately. The following are the adjustments that would be made to the most used thresholds by this rule: Comparable changes would be made to corresponding provisions and clauses in FAR part 52, Solicitation Provisions and Contract Clauses. The $150,000 simplified acquisition threshold in FAR 2.101 would be unchanged because it was escalated in 2010 and the inflation since then is insufficient to trigger another adjustment. Also, the threshold for FedBizOpps (https://www.fbo.gov/) preaward and post-award notices in FAR part 5, Publicizing Contract Actions, will remain at $25,000 because of the trade agreements. Comments on the proposed rule must be submitted no later than January 26, 2015, identified as “FAR case 2014-022,” 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: Ms. Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405. For more on the previous adjustments to FAR thresholds, see the September 2010 Federal Contracts Perspective article “Federal Acquisition-Related Thresholds Adjusted for Inflation.” In addition, the Department of Defense (DOD) has proposed five-year inflation adjustments to acquisition-related thresholds in the Defense FAR Supplement (DFARS). Besides making changes to conform to the FAR threshold adjustments (see above), DOD is proposing changes to thresholds that apply only to DOD. Among the most significant DOD-unique threshold changes would be the following: Comparable changes would be made to corresponding provisions and clauses in DFARS part 252, Solicitation Provisions and Contract Clauses. Comments on the proposed rule must be submitted no later than January 5, 2015, identified as “DFARS 2014-D025,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Amy Williams, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060. For more on the previous adjustments to DFARS thresholds, see the September 2010 Federal Contracts Perspective article “Defense Acquisition-Related Thresholds Adjusted, Too.” The Government Accountability Office (GAO) issued its annual letter on bid protests to various Congressional committees, in which it reported that 2,561 protests, cost claims, and requests for reconsideration were filed in Fiscal Year (FY) 2014, a 5% increase from the 2,429 filed in FY 2013. This is the largest number of protests filed since FY 1995. The FY 2014 protest sustain rate (number of GAO decisions in favor of the protestor versus the number of all protests) was 13%, compared to the 17% sustain rate for FY 2013 and 18.6% sustain rate for FY 2012. The 43% effectiveness rate (the protestor obtained some form of relief from the agency either as a result of voluntary corrective action by the agency or a GAO decision sustaining the protest) was the same as the effectiveness rate for FY 2013 and slightly higher than the 42% effectiveness rates for FY 2012 and FY 2011. GAO’s review of its decisions shows the most prevalent reasons for sustaining protests during FY 2014 were: (1) failure to follow the solicitation evaluation criteria; (2) flawed selection decision; (3) unreasonable technical evaluation; and (4) unequal treatment of offerors. Besides the proposed revision of acquisition thresholds in the DFARS (see above), DOD continued its revision of DFARS provisions and clauses that have alternates by finalizing the proposed rules on clauses and their alternates in contracts involving special contracting methods, major systems, services, and foreign acquisitions. In addition, DOD is proposing to require the use of a new clause that would clarify that entering into a contract may cause a small business to exceed the applicable small business size standard.
Vol. XV, No. 12
[pdf version]
FAC 2005-78 Standardizes Incorporation of Representations and Certifications in Contracts
Five-Year Acquisition Threshold Adjustments Proposed
Number of Protests Increased by 5% in FY 2014
DOD Updates Four Types of Contract Clauses
Representations and Certifications in Contracts
The standard contract award forms are inconsistent regarding the reference to Section K of the Uniform Contract Format [Representations, Certifications, and Other Statements of Bidders/Offerors or Respondents]. Standard Form (SF) 26, Award/Contract, SF 33, Solicitation, Offer and Award, and Optional Form 307, Contract Award, each have a block for the page numbers where Section K is located in the contract, but SF 252, Architect-Engineer Contract, SF 1442, Solicitation, Offer and Award (Construction, Alteration or Repair), SF 1447, Solicitation/Contract, and SF 1449, Solicitation/Contract/Order for Commercial Items, do not address Section K. In addition, FAR 15.204-1, Uniform Contract Format, requires that Section K be incorporated by reference into the contract, but FAR 14.201-1, Uniform Contract Format [Sealed Bidding], merely stated that acceptance of a bid incorporates Section K “in the resultant contract even though not physically attached.”
To clarify this, the rule proposed the following:
One respondent submitted comments on the proposed rule, and in response the parenthetical phrase in FAR 14.201-1 and FAR 15.204-1 is amended to read: “(see [FAR] 4.1202(b)) or for commercial items see [FAR] 52.212-4(v))” (emphasis added). In addition, the numbering of the added clause is finalized as FAR 52.204-19 (FAR 52.204-X was merely a placeholder).
For more on the proposed rule, see the May 2014 Federal Contracts Perspective article “Proposed FAR Rule Would Add Section K to Contracts.”
One of the specific functions transferred to the DOL is the authority to pay certain wages. FAR subpart 22.4, which addresses the withholding or suspending of contract payments and the disposition of such payments, requires revision to be consistent with the act. Specifically, paragraph (c) of FAR 22.406-9, Withholding from or Suspension of Contract Payments, includes instructions regarding the disposition of contract payments that have been withheld or suspended. Also, FAR 22.406-11, Contract Terminations, includes instructions for submitting reports when terminations result from violation of labor standards clauses. This final rule revises these FAR sections to reflect the authorities transferred to the DOL, and to provide a link to the DOL website that provides guidance on the disbursement of withheld funds (http://www.dol.gov/whd/govcontracts/dbra.htm). Also, because the SF 1093 was used to disburse funds to the GAO, SF 1093 is deleted from FAR part 53, Illustration of Forms, and references to it in FAR 22.406-9 are removed.
FAR 39.106 required that information technology being acquired must be “year 2000 compliant,” meaning the year had to be representing in a four-digit format (“1/1/2000”). In addition, FAR 39.106 required that all information technology not year 2000 compliant be upgraded into compliance.
Because all information technology now in use by the government is year 2000 compliant, FAR 39.106 is no longer necessary. In addition, the rule proposed to remove the “Year 2000 Compliant” definition in FAR 39.002, Definitions, and paragraph (a) of FAR 39.101, Policy, which addresses the statutory requirement for year 2000 compliance.
No comments were submitted on the proposed rule, so it is finalized without changes. For more on the proposed rule, see the April 2014 Federal Contracts Perspective article “Removal of Year 2000 Compliance Regulations Proposed.”
Section 818 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81), “Detection and Avoidance of Counterfeit Electronic Parts,” requires the Department of Defense (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. Therefore, it was decided to apply the rule to all federal contracting activities and to expand it beyond electronics.
The rule proposed making the following changes to FAR part 46:
In addition, it was proposed that FAR 44.303, Contractors’ Purchasing Systems Review, be revised to add “implementation of higher-level quality standards” to the areas for evaluation when conducting a contractor’s purchasing system review (new paragraph (k)).
Six respondents submitted comments, and the following changes are incorporated in the final rule in response:
For more on the proposed rule, see the January 2014 Federal Contracts Perspective article “Higher-Level Contract Quality Requirements Proposed.”
The affected clauses are:
The naming convention results in new clause titles, for example, Exercise of Option to Fulfill Foreign Military Sales Commitments – Basic, and Exercise of Option to Fulfill Foreign Military Sales Commitments – Alternate I.
No comments were submitted on the proposed rule, so it is finalized without changes. For more on the proposed rule, see the June 2014 Federal Contracts Perspective article “DOD Continues Revising Clauses with Alternates.”
The six clauses that were proposed for this treatment were:
No comments were submitted in response to the proposed rule. However, DFARS part 225 contains eight solicitation provisions and clauses that have alternates. The proposed rule addressed the six above but not DFARS 252.225-7044, Balance of Payments Program – Construction Material, and its alternate, or DFARS 252.225-7045, Balance of Payments Program – Construction Material Under Trade Agreements, and its three alternates. These were to be addressed in a separate rule but the effort was abandoned. Therefore, this final rule includes DFARS 252.225-7044 and DFARS 252.225-7045 and reformats them to conform to the new structure for provisions and clauses with alternates.
Finally, the final rule contains some minor wording changes for clarity and consistency in presentation of the clauses and provisions.
For more on the proposed rule, see the March 2014 Federal Contracts Perspective article “DOD Cranks Up DFARS Changes.”
The rule would add DFARS 219.309, Solicitation Provisions and Contract Clauses [for determining small business status], which would require the inclusion of DFARS 252.219-XXXX in solicitations for contracts that are expected to exceed “(1) the small business size standard, if expressed in dollars, for the North American Industry Classification System (NAICS) code assigned by the contracting officer; or (2) $70,000,000, if the small business size standard is expressed as number of employees for the NAICS code assigned by the contracting officer.”
DFARS 252.219-XXXX would require the offeror to acknowledge that “by acceptance of this contract, it may exceed the applicable small business size standard of the NAICS code assigned to the contract and would no longer qualify as a small business concern for that NAICS code. (Small business size standards matched to industry NAICS codes are published by the Small Business Administration and are available at http://www.sba.gov/content/table-small-business-size-standards.) The offeror is therefore encouraged to develop the capabilities and characteristics typically desired in contractors that are competitive as other-than-small contractors in this industry...For technical assistance in this regard, the offeror may contact the nearest Procurement Technical Assistance Center (PTAC). PTAC locations are available at http://www.aptac-us.org.” There are over 300 PTACs in the U.S., Puerto Rico, and Guam, and they offer a wide range of government contracting assistance.
Comments on the proposed rule must be submitted no later than January 5, 2015, identified as “DFARS case 2014-D022,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Lee Renna, OUSD(AT&L)DPAP/ DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
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