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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


February 2014
Vol. XV, No. 2
[pdf version]

CONTENTS


DOD Limits Use of Cost-Type Contracts for Major Defense Acquisition Programs
DPAS Revisions and Clarifications Proposed
GSA Seeking Comments on FSS Order-Level Materials
Number of Protests Decreased by 2% in FY 2013
Prompt Payment Interest Rate Set at 2 1/8%



DOD Limits Use of Cost-Type Contracts for
Major Defense Acquisition Programs

Department of Defense (DOD) started 2014 slowly, issuing an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a provision of the National Defense Authorization Act for Fiscal Year (FY) 2013 (Public Law 112-239) that prohibits DOD from entering into cost-type contracts for production of major defense acquisition programs (MDAP). In addition, DOD revised the Proposal Adequacy Checklist to remove a redundancy, and proposed two rules: one would address payment in local Afghan currency; the other would address storage, treatment, and disposal of toxic or hazardous materials. Finally, DOD issued a class deviation addressing contractor personnel performing in Djibouti.



DPAS Revisions and Clarifications Proposed

The Bureau of Industry and Security (BIS), a part of the Department of Commerce, is proposing to update and expand Title 15 of the Code of Federal Regulations, part 700 (15 CFR 700), Defense Priorities and Allocations [DPAS], to make the DPAS regulations consistent with the regulations issued by agencies those with priorities and allocations authority (that is, the Departments of Agriculture [USDA], Defense [DOD], Energy [DOE], Health and Human Services [HHS], Homeland Security [DHS], and Transportation [DOT]), and to make the regulations easier to understand. In addition, this proposed revision would expand the provisions pertaining to allocations to clarify the procedures to be followed for allocations actions.

The DPAS has two principal components – priorities and allocations. Under the priorities component, certain contracts between the government and private parties or between private parties for the production or delivery of industrial resources are required to be given priority over other contracts to facilitate expedited delivery in promotion of the U.S. national defense. Under the allocations component, materials, services, and facilities may be allocated to promote the national defense. For both components, the term “national defense” means programs for military and energy production or construction, homeland security, stockpiling, space, emergency preparedness, and critical infrastructure protection and restoration. The term also includes foreign military and critical infrastructure assistance. Approximately 400,000 “rated” contracts are placed annually to satisfy national defense requirements.

The following are the significant changes being proposed to the DPAS regulations:

Comments on this proposed rule must be submitted no later than April 1, 2014 by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov (the identification number is “BIS-2010-0021”); (2) email: publiccomments@bis.doc.gov (include “RIN 0694-AE81” in the subject line); or (3) mail: Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW, Washington, DC 20230 (refer to “RIN 0694-AE81”).

GSA Seeking Comments on FSS Order-Level Materials

The General Services Administration (GSA) is seeking comments on the development of processes and procedures for the inclusion of order-level materials under the Federal Supply Schedule (FSS) program. Though the acquisition of order-level materials is allowed under multiple-award indefinite-delivery/indefinite-quantity (IDIQ) contracts, GSA has yet to develop a clear mechanism for the procurement of these items under the FSS program, resulting in the inability to fully realize the effective use of the FSS program across the government. GSA is now taking steps to bring the FSS program into parity with other multiple-award IDIQ contract vehicles.

Respondents are encouraged to offer their views on the following questions:

  1. Is the current lack of a clear mechanism for the procurement of order-level materials a deterrent from using the FSS program? If so, how?

  2. What potential challenges exist where order-level materials and the FSS program are concerned? How can these be addressed?

  3. What kinds of processes and procedures are in place for the procurement of order-level materials under other multiple-award IDIQ contract vehicles? Can these be applied to the FSS program as is, or are there special considerations GSA needs to address? If possible, provide specific examples from multiple-award IDIQ contract vehicles that could serve as a good example of the kind of processes and procedures needed for the efficient and effective use of order-level materials.

  4. If GSA were to implement clear processes and procedures for the acquisition of order-level materials under the FSS program, is there the potential for administrative cost savings? If so, elaborate.

  5. If GSA were to implement clear processes and procedures for the acquisition of order-level materials under the FSS program, would it provide increased flexibility to contractors to provide total solutions to government requirements? Are there any additional benefits for small businesses in particular?

  6. What kind of risk management controls are needed to ensure efficient and effective use of order-level materials under the FSS program?

Written comments must be submitted no later than March 17, 2014 by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov (the identification number is “Notice – FAS-2013-02”); or (2) mail: General Services Administration, Regulatory Secretariat (MVCB), ATTN: Ms. Flowers/Notice – FAS-2013-02, 1800 F Street NW, 2nd Floor, Washington, DC 20405-0001.



Number of Protests Decreased by 2% in FY 2013

The Government Accountability Office (GAO) issued its annual letter on bid protests to various Congressional committees, in which it reported that 2,429 protests, cost claims, and requests for reconsideration were filed in Fiscal Year (FY) 2013, a 2% decrease from the 2,475 filed in FY 2012 (which had the largest number of protests filed since FY 1995).

The FY 2013 protest sustain rate (number of GAO decisions in favor of the protestor versus the number of all protests) was 17%, compared to the 18.6% sustain rate for FY 2012 and 16% sustain rate for FY 2011. 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 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 the 2013 fiscal year were: (1) failure to follow the solicitation evaluation criteria; (2) inadequate documentation of the record, (3) unequal treatment of offerors; and (4) unreasonable price or cost evaluation.



Prompt Payment Interest Rate Set at 2 1/8%

The Treasury Department has established 2 1/8% (2.125%) as the interest rate for the computation of payments made between January 1, 2014, and June 30, 2014, under the Prompt Payment Act and the Contracts Disputes Act. This rate is also used in facilities capital cost of money calculations. The interest rate for the prior six-month period (July 1, 2013, through December 31, 2013) was 1 3/4% (1.75%). The interest rate for January 1, 2013, through June 30, 2013, was 1 3/8% (1.375%).

All prompt payment interest rates since 1980 (in six-month increments) are available at http://www.treasurydirect.gov/govt/rates/tcir/tcir_opdprmt2.htm.

FAR subpart 32.9, Prompt Payment; FAR subpart 33.2, Disputes and Appeals; FAR 31.205-10, Cost of Money; and Cost Accounting Standard (CAS) 9904.414, Cost of Money as an Element of the Cost of Facilities Capital, are affected by this interest rate.



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