FEDERAL CONTRACTS PERSPECTIVE
Federal Acquisition Developments, Guidance, and Opinions
Vol. XV, No. 3
President Issues Executive Order Mandating $10.10/Hour Minimum Wage
DOD Cranks Up DFARS Changes
NASA Issues Proposal Adequacy Checklist
FAR Changes Would Reflect 8(a) Program Revisions
President Issues Executive Order
Mandating $10.10/Hour Minimum Wage
On February 12, after announcing his intentions in the State of the Union address, President Obama issued Executive Order 13658 establishing a minimum wage of $10.10 per hour effective January 1, 2015, for all contractors and subcontractors performing federal contracts. According to the executive order, “Raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs. These savings and quality improvements will lead to improved economy and efficiency in government procurement.”
The $10.10 amount will be adjusted every year, beginning January 1, 2016, to reflect inflation during the year as reflected in the Consumer Price Index for Urban Wage Earners and Clerical Workers. According to the executive order, the minimum wage cannot be reduced to reflect deflation.
The minimum wage set for tipped workers is $4.90, which will be adjusted annually by 95¢ per hour or to 70% of the basic minimum wage amount, whichever is less.
The secretary of labor is to issue implementing regulations by October 1, 2014, and the Federal Acquisition Regulation (FAR) is to be amended within 60 days of issuance (that is, no later than December 1, 2014) to require the inclusion of a clause mandating the payment of this minimum wage to workers under new contracts or contract-like instruments (and subcontracts) subject to the Fair Labor Standards Act, the Service Contract Act, or the Davis-Bacon Act.
EDITOR’S NOTE: This executive order does not affect very many contractor employees. First of all, it doesn’t go into effect until January 1, 2015, and then only for “new contracts or contract-like instruments” (such as task orders). Second, almost all employees who perform services are already required by the secretary of labor to be paid at least the prevailing wage rate and fringe benefit for the geographical area – these are called “wage determinations” and are available on “Wage Determinations OnLine” at http://www.wdol.gov. Most of these prevailing wage rates are based on union wages, and very few are less than $10.10/hour. While the Obama administration claims “there are hundreds of thousands of people working under contracts with the federal government to provide services or construction who are currently making less than $10.10 an hour,” likely there are far, far fewer than that.
Regarding the statement in the executive order that “raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs,” the president doesn’t explain why, if this is the case, contractors hadn’t raised the wages themselves to obtain an edge over their competitors.
And how did the president determine $10.10/hour was the appropriate amount for the minimum wage? In his 2013 State of the Union address, Obama called for a $9.00/hour minimum wage. No one in the Obama administration has claimed that inflation was 12% in 2013, so it doesn’t seem that the $10.10 minimum wage is based on anything except politics.
There is one group of employees that will benefit from this: those with disabilities working under concession contracts. Current law permits these workers to be paid less than the minimum wage, so they will receive the same $10.10 per hour minimum wage as others.
DOD Cranks Up DFARS Changes
The Department of Defense (DOD) picked up some steam in February in the Defense Federal Acquisition Regulation Supplement (DFARS) revision department. DOD issued two final rules, one interim rule, three proposed rules, two requests for comments, three class deviations, and published an updated list of Federal Prison Industries (FPI) commodities that must be competed.
- Acquisitions in Support of Operations in Afghanistan: This finalizes, with changes, the interim rule that amended DFARS subpart 225.77, Acquisitions in Support of Operations in Afghanistan, and associated provisions and clauses to require compliance with domestic source restrictions in the case of any textile components supplied by DOD to the Afghan National Army or the Afghan National Police for purposes of production of uniforms, and to eliminate the application of the enhanced authority to acquire products and services from Iraq.
The interim rule implemented two sections of the National Defense Authorization Act (NDAA) for Fiscal Year 2013 (Public Law 112-239):
- Section 826 required compliance with Title 10 of the United States Code, Section 2533a (10 USC 2533a) (also known as the “Berry Amendment”) for any textile components supplied by DOD to the Afghan National Army or the Afghan National Police for purposes of production of uniforms, with no exceptions or exemptions.
- Section 842 modified Section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), which provided enhanced authority to acquire products and services from Iraq and Afghanistan in support of operations in Iraq or Afghanistan. Section 842 eliminated the application of the enhanced authority to acquisition of products and services from Iraq.
DFARS subpart 225.77 was amended to delete references to the Army of Iraq, the Iraqi Police Forces, and other Iraqi security organizations, and DFARS 225.7702-2, Acquisition of Uniform Components for the Afghan Military or the Afghan Police, was added. In addition, Alternate I of DFARS 252.225-7021, Trade Agreements, and DFARS 252.225-7022, Trade Agreements Certificate – Inclusion of Iraqi End Products, were deleted because they only applied to the acquisition of Iraqi end products when trade agreements applied to the acquisition. Finally, DFARS 252.225-7023, Preference for Products or Services from Iraq or Afghanistan, DFARS 252.225-7024, Requirement for Products or Services from Iraq or Afghanistan, and DFARS 252.225-7026, Acquisition Restricted to Products or Services from Iraq or Afghanistan, were modified to delete the enhanced authority relating to acquisitions of products or services from of Iraq.
One comment on the interim rule was submitted. No changes were made to the final rule based on this comment, but one editorial change is being made to correct the electronic Code of Federal Regulations: in the prescription for DFARS 252.225-7021, the phrase “instead of the clause at FAR 52.225-5, Trade Agreements” had been inadvertently omitted, so the phrase is reinstated.
For more on the interim rule, see the October 2013 Federal Contracts Perspective article “Lots More Changes to DOD Acquisition Regulations and Policies.”
- Disclosure to Litigation Support Contractors: This interim rule adds DFARS subpart 204.74, Disclosure of Information to Litigation Support Contractors, and related clauses to allow DOD litigation support contractors to have access to “sensitive information” provided the litigation support contractor is required to protect that information from any unauthorized disclosure and is prohibited from using that information for any purpose other than providing litigation support services to DOD.
This interim rule implements Section 802 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81), which authorizes DOD to disclose to a litigation support contractor “confidential commercial, financial, or proprietary information, technical data, or other privileged information” provided the litigation support contractor agrees to and acknowledges “(A) that sensitive information furnished will be accessed and used only for the purposes stated in the relevant contract; (B) that the contractor will take all precautions necessary to prevent disclosure of the sensitive information provided to the contractor; (C) that such sensitive information provided to the contractor under the authority of this section shall not be used by the contractor to compete against a third party for government or non-government contracts; and (D) that the violation of subparagraph (A), (B), or (C) is a basis for the government to terminate the litigation support contract of the contractor.” New DFARS subpart 204.74 reiterates this policy and, although not required by the statute, states that DOD will ensure that offerors and contractors submitting information to DOD under solicitations and contracts will be notified that the submitted information may be disclosed to DOD’s litigation support contractors.
In addition, the following provision and clauses are added:
- The provision DFARS 252.204-7013, Limitations on the Use or Disclosure of Information by Litigation Support Solicitation Offerors, is to be included in all solicitations, including those using FAR part 12 procedures for the acquisition of commercial items, that involve litigation support services. The provision identifies all the limitations that will be placed on winning litigation support contractor.
The clause DFARS 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors, specifies all the requirements, limitations, and restrictions that apply to the litigation support contractor.
- The clause DFARS 252.204-7015, Disclosure of Information to Litigation support Contractors, notifies all offerors and contractors that information they submit to DOD may be disclosed to litigation support contractors.
Comments on this interim rule must be submitted no later than April 29, 2014, identified as “DFARS Case 2012-D029,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: email@example.com; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Mark Gomersall, OUSD (AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060.
- Enhancement of Contractor Employee Whistleblower Protections: This finalizes, with changes, the interim rule that amended DFARS subpart 203.9, Whistleblower Protections for Contractor Employees, to expand its applicability to include violations of rule or regulation (the subpart had previously been applicable to violations of law only) and abuse of authority relating to a DOD contract. The entities to which protected disclosure may be made are expanded to include other law enforcement agencies, a court or grand jury, and certain contractor or subcontractor management officials or employees (the subpart had previously protected disclosure to members of Congress, an inspector general, the Government Accountability Office [GAO], a DOD employee responsible for contract oversight or management, and an authorized official of the Department of Justice).
One comment on the interim rule was submitted. In response to the comment, the final rule adds to DFARS 203.900, Scope of Subpart, the sentence “This subpart applies to DOD instead of FAR subpart 3.9.” This sentence is added because Section 827 of the National Defense Authorization Act for Fiscal Year 2013 (Public Law 112-239) created separate statutory provisions for DOD, the National Aeronautics and Space Administration (NASA), and the Coast Guard, and these statutory provisions are not dependent on FAR subpart 3.9, Whistleblower Protections for Contractor Employees.
For more on the interim rule, see the October 2013 Federal Contracts Perspective article “FAC 2005-70 Addresses Contractor Whistleblower Issues.”
- Foreign Acquisition Clauses with Alternates: This proposed rule would include the full texts of six foreign acquisition provisions/clauses and their alternates in DFARS part 252, and would add separate prescriptions for the provisions/clauses and their alternates in DFARS 225.1101, Acquisition of Supplies.
The six DFARS foreign acquisition-related provisions/clauses that would be affected by this rule are:
- DFARS 252.225-7000, Buy American – Balance of Payments Program Certificate, and its one alternate;
- DFARS 252.225-7001, Buy American and Balance of Payments Program, and its one alternate;
- DFARS 252.225-7020, Trade Agreements Certificate, and its one alternate;
- DFARS 252.225-7021, Trade Agreements, and its two alternates;
- DFARS 252.225-7035, Buy American – Free Trade Agreements – Balance of Payments Program Certificate, and its five alternates; and
- DFARS 252.225-7036, Buy American – Free Trade Agreements – Balance of Payments Program, and its five alternates.
Using DFARS 252.225-7000 as an example, DFARS 225.1101 would include an overarching prescription for “Buy American – Balance of Payments Program Certificate – Basic” and “Buy American – Balance of Payments Program Certificate – Alternate” (“Use the basic or the alternate of the provision at [DFARS] 252.225-7000, Buy American – Balance of Payments Program Certificate, instead of the provision at FAR 52.225-2, Buy American Certificate, in any solicitation, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that includes the basic or the alternate of the clause at [DFARS] 252.225-7001, Buy American and Balance of Payments Program”). Then DFARS 225.1101 would provide distinct prescriptions for each provision (”Use the provision Buy American – Balance of Payments Program Certificate – Basic, when the solicitation, including solicitations using FAR part 12 procedures for the acquisition of commercial items, includes the basic clause at [DFARS] 252.225-7001” and “Use the provision Buy American – Balance of Payments Program Certificate – Alternate I in solicitations, including solicitations using FAR part 12 procedures, when the solicitation includes Alternate I of the clause at [DFARS] 252.225-7001”).
DFARS part 252 would include the full texts of DFARS 252.225-7000 and its alternative provision. “The inclusion of the full text of each provision/clause alternate aims to make the terms of a provision/clause alternate clearer to offerors and to DOD contracting officers. The current convention for alternates is to show only the changed paragraphs from the basic provision or clause...[This] will assist in making solicitation and contract terms and conditions easier to read and understand. By placing alternates in full text, all paragraph substitutions from the basic provision/clause will have already been made. Inapplicable paragraphs from the basic provision/clause that are superseded by the alternate will not be included in the solicitation or contract in order to prevent confusion.”
Provisions and clauses with multiple alternates would be designated as “Basic,” “Alternate I,” “Alternate II,” etc.
Comments on this proposed rule must be submitted no later than April 14, 2014, identified as “DFARS Case 2013-D005,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: firstname.lastname@example.org; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Amy Williams, OUSD (AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060.
- Tax-Related Clause with Alternate: This proposed rule is similar to the proposed rule on foreign acquisition clauses with alternates except that it addresses a single tax-related clause and its alternate: DFARS 252.229-7001, Tax Relief. The overarching prescription for DFARS 252.229-7001, Tax Relief – Basic, and Tax Relief – Alternate I, would be included in DFARS 229.402-70, Additional Clauses, and the full texts of both the Basic and Alternate I versions would be included in DFARS 252.229-7001.
Comments on this proposed rule must be submitted no later than April 29, 2014, identified as “DFARS Case 2013-D025,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: email@example.com; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Annette Gray, OUSD (AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060.
- Rules of the Armed Services Board of Contract Appeals (ASBCA): This proposed rule is issued at the request of Judge Paul Williams, ASBCA Chairman. The proposed rule would amend the DFARS Appendix A to revise and reorder the ASBCA’s rules for clarity and consistency, reflect changes in technology, remove contradictions, resolve ambiguities, provide updated contact information to allow for some electronic communication by litigants appearing before the board, and add two addendums that previously had not been contained in the board’s rules: Equal Access to Justice Act Procedures, and Alternative Methods of Dispute Resolution.
Comments on this proposed rule must be submitted no later than April 29, 2014, identified as “DARS 2014-0011,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: firstname.lastname@example.org; (3) fax: 703-681-8535; or (4) mail: Armed Services Board of Contract Appeals, Attn: Jeffrey Gardin, Skyline Six, Room 703, 5109 Leesburg Pike, Falls Church, VA 22041-3208.
- Review of Statutory and Regulatory Requirements: This request seeks comments on the effects experienced by industry resulting from contracting statutes. The purpose of this assessment is to reduce compliance requirements that do not achieve the benefits intended by contracting statutes. There is an extensive body of law and regulation that govern DOD’s business, and DOD is seeking to better understand the impact experienced by industry resulting from requirements based on statute. DOD’s initial review identified approximately 400 DFARS requirements based solely on statute. Therefore, DOD is soliciting public comments on the particular effects associated with specific contracting statutes, with reference to:
- Particular effects associated with specific contracting statutes;
- Why the identified effect does not achieve the intended benefit of the identified legislation, or why the intended benefit is not helpful to DOD; and
- Any recommendations for alternative approaches to achieve the intended benefit of the identified legislation.
In addition, DOD is interested in comments on requirements in the DFARS and component supplements (for example, Army FAR Supplement) that, although not based in statute, warrant similar consideration.
Comments must be submitted no later than March 14, 2014, by any of the following methods: (1) mail: Mr. Michael Canales, Room 5E621, 3060 Defense Pentagon, Washington, DC 20301-3060; (2) fax: 703-614-1254; or (3) email: email@example.com.
- Negotiation of a Reciprocal Defense Procurement Memorandum of Understanding With the Republic of Slovenia: DOD is requesting comments on a contemplated Reciprocal Defense Procurement (RDP) Memorandum of Understanding (MOU) with the Republic of Slovenia. DOD is requesting industry feedback regarding its experience in public defense procurements conducted by or on behalf of the Slovenian Ministry of Defense or Armed Forces.
If DOD signs an RDP MOU with Slovenia, Slovenia would be listed as one of the “qualifying countries” identified in DFARS 225.003, Definitions, and offers of products of Slovenia or that contain components from Slovenia would be afforded the benefits available to all qualifying countries. This also means that U.S. products would be exempt from any analogous “Buy Slovenia” and “Buy European Union” laws or policies applicable to procurements by the Slovenian Ministry of Defense or Armed Forces.
While DOD is evaluating Slovenia’s laws and regulations in this area, DOD is requesting comments from U.S. industry on its experience in participating in Slovenia’s public defense procurements. DOD is asking U.S. firms that have participated or attempted to participate in procurements by or on behalf of the Slovenian Ministry of Defense or Armed Forces to let it know if the procurements were conducted in accordance with published procedures with transparency, integrity, fairness, and due process, and if not, the nature of the problems encountered.
Also, DOD is interested in comments relating to the degree of reciprocity that exists between the U.S. and Slovenia when it comes to the openness of defense procurements to offers of products from the other country.
Comments must be submitted no later than March 14, 2014, to Defense Procurement and Acquisition Policy, Attn: Victor Deal, 3060 Defense Pentagon, Room 5E621, Washington, DC 20301-3060; or by e-mail to Victor.T.Deal3.firstname.lastname@example.org.
- Class Deviation Prohibiting Use of FY 2014 Funds to Contract with Corporations with Unpaid Delinquent Taxes: DOD has issued a class deviation that prohibits the use of any Fiscal Year 2014 funds appropriated to DOD by the Department of Defense Appropriations Act, 2014, and the Military Construction and Veterans Affairs, and Related Agencies Appropriations Act, 2014 (Public Law 113-76) in any contracts with corporations that have an unpaid delinquent tax liability or a felony conviction under a federal law.
The class deviation provides a provision, DFARS 252.209-7993, Representation by Corporations Regarding an Unpaid Delinquent Tax Liability or a Felony Conviction Under Any Federal Law – Fiscal Year 2014 Appropriations (DEVIATION 2014-OO0009), and requires the contracting officer to include it in all solicitations that will use funds made available by Public Law 113-76, including solicitations for the acquisition of commercial items under FAR part 12. DFARS 252.209-7993 requires each contractor to represent whether it: (1) “has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability...”; or (2) “was convicted of a felony criminal violation under a federal law within the preceding 24 months...”
If the contractor answers “it is” such a corporation, the contracting officer shall not award a contract to the contractor “unless the agency debarring and suspending official has considered suspension or debarment of the corporation and has made a written determination that this further action is not necessary to protect the interests of the government.”
- Class Deviation on Acquisition of the American Flag: This class deviation implements Section 8123 of the Department of Defense Appropriations Act, 2014 (Public Law 113-76), which states, “None of the funds made available in this act may be used for the purchase or manufacture of a flag of the United States unless such flags are treated as covered items under Section 2533a(b) of Title 10, United States Code [the Berry Amendment].” To comply with Section 8123, this class deviation requires that DFARS 252.225-7988, Acquisition of the American Flag (CLASS DEVIATION 2014-O0010), be included in all solicitations and contracts, including those using FAR part 12 procedures for the acquisition of commercial items, that are for the acquisition of American flags and have an estimated value that exceeds the simplified acquisition threshold ($150,000) unless the flags are for commissary resale. The clause requires that covered flags, including the materials and components, shall be manufactured in the United States. The clause goes on to state that “this clause does not apply to the acquisition of any end items or components related to the flying or displaying the flag (e.g., flagpoles and accessories).”
- Class Deviation on Prohibition on Contracting with the Enemy: This class deviation implements Section 831 of the National Defense Authorization Act for Fiscal Year 2014 (Public Law 113-66). Section 831 requires the U.S. Central Command (USCENTCOM), U.S. European Command (USEUCOM), the U.S. African Command (USAFRICOM), U.S. Southern Command (USSOUTHCOM), and the U.S. Pacific Command (USPACOM) to identify persons or entities who are actively opposing U.S. or Coalition forces involved in a contingency operation in which members of the armed forces are actively engaged in hostilities. The respective commanders are to notify their appropriate heads of contracting activities (HCAs) of the individuals or entities so identified. Upon receipt of such notification, the HCA shall decide whether to:
- Prohibit, limit, or place other restrictions on the award of any DOD contracts to such individuals or entities;
- Terminate for default any DOD contracts if the contractor failed to exercise due diligence to ensure that none of the contract funds are provided to such individuals or entities; or
- Void any DOD contract that provided funds to such individuals or entities.
The class deviation provides two clauses:
- DFARS 252.225-7993, Prohibition on Contracting with the Enemy (DEVIATION 2014-O0008), which is to be included in all solicitations and contracts awarded on or before December 31, 2018, with an estimated value in excess of $50,000, that are being, or will be, performed in the USCENTCOM, USEUCOM, USAFRICOM, USSOUTHCOM, or USPACOM theaters of operation. The clause contains the provisions in Section 831.
- DFARS 252.225-7994, Additional Access to Contractor and Subcontractor Records in the United States Central Command Theater of Operations (DEVIATION 2014-O0008), which is to be included in all solicitations and contracts awarded prior to December 31, 2014, with an estimated value in excess of $100,000, that are being performed in USCENTCOM. The clause authorizes DOD to examine any contractor records to ensure that contract funds are not subject to extortion or corruption, or provided to individuals or entities that are actively supporting an insurgency or actively opposing U.S. or Coalition forces in a contingency operation. This clause reflects the provisions of Section 842 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81), which had been implemented by an earlier class deviation that is superseded by this class deviation.
- Updated List of Federal Supply Classification (FSC) Codes to be Competed When Purchasing from Federal Prison Industries (FPI): DOD has published a list of product categories, by FSC codes, for which FPI’s share of the DOD market is greater than 5%. This list is required by Section 827 of the National Defense Authorization Act for FY 2008 (Public Law 110-181), and products on the list must be procured using competitive (or fair opportunity) procedures (see DFARS 208.602-70, Acquisition of Items for Which FPI Has a Significant Market Share). In conducting such a competition, contracting officers must consider a timely offer from FPI for any of the products on the list. In addition, FPI must be included in the process even if the procurement otherwise would have been set aside in accordance with FAR part 19, Small Business Programs. When the FPI item is determined to provide the best value as a result of FPI’s response to a competitive solicitation, contracting officers are to follow the ordering procedures at http://www.unicor.gov.
The following is the list of products:
| || |
|5335|| Metal Screening|
|7110|| Office Furniture|
|7125|| Cabinets, Lockers, Bins, and Shelving|
|7230|| Draperies, Awnings, and Shades|
|7290|| Miscellaneous Household and Commercial Furnishings and Appliances|
|8405|| Outerwear, Men’s|
|8415|| Clothing, Special Purpose|
|8420|| Underwear and Nightwear, Men’s|
|8465|| Individual Equipment|
|9905|| Signs, Advertising Displays and Identification Plates|
NASA Issues Proposal Adequacy Checklist
The National Aeronautics and Space Administration (NASA) is finalizing, without changes, the proposed rule that would add NASA FAR Supplement (NFS) 1852.215-85, Proposal Adequacy Checklist, and require contracting officers to include the provision in solicitations that require the submission of certified cost or pricing data (see FAR 15.403, Obtaining Certified Cost or Pricing Data). The intent of the proposed provision was to facilitate submission of a thorough, accurate, and complete proposal.
The Proposal Adequacy Checklist includes 34 pieces of information that the offeror must address. Each of the 34 provides a reference to the FAR provision that requires the information, a description of the information, and a place for the offeror to provide the page number in the proposal where that information is included or to provide an explanation of why the information is not included. For example, item 5 references “FAR 15.408 [Solicitation Provisions and Contract Clauses], Table 15-2 [Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data are Required], Section I [General Instructions], Paragraph B” [“In submitting your proposal, you must include an index, appropriately referenced, of all the certified cost or pricing data and information accompanying or identified in the proposal”]; identifies the required information (“Is an Index of all certified cost or pricing data and information accompanying or identified in the proposal provided and appropriately referenced?”); and then provides space for the offeror to identify the proposal page where the index is or explain why there is no index.
One respondent submitted comments on the proposed rule but none of the comments were adopted, so the proposed rule is finalized without changes.
For more on the proposed rule, see the November 2013 Federal Contracts Perspective article “NASA Proposes Proposal Adequacy Checklist.”
FAR Changes Would Reflect 8(a) Program Revisions
A proposed rule has been published that would revised the Federal Acquisition Regulation (FAR) to implement revisions made by the Small Business Administration (SBA) to its regulations implementing Section 8(a) of the Small Business Act (referred to as the “8(a) Business Development Program” or “8(a) program”), and to provide additional coverage regarding protesting an 8(a) participant’s eligibility or size status, procedures for releasing a requirement for non-8(a) procurements, and the ways a participant could exit the 8(a) program.
In 2011, the SBA made the first comprehensive revision of its 8(a) program regulations in more than ten years (see the March 2011 Federal Contracts Perspective article “SBA Revises 8(a) Program, Small Business Size Regulations”). This proposed rule would revise FAR subpart 19.8, Contracting with the Small Business Administration (The 8(a) Program), and other FAR parts to reflect the SBA’s 8(a) program rule changes and to provide additional clarification and guidance pertaining to the operation of the 8(a) program.
The following are the significant changes being proposed:
- The terms “8(a) concerns,” “8(a) contractors,” and “8(a) firms” would be replaced with “8(a) participants” throughout the FAR to reflect the terminology used in SBA’s 8(a) regulations.
- FAR 19.802, Selecting Concerns for the 8(a) Program, would be retitled “Determining Eligibility for the 8(a) Program”, and revised to add the location in SBA regulations where the eligibility requirements for participation in the 8(a) program can be found (“13 CFR [Code of Federal Regulations] 124.101 through 124.112”).
- New paragraph (c) of FAR 19.804-3, SBA Acceptance, would advise contracting officers that SBA will either work with the contracting officer to select an 8(a) participant for a possible award or, where the contracting officer nominates the 8(a) participant, determine whether an appropriate match exists by matching requirements consistent with the 8(a) participants’ capability.
- Paragraph (c) of FAR 19.804-6, Indefinite Delivery Contracts, would be revised to clarify that agencies may still continue to take small disadvantaged business (SDB) credit even after the contractor has left the 8(a) Program unless the contractor has re-represented that it is other than small.
- Paragraph (b) of FAR 19.805-2, Procedures [for competitive 8(a) awards], would be revised to require that an 8(a) participant must represent it is a small business in accordance with the size standard corresponding to the North American Industry Classification System (NAICS) code assigned to the contract. Also, paragraph (b) would discuss SBA’s eligibility determination process.
Paragraph (b)(1) would be revised by deleting all the text pertaining to sealed bidding acquisitions and replacing it with language addressing both sealed bidding and negotiated acquisitions. Subparagraph (b)(1)(i) would clarify that if SBA determines the apparent successful offeror is ineligible, the contracting office must send to SBA the identity of the next highest evaluated firm for an eligibility determination. The process is repeated until SBA determines that an identified offeror is eligible for award. Subparagraph (b)(1)(ii) would state that if the contracting office believes the apparent successful offeror (or the offeror SBA has determined eligible for award) is not responsible, the contracting office must refer the matter to SBA for Certificate of Competency consideration.
- Paragraph (e) would be added to FAR 19.808-1, Sole Source. It would advise contracting officers that an 8(a) participant owned by an Alaska Native Corporation, Indian Tribe, Native Hawaiian Organization, or Community Development Corporation may not receive a sole source follow-on 8(a) contract if the predecessor contract was performed by another participant owned by the same Alaska Native Corporation, Indian Tribe, Native Hawaiian Organization, or Community Development Corporation.
- FAR 19.810, SBA Appeals, would be retitled “SBA Appeals of a Contracting Officer’s Decision to the Agency Head” because that more clearly indicates the section’s subject matter.
- FAR 19.813, Protesting an 8(a) Participant’s Eligibility or Size Status, would be added to clarify that the eligibility of an 8(a) participant for a sole source or competitive 8(a) requirement may not be challenged by another 8(a) participant or any other party. However, a successful offeror’s size status for a competitive 8(a) award may be protested by any offeror whom the contracting officer has not eliminated for reasons unrelated to size, by the contracting officer, or by the SBA.
- FAR 19.814, Requesting a Formal Size Determination (8(a) Sole Source Requirements), would be added to clarify that, if the size of an 8(a) participant nominated for award of an 8(a) sole source contract is called into question, a formal size determination may be requested.
- FAR 19.815, Release for Non-8(a) Procurement, would be added to provide the procedures for obtaining SBA’s consent to release an 8(a) requirement for non-8(a) procurement. Also, it would it would briefly describe the matters the SBA takes into consideration when deciding whether releasing a requirement for non-8(a) procurement is in the best interest of the agency and the 8(a) participant currently performing the requirement.
- FAR 19.816, Exiting the 8(a) Program, would be added to advise contracting officers that:
- When a contractor exits the 8(a) program, it is no longer eligible to receive new 8(a) contracts. However, the contractor remains under contractual obligation to complete existing contracts and any priced options that may be exercised.
- If an 8(a) participant is suspended from the program, it may not receive any new 8(a) contracts unless the head of the contracting agency determines it would be in the best interest of the government to issue the award, and SBA adopts that determination.
- A contractor that has completed its term of participation in the 8(a) program may be awarded a competitive 8(a) contract if it was an 8(a) participant eligible for award of the contract on the initial date specified for receipt of offers contained in the contract solicitation, and if the contractor continues to meet all other applicable eligibility criteria.
Comments on this proposed rule must be submitted no later than April 4, 2014, identified as “FAR Case 2012-022,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail: U.S. General Services Administration, Regulatory Secretariat Division (MVCB), ATTN: Hada Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
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