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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


April 2014
Vol. XV, No. 4
[pdf version]

CONTENTS


DOD Provides Guidance on Performance-Based Payments
Removal of Year 2000 Compliance Regulations Proposed
EPA Removing Redundant Performance Information Regulations
Treasury Requires Minority and Women Inclusion
GSA Seeks Comments on Cybersecurity Recommendations
GSA Reinstating FSS Modification Clause
Labor Directed to Propose Changes to Overtime Regulations



DOD Provides Guidance on
Performance-Based Payments

The Department of Defense (DOD) took it easy during March, issuing four final rules, three class deviations, and a waiver to the Defense Federal Acquisition Regulation Supplement (DFARS). Probably the most significant action was the final rule that provides guidance and two contract clauses on performance-based payments, a form of contract finance.



Removal of Year 2000 Compliance Regulations Proposed

A proposed rule has been published that would delete FAR 39.106, Year 2000 Compliance, and related portions of the FAR because all of the issues addressing the transition to year 2000 have been resolved.

In 1997, an interim rule was published that addressed year 2000 compliance issues, which were expected to affect many information technology systems on January 1, 2000. Many of the systems in use at that time represented years in a two-digit format – on January 1, 2000, it was feared that these computers would interpret “1/1/00” as “January 1, 1900,” thus causing false calculations, innumerable problems, and the possible collapse of the computer-grid if left uncorrected.

FAR 39.106 requires 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 requires that all information technology that is not year 2000 compliant is to be upgraded into compliance.

Because all information technology now in use by the government is year 2000 compliant, this proposed rule would remove FAR 39.106. In addition, the proposed rule would 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 (Section 622 of the Omnibus Appropriations and Authorization Act for Fiscal Year 1999 [Public Law 105-277]).

Comments on this proposed rule must be submitted no later than May 27, 2014, identified as “FAR Case 2014-006,” 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.



EPA Removing Redundant Performance Information Regulations

The Environmental Protection Agency (EPA) is removing the EPA Acquisition Regulation (EPAAR) policies for collecting and maintaining contractor past performance information because Federal Acquisition Circular (FAC) 2005-69 contained a rule that revised FAR subpart 42.15, Contractor Performance Information, thus making the EPAAR policies redundant. The new FAR requirements mirror the current EPA policies for collecting and maintaining contractor past performance, so there is no need for an agency supplement. FAR subpart 42.15, combined with the guidance and reference material included on the Contractor Performance Assessment Reporting System (CPARS) website at http://www.cpars.gov provide sufficient policies and procedures for the EPA to satisfy the EPA’s needs.

This direct final rule deletes the following: EPAAR subpart 1542.15, Contractor Performance Information, in its entirety; EPAAR 1552.242-71, Contractor Performance Evaluations; and EPAAR 1553.209, Contractor Qualifications, including EPAAR 1553.209-70, EPA Form 1900-26, Contracting Officer’s Evaluation of Contractor Performance, and EPAAR 1553.209-71, EPA Form 1900-27, Project Officer’s Evaluation of Contractor Performance.

This is being published as a “direct final rule,” which EPA reserves for rules it believes are noncontroversial. The rule will take into effect May 23, 2014, without further action unless adverse comment is received by April 23, 2014. If adverse comment is received, the EPA will withdraw the rule and publish a notice in the Federal Register that the rule will not take effect.

Comments on this direct final rule must be submitted no later than April 23, 2014, identified as “EPA-HQ-OARM-2013-0736,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: docket.oei@epa.gov; (3) fax: 202-566-1753; (4) mail: EPA-HQ-OARM-2013-0736, OEI Docket, Environmental Protection Agency, 2822T, 1200 Pennsylvania Ave., NW, Washington, DC 20460 (include three [3] copies); or (5) hand delivery to the EPA Docket Center – Attention OEI Docket, EPA West, Room B102, 1301 Constitution Ave., NW, Washington, DC 20004 (such deliveries are only accepted during the Docket’s normal hours of operation [8:30 am to 4:30 pm, Monday through Friday, excluding legal holidays], and special arrangements should be made for deliveries of boxed information).



Treasury Requires Minority and Women Inclusion

The Department of the Treasury is amending the Department of the Treasury Acquisition Regulation (DTAR) to include a contract clause on minority and women inclusion, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Public Law 111-203). Section 342 of the Dodd-Frank Act established an Office of Minority and Women Inclusion in certain agencies, including the Department of the Treasury, and it requires those agencies to obtain from its contractors a written statement that the “contractor shall ensure, to the maximum extent possible, the fair inclusion of women and minorities in the workforce of the contractor and, as applicable, subcontractors.”

Treasury issued a proposed rule that would implement Section 342 by adding DTAR 1052.222-70, Minority and Women Inclusion, in all solicitations and contracts for services that exceed the simplified acquisition threshold ($150,000). The clause would require the contractor to “ensure, to the maximum extent possible consistent with applicable law, the fair inclusion of minorities and women in its workforce. The contractor shall insert the substance of this clause in all subcontracts under this contract whose dollar value exceeds $150,000.” In addition, the clause would require the contractor to provide to the contracting officer, upon request, “documentation, satisfactory to the agency, of the actions it (and as applicable, its subcontractors) has undertaken to demonstrate its good faith effort to comply with the aforementioned provisions.”

Eight respondents submitted comments on the proposed rule, and the following two minor changes are made in the final rule in response:

For more on the proposed rule, see the September 2012 Federal Contracts Perspective article “Treasury Proposes Minority and Women Inclusion.”



GSA Seeks Comments on Cybersecurity Recommendations

The General Services Administration (GSA) is seeking comments on the report “Improving Cybersecurity and Resilience through Acquisition,” which was prepared by a Joint Working Group consisting of GSA and DOD personnel as directed by the president in Executive Order 13636, Improving Critical Infrastructure Cybersecurity.

In accordance with Section 8(e) of Executive Order 13636, GSA and DOD submitted recommendations on the feasibility, security benefits, and relative merits of incorporating security standards into acquisition planning and contract administration, and addressed what steps can be taken to harmonize, and make consistent, existing procurement requirements related to cybersecurity. The report made six recommendations to improve cybersecurity and resilience in federal acquisitions. The recommendations focus on the need for baseline cybersecurity for federal contractors, comprehensive workforce training, consistent cybersecurity terminology for contracts, incorporation of cyber risk management into federal enterprise risk management, development of more specific and standardized security controls for particular types of acquisitions, limiting purchases to certain sources for higher risk acquisitions, and increasing government accountability for cybersecurity throughout the development, acquisition, sustainment, and disposal lifecycles.

GSA is now seeking comments from the public on a draft implementation plan of the report’s recommendations. The report and the draft implementation plan are available at http://www.gsa.gov/portal/content/176547.

Comments must be submitted no later than April 28, 2014, identified as “Notice-OMA-2014-01,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.



GSA Reinstating FSS Modification Clause

The General Services Administration (GSA) is reinstating GSA Acquisition Regulation (GSAR) 552.238-81, Modifications (Federal Supply Schedule), and adding Alternate I to the clause that requires electronic submission of modifications for Federal Supply Schedule (FSS) contracts managed by GSA via eMod (http://eoffer.gsa.gov/).

The GSAR has been undergoing a complete rewrite since 2008 (see the July 2008 Federal Contracts Perspective article “GSAR Undergoing Rewrite”). Part of the rewrite has involved GSAR part 538, Federal Supply Schedule Contracting, and GSAR part 543, Contract Modifications. GSAR part 543 included a clause prescription for GSAR 552.243-72, Modifications (Multiple Award Schedule). Because GSAR 552.243-72 addressed modifications to the Multiple Award Schedule (also called the “Federal Supply Schedule”), the final rewrite of GSAR part 543 removed GSAR 552.243-72 and stated it was being relocated to GSAR part 538 (see the February 2009 Federal Contracts Perspective article “Two Rewritten GSAR Parts Finalized”). The proposed rewrite of GSAR part 538 stated that GSAR 552.243-77 would be relocated and redesignated as GSAR 552.238-67, Modifications (Multiple Award Schedule) (see the February 2009 Federal Contracts Perspective article “GSA Proposes Rewriting Federal Supply Schedule Rules”). However, the GSAR part 538 rewrite was withdrawn “due to the variety of issues addressed...and strong stakeholder interest...” (see the January 2013 Federal Contracts Perspective article “GSA Withdraws Proposed FSS Contracting Rewrite”), so there was no clause addressing FSS modification procedures in the GSAR.

GSAR 552.243-72 is now reinstated as GSAR 552.238-81. It addresses FSS modifications that add items, delete items, and reduction prices. In addition, new Alternate I of the clause, which is used for FSS that only accept electronic modifications, will require electronic submission of modifications under FSS contracts managed by GSA via eMod. (NOTE: The Department of Veterans Affairs [VA] also has FSS contracts [primarily for medicine] but it does not have access to eMod, so it is not required to comply with the requirements of Alternate I. VA will continue to utilize the basic version of GSA 552.238-81 in management of their FSS contracts.)

Current and new FSS contractors will be required to obtain a digital certificate to comply with submission of information via eMod. A digital certificate is an electronic credential that asserts the identity of an individual and enables eMod to verify the identity of the individual entering the system and signing documents. The certificate will be valid for a period of two years, after which contractors must renew the certificate at the associated cost during that time. At present, two FSS vendors are authorized to issue digital certificates that facilitate the use of eMod, at a price of $119 per issuance and at renewals every two years.

One respondent submitted a comment on the proposed rule, but the comment was outside the scope of the proposed rule, so the proposed rule is finalized without changes. For more on the proposed rule, see the June 2013 Federal Contracts Perspective article “GSA Proposes Reinstating FSS Modification Clause.”



Labor Directed to Propose Changes to Overtime Regulations

On March 13, President Obama issued a memorandum for Secretary of Labor Thomas Perez directing him “to propose revisions to modernize and streamline the existing overtime regulations...You shall consider how the regulations could be revised to update existing protections consistent with the intent of the [Fair Labor Standards] Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.”

The Fair Labor Standards Act (29 U.S.C. 201 et seq.) provides basic rights and wage protections for American workers, including federal minimum wage and overtime requirements. Most workers covered under the act must receive overtime pay of at least 1.5 times their regular pay rate for hours worked in excess of 40 hours per week. However, most white collar employees (such as executive, administrative, and professional employees) are exempt from coverage of the act – the act, passed in 1938, was intended to protect factory workers and laborers. Because of this, these employees are frequently required by their employers to work uncompensated overtime without recourse. Of particular concern are secretaries and clerks that might be earning less than the $7.25/hour minimum wage when they work uncompensated overtime. For example, a clerk making $10.00/hour earns $400.00 during a 40 hour week. However, working an additional 20 hours of uncompensated overtime results in an effective wage of $6.67/hour ($400/60 hours). Because “the regulations regarding exemptions from the act’s overtime requirement…have not kept up with our modern economy,” the president has directed the secretary of labor to propose revisions to the act’s implementing regulations.



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