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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


May 2014
Vol. XV, No. 5
[pdf version]

CONTENTS


President Requires Collection of Compensation Data From Contractors and Subcontractors
FAC 2005-73 Implements Law Codification of Title 41
SBA Replaces Four Nonmanufacturer Waivers with Three
Proposed FAR Rule Would Add Section K to Contracts
Proposal Would Extend Contractor Employee Conflict of Interest Limits
Dialogue Sought on Improving Federal Procurement
DOD Updates Transportation, Financing Clauses
GSA Expands Uses of Industrial Funding Fee



President Requires Collection of Compensation Data
From Contractors and Subcontractors

On April 8, “Equal Pay Day,” President Obama continued his efforts to address income inequality without involving Congress (“pen and phone”) with the issuance of a memorandum to the secretary of labor directing him to propose “a rule that would require federal contractors and subcontractors to submit to DOL [the Department of Labor] summary data on the compensation paid their employees, including data by sex and race.” Simultaneously with the issuance of the memorandum the president issued Executive Order 13665, Non-Retaliation for Disclosure of Compensation Information, prohibiting contractors from “discharg[ing] or in any other manner discriminat[ing] against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.”

The memorandum to the secretary of labor, “Advancing Pay Equality Through Compensation Data Collection,” cites the statistic from the Bureau of the Census that women “earn only 77 cents for every dollar that a man earns.” The president has been citing this figure and the resulting 23 cent difference since at least 2011. However, the 77¢ Census figure is a simple calculation that merely compares women’s and men’s median annual earnings (the median is the midpoint – 50% are above the median and 50% are below). The Census Bureau calculation did not take into account that, in general, women work fewer hours than men during a year (for example, teachers, most of whom are women, work nine months of the year, and men tend to work more overtime). In addition, the average woman has less work experience than the average man (frequently taking time off to raise children); women tend to have more part-time jobs; and women tend to choose careers that pay less (for example, teaching versus engineering). In addition, this simple calculation excludes fringe benefits, and many women accept jobs that pay less buy have more flexibility (such as flexhours or parental leave). When all of these factors are taken into consideration, the gap between women and men drop to 5¢ (according to a report prepared for the DOL). In fact, unmarried women earn almost as much as men – 96¢ per dollar.

Using the Census Bureau methodology (all men’s annual wages compared to all women’s annual wages), the White House has a “gender gap” – women working in the White House get paid 88¢ for every dollar a man in the White House makes. When told of the existence of this “gender gap,” White House press secretary Jay Carney said the calculation was misleading because it “looked at the aggregate of everyone on staff, and that includes from the most junior levels to the most senior.” Yet that is exactly how the 77¢ figure was derived!

This action is merely a political ploy intended to demonstrate “compassion” for women experiencing “pay inequality.” These documents will not accomplish their intended goal. However, compliance will require more recordkeeping and reporting by government contractors and subcontractors, which generates higher overhead costs, and thus produces higher contract costs that must be paid by the taxpayers.

EDITOR’S NOTE: April 8 was designated “Equal Pay Day” because, if both men and women started work on January 1, 2013, women would have to work until April 8, 2014, to make as much as men who stopped working on December 31, 2013, since they supposedly make only 77¢ for every dollar a man earns.



FAC 2005-73 Implements Law Codification of Title 41

Federal Acquisition Circular (FAC) 2005-73 consists of a final rule that implements Public Law 111-350, which is the positive law codification of Title 41 of the United States Code, Public Contracts. “In the codification of laws by this act, the intent is to conform to the understood policy, intent, and purpose of Congress in the original enactments, with such amendments and corrections as will remove ambiguities, contradictions, and other imperfections...”

FAC 2005-73 consists of the following kinds of changes throughout the Federal Acquisition Regulation (FAR):



SBA Replaces Four Nonmanufacturer Waivers with Three

The Small Business Administration (SBA) is rescinding four nonmanufacturer rule waivers which were classified under North American Industry Classification System (NAICS) code 335999, All Other Miscellaneous Electrical Equipment and Component Manufacturing, and which were further classified under Product Service Codes (PSCs) 5999, 6210, 6240, and 6250. In their place SBA is issuing three replacement nonmanufacturer rule waivers.

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.



Proposed FAR Rule Would Add Section K to Contracts

To standardize the incorporation by reference of representations and certifications in contracts, a proposed rule would revise FAR subpart 4.12, Representations and Certifications, and add FAR 52.204-X, Incorporation by Reference of Representations and Certifications, to standardize the incorporation by reference of 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 states that acceptance of a bid incorporates Section K “in the resultant contract even though not physically attached.”

To clarify and standardize Section K procedures, the following changes would be made:

Comments on this proposed rule must be submitted no later than June 23, 2014, identified as “FAR Case 2014-001,” 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.



Proposal Would Extend Contractor Employee Conflict of Interest Limits

To implement Section 829 of the National Defense Authorization Act (NDAA) for Fiscal Year 2013 (Public Law 112-239), a proposed rule would amend FAR subpart 3.11, Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions, to extend the limitations on contractor employee personal conflicts of interest (COIs) to apply to the performance of all functions that are closely associated with inherently governmental functions and contracts for personal services.

Section 841 of the NDAA for Fiscal Year 2009 (Public Law 110-417) required the Office of Federal Procurement Policy (OFPP) to develop and issue a policy to address personal COIs for contractor employees who perform acquisition functions closely associated with inherently governmental functions. This was done by FAC 2005-54, which added FAR subpart 3.11 and FAR 52.203-16, Preventing Personal Conflicts of Interest (see the December 2011 Federal Contracts Perspective article “FAC 2005-54 Permits Small Business Set-Asides For Multiple-Award Contracts”). In addition, Section 841 required that OFPP conduct a review of the FAR to determine whether coverage of personal conflicts of interest should be expanded beyond contractors whose work supports acquisition functions closely associated with inherently governmental functions.

Section 829 of the FY 2013 NDAA required the Secretary of Defense to review the guidance on personal conflicts of interest for contractor employees issued in response to Section 841 to determine whether it would be in the best interest of DOD and the taxpayers to extend such guidance to personal COIs by contractor personnel performing any of the following:

  1. Functions other than acquisition functions that are closely associated with inherently governmental functions;

  2. Personal services contracts; or

  3. Contracts for staff augmentation services.

After conducting the review mandated by Section 829, the Secretary of Defense concluded that extension of the FAR personal conflicts of interest regulations to additional functions and contract types might be in the best interest of DOD and the taxpayers. DOD asked OFPP whether the extension of coverage should be pursued as a change to the FAR. This proposed rule is in response to OFPP’s affirmative response.

To extend the personal COI regulations to contractor employees performing all functions that are closely associated with inherently governmental functions (not just acquisition functions) and to personal services contracts (to the extent such contracts are authorized by law, such as for legal or medical services), the proposed rule would make the following changes to the FAR:

Comments on this proposed rule must be submitted no later than June 2, 2014, identified as “FAR Case 2013-022,” 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.



Dialogue Sought on Improving Federal Procurement

The OFPP, in conjunction with the Chief Acquisition Officers Council (CAOC), the Federal Acquisition Regulatory Council (FAR Council), the Chief Information Officers Council (CIOC), and the General Services Administration (GSA) is conducting a dialogue to discuss improvements to the federal acquisition process. According to the summary of the notice, “This dialogue is part an ongoing effort to improve the effectiveness and efficiency of the federal acquisition system by identifying impactful steps that can be taken by agencies to improve the way they do business with the best companies and enter into contracts that allow these companies to provide their best solutions for the taxpayer.”

“The federal acquisition system is governed by a myriad of rules, both administrative and statutory, that are designed to help agencies maximize results from their contracts, make sure that contractors are qualified to do business with the federal government, and ensure consistency with key economic and social policies. Efforts to streamline, modernize, and improve requirements may allow contractors and agencies to execute in a more efficient and effective manner, while still supporting the execution of these policies.”

The OFPP and the other groups seek to conduct a conversation to identify specific rules and requirements, tools, procedures, and practices that affect the efficiency and effectiveness of federal procurement and ways to improve them. They are interested in hearing about proposed improvements that can be accomplished through executive (regulatory, administrative, or management) action, as well as potential legislative proposals where requirements are based in statute. Dialogue will be encouraged in each of the following areas:

An online platform is being launched so interested parties may submit ideas, respond to questions posed by moderators, and comment on other ideas, including those that they think are most promising and impactful. Information on the platform and the dates for participating in the dialogue are posted at the CAOC’s website http://www.cao.gov.



DOD Updates Transportation, Financing Clauses

The Department of Defense (DOD) has continued its revision of Defense FAR Supplement (DFARS) provisions and clauses that have alternates by finalizing the proposed rules on transportation clauses and contract financing clauses. In addition, DOD has amended the DFARS to remove internal guidance on contracting officer’s representatives’ responsibilities, and to implement new requirements for the acquisition of photovoltaic devices.



GSA Expands Uses of Industrial Funding Fee

The General Services Administration (GSA) has amended the GSA Acquisition Regulation (GSAR) to address the expanded use of Industrial Funding Fee (IFF) under the Federal Supply Schedules (FSS) Program. In addition, GSA is proposing to provide increased access to the FSS by authorized organizations, and to remove from the GSAR a clause and a provision that are considered obsolete and unnecessary.



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