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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


September 2014
Vol. XV, No. 9
[pdf version]

CONTENTS


Obama Issues Order Requiring That Contractors Provide “Fair Pay and Safe Workplaces”
Looseleaf Version of GSAM Discontinued
DOD Prohibits Contracting with “Sponsors of Terrorism”
Uniform Line Item Identification Proposed
Comments Sought on TechFAR Handbook
DPAS Standards and Procedures Clarified
Contractors to Report Summary Compensation Data
HHS Protects Proprietary Material Providers
EPA Proposes to Clean Up the EPAAR



Obama Issues Order Requiring That Contractors
Provide “Fair Pay and Safe Workplaces”

President Obama has issued Executive Order 13673, Fair Pay and Safe Workplaces, to “promote economy and efficiency in procurement by contracting with responsible sources who comply with labor laws...Contractors that consistently adhere to labor laws are more likely to have workplace practices that enhance productivity and increase the likelihood of timely, predictable, and satisfactory delivery of goods and services to the federal government.” The executive order requires federal contractors to disclose labor law violations and gives agencies more guidance on how to consider labor violations when awarding federal contracts.

The provisions of the executive order apply to federal contracts and subcontracts that exceed $500,000. Prior to contract award, the executive order requires each offeror to represent “whether there has been any administrative merits determination, arbitral award or decision, or civil judgment…rendered against the offeror within the preceding three-year period for violations” of any of the following labor laws and executive orders:

If an offeror discloses a violation within the previous three years, the contracting officer, prior to making an award and as part of the responsibility determination, must give the offeror an opportunity to disclose any steps taken to correct the violations of or improve compliance with the labor law(s).

During performance of the contract, the contractor must update its information every six months and update the information provided by covered subcontractors.

Each agency shall designate a “Labor Compliance Advisor” who will “work with the acquisition workforce, agency officials, and agency contractors to promote greater awareness and understanding of labor law requirements, including recordkeeping, reporting, and notice requirements, as well as best practices for obtaining compliance with these requirements; coordinate assistance for agency contractors seeking help in addressing and preventing labor violations; [and] provide assistance to contracting officers regarding appropriate actions to be taken in response to violations identified prior to or after contracts are awarded…”

The president has directed the General Services Administration (GSA) to “develop a single website for federal contractors to use for all federal contract reporting requirements related to this order, as well as any other federal contract reporting requirements to the extent practicable…” Elsewhere in the executive order the Office of Management and Budget (OMB) is directed to work with GSA to “include in the Federal Awardee Performance and Integrity Information System [FAPIIS – https://www.fapiis.gov/fapiis/index.jsp] information provided by contractors…”

Finally, the executive order directs the FAR Council to “propose to amend the Federal Acquisition Regulation to identify considerations for determining whether serious, repeated, willful, or pervasive violations of the labor laws…demonstrate a lack of integrity or business ethics. Such considerations shall apply to the integrity and business ethics determinations made by both contracting officers and contractors pursuant to this order. In addition, such proposed regulations shall: (i) provide that…in most cases a single violation of law may not necessarily give rise to a determination of lack of responsibility, depending on the nature of the violation; (ii) ensure appropriate consideration is given to any remedial measures or mitigating factors, including any agreements by contractors or other corrective action taken to address violations; and (iii) ensure that contracting officers and Labor Compliance Advisors send information, as appropriate, to the agency suspending and debarring official, in accordance with agency procedures.”

EDITOR’S NOTE: A fact sheet issued with the executive order observes that “the vast majority of federal contractors have clean records. The Department of Labor estimates that the overwhelming majority of companies with federal contracts have no federal workplace violations in the past three years.” So what is the purpose of this executive order? President Obama is showing he can exercise his pen to avoid Congress. More work for offerors, contractors, and contracting officers with little to show for it. But that’s the way so much of federal contracting works these days – political statements that raise the cost of everything the government buys…



Looseleaf Version of GSAM Discontinued

As part of the General Services Administration’s (GSA’s) effort to increase efficiency and promote environmental sustainability, GSA has decided it will no longer produce the looseleaf version of the General Services Administration Acquisition Manual (GSAM), which is a consolidation of the GSA Acquisition Regulation (GSAR) and internal guidance and procedures (the GSAR is the shaded portion of the GSAM).

Because of today’s technologies, those who follow the GSAM can view and print the latest changes on the day the changes are published in the Federal Register and go into effect. GSA produced the looseleaf pages for these changes although the need for them has become almost nonexistent and the number of subscribers to the paper version dwindles. So GSA has decided to discontinue the production of the looseleaf versions of the GSAM immediately.

The electronic version of the GSAM is available at http://www.acquisition.gov/gsam/gsam.html.



DOD Prohibits Contracting with “Sponsors of Terrorism”

The Department of Defense (DOD) took a summer break this August, issuing one interim rule and one proposed rule prohibiting contracting with “state sponsors of terrorism,” one proposed rule that would require contractors to submit an electronic copy of approved final scientific or technical reports, and a memorandum outlining actions to improve competition.



Uniform Line Item Identification Proposed

To establish a uniform line item identification structure for the federal procurement system, a proposed rule would amend FAR subpart 4.10, Contract Line Items, to mandate the establishment of line items and, as necessary, subline items. Mandating a uniform line item identification structure would improve the accuracy, traceability, and usability of procurement data.

Currently, funding traceability is limited to contract-level information, and this limits the ability to implement and effectively conduct initiatives, such as strategic sourcing, on a federal-wide basis. The use of a line item identification structure would facilitate the implementation of these initiatives. Furthermore, the structure would aid in the tracking of goods and services and support tracing of funding from obligation through expenditure. This structure is expected to be implemented during Fiscal Year (FY) 2016.

FAR subpart 4.10 merely states the following: “4.1001, Policy: Contracts may identify the items or services to be acquired as separately identified line items. Contract line items should provide unit prices or lump sum prices for separately identifiable contract deliverables, and associated delivery schedules or performance periods. Line items may be further subdivided or stratified for administrative purposes (e.g., to provide for traceable accounting classification citations).”

To improve standardization of a unique instrument identifier, and to move the procurement community in the direction of enhancing the uniformity and consistency of data, the proposed FAR changes are based on the guidance in DFARS subpart 204.71, Uniform Contract Line Item Numbering System. The proposed rule would make the following changes, primarily to FAR subpart 4.10, which would be retitled “Uniform Use of Line Items”:

In addition, FAR subpart 8.4, Federal Supply Schedules, and FAR subpart 16.5, Indefinite-Delivery Contracts, would be revised to address the application of line items and subline items.

Comments on the proposed rule must be submitted no later than October 6, 2014, identified as “FAR Case 2013-014,” 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.



Comments Sought on TechFAR Handbook

The Office of Science and Technology Policy (OSTP) and the Office of Federal Procurement Policy (OFPP) are seeking comments on two documents, the Digital Services Playbook and the TechFAR Handbook, which were developed to improve the delivery of digital services by the government.

The Digital Services Playbook identifies a series of “plays” drawn from successful best practices from the private sector and government that, if followed together, will help the government build effective digital services. The plays outline an approach to delivering services that increases the government’s ability to be flexible and to focus on the needs of the people that use its services.

The TechFAR Handbook highlights the flexibilities in the FAR that can help agencies implement “plays” from the Digital Services Playbook that would be accomplished with acquisition support, with a particular focus on how to use contractors to support an iterative, customer-driven software development process, as is routinely done in the private sector.

OFPP and OSTP intend for these documents to be used together by agencies as resources for the successful delivery of digital services. The documents are available at http://playbook.cio.gov and http://playbook.cio.gov/techfar/, and comments may be posted at those sites. Comments are especially welcome on additional best practices or lessons learned that may be appropriate for inclusion in the guidance.



DPAS Standards and Procedures Clarified

The Bureau of Industry and Security (BIS), part of the Department of Commerce, is updating and expanding 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 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 revision expands 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.

A proposed rule was published that would have made the following changes:

No one submitted comments on the proposed rule, so it is finalized without changes. For more on the proposed rule, see the February 2014 Federal Contracts Perspective article “DPAS Revisions and Clarifications Proposed.”

For more on DPAS, see http://www.bis.doc.gov/dpas/default.htm.



Contractors to Report Summary Compensation Data

The Office of Federal Contract Compliance Programs (OFCCP) is proposing to amend its implementing equal employment opportunity regulations to require contractors and subcontractors to provide summary information on compensation paid to employees by sex, race, ethnicity, and specified job categories, as well as other relevant information such as hours worked and the number of employees.

This proposed rule would amend Title 41 of the Code of Federal Regulations, part 60-1.7, Reports and Other Required Information (41 CFR 60-1.7), to require contractors and subcontractors that are required to file Standard Form 100 (EEO-1), have more than 100 employees and a contract, subcontract, or purchase order amounting to $50,000 or more to file an “Equal Pay Report” (contractors and subcontractors with more than 50 employees and a contract, subcontract, or purchase order amounting to $50,000 or more are required to file an EEO-1). The contractor or subcontractor would be required to submit the Equal Pay Report electronically through OFCCP’s web-based filing system. However, OFCCP “may require a contractor to keep employment or other records and to furnish, in the form requested, within reasonable limits, such additional information about its employment practices as the [OFCCP] Director or the applicant deems necessary for the administration of the order [Executive Order 11246, Equal Employment Opportunity]” (proposed paragraph (c)).

“OFCCP may publish aggregate information based on compensation data collected from the Equal Pay Report, such as ranges or averages by industry, labor market, or other groupings, but only in such a way as not to reveal any particular establishment’s or individual employee’s data” (proposed paragraph (b)(4)(ii)). The introduction of the proposed rule provides the reason for this: “The disclosure of compensation data summarized at the industry level enables contractors and subcontractors to assess their compensation structure along with those of others in the same industry, and provide useful data to current and potential employees. Some of these employers will not want to be identified as having pay standards that are significantly lower or different from those of their industry peers, since this may encourage valuable employees to consider moving to other employers, or discourage applicants who see that higher paying jobs may be available elsewhere. Employers do not want to be known as one of the lowest paying members of their industry, and may voluntarily change their pay structure.” So there you have it: this would be a backdoor way to increase salaries, thus raising the cost of goods and services to the government and, consequently, eating further into our taxes (and increasing the federal debt).

Comments on the proposed rule must be submitted no later than November 6, 2014, identified as “RIN number 1250-AA03,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-693-1313; or (3) mail: Debra A. Carr, Director, Division of Policy and Program Development, Office of Federal Contract Compliance Programs, Room C-3325, 200 Constitution Avenue NW, Washington, DC 20210.



HHS Protects Proprietary Material Providers

The Department of Health and Human Services (HHS) is adding two clauses to the HHS Acquisition Regulation (HHSAR) to ensure that providers will retain their preexisting rights to material and inventions in which the provider has a proprietary interest when a Determination of Exceptional Circumstances (DEC) has been executed. The two clauses, HHSAR 352.227-11, Patent Rights – Exceptional Circumstances, and HHSAR 352.227-14, Rights in Data – Exceptional Circumstances, will be used in place of FAR 52.227-11, Patent Rights – Ownership by the Contractor, and FAR 52.227-14, Rights in Data – General.

A DEC is executed consistent with the policy and objectives of the Bayh-Dole Act (Title 35 of the U.S. Code, Chapter 18, Patent Rights in Inventions Made with Federal Assistance) to ensure that inventions made under contracts and subcontracts are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery; to encourage maximum participation of small business firms in federally supported research and development efforts; to promote collaboration between commercial concerns and nonprofit organizations including universities; to ensure that the government obtains sufficient rights in federally supported inventions to meet its needs; to protect the public against nonuse or unreasonable use of inventions; and in the case of fulfilling the mission of HHS to ultimately to benefit the public health.

Under certain circumstances, to ensure that pharmaceutical companies, academia, and others will collaborate with HHS in identifying, testing, developing, and commercializing new drugs, therapeutics, diagnostics, prognostics, and prophylactic measures affecting human health, a DEC must be executed, and the contractor’s and subcontractor’s rights in subject inventions should be limited accordingly, consistent with DEC requirements and through appropriate contract clauses. The affected contracts are usually awarded using North American Industry Classification System (NAICS) code 541711, Research and Development in Biotechnology, or NAICS code 541712, Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology).

In the past, a significant number of FAR deviations were processed each time a DEC was executed. Using these new clauses will eliminate the need for the FAR deviations.

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

For more on the proposed rule, see the February 2013 Federal Contracts Perspective article “HHSAR Patent and Data Rights Clauses Proposed.”



EPA Proposes to Clean Up the EPAAR

The Environmental Protection Agency (EPA) is proposing to conduct a little tidying up of the EPA Acquisition Regulation (EPAAR) to delete language superseded by changes to the FAR and to add flexibilities to three EPAAR clauses.



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