Panoptic Enterprises’


Federal Acquisition Developments, Guidance, and Opinions

January 2016
Vol. XVII, No. 1
[pdf version]


FAC 2005-86 Revises Trade Agreements Thresholds, Authorizes Sole Source Contracts to WOSBs
FAC 2005-85 Finalizes Minimum Wage Regulations
DOD Addresses Acquisition Policies Outside the U.S.
OMB Proposes New Software Licensing Policy
Number of Protests Increased by 3% in FY 2015
Mileage Reimbursement Set at 54¢/Mile for Autos
Prompt Payment Interest Rate Set at 2 1/2%

FAC 2005-86 Revises Trade Agreements Thresholds,
Authorizes Sole Source Contracts to WOSBs

On the last day of 2015, Federal Acquisition Circular (FAC) 2005-86 was issued. FAC 2005-86 updates Federal Acquisition Regulation (FAR) part 25, Foreign Acquisition, to reflect the United States Trade Representative’s (USTR) biennial revision of thresholds for application of the various trade agreements into which the United States has entered with other countries. In addition, FAC 2005-86 implements Small Business Administration regulations that authorize sole source contracts to women-owned small businesses, provides a definition for “multiple-award contract,” and adds Montenegro and New Zealand as new designated countries under the World Trade Organization Government Procurement Agreement.

FAC 2005-85 Finalizes Minimum Wage Regulations

Earlier in the month of December, FAC 2005-85 was issued. It consisted of six rules, including finalized minimum wage regulations, revised retention periods, and veterans’ employment reporting requirements.

DOD Addresses Acquisition Policies Outside the U.S.

Besides incorporating the revised trade agreements thresholds into the Defense FAR Supplement (DFARS) (see “FAC 2005-86 Revises Trade Agreements Thresholds, Authorizes Sole Source Contracts to WOSBs” above), the Department of Defense (DOD) has addressed foreign acquisition issues with the publication of two documents addressing Afghanistan (one final rule and one class deviation), a proposed rule addressing private security functions outside the U.S., and a request for comments on a proposed memorandum of understanding with Japan. In addition, DOD has issued a final rule on the acquisition of cloud services and a proposed rule on multiyear contract requirements.

OMB Proposes New Software Licensing Policy

The Office of Management and Budget (OMB) is proposing a new policy to improve the management and acquisition of commonly-purchased enterprise software. This is the second in a series of policies intended to drive greater performance, efficiencies, and savings in commonly-purchased information technology goods and services. The first policy addressed the acquisition of laptops and desktops (see the November 2015 Federal Contracts Perspective article “OMB Establishes Standard Configurations for Laptop and Desktop Computers”).

The draft policy, “Category Management Policy 16-1: Improving the Acquisition and Management of Common Information Technology: Software Licensing,” states the reason for the policy as follows: “Each year, the federal government spends more than $9 billion on software through more than 50,000 transactions, which results in a fragmented and inefficient marketplace. A recent report by the Government Accountability Office (GAO) [GAO-14-413, Federal Software Licenses: Better Management Needed to Achieve Significant Savings Government-Wide] indicates that agencies buy and manage software licenses in a decentralized manner, struggle to create accurate inventories, often purchase unneeded capabilities, and generally do not share pricing, terms, and conditions across government to facilitate better purchasing. Furthermore, most agencies do not have a designated central oversight authority to manage software agreements, and agency personnel often lack sufficient experience and expertise to effectively negotiate and manage large software agreements.”

The proposed policy calls on agencies to centrally manage their software buys, to maximize the use of best-in-class solutions, and for a multi-agency software team to develop new enterprise-wide software agreements. It requires each agency to submit to OMB a centralized software license management plan by May 31, 2016; submit an annual report of its software license inventory, including maintenance agreements and cloud-based licenses, subscriptions and enrollments beginning August 31, 2016; and submit a report on software inventory and usage by September 30, 2016.

Comments on the draft policy must be submitted by November 20, 2015, in one of three ways:

  1. "Content suggestions and discussions are welcome via GitHub ‘issues.’ Each issue is a conversation initiated by a member of the public. We encourage you to browse and join in on discussions in existing issues [https://github.com/whitehouse/software-policy/issues], or start a new conversation by opening a new issue [https://github.com/login?return_to=https%3A%2F%2Fgithub.com%2FWhiteHouse%2Fsoftware-policy%2Fissues%2Fnew]."

  2. "Direct changes and line edits to the content may be submitted through a "pull request" [https://help.github.com/articles/creating-a-pull-request/] by clicking "Edit this page". You do not need to install any software to suggest a change. You can use GitHub's in-browser editor to edit files and submit a pull request for your changes to be merged into the document. Open pull requests for the proposed guidance can be found here [https://github.com/whitehouse/software-policy/pulls]."

  3. "Send your content suggestions or proposed revisions to the OMB Office of the Federal Chief Information Officer via email to ofcio@omb.eop.gov.”

Number of Protests Increased by 3% in FY 2015

The Government Accountability Office (GAO) issued its annual letter on bid protests to various Congressional committees, in which it reported that 2,639 protests, cost claims, and requests for reconsideration were filed in Fiscal Year (FY) 2015, a 3% increase from the 2,561 filed in FY 2014. This is the largest number of protests filed since FY 1995.

The FY 2015 protest sustain rate (the number of GAO decisions in favor of the protestor versus the number of all protests) was 12%, compared to the 13% sustain rate for FY 2014 and 17% sustain rate for FY 2013. The 45% 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 higher than the 43% effectiveness rate for FY 2014 and FY 2013 and 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 FY 2015 were: (1) unreasonable cost or price evaluation; (2) unreasonable past performance evaluation; (3) failure to follow evaluation criteria; (4) inadequate documentation of the record; and (5) unreasonable technical evaluation. In comparison, the most prevalent reasons for sustaining protests during FY 2014 were: (1) failure to follow the solicitation evaluation criteria; (2) flawed selection decision; (3) unreasonable technical evaluation; and (4) unequal treatment of offerors.

Mileage Reimbursement Set at 54¢/Mile for Autos

The General Services Administration (GSA) is reducing the mileage reimbursement rate for use of a privately owned automobile on official travel from 57.5¢ per mile to 54¢ per mile, and the rate for use of a motorcycle on official travel from 54.5¢ per mile to 51¢ per mile. The rate for use of a privately owned aircraft is reduced from $1.29 per mile to $1.19 per mile. These revised rates are effective for travel performed on or after January 1, 2016, through December 31, 2016. The reduced reimbursement rates reflect lower fuel prices.

Prompt Payment Interest Rate Set at 2 1/2%

The Treasury Department has established 2 1/2% (2.5%) as the interest rate for the computation of payments made between January 1, 2016, and June 30, 2016, 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, 2015, through December 31, 2015) was 2 3/8%. The interest rate for January 1, 2015, through June 30, 2015, was 2 1/8% (2.125%).

All prompt payment interest rates since 1980 (in six-month increments) are available at https://www.fiscal.treasury.gov/fsservices/gov/pmt/promptPayment/rates.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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