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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


August 2016
Vol. XVII, No. 8
[pdf version]

CONTENTS


FAC 2005-89 Implements SBA Rules on Small Business Subcontracting
Governmentwide Mentor-Protégé Program Established
OMB Issues Circular A-130 Revision
Treasury Proposes Continuing Resolution Funding Rules
USTR Waives Restrictions for Moldova
Prompt Payment Interest Rate Set at 1 7/8%



FAC 2005-89 Implements SBA Rules on
Small Business Subcontracting

Federal Acquisition Circular (FAC) 2005-89 contains revisions to the Federal Acquisition Regulation (FAR) that implement Small Business Administration (SBA) regulatory changes made in response to provisions of the Small Business Jobs Act of 2010 that require a governmentwide policy on small business subcontracting. In addition, FAC 2005-89 conducts some FAR housekeeping by removing obsolete references, changing a waiver threshold for acquisitions from the Federal Prison Industries, and revising several standard forms that involve bonds.



Governmentwide Mentor-Protégé Program Established

The Small Business Administration (SBA) is establishing a governmentwide mentor-protégé program for all small business concerns that is consistent with the mentor-protégé program for participants in its 8(a) Business Development (BD) program. In doing so, the SBA is implementing Section 1347 of the Small Business Jobs Act of 2010 (Public Law 111-240 – see the October 2010 Federal Contracts Perspective article "Parity Among Small Business Programs Mandated by Statute") and Section 1641 of the National Defense Authorization Act for Fiscal Year 2013 (Public Law 112-239 – see the February 2013 Federal Contracts Perspective article “FY 2013 National Defense Authorization Act Extends FAR Subpart 13.5 Procedures Through 2014”).

A new section in Title 13 of the Code of Federal Regulations (CFR), Business Credit and Assistance, Section 125.9 (13 CFR 125.9), What are the rules governing SBA’s small business mentor-protégé program?, provides the following explanation of the mentor-protégé program: “The small business mentor-protégé program is designed to enhance the capabilities of protégé firms by requiring approved mentors to provide business development assistance to protégé firms and to improve the protégé firms’ ability to successfully compete for federal contracts. This assistance may include technical and/or management assistance; financial assistance in the form of equity investments and/or loans; subcontracts (either from the mentor to the protégé or from the protégé to the mentor); trade education; and/or assistance in performing prime contracts with the government through joint venture arrangements. Mentors are encouraged to provide assistance relating to the performance of contracts set aside or reserved for small business so that protégé firms may more fully develop their capabilities.” By mentoring a protégé, the mentor: (1) establishes a long-term business relationship with the protégé, thus improving the performance of subcontracts; (2) is permitted to acquire a minority interest in the protégé, and (3) can enter into joint-venture arrangements with its protégé to compete for, and perform on, federal government contracts.

Several agencies have developed mentor-protégé programs, some with congressional approval (Department of Defense, National Aeronautics and Space Administration, Department of Homeland Security, and Federal Aviation Administration), and some without (Department of Energy, Department of State, Department of Veterans Affairs, Environmental Protection Agency, General Services Administration, and U.S. Agency for International Development). All of these have different requirements, different rules, different procedures, etc. Congress recognized that the various mentor-protégé programs helped small businesses develop into viable and important government contractors, but that the agencies’ disparate programs were needlessly confusing and burdensome. Therefore, Congress decided to assign SBA with the task of simplifying the mentor-protégé programs for all agencies except the Department of Defense, which is allowed to keep and operate its mentor-protégé program because it was the first and was such a success it inspired the establishment of the other mentor-protégé programs.

Paragraph (b)(3) of Section 1347, Small Business Contracting Parity, authorizes the Small Business administrator to “establish mentor-protégé programs for small business concerns owned and controlled by service-disabled veterans, small business concerns owned and controlled by women, and HUBZone [Historically Underutilized Business Zone] small business concerns modeled on the mentor-protégé program of the [SBA] for small business concerns participating in programs under Section 8(a) of the Small Business Act (15 USC 637(a)).”

Section 1641, Mentor-Protégé Programs, added a new section to Title 15 of the U.S. Code – 15 USC 657r, Mentor-Protégé Programs. It authorizes the SBA to “establish a mentor-protégé program for all small business concerns.” It goes on to require that the mentor-protégé program “be identical to the mentor-protégé program of the [SBA] for small business concerns that participate in the program under section 8(a)...except that the [SBA] may modify the program to the extent necessary given the types of small business concerns included as protégés.” Furthermore, Section 1641 prohibits agencies from conducting their own mentor-protégé programs unless the head of the agency submits a plan to SBA for approval (however, this does not apply to DOD because it already has the necessary statutory and regulatory framework for its mentor-protégé program).

To implement these two statutory sections, SBA published a proposed rule (see the March 2015 Federal Contracts Perspective article “Governmentwide Mentor-Protégé Program Proposed”). “SBA decided to implement one new small business mentor-protégé program instead of four new mentor-protégé programs (one for small businesses, one for [service-disabled veteran-owned] small businesses, one for [women-owned small businesses] and one for HUBZone small businesses) since [they]...would be necessarily included within any mentor-protégé program targeting all small business concerns. SBA did not eliminate the 8(a) BD mentor-protégé program. Thus, the intent was to propose two separate mentor-protégé programs, one for 8(a) BD participants and one for all small businesses (including 8(a) participants if they choose to create a small business mentor-protégé relationship instead of a mentor-protégé relationship under the 8(a) BD program). The small business mentor-protégé program was drafted to be as similar to the 8(a) mentor-protégé program as possible.”

SBA received 113 comments on the proposed rule. Most of the changes made to the final rule were to clarify the regulations and procedures pertaining to the new mentor-protégé program and those of small business programs in general.

The following are the main provisions of the final rule:



OMB Issues Circular A-130 Revision

For the first time since 2000, the Office of Management and Budget (OMB) has updated OMB Circular A-130, Managing Information as a Strategic Resource, to reflect advances in technology and changes in law, and to make the circular consistent with executive orders, presidential directives, recent OMB policy, and National Institute of Standards and Technology (NIST) standards and guidelines. It is available at https://www.whitehouse.gov/omb/circulars_default/.

OMB Circular A-130 provides guidance to federal agencies on the planning, budgeting, governance, acquisition, and management of federal information, personnel, equipment, funds, information technology (IT) resources, and supporting infrastructure and services.

“The way we manage information technology (IT), security, data governance, and privacy has rapidly evolved since A-130 was last updated in 2000,” write Tony Scott, U.S. Chief Information Officer, Howard Shelanski, Administrator of the Office of Information and Regulatory Affairs, Anne Rung, U.S. Chief Acquisition Officer, and Marc Groman, Senior Advisor for Privacy at OMB, in a blog. “The updated circular promotes innovation, enables information sharing, and fosters the wide-scale and rapid adoption of new technologies while protecting and enhancing security and privacy.”

The revised circular focuses on three key elements to help spur innovation throughout the government:

The majority of the circular consists of two new appendices (the 2000 edition had four appendices: Appendix I, Federal Agency Responsibilities for Maintaining Records About Individuals; Appendix II, Implementation of the Government Paperwork Elimination Act; Appendix III, Security of Federal Automated Information Resources; and Appendix IV, Analysis of Key Sections):

In October 2015, OMB issued a proposed revision of Circular A-130 and sought comments. For more on the proposed revision to OMB Circular A-130, see the November 2015 Federal Contracts Perspective article “OMB Proposes A-130 Revisions, Seeks Comments.”



In a related development, Anne Rung, U.S. Chief Acquisition Officer, and Mikey Dickerson, Administrator of the U.S. Digital Service, announced in a blog the unveiling of TechFAR Hub “which will provide agency personnel involved in the procurement process with practical tools and resources for applying industry best practices to digital service acquisitions.” The TechFAR Hub is available through the General Services Administration’s (GSA) Acquisition Gateway, “a one-stop portal for contract information, pricing tools, best practices, and other information” (https://hallways.cap.gsa.gov/login-information – see the March 2016 Federal Contracts Perspective article “GSA Opens Federal Acquisition Gateway to Public”), or directly at https://techfarhub.cio.gov/.

“Using the TechFAR Hub, acquisition professionals and other stakeholders in digital acquisition can discover resources that describe successful practices, discuss these ideas with other members of the community, get digital IT support through step-by-step aides built by agency experts, and then share what they learned with the community,” wrote Rung and Dickerson.

The TechFAR Hub “provides resources to apply industry best practices to the world of digital service acquisition across the federal government.” Among the resources are:



Treasury Proposes Continuing Resolution Funding Rules

The Department of the Treasury is proposing to amend its Department of the Treasury Acquisition Regulation (DTAR) to add DTAR subpart 1032.7, Contract Funding, which would consist of one section: DTAR 1032.770, Incremental Funding During a Continuing Resolution. DTAR 1032.770 would provide policy for incremental funding of fixed-price, time-and-material, or labor-hour contracts during a continuing resolution (CR) (“an appropriation, in the form of a joint resolution, that provides budget authority for federal agencies, specific activities, or both to continue operation until the regular appropriations are enacted. Typically, a continuing resolution is used when legislative action on appropriations is not completed by the beginning of a fiscal year”).

The Anti-Deficiency Act (31 USC 1341) and FAR 32.702, Policy [on contract funding], state that “no officer or employee of the government may create or authorize an obligation in excess of the funds available, or in advance of appropriations, unless otherwise authorized by law.” A CR provides funding for continuing projects or activities that were conducted in the prior fiscal year for which appropriations, funds, or other authority were previously made available."

Amounts available under a CR are frequently insufficient to fully fund contract actions that may be required during its term. No existing contract clause permits partial funding of a contract action awarded during a CR. While other strategies are available to address the need to take contract actions during a CR (for example short-term awards), these are inefficient and may have other disadvantages.

This proposed rule would establish policies and procedures to facilitate successful, timely, and economical execution of Treasury fixed-price, time-and-material, and labor-hour contracts during a period in which funds are provided to Treasury under a CR. These procedures would be in DTAR 1032.770 (specifically, DTAR 1032.770-4, Policy; DTAR 1032.770-5, Limitations; and DTAR 1032.770-6, Procedures), and contract clause DTAR 1052.232-70, Limitation of Government’s Obligation.

Comments on the proposed rule must be submitted no later than September 12, 2016, by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: thomas.olinn@treasury.gov; or (3) mail: Department of the Treasury, Office of the Procurement Executive, Attn: Thomas O'Linn, 1722 I Street NW., Mezzanine – M12C, Washington, DC 20006.



USTR Waives Restrictions for Moldova

U.S. Trade Representative (USTR) Michael Froman has agreed to waive discriminatory purchasing requirements for eligible products and suppliers of the Republic of Moldova because Moldova has become a party to the World Trade Organization Government Procurement Agreement (WTO GPA), and it has agreed to provide reciprocal competitive government procurement opportunities to U.S. products and services and to suppliers of such products and services.

Because of this waiver, a future FAC will add Moldova to the list of WTO GPA “designated countries” wherever the list appears in the FAR: FAR 22.1503, Procedures for acquiring end products on the List of Products Requiring Contractor Certification as to Forced or Indentured Child Labor; FAR 25.003, Definitions; FAR 25.407, Agreement on Trade in Civil Aircraft; FAR 52.222-19, Child Labor – Cooperation with Authorities and Remedies; FAR 52.225-5, Trade Agreements; FAR 52.225-11, Buy American Act – Construction Materials under Trade Agreements; and FAR 52.225-23, Required Use of American Iron, Steel, and Manufactured Goods – Buy American Act – Construction Materials Under Trade Agreements.



Prompt Payment Interest Rate Set at 1 7/8%

The Treasury Department has established 1 7/8% (1.875%) as the interest rate for the computation of payments made between July 1, 2016, and December 31, 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 (January 1, 2016, through June 30, 2016) was 2 1/2% (2.5%). The interest rate for July 1, 2015, through December 31, 2015, was 2 3/8% (2.375%).

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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