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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


November 2017
Vol. XVIII, No. 11
[pdf version]

CONTENTS


DOE Addresses Contracting Issues with Acquisition Letters, Deviations
FY 2017 Spending Down 9% to $430 Billion
DOD Negotiating MOUs with UK, Finland
SBA Updates NAICS Codes for WOSB Program



DOE Addresses Contracting Issues
with Acquisition Letters, Deviations

The Department of Energy (DOE) conducted some housecleaning during October by issuing the following: (1) an acquisition letter reemphasizing the mandatory use of STRIPES; (2) an acquisition letter revising requirements for employee benefits cost studies; (3) a deviation reinstating, and making permanent, whistleblower protections for contractor employees; and (4) a deviation streamlining the approval process for overtime compensation for training and education.



FY 2017 Spending Down 9% to $430 Billion

Federal contracting spending in Fiscal Year (FY) 2017 dropped to $430 billion, down 9.1% from the $473 billion spending level in FY 2016.

The big loser was the Department of Defense (DOD), which saw its contract spending drop 18%, from $297.7 billion to $243.5 billion. The biggest dollar increase winner was the Department of Veterans Affairs, which saw its spending increase 14% from $22.7 billion to $25.8 billion. The biggest percentage increase winner was the Peace Corps, which saw its spending increase 68%, from $62 million to $103 million.

The following are the largest agencies’ FY 2017 spending versus their FY 2016 spending:

Department/Agency FY 2017 Spending FY 2016 Spending
Defense $243,486,617,473 $297,686,698,873
Energy 28,949,640,886 28,278,604,484
Veterans Affairs 25,824,127,070 22,683,774,651
Health and Human Services 24,775,365,872 24,000,453,263
National Aeronautics and Space Admin istration 17,257,343,033 17,275,432,463
Homeland Security 16,096,022,287 13,525,924,569
General Services Administration 11,474,929,496 10,345,493,624
State 10,928,084,404 9,152,752,527
Justice 7,538,075,848 7,455,834,557
Transportation 6,205,561,091 6,750,915,443
Treasury 6,078,523,376 6,208,242,377
Agriculture 5,295,094,732 5,766,430,194
Agency for International Development 5,273,426,265 4,656,445,660
Interior 4,908,719,914 4,388,502,266
Commerce 3,196,724,004 3,194,578,056
Education 2,539,589,526 2,464,188,684
Labor 2,086,854,528 1,820,010,065
Social Security Administration 1,563,696,601 1,275,038,121
Housing and Urban Development 1,378,798,056 1,016,574,179
Environmental Protection Agency 1,275,068,568 1,363,331,523
Office of Personnel Management 782,210,321 936,263,981
National Science Foundation 466,267,212 419,776,373
Securities and Exchange Commission 384,578,333 419,312,948
Pension Benefit Guaranty Corporation 304,823,366 326,787,350
Smithsonian Institution 251,990,193 280,602,419
Nuclear Regulatory Commission 196,744,318 209,146,944
Broadcasting Board of Governors 174,998,321 159,325,339
National Archives and Record Administration 154,469,260 164,107,258
Federal Communications Commission 118,719,966 99,448,637
Small Business Administration 116,413,843 104,643,231
Peace Corps 102,916,598 61,399,598
Others 924,178,472 798,449,506
      TOTAL $430,110,573,233 $473,153,217,658


DOD Negotiating MOUs with UK, FINLAND

The DOD is requesting that industry provide comments regarding its experience in public defense procurements conducted by or on behalf of (1) the Ministry of Defence of the United Kingdom of Great Britain and Northern Ireland (UK), and/or (2) the Ministry of Defence of the Republic of Finland as DOD contemplates negotiating proposed Reciprocal Defense Procurement Memoranda of Understanding (RDP MOU) with the ministries.

DOD has entered into RDP MOUs with 27 “qualifying countries,” primarily European Union countries, North Atlantic Treaty Organization (NATO) countries, and other allies such as Australia, Egypt, and Israel (see DFARS 225.003, Definitions). The purpose of RDP MOUs is to promote rationalization, standardization, and interoperability of conventional defense equipment with allies and other friendly governments.

RDP MOUs generally include language by which the parties agree that their defense procurements will be conducted in accordance with certain implementing procedures. These procedures relate to: (1) publication of notices of proposed purchases; (2) the content and availability of solicitations for proposed purchases; (3) notification to each unsuccessful offeror; (4) feedback, upon request, to unsuccessful offerors concerning the reasons they were not allowed to participate in a procurement or were not awarded a contract; and (5) provision for the hearing and review of complaints arising in connection with any phase of the procurement process to ensure that, to the extent possible, complaints are equitably and expeditiously resolved.

Based on the RDP MOU, each country affords the other country certain benefits on a reciprocal basis consistent with national laws and regulations. The benefits that the United States accords to the products of qualifying countries include: (1) evaluating offers of qualifying country end products without applying the price differentials required by the Buy American statute and the Balance of Payments Program; and (2) customs, taxes, and duties are waived for qualifying country end products and components of defense procurements.

Both the UK and Finland have been listed as “qualifying countries” in the definition of “qualifying country” in DFARS 225.003(10), and offers of products of the UK and Finland, or that contain components from these countries, would continue to be afforded the benefits available to all qualifying countries. Also, this means that U.S. products would be exempt from any analogous “Buy UK” and “Buy Finland” laws or policies applicable to procurements by the Ministry of Defence of each country.

While DOD is evaluating the UK’s and Finland’s laws and regulations in this area, DOD would benefit from U.S. industry’s experience in participating in these countries' public defense procurements. Therefore, DOD is asking U.S. firms that have participated or attempted to participate in procurements by or on behalf of the UK's Ministry of Defence or Finland's Ministry of Defence to let DOD know if the procurements were conducted with transparency, integrity, fairness, and due process in accordance with published procedures; if not, to explain the nature of the problems encountered.

Also, DOD is interested in comments relating to the degree of reciprocity that exists between the U.S. and the UK and Finland when it comes to the openness of defense procurements to offers of products from the other country.

Written comments must be submitted no later than November 20, 2017, by either: (1) mail: Defense Procurement and Acquisition Policy, Attn: Patricia Foley, 3060 Defense Pentagon, Room 5E621, Washington, DC 20301-3060; or (2) email: patricia.g.foley.civ@mail.mil.

SBA Updates NAICS Codes for WOSB Program

The Small Business Administration (SBA) is updating the North American Industry Classification System (NAICS) codes authorized for use in the Women-Owned Small Business (WOSB) Federal Contract Program (WOSB Program). The update is necessary to reflect the U.S. Office of Management and Budget’s (OMB) NAICS revision for 2017 (NAICS 2017), which created 21 new industries by reclassifying, combining, or splitting 29 NAICS 2012 industry codes. These changes affect eight (8) of the NAICS 2012 codes designated for use under the WOSB Program. (For more on NAICS 2017, see the September 2016 Federal Contracts Perspective article “OMB Issues 2017 Version of the NAICS.”)

Subsequently, the SBA adopted OMB’s NAICS 2017 into its table of small business size standards, effective October 1, 2017 (see the October 2017 Federal Contracts Perspective article “SBA Adopts NAICS 2017 For Size Standards”).

To align the WOSB Program with OMB’s NAICS 2017 and SBA’s adoption of NAICS 2017 for its size standards, SBA is amending the NAICS codes eligible for use under the WOSB Program (including those limited to Economically Disadvantaged WOSBs [EDWOSB]) as follows:

NAICS 2012 NAICS 2017
6-Digit Description WOSB/EDWOSB 6-Digit Description WOSB/EDWOSB
333911 Pump and Pumping Equipment Manufacturing WOSB 333914 Measuring, Dispensing, and Other Pumping Equipment Manufacturing WOSB
333913 Measuring and Dispensing Pump Manufacturing WOSB 333914 Measuring, Dispensing, and Other Pumping Equipment Manufacturing WOSB
512210 Record ProductionWOSB512250 Record Production and DistributionWOSB
512220 Integrated Record Production/Distribution WOSB512250 Record Production and Distribution WOSB
517110 Wired Telecommunications CarriersEDWOSB517311 Wired Telecommunications CarriersEDWOSB
517210 Wireless Telecommunications Carriers (except Satellites)WOSB517312 Wireless Telecommunications Carriers (except Satellites)WOSB
541711 Research and Development in BiotechnologyWOSB541713 Research and Development in NanotechnologyWOSB
541714 Research and Development in Biotechnology (except Nanobiotechnology)WOSB
541712 Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)WOSB541713 Research and Development in NanotechnologyWOSB
541715 Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)WOSB

For more information on the SBA’s WOSB Program, go to http://www.sba.gov/wosb.





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