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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


February 2017
Vol. XVIII, No. 2
[pdf version]

CONTENTS


President Trump Orders Regulatory Freeze
FAC 2005-95 is Obama Administration's Last Hurrah
USDA Proposes 12 New Biobased Products
Prompt Payment Interest Rate Set at 2 1/2%



President Trump Orders
Regulatory Freeze

It didn’t take long from newly inaugurated President Donald Trump to place a freeze on all pending regulatory actions – Reince Priebus, assistant to the president and chief of staff, issued a memorandum on Inauguration Day, January 20, 2017, to federal agencies directing them to “send no regulation to the Office of the Federal Register until a department or agency head appointed or designated by the president after noon on January 20, 2017, reviews and approves the regulation.” The Office of Management and Budget (OMB) may make exceptions “for emergency situations or other urgent circumstances relating to health, safety, financial, or national security matters, or otherwise...”

Priebus went on to direct agencies to “immediately withdraw” all regulations that have been sent to the Office of the Federal Register but not published in the Federal Register, provided none of the emergency situations authorizing an exception applies.

“With respect to regulations that have been published in the Federal Register but have not taken effect...temporarily postpone their effective date for 60 days from the date of this memorandum...for the purpose of reviewing questions of fact, law, and policy they raise. Where appropriate and as permitted by applicable law, you should consider proposing for notice and comment a rule to delay the effective date for regulations beyond that 60-day period. In cases where the effective date has been delayed in order to review questions of fact, law, or policy, you should consider potentially proposing further notice-and-comment rulemaking.”

Excluded from these directions are “any regulations subject to statutory or judicial deadlines...”

In addition, President Trump issued Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs, on January 30 stating “unless prohibited by law, whenever an executive department or agency (agency) publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed...The heads of all agencies are directed that the total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero, unless otherwise required by law or consistent with advice provided in writing by the Director of the Office of Management and Budget.”



FAC 2005-95 is Obama Administration's Last Hurrah

Just one week before President Obama’s administration was to come to an end, Federal Acquisition Circular (FAC) 2005-95 was issued to conduct some final clean up for the new president’s administration. Four of the five rules went into effect January 13; one went into effect January 19, one day before President Trump was sworn in. Because all the FAC 2005-95 rules went into effect before President Trump was inaugurated on January 20, they are not affected by President Trump’s executive order freezing regulations that have not gone into effect (see previous article).



USDA Proposes 12 New Biobased Products

The United States Department of Agriculture (USDA) is proposing to add twelve (12) more sections to Title 7 of the Code of Federal Regulations (CFR), Part 3201, Guidelines for Designating Biobased Products for Federal Procurement (7 CFR Part 3201), to designate product categories composed of intermediate ingredient and feedstock materials that would be given preference in federal procurements as provided under Section 9002 of the Farm Security and Rural Investment Act of 2002 (FSRIA) (Public Law 107-171), and to specify the minimum level of biobased content to be contained in the procured products. (EDITOR’S NOTE: The term “intermediate ingredient and feedstock” is defined in FSRIA as “a material or compound made in whole or in significant part from biological products, including renewable agricultural materials (including plant, animal, and marine materials) or forestry materials, that are subsequently used to make a more complex compound or product.” The term "intermediates" is used in the titles of the product categories being proposed for designation to distinguish these proposed categories from the finished, consumer products previously designated by USDA.)

The following are the proposed new designated product categories and their Title 7 section numbers:

3201.108, Intermediates – Plastic Resins
3201.109, Intermediates – Chemicals
3201.110, Intermediates – Paint and Coating Components
3201.111, Intermediates – Textile Processing Materials
3201.112, Intermediates – Foams
3201.113, Intermediates – Fibers and Fabrics
3201.114, Intermediates – Lubricant Components
3201.115, Intermediates – Binders
3201.116, Intermediates – Cleaner Components
3201.117, Intermediates – Personal Care Product Components
3201.118, Intermediates – Oils, Fats, and Waxes
3201.119, Intermediates – Rubber Materials

As a general rule, procuring agencies must purchase biobased products within these designated items where the purchase price of the procurement item exceeds $10,000 or where the quantity of such items or functionally equivalent items purchased over the preceding fiscal year equaled $10,000 or more, unless products within a designated item: (1) are not reasonably available within a reasonable period of time; (2) fail to meet the reasonable performance standards of the procuring agencies; or (3) are available only at an unreasonable price. The $10,000 threshold applies to federal agencies as a whole and not to agency subgroups such as regional offices or subagencies of the larger federal department or agency. In addition, federal contractors are subject to the procurement preference provisions of Section 9002 of FSRIA.

Comments on this proposal must be submitted no later than March 14, 2017, identified with the Regulatory Information Number (RIN) 0599-AA24, by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: biopreferred_support@amecfw.com – include “RIN 0599-AA24” and “Proposed Designation of Product Categories” on the subject line; or (3) mail or commercial/hand delivery to: Marie Wheat, USDA, Office of Procurement and Property Management, Room 361, Reporters Building, 300 7th St. SW, Washington, DC 20024.

For more information on the biobased program and the products in the program, go to https://www.biopreferred.gov/.



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, 2017, through June 30, 2017, 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, 2016, and December 31, 2016) was 1 7/8% (1.875%). The interest rate for January 1, 2016, through June 30, 2016, was 2 1/2% (2.5%).

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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