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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


May 2018
Vol. XIX, No. 5
[pdf version]

CONTENTS


GAO Introduces Electronic Protest System, Assesses $350 Filing Fee
DOD Cranks It Up For Spring!
Phase II of VAAR Update Finalized
Treasury Finalizes Tax Check Requirement Rule
HUDAR Revisions Proposed
SBA Proposes Revised Size Standards Methodology



GAO Introduces Electronic Protest System,
Assesses $350 Filing Fee

The Government Accountability Office (GAO) has announced that it is introducing a secure web-based electronic system for bid protests. The new electronic bid protest docketing system (EPDS) is designed “to provide a more seamless and efficient process for all participants, providing real-time notice to federal agencies of new protest filings as well as notice to all parties to a protest of subsequent protest filings.”

Effective May 1, all new protests of government contract awards (excluding those including classified material) must be submitted and managed through EPDS (https://epds.gao.gov/login).  There will be a $350 filing fee, which will be used to pay for the operation and maintenance of the system. When filing a protest, the protester will be automatically redirected to http://www.pay.gov.

The EPDS implements Section 1501 of the Consolidated Appropriations Act for 2014 (Public Law 113-76), which requires the Comptroller General of the GAO to “establish and operate an electronic filing and document dissemination system under which, in accordance with procedures prescribed by the Comptroller General: (A) a person filing a protest…may file the protest through electronic means; and (B) all documents and information required with respect to the protest may be disseminated and made available to the parties to the protest through electronic means.” Also, Section 1501 authorizes the Comptroller General to “require each person who files a protest...to pay a fee to support the establishment and operation of the electronic system...”

In addition to announcing the establishment of the EPDS, GAO amended its regulations in Title 4 of the Code of Federal Regulations (CFR), Part 21, Bid Protest Regulations (4 CFR Part 21), to recognize the EPDS, to reflect the mandatory nature of the EPDS, to make certain administrative changes to reflect current practice, and to streamline the bid protest process.

The following are some of the significant changes GAO is making to its bid protest regulations:

GAO has established a webpage, https://www.gao.gov/legal/bid-protests/file-a-bid-protest, that provides how-to videos on registering as a new EPDS user, logging into and navigating EPDS, filing a new protest, and submitting a request to intervene. In addition, this webpage includes frequently asked questions (FAQs) and user manuals.



DOD Cranks It Up For Spring!

After a relatively quiet winter, the Department of Defense (DOD) changes to the DOD Federal Acquisition Regulation Supplement (DFARS) are in full bloom, with the issuance of six final rules, two class deviations, and one notice!



Phase II of VAAR Update Finalized

The Department of Veterans Affairs (VA) is issuing the second of several final rules that conduct housekeeping on the VA Acquisition Regulation (VAAR) to revise or remove any policy that has been superseded by changes in the Federal Acquisition Regulation (FAR); remove any procedural guidance that is internal to the VA; incorporate new regulations and policies; correct inconsistencies within the VAAR; remove redundant and duplicate material already covered by the FAR; delete outdated material or information; and renumber VAAR text, clauses, and provisions to conform to the FAR format, numbering, and arrangement.

In addition, VA is proposing three more revisions to the VAAR that would reflect current FAR titles of parts, subparts, and sections; reflect current FAR format, numbering, and arrangement; reflect current FAR requirements and definitions; correct inconsistencies with the FAR; remove redundancies and duplicate material already covered by the FAR; and delete outdated material and information.

The second final rule, which addresses VAAR part 803, Improper Business Practices and Personal Conflicts of Interest, VAAR part 814, Sealed Bidding, and VAAR part 822, Application of Labor Laws to Government Acquisitions, incorporated several technical non-substantive changes to the second of the proposed rules (see the June 2017 Federal Contracts Perspective article “Phase Two of VAAR Revision Proposed”). Besides conducting clean-up and maintenance, the final rule makes the following significant changes:

In addition to this final rule, VA issued three more proposed increments to the VAAR overhaul (the fifth through seventh increments overall). Each of the three proposed increments would amend and update VAAR parts that address related topics. Each increment would revise or remove any policy superseded by changes in the FAR, remove procedural guidance internal to VA, and incorporate any new agency specific regulations or policies. These changes are intended to streamline and align the VAAR with the FAR and remove outdated and duplicative requirements.

The first of these increments would add VAAR part 844, Subcontracting Policies and Procedures, and add VAAR part 845, Government Property, to supplement the FAR by adding (and making public) unique VA requirements on these topics. Comments on this proposed rule must be submitted by June 5, 2018, identified as “RIN 2900-AQ05–Revise and Streamline VA Acquisition Regulation Parts 844 and 845,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) mail or hand-delivery: Director, Regulation Policy and Management (00REG), Department of Veterans Affairs, 810 Vermont Avenue NW, Room 1063B, Washington, DC 20420; or (3) fax: 202-273-9026.

The second of these increments would amend VAAR part 831, Contract Cost Principles and Procedures, VAAR part 833, Protests, Disputes, and Appeals, and VAAR Part 871, Loan Guaranty and Vocational Rehabilitation and Employment Programs. Comments on this https://www.govinfo.gov/content/pkg/FR-2018-04-06/html/2018-04003.htmproposed rule must be submitted by June 5, 2018, identified as “RIN 2900-AQ02–Revise and Streamline VA Acquisition Regulation (Parts 831 and 833,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) mail or hand-delivery: Director, Regulation Policy and Management (00REG), Department of Veterans Affairs, 810 Vermont Avenue NW, Room 1063B, Washington, DC 20420; or (3) fax: 202-273-9026.

The third of these increments would amend VAAR part 829, Taxes, VAAR part 846, Quality Assurance, VAAR part 847, Transportation, and VAAR part 870, Special Procurement Controls. Comments on this proposed rule must be submitted by June 25, 2018, identified as “RIN 2900-AQ04–Revise and Streamline VA Acquisition Regulation – Parts 829, 846, and 847,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) mail or hand-delivery: Director, Regulation Policy and Management (00REG), Department of Veterans Affairs, 810 Vermont Avenue NW, Room 1063B, Washington, DC 20420; or (3) fax: 202-273-9026.



Treasury Finalizes Tax Check Requirement Rule

The Department of the Treasury finalizes, without changes, the interim rule that added Department of the Treasury Acquisition Regulation (DTAR) subpart 1009.70, Tax Check Requirements, which directs Internal Revenue Service (IRS) contracting officers to perform a tax check on the apparent successful offeror to determine eligibility to receive an award. If the tax check shows the offeror has a delinquent federal tax liability, the offeror is ineligible for award unless “the offeror provides the contracting officer with documentation...that demonstrates the offeror’s tax status as being paid-in-full or that an approved payment agreement is in place...If the tax check demonstrates the offeror as tax compliant then the offeror is eligible for award, assuming all other standards of responsibility have been met.” (DTAR 1009.7001, Definitions, defines a a “tax check” as “an IRS process that accesses and uses taxpayer return information to support the government’s determination of an offeror’s eligibility to receive an award, including but not limited to implementation of the statutory prohibition of making an award to corporations that have a delinquent federal tax liability...”)

Twenty-seven comments were submitted on the interim rule, but twenty-six of those comments were outside the scope of the interim rule, and the other comment supported the interim rule. Therefore, Treasury is finalizing the interim rule without changes. For more on the interim rule, see the December 2017 Federal Contracts Perspective article “IRS to Assess Contractors’ Tax Compliance.”



HUDAR Revisions Proposed

The Department of Housing and Urban Development (HUD) is proposing to amend the HUD Acquisition Regulation (HUDAR) to implement miscellaneous changes. The most significant change would be changing throughout the HUDAR the unique-HUD term “government technical representative” (GTR) to “contracting officer representative” (COR), and the term “government technical monitor” would be removed.

In addition, the following are the most significant changes that are being proposed:

Comments on this proposed rule must be submitted by June 8, 2018, by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410–0500.



SBA Proposes Revised Size Standards Methodology

The Small Business Administration (SBA) has revised its white paper “SBA’s Size Standards Methodology,” which explains how it establishes, reviews, and modifies small business size standards. The white paper, which SBA intends to apply to the forthcoming five-year comprehensive review of size standards, is available at https://www.sba.gov/document/support--size-standards-methodology-white-paper, and SBA is inviting comments on it.

The white paper provides a brief review of the following:

The most significant proposed change in methodology is the conversion from the “anchor” approach to the “percentile” approach.

With the “anchor” size standards approach, SBA evaluates the characteristics of individual industries relative to the average characteristics of industries with the anchor size standard to other industries to determine whether they should have a higher or a lower size standard than the anchor. SBA adopted 500 emp1oyees as the size standard for manufacturing industries at its 1953 inception, and 500 employees has remained the standard for many industries and has long been considered the “anchor” size standard for employee based size standards. For nonmanufacturing industries, SBA has used annual receipts as the measure of size standards for nonmanufacturing industries since 1954 when it established $1,000,000 in average annual receipts as the “anchor” size standard for nonmanufacturing industries. Over the years the receipts based size standards for various industries were adjusted to reflect their different natures: retail trade and service industries had size standards lower than the $1,000,000 anchor; wholesale trade industries had size standards that were higher than the $1,000,000 anchor; and construction industries had size standards that were higher yet. SBA has periodically increased all receipts based size standards for inflation. With the inflation adjustment, the most common receipts based size standard of $1,000,000 has increased to $7,500,000, which is considered today’s “anchor” size standard for nonmanufacturing industries.

With the “percentile” approach, SBA will rank each industry among all industries with the same measure of size standards using each of five industry factors: average firm size; average assets size; industry competition; distribution of firms by size; and small business share of federal contracts relative to their share of the industry’s receipts. Specifically, the size standard for an industry will be derived based on where the specific factors of that industry fall relative to other industries sharing the same measure of size standards. If an industry ranks high for a specific factor relative to most other industries, and all other factors are the same as the other industries, a size standard assigned to that industry will be higher than that for most industries. Conversely, if an industry ranks low for a specific factor relative to most industries in the group, a lower size standard will be assigned to that industry. The size standards for each factor are then averaged to obtain the overall size standard for a specific industry.

Currently, the most prevalent size standards are $7,500,000 in annual receipts for retail trade and services; $35,500,00 general construction; $15,000,000 for special trade construction; 100 employees for wholesale trade for all federal programs except for federal procurement where it is 500 employees under the nonmanufacturer rule; and 500 employees for manufacturing industries. Monetary based size standards range from $750,000 in annual receipts for most agricultural enterprises (which were set by statute until the enactment of NDAA for FY 2017) to $38,500,000 in annual receipts for facility support services. Similarly, employee based standards range from 100 employees for heating oil dealers to 1,500 employees for some manufacturing and telecommunications industries. With a very few exceptions, uniform size standards are now in place for all SBA’s programs. (The table of size standards is available at https://www.sba.gov/document/support--table-size-standards.)

Comments are being solicited on issues such as:

Comments on this white paper must be submitted by June 26, 2018, identified as “SBA-2018-0004,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail or hand delivery: U.S. Small Business Administration, Khem R. Sharma, Chief, Office of Size Standards, 409 Third Street SW, Mail Code 6530, Washington, DC 20416; or (3) email: sizestandards@sba.gov.





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