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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


MAY 2001
Vol. II, No. 5

CONTENTS

"Blacklisting Rule" Suspended, FAC 97-21 Proposed for Permanent Repeal
FAC 97-27 Implements Section 508 Accessibility Standards
GAO Names Members of Contracting Out Panel
SBA Waives Nonmanufacturer Rule for Bearings
Energy Reinstates Legal Management Regulation
Existing Project Labor Agreements "Grandfathered"
DOD Clarifies Acquisition Education Requirements
NASA to Hold Meeting on Procurement Policies Meeting



"Blacklisting Rule" Suspended,
FAC 97-21 Proposed for Permanent Repeal

On April 3, Federal Acquisition Circular (FAC) 97-24 suspended the effectivity of FAC 97-21, which added language to Federal Acquisition Regulation (FAR) 9.104-1, General Standards, stating that a contracting officer must take into account a contractor's compliance with tax, labor and employment, environmental, antitrust, and consumer protection laws when determining the contractor's responsibility. This "blacklisting" regulation was prepared in response to a pledge made by Vice President Al Gore in 1997 to the AFL-CIO, and it produced over 1,800 predominantly negative comments before going into effect on January 19, 2001, the last full day of the Clinton administration (see the January 2001, Federal Contracts Perspective article "FAC 97-21 Implements 'Blacklisting' Regulations, Widely Opposed by Industry and Agencies").

The great concern by contractors about FAC 97-21 was that labor unions or contracting officers sympathetic to labor could use this rule to "blacklist" contractors hostile to labor, especially since the contracting officer could consider "adverse decisions by a federal administrative law judge, board, or commission" and "other relevant information such as civil or administrative complaints or similar actions filed by...a federal agency, board or commission..." All large corporations are involved in on-going litigation and administration actions, and they thought it was unfair to ask a vice president or contract manager preparing a proposal in one part of the corporation to certify that the entire corporation has not been convicted or had a judgment against it during the previous three years, or be prepared to provide details on all such convictions and judgments, or be subject to penalties for fraud and false certification. In addition, many agencies, did not want their contracting officers getting involved in tax, labor, or environmental litigation -- something they are not trained to evaluate.

With the inauguration of President George W. Bush on January 20, 2001, these regulations became a large target.

On January 26, 2001, the Civilian Agency Acquisition Council (CAAC) authorized all civilian agencies to issue FAR deviations postponing the FAC 97-21 effectivity date for 180 days, from January 19, 2001, to July 19, 2001, (see the March 2001 Federal Contracts Perspective article "Bush Issues Three Acquisition-Related Orders Involving Labor Issues in FAR Part 22"). The CAAC memorandum stated, "the Administrative Procedure Act, 5 U.S.C. 705, gives authority for a stay of the final rule: 'When an agency finds that justice so requires, it may postpone the effective date of action taken by it, pending judicial review.'" The memo went on to cite a lawsuit seeking to overturn FAC 97-21 that was filed in the U.S. District Court for the District of Columbia by the Chamber of Commerce and several industry associations as a justification for invoking the provisions of 5 U.S.C. 705 and postponing FAC 97-21. Most civilian agencies did issue such FAR deviations, including the General Services Administration (GSA), National Aeronautics and Space Administration (NASA), and the Departments of Agriculture, Commerce, Energy, Health and Human Services, Housing and Urban Development, Interior, and Transportation.

Citing the same lawsuit and the 1,800 comments, the FAR Council decided to issue FAC 97-24 and suspend FAC 97-21 for 270 days, until December 29, 2001, or upon final repeal of FAC 97-21, whichever comes first, because it is:

"reassessing the advantages and disadvantages of the changes made by the December 20, 2000, final rule, to determine if the benefits of the rule are outweighed by the burdens imposed by the rule. In this regard, it is not clear to the FAR Council that there is a justification for including the added categories of covered laws in the rule and its implementing certification, that the rule provides contracting officers with sufficient guidelines to prevent arbitrary or otherwise abusive implementation, or that the final rule is justified from a cost benefit perspective...the FAR Council has determined that the 30-day effective date did not give contractors, and the government, sufficient time to meet the new obligations and responsibilities imposed by the final rule. Government contracting officers have not had sufficient training. Offerors have not had sufficient time to establish a system to track compliance with applicable laws and keep it current, in order to be able to properly fill out the certification...The FAR Council now recognizes that it will take more time than it anticipated for businesses to put the systems in place."

Therefore, the FAR is returned to the way it was before FAC 97-21 (except that several paragraph numbers which were changed to make room for text inserted by FAC 97-21 are not being returned to their original designation). That means the changes made by FAC 97-21 to FAR 9.104-1; FAR 9.104-3, Application of Standards; FAR 31.205-21, Labor Relations Costs; FAR 31.205-47, Costs Related to Legal and Other Proceedings; FAR 52.209-5, Certification Regarding, Debarment, Suspension, Proposed, Debarment, and Other Responsibility Matters; FAR 52.212-3, Offeror Representations and Certifications -- Commercial Items; and several other FAR sections are rescinded. (EDITOR'S NOTE: The FAR version at http://www.arnet.gov/far/ has the replaced language in bold.)

Though FAC 97-24 went into effect on April 3, it requires that all solicitations issued on or after the January 19, 2001, effective date of FAC 97-21 must be amended to delete the certification provisions added to FAR 52.209-5 and FAR 52.212-3.

In addition, the FAR Council is requesting comments on a proposed rule that would permanently repeal FAC 97-21. Submit comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, e-mail: farcase.1999-010@gsa.gov.



FAC 97-27 Implements Section 508 Accessibility Standards

Effective June 25, 2001, most contracts for the development, purchase, maintenance, or use of electronic and information technology (EIT) will have to comply with the accessibility standards developed by the Architectural and Transportation Barriers Compliance Board, which were published December 1, 2000 (see the January 2001 Federal Contracts Perspective article "IT Accessibility Standards Published"). The new requirement is in FAC 97-27, which was published April 25, 2001. (EDITOR'S NOTE: FACs 97-25 and 97-26 have already been assigned to other FAR changes, but those changes were not finalized before FAC 97-27. Since the Board's standards go into effect June 21, 2001, it was imperative that FAC 97-27 not be delayed).

The Access Board's standards (which are in Title 36 of the Code of Federal Regulations (CFR), Part 1194, Electronic and Information Technology Accessibility Standards) are commonly referred to as the "Section 508 standards" because they are required by Section 508 of the Rehabilitation Act of 1973, as amended by the Rehabilitation Act Amendments of 1998. The Rehabilitation Act Amendments amended Section 508 to require that: (1) the EIT allow federal employees with disabilities to have access to, and use of, information and data that is comparable to the access to and use of information and data by other federal employees; and (2) individuals with disabilities, who are members of the public seeking information or services from a federal department or agency, have access to and use of information and data that is comparable to that provided to the public without disabilities. However, "comparable access" is not required if it would impose an "undue burden." (EDITOR'S NOTE: Guidance for manufacturers and vendors on how to meet the Board's requirements is available at http://www.section508.gov.)

On January 22, 2001, a proposed rule was published to add a new FAR Subpart 39.X, Electronic and Information Technology, and make other changes to the FAR to implement the standards. This new FAR subpart is Subpart 39.2, with some changes. (EDITOR'S NOTE: For more on the proposed rule, see the February 2001 Federal Contracts Perspective article "FAR Changes Proposed on Helium, IT Accessibility.")

The final rule amends the FAR as follows:

The final rule applies to contracts awarded on or after June 25, 2001, except for indefinite-quantity contracts, it is applicable to delivery orders or task orders issued on or after the effective date. Normally, FACs apply to solicitations issued after the effective date. Many in industry are concerned that contracts which are negotiated before June 25, 2001, may have to be renegotiated if they are not signed before that date.



GAO Names Members of Contracting Out Panel

As required by the Fiscal Year 2001 National Defense Authorization Act (Public Law 106-398), the General Accounting Office (GAO) has named the panel of experts who will study the policies and procedures governing the transfer of commercial activities currently performed by government personnel to a federal contractor -- commonly called "contracting out" or "outsourcing". The panel's study is to include a review of: (1) procedures for determining whether functions should continue to be performed by government personnel; (2) procedures for comparing the costs of performing functions by government personnel with the costs of performing those functions by federal contractors; (3) implementation by the Department of Defense (DOD) of the Federal Activities Inventory Reform Act of 1998 (Public Law 105-270); and (4) procedures of the Department of Defense for public-private competitions under Office of Management and Budget (OMB) Circular A-76, Performance of Commercial Activities. By May 1, 2002, the Comptroller General of GAO must submit to Congress the results of the study, including recommended changes with regard to implementing policies and enactment of legislation.

The FY01 National Defense Authorization Act requires that the panel be headed by the GAO Comptroller General or a GAO official designated by the Comptroller General. The Comptroller General must appoint highly qualified and knowledgeable persons to the panel, and must ensure that the following entities receive fair representation on the panel: (1) DOD; (2) private industry; (3) federal labor organizations; and (4) OMB. On December 1, 2000, GAO published a notice in the Federal Register inviting nominations, and it received nominations of 44 individuals, including representatives from the private sector, federal labor organizations, industry groups, research organizations, interest groups, and contractors. After considering all the nominations, the Comptroller General has selected the following for the panel:

It is expected that the panel will meet for the first time on May 8.

During the course of its work, the panel will hold several public hearings. Interested parties will be encouraged to attend these hearings to provide their perspectives on outsourcing issues. The schedules for these hearings will be announced in later Federal Register notices.

EDITOR'S NOTE: For more on the commercial activities panel, see the April 2001 Federal Contracts Perspective article "GAO to Convene Panel on Contracting Out."



SBA Waives Nonmanufacturer Rule for Bearings

The Small Business Administration (SBA) has waived the "nonmanufacturer rule" for aerospace ball and roller bearings, consisting of, but not limited to, annular ball bearings, cylindrical ball bearings, linear ball bearings, linear roller bearings, needle roller bearings, ball or roller bearing races, roller bearings, tapered roller bearings and thrust roller bearings classified under Standard Industrial Classification (SIC) code 3562 and North American Industry Classification System (NAICS) 332991. SBA is taking this action because it has been unable to identify any small business manufacturers of the items -- SBA searched the Procurement Marketing and Access Network (PRO-Net) (http://pro-net.sba.gov) but failed to identify any small business manufacturers of these items, and it published a notice in the Federal Register on February 20, 2001, requesting information on potential small business sources for these bearings but received no comments (see the March 2001 Federal Contracts Perspective article "Proposed Nonmanufacturer Rule Waiver for Bearings" for more on the request for information).

EDITOR'S NOTE: Paragraph (f) of FAR 19.102, Size Standards, requires that small businesses awarded contracts under small business set-asides and the 8(a) program must either (1) produce the item itself (that is, be the manufacturer), or (2) if the small business does not manufacture the item (for example, the small business is a dealer), it must provide "the product of a [domestic] small business manufacturer or producer." The second condition is the "nonmanufacturer rule." However, if the SBA cannot identify any domestic small business manufacturers for a "class of products," it may waive the nonmanufacturer rule and permit small businesses to provide any domestic products under set-aside and 8(a) contracts.

The SBA's regulations on the nonmanufacturer rule are in Title 13 of the CFR, Business and Credit Administration, Part 121, Small Business Size Regulations, under paragraph (b) of 13 CFR 121.406, How Does a Small Business Concern Qualify to Provide Manufactured Products Under Small Business Set-Aside or MED [Minority Enterprise Development] Procurements? The SBA regulation on the waiver of the nonmanufacturer rule is 13 CFR 121.1202, When Will a Waiver of the Nonmanufacturer Rule Be Granted for a Class of Products?

A list of all other nonmanufacturer rule waivers is available at http://www.sba.gov/GC/approved.html.



Energy Reinstates Legal Management Regulation

On January 18, 2001, the Department of Energy (DOE) published a new regulation to monitor and control legal costs incurred by its contractors at government-owned or leased facilities with contracts exceeding $100,000,000. Since the regulation's effective date was to be February 20, it was covered by President Bush's January 20 order to postpone for 60 days all regulations that had not yet gone into effect so members of the Bush administration could review them and decide whether to retain or repeal these "midnight" regulations issued by the Clinton administration as it left office (see the February 2001 Federal Contracts Perspective articles "DOE Rewrites DEAR Part 970, Mandates Legal Mandate" and "President Bush Freezes New Regulations").

DOE has completed its review of the regulation and announced on April 23 that it does not intend to initiate any further rulemaking action to modify its provisions. Therefore, the rule went into effect April 23.



Existing Project Labor Agreements "Grandfathered"

On February 17, 2001, President Bush issued Executive Order 13202 to prohibit the government from using any contract provisions that require bidders to enter into agreements with labor to require employees to join a union or pay union dues -- so-called "project labor agreements" (see the March 2001 Federal Contracts Perspective article "Bush Issues Three Acquisition-Related Orders Involving Labor Issues in FAR Part 22"). There were widespread concerns that Executive Order 13202 outlawed existing project labor agreements, such as that on the $14 billion Boston Central Artery/Tunnel project, and that there could be significant disruptions to such projects. Therefore, President Bush decided to issue Executive Order 13208 on April 6 to amend Executive Order 13202 by adding a paragraph permitting the head of an agency to exempt a project from the provisions of Executive Order 13202 if one or more of the project's construction contracts were awarded by the February 17 issuance date of Executive Order 13202 and were subject to a project labor agreement.



DOD Clarifies Acquisition Education Requirements

Section 808 of the FY01 National Defense Authorization Act established a new minimum qualification requirement for all new DOD entrants into the GS-1102 occupational series or similar military occupational specialty and for contracting officers with authority to award or administer contracts above the $100,000 simplified acquisition threshold: an individual must have completed a baccalaureate degree and at least 24 semester credit hours (or equivalent) of study from an accredited institution of higher education in any of the following disciplines: accounting, business finance, law, contracts, purchasing, economics, industrial management, marketing, quantitative methods, and organization and management. It went on to state that this minimum qualification requirement "shall not apply to a person for the purpose of qualifying to serve in a position in which the person is serving on September 30, 2000."

This wording caused quite a bit of confusion and consternation. Many people with 10, 20, and 30 years of "on-the-job training" were concerned that they were no longer eligible for promotions because they did not have the requisite baccalaureate degree and/or 24 hours of business-related education. Therefore, after consultation with key members of Congress, DOD issued a memorandum to all military departments stating that "it is the Department's view that this requirement applies only to new military and civilian entrants as of October 1, 2000. Civilian personnel in DOD, who occupied GS-1102 positions or contracting officer positions with authority to award or administer contracts above the simplified acquisition threshold on or before September 30, 2000, are therefore excluded from this new requirement with respect to civilian positions." It goes on to state that military personnel who occupied positions similar to the GS-1102 series or contracting officer positions on or before September 30, 2000, are excluded from this requirement with respect to military positions.

Attached to the memorandum are several questions and answers pertaining to this clarification. For example, a DOD employee currently holding a GS-301 position but held a GS-1102 position in DOD in 1999 would not have to meet the new requirements, whereas a DOD employee holding a GS-301 position without ever having held a GS-1102 position within DOD would have to meet the requirements. A retired military member who occupied a position similar to the GS-1102 series would have to meet the education requirements, as would a person in a GS-1102 position outside of DOD (but not if that person had ever held a GS-1102 position within DOD). For those who do not meet the education requirements but were hired between October 1, 2000, and the March 21, 2001, date of the memorandum, the military department may issue a waiver.



NASA to Hold Meeting on Procurement Policies

On May 3, NASA will hold a meeting at the George C. Marshall Space Flight Center to solicit questions, views, and opinions about its procurement policies, practices, and initiatives. The meeting will be from 9:00 am to 11:00 am in the Morris Auditorium, Building 4200, Huntsville, AL 35812. Doors will open at a half-hour prior to the presentation.

Attendees must be U.S. citizens or have a valid green card in their possession. Admittance will be first-come, first-served. Since the auditorium capacity is approximately 90 persons, no more than two representatives per firm should attend. No reservations will be accepted.

The following are among the topics that will be discussed:

For further information, contact Joseph Derell Hobson, 256-544-0375.

Regarding safety and health, there were two NASA FAR Supplement (NFS) amendments published in April:

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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