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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


March 2019
Vol. XX, No. 3
[pdf version]

CONTENTS


DFARS Amended to Comply with NDAA Statutory Changes, Directives
Navy Acquisition Regulations Trimmed
Two Agencies Address Their Mentor-Protégé Programs
Michael Wooten Nominated to be OFPP Administrator
Prompt Payment Interest Rate Set At 3 5/8%



DFARS Amended to Comply with
NDAA Statutory Changes, Directives

The Department of Defense (DOD) conducted a little tidying up of the Defense Federal Acquisition Regulation Supplement (DFARS) during February by issuing seven final rules, primarily to implement provisions of various National Defense Authorization Acts (NDAAs). In addition, DOD proposed a rule to implement another NDAA provision, and issued a memorandum to comply with yet another NDAA provision.



Navy Acquisition Regulations Trimmed

The Department of the Navy has decided to trim down the Department of the Navy Acquisition Regulations because the coverage is duplicative of that in the Federal Acquisition Regulation (FAR) and the Defense FAR Supplement (DFARS).



Two Agencies Address Their Mentor-Protégé Programs

The General Services Administration (GSA) and the Department of Energy (DOE) took action on their respective mentor-protégé programs by going in two different directions.

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 developed their own mentor-protégé programs. All the programs had 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 passed the NDAA for FY 2013 (Public Law 112-239), which included Section 1641, Mentor-Protégé Programs, which authorizes the Small Business Administration (SBA) to “establish a mentor-protégé program for all small business concerns (emphasis added).” In addition, Section 1641 prohibits agencies from conducting their own mentor-protégé programs unless the head of the agency submits a plan to SBA for approval. (EDITOR’S NOTE: This does not apply to DOD because it has the necessary statutory and regulatory framework for its own separate mentor-protégé program).

In 2016 the SBA published a final rule establishing a governmentwide mentor-protégé program applicable to civilian agencies in which all small businesses are eligible (see the August 2016 Federal Contracts Perspective article “Governmentwide Mentor-Protégé Program Established”). Agencies were given one year to decide whether to adopt the SBA’s mentor-protégé program or submit to SBA for approval a plan for continuing a previously existing mentor-protégé program.

GSA has decided not to continue its mentor-protégé program, so it published a direct final rule in February repealing the regulations implementing its mentor-protégé program in GSA Acquisition Regulation (GSAR) subpart 519.70, GSA Mentor-Protégé Program, and associated clauses GSAR 552.219–75, GSA Mentor-Protégé Program, and GSAR 552.219–76, Mentor Requirements and Evaluation.

DOE has taken the other approach. DOE decided to continue administering its mentor-protégé program, so it developed a plan, submitted it to the SBA, and SBA approved the DOE mentor-protégé program on February 20, 2018. The DOE mentor-protégé program required the protégé to be either: (1) a business certified by the SBA in the 8(a) Program; (2) a small disadvantaged business (SDB); (3) a women-owned small business (WOSB); (4) a Historically Black College and University or other minority institution of higher learning (HBCU/Ml); or (5) a small business concern owned and controlled by service-disabled veterans.

However, on July 10, 2018, SBA gave DOE approval to amend the language in the DOE Acquisition Regulation (DEAR) to expand the eligibility for its mentor-protégé program to all small businesses, including HUBZone [Historically Underutilized Business Zone] small businesses. Therefore, DOE issued a class deviation revising DEAR subpart 919.70, The Department of Energy Mentor-Protégé Program, and DEAR 952.219-70, DOE Mentor-Protégé Program, to open participation to all small businesses. This is consistent with SBA’s “All Small Business Mentor-Protege Program” and will enable more small businesses to receive business development assistance from DOE prime contractors.



Michael Wooten Nominated to be OFPP Administrator

President Trump has nominated Dr. Michael Eric Wooten to be the next administrator of the Office of Federal Procurement Policy (OFPP). Dr. Wooten is a senior advisor for acquisitions at the Department of Education’s Federal Student Aid office.

He recently served in the Trump Administration as Department of Education's acting Assistant Secretary and Deputy Assistant Secretary for Career, Technical, and Adult Education. Prior to this appointment, Dr. Wooten served as Deputy Chief Procurement Officer for the District of Columbia government.

Between 2005 and 2015, he served as a professor of contract management and in senior staff and acquisition workforce positions at Defense Acquisition University.

Dr. Wooten holds a doctorate in Higher Education Management from the University of Pennsylvania, an M.S. in contract management from the Naval Postgraduate School, master’s degrees from George Washington University and Norwich University, and a B.A. in psychology from Chapman University.

He is a retired Marine Corps major and previously served in Afghanistan.



Prompt Payment Interest Rate Set At 3 5/8%

The Treasury Department has established 3 5/8% (3.625%) as the interest rate for the computation of payments made between January 1, 2019, and June 30, 2019, 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, 2018, through December 31, 2018) was 3 1/2% (3.5%). The interest rate for January 1, 2018, through June 30, 2018, was 2 5/8% (2.625%).

All prompt payment interest rates since 1980 (in six-month increments) are available at https://www.fiscal.treasury.gov/prompt-payment/rates.html.

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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