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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


MARCH 2002
Vol. III, No. 3

CONTENTS

FAC 2001-04 Redefines "Classified Acquisitions"
Listing of Multi-Agency Contract Instruments Proposed
GAO Protest Procedures Being Reviewed
Trade Agreements Act and NAFTA Thresholds Revised
DOD Extends Suspension of SDB Evaluation Adjustments
SBA Proposes Revising Size Standard for Oil Refineries
NFS Changes on Security, Construction Set-Asides
EPA to Empower Procurement Officials



FAC 2001-04 Redefines "Classified Acquisitions",
Extends FAR Subpart 13.5 for One Year

The Federal Acquisition Regulation (FAR) Council published Federal Acquisition Circular (FAC) 2001-04 on February 8 to conduct a little "housekeeping" -- cleaning up seven little regulatory odds and ends that have been gathering dust in the corner. FAC 2001-04 contains nothing very noteworthy, unless you are directly affected by the change, in which case FAC 2001-04 could be very important.



Listing of Multi-Agency Contract Instruments Proposed

The FAR Council is proposing to add FAR Subpart 5.6, Publicizing Multi-Agency Use Contracts, to require contracting activities to post information online for governmentwide acquisition contracts (GWACs), multi-agency contracts, General Services Administration (GSA) Federal Supply Schedule (FSS) contracts, blanket purchase agreements (BPAs) under FSS contracts, and other procurement instruments intended for multiple agency use. This information would be posted at http://www.arnet.gov/gwac/govwide.html.

Comments on the proposed rule must be submitted by April 16, 2002, to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2001-030@gsa.gov.



GAO Protest Procedures Being Reviewed

On February 25, the General Accounting Office (GAO) published an advance notice of proposed rulemaking to alert the public that it is reviewing its bid protest procedures because developments since 1996, when those regulations were last revised, "warrant updating the regulations to reflect current practice." Those regulations, which are in Title 4 of the Code of Federal Regulations (CFR), Part 21, govern offeror protests filed with the GAO against alleged improprieties in the government's conduct of acquisitions. (EDITOR'S NOTE: FAR 33.104, Protests to the GAO, provides an overview of the protest process and procedures. However, if there is a conflict between GAO's regulations at 4 CFR Part 21 and the FAR, GAO's regulations govern.)

Among the regulatory changes being considered are:

Comments on these issues and any other suggestions for changes to other areas of the regulations that may enhance the efficiency and overall effectiveness of the bid protest process must be submitted by April 1, 2002, by hand or mail to John M. Melody, Assistant General Counsel, General Accounting Office, 441 G Street, NW, Washington, DC 20548, or by e-mail to BidProtestRegs@gao.gov, or by facsimile to 202-512-9749.



Trade Agreements Act and NAFTA Thresholds Revised

The Trade Agreements Act exempts products of "designated countries" (that is, signatories to World Trade Organization Government Procurement Agreement -- see FAR 25.003, Definitions) from the application of the Buy American Act (see FAR Subparts 25.1 and 25.2) in acquisitions that exceed certain thresholds. The North American Free Trade Agreement (NAFTA) does the same for products of Canada and Mexico (see FAR Subpart 25.4, Trade Agreements, for more on compliance with the Trade Agreements Act and NAFTA).

The USTR is required to adjust the thresholds about every two years to reflect changes in the value of the U.S. dollar against other currencies. Therefore, on February 21, the Office of the USTR announced that is adjusting the Trade Agreements Act and NAFTA thresholds for calendar years 2002 and 2003 as follows:

Trade Agreements Act: Goods and Services -- $169,000 (down from $177,000); Construction -- $6,481,000 (down from $6,806,000).

NAFTA: Goods and Services -- $56,190 (up from $54,372); Construction -- $7,304,733 (up from $7,068,419) (EDITOR'S NOTE: The NAFTA threshold for Canadian goods and services remains $25,000).

For information on the changes made to these thresholds by the USTR in 2000, see the April 2000 Federal Contracts Perspective article "Trade Agreements Thresholds Revised."



DOD Extends Suspension of SDB Evaluation Adjustments

On January 31, 2002, Colonel Carolyn Balven issued a memorandum for Director of Defense Procurement Deidre Lee suspending until February 24, 2003, the use of the 10% price evaluation adjustment for small disadvantaged businesses (SDBs) prescribed in FAR Subpart 19.11, Price Evaluation Adjustment for Small Disadvantaged Business Concerns.

This action was taken to comply with Section 801 of the National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261), which prohibits DOD from paying a price that exceeds the fair market cost if the secretary of defense determines that DOD achieved its 5% goal for contract awards to SDBs in the most recent fiscal year.

Title 10 of the U.S. Code, Section 2323, Contract Goal for Small Disadvantaged Businesses and Certain Institutions of Higher Education, sets for the DOD, the National Aeronautics and Space Administration (NASA), and the Coast Guard a 5% goal of contract awards to SDBs, historically Black colleges and universities (HBCUs), and minority institutions (MIs). Subsection 2323(e) authorizes DOD, NASA, and the Coast Guard to take actions to achieve this 5% goal, including the payment of a price that exceeds the fair market cost by no more than 10%.

FAR Subpart 19.11 provides for the application of a price evaluation adjustment to competitive offers of SDBs that exceed the $100,000 simplified acquisition threshold and are not set aside for small businesses in industries determined by the Department of Commerce to have "persistent and significant underutilization of minority firms." The Department of Commerce has determined that a 10% price evaluation adjustment is appropriate for 56 industries.

Since the secretary of defense determined that DOD exceeded the 5% goal during fiscal year 2001, the use of the 10% price evaluation adjustment had to be suspended, as it has been since February 24, 2000.



SBA Proposes Revising Size Standard for Oil Refineries

The Small Business Administration (SBA) is proposing to increase the capacity component of the small business size standard for petroleum refiners from 75,000 barrels per day (bpd) to 155,000 barrels per calendar day (bpcd). The current small business size standard for North American Industry Classification System (NAICS) 324110, Petroleum Refineries, is 1,500 employees, but there is a Footnote 4 to the Table of Small Business Size Standards in 13 CFR 121.201 which states:

"NAICS code 324110 -- For purposes of government procurement, the firm may not have more than 1,500 employees nor more than 75,000 barrels per day capacity of petroleum- based inputs, including crude oil or bona fide feedstocks. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks."

SBA received a request from a small petroleum refiner to delete the bpd part of the size standard for NAICS 324110 for two reasons:

  1. The refining industry is dominated by large refiners. The requestor complained that under the current 75,000 bpd size standard, many smaller refiners cannot grow, merge with, or acquire other refiners without losing their small business status.

  2. The small refiners' share of the U.S. total refining capacity has steadily declined during the past 25 years. The requestor states that small refiners' share of the total U.S. capacity has declined from 7.8% in 1975, to 7.1% in 1984, to 6.7% in 1990, and to 4.1% in 1999.

Based on these concerns, SBA is not proposing to delete the bpd part of the size standards as recommended, but rather is proposing to increase the 75,000 bpd component of the size standard to 155,000 bpcd. This would restore the share of small refiners to approximate the same level as in 1992, when the small business size standard was increased to 75,000 bpd.

In addition, SBA proposes to clarify the capacity measure for determining small business size status by replacing the term "barrels per day" with the term "barrels per calendar day" as the U. S. Department of Energy, Energy Information Administration (EIA) has defined it in the glossary to Petroleum Supply Annual 2000, Volume 1. Also, SBA proposes to further clarify the capacity measure by adding to Footnote 4 the phrase "total Operable Atmospheric Crude Oil Distillation Capacity" as used in Petroleum Supply Annual 2000, Volume 1.

Therefore, SBA proposes to revise Footnote 4 to the NAICS 324110 size standard of 1,500 employees to read as follows:

"NAICS code 324110 -- For purposes of federal government procurement, the petroleum refiner must be a concern that has no more than 1,500 employees nor more than 155,000 barrels per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes owned or leased facilities as well as facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. The total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks."

Comments on the proposed size standard must be sent by March 14, 2002, to Gary M. Jackson, Assistant Administrator for Size Standards, U.S. Small Business Administration, 409 Third Street, SW, Mail Code 6530, Washington, DC 20416; or by e-mail to sizestandards@sba.gov.



NFS Changes on Security, Construction Set-Asides

NASA has been fairly busy recently, revising the NASA FAR Supplement (NFS) by issuing two final rules and instituting small business set-asides for construction and architect-engineering services:



EPA to Empower Procurement Officials

The Environmental Protection Agency (EPA) has decided to issue a "direct final rule" amending the EPA Acquisition Regulation (EPAAR) to eliminate certain higher level reviews to reduce delays and to "empower" those procurement officials most familiar with a contract action to make decisions relating to that action.

In addition, certain technical amendments are being made to the EPAAR to add procedures for class deviations (EPAAR 1501.404, Class Deviations), to revise definitions (EPAAR 1502.100, Definitions), and to make miscellaneous clarifications.

This rule is being published as a "direct final rule," which EPA reserves for rules it believes are noncontroversial. The rule will take effect May 6, 2002, without further action unless EPA receives adverse comments by March 6, 2002, in which case it will withdraw the rule and publish a notice in the Federal Register that the rule will not take effect.

Adverse comments on the direct final rule should be sent to Larry Wyborski, U.S. Environmental Protection Agency, Office of Acquisition Management, Mail Code 3802R, 1200 Pennsylvania Avenue, NW, Ariel Rios Building, Washington, DC 20460.

EDITOR'S NOTE: The EPAAR is available on the Internet at http://www.epa.gov/oamrfp12/ptod/epaar.pdf.



Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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