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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


July 2002
Vol. III, No. 7

CONTENTS

FAC 2001-08 Restricts "Incidental Items" on FSS Orders
FY 2001 Spending Increases 8.1% to $248.7 Billion
FAR Changes on Taxes Proposed, 508 Comments Sought
DFARS Changes on U.S.-Flag Vessels, Indian Organizations
Travel Agencies' Size Standard Increased



FAC 2001-08 Restricts "Incidental Items" on FSS Orders,
Moves Definitions, Adds Relocation Costs

Continuing its languid summer pace, the Federal Acquisition Regulation (FAR) Council issued another little Federal Acquisition Circular (FAC) -- FAC 2001-08, which adds policies on incidental items and disputes under Federal Supply Schedule (FSS) contracts, moves the definitions of "claim" and various other terms related to contract terminations to FAR 2.101, Definitions, and amends FAR 31.205-35, Relocation Costs, to make some additional costs allowable.

  1. Definition of "Claim" and Terms Relating to Termination: This final rule makes the following changes:


    On August 15, 2001, a proposed rule was published to make these changes (see the September 2001 Federal Contracts Perspective article "Flurry of FAR Changes Proposed: Trademarks, Claims, Terminations, Commercial Items, Task Orders"). One respondent submitted two comments suggesting editorial changes, and both were accepted, so the proposed rule was finalized with a correction to a cross-reference and the inclusion of "the movement of the various definitions to FAR 2.101 is not intended to change the operation of the cost principles" in the introduction to the final rule.

  2. Federal Supply Schedule Order Incidental Items and Disputes: This final rule amends the FAR to add policies on incidental items and disputes under FSS contracts and to remove the requirement that contracting officers notify GSA when a schedule contractor refuses to honor an order placed by a government contractor, as follows:


    A proposed rule was published on December 19, 2000, to make these changes (see the January 2001 Federal Contracts Perspective article "Proposed FAR Changes on High Tech Employees"). Nine respondents submitted comments, and the following changes were made to the finalized rule:


  3. Relocation Costs: FAR 31.205-35, Relocation Costs, is amended to make the following changes:



FY 2001 Spending Increases 8.1% to $248.7 Billion

Fiscal Year (FY) 2001 spending by the federal government surpassed the FY 2000 record of $230.1 billion by $18.6 billion, setting a new record of $248.7 billion -- a 8.1% increase. Since the end of the fiscal year was September 30, 2001, most of this spending took place before the September 11 attack. With almost all the spending on the war in Afghanistan and homeland security taking place in FY 2002 (which began on October 1), FY 2002 is certain to set another record.

The following are the largest agencies' FY 2001 spending totals (in billions) and the percentage change from FY 2000:

Defense$162.6+10.1%
Energy$18.8+10.0%
General Services Administration$12.8+13.5%
National Aeronautics and Space Administration$10.7-4.2%
Veterans Affairs$9.7+10.9%
Health and Human Services$4.9+1.8%
Justice$4.8+16.8%
Agriculture$4.3+4.7%
Treasury$3.5+13.5%
Transportation$2.8+25.9%
Interior$2.8+50.6%
State$2.2+37.7%
Labor$1.4+5.1%
Commerce$1.3-37.5%
Environmental Protection Agency$1.1+11.8%
Education$0.9+3.1%
Housing and Urban Development$0.8-29.3%
Agency for International Development$0.8+66.4%
Social Security Administration$0.7-4.3%
Federal Emergency Management Agency$0.3+27.7%
Office of Personnel Management$0.3+38.8%
National Science Foundation$0.2+11.6%
Miscellaneous Agencies$1.0-22.4%

The following states received the most federal contract money in FY 2001 (in billions), with their FY 2000 rank and dollar amount change in parentheses:

1. California (1)$27.4 (+$1.9)
2. Virginia (2)$26.0 (+$5.1)
3. Texas (3)$14.7 (-$3.4)
4. Maryland (4)$10.2 (-$0.1)
5. District of Columbia (6)$10.1 (+$2.7)
6. Florida (5)$8.0 (+$0.1)
7. Georgia (13)$7.0 (+$2.2)
8. Missouri (8)$6.4 (+$0.7)
9. Massachusetts (10)$6.4 (+$0.8)
10. Pennsylvania (9)$6.0 (+$0.4)


FAR Changes on Taxes Proposed, 508 Comments Sought

The FAR Council continues to think about topics for future FACs:



DFARS Changes on U.S.-Flag Vessels, Indian Organizations

The Department of Defense (DOD) was busy in June, as usual:



Travel Agencies' Size Standard Increased

The Small Business Administration (SBA) is finalizing the proposed small business size standard for travel agencies from $1,000,000 to $3,000,000. It also is finalizing the interim final rule that applied the increased size standard retroactively to victims of the September 11, 2001, terrorist attacks. For more on the changes, see the April 2002 Federal Contracts Perspective article "SBA Proposes Increasing Travel Agencies' Size Standard."

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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