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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


August 2003
Vol. IV, No. 8

CONTENTS

FAC 2001-15 Addresses SF 129 Elimination, Environmental Issues
GSA Reduces Industrial Funding Fee to 0.75%
SBA Busy with Size Standards, Nonmanufacturer Rule
Proposed FAR Changes on CAS, Cost Principles
OMB Streamlines Grants Process
Treasury Rewrites DTAR
Prompt Payment Interest Rate Set at 3 1/8%



FAC 2001-15 Addresses SF 129 Elimination, Environmental Issues,
Cost Principles, GWAC/MAC Directory

Federal Acquisition Circular (FAC) 2001-15 amends the Federal Acquisition Regulation (FAR) to eliminate the Standard Form (SF) 129, Solicitation Mailing List Application; address environmental leadership and the acquisition of energy-efficient standby power devices; establish the "Contract Directory" for multi-agency use contracts; clarify the compensation and selling cost principles; and extend the Section 508 micro-purchase exception sunset provision.



GSA Reduces Industrial Funding Fee to 0.75%

On July 11, the General Services Administration (GSA) amended the GSA Acquisition Regulation (GSAR) to combine GSAR 552.238-74, Contractor's Report of Sales, and GSAR 552.238-76, Industrial Funding Fee, into a single clause -- GSAR 552.238-74, Industrial Funding Fee and Sales Reporting. This new clause gives GSA the unilateral right to change the percentage rate of the industrial funding fee (IFF) in Federal Supply Schedule (FSS) contracts. Also, GSA provided notice it intends to reduce the IFF rate from 1.0% to 0.75%, effective January 1, 2004.

GSA proposed this change in March 2003 (see the April 2003 Federal Contracts Perspective article "GSA Proposes Reducing Industrial Funding Fee to 0.75%"). Minor editorial changes are the only differences between the proposed rule and this final rule.

In addition, the introduction to the final rule states, "The January 1, 2004, change will be implemented by means of a bilateral contract modification to be executed electronically. As consideration to Federal Supply Schedule contractors for any potential costs incurred as the direct result of this change, FSS will allow these vendors to continue to include the 1 percent IFF in their contract prices until December 31, 2003, but to forward to FSS an IFF of 0.75 percent for reported sales for the period of October 1, 2003, through December 31, 2003. Examples of the type of costs GSA anticipates contractors could incur include updating published prices and modifying accounting systems."



SBA Busy with Size Standards, Nonmanufacturer Rule

The Small Business Administration (SBA) has been revising and proposing to revise small business size standards; issuing and proposing to issue waivers of the nonmanufacturer rule; and announcing its intention to rescind a previously issued waiver of the nonmanufacturer rule. (EDITOR'S NOTE: The nonmanufacturer rule requires recipients of federal contracts that are set-aside for small businesses or are awarded through the 8(a) program to provide the product of a small business manufacturer or processor if the recipient is not the actual manufacturer or processor (see paragraph (f) of FAR 19.102, Size Standards). However, SBA may waive this requirement if there are no small business manufacturers or processors.)



Proposed FAR Changes on CAS, Cost Principles

The FAR Council continues developing proposed cost-related FAR changes:



OMB Streamlines Grants Process

To implement the Federal Financial Assistance Management Improvement Act of 1999 (Public Law 106-107), the Office of Management and Budget (OMB) has issued five documents that streamline and standardize the federal grants process. Three of these actions finalize actions proposed in August 2002, one is a unilateral action, and the fifth is a proposed action. (EDITOR'S NOTE: For more on the three proposed actions that are being finalized, see the September 2002 Federal Contracts Perspective article "OMB Seeks to Streamline Grants Process.")



Treasury Rewrites DTAR

The Department of the Treasury is completely rewriting the Treasury Acquisition Regulation (DTAR) so it is in plain English; reflects current policy, practice, and recent Federal Acquisition Regulation (FAR) changes; and eliminates internal operating procedures that do not have a significant effect beyond Treasury. In addition, the rewritten DTAR establishes a Treasury mentor-protege program.

On December 11, 2002, Treasury published a proposed rewritten DTAR that was intended to be simple for contractors, offerors, and Treasury contracting personnel to use (see the January 2003 Federal Contracts Perspective article "DTAR to Be Rewritten"). Besides the simplified language, the most noteworthy difference between the old DTAR and the proposed DTAR was the addition of procedures and guidance for a Treasury mentor-protege program that assists qualified small businesses receive developmental assistance from Treasury prime contractors -- the intent of the program is to increase the base of small businesses eligible to perform Treasury contracts and subcontracts. The program's procedures were in proposed DTAR 1019.202-70, The Treasury Mentor-Protege Program; DTAR 1052.219-73, Department of the Treasury Mentor-Protege Program; and DTAR 1052.219-75, Mentor Requirements and Evaluation.

There were no comments received regarding the proposed rule, so the proposed rule is adopted as final with minor editorial changes.



Prompt Payment Interest Rate Set at 3 1/8%

The Department of Treasury has established 3 1/8% (3.125%) as the interest rate for the computation of payments made between July 1 and December 31, 2003, 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 (January 1 -- June 30, 2003) was 4 1/4% (4.25%). The interest rate for July 1, 2002, through December 31, 2002 was 5 1/4% (5.25%).

The following portions of the FAR are affected by this interest rate: FAR Subpart 32.9, Prompt Payment; FAR Subpart 33.2, Disputes and Appeals; and FAR 31.205-10, Cost of Money. Also see Cost Accounting Standard (CAS) 9904.414, Cost of Money as an Element of the Cost of Facilities Capital.



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