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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

January 2004
Vol. V, No. 1

CONTENTS

FAC 2001-18 Implements New A-E Form, Electronic Procurement Data Reporting
Proposed FAR Changes on Debarred List, JWOD
Navy Marine Corps Acquisition Regulation Issued
Homeland Security Acquisition Regulation Issued
Disabled Veteran Set-Asides Established
Automobile Reimbursement Increased to 37.5 Cents/Mile
Trade Agreements Act and NAFTA Thresholds Revised
PRO-Net, CCR Databases Integrated

FAC 2001-18 Implements New A-E Qualifications Form,
Electronic Procurement Data Reporting

On December 11, 2003, Federal Acquisition Circular (FAC) 2001-18 amended the Federal Acquisition Regulation (FAR) to implement the new Standard Form 330, Architect-Engineer Qualifications, to reflect changes in contract action reporting to the Federal Procurement Data System Next Generation (FPDS-NG), to address the placement of orders against existing contracts and agreements with contractors that have been debarred, a few cost principles, and some odds and ends.

• New Consolidated Standard Form (SF) 330, Architect-Engineer Qualifications: The SF 254, Architect-Engineer and Related Services Questionnaire, and SF 255, Architect-Engineer and Related Services Questionnaire for Specific Projects, are replaced by the SF 330, a six-page form with eight pages of instructions and codes. The SF 330 is intended to facilitate electronic usage and to reflect the greatly expanded variety of services provided by the architect-engineer (A-E) industry.
  
  One hundred and ten respondents submitted comments on the October 19, 2001, proposed rule, and a significant number of "Disciplines" and "Experience Categories" have been added, deleted, or changed as a result of those comments -- generally, if an addition, deletion, or change was suggested by two or more respondents, it was made. (EDITOR'S NOTE: For more on the proposed rule, see the November 2001 Federal Contracts Perspective "Proposed Changes on Construction Payments, A-E Forms.")
  
  The introduction to this final rule states, "The policies and the SF 330, Architect-Engineer Qualifications, of this final rule apply for all agencies and their solicitations issued on or after January 12, 2004. However, agencies may delay implementation of this final rule until June 8, 2004, at which time it becomes mandatory for all agencies and their solicitations issued on or after that date...The SF 330 will be posted electronically on the General Services Administration forms website in a screen-fillable format, Adobe Acrobat Portable Document Format, and possibly other formats. Also, commercial vendors will develop customized software products for preparation of the SF 330, similar to those currently available for the SFs 254 and 255. Individual agencies will specify if electronic submission is required and the specific format to use."
  
  
• Federal Procurement Data System -- Next Generation: This final rule amends FAR 4.602, Federal Procurement Data System, to reflect changes in contract action reporting to the Federal Procurement Data System -- Next Generation (FPDS-NG), which became operational on October 1, 2003. FAR 4.602 is being amended to:
  
  
  • State that the FPDS-NG information is available to Congress, the General Accounting Office, federal executive agencies, and the general public;
    
    
  • Identify https://www.fpds.gov as the website for FPDS-NG;
    
    
  • Permit agencies to report all transactions between $2,500 and $25,000 to FPDS-NG as either individual contract actions or summary contract actions until September 30, 2004; and
    
    
  • Require all contract actions over $2,500 be reported to FPDS-NG as individual contract actions after September 30, 2004.
  
  In addition, the SF 279, Federal Procurement Data System (FPDS) -- Individual Contract Action Report, and the SF 281, Federal Procurement Data System (FPDS) -- Summary Contract Action Report ($25,000 or Less), are deleted.
  
  
• Increased Federal Prison Industries, Inc. Waiver Threshold: This rule finalizes, without change, the May 22, 2003, interim rule that revised FAR 8.606, Exceptions, to increase the Federal Prison Industries, Inc.'s (FPI) clearance exception threshold from $25 to $2,500, and to eliminate the requirement that delivery be within 10 days (for more on the interim rule, see the June 2003 Federal Contracts Perspective article "FAC 2001-14 Addresses Electronic Signatures, Federal Prison Industries, Cost Principles").
  
  
• Debarment and Suspension -- Order Placement and Option Exercise: This final rule amends FAR 9.405-1, Continuation of Current Contracts, to address the placement of orders against existing contracts and agreements with contractors that have been debarred, suspended, or proposed for debarment.
  
  A contractor that is debarred, suspended, or proposed for debarment under FAR Subpart 9.4, Debarment, Suspension, and Ineligibility, is nonresponsible, and is excluded from receiving government contracts. However, contracts with the debarred or suspended contractor that are already in existence are not required to be terminated. In addition, FAR 9.405-1(b) states that an ordering activity "may continue to place orders against existing contracts, including indefinite-delivery contracts, in the absence of a termination."
  
  On November 4, 2002, a proposed rule was published to amend FAR 9.405-1 to require that discretionary actions on the part of agencies meet the same standards as agencies have to meet in awarding new contracts. The proposed rule would have prohibited agencies from placing orders exceeding the guaranteed minimum against existing contracts, placing orders against optional Federal Supply Schedule contracts, adding new work, exercising options or otherwise extending the duration of contracts with contractors that are debarred, suspended, or proposed for debarment unless the agency head makes a determination that there are compelling reasons for doing so (for more on the proposed rule, see the December 2002, Federal Contracts Perspective article "Proposed FAR Changes on SF 129, GPO Printing, Debarment"). Comments were received from two respondents. Because of the comments, the final rule addresses blanket purchase agreements (BPAs) and basic ordering agreements (BOAs) because, though BPAs and BOAs are agreements and not contracts, they should contain the basic clauses that will apply to orders placed under them. Therefore, the revised FAR 9.405-1(b) now states, "For contractors debarred, suspended, or proposed for debarment, unless the agency head makes a written determination of the compelling reasons for doing so, ordering activities shall not (1) place orders exceeding the guaranteed minimum under indefinite quantity contracts; (2) place orders under optional use Federal Supply Schedule contracts, blanket purchase agreements, or basic ordering agreements; or (3) add new work, exercise options, or otherwise extend the duration of current contracts or orders."
  
  
• Depreciation Cost Principle: This final rule revises FAR 31.205-11, Depreciation, to improve clarity and structure, and to remove unnecessary and duplicative language.
  
  On January 30, 2003, a proposed rule was published that would revise FAR 31.205-11, particularly in the following areas: residual values; depreciation claimed for tax purposes; write-down due to business combinations/impaired assets; and emergency facilities (see the March 2003 Federal Contracts Perspective article "FAR Changes Proposed for Contract Bundling, Cost Principles, Debriefings, Commercial Items"). Two respondents submitted comments, and several additional clarifying and editorial changes are made to the final rule.
  
  
• Insurance and Pension Costs: This final rule amends paragraph (j) of FAR 31.205-6, Compensation for Personal Services (the portion that addresses pension costs), and FAR 31.205-19, Insurance and indemnification, to clarify the cost principles involved and reflect current policy.
  
  On January 30, 2003, a proposed rule was published, and four respondents submitted comments (for more on the proposed rule, see the same March 2003 Federal Contracts Perspective article referenced in the "Depreciation Cost Principle" item above). As a result of the comments, the proposed rule is finalized with additional clarifications.
  
  
• Debriefing -- Competitive Acquisition: This final rule amends FAR 52.212-1, Instruction to Offerors -- Commercial Items, and FAR 52.215-1, Instructions to Offerors -- Competitive Acquisition, to add requirements for debriefing unsuccessful offerors under competitive proposals specified in paragraph (d) of FAR 15.506, Postaward Debriefing of Offerors, that were inadvertently left out when the clauses were drafted.
  
  On February 4, 2003, a proposed rule was published to include the omitted text: (1) to FAR 52.212-1, the entire subject of debriefings was proposed for addition; and (2) to FAR 52.215-1, the requirements to disclose the agency's evaluation of the significant weak or deficient factors in the debriefed offeror's offer, provide reasonable responses to relevant questions, and provide past performance information were proposed for addition (for more on the proposed rule, see the same March 2003 Federal Contracts Perspective article referenced in the "Depreciation Cost Principle" item above). Two respondents submitted comments, but it was decided to finalize the proposed rule without changes. (EDITOR'S NOTE: "Unit price information" was intentionally omitted from the proposed rule and the resulting final rule because recent court cases have put the treatment of unit prices under the Freedom of Information Act (FOIA) in a state of flux, and this may necessitate the revision of FAR 15.506 and paragraph (b)(1)(iv) of FAR 15.503, Notifications to Unsuccessful Offerors, to clarify the release of unit prices.)

Proposed FAR Changes on Debarred List, JWOD

Besides FAC 2001-18, four proposed FAR changes were recently published:

• Excluded Parties List System (EPLS): Under this proposal, the publication of the paper List of Parties Excluded from Federal Procurement and Nonprocurement Programs would be terminated, and it would be replaced by the electronic EPLS (http://epls.gov/). By terminating the paper List of Parties and relying on the electronic EPLS, agencies will: (1) be able to enter their data directly to the EPLS; (2) improve the reliability of the content by allowing content owners to directly input entries; (3) provide access to historical data that was previously provided through Freedom of Information Act (FOIA) procedures; (4) enhance the ability to verify entries by permitting search by exact name and social security number; and (5) shorten the lead time between exclusionary action taken by agencies and updating the content.
  
  Comments on this proposed rule should be submitted on or before January 30, 2004, to the General Services Administration, FAR Secretariat (MVA), 1800 F Street, NW, Room 4035, Attn: Laurie Duarte, Washington, DC 20405; or be e-mail to: farcase.2002-023@gsa.gov.
  
  
• Javits-Wagner O'Day (JWOD) Program Procurement List: This proposed rule would amend FAR Part 8, Required Sources of Supplies and Services, to clarify the point that the JWOD program becomes a mandatory source of supplies and services.
  
  The JWOD program is administered by the Committee of Purchase from People Who Are Blind or Severely Disabled, which has established workshops ("participating agencies") that employ blind or severely disabled people in the production of supplies or rendering of services. The Committee maintains a Procurement List of all supplies and services that are required to be purchased from these JWOD participating agencies.
  
  Not all JWOD supplies and services are on the Committee's Procurement List. However, FAR 8.002, Priorities for Use of Government Supply Sources, states that "products available from the Committee..." and "services available from the Committee..." are to be acquired before products or services from Federal Supply Schedules or commercial sources. This has caused confusion in that some are under the misconception that all products and services available from the Committee have a higher priority. Therefore, this proposed rule would revise FAR 8.002 to state "supplies which are on the Procurement List maintained by the Committee..." and "services which are on the Procurement List maintained by the Committee..." Also, FAR 8.703, Procurement List, would be revised to add "The Procurement List may be accessed at: http://www.jwod.gov/procurementlist", and would add that questions concerning whether a supply item or service is on the Procurement List may be submitted by e-mail to: info@jwod.gov (the mailing address that is in FAR 8.703 would be retained as an alternate).
  
  Comments on this proposed rule must be submitted on or before January 12, 2004, to the above address or be e-mail to farcase.2003-013@gsa.gov.
  
  
• Applicability of the Cost Principles and Penalties for Unallowable Costs: This rule would narrow the scope of FAR Part 31, Contract Cost Principles and Procedures, by removing the requirement to apply cost principles and procedures when pricing a contract if cost or pricing data are not obtained. Paragraph (a) of FAR 31.000, Scope of Part, would be revised to state that FAR Part 31 applies to "the pricing of contracts, subcontracts, and modifications to contracts and subcontracts whenever cost analysis is performed...except contracts, subcontracts, and modifications issued on a fixed-price basis where cost or pricing data is not obtained..."
  
  In addition, to reflect that the cost or pricing data threshold has been increased from $500,000 to $550,000 (see the November 2000 Federal Contracts Perspective article "FAC 97-20 Implements Veterans Entrepreneurship Act, Raises Cost or Pricing Threshold to $550,000"), the threshold would be increased in paragraph (b) of FAR 42.709, Scope (which states that the section implements the statutory penalty provisions for claiming expressly unallowable costs), and in FAR 42.709-6, Contract Clause (which requires that FAR 52.242-3, Penalties for Unallowable Costs, be included in solicitations and contracts over the cost or pricing data threshold except fixed-price contracts without cost incentives).
  
  Comments on this proposed rule must be submitted on or before January 27, 2004, to the above address or be e-mail to farcase.2001-018@gsa.gov.
  
  
• Reimbursement of Relocation Costs on a Lump-Sum Basis: This proposed rule would amend FAR 31.205-35, Relocation Costs, to expand the use of lump-sum reimbursement to certain types of employee relocation costs. Currently, FAR 31.205-35 requires the government to reimburse a contractor up to an employee's actual expenses with one exception: the miscellaneous costs identified in FAR 31.205-35(a)(5) (such as disconnecting and connecting appliances, automobile registration, forfeited utility fees and deposits) may be reimbursed a flat, or lump-sum, amount up to $5,000 (there is no ceiling for miscellaneous expenses when reimbursement is based on actual expenses).
  
  On October 24, 2002, a request for public comments was published inviting parties to provide information on the potential costs and benefits of the lump-sum reimbursement approach (see the November 2002 Federal Contracts Perspective article "FAR Changes on Efficient Devices, Relocation Costs"). After reviewing the public comments, it is apparent that it is common commercial practice to reimburse relocating employees on a lump-sum basis for their house-hunting, final move, and temporary lodging expenses. Therefore, it is proposed that FAR 31.205-35(b)(4) be amended to permit contractors the option of being reimbursed on a lump-sum basis for three types of employee relocation costs: (1) costs of finding a new home, (2) costs of travel to the new location, and (3) costs of temporary lodging. These three types of costs are in addition to the miscellaneous relocation costs for which lump-sum reimbursements are already permitted (the $5,000 limitation would be retained for lump-sum reimbursements of miscellaneous relocation costs). While individual receipts are not required with a lump-sum approach, contractors would still have to demonstrate that amounts paid are reasonable and appropriate for the circumstances of each relocating employee.
  
  Comments on this proposed rule must be submitted on or before February 9, 2004, to the above address or be e-mail to farcase.2003-002@gsa.gov.

Navy Marine Corps Acquisition Regulation Issued

On November 25, 2003, the Navy Assistant Secretary for Research, Development and Acquisition issued a memorandum notifying the public that the new Navy Marine Corps Acquisition Regulation Supplement (NMCARS) is replacing the Navy Acquisition Procedures Supplement (NAPS).

"The NCMARS has been streamlined to reduce its content and focus principally on mandatory policies and procedures, including delegations of authority and assignment of responsibilities," the memorandum says. In addition to the NMCARS, the Navy Marine Corps Acquisition Guide (NMCAG) is being issued, and it "primarily addresses administrative matters including procedures for processing documents for higher level approval, internal reporting requirements, and various discretionary practices" (the NMCARS is available at http://www.abm.rda.hq.navy.mil/2november2003nmcars.doc, and the NMCAG is available at http://www.abm.rda.hq.navy.mil/nmcagnov2003final.doc.)

Homeland Security Acquisition Regulation Issued

On December 4, 2003, the Department of Homeland Security (DHS) issued the long-awaited Homeland Security Acquisition Regulation (HSAR) to provide uniform procedures "that will ensure seamless continued acquisition and contracting operations of the previous agencies and organizations that now comprise DHS." The HSAR is Chapter 30 of Title 48 of the Code of Federal Regulations (CFR), and it is available at http://www.dhs.gov/dhspublic/interapp/editorial/editorial_0378.xml.

DHS consists of more than 20 agencies and other operating elements that pre-existed the formation of DHS. Prior to DHS's formation, those agencies and elements used supplemental acquisition regulations as a foundation for the conduct of their procurement and acquisition functions. For example, the Coast Guard utilized the Department of Transportation (DOT) Acquisition Regulations (DTAR), but the Coast Guard can no longer rely on the DTAR since it is no longer are a part of DOT. Similarly, organizations that used the Department of Treasury's or Department of Justice's acquisition supplements can no longer rely on those regulations. The HSAR will provide a common departmentwide set of procurement procedures. (EDITOR'S NOTE: The Transportation Security Administration (TSA) is exempt from the HSAR by the Aviation and Transportation Security Act of 2001 (Public Law 107-71). It is developing its own set of regulations).

The HSAR will be amended by Homeland Security Acquisition Circulars (HSAC), and HSAR Notices will be issued when interim guidance is necessary. Each HSAR Notice will have a specific expiration date. Internal agency guidance and procedures are contained in the Department of Homeland Security Acquisition Manual (HSAM), which is available at http://www.dhs.gov/interweb/assetlibrary/DHS_HSAM_12-19-03.pdf.

The following are some of the unique provisions contained in the HSAR:

• HSAR Part 3009, Contractor Qualifications (HSAR 3009.104-71, General), prohibits the DHS from entering into "any contract with a foreign incorporated entity, which is treated as an inverted domestic corporation" (that is, a domestic firm that moves off-shore to become a foreign concern merely to avoid taxes). However, the DHS secretary may waive this prohibition if "in the interest of homeland security, or to prevent the loss of any jobs in the United States or prevent the government from incurring any additional costs that otherwise would not occur."
  
  
• HSAR Subpart 3013.70, Special Streamlined Acquisition Authority, authorizes the use of the "special streamlined acquisition authority set forth in Public Law 107-296 [Homeland Security Act], Section 833, with respect to any procurement made during the period beginning on November 25, 2002, and ending September 30, 2007, where if the secretary determines in writing the mission of the Department...would be seriously impaired without the use of such authorities." This "special streamlined acquisition authority" permits the secretary to "deem any item or service to be a commercial item for the purpose of federal procurement laws." Under such authority, the micro-purchase threshold is $7,500; the simplified acquisition threshold is $200,000 for contracts that are to be awarded and performed, or purchases to be made, within the United States, and $300,000 for contracts that are to be awarded and performed, or purchases to be made, outside of the United States; and the limitation on the use of FAR Subpart 13.5, Test Program for Certain Commercial Items, is $7,500,000.

The HSAR is issued as an interim rule, and comments must be submitted by January 5, 2004, by e-mail to acquisition@dhs.gov, or by mail to the Department of Homeland Security, Office of the Chief Procurement Officer, Acquisition Policy and Oversight, ATTN: Kathy Strouss, 245 Murray Drive, Bldg. 410 (RDS), Washington, DC 20528.

Disabled Veteran Set-Asides Established

On December 16, 2003, President Bush signed Public Law 108-183, the Veterans Benefits Act of 2003, which establishes a service-disabled veteran-owned small business (SDVOSB) set-aside program. The new SDVOSB program is essentially the same as the Historically Underutilized Business Zone (HUBZone) sole source and set-aside programs implemented in FAR Subpart 19.13.

The SDVOSB program provides:

• An acquisition may be awarded sole-source to a SDVOSB if: (1) it is responsible; (2) the contracting officer does not have a reasonable expectation that two or more SDVOSBs will submit offers; (3) the award is not anticipated to exceed $5 million for manufacturing and $3 million for all others; and (4) "in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price."
  
  
• An acquisition may be set-aside for SDVOSBs "if the contracting officer has a reasonable expectation that not less than two small business concerns owned and controlled by service-disabled veterans will submit offers and that the award can be made at a fair market price."

While these requirements and restrictions are very similar to those for the HUBZone program, there are some significant differences:

• While an acquisition must be set aside for HUBZone concerns if the contracting officer has a reasonable expectation that offers will be received from two or more HUBZone concerns and award will be at a fair market price (FAR 19.1305, HUBZone Set-Aside Procedures), SDVOSB set-asides are discretionary -- the contracting officer may set aside the acquisition...
  
  
• There is no provision for applying a price evaluation preference for SDVOSBs in acquisitions conducted under full and open competition as there is for HUBZone concerns competing under full and open competition.

Expect the Small Business Administration (SBA) and the FAR to publish proposed implementing rules in the near future.

Automobile Reimbursement Increased to 37.5 Cents/Mile

The General Services Administration (GSA) is amending Federal Travel Regulation (FTR) 301-10.303, What am I reimbursed when use of a POV is determined by my agency to be advantageous to the Government?, to increase the 2004 mileage reimbursement rate for use of a privately owned automobile on official travel from 36.0 cents per mile to 37.5 cents per mile; for use of a privately owned airplane from 95.5 cents per mile to 99.5 cents per mile; and the cost of operating a privately owned motorcycle from 27.5 cents per mile to 27.8 cents per mile. This increase reflects the current costs of operation as determined in GSA's cost studies.

The same statute that directs the Administrator of General Services to establish the POV mileage reimbursement rates also provides that the automobile reimbursement rate cannot exceed the single standard mileage rate established by the Internal Revenue Service (IRS). The IRS announced a new single standard mileage rate for automobiles of 37.5 cents per mile effective January 1, 2004, so the new FTR rate of 37.5 cents per mile conforms with the IRS rate.

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 December 19, the Office of the USTR announced that it is adjusting the Trade Agreements Act and NAFTA thresholds for calendar years 2004 and 2005 as follows:

Trade Agreements Act: Goods and Services -- $175,000 (up from $169,000); Construction -- $6,725,000 (up from $6,481,000).

NAFTA: Goods and Services -- $58,550 (up from $56,190); Construction $7,611,532 (up from $7,304,733) (EDITOR'S NOTE: The NAFTA threshold for Canadian goods and services remains $25,000).

For information on the threshold changes made by the USTR in 2002, see the March 2002 Federal Contracts Perspective article "Trade Agreements Act and NAFTA Thresholds Revised."

PRO-Net, CCR Databases Integrated

On December 22, SBA announced the integration of PRO-Net (SBA's database of small businesses interested in contracting with the government) and Central Contractor Registration (CCR) (DOD's database of all contractors interested in contracting with the government) "to create one portal for entering and searching small business sources, and to assist small businesses with marketing their goods and services to the federal government." On January 1, 2004, CCR will assume all of PRO-Net's search capabilities and functions -- small businesses will no longer need to register in both PRO-Net and CCR.

To conduct market research and confirm eligibility for SBA's procurement preference programs, users will go to http://www.ccr.gov and click on "Dynamic Small Business Search." All the search options and information that existed in PRO-Net is now in the "Dynamic Small Business Search."

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