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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


October 2004
Vol. V, No. 10

CONTENTS


Comments Sought on Use of T&M and Labor-Hour Contracts for Commercial Services
FAR Rules on Evaluation, Unallowable Costs Proposed
NASA Removes MidRange Procedures from NFS
DOD Removes Iraq from List of Terrorist Countries
GSA Applies DPAS to FSS



Government Seeks Comments on Use of T&M and
Labor-Hour Contracts for Commercial Services

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council, along with the Office of Federal Procurement Policy (OFPP), are seeking public comments on how best to implement the requirements and authorities of Section 1432 of the Services Acquisition Reform Act (part of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136), which expressly authorizes the use of time-and-materials (T&M) and labor-hour (LH) contracts for the procurement of commercial services (for more on Section 1432 and other acquisition-related provisions of Public Law 108-136, see the December 2003 Federal Contracts Perspective article "Services Acquisition Reform Act Signed Into Law, Establishes Training Fund, Chief Acquisition Officer").

The Councils and OFPP want to make sure that T&M and LH contracts are used only when warranted, and that the terms and conditions incorporated into resulting T&M and LH contracts adequately protect the parties' respective interests based on the risk each party is to bear.

Federal Acquisition Regulation (FAR) 12.207, Contract Type, authorizes only firm-fixed-price and fixed-price with economic price adjustment contracts for commercial services. Section 1432 authorizes the use of T&M and LH contracts for the acquisition of commercial services that are commonly sold to the general public through such contracts and are procured on a competitive basis. This provision was included in the authorization act to recognize that many types of commercial information technology services are acquired through T&M and LH pricing arrangements, and that the requirement to use fixed-price contracts makes it difficult for the government to acquire such services.

The Councils and OFPP are soliciting comments on how best to implement the requirements and authorities of Section 1432. They have grouped their concerns and questions as follows:

Comments should be submitted on or before November 19, 2004, to (1) http://www.regulations.gov; (2) http://www.acqnet.gov/far/ProposedRules/proposed.htm; (3) e-mail: ANPR.2003-027@gsa.gov; (4) fax: 202-501-4067; or (5) mail: General Services Administration, Regulatory Secretariat (MVA), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405.

A public meeting will be held on October 19, 2004, from 10:00 am to 4:30 pm EST, in the GSA Building Auditorium, 1800 F Street, NW, Washington, DC, 20405. Parties are encouraged to provide written comments on issues they would like addressed at the public meeting no later than October 1, 2004. Parties may offer additional questions for discussion at the public meeting.

Parties may register and submit their input electronically at http://www.acq.osd.mil/dpap/dars/coming.htm. Attendees are encouraged but not required to register for the public meeting to ensure adequate room accommodations.



FAR Rules on Evaluation, Unallowable Costs Proposed

Two FAR rule changes were proposed in September:



NASA Removes MidRange Procedures from NFS

NASA is removing NFS Part 1871, MidRange Procurement Procedures, because the FAR provides contracting officers with broad discretion and flexibility in the source selection process, so a separate MidRange process is no longer necessary.

The purpose of the MidRange procedures was to reduce the leadtime and effort associated with the conduct of acquisitions between $25,000 (the small purchase threshold at that time) and $500,000. Subsequent changes increased the threshold to $10,000,000 for non-commercial items and $25,000,000 for commercial items. The MidRange procedures are no longer unique and all the source selection methodologies under NFS Part 1871 have been incorporated in FAR Part 12, Acquisition of Commercial Items, FAR Part 14, Sealed Bidding, and FAR Part 15, Contracting by Negotiation. Retaining a separate NASA MidRange process is no longer necessary, so NFS Part 1871 is removed.



DOD Removes Iraq from List of Terrorist Countries

The Department of Defense (DOD) was busy during September, amending the Defense Federal Acquisition Regulation Supplement (DFARS) to remove Iraq from the list of terrorist countries, to prevent and mitigate corrosion, to establish a quality control policy for aviation critical safety items, and to address several other issues.



GSA Applies DPAS to FSS

The General Services Administration (GSA) is amending the GSA Acquisition Regulation (GSAR) to implement the Defense Priorities and Allocations System (DPAS) within the Federal Supply Service (FSS).

FAR Subpart 11.6, Priorities and Allocations, implements DPAS, a Department of Commerce (DOC) program that supports the national defense. DOC delegates authority to "delegate agencies" to place priority ratings on contracts and orders that support authorized programs "to require that contracts in support of the national defense be accepted and performed on a preferential or priority basis over all other contracts, and to allocate materials and facilities in such a manner as to promote the national defense." GSA is a delegate agency.

The FSS issues Federal Supply Schedule contracts. These contracts are not rated orders as defined by DPAS but occasionally an order placed against one of these Federal Supply Schedule contracts is a rated order. Therefore, GSAR Subpart 511.6, Priorities and Allocations, is added to provide GSA contracting officers with specific guidance, and to require the use of a new clause, GSAR 552.211-15, Defense Priorities and Allocations System Requirements, which explains to schedule contractors their obligations under DPAS.



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