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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


May 2004
Vol. V, No. 5

CONTENTS


FAC 2001-22 Simplifies Property Disposal Procedures
NASA Reissues NFS Parts 1801 Through 1825
Proposed DFARS Transformation Continues
Government Workers Are Not A-76 "Interested Parties"
Labor, State Departments Issue Revised Supplements
NASA Imposes Five-Year Limit on Task Order Contracts
DOD Mentor-Protege Agreement Approvals to Change
DOD to Establish U.S. Machine Tools Incentive Program
Davis Introduces ASIA



FAC 2001-22 Simplifies Property Disposal Procedures,
Revises General Provisions of Cost Principles

On April 5, Federal Acquisition Circular (FAC) 2001-22 was published. The most significant changes to the Federal Acquisition Regulation (FAR) involve: (1) the amendment of FAR Subpart 45.6, Reporting, Reutilization, and Disposal, to simplify procedures and reduce recordkeeping involving government property in possession of contractors: and (2) the revision of the general provisions in FAR Part 31, Contract Cost Principles and Procedures, by improving clarity and structure, by removing unnecessary and duplicative language, and to reflect the evolution of Generally Accepted Accounting Principles (GAAP) and the advent of acquisition reform.



NASA Reissues NFS Parts 1801 Through 1825

The National Aeronautics and Space Administration (NASA) is adopting, without change, the proposed revisions of NASA FAR Supplement (NFS) Parts 1801 through 1825 (see the December 2003 Federal Contracts Perspective article "NASA FAR Supplement Reissuance Proposed," and the February 2004 Federal Contracts Perspective article "NASA Continues Proposed NFS Resissue").

The revisions remove from the Code of Federal Regulations (CFR) version of the NFS those portions of NFS Parts 1801 through 1825 that contain information consisting of internal administrative procedures and guidance that does not control the relationship between NASA and contractors or prospective contractors. All that remains in the CFR version of NFS Parts 1801 through 1825 is information requiring codification and subject to public comment.

The Internet version of the NFS (http://www.hq.nasa.gov/office/procurement/regs/nfstoc.htm) continues to provide, in a single document, both the regulations subject to public comments and internal agency guidance and procedures that do not require public comment. Changes to the CFR version of the NFS (that is, the portions of the NFS that require public comment) will continue to be amended by publishing changes in the Federal Register. Changes to the CFR version of the NFS, along with changes to internal guidance and procedures, will be incorporated into the Internet version of the NFS through Procurement Notices (PNs).

In addition, NASA is proposing to revise NFS Parts 1834 through 1851. NFS Part 1834, Major Systems Acquisitions, and NFS Part 1848, Value Engineering, would be removed in their entirety, and the following NFS subparts would be removed if the proposal is adopted: 1836.7, 1841.2, 1841.3, 1841.4, 1842.1, 1842.3, 1842.5, 1842.7, 1842.8, 1842.12, 1842.13, 1842.14, 1842.15, 1842.73, 1843.70, 1844.3, 1845.3, 1846.7, 1847.2, 1847.5, 1849.1, 1850.2, and 1850.3. Also, many NFS sections in NFS Parts 1834 though 1851 would be removed.

Comments on the proposed revision of NFS Parts 1834 through 1841 should be submitted no later than June 1, 2004, and on the proposed revision of NFS Parts 1842 through 1851 should be submitted no later than June 21, 2004, to Celeste Dalton, NASA, Office of Procurement, Contract Management Division (Code HK), Washington DC 20546 or by e-mail to: Celeste.M.Dalton@nasa.gov. For more on the NASA proposal to revise NFS Parts 1827 through 1833, see the April 2004 Federal Contracts Perspective article "Proposed NFS Reissuance Continues with Parts 1827-1833."



Proposed DFARS Transformation Continues

The Department of Defense (DOD) continued with its proposed Defense FAR Supplement (DFARS) "transformation" with two proposed rule changes:

Comments on the proposed rules must be submitted on or before June 22, 2004, to the website at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm; by e-mail to: dfars@acq.osd.mil; or by fax to 703-602-0350.



Government Workers Are Not A-76 "Interested Parties"

On April 19, the General Accounting Office (GAO) dismissed four protests filed by federal employee unions against agencies' decisions made during public/private competitions conducted under Office of Management and Budget (OMB) Circular A-76, Performance of Commercial Activities, because individuals and organizations representing in-house competitors are not "interested parties" who are eligible to protest to the GAO under the Competition in Contracting Act of 1984 (CICA). Though GAO believed it had no choice but to decide as it did, it considers the decision "unfair" because it permits an unsuccessful private-sector offeror to protest an agency's decision but not an unsuccessful public-sector competitor. Therefore, GAO has taken the unusual action of writing a letter to Congress suggesting that it amend CICA to permit protests by unsuccessful public-sector competitors. The protest is GAO Decision B-293590.2; B-293590.3; B-293883; B-293887; Dan Duefrene; Kelley Dull; Brenda Neuerburg; Gabrielle Martin.

On May 29, 2003, OMB revised OMB Circular No. A-76 to expand the use of public-private competitions to improve performance of commercial activities, and to incorporate the principles of FAR Part 15, Contracting by Negotiation, into the public-private competition process (see the July 2003 Federal Contracts Perspective article "Revised OMB Circular A-76 Released, Establishes 12 Month Period for Competitions").

Paragraph F of A-76 Attachment B provides that "a directly interested party" may contest certain agency actions "taken in connection with the standard competition," and the pursuit of such protest "shall be governed by the procedures of FAR 33.103 [Protests to the Agency]." The definition of a "directly interested party" in A-76 Attachment D includes "a single individual appointed by a majority of directly affected employees as their agent."

Subsequently, four protests were filed against agencies' decisions under the A-76 standard competition procedures that "contracting-out" the services would be more economical to the government. The four protests were filed by local branches of the National Federation of Federal Employees (NFFE) and the American Federation of Government Employees (AFGE) against the Department of Agriculture, the Department of Homeland Security, the Defense Finance and Accounting Services (DFAS), and the U.S. Equal Employment Opportunity Commission (EEOC). In each case, the party bringing the protest was "the individual selected by a majority vote of affected employees to represent them on an OMB Circular A-76 competitive sourcing matter" -- the local president or regional vice president.

In all four cases, GAO dismissed the protest. "Our Office's statutory authority to hear bid protests is found in CICA, which establishes the standard for standing to file a protest by allowing a protest to be filed only by an 'interested party' with respect to a contract or a solicitation or other request for offers," wrote GAO. "We have consistently found that federal employees and their unions could not protest any aspect of an A-76 cost comparison under the prior Circular. We concluded that they did not meet CICA's definition of an 'interested party' and, therefore, as a matter of law, we lacked authority to consider their protests."

GAO points out that it had decided, under the previous A-76 version, that "neither individual federal employees, nor the in-house plan (the 'Most Efficient Organization' or MEO), nor the employees' union representatives was an offeror. In addition, we found that the MEO plan submitted in an A-76 cost comparison under the prior Circular was not an offer as defined under the (FAR) because the MEO was not responding to a solicitation (under the prior Circular, the solicitation applied only to private-sector competitors), nor would the MEO, if adopted, lead to the formation of a contract, which is a mutually binding legal relationship to perform the services. Indeed...no contract is awarded where the MEO prevails in the cost comparison."

GAO further explains that "the new Circular is more than a mere revision to the earlier one; it is essentially a new document that establishes new FAR-based ground rules for conducting A-76 competitions," and these significant changes caused GAO to reconsider the question of whether it should reach a different conclusion regarding the in-house entity's standing to file a protest at GAO.

GAO concludes that CICA overrides the revised A-76: "The distinctions between the two versions of the Circular cannot properly make a difference in our position that, under the current statutory language in CICA -- which is the language we must look to in determining whether a party has standing to protest to our Office -- the in-house entity lacks standing to protest."

GAO ends with a letter to Congress suggesting that the CICA restrictions on protests by unsuccessful pubic-sector competitors is inequitable. "We recognize the concerns of fairness that weigh in favor of correcting the current situation, where an unsuccessful private-sector offeror has the right to protest to our Office, while an unsuccessful public sector competitor does not. As a result, consistent with the principles adopted unanimously by the Commercial Activities Panel in its April 2002 report, we are recommending that Congress consider amending CICA to allow protests to be brought on behalf of MEOs. Accordingly, by letter of today to the Chairman and Ranking Minority Member of the House Committee on Government Reform, the Senate Committee on Governmental Affairs, and the Senate and House Committees on Armed Services, we are transmitting a copy of this decision, with the suggestion that Congress may wish to consider amending CICA to provide for MEO standing." (EDITOR'S NOTE: The letter to Congress was signed by Daniel M. Walker, Comptroller General of the United States (the head of GAO). Mr. Walker chaired the Commercial Activities Panel, which studied the transfer of commercial activities performed by government employees to federal contractors and made several recommendations that became the basis for the revised A-76. For more on the Commercial Activities Panel principles and recommendations, see the June 2002 Federal Contracts Perspective article "GAO Commercial Activities Panel Issues Report.")



Labor, State Departments Issue Revised Supplements

Both the Department of Labor (DOL) and the Department of State (DOS) issued completely revised FAR supplements -- the DOL Acquisition Regulation (DOLAR) and the DOS Acquisition Regulation, respectively. The DOLAR was last revised in 1986, and the DOSAR last underwent a major revision in 1994. Both supplements were significant out-of-date and needed extensive revisions to bring them into compliance with the FAR and to reflect current operational practices.

The revised DOSAR was published in the April 13 Federal Register, and the revised DOLAR was published in the April 27 Federal Register (for more on the proposed DOLAR revisions, see the September 2003 Federal Contracts Perspective article "Updating Proposed for DOLAR").



NASA Imposes Five-Year Limit on Task Order Contracts

Following DOD's lead, NASA has issued Procurement Information Circular (PIC) 04-09 to implement Section 843 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136) by specifying that task and delivery order contracts entered into under that section may cover a total period of not more than five years.

Section 843 of Public Law 108-136 amends the general authority for task and delivery order contracts at 10 U.S.C. 2304a to specify that task or delivery order contacts may cover a total period of not more than five years, and that the total period includes all options or modifications. This limitation applies to contracts awarded by NASA, DOD, and the Coast Guard. DOD amended the DFARS on March 23, 2004, to implement Section 843, and NASA's implementation closely resembles DOD's. For more on DOD's implementation, see the April 2004 Federal Contracts Perspective article "DFARS Limits Task/Delivery Order Contracts to Five Years."

PIC 04-09 implements Section 843 by stating that the five year limitation includes options, modifications, or any other ordering period extensions (for example, subsequent award term periods), and that Section 843 does not permit deviations. However, "the five year limitation does not apply to task and delivery order contracts awarded pursuant to other statutory authority, and the following awards are not subject to the Section 843 limitations:

      "a. Advisory and assistance service task order contracts (authorized by 10. U.S.C. 2304b). These contracts are limited by statute to five years, with the authority to extend an additional six months (see FAR 16.505(c) [Ordering]).
      "b. Definite quantity contracts.
      "c. GSA [General Services Administration] schedule contracts.
      "d. Multi-agency contracts awarded by agencies other than NASA, DOD, or the Coast Guard."

PIC 04-09 goes on to state, "Performance of orders placed within the ordering period may extend for up to one year past the end of the ordering period if the contracting officer determines that performance of the order cannot reasonably be deferred to any planned follow-on contract. Orders that require performance of more than one year past the end of the ordering period must be approved by Code H [Assistant Administrator or Deputy Assistant Administrator for Procurement, Office of Procurement, NASA Headquarters] prior to issuance. Centers shall submit approval requests, with full rationale for the necessity of placing the order, to Code HS [Headquarters Office of Procurement] at least two weeks before the planned issuance of the order."



DOD Mentor-Protege Agreement Approvals to Change

On April 6, a proposal was published to amend FAR 19.702, Statutory Requirements, to change the approval authority of Mentor-Protege Agreements for DOD. Currently, the DOD Office of Small and Disadvantaged Business Utilization (OSDBU) manages the Mentor-Protege program for DOD. DOD is proposing to amend paragraph (d) to transfer the management of the Mentor-Protege program to the OSDBUs of the military departments and defense agencies. However, the DOD OSDBU would maintain oversight and policy development responsibilities.

Comments on the proposed FAR change are due on or before June 7, 2004, 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.2003-010@gsa.gov.



DOD to Establish U.S. Machine Tools Incentive Program

DOD is establishing an incentive program in accordance with Section 822 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136) and is seeking information that will assist it in identifying appropriate incentives for industry to use machine tools and other capital assets produced in the United States.

Public Law 108-136, Section 822, Incentive Program for Major Defense Acquisition Programs to Use Machine Tools and Other Capital Assets Produced Within the United States, requires DOD to establish an incentive program for contractors to purchase capital assets manufactured in the United States, and authorizes DOD to use the Industrial Base Capabilities Fund established under Section 814 of Public Law 108-136 for this purpose. This incentive program applies to contracts for major defense acquisition programs and applies to contracts entered into after May 2005.

The notice contains the following: "Industry input is considered essential. What does industry believe are the factors or inducements that would motivate contractors to purchase capital assets manufactured in the United States? It should be noted that no funds have been appropriated for the Industrial Base Capabilities Fund. Therefore, the Department is seeking suggestions for other alternatives. Interested parties are invited to submit written comments to assist the Department in its deliberations and discussions."

The notice goes on to state, "Material that is business confidential information will be exempted from public disclosure as provided for by 5 U.S.C. 552(b)(4) (Freedom of Information Act rules). Anyone submitting business confidential information should clearly identify the business confidential portion of the submission and also provide a non-confidential submission, which can be placed in the public file. Comments not marked business confidential may be subject to disclosure under the Freedom of Information Act."

EDITOR'S NOTE: The notice says that "it is the Department's goal to structure this incentive program and publish interim implementing regulations in the Fall of 2004."



Davis Introduces ASIA

Representative Tom Davis (R-VA) has introduced the Acquisition System Improvement Act (ASIA) to pick up where his Services Acquisition Reform Act (SARA) left off. ASIA would further modernize and streamline the federal acquisition process by encouraging the increased use of "share-in-savings" contracts; extend the provisions of FAR Subpart 13.5, Test Program for Certain Commercial Items, to January 1, 2009; and when an agency-level protest is filed, require agencies to stop action on an acquisition during the 20-day period the agency has to decide the protest.



Copyright 2004 by Panoptic Enterprises. All Rights Reserved.

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