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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

January 2005
Vol. VI, No. 1

CONTENTS

FAC 2001-26 Mandates Use of "Online
Representations and Certifications Application"

Federal Acquisition Circular (FAC) 2001-26 takes a couple of steps towards implementation of the "Integrated Acquisition Environment" by requiring offerors to submit their representations and certifications electronically through the "Online Representations and Certifications Application" (ORCA), and by replacing the paper "List of Parties Excluded from Federal Procurement and Nonprocurement Programs" with the electronic "Excluded Parties List System" (EPLS). FAC 2001-26 also adds regulations on the notification of employees regarding their rights concerning payment of union dues or fees, and increases the thresholds for special emergency procurement authorities.

• Electronic Representations and Certifications: This final rule requires offerors to submit representations and certifications electronically through the "Online Representations and Certifications Application" (ORCA) portion of the Business Partner Network (BPN) (http://orca.bpn.gov). Company information collected in the Central Contractor Registration (CCR) database (which is also part of the BPN at http://www.ccr.gov) is electronically provided and pre-populated into ORCA (such as small business status, ownership, etc.). The vendor is not asked to re-enter any information that is found in CCR. The only information the vendor needs to supply in ORCA is directly related to representations and certifications.
  
  In January 2004, a proposed rule was published that would delete the requirement to include 25 representations and certifications in solicitations, and require that the 25 representations and certifications be completed in ORCA at least annually (see the February 2004 Federal Contracts Perspective article "Proposed FAR Rules on Electronic Reps & Certs, COTS"). The ORCA representations and certifications would be available to contracting officers throughout the government (and the general public) at http://orca.bpn.gov/publicsearch.aspx -- contracting officers would check ORCA before making an award over the micro-purchase threshold to make sure the bidder or offeror is eligible (except solicitations listed in FAR 4.1102, Policy, as exempt from the CCR requirements are also exempt from ORCA). There would no longer be a need for bidders and offerors to complete separate representations and certifications for each bid or offer.
  
  Forty-five comments were submitted in response to the proposed rule. Based on those comments, the proposed rule is adopted as final with the following changes:
  
  
  • The requirements for using ORCA are not described separately in FAR Part 12, Acquisition of Commercial Items, FAR Part 14, Sealed Bidding, and FAR Part 15, Contracting by Negotiation, as proposed, but are consolidated in new FAR Subpart 4.12, Annual Representations and Certifications.
    
    Also, instead of having separate provisions for sealed bidding (FAR 52.214-30, Annual Representations and Certifications -- Sealed Bidding) and negotiations (FAR 52.215-7, Annual Representations and Certifications -- Negotiation), a single representation is added for all solicitations: FAR 52.204-8, Annual Representations and Certifications (except solicitations for commercial items will use the revised FAR 52.212-1, Instructions to Offerors -- Commercial Items, as proposed).
    
    
  • The language in FAR 52.204-8(b) and FAR 52.212-3(j)(2) makes clear that bidders and offerors are required to indicate in the solicitation whether there are any differences from its ORCA representations and certifications that apply to the solicitation only. For example, an offeror that normally offers domestic end items and has indicated this in ORCA under FAR 52.225-2, Buy American Act Certificate, would have to indicate that its FAR 52.225-2 ORCA certification does not apply to the particular solicitation if the offeror intends to provide a foreign end product.
    
    
  • FAR 52.222-38, Compliance with Veteran's Employment Reporting Requirements, is added to ORCA.
  
  
• Excluded Parties List System (EPLS) Enhancement: This final rule revises FAR 9.404, Excluded Parties List System (formerly titled "List of Parties Excluded from Federal Procurement and Nonprocurement Programs"), to replace the paper List of Parties Excluded from Federal Procurement and Nonprocurement Programs with the electronic Excluded Parties List System (EPLS) (http://epls.gov). This change enables agencies to directly enter data on parties suspended, proposed for debarment, debarred, declared ineligible, excluded, or disqualified.
  
  On December 1, 2003, a proposed rule was published (see the January 2004 Federal Contracts Perspective article "Proposed FAR Changes on Debarred List, JWOD"). Six respondents submitted comments, and the proposed rule is adopted as final with editorial changes.
  
  
• Special Emergency Procurement Authority: This adopts as final, with changes, the interim rule in FAC 2001-20 which implemented the special emergency procurement authorities of Section 1443 of Public Law 108-136, the National Defense Authorization Act for Fiscal Year 2004 (see the December 2003 Federal Contracts Perspective article "Services Acquisition Reform Act Signed Into Law, Establishes Training Fund, Chief Acquisition Officer," and the March 2004 Federal Contracts Perspective article "FAC 2001-20 Implements Emergency Purchasing Authority"). The interim rule made the following changes for acquisitions that support a contingency operation or facilitate the defense against or recovery from nuclear, biological, chemical, or radiological attack against the United States:
  
  
  • Increased the micro-purchase threshold from $2,500 to $15,000;
    
    
  • Increased the simplified acquisition threshold from $100,000 to $250,000 when the contract is to be awarded and performed inside the United States, and to $500,000 for contracts to be awarded and performed outside the United States;
    
    
  • Authorized such acquisitions to be considered commercial items regardless of dollar amount (see FAR Part 12); and
    
    
  • Increased the limitation on the authority in FAR Subpart 13.5, Test Program for Certain Commercial Items, for contracting officers to use FAR Part 13, Simplified Acquisition Procedures, when acquiring commercial items, from $5,000,000 to $10,000,000.
  
  Two respondents submitted comments, and a minor editorial change is made as a result. However, on October 28, 2004, President Bush signed Public Law 108-375, Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005. For acquisitions that support a contingency operation or facilitate the defense against or recovery from nuclear, biological, chemical, or radiological attack, Section 822 of Public Law 108-375 increased the micro- purchase threshold from $15,000 to $25,000, and the simplified acquisition threshold for such contracts awarded or performed outside the United States from $500,000 to $1,000,000. This final rule reflects the increased thresholds. (EDITOR'S NOTE: For more on the acquisition-related provisions of Public Law 108-375, see the November 2004 Federal Contracts Perspective article "FY 2005 Defense Authorization Act Directs Review of GSA Procedures, Permits A-76 Protests by Feds.")
  
  
• Notification of Employee Rights Concerning Payment of Union Dues or Fees: This interim rule adds FAR Subpart 22.16, Notification of Employee Rights Concerning Payment of Union Dues or Fees, and FAR 52.222-39, Notification of Employee Rights Concerning Payment of Union Dues or Fees to implement Executive Order (EO) 13201, Notification of Employee Rights Concerning Payment of Union Dues or Fees (see the March 2001 Federal Contracts Perspective article "Bush Issues Three Acquisition-Related Orders Involving Labor Issues in FAR Part 22"). EO 13201 requires non-exempt federal contractors and subcontractors with contracts or subcontracts that exceed the simplified acquisition threshold to post notices alerting nonunion employees that they cannot be forced to pay fees to unions to support activities not related to collective bargaining, contract administration, and grievance adjustment.
  
  Comments on this interim rule must be submitted on or before February 18, 2005, by one of the following methods: (1) http://www.regulations.gov; (2) http://www.acqnet.gov/far/ProposedRules/proposed.htm; (3) e-mail: farcase.2004-010@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.
  
  
• Delegation of Approval Authority for Mentor-Protege Agreements: This final rule amends FAR 19.702, Statutory Requirements, to change the approval authority of mentor-protege agreements from the DOD Office of Small and Disadvantaged Business Utilization (OSDBU) to the OSDBUs of the military departments and defense agencies.
  
  DOD is making this change in recognition that the military departments have the necessary expertise to manage their mentor-protege programs. The DOD OSDBU will maintain oversight and policy development responsibilities.
  
  A proposed rule was published in April 2004 (see the May 2004 Federal Contracts Perspective article "DOD Mentor-Protege Agreement Approvals to Change"). One respondent submitted a comment, but it was outside the scope of the rule, so the proposed rule is adopted as final without changes.
  
  
• Penalties for Unallowable Costs: This final rule increases the contract dollar threshold for assessing a penalty if the contractor includes expressly unallowable costs in its claim for reimbursement from $500,000 to $550,000 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).
  
  On November 28, 2003, a proposed rule was published to increase the penalty threshold and to amend FAR Part 31, Contract Cost Principles and Procedures, to remove the requirement to apply cost principles and procedures when pricing a contract if cost or pricing data are not obtained (see the January 2004 Federal Contracts Perspective article "Proposed FAR Changes on Debarred List, JWOD"). However, the proposal to amend FAR Part 31 was not adopted because the government needs consistency when dealing with cost data whether it is "certified cost or pricing data" or not, and because of concerns that the proposed language could be construed as limiting the government's use of FAR Part 31 for its prenegotiation positions.

SBA Seeks Comments on Size Standards Issues

The Small Business Administration (SBA) has announced that it is seeking comments on several issues that were raised on the recently withdrawn proposal to restructure the small business size standards. The issues on which SBA is seeking comments pertain to SBA's size standards but were not part of the proposed changes (for more on the proposed rule, see the April 2004 Federal Contracts Perspective article "SBA proposes to Restructure Size Standards, Would Reduce Number of Categories from 37 to 10"; for more on the withdrawal of that proposed rule, see the August 2004 Federal Contracts Perspective article "SBA Withdraws Proposed Size Standards Revision, 'Needs a Little More Work'").

SBA is giving the public an opportunity to comment on the following issues before deciding on its next course of action:

• Approaches to simplification of size standards
• Calculation of number of employees
• Use of receipts-based size standards
• Designation of size standards for federal procurements
• Establishment of size standards solely for federal procurement
• Establishment of tiered size standards
• Simplification of small business status and affiliation with other businesses
• Joint ventures and small business eligibility
• Grandfathering of currently eligible small businesses
• Effect of SBA size standards on the regulations of other federal agencies
• Participation of businesses majority-owned by venture capital companies in the Small Business Innovation Research (SBIR) program

SBA is planning to hold a series of public meetings on size standards that will focus on these issues. Also, SBA is examining a number of specific size standards as separate rulemaking actions, such as the nonmanufacturer size standard of 500 employees regardless of the actual size standard for the particular industry.

Comments must be received on or before February 1, 2005. Respondents may submit comments directly on the Federal eRulemaking Portal at http://www.regulations.gov; by e-mail to: restructure.sizestandandards@sba.gov; by fax to 202-205-6930; or by mail, hand-delivery, or courier to Gary M. Jackson, Assistant Administrator for Size Standards, 409 Third Street, SW, Washington, DC 20416. Cite "RIN 3245-ZA02" when making comments.

DFARS Changes Address Task Order Contract Limit

In December, the Department of Defense (DOD) maintained its frantic pace of changes to the Defense FAR Supplement (DFARS) with six final rules (most implementing the "DFARS transformation") and one interim rule:

• Contract Period for Task and Delivery Orders: This interim rule amends DFARS 217.204, Contracts, to permit task and delivery order contracts to cover a total period of up to 10 years, which may be exceeded if the head of the agency determines in writing that exceptional circumstances require a longer contract period.
  
  Section 843 of the National Defense Authorization Act for Fiscal Year 2004 specified that task or delivery order contacts awarded under the authority of 10 U.S.C. 2304a (which applies to DOD, the National Aeronautics and Space Administration, and the Coast Guard) may cover a total period of not more than five years, and that the total period includes all options or modifications (see the December 2003 Federal Contracts Perspective article "Services Acquisition Reform Act Signed Into Law, Establishes Training Fund, Chief Acquisition Officer").
  
  In March 2004, DOD published an interim rule implementing Section 843 (see the April 2004 Federal Contracts Perspective article "DFARS Limits Task/Delivery Order Contracts to Five Years"). The interim rule added DFARS 217.204, Contracts, and its paragraph (e) stated, "Notwithstanding FAR 17.204(e), the period of a task order or delivery order contract, including all options or modifications, awarded by DOD pursuant to 10 U.S.C. 2304a shall not exceed 5 years." (EDITOR'S NOTE: Paragraph (e) of FAR 17.204, Contracts, states, "...the total of the basic and option periods shall not exceed 5 years in the case of services, and the total of the basic and option quantities shall not exceed the requirement for 5 years in the case of supplies. These limitations do not apply to information technology contracts....")
  
  Subsequent to the publication of the interim rule, Public Law 108-375 was enacted. Section 813 of Public Law 108-375 further amended 10 U.S.C. 2304a revised the contract period for task and delivery order contracts (including options) to "any period up to five years and may extend the contract period for one or more successive periods pursuant to an option provided in the contract or a modification of the contract. The total contract period as extended may not exceed 10 years unless such head of an agency determines in writing that exceptional circumstances necessitate a longer contract period."
  
  This second interim rule implements the provisions of Section 813 and several comments submitted in response to the March 23, 2004, interim rule. It amends DFARS 217.204(e) to state:

  "(e)(i) Notwithstanding FAR 17.204(e), the ordering period of a task order or delivery order contract awarded by DOD pursuant to 10 U.S.C. 2304a (A) may be for any period up to 5 years; (B) may be subsequently extended for one or more successive periods in accordance with an option provided in the contract or a modification of the contract; and (C) shall not exceed 10 years unless the head of the agency determines in writing that exceptional circumstances require a longer ordering period...(iii) Paragraph (e)(i) of this section...also applies to information technology task or delivery order contracts..."

  Comments on the second interim rule should be submitted on of before February 14, 2005, by any of the following methods: (1) http://www.regulations.gov; (2) http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm; (3) e-mail: dfars@acq.osd.mil; (4) mail: Defense Acquisition Regulations Council, Attn: Robin Schulze, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; or (5) fax: 703-602-0350.
  
  
• Chile and Singapore Free Trade Agreements: This final rule adopts, with changes, the interim rule that amended DFARS Part 225, Foreign Acquisitions, and the related clauses in DFARS Part 252 to implement the the United States-Chile Free Trade Agreement Implementation Act (USCFTA) and United States-Singapore Free Trade Agreement Implementation Act (USSFTA) (see the February 2004 Federal Contracts Perspective article "FAC 2001-19 Delays SF 330 Implementation, Revises Thresholds for Free Trade Agreements").
  
  FAC 2001-19 amended FAR Part 25 and the related clauses in FAR Part 52 to implement the USCFTA and the USSFTA, setting the threshold for applicability of the USCFTA and USSFTA at $58,550 for supplies and services and $6,725,000 for construction. A few days later, DOD published its interim rule amending DFARS Part 225 to make parallel changes -- separate coverage in the DFARS is necessary because there is an entire body of legislation that applies only to DOD foreign purchases and not the rest of the government.
  
  Like FAC 2001-19, the interim rule added the sentence "United States law will apply to resolve any claim of breach of this contract" to the related clauses in DFARS Part 252: DFARS 252.225-7021, Trade Agreements; DFARS 252.225-7036, Buy American Act -- Free Trade Agreements -- Balance of Payments Program; and DFARS 252.225-7045, Balance of Payments Program -- Construction Material Under Trade Agreements. This sentence was added to the FAR and DFARS clauses because both the USCFTA and the USSFTA provide that the United States is authorized to resolve any claim against it, and require that contracts specify the law that will apply to resolve any breach of contract claim. However, this sentence is removed from the DFARS clauses because FAC 2001-25 contains a new clause, FAR 52.233-4, Applicable Law for Breach of Contract Claim, which consists of that sentence and is required to be included in all federal contracts (for more on FAC 2001-25, see the November 2004 Federal Contracts Perspective article "FAC 2001-25 Authorizes Telecommuting for Contractors").
  
  
• Competition Requirements: This final rule amends DFARS Part 206, Competition Requirements, as follows to update text pertaining to competition requirements in response to the DFARS Transformation (for more on the DFARS Transformation initiative, go to http://www.acq.osd.mil/dpap/dfars/transf.htm):
  
  
  • DFARS 206.001, Applicability, is revised to clarify that personal services contracts to individuals for health care are exempt from the competition requirements in FAR Part 6, Competition Requirements.
    
    
  • Paragraph (b) of DFARS 206.202, Establishing or Maintaining Alternative Sources, which specifies the information to be included in the determination and findings and supporting documentation required to exclude a particular source, and DFARS 206.302-2, Unusual and Compelling Urgency, which contains examples of circumstances under which use of other than full and open competition may be appropriate because of unusual and compelling urgency, are removed and relocated to the "Procedures, Guidance, and Information"(PGI) (see the December 2004 Federal Contracts Perspective article "DFARS Transformation in Full Gear, 'Procedures, Guidance, and Information' Added").
    
    
  • The following paragraphs are deleted because they are unnecessary: paragraph (b)(4) of DFARS 206.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements; paragraphs (b) and (c) of DFARS 206.303-1, Requirements; and DFARS 206.303-2, Content.
  
  A proposed rule was published in February 2004 (see the March 2004 Federal Contracts Perspective article "DFARS Transformation Gets Underway, Public Requested to Comment on 14 Proposed Rules"), and the one clarifying comment is included in the final rule.
  
  
• Improper Business Practices and Contractor Qualifications Relating to Debarment, Suspension, and Business Ethics: This final rule amends DFARS Part 203, Improper Business Practices and Personal Conflicts of Interest, and DFARS Part 209, Debarment, Suspension, and Ineligibility, to streamline and clarify text pertaining to debarment, suspension, and improper business practices. It adds DFARS 203.070, Reporting of Violations and Suspected Violations, to consolidate all the requirements for reporting violations and suspected violations. DFARS 203.070 consists of cross-references to the corresponding FAR sections, and eliminates the redundant DFARS 203.103, Independent Pricing, DFARS 203.104-10, Violations or Possible Violations, DFARS Subpart 203.2, Contractor Gratuities to Government Personnel, DFARS Subpart 203.3, Reports of Suspected Antitrust Violations, DFARS Subpart 203.4, Contingent Fees, DFARS 203.502, Subcontractor Kickbacks, and DFARS 203.570-4, Reporting. Also, the following are deleted and moved to the PGI: DFARS 203.570-3, Waiver; DFARS 209.105-2, Determinations and Documentation; paragraphs (a)(ii), (a)(iii), (a)(iv), and (b) of DFARS 209.406-3, Procedures; and paragraphs (a)(ii), (a)(iii), and (b) of DFARS 209.407-3, Procedures.
  
  A proposed rule was published in February 2004 (see the March 2004 Federal Contracts Perspective article mentioned above), and two editorial comments are included in the final rule.
  
  
• Firefighting Services Contracts: This adopts as final, without changes, the interim rule that amended DFARS 237.102-70, Prohibition on Contracting for Firefighting or Security-Guard Functions, to implement Section 331 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136). Section 331 authorizes contractor performance of firefighting functions at military installations or facilities for periods of one year or less if the functions would otherwise have to be performed by members of the armed forces who are not readily available by reason of a deployment. (For more on the interim rule, see the July 2004 Federal Contracts Perspective article "A Plethora of Changes Made to the DFARS.")
  
  
• Architect-Engineer Services: This adopts as final, without changes, the proposed rule to amend DFARS Subpart 236.6, Architect-Engineer Services, to update text pertaining to the selection of firms for architect-engineer contracts. The final rule: (1) removes all but the first sentence of paragraph (a) of DFARS 236.602-1, Selection Criteria, and relocates the text to PGI 236.602-1; (2) deletes DFARS 236.602-2, Evaluation Boards, and DFARS 236.602-4, Selection Authority; and (3) amends paragraph (c)(ii) of DFARS 236.604, Performance Evaluation, to replace the reference to the Standard Form 254, Architect-Engineer and Related Services Questionnaire, with a reference to the Standard Form 330, Architect-Engineer Qualifications. The SF 330 replaced the SF 254 effective June 8, 2004 (see the January 2004 Federal Contracts Perspective article "FAC 2001-18 Implements New A-E Qualifications Form, Electronic Procurement Data Reporting"). For more on the proposed rule, see the July 2004 Federal Contracts Perspective article mentioned above.
  
  
• Pilot Mentor-Protege Program: This final rule amends DFARS Subpart 219.71, Pilot Mentor-Protege Program, and DFARS Appendix I, Policy and Procedures for the DOD Pilot Mentor-Protege Program, to authorize each military department's or defense agency's Director of Small and Disadvantaged Business Utilization to approve mentor firms and mentor-protege agreements.

One Nonmanufacturer Rule Waived, One Proposed, One Terminated

The SBA has decided to waive the nonmanufacturer rule for general aviation turboprop aircraft with six or more passenger seats under North American Industry Classification System (NAICS) code 336411 because no small business manufacturers are currently supplying these classes of products to the federal government. This waiver allows otherwise qualified nonmanufacturers to supply the general aviation turboprop aircraft of any domestic manufacturer on a federal contract set aside for small businesses, set aside for service-disabled veteran-owned small businesses, or awarded through the SBA's 8(a) program. (EDITOR'S NOTE: For more on the proposed waiver, see the November 2004 Federal Contracts Perspective article "One Nonmanufacturer Rule Waived, Two Proposed.")

Also, SBA is proposing to waive the nonmanufacturer rule for adhesives and sealants manufacturing under NAICS code 325520, and petroleum and coal products manufacturing under NAICS code 324110.

Finally, SBA is terminating consideration of a proposed waiver of the nonmanufacturer rule for small arms ammunition manufacturing under North American Industry Classification System (NAICS) code 332992 because of its recent discovery of a small business manufacturer for this class of products. (EDITOR'S NOTE: SBA originally waived the nonmanufacturer rule for small arms ammunition manufacturing in September 2002 (see the October 2002 Federal Contracts Perspective article "SBA Waives One Nonmanufacturer Rule, Rethinks Another"). However, SBA terminated its waiver of the nonmanufacturer rule in October 2003 because it discovered a small business manufacturer (see the December 2003 Federal Contracts Perspective article "Small Arms Ammo Nonmanufacturer Waiver Terminated"). Apparently, SBA didn't think the small business manufacturer was still capable of providing small arms ammunition to the government, so another waiver was proposed. It appears SBA has changed its mind once again about the capabilities of the small business. For more on the proposed waiver, see the November 2004 Federal Contracts Perspective article mentioned above.)

Labor Proposes Requiring WDOL Website

The Department of Labor (DOL) is proposing to amend its regulations to require contracting agencies to use the Wage Determinations OnLine (WDOL) website (http://www.wdol.gov) to obtain Service Contract Act and Davis-Bacon Act wage determinations. DOL would no longer publish paper copies of wage determinations.

Comments on the proposal must be received no later than January 18 by Alfred B. Robinson, Jr., Wage and Hour Division; http://www.regulations.gov; by e-mail to WHD-REG-1215-AB47@dol.gov; or by fax: 202-693-1302.

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