Panoptic Enterprises'


Federal Acquisition Developments, Guidance, and Opinions

July 2005
Vol. VI, No. 7


FAC 2005-04 Requires Cost Data for Noncommercial Modifications of Commercial Items
DFARS Standardizes Definition of "United States"
FAR to Address Alaskan, Indian Subcontracting Credit
NASA Amends Supplement on Access to Sensitive Info

FAC 2005-04 Requires Cost or Pricing Data for
Noncommercial Modifications of Commercial Items

Federal Acquisition Circular (FAC) 2005-04 amends the Federal Acquisition Regulation to require that cost or pricing data be submitted for noncommercial modifications of a commercial item that are expected to cost more than $500,000 or 5% of the total price of the contract, whichever is greater. Also, FAC 2005-04 finalizes a couple of interim rules and implements various statutory provisions.

DFARS Standardizes Definition of "United States"

The Department of Defense (DOD) has amended the DOD FAR Supplement (DFARS) to standardize the use of the term "United States" and associated geographic terms, in accordance with definitions found in the FAR. FAC 2001-14 amended the FAR to clarify the use of the term "United States" when used in a geographic sense. Definitions of "contiguous United States (CONUS)," "customs territory of the United States," and "outlying areas" were added to FAR 2.101, Definitions, and all other definitions of "United States" in the FAR were revised to conform to the FAR 2.101 definitions. (For more on FAC 2001-14, see the June 2003 Federal Contracts Perspective article "FAC 2001-14 Addresses Electronic Signatures, Federal Prison Industries, Cost Principles.")

DOD published a proposed rule to amend the DFARS to conform to the FAR definitions (see the December 2004 Federal Contracts Perspective article "DFARS Transformation in Full Gear, 'Procedures, Guidance, and Information' Added"). No comments were submitted on the proposed rule, so the proposed rule is adopted as final with changes to other DFARS sections that have been revised by other rule changes since publication of the proposed rule.

In addition to the "United States" changes, DOD proposes to amend the DFARS as follows:

Finally, the Undersecretary of Defense (Acquisition, Technology, and Logistics) has extended for another year (until July 13, 2006) the waiver of the limitation on procurement of the following products from the United Kingdom (UK): air circuit breakers; welded shipboard anchor and mooring chain with a diameter of four inches or less; gyrocompasses; electronic navigation chart systems; steering controls; pumps; propulsion and machinery control systems; totally enclosed lifeboats; and ball and roller bearings.

The Under Secretary of Defense granted this waiver because the UK does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in the UK.

FAR to Address Alaskan, Indian Subcontracting Credit

A proposed rule has been published that would amend FAR Subpart 19.7, The Small Business Subcontracting Program, and FAR 52.219-9, Small Business Subcontracting Plan, to permit subcontracts awarded to certain Alaskan Native Corporations (ANCs) and Indian tribes to be counted towards a contractor's goals for subcontracting with small businesses, regardless of the size of the ANC or Indian tribe. Also, subcontracts awarded to ANCs would be counted towards a contractor's goals for small disadvantaged businesses (SDB) as well.

In addition, this proposed rule would require that, where one or more subcontractors are in the subcontract tier between the prime contractor and the ANC or Indian tribe, the ANC or Indian tribe designate the appropriate contractor to count the subcontract towards its small business and/or small disadvantaged subcontracting goals. In most cases, the appropriate contractor will be the contractor that awarded the subcontract to the ANC or Indian tribe. Industry is invited to comment on the feasibility of this approach and any alternatives.

The introduction to the proposed rule states that the law mandating this change "does not provide for such an ANC and any of its direct and indirect subsidiary corporations, joint ventures, and partnerships to be eligible for SDB or 8(a) certification unless the entity otherwise meets the requirements for certification under 15 U.S.C. 637. Similarly, the law does not provide for contractors to count subcontracts awarded to such an entity toward the evaluation of the extent of the participation of SDB concerns in the performance of certain North American Industry Classification System (NAICS) Industry codes unless the entity is certified as an SDB by SBA (FAR Subpart 19.12 [Small Disadvantaged Business Participation Program])."

Finally, contractors required to submit a small business subcontracting plan would be required to include separate percentage goals for subcontracts to ANC and Indian tribes.

Comments on the proposed rule must be submitted by August 2, 2005, to (a) http://www.regulations.gov; (b) http://www.acqnet.gov/far/ProposedRules/proposed.htm; (c) e-mail: farcase.2004-017@gsa.gov; (d) fax: 202-501-4067; or (e) mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405.

In another proposed rule, the FAR would be amended to ensure that a prime contractor's past performance would be considered as part of the overall assessment of performance on orders over $100,000. The contractor's subcontract management efforts would be used in past performance evaluations during source selection.

Currently, FAR Subpart 42.15, Contractor Performance Information, requires that contracting officers evaluate a contractor's past performance on all contracts exceeding $100,000. This proposed rule would amend FAR Subpart 42.15 to require contracting officers to evaluate a contractor's past performance, including an assessment of the contractor;s performance against, and efforts to achieve, the goals identified in the small business subcontracting plan for "each order excess of $100,000 placed against a Federal Supply Schedule contract or a task-order contract or delivery-order contract awarded by another agency (i.e., governmentwide acquisition contract or multi-agency contract)..." For single agency task order and delivery order contracts, performance evaluations for orders in excess of $100,000 would be at the discretion of the contracting officer "when such evaluations would produce more useful past performance information for source selection officials than that contained in the overall contract evaluation (e.g., when the scope of the basic contract is very broad and the nature of individual orders could be significantly different)."

Comments on this proposed rule must be submitted by August 22, 2005, by any of the methods mentioned above, except e-mail should be addressed to farcase.2004-012@gsa.gov.

NASA Amends Supplement on Access to Sensitive Info

The National Aeronautics and Space Administration (NASA) has amended the NASA FAR Supplement (NFS) to prescribe policy, procedures, and clauses to address how it acquire services to support management activities and administrative functions when performing those services requires the service provider to have access to sensitive information submitted by other contractors. This rule was necessitated by NASA's increased use of contractors to support management activities and administrative functions which, when coupled with implementing agency-wide electronic information systems, requires the establishment of consistent procedures for protecting sensitive information from unauthorized use or disclosure.

NFS 1809.505-4, Obtaining Access to Proprietary Information, is added. It states that the Assistant Administrator for Procurement has waived the FAR 9.505-4 requirement that, before gaining access to other companies' proprietary or sensitive information, contractors must enter specific agreements with each of those other companies to protect their information from unauthorized use or disclosure. As an alternative to numerous, separate third party agreements, new NFS 1837.203-70, Providing Contractors Access to Sensitive Information, prescribes detailed policy and procedures to protect contractors from unauthorized use or disclosure of their sensitive information.

To implement the procedures specified in NFS 1837.203-70, two clauses are added:

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