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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

November 2006
Vol. VII, No. 11

CONTENTS

2007 Defense Authorization Addresses Training,
Award Fees, Specialty Metals, Small Claims

The $532.8 billion John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364), signed by President Bush October 17, is relatively quiet on the acquisition front for a change. Probably the most significant changes this statute make involve training requirements for those who generate requirements for major defense acquisition programs, and the requirement for the Department of Defense (DOD) to link award fees to outcomes.

• Section 801, Requirements Management Certification Training Program: Effective September 30, 2008, a member of the Armed Forces or an employee of the DOD with authority to generate requirements for a major defense acquisition program must have successfully completed the certification training program that is to be developed by the Under Secretary of Defense for Acquisition, Technology, and Logistics.
  
  
• Section 814, Linking of Award and Incentive Fees to Acquisition Outcomes: DOD shall issue guidance that ensures all new contracts using award fees link such fees to acquisition outcomes (defined in terms of program cost, schedule, and performance); establishes the circumstances in which contractor performance may be judged to be 'excellent' or 'superior,' and the percentage of the available award fee which contractors should be paid for such performance; establishes standards for determining the percentage of the available award fee, if any, which contractors should be paid for performance that is judged 'acceptable,' 'average,' 'expected,' 'good,' or 'satisfactory'; ensures that no award fee is paid for contractor performance that is judged to be below satisfactory performance or performance that does not meet the basic requirements of the contract; provides specific direction on the circumstances, if any, in which it may be appropriate to roll over award fees that are not earned in one award fee period to a subsequent award fee period or periods; and includes performance measures that evaluate the effectiveness of award and incentive fees for improving contractor performance and achieving desired program outcomes.
  
  
• Section 818, Determination of Contract Type for Development Programs: The use of fixed-price contracts is encouraged for development contracts. Cost-type contracts may be used for development contracts only when the program is so complex and technically challenging that it would not be practicable to reduce program risk to a level that would permit the use of a fixed-price type contract.
  
  
• Section 833, Use of Federal Supply Schedules by State and Local Governments for Goods and Services for Recovery from Natural Disasters, Terrorism, or Nuclear, Biological, Chemical, or Radiological Attack: The administrator of the General Services Administration (GSA) may authorize state and local governments to use Federal Supply Schedules for goods or services that are to be used to facilitate recovery from a major disaster declared by the president or to facilitate recovery from terrorism or nuclear, biological, chemical, or radiological attack. The Secretary of Homeland Security will determine which goods and services are eligible. Federal Supply Schedule contractors are not obligated to sell their goods and services to state and local governments.
  
  
• Section 842, Protection of Strategic Materials Critical to National Security: End items (aircraft, missile and space systems, ships, tank and automotive items, weapon systems, or ammunition), or end item components, may contain only specialty metals that are melted or produced in the United States. Also, DOD must buy specialty metals that are melted or produced in the United States when purchased directly or by a prime contractor. This requirement applies to prime contractors and subcontractors at any tier, and it applies to procurements of commercial items. However, this requirement does not apply to commercially-available electronic components whose specialty metal content is de minimis in value compared to the overall value of the lowest level electronic component produced that contains such specialty metal.
  
  
• Section 857, Enhanced Access for Small Business: The threshold for small businesses to use small claims procedures under the Contract Disputes Act is increased from $50,000 to $150,000.

Safavian Sentenced to 18 Months in Prison

Former GSA chief of staff and Office of Federal Procurement Policy (OFPP) administrator David Safavian was sentenced to 18 months in prison on charges of obstructing a GSA proceeding and making false statements regarding his relationship with former Washington lobbyist Jack Abramoff. The investigations focused on whether Safavian aided Abramoff in his attempts to acquire GSA-controlled property in and around Washington, DC. In August 2002, Abramoff took Safavian and others on a gold trip to Scotland.

Prosecutors had recommended that Safavian be sentenced to prison for 30 to 37 months. Safavian's defense attorneys recommended that he serve no more than 12 months in prison.

For other articles on Safavian and Abramoff, see the December 2004 Federal Contracts Perspective article "Safavian Confirmed to Head OFPP"; the October 2005 Federal Contracts Perspective article "OFPP Chief Arrested for Making False Statements"; the November 2005 Federal Contracts Perspective article "Former OFPP Chief Indicted for Obstruction, False Statements"; the February 2006 Federal Contracts Perspective article "Abramoff Pleads Guilty to Fraud, Tax Evasion"; and the July 2006 Federal Contracts Perspective article "Former OFPP Chief Safavian Convicted, Faces Up to 20 Years in Prison."

DFARS Amended to Address Foreign Acquisitions

The Defense Federal Acquisition Regulation Supplement (DFARS) was amended in several different ways to address various foreign acquisition issues: notices of certain exceptions to the Berry Amendment; exemption from the Buy American Act for commercial information technology; free trade agreements with Guatemala and Bahrain; removal of Libya from the list of terrorist countries; acquisition of PAN carbon fiber from foreign sources; and simplification of DFARS Part 225, Foreign Acquisition. In addition, there are DFARS changes regarding the acquisition of major systems as commercial items, Congressional notification of architect-engineer services for military housing, and prohibition against trafficking in persons.

• Berry Amendment Notification Requirement: This interim rule amends DFARS 205.301, General [Synopses of Contract Awards] to add a requirement for the posting of a contract award notice on FedBizOpps (http://www.FedBizOpps.gov) when certain exceptions to domestic source requirements apply.
  
  The DFARS 205.301 amendment implements Section 833(a) of the National Defense Authorization Act for Fiscal Year 2006 (Public Law 109-163), which adds a requirement for the posting of a notice on FedBizOpps, within seven days after award of a contract exceeding the simplified acquisition threshold, for the acquisition of (1) certain clothing, fiber, yarn, or fabric items, when DOD has determined adequate domestic items are not available; or (2) chemical warfare protective clothing, when an exception to domestic source requirements applies because the acquisition furthers an agreement with a qualifying country.
  
  Comments on the interim rule must be submitted no later than December 4, 2006, identified as "DFARS Case 2006-D006," by any of the following methods: (1) eRulemaking Portal: http://www.regulations.gov; (2) e-mail: dfars@osd.mil; (3) fax: 703-602-0350; (4) mail to: Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; or (5) hand delivery or courier to: Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.
  
  For more on the acquisition-related provisions of Public Law 109-163, see the February 2006 Federal Contracts Perspective article "2006 Defense Authorization Addresses A-76, Consolidates Civilian Boards of Contract Appeals."
  
  
• Buy American Act Exemption for Commercial Information Technology: This final rule amends DFARS 225.1101, Acquisition of Supplies, to implement provisions of various annual appropriations acts that authorize an exemption from the Buy American Act for the acquisition of commercial information technology. Also, this rule amends DFARS 225.7501, Policy, to exempt commercial information technology from the provisions of the Balance of Payments program, which applies to the acquisition of supplies outside the U.S.
  
  Five respondents submitted comments on the proposed rule, but DOD decided not to adopt any of the comments, so the proposed rule is adopted as final without change. For more on the proposed rule, see the May 2006 Federal Contracts Perspective article "Coverage on Labor Laws Cleaned Up in DFARS." For more on the similar changes made to the FAR, see the October 2006 Federal Contracts Perspective article "Micro-Purchase, Cost or Pricing Data, 8(a) Competition Thresholds Adjusted for Inflation."
  
  
• Acquisition of Major Weapon Systems as Commercial Items: This interim rule adds DFARS Subpart 234.70, Acquisition of Major Weapon Systems as Commercial Items, to implement Section 803 of Public Law 109-163, which permits the treatment or acquisition of a major weapon system as a commercial item only if: (1) the Secretary of Defense determines that the major weapon system meets the "commercial item" definition in FAR 2.101, Definitions, and such treatment is necessary to meet national security objectives; and (2) the congressional defense committees are notified at least 30 days before such treatment or acquisition occurs. A subsystem or component of a major weapon system that meets the "commercial item" definition is not subject to these requirements but must be acquired under the procedures of FAR Part 12, Acquisition of Commercial Items.
  
  Comments on the interim rule must be submitted no later than December 4, 2006, identified as "DFARS Case 2006-D012," by any of the methods specified above.
  
  For more on the acquisition-related provisions of Public Law 109-163, see the February 2006 Federal Contracts Perspective article "2006 Defense Authorization Addresses A-76, Consolidates Civilian Boards of Contract Appeals."
  
  
• Congressional Notification of Architect-Engineer Services Contracts for Military Family Housing: This interim rule revises DFARS 236.601, Policy [for Architect-Engineer Services], to implement Section 1031(a)(37) of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136), which amended Congressional notification requirements before the award of a contract for architectural and engineering services or construction design in connection with military construction, military family housing, or restoration or replacement of damaged or destroyed facilities by increasing threshold for submission from $500,000 to $1,000,000; and reduced the time period for submission from 21 to 14 days before obligation of funds when the notification is provided in electronic medium.
  
  Comments on the interim rule must be submitted no later than December 4, 2006, identified as "DFARS Case 2006-D015," by any of the methods specified above.
  
  For more on the 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."
  
  
• Free Trade Agreements with Guatemala and Bahrain: This interim rule amends various trade agreements provisions and clauses to implement the Dominican Republic-Central America-United States Free Trade Agreement, with respect to Guatemala, and the United States-Bahrain Free Trade Agreement.
  
  The rule adds Bahrain and Guatemala to the definition of "Free Trade Agreement country," and removes Guatemala from the definition of "Caribbean Basin country" (once a country becomes a "Free Trade Agreement country," it ceases to be a "Caribbean Basin country").
  
  The thresholds for applicability of the Dominican Republic-Central America-United States Free Trade Agreement to Guatemala are $64,786 for supply and service contracts, and $7,407,000 for construction contracts. The thresholds for applicability of the Bahrain Free Trade Agreement are $193,000 for supply and service contracts, and $8,422,165 for construction contracts.
  
  Comments on the interim rule must be submitted no later than December 4, 2006, identified as "DFARS Case 2006-D028," by any of the methods specified above.
  
  
• Removal of Libya from List of Terrorist Countries: This final rule amends DFARS 252.209-7001, Disclosure of Ownership or Control by the Government of a Terrorist Country, to remove Libya from the list of terrorist countries. Countries on this list are prohibited from receiving DOD contract awards. This rule brings the DFARS into accord with the FAR, which was amended by FAC 2005-07 to remove Libya from the list of countries sanctioned by the Department of the Treasury's Office of Foreign Assets Control (OFAC). For more on the FAC 2005-07 final rule, see the February 2006 Federal Contracts Perspective article "Performance-Based Acquisition Procedures Revised."
  
  
• Foreign Acquisition Procedures: This final rule amends DFARS Part 225, Foreign Acquisition, to delete the following internal DOD procedures and relocate them to the Procedures, Guidance, and Information (PGI) (for more on the PGI, see the December 2004 Federal Contracts Perspective article "DFARS Transformation in Full Gear, 'Procedures, Guidance, and Information' Added"):
  
  
  • Paragraph (c) of DFARS 225.871-4, Statutory Waivers, which addresses processing of requests for waiver under North Atlantic Treaty Organization cooperative projects.
    
    
  • Paragraphs (b)(1), (b)(2), and (b)(3) of DFARS 225.7017-3, Exceptions, which address the preparation of determinations regarding award of a contract for ballistic missile defense research, development, test, and evaluation to a foreign source.
    
    
  • DFARS 225.7502, Procedures, which addresses the application of the Balance of Payments Program.
    
    
  • DFARS 225.7604, Waivers, which addresses the processing of requests for waiver of foreign source restrictions.
  
  No comments were received on the proposed rule, so the proposed rule is adopted as final with one change: a final rule published July 11, 2006, redesignated DFARS Subpart 225.6, Trade Sanctions, as DFARS Subpart 225.76, Secondary Arab Boycott of Israel, so DFARS 225.670-4 is now DFARS 225.7604 (Federal Acquisition Circular (FAC) 2005-09 removed FAR Subpart 25.6, so the DFARS could no longer have a Subpart 225.6). For more on the proposed rule, see the February 2006 article "DOD Finalizes Many Proposed, Interim DFARS Rules." For more on the July 11, 2006, final rule, see the August 2006 Federal Contracts Perspective article "DFARS Coverage on Required Sources of Supply Updated." For more on FAC 2005-09, see the May 2006 Federal Contracts Perspective article "FAC 2005-09 Revises A-76 Rules, Provides FedTeDs Guidance, Addresses Trafficking in Persons."
  
  
• Acquisition of Polyacrylonitrile (PAN) Carbon Fiber from Foreign Sources: This final rule removes DFARS 225.7103, Polyacrylonitrile (PAN) Carbon Fiber (DFARS 225.7103-1 through DFARS 225.7103-3), and DFARS 252.225-7022, Restrictions on Acquisition of Polyacrylonitrile (PAN) Carbon Fiber, because the restriction expired on May 31, 2006.
  
  
• Combating Trafficking in Persons: This interim rule adds DFARS Subpart 222.17, Combating Trafficking in Persons, to implement DOD policy prohibiting activities on the part of contractors and contractor employees that support or promote trafficking in persons. DFARS Subpart 222.17 implements (1) a memorandum issued by the Secretary of Defense on September 16, 2004, which states that trafficking practices will not be tolerated in contractor organizations or their subcontractors in supporting DOD operations, and (2) a memorandum issued by the Deputy Secretary of Defense on January 30, 2004, which states that provisions should be incorporated in overseas service contracts that prohibit any activities on the part of contractor employees that support or promote trafficking in persons and that impose suitable penalties on contractors who fail to monitor the conduct of their employees.
  
  A proposed rule was published on June 21, 2005, to implement policy prohibiting trafficking in persons in all contracts performed outside the United States (see the July 2005 Federal Contracts Perspective article "DFARS Standardizes Definition of 'United States'"). Subsequently, on April 19, 2006, an interim rule in Federal Acquisition Circular (FAC) 2005-09 amended the Federal Acquisition Regulation (FAR) to add FAR Subpart 22.17, Combating Trafficking in Persons, and an associated contract clause. FAR Subpart 22.17 applies to service contracts other than commercial service contracts awarded under FAR Part 12, Acquisition of Commercial Items, and it prohibits severe forms of trafficking in persons, procurement of commercial sex acts, and the use of forced labor by government contractors or subcontractors or their employees (for more on FAC 2005-09, see the May 2006 Federal Contracts Perspective article "FAC 2005-09 Revises A-76 Rules, Provides FedTeDS Guidance, Addresses Trafficking in Persons").
  
  Two respondents submitted comments on the proposed DFARS rule. Several comments requesting clarification have been adopted in this interim DFARS rule, and it supplements the interim FAR rule by extending the FAR prohibitions on severe forms of trafficking in persons and the use of forced labor to all DOD contracts performed outside the United States, and it extends the FAR prohibition on the procurement of commercial sex acts to all DOD service and construction contracts performed outside the United States. Because FAC 2005-09 added the anti-trafficking language as FAR Subpart 22.17, the DFARS language which was proposed to be DFARS Subpart 225.74, Defense Contractors Outside the United States, is now DFARS Subpart 222.17.
  
  Comments on the interim rule must be submitted no later than December 26, 2006, identified as "DFARS Case 2006-D017," by any of the methods specified above.

GSA Reorganized

On October 12, GSA Administrator Lurita Doan signed GSA Order ADM 5440.591, completing the agency's reorganization efforts by merging the Federal Supply Service and the Federal Technology Service into the new Federal Acquisition Service (FAS). The order announces 10 national office-level organizations and provides for 11 FAS regions.

The new FAS organization structure includes 10 portfolios:

• Office of General Supplies and Services: Acquires a broad range of commercial products and certain professional services, as well as specialized logistics-based activities.
  
  
• Office of Travel, Motor Vehicle, and Card Services: Operates with respective supplier industries, but shares commonalities for customers that provide opportunities for synergy and scale.
  
  
• Office of Integrated Technology Services: Establishes a managed portfolio of integrated technology products and service offerings.
  
  
• Office of Assisted Acquisition Services: This organization will enable a stronger relationship with the FAS regional structure for an improved customer experience.
  
  
• Office of Customer Accounts and Research: Enables FAS to better understand customer requirements and become a strategic partner in helping agencies meet their responsibilities.
  
  
• Office of Acquisition Management: Ensures that FAS activities are fully compliant with all laws, regulations and policies, and that operating practices are consistent across business lines.
  
  
• Office of Strategic Business Planning and Process Improvement: Consolidates strategic planning and business improvement functions.
  
  
• Office of the Controller: Provides financial management and analysis support to drive financial and budget planning and execution.
  
  
• Office of the Chief Information Officer: Develops and manages applications and systems to support business needs of FAS business lines and staff offices.
  
  
• Office of Administration: Combines human capital and administrative management with internal and external communications and employee development.

For more on the reorganization, see the August 2004 Federal Contracts Perspective article "GSA, DOD Announce 'Get It Right' Program," and the September 2005 Federal Contracts Perspective article "GSA Announces Federal Acquisition Service Plan."

FY 2005 Federal Spending Hit $366 Billion

Reflecting the continuing war in Iraq and the war on terrorism (and the related spending on homeland security), federal government spending increased to $366.0 billion, 7.3% more than the $341.4 billion spent in FY 2004.

The following are the largest agencies' FY 2005 spending totals (in billions) and the percentage change from FY 2004:

Business.gov is One-Stop for Compliance Resources

The Small Business Administration (SBA) has launched a new website that provides business owners with a one-stop resource that searches the government agencies for information on taxes, immigration laws, workplace safety, environmental requirements, and other regulations that can be challenging to small and mid-size businesses. The site is called "Business.gov" (http://www.business.gov), and it provides compliance information, forms, and points-of-contact. Businesses can quickly search for information by topic and industry from all major federal agencies regulating or serving businesses.

The topics covered are: advertising and marketing, business law, emergency and disaster planning, environmental compliance, finance, government contracting, hiring and managing employees, information security, international trade, licenses and permits, non-profits, taxes, and workplace health and safety.

The industries covered are: aerospace and defense, agriculture, automotive, chemicals, construction and facilities, consumer goods and services, energy, financial services, firearms and explosives, food and beverage, healthcare, housing and real estate, industrial goods and services, mining and drilling, pharmaceuticals and biotechnology, telecommunications and media, and transportation and logistics.

10 More Biobased Items Proposed

The U.S. Department of Agriculture (USDA) is proposing to add another 10 sections to Title 7 of the Code of Federal Regulations (CFR) Part 2902, Guidelines for Designating Biobased Products for Federal Procurement, to identify 10 more biobased products that would be given preference in federal procurements as provided under Section 9002 of the Farm Security and Rural Investment Act of 2002 (FSRIA), and proposing minimum biobased content for each of these items. This is in addition to the 20 products proposed in August 2006, and the six biobased products that were designated by USDA in March 2006.

Once USDA designates an item under the "Federal Biobased Products Preferred Procurement Program" (FB4P), procuring agencies must purchase biobased products within these designated items where the amount purchased over the preceding fiscal year equaled $10,000 or more (except under certain circumstances). The $10,000 threshold applies to federal agencies as a whole and not to agency subgroups such as regional offices or subagencies of the larger federal department or agency.

Comments on this proposed rule must be submitted by December 11, 2006, by any of the following methods: (1) http://www.regulations.gov; (2) e-mail: fb4p@oce.usda.gov (include "RIN number 0503-AA32" and "Proposed Designation of Items"on the subject line); or (3) mail/commercial/hand delivery to: Marvin Duncan, USDA, Office of the Chief Economist, Office of Energy Policy and New Uses, Room 4059, South Building, 1400 Independence Avenue, SW, MS-3815, Washington, DC 20250-3815.

For more on the FB4P, the first six biobased items designated by USDA, and the 20 proposed biobased products, see the February 2005 Federal Contracts Perspective article "USDA Publishes Biobased Products Guidelines," the August 2005 Federal Contracts Perspective article "Agriculture Proposes Six Biobased Items," the April 2006 Federal Contracts Perspective article "USDA Designates Six Biobased Products for Procurement," and the September 2006 Federal Contracts Perspective article "USDA Proposes 20 More Biobased Products."

GSA Opens Surplus Sales Site

GSA is introducing a new website, http://www.GovSales.gov, that gives consumers access to live auctions of surplus, seized, and forfeited property. GovSales.gov lets consumers search for houses, farms, industrial property, cars, trucks, computers, electronics, clothing, jewelry, household goods, office supplies, sporting equipment, and much more. The site is secure, efficient, and an effective way for consumers to participate in auctions conducted by the federal government.

Changes to FAR Contract Debt Coverage Proposed

A rewrite and reorganization of FAR Subpart 32.6, Contract Debts, is being proposed to improve contract debt controls and procedures. The revised FAR Subpart 32.6 would prescribe policies and procedures for identifying, collecting, and deferring contract debts (including interest, if applicable). Among the significant changes that would be made are:

• FAR 32.601, General, would specify what constitutes a contract debt, rather than how a contract debt may arise. In addition, it would include payments determined to be in excess of contract limitations for commercial financing, since such payments constitute a contract debt.
  
  
• FAR 32.602, Responsibilities, would be added to clearly define the responsibilities of the contracting officer and the payment officials to assure an efficient and non-duplicative process.
  
  
• FAR 32.603, Debt Determination, would consolidate all discussions of contract debt determinations, including the responsibility of the contracting officer in making debt determinations.
  
  
• FAR 32.604, Demand for Payment, would consolidate all discussions of payment demands.
  
  
• FAR 32.606, Debt Collection, would consolidate all discussions of debt collection.

Comments on the proposed rule must be submitted no later than December 26, 2006, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov/far; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405. Identify such comments as "FAR case 2005-018."

More FAR Changes Proposed for CAS Administration

More changes to the FAR are being proposed that would implement recommendations to clarify the regulations related to the administration of the Cost Accounting Standards (CAS). These proposed changes are in response to those suggested by both government and industry representatives in response to the earlier changes to FAR Subpart 30.6, CAS Administration (see the April 2005 Federal Contracts Perspective article "FAC 2005-01 Addresses Cost Accounting Standards Administration, Architect-Engineer Services").

The changes would involve: (1) minor revisions to several entries in FAR 30.001, Definitions: "cognizant federal agency official (CFAO)" "desirable change," and "required change" are clarified; (2) the addition of paragraph (c) to FAR 30.601, Responsibility, to require that the CFAO request and consider the advice of the auditor when administering the CAS; and (3) the addition of paragraph (h)(6) to FAR 30.605, Processing Noncompliances, to specify that the cost impact of a noncompliance that affects both cost estimating and cost accumulation shall be determined by combining the separate cost impacts of both the cost estimating and cost accumulation noncompliances.

Also, additional changes are proposed to FAR 52.230-4, Consistency in Cost Accounting Practices, to make it consistent with the changes made to CAS addressing the applicability of CAS to United Kingdom (U.K.) contracts and subcontracts (see the May 23, 2005, Federal Contracts Dispatch "Cost Accounting Standards Board (CASB); Disclosure Statements from United Kingdom Contractors").

Comments on these proposed rules must be submitted no later than December 4, 2006, by any of the methods mentioned above. Identify comments on CAS administration as "FAR case 2005-027," and comments on CAS applicability to U.K. contracts as "FAR Case 2006-004."

Nonmanufacturer Rule Waiver Proposed for Computers

The Small Business Administration (SBA) is proposing to waive the nonmanufacturer rule for personal computers, manufacturing under North American Industry Classification System (NAICS) code 334111.

SBA is inviting the public to comment on this proposed waiver, or provide information on potential small business sources for these products, by October 27, 2006, to Edith Butler, U.S. Small Business Administration, Office of Government Contracting, 409 3rd Street, SW, Suite 8800, Washington, DC 20416.

The SBA regulation on the nonmanufacturer rule is in Title 13 of the CFR, Business and Credit Administration, Part 121, Small Business Size Standards, under paragraph (b) of 121.406, How Does a Small Business Concern Qualify to Provide Manufactured Products Under Small Business Set-Aside or MED [Minority Enterprise Development] Procurements? The SBA regulation on the waiver of the nonmanufacturer rule is 13 CFR 121.1202, When Will a Waiver of the Nonmanufacturer Rule Be Granted for a Class of Products? A complete list of products for which the nonmanufacturer rule has been waived is available at http://www.sba.gov/GC/approved.html.

Justice Launches Procurement Fraud Task Force

The Department of Justice (DOJ) announced on October 10 the establishment of a procurement fraud initiative to promote the early detection, prevention, and prosecution of procurement fraud associated with increased contracting activity for national security and other government programs.

The federal agencies that will participate in the task force include the Federal Bureau of Investigation (FBI), the Special Inspector General for Iraq Reconstruction and the Offices of Inspectors General (OIGs) for 20 departments and agencies.

The task force will focus resources at all levels of government to increase criminal enforcement in all areas of procurement fraud, with emphasis on defective pricing or other irregularities in the pricing and formation of contracts, product substitution, misuse of classified and procurement sensitive information, false claims, grant fraud, labor mischarging, accounting fraud, fraud involving foreign military sales, ethics and conflict of interest violations, and public corruption associated with procurement fraud.

As if to emphasize this initiative, DOJ announced on the same day that Oracle Corp. had agreed to pay $98.5 million for providing false pricing information during negotiations of a contract under GSA's Federal Supply Schedule program.

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