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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


March 2006
Vol. VII, No. 3

CONTENTS


U.S. Trade Representative Lifts Sanctions Against Members of the European Communities
DOD Suspends SDB Evaluation Adjustment Another Year
Proposed Share-in-Savings Rule Withdrawn
NASA to Hold Meeting on Procurement Policies, Practices
SBA to Waive Two Nonmanufacturer Rules, Denies Two
GSAR Rewrite Underway
NASA Definition of HCA Revised
Policy on Contractors with Disabled Employees Readied
Electric Motor Efficiency Standards Being Prepared



U.S. Trade Representative Lifts Sanctions Against
Certain Members of the European Communities

On February 28, United States Trade Representative (USTR) Rob Portman terminated sanctions that had been imposed on certain members of the European Communities since 1993. The sanctions, which are covered in the Federal Acquisition Regulation (FAR) Subpart 25.6, Trade Sanctions, had prohibited the acquisition of all products and services from the sanctioned countries between the simplified acquisition threshold and $193,000, and prohibited the acquisition of a variety of services regardless of dollar amount.

The sanctions had been imposed against Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Sweden, and the United Kingdom because they maintained, in government procurement of telecommunications goods, "a significant and persistent pattern or practice of discrimination against U.S. products or services that results in identifiable harm to U.S. businesses." In retaliation, the European Communities imposed countermeasures against the U.S. However, in 1994 Germany eliminated its discriminatory practices, and the U.S. reciprocated by terminating the sanctions against it.

In 2004, the European Communities adopted new procurement rules which exclude telecommunications from their scope, and the European Communities promised to remove its countermeasures against the U.S. This lifting of U.S. sanctions is in response to that promise.

Among the services that were completely prohibited were transportation services, dredging, production of motion pictures, research and development, airport concessions, hotel and restaurant services, educational and training services, and telecommunications services (but only voice telephony, telex, radio telephony, paging, and satellite services).

The sanctions were so limited that they rarely had to be enforced. Unless a service was one of those completely prohibited, any product or service from the sanctioned countries could be procured unless it fell within a $93,000 window -- between $100,000 and $193,000. In addition, any product or service, including those in the $93,000 window and prohibited services, could still be procured if (1) it was acquired under a small business set-aside; (2) it was in support of U.S. national security interests; (3) it was for essential spare, repair, or replacement parts not otherwise available from nonsanctioned countries; or (4) the head of the agency authorized the award of a contract for sanctioned products or services because it would be in the public interest, or would avoid limiting the acquisition to a single source, or because their would not a sufficient number of offerors to ensure the acquisition of products or services of requisite quality at competitive prices. So it was a relatively toothless set of sanctions, but one that could occasionally be a nuisance.



DOD Suspends SDB Evaluation Adjustment Another Year

To comply with Section 801 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261), which prohibits the Department of Defense (DOD) from granting to small disadvantaged businesses (SDBs) a 10% price evaluation adjustment in certain acquisitions for a one-year period when it achieves the 5% goal for contract awards to SDBs, DOD is suspending the 10% SDB price evaluation adjustment from March 10, 2006, to March 9, 2007, because it exceeded the 5% SDB goal in Fiscal Year 2005 (for more on the SDB price evaluation adjustment, see FAR Subpart 19.11, Price Evaluation Adjustment for Small Disadvantaged Business Concerns).

In addition to suspending the SDB price evaluation adjustment, DOD made several amendments to the Defense FAR Supplement (DFARS) on a variety of topics.



Proposed Share-in-Savings Rule Withdrawn

The proposed FAR rule that would implement "share-in-savings" (SIS) contracting is withdrawn by the FAR Council because SIS authority expired and was not reauthorized by Congress (for more on the proposed rule, see the August 2004 Federal Contracts Perspective article FAR Rules on Commercial-Type Contracts Proposed).

Section 210 of the E-Government Act of 2002 (Public Law 107-347) authorized the use of share-in-savings (SIS) contracts for information technology (IT). In SIS contracts, the contractor finances the work and then shares the savings generated from contract performance with the agency. The Section 210 authority to award SIS contracts expired September 30, 2005.

SIS is a performance-based concept intended to help an agency leverage its limited resources to improve or accelerate mission-related or administrative processes and lower costs for the taxpayer. Under an SIS contract, the contractor finances the work, and agencies are obligated to pay the contractor for services performed only if savings are realized and, in such cases, a portion of the savings. The agency may retain its share of the savings (that is, not return the savings to the Department of the Treasury) with certain exceptions.

While a SIS contract can be highly effective in motivating contractors to generate savings and revenues for federal agencies, to be successful it must have a clearly specified expected outcome, defined incentives, a baseline and good performance measures to gauge exactly what savings or revenues are being achieved, and the commitment of senior level management. However, SIS contracts are not suitable when a baseline cost cannot be calculated -- the savings are calculated from this baseline, and much of what the federal government does cannot easily be calculated.

This is the problem federal agencies ran into when trying to write SIS contracts. While a SIS contract is suitable for energy conservation in an existing building, it is difficult to use in the acquisition of new IT systems. This is the primary reason federal agencies were unenthusiastic about SIS contracts -- IT is not particularly well-suited to SIS contracting. Congress heard the complaints and reservations, and decided not to take action.



NASA to Hold Meeting on Procurement Policies, Practices

On March 8, the National Aeronautics and Space Administration (NASA) will conduct an open forum meeting to solicit questions, views, and opinions of interested persons or firms concerning NASA's procurement policies, practices, and initiatives. This is not a meeting about how to do business with NASA for new firms, nor will it focus on small businesses or specific contracting opportunities.

The meeting will be held between 1:00 and 3:00 pm at the Johnson Space Center's Robert R. Gilruth Center in the Lone Star Room (second floor of Gilruth Center), Houston, TX 77058. Access to the Gilruth Center is through Gate 5 off of Space Center Boulevard (view map at http://jsc-web-pub.jsc.nasa.gov/bd01/Index.htm). Admittance will be on a first-come, first-served basis. Room capacity is limited to approximately 90 persons, so a maximum of two representatives per firm is requested. No reservations will be accepted.

For further information, contact Barbara Kirkland, NASA Johnson Space Center, Mail Code BD35, Houston, TX 77058; telephone: 281-483-4512 or 281-483-4511; or e-mail at: barbara.j.kirkland@nasa.gov.



SBA to Waive Two Nonmanufacturer Rules, Denies Two

The Small Business Administration (SBA) is proposing to waive the nonmanufacturer rule for the following industries:

SBA is inviting the public to comment on these proposed waivers, or provide information on potential small business sources for these products, by March 6, 2006, to Edith Butler, Program Analyst, at 202-619-0422; by fax at 202-481-1788; or by e-mail at edith.butler@sba.gov.

In addition, SBA is denying the requests for nonmanufacturer rule waivers for commercial cooking equipment under NAICS code 333319 and forklifts manufacturing under NAICS code 333924 because of SBA's discovery of small business manufacturers for these classes of products.

For more on the proposed waiver for commercial cooking equipment, see the September 2005 Federal Contracts Perspective article "SBA Proposes Waiving Five Nonmanufacturing Rules."

For more on the proposed waiver for forklift manufacturing, see the December 2005 Federal Contracts Perspective article "SBA Taking More Actions on Nonmanufacturer Rules."

EDITOR'S NOTE: Public Law 100-656, enacted November 15, 1988, requires those with federal contracts that are set-aside for small businesses or awarded through the 8(a) program to provide the product of a small business manufacturer or processor if the recipient is not the actual manufacturer or processor (see paragraph (f) of FAR 19.102, Size Standards). This is called the "nonmanufacturer rule." However, SBA may waive this requirement if there are no small business manufacturers or processors.

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.



GSAR Rewrite Underway

The General Services Administration (GSA) is beginning the review and update of the GSA Acquisition Regulation (GSAR), and it is seeking comments from both government and industry on areas in which it can be revised to improve clarity and simplify procedures.

The GSAR is the regulatory part of the GSA Acquisition Manual (GSAM). The GSAM contains both regulatory and non-regulatory acquisition guidance. The GSAR, which contains GSA's agency acquisition policies and practices, contract clauses, solicitation provisions, and forms that control the relationship between GSA and contractors and prospective contractors, is the shaded portion of the GSAM. The GSAM can be found at http://www.acqnet.gov/GSAM/gsam.html. GSA is only seeking comments on the GSAR -- the shaded parts of the GSAM.

GSA believes revisions to the GSAR are necessary to maintain consistency with the FAR, and to implement streamlined and innovative acquisition procedures that contractors, offerors, and GSA contracting personnel can utilize when entering into and administering contractual relationships.

GSA is asking industry and other interested parties, including government personnel, to submit suggestion on which parts of the GSAR:

Those submitting recommendations are requested to provide a rationale for their recommendations and, if possible, suggested language or examples.

Interested parties should submit comments in writing, identified by "GSAR ANPR2006-N01," on or before April 17, 2006, by any of the following methods: (1) eRulemaking Portal: http://www.regulations.gov; (2) http://www.acqnet.gov/GSAM/gsamproposed.htm (click on the GSAR case number "2006-N01" to submit comments); (3) e-mail: gsaranpr.2006-N01@gsa.gov; (4) fax: 202-501-4067; or (5) mail to: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405. All comments received will be posted without change to http://www.acqnet.gov/GSAM/gsamcomments.html.

For further information contact Althea Kireilis at 202-208-4724. Cite "GSAR ANPR 2006-N01 notice on GSAR Revision Initiative."



NASA Definition of HCA Revised

NASA is revising the definition of "head of the contracting activity" (HCA) in NASA FAR Supplement (NFS) 1802.101, Definitions, to designate the Associate Administrator for the Space Operations Mission Directorate (SOMD) as head of the contracting activity for SOMD contracts. Previously, the center director of the NASA installation cognizant for award of an SOMD contract was the designated HCA.



Policy on Contractors with Disabled Employees Readied

DOD, the Department of Education, and the Committee for Purchase From People Who Are Blind or Severely Disabled, are required to issue a joint policy statement and report relating to contracting with employers of persons with disabilities, and are seeking comments that will assist in identifying appropriate policy solutions for implementation of the Randolph-Sheppard Act and the Javits-Wagner-O'Day Act as they pertain to the operation and management of military dining facilities.

The interagency team is seeking suggestions for potential policy solutions and is inviting interested parties to submit comments for consideration in developing the policy statement and report to Congress.

Submit comments no later than March 1, 2006, to the Director, Defense Procurement and Acquisition Policy, 3060 Defense Pentagon, ATTN: Susan Pollack, Washington, DC 20301-3060; or by e-mail to susan.pollack@osd.mil.



Electric Motor Efficiency Standards Being Prepared

The Department of Energy (DOE) is designating temporary standards for premium energy efficient electric motors of 1 to 500 horsepower for mandatory use in federal acquisitions. The temporary standards are consistent with those recommended by the National Electrical Manufacturers Association (NEMA), the Consortium for Energy Efficiency (CEE), and other energy efficiency groups.

These standards implement Section 104 of the Energy Policy Act of 2005 (Public Law 109-58), which requires that federal agencies procure only ENERGY STAR qualified products or Federal Energy Management Program (FEMP)-designated products unless the agency finds that no qualifying product is lifecycle cost-effective or reasonably available that meets the applicable functional requirements. The standards can be found on the FEMP website http://www.eere.energy.gov/femp/procurement/eep_emotors.cfm; the NEMA website http://www.nema.org/gov/energy/efficiency/premium/; and the CEE website http://www.cee1.org/ind/motrs/motrs-main.php3.

Comments on these temporary standards must be submitted by March 16, 2006, to Joan Glickman, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, EE-2L, 1000 Independence Avenue, SW, Washington, DC 20585-0121; 202-586-0371; e-mail: joan.glickman@ee.doe.gov. DOE intends to finalize a standard after considering all public comments that are submitted.



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