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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


July 2006
Vol. VII, No. 7

CONTENTS


Former OFPP Chief Safavian Convicted, Faces Up to 20 Years in Prison
Denett Testifies for OFPP Position
FAC 2005-10 Mandates Electronic Wage Determinations
New DFARS Rule on Contractors Accompanying Troops
DOE Postpones Pension Decision for One Year
SBA Proposes Women-Owned Small Business Program
DOSAR Amended to Address Overseas Contracting
EPA Permits Financing of Simplified Acquisitions
SBA Waives Nonmanufacturer Rule for Furniture



Former OFPP Chief Safavian Convicted,
Faces Up to 20 Years in Prison

On June 20, a federal jury convicted David Safavian, former administrator of the Office of Federal Procurement Policy (OFPP) and former chief of staff of the General Services Administration (GSA), of obstructing a GSA proceeding and making false statements. The jury convicted Safavian of four charges, finding that he made false statements and obstructed investigations into his relationship with Jack Abramoff. The investigations focused on whether Safavian, during his tenure as GSA chief of staff, 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 golf trip to Scotland that cost $140,000.

Safavian was convicted on three counts of making false statements to a GSA Office of Inspector General special agent, a GSA ethics official, and the Senate Committee on Indian Affairs, by telling them Abramoff had no business before GSA prior to the Scotland golf trip. Prosecutors convinced the jury by releasing e-mails in which Safavian provided Abramoff information and advice on obtaining two GSA-controlled properties soon after he became GSA chief of staff in 2002. One property was the Naval Surface Warfare Center in Silver Spring, MD, which Abramoff wanted to use for a Jewish high school he supported, the other was the Old Post Office Building on Pennsylvania Avenue several blocks from the White House, which Abramoff wanted to convert into a hotel and was near two restaurants owned by Abramoff.

Also, Safavian was convicted of obstructing the GSA Office of Inspector General investigation. Safavian was acquited of obstructing the Senate Indian Affairs Committee's investigation.

Safavian faces a maximum sentence of five years in prison on each of the four counts, a $250,000 fine, and three years of supervised release. Sentencing is scheduled for October 12, 2006. His attorney said an appeal is planned.

On January 3, Abramoff pleaded guilty to charges of conspiracy, mail fraud, and tax evasion. He has agreed to cooperate with law enforcement officials in other criminal investigations (see the February 2006 Federal Contracts Perspective article "Abramoff Pleads Guilty to Fraud, Tax Evasion").

Safavian became OFPP administrator on November 20, 2004, and resigned from that post on September 16, 2005, three days before he was arrested. None of the activities for which he was convicted took place while he was OFPP administrator.

Safavian had worked with Abramoff in the law firm Preston, Gates & Ellis, in the late 1990s, and Abramoff became Safavian's mentor. After leaving the firm, he became a lobbyist.

His wife, Jennifer, is the chief investigative counsel for House Committee on Government Reform, which oversees procurement activities within the government.

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" and the November 2005 Federal Contracts Perspective article "Former OFPP Chief Indicted for Obstruction."



Denett Testifies for OFPP Position

On the same day Safavian was convicted, the Senate Committee on Homeland Security and Governmental Affairs (actually, two senators -- chairwoman Susan Collins (R-ME) and Tom Coburn (R-OK)) heard testimony from Paul Denett, nominated to be Safavian's successor as OFPP administrator. Though Safavian was not mentioned at the confirmation hearing, his "legacy" was invoked when Denett promised to "build a world-class acquisition system that garners the confidence of our taxpayers by consistently delivering efficient, effective, and ethical contracting service."

Denett said that he would strive to obtain training for the acquisition workforce to keep it current; would improve the Federal Procurement Data System--Next Generation so that it accurately depicted the status of all federal contracts, and would continue the emphasis on competitive sourcing through the Office of Management and Budget (OMB) Circular A-76, Performance of Commercial Activities.

Denett's testimony pointed up a significant difference between himself and Safavian: Denett knows federal contracting, and is not a mere political hack who got his government positions through his connections. During his more than 30-year career in federal contracts, Denett was involved in acquisition with the Departments of the Navy, Army, and Agriculture, and was the senior procurement executive of the Department of the Interior and the Treasury. He left government service to become program director for the Logistics Management Institute, where he focused on the strategic improvement of government acquisition and grant management issues. Currently, he is Vice President of Contracting Programs at ESI International.

Denett holds a master's degree with emphasis in acquisition from The George Washington University, and he is a National Contract Management Association (NCMA) fellow.

For more on the Denett nomination, see the June 2006 Federal Contracts Perspective article "Denett Nominated to be OFPP Administrator."

If confirmed, Denett would become OFPP Administrator at a difficult time for the acquisition community. Besides the Safavian conviction, the jailing of the former Air Force acquisition head Darlene Druyun for giving the Boeing Company preferential treatment in multibillion dollar contract competitions in return for a high-level position in Boeing, and the poor (possibly illegal) practices in Iraq and Hurricane Katrina relief efforts bring into question the integrity and capabilities of the federal contracting workforce and will put Denett under the microscope.



FAC 2005-10 Mandates Electronic Wage Determinations

Federal Acquisition Circular (FAC) 2005-10 amends Federal Acquisition Regulation (FAR) Part 22, Application of Labor Laws to Government Acquisitions, to implement the Department of Labor (DOL) Wage Determinations OnLine (WDOL) website as the source for Service Contract Act and Davis-Bacon Act wage determinations (for service contracts over $2,500 and construction contracts over $2,000, respectively). The website is at http://www.wdol.gov.

Both the Service Contract Act and Davis-Bacon Act require contractors and subcontractors to pay locally-prevailing wages and fringe benefits to service employees, laborers, and mechanics. The DOL determines what are the locally-prevailing wages and fringe benefits and publishes "wage determinations," and the appropriate wage determinations are incorporated into service and construction contracts and are binding on the contractors -- the contractor must pay the covered employees the wages and benefits as a minimum.

Until the establishment of the WDOL website, contracting officers had to submit to DOL an SF-98, Notice of Intention to Make a Service Contract and Response to Notice, for contracts subject to the Service Contract Act, or an SF-308, Request for Wage Determination and Response to Request, for contracts subject to the Davis-Bacon Act. Now, contracting officers will be able to get most wage determinations from WDOL.

If WDOL does not contain an applicable wage determination for a service contract, the contracting officer must use the e98 process instead -- this is available at http://www.wdol.gov as well. However, if the WDOL does not contain an applicable wage determination for a construction contract, the contracting must still submit an SF-308 request to DOL -- DOL decided not to develop an electronic version because it processes fewer than 100 SF-308s a year.

The key changes are made to FAR 22.404, Davis-Bacon Act Wage Determinations, and FAR 22.1008, Procedures for Obtaining [Service Contract Act] Wage Determinations.

Comments on this interim rule must be submitted no later than August 28, 2006, by any of the following methods: (1) eRulemaking Portal: http://www.regulations.gov; (2) http://www.acquisition.gov/far/ProposedRules/proposed.htm; (3) e-mail: farcase.2005-033@gsa.gov; (4) fax: 202-501-4067; or (5) mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405.

Besides this rule, FAC 2005-10 contains five other rules:



New DFARS Rule on Contractors Accompanying Troops

The Department of Defense has amended Defense FAR Supplement (DFARS) Subpart 225.74, Defense Contractors Outside the United States, and DFARS 252.225-7040, Contractor Personnel Authorized to Accompany U.S. Armed Forces Deployed Outside the United States to implement the policy in DoD Instruction 3020.41, Contractor Personnel Authorized to Accompany the U.S. Armed Forces (available at http://www.dtic.mil/whs/directives/corres/html/302041.htm. The rule addresses the status of contractor personnel as civilians accompanying the U.S. Armed Forces and the responsibilities of the combatant commander regarding the protection of contractor personnel.

The rule makes the following significant changes to DFARS 252.225-7040:

Comments on this interim rule must be submitted no later than August 15, 2006, by any of the following methods: (1) eRulemaking Portal: http://www.regulations.gov; (2) e-mail: dfars@gsa.gov (include "DFARS Case 2005-D013" in the subject line); (3) fax: 703-602-0350; (4) mail: Defense Acquisition Regulations System, OUSD(AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; or (5) hand delivery/courier: Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

In addition, DOD published the following DFARS changes and proposed changes:



DOE Postpones Pension Decision for One Year

On June 20, Department of Energy (DOE) Secretary Samuel Bodman announced that DOE is postponing for one year its decision not to compensate management and operating (M&O) contractors and site management contracts for the costs of defined benefit pension plans. The policy was attacked by members of Congress and the unions. For more on the original DOE decision, see the June 2006 Federal Contracts Perspective article "DOE Will Not Reimburse Defined Benefit Pension Plans."



SBA Proposes Women-Owned Small Business Program

The Small Business Administration (SBA) proposes to implement the Women-Owned Small Business Federal Contract Assistance Program that was authorized under the Small Business Reauthorization Act of 2000 (Public Law 106-554). Section 811 of the act authorizes contracting officers to restrict competition to women-owned small businesses (WOSBs) in industries that SBA has determined that WOSBs are underrepresented. Section 811 limits the contracting officer's authority to restrict competition to contracts not exceeding $3 million ($5 million for manufacturing). The program's regulations would be in Title 13 of the Code of Federal Regulations, Part 127, Women-Owned Small Business Federal Contract Assistance Program.

The federal government has had a 5% goal for awards to WOSBs since the enactment of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355). However, WOSBs have never received anywhere near that share of federal contracting dollars. WOSBs received 2.3% of federal contract dollars in Fiscal Year (FY) 2000; 2.5% in FY 2001; 2.9% in FY 2002; and 3.0% in FY 2003 and FY 2004. This shortfall precipitated enactment of Section 811 to assist contracting officers achieve the 5% goal by providing a targeted government program for contracting with WOSBs.

According to the proposed SBA rule, it will conduct a study at least once every three years to identify the industries in which WOSBs are "underrepresented" or "substantially underrepresented" in federal contracting (neither of these terms is defined).

For industries in which WOSBs are underrepresented, the contracting officer will be permitted to set-aside contracts for certified "economically disadvantaged WOSBs" (EDWOSBs) if (1) two or more EDWOSBs will compete for the contract; (2) the anticipated award price of the contract (including options) does not exceed $3,000,000 ($5,000,000 for manufacturing contracts); and (3) contract award will be made at a fair market price.

For industries in which WOSBs are substantially underrepresented, the contracting officer will be permitted to set-aside contracts for certified WOSBs under the same conditions as set-asides for EDWOSBs.

To be eligible as a WOSB, the firm must be a small business that is at least 51% owned by one or more women and controlled by one or more women who are United States citizens. To be eligible as a EDWOSB, the firm must be a small business that is at least 51% owned by one or more economically disadvantaged women and controlled by one or more economically disadvantaged women who are United States citizens. The economic disadvantage requirement has the same $750,000 threshold for personal net worth as does the 8(a) business development program and the small disadvantaged business program. One notable feature of the 51% ownership requirement is that community property laws do not apply.

SBA points out that its proposed certification requirement is at odds with the statute in that the statute authorizes concerns to self-certify their status directly to the contracting officer. "However, based on prevailing Supreme Court precedent, the likely disruption that such an approach would have on the acquisition process as well as the agency's goal of reducing the risk of fraud associated with the program, SBA has decided not to propose a self-certification process for procurements set aside under the program..."

Comments on SBA's proposed implementation of the WOSB program must be received not later than July 17, 2006, identified by "RIN 3245-AE65," by any of the following methods: (1) http://www.regulations.gov; (2) e-mail: Linda.Waters@sba.gov (include "RIN 3245-AE65" in the subject line); (3) fax: 202-205-6390; or (4) mail or hand delivery/courier to Linda Waters, Procurement Analyst, Office of Federal Contract Assistance for Women Business Owners, U.S. Small Business Administration, 409 3rd Street, SW, Washington, DC 20416.



DOSAR Amended to Address Overseas Contracting

The Department of State (DOS) has revised the DOS Acquisition Regulation (DOSAR) to (1) formalize policy regarding the application of the Small Business Act to contracts awarded by domestic contracting activities where contract performance takes place overseas; and, (2) clarify the application of the Defense Base Act (DBA) insurance to local and third country nationals.



EPA Permits Financing of Simplified Acquisitions

The Environmental Protection Agency (EPA) is amending the EPA Acquisition Regulation (EPAAR) to add a prescription and clause for contracting officers to use when approving advance or interim payments on purchases at or below the simplified acquisition threshold that are appropriate or customary in the commercial marketplace.

The final rule adds EPAAR 1532.003, Simplified Acquisition Procedures Financing, which permits the contracting officer to authorize advance and interim payments on orders for commercial items that do not exceed the micro-purchase threshold, and requires approval at one level above the contracting officer, on a case-by-case basis, for advance and interim payments on orders for commercial items exceeding the micro-purchase threshold but not exceeding the simplified acquisition threshold.

In addition, a new clause EPAAR 1552.232-74, Payments -- Simplified Acquisition Procedures Financing, is added for inclusion in all solicitations and orders that will provide such financing. EPAAR 1552.232-74 requires the contracting officer to identify the type of financing being authorized (advance and/or interim), and to specify the payment schedule.

No comments were submitted in response to the proposed rule, so the proposed rule is finalized with an editorial change. For more on the proposed rule, see the April 2006 Federal Contracts Perspective article "EPA Proposes Financing for Simplified Acquisitions."



SBA Waives Nonmanufacturer Rule for Furniture

SBA is waiving the nonmanufacturer rule for the following products: furniture frames and parts, metal, manufacturing, North American Industry Classification System (NAICS) code 337215; furniture frames, wood, manufacturing, NAICS 337215; furniture parts, finished metal, manufacturing, NAICS 337215; furniture parts, finished plastics, manufacturing, NAICS 337215; furniture, factory-type (e.g., cabinets, stools, tool stands, work benches), manufacturing, NAICS 337127; furniture, hospital (e.g., hospital beds, operating room furniture), manufacturing, NAICS 339111; and furniture, laboratory-type (e.g., benches, cabinets, stools, tables), manufacturing, NAICS 339111.

The SBA is denying a nonmanufacturer rule waiver for the following products, because there are small businesses manufacturers for them: furniture (except wood), office-type, padded, upholstered, or plain, manufacturing, NAICS 337214; and furniture parts, finished wood, manufacturing, NAICS 337215.

For more on the proposed waiver, see the March 2006 Federal Contracts Perspective article "SBA to Waive Two Nonmanufacturer Rules, Denies Two."



Copyright 2006 by Panoptic Enterprises. All Rights Reserved.

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