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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

October 2007
Vol. VIII, No. 10

CONTENTS

OFPP Recommends That Agencies Hire Annuitants
To Fill Acquisition-Related Positions

"The beginning of the twenty-first century has presented our acquisition workforce with unprecedented challenges," wrote Mr. Denett in a memorandum to chief acquisition officers and senior procurement executives. "We are more reliant on contracting to support agency missions, and federal acquisition spending has nearly doubled in the last five years. We are increasing the size of the overall acquisition workforce and expanding our intern programs. However, a significant loss of experience and corporate knowledge is expected as the baby boomer generation retires over the next few years."

The law, the General Services Administration Modernization Act (Public Law 109-313), was signed into law by President Bush in October 2006. It allows agencies to hire an individual receiving an federal annuity to fill an acquisition-related position under certain circumstances. The authority to use this provision expires December 31, 2011.

The memorandum identified the following functions as among those reemployed annuitants could provide:

• Act as mentors to entry and mid-level staff and provide on-the-job training and coaching;
  
  
• Serve as additional staff for short-term projects or surges;
  
  
• Provide agencies staffing flexibility to support emergency acquisition needs (for example, natural disasters or other national emergencies);
  
  
• Provide a knowledge pool for best practices that could be leveraged across agencies;
  
  
• Serve as a consulting resource to address specific agency acquisition issues; and
  
  
• Provide support to program managers as acquisition experts to more effectively link contracting and program functions and improve the acquisition process.

To use this authority, agencies must provide a plan that includes the process for reemploying annuitants to acquisition-related positions. The plan must be coordinated with the agency's Chief Human Capital Officer, the Chief Acquisition Officer, and the Acquisition Career Manager, then the agency head must consult with the Office of Personnel Management (OPM) and OFPP before implementing the plan.

Further information on the use of this legislative authority may be obtained from Lesley Field, OFPP, 202-395-4761.

Pilot Program Requires Subcontract Reporting

Federal Acquisition Circular (FAC) 2005-20 consists of a single final rule, one that requires contractors with contracts awarded and performed in the United States that exceed $500,000,000 to report all first-tier subcontract awards greater than $1,000,000 into the publically-accessible, searchable database mandated by the Federal Funding Accountability and Transparency Act of 2006 (FFATA) (Public Law 109-282). However, because this reporting requirement is a pilot program intended to test the collection and accession of subcontract data, information reported under the pilot program will not be disclosed to the public.

The FFATA requires the establishment of a searchable website that provides public access, at no charge, to information about federal expenditures -- contracts, subcontracts, purchase orders, task orders, delivery orders, grants, subgrants, loans, cooperative agreements, and other forms of financial assistance that exceed $25,000. Section 2(d) of the FFATA requires that a pilot program be established to test the collection and accession of subcontract award data. The pilot program will terminate no later than January 1, 2009. (EDITOR'S NOTE: For more on Public Law 109-282, see the October 2006 Federal Contracts Perspective article "Federal Awards Website Approved").

The rule adds Federal Acquisition Regulation (FAR) Subpart 4.14, Reporting Subcontract Awards, and the corresponding clause at FAR 52.204-10. The clause requires that contractors with contracts over $500,000,000 report the following on each subcontract greater than $1,000,000 to http://www.esrs.gov:

• Name of the subcontractor
  
  
• Amount of the award
  
  
• Date of award
  
  
• The applicable North American Industry Classification System (NAICS) code
  
  
• Funding agency or agencies
  
  
• Award title descriptive of the purpose of the action
  
  
• Contract number
  
  
• Subcontractor location including address
  
  
• Subcontract primary performance location, including address
  
  
• Unique identifier for the subcontractor

Solicitations and contracts for commercial items issued under FAR Part 12, Acquisition of Commercial Items, and classified soliciations and contracts are exempt from this requirement.

Seventeen respondents submitted comments on the proposed rule, addressing security issues and competitive issues regarding the public accessibility of this information, and the burdens placed on contractors to capture the required data. However, the proposed rule is finalized without changes, primarily because Congress, with the enactment of FFATA, has mandated the collection and availability of such information. For more on the proposed rule, see the April 2007 Federal Contracts Perspective article "Numbered Synopsis Notes Proposed for Deletion."

Tidying Up the DFARS

The Department of Defense (DOD) decided to tidy up the Defense Federal Acquisition Regulation Supplement (DFARS) to finalize several interim rules and to issue three new interim rules. Also, DOD proposes another DFARS change.

• Emergency Acquisitions: This finalizes, without changes, the interim rule that added DFARS Part 218, Emergency Acquisitions, to provide a single reference to the additional acquisition flexibilities available to DOD that may be used to facilitate and expedite acquisitions of supplies and services during emergency situations.
  
  No comments were received on the interim rule, so it is finalized without changes. For more on the interim rule, see the February 2007 Federal Contracts Perspective article "DOD-Unique Emergency Flexibilities Added to DFARS."
  
  
• Acquisition of Major Weapon Systems as Commercial Items: This finalizes, without changes, the interim rule that added DFARS Subpart 234.70, Acquisition of Major Weapon Systems as Commercial Items, to implement Section 803 of Public Law 109-163. Section 803 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.
  
  No comments were received on the interim rule, so it is finalized without changes. For more on the interim rule, see the November 2006 Federal Contracts Perspective article "DFARS Amended to Address Foreign Acquisitions."
  
  
• Labor Reimbursement on DOD Non-Commercial Time-and-Materials and Labor-Hour Contracts: This finalizes, without changes, the interim rule that added DFARS 252.216-7002, Alternate A, Time-and-Materials/Labor-Hour Proposal Requirements -- Non-Commercial Item Acquisition with Adequate Price Competition, to provide policy for reimbursing labor costs on competitively awarded DOD non-commercial time-and-materials and labor-hour contracts. Specifically, the clause consists of a replacement to paragraph (c) of FAR 52.216-29, Time-and-Materials/Labor-Hour Proposal Requirements -- Non-Commercial Item Acquisition with Adequate Price Competition. The replacement paragraph (c) requires the offeror to "establish fixed hourly using separate rates for each category of labor to be performed by each subcontractor and for each category of labor to be performed by the offeror, and for each category of labor to be transferred between divisions, subsidiaries, or affiliates of the offeror under a common control."
  
  Two respondents submitted comments on the interim rule, but DOD decided not to make changes to the final rule. For more on the interim rule, see the January 2007 Federal Contracts Perspective article "Year-End Closeout on DFARS Changes!"
  
  
• Congressional Notification of Architect-Engineer Services Contracts for Military Family Housing: This finalizes, without changes, the interim rule that amended 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). Section 1031(a)(37) 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.
  
  No comments were received on the interim rule, so it is finalized without changes. For more on the interim rule, see the November 2006 Federal Contracts Perspective article "DFARS Amended to Address Foreign Acquisitions."
  
  
• Taxpayer Identification Numbers (TINs): This finalizes, without changes, the proposed rule that would amend DFARS 252.204-7004, Alternate A, Central Contractor Registration (CCR), to address requirements for validation of TINs as part of the CCR process.
  
  DFARS 252.204-7004 is a substitute for paragraph (a) of FAR 52.204-7, Central Contractor Registration. The substitute paragraph addresses DOD-unique requirements relating to contractor registration in the CCR database.
  
  FAC 2005-10 amended FAR 52.204-7 to include requirements for the government to validate a contractor's TIN, and for the contractor to consent to this validation, as part of the CCR registration process (see the July 2006 Federal Contracts Perspective article "FAC 2005-10 Mandates Electronic Wage Determinations").
  
  This rule amends the definition of "registered in the CCR database" in DFARS 252.204-7004 to state that the term means "(1) the contractor has entered all mandatory information, including the DUNS number or the DUNS+4 number, into the CCR database; (2) the contractor's CAGE code is in the CCR database; and (3) the government has validated all mandatory data fields, to include validation of the Taxpayer Identification Number (TIN) with the Internal Revenue Service, and has marked the records 'Active.' The contractor will be required to provide consent for TIN validation to the government as part of the CCR registration process." (EDITOR'S NOTE: The new language is in italics.)
  
  For more on the proposed rule, see the February 2007 Federal Contracts Perspective article "DOD-Unique Emergency Flexibilities Added to DFARS."
  
  
• Limitation on Contracts for the Acquisition of Military Flight Simulators: This final rule adds DFARS 237.102-71, Limitation on Service Contracts for Military Flight Simulators, to implement Section 832 of the National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364). Section 832 prohibits DOD from entering into a service contract to acquire a military flight simulator, unless the Secretary of Defense determines that a waiver is necessary for national security purposes and provides an economic analysis to the congressional defense committees at least 30 days before the waiver takes effect.
  
  The economic analysis must include, at a minimum:
  
  
  • A clear explanation of the need for the contract; and
    
    
  • An examination of at least two alternatives for fulfilling the requirements that the contract is meant to fulfill, including the following with respect to each alternative:
    
    
    1. A rationale for including the alternative;
       
       
    2. A cost estimate of the alternative and an analysis of the quality of each cost estimate;
       
       
    3. A discussion of the benefits to be realized from the alternative; and
       
       
    4. A best value determination of each alternative and a detailed explanation of the life-cycle cost calculations used in the determination.
  
  For more on other acquisition-related provisions of Public Law 109-364, see the November 2006 Federal Contracts Perspective article "2007 Defense Authorization Addresses Training, Award Fees, Specialty Metals, Small Claims."
  
  
• Technical Data Rights: This interim rule amends DFARS 207.106, Additional Requirements for Major systems, to implement Section 802(a) of the National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364). Section 802(a) requires DOD program managers to assess long-term technical data needs when acquiring major weapon systems and subsystems, and to establish acquisition strategies that provide for technical data rights needed to sustain such systems and subsystems over their life cycle. Though the law does not address requirements for computer software, it is long-standing DOD policy to apply the same or similar requirements to both technical data and computer software, since many issues are common to both. Therefore, this interim rule applies to both technical data and computer software.
  
  The rule adds DFARS 207.106(S-70) to require acquisition plans for major weapon systems and subsystems to (1) assess long-term technical data and computer software needs, and (2) establish acquisition strategies that provide for the technical data deliverables and associated license rights to sustain the systems and subsystems over their life cycle. The strategy may include the development of maintenance capabilities within DOD, or competition for contracts for sustainment of the systems or subsystems. Assessments and corresponding acquisition strategies shall (1) be developed before issuance of a solicitation for the weapon system or subsystem; (2) address the merits of including a priced contract option for the future delivery of technical data and computer software, and associated license rights, that were not acquired upon initial contract award; (3) address the potential for changes in the sustainment plan over the life cycle of the weapon system or subsystem; and (4) apply to weapon systems and subsystems that are to be supported by performance-based logistics arrangements as well as to weapon systems and subsystems that are to be supported by other sustainment approaches.
  
  Comments on the interim rule must be submitted no later than November 5, 2007, identified as "DFARS Case 2006-D055," by: (1) eRulemaking Portal: http://www.regulations.gov; (2) e-mail: dfars@osd.mil; (3) fax: 703-602-7887; (4) mail to: Defense Acquisition Regulations System, Attn: Amy Williams, 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 other acquisition-related provisions of Public Law 109-364, see the November 2006 Federal Contracts Perspective article "2007 Defense Authorization Addresses Training, Award Fees, Specialty Metals, Small Claims."
  
  
• Security-Guard Functions: This interim rule amends paragraph (d) of DFARS 237.102-70, Prohibition on Contracting for Firefighting or Security-Guard Functions, to extend from September 30, 2007, to September 30, 2009, the period during which contractor performance of security-guard functions at military installations or facilities is authorized to fulfill additional requirements resulting from the terrorist attacks on September 11, 2001. This implements Section 333 of the National Defense Authorization Act of Fiscal Year 2007 (Public Law 109-364).
  
  Comments on the interim rule must be submitted no later than November 5, 2007, identified as "DFARS Case 2006-D050," by any of the methods mentioned above, except send mailed comments to the attention of Michael Benavides.
  
  For more on other acquisition-related provisions of Public Law 109-364, see the November 2006 Federal Contracts Perspective article "2007 Defense Authorization Addresses Training, Award Fees, Specialty Metals, Small Claims."
  
  
• Reports of Government Property: This interim rule amends DFARS 252.211-7007, Item Unique Identification of Government Property (formerly DFARS 252.245-7001, Reports of Government Property), to replace existing reporting requirements in DD Form 1662, DOD Property in the Custody of Contractors, with requirements for contractors to electronically submit to the Item Unique Identification (IUID) Registry the IUID data applicable to the government property in the contractor's possession. Also, DFARS 252.211-7007 requires contractors to provide real property data to the owning military department's real property inventory system. The rule does not apply to property under any statutory leasing authority; property to which the government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments; software and intellectual property; or real property (see paragraph (b) of revised DFARS 211.274, Item Identification and Valuation Requirements).
  
  Seventeen respondents submitted comments on the proposed rule. As a result of these comments, the interim rule (1) clarifies the definition of "equipment" and the types of property that must be reported in the IUID Registry; (2) excludes items under $5,000 from reporting unless otherwise specified in the contract; and (3) provides more specific procedures regarding data submission. In addition, the clause prescription has been moved to DFARS Part 211, Describing Agency Needs, to permit collocation of item identification and valuation requirements applicable to government property and delivered items. Therefore, the clause number has been changed from DFARS 252.245-7001 to DFARS 252.211-7007.
  
  The IUID reporting requirements will apply to contracts resulting from solicitations issued on or after the effective date of this interim rule. However, DOD contractors with existing contracts containing DD Form 1662 reporting requirements are encouraged to request contract modifications to designate use of the procedures specified in this interim rule as the approved substitute for DD Form 1662.
  
  Comments on the interim rule must be submitted no later than November 13, 2007, identified as "DFARS Case 2005-D015," by any of the methods mentioned above, except send mailed comments to the attention of Michael Benavides.
  
  For more on the proposed rule, see the April 2006 Federal Contracts Perspective article "DFARS Rules Finalized on Contract Consolidations, Component Breakout, Task Order Competitions."
  
  
• Evaluation Factor for Use of Members of the Selected Reserve: This proposed rule would add DFARS 215.370, Evaluation Factor for Employing or Subcontracting with Members of the Selected Reserve, and the corresponding provision DFARS 252.215-XXXX to authorize contracting officers to use an evaluation factor that considers whether an offeror intends to perform the contract using employees or individual subcontractors who are members of the Selected Reserve ("Selected Reserve members normally attend regular drills throughout the year and are the group of Reserves most readily available to the President").
  
  In addition, the rule would add DFARS 252.215-YYYY, Use of Employees or Individual Subcontractors Who are Members of the Selected Reserve, in solicitations that include DFARS 252.215-XXXX. However, the clause would be included in the resultant contract only if the contractor stated in its proposal that it intends to perform the contract using employees or individual subcontractors who are members of the Selected Reserve, and that statement was used as an evaluation factor in the award decision.
  
  This rule would implement Section 819 of the National Defense Authorization Act for Fiscal Year 2006 (Public Law 109-163) (for more on other 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").
  
  Comments on the proposed rule must be submitted no later than November 5, 2007, identified as "DFARS Case 2006-D014," by any of the methods mentioned above, except send mailed comments to the attention of Michael Benavides.

GSA Simplifies Local Set-Asides for Recovery Contracts

Lurita Doan, administrator of the General Services Administration (GSA), signed GSA Order ADM 2851.5, making it simpler and faster for GSA to award million of dollars in recovery contracts to local small businesses in the Gulf Region supporting Hurricane Katrina recovery efforts.

After Hurricane Katrina in 2005, President Bush declared the Gulf Coast a major disaster area under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. This declaration allows contracting officers to give a preference to local firms in the affected area. Instead of writing separate justifications, ADM 2851.5 provides a blanket justification for all local preference awards under the authority of the Stafford Act (see FAR Subpart 6.6, Stafford Act Preference for Local Area Contractor, and FAR Subpart 26.2, Disaster or Emergency Assistance Activities).

ADM 2851.5 requires that "contracts for debris clearance, distribution of supplies, reconstruction, and other major disaster or emergency assistance activities, undertaken pusuant to the Stafford Act for disaster assistance and recovery shall, to the maximum extent feasible and practicable, be set-aside for award to local business concerns. This Stafford Act local area set-aside may be used in conjunction with other authorized set-asides, for example, those in FAR Part 19 [Small Business Programs] for small businesses. In particular, the HUBZone program in FAR Subpart 19.13 [Historically Underutilized Business Zone (HUBZone) Program] is an appropriate contract vehicle to use with the local area set-aside since the HUBZone program is designed to increase economic development and there are numerous HUBZone qualified areas within the Gulf Coast region.

"With respect to contracts for goods and services below the simplified acquisition threshold, contracting officers are to consider for award local small business concerns in the areas covered by the above-referenced Disaster Declarations...When contracting for these procurements, preference is to be given to businesses that are both small business concerns and are local. Contracts for goods and services in the areas covered by the above-referenced Disaster Declarations that are not set-aside for award to local small business concerns or local concerns shall include a statement of the reasons why set-aside was not feasible or practicable."

SBA Extends "GO Loan" Pilot Program

Because the Small Business Administration (SBA) believes there continues to be a substantial need for SBA assistance in the presidentially-declared disaster areas resulting from Hurricanes Katrina and Rita, SBA is extending the Gulf Opportunity Pilot Loan Program (GO Loan Pilot) for one year, until September 30, 2008.

The GO Loan Pilot was initiated on an emergency basis in November 20005 to provide expedited small business financial assistance to businesses located in those communities severely affected by Hurricanes Katrina and Rita. Under this unique initiative, SBA provides its full (85%) guaranty and streamlined and centralized loan processing to all eligible lenders that agree to make expedited SBA 7(a) loans available to small businesses located in, locating to or relocating in the parishes/counties that have been presidentially-declared as disaster areas resulting from Hurricanes Katrina and Rita, plus any contiguous parishes/counties (a list of all eligible parishes/counties is located at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_goloan_3.pdf).

For more on the GO Loan Program, see the December 2005 Federal Contracts Perspective article "Size Standards Amended for Hurricane-Relief Programs."

OMB Releases Final Set of FY 2006 FAIR Act Inventories

The Office of Management and Budget (OMB) has released the third and final set of Fiscal Year 2006 Commercial Activities Inventories of non-governmental functions being performed by government agencies. These inventories are required to be compiled and made available to the public by the Federal Activities Inventory Reform (FAIR) Act of 1998.

Inventories are from the Department of Housing and Urban Development Inspector General (IG), Federal Communications Commission, Office of Management and Budget, the Small Business Administration (IG), and several small agencies and commissions.

Interested parties who disagree with an agency's initial judgment have 30 working days from September (that is, until October 26) to challenge the omission or inclusion of an activity on an agency's Commercial Activities Inventories list.

The Office of Federal Procurement Policy has made available a FAIR Act User's Guide at http://www.whitehouse.gov/OMB/procurement/fair-index.html to help interested parties review FY 2006 FAIR Act inventories.

DOSAR Implements IT Security Requirements

The Department of State (DOS) is amending the DOS Acquisition Regulation (DOSAR) to add a new solicitation provision, DOSAR 652.239-70, Information Technology Security Plan and Accreditation, and a new contract clause, DOSAR 652.239-71, Security Requirements for Unclassified Information Technology Resources, for inclusion in solicitations and contracts "that include information technology resources or services in which the contractor will have physical or electronic access to Department information that directly supports the mission of the Department." The clause and provision implement information technology (IT) systems security as required by the Federal Information Security Management Act of 2002 (FISMA) (Title III of the E-Government Act of 2002).

DOSAR 652.239-70 notifies offerors that all responses to the solicitation must address the approach for completing the security plan and certification requirements required by DOSAR 652.239-71. DOSAR 652.239-71 requires that the contractor be responsible for IT security, based on agency risk assessments, for all systems connected to a DOS network or operated by a contractor for DOS.

No comments were submitted in response to the proposed rule, so it is being finalized without changes.

For more on the proposed rule, see the July 2007 Federal Contracts Perspective article "DOSAR to Implement IT Security Requirements."

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