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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

February 2007
Vol. VIII, No. 2

CONTENTS

House Government Reform Committee to Investigate
GSA Administrator's Alleged Contract-Steering

Lurita Doan, adminstrator of the General Services Administration (GSA), is under investigation by the GSA Inspector General (IG) and the House Committee on Oversight and Government Reform for personally signing a $20,000 contract without competition to a firm operated by a long-time friend. "I made a mistake," she said in an interview with the Washington Post. The contract, awarded last July, two months after she took office, had been cancelled before any money was paid, but questions about Doan's judgment and integrity have been raised.

Doan awarded the contract to the Public Affairs Group, Inc., which is owned and operated by her friend Edie Frasier. The contract was for a 24-page "best practices report -- to profile the best practices in GSA contracting for minority and women-owned business and publish a data report with case studies."

Doan claimed "she believed she was following proper procedures to hire the best firm available to quickly produce a report on diversity practices," according to the Post.

Before becoming GSA administrator, Doan was owner and chief executive officer of New Technology Management, Inc. for 15 years. In 2005, the last year she headed the company, it received $14.6 million in federal contracts. Public Affairs Group, on the other hand, received a single contract for $15,000 in 2005.

The Post reports that GSA's IG has initiated an investigation of the contract, and the Department of Justice has been briefed.

And that's not all of her problems. Congressman Henry Waxman (D-CA), the new chairman of the House Committee on Oversight and Government Reform, wrote to Doan about "multiple procurement irregularities at GSA under your leadership. I am writing to request your assistance in providing the Oversight Committee with more information about these matters." These matters are the $20,000 contract; her intervention in debarment proceedings involving KPMG, Ernst & Young, PricewaterhouseCoopers, Booz Allen Hamilton, and BearingPoint, all of which together paid $66 million to settle allegations that they withheld travel rebates from GSA; and her proposal to replace IG auditors with private contractors in the conduct of pre-award audits on Federal Supply Schedule contracts (the proposal was made after the IG had initiated an investigation into the $20,000 contract).

"I'm stunned, absolutely stunned by the amount of legs that this has taken, you know, how this has like kind of jumped up and run away with things," Doan said to the Post.

EDITOR'S NOTE: This is another blow to the beleaguered acquisition community, coming so soon after the conviction of former GSA chief of staff and former Office of Federal Procurement Policy administrator David Safavian, contracting irregularities in Iraq and in response to Hurricane Katrina, and the conviction and imprisonment of former Air Force acquisition chief Darlene Druyen. Ms. Doan's actions were reckless and breathtakingly arrogant, and are particularly damaging because she is the head of the federal government's primary acquisition organization. Not only do her actions raise doubts about the integrity of the entire acquisition community in the minds of the general public, but they generate misgivings within the acquisition community about her ability to guide GSA back to respectability. Now she will spend an inordinate amount of time responding to the IG's and Congressman Waxman's investigations, and not spend enough time trying to remedy GSA's problems. Considering it is late in President Bush's second term, this $20,000 contract has probably eliminated any chance she might have had to take effective action.

President Orders Federal Energy Conservation

The day following President Bush's State of the Union, in which he called upon the nation to conserve energy and decrease dependence on foreign oil, the president issued Executive Order 13423, Strengthening Federal Environmental, Energy, and Transportation Management, ordering the government to do its share.

The executive order directs each agency to:

• Improve energy efficiency and reduce greenhouse gas emissions of the agency by 3% annually through the end of Fiscal Year (FY) 2015, or 30% by the end of FY 2015.
  
  
• Reduce water consumption 2% annually through the end of FY 2015 or 16% by the end of fiscal year 2015.
  
  
• In the acquisition of goods and services, require use of sustainable environmental practices, including acquisition of biobased, environmentally preferable, energy-efficient, water-efficient, and recycled-content products; and acquire paper that is at least 30% post-consumer fiber content.
  
  
• If the agency operates a fleet of at least 20 motor vehicles, (1) reduce the fleet's total consumption of petroleum products by 2% annually through the end of FY 2015; (2) increase the total fuel consumption that is non-petroleum-based by 10% annually, and (3) use plug-in hybrid (PIH) vehicles when they are commercially available at a cost reasonably comparable, on the basis of life-cycle cost, to non-PIH vehicles.
  
  
• When acquiring an electronic product for its needs, ensure that (1) the product meets at least 95% of those requirements with an Electronic Product Environmental Assessment Tool (EPEAT)-registered electronic product; (2) the ENERGY STAR feature on agency computers and monitors is enabled; (3) policies are established and implemented to extend the useful life of agency electronic equipment, and (4) environmentally-sound practices are used in disposition of agency electronic equipment that has reached the end of its useful life.

DOD-Unique Emergency Flexibilities Added to DFARS

To correspond to Federal Acquisition Regulation (FAR) Part 18, Emergency Acquisitions, the Department of Defense (DOD) has decided to add a Defense FAR Supplement (DFARS) Part 218 to provide a single reference to the additional acquisition flexibilities available to DOD. In addition, the DFARS is further amended to address clothing materials covered by the Berry Amendment, and to address notification requirements for critical safety items. Finally, DOD proposes to amend the DFARS to address taxpayer identification numbers and information assurance contractor training and certification.

• Emergency Acquisitions: This interim rule adds DFARS Part 218, Emergency Acquisitions, which consists of DFARS Subpart 218.1, Available Acquisition Flexibilities, and DFARS Subpart 218.2, Emergency Acquisition Flexibilities. This conforms to the format established in FAR Part 18, which was added by Federal Acquisition Circular (FAC) 2005-11 (for more on the addition of FAR Part 18, see the August 2006 Federal Contracts Perspective article "New FAR Part Consolidates Emergency Authorities; Earned Value Management Coverage Added").
  
  DFARS Subpart 218.1 identifies the DOD flexibilities that may be used anytime and do not require an emergency declaration. These flexibilities include:
  
  
  • FAR 6.302-2, Unusual and Compelling Urgency
    
    
  • Electronically transmitted advance Military Interdepartmental Purchase Request (MIPR)
    
    
  • Governmentwide commercial purchase cards do not have to be used for purchases at or below the micro-purchase threshold if the place of performance is outside the U.S.
    
    
  • Job orders for emergency work under a master agreement for repair and alteration of vessels
    
    
  • Urgent acquisition of spare parts
    
    
  • Storage or disposal of non-DOD-owned toxic or hazardous materials on DOD installations
    
    
  • Acquisitions not subject to the restrictions of the Berry Amendment (see DFARS 225.7002, Restrictions on Food, Clothing, Fabrics, Specialty Metals, and Hand or Measuring Tools)
    
    
  • Use of technical data with restricted rights
    
    
  • Waiver of the requirement to submit payment requests in electronic format
    
    
  • Acquisition of mortuary services in an epidemic or other emergency
  
  DFARS Subpart 218.2 identifies the DOD flexibilities that may be used only after an emergency declaration or designation has been made by the appropriate official. The subpart is further subdivided into three sections: contingency operation; defense or recovery from certain attacks; and incidents of national significance, emergency declaration, or major disaster declaration. These flexibilities include:
  
  Contingency operation:
  
  
  • Waiver of contracting officer qualification requirements for employees or members of the Armed Forces who are in a contingency contracting force
    
    
  • Exemption of contractors from the requirement to provide DOD unique item identification
    
    
  • Governmentwide commercial purchase cards do not have to be used for purchases at or below the micro-purchase threshold if the purchase or payment is for an overseas transaction in support of a contingency operation, or for training exercises in preparation for overseas contingency, humanitarian, or peacekeeping operations
    
    
  • Governmentwide commercial purchase cards may be used to make a purchase exceeding the micro-purchase threshold up to the simplified threshold if the purchase is in support of a contingency operation or a humanitarian or peacekeeping operation
    
    
  • Imprest funds are authorized without further approval for overseas transactions at or below the micro-purchase threshold in support of a contingency operation or a humanitarian or peacekeeping operation
    
    
  • The Standard Form 44, Purchase Order-Invoice-Voucher, may be used for purchases not exceeding the simplified acquisition threshold for overseas transactions in support of a contingency operation or a humanitarian or peacekeeping operation
    
    
  • The head of the agency may waive limitations for undefinitized contract actions in support of a contingency operation or a humanitarian or peacekeeping operation
    
    
  • Emergency acquisitions in support of U.S. or allied forces deployed in military contingency, humanitarian, or peackeeping operations are authorized in a country or region subject to economic sanctions
    
    
  • Acquisitions not subject to the restrictions of the Berry Amendment (see DFARS 225.7002, Restrictions on Food, Clothing, Fabrics, Specialty Metals, and Hand or Measuring Tools)
    
    
  • Waiver of the requirement to submit payment requests in electronic format
  
  Defense or Recovery from Certain Attacks:
  
  
  • Exemption of contractors from the requirement to provide DOD unique item identification if the items are to be used to facilitate defense against, or recovery from, nuclear, biological, chemical, or radiological attack
  
  Incidents of National Significance, Emergency Declaration, or Major Disaster Declaration:
  
  
  • Establishing or maintaining alternative sources
    
    
  • Waiver of the requirement to submit payment requests in electronic format
  
  DOD would like to hear the views of interested parties on the sufficiency of these provisions. In particular, DOD is interested in receiving comments on whether the provisions sufficiently clarify the existing DFARS flexibilities that can be used in emergency situations or whether more detailed, comprehensive coverage is needed.
  
  Comments on the interim rule must be submitted by March 23, 2007, identified as "DFARS Case 2006-D036," 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, Attn: Gary Delaney, 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.
  
  
• Berry Amendment Restrictions on Clothing Materials and Components Covered: This interim rule amends DFARS 225.7002, Restrictions on Food, Clothing, Fabrics, Specialty Metals, and Hand or Measuring Tools, and DFARS 252.225-7012, Preference for Certain Domestic Commodities, to implement Section 833(b) of the National Defense Authorization Act for Fiscal Year 2006 (Public Law 109-163), which expands the foreign source restrictions applicable to the acquisition of clothing.
  
  The definition of "clothing" in paragraph (a)(2) of DFARS 225.7002-1, Restrictions, and DFARS 252.225-7012(b)(2) is expanded to include "clothing materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with, clothing and the materials and components thereof. Clothing includes items such as outerwear, headgear, underwear, nightwear, footwear, hosiery, handwear, belts, badges, and insignia."
  
  Comments on the interim rule must be submitted by March 23, 2007, identified as "DFARS Case 2006-D031," by any of the methods mentioned above, except mail should be directed to the attention of Amy Williams.
  
  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, Consoldates Civilian Boards of Contract Appeals."
  
  
• Notification Requirements for Critical Safety Items: This finalizes, with changes, the proposed rule that would add policy to the DFARS regarding notification of potential safety issues under DOD contracts.
  
  The policy is included in DFARS 252.246-7003, Notification of Potential Safety Issues, which is to be included in solicitations and contracts for: "(1) repairable or consumable parts identified as critical safety items; (2) systems and subsystems, assemblies, and subassemblies integral to a system; or (3) repair, maintenance, logistics support, or overhaul services for systems and subsystems, assemblies, and subassemblies integral to a system." The clause requires the contractor to notify the administrative contracting officer and the procuring contracting officer within 72 hours after discovering or acquiring credible information concerning "(1) all nonconformances for parts identified as critical safety items...; and (2) all nonconformances or deficiencies that may result in a safety impact for systems, or subsystems, assemblies, subassemblies, or parts integral to a system acquired by or serviced for the government." In addition, "the contractor (1) is responsible for the notification of potential safety issues regarding an item furnished by a subcontractor; and (2) shall facilitate direct communication between the government and the subcontractor as necessary."
  
  Thirteen respondents submitted comments on the proposed rule. As a result of these comments, the clause is amended to clarify that the clause applies to contracts and subcontracts for both commercial and non-commercial items; to add a definition of "credible information"; to revise the definition of "critical safety item"; and to make other editorial clarifications.
  
  For more on the proposed rule, see the September 2005 Federal Contracts Perspective article "Safety Issues Notification to be Added to DFARS."
  
  
• Taxpayer Identification Numbers (TINs): This proposed rule would amend DFARS 252.204-7004, Alternate A, to address requirements for validation of TINs as part of the Central Contractor Registration (CCR) process. The requirements would be consistent with changes made to FAR 52.204-7, Central Contractor Registration.
  
  DFARS 252.204-7004 contains a substitute paragraph (a) for use instead of the paragraph (a) in 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 proposed rule would amend the definition of "registered in the CCR database" in DFARS 252.204-7004 to address TIN validation, for consistency with the changes made to FAR 52.204-7. The new language (in italics) would 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."
  
  Comments on the proposed rule must be submitted by March 23, 2007, identified as "DFARS Case 2006-D037," by any of the methods mentioned above, except mail should be directed to the attention of Felisha Hitt.
  
  
• Information Assurance Contractor Training and Certification: This proposed rule would address training requirements that apply to contractor personnel who perform information assurance functions for DOD. This rule would implement requirements of the Federal Information Security Management Act of 2002; DOD Directive 8570.1, Information Assurance Training, Certification, and Workforce Management; and DOD Manual 8570.01-M, Information Assurance Workforce Improvement Program.
  
  The rule would add DFARS 252.239-XXXX, Information Assurance Contractor Training and Certification, for use in contracts involving contractor performance of information assurance functions, and it would require the contractor to ensure that personnel accessing information systems are properly trained and certified according to the requirements of DOD 8570.01-M.
  
  In addition, a new DFARS 239.7102-3, Information Assurance Contractor Training and Certification, would make the requiring activity responsible for providing to the contracting officer "(1) a list of information assurance functional responsibilities for DOD information systems by category (e.g., technical or management) and level (e.g., computing environment, network environment, or enclave); and (2) the information assurance training, certification, certification maintenance, and continuing education or sustainment training required for the information assurance functional responsibilities." In addition, the requiring activity would be responsible for ensuring that the certifications of all contractor personnel are in compliance with DOD Manual 8570.01-M and are identified, documented, and tracked.
  
  Comments on the proposed rule must be submitted by March 23, 2007, identified as "DFARS Case 2006-D023," by any of the methods mentioned above, except mail should be directed to the attention of Felisha Hitt.

SBA Proposes New Definition for "HUBZone Employee"

The Small Business Administration (SBA) is proposing to amend the Historically Underutilized Business Zone (HUBZone) program's definition of the term "employee" because it believes the proposed amendment will simplify the existing definition and increase employment of HUBZone residents.

Currently, 35% of a HUBZone concern's employees must be residents of a HUBZone, and employees are considered those employed "on a full-time (or full-time equivalent) permanent basis." SBA had wanted to eliminate the "full-time equivalent" because it is confusing. However, this change would not count part-time or temporary employees. Therefore, SBA is proposing to change the definition of "employee" to cover "all individuals employed on a full-time, part-time, or other basis, so long as that individual works a minimum of 40 hours per month. This includes employees obtained from a temporary employee agency, professional employee organization, leasing concern, or through a union agreement."

Comments on the proposed rule must be submitted by February 26, 2007, identified as "RIN 3245-AF44 ," by any of the following methods: (1) http://www.regulations.gov; (2) e-mail: hubzone@sba.gov; (3) fax: 202-481-5593; or (4) mail or hand-delivery to: Michael McHale, Associate Administrator for the HUBZone Program, 409 Third Street, SW, Washington, DC 20416.

GSA Launches Program to Speed Schedule Award Process

GSA's Federal Acquisition Service has announced the establishment of the "Multiple Award Schedule (MAS) Express Program" to simplify, streamline, and accelerate the process for vendors to obtain MAS contracts (also known as GSA Schedule and Federal Supply Schedule contracts). This program is in response to a commitment by GSA Administrator Lurita Doan to award basic GSA MAS contracts within 30 days. Currently, the process averages 120 days.

While the goal is to open the program to all 37 MAS, offers under the MAS Express Program will initially be limited to a total of 500 products/line items under portions of the following five MAS:

• Schedule 70, General Purpose Information Technology Equipment, Software, and Services
  
  
• Schedule 67, Photographic Equipment -- Cameras, Photographic Printers, and Related Supplies and Services (Digital and Film-Based)
  
  
• Schedule 78, Sports, Promotional, Outdoor, Recreational, Trophies, and Signs (SPORTS)
  
  
• Schedule 58 I, Professional Audio/Video, Telecommunications, and Security Solutions
  
  
• Schedule 81 I B, Shipping, Packaging, and Packing Supplies

Participation in the MAS Express Program is open to all businesses, regardless of size. A prerequisite for participation in the MAS Express Program is the successful completion of the "Pathway to Success" education seminar. Vendors may attend either a live presentation or complete the web based presentation posted at http://webcast.gsa.gov/goto/gsa/pathways.asp. The seminar is designed to assist prospective MAS contractors in making informed business decisions as to whether obtaining a MAS contract is in their best interests. The presentation provides background information on the MAS program and encompasses a variety of other topics, including:

• What are GSA's expectations for a vendor to become a successful MAS contractor;
  
  
• How to compete and succeed as an MAS schedule contractor in the federal marketplace;
  
  
• How to develop an MAS-specific business plan; and
  
  
• How to submit a quality offer, the proposal submission process, and the MAS solicitation.

GSA anticipates as many as 1000 offers under the MAS Express Program in the first year. For more information, go to http://www.gsa.gov/masexpress.

USAID Seeks Consent Before Replacing Subcontractors

The U.S. Agency for International Development (USAID) is proposing to amend the USAID Acquisition Regulation (AIDAR) to require a prime contractor to obtain contracting officer consent to before replacing a named key subcontractor with another organization or before the contractor performs any contract requirements that were intended to be performed by a named key subcontractor. The intent of the proposed amendment is to provide the contracting officer a means for monitoring and assuring that subcontractors that were named in the offeror's proposal, and were evaluated as part of the proposal, are in fact used in the contract.

USAID is seeking comments and opinions prior to drafting regulatory guidance, particularly on the challenges associated with enforcing such a modification. Comments must be submitted by March 27, 2007, either through the Federal eRulemaking Portal at http://www.regulations.gov or by fax to 202-216-3395.

Nonmanufacturer Rule Waiver Proposed for Used Oil

The Small Business Administration (SBA) is proposing to waive the nonmanufacturer rule for re-refining used petroleum lubricating oils (MIL-PRF-2104, Type 10W; Type 15W40; Type 30W; and Type 40W) under North American Industry Classification System (NAICS) code 324191 because SBA is unaware of any small business manufacturers supplying these products to the federal government.

SBA is inviting the public to comment on this proposed waiver, or provide information on potential small business sources for these products, by January 22, 2007, to Sarah Ayers, Program Analyst, U.S. Small Business Administration, Office of Government Contracting, 409 3rd Street, SW, Suite 8800, Washington, DC 20416.

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.

Auto Reimbursement Increased to 48.5 Cents/Mile

GSA is amending the Federal Travel Regulation (FTR) to increase the mileage reimbursement rate for use of a privately owned automobile on official travel from 44.5 cents per mile to 48.5 cents per mile. This increase reflects the current costs of operation as determined in GSA's cost studies.

By law, the automobile reimbursement rate cannot exceed the single standard mileage rate established by the Internal Revenue Service (IRS). The IRS announced a new single standard mileage rate for automobiles of 48.5 cents per mile effective January 1, 2007.

NOTE: The cost of operating a privately owned airplane ($1.07/mile) and motorcycle (30.5 cents/mile) remain unchanged.

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