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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


February 2007
Vol. VIII, No. 2

CONTENTS


House Committee to Investigate GSA Administrator's Alleged Contract-Steering
President Orders Federal Energy Conservation
DOD-Unique Emergency Flexibilities Added to DFARS
SBA Proposes New Definition for "HUBZone Employee"
GSA Launches Program to Speed Schedule Award Process
USAID Seeks Consent Before Replacing Subcontractors
Nonmanufacturer Rule Waiver Proposed for Used Oil
Auto Reimbursement Increased to 48.5 Cents/Mile



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:



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.



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:

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:

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.



Copyright 2007 by Panoptic Enterprises. All Rights Reserved.

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