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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


March 2007
Vol. VIII, No. 3

CONTENTS


Contractor Code of Ethics Proposed, Would Be Required for Awards Over $5 Million
Green Meetings and Conferences Proposed for EPA
DOD Undertakes a Little Spring Cleaning
State, Local Governments to Use Schedules for Disasters
DOD Suspends SDB Evaluation Adjustment Another Year
GSA to Cease Funding FIPS 201 Product Evaluations
Nonmanufacturer Waiver Denied for Cargo Containers
References to FACNET to be Deleted



Contractor Code of Ethics Proposed,
Would Be Required for Awards Over $5 Million

While federal contracting officials have long been subject to prohibitions against improper business practices and conflict of interest rules in Federal Acquisition Regulation (FAR) Part 3, there have been no such prohibitions and rules for contractors. Because of the increased use of contractors to do jobs formerly performed by government employees, and the concomitant growth in the amount of money spent by the federal government through contracts, a new FAR Subpart 3.10, Contractor Code of Ethics and Business Conduct, and corresponding contract clause are being proposed.

Currently, three agencies -- the Department of Defense, the Department of Veterans Affairs, and the Environmental Protection Agency -- have contractor codes of ethics and business conduct. The agencies' codes and implementing contract clauses are very similar to one another, with the primary difference being the dollar thresholds for contractors to adopt codes. This proposed rule is patterned after the agencies' codes, and is intended to establish a clear and consistent governmentwide policy.

This proposed rule would state that all contractors "should" have a code of ethics and business conduct, and "should have an employee ethics and compliance training program and an internal control system that (a) are suitable to the size of the company and extent of its involvement in government contracting; (b) facilitate timely discovery and disclosure of improper conduct in connection with government contracts; and (c) ensure corrective measures are promptly instituted and carried out" (proposed FAR 3.1002, Policy). However, contractors receiving awards exceeding $5,000,000 with performance periods of 120 days or more "shall" have a written code of ethics and business conduct within 30 days after contract award, and "shall" establish an employee ethics and compliance training program and an internal control system within 90 days after contract award (paragraph (b) of proposed FAR 3.1003, Procedures, and paragraph (b) of proposed FAR 52.203-XX, Contractor Code of Ethics and Business Conduct).

Contracts awarded under the procedures in FAR Part 12, Acquisition of Commercial Items, would be exempt from this requirement (FAR 3.1003(a)) because ethics programs are not standard commercial practices.

FAR 52.203-XX would require the contractor to include the clause in subcontracts that exceed $5,000,000 unless the subcontract is for a commercial item or performed outside the United States (FAR 52.203-XX(f)).

If the contractor fails to comply with the requirements of the clause, the government may withhold contract payments or deny award fee for the performance periods during which the contractor was in non-compliance (FAR 52.203-XX(e)).

Comments on the proposed rule must be submitted no later than April 17, 2007, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov/far; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405. Identify such comments as "FAR case 2006-007."



Green Meetings and Conferences Proposed for EPA

The Environmental Protection Agency (EPA) is proposing to amend the EPA Acquisition Regulation (EPAAR) to establish policy and procedures for acquiring environmentally preferable meeting and conference services.

A new solicitation provision, EPAAR 1552.223-71, EPA Green Meetings and Conferences, would be required in solicitations for meeting and conference space and services. The provision would require meeting and conference venues to provide EPA with information about their environmentally preferable (green) practices for consideration in the award decision, thus encouraging the industry to adopt more of these practices so that we will be more likely to do business with them.

The information offerors would be asked to provide is:

  1. Do you have a recycling program? If so, please describe.
  2. Do you have a linen/towel reuse option that is communicated to guests?
  3. Do guests have easy access to public transportation or shuttle services at your facility?
  4. Are lights and air conditioning turned off when rooms are not in use? If so, how do you ensure this?
  5. Do you provide bulk dispensers or reusable containers for beverages, food and condiments?
  6. Do you provide reusable serving utensils, napkins and tablecloths when food and beverages are served?
  7. Do you have an energy efficiency program? Please describe.
  8. Do you have a water conservation program? Please describe.
  9. Does your facility provide guests with paperless check-in and check-out?
  10. Does your facility use recycled or recyclable products? Please describe.
  11. Do you provide training to your employees on these green initiatives? Please describe.
  12. What other environmental initiatives have you undertaken?

Comments on the proposed rule must be submitted no later than March 26, 2007, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov/far; (2) e-mail: oei.docket@epa.gov; or (3) mail: EPA Docket Center, Environmental Protection Agency, Mail code: 28221T, 1200 Pennsylvania Ave., NW., Washington, DC 20460. Identify such comments as "EPA-HQ-OARM-2007-0102."



DOD Undertakes a Little Spring Cleaning

The Department of Defense (DOD) has decided to finalize several proposed and interim changes to the Defense FAR Supplement (DFARS) that have been hanging around since last summer, and to propose changes that would address the inclusion of its representations and certifications in the Online Representations and Certifications Application (ORCA).



State, Local Governments to Use Schedules for Disasters

The General Services Administration (GSA) is amending the GSA Acquisition Regulation (GSAR) to implement Section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364), which authorizes GSA to permit state and local governments the use of Federal Supply Schedules for purchase of supplies and services to facilitate recovery from a major disaster, terrorism or nuclear, biological, chemical, or radiological attack.

Federal Supply Schedules provide federal agencies with a simplified process of acquiring commonly used commercial supplies and services at prices associated with volume buying. Ordering activities conduct streamlined competitions among a number of schedule contractors, issue orders directly with the selected contractor, and administer orders.

This interim rule establishes a new GSAR Subpart 538.71, Recovery Purchasing, and amends associated clauses to address the use of Federal Supply Schedules by eligible non-federal organizations to acquire supplies and services needed to recover from disasters or attacks. This subpart is patterned after GSAR Subpart 538.70, Cooperative Agreement, which permits state and local governments to use Federal Supply Schedule 70 to acquire information technology.

The "state and local government entities" authorized to use this authority are the same as those authorized to use Schedule 70: "the states of the United States, counties, municipalities, cities, towns, townships, tribal governments, public authorities (including public or Indian housing agencies under the United States Housing Act of 1937), school districts, colleges and other institutions of higher education, council of governments (incorporated or not), regional or interstate government entities, or any agency or instrumentality of the preceding entities (including any local educational agency or institution of higher education), and including legislative and judicial departments. The term does not include contractors of, or grantees of, state or local governments."

Participation in recovery purchasing by schedule contractors is voluntary in that they have the option of deciding whether they will accept orders placed by state or local governments. Existing schedule contracts must be modified by mutual agreement of the schedule contractor and GSA to permit recovery purchasing. Schedule contracts so modified are identified in GSA's Schedules e-Library (http://www.gsaelibrary.gsa.gov) with the "Disaster Recovery Purchasing" icon.

Even when a schedule contract is amended to authorize recovery purchasing, a schedule contractor still has the right to decline orders by state or local governments on a case-by-case basis within five-days of receipt of the order -- see new Alternate I to GSAR 552.238-78, Scope of Contract (Eligible Ordering Activities) (future schedule contractors will also be able to decline orders on a case-by-case basis). Similarly, state and local governments are under no obligation to use any schedule contracts.

State and local governments may use schedule contracts to purchase products or services in advance of a major disaster or attack. This is because, in the aftermath of emergency events, state or local governments' systems may be disrupted. However, the state or local government will be responsible for ensuring the purchased supplies or services are to be used to facilitate recovery.

Finally, the federal government will not be liable for the performance or nonperformance of contracts between schedule contractors and eligible non-federal entities. Disputes that cannot be resolved by the parties to the new contract can be litigated in any state or federal court with jurisdiction over the parties, using principles of federal procurement law and the Uniform Commercial Code, as applicable and appropriate (see new GSAR 552.238-80, Use of Federal Supply Schedule Contracts by Certain Entities -- Recovery Purchasing).

Comments on the interim rule must be submitted by April 2, 2007, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov/far; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405. Identify such comments as "Amendment 2007-01, GSAR case 2006-G522."



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 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, 2007, to March 9, 2008, because it exceeded the 5% SDB goal in Fiscal Year 2006. For more on the SDB price evaluation adjustment, see FAR Subpart 19.11, Price Evaluation Adjustment for Small Disadvantaged Business Concerns.

EDITOR'S NOTE: The SDB 10% evaluation adjustment applies only to DOD, the National Aeronautics and Space Administration (NASA), and the Coast Guard (which is part of the Department of Homeland Security). The authority for civilian agencies (other than NASA and the Coast Guard) expired on December 9, 2004. For more on the expiration of the authority for civilian agencies, see the November 2005 Federal Contracts Perspective article "FAC 2005-06 Addresses IT Security, Cancels SDB Price Evaluation Adjustment for Civilian Agencies."



GSA to Cease Funding FIPS 201 Product Evaluations

GSA has announced that it will no longer fund Federal Information Processing Standard (FIPS) 201 product and service evaluations as of April 3, 2007. FIPS 201 product and service evaluations will continue to be performed and approved through the current fully operational laboratory and future qualified laboratories; however, fees for evaluations will be borne on a cost-reimbursable basis by the product or service supplier.

Homeland Security Presidential Directive-12 (HSPD-12), Policy for a Common Identification Standard for Federal Employees and Contractors (http://csrc.nist.gov/policies/Presidential-Directive-Hspd-12.html), requires agencies to use only information technology products and services that meet FIPS 201, Personal Identity Verification of Federal Employees and Contractors (http://csrc.nist.gov/publications/fips/fips201-1/FIPS-201-1-chng1.pdf), the governmentwide standard for secure and reliable forms of identification issued by the government to its employees and contractors. The Office of Management and Budget (OMB) has designated GSA as responsible for implementation of HSPD-12 in government acquisitions, and has directed federal agencies to purchase only products and services that are compliant with this policy. For more information, see FAR Subpart 4.13, Personal Identity Verification of Contractor Personnel, and the December 2006 Federal Contracts Perspective article "FAC 2005-14 Addresses Trade Agreements, Contractor IDs."

To ensure HSPD-12 compliant products and services are available, the National Institute of Standards and Technology (NIST) has issued requirements and supporting documentation. These are available at http://csrc.nist.gov/piv-program/fips201-support-docs.html.

GSA's FIPS 201 Evaluation Program is currently set up to evaluate products and services against the requirements outlined in FIPS 201 and its supporting documents. Twenty-two product/service categories were created using FIPS 201 as the foundation. Each category has developed approval and test procedures which outline the evaluation criteria, approval mechanisms and test process employed by the laboratory during their evaluation of a supplier's product or service against the requirements for that category. Once evaluated and approved by GSA, products and services are placed on the FIPS 201 Approved List. Agencies can then procure these products and services from suppliers for their HSPD-12 implementations having full assurance that they meet all the requirements of FIPS 201 and all supporting documentation.

Initially, the cost of evaluating each product was funded by GSA. GSA will stop funding the program on April 3, 2007, after which suppliers will be responsible for funding the evaluations conducted by laboratories. Instructions on how to obtain FIPS 201 product or service evaluations and an estimated fee structure will be posted at http://fips201ep.cio.gov/index.php.



Nonmanufacturer Waiver Denied for Cargo Containers

The Small Business Administration (SBA) has announced that it is denying a request for a waiver of the nonmanufacturer rule for demountable cargo containers manufacturing (dry freight containers/connex boxes) under North American Industry Classification System (NAICS) code 336212. SBA is denying the request because it received notices from small business manufacturers that they have furnished this product to the federal government.

For more on the proposed nonmanufacturer rule waiver, see the January 2007 Federal Contracts Perspective article "Nonmanufacturer Rule Waiver Proposed for Cargo Containers."



References to FACNET to be Deleted

The "Federal Acquisition Computer Network" (FACNET) will soon be nothing but a memory if a proposal to delete all references to it is adopted.

In 1994, Congress enacted the Federal Acquisition Streamlining Act of 1994 (FASA), which called for the development of a FACNET for automating the procurement process. FACNET was to be the preferred means for conducting government purchases above the micro-purchase threshold and below the simplified acquisition threshold. The law set a goal for the government to utilize FACNET to purchase more than 75% of its goods and services within these dollar limits by 2000.

However, when FASA was enacted and the development of FACNET mandated, the Internet was in its infancy. By 1997, the explosive development and evolution of the Internet made it apparent that dedicated electronic commerce systems such as FACNET were obsolete. The Internet, coupled with problems in the development of a workable FACNET that could process simple procurement transactions, persuaded Congress, with the enactment of the Fiscal Year 1998 National Defense Authorization Act, to remove the statutory goal and to free agencies to use other electronic contracting means, such as FedBizOpps (http://www.fbo.gov).

Though FACNET use has all but ceased, references to it remain throughout the FAR, particularly in FAR Part 5, Publicizing Contract Actions, and FAR Part 13, Simplified Acquisition Procedures. This proposed rule would remove "FACNET" wherever it appears and either not replace it with anything or replace it with "using electronic commerce" -- for example, changing "When transmitting notices to FACNET, contracting officers must ensure the notice is forwarded to the GPE" to "When transmitting notices using electronic commerce, contracting officers must ensure the notice is forwarded to the GPE."

Comments on the proposed rule must be submitted no later than April 2, 2007, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov/far; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405. Identify such comments as "FAR case 2006-015."



Copyright 2007 by Panoptic Enterprises. All Rights Reserved.

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