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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

October 2008
Vol. IX, No. 10

CONTENTS


FAC 2005-27 Requires "Enhanced Competition” for Task and Delivery Orders
SBA Ceases Certifying SDBs
DFARS Implements 2008 Defense Authorization Act
Removal of GSAR Part 505 Proposed
State and Local Governments Can Buy Off Schedule 84
Comments Sought on Harmonization of CAS 412 and 413
FEHBAR Would Clarify Rate Setting Process
NASA to Update Its Mentor-Protégé Program



FAC 2005-27 Requires "Enhanced Competition”
for Task and Delivery Orders

Federal Acquisition Circular (FAC) 2005-27 contains 14 different rules revising the Federal Acquisition Regulation (FAR) on such topics as competition for task and delivery orders, extension of the authority to acquire commercial items up to $5.5 million using simplified procedures, cost accounting standards administration, accepting and dispensing $1 coins by vending machines, and subcontractor requests for bonds.



SBA Ceases Certifying SDBs

The Small Business Administration (SBA) has decided to remove itself from the small disadvantaged business (SDB) certification process because only two agencies, the National Aeronautics and Space Administration (NASA) and the Coast Guard, are eligible to use the 10% SDB price evaluation preference authorized by FAR Subpart 19.11, Price Evaluation Adjustment for Small Disadvantaged Business Concerns, and those two agencies hardly use it at all. Instead, SBA recommends that NASA and the Coast Guard develop their own procedures for certifying SDBs. However, for the SDB subcontracting programs described in FAR Subpart 19.12, Small Disadvantaged Business Participation Program (an evaluation factor for the participation of SDBs in performance of the contract, and an SDB incentive subcontracting program), businesses will be able to self-certify their SDB status, and agencies and prime contractors will be permitted to rely on those self-certifications.

The 9,545 firms currently participating in the 8(a) program are considered certified SDB firms during their tenure in the 8(a) program, and the 2,814 firms previously certified as SDB firms by the SBA will remain certified for the remainder of their three-year certification periods.



DFARS Implements 2008 Defense Authorization Act

The Department of Defense (DOD) issued three rules to implement various provisions of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), and a proposed rule to update text addressing management of government property in the possession of contractors.

For more on other acquisition-related provisions of Public Law 110-181, see the February 2008 Federal Contracts Perspective article “Defense Authorization Act Restricts A-76 Competitions, Extends FAR Subpart 13.5.”



Removal of GSAR Part 505 Proposed

As part of the General Services Administration (GSA) Acquisition Regulation (GSAR) rewrite effort, GSA proposes to remove GSAR Part 505, Publicizing Contract Actions, because its contents consists of non-regulatory material addressing internal agency acquisition policy. GSA intends to revise GSAR Part 505 and move it to the non-regulatory GSA Acquisition Manual (GSAM).

Comments on the proposed rule must be submitted no later than November 17, 2008, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW, Room 4041, ATTN: Laurieann Duarte, Washington, DC 20405. Identify comments as “GSAR Case 2008-G503.”



State and Local Governments Can Buy Off Schedule 84

GSA is amending GSAR Part 538, Federal Supply Schedule Contracting, to permit state and local governments to purchase from Federal Supply Schedule (FSS) 84, Total Solutions for Law Enforcement, Security, Facility Management Systems, Fire, Rescue, Special Purpose Clothing, Marine Craft, and Emergency/Disaster Response. This change implements the Local Preparedness Acquisition Act (Public Law 110-248).

The primary changes are in GSAR Subpart 538.70, Cooperative Purchasing, which addresses the use of Federal Supply Schedule contracts by non-federal organizations. Until enactment of Public Law 110-248, state and local governments were authorized to acquire only products and services from Federal Supply Schedule 70, Information Technology. A similar type of purchasing is addressed in GSAR Subpart 538.71, Recovery Purchasing, which authorizes non-federal organizations to use Federal Supply Schedule contracts to purchase products and services for recovery from major disasters, terrorism, or nuclear, biological, chemical, or radiological attack. Additional information about cooperative purchasing and recovery purchasing is available in GSA's Schedules e-Library at http://www.gsaelibrary.gsa.gov.

GSAR Subpart 538.70 and GSAR 552.238-78, Scope of Contract (Eligible Ordering Activities, are revised to add Schedule 84 to the schedule for which cooperative purchasing are authorized (that is, Schedule 70).

The interim rule applies to contracts awarded after the effective date of this rule (that is, September 19, 2008) for Schedule 84. Existing Schedule 84 contracts are to be modified by mutual agreement of both parties.

Comments on the interim rule must be submitted no later than November 18, 2008, by any of the means mentioned in the previous article, except that comments are to be identified as “GSAR Case 2008-G517.”



Comments Sought on Harmonization of CAS 412 and 413

The Cost Accounting Standards Board (CASB) is inviting comments concerning an Advance Notice of Proposed Rulemaking (ANPR) on the harmonization of Cost Accounting Standards (CAS) 412, Cost Accounting Standard for Composition and Measurement of Pension Cost, and CAS 413, Adjustment and Allocation of Pension Cost, with the Pension Protection Act of 2006 (Public Law 109-280).

The Pension Protection Act (PPA) amended the minimum funding requirements and tax-deductibility of pension plans under the Employee Retirement Income Security Act of 1974 (ERISA). The PPA requires the CASB to revise CAS 412 and CAS 413 to harmonize with the amended ERISA minimum required contribution not later than January 1, 2010.

Basic conceptual differences exist between the CAS and the PPA. The PPA utilizes a settlement or liquidation approach to value pension plan assets and liabilities, including the use of accrued benefit obligations and interest rates based on current corporate bond rates. CAS 412 and CAS 413 utilize the going concern approach to plan asset and liability valuation -- they assume the company (or, in this case, the pension plan) will continue in business, and follow accrual accounting principles that incorporate assumptions about future years of employees’ service and salary increases that are absent from the settlement approach.

The CASB had published a Staff Discussion Paper to solicit public views (see the August 2007 Federal Contracts Perspective article “Harmonization of CAS with Pension Protection Act Sought”). The CASB received 18 public comments on the Staff Discussion Paper from contractors, industry associations, federal agencies, and from the actuarial and legal professions. After considering the comments, the CASB is proposing to change the amortization period for gains and losses to a 10-year amortization period from its current 15-year period. According to the CASB, this change will “provide more timely adjustment of plan experience while not introducing unmanageable volatility. This shorter amortization period also more closely follows the 7-year period required by ERISA to fully fund the plan’s settlement liability.” The text of the ANPR and the CASB’s analysis of the comments is available at http://www.whitehouse.gov/omb/procurement/casb/2008_anprm.pdf.

Comments on the ANPR must be submitted no later than November 3, 2008, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) e-mail: casb2@omb.eop.gov; or (3) fax: 202-395-5105. Identify comments as “CAS Pension Harmonization ANPR.”



FEHBAR Would Clarify Rate Setting Process

The Office of Personnel Management (OPM) is proposing to amend paragraph (b) of Federal Employees Health Benefits Program Acquisition Regulation (FEHBAR) 1652.216-70, Accounting and Price Adjustment, to clarify the rate setting process for community rated carriers with respect to Similarly Sized Subscriber Groups (SSSG), and remove the ban on adjustments based on rate reconciliation for the final year of Federal Employees Health Benefits Program (FEHBP) contracts. In prior years, carriers were not subjected to rate reconciliation in the final year of their contracts. Information technology and electronic transmission and storage of data now make it possible to efficiently perform rate reconciliation for the final contract year. Therefore, OPM will begin conducting such rate reconciliation on community rated contracts that terminate after January 1, 2009.

Comments on the proposed rule must be submitted no later than October 2, 2008, by either: (1) eRulemaking Portal: http://www.regulations.gov; or (2) mail: Edward M. DeHarde, Senior Policy Analyst, Insurance Policy Group, Office of Personnel Management, 1900 E Street, NW, Room 3415, Washington, DC 20415.



NASA to Update Its Mentor-Protégé Program

The National Aeronautics and Space Administration (NASA) proposes to revise the NASA FAR Supplement (NFS) Subpart 1819.72, NASA Mentor-Protégé Program, to update, revise, and expand the program.

The program, which currently is open to small disadvantaged businesses (SDBs), women-owned small businesses, Historically Black Colleges and Universities, and minority institutions of higher education, would be expanded to include veteran-owned small businesses, service-disabled veteran-owned small businesses, and NASA Small Business Innovative Research (SBIR) Phase II small businesses. In addition, the proposed rule would introduce mentor award fee incentives, and explain the calculated subcontracting credit in FAR 52.219-9, Small Business Subcontracting Plan.

NFS 1819.7208, Award Fee Pilot Program, would explain the mentor award fee incentives. The mentor-protégé program currently provides for mentors with award fee contracts to earn fee associated with their performance as a mentor. The new award fee would be a separate fee, but would apply only to developmental assistance to NASA SBIR Phase II protégés. However, any NASA contractors with an award fee contract would be eligible to earn award fee for overall developmental assistance in promoting the use of small businesses as subcontractors. The award fee evaluation criteria would include:

The award fee would be in addition to the credit agreement described in NFS 1819.7209, Credit Agreements. Basically, credit agreements permit the mentor to consider its developmental assistance costs as if they were incurred in a subcontract awarded to the protégé. “Credit is given for the sole purpose of determining the performance of the mentor in attaining an applicable subcontracting goal established under any contract containing a subcontracting plan pursuant to the clause at FAR 52.219-9, Small Business Subcontracting Plan.”

NFS 1819.7209 goes on to provide that “other costs that have been reimbursed through inclusion in indirect expense pools may also be credited as subcontract awards for determining the performance of the mentor in attaining an applicable subcontracting goal established under any contract containing a subcontracting plan.”

The proposed rule would amend NFS 1852.219-77, NASA Mentor-Protégé Program, and NFS 1852.219-79, Mentor Requirements and Evaluation, to reflect the changes made by the rule.

Comments on the proposed rule must be submitted no later than November 18, 2008, by any of the following methods: (1) eRulemaking Portal: http://www.regulations.gov; (2) mail: Diane Thompson, NASA Headquarters, Office of Procurement, Contract Management Division, Washington, DC 20546; or (3) e-mail: Diane.Thompson@nasa.gov.

Copyright 2008 by Panoptic Enterprises. All Rights Reserved.

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