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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


March 2008
Vol. IX, No. 3

CONTENTS


FAC 2005-24 Removes Numbered Notes From Synopses, Mandates Common Security Configurations
Limit on Urgent Noncompetitive Contracts Proposed
CAS Board Invites Comments on Home Office Expenses
DOD Suspends SDB Evaluation Adjustment One More Year
DOE Proposes Revising DEAR Security Clause
OFPP Provides Guidance on FY 2008 A-76 Competitions



FAC 2005-24 Removes Numbered Notes From Synopses,
Mandates Common Security Configurations

Federal Acquisition Circular (FAC) 2005-24 removes all references to FedBizOpps “numbered notes” from the Federal Acquisition Regulation (FAR) because there is no need to save paper in cyberspace. In addition, FAC 2005-24 requires agencies to include common security configurations in new information technology acquisitions, establishes new thresholds for the trade agreements, clarifies the regulations on Cost Accounting Standards administration, and addresses the issues of contractor personnel that are providing support to the mission of the United States government.



Limit on Urgent Noncompetitive Contracts Proposed

A proposed change to the FAR would limit the length of contracts awarded noncompetitively under unusual and compelling urgency circumstances, as recommended by Paul Denett, Administrator of the Office of Federal Procurement Policy (OFPP).

In a May 31, 2007, memorandum sent by Mr. Denett to agency chief acquisition officers and senior procurement executives on “Enhancing Competition in Federal Acquisition,” one of his proposals was “limiting the length of contracts awarded noncompetitively under urgent and compelling circumstances to the minimum contract period necessary to meet requirements, and no longer than one year unless approved by the head of the contracting activity.” This rule would implement Mr. Denett’s proposal.

The proposed rule would add the following as paragraph (d) to FAR 6.302-2, Unusual and Compelling Urgency:

     (d) Period of Performance. The total period of performance of a contract awarded using this authority shall not exceed the minimum period necessary for meeting the unusual and compelling urgency requirements, but no longer than one year unless a longer period of performance is approved by the head of the contracting activity. Approval of a longer contract period of performance is in addition to the justification approval of requirements in [FAR] 6.304 [Approval of the Justification].

Comments on the proposed rule must be submitted by March 31, 2008, by any of the following means mentioned above. Identify such comments as “FAR case 2007-008.”



CAS Board Invites Comments on Home Office Expenses

The Cost Accounting Standards (CAS) Board is inviting comments on a staff discussion paper addressing potential revisions to CAS 403, Allocation of Home Office Expenses to Segments. This paper addresses whether the current thresholds that require use of the three factor formula for allocating residual home office expenses require revision.

Paragraph (c)(2) of CAS 9904.403-40 requires that home office residual expenses be allocated to segments using the three factor formula (arithmetical average of the following three percentages: the segment’s payroll dollars to total payroll dollars; the segment’s operating revenue to the total operating revenue of all segments; and the average net book value of the sum of the segment’s tangible capital assets plus inventories to the total average net book value of such assets of all segments) if the residual expenses exceed:

The operating revenue thresholds at CAS 9904.403-40(c)(2) were promulgated in December 1972 and have not been revised in the 35 years since.

Over the past few years, the CAS Board has received two proposals to revise the CAS operating revenue thresholds for determining if a contractor is required to use the three factor formula to allocate residual home office expenses to segments:

The CAS Board is requesting public comments on whether the thresholds should be raised, the potential advantages and disadvantages of the two alternatives described above, and any additional recommended alternatives commenters may have. Key questions for consideration include, but are not limited to:

  1. Should the operating revenue thresholds be revised? Why or why not?
  2. If the threshold should be revised, what should be the basis of that revision (e.g., CPI, staff study, other)?
  3. What are the advantages and disadvantages of the two alternatives described above?
  4. What type of data is currently available for performance of the staff study?
  5. Is the administrative burden of collecting the data associated with the staff study commensurate with risk?
  6. To what extent does the proliferation of intermediate home offices impact any potential revision of the operating revenue thresholds?

Comments on the staff discussion paper must be submitted by April 14, 2008, by e-mail to casb2@omb.eop.gov; facsimile to 202-395-5105; or by regular mail to the Office of Federal Procurement Policy, 725 17th Street, NW, Room 9013, Washington, DC 20503, ATTN: Laura Auletta. Identify the comments as “CAS-2008-01S.”

In another CAS-related development, the CAS Board is providing public notification of the decision to discontinue its review of the exemption from CAS requirements for contracts that are executed and performed outside the United States, its territories, and possessions.

On September 15, 2005, the CAS Board issued a staff discussion paper inviting comments regarding whether the exemption at paragraph (b)(14) of 9903.201-1, CAS Applicability, should be revised or eliminated (see the October 2005 Federal Contracts Perspective article “Should CAS Apply to Non-U.S. Contracts?”). The CAS Board received three sets of comments in response to the staff discussion paper. None of the comments supported the revision or elimination of the exemption. In fact, all three of the comments offered arguments for why the CAS Board should retain the exemption. While the CAS Board does not necessarily share each of the views expressed in these comments, the CAS Board agrees with the conclusion not to delete or revise the exemption, especially with the absence of any commenter support for any such revision or elimination. “Based on the public input and Board discussions of this issue, the Board finds that the exemption should be retained without change.”



DOD Suspends SDB Evaluation Adjustment One More 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, 2008, to March 9, 2009, because it exceeded the 5% SDB goal in Fiscal Year 2007. 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."



DOE Proposes Revising DEAR Security Clause

The Department of Energy (DOE) is proposing to revise DOE Acquisition Regulation (DEAR) 952.204-2, Security Requirements, to make all contractor and subcontractor employees possessing access authorizations subject to applicant, random, or for cause testing for use of illegal drugs.

Many DOE contractor and subcontractor employees require access authorizations for access to classified information (Restricted Data, Formerly Restricted Data, or National Security Information) or certain quantities of special nuclear material in order to perform official duties. To clarify contractor responsibilities and requirements regarding employees with access to such information, a new paragraph (h)(2) and (h)(3) would be added. These new paragraphs would require the following:

Comments on the proposed rule must be submitted no later than March 20, 2008, by any of the following means: (1) the Federal Electronic Rulemaking Portal at http://www.regulations.gov; (2) by e-mail to Richard.Langston@hq.doe.gov; or (3) by mail to Richard Langston, Procurement Policy Analyst; MA-61/Forrestal Building; U.S. Department of Energy; 1000 Independence Avenue, SW; Washington, DC 20585.



OFPP Provides Guidance on FY 2008 A-76 Competitions

Paul Denett, OFPP Administrator, issued a memorandum to agency heads providing guidance on compliance with certain government-wide provisions of the Fiscal Year (FY) 2008 Consolidated Appropriations Act related to competitions under Office of Management and Budget (OMB) Circular A-76, Performance of Commercial Activities. This guidance addresses: (1) health and retirement fringe benefit comparability requirements, (2) the use of competitive sourcing for human resources (HR) activities, (3) application of the conversion differential, and (4) the performance of commercial activities by non-profit agencies under the AbilityOne Program.



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