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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

September 2008
Vol. IX, No. 9

CONTENTS

DFARS Amended to Address Competition
For Purchases from Federal Prison Industries

The Department of Defense (DOD) has amended the Defense Federal Acquisition Regulation Supplement (DFARS) to require the use of competitive procedures in the acquisition of items for which Federal Prison Industries (FPI) has a significant market share. In addition, DOD has revised the DFARS to update and clarify requirements for unique identification and valuation of items delivered under DOD contracts, to update text addressing contractor standards of conduct and the handling of extraordinary contractual actions, and several other topics.

• Competition Requirements for Purchases from FPI: This interim rule adds DFARS Subpart 208.6, Acquisition From Federal Prison Industries, Inc., to implement Section 827 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181), which requires the use of competitive procedures in the acquisition of items for which FPI has a significant market share.
  
  Section 827 requires DOD to consider FPI as having a significant share of the market for a product if DOD, in consultation with the Office of Federal Procurement Policy (OFPP), determines that the FPI share of the DOD market for the category of products including that product is greater than 5%. DOD has determined that FPI presently has a significant market share of the items in the following Federal Supply Classes (FSC):
  
  

  FSC	Description
  3510	Laundry and Dry Cleaning Equipment
  5340	Miscellaneous Hardware
  5935	Connectors, Electrical
  5975	Electrical Hardware and Supplies
  5995	Cable, Cord, Wire Assemblies; Communications Equipment
  6145	Wire and Cable, Electrical
  7110	Office Furniture
  7210	Household Furnishings

  
  DOD will update the list as necessary (the list is available at http://www.acq.osd.mil/dpap/cpic/cp/specific_policy_areas.html#federal_prison).
  
  To implement Section 827, DFARS Subpart 208.6 is added, which consists of DFARS 208.602-70, Acquisition of Items for Which FPI Has a Significant Market Share. Paragraph (c) requires contracting officers, when acquiring an item on the list, to use “(A) competitive procedures (e.g., the procedures in [Federal Acquisition Regulation] FAR 6.102 [Use of Competitive Procedures], the set-aside procedures in FAR Subpart 19.5 [Set-Asides for Small Business], or competition conducted in accordance with FAR Part 13 [Simplified Acquisition Procedures]); or (B) the fair opportunity procedures in FAR 16.505 [Ordering], if placing an order under a multiple award delivery-order contract; and (ii) include FPI in the solicitation process, consider a timely offer from FPI, and make an award in accordance with the policy at FAR 8.602(a)(4)(ii) through (v) [Policy (on Acquisition from FPI)].”
  
  When acquiring an item listed in the FPI schedule for which FPI does not have a significant market share, contracting officers are to “acquire the item in accordance with the policy at FAR 8.602.”
  
  Comments on the interim rule must be submitted no later than October 12, 2008, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) e-mail: dfars@osd.mil; (3) fax: 703-602-7887; (4) mail: Defense Acquisition Regulations System, Attn: Michael Benavides, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062; or (5) hand delivery/courier: Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402. Identify comments as “DFARS Case 2008-D015.” (EDITOR'S NOTE: FPI'S website is http://www.unicor.gov.)
  
  
• Item Identification and Valuation Clause Update: This final rule updates and clarifies DFARS 252.211-7003, Item Identification and Valuation, which requires unique identification for all delivered items for which the government’s unit acquisition cost is $5,000 or more, and for other items designated by the government. In addition, the clause requires identification of the government’s unit acquisition cost for all delivered items, and provides instructions to contractors regarding the identification and valuation processes.
  
  The changes made to DFARS 252.211-7003 include:
  
  
  • Update of references to standards and other documents (paragraph (c)(3));
    
    
  • Clarification of the definition of “unique item identifier,” specifically addressing the “DOD recognized unique identification equivalent” (paragraph (a));
    
    
  • Clarification of data submission requirements for end items and embedded items (paragraphs (d) and (e), respectively);
    
    
  • Clarification of requirements for inclusion of the clause in subcontracts (paragraph (g); and
    
    
  • Update of referenced Internet addresses (particularly data submission procedures –- http://www.acq.osd.mil/dpap/pdi/uid/data_submission_information.html (paragraph (f) and paragraph (d) of Alternate I).
  
  Two respondents submitted comments on the proposed rule. Though DOD did not adopt any of their comments, definitions of “DOD recognized unique identification equivalent” and “unique item identifier type” were added to the final rule. For more on the proposed rule, see the September 2007 Federal Contracts Perspective article “Defense Issues Seven DFARS Rules During August."
  
  
• Standards of Conduct and Extraordinary Contractual Actions: This final rule updates text addressing contractor standards of conduct and the handling of extraordinary contractual actions to be consistent with changes made to the Federal Acquisition Regulation (FAR) (see the December 2007 Federal Contracts Perspective articles “Contractors Required to Develop Codes of Business Ethics and Conduct” and “FAC 2005-21 Rewrites FAR Part 27 in Plain English”), as follows:
  
  
  • It removes DFARS Subpart 203.70, Contractor Standards of Conduct, and the corresponding contract clause at DFARS 252.203-7002, Display of DOD Hotline Poster, since policy on this subject was added to the FAR by FAC 2005-22.
    
    
  • Adds DFARS Subpart 203.10, Contractor Code of Business Ethics and Conduct, which consists of DFARS 203.1004, Contract Clauses, to provide address information for use in completion of the clause at FAR 52.203-14, Display of Hotline Poster(s).
    
    
  • Revises DFARS Part 250, Extraordinary Contractual Actions and the SAFETY Act, for consistency with the structure of FAR Part 50 as revised by FAC 2005-21. The changes to DFARS Part 250 update headings, numbering, and cross-references, and reflect the dollar threshold currently specified in the FAR with regard to delegation of authority for approval of extraordinary contractual actions.
  
  
• Small Business Program Name Change: This final rule redesignates the “Office of Small and Disadvantaged Business Utilization” as the “Office of Small Business Programs” throughout the DFARS, particularly in DFARS Part 219, Small Business Programs; DFARS 252.219-7004, Small Business Subcontracting Plan (Test Program); and DFARS Appendix I, Policy and Procedures for the DOD Mentor-Protégé Program. The redesignation was required by Section 904 of the National Defense Authorization Act for Fiscal Year 2006 (Public Law 109-163).
  
  
• New Thresholds for the Trade Agreements: This finalizes, without changes, the interim rule that incorporated increased dollar thresholds for application of the World Trade Organization Government Procurement Agreement and the Free Trade Agreements, as determined by the United States Trade Representative (USTR). The rule increases the threshold for complying with the provisions of the trade agreements for supplies and services from $193,000 to $194,000, and for construction from $7,407.000 to $7,443,000; and increases other thresholds.
  
  No comments were received in response to the interim rule, so it is finalized without changes. For more on the interim rule, see the February 2008 Federal Contracts Perspective article “Lots of DFARS Rules Saved for the New Year.”
  
  
• Ship Critical Safety Items: This finalizes, without changes, the interim rule that amended DFARS Subpart 209.2, Qualification Requirements, to implement Section 130 of the National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364), which requires DOD to establish a quality control policy for the procurement, modification, repair, and overhaul of ship critical safety items.
  
  One comment was received on the interim rule, but DOD did not adopt it, so the interim rule is finalized without changes. For more on the interim rule, see the February 2008 Federal Contracts Perspective article “Lots of DFARS Rules Saved for the New Year.”
  
  
• U.S.-International Atomic Energy Agency Additional Protocol: This proposed rule would add DFARS 204.470, U.S.-International Atomic Energy Agency Additional Protocol, and DFARS 252.204-7XXX, Contractor Notification of Requirement to Report Activities Under the U.S.-International Atomic Energy Agency Additional Protocol, to require a contractor to notify DOD if it is required to report its activities under the U.S.-International Atomic Energy Agency Additional Protocol (US-IAEA AP). DFARS 252.204-7XXX would be included in contracts for research and development or major defense acquisition programs involving fissionable materials (such as uranium, plutonium, neptunium, thorium, and americium), other radiological source materials, or technologies directly related to nuclear power production.
  
  Under the US-IAEA AP, the United States is required to declare a wide range of public and private nuclear-related activities to the IAEA and potentially provide access to IAEA inspectors for verification purposes (DFARS 204.470-1, General). The U.S.-IAEA AP permits the United States unilaterally to declare exclusions from inspection requirements for activities with direct national security significance (paragraph (a) of DFARS 204.470-2, National Security Exclusion). If a DOD program manager receives notification from a contractor that the contractor is required to report its activities in accordance with the U.S.-IAEA AP, the program manager will either (1) conduct a security assessment to determine if, and by what means, access may be granted to the IAEA; or (2) provide written justification to the component or agency treaty office for a national security exclusion (DFARS 204.470-2(c)).
  
  DFARS 252.204-7XXX would provide instructions to the contractor on how to provide notification and how DOD officials would notify the contractor whether access will be granted to IAEA inspectors, or if a national security exclusion will be applied.
  
  Comments on the proposed rule must be submitted no later than October 17, 2008, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) e-mail: dfars@osd.mil; (3) fax: 703-602-7887; (4) mail: Defense Acquisition Regulations System, Attn: Michele Peterson, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062; or (5) hand delivery/courier: Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402. Identify comments as “DFARS Case 2004-D003.”

Increased Limits Proposed for SBIR Awards

The Small Business Administration (SBA) is proposing to increase the limit for Phase I awards under the Small Business Innovation Research (SBIR) program from $100,000 to $150,000, and the limit for Phase II awards from $750,000 to $1,000,000. The current limits have been in effect since 1992, and since then the general price level has increased by almost 39%. This increase in the limits would restore the average economic value of the SBIR awards.

Comments on the proposed increases must be submitted no later than September 15, 2008, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) mail: Office of Technology, 409 Third Street, SW, Washington, DC 20416; or (3) hand delivery or courier: Edsel Brown, Assistant Director, Office of Technology, 409 Third Street, SW, Washington, DC 20416. Identify comments as “RIN 3245-AF61.”

GSAR Rewrite Begins to Show Results

The rewrite of the General Services Administration (GSA) Acquisition Regulation (GSAR), which started in June, produced the first finalized GSAR part – GSAR Part 522, Application of Labor Laws to Government Acquisitions – and the publication of six more proposed GSAR parts.

• GSAR Part 522, Application of Labor Laws to Government Acquisitions: This final rule makes the following changes to GSAR Part 522:
  
  
  • Information in GSAR 522.101-1, General, regarding the necessary impartiality of GSA personnel in disputes between labor and contractor management is deleted as unnecessary because it repeats FAR language.
    
    
  • GSAR 522.101-1(b) includes new language requiring contracting officers to notify the Office of General Counsel and the agency labor advisor when they are contacted by external organizations.
    
    
  • GSAR 522.103-5, Contract Clauses, is revised to clarify that FAR 52.222-1, Notice to the Government of Labor Disputes, must be inserted in solicitations and contracts for DX-rated orders under the Defense Priorities and Allocations System (DPAS).
    
    
  • GSAR Subpart 522.4, Labor Standards for Contracts Involving Construction, is revised to ensure consistency with FAR Subpart 22.4.
    
    
  • Paragraph (b) of GSAR 522.804-1, Nonconstruction, is revised to indicate that contractors, subcontractors, and financial institutions must develop a written affirmative action compliance program for each of its establishments regardless of the contract or holding value
    
    Paragraph (b) of GSAR 522.805, Procedures, is revised to add a website that lists the various Office of Federal Contract Compliance Programs (OFCCP) Regional Offices (http://www.dol.gov/esa/contacts/ofccp/ofcpkeyp.htm).
  
  
• GSAR 503, Improper Personal Conflicts of Interest: This proposed rule would revise GSAR Part 503 as follows:
  
  
  • GSAR 503.104-3, Definitions, GSAR 503.104-9, Contracts Clauses, GSAR 503.404, Contract Clauses, GSAR 552.203-5, Covenant Against Contingency Fees, and GSAR 552.203-70, Price Adjustment for Illegal or Improper Activity, all of which address leasehold interests in real property, would be deleted to ensure consistency with the GSA Acquisition Manual (GSAM) Part 570, Acquiring Leasehold Interests in Real Property.
    
    
  • Paragraph (a)(2) of GSAR 503.204, Treatment of Violations [of the Gratuities clause] would be revised to delete the term “joint venture” from the following sentence to ensure grammatical and structural clarity: “In the case of a business, notice is sent to any partner, principal officer, director, owner or co-owner, or joint venture.” Also, “designated by the Chairman of the GSA Board of Contract Appeals” would be deleted from GSAR 503.204(c) because the GSA Board of Contract Appeals no longer exists. Finally, GSAR 503.204(f) would be revised to reference the rights afforded the contractor in FAR 3.204(b).
    
    
  • GSAR 503.570-1, Policy, would revise the phrase “GSA policy precludes contractors from referring to GSA contracts in commercial advertising…” to read “GSA policy precludes contractors from making reference to GSA contracts in commercial advertising…”
    
    
  • GSAR 503.702, Definition, would be deleted because the terms “Notice” and “Voiding and rescinding official” do not require definition. Instead, GSAR 503.703, Authority, would be added to identify the Senior Procurement Executive as having the authority to void and rescind contracts in accordance with FAR 3.703 and paragraph (b) of FAR 3.705, Procedures. Also, GSAR 503.705 would be removed from the GSAR and relocated to the manual part of the GSAM because it relates to internal administrative procedures.
    
    
  • GSAR Subpart 503.10, Contractor Code of Business Ethics and Conduct, would be added. It would consist of GSAR 503.1004, Contract Clauses, which would reduce the threshold for the inclusion of FAR 52.203-14, Display of Hotline Poster(s), from $5,000,000 to $1,000,000 (paragraph (a)), and would include the name of the poster and where the poster may be obtained (paragraph (b)).
  
  Comments on the proposed rule must be submitted no later than October 3, 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 4035, ATTN: Laurieann Duarte, Washington, DC 20405. Identify comments as “GSAR case 2008-G502.”
  
  
• GSAR Part 512, Acquisition of Commercial Items: This proposed rule would revise GSAR Part 512 as follows:
  
  
  • Paragraph (a) of GSAR 512.301, Solicitation Provisions and Contract Clauses for the Acquisition of Commercial Items, would be revised to delete prescriptions for GSAR 552.212-70, Preparation of Offer (Multiple Award Schedule), and GSAR 552.212-73, Evaluation – Commercial Items (Multiple Award Schedule), which would be relocated to GSAR Part 538, Federal Supply Schedule Contracting, where they are more appropriate.
  
  Comments on the proposed rule must be submitted no later than September 30, 2008, by any of the methods mentioned above, except identify comments as “GSAR case 2008-G504.”
  
  
• GSAR Part 513, Simplified Acquisition Procedures: This proposed rule would remove the text of GSAR Part 513 and relocate it to the GSAM as GSAM Part 513 (with some modifications updating and clarifying the coverage). This would be done because GSAR Part 513 consists of policy that merely directs contracting officers to use certain forms in certain circumstances, and to include any geographic limitations and instructions in Blanket Purchase Agreements (BPAs). There are no clauses or solicitation provisions in GSAR Part 513.
  
  Comments on the proposed rule must be submitted no later than September 30, 2008, by any of the methods mentioned above, except identify comments as “GSAR case 2008-G502.”
  
  
• GSAR Part 528, Bonds and Insurance: This proposed rule would revise GSAR Part 528 as follows:
  
  
  • In GSAR 528.202, Acceptability of Corporate Sureties, “you” would be changed to “the contracting officer.”
    
    
  • GSAR 528.310, Contract Clause for Work on a Government Installation, would be revised to replace the reference to GSAR 552.228-70, Workers’ Compensation Laws, with GSAR 552.228-5, Government as Additional Insured, because GSAR 552.228-70 would be deleted from the GSAR. GSAR 552.228-70 would be deleted because its only purpose is to recite the fact that 40 U.S.C. 3172 effects a limited cession of jurisdiction to states with respect to enforcement of worker’s compensation laws, and it is superfluous because it has no contractual effect. Its replacement, new GSAR 552.228-5, was previously in the GSAR. Based on GSA’s experience with contracts that do not have such a clause, it is being reinstated to protect the federal government's interest. GSAR 552.228-5 would state, “Each insurance policy required under this contract, other than workers’ compensation insurance, shall contain an endorsement naming the United States as an additional insured with respect to operations performed under this contract. The insurance carrier is required to waive all subrogation rights against any of the named insured.” Also, GSAR 528.310(b) would be deleted it refers to GSAR 552.228-70 (“the clause”).
    
    
  • GSAR 528.311, Solicitation Provision and Contract Clause on Liability Insurance Under Cost-Reimbursement Contracts, would be added. It would consist of GSAR 528.311-1, Contract Clause, which would clarify the usage for FAR 52.228-7, Insurance – Liability to Third Persons, in solicitations and contracts. The language states that FAR 52.228-7 is required “in solicitations and contracts, other than those for construction and those for architect-engineer services, when a cost-reimbursement contract is contemplated, unless the head of the contracting activity waives the requirement for use of the clause.”
  
  Comments on the proposed rule must be submitted no later than October 6, 2008, by any of the methods mentioned above, except identify comments as “GSAR case 2008-G517.”
  
  
• GSAR Part 546, Quality Assurance: This proposed rule would revise GSAR Part 546 as follows:
  
  
  • GSAR 546.302-70, Source Inspection by Quality Approved Manufacturer, would be revised to include applicability to the Stock and Special Order programs, and the Wildfire programs. Also, it would include a reference to FAR 52.246-2, Inspection of Supplies – Fixed Price.
    
    
  • GSAR 546.302-72, Destination Inspection, would be added to prescribe new GSAR 552.246-78, Inspection at Destination, which would provide for inspection by government personnel at destination.
    
    
  • GSAR 546.312, Construction Contracts, which prescribes GSAR 552.246-72, Final Inspection and Tests, would be deleted, as would be GSAR 552.246-72, because the FAR provides sufficient guidance.
    
    
  • GSAR 546.708, Warranties of Data, would be revised to place emphasis on the role of the contracting officer.
    
    
  • GSAR 546.710, Contract Clause, would be revised to add a prescription for new GSAR 552.246-77, Additional Contract Warranty Provisions for Supplies of a Noncomplex Nature. GSAR 552.246-77 would be used when FAR 52.246-17, Warranty of Supplies of a Noncomplex Nature, is included in solicitations and contracts. GSAR 552.246-77 would provide for GSA unique rights and remedies. In addition, the prescriptions for GSAR 552.246-17, Warranty of Supplies of a Noncomplex Nature; GSAR 552.246-73, Warranty – Multiple Award Schedule; GSAR 552.246-75, Guarantees; and GSAR 552.246-76, Warranty of Pesticides, would be deleted because the clauses would be deleted. GSAR 552.246-17 would be deleted because it unnecessarily repeats, paraphrases, and restates material in the FAR; GSAR 552.246-73 would be relocated to GSAR Part 538, Federal Supply Schedule Contracting; GSAR 552.246-75 would be deleted because the FAR provides sufficient guidance; and GSAR 552.246-76 would be deleted because it is unnecessary.
    
    
  • GSAR 552.246.70, Source Inspection by Quality Approved Manufacturer, would be revised to clarify existing clause language.
  
  Comments on the proposed rule must be submitted no later than October 6, 2008, by any of the methods mentioned above, except identify comments as “GSAR case 2008-G514.”
  
  
• GSAR Part 549, Termination of Contract: This proposed rule would revise GSAR Part 549 by deleting GSAR Subpart 549.5, Contract Termination Clauses, which consists of GSAR 549.502, Termination for Convenience of the Government. GSAR 549.502 consists of prescriptive language for two clauses: GSAR 552.249-70, Termination for Convenience of the Government (Fixed Price) (Short Form); and GSAR 552.249-71, Submission of Termination Liability Schedule. These GSA-unique clauses are for use in contracts for the acquisition and maintenance of telephone systems funded through the Information Technology (IT) Fund. Since this fund no longer exists, these clauses are obsolete.
  
  Comments on the proposed rule must be submitted no later than October 14, 2008, by any of the methods mentioned above, except identify comments as “GSAR case 2008-G515.”

VA Proposes Veteran-Owned Small Business Set-Asides

The Department of Veterans Affairs (VA) is proposing to add to the VA Acquisition Regulation (VAAR) Subpart 819.70, Service-Disabled Veteran-Owned and Veteran-Owned Small Business Acquisition Program, to restrict competition for certain VA acquisitions to veteran-owned small businesses (VOSB) and service-disabled veteran-owned small businesses (SDVOSB). In addition, VA would add VAAR Subpart 819.71, VA Mentor-Protégé Program, which would assist SDVOSBs and VOSBs. These new VAAR subparts would implement Sections 502 and 503 of the Veterans Benefits, Health Care, and Information Technology Act of 2006 (Public Law 109-461), which authorized VA to create these unique procurement programs to support its mission.

The following would be the significant provisions of VAAR Subpart 819.70:

• VAAR 819.7004, Contracting Order of Precedence, would establish the following order of precedence for VA contracting officers to consider when determining the acquisition strategy: (1) SDVOSBs; (2) VOSBs (including, but not limited to, SDVOSBs); (3) either the 8(a) program or the Historically Underutilized Business Zone (HUBZone) program; and (4) any other small business program.
  
  
• VAAR 819.7005, Service-Disabled Veteran-Owned Small Business Set-Aside Procedures, would require that an acquisition be set-aside for SDVOSBs if offers will be received from two or more eligible SDVOSBs, and award will be made at a fair and reasonable price. Also, it would require VA contracting officers to consider SDVOSB set-asides before considering VOSB set-asides.
  
  
• VAAR 819.7006, Veteran-Owned Small Business Set-Aside Procedures, would require that an acquisition be set-aside for VOSBs if the conditions of VAAR 819.7005 cannot be met, if offers will be received from two or more eligible VOSBs, and award will be made at a fair and reasonable price.
  
  
• VAAR 819.7007, Sole Source Awards to Service-Disabled Veteran-Owned Small Business Concerns, would authorize the VA contracting officer to award sole source contracts to a SDVOSB if: (1) the anticipated award price of the contract (including options) will not exceed $5,000,000; (2) the requirement is synopsized in accordance with FAR Part 5, Publicizing Contract Actions; (3) the SDVOSB has been determined to be a responsible contractor with respect to performance; and (4) award can be made at a fair and reasonable price.
  
  
• VAAR 819.7008, Sole Source Awards to Veteran-Owned Small Business Concerns, would authorize the VA contracting officer to award sole source contracts to a VOSB if: (1) the anticipated award price of the contract (including options) will not exceed $5,000,000; (2) the requirement is synopsized in accordance with FAR Part 5, Publicizing Contract Actions; (3) the VOSB has been determined to be a responsible contractor with respect to performance; (4) award can be made at a fair and reasonable price; and (5) no responsible SDVOSB concern has been identified.
  
  
• VAAR 852.219-10, Notice of Total Service-Disabled Veteran-Owned Small Business Set-Aside, and VAAR 852.219-11, Notice of Total Veteran-Owned Small Business Set-Aside, would be added to be included (as appropriate) in solicitations and contracts conducted under VAAR Subpart 819.70.

The following would be the significant provisions of VAAR Subpart 819.71:

• VAAR 819.7102, Definitions, states that a mentor may be a large or small business, and a protégé must be either a SDVOSB or VOSB.
  
  
• VAAR 819.7105, Incentives for Prime Contractor Participation, states that developmental assistance provided by the mentor to the protégé is not reimbursable as a direct cost. However, if VA is the mentor’s responsible audit agency under FAR 42.703-1, Policy [for Indirect Rates], VA will consider these costs in determining indirect cost rates. If VA is not the responsible audit agency, mentors would be encouraged to enter into an advance agreement with their responsible audit agency on the treatment of such costs when determining indirect cost rates.
  
  In addition, contracting officers would be able to give mentors evaluation credit under VAAR 852.219-72, Evaluation Factor for Participation in the VA Mentor-Protégé Program, by (1) evaluating subcontracting plans containing mentor-protégé arrangements more favorably than subcontracting plans without mentor-protégé agreements; and (2) assessing the mentor’s compliance with the subcontracting plans submitted in previous contracts as a factor in evaluating past performance and determining contractor responsibility.
  
  
• VAAR 819.7110, Developmental Assistance, would authorize mentors to provide protégés the following assistance:
  
  
  • Guidance relating to: (1) financial management; (2) organizational management; (3) overall business management/planning; (4) business development; and (5) technical assistance
    
    
  • Loans
    
    
  • Rent-free use of facilities and/or equipment
    
    
  • Property
    
    
  • Temporary assignment of personnel to a protégé for training, and
    
    
  • Any other types of permissible, mutually beneficial assistance.
  
  
• VAAR 819.7115, Solicitation Provisions, would require the inclusion of VAAR 852.219-71, VA Mentor-Protégé Program, in solicitations that include FAR 52.219-9, Small Business Subcontracting Plan. Also, it would require the inclusion of VAAR 852.219-72 in solicitations that include an evaluation factor for participation in VA's mentor-protégé program in accordance with VAAR 819.7105 and include FAR 52.219-9.

The following would be additional provisions that would assist SDVOSBs and VOSBs:

• VAAR 802.101, Definitions, would revise the eligibility definition for “service-disabled veteran-owned small business concerns'' to include a “surviving spouse” who obtains ownership rights upon the death of a 100% service-disabled veteran or a veteran who died as a direct result of a service-connected injury for a period of 10 years unless the spouse remarries or sells the interest in the business.
  
  
• VAAR 804.1102, Vendor Information Pages (VIP) Database, would be added. It would require all VOSBs and SDVOSBs to register in the VIP database (http://www.VetBiz.gov) to be eligible to participate in VA’s VOSB and SDVOSB prime contracting and subcontracting programs. In addition, new VAAR 810.001, Market Research Policy, would require that VA contracting teams use the VIP database in addition to other sources of information when conducting market research.
  
  
• VAAR 808.603, Purchase Priorities, would be added to authorize contracting officers to purchase supplies and services produced or provided by Federal Prison Industries, Inc. (FPI) from eligible SDVOSBs and VOSBs in accordance with VAAR Subpart 819.70 without seeking a waiver from FPI.
  
  
• VAAR 808.803, Priority for Acquisition of Printing and Related Supplies, would be added to authorize contracting officer to acquire government printing from SDVOSBs and VOSBs in accordance with VAAR Subpart 819.70 without seeking a waiver from the Government Printing Office (GPO).
  
  
• VAAR 809.406-2, Cause for Debarment, would be added to make misrepresentations of VOSB or SDVOSB eligibility as grounds for VA officials to debar the business concern for a period not to exceed five years from contracting with VA as a prime contractor or a subcontractor.
  
  
• VAAR 813.106, Soliciting Competition, Evaluation of Quotations or Offers, Award and Documentation, would be revised to permit contracting officers to use other than competitive procedures to enter into a contract with an SDVOSB or VOSB when the amount is less than the simplified acquisition threshold. Contracting officers are to give first consideration to SDVOSBs.
  
  
• VAAR 813.202, Purchase Guidelines, would be added. It would require that “open market micro-purchases [be] equitably distributed among all qualified SDVOSBs or VOSBs, respectively, to the maximum extent practicable.”
  
  
• VAAR 815.304, Evaluation Factors and Significant Subfactors, would be added. It would require contracting officers to include evaluation factors in competitively negotiated solicitations that are not set aside for SDVOSBs or VOSBs. Also, it would require that “additional consideration [be] given to any offeror, regardless of size status, that proposes to subcontract with SDVOSBs or VOSBs.”
  
  
• VAAR 815.304-70, Evaluation Factor Commitments, would be added. It would require VA contracting officers to: “(1) include provisions in negotiated solicitations giving preference to offers received from VOSBs and additional preference to offers received from SDVOSBs; (2) use past performance in meeting SDVOSB subcontracting goals as a non-price evaluation factor in selecting offers for award; (3) use the proposed inclusion of SDVOSBs or VOSBs as subcontractors as an evaluation factor when competitively negotiating the award of contracts or task or delivery orders; and (4) consider participation in VA’s Mentor-Protégé Program as an evaluation factor when competitively negotiating the award of contracts or task or delivery orders.”
  
  
• VAAR 815.304-71, Solicitation Provision and Clause, would require that VAAR 852.215-70, Service-Disabled Veteran-owned and Veteran-owned Small Business Evaluation Factors, and VAAR 852.215-71, Evaluation Factor Commitments, be included in competitively negotiated solicitations that are not set aside for SDVOSBs or VOSBs.
  
  
• VAAR 819.704, Subcontracting Plan Requirements, would be added to require contracting officers to ensure that any subcontracting plans include SDVOSB and VOSB subcontracting goals that are at least commensurate with the annual VA SDVOSB and VOSB prime contracting goals, respectively, for the total value of all planned subcontracts. Also, it would require VA’s Office of Small and Disadvantaged Business Utilization to review all prime contractors’ subcontracting plan achievement reports to ensure that eligible SDVOSBs and VOSBs were used to meet the subcontracting goals.
  
  
• VAAR 828.106-71, Assisting Service-Disabled Veteran-Owned and Veteran-Owned Small Businesses in Obtaining Bonding, would be added. It would encourage prime contractors and mentors to obtain bid, payment, and performance bonds when required.

Comments on the proposed rule must be submitted no later than October 20, 2008, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-273-9026; or (3) by mail/hand-delivery: Director, Regulations Management (02REG), Department of Veterans Affairs, 810 Vermont Ave., NW, Room 1068, Washington, DC 20420. Identify comments as “RIN 2900-AM92--VA Acquisition Regulation: Supporting Veteran-Owned and Service-Disabled Veteran-Owned Small Businesses.”

NASA Proposes Personal ID Verification of Contractors

The National Aeronautics and Space Administration (NASA) proposes to revise the NASA FAR Supplement (NFS) to update procedures for compliance with FAR Subpart 4.13, Personal Identity Verification of Contractor Personnel. FAR Subpart 4.13 requires that agencies include their implementing guidance of FIPS 201, Personal Identity Verification (PIV) of Federal Employees and Contractors, and Office of Management and Budget (OMB) Memorandum M-05-24, Implementation of Homeland Security Presidential Directive (HSPD) 12 –- Policy for a Common Identification Standard for Federal Employees and Contractors, in solicitations and contracts that require the contractor to have routine physical access to federally-controlled facilities and/or access to federally-controlled information systems. NASA further proposes to designate the Assistant Administrator, Office of Security and Program Protection as the official with overall responsibility for verifying contractor employee personal identity. (EDITOR’S NOTE: For more on FAR Subpart 4.13, see the December 2006 Federal Contracts Perspective article “FAC 2004-14 Addresses Trade Agreements, Contractor IDs.”)

Section 304(A) of the National Aeronautics and Space Act of 1958 (codified at 42 U.S.C. 2455, Security Requirements) provides that the NASA Administrator “shall establish such security requirements, restrictions, and safeguards as he deems necessary in the interest of the national security,” and he may arrange “for the conduct of such security or other personnel investigations of the Administration’s officers, employees, and consultants, and its contractors and subcontractors and their officers and employees, actual or prospective, as he deems appropriate for such personnel.” NASA’s implementing guidance, which is to be used in conjunction with FAR 52.204-9, Personal Identity Verification of Contractor Personnel, is in NASA Policy Regulation (NPR) 1600.1, NASA Security Program Procedural Requirements (with Change 1) (available at http://nodis.hq.nasa.gov or from the Contracting Officer).

This proposed rule would establish a new NFS Subpart 1804.13, Personal Identity Verification of Contractor Personnel, which would consist of NFS 1804.1303-70, NASA Contract Clause. NFS 1804.1303-70 would require that new NFS 1852.204-77, NASA Procedures for Personal Identity Verification of Contractor Personnel, be included in solicitations and contracts when the Center Chief of Security has determined that a contractor will require routine access to generally-controlled facilities or access to federally-controlled information systems. “The Center Chief shall make such a determination, on a case-by-case basis, as part of acquisition planning. [NFS] Section 1807.104(a) [General Procedures for Acquisition Planning] requires the contracting officer to coordinate new requirements with the security office and cites NASA NPR 1600.1, NASA Security Program Procedural Requirements, as the procedural document for identifying and processing contractor employees requiring personal identity verification. [NFS] Clause 1852.204-77 will be used in conjunction with the clause at FAR 52.204-9 Personal Identity Verification of Contractor Personnel.”

NFS 1852.204-77 would require the contractor to apply for NASA badges for all employees and subcontractor employees at any tier requiring physical access to NASA facilities and/or access to federally-controlled information systems. The contractor must apply for the badges following the procedures in NPF 1600.1. In addition, the contractor is responsible for collecting and submitting all requests for subcontractor badges, regardless of subcontract tier.

If approved by the Center Chief of Security, the badges will be issued for no longer than the contract period of performance inclusive of options, but not to exceed five years. Badge renewal will be required for additional periods. All personnel issued badges must display the badge conspicuously above the waistline on the outermost garment, and must comply with all requirements applicable to badges in effect at the center.

NASA will make suitability/access determinations, and the Center Chief of Security or the PIV Authorizer, will approve the issuance of badges based upon a background investigation in accordance with NPR 1600.1, Section 6.2. At a minimum, a National Agency Check with Written Inquiries (NACI) will be required. NPR 1600.1 also specifies higher level reinvestigation requirements which may be applicable; for example, due to position risk level changes or time since last investigation.

Other employees who may require access on a non-routine or infrequent basis are to be identified by the contractor for approval and registered on an access list under the control of the center security office in accordance with center procedures.

Prior to the commencement of contract performance, the contractor must designate a person responsible for determining that an employee (or an employee of a subcontractor at any tier) requires physical access to NASA-controlled facilities and/or access to federally-controlled information systems to perform work under the contract. This designated person acts as the contractor’s “requestor.” Also, the contractor’s requestor will be responsible for providing updated information as changes occur during the period of contract performance (such as additions, deletions, and position risk changes), and for managing all subcontractor requests.

Finally, the contractor would be required to include the terms of NFS 1852.204-77 (except for the paragraph regarding the duties and responsibilities of the contractor’s requestor), in all subcontracts when the subcontractor is required to have routine physical access to federally-controlled facilities and/or access to federally-controlled information systems. NFS 1852.204-77 is not to be used when contractors require intermittent access to federally-controlled facilities.

Comments on the proposed rule must be submitted no later than October 6, 2008, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov; (2) e-mail to: Leigh.Pomponio-1@nasa.gov; or (3) by mail: Leigh Pomponio, NASA Headquarters, Office of Procurement, Contract Management Division, Washington, DC 20546. Identify comments as “RIN number 2700-AD38.”

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