Barry McVay's FEDERAL CONTRACTS DISPATCH
DATE: June 6, 2000
FROM: Barry McVay, CPCM
SUBJECT: Federal Acquisition Circular (FAC) 97-18, Miscellaneous Amendments
SOURCE: Federal Register, June 6, 2000, Vol. 65, No. 109, page 36011
AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)
ACTION: Final and Interim Rules
SYNOPSIS: The Federal Acquisition Regulatory Council is issuing FAC 97-18 to amend the Federal Acquisition Regulation (FAR) in the following nine subject areas: (1) rescission of Office of Federal Procurement Policy letters; (2) FAR drafting principles; (3) requirements supporting procurement of recycled products and environmentally preferable services; (4) general records schedules; (5) Federal Supply Schedules small business opportunities; (6) trade agreements thresholds; (7) restrictions on acquisitions from Yugoslavia and Afghanistan; (8) applicability, thresholds, and waiver of cost accounting standards coverage; and (9) technical amendments. These FAR changes are in plain language as required by the June 1, 1998, Presidential memorandum "Plain Language in Government Writing."
DATES: Items (1), (6), (8), and the technical amendments are effective June 6, 2000. Item (7) is effective July 6, 2000. Items (2), (3), (4), and (5) are effective August 7, 2000. Comments on the interim rule at item (8) should be submitted to the FAR Secretariat by August 7, 2000, to be considered in the formulation of a final rule.
ADDRESSES: Interested parties should submit written comments on the interim rule at item (8) to the General Services Administration, FAR Secretariat (MVR), 1800 F Street, NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405. Cite FAC 97-18, FAR case 2000-301 in all correspondence related to the interim rule. Address e-mail comments to firstname.lastname@example.org.
FOR FURTHER INFORMATION CONTACT: The following analysts:
Item (1): Jeremy Olson at 202-501-0692.
Item (2): Ralph De Stefano at 202-501-1758.
Items (3), (6), and (7): Paul Linfield at 202-501-1757.
Items (4), (5), and (8): Linda Nelson at 202-501-1900.
For more information on the technical amendments or for general information, contact the FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, 202-501-4755.
SUPPLEMENTAL INFORMATION: (1) Rescission of Office of Federal Procurement Policy (OFPP) Letters: On March 30, 2000, the OFPP rescinded 22 policy letters because they were either obsolete, superseded by statutory changes, or reflected in policies contained in the FAR (see the March 30, 2000, FEDERAL CONTRACTS DISPATCH "Office of Federal Procurement Policy (OFPP); Rescission of 22 Policy Letters."). Although the rescission of these policy letters did not change any FAR policies, cross-references in the FAR to those rescinded policy letters are no longer necessary or appropriate. Therefore, this final rule removes those cross-references from the following FAR sections: paragraph (a) of FAR 1.103, Authority; paragraph (c) of FAR 9.500, Scope of Subpart; paragraph (c)(3)(iv) of FAR 15.304, Evaluation Factors and Significant Subfactors; FAR 22.1101, Applicability (remove the second, third, and fourth sentences); FAR 35.000, Scope of Part; paragraph (c) of FAR 37.503, Agency-Head Responsibilities (remove paragraph (c)); FAR 37.600, Scope of Subpart (remove last sentence); paragraph (a) of FAR 42.002, Interagency Agreements; and FAR 42.1500, Scope of Subpart (remove second sentence).
(2) FAR Drafting Principles: This final rule adds drafting principles to the FAR "to enhance a common understanding of the regulation among all members of the acquisition team and other users." A proposed rule was published January 26, 2000 (see the January 26, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Drafting Principles"), and three comments were received. As a result of those comments, the proposed rule is finalized with changes. The following are the primary changes made to the FAR by this final rule, with the differences between the proposed rule and the final rule in brackets ("[ ]"):
- In paragraph (b)(2) of FAR 1.105-2, Arrangement of Regulations, which provides "(a)(1)(i)(A) -- subdivisions, below the 4th level, shall repeat the sequence", is changed to "(a)(1)(i)(A)(1)(i)."
- FAR 1.108, FAR Conventions, is added. Individual paragraphs address various conventions: paragraph (a), Words and terms; paragraph (b), Delegation of authority; paragraph (c), Dollar thresholds; paragraph (d), Application of FAR changes to solicitations and contracts [this paragraph is clarified to state that contracting officers are not to award or modify contracts to include a FAR change until the effective date of the FAR change]; paragraph (e), Citations [the proposed rule merely stated that "statutory citations include all applicable amendments"; the final rule adds executive orders, Office of Management and Budget policy letters, and Code of Federal Regulations citations to this]; and paragraph (f), Imperative sentences.
- In paragraph (d) of FAR 52.101, Using Part 52, the term "prefaces" is changed to "introductory text" and the statement that each provision or clause have "directions for inserting it in solicitations and/or contracts" is removed.
- In paragraph (a) of FAR 52.105, Procedures for Using Alternates, the following is deleted: "In Subpart 52.2, the instructions for using these alternates appear after the basic provision or clause. A statement of the manner of and conditions for its use is given for each alternate. This statement shall be read in conjunction with the preface to the provision or clause."
- FAR 52.200, Scope of Subpart, is revised to delete the statement that FAR Subpart 52.2 includes in each provision's or clause's introductory text "directions for including it in solicitations and/or contracts."
(3) Requirements Supporting Procurement of Recycled Products and Environmentally Preferable Services: This final rule implements Executive Order (EO) 13101, Greening the Government through Waste Prevention, Recycling, and Federal Acquisition, dated September 14, 1998. On September 23, 1999, a proposed rule was published, and seven respondents submitted comments. As a result of the comments, minor editorial changes have been made.
The following are the main changes made to the FAR by this rule:
- Definitions of various terms found elsewhere in the FAR are moved to FAR 2.101, Definitions, so they will be easier to find and easier to understand when used in other FAR parts: "energy-efficient product" (from FAR 23.704, Policy); "environmentally preferable" (from FAR 23.703, Definitions); "pollution prevention" (from FAR 23.703); "recovered material" (from FAR 11.001, Definitions, and FAR 23.402, Definitions), "virgin material" (from FAR 11.001); and "waste reduction" (from FAR 23.703).
- Paragraph (n) of FAR 7.103, Agency-Head Responsibilities, is revised to require procedures for making sure that agency planners "specify needs for printing and writing paper consistent with the minimum content standards specified in Section 505 of Executive Order 13101 of September 14, 1998, Greening the Government through Waste Prevention, Recycling, and Federal Acquisition (see 11.303); and comply with the policy in 11.002(d) regarding procurement of products containing recovered materials, and environmentally preferable and energy-efficient products and services."
- FAR Subpart 11.3, Acceptable Material, is revised. New FAR 11.301, Definitions, includes definitions for "postconsumer material" (taken from FAR 23.402, Definitions, and expanded to cover paper products) and "recovered material for paper and paper products." FAR 11.302, Policy, is redesignated from FAR 11.301, and a new paragraph (c) authorizes the contracting officer to "require offerors to submit additional information on the recycled content or related standards. The request for the information must be included in the solicitation." New FAR 11.303, Special Requirements for Printing and Writing Paper, specifies the requirements in Section 505 of EO 13101. FAR 11.304, Contract Clause, is redesignated from FAR 11.302.
- A paragraph (f) is added to FAR 13.201, General, which states that "the procurement requirements in the Resource Conservation and Recovery Act (42 U.S.C. 6962) and Executive Order 13101 of September 14, 1998, Greening the Government through Waste Prevention, Recycling, and Federal Acquisition, apply to purchases at or below the micro-purchase threshold (see Subpart 23.4)."
- FAR Subpart 23.4, Use of Recovered Materials, is reorganized and rewritten. The most significant change is in new FAR 23.405, Procedures, which states that "contracting officers should refer to EPA's [Environmental Protection Agency] list of EPA-designated products (available via the Internet at http://www.epa.gov/cpg/) and to their agencies' affirmative procurement programs when purchasing supplies that contain recovered material or services that could include supplies that contain recovered material." In addition, "the contracting officer must place in the contract file a written justification if an acquisition of EPA-designated products above the micro-purchase threshold does not contain recovered material." (EDITOR'S NOTE: For more on the procurement of products with recovered materials, see the January 19, 2000, FEDERAL CONTRACTS DISPATCH "Comprehensive Guideline for Procurement of Products Containing Recovered Materials and Recovered Materials Advisory Notice III (RMAN III).")
- FAR Subpart 23.7, Contracting for Environmentally Preferable and Energy-Efficient Products and Services, is reorganized and rewritten. FAR 23.703, Definitions, is redesignated as FAR 23.701, and all the definitions are removed (some are moved to FAR 2.101 (see above)). In their place is a definition for "'biobased product'...[which] means a commercial or industrial product (other than food or feed) that utilizes biological products or renewable domestic agricultural (plant, animal, and marine) or forestry materials." Redesignated FAR 23.703, Policy (formerly FAR 23.704), adds a requirement that biobased products be considered in acquisition strategies. Finally, redesignated FAR 23.704, Application to Government-Owned or -Leased Facilities, requires that contracts for operation of a government facility or related support services must require the contractor to develop "programs to promote and implement cost-effective waste reduction and affirmative procurement programs required by 42 U.S.C. 6962 for all products designated in EPA's Comprehensive Procurement Guideline (40 CFR [Code of Federal Regulations] Part 247)" (see the January 19, 2000, FEDERAL CONTRACTS DISPATCH referenced above). (EDITOR'S NOTE: For more on the proposed rule that would further revise FAR Subpart 23.7 to implement Executive Order 13123 of June 3, 1999, Greening the Government Through Efficient Energy Management, see the May 10, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Energy Efficiency of Supplies and Services.")
- FAR 52.204-4, Printed or Copied Double-Sided on Recycled Paper, is revised to contain the definitions for "postconsumer material" and "recovered material" from FAR 11.301, Definitions (see above), and cites the requirements of EO 13101 regarding the postconsumer material content of paper used by contractors.
- FAR 52.223-9, Estimate of Percentage of Recovered Material Content for EPA-Designated Products (the "Certificate and" portion of the title is removed), is revised to add definitions for "postconsumer material" and "recovered material," and to delete the certification -- all that remains of the original clause is the requirement for the contractor to submit, upon contract completion, an estimate of the "total recovered material used in contract performance, including, if applicable, the percentage of postconsumer material content." However, a new Alternate I is added which consists of the certification, and it is to be used "if technical personnel advise that estimates can be verified".
- FAR 52.223-10, Waste Reduction Program, is revised to add definitions for "recycling" and "waste prevention," and requires the contractor to "establish a program to promote cost-effective waste reduction in all operations and facilities covered by this contract" consistent with the requirements of EO 13101.
EDITOR'S NOTE: For more on the recent issuance of three other "greening" executive orders (EO 13148, Greening the Government Through Leadership in Environmental Management; EO 13149, Greening the Government Through Federal Fleet and Transportation Efficiency; and EO 13150, Federal Workforce Transportation), see the April 26, 2000, FEDERAL CONTRACTS DISPATCH "'Greening the Government' Executive Orders."
(4) General Records Schedules: This final rule conforms the FAR with the revised National Archives and Records Administration General Records Schedule 3, Procurement, Supply, and Grants Records, dated December 15, 1998.
- Paragraph (a) of FAR 4.705-2, Construction Contracts Pay Administration Records, is revised to change the retention period for payroll sheets, registers, etc., from 4 years to "3 years after completion of contract, unless contract performance is the subject of enforcement action."
- FAR 4.800, Scope of Subpart, is revised to remove the sentences "The application of this subpart to contracts awarded using the simplified acquisition procedures covered by Part 13 is optional. (See also documentation requirements in 13.106-3(b))."
- The retention table in paragraph (b) of FAR 4.805, Storage, Handling, and Disposal of Contract Files, is simplified by grouping together several categories of records that were previously treated as separate records. For example, the separate retention period for contract status, expediting, and production surveillance records (#6 in the superseded table -- "6 months after final payment") is now covered under #7, Other copies of procurement file records used by component elements of a contracting office for administrative purposes ("upon termination or completion").
(5) Federal Supply Schedules (FSS) Small Business Opportunities: This final rule is intended to insure that small businesses with FSS contracts are given the maximum practicable opportunity to compete for and receive FSS purchases. A proposed rule was published on September 14, 1999, and thirty-two respondents submitted comments. Those comments produced several minor editorial changes in the final rule.
The following are the main changes being made to the FAR by this final rule:
- In FAR 8.404, Using Schedules, paragraph (b)(6) covers "small businesses." To this paragraph is added the following: "When conducting evaluations and before placing an order, consider including, if available, one or more small, women-owned small, and/or small disadvantaged business schedule contractor(s). Orders placed against the schedules may be credited toward the ordering agency's small business goals."
- A paragraph (e) is added to FAR 38.101, General, which states: "When establishing Federal Supply Schedules, GSA, or an agency delegated that authority, is responsible for complying with all applicable statutory and regulatory requirements (e.g., Parts 5, 6, and 19). The requirements of Parts 5, 6, and 19 apply at the acquisition planning stage prior to issuing the schedule solicitation and do not apply to orders and BPAs [blanket purchase agreements] placed under resulting schedule contracts (see 8.404)."
(6) Trade Agreements Thresholds: This final rule revises the FAR to conform to the revised dollar thresholds for application of the Trade Agreements Act and the North American Free Trade Agreement (NAFTA), as published by the U.S. Trade Representative on March 31, 2000 (see the March 31, 2000 FEDERAL CONTRACTS DISPATCH "Procurement Thresholds for Implementation of Trade Agreements Act"). The threshold changes are as follows:
Trade Agreements Act
Procurement of goods and services -- $177,000 (down from $186,000)
Procurement of construction services -- $6,806,000 (down from $7,143,000)
Procurement of goods and services -- $54,372 (up from $53,150)
Procurement of construction services -- $7,068,419 (up from $6,909,500)
The appropriate threshold changes are made to the following sections of the FAR:
- Paragraph (c) of FAR 25.202, Exceptions.
- Paragraph (b) of FAR 25.403, Trade Agreements Act (also, remove the reference to the January 1, 1998, effective date).
- Paragraphs (a), (b), and (c) of FAR 25.405, North American Free Trade Agreement (NAFTA).
- Paragraphs (a)(1), (a)(2), and (a)(3) of FAR 25.601, Policy.
- Paragraphs (b)(1)(i), (b)(1)(iii), (b)(2)(iii), (c)(1), and (d) of FAR 25.1101, Acquisition of Supplies.
- Paragraphs (a) and (c) of FAR 25.1102, Acquisition of Construction. Also, change paragraph (c)(3) to state "For acquisitions valued at $6,806,000 or more, but less than $7,068,419, use the clause [FAR 52.225-11, Buy American Act -- Balance of Payments Program -- Construction Materials Under Trade Agreements] with its Alternate I"; and add a paragraph (d)(3) which states: "For acquisitions valued at $6,806,000 or more, but less than $7,068,419, use the clause [FAR 52.225-12, Notice of Buy American Act -- Balance of Payments Program -- Construction Materials Under Trade Agreements] with its Alternate II." (EDITOR'S NOTE: Previously, the threshold for the application of NAFTA to construction materials was lower than the threshold for the application of the Trade Agreements Act to construction materials ($6,909,000 versus $7,143,000). Now, the threshold for the application of NAFTA to construction materials is higher than the threshold for the application of the Trade Agreements Act to construction materials ($7,068,419 versus $6,806,000). This has required the changing of references regarding construction materials within this narrow band from "NAFTA applies" to "the Trade Agreements apply", particularly in Alternate I to FAR 52.225-11, and the addition of Alternate II to FAR 52.225-12.]
- Paragraphs (c)(1)(i) and (c)(1)(ii)(B) of FAR 25.1103, Other Provisions and Clauses.
EDITOR'S NOTE: Also see today's FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); NAFTA Procurement Threshold," for a interim rule published by DOD which increases the NAFTA threshold for supplies from Mexico from $53,150 to $54,372.
(7) Restrictions on Acquisitions from Yugoslavia and Afghanistan: This final rule revised the FAR to implement Executive Order 13121 of April 30, 1999, Blocking Property and Prohibiting Transactions with the Taliban; and Executive Order 13129 of July 4, 1999, Blocking Property of the Governments of the Federal Republic of Yugoslavia (Serbia and Montenegro), the Republic of Serbia, and the Republic of Montenegro, and Prohibiting Trade Transactions Involving the Federal Republic of Yugoslavia (Serbia and Montenegro) in Response to the Situation in Kosovo. These executive orders prohibit the importation into the United States of any goods or services from Serbia (excluding the territory of Kosovo) or the territory of Afghanistan controlled by the Taliban.
A proposed rule was published December 1, 1999, and four respondents submitted comments. As a result of those comments, the proposed rule is finalized with changes. The following are the primary changes made to the FAR by this final rule, with the differences between the proposed rule and the final rule in brackets ("[ ]"):
- To paragraph (a)(1) of FAR 25.701, Restrictions, is added "(vii) Territory of Afghanistan controlled by the Taliban", and (viii) Serbia, excluding the territory of Kosovo." (EDITOR'S NOTE: Paragraphs (i) through (vi) prohibit the acquisition of supplies or services from Cuba, Iran, Iraq, Libya, North Korea, and Sudan.) [The proposed rule excluded "Yugoslavia (Serbia and Montenegro)". However, the Office of Foreign Assets Control (OFAC) General Licenses Numbers 2 and 4 modified Executive Order
13129 to permit transactions with Montenegro and Kosovo, respectively. Also, an exception is added to paragraph (a)(2) which permits the contracting officer, in unusual circumstances, to acquire for use outside the United States supplies and services restricted in paragraph (a)(1).]
- To paragraph (a) of FAR 25.1103, Other Provisions and Clauses, which requires the inclusion of FAR
52.225-13, Restrictions on Certain Foreign Purchases, in solicitations and contracts exceeding $2,500, is added "unless an exception applies (see 25.701(a)(2))." [This change was not included in the proposed rule.]
- To FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders -- Commercial Items, FAR 52.225-13, Restriction on Certain Foreign Purchases (E.O. 12722, 12724, 13059, 13067, 13121, and 13129), is added as a clause that a contracting officer may check as applicable to contracts for commercial items.
- In paragraph (a) of FAR 52.225-13, Restrictions on Certain Foreign Purchases, the last sentence is changed to "Those countries are Cuba, Iran, Iraq, Libya, North Korea, Sudan, the territory of Afghanistan controlled by the Taliban, and Serbia (excluding the territory of Kosovo)." [The proposed rule had referred to this clause as FAR 52.225-11, but it was redesignated as FAR 52.225-13, by the FAR Part 25 rewrite included in FAC 97-15, dated December 27, 1999.]
(8) Applicability, Thresholds and Waiver of Cost Accounting Standards (CAS) Coverage: On October 5, 1999, President Clinton signed the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106-65). Section 802 of the act, titled "Streamlined Applicability of Cost Accounting Standards", makes changes in the applicability requirements for CAS coverage. On February 7, 2000, the Cost Accounting Standards Board (CASB) issued an interim rule implementing the changes effective April 2, 2000 (see the February 7, 2000, FEDERAL CONTRACTS DISPATCH "Cost Accounting Standards Board (CASB); Applicability, Thresholds and Waiver of Cost Accounting Standards Coverage"). Because the CASB interim rule has gone into effect, revisions to the FAR on an interim basis are considered appropriate.
The following are the changes made to the FAR by this interim rule:
- In paragraph (b)(1) of FAR 30.201-4, Contract Clauses, the limit on the use of FAR 52.230-3, Disclosure and Consistency of Cost Accounting Practices, is increased from $25 million to $50 million. (EDITOR'S NOTE: FAR 52.230-3 is used in contracts subject to "modified CAS coverage." Raising the limit on contracts from $25 million to $50 million reflects the Section 802 increase in the threshold for "full CAS coverage" from $25 million to $50 million.)
- FAR 30.201-5, Waiver, is revised to authorize the head of the agency to waive CAS applicability if "the contract or subcontract value is less than $15,000,000 and the segment of the contractor or subcontractor that will perform the contract or subcontract (i) is primarily engaged in the sale of commercial items; and (ii) has no contracts or subcontracts that are subject to CAS"; or "the head of the agency determines that exceptional circumstances exist whereby a waiver of CAS is necessary to meet the needs of the agency. Exceptional circumstances exist only when the benefits to be derived from waiving the CAS outweigh the risk associated with the waiver." (EDITOR'S NOTE: Also see today's FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Waiver of Cost Accounting Standards," for an interim rule published by DOD to provide procedures for processing CAS waivers and clarifying which DOD components may grant CAS waivers.)
- In FAR 52.230-1, Cost Accounting Standards Notices and Certification, "$25 million" is replaced by "$50 million" in the first sentence of paragraph (c)(3) (also remove "(of which at least one award exceeded $1 million)"); in the "Caution" paragraph of (c)(4); in the second paragraph of "II. Cost Accounting Standards -- Eligibility for Modified Contract Coverage" (also remove "or the offeror did not receive a single CAS-covered award exceeding $1 million"); and twice in the "Caution" following the second paragraph of "II. Cost Accounting Standards -- Eligibility for Modified Contract Coverage." (EDITOR'S NOTE: The removal of "the offeror did not receive a single CAS-covered award exceeding $1 million" reflects the elimination by the CASB of the requirement that a contractor or subcontractor must have received at least one CAS-covered contract exceeding $1 million (a "trigger contract") to be subject to full CAS coverage. The CASB added a new "trigger contract" dollar amount of $7.5 million at paragraph (b)(7) of 48 CFR 9903.201-1, CAS Applicability. Since 48 CFR 9903.201-1 is referenced in FAR 30.201-1, CAS Applicability, "no FAR changes were required to address the new 'trigger contract' dollar amount." The CAS is available at http://www.arnet.gov/far/97/html/appendix.html.)
(9) Technical Amendments: Four minor editorial changes are made, the most significant being changing the date "19__" to "20__" in paragraphs (a) and (b) of FAR 49.601-1, Telegraphic Notice; and in FAR 49.601-2, Letter Notice (in paragraph (a) of the Notice of Termination to Prime Contractors; in paragraph (i) in the Acknowledgment of Notice; and in paragraph (a) of the Alternate notice).
FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.
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