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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: October 11, 2000

FROM: Barry McVay, CPCM

SUBJECT: Federal Acquisition Circular (FAC) 97-20, Veterans Entrepreneurship and Truth in Negotiations Act Threshold

SOURCE: Federal Register, October 11, 2000, Vol. 65, No. 197, page 60541

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Interim and Final Rules

SYNOPSIS: The Federal Acquisition Regulatory Council is issuing FAC 97-20 to amend the Federal Acquisition Regulation (FAR) in the following two areas: (1) implementation of the Veterans Entrepreneurship and Small Business Development Act of 1999 (Public Law 106-50), and (2) increasing the threshold for obtaining cost or pricing data under the Truth in Negotiations Act from $500,000 to $550,000. These FAR changes are in plain language as required by the June 1, 1998, Presidential memorandum "Plain Language in Government Writing."

EDITOR'S NOTE: For more on the proposed increase in the Truth in Negotiations Act threshold for cost or pricing data, see the July 3, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Truth in Negotiations Act Threshold."

DATES: Both these items are effective October 11, 2000. Comments on the interim rule implementing the Veterans Entrepreneurship and Small Business Development Act (item (1)) should be submitted to the FAR Secretariat by December 11, 2000, to be considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments on the interim rule at item (1) to the General Services Administration, FAR Secretariat (MVR), 1800 F Street, NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405. Cite FAC 97-20, FAR case 2000-302 in all correspondence related to the interim rule. Address e-mail comments to farcase.2000-302@gsa.gov.

FOR FURTHER INFORMATION CONTACT: Victoria Moss, Procurement Analyst, at 202-501-4764. For general information, contact the FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, 202-501-4755.

SUPPLEMENTAL INFORMATION: (1) Veterans Entrepreneurship and Small Business Development Act of 1999: This act expanded the eligibility for certain small business assistance programs to include veterans, directed that small business subcontracting plans must address proposed subcontracting with "small business concerns owned and controlled by veterans," and established a 3% governmentwide goal (all prime and subcontract awards) for "small business concerns owned and controlled by service-disabled veterans". To implement the contracting provisions of the act, the most obvious amendments to the FAR are the addition of the terms "veteran-owned small business" and "service-disabled veteran-owned small business" to paragraphs that require assistance or consideration be accorded to "small businesses, HUBZone [historically underutilized business zone] small business, small disadvantaged business, and women-owned small business concerns." Other significant FAR revisions are as follows:

EDITOR'S NOTE: The 3% goal for awards to service-disabled veteran-owned small business concerns is not reflected in the FAR. Neither are the other goals established for federal contract awards: 23% of prime contracts for small businesses; 5% of prime and subcontracts for small disadvantaged businesses; 5% of prime and subcontracts for women-owned small businesses; or 2% of prime and subcontracts for HUBZone small businesses for fiscal year 2001 (2.5% for FY 2002 and 3% thereafter). However, each of these goals was established by statute, and the Small Business Administration monitors compliance with these goals through the data contained on Standard Form 294 and Standard Form 295.

(2) Truth in Negotiation Act Threshold: This final rule amends paragraph (a)(1) of FAR 15.403-4, Requiring cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 254b), to increase the threshold for obtaining cost or pricing data from $500,000 to $550,000. 10 U.S.C. 2306a(a)(7) and 41 U.S.C. 254b(a)(7) require review of the threshold every 5 years, starting October 1, 1995, and that the revised threshold be rounded to the nearest multiple of $50,000. Therefore, the next adjustment was due October 1, 2000.

Between 1994 (when the $500,000 threshold was established by the Federal Acquisition Streamlining Act of 1994) and 2000, the gross domestic product deflators from the fiscal year 2001 budget indicated that 10.22% inflation had occurred. This increase equates to $51,100 (10.22% of $500,000). Rounding the $51,100 to $50,000 and adding that to the $500,000 threshold produced the revised $550,000 threshold.

On July 3, 2000, a proposed revision to FAR 15.403-4 was published. Two comments were received, but no changes were made to the final rule as a result of the comments.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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