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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: August 30, 2002

SUBJECT: Federal Acquisition Circular (FAC) 2001-09, Miscellaneous Amendments

SOURCE: Federal Register, August 30, 2002, Vol. 67, No. 169, page 56115

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 2001-09 to amend the Federal Acquisition Regulation (FAR) in the following areas: (1) task-order and delivery-order contracts; (2) temporary emergency procurement authority; (3) Veterans Entrepreneurship and Small Business Development Act of 1999; (4) trade agreements thresholds; (5) payments under fixed-price construction contracts; and (6) technical amendments.

EFFECTIVE DATES: All items are effective September 30, 2002, except Items (2) and (3), which are effective August 30, 2002.

FOR FURTHER INFORMATION CONTACT: The following analysts:

      Item (1), Julia Wise at 202-208-1168.

      Item (2), Victoria Moss at 202-501-4764.

      Item (3), Rhonda Cundiff at 202-501-0044.

      Item (4), Cecelia Davis at 202-219-0202.

      Item (5), Jeremy Olson at 202-501-3221.

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) Task-Order and Delivery-Order Contracts: Section 804 of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106-65) requires that the FAR be revised "to provide guidance to agencies on the appropriate use of task order and delivery order contracts". On April 25, 2000, the FAR was revised to clarify what contracting officers should consider when planning for multiple awards of indefinite-delivery contracts and to clarify how orders should be placed against the resultant contracts (see the April 25, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 97-17, Miscellaneous Amendments" (Item (1)). On August 23, 2001, a proposed rule was published to further implement Section 804 by providing guidance on the appropriate use of task- and delivery-order contracts; requiring more deliberation by agency acquisition planners before orders are placed under a Federal Supply Schedule contract, or task- or delivery-order contracts are awarded; and specific steps agencies should take when placing orders under task- and delivery-order contracts established by another agency (see the August 23, 2001, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Task-Order and Delivery-Order Contracts"). Four respondents submitted comments and, as a result, the definition of "multi-agency contract" was modified to add a cross-reference to paragraph (b) of FAR 17.500, Scope of Subpart, which expressly provides that the Economy Act is not applicable if an interagency acquisition is authorized under a more specific statutory authority.

This final rule makes the following changes to the FAR:

(2) Temporary Emergency Procurement Authority: This interim rule implements Section 836 of the Fiscal Year 2002 National Defense Authorization Act (Public Law 107-107), which provides temporary procurement authority for any procurement that facilitates the defense of the United States against terrorism or biological or chemical attack until September 30, 2003. The interim rule increases the micro-purchase threshold for such procurements from $2,500 to $15,000 when made by or for DOD; increases the simplified acquisition threshold from $100,000 to $250,000 when the purchase is made by or for DOD inside the U.S. in support of a contingency operation; and from $200,000 to $500,000 when the purchase is made by or for DOD outside the U.S. in support of a contingency operation. Also, any acquisition by or for DOD of biotechnology supplies or biotechnology services to facilitate the U.S. defense against terrorism or biological or chemical attack may treat the supplies or services as commercial items is to be treated as an acquisition of commercial items. (EDITOR'S NOTE: For more on the acquisition-related provisions of Public Law 107-107, see the January 2, 2002, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act for Fiscal Year 2002.")

This interim rule amends the following accordingly:

Comments on the interim rule must be submitted by October 29, 2002, to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2002-003@gsa.gov. Cite FAC 2001-09, FAR case 2003-003 in all correspondence related to this interim rule.

(3) Veterans Entrepreneurship and Small Business Development Act of 1999: This final rule adopts, without changes, (a) the October 11, 2000, interim rule which added a 3% subcontracting plan goal for veteran-owned small businesses to FAR 19.704, Subcontracting Plan Requirements, and a 3% governmentwide agency goal for service-disabled veteran-owned small businesses throughout FAR Part 19, Small Business Programs (see the October 11, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 97-20, Veterans Entrepreneurship and Truth in Negotiations Act Threshold" (see Item (1)); and (b) the October 22, 2001, interim rule which added a subcontracting plan goal for service-disabled veteran-owned small business concerns to FAR 52.219-9, Small Business Subcontracting Plan (see the October 22, 2001, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-01, Miscellaneous Amendments" (see Item (5)). Four comments were received in response to the interim rules, but none of the comments were adopted.

(4) Trade Agreements Thresholds: On February 21, 2002, the United States Trade Representative (USTR) decided to adjust the U.S. dollar thresholds for the application of the Trade Agreements Act of 1979 (TAA) and the North American Free Trade Agreement (NAFTA) (see the February 21, 2002, FEDERAL CONTRACTS DISPATCH "Procurement Thresholds for Implementation of Trade Agreements Act"). The following are the revised thresholds:

This final rule revises the thresholds for the application of the TAA and NAFTA in the following FAR sections:

(5) Payments Under Fixed-Price Construction Contracts: This final rule revises FAR 52.232-5, Payments Under Fixed-Price Construction Contracts, to clarify the certification language. The ambiguity surfaced as a result of a decision issued on April 2, 1999, by the United States Court of Appeals for the Sixth Circuit in United States v. Gatewood (173 F.3d 983), in which the court concluded that requiring the prime contractor to certify that it has made payments to subcontractors and suppliers is not the same as having a prime contractor certify it has made all payments due to subcontractors and suppliers. A proposed revision to FAR 52.232-5(c)(2) was published October 18, 2001 (see the October 18, 2001, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Payments Under Fixed-Price Construction Contracts"). It proposed to revise paragraph (c)(2) to read as follows:

"(c)(2) All payments due to subcontractors and suppliers from previous payments received under the contract have been made, and timely payments will be made from the proceeds of the payment covered by this certification, in accordance with subcontract agreements and the requirements of Chapter 39 of Title 31, United States Code..."

Essentially, the proposed revision added the words "All" and "due" to the beginning of the paragraph.

Six respondents submitted comments, but none of the comments were adopted, so the proposed rule is finalized without change.

(6) Technical Amendments: This makes several changes to the FAR to update references and make editorial changes.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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