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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: December 20, 2004

SUBJECT: Federal Acquisition Circular (FAC) 2001-26, Miscellaneous Amendments

SOURCE: Federal Register, December 20, 2004, Vol. 69, No. 243, page 76339

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 Secretariat is issuing FAC 2001-26 to amend the Federal Acquisition Regulation (FAR) in the following areas: (1) electronic representations and certifications; (2) Excluded Parties List System enhancement; (3) special emergency procurement authority; (4) notification of employee rights concerning payment of union dues or fees; (5) delegation of approval authority for mentor-protege agreements; (6) penalties for unallowable costs; and (7) technical amendments.

DATES: The effective date of these rules is January 19, 2005, except for item (1) which is effective January 1, 2005, and items (4) and (7) which are effective December 20, 2004. Comments on item (4) must be submitted on or before February 18, 2005.

ADDRESSES: Submit comments on item (4), identified by "FAC 2001-26, FAR case 2004-010, to: (1) http://www.regulations.gov; (2) http://www.acqnet.gov/far/ProposedRules/proposed.htm; (3) e-mail: farcase.2004-010@gsa.gov; (4) fax: 202-501-4067; or (5) mail: General Services Administration, Regulatory Secretariat (MVA), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405.

FOR FURTHER INFORMATION CONTACT: The following analysts:

      Items (1) and (3), Gerald Zaffos, 202-208-6091.

      Items (2) and (4), Craig Goral, 202-501-3856.

      Item (5), Rhonda Cundiff, 202-501-0044.

      Item (6), Richard Loeb, 202-208-3810.

For general information, contact the FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, 202-501-4755.

SUPPLEMENTAL INFORMATION: (1) Electronic Representations and Certifications: This final rule requires offerors to submit representations and certifications electronically through the "Online Representations and Certifications Application" (ORCA) portion of the Business Partner Network (BPN) (http://orca.bpn.gov). Company information collected in the Central Contractor Registration (CCR) database (which is also part of the BPN at http://www.ccr.gov) is electronically provided and pre-populated into ORCA (such as small business status, ownership, etc.). The vendor is not asked to re-enter any information that is found in CCR. The only information the vendor needs to supply in ORCA is directly related to representations and certifications.

On January 27, 2004, a proposed rule was published that would delete the requirement to include 25 representations and certifications in solicitations, and require that the 25 representations and certifications be completed in ORCA at least annually (see the January 27, 2004, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Electronic Representations and Certifications). The ORCA representations and certifications would be available to contracting officers throughout the government (and the general public) at http://orca.bpn.gov/publicsearch.aspx -- contracting officers would check ORCA before making an award over the micro-purchase threshold to make sure the bidder or offeror is eligible (except solicitations listed in FAR 4.1102, Policy, as exempt from the CCR requirements are also exempt from ORCA). There would no longer be a need for bidders and offerors to complete separate representations and certifications for each bid or offer.

Forty-five comments were submitted in response to the proposed rule. Based on those comments, the proposed rule is adopted as final with the following changes:


(2) Excluded Parties List System (EPLS) Enhancement: This final rule revises FAR 9.404, Excluded Parties List System (formerly titled "List of Parties Excluded from Federal Procurement and Nonprocurement Programs"), to replace the paper List of Parties Excluded from Federal Procurement and Nonprocurement Programs with the electronic Excluded Parties List System (EPLS) (http://epls.gov). This change enables agencies to directly enter data on parties suspended, proposed for debarment, debarred, declared ineligible, excluded, or disqualified.

On December 1, 2003, a proposed rule was published (see the December 1, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Excluded Parties System Enhancement"). Six respondents submitted comments. The proposed rule is adopted as final with a few editorial changes.

EDITOR'S NOTE: The introduction to the final rule acknowledges that there are differences between the definitions used in the FAR and the "Nonprocurement Common Rule" (NCR) which applies to grants and other non-contract transactions (see the November 26, 2003, FEDERAL CONTRACTS DISPATCH "Governmentwide Debarment and Suspension (Nonprocurement) and Governmentwide Requirements for Drug-Free Workplace (Grants)"). For example, the FAR uses the terms "suspension," "debarment," and "proposed for debarment," as does the NCR, but the NCR includes all these terms under the term "excluded," which the FAR does not use. Also, the FAR uses the term "ineligible" instead of the comparable term "disqualified" that is used in the NCR, but the NCR also uses the term "ineligible" to cover both "excluded" and "ineligible." However, removing the term "ineligible" from the FAR was considered "unnecessarily disruptive...The main thing a contracting officer needs to know is the effect of being listed in the 'Excluded Parties List System,' not the underlying basis for the listing, and whether the party is considered 'ineligible' or 'disqualified.'"


(3) Special Emergency Procurement Authority: This adopts as final, with changes, the interim rule in FAC 2001-20 which implemented the special emergency procurement authorities of Section 1443 of Public Law 108-136, the National Defense Authorization Act for Fiscal Year 2004 (see the the November 25, 2003, FEDERAL CONTRACTS DISPATCH Enactment of the National Defense Authorization Act for Fiscal Year 2004, and the February 23, 2004, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-20, Special Emergency Procurement Authority").

The interim rule made the following changes for acquisitions that support a contingency operation or facilitate the defense against or recovery from nuclear, biological, chemical, or radiological attack against the United States:

Two respondents submitted comments, and a minor editorial change is made as a result. However, on October 28, 2004, President Bush signed Public Law 108-375, Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005. For acquisitions that support a contingency operation or facilitate the defense against or recovery from nuclear, biological, chemical, or radiological attack, Section 822 of Public Law 108-375 increased the micro-purchase threshold from $15,000 to $25,000, and the simplified acquisition threshold for such contracts awarded or performed outside the United States from $500,000 to $1,000,000. Therefore, this final rule reflects the increased thresholds. (EDITOR'S NOTE: For more on the acquisition-related provisions of Public Law 108-375, see the October 29, 2004, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act for Fiscal Year 2005.")


(4) Notification of Employee Rights Concerning Payment of Union Dues or Fees: This interim rule adds FAR Subpart 22.16, Notification of Employee Rights Concerning Payment of Union Dues or Fees, and corresponding contract clauses, to implement Executive Order (EO) 13201, Notification of Employee Rights Concerning Payment of Union Dues or Fees, and the Department of Labor's implementing regulations at Title 29 of the Code of Federal Regulations (CFR) Part 470, Obligations of Federal Contractors and Subcontractors; Notice of Employee Rights Concerning Payment of Union Dues or Fees (see the February 22, 2001, FEDERAL CONTRACTS DISPATCH "Executive Order 13201, Notification of Employee Rights Concerning Payment of Union Dues or Fees," and the March 29, 2004, FEDERAL CONTRACTS DISPATCH "Department of Labor (DOL); Notice of Employee Rights Concerning Payment of Union Dues or Fees"). EO 13201 requires non-exempt federal contractors and subcontractors with contracts or subcontracts that exceed the simplified acquisition threshold to post notices alerting nonunion employees that they cannot be forced to pay fees to unions to support activities not related to collective bargaining, contract administration, and grievance adjustment.

FAR Subpart 22.16 consists of the following:

FAR 52.222-39 reiterates the requirements of EO 13201 as implemented by FAR Subpart 22.16, provides the text of the required notice, provides instructions for obtaining a poster with the notice, provides contractor compliance requirements, and exempts the following from the requirement to post the employee notice:


(5) Delegation of Approval Authority for Mentor-Protege Agreements: This final rule amends FAR 19.702, Statutory Requirements, to change the approval authority of mentor-protege agreements from the DOD Office of Small and Disadvantaged Business Utilization (OSDBU) to the OSDBUs of the military departments and defense agencies.

DOD is making this change in recognition that the military departments have the necessary expertise to manage their mentor-protege programs. The DOD OSDBU will maintain oversight and policy development responsibilities.

A proposed rule was published April 6, 2004 (see the April 6, 2004, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Delegation of Approval Authority for Mentor-Protege Agreements"). One respondent submitted a comment, but it was outside the scope of the rule, so the proposed rule is adopted as final without changes.


(6) Penalties for Unallowable Costs: This final rule increases the contract dollar threshold for assessing a penalty if the contractor includes expressly unallowable costs in its claim for reimbursement from $500,000 to $550,000 in paragraph (b) of FAR 42.709, Scope (which states that the section implements the statutory penalty provisions for claiming expressly unallowable costs), and in FAR 42.709-6, Contract Clause (which requires that FAR 52.242-3, Penalties for Unallowable Costs, be included in solicitations and contracts over the cost or pricing data threshold except fixed-price contracts without cost incentives).

On November 28, 2003, a proposed rule was published that would increase the penalty threshold as well as to amend FAR Part 31, Contract Cost Principles and Procedures, to remove the requirement to apply cost principles and procedures when pricing a contract if cost or pricing data are not obtained (see the November 28, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Applicability of the Cost Principles and Penalties for Unallowable Costs"). However, the proposal to amend FAR Part 31 was not adopted because the government needs consistency when dealing with cost data whether it is "certified cost or pricing data" or not, and because of concerns that the proposed language could be construed as limiting the government's use of FAR Part 31 for its prenegotiation positions.


(7) Technical Amendments: In addition to updating cross-references in FAR 44.203, Consent Limitations, and FAR 52.219-1, Small Business Program Representations, and changing an office symbol in FAR 51.102, Authorization to Use Government Supply Sources, the following technical amendments are made:


FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.

Copyright 2004 by Panoptic Enterprises. All Rights Reserved.

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