Panoptic Enterprises'


Federal Acquisition Developments, Guidance, and Opinions

March 2011
Vol. XII, No. 3


SBA Revises 8(a) Program, Small Business Size Regulations
After Hiatus, DOD Resumes Rampage Through DFARS
SBA Revises Small Business Status Protest Regulations
Government Awards $537 Billion in FY10
OFPP Addresses Communications with Industry
OFPP Issues Guide for Attracting Acquisition Talent
Contract Transparency Not to Be Pursued, For Now
DEAR Brought Up-to-Date
NFS Implements FAR Award Fee Revision
NFS Revision Would Discourage EVM for FFP Contracts

SBA Revises 8(a) Program,
Small Business Size Regulations

The Small Business Administration (SBA) has made the first comprehensive revision of its Section 8(a) Business Development program regulations in more than ten years. In addition, SBA revised its small business size regulations and its regulations affecting small disadvantaged businesses (SDBs). This revision reflects current practice and experience, implements statutory changes, clarifies various aspects of the regulations that have been prone to misinterpretation, and addresses situations that were not contemplated when the previous revisions to the 8(a) program were made.

The basic rules and requirements of SBA’s small business size regulations and its 8(a) program remain unchanged by this rule change; SBA proposed making changes to Title 13 of the Code of Federal Regulations, Part 121 (13 CFR Part 121), Small Business Size Regulations, and 13 CFR Part 124, 8(a) Business Development/Small Disadvantaged Business Status Determinations, to “fine tune” the regulations in the following subject areas:

13 CFR Part 121

13 CFR Part 124

(For more on the proposed rule, see the November 2009 Federal Contracts Perspective article “SBA Proposes Extensive Changes to 8(a) Program and Related Small Business Size Standards.”)

Two hundred and thirty-one (231) respondents submitted written comments on the proposed rule. In addition, SBA held hearings in Washington, DC; New York, NY; Seattle, WA; Boston, MA; Dallas, TX; Atlanta, GA; Albuquerque, NM; Miami, FL; Chicago, IL; and Los Angeles, CA. Finally, SBA conducted tribal consultations in Seattle, WA; in Albuquerque, NM; and via teleconference in Vienna, VA with representatives in Anchorage, AK. In response to the comments, many editorial changes were made to clarify the intent of SBA. The following are some of the more significant changes made to the final rule:

After Hiatus, DOD Resumes Rampage Through DFARS

After a one month respite from the continual overhaul of the Defense FAR Supplement (DFARS), the Department of Defense (DOD) decided pick up where it left off , issuing six final rules, two proposed rules, one request for comments, and one policy memorandum.

SBA Revises Small Business Status Protest Regulations

The Small Business Administration (SBA) is amending its regulations to clarify the effect, across all small business programs (that is, small business, small disadvantaged business, HUBZone, and service-disabled veteran owned small business programs), of initial and appeal eligibility decisions on the procurement; increase the amount of time SBA has to render formal size determinations (15 business days); require that SBA's Office of Hearings and Appeals (OHA) issue a size appeal decision within 60 calendar days of the close of the record, if possible; increase the amount of time SBA has to file North American Industry Classification System (NAICS) code appeals; alter the NAICS code appeal procedures to comply with a Federal Court decision; clarify that contracting officers must reflect final agency eligibility decisions in federal procurement databases and goaling statistics; clarify how a contracting officer assigns a NAICS code and size standard to a multiple award procurement; and make other changes to size status protest and appeal rules.

Government Awards $537 Billion in FY10

The federal government spent slightly less money on contracts in Fiscal Year (FY) 2010 than it did in the previous year – $537 billion vs. $541 billion in FY 2009, a -0.7% reduction. This can be attributed largely to the fact that the wars in Iraq and Afghanistan were winding down, and that much of the Recovery Act funds had already been dispersed.

The following are the largest agencies’ FY 2010 spending totals:

Defense $366,941,507,748
Health and Human Services $19,033,719,304
General Services Administration $17,655,768,989
Veterans Affairs $16,129,042,652
National Aeronautics And Space Administration $16,029,010,610
Homeland Security $13,560,278,880
State $8,120,812,544
Agency For International Development $6,639,466,955
Justice $6,468,503,313
Interior $6,106,149,232
Agriculture $6,062,683,159
Treasury $5,959,484,316
Transportation $5,638,321,623
Commerce $3,939,532,190
Labor $2,233,409,557
Education $1,835,178,394
Environmental Protection Agency $1,657,763,354
Housing and Urban Development $1,596,607,896
Social Security Administration $1,366,017,428
Office Of Personnel Management $1,230,554,321
All Other Agencies $3,029,616,829
      GRAND TOTAL $536,923,377,943

OFPP Addresses Communications with Industry

Office of Federal Procurement Policy (OFPP) Administrator Daniel Gordon issued a memorandum to all chief acquisition officers, senior procurement officers, and chief information officers announcing the initiation of the “Myth-Busters Information Program” to address misconceptions regarding communications with industry during the acquisition process.

“The purposes of this memorandum are to: (1) identify common misconceptions about vendor engagement that may be unnecessarily hindering agencies’ appropriate use of the existing flexibilities, and provide facts and strategies to help acquisition professionals benefit from industry’s knowledge and insight; (2) direct agencies to remove unnecessary barriers to reasonable communication and develop vendor communications plans, consistent with existing law and regulation, that promote responsible and constructive exchanges; and (3) outline steps for continued engagement with agencies and industry to increase awareness and education.”

The 10 “myths” this memorandum “busts” are:

  1. Misconception – “We can’t meet one-on-one with a potential offeror.”
    Fact – Government officials can generally meet one-on-one with potential offerors as long as no vendor receives preferential treatment.

  2. Misconception – “Since communication with contractors is like communication with registered lobbyists, and since contact with lobbyists must be disclosed, additional communication with contractors will involve a substantial additional disclosure burden, so we should avoid these meetings.”
    Fact – Disclosure is required only in certain circumstances, such as for meetings with registered lobbyists. Many contractors do not fall into this category, and even when disclosure is required, it is normally a minimal burden that should not prevent a useful meeting from taking place.

  3. Misconception – “A protest is something to be avoided at all costs - even if it means the government limits conversations with industry.”
    Fact – Restricting communication won’t prevent a protest, and limiting communication might actually increase the chance of a protest – in addition to depriving the government of potentially useful information.

  4. Misconception – “Conducting discussions/negotiations after receipt of proposals will add too much time to the schedule.”
    Fact – Whether discussions should be conducted is a key decision for contracting officers to make. Avoiding discussions solely because of schedule concerns may be counter-productive, and may cause delays and other problems during contract performance.

  5. Misconception – “If the government meets with vendors, that may cause them to submit an unsolicited proposal and that will delay the procurement process.”
    Fact – Submission of an unsolicited proposal should not affect the schedule. Generally, the unsolicited proposal process is separate from the process for a known agency requirement that can be acquired using competitive methods.

  6. Misconception – “When the government awards a task or delivery order using the Federal Supply Schedules, debriefing the offerors isn’t required so it shouldn’t be done.”
    Fact – Providing feedback is important, both for offerors and the government, so agencies should generally provide feedback whenever possible.

  7. Misconception – “Industry days and similar events attended by multiple vendors are of low value to industry and the government because industry won’t provide useful information in front of competitors, and the government doesn’t release new information.”
    Fact – Well-organized industry days, as well as pre-solicitation and pre-proposal conferences, are valuable opportunities for the government and for potential vendors – both prime contractors and subcontractors, many of whom are small businesses.

  8. Misconception – “The program manager already talked to industry to develop the technical requirements, so the contracting officer doesn’t need to do anything else before issuing the RFP.”
    Fact – The technical requirements are only part of the acquisition; getting feedback on terms and conditions, pricing structure, performance metrics, evaluation criteria, and contract administration matters will improve the award and implementation process.

  9. Misconception – “Giving industry only a few days to respond to an RFP is OK since the government has been talking to industry about this procurement for over a year.”
    Fact – Providing only short response times may result in the government receiving fewer proposals and the ones received may not be as well-developed - which can lead to a flawed contract. This approach signals that the government isn’t really interested in competition.

  10. Misconception – “Getting broad participation by many different vendors is too difficult; we’re better off dealing with the established companies we know.”
    Fact – The government loses when we limit ourselves to the companies we already work with. Instead, we need to look for opportunities to increase competition and ensure that all vendors, including small businesses, get fair consideration.

In addition, Gordon directs each department and agency to develop a vendor communication plan “to provide better direction to the workforce and to clarify the nature and schedule of engagement opportunities for industry.” Finally, Gordon states he has directed the Federal Acquisition Institute (FAI) to develop a continuous learning module that contracting officers, program managers, procurement attorneys, and others; and that OFPP will work with FAI, the Defense Acquisition University (DAU), and agency training practitioners to conduct an awareness campaign to eliminate unnecessary barriers to vendor engagement.

OFPP Issues Guide for Attracting Acquisition Talent

In another memorandum to chief acquisition officers and senior procurement officers, OFPP Administrator Gordon provides “civilian agency acquisition and human capital officials with additional information about the many special hiring authorities and strategies which are available for the acquisition profession.”

An attachment to the memorandum lists the various veterans’ hiring authorities, the direct hiring authority for acquisition positions, student employment authorities, Schedule A Excepted Service appointing authority for persons with disabilities, other Excepted Service appointing authorities, non-competitive hiring authority for military spouses, and reemploying annuitants into acquisition positions.

In addition, Gordon informs readers that the Office of Personnel Management (OPM) has an online Federal Hiring Flexibilities Resource Center, which includes an online tool to help determine which potential hiring flexibility is appropriate for the particular situation (http://www.opm.gov/Strategic_Management_of_Human_Capital/fhfrc/default.asp).

Finally, Gordon included an attachment to the memorandum with hiring strategies that improve the visibility of acquisition jobs, target specific skill sets, and reduce, wherever possible, the administrative burden on the agency and the applicant.

Contract Transparency Not to Be Pursued, For Now

Based on comments and information provided in response to an advance notice of proposed rulemaking that asked for assistance in determining how best to amend the FAR to enable public posting of contract actions should such posting become a requirement in the future, the FAR Council has decided not to amend the FAR at this time because some of the existing acquisition systems at Acquisition Central (http://www.acquisition.gov) provide certain information on government contracts that is readily available to the public, and most of the content of a solicitation or contract action consists either of standard FAR terms and conditions available at https://www.acquisition.gov/far/index.html, agency specific terms and conditions available from the contracting agency website, or sensitive information that may be releasable under the Freedom of Information Act (FOIA).

This transparency effort is intended to promote efficiency in government contracting through an open acquisition process and improve federal spending accountability consistent with the president’s January 21, 2009, memorandum to agency heads titled “Transparency and Open Government.”

For more on the advance notice of proposed rulemaking and request for information, see the June 2010 Federal Contracts Perspective article “Information on Enhancing Transparency Sought.”

DEAR Brought Up-to-Date

The Department of Energy (DOE) is updating the DOE Acquisition Regulation (DEAR) to conform to the FAR, the Federal Property Management Regulation, and the Federal Management Regulation; to remove out-of-date coverage; and to update references.

The DEAR parts being revised are:

DOE received no responses to its proposed DEAR changes, so the DEAR is amended as proposed. For more on the proposed rule, see the August 2010 Federal Contracts Perspective article “DOE Proposes More Updates to DEAR.”

NFS Implements FAR Award Fee Revision

To bring the National Aeronautics and Space Administration (NASA) FAR Supplement (NFS) into compliance with the changes made to the FAR by Federal Acquisition Circular (FAC) 2005-46, NASA is issuing an interim rule revising NFS Subpart 1816.4, Incentive Contracts (for more on FAC 2005-46, see the October 2010 Federal Contracts Perspective article “FAC 2005-46 Exempts Commercial IT from BAA”).

FAC 2005-46 revised FAR 16.305, Cost-Plus-Award-Fee Contracts, FAR 16.401, General [for Incentive Contracts], and FAR 16.405-2, Cost-Plus-Award-Fee Contracts, to incorporate new requirements on the use of award fee incentives as directed by Section 814 of the Fiscal Year (FY) 2007 National Defense Authorization Act (Public Law 109-364) and Section 867 of the FY 2009 National Defense Authorization Act (Public Law 100-417):

These revisions in the FAR award fee guidance resulted in the need to make associated changes to the NFS award fee regulations as follows:

Comments on this interim rule must be submitted by April 11, 2011, identified as “RIN 2700-AD69,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) e-mail: william.roets-1@nasa.gov; or (3) mail: NASA Headquarters, Office of Procurement, Contract Management Division, Washington, DC 20546.

NFS Revision Would Discourage EVM for FFP Contracts

This proposed rule would revise NFS Subpart 1834.2, Earned Value Management System, to discourage contracting officers from requiring the use of an earned value management (EVM) system for firm-fixed-price (FFP) contracts and subcontracts of any dollar value to relieve contractors of unnecessary reporting burdens.

EVM gives agency managers an early warning of potential cost overruns and schedule delays during the execution of their programs. EVM requires agencies to integrate information about the scope of work with cost, schedule, and performance information so they may compare planned spending with actual spending, isolate the source of performance problems, and take corrective actions in a timely manner.

FAR Subpart 34.2 and Office of Management and Budget (OMB) Circular A-11, Preparation, Submission and Execution of the Budget, require agencies to measure the cost and schedule performance of major investments with development activity using EVM. These policies are implemented by NASA through NASA Procedural Requirement (NPR) 7120.5, NASA Program and Project Management Processes and Requirements, which requires program managers to perform appropriate EVM analyses of their investments, and NFS Subpart 1834.2, which requires contractors to have an EVM system for major acquisitions with development or production work, including development or production work for flight and ground support systems and components, prototypes, and institutional investments (facilities, IT infrastructure, etc.).

Under the current NASA policy, contractors executing a FFP contract meeting specified thresholds are required to have an EVM system that complies with the guidelines in American National Standards Institute/Electronic Industries Alliance (ANSI/EIA) Standard 748, Earned Value Management Systems. However, since the cost incurred by the government is fixed, the requirement for ANSI compliance for performance under FFP contracts creates an unnecessary burden on contractors that may increase their costs and those passed on to the government. Accordingly, this proposed rule would make the following changes to NFS Subpart 1834.2:

Comments on this proposed rule must be submitted by April 11, 2011, identified as “RIN 2700-AD29,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) e-mail: carl.c.weber@nasa.gov; or (3) mail: Carl Weber (Mail stop 5K80), NASA Headquarters, Office of Procurement, Contract Management Division, Washington, DC 20546.

Copyright 2011 by Panoptic Enterprises. All Rights Reserved.

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