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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions

May 2014
Vol. XV, No. 5
[pdf version]

CONTENTS

President Requires Collection of Compensation Data
From Contractors and Subcontractors

On April 8, “Equal Pay Day,” President Obama continued his efforts to address income inequality without involving Congress (“pen and phone”) with the issuance of a memorandum to the secretary of labor directing him to propose “a rule that would require federal contractors and subcontractors to submit to DOL [the Department of Labor] summary data on the compensation paid their employees, including data by sex and race.” Simultaneously with the issuance of the memorandum the president issued Executive Order 13665, Non-Retaliation for Disclosure of Compensation Information, prohibiting contractors from “discharg[ing] or in any other manner discriminat[ing] against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.”

The memorandum to the secretary of labor, “Advancing Pay Equality Through Compensation Data Collection,” cites the statistic from the Bureau of the Census that women “earn only 77 cents for every dollar that a man earns.” The president has been citing this figure and the resulting 23 cent difference since at least 2011. However, the 77¢ Census figure is a simple calculation that merely compares women’s and men’s median annual earnings (the median is the midpoint – 50% are above the median and 50% are below). The Census Bureau calculation did not take into account that, in general, women work fewer hours than men during a year (for example, teachers, most of whom are women, work nine months of the year, and men tend to work more overtime). In addition, the average woman has less work experience than the average man (frequently taking time off to raise children); women tend to have more part-time jobs; and women tend to choose careers that pay less (for example, teaching versus engineering). In addition, this simple calculation excludes fringe benefits, and many women accept jobs that pay less buy have more flexibility (such as flexhours or parental leave). When all of these factors are taken into consideration, the gap between women and men drop to 5¢ (according to a report prepared for the DOL). In fact, unmarried women earn almost as much as men – 96¢ per dollar.

Using the Census Bureau methodology (all men’s annual wages compared to all women’s annual wages), the White House has a “gender gap” – women working in the White House get paid 88¢ for every dollar a man in the White House makes. When told of the existence of this “gender gap,” White House press secretary Jay Carney said the calculation was misleading because it “looked at the aggregate of everyone on staff, and that includes from the most junior levels to the most senior.” Yet that is exactly how the 77¢ figure was derived!

This action is merely a political ploy intended to demonstrate “compassion” for women experiencing “pay inequality.” These documents will not accomplish their intended goal. However, compliance will require more recordkeeping and reporting by government contractors and subcontractors, which generates higher overhead costs, and thus produces higher contract costs that must be paid by the taxpayers.

EDITOR’S NOTE: April 8 was designated “Equal Pay Day” because, if both men and women started work on January 1, 2013, women would have to work until April 8, 2014, to make as much as men who stopped working on December 31, 2013, since they supposedly make only 77¢ for every dollar a man earns.

FAC 2005-73 Implements Law Codification of Title 41

Federal Acquisition Circular (FAC) 2005-73 consists of a final rule that implements Public Law 111-350, which is the positive law codification of Title 41 of the United States Code, Public Contracts. “In the codification of laws by this act, the intent is to conform to the understood policy, intent, and purpose of Congress in the original enactments, with such amendments and corrections as will remove ambiguities, contradictions, and other imperfections...”

FAC 2005-73 consists of the following kinds of changes throughout the Federal Acquisition Regulation (FAR):

• Changes to citations (for example, “41 U.S.C. 10a-10d” is changed to “41 U.S.C. chapter 83”).
  
  
• Changes to the popular names of acts cited in the FAR (for example, the “Service Contract Act of 1965” is changed to the “Service Contract Labor Standards statute”). A table providing the popular names of the acts, the present statutory citation, and the new titles of the statutes appears at FAR 1.110, Positive Law Codification.
  
  
• Changes to terminology which does not involve substantive changes to the meaning of the statutes (such as changing “competition advocate” to “advocate for competition”).
  
  
• Numerous minor corrections apart from the changes directly due to the recodification, such as corrections to references to Title 10 of the United States Code; and the addition of codification citations for authorization acts, appropriations acts, and other public laws.

SBA Replaces Four Nonmanufacturer Waivers with Three

The Small Business Administration (SBA) is rescinding four nonmanufacturer rule waivers which were classified under North American Industry Classification System (NAICS) code 335999, All Other Miscellaneous Electrical Equipment and Component Manufacturing, and which were further classified under Product Service Codes (PSCs) 5999, 6210, 6240, and 6250. In their place SBA is issuing three replacement nonmanufacturer rule waivers.

• The class waiver applicable to PSC 5999, Miscellaneous Electrical and Electronic Components, is rescinded because it has been determined that several small business manufacturers of miscellaneous electrical equipment are currently available to participate in the federal marketplace.
  
  
• The class waivers applicable to PSC 6210, Indoor and Outdoor Electrical Lighting Fixtures; PSC 6240, Electric Lamps; and PSC 6250, Ballasts, Lampholders, and Starters, are rescinded because they were each were improperly classified under NAICS code 335999. To correct this error, SBA is granting three new class waivers under the correct NAICS codes. Specifically, SBA is granting class waivers for the following:
  
  
  • NAICS code 335122, Commercial, Industrial, and Institutional Electric Lighting Fixture Manufacturing, PSC 6210
    
    
  • NAICS code 335110, Electric Lamp Bulb and Part Manufacturing, PSC 6240
    
    
  • NAICS Code 335311, Power, Distribution, and Specialty Transformer Manufacturing, PSC 6250

The SBA regulation on the nonmanufacturer rule is in Title 13 of the Code of Federal Regulations (CFR), Business and Credit Administration; part 121, Small Business Size Standards; under paragraph (b) of 121.406, How does a small business concern qualify to provide manufactured products or other supply items under a small business set-aside, service-disabled veteran-owned small business set-aside, WOSB [women-owned small business] or EDWOSB [economically disadvantaged women-owned small business] set-aside, or 8(a) contract? The SBA regulation on the waiver of the nonmanufacturer rule is 13 CFR 121.1202, When Will a Waiver of the Nonmanufacturer Rule Be Granted for a Class of Products? A complete list of products for which the nonmanufacturer rule has been waived is available at http://www.sba.gov/sites/default/files/NMR CLASS WAIVER LIST-AS OF 12-31-2013-VERSION 10.pdf.

Proposed FAR Rule Would Add Section K to Contracts

To standardize the incorporation by reference of representations and certifications in contracts, a proposed rule would revise FAR subpart 4.12, Representations and Certifications, and add FAR 52.204-X, Incorporation by Reference of Representations and Certifications, to standardize the incorporation by reference of representations and certifications in contracts.

The standard contract award forms are inconsistent regarding the reference to Section K of the Uniform Contract Format [Representations, Certifications, and Other Statements of Bidders/Offerors or Respondents]. Standard Form (SF) 26, Award/Contract, SF 33, Solicitation, Offer and Award, and Optional Form 307, Contract Award, each have a block for the page numbers where Section K is located in the contract, but SF 252, Architect-Engineer Contract, SF 1442, Solicitation, Offer and Award (Construction, Alteration or Repair), SF 1447, Solicitation/Contract, and SF 1449, Solicitation/Contract/Order for Commercial Items, do not address Section K. In addition, FAR 15.204-1, Uniform Contract Format, requires that Section K be incorporated by reference into the contract, but FAR 14.201-1, Uniform Contract Format [Sealed Bidding], merely states that acceptance of a bid incorporates Section K “in the resultant contract even though not physically attached.”

To clarify and standardize Section K procedures, the following changes would be made:

• A new paragraph (d) would be added to FAR 4.1201, Policy, which would state, “The contracting officer shall incorporate the representations and certifications by reference in the contract (see [FAR] 52.204-X, or for commercial items see [FAR] 52.212-4(v)).”
  
  
• A new paragraph (b) would be added to FAR 4.1202, Solicitation Provision and Contract Clause, which would state, “The contracting officer shall insert the clause at [FAR] 52.204-X, Incorporation by Reference of Representations and Certifications, in solicitations and contracts.”
  
  
• Paragraph (c) of FAR 14.201-1 would be amended by adding the following sentence: “The representations and certifications are incorporated by reference in the contract by using [FAR] 52.204-X (see [FAR] 4.1202(b)) or for commercial items [FAR] 52.212-4(v).”
  
  
• Paragraph (b) of FAR 15.204-1 would be amended by adding the following sentence: “The representations and certifications shall be incorporated by reference in the contract by using [FAR] 52.204-X (see [FAR] 4.1202(b)) or for commercial items [FAR] 52.212-4(v).”
  
  
• New FAR 52.204-X would state, “The contractor’s representations and certifications, including those completed electronically via the System for Award Management (SAM) [https://www.sam.gov], are incorporated by reference into the contract.”
  
  
• FAR 52.212-4, Contract Terms and Conditions – Commercial Items, would be revised by adding paragraph (v) which would consist of the FAR 52.204-X language.

Comments on this proposed rule must be submitted no later than June 23, 2014, identified as “FAR Case 2014-001,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail: U.S. General Services Administration, Regulatory Secretariat Division (MVCB), ATTN: Hada Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.

Proposal Would Extend Contractor Employee Conflict of Interest Limits

To implement Section 829 of the National Defense Authorization Act (NDAA) for Fiscal Year 2013 (Public Law 112-239), a proposed rule would amend FAR subpart 3.11, Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions, to extend the limitations on contractor employee personal conflicts of interest (COIs) to apply to the performance of all functions that are closely associated with inherently governmental functions and contracts for personal services.

Section 841 of the NDAA for Fiscal Year 2009 (Public Law 110-417) required the Office of Federal Procurement Policy (OFPP) to develop and issue a policy to address personal COIs for contractor employees who perform acquisition functions closely associated with inherently governmental functions. This was done by FAC 2005-54, which added FAR subpart 3.11 and FAR 52.203-16, Preventing Personal Conflicts of Interest (see the December 2011 Federal Contracts Perspective article “FAC 2005-54 Permits Small Business Set-Asides For Multiple-Award Contracts”). In addition, Section 841 required that OFPP conduct a review of the FAR to determine whether coverage of personal conflicts of interest should be expanded beyond contractors whose work supports acquisition functions closely associated with inherently governmental functions.

Section 829 of the FY 2013 NDAA required the Secretary of Defense to review the guidance on personal conflicts of interest for contractor employees issued in response to Section 841 to determine whether it would be in the best interest of DOD and the taxpayers to extend such guidance to personal COIs by contractor personnel performing any of the following:

1. Functions other than acquisition functions that are closely associated with inherently governmental functions;
   
   
2. Personal services contracts; or
   
   
3. Contracts for staff augmentation services.

After conducting the review mandated by Section 829, the Secretary of Defense concluded that extension of the FAR personal conflicts of interest regulations to additional functions and contract types might be in the best interest of DOD and the taxpayers. DOD asked OFPP whether the extension of coverage should be pursued as a change to the FAR. This proposed rule is in response to OFPP’s affirmative response.

To extend the personal COI regulations to contractor employees performing all functions that are closely associated with inherently governmental functions (not just acquisition functions) and to personal services contracts (to the extent such contracts are authorized by law, such as for legal or medical services), the proposed rule would make the following changes to the FAR:

• The title of FAR subpart 3.11 would be changed from “Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions” to “Preventing Personal Conflicts of Interest for Contractor Employees” (“Performing Acquisition Functions” would be removed).
  
  
• FAR 3.1101, Definitions, would be revised by deleting the definition of “acquisition function closely associated with inherently governmental functions,” and revising the definition of “covered employee” from “an individual who performs an acquisition function closely associated with inherently governmental functions” to “an individual who performs a function closely associated with inherently governmental functions (see [FAR] subpart 7.5 [Inherently Governmental Functions]) or performs under a personal services contract (see [FAR] 37.104 [Personal Services Contracts]).”
  
  
• Paragraph (a) of FAR 3.1103, Procedures, would be revised by changing “by use of the contract clause at [FAR] 52.203-16, as prescribed at [FAR] 3.1106, the contracting officer shall require each contractor whose employees perform acquisition functions closely associated with inherently government functions to...” to “by use of the contract clause at [FAR] 52.203-16, as prescribed at [FAR] 3.1106, the contracting officer shall require each contractor with at least one covered employee to...”
  
  
• FAR 3.1106, Contract Clause (which addresses the use of FAR 52.203-16), would be revised as follows:
  
  
  • Paragraph (a)(2) would be changed from “[Insert FAR 52.203-16 in solicitations and contracts that] include a requirement for services by contractor employee(s) that involve performance of acquisition functions closely associated with inherently governmental functions for, or on behalf of, a federal agency or department” to “...include a requirement for services by contractor employee(s) that are covered employees, i.e., an individual who performs a function closely associated with inherently governmental functions or performs under a personal services contract and is: (i) an employee of the contractor; or (ii) a subcontractor that is a self-employed individual treated as a covered employee of the contractor because there is no employer to whom such an individual could submit the required disclosures.”
    
    
  • Paragraph (b) would be changed from “If only a portion of a contract is for the performance of acquisition functions closely associated with inherently governmental functions, then the contracting officer shall still insert the clause, but shall limit applicability of the clause to that portion of the contract that is for the performance of such services” to “If only a portion of a contract is for the performance of services by covered employees, then the contracting officer shall still insert the clause, but shall limit applicability of the clause to that portion of the contract that is for the performance of such services.”
    
    
  • Paragraph (c) would be changed from “If only a portion of a contract is for the performance of acquisition functions closely associated with inherently governmental functions, then the contracting officer shall still insert the clause, but shall limit applicability of the clause to that portion of the contract that is for the performance of such services” to “do not insert the clause in solicitations or contracts with a self-employed individual if the services are to be performed entirely by the self-employed individual, rather than a covered employee of the contractor. In such cases, the contracting officer shall consider these matters as part of the Organizational Conflict of Interest analysis (see [FAR] subpart 9.5 [Organizational and Consultant Conflicts of Interest]).”
  
  
• FAR 52.203-16 would be revised to remove the definition of “acquisition function closely associated with inherently governmental functions”; revise the definition of “covered employee” to reflect the revised definition in FAR 3.1101; and revise paragraph (d)(2), which addresses the requirement to include the clause in subcontracts, to remove the word “acquisition” from “...in which subcontractor employees will perform acquisition functions closely associated with inherently governmental functions...”

Comments on this proposed rule must be submitted no later than June 2, 2014, identified as “FAR Case 2013-022,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail: U.S. General Services Administration, Regulatory Secretariat Division (MVCB), ATTN: Hada Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.

Dialogue Sought on Improving Federal Procurement

The OFPP, in conjunction with the Chief Acquisition Officers Council (CAOC), the Federal Acquisition Regulatory Council (FAR Council), the Chief Information Officers Council (CIOC), and the General Services Administration (GSA) is conducting a dialogue to discuss improvements to the federal acquisition process. According to the summary of the notice, “This dialogue is part an ongoing effort to improve the effectiveness and efficiency of the federal acquisition system by identifying impactful steps that can be taken by agencies to improve the way they do business with the best companies and enter into contracts that allow these companies to provide their best solutions for the taxpayer.”

“The federal acquisition system is governed by a myriad of rules, both administrative and statutory, that are designed to help agencies maximize results from their contracts, make sure that contractors are qualified to do business with the federal government, and ensure consistency with key economic and social policies. Efforts to streamline, modernize, and improve requirements may allow contractors and agencies to execute in a more efficient and effective manner, while still supporting the execution of these policies.”

The OFPP and the other groups seek to conduct a conversation to identify specific rules and requirements, tools, procedures, and practices that affect the efficiency and effectiveness of federal procurement and ways to improve them. They are interested in hearing about proposed improvements that can be accomplished through executive (regulatory, administrative, or management) action, as well as potential legislative proposals where requirements are based in statute. Dialogue will be encouraged in each of the following areas:

• Reporting and compliance requirements: For example, opportunities where collection processes and systems can be reengineered or automated, duplicative reporting can be eliminated, the frequency of reporting can be reduced, and outdated compliance thresholds can be changed.
  
  
• Procurement practices: For example, opportunities where acquisition strategies can be modernized (to support more efficient and effective acquisition of information technology, in particular), where best commercial practices can be utilized, as well as efforts to promote greater consideration of innovative solutions and contracting practices.
  
  
• Participation by small and minority businesses, new entrants, and non-traditional government contractors: For example, opportunities for improving existing technical or strategic assistance programs, making buying platforms for finding business opportunities and bidding more user friendly, and lowering the cost of doing business.

An online platform is being launched so interested parties may submit ideas, respond to questions posed by moderators, and comment on other ideas, including those that they think are most promising and impactful. Information on the platform and the dates for participating in the dialogue are posted at the CAOC’s website http://www.cao.gov.

DOD Updates Transportation, Financing Clauses

The Department of Defense (DOD) has continued its revision of Defense FAR Supplement (DFARS) provisions and clauses that have alternates by finalizing the proposed rules on transportation clauses and contract financing clauses. In addition, DOD has amended the DFARS to remove internal guidance on contracting officer’s representatives’ responsibilities, and to implement new requirements for the acquisition of photovoltaic devices.

• Transportation Clauses with Alternates: This finalizes, with changes, the proposed rule that would include the full texts of three clauses and their alternate(s): DFARS 252.247-7008, Evaluation of Bids, and its alternate; DFARS 252.247-7023, Transportation of Supplies by Sea, and its three alternates; and DFARS 252.216-7010, Requirements, which is an alternate to FAR 52.216-21, Requirements. In addition, the prescriptions for these clauses and their alternate(s) have been revised to address the elements common to the basic clause and its alternate(s).
  
  
  • Paragraph (d) of DFARS 216.506, Solicitation Provisions and Contract Clauses, is revised to state, “Use the basic or the alternate of the clause at [DFARS] 252.216-7010, Requirements, in lieu of the clause at FAR 52.216-21, Requirements, in solicitations and contracts when a requirements contract for the preparation of personal property for shipment or storage, or for the performance of intra-city or intra-area movement, is contemplated.” It goes on to require the use of the basic clause “if the acquisition does not involve a partial small business set-aside,” and the use of Requirements – Alternate I “if the acquisition involves a partial small business set-aside.” The texts of both Requirements – Basic and Requirements – Alternate I are included in DFARS 252.216-7010.
    
    EDITOR’S NOTE: The changes to DFARS 216.506 and addition of DFARS 252.216-7010 and its Alternate I are really “corrections.” Although DFARS 252.247-7015, Requirements, was located with the other transportation clauses in DFARS 252.247, it was an alternate to be used with FAR 52.216-21 when “the contract is for the preparation of personal property for shipment or storage...” Because DFARS 252.247-7015 more accurately applied to requirements contracts rather than transportation contracts, DFARS 252.216-7010 and its alternate replace DFARS 252.247-7015 (which is removed by this rule), and they are to be used in lieu of FAR 52.216-21, not with FAR 52.216-21 as was the case with DFARS 252.247-7015.
    
    
  • Paragraph (a) of DFARS 247.271-3, Solicitation Provisions, Schedule Formats, and Contract Clauses, is revised to state, “Use the basic or the alternate of the provision at [DFARS] 252.247-7008, Evaluation of Bids.” It goes on to require the use of the basic provision “when there are no ‘additional services’ items being added to the schedule,” and the use of Evaluations of Bids – Alternate I “when adding ‘additional services’ items to the schedule.”
    
    
  • Paragraph (b) of DFARS 247.574, Solicitation Provisions and Contract Clauses, is revised to state, “Use the basic or one of the alternates of the clause at [DFARS] 252.247-7023, Transportation of Supplies by Sea, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, except those for direct purchase of ocean transportation services.” It goes on to require the use of the basic clause “unless any of the supplies to be transported are commercial items that are: (i) shipped in direct support of U.S. military contingency operations, exercises, or forces deployed in humanitarian or peacekeeping operations when the contract is not a construction contract; or (ii) commissary or exchange cargoes transported outside of the Defense Transportation System when the contract is not a construction contract”; to use Transportation of Supplies by Sea – Alternate I “if any of the supplies to be transported are commercial items that are shipped in direct support of U.S. military contingency operations, exercises, or forces deployed in humanitarian or peacekeeping operations when the contract is not a construction contract”; and to use Transportation of Supplies by Sea – Alternate II “if any of the supplies to be transported are commercial items that are commissary or exchange cargoes transported outside of the Defense Transportation System...when the contract is not a construction contract.”
  
  One respondent submitted comments on the proposed rule and, as a result, the prescription for DFARS 252.216-7010 in DFARS 216.506(d) was revised to add “when a requirements contract...is contemplated.” In addition, minor editorial changes were made to standardize language for the clause prescriptions and prefaces to provide uniform arrangement in the regulations, and, in DFARS 252.247-7023, to provide for consistent use of the term “foreign-flag vessels.”
  
  For more on the proposed rule, see the September 2013 Federal Contracts Perspective article “DOD Proposes ‘Overarching Prescriptions’ for Clauses with Alternatives.”
  
  
• Contract Financing Clause with Alternate: This finalizes, with changes, the proposed rule that would address the only clause in DFARS part 232, Contract Financing, that has an alternate: DFARS 252.232-7007, Limitation of Government's Obligation.
  
  No one submitted comments on the proposed rule, which would have amended DFARS 232.705-70, Clause for Limitation of Government’s Obligation, to prescribe when to use DFARS 252.232-7007, Limitation of Government's Obligation – Basic, and Alternate I. However, in developing the final rule, DOD noticed that the only difference between the basic clause and the alternate is the number of line items subject to incremental funding – the basic clause would be used when two or more line items would be incrementally funded, and Alternate I would be used when only one line item would be incrementally funded. Therefore, DOD determined that Alternate I could be eliminated by allowing the contracting officer to tailor and use the basic clause, whether a single line item or multiple line items are being incrementally funded. So the final rule removes Alternate I and revises paragraph (a) of the basic clause to read “Contract line item(s) [Contracting Officer insert after negotiations] is/are incrementally funded. For this/these item(s), the sum of $______ [Contracting Officer insert after negotiations] of the total price is presently available for payment and allotted to this contract. An allotment schedule is set forth in paragraph (j) of this clause.”
  
  For more on the proposed rule, see the September 2013 Federal Contracts Perspective article “DOD DOD Proposes ‘Overarching Prescriptions’ for Clauses with Alternatives.”
  
  
• Contracting Officer’s Representative (COR): This final rule revises DFARS 201.602-2, Responsibilities, to remove guidance that is internal to DOD concerning COR responsibilities and move it to Procedures, Guidance, and Information (PGI) 201.602-2, Responsibilities. All that remains of DFARS 201.602-2 is the following: “(d) Follow the procedures at PGI 201.602-2 regarding designation, assignment, and responsibilities of a contracting officer's representative (COR). (1) A COR shall be an employee, military or civilian, of the U.S. government, a foreign government, or a North Atlantic Treaty Organization/coalition partner. In no case shall contractor personnel serve as CORs.”
  
  In addition, PGI 201.602-2 is revised to include a link in paragraph (d)(iii) to the DOD COR Handbook, dated March 22, 2012, which provides detailed guidance on COR appointments and duties.
  
  
• Photovoltaic Devices: This finalizes, without changes, the interim rule that revised DFARS 252.225-7017, Photovoltaic Devices, and DFARS 252.225-7018, Photovoltaic Devices – Certificate, to implement Section 846 of the National Defense Authorization Act for Fiscal Year 2011 (Public Law 111-383), which addresses the origin of photovoltaic devices purchased by a contractor under an energy savings performance contract, a utility service contract, or a private housing contract, and DOD takes ownership of the photovoltaic devices (this rule does not apply if DOD purchases the photovoltaic devices as end items).
  
  To implement Section 846, the interim rule revised DFARS 252.225-7017 to state: “In the case of an article that consists in whole or in part of materials from another country, [the photovoltaic device] has been substantially transformed in [name of country] into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed, provided that the photovoltaic device is not subsequently substantially transformed outside of [name of country]” (emphasis added). In addition, the interim rule revised DFARS 252.225-7018 by adding paragraph (c), which directs offerors to certify the origin of a designated country photovoltaic device consistent with country of origin determinations by U.S. Customs and Border Protection for the same or similar items. If the offeror is uncertain, paragraph (c) directs the offeror to request a determination from U.S. Customs and Border Protection.
  
  One comment was submitted on the interim rule, but it was outside the scope of the rule so the interim rule is finalized without changes. For more on the interim rule, see the January 2014 Federal Contracts Perspective article “Lots of Revisions (and Proposed Revisions) to the DFARS.”

GSA Expands Uses of Industrial Funding Fee

The General Services Administration (GSA) has amended the GSA Acquisition Regulation (GSAR) to address the expanded use of Industrial Funding Fee (IFF) under the Federal Supply Schedules (FSS) Program. In addition, GSA is proposing to provide increased access to the FSS by authorized organizations, and to remove from the GSAR a clause and a provision that are considered obsolete and unnecessary.

• Industrial Funding Fee (IFF) and Sales Reporting: This finalizes, without changes, the proposed rule that would revise paragraph (b)(2) of GSA Acquisition Regulation (GSAR) 552.238-74, Industrial Funding Fee and Sales Reporting, to reflect GSA’s current use of the IFF collected under the Multiple Award Schedules (MAS) Program (also called “FSS”).
  
  Federal Supply Schedule (FSS) contracts are negotiated by GSA’s Federal Acquisition Service (FAS) and are used by various federal agencies to purchase supplies and services directly from commercial entities. The IFF is a fee paid by customers to cover FAS’ cost of operating the FSS, and it is a percentage of reported sales under FSS contracts (currently 0.75%).
  
  GSAR 552.238-74(b)(2) had stated, “The IFF reimburses the Federal Supply Service for the costs of operating the Federal Supply Schedules Program and recoups its operating costs from ordering activities.” To inform FSS customers that the IFF may be used to fund other programs or offset losses in other FAS programs, the following sentences were proposed to be added: “Net operating results generated by the IFF are also applied to offset losses or fund initiatives benefitting other FAS programs, in accordance with 40 U.S.C. 321: Acquisition Services Fund. Net operating revenues generated by the IFF are also applied to fund initiatives benefitting other authorized FAS programs, in accordance with 40 U.S.C. 321.”
  
  One comment was submitted on information collection, but GSA decided not to make any changes to the final rule. For more on the proposed rule, see the January 2013 Federal Contracts Perspective article “GSA Proposes Expanding Industrial Funding Fee Use.”
  
  
• Purchasing by Non-Federal Entities: This proposed rule would revise GSAR subpart 538.70, Cooperative Purchasing (which would be retitled “Purchasing by Non-Federal Entities”), to provide increased access to GSA’s FSS to the American National Red Cross, other qualified organizations, and state or local governments.
  
  GSAR 538.7002, General, would be revised to add the following authorizations to those already cited:
  
  
  • The National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364) authorizes state and local governments to use FSS contracts to purchase products and services to be used to facilitate recovery from a major disaster declared by the president under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) or to facilitate for recovery from terrorism or nuclear, biological, chemical, or radiological attack.
    
    
  • The Federal Supply Schedules Usage Act of 2010 (Public Law 111-263) authorizes:
    
    
    1. State and local governments to use FSS contracts to purchase products and services to be used to facilitate disaster preparedness or response.
       
       
    2. The American National Red Cross to use FSS contracts to purchase goods or services to be used in furtherance of its purposes as set forth in its federal charter (36 U.S.C. 300102).
       
       
    3. Other qualified organizations to use FSS contracts to purchase products and services in furtherance of purposes determined to be appropriate to facilitate emergency preparedness and disaster relief and set forth in guidance by the administrator of General Services, in consultation with the administrator of the Federal Emergency Management Agency. Other qualified organizations must meet the requirements of 42 U.S.C. 5152, Use and Coordination of Relief Organizations.
  
  Also, GSAR 538.7002 would state that “a listing of the participating contractors and SINs [Special Item Numbers] for the goods and services that are available under these authorized Federal Supply Schedules, is available in GSA's e-Library at www.gsa.gov/elibrary.”
  
  In addition, the introductory text to GSAR 538.7003, Policy, would be revised to state the following: “When opening authorized Federal Supply Schedules for use by eligible non-federal entities, the contracting officer must make minor modifications to certain Federal Acquisition Regulation and GSAM [GSA Acquisition Manual] provisions and clauses in order to make clear distinctions between the rights and responsibilities of the U.S. government in its management and regulatory capacity pursuant to which it awards schedule contracts and fulfills associated federal requirements versus the rights and responsibilities of eligible ordering activities placing orders to fulfill agency needs. Accordingly, the contracting officer is authorized to modify the following FAR provisions/clauses to delete ‘government’ or similar language referring to the U.S. government and substitute ‘ordering activity’ or similar language when preparing solicitations and contracts to be awarded under authorized Federal Supply Schedules. When such changes are made, the word ‘(DEVIATION)’ shall be added at the end of the title of the provision or clause.”
  
  Comments on this proposed rule must be submitted no later than June 16, 2014, identified as “GSAR Case 2010-G511,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street NW, 2nd Floor, ATTN: Hada Flowers, Washington, DC 20405.
  
  
• Progressive Awards and Monthly Quantity Allocations: This proposed rule would remove GSAR 552.214-71, Progressive Awards and Monthly Quantity Allocations, because it is obsolete and no longer necessary.
  
  GSAR 552.214-71 was used to support some stock replenishment contracts under the GSA’s Global Supply Program for supplying firefighting clothing and shelter. The clause prescription at GSAR 514.201-7, Contract Clauses, states that some contractors may be unable to meet the government’s monthly requirements for some stock replenishment contracts and therefore recommends the use of GSAR 552.214-71 in solicitations and contracts. GSAR 552.214-71 requires contractors to identify monthly quantities they are able to furnish from the same production facilities, and the government then makes awards beginning with the lowest responsive offeror, including each next low responsive offeror until the government's need is fulfilled.
  
  GSAR 552.214-71 is no longer used by the Global Supply Program and is not included in any of the GSA FSS contracts, including those for firefighting clothing and shelters. Therefore, GSA is proposing to remove GSAR 552.214-71 and its prescription in GSAR 514.201-7.
  
  Comments on this proposed rule must be submitted no later than June 30, 2014, identified as “GSAR Case 2014-G501,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street NW, 2nd Floor, ATTN: Hada Flowers, Washington, DC 20405.
  
  
• Qualifications of Offerors: This proposed rule would remove GSAR 552.237-70, Qualifications of Offerors, because it is obsolete and no longer necessary.
  
  GSAR 552.237-70 was used to support GSA’s Public Buildings Service as prescribed in paragraph (a) of GSAR 537.110, Solicitation Provisions and Contract Clauses. GSAR 552.237-70 requires all offerors considered for award for building services expected to exceed the simplified acquisition threshold ($150,000) and not initiated with Ability One under the Javis-Wagner-O-Day Act to furnish: “a narrative statement listing comparable contracts which it has performed; a general history of its operating organization; and its complete experience. An offeror may also be required to furnish a statement of its financial resources; show that it has the ability to maintain a staff of regular employees adequate to ensure continuous performance of the work; and, demonstrate that its equipment and/or plant capacity for the work contemplated is sufficient, adequate, and suitable.”
  
  The information required to be submitted by GSAR 552.237-70 is available from a variety of other sources, such as: compliance with FAR part 9, Contractor Qualifications, including pre-award information; receipt of Dun and Bradstreet reports; and receipt of the offeror’s proposal information submitted in response to the technical evaluation criteria contained in the solicitation. Therefore, GSA is proposing to remove GSAR 552.237-70 and its prescription in GSAR 537.110(a).
  
  Comments on this proposed rule must be submitted no later than June 30, 2014, identified as “GSAR Case 2013-G501,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street NW, 2nd Floor, ATTN: Hada Flowers, Washington, DC 20405.

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