FEDERAL CONTRACTS PERSPECTIVE

Authority to Use Simplified Procedures for
Commercial Items Up to $6,500,000 Made Permanent

Just before Congress left town for the holidays, it passed, and President Obama signed, the “Carl Levin and Howard P. ‘Buck’ McKeon National Defense Authorization Act for Fiscal Year 2015” (Public Law 113-291). Title VIII, Acquisition Policy, Acquisition Management, and Related Matters, contains the sections that are significant to the defense and civilian acquisition communities, but this year Title VIII has few sections that have widespread effect on the acquisition community. The following are among those few sections:

• Section 815, Permanent Authority for Use of Simplified Acquisition Procedures for Certain Commercial Items: This section makes permanent the “test program” in Federal Acquisition Regulation (FAR) subpart 13.5, Test Program for Certain Commercial Items. This test program was scheduled to expire January 1, 2015, but Section 815 removes the expiration date, thus making the program permanent. FAR subpart 13.5 authorizes contracting officers to use the simplified procedures in FAR part 13, Simplified Acquisition Procedures, to acquire commercial supplies and services up to $6,500,000. (EDITOR’S NOTES: (1) The Department of Defense (DOD) and the Civilian Agency Acquisition Council [CAAC] have issued class deviations to FAR 13.500, General, removing paragraph (d), which states “The authority to issue solicitations under this subpart expires on January 1, 2015.” (2) There is a proposal to increase this $6,500,000 limit to $7,000,000 to compensate for inflation during the past five years. For more on the proposed increase to this and other acquisition-related thresholds and limits, see the December 2014 Federal Contracts Perspective article “Five-Year Acquisition Threshold Adjustments Proposed.”)
  
  
• Section 821, Temporary Extension of and Amendments to Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans: This section extends, from December 31, 2014, to December 31, 2017, the expiration date of the test program that is intended to determine whether comprehensive small business subcontracting plans negotiated on a corporate, division, or plantwide basis will increase subcontracting opportunities for small businesses. (NOTE: The DOD has already issued a class deviation changing the expiration date in paragraph (d) of Defense FAR Supplement [DFARS] 219.702, Statutory Requirements [for the Small Business Subcontracting Program].)
  
  
• Section 824, Matters Relating to Reverse Auctions: Section 824 requires the Secretary of Defense to “clarify regulations on reverse auctions, as necessary, to ensure that: (1) single bid contracts may not be entered into resulting from reverse auctions unless compliant with existing federal regulations and Department of Defense memoranda providing guidance on single bid offers; (2) all reverse auctions provide offerors with the ability to submit revised bids throughout the course of the auction; (3) if a reverse auction is conducted by a third party: (A) inherently governmental functions are not performed by private contractors, including by the third party; and (B) past performance or financial responsibility information created by the third party is made available to offerors; and (4) reverse auctions resulting in design-build military construction contracts specifically authorized in law are prohibited.” (EDITOR’S NOTE: A recent report by the Government Accountability Office [GAO], GAO-14-108, Reverse Auctions: Guidance Is Needed to Maximize Competition and Achieve Cost Savings, noted “The Federal Acquisition Regulation (FAR) does not specifically address reverse auctions. Agencies have developed their own guidance, though most do not provide information on what to do in certain situations – for example, when only one vendor submits a bid. In our discussions with agency officials and vendors, we found they were uncertain about how reverse auction fees are paid and that confusion exists about how reverse auctions are managed. We believe that the lack of government-wide guidance addressing the use of reverse auctions and the confusion within the vendor community about the process may limit the potential benefits of reverse auctions.” It appears that Congress is addressing GAO’s concern by including Section 824.)
  
  
• Section 825, Sole Source Contracts for Small Business Concerns Owned and Controlled By Women: Section 825 authorizes contracting officers to award sole source contracts to women-owned small businesses (WOSBs) in industries where WOSBs are substantially underrepresented, or to economically disadvantaged WOSBs (EDWOSBs) in industries where WOSBs are underrepresented (go to https://www.sba.gov/content/women-owned-small-business-program) provided: (1) the contracting officer does not have a reasonable expectation that offers will be received from two or more WOSBs (or EDWOSBs); (2) the anticipated contract price (including options) will not exceed $6,500,000 for manufacturing contracts or $4,000,000 for all other contracts; and (3) award will be made at a fair and reasonable price. (EDITOR’S NOTE: See FAR subpart 19.15, Women-Owned Small Business (WOSB) Program.)

FAR Amended to Mandate $10.10/Hour Minimum Wage

Federal Acquisition Circular (FAC) 2005-79 consists of two interim rules: (1) the establishment of $10.10/hour as the minimum wage for federal contractor employees; and (2) clarification of the ongoing, continuing nature of the statutory prohibition on contracting with inverted domestic corporations and their subsidiaries (an “inverted domestic corporation” is one that used to be incorporated in the United States but now is incorporated in a foreign country, or is a subsidiary whose parent corporation is incorporated in a foreign country).

• Establishing a Minimum Wage for Contractors: This interim rule adds FAR subpart 22.19, Establishing a Minimum Wage for Contractors, and the corresponding clause FAR 52.222-55, Minimum Wages Under Executive Order 13658, to implement Executive Order (EO) 13658, Establishing a Minimum Wage for Contractors, and implementing rules issued by the Department of Labor (DOL). The EO and the DOL rules raised the hourly minimum wage paid by contractors and subcontractors to workers performing on federal contracts to $10.10 per hour beginning January 1, 2015, and adjusted annually by DOL to compensate for inflation during the year (for more on EO 13658, see the March 2014 Federal Contracts Perspective article “President Issues Executive Order Mandating $10.10/Hour Minimum Wage”; for more on the DOL rules, see the November 2014 Federal Contracts Perspective article “$10.10/Hour Minimum Wage Established for Contractors”).
  
  FAR subpart 22.19 includes the following provisions:
  
  
  • A definition of “worker” in FAR 22.1901, Definition. This definition incorporates the definition in the DOL rules: “any person engaged in performing work on, or in connection with, a contract covered by Executive Order 13658, and (i) whose wages under such contract are governed by the Fair Labor Standards Act (29 U.S.C. chapter 8), the Service Contract Labor Standards statute (41 U.S.C. chapter 67) [formerly known as the Service Contract Act; see FAR subpart 22.10, Service Contract Labor Standard], or the Wage Rate Requirements (Construction) statute (40 U.S.C. chapter 31, subchapter IV) [formerly known as the Davis-Bacon Act; see FAR subpart 22.4, Labor Standards for Contracts Involving Construction], (ii) other than individuals employed in a bona fide executive, administrative, or professional capacity, (iii) regardless of the contractual relationship alleged to exist between the individual and the employer.” In addition, the definitions states that “workers with disabilities whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c)” are covered.
    
    
  • FAR 22.1902, Policy, describes the EO’s minimum wage requirements (“at least $10.10 per hour beginning January 1, 2015, and beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor”), and the relationship to other wage rates, including other federal or state prevailing wage rates and collective bargaining agreements that provide a higher wage rate (“nothing in this subpart shall excuse noncompliance with any applicable federal or state prevailing wage law or any applicable law or municipal ordinance establishing a minimum wage higher than the EO minimum wage”), and to wages of tipped workers.
    
    
  • FAR 22.1903, Applicability, provides that the EO applies to contracts governed by the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, and to performance in whole or in part in the United States. In addition, it delineates individuals to whom the subpart applies (“workers as defined at [FAR] 22.1901”) or does not apply (“individuals...who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20% of their hours worked in a particular workweek performing in connection with such contracts” and “(A) learners, apprentices, or messengers whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(a); (B) students whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(b); and (C) those employed in a bona fide executive, administrative, or professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541)”).
    
    
  • FAR 22.1904, Annual Executive Order Minimum Wage Rate, describes how DOL will notify the public of the annual EO minimum wage rates, and how price adjustments will be made by contracting officers after requests for such price adjustments are received from contractors. This coverage provides detail and direction, including examples of how price adjustments are calculated.
    
    
  • FAR 22.1905, Enforcement of Executive Order Minimum Wage Requirements, provides information on enforcement authority, filing complaints, reporting and investigating complaints, remedies and sanctions, and retroactive inclusion of FAR 52.222-55 when an agency fails to include the clause in a contract to which the EO applies.
    
    
  • FAR 22.1906, Contract Clause, requires that FAR 52.222-55 be included in contracts that include FAR 52.222-6, Construction Wage Rate Requirements (required for construction contracts exceeding $2,000), or FAR 52.222-41, Service Contract Labor Standards (required for service contracts exceeding $2,500) and performance is in whole or in part in the United States.
  
  FAR 52.222-55 contains all the salient provisions of FAR subpart 22.19, and covers the following additional topics: subcontractor price adjustments; length of pay period; deductions; fringe benefits; workers who regularly receive tips; requirement to notify workers of the EO minimum wage; payroll recordkeeping requirements; and providing DOL access to the workers and worksite to conduct investigations.
  
  Finally, the following miscellaneous changes are made:
  
  
  • FAR 22.403-5 (applicable to service contracts) and FAR 22.1002-5 (applicable to construction contracts), both titled “Executive Order 13658,” are added. The text for both sections is almost identical: “Executive Order 13658 establishes minimum wages for certain workers. The wage rate is subject to annual increases by an amount determined by the Secretary of Labor. See subpart 22.19. The clause at 52.222-55, Minimum Wages under Executive Order 13658, requires the Executive Order 13658 minimum wage rate to be paid if it is higher than other minimum wage rates, such as the subpart 22.4 [or 22.10] statutory wage determination amount.”
    
    
  • FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders – Commercial Items, and FAR 52.213-4, Terms and Conditions – Simplified Acquisitions (Other than Commercial Items), are amended to add FAR 52.222-55 as a clause that must be included in contracts when applicable.
  
  This rule applies to solicitations issued on or after February 13, 2015, the rule’s effective date.
  
  
  At the behest of the Office of Management and Budget (OMB) and the DOL, FAR class deviations were issued prior to the issuance of the DOL rules, and these class deviations (one for the Department of Defense [DOD] and the National Aeronautics and Space Administration [NASA], the other for civilian agencies) directed contracting officers to use FAR 52.222-99, Establishing a Minimum Wage for Contractors (DEVIATION), in covered solicitations and contracts (see the July 2014 Federal Contracts Perspective article “$10.10/Hour Minimum Wage Deviations Issued”). For contracts that do not contain FAR 52.222-99, contracting officers must include FAR 52.222-55 when entering into bilateral modifications extending contracts when such modifications are individually or cumulatively longer than six months. In addition, contracting officers are strongly encouraged to include the clause in existing indefinite-delivery indefinite-quantity (IDIQ) contracts if the remaining ordering period extends at least six months and the amount of remaining work or number of orders expected is substantial.
  
  Comments on the interim rule must be submitted no later than February 13, 2015, identified as “FAC 2005-79, FAR case 2015-003,” 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), ATTN: Ms. Hada Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
  
  
• Prohibition on Contracting with Inverted Domestic Corporations: This interim rule amends FAR 9.108, Prohibition on Contracting with Inverted Domestic Corporations, and the associated solicitation provisions and contract clauses so they more clearly reflect the ongoing, continuing nature of the statutory prohibition on contracting with inverted domestic corporations and their subsidiaries, which was first enacted in 2008.
  
  FAR 9.108-2, Prohibition, had discussed the prohibitions against the use of funds appropriated in each of the FYs 2008, 2009, 2010, and 2012 (the prohibition was not included in the FY 2011 appropriations act but was included in two continuing resolutions enacted that year). The prohibition for FYs 2013 and 2014 were included in continuing resolutions but the FAR was not amended to reflect the prohibition’s extension. Since Congress has retained the prohibition since FY 2008, this interim rule amends FAR 9.108-2, FAR 9.108-3, Representation by the Offeror, and FAR 9.108-5, Solicitation Provision and Contract Clause, to reflect the ongoing nature of the prohibition for as long as Congress extends the prohibition in its current form through subsequent appropriations action (in full-year appropriations acts and in short-term and full-year continuing resolutions). Instead of having to amend these FAR sections every time an appropriations act or continuing resolution contains this prohibition, the following changes are made:
  
  
  • FAR 9.108-2(a) is amended to read as follows: “Section 745 of Division D of the Consolidated Appropriations Act, 2008 (Pub. L. 110-161) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions) prohibit, on a governmentwide basis, the use of appropriated (or otherwise made available) funds for contracts with either an inverted domestic corporation, or a subsidiary of such a corporation...”
    
    
  • FAR 9.108-3(a) is amended to remove “when using Fiscal Year 2008 through Fiscal Year 2010 funds or Fiscal Year 2012 funds” from “In order to be eligible for contract award when using Fiscal Year 2008 through Fiscal Year 2010 funds or Fiscal Year 2012 funds, an offeror must represent that it is neither an inverted domestic corporation, nor a subsidiary of an inverted domestic corporation.”
    
    
  • The introductory text in FAR 9.108-5 is amended to revise “When using funds appropriated in Fiscal Year 2008 through Fiscal Year 2010 or in Fiscal Year 2012, unless waived in accordance with FAR 9.108-4 [Waiver], the contracting officer shall...” to “The contracting officer shall...”
  
  In addition, the definition of “inverted domestic corporation” is revised to eliminate unclear discussion and references.
  
  Finally, conforming changes are made to FAR 52.204-8, Annual Representations and Certifications, FAR 52.209-2, Prohibition on Contracting with Inverted Domestic Corporations – Representation, FAR 52.209-10, Prohibition on Contracting with Inverted Domestic Corporations, FAR 52.212-3, Offeror Representations and Certifications – Commercial Items, and FAR 52.212-5, Contract Terms and Conditions Required To Implement Statutes or Executive Orders – Commercial Items, so offerors and contractors have a clearer idea of the ongoing and continuing nature of the statutory prohibition on contracting with inverted domestic corporations and their subsidiaries.
  
  Comments on the interim rule must be submitted no later than February 13, 2015, identified as “FAC 2005-79, FAR case 2014-017,” 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), ATTN: Ms. Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
  
  Concurrently with the issuance of this interim rule is the issuance of a proposed rule that would require additional actions by contractors to assist contracting officers in ensuring compliance with the governmentwide statutory prohibition on the use of appropriated funds for contracts with any foreign incorporated entity that is an inverted domestic corporation or a subsidiary of such a corporation.
  
  To increase the government’s ability to identify an offeror’s status as an inverted domestic corporation, this proposed rule would change the representations in FAR 52.209-2 and FAR 52.212-3. Currently, the representations are passive: “By submission of its offer, the offeror represents that: (1) it is not an inverted domestic corporation; and (2) it is not a subsidiary of an inverted domestic corporation.” This proposed rule would require an affirmative act by the offeror to complete two check-off boxes: “The offeror represents that: (1) it [ ] is, [ ] is not an inverted domestic corporation; and (2) it [ ] is, [ ] is not a subsidiary of an inverted domestic corporation.”
  
  In addition, the proposed rule would add the following new paragraph (d) to FAR 52.209-10: “In the event the contractor becomes either an inverted domestic corporation, or a subsidiary of an inverted domestic corporation during contract performance, the contractor shall give written notice to the contracting officer within five business days from the date of the inversion event.”
  
  Comments on the proposed rule must be submitted no later than February 13, 2015, identified as “FAR case 2015-006,” 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), ATTN: Ms. Hada Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.

DOD Conducts Regulation-Dump

In addition to the two deviations the Department of Defense (DOD) issued in response to provisions in the National Defense Authorization Act for Fiscal Year 2015 (Public Law 113-291) (see article above), DOD cleaned out its regulatory closet and issued eight final rules to the Defense FAR Supplement (DFARS) (and a correcting amendment to one of these final rules), one proposed rule, four additional class deviations, and one memorandum!

• Deletion of Certification Requirement Regarding Separation of Duties of Senior Leaders: This final rule revises paragraph (a) of DFARS 203.170, Business Practices, to remove the requirement for DOD departments and agencies to certify every two years that no senior leader has performed multiple roles in the acquisition of a major weapon system or major service. This paragraph had implemented a memorandum that has since been rescinded. With this revision, all that is left of paragraph (a) is “Senior leaders shall not perform multiple roles in source selection for a major weapon system or major service acquisition.”
  
  
• State Sponsors of Terrorism: This finalizes, with minor editorial changes, the proposed rule that would relocate coverage relating to state sponsors of terrorism (as identified by the Department of State), add an explicit representation, and clarify the terminology.
  
  10 U.S.C. 2327, Contracts: Consideration of National Security Objectives, requires “a firm or a subsidiary of a firm that submits a bid or proposal in response to a solicitation issued by the Department of Defense to disclose in that bid or proposal any significant interest in such firm or subsidiary (or, in the case of a subsidiary, in the firm that owns the subsidiary) that is owned or controlled (whether directly or indirectly) by a foreign government or an agent or instrumentality of a foreign government, if such foreign government is the government of a country that the Secretary of State determines under section 6(j)(1)(A) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)(A)) has repeatedly provided support for acts of international terrorism.” The statute further provides restrictions on entering into contracts or subcontracts with such firms. (EDITOR’S NOTE: The Department of State identifies the “State Sponsors of Terrorism” at http://www.state.gov/j/ct/list/c14151.htm. They are Cuba, Iran, Sudan, and Syria.)
  
  This statutory provision was implemented in various DFARS locations: DFARS subpart 209.1, Responsible Prospective Contractors; DFARS subpart 209.4, Debarment, Suspension, and Ineligibility; DFARS 252.209-7001, Disclosure of Ownership or Control by the Government of a Terrorist Country; and DFARS 252.209-7004, Subcontracting with Firms that are Owned or Controlled by the Government of a Terrorist Country.
  
  To consolidate these regulations, the proposed rule would move paragraph (g)(i) of DFARS 209.104-1, General Standards [for responsible prospective contractors], to DFARS subpart 225.7, Prohibited Sources, where it would become part of new DFARS 225.771, Prohibition on Contracting or Subcontracting with a Firm that is Owned or Controlled by the Government of a Country that is a State Sponsor of Terrorism. DFARS subpart 225.7 was considered a better location for this prohibition because it is based on ownership or control of an offeror by the government of specified countries, rather than the responsibility of the individual offeror. To conform with this move, the proposed rule would make DFARS 252.209-7001 the new provision DFARS 252.225-7050, Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of Terrorism. However, the coverage in DFARS subpart 209.4 (that is, DFARS 209.405-2, Restrictions on Subcontracting, and DFARS 209.409, Solicitation Provision and Contract Clause) and the corresponding clause DFARS 252.209-7004 were considered properly located because they relate to treatment of entities listed as ineligible in the “Exclusion” section of the System for Award Management (SAM – https://www.sam.gov).
  
  In addition, because DFARS 252.209-7001 merely required the offeror to disclose if a state sponsor of terrorism has a significant interest in the offeror, the proposed rule would include an explicit representation in DFARS 252.225-7050 that requires the offeror to “disclose in an attachment to its offer if the government of a country that is a state sponsor of terrorism owns or controls a significant interest in the offeror; a subsidiary of the offeror; or any other firm that owns or controls the offeror.” This would make an offeror liable for a false statement if it does not disclose such ownership or control.
  
  No comments were submitted in response to the proposed rule, so it is finalized with minor editorial changes. For more on the proposed rule, see the September 2014 Federal Contracts Perspective article “DOD Prohibits Contracting with “Sponsors of Terrorism.”
  
  
• Foreign Commercial Satellite Services: This finalizes, with minor editorial changes, the interim rule that added DFARS 225.772, Prohibition on Acquisition of Commercial Satellite Services from Certain Foreign Entities, to implement Section 1602 of National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2014 (Public Law 113-66), which prohibits award of a contract for commercial satellite services to a foreign entity if it either: (1) is an entity in which the government of a covered foreign country has an ownership interest that enables the government to affect satellite operations; or (2) plans to, or is expected to, provide or use launch or other satellite services under the contract from a covered foreign country. “Covered foreign countries” are defined as the People’s Republic of China, North Korea, and “state sponsors of terrorism”: Cuba, Iran, Sudan, and Syria.
  
  In addition, DFARS 252.225-7049, Prohibition on Acquisition of Commercial Satellite Services from Certain Foreign Entities – Representations, was added. It requires the offeror to represent whether it is owned or controlled by the government of a covered foreign country, or intends to use launch or other satellite services provided by a covered foreign country.
  
  No comments were submitted in response to the interim rule, so it is finalized with minor editorial changes. For more on the interim rule, see the September 2014 Federal Contracts Perspective article “DOD Prohibits Contracting with “Sponsors of Terrorism.”
  
  
• Update Contractor and Government Entity (CAGE) Code Information: This final rule deletes DFARS subpart 204.72, Contractor Identification, and DFARS 252.204-7001, Commercial and Government Entity (CAGE) Code Reporting, because a rule in FAC 2005-74 requires all offerors to obtain a CAGE code, which was previously only required for offerors on DOD solicitations. This FAR CAGE code requirement made the DFARS language no longer necessary. (For more on FAC 2005-74, see the June 2014 Federal Contracts Perspective article "FAC 2005-74 Requires CAGE Codes, Repeals Recovery Act Reporting Requirements."
  
  
• Forward Pricing Rate Proposal Adequacy Checklist: This finalizes, with changes, the proposed rule that would add DFARS 215.403-5, Instructions for Submissions of Certified Cost or Pricing Data or Data Other Than Cost or Pricing Data, to direct contracting officers to request that contractors submit Table 215.403-1, Contractor Forward Pricing Rate Proposal Adequacy Checklist, with forward pricing rate proposals (FPRPs) to help ensure submission of thorough, accurate, and complete proposals.
  
  Among the comments on the proposed rule was one that addressed the referencing of Table 15-2, Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data are Required (in FAR 15.408, Solicitation Provisions and Contract Clauses), throughout the checklist. The commenter did not believe that Table 15-2 is applicable to an FPRP. In response, the preamble to the final rule states, “The references in the proposed rule to FAR 15.408 Table 15-2 were intended to help offerors understand the minimum criteria to ensure their FPRPs adequately comply with each submission item. However, to remove any misunderstandings of the intent and content of the table submission items, the FPRP adequacy checklist references, including references to FAR 15.408 Table 15-2, have been removed in this final rule.”
  
  For more on the proposed rule, see the June 2013 Federal Contracts Perspective article “Defense Regulation-Making Picks Up Pace.”
  
  
• Use of Military Construction Funds in Countries Bordering the Arabian Sea: This finalizes, without changes, the interim rule that amended DFARS 236.273, Construction in Foreign Countries, and DFARS 236.602-70, Restriction on Award of Overseas Architect-Engineer Contracts to Foreign Firms, to implement Sections 112 and 111 of the Military Construction and Veterans Affairs, and Related Agencies Appropriations Act, 2014 (Public Law 113-76), respectively, which change the restriction from “countries bordering the Arabian Gulf” to “countries bordering the Arabian Sea (i.e., India, Iran, Oman, Pakistan, Somalia, and Yemen).” These restrictions apply to military construction contracts that have an estimated value greater than $1,000,000, and architect-engineer contracts that have an estimated value greater than $500,000. These thresholds are unchanged. (EDITOR’S NOTE: This restriction has been applied to “countries bordering the Arabian Gulf” by annual appropriations acts and continuing resolutions for many years. The 2014 Appropriations Act is the first to refer to "the Arabian Sea.” The 2015 Appropriations Act has gone back to “the Arabian Gulf” – see the class deviation explained below.)
  
  One respondent submitted a comment on the interim rule, but the comment was not adopted, so the interim rule is finalized without changes.
  
  For more on the interim rule, see the August 2014 Federal Contracts Perspective article “DOD Conducts DFARS Clean-Up.”
  
  
• Elimination of Quarterly Reporting of Actual Performance Outside the United States: This final rule deletes DFARS 252.225-7006, Quarterly Reporting of Actual Contract Performance Outside the United States, and the associated text in DFARS subpart 225.72, Reporting Contract Performance Outside the United States, because the report is not required by statute (the associated text in DFARS subpart 225.72 is paragraph (b) of DFARS 225.7201, Policy [“DOD requires contractors to report the volume, type, and nature of contract performance outside the United States”], and paragraph (c) of DFARS 225.7204, Solicitation Provision and Contract Clauses [“Use the clause at 252.225-7006, Quarterly Reporting of Actual Contract Performance Outside the United States, in solicitations and contracts with a value exceeding $650,000”].)
  
  Related provision DFARS 252.225-7003, Report of Intended Performance Outside the United States and Canada – Submission with Offer, and clause DFARS 252.225-7004, Report of Intended Performance Outside the United States and Canada – Submission After Award, are retained because both implement 10 U.S.C. 2410g, Advance Notification of Contract Performance Outside the United States.
  
  EDITOR’S NOTE: The final rule inadvertently stated that DFARS 252.225-7005 was removed instead of DFARS 252.225-7006. Therefore, a correction reinstating DFARS 252.225-7005, Identification of Expenditures in the United States, was issued.
  
  
• Animal Welfare: This finalizes, with changes, the proposed rule that would revise DFARS 252.235-7002, Animal Welfare, to be consistent with the DOD Instruction (DODI) 3216.01, Use of Animals in DOD Programs, which governs DOD-supported research, development, test, and evaluation or training that uses vertebrate animals, and the acquisition of animals.
  
  In addition, DFARS 237.175, Training that Uses Live Vertebrate Animals, is added. It was proposed as “When contracting for training that will use live vertebrate animals, see [DFARS] 235.072 [Additional Contract Clauses, which contains the prescription for DFARS 252.235-7002]." This final rule revises DFARS 237.175 to read “Use the clause at [DFARS] 252.235-7002, Animal Welfare, as prescribed in [DFARS] 235.072(a), when contracting for training that will use live vertebrate animals.”
  
  For more on the proposed rule, see the July 2014 Federal Contracts Perspective article “DOD Undertakes Housekeeping, NDAA Implementation.”
  
  
• Energy Receiving Reports: This proposed rule would amend DFARS Appendix F, Material Inspection and Receiving Report, to identify the electronic Wide Area WorkFlow (WAWF) Energy Receiving Report as the equivalent of the paper Form 250, Material Inspection and Receiving Report, for overland shipments, and the DD Form 250-1, Material Inspection And Receiving Report, Tanker/Barge, for waterborne shipments. (EDITOR'S NOTE: For information on WAWF, go to https://wawf.eb.mil/.)
  
  The following are the proposed changes to DFARS Appendix F:
  
  
  • Paragraph (a) of F-101, General, would be amended to clarify that the WAWF Energy Receiving Report is the electronic equivalent of the paper DD Form 250 for overland shipments and the DD Form 250-1 for waterborne shipments.
    
    
  • F-101(b) would be amended to clarify that use of the “DD Form 250 series documents” is on an exception basis.
    
    
  • The title of paragraph (d) of F-103, Use, would be changed from “Use the DD Form 250-1” to “Use the WAWF Energy RR [Receiving Report] or the DD Form 250-1.”
    
    
  • The title of paragraph (b) of F-104, Application, would be changed from “DD Form 250-1” to “WAWF Energy RR or the DD Form 250-1.”
    
    
  • The title of Part 3 would be changed from “Preparation of the Wide Area Workflow Receiving Report (WAWF RR)” to “Preparation of the Wide Area Workflow (WAWF) Receiving Report (RR) and Energy RR.”
    
    
  • Paragraph (b)(13) of F-301, Preparation Instructions, would be amended to clarify that the three-character project code must be entered in the “MARK FOR/CODE” block of the receiving report when the project code is provided in the contract.
  
  Comments on this proposed rule must be submitted no later than February 9, 2015, identified as “DFARS Case 2014-D024,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: osd.dfars@mail.mil; (3) fax: 571-372-6094; or (4) mail: Defense Acquisition Regulations System, Attn: Ms. Jennifer Hawes, OUSD(AT&L) DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.
  
  
• Class Deviation on Contractor Personnel Performing in Support of Operation United Assistance in the United States Africa Command Theater of Operations (Ebola Outbreak in West Africa): This class deviation requires the incorporation of DFARS 252.225-7985, Contractor Personnel Performing in Support of Operation United Assistance (OUA) in the United States Africa Command (USAFRICOM) Theater of Operations (Deviation 2015-O0003), in contracts, task orders, and delivery orders that require contractor personnel to perform services or construction, or deliver supplies, in support of OUA in the USAFRICOM (countries in the OUA designated operational area are Senegal, The Gambia, Guinea Bissau, Guinea, Sierra Leone, and Liberia).
  
  Contracting officers are required to post covered solicitation and award documents to the Theater Business Clearance (TBC) module of the Joint Contingency Contracting System (JCCS) at https://www.jccs.gov, in accordance with the USAFRICOM OUA TBC guide at https://www.jccs.gov.
  
  This class deviation supersedes class deviations 2015-O0001 and 2015-O0002. For more on class deviation 2015-O0001, see the November 2014 Federal Contracts Perspective article “Defense Clarifies, Cleans Up DFARS.”
  
  
• Class Deviation on Acquisition of the American Flag: This deviation requires that all solicitations and contracts for the acquisition of American flags exceeding the simplified acquisition threshold ($150,000) include DFARS 252.225-7988, Acquisition of an American Flag (Deviation 2015-O0007), which requires the contractor to deliver flags manufactured in the United States. This requirement applies to materials and components of the flag, but not to any end items or components related to flying or displaying the flag (such as flagpoles and accessories). This implements Section 8119 of the Consolidated and Further Continuing Appropriations Act, 2015 (Public Law 113-235).
  
  
• Class Deviation on the Use of Military Construction Funds: This class deviation revises the prescriptions for DFARS 252.236-7010, Overseas Military Construction – Preference for United States Firms (in paragraph (c)(1) of DFARS 236.570, Additional Provisions and Clauses [for construction contracts]), and DFARS 252.236-7011, Overseas Architect-Engineer Services – Restriction to the United States Firm (in paragraph (b)(3) of DFARS 236.609-70, Additional Provision and Clause [for architect-engineer services contracts]), to implement Sections 111 and 112 of the Consolidated and Further Continuing Appropriations Act, 2015 (Public Law 113-235), which replaces “Arabian Sea” with “Arabian Gulf” for military construction using FY 2015 funds (see the final rule explained above that implemented the 2014 Appropriations Act by replacing “Arabian Gulf” with “Arabian Sea”).
  
  In addition, this class deviation implements Section 108 of Public Law 113-235 by revising the prescription for DFARS 252.236-7013, Requirement for Competition Opportunity for American Steel Producers, Fabricators, and Manufacturers (in DFARS 236.570(d)(1)), to delete the reference to the 2009 Appropriations Act and replace it with “Title I of the Military Construction and Veteran Affairs, and Related Agencies Appropriations Act, 2015 (Pub. L. 113-235), Division I.”
  
  
• Class Deviation Prohibiting FY15 Funds to Contract with Corporations with Unpaid Delinquent Taxes or a Felony Conviction: This class deviation prohibits the use of any Fiscal Year 2015 funds appropriated to the DOD by the Consolidated and Further Continuing Appropriations Act, 2015 (Public Law 113-235) in any contracts with corporations that have an unpaid delinquent tax liability or a felony criminal conviction under any federal law within the preceding 24 months.
  
  The class deviation provides a provision, DFARS 252.209-7992, Representation by Corporations Regarding an Unpaid Delinquent Tax Liability or a Felony Conviction Under Any Federal Law – Fiscal Year 2015 Appropriations (DEVIATION 2015-O0005), and requires the contracting officer to include it in all solicitations that will use funds made available by Public Law 113-235, including solicitations for the acquisition of commercial items under FAR part 12. DFARS 252.209-7992 requires each contractor to represent whether it is a corporation that: (1) “has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability”; or (2) “was convicted of a felony criminal violation under a federal law within the preceding 24 months.”
  
  If the contractor answers “it is” such a corporation, the contracting officer shall not award a contract to the contractor “unless the agency debarring and suspending official has considered suspension or debarment of the corporation and has made a written determination that this further action is not necessary to protect the interests of the government.”
  
  
• Implementation of Uniform Procurement Identification Procedures: This memorandum directs defense contracting officers not to implement the changes made to FAR subpart 4.16, Unique Procurement Instrument Identifiers, by the final rule in FAC 2005-77 that requires use of a uniform procurement instrument identification (PIID) number system throughout the government (see the November 2014 Federal Contracts Perspective article “FAC 2005-77 Imposes Uniform Procurement Instrument Identification Numbering System”). Even though the changes to FAR subpart 4.16 were based on language in DFARS subpart 204.71, Uniform Contract Line Item Numbering, there are some difference that require DOD changes to implement.
  
  “A DFARS case is being prepared to (1) address the DOD process changes required and establish a date by which the Department shall implement the required changes imposed by the FAR case; and (2) removing existing duplicative numbering instruction from the DFARS. Until the DFARS is updated to reflect the implementation of the FAR case, do not implement the changes the FAR case imposes. We intend that the Department will follow a common approach for doing so. The planned implementation date is no later than October 1, 2015.”

Two FAR Changes Proposed in December

During December, two FAR changes were proposed: one to require each offeror to identify all its predecessors that held a federal contract or grant within the previous three years; and one to clarify the requirement that a noncompetitive contract awarded on the basis of unusual and compelling urgency that exceeds one year must be supported by a determination of exceptional circumstances.

• Information on Corporate Contractor Performance and Integrity: This proposed rule would implement Section 852 of the National Defense Authorization Act for Fiscal Year 2013 (Public Law 112-239) which requires that the Federal Awardee Performance and Integrity Information System (FAPIIS) include, to the extent practicable, information on any parent, subsidiary, or successor entities to a corporation in a manner designed to give the acquisition officials using the database a comprehensive understanding of the performance and integrity of the corporation in carrying out federal contracts and grants. This proposed rule addresses the collection of information with regard to offerors that are responding to a solicitation for a federal contract. (EDITOR'S NOTE: FAPIIS is available at https://www.ppirs.gov, then select “FAPIIS”.)
  
  The following changes would be made to implement Section 852:
  
  
  • FAR 9.104-6, Federal Awardee Performance and Integrity Information System, would be amended to add the following as paragraph (a)(2): “In accordance with 41 U.S.C. 2313(d)(3), FAPIIS also identifies: (i) an affiliate that is an immediate owner or subsidiary of the offeror, if any (see 52.204-17, Ownership or Control of Offeror); and (ii) all predecessors of the offeror that held a federal contract or grant within the last three years (see 52.204-WW, Predecessor of Offeror).”
    
    
  • FAR 52.204-WW, Predecessor of Offeror, would be added, and FAR 52.212-3, Offeror Representations and Certifications – Commercial Items, would be revised to require the offeror to represent whether it is or is not “a successor to a predecessor that held a federal contract or grant within the last three years.” If the offeror indicates it “is,” it must provide the predecessor’s Commercial and Government Entity (CAGE) code and the predecessor’s legal name. (FAR 52.204-WW would be required to included in all solicitations that include FAR 52.204-16, Commercial and Government Entity Code Reporting. FAR 52.212-3 is required to be included in solicitations for the acquisition of commercial items.)
  
  EDITOR’S NOTE: For more on FAR 52.204-16 and FAR 52.204-17, see the June 2014 Federal Contracts Perspective article “FAC 2005-74 Requires CAGE Codes, Repeals Recovery Act Reporting Requirements.”
  
  Comments on the proposed rule must be submitted no later than February 2, 2015, identified as “FAR case 2013-020,” 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), ATTN: Ms. Hada Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.
  
  
• Clarification on Justification for Urgent Noncompetitive Awards Exceeding One Year: This proposed rule would amend FAR 6.302-2, Unusual and Compelling Urgency, to clarify that a determination of exceptional circumstances is needed when a noncompetitive contract awarded on the basis of unusual and compelling urgency exceeds one year.
  
  FAC 2005-37 included a final rule that amended FAR 6.302-2 to implement Section 862 of the Duncan Hunter National Defense Authorization Act (NDAA) for Fiscal Year 2009 (Public Law 110-417), which restricted the length of contracts awarded noncompetitively under unusual and compelling urgency to one year unless the head of the agency determines that exceptional circumstances apply (see the November 2009 Federal Contracts Perspective article “FAC 2005-37 Provides Guidance on Use of Award Fees”).
  
  In March 2014, the Government Accountability Office (GAO) issued report GAO-14-304, Federal Contracting: Noncompetitive Contracts Based on Urgency Need Additional Oversight, in which it reported that its review of ten contracts that were awarded noncompetitively under unusual and compelling urgency for more than one year period found that none of the agencies made the required determination.
  
  To clarify the Section 862 requirement and implementing procedures, the following revisions would be made to FAR 6.302-3(d), which covers the period of performance of contracts awarded under unusual and compelling urgency:
  
  
  • Paragraph (d)(1)(ii) would be revised to add “This determination must be documented in the contract file” as a sentence immediately following “[A contract awarded under the unusual and compelling urgency authority] May not exceed one year, including all options, unless the head of the agency entering into the contract determines that exceptional circumstances apply.”
    
    
  • The following would be added as paragraph (d)(2): “(i) A separate determination shall be made when executing any modification or option that extends the period of performance beyond one year. This requirement does not apply to the exercise of options previously addressed in the determination required at (d)(1)(ii) of this section. Any subsequent extension requires a new determination. (ii) The determination shall be approved at the same level as the level to which the agency head authority in (d)(1)(ii) of this section is delegated.”
  
  Comments on the proposed rule must be submitted no later than March 2, 2015, identified as “FAR case 2014-020,” 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), ATTN: Ms. Hada Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.

No Sexual Orientation or Gender Identity Discrimination

The Office of Federal Contract Compliance Programs (OFCCP) is revising its regulations at Title 41 of the Code of Federal Regulations (CFR), Chapter 60, Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor (41 CFR Chapter 60) to implement Executive Order 13672, Equal Employment Opportunity Amendments Regarding Sexual Orientation and Gender Identity, which prohibits federal contractors from discriminating against lesbian, gay, bisexual, and transgender (LGBT) employees (see the August 2014 Federal Contracts Perspective article “Sexual Orientation and Gender Identity Order Issued”).

Executive Order 11246, Equal Employment Opportunity, was issued on September 24, 1965, and it prohibited federal contractors from discriminating “against any employee or applicant for employment because of race, creed, color, or national origin.” Executive Order 11375, Amending Executive Order No. 11246, Relating to Equal Employment Opportunity, was issued October 13, 1967, and it added “sex” as a covered category. Executive Order 13672 further amends Executive Order 11246 to add “sexual orientation, gender identity” to the covered categories, so it now reads “race, creed, color, sex, sexual orientation, gender identity, or national origin”.

To implement Executive Order 13672, OFCCP is making changes throughout its regulations to add “sexual orientation, gender identity” to the list of categories covered by the equal opportunity executive orders: 41 CFR part 60-1, Obligations of Contractors and Subcontractors; 41 CFR part 60-2, Affirmative Action Programs; 41 CFR part 60-4, Construction Contracts – Affirmative Action Requirements; and 41 CFR part 60-50, Guidelines on Discrimination Because of Religion or National Origin.

These regulations go into effective on April 8, 2015, and they will apply to federal contractors who hold contracts entered into or modified on or after that date.

Prompt Payment Interest Rate Set at 2 1/8%

The Treasury Department has established 2 1/8% (2.125%) as the interest rate for the computation of payments made between January 1, 2015, and June 30, 2015, under the Prompt Payment Act and the Contracts Disputes Act. This rate is also used in facilities capital cost of money calculations.

The interest rate for the prior six-month period (July 1, 2014, through December 31, 2014) was 2%. The interest rate for January 1, 2014, through June 30, 2014, was 2 1/8% (2.125%).

All prompt payment interest rates since 1980 (in six-month increments) are available at http://www.fms.treas.gov/prompt/rates.html.

FAR subpart 32.9, Prompt Payment; FAR subpart 33.2, Disputes and Appeals; FAR 31.205-10, Cost of Money; and Cost Accounting Standard (CAS) 9904.414, Cost of Money as an Element of the Cost of Facilities Capital, are affected by this interest rate.

Mileage Reimbursement Set at 57.5˘/Mile for Autos

The General Services Administration (GSA) is increasing the mileage reimbursement rate for use of a privately owned automobile on official travel from 56˘ per mile to 57.5˘ per mile, and the rate for use of a motorcycle on official travel from 53˘ per mile to 54.5˘ per mile. The rate for use of a privately owned aircraft is reduced from $1.31 per mile to $1.29 per mile. These revised rates are effective for travel performed on or after January 1, 2015, through December 31, 2015.

The privately owned vehicle mileage reimbursement rates are published at http://www.gsa.gov/mileage.

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