FedGovContracts.com

Panoptic Enterprises’

FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


January 2020
Vol. XXI, No. 1
[pdf version]

CONTENTS


2020 Defense Authorization Act Extends DOD Mentor-Protégé Program
FAC 2020-03 Modifies Prohibition on Telecommunications
Trade Agreements Thresholds Increased
SBA Proposes Nonmanufacturer Rule Waiver
Prompt Payment Interest Rate Set at 2 1/8%



2020 Defense Authorization Act
Extends DOD Mentor-Protégé Program

On December 20, President Trump signed the $738 billion National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020 (Public Law 116-92). Besides establishing the Space Force as the sixth branch of the military (Title IX, Subtitle D), the NDAA for FY 2020 was a “standing in place” piece of legislation, primarily concerned with authorizing a 3% increase in defense spending over that authorized by the NDAA for FY 2019 (Public Law 115-232). Within the NDAA for FY 2020 are some provisions that address issues involving acquisition; most of those provisions are in Title VIII, Acquisition Policy, Acquisition Management, and Related Matters (Sections 800-893), though there are a few other acquisition-related provisions scattered elsewhere in the statute.

While most of the acquisition-related provisions are limited to the Department of Defense (DOD), there are a few acquisition-related provisions that apply governmentwide.

The following are some of the more noteworthy acquisition-related provisions in the 1119-page NDAA for FY 2020:

The following miscellaneous sections of Public Law 116-92 involving acquisition are outside of Title VIII:



FAC 2020-03 Modifies Prohibition on Telecommunications

Federal Acquisition Circular (FAC) 2020-03 consists of an interim rule that allows an offeror that represents in Federal Acquisition Regulation (FAR) 52.204-26, Covered Telecommunications Equipment or Services – Representation, or in paragraph (v) of FAR 52.212-3, Offeror Representations and Certifications – Commercial Items, that it “does not provide covered telecommunications equipment or services as a part of its offered products or services to the government in the performance of any contract, subcontract, or other contractual instrument”, to skip the offer-by-offer representation within FAR 52.204-24, Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment.

The NDAA for FY 2019 (Public Law 115-232), Section 889, Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, prohibits agencies from procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as a critical technology as part of any system, on or after August 13, 2019. This section was included in the NDAA for FY 2019 because of Congressional concern about federal databases being vulnerable to access by the Chinese government through Chinese-produced video surveillance and telecommunications equipment.

FAC 2019-05 implemented Section 889 with an interim rule that added FAR subpart 4.21, Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment; FAR 52.204-24, Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment, and FAR 52.204-25, Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment.

FAR 4.2101, Definitions, defines “covered telecommunications equipment or services” as “(1) telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation, (or any subsidiary or affiliate of such entities); (2) for the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes, video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or affiliate of such entities); (3) telecommunications or video surveillance services provided by such entities or using such equipment; or (4) telecommunications or video surveillance equipment or services produced or provided by an entity that the Secretary of Defense, in consultation with the Director of National Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country.”

FAR 52.204-24, which is to be included in all solicitations for contracts or orders under indefinite-delivery indefinite-quantity (IDIQ) contracts, requires the offeror to represent whether “It [ ] will, [ ] will not provide covered telecommunications equipment or services to the government in the performance of any contract, subcontract or other contractual instrument resulting from this solicitation.” FAR 52.204-25, which is to be included in all solicitations and contracts, provides the definitions, prohibitions, exceptions, and reporting requirements.

This second interim rule adds FAR 52.204-26, Covered Telecommunications Equipment or Services – Representation, which requires an offeror to represent annually if it does or does not provide covered telecommunications equipment or services as a part of its offered products or services to the government. If an offeror represents that it “does not,” FAR 52.204-24 is amended to state that the offeror shall not complete the offer-by-offer representation in FAR 52.204-24 or FAR 52.212-3(v). An offeror that represents it “does” must complete the representation at FAR 52.204-24 and provide the information required by FAR 52.204-24(e).

The purpose of this second interim rule is to provide an annual representation, thus reducing the information collection burden imposed on the public.

Comments on this second interim rule must be submitted no later than February 11, 2020, identified as “FAR Case 2018-017,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory Secretariat Division (MVCB), 1800 F Street NW, 2nd Floor, Washington, DC 20405.

For more on the first interim rule, see the September 2019 Federal Contracts Perspective article “FAC 2019-05 Prohibits Acquisition of Chinese Telecommunications and Surveillance Equipment.”

Trade Agreements Thresholds Increased

On December 20, the U.S. Trade Representative performed the biennial adjustment of the thresholds for the various trade agreements into which the United States has entered with other countries. The adjustments are made to account for inflation that occurred in the previous two years and changes in the value of the respective currencies. These thresholds will be incorporated into FAR part 25, Foreign Acquisition, (specifically FAR subpart 25.4, Trade Agreements).

The following are the revised thresholds (with the previous thresholds in parentheses):

Within a few days of the U.S. Trade Representative’s action, the Department of Defense (DOD) issued a final rule incorporating the revised thresholds into DOD FAR Supplement (DFARS) part 225, Foreign Acquisition, and corresponding clauses in DFARS part 252, Solicitation Provisions and Contract Clauses.



SBA Proposes Nonmanufacturer Rule Waiver

The Small Business Administration (SBA) is proposing to issue a nonmanufacturer rule waiver for commercially available off-the-shelf laptop and tablet computers under Product Service Code (PSC) 7435, Office Information System Equipment, North American Industry Classification System (NAICS) code 334111, Electronic Computer Manufacturing.

SBA is inviting the public to comment on this proposed waiver or to provide information on potential small business sources on any small business manufacturers of this class of products that are available to participate in the federal market by January 16, 2020, to the Federal Rulemaking Portal at https://www.regulations.gov.

EDITOR’S NOTE: Public Law 100-656, enacted November 15, 1988, requires those with federal contracts that are set-aside for small businesses or awarded through the 8(a) program to provide the product of a small business manufacturer or processor if the recipient is not the actual manufacturer or processor (see paragraph (f) of FAR 19.102, Size Standards). This is called the “nonmanufacturer rule.” However, SBA may waive this requirement if there are no small business manufacturers or processors.

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 Section 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? (13 CFR 121.406(b)).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?

More information on the nonmanufacturer rule and class waivers can be found at https://www.sba.gov/contracting/contracting-officials/non-manufacturer-rule/non-manufacturer-waivers. A complete list of products for which the nonmanufacturer rule has been waived is available at https://www.sba.gov/document/support--non-manufacturer-rule-class-waiver-list.



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, 2020, through June 30, 2020, 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, 2019, through December 31, 2019) was 2 5/8% (2.625%). The interest rate for January 1, 2019, through June 30, 2019, was 3 5/8% (3.625%).

All prompt payment interest rates since 1980 (in six-month increments) are available at https://www.fiscal.treasury.gov/prompt-payment/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.





Copyright 2020 by Panoptic Enterprises. All Rights Reserved.

Return to the Newsletters Library.

Return to the Main Page.