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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


September 2020
Vol. XXI, No. 9
[pdf version]

CONTENTS


More Guidance on Prohibited Telecommunications and Video Surveillance Equipment Issued
More COVID-19 Guidance Issued
DOD Cranks Up the DFARS Changes
Multiple Award Schedule Consolidation in Final Phase
Purchase Card Limits Unchanged by Threshold Increases
ASTRO Program IDIQ Solicitation Issued
Vets First Program Preference Clarified
Federal Minimum Wage Increased to $10.95/Hour for 2021
President Orders Review of Foreign Labor on Contracts
FY 2019 Spending Up 6% to $590 Billion
Nonmanufacturer Waiver Proposed for Surgical Beds
FAR to Require Analysis of Equipment Acquisitions
GSA Takes on Task-Orders
SBA Amends SBIR/STTR Policy Directive
EPAAR Addresses Open Source Software Requirements
NASA Mandates Avoidance of Counterfeit Parts



More Guidance on Prohibited Telecommunications
and Video Surveillance Equipment Issued

On August 13, paragraph (a)(1)(B) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Public Law 115-232), Section 889, Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, went into effect. Paragraph (a)(1)(B) prohibits agencies from entering into “into a contract (or extend or renew a contract) with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.”

Section 889 defines “covered telecommunications equipment or services” as: “(A) telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities); (B) 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); (C) telecommunications or video surveillance services provided by such entities or using such equipment; [or] (D) telecommunications or video surveillance equipment or services produced or provided by an entity that the Secretary of Defense, in consultation with the Director of the 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.”

There are two parts to Section 889:

However, despite the issuance of FAC 2020-08, several agencies still perceived a need for additional guidance on “Part B” implementation.



More COVID-19 Guidance Issued

The COVID-19 pandemic continues with no end in sight, so the president has issued an executive order directing non-competitive procedures be used to acquire essential medicines produced in the United States, and the Department of Defense (DOD) issued four documents addressing implementation of Section 3610 of the Coronavirus Aid, Relief and Economic Security (CARES) Act (Public Law 116-136) and one addressing contracting personnel travelling overseas.



DOD Cranks Up the DFARS Changes

The Department of Defense was very busy in August! Besides issuing the COVID-19 policies and procedures (see preceding article) and the guidance to micro-purchase cardholders on complying with the Chinese telecommunications prohibition (see first article), it issued three final rules, four proposed rules, one advanced notice of proposed rulemaking (ANPR), and three superseding deviations!



Multiple Award Schedule Consolidation in Final Phase

The General Services Administration (GSA) announced on August 3 the beginning of Phase 3 of its Multiple Award Schedule (MAS) consolidation. Phase 3 requires all current contractors with more than one contract to consolidate their offerings down to one contract. GSA will be working hand-in-hand with affected contractors to put together their consolidation plans in FY 2021. GSA expects Phase 3 to take five to ten years to reach completion.

In Phase 1, GSA consolidated its 24 MAS into a single solicitation for products, services, and solutions (see the November 2019 Federal Contracts Perspective article “GSA Consolidating Schedules, Retiring FedBizOpps”). In Phase 2, current contracts were modified to update and streamline terms and conditions for the new solicitation. Phase 2 ended on July 31, 2020, with 99% of contractors signing the “mass modification.”

Under the MAS (also referred to as the GSA Schedule and Federal Supply Schedule), GSA establishes long-term, governmentwide contracts with commercial firms offering more than 10 million commercial supplies and services that federal, state, and local agencies order directly from MAS contractors, or through the GSA Advantage!® online shopping and ordering system (https://www.gsaadvantage.gov). Approximately $33 billion dollars is spent through the MAS each year.



Purchase Card Limits Unchanged by Threshold Increases

The Department of Energy (DOE) has announced that “notwithstanding the Federal Acquisition Regulation finalization that increases the micro-purchase threshold for supplies from $3,500 to $10,000 and the simplified acquisition threshold from $150,000 to $250,000, existing purchase card limits are not raised. Furthermore, new cardholders must not receive these higher limits.” (EDITOR’S NOTE: The “FAR finalization” referenced in the DOE announcement is in Federal Acquisition Circular (FAC) 2020-07; see the August 2020 Federal Contracts Perspective article “FAC 2020-07 Increases Simplified Acquisition, Micro-Purchase Thresholds.”)



ASTRO Program IDIQ Solicitation Issued

On August 24 the General Services Administration (GSA) issued the long-awaited solicitation for the ASTRO program (Request for Proposals [RFP] 47QFCA20R0026). The ASTRO solicitation is expected to establish a family of ten individual multiple award (MA) indefinite-delivery/indefinite-quantity (IDIQ) contracts that encompass operations, maintenance, readiness, research, development, systems integration, and support for manned, unmanned, and optionally manned platforms and/or robotics sponsored by the Department of Defense (DOD), as well as the services that support those platforms and robotics. The ASTRO MA-IDIQ contracts will be awarded and administered by GSA’s Federal Systems Integration and Management Center (FEDSIM). (EDITOR’S NOTE: FEDSIM [https://fedsim.gsa.gov] provides acquisition support for information technology and professional services to other government agencies for a fee. Orders under the ASTRO MA-IDIQs must be made through FEDSIM unless a contracting officer requests a delegation of procurement authority (DPA) and FEDSIM grants the DPA.)

The 10 MA-IDIQ “pools” under the ASTRO master contract are:

Each pool is expected to have 45 awards of IDIQ task order contracts, for a total of 450 contract awards. The total number of contractors within any given pool may fluctuate over time due to novation agreements, acquisitions, and mergers, or the government’s exercise of the “off-ramp” process (termination, debarment, suspension, allow the contract to expire, etc.). Offerors may compete for more than one pool; however, each offeror may only submit one proposal per pool.

Offerors will be evaluated based on relevant experience and past performance, but not cost or price. Section B.7 of the RFP, Task Order Pricing/Tasks, states, “The Master Contract does not establish prices for any supply or service at the task order level; therefore, the OCO [ordering contracting officer] shall establish cost and price reasonableness for each task order using the policies and methods in FAR subpart 15.4 [Contract Pricing], internal policies, and other applicable regulatory supplements.”

Each pool is designed to be a total solution vehicle for services solicited and awarded at the task order level. “Total solution” is defined as any combination of support that is integral and necessary to the service-based requirements within the scope of the contract and task order award. For example, a total solution may include any combination of contract types and labor associated with continental U.S. (CONUS) labor, outside CONUS (OCONUS) labor, specialized labor, construction wage rate requirements, professional labor, service contract labor standards, and other costs such as subcontracts, travel, supplies, materials, equipment, special test equipment, and special tooling.

All contract types at the task order level will be permitted, including all types of fixed-price contracts, all types of cost-reimbursement contracts, all types of incentive contracts, time-and-materials (T&M), and labor-hour (LH). Individual task orders may combine more than one contract type and include multi-year or option periods, performance-based procedures, classified and/or unclassified, and commercial and/or non-commercial items.

The ordering period for each contract will be five years, and each will have a five-year option period, which if exercised would make the total contract term ten years in length. Paragraph (e) of FAR 17.204, Contracts [with options], states that “unless otherwise approved in accordance with agency procedures, the total of the basic and option periods shall not exceed 5 years in the case of services, and the total of the basic and option quantities shall not exceed the requirement for 5 years in the case of supplies.” To implement the 10-year total contract period, GSA issued a deviation authorized by Jeffrey Koses, GSA Senior Procurement Executive, approving the total contract term of ten years.

In addition, paragraph (a)(ii)(4) of FAR 16.504, Indefinite-Quantity Contracts, requires that each indefinite-quantity contract “specify the total minimum and maximum quantity of supplies or services the government will acquire under the contract...” Since the intent of the ASTRO solicitation is to result in IDIQ task order contracts without a maximum quantity limitation, Jeffrey Koses issued a deviation striking the maximum limitation requirement in FAR 16.504(a)(ii)(4) for the ASTRO program.

While no estimated value of the ASTRO program has been published, the ASTRO program is expected to generate billions of dollars worth of orders over ten years since it is sponsored by the DOD.

Proposals are due no later than 4:00 pm Central Daylight Time on October 30, 2020. Proposals must be submitted electronically via https://astro.app.cloud.gov.



Vets First Program Preference Clarified

With the enactment of the Department of Veterans Affairs Contracting Preference Consistency Act of 2020 (Public Law 116-155), the conflict between the Veterans First Contracting Program and the AbilityOne Program has been resolved in favor of the Veterans First Contracting Program.

The AbilityOne Program (https://www.abilityone.gov) is one of the largest sources of employment for people who are blind or have significant disabilities. It was created by Congress in 1938 (the Javits-Wagner-O’Day Act) to require the federal government to give a preference to non-profit companies that employ individuals who are blind or severely disabled when contracting for certain products and services including office and medical supplies, clothing items, janitorial work, and call center staffing. These products and services are listed on the Procurement List (“a list of supplies and services that...are suitable for purchase by the government”) maintained by the Committee for Purchase from People Who Are Blind or Severely Disabled (operating as the U.S. AbilityOne Commission®) (see FAR 8.002, Priorities for Use of Mandatory Government Sources). FAR subpart 8.7, Acquisition from Nonprofit Agencies Employing People Who Are Blind or Severely Disabled, provides policies and procedures for implementing the AbilityOne Program.

The Veterans First Contracting Program was created by Congress with the Veterans Benefits, Health Care, and Information Technology Act of 2006 (Public Law 109-461) to require the Department of Veterans Affairs (VA) to give a preference to service-disabled veteran-owned small businesses (SDVOSB) and veteran-owned small businesses (VOSB) when awarding contracts (Section 502, Department of Veterans Affairs Goals for Participation by Small Businesses Owned and Controlled by Veterans in Procurement Contracts, and Section 503, Department of Veterans Affairs Contracting Priority for Veteran-Owned Small Businesses). The Veterans Affairs Acquisition Regulation (VAAR) subpart 819.70, Service-Disabled Veteran-Owned and Veteran-Owned and Operated Small Businesses, addresses the Veterans First Contracting Program.

Earlier legislation that addressed VA contracting specifically exempted products and services on the AbilityOne Program’s Procurement List, but the 2006 legislation did not. As a result, Veterans First and AbilityOne have come into conflict in a series of contract protests and court cases over the last several years.

To resolve this conflict, Congress enacted the VA Contracting Preference Consistency Act on August 8, 2020. The law preserves the AbilityOne Program with respect to products and services VA was purchasing before the Veterans First Program was created in 2006, and the Veterans First Program applies to all other products and services.

This law requires a VA contracting officer to procure covered products and services on the Procurement List through the AbilityOne Program, as a priority mandatory government source. The legislation also provides an exception when a covered product or service was procured from an eligible SDVOSB or VOSB as a result of a VA Rule of Two determination between the period after December 22, 2006 (the day the Veterans Benefits, Health Care, and Information Technology Act of 2006 was enacted) and August 7, 2020 (the day before the enactment of the VA Contracting Preference Consistency Act of 2020). (EDITOR’S NOTE: The “VA Rule of Two” is the process by which a VA contracting officer awards contracts on the basis of competition restricted to SDVOSBs and VOSBs if the contracting officer has a reasonable expectation that two or more SDVOSBs or VOSBs will submit offers and that the award can be made at a fair and reasonable price that offers best value. See Veterans Affairs Acquisition Regulation (VAAR) 819.7005, VA Service-Disabled Veteran-Owned Small Business Set-Aside Procedures, and VAAR 819.7006, VA Veteran-Owned Small Business Set-Aside Procedures.)

On August 14, the VA issued a deviation to VAAR 808.002, Priorities for Use of Mandatory Government Sources, to implement the VA Contracting Preference Consistency Act of 2020. The deviation amends paragraph (a)(1)(iv), which addresses products that are on the Procurement List, and paragraph (a)(2), which addresses services that are on the Procurement List. The deviation provides that the VA contracting officer shall procure products or services that are on the Procurement List through the AbilityOne program – this is essentially the same as VAAR 808.002. However, the deviation adds “exceptions for covered products [or services] previously awarded to SDVOSBs/VOSBs” (paragraphs (a)(1)(iv)(B) and (a)(2)(iii)). The exception states, “If a contract for a covered product [or service] was previously awarded to a VIP-listed SDVOSB or VOSB after December 22, 2006 and in effect August 7, 2020, the requirement shall continue to be procured as a SDVOSB/VOSB set-aside provided (1) the contracting officer makes a determination that two or more VIP-listed SDVOSBs or VOSBs will submit offers for the same or similar product [or service], in accordance with 38 USC 8127 [Small Business Concerns Owned and Controlled by Veterans: Contracting Goals and Preferences] and [VAAR] subpart 819.70; and (2) the award can be made at a fair and reasonable price that offers the best value to the United States.” (EDITOR’S NOTE: “VIP” stands for “Vendor Information Pages,” which is a database at https://www.vip.vetbiz.gov that lists businesses the VA has determined are eligible for the Veterans First Contracting Program.)

In addition, the deviation provides that in the event a contract for a covered product or service previously awarded under the Veterans First Contracting Program is terminated or expires, the products or services may not be procured under the AbilityOne Program unless the Head of the Contracting Activity makes a determination that a reasonable expectation no longer exists that two or more SDVOSBs/VOSBs will submit offers, and that an award can be made at a fair and reasonable price that offers best value to the United States.



Federal Minimum Wage Increased to $10.95/Hour for 2021

The Department of Labor (DOL) has announced that the applicable minimum wage rate to be paid to workers performing work on or in connection with federal contracts covered by Executive Order 13658, Establishing a Minimum Wage for Contractors, beginning January 1, 2021, is increased from $10.80 to $10.95 per hour.

Executive Order 13658 was signed by President Obama on February 12, 2014 (see the March 2014 Federal Contracts Perspective article “President Issues Executive Order Mandating $10.10/Hour Minimum Wage”), which raised the hourly minimum wage paid by contractors to workers performing work on covered federal contracts to $10.10 per hour, beginning January 1, 2015. Further, the executive order stated that the Department of Labor (DOL) would adjust the minimum wage annually (beginning January 1, 2016) to reflect inflation during the year as reflected in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers.

In 2015, the DOL determined that the CPI increased by 0.345% in 2015, so the minimum wage became $10.15 per hour beginning January 1, 2016 (see the October 2015 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.15/Hour for 2016”).

In 2016, the DOL determined that the CPI increased by 0.278% in 2016, so the minimum wage became $10.20 per hour beginning January 1, 2017 (see the October 2016 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.20/Hour for 2017”).

In 2017, the DOL determined that the CPI index increased by 1.691% in 2017, so the minimum wage became $10.35 per hour beginning January 1, 2018 (see the October 2017 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.35/Hour For 2018”).

In 2018, the DOL determined that the CPI index increased by 2.337% in 2018, so the minimum wage became $10.60 per hour effective January 1, 2019 (see the October 2018 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.60/Hour for 2019”).

In 2019, the DOL determined that the CPI increased by 2.036% in 2019, so the minimum wage became $10.80 per hour effective January 1, 2020 (see the October 2019 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.80/Hour for 2020”).

Now, the DOL has determined that the CPI index increased by 1.432% in 2020, and this produces a minimum wage of $10.95 per hour effective January 1, 2021.

In addition, the required minimum cash wage that must be paid to tipped employees performing work on or in connection with covered contracts is increased from $7.55 to $7.65 per hour.



President Orders Review of Foreign Labor on Contracts

President Trump has issued Executive Order 13940, Aligning Federal Contracting and Hiring Practices with the Interests of American Workers, to direct each agency head to review “performance of contracts (including subcontracts) awarded by the agency in fiscal years 2018 and 2019 to assess: (i) whether contractors (including subcontractors) used temporary foreign labor for contracts performed in the United States, and, if so, the nature of the work performed by temporary foreign labor on such contracts; whether opportunities for United States workers were affected by such hiring; and any potential effects on the national security caused by such hiring; and (ii) whether contractors (including subcontractors) performed in foreign countries services previously performed in the United States, and, if so, whether opportunities for United States workers were affected by such offshoring; whether affected United States workers were eligible for assistance...; and any potential effects on the national security caused by such offshoring.”

The president goes on to direct each agency head to “assess any negative impact of contractors’ and subcontractors’ temporary foreign labor hiring practices or offshoring practices on the economy and efficiency of federal procurement and on the national security, and propose action...to improve the economy and efficiency of federal procurement and protect the national security.”



FY 2019 Spending Up 6% to $590 Billion

Federal contracting spending in Fiscal Year (FY) 2019 increased to $589.8 billion, up 6.2% from the $555.3 billion spending level in FY 2018.

The big dollar increase winner was the Department of Defense (DOD), which saw its contract spending increase 7%, from $359.0 billion to $383.8 billion. The biggest percentage increase winner was the Smithsonian Institution, which saw its spending more than double, from $299 million to $605 million. The biggest dollar decrease loser was the Department of Homeland Security, which saw its spending decrease 3.5%, from $18.2 billion to $17.6 billion. The biggest percentage decrease loser was the Office of Personnel Management, which saw its spending decrease 20%, from $1.2 billion to $968 million.

The following are the largest agencies’ FY 2019 spending versus their FY 2018 spending:

Department/Agency FY 2019 Spending FY 2018 Spending
Defense $383,835,264,897 $358,990,696,967
Energy 33,301,917,354 31,959,016,541
Veterans Affairs 28,436,117,807 27,128,144,020
Health and Human Services 26,530,826,471 24,622,561,872
National Aeronautics and Space Admin 18,152,949,028 18,029,293,806
Homeland Security 17,628,251,773 18,238,165,383
General Services Administration 16,145,237,030 13,826,637,029
State 9,486,907,494 9,945,166,817
Justice 8,492,951,332 8,191,887,303
Agriculture 7,506,919,830 6,514,957,295
Transportation 6,797,527,737 7,009,472,845
Commerce 5,501,181,203 3,767,969,523
Agency for International Development 5,448,480,224 4,975,883,369
Treasury 4,659,202,404 4,690,447,167
Interior 3,934,300,0494,382,944,995
Education 2,889,979,064 2,760,191,790
Labor 2,054,838,083 1,914,632,524
Social Security Administration 1,696,321,446 1,638,091,320
Environmental Protection Agency 1,215,702,736 1,243,909,515
Housing and Urban Development 1,124,979,369 845,858,230
Office of Personnel Management 968,141,682 1,207,032,774
Smithsonian Institution 605,070,370 299,266,244
National Science Foundation 515,480,058 466,257,721
Securities and Exchange Commission 458,536,704 421,242,086
Pension Benefit Guaranty Corporation 337,802,899 309,160,080
Federal Communications Commission 189,835,114 116,754,777
Others 1,852,529,7711,848,591,695
      TOTAL $589,767,251,929 $555,344,233,688

In addition, the Small Business Administration (SBA) announced that the federal government exceeded its small business federal contracting goal of 23% by awarding 26.5% of prime contract dollars to small businesses in FY 2019 ($132.9 billion), an increase of more than $12 billion from FY 2018. In addition, $90.7 billion in subcontracts were awarded to small businesses under federal contracts.

Other goals that were exceeded in FY 2019 are: small disadvantaged businesses, 10.29% – $51.6 billion (exceeding the 5% goal); services-disabled veteran-owned small businesses, 4.39% – $22 billion (exceeding the 3% goal); and women-owned small businesses, 5.19% – $26 billion (exceeding the 5% goal). The only category that did not meet its goal was the Historically Underutilized Business Zone (HUBZone) program small businesses, which fell short of its 3% with 2.3% awarded ($11.4 billion).

Finally, the reports function of the Federal Procurement Data System (https://www.fpds.gov), which compiles the statistics on federal contract awards (including the SBA’s small business contract awards statistics), is being transitioned into the System for Award Management (https://beta.SAM.gov/) on October 17, 2020. At that time, beta.SAM.gov will be the only place to create and run contract data reports, and the reports module in FPDS.gov will be retired.



Nonmanufacturer Waiver Proposed for Surgical Beds

The Small Business Administration (SBA) is proposing to issue a nonmanufacturer rule waiver for surgical beds under Product Service Code (PSC) 6515, Office Information System Equipment, North American Industry Classification System (NAICS) code 339113, 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 September 10, 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 if the recipient is not the actual manufacturer (see paragraph (c) of FAR 19.505, Limitations on Subcontracting and Nonmanufacturer Rule). This is called the “nonmanufacturer rule.” However, SBA may waive this requirement if there are no small business manufacturers of the product (see FAR 19.505(c)(4).

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? (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/partners/contracting-officials/small-business-procurement/non-manufacturer-rule. 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.



FAR to Require Analysis of Equipment Acquisitions

The FAA [Federal Aviation Administration] Reauthorization Act of 2018 (Public Law 115-254), Section 555, Cost-Effectiveness Analysis of Equipment Rental, requires the head of each agency to acquire equipment using the method of acquisition most advantageous to the government based on a case-by-case analysis of comparative costs and other factors, including purchase, short-term rental or lease, long-term rental or lease, interagency acquisition, and acquisition agreements with a state or local government.

To implement Section 555, the FAR Council has published a proposed rule that would revise FAR subpart 7.4, Equipment Lease or Purchase (which would be retitled “Equipment Acquisition”), to facilitate an analysis and a decision on whether it is in the best interest of the government to purchase a piece of equipment as opposed to obtaining the equipment through any other non-purchase method.

The rule proposes to make the following changes to FAR subpart 7.4:

Comments on this proposed rule must be submitted no later than October 23, 2020, identified as “FAR Case 2019-001,” through the Federal eRulemaking Portal: http://www.regulations.gov.



GSA Takes on Task-Orders

The General Services Administration (GSA) was very busy in August as well! Besides issuing instructions and deviations on the Chinese telecommunications prohibition (see first article), announcing Phase 3 of the Multiple Award Schedule (MAS) consolidation (see above article), and releasing the ASTRO Program solicitation (see above article), GSA issued a rule amending the GSA Acquisition Regulation (GSAR) to remove text that is duplicated in the FAR, and two documents addressing the implementation of a section of the NDAA for FY 2019.



SBA Amends SBIR/STTR Policy Directive

The Small Business Administration is amending the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs’ Policy Directive to clarify that successor-in-interest entities are eligible to receive Phase III awards.

Both the SBIR and STTR programs use a phased process to solicit proposals and award funding agreements for research and research and development (R&D) to meet stated agency needs or missions: Phase I, Experimental or Theoretical Research; Phase II, Development of the Research Conducted in Phase I; and Phase III, Commercial Application of the Research Developed in Phase II.

The SBIR program requires all agencies with R&D budgets of more than $100,000,000 to set aside 3.2% of their R&D budgets for small businesses; approximately $1.7 billion is awarded to small businesses through the SBIR program each year. The STTR program requires all agencies with R&D budgets of more than $1 billion to set aside 0.45% of their R&D budgets for small businesses; approximately $200,000,000 is awarded to small businesses through the STTR program each year. The primary difference between the SBIR and the STTR programs is that small businesses must have a single nonprofit research institution as a partner to participate in the STTR program. The nonprofit research institution must be located in the U.S. and must be either: (1) a nonprofit college or university; (2) a domestic nonprofit research organization; or (3) a federally funded research and development center (FFRDC).

In the Directive is Section 6, Eligibility and Application (Proposal) Requirements, and paragraph (a)(5) specifically relates to the eligibility of entities that have received a novated award, a similarly-revised award, or are successor-in-interest entities. It has been pointed out to the SBA that the language in Section 6(a)(5) requires clarification to confirm for agencies and applicants that successor-in-interest entities are eligible to receive Phase III SBIR/STTR awards.

The first two sentences of Section 6(a)(5) state, “An SBIR/STTR awardee may include, and SBIR/STTR work may be performed by, those identified via a ‘novated’ or ‘successor-in-interest’ or similarly-revised funding agreement. For example, in order to receive a Phase III award, the awardee must have either received a prior Phase I or Phase II award or been novated a Phase I or Phase II award (or received a revised Phase I or Phase II award if a grant or cooperative grant).” To clarify that entities may be eligible to receive a Phase III award as a successor-in-interest without novation, SBA is revising the second of these two sentences to read as follows: “For example, a Phase III awardee may have either received a prior Phase I or Phase II award or been novated a Phase I or Phase II award (or received a revised Phase I or Phase II award if a grant or cooperative grant) or be a successor-in-interest entity.” (EDITOR’S NOTE: The second sentence is edited as follows (strikethrough text is removed and italicized text is added): “For example, in order to receive a Phase III award, the awardee must may have either received a prior Phase I or Phase II award or been novated a Phase I or Phase II award (or received a revised Phase I or Phase II award if a grant or cooperative grant) or be a successor-in-interest entity.”)

For more on the SBIR/STTR Policy Directive, see the May 2019 Federal Contracts Perspective article “SBA Issues Combined SBIR Program and STTR Program Policy Directive.”



EPAAR Addresses Open Source Software Requirements

The Environmental Protection Agency (EPA) has amended the EPA Acquisition Regulation (EPAAR) to add EPAAR 1552.239-71, Open Source Software, to address open source software requirements in accordance with Office of Management and Budget’s (OMB) Memorandum M-16-21, Federal Source Code Policy: Achieving Efficiency, Transparency, and Innovation Through Reusable and Open Source Software.

This final rule creates EPAAR part 1539, Acquisition of Information Technology, which consists of EPAAR Subpart 1539.2, Open Source Software, which in turn consists of EPAAR 1539.2071, Contract Clause. EPAAR 1539.2071 consists of the prescription for use of EPAAR 1552.239-71, Open Source Software, in all procurements where open-source software development/custom development of software will be required, “including, but not limited to, multi-agency contracts, Federal Supply Schedule orders, governmentwide acquisition contracts, interagency agreements, cooperative agreements, and student services contracts.” Also, EPAAR 1539.2071 states that “in addition to clause [EPAAR] 1552.239-71, contracting officers must also select the appropriate version* of Federal Acquisition Regulation (FAR) clause 52.227-14, Rights in Data – General, to include in the subject procurement in accordance with FAR 27.409 [Solicitation Provisions and Contract Clauses (for rights in data and copyrights)]. (*Important note: Alternate IV of clause [FAR] 52.227-14 is NOT suitable for open-source software procurement use because it gives the contractor blanket permission to assert copyright.)” (EDITOR’S NOTE: The “important note” identified by the * is part of EPAAR 1539.2071.)

The other part of the final rule is the addition of EPAAR 1552.239-71, Open Source Software, which consists of the following:



NASA Mandates Avoidance of Counterfeit Parts

The National Aeronautics and Space Administration (NASA) is amending the NASA FAR Supplement (NFS) to add NFS subpart 1846.70, Counterfeit Electronic Part Detection and Avoidance, and NFS 1852.246-74, Contractor Counterfeit Electronic Part Detection and Avoidance. This final rule implements the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Public Law 115-10), Section 823, Detection and Avoidance of Counterfeit Parts, which requires covered contractors and subcontractors (those that supply “an electronic part, or a product that contains an electronic part, to NASA”) to use electronic parts that are currently in production and purchased from the original manufacturers of the parts, their authorized dealers, or suppliers who obtain such parts exclusively from the original manufacturers or their authorized dealers.

The following are added to the NFS to implement Section 823:

EDITOR'S NOTE: NASA’s final rule is a companion to the FAC 2020-02 final rule that requires contractors and subcontractors to report to the Government-Industry Data Exchange Program (https://www.gidep.org/) a broader spectrum of counterfeit or suspect counterfeit parts and certain major or critical nonconformances. While both rules pertain to counterfeit parts and suspected counterfeit parts, there are discernible differences since they implement different acts (FAC 2020-02 implements the NDAA for FY 2012 [Public Law 112-81], Section 818, Detection and Avoidance of Counterfeit Electronic Parts. For more on the FAC 2020-02 rule, see the December 2019 Federal Contracts Perspective article “FAC 2020-02 Requires Contractors to Report Counterfeit Parts to GIDEP.org.”





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