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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


July 2021
Vol. XXII, No. 7
[pdf version]

CONTENTS


FAC 2021-06 Addresses Equipment Acquisitions, Fair Opportunity Under Task and Delivery Orders
Proposed FAR Rule to Update HUBZone Program
DOD Issues Two Deviations, One Revision
Guidance on Reducing Made in America Waivers Issued



FAC 2021-06 Addresses Equipment Acquisitions,
Fair Opportunity Under Task and Delivery Orders

Federal Acquisition Circular (FAC) 2021-06 consists of two final rules that amend the Federal Acquisition Regulation (FAR). One requires agencies to analyze the most advantageous method for acquiring equipment, and the other increases the threshold for requiring fair opportunity on orders under multiple-award contracts to the micro-purchase threshold.”

Five respondents submitted comments on the proposed rule, but none of the comments were adopted. The only difference between the proposed rule and the final rule is that the proposed sentence in paragraph (a) – “When requested by an agency, the General Services Administration (GSA) will assist in lease, rent, or purchase decisions...” – is changed to “When requested by an agency, the General Services Administration (GSA) will assist in rent, lease, or purchase decisions...” This is to ensure that the terms “rent” and “lease” are used in the same order throughout the rule.

For more on the proposed rule, see the September 2020 Federal Contracts Perspective article “FAR to Require Analysis of Equipment Acquisitions.”

  • Application of Micro-Purchase Threshold to Task and Delivery Orders: This finalizes, without changes, the rule that proposed to amend FAR 16.505, Ordering [under indefinite-delivery contracts], to implement the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020 (Public Law 116-92), Section 826, Uniformity in Application of Micro-Purchase Threshold to Certain Task or Delivery Orders, which increases the threshold for requiring fair opportunity on orders under multiple-award contracts from $2,500 to the “micro-purchase threshold”.

    Paragraph (c) of Title 41 of the U.S. Code, Section 4106 (41 USC 4106), Orders [under task and delivery order contracts], requires that “when multiple contracts are awarded...all contractors awarded the contracts shall be provided a fair opportunity to be considered…for each task or delivery order in excess of $2,500 that is to be issued under any of the contracts…” unless an exception applies. Section 826 increases the $2,500 threshold in 41 USC 4106(c) to “the micro-purchase threshold”.

    To implement Section 826, the rule proposed amending FAR 16.505(b)(1)(i) and FAR 16.505(b)(2)(i) by removing “$3,500” and replacing it with “the micro-purchase threshold”. In addition, the rule proposed to make the same change to FAR 16.505(b)(2)(ii)(A), which requires the contracting officer to document the basis for using an exception to the fair opportunity process for orders exceeding $3,500, but not exceeding the simplified acquisition threshold. (EDITOR’S NOTE: The $3,500 threshold in FAR 16.505 was the product of inflation adjustments to the micro-purchase threshold; it was increased from $2,500 to $3,000 in 2006 (see “Inflation Adjustment of Acquisition-Related Thresholds” in the October 2006 Federal Contracts Perspective article “Micro-Purchase, Cost or Pricing Data, 8(a) Competition Thresholds Adjusted for Inflation”), and from $3,000 to $3,500 in 2015 (see “Inflation Adjustment of Acquisition-Related Thresholds” in the August 2015 Federal Contracts Perspective article “FAC 2005-83 Adjusts Federal Acquisition-Related Thresholds, Makes FAR Subpart 13.5 Permanent.” Since the 2015 inflation adjustment, the NDAA for FY 2018 (Public Law 115-91), Section 806, Requirements Related to the Micro-Purchase Threshold, has increased the micro-purchase threshold from $3,500 to $10,000 – see “Increased Micro-Purchase and Simplified Acquisition Thresholds” in the August 2020 Federal Contracts Perspective article “FAC 2020-07 Increases Simplified Acquisition, Micro-Purchase Thresholds.”)

    No comments were submitted in response to the proposed rule, so it is finalized without changes. For more on the proposed rule, see “Application of Micro-Purchase Threshold To Task and Delivery Orders” in the November 2020 Federal Contracts Perspective article “Revision of ‘Commercial Item’ Definition Proposed.”

    Proposed FAR Rule to Update HUBZone Program

    The FAR Council has published a proposed rule that would amend FAR part 19, Small Business Programs, to reflect changes the Small Business Administration (SBA) made to its regulations for the Historically Underutilized Business Zone (HUBZone) Program (Title 13 of the Code of Federal Regulations, part 126 [13 CFR part 126], HUBZone Program) to reduce the regulatory burdens imposed on HUBZone small businesses and government agencies, implement new statutory provisions, and eliminate ambiguities in the regulations (see “Revision of the HUBZone Program” in the December 2019 Federal Contracts Perspective article “SBA Takes on Small Business Contracting Programs”).

    To bring FAR part 19 and related FAR sections into conformance with the revised 13 CFR part 126, the following are the significant changes that are proposed:

    Comments on this proposed rule must be submitted by August 13, 2021, identified as “FAR Case 2019-007,” through the Federal eRulemaking portal at https://www.regulations.gov.

    DOD Issues Two Deviations, One Revision

    The Department of Defense (DOD) took June off, only issuing two Defense FAR Supplement (DFARS) deviations and an update to an original deviation.



    Guidance on Reducing Made in America Waivers Issued

    The Office of Management and Budget (OMB) has issued a memorandum titled “Increasing Opportunities for Domestic Sourcing and Reducing the Need for Waivers from Made in America Laws” that provides guidance on complying with Executive Order 14005, Ensuring the Future is Made in All of America by All of America’s Workers. Executive Order 14005 directs that agencies take “a series of actions to enable the United States government to maximize its use of goods, products, and materials produced in, and services offered in, the United States. These actions include, among other things, requiring the Office of Management and Budget (OMB) to establish the Made in America Office (MIAO). The MIAO will provide greater oversight of waivers from Made in America laws, thus increasing consistency and public transparency of such waivers. The executive order also directs the Federal Acquisition Regulatory Council (FAR Council) to consider strengthening applicable Made in America provisions in the Federal Acquisition Regulation (FAR).” This OMB memorandum provides initial guidance to agencies regarding the MIAO’s implementation of Executive Order 14005.

    The memorandum covers several key Made in America laws: the Buy American Act (see FAR subpart 25.1, Buy American – Supplies, and FAR subpart 25.2, Buy American – Construction Materials; the Berry Amendment (see DFARS 225.7002, Restrictions on Food, Clothing, Fabrics, Hand or Measuring Tools, and Flags); the Kissell Amendment (see Section 604 of the American Recovery and Reinvestment Act of 2009 [Public Law 111-5] and Department of Homeland Security Acquisition Regulation [HSAR] 3025.7002, Restrictions on Clothing, Fabrics, and Related Items); the Merchant Marine Act of 1920 (Public Law 66-261, also known as the “Jones Act” – it “generally provides that no merchandise may be transported between points in the United States to which coastwise laws apply, either directly or via a foreign port, in any vessel unless it is U.S.-built, U.S.-owned, and documented with a coastwise endorsement by the U.S. Coast Guard”); and the Cargo Preference Acts of 1904 and 1954 (“100% of all supplies bought for the DOD, and at least 50% of all equipment, materials, or commodities purchased or financed by non-DOD entities with federal funds, must be carried on privately-owned, U.S.-flag commercial vessels when transported to and from international destinations”) (see FAR subpart 47.5, Ocean Transportation by U.S.-Flag Vessels, for policies and procedures implementing the Merchant Marine Act of 1920 and the Cargo Preference Acts of 1904 and 1954).

    The memorandum directs agencies to take the following initial actions:

    In addition, the following are additional planned actions related to waivers:





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