Panoptic Enterprises'


Federal Acquisition Developments, Guidance, and Opinions

Vol. III, No. 1


"Blacklisting Regulations" Permanently Revoked by FAC 2001-03
FAC 2001-02 Addresses Energy Efficiency, Prompt Payment
SBA Initiates BusinessLaw.gov
Changes Proposed for NFS Safety and Health Clauses
New DFARS Rules on Various Contracting Methods
CBD Goes Out of Business January 4, 2002
Prompt Payment Interest Rate Set at 5 1/2%

"Blacklisting Regulations" Permanently Revoked,
Called "Unworkable and Defective" by FAR Courcil

The long, drawn out saga of the "Contractor Responsibility" regulations, which began on September 21, 1997, when then-Vice President Al Gore promised the AFL-CIO that the Clinton administration would require contracting officers to consider contractor compliance with labor laws when making responsibility determinations, came to an anti-climatic end on December 28 when the Federal Acquisition Regulation (FAR) Council published Federal Acquisition Circular (FAC) 2001-03 revoking FAC 97-21. FAC 97-21, which revised the FAR to implement the so-called "blacklisting regulations," went into effect on January 19, 2001, the last full day of the Clinton administration.

On July 9, 1999, the FAR Council published a proposed rule amending FAR Part 9, Contractor Qualifications, to clarify coverage and give examples of suitable contractor responsibility considerations, and FAR Part 31, Contract Cost Principles and Procedures, to make unallowable the costs of attempting to influence employee decisions regarding unionization, and legal expenses related to the defense of judicial or administrative proceedings brought by the federal government when a contractor is found to have violated a law or regulation, or the proceeding is settled by consent or compromise.

The FAR Council received more than 1500 comments in response to the proposed rule. After reviewing the public comments, the FAR Council republished the proposed rule with certain changes on June 30, 2000. Over 300 comments were received on the June 30, 2000, proposed rule. On December 20, 2000, the FAR Council published FAC 97-21, with an effective date of January 19, 2001.

On January 26, 2001, the Civilian Agency Acquisition Council (CAAC) authorized all civilian agencies to postpone the effective date of FAC 97-21 for six months, from January 19, 2001, to July 19, 2001. The CAAC cited the lawsuit filed by the Business Roundtable, Chamber of Commerce of the United States, the National Association of Manufacturers, the Associated General Contractors of America, Inc., and the Associated Builders and Contractors, Inc., in the United States District Court for the District of Columbia on December 22, 2000, seeking to overturn the final rule as the reason for the postponement, stating that "the Administrative Procedure Act, 5 U.S.C. 705, gives authority for a stay of the final rule: 'When an agency finds that justice so requires, it may postpone the effective date of action taken by it, pending judicial review.'"

On April 3, 2001, the FAR Council issued FAC 97-24, suspending the effectivity of FAC 97-21 for 270 days, until December 29, 2001, or until the repeal of FAC 97-21, whichever occurred first. Almost 4700 comments were received on the proposal to revoke the blacklisting regulations and, based on those comments, the FAR Council decided to publish FAC 2001-03 revoking FAC 97-21, and restoring the FAR to the text that existed before the January 19, 2001, changes.

In the preamble to FAC 2001-03, the FAR Council wrote, "It is clear that there is a conviction held by people at many levels and many walks of life that the government should conduct its business with corporations that adhere to the law...We support the objective but find the vehicle unworkable and defective.

"The FAR Council finds that the current regulations governing suspension and debarment provide adequate protection to address serious threats of waste, fraud, abuse, poor performance, and noncompliance. Any one of these concerns may authorize suspension or debarment under appropriate conditions and circumstances, subject to judicial review...

"The December final rule [FAC 97-21] requires contracting officers to perform a function, which they lack the experience, procedures, and resources to perform. Contracting officers are not experts in tax laws, labor and employment laws, environmental laws, antitrust laws, and consumer protection laws. This lack of expertise would create a problem rather than solving a problem. Contracting officers are not the appropriate individuals to make decisions regarding satisfactory compliance with the law...

"Sufficient enforcement regulations already existed before the December final rule. The government has sufficient regulations to address contractor responsibility. Among other things, debarment rules provide for existing and appropriate remedies with sufficient due process safeguard for addressing conduct adversely reflecting on business honesty and integrity. Also, for example, under statutory schemes, determinations in the area of worker health and safety, failure to pay minimum wages, or violations of other worker protection laws lie within the purview of the Department of Labor. This approach ensures consistency governmentwide."

The FAR Council estimates that the elimination of the certification requirements that were added by FAC 97-21 to FAR 52.209-5, Certification Regarding Debarment, Suspension, Proposed Debarment, and Other Responsibility Matters, and FAR 52.212-3, Offeror Representations and Certifications -- Commercial Items, and the required recordkeeping will eliminate 505,000 hours of burden on contractors and subcontractors each year.

For more on the various actions pertaining to the "blacklisting rule" during the past two years, see the following Federal Contracts Perspective articles:

May 2001, "Blacklisting Rule" Suspended, FAR 97-21 Proposed for Permanent Repeal

March 2001, Bush Issues Three Acquisition-Related Orders Involving Labor Issues in FAR Part 22

January 2001, FAC 97-21 Implements "Blacklisting" Regulations, Widely Opposed by Industry and Agencies

August 2000, Cost or Pricing Data Threshold of $550,000 Proposed

FAC 2001-02 Addresses Energy Efficiency, Prompt Payment

Ten days before the repeal of the "blacklisting rules" (see previous article), the FAR Council issued FAC 2001-02 to take care of several loose ends. FAC 2001-02 addresses nine items, probably the most significant being a requirement for contracting officers to acquire energy-efficient products if life-cycle cost-effective and available, and a rewritten FAR Subpart 32.9, Prompt Payment. All the rules in FAC 2001-02 are effective February 19, 2002, except for the North American Industrial Classification System final rule, which went into effect December 18, 2001.

SBA Initiates BusinessLaw.gov

To help reduce the burden on small businesses of complying with laws and regulations on many different topics, and to provide small businesses access to legal and regulatory business information, the SBA has developed BusinessLaw.gov (http://www.businesslaw.gov).

BusinessLaw.gov provides interagency and intergovernmental information arranged by subject. It consolidates and indexes links to credible sources of information on 39 topics of interest, ranging from licenses and permits to such specialized topics as e-commerce and exporting. Also, the site offers information specific to each state and territory, including sections on "Hiring Employees," "Paying Taxes," and "Selecting a Location." In addition, BusinessLaw.gov features interactive tools, searchable frequently asked questions (FAQs) and their answers, downloadable forms and publications, and electronic compliance guides.

Changes Proposed for NFS Safety and Health Clauses

The National Aeronautics and Space Administration (NASA) currently requires the inclusion of NASA FAR Supplement (NFS) 1852.223-70, NASA Safety and Health, and NFS 1852.223-73, Safety and Health Plan, in contracts that are greater than $1 million, involve construction, or have hazardous deliverable end items or operations. This proposed rule would remove from NFS 1823.7001, NASA Solicitation Provisions and Contract Clauses, the $1 million dollar threshold from the NFS 1852.223-70 prescription because NASA feels that safety and health requirements should be determined by the risks rather than cost of the contract requirements (since NFS 1852.223-73 is required to be included in contracts that contain NFS 1852.223-70, the removal of the $1 million threshold would apply to it also). In addition, NFS 1852.223-73 would be revised to require the contractor's safety and health plan to address subcontractors' employees' safety and occupational health.

Also, NFS 1836.513, Accident Prevention, would be revised to require the use of NFS 1852.223-70 instead of FAR 52.236-13, Accident Prevention, and its Alternate I.

Comments on the proposed rule be submitted by February 11, 2002, to Jeff Cullen, NASA Headquarters Office of Procurement, Contract Management Division (Code HK), Washington, DC 20546; or by e-mail to jcullen@hq.nasa.gov.

New DFARS Rules on Various Contracting Methods

December was a quiet month in which DOD revised the Defense FAR Supplement (DFARS) to address multiyear, performance-based, and proposed to amend the DFARS to address research and development contracting methods.

CBD Goes Out of Business January 4, 2002

Effective January 4, 2002, the Department of Commerce will cease publication of the Commerce Business Daily (CBD) and posting synopses on the CBDNet (http://cbdnet.access.gpo.gov/). Instead, all federal agencies will be required to post their synopses of upcoming procurements on FedBizOpps (Federal Business Opportunities, http://www.fedbizopps.gov). The move from the CBD to FedBizOpps was mandated by the Fiscal Year 2001 National Defense Authorization Act (Public Law 106-398) when it designated FedBizOpps as the single governmentwide point of entry (GPE) to procurement opportunities over $25,000 and made the CBD optional after January 1, 2002. To ease the transition, agencies were required to submit their synopses to both the CBD and FedBizOpps between October 1, 2001, and January 1, 2002. The Department of Commerce realized that CBD would not last very long as an optional source of synopses, so Commerce wisely pulled the plug.

FAC 97-26 implemented the designation of FedBizOpps as the GPE (see the June 2001 Federal Contracts Perspective article "FedBizOpps.gov to Replace CBD, Performance-Based Contracts Preferred for Services").

The last paper edition of the CBD will be published January 4, and CBDNet will post the January 4th edition. However, CBDNet will maintain its site for an additional 15 days to comply with the requirement that a synopsis be published at least 15 days before issuance of the solicitation (see FAR 5.203, Publicizing and Response Time). After that time, all the data will be transferred to an archive database and the active database will be shut down. The archive database will continue to be available on CBDNet as part of the Federal Depository Library Electronic Collection.

FedBizOpps provides the same information that is currently in the CBD printed version. Though FedBizOpps is an electronic means of providing synopses and other information, the Department of Commerce will maintain a list of service providers who provide printed versions of FedBizOpps and will make it available in the near future.

Prompt Payment Interest Rate Set at 5 1/2%

The Department of Treasury has established 5 1/2% (5.5%) as the interest rate for the computation of payments made between January 1 and June 30, 2002, 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, 2001 -- December 31, 2001) was 5 7/8% (5.875%). The interest rate for January 1, 2001, through June 30, 2001, was 6 3/8% (6.375%).

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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