Panoptic Enterprises'


Federal Acquisition Developments, Guidance, and Opinions

APRIL 2002
Vol. III, No. 4


FACs 2001-05, 2001-06 Issued
Enron, Arthur Andersen Suspended from Federal Work
DOD Conducts Some "Spring Cleaning," Too
Revamped FirstGov Website, E-Gov Strategy Unveiled
SBA Proposes Increasing Travel Agencies' Size Standard
Unnecessary Requirements Removed from EPAAR

FAC 2001-05 Suspends "Project Labor Agreements" Ban,
FAC 2001-06 Includes Procurement Integrity Rewrite

The Federal Acquisition Regulation (FAR) Council was busy this month, issuing Federal Acquisition Circular (FAC) 2001-05 to suspend some of its earlier work on "project labor agreements" pending the resolution of litigation; issuing FAC 2001-06 to perform still more "spring cleaning" -- implementing another eight relatively minor regulatory changes; and publishing three proposed rules for everyone's enjoyment!

FAC 2001-05:

On February 17, 2001, President Bush signed Executive Order (EO) 13202, Preservation of Open Competition and Government Neutrality Towards Government Contractors' Labor Relations on Federal and Federally Funded Construction Projects, which prohibited any construction contract or subcontract from including provisions requiring the contractor to enter into an affiliation with a labor organization (commonly called "project labor agreements") (see the March 2001 Federal Contracts Perspective article "Bush Issues Three Acquisition-Related Orders involving Labor Issues in FAR Part 22").

On May 16, 2001, the FAR Council published an interim rule in FAC 97-26 which added paragraph (d) to FAR 36.202, Specifications, explaining this prohibition (see the June 2001 Federal Contracts Perspective article "FedBizOpps.gov to Replace CBD, Performance-Based Contracts Preferred for Services").

EO 13202 is currently being appealed in the United States Court of Appeals for the District of Columbia Circuit (Building and Construction Trades Department, AFL-CIO v. Allbaugh). Based on guidance received from the Office of Federal Procurement Policy (OFPP), FAC 2001-05 is suspending FAR 36.202(d) until the appeal is resolved.

FAC 2001-06:

Proposed Rules:

Comments on these proposed rules must be submitted no later than May 20, 2002, to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW., Room 4035, ATTN: Laurie Duarte, Washington, DC 20405.

Enron, Arthur Andersen Suspended from Federal Work

In a highly unusual move, on March 15, the General Services Administration (GSA) suspended Enron Corporation and Arthur Andersen, LLP, from conducting new business with the federal government. Both firms have been placed on the List of Parties Excluded from Federal Procurement and Non-Procurement Programs, which means that contracting officers may not contract with either of them. The suspension of Enron is for 12 months, and the suspension of Andersen is for the duration of its indictment, which was released March 14. (EDITOR'S NOTE: For more on what it means for a contractor to be "suspended," see FAR Subpart 9.4, Debarment, Suspension, and Ineligibility. The List of Parties is available on the Internet at http://epls.arnet.gov/.)

Despite the suspension, FAR 9.405-1, Continuation of Current Contracts, permits agencies to continue contracts already in existence unless the agency head directs otherwise. In addition, ordering activities may continue to place orders against existing contracts, including indefinite delivery contracts. However, agencies may not renew or extend the duration of current contracts unless the agency head states, in writing, the compelling reasons for renewal or extension.

In January, the Office of Management and Budget asked GSA to determine whether the business performance of Enron and Andersen met the standards required to do business with the government and to consider whether it would be appropriate to initiate suspension or debarment proceedings (suspension is for a temporary period pending the completion of an investigation and any ensuing legal proceedings, and debarment is for up to three years for conviction of, or civil judgment for, a criminal offense). All agencies with Enron and Andersen contracts were directed to provide GSA with the status of those contracts and if there were any problems in contract performance.

Though no agency reported any problems or improprieties with the performance of any Enron or Andersen contracts, the government GSA found that Enron "had engaged in misconduct and committed internal control irregularities that seriously affect their suitability to receive government contracts", and that Andersen had been indicted on March 14 for "knowingly, intentionally, and corruptly destroy(ing) documents and other information relating to Andersen's work for Enron, and that these actions were taken to impair official proceedings."

While the government suspends and debars hundreds of individuals and small firms each year to protect itself from those that do not have a satisfactory record of business ethics and integrity, it is rare that a large firm is suspended or debarred. According to an article in the March 16 Washington Post, the Department of Defense suspended the General Electric Co.'s aircraft-engine division for less than a week in the early 1990s (for diverting funds intended for Israel), and the Toshiba Corp. was suspended in the late 1980s for selling equipment that helped the Soviets design and manufacture quiet submarine propellers.

DOD Conducts Some "Spring Cleaning," Too

During March, the Department of Defense (DOD) swept some cobwebs out of the corners, issuing five changes to the Defense FAR Supplement (DFARS) and proposing another.

Revamped FirstGov Website, E-Gov Strategy Unveiled

On February 27, Vice President Dick Cheney clicked on a mouse and launched the new, improved government web portal FirstGov (http://www.FirstGov.gov). The purpose of FirstGov is to provide government information to the public quickly and accurately. "This is an attempt to remedy one of government's oldest problems: the slow, confusing, and often ineffective ways in which it responds to the public," the vice president said.

Also unveiled on February 27 was the Bush administration's E-Government Strategy, which describes the implementation plans for 24 high-payoff, high-priority government initiatives intended to integrate government operations and information technology investments. The Strategy is available at http://www.whitehouse.gov/omb/inforeg/egovstrategy.pdf.

The redesigned FirstGov site focuses on three customer gateways:

In addition, FirstGov allows searching of state websites for more localized information. Searches using key words can still be conducted, as with the old FirstGov.

The E-Government Strategy is intended to be the next step beyond FirstGov in that it will connect and consolidates various related information systems. Among the 24 initiatives are: Recreation One Stop (will provide a one-stop, searchable database of recreation areas nationwide and accept reservations); Eligibility Assistance Online (will allow citizens to identify government benefit programs from which they may be eligible to receive assistance); Online Access for Loans (will allow citizens and businesses to find loan programs that meet their needs); Federal Asset Sales (will permit prospective customers to find assets, and bid electronically; International Trade Process Streamlining (where new or existing exporters could be assisted through the entire export process); e-Grants (for grants recipients and grant-making agencies); Disaster Assistance and Crisis Response (will be a one-stop portal containing information from public and private organizations involved in disaster preparedness); and E-Vital (would expand the existing vital records online data exchange efforts between federal agencies and state governments).

Probably of most interest to Federal Contracts Perspective is the Integrated Acquisition Environment. It will involve the sharing of common data elements to enable agencies to make more informed procurement, logistical, payment, and performance assessment decisions. The Integrated Acquisition Environment is expected to integrate various systems, such as DOD's Central Contractor Registration (CCR) (http://www.ccr2000.com/), SBA's Pro-Net database of small businesses (http://pro-net.sba.gov), the Federal Procurement Data System, the Acquisition Reform Network (ARNet) (http://www.arnet.gov), FedBizOpps (http://www.fedbizopps.gov/), and development of an e-Catalog (a directory of governmentwide acquisition contracts and multiple award contracts -- see the March 2002 Federal Contracts Perspective article "Listing of Multi-Agency Contract Instruments Proposed").

SBA Proposes Increasing Travel Agencies' Size Standard

SBA is proposing to increase the small business size standard for travel agencies from $1 million to $3 million, and is increasing the size standard for travel agencies to $3 million for purposes of eligibility for economic injury disaster loan (EIDL) assistance related to the September 11, 2001, terrorist attacks on the World Trade Center and the Pentagon. The increased size standard is retroactive to September 11, 2001.

SBA is proposing to increase the size standard for North American Industry Classification System (NAICS) code 561510, Travel Agencies, because of recent changes in the travel agencies industry. Some of those changes are the requirement for specialized equipment and systems on federal and corporate travel services contracts, and the adoption of a consolidated and regional approach by federal agencies and large commercial clients.

After evaluating five factors, SBA has decided that a small business size standard of $3 million is supportable because four out of the five factors support an increase between $2 and $3 million.

In addition, SBA is offering EIDL assistance to travel agencies with less than $3 million in gross receipts because the industry was one of the hardest hit by the September 11 terrorist attacks -- the public cancelled and rescheduled existing travel arrangements and many postponed travel altogether. Consequently, airlines rescinded travel agencies' commissions, and many small travel agencies have seen business declines of 20% to 50% since September 11.

Unnecessary Requirements Removed from EPAAR

The Environmental Protection Agency (EPA) is revising the EPA Acquisition Regulation (EPAAR) to:

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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