Panoptic Enterprises'


Federal Acquisition Developments, Guidance, and Opinions

September 2002
Vol. III, No. 9


FAR Changes Proposed on Cost Principles, Overpayments, Environmental Management
DOD Exempts UK Products, Finalizes Security Rule
OMB Seeks to Streamline Grants Process
SBA Adopts, Revises NAICS Codes for Size Standards
DOD Revises Its Regulations on "Other Transactions"

FAR Changes Proposed to Cost Principles,
to Address Overpayments, Environmental Management

This month, the Federal Acquisition Regulation (FAR) Council concentrated on financial issues in its proposed series of changes to the FAR -- notification of contract financing overpayments; and cost principles on economic planning; employee morale, health, welfare, food service, and dormitory; selling; and travel. In addition, FAR changes were proposed to implement Executive Order 13148, Greening the Government Through Leadership in Environmental Management, and to remove the prohibition on evaluating Federal Prison Industries contract performance.

Comments on any of these proposed rules must be submitted no later than October 28, 2002, to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405.

DOD Exempts UK Products, Finalizes Security Rule

The Department of Defense took it easy in September, only taking two actions that affect contracting, neither of which is new:

OMB Seeks to Streamline Grants Process

The Office of Management and Budget (OMB) has announced five actions that relate to the streamlining efforts of the OMB staff and the interagency works groups dedicated to implementing Public Law 106-107, the Federal Financial Assistance Management Improvement Act of 1999.

Comments on the various proposals must be received by October 11, 2002, at the Office of Federal Financial Management, Office of Management and Budget, Room 6025, New Executive Office Building, Washington, DC 20503, For further information on any of these proposed actions, contact Elizabeth C. Phillips, Office of Federal Financial Management, 202-395-3053, or by e-mail to ephillip@omb.eop.gov.

SBA Adopts, Revises NAICS Codes for Size Standards

The Small Business Administration (SBA) is amending its small business size standards regulations by incorporating the Office of Management and Budget's (OMB) 2002 modifications of the North American Industry Classification System (NAICS) into its table of small business size standards.

SBA adopted NAICS industry definitions as the basis for its small business size standards effective October 1, 2000 (see the June 2000 Federal Contracts Perspective article "SBA Publishes NAICS-Based Size Standards, to Replace SIC-Based Standards on October 1, 2000"). OMB restructured and modified parts of NAICS on January 16, 2001, effective January 1, 2002. This final rule incorporates OMB's restructuring and modifications into SBA's small business size standards. The small business size standards for 12 NAICS 1997 industries and economic activities have been changed. The 12 activities with a size standard change moved to seven NAICS 2002 industries. The following is a list of the NAICS 1997 industries and corresponding size standards and the revised NAICS 2002 industries and corresponding size standards:

NAICS 1997NAICS 2002
CodeSize Standard
($ Millions)
ActivityCodeSize Standard
($ Millions,
except as indicated)
235990$12.0Indoor Swimming Pools236220$28.5Commercial & Institutional Construction
235810$12.0Water Well Drilling Contractors237110$28.5Water and Sewer Line Construction
213112$6.0Construction of Field Gathering Lines237120$28.5Oil and Gas Pipeline Construction
235990$12.0Anchored Earth Retention Contractors237990$28.5Other Heavy and Civil Engineering Construction
213112$6.0Site Preparation (oil and gas)238910$12.0Site Preparation Contractors
213113$6.0Site Preparation (coal mining)238910$12.0Site Preparation Contractors
213114$6.0Site Preparation (metal mining)238910$12.0Site Preparation ContractorS
213115$6.0Site Preparation (nonmetallic minerals)238910$12.0Site Preparation Contractors
234990$28.5Right-of-Way Clearing238910$12.0Site Preparation Contractors
234990$28.5Rental of Cranes238990$12.0All Other Specialty Trade Contractors
561720$14.0Cleaning Buildings During and Immediately After Construction238990$12.0All Other Specialty Trade Contractors
514199$6.0Internet Broadcasting516110500 employeesInternet Publishing and Broadcasting

DOD Revises Its Regulations on "Other Transactions"

DOD has revised Title 32 of the Code of Federal Regulations (CFR), Chapter 1, Office of the Secretary of Defense, Part 3, Transactions Other Than Contracts, Grants, or Cooperative Agreements for Prototype Projects, to outline the conditions for appropriate use of "other transactions" (OTs) and to define a "nontraditional defense contractor."

Section 845 of the National Defense Authorization Act for Fiscal Year 1994 (Public Law 103-160) authorized the secretary of a military department, the director of Defense Advanced Research Projects Agency (DARPA), and any other official designated by the Secretary of Defense, to enter into OTs, which are generally exempt from all the statutes and regulations that govern federal contracts and grants. The purpose of OTs is to overcome the reluctance of many firms with significant technological advances and innovations to share their innovations with the government because of the significant statutory and regulatory requirements involved in government contracts and grants. When using OTs to contract with these "nontraditional defense contractors," DOD contracting officials are not required to include standard contract provisions that typically address such issues as financial management or intellectual property rights, but may structure the agreements as they consider appropriate.

The most significant changes are:

Additional guidance on OTs can be found at http://www.acq.osd.mil/dp/dsps/ot/dspsot.htm.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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