Panoptic Enterprises'


Federal Acquisition Developments, Guidance, and Opinions

November 2006
Vol. VII, No. 11


2007 Defense Authorization Addresses Training, Award Fees, Specialty Metals
Safavian Sentenced to 18 Months in Prison
DFARS Amended to Address Foreign Acquisitions
GSA Reorganized
FY 2005 Federal Spending Hit $366 Billion
Business.gov is One-Stop for Compliance Resources
10 More Biobased Items Proposed
GSA Opens Surplus Sales Site
Changes to FAR Contract Debt Coverage Proposed
More FAR Changes Proposed for CAS Administration
Nonmanufacturer Rule Waiver Proposed for Computers
Justice Launches Procurement Fraud Task Force

2007 Defense Authorization Addresses Training,
Award Fees, Specialty Metals, Small Claims

The $532.8 billion John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364), signed by President Bush October 17, is relatively quiet on the acquisition front for a change. Probably the most significant changes this statute make involve training requirements for those who generate requirements for major defense acquisition programs, and the requirement for the Department of Defense (DOD) to link award fees to outcomes.

Safavian Sentenced to 18 Months in Prison

Former GSA chief of staff and Office of Federal Procurement Policy (OFPP) administrator David Safavian was sentenced to 18 months in prison on charges of obstructing a GSA proceeding and making false statements regarding his relationship with former Washington lobbyist Jack Abramoff. The investigations focused on whether Safavian aided Abramoff in his attempts to acquire GSA-controlled property in and around Washington, DC. In August 2002, Abramoff took Safavian and others on a gold trip to Scotland.

Prosecutors had recommended that Safavian be sentenced to prison for 30 to 37 months. Safavian's defense attorneys recommended that he serve no more than 12 months in prison.

For other articles on Safavian and Abramoff, see the December 2004 Federal Contracts Perspective article "Safavian Confirmed to Head OFPP"; the October 2005 Federal Contracts Perspective article "OFPP Chief Arrested for Making False Statements"; the November 2005 Federal Contracts Perspective article "Former OFPP Chief Indicted for Obstruction, False Statements"; the February 2006 Federal Contracts Perspective article "Abramoff Pleads Guilty to Fraud, Tax Evasion"; and the July 2006 Federal Contracts Perspective article "Former OFPP Chief Safavian Convicted, Faces Up to 20 Years in Prison."

DFARS Amended to Address Foreign Acquisitions

The Defense Federal Acquisition Regulation Supplement (DFARS) was amended in several different ways to address various foreign acquisition issues: notices of certain exceptions to the Berry Amendment; exemption from the Buy American Act for commercial information technology; free trade agreements with Guatemala and Bahrain; removal of Libya from the list of terrorist countries; acquisition of PAN carbon fiber from foreign sources; and simplification of DFARS Part 225, Foreign Acquisition. In addition, there are DFARS changes regarding the acquisition of major systems as commercial items, Congressional notification of architect-engineer services for military housing, and prohibition against trafficking in persons.

GSA Reorganized

On October 12, GSA Administrator Lurita Doan signed GSA Order ADM 5440.591, completing the agency's reorganization efforts by merging the Federal Supply Service and the Federal Technology Service into the new Federal Acquisition Service (FAS). The order announces 10 national office-level organizations and provides for 11 FAS regions.

The new FAS organization structure includes 10 portfolios:

For more on the reorganization, see the August 2004 Federal Contracts Perspective article "GSA, DOD Announce 'Get It Right' Program," and the September 2005 Federal Contracts Perspective article "GSA Announces Federal Acquisition Service Plan."

FY 2005 Federal Spending Hit $366 Billion

Reflecting the continuing war in Iraq and the war on terrorism (and the related spending on homeland security), federal government spending increased to $366.0 billion, 7.3% more than the $341.4 billion spent in FY 2004.

The following are the largest agencies' FY 2005 spending totals (in billions) and the percentage change from FY 2004:

National Aeronautics and Space Administration$12.5-0.6%
General Services Administration$11.6-15.7%
Homeland Security$9.9+58.2%
Health and Human Services$8.9+7.9%
Veterans Affairs$4.7-46.6%
Environmental Protection Agency$1.1-7.3%
Housing and Urban Development$1.0+6.1%
Social Security Administration$0.5-41.2%
National Science Foundation$0.3+201.2%
Smithsonian Institution$0.2+45.7%
Miscellaneous Agencies$0.9-12.9%

Business.gov is One-Stop for Compliance Resources

The Small Business Administration (SBA) has launched a new website that provides business owners with a one-stop resource that searches the government agencies for information on taxes, immigration laws, workplace safety, environmental requirements, and other regulations that can be challenging to small and mid-size businesses. The site is called "Business.gov" (http://www.business.gov), and it provides compliance information, forms, and points-of-contact. Businesses can quickly search for information by topic and industry from all major federal agencies regulating or serving businesses.

The topics covered are: advertising and marketing, business law, emergency and disaster planning, environmental compliance, finance, government contracting, hiring and managing employees, information security, international trade, licenses and permits, non-profits, taxes, and workplace health and safety.

The industries covered are: aerospace and defense, agriculture, automotive, chemicals, construction and facilities, consumer goods and services, energy, financial services, firearms and explosives, food and beverage, healthcare, housing and real estate, industrial goods and services, mining and drilling, pharmaceuticals and biotechnology, telecommunications and media, and transportation and logistics.

10 More Biobased Items Proposed

The U.S. Department of Agriculture (USDA) is proposing to add another 10 sections to Title 7 of the Code of Federal Regulations (CFR) Part 2902, Guidelines for Designating Biobased Products for Federal Procurement, to identify 10 more biobased products that would be given preference in federal procurements as provided under Section 9002 of the Farm Security and Rural Investment Act of 2002 (FSRIA), and proposing minimum biobased content for each of these items. This is in addition to the 20 products proposed in August 2006, and the six biobased products that were designated by USDA in March 2006.

      Section 2902.36, Bath and Tile Cleaners
      Section 2902.37, Clothing Products
      Section 2902.38, Concrete and Asphalt Release Fluids
      Section 2902.39, Cutting, Drilling, and Tapping Oils
      Section 2902.40, De-Icers
      Section 2902.41, Durable Plastic Films
      Section 2902.42, Firearm Lubricants
      Section 2902.43, Floor Strippers
      Section 2902.44, Laundry Products
      Section 2902.45, Wood and Concrete Sealers

Once USDA designates an item under the "Federal Biobased Products Preferred Procurement Program" (FB4P), procuring agencies must purchase biobased products within these designated items where the amount purchased over the preceding fiscal year equaled $10,000 or more (except under certain circumstances). The $10,000 threshold applies to federal agencies as a whole and not to agency subgroups such as regional offices or subagencies of the larger federal department or agency.

Comments on this proposed rule must be submitted by December 11, 2006, by any of the following methods: (1) http://www.regulations.gov; (2) e-mail: fb4p@oce.usda.gov (include "RIN number 0503-AA32" and "Proposed Designation of Items"on the subject line); or (3) mail/commercial/hand delivery to: Marvin Duncan, USDA, Office of the Chief Economist, Office of Energy Policy and New Uses, Room 4059, South Building, 1400 Independence Avenue, SW, MS-3815, Washington, DC 20250-3815.

For more on the FB4P, the first six biobased items designated by USDA, and the 20 proposed biobased products, see the February 2005 Federal Contracts Perspective article "USDA Publishes Biobased Products Guidelines," the August 2005 Federal Contracts Perspective article "Agriculture Proposes Six Biobased Items," the April 2006 Federal Contracts Perspective article "USDA Designates Six Biobased Products for Procurement," and the September 2006 Federal Contracts Perspective article "USDA Proposes 20 More Biobased Products."

GSA Opens Surplus Sales Site

GSA is introducing a new website, http://www.GovSales.gov, that gives consumers access to live auctions of surplus, seized, and forfeited property. GovSales.gov lets consumers search for houses, farms, industrial property, cars, trucks, computers, electronics, clothing, jewelry, household goods, office supplies, sporting equipment, and much more. The site is secure, efficient, and an effective way for consumers to participate in auctions conducted by the federal government.

Changes to FAR Contract Debt Coverage Proposed

A rewrite and reorganization of FAR Subpart 32.6, Contract Debts, is being proposed to improve contract debt controls and procedures. The revised FAR Subpart 32.6 would prescribe policies and procedures for identifying, collecting, and deferring contract debts (including interest, if applicable). Among the significant changes that would be made are:

Comments on the proposed rule must be submitted no later than December 26, 2006, by any of the following means: (1) eRulemaking Portal: http://www.regulations.gov/far; (2) fax: 202-501-4067; or (3) mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405. Identify such comments as "FAR case 2005-018."

More FAR Changes Proposed for CAS Administration

More changes to the FAR are being proposed that would implement recommendations to clarify the regulations related to the administration of the Cost Accounting Standards (CAS). These proposed changes are in response to those suggested by both government and industry representatives in response to the earlier changes to FAR Subpart 30.6, CAS Administration (see the April 2005 Federal Contracts Perspective article "FAC 2005-01 Addresses Cost Accounting Standards Administration, Architect-Engineer Services").

The changes would involve: (1) minor revisions to several entries in FAR 30.001, Definitions: "cognizant federal agency official (CFAO)" "desirable change," and "required change" are clarified; (2) the addition of paragraph (c) to FAR 30.601, Responsibility, to require that the CFAO request and consider the advice of the auditor when administering the CAS; and (3) the addition of paragraph (h)(6) to FAR 30.605, Processing Noncompliances, to specify that the cost impact of a noncompliance that affects both cost estimating and cost accumulation shall be determined by combining the separate cost impacts of both the cost estimating and cost accumulation noncompliances.

Also, additional changes are proposed to FAR 52.230-4, Consistency in Cost Accounting Practices, to make it consistent with the changes made to CAS addressing the applicability of CAS to United Kingdom (U.K.) contracts and subcontracts (see the May 23, 2005, Federal Contracts Dispatch "Cost Accounting Standards Board (CASB); Disclosure Statements from United Kingdom Contractors").

Comments on these proposed rules must be submitted no later than December 4, 2006, by any of the methods mentioned above. Identify comments on CAS administration as "FAR case 2005-027," and comments on CAS applicability to U.K. contracts as "FAR Case 2006-004."

Nonmanufacturer Rule Waiver Proposed for Computers

The Small Business Administration (SBA) is proposing to waive the nonmanufacturer rule for personal computers, manufacturing under North American Industry Classification System (NAICS) code 334111.

SBA is inviting the public to comment on this proposed waiver, or provide information on potential small business sources for these products, by October 27, 2006, to Edith Butler, U.S. Small Business Administration, Office of Government Contracting, 409 3rd Street, SW, Suite 8800, Washington, DC 20416.

The SBA regulation on the nonmanufacturer rule is in Title 13 of the 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 Under Small Business Set-Aside or MED [Minority Enterprise Development] Procurements? 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? A complete list of products for which the nonmanufacturer rule has been waived is available at http://www.sba.gov/GC/approved.html.

Justice Launches Procurement Fraud Task Force

The Department of Justice (DOJ) announced on October 10 the establishment of a procurement fraud initiative to promote the early detection, prevention, and prosecution of procurement fraud associated with increased contracting activity for national security and other government programs.

The federal agencies that will participate in the task force include the Federal Bureau of Investigation (FBI), the Special Inspector General for Iraq Reconstruction and the Offices of Inspectors General (OIGs) for 20 departments and agencies.

The task force will focus resources at all levels of government to increase criminal enforcement in all areas of procurement fraud, with emphasis on defective pricing or other irregularities in the pricing and formation of contracts, product substitution, misuse of classified and procurement sensitive information, false claims, grant fraud, labor mischarging, accounting fraud, fraud involving foreign military sales, ethics and conflict of interest violations, and public corruption associated with procurement fraud.

As if to emphasize this initiative, DOJ announced on the same day that Oracle Corp. had agreed to pay $98.5 million for providing false pricing information during negotiations of a contract under GSA's Federal Supply Schedule program.

Copyright 2006 by Panoptic Enterprises. All Rights Reserved.

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