Contract Policy Updates
March 13, 2013
NCMA Boston Chapter Annual Workshop
Richard C. Bean
Attorney at Law
Contract Policy Updates
• Many changes over the past year– Regulatory (FAR and DFARS)
– Statutory
– Policy Memoranda (OMB, OFPP, DoD AT&L)
– Proposed Regulations (FAR and DFARS)
– Proposed Legislation
– Audits by investigative staff (GAO, DoD IG, other
IGs)
Always a moving target! What is on the horizon?
2
Total Federal Contract Spending
• Spending on the decline;
Source: USASpending.gov
FY 2012: $515.9B
FY 2011: $538.5B
FY 2010: $539.0B
FY 2009: $539.9B
FY 2008: $540.8B
FY 2007: $469.1B
3
Contract Policy Updates
• Since the last March Workshop, there have
been eight FACs:
Federal Acquisition Circular 2005-59, 77 Fed. Reg.
27546, May 10, 2012
Federal Acquisition Circular 2005-60, 77 Fed. Reg.
44045, July 26, 2012
Federal Acquisition Circular 2005-61, 77 Fed. Reg.
56738, September 13, 2012
Federal Acquisition Circular 2005-62, 77 Fed. Reg.
69713, November 20, 2012.
4
Contract Policy Updates
Federal Acquisition Circular 2005-63, 77 Fed. Reg.
73516, December 10, 2012
Federal Acquisition Circular 2005-64, 77 Fed. Reg.
75766, December 21, 2012
Federal Acquisition Circular 2005-65, 78 Fed. Reg.
6183, January 29, 2013
Federal Acquisition Circular 2005-66, 78 Fed. Reg.
13764, February 28, 2013
Frequency of regulatory change is reflection of
legislative change in many cases
5
FAC 2005-66
Contingency Operation Definition Expanded (FAR Case
2013-003) This interim rule amends the definition of
‘‘contingency operation’’ in FAR 2.101 to address the
statutory change to the definition made by paragraph (b)
of section 515 of the National Defense Authorization Act
for Fiscal Year 2012 (Pub. L. 112–081). Expanding the
definition to include responding to a major disaster or
emergency will increase the circumstances under which
agencies may raise the micro-purchase and simplified
acquisition thresholds.
This may increase opportunities for awarding contracts to
small entities located at or near a major disaster area or
emergency activities.
6
FAC 2005-66
Extension of Authority to Use Simplified
Acquisition Procedures (FAR Case 2013-007)
Final rule amends FAR 13.500(d) to implement
section 822 of FY 2013 NDAA which allowed for
an extension of the Commercial Item Test
Program to January 1, 2015; applies to
acquisitions not exceeding $6.5M generally or
$12M for those listed in FAR 13.500(e)
(includes options for commercial items)
7
DFARS Final Rule
Alleged Crimes by or against Contractor
Personnel - February 28, 2013 78 Fed. Reg.
13547
• DFARS 252.225-7040 revised to expand
coverage of contractor requirements and
responsibilities; clause also highlights the
ability of contractor personnel to seek
whistleblower protection or guidance by
contacting the DoD IG
8
DFARS Final Rule
• DFARS 252.225-7040 Continued• Expands list of entities that can be contacted
(includes DCIS; AFOSI; Army CIC; NCIS; any
command of any supported military element
or the command of any base)
• Contractor must advise deployed employees
of reporting requirements and where to seek
assistance
9
DFARS Final Rule
Electronic Subcontracting Reporting System
(eSRS) (DFARS Case 2009-D002) February 28,
2013, 78 Fed. Reg. 13546.
• Interim rule adopted as originally published
October 25, 2010, 75 Fed. Reg. 65439
10
RFI on Electronic Procurement System
• On February 23, 2013, FBO.gov posted an RFI
from the Navy requesting industry response
on a replacement for the current DoD-wide
Standard Procurement System (SPS).
• Responses were requested by March 4, 2013
NLT 11:59 PM
• The RFI had several attachments which outline
objectives and requirements
11
FAC 2005-65
• Prohibition on Contracting with Inverted Domestic
Corporations (FAR Case 2012-013) - This rule adopts as
final, an interim rule implementing section 738 of
Division C of the Consolidated Appropriations Act,
2012 (Pub. L. 112–74), which prohibits the award of
contracts using Fiscal Year 2012 appropriated funds to
any foreign incorporated entity that is treated as an
inverted domestic corporation or to any subsidiary of
such an entity.
• The interim rule extended an existing prohibition that
applied to the use of Fiscal Year 2008 through 2010
funds. Effective January 29, 2013.
12
FAC 2005-65
• Extension of Sunset Date for Protests of Task
and Delivery Orders (FAR Case 2012-007) – This
final rule adopts without change, the interim rule
amending FAR 16.505(a)(10)(ii) to extend the
authority to protest the placement of task and
delivery orders valued in excess of $10 million
from May 27, 2011, to September 30, 2016 for all
agencies. Effective January 29, 2013 (retroactive
impact due to interim rule)
13
FAC 2005-65
• Free Trade Agreement (FTA) – Colombia (FAR Case
2012-012) - This final rule adopts, with minor change,
the interim rule to implement the United StatesColombia Trade Promotion Agreement. This Trade
Promotion Agreement is a FTA that provides for
mutually nondiscriminatory treatment of eligible
products and services from Colombia. The Colombia
FTA covers acquisition of supplies and services equal to
or exceeding $77,494. The threshold for the Colombia
FTA is $7,777,000 for construction. Effective January
29, 2013.
14
FAC 2005-65
• Unallowability of Costs Associated with Foreign Contractor Excise
Tax (FAR Case 2011-011) – This final rule amends the FAR to
implement certain requirements of the James Zadroga 9/11 Health
and Compensation Act of 2010, which imposes a 2% excise tax on
certain Federal procurement payments to foreign persons. First, the
statute disallows the cost of the 2% excise tax on certain foreign
procurements as part of a payment, or as part of a cost-based
negotiated price. Second, the statute stipulates that no funds are to
be disbursed to any foreign contractor in order to reimburse the tax
imposed. The 2% excise tax is applied only to foreign persons that
receive Federal procurement payments pursuant to a contract with
the Government of the United States for the provision of goods or
services, if the goods are manufactured or produced in, or the
services are performed in, a country that is not a party to an
international procurement agreement with the United States.
15
FAC 2005-65
• To comply with the statute, FAR 31.205–41 is amended to
inform the Government and contractors that the costs of
the 2 percent excise tax are not allowable. FAR 52.229–3,
52.229–4, 52.229–6, and 52.229–7 are amended to provide
that the costs for the excise tax are not included in either
foreign fixed-price contracts with a foreign concern or
foreign fixed-price contracts with foreign governments.
• Regulations will be forthcoming from the Department of
the Treasury that will provide specific guidance regarding
the application of the tax and the procedures for
withholding the tax. Any impact on applicable FAR
provisions will be handled in a separate FAR case. Effective
February 28, 2013.
16
Deviation
• Class Deviation – Extension of Authority for Use of
Simplified Acquisition Procedures for Certain Commercial
Items (OUSD(AT&L)/DPAP Memo, 15 Jan 13) – Effective
immediately, the authority to issue solicitations under FAR
13.5, Test Program for Certain Commercial Items, is
extended to January 1, 2015. Subpart 13.5 authorizes use
of simplified procedures for the acquisition of supplies and
services greater than the simplified acquisition threshold
but not exceeding $6.5M ($12M for acquisitions described
in 13.500(e)), including options, if the contracting officer
reasonably expects, based on the nature of the supplies or
services sought, and on market research, that offers will
only include commercial items. Effective January 29, 2013.
17
Deviation
• Class Deviation -- Extension & Expansion of Authority to
Acquire Products & Services Produced in Countries Along
a Major Route of Supply to Afghanistan
(OUSD(AT&L)/DPAP Memo, 6 Feb 13) - Effective
immediately, contracting officers shall use the procedures
and provided class deviation contained in subject memo
when acquiring products or services in support of
Operation ENDURING FREEDOM, pursuant to section 841 of
National Defense Authorization Act for Fiscal Year 2013.
This class deviation remains in effect until December 31,
2014, unless incorporated in the DFARS or otherwise
rescinded. Further details are provided within the memo.
18
FAC 2005-64
• Nondisplacement of Qualified Workers Under Service Contracts (Federal
Acquisition Circular 2005-64/FAR Case 2011-028) - On December 21, 2012,
a final rule was issued amending the FAR to implement an Executive order
for non-displacement of qualified workers under service contracts, as
implemented in Department of Labor regulations. This final rule is
applicable to solicitations issued on or after the effective date of January
18, 2013.
• Contracting officers are expected to work with their existing service
contractors and bilaterally modify their contracts, to the extent feasible, to
include the clause at FAR 52.222-17. As an alternative, contracting officers
should consider entering into bilateral modifications with existing service
contractors to agree to perform paragraph (c) of the clause at FAR 52.22217, which: (1) Informs the existing predecessor contractor's workforce of
their right of first refusal; and (2) provides the list of service employees to
the contracting officer no less than 30 days before contract completion.
Contracting officers shall document the contract files of their existing
service contracts to describe the steps that were taken.
19
FAC 2005-64
• Iran Threat Reduction (Federal Acquisition Circular 2005-63/FAR
Case 2012-030) – Effective 10 Dec 12, this FAR interim rule requires
certifications that implement the expansion of sanctions relating to
the energy sector of Iran and sanctions with respect to Iran’s
Revolutionary Guard Corps, as contained in Titles II and III of the
Iran Threat Reduction and Syria Human Rights Act of 2012.
• The FAR is amended as follows to address the new sanctions and
certification requirements:
• - FAR 25.703-2(a)(1) -- Replaces the list summarizing the activities
subject to sanctions with a more top-level description of the types
of activities subject to sanctions,
• - FAR 25.703-2(a)(2) -- Adds a new certification requirement and
specifies that a significant transaction, for purposes of this rule, is
any transaction that exceeds $3,000
20
FAC 2005-64
•
•
•
•
•
•
IRAN THREAT REDUCTION continuedFAR 25.703-2(b) -- Amends paragraph (b)(3) to require debarment period to be at
least 2 years to implement section 311(b)(1)(B)(i) (II) of this new Act.
FAR 25.703-2(c) and 25.703-3(c) Exceptions -- Simplifies and clarifies the exception
for acquisitions subject to trade agreements.
- FAR 25.703-4 Waivers -- Waivers of the 25.703-2 certification requirements must
be “essential to the national security interest of the United States.”
- FAR 52.212-3(o) and 52.225-25 solicitation provisions -- Adds the new
certification requirement – condition by submission of its offer, the offeror certifies
that it, and any person owned or controlled by it, does not knowingly engage in
any transaction that exceeds $3,000 with Iran's Revolutionary Guard Corps or any
of its officials, agents, or affiliates.
- FAR 4.1202 and FAR 52.204-8 Annual Representations and Certifications -- Makes
conforming changes to revise references to title and date of FAR 52.225-25.
21
FAC 2005-64
• Definition of Cost or Pricing Data (DFARS Case 2011D040)- A final rule was issued updating the DFARS and
DFARS PGI to reflect the distinction between “certified
cost or pricing data” and “data other than certified cost
or pricing data.” DFARS Part 204, 215, 217, 219, 225,
239, 241, 242, and 252, as well as DFARS PGI 215, 216,
225, 239, and 253, were amended in this final rule. The
DFARS changes ensure consistency with the FAR which
had been amended to clarify the distinction between
those terms, as well as the requirements for the
submission of cost or pricing data.
22
FAC 2005-64
• New Qualifying Country – Poland (DFARS Case 2012D049) – DoD issued a final rule amending DFARS Part
225 to add the Republic of Poland as a qualifying
country. The U.S. Secretary of Defense signed a new
reciprocal defense procurement agreement with the
Polish Minister of National Defense, which removes
discriminatory barriers to procurements of supplies
and services produced by industrial enterprises of the
other country to the extent mutually beneficial and
consistent with national laws, regulations, policies, and
international obligations. The agreement does not
cover construction or construction material.
23
Proposed Rules
• Accelerated Payment to Small Business (SB) Subcontractors – Proposed
Rule, December 19, 2012 [FAR Case 2012-031] still an open case, but DoD
suspended the temporary practice February 25, 2013
https://www.federalregister.gov/articles/2013/02/25/201304394/accelerated-payments-to-small-business-subcontractors
• OMB Policy Memorandum M-12-16, July 12, 2012 was the genesis for the
FAR Case
• Provided no new rights under the Prompt Payment Act (PPA) and did not
affect the application of the PPA late payment interest provisions
• FAR Case proposed to establish a new FAR clause to make accelerated
payment to SB subcontractors to the maximum extent practicable after
receipt of a proper invoice and proper documentation, but DoD may revisit the issue at a later point (per the link above)
24
DFARS Proposed Rule
Unallowable Fringe Benefit Costs
DFARS Case 2012-D038 Proposed rule, 78 Fed.
Reg. 13606, February 28, 2013.
DoD is proposing to amend the DFARS to explicitly state
that fringe benefit costs incurred or estimated that are
contrary to law, employer-employee agreement, or an
established policy of the contractor are unallowable.
Comments on the proposed rule should be submitted on
or before April 29, 2013, to be considered in the
formation of the final rule.
25
FY13 National Defense
Authorization Act (NDAA)
Section 1641 – Small Business Mentor-Protégé Program
Authorizes SBA to establish a Mentor-Protégé Program for small businesses
Should be “identical” to 8(a) Mentor-Protégé Program
Agencies other than SBA cannot establish a Mentor-Protégé Program unless the agency first
submits a plan for approval by SBA (exception for DoD Mentor-Protégé Program/SBIR/SBTT)
SBA to issue regulations ensuring consistency among various agency Mentor-Protégé Programs
Agencies with existing Mentor-Protégé Programs may continue with those programs until one
year following the day on which SBA issues final regulations described above
Existing Mentor-Protégé relationships not affected; the parties may continue to operate in
accordance with their Mentor-Protégé Agreement until such time as the agreement expires
and/or terminates
SBA must propose regulations regarding the small business and other agency Mentor-Protégé
Programs within 270 days after enactment, which will be subject to the notice and comment
process
Congress provided SBA with the authority to establish Mentor-Protégé Programs for its SDVOSB,
WOSB and HUBZone Programs in the Small Business Jobs Act of 2010. SBA has yet to propose
regulations regarding these new programs.
26
FY13 NDAA Continued
Section 1651 – Limitations on Subcontracting
Services contracts: the small business prime contractor must perform more
than 50% of the amount paid the contractor under the contract (as opposed
to 50% of the “cost of contract performance incurred for personnel”)
Supply contracts: the small business prime contractor must perform more
than 50% of the amount paid (less the cost of materials) the small business
prime contractor (as opposed to the “cost of manufacturing”)
Construction contracts: Not addressed. However, allowed SBA to promulgate
rulemaking to create provisions similar to those for services and supply
contracts
Exemption provided for “similarly situated” entities; the 50% restriction does
not apply if the subcontractor is small and of the same type as the prime
(8(a), WOSB, etc.)
Establishes penalties for failure to comply with the limitations on
subcontracting requirement
27
FY13 NDAA Continued
• Sections 1681 and 1682 – Fraud
• Limits the liability of a small business for misrepresentation of its
size or status if it relies in good faith on an “advisory opinion”
issued by a Small Business Development Center (SBDC) or a
Procurement Technical Assistance Center (PTAC)
• The SBDC or the PTAC does not have to issue the opinion
• The SBDC or the PTAC must send copy of opinion to SBA and if SBA
disagrees with opinion, the small business cannot rely on it
• Smalls businesses may be suspended or debarred for
misrepresentation as to size or status without regard to whether
they are “presently responsible” as provided in FAR Part 9
28
Speaking of Fraud …
• DOJ has had a very aggressive effort to
address fraud – one tool being civil
enforcement through the False Claims Act
(FCA)
• FY2012 DOJ statistics can be found at:
http://www.justice.gov/civil/docs_forms/CFRAUDS_FCA_Statistics.pdf
FY 2012 total recovery $4,959,333,598
29
DOJ Fraud Recovery
• Over $3 billion of the nearly $5B in civil recoveries are
from cases involving health care fraud, breaking a
previous health care fraud record set in fiscal year 2011
• From January 2009 through the end of fiscal year 2012,
the DOJ collected over $9.5 billion from health care
fraud, setting another record over a four-year period
• Almost $1 billion ($911 million) consists of the FCA
component of DOJ’s $25 billion mortgage settlement
with five banks
• The numbers indicate increased activity in this area in
2013, a trend that will likely continue
30
FY13 NDAA Continued
• The FY13 NDAA significantly enhanced
whistleblower protections for government
contractor employees, including extending
coverage to:
– Employees of subcontractors
– Contracts and subcontracts with most civilian agencies
– Disclosures that are made to management officials of
the contractor or subcontractor
– Reports of “abuses of authority” that undermine
performance of a contract
31
Proposed Legislation
Sampling of some House Bills affecting Contracting:
• H. R. 436 Introduced on January 29, 2013, as the Government Neutrality in
Contracting Act, to preserve open competition and Federal Government
neutrality towards the labor relations of Federal Government contractors
on Federal and federally funded construction projects.
• H. R. 3893 Introduced February 2, 2012, Subcontracting Transparency and
Reliability Act, would amend Small Business Act to require every
subcontracting plan submitted to a federal agency to contain assurances
that the offeror will report on subcontracting activities throughout the life
of the contract and cooperate with any study to determine compliance;
failure to report would be an actionable breach of contract.
• H. R. 489 New Introduced on February 4, 2013, as the HUBZone Expansion
Act of 2013, to expand the HUBZone program for communities affected by
base realignment and closure.
32
Proposed Legislation
Senate Contracting Bills
• S. 6 Introduced on January 3, 2013, as the Putting Our Veterans Back to
Work Act of 2013, to reauthorize the VOW to Hire Heroes Act of 2011, to
provide assistance to small businesses owned by veterans, to improve
enforcement of employment and reemployment rights of members of the
uniformed services.
• S. 2198 Introduced March 15, 2012, Common Sense Contractor
Compensation Act of 2012, would lower the amount of compensation
government contractors could claim as reimbursable costs and expand
coverage of the cap to all employees rather than the top five executives;
reimbursement capped at the annual pay of the President of the United
States
• S. 98 Introduced on January 23, 2013, as the Local Disaster Contracting
Fairness Act of 2013, to ensure efficiency and fairness in the awarding of
Federal contracts in connection with natural disaster reconstruction
efforts.
33
Proposed Legislation
•
•
•
•
•
S. 99 Introduced on January 23, 2013, as the Natural Disaster Fairness in
Contracting Act of 2013, to provide for full and open competition for Federal
contracts related to natural disaster reconstruction efforts. S. 109 Introduced on
January 23, 2013, as the Government Neutrality in Contracting Act, to preserve
open competition and Federal Government neutrality towards the labor relations
of Federal Government contractors on Federal and federally funded construction
projects.
S. 117 Introduced on January 23, 2013, as the Medicare Prescription Drug Price
Negotiation Act of 2013, to amend part D of title XVIII of the Social Security Act to
require the Secretary of Health and Human Services to negotiate covered part D
drug prices on behalf of Medicare beneficiaries.
S. 126 Introduced on January 24, 2013, as the Earmark Elimination Act of 2013, to
prohibit earmarks.
S. 196 Introduced on January 31, 2013, as the Assuring Contracting Equity Act of
2013, to assure equity in contracting between the Federal Government and small
business concerns.
S. 206 Introduced on January 31, 2013, as the HUBZone Expansion Act of 2013, to
expand the HUBZone program for communities affected by base realignment and
closure.
34
IDIQ Contracts
• Reporting Indefinite Delivery Contracts and Agreements to the
Federal Procurement Data System (OUSD(AT&L)/DPAP Memo, 28
Jan 13) – Effective immediately, the Office of Federal Procurement
Policy has issued instructions to Federal agencies for completing
certain fields in the Federal Procurement Data System (FPDS) when
reporting indefinite-delivery contracts and agreements that allow
orders to be placed by other contracting offices. This will allow the
Interagency Contract Directory (ICD) (see FAR 7.105(b)(1)) to begin
displaying search results by the agency's assigned program or
vehicle name (e.g., Army's Computer Hardware, Enterprise
Software and Solutions (CHESS)) and be more useful for identifying
possible contracts to support requirements. Further details are
provided within the memo. Effective January 29, 2013.
35
Counterfeit Parts
•
•
•
•
•
•
SEC. 833. CONTRACTOR RESPONSIBILITIES IN REGULATIONS RELATING TO
DETECTION AND AVOIDANCE OF COUNTERFEIT ELECTRONIC PARTS.
Section 818(c)(2)(B) of the National Defense Authorization Act for Fiscal Year 2012
(Public Law 112-81; 125 Stat. 1493; 10 U.S.C. 2302 note) is amended to read as
follows:
`(B) the cost of counterfeit electronic parts and suspect counterfeit electronic parts
and the cost of rework or corrective action that may be required to remedy the
use or inclusion of such parts are not allowable costs under Department contracts,
unless–
`(i) the covered contractor has an operational system to detect and avoid
counterfeit parts and suspect counterfeit electronic parts that has been reviewed
and approved by the Department of Defense pursuant to subsection (e)(2)(B);
`(ii) the counterfeit electronic parts or suspect counterfeit electronic parts were
provided to the contractor as Government property in accordance with part 45 of
the Federal Acquisition Regulation; and
`(iii) the covered contractor provides timely notice to the Government pursuant to
paragraph (4).
36
Counterfeit Parts
• Counterfeit Parts Disclosure Notifications: Requirements and
Processes
• Following the Senate Armed Services Committee investigation and
hearings in 2011, the Government and contractors alike have
become aware of the prevalence of the counterfeit electronic parts
epidemic.
• Once contractors become aware of counterfeit electronic parts or
other fraud-related violations of Federal criminal law in contracts
exceeding $5M and lasting more than 120 days in duration, FAR
52.203-13(b)(3)(i) requires that the contractor make a written
disclosure to the Department of Defense Inspector General (DoD
IG) and the contracting officer.
• A contractor who fails to disclose is subject to automatic debarment
under FAR 9.406-2(b)(1)(vi).
37
2012 Consolidated Appropriations Act
• Pub. L. 112-74, sections 8124 and 8125
• Prevent agencies from using 2012 CAA funds to
contract with companies convicted of a Federal
felony within the preceding 24 months or which
have outstanding federal tax liability, unless the
agency has considered suspension or debarment
and made a determination this action was not
necessary to protect the interests of the
Government (each agency makes independent
decision, unlike prior system)
38
OFPP Policy Update
• April 23, 2012 memorandum (77 Fed. Reg. 24226)
announced that $763,029 is the benchmark salary
compensation amount for contractors’ fiscal year 2011
and beyond, unless revised by OFPP
• The reimbursement formula for cost-based contracts in
41 U.S.C. 1127 caused a $70,000 increase from FY 2010
to FY 2011 (significantly exceeding inflation rate)
• A proposed change would limit the reimbursement cap
equal to Level I of the Executive Schedule, $199,700
(per 5 U.S.C. 5312)
39
OFPP Policy Update
• May 7, 2012 “Myth-Busting 2: Addressing
Misconceptions and Further Improving
Communications During the Acquisition
Process”
• Highlights common misconceptions and
provides strategies to overcome them
•
http://www.whitehouse.gov/sites/default/files/omb/procurement/memo/mythbusting-2-addressing-misconceptions-and-further-improving-communication-duringthe-acquisition-process.pdf
40
Better Buying Power 2.0
• November 13, 2012 memorandum by Mr. Frank
Kendall, OSD, AT&L
• Thirty six initiatives organized into seven focus areas:
– Achieve affordable programs
– Control costs throughout product lifecycle
– Incentivize productivity and innovation in industry and
government
– Eliminate unproductive processes and bureaucracy
– Promote effective competition
– Improve tradecraft in acquisition of services
– Improve professionalism of the total acquisition workforce
see important full text: http://bbp.dau.mil
41
GAO Report: Interagency Contracting
• To ensure that DOD organizations fully comply with interagency
acquisition regulations, the GAO recommended that the Secretary of
Defense direct the Office of Defense Procurement and Acquisition Policy,
as part of its ongoing interagency acquisition policy review, to ensure that
its acquisition regulations, policies, and guidance on interagency
contracting are updated to reflect new FAR rules, including those related
to a best procurement approach determination.
• To ensure that users of interagency contracts are aware of interagency
acquisition requirements, the GAO recommended that the Administrator
of General Services direct the Federal Acquisition Service to fully
implement the actions called for in its April 2011 instructional letter to
update ordering guides for its government-wide and multi-agency
contracts as needed to reflect new FAR rules for interagency acquisitions.
http://www.gao.gov/products/GAO-13-133R January 29, 2013
42
Second GAO Review of
8(a) Sole Source Justifications
http://www.gao.gov/products/GAO-13-308R
In a Feb. 8, 2013 report, GAO found that DOD awarded 51 sole source
8(a) contracts over $20 million between October 2009 and September
2012 (steady decline in this acquisition method).
DoD awarded eight sole-source 8(a) contracts worth over $20 million
from March 16, 2011, when the requirement was implemented in the
FAR, through March 31, 2012, the most recent data available at the
time of the review.
Of the eight, six contracts did not meet the new justification
requirement because contracting officials were not aware of the
requirement or because they were confused about the type of
justification to complete.
43
Sole Source 8(a) GAO Report
• Prior report entitled “Federal Contracting:
Slow Start to Implementation of Justifications
for 8(a) Sole-Source Contracts,” GAO-13-118,
December 12, 2012
• Prior report showed greater level of
noncompliance
http://www.gao.gov/products/GAO-13-118R
44
GAO Report on
Suspension/Debarment
• GAO-12-932, “Suspension and Debarment: DoD
Has Active Referral Processes, but Action Needed
to Promote Transparency” September 19, 2012
http://www.gao.gov/products/GAO-12-932
• 75 Actions between FY 2009 and 2011 studied
• 126 contractors had three or more contracts
terminated for default; high percentage were
reviewed or undergoing review, with 13 already
suspended or debarred
45
OMB Meeting on Cost Comparisons
http://www.gpo.gov/fdsys/pkg/FR-2013-02-15/pdf/2013-03581.pdf
March 5, 2013 meeting solicited input on the practice of comparing the relative
cost of performance by federal employees versus contract performance in order
to identify the most cost-effective source
Meeting also solicited input on development of guidance addressing the
conversion of a function being performed by a small business concern to
performance by a federal employee
OMB recognizes that cost comparisons are not a “one size fits all” tool
OMB Memorandum M-09-26 has two overarching principles for a cost analysis:
- “like comparisons” of costs that are of a sufficient magnitude to influence a final
decision
- must address the full costs of government and private sector performance
46
Meeting on Contract Profit
• March 20, 2013, from 1:00 p.m.to 3:00 p.m. at GSA
• DoD is interested in opening a dialogue with experts and
interested parties in Government and the private sector
about the requirements of section 804 of the National
Defense Authorization Act for Fiscal Year 2013. Section 804,
Department of Defense Policy on Contractor Profits,
included a requirement for DoD to review its profit policy
guidelines in order to identify any modifications to such
guidelines that are necessary to ensure an appropriate link
between contractor profit and contractor performance. The
law also stated that, in conducting the review, the Secretary
shall obtain the views of experts and interested parties in
Government and the private sector.
47
Meeting on Contract Profit
• Notice published in the February 15, 2013
Federal Register, 78 Fed. Reg. 11164
•
https://www.federalregister.gov/articles/2013/02/15/2013-03575/policy-on-contractor-profits
48
Closed FAR Cases
• FAR Case 2011-010 on sharing cyber threat information – November 13,
2012
– Closed but action taken February 12, 2013 by Executive Order (eight
pages) which was published in the February 19, 2013 Federal Register:
https://www.federalregister.gov/articles/2013/02/19/201303915/improving-critical-infrastructure-cybersecurity
– Related topic: Feb. 18, 2013 Mandiant Corp. 76-page cyber hacking
report:
http://intelreport.mandiant.com/Mandiant_APT1_Report.pdf
49
Related FAR Case – Proposed Rule
• FAR Case 2011-020, Basic Safeguarding of
Contractor Information Systems
• 77 Fed. Reg. 51496, August 24, 2012
• Contractors are required to implement measures
or controls to protect information provided by or
generated for the Government (other than public
information) that will be resident on or pass
through a contractor IT system (at least one
physical and one electronic barrier)
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Executive Order 13636
• Within 120 days, the Order provides: (1) the Secretary of
Homeland Security("the Secretary"), the Director of
National Intelligence ("DNI"), and the Attorney General
("AG") shall issue instructions on producing unclassified
reports of cyber threats to specifically targeted entities; (2)
the Secretary, the DNI, and the AG shall include in these
instructions a process for disseminating classified reports to
those entities authorized to receive such information; and
(3) the Secretary, in coordination with the Secretary of
Defense, shall establish a voluntary information-sharing
network called the "Enhanced Cybersecurity Services
Program," which will provide classified threat information
to eligible companies.
• Will all this lead to a new FAR Case? Potentially!
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Executive Order continued
• However, the executive branch presently lacks the legal
authority to indemnify companies that meet certain
minimum security standards that may be established
• Will any disclosures by industry be exempt from FOIA
release?
• National security FOIA exemption would be expanded
if it is applied in such a case
• Industry will need to pay close attention to the
forthcoming incentives and recommendations on
security standards in acquisition planning and
government contract administration (compliance)
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Grants and Cooperative Agreements
• 78 Fed. Reg. 7282, February 01, 2012 (15 pages): The Office of
Management and Budget (OMB) is seeking to adjust the Federal
government’s partnership with non-Federal stakeholders to best
achieve program outcomes while ensuring the financial integrity of
the dollars spent. Federal grant-making must be streamlined to
make the most of taxpayer dollars and ensure financial integrity
while delivering the right program outcomes. This proposal
provides this opportunity for the Federal government and its
partners: state, local, tribal governments, institutions of higher
education, and nonprofit organizations, to rethink and reform the
rules that govern our stewardship of Federal dollars.
Comments must be received by OMB electronically through
www.regulations.gov no later than midnight Eastern Standard Time
(E.S.T.) on May 2, 2013
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FAR Case on OCI still open
• Organizational Conflicts of Interest (OCI) – FAR
Case 2011-001
• January 18, 2013: DARC agreed to draft final FAR
rule; resolving issues with GSA case manager.
• Implements section 841 of the NDAA for FY 2009
(Pub. L.110-147). Section 841 requires
consideration of how to address the current
needs of the acquisition community with regard
to Organizational Conflicts of Interest. Separately
addresses the issues regarding unequal access to
information.
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Contract Policy Updates
• How can you check on pending or closed FAR and
DFARS cases?
for open FAR cases:
http://www.acq.osd.mil/dpap/dars/opencases/farcasenum/far.pdf
for closed FAR cases:
http://www.acq.osd.mil/dpap/dars/closedcases/far.pdf
Both provide citation to the Federal Register if you wish to follow up on the
topic; closed cases identify a Government point of contact; both listings
updated bi-weekly
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Contract Policy Updates
• For open DFARS Cases:
http://www.acq.osd.mil/dpap/dars/opencases/dfarscasenum/dfars.pdf
• For closed DFARS cases:
http://www.acq.osd.mil/dpap/dars/closedcases/dfars.pdf
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Navigating the Federal Register
• It is easy to subscribe to the daily digest of
postings in the Federal Register:
https://www.federalregister.gov/my/users/sign_up
Impress your friends, co-workers, and maybe even your
boss by being on top of the latest developments!
Don’t miss your chance to comment on proposed
regulations before they become final! It only takes a few
minutes a day to scan the headings.
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Bonus Resource!
• GAO Significant Protest Summary for 2012:
http://www.gao.gov/products/GAO-13-404SP
17-page summary of important decisions
Issued February 20, 2013
Includes FY 2008-2012 protest statistics
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Other Resources
• Federal Acquisition Regulation (FAR)(and all agency
supplements):
http://farsite.hill.af.mil
• Armed Services Board of Contract Appeals decisions:
http://www.asbca.mil/index.html
• U.S. Court of Appeals for the Federal Circuit:
http://www.cafc.uscourts.gov/
• Defense Contract Management Agency Guidebook:
http://guidebook.dcma.mil/23/index.cfm
• Office of the Secretary of Defense Acquisition Site
(acquisition policy): http://www.acq.osd.mil/dpap/
• Suspended and Debarred Contractor Listing:
https://www.epls.gov/
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Contract Policy Updates
• The ever-evolving world of Federal contracts
will continue to offer compliance challenges
• Any additional questions or additional topics?
• Thank you for your attendance and enjoy the
rest of the sessions today!
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