Georgia Tech Procurement Assistance Center

DoD makes immediate change to limitations on subcontracting rule; FAR Council issues proposed rule

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The Department of Defense (DoD) has issued a class deviation that resolves the inconsistency between the Small Business Administration (SBA) regulations and the clause at Federal Acquisition Regulation (FAR) 52.219-14 related to the Limitations on Subcontracting Rule (LOSR).

The FAR Council has also issued a proposed rule to amend FAR 52.219-14 to fully resolve this issue for all small businesses. Government contractors should be aware of these new changes and proposed changes.

Generally, the LOSR prevents small business prime contractors from subcontracting the majority of the work under a prime contract to large businesses. The LOSR is intended to ensure that small businesses get the benefit of the set-aside prime contract. The government does not want a small business to get an award, perform only a small portion of the work, and then subcontract out everything else to large businesses.

Since 2016, SBA small businesses have struggled to comply with the LOSR because the regulations at 13 C.F.R. § 125.6 are inconsistent with the contract clause at FAR 52.219-14.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=777544

See DoD’s Jan. 8, 2019 Class Deviation 2019-O0003 on this subject at: https://www.acq.osd.mil/dpap/policy/policyvault/USA000039-19-DPC_Class_Deviation_2019-O0003.pdf

See the proposed rule here: https://www.govinfo.gov/content/pkg/FR-2018-12-04/pdf/2018-25506.pdf

While FAR Council proposes change to subcontracting limitation rules, DoD issues immediate class deviation

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More than five years after Congress directed the Executive Branch to change the way small business contract performance requirements are calculated, the U.S. Department of Defense (DoD) and the Federal Acquisition Regulation (FAR) Council announced significant steps yesterday to adopt these new requirements.

By way of background, in June 2016, the U.S. Small Business Administration (SBA) issued a final rule changing its regulations regarding the limitations on subcontracting applicable to small business set-aside contracts. SBA’s amended regulations were promulgated in response to a directive in the 2013 National Defense Authorization Act (2013 NDAA) which required changes to how limitations on subcontracting requirements are quantified and which required inclusion of “Similarly Situated Entities” (SSEs) in the prime contractor’s portion of the work under set-aside contracts.

The contracting community has been anxiously awaiting an amendment to the FAR, which has been asserted to be necessary for these Congressionally-mandated changes to become effective.  On Dec. 5th, the DoD issued a Class Deviation which adopts SBA’s current approach to Limitations on Subcontracting. The Class Deviation is effective immediately and applies to all DoD solicitations and contract awards from that date forward.

DoD’s Class Deviation was issued in conjunction with a notice of proposed rule-making issued by the FAR Council, which proposes to amend the FAR’s Limitations on Subcontracting clause (52.219-14) to conform with the statutory requirement and SBA’s previously announced final rule.

Keep reading this article at: https://www.jdsupra.com/legalnews/dod-issues-a-limitations-on-58789/

See commentary about the limitations on subcontracting rule at: http://smallgovcon.com/statutes-and-regulations/limitations-on-subcontracting-far-council-finally-proposes-rule-change/

‘Cascading’ set-asides now authorized at the VA

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In what many will see as VA’s continued assault on its Veterans First Contracting Program post-Kingdomware, the Dept. of Veterans Affairs (VA) recently implemented “Cascading” set-asides.

The VA refers to these set-asides as “Tiered Evaluations,” noting they are also known as “Cascading” set-asides.

The VA issued Acquisition Policy Flash (No. 18-15), transmitting Procurement Policy Memorandum (PPM) No. 2018-04, dated and effective February 8, 2018.

The VA issued the PPM in response to requests from VA contracting officers requesting guidance and procedures for the use of tiered evaluations within a single synopsized solicitation when applying the “VA Rule of Two.”

Keep reading this article at: http://vetlikeme.org/its-official-cascading-set-asides-are-now-authorized-at-the-department-of-veterans-affairs/

New rules for filing protests at GAO and new DFARS debriefing requirements

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The Government Accountability Office {GAO) finally has unveiled its long-awaited Electronic Protest Docketing System (EPDS).

Effective May 1, 2018, all new protests (excluding those containing classified material) must be filed using GAO’s EPDS.

In addition, the National Defense Authorization Act (NDAA) for 2018 enhanced debriefing requirements for all contract and task order awards valued at $10 million or more. Under the new rules, contracting officers must provide unsuccessful offerors an opportunity to submit additional questions related to the debriefing within two business days after receiving the initial debriefing. The agency then has five business days to respond after receipt of the questions.

See details on both of these new requirements at: http://www.mondaq.com/article.asp?articleid=697940

DoD micro-purchase increase is now in effect

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The increase to DoD’s micro-purchase threshold mandated by the 2017 National Defense Authorization Act is now in effect.

A Class Deviation issued earlier this month provides, effective immediately, that the DoD micro-purchase threshold is $5,000 for many acquisitions.

The new micro-purchase threshold is $1,500 higher than the standard $3,500 micro-purchase threshold.  But there are a few exceptions.

Keep reading this article at: http://smallgovcon.com/statutes-and-regulations/dod-micro-purchase-increase-is-now-in-effect/

VA class deviation restricts SDVOSB nonmanufacturers

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The VA has adopted a Class Deviation to the VAAR, severely restricting the ability of VA Contracting Officers to request waivers of the nonmanufacturer rule–and, even more troubling, suggesting that Contracting Officers need not apply the statutory SDVOSB and VOSB preferences even when the SBA has already granted a class waiver.

You may be wondering “does the VA’s Class Deviation comply with Kingdomware?”  Good question.

Before diving into the details of the Class Deviation, let’s step back for a second to review why this is so important.

Under the SBA’s regulations, when any contract is set-aside for small businesses (including SDVOSBs and VOSBs) under a manufacturing NAICS code, there are two ways that the prime contractor can satisfy the requirements of the limitations on subcontracting.  As one option, the prime contractor can agree to pay no more than 50% of the amount paid by the government to it to firms that are not similarly situated.  In other words, the prime can do most or all of the manufacturing itself (or work with similarly situated small businesses).  Alternatively, the prime can sell the products of another business, so long as the prime qualifies as a nonmanufacturer.

Keep reading this article at: http://smallgovcon.com/service-disabled-veteran-owned-small-businesses/va-class-deviation-restricts-sdvosb-nonmanufacturers/#more-7207

Government may disqualify contractors who use standard confidentiality language with employees and subcontractors

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Under a new FAR rule, standard language in confidentiality agreements could lead to disqualification from contracting or False Claims Act liability.

In January, the FAR Council issued a final rule regulating confidentiality agreements between prime contractors and their employees and subcontractors. The rule implements Section 743 of the Consolidated and Further Continuing Appropriations Act of 2015, Pub. L. 113-235 (Dec. 6, 2014).  As we previously reported, a proposed rule was issued in January of 2016 and a class deviation was issued by the Department of Defense late last year.  The final rule largely adopts the proposed rule’s language and applies to all solicitations and resultant contracts that are funded with fiscal year (FY) 2015 funds.  Contractor Employee Internal Confidentiality Agreements or Statements, 82 Fed. Reg. 4717 (Jan. 13, 2017).

In summary, the new FAR 52.203-19 bars contractors from requiring their employees or subcontractors to sign or comply with “internal confidentiality agreements or statements” that would prohibit them from reporting “waste, fraud, or abuse” on a federal contract.  FAR 52.203-19(b).  Contractors who disregard this rule are prohibited from receiving federal funds.  FAR 3.909-1(a).

Because of the broad reach and significant consequences of non-compliance, the contracting community should take notice of this new rule’s requirements.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/04/new-far-rule-government-may-disqualify-contractors-use-standard-confidentiality-language-employees-subcontractors/

DoD temporarily alters vendor registration rule due to SAM’s launch shortcomings

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In order to avoid delays in “the timely processing of awards,” the U.S. Department of Defense (DoD) has ordered the temporary suspension of rules requiring vendor registration in the System for Award Management (SAM).

SAM replaced Central Contractor Registration (CCR), the government’s long-standing vendor database. SAM was launched during the last weekend in July 2012 when CCR vendor data was migrated to the new system.

SAM’s late July implementation included not only CCR but Federal Agency Registration (FedReg), the Online Representation and Certification Application (ORCA), and the Excluded Parties List System (EPLS) as well.  “Performance issues” involving the new SAM database prompted DoD’s action to suspend for “a brief period” the requirement that vendors be registered in SAM before being eligible for a contract award.

Keep reading this article on The Contracting Education Academy at Georgia Tech’s web site at http://contractingacademy.gatech.edu/2012/08/dod-temporarily-alters-vendor-registration-rule-due-to-sams-launch-shortcomings.

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