Georgia Tech Procurement Assistance Center

DoD proposes new rule on performance-based contract payments

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According to a report by the Federal News Network, the Department of Defense (“DoD”) is proposing a new rule which would change how it pays some defense contractors.  DoD is looking to require, whenever practicable, that fixed price contracts be paid out through performance-based contractual payments.  Performance-based payments are a method of contract financing where payments are made on the basis of the contractor’s achievement of objective, quantifiably measurable events, results, or accomplishments that are defined and valued in the contract prior to performance.  Some within the government consider it a preferred method of contracting and claim that it reduces the government’s oversight and compliance costs.  It also may have benefits for contractors, as it should help cash flow, reduce the cost of oversight and compliance, and allow the contractor to focus on technical and schedule progress.  Comments on the proposed rule are due by July 1.

Read the new rule at the Federal Register.

FAR definition of “recruitment fees”: No means no

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On December 20, 2018, the Federal Acquisition Regulation (FAR) was amended to clarify the FAR’s prohibition on assessing employees with recruitment fees in connection with federal contracts.  The rule provides a final definition of “recruitment fees” and clarifies the FAR’s broad prohibition on federal contractors or subcontractors assessing employees or potential employees with any such fees.

The final rule brings long-awaited clarity to the scope of the prohibition on recruitment fees, as the term has not previously been defined in anti-trafficking regulations.  Upon publication of a proposed rule change in January 2015, the FAR Council invited the public to comment on a draft definition of the term “recruitment fees” in a notice-and-comment process.  The final rule, which took effect on January 22, 2019, incorporates a definition that has been revised pursuant to comments received during that rulemaking process. Government contractors will need to take these new rules into account in their compliance efforts in connection with their supply chains.

Background

On January 29, 2015, DoD, GSA, and NASA issued a final rule amending the FAR to strengthen and enhance the human trafficking-related prohibitions applicable to all federal contracts. The final rule implemented Executive Order (E.O.) 13627, “Strengthening Protections Against Trafficking in Persons in Federal Contracts,” and Title XVII of the National Defense Authorization Act for Fiscal Year 2013, entitled “Ending Trafficking in Government Contracting.”  The amended FAR, which applied to all future contracts and orders under existing indefinite-delivery/indefinite quantity contracts, imposed significant responsibilities on federal contractors and subcontractors to prevent human trafficking and forced labor.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=768098

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/

New FAR rule encourages ‘constructive exchanges’ between federal agencies and contractors

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The November 29, 2016 edition of the Federal Register contains a proposed amendment to the Federal Acquisition Regulation (FAR) aimed at encouraging pre-acquisition communications between industry professionals and federal agencies.  This amendment is part of a five-year long effort by the Obama Administration to clarify that communications between potential government contractors and federal agencies are not only allowed, but encouraged.

The proposed rule would amend FAR 1.102-2(a)(4), which currently states that “[t]he Government must not hesitate to communicate with the commercial sector as early as possible in the acquisition cycle to help the Government determine the capabilities available in the commercial marketplace. The Government will maximize its use of commercial products and services in meeting Government requirements.”  In the revised version, the following language would be added:

“Government acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry as part of market research … so long as those exchanges are consistent with existing laws, regulations, and promote a fair competitive environment.” 

There are a number of laws and regulations that may be come into play during pre-acquisition exchanges with government officials, including the Procurement Integrity Act, 41 U.S.C. § 423, Anti-Kickback Act, 41 U.S.C. § 51 et seq., restrictions on lobbying activity, regulations on collusive bidding, prohibition on contingent fee arrangements, and various laws prohibiting gifts and gratuities to and bribery of federal officials.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2016/12/new-far-rule-encourages-constructive-exchanges-between-federal-agencies-and-contractors/

DoD’s proposed rule would create additional risk and burdens for contractors handling export-controlled information

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A newly-released Proposed Rule would create a procedure for the Dept. of Defense (DoD) to release unclassified technical data subject to Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR) to “qualified contractors,” which are defined to mean qualified U.S. and Canadian contractors.

The public-comment period ends on December 30, 2016.

The Proposed Rule raises the following critical operational and legal issues for U.S. and Canadian defense contractors seeking to obtain ITAR and EAR technical data from DoD:

  1. the certification requirements related to qualification,
  2. the use of overlapping and confusing terminology throughout the rule regarding the type of information subject to the rule,
  3. the limitations on further dissemination, and
  4. the possibility of disqualification for export violations.

For a brief summary of the process, the contractor certification requirement, the type of information subject to the rule, the disclosure limitations, and the issue of disqualification, click on this link: http://www.mondaq.com/article.asp?articleid=541556

FAR Council adds new layer to small business subcontracting rules

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On January 20, 2016, the FAR Council published a proposed rule calling for changes to the Federal Acquisition Regulation (FAR) Parts 19 and 52 that address payments to small business subcontractors.

The FARThe proposed changes, which are intended to implement regulations adopted by the Small Business Administration (SBA) in 2013, will expand the range of small business-related obligations imposed on prime contractors.

The proposed rule stems from the Small Business Jobs Act of 2010, which, as noted in a previous post, called for regulations governing prime contractors’ compliance with their small business subcontracting plans. Among the Act’s requirements was that prime contractors notify their contracting officer if they pay a “reduced price” or make an “untimely payment” to a small business subcontractor.  Although the SBA adopted regulations implementing this statutory directive in July 2013, the Far Council is taking on the task for the first time.

Keep reading this article at: http://www.natlawreview.com/article/far-council-adds-new-layer-to-small-business-subcontracting-rules

Comments on the proposed rule must be submitted by March 21, 2016.  Comments should reference “FAR Case 2014-004” and may be submitted by mail, email, or online. 

SBA seeks comments on WOSB certification process until Feb. 16, 2016

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SBA sealThe Small Business Administration (SBA) released an advance notice of proposed rulemaking (ANPR) on Friday, December 18, 2015, which would change the certification process for the Women Owned Small Business (WOSB) Program.  Public comments on SBA’s new rules are due not later than February 16, 2016.

Background

In the 2015 version of the National Defense Authorization Act (NDAA), Congress directed the SBA to end self-certification for WOSBs and EDWOSBs and take on a formal certification process.  Section 825 of the 2015 NDAA specifically authorizes certification by a federal agency, a State government, SBA, or a national certifying entity approved by SBA.  In the ANPR, the SBA is seeking comments on how to best implement this Congressional directive.  In essence, the SBA is requesting the public to suggest the most appropriate way to structure the WOSB/EDWOSB certification process before SBA engages in a formal rulemaking process.

The Advance Notice of Proposed Rulemaking (ANPR)

Four significant areas of change to the WOSB certification process are under consideration:

  • The SBA wants comments on the four certification approaches specified in the 2015 NDAA.  Specifically, SBA requests comments on whether each of the four types should be pursued.
  • SBA also requests comments on whether there should be a grace period after implementation of a formal certification process to give self-certified WOSBs and EDWOSBs firms enough time to complete the new certification process.
  • SBA also wants public comment on what should become of the current WOSB repository and whether or not it should be maintained.
  • Lastly, the SBA is asking for comments on the existing SBA-approved third-party national certifying entities as well as on the WOSB certification programs available through the SBA’s 8(a) Program and by state governments that certify women to be DBEs for the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) Program.
Who Should Comment

SBA’s ANPR is extremely relevant to all businesses currently self-certified as a WOSB or EDWOSB, as well as those who intend to pursue WOSB/EDWOSB certification in the future.  The ANPR, including instructions for commenting can be found at: https://www.gpo.gov/fdsys/pkg/FR-2015-12-18/pdf/2015-31806.pdf

FAR change proposed that would eliminate DUNS® requirement

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Federal RegisterIn the Nov. 18, 2015 edition of the Federal Register, there’s a proposal to amend the Federal Acquisition Regulation (FAR) to re-designate the terminology for unique identification of entities receiving Federal awards. The change to the FAR would remove the proprietary standard or number; in this case, the the proprietary Data Universal Numbering System (DUNS®) number from Dun and Bradstreet.

The rule proposes to provide references to a web site where information on the unique entity identifier used for Federal contractors will be located.  The process for exploring non-proprietary alternatives to DUNS® will be led by the Office of Management and Budget and the Treasury Department, assisted by GSA and the Award Committee for E-Government.

“Although the government is not currently in a position to move away from use of the DUNS® number in the short term,” the notice states, “elimination of regulatory references to a proprietary entity identifier will provide opportunities for future competition that can reduce costs to taxpayers. The current requirement limits competition by using a proprietary number and organization to meet the identification need as well as the need for other business information associated with that number.”

Comments on the proposal are due January 19, 2016.  The proposed rule can be found at: http://www.gpo.gov/fdsys/pkg/FR-2015-11-18/pdf/2015-29414.pdf

DoD reopens comment period on pricing data rule

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The public comment period on a contract pricing rule which would amend the Defense Federal Acquisition Regulation Supplement (DFARS) has been extended to November 13, 2015.

DFARSThe proposed DFARS change is necessary in order to implement Section 831 of the 2013 National Defense Authorization Act (NDAA), which requires the issuance of guidance on the use of the authority to require the submission of other than cost or pricing data, 80 Fed. Reg. 61333.

The 2013 NDAA mandates that offerors submitting proposals for negotiated procurements provide certified cost or pricing data under certain circumstances if the estimated value of the procurement is above a certain dollar threshold. For other types of procurements (e.g., commercial-item acquisitions) the law requires only that an offeror provide “data other than certified cost or pricing data to the extent necessary to determine the reasonableness of the price” (10 U.S.C. 2306a(d)(1)).   Section 831 of the NDAA requires the issuance of guidance on the use of the authority to require the submission of other than cost or pricing data.

The new rule proposes to amend the DFARS as follows:

  • Add new definitions at 202.101 for “market-based pricing” and “uncertified cost data” and at 215.401 for “nongovernment sales,” “relevant sales data,” and “sufficient nongovernment sales to establish reasonableness of price”;
  • Add section 212.209 entitled “Determination of price reasonableness”;
  • Add guidelines at 215.402(a)(3), for obtaining data other than certified cost or pricing data;
  • Add instructions at 215.403-5 for the submission of certified cost or pricing data and data other than certified cost or pricing data;
  • Add guidelines at 215.404-1 concerning proposal analysis techniques;
  • Renumber the paragraph structure at 215.404-1-70;
  • Revise the clause prescription at 215.408, paragraph(3)(i), and add three new provision prescriptions at paragraph (6); and
  • Add three new provisions in part 252.

Interested parties may submit comments via the Federal eRulemaking portal by entering ‘‘DFARS Case 2013–D034’’ under the heading ‘‘Enter keyword or ID’’ and selecting ‘‘Search.’’ Select the link ‘‘Submit a Comment’’ that corresponds with ‘‘DFARS Case 2013– D034.’’ Follow the instructions provided at the ‘‘Submit a Comment’’ screen. Please include your name, company name (if any), and ‘‘DFARS Case 2013– D034’’ on your attached document.

  • Email: osd.dfars@mail.mil. Include DFARS Case 2013–D034 in the subject line of the message.
  • Fax: 571–372–6094.
  • Mail: Defense Acquisition Regulations System, Attn: Mr. Mark Gomersall, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301–3060.

More detail at: https://www.federalregister.gov/articles/2015/08/03/2015-18938/defense-federal-acquisition-regulation-supplement-evaluating-price-reasonableness-for-commercial 

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