FAR Council Previews Upcoming Rules

The Department of Defense, General Services Administration, and National Aeronautics and Space Administration have issued a semiannual regulatory agenda for the Federal Acquisition Regulation. The agenda provides summary descriptions of regulations being developed by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council. The agenda shows 33 rules in the proposed stage, 9 rules in the final stage, and 7 completed actions. The rules in the proposed stage include:

  • FAR Case 2015-021, which would direct ordering activity contracting officers to make a determination of fair and reasonable pricing when placing an order against GSA’s Federal Supply Schedules;
  • FAR Case 2017-005, which would implement 41 USC 4712, Enhancement of contractor protection from reprisal for disclosure of certain information, and make a 2013 whistleblower protection pilot program permanent;
  • FAR Case 2016-002, which would implement SBA 125.2 and a 2013 Small Business Administration final rule to clarify that overseas contracting is not excluded from agency responsibilities to foster small business participation;
  • FAR Case 2016-011, which would revise and standardize the limitations on subcontracting, including the nonmanufacturer rule, that apply to small business concerns under FAR 19.000 FAR Part 19 procurements;
  • FAR Case 2016-013, which would implement a final rule issued by the Department of the Treasury (81 FR 55133) imposing on any foreign person that receives a specified federal procurement payment a tax equal to two percent of the payment;
  • FAR Case 2017-003, which would change the kinds of assets that individual sureties must use as security for their individual surety bonds;
  • FAR Case 2015-002, which would require the use of DoD Wide Area Workflow for the electronic submission of DD Form 254, Contract Security Classification Specification;
  • FAR Case 2017-013, which would create and implement appropriate contract clauses and regulatory coverage to address contractor requirements in connection with breaches of personally identifiable information;
  • FAR Case 2016-012, which would allow for incremental funding of certain fixed-price contracting actions;
  • FAR Case 2017-010, which would change the requirement regarding the consideration of cost or price to the government as a factor in the evaluation of proposals for certain multiple-award task order contracts;
  • FAR Case 2017-016, which would implement the National Archives and Records Administration regulations governing agency policies for designating, safeguarding, disseminating, marking, decontrolling and disposing of controlled unclassified information;
  • FAR Case 2018-003, which would allow other than small prime contractors to receive small business subcontracting credit for subcontracts their subcontractors award to small businesses;
  • FAR Case 2018-006, which would implement a new approach to the prescription and flowdown for provisions and clauses applicable to acquisitions of commercial items or acquisitions that do not exceed the simplified acquisition threshold;
  • FAR Case 2018-004, which would increase the micro-purchase threshold to $10,000 and the simplified acquisition threshold to $250,000;
  • FAR Case 2018-005, which would increase the threshold for requiring certified cost or pricing data to $2 million;
  • FAR Case 2018-013, which would require the FAR Council to review each past determination made not to exempt contacts and subcontracts for commercial products, commercial services, and commercially available off-the-shelf items from certain laws when these contracts would otherwise have been exempt under 41 USC 1906(d) or 41 USC 1907(b);
  • FAR Case 2018-014, which would provide, for indefinite-delivery/indefinite-quantity and Federal Supply Schedule contracts for services that are priced at an hourly rate, an exception to the requirement to include price to the government as an evaluation factor.
  • FAR Case 2018-016, which would discourage the use of lowest price technically acceptable source selection criteria in circumstances that would deny the government the benefits of cost and technical tradeoffs;
  • FAR Case 2018-018, which would separate the commercial item definition into definitions of commercial product and commercial service;
  • FAR Case 2018-019, which would require the FAR Council to assess every FAR regulation that requires a specific clause in contracts for commercial products or commercial services, or requires a prime contractor to include a specific clause in subcontracts for commercially available off-the-shelf items, and to consider the elimination of these regulations; and
  • FAR Case 2018-022, which would amend the clause at FAR 52.216-18, Ordering, to authorize the issuance of orders via fax or email and clarify when an order is considered to be issued when utilizing these methods.

The agenda states the proposed rules will be issued in 2018 or 2019. DoD, GSA, and NASA published the agenda to allow interested persons an opportunity to participate in the rulemaking process. For full text of the agenda, issued November 16, 2018, see 83 FR 58099.

DoD Announces Higher Certified Cost or Pricing Data Threshold

The Department of Defense has issued Class Deviation 2018-O0012, which raises the threshold for obtaining certified cost or pricing data to $2 million.

FAR 15.403-4 sets the threshold for obtaining CCPD at $750,000. However, section 811 of the National Defense Authorization Act for Fiscal Year 2018 (PL 115-91) increased the threshold for obtaining CCPD under the Truth in Negotiations Act (10 USC 2306a) and 41 USC 3502 from $750,000 to $2 million.

Since 41 USC 1502(B)(1)(B) equates the cost accounting standards threshold to the TINA threshold for obtaining CCPD, DoD has also increased the threshold for CAS applicability to $2 million.

The class deviation includes five deviated clauses/provisions and directs contracting officers to use them in lieu of FAR 52.230-1 through FAR 52.230-5:

  • 230-1 Cost Accounting Standards Notices and Certification (DEVIATION 2018-O0012)
  • 230-2 Cost Accounting Standards (DEVIATION 2018-O0012)
  • 230-3 Disclosure and Consistency of Cost Accounting Practices (DEVIATION 2018-O0012)
  • 230-4 Disclosure and Consistency of Cost Accounting Practices—Foreign Concerns (DEVIATION 2018-O0012)
  • 230-5 Cost Accounting Standards—Educational Institution (DEVIATION 2018-O0012)

The class deviation goes into effect on July 1, 2018. The text of the notice and the deviated provisions and clauses can be found here.

Cost of Administering a Government Contract: $907

A May 12, 2016, proposed rule issued by the Department of Defense, General Services Administration, and National Aeronautics and Space Administration estimates that it costs the government $907 to award and administer a contract.

The rule proposes to amend the Federal Acquisition Regulation to revise, for the purpose of evaluating bids for multiple awards, the estimated administrative cost to award and administer a contract.

The rule would make a monetary adjustment to FAR 14.201-8, Price related factors, and the solicitation provision at FAR 52.214-22, Evaluation of Bids for Multiple Awards.

FAR 14.201-8(c) provides that advantages or disadvantages to the government that might result from making more than one award is one of the factors that may be considered in evaluating bids. FAR 52.214-22 currently reflects an estimated administrative cost of $500, but that amount was last adjusted in 1990 (see 55 FR 3878).

According to the rule, an adjustment from $500 to $1,000 is a realistic reflection of the actual cost to the government.

The government’s Consumer Price Index calculator showed $907 as the proper adjustment, but the rule rounds up the figure to $1,000. The agencies will review the cost periodically and update it as deemed appropriate.

Comments on the proposed rule referencing FAR Case 2016-003 are due July 11, 2016. For the text of the rule, see 81 FR 29514

Executive Compensation Benchmark Amount Increased

An Office of Management and Budget, Office of Federal Procurement Policy, notice sets the maximum executive compensation benchmark amount allowable under government contracts for fiscal years 2013 and 2014 at $980,796 and $1,144,888, respectively. As required by Section 39 of the Office of Federal Procurement Policy Act, as amended (41 USC 1127), the benchmark compensation amount limits the allowability of compensation costs under government contracts in accordance with FAR 31.205-6(p). However, the cap does not limit the compensation an executive may otherwise receive. The benchmark compensation amount applies to both defense and civilian procurement agencies for contracts awarded before June 24, 2014. The notice includes a memorandum from the OFPP Administrator to the Heads of Executive Departments and Agencies providing additional information on this compensation cap.

Rule to Require Reporting of Untimely Subcontractor Payments

A proposed rule would amend the Federal Acquisition Regulation to require prime contractors to self-report reduced or untimely payments to small business subcontractors.

The rule would implement section 1334 of the Small Business Jobs Act of 2010 (PL 111-240), which requires contractors to notify the contracting officer in writing if the contractor pays a reduced price to a small business subcontractor, or if the contractor’s payment to a small business contractor is more than 90 days past due.

The rule would also require COs to record the identity of contractors with a history of late or reduced payments to small business subcontractors in the Federal Awardee Performance and Integrity Information System.

The new requirements would be added at FAR 42.1502 and FAR 42.1503, and implemented in a new clause at FAR 52.242-XX, Payments to Small Business Subcontractors (prescribed at proposed FAR 42.1504).

The rule would apply to prime contracts that require small business subcontracting plans, including contracts for commercial items and commercial-off-the-shelf items.

Comments on the proposed rule referencing FAR Case 2014-004 are due March 21, 2016. The text of the rule appears at 81 FR 3087.