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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)
Richard C. BeanAttorney at Law
Always a moving target! What is on the horizon?
Federal Acquisition Circular 2005-63, 77 Fed. Reg. 73516, December 10, 2012
Federal Acquisition Circular 2005-64, 77 Fed. Reg. 75766, December 21, 2012Federal Acquisition Circular 2005-65, 78 Fed. Reg. 6183, January 29, 2013Federal Acquisition Circular 2005-66,78 Fed. Reg. 13764, February 28, 2013Frequency of regulatory change is reflection of legislative change in many cases
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.
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)
Alleged Crimes by or against Contractor Personnel - February 28, 2013 78 Fed. Reg. 13547
Electronic Subcontracting Reporting System (eSRS) (DFARS Case 2009-D002) February 28, 2013, 78 Fed. Reg. 13546.
Unallowable Fringe Benefit CostsDFARS Case 2012-D038 Proposed rule, 78 Fed.Reg. 13606, February 28, 2013.DoDis 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.
Section 1641 – Small Business Mentor-Protégé Program
Authorizes SBA to establish a Mentor-Protégé Program for small businessesShould 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.
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
Sampling of some House Bills affecting Contracting:
Senate Contracting Bills
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.
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 employeeOMB recognizes that cost comparisons are not a “one size fits all” toolOMB 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