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2007 Procurement Review: Statutes and Regulations




          In December, the Regulatory Information Service Center published the semiannual Regulatory Plan and Unified Agenda for 29 federal agencies, which details significant regulations each agency plans to publish in 2008.   As for 2007 . . . keep reading.


FAC 2005-16 (March 22)          

1.     Implementation of Wage Determinations Online (WDOL) (FAR Case 2005-033) Final Rule

          This final rule implemented the DOL's Wage Determinations Online (WDOL) website and directed federal contracting agencies to obtain wage determinations from that site for service contracts subject to the Service Contract Act (SCA) and construction contracts subject to the Davis -Bacon Act. Thus, agencies will now use the "e98" process instead of paper forms 98, 98a, and 99, which are deleted from the FAR. The rule also incorporated new geographical jurisdictions for DOL’s Wage and Hour Regional Offices and eliminates FAR references to the Government Printing Office (GPO) publication of general wage determinations.

2.     Termination or Cancellation of Purchase Orders (FAR Case 2005-029) Correction

        This rule corrected an inadvertent omission of a reference to FAR 13.302-4(a) in FAR 52.212-4(l) or (m) to make it clear that, if a contractor has accepted a purchase order in writing, the Contracting Officer has an option to terminate that purchase order for cause, if appropriate.

3.     Contracts with Religious Entities (FAR Case 2006-019) Interim Rule

        This interim rule amended the regulations at FAR Subpart 22.8  and the associated clause at FAR 52.222-26 to make it clear that religious entities may consider employment of individuals of a particular religion to perform work connected with carrying on the entity’s activities without violating any Equal Opportunity Employment (EEO) requirements. These entities, however, remain subject to other Equal Opportunity requirements.

4.     Contract Terms and Conditions Required to Implement Statues or Executive Orders--Commercial Items (FAR Case 2006-012) Final Rule

        The final rule revised the FAR to update the required contract clauses that implement provisions of law or executive orders for acquisitions of commercial items.

FAC 2005-17 (May 15)

Significant and extensive revisions were made to various FAR provisions covering government property

FAC 2005-18 (July 5)

New requirements were placed on small businesses to re-certify their size status at various times during long-term contracts, and a new contract clause wass been added to implement these new requirements: FAR 52.219–28 Post-Award Small Business Program Representation.

FAC 2005-19 (August 17)    

1.     Reporting of Purchases from Overseas Sources (FAR Case 2005-034) Final Rule

          A new provision (FAR 52.225-18) required an offeror to indicate whether the place of manufacture of the end products it expects to provide in response to a solicitation is predominantly inside or outside the United States. Whenever the place of manufacture is outside the United States, the Contracting Officer is required to enter into FPDS the reason for buying items manufactured outside the United States. In addition, the new rule clarified different tests used to determine the country of origin (FAR 25.001) under the Buy American Act and the Trade Agreements Act.

2.     Lobbying Restrictions (FAR Case 2005-035) Final Rule

          The FAR now (i) includes (a) the new concept of ‘‘lobbying contact’’ (see FAR 52.203-11(a) Certification and Disclosure Regarding Payments to Influence Certain Foreign Transactions (Sep 2007)) and (b) the concept of registrants under the Lobbying Act of 1995 (see FAR 52.203-11(d)); (ii) reflects OMB guidance (a) that the term ‘‘appropriated funds’’ does not include profit or fee from a covered Federal action and (b) that, to the extent the contractor can demonstrate that the contractor has sufficient monies, other than Federal appropriated funds, the Government will assume that these other monies were spent for any influencing activities that would be unallowable if paid for with Federal appropriated funds (FAR 3.802(a)(2); FAR 52.203-12 (b)(2)); (iii) formalizes the changes that were already incorporated in the OMB Form Standard Form LLL, Disclosure of Lobbying Activities; and (iv) removes 31 U.S.C. 1352, (Limitations on Payment to Influence Certain Federal Transactions) from the list of laws that are inapplicable to subcontracts for the acquisition of commercial items.

3.     Online Representations and Certifications (FAR Case 2005-025) Final Rule        

          This final rule adopted without change the interim rule originally published as 71 FR 57362 (Sept. 28, 2006) and amended the FAR to eliminate confusion between the FAR record retention requirements at FAR 4.803 and the requirements at FAR Subpart 4.12. The latter (4.12) requires contractors to submit Annual Representations and Certifications via the Online Representations and Certifications Application (ORCA), a part of the Business Partner Network, which eliminates the administrative burden for contractors of repeatedly submitting the same information to various contracting offices.

4.     Requirement to Purchase Approved Authentication Products and Services (FAR Case 2005–017) Final Rule

          FAR 4-1301 and 4-1302  now address the acquisition of products and services for personal identity verification that comply with requirements in Homeland Security Presidential Directive (HSPD) 12, ‘‘Policy for a Common Identification Standard for Federal Employees and Contractors,’’ and Federal Information Processing Standards Publication (FIPS PUB) 201, ‘‘Personal Identity Verification of Federal Employees and Contractors." See also FAR 52.204-9: Personal Identity Verification of Contractor Personnel (Sep. 2007).

5.     Combating Trafficking in Persons (FAR Case 2005-012) Revised Interim Rule

          FAR subpart 22.17 was amended to implement 22 U.S.C. 7104(g), which requires that contracts must include a clause that authorizes the department or agency to terminate the contract if the contractor, contractor employee, subcontractor, or subcontractor employee engages in trafficking in persons. The revised interim rule provides for contract termination for engaging in severe forms of trafficking in persons or procurement of a commercial sex act during the period of performance of the contract and provides for contract termination for use of forced labor in the performance of the contract. The revised interim rule applies to all contracts, including those for services and supplies and those for commercial items.

6.     Emergency Acquisitions (FAR Case 2005-038) Final Rule

          The interim rule published at 71 Fed Reg 38247 (July 5, 2006) was converted to a final rule, with several changes. FAR subpart 18.2 was amended to  provide a consolidated reference to acquisition flexibilities that may be used during emergency situations. This rule is intended to improve a Contracting Officer’s ability to expedite acquisition of supplies and services during emergency situations.

7.     Small Business Credit for Alaska Native Tribes and Indian Corporations (FAR Case 2004-017) Final Rule

          FAR subpart 19.7 was amended to provide that contractors may count subcontracts awarded to Alaskan Native Corporations (ANCs) and Indian tribes (regardless of their size) towards the satisfaction of goals for subcontracting with small business  and small disadvantaged business concerns.  

8.     New Designated Countries--Dominican Republic, Bulgaria, Romania (FAR Case 2006-028 ) Interim Rule          

          This interim rule allowed Contracting Officers to purchase the goods and services of the Dominican Republic (because of a new trade agreement with it), as well as Bulgaria and Romania (because they have become parties to the World Trade Organization Government Procurement Agreement), without application of the Buy American Act if the acquisition is subject to Free Trade Agreements. 

9.     Online Representations and Certifications Application (ORCA) Review (FAR Case 2006-025) Interim Rule          

          This interim rule amended FAR 23.406 and 23.906, to harmonize them with the solicitation provision and contract clause they prescribe (FAR 52.223–9 and 52.223–14).

10.    Free Trade Agreements El Salvador, Honduras, and Nicaragua (FAR Case 2006-006) Final Rule

          This final rule converted the interim rule published at 71 Fed Reg 36935 (June 28, 2006)  to a final rule without change and permits Contracting Officers to purchase the products of El Salvador, Honduras, and Nicaragua without application of the Buy American Act if the acquisition is subject to the Dominican Republic—Central America—United States Free Trade Agreement.  

11.    Free Trade Agreements Bahrain and Guatemala (FAR Case 2006-017) Final Rule          

          This final rule converted the interim rule published at 71 Fed Reg 67776 (Nov. 22, 2006) to a final rule without change and permits Contracting Officers to purchase the goods and services of Bahrain and Guatemala without application of the Buy American Act if the acquisition is subject to Free Trade Agreements.


          The FAR was amended to add the clause at 52.219–16 (Liquidated Damages Subcontracting Plan) to the list of clauses FAR 52.212–5 that the contracting officer may select to use in contracts for commercial items.

FAC 2005-20 (September 6)

          As a pilot program (scheduled to terminate January 1, 2009), awardees of contracts whose values equal or exceed $500 million, which are awarded, and to be performed in, the United States, must report all first tier subcontract awards exceeding $1 million to the Federal Funding Accountability and Transparency Act of 2006 ("FFATA") database at     

FAC 2005-21 (November 7)          

1.     SAFETY Act: Implementation of DHS Regulations (FAR Case 2006–023) Interim Rule

          The interim rule implemented the SAFETY Act, which provides incentives for the development and deployment of anti-terrorism technologies.

2.     Biobased Products Preference Program (FAR Case 2004-032) Final Rule           

          This rule established procurement preferences for the use of biobased products (the list of bio-preferred products can be found here).  

3.     FAR Part 27 Rewrite in Plain Language (FAR Case 1999-042) Final Rule

           FAR Part 27 (Patents Data and Copyrights) was rewritten using "plain language."  

4.     Federal Computer Network (FACNET) Architecture (FAR Case 2006-015) Final Rule

          This final rule removed outdated FACENET references from the FAR

5.     Exemption of Certain Service Contracts from the Service Contract Act (SCA) (FAR Case 2001-004) Interim Rule

          This interim rule exempted certain contracts involving commercial-type services from the Service Contract Act, to be consistent with a DOL rule at 66 Fed. Reg. 5327 (Jan. 18, 2001). 

6.     Local Community Recovery Act of 2006 (FAR Case 2006-014) Interim Rule

          This second interim rule implemented Congressional amendments to the Stafford Act and establishes requirements for transitioning work to local firms in the geographic area affected by a disaster or emergency and for justifying expenditures to entities outside the major disaster or emergency area. 

7.     Labor Standards for Contracts Containing Construction Requirements--Contract Pricing Method References (FAR Case 2007-001) Final Rule 

          This rule removed the term R.S. Means Cost Estimating System  from FAR 22.404-12(c)(2).    

FAC 2005-22 (November 23)

   This FAC includes two items.

          The first (FAR Case 2006-008) implemented Section 104 of the Energy Policy Act of 2005, which provides that all acquisitions of energy consuming products and all contracts that involve the furnishing of energy-consuming products require acquisition of ENERGY STAR or Federal Energy Management Program (FEMP) designated products.

          The second (FAR Case 2006-007) amended FAR Parts 2, 3, and 52 to address the requirements for a contractor code of business ethics and conduct and the display of Office of the Inspector General (OIG) Fraud Hotline Posters.

FAC 2005-23 (December 26)

1.     Electronic Products Environmental Assessment Tool (EPEAT) (FAR Case 2006–030) Interim Rule

        FAR subpart  23.7 and the associated solicitation/contrast provisions wete amended to require use of the Electronic Products Environmental Assessment Tool (EPEAT) when acquiring personal computer products such as desktops, laptops, and monitors pursuant to the Energy Policy Act of 2005 and Executive Order 13423, ‘‘Strengthening Federal Environmental, Energy, and Transportation Management.’’

2.     Contracts With Religious Entities (FAR Case 2006–019) Final Rule

          This final rule adopted, without changes, the prior interim rule published March 22 which exempts religious institutions from certain EEOC obligations so that they may consider employment of individuals of a particular religion to perform work connected with carrying on the entity’s activities.

3.     Performance-Based Payments (FAR Case 2005–016) Final Rule

         This final rule amended FAR sections 32.1000 through 32.1009 to increase the use of performance-based payments as the method of contract financing on government contracts and improve the efficiency of performance based payments when used on these contracts.


Department of Defense FAR Supplement (DFARS)

         In January, the DoD published an interim DFARS rule to implement section 833(b) of the National Defense Authorization Act for Fiscal Year 2006, which expands the foreign source restrictions applicable to the acquisition of clothing in the so-called Berry Amendment to include clothing materials and components (other than sensors, electronics, or other items added to, and not normally associated with, clothing). Clothing includes items such as outerwear, headwear, underwear, nightwear, footwear, hosiery, hand wear, belts, badges, and insignia. The DoD also issued a final rule to add policy and a required contract clause requiring contractors to provide prompt notice of potential safety issues under DoD contracts. The final rule includes a new contract clause requiring contractors to notify the Government of any nonconformance or deficiency that could impact the safety of items acquired by or serviced for the Government. An interim rule was published, which provides a single reference to a new DFARS Part 218 covering DoD-unique procedures that may be used to facilitate acquisition of supplies and services during emergency situations.

          Several amendments to the DFARS were issued in February, involving: (i) Aviation Into-plane Reimbursement (AIR) cards for purchasing fuel at commercial airports; (ii) free trade agreements involving Honduras, El Salvador, and Nicaragua (implementing the Dominican Republic-Central America-United States Free Trade Agreement, which waives the applicability of the Buy American Act for some foreign supplies and construction materials and specifies procurement procedures designed to ensure fairness); (iii) Berry amendment exceptions involving perishable food and seafood; (iv) relocating certain procedures related to processing  protests, disputes, and appeals from the DFARS to the Procedures, Guidance, and Information (PGI) document; and (v) radio frequency identification tags (requiring contractors to affix passive RFID tags at the case and palletized unit load levels when shipping packaged petroleum, lubricants, oils, preservatives, chemicals, additives, construction and barrier materials, and medical materials to specified DoD locations).           

             DoD corrected some previously published per diem rates for overseas, non-foreign travel.

             DoD suspended (for one year) its 10% price evaluation preference for SDBs.

            Several amendments were published in the DFARS in April, relating to DOL wage determinations, small business programs, excessive pass-through charges on subcontract costs, Guam military construction, and separation of government procurement functions to ensure acquisition integrity.

            An interim rule published in August establishes an evaluation criterion concerning experience for use in obtaining carriage of cargo by vessel.               

            The DFARS also was amended to implement certain Berry amendment requirements concerning restrictions on foreign sources of clothing and related items and publicizing requirements concerning such restrictions.

            The DFARS was amended to make final (with some changes) an interim rule delineating requirements that must be met before a tiered evaluation may be used in a government solicitation.

          In September, DoD (i) adopted, without change, the interim rule specifying DoD-unique acquisition flexibilities that may be used to purchase supplies and services during emergency situations; (ii) adopted (again, without change) the interim rule limiting situations in which major weapons systems may be purchased as commercial items; (iii) adopted (without change) the interim rule clarifying procedures for reimbursing labor costs on non-commercial time-and-materials and labor-hour contracts;  (iv) published an interim rule concerning assessing technical data needs when purchasing major weapons systems and subsystems; (v) issued a final rule prohibiting service contracts for military flight simulators absent certain waiver criteria; (vi) extended until September 30, 2009, the period during which private contractor security guards may be used on military facilities to respond to terrorist situations; and (vii) issued a proposed rule regarding evaluating offers to utilize members of the Selected Reserve to perform contracts as individuals or as subcontractors.         

            Effective for one year beginning November 14, the DoD waived the limitations  of 10 U.S.C. 2534 to allow procurement of 8 listed items (e.g., enclosed lifeboats) from sources in the United Kingdom. 

            In a final rule that generated numerous and lengthy comments and critiques, the DoD added a paragraph 212.570 to the DFARS, which reads as follows: "Paragraph (a)(1) of 10 U.S.C. 2533b, Requirement to buy strategic materials critical to national security from American sources, is not applicable to contracts and subcontracts for the acquisition of commercially available off-the-shelf items." The new rule also adds the following new paragraph (q) to the list of exceptions under Part 225 ("Foreign Acquisition") of the DFARS: "(q) Acquisitions of commercially available off-the-shelf items containing specialty metals. This exception does not apply when the specialty metal (e.g., raw stock) is acquired directly by the Government or by a prime contractor for delivery to the Government as the end item." 

            DoD (DFARS Case 2001-D015) added a clause to the DFARS that is essentially the same as the "Patent Rights--Retention by the Contractor (Long Form)" clause that was recently removed from the FAR because the DoD was the only agency using it. The new DoD clause (252.227-7038) is entitled  "Patent Rights--Ownership by the Contractor (Large Business)" and is to be used in contracts for experimental, developmental, or research work. At the same time, the DoD has removed the clause at 252.227-7034 (Patents-Subcontracts)  as no longer needed.         

Individual Agencies    

Commerce Department

          The Commerce Department revised the Commerce Control List (CCL) of the Export Administration Regulations (EAR) to harmonize it with the Wassenaar Arrangement Plenary Agreement.

Equal Employment Opportunity Commission (EEOC)

          The EEOC issued a final rule under the Age Discrimination in Employment Act (ADEA) to comply with the Supreme Court's decision in General Dynamics Land Systems, Inc. v. Cline. The new regulations provide that only discrimination against an individual based on old age is prohibited and that employers are not prohibited from favoring relatively older individuals. 

Energy Department (DOE)

          The Energy Department issued revised regulations regarding cooperative audit arrangements for management and operating contracts.

General Services Administration (GSA)         

          The GSA revised its Acquisition Regulations (GSAR to implement Section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109–364), which amends 40 U.S.C. 502 to authorize the Administrator of General Services to allow state and local governments to use  Federal Supply Schedules for purchases of products and services to be used to facilitate recovery from a major disaster, terrorism or nuclear, biological, chemical, or radiological attack.

          The GSA revised various CONUS lodging and meal daily allowances in the FTR.  The GSA also  revised the FTR to change the per diem/lodging rates for quite a few locations; the agency issued still more revised per diem rates for non-foreign, overseas travel. The GSA amended the Federal Travel Regulation (FTR)   to change the mileage reimbursement rate for use of private autos to $0.485 per mile.

          The GSA issued an interim rule establishing rules of procedure for the Civilian Board of Contract Appeals.      

Housing and Urban Development (HUD)

          HUD adopted a final rule (48 C.F.R. 2409.7001) applying its prior debarment and suspension requirements to its procurement contracts.

National Aeronautics and Space Administration (NASA)

          NASA amended its FAR Supplement  to clarify factors for award fee evaluation and for documenting cost/benefit analyses on award fee contracts.     

Navy Department

          The Navy adopted a policy (SECNAV Instruction 5800.15) authorizing Contracting Officers to use binding arbitration for resolving procurement contract disputes.

Office of Federal Contract Compliance Programs (OFCCP)

         OFCCP published new regulations concerning affirmative action and nondiscrimination regarding disabled veterans, recently separated veterans, other protected veterans, and "armed forces service medal" veterans, which became effective on September 7, 2007, for covered contracts and modifications entered into after December 1, 2003. The regulations appear in a significantly revised 41 CFR Chapter 60.

Office of Federal Procurement Policy (OFPP)

          The threshold for CAS applicability has been increased to $650,000 to match TINA. The CAS Board also proposed adding a CAS clause for use in contracts awarded to foreign firms.  A final rule was adopted regarding CAS coverage for UK contractors. 

          The OFPP issued a final rule exempting T&M and Labor Hour contracts for commercial items from the application of Cost Accounting Standards. The rule appears in 48 CFR Chapter 99.

          The OFPP issued guidance to all agencies concerning the maximum allowable senior executive benchmark compensation for federal contracts for FY 2007.

Office of Government Ethics

          The Office of Government Ethics issued revised regulations exempting certain senior government positions from the one-year post employment conflict-of-interest restrictions.

Postal Service (USPS)

          The Postal Service made several revisions to its regulations regarding the purchase of property and services to comply with GAO recommendations.

Small Business Administration (SBA)

          The SBA denied a request to waive the nonmanufacturer rule for Demountable Cargo Containers Manufacturing (Dry Freight Containers/Connex Boxes).

          The agency amended its small business size regulations by incorporating the Office of Management and Budget’s (OMB) 2007 modifications of the North American Industry Classification System (NAICS) in its table of small business size standards.

          It also issued a notice of intent to waive the nonmanufacturer rule for re-refining used petroleum lubricating oils. 

             Effective January 4, 2008, the agency is waiving the nonmanufacturer rule for various MRI and PET medical devices. It also is waiving the rule for X-ray equipment and supplies.

          The SBA proposed to amend its regulations governing small business contracting procedures as well as its procurement regulations to provide greater contracting opportunities for women-owned small businesses (WOSB). The most significant revisions are the additions of a new Part 127 (Women-Owned Small Business Federal Contract Assistance Procedures) to 13 C.F.R. and a new Subpart G to Part 134 of the same title to establish procedures for the appeal of WOSB status  and economically disadvantaged WOSB (EDWOSB) status to the SBA's Office of Hearings and Appeals (OHA).  Comments are due by February 25, 2008.

          Finally, the SBA proposed to incorporate SBA’s risk-based lender oversight program into SBA regulations in order to provide oversight of financial institutions that originate and manage SBA guaranteed loans. 

State Department

          The State Department made certain changes to the ITAR relating to Libya and Venezuela and amended the ITAR Munitions List Category XV--Spacecraft Systems and Associated Equipment. It also added a section  that lists  countries embargoed by the United Nations and prohibits arms sales to such countries.

          It added a new solicitation provision and contract clause to its procurement regulations to implement requirements regarding security issues for information technology systems, as mandated by the Federal Information Security Management Act of 2002 (FISMA), and it  issued various technical corrections to its acquisition regulations. Finally, it issued Trade Agreements Act procurement thresholds to implement E.O. 12260.         

US Agency for International Development (USAID)

          USAID proposed to consolidate all its regulations for personal services direct contracts into one appendix. It also proposed to amend its acquisition regulations to provide additional authority for contracting officers to monitor compliance with subcontracting plans


        The DoD Appropriations Act for fiscal 2008 was finally signed in mid-November. 

          The National Defense Authorization Bill for Fiscal Year 2008 was presented to the President for signature on December 19, but he is vetoing it, so a discussion of the Act will have to wait for the next review.


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