FEDERAL CONTRACTS PERSPECTIVE

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1 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE Federal Acquisition Developments, Guidance, and Opinions Vol. XI, No. 10 October 2010 PARITY AMONG SMALL BUSINESS PROGRAMS MANDATED BY STATUTE The Small Business Jobs Act of 2010 (Public Law ) resolved a dispute among the three branches of government regarding whether the Historically Underutilized Business Zone (HUBZone) program takes precedence over the Small Business Administration s 8(a) program and the service-disabled veteran-owned small business (SDVOSB) program by changing shall to may in the HUBZone program s authorization language, thus providing parity among all three small business programs. The disagreement was the result of a protest to the Government Accountability Office (GAO), Congress investigative arm, in which GAO ruled that the statutory language authorizing the HUBZone program contained language that gave it precedence over the 8(a) and SDVOSB CONTENTS Parity Among Small Business Programs... 1 Commercial IT Exempted from BAA... 3 FAR to Address T&M/Labor-Hour Contracts... 7 DOD Directed to Do More with Less DOD Piles on More Changes to DFARS DEAR Implements Sustainable Acquisition HSAR Undergoes Revision Initiative programs. That language, in Title 15 of the U.S. Code, Section 657a (15 U.S.C. 657a), paragraph (b)(2)(b), stated, Notwithstanding any other provision of law a contract opportunity shall be awarded pursuant to this section on the basis of competition restricted to HUBZone small business concerns if the contracting officer has a reasonable expectation that not less than 2 qualified HUBZone small business concerns will submit offers and that the award can be made at a fair market price. Comparable statutory language authorizing the 8(a) programs states, such officer shall be authorized in his discretion to let such procurement contract to the [Small Business Administration (SBA)] (15 U.S.C. 637, paragraph (a)(1)(a)), and comparable statutory language authorizing the SDVOSB program states, A contracting officer may award contracts on the basis of competition restricted to small business concerns owned and controlled by service-disabled veterans (15 U.S.C. 657f, paragraph (b)). The Court of Federal Claims upheld the GAO in two cases, while the Office of Management and Budget (OMB) issued a memorandum to federal agencies directing them to ignore the GAO decisions, and the Department of Justice (DOJ) issued a memorandum to SBA, one that was widely distributed within the government, stating that SBA s regulations are correct to make all three programs equal ( parity ). This kind of regulatory squabbling could not be allowed to continue without producing dire consequences for federal acquisition confusion, court cases, etc. So Congress, on its second attempt at correcting this mess (it failed last year), passed Public Law , and in the statute is Section 1347, Small Business Contracting Parity. Paragraph (c) of Section 1347 amends 15

2 U.S.C. 657a(b)(2) to remove Notwithstanding any other provision of law and change shall to may, so that it now reads, a contract opportunity may be awarded pursuant to this section on the basis of competition restricted to HUBZone small business concerns This now makes parity a matter of law, and no longer a matter of SBA regulations. For more on the dispute, see the see the August 2009 Federal Contracts Perspective article OMB Issues Five Memos Providing Contracting Guidance ; the September 2009 Federal Contracts Perspective article Department of Justice Reaffirms SBA s Small Business Program Parity Regulations ; the April 2010 Federal Contracts Perspective article HUBZone Preference Upheld by Court of Federal Claims ; and the September 2010 Federal Contracts Perspective article Court of Federal Claims Upholds HUBZone Precedence. There are other acquisition-related provisions of Public Law besides the parity provision: Section 1313, Consolidation of Contract Requirements, establishes $2,000,000 at the threshold above which the senior procurement executive or chief acquisition officer must approve conducting acquisitions that involve bundling (see (1) the bundling definition in Federal Acquisition Regulation (FAR) 2.101, Definitions; and (2) FAR 7.107, Additional Requirements for Acquisitions Involving Bundling). Section 1322, Small Business Subcontracting Improvements, requires large contractors to include in their small business subcontracting plans a representation that the offeror or bidder will (i) make a good faith effort to acquire articles, equipment, supplies, services, or materials, or obtain the performance of construction work from the small business concerns used in preparing and submitting to the contracting agency the bid or proposal, in the same amount and quality used in preparing and submitting the bid or proposal; and (ii) provide to the contracting officer a written explanation if the offeror or bidder fails to acquire articles, equipment, supplies, services, or materials or obtain the performance of construction work as described in (i). Section 1331, Reservation of Prime Contract Awards for Small Businesses, directs that the FAR be amended to permit the setting aside of orders or parts of orders placed against a multiple award contract for small business concerns notwithstanding the fair opportunity requirements (see paragraph (b)(1) of FAR , Ordering). Section 1334, Payment of Subcontractors, require a prime contractor that has to prepare small business subcontracting plans to notify the contracting officer if it pays a reduced price to a subcontractor for goods and services upon completion of the responsibilities of the subcontractor or pays the subcontractor more than 90 days late. The contractor must provide the reason for paying a reduced price or paying late, and if the contracting officer decides the reason is unjustified, he or she will consider this when evaluating the performance of the prime contractor. Vivina McVay, Editor-in Chief 2010 by Panoptic Enterprises. All rights reserved. Reproduction, photocopying, storage, or transmission by any means is prohibited by law without the express written permission of Panoptic Enterprises. Under no circumstances should the information contained in Federal Contracts Perspective be construed as legal or accounting advice. If a reader feels expert assistance is required, the services of a professional counselor should be retained. The Federal Contracts Perspective is published monthly by Panoptic Enterprises, P.O. Box 11220, Burke, VA October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 2

3 If the contracting officer determines that a prime contractor has a history of unjustified untimely payments to contractors, the contracting officer shall record the identity of the contractor in the Federal Awardee Performance and Integrity Information System (FAPIIS) (see the April 2010 Federal Contracts Perspective article Contracting Officers to Check Federal Awardee Performance and Integrity Information System ). Section 1335, Repeal of Small Business Competitiveness Demonstration Program, repeals the portion of the Business Opportunity Development Reform Act of 1988 (Public Law ) that established the Small Business Competitiveness Demonstration Program (see FAR Subpart 19.10). The Small Business Competitive Demonstration Program prohibits 10 major agencies (such as the Departments of Defense and Health and Human Services) from setting aside acquisitions for construction, non-nuclear ship repair, architectural and engineering services, refuse systems and related services, and landscaping and pest control services. Section 1341, Policy and Presumptions, establishes the presumption of loss to the United States whenever a business other than a small business willfully sought and received a small business set-aside award. A submission of a bid or proposal for a federal contract, subcontract, cooperative agreement, cooperative research and development agreement, or grant that is set aside for small businesses will be deemed affirmative, willful, and intentional certifications of small business size and status, as will registering as a small business in any federal electronic database. In addition, an authorized official of the contractor must execute a certification concerning the contractor s small business size and status for each solicitation, bid, or application for a federal contract, subcontract, or grant. Section 1342, Annual Certification, requires that each business certified as a small business concern under this Act shall annually certify its small business size and, if appropriate, its small business status, by means of a confirming entry on the Online Representations and Application [ORCA] database ( (see FAR Subpart 4.12, Representations and Certifications). Section 1344, Updated Size Standards, requires that the SBA review and adjust as necessary every small business size standard at least once every five years. FAC EXEMPTS COMMERCIAL IT FROM BAA Federal Acquisition Circular (FAC) has amended the FAR to authorize exemption from the Buy American Act (BAA) acquisition of construction material that is commercial information technology (IT). Other rules in FAC involve equal opportunity for veterans, Iranian sanctions, termination for default reporting, award-fee language revision, offering construction requirements for the 8(a) program, and banning text messaging while driving. Buy American Exemption for Commercial Information Technology Construction Material: This interim rule amends FAR Subpart 25.2, Buy American Act Construction Materials, and two related clauses to implement Section 615 of the Consolidated Appropriations Act of 2010 (Public Law ), which states, In order to promote government access to 3 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

4 commercial information technology, the restriction on purchasing nondomestic articles, materials, and supplies set forth in the Buy American Act (41 U.S.C. 10a et seq.), shall not apply to the acquisition by the federal government of information technology that is a commercial item This same exemption has appeared every year since Fiscal Year 2004 (Section 535(a) of the Consolidated Appropriations Act of 2004 [Public Law ]). The Fiscal Year 2004 exemption was implemented through deviations by the individual agencies. Subsequently, regulations were published to implement the exemption for supplies (see paragraph (e) of FAR , Exceptions). However, the exemption for construction materials had not been previously implemented. The changes made to the FAR by this interim rule are based on the expectation that the exemption of commercial IT is likely to continue. The introduction to the rule states, If the exception does not appear in a future appropriations act, a prompt change to the FAR will be made to limit applicability of the exemption to the fiscal years to which it applies. The following are the changes made by this rule: Paragraph (a) of FAR , Exceptions, is amended to add the italicized words: When one of the following exceptions applies, the contracting officer may allow the contractor to acquire foreign construction materials without regard to the restrictions of the Buy American Act In addition, subparagraph (a)(4) is added: Information technology that is a commercial item. The restriction on purchasing foreign construction material does not apply to the acquisition of information technology that is a commercial item, when using Fiscal Year 2004 or subsequent fiscal year funds (Section 535(a) of Division F, Title V, Consolidated Appropriations Act, 2004, and similar sections in subsequent appropriations acts). Subparagraph (b)(4) of FAR , Buy American Construction Materials, is amended to add the italicized words: This requirement does not apply to information technology that is a commercial item or to the construction materials or components listed by the government as follows Paragraph (b)(3) of FAR , Buy American Act Construction Materials under Trade Agreements, is amended to add the italicized words: The requirement in paragraph (b)(2) of this clause does not apply to information technology that is a commercial item or to the construction materials or components listed by the government as follows Comments on the interim rule must be submitted no later than November 29, 2010, identified as FAC , FAR Case , by any of the following methods: (1) the Federal erulemaking Portal: (2) fax: ; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC Equal Opportunity for Veterans: This interim rule revises FAR Subpart 22.13, Equal Opportunity for Veterans (formerly titled Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans ), to implement Department of Labor (DOL) affirmative action regulations (Title 41 of the Code of Federal Regulations [CFR], , Annual Report from Federal Contractors), that (1) eliminated Vietnam-era veterans as a separate protected category and expanded coverage to veterans who served on active duty during a war or in a campaign or October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 4

5 expedition for which a campaign badge has been authorized ; and (2) requires annual reporting using the VETS-100A, Federal Contractor Veterans Employment Report, in place of the VETS- 100 (see the June 2008 Federal Contracts Perspective article New Regs Address Veterans Employment, Ownership ). The interim rule makes the changes to the broad categories of veterans afforded protection and the reporting requirements throughout FAR Subpart 22.13; to FAR , Equal Opportunity for Veterans (formerly Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans ); and to FAR , Employment Reports on Veterans (formerly Employment Reports on Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans ). Comments on the interim rule must be submitted no later than November 29, 2010, identified as FAC , FAR Case , by any of the following methods: (1) the Federal erulemaking Portal: (2) fax: ; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC Award-Fee Language Revision: This finalizes, with a clarifying change, the interim rule that revised FAR Subpart 16.4, Incentive Contracts, to improve the use of award fee contracts. Seven respondents submitted comments on the interim rule, and two respondents commented that the rule needed to clarify whether an unsatisfactory evaluation in one category requires an overall unsatisfactory rating and thus no award fee in any category for the evaluation period (for example, whether a contractor rated below satisfactory in schedule performance could be entitled to award fee if it is rated above satisfactory for cost and/or technical performance). In response to the two comments, the final rule modifies FAR , General, to add in the aggregate to paragraph (e)(2) ( The amount of award fee earned shall be commensurate with the contractor s overall cost, schedule, and technical performance in the aggregate as measured against contract requirements ); in the five adjectival ratings in Table 16-1 ( Contractor has exceeded almost all of [many of, some of, has met, has failed to meet] the significant award-fee criteria and has met [failed to meet] overall cost, schedule, and technical performance requirements of the contract in the aggregate... ) (Table 16-1 immediately follows paragraph (e)(3)(iv)); and paragraph (e)(3)(v) ( [Award-fee plans shall] prohibit earning any award fee when a contractor s overall cost, schedule, and technical performance in the aggregate is below satisfactory ) (emphasis added). For more on the interim rule, see the November 2009 Federal Contracts Perspective article FAC Provides Guidance on Use of Award Fees. Certification Requirement and Procurement Prohibition Relating to Iran Sanctions: This interim rule implements requirements of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (Public Law ) that: (1) require prospective contractors to certify they have not engaged in any action for which sanctions may be imposed under the Iran Sanctions Act of 1996 (see the new FAR , Iran Sanctions Act); and (2) prohibit agencies from entering into or extending contracts for goods or services with persons that export certain sensitive technology to Iran as determined by the President and listed on the Excluded Parties List System (EPLS) ( (see new FAR , Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, Section 106). 5 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

6 This rule adds new FAR , Prohibition on Contracting with Entities that Engage in Certain Activities Relating to Iran; new provision FAR , Prohibition on Engaging in Sanctioned Activities Relating to Iran Certification; and adds this new provision to the lists of required provisions in FAR , Annual Representations and Certifications, and FAR , Offeror Representations and Certifications Commercial Items. Also, the rule amends FAR Solicitation Provision and Contract Clause, to allow contractors to execute these certifications annually through the Online Representations and Certifications (ORCA) database ( Comments on the interim rule must be submitted no later than November 29, 2010, identified as FAC , FAR Case , by any of the following methods: (1) the Federal erulemaking Portal: (2) fax: ; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC Termination for Default Reporting: This rule finalizes, with changes, the interim rule that established procedures for contracting officers to provide contractor information into the Federal Awardee Performance & Integrity Information System (FAPIIS) module of the Past Performance Information Retrieval System (PPIRS) ( regarding defective cost or pricing data and terminations for cause or default. This rule amends FAR , Termination for Cause; FAR , Termination; FAR , Defective Cost or Pricing Data; FAR , Procedures; and FAR , Reporting Information, to implement these procedures. Four respondents submitted comments on the proposed rule, and the following changes were made to the final rule in response: The following sentence was proposed to be added to the end of paragraph (d) of FAR , Defective Cost or Pricing Data: When the contracting officer determines that the contractor submitted defective cost or pricing data, the contracting officer, in accordance with agency procedures, shall ensure that information relating to the determination is provided for inclusion in PPIRS in accordance with [FAR] (f) [procedures on contractor performance information]. The final rule adds the words contracting officer s final in front of determination to clarify when the contracting officer is to post this information: When the contracting officer determines that the contractor submitted defective cost or pricing data, the contracting officer, in accordance with agency procedures, shall ensure that information relating to the contracting officer s final determination is reported in accordance with (f). In addition, the following is added as the end of the paragraph: Agencies shall ensure updated information that changes a contracting officer s prior final determination is reported into the FAPIIS module of PPIRS in the event of a (1) contracting officer s decision in accordance with the Contract Disputes Act; (2) Board of Contract Appeals decision; or (3) court decision. In FAR (f)(1), the 10-day timeframe for posting information to FAPIIS is changed to three working days to be synonymous with the requirements of FAPIIS. In addition, the requirement that conversions be reported is changed to conversion of a termination for October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 6

7 default to a termination for convenience. Finally, subparagraph (f)(2) is added to address agency focal points. For more on the proposed rule, see the October 2009 Federal Contracts Perspective article Proposal for Entering More Information Into PPIRS. Offering a Construction Requirement 8(a) Program: This final rule amends FAR , Agency Offering, to conform to Small Business Administration (SBA) regulations that require offering letters for sole source construction requirements offered on behalf of a specific participant be submitted to the SBA district office servicing that concern. FAR had required that sole source offerings for construction requirements be submitted to the SBA District Office for the geographical area where the work was to be performed. Encouraging Contractor Policies to Ban Text Messaging While Driving: This interim rule implements Executive Order 13513, Federal Leadership on Reducing Text Messaging While Driving, by adding FAR Subpart 23.11, Encouraging Contractor Policies to Ban Text Messaging While Driving, and a new clause at FAR , Contractor Policy to Ban Text Messaging While Driving. FAR encourages contractors to conduct initiatives in a manner commensurate with the size of the business, such as: (i) establishment of new rules and programs or re-evaluation of existing programs to prohibit text messaging while driving; and (ii) education, awareness, and other outreach to employees about the safety risks associated with texting while driving. Comments on the interim rule must be submitted no later than November 29, 2010, identified as FAC , FAR Case , by any of the following methods: (1) the Federal erulemaking Portal: (2) fax: ; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC FAR RULE WOULD ADDRESS T&M/LABOR-HOUR CONTRACTS To relieve contracting officers of the mistaken impression that the fixed labor rates in the time-and-material/labor-hour contracts make them fixed price type contracts, it is proposed that the FAR be amended to state, once and for all, that time-and-materials contracts and labor-hour contracts are not fixed-price contracts. Government Accountability Office (GAO) Report , Minimal Compliance with New Safeguards for Time-and-Materials Contracts for Commercial Services and Safeguards Have Not Been Applied to GSA Schedules Program, dated June 2009 ( d09579.pdf), found that T&M [time-and-material] contracts for commercial services may be underreported based on a misunderstanding about contract type among contracting officials in most of the government agencies in our review. Some contracting officers had the incorrect belief that the fixed labor rate component of T&M contracts renders them fixed-price. In fact, some contracts in our sample were referred to in the contract file as firm fixed price labor hour, a contract type that does not exist. Also, GAO found a general lack of awareness among contracting officers of the requirement to prepare a determinations and findings (D&F) before using a T&M or labor-hour contract to acquire commercial services (FAR , Contract 7 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

8 Type). Based on this, GAO recommended to the Office of Federal Procurement Policy (OFPP) that the following actions be taken: Amend FAR Subpart 8.4, Federal Supply Schedules, to explicitly require the same safeguards for commercial T&M services that are required in FAR ; Provide guidance to contracting officials on the requirements in FAR for the detailed D&F for T&M or labor-hour contracts for commercial services, and encourage agencies to provide training regarding the D&F requirement; and Amend FAR Subpart 16.2, Fixed-Price Contracts, and FAR Subpart 16.6, Time-and- Materials, Labor-Hour, and Letter Contracts, to make it clear that contracts with a fixed hourly labor rate and an estimated ceiling price are T&M or labor-hour contracts, not fixedprice type contracts. OFPP officials agreed with GAO and, in response, the following changes are proposed: To FAR , Ordering Procedures for Services Requiring a Statement of Work, would be added the requirement for contracting officers to prepare a D&F that a fixed-price order is not suitable prior to issuing a T&M or labor-hour order against a federal supply schedule contract (paragraph (e)(3)). Paragraph (e)(4) would require that the D&F address the same issues as those in FAR for commercial acquisitions and FAR , Time-and- Materials Contracts. Paragraph (b)(4) would be added to FAR , which would cross-reference the D&F requirements in FAR (e). Paragraph (b) would be added to FAR , General [for fixed-price contracts], which would state, Time-and-materials contracts and labor-hour contracts are not fixed-price contracts. FAR , Scope [of FAR Subpart 16.6], would be added, and it would state, Time-andmaterials contracts and labor-hour contracts are not fixed-price contracts. Comments on the proposed rule must be submitted no later than November 26, 2010, identified as FAR Case , by any of the following methods: (1) the Federal erulemaking Portal: (2) fax: ; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC Besides the T&M and labor-hour proposed rule, two other proposed FAR rules were published in September: Truth in Negotiations Act Interest Calculations: This proposed rule would revise FAR , Price Reduction for Defective Certified Cost or Pricing Data Modifications Sealed Bidding, FAR , Price Reduction for Defective Certified Cost or Pricing Data, and FAR , Price Reduction for Defective Certified Cost or Pricing Data Modifications, to require that compound interest calculations be applied to government overpayments as a result of defective cost or pricing data. A Court of Appeals for the Federal Circuit decision in 2009 (Robert M. Gates, Secretary of Defense v. Raytheon Company, CAFC , September 14, 2009) addressed the method October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 8

9 of interest calculation on Cost Accounting Standards (CAS) cost impacts interest on CAS, citing the governing statute 26 U.S.C. 6621, Determination of Rate of Interest, which, in turn, cites 26 U.S.C. 6622, Interest Compounded Daily. Because the Truth in Negotiation Act (TINA) also references 26 U.S.C for interest calculation, this proposed rule would replace the term simple interest in these three clauses with the phrase Interest compounded daily as required by 26 U.S.C Comments on the proposed rule must be submitted no later than November 22, 2010, identified as FAR Case , by any of the following methods: (1) the Federal erulemaking Portal: (2) fax: ; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC Clarification of Standard Form 26, Award/Contract: This proposed rule would revise Standard Form 26, Award/Contract, to clarify that Block 18, Award, is to be used only in sealed bidding procurements. SF 26 has two blocks indicating whether the contractual instrument is bilateral ( Block 17, Contractor s Negotiated Agreement (Contractor is required to sign this document and return copies to issuing office) ) or unilateral ( Block 18, Award (Contractor is not required to sign this document) ). Block 18 is intended to be used only when sealed bidding is used, when the contracting officer accepts the sealed bid. However, contracting officers have mistakenly checked Block 18 when awarding negotiated contracts, creating the potential for disputes in situations where the contracting officer s intent is not to accept the terms of the offer in its entirety, contrary to the language in Block 18 ( Your offer on Solicitation Number, including the additions or changes made by you which additions or changes are set forth in full above, is hereby accepted as to the terms listed above and on any continuation sheets. This award consummates the contract which consists of the following documents: (a) the government s solicitation and your offer, and (b) this award/contract. No further contractual document is necessary. ). This proposed rule would add sealed bid to the title of Block 18, change offer to bid each time it occurs in Block 18, and add a new sentence at the end of the block stating that Block 18 should only be checked when awarding a sealed bid contract. These changes will not prohibit the use of the SF 26 for awarding negotiated procurements, only the use of Block 18 of the SF 26 when awarding negotiated procurements. Comments on the proposed rule must be submitted no later than November 8, 2010, identified as FAR Case , by any of the following methods: (1) the Federal erulemaking Portal: (2) fax: ; or (3) mail: General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, ATTN: Hada Flowers, Washington, DC For other recent changes to clarify SF 26, see the April 2010 Federal Contracts Perspective article FAC Extends FAR Subpart 13.5 Through Visit for more information on the rapidly-changing world of federal contracting! 9 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

10 USD(AT&L) DIRECTS DOD TO DO MORE WITHOUT MORE On September 14, 2010, Under Secretary for Defense for Acquisition, Technology & Logistics (USD(AT&L)) Ashton Carter issued a memorandum to all Department of Defense (DOD) acquisition professionals directing them to DO MORE WITHOUT MORE (sic). The memorandum, titled Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending, provides specific guidance for achieving the mandate outlined in his June 28, 2010, memorandum Better Buying Power: Mandate for Restoring Affordability and Productivity in Defense Spending delivering better value to the taxpayer and improving the way the Department does business (see the July 2010 Federal Contracts Perspective article A Plethora of Changes to DFARS in June ). We estimate that the efficiencies targeted by this guidance can make a significant contribution to achieving the $100 billion redirection of defense budget dollars from unproductive to more productive purposes that is sought by Secretary Gates and Deputy Secretary Lynn over the next five years. The guidance contains the following 23 principal actions to improve efficiency organized in five major areas: Target Affordability and Control Cost Growth o Mandate affordability as a requirement At Milestone A set affordability target as a Key Performance Parameter At Milestone B establish engineering trades showing how each key design feature affects the target cost o Drive productivity growth through Will Cost/Should Cost management o Eliminate redundancy within warfighter portfolios o Make production rates economical and hold them stable o Set shorter program timelines and manage to them Incentivize Productivity & Innovation in Industry o Reward contractors for successful supply chain and indirect expense management o Increase the use of fixed-price incentive fee (FPIF) contract type where appropriate using a 50/50 share line and 120% ceiling as a point of departure o Adjust progress payments to incentivize performance o Extend the Navy s Preferred Supplier Program to a DOD-wide pilot o Reinvigorate industry s independent research and development and protect the defense technology base Promote Real Competition o Present a competitive strategy at each program milestone o Remove obstacles to competition Allow reasonable time to bid Require non-certified cost and pricing data on single offers Require open system architectures and set rules for acquisition of technical data rights o Increase dynamic small business role in defense marketplace competition October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 10

11 Improve Tradecraft in Services Acquisition o Create a senior manager for acquisition of services in each component, following the Air Force s example o Adopt uniform taxonomy for different types of services o Address causes of poor tradecraft in services acquisition Assist users of services to define requirements and prevent creep via requirements templates Assist users of services to conduct market research to support competition and pricing Enhance competition by requiring more frequent re-compete of knowledge-based services Limit the use of time and materials and award fee contracts for services Require that services contracts exceeding $1 billion contain cost efficiency objectives o Increase small business participation in providing services Reduce Non-Productive Processes and Bureaucracy o Reduce the number of Office of the Secretary of Defense (OSD)-level reviews to those necessary to support major investment decisions or to uncover and respond to significant program execution issues o Eliminate low-value-added statutory processes o Reduce by half the volume and cost of internal and congressional reports o Reduce non-value-added overhead imposed on industry o Align Defense Contract Management Agency (DCMA) and Defense Contract Audit Agency (DCAA) processes to ensure work is complementary o Increase use of Forward Pricing Rate Recommendations (FPRRs) to reduce administrative costs There is every reason to believe the efficiencies we are seeking can be realized. It has taken years for excessive costs and unproductive overhead to creep into our business practices, but over the coming years we can surely work them out again. Those who hesitate to go down the road of greater efficiency must consider the alternative: broken or cancelled programs, budget turbulence, uncertainty and unpredictability for industry, erosion of taxpayer confidence that they are getting value for their defense dollar and, above all, lost capability for the warfighter in a dangerous world. Not only can we succeed: we must. DEFENSE PILES ON MORE CHANGES TO DFARS The Department of Defense (DOD) can t seem to help itself, issuing 11 rule changes to the Defense FAR Supplement (DFARS), one class deviation, and four memoranda on acquisition issues. DOD Office of the Inspector General Address: This final rule adds DFARS , Agency Office of the Inspector General, to provide the address for the DOD Office of the Inspector General as referenced in FAR , Contractor Code of Business Ethics and Conduct. The address is: DOD Office of the Inspector General, Investigative Policy and 11 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

12 Oversight, 400 Army Navy Drive, Suite 1037, Arlington, VA (toll-free telephone: ). Administrative Matters: This final rule: (1) adds DFARS , Electronic Document Access, to direct contracting officers to the location of procedures relating to obtaining an account in the Electronic Document Access system (it is in Procedures, Guidance and Information (PGI) ); and (2) adds DFARS , Cross Reference to Federal Procurement Data System, to provide the location of guidance on a uniform contract indexing methodology across DOD (it is in PGI ). Government-Assigned Serial Number Marking: This final rule adds DFARS , Policy for Assignment of Government-Assigned Serial Numbers, and an associated clause at DFARS , Use of Government-Assigned Serial Numbers, to require contractors to apply government-assigned serial numbers in human-readable format on major end items when required by law, regulation, or military operational necessity. These additions establish a standard DOD method of specifying government-assigned serial numbers contractually and require the contractor to associate these serial numbers with the Unique Item Identifier (UII) assigned by the contractor and to register them in the DOD Item Unique Identification (IUID) Registry along with the UII. No comments were submitted in response to the proposed rule, so it is adopted without changes. For more on the proposed rule, see the May 2010 Federal Contracts Perspective article DOD Rolls Out More Policies and Regulations. Guidance on Personal Services: This interim rule implements Section 831 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (Public Law ), Development of Guidance on Personal Services Contracts, which requires the Secretary of Defense to develop guidance to: (1) require a clear distinction between employees of the Department of Defense and employees of Department of Defense contractors; (2) provide appropriate safeguards with respect to when, where, and to what extent the Secretary may enter into a contract for the procurement of personal services; and (3) assess and take steps to mitigate the risk that, as implemented and administered, non-personal services contracts may become personal services contracts. To implement Section 831, the following are added to the DFARS: DFARS , Purchase Descriptions for Service Contracts, is added to require that purchase descriptions for service contracts and resulting requirements documents, such as statements of work or performance work statements, clearly distinguish between government employees and contractor employees. Service contracts shall require contractor employees to identify themselves as contractor personnel by introducing themselves or being introduced as contractor personnel and by displaying distinguishing badges or other visible identification for meetings with government personnel. In addition, contracts shall require contractor personnel to appropriately identify themselves as contractor employees in telephone conversations and in formal and informal written correspondence. DFARS , Agency-Head Responsibilities, is added to require DOD agencies to adopt procedures that: (1) ensure that requirements for service contracts are vetted and approved October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 12

13 as a safeguard to prevent contracts from being awarded or administered in a manner that constitutes an unauthorized personal services contract. Contracting officers shall follow the procedures at PGI , include substantially similar certifications in conjunction with service contract requirements, and place the certification in the contract file ; and (2) require the program manager or other official responsible for the requirement to execute the certification. Comments on this interim rule must be submitted no later than November 8, 2010, identified as DFARS Case 2009-D028, by any of the following methods: (1) the Federal erulemaking Portal: (2) dfars@osd.mil; (3) fax: ; or (4) mail: Defense Acquisition Regulations Council, Attn: Meredith Murphy, OUSD (AT&L) DPAP (DARS), 3060 Defense Pentagon, Room 3B855, Washington, DC Acquisition Strategies To Ensure Competition Throughout the Life Cycle of Major Defense Acquisition Programs: This finalizes, without changes, the interim rule that added paragraph (S-72) to DFARS , Additional Requirements for Major Systems, to implement Section 202 of the Weapon Systems Acquisition Reform Act of 2009 (Public Law ). Section 202 directs the Secretary of Defense to ensure that the acquisition strategy for each major defense acquisition program (MDAP) includes: (1) measures to ensure competition at both the prime contract and subcontract level of the MDAP throughout its life cycle as a means to improve contractor performance; and (2) adequate documentation of the rationale for selection of the subcontractor tier or tiers. Besides identifying these requirements, paragraph (S-72) states that the following are measures to ensure competition, or the option of competition: (1) competitive prototyping; (2) dual-sourcing; (3) unbundling of contracts; (4) funding of next-generation prototype systems or subsystems; (5) use of modular, open architectures to enable competition for upgrades; (6) use of build-to-print approaches to enable production through multiple sources; (7) acquisition of complete technical data packages; (8) periodic competitions for subsystem upgrades; (9) licensing of additional suppliers; and (10) periodic system or program reviews to address longterm competitive effects of program decisions. No comments were submitted on the interim rule, so it is finalized without changes. For more on the interim rule, see the March 2010 Federal Contracts Perspective article DOD Addresses Procurements on Its Behalf, Competition. Payment of Costs Prior to Definitization: This finalizes, without changes, the interim rule that amended DFARS , Definitions [for undefinitized contract actions], to implement Section 812 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law ), which made the limitations on payment of costs prior to definitization of unpriced change orders applicable to all categories of undefinitized contractual actions, including undefinitized task orders and delivery orders. The rule does this by adding task orders and delivery orders to the definition of contract action in paragraph (a). Also, the rule specifically excludes from the definition change orders, administrative changes, funding modifications, or any other contract modifications that are within the scope and under the terms of the contract, e.g., engineering change proposals, value engineering change proposals, and over and above work requests as described in [DFARS] Subpart [Over and Above Work]. 13 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

14 No comments were submitted on the interim rule, so it is finalized without changes. For more on the interim rule, see the April 2010 Federal Contracts Perspective article Multitude of DOD Regulations and Deviations Issued. Additional Requirements Applicable to Multiyear Contracts: This finalizes, with minor editorial corrections, the interim rule that amended DFARS , Multiyear Contracts for Supplies, to implement Section 811 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law ), which requires the Secretary of Defense to make certain cost savings determinations with regard to a multiyear contract greater than or equal to $500 million. No comments were submitted in response to the interim rule, so it is finalized with two corrections to paragraph references and one verb tense correction (change are to is ). For more on the interim rule, see the April 2010 Federal Contracts Perspective article Multitude of DOD Regulations and Deviations Issued. Government Rights in the Design of DOD Vessels: This finalizes, without changes, the interim rule that amended DFARS Subpart , Rights in Technical Data, and corresponding clauses at DFARS , Rights in Technical Data Noncommercial Items, and DFARS , Technical Data Commercial Items, to implement Section 825 of the National Defense Authorization Act for Fiscal Year 2009 (Public Law ) and the Vessel Hull Design Protection Amendments of 2008 (Public Law ). The two statutory provisions are similar in substance and language in that they both clarify the government s technical data rights in the designs of DOD vessels, boats, craft, and components. No comments were submitted on the interim rule, so it is finalized without changes. For more on the interim rule, see the December 2009 Federal Contracts Perspective article DOD Ties Up Some Loose Ends. Motor Carrier Fuel Surcharge: This finalizes, with changes, the interim rule that added DFARS , Pass-Through of Motor Carrier Fuel Surcharge Adjustment to the Cost Bearer, to implement Section 884 of the National Defense Authorization Act for Fiscal Year 2009 (Public Law ). Section 884 requires DOD to take appropriate actions to ensure that, to the maximum extent practicable, in all carriage contracts that provide for a fuel-related adjustment, any such adjustment is passed through to the person who bears the cost of the fuel to which the adjustment relates. DFARS requires the contractor to include the substance of the clause in all subcontracts with motor carriers, brokers, or freight forwarders. Two respondents submitted comments on the interim rule and, as a result, DFARS is amended to add Unless an exception is authorized by the contracting officer to Unless an exception is authorized by the contracting officer, the contractor shall pass through any motor carrier fuel-related surcharge adjustments to the person, corporation, or entity that directly bears the cost of fuel for shipment(s) transported under this contract. This change is made because Section 884 provides that the Secretary of Defense shall take appropriate actions to ensure that, to the maximum extent practicable, in all carriage contracts in which a fuel-related adjustment is provided for, any fuel-related adjustment is passed through to the person who bears the cost of the fuel that the adjustment relates to (emphasis added). Because the statutory language recognizes there may be limited instances where pass-through of fuel surcharge may not be feasible, this change provides the contracting officer with the needed flexibility when confronted with these instances. October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 14

15 For more on the interim rule, see the August 2009 Federal Contracts Perspective article Tidal Wave of DFARS Changes in July. Patents, Data, and Copyrights: This proposed rule would amend DFARS Part 227, Patents, Data, and Copyrights, to simplify and clarify the text; remove text and clauses that are obsolete or unnecessary; relocate and integrate the coverage for computer software and computer software documentation with the coverage for technical data to eliminate redundant coverage for these subjects while retaining the necessary distinctions; eliminate or combine the clauses associated with technical data and computer software, consistent with the revised and streamlined regulatory coverage; relocate, reorganize, and clarify the coverage for rights in works; and relocate to the PGI text that is not regulatory in nature and does not affect the public. Comments on this proposed rule must be submitted no later than November 26, 2010, identified as DFARS Case 2010-D001, by any of the following methods: (1) the Federal erulemaking Portal: (2) (3) fax: ; or (4) mail: Defense Acquisition Regulations Council, Attn: Amy Williams, OUSD (AT&L) DPAP (DARS), 3060 Defense Pentagon, Room 3B855, Washington, DC Material Inspection and Receiving Report: This proposed rule would update DFARS Appendix F, Material Inspection and Receiving Report, to incorporate procedures for using the electronic Wide Area Workflow (WAWF) Receiving Report required for use in most contracts in lieu of the DD Form 250, Material Inspection and Receiving Report, which is now used mostly on an exception basis. The proposed rule would provide new coverage on the use, preparation, and distribution of the electronic WAWF receiving report, which is the primary method for documenting acceptance and distribution of shipments. In addition, the rule also would address WAWF capability to provide the following: Item Unique Identification (IUID): When DFARS , Item Identification and Valuation, is used in the contract and requires reporting of IUID data, WAWF captures the IUID data and forwards the data to the IUID registry after acceptance. WAWF may be used to report Unique Item Identifiers (UIIs) at the line item level and also UIIs embedded at the line item level. Radio Frequency Identification (RFID): When DFARS , Radio Frequency Identification, is used in the contract, WAWF captures the RFID information and forwards the data to the receiving location. Using WAWF is the only way a contractor can comply with the clause to furnish RFID data via an Advance Shipping Notice. Insertion of the new WAWF coverage necessitates relocating and renumbering existing coverage for use, preparation, and distribution of the DD Form 250 and the DD Form 250-1, Tanker/Barge Material Inspection and Receiving Report. Comments on this proposed rule must be submitted no later than November 16, 2010, identified as DFARS Case 2009-D023, by any of the following methods: (1) the Federal erulemaking Portal: (2) dfars@osd.mil; (3) fax: ; or (4) mail: Defense Acquisition Regulations Council, Attn: Meredith Murphy, OUSD (AT&L) DPAP (DARS), 3060 Defense Pentagon, Room 3B855, Washington, DC Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

16 Class Deviation on Additional Contractor Requirements and Responsibilities Relating to Alleged Crimes by or Against Contractor Personnel in Iraq and Afghanistan: This class deviation replaces and supersedes the 2009 class deviation for contracts performed in Iraq and Afghanistan (see the January 2010 Federal Contracts Perspective article Slew of DOD Memos and DFARS Changes ). This deviation provides a revised prescription and replacement DFARS , Addition Requirements and Responsibilities Related to Alleged Crimes by or Against Contractor Personnel in Iraq and Afghanistan. The replacement clause provides information to contractor personnel who perform work on a contract in Iraq or Afghanistan, before beginning such work, about (1) how and where to report an alleged crime, and (2) where to seek assistance. Contract Destination Acceptance Procedures: This memorandum is in response to a review of data on 130,000 contracts with destination acceptance that showed that 7% of the destination acceptance could not be identified, and that 20% of the ones that did exist did not have acceptors registered in WAWF. Clearly some requiring activities and contracting officers are articulating requirements and issuing contracts without ensuring that an adequate process is in place to accept goods and services and properly pay the contractor. As a result of this review, the following corrective actions are ordered: Components shall ensure: o There is a registered acceptor available in WAWF to perform acceptance at each location that receives shipments and prioritize assignment of acceptors in WAWF to the activities with the most direct vendor shipments. o That requiring activities verify that the Department of Defense Activity Address Code (DODAAC) to which supplies are to be shipped is valid, prior to submitting a requisition or procurement request. Contracting activities shall: o Verify each DODAAC in a solicitation or contract. DODAACs can be verified at o Prior to assigning acceptance responsibility, ensure there is a registered acceptor available in WAWF for each acceptance point DODAAC or ensure other procedures are in place for acceptance (pending WAWF implementation at that location in compliance with DFARS Part 232, Contract Financing, and DFARS Part 246, Quality Assurance, as well as DFARS Appendix F, Material Inspection and Receiving Report. When no WAWF acceptor is available at destination, the contracting activity shall use source acceptance or acceptance at other in WAWF. WAWF acceptors can be verified at o Review contract distribution procedures to ensure compliance with the Electronic Document Access requirements in PGI , Procedures [for contract distribution]. Contracting officer shall ensure: o Destinations are not designated to perform acceptance when the destination is a contractor, but shall instead clearly designate a government acceptance point within Section E of the contract schedule, Inspection and Acceptance. October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 16

17 o The acceptance procedures are clearly defined in Section E. o Acceptance documentation is included as a permanent part of the contract file prior to contract closure. Guidance Regarding Purchases from Federal Prison Industries (FPI): This memorandum reminds contracting officers that Section 827 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law ) requires DOD to publish a list of product categories for which the FPI share of the DOD market is greater than 5%, and that products on the list must be competed in accordance with DFARS Subpart 208.6, Acquisition from Federal Prison Industries, Inc. (see the April 2010 Federal Contracts Perspective article Multitude of DOD Regulations and Deviations Issued ). For FPI products not on the list of items to be competed, contracting officers are reminded of the responsibility to conduct market research activities and make comparability determinations as required by Section 811 of the National Defense Authorization Act for Fiscal Year 2002, Public Law , and implemented in the Federal Acquisition Regulation [Policy]. Contracting officers shall use competitive procedures if a determination is made that the FPI product is not comparable to the private sector in terms of price, quality, or time of delivery. In conducting such a competition or a competition resulting from Section 827 requirements, contracting officers shall include FPI in the solicitation process and consider a timely offer from FPI. If the FPI product is determined to be comparable, contracting officers shall purchase the FPI product following the ordering procedures at unless a waiver is obtained in accordance with FAR [Waivers]. The DOD website for FPI procurement policy is at specific_policy_areas.html. Mandatory Use of AbilityOne Program Contract Closeout Services: This memorandum announces that the AbilityOne program Contract Closeout Support Services indefinitedelivery/indefinite-quantity (IDIQ) contract was awarded by the Army and must be used by all DOD components when outsourcing contract closeout services. The IDIQ contract provides non-inherently governmental contract closeout support and creates career-oriented, upwardly mobile employment opportunities for people who are blind or who have other significant disabilities, to include wounded warriors and service-disabled veterans. This contract fulfills a critical need for the department by reducing the contract closeout administrative workload and allowing the contracting workforce to focus resources on critical mission support to the warfighter. Assignment of Call Order Codes for DOD Contracts: This memorandum announces that call order codes on the Defense Procurement Acquisition Policy (DPAP) website have become outdated and inaccurate. Call order codes are prescribed by paragraph (d) of DFARS , Supplementary PII [procurement instrument identification] Numbers, to uniquely identify task or delivery orders places, but it has been discovered that different components often share the same call order code. Therefore, the call order codes have been updated and reassigned. The new list of call order code assignments is at assignments.html. Orders already awarded using previous call order codes need not be changed contacted directly by DPAP to correct a duplication. 17 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

18 DEAR IMPLEMENTS SUSTAINABLE ACQUISITION The Department of Energy (DOE) is amending the DOE Acquisition Regulation (DEAR) to implement Executive Order 13514, Federal Leadership in Environmental, Energy and Economic Performance, to leverage agency acquisitions to foster markets for sustainable technologies and energy efficient and environmentally sustainable materials, products, and services (for more on Executive Order 13514, see the November 2009 Federal Contracts Perspective article President Sets Sustainability Goals for Government ). This DEAR amendment will supplement the sustainable acquisition regulations that will soon be added to FAR Part 23, Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and Drug- Free Workplace. The following changes are being made to the DEAR by this interim rule: DEAR Subpart 907.1, Acquisition Plans, is added. It consists of paragraph (b)(16) of DEAR , Environmental and Energy Conservation Objectives, and states, Incorporate sustainable building considerations including building location and regional planning considerations into planning for new federal facilities and leases. DEAR , Policy, is added to restate a requirement of Executive Order 13423, Strengthening Federal Environmental, Energy, and Transportation Management, that requires contracts for the operation of government-owned facilities or government-owned motor vehicle fleets to include provisions that obligate the contractor to comply with the requirements of Executive Order to the same extent as the federal agency would be required to comply if the agency operated the facility or fleet. Also, it requires that DEAR , Executive Order 13423, Strengthening Federal Environmental, Energy, and Transportation Management, be included in contracts for contractor operation of a DOE facility or motor vehicle fleet. (For more on Executive Order 13423, see the February 2007 Federal Contracts Perspective article President Orders Federal Energy Conservation. ) DEAR Subpart 923.1, Sustainable Acquisition, is added to explain DOE s sustainable acquisition program and to prescribe the inclusion of new DEAR , Sustainable Acquisition Program, or its Alternate I, in all contracts under which the contractor operates government-owned facilities or government-owned fleets, or performs construction at a government-owned facility. DEAR Subpart 923.4, Use of Recovered Materials, is removed because it will be duplicative of the forthcoming FAR Subpart DEAR Subpart 923.7, Contracting for Environmentally Preferable and Energy Efficient Products and Services, is removed because it is outdated. DEAR Subpart 923.9, Contractor Compliance with Environmental Management Systems, is added to implement the forthcoming FAR Subpart DEAR Subpart 936.2, Special Aspects of Contracting for Construction, is added. It consists of DEAR , Specifications, which states, When developing specifications for the October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 18

19 work to be performed, plan for ways to ensure that construction and demolition debris can be diverted or recycled in sufficient quantities as to ensure that the agency goal from Section 2(e) of Executive Order of diverting at least 50% of the debris stream may be attained. The following changes are made to DEAR Part 970, DOE Management and Operating contracts: DEAR , Sustainable Acquisition is added. Essentially, it duplicates DEAR Subpart DEAR , Contract Clauses, prescribes new DEAR , Executive Order 13423, Strengthening Federal Environmental, Energy, and Transportation Management (which duplicates DEAR ), and new DEAR , Sustainable Acquisition Program (which duplicates DEAR ). DEAR , Contracting for Environmentally Preferable and Energy Efficient Products and Services, is removed. DEAR , Affirmative Procurement Program, is removed. DEAR , DOE Motor Vehicle Fleet Fuel Efficiency, is removed. Comments on this interim rule must be submitted no later than October 22, 2010, identified as RIN 1991-AB95, by any of the following methods: (1) the Federal erulemaking Portal: (2) or (3) mail: Richard Langston, MA-61, U.S. Department of Energy, 1000 Independence Avenue, SW, Washington, DC HOMELAND SECURITY UNDERTAKES REVISION INITIATIVE The Department of Homeland Security (DHS) is undertaking a DHS Acquisition Regulation (HSAR) revision initiative to align the existing content with the FAR; to implement Section 695 of the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA) (Public Law ); to clarify agency acquisition regulations; and to provide editorial corrections. Among the more significant changes being proposed to the HSAR are: Amending HSAR , Copies, to provide information for accessing the HSAR online and to add an internet site for accessing the Homeland Security Acquisition Manual (HSAM) ( The HSAR is also available in electronic form at A convenient but unofficial up-to-date version of the HSAR is also available from the Government Printing Office at The Homeland Security Acquisition Manual (HSAM), which complements the HSAR, can also be found at ). Adding HSAR , Contractor Award Announcements, Advertisements, and Releases, to address the DHS policy that precludes contractors from referring to DHS contracts in commercial advertising in a manner that states or implies the government approves or endorses the product or service or considers it superior to other products or services. 19 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010

20 Adding HSAR Subpart , Other Than Full and Open Competition, to implement Section 695 of the PKEMRA, which restricts to 150 days the period of performance of contracts above the simplified acquisition threshold that have been entered into by DHS to facilitate the response and recovery from a natural disaster, act of terrorism, or other man-made disaster, where the award was made with other than full and open competition under FAR , Unusual and Compelling Urgency. Adding HSAR , Definitions, to identify the head of the contracting activity (HCA) as the debarring and suspending official without authority to redelegate. Adding HSAR , Requirements, to provide information regarding DHS sustainable practices policy. Removing HSAR Part 3045, Government Property, which was made obsolete by the FAR Part 45 rewrite (see the June 2007 Federal Contracts Perspective article FAR Coverage on Government Property Simplified, Clarified, Trimmed ). Amending HSAR Part 3052, Solicitation Provisions and Contract Clauses, as follows: Add the following note to HSAR , Using Part 3052: The solicitation provisions and contract clauses matrix referencing all HSAR provisions and clauses is available at under Policy and Regulations, Homeland Security Acquisition Regulation (HSAR). Add HSAR XX Instructions for Contractor Disclosure of Violations. Add HSAR XX Advertisements, Publicizing Awards, and Releases, and its Alternate I. Add HSAR XX, Contract Terms and Conditions Applicable to DHS Acquisition of Commercial Items. Amend HSAR , Determination of Award Fee, to delete the content addressing rollover of award fee amounts from one period to subsequent periods (to align with the Office of Federal Procurement Policy (OFPP) memorandum Appropriate Use of Incentive Contracts, issued December 4, 2007). Delete HSAR , Dissemination of Contract Information, because its procedures will be incorporated into HSAR XX. Delete HSAR , Government Property Reports, because it is obsolete with the removal of HSAR Part Comments on this proposed rule must be submitted no later than November 12, 2010, identified as DHS , by either of the following methods: (1) the Federal erulemaking Portal: (2) or mail to the Department of Homeland Security, Office of the Chief Procurement Officer, Acquisition Policy and Legislation, ATTN: Teresa McConahie, 245 Murray Drive, Bldg. 410 (RDS), Washington, DC October 2010 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 20

21 TAKE ADVANTAGE OF THE ECONOMIC STIMULUS! 426 pages, 2009, ISBN: , $49.95 from Panoptic Enterprises ( and from Amazon.com To see: Table of Contents, go to Index, go to Sample Chapters: Chapter 11, Set-Asides and Preference Programs, go to Chapter 13, Federal Supply Schedules, go to 21 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE October 2010