FEDERAL CONTRACTS PERSPECTIVE Federal Acquisition Developments, Guidance, and Opinions

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1 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE Federal Acquisition Developments, Guidance, and Opinions Vol. XIV, No. 4 April 2013 DOD IMPLEMENTS PROPOSAL ADEQUACY CHECKLIST, TWO TRADE AGREEMENTS The Department of Defense (DOD) took a much needed break in its amending of the Defense Federal Acquisition Regulation Supplement (DFARS) during March all it did was issue four final rules that: (1) add a proposal adequacy checklist for solicitations that require the submission of cost or pricing data; (2) implement the Korea Free Trade Agreement; (3) implement the Colombia Free Trade Agreement; and (4) revise the definition CONTENTS of produce as it applies to specialty metals. DOD Implements Proposal Adequacy Checklist... 1 Small Business Protest Procedures Proposed... 3 FAR Change to Address Defense Base Act... 6 DOD Lists FPI s Items to be Competed... 6 Proposal Adequacy Checklist: This final rule adds DFARS , Proposal Adequacy Checklist, which contracting officers should include in solicitations that require the submission of certified cost or pricing data (see Federal Acquisition Regulation [FAR] , Obtaining Certified Cost or Pricing Data) to ensure offerors take responsibility for submitting thorough, accurate, and complete proposals. This implements one of DOD s Better Buying Power initiatives (see the October 2010 Federal Contracts Perspective article USD(AT&L) Directs DOD to Do More Without More ). DFARS does not impose any new reporting requirements, and it does not duplicate, overlap, or conflict with any other federal rules. The Proposal Adequacy Checklist includes 36 pieces of information that the offeror must address. Each of the 36 provides a reference to the FAR or DFARS provision that requires the information, a description of the information, and a place for the offeror to provide the page number in the proposal where that information is included or to provide an explanation of why the information is not included. For example, item 5 references FAR [Solicitation Provisions and Contract Clauses], Table 15-2 [Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data are Required], Section I [General Instructions] Paragraph B [ In submitting your proposal, you must include an index, appropriately referenced, of all the certified cost or pricing data and information accompanying or identified in the proposal ]; identifies the required information ( Is an Index of all certified cost or pricing data and information accompanying or identified in the proposal provided and appropriately referenced? ); and then provides space for the offeror to identify the proposal page where the index is or explain why there is no index. United States-Korea Free Trade Agreement: This final rule amends DFARS part 225, Foreign Acquisition, and the corresponding provisions and clauses in DFARS to

2 implement the United States-Korea Free Trade Agreement Implementation Act (Public Law ). This does so by adding the Republic of Korea to the definition of Free Trade Agreement country. The Republic of Korea is already party to the World Trade Organization Government Procurement Agreement (WTO GPA). The WTO GPA threshold for the acquisition of supplies and services is $202,000. The Korea Free Trade Agreement (FTA) threshold for the acquisition of supplies and services is $100,000. Therefore, the Korea FTA applies to supplies and services between $100,000 and the current WTO GPA threshold of $202,000, thus lowering the threshold for waiver of the applicability of the Buy American Act. The Korea FTA threshold for the acquisition of construction is $7,700,000, the same as the WTO GPA threshold for construction and the threshold for most other FTAs. The Korea FTA $100,000 threshold for supplies and services is higher than the threshold for supplies and services for most FTAs ($77,494), but not as high as the Bahrain, Morocco, and Peru FTA threshold for supplies and services ($202,000). Therefore, new alternates are added for DFARS , Photovoltaic Devices; DFARS , Photovoltaic Devices Certificate; DFARS , Buy American Act Free Trade Agreements Balance of Payments Program Certificate; and DFARS , Buy American Act Free Trade Agreements Balance of Payments Program, to cover acquisitions valued at $77,494 or more but less than $100,000. In that dollar range, all FTAs are applicable, except for the Bahrain, Korea, Morocco, and Peru FTAs. United States Colombia Trade Promotion Agreement: This interim rule revises DFARS part 225, Foreign Acquisition, and the corresponding provisions and clauses in DFARS to implement the United States Colombia Trade Promotion Agreement (Public Law ) (referred to in the FAR and DFARS as the Colombia FTA). This does so by adding Colombia to the definition of Free Trade Agreement country. The Colombia FTA threshold for the acquisition of supplies and services is $77,494, the same as the threshold for most other FTAs. The Colombia FTA threshold for the acquisition of construction is $7,700,000, the same as the WTO GPA threshold for construction and the threshold for most other FTAs. Therefore, the only changes that need to be made to implement Public Law is to add Colombia to the definition of Free Trade Agreement country in DFARS , Photovoltaic Devices; DFARS , Trade Agreements; and DFARS , Balance of Payments Program Construction Material Under Trade Agreements. Comments on this interim rule must be submitted no later than July 23, 2013, identified as DFARS Case 2012-D032, by any of the following methods: (1) the Federal erulemaking Portal: (2) (3) fax: ; or (4) mail: Defense Acquisition Regulations System, Attn: Amy Williams, OUSD(AT&L)DPAP/ DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC Vivina McVay, Editor-in Chief 2013 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 April 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 2

3 Definition of Produce as It Applies to Specialty Metals: This rule revises the definition of produce as it applies to specialty metals in DFARS , Restriction on Acquisition of Specialty Metals, and DFARS , Restriction on Acquisition of Certain Articles Containing Specialty Metals. DFARS and DFARS defined produce as the application of forces or processes to a specialty metal to create the desired physical properties through quenching or tempering of steel plate, gas atomization or sputtering of titanium, or final consolidation of non-melt derived titanium powder or titanium alloy powder. Section 823 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2011 (Public Law ) required the secretary of defense to review the definition of produce as it applies to the production of specialty metals to ensure its compliance with the statutory restrictions on specialty metals and to determine if a revision to the definition was necessary and appropriate. DOD proposed to amend the definition to eliminate the phrase quenching and tempering of armor steel plate, and to expand the application of the other listed technologies, which were restricted just to titanium and titanium alloys, to any specialty metal that could be formed by such technologies. The proposed revised definition was Produce means the gas atomization, sputtering, or final consolidation of non-melt derived metal powders. Comments on the proposed revised definition were sought, and 13 respondents submitted comments. In response to the comments, the phrase gas atomization has been revised to atomization to allow for other types of atomization (for example, gas, water, centrifugal, plasma). The revised definition is now Produce means: (i) atomization; (ii) sputtering; or (iii) final consolidation of non-melt derived metal powders. SMALL BUSINESS PROTEST PROCEDURES PROPOSED An amendment to the Federal Acquisition Regulation (FAR) is proposed that would update the small business size and small business status protest and appeal procedures to be consistent with the Small Business Administration s (SBA s) recent revisions to its regulations (see the March 2011 Federal Contracts Perspective articles SBA Revises Small Business Status Protest Regulations and SBA Revises 8(a) Program, Small Business Size Regulations ). The following are the significant changes being proposed: FAR , Protesting a Small Business Representation or Rerepresentation, would be amended to: Increase from 10 to 15 days the amount of time the SBA has to make a size determination after a protest against a concern is filed (paragraph (f)(1)), and to advise that an award may be made to a protested concern after SBA has determined it to be an eligible small business or has dismissed the protest (paragraph (f)(2)). Clarify that the contracting officer has the authority to extend the amount of time needed by SBA to make a size determination (paragraph (f)(1)). 3 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE April 2013

4 Provide guidance on actions available to the contracting officer in the event a size or status determination is not received within the 15-day timeframe or within any extension granted by the contracting officer (paragraph (g)(2)). Clarify that it is within the discretion of SBA s Office of Hearing and Appeals (OHA) to accept an appeal from a size determination, and that SBA may reopen a formal size determination to correct an error or mistake, if it is within the appeal period and no appeal has been filed with OHA (paragraph (g)(4)). Include the requirement that the contracting officer shall consider whether contract performance can be suspended until an OHA Judge renders a decision, when a postaward appeal is submitted to OHA within the required timeframe. In addition, if OHA finds a protested concern to be ineligible for award, the contracting officer may terminate the contract, and shall not exercise the next option or issue any further task or delivery orders (paragraph (h)). FAR , Protesting a Firm s Status as a HUBZone Small Business Concern; FAR , Protesting a Firm s Status as a Service-Disabled Veteran-Owned Small Business Concern; and FAR , Protesting a Firm s Status as an Economically Disadvantaged Women-Owned Small Business Concern or Women-Owned Small Business Concern Eligible Under the WOSB Program, would be amended so they have consistent protest and appeal procedures. The proposed revisions would address: What information the protest must contain in order for it to be considered and the timeframes for submittal of a protest by an interested party (paragraph (f)(2) of FAR , FAR , and FAR ). What actions the contracting officer must take before and after receipt of an eligibility decision (paragraphs (h) and (i)). What actions the contracting officer must take if a protest has been denied or dismissed (paragraph (i)(1)). What actions to take if a protest has been sustained and the concern was determined to be ineligible (paragraph (i)(2)). What actions to take if a concern has or has not filed a timely appeal (paragraphs (i)(4) and (j)). If a protest has been sustained and the concern was determined to be ineligible as a small disadvantaged business (SDB), service-disabled veteran-owned small business (SDVOSB), Historically Underutilized Business Zone (HUBZone) concern, or an economically disadvantaged women-owned small business (EDWOSB) or womenowned small business (WOSB) eligible under the WOSB Program, what must happen before the concern can represent itself under one of these small business categories (paragraph (i)(6)). April 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 4

5 Other Revisions FAR 4.604, Responsibilities [for contract reporting], would require contracting officers to update the Federal Procurement Data System (FPDS) ( to reflect the final decision of the SBA regarding the small business size determination (paragraph (b)(5)). FAR , Size Standards, would be amended to clarify the requirements for a small business concern to be considered a nonmanufacturer. The proposed amendment would state that a small business must be primarily engaged in the retail or wholesale trade and normally sell the type of item being supplied; take ownership or possession of the item(s) with its personnel, equipment, or facilities in a manner consistent with industry practice; and will supply the end item of a small business manufacturer, processor, or producer made in the United States or its outlying areas, or is granted a waiver (paragraph (f)(2)). FAR , Determining North American Industry Classification System (NAICS) Codes and Size Standards, would be revised to: (1) clarify that the contracting officer shall select the NAICS code that best describes the principal purpose of the product or service being acquired (paragraph (a)(2)); (2) clarifying who may appeal a contracting officer s NAICS code designations or applicable size standard (paragraph (c)); (3) adding a new requirement that contracting officers advise the public, by amendment to the solicitation, of the existence of a NAICS code appeal (paragraph (c)(3)); and (4) adding a notification that the SBA may file a NAICS code appeal at any time before offers are due (paragraph (c)(4)). The proposed rule substitutes the System for Award Management (SAM) ( for Central Contractor Registration (CCR) and Online Representations and Certifications Application (ORCA). The SAM is a free website that consolidates various federal procurement systems, including CCR and ORCA, thus eliminating the need to enter the same data multiple times and consolidating hosting to make the process of doing business with the government more efficient. For more on the SAM, see the February 2012 Federal Contracts Perspective article FAC Finalizes Commercial Item T&M Contract Rule and the August 2012 Federal Contracts Perspective article Phase I of SAM Implemented. Comments on this proposed rule must be submitted no later than May 6, 2013, 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), ATTN: Hada Flowers, 1275 First Street NE, 7th Floor, Washington, DC Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE April 2013

6 PROPOSED FAR CHANGE ADDRESSES DEFENSE BASE ACT A proposed rule change would amend FAR , Workers Compensation Insurance (Defense Base Act), to clarify the responsibilities of contractors under the Defense Base Act, including the requirement to include flow down of the clause to all subcontractors subject to the Defense Base Act. The Defense Base Act of 1941 (42 U.S.C. 1651, et seq.) extended the federal workers compensation protections provided by the Longshore and Harbor Workers Compensation Act (LHWCA) (33 U.S.C. 901, et seq.) to the following employment outside of the United States: Work for private employers on United States military bases; Work on public work contracts with a United States government agency, where public work is not limited to construction, but includes service contracts; Work on contracts approved and funded by the U.S. under the Foreign Assistance Act; and Work for American employers providing welfare or similar services for the benefit of the Armed Services (for example, the United Service Organizations [USO]). The Defense Base Act is intended to provide disability compensation and medical benefits to covered employees for work-related injuries, and death benefits to eligible survivors of employees whose deaths are work-related. Recent experience and anticipated contingency contracting efforts require the clarification of the responsibilities of contractors and subcontractors under the LHWCA to purchase workers compensation insurance or to qualify as a self-insurer; to submit a timely, written report to the Department of Labor (DOL) in the event of an employee s injury or death; to make timely payment of all compensation due for disability or death, and to submit a timely, written report of such payment to the DOL; and to adhere to all other provisions of the LHWCA, as extended by the Defense Base Act. Comments on this proposed rule must be submitted no later than May 20, 2013, 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), ATTN: Hada Flowers, 1275 First Street NE, 7th Floor, Washington, DC DOD LISTS FPI S ITEMS TO BE COMPETED The Department of Defense (DOD) has published a list of product categories (by Federal Supply Classification codes [FSCs]) for which the Federal Prison Industries (FPI s) share of the DOD market is greater than 5%. This list is required by Section 827 of the National Defense Authorization Act for FY 2008 (Public Law ), and products on the list must be procured using competitive (or fair opportunity) procedures (see DFARS , Acquisition of Items for Which FPI Has a Significant Market Share). In conducting such a competition, contracting officers must consider a timely offer from FPI for any of the products on the list. In addition, FPI must be included in the process even if the procurement otherwise would have been set aside in accordance with FAR Part 19, Small Business Programs. When the FPI item is determined to provide the best value as a result of FPI's response to a competitive solicitation, contracting April 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 6

7 officers are to follow the ordering procedures at cfm. The following is the list of products: FSC Description 5220 Inspection Gages and Precision Layout Tools 5335 Metal Screening 7210 Household Furnishings 7230 Draperies, Awnings, and Shades 8405 Outerwear, Men s 8415 Clothing, Special Purpose 8465 Individual Equipment 9905 Signs, Advertising Displays and Identification Plates Visit for more information on the rapidly-changing world of federal contracting! 7 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE April 2013

8 426 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 April 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 8