FEDERAL CONTRACTS PERSPECTIVE

Transcription

1 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE Federal Acquisition Developments, Guidance, and Opinions Vol. XIV, No. 1 January 2013 FAR AMENDED TO REQUIRE NONDISPLACEMENT OF PREDECESSOR SERVICE CONTRACTOR S EMPLOYEES Federal Acquisition Circular (FAC) amends the Federal Acquisition Regulation (FAR) by adding FAR subpart 22.12, Nondisplacement of Qualified Workers Under Service Contracts, and contract clause FAR , Nondisplacement of Qualified Workers, to implement Executive Order (EO) 13495, Nondisplacement of Qualified Workers Under Service Contracts, and the Department of Labor s (DOL s) CONTENTS implementing regulations at Title 29 of the Code of Federal Regulations (CFR), Part 9, Nondisplacement Of Qualified Workers Under Service Contracts (29 CFR Part 9). EO and 29 CFR Part 9 require service contractors and their subcontractors under successor contracts to offer employees of the predecessor contractor and its subcontractors the right of first refusal of employment for positions for which they are qualified (see the March 2009 Federal Contracts Perspective article Obama Issues Four Labor-Related Executive Orders and the September 2011 Federal Contracts Perspective article Displaced Service Workers Get Right of First Refusal ). FAC Requires Employee Nondisplacement 1 FAR Implements Iranian Sanctions... 3 Accelerated Subcontractor Payments Proposed... 4 Auto Mileage Reimbursement Set at 56.5 /Mile... 4 SBA Finalizes, Proposes More Size Standards... 5 GSA Proposes Expanding IFF Use... 7 GSA Withdraws Proposed FSS Contracting Rewrite 8 DEAR Property Regulations Updated... 8 HUDAR Brought Up-to-Date... 8 Poland New Qualifying Country Items Proposed for Biobased Designation... 9 Prompt Payment Interest Rate Set at 1 3/8% EO mandated that service contracts and solicitations for such contracts shall include a clause that requires the contractor, and its subcontractors, under a contract that succeeds a contract for performance of the same or similar services at the same location, to offer those employees (other than managerial and supervisory employees) employed under the predecessor contract whose employment will be terminated as a result of the award of the successor contract, a right of first refusal of employment under the contract in positions for which they are qualified. There shall be no employment openings under the contract until such right of first refusal has been provided. EO prescribed the text of the clause to be included in all service contracts and solicitations exceeding the simplified acquisition threshold ($150,000). The EO went on to mandate that any contractor or subcontractor that fails to comply with this clause or commits willful violations, along with its responsible officers and any firm in which the contractor or subcontractor has a substantial interest, are to be debarred for up to three years. A proposed FAR rule that would implement EO and the DOL s regulations was issued for comment (see the June 2012 Federal Contracts Perspective article FAR Rule Would

2 Address Nondisplacement of Workers ). Twenty-seven respondents submitted comments on the proposed rule. In response to those comments, the following changes are made to this final rule: FAR , Definitions [applicable to FAR part 22, Application of Labor Laws to Government Acquisitions], is amended to add the definitions of service contract and service employee that were in FAR , Definitions [applicable to FAR subpart 22.10, Service Contract Act of 1965, as Amended]. FAR , Scope of Subpart, is revised to clarify that the DOL regulations at 29 CFR part 9 are applicable. FAR , Policy, is revised to clarify the applicability of FAR subpart FAR , Waiver, is revised to require the approval of waivers by the agency Senior Procurement Executive, without power of redelegation. Three subsections are added to FAR , Applicability: FAR , Method of Job Offer ( a job offer made by a successor contractor must be a bona fide express offer of employment on the contract ); FAR , Exceptions; and FAR , Reduced Staffing ( a successor contractor and its subcontractors may employ fewer service employees than the predecessor contractor employed in connection with performance of the work ). In addition, cross-references throughout FAR subpart to the applicable section of the DOL s implementing regulations have been added. FAC and DOL s regulations go into effect January 18, According to the FAC introduction: Contracting officers are expected to work with their existing service contractors and bilaterally modify their contracts, to the extent feasible, to include the clause at FAR As an alternative, contracting officers should consider entering into bilateral modifications with existing service contractors to agree to perform paragraph (c) of the clause at FAR , which: (1) informs the existing predecessor contractor's workforce of their right of first refusal; and (2) provides the list of service employees to the contracting officer no less than 30 days before contract completion. Contracting officers shall document the contract files of their existing service contracts to describe the steps that were taken. Also of note is the following introductory material: On January 4, 2011, Public Law enacted a new codified version of Title 41 United States Code (U.S.C.), entitled Public Contracts. The CAAC [Civilian Agency Acquisition Council] and DARC [Defense Acquisition Regulations Council] published a proposed rule on September 18, 2012 to update all references to Title 41 in the FAR to conform to the positive law codification. As part of these changes, the proposed rule would replace the term Service Contract Act with the term Service Contract Labor Standards statute (SCLS statute). If this change is adopted through that rulemaking, similar conforming changes in the use of terms will be made in the text to this final rule. 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 January 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 2

3 FAR IMPLEMENTS IRANIAN SANCTIONS FAC amends FAR , Prohibition on Contracting with Entities That Engage in Certain Activities or Transactions Relating to Iran, to implement provisions of the Iran Threat Reduction and Syria Human Rights Act of 2012 (Public Law ) that expand sanctions relating to the energy sector of Iran and sanctions with respect to Iran's Revolutionary Guard Corps. Sections 201 and 202 of Public Law expand sanctions in the Iran Sanctions Act of 1996 (Public Law ) with respect to the energy sector of Iran and impose sanctions with respect to transport of crude oil from Iran and evasion of sanctions by shipping companies. Section 203 expands sanctions with respect to development by Iran of weapons of mass destruction. Section 302 imposes sanctions with respect to persons that support or conduct certain transactions with Iran s Revolutionary Guard Corps or other sanctioned persons. Section 311 amends the Iran Sanctions Act to require a certification from each prospective contractor that it, and any person owned and controlled by the prospective contractor, does not knowingly engage in a significant transaction or transactions with Iran s Revolutionary Guard Corps or any of its officials, agents or affiliates. To implement these provisions of Public Law , this interim rule makes the following amendments to the FAR: Paragraph (a)(1) of FAR , Iran Sanctions Act, is amended to replace the list of activities subject to sanctions with a more top-level description of the types of activities subject to sanctions because numerous activities that may be subject to sanctions have been by Sections 201 through 203 of Public Law To FAR (a)(2) is added a new certification requirement to implement Section 311 of Public Law It specifies that a significant transaction, for purposes of this rule, is any transaction that exceeds $3,000, and uses the $3,000 threshold throughout the rule. FAR (b)(3) is amended to require a debarment period of at least two years for execution of a false certification. FAR (c) and paragraph (c) of FAR , Prohibition on Contracting with Entities That Export Sensitive Technology to Iran, are amended to simplify and clarify the exception for acquisitions subject to trade agreements ( the certification requirements do not apply if the acquisition is subject to trade agreements and the offeror certifies that all the offered products are designated country end products or designated country construction material (see [FAR] subpart 25.4 [Trade Agreements]) ). FAR , Waiver, is amended to state that waivers to the FAR certification requirements must be essential to the national security interest of the United States. To paragraph (o) of FAR , Offeror Representations and Certifications Commercial Items, and paragraph (c) of FAR , Prohibition on Contracting with Entities Engaging in Certain Activities or Transactions Relating to Iran Representation and 3 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE January 2013

4 Certifications, is added a new certification that, by submission of its offer, the offeror certifies that it, and any person owned or controlled by it, does not knowingly engage in any transaction that exceeds $3,000 with Iran s Revolutionary Guard Corps or any of its officials, agents, or affiliates. Comments on this interim rule must be submitted no later than February 8, 2013, 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), ATTN: Hada Flowers, 1275 First Street, NE, 7th Floor, Washington, DC ACCELERATED SUBCONTRACTOR PAYMENTS PROPOSED To implement the temporary policy provided by Office of Management and Budget (OMB) Policy Memorandum M-12-16, Providing Prompt Payment to Small Business Subcontractors, a FAR amendment has been proposed that would add a new clause, FAR XX, Providing Accelerated Payments to Small Business Subcontractors, that would will require the prime contractor, upon receipt of accelerated payments from the government, to make accelerated payments to small business subcontractors after receipt of a proper invoice and all proper documentation from small business subcontractors. The clause is to be included in all solicitations and contracts. The clause requires contractors to include the clause in all subcontracts with small businesses, including those for the acquisition of commercial items. OMB s temporary policy of accelerating payments ends on July 10, Comments on this proposed rule must be submitted no later than February 19, 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 For more on OMB Policy Memorandum M-12-16, see the September 2012 Federal Contracts Perspective article OMB Orders Prompt Payment to Small Subcontractors. MILEAGE REIMBURSEMENT SET AT 56.5 /MILE FOR AUTOS The General Services Administration (GSA) is increasing the mileage reimbursement rate for use of a privately owned automobile on official travel from 55.5 per mile to 56.5 per mile; the rate for use of a motorcycle on official travel from 52.5 per mile to 53.5 per mile; and the rate for use of a privately owned aircraft from $1.31 per mile to $1.33 per mile. These revised rates are effective for travel performed on or after January 1, 2013, through December 31, GSA formerly published the privately owned vehicle mileage reimbursement rates in the Federal Travel Regulation (FTR). However, it no longer does that, but instead posts the reimbursement rates on the Internet at in an FTR Travel/Per Diem Bulletin. January 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 4

5 SBA FINALIZES, PROPOSES MORE SIZE STANDARDS As part of its ongoing comprehensive small business size standards review, the Small Business Administration (SBA) has decided to increase the small business size standards for 52 industries in North American Industry Classification System (NAICS) Sector 51, Information, and Sector 56, Administrative and Support, Waste Management and Remediation Services. In addition, SBA is proposing to increase the small business size standards for three industries in NAICS Subsector 213, Support Activities for Mining, within NAICS Sector 21, Mining, Quarrying, and Oil and Gas Extraction. The following are the industries in Sectors 51 and 56 with their finalized small business size standards and their previous small business size standards: NAICS Code Industry Title Previous Size Standard ($ million) Revised Size Standard ($ million) Sector Software Publishers $25.0 $ Motion Picture and Video Production $29.5 $ Motion Picture Theaters (except Drive- Ins) $7.0 $ Other Motion Picture and Video Industries $7.0 $ Other Sound Recording Industries $7.0 $ Radio Networks $7.0 $ Radio Stations $7.0 $ Television Broadcasting $14.0 $ Cable and Other Subscription $15.0 $35.0 Programming Satellite Telecommunications $15.0 $ All Other Telecommunications $25.0 $ Data Processing, Hosting, and Related $25.0 $30.0 Services News Syndicates $7.0 $ Libraries and Archives $7.0 $ All Other Information Services $7.0 $25.5 Sector Employment Placement Agencies $7.0 $ Executive Search Services $7.0 $ Temporary Help Services $13.5 $ Professional Employer Organizations $13.5 $ Document Preparation Services $7.0 $ Telephone Answering Services $7.0 $ Telemarketing Bureaus and Other Contact Centers $7.0 $ Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE January 2013

6 Private Mail Centers $7.0 $ Other Business Service Centers (including Copy Shops) $7.0 $ Collection Agencies $7.0 $ Credit Bureaus $7.0 $ Repossession Services $7.0 $ Court Reporting and Stenotype Services $7.0 $ All Other Business Support Services $7.0 $ Travel Agencies $3.5 $ Tour Operators $7.0 $ Convention and Visitors Bureaus $7.0 $ All Other Travel Arrangement and Reservation Services $7.0 $ Investigation Services $12.5 $ Security Guards and Patrol Services $18.5 $ Armored Car Services $12.5 $ Security Systems Services (except Locksmiths) $12.5 $ Locksmiths $7.0 $ Exterminating and Pest Control Services $7.0 $ Carpet and Upholstery Cleaning Services $4.5 $ Packaging and Labeling Services $7.0 $ Convention and Trade Show Organizers $7.0 $ All Other Support Services $7.0 $ Solid Waste Collection $12.5 $ Hazardous Waste Collection $12.5 $ Other Waste Collection $12.5 $ Hazardous Waste Treatment and Disposal $12.5 $ Solid Waste Landfill $12.5 $ Solid Waste Combustors and Incinerators $12.5 $ Other Nonhazardous Waste Treatment and Disposal $12.5 $ Remediation Services $14.0 $ Materials Recovery Facilities $12.5 $19.0 SBA received two comments on the proposed increases to the Sector 51 size standards, and 21 comments on proposed increases to the Sector 56 size standards. However, after analysis, SBA decided to adopt all the proposed increases. For more on the changes that were proposed to Sectors 51 and 56, see the November 2011 Federal Contracts Perspective article SBA Proposes Increasing Small Business Size Standards. The following are the industries in NAICS Subsector 213 with proposed revised small business size standards and their current small business size standards: January 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 6

7 NAICS Code Subsector Industry Title Support Activities for Oil and Gas Operations Support Activities for Coal Mining Support Activities for Metal Mining Current Size Standard ($ million) Proposed Size Standard ($ million) $7.0 $35.5 $7.0 $19.0 $7.0 $19.0 Comments on the proposed changes to Subsector 213 size standards are to be submitted no later than February 4, 2013, identified as RIN 3245-AG44, by either of the following methods: (1) the Federal erulemaking Portal: or (2) mail/handdelivery/courier to: Khem R. Sharma, PhD, Chief, Size Standards Division, 409 Third Street, SW, Mail Code 6530, Washington, DC SBA will not accept comments by . GSA PROPOSES EXPANDING INDUSTRIAL FUNDING FEE USE The General Services Administration (GSA) is proposing to amend GSA Acquisition Regulation (GSAR) , Industrial Funding Fee and Sales Reporting, to address the use of the Industrial Funding Fee (IFF) under the Federal Supply Schedules (FSS) Program. The proposed revisions would reflect the current use of the IFF by including the ability to use IFF monies to offset losses in other Federal Acquisition Service (FAS) programs and fund initiatives that benefit other FAS programs. Federal Supply Schedule (FSS) contracts are negotiated by GSA s FAS and are used by various federal agencies to purchase supplies and services directly from commercial entities. The IFF is a fee paid by customers to cover FAS cost of operating the FSS, and it is a percentage of reported sales under FSS contracts (currently 0.75%). The current language in GSAR (b)(2) states, The IFF reimburses FSS for the costs of operating the Federal Supply Schedules Program and recoups its operating costs from ordering activities. To inform FSS customers that the IFF may be used to fund other programs or offset losses in other FAS programs, the following sentence would be added: Net operating results generated by the IFF are also applied to offset losses or fund initiatives benefitting other FAS programs, in accordance with 40 U.S.C. 321 [Acquisition Services Fund]. According to GSA, this change will facilitate transparency and open government, and more accurately define the current FAS program operations. Comments on this proposed rule must be submitted no later than February 26, 2013, identified as GSAR Case 2012-G503, 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 January 2013

8 GSA WITHDRAWS PROPOSED FSS CONTRACTING REWRITE The GSA has decided to withdraw its proposed rewrite of GSAR Part 538, Federal Supply Schedule Contracting, due to the variety of issues addressed and strong stakeholder interest There were 36 comments submitted on the proposed rewrite. The notice of withdrawal states, GSA is opening a series of new GSAR cases to modernize the Federal Supply Schedules (FSS) program. The new GSAR cases will focus on the areas that require immediate modernization to maintain currency in the FSS program as well as strategically position the FSS program to meet the current and future needs of ordering activities. For more on the proposed GSAR Part 538 rewrite, see the February 2009 Federal Contracts Perspective article GSA Proposes Rewriting Federal Supply Schedule Rules. DEAR PROPERTY REGULATIONS UPDATED The Department of Energy (DOE) is amending DOE Acquisition Regulation (DEAR) Part 908, Required Sources of Supplies and Services, DEAR Part 945, Government Property, and DEAR Part 970, Management and Operating Contracts, to conform to the FAR, remove out-of date government property coverage, and update references. Though no comments were submitted on the proposed rule, several administrative changes are made to the final rule, including correcting citations; correcting office names; updating vehicle license tag ordering procedures (DEAR , Government License Tags); retaining the definition of capital equipment, which was proposed for deletion but determined to be necessary (DEAR , Definitions); revising the contractor s reporting of sensitive item listing (DEAR , Reporting of Contractor Sensitive Property Inventory); and correcting the excess personal property screening timeframe (paragraph (a)(1) of DEAR , Screening). Also, it was discovered that DEAR , Government Property (Cost Reimbursement, Time-and-Materials, or Labor-Hour Contracts), referenced FAR which is Reserved under the FAR Part 45 rewrite (see the June 2007 Federal Contracts Perspective article FAR Coverage on Government Property Simplified, Clarified, Trimmed ). To correct this, FAR is replaced by FAR [Government Property]. For more on the proposed rule, see the April 2011 Federal Contracts Perspective article Energy Proposes to Update Government Property Regs. HUDAR BROUGHT UP-TO-DATE The Department of Housing and Urban Development (HUD) is updating the HUD Acquisition Regulation (HUDAR), which was last revised on January 13, This revision removes provisions that are obsolete, refines provisions to approve requests for deviation from the HUDAR, updates provisions that address the organizational structure of HUD, and adds provisions on contractor record retention. No comments were submitted on the proposed rule, so the proposed rule is adopted as final with a few editorial changes. For more on the proposed rule, see the April 2012 Federal Contract Perspective article HUDAR Update Proposed. January 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 8

9 POLAND NEW QUALIFYING COUNTRY The Department of Defense (DOD) is amending the following Defense FAR Supplement (DFARS) clauses to add Poland to the list of qualifying countries: DFARS , Buy American and Balance of Payments Program DFARS , Qualifying Country Sources as Subcontractors DFARS , Preference for Certain Domestic Commodities. DFARS , Photovoltaic Devices DFARS , Trade Agreements DFARS , Buy American Free Trade Agreements Balance of Payments Program A qualifying country is a country with a reciprocal defense procurement memorandum of understanding or international agreement with the United States in which both countries agree to remove barriers to purchases of supplies produced in the other country or services performed by sources of the other country, and the memorandum or agreement complies, where applicable, with the requirements of section 36 of the Arms Export Control Act (22 U.S.C. 2776) and with 10 U.S.C On August 27, 2011, the U.S. Secretary of Defense signed a new reciprocal defense procurement agreement with the Polish Minister of National Defense. The agreement removes discriminatory barriers to procurements of supplies and services produced by industrial enterprises of the other country to the extent mutually beneficial and consistent with national laws, regulations, policies, and international obligations. The agreement does not cover construction or construction material. Because of the execution of this agreement, Poland meets the criteria as a qualifying country. In other recent changes to the DFARS: Text addressing the definition of cost or pricing data is updated to ensure consistency with the FAR changes made by FAC that redefined cost or pricing data, added a definition of certified cost or pricing data, and changed the term information other than cost or pricing data to data other than certified cost or pricing data (see the September 2010 Federal Contracts Perspective article Federal Acquisition-Related Thresholds Adjusted for Inflation ). The list of contracting activities is updated and moved to the DFARS Procedures, Guidance, and Instruction (PGI). The list of contracting activities is removed from the definition of contracting activity in DFARS , Definitions, and a cross-reference to PGI is added to the definition. EIGHT CATEGORIES PROPOSED FOR BIOBASED DESIGNATION The United States Department of Agriculture (USDA) is proposing to add eight (8) more sections to Title 7 of the Code of Federal Regulations (CFR), Part 3201, Guidelines for Designating Biobased Products for Federal Procurement (7 CFR Part 3201), to designate product 9 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE January 2013

10 categories that would be given preference in federal procurements as provided under Section 9002 of the Farm Security and Rural Investment Act of 2002 (FSRIA) (Public Law ), and to specify the minimum level of biobased content to be contained in the procured products. The following are the proposed new designated product categories and their Title 7 section numbers: , Aircraft and boat cleaners , Automotive care products , Engine crankcase oil , Gasoline fuel additives , Metal cleaners and corrosion removers , Microbial cleaning products , Paint removers , Water turbine bearing oils As a general rule, procuring agencies must purchase biobased products within these designated items where the purchase price of the procurement item exceeds $10,000 or where the quantity of such items or functionally equivalent items purchased over the preceding fiscal year equaled $10,000 or more, unless products within a designated item: (1) are not reasonably available within a reasonable period of time; (2) fail to meet the reasonable performance standards of the procuring agencies; or (3) are available only at an unreasonable price. The $10,000 threshold applies to federal agencies as a whole and not to agency subgroups such as regional offices or subagencies of the larger federal department or agency. Comments on this proposal must be submitted no later than February 4, 2013, identified with the Regulatory Information Number (RIN) 0599-AA16, by any of the following methods: (1) the Federal erulemaking Portal: (2) biopreferred@usda.gov include RIN 0599-AA16 and Proposed Designation of Product Categories on the subject line; or (3) mail or commercial/hand delivery to: Ron Buckhalt, USDA, Office of Procurement and Property Management, Room 361, Reporters Building, 300 7th St. SW, Washington, DC For more information on the biobased program, all the products in the program, and those proposed for inclusion, go to PROMPT PAYMENT INTEREST RATE SET AT 1 3/8% The Treasury Department has established 1 3/8% (1.375%) as the interest rate for the computation of payments made between January 1, 2013, and June 30, 2013, under the Prompt Payment Act and the Contracts Disputes Act. This rate is also used in facilities capital cost of money calculations. The interest rate for the prior six-month period (July 1, 2012, through December 31, 2012) was 1 3/4% (1.75%). The interest rate for January 1, 2012, through June 30, 2012, was 2% (2.0%). All prompt payment interest rates since 1980 (in six-month increments) are available at FAR Subpart 32.9, Prompt Payment; FAR Subpart 33.2, Disputes and Appeals; FAR , Cost of Money; and Cost Accounting Standard (CAS) , Cost of Money as an Element of the Cost of Facilities Capital, are affected by this interest rate. January 2013 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 10

11 426 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 11 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE January 2013