2009 National Defense Authorization Act

Transcription

1 2009 National Defense Authorization Act Policy Update

2 2009 NDAA Update 2009 NDAA signed October 14, 2008 Significant Sections include: Costs and Contract Administration Sec. 823 Revision to the application of Cost Accounting Standards Sec. 844 Report on use of off-shore subsidiaries by defense contractors Sec. 863 Requirements for purchase of property and services pursuant to multiple award contracts Sec. 868 Minimizing abuse of commercial services item authority Ethics and Compliance Sec. 841 Ethics safeguards related to contractor conflicts of interest Sec. 842 Information for Dept. of Defense contractor employees on their whistleblower rights Sec. 871 Access of Government Accountability Office to contractor employees Sec. 872 Database for Federal Agency contract and grant officers and suspension and debarment officials Security Section 321 Definition of inherently governmental function Section 832 Private security contractors Sec. 845 Defense industrial security Page 2

3 Sec. 823 Revision to the application of Cost Accounting Standards Directs the CAS Board to re-examine the CAS exemption for contracts or subcontracts to be awarded and performed entirely outside the United States. Report to Congress within 270 days (July/Aug 09): Whether application of CAS to the currently exempted contracts would benefit the United States Any proposed revision to the Cost Accounting Standards, or Justification why no change is needed History: CAS Board issued a staff discussion paper in 2005 to request public comment on the exemption. Staff Discussion paper withdrawn February 13, 2008 following near unanimous public comment to retain the exemption. HASC chairman urged OMB to reconsider as retaining the exemption does not recognize the significance of the waste and fraud that has occurred with contingency contracting in Iraq. Page 3

4 Sec. 844 Report on use of off-shore subsidiaries by defense contractors Comptroller General to report to Congress within 1 year (October 09) on the use of off-shore subsidiaries Report to examine rationale, implications, costs and benefits for DoD and contractors including: Tax liability (income and payroll) Legal liability Compliance with CAS Efficiency in performance Contract management and oversight Page 4

5 Sec. 863 Requirements for purchase of property and services pursuant to multiple award contracts Requires revision of the FAR to enhance the use of competition in the use of multiple award contract vehicles Requirements include: Competition requirements apply to all purchases above the simplified acquisition threshold Expanded notice requirements to all offerors under the multiple award contract Limitation on purchases if notice was not given to all offerors, unless at least 3 offers were received or determination in writing that there were not other qualified bidders Disclosure on FedBizOpps of sole source orders, including the justification Is this not a basis for the elimination of the price reductions clause? In light of these changes, a compelling argument can be made that a determination of fair and reasonable prices at the time of award of the MAS contract is unnecessary, and that prices instead should be determined based solely on order competition. ABA Section of Public Contract Law. Page 5

6 Sec. 868 Minimizing abuse of commercial item services authority Mandates revision of the FAR within 6 months (April 09) for procurement of commercial services Regulations shall ensure that: Services not sold offered and sold competitively in substantial quantities in the competitive marketplace, but of a type that are, may be treated as commercial items only if the contracting officer determines in writing that the offeror has submitted sufficient information to evaluate the reasonableness of the offered price. If information on prices paid is insufficient to determine price reasonableness, the contracting officer may request relevant information on cost, including labor, material and overhead rates. The implications of this provision should be considered in the light of FAR Case Definition of Cost or Pricing Data Page 6

7 Sec. 841 Ethics safeguards related to contractor conflicts of interest Requires the OFPP Administrator to develop a policy to prevent personal conflicts of interest by contractor employees performing acquisition functions closely associated with inherently governmental functions Policy must provide: Definition of personal conflict of interest (PCI) Contractor requirements: Identify and prevent PCI Prevent those who access non-public govt. information to use it for personal gain Report PCI violations to the contracting officer Maintain effective oversight Maintain procedures to screen employees for potential PCI Take appropriate disciplinary actions for employee failure to comply Develop contract clause(s) for inclusion in such contract types that exceed the simplified acquisition threshold OFPP in consultation with Dir., Office of Government Ethics (OGE) Identify contracting methods, types and services that raise concerns for potential PCI and OCI Determine whether revisions to the FAR are necessary Page 7

8 Sec. 842 Information for Department of Defense contractor employees on their whistleblower rights Requires that contractors inform employees in writing of employee whistleblower rights and protections as implemented in FAR Part 3.9 Contractors should review policies and procedures for appropriate coverage Watch for FAR/DFAR coverage for any requirements for evidence of employee receipt or acknowledgement Page 8

9 Sec. 871 Access of Government Accountability Office to contractor employees Amends 10 USC 2313 (Defense) and 41 USC 254d (Civilian Agencies) to provide statutory authority for GAO to interview any current employee regarding transactions on negotiated contracts. While the Act does not direct it, expect revision of FAR Audit and Records- Negotiation to reflect the expanded authority. The clause currently allows GAO examination of records directly pertinent to transactions related to a negotiated contract or subcontract. Page 9

10 Sec. 872 Database for Federal Agency contract and grant officers and suspension and debarment officials Requires GSA to establish a database on integrity and performance of contractors and grantees receiving any award over $500,000. Database to include information for the most recent 5 year period on: Most Civil, criminal or administrative proceedings in connection with Federal awards that resulted in convictions, findings of fault or liability, or fines, penalties, damages or restitution Each contract or grant terminated for default Each Federal suspension or debarment, including the administrative agreements to resolve a suspension or debarment proceeding Non responsibility determinations by Federal officials Requires review of the database before award of a contract above the simplified acquisition threshold, documented in the contract file Requires timely notification of contractors when information is added, including the right to submit comments related to the information FAR will be amended to require contractors with contracts over $10 million to submit the information for the database and update it semi-annually Page 10

11 Section 321 Definition of inherently governmental function Requires the OFPP Administrator to review the current definition to determine whether it is sufficiently focused to ensure that only officers or employees of the federal Government or members of the Armed Forces perform such functions. Establish a single consistent definition applicable to all federal agencies Develop criteria that individual agencies could use to identify critical positions to restrict to performance by government employees Page 11

12 Section 832 Private security contractors In response to strong opposition to a prior version of the NDAA that would have placed severe restrictions on the activities of private security contractors, this final version provides that it is the sense of Congress that: Security functions should be performed by members of the Armed Forces if in highly hazardous public areas It should be the sole discretion of the commander of the relevant combatant command to determine whether use of a private security contractor is appropriate Secretaries of the military departments should ensure the military has appropriate number of trained personnel to perform security functions DoD regulations should ensure private security contractors are not authorized to perform inherently governmental functions in an area of combat operations. Page 12

13 Sec. 845 Defense industrial security Requires the Secretary of Defense to report biennially on Defense Industrial Security Report to include: Statistics on the number of contractors handling classified information and the percentage subject to foreign ownership, control, or influence (FOCI) Statistics on violations and enforcement actions, including the percentage of contractors subject to FOCI An assessment of whether major contractors have adequate systems and enforcement programs Submit a report on improving Industrial Security by March 1, 2009 to address the actions taken or planned to implement GAO recommendations in the report Industrial Security: DoD cannot ensure its oversight of contractors under foreign influence is sufficient. The report should analyze the impact of hedge and sovereign wealth funds on DoD s ability to identify and mitigate FOCI issues. Page 13