FEDERAL CONTRACTS PERSPECTIVE

Transcription

1 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE Federal Acquisition Developments, Guidance, and Opinions Vol. XIII, No. 3 March 2012 SIZE STANDARDS FINALIZED FOR PROFESSIONAL, TECHNICAL SERVICES AND TRANSPORTATION The Small Business Administration (SBA) is increasing 37 small business size standards for 34 industries and three sub-industries ( exceptions in SBA s table of small business size standards) in North American Industry Classification System (NAICS) Sector 54, Professional, Technical, and Scientific Services. SBA is retaining the current standards for the remaining industries in NAICS Sector 54, except that SBA is removing Map Drafting as the exception to NAICS , Drafting Services. Also, SBA is increasing the small business size standards for 22 industries in NAICS Sector 48, Transportation and Warehousing, and retaining the current standards for the remaining 37 industries in that sector. Finally, SBA is increasing the one size standard in NAICS Sector 81, Other Services, that it did not review in 2010: Computer and Office Repair and Maintenance. The following are the previous and revised size standards in these sectors (in millions of dollars) (* indicates different from proposed size standard): NAICS Code Industry Title Current Size Revised Size Sector Offices of Lawyers Title Abstract and Settlement Offices All Other Legal Services Offices of Certified Public Accountants * Tax Preparation Services * Payroll Services * Other Accounting Services * Architectural Services * Landscape Architectural Services * Engineering Services * Except Military and Aerospace Equipment and Military Weapons CONTENTS Size s for Services Finalized... 1 USDA Withdraws Labor Law Violations Rule... 5 Foreign Contractor Excise Tax Regs Proposed... 6 Acquisition Thresholds in GSAR Adjusted... 6 Work Assignment Clause Prescription Amended *

2 Except Contracts and Subcontracts for Engineering Services Awarded Under the National Energy * Policy Act of 1992 Except Marine Engineering and Naval Architecture * Drafting Services * Except Map Drafting 4.5 Eliminated* Building Inspection Services * Geophysical Surveying and Mapping Services * Surveying and Mapping (except Geophysical) Services * Testing Laboratories * Custom Computer Programming Services Computer Systems Design Services Computer Facilities Management Services Other Computer Related Services Administrative Management and General Management Consulting Services Human Resources Consulting Services Marketing Consulting Services Process, Physical Distribution and Logistics Consulting Services Other Management Consulting Services Environmental Consulting Services Other Scientific and Technical Consulting Services Research and Development in the Social Sciences and Humanities Advertising Agencies Public Relations Agencies Media Buying Agencies Media Representatives Display Advertising Direct Mail Advertising Advertising Material Distribution Services Other Services Related to Advertising Marketing Research and Public Opinion Polling * All Other Professional, Scientific, and Technical Services * Vivina McVay, Editor-in Chief 2012 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 March 2012 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 2

3 NAICS Code Industry Title Current Size Revised Size Sector Other Non-Scheduled Air Transportation Mixed Mode Transit Systems Commuter Rail Systems Bus and Other Motor Vehicle Transit Systems Other Urban Transit Systems Interurban and Rural Bus Transportation Taxi Service Limousine Service School and Employee Bus Transportation Charter Bus Industry Special Needs Transportation All Other Transit and Ground Passenger Transportation Pipeline Transportation of Natural Gas Air Traffic Control Other Airport Operations Other Support Activities for Air Transportation Support Activities for Rail Transportation Port and Harbor Operations Marine Cargo Handling Navigational Services to Shipping Other Support Activities for Water Transportation Freight Transportation Arrangement Sector Computer and Office Repair and Maintenance See the April 2010 Federal Contracts Perspective article Technical Services Size s Increase Proposed for more on SBA s review of the NAICS Sector 54 size standards. See the November 2010 Federal Contracts Perspective article SBA Increases Size s in 69 Industries for more on SBA s review of the NAICS Sector 81 size standards. See the June 2011 Federal Contracts Perspective article Transportation Size Increases Proposed for more on SBA s review of the NAICS Sector size standards. In addition, SBA is proposing to increase the small business size standards for the following 28 industries in NAICS Sector 62, Health Care and Social Assistance: 3 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE March 2012

4 NAICS Code Industry Title Current Size Proposed Size Outpatient Mental Health and Substance Abuse Centers Health Maintenance Organization (HMO) Medical Centers Kidney Dialysis Centers Freestanding Ambulatory Surgical and Emergency Centers All Other Outpatient Care Centers Medical Laboratories Diagnostic Imaging Centers Home Health Care Services Ambulance Services Blood and Organ Banks All Other Miscellaneous Ambulatory Health Care Services General Medical and Surgical Hospitals Psychiatric and Substance Abuse Hospitals Specialty (except Psychiatric and Substance Abuse) Hospitals Nursing Care Facilities Residential Mental Retardation Facilities Residential Mental Health and Substance Abuse Facilities Continuing Care Retirement Communities Homes for the Elderly Other Residential Care Facilities Child and Youth Services Services for the Elderly and Persons with Disabilities Other Individual and Family Services Community Food Services Temporary Shelters Other Community Housing Services Emergency and Other Relief Services Vocational Rehabilitation Services Comments on this proposed rule must be submitted no later than April 24, 2012, identified as RIN RIN 3245-AG30, by one of the following methods: (1) the Federal erulemaking Portal: or (2) mail/hand delivery/courier: Khem R. Sharma, Ph.D., Chief, Size s Division, 409 Third Street, SW, Mail Code 6530, Washington, DC SBA will not accept comments on this proposed rule submitted by . March 2012 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 4

5 USDA WITHDRAWS LABOR LAW VIOLATIONS RULE The U.S. Department of Agriculture (USDA) is withdrawing its direct final rule that would have added a new clause to the Agriculture Acquisition Regulation (AGAR), AGAR , Labor Law Violations, to ensure USDA contractors and subcontractors comply with all applicable labor laws. The following is the text of the withdrawn clause: In accepting this contract award, the contractor certifies that it is in compliance with all applicable labor laws and that, to the best of its knowledge, its subcontractors of any tier, and suppliers, are also in compliance with all applicable labor laws. The Department of Agriculture will vigorously pursue corrective action against the contractor and/or any tier subcontractor (or supplier) in the event of a violation of labor law made in the provision of supplies and/or services under this or any other government contract. The contractor is responsible for promptly reporting to the contracting officer when formal allegations or formal findings of non-compliance of labor laws are determined. The Department of Agriculture considers certification under this clause to be a certification for purposes of the False Claims Act. The Department will cooperate as appropriate regarding labor laws applicable to the contract which are enforced by other agencies. The clause was to be included in all USDA contracts exceeding the simplified acquisition threshold ($150,000). The clause would have been added to the AGAR on February 29, 2012, unless any timely significant adverse comments were received by January 30, 2012, in which case the direct final rule would be withdrawn. On January 27, 2012, USDA received a comment. USDA interprets this comment as adverse and, therefore, USDA is withdrawing the direct final rule. Though 35 respondents submitted comments on USDA s direct final rule, USDA did not identify which comment precipitated the withdrawal. However, the Equal Employment Advisory Council (EEAC), a national nonprofit association comprised of nearly 300 of the nation s largest private sector companies, collectively providing employment to more than 20 million people throughout the United States, submitted comments dated January 24, 2012, and those comments are similar to those submitted by many other respondents. The sheer breadth and practical infeasibility of the certification requirement, coupled with the specter of potential False Claims Act (FCA) liability, makes the proposed contract clause onerous and punitive in the extreme, wrote Jeffrey Norris, EEAC president. The reporting requirement is also vague and unduly burdensome, and potentially exposes contractors to blacklisting by USDA contracting officers. Mr. Norris went on to subdivide EEAC s objections into the following categories: The Term All Applicable Labor Laws is Impossibly Vague The Certification Requirement is Infeasible ( even the most conscientious company cannot possibly know for sure whether or not, at some lower level of management in a business unit or far-flung location, some violation of some law has occurred ) Imposing False Claims Act Liability on Contractors Would Be Onerous and Punitive The Reporting Requirement is Vague and Burdensome ( the reference to formal allegations makes the proposal vague and unworkable ) For more on the proposed clause, see the January 2012 Federal Contracts Perspective article New AGAR Clause on Labor Law Violations. 5 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE March 2012

6 FOREIGN CONTRACTOR EXCISE TAX WOULD BE UNALLOWABLE A revision to the FAR is being proposed that would impose on any foreign person that receives a specified federal procurement payment a 2% tax on the payment, and the tax would be unallowable for reimbursement. Section 301 of the James Zadroga 9/11 Health and Compensation Act of 2010 (Public Law ) adds a new Section 5000C, Imposition of Tax on Certain Foreign Procurement, to the Internal Revenue Code (Title 26 of the U.S. Code). It imposes a 2% tax on any foreign person (including any individual, partnership, corporation, or other form of association) who receives federal procurement payments pursuant to a contract with the government of the United States for the provision of goods, if such goods are manufactured or produced in a covered country, or for the provision of services if those services are provided in a covered country. A covered country is one that is not a party to an international procurement agreement with the United States. Furthermore, the head of each executive agency shall take any and all measures necessary to ensure that no funds are disbursed to any foreign contractor in order to reimburse the tax imposed under Section 5000C of the Internal Revenue Code of 1986 in other words, such 2% tax is not allowable. This proposed rule would revise FAR , Taxes, to add that any tax imposed under 26 U.S.C. 5000C is not an allowable cost. In addition, the rule would add Taxes imposed under 26 U.S.C. 5000C may not be (i) included in the contract price; nor (ii) reimbursed to FAR , Federal, State, and Local Taxes; FAR , Federal, State, and Local Taxes (State and Local Adjustments); FAR , Taxes-Foreign Fixed Price Contracts; and FAR , Taxes Foreign Fixed-Price Contract With Foreign Governments. Comments on this proposed rule must be submitted no later than April 23, 2012, 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 ACQUISITION THRESHOLDS IN GSAR ADJUSTED The General Services Administration (GSA) is amending the GSA Acquisition Regulation (GSAR) to comply with changes made to acquisition-related thresholds by Federal Acquisition Circular (FAC) (see the September 2010 Federal Contracts Perspective article Federal Acquisition-Related Thresholds Adjusted for Inflation ). The changes are to two clauses: GSAR , Notice to Offerors of Subcontracting Plan Requirements, and GSAR , Preparation, Submission, and Negotiation of Subcontracting Plans. In both, the threshold for submission of subcontracting plans by prime contractors is increased from $500,000 to $650,000 (for construction contracts, from $1,000,000 to $1,500,000). Section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (Public Law ) requires that acquisition-related thresholds be adjusted every five years ( on October 1 of each year that is evenly divisible by five ) for inflation using the Consumer Price Index for all urban consumers (except for Davis-Bacon Act, Service Contract Act, and trade agreements thresholds). FAC was the most recent required adjustment. March 2012 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 6

7 EPA AMENDS PRESCRIPTION FOR WORK ASSIGNMENT CLAUSE The Environmental Protection Agency (EPA) is amending the EPA Acquisition Regulation (EPAAR) prescription for use of the clause at EPAAR , Work Assignments, to provide further instructions on the use of the clause. Recent contract file review activities revealed better guidance is needed for EPA contracting officers on the work plan and work assignment processes regarding when a contracting officer should provide the expected level of service needed to the contractor. As a result, clarifying policy is being added to EPAAR , Work Assignments, on the proper issuance of work assignments. Originally, EPAAR merely stated that EPAAR was to be inserted in cost-reimbursement type term form contracts when work assignments are used, and that one of two alternatives be inserted for Superfund contracts. This language being redesignated as paragraph (b) of EPAAR , and the following is being added as new paragraph (a): (a) Policy. When issuing work assignments, the independent government cost estimate shall not be released to the contractor. In most cases the contracting officer (CO) should authorize the contractor to expend only the estimated labor hours necessary to develop the work plan and to initiate preliminary tasks which must be performed before work plan approval can be made. However, in cases where the uncertainties involved in the effort are of such a magnitude that there is no reasonable expectation that the contractor can estimate the level of effort required by the tasks, objectives, or outcomes of the requirement, the CO may provide a ceiling level of effort for the entire work assignment at the time of its issuance. In such cases, the specific uncertainties precluding reasonable estimation of the required level of effort on the contractor's part must be documented in the contract file. A revision will not be required to EPAAR because this does not revise in any way the meaning of the clause. The revised language communicates to contract personnel and program staff that government cost-related estimates should not be provided to contractors prior to receiving the contractor's work plan (proposal); and how to address exceptions. The exceptions addressed in the policy involve circumstances where a contracting officer may need to be able to provide some of the expected level of service needed to the contractor prior to receipt of the work plan (proposal) due to the nature of the work. Visit for more information on the rapidly-changing world of federal contracting! 7 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE March 2012

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 March 2012 Panoptic Enterprises FEDERAL CONTRACTS PERSPECTIVE 8