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FAC 2005-39 Issued with Seven Rules

The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have published Federal Acquisition Circular 2005-39, which contains seven final rules amending the Federal Acquisition Regulation. In order of appearance, the rules address the following subjects: Item I, Extend Use of Simplified Acquisition Procedures for Certain Commercial Items (FAR Case 2009-035); Item II, Clarification of Submission of Cost or Pricing Data on Non-Commercial Modifications of Commercial Items (FAR Case 2008-0012); Item III, Use of Standard Form 26 - Award/Contract (FAR Case 2008-040); Item IV, Enhanced Competition for Task- and Delivery-Order Contracts-Section 843 of the Fiscal Year 2008 National Defense Authorization Act (FAR Case 2008-006); Item V, Trade Agreements --Costa Rica, Oman, and Peru (FAR Case 2008-036); and Item VI, Payments Under Fixed-Price Architect-Engineer Contracts (FAR Case 2008-015). Item VII contains a final rule that makes a technical editorial amendment to FAR 14.202-4. This FAC also contains a Small Entity Compliance Guide. A full listing of FAR sections impacted by these rules, as well as the effective date for each rule, appears in the table below. For the text of FAC 2005-39, see 70,002.118.

Simplified Procedures

A final rule, FAR Case 2009-035, amends the FAR to revise Subpart 13.5, "Test Program for Certain Commercial Items," to implement Section 816 of the National Defense Authorization Act for Fiscal Year 2010 (PL 111-84). FAR Subpart 13.5 authorizes as a test program, the use of simplified procedures for the acquisition of certain commercial items in amounts greater than the simplified acquisition threshold, but not exceeding $5.5 million ($11 million for acquisitions described in FAR 13.500(e)), including options, if the contracting officer can reasonably expect that offers will include commercial items. FAR 13.500(d) authorized COs to issue solicitations under this Subpart until January 1, 2010, and this final rule extends this authority to January 1, 2012.

Threshold Harmonization

The FAR Case 2008-012 rule finalizes, with minor changes, the interim rule issued with FAC 2005-31, which amended the FAR to implement Section 814 of the National Defense Authorization Act for Fiscal Year 2008 (PL 110-181), which required the harmonization of the thresholds for cost or pricing data. Specifically, Section 814 required alignment of the current threshold for cost or pricing data on non-commercial modifications of commercial items ($500,000) with the Truth in Negotiation Act threshold for cost and pricing data ($650,000). Accordingly, as the TINA threshold for cost or pricing data is adjusted in the future, so will the threshold for obtaining cost or pricing data on non-commercial modifications of commercial items. The interim rule amended FAR 15.403-1 at paragraphs (c)(3)(ii)(B) and (C). This final rule amends FAR 15.403-1 to reflect minor editorial changes.

Standard Form 26

The final rule associated with FAR Case 2008-040 amends the FAR to revise FAR Parts 15 and 53 regarding instructions for use of the Standard Form 26 to strengthen the prohibition against using block 18 of the form when awarding a negotiated procurement and to emphasize that block 18 should only be checked when awarding a sealed bid contract. The FAR Councils believe that revisions to the instructions for use of the form, at FAR 15.509 and FAR 53.214, along with improved training and emphasis on the proper use of the SF 26, will eliminate the issue. Thus, the rule revises FAR 15.509 to add "Note however, if using the SF 26 for a negotiated procurement, block 18 is not to be used." FAR 53.214(a) is revised by deleting the no-longer-necessary phrase "Pending issuance of a new edition of the form, the reference in 'block 1' should be amended to read '15 CFR 700' "and adding "Block 18 may only be used for sealed-bid procurements. "In addition, a sentence is added at FAR 53.215-1(a) to read "Block 18 may not be used for negotiated procurements." This change does not prohibit the use of the SF 26 for awarding negotiated procurements, it only prohibits the use of block 18 of the SF 26 when awarding negotiated procurements. Thus, the rule does not change existing policy or procedures.

Enhanced Competition

A rule, FAR Case 2008-006, finalizes with changes an interim rule issued with FAC 2005-27 that amended the FAR to implement the Fiscal Year 2008 National Defense Authorization Act (PL 110-181), Section 843, entitled "Enhanced Competition for Task and Delivery Order Contracts." The purpose of this statute is to improve opportunities for competition through fair opportunity, transparency, and accountability in contracting. Section 843 of the FY08 NDAA stipulated several requirements regarding enhancing competition within federal contracting. The provisions of Section 843 implemented by the interim rule included those pertaining to: a limitation on single-award task and delivery order contracts greater than $100 million; enhanced competition for task and delivery orders in excess of $5 million; and restrictions on protests on orders other than on the grounds the order increases the scope, period, maximum value of the contract under which the order is issued, or the order is valued in excess of $10 million. FAR 16.503 and FAR 16.504, as amended by the interim rule, apply to single award task or delivery order contracts awarded on or after May 27, 2008, which was the date FY08 NDAA went into effect. FAR 16.505, as amended, applies to orders awarded on or after May 27, 2008, on existing contracts as well as new contracts. The final rule makes several additional changes as result of public comments on the interim rule. FAR 16.503 is amended to clarify that a requirements contract is awarded to one contractor. FAR 16.504(c)(1)(ii)(D)(3) is amended to clarify that the agency-head determination to award a single-award task- or delivery-order contract over $100 million does not apply to an architect-engineer task- or delivery-order contract awarded pursuant to FAR Subpart 36.6. The final rule also revises FAR 16.504(c)(1)(ii)(D)(3) to state that the requirement for a determination for a single-award contract greater than $100 million is in addition to any applicable requirements of FAR Subpart 6.3. This change is made to clarify that the determination for a single award task- or delivery-order contract greater than $100 million is required in addition to the Justification and Approval required by FAR Subpart 6.3 when a procurement will be conducted as other than full and open competition. The final rule also makes corresponding technical changes at FAR 16.501-1 and FAR 16.501-2.

Trade Agreements

The rule associated with FAR Case 2008-036 finalizes without change an interim rule issued with FAC 2005-33, which amended the FAR to implement the Dominican Republic-Central America-United States Free Trade Agreement with respect to Costa Rica, the United States-Oman Free Trade Agreement, and the United States-Peru Trade Promotion Agreement. Congress approved these trade agreements in Public Law 109-53, PL 109-283, and PL 110-138, respectively. These Acts waived the applicability of the Buy American Act for some foreign supplies and construction materials from Costa Rica, Oman, and Peru, and specified procurement procedures designed to ensure fairness in the acquisition of supplies and services. The rule allowed contracting officers to purchase goods and services from these three countries without application of the Buy American Act if the acquisition is subject to the applicable trade agreement. The threshold for supplies and services is $67,826 for the CAFTA-DR and $194,000 for the Oman and Peru FTAs. The threshold for construction is $7,443,000 for the CAFTA-DR and the Peru FTA, and $8,817,449 for the Oman FTA. The interim rule amended FAR Part 25 and the corresponding clauses in FAR Part 52 to implement these agreements. Specifically, the rule amended the definitions of "Caribbean Basin country," "Designated country," and "Free Trade Agreement country" in FAR 25.003. Other amended regulations included FAR 25.400, which describes the scope of FAR Subpart 25.4, FAR 25.401, which identifies the types of acquisitions that do not fall under FAR Subpart 25.4, and the general provision at FAR 25.402, which sets forth the various thresholds applicable to the trade agreements. The rule also made corresponding changes to the following contract clauses: FAR 52.212-3, FAR 52.212-5, FAR 52.225-3 through FAR 52.225-5, FAR 52.225-11, and FAR 52.225-12.

A&E Payments

A final rule, FAR Case 2008-015, amends the FAR to revise the withholding of payment requirements under FAR 52.232-10, "Payments under Fixed-Price Architect-Engineer Contracts." This rule amends FAR 52.232-10 to revise and clarify the retainage requirements. A contracting officer may withhold up to 10 percent of the payment due in any billing period when the CO determines that such a withholding is necessary to protect the government's interest and ensure satisfactory completion of the contract. However, withholding the entire 10 percent is not required, and no withholding is required if the contractor's performance has been satisfactory. The changes clarify that retainage is optional and any amounts retained should not be held over beyond the satisfactory completion of the instant contract. This FAR amendment was initiated by the Small Business Administration Advocacy Office and is a part of the SBA, Office of Advocacy's Regulatory Review and Reform Initiative, or r3 initiative. The r3 program was established to help small businesses address the cumulative federal regulatory burden. For the text of the preceding proposed rule, see 70,006.227.




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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