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FAC 2005-42 Issued with Twelve Rules

The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have published Federal Acquisition Circular 2005-42, which contains eight final and four interim rules amending the Federal Acquisition Regulation. In order of appearance, the rules address the following subjects: Item I, American Recovery and Reinvestment Act (the Recovery Act) of 2009 --Whistleblower Protections (FAR Case 2009-012); Item II, Electronic Subcontracting Reporting System (eSRS) (FAR Case 2005-040); Item III, American Recovery and Reinvestment Act of 2009 (the Recovery Act) --Publicizing Contract Actions (FAR Case 2009-010); Item IV, Public Disclosure of Justification and Approval Documents for Noncompetitive Contracts --Section 844 of the National Defense Authorization Act for Fiscal Year 2008 (FAR Case 2008-003); Item V, Additional Requirements for Market Research (FAR Case 2008-007; Interim); Item VI, American Recovery and Reinvestment Act of 2009 (Recovery Act) --GAO/IG Access (FAR Case 2009-011); Item VII, New Designated Country --Taiwan (FAR Case 2009-014); Item VIII, Nonavailable Articles (FAR Case 2009-013); Item IX, Disclosure and Consistency of Cost Accounting Practices for Contracts Awarded to Foreign Concerns (FAR Case 2009-025; Interim); Item X, Compensation for Personal Services (FAR Case 2009-026; Interim); and Item XI, Payrolls and Basic Records (FAR Case 2009-018; Interim). Item XII contains a final rule that makes editorial changes to FAR 31.205-6, FAR 31.205-16, FAR 49.505, and FAR 52.222-34. 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. Comments on the interim rules, identified by their respective FAR case number, are due by August 16, 2010. For the text of FAC 2005-42, see 70,002.121.

Whistleblower Protections

The rule associated with FAR Case 2009-012 finalizes, with minor changes, the FAC 2005-32 interim rule that amended the FAR to implement Section 1553 of the Recovery Act, Protecting State and Local Government and Contractor Whistleblowers. The rule added new sections at FAR 3.907 through FAR 3.907-7, "Whistleblower Protections Under the American Recovery and Reinvestment Act of 2009," and a related new clause at FAR 52.203-15, which is prescribed at FAR 3.907-7. These provisions prohibit non-federal employers receiving funds under the Recovery Act from discharging, demoting, or discriminating against employees as a reprisal for disclosing certain covered information to certain categories of government officials or a person with supervisory authority over the employee. The newly added regulations provided definitions relevant to the statute, established time periods within which the Inspector General and the agency head must take action with regard to a complaint filed by a contractor employee, established procedures for access to investigative files of the Inspector General, and provided for remedies and enforcement authority. Corresponding amendments were made to FAR 3.900, FAR 3.902 (which was removed and reserved), FAR 52.212-4, FAR 52.212-5, FAR 52.213-4, and FAR 52.244-6. The final rule revises the definition of "covered funds" at FAR 3.907-1 to be more consistent with the statutory definition, and amends the procedures for filing complaints at FAR 3.907-3(c). The flowdown in the clause at FAR 52.203-15(b) is also revised to apply only to subcontracts that are funded in whole or in part with the Recovery Act funds. The final rule also removes unnecessary language from FAR 52.212-4(r). Corresponding technical changes were made to the clauses at FAR 52.213-4 and FAR 52.244-6.

Subcontract Reporting

A final rule, FAR Case 2005-040, makes changes to an interim rule issued with FAC 2005-25 that amended the FAR to require small business subcontract reports to be submitted using the Electronic Subcontracting Reporting System, rather than through Standard Form 294-Subcontract Report for Individual Contracts and Standard Form 295-Summary Subcontract Report. The eSRS, which is a web-based system managed by the Integrated Acquisition Environment, is intended to streamline the small business subcontracting program reporting process and provide the data to agencies in a manner that will enable them to manage the program more effectively. The interim rule amended FAR Subpart 19.7 and related clauses to clarify existing small business subcontracting program requirements. Specifically, the interim rule amended FAR 1.106, FAR 4.402, FAR 4.403, FAR 19.701, FAR 19.704, FAR 19.705-2, FAR 19.705-6, FAR 19.705-7, and the contract clauses at FAR 52.212-5, FAR 52.219-9, and FAR 52.219-25. The rule also revised FAR 53.219 and removed the forms at FAR 53.301-294 and FAR 53.301-295. In response to public comments, the final rule adds a new Alternate III to the Small Business Subcontracting Plan clause at FAR 52.219-9 and amends the data reporting requirements at FAR 4.606, the subcontracting plan requirements at FAR 19.704, and the contract clause prescriptions at FAR 19.708 to recognize that contractors will need to use the newly created SF 294 at FAR 53.301-294, rather than eSRS, to submit an individual subcontract report. Contractors must use SF 294 if a contract is not reported in the Federal Procurement Data System because reporting may disclose information that would compromise national security.

Publicizing Actions

The rule associated with FAR Case 2009-010 finalizes amendments to the FAR made by a FAC 2005-32 interim rule that implemented the Office of Management and Budget Guidance M-09-10, dated February 18, 2009, entitled "Initial Implementing Guidance for the American Recovery and Reinvestment Act of 2009," with respect to publicizing contract actions. The interim rule added text to FAR 4.605 requiring contracting officers to enter data in the Federal Procurement Data System on any action funded in whole or in part by the Recovery Act, in accordance with the instructions at https://www.fpds.gov. The rule also added a new FAR Subpart 5.7 (FAR 5.701 - FAR 5.705), which directs COs to use the Governmentwide Point of Entry (https://www.fedbizopps.gov) to identify the action as funded by the Recovery Act, post pre-award notices for orders exceeding $25,000 for "informational purposes only," describe supplies and services (including construction) in a narrative that is clear and unambiguous to the general public, provide a rationale for awarding any action, including modifications and orders, that is not both fixed-price and competitive, and include the rationale for using other than a fixed-price or competitive approach. FAR 8.404, FAR 13.105, and FAR 16.505 were amended to reflect the new posting requirements for orders at FAR Subpart 5.7. The final rule amends FAR 5.704(a)(2) to clarify that modifications of orders are not required to be publicized at the pre-award stage and FAR 5.704(b) to require COs to identify proposed contract actions funded in whole or in part by the Recovery Act. Amended FAR 5.705(b) requires COs to include in the description of the contract action a statement specifically noting if the action was not awarded competitively or was not fixed-price.

J&A Disclosure

The FAR Case 2008-003 final rule adopts as final, with changes, the interim rule in FAC 2005-30 that amended the FAR to implement Section 844 of the National Defense Authorization Act for Fiscal Year 2008, "Public Disclosure of Justification and Approval Documents for Noncompetitive Contracts," which stipulates the requirements regarding the public availability of justification and approval documents after contract award, except for information exempt from public disclosure. The interim rule revised FAR 6.305 to require agencies to make available for public inspection within 14 days after contract award the justification required by FAR 6.303-1, on the agency's website and at the Governmentwide Point of Entry (www.fedbizopps.gov). In the case of a contract award permitted under FAR 6.302-2, the rule required the justification to be posted within 30 days after contract award. The rule also required contracting officers to screen carefully all justifications for contractor proprietary data and remove the data, and any references and citations necessary to protect the data, before making the justifications available for public inspection. This interim rule also added a new section at FAR 5.406 that cross-references the requirements at FAR 6.305. The rule also amended FAR 5.301 and FAR 24.203. The final rule adds a new paragraph FAR 6.305(c) to require the justification to be posted with the solicitation if the justification is a brand-name justification under FAR 6.302-1. Also, a new paragraph FAR 6.305(f) clarifies that posting the justification is not required if it would disclose the agency's needs and disclosure would compromise national security or create other security risks. In addition, the final rule establishes procedures at FAR 13.501 similar to the procedures at FAR 6.305(b), (d), (e), and (f).

Market Research

An interim rule, FAR Case 2008-007, amends the FAR to implement Section 826 of the National Defense Authorization Act for Fiscal Year 2008 (PL 110-181), which established additional market research requirements in subsection (c) of 10 USC 2377. As a matter of policy, these statutory requirements extend to all executive agencies. This rule requires market research to be accomplished before an agency places an indefinite-delivery/indefinite-quantity task or delivery order in excess of the simplified acquisition threshold. In addition, a prime contractor with a contract in excess of $5 million for the procurement of items other than commercial items must conduct market research before making purchases that exceed the simplified acquisition threshold when the contractor is acting as a purchasing agent for the government. To implement these new requirements, the interim rule amends FAR 10.001, FAR 10.002, FAR 44.303, FAR 44.400, FAR 44.402, and FAR 44.403, as well as the contract clause at FAR 52.244-6 relating to subcontracts for commercial items.

GAO/IG Access

The FAR Case 2009-011 final rule adopts, with some changes, the FAC 2005-32 interim rule that implemented Sections 902, 1514, and 1515 of Division A of the Recovery Act with regard to agency inspector general and Government Accountability Office access to contractor records. These sections are intended to "prevent the fraud, waste, and abuse" of Recovery Act funds through the review and audit of contracts using these funds. The interim rule amended FAR 12.504(a)(7) for contracts using Recovery Act funds to apply 41 USC 254d(c) and 10 USC 2313(c), Examination of Records of Contractor, to commercial item subcontracts that are otherwise exempt when subcontractors are not required to provide cost or pricing data. Similarly, FAR 13.006(d) was amended for contracts using Recovery Act funds to apply FAR 52.215-2, Audit and Records-Negotiation, to contracts and subcontracts that are otherwise exempt because they are under the simplified acquisition threshold. The interim rule also adds alternate clauses to FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders-Commercial Items, FAR 52.214-26, Audit and Records-Sealed Bidding, and FAR 52.215-2, Audit and Records-Negotiation. Corresponding changes were made to FAR 12.301, FAR 14.201-7, and FAR 15.209. The final rule makes minor changes to the prescription provisions at FAR 12.301, FAR 14.201-7, and FAR 15.209. The final rule also makes a technical change to FAR 52.214-26.

Designated Country

The FAR Case 2009-014 rule finalizes, without change, the interim rule issued with FAC 2005-36 that implemented the designation of Taiwan under the World Trade Organization Agreement on Government Procurement. Taiwan became a designated country on July 15, 2009, based on its accession to the WTO Agreement on Government Procurement. The interim rule's addition of Taiwan to the list of WTO designated countries impacted FAR 22.1503, FAR 25.003, FAR 52.212-5, FAR 52.213-4, FAR 52.222-19, FAR 52.225-5, FAR 52.225-11, and FAR 52.225-23. As a result of the changes, contracting officers may purchase goods and services made in Taiwan without application of the Buy American Act, if the acquisition is covered by the WTO Agreement on Government Procurement.

Nonavailable Articles

A final rule (FAR Case 2009-013) amends FAR 25.104(a) to add items to the list of articles not available from domestic sources in sufficient and reasonably available commercial quantities of a satisfactory quality. Unless the contracting officer learns before the time designated for receipt of bids in sealed bidding or final offers in negotiation that an article on the list is available domestically in sufficient and reasonably available quantities of a satisfactory quality, the Buy American Act does not apply to the acquisition of these items as end products, and the CO may treat foreign components of the same class or kind as domestic components. Specifically, the rule removes "Modacrylic fur ruff" and adds "Modacrylic fiber" in its place. The rule also adds "Pineapple, canned" and "Yeast, active dry and instant active dry" to the list. For the proposed rule, see 70,006.231.


An interim rule, FAR Case 2009-025, aligns the FAR with the revised Cost Accounting Standards Board clause, Disclosure and Consistency of Cost Accounting Practices-Foreign Concerns (see CASB 9903.201-4). A 2008 CASB final rule (70,055.21) added the clause for inclusion in CAS-covered contracts and subcontracts awarded to foreign concerns. To maintain consistency between CAS and the FAR in matters relating to CAS administration, the interim rule amends FAR 30.201-4, which prescribes the clause at FAR 52.230-4. Also, the rule revises FAR 30.201-4(d) to include use of FAR 52.230-6, Administration of Cost Accounting Standards, in all contracts containing FAR 52.230-4. The rule replaces the FAR 52.230-4 clause in its entirety and re-titles it "Disclosure and Consistency of Cost Accounting Practices-Foreign Concerns." FAR 52.230-6 is revised to include a reference to FAR 52.230-4.


The FAR Case 2009-026 interim rule incorporates into the FAR revised Cost Accounting Standards 412, Composition and measurement of pension cost, and 415, Accounting for the cost of deferred compensation. A CASB final rule (70,055.20) amended the CAS provisions concerning the recognition of costs incurred for Employee Stock Ownership Plans under government cost-based contracts and subcontracts. The final rule provided criteria for measuring the costs of ESOPs and assigning the costs to accounting periods, and the amendments specified the provisions of CAS 415, and not any other standard, govern accounting for ESOP costs. This interim rule amends FAR 31.205-6 to implement the CAS changes.

Payroll Privacy

An interim rule (FAR Case 2009-018) amends the FAR to implement a Department of Labor final rule regarding the submission of payroll data, Protecting the Privacy of Workers: Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction (73 FR 77504). The interim rule revises FAR 52.222-8, Payrolls and Basic Records, and the form at FAR 53.303-WH-347, to delete the requirement for submission of full social security numbers and home addresses of individual workers on weekly payroll transmittals as required on covered construction contracts. However, the rule requires contractors and subcontractors to maintain the full social security number and current address of each covered worker and provide the information on request to the contracting officer, the contractor, or the DOL Wage and Hour Division for purposes of an investigation or audit of compliance with prevailing wage requirements. The rule recognizes DOL's finding that complete social security numbers and home addresses for individual workers is personal information to the worker and that any unnecessary disclosure and submittal of this information creates exposure to identity theft and an invasion of privacy.




(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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