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FAC 2005-37 Issued with Eight Rules

The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have published Federal Acquisition Circular 2005-37, which contains four interim and four final rules amending the Federal Acquisition Regulation. In order of appearance, the rules address the following subjects: Item I, Registry of Disaster Response Contractors (FAR Case 2008-035, Interim); Item II, Limiting Length of Noncompetitive Contracts in "Unusual and Compelling Urgency" Circumstances (FAR Case 2007-008); Item III, GAO Access to Contractor Employees (FAR Case 2008-026); Item IV, Use of Commercial Services Item Authority (FAR Case 2008-034, Interim); Item V, Limitations on Pass-Through Charges (FAR Case 2008-031, Interim); Item VI, Award Fee Language Revision (FAR Case 2008-008, Interim); and Item VII, National Response Framework (FAR Case 2009-003).


Item VIII contains a final rule that makes technical editorial changes to FAR 5.102, FAR 52.213-4 and FAR 52.244-6. This FAC also contains a Small Entity Compliance Guide. All rules carry an October 14, 2009, effective date unless otherwise noted below. Comments on the interim rules, identified by FAR case number, are due by December 14, 2009. For the text of FAC 2005-37, see 70,002.116.

Disaster Response

The interim rule associated with FAR Case 2008-35 amends the FAR to implement Section 697, Registry of Disaster Response Contractors (PL 109-295), of the Department of Homeland Security Appropriations Act, 2007 (6 USC 796). The Act requires the Administrator of the Federal Emergency Management Agency to establish and maintain a registry of contractors willing to perform debris removal, distribution of supplies, reconstruction, and other disaster or emergency relief activities. The Registry includes business information consistent with the data that is currently required in the Central Contractor Registration with two additional categories added to reflect the area served by the business, and the bonding level of the business concern. This interim rule adds a definition for the "Disaster Response Registry" at FAR 2.101; redesignates FAR 4.1104 as FAR 4.1105, and adds a new FAR 4.1104, requiring contracting officers to consult the Registry at www.ccr.gov; adds a paragraph (v) to FAR 7.103 that requires agency heads to prescribe procedures to ensure COs consult the Registry; includes a reference to 6 USC 796 at FAR 10.000 and adds language to FAR 10.001 regarding market research; adds the requirement in FAR 18.102 for COs to consult the Registry for available contractors; redesignates FAR 26.205 as FAR 26.206, and adds a new FAR 26.205 to inform COs how to locate contractors on the Registry; and makes conforming amendments to FAR 13.201, and to the prefatory text in FAR 52.204-7 and FAR 52.226-3 through FAR 52.226-5.

Length of Contracts

The FAR Case 2007-008 final rule amends the FAR to implement Section 862 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (PL 110-417) and the Office of Federal Procurement Policy Administrator's memorandum of May 31, 2007. The rule amends FAR 6.302-2 by adding paragraph (d) to limit the length of contracts awarded noncompetitively under unusual and compelling urgency circumstances to the minimum contract period necessary to meet the requirements, and no longer than one year, unless the agency head determines exceptional circumstances apply. The determination of exceptional circumstances is in addition to the approval of the justification in FAR 6.304. These requirements apply to any contract that has a value greater than the simplified acquisition threshold. See 70,006.219 for the text of the proposed rule.

GAO Access

The rule associated with FAR Case 2008-026 finalizes without change an interim rule issued with FAC 2005-32 that amended the FAR to implement Section 871 of the Duncan Hunter NDAA for FY 2009, which allows the Government Accountability Office to interview current contractor employees during the audit of the contractor's records. The interim rule revised FAR 52.214-26(c), Audit and Records-Sealed Bidding, and FAR 52.215-2(d)(1), Audit and Records-Negotiation, to add the required statutory language and allow for the required access. FAR 12.503 was amended to add the statute to the list of laws inapplicable to the acquisition of commercial items.

Commercial Price Analysis

An interim rule, FAR Case 2008-034, amends the FAR to implement Section 868 of the Duncan Hunter NDAA for FY 2009. Section 868 provides that purchases of commercial services that are not offered and sold competitively in substantial quantities in the commercial marketplace may only be considered commercial items for the purposes of the FAR if the contracting officer determines in writing that the offeror has submitted sufficient information to evaluate, through price analysis, the reasonableness of the price for the services. The rule, which amends FAR 15.403-1 and FAR 15.403-3, details the information the CO may consider to make this determination.

Excessive Charges

The interim rule associated with FAR Case 2008-031 amends the FAR to minimize excessive pass-through charges by contractors from subcontractors, or of tiers of subcontractors, that add no or negligible value and to ensure that neither a contractor nor a subcontractor receives indirect costs or profit/fee on work performed by a lower-tier subcontractor to which the higher-tier contractor or subcontractor adds no, or negligible, value. This rule implements Section 866 of the Duncan Hunter NDAA for FY 2009, which applies to executive agencies other than the Department of Defense, which is subject to Section 852 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (P. L. 109-364). The rule is intended to protect the government's interests when there appears to be an agreement with a contractor to perform the contract scope of work, including managing subcontractors, then after award, the contractor subcontracts substantially all the effort without providing the required value-added subcontract management functions that were expected. To enable agencies to ensure that pass-through charges are not excessive, this interim rule adds a solicitation provision, FAR 52.215-22, and a contract clause, FAR 52.215-23, requiring offerors and contractors to identify the percentage of work that will be subcontracted, and when subcontract costs will exceed 70 percent of the total cost of work to be performed, to provide information on indirect costs and profit/fee and value added with regard to the subcontract work. The rule makes corresponding technical changes to FAR 15.408 and FAR 31.203. The rule is to be applied consistent with existing Cost Accounting Standards and FAR rules related to subcontract management, indirect cost allocation, and profit analysis.

Award Fee

An interim rule, FAR Case 2008-008, addresses award and incentive fee contract types, by amending and integrating where appropriate, FAR Part 7, Acquisition Planning, and FAR Part 16, Contract Types, to improve agency use and decision making when using incentive contracts. The rule adds new definitions at FAR 16.001, and amends FAR 16.305, FAR 16.401, FAR 16.402-1, FAR 16.404 and FAR 16.405-2, to provide further guidance relative to: award fees being linked to acquisition objectives in the areas of cost, schedule, and technical performance; the percentage of award fee available for prescribed narrative ratings; award fees not being earned if the contractor's overall performance is judged to be below satisfactory; the analysis required in determining whether to use an award or incentive fee type contract or not; award-fee plan content; the prohibition of the use of the award fee rollover concept; the requirements relative to award and incentive fee data collection and performance measures to evaluate such data, and a reference to FAR 7.105 for consideration of this information in acquisition planning; and the publishing of best practices. The rule implements the provisions of Section 814 of the John Warner NDAA for FY 2007, Section 867 of the Duncan Hunter NDAA for FY 2009, and the Office of Federal Procurement Policy guidance memorandum dated December 4, 2007, entitled Appropriate Use of Incentive Contracts.

Response Plan

The FAR Case 2009-003 final rule amends the FAR to reflect the reissuance of the Federal Emergency Management Agency's National Response Plan. On January 22, 2008, FEMA reissued the NRP as the National Response Framework. With the reissuance, which went into effect March 22, 2008, the term "Incidents of National Significance" was eliminated and the NRP became obsolete. Accordingly, this rule amends FAR 18.001, FAR 18.203, and FAR 18.204 to reflect these changes. This final rule goes into effect November 13, 2009.




(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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