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FAC 2005-38 Issued with Seven Rules

The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have published Federal Acquisition Circular 2005-38, which contains seven final rules amending the Federal Acquisition Regulation. In order of appearance, the rules address the following subjects: Item I, Revocation of Executive Order 13201, Notification of Employee Rights Concerning Payment of Union Dues or Fees (FAR Case 2009-017); Item II, Governmentwide Commercial Purchase Card Restrictions for Treasury Offset Program Debts (FAR Case 2006-026); Item III, Internet Protocol Version 6 (FAR Case 2005-041); Item IV, Federal Food Donation Act of 2008 (FAR Case 2008-017); Item V, Postretirement Benefits (FAR Case 2006-021); and Item VI, Travel Costs (FAR Case 2006-024). Item VII contains a final rule that makes technical editorial amendments to FAR 6.302-2, FAR 8.703, FAR 15.305, FAR 52.209-6, and FAR 52.212-5. This FAC also contains a Small Entity Compliance Guide. For the text of FAC 2005-38, see 70,002.117.

Labor


The rule associated with FAR Case 2009-017, amends the FAR to delete FAR Subpart 22.16 and the corresponding clause at FAR 52.222-39, Notification of Employee Rights Concerning Payment of Union Dues or Fees. These provisions implemented Executive Order 13201 of February 17, 2001, which required contractors to post a notice informing employees of their rights concerning payment of union dues or fees and stated employees could not be required to join unions or maintain membership in unions to retain their jobs. E. O. 13201 was revoked by E. O. 13496 of January 30, 2009, Notification of Employee Rights Under Federal Labor Laws. This order requires contractors to post a notice informing employees of their rights under federal labor laws, including the National Labor Relations Act (29 USC 151 and following). This Act encourages collective bargaining by allowing workers to freely associate, self- organize, and designate representatives of their own choosing for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection. Accordingly, the language at FAR Subpart 22.16, which prescribed the policy and procedures of E. O. 13201, no longer applies. This final rule also amends the definition of "United States" in FAR 2.101 and the clauses at FAR 52.212-5, FAR 52.213-4, and FAR 52.244-6 to remove any references to the revoked E. O. 13201 and deleted FAR provisions. This rule has a December 10, 2009, effective date.

Purchase Cards


The FAR Case 2006-026 final rule amends the FAR to restrict the use of the governmentwide commercial purchase card as a method of payment for offerors with debts subject to the Treasury Offset Program (see http://fms.treas.gov/debt/index.html). This rule facilitates the collection of delinquent debts owed to the government by requiring contracting officers to determine whether the Central Contractor Registration database indicates the contractor has delinquent debt that is subject to collection under the TOP. If the CCR database contains a debt flag indicator, then, pursuant to amended FAR 52.232-36, the governmentwide commercial purchase card is not authorized as a method of payment to that contractor. The CO must check for the debt flag indicator at the time of contract award or order issuance or placement. Unlike the proposed rule (70,006.218), this final rule does not contain a requirement for the CO to check CCR before exercising an option. Purchases and orders at or below the micro-purchase threshold are exempt from verification in the CCR database. Also, the rule does not apply to individual travel charge cards or centrally billed accounts for travel and transportation services. In addition to amending FAR 52.232-36, Payment by Third Party, this final rule amends CCR procedures at FAR 4.1103, required sources language at FAR 8.402 and FAR 8.405-7, simplified acquisition requirements at FAR 13.003, FAR 13.201 and FAR 13.301, indefinite-delivery contract provisions at FAR 16.505, and contract financing requirements at FAR 32.1108 and FAR 32.1110. The rule also makes a corresponding technical change to FAR 52.212-5. The rule goes into effect on February 1, 2010.

Internet Protocol


The rule associated with FAR Case 2005-041 amends the FAR to require the inclusion of Internet Protocol Version 6 compliant products in all new information technology acquisitions using Internet Protocol. IP is one of the primary mechanisms that define how and where information moves across networks. The widely-used IP industry standard is IP Version 4. However, the Office of Management and Budget Memorandum M-05-22, dated August 2, 2005, requires all new IT procurements, to the maximum extent practicable, to include IPv6 capable products and standards. Benefits offered by IPv6 include a platform for innovation, collaboration, and transparency; integrated interoperability and mobility; improved security features; and unconstrained address abundance. The government version 6 (USGv6) profile defines effective dates for its mandatory requirements so as to provide vendors a 24-month lead time to implement and test (see http://www.antd.nist.gov/usgv6). The earliest effective date in version 1 of the profile is July, 2010. To implement this policy, this final rule adds a new paragraph (iii) at FAR 7.105(b)(4) to require a discussion of Internet Protocol compliance for information technology acquisitions using IP. The rule also adds a new paragraph (g) to FAR 11.002 specifying that agency requirement documents must include the appropriate IPv6 compliance requirements, unless a waiver to the use of IPv6 has been granted. In addition, the rule adds a new paragraph (e) to both FAR 12.202 and FAR 39.101, stating that agencies must include the appropriate IP compliance requirements consistent with FAR 11.002(g). The final rule, which is effective December 10, 2009, makes minor technical changes to the proposed rule (70,006.196).

Food Donation


The rule in FAR Case 2008-017 finalizes without change an interim rule issued with FAC 2005-31. The interim rule implemented the Federal Food Donation Act of 2008 (PL 110-247), which encourages executive agencies and their contractors to donate, to the maximum extent practicable and safe, apparently wholesome excess food to nonprofit organizations that provide assistance to food-insecure people in the United States. The rule added a new FAR Subpart 26.4 (FAR 26.400 - FAR 26.404), entitled Food Donations to Nonprofit Organizations. The definition section, FAR 26.401, contains four definitions from the Act: "apparently wholesome food," "excess food," "food-insecure," and "nonprofit organization." The policy section, FAR 26.402, states the government encourages agencies and their contractors to donate excess apparently wholesome food to nonprofit organizations providing food-bank assistance to Americans. The procedures section, FAR 26.403, provides the costs and liability details to encourage contractor donations to nonprofit organizations. FAR 26.404 prescribes use of a new contract clause, FAR 52.226-6, in solicitations and contracts greater than $25,000 for the provision, service, or sale of food in the U.S. The interim rule also added corresponding language at FAR 31.205-1, FAR 52.212-5, and FAR 52.213-4. The final rule is effective December 10, 2009.

Postretirement Benefits


The FAR Case 2006-021 final rule amends the FAR to permit contractors to measure accrued postretirement benefit costs using the criteria in either Internal Revenue Code section 419 or Financial Accounting Standard 106. Currently, FAR 31.205-6(o) allows contractors to choose among three different accounting methods for PRB costs: cash basis, terminal funding, and accrual basis. When a contractor uses the accrual basis method, the FAR requires that costs must be measured based on the requirements of Financial Accounting Standard 106. However, the tax-deductible amount that is contributed to the retiree benefit trust, which is part of a welfare benefit plan, is determined using IRC sections 419 and 419A, which set forth different measurement criteria than FAS 106. As a result, the FAS 106 amount can often exceed the costs measured under IRC sections 419 and 419A, and contractors that choose to accrue PRB costs for government reimbursement must decide whether to fund the entire FAS 106 amount to obtain government reimbursement of the costs, regardless of tax implications, or to fund only the tax deductible amount and not be reimbursed for the entire FAS 106 amount under their government contracts. Accordingly, the rule amends the cost principle at FAR 31.205-6(o)(2)(iii), and makes a technical amendment at FAR 31.001 to add the definition of "welfare benefit fund." The final rule clarifies the proposed rule's (70,006.216) language on the healthcare inflation assumption and the transition between accounting methods. The rule goes into effect January 11, 2010.

Travel Costs


A final rule, FAR Case 2006-024, amends the FAR to change the travel cost principle at FAR 31.205-46, to ensure a consistent application of the limitation on allowable contractor airfare costs. FAR 31.205-46(b) currently limits allowable contractor airfare costs to "the lowest customary standard, coach, or equivalent airfare offered during normal business hours." However, contractors are interpreting this limitation inconsistently --either as lowest coach fare available to the contractor or lowest coach fare available to the general public --and these inconsistent interpretations can lead to confusion regarding what costs are allowable (see the proposed rule 70,006.217). This rule clarifies that the reasonable standard to apply in determining the allowability of airfares is the lowest priced airfare available to the contractor. The rule, therefore, addresses circumstances where contractors, as a result of direct negotiation, obtain lower priced airfares than the general public. This final rule goes into effect January 11, 2010.









 






 

 

(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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