FAC 2005-56 Issued with Eight Final Rules Amending the FAR

The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have issued Federal Acquisition Circular 2005-56, which contains eight final rules amending the Federal Acquisition Regulation. In order of appearance, the rules are: Item I --Women-Owned Small Business (WOSB) Program (FAR Case 2010-015); Item II --Proper Use and Management of Cost-Reimbursement Contracts (FAR Case 2008-030); Item III --Requirements for Acquisitions Pursuant to Multiple-Award Contracts (FAR Case 2007-012); Item IV --Socioeconomic Program Parity (FAR Case 2011-004); Item V --Trade Agreements Thresholds (FAR Case 2012-002); Item VI --New Designated Country (Armenia) and Other Trade Agreements Updates (FAR Case 2011-030); and Item VII --Government Property (FAR Case 2010-009). Item VIII makes editorial amendments. This FAC also contains a Small Entity Compliance Guide that identifies the rules that have an associated regulatory flexibility analysis. A full listing of the regulations impacted by the rules, along with the effective date for each rule, appears in the FAC regulation table below. For the text of FAC 2005-56, see 70,002.141.

WOSB Program

The FAR Case 2010-015 interim rule issued in FAC 2005-51 has been finalized with changes. The rule provides a tool to assist agencies in achieving the five-percent statutory goal for contracting with women-owned small businesses. This case is based on the Small Business Administration's regulations establishing the Women-Owned Small Business Program, authorized under Section 8(m) of the Small Business Act (15 USC 637(m)). Agencies may restrict competition to Economically Disadvantaged Women-Owned Small Business concerns, for contracts assigned a North American Industry Classification Systems code in an industry in which SBA has determined that WOSBs are underrepresented in federal procurement. For NAICS code industries where WOSBs are substantially underrepresented, agencies may restrict competition to either EDWOSB concerns or to WOSB concerns eligible under the WOSB Program. EDWOSB concerns and WOSB concerns eligible under the WOSB Program must be owned and controlled by one or more women who are United States citizens. An EDWOSB concern is automatically a WOSB concern eligible under the WOSB Program. The final rule makes minor changes to the interim rule. In particular, the term "WOSB concern" is corrected to "WOSB concern eligible under the WOSB Program" in the FAR and in the standard forms. Also, the relevant Paperwork Reduction Act burden control number is added to the list at FAR 1.106. Other changes include minor revisions to Optional Form 347, Order for Supplies and Services; Standard Form 1447, Solicitation/Contract; and SF 1449, Solicitation/Contract/Order for Commercial Items, to add to the business classification for WOSB "eligible under the WOSB Program."

Cost-Reimbursement Contracts

A FAC 2005-50 interim rule, FAR Case 2008-030, which amended the FAR to implement Section 864 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (PL 110-417), has been finalized with changes. The NDAA and the rule are aligned with the Presidential Memorandum on Government Contracting, issued on March 4, 2009 (70,105.05). The interim rule provided regulatory guidance at FAR Subpart 16.1, Selecting Contract Types, and FAR Subpart 16.3, Cost-Reimbursement Contracts, on the proper use and management of other than firm-fixed-price contracts, which include cost-reimbursement, time-and-material, and labor-hour contracts. Specifically, the interim rule amended FAR 16.103 to revise paragraph (d) to reflect additional documentation when other than a firm-fixed-price contract type is selected, and the procedures for negotiating contract types. FAR 16.104 was amended to add a new paragraph (e) to provide contracting officers with guidance on combining contract types if the entire contract cannot be firm fixed-price. Similarly, FAR 16.301-2 and FAR 16.301-3 were amended to provide guidance to COs as to which C-R contracts to use and under what circumstances they should be used. FAR 2.101 was amended to add the definition of a "Contracting officer representative." The amendments to FAR 7.103 addressed agency-head responsibilities. Additionally, the rule amended FAR 16.301-2 on the application of C-R contracts and FAR 16.301-3 to describe the limits placed on C-R contracts. With regard to contract administration functions, the rule added a new paragraph at FAR 42.302(a)(12) to require COs to determine the continuing adequacy of the contractor's accounting system during the entire period of contract performance. The final rule made minor changes and clarifications to FAR 1.602-2 to clarify that COR duties may be retained by COs, FAR 7.104 regarding the nomination of a COR, FAR 16.103(d) to clarify the need to document the contract file with regard to the selection of the contract type, FAR 16.301-2 to remove language from paragraph (b), and FAR 16.301-3 regarding the limits on use of C-R contracts.


The FAR Case 2007-012 interim rule issued in FAC 2005-50, which implemented Section 863 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (PL 110-417), has been finalized with changes. Section 863, entitled "Requirements for Purchase of Property and Services Pursuant to Multiple-Award Contracts," mandates enhanced competition for orders placed under multiple-award contracts, including the General Service Administration's Federal Supply Schedules. If an individual order over the simplified acquisition threshold does not follow the Section 863 competitive procedures, a notice of, and the determination to waive competition for, the order must be published at http://www.fedbizopps.gov within 14 days after award. In particular, the interim rule revised the "fair opportunity" competition requirements in FAR 16.505(b) applicable to multiple-award task- and delivery-order contracts, other than FSS contracts; amended the procedures for ordering supplies and services under FSS contracts at FAR 8.405-1 and FAR 8.405-2; established new competition procedures at FAR 8.405-3 for creating blanket purchase agreements under FSS contracts and placing orders under the BPAs; amended the contract award synopsis provisions at FAR 5.301 to require publication and posting of actions supported by exceptions to fair opportunity at FAR 16.505(b)(2) for non-FSS task- and delivery-order contracts and limited-sources justifications at FAR 8.405-6 for FSS contracts, except when disclosure would compromise national security or create other security risks; clarified that ordering activities may seek a price reduction under FSS contracts at any time; and added language explaining that the protest procedures found at FAR Subpart 33.1 apply to the issuance of an order or the establishment of a BPA against an FSS contract. The final rule amends FAR 8.405-3(a)(7)(v) to correct the threshold amount, which should have read $103 million in the interim rule. The final rule also amends FAR 8.405-3(c)(3) to clarify the reporting activity's responsibilities to consider the level of effort, mix of labor, and total price.

Program Parity

The interim rule associated with FAR Case 2011-004 has been finalized with changes. The rule, issued with FAC 2005-50, implemented Section 1347 of the Small Business Jobs Act of 2010 (PL 111-240). Section 1347 clarifies the contracting officer's ability to use discretion when determining whether an acquisition will be restricted to small businesses participating in the 8(a), HUBZone, or service-disabled veteran-owned small business programs. The interim rule made similar changes to the FAR and provided for program parity among the programs. The interim rule added a new section at FAR 19.203 to explain the relationship among small business programs. A correcting amendment (70,002.132) amended FAR 19.502-2 to reinstate the "Rule of Two," which was inadvertently deleted in the interim rule. In response to public comments, the final rule makes the following changes: FAR 13.003(b)(2) is revised to remove the reference to SDVOSB concerns and to add a reference to the SDVOSB program; FAR 19.800(e) is revised to clarify that COs must consider 8(a) set-asides or sole source awards before considering a general small business set-aside; FAR 13.003(b)(2) is revised to remove the reference to HUBZone small business concerns and to add a reference to FAR 19.1305 and FAR 19.1306(a)(4) for the HUBZone program; FAR 19.203(d) was added to include language consistent with SBA 125.2(f)(2)(ii) regarding the minimum elements a CO should examine when choosing a socioeconomic program (i.e., the results of market research and progress in fulfilling agency small business goals); and an introductory statement was added at FAR 19.800(e), FAR 19.1305(a), and FAR 19.1405(a) to clarify COs must keep in mind the priorities and considerations set forth in FAR 19.203 when planning an acquisition under the 8(a), HUBZone, or SDVOSB programs.

Trade Thresholds

A final rule, FAR Case 2012-002, amends the FAR to incorporate adjusted thresholds for application of the World Trade Organization Government Procurement Agreement and the Free Trade Agreements, as determined by the United States Trade Representative. The Trade Representative published the new procurement thresholds on December 8, 2011 (77 FR 76808). A table showing the new dollar thresholds appears at revised FAR 25.402. To implement these changes, this final rule also amends FAR 22.1503, FAR 25.202, FAR 25.603, FAR 25.1101, FAR 25.1102, FAR 52.204-8, FAR 52.212-5, FAR 52.213-4, and FAR 52.222-19.

New Designated Country

The final rule associated with FAR Case 2011-030 amends the FAR to add Armenia as a designated country, due to the accession of Armenia to membership in the World Trade Organization Government Procurement Agreement. The rule amends FAR 25.003, which defines WTO GPA countries by listing the parties to the WTO GPA, and defines "designated country" as a WTO GPA country, a Free Trade Agreement country, a least designated country, or a Caribbean Basin country. Accordingly, this final rule adds Armenia to the lists of WTO GPA countries and designated countries at FAR 22.1503, FAR 25.003, FAR 52.222-19, FAR 52.225-5, FAR 52.225-11, and FAR 52.225-23. Conforming changes have also been made to the associated clause dates for the revised clauses in the lists at FAR 52.212-5 and FAR 52.213-4. The rule also updates the FAR lists of countries at FAR 25.407 and the clause at FAR 52.225-7 that are party to the Agreement on Trade in Civil Aircraft.

Government Property

A final rule, FAR Case 2010-009, makes extensive changes to the FAR to clarify the requirements for reporting, reutilizing, and disposing of government property (see 70,006.248 for the proposed rule). The revisions include new and expanded policy language on the disposal of scrap; new language for contracting officers and contract specialists on depositing of monies received from contractors for property that is lost, damaged, destroyed, or stolen; and new requirements prohibiting personal property from being installed or constructed on contractor-owned real property in such fashion as to become nonseverable. The rule does not place new requirements on contractors. Instead, it clarifies existing policies and procedures and should simplify compliance for contractors, while also enabling consistent government oversight. The revisions include technical corrections to align the FAR with the requirements of the Federal Management Regulation. Included among the changes to the FAR are the following: a definition of "surplus property" is added at FAR 2.101 to apply throughout the FAR; terminology is updated and used consistently throughout the FAR (e.g., "loss of Government property" is defined at FAR 45.101, and "loss" is used consistently in lieu of "loss, damage, destruction, or theft"); the responsibilities and authorities of the CO, property administrator, plant clearance officer, and contractor are clarified; procedures and responsibilities for government property disposal are reorganized and clarified (see FAR Subpart 45.6); and the Government property clause at FAR 52.245-1 updated to conform with revisions to FAR Part 45.




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