FAR Councils Issue Six Rules with FAC 2005-31

The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have published Federal Acquisition Circular 2005-31. The Circular contains two interim and four final rules amending the Federal Acquisition Regulation. In order of appearance, the rules address: Item I --Small Business Size Rerepresentation (FAR Case 2006-032); Item II --Clarification of Submission of Cost or Pricing Data on Non-Commercial Modifications of Commercial Items (FAR Case 2008-012, Interim); Item III --Amendments to Incorporate New Wage Determinations (FAR Case 2008-014); Item IV --Least Developed Countries that are Designated Countries (FAR Case 2008-021); Item V --Federal Food Donation Act (2008) (FAR Case 2008-017, Interim); and Item VI --Technical Amendments. See the summaries below for each rule's effective date. For a complete listing of all FAR sections impacted by this FAC, see the table at the end of this report. The full text of FAC 2005-31 appears at 70,002.106.

FAR Case 2006-032 finalizes, with changes, the interim rule issued in FAC 2005-18, which amended the FAR to implement the Small Business Administration's final rule entitled "Small Business Size Regulations; Size for Purposes of Governmentwide Acquisition Contracts, Multiple Award Schedule Contracts and Other Long-Term Contracts; 8(a) Business Development/Small Disadvantaged Business; Business Status Determinations" (70,425.282). The purpose of the SBA rule and this FAR case is to improve the accuracy of small business size status reporting at the prime contract level over the life of certain contracts, including long-term contracts and contracts involving novations, acquisitions, and mergers. Pursuant to the interim rule, contractors are required to rerepresent their size status on contracts before the end of the fifth year of a contract that is more than five years in duration. Rerepresentation is also required before exercising any option of a contract exceeding five years, and following execution of a novation agreement or a merger or acquisition of the contractor, regardless of whether there is a novation agreement. A change in size status does not change the terms and conditions of the contract, but the agency may no longer include the value of options exercised or orders issued against the contract in its small business prime contracting goal achievements. Although not addressed in the SBA rule, the interim rule strengthened the requirement for a contracting officer to document in the contract file the date the contractor verified its representations in the government's Online Representations and Certifications Application, or to include a paper copy of those representations in the contract file.
Interim Rule Changes

To implement these changes, the interim rule amended FAR 4.602; changed the heading of FAR Subpart 4.12 to read "Rerepresentations and Certifications" and revised the introductory text to FAR 4.1200; added a new subparagraph to FAR 4.1201; revised FAR 17.207(e); added a new paragraph (c) to FAR 19.202-5; redesignated FAR 19.301 as FAR 19.301-1, while adding new sections at FAR 19.301, FAR 19.301-2, and FAR 19.301-3; amended FAR 19.302 and FAR 19.308; revised FAR 19.804-6; amended the contract clause at FAR 52.212-5; and added a new clause at FAR 52.219-28. In response to comments to the interim rule, the FAR Case 2006-032 final rule makes further changes. The rule adds a requirement to the clause at FAR 52.219-28 for contractors to update size status information in the Central Contractor Registration and ORCA databases when any of the events requiring rerepresentation occur. The final rule also revises FAR 19.301-2(d) to state that agencies should issue a modification to the contract capturing the rerepresentation and report it to the Federal Procurement Data System within 30 days after notification of the rerepresentation. The final rule makes additional changes for clarity and overall ease of understanding, and to maintain consistency within the FAR. A corresponding technical change is made to FAR 1.106 regarding Office of Management and Budget approval under the Paper Work Reduction Act. This rule carries an April 20, 2009, effective date.
Cost/Pricing Data

The interim rule in FAR Case 2008-12 amends the FAR to implement Section 814 of the National Defense Authorization Act for Fiscal Year 2008, 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). Thus, 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. This rule amends FAR 15.403-1 at paragraphs (c)(3)(ii)(B) and (c)(3)(ii)(C). Comments on the interim rule, which must reference FAR Case 2008-12, are due May 18, 2009. The rule is effective March 19, 2009.
Wage Determinations

The final rule in FAR Case 2008-014 addresses solicitation amendments incorporating new wage determinations requirements, and a possible scenario where a contracting officer has to unnecessarily reevaluate proposals already eliminated from a competition. The rule amends FAR 22.404-5(c)(3), which covers contracting by negotiation when the closing date has passed, and currently requires a new wage determination with a changed wage rate be furnished as an amendment to all prospective offerors that submitted proposals. There was an apparent inconsistency between FAR 22.404-5(c)(3) and FAR 15.206(c), with the latter requiring amendments issued after closing to be issued to all offerors that have not been eliminated from the competition. This final rule corrects the inconsistency by changing the language at FAR 22.404-5(c)(3) to indicate a contracting officer must amend solicitations to incorporate new wage determinations and furnish the wage rate information to all offerors that have not been eliminated from the competition, if the closing date for receipt of offers has already passed. The rule goes into effect April 20, 2009.
Least Developed Countries

The final rule associated with FAR Case 2008-021 implements a revision by the United States Trade Representative to the list of Least Developed Countries that are designated countries under the Trade Agreements Act of 1979. The USTR has revised the list to add Liberia and to remove Cape Verde. Accordingly, this final rule amends the FAR to revise the definitions of "designated country" and "least developed country" at FAR 25.003, and the definition of "designated country" in the clauses at FAR 52.225-5, Trade Agreements, and FAR 52.225-11, Buy American Act --Construction Materials Under Trade Agreements. The rule also amends a date in the clause at FAR 52.212-5. This final rule carries a March 19, 2009, effective date.
Food Donation

The interim rule in FAR Case 2008-017 amends the FAR to implement the Federal Food Donation Act of 2008 (PL 110-247), which encourages executive agencies and their contractors to donate wholesome excess food to nonprofit organizations that provide assistance to food-insecure people in the United States. Specifically, this interim rule applies to contracts greater than $25,000 for the provision, service, or sale of food in the U.S. The rule adds a new FAR Subpart 26.4, entitled "Food Donations to Nonprofit Organizations." Specifically, the definition section, FAR 26.401, adds 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 rule also adds corresponding language at FAR 31.205-11, FAR 52.212-5, and FAR 52.213-4 . Comments on the interim rule, which must reference FAR Case 2008-017, are due May 18, 2009. The rule is effective March 19, 2009.

Item VI of FAC 2005-31 makes technical amendments to the FAR. The final rule makes editorial changes at FAR 3.503-2, FAR 47.103-1, and FAR 52.225-11. These technical amendments are effective March 19, 2009. Also, FAC 2005-31 includes a Small Entity Compliance Guide, which was prepared in accordance with Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996. The Guide identifies one rule --FAR Case 2006-032, Small Business Size Rerepresentation --as having a corresponding regulatory flexibility analysis.

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