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FAC 2005-54 Contains 2 Interim, 8 Final Rules Amending the FAR

The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have issued Federal Acquisition Circular 2005-54, which contains 2 interim and 8 final rules amending the Federal Acquisition Regulation. In order of appearance, the rules address: Item I, Notification of Employee Rights under the National Labor Relations Act (FAR Case 2010-006); Item II, Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions (FAR Case 2008-025); Item III, Small Disadvantaged Business Program Self-Certification (FAR Case 2009-019); Item IV, Certification Requirement and Procurement Prohibition Relating to Iran Sanctions (FAR Case 2010-012); Item V, Representation Regarding Export of Sensitive Technology to Iran (FAR Case 2010-018, Interim); Item VI, Set-Asides for Small Business (FAR Case 2011-024, Interim); Item VII, Sudan Waiver Process (FAR Case 2009-041); Item VIII, Successor Entities to the Netherlands Antilles (FAR Case 2011-014); and Item IX, Labor Relations Costs (FAR Case 2009-006). Item X makes editorial amendments to FAR 1.106, FAR 4.604, and FAR 8.501. This FAC also contains a Small Entity Compliance Guide. 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 2005-54, see ¶70,002.135.

Employee Rights

The FAR Case 2010-006 rule finalizes, without change, the interim rule issued with FAC 2005-47 that amended the FAR to implement Executive Order 13496, Notification of Employee Rights under Federal Labor Laws, as implemented by the Department of Labor. The order requires contractors and subcontractors to display a notice to employees of their rights under federal labor laws. DoL has determined the notice must also include employee rights under the National Labor Relations Act (29 USC 151 and following). The NLRA encourages collective bargaining and protects employees' freedom to associate, self organize, and designate representatives of their own choosing for negotiating the terms and conditions of their employment. The DoL issued a final rule implementing E.O. 13496 at 29 CFR Part 471 (75 FR 28368). The FAR interim rule implemented the requirements of the DoL final rule by creating FAR Subpart 22.16 and a clause at FAR 52.222-40, Notification of Employee Rights under the National Labor Relations Act. In addition, the rule revised the clauses at FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders --Commercial Items, and FAR 52.244-6, Subcontracts for Commercial Items, to include the requirements of FAR 52.222-40. The interim rule also made corresponding technical changes to the definition of "United States" in FAR 2.101, the Office of Management and Budget Paperwork Reduction Act approval provision at FAR 1.106, and the terms and conditions clause for simplified acquisitions at FAR 52.213-4.

Personal Conflicts of Interest

The FAR Case 2008-025 final rule amends the FAR to address personal conflicts of interest by employees of government contractors, as required by Section 841(a) of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (PL 110-417) (codified at 41 USC 2303). Generally, the rule requires contractors to take necessary steps to identify and prevent personal conflicts of interest for employees that perform acquisition functions closely associated with inherently governmental functions. Contracting officers must consult with legal counsel for advice and recommendations on a course of action when a contractor reports a personal conflict of interest violation by a covered employee or when the contractor violates the requirements of newly-added clause FAR 52.203-16, Preventing Personal Conflicts of Interest. The rule adds a new FAR Subpart 3.11, consisting of FAR 3.1100 through FAR 3.1106. FAR 3.1101 provides definitions for "acquisition function closely associated with inherently governmental functions," "covered employee," and "personal conflict of interest," while FAR 3.1102 sets out the government's policy to require contractors to identify and prevent personal conflicts of interest of their covered employees and prohibit covered employees who have access to non-public information from using the information for personal gain. FAR 3.1103 sets out the procedures for screening covered employees for potential conflicts and to inform covered employees of their obligation with regard to potential conflicts of interest. FAR 3.1104 sets forth the parameters for mitigation of conflicts and for seeking a waiver of the requirements. FAR 3.1105 instructs COs on what steps to take for suspected violations. FAR 3.1006 is the prescription provision for FAR 52.203-16. The final rule also makes corresponding technical changes to FAR 1.106 and FAR 12.503. This rule makes significant changes to the proposed version of the rule ( ¶70,006.237). The final rule applies to contracts issued on or after the effective date, December 2, 2011, and task or delivery orders awarded on or after the effective date, but not to commercial items contracts. In a notice published concurrently with FAC 2005-54 (76 FR 68046), the FAR Councils have requested public comment on whether additional guidance is necessary to address personal conflicts of interest by employees of government contractors. Comments are due January 3, 2012.

SDB Self-Certification

The FAR Case 2009-019 rule finalizes, without change, the interim rule issued with FAC 2005-47 that incorporated changes made by the Small Business Administration to its Small Disadvantaged Business Program. The SBA rule ( ¶70,425.338) permitted SDB subcontractors to provide written statements to prime contractors representing in good faith their status as SDB concerns for the purposes of subcontract awards under federal prime contracts. This interim rule was intended to maintain consistency between the SBA regulations and the FAR. Specifically, the rule amended the definition provision at FAR 2.101 to revise the term "small disadvantaged business concern" to be consistent with SBA Part 124, which continues to recognize small business concerns that have been certified by SBA, and to add language that allows small business concerns to self-represent their status as SDBs for subcontracts. FAR 19.301-1 was amended to update citations, and FAR 19.703 was amended to add language that allows the contractor to rely on small business concerns to self-represent their status as SDBs for subcontracts. Also, the rule amended FAR 52.219-8, Utilization of Small Business Concerns, to allow a small business concern to self-represent its SDB status in writing, and FAR 52.219-25, Small Disadvantaged Business Participation Program --Disadvantaged Status and Reporting, to allow contractors to accept written self-representations of small disadvantaged status from subcontractors. Corresponding technical changes were made to FAR 52.212-5, FAR 52.213-4, and FAR 52.244-6.

Iran Sanctions

An interim rule issued with FAC 2005-46 (FAR Case 2010-012) has been finalized, with a minor change to the prescription provision at FAR 25.1103, to reflect the revised title of FAR 52.225-25, Prohibition on Contracting with Entities Engaging in Sanctioned Activities Relating to Iran --Representation and Certification, as amended by the FAR Case 2010-018 interim rule (Item V of this FAC). The interim rule implemented Section 102 and partially implemented Section 106 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (PL 111-195). Section 102 requires certification that each offeror, and any person owned or controlled by the offeror, does not engage in any activity for which sanctions may be imposed under Section 5 of the Iran Sanctions Act of 1996, as amended. Section 106 imposes a procurement prohibition relating to contracts with persons that export certain sensitive technology to Iran. The interim rule added a new section at FAR 25.703, Prohibition on contracting with entities that engage in certain activities relating to Iran, and three new subsections. FAR 25.703-1 provided a definition of "person" as it applies to the requirements in FAR 25.703-2 and FAR 25.703-3. FAR 25.703-2 explained the certification requirement and provided a summary of the activities for which sanctions may be imposed. It also set forth the remedies if the head of an executive agency determines a person has submitted a false certification. FAR 25.703-3 partially implemented Section 106 of PL 111-195 by prohibiting agencies from entering into or extending a contract for the procurement of goods or services with a person that exports certain sensitive technology to Iran, as determined by the President and listed on the Excluded Parties List System. The interim rule established a waiver of the requirements if the President, on a case-by-case basis, determines and certifies in writing to the appropriate congressional committees that it is in the national interest to do so. The interim rule also made conforming changes to FAR 4.1202 and the clause at FAR 52.204-8, Annual Representations and Certifications.

Sensitive Technology Exports

An interim rule, FAR Case 2010-018, adds a representation to implement Section 106 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, which imposed a procurement prohibition on contracts with persons that export certain sensitive technology to Iran. This rule expands on the interim rule published with FAC 2005-46 under FAR Case 2010-012, which was finalized in Item IV of this FAC. To further implement Section 106, this rule adds, at FAR 25.703-3 (b), a requirement for a representation that the offeror does not export any sensitive technology to the government of Iran or any entities or individuals controlled by the government of Iran. The waiver procedure at FAR 25.703-2 (d) has been moved to FAR 25.703-4, so that waiver of Section 106 can be addressed along with the procedures for waiver of Section 102. The representation that the offeror does not export sensitive technology to Iran is incorporated into the certification at FAR 52.225-25, now titled "Prohibition on Contracting with Entities Engaging in Sanctioned Activities Relating to Iran --Representation and Certification," to include the representation and clarify the prohibition is against contracting with sanctioned entities. FAR 52.225-25 includes the statutory definition of "sensitive technology" and a Department of State e-mail address where offerors can refer questions concerning sensitive technology before making the representation. This representation requirement also applies to the acquisition of commercial items pursuant to a change to FAR 52.212-3, Offeror Representations and Certifications --Commercial Items. Offerors will be able to make an annual certification through the Online Representations and Certifications Application, if the offeror is registered in the Central Contractor Registration database. Therefore, conforming changes have been made to FAR Part 4 and the clause at FAR 52.204-8, Annual Representations and Certifications. Comments on the interim rule, identified by FAR Case 2010-018, are due by January 3, 2012.

Set-Asides

The FAR Case 2011-024 interim rule amends the FAR to implement Section 1331 of the Small Business Jobs Act of 2010 (PL 111-240), which addresses set-asides of task- and delivery-orders under multiple-award contracts, partial set-asides under multiple-award contracts, and the reserving of 1 or more multiple-award contracts that are awarded using full and open competition. This interim rule amends: FAR 8.405-5, to clarify that set-asides may be used in connection with the placement of orders and blanket purchase agreements under Federal Supply Schedules; FAR 12.207, to acknowledge that discretionary set-asides may be used if placing an order under a multiple-award contract; FAR 16.505, to acknowledge set-asides may be used in connection with the placement of orders under multiple-award contracts, notwithstanding the requirement to provide each contract holder a fair opportunity to be considered; and FAR 38.101 to add a reference to FAR 8.405-5 to clarify that order set-asides may be used in connection with the placement of orders and blanket purchase agreements under Federal Supply Schedules. The rule also amends FAR Part 19, at FAR 19.502-4 through FAR 19.502-6, FAR 19.508, FAR 19.811-3, FAR 19.1304, FAR 19.1308, FAR 19.1309, FAR 19.1404, FAR 19.1407, FAR 19.1504, and FAR 19.1506, to add new regulations authorizing agencies to use set-asides under multiple-award contracts (including set-asides for small businesses participating in the small business programs identified in FAR 19.000 (a)(3)), and to reserve 1 or more contract awards under multiple-award contracts for small businesses, including any of the socio-economic groups. This interim rule further amends existing solicitation provisions and contract clauses, including FAR 52.219-6, to provide notice of total set-asides and partial set-asides under multiple-award contracts, and it revises existing contract clauses at FAR 52.219-3, FAR 52.219-14, FAR 52.219-27, FAR 52.219-29, and FAR 52.219-30, to address limitations on subcontracting for small businesses under multiple award contracts. A new clause, FAR 52.219-13, advises that the contracting officer will give notice of orders to be set aside for small business concerns. COs are encouraged to modify, on a bilateral basis, existing multiple-award contracts in accordance with FAR 1.108 (d)(3), if the remaining period of performance extends at least 6 months after the effective date, and the amount of work or number of orders expected under the remaining performance period is substantial. Comments on the interim rule, identified by FAR Case 2011-024, are due by January 3, 2012.

Sudan Waiver

A final rule, FAR Case 2009-041, amends FAR 25.702-4 to revise the prohibition on contracting with entities that conduct restricted business operations in Sudan. This rule adds specific criteria, including foreign policy aspects an agency must address when applying to the President or his appointed designee for a waiver of the prohibition on awarding a contract to a contractor that conducts restricted business operations in Sudan. The rule also describes the consultation process that will be used by the Office of Federal Procurement Policy in support of the waiver request review.

Netherlands Antilles

The FAR Case 2011-014 final rule amends the FAR to revise the definitions of "Caribbean Basin country" and "designated country" in FAR 25.003 due to the change in status of the islands that comprised the Netherlands Antilles. The Netherlands Antilles was designated as a beneficiary country under the Caribbean Basin Initiative (see 19 USC 2702). According to the initiative, successor political entities remain eligible as beneficiary countries. On October 10, 2010, Curacao and Sint Maarten became autonomous territories of the Kingdom of the Netherlands. Bonaire, Saba, and Sint Eustatius now fall under the direct administration of the Netherlands. The rule also reflects this change in the following FAR clauses: FAR 52.225-5, Trade Agreements; FAR 52.225-11, Buy American Act --Construction Materials under Trade Agreements; and FAR 52.225-23, Required Use of American Iron, Steel, and Manufactured Goods --Buy American Act --Construction Materials under Trade Agreements.

Labor Relations Costs

A final rule, FAR Case 2009-006, amends the FAR to implement E.O. Executive Order 13494, Economy in Government Contracting, issued on January 30, 2009, and amended on October 30, 2009. This EO treats as unallowable the costs of any activities undertaken to persuade employees of the recipient of federal disbursements, or of any other entity, to exercise or not exercise the right to organize and bargain collectively through representatives of the employee's own choosing. Accordingly, this final rule amends the cost principle at FAR 31.205-21 to reflect the requirements of E.O. 13494. The proposed version of the rule appears at ¶70,006.239.

(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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