Michelle M. Currier, CPCM, CFCM - PowerPoint Presentation

Slide1

Michelle M. Currier, CPCM, CFCM

Professor of Contract ManagementDefense Acquisition University

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Acquisition Provisions in Defense Authorization BillsSlide3

Sources of FAR Changes(http://www.acq.osd.mil/dpap/dars/case_status.html

Legislation

IG & GAO Recommendations

Court Decisions

OFPP Policy Letters

Executive Orders

Agency Recommendations

Individual Recommendations

Industry Recommendations

Policy Changes

FAR

DFARS

PGI

CDSlide4

Defense

Acquisition

Regulations

System(DARS)Ms. Linda Neilson

Acquisition

Policy

(AP)

Mr. Skip

Hawthorne

Contract

Policy/

International

Contracting

(CPIC)

Mr. John Tenaglia

Program

Acquisition

(PA)

Ms. Jill Stiglich

Program

Development

& Implementation

(PDI)

Ms. LeAntha

Sumpter

Defense Procurement & Acquisition Policy (DPAP)

Contingency

Contracting

(CC)

Ms. Barbara Truillo

Mr. Shay D. Assad assumed the role of Director of Defense Pricing in June of 2011.

Services

Acquisition

(SA)/

Strategic

Sourcing (SS)

Mr. Kenneth

Brennan

Director

Ms. Claire M. Grady

Operations

Mr. Robert JarrettSlide5

Better Buying Power 3.0

Achieve Affordable Programs

Continue to set and enforce affordability caps

Achieve Dominant Capabilities While Controlling Lifecycle Costs

Strengthen and expand

“should cost” based cost management

Anticipate and plan for responsive and emerging

threats by

building

stronger partnerships

of acquisition, requirements

,

and intelligence

communities

Institutionalize stronger DoD

level Long Range R&D

Program Plans

Strengthen cybersecurity throughout the product lifecycle

Incentivize Productivity in Industry and Government

Align profitability more tightly with Department goals

Employ appropriate contract types

,

but increase the use of incentive type contracts

Expand

the s

uperior supplier incentive program

Ensure effective use of Performance-Based Logistics

Remove barriers to commercial technology utilization

Improve the return on investment in DoD laboratories

Increase the productivity of corporate IRAD

Incentivize Innovation in Industry and Government

Increase the use of prototyping and experimentation

Emphasize technology insertion and refresh in

program planningUse Modular Open Systems Architecture to stimulate innovation

Increase the return on and access to

small business research and developmentProvide draft technical requirements to industry early and involve industry in funded concept definition Provide clear and objective “best value” definitions to industry Eliminate Unproductive Processes and BureaucracyEmphasize acquisition chain of command responsibility, authority, and accountability

Reduce cycle times while ensuring sound investments

Streamline documentation requirements and staff reviewsRemove unproductive requirements imposed on industry

Promote Effective CompetitionCreate and maintain competitive environmentsImprove DoD outreach for technology and products from global marketsIncrease small business participation, including through more effective use of market research Improve Tradecraft in Acquisition of ServicesStrengthen contract management outside the normal acquisition chain – installations, etc.

Improve requirements definition for services Improve the effectiveness and productivity of contracted engineering and technical servicesImprove the Professionalism of the Total Acquisition WorkforceEstablish higher standards for key leadership positionsEstablish stronger professional qualification requirements for all acquisition specialties Strengthen organic engineering capabilities Ensure development program leadership for is technically qualified to manage R&D activities

Improve our leaders’ ability to understand and mitigate technical riskIncrease DoD support for (STEM) educationAchieving Dominant Capabilities through Technical Excellence and InnovationIdeas retained from BBP 2.0 and/or BBP 1.0New in BBP 3.0Continue Strengthening Our Culture of: Cost Consciousness, Professionalism, and Technical Excellence

9 Apr 15Slide6

RemindersHave you issued your whistleblower protection letters to each of your employees? As of September 30, 2013 all federal contractors were required to notify each employee in writing of their whistleblower rights- what they can disclose, and to whom they can disclose the information, and not be retaliated against by their employer. If the employee does not speak English, the letter

must be translated for them into their predominant language.Rule prohibits contractor or subcontractor from discharging, demoting or otherwise discriminating against employees who wish to report fraud, waste or abuse. Scope of information protected expanded to include disclosures about “abuse of authority” in the management of a DoD Contract. Old standard was just mismanagement, waste, violation of law or danger to public health or safety. Slide7

RemindersHave you conducted your annual training for each of your employees on how to prevent and detect human trafficking? Have you verified your subcontractors prevention and detection plans? Is your workforce comprised of 8% veterans and 7% disabled, or do you have a written plan to achieve those goals by 2015? 

Have you added sexual orientation and gender identity to your employee handbook as protected classes that cannot be discriminated against?Slide8

RemindersCost Realism AnalysisGAO sustained protest where the record shows that agency’s evaluation was based on the mechanical application of a government estimate. Did not take into consideration each offeror’s unique technical approach.

Not consistent with the terms of the solicitation and applicable statues and regulations.Slide9

Historical Title Act Slide10

Historical Title Act10Slide11

Historical Title Act11Slide12

Historical Title Act12Slide13

ThresholdsEffective October 1, 2015, one final rule amends the FAR to implement inflation adjustments to acquisition-related thresholds. Changes include:The micropurchase threshold of $3,000 is increased to $3,500.The commercial items test program ceiling is increased from $6.5 million to $7 million.The cost or pricing data threshold is increased from $700,000 to $750,000.

The prime contractor subcontracting plan floor is increased from $650,000 to $700,000, while the construction threshold remains at $1.5 million.Slide14

ThresholdsThe threshold for reporting first-tier subcontract information, including executive compensation, is increased from $25,000 to $30,000.The cost or pricing data threshold and Cost Accounting Standard threshold are raised from $700,000 to $750,000.The simplified acquisition threshold of $150,000 is unchanged, as are FedBizOpps preaward and postaward notices, which remain at $25,000. A proposed rule published November 25, 2014, is adopted without change. However, some final thresholds are lower due to a lower rate of inflation than projected at the time the proposed rule was published.Slide15

New Stuff Coming!Contracting officers are prohibited from awarding contracts using FY15 funds to any contractor that has an adjudicated federal tax liability or has been convicted of a felony criminal violation of any federal law within the preceding 24 months.Women-owned small businesses (WOSBs) now are authorized to receive sole source contracts up to $4 million (services) and $6.5 million (equipment). WOSBs MUST BE CERTIFIED BY THE SBA- THEY CAN NO LONGER SELF CERTIFY.

Small businesses are exempt from fraud penalties for False Small Business certifications if they relied on written advisory opinions from a SBDC or PTAC. The FAR was amended to make it harder for firms to propose uncompensated overtime as a method for gaining a cost advantage.Saving Federal Dollars Through Better Use of Government Purchase and Travel Cards Act (S1616) to examine charge card purchases across government.Slide16

New Stuff Coming!FAR rule has been published regarding pass through contracts. If the prime intends to award subcontracts for more than 70% of the work effort, the contracting officer must justify continuing with that contract in writing, or seek to contract directly with the subcontractor.

Far 15.404-1(h)(2) COMPETITION REQUIREMENTS STILL APPLY IF THE CONTRACTING OFFICER SELECTS ALTERNATIVE APPROACHESFar 15.404-1(h)(3) DOES NOT APPLY TO SMALL BUSINESS SET-ASIDE CONTRACTS 

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Labor Issues

Fair Pay and Safe Workplaces Proposed Regulations

New $10.10 Minimum Wage

Service Contract Act and GSA Schedules Interplay

Nondisplacement of Qualified Workers

General SCA Compliance IssuesSlide18

New Regulations affecting Service Contracting:Labor LawsE.O

. 13658, Establishing a Minimum Wage for ContractorsEstablish a minimum wage for contractors of $10.10 to be adjusted annually (FAR 22.12, 15 Dec 2014, Interim rule)E.O. 13665, Non-Retaliation for Disclosure of Compensation InformationApplicants or employees of Federal contractors may discuss compensation without fear of adverse

action (Rulemaking is still at the DOL)E.O. 13673, Fair Pay and Safe WorkplacesInformation to be provided to workers regarding how their pay is calculated and if they are being treated independent contractors.That certain claims brought by workers be adjudicated using arbitration only if voluntarily agreed to

.Agencies to appoint a senior labor compliance advisor who will advise contracting officers on specific procurement actions.Disclosure of contractor and subcontractor labor law violations so contracting officers and contractors, respectively, can consider this information when making responsibility determinations and during contract/subcontract performance

.

E.O

. 13672, Further Amendments

to

Equal Opportunity in the Federal

Government

Prohibits

discrimination in Federal contracting by adding sexual orientation and gender identity to the prohibited bases of discrimination, which are race, color, religion, sex, and national

origin (FAR Interim rule, 10 April 2015)

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Labor Issues

The Labor Landscape

: contracting professionals have a dizzying array of labor compliance challenges

New FLSA regulations proposed higher minimum salary

FLSA Compliance including overtime and employee categorization

Exempt employees must be paid as required (salary, fee, or hourly) Hours worked

Class actions rising

Service Contract Act for non-exempt services and Davis-Bacon Act for construction

Employee Classification – Employees or Contractors (1099s)?Slide20

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Labor Issues

Fair Pay and Safe Workplaces

:

Expected to take effect in 2016

Proposed regulations issued in May

Impacts contracts for services

and

products

Requires contractors to disclose (in proposal) if they have labor violations from preceding three years and update disclosures every 6 mos. after contract award.

Contracting agency will make responsibility determination depending on labor compliance historySlide21

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Fair Pay

and

Safe

Workplaces

:

What is a “violation?”

Prospective contractors bidding on contracts valued over $500,000 would be required to report whether they have had any “administrative merits determination,” “arbitral award or decision,” or “civil judgment” rendered against them for violation of any one of fourteen federal labor laws/regulations (or their state equivalents) within three years of the date the bid or proposal is submitted.  See Proposed FAR 22.2002 (note, DOL will be issuing guidance regarding the equivalent state laws at some point in the future).

Labor

IssuesSlide22

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Labor Issues

Fair Pay and Safe Workplaces

:

Reportable violations include restraining orders issued by a court (including consent injunctions), summary judgment decisions in a case, or investigative findings by DOL (such as the issuance of DOL form WH-56).  A DOL investigator issues a WH-56 form anytime he or she is requiring the payment of back wages regardless of whether the contractor is at fault for the “violation.”  For instance, with respect to the McNamara-O’Hara Service Contract Act of 1965 (the “SCA”), sometimes the payment of back wages is triggered by the contracting agency’s failure to include the SCA statute and appropriate wage determination into the contract – a circumstance where a contractor has no fault. 

See

Proposed FAR 22.2002. Slide23

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Labor Issues

Fair Pay and Safe Workplaces

:

What happens next?

If a contractor’s proposal is considered for award, the prospective contractor would be required to enter the following information regarding the violation into the System for Award Management (“SAM”): the labor law violated, the case number or other unique identifying number, the date rendered, and the agency, panel, or court that issued the decision. 

See

Proposed FAR 22.2004-2(b)(1)(i).Slide24

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Fair Pay and Safe Workplaces

:

Contracting agencies, in consultation with their internal agency labor compliance advisors (“ALCA” – a new position created by the Proposed FAR Regulations), would be required to make an affirmative determination prior to awarding a contract in excess of $500,000 as to whether the prospective contractor is a responsible source.  This analysis is in addition to the existing present responsibility analysis under Federal Acquisition Regulation (“FAR”) Part 9. 

See

Proposed FAR 22.2004-2

. 

Labor

IssuesSlide25

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Labor Issues

Fair Pay and Safe Workplaces

:

How are subcontractors impacted?

Prime contractors would also be required to make responsibility determinations regarding their proposed subcontractors if the subcontract is estimated to exceed $500,000 and is not for the supply of Commercial Off The Shelf (“COTS”) items (this requirement is supposed to be passed down to each lower tier subcontractor). 

See

Proposed FAR 22.2004-1(b).  Prime contractors are encouraged to consult with DOL to help in making responsibility determinations.  In addition, in some circumstances (particularly when a subcontractor with previous violations has not entered into a Labor Compliance Agreement), prime contractors will be required to report an affirmative responsibility determination to the contracting agency. Slide26

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Labor Issues

Fair Pay and Safe Workplaces

:

Consequences (Unintended and Intended):

Increase in bid protests challenging responsibility determinations

More publicly available information regarding labor violations

Double trouble

: a second punishment for contractors who have labor violations

Increase in court settlements to avoid reporting

More expensive contracts with a smaller pool of contractors

Three year look-back starts now!Slide27

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Labor Issues

Fair Pay and Safe Workplaces

:

There are also provisions regarding paycheck transparency and employee arbitration

Comments are due August 11Slide28

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Labor Issues

$10.10 Minimum Wage

:

$10.10 Minimum Wage EO is now a final regulation and applicable to all new procurements (after Jan. 1, 2015).

Impacts SCA, DBA and certain other contracts

Pop Quiz

: is it applicable to options that occur after January 1, 2015?

Requires minimum wage payments to workers on contract and certain other support workers

Violations could result in debarment and payment of back wagesSlide29

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Labor Issues

$10.10 Minimum Wage

:

WDs not being updated – disclaimer on the front:

Note: Executive Order (EO) 13658 establishes an hourly minimum wage of $10.10for 2015 that applies to all contracts subject to the Service Contract Act for which the solicitation is issued on or after January 1, 2015. If this contract is covered by the EO, the contractor must pay all workers in any classification listed on this wage determination at least $10.10 (or the applicable wage rate listed on this wage determination, if it is higher) for all hours spent performing on the contract. The EO minimum wage rate will be adjusted annually. Additional information on contractor requirements and worker protections under the EO is available at www.dol.gov/whd/govcontracts.Slide30

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Labor Issues

SCA/GSA Interplay

:

SCA clause and all WDs in all GSA Schedules

Burden on contractor to determine applicability of SCA

Burden on contractor to choose the correct WD

Ordering agency not expected to include specific WD

Guidance coming from DOL?Slide31

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Labor Issues

The Non-Displacement

of Qualified Workers

: requires incoming contractors (with exceptions) to hire

the non-exempt

SCA-covered workforce.

Outgoing contractors required to provide employee list with anniversary dates to contracting officer 30 days prior to the end of the contract.

The contracting officer must forward list to incoming contractor.Slide32

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Labor Issues

Incoming contractors must provide bona fide offers to incumbent workforce

except

:

Changes with written bona fide staffing plan.

Outgoing contractor takes their staff.

Incoming contractor has its own staff.

Poor performance by worker.

Note

: burden on contractor to prove exemption.

Some practical issues include

:

No new requirements by incoming contractors.

Pricing is difficult.

Even if employee not on list, must be given offer.

Complaints must be made within 120 days of start of contract.Slide33

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Labor Issues

SCA Compliance Issues

:

More investigators and investigations

Basic requirements: (1) pay according to WD/CBA, (2) benefits (H&W, vacation, and holiday), and (3) notification of SCA applicability

Pitfalls include benefits for PT and temporary workers, “volunteer” work, properly counting hours worked, agency failure to include SCA/WD in contract

Get help during an investigationSlide34

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Labor Issues

Affordable Care Act - How is H&W Impacted

? Depends whether ACA benefits are required because SCA benefits cannot otherwise be required by law.

The Supreme Court addressed the issue as to whether the ACA required an employer to provide health insurance in

National Federation of Independent Businesses v. Sebelius,

132 S.Ct. 2566 (2012). 

Because, under the ACA, no one has to actually provide health insurance, it is not a requirement that would prevent one from counting it for SCA purposes.Slide35

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Cyber

The Scary Cyber Landscape

Keith Alexander

: the “loss of industrial information and intellectual property through cyber espionage” the “greatest transfer of wealth in history.”

Tony Scott (federal gov’t CIO)

: protections instituted by contractors were “inconsistent” and federal agencies failed to have proper “contractual language, policy direction, or awareness” as to how they should respond to breaches.Slide36

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Cyber

The Scary Cyber Landscape

67K cyber incidents on systems supporting federal government in 2014

Of 24 agencies reviewed by GAO, 23 were not cyber ready

VA failed its cybersecurity audit for the 16

th

straight year (1.2m malware attempts in April)

GAO: Healthcare.gov lacks proper cyber protections

HBGary provides a cautionary tale (you will be hacked)Slide37

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Cyber

Federal Agencies Racing…

NIST Leads the Way

DOJ, GSA, DoD, and others release guidance

Guidance may be used against contractors (legally or for responsibility determinations) if there is a breachSlide38

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The OPM BreachSlide39

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OPM Breach

Who is impacted?

22.1 million people including government employees and contractor employees and their families. Included was James Comey – FBI Director.

What was stolen?

Highly sensitive information including social security numbers, health records, criminal records and 1.1 million fingerprints.

What are the consequences?

Individuals’ information can be sold and there is a fear that the information can be used to “out” spies.

Army blocked OPM e-mail…Slide40

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New DFARS

252.204-7012

Highlights

:

Applies to Unclassified Controlled Technical Information (any information that has military or space application);

Must be inserted into every DoD contract:

no exemption

for small businesses and commercial buys;

Must be flowed down to subcontractors;

Establishes minimum security controls for safeguarding Unclassified Controlled Technical Information; and

Requires disclosure to DoD within 72 hours of breach – no safe harbor.Slide41

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New DFARS

252.204-7012

Some

of the 50+ Requirements

:

AT-2: Contractor must provide security awareness training.

CM-7: Configuration of the system provides only essential capabilities.

IA-5(1): Requirement regarding passwords – encryption, type, etc.

IR-2: The organization provides incident response training.

PE-2: Maintains list of individuals with physical access to facility where information systems resides.

PE-3: Maintains physical access logs, escorts visitors and monitors visitor activity.

RA-5: Scans for vulnerabilities.

SC-4: Prevents unauthorized transfer of information using shared system resources.

SC-28 (and others): Requires encryption of information.

SI-4: Monitor system to detect attacks and potential attacks.Slide42

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New DFARS 252.204-7012

Some

Practical

Issues

:

Applies to subcontractors and vendors supplying your IT

Penalties can include contract administration actions (termination)

Contracts should be getting certifications from subcontractors where possible

Agencies should be monitoring contractor complianceSlide43

Data VulnerabilitySafeguarding Unclassified Controlled Technical Information, DFARS 204.73, 18 Nov 2013, PGI 204.73, 16 Dec 2014 Requires the contractor to safeguard DoD unclassified controlled technical information within the contractor’s unclassified

information systems and report the compromise of unclassified controlled technical information, such as technical data, computer software, and other technical informationProcedures for requiring activity and contracting officer when a solicitation is expected to result in a contract with CTI. Requirements Relating to Supply Chain Risk, DFARS 230.7306, 18 Nov 2013 (Interim Rule)

Provision and clause for inclusion in all solicitations and contracts, including contracts for commercial items or COTS items involving the development or delivery of any information technology, but only applies to National Security SystemsBasic Safeguarding of Contractor Information Systems (Proposed FAR Case 2011-020)Will add subpart at 4.17, Basic Safeguarding of Contractor Information Systems

Contractor must protect Federal Gov’t information transiting through the contractors information systems and report information breaches to the Gov’t. Gov’t will have access to computers to analyze breach.Class Deviation, Contracting for Cloud Services, 9 Feb 2015Rules and contract clauses when procuring cloud services

Associated cyber incident reporting

Slide44

Controlled Unclassified Information (CUI)DFARS 252.204-7012 Safeguarding of Unclassified Controlled Technical InformationExamples: credit card and healthcare information, background and law enforcement records, IRS tax records, patent submissions, technical data to develop satellites, communication systems, infrastructure and weapons.

Most information stolen in security breaches is CUI.Slide45

Controlled Unclassified Information (CUI)Contractors’ information system must at a minimum comply with NIST Special Pub 800-53 relating to 14 factors including access control, awareness and training, audit and accountability, CM, contingency, planning, identification and authentication and incident responseMandatory 72-hour Cyber Incident Reporting with No Safe Harbor on Compliance

All DoD contractors and subcontractors including commercial and small business contracts if contractor has access to or stores “controlled technical information”Slide46

Controlled Unclassified Information (CUI)Be ready! Evaluate if you have or use CUI, consider the type of CUI and the nature of the safeguards as expected by NARA and by 800-171Determine if you conform to the objectives of 800-171, gaps and find cost-effective means to close themBurden not as great as expected

Use commercial cyber security best practices instead of government-specific onesSlide47

FITARA – The Federal IT Acquisition Reform ActFederal Information Technology Acquisition Reform Act (FITARA)Implementing guidance coming from OFPPImprove how the federal government acquires, implements and manages its IT investments

CIOs more authority over the budget, governance and personnel processes TechFAR Handbook- guidance to use existing authorities for software development procurementsDigital Services Playbook- propose services on an incremental and iterative basisReduce government’s commitment to failing contract solutionsAllow contractors to propose solutions that meet government needs without having to incorporate predefined solutions47Slide48

FITARA – The Federal IT Acquisition Reform ActRequires CIOs to be involved in IT acquisition, budgeting, and hiring

Final regulations issued June 10Self assessment and implementation plan due August 15Baseline requirements must be met by December 31 48Slide49

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CIO Role in IT ManagementSlide50

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FITARA

How is cybersecurity impacted?

Federal CIO Tony Scott said: “While there's nothing specific in FITARA about cybersecurity, this is going to be one of the great benefits of FITARA: a greatly improved cybersecurity posture…[t]he very first thing in cybersecurity is understanding what's of value and being very clear about that … Once you understand what's of value and you figure out a management strategy of how to protect it, that's the beginning step in having an effective cyber strategy.”

Source

: Federal TimesSlide51

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Crystal Ball-What’s Next??

Contractors will have to pay close attention to cybersecurity compliance (see USIS)

Agencies will come under closer scrutiny

Legislation is rushing to the forefront and more regulations are

comingSlide52

The Small Business ProgramsDoD Directive 4205.01, March 10, 2009

It is DoD policy that a fair proportion of DoD total purchases, contracts, subcontracts, and other agreements for property and services and for sales of property, be placed with Small Business Programs: Small Business (SB), Veteran-Owned Small Business (VOSB),Service-Disabled Veteran-Owned Small Business (SDVOSB),Historically Underutilized Business Zone Small Business (HUBZone),Small Disadvantaged Business (SDB),Women-Owned Small Business (WOSB),

Historically Black Colleges and Universities and Minority Institutions (HBCU/MI),DoD Pilot Mentor-Protégé Program,Indian Incentive Program, Small Business Innovation Research (SBIR), and Small Business Technology Transfer (STTR)

and that such small businesses have the maximum practicable opportunity to participate as subcontractors in DoD contracts, consistent with efficient contract performance.Slide53

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Set-Aside Program

`

Competitive

Actions >$3000 and < SAT

Competitive

Actions >SAT

Sole Source 

Small Business

Automatically reserved for set-aside for small business if two or more offers

anticipated FAR

19.502-2(a)

May be set-aside if not

suitable

for other SB

programs, i.e, 8(a),

HUBZone

, WOSB,

or SDVOSB

FAR

19.502-2(b)

No authority8(a)

K

O

may set-aside prior to a small business set-aside

Shall consider set-aside if greater than $6.5M for manufacturing and greater than $4M for all other acquisitions – may offer to SBA for competitive contract

If < $6.5M for manufacturing and $4M for all other acquisitions – may offer to SBA for sole source contract. J&A required if action is > $20M

HUBZONE

K

O may set-aside prior to a small business set-aside

Shall consider set-aside if two or more offers anticipated.

If the requirement is currently in the 8(a) program, must remain in 8(a) program unless released by SBA

If <$6.5M for Mfg and < $4M for all other acquisitions, and no reasonable expectation of more than one HUBZone offer and award can be made at fair and reasonable

price. No sole source authority under SAT

SDVOSBKO may set-aside prior to a small business set-asideShall consider set-aside if two or more offers anticipated.  If the requirement is currently in the 8(a) program, must remain in 8(a) program unless released by SBA If <$6M for Mfg and < $3.5M for all other acquisitions, and no reasonable expectation of more than one SDVOSB offer and award can be made at fair and reasonable price

WOSB / EDWOSB

K

O may set-aside prior to a small business set-aside within the appropriate NAICSShall consider set-aside if 2 or more offers anticipated within the appropriate NAICS. If the requirement is currently in 8(a) program, it must remain unless released by SBANo sole source authority for this program.Slide54

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Small Business

2013 NDAA Implemented

Two substantive changes to the law governing limitations on subcontracting – Section 1651 of Public Law:

New limitations for service contracts are now based on the total amount paid to the small business, not the cost of the contract incurred for personnel

Does not count against performance requirements when subcontracting to other “similarly situated” small businessesSlide55

Small BusinessUnder the old law, a small business had to incur at 50% of the labor costs of the contract for its own employees (services contracts). The same rule applied for supply contracts, minus the cost of material. Profit and/or fee was not included in the calculation.Under the new law no calculations are needed. The prime cannot subcontract more than 50% of the contract value for service contracts, or 50% of the contract value for supply contracts, less material costs.

Prime contractors may meet the performance requirements by subcontracting to other “similarly situated” small businesses-i.e. those either small under the same standard or participating in the same SB program.If a subcontractor is a “similarly situated” SB its work does not count against the limitation on subcontractors. The new rule treats the “similarly situated” subcontract as if the prime performed the work..Slide56

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Small Business

New Fines and Penalties

The penalty for violations is the greater of either $500,000 or the dollar amount spent in excess of the permitted levels for subcontracting

Material misrepresentations

Prime Contractor is responsible and must certify compliance in its offerSlide57

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Small Business

Joint Ventures

SBA is proposing to allow small businesses to compete on any size contract as long as each business is small

Simplifies eligibility requirements for joint venture members.

Currently

JVs are qualified only when all members are small and:

(1) the procurement is bundled; or

(2) the procurement value exceeds half the size standard of the applicable NAICS code (or $10 million dollars for employee-based NAICS codes)

Purpose

: to encourage more small business joint venturing, and to extend the “similarly situated” benefits to joint venturesSlide58

Changes to Small BusinessRothe Case (FAR 19.11 and 19.12): Deletion of Price Evaluation Adj, 95% progress payment rate, use of evaluation factor for SDB’s, 10/14/14Keeps other SDB incentives such as 5% goal and evaluation of prime contractors subcontracting plan for SDBs.

Extension of Test Program for Negotiation of Comprehensive SB Subcontracting Plans to Dec 2017, Deviation 2015-O0006, 12/24/14Socio-economic Parity, FAR rule, 3/2/12SVOSB, 8(a), WOSB, HUBZone are equalIf contractor eligibility is protested or appealed, the KO cannot make award until SBA determination is made (15 days), FAR 07/25/14Accelerated Payments to Small Business Primes and Subcontractors, 08/01/14 Contract Consolidation, Deviation 10/01/13$6M threshold changed to $2M for justificationSlide59

Small Business and Multiple Award Contracts (MAC’s) FAR part 8 and 19 KO’s can make set-asides against MAC’sSet asides can be SB, HUB,WOSB, SDVOSB

Also applies to Orders and BPA’s July 12, 2012 DPAP Policy Letter“For all prospective new MAC’s w/SB contract holders where order set asides many be appropriate, commit to using order set asides unless a determination is made … that there is not a reasonable expectation of obtaining offers from two or more responsible SB concerns that are competitive in terms of market prices, quality and delivery”Jan 13, FPDS was modified to allow agencies to record the action of set-aside at the order levelSlide60

Woman Owned Small BusinessAuthorizes set-asides for eligible:

Women-Owned Small Businesses (WOSBs) orEconomically Disadvantaged Women-Owned Small Businesses (EDWOSB)No sole source authority (Yet!)Set-aside for two or more within appropriate NAICs codesKO’s have to check for eligibility at WOSB Program Repository

https://eweb.sba.gov/gls/dsp_login.cfmwww.sba.gov/wosbSlide61

Small Business: BBP 2.0New Small Business Career Field, effective 1 Oct 2014500 personnel in the new career field, 1101’sThey don’t have to come from contracting

New certification program and courses begin Oct 16Director SB will review all MDAP strategy documentsSB will develop annual procurement forecastsNew MAXPRAC tool to assist in market research to achieve small business goalshttp://www.acq.osd.mil/osbp/ or https://extranet.acq.osd.mil/osbp/maxprac.htmlSlide62

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Are you thinking about these?

Upcoming Deadlines

Quick Update and What to Expect

Sequestration

Shutdown

Debt Ceiling

VA Shutdown possible in next few weeksSlide63

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NDAA 2015

2015 NDAA Section 804

: requires Congress to report on the commercialization of IT acquisition

2015 NDAA Section 813

: extends cap on DoD services

2015 NDAA Section 823

: allows DoD PTAPs to provide education about the Arms Export Control Act

2015 NDAA Section 824

: prohibits reverse auctions if there is only one bidder and are not always compliant with procurement regulations and prohibits such auctions for DoD design-build contracts

2015 NDAA Section 857

: costs related to Congressional investigations are unallowable Slide64

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NDAA 2015

2015 NDAA Section 912

: repeals requirement for GAO to report on DoD service contract inventory

2015 NDAA Section 1230

: construction projects that cannot be physically inspected by the Government over $1 million are prohibited

2015 NDAA Section 1632

: requires DoD to develop a plan regarding reporting of cyber intrusions of contractor “operationally critical” responsibilities

2015 NDAA Section 2711

: affirms Congressional intent to reject further base closures.Slide65

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Protests

Contractors generally have three options when protesting an award:

Court of Federal Claims

Government Accountability Office

Agency

Each has advantages/disadvantages

Despite the chatter, bid protests are not on the riseSlide66

66

ProtestsSlide67

67

Protests

Proposed 2016 NDAA requires DoD to determine whether contractors are gaming the bid protest process.

More specifically, DoD is supposed to analyze whether:

Incumbent contractors filed protests to draw business away from the new contract and

Contractors filed protests knowing they lacked merit

Slide68

68

Protests

Be mindful of perceived unfair competitive advantages

Lesson learned

: Agencies must consider whether former government official had non-public competitive information that gave offeror an unfair competitive advantage.

Case Name

:

International Resources GroupSlide69

69

Protests

Bait and switch difficult to establish

Lesson learned

: Bait and switch is an attractive protest ground, but must show a misrepresentation that was relied on by the agency and had a material impact on the procurement. Even though awardee (EY) was recruiting incumbent’s personnel after contract award does not mean bait and switch occurred.

Case Name

:

IBM U.S. FederalSlide70

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Protests

Federal Supply Schedules Rule of Two

Lesson learned

: Rule of Two is inapplicable to Federal Supply Schedules. The Government does not have to consider whether two small businesses can perform. FSS is excluded from FAR Part 19.

Case Name

:

Walker Development and Trading Corp.Slide71

71

Protests

Agencies Must Evaluate Consistent With Criteria

Lessons learned

:

When conducting a best value tradeoff analysis, cost must be considered.

When evaluating past performance, agency must consider past performance information that is close at hand.

Case Name

:

DKW Communications, Inc.Slide72

72

Protests

Contractors Must Re-Submit Proposals

Lesson learned

: if the agency modifies a solicitation following the submission of a proposal and calls for revised proposals, the contractor cannot rely on the initial proposal. A new proposal is required.

Case Name

:

Northstar Location ServicesSlide73

73

Protests

COFC: Attorneys’ Fees Available

Lesson learned

: if the agency takes corrective action that is not reasonably justified, attorneys’ fees are available under the Equal Access to Justice Act (small businesses only).

Case Name

:

WHR GroupSlide74

74

Protests

Federal District Court: DBA Does Not Apply to CityCenter

Lesson learned

: Davis-Bacon Act does not apply to construction projects that serve the public interest if the government’s only interest was providing a ground lease and design requirements for the project.

Case Name

:

District of Columbia v. Department of Labor

Case to be argued on appeal on September 10.Slide75

SB Subcontracting ImprovementsProposed FAR rule in DevelopmentPrime contractor must notify the KO in writing if it does not use the SB subcontractors set forth in it offerKO monitor and evaluate prime’s adherence to its subcontracting planClarifies which subcontracts must be included in the prime’s subcontracting data reporting

Funding agencies allowed to receive subcontracting credit for FSS and GWAC ordersSlide76

Proposed RulesFAR Case 2014-018, Contractors Performing Private Security Functions, published on May 27, 2015. This proposed rule proposes to amend the FAR to remove the distinction between Department of Defense (DoD) and non-DoD agency areas of operation applicable for the use of FAR clause “Contractors Performing Private Security Functions Outside the United States” and provide a definition of “full cooperation” within the clause. The public comment period closes July 27, 2015

. FAR Case 2014-025, Fair Pay and Safe Workplaces, published on May 28, 2015. This proposed rule proposes to amend the FAR to implement the Executive Order “Fair Pay and Safe Workplaces,” which is designed to improve contractor compliance with labor laws and increase efficiency and cost savings in Federal contracting. The public comment period closes July 27, 2015.Slide77

Proposed RulesFAR Case 2015-019, Definition of Multiple-Award Contract, published on June 2, 2015. This proposed rule proposes to amend the FAR to define multiple-award contract. The public comment period closes August 3, 2015.

FAR Case 2014-015, Consolidation and Bundling of Contract Requirements, published on June 3, 2015. This proposed rule proposes to amend the FAR to implement sections of the Small Business Jobs Act of 2010 and regulatory changes made by the Small Business Administration, which provide for a Government-wide policy on the consolidation and bundling of contract requirements. The public comment period closes August 3, 2015.FAR Case 2014-003, Small Business Subcontracting Improvements, published on June 10, 2015. This proposed rule proposes to amend the FAR to implement regulatory changes made by the Small Business Administration, which provide for a Government-wide policy on small business subcontracting. The public comment period closes August 10, 2015.Slide78

FAR Case 2014-022, Inflation Adjustment of Acquisition-Related Thresholds This final rule amends the FAR to implement the inflation adjustment of acquisition-related dollar thresholds. 41 U.S.C. 1908 requires an adjustment every 5 years of acquisition-related thresholds for inflation using the Consumer Price Index for all urban consumers, except for the Construction Wage Rate Requirements statute (formerly Davis-Bacon Act), Service Contract Labor Standards statute, and trade agreements thresholds. This rule will become effective on October 1, 2015.

FAR Case 2015-006, Prohibition on Contracting with Inverted Domestic Corporations – Representation and Notification. This final rule amends the FAR to require additional actions by contractors to assist contracting officers in ensuring compliance with the Government-wide statutory prohibition on the use of appropriated (or otherwise made available) funds for contracts with any foreign incorporated entity that is an inverted domestic corporation or to any subsidiary of such an entity. This rule will become effective on November 1, 2015.

Final rulesSlide79

Final RulesFAR Case 2015-008, Update to Product and Service Codes. This final rule amends the FAR to update the descriptions of Federal product and service codes related to exemptions from services contract labor standards, to conform to the current Federal Procurement Data System Product and Service Codes Manual. This rule will become effective on August 3, 2015.

FAR Case 2014-020, Clarification on Justification for Urgent Noncompetitive Awards Exceeding One Year. This final rule amends the FAR to clarify that a determination of exceptional circumstances is needed when a noncompetitive contract awarded on the basis of unusual and compelling urgency exceeds 1 year, either at time of award or due to post-award modifications. This rule will become effective on August 3, 2015.Slide80

Final RuleFAR Case 2014-017, Prohibition on Contracting with Inverted Domestic Corporations. This rule adopts as final, without change, a previously issued interim rule that amends the FAR to address the continuing Government-wide statutory prohibition on the use of appropriated (or otherwise made available) funds for contracts with any foreign incorporated entity that is an inverted domestic corporation (under 6 U.S.C. 395) or to any subsidiary of such entity. The interim rule was effective on December 15, 2014, and the final rule is effective on July 2, 2015.

FAR Case 2015-010, Permanent Authority for Use of Simplified Acquisition Procedures for Certain Commercial Items. This final rule amends the FAR to make permanent the authority to issue solicitations under subpart 13.5. This rule will become effective on August 3, 2015.Slide81

What’s Happening on the Hill A bill was introduced in the senate to allow a surviving non-veteran spouse of a service disabled veteran who owned an SDVOSB company to retain that designation and the benefits that go with it for up to three years after the veteran’s death, if the death was unrelated to the service disability. This is likely to become law next year. 

Both the house and senate are looking at expanding the definition of “hubzone” tracts to include areas around a base being closed pursuant to a BRAC statute.2016 NDAA, Simplified Acquisition Threshold $150,000 to $500,000. Passed the House not the Senate.The SBA issued proposed rules greatly expanding the mentor-protégé program and making multiple substantive changes to the program, including limiting the number of protégés a mentor can have to three (3) total. Slide82

Promote Real Competition BBP 1.0/2.0Continue to emphasize continuous competitionCompetitive prototypes, dual sourcing, subcontractor competition…Use open s

ystems architecture (OSA)and manage technical data rightsAllows for greater competition through the lifecycleEffectively use prototypes to reduce risk early in the Technology Development phase. Increase use of competition in early development Only One Offer to do effective competitionGo out for 30 more days if necessary to get competition, or if only one, do cost analysis. Slide83

CompetitionBBP 3.0 Continues Emphasis on CompetitionCreate and maintain competitive environments with direct or subcontracting competition, or competitive pressureReach out to global allies with co-research, co-developmentImprove MR in order to find Small Businesses

“Guidelines for Creating and Maintaining a Competitive Environment for Supplies and Services in the Dept of Defense”, December 2014 Overcome: status quo, time constraints, scope creep, restrictive or poor requirements, etc.Improve: continuous market research, keeping industry informed, performance based requirements, data rights/computer software strategy, etc.Slide84

Actions to Improve DoD CompetitionUSD(AT&L) memorandum dated August 21, 2014, “Actions to Improve Department of Defense Competition” and caused changes to the PGI  Issues “Guidelines

for Creating and Maintaining a Competitive Environment for Supplies and Services in the Department of Defense, Dec 2014” PGI 215.371-2 Requires Contracting Officers to solicit feedback from companies that expressed interest during the market research phase of an acquisition that resulted in only one offer on why they did not submit an offer. (kept in contract file with source selection documents)PGI 206.302-1 Require Contracting Officers to use RFI’s or Sources Sought notices before soliciting non-competitive acquisitions and to include results of this inquiry in the applicable justification document. PGI 206.303-2, 206.304 ,208.405-6, and 216.505 Justifications

for non-competitive follow-on acquisitions of the same supply or service, shall include the prior J&A as part of the new J&A package to determine whether actions to remove barriers to competitions were completed. 84Slide85

Source Selection

Estimated Frequencies of Source Selection Approaches Used in Fiscal Year 2009 for New, Competitively Awarded DOD Contracts Obligating over $25 million

Non-cost factors less important than price

Non-cost factors more important than price

Non-cost factors equal to price

Sealed bid

Lowest price technically acceptable

GAO Report 11-8, Figure 2

Recent GAO findings state LPTA has increased up to 39%Slide86

Source SelectionAppropriate Use of LPTA and Associated Contract Type, Mr. Kendall Memo, 4 March 2015 Clear, but limited place in “Best Value” continuum

Only applies if we can clearly define the requirements and can do a technical evaluation based on “acceptable/unacceptable”If these standards are subjective, then LPTA is not appropriateCan be appropriate for commercial and non-complex supplies and servicesThink about using CPFF LOE in Knowledge-based Services because it is well-suited to these requirementsSlide87

87

Source Selection

BBP 2.0 and 3.0 Sustained Superior Supplier Program

Recognize higher performing industry partners based on past performance evaluations

Service specific implementation

Higher weight for more recent performance

BBP 2.0 and 3.0 Clear Best Value Definitions

How much $ are we willing to pay for higher levels of performance than minimal or threshold levels?

Anxiously awaiting the May 2015 Modification to the DOD Source Selection GuideSlide88

Improving Acquisition of ServicesService Acquisition GovernanceNew DoDI 5000.ac, “Defense Acquisition of Services” will complement the recently issuedDoDI 5000.02, “Operation of the Defense Acquisition System” by focusing solely on servicesProvides management and oversight of contracted services by encouraging DAU Service Acquisition Process for standardization.

Implement and strengthen the requirements validation process by utilizing a Services Requirements Review Board (SRRB)Slide89

Improving Acquisition of ServicesServices acquisitions are predominately decentralizedEach service acquisition recreates information it needs each time andDoD loses the buying power of acting as a single buyerUSD(AT&L) appointed senior DoD officials as Functional Domain Experts (FDE) for specific portfoliosSlide90

Contracting Officer RepresentativeDoDI 5000.72, “DoD Standard for Contracting Officer’s Representative Certification, March 2015Supplements FAR/DFARS 201.602-2

Applies to all requiring activities, CORs and supervisors of CORs, and Contracting Officers delegating COR responsibilityDo you know if you meet or exceed this standard? Slide91

Past PerformanceStandardization of Evaluation Factor and Performance Ratings (FAR subpart 42.15)Mandatory entry of all PP information in CPARSMinimum of Annual Evaluations; Standard Factors (including SB subcontracting);Five Scale Adjectival Rating SystemAppeals Process Remains Intact

New Thresholds for DoD Contracts (CD)Offerors must take responsibility to ensure availability of necessary PP information Solicitations can be unduly restrictive if they prohibit consideration of PP of offeror’s affiliatesSlide92

Insufficient DiscussionsAgency not required to discuss every weakness appearing in a pricing proposalOnly significant weaknesses, not all weaknesses, must be discussedAgency not required to advise offer that its price was higher than those of its competitorsSlide93

Commercial Items24 Dec 2014 Deviation, FAR 13.5, Permanent Authority for use of the Simplified Acquisition Procedures for Certain Commercial ItemsTest program for commercial items $150K<X<$6.5M

Congress made permanent in 2015 NDAA25 June 2013, DFAR 212.301(f), Simplification of solicitation provisions and contract clauses Makes it clear which provisions and clauses apply to commercial item and which flow down to commercial subcontracts. 24 Sept 2013 Deviation allows SPS to automatically select the clausesSlide94

Commercial ItemsCommercial Items and Determination of Reasonableness of Price, Feb 15 DPAP memo Timeliness: KO’s need to make a determination of “commercial of a type” within 10 days of assembling support data

Pay Fair and Reasonable Price: Must evaluate for price reasonableness; If market pricing isn’t available or sufficient, KO’s may use cost dataChanges to DFAR, PGI and Commercial Item Handbook is comingDue to heightened audit and oversight attention, DON’T ASSUME PRODUCTS AND SERVICES PREVIOUSLY ACCEPTED AS COMMERICAL ITEMS WILL BE IN THE FUTURE!Slide95

Contractor Business SystemsContractor business systems and internal controls are the first line of defense against waste, fraud, and abuse

Weak control systems increase the risk of unallowable and unreasonable costs on Government contracts Contractor business systems: Accounting

Systems Estimating Systems Purchasing Systems

Earned Value Management Systems (EVMS) Material Management And Accounting Systems (MMAS) Property Management SystemsSlide96

Contractor Business SystemsFeb 24, 2012, DoD Final Rule

KO’s must include DFARS clause 252.242-7005 in all CAS covered contracts/TO/DO after August 16,2011 (not small business)Business Systems Clause allows the KO (generally ACOs) to withhold a percentage of payments when a contractor's business system contains significant deficiencies Payments could be withheld

using:Interim payments under:Cost reimbursement contracts

Incentive type contractsTime-and-materials contracts

Labor-hour contracts

Progress payments

Performance-based

paymentsSlide97

FSS/GWAC/MACReasonable Fees for Assisted Acquisitions, 11 June 14 Policy LtrKnow and document the fees when using non-DoD vehicle if the assisting agencies approach is to use another agencies contract vehicle

Priorities, FAR 7.102 and 8.002/4, Effective 30 Jan 14No Mandatory Schedules. Consider existing contracts, including interagency and intra-agency contracts before awarding new contracts, especially GWAC, FSS, MACs.Interagency, DFAR 217.7802 and FAR 17.7, July 2013A DoD acquisition official may acquire

supplies or services for DoD in excess of the simplified acquisition threshold through a non-DoD agency only if the head of the non-DoD agency has certified that the non-DoD agency will comply with defense procurement requirements including DoD financial management regulations, Class Deviations, and PGI.Slide98

Business Case for GWACS and MACSOFPP memo, dated 29 Sept 11, FAR change on 3 Jan 12: For acquisitions that enter the solicitation phase after Dec. 31, 2011, agencies must develop a business case using procedures outlined in the memorandum to support the establishment or renewal of:GWACs Multi-Agency

Contracts Multi-Agency BPAs created in the FSS where another agency is expected to use the BPA significantly Ensure expected return of a new contracting vehicle is worth the cost of planning, awarding and managing itApplies to new MAC with a total value of more than $250 millionLimit duplication of large contract typesSlide99

Class Deviation 2014-O0011, March 13, 2014Class Deviation: Determination of Fair and Reasonable Prices When Using Federal Supply Schedule Contracts Effective immediatelyIn lieu of FAR 8.404(d) must use FAR 15.404-1

GSA determination of fair and reasonable prices does not relieve the ordering activity contracting officer from making determination of Fair & Reasonable Price for individual orders, BPA’s or orders under BPAs.Must use proposal analysis techniques at 15.404-1Complexity and circumstances of each acquisition should determine level of analysis requiredSlide100

Contract Business Analysis Repository (CBAR)DCMA shares real time business data with government employees w/a need to know. Where do I find CBAR? Under e-tools at the DCMA website or http://www.dcma.mil/itcso/cbt/CBAR_1_2/index.cfm

24/7 data on individual contractorsEffective 24 June 13, for all negotiated contracts >$25 M, PCO will share Business Clearance and PNM’s (PGI 215.406-3)FPRA/FPRRStatus of Contractor Business Systems Status of compliance with cost accounting standard issuesGeneral info on the cost & financial condition of the contractor division and corporate officeSlide101

Government PropertyDoD needs to strengthen the accountability and management of personal property owned by DoD when the property is provided to contractors for contract performanceFAR and DFARS clauses are not being included in solicitations and contracts as required

Accountability and auditability of Government-Furnished Property (GFP) cannot be achieved if contracts do not contain the appropriate contract clausesSlide102

Government PropertyMANDATORYFAR 52.245-1 Government Property, in

all cost type and T&M solicitations and contracts, and in labor hour and fixed-price solicitations and contracts when the Government will provide property.FAR 52.245-9 Use and Charges, in solicitations and contracts when the clause at 52.245-1 is included.DFARS 252.245–7001 Tagging, Labeling, and Marking of Government-Furnished Property, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.DFARS 252.245–7002

Reporting Loss of Government Property, in solicitations and contracts that contain the clause at FAR 52.245–1, Government Property. DFARS 252.245-7003 Contractor Property Management System Administration, in solicitations and contracts containing the clause at FAR 52.245-1, Government Property.DFARS252.245–7004 Reporting, Reutilization, and Disposal, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.

DFARS 252.211-7007 Reporting of Government-Furnished Property, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.OPTIONAL

DFARS 252.245-7000

Government-Furnished Mapping, Charting, and Geodesy Property, in solicitations and contracts when mapping, charting, and geodesy property is to be furnished. Slide103

Government PropertySlide104

BRAIN HURT? Having a hard time keeping up with all the changes?

104Slide105

Acquisition CentralSlide106

Defense Procurement and Acquisition Policy (DPAP)Slide107

Federal Contracts ReportSlide108

Defense Acquisition Portal108Slide109

Contracting Site in the DAPSlide110

National Contract Management Association Slide111

http://www.wifcon.com/

Where In Federal ContractingSlide112

Keep in TouchMichelle CurrierMichelle.Currier@DAU.Mil

757-635-8261