Quarterly Regulatory Update

May 2017

FINAL FAR

Uniform Use of Line Items
Key Details: DOD, GSA and NASA published a proposed rule in the Federal Register at 79 FR 45408 on August 5, 2014, to establish uniform use of line items in federal procurement. The uniform line item structure is designed to improve the accuracy, traceability and usability of procurement data. The need for this rule stems from the lack of access to reliable and comprehensive data on federal procurement actions that is essential to management and program decisions that result in delivering services to taxpayers in the most efficient and effective manner. Lack of standards for identifying and tracing tax dollars across the acquisition contributes to duplication in spending, gaps in reporting and inefficiencies in management decisions. The implementation of these standards will facilitate the identification and traceability of spending from appropriation through expenditure, supporting automated collection of information using key identifiers.

Effective: January 12, 2017

Final Rule Clarifies SBA 8(a) Program Rules
Key Details: DOD, GSA and NASA published a proposed rule in the Federal Register at 79 FR 6135 on February 3, 2014, soliciting public comments regarding the implementation of regulatory clarifications made by the Small Business Administration (SBA) under section 8(a) of the Small Business Act (15 U.S.C. 637(a)). The proposed rule provided additional guidance for the evaluation, offering and acceptance process; procedures for releasing a requirement for non-8(a) procurement; and information on the effect exiting the 8(a) program will have on its current contractual obligations and the firm’s ability to receive new 8(a) requirements.

The final rule contains revisions to the language at FAR 19.804-6(a) to clarify that offers and acceptances are required for individual orders under multiple-award contracts that were not set aside for competition among 8(a) contractors.

The final rule also revises the language at FAR 19.814(a) to indicate that the SBA Inspector General can request a formal size determination. In addition, the final rule revises the language at FAR 19.815 regarding the release of requirements from the 8(a) program.

Language has been added to clarify that any follow-on 8(a) requirement shall remain in the 8(a) program unless there is a mandatory source for the requirement pursuant to FAR 8.002 or 8.003 or SBA agrees to release the requirement for procurement outside the 8(a) program.

Effective: January 12, 2017

Final Rules Raises Acquisition Threshold for Special Emergency Procurement Authority
Key Details: DOD, GSA and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement a section of the National Defense Authorization Act for fiscal year 2016 to raise the simplified acquisition threshold for special emergency procurement authority.

Effective: January 12, 2017

FAR Updates That May Impact Your Small Business
Key Details: Several new rules were incorporated into the FAR that could affect small businesses. The new rules apply to the uniform use of line items; acquisition threshold for special emergency procurement authority; contractor employee confidentiality agreements; contracts under the SBA’s 8(a) program; and the prohibition on reimbursement for congressional investigations and inquiries.

Effective: January 13, 2017

Prohibition on Reimbursement for Congressional Investigations and Inquiries
Key Details: DOD, GSA and NASA are issuing a final rule to amend the FAR to implement Section 857 of the Carl Levin and Howard P. “Buck” McKeon National Defense Authorization Act for fiscal year 2015. This section provides additional requirements relative to the allowability of costs incurred by a contractor in connection with a congressional investigation or inquiry.

This statute amended 10 U.S.C. 2324(e)(1) to disallow costs incurred by a contractor in connection with a congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition as described in 10 U.S.C. 2324(k)(2).

Effective: January 13, 2017

Payment of Subcontractors 
Key Details: DOD, GSA and NASA are issuing a final rule to implement Section 1334 of the Small Business Jobs Act of 2010 (Pub. L. 111-240, 15 U.S.C. 637(d)(12)) and the SBA final rule published in the Federal Register on July 16, 2013 at 78 FR 42391, which require prime contractors to self-report late or reduced payments to their small business subcontractors. The rule also requires contracting officers to record the identity of contractors with a history of late or reduced payments to small business subcontractors in the Federal Awardee Performance and Integrity Information System (FAPIIS). DOD, GSA and NASA published a proposed rule in the Federal Register on January 20, 2016 at 81 FR 3087.

Effective: January 19, 2017

Privacy Training 
Key Details: DOD, GSA and NASA published a proposed rule in the Federal Register at 76 FR 63896 on October 14, 2011, to provide guidance to contractors regarding the requirement to complete training that addresses the protection of privacy in accordance with the Privacy Act of 1974, 5 U.S.C. 552a, as amended, and the handling and safeguarding of personally identifiable information (PII). The rule ensures that contractors identify employees who handle PII, have access to a system of records or design, develop, maintain or operate a system of records. These employees are required to complete initial privacy training and annual privacy training thereafter. A contractor who has employees involved in these activities is also required to maintain records indicating that its employees have completed the requisite training and provide these records to the contracting officer upon request. In addition, the prime contractor is required to flow-down these requirements to all applicable subcontracts.

Effective: January 19, 2017

OTHER PROPOSED DFARS

DOD’s Proposed IR&D Rule Adds Unnecessary Complexity
Key Details: The DOD’s proposed rule on evaluating future independent research and development (IR&D) costs during the procurement process creates challenges for defense contractors. The rule would require defense agencies to assign an evaluation cost penalty to the proposed price of any contractor expecting to receive reimbursement from the government for any future IR&D expenses through its indirect cost rates. The proposal goes against the concept that IR&D is a valid and valuable component of a contractor’s indirect costs and would add complexity to the proposal evaluation process.

FINAL DFARS

New Qualifying Country-Estonia 
Key Details: DOD is amending the DFARS to add Estonia as a qualifying country. On September 23, 2016, the Secretary of Defense signed a reciprocal defense procurement agreement with Estonia. The agreement removes discriminatory barriers to procurements of supplies and services produced by industrial enterprises of the other country to the extent that is mutually beneficial and consistent with national laws, regulations, policies, and international obligations. This agreement does not cover construction or construction material. Estonia is already a designated country under the World Trade Organization Government Procurement Agreement.

Effective: December 22, 2016

PROPOSED RULES – AGENCY SUPPLEMENTS TO THE FAR

Federal Policy for the Protection of Human Subjects
Key Details: The departments and agencies listed in this document announce revisions to modernize, strengthen and make more effective the Federal Policy for the Protection of Human Subjects that was originally promulgated as a Common Rule in 1991. This final rule is intended to better protect human subjects involved in research while facilitating valuable research and reducing burden, delay and ambiguity for investigators. These revisions are an effort to modernize, simplify and enhance the current system of oversight. The final rule makes the following significant changes to the Common Rule:
  • Establishes new requirements regarding the information that must be given to prospective research subjects as part of the informed consent process.
  • Allows the use of broad consent (i.e., seeking prospective consent to unspecified future research) from a subject for storage, maintenance and secondary research use of identifiable private information and identifiable biospecimens. Broad consent will be an alternative that an investigator may choose instead of, for example, conducting the research on nonidentified information and nonidentified biospecimens, having an institutional review board (IRB) waive the requirement for informed consent or obtaining consent for a specific study.
  • Establishes new exempt categories of research based on their risk profile. Under some of the new categories, exempt research would be required to undergo limited IRB review to ensure that there are adequate privacy safeguards for identifiable private information and identifiable biospecimens.
  • Creates a requirement for U.S.-based institutions engaged in cooperative research to use a single IRB for the portion of the research taking place within the U.S., with certain exceptions. This requirement becomes effective three years after publication of the final rule.
  • Removes the requirement to conduct continuing review of ongoing research for studies that undergo expedited review and for studies that have completed study interventions and are merely analyzing study data or involve only observational follow-up in conjunction with standard clinical care.
Effective: December 22, 2016

FINAL RULES – AGENCY SUPPLEMENTS TO THE FAR

Final Rule: Inflation adjustment of civil monetary penalties
Key Details: The Department of the Treasury published a final rule to adjust its civil monetary penalties (CMPs) for inflation as mandated by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. This rule adjusts CMPs within the jurisdiction of certain components of the Department to the maximum amount required by the Act.

Effective: February 10, 2017

22 CFR Part 241
KEY DETAILS: The United States Agency for International Development (USAID) has issued a final rule on this regulation which prescribes the procedures and standard terms and conditions applicable to loan guarantees to be issued for the benefit of the Republic of Iraq, pursuant to the Further Continuing and Security Assistance Appropriations Act, 2017. Pursuant to the Further Continuing and Security Assistance Appropriations Act, 2017 (Pub. L. 114-254), the U.S., acting through the U.S. Agency for International Development, may issue certain loan guarantees applicable to sums borrowed by the Republic of Iraq, not exceeding an aggregate total of $1 billion in principal amount. Upon issuance, the loan guarantees shall ensure Iraq’s repayment of 100 percent of principal and interest due under such borrowings and the full faith and credit of the U.S. shall be pledged for the full payment and performance of such guarantee obligations.

Effective: January 9, 2017

EXECUTIVE ORDERS

Presidential Executive Order on the Revocation of Federal Contracting Executive Orders 
Key Details: President Trump revoked EO 13673 (Fair Pay and Safe Workplaces), as amended by section 3 of EO 13683, and EO 13738. Certain prospective federal contractors are no longer required to disclose their historical violations of certain basic workplace protections, including those addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights, before receiving a federal contract from the DOD, GSA, and NASA. This executive order also prompts all executive department and agencies to rescind any orders, rules, regulations, guidance, guidelines, or policies implementing or enforcing the aforementioned EOs.

Release: 3/27/2017

President Donald Trump Signs H.J.Res. 37 into Law 
Key Details: H.J.Res. 37 nullifies the DOD, GSA, and NASA’s FAR Fair Pay and Safe Workplaces. In effect, the resolution repeals the “blacklisting rule” associated with the FPSW.

Release: 3/27/2017

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Return to BDO Knows Government Contracting Newsletter - Spring 2017