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Regulatory Update


FASMG member Charles Rumbaugh's Regulatory Update provides general insight into timely issues facing the purchasing professional and stimulates further discussion. These updates are not intended as legal advice and you should consult your own attorney before applying any item below to a specific situation or real transaction.


CHARLES E. RUMBAUGH
Arbitrator/Mediator
Voice: 310.373.1981
FAX: 310.373.4182
E-mail: ADROffice@Rumbaugh.net
P.O. Box 2636
Rolling Hills, California 90274

P.O. Box 2095
Burlingame, California 94011


23 September 1998


Recent regulatory matters that may be of interest since the last report --

  1. Y2K. On August 7, 1998, Secretary of Defense Cohen issued a memorandum on "Y2K Compliance." This memorandum called for several actions in connection with Y2K which is described therein as a "critical national defense issue." Briefly, the memo requires Y2K status ("compliance or non-compliance") reporting on a periodic basis for specified programs/systems. Effective October 1st certain identified actions are also required of the Military Departments and Defense Agencies including, (1) "funds are not obligated for any mission-critical system that is listed in the Y2K database that lacks a complete set of formal interface agreements for Y2K compliance" and (2) "funds are not obligated for any contract that is for information technology (IT) or national security system (NSS) that processes date-related information and that does not contain Y2K requirements specified in Section 39.106 of the Federal Acquisition Regulation." On August 24, 1998, Deputy Secretary of Defense Hamre issued a memorandum on the Subject of "Year 2000 (Y2K) Verification of National Security Capabilities" calling in part for testing of information technology and national security system Y2K capabilities with certain certifications by November 1st.

    Also on the subject of Y2K, the Securities and Exchange Commission announced in the Federal Register on September 3rd that it was imposing a "moratorium on the implementation of new Commission rules that require major reprogramming of computer systems by SEC-regulated entities between June 1, 1999 and March 31, 2000·in order to facilitate and encourage securities industry participants to allocate significant time and resources to addressing the potential problems caused by the Year 2000 computer technology conversion."

    COMMENT: Review the DoD memorandums and any implementing "direction." Some contractors are receiving "inquiries" in response to these memorandums. The terminology is many cases needs to be clarified; impact on current contracts needs to be ascertained; and, to the extent that direction is received, caution must be exercised if it is not being directed from the contracting officer! This is indeed a national defense issue as well as a contract issue! All parties should assure that communications on Y2K come through a focal point. Contracts and Legal functions should be involved. The Department of Defense, Assistant Secretary of Defense (C3I) Year 2000 Oversight and Contingency Planning Office Internet location at http://www.dtic.mil/c3i/y2k/ may be helpful.
  2. PROPOSAL TO "CLARIFY" RULES IN PLACEMENT OF ORDERS UNDER MULTIPLE AWARD CONTRACTS PUBLISHED. The Federal Register on September 19, 1998, published a proposed FAR rule (FAR 16.505) to "clarify the procedures governing placement of orders under multiple award indefinite delivery contracts." Specifically, a "fair opportunity to be considered" for each order in excess of $2,500 is normally required. Factors are listed which the contracting officer can use in making an order award decision. Further, the "procedures and selection criteria that will be used to provide multiple awardees a fair opportunity to be considered for each order (award) must be set forth in the solicitation and contract." Comments are due on or before November 9th.
  3. ENVIRONMENTAL PROTECTION AGENCY (EPA) PUBLISHES PROPOSAL ON EVALUATION OF CONTRACTOR PAST PERFORMANCE. On September 16, 1998, the EPA published in the Federal Register a proposed rule that would amend "the EPA Acquisition Regulation (EPAAR) (48 CFR Chapter 15) to revise its policy and procedures regarding the evaluation of contractor performance on EPA contracts and to establish an EPAAR clause to be used in solicitations and contracts with an estimated dollar value in excess of $100,000. This proposed rule applies to all large and small entities who perform or are interested in performing under EPA contracts." Comments are due on/before November 16th.

    COMMENT: There "still" seems to be an issue on how "experience" relates to past performance in view of the FAR Part 15 detailed rules on when and how one has an "opportunity to rebut certain adverse information" and FAR Part 15 which does not expressly recognize "experience" as a distinct area.
  4. SMALL BUSINESS REGULATORY ACTIVITIES. The Federal Register on August 24, 1998, published a final Small Business Administration Rule to incorporate the Very Small Business (VSB) Set-Aside Pilot Program pursuant to amendments to the Small Business Administration Reauthorization and Amendments Act of 1994. "The Act defines a very small business concern as one that has 15 or fewer employees together with average annual receipts that do not exceed $1 million." "A contracting officer must (generally) set aside for VSB concerns each procurement that has an anticipated dollar value between $2,500 and $50,000." This pilot VSB program will now expire on September 30, 2000.

    DoD also published a Federal Register notice on September 14th to "reinstate the use of small business set-aside procedure for certain non-nuclear ship repair and construction acquisitions conducted by the Navy."

Miscellaneous Items


© 1998 Charles E. Rumbaugh

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