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
PO Box 2636
Rolling Hills, California 90274

PO Box 2095
Burlingame, California 94011


July 23, 1999


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

1. NASA PROPOSES TO INCREASE THE EMPHASIS ON RISK MANAGEMENT IN ACQUISITIONS. On July 20th a proposed rule was published in the Federal Register which would amend the NASA FAR Supplement "to emphasize considerations of risk management, including safety, security (including information technology security), health, export control, and damage to the environment, within the acquisition process. The proposed rule addresses risk management within the context of acquisition planning, selecting sources, choosing contract type, structuring award fee incentives, administering contracts, and conducting contractor surveillance. Additionally, this proposed rule would require offeror proposals to include a risk management plan whenever the value of the resulting contract is expected to exceed $5,000,000, or whenever the contracting officer determines that it would be appropriate. Furthermore, this proposed rule would allow that contractors not be paid award fee for any evaluation period in which there is a major breach of safety or security." This proposed rule only implements that part of the initiative pertaining directly to the procurement process. Comments are due on/before September 20, 1999.
   
   
2. FINAL RULE ISSUED BY DEPARTMENT OF COMMERCE ON EXPORT CONTROL OF DUAL-USE ITEMS. On July 23rd a final rule was published in the Federal Register which amends the Department of Commerce, Bureau of Export Administration maintained Commerce Control List (CCL), which identifies those items subject to Department of Commerce export controls. This final rule revises a number of national security controlled entries on CCL to conform with recent changes in the "Wassenaar List of Dual-Use Goods and Technologies." As background, "in July 1996, the United States and thirty-two other countries gave final approval to the establishment of a new multilateral export control arrangement, called the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement). The Wassenaar Arrangement contributes to regional and international security and stability by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies, thus preventing destabilizing accumulations of such items. Participating states have committed to exchange information on exports of dual-use goods and technologies to non-participating states for the purposes of enhancing transparency and assisting in developing common understandings of the risks associated with the transfers of these items." This rule covers over 30 pages of changes and is effective on July 23, 1999.
   
   
3. COMMENTS REQUESTED ON REVISIONS TO "REPORTING REQUIREMENTS" ON GOVERNMENT OWNED PROPERTY. On July 22nd a "Advance notice of proposed rulemaking" was published in the Federal Register "soliciting comments from Government and industry personnel on contemplated revisions to the Defense Federal Acquisition Regulation Supplement (DFARS) to obtain data that will enable DoD to comply with the financial reporting requirements of the Chief Financial Officer's Act. The DFARS revisions would require contractors to furnish information on other real property, industrial plant equipment, other plant equipment, and software acquired or produced for performance of a cost-reimbursement or time-and-material contract. The reporting requirement is limited to reportable items or systems having an acquisition cost of $100,000 or more." Comments are due on/before September 7, 1999.
   
   
4. FINAL DFARS RULE CHANGES DEFINITION OF "ADVISORY AND ASSISTANCE SERVICES." On July 22nd a final rule was published in the Federal Register which amends the DFARS to revise the definition of "advisory and assistance services" in Section 237.201 The changes are in the following categories: (1) Management and professional support services, (2) Studies, analyses, and evaluations, and (3) Engineering and technical services. This rule is effective July 22, 1999.
   
   
5. DOD PROPOSES TO REQUIRE THE USE OF GOVERNMENT PURCHASE CARD FOR LOW VALUE PURCHASES. On July 20th a proposed rule was published in the Federal Register which would amend the DFARS "to require use of the Governmentwide commercial purchase card as the method of purchase and/or method of payment for purchases valued at or below the micro-purchase threshold, unless an exception is authorized." Comments are due on/before September 20, 1999.
   
   COMMENT: Interesting that this is only a DFARS proposal. Where/what is the DoD "specific and unique need" requirement in the OFPP Act that would authorize this regulatory action notwithstanding the "use of the purchase card streamlines purchasing and payment procedures and, therefore, increases operational efficiency?" See below.
   
   
6. GSA REGULATION CHALLENGED. Several industry association letters have been sent to OFPP Administrator Deidre Lee challenging the propriety of certain GSA contract clauses in that they do not comport with the Congressional mandate that there shall only be one set of governmentwide commercial contract clauses and those are in the FAR! One of the letters stated, in part, "it is imperative for GSA to comply with existing law and provide a better balance between the Government's pricing risks and private industry's infrastructure costs." The letter went on to express its deep concern "with any agency rule that is contrary to the commercial item acquisition reforms enacted by Congress under the Federal Acquisition Streamlining Act."
   
   COMMENT: The OFPP Administrator has a specified statutory timeframe in which to respond to these types of "petitions."
   

1. "to establish uniform legal standards that give all businesses and users of technology products reasonable incentives to solve year 2000 computer date-change problems before they develop;
   
   
2. to encourage continued remediation and testing efforts to solve such problems by providers, suppliers, customers, and other contracting partners;
   
   
3. to encourage private and public parties alike to resolve disputes relating to year 2000 computer date-change problems by alternative dispute mechanisms in order to avoid costly and time-consuming litigation, to initiate those mechanisms as early as possible, and to encourage the prompt identification and correction of such problems; and
   
   
4. to lessen the burdens on interstate commerce by discouraging insubstantial lawsuits while preserving the ability of individuals and businesses that have suffered real injury to obtain complete relief."
   

1. "the manifestations of any material defect alleged to have caused harm or loss;
   
   
2. the harm or loss allegedly suffered by the prospective plaintiff;
   
   
3. how the prospective plaintiff would like the prospective defendant to remedy the problem;
   
   
4. the basis upon which the prospective plaintiff seeks that remedy; and
   
   
5. the name, title, address, and telephone number of any individual who has authority to negotiate a resolution of the dispute on behalf of the prospective plaintiff."
   

1. "lost profits or sales;
   
   
2. business interruption;
   
   
3. losses indirectly suffered as a result of the defendant's wrongful act or omission;
   
   
4. losses that arise because of the claims of third parties;
   
   
5. losses that must be pled as special damages; and
   
   
6. consequential damages (as defined in the Uniform Commercial Code or analogous State commercial law)."
   

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