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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
(310) 373-1981 / FAX (310) 373-4182
(888) ADROffice (toll free)
E-mail: ADROffice@Rumbaugh.net
P.O. Box 2636
Rolling Hills, California 90274
P.O. Box 2095
Burlingame, California 94011
November 18, 2000
Recent Regulatory Matters that may be of interest since the last Update include --
1. AFFIRMATIVE ACTION RULES REVISED. On November 13, 2000, the Department of Labor, Office of Federal Contract Compliance Programs (OFCCP) published in the Federal Register a final rule (effective December 13, 2000) that will refocus, revise, and restructure the Code of Federal Regulations that establish the requirements for affirmative action programs. The rule will (primarily) refocus the regulatory emphasis from the development of a document that complies with highly prescriptive standards, to a performance based standard that effectively implements an affirmative action program into the overall management plan of the contractor . The rule also will introduce a new tool, the Equal Opportunity Survey, that will aid contractors in assessing their pay and other personnel practices , while increasing the efficiency and effectiveness of program monitoring. For the most part, (the final rule) adopts the revisions that were proposed earlier in May.
COMMENT: Again, it is refreshing to see the concurrent publication of public comments submitted in response to the May 4th notice of proposed rule-making and OFCCP's responses thereto as well as an explanation of any resulting changes to the proposed revisionsover 20 pages! Are other government agencies watching/reading this participatory process?
2. ELECTRONIC SIGNATURES ARE (ALMOST) HERE. On November 1, 2000, a notice was published in the Federal Register of a proposed FAR change to clarify and encourage the use of electronic signatures in Federal procurement. Pursuant to the Electronic Signatures in Global and National Commerce Act (Pub. L. 106-229) this proposal continues the movement toward electronic contracting by revising the definitions of in writing and signature at FAR 2.101 to clarify that these terms include electronic, in addition to paper, transactions; and adding a policy statement at FAR Subpart 4.5, Electronic Commerce in Contracting, to encourage agencies to use electronic commerce, such as electronic signature, in the transaction of Federal procurements. This proposal also acknowledges in FAR 4.5 provisions of the Government Paperwork Elimination Act that agencies (by October 21, 2003) must allow individuals or entities the option to submit information or transact with the agency electronically when practicable. Comments are due on/before January 2, 2001.
COMMENT: See September and October Updates for additional background on topic.
3. WILL REVERSE AUCTIONS RECEIVE REGULATORY SANCTION? On October 31, 2000, the Federal Register provided notice that the Defense/Civilian Councils are considering whether there is a need at this time for guidance on the use of reverse auction techniques and, if so, how it can be most effectively communicated (e.g., through the Federal Acquisition Regulation, best practice guides, agency instructions, or training). Reverse auctions have been conducted electronically and usually involve bidders offering to sell specified supply items to the government/commercial buyer in a time constrained, auction format. Comments are due on/before January 2, 2001.
COMMENT: The following statement is provided in the Federal Register notice as one possible government position as to the necessity of any regulatory coverage on the topic, Explicit coverage (on reverse auctions) in the FAR is not needed because FAR 1.102(d) permits any technique that is not expressly prohibited. Doesnt the OFPP Act trump this FAR logic and prescribe when regulations are required and when they are permittedand only then? Accordingly, doesnt the logic cited in FAR 1.102(d) conflict with that statutory mandate? Repetitive use of clauses or implementation of policies which impact the public need to be properly promulgated pursuant to the OFPP Act, Paperwork Reduction Act, etc. in order to have a fair acquisition systemis anything else, without statutory change, acceptable? Also, see September Update on the topic.
4. OFPP PROPOSES TO ADDRESS NON-FEE CONTRACTING INCENTIVES. On October 14, 2000, OFPP published a notice in the Federal Register soliciting public input on its new initiative to fundamentally examine the manner by which the Government develops and applies incentives to its contractual vehicles, and is seeking information and advice that would advance this effort". In pursuing this project, OFPP would like to pull together any experiences and literature regarding non-fee type incentives. Comments are due on/before December 26, 2000.
Miscellaneous:
The Department of Commerce, Bureau of Export Administration (BXA), published a notice in the November 6th Federal Register seeking comments on how existing foreign policy-based export controls have affected exporters and the general public. Of particular interest to BXA in knowing the experience of individual exporters in complying with the proliferation (of) controls, with emphasis on economic impact and specific instances of business lost to foreign competitors. In addition, comments are also requested from industry on several enumerated questions. Comments are due on/before November 30, 2000.
COMMENT: This is a good opportunity (albeit short timeframe to respond) to indicate which regulations have had a significant impact upon business and suggest changes thereto.
A revised DoD Directive 5000.1 (The Defense Acquisition System) was issued on October 23, 2000.
NAVSEA is floating an old renegade clause purportedly patterned after FAR Clause 52.243-7Notification of Changes. However, this NAVSEA clause (5252.243-9105Notification of Changes) has a date predating the conversion to the FAR/DFARS acquisition system, has no label indicating a deviation had been issued as required by FAR 52.103, no indication that there is any specific and unique need for this clause at NAVSEA (as required by OFPP Act ), and nothing that authorizes the scope of the release that is purportedly required, etc.
COMMENT: If these types of clauses are deemed necessary by NAVSEA, why are they unilaterally thrust upon contractors? Why arent they forwarded for government-wide consideration under FARas required by FAR Part 1? Contractors should work through trade associations to cause this activity to cease and consult with counsel as to an appropriate response to this NAVSEA clause in a particular solicitation. Further, Industry members on Integrated Process/Product Teams (IPTs) should remind themselves of their obligations, i.e. to those they really represent on the IPT, and raise these types of issues since they strike at the integrity of the process.
On November 15, 2000, the Department of Energy (DoE) noticed in the Federal Register that it is amending its Department of Energy Acquisition Regulation (DEAR) to improve the patent coverage relating to management and operating contracts . The clauses contained herein generally reflect the clauses used in such DoE contracts over the last five yearsÖand establishes three clauses, one for nonprofit contractors, one for profit-making contractors where their contracts do not provide for technology transfer responsibilities, and a third for large profit-making contractors where their contracts do provide for technology transfer activities. The terms of the third clause reflect DoEs probable issuance of an advance waiver under which large profit- making management and operating contractors with a technology transfer mission will receive title to inventions. The individual class waiver that is likely to be granted may cause the actual terms of the patent clause used to vary from the model published here. This interim rule is effective December 15, 2000. Comments are due on/before January 16, 2001.
COMMENT: The clauses require certain flowdown provisions for those subcontractors providing R&D effort. Note that these clauses generally reflect the clauses used inÖ DoE contracts over the last five years.
On October 25th a final rule was issued which amended the DFARS in order to update instructions for completion of the Material Inspection and Receiving Report. The rule adds requirements for inclusion of the title, mailing address, and telephone number of the Government official responsible for acceptance of supplies or services under a contract.
On October 25th a final rule was issued amending the DFARS to update the policy pertaining to the functions of small business specialists at DoD contracting activities. The rule provides for small business specialist review of all proposed acquisitions exceeding $10,000 in value .
On November 13, 2000, Dr. Gansler issued a memorandum on increasing the use of Performance-Based Payments.
And, pursuant to a notice on October 25th NASA will continue to participate with the cognizant contracting officerÖin the final indirect cost rate determination procedure where the issues involved would have a significant financial impact on the agency (NASA) .
DoE pursuant to an October 25th notice is proposing to establish new regulations covering contractor legal management requirements. Conforming amendments are also proposed to the DEAR. The proposed regulation will cover legal costs to be reimbursed by the Department to its facility management contractors with contracts exceeding $10,000,000. And, seemingly related thereto, was the earlier October 18th final rule issued by DoE to establish its policy on the reimbursement of contractor settlement, award and defense costs associated with contractor employee whistleblower actions.
COMMENT: Legal related expenses are under increased scrutiny at DoE while appearing to expand allowability of certain (whistleblower retaliation related) costs!
On October 19th NASA published as a final rule extensive revisions to its Grant and Cooperative Agreement Handbook.
Lastly, the Marines on October 19th updated the mileage allowances as part of the rewards for return of Navy and Marine Corps absentees.
Recently Published Articles/Notes Include
ADR Tips (co-author) American Arbitration Association Dispute Resolution Times , on-going quarterly series of articles:
What is Mediation
Mediator Subject Matter Expertise
Party-Appointed Arbitrator
Baseball Arbitration I (How to Negotiate with Sole Source SuppliersPart 1)
Baseball Arbitration II (How to Negotiate with Sole Source SuppliersPart 2)
Insights to Conducting/Attending a Preliminary Hearing In An Arbitration
Future Speaking Engagements Include
November 24-26, 2000, Beijing, China, International Business Transactions.
January 11, 2001, Vandenberg NCMA Chapter, Award Term Contracting (NES)
February 16, 2001, ISM Dallas, Recent ADR Initiatives
March 9-12, 2001, Beijing, China, International Negotiations.
April 19, 2001, Phoenix NCMA Chapter, ADR Workshop/Seminar.
Charles E. Rumbaugh
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