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
PO Box 2636
Rolling Hills, California 90274

PO Box 2095
Burlingame, California 94011

8 January 2001 -- Special Regulatory Update

Special Regulatory Related Matters that may be of interest since the last Update includes --<

IS THE DEFENSE PRIORITY ALLOCATION SYSTEM (DPAS) "WORKING?" The recent reports on rate increases and/or potential allocation of critical electrical service in some parts of the country reinforces a re-review of DPAS (by customers and suppliers) to ensure that disruptions and/or cost impact is managed/minimized.

COMMENT:

The October 2000 Regulatory Update noted that DoD proposed the issuance of a Commercial Item Handbook and the following comment was made in that Update, "Further, the (Handbook) coverage on issuing 'rated orders' for critical commercial items under rated prime contracts AND subcontracts is wanting."

Recently some "DPAS discussions" with Update readers on the possible power supply curtailment and rate escalations that are seemingly on the horizon -- or are here -- reinforced the expressed DPAS (FAR Subpart 11.6) concern as well as raised a number of questions -- shared here:

• Are your lower tier suppliers (commercial and non-commercial) using DPAS under your rated orders? Should they? Specifically, are those suppliers "issuing" rated orders? Should they? If not, will any delay by you and/or your suppliers be excusable due to any electricity supply shortage? Should it be excusable?
  
• Customers, are your suppliers using DPAS for rated orders? Should they? Are your suppliers advising you of any potential impact? Should they?
  
• Are your electricity suppliers, i.e. "distributors," doing business with you under DPAS? Should they? If so, are those "distributors" flowing down rated orders to the electricity "generator(s)?" Should they? Should your electricity company need be reminded of their obligations under DPAS if they contemplate a curtailment in service?
  
• Is the contractual/subcontractual coverage for economic price adjustment clauses appropriate under the circumstances for increased charges for current and/or new contracts? Should currently impacted contracts/subcontracts be analyzed to determine if an equitable adjustment is due because of unanticipated/increased electrical rates/charges, under the Contingency Cost Principle (31.205-7(c)(2))?
  

Consult with your legal counsel on this issue.


Charles E. Rumbaugh

Back Top

Back to FASMG's Home Page