FAR and Beyond Blog
Yesterday GSA issued a notice to its Multiple Award Schedule (MAS) contractors entitled “Improving Product Number Data Quality on GSA Schedules.” The notice states the GSA is seeking “to improve product data quality on MAS through submission of all awarded base products and associated descriptive data on GSA Advantage.” According to the notice, GSA is asking MAS contractors “to improve the integrity of your schedule offerings by submitting Universal Product Codes (UPC) and Manufacturer Part Number (MPN) for each awarded contract item.”
The notice further directs MAS contractors to upload all base product contract line items with UPCs and MPNs to GSA Advantage via SIP within 90 days. The notice also includes a set of frequently asked questions (FAQs). The FAQs confirm the requirement to upload to GSA Advantage all base products with the corresponding UPC or MPN.
Interestingly, the notice cites compliance with clause I-FSS-600 Contract Price Lists (Oct 2013) and clause 552.238-71 Submission and Distribution of Authorized FSS Schedule Price Lists as one of the goals of this initiative. However, neither of the clauses requires submission of a UPC or MPN. For example, subparagraph (b)(3) of Clause I-FSS-600 lists over 26 data elements that MAS contractors must include in their price lists. UPC and MPN are not among those specific data elements. Clause 552.238-71 sets forth the requirement for submission and distribution of the price list but does not specifically identify/list the data elements to be included in the price list. That these clauses are silent regarding the submission of the UPC and MPN raises questions whether the notice is consistent with the requirements of the Paperwork Reduction Act.
Generally, the Paperwork Reduction Act requires that where the government is seeking to collect data from the public, it must provide the public with notice and an opportunity to comment on the paperwork burden associated with the proposed new data reporting requirement. The notice and opportunity to comment for procurement data collection requirements is done through the Federal Register. The Paperwork Reduction Act ensures that the costs/burdens on the public of any proposed data reporting requirement are appropriately and transparently considered by the government. It is an important tool to ensure accountability when the government seeks to impose new reporting burdens.
In this case GSA should address why it is not following the process called for by the Paperwork Reduction Act, as the burden on the public (MAS contractors) will be significant. Indeed, given the millions of potential variations in models, parts, specifications and products, many MAS contractors will find compliance with the notice impossible, or at the very least cost prohibitive. The Coalition has already heard from MAS contractors indicating that the notice will require significant changes to their electronic systems. Here again is a situation where GSA is adding additional contract reporting requirements that increase operational costs for contractors without any real assessment of the burdens.
Moreover, although FAS has sought some feedback regarding the notice, to date there has been no real direct, fulsome dialogue with MAS contractors regarding the new requirements. Perhaps the notice is intended to begin that dialogue. However, the notice does not make that clear. Rather it directs submission of the information to the extent it is available. At the same time, FAS Commissioner Tom Sharpe has reached out to the Coalition seeking a dialogue regarding the notice. To that end, the Coalition will be hosting a meeting with the FAS Commissioner and our members focusing on the notice and its impact.
As soon as we have worked out the logistics we will let you know the time and place of the meeting.
Roger Waldron
President
Emily Murphy Addresses Implementation at Small Business Forum
On July 23rd, The Coalition for Government Procurement hosted a Small Business Forum at the Tower Club in Tysons Corner, VA. The keynote speaker was Emily Murphy, senior counsel of the House Committee on Small Business. As part of her comments, Murphy highlighted the status of implementing regulations from the National Defense Authorization Act of 2013 (NDAA) at the Small Business Administration (SBA). According to Murphy, SBA has not issued clear regulations for many provisions in the 2013 NDAA, including rules on small business teaming and subcontracting opportunities with larger businesses. The delays in issuing these regulations make it difficult for small businesses to partner with large businesses and participate in the federal procurement market, according to Murphy. Last week, the Small Business Committee’s Subcommittee on Contracting and Workforce held a hearing on this topic— the memo can be viewed here.
The Coalition extends a special thank you to Emily Murphy for her keynote at the Small Business Forum. We also sincerely appreciate the participation of our other government and industry guest speakers:
- Kenneth Dodds, Director, Small Business Administration
- Joseph Hornyak, Partner, Holland and Knight, LLP
- Mark Lee, Deputy Director, Office of Governmentwide Policy, GSA
- Marian Morley, Vice President, Government Sales & Operations, Allsteel
- Jim Connal, Vice President, Contracts and Compliance, Red River Computing
Thanks to our guest speakers and their shared expertise, the Small Business Forum offered an engaging discussion of key initiatives impacting performance in the federal market. Members interested in becoming more engaged with the Coalition on small business matters, contact Carolyn Alston at calston@thecgp.org.
Strategies for Federal Market Success in Q4: 2014 and Beyond, July 31
It’s a familiar federal market ritual. Each year federal agencies race to spend their remaining budget dollars in the End of the Year Scramble. For contractors, spend-it-or-lose-it often means a sprint to win these last minute contracts. How do contractors turn the end of year scramble to an enduring strategy for success?
Bloomberg Government, in partnership with The Coalition for Government Procurement, moves the conversation beyond specific contracting opportunities at the end of fiscal year 2014, to a focus on shaping companies’ Q4 strategies to always be prepared for the End of the Year Scramble. We will also conduct this conversation with an eye towards 2015 appropriations, which industry segments can expect increased federal opportunities, and how to best prepare
for them.
Confirmed Speakers Include:
Roger Waldron, President, The Coalition for Government Procurement
Kevin Brancato, Senior Defense Analyst, Bloomberg Government
To register, visit http://successinq4.eventbrite.com/?aff=cgp.
Seeking Member Input on Cloud RFI
As mentioned in today’s FAR & Beyond blog, the Coalition will submit comments in response to GSA’s Cloud Computing Request for Information (RFI). The RFI is seeking industry feedback on a proposed change to add a Cloud Computing Special Item Number (SIN) to IT Schedule 70. The Coalition is interested in receiving member input to include in our comments. Please submit your feedback on the RFI by August 1st to Aubrey Woolley at (202) 315-1053 or awoolley@thecgp.org.
FEDSIM to Join IT/Services Committee, Aug 12
The Coalition is pleased to announce that GSA’s FEDSIM team will attend our next IT/Services Committee meeting on August 12th at 10am at Northrop Grumman. The members only meeting will feature a discussion on the Continuous Diagnostics and Mitigation (CDM) Program. If you are interested in attending, please contact Roy Dicharry at rdicharry@thecgp.org.
In a recent blog post, Office of Integrated Technology Services (ITS) Assistant Commissioner Mary Davie announced the release of a interactive, real-time Connections II dashboard. The tool allows Connections II users to view and analyze non-classified data on federal IT purchasing activity awarded under GSA’s Connections II contract. Connections II meets federal agencies’ network and telecom equipment, labor, building, and campus infrastructure solution needs. The release of the dashboard supports GSA’s goal to look for ways to make government purchasing data more open, transparent, and accessible.
According to the blog, the portal creates a single point of access for all data on Connections II task order obligations, number of awards, agency/bureau, and industry partner activity. Search results display in lists, graphs, and charts. Additionally, users can search for specific items, sort data, and create and download custom reports. For more information on Connections II please click here.
Join the FSSI HR Services and Training (HRST) Working Group
The Coalition will provide feedback to GSA on the FSSI acquisition strategy for Human Resources and Training and Capital Management. This is a joint GSA/OPM initiative which will replace OPM’s existing Training and Management Assistance (TMA) contract vehicle. If you are interested in participating in the Coalition’s working group, please send an email to Aubrey at awoolley@thecgp.org.
RFI: GSA Seeking Input on ENERGY STAR and EPEAT Only for Schedule 70
GSA released a Request for Information (RFI) on July 15th seeking input on potentially limiting products under IT Schedule 70 to only those “that are covered by the ENERGY STAR or EPEAT programs”. The specific SINs that GSA is considering the limitation under are:
- SIN 132-8: Purchase of New Equipment
- SIN 132-53: Wireless Services
- SIN 132-99: Introduction of New Information Technology Services and/or Products
- SIN 132-100: Ancillary Supplies and/or Service
According to the RFI, GSA would like to provide schedule holders with product offerings under these SINs an opportunity to provide feedback before proceeding. Specifically, the RFI is meant to achieve the following goals:
- Gain feedback from industry and other relevant stakeholders on the current availability of Energy Star and EPEAT-registered products
- Better understand industry partners’ views on EPEAT and Energy Star product registry compliance on IT Schedule 70, in an effort to support a decision on creating new requirements under GSA’s “Green” effort.
For more details on the specific feedback that GSA is interested in, please review the RFI and the associated response template. The Coalition plans to respond to the RFI through the IT/Services and Green Committees. Members that have input they would like included in the Coalition’s comments, please contact Aubrey Woolley at awoolley@thecgp.org.
Freeze the Footprint Initiative Makes Progress
OMB Deputy Director Beth Cobert noted in a recent blog post that the Federal government has made significant progress toward implementing the Administration’s “Freeze the Footprint” policy for Federal real estate. The policy, first announced in May 2012, prohibited agencies from increasing the size of their civilian real estate inventory, subject to certain exceptions.
Cobert notes that in accordance with the policy guidance, agencies are taking significant and creative steps to manage their real estate inventories by freezing growth in the portfolio, measuring the cost and utilization of real property, and identifying opportunities to reduce the portfolio. Most significant, the office and warehouse space in the inventory of the 24 Chief Financial Officer (CFO) agencies was reduced by roughly 10.2 million square feet at the close of FY 2013. Agencies have also developed three-year plans to restrict the growth in their office and warehouse inventories.
GSA’s Public Buildings Service (PBS) is playing a lead role in assisting agencies with reducing their Federal property footprints. PBS has made reducing the Federal footprint their top priority goal. As part of this initiative, PBS plans to work with agencies to implement new and innovative workplace strategies using GSA’s headquarters office in Washington, DC as a model. PBS has set a specific objective to work with agencies to complete 15 client portfolio plans (three plans each year) to identify opportunities for agencies to optimize their real estate portfolios.
DAPA Holders are Caught in the Middle of a Disagreement between the VA and DLA over the Application of the IFF to DAPA Sales
By Jack Horan, Partner, McKenna Long & Aldridge LLP
Sales to the Department of Defense under its Distribution and Pricing Agreement program are very important to many VA FSS contractors. The VA, itself, views DAPA sales as integral to the success of VA Schedule contracts, telling contractors that “success of your VA FSS contract requires the development of a strong federal customer base and active promotion of your business to these customers” and “[p]articipation in the Defense Logistics Agency’s (DLA) Troop Support Distribution and Pricing Agreements (DAPA) program is a surefire way to penetrate the federal healthcare marketplace.” See VA FSS eNewsletter, No. 55 (March 2014) at 1
Despite the importance of these sales to VA FSS contractors, DOD and the VA are in the midst of a disagreement over whether VA FSS contractors are required to pay the industrial funding fee on sales of items through the DAPA when those items are also listed on the contractor’s VA Schedule Contract. The VA’s position is explicitly set forth in a somewhat unusual appendage to the standard Industrial Funding Fee and Sales Reporting Clause, GSAR 552.238-74, included in VA Schedule contracts:
NOTICE REGARDING DISTRIBUTION AND PRICING AGREEMENTS (DAPA)
If your firm has a DAPA with the Department of Defense, items available therein that are also awarded under FSS contract must, during the course of the FSS contract, be reported as FSS sales and included in quarterly FSS Sales Reports and Industrial Funding Fee (IFF) remittance.
See, e.g. RFP 797-FSS-99-0025-R9, Solicitation Document at 38.
The VA recently confirmed (and justified) its position that FSS Contractors must pay the IFF on DAPA sales in its FSS eNewsletter:
One of the questions we most often receive is “I have a DAPA, do I need to report those sales on my quarterly sales report?” In 1999, DoD and the VA signed a memorandum of understanding indicating that FSS pricing is the preferred method of pricing for products identified on DAPAs and as such sales for items awarded under a VA FSS contract that are also available under a DAPA must be reported as FSS sales.
Any delivery/task order placed against a VA Schedule contract – whether for a base contract item, blanket purchase agreement, or DAPA, is a reportable sale and must be included in the quarterly sales report & IFF payment. Additionally, all sales made to agencies other than the VA, state & local governments, and through prime vendor programs & direct-to-patient distribution must be reported. Direct all FSS sales reporting & IFF remittance questions to the VA Sales Desk.
See VA FSS eNewsletter, No. 55 (March 2014) at 5 (emphasis in original).
So the VA’s answer is a firm “yes” – VA Schedule contractors must pay the IFF on DAPA sales. Based on the VA’s eNewsletter, the VA appears to believe it has two justifications for the requirement: (1) a 1999 memorandum of understanding with DOD; and (2) its apparent view that items purchased under a DAPA is “placed against a VA Schedule contract.” Id.
A major problem with the VA’s position is that DOD apparently does not agree. The Defense Logistics Agency, the DOD Executive Agent for Medical Material. responsible for administration of DAPAs, is instructing its DAPA holders not to pay the IFF for sales to prime vendors under a DAPA:
The following is specific DAPA guidance:
• There is no direct relationship between a Federal Supply Schedule (FSS) and DAPA.
• A DAPA does not require a vendor to establish or have a FSS.
• Prime Vendor contracts are separate acquisitions and sales thereunder using the DAPA catalogue do not require reporting or payment through the Department of Veterans Affairs (DVA) Industrial Funding Fee (IFF) process.
Any DAPA holder given contrary guidance should immediately contact DLA.
See DLA Memorandum to Prime Vendor DAPA Program, found at https://www.medical.dla.mil/Portal/.
DLA views DAPAs as “DLA pricing vehicles used to establish and manage pricing with manufacturers and/or distributors for medical material purchased under DLA’s Prime Vendor contracts” rather than orders “placed against a VA Schedule contract,” Compare, id and VA FSS eNewsletter at 5. DLA also sees its Prime Vendor contracts – “FAR Par 12 acquisitions that use pricing vehicles such as DAPA under FAR Part 16 as single source awards within a region” — as separate from VA’s FSS contracts. Id. Thus, these opposite views on the IFF grow out of a fundamentally different view of the role of VA Schedule contracts in DAPA orders. VA views the DAPA orders as “placed against” Schedule contracts while DLA views them as placed under DLA’s Prime Vendor contracts independent of the VA’s Schedule contracts. In its instruction to DAPA holders, DLA does not address the 1999 memorandum referenced in the VA’s eNewsletter.
So, FSS contractors with a DAPA, at least for now, are caught between the conflicting views of the VA and DLA – one telling them that they have to pay the IFF and the other telling them that they should not. Each relying on a fundamentally different view of the status of orders placed through DLA Prime Vendors based on DAPA pricing.
Moreover, a contractor faces risk in following either position. By excluding DAPA sales from the IFF, as instructed by DLA, the contractor risks a claim by the VA that it is not complying with its FSS contract, or worse, a potential claim under the False Claims Act. By paying the IFF, the contractor faces at least the financial risk of paying a fee that it is not obligated to pay. To the extent the fee is included in the cost in its DAPA, the DAPA holder also faces a potential request for a price reduction under the DAPA to eliminate the IFF. Given these risks, the VA and DLA have an obligation to their contractors to resolve this issue.
VA and DLA are involved in a discussion of these issues and we hope to report a resolution soon.
Important Decision Impacting Government Contractors
IN RE: KELLOGG BROWN &ROOT, INC., (KBR) (D.C. Circuit June 27, 2014)
This week the court decided a significant case for government contractors. The case is important because a contrary ruling would have eliminated the attorney-client privilege in connection with internal investigations conducted by companies required by law to maintain compliance programs. Given the requirements for compliance plans and mandatory disclosure of FAR Subpart 3.10, Contractor Code of Business Ethics and Conduct, many contractors would have been affected. Because of the potential impact, a number of organizations, including The Coalition for Government Procurement, submitted an amicus brief in support of KBR. The court cited the amicus brief as demonstrating the depth of industry concern with this issue. The following is an analysis of the case from McKenna Long & Aldridge. We suggest that you share it with your corporate attorneys and internal audit staff.
D.C. Circuit Upholds the Attorney-Client Privilege for Corporate Internal Investigations
By: Jack Horan, Partner, McKenna Long & Aldridge LLP, Jason Workmaster, Partner, McKenna Long & Aldridge LLP and Sandeep Nandivada, Associate, McKenna Long & Aldridge LLP
On June 27, 2014, the U.S. Court of Appeals for the D.C. Circuit granted Kellogg Brown & Root’s (KBR) petition for a writ of mandamus and vacated the District Court’s order in United States ex rel. Barko v. Halliburton Co., No. 05-cv-1276, 2014 WL 1016784 (D.D.C Mar. 5, 2014) compelling KBR to produce internal investigation documents. In Re: Kellogg Brown & Root, Inc., No. 1:05-cv-1276 (D.C. Cir. June 27, 2014). The D.C. Circuit’s ruling has upheld important protections for companies conducting internal investigations pursuant to statute or regulation, and affirmed the continued vitality of the Supreme Court’s decision in Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) for companies claiming the attorney-client privilege.
District Court Proceedings
In Barko, the relator sought documents created by KBR during its internal investigation of the allegations that are the basis for the relator’s qui tam case. KBR’s legal department oversaw the investigation, which was conducted pursuant to KBR’s Code of Business Conduct. KBR asserted the attorney-client privilege over the investigation, arguing that KBR created the documents so that KBR’s internal lawyers could provide legal advice to the company. The relator argued that the documents were not privileged because they were ordinary business records. The District Court applied a “but for” test for determining whether the purpose of the documents was to obtain legal advice – analyzing whether the documents would have been created “but for” the need for legal advice. The District Court reasoned that because regulations and KBR’s own corporate policy required KBR to conduct the investigation, KBR had not created the documents solely to obtain legal advice. The Court concluded that the documents were not privileged because KBR created them to satisfy regulatory and corporate requirements.
KBR immediately requested that the District Court certify the privilege question for interlocutory appeal and to stay its order compelling production pending a petition for a writ of mandamus from the D.C. Circuit. The District Court denied those requests. Left with no other choice, KBR took the extraordinary action of filing a petition for writ of mandamus with the D.C. Circuit. The D.C. Circuit stayed the District Court’s order pending a ruling on the mandamus petition.
D.C. Circuit’s Analysis
KBR had two difficult hurdles to clear to prevail on mandamus – it had to show legal error and that the error justified the extraordinary writ of mandamus. It cleared both of them.
The Circuit found two fundamental legal errors. First, the District Court improperly used a “but for” causation analysis when applying the “primary purpose test.” The correct formulation of the “primary purpose” test requires legal advice to be a significant purpose of the communication. The significant purpose of legal advice is not undermined simply because the internal investigation is also required by statute, regulation or a company’s compliance program.
Second, the District Court misinterpreted Upjohn. The D.C. Circuit noted that Upjohn does not require any of the following for the privilege to apply: (1) the involvement of outside counsel to claim the attorney-client privilege; (2) that attorneys personally conduct employee interviews when the investigation is conducted at the direction of counsel; or (3) the use “magic words” informing employees of the purpose of the interview.
The D.C. Circuit noted that KBR’s assertion of the privilege was “materially indistinguishable” from the basis upheld in Upjohn. As in Upjohn, KBR initiated an internal investigation in response to reports of potential misconduct and as part of a concerted effort to gather facts and ensure compliance with applicable laws and regulations. As in Upjohn, KBR’s in-house legal counsel coordinated the investigation. In short, the Circuit confirmed the continuing validity of Upjohn procedures in establishing the attorney-client privilege.
After finding clear legal error, the D.C Circuit applied the three factors required for mandamus as set forth in Cheney v. U.S. District Court for the District of Columbia, 542, U.S. 367, 380 (2004): (1) no other adequate means to secure the desired relief; (2) the right to relief must be clear and indisputable; and (3) the writ is appropriate under the circumstances. KBR easily met the first two factors. Mandamus provided KBR with the only meaningful remedy. The District Court had denied KBR’s motion for interlocutory appeal, and an interlocutory appeal under the collateral order doctrine is not available for attorney-client privilege orders. An appeal after final judgment would be too late to protect the documents that KBR was ordered to produce. The DC Circuit’s finding of clear legal error itself made KBR’s right to relief clear and indisputable.
The third factor, “a relatively broad and amorphous totality of the circumstances consideration”, also favored KBR. The potential for grave harm to the attorney-client privilege if the District Court’s decision remained in effect made mandamus “appropriate under the circumstances.” Left in place, the District Court’s decision could “work a sea change in the well-settled rules governing internal corporate investigations”:
Because defense contractors are subject to regulatory requirements of the sort cited by the District Court, the logic of the ruling would seemingly prevent any defense contractor from invoking the attorney-client privilege to protect internal investigations undertaken as part of a mandatory compliance program. See 48 C.F.R. § 52.203-13 (2010). And because a variety of other federal laws require similar internal controls or compliance programs, many other companies likewise would not be able to assert the privilege to protect the records of their internal investigations. See, e.g., 15 U.S.C. §§ 78m(b)(2), 7262; 41 U.S.C. § 8703. As KBR explained, the District Court’s decision “would disable most public companies from undertaking confidential internal investigations.” KBR Pet. 19.
Id. at 15. Thus, although not binding, the incorrect “but for” analysis could gain traction in other district courts. To protect against these harms to both KBR and the attorney-client privilege more broadly, the D.C. Circuit granted KBR’s petition for a writ of mandamus.
Government contractors (and the many other companies subject to statutory and regulatory requirements to conduct internal investigations) can now breathe a sigh of relief – the application of the attorney-client privilege to corporate internal investigations required by law or regulation has been vindicated and upheld. Companies following Upjohn procedures can conduct their internal investigations with the assurance that the attorney-client privilege will protect candid and full communications.
The Coalition’s Second Annual Joseph P. Caggiano Memorial Golf Tournament
Please join us for The Coalition’s 2nd Annual Joseph P. Caggiano Memorial Golf Tournament on August 27th at Whiskey Creek Golf Club! This charity tournament is to honor our good friend and colleague, Joe Caggiano, who was not only a 23-year veteran of the federal contracting marketplace but a naval veteran as well.
We believe Joe would be proud of the fact this year’s tournament proceeds are going to a brand new cause that will continue to support our nation’s veterans. In honor of the 35th Anniversary of The Coalition for Government Procurement, and in conjunction with The George Washington University, we are creating a scholarship/fellowship to provide financial support to a veteran. Specifically, qualified veterans concentrating their studies in the field of US Government procurement and pursuing the JD or LLM degree in Government Procurement Law or the interdisciplinary Masters of Science in Government Contracting degree (MSGC) at The George Washington University will benefit from the fund as we count on them to become the next generation of skilled professionals leading this critically important sector of the US economy.
Registration will begin at 9:30am with an 11:00am shotgun start, followed by a 4:30 pm post-tournament reception. The tournament will consists of a 4 player scramble with 144 maximum players. Please click here to register your foursome or as an individual golfer!
We have several exciting sponsorships available from title sponsors to beverage cart sponsors to hole sponsors, and also a wide range in pricing so no matter what your budget, you will still have an opportunity to support this wonderful cause. Please click here to review sponsorship opportunities and contact Matt Cahill at mcahill@thecgp.org or 202-315-1054 with any questions or sponsor commitments.
We look forward to your support and a fun and rewarding day for everyone!
Off the Shelf – What’s the latest from Capitol Hill?
Recently on Off the Shelf, Jon Etherton, president of Etherton and Associates, Inc., provided an update on the Hill. Etherton discussed the current status of the procurement provisions included in the current versions of the National Defense Authorization Act. He also talks about the ongoing efforts to identify opportunities for procurement reform that increases the efficiency and effectiveness of the procurement system. In particular, Etherton discusses NDIA’s efforts with regard to acquisition reform initiatives in response to the Hill. To listen to the program, click here.
Executive Order Updates Equal Opportunity Requirements for Contractors
On July 21st, an Executive Order was released that updates existing non-discrimination requirements for Federal contractors and subcontractors. Specifically, the executive order prohibits discrimination based on sexual orientation or gender identity by contractors and within the Federal workforce. At a White House signing ceremony, the President declared that “America’s federal contracts should not subsidize discrimination against the American people.” The Department of Labor has not yet released details regarding implementation and compliance requirements under the executive order. The Coalition will provide an update when this information becomes available.
Interim Rule: Hiring Individuals with Disabilities & Veterans
On July 25th, GSA, NASA, and the Department of Defense published an interim rule in the Federal Register regarding the hiring of people with disabilities and veteran employees by federal contractors. The interim rule amends the Federal Acquisition Regulation to implement two Department of Labor (DoL) final rules that were published in the Federal Register on September 24, 2013.
The following is a summary of the requirements that the two final rules are implementing that was published in the Friday Flash on March 28, 2014.
Two final rules from the U.S. Department of Labor Office of Federal Contract Compliance Programs (OFCCP) on the hiring of veterans and people with disabilities went into effect on March 24, 2014. The two rules strengthen existing requirements for contractors and impose new recruitment and data reporting requirements.
1. Hiring Veterans
The Department of Labor has made changes to the Vietnam Era Veteran’s Readjustment Assistance Act (VEVRAA) at 41 CFR Part 60-300. The final rule strengthens existing affirmative action provisions in VEVRAA and also requires that contractors:
- Establish annual hiring benchmarks for protected veterans
- Document the number of veterans who apply for jobs and the number of veterans hired
- Invite applicants to self-identify as veterans
- Incorporate the equal opportunity clause in subcontracts
- Follow certain job listing requirements
- Allow OFCCP access to documentation showing contractor compliance
2. Hiring Individuals with Disabilities
The Department of Labor has also updated regulations in Section 503 of the Rehabilitation Act of 1973, as amended at 41 CFR Part 60-741. The final rule strengthens existing affirmative action requirements for contractors to improve the hiring and recruitment of individuals with disabilities. Specifically, the rule requires contractors to:
- Apply a 7% utilization goal for qualified individuals with disabilities to each of their job groups, or to their entire workforce if there are fewer than 100 employees
- Document the number of people with disabilities who apply for jobs versus the number hired
- Invite applicants to self-identify as having a disability
- Incorporate the equal opportunity clause in subcontracts
- Follow certain job listing requirements
- Allow OFCCP access to documentation showing contractor compliance
The compliance structure seeks to provide contractors the opportunity to maintain their current affirmative action program (AAP) cycle.
The Department of Labor’s OFCCP has materials available to assist contractors with complying with the two rules, including:
- Training Webinars
- Fact Sheets
- Veterans
- Individuals with Disabilities
- Side by Side Charts of New vs Previous Regulations
- Veterans
- Individuals with Disabilities
- Benchmarking Guidance for Veterans Hiring Compliance
- EEOC opinion on Disability Voluntary Self Identification
- Self Identification Form
Sweeping Counterfeit Reporting Proposed Rule
The FAR Council published a proposed rule on June 10th extending certain reporting requirements for contractors beyond what is already required for counterfeit electronic parts to a broader scope of products and services. The proposed rule, titled “Extending Reporting of Nonconforming Items”, is intended to reduce the risk of counterfeit items entering the supply chain by ensuring that contractors report suspect items to a government database. According to an article by Crowell & Moring, “a contractor would be required to report to the contracting officer within 30 days of becoming aware that any ‘end item, component, subassembly, part or material contained in supplies purchased by the Contractor for delivery to, or for the Government is counterfeit or suspect counterfeit’”. It would also require that the contractor report the incidence to the Government-Industry Data Exchange Program (GIDEP) and monitor this site regularly to avoid delivery of any reported items to the government. For more details on the proposed rule, access Crowell & Moring’s article here. Comments on the rule are due August 11, 2014. Members who would like to provide feedback on the rule to the Coalition, please contact Aubrey Woolley at awoolley@thecgp.org.
DOL Proposed Rule: Minimum Wage for Contractors, Extended to July 28
The Department of Labor (DOL) has extended the deadline to comment on the Minimum Wage for Contractors proposed rulemaking. The new deadline is July 28. The rule implements Presidential Executive Order (EO) 13658, which set a new minimum wage of $10.10 per hour, effective January 1, 2015. Beginning on January 1, 2016, and annually thereafter, the applicable minimum wage will be determined by the Secretary of Labor.
DOL has posted a fact sheet about the rule on its website. The fact sheet includes the following helpful information about the proposed rule.
A. Contracts covered – new contracts and replacements for expiring contracts that result from solicitations issued on or after January 1, 2015 in the following four major categories
(1) procurement contracts for construction covered by the Davis-Bacon Act (DBA);
(2) service contracts covered by the Service Contract Act (SCA);
(3) concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b); and
(4) contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.
B. Contracts not covered
(1) grants;
(2) contracts and agreements with and grants to certain Indian Tribes
(3) procurement contracts for construction that are not subject to the DBA (i.e., procurement contracts for construction under $2,000); and
(4) contracts for services that are exempted from coverage under the SCA or its implementing regulations. For example, the SCA exempts contracts for public utility services, including electric light and power, water, steam, and gas, from its coverage.
(5) employment contracts providing for direct services to a Federal agency by an individual.
(6) contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government, i.e., those subject to the Walsh-Healey Public Contracts Act.
C. Contractor Obligations
(1) contractors and subcontractors must pay not less than the Executive Order minimum wage to workers for all hours spent performing on covered contracts;
(2) include the Executive Order minimum wage contract clause in lower-tiered subcontracts; and
(3) comply with obligations related to wage deductions, frequency of pay, and recordkeeping.
The proposed rule also prohibits taking kickbacks from wages paid to workers on covered contracts and retaliation against any worker for exercising his or her rights under the Executive Order or the implementing regulations.
Under the proposed rule, prime contractors and upper-tier contractors would be responsible for the compliance of any subcontractor or lower-tier subcontractor. Contractors would be required to maintain records for three years including for each worker the rate or rates of wages paid, the number of daily or weekly hours worked and any deductions made. Compliance with the EO’s requirements will be monitored by the Department of Labor’s Wage and Hour Division.
The Labor Secretary is scheduled to issue the final regulations implementing EO 13658 by October 1, 2014. Within 60 days of their release, the Federal Acquisition Regulatory (FAR) Council will update the FAR with the appropriate contract clause.
The Coalition is interested in hearing member feedback on the rule. Please send your comments to Carolyn Alston at calston@thecgp.org or (202) 600-2915 by Tuesday, July 22. We will be providing written comments to the Labor Department by July 28.
DPAP Proposes Update to DFARS Business Systems Rule
On July 15th, Defense Procurement and Acquisition Policy (DPAP) published a proposed update to the Defense Federal Acquisition Regulation Supplement (DFARS) Business Systems Rule. The update would require contractors to conduct self-assessments and report on business systems compliance. Inadequate or inaccurate reports could result in significant penalties, including liability under the False Claims Act. To view the proposed rule, visit www.acq.osd.mil/dpap/dars/dfars/changenotice/2014/20140715/fr_2012-D042.pdf.
Public Meeting on DoD Business Systems, Aug 18
The Department of Defense plans to hold a public meeting to hear the views of interested parties concerning the proposed rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) ensuring appropriate contractor accountability for adequate contractor business systems. The meeting will be held at the Mark Center Auditorium, 4800 Mark Center Drive, Alexandria, VA 22350–3603, on August 18, 2014, from 2 p.m. to 4 p.m., local time. DoD is also requesting written comments in response to the proposed rule due September 15, 2014.
EPA Proposed Rule: Clause for Work Assignments
The Environmental Protection Agency (EPA) has issued a proposed rule to amend the EPA Acquisition Regulation (EPAAR) to update policy, procedures, and contract clauses. The proposed rule updates EPAAR clause 1552.211-74, Work Assignments. On December 3, 2009 the Office of Acquisition Management (OAM) Head of the Contracting Activity (HCA) issued a class deviation that revised the prescription for the work assignments clause by eliminating the requirement that EPA include total estimated labor hours when issuing work assignments.
According to the EPA, this is necessary because including total estimated labor hours when work assignments are issued undermines the negotiation process by providing the contractor no incentive to seek more efficient or innovative approaches to meet the Government’s needs. As a result, the work assignments clause is being updated to make it consistent with the revised prescription. Comments must be received on or before August 18, 2014.
Two-Part Webinar Series for GSA Schedule Contractors
The Coalition for Government Procurement, in conjunction with Baker Tilly, is pleased to announce an upcoming Two-Part Webinar Series for GSA Schedule Contractors:
The landscape for GSA Schedule contractors has become increasingly difficult. Both products and services contractors are facing new challenges as they negotiate new GSA Schedule contracts or administer their existing GSA Schedule contracts. Pricing, contract terms and conditions, and post-award compliance have all come under the microscope, and contractors must be ready to respond. This two part series will address some of GSA’s and GSA OIG’s recent focal points so that contractors can consider potential impacts to their business and how they can best prepare.
Part 2: Challenges Facing Products Contractors
Thursday, August 14th, at Noon EDT
Presented by Jeff Clayton and Steven Brewer
GSA is facing immense pressure to achieve lower prices for its federal government customers. This has impacted the government’s negotiation tactics and in turn it has impacted, and will continue to impact, products contractors. Prices paid data is being tracked and horizontal pricing comparisons are becoming the norm. Federal Strategic Sourcing Initiatives, an increasingly popular tool for GSA, continue their march across the supply side of the Schedules program. The presentation will discuss all of this and more, including best practices, so that contractors can prepare themselves to respond to these issues.