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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: January 2, 2002

SUBJECT: Enactment of the National Defense Authorization Act for Fiscal Year 2002

AGENCIES: Department of Defense (DOD)

ACTION: Editor's Analysis

SYNOPSIS: On December 28, 2001, President Bush signed Public Law 107-107, the National Defense Authorization Act for Fiscal Year 2002, which contains several acquisition-related provisions, some of which apply governmentwide.

ANALYSIS: The following are some of the key acquisition-related provisions of the $318 billion Fiscal Year 2002 Defense Authorization Act (all of which are in Title VIII, Acquisition Policy, Acquisition Management, and Related Matters):

• Section 802, Savings Goals for Procurements of Services: Establishes the following goals for reductions in the amount DOD expends on services (based on Fiscal Year 2000 expenditures on services) through performance-based services contracting, competition for task orders under services contracts (see Section 803 below), and improved management of services contracts:
  
  
  • by FY 2002, 3%
  • by FY 2003, 4%
  • by FY 2004, 5%
  • by FY 2011, 10%
  
  
• Section 803, Competition Requirement for Purchase of Services Pursuant to Multiple Award Contracts: Requires each DOD purchase of services over $100,000 that is made under a multiple award contract be made on a competitive basis unless a contracting officer waives the requirement under certain specific circumstances. To qualify as being made "on a competitive basis," a "fair notice" must be provided to all contractors offering such services under the multiple award contract. However, a notice may be provided to "fewer than all contractors" if notice is provided to "as many contractors as practicable" and "offers [are] received from at least three qualified contractors..."
  
  
• Section 811, Applicability of Competition Requirements to Purchases from a Required Source: Before purchasing a product in the Federal Prison Industries (FPI) catalog, DOD contracting officers must conduct market research to determine whether the FPI product is comparable in price, quality, and time of delivery to products available from the private sector. If so, competitive procedures shall be used to procure the product. (EDITOR'S NOTE: For more on acquisitions from FPI, see Federal Acquisition Regulation (FAR) Subpart 8.6, Acquisitions from Federal Prison Industries, Inc.)
  
  
• Section 812, Extension of Mentor-Protege Program: The DOD Mentor-Protege Program expiration date is extended from September 30, 2002, to September 30, 2005. (EDITOR'S NOTE: For more on the DOD Mentor-Protege Program, see the Defense FAR Supplement (DFARS) Subpart 219.71, Pilot Mentor-Protege Program, and DFARS Appendix I, Policy and Procedures for the DOD Pilot Mentor-Protege Program.)
  
  
• Section 823, One-Year Extension of Program Applying Simplified Procedures to Certain Commercial Items: Extends from January 1, 2002, to January 1, 2003, the authority in FAR Subpart 13.5, Test Program for Certain Commercial Items, for contracting officers governmentwide to use FAR Part 13 simplified acquisition procedures when acquiring commercial items up to $5,000,000.
  
  
• Section 824, Acquisition Workforce Qualifications: Clarifies that the following DOD employees or members of the military are exempt from the requirement that contracting officers and others in GS-1102 series (contracting) positions and similar military positions have a bachelor's degree and at least 24 semester hours of business-related studies: (1) those who served as a contracting officer with authority to award or administer contracts in excess of the $100,000 simplified acquisition threshold on or before September 30, 2000; (2) those who served as an employee in the GS-1102 series or as a member of the armed services in a similar occupational specialty on or before September 30, 2000; (3) those in the contingency contracting force (that is, "members of the armed forces whose mission is to deploy in support of contingency operations and other operations of the Department of Defense"); and (4) those appointed by the Secretary of Defense to developmental positions.
  
  
• Section 832, Codification and Modification of Provision of Law Known as the "Berry Amendment": This codifies the "Berry Amendment" as Title 10 of the United States Code (U.S.C.), Chapter 148, Section 2533a, Requirement to Buy Certain Articles from American Sources; Exceptions. The "Berry Amendment" is implemented by DFARS 225.7002, Restrictions on Food, Clothing, Fabrics, Specialty Metals, and Hand or Measuring Tools, and it requires that procurements of covered items in excess of the $100,000 simplified acquisition threshold must be of products grown, reprocessed, reuse, or produced in the U.S. or its possessions unless the service secretary determines that satisfactory quality and sufficient quantity cannot be procured when needed at U.S. market prices. Also, new 10 U.S.C. 2533a(g) clarifies that the Berry Amendment "does not apply to items purchased for resale purposes in commissaries, exchanges, or nonappropriated fund instrumentalities operated by the Department of Defense."
  
  
• Section 836, Temporary Emergency Procurement Authority to Facilitate the Defense Against Terrorism or Biological or Chemical Attack: For any procurement to facilitate the defense against terrorism or biological or chemical attack against the United States, the term "micropurchase" is defined as $15,000 (as opposed to $2,500 as defined in FAR 2.101, Definitions); and the term "simplified acquisition threshold" is defined as $250,000 when the purchase is made inside the U.S. in support of a contingency operation, and as $500,000 when the purchase is made outside the U.S. in support of a contingency operation (as opposed to $100,000, or $200,000 for purchases outside the U.S. in support of contingency operations, as defined in FAR 2.101). This temporary authority will expire September 30, 2003.

In addition to Title VIII of Public Law 107-107, an acquisition-related provision is included in Section 345, Pilot Manpower Reporting System in Department of the Army. This requires the Army to "submit to Congress a report describing the use during the previous fiscal year of non-federal entities to provide services to the Department of the Army." This report is to be submitted no later than March 1 of FY 2002, 2003, and 2004, and is to "specify the number of work year equivalents performed by individuals employed by non-federal entities in providing services to the Department..." However, the information obtained from non-federal entities must be "available to the contractor from existing data collection systems." In other words, contractors will not be forced to collect any additional data or develop new data systems.

Section 343 of Public Law 106-65, the FY 2000 Department of Defense Authorization Act, required the Secretary of Defense to report to Congress by March 1, 2001, "the use during the previous fiscal year of non-federal entities to provide services to the Department of Defense." To implement Section 343, on March 15, 2000, the Army established Title 32 of the Code of Federal Regulations (CFR), Part 668, Contractor Manhour Reporting Requirement, which required Army contractors to identify the number and value of direct, and associated indirect, labor work year equivalents for contracted services in support of the Army.

On December 26, 2000, the Army completely reorganized and revised 32 CFR Part 668, but the Army did not ask for public comments on the reorganized Part 668. Because of a number of legal and technical/procedural issues raised and significant complaints from industry about the scope and methodology of the Army rule, Director of Defense Procurement Deidre Lee issued memorandums dated May 5, 2001, and June 5, 2001, directing the Army to cease collecting the data. Therefore, on July 12, 2001, the Army removed 32 CFR Part 668. Now, the Army will be reinstating 32 CFR Part 668 in accordance with Section 345 of Public Law 107-107 (but probably being a little more careful about procedural niceties).

For more on the Army reporting requirement in response to Section 343 of Public Law 106-65, see the following FEDERAL CONTRACTS DISPATCHES:

July 13, 2001, Army; Report On Use of Employees of Non-Federal Entities To Provide Services

June 27, 2001, Army; Report On Use of Contractor Employees to Provide Services

December 26, 2000, Army; Report On Use of Contractor Employees to Provide Services

March 15, 2000, Army; Report On Use of Contractor Employees to Provide Services

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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