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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: December 3, 2002

SUBJECT: Enactment of the National Defense Authorization Act for Fiscal Year 2003

AGENCIES: Department of Defense (DOD)

ACTION: Editor's Analysis

SYNOPSIS: On December 2, 2002, President Bush signed Public Law 107-314, the Bob Stump National Defense Authorization Act for Fiscal Year 2003, which contains several acquisition-related provisions, some of which apply governmentwide.

ANALYSIS: The following are some of the key acquisition-related provisions of the $393 billion Fiscal Year 2002 Defense Authorization Act (all of which are in Title VIII, Acquisition Policy, Acquisition Management, and Related Matters):

• Section 801, Buy-to-Budget Acquisition of End Items: Allows DOD to acquire a higher quantity of an end item than specified in an authorization or appropriations law if (1) the agency has an established requirement for the end item that is expected to remain substantially unchanged throughout the period of the acquisition; (2) it is possible to acquire the higher quantity without additional funding because of production efficiencies or other cost reductions; (3) the funds used for the acquisition of the higher quantity of end items will not exceed the amount provided for the acquisition of the end item; and (4) the amount is sufficient to ensure that each of the additional end items are fully funded and complete.
  
  
• Section 805, Performance Goals for Procuring Services Pursuant to Multiple Award Contracts: Establishes the following goals for purchases of services under multiple award contracts that are made on a competitive basis and involve receipt of more than one offer from qualified contractors:
  
  
  • for FY 2003, not less than 40%
  • for FY 2004, not less than 50%
  • for FY 2011, not less than 75%
    
    Also, this section establishes the following goals for all purchases of services under multiple award contracts that use performance-based purchasing specifying firm-fixed prices for the specific tasks to be performed:
    
    
  • for FY 2003, not less than 25%
  • for FY 2004, not less than 35%
  • for FY 2005, not less than 50%
  • for FY 2011, not less than 70%
  
  
• Section 811, Limitation Period for Task and Delivery Orders: Limits to five years the length of task and delivery order contracts, and applies the same restrictions and requirements to such multiyear task and delivery order contracts as other multiyear contracts. This also applies to the National Aeronautics and Space Administration (NASA).
  
  
• Section 812, One-Year Extension of Program Applying Simplified Procedures to Certain Commercial Items: Extends from January 1, 2003, to January 1, 2004, 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 816, Extension of Contract Goal for Small Disadvantaged Businesses and Certain Institutions of Higher Education: Extends for three years, through FY 2006, the 5% goal for awards to small disadvantaged businesses, Historically Underutilized Business Zone (HUBZone) concerns, historically black colleges and universities, and minority institutions. This also applies to NASA.
  
  
• Section 817, Grants of Exceptions to Cost or Pricing Data Certification Requirements and Waivers of Cost Accounting Standards: Requires that guidance be issued on when it is appropriate to grant a waiver to cost or pricing data certification requirements and waivers of cost accounting standards. The guidance is to state that such waivers may granted only when: (1) the property or services cannot reasonably be obtained under the contract, subcontract, or modification without the grant of the exception or waiver; (2) the price can be determined to be fair and reasonable without the submission of certified cost and pricing data or the application of cost accounting standards; and (3) there are demonstrated benefits to granting the exception or waiver.
  
  
• Section 819, Contracting with Federal Prison Industries (FPI): To clarify the requirements of Section 811 of the National Defense Authorization Act for Fiscal Year 2002 (Public Law 107-107), requires that competitive procedures be used to acquire a product if the contracting officer determines the FPI product is not comparable in price, quality, or time of delivery to products available from the private sector that best meet DOD's needs in terms of price, quality, and time of delivery ("that best meet DOD's needs in terms of price, quality, and time of delivery" are added). In addition, such a determination by a contracting officer is not subject to review. Also, a contractor or potential contractor may not be required to use FPI as a subcontractor or supplier of products or provider of services for the performance of a DOD contract by any means. Finally, DOD is prohibited from entering into a contract with FPI if an inmate worker would have access to: (1) any classified data; (2) any geographic data regarding the location of surface and subsurface infrastructure providing communications or water or electrical power distribution, pipelines for the distribution of natural gas, bulk petroleum products, or other commodities, or other utilities; or (3) any personal or financial information about any private citizen, including information relating to such person's real property, without the prior consent of the individual. (EDITOR'S NOTE: For more on the acquisition-related provisions of Public Law 107-107, see the January 2, 2002, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act for Fiscal Year 2002." For more on acquisitions from FPI, see FAR Subpart 8.6, Acquisitions from Federal Prison Industries, Inc.)
  
  
• Section 820, Revisions to Multiyear Contracting Authority: Clarifies that funds for multiyear contracts may only be used for the procurement of complete and usable end items, for the procurement of long-lead items necessary to meet a planned delivery schedule for complete major end items, or for economic order quantities of long-lead items when authorized by law. This also applies to NASA.
  
  
• Section 827, Multiyear Procurement Authority for Environmental Services for Military Installations: Authorizes the use of multiyear contracts for the acquisition of environmental remediation services.

In addition to Title VIII of Public Law 107-314, there are several miscellaneous acquisition-related provisions scattered about:

• Section 243, Defense Acquisition Challenge Program: Requires DOD to establish a "Defense Acquisition Challenge Program" to provide any person or activity within or outside DOD the opportunity to propose alternatives at the component, subsystem, or system level of an existing DOD program that would result in improvements in performance, affordability, manufacturability, or operational capability.
  
  
• Section 244, Encouragement of Small Businesses and Nontraditional Defense Contractors to Submit Proposals Potentially Beneficial for Combating Terrorism: During FYs 2003, 2004, and 2005, DOD is required to establish an outreach program that provides a process for reviewing and evaluating research activities of, and new technologies being developed by, small businesses and nontraditional defense contractors that have the potential for meeting a defense requirement or technology development goal that relates to the combat of terrorism.
  
  
• Section 314, Procurement of Environmentally Preferable Procurement Items: Requires DOD to develop and implement an effective and efficient tracking system to identify the extent to which the Defense Logistics Agency (DLA) procures environmentally preferable procurement items or procurement items made with recovered material.
  
  
• Section 332, Temporary Authority for Contractor Performance of Security-Guard Functions to Meet Increased Requirements Since September 11, 2001: Permits DOD to enter into contracts for security-guards at a military installation or facility in response to the terrorist attacks on September 11, 2001. Previously, DOD was prohibited from using contracts to acquire security-guards or firefighters. However, this authority may not be used to fulfill security needs that existed prior to September 11, 2001.
  
  
• Section 365, Logistics Support and Services for Weapon Systems Contractors: Authorizes DOD to make available logistics support and logistics services to a contractor in support of the performance of a contract for the construction, modification, or maintenance of a weapon system.
  
  
• Section 1007, Improvements in Purchase Card Management: Requires DOD to conduct periodic reviews to determine whether each purchase card holder has a need for that card. Also, DOD is to conduct periodic audits to identify potentially fraudulent, improper, and abusive uses of purchase cards; any patterns of improper card holder transactions, such as purchases of prohibited items; and categories of purchases that should be made by means other than purchase cards to better aggregate purchases and obtain lower prices. Appropriate penalties are to be prescribed, to include adverse personnel actions or other punishments.
  
  
• Section 1008, Improvements in Travel Card Management: Permits DOD to require disbursement directly to the issuer of a defense travel card. Also, DOD may deduct and withhold from an employee's or armed forces member's pay any amount that is owed by the employee or member to a creditor if payment is delinquent and the mount is not in dispute.

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

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