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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: November 25, 2003

SUBJECT: Enactment of the National Defense Authorization Act for Fiscal Year 2004

AGENCIES: Department of Defense (DOD)

ACTION: Editor's Analysis

SYNOPSIS: On November 24, 2003, President Bush signed Public Law 108-136, the National Defense Authorization Act for Fiscal Year 2004, which contains several acquisition-related provisions, including the Services Acquisition Reform Act of 2003 (SARA).

ANALYSIS: The following are some of the key acquisition-related provisions of the Fiscal Year 2004 Defense Authorization Act:

• Section 801, Consolidation of Contract Requirements: Before DOD contract requirements in excess of $5,000,000 can be consolidated (that is, "bundled"), the senior procurement executive must determine that the benefits of the acquisition strategy substantially exceed the benefits of alternative contracting approaches that would involve a lesser degree of consolidation.
  
  
• Section 803, Federal Support for Enhancement of State and Local Anti-Terrorism Response Capabilities: Requires the Office of Federal Procurement Policy to establish a program under which states and local governments may procure anti-terrorism technologies or anti-terrorism services through DOD or Department of Homeland Security (DHS) contracts. In addition, DOD and DHS are authorized to award contracts using the same procedures as those used by the General Services Administration (GSA) to award Federal Supply Schedule contracts.
  
  
• Section 804, Special Temporary Contract Closeout Authority: Until September 30, 2006, the Secretary of Defense is authorized to settle the financial accounts for contracts executed prior to September 30, 1996, that have unreconciled balances of less than $100,000.
  
  
• Section 805, Competitive Award of Contracts for Reconstruction Activities in Iraq: DOD is to conduct full and open competition for performing work needed for the reconstruction of the Iraqi oil industry.
  
  
• Section 822, Incentive Program for Major Defense Acquisition Programs to Use Machine Tools and Other Capital Assets Produced Within the United States: DOD is to establish an incentive program for contractors to purchase capital assets manufactured in the United States.
  
  
• Section 823, Technical Assistance Relating to Machine Tools: DOD must publish information on resources available to assist machine tool companies and users of machine tools in government contracting. Also, DOD is required to incorporate into its science and technology incentives on manufacturing technology an objective of developing advanced machine tool capabilities.
  
  
• Section 833, Single Acquisition Corps: DOD is required to consolidate all the military departments' acquisition corps into a single acquisition corps.
  
  
• Section 835, General Management Provisions: Authorizes the Secretary of Defense to establish different experience, educational, and tenure requirements for contracting officers, program executive officers, senior contracting officials, program managers, and positions in the contract contingency force filled by members of the armed forces.
  
  
• Section 841, Additional Authority to Enter Into Personal Services Contracts: DOD may enter into personal services contracts for urgent or unique services that would not be practicable for it to obtain by other means if the services: (1) are to be provided by individuals outside the United States, regardless of their nationality, and are necessry and appropriate for supporting DOD activities and programs outside the U.S.; (2) directly support the mission of a DOD intelligence component or counter-intelligence organization; or (3) directly support the mission of the U.S. Special Operations Command.
  
  
• Section 843, Multiyear Task and Delivery Order Contracts: The total period for a task or delivery order contract may not be more than five years. (This applies to DOD, the National Aeronautics and Space Administration (NASA), and the Coast Guard.)
  
  
• Section 851, Report on Contract Payments to Small Businesses: The General Accounting Office (GAO) is to review and report to Congress on the timeliness of contract payments DOD made to small businesses during fiscal years 2001 and 2002.
  
  
• Section 853, Demonstration Project for Contractors Employing Persons with Disabilities: Authorizes DOD to carry out a demonstration project by entering into one or more contracts with an eligible contractor (that is, at least 33% of its employees are severely disabled individuals) for the purpose of providing DOD contracting opportunities for severely disabled individuals. Offers under the demonstration program shall have as an evaluation factor the percentage of the offeror's total workforce that consists of severely disabled individuals.

• Section 1411, Definition of Acquisition: Defines "acquisition" as including: (1) the process of acquiring property or services that are already in existence, or that must be created, developed, demonstrated, and evaluated; (2) the description of requirements to satisfy agency needs; (3) solicitation and selection of sources; (4) award of contracts; (5) contract performance; (6) contract financing; (7) management and measurement of contract performance through final delivery and payment; and (8) technical and management functions directly related to the process of fulfilling agency requirements by contract.
  
  
• Section 1412, Acquisition Workforce Training Fund: Directs the General Services Administration (GSA) to establish an acquisition workforce training fund to be managed by the Federal Acquisition Institution (FAI). The fund will be financed by depositing 5% of the fees collected by executive agencies (other than DOD) under governmentwide task and delivery-order contracts, governmentwide contracts for the acquisition of information technology ("governmentwide acquisition contracts" (GWACs)), and GSA's multiple-award schedule contracts (Federal Supply Schedule contracts). This training fund shall cease five years after enactment (that is, November 24, 2008).
  
  
• Section 1414, Architectural and Engineering Acquisition Workforce: The Office of Federal Procurement Policy (OFPP), in consultation with DOD, GSA, and the Office of Personnel Management (OPM), shall develop and implement a plan to ensure that the government maintains the necessary capability to contract effectively for the performance of architectural and engineering services.
  
  
• Section 1421, Chief Acquisition Officers: Each agency, other than DOD, that has an appointed or designated Chief Financial Officer shall appoint or designate a non-career employee as its Chief Acquisition Officer, who shall:
  
  
  1. Monitor and evaluate the performance of acquisition activities and acquisition programs, and advise the head of the agency regarding the appropriate business strategy to achieve the agency's mission;
     
     
  2. Increase the use of full and open competition in the acquisition of property and services by establishing policies, procedures, and practices that ensure the agency receives a sufficient number of sealed bids or competitive proposals from responsible sources to fulfill the government's requirements at the lowest cost or best value considering the nature of the property or service;
     
     
  3. Increasing appropriate use of performance-based contracting and performance specifications;
     
     
  4. Making acquisition decisions consistent with all applicable laws and establishing clear lines of authority, accountability, and responsibility for acquisiton decisionmaking within the agency;
     
     
  5. Managing the direction of acquisition policy for the agency, including implementation of the unique acquisition policies, regulations, and standards of the agency;
     
     
  6. Developing and maintaining an acquisiton career management program in the agency to ensure there is an adequate professional workforce; and
     
     
  7. As part of the strategic planning and performance evaluation process:
     
     
     1. Assess the requirements established for agency personnel regarding knowledge and skills in acquisition resources management and the adequacy of such requirements for facilitating the achievement of the performance goals established for acquisition management;
        
        
     2. Develop strategies and specific plans for hiring, training, and professional development in order to rectify any deficiency in meeting such requirements; and
        
        
     3. Report to the head of the agency on the progress made in improving acquisition management capability.
  
  Agencies retain their senior procurement executives, who shall be responsible for management direction of the procurement system of the agency, including implementation of the unique procurement policies, regulations, and standards of the agency.
  
  
• Section 1423, Statutory and Regulatory Review: OFPP shall establish an advisory panel to review laws and regulations regarding the use of commercial practices, performance-based contracts, the performance of acquisition functions across agency lines of responsibility, and the use of governmentwide contracts. The panel is to consist of at least nine experts in acquisition law and policy who represent diverse public and private sector experiences.
  
  
• Section 1427, Improvements in Contracting for Architectural and Engineering Services: The threshold for exemption of DOD contracts that are for architect-engineering services in support of military construction projects or military family housing projects from the Small Business Competitiveness Demonstration Program (see Federal Acquisition Regulation (FAR) Subpart 19.10 and Defense FAR Supplement (DFARS) Subpart 219.10) is increased from $85,000 to $300,000. Also, architectural and engineering services may not be acquired under Federal Supply Schedule contracts or governmentwide task and delivery-order contracts unless such services are performed under the direct supervision of a licensed architect or engineer and awarded under the quality-based procedures in FAR Subpart 36.6, Architect-Engineer Services. (This applies to DOD, NASA, and the Coast Guard only.)
  
  
• Section 1428, Authorization of Telecommuting for Federal Contractors: Requires that the FAR be amended to permit telecommuting by employees of government contractors in the performance of contracts. The FAR shall prohibit the inclusion of any requirement or evaluation factor that would render an offeror ineligible or reduce the coring of the offeror's proposal based on the offeror's inclusion of a plan to all its employees to telecommute, unless the contracting officer determines that the requirements of the agency, including security requirements, cannot be met or would be adversely affected if telecommuting is permitted.
  
  
• Section 1431, Additional Incentive for Use of Performance-Based Contracting for Services: FAR Part 12, Acquisition of Commercial Items, must be amended to permit performance-based contracts or task orders for services to be treated as a contract for commercial items if the value of the contract or order does not exceed $25,000,000, the contract or task order specifies each task to be performed, and each task has a firm-fixed-price. This authority expires in 10 years, on November 24, 2013.
  
  
• Section 1432, Authorization of Additional Commercial Contract Types: FAR 12.207, Contract Type, is to be amended to authorize the use of time-and-materials or labor-hour contracts for the acquisition of commercial services that are commonly sold to the general public through such contracts and are procured on a competitive basis (currently, FAR 12.207 authorizes only firm-fixed-price and fixed-price with economic price adjustment contracts for commercial services). Time-and-materials or labor-hour contracts would be authorized for use only if the contracting officer determines that no other contract type is suitable, includes a ceiling price that the contractor exceeds at its own risk, and authorizes any subsequent change in the ceiling price only upon determining that such a change is in the best interest of the agency.
  
  
• Section 1441, Authority to Enter Into Certain Transactions for Defense Against or Recovery from Terrorism or Nuclear, Biological, Chemical, or Radiological Attack: The Office of Management and Budget (OMB) may authorize civilian agencies to enter into "other transactions" (that is, transactions other than contracts, cooperative agreements, and grants) to carry out prototype projects that have the potential to facilitate defense against or recovery from terrorism or nuclear, biological, chemical, or radiological attack (DOD already has such authority). Competition procedures shall be used to the maximum extent practicable when entering into such agreements. OMB must authorize these other transactions on a case-by-case basis.
  
  
• Section 1442, Public Disclosure of Noncompetitive Contracting for the Reconstruction of Infrastructure in Iraq: Any agency that enters into a contract for the repair, maintenance, or construction of Iraqi infrastructure without full and open competition must publish in the Federal Register or FedBizOpps (http://www.fedbizopps.gov), within 30 days of contract award: (1) the amount of the contract; (2) a brief description of the contract; (3) a discussion of how the agency identified, and solicited offers from, potential contractors to perform the contract; (4) a list of the potential contractors that were issued solicitations; and (5) the justification and approval documents that supported the decision to use other than full and open competition. This requirement will cease on October 1, 2005. (EDITOR'S NOTE: The legislation requires that this information be published in the Federal Register or the Commerce Business Daily (CBD). However, the CBD ceased publication on January 4, 2002, and was replaced by FedBizOpps. Undoubtedly, FedBizOpps is what was intended.)
  
  
• Section 1443, Special Emergency Procurement Authority: For all acquisitions that support a contingency operation or facilitate the defense against or recovery from nuclear, biological, chemical, or radiological attack against the United States: (1) the micro-purchase threshold is increased from $2,500 to $15,000; (2) the simplified acquisition threshold is increased from $100,000 to $250,000 when the contract is to be awarded and performed inside the United States, and to $500,000 for contracts to be awarded and performed outside the United States; (3) such acquisitions are considered to be for commercial items, regardless of dollar amount; and (4) the limitation on 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 is increased from $5,000,000 to $10,000,000. However, acquisitions for supplies or services covered by this section that are in excess of $15,000,000 and are awarded on a sole source basis are not exempt from cost or pricing data requirements (see FAR Subpart 15.4, Contract Pricing), or the Cost Accounting Standards (see Chapter 99 of Title 48 of the Code of Federal Regulations and FAR Part 30, Cost Accounting Standards Administration). (EDITOR'S NOTE: The threshold increases are essentially the same as those authorized by Section 836 of the Fiscal Year 2002 National Defense Authorization Act (Public Law 107-107), which expired September 30, 2003. For more information on this emergency procurement authority, see the January 2, 2002, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act for Fiscal Year 2002," and the October 1, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-16, Miscellaneous Amendments," Item (4).)
  
  Also, the expiration date of the authority in FAR Subpart 13.5 is extended from January 1, 2004, to January 1, 2006.

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