DATE: February 8, 2002

SUBJECT: Federal Acquisition Circular (FAC) 2001-04, Miscellaneous Amendments

SOURCE: Federal Register, February 8, 2002, Vol. 67, No. 27, page 6111

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Final and Interim Rules

SYNOPSIS: The Federal Acquisition Regulatory Council is issuing FAC 2001-04 to amend the Federal Acquisition Regulation (FAR) in the following areas: (1) definitions for classified acquisitions; (2) special simplified procedures for purchases of commercial items in excess of the simplified acquisition threshold; (3) notification of noncompliance with the Cost Accounting Standards; (4) Executive Order 13204, Revocation of Executive Order on Nondisplacement of Qualified Workers Under Certain Contracts; (5) Caribbean Basin Country end products; (6) final contract voucher submission; and (7) technical amendments.

EFFECTIVE DATES: All items are effective February 20, 2002, except for Item 7 which is effective February 8, 2002. Note that the extension of FAR Subpart 13.5 (Item (2)) is applicable to all solicitations issued on or after January 1, 2002.


     Item (1), Ralph DeStefano at 202-501-1758.

     Item (2), Victoria Moss at 202-501-4764.

     Item (3), Jeremy Olson at 202-501-3221.

     Item (4), Linda Nelson at 202-501-1900.

     Item (5), Cecelia L. Davis at 202-219-0202.

     Item (6), Linda Klein at 202-501-3775.

For more information on the technical amendments or for general information, contact the FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, 202-501-4755.

SUPPLEMENTAL INFORMATION: (1) Definitions for Classified Acquisitions: This final rule moves the definitions of "classified acquisition," "classified contract," and "classified information" from FAR 4.401, Definitions, to FAR 2.101, Definitions, because they apply to more than one FAR part. In addition, the definitions have been rewritten for clarity and simplification:

In addition, FAR 14.402-2, Classified Bids, is rewritten to state:

"The general public may not attend bid openings for classified acquisitions. A bidder or its representative may attend and record the results if the individual has the appropriate security clearance. The contracting officer also may make the bids available at a later time to properly cleared individuals who represent bidders. No public record shall be made of bids or bid prices received in response to classified invitations for bids."

EDITOR'S NOTE: The last sentence in the proposed FAR 14.402-3 was "the contracting officer must not make a public record of the bids or the bid prices." One comment was received regarding this sentence, stating that "the language is too narrow because it only restricts the contracting officer from making a public record." In response, the current FAR language has been retained because it addresses the person opening the bids.

(2) Special Simplified Procedures for Purchases of Commercial Items in Excess of the Simplified Acquisition Threshold: This final rule amends paragraph (d) of FAR 13.500, General, to extend the expiration of FAR Subpart 13.5, Test Program for Certain Commercial Items, from January 1, 2002, to January 1, 2003. FAR Subpart 13.5 authorizes the use of simplified procedures for purchases of commercial items greater than the $100,000 simplified acquisition threshold but not exceeding $5,000,000. This change implements Section 823 of the National Defense Authorization Act for Fiscal Year 2002 (Public Law 107-107).

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."

Since DOD couldn't wait for the FAR to be amended, Director of Defense Procurement Deidre Lee issued a FAR class deviation on January 11, 2002, authorizing DOD contracting officers to use the procedures authorized in FAR Subpart 13.5 until January 1, 2003. For more on the FAR class deviation, see the January 15, 2002, FEDERAL CONTRACTS DISPATCH "Department of Defense; Class Deviation -- Extension of Authority to Use Federal Acquisition Regulation (FAR) Subpart 13.5, Test Program for Certain Commercial Items."

(3) Notification of Noncompliance with Cost Accounting Standards: This final rule amends FAR 15.408, Solicitation Provisions and Contract Clauses, which contains Table 15-2, Instructions for Submitting Cost/Price Proposals When Cost or Pricing Data are Required, to exempt contractors from having to notify the contracting officer when there is a cost accounting standard (CAS) noncompliance that has an immaterial cost impact. Paragraph (A) of the General Instructions requires the offeror to include certain information with its pricing proposal, and subparagraph (A)(8) requires the offeror to state "whether you have been notified that you are or may be in noncompliance with your Disclosure Statement or CAS..." To this is added the parenthetical phrase "(other than a noncompliance that the cognizant federal agency official has determined to have an immaterial cost impact)".

(4) Executive Order 13204, Revocation of Executive Order on Nondisplacement of Qualified Workers Under Certain Contracts: This rule finalizes without changes the interim rule published in FAC 97-26, which deleted FAR Subpart 22.12, Nondisplacement of Qualified Workers Under Certain Contracts, and FAR clause 52.222-50, Nondisplacement of Qualified Workers. This action was taken in response to Executive Order 13204, which directed the FAR Council and federal agencies to "promptly move to rescind any orders, rules, regulations, guidelines, or policies implementing or enforcing Executive Order 12933..." Executive Order 12933 had directed federal agencies to include in public building maintenance contracts a clause requiring successor contractors to give their predecessors' employees the right of first refusal to employment openings under the new contract. On August 7, 1997, FAC 97-01 implemented Executive Order 12933 by adding FAR Subpart 22.12 and FAR 52.222-50.

Since no comments were received on the interim rule, it is finalized without changes.

EDITOR'S NOTE: For more on Executive Order 13204, see the February 22, 2001, FEDERAL CONTRACTS DISPATCH "Executive Order 13204, Revocation of Executive Order on Nondisplacement of Qualified Workers Under Certain Contracts."

For more on FAC 97-26, see the May 16, 2001, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 97-26, Miscellaneous Amendments."

(5) Caribbean Basin Country End Products: This interim rule removes Panama from the definition of "Caribbean Basin country" in FAR 25.003, Definitions, and FAR 52.225-5, Trade Agreements, to implement the December 14, 2001, determination by the United States Trade Representative (USTR) that Panama is not making substantial progress toward implementing and following the customs procedures required by the Caribbean Basin Trade Partnership Act, so its products no longer qualify for duty-free treatment.

In addition, this interim rule amends the definition of "Caribbean Basin country end product" in FAR 25.003 and FAR 52.225-5 to implement Section 211 of the United States -- Caribbean Basin Trade Partnership Act (Title II of Public Law 106-200) and the determinations the USTR published on October 10, 2000, November 21, 2000, February 12, 2001, and June 11, 2001. Section 211 amends the Caribbean Basin Economic Recovery Act at 19 U.S.C. 2703 to provide enhanced trade benefits for qualified Caribbean Basin countries, and FAR 25.003 and FAR 52.225-5 have been amended to clarify which Caribbean Basin country products are subject to duty-free treatment. Added to the "Caribbean Basin country end product" definition in FAR 25.003 and FAR 52.225-5 is the note that "access to the HTSUS [Harmonized Tariff Schedule of the United States] to determine duty-free status of articles of these types is available at http://www.customs.ustreas.gov/impoexpo/impoexpo.htm."

Comments on the interim rule must be submitted by April 9, 2002, to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2000-306@gsa.gov.

EDITOR'S NOTE: On January 29, 2002, DOD made similar changes to the Defense FAR Supplement (DFARS) to implement the USTR's Panamanian determinations and Section 211 of Public Law 106-200. For more on the DFARS amendment, see the January 29, 2002, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Caribbean Basin Country End Products."

(6) Final Contract Voucher Submission: This final rule revises FAR 42.705, Final Indirect Cost Rates, and FAR 52.216-7, Allowable Cost and Payment, to explicitly state that the contracting officer has the right to unilaterally determine the final contract payment amount when the contractor does not submit the final invoice or voucher within the time specified in the contract, and that this contracting officer decision is final. The contracting officer may make this determination if the contractor fails to submit a completion invoice or voucher within the time specified (normally 120 days after settlement of the final indirect cost rates but may be longer, if approved in writing by the contracting officer). This finalizes a July 27, 2000, proposed rule with two significant changes:

EDITOR'S NOTE: For more on the proposed rule, see the July 27, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Final Contract Voucher Submission."

(7) Technical Amendments: This final rule revises various sections of the FAR to update references and make editorial changes. Probably the two most significant changes are in FAR 31.002, Availability of Accounting Guide, and FAR 42.705-1, Contracting Officer Determination Procedure, where the address a contractor may obtain a copy of the Defense Contract Audit Agency Pamphlet No. 7641.90, Information for Contractors, is deleted and replaced with the Internet address http://www.dcaa.mil.

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

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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