Federal Acquisition Circular 2005-07; Introduction

AGENCIES:

Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION:

Summary presentation of final and interim rules, and technical amendments.

SUMMARY:

This document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in this Federal Acquisition Circular (FAC) 2005-07. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, is available via the Internet at http://www.acqnet.gov/far .

DATES:

For effective dates and comment dates, see separate documents which follow.

FOR FURTHER INFORMATION CONTACT:

For clarification of content, contact the analyst whose name appears in the table below in relation to each FAR case or subject area. Please cite FAC 2005-07 and specific FAR case number(s). Interested parties may also visit our Web site at http://www.acqnet.gov/far . For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

Summaries for each FAR rule follow. For the actual revisions and/or amendments to these FAR cases, refer to the specific item number and subject set forth in the documents following these item summaries.

FAC 2005-07 amends the FAR as specified below:

Item I—Transportation: Standard Industry Practices (FAR Case 2002-005)

This final rule amends FAR Parts 1, 42, 46, 47, 52, and 53 to clarify and update the FAR coverage to reflect the latest changes to the Federal Management Regulation and statutes that require use of commercial bills of lading for domestic shipments. This final rule amends the FAR to—

• Move FAR Subpart 42.14, Traffic and Transportation Management, to FAR Part 47, Transportation;
• Delete the clauses at FAR 52.242-10 and FAR 52.242-11 and revise and relocate FAR clause 52.242-12 to FAR 52.247-68;
• Add definitions of “bill of lading,” “commercial bill of lading,” and “Government bill of lading” and clarify the usage of each term throughout FAR Part 47;
• Add definitions of “Government rate tenders,” “household goods,” “noncontiguous domestic trade,” and “released or declared value”;
• Require the use of commercial bills of lading for domestic shipments;
• Revise the references to “49 U.S.C. 10721” to read “49 U.S.C. 10721 and 13712” throughout FAR Part 47 to make it clear that Government rate tenders can be used in certain situations for the transportation of household goods by rail carrier (authorized by 49 U.S.C. 10721), as well as by motor carrier, water carrier, and freight forwarder (authorized by 49 U.S.C. 13712 and the definition of “carrier” at 49 U.S.C. 13102); and
• Update the fact that the Federal Motor Carrier Safety Administration prescribes commercial zones at 49 CFR 372 Subpart B.

Item II—Common Identification Standard for Contractors (FAR Case 2005-015)

This interim rule amends the FAR by addressing the contractor personal identification requirements in Homeland Security Presidential Directive (HSPD-12), “Policy for a Common Identification Standard for Federal Employees and Contractors,” and Federal Information Processing Standards Publication (FIPS PUB) Number 201, “Personal Identity Verification (PIV) of Federal Employees and Contractors.” The primary objectives of HSPD-12 are to establish a process to enhance security, increase Government efficiency, reduce identity fraud, and protect personal privacy by establishing a mandatory, Governmentwide standard for secure and reliable forms of identification issued by the Federal Government to its employees and contractors.

Item III—Change to Performance-based Acquisition (FAR Case 2003-018)

This final rule amends the FAR by changing the terms “performance-based contracting (PBC)” and “performance-based service contracting (PBSC)” to “performance-based acquisition (PBA)” throughout the FAR; adding applicable PBA definitions of “Performance Work Statement (PWS)” and “Statement of Objectives (SOO)”, and describing their uses; clarifying the order of precedence for requirements; eliminating redundancy where found; modifying the regulation to broaden the scope of PBA and give agencies more flexibility in applying PBA methods to contracts and orders of varying complexity; and reducing the burden of force-fitting contracts and orders into PBA, when it is not appropriate.

Item IV—Free Trade Agreements—Australia and Morocco (FAR Case 2004-027)

This final rule converts the interim rule published at 69 FR 77870, December 28, 2004, to a final rule with changes. It allows contracting officers to purchase the products of Australia without application of the Buy American Act if the acquisition is subject to the Free Trade Agreements. The U.S. Trade Representative negotiated Free Trade Agreements with Australia and Morocco, which were scheduled to go into effect on or after January 1, 2005, according to Public Laws 108-286 and 108-302. However, the Morocco Free Trade Agreement has not yet entered into force and, therefore, the implementation of the Morocco Free Trade Agreement has been removed from the final rule. The Australian Free Trade Agreement joins the North American Free Trade Agreement (NAFTA) and the Chile and Singapore Free Trade Agreements which are already in the FAR. The threshold for applicability of the Australian Free Trade Agreement is $58,550 (the same as other Free Trade Agreements to date).

Item V—Deletion of the Very Small Business Pilot Program (FAR Case 2005-013)

This final rule amends the FAR to delete the Very Small Business Pilot Program. Under the pilot program, contracting officers were required to set-aside for very small business concerns certain acquisitions with an anticipated dollar value between $2,500 and $50,000. The Councils are removing the FAR coverage because the legislative authority for the program terminated on September 30, 2003. Acquisitions previously set aside for pilot program vendors will now be open to other small businesses.

Item VI—Purchases From Federal Prison Industries-Requirement for Market Research (FAR Case 2003-023)

This final rule converts the interim rule published in FAC 2001-21 at 69 FR 16148, March 26, 2004, and the interim rule published as Item I of FAC 2005-03 at 70 FR 18954, April 11, 2005, to a final rule with amendments at FAR 8.602 to clarify the applicability of the rule. The rule implements Section 637 of Division H of the Consolidated Appropriations Act, 2005. Section 637 provides that no funds made available under the Consolidated Appropriations Act for fiscal year 2005, or under any other Act for fiscal year 2005 and each fiscal year thereafter, shall be expended for purchase of a product or service offered by Federal Prison Industries, Inc., unless the agency making the purchase determines that the offered product or service provides the best value to the buying agency, pursuant to Governmentwide procurement regulations issued pursuant to 41 U.S.C. 421(c)(1) that impose procedures, standards, and limitations of 10 U.S.C. 2410n.

Item VII—Exception from Buy American Act for Commercial Information Technology (FAR Case 2005-022)

This interim rule amends FAR 25.103 and FAR Subpart 25.11 to implement Section 517 of Division H, Title V of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447). Section 517 authorizes exemption from the Buy American Act for acquisitions of information technology that are commercial items. This applies only to the use of FY 2005 funds. This same exemption appeared last year in section 535(a) of Division F, Title V, Consolidated Appropriations Act, 2004 (Pub. L. 108-199). The FY 04 exemption was implemented through deviations by the individual agencies.

The interim rule is based on the estimation that the exemption of commercial information technology is likely to continue. If the exception does not appear in a future appropriations act, a prompt change to the FAR will be made to limit applicability of the exemption to the fiscal years to which it applies. The effect of this exemption is that the following clauses are no longer applicable in acquisition of commercial information technology:

• FAR 52.225-1, Buy American Act—Supplies.
• FAR 52.225-2, Buy American Act Certificate.
• FAR 52.225-3, Buy American Act—Free Trade Agreements—Israeli Trade Act.
• FAR 52.225-4, Buy American Act—Free Trade Agreements—Israeli Trade Act Certificate.

This is because the Buy American Act no longer applies; and the Free Trade Agreement non-discriminatory provisions are no longer necessary, since all products now are treated without the restrictions of the Buy American Act.

Item VIII—Removal of Sanctions Against Libya (FAR Case 2005-026)

This final rule removes Libya from the list of prohibited sources at FAR Subpart 25.7 and the associated clause at 52.225-13, Restriction on Certain Foreign Purchases. Acquisitions of products from Libya may still be subject to restrictions of the Buy American Act, trade agreements, or other domestic source restrictions. The Department of State has not yet removed Libya from the list of state sponsors of terrorism.

Item IX—Elimination of Certain Subcontract Notification Requirements (FAR Case 2003-024)

This final rule converts, with minor changes, the Federal Acquisition Regulation (FAR) interim rule published in the Federal Register at 70 FR 11761, March 9, 2005. The rule impacts contractors with Department of Defense (DoD), National Aeronautics and Space Administration (NASA), or Coast Guard cost-reimbursement contracts and Government personnel who award and administer those contracts. The interim rule amended FAR 44.201-2, Advance Notification Requirements, and 52.244-2, Subcontracts, to implement Section 842 of the National Defense Authorization Act for Fiscal Year 2004, in Public Law 108-136. Section 842 removed the requirement under cost-reimbursement contracts with DoD, Coast Guard, and NASA for contractors to notify the agency before the award of any cost-plus-fixed-fee subcontract or any fixed-price subcontract that exceeds the greater of the simplified acquisition threshold or 5 percent of the total estimated cost of the contract if the contractor maintains a purchasing system approved by the contracting officer for the contract. The final rule makes two changes that resulted from one of the public comments. The final rule deletes Alternate I from FAR 44.204, Contract clauses for the Department of Defense, the Coast Guard, and the National Aeronautics and Space Administration, and deletes the current Alternate I from 52.244-2, Subcontracts.

Item X—Annual Representations and Certifications—NAICS Code/Size (FAR Case 2005-006)

This final rule amends the FAR provision at 52.204-8 to provide a place for contracting officers to inform prospective offerors of the NAICS code and small business size standard applicable to the procurement.

Item XI—Technical Amendments

Editorial changes are made at FAR 9.203(b)(2), 11.102, 11.201(a), 11.201(b), 11.201(d)(2), 11.201(d)(3), 11.201(d)(4), 11.204(b), 25.1101(e)(2), and the provisions at 52.211-2 and 52.212-1 in order to update references.

The authority citation for FAR parts 27, 34, 38, 39, 43, 46, 48, and 50 is revised.

Federal Acquisition Circular

Federal Acquisition Circular (FAC) 2005-07 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration.

Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2005-07 is effective February 2, 2006 except for Items II, IV, V, VI, VII, IX, X and XI which are effective January 3, 2006