Federal Procurement Policy

Subscribe to Federal Procurement Policy via RSS

By: Joseph A. Hackenbracht

On April 2, 2010, the Government Accountability Office responded to a request from the House Subcommittee on Energy and Water Development to evaluate “whether the President’s recent budget requests for the Corps are presented so that agency priorities are clear and proposed use of funds transparent.” In its analysis, the GAO…

By: Edward T. DeLisle

On Wednesday, January 20, 2010, President Obama signed a presidential memorandum directing the Internal Revenue Service to conduct an audit of all federal contractors.  As reported by Nextgov.com, the audit is designed to identify those federal contractors that have failed to pay taxes and prevent them from obtaining additional federal…

Co-authored by Michael H. Payne and Craig A. Schroeder

On February 17, 2009, the President signed Public Law 111-5, the American Recovery and Reinvestment Act of 2009 (also known as “ARRA,” the “Recovery Act,” and the “Stimulus Act”), including a number of provisions to be implemented in Federal Government contracts.  The Recovery Act’s purposes are to stimulate the economy and to create and retain jobs. The Act gives preference to activities that can be started and completed expeditiously, including a goal of using at least 50 percent of the funds made available by it for activities that can be initiated not later than June 17, 2009.

An Interim Rule issued on March 31, 2009, implements section 1512, which is also known as the “Jobs Accountability Act.”  Subsection (c) of section 1512 requires contractors that receive awards (or modifications to existing awards) funded, in whole or in part, by the Recovery Act to report quarterly on the use of the funds. The comment period on the interim rule expires on June 1, 2009. In addition, a new section was added to the FAR, subpart 4.15, “American Recovery and Reinvestment Act – Reporting Requirements,” and a new clause was added to implement the reporting requirements, FAR 52.204-11.   Contracting Officers are now required to include the new clause in solicitations and contracts funded in whole or in part with Recovery Act funds, except classified solicitations and contracts.  Commercial item contracts and Commercially Available Off-The-Shelf (COTS) item contracts are covered, as well as actions under the simplified acquisition threshold.

Effective March 31, 2009, five (5) interim Federal Acquisition Regulation (FAR) rules went into effect that implement several requirements of the Recovery Act. See Federal Acquisition Circular (FAC) 2005-32, published at 74 Fed. Reg. 14,639 (Mar. 31, 2009). These new rules only apply to federal procurement contracts funded with stimulus money. Their goal is increased transparency and accountability in the spending of Stimulus Act funds. The new rules include:

1. Reporting Requirements for Recipients of Recovery Funds (See 74 Federal Register 14639);

2. Publicizing Contract Actions (See 74 Federal Register 14636);

3. GAO and IG Access to Company Employees (See 74 Federal Register 14646);

4. Whistleblower Protections (See 74 Federal Register 14633); and

5. Buy American Requirements for Construction Materials (See 74 Federal Register 14623).

Each rule is discussed, in turn, below.

1. Reporting Requirements for Recipients of Recovery Funds

This is the most onerous of the new requirements and contractors must now file quarterly reports documenting their use of stimulus funds. See FAR Case 2009-009, Interim Rule, American Recovery and Reinvestment Act of 2009 (the Recovery Act)— Reporting Requirements, 74 Fed. Reg. 14,639 (Mar. 31, 2009).  Information on the Recovery Act may be found on the Recovery Act website.

The new mandated contract clause, FAR 52.204-11, which must be included in all contracts receiving stimulus funds, requires the prime contractor, and first-tier subcontractors, to report the following information:

(i) Contract and order number;

(ii) Amount of stimulus funds invoiced by the contractor for the reporting period;

(iii) List of significant supplies delivered or services performed;

(iv) Assessment of the contractor’s progress on the contract;

(v) Employment impact of the contract (e.g., an estimate of the number of jobs      created and retained);

(vi) The names and compensation of the five most highly compensated officers of the contractor for the calendar year in which the contract is awarded if the contractor receives 80 percent and $25 million or more of its annual gross revenues from federal awards and the public does not have access to the information through periodic reports filed with the Securities and Exchange Commission or the Internal Revenue Service; and

(vii) Detailed information on first-tier subcontracts.

Reporting on invoices submitted prior to June 30, 2009 are due no later than July 10, 2009.   After those dates, contractor reports must be submitted no later than the 10th day after the end of each calendar quarter. The new reporting requirements apply to all solicitations and contracts funded in whole or in part with Recovery Act funds, except classified solicitations and contracts. This includes Government-wide Acquisition Contracts (GWACs), multi-agency contracts (MACs), Federal Supply Schedule (FSS) contracts, or agency indefinite-delivery indefinite-quantity (ID/IQ) contracts that will be funded with Recovery Act funds.Continue Reading The American Recovery and Reinvestment Act of 2009: What it Means for Federal Construction Contractors

Although many aspects of our economy are suffering, the federal construction market will most certainly be booming.  On Friday March 20, 2009, the Department of Defense issued a 191 page Report to Congress detailing how it plans to spend the money it has received as part of the American Recovery and Reinvestment Act of 2009,…

On February 18, the Office of Management and Budget (“OMB”) director Peter Orszag issued guidance to agencies regarding the administration of federal Stimulus funds. Just this past week, on March 4, President Obama signed a memorandum designed to reform federal government contracting. These directives mark the beginning of reform in the world of government contracting, and reflect the greater accountability and transparency the new administration promises to American taxpayers.

The OMB memo requires agencies to submit spending and performance data to their website on a regular basis. The website is a web portal that demonstrates exactly how the Stimulus funds are being spent, and it calls itself the “centerpiece” of efforts to implement the American Recovery and Reinvestment Act with “accountability and transparency.” In a video message to Americans on the website, President Obama pledges greater accountability and transparency in government spending. In his address, he notes that the “size and scale of this effort demand unprecedented efforts to root out waste, inefficiency and unnecessary spending,” and he refers to the Stimulus as a “significant investment in our country’s future.”

The OMB memo also increases the requirements for those doing business with the federal government. Starting on March 3, agencies must submit weekly reports breaking down how they have spent Stimulus funding. They must also summarize any major actions taken as well as any future activities. Beginning May 1, they must provide recovery plans outlining their individual agency goals and any coordinating efforts. By May 8, they must being submitting monthly financial reports detailing their obligations, expenditures, and other pertinent financial information.

Under the new requirements, agencies are now required to post pre-solicitation and award notices for any task and delivery order acquisition contracts on FedBizOpps, a clearinghouse for federal government contracting opportunities. Any Stimulus-related prospects must be specially formatted to differentiate them from regular projects. For any contracts or orders over $500,000, the agencies must summarize the contract or order, provide a description of the particular goods or services required, and then post that information to the recovery.gov website, making it available to the public.

Agencies are also urged to use fixed-price contracts wherever possible and appropriate. Several types of fixed-price contracts exist. They are designed to facilitate proper pricing under varying conditions. Generally, they place more cost responsibility on the contractor than on the Government, and encourage greater efficiency in contract management. According to Orszag, these kinds of contracts “expose the government to the least risk.” Fixed-price contracts are outlined in more detail in Subpart 16.2 of the Federal Acquisition Regulation (“FAR”).  More detailed instructions will be provided to agencies in the coming months.

Obama’s presidential memo comes out of the recent government responsibility summit and calls for massive overhaul in government procurement. In his announcement regarding this memo, President Obama noted that, “last year, the Government Accountability Office, looked into 95 major defense projects and found cost overruns that totaled $295 billion…That’s $295 billion in wasteful spending.”Continue Reading Obama Issues Memorandum Ordering Reduced Wastefulness in the Federal Procurement Process

On February 6, 2009, President Obama issued an Executive Order encouraging agencies to use Project Labor Agreements ("PLAs") in federal construction projects with a total cost to the Government of $25 million or more.  The purpose of the Order is to avoid some of the problems which typically arise during the completion of such large…

In recent years, the U.S. Army Corps of Engineers has attempted to employ "innovative" contracting methods but, in doing so, has often limited the number of contractors who have had the opportunity to perform major construction projects.  One of the justifications for these “innovative” methods has been that there will be a reduction in the …

In November, 2008, the Department of Homeland Security (DHS) implemented a new rule through the Federal Acquisition Regulation (FAR) that would force companies doing business with the federal government to clear their workers through a verification database. This database is called E-Verify and it electronically confirms whether a new hire is in the United States…