Source: Winvale – GSA Schedule Blog
Source: Winvale – GSA Schedule Blog
Source: Winvale – GSA Schedule Blog
A new amendment to the Federal Acquisition Regulation (FAR) will greatly impact the way service providers track both theirs and subcontractor hours. The ruling comes from the Federal Activities Inventory Reform (FAIR) act that mandates agencies annually submit an inventory of activities performed by service contractors to the Office of Management and Budget (OMB). The new rule requires that prime contracts submit their hours worked.
This new amendment requires contractors with fixed-priced definite-delivery contracts to track and report hours worked on their service contracts. Prime contractors will not only be responsible for their own internal hours, but for reporting the hours worked by their first-tier subcontractors as well. First –tier subcontracts are those awarded directly by the prime contractor for the purpose of acquiring supplies or services (including construction) for performance of a prime contract. This does not include the supplier agreements with vendors, such as long-term arrangements for materials or supplies that benefit multiple contracts and/or the costs of which are normally applied to a Contractor’s general and administrative expenses or indirect costs.
The new rule will be implemented in the following phases with regards to fixed-priced definite-delivery contract values:
- $2.5 million in Fiscal Year 2014.
- $1 million in Fiscal Year 2015.
- $500,000 from Fiscal Year 2016 onwards.
While cost-reimbursement, time-and-materials, and labor-hour contracts already track and report hours, the determining dollar threshold has been lowered to the simplified acquisition threshold (SAT), which is currently $150,000
In regards to IDIQs, FSS contracts, GWACs, and multi-agency contracts, the reporting requirements will be determined based on the expected dollar amount and type of orders issued under the contracts. For any existing indefinite-delivery will be modified bilaterally within six months of January 30, 2014 so long as the contract performance period extend past October 1, 2013; and there is $2.5 million or more obligated.
This rule change applies to both solicitations and contracts issued on or after January 30, 2014. The DoD is exempt from this requirement as the DFAR already stipulates this reporting requirement. Reports will be due annually by October 31, for services performed during the preceding Government fiscal year (October 1-September 30).
The new amendment can be found under FAR clauses 52-204-14 and 52-204-15.
With the threat of sequestration looming, and no seemingly solution on the horizon, I’ve seen a lot on the Worker Adjustment and Retraining Notification (WARN) Act in the news recently. For background reading on sequestration, check out these previous blog entries here and here. The media has focused on how the WARN Act will affect defense contractors, as they will likely have the most layoffs from sequestration, but all GSA contractors should be aware of this law and its impact on your company.
First, you may be wondering what the WARN Act is and if it applies to you. The WARN Act became law in 1989, and it requires many employers to notify employees at least 60 days in advance of mass layoffs or plant closings. So exactly what employers does this apply to? The Department of Labor’s guidance says, “Generally, WARN covers employers with 100 or more employees, not counting those who have worked less than six months in the last twelve months and those who work an average of less than 20 hours a week.” If employers fail to comply, employees can sue for damages under the WARN Act. A mass layoff is defined as affecting at least 33% of full-time employees AND at least 50 full-time employees, OR at least 500 full-time employees.
It’s a noble idea – to provide employees with time to prepare before a potential layoff, try to locate a new job or perhaps enter a training program to make themselves more marketable in the workforce. But between the upcoming election and the sequestration issue, some argue that it’s become politicized. The required 60 day timeline would require contractors facing layoffs due to sequestration to issue notices to employees just days prior to the November 6th election.
The Department of Labor released guidance in July noting that contractors were not required to notify employees regarding the WARN Act because it is speculative whether sequestration will occur, and if it did occur, exactly which contracts it would affect. This memo from the Department of Labor was enough for some large contractors to announce they would not issue WARN notices, but some contractors still planned to notify employees, Lockheed Martin specifically. On September 28th, the Office of Management and Budget issued a memo noting that the Federal government, specifically the contracting/purchasing agency, would cover any legal fees accrued by contractors who did not issue WARN notices and were subsequently sued by employees. After OMB released this guidance, Lockheed Martin announced they would not issue WARN notices in early November.
This isn’t over yet. Senators John McCain and Lindsey Graham have sent letters to defense contractor CEO’s urging them to comply with the WARN Act, noting that compliance is not optional. Many Senate Republicans have also said they will block any taxpayer dollars from funding legal fees for companies who do not comply with the law. Will this make contractors reconsider? Will any WARN notices be issued, and will this impact the election? We’ll have to stay tuned.
The White House Office of Federal Procurement Policy, part of the Office of Management and Budget (OMB) introduced a myth-busting campaign in early 2011 to inspire better communication between contractors and government procurement officers. The campaign was to be rolled out in two phases, the first in 2011, and the second in 2012. It now appears, as noted in the Washington Business Journal, that the Obama administration is considering a third phase of its myth-busting campaign.
The campaign was introduced due to prevailing miscommunication between contractors and government procurement officers, leading to misinformation being distributed around the contracting realm. With every agency having its own site for facts, and with each site proving to be a labyrinth for the information seeker to have to navigate through, the myth busting campaign was to provide one easy source for facts regarding government procurement.
The campaign is composed of memos that answer the most common contractor questions, as well as debunk the most prevalent current myths. However well-intentioned the myth busting campaign is though, many contractors say they have not seen a significant constructive change in communication. Contractors point to a lack of transparency on the government’s side in rendering contract decisions. If contractors were provided with a more comprehensive explanation for a procurement officers’ decision, they would be prepared to provide proposals better suited to the needs of the procurement officer. In addition, contractors could tailor their proposals to not only answer the immediate solicitation but provide a more comprehensive proposal demonstrating the long range values, savings, and ROI.
Perhaps the insufficiency of the first phase is what has prompted the administration to propose a third phase. While the second phase will be rolled out this summer and will focus on advising contractors on how they can improve the lines of communications throughout the course of competitions, the third phase will focus on a similar message but for the acquisition professional in the government. For more information, read the complete memos.