Contract Policy Updates March 13, 2013 NCMA Boston Chapter Annual Workshop

Contract Policy UpdatesMarch 13, 2013NCMA Boston Chapter Annual Workshop Richard C. BeanAttorney at Law

Contract Policy Updates • Many changes over the past year- • Regulatory (FAR and DFARS) • Statutory • Policy Memoranda (OMB, OFPP, DoD AT&L) • Proposed Regulations (FAR and DFARS) • Proposed Legislation • Audits by investigative staff (GAO, DoD IG, other IGs) Always a moving target! What is on the horizon?

Total Federal Contract Spending • Spending on the decline; Source: USASpending.govFY 2012: $515.9BFY 2011: $538.5BFY 2010: $539.0BFY 2009: $539.9BFY 2008: $540.8BFY 2007: $469.1B

Contract Policy Updates • Since the last March Workshop, there have been eight FACs:Federal Acquisition Circular 2005-59, 77 Fed. Reg. 27546, May 10, 2012Federal Acquisition Circular 2005-60, 77 Fed. Reg. 44045, July 26, 2012 Federal Acquisition Circular 2005-61, 77 Fed. Reg. 56738, September 13, 2012Federal Acquisition Circular 2005-62, 77 Fed. Reg. 69713, November 20, 2012.

Contract Policy Updates Federal Acquisition Circular 2005-63, 77 Fed. Reg. 73516, December 10, 2012 Federal Acquisition Circular 2005-64, 77 Fed. Reg. 75766, December 21, 2012Federal Acquisition Circular 2005-65, 78 Fed. Reg. 6183, January 29, 2013Federal Acquisition Circular 2005-66,78 Fed. Reg. 13764, February 28, 2013Frequency of regulatory change is reflection of legislative change in many cases

FAC 2005-66 Contingency Operation Definition Expanded (FAR Case 2013-003) This interim rule amends the definition of ‘‘contingency operation’’ in FAR 2.101 to address the statutory change to the definition made by paragraph (b) of section 515 of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112–081). Expanding the definition to include responding to a major disaster or emergency will increase the circumstances under which agencies may raise the micro-purchase and simplified acquisition thresholds. This may increase opportunities for awarding contracts to small entities located at or near a major disaster area or emergency activities.

FAC 2005-66 Extension of Authority to Use Simplified Acquisition Procedures (FAR Case 2013-007)Final rule amends FAR 13.500(d) to implement section 822 of FY 2013 NDAA which allowed for an extension of the Commercial Item Test Program to January 1, 2015; applies to acquisitions not exceeding $6.5M generally or $12M for those listed in FAR 13.500(e)(includes options for commercial items)

DFARS Final Rule Alleged Crimes by or against Contractor Personnel - February 28, 2013 78 Fed. Reg. 13547 • DFARS 252.225-7040 revised to expand coverage of contractor requirements and responsibilities; clause also highlights the ability of contractor personnel to seek whistleblower protection or guidance by contacting the DoD IG

DFARS Final Rule • DFARS 252.225-7040 Continued- • Expands list of entities that can be contacted (includes DCIS; AFOSI; Army CIC; NCIS; any command of any supported military element or the command of any base) • Contractor must advise deployed employees of reporting requirements and where to seek assistance

DFARS Final Rule Electronic Subcontracting Reporting System (eSRS) (DFARS Case 2009-D002) February 28, 2013, 78 Fed. Reg. 13546. • Interim rule adopted as originally published October 25, 2010, 75 Fed. Reg. 65439

RFI on Electronic Procurement System • On February 23, 2013, FBO.gov posted an RFI from the Navy requesting industry response on a replacement for the current DoD-wide Standard Procurement System (SPS). • Responses were requested by March 4, 2013 NLT 11:59 PM • The RFI had several attachments which outline objectives and requirements

FAC 2005-65 • Prohibition on Contracting with Inverted Domestic Corporations (FAR Case 2012-013) - This rule adopts as final, an interim rule implementing section 738 of Division C of the Consolidated Appropriations Act, 2012 (Pub. L. 112–74), which prohibits the award of contracts using Fiscal Year 2012 appropriated funds to any foreign incorporated entity that is treated as an inverted domestic corporation or to any subsidiary of such an entity. • The interim rule extended an existing prohibition that applied to the use of Fiscal Year 2008 through 2010 funds. Effective January 29, 2013.

FAC 2005-65 • Extension of Sunset Date for Protests of Task and Delivery Orders (FAR Case 2012-007) – This final rule adopts without change, the interim rule amending FAR 16.505(a)(10)(ii) to extend the authority to protest the placement of task and delivery orders valued in excess of $10 million from May 27, 2011, to September 30, 2016 for all agencies. Effective January 29, 2013 (retroactive impact due to interim rule)

FAC 2005-65 • Free Trade Agreement (FTA) – Colombia (FAR Case 2012-012) - This final rule adopts, with minor change, the interim rule to implement the United States-Colombia Trade Promotion Agreement. This Trade Promotion Agreement is a FTA that provides for mutually nondiscriminatory treatment of eligible products and services from Colombia. The Colombia FTA covers acquisition of supplies and services equal to or exceeding $77,494. The threshold for the Colombia FTA is $7,777,000 for construction. Effective January 29, 2013.

FAC 2005-65 • Unallowability of Costs Associated with Foreign Contractor Excise Tax (FAR Case 2011-011) – This final rule amends the FAR to implement certain requirements of the James Zadroga 9/11 Health and Compensation Act of 2010, which imposes a 2% excise tax on certain Federal procurement payments to foreign persons. First, the statute disallows the cost of the 2% excise tax on certain foreign procurements as part of a payment, or as part of a cost-based negotiated price. Second, the statute stipulates that no funds are to be disbursed to any foreign contractor in order to reimburse the tax imposed. The 2% excise tax is applied only to foreign persons that receive Federal procurement payments pursuant to a contract with the Government of the United States for the provision of goods or services, if the goods are manufactured or produced in, or the services are performed in, a country that is not a party to an international procurement agreement with the United States.

FAC 2005-65 • To comply with the statute, FAR 31.205–41 is amended to inform the Government and contractors that the costs of the 2 percent excise tax are not allowable. FAR 52.229–3, 52.229–4, 52.229–6, and 52.229–7 are amended to provide that the costs for the excise tax are not included in either foreign fixed-price contracts with a foreign concern or foreign fixed-price contracts with foreign governments. • Regulations will be forthcoming from the Department of the Treasury that will provide specific guidance regarding the application of the tax and the procedures for withholding the tax. Any impact on applicable FAR provisions will be handled in a separate FAR case. Effective February 28, 2013.

Deviation • Class Deviation – Extension of Authority for Use of Simplified Acquisition Procedures for Certain Commercial Items (OUSD(AT&L)/DPAP Memo, 15 Jan 13) – Effective immediately, the authority to issue solicitations under FAR 13.5, Test Program for Certain Commercial Items, is extended to January 1, 2015. Subpart 13.5 authorizes use of simplified procedures for the acquisition of supplies and services greater than the simplified acquisition threshold but not exceeding $6.5M ($12M for acquisitions described in 13.500(e)), including options, if the contracting officer reasonably expects, based on the nature of the supplies or services sought, and on market research, that offers will only include commercial items. Effective January 29, 2013.

Deviation • Class Deviation -- Extension & Expansion of Authority to Acquire Products & Services Produced in Countries Along a Major Route of Supply to Afghanistan (OUSD(AT&L)/DPAP Memo, 6 Feb 13) - Effective immediately, contracting officers shall use the procedures and provided class deviation contained in subject memo when acquiring products or services in support of Operation ENDURING FREEDOM, pursuant to section 841 of National Defense Authorization Act for Fiscal Year 2013. This class deviation remains in effect until December 31, 2014, unless incorporated in the DFARS or otherwise rescinded. Further details are provided within the memo.

FAC 2005-64 • Nondisplacementof Qualified Workers Under Service Contracts (Federal Acquisition Circular 2005-64/FAR Case 2011-028) - On December 21, 2012, a final rule was issued amending the FAR to implement an Executive order for non-displacement of qualified workers under service contracts, as implemented in Department of Labor regulations. This final rule is applicable to solicitations issued on or after the effective date of January 18, 2013. • Contracting officers are expected to work with their existing service contractors and bilaterally modify their contracts, to the extent feasible, to include the clause at FAR 52.222-17. As an alternative, contracting officers should consider entering into bilateral modifications with existing service contractors to agree to perform paragraph (c) of the clause at FAR 52.222-17, which: (1) Informs the existing predecessor contractor's workforce of their right of first refusal; and (2) provides the list of service employees to the contracting officer no less than 30 days before contract completion. Contracting officers shall document the contract files of their existing service contracts to describe the steps that were taken.

FAC 2005-64 • Iran Threat Reduction (Federal Acquisition Circular 2005-63/FAR Case 2012-030) – Effective 10 Dec 12, this FAR interim rule requires certifications that implement the expansion of sanctions relating to the energy sector of Iran and sanctions with respect to Iran’s Revolutionary Guard Corps, as contained in Titles II and III of the Iran Threat Reduction and Syria Human Rights Act of 2012. • The FAR is amended as follows to address the new sanctions and certification requirements: • - FAR 25.703-2(a)(1) -- Replaces the list summarizing the activities subject to sanctions with a more top-level description of the types of activities subject to sanctions, • - FAR 25.703-2(a)(2) -- Adds a new certification requirement and specifies that a significant transaction, for purposes of this rule, is any transaction that exceeds $3,000

FAC 2005-64 • IRAN THREAT REDUCTION continued- • FAR 25.703-2(b) -- Amends paragraph (b)(3) to require debarment period to be at least 2 years to implement section 311(b)(1)(B)(i) (II) of this new Act. • FAR 25.703-2(c) and 25.703-3(c) Exceptions -- Simplifies and clarifies the exception for acquisitions subject to trade agreements. • - FAR 25.703-4 Waivers -- Waivers of the 25.703-2 certification requirements must be “essential to the national security interest of the United States.” • - FAR 52.212-3(o) and 52.225-25 solicitation provisions -- Adds the new certification requirement – condition by submission of its offer, the offeror certifies that it, and any person owned or controlled by it, does not knowingly engage in any transaction that exceeds $3,000 with Iran's Revolutionary Guard Corps or any of its officials, agents, or affiliates. • - FAR 4.1202 and FAR 52.204-8 Annual Representations and Certifications -- Makes conforming changes to revise references to title and date of FAR 52.225-25.

FAC 2005-64 • Definition of Cost or Pricing Data (DFARS Case 2011-D040)- A final rule was issued updating the DFARS and DFARS PGI to reflect the distinction between “certified cost or pricing data” and “data other than certified cost or pricing data.” DFARS Part 204, 215, 217, 219, 225, 239, 241, 242, and 252, as well as DFARS PGI 215, 216, 225, 239, and 253, were amended in this final rule. The DFARS changes ensure consistency with the FAR which had been amended to clarify the distinction between those terms, as well as the requirements for the submission of cost or pricing data.

FAC 2005-64 • New Qualifying Country – Poland (DFARS Case 2012-D049) – DoD issued a final rule amending DFARS Part 225 to add the Republic of Poland as a qualifying country. The U.S. Secretary of Defense signed a new reciprocal defense procurement agreement with the Polish Minister of National Defense, which removes discriminatory barriers to procurements of supplies and services produced by industrial enterprises of the other country to the extent mutually beneficial and consistent with national laws, regulations, policies, and international obligations. The agreement does not cover construction or construction material.

Proposed Rules • Accelerated Payment to Small Business (SB) Subcontractors – Proposed Rule, December 19, 2012 [FAR Case 2012-031] still an open case, but DoDsuspendedthe temporary practice February 25, 2013 https://www.federalregister.gov/articles/2013/02/25/2013-04394/accelerated-payments-to-small-business-subcontractors • OMB Policy Memorandum M-12-16, July 12, 2012 was the genesis for the FAR Case • Provided no new rights under the Prompt Payment Act (PPA) and did not affect the application of the PPA late payment interest provisions • FAR Case proposed to establish a new FAR clause to make accelerated payment to SB subcontractors to the maximum extent practicable after receipt of a proper invoice and proper documentation, but DoD may re-visit the issue at a later point (per the link above)

DFARS Proposed Rule Unallowable Fringe Benefit CostsDFARS Case 2012-D038 Proposed rule, 78 Fed.Reg. 13606, February 28, 2013.DoDis proposing to amend the DFARS to explicitly state that fringe benefit costs incurred or estimated that are contrary to law, employer-employee agreement, or an established policy of the contractor are unallowable.Comments on the proposed rule should be submitted on or before April 29, 2013, to be considered in the formation of the final rule.

FY13 National Defense Authorization Act (NDAA) Section 1641 – Small Business Mentor-Protégé Program Authorizes SBA to establish a Mentor-Protégé Program for small businessesShould be “identical” to 8(a) Mentor-Protégé Program Agencies other than SBA cannot establish a Mentor-Protégé Program unless the agency first submits a plan for approval by SBA (exception for DoD Mentor-Protégé Program/SBIR/SBTT) SBA to issue regulations ensuring consistency among various agency Mentor-Protégé Programs Agencies with existing Mentor-Protégé Programs may continue with those programs until one year following the day on which SBA issues final regulations described above Existing Mentor-Protégé relationships not affected; the parties may continue to operate in accordance with their Mentor-Protégé Agreement until such time as the agreement expires and/or terminates SBA must propose regulations regarding the small business and other agency Mentor-Protégé Programs within 270 days after enactment, which will be subject to the notice and comment process Congress provided SBA with the authority to establish Mentor-Protégé Programs for its SDVOSB, WOSB and HUBZone Programs in the Small Business Jobs Act of 2010. SBA has yet to propose regulations regarding these new programs.

FY13 NDAA Continued Section 1651 – Limitations on Subcontracting Services contracts: the small business prime contractor must perform more than 50% of the amount paid the contractor under the contract (as opposed to 50% of the “cost of contract performance incurred for personnel”) Supply contracts: the small business prime contractor must perform more than 50% of the amount paid (less the cost of materials) the small business prime contractor (as opposed to the “cost of manufacturing”) Construction contracts: Not addressed. However, allowed SBA to promulgate rulemaking to create provisions similar to those for services and supply contracts Exemption provided for “similarly situated” entities; the 50% restriction does not apply if the subcontractor is small and of the same type as the prime (8(a), WOSB, etc.) Establishes penalties for failure to comply with the limitations on subcontracting requirement

FY13 NDAA Continued • Sections 1681 and 1682 – Fraud • Limits the liability of a small business for misrepresentation of its size or status if it relies in good faith on an “advisory opinion” issued by a Small Business Development Center (SBDC) or a Procurement Technical Assistance Center (PTAC) • The SBDC or the PTAC does not have to issue the opinion • The SBDC or the PTAC must send copy of opinion to SBA and if SBA disagrees with opinion, the small business cannot rely on it • Smalls businesses may be suspended or debarred for misrepresentation as to size or status without regard to whether they are “presently responsible” as provided in FAR Part 9

Speaking of Fraud … • DOJ has had a very aggressive effort to address fraud – one tool being civil enforcement through the False Claims Act (FCA) • FY2012 DOJ statistics can be found at:http://www.justice.gov/civil/docs_forms/C-FRAUDS_FCA_Statistics.pdfFY 2012 total recovery $4,959,333,598

DOJ Fraud Recovery • Over $3 billion of the nearly $5B in civil recoveries are from cases involving health care fraud, breaking a previous health care fraud record set in fiscal year 2011 • From January 2009 through the end of fiscal year 2012, the DOJ collected over $9.5 billion from health care fraud, setting another record over a four-year period • Almost $1 billion ($911 million) consists of the FCA component of DOJ’s $25 billion mortgage settlement with five banks • The numbers indicate increased activity in this area in 2013, a trend that will likely continue

FY13 NDAA Continued • The FY13 NDAA significantly enhanced whistleblower protections for government contractor employees, including extending coverage to: • Employees of subcontractors • Contracts and subcontracts with most civilian agencies • Disclosures that are made to management officials of the contractor or subcontractor • Reports of “abuses of authority” that undermine performance of a contract

Proposed Legislation Sampling of some House Bills affecting Contracting: • H. R. 436 Introduced on January 29, 2013, as the Government Neutrality in Contracting Act, to preserve open competition and Federal Government neutrality towards the labor relations of Federal Government contractors on Federal and federally funded construction projects. • H. R. 3893 Introduced February 2, 2012, Subcontracting Transparency and Reliability Act, would amend Small Business Act to require every subcontracting plan submitted to a federal agency to contain assurances that the offeror will report on subcontracting activities throughout the life of the contract and cooperate with any study to determine compliance; failure to report would be an actionable breach of contract. • H. R. 489 New Introduced on February 4, 2013, as the HUBZone Expansion Act of 2013, to expand the HUBZone program for communities affected by base realignment and closure.

Proposed Legislation Senate Contracting Bills • S. 6 Introduced on January 3, 2013, as the Putting Our Veterans Back to Work Act of 2013, to reauthorize the VOW to Hire Heroes Act of 2011, to provide assistance to small businesses owned by veterans, to improve enforcement of employment and reemployment rights of members of the uniformed services. • S. 2198 Introduced March 15, 2012, Common Sense Contractor Compensation Act of 2012, would lower the amount of compensation government contractors could claim as reimbursable costs and expand coverage of the cap to all employees rather than the top five executives; reimbursement capped at the annual pay of the President of the United States • S. 98 Introduced on January 23, 2013, as the Local Disaster Contracting Fairness Act of 2013, to ensure efficiency and fairness in the awarding of Federal contracts in connection with natural disaster reconstruction efforts.

Proposed Legislation • S. 99 Introduced on January 23, 2013, as the Natural Disaster Fairness in Contracting Act of 2013, to provide for full and open competition for Federal contracts related to natural disaster reconstruction efforts. S. 109 Introduced on January 23, 2013, as the Government Neutrality in Contracting Act, to preserve open competition and Federal Government neutrality towards the labor relations of Federal Government contractors on Federal and federally funded construction projects. • S. 117 Introduced on January 23, 2013, as the Medicare Prescription Drug Price Negotiation Act of 2013, to amend part D of title XVIII of the Social Security Act to require the Secretary of Health and Human Services to negotiate covered part D drug prices on behalf of Medicare beneficiaries. • S. 126 Introduced on January 24, 2013, as the Earmark Elimination Act of 2013, to prohibit earmarks. • S. 196 Introduced on January 31, 2013, as the Assuring Contracting Equity Act of 2013, to assure equity in contracting between the Federal Government and small business concerns. • S. 206 Introduced on January 31, 2013, as the HUBZone Expansion Act of 2013, to expand the HUBZone program for communities affected by base realignment and closure.

IDIQ Contracts • Reporting Indefinite Delivery Contracts and Agreements to the Federal Procurement Data System (OUSD(AT&L)/DPAP Memo, 28 Jan 13) – Effective immediately, the Office of Federal Procurement Policy has issued instructions to Federal agencies for completing certain fields in the Federal Procurement Data System (FPDS) when reporting indefinite-delivery contracts and agreements that allow orders to be placed by other contracting offices. This will allow the Interagency Contract Directory (ICD) (see FAR 7.105(b)(1)) to begin displaying search results by the agency's assigned program or vehicle name (e.g., Army's Computer Hardware, Enterprise Software and Solutions (CHESS)) and be more useful for identifying possible contracts to support requirements. Further details are provided within the memo. Effective January 29, 2013.

Counterfeit Parts • SEC. 833. CONTRACTOR RESPONSIBILITIES IN REGULATIONS RELATING TO DETECTION AND AVOIDANCE OF COUNTERFEIT ELECTRONIC PARTS. • Section 818(c)(2)(B) of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81; 125 Stat. 1493; 10 U.S.C. 2302 note) is amended to read as follows: • `(B) the cost of counterfeit electronic parts and suspect counterfeit electronic parts and the cost of rework or corrective action that may be required to remedy the use or inclusion of such parts are not allowable costs under Department contracts, unless– • `(i) the covered contractor has an operational system to detect and avoid counterfeit parts and suspect counterfeit electronic parts that has been reviewed and approved by the Department of Defense pursuant to subsection (e)(2)(B); • `(ii) the counterfeit electronic parts or suspect counterfeit electronic parts were provided to the contractor as Government property in accordance with part 45 of the Federal Acquisition Regulation; and • `(iii) the covered contractor provides timely notice to the Government pursuant to paragraph (4).

Counterfeit Parts • Counterfeit Parts Disclosure Notifications: Requirements and Processes • Following the Senate Armed Services Committee investigation and hearings in 2011, the Government and contractors alike have become aware of the prevalence of the counterfeit electronic parts epidemic. • Once contractors become aware of counterfeit electronic parts or other fraud-related violations of Federal criminal law in contracts exceeding $5M and lasting more than 120 days in duration, FAR 52.203-13(b)(3)(i) requires that the contractor make a written disclosure to the Department of Defense Inspector General (DoD IG) and the contracting officer. • A contractor who fails to disclose is subject to automatic debarment under FAR 9.406-2(b)(1)(vi).

2012 Consolidated Appropriations Act • Pub. L. 112-74, sections 8124 and 8125 • Prevent agencies from using 2012 CAA funds to contract with companies convicted of a Federal felony within the preceding 24 months or which have outstanding federal tax liability, unless the agency has considered suspension or debarment and made a determination this action was not necessary to protect the interests of the Government (each agency makes independent decision, unlike prior system)

OFPP Policy Update • April 23, 2012 memorandum (77 Fed. Reg. 24226) announced that $763,029 is the benchmark salary compensation amount for contractors’ fiscal year 2011 and beyond, unless revised by OFPP • The reimbursement formula for cost-based contracts in 41 U.S.C. 1127 caused a $70,000 increase from FY 2010 to FY 2011 (significantly exceeding inflation rate) • A proposed change would limit the reimbursement cap equal to Level I of the Executive Schedule, $199,700 (per 5 U.S.C. 5312)

OFPP Policy Update • May 7, 2012 “Myth-Busting 2: Addressing Misconceptions and Further Improving Communications During the Acquisition Process” • Highlights common misconceptions and provides strategies to overcome them • http://www.whitehouse.gov/sites/default/files/omb/procurement/memo/myth-busting-2-addressing-misconceptions-and-further-improving-communication-during-the-acquisition-process.pdf

Better Buying Power 2.0 • November 13, 2012 memorandum by Mr. Frank Kendall, OSD, AT&L • Thirty six initiatives organized into seven focus areas: • Achieve affordable programs • Control costs throughout product lifecycle • Incentivize productivity and innovation in industry and government • Eliminate unproductive processes and bureaucracy • Promote effective competition • Improve tradecraft in acquisition of services • Improve professionalism of the total acquisition workforcesee important full text: http://bbp.dau.mil

GAO Report: Interagency Contracting • To ensure that DOD organizations fully comply with interagency acquisition regulations, the GAO recommended that the Secretary of Defense direct the Office of Defense Procurement and Acquisition Policy, as part of its ongoing interagency acquisition policy review, to ensure that its acquisition regulations, policies, and guidance on interagency contracting are updated to reflect new FAR rules, including those related to a best procurement approach determination. • To ensure that users of interagency contracts are aware of interagency acquisition requirements, the GAO recommended that the Administrator of General Services direct the Federal Acquisition Service to fully implement the actions called for in its April 2011 instructional letter to update ordering guides for its government-wide and multi-agency contracts as needed to reflect new FAR rules for interagency acquisitions.http://www.gao.gov/products/GAO-13-133R January 29, 2013

Second GAO Review of 8(a) Sole Source Justifications http://www.gao.gov/products/GAO-13-308R In a Feb. 8, 2013 report, GAO found that DOD awarded 51 sole source 8(a) contracts over $20 million between October 2009 and September 2012 (steady decline in this acquisition method). DoD awarded eight sole-source 8(a) contracts worth over $20 million from March 16, 2011, when the requirement was implemented in the FAR, through March 31, 2012, the most recent data available at the time of the review. Of the eight, six contracts did not meet the new justification requirement because contracting officials were not aware of the requirement or because they were confused about the type of justification to complete.

Sole Source 8(a) GAO Report • Prior report entitled “Federal Contracting: Slow Start to Implementation of Justifications for 8(a) Sole-Source Contracts,” GAO-13-118, December 12, 2012 • Prior report showed greater level of noncompliance http://www.gao.gov/products/GAO-13-118R

GAO Report on Suspension/Debarment • GAO-12-932, “Suspension and Debarment: DoD Has Active Referral Processes, but Action Needed to Promote Transparency” September 19, 2012 http://www.gao.gov/products/GAO-12-932 • 75 Actions between FY 2009 and 2011 studied • 126 contractors had three or more contracts terminated for default; high percentage were reviewed or undergoing review, with 13 already suspended or debarred

OMB Meeting on Cost Comparisons http://www.gpo.gov/fdsys/pkg/FR-2013-02-15/pdf/2013-03581.pdf March 5, 2013 meeting solicited input on the practice of comparing the relative cost of performance by federal employees versus contract performance in order to identify the most cost-effective source Meeting also solicited input on development of guidance addressing the conversion of a function being performed by a small business concern to performance by a federal employeeOMB recognizes that cost comparisons are not a “one size fits all” toolOMB Memorandum M-09-26 has two overarching principles for a cost analysis:- “like comparisons” of costs that are of a sufficient magnitude to influence a final decision- must address the full costs of government and private sector performance

Meeting on Contract Profit • March 20, 2013, from 1:00 p.m.to 3:00 p.m. at GSA • DoD is interested in opening a dialogue with experts and interested parties in Government and the private sector about the requirements of section 804 of the National Defense Authorization Act for Fiscal Year 2013. Section 804, Department of Defense Policy on Contractor Profits, included a requirement for DoD to review its profit policy guidelines in order to identify any modifications to such guidelines that are necessary to ensure an appropriate link between contractor profit and contractor performance. The law also stated that, in conducting the review, the Secretary shall obtain the views of experts and interested parties in Government and the private sector.

Meeting on Contract Profit • Notice published in the February 15, 2013 Federal Register, 78 Fed. Reg. 11164 • https://www.federalregister.gov/articles/2013/02/15/2013-03575/policy-on-contractor-profits

Closed FAR Cases • FAR Case 2011-010 on sharing cyber threat information – November 13, 2012 • Closed but action taken February 12, 2013 by Executive Order (eight pages) which was published in the February 19, 2013 Federal Register: https://www.federalregister.gov/articles/2013/02/19/2013-03915/improving-critical-infrastructure-cybersecurity • Related topic: Feb. 18, 2013 Mandiant Corp. 76-page cyber hacking report:http://intelreport.mandiant.com/Mandiant_APT1_Report.pdf

Related FAR Case – Proposed Rule • FAR Case 2011-020, Basic Safeguarding of Contractor Information Systems • 77 Fed. Reg. 51496, August 24, 2012 • Contractors are required to implement measures or controls to protect information provided by or generated for the Government (other than public information) that will be resident on or pass through a contractor IT system (at least one physical and one electronic barrier)

Contract Policy Updates March 13, 2013 NCMA Boston Chapter Annual Workshop