Acquisition Training Event When the FAR Gets Fuzzy National Contract Management Association (NCMA)...

Acquisition Training Event

When the FAR Gets Fuzzy

National Contract Management Association (NCMA)Pikes Peak Chapter

June 21, 2012

Suzanne Snyder, CPCM,CFMC, CPPO, Fellow

When the FAR Gets Fuzzy

Remember where it came from

Remember what it implements

Remember what it wants

Remember who it wants to involve

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Where did the FAR come from?

• The birth – the Constitution• Constitution major source of the government’s power

• Constitution divides the government into the legislative, executive, and judicial branches each with delegated power to affect the procurement process.

• Legislative - lawmaking power• Executive - executes the laws of Congress• Judicial branch interprets cases and controversies

concerning the law


Legislative Power•Congress express and implied constitutional power to affect the procurement process

• Passes laws (Acts of Congress)• Statutory Authority

• Appropriation - authorization to spend, allows executive branch to obtain money from the US Treasury

• Authorization - part of the planning and budgetary process – need for money and amount necessary to fund need

• Enabling - authorize the executive branch to contract• Procedural - statutes which establish process and policy


Executive Power•Cabinet includes the Vice President and the heads of 15 executive departments —Secretaries of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Labor, State, Transportation, Treasury, and Veterans Affairs, as well as the Attorney General.•Executive Agencies influence procurement for example•Department of Commerce

• Assists with development of federal specifications and publicizes synopses of US government proposed acquisition, sales, and contract awards

•Department of Justice• Maintains Bureau of Prisons which operates the Federal Prison Industries Inc. (FPI), also known as UNICOR• Maintains industrial operations in penal institutions that sell goods to federal agencies.

•Department of Labor• The secretary of labor administers such labor acts as Walsh-Healey Act, Service Contract Act of 1965, and Davis-

Bacon Act.

•Department of Defense• Defense Acquisition Regulatory Council (DAR Council) part of team preparing revisions to FAR


• Executive Power continued• Independent agencies within executive branch

regulate activities of a nonpolitical nature. • 3 which affect government contracting:

• General Services Administration (GSA)• Small Business Administration (SBA) • Committee for Purchase from People Who Are Blind or

Severely Disabled - operates as the U.S. AbilityOne Commission


Judicial Power interprets cases and controversies concerning the law – laws that Congress passes and use of common law

• Common law principles apply unless Congress has indicated clear intent to nullify or Constitution requires other than common law

• Common law principles give meaning and effect to the relationships and intent of parties to government contracts

• Government sets aside or suspends sovereignty when entering into contract with private citizens

• Government bound by same laws and principles that apply to private citizens

• All presumptions of law and fact, as well as obligations that apply to citizens, apply equally to the government.


Judicial Power continued - examples of application of common law

•Ambiguities in a contract are construed against the drafter• When government contracts are prepared exclusively by government

agents, leaving contractor no choice as to form or wording, ambiguities in government contracts are resolved against government

•Where an ambiguity exists in a contract, the nondrafting party has a duty to seek clarification.

• In turn, the drafting party must provide clarification

• The nondrafting party is then entitled to rely on the clarification


Judicial Power continued - Sovereign power•Sovereignty - supreme, absolute, and uncontrollable power by which an independent state is governed

• Sovereign power is the United States’ capacity to enter into contracts and take bonds even though bonds may not be required or prescribed by any positive law

• Inherent power present in the executive branch, without an act of Congress existing as necessary incident of sovereignty

• Permits executive agencies to enter into agreements and effectively operate the government

• Even when Congress has not passed a specific statute, the US Supreme Court concluded that the executive branch of government has inherent sovereign power to contract.

• Congress has power to affect the executive’s inherent sovereign power (may limit by placing conditions and terms upon it)


Judicial Power continued - Dual capacityWhen it enters into contracts with private parties, the government acts in both a proprietary and sovereign capacity -- both the sovereign and party to a contract

•When the government acts as a party to a contract - proprietary capacity

• Equivalent to being an owner or operator of a business

• Government held to same standards as private contractor - common law applies

•When government acts as sovereign common law does not apply

• When interference results from the government’s indirect sovereign acts, whether the acts are executive or legislative in nature, the government is not liable


Judicial Power continued - Sovereign immunity•Sovereign immunity holds that a monarch’s acts constitute all the powers of government and the monarch can do no wrong

•For many years, US followed sovereign immunity - contractors had no right to sue the US government for harm resulting from the government’s failure to perform its contractual obligations

•Result - many contractors would not to engage in government contracts

•Congress elected to waive a portion of the government’s sovereignty.

•State courts have no jurisdiction to decide matters of federal procurement, the federal government alone hears cases

What does the FAR implement?

• The FAR guides executive branch in accomplishing the will of Congress in a legal way

• The FAR is full of references to UNITED STATES CODE • The United States Code is the codification by subject matter of the

general and permanent laws of the United States.

• It is divided by broad subjects into 51 titles and published by the Office of the Law Revision Counsel of the U.S. House of Representatives.

• The U.S. Code was first published in 1926. The next main edition was published in 1934, and subsequent main editions have been published every six years since 1934. In between editions, annual cumulative supplements are published in order to present the most current information.

http://www.gpo.gov/fdsys/browse/collectionUScode.action?collectionCode=USCODE


• Title 1 General Provisions• Title 2 The Congress• Title 3 The President• Title 4 Flag and Seal, Seat of Government, and the States• Title 5 Government Organization and Employees*• Title 6 Domestic Security• Title 7 Agriculture• Title 8 Aliens and Nationality• Title 9 Arbitration• Title 10 Armed Forces (including the Uniform Code of Military Justice)• Title 11 Bankruptcy• Title 12 Banks and Banking• Title 13 Census• Title 14 Coast Guard• Title 15 Commerce and Trade• Title 16 Conservation• Title 17 Copyrights

What does the FAR implement?• Title 18 Crimes and Criminal Procedure*• Title 19 Customs Duties• Title 20 Education• Title 21 Food and Drugs• Title 22 Foreign Relations and Intercourse• Title 23 Highways• Title 24 Hospitals and Asylums• Title 25 Indians• Title 26 Internal Revenue Code• Title 27 Intoxicating Liquors• Title 28 Judiciary and Judicial Procedure• Title 29 Labor• Title 30 Mineral Lands and Mining• Title 31 Money and Finance• Title 32 National Guard• Title 33 Navigation and Navigable Waters• Title 34 Navy (repealed all of Title 34 in 1956 when Navy was moved into Title 10 subtitle C)

What does the FAR implement?• Title 35 Patents

• Title 36 Patriotic Societies and Observances

• Title 37 Pay and Allowances of the Uniformed Services

• Title 38 Veterans' Benefits

• Title 39 Postal Service

• Title 40 Public Buildings, Properties, and Works

• Title 41 Public Contracts

• Title 42 The Public Health and Welfare

• Title 43 Public Lands

• Title 44 Public Printing and Documents

• Title 45 Railroads

• Title 46 Shipping

• Title 47 Telegraphs, Telephones, and Radiotelegraphs

• Title 48 Territories and Insular Possessions

• Title 49 Transportation

• Title 50 War and National Defense

• Title 51 National and Commercial Space Programs

What does the FAR want to implement?

• Title 5 Government Organization and Employees• Freedom of Information Act

• Title 10 Armed Forces• 10 USC 2302 Armed Services Procurement Act

• Title15: Commerce and Trade• Federal Trade Commission Act, the Clayton Antitrust Act, the Sherman Antitrust

Act, the Securities Exchange Act of 1934, the Consumer Product Safety Act, Lanham Act (Trademarks etc.

• Chapter 14a Aide to Small Business• Chapter 14b Small Business Investment Program

• Title 29 Labor

• Title 31 Procurement Protest System

• Title 41of the United States Code – Public Contracts• 41 USC 252 Federal Property and Administrative Services Act

.

Where does the FAR implement?

• Part of the Code of Federal Regulations (CFR)• Codification of the general and permanent rules and

regulations (sometimes called administrative law) published in the Federal Register by the executive departments and agencies of the federal government of the United States.

• Divided into 50 titles representing broad areas subject to Federal regulation

• Published by the Office of the Federal Register, an agency of the National Archives and Records Administration (NARA).

• Every regulation in the CFR must have an "enabling statute," or statutory authority. The United States Code (U.S. Code) precedes the CFR and contains statutes enacted by Congress.

• FAR is 48 CFR


The following slides are only some examples of how statutes are placed into the regulation of the FAR….this is not an exhaustive listing!


The Armed Services Procurement Act of 1947

In 1945 the Procurement Policy Board conduct of military contracting brought forth recommendations enacted under the Armed Services Procurement Act of 1947. This act authorized and provided for the

following:• Negotiated purchases where circumstances required or justified departure from the preferred

method of formal advertising

• Use of a type contract best adapted to the circumstances, without blind reliance on a fixed price form of contract in every case

• Advance payments

• Statutory authority for joint or cross contracting between the services

What does the FAR want to implement?

The Competition in Contracting Act of 1984 (CICA), 41 U.S.C. 253

A public law enacted for the purpose of encouraging the competition for the award of all types of government contracts. The purpose was to increase the number of competitors and to increase savings through lower, more competitive pricing. •Contracting officers should provide for full and open competition through use of the competitive procedure or combination of competitive procedures contained in the Act that is best suited to the circumstances of the contract action.

• Every deviation from the requirement for full and open competition must be documented in writing and authorized by the appropriate government official.


• Title 19 Labor

• Contract Work Hours and Safety Standards Act (CWHSSA)

• Copeland "Anti-Kickback" Act

• Davis-Bacon and Related Acts (DBRA)

• McNamara-O'Hara Service Contract Act (SCA)

• Occupational Safety and Health (OSH) Act

• Rehabilitation Act of 1973, Section 503

• Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA)

• Walsh-Healey Public Contracts Act (PCA)


Title 31 Finance and Money

The Antideficiency Act (ADA), Pub.L. 97-258, 96 Stat. 923, codified at 31 U.S.C. § 1341enacted September 13, 1982, is legislation enacted by the United States Congress to prevent the incurring of obligations or the making of expenditures (outlays) in excess of amounts available in appropriations or funds.. The ADA prohibits the Federal government from entering into a contract that is not "fully funded" because doing so would obligate the government in the absence of an appropriation adequate to the needs of the contract.

ADA interestingly enough was first enacted in 1884

The Purpose Act (31 U.S.C. § 1301) provides "Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law." The annual DoD appropriations acts include approximately 100 different appropriations (otherwise known as "colors of money").


Title 40 PUBLIC BUILDINGS, PROPERTY, AND WORKS

The Miller Act (40 U.S.C. §§ 3131 et seq.) enacted in 1935 requires prime contractors on some government construction contracts to post bonds guarantying both the performance of their contractual duties


Federal Acquisition Streamlining Act of 1994 Pub. L. No. 103-355 (FASA)

Seeks to: (1) increase the government's reliance on commercial goods and services; (2) streamline the procurement process for high-volume, low-value acquisitions; (3) improve access by small businesses to government contracting opportunities; (4) improve the bid protest process; and (5) extend the Truth in Negotiations Act to civilian agencies and raise to $500,000 the threshold for submitting certified cost or pricing data under that Act.

Note: Threshold now $650,00

•More than 200 sections changing the laws that govern how agencies acquire goods and services

•Simplified the procurement of any item estimated at less than $100,000 (formerly simplified acquisition threshold was $25,000)

•It added the micro-purchase threshold for items less than $2,500.

Note: Both thresholds have changed to $150,000 and $3,000.


Federal Acquisition Reform Act of 1996 (FARA), Pub. L. No. 104-106, Division D of the National Defense Authorization Act for Fiscal Year 1996.(now redesignated as the Clinger-Cohen Act of 1996). FARA affects acquisition in general, making major changes in procurement processes. Introduced concept of “efficiency” in three areas: competition, approval procedures, and efficient competitive range determinations•Provides for and specifies content of pre-award debriefings for contractors eliminated from competition•Exempts the procurement of commercial items from a requirement that certified cost or pricing data must accompany an offer — and allows a contracting officer to re-quire such cost or pricing data to the extent necessary to determine the reasonableness of the price of the contract, subcontract, or modification. •Authorized use of simplified acquisition procedures for acquisition of commercial items valued at greater than simplified acquisition threshold (generally $100,000 including options) but not greater than $5 million when expectation is responses will include only commercial items. •Requires FAR list Federal procurement provisions inapplicable to contracts for procurement of commercially available off-the-shelf items


Services Acquisition Reform Act of 2003, P.L. 108-136, signed November 14, 2003. Provisions include:

• Civilian acquisition workforce training fund

• Acquisition workforce recruitment flexibility

• Maintaining architectural and engineering acquisition workforce expertise

• Civilian Agency Chief Acquisition Officers (CAO) and CAO Council

• Advisory panel on acquisition laws and regulations

• Extension of franchise fund programs

• Contracting for architectural/engineering services

• Telecommuting for federal contractors

• Incentives for performance-based contracts

• Time-and-materials contracts for commercial services

• Special “other transactions” acquisition authority

• Public disclosure of noncompetitive contracts for Iraq reconstruction

• Emergency procurement flexibilities


Weapons System Reform Act of 2009, PL 111-23 (amended Titles 5 and 10)(WSARA), created to reform contracts and purchases of major weapons systems. • Requires appointment of:

• Director of Cost Assessment and Program Evaluation (CAPE), to communicate directly with SECDEF And Deputy SECDEF and issue policies and establish guidance on cost estimating and developing confidence levels estimates

• Director of Developmental Test and Evaluation, principal advisor to the SECDEF on developmental test and evaluation, develop DoD-wide polices and guidance for conducting developmental testing and evaluation and review, approve, and monitor testing for Major Defense Acquisition Program (MDAP)

• Director of Systems Engineering, principal advisor to the SECDEF on systems engineering, develop DoD-wide policies and guidance for the application of systems engineering and review, approve, and monitor each MDAP

• Requirement Director of Defense Research and Engineering periodically assess technological maturity of MDAPs and annually report his/her findings to Congress• Requirement DoD employ prototyping of MDAPs whenever practical

• Requirement combatant commanders have more influence in requirements generation

• Changes to the Nunn-McCurdy Act, such as rescinding most recent "Milestone" approval for any program that has experienced "critical cost growth;" and

• Requirement DoD revise guidelines and tighten regulations pertaining to conflicts of interest of contractors working on MDAPs

What does the FAR want?

1.102 -- Statement of Guiding Principles for the Federal Acquisition System.(b) The Federal Acquisition System will --

(1) Satisfy the customer in terms of cost, quality, and timeliness of the delivered product or service by, for example --

(i) Maximizing the use of commercial products and services;

(ii) Using contractors who have a track record of successful past performance or who demonstrate a current superior ability to perform; and

(iii) Promoting competition;

(2) Minimize administrative operating costs;

(3) Conduct business with integrity, fairness, and openness; and

(4) Fulfill public policy objectives.


FAR 1.102-1 -- Discussion.

(a) Introduction. The statement of Guiding Principles for the Federal Acquisition System (System) represents a concise statement designed to be user-friendly for all participants in Government acquisition. The following discussion of the principles is provided in order to illuminate the meaning of the terms and phrases used. The framework for the System includes the Guiding Principles for the System and the supporting policies and procedures in the FAR.

(b) Vision. All participants in the System are responsible for making acquisition decisions that deliver the best value product or service to the customer. Best value must be viewed from a broad perspective and is achieved by balancing the many competing interests in the System. The result is a system which works better and costs less.


FAR 1.102-2 -- Performance Standards.(a) Satisfy the customer in terms of cost, quality, and timeliness of the delivered product or service.

(1) The principal customers for the product or service provided by the System are the users and line managers, acting on behalf of the American taxpayer.

(2) The System must be responsive and adaptive to customer needs, concerns, and feedback. Implementation of acquisition policies and procedures, as well as consideration of timeliness, quality, and cost throughout the process, must take into account the perspective of the user of the product or service.

(3) When selecting contractors to provide products or perform services, the Government will use contractors who have a track record of successful past performance or who demonstrate a current superior ability to perform.

(4) The Government must not hesitate to communicate with the commercial sector as early as possible in the acquisition cycle to help the Government determine the capabilities available in the commercial marketplace. The Government will maximize its use of commercial products and services in meeting Government requirements.


FAR 1.102-2 -- Performance Standards.(a) Satisfy the customer in terms of cost, quality, and timeliness of the delivered product or service.

(5) It is the policy of the System to promote competition in the acquisition process.

(6) The System must perform in a timely, high quality, and cost-effective manner.

(7) All members of the Team are required to employ planning as an integral part of the overall process of acquiring products or services. Although advance planning is required, each member of the Team must be flexible in order to accommodate changing or unforeseen mission needs. Planning is a tool for the accomplishment of tasks, and application of its discipline should be commensurate with the size and nature of a given task.


FAR 1.102-2 -- Performance Standards.(b) Minimize administrative operating costs.

(1) In order to ensure that maximum efficiency is obtained, rules, regulations, and policies should be promulgated only when their benefits clearly exceed the costs of their development, implementation, administration, and enforcement. This applies to internal administrative processes, including reviews, and to rules and procedures applied to the contractor community.

(2) The System must provide uniformity where it contributes to efficiency or where fairness or predictability is essential. The System should also, however, encourage innovation, and local adaptation where uniformity is not essential.

What does the FAR want?FAR 1.102-2 -- Performance Standards.(c) Conduct business with integrity, fairness, and openness.

(1) An essential consideration in every aspect of the System is maintaining the public’s trust. Not only must the System have integrity, but the actions of each member of the Team must reflect integrity, fairness, and openness. The foundation of integrity within the System is a competent, experienced, and well-trained, professional workforce. Accordingly, each member of the Team is responsible and accountable for the wise use of public resources as well as acting in a manner which maintains the public’s trust. Fairness and openness require open communication among team members, internal and external customers, and the public.

(2) To achieve efficient operations, the System must shift its focus from “risk avoidance” to one of “risk management.” The cost to the taxpayer of attempting to eliminate all risk is prohibitive. The Executive Branch will accept and manage the risk associated with empowering local procurement officials to take independent action based on their professional judgment.

(3) The Government shall exercise discretion, use sound business judgment, and comply with applicable laws and regulations in dealing with contractors and prospective contractors. All contractors and prospective contractors shall be treated fairly and impartially but need not be treated the same.


FAR 1.102-2 -- Performance Standards.

(d) Fulfill public policy objectives. The System must support the attainment of public policy goals adopted by the Congress and the President. In attaining these goals, and in its overall operations, the process shall ensure the efficient use of public resources.

Who does the FAR want to involve?

FAR 1.201-1 -- The Two Councils.(a) Subject to the authorities discussed in 1.103, revisions to the FAR will be prepared and issued through the coordinated action of two councils, the Defense Acquisition Regulations Council (DAR Council) and the Civilian Agency Acquisition Council (CAA Council). Members of these councils shall --

(1) Represent their agencies on a full-time basis;

(2) Be selected for their superior qualifications in terms of acquisition experience and demonstrated professional expertise; and

(3) Be funded by their respective agencies.

(b) The chairperson of the CAA Council shall be the representative of the Administrator of General Services. The other members of this council shall be one each representative from the--

(1) Departments of Agriculture, Commerce, Energy, Health and Human Services, Homeland Security, Interior, Labor, State, Transportation, and Treasury; and

(2) Environmental Protection Agency, Social Security Administration, Small Business Administration, and Department of Veterans Affairs.


FAR 1.201-1 -- The Two Councils.(c) The Director of the DAR Council shall be the representative of the Secretary of Defense. The operation of the DAR Council will be as prescribed by the Secretary of Defense. Membership shall include representatives of the military departments, the Defense Logistics Agency, the Defense Contract Management Agency, and the National Aeronautics and Space Administration.

(d) Responsibility for processing revisions to the FAR is apportioned by the two councils so that each council has cognizance over specified parts or subparts.

(e) Each council shall be responsible for --

(1) Agreeing on all revisions with the other council;

(2) Submitting to the FAR Secretariat (see 1.201-2) the information required under paragraphs 1.501-2(b) and (e) for publication in the Federal Register of a notice soliciting comments on a proposed revision to the FAR;

(3) Considering all comments received in response to notice of proposed revisions;

(4) Arranging for public meetings;

(5) Preparing any final revision in the appropriate FAR format and language; and

(6) Submitting any final revision to the FAR Secretariat for publication in the Federal Register and printing for distribution.


FAR 1.102-3 -- Acquisition Team.The purpose of defining the Federal Acquisition Team (Team) in the Guiding Principles is to ensure that participants in the System are identified -- beginning with the customer and ending with the contractor of the product or service. By identifying the team members in this manner, teamwork, unity of purpose, and open communication among the members of the Team in sharing the vision and achieving the goal of the System are encouraged. Individual team members will participate in the acquisition process at the appropriate time.


FAR 1.102-4 -- Role of the Acquisition Team.(a) Government members of the Team must be empowered to make acquisition decisions within their areas of responsibility, including selection, negotiation, and administration of contracts consistent with the Guiding Principles. In particular, the contracting officer must have the authority to the maximum extent practicable and consistent with law, to determine the application of rules, regulations, and policies, on a specific contract.

(b) The authority to make decisions and the accountability for the decisions made will be delegated to the lowest level within the System, consistent with law.

(c) The Team must be prepared to perform the functions and duties assigned. The Government is committed to provide training, professional development, and other resources necessary for maintaining and improving the knowledge, skills, and abilities for all Government participants on the Team, both with regard to their particular area of responsibility within the System, and their respective role as a team member. The contractor community is encouraged to do likewise.


FAR 1.102-4 -- Role of the Acquisition Team.(d) The System will foster cooperative relationships between the Government and its contractors consistent with its overriding responsibility to the taxpayers.

(e) The FAR outlines procurement policies and procedures that are used by members of the Acquisition Team. If a policy or procedure, or a particular strategy or practice, is in the best interest of the Government and is not specifically addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, Government members of the Team should not assume it is prohibited. Rather, absence of direction should be interpreted as permitting the Team to innovate and use sound business judgment that is otherwise consistent with law and within the limits of their authority. Contracting officers should take the lead in encouraging business process innovations and ensuring that business decisions are sound.

Summary

• FAR is dynamic• FAR is not a stand alone document• FAR is compromise• FAR represents multiple interests• FAR belongs to a team• FAR is to guide• FAR must support the attainment of public policy

goals adopted by the Congress and the President• FAR requires team to acting on behalf of the

American taxpayer

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Sources

• The Federal Acquisition Regulationhttps://www.acquisition.gov/far

• The United States Code http://www.gpo.gov/fdsys/browse/collectionUScode.action?collectionCode=USCODE

• The Code of Federal Regulationswww.gpoaccess.gov/cfr/index.html

• WIFCON.com – Where in Federal Contracting ?www.wifcon.com

• The White Househttp://www.whitehouse.gov

Sources

• CDC 6C051A Contracting Journeyman (Simplified Acquisition) Volume 1. Basic Fundamentals

Author: MSgt Eric Johnson, 345th Training Squadron, Contracting Training Flight (AETC), 345 TRS/TTC

1015 Femoyer Street, Ste 126

Lackland Air Force Base, Texas, 78236–5443

DSN: 473–6132

E-mail address: [email protected]

Instructional Systems Specialist:

Evangeline K. Walmsley

Editor: Josephine Stokes

Air Force Institute for Advanced Distributed Learning

Air University (AETC)

Maxwell Air Force Base, Gunter Annex, Alabama 36118

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