Redstone Government Consulting Blog (43)

Section 880 of the National Defense Authorization Act (NDAA) included provisions restricting the use of the Lowest Price Technically Acceptable (LPTA) source selection criteria to only procurements where:

The World Trade Organization (WTO) issued an arbitration decision in European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/ARB. The decision authorized the United States to impose $7.5 billion in tariffs, beginning October 18^th, 2019, on EU imports due to EU subsidies to Airbus, making the ruling the largest in the WTO’s history.

As we outlined in Applicability of DFARS Business System Rules to Small Businesses, small businesses are exempt from Cost Accounting Standards and therefore are not subject to the business system rules, based on the requirements for inclusion in the Business System Clauses as set out in DFARS.  DFARS Case 2009-D038 – Defense Federal Acquisition Regulation Supplement; Business Systems-Definition and Administration, final rule issue February 24, 2013 in the Federal Register specifically stated: “DoD does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because contracts and subcontracts with small businesses are exempt from Cost Accounting Standards (CAS) requirements.”

As we begin October 31^st, we’ve invested heavily in researching all sources to identify the Halloween costumes which will most likely be used by Government entities (including Congress), agencies, and employees (or wannabe employees in the context of political candidates).

In 1948 the Armed Services Procurement Regulations (ASPR) was issued as a result of the Armed Services Procurement Act, remaining in place until 1978.  ASPR defined direct cost as “any cost that is specifically identified with a particular final cost objective, but not necessarily limited to items that are incorporated in the end product as material or labor.”  This is a fairly broad definition and clearly establishes that direct cost includes more than direct material and direct labor.  The APSR also discussed Other Direct Costs (ODC), which were costs that were not material nor labor and provided examples, such as “travel and subsistence, consultants, telephone, computer costs and report reproduction.” 

Believe it or not, getting DCAA to show up and complete a “Paid Voucher Review” is “Good News.”

To understand where I’m coming from with this statement, let’s start with a little history.  The way DCAA dug itself out of its incurred cost backlog hole was with low risk sampling, provided for under FAR Class Deviation (2012-O0013) – DCAA Policy and Procedure for Sampling Low-Risk Incurred Cost Proposals, issued July 24, 2012.

Per DFARS 252.204-7012, Contractors were to implement NIST SP 800-171 by 12/31/2017 “Safeguarding Cover Defense Information and Incident Reporting”. However, Contractors self-certification has not gone as well as the Department of Defense (DoD) had hoped.  They have even included it as part of 2019 Contractor Purchasing System Reviews (CPSR) for the Defense Contract Management Agency (DCMA) to evaluate Contractors monitoring of subcontractor’s self-certification.  In the meantime, DoD has shifted gears and is developing the Cybersecurity Maturity Model Certification (CMMC) to help strengthen the DoD supply chain's cybersecurity at all levels of the supply chain, from the prime Contractor on down to the lowest subcontractor. 

After over three years of waiting, on September 24^th, 2019 the Department of Labor released its long-awaited final overtime rule,  increasing the standard salary threshold for exempt status to $684 per week (up from the current $455 per week floor), or $35,568 per year on an annual basis. The new rule takes effect on January 1^st, 2020, providing the first overtime salary adjustment in more than 10 years.

Future Supply-Chain Rules to Be Implemented Under Executive Order 13873, and Under Sections 889(a)(1)(B) and 889(b) of the 2019 NDAA

There have been several recent developments in U.S. law, relating to non-tariff restrictions on foreign-origin information technology and telecommunications equipment, with a focus on Chinese-origin products. This is the third installment of a three-part series on this topic.

All too often, contractors have a dilemma as to which changing dollar threshold should be inserted into company policy.  You may recall that there has been considerable debate around changing dollar thresholds around TINA, CAS, and even the executive comp ceiling from a few years back.  There is now a proposed rule before the FAR Council is seeking to eliminate this confusion.  This rule will also reduce the administrative workload in processing changing dollar thresholds throughout the FAR.