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On August 30, DOD issued FAR class deviation 2013-O0017, Contractor Demobilization. The memo is posted on the Wifcon homepage.

Can anyone tell me what the nature of the deviation is? From what FAR rule are they deviating?

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Compliance with FAR 1.401(f )?

FAR 1.401(f )

“Deviation” means any one or combination of the following:

(f ) The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated into agency acquisition regulations in accordance with 1.301(a).

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Guest Jason Lent

It is a "shall include" clause describing the requirements for submitting a demobilization plan for non-commodities contracts in Afghanistan. Based on the numbering, I can't really figure out what it "deviates" from.

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FAR 1.401(f) covers issuance of agency-specific rules that are (a) not in FAR and ( b ) are not to be incorporated into the agency's FAR supplement. Apparently, such issuance would deviate from 1.301(a). But according to the cover letter transmitting and requiring the inclusion of the new clause, it will be incorporated into the DFARS. So FAR 1.401(f) does not apply.

What's the deviation? Deviation from what?

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I have looked (not to say how well) but havent found any discussion or background concerning this deviation. Has anyone asked the point of contact in the memorandum?

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FAR 1.401(f) covers issuance of agency-specific rules that are (a) not in FAR and ( b ) are not to be incorporated into the agency's FAR supplement. Apparently, such issuance would deviate from 1.301(a). But according to the cover letter transmitting and requiring the inclusion of the new clause, it will be incorporated into the DFARS. So FAR 1.401(f) does not apply.

What's the deviation? Deviation from what?

FAR 1.401(f) doesn't say anything about rules that are not "to be" incorporated into the agency's FAR supplement. It uses present tense:

"The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated into agency acquisition regulations in accordance with 1.301(a)."

Whether the deviation was issued properly (i.e. without rulemaking) is a different issue. I don't see that as having any effect on whether the issuance itself is a deviation. When the policy gets incorporated into the DFARS, it will no longer be a deviation under FAR 1.401(f).

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If you are correct, is FAR Subpart 1.4 authorizing agency heads to disregard 41 U.S.C. 1707, "Publication of proposed regulations," by approving a deviation from FAR as defined by 1.401(f)?

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Vern,

No. FAR subpart 1.4 does not authorize agency heads to disregard 41 U.S.C. 1707. If the deviation has "a significant effect beyond the internal operating procedures of the agency" or has "a significant cost or administrative impact on contractors or offerors", then 41 U.S.C. 1707 would require the deviation to go through rulemaking. An example of such a deviation would be DFARS 225.105( b ), which deviates from FAR 25.105( b ):

"Use an evaluation factor of 50 percent instead of the factors specified in FAR 25.105( b )."

Retread,

Yes, DFARS PGI meets the definition of "deviation" at FAR 1.401(f).

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Don:

According to 41 U.S.C. 1707, the only rule that must be published in an agency supp and is subject to rulemaking is one that:

(i) has a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure, or form; or (ii) has a significant cost or administrative impact on contractors or offerors.

FAR 1.301( b ) mirrors the statute. If a rule is subject to rulemaking, then publishing it as a FAR deviation without first going through rulemaking is a violation of statute. If an agency goes through rulemaking, then it does not need a FAR deviation.

The PGI are "internal agency guidance," not "agency acquisition regulations." See FAR 1.101 (last sentence) and 1.301(a)(2). They are not part of the FAR System and thus are not FAR deviations. They are not subject to the rulemaking process.

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Seems to me that you folks have it correct. DPAP is deviating from the need to have public input into the rulemaking process before issuing new contract clause requirements that impact the rights of the contracting parties. I also noticed the letter of transmission was curiously ambiguous regarding whether the new requirements are to be incorporated into existing contracts (e.g., KBR's LOGCAP III contract) or whether they are to be applied only prospectively to new awards.

H2H

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If an agency goes through rulemaking, then it does not need a FAR deviation.

Vern,

I don't understand that comment. Some deviations require rulemaking, some don't. Agency supplements contain deviations that have been through rulemaking. For example, DFARS 201.301( a )(1) states:

DoD implementation and supplementation of the FAR is issued in the Defense Federal Acquisition Regulation Supplement (DFARS) under authorization and subject to the authority, direction, and control of the Secretary of Defense. The DFARS contains—

(i) Requirements of law;

(ii) DoD-wide policies;

(iii) Delegations of FAR authorities;

(iv) Deviations from FAR requirements; and

(v) Policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors.

[bold added].

I provided an example of such a deviation in my prior post.

You are correct that the DFARS PGI is not an agency acquisition regulation. That is why the DFARS PGI meets the definition of "deviation" as described at FAR 1.401( f ):

The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated into agency acquisition regulations in accordance with 1.301(a).

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You are correct that the DFARS PGI is not an agency acquisition regulation. That is why the DFARS PGI meets the definition of "deviation" as described at FAR 1.401( f ).

Don:

If I understand you, you are saying (or suggesting) that every DOD policy or procedure issuance that "governs the contracting process or otherwise controls contracting relationships" and that is not incorporated into the DFARS is a FAR deviation. Do I understand you correctly?

If so, I say that cannot be true. If it is true, then DOD has committed countless unannounced deviations. For instance, the DOD Source Selection Procedures, issued on March 4, 2011 by the Director of Defense Procurement and never incorporated into the DFARS, was not identified as a deviation. The DCAA Contract Audit Manual has never, to the best of my knowledge, been considered a FAR deviation. The "Better Buying Power" memos have not been treated as deviations. What am I missing? Were they announced as deviations and I missed it? I say that the only thing that must be published in the DFARS are the things described in 41 U.S.C. 1707 and FAR 1.301( b ). The issuance of other policies, procedures, etc. that are not incorporated into the DFARS are not FAR deviations. The PGI are not FAR deviations.

I find FAR 1.401(f) to be ambiguous. For instance, it talks about issuances that are not incorporated in agency supplements "in accordance with FAR 1.301(a)." Please note that FAR 1.301(a) does not require that anything be incorporated in an agency supplement. The words "shall" and "must" do not appear in that paragraph. FAR 1.301(a) permits the issuance of FAR supplements. FAR 1.301( b ) and 1.501 are the rules that require inclusion and publication of things in an agency supplement. Neither are mentioned in FAR 1.301(a).

If DOD is interpreting FAR 1.401(f) to say that a class deviation that it has put into effect and that it plans to include in DFARS, but has not yet done so, is a deviation, then more power to it. If that is what they think, I could not care less that they want to do the deviation paperwork. What I do think and care about is that DOD believes it can get around 41 U.S.C. 1707, FAR 1.301( b ), and FAR 1.501 by calling a rule a "class deviation" and putting it into effect without first publishing in the Federal Register and seeking public comment, or by doing so when it can get around to it, in six months or a year or more, if ever. If that's what they think, then I think they are wrong. I think that the DOD class deviation of August 30 concerning contractor demobilization was put into effect in violation of statute.

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Don:

Here’s an interesting bit of regulatory history. In the first edition of the FAR, 1.401(f) read as it does today:

The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated into agency acquisition regulations in accordance with 1.301(a).

In the same edition of the FAR, 1.301(a) read as follows:

(a) Subject to the authorities in ( c ) below and other statutory authority and, except as stated in 1.301( b ) below, an agency head may issue or authorize the issuance of agency acquisition regulations that (1) implement or supplement the FAR and (2) incorporate, together with the FAR, agency-wide policies, procedures, contract clauses, and solicitation provisions that govern the contracting process or otherwise control the relationship between the agency, including any of its suborganizations, and contractors or prospective contractors. Agency-wide acquisition regulations shall be published in the Federal Register as required by law. [Emphasis added.]

That last sentence no longer appears in FAR 1.301(a). It was deleted in 1985 by FAC 84-6, 50 Fed. Reg. 2268, 2269 (Jan. 15, 1985). The "law" in 1984 was 41 U.S.C. 418b, which is now 41 U.S.C. 1707.

In 1984 FAR 1.301 ( b ) said:

( b ) Subject to the authorities in ( c ) below and other statutory authority, an agency head may issue or authorize the issuance of internal agency guidance at any organizational level (e.g., designations and delegations of authority, assignments of responsibilities, work-flow procedures, and internal reporting requirements). Such agency internal guidance need not be published in the Federal Register.

The same 1985 FAC that changed FAR 1.301(a) also change ( b ), so that the two then read as follows:

(a)(1) Subject to the authorities in ( c ) below and other statutory authority, an agency head may issue or authorize the issuance of agency acquisition regulations that implement or supplement the FAR and incorporate, together with the FAR, agency policies, procedures, contract clauses, solicitation provisions, and forms that govern the contracting process or otherwise control the relationship between the agency, including any of its suborganizations, and contractors or prospective contractors.

(a)(2) Subject to the authorities in ( c ) below and other statutory authority, an agency head may issue or authorize the issuance of internal agency guidance at any organizational level (e.g., designations and delegations of authority, assignments of responsibilities, work-flow procedures, and internal reporting requirements).

( b ) Agency heads shall establish procedures to ensure that issuances (including revisions) under 1.301(a)(1) shall be publicized for public comment in the Federal Register in conformance with the procedures in Subpart 1.5 and as required by section 22 of the Office of Federal Procurement Policy Act, as amended, and other applicable statutes when they have a significant effect beyond the internal operating procedures of the agency or have a significant cost or administrative impact on contractors or offerors. However, publication is not required for issuances that merely implement or supplement higher level issuances that have previously undergone the public comment process, unless such implementation or supplementation results in an additional significant cost or administrative impact on contractors or offerors or effect beyond the internal operating procedures of the issuing organization. Issuances under 1.301(a)(2) need not be publicized for public comment. [Emphasis added.]

Today, the first sentence of 1.301( b ) says:

Agency heads shall establish procedures to ensure that agency acquisition regulations are published for comment in the Federal Register in conformance with the procedures in subpart 1.5 and as required by section 22 of the Office of Federal Procurement Policy Act, as amended (41 U.S.C. 418b) [i.e. 41 U.S.C. 1707], and other applicable statutes, when they have a significant effect beyond the internal operating procedures of the agency or have a significant cost or administrative impact on contractors or offerors... Issuances under 1.301(a)(2) need not be publicized for public comment. [Emphasis added.]

FAR 1.301( b ) is an expansion upon the deleted last sentence in the original 1.301(a). FAR 1.401(f) should have been changed to refer to 1.301( b ), but was not. If we read today’s 1.401(f) to say “in accordance with 1.301( b )," then we can see that the only policies and procedures that must be published and included in agency supps are those that “have a significant effect beyond the internal operating procedures of the agency or have a significant cost or administrative impact on contractors or offerors.” I believe that is the correct reading of 1.401(f). Based on that reading, the PGI, which DOD says do not have a significant impact, and other such internal guidance, are not FAR deviations.

Thus, a deviation under 1.401(f) is failure to incorporate a policy or procedure into an agency supp when such incorporation is required by law, i.e., 41 U.S.C. 1707, and by FAR 1.301( b ). Clearly, however, deviations that must be published in the agency supplements in accordance with 1.301( b ) are subject to the notice and public comment requirements of 41 U.S.C. 1707, and cannot take effect until published in the Federal Register as proposed or interim rules. Thus, DOD’s August 30 class deviation is unlawful.

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Vern,

What you wrote about the outdated cross-reference to FAR 1.301( a ) is reasonable, but I still think you are reading something into FAR 1.401(f) that isn't there. Your interpretation essentially adds the bracketed words below:

The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated into agency acquisition regulations in accordance with 1.301(a)[, but should be].

I see no reason to interpret FAR 1.401(f) other than literally. The fact that DPAP does not commonly refer to such issuances as deviations is not persuasive. Common usage and understanding of words and terms often differs from FAR definitions. A COR is commonly understood to NOT be a "contracting officer", but the FAR definition includes CORs. A request for equitable adjustment is commonly understood to be different than a "claim", but the FAR definition includes REAs. I see the definition of "deviation" at FAR 1.401(f) as another one of these instances. Nonetheless, I will see if I can get a clarification from the DAR Council.

As far as your assertion of noncompliance with 41 U.S.C. 1707, I have no argument with that. However, this is not unique to the most recent class deviation. Almost all class deviations conclude with something to the effect that "this deviation remains in effect until incorporated into the FAR [or DFARS] or is otherwise rescinded." Neither is this practice unique to the issuance of class deviations. DPAP has a history of issuing policy memos that mandate compliance prior to the rulemaking process. Remember the "Only One Offer" policy that essentially eliminated the exception to the requirement for certified cost or pricing data if only one offer was received and there was adequate price competition? That was issued as "amplifying guidance." DPAP even has a procedure for coding policy memos that contain policy to be incorporated into the regulations. The practice of implementing policy by memo and worrying about rulemaking later is standard and has been for as long as I can remember.

Noncompliance with 41 U.S.C. 1707 is pervasive. Just turn to Section H of the nearest Government solicitation. You will undoubtedly find homegrown contract clauses that meet the criteria for rulemaking in the statute, but never actually went through the rulemaking process. Several Navy activities recently issued "Tripwires" policies, which impose all kinds reporting burdens on contractors, without complying with 41 U.S.C. 1707 (or the Paperwork Reduction Act, for that matter). NDIA wrote a letter to Frank Kendall about it. It's a problem.

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Hi Don:

I'll conclude with this: A standard rule of regulatory interpretation is that you must read a regulation as a whole and in context. I say that my interpretation of FAR 1.401(f), which considers it in conjunction with 41 U.S.C. 1707, FAR 1.3, and FAR 1.5, is more in line with that rule than yours. This is a case in which a literal interpretation does not work. I'll let it go at that.

You won't get anything useful from the DAR Council. I have seen correspondence about the contractor demobilization class deviation that indicates that they are clueless and incoherent in the matter.

I agree with all your other comments. I knew about the NDIA letter and have written about agency violations of publication and public comment requirements in The Nash & Cibinic Report. I will write about it again for the October issue. I don't expect it to do any good, but I get paid for it, so why not.

Members of our "profession" have divided minds about regulations, especially the FAR. We recognize it as law that we must follow, but we don't like it, don't keep up with it, and regularly violate it. Did you see the DODIG report about Army noncompliance with rules about cost-reimbursement contracts? http://www.dodig.mil/pubs/report_summary.cfm?id=5269.

Contracting personnel issued contracts that did not follow the interim rule because they were unaware of the rule.

Violations catch up with us in time and result in more regulation in the long run. Many of the rules we like least are the products of widespread and repeated failures to comply with regulations already in place. Even people who ought to know better have said to me "who cares what the FAR says." At present, the FAR is in a bad shape -- poorly written and sometimes incoherent. Editorial mistakes, like continuing to cite FAR 1.301(a) in 1.401(f), poor definitions, and badly written sentences (poor diction, syntax, and punctuation), are rife throughout the FAR and seem to me to be worse than in other titles of the CFR. (A friend of mine on the DAR Council has said to me on more than one occasion that nobody on that council can write a decent English sentence.)

You know what the worst thing is about the contractor demobilization class deviation? The clause is very badly written. It is hard to believe that contracting "professionals" wrote it and that DOD attorneys reviewed it. They ought to be ashamed of their work product.

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Don:

Not "anything."

I think class deviations have to go through rulemaking (publication in the Federal Register and request for public comments before taking effect) if they meet the criteria in 41 U.S.C. 1707(a) and FAR 1.301( b ) or 1.501-2, specifically, the "significant effect" and "significant impact" criteria.

Individual deviations affect only one contract action and thus, in my opinion, do not meet the "significant" criteria. So I do not think they have to go through rulemaking. It's likely that some class deviations will meet the criteria and some will not.

For a discussion of the rulemaking requirement for class deviations, see La Gloria Oil and Gas Co. v. U.S., 56 Fed. Cl. 211 at 220 (2003) (overruled on other grounds). The Federal Circuit has not ruled on class deviations and rulemaking.

Deviation, in and of itself, does not trigger the rulemaking requirement. What triggers rulemaking is the issuance of a policy or procedure that meets the criteria of the statute and FAR ("significant effect" "significant impact"), any policy or procedure, whether it deviates from FAR or not.

A deviation is issuance or use of a policy or procedure that is inconsistent with FAR, i.e. that is not in agreement with, or that is at variance with, the FAR. If FAR is silent about a matter, I do not think that the issuance or use of a rule about that matter is a deviation. However, the issuance of such a rule might trigger rule making. I think that the issuance of a policy or procedure without complying with FAR 1.301( b ) or 1.501-2 is a deviation. The paradox is that an agency head cannot approve such a deviation, because an agency head cannot approve a violation of statute.

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Please note that FAR 1.301(a) does not require that anything be incorporated in an agency supplement.

But DFARS 201.301(a )(1) apparently does – “DoD implementation and supplementation of the FAR is issued in the Defense Federal Acquisition Regulation Supplement (DFARS)…”

Could be the deviation is a deviation from DFARS 201.301.

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An observation: We are fighting a War in Afghanistan (regardless of what the conflict is officially titled). The President has also determined that we are going to withdraw in the near future. There are a lot of contracts in the process or soon to be in the process of completing, closing out or terminating. I'm pretty certain that you'd never find my butt in that country once the Forces have substantially withdrawn. There is a good chance that the DoD has determined that there isn't time to go through the rule making process, if that is otherwise necessary, to implement the policy directives in the "Deviation". I know that USACE, let alone any other agencies, has had its hands full in trying to closeout completed, partially completed, terminated (both TFC and TFD) contracts as it is.

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