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dmuir

Compliance with Law vs FAR

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Certain provisions of the National Defense Authorization Act from previous years (2012, 2013 & 2014) relating to how the Limitations of Subcontracting clause is calculated have not yet been incorporated into the FAR.

Does a Contracting Officer have any discretion to go by what is in the Law before it is formally incorporated in the FAR?

Is there any responsibility/liability on the part of the contractor to be following the law before it is incorporated in the FAR?

In this particular case, we would like to use the law's basis for calculations, but I'm not sure where to find justification for the CO to accept it.

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By the text of the Act, do those provisions become effective immediately upon enactment, or only upon issuance of implementing regulations?

For example, if the provisions in question have text something as below, the contracting officer will wait for the implementing regulations -- even if the designated time period is long past.

Not later than 30 days after the date of the enactment of this Act, the Department of Defense Supplement to the Federal Acquisition Regulation shall be revised as follows:

or

No later than 18 months after the date of the enactment of this Act, the Administrator of the Small Business Administration shall promulgate any regulations necessary, and the Federal Acquisition Regulation shall be revised, to implement this section and the amendments made by this section.

If the Congress is dismayed by the failure of the departments to issue the implementing regulations, well, this is a matter between the Legislative and Executive branches.

What do your provisions say?

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Is there any responsibility/liability on the part of the contractor to be following the law before it is incorporated in the FAR?

Generally, contractor's are responsible for meeting contract terms and conditions, including applicable provisions of law, not the FAR (see FAR 1.101). If the contract does not incorporate a legal or FAR requirement, generally, it would not be binding on the contractor. With that being said, to find the answer to your question, you'll have to identify what your contract says?

I say generally because some contracts may include a clause that authorizes the revision, addition, or deletion of terms and conditions; inevitably the Christian Doctrine will be thought of; and there is caselaw on laws changing contract requirements (see United States v. Winstar Corp., 518 U.S. 839 (1996)).

If the CO wants to include FAR changes he/she can do so (see FAR 1.108[d][3]), but I believe it would be through a supplemental agreement in order to avoid a breach of contract. If the CO wants to include any other changes unilaterally I think he/she would need a clause to do so.

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Does a Contracting Officer have any discretion to go by what is in the Law before it is formally incorporated in the FAR?

No. However, the contracting officer may request a FAR deviation from the agency head.

Is there any responsibility/liability on the part of the contractor to be following the law before it is incorporated in the FAR?

Only if there's a clause requiring the contractor to do so. Right now, the FAR contains no such clause.

In this particular case, we would like to use the law's basis for calculations, but I'm not sure where to find justification for the CO to accept it.

Well, if the CO deviated from the FAR to apply the limitation on subcontracting as stated in the law, it would likely increase small business participation, right? That's a good reason.

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I wrote about this problem in the August 2014 issue of The Nash & Cibinic Report, "Limitations on Subcontracting: Are They Being Enforced? Will They Ever Be?", 28 N&CR ¶ 45.The statute governing limitations on subcontracting, 15 USC § 631 et seq., must be implemented by the Small Business Administration in Title 13 of the CFR before it can be further implemented by the FAR councils. The SBA is always very slow in issuing regulations to implement statutes.

You must comply with the current regulations. You have no authority to implement the statute on your own initiative.

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Thank you! I will look for those sections of the relevant NDAA's. It seems that the current CO has decided not to ask for a waiver from the FAR council and stands by the FAR Clause as currently written. But your comments have been helpful to present the idea that it would assist small businesses to seek a waiver in this case.

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Note, if you were interested, that you wouldn't seek a FAR waiver from the FAR council and would request a FAR deviation from your agency head (see FAR 1.403 or 1.404).

The difference may or may not be more palatable to your office or situation.

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dmuir,

You may also want to discuss the issue with the agency small business specialist. They may be able to help you persuade the CO. Keep in mind, though, that it's up to the CO whether or not they want to pursue a deviation

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Just a reminder that the similarly situated subcontractor concept has applied to HUBZone and SDVOSB set asides for several years. Also, if small businesses form a JV for large procurements that are set aside, the JV is subject to the 50% rule instead of the individual members of the JV. Interestingly, the small businesses that form the JV do not have to be from the same category.

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I am not sure that the change in the statute(s) for the limitation of subcontracting is so dramatic that it doesn’t fall within the scope of the current regulations. Maybe the statute changes do not impose significantly new contractual standards on offerors or contractors that are at such variance with existing regulation to cause a need for a deviation to impose. There may be room for interpretation, unless, the test is absolute (any variance) rather than (minor variation).

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Vern, would that reasoning also apply to the new laws concerning small business Joint Venture teams and Prime/Subcontractor teams that came from the NDAA 2016 (the one requiring the consideration of capabilities and past performance of individual members of JVs as the JV's and subcontractors as the prime's) before implementing regulations?

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Whynot:

In the thread to which you provided a link, the statute in question extended a program. I think in a case like that an agency can proceed under the statute without waiting for the change to be recognized in FAR. But in the case of the new standards for limitations on subcontracting, and whenever a law must be implemented through the use of a contract clause, there are rules that restrict the writing and use of contract clauses. So agencies must await action by the regulatory bodies, which in this case are the SBA and the FAR councils.

Lean_of_Peak:

I don't understand your Posts ## 12 and 13. Does the response I gave above to Whynot help you?

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I am not sure that the change in the statute(s) for the limitation of subcontracting is so dramatic that it doesn’t fall within the scope of the current regulations. Maybe the statute changes do not impose significantly new contractual standards on offerors or contractors that are at such variance with existing regulation to cause a need for a deviation to impose. There may be room for interpretation, unless, the test is absolute (any variance) rather than (minor variation).

Whynot,

Instead of speculating, why not put together an argument and post it? I'd like to think I'm open-minded.

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Ok, but I need help. Where can I find the rules that control the implementation of revised standards to existing clauses as enacted by law for use in new procurements after the law is enacted? I am not challenging the implementation of new standards to clauses already in use under an existing contract, but revised standards to existing clauses be used in new procurements after the law is enacted. Help me find those rules.

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Whynot:

In the thread to which you provided a link, the statute in question extended a program. I think in a case like that an agency can proceed under the statute without waiting for the change to be recognized in FAR. But in the case of the new standards for limitations on subcontracting, and whenever a law must be implemented through the use of a contract clause, there are rules that restrict the writing and use of contract clauses. So agencies must await action by the regulatory bodies, which in this case are the SBA and the FAR councils.

Lean_of_Peak:

I don't understand your Posts ## 12 and 13. Does the response I gave above to Whynot help you?

That does help a little in regard to contract clauses. Not sure the new NDAA 2016 issues I spoke of would spark new clauses. They may influence provisions though. I was wondering if an agency has to comply for new solicitations since its enactment. I thought we did but your comment in #5 gave me pause.

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LOP, notice that the various clauses that require compliance with the 50% rule are also solicitation provisions. If you were to design your own solicitation provisions to implement what is in the NDAA, you would create an internal inconsistency in the solicitation between the current FAR provisions/clauses and what you have designed.

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Ok, but I need help. Where can I find the rules that control the implementation of revised standards to existing clauses as enacted by law for use in new procurements after the law is enacted? I am not challenging the implementation of new standards to clauses already in use under an existing contract, but revised standards to existing clauses be used in new procurements after the law is enacted. Help me find those rules.

I don't know of any such rules. Let us know if you're able to find anything.

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Whynot:

There are no such rules. You have to wait for SBA to promulgate regulations to implement the statute and then for the FAR to promulgate regulations to implement the SBA's regulations.

Relax, dammit. Where have you been? Don't you know how things work? This is normal. It took SBA years to implement the women-owned business set-aside program after Congress authorized it. Read the article I cited in Post #5. If you don't like the process, write to your congressional representatives.

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I've had similar questions.

Assuming a FAR change is pending, should offices hold to FAR 19.000, which says Part 19 "...applies only in the United States or its outlying areas." or should offices implement current SBA regulations as revised?

Example - 13 CFR 125.2[a] was changed to..."apply to all types of Federal Government contracts...regardless of the place of performance...".

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You should follow the FAR and your agency's supplement until authority says to do otherwise. DOD and SBA are in disagreement about that rule. The DOD's position is long-standing and I think goes back to the 1950s.

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I've had similar questions.

Assuming a FAR change is pending, should offices hold to FAR 19.000, which says Part 19 "...applies only in the United States or its outlying areas." or should offices implement current SBA regulations as revised?

Example - 13 CFR 125.2[a] was changed to..."apply to all types of Federal Government contracts...regardless of the place of performance...".

A FAR change is not pending. I wrote about this issue in my blog. Latvian Connection is protesting (to the GAO) overseas solicitations between $3,500 and $150,000 that are not reserved for small business on what seems like a daily basis. They've protested solicitations issued by the Army, Navy, Air Force, DLA, State. So far, these agencies have either reissued the solicitations as set-asides or cancelled them. Nobody has been fighting back, presumably because they don't think they can win.

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Perhaps I should have used 'impending', 'hoping', or 'absent'. I don't see how this can go unaddressed without a change to the FAR or SBA regulation. My intention was not to imply that a proposed change was pending under the FAR rulemaking process.

Thanks for the reminder about the discussion at your blog.

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