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H. R. 4754: Change Order Transparency for Federal Contractors Act


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I'm going to start posting selected non-NDAA contracting legislation so that you may comment on it.  This is the first.  There is a press release to go with it here.

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H. R. 4754

To amend the Small Business Act to provide prospective construction contractors with information about an agency’s policies on the administration of change orders to allow such contractors to make informed business decisions regarding the pricing of bids or proposals, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES
January 10, 2018

Mr. Bacon (for himself, Mr. Knight, Mr. Lawson of Florida, and Mrs. Murphy of Florida) introduced the following bill; which was referred to the Committee on Small Business


A BILL

To amend the Small Business Act to provide prospective construction contractors with information about an agency’s policies on the administration of change orders to allow such contractors to make informed business decisions regarding the pricing of bids or proposals, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the “Change Order Transparency for Federal Contractors Act”.

SEC. 2. CONSTRUCTION CONTRACT ADMINISTRATION.

Section 15 of the Small Business Act (15 U.S.C. 644) is amended by adding at the end the following new subsection:

“(w) Solicitation Notice Regarding Administration Of Change Orders For Construction.—

“(1) IN GENERAL.—With respect to any solicitation for the award of a contract for construction anticipated to be awarded to a small business concern, the agency administering such contract shall provide a notice along with the solicitation to prospective bidders and offerors that includes—

“(A) information about the agency’s policies or practices in complying with the requirements of the Federal Acquisition Regulation relating to the timely definitization of requests for an equitable adjustment; and

“(B) information about the agency’s past performance in definitizing requests for equitable adjustments in accordance with paragraph (2).

“(2) REQUIREMENTS FOR AGENCIES.—An agency shall provide the past performance information described under paragraph (1)(B) as follows:

“(A) For the 3-year period preceding the issuance of the notice, to the extent such information is available.

“(B) With respect to an agency that, on the date of the enactment of this subsection, has not compiled the information described under paragraph (1)(B)—

“(i) beginning 1 year after the date of the enactment of this subsection, for the 1-year period preceding the issuance of the notice;

“(ii) beginning 2 years after the date of the enactment of this subsection, for the 2-year period preceding the issuance of the notice; and

“(iii) beginning 3 years after the date of the enactment of this subsection and each year thereafter, for the 3-year period preceding the issuance of the notice.

“(3) FORMAT OF PAST PERFORMANCE INFORMATION.—In the notice required under paragraph (1), the agency shall ensure that the past performance information described under paragraph (1)(B) is set forth separately for each definitization action that was completed during the following periods:

“(A) Not more than 30 days after receipt of a request for an equitable adjustment.

“(B) Not more than 60 days after receipt of a request for an equitable adjustment.

“(C) Not more than 90 days after receipt of a request for an equitable adjustment.

“(D) Not more than 180 days after receipt of a request for an equitable adjustment.

“(E) More than 365 days after receipt of a request for an equitable adjustment.

“(F) After the completion of the performance of the contract through a contract modification addressing all undefinitized requests for an equitable adjustment received during the term of the contract.”.

 

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Guest Vern Edwards

Well, the bill is stupid, of course, and, hopefully, will not pass into law. But I sympathize with the motivation. By and large, government agencies are awful in the way they handle REAs and do not seem to understand the impact that delayed negotiation and settlement has on the contractor.  This is an especially serious problem under construction contracts.

Note that the legislation mentions only REAs and not claims. Claim settlement timelines are governed by the Contract Disputes Act and FAR Subpart 33.2. Nevertheless, some REAs are, in fact, claims. As I have written, there is a lot of confusion about terminology. So the legislation, if passed, could be the source of confusion about what past performance must be reported. And, of course, there is the problem that some contractors contribute to settlement delays by making inadequate REA submissions.

The problem with Congress is that it thinks that it can solve complex problems through what seems to them to be simple legislatively mandated solutions.

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Three of the 4 sponsors are on the Subcommittee on Contracting and Workforce of the House Committee on Small Business.  I assume that over this year, there will be a markup in the subcommittee and the probability that it is reported to the full committee.  If the sponsors can gain support in the full Committee and report it out of Committee, then it may find its way to the NDAA.  A Small Business Committee bill has a better chance of attaching itself to an NDAA, then an individual sponsor's bill.

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Guest Vern Edwards

This is from the press release issued by the sponsors:

 
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January 10, 2018 

Press Release

WASHINGTON, D.C. - Today, Congressman Don Bacon (NE-02) introduced H.R. 4754, the Change Order Transparency for Federal Contractors Act. Original cosponsors include: Rep. Steve Knight (CA-25), Rep. Al Lawson (FL-05), and Rep. Stephanie Murphy (FL-07).

Time is money for all businesses, but even more so for small businesses. Requests for equitable adjustments to a contract, more commonly known as change orders, are abundant on federal construction projects. Contractors and subcontractors currently lack visibility into agencies’ change order processes prior to submitting a bid. This lack of transparency makes it difficult for federal contractors to prepare for the inevitable burden of change orders during the life cycle of the construction project. Federal construction contractors are increasingly frustrated by the slow approval and lack of payment for change orders. While change orders wait to be made definite, contractors and subcontractors must pay their own bills—payroll, material costs, and even taxes—while payments from the federal government are delayed. 

H.R. 4754 provides prospective federal construction contractors and subcontractors with the information needed to plan their operations prior to submitting a bid on a contract. This legislation would require the contracting agency to provide details on their change order procedures and their historical performance data with solicitations.

 Bacon, a Republican from Nebraska, is a retired USAF brigadier general in (I believe) his first term. The HASC is among his committee assignments.

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Guest Vern Edwards
52 minutes ago, here_2_help said:

I'm sympathetic to the proposed "past performance" requirement. Turn-about is fair play, after all.

I hope you're not serious.

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30 minutes ago, Vern Edwards said:

I hope you're not serious.

I am serious!

Let's start to track how long it takes contracting activities to definitize REAs after receipt, when a small business is involved. You can't improve what you can't measure, or so the Six Sigma folks tell me. I fully realize there will be completely valid reasons for not definitizing timely (however that's defined). But let's see what the data tells us.

The data might surface anomalies so that HCAs can take appropriate remedial action.

http://www.asbca.mil/Decisions/2016/60533 HCS, Inc. 9.20.16.pdf

 

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