On July 14, the FAR Council published an interim rule revising FAR 52.204-24 and FAR 52.204-25 to implement Section 889(a)(1)(B) of the 2019 National Defense Authorization Act (NDAA) prohibiting executive agencies from entering into, renewing, or extending contracts with contractors that use Huawei, ZTE, or other identified telecommunications equipment and services (“covered telecommunications equipment and
Section 889(a)(1)(B) of the FY 2019 NDAA, scheduled to become effective on August 13, 2020, bars the Government from entering into a contract, or extending or renewing a contract, with any entity that uses certain covered telecommunications equipment or services. The prohibition against “use” of covered equipment applies broadly to a contractor’s “use” anywhere within…
In Alutiiq Commercial Enterprise, LLC (Jan. 9, 2020), the Armed Services Board of Contract Appeals held that a contractor is entitled to an equitable adjustment under the Service Contract Act Price Adjustment Clause, FAR 52.222-43, for increased labor costs associated with a new Collective Bargaining Agreement executed after an…
Today, in Acetris Health, LLC v. United States, the Federal Circuit held that a pharmaceutical manufactured in the United States qualified for sale, under the TAA, to the Department of Veterans Affairs even though the active pharmaceutical ingredient (API) came from a non-designated country, India. In reaching this decision, the court questioned, without deciding,…
Contractors looking for updates to the statutory allowable cost limits on employee compensation may be looking in the wrong place. But what was once lost can easily be found, at least for the moment, by simply navigating to a different website.
The Cost Principles and the Compensation Cap
FAR 31.205-6(p)(4) governs the allowable compensation of contractor and subcontractor employees. It promulgates section 702 of the Bipartisan Budget Act of 2013 (“BBA”), which set an initial limit on allowable contractor and subcontractor employee compensation costs at $487,000 per year. “Compensation” is defined broadly to include the total amount of wages, salary, bonuses, deferred compensation, and employer contributions to defined contribution pension plans. According to the BBA, the cap is to be adjusted annually based on the Employment Cost Index calculated by the Bureau of Labor Statistics. The BBA repealed the prior existing formula for determining the relevant compensation cap under 41 U.S.C. § 1127 and applies to contracts awarded on or after June 24, 2014. It also provided agencies with the authority to establish “one or more narrowly targeted exceptions” for certain specialists.
On March 22, 2018, the Department of Defense (DoD), Office of the Under Secretary of Defense issued a Class Deviation letter to the heads of all Department of Defense agencies requiring, effective immediately, that every DoD agency ensure that its contracting officers implement the recommendations for enhanced post-award debriefings set forth in Section 818 of the 2018 National Defense Authorization Act (NDAA).
The direction makes clear that DoD agencies are to provide unsuccessful offerors who are given a debriefing in accordance with FAR 15.506(d) the opportunity to “submit additional questions related to the debriefing within two business days after receiving the debriefing.” The agency will then be required to “respond in writing to the additional questions submitted by an unsuccessful offeror within five business days after receipt of the questions” and must hold the debriefing open until it “delivers its written responses to the unsuccessful offeror.”
On March 1, the President announced his intention to impose tariffs of 25% on all imported steel and 10% on all imported aluminum. A more formal announcement of the tariffs is expected in the coming week and, while many might have been surprised by the timing of the President’s initial statement, it came after a 10-month process of investigation by the U.S. Department of Commerce, culminating with its January 2018 recommendation for tariffs or quotas to protect U.S. producers. The Commerce Department reports are available here and here.
When finalized, these tariffs could have significant impacts on contractors across a range of industries, increasing costs of performance and restricting available supply. Domestic prices are expected to rise, and foreign suppliers may turn their focus to other markets. Supply disruptions are possible, particularly in the short term. To protect themselves, federal contractors who manufacture or use products with steel or aluminum should examine existing contracts, re-evaluate bids being developed, and consider revisions to standard contract terms.
Everyone can agree that professional employees should be compensated fairly and properly—both for the benefit of the employees and to ensure successful contract performance. However, a recent GAO decision could provide a loophole for agencies to forego the very evaluation designed to ensure that fair and proper compensation.
Contractors competing for work involving meaningful numbers of professional employees—and, in particular, incumbents seeking to prevent newcomers from undercutting their established professional compensation—should take note.
Crowell & Moring is hosting Government Contracts 101 in our Washington, D.C., office on Thursday, October 26, 2017. This all-day event will last from 8:30 a.m. to 6:30 p.m. at 1001 Pennsylvania Ave, N.W., and provide an overview of the full scope of issues that government contractors face on a daily basis. We will cover …
Suspension and debarment practice in 2017 is very different than it was just five or 10 years ago, and it continues to evolve. Historically active programs, such as the Department of the Air Force, show few actions initiated in the last three months, while the Environmental Protection Agency has been heavily involved in excluding contractors and awardees. Awareness of the current activity level and preferences of relevant agency suspension and debarment offices is one key to successfully managing your relationship with key federal agencies. But successfully navigating the current suspension/debarment landscape is often more complicated than a single agency analysis.
Continue Reading Not Your Grandfather’s Suspension & Debarment: How Contractors Can Prepare For and Defend Against Today’s Exclusions