Proposed T&M and Labor-Hour Provisions Rule

On July 27, 2011 a proposed rule was issued which would enforce changes to multiple FAR sections.  For FAR 52.212-4 (Contract Terms and Conditions – Commercial Items) this would establish T&M Termination for Cause provisions similar to the provisions for non-commercial T&M contracts.  Under the rule contractors can now be paid for work prior to Termination for Cause, including work that is not delivered or accepted by the Government, less profit. 

For FAR 52.232-7, Payments Under Time and Materials and Labor-Hour Contracts, it would authorize bi-weekly invoicing for T&M contracts versus monthly.  It would also require final completion invoice for T&M within 120 after settlement of indirect cost rates versus one year. 

For further detail see Federal Register Vol. 76, No. 144

Uniform Suspension and Debarment Requirement

This final rule, effective July 5, 2011, requires that suspension and debarment requirements flow down to all subcontracts.  An exception may be granted on contracts for commercially available off-the-shelf items and in the case of commercial items, first-tier subcontracts.  This rule will help ensure that subcontractors are checking the Excluded Parties Listing System for suspended or debarred second, third, etc. tier subcontractors and makes prime contractors and all tiers of subcontractors responsible for subcontractor oversight. 

For further detail see Federal Register Vol. 76, No. 128

TINA Interest Calculation

The final ruling on TINA Interest Calculation, effective July 05, 2011, requires that compound interest be used on Government overpayments which result from defective cost or pricing data.  This is in accordance with 26 U.S.C. 6622.  Previously simple interest was used for the calculation. 

For further detail see Federal Register Vol. 76, No. 128

Contract Closeout

A final rule amending the FAR procedures for closing out contract files became effective on June 30, 2011.  This rule authorizes quick closeouts when unsettled direct and indirect costs of the contract do not exceed the lesser of $1 million or 10% of the total contract, task order, or deliver order amount.  The rule also defines an “adequate” incurred cost submission as 15 mandatory schedules.  It also makes the prime contractor responsible for settling subcontractor amounts and rates included in the completion invoice or voucher.  This rule also makes fee withholdings mandatory on fixed fee contracts. 

For further detail see Federal Register Vol. 76, No. 104

Only One Offer

A DOD proposed rule to amend the DFARS makes the statement that adequate price competition does not exist if only one offer is received.  The rule states that the Contracting Officer must specify in a competitive solicitation what cost or pricing data must be required if only one offer is received.   It also says that the Contracting Officer must re-solicit for a period of 30 days from the receipt of proposals.  There are exceptions which relate to acquisitions for defense, humanitarianism, or if it is below the acquisition threshold.  The comment period will be open on this rule until October 7, 2011. 

For further detail see Federal Register Vol. 76, No. 187

Increase the Use of Fixed Price Incentive (Firm Target) Contracts

On September 16, 2011, DOD issued a final ruling to amend the DFARS to increase the use of fixed price (firm target) incentive contracts.  The planned result is to obtain greater efficiency and productivity in defense spending.  It requires that Contracting Officers pay particular attention to share line and ceiling prices for fixed-price incentive (firm target) contracts, with 120 percent ceiling and a 50/50 share ratio as the default arrangement. 

For further detail see Federal Register Vol. 76, No. 180

CAS Exemption Removed

The Office of Federal Procurement Policy (OFPP) and Cost Accounting Standards (CAS) Board published a final rule which eliminates the exemption for contracts executed and performed entirely outside the United States, its territories and possessions.  This rule is effective October 11, 2011. 

For further detail see Federal Register Vol. 76, No. 154