On July 2, 2015, the Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”) published several final rules that will result in amendments to the Federal Acquisition Regulations (“FAR”). Following are some of those final rules.
Adjustment of Acquisition-Related Dollar Thresholds (Final Rule at 80 Fed. Reg. 38293 (July 2, 2015); Proposed Rule at 79 Fed. Reg. 70141 (Nov. 25, 2014))
As required by statute, the FAR will be amended to reflect an adjustment for inflation, using the Consumer Price Index for all urban consumers. Among the most common thresholds being updated are the following:
- Micro-purchase threshold will be raised from $3,000 to $3,500 (FAR § 2.101).
- The Commercial Items Test Program ceiling will increase from $6.5 million to $7 million (FAR § 13.500).
- Cost or pricing data threshold will increase from $700,000 to $750,000 (FAR § 15.403-4).
- Prime contractor subcontracting plan is being raised from $650,000 to $700,00, although the construction threshold of $1.5 million will not change (FAR § 19.702).
- Reporting first-tier subcontract information, including executive compensation, will increase from $25,000 to $30,000 (FAR Subpart 4.14 and § 52.2047-10).
No change is being made to the Simplified Acquisition Threshold, which will remain $150,000. Inflation adjustments are not made to the Davis-Bacon Act wages, Service Contract Labor Standards rates or trade agreements thresholds.
Use of Simplified Acquisition Procedures for Acquisition of Certain Commercial Items (80 Fed. Reg. 38311, (July 2, 2015))
Effective Aug. 3, 2015, the FAR will now permit agencies to issue solicitations for certain commercial items that exceed the simplified acquisition threshold using the simplified acquisition procedures found in FAR Part 13. In order to qualify, the acquisition may not exceed $6.5 million (or $12 million in certain cases generally relating to acquisitions in support of certain contingency operations or to defend against or recover nuclear, biological, chemical or radiological attack), and the contracting officer must reasonably expect, based on market research, that the offer will include only commercial items. This amendment will apply to both acquisitions of commercial supplies and commercial services. See FAR § 13.500.
Additional Requirements for J&A’s for Contracts Exceeding One Year (Final Rule at 80 Fed. Reg. 38308 (July 2, 2015); Proposed Rule at 79 Fed. Reg. 78378 (Dec. 30, 2014))
The FAR will now require that in instances where a noncompetitive award is justified on the basis of unusual and compelling urgency, and duration of the award exceeds one year, including all options, the head of the agency must document the determination that “exceptional circumstances apply.” In addition, subsequent modifications that will extend performance beyond one year will require a separate determination. This applies to all acquisitions valued greater than the simplified acquisition threshold. See FAR § 6.302-2.
Inverted Domestic Corporations (Final Rule at 80 Fed. Reg. 38306 (July 2, 2015) and Proposed Rule at 79 Fed. Reg. 74558 (Dec. 15, 2014); Final Rule at 80 Fed. Reg. 38309 (July 2, 2015) and Interim Rule at 79 Fed. Reg. 74554 (Dec. 15, 2014))
Two final rules relate to the implementation of the statutory prohibition on using appropriated funds for contracts with any foreign incorporated entity that is an inverted domestic corporation or any subsidiary of such entity. As a result of the final rules, the FAR will include the language prohibiting agencies from using appropriated funds for contracts with any inverted domestic corporation and will include language in the FAR Representations and Certifications clause requiring offerors to represent whether the entity is or is not an inverted domestic corporation or a subsidiary of one. See FAR Part 9 and §§ 52.209-2(c); 52.212-3, 52.212-5, and 52.209-10.