FEDERAL ACQUISITION REGULATION (FAR)

The Federal Acquisition Regulation (FAR) was established to codify uniform policies for acquisition of supplies and services by executive agencies. It is issued and maintained jointly under the statutory authorities granted to the Secretary of Defense, Administrator of General Services, and the Administrator, National Aeronautics and Space Administration, known as the FAR Council. Overall statutory authority is found at chapters 11 and 13 of title 41 of the United States Code.

Regulatory and Deregulatory Activities

Executive Order 13777, "Enforcing the Regulatory Reform Agenda" (February 24, 2017), required the FAR Council to oversee the implementation of regulatory reform initiatives and policies. The reform initiatives and policies include Executive Order 13771, "Reducing Regulation and Controlling Regulatory Costs" (January 30, 2017), section 6 of Executive Order 13563, "Improving Regulation and Regulatory Review" (January 18, 2011), and Executive Order 12866, "Regulatory Planning and Review" (September 30, 1993). In response to Executive Order 13777, the FAR Council reviewed and evaluated existing policies and regulations and identified regulations that could be repealed, replaced, or modified to reduce the regulatory burden. In relation to Executive Order 13771, the FAR Council conducts analysis of the regulatory cost or savings impact for agenda items.

During Fiscal Year 2018, the FAR Council completed two (2) deregulatory actions.

The FAR Council issued a final rule (case 2015-039) on May 1, 2018 to increase the dollar threshold for the audit of prime contract settlement proposals and subcontract settlements submitted in the event of contract termination, from $100,000 to $750,000. The increased threshold reduces the number of terminated contracts that require settlement audits, and enables contracting officers to more quickly deobligate the excess funds from terminated contracts under the threshold. Contractors will save costs associated with the preparation for termination settlement audits and will have improved cash flow from faster final settlement under the threshold.

The FAR Council issued a final rule (case 2017-007) on May 1, 2018 to raise the threshold for task- and delivery-order protests for DoD, NASA, and the Coast Guard from $10 million to $25 million, except for a protest on the grounds that the order increases the scope, period, or maximum value of the contract. The increased threshold will result in savings for the agencies involved in processing the protests and will benefit contractors who win awards and will no longer need to expend resources defending challenges to those awards.

The Fiscal Year 2019 Unified Agenda consists of forty-eight (48) agenda items of which the following seven (7) have been identified as deregulatory.

FAR Case 2016-011, Revision of Limitations on Subcontracting

FAR Case 2017-009, Special Emergency Procurement Authority

FAR Case 2017-010, Evaluation Factors for Multiple-Award Contracts

FAR Case 2018-004, Increased Micro-Purchase and Simplified Acquisition Thresholds

FAR Case 2018-013, Exemption of Commercial and COTS Item Contracts from Certain Laws and Regulations

FAR Case 2018-015, Governmentwide and Other Interagency Contracts

FAR Case 2018-019, Review of Commercial Contract Clause Requirements and Flowdown

Regulatory and Deregulatory Priorities

The FAR Council is required to amend the Federal Acquisition Regulation to implement statutory and policy initiatives. The FAR Council prioritization is focused on initiatives that:

Streamline regulations and reduce burden, especially for commercial and commercially available off-the-shelf (COTS) items;

Promote disclosure and open government

Support national security efforts, especially safeguarding Federal Government information technology systems; and

Improve small business opportunities with the Federal Government.

Rulemakings That Streamline Regulations and Reduce Burdens

FAR Case 2018-004, Increased Micro-Purchase and Simplified Acquisition Thresholds, will increase the micro-purchase threshold (MPT) to $10,000; increase the simplified acquisition threshold (SAT) to $250,000; and make additional changes related to the thresholds. The increase in thresholds will allow the use of more streamlined procedures which reduces the time and effort needed to make an award. Some contractors will benefit from reduced contract compliance requirements.

FAR Case 2018-013, Exemption of Commercial and COTS Item Contracts from Certain Laws and Regulations, will implement revisions to the FAR to exempt commercial and COTS items from laws identified by the FAR Council or Administrator for Federal Procurement Policy. This reduction will allow contractors to use existing commercial practices, reducing compliance costs from requirements unique to the Government.

FAR Case 2018-014, Increasing Task-order Level Competition, will provide an exception to the requirement to consider price as an evaluation factor, for the award of services to be acquired on an hourly rate basis under certain indefinite-delivery indefinite-quantity contracts and Federal Supply Schedule contracts. Meaningful evaluation of cost and price takes place later, when task or delivery order proposals are evaluated. The exception will allow procurement officials to focus on establishing and evaluating non-price factors at the earlier contract award level, resulting in more meaningful distinctions among offerors.

Rulemakings That Promote Disclosure and Open Government

FAR Case 2017-004, Use of Acquisition 360 to Encourage Vendor Feedback, will address soliciting contractor feedback on how well agencies are doing in awarding and administering contracts. This will improve the efficiency and effectiveness of agency acquisition activities.

FAR Case 2016-005, Effective Communication between Government and Industry, encourages agency acquisition personnel to talk to industry.

Rulemakings That Support National Security

FAR Case 2018-017, Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, will prohibit the procurement of covered equipment and services from Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Technology Company or Dahua Technology Company and any subsidiaries or affiliates. The prohibition is implemented to protect Government information systems from threats.

FAR Case 2018-010, Use of Product and Services of Kaspersky Lab, prohibits any department, agency, organization or other element of the Federal Government from using hardware, software or services developed by Kaspersky Lab or any entity in which Kaspersky Lab has a majority ownership. The prohibition is implemented to protect Government information systems from threats.

FAR Case 2017-018, Violation of Arms Control Treaties or Agreements with the United States, prohibits, with some exceptions, the heads of executive agencies from entering into, renewing or extending a contract for the procurement of products or services from any persons involved in activities that violate arms control treaties or agreements with the United States. The prohibition reduces potential threats to the security of the United States and our allies.

Rulemakings of Interest to Small Business

FAR Case 2016-011, Revision of Limitations on Subcontracting, will implement SBA's regulatory clarifications concerning the nonmanufacturer rule, and how much a small business may subcontract to a large business. These were inconsistent across small business programs, such as whether a HUBZone small business could subcontract to other HUBZone small businesses. This rule revises and standardizes these requirements from multiple FAR clauses to two.

FAR Case 2018-003, Credit for Lower-Tier Small Business Subcontracting will allow large businesses to receive small business subcontracting credit for subcontracts that their subcontractors award to small businesses.

DATED: July 27, 2018.

NAME: William F. Clark,

Director,

Office of Government-wide

Acquisition Policy,

Office of Acquisition Policy,

Office of Government-wide Policy.

BILLING CODE 6820-EP-P