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GAO looks at NAICS code assignments, SBA clarifications, and industry views

Agencies’ contracting officers consider various factors in assigning North American Industry Classification System (NAICS) codes to federal contracts, and the Small Business Administration (SBA) issued a rule in 2013 intended to clarify NAICS code assignment.

NAICS codes are the basis for SBA’s size standards; therefore, the code that the contracting officer assigns determines whether a firm is eligible for federal contracting preferences, such as small business set-asides.

NAICS Code Assignment Within the Acquisition Process

The Government Accountability Office (GAO) recently studied this activity and learned that contracting officers (COs) cite several factors that affect their assignment of NAICS codes, including information on the work to be performed and input from agency small business specialists. However, the COs also told GAO that assigning a NAICS code can be challenging when one or more codes could apply to a contract.

In the 2013 rule, SBA clarified that under certain circumstances, COs may assign more than one code to multiple-award contracts. Such contracts are awarded to two or more contractors under a single solicitation and include indefinite delivery/indefinite quantity (ID/IQ) contracts used when quantities and timing are not known at the time of the award. However, updates to the Federal Acquisition Regulation (FAR) — the rules governing the federal government’s purchasing process — are required to fully implement SBA’s final rule.  The agencies GAO interviewed plan to implement this rule after it is adopted into the FAR and they can make necessary updates to their information technology for contracting. This FAR rule-making process is ongoing.

In a report released by the GAO on Jan. 4, 2018, the GAO reports that some industry groups and firms have expressed concerns about how COs assign NAICS codes even though SBA’s Office of Hearings and Appeals (OHA) dismissed most appeals and denied more than half of the remaining appeals. Some industry groups and firms GAO interviewed expressed concerns that COs may assign NAICS codes based on the size standard (thereby affecting the number of firms that can compete as a small business) and not the work to be performed. However, some also stated it was difficult to determine how often this practice occurs, and OHA officials noted it is the office’s role to review the appropriateness of appealed NAICS codes, not the contracting officer’s intention when assigning the code. Of the 62 NAICS code appeals that were filed in calendar years 2014 through 2016, OHA dismissed 35, denied 15, and granted 12.  Appeals were dismissed because, among other things, they were untimely or the contracting officer cancelled the acquisition.

GAO’s full report examines: 1) what COs consider when assigning NAICS codes to federal contracts and the status of efforts to clarify code assignment and 2) industry views on NAICS code assignment and the number and outcomes of appeals.  The report can be downloaded here.

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Learn how the government administers contracts during week of Dec. 4th

You have the opportunity before year’s end to attend  a week-long course at Georgia Tech that comprehensively covers the federal contract administration process.  

The course — Contract Administration in the FAR — begins Monday, Dec. 4 and concludes Friday, Dec. 8, 2017.  Registration details may be found at: https://pe.gatech.edu/courses/con-090-4-contract-administration-far.

Students work in teams to answer questions and solve problems involving contract administration.
Who Should Attend
  • Government contracting officials will learn not only the rules but the best practices in contract administration. And, this course satisfies required FAC-C and DAWIA certification programs.
  • Business people, including those to aspire to become federal contractors, will learn how to use the power of being an incumbent to win future contracts as well as how to protect contractual interests.
How You Will Benefit

You will learn:

      • The fundamental concepts of government contract administration.
      • The rights of the parties when contract performance is not timely.
      • Both the government’s and the contractor’s rights when contract performance comes into question.
      • The policies and procedures for preparing and processing contract modifications.
      • How to apply the requirements of applicable contract clauses in various contracting scenarios.
      • The applicable payment clauses and invoicing procedures.
      • The policies and procedures for filing and processing contract disputes and appeals.
      • The policies and procedures pertaining to the complete or partial termination of contracts for the convenience of the government or for default.
      • All pertinent parts of the Federal Acquisition Regulation (FAR).
Content
      • Contract administration basics
      • Contract modifications
      • Administration of selected terms and conditions
      • Delays
      • Quality assurance
      • Payment and cost allowability
      • Disputes and appeals
      • Terminations
      • Closeout
Materials

Each student receives a printed Student Guide, exercises, updated supplemental information, and exclusive access to web-based student resources. A complimentary breakfast is provided each morning, along with snacks throughout each day.

Additional Information

The Contracting Education Academy at Georgia Tech (The Academy) is an approved equivalency training provider to the Defense Acquisition University (DAU) and the Federal Acquisition Institute (FAI).  Our courses satisfy both the FAC-C and the DAWIA certification programs.  The coursework also provides students the opportunity to earn continuing education unit credits (CEUs) for acquisition and government contracting professionals as well as business professionals working for the government or pursuing opportunities in the federal contracting arena.

More Information and To Register

For more information on this course, please visit: https://pe.gatech.edu/courses/con-090-4-contract-administration-far

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ASBCA issues important ruling in ‘contractor-on-the-battlefield’ dispute

Last month, the Armed Services Board of Contract Appeals (ASBCA) held that the U.S. Army breached its contractual obligation to provide physical security to its principal logistical support contractor, KBR, during the height of the Iraq War. 

As a consequence, the Board found that KBR was entitled to be reimbursed for $44 million, plus interest, in costs that the Government had withheld from KBR relating to KBR’s and its subcontractors’ use of private security.  A copy of the opinion is available here.

Before the Board, the Army had argued that the costs in question were unallowable because KBR’s LOGCAP III contract with the Government prohibited the use of private security.  In response, KBR argued (among other things) that any violation of this prohibition had been excused by the Government’s prior material breach of its obligation to provide physical security.  On the basis of an extensive documentary and testimonial record (including a month-long trial), the Board agreed with KBR, finding:

[D]espite the many and continuing failures of the government to provide the promised level of force protection to KBRS and its subcontractors . . . , the government seeks to disallow the PSC costs incurred . . . in order to accomplish [the] mission under the LOGCAP contract despite the government’s breach, and argues that its breach was not material.  It is hard to imagine a contract breach more material than this one, which eviscerated the promise at the heart of the justification for the government’s claim.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/06/asbca-issues-important-ruling-contractor-battlefield-dispute/

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Past performance: A challenge to the Office of Federal Procurement Policy

Anne Rung is the intelligent, personable administrator of the Office of Federal Procurement Policy, and thus the government’s senior procurement policy official.

OFPP(The author of this article, Steve Kelman, held Anne’s job during the Clinton administration in the 1990s.)

On the job somewhat over a year, she counts among her proudest achievements the innovative digital training effort that I blogged about a while ago, as well as the new policy for IT commodity buys (which I also blogged about) that tweaks the balance between getting volume discounts and giving agency managers the freedom to order exactly what they want.

With this blog post, I would like to propose a signature initiative for Rung for the final year of the Obama administration. I suggest she reverse the failure spiral that has devastated the government’s effort to factor in contractor past performance when making new contract awards. The way to do this: Repeal the ability of contractors disappointed with their past performance rating to have the decision reviewed at a higher level in the contracting organization.

Keep reading this article at: https://fcw.com/blogs/lectern/2015/12/kelman-past-performance.aspx

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Learn how the government administers contracts during week of Sept. 14

The Contracting Education Academy at Georgia Tech is just days away from kicking off a week-long course that comprehensively covers the federal contract administration process.  
Students work in teams to answer questions and solve problems involving contract administration.
Students work in teams to answer questions and solve problems involving contract administration.

The course — Contract Administration in the FAR — begins Monday, Sept. 14 and concludes Friday, Sept. 18, 2015.  Registration details may be found at: https://pe.gatech.edu/courses/con-090-4-contract-administration-far.

Who Should Attend
    • Government contracting officials will learn not only the rules but the best practices in contract administration. And, this course satisfies required FAC-C and DAWIA certification programs.
    • Business people, including those to aspire to become federal contractors, will learn how to use the power of being an incumbent to win future contracts as well as how to protect contractual interests.
How You Will Benefit

You will learn:

      • The fundamental concepts of government contract administration.
      • The rights of the parties when contract performance is not timely.
      • Both the government’s and the contractor’s rights when contract performance comes into question.
      • The policies and procedures for preparing and processing contract modifications.
      • How to apply the requirements of applicable contract clauses in various contracting scenarios.
      • The applicable payment clauses and invoicing procedures.
      • The policies and procedures for filing and processing contract disputes and appeals.
      • The policies and procedures pertaining to the complete or partial termination of contracts for the convenience of the government or for default.
      • All pertinent parts of the Federal Acquisition Regulation (FAR).
Content
      • Contract administration basics
      • Contract modifications
      • Administration of selected terms and conditions
      • Delays
      • Quality assurance
      • Payment and cost allowability
      • Disputes and appeals
      • Terminations
      • Closeout
Materials

Each student receives a printed Student Guide, exercises, updated supplemental information, and exclusive access to web-based student resources.

Additional Information

The Contracting Education Academy at Georgia Tech (The Academy) is an approved equivalency training provider to the Defense Acquisition University (DAU) and the Federal Acquisition Institute (FAI).  Our courses satisfy both the FAC-C and the DAWIA certification programs.  The coursework also provides students the opportunity to earn continuing education unit credits (CEUs) for acquisition and government contracting professionals as well as business professionals working for the government or pursuing opportunities in the federal contracting arena.

More Information and To Register

For more information on this course, please visit: https://pe.gatech.edu/courses/con-090-4-contract-administration-far

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