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Recent DFARS Amendments
Practical Law Legal Update 1-614-6345 (Approx. 4 pages)
Recent DFARS Amendments
by Practical Law Commercial
| Published on 26 May 2015 • USA (National/Federal) |
The Department of Defense (DoD) has recently issued final amendments to five areas of the Defense Federal Acquisition Regulation Supplement (DFARS): time-and-materials and labor-hours contracts approval thresholds; multiyear service contracts cancellation ceiling thresholds; energy receiving reports; advancing small business growth; and statistical reporting in the past performance information retrieval system.
On May 26, 2015, the Department of Defense (DoD) published amendments to the Defense Federal Acquisition Regulation Supplement (DFARS). The amendments affect the following five areas of DoD procurements:
- Approval threshold for time-and-materials and labor-hour contracts (see Time-and-Material and Labor-Hour Approval Threshold).
- Cancellation threshold for multiyear service contracts. The DFARS is amended to update the cancellation threshold for multiyear contracts, from $100 million to $125 million (80 Fed. Reg. 29981-29983 (May 26, 2016)).
- Energy receiving reports. The DFARS is amended to identify the Wide Area WorkFlow Energy Receiving Report as the electronic equivalent of the DD Form 250, Material Inspection and Receiving Report, for overland shipments and the DD Form 250-1, Tanker/Barge Material Inspection and Receiving Report for waterborne shipments (80 Fed. Reg. 29983-29984 (May 26, 2016)).
- Advancing small business growth. The DFARS is amended to clarify that entering a contract award may cause a small business to eventually exceed the applicable small business size standard and adds a new clause, which states this fact, in all small business contracts (80 Fed. Reg. 30116-30117 (May 26, 2016)).
- Statistical reporting for the Past Performance Information Retrieval System. The DFARS is amended to require contracting officers to consider information in the Statistical Reporting Module of the Past Performance Information Retrieval System when evaluating offerors' past performance under competitive solicitations for supplies using simplified acquisition procedures (80 Fed. Reg. 30017-30018 (May 26, 2016)).
All of these amendments became effective on May 26, 2015.
Time-and-Material and Labor-Hour Approval Threshold
This rule amends the DFARS to establish the level of approval required for a determination and findings for a time-and-materials and labor-hour contracts, or portions of contracts, exceeding $1 million. Under the amended rule, the authority to make a time-and-material and labor-hour contract determination depends on the dollar amount value and length of the contract. For agreements that will last:
- Three years or less (base period plus any option periods) and the portion of the requirement performed on a time-and-materials or labor-hour basis exceeds $1 million, the approval authority for the determination and findings shall be the senior contracting official within the contracting activity.
- Three years or less (base period plus any option periods) and the portion of the requirement performed on a time-and-materials or labor-hour basis is less than or equal to $1 million, the determination and findings shall be approved one level above the contracting officer.
- Longer than three years (base period plus any option periods) the authority of the head of the contracting activity must approve the determination and findings, regardless of dollar value.
The determination and findings must contain sufficient facts and rationale to justify that no contract-type other than time-and-materials and labor-hour is appropriate and, at a minimum:
- Include a description of the market research conducted.
- Establish that it is not possible at the time of placing the contract or order to accurately estimate the extent or duration of the work or to anticipate costs with a reasonable degree of certainty.
- Address why a cost-plus-fixed-fee term or other cost-reimbursement incentive or fixed-price contract is not appropriate.
- Establish that the requirements for time and materials and labor and hour are structured so that their use is minimized.
- Describe the actions planned to minimize the use of time-and-materials and labor-hour contracts on future acquisitions for the same requirements.
For indefinite delivery contracts, the contracting officer shall structure contracts that authorize time-and-materials orders or labor-hour orders to also authorize orders on a cost-reimbursement, incentive or fixed-price basis, to the maximum extent possible.
These new requirements do not apply to contracts that:
- Support contingency or peacekeeping operations.
- Provide humanitarian assistance, disaster relief or recovery from conventional, nuclear, biological, chemical or radiological attack.