New rule corrects contracting misunderstandings

The Obama administration has issued a final rule to implement several clarifying recommendations from the Government Accountability Office on time-and-materials contracts.

In 2009, GAO said there were several areas needing clarity surrounding the high-risk type of contracts. It found a misunderstanding among contracting officers that the fixed-price labor rates in time-and-materials contracts may actually make them fixed-price contracts. GAO also said acquisition officials were unsure how to know if it was necessary for them to justify the use of time-and-materials contracts when purchasing commercial services. GAO even concluded that managers weren't detecting that contracting officers were not complying with safeguards around time-and-materials contracts.


Related stories:

More guidance coming on time-and-materials contracting

Gordon optimistic GAO will remove interagency contracting from high-risk list

Homework: Describe the elements that make up FAPIIS


The Obama administration proposed the changes to the Federal Acquisition Regulation in 2010.

The final rule and response to comments on the earlier proposed rule were published in the Federal Register on Jan. 3. The rule  specifies that time-and-materials contracts are just that, and can't be conflated with fixed-price vehicles. It also gives contracting officers detailed guidance on determining whether time-and-materials or labor-hour contracts are the best option for buying commercial services. The rule change also tells agencies to train employees on how to make the determination.

The administration made additional changes while deliberating on the final rule. They decided that these same safeguards on the use of time-and-materials and labor-hour orders should cover blanket purchase agreements awarded under the Federal Supply Schedule program.

The final rule takes effect Feb. 2.

Acquisition policy officials also finalized an interim rule that requires agencies to post a government contractor’s work history on a publicly accessible web site known as the Federal Awardee Performance and Integrity Information System (FAPIIS). The interim rule took effect in April.

The final rule took effect Jan. 3.

FAPIIS is a one-stop web site for contracting officers and federal employees to look at the history of companies’ work with the federal government. It includes data from the Performance Information Retrieval System, as well as information from other databases, including the Excluded Parties List System, which cites companies that are suspended or debarred from federal contracting.

The purpose of FAPIIS is to make it easier for contracting officers to get an overall assessment of a company before awarding a contract and without having to search numerous databases.

Based on legislation, the interim rule made all the information publicly available through FAPIIS, except for past performance reviews by agencies.

In the Federal Register notice about the final rule, officials recognized the risks about the information going public though.

The final rule gives companies seven days to find any information that should not be disclosed because it should be considered exempt. In such a case, officials will remove the information from FAPIIS to resolve the issue.

If the government official does not remove the item, it will be automatically released to the public site within two weeks after the review period began, according to the notice.

In addition, officials finalized rules to prevent abuses of interagency contracts. The rule requires a written agreement between the agency buying the service and the agency that will manage the contract on behalf. Agencies must also show why this was the best avenue for buying and include sufficient documentation to ensure an adequate audit.

The rule takes effect Feb. 2.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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