Infotech and the Law: FAR changes bring new reporting requirements

Jonathan Cain

Changes to the Federal Acquisition Regulation, published Oct. 1, affect all government contractors, particularly those without an administration staff that tracks such changes. Everyone should take heed.

The first change is that any winner of a basic ordering agreement, basic agreement or blanket purchase agreement made after Oct. 1 is required to register with the Central Contractor Registration database before an award can be made. If the awardee is not registered, the agency either may permit the awardee time to get registered or may give the contract to the next eligible offerer.

Contracts that extend beyond Dec. 31 will be modified to require that the awardees register by the end of the year. Payments may be suspended if the registration is not kept up to date.

Defense Department contractors have been required to register in the database since 1998; this new requirement applies to all agencies. There are very few exceptions, such as emergency contracts awarded during natural disasters or national emergencies, and micropurchases. But most contractors should register now to avoid delays.

A second change amends payment clauses of contracts for commercial and noncommercial items. Now, contractors that receive an overpayment need to notify the contracting officer immediately and request instructions concerning disposition of the overpayment.

Contractors that know of an overpayment or a duplicate payment usually notify the agency eventually, but this change imposes an immediate obligation.

This clause is not intended to require immediate disclosure of overpayments that stem from a contractor's awareness that its indirect costs have shrunk before a formal change in rates, or other such changes in everyday contract administration. Rather, it covers overpayments that result from contractor invoicing or government payment errors. The rule does not specify the extent of the contractor's duty to verify the accuracy of government payments. It just requires contractors to give notice of the overpayments of which it "becomes aware."

The FAR amendments also have effectively put an end to the Federal Acquisition Computer Network, known as FACNET, and Commerce Business Daily as sources of governmentwide business opportunity information. The rule designates FedBiz

Opps as the official, exclusive point of publication for all public procurement actions worth more than $25,000.

Finally, earlier interim rules that authorized higher ceilings on micropurchases and simplified acquisitions for procurements of goods and services used for defense against or recovery from terrorist attacks were made permanent -- at least for now.

In January, the interim rules raised the anti-terrorism micropurchase threshold from $2,500 to $7,500 for civilian agencies and $15,000 for the Defense Department, and the simplified acquisition threshold from $100,000 to $200,000 for civilian agencies and $250,000 for the Defense Department. These changes were authorized for a temporary period under the Homeland Security Act.

The scope of purchases that may be made under these ceilings is not well-defined. Essentially, any purchase that an agency designates as prevention or recovery from a terrorist, chemical, biological, nuclear or radiological attack could qualify.

The final rule makes these changes permanent, but acquisitions using this authority will have to move quickly. The statutory authority for the higher ceilings ends Nov. 25.

Jonathan Cain is a member of the law firm Mintz Levin Cohn Ferris Glovsky & Popeo PC in Reston, Va. The opinions expressed in this article are his. He can be reached by e-mail at jcain@mintz.com.

About the Author

Jonathan Cain is a member of law firm Mintz Levin.

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