Key Interim FAR Rules Issued - Targeted at Wasteful Contracting Practices

4.1.2011 - Posted in E&B Alerts - Government Contracts

The Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration ("DoD", "GSA", and "NASA") jointly issued on March 16, 2011 several interim rules that amend the FAR to implement sections 864, 863 and 811 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009. These sections are aligned with goals enunciated in the Presidential Memorandum issued March 4, 2009 directing the OMB to work with agencies towards reducing wasteful spending on government contracts:

  • Proper Use and Management of Cost Reimbursement Contracts (FAR Case 2008-030; Section 864): provides internal regulatory guidance on the proper use and management of all contracts, specifically cost-reimbursement contracts, by identifying: (1) circumstances when cost-reimbursement contracts are appropriate; (2) acquisition plan findings required to support the contract type selection; and (3) the acquisition resources necessary to award and manage a cost-reimbursement contract.

  • Requirements for Acquisitions Pursuant to Multiple-Award Contracts (FAR Case 2007-012; Section 863): implements procedures intended to enhance competition for orders placed under multiple-award contracts. The rule also mandates that if an order over the simplified acquisition threshold does not follow these competitive procedures, there must be a notice and determination of an exception published in FedBizOpps within 14 days following the award.

  • Justification and Approval of Sole-Source 8(a) Contracts (FAR Case 2009-038; Section 811): prohibits award of sole-source contract in an amount over $20 million under the 8(a) program without first obtaining written Justification and Approval (J&A) by an appropriate official and making public the J&A and related information.

  • Socioeconomic Program Parity (FAR Case 2011-004): amends the FAR to implement section 1347 of the Small Business Act, changing the word "shall" to "may" at section 31(b)(2)(B), thereby permitting a contracting officer to use discretion when determining whether an acquisition will be restricted to a small business participating in the 8(a) Business Development Program, the Historically Underutilized Business Zone Program, or the Service-Disabled Veteran-Owned Small Business Program.

In addition, the following interim rule - also aimed at reducing government spending - was adopted as a final rule and will go into effect on April 15, 2011:

  • Additional Requirements for Market Research (FAR Case 2008-007): DoD, GSA and NASA have adopted as final the interim rule, entitled "Market Research," amending the FAR to implement section 826 of the National Defense Authorization Act for Fiscal Year 2008. This rule requires the head of an agency to take appropriate steps to ensure that any prime contractor of a contract (or task order or delivery order) in an amount in excess of $5 million for the procurement of items other than commercial items engages in market research as necessary before making purchases.


Comments regarding the proposed rules may be submitted through www.regulations.gov and search for "FAR Case 2008-030." The deadline for submitting comments is May 16, 2011. For further information regarding the proposed rules, please contact Mark Blando at (612) 236-0160 or [email protected] .