Proposed FAR Change

03 August 2011 Publication
Authors: Robert Slovak

Federal agencies have proposed an amendment to the Federal Acquisition Regulation addressing the Federal preference for purchasing biobased products. The purpose of the proposed amendment is to allow federal agencies to monitor compliance with that preference, which was originally implemented in the FAR on Nov. 7, 2007, as the Biobased Products Preference Program. Under that "BioPreferred Program", the United States Department of Agriculture determines categories of biobased products for preferred designation and establishes a minimum biobased content for each category. The USDA also maintains a catalog of "biopreferred" products. However, the previous FAR stopped short of creating a reporting mechanism by which agencies could monitor compliance with the BioPreferred Program.

The new mandatory reporting requirements could affect service and construction contracts in many ways. From a practical standpoint, government contractors may have to assign additional contracting staff to projects in order to handle product research, tracking and reporting. Because the USDA has identified more than 15,000 biobased products, a number that is constantly growing, simply staying abreast of the latest developments also will require additional resources. Although the FAR provides certain exceptions where (a) the item cannot be acquired competitively within a reasonable time frame, (b) at a reasonable price, or (c) will not meet reasonable performance standards, it provides little guidance on what constitutes "reasonable." As such, contractors will be forced to strike a delicate balance between satisfying the federal preference for purchasing biobased products while still submitting competitive bids or proposals. Disagreements regarding what constitutes "reasonable" also may create additional grounds for bid protests and even encourage qui tam whistleblower lawsuits.

The agencies are inviting comments on the proposed FAR and new reporting requirement, including feedback on the following topics:

  • Methodology. The agencies seek comments on the least burdensome, most cost-efficient method to collect this information. The agencies are particularly interested in current practices used to track purchases of biobased products, including what level of detail is tracked and whether the tracking is automated or manual.
  • Level of effort. Information is also requested on the level of effort required to collect and report information for any given contract, and whether those costs are allocated to contracts as a direct cost or as an overhead cost.
  • Scope of requirement. The agencies are interested in whether certain contract types or industries should be excluded altogether because biobased are not typically purchased.
  • Impact on subcontractors. How many subcontractors will be affected, and to what extent?
  • New technologies. The agencies are also interested in any new technologies that might reduce the burden of information collection.

Although the agencies' comment process is the primary opportunity for government contractors to shape such rules, few take advantage of the opportunity. For example, only six respondents submitted comments to the original version of this FAR. The deadline to submit written comments to the Regulatory Secretariat regarding the proposed FAR is Sept. 12, 2011. Comments may be submitted online, via fax or by regular mail.

In addition to the new reporting requirement, the USDA is constantly proposing new rules designating additional categories of items for the BioPreferred Program or adjusting the minimum biobased contents for items. The USDA seeks – but rarely receives – comments to its proposed rules. For example, as recently as July 22, the USDA announced a new rule adding 14 new categories of biobased products. The USDA sets minimum biobased content based only on those products for which it is able to obtain content test data. However, because the submission of product samples is on a voluntary basis, the USDA frequently sets minimum levels based only on data for a single product within a designated category. The USDA welcomes additional test data and constantly evaluates whether the minimum biobased content for a designated item should be revised. This is an important opportunity for manufacturers of biobased products to work with the USDA to have their product listed, and assure that reasonable minimum contents are established.

If you would like to further discuss the new and proposed rules and how they may affect you or your business, or any other issues regarding government contracting and construction, please contact a member of Gardere's Construction team.

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