New FAC Issued

The FAR Council issued several amendment to the FAR in the form of Federal Acquisition Circular 2005-32. Two significant ones address past performance information and prohibition of granting awards to “inverted domestic companies.”

The final rule emphasizes the use of the Past Performance Retrieval System (PPIRS) which follows a highly critical GAO report in May finding that contracting officers doubt the reliability of available past performance information due, in part, from lax management of the PPIRS. The PPIRS related changes require the FAR clearly (1) reflects the use of the PPIRS at www.ppirs.gov (2) requires evaluation of past performance on orders exceeding the simplified acquisition threshold (currently $100K) against Federal Supply Schedule contracts or under task or delivery orders against a government-wide or multi-agency contract (3) recommends past performance information for orders under single agency contracts and (4) consolidates the past performance guidance into FAR Part 42.

Other past performance rules changes in the FAC include (1) revision to the definition of past performance to clarify that “completed contract” is a physically completed contract in accordance with FAR 4.804-4 (2) FAR 8.406-7 is modified to advise ordering activities that past performance evaluations required in FAR 42 are applicable to delivery and task orders (3) FAR 42.1503(a) is modified to clarify that agency procedures must identify those responsible for interim and final evaluations and (4) FAR 42.1503(c) is revised to clarify agencies must establish procedures for reporting past performance information to PPIRS.

The FAR has been modified to implement the Omnibus Appropriation Act of 2009 that prohibits award of contracts to any foreign incorporated entity that is treated as an inverted domestic corporation or any subsidiary of such an entity. An inverted corporation is defined in the FAC as one that was incorporated or was in a partnership in the US but is now incorporated in a foreign country or subsidiary of a foreign corporation. This is done to avoid US taxes on business income generated in foreign countries where Congress has enacted laws to discourage corporations from expatriating themselves. The Council stated the government does not know which companies are inverted because by law COs have no access to tax return information so each contractor must analyze its own status (Fed Reg. 31561).

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