GSA Acquisition Regulation Update: Removal of the GSA Payments Clause for Non-Commercial Contracts
On July 3, GSA published two final rules amending the GSAR. Both rules will be effective August 2, 2024. This rule removes GSAR Clause 552.232-1, Payments, which requires that a contractor is paid for non-commercial fixed-price contracts for supplies and services without submitting an invoice or voucher.
- The removal of the GSA Payments Clause for non-commercial contracts is expected to have several positive impacts on contractors:
Contractors will no longer need to navigate and comply with both GSA-specific and FAR payment clauses, reducing paperwork and administrative tasks. - A more streamlined payment process will likely result in faster payments and reduced delays, enhancing cash flow for contractors.
- Aligning with FAR payment clauses ensures a more uniform approach across different contracts, simplifying contract management for contractors working with multiple agencies
The GSA’s decision to remove the GSA Payments Clause for non-commercial contracts marks a significant step towards streamlining federal acquisition processes. By aligning more closely with FAR, the GSA aims to reduce redundancy, improve efficiency, and simplify contract management for contractors. This update reflects the GSA’s ongoing commitment to enhancing the effectiveness and efficiency of federal procurement.
Cybersecurity Maturity Model Certification (CMMC) 2.0 Update
The Cybersecurity Maturity Model Certification (CMMC) 2.0 program is the next iteration of the Department of Defense’s (DoD) CMMC cybersecurity model designed to protect sensitive unclassified information within the defense industrial base.
The DoD has submitted the revised regulation to the Office of Information and Regulatory Affairs (OIRA) for review. This review process can take up to 90 days, but it could be extended. The final version of the regulation is expected to be published in the Federal Register by October 25, 2024.
Key Changes in CMMC 2.0
1. Reduction in Levels: The model has been streamlined from five levels to three levels:
- Level 1: Foundational (Basic Cyber Hygiene)
- Level 2: Advanced (Aligned with NIST SP 800-171)
- Level 3: Expert (Aligned with a subset of NIST SP 800-172)
2. Level 1 requires self-assessments, while Levels 2 and 3 require third-party or government-led assessments
3. Closer alignment with NIST SP 800-171 and SP 800-172 standards, making compliance more straightforward for contractors already adhering to these guidelines.
The CMMC 2.0 update is a significant step towards enhancing cybersecurity within the defense industrial base while simplifying compliance for contractors. The streamlined model, focused on essential cybersecurity practices, and the phased implementation plan, ensures that contractors have ample time to prepare and comply.
Application of Cost Accounting Standards (CAS) to Indefinite Delivery Vehicles (IDVs)
The Office of Management and Budget (OMB) has issued a notice regarding the application of Cost Accounting Standards (CAS) to Indefinite Delivery Vehicles (IDVs). This notice aims to provide clarity and uniformity in the application of CAS requirements to federal contracts awarded under IDVs. The new guidance is expected to streamline the contracting process and ensure compliance with federal cost accounting standards.
Key Points:
- The notice specifies that CAS requirements will apply to task orders and delivery orders issued under IDVs if the total value of the orders meets the CAS applicability threshold.
- This includes orders under General Services Administration (GSA) Schedules, Government-Wide Acquisition Contracts (GWACs), and other IDVs.
- The notice reiterates the CAS applicability thresholds as outlined in the Federal Acquisition Regulation (FAR).
- Certain exemptions will apply, including contracts and subcontracts with small businesses and contracts awarded based on adequate price competition
- Contractors must ensure that their accounting systems are compliant with CAS requirements when bidding on and performing IDV contracts.
- The notice aims to reduce administrative burdens by providing clear guidelines and expectations for CAS compliance.
Contractors engaged in federal contracts through IDVs will need to review and possibly update their accounting practices to align with CAS.
The OMB’s notice on the application of CAS to IDVs represents a significant step towards standardizing cost accounting practices in federal contracting. By clarifying the applicability of CAS requirements to task orders and delivery orders under IDVs, the OMB aims to enhance compliance and streamline the contracting process
Department of Defense (DOD) Final Rule: Defense Federal Acquisition Regulation Supplement (DFARS), Architect and Engineering Service Fees
On June 27, DOD published a final rule updating the DFARS increasing the fee limit for architect and engineering services from 6% to 10% of a project’s estimated construction costs. DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2024 that increases the statutory fee limit for architect and engineering services. The final rule will be effective August 26, 2024.
The Defense Federal Acquisition Regulation Supplement (DFARS) has been updated to reflect changes mandated by Section 2881 of the National Defense Authorization Act (NDAA) for Fiscal Year 2024. This significant revision increases the statutory fee limitation for architect and engineering (A&E) services from 6% to 10% of a project’s estimated construction cost. This change applies to contracts with the Departments of the Army, Navy, and Air Force.
Key Points:
- The statutory fee limitation for A&E services has been increased from 6% to 10% of the project’s estimated construction cost.
- This adjustment aligns with sections 10 U.S.C. 7540, 8612, and 9540, ensuring contractors can cover increased labor, overhead, and other costs.
- Minor editorial changes were made to DFARS 236.606-70 to comply with drafting conventions, but these do not alter the substance of the regulation.
- For smaller projects (under $5 million), the fee limit increase is expected to significantly benefit contractors, potentially raising fees to 5.42% of construction costs.
- For larger projects (over $5 million), the fee increase is more modest, expected to range between 3.25% and 3.75% of construction costs.
- The increased fee limit is anticipated to result in an average annual economic impact of approximately $145 million, accounting for both small and large projects
The DFARS update to increase the statutory fee limitation for A&E services is a crucial adjustment that reflects current economic realities. By raising the limit from 6% to 10%, the DoD ensures fair compensation for contractors and addresses cost increases over the past decades. This change will likely enhance the quality and efficiency of A&E services provided to the Army, Navy, and Air Force, benefiting both the DoD and its contractors.
