Civilian Agency Acquisitions Council Authorizes Agencies to Issue Class Waivers to Standardize Outsourcing Compliance Limits | PilieroMazza SARL


The Federal Procurement Regulatory Council (FAR Council) recently issued a final rule on August 11, 2021, updating the Federal Procurement Regulation (FAR) limits on outsourcing (LOS) to more closely reflect the LOS regulations of the US Small Business Administration. However, inconsistencies between the two sets of regulations remain. To bridge the gap, on August 13, 2021, the Civilian Agency Acquisition Council (CAAC) released a memorandum allowing civilian agencies to issue FAR class exemptions by adopting certain exceptions to the LOS requirements for small businesses which are specifically described in SBA regulations but have not yet been added to the FAR. This CAAC memorandum promotes greater compliance between the FAR and SBA LOS rules.

The SBA’s LOS rule provides that, for service contracts (except construction), prime contractors “shall not pay more than 50% of the amount the government has paid to companies that do not. are not in the same situation. “As it relates here, the rule further provides that” other direct costs may be excluded as long as they are not the primary objective of the acquisition and small businesses do not provide the service, such as air travel, work performed by a conveyance or disposal entity under a contract assigned the NAICS code for environmental remediation (562910), cloud computing services, or procurement mass media. In addition, work carried out abroad on awards granted under the Foreign Assistance Act 1961 or work to be performed by a local contractor is excluded. In particular, these exclusions were not added to the decision of the FAR Council of August 11.e final rule. On the contrary, the FAR Council explained that a “new FAR file should be opened to implement the additional changes”. Given that it took approximately five years for the FAR Council to adopt its recent changes to the LOS rule (after these changes were added to the SBA rules), we believe it will take some time before these changes. exceptions are formally incorporated into the FAR.

In the meantime, the CAAC memorandum specifically authorizes civilian agencies to issue class waivers to ensure that the above exceptions for other direct costs and work performed outside the United States are recognized when the application of LOS. The memorandum includes recommended deviated language for FAR 52.219-14, Limitations on Subcontracting, and advises contracting officers to use the deviated clause instead of FAR 52.219-14 in accordance with their agency guidelines.

Hopefully civilian agencies follow suit and issue such waivers, as this will make LOS compliance less onerous and promote regulatory compliance. If the Department of Defense takes similar action, compliance with the LOS could become consistent across the federal government.

Special thanks to Summer Associate, Daniel Figuenick, for his help with this post.

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