Hot Topics Executive Compensation Caps Department of Labor Initiatives Safeguarding Information Supply Chain Risk Counterfeit Electronic Items Fair and Reasonable Pricing for Schedule Purchases Accelerated Payment for Small Business Subcontractors 1

Senior Executive Benchmark Extension 2012 NDAA Authority: Section 803, NDAA for FY 2012 – Expands application of compensation cap from the five most highly compensated employees in management positions to all contractor employees – Applies to compensation costs incurred after 1/1/2012, under DoD, NASA, and Coast Guard contracts entered into before, on, or after the date of the enactment of this law FAR Case Prospective implementation for contracts awarded on or after 12/31/2011 – Interim rule published 6/26/2013 – Final rule published 5/30//2014 FAR Case Retroactive implementation for contracts awarded prior to 12/31/2011 – Proposed rule published 6/26/2013 – Issues relating to retroactivity – Final rule is in development 2

Limitation on Allowable Government Contractor Compensation Costs ( ) Authority: Section 702, Bipartisan Budget Act (BBA) of 2013 (Pub. L ) – BBA establishes a compensation cap for contractors Outcome: – Interim rule sets the initial limitation on allowable contractor and subcontractor employee compensation costs at $487K/year – Applies to contracts awarded on or after 6/24/2014 Stage of Rulemaking: – Interim rule published 6/24/2014 – Next step: analysis of public comments and development of a final rule 3

Department of Labor Initiatives Executive Order 13658, Establishing a Minimum Wage for Contractors, dated 2/12/2014 – Minimum wage of $10.10 effective as of 1/1/2015 for certain Federal Contractor Employees DoD Sponsor: DPAP/CPIC Implementation: – OMB: Memo of 6/12/14 requires agencies to take all reasonable and legally permissible steps for immediate implementation – DOL: Proposed rule published 6/17/2014 – FAR Council: FAR rule to follow DOL’s final rule 4

Department of Labor Initiatives Cont’d Executive Order 13665, Non-Retaliation for Disclosure of Compensation Information, dated 4/8/2014 – Amends EO 11246, Equal Employment Opportunity, dated 1/24/1965 – Provides employees protection from discharge or other discrimination – Next step: DOL rule due 160 days from EO issue date Draft Executive Order - improving compliance with Federal contract labor laws – “Levels the playing field” regarding adherence to labor laws – Offerors to report violations within the past three years – Information may be used: To negotiate agreements as a condition of award to address remedial measures and steps to avoid future violations – flowdown to lower-tier subcontracts In making responsibility determinations 5

Safeguarding Unclassified Controlled Technical Information (2011-D039) Objective: Provide standards and structures for safeguarding unclassified controlled technical information and reporting the compromise of unclassified controlled technical information DoD Sponsors: CIO; OUSD(SE); DPAP/PDI Outcome: Implement security measures to safeguard unclassified DoD information within contractor information systems from unauthorized access and disclosure Stage of Rulemaking – Final rule published 11/18/2013 – Next step: Implement section 941 of the FY13 NDAA & NARA CUI rule in development 6

Basic Safeguarding of Contractor Information Systems ( ) Authorities: – Federal Information Security Management Act (FISMA) of 2002 – 44 USC 3544, Federal Agency Responsibilities (paragraph (a)(1) (ii) - information systems used by an agency or contractor) DoD Sponsor: DPAP/PDI Outcome: FAR subpart and clause to address basic safeguarding of information systems that contain or process information provided by or generated for the Government (other than public information) Status of Rulemaking: – Next step: Ad Hoc Team adjudicating proposed rule comments and developing a final FAR rule 7

Requirements Relating to Supply Chain Risk (2012-D050) Authority: Section 806, NDAA of FY 2011 DoD Sponsor: CIO Objective: Enable agencies to exclude sources that are identified as having a supply chain risk on information technology purchases relating to national security systems Stage of Rulemaking – Interim rule published 11/18/2013 – Next step: analyze public comments and draft a final rule 8

Detection and Avoidance of Counterfeit Electronic Parts (2012-D055) Authorities: – Section 818, NDAA for FY 2012 – Section 833, NDAA for FY 2013 DoD Sponsors: DPAP/PDI, L&MR Objective: Reduce the incidence of counterfeit electronic parts in DoD systems Stage of Rulemaking – Final rule published 5/6/2014 – Follow-on DFARS Case 2014-D005 opened to consider further implementation Public Meeting: 6/28/2013 – Further Implementation public meetings: 3/27/2014, and 6/16/2014 9

Recent Publications Executive Compensation Caps Safeguarding Unclassified Controlled Technical Information Detection and Avoidance of Counterfeit Electronic Parts Expanded Reporting of Nonconforming Items (GIDEP) (proposed) Contractor Comment Period Past Performance Evaluations Commercial and Government Entity Code Contracting with Women-Owned Small Businesses Contractor Personnel Supporting U.S. Armed Forces EPEAT Items 11

Expanded Reporting of Nonconforming Items ( ) Authorities: – Section 818, NDAA for FY 2012 – OFPP Letter 91-3, “Reporting Nonconforming Products” DoD Sponsor: DPAP/PDI Outcome: FAR clause to require contractors to use GIDEP to screen for and report items that are counterfeit, suspect counterfeit, or contain a major or critical nonconformance Status of Rulemaking: – Proposed rule: published 6/10/2014 – Public meeting: 6/16/2014 – Next step: analysis of public comments and development of a final rule 12

Contractor Comment Period Past Performance Evaluations ( ) Authorities: – Section 853, NDAA for FY 2013 – Section 806, NDAA for FY 2012 DoD Sponsor: DPAP/CPIC; DPAP/PDI Outcome: Revised past performance evaluation language – Contractor comment period is 14 calendar days from date of notification of past performance evaluation in CPARS – Evaluations and contractor comments are automatically transmitted to PPIRS no later than 14 days after contractor notification – Government must update PPIRS with comments provided after 14 days and any subsequent agency review of comments Stage of Rulemaking: – Final rule - published 5/30/2014

Commercial and Government Entity Code ( ) Objective: Require the use of Commercial and Government Entity (CAGE) codes, including North Atlantic Treaty Organization CAGE codes for foreign entities, for awards valued at greater than the micro- purchase threshold DoD Sponsors: D, DPAP; DPAP/PDI Outcome: – Require offerors, if owned by another entity, to identify that entity – Increase transparency and accuracy of Federal procurement data Stage of Rulemaking – Final rule published 5/30/2014; effective 11/1/

Contracting with Women-Owned Small Businesses ( ) Authority: Section 1697, NDAA for FY 2013 DoD Sponsor: SBP; DPAP/CPIC Purpose: Leveled playing field among the small business socio- economic programs - eliminated mandatory dollar limit caps for set-asides under the Women-Owned Small Business Program: ‒$6.5 million for manufacturing requirements ‒$4 million for all other requirements Outcome: Contracting officers may set-aside requirements under the Women-Owned Small Business program at any dollar threshold above the micro-purchase threshold, provided all other eligibility criteria are met Implements: SBA final rule published 5/7/2013 Stage of Rulemaking: ‒Final rule published and effective 06/24/

Contractor Personnel Supporting U.S. Armed Forces Deployed Outside the U.S. (2013-D015) Authorities: – DoDI , Operational Contract Support DoD Sponsors: DPAP/CC, PS Objective: Implement DoDI Apply clause to non-CAAF as well as CAAF (Contractors Authorized to Accompany the Force) Stage of Rulemaking – Final rule published 5/28/

EPEAT Items ( ) Authorities: Executive Orders and Sponsors: DPAP/CPIC and GSA; Proponent: EPA Objectives: – Revise the EPEAT® standard for personal computer products – Add new EPEAT® standards for imaging equipment and televisions Outcome: Expand the use of EPEAT® Standards to fully implement EOs Initial Implementation: – Final rule , effective 2/17/2009, initially implemented E.O and established EPEAT® requirements for personal computer products Stage of Rulemaking: – Interim FAR rule published and effective 6/24/

Other Rules of Interest Ending Trafficking in Persons OCI/Unequal Access to Information Service Contract Reporting (eCMRA) Uniform Use of Line Items Uniform Procurement Identification Enhancements to Past Performance Evaluation Systems Business Systems Compliance Contracts Under the SBA 8(a) Program Small Business Subcontracting Improvements Set-asides Under Multiple Award IDIQ Contracts 18

Ending Trafficking in Persons ( ) Authorities: – Executive Order – Title XVII of the NDAA for FY 2013 DoD Sponsors: DPAP/CPIC; USD(P&R) CTIP Program Manager Objective: Strengthen protections against trafficking in persons Stage of Rulemaking – Proposed rule - published 9/26/2013 – Associated DFARS Final Rule: 2013-D007, Further Implementation of Trafficking in Persons Policy – Next steps - publish final FAR rule and DFARS rule Public Meeting - 3/2/

Organizational Conflicts of Interest and Unequal Access to Information ( ) Authority: Section 841, NDAA for FY 2009 DoD Sponsor: DPAP/CPIC Objectives: – Provide an approach that focuses on risk of harm to the business interests of the Government or to the integrity of the competitive process – Differentiate unequal access to information from organizational conflicts of interest Stage of Rulemaking – Proposed rule published 4/26/2011 – Also considered public comments of DFARS 2009-D015 proposed rule (based on incorporation of GAO case law), published 4/22/2010 – Next steps: publish final FAR rule 20

Service Contract Reporting (2012-D051) Authority: Section 807, NDAA for FY 2008, which amended 10 USC 2330a DoD Sponsor: DPAP/CPIC Outcome: Require contractors to annually report service contract data, to include direct labor hours and cost data, into an online DoD database Purpose: Enable SECDEF to report to Congress an annual inventory of service contracts above the SAT – The data also supports DoD’s total force management and strategic workforce planning decisions (10 USC 129a) Stage of Rulemaking – Proposed rule published 6/5/2014 – Next steps: analyze comments; draft final rule 21

Uniform Use of Line Items ( ) Authority: Federal Funding Accountability and Transparency Act of 2006 DoD Sponsors: D, DPAP; DPAP/PDI Objective: Establish a uniform contract line item numbering structure in Federal procurement – Current funding traceablity is limited to contract-level Outcome: Improve the accuracy, traceability and usability of procurement data – Will support tracing of funding from obligation through expenditure on a Federal-wide basis Stage of Rulemaking – Proposed rule is in development 22

Uniform Procurement Identification ( ) Objective : Implement a uniform Procurement Instrument Identification (PIID) number system, which will require the use of Activity Address Codes (AACs) as the unique identifier for contracting offices and other offices DoD Sponsors: D, DPAP; DPAP/PDI Outcome: Provide for standardization across the Federal Government – Will facilitate tracking of Federal spending data Stage of Rulemaking – Proposed rule published 6/6/2013 – Next step: publish final FAR rule 23

Enhancements to Past Performance Evaluation Systems ( ) Objective: Update FAR subpart 42.15, Contractor Performance Information Sponsors: OFPP; DPAP/CPIC Outcome: – Incorporate two stand-alone past-performance reporting modules into the CPARS database Architect-Engineer Contract Administration Support System (ACASS) Construction Contractor Appraisal Support System (CCASS) – Provide reference to the CPARS Guide at – Update the list of evaluation factors to consider when assessing performance to better align with CPARS Stage of Rulemaking: – Proposed rule is in development

Business Systems Compliance (2012-D042) Objective: Contractor accountability for adequate contractor business systems DoD Sponsor: DCAA Outcome: – Entrust contractors with the capability to demonstrate compliance with DFARS system criteria for the following contractors’ business systems, based on self-evaluations and triennial audits by independent CPAs: Accounting systems Estimating systems, and Material management and accounting systems Stage of Rulemaking – Proposed rule in development – Public meeting to follow publication of the proposed rule 25

Contracts Under the Small Business Administration 8(a) Program ( ) Authority: SBA’s final rule amending the 8(a) program DoD Sponsors: SBP; DPAP/CPIC Purpose: Clarifies 8(a) procurement processes as follows: –Separate offering and acceptance not required for orders under Multiple Award IDIQ contracts that were set-aside for 8(a) –Agencies may take SB/SDB credit for awards to “post- graduate” 8(a) concerns, as long as firm does not represent itself as other than small –Obtain release of a requirement currently under the 8(a) program –A firm recently graduated from the 8(a) program may still be awarded a competitive 8(a) contract as long as it was eligible for the award on the initial date specified for receipt of offers Stage of Rulemaking ‒Final rule is in development ‒Proposed rule - published 2/3/

Small Business Subcontracting Improvements ( ) Authority: Sections 1321 & 1322, Small Business Jobs Act of 2010 DoD Sponsors: SBP; DPAP/CPIC Objective: Provide additional safeguards for small business subcontractors: ‒Prime contractor must notify the contracting officer in writing if it does not use the SB subcontractors set forth in its offer ‒Contracting officer is responsible to monitor and evaluate the prime’s adherence to its subcontracting plan ‒Clarifies which subcontracts must be included in the prime’s subcontracting data reporting ‒Funding agencies will be allowed to receive subcontracting credit for FSS and GWAC orders Implements: SBA final rule Stage of Rulemaking – Proposed rule is in development 27

Set-asides Under Multiple Award IDIQ Contracts ( ) Authority: Section 1331, Small Business Jobs Act of 2010 DoD Sponsor: SBP; DPAP/CPIC Objective: Provide uniform policy for conducting SB set- asides under multiple award (MA), IDIQ solicitations/ contracts - provides 3 new MA/IDIQ authorities to: ‒Set-aside part or parts ‒Set-aside orders for SB awardees ‒Reserve one or more contract awards under full and open solicitations Implements: SBA final rule published 10/02/2013 Stage of Rulemaking: ‒Proposed rule is in development ‒Prior partial implementation: interim rule published 11/02/