Minimum of a B.A. in Business or technical field, and 10 years experience in
contracts (International and Domestic), good knowledge of FAR, DFAR and
procurement regulations.

Please call Jo Anna Claycomb at (760) 967-0866.  Her fax # is (760) 757-3880
and e-mail is jaca@nctimes.net.

Yesterday the United States Supreme Court unanimously reversed the Ninth
Circuit Court of Appeals (opinion by Rehnquist) and held the
Administrative Procedure Act (APA), 5 USC s 702, does not
nullify the long-settled rule that, unless waived by Congress,
sovereign immunity bars creditors from enforcing liens on
Government property.  Blue Fox, subcontractor on Army project,
brought action to enforce an equitable lien against the United
States to recover money primary contractor owed but failed to
pay.  The court reasoned that although the APA waives the
Government's immunity from actions seeking relief "other than
money damages," the waiver must be strictly construed, in terms
of scope, in the sovereign's favor and must be "unequivocally
expressed" in the statutory text.  Blue Fox does not meet
this high standard.

CHARLES E. RUMBAUGH
Arbitrator/Mediator
(310) 373-1981 / FAX (310) 373-4182
e-mail:  cerumbaugh@aol.com

P.O. BOX 2636
ROLLING HILLS, CALIFORNIA 90274

P.O. Box 2095
BURLINGAME, CALIFORNIA 94011

January 4, 1999

Recent Regulatory Matters that may be of interest since the last Regulatory
Update include---

1.      DoD PROPOSES "REOPENER" CLAUSE FOR USE IN NEGOTIATED PROCUREMENTS
DURING TIME PHASE ASSOCIATED WITH FINALIZATION OF A BUSINESS COMBINATION.    On
December 31st a proposed rule was published by DoD in the Federal Register
which would "amend the DFARS to specify that contracting officers should
consider using a repricing (downward-only) clause in noncompetitive fixed-
price contracts that are negotiated during the period between the time a
business combination is announced and the time the contractor's forward
pricing rates are adjusted to reflect the impact of restructuring."   "The
repricing clause should ensure that DoD receives its appropriate share of
restructuring savings."   Comments are due on/before January 29, 1999.
        COMMENT:  Perhaps TINA adequately covers the situation!

2.      DEPARTMENT OF COMMERCE, BUREAU OF EXPORT ADMINISTRATION, IMPLEMENTS
INITIATIVE TO UPDATE IT'S ENCRYPTION POLICY.  On December 31st an interim rule
was published in the Federal Register which extensively "amends the Export
Administration Regulations for exports and reexports of encryption commodities
and software to U.S. subsidiaries, insurance companies, health and medical
end-users, on-line merchants and foreign commercial firms. This
rule…updates…encryption policy, and will streamline U.S. encryption export and
reexport controls."  The rule is effective December 31st with comments due
on/before March 1, 1999.

3.      ENVIRONMENTAL PROTECTION AGENCY (EPA) PROPOSES CONFORMING CHANGES DUE
TO FAR PART 15 REWRITE.  On December 28th EPA published a proposed rule in the
Federal Register to amend the EPA Acquisition Regulation (EPAAR) so that it
will conform to the FAR Part 15 Rewrite. "EPA began implementation of the
revised Part 15 as of December 19, 1997. The EPAAR is in substantive
compliance with the revised FAR, but extensive redesignation of EPAAR subparts
and sections is required for structural conformance. Accordingly, EPAAR Part
1515, Contracting by Negotiation, is revised in its entirety, and parts 1503,
Improper Business Practices and Personal Conflicts of Interest, and 1552,
Solicitation Provisions and Contract Clauses, are amended." Comments are due
on/before January 27, 1999.

4.      ELECTRONIC NOTIFICATION OF GOVERNMENT ACCEPTANCE & APPROVAL OF
SUPPLIES AUTHORIZED BY DFARS. On December 15th DoD published a final rule in the
Federal Register to amend the DFARS to clarify that DoD Manual 4000.25-5-M,
Military Standard Contract Administration Procedures (MILSCAP), authorizes
electronic notification to the payment office of Government acceptance or
approval of supplies delivered or services performed under a contract.  The
rule is effective December 15th.

5. FEDERAL ACQUISITION CIRCULAR (FAC)  97-10 ISSUED.  On December 18th FAC
97-10 was published in the Federal Register.   In the published summary below,
all changes are effective February 16th except where noted otherwise:

· Historically Underutilized Business Zone (HUBZone) Empowerment Contracting
Program.  This interim rule amends FAR Parts 5, 6, 7, 8, 12, 13, 14, 15, 19,
26, 52, and 53 to implement the HUBZone Empowerment Contracting Program. The
program provides for set-asides, sole source awards, and price evaluation
preferences for HUBZone small business concerns and establishes goals for
awards to such concerns.  Effective January 4th.  (FAR Case 97-307)

· Limits for Indefinite-Quantity Contracts.  This final rule amends FAR
16.504(a) to clarify that maximum and minimum limits for indefinite-quantity
contracts may be expressed as a number of units or dollar value.  (FAR Case
98-016)

· Office of Federal Contract Compliance Programs (OFCCP) National Pre-Award
Registry.  This final rule amends FAR part 22 and related clauses at part 52
to (1) inform the procurement community of the availability of the Department
of Labor's OFCCP National Pre-Award Registry (Registry), accessible through
the Internet, that contains contractor establishments who have received a
preaward clearance within the preceding 24 months, and the option to use the
information in the Registry in lieu of submitting a written request for a
preaward clearance; and (2) implement revised Department of Labor regulations
pertaining to equal employment opportunity and affirmative action requirements
for Federal contractors and subcontractors. (FAR Case 98-607)

· Limitation on Allowability of Compensation for Certain Contractor Personnel.
The interim rule is converted to a final rule with minor clarifying amendments
at FAR 31.205-6(p)(2). The rule implements Section 808 of the National Defense
Authorization Act for Fiscal Year 1998 (Pub. L. 105-85). Section 808 limits
allowable compensation costs for senior executives of contractors to the
benchmark year by the OFPP Administrator.  The benchmark compensation amount
is $340,650 for contractor fiscal year 1998, and subsequent contractor fiscal
years, unless and until revised by OFPP. (FAR Case 97-303)

· Evidence of Shipment in Electronic Data Interchange (EDI) Transactions.
This final rule revises the clause at FAR 52.247-48 to facilitate the use of
EDI transactions and to streamline the payment process when supplies are
purchased on a free on board (f.o.b.) destination basis with inspection and
acceptance at origin.       (FAR Case 97-011)

· Contractor Purchasing System Review (CPSR) Exclusions.  This final rule
amends FAR 44.302 and 44.303 to exclude competitively awarded firm-fixed-price
and competitively awarded fixed-price contracts with economic price
adjustment, and sales of commercial items pursuant to FAR part 12, from the
dollar amount used to determine if a contractor's level of sales to the
Government warrants the conduct of a CPSR; and to exclude subcontracts awarded
by a contractor exclusively in support of Government contracts that are
competitively awarded firm-fixed-price, competitively awarded fixed-price with
economic price adjustment, or awarded for commercial items pursuant to FAR
part 12, from evaluation during a CPSR.  (FAR Case 97-016)

· Contract Quality Requirements.  This final rule amends FAR 46.202-4, 46.311,
and 52.246-11 to replace references to Government specifications with
references to commercial quality standards as examples of higher-level
contract quality requirements; to require the contracting officer to indicate
in the solicitation which higher-level quality standards will satisfy the
Government's requirement; and, if more than one standard is listed in the
solicitation, to require the offeror to indicate its selection.  (FAR Case
96-009)

· Mandatory Government Source Inspection.  This final rule amends FAR 46.402
to facilitate the elimination of certain requirements for Government contract
quality assurance at source. This rule deletes the mandatory requirements for
Government contract quality assurance at source on all contracts that include
a higher-level contract quality requirement, and for supplies requiring
inspection that are destined for overseas shipment. (FAR Case 97-027)

· No-Cost Value Engineering Change Proposals (VECPs). The interim rule is
converted to a final rule without change. The rule revises FAR 48.104-3 to
clarify that no-cost VECPs may be used when, in the contracting officer's
judgment, reliance on other VECP approaches likely would not be more cost-
effective and the no-cost settlement would provide adequate consideration to
the Government. Effective December 18th.  (FAR Case 96-011)

Miscellaneous items-

· OFPP Administrator Deidre Lee will be speaking in San Diego on January 21st
at a NCMA luncheon meeting on the topic of "Current Events in Federal
Procurement Environment."  Reservation can be made at 619 221-5556.

· The December 8th Director of Defense Procurement briefing with Industry
highlighted a couple of items:
        Industry stated that it is experiencing as much as 100 days in delay
in payment by DFAS.  Ms. Spector was quoted as saying any DFAS payment issue is
unrelated to the Y2K software implementation problem.
        She is also of the view to have the Civil Defense, Relocation, and
Travel Costs principles eliminated.
        On the subject of cost/pricing data being requested for "commercial
items," she is reported as saying, "if an item is not 'identical to' a known
commercial item the government must protect itself and get data because we
(the Government) are still blameworthy in subsequent oversight actions that
challenge why the Government paid a higher price."
        COMMENT:  On the DFAS payment delay, this is the prevalidation-related
payment delay effort reported on in earlier Updates.  In fact, by a memorandum
dated December 7th the Director of DFAS, in part, "suspend(s) cash management
beginning on December 18, 1988, consistent with the provisions of the Prompt
Payment Act."  Leave was also canceled!  The check is "in the mail!"
        On the latter commercial item data issue, it seems that more tools may
need to be available to the contracting parties to assure the government is only
paying (and a Contractor is only receiving) a "fair and reasonable" price (as
the FAR currently requires) so that industry is not called upon to provide
cost/pricing data.  Whatever happened to "information other than cost or
pricing data?"  (In an earlier November 23rd letter to an industry association
representative, Ms. Spector reminded industry of this fair and reasonableness
standard.)

· For the period beginning January 1, 1999 and ending on June 30, 1999, the
prompt payment interest rate is 5% (five) per cent per annum which is also
used for the calculation of interest due on claims.

· The Air Force is requesting its Contractors to execute a document entitled,
"Overarching Principles Between The Department of The Air Force and (named
Contractor) Concerning Use of Alternative Dispute Resolution Processes."  By
signing the Agreement a Contractor and the Air Force acknowledges that "drawn
out litigation consumes resources and funds, detracting from…(national
defense) mission accomplishment….  Alternative Dispute Resolution (ADR)
procedures involve collaborative techniques which can often spare the Air
Force and (named Contractor) the high cost and wear and tear of litigation."
        Underlying principles of the Agreement include avoidance/minimization
of disputes, identify early-on potential program/contract obstacles, resolution
of all contractual contractual issues at the program/contract execution level
and absent resolution "ADR should be used to settle the dispute in lieu of
litigation," specific ADR collaborative techniques are subject to mutual
agreement, and "in the event either party believes that a particular dispute
is not well suited to ADR, or is dissatisfied with progress being made in a
particular ADR proceeding, that party may elect to opt out of the ADR process,
by notifying the other party in writing, and proceed as otherwise provided
under contract, regulation or statute."  Over 7 Contractors had signed a form
of the Agreement as of late 1998.
        COMMENT:  Since most of the procurement dollars are spent at the
subcontractor level it is interesting that no mention of subcontractors being
directly or indirectly part of this process/action.   Can there be a
resolution of all program/contract disputes without a similar commitment from
subcontractors?  Since this AF action is part of the Administration's
Interagency ADR Working Group effort (under the auspices of the Attorney
General to implement the Administration's commitment to ADR) it seems
reasonable that this would also involve merely a "request" for all
contractors/subcontractors.  Otherwise….
        Subcontractors should seriously consider requesting a similar
undertaking with their primes or higher tier contractor.  Recall that twelve major defense
contractors starting in 1995 agreed to a two prong ADR approach to the
resolution of specified disputes between them.  OFPP seems to be (currently)
silent on this ADR issue.
        Also on the ADR front, over twelve major commercial companies "have
signed a commitment to use mediation for Year 2000 business disputes" as announced in
late November by the CPR Institute for Dispute Resolution.  A copy of the CPR
Year 2000ADR Commitment can be found at www.cpradr.org.

· The Department of the Air Force amended Title 48, Chapter 53 of the CFR by
removing Part 5350, Extraordinary Contractual Actions, "because it is outdated
and was deleted from the Air Force Federal Acquisition Regulation Supplement
(AFFARS) by Air Force Acquisition Circular (AFAC) 96-1 in June 1997."

· On December 24th "the Director of Defense Procurement reinstated the use of
small business set-aside procedures for certain construction acquisitions
conducted by the Departments of the Army and Navy. Included in the
reinstatement are solicitations issued under Standard Industrial
Classification (SIC) Major Group 16 (Army and Navy) and SIC Code 1791 (Navy
only). The Director of Defense Procurement has also reinstated the use of
unrestricted competition for certain construction acquisitions conducted by
the Departments of the Army and Navy and non-nuclear ship repair acquisitions
conducted by the Navy. Included in the reinstatement are solicitations issued
under SIC Major Group 15 (Army and Navy) and SIC Code 3731 (Navy only)."  This
action is effective on December 11th.

· On December 15th the Director of Defense Procurement issued a final rule
amending the DFARS to specify that contracting officers must include an e-
mail/Internet address, when available, on contracts and modifications
COMMENT:  Why isn't this in the FAR?  What "specific and unique need" does DoD
have for this agency regulation (the specified agency regulatory standard in
the OFPP Act)?  Then again, FAR Part 1 provides greater discretion/judgment.

· Copies of individual OMB circulars are available at OMB's Internet home page
at http://www.whitehouse.gov/WH/EOP/OMB/html/circular.html

· The Nuclear Regulatory Commission published a proposed  rule on December 8th
which proposes to amend its regulations governing the procurement of goods and
services. "The proposed rule is intended to meet the requirements" of FASA and
FARA.   Comments are due on/before February 22nd.

· On December 29th NASA noticed in a proposed rule that it intended "to revise
the NASA Grant and Cooperative Agreement Handbook to specify that for all
awards of new grants and cooperative agreements and modifications of existing
grants and cooperative agreements, management fee shall not be permitted.
Comments are due on/before March 1, 1999.

· The recent Rig Masters Inc. case decided by the US Court of Federal Claims
should be reviewed with counsel in view of its ruling that a regulatory
provision which purports to exempt disputes involving VECPs from the statutory
provisions of the Contract Disputes Act is unenforceable.

· In early December the US Supreme Court heard arguments in the Department of
the Army v. Blue Fox case to determine whether a subcontractor shall be
permitted to bring an action to enforce an equitable lien against the US, i.e.
enjoin payment by SBA and the Army to another contractor, in order to recover
the amount of money an original contractor owed but failed to pay the
subcontractor.
COMMENT:   Stay tuned subcontractors, this may be away to collect when the
work was completed but the primed failed to pay.

· The Small Disadvantaged Business Certification Requirement start date has
been extended to July 1st.

· Finally, the IRS issued temporary regulations effective January 1st to add
payments by certain credit cards and debit cards to the acceptable methods of
payment under IRS Code.  Frequent Flyer Mileage?

CHARLES E. RUMBAUGH
Arbitrator/Mediator
(310) 373-1981 / FAX (310) 373-4182
e-mail:  cerumbaugh@aol.com
ADRoffice@ieee.org

P.O. BOX 2636
ROLLING HILLS, CALIFORNIA 90274

P.O. Box 2095
BURLINGAME, CALIFORNIA 94011

September 23, 1998

Recent Regulatory Matters that may be of interest since the last Regulatory
Update---

1.  Y2K.  On August 7, 1998, Secretary of Defense Cohen issued a memorandum on
"Y2K Compliance."  This memorandum called for several actions in connection
with Y2K which is described therein as a "critical national defense issue."
Briefly, the memo requires Y2K status ("compliance or non-compliance")
reporting on a periodic basis for specified programs/systems.  Effective
October 1st certain identified actions are also required of the Military
Departments and Defense Agencies including, (1) "funds are not obligated for
any mission-critical system that is listed in the Y2K database that lacks a
complete set of formal interface agreements for Y2K compliance" and (2) "funds
are not obligated for any contract that is for information technology (IT) or
national security system (NSS) that processes date-related information and
that does not contain Y2K requirements specified in Section 39.106 of the
Federal Acquisition Regulation."   On August 24, 1998, Deputy Secretary of
Defense Hamre issued a memorandum on the Subject of "Year 2000 (Y2K)
Verification of National Security Capabilities" calling in part for testing of
information technology and national security  system Y2K capabilities with
certain certifications by November 1st.

Also on the subject of Y2K, the Securities and Exchange Commission announced
in the Federal Register on September 3rd that it was imposing a "moratorium on
the implementation of new Commission rules that require major reprogramming of
computer systems by SEC-regulated entities between June 1, 1999 and March 31,
2000_in order to facilitate and encourage securities industry participants to
allocate significant time and resources to addressing the potential problems
caused by the Year 2000 computer technology conversion."

COMMENT:  Review the DoD memorandums and any implementing "direction."  Some
contractors are receiving "inquiries" in response to these memorandums.  The
terminology is many cases needs to be clarified; impact on current contracts
needs to be ascertained; and, to the extent that direction is received,
caution must be exercised if it is not being directed from the contracting
officer!  This is indeed a national defense issue as well as a contract issue!
All parties should assure that communications on Y2K come through a focal
point.  Contracts and Legal functions should be involved.   The Department of
Defense, Assistant Secretary of Defense (C3I) Year 2000 Oversight and
Contingency Planning Office Internet location at http://www.dtic.mil/c3i/y2k/
may be helpful.

2. PROPOSAL TO "CLARIFY" RULES IN PLACEMENT OF ORDERS UNDER MULTIPLE AWARD
CONTRACTS PUBLISHED.   The Federal Register on September 19, 1998, published a
proposed FAR rule (FAR 16.505) to "clarify the procedures governing placement
of orders under multiple award indefinite delivery contracts." Specifically, a
"fair opportunity to be considered" for each order in excess of $2,500 is
normally required.  Factors are listed which the contracting officer can use
in making an order award decision.  Further, the "procedures and selection
criteria that will be used to provide multiple awardees a fair opportunity to
be considered for each order (award) must be set forth in the solicitation and
contract."  Comments are due on/before November 9th.

3. ENVIRONMENTAL PROTECTION AGENCY (EPA) PUBLISHES PROPOSAL ON EVALUATION OF
CONTRACTOR PAST PERFORMANCE.  On September 16, 1998, the EPA published in the
Federal Register a proposed rule that would amend "the EPA Acquisition
Regulation (EPAAR) (48 CFR Chapter 15) to revise its policy and procedures
regarding the evaluation of contractor performance on EPA contracts and to
establish an EPAAR clause to be used in solicitations and contracts with an
estimated dollar value in excess of $100,000. This proposed rule applies to
all large and small entities who perform or are interested in performing under
EPA contracts."  Comments are due on/before November 16th.
      COMMENT:  There "still" seems to be an issue on how "experience" relates
to past performance in view of the FAR Part 15 detailed rules on when and how
one has an "opportunity to rebut certain adverse information" and FAR Part 15
which does not expressly recognize "experience" as a distinct area.

4. SMALL BUSINESS REGULATORY ACTIVITIES. The Federal Register on August 24,
1998, published a final Small Business Administration Rule to incorporate the
Very Small Business (VSB) Set-Aside Pilot Program pursuant to amendments to
the Small Business Administration Reauthorization and Amendments Act of 1994.
"The Act defines a very small business concern as one that has 15 or fewer
employees together with average annual receipts that do not exceed $1
million."  "A contracting officer must (generally) set aside for VSB concerns
each procurement that has an anticipated dollar value between $2,500 and
$50,000."  This pilot VSB program will now expire on September 30, 2000.

DoD also published a Federal Register notice on September 14th to "reinstate
the use of small business set-aside procedure for certain non-nuclear ship
repair and construction  acquisitions conducted by the Navy."

Miscellaneous Items-

· On August 28th the FAR Secretariat published a notice in the Federal
Register soliciting comments in connection with the Paperwork Reduction Act
regarding an "extension of a currently approved information collection
requirement" concerning "Termination Requirements," i.e. for default and
convenience.  Comments on paperwork aspects are due on/before October 27,
1998.

· The Environmental Protection Agency published a notice in the September 3rd
Federal Register which amended the EPA Acquisition Regulations to, among other
things, remove "unnecessary coverage that duplicates existing FAR coverage on
quick-closeout procedures" and to make some revisions to the Organizational
Conflicts of Interest clause at 1552.209-71.

· DoD published in the September 8th issue of the Federal Register a proposed
rule that would remove from the DFARS all references to flexible progress
payments.  In a prior Update mention was made of a notice/comment and public
hearing opportunity in connection with an advance notice of proposed
rulemaking on "administering progress payments."  This is one output of that
process and will be the demise of flex!  Comments are due on/before November
9th.

· GSA published a notice on September 11th that is implementing, effective
October 1, 1998, a single agency-wide Electronic Posting System (EPS) for
soliciting quotations, bids, and proposals in connection with business
opportunities.  Solicitations will be available on the Internet at
http://eps.arnet.gov.

· The DCMC is reported to be intensifying its efforts in closing out contracts
as part of an initiative with DCAA in reducing the number of open overhead
negotiations.

Future Speaking Engagements include-

· October 15, 1998, NCMA Puget Sound Chapter on "Y2K Issues/Challenges."

· October 16, 1998 NCMA Portland/Vancouver Chapter on "Y2K Issues/Challenges."

· October 17, 1998, Society of Professionals In Dispute Resolution (SPIDR),
International Sector Annual Meeting, Portland, Oregon.

· November 5, 1998, NAPM Modesto Chapter, "How will the Y2K 'Bug'
Affect/Infect You?"

· November 16, 1998, NAPM Electronic Commerce '98 Conference, Phoenix, on "Y2K
Issues/Challenges & Ways to Address/Resolve Them."

· November 18, 1998, NCMA Inland Empire Chapter on "FAR Part 15 Changes."

· December 3, 1998, NCMA East Coast Educational Conference, Washington DC.
Panel moderator, "The ADR Evolution: 'Working it out.'"

Q: What is a Certified Purchasing Manager (C.P.M.) certification worth to a Supply Management Professional?
A: According to a recent NAPM survey, an average salary of $59,300 p/a.

Q: What is an MBA worth to a Supply Management Professional?
A: According to the same survey, an average salary of $74,400.

Q: What are the most common college degrees for Supply Management Professionals?
A: Technical undergraduate with a graduate in Business (or Law).