New Regulation Formalizes Ombudsman Practice and Identity for IDIQ Contracts

An 'ombudsman' is an official charged with addressing and/or investigating the interests of individuals' or companies' complaints of maladministration or violations of rights. You can find them at all levels of governments; federal, state, local, and municipal. To be effective, ombudsmen must be independent of the aggrieving organization.

The FAR (Federal Acquisition Regulations) Councils have just issued a final rule implementing a requirement for contracting agencies to establish ombudsmen for multiple-award indefinite-delivery indefinite-quantity (IDIQ) contracts.

Under this new regulations,

1. Each agency that awards IDIQ contracts must designate a task-order and delivery-order ombudsman for the contract.
2. The ombudsman must review complaints from the contractor concerning all task-order and delivery-order actions for the contract
3. The ombudsman must ensure the contractor is afforded a fair opportunity for consideration in the award of orders, consistent with the procedures in the contract.
4. The contracting officer must include the name, address, telephone number and email address for the agency ombudsman.

The provision also provides that prior to consulting with the ombudsman, the contractor is encouraged to first address complaints with the contracting officer for resolution. Also, when requested by the contractor, the ombudsman will keep the identity of the concerned party confidential.

Some agencies have already established task-order and delivery-order ombudsmen however, they can be sometimes hard to find. This provision formalizes the practice across all agencies and requires the name and contact information be specifically spelled out in the contract.

The full regulation can be accessed here.

Fewer Regulations Saved $913 Million for Small Businesses

Every year, the Small Business Administration (SBA) Office of Advocacy reports on efforts to relieve the burden of new regulations on small businesses. These efforts are the result of the Regulatory Flexibility Act (RFA) that requires federal agencies to evaluate the impact of new rules on small businesses and to consider flexible approaches to complying with those rules.

Here's the good news, according to the SBA. In fiscal year 2017, changes to proposed federal regulations saved small businesses $913 million in regulatory costs. How did they achieve such savings? The savings are explained in the Annual Report which you can download and read here. The report details how 16 regulatory and (more significantly) deregulatory actions by six agencies achieved the $913 million in savings.

Chief among the reasons really had nothing to do with SBA's. It was the result of a couple of executive orders (EOs) designed to reduce the number of new regulations (see below). Recall the President's order that every agencies must repeal two regulations for every new regulations that it proposes. Because of this EO, there have been only two changes to the Federal Acquisition Regulations under the current administration.

Whether you believe SBA's cost savings estimate or, like us, believe it to be based on subjective non-quantifiable estimate, the point is that fewer regulations will result is tangible cost savings and those cost savings are more significant to small businesses who typically lack economies of scale and do not have the resources of larger businesses to comply.

EO 13771 Reducing Regulation and Controlling Regulatory Costs: Whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.

EO 13777 Enforcing the Regulatory Reform Agenda: The head of each agnecy shall designate an agency official as its Regulatory Reform Officer (RRO) Each RRO shall oversee the implementation of regulatory reform initiatives and policies to ensure that agencies effectively carry out  regulatory reform.

One of the first regulations to fall under the current administration was the onerous Fair Pay and Safe Wrokplaces rule, of which we have reported previously (see Fair Pay and Safe Workplaces Rules - Dead).

RIP - Fair Pay and Safe Workplaces Regulations

Yesterday the President signed into law H.J.Res 37 which repeals the Fair Pay and Safe Workplaces regulations, which was based on an Executive Order from the prior President.

According to the Presidential spokesman, manufacturers had identified the "blacklisting" rule as one of the most significant threats to growing American business and hiring more American workers. "The rule simply made it too easy for trial lawyers to go after American companies and American workers who contracted with the federal Government.

Nice, we just got rid of 90 pages of Federal Register regulations.

Congressional Resolution to Rescind Fair Pay and Safe Workplaces Rules Passes Both Houses

Last Monday (March 6), the Senate passed a joint resolution disapproving the final rule implementing the Fair Pay and Safe Workplaces Executive Order. The House initiated the joint resolution and passed it in February. From what we've been able to discern from reading online sources, the President is expected to sign it into law.

The resolution reads:

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration relating to the Federal Acquisition Regulations (published at 81 Fed. Reg. 58562 (August 25, 2016)), and such rule shall have no force or effect.

The Fair Pay and Safe Workplaces Executive Order and its related regulations have been controversial from the start. It requires the Government to "consider" a contractor's (or prospective contractor's) history of actual and alleged labor violations when awarding contracts. It has become known as the blackballing regulation.

Just before it was to go into effect, a Texas judge enjoined the Government from implementing the portion of the new rules relating to the reporting and disclosure requirement s regarding labor law violations, but not other aspects of the regulations.

Presumably, this resolution applies to the entirety of EO and regulations including the provisions relating to the paycheck transparency (see FAR 52.222-60), based on the same EO and part of the same regulation addressed in the Congressional resolution.

Senate Doesn't Like 60 Day Suspension of New Regulations

Three United States Senators (Wyden, McCaskill, and Markey) published a letter they wrote to the Secretary of Energy (Rick Perry) concerning whistleblower protections for employees of DOE (Department of Energy) contractors.

On January 31, 2017, DOE published a notice that it was issuing a stay on implementation of final rules allowing DOE to hold contractors accountable for retaliation against whistleblowers who reported nuclear safety violations. The Senators requested DOE to immediately reinstate these rules which, according to them, have clear impacts on public safety and national security.

DOE published final regulations establishing that retaliation against whistleblowers for raising nuclear safety concerns was a nuclear safety violation on December 27, 2016. These new rules allowing DOE to assess civil penalties against certain contractors and subcontractors for violations of the prohibition against retaliating against an employee who reports violations of law, mismanagement, waste, abuse, or dangerous/unsafe workplace conditions, among other protected activities, concerning nuclear safety we to become effective on January 26, 2017.

These new rules however were halted (or temporarily suspended) by the new administration who established a new process for managing the Federal regulatory process. The temporary stay is 60 days.

The Senators didn't like the action. In their letter, they wrote:

Whistleblowers at DOE have exposed substantial waste, fraud and abuse, as well as prevented serious safety violations across the DOE complex. That DOE contractors have retaliated against these whistleblowers is well documented. What's missing is DOE's willingness to do something to reverse the culture of retaliation among its contractors and to demand accountability. After failing for years to close a regulatory chasm that prevented the DOE from fully using its nuclear safety authority to protect whistleblowers, including the use of civil penalties, DOE finally di so in December, only to then suspend them a month later. We request that you immediately lift this suspension and reinstate these rules.

Good grief, its only a 60 day suspension. Do the Senators really think that contractors will use this 60 day stay to retaliate against whistleblowers?

Executive Order on Enforcing Regulatory Reform

The President issued an Executive Order (EO) last Friday designed to add teeth to his regulatory reform agenda. The EO requires agencies to dedicate an individual and a task force infrastructure to enforce his previous EO concerning two for one offsets for any new regulations at zero cost.

To implement the new EO, every agency must designate an agency official as its Regulatory Reform Officer (RRO). They must also set up a task force to assist the RRO in implementing the EO.

Each RRO will oversee the implementation of regulatory reform initiatives and policies to ensure that agencies effectively carry out regulatory reforms consistent with applicable laws. These initiatives and policies include:

• Executive Order 13771 (under President Trump) regarding offsetting the number and cost of new regulations (eliminating two existing regulations for every new regulation and at zero increased cost.
• Executive Order 12866 (under President Clinton) regarding regulatory planning and review
• Executive Order 13563 (under President Obama) regarding retrospective review
• The termination of programs and activities that derive from or implement Executive Orders, guidance documents, policy memoranda, rule interpretations, and similar documents, or relevant portions thereof that have been rescinded (such as the Fair Pay and Safe Workplaces rules).

Each agency RRO must periodically report to the agency head and regularly consult with agency leadership. The definition of "periodically" and "regularly" is left up to the agencies.

The RRO, along with the Regulatory Reform Tax Force (RRTF), will be evaluating existing regulations and make recommendations to the agency head regarding their repeal, replacement, or modification, At a minimum, the Task Force must identify regulations that

• eliminate jobs, or inhibit job creation
• are outdated, unnecessary, or ineffective,
• impose costs that exceed benefits
• create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies
• derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified.

Although not part of the EO, it would seem beneficial for the RRO and the RRTF to solicit public input on what regulations should be repealed, replaced, or modified. Perhaps the RRTF could begin with provisions in the Federal Acquisition Regulations (FAR) that are ignored or not enforced that have no consequences for noncompliance. 

Want a New Regulation? Fine, But First, Eliminate Two Existing Regulations

Last week, we reported on the President's moratorium on new regulations; no new regulations can be sent to the Federal Register until approved by someone appointed by the new administration and a 60 day freeze on those already published but have not taken effect.

Today, the President signed another Executive Order (EO) that should dramatically reduce the number of regulations. It requires agencies to cut two existing regulations for every new rule introduced. It will also set a cap on the cost of new regulations. For fiscal year 2017, the cap is set at $0.

The two for one plan is aimed at reducing regulator burdens on the private sector, especially small businesses. Agencies must self-identify the regulations to cut although the White House will have final say on the matter.

You can read the full text of the EO here.

Don't Expect Any New Regulations to be Published for A While

Yesterday, we reported the President's goal of reducing regulations by 75 percent. That, or course, is a very ambitious goal and whether he can roll back the number of pages of regulations to the early 1970s level is questionable but a very worthy goal.

But, the President has already begun - he has instituted a freeze on all new regulations.

Specifically, the freeze provides for the following:

1. Subject to any exceptions the Director or Acting Director of the OMB (Office of Management and Budget allows for emergency situations or other urgent circumstances relating to health, safety, financial, or national security matters, Executive Agencies may send no regulations to the Office of the Federal Register (OFR) until a department or agency head appointed or designated by the President after noon on January 20, 2017, reviews and approves the regulation.

2. With respect to regulations that have been sent to the OFR but not published in the Federal Register, immediately withdraw them from the OFR for review and approval.

3. With respect to regulations that have been published in the OFR but have not yet taken effect, as permitted by applicable law, temporarily postpone their effective date for 60 days for the purpose of reviewing questions of fact, law, and policy they raise. Where appropriate, consider proposing for notice and comment a rule to delay the effective date beyond the 60-day period.

You may read the entire directive, signed by the President's Chief of Staff here.