A new rule awaiting approval is seeking to require the Department of Defense and other federal agencies more stringent reporting requirements for service contracts.

The proposed rule – suggested by the Department of Defense, General Services Administration and NASA – is an amendment to the Federal Acquisition Regulation (FAR). It suggests that contractors that have cost-reimbursement and time-and-materials services contracts should report its hours of work as low as the $150,000 simplified acquisition threshold, which allows agencies to make purchases without the lengthy formal procedures of purchasing. The amendment identified T-and-M services contracts as the riskiest types compared with contracts with a set price.

“In the absence of complete and reliable information on the extent of their reliance on service contractors, Federal agencies are not well-equipped to determine whether they have the right balance of contractor and in-house resources needed to accomplish their missions,” the proposed rule stated.

Currently, companies with riskier contracts have tracked their work hours through invoices sent to the federal government. Yet under the new proposal, they would be required to report hours worked directly to the agency.

For set price contracts, contractors would need to report their work based on a phased approach laid out in President Barack Obama’s fiscal 2011 budget. For fiscal 2011, requirements would be set at $5 million, then decline steadily to $500,000 in fiscal 2014, according to the revised notice. It is anticipated that agencies would then manage incoming information more effectively.

For indefinite-delivery contracts, Federal Supply Schedule contracts (FSSs), Governmentwide acquisition contracts (GWACs), and multi-agency contracts, the reporting would be determined based on the type and estimated total value of the orders issued under the contract.

Each report would be expected to contain:

  • The contract number
  • The total dollar amount invoiced for services performed during the previous fiscal year under the contract.
  • The number of contractor direct labor hours used on services during the previous year.
  • Data reported by subcontractors, which includes subcontract number and the amount of labor hours invoiced by a first-tier subcontractor.

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Chandler Harris is a freelance business and technology writer located in Silicon Valley. He has written for numerous publications including Entrepreneur, InformationWeek, San Jose Magazine, Government Technology, Public CIO, AllBusiness.com, U.S. Banker, Digital Communities Magazine, Converge Magazine, Surfer's Journal, Adventure Sports Magazine, ClearanceJobs.com, and the San Jose Business Journal. Chandler is also engaged in helping companies further their content marketing needs through content strategy, optimization and creation, as well as blogging and social media platforms. When he's not writing, Chandler enjoys his beach haunt of Santa Cruz where he rides roller coasters with his son, surfs and bikes across mountain ranges.