[Federal Register: May 22, 2003 (Volume 68, Number 99)]
[Rules and Regulations]               
[Page 28093-28094]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]





48 CFR Part 4

[FAC 2001-14; FAR Case 2000-304; Item IV]
RIN 9000-AI94

Federal Acquisition Regulation; Electronic Signatures

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.


SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on a final rule 
amending the Federal Acquisition Regulation (FAR) to clarify that 
agencies are permitted to accept electronic signatures and records in 
connection with Government contracts.

DATES: Effective Date: June 23, 2003.

Building, Washington, DC, 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Laura Smith, Procurement Analyst, at (202) 501-
7279. Please cite FAC 2001-14, FAR case 2000-304.


A. Background

    On October 21, 1998, the Government Paperwork Elimination Act 
(Title XVII of Division C of Public Law 105-277) was enacted. On June 
30, 2000, the Electronic Signatures in Global and National Commerce Act 
(E-SIGN) (Pub. L. 106-229) was enacted. These laws eliminate legal 
barriers to using electronic technology in business transactions, such 
as the formation and signing of contracts. The Office of Management and 
Budget (OMB) has issued guidance on both of these laws. See Memorandum 
M-00-15, ``OMB Guidance on Implementing the Electronic Signatures in 
Global and National Commerce Act,'' dated September 25, 2000, and 
Memorandum M-00-10, ``OMB Procedures and Guidance on Implementing the 
Government Paperwork Elimination Act,'' dated April 25, 2000. These 
memoranda are available on the OMB Homepage at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.omb.gov.
    This final rule furthers Government participation in electronic 
commerce when conducting Government procurements by adding a statement 
at FAR Subpart 4.5, Electronic Commerce in Contracting, clarifying that 
agencies are permitted to accept electronic signatures and records in 
connection with Government contracts.
    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 65 FR 65698, November 1, 2000. In addition to proposing a 
policy statement recognizing the use of electronic signatures, the 
proposed rule would have revised the current FAR definitions of ``in 
writing'' and ``signature'' at FAR 2.101 to clarify that these terms 
include electronic, in addition to paper, transactions. It also would 
have made minor changes to the definition of electronic commerce. 
Twenty-five sources submitted comments in response to the proposed 
rule. All comments were considered in the development of the final 
    Several surety companies expressed support for greater use of 
electronic technologies for the filing of bid, performance, and payment 
bonds and associated powers of attorney. They noted that such 
technologies will ``streamline the procurement process, reduce costs, 
and increase efficiency for all trading partners.'' However, they 
cautioned that FAR coverage should not result in reliance on a single 
proprietary system for electronic signatures for the entire Federal 
government. They further recommended a phase-in period so sureties that 
are not yet automated have alternative means of transacting with the 
Government in the near term.
    With respect to the choice of technology, the final rule simply 
states, ``agencies may accept electronic signatures and records in 
connection with Government contracts.'' The choice of technology for 
implementing electronic signatures is left to each agency. As for the 
execution of bonds and powers of attorney, the rule does not require 
that these documents be submitted electronically, which will allow time 
for parties to effectively transition to electronic transactions.
    One commenter made several recommendations regarding the 
definitions. In particular, the commenter asserted that--
    [sbull] A definition for ``electronic commerce'' is unnecessary and 
should be removed from the FAR;
    [sbull] The current FAR definition of ``signature'' should be 
replaced by the E-SIGN definition of ``electronic signature''; and
    [sbull] The E-SIGN definition of electronic record should be 
substituted for the

[[Page 28094]]

current and proposed definitions of ``in writing,'' ``writing,'' and 
``written,'' because the latter definitions are too narrow. The 
Councils disagree with the recommended changes to the definitions.
    The current FAR definition of ``electronic commerce'' is consistent 
with that set forth in section 30 of the Office of Federal Procurement 
Policy Act. The Councils believe the statutory definition should be 
reflected in the FAR. At the same time, the Councils recognize the 
value in evaluating the continued need for, and appropriateness of this 
definition as electronic commerce continues to become more 
institutionalized in the Government.
    The commenter's proposed definition of electronic signature does 
not reflect intention to authenticate. This concept is important to 
contracting-related transactions, electronic or otherwise. As noted in 
a September 12, 1951, Comptroller General decision (B-104590), courts 
have held that ``a signature consists of the writing of one's name and 
of the intention that it authenticate the instrument, and, therefore, 
any symbol adopted as one's signature when affixed with his knowledge 
and consent is a binding and legal signature * * *'' This was 
reiterated in a September 20, 1984, Comptroller General decision (B-
216035). Consistent with this reasoning, FAR case 91-104 incorporated 
the concept of authentication into the definition of ``signature.'' 
That case established the premise that either hand scribed or other 
format signatures indicate an intent to authenticate (or be bound).
    Similarly, the Councils believe that the proposed definition for 
``electronic record'' is insufficient. The Councils maintain that the 
definition of ``in writing'' should reflect the requirement to store 
because agencies ask for information in writing when they intend to 
keep it as a record. Therefore, storage, reproduction, and later 
retrieval are all salient characteristics of a record. After further 
deliberation and consideration of the public comments regarding the 
proposed changes to the definitions, the Councils have determined that 
the current FAR definitions are sufficient and appropriately capture 
the necessary salient characteristics required of a ``writing'' and a 
``signature.'' Likewise, the Councils concluded that there was no 
significant value achieved through the proposed change to the 
definition of ``electronic commerce.''
    Therefore, this final rule makes no changes to the current FAR 
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because the rule does not 
change the procedures for award or administration of contracts, but 
rather, clarifies that the use of electronic signatures and electronic 
methods are permitted in Government procurement.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

List of Subjects in 48 CFR Part 4

    Government procurement.

    Dated: May 13, 2003.
Laura G. Smith,
Director, Acquisition Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR part 4 as set forth below:


1. The authority citation for 48 CFR part 4 is revised to read as 

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

2. Amend section 4.502 by adding paragraph (d) to read as follows:

4.502  Policy.

* * * * *
    (d) Agencies may accept electronic signatures and records in 
connection with Government contracts.

[FR Doc. 03-12304 Filed 5-22-03; 8:45 am]