[Federal Register: July 5, 2011 (Volume 76, Number 128)]
[Rules and Regulations]
[Page 39236-39238]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05jy11-17]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 9 and 52
[FAC 2005-53; FAR Case 2009-036; Item III; Docket 2010-0109, Sequence
1]
RIN 9000-AL75
Federal Acquisition Regulation; Uniform Suspension and Debarment
Requirement
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD, GSA, and NASA have adopted as final, with changes, the
interim rule amending the Federal Acquisition Regulation (FAR) to
implement section 815 of the National Defense Authorization Act for
Fiscal Year 2010. Section 815 extends the flow down of limitations on
subcontracting with entities that have been debarred, suspended, or
proposed for debarment.
DATES: Effective Date: August 4, 2011.
FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement
Analyst, at (202) 208-4949 for clarification of content. For
information pertaining to status or publication schedules, contact the
Regulatory Secretariat at (202) 501-4755. Please cite FAC 2005-53, FAR
Case 2009-036.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published an interim rule in the Federal
Register at 75 FR 77739 on December 13, 2010, to implement section 815
of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L.
111-84). Section 815 amends section 2455(c)(1) of the Federal
Acquisition Streamlining Act of 1994 (FASA) (31 U.S.C. 6101 note) by
amending the definition of ``procurement activities'' to include
subcontracts at any tier, except--
It does not include subcontracts for commercially
available off-the-shelf items (COTS); and
In the case of commercial items, such term includes only
the first-tier subcontracts.
This has the effect, except for commercial items and COTS items, of
expanding the requirement of section 2455(a), which states that ``No
agency shall allow a party to participate in any procurement * * *
activity if any agency has debarred, suspended, or otherwise excluded *
* * that party from participation in a procurement * * * activity.''
Therefore, the interim rule amended the FAR clause at 52.209-6,
Protecting the Government's Interest When Subcontracting with
Contractors Debarred, Suspended, or Proposed for Debarment, by flowing
down the requirements for the contractor or higher-tier subcontractor
to check whether a subcontractor beyond the first tier is debarred,
suspended, or proposed for debarment, with the stated dollar threshold
and exceptions for commercial items and COTS items. As in the current
clause, the contractor and higher-tier subcontractors must also notify
the contracting officer in writing before entering into a subcontract
with a party that is debarred, suspended, or proposed for debarment,
providing the contractor's knowledge of the reasons for the
subcontractor being on the Excluded Parties Systems List, and the
compelling reasons for doing business with the subcontractor, as well
as the systems and procedures the contractor has established to ensure
that it is fully protecting the Government's interests. The contracting
officer will now have more visibility into whether lower- tier
subcontractors have been debarred, suspended, or proposed for
debarment. Because commercial contracts must now flow the requirement
down to the first tier, the clause was added to FAR 52.212-5, Contract
Terms and Conditions Required to Implement Statutes or Executive
Orders--Commercial Items.
The comment period closed on February 11, 2011. Three respondents
submitted comments on the interim rule.
II. Discussion/Analysis of the Public Comments
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule. A discussion of the comments and the
changes made to the rule as a result of those comments are provided as
follows:
A. Dollar Threshold in FAR 9.405-2
Comment: One respondent recommended a rewrite of FAR 9.405-2 to
clarify that the notification requirement does not apply to
subcontracts under $30,000.
Response: The Councils agree and have incorporated the requested
change.
[[Page 39237]]
B. Definition of COTS Item
Comment: One respondent recommended deletion of the definition of
COTS item from paragraph (a) of the FAR clause 52.209-6. The rationale
is that the term is defined in FAR 2.101 and is therefore unnecessary
in the clause.
Response: The Councils have retained the definition of COTS item in
the clause. Although the clause at FAR 52.202-1, Definitions, provides
for the applicability of definitions in FAR 2.101 to words or terms
used in a solicitation provision or contract clause, unless the
solicitation provides a different definition, or certain other
exceptions apply, it is common practice to include the definition of
important terms in solicitation provisions and contract clauses, for
clarity and ease of use.
C. Applicability to Commercial Items
Comment: Two respondents supported the interim rule but hoped that
the Councils will eliminate the exceptions for commercial item and COTS
item acquisition contracts.
Response: The statute specifically stated that contracts for COTS
items are exempt and that for contracts for commercial items, the
requirements only flow to the first-tier subcontracts. The rule
implements the statutory requirements.
Comment: One respondent suggested that the following rewording of
the clause flowdown in FAR 52.209-6(e) to ``make the exceptions
clearer'':
``Subcontracts. The Contractor shall include the
requirements of this clause, including this paragraph (e)
(appropriately modified for the identification of the parties), in each
subcontract that--
[cir] Exceeds $30,000 in value; and
[cir] Is not a subcontract for commercially available off-the-
shelf items or commercial items.''
According to the respondent, if the subcontract is for COTS or
commercial items, the clause will not flow down to any subcontractor,
because the prime contractor is responsible for determining the
suspension and debarment status of only first-tier commercial item
subcontractors and the prime contractor is not responsible for
determining the suspension and debarment status for COTS
subcontractors.
Response: According to the statute, the prohibition on
subcontracting with entities that have been debarred, suspended, or
proposed for debarment applies to subcontractors at any tier, other
than subcontractors for COTS items, except that in the case of a
contract for commercial items, such term includes only first-tier
subcontracts.
The difference between the revised language proposed by the
respondent and the language that was proposed in the Federal Register
is in the treatment of a subcontract for a commercial item. Both
versions will arrive at the same result with regard to a prime contract
for a commercial item and the first-tier subcontracts under that
commercial contract. In such case, each first-tier subcontract (over
$30,000 and not a COTS item) will have to disclose whether at time of
subcontract award it, or its principals, is debarred, suspended, or
proposed for debarment.
However, with regard to subcontracts for the acquisition of a
commercial item (which were not specifically addressed by the statute),
the proposed rule implemented the statute to also apply to the
subcontract one tier below a commercial subcontract for the acquisition
of a commercial item, whereas the proposed revision does not apply the
requirements of the statute to a subcontract under a commercial
subcontract. The Councils consider the language of the proposed rule to
be a reasonable interpretation of the statutory intent, by requiring
all commercial contractors (whether a prime contractor or a higher-tier
subcontractor), to get the reports of the next-tier subcontractors, but
not be required to flow the requirement down to the next tier. To adopt
the interpretation of the respondent would narrow the ability of
agencies to determine if a subcontractor has been debarred, suspended,
or proposed for debarment because agencies would have no visibility
into the debarment/suspension status of any subcontract that was one
level below a subcontract for the acquisition of a commercial item.
This appears to be contrary to the intent of the statute.
D. Compelling Reason
Comment: One respondent believes that the Councils should provide a
clarification of the term ``compelling reason'' as it appears in FAR
9.405-2(b) and 52.209-6(b). FAR 9.405-2(b) and the clause at 52.209-
6(b) state that contractors shall not enter into subcontracts in excess
of $30,000, other than a subcontract for a COTS item, with a contractor
that has been debarred, suspended, or proposed for debarment, unless
there is a compelling reason to do so.
Response: The Councils believe this request is outside the scope of
this case. The term ``compelling reason'' was not instituted with the
current FAR case, which simply removed applicability to COTS items and
extended flowdown of the requirement to lower-tier subcontracts.
E. Applicability in FAR 52.212-5 and FAR 52.213-4
Comment: One respondent requested that both parentheticals
indicating applicability be removed from the listing of the clause
52.209-6 in FAR 52.212-5 (commercial items) and 52.213-4 (simplified
acquisition). The rationale of the respondent is that the directives
are not complete and are not used in most clauses contained in these
clauses. In addition, the respondent states that FAR 52.209-6 already
states when the clause is applicable and applicability to subcontracts
is covered in FAR 52.209-6(e).
Response: With regard to FAR 52.212-5, the contracting officer
indicates if the clause applies to the acquisition of commercial items.
The respondent is correct that no parenthetical indication of
applicability is appropriate, unless the clause is applicable to the
acquisition of commercial items, but is not applicable to the
acquisition of COTS items (e.g., FAR 52.223-9, Estimate of Percentage
of Recovered Material). However, indication of inapplicability to
subcontracts for COTS items is not appropriate. That is covered in the
FAR clause itself, once it is decided that the clause is applicable to
the prime contract. The Councils have removed both parentheticals from
the listing of FAR 52.209-6 in the FAR clause 52.212-5 in the final
rule.
However, with regard to the FAR clause 52.213-4, the Councils do
not agree that there should be no parenthetical indication of
applicability for the listed clauses. Unless the clause is required in
all contracts, each of the clauses listed in paragraph (b) of FAR
52.213-4 indicates applicability parenthetically. However, this
indication of applicability should be to the prime contract, not the
subcontract. Therefore, the statement of inapplicability to
subcontracts for the acquisition of COTS items has been deleted from
the final rule.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the
[[Page 39238]]
importance of quantifying both costs and benefits, of reducing costs,
of harmonizing rules, and of promoting flexibility. This is not a
significant regulatory action and, therefore, was not subject to review
under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated
September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
IV. 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. The interim rule removed
requirements relating to subcontracts for COTS items. In the case of
commercial items, the requirement extends only to the first-tier
subcontracts. This rule will impact small entities that are awarded a
lower-tier subcontract for a non-COTS item that exceeds $30,000, in
that these entities must now disclose to the higher-tier subcontractor
whether they are debarred, suspended, or proposed for debarment.
Although a substantial number of small entities may be impacted by this
rule, the impact is not significant. It will probably take only minimal
time to include the required information with an offer. For the other
impact of the rule, which will require the higher-tier subcontractor to
provide an explanation if desiring to subcontract with an entity that
has been debarred, suspended, or proposed for debarment, DoD, GSA, and
NASA have determined that this will not impact a substantial number of
small entities, because it should be a rare occurrence that a
subcontractor would potentially jeopardize performance or integrity by
knowingly contracting with an entity that is debarred, suspended, or
proposed for debarment. No public comments were received with regard to
the impact of this rule on small entities.
V. Paperwork Reduction Act
This rule affects the certification and information collection
requirements in the provisions at FAR case 2009-036 currently approved
under OMB Control Number 9000-0094 in accordance with the Paperwork
Reduction Act (44 U.S.C. chapter 35). The impact, however, is
negligible because the change in burden hours is so slight.
List of Subjects in 48 CFR Parts 9 and 52
Government procurement.
Dated: June 28, 2011.
Laura Auletta,
Acting Director, Office of Governmentwide Acquisition Policy, Office of
Acquisition Policy.
Accordingly, the interim rule amending 48 CFR parts 9 and 52, which
was published in the Federal Register at 75 FR 77739, December 13,
2010, is adopted as final with the following changes:
0
1. The authority citation for 48 CFR parts 9 and 52 continues to read
as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 9--CONTRACTOR QUALIFICATIONS
9.405-2 [Amended]
0
2. Amend section 9.405-2 by removing from paragraph (b) introductory
text, in the third sentence, ``to subcontract'' and adding ``to enter
into a subcontract in excess of $30,000'' in its place.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
3. Amend section 52.212-5 by revising the date of the clause and
paragraph (b)(6) to read as follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
Contract Terms and Conditions Required to Implement Statutes or
Executive Orders--Commercial Items (AUG 2011)
* * * * *
(b) * * *
(6) 52.209-6, Protecting the Government's Interest When
Subcontracting with Contractors Debarred, Suspended, or Proposed for
Debarment. (Dec 2010) (31 U.S.C. 6101 note).
* * * * *
0
4. Amend section 52.213-4 by revising the date of the clause and
paragraph (b)(2)(i) to read as follows:
52.213-4 Terms and Conditions--Simplified Acquisitions (Other Than
Commercial Items).
* * * * *
Terms and Conditions--Simplified Acquisitions (Other Than Commercial
Items) (AUG 2011)
* * * * *
(b) * * *
(2) * * *
(i) 52.209-6, Protecting the Government's Interest When
Subcontracting with Contractors Debarred, Suspended, or Proposed for
Debarment (Dec 2010) (Applies to contracts over $30,000).
* * * * *
[FR Doc. 2011-16674 Filed 7-1-11; 8:45 am]
BILLING CODE 6820-EP-P