[Federal Register Volume 61, Number 23 (Friday, February 2, 1996)]
[Rules and Regulations]
[Pages 3846-3849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2044]



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PANAMA CANAL COMMISSION

48 CFR Part 3509

RIN: 3207-AA30


Panama Canal Commission Acquisition Regulation; Debarment, 
Suspension and Ineligibility

AGENCY: Panama Canal Commission.

ACTION: Interim final rule with request for comments.

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SUMMARY: The Panama Canal Commission is today amending its regulations 
in Subpart 3509.4 of Title 48, Code of Federal Regulations (CFR), 
concerning the debarment, suspension and ineligibility of contractors 
or potential contractors to conform with changes in the Federal 
Acquisition Regulation (FAR) and to improve the agency's notice and 
administrative procedures pertaining to debarment, suspension or 
ineligibility.

DATES: Effective February 2, 1996. Comments must be received by April 
2, 1996.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to John A. Mills, 
Secretary, Panama Canal Commission, 1825 I Street NW., Suite 1050, 
Washington, DC 20006-5402 (Telephone: (202) 634-6441; Facsimile: (202) 
634-6439), or Theodore G. Lucas, Deputy General Counsel, Office of 
General Counsel, Panama Canal Commission, Unit 2300, APO AA 34011-2300 
(Telephone in Republic of Panama: 011 (507) 272-7511; Facsimile: 011 
(507) 272-3748).

FOR FURTHER INFORMATION CONTACT: Theodore G. Lucas, Deputy General 
Counsel, Office of General Counsel, Panama Canal Commission, or Barbara 
Fuller, Assistant to the Secretary for Commission Affairs, Office of 
the Secretary, Panama Canal Commission, 1825 I Street NW., Suite 1050, 
Washington, DC 20006-5402 (Telephone: (202) 634-6441; Facsimile: (202) 
634-6439).

SUPPLEMENTARY INFORMATION: Subpart 3509.4 forms part of the Panama 
Canal Commission Acquisition Regulation (PAR) located at Part 3509 of 
CFR Title 48. The subpart is being revised at this time to conform with 
recent changes to this subpart in the FAR and to improve the agency's 
notice and administrative procedures that govern actions pertaining to 
debarment, suspension and ineligibility determinations.
    The changes substitute ``Procurement Executive'' for ``Chairman of 
the Debarment Committee'' in section 3509.404(c), remove paragraph (a) 
from section 3509.406-1, the substance of which is now incorporated in 
new section 3509.403, add paragraph (c) under section 3509.406-1 to 
name the Procurement Executive as the agency head's designee with 
respect to the action authorized by FAR 9.406-1(c), and improve the 
procedures in section 3509.406-3 by providing a more comprehensive and 
efficient system including the use of an independent, non-Government 
fact-finding official where fact-finding is required and by improving 
the internal processes of investigation, review and recommendation.
    Several new sections are added to the subpart. Section 3509.403 is 
added to identify the Administrator of the Panama Canal Commission as 
the agency's Debarring Official and Suspending Official unless there is 
a conflict of interest or a previously established recusal statement in 
which case it is the Deputy Administrator. The new section also 
introduces and defines the term Fact-finding Official. The appointment 
and duties of a Fact-finding Official are developed fully at section 
3509.406-3. Sections 3509.405, 3509.405-1 and 3509.405-2 are added to 
name the Procurement Executive as the agency head's designee with 
respect to the requirements of FAR 9.405 (a) and (d) (2) and (3), 
9.405-1 (a) and (c) and 9.405-2(a). Section 3509.406-2 is unchanged. 
Sections 3509.406-70, ``Settlement,'' and 3509.406-71, ``Voluntary 
Exclusion,'' are added to enable the debarring official to, at his 
discretion, resolve a potential debarment without engaging in the 
complete debarment process. New sections 3509.407-2, 3509.407-70 and 
3509.407-71 are added and section 3509.407-3 is revised to establish 
that most of the subpart's provisions concerning debarment apply 
equally to suspension. New section 3509.470 is substantively identical 
to the existing 3509.406-3(b)(7) and new section 3509.471 is 
substantively identical to the existing 3509.406-3(b)(6).
    The section and paragraph numbers of this PAR subpart continue to 
conform with the corresponding section and paragraph numbers of the 
FAR.
    The Commission has been exempted from Executive Order 12866 and, 
accordingly, the provisions of that directive do not apply to this 
rule. Even if the Order were applicable, this rule would not have 
significant economic impact on a substantial number of small entities 
under the Regulatory Flexibility Act. Only a very small percentage of 
contractors or prospective contractors doing business with the 
Commission are debarred or suspended.
    The agency has additionally determined the Paperwork Reduction Act 
does not apply because these changes to the PAR do not impose 
recordkeeping or information collection requirements or collections of 
information from offerors, contractors or members of the public which 
require the approval of the Office of Management and Budget under 44 
U.S.C. 3501, et seq.
    Further, the agency has determined implementation of the rule will 
have no adverse effect on competition, employment, investment, 
productivity or innovation or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic or 
export markets.
    Finally, the Administrator of the Panama Canal Commission certifies 
these regulatory changes meet the applicable standards provided in 
sections 2(a) and 2(b)(2) of Executive Order No. 12778.

List of Subjects in 48 CFR Part 3509

    Government procurement.

    For the reasons set forth in the preamble, 48 CFR Part 3509 is 
amended as follows:

PART 3509--CONTRACTOR QUALIFICATIONS

    1. The authority citation for Part 3509 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c).

    2. Part 3509 is amended by revising Subpart 3509.4 to read as 
follows:

Subpart 3509.4--Debarment, Suspension and Ineligibility

Sec. 3509.400 Scope of subpart.
3509.403  Definitions.
3509.404  List of Parties Excluded from Federal Procurement and 
Nonprocurement Programs.
3509.405  Effect of listing.
3509.405-1  Continuation of current contracts. 

[[Page 3847]]

3509.405-2  Restrictions on subcontracting.
3509.406  Debarment.
3509.406-1  General.
3509.406-2  Causes for debarment.
3509.406-3  Procedures.
3509.406-70  Settlement.
3509.406-71  Voluntary exclusion.
3509.407  Suspension.
3509.407-2  Causes for suspension.
3509.407-3  Procedures.
3509.407-70  Settlement.
3509.407-71  Voluntary exclusion.
3509.470  Special notice.
3509.471  Equal application.

Subpart 3509.4--Debarment, Suspension and Ineligibility


3509.400  Scope of subpart.

    This subpart supplements, and shall be applied in conformity with, 
FAR subpart 9.4.


3509.403  Definitions.

    Debarring official means the Administrator of the Panama Canal 
Commission (hereinafter ``Commission''). In the event the Administrator 
is ineligible from participating personally in Commission actions with 
respect to the particular contractor, named individual or affiliate 
subject to the proposed debarment due to a conflict of interest or in 
view of a previously established recusal statement, the Commission 
Deputy Administrator shall be the debarring official.
    Fact-finding official means a person not employed by the Commission 
or any agency of the U.S. Government retained at Commission expense to 
conduct fact-finding under this subpart. The individual must have no 
prior knowledge of the particular subject matter and no conflict of 
interest with respect to any of the parties involved in the debarment 
or suspension action. He shall have knowledge of the laws and 
regulations governing the federal procurement system, and shall have 
experience in receiving evidence and formulating findings of fact.
    Suspending official means the Commission Administrator. In the 
event the Administrator is ineligible from participating personally in 
Commission actions with respect to the particular contractor, named 
individual or affiliate subject to the proposed suspension due to a 
conflict of interest or in view of a previously established recusal 
statement, the Commission Deputy Administrator shall be the suspending 
official.


3509.404  List of parties excluded from Federal procurement and 
nonprocurement programs.

    (c) The Commission Procurement Executive (hereinafter ``PE'') shall 
perform the actions required by FAR 9.404(c).


3509.405  Effect of listing.

    The PE is the designee of the agency head for the purposes of FAR 
9.405(a) and (d)(2) and (3) and may, upon the written recommendation of 
the pertinent Head of the Contracting Activity (hereinafter ``HCA''), 
make the determinations referenced therein.


3509.405-1  Continuation of current contracts.

    The PE is the designee of the agency head for the purposes of FAR 
9.405-1(a) and (c) and may, upon the written recommendation of the 
pertinent HCA, take the actions referenced therein.


3509.405-2  Restrictions on subcontracting.

    (a) The PE is the designee of the agency head for the purposes of 
FAR 9.405-2(a) and may, upon the written recommendation of the 
pertinent HCA, take the action referenced therein.


3509.406  Debarment.


3509.406-1  General.

    (c) The PE is the designee of the agency head for the purposes of 
FAR 9.406-1(c) and may, upon the written recommendation of the 
pertinent HCA, take the action referenced therein.


3509.406-2  Causes for debarment.

    In addition to the causes listed in FAR 9.406-2, the use of a 
Panama Canal Commission employee or a member of the Commission's Board 
of Directors as an agent or advocate for a Commission contractor, or 
prospective contractor, shall be a cause for debarment.


3509.406-3  Procedures.

    (a) Investigation and referral.
    (1)(i) Any Commission official or employee who suspects or has 
knowledge of any conduct, statement, act, or omission of, or 
attributable to, a Commission contractor or a potential Commission 
contractor which could justify debarment under FAR subpart 9.4 or this 
subpart shall immediately report this information to the Commission 
General Counsel (hereinafter ``GC'') or to the appropriate contracting 
officer.
    (ii) Any Commission official or employee who suspects or has 
knowledge that a debarred individual or company has reestablished 
itself under a new name shall immediately report this information to 
the GC or to the appropriate contracting officer.
    (2) When the GC receives such information he shall refer the matter 
to the appropriate contracting officer for investigation and shall 
notify the PE and the pertinent HCA. When the contracting officer 
receives such information he shall notify the PE and the pertinent HCA.
    (3) The contracting officer shall, in coordination with the 
pertinent HCA, promptly investigate the matter, assemble all relevant 
information and prepare a written report containing all available 
evidentiary material, including copies of indictments and conviction 
notices when applicable, and the names of the owners and officers, as 
well as any affiliates, of the contractor in question. The written 
report shall include a recommendation whether a debarment action should 
be commenced and, if so, shall identify the causes for debarment, see 
FAR 9.406-2 and 3509.406-2 of this subpart, and identify each company 
and individual, including divisions of companies and affiliates, which 
the contracting officer recommends should be specifically named in the 
action.
    (4) The contracting officer shall submit his report to the 
pertinent HCA and a copy thereof to the PE and the GC. The HCA shall 
study the report and promptly advise the PE, in writing, whether or not 
he concurs in the contracting officer's recommendation and shall 
explain the reasons for his concurrence or nonconcurrence.
    (5) The PE shall study the contracting officer's report and the 
recommendation of the HCA. If the HCA and the PE agree that a debarment 
action should not be commenced, the PE shall so inform the debarring 
official and shall prepare a memorandum for record describing and 
closing the matter. If, however, either the HCA or the PE recommend 
that a debarment action should be commenced, the PE shall forward the 
contracting officer's report to the debarring official, together with 
the recommendation of the HCA as well as the PE's own written 
recommendation.
    (b) Decisionmaking process.
    (1) If the debarring official, after reviewing the contracting 
officer's report and the recommendations of the HCA and the PE, 
considering fully the provisions of FAR 9.402 and 9.406-1(a), and 
consulting with the GC, determines there is a reasonable basis to 
commence a debarment action, the debarring official shall instruct the 
PE to sign and send to each specifically named company, individual or 
affiliate to which the action is to apply, via certified mail, return 
receipt requested, either:
    (i) An informal notice of the Commission's intention to propose 
debarment, see 3509.406-3(b)(2) of this subpart; or 

[[Page 3848]]

    (ii) A formal notice of the Commission's proposal to debar under 
FAR 9.406-3(c).
    (2) An informal notice of the Commission's intention to propose 
debarment shall advise the addressee, in writing, of the following:
    (i) The issuance under FAR 9.406-3(c) of a formal notice of 
proposal to debar the addressee is seriously being considered by the 
Commission;
    (ii) The basic factual reasons for the contemplated debarment;
    (iii) The causes relied upon under FAR 9.406-2 and 3509.406-2 of 
this subpart;
    (iv) The Commission's procedures governing the debarment process;
    (v) The addressee's right to reply to the PE in writing within 21 
calendar days of receipt of the informal notice, and show cause why the 
Commission should not issue, to the addressee, a formal notice of 
proposal to debar under FAR 9.406-3(c) for the reasons and causes cited 
by the Commission;
    (vi) That, if the PE does not receive a reply from the addressee to 
the informal notice within 21 calendar days of the addressee's receipt 
of the informal notice, the Commission will issue to the addressee a 
formal notice of proposal to debar;
    (vii) The effect of the issuance of a formal notice of proposal to 
debar;
    (viii) The potential effect of an actual debarment; and
    (ix) That, while the Commission will carefully consider the content 
of a timely reply to the informal notice, the Commission reserves the 
right to issue a formal notice of proposal to debar without additional 
discussion or correspondence.
    (3) The PE shall study the timely reply of an addressee to an 
informal notice and shall forward the reply to the GC and the debarring 
official with the PE's evaluation and recommendation.
    (4) If, after reviewing a timely reply to an informal notice, as 
well as the views of the PE and the GC, the debarring official 
determines, considering fully the provisions of FAR 9.402 and 9.406-
1(a), that a formal debarment action should commence, the debarring 
official shall instruct the PE to sign and send a formal notice of 
proposal to debar to the addressee.
    (c) Notice of proposal to debar. In addition to the matters listed 
at FAR 9.406-3(c), a formal notice of proposal to debar shall advise 
the contractor and any specifically named individual or affiliate of 
the specific, fundamental allegations of material fact supporting the 
proposed debarment.
    (d) Debarring official's decision.
    (1) A submission in opposition to the Commission's formal notice of 
proposal to debar presented by a contractor, or any named individual or 
affiliate, shall include information and argument in opposition to the 
proposed debarment, including any additional specific information or 
documents that raise a genuine dispute over material facts. The 
submission shall be addressed to the PE.
    (2) If a timely submission in opposition to a formal notice of 
proposal to debar is not presented by a named contractor, individual or 
affiliate to whom a formal notice was sent, the PE shall, with respect 
only to each such contractor, individual or affiliate that failed to 
present a timely submission, study all the information in the 
administrative record and shall forward the entire record to the 
debarring official with an evaluation and recommendation whether to 
debar the nonresponding contractor, individual or affiliate and, if so, 
for what period of time.
    (3) If a timely submission in opposition to a formal notice of 
proposal to debar is submitted in actions based upon a conviction or 
civil judgment, the PE shall evaluate all the information in the 
administrative record, including the submission in opposition, and 
shall forward these materials to the debarring official with a 
recommendation whether to debar and, if so, for what period of time.
    (4)(i) If a timely submission in opposition to a formal notice of 
proposal to debar is presented in actions not based upon a conviction 
or civil judgment, the PE shall evaluate the formal notice of proposal 
to debar and the submission in opposition and shall determine, with the 
advice of the GC, if the submission raises a genuine dispute over any 
facts material to the proposed debarment. If it does not, the PE shall 
forward the entire administrative record, including the submission in 
opposition, to the debarring official with an evaluation and a 
recommendation whether to debar and, if so, for what period of time.
    (ii) If, however, the PE determines, in consultation with the GC, 
that a timely submission in opposition to a formal notice of proposal 
to debar in actions not based upon a conviction or civil judgment 
raises a genuine dispute over any fact material to the proposed 
debarment, the PE shall so advise the contractor, named individual or 
affiliate, and shall inquire whether a fact-finding hearing is desired. 
If a fact-finding hearing is not requested by the contractor, named 
individual or affiliate, the PE shall forward the entire administrative 
record, including the submission in opposition, to the debarring 
official with an evaluation and a recommendation whether to debar and, 
if so, for what period of time.
    (iii) If a fact-finding hearing is requested, the PE shall appoint 
a fact-finding official to whom all matters involving disputed material 
facts shall be referred. The PE will provide the fact-finding official 
with a copy of the entire administrative record including the 
submission in opposition. The fact-finding official shall study the 
Commission's notice(s) of proposal to debar and the submission(s) in 
opposition, and shall identify specifically the material facts in 
genuine dispute and so advise the pertinent contractor, named 
individual or affiliate, as well as the Commission's designated 
advocate in the Office of General Counsel. A fact-finding hearing shall 
be scheduled and conducted by the fact-finding official, and shall take 
place in a Commission facility in Panama unless the fact-finding 
official determines that fundamental fairness compels the use of 
another location. The rules governing the fact-finding hearing shall be 
established by the fact-finding official but shall conform fully with 
FAR 9.406-3(b)(2) and (d)(2) and (3).
    (5) The fact-finding official shall present written findings of 
fact and the transcribed record of the hearing, if made, to the 
debarring official within 21 calendar days from his receipt of the 
transcript or from the final day of the hearing if no transcript is 
ordered. The findings shall resolve each material fact previously 
determined to be in genuine dispute based on a preponderance of the 
evidence presented.
    (6) Upon receiving the complete administrative record and the 
evaluation and recommendation of the PE or, if there was a fact-finding 
hearing, upon receiving the hearing record and the findings of fact of 
the fact-finding official and the evaluation and recommendation of the 
PE, the debarring official shall, considering fully the provisions of 
FAR 9.402 and 9.406-1(a), make a final decision whether to impose 
debarment. If debarment is chosen, the debarring official shall also 
determine the period of debarment.
    (e) Notice of debarring official's decision. The debarring official 
shall promptly notify the contractor and any named individual or 
affiliate of the final decision in writing by certified mail, return 
receipt requested.


3509.406-70  Settlement.

    (a) At any time prior to the debarring official's issuance of a 
final decision whether to debar, the debarring official may, in the 
best interests of the U.S. 

[[Page 3849]]
Government, forgo or withdraw a proposed debarment by entering into a 
written agreement with the contractor, named individual or affiliate, 
in which the contractor, individual or affiliate agrees to perform, 
accomplish or implement such remedial measures or mitigating factors as 
are listed at FAR 9.406-1(a). The contractor, individual or affiliate 
shall also agree that its failure to observe any term or condition of 
the agreement shall constitute sufficient cause for the immediate 
imposition of debarment by the debarring official without entitlement 
to a fact-finding hearing.
    (b) The debarring official shall not enter into a settlement 
agreement if the proposed debarment is based on a conviction of or 
civil judgment for any of the causes in FAR 9.406-2(a).


3509.406-71  Voluntary exclusion.

    (a)(1) At any time prior to the debarring official's issuance of a 
final decision whether to debar, the debarring official may, in the 
best interests of the U.S. Government, forgo or withdraw a proposed 
debarment by entering into a written agreement with the contractor, 
named individual or affiliate, in which the contractor, individual or 
affiliate agrees to voluntarily refrain, for a specified period of 
time, from attempting to obtain, and from entering into, any contract, 
purchase agreement or other form of contractual relationship, 
regardless of dollar amount, with, as the debarring official may 
determine, either: (i) the Commission; or (ii) the Commission and one 
or more, or all, other agencies, departments or entities of the U.S. 
Government.
    (2) A voluntary exclusion will not be reported to the GSA nor 
appear in the ``List of Parties Excluded from Federal Procurement and 
Nonprocurement Programs,'' and if the contractor, individual or 
affiliate is currently listed due to a Commission notice of proposal to 
debar the PE will advise the GSA of the voluntary exclusion and request 
the immediate cessation of the listing. The contractor, individual or 
affiliate shall agree that its failure to observe any term or condition 
of the voluntary exclusion shall constitute sufficient cause for the 
immediate imposition of debarment by the debarring official without 
entitlement to a fact-finding hearing.
    (b) The debarring official shall not enter into a voluntary 
exclusion agreement if the proposed debarment is based on a conviction 
of or civil judgment for any of the causes in FAR 9.406-2(a).


3509.407  Suspension.


3509.407-2  Causes for suspension.

    In addition to the causes listed in FAR 9.407-2, the cause for 
debarment identified in 48 CFR (PAR) 3509.406-2 also applies to 
suspension actions.


3509.407-3  Procedures.

    (a) The procedures set forth in 48 CFR (PAR) 3509.406-3 for 
debarment also apply, insofar as they are compatible with the 
procedures set forth in FAR 9.407-3, to suspension actions except those 
procedures identified in paragraph (b) of this subsection.
    (b) The following procedures in 48 CFR (PAR) 3509.406-3 do not 
apply to suspension actions: 3509.406-3(b)(1)(i), 3509.406-3(b) (2) 
through (4) and 3509.406-3(c).
    (c) Notice of suspension. In addition to the matters listed at FAR 
9.407-3(c), in actions not based on an indictment, a notice of 
suspension shall advise the contractor and any specifically named 
individual or affiliate of the specific, fundamental allegations of 
material fact supporting the suspension.


3509.407-70  Settlement.

    Where a suspension is being considered, the suspending official may 
enter into a settlement agreement in the same manner and under the same 
terms as are provided in 48 CFR (PAR) 3509.406-70.


3509.407-71  Voluntary exclusion.

    Where a suspension is being considered, the suspending official may 
enter into a voluntary exclusion agreement in the same manner and under 
the same terms as are provided in 48 CFR (PAR) 3509.406-71.


3509.470  Special notice.

    The Commander in Chief, United States Southern Command, shall be 
notified by the Procurement Executive of the issuance of any Commission 
notice of proposal to debar and of any debarment or suspension decision 
made by the debarring or suspending official.


3509.471  Equal application.

    These procedures for debarment and suspension apply equally to all 
firms, individuals and affiliates doing business with the Panama Canal 
Commission regardless of their nationality, residence or location.

    Dated: January 24, 1996.
Gilberto Guardia F.,
Administrator, Panama Canal Commission.
[FR Doc. 96-2044 Filed 2-1-96; 8:45 am]
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