[Federal Register Volume 61, Number 225 (Wednesday, November 20, 1996)]
[Proposed Rules]
[Pages 59072-59075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29542]


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DEPARTMENT OF ENERGY

48 CFR Parts 952 and 970


Acquisition Regulation, Classification, Security and 
Counterintelligence

AGENCY: Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Energy (DOE) proposes to amend the 
Department of Energy Acquisition Regulation (DEAR) to revise its 
classification contract clause, revise its access authorization 
(security clearance) procedures for contractor personnel, and add new 
counterintelligence provisions. Specific material being revised or 
added is summarized in the ``Section-by-Section Analysis'' appearing 
later in this document.

DATES: Written comments should be forwarded no later than January 21, 
1997.

ADDRESSES: Send written comments to the attention of Richard B. 
Langston, Office of Policy (HR-51), Office of the Assistant Secretary 
for Procurement and Assistance Management, Department of Energy, 1000 
Independence Avenue, SW., Washington, D.C. 20585.

FOR FURTHER INFORMATION CONTACT: Richard Langston, (202) 586-8247.

SUPPLEMENTARY INFORMATION:

I. Background
II. Section-by-Section Analysis
III. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under Executive Order 12988
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act
    E. Review Under Executive Order 12612
    F. Review Under the National Environmental Policy Act
    G. Public Hearing Determination

I. Background

    This proposed rule will accomplish three objectives.
    First, it will update the classification contract clause to 
incorporate interim changes set forth in Acquisition Letter 92-2R dated 
April 8, 1993 which provides that only Federal Government employees may 
serve as ``original classifiers'' and that both Federal Government 
employees and contractor employees may serve as ``derivative 
classifiers.'' The clause is also changed to recognize that a balance 
is required between the Department's mission to protect the national 
security and prevent nuclear proliferation and its commitment to 
maximize the amount of information available to the public. As revised, 
the clause not only requires that information, documents or equipment 
originated or generated in classified or potentially classified subject 
areas be reviewed for classification by the appropriate officials using 
proper classification guidance provided by the Department, but also 
requires that documents containing information which is no longer 
classified by current classification guidance be systematically 
reviewed for declassification by a Derivative Declassifier. Only when 
both classification and declassification reviews are performed can the 
Department achieve its goal of protecting the national security while 
providing the public with access to as much Government information as 
possible.
    Second, it will provide a definition of ``counterintelligence'' 
consistent with E.O. 12333, a policy statement regarding DOE's 
counterintelligence program, and a new contract clause on 
counterintelligence applicable to certain

[[Page 59073]]

DOE management and operating contractors and other contractors managing 
DOE-owned facilities.
    Third, it will revise the DEAR to be consistent with the General 
Accounting Office Report on Nuclear Security, RCED-93- 183, as 
implemented by DOE Order 472.1 entitled ``Personnel Security 
Activities.'' The GAO report stresses contractor responsibility for 
certifying preemployment checks conducted on prospective employees. 
Where DOE access authorization is required, the contractor must perform 
normal and prudent preemployment checks and the applicant's job 
qualifications and suitability must be established before a request is 
made to the Department for a security clearance. This revision is 
applicable to DOE management and operating contractors and other 
contractors managing DOE-owned facilities.

II. Section-by-Section Analysis

    1. The authority citations for Parts 952 and 970 are restated.
    2. The classification clause at 952.204-70 is renamed 
classification/declassification and is updated to incorporate changes 
set forth as interim changes in Acquisition Letter 92-2R dated April 8, 
1993. It is also revised to require systematic declassification reviews 
as well as classification reviews.
    3. A definition of counterintelligence is added to subsection 
970.0404-1.
    4. A new paragraph is added to 970.0404-2 to describe DOE policy on 
counterintelligence.
    5. New instructions are added to 970.0404-4 to detail the security 
clause requirements for management and operating contractors and other 
contractors managing DOE-owned facilities.
    6. Section 970.2201 is amended to describe the procedures for 
confirming to DOE the conduct and outcome of preemployment checks 
performed by management and operating contractors and other contractors 
managing DOE-owned facilities, when such contractors request that the 
DOE process an applicant for access authorization.
    7. Section 970.5204-1 is amended to add a new clause entitled 
counterintelligence.

III. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined not to be a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993). 
Accordingly, this action was not subject to review, under that 
Executive Order, by the Office of Information and Regulatory Affairs of 
the Office of Management and Budget (OMB).

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. DOE has completed the 
required review and determined that, to the extent permitted by law, 
the interim final regulations meet the relevant standards of Executive 
Order 12988.

C. Review Under the Regulatory Flexibility Act

    This proposed rule was reviewed under the Regulatory Flexibility 
Act of 1980, Pub. L. 96-354, 5 U.S.C. 601, et seq., which requires 
preparation of a regulatory flexibility analysis for any rule that is 
likely to have a significant economic impact on a substantial number of 
small entities. This proposed rule revises established classification, 
and security requirements and adds counterintelligence requirements. 
The security and counterintelligence requirements of this proposed rule 
are applicable only to management and operating contractors and other 
contractors managing DOE-owned facilities. Typically, such contractors 
are large businesses or universities, therefor, this proposed rule will 
have no significant impact on a substantial number of small entities. 
These security and counterintelligence requirements apply only to prime 
contractors and there is no flowdown to subcontractors who might be 
small entities. The change to the classification clause applies to all 
contracts and subcontracts with classified information but has no 
significant economic impact. Based on this review, DOE certifies that 
this proposed rule will not have a significant economic impact on a 
substantial number of small entities and, therefore, no regulatory 
flexibility analysis has been prepared.

D. Review Under the Paperwork Reduction Act

    This proposed rule imposes no new information collection or record 
keeping requirements. Accordingly, they require no OMB clearance under 
the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

E. Review Under Executive Order 12612

    Executive Order 12612, entitled ``Federalism,'' 52 FR 41685 
(October 30, 1987), requires that regulations, rules, legislation, and 
any other policy actions be reviewed for any substantial direct effects 
on states, on the relationship between the Federal Government and the 
states, or in the distribution of power and responsibilities among 
various levels of government. If there are sufficient substantial 
direct effects, then the Executive Order requires preparation of a 
federalism assessment to be used in all decisions involved in 
promulgating and implementing a policy action. DOE has determined that 
this proposed rule will not have a substantial direct effect on the 
institutional interests or traditional functions of states.

F. Review Under the National Environmental Policy Act

    Pursuant to the Council on Environmental Quality Regulations (40 
CFR 1500-1508), the Department has established guidelines for its 
compliance with the provisions of the National Environmental Policy Act 
(NEPA) of 1969 (42 U.S.C. 4321 et seq.). Pursuant to Appendix A of 
Subpart D of 10 CFR Part 1021, National Environmental Policy Act 
Implementing Procedures (Categorical Exclusion A), DOE has determined 
that this proposed rule is categorically excluded from the need to 
prepare an environmental impact statement or environmental assessment.

[[Page 59074]]

G. Public Hearing Determination

    DOE has concluded that this proposed rule does not involve any 
significant issues of law or fact. Therefore, consistent with 5 U.S.C. 
553, DOE has not scheduled a public hearing.

List of Subjects in 48 CFR Parts 952 and 970

    Government procurement.

    Issued in Washington, D.C., on November 13, 1996.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management.

    For the reasons set out in the preamble, Chapter 9 of Title 48 of 
the Code of Federal Regulations is proposed to be amended as set forth 
below:
    1. The authority citation for Part 952 continues to read:

    Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c); 42 U.S.C. 13524.

PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


952.204-70  [Amended]

    2. Subsection 952.204-70 is amended by revising the section heading 
and revising the clause to read:


952.204-70  Classification/Declassification.

* * * * *

CLASSIFICATION/DECLASSIFICATION (XXX 1996)

    In the performance of work under this contract, the contractor 
shall ensure that all information originated or generated under the 
contract in a classified or potentially classified subject area is 
reviewed by a Federal Government Original Classifier and that any 
documents or equipment originated or generated in such areas are 
reviewed by a Federal Government or Contractor Derivative Classifier 
in accordance with classification regulations (e.g., internal agency 
directives) and guidance furnished to the contractor by the 
Department of Energy. Every subcontract and purchase order issued 
hereunder involving the origination or generation of classified 
information, documents, or equipment shall require that, in the 
performance of such subcontract or purchase order, the subcontractor 
or supplier shall ensure that all such information, documents or 
equipment in a classified or potentially classified subject area are 
reviewed by a Federal Government Original Classifier or a Federal 
Government or Contractor Derivative Classifier in accordance with 
classification regulations (e.g., internal agency directives) and 
guidance furnished to such subcontractor or supplier by the 
contractor. In addition, each contractor or subcontractor shall 
assure that documents containing information which is no longer 
classified by current classification regulations are systematically 
reviewed by a Federal Government or Contractor Derivative 
Declassifier under applicable regulations in order to maximize the 
public's access to as much Government information as possible while 
minimizing security costs.

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

    The authority citation for Part 970 continues to read:

    Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C. 
2201), and Sec. 644 of the Department of Energy Organization Act, 
Pub. L. 95-91 (42 U.S.C. 7254).


970.0404-1  [Amended]

    3. Subsection 970.0404-1 is amended by adding in alphabetical order 
``counterintelligence'' as a new definition to read as follows:


970.0404-1  Definitions.

* * * * *
    Counterintelligence means information gathered and activities 
conducted to protect against espionage, other intelligence activities, 
sabotage, or assassinations conducted for or on behalf of foreign 
powers, organizations or persons, or international terrorist 
activities.
* * * * *
    4. Subsection 970.0404-2 is amended by adding paragraph (e) to read 
as follows:


970.0404-2  General.

* * * * *
    (e) Executive Order 12333, United States Intelligence Activities, 
provides for the organization and control of United States foreign 
intelligence and counterintelligence activities. In accordance with 
this Executive Order, DOE has established a counterintelligence program 
which is described in DOE Order 5670.3 (as amended). All DOE elements, 
including management and operating contractors and other contractors 
managing DOE-owned facilities, should undertake the necessary 
precautions to ensure that DOE and covered contractor personnel, 
programs and resources are properly protected from foreign intelligence 
threats and activities.
    5. Subsection 970.0404-4 is amended by revising paragraph (a)(1) 
and by adding a new paragraph (a)(2) to read as follows:


970.0404-4  Contract clauses.

    (a) * * *
    (1) Security and Classification/Declassification, 970.5204-1(a). 
These clauses are required in all contracts which involve access to 
classified information, nuclear material, or access authorizations.
    (2) Counterintelligence, 970.5204-1(b). This clause is required in 
all management and operating contracts and other contracts for the 
management of DOE-owned facilities which include the security and 
classification/declassification clauses.
* * * * *
    6. Section 970.2201 is amended by revising paragraph (b)(1)(ii) to 
read as follows:


970.2201  Basic labor policies.

* * * * *
    (b) * * *
    (1) * * *
    (ii) The job qualifications and suitability of prospective 
employees should be established by the contractor prior to employment 
by careful personnel investigations. Such personnel investigations 
should include, as appropriate: A credit check; verification of high 
school degree/diploma or degree/diploma granted by an institution of 
higher learning within the last 5 years; contacts with listed personal 
references; contacts with listed employers for the past 3 years 
(excluding employment of less than 60 days duration, part-time 
employments, and craft/union employments); and local law enforcement 
checks when such checks are not prohibited by state or local law, 
statute, or regulation, and when the individual had resided in the 
jurisdiction where the contractor is located. When a DOE access 
authorization (security clearance) will be required, the preemployment 
checks must be conducted and the applicant's job qualifications and 
suitability must be established before a request is made to the DOE to 
process the applicant for access authorization. Evidence must be 
furnished to the DOE with the applicant's security forms that 
specifies: the date each check was conducted, the entity contacted that 
provided information concerning the applicant, a synopsis of the 
information provided as a result of each contact, and a statement that 
all information available has been reviewed and favorably adjudicated 
in accordance with the contractor's personnel policies. When an 
applicant is being hired specifically for a position which requires a 
DOE access authorization, the applicant shall not be placed in that 
position prior to the access authorization being granted by the DOE 
unless an exception has been obtained from the Head of the Contracting 
Activity or designee. If an applicant is placed in that position prior 
to access authorization being granted by the DOE, the applicant may not 
be afforded access to classified matter or special nuclear materials 
(in categories requiring access authorization) until the

[[Page 59075]]

DOE notifies the employer that access authorization has been granted.
* * * * *


970.5204-1  [Amended]

    7. Section 970.5204-1 is revised to read as follows:


970.5204-1  Security.

    (a) As prescribed in 970.0404-4(a)(1), insert the Security and 
Classification/Declassification clauses found at 952.204-1 and 952.204-
70.
    (b) As prescribed in 970.0404-4(a)(2), insert the following clause 
in contracts containing the security and classification/
declassification clauses:

COUNTERINTELLIGENCE (XXX 1996)

    (a) The contractor shall take all reasonable precautions in the 
work under this contract to protect DOE programs, facilities, 
technology, personnel, unclassified sensitive information and 
classified matter from foreign intelligence threats and activities 
conducted for governmental or industrial purposes, in accordance 
with DOE Order 5670.3, Counterintelligence Program; Executive Order 
12333, U.S. Intelligence Activities; and other pertinent national 
and Departmental Counterintelligence requirements.
    (b) The contractor shall appoint a qualified employee(s) to 
function as the Contractor Counterintelligence Officer. The 
Contractor Counterintelligence Officer will be responsible for 
conducting defensive Counterintelligence briefings and debriefings 
of employees traveling to foreign countries or interacting with 
foreign nationals; providing thoroughly documented written reports 
relative to targeting, suspicious activity and other matters of 
counterintelligence interest; immediately reporting targeting, 
suspicious activity and other Counterintelligence concerns to the 
DOE Headquarters Counterintelligence Division; and providing 
assistance to other elements of the U.S. Intelligence Community as 
stated in the aforementioned Executive Order, the DOE 
Counterintelligence Order, and other pertinent national and 
Departmental Counterintelligence requirements.
[FR Doc. 96-29542 Filed 11-19-96; 8:45 am]
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