[Federal Register Volume 61, Number 246 (Friday, December 20, 1996)]
[Rules and Regulations]
[Pages 67424-67425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32011]


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DEPARTMENT OF DEFENSE
48 CFR Part 31

[FAC 90-43, FAR Case 96-003, Item XI]
RIN 9000-AH35


Federal Acquisition Regulation; Local Government Lobbying Costs

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

ACTION: Interim rule with request for comment.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed to an interim rule to amend 
the Federal Acquisition Regulation (FAR) to make allowable the costs of 
lobbying activities to influence local legislation in order to directly 
reduce contract costs or to avoid material impairment of the 
contractor's authority to perform the contract. This regulatory action 
was not subject to Office of Management and Budget review under 
Executive Order 12866, dated September 30, 1993, and is not a major 
rule under 5 U.S.C. 804.

DATES: Effective Date: December 20, 1996.
    Comment Date: Comments should be submitted to the FAR Secretariat 
at the address shown below on or before February 18, 1997 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVRS), 18th & F 
Streets, NW, Room 4035, Attn: Ms. Beverly Fayson, Washington, DC 20405. 
Please cite FAC 90-43, FAR case 96-003, in all correspondence related 
to this case.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson at (202) 501-3221 in 
reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4035, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-43, FAR case 96-003.

SUPPLEMENTARY INFORMATION:

A. Background

    Sections 2101 and 2151 of the Federal Acquisition Streamlining Act 
of 1994 (Public Law 103-355) (FASA) added to the lists of unallowable 
costs found at 10 U.S.C. 2324(e)(1) and 41 U.S.C. 256, the costs of 
lobbying the legislative body of a political subdivision of a state 
(i.e., local lobbying). As a result, under FAR Case 94-754 (60 FR 
42659, August 16, 1995), FAR 31.205-22(a) (3) and (4) were revised to 
make unallowable the costs associated with any attempt to influence 
local legislation. The paragraph at FAR 31.205-22(b) contains a list of 
activities exempted from the provisions at 31.205-22(a). Included in 
the exempted activities are lobbying activities to influence state 
legislation in order to directly reduce contract costs, or to avoid 
material impairment of the contractor's authority to perform the 
contract. This interim rule amends FAR 31.205-22(b)(2) to treat 
lobbying activities to influence local legislation in a manner 
consistent with the treatment of lobbying activities to influence state 
legislation.

B. Regulatory Flexibility Act

    The interim rule is not expected to 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.,

[[Page 67425]]

because most contracts awarded to small entities use simplified 
acquisition procedures or are awarded on a competitive fixed-price 
basis and do not require application of the FAR cost principles. An 
Initial Regulatory Flexibility Analysis has, therefore, not been 
performed. Comments are invited from small businesses and other 
interested parties. Comments from small entities concerning the 
affected FAR part also will be considered in accordance with 5 U.S.C. 
610. Such comments must be submitted separately and cite 5 U.S.C 601, 
et seq., (FAR case 96-003), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR 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.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DOD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary to fully implement Sections 2101 and 2151 of the Federal 
Acquisition Streamlining Act of 1994 with regard to the allowability of 
lobbying costs to influence local legislation. However, pursuant to 
Pub. L. 98-577 and FAR 1.501, public comments received in response to 
this interim rule will be considered in the formulation of the final 
rule.

List of Subjects in 48 CFR Part 31:

    Government procurement.

    Dated: December 11, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Part 31 is amended as set forth below:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

    1. The authority citation for 48 CFR Part 31 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

    2. Section 31.205-22(b)(2) is revised to read as follows:


31.205-22  Lobbying and political activity costs.

* * * * *
    (b) * * *
    (2) Any lobbying made unallowable by paragraph (a)(3) of this 
subsection to influence state or local legislation in order to directly 
reduce contract cost, or to avoid material impairment of the 
contractor's authority to perform the contract.
* * * * *
[FR Doc. 96-32011 Filed 12-19-96; 8:45 am]
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