[Federal Register Volume 62, Number 191 (Thursday, October 2, 1997)]
[Proposed Rules]
[Pages 51623-51624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26115]


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DEPARTMENT OF DEFENSE

48 CFR Parts 203 and 252

[DFARS Case 97-D020]


Defense Federal Acquisition Regulation Supplement; Employment 
Prohibition on Persons Convicted of Fraud or Other DoD Contract-Related 
Felonies

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: The Director of Defense Procurement is proposing to amend the 
Defense Federal Acquisition Regulation Supplement (DFARS) to expand the 
list of positions in which contractors may not allow persons convicted 
of fraud or other DoD contract-related felonies to serve, and to 
provide that the term of such a prohibition on service may exceed 5 
years.

DATES: Comment date: Comments on the proposed rule should be submitted 
in writing to the address shown below on or before December 1, 1997, to 
be considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, Attn: Mr. Michael Pelkey, 
PDUSD(A&T)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 
20301-3062. Telefax number (703) 602-0350.
    E-mail comments submitted over the Inernet should be addressed to: 
[email protected]
    Please cite DFARS Case 97-D020 in all correspondence related to 
this issue. E-mail comments should cite DFARS Case 97-D020 in the 
subject line.

FOR FURTHER INFORMATION CONTACT:
Mr. Michael Pelkey, (703) 602-0131.

SUPPLEMENTARY INFORMATION: 

A. Background

    This proposed rule amends DFARS 203.570-2 and the clause at 
252.203-7001 to expand the list of positions in which a person 
convicted of a felony arising out of a contract with DoD may not serve, 
and to permit agencies to prohibit such service for periods greater 
than 5 years, in accordance with 10 U.S.C. 2408.

B. Regulatory Flexibility Act

    The proposed 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., because the rule 
pertains only to the employment of persons convicted of a felony 
arising out of a DoD contract. 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 DFARS subparts also will be considered 
in accordance with 5 U.S.C. 610. Such comments should be submitted 
separately and should cite DFARS Case 97-D020 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
rule does not impose any information collection requirements that 
require the

[[Page 51624]]

approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 203 and 252

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 203 and 252 are proposed to be amended as 
follows:
    1. The authority citation for 48 CFR Parts 203 and 252 continues to 
read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST

    2. Section 203.570 is revised to read as follows:


203.570  Prohibition on persons convicted of fraud or other DoD 
contract-related felonies.

    3. Section 203.570-2 is revised to read as follows:


203.570-2  Policy.

    (a) Contractors or subcontractors shall not knowingly allow a 
person, convicted after September 29, 1988, of fraud or any other 
felony arising out of a contract with DoD, to serve--
    (1) In a management or supervisory capacity on any DoD contract or 
first-tier subcontract;
    (2) On its board of directors;
    (3) As a consultant, agent, or representative; or
    (4) In any capacity with the authority to influence, advise, or 
control the decisions of any DoD contractor or subcontractor with 
regard to any DoD contract or first-tier subcontract.
    (b) The period covered by the prohibition in paragraph (a) of this 
subsection is not less than 5 years from the date of conviction unless 
waived in the interest of national security by the agency head or 
designee. Prohibition periods greater than 5 years may be imposed upon 
a written determination by the agency head or designee. A copy of each 
such determination shall be provided to the Bureau of Justice 
Assistance, U.S. Department of Justice, 633 Indiana Avenue, NW., Room 
470, Washington, DC 20531.
    4. Section 203.570-5 is revised to read as follows:


203.570-5  Contract clause.

    Use the clause at 252.203-7001, Special Prohibition on Persons 
Convicted of Fraud or Other DoD Contract-Related Felonies, in all 
solicitations and contracts exceeding the simplified acquisition 
threshold, except solicitations and contracts for commercial items.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    5. Section 252.203-7001 is amended by revising the section heading, 
the clause title and date, paragraphs (b) and (c), the introductory 
text of paragraph (d), and paragraph (h) to read as follows:


252.203-7001  Special Prohibition On Persons Convicted of Fraud or 
Other DoD Contract-Related Felonies.

* * * * *

Special Prohibition on Persons Convicted of Fraud or Other DOD 
Contract-Related Felonies (XXX 19XX)

* * * * *
    (b) Any individual who is convicted after September 29, 1988, of 
fraud or any other felony arising out of a contract with DoD is 
prohibited from serving--
    (1) In a management or supervisory capacity on any DoD contract or 
first-tier subcontract;
    (2) On the board of directors of any DoD contractor or first-tier 
subcontractor;
    (3) As a consultant, agent, or representative to any DoD contractor 
or first-tier subcontractor; or
    (4) In any other capacity with the authority to influence, advise, 
or control the decisions of any DoD contractor or subcontractor with 
regard to any DoD contract or first-tier subcontract.
    (c) Unless waived, the prohibition in paragraph (b) of this clause 
applies for not less than 5 years from the date of conviction.
    (d) 10 U.S.C. 2408 provides that a defense contractor or first-tier 
subcontractor shall be subject to a criminal penalty of not more than 
$500,000 if convicted of knowingly--
* * * * *
    (h) Pursuant to 10 U.S.C. 2408(c), defense contractors and 
subcontractors may obtain information as to whether a particular person 
has been convicted of fraud or any other felony arising out of a 
contract with DoD by contacting The Office of Justice Programs, The 
Denial of Federal Benefits Office, U.S. Department of Justice, 
telephone (202) 616-3507.

(End of clause)

[FR Doc. 97-26115 Filed 10-1-97; 8:45 am]
BILLING CODE 5000-04-M