[Federal Register Volume 64, Number 222 (Thursday, November 18, 1999)]
[Rules and Regulations]
[Pages 62984-62986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29984]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

48 CFR Parts 203, 209, 225, and 249

[DFARS Case 99-D013]


Defense Federal Acquisition Regulation Supplement; Debarment 
Investigation and Reports

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Director of Defense Procurement has issued a final rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to clarify the historical practice of the agencies and the original 
intent of the regulation that any person may refer a matter to the 
agency debarring and suspending official, and that the absence of a 
referral or any information specified in the report format in the DFARS 
will not preclude the debarring and suspending official from initiating 
the debarment or suspension process or from making a final decision.

EFFECTIVE DATE: November 18, 1999.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition 
Regulations Council, PDUSD (AT&L) DP (DAR), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0288; telefax 
(703) 602-0350. Please cite DFARS Case 99-D013.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule amends the DFARS to clarify that any person may 
refer a matter to the agency debarring and suspending official, and 
that the absence of a referral or any information specified in the 
report format at DFARS 209.406(a)(ii) will not preclude the debarring 
and suspending official from initiating the debarment or suspension 
process or from making a final decision.
    There have been recent efforts to convince various Federal courts 
that receipt of a contracting officer's report is a jurisdictional 
prerequisite to action by the debarring and suspending official. In 
fact, the historical practice of the agencies has been to take 
suspending and debarring action whenever appropriate, whether or not a 
contracting officer's report was available. This DFARS change is 
intended merely to make clear the actual practices of the debarring and 
suspending authorities and the original intent of this language.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    This final rule does not constitute a significant revision within 
the meaning of FAR 1.501 and Public Law 98-577 and publication for 
public comment is not required. However, DoD will consider comments 
from small entities concerning the affected DFARS subparts in 
accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 99-
D013.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not contain any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 203, 209, 225, and 249

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

    Therefore, 48 CFR Parts 203, 209, 225, and 249 are amended as 
follows:
    1. The authority citation for 48 CFR Parts 203, 209, 225, and 249 
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 203.103-2 is revised to read as follows:


203.103-2  Evaluating the certification.

    (b)(3) Report the matter in accordance with 209.406-3 or 209.407-3, 
and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption 
Related to Procurement Activities.
    3. Section 203.104-10 is added to read as follows:


203.104-10  Violation or possible violations.

    (d)(3) When referring a violation to the agency debarring and 
suspending official, use the procedures at 209.406-3 or 209.407-3, and 
DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related 
to Procurement Activities.


203.203, 203.301, 203.405, and 203.502  [Amended]

    4. The following sections are amended by adding, after the phrase 
``in accordance with 209.406-3,'' the phrase ``or 209.407-3,'':
    a. 203.203;
    b. 203.301(b);
    c. 203.405(b); and
    d. 203.502.
    5. Section 203.570-4 is revised to read as follows:


203.570-4  Reporting.

    When a defense contractor or first-tier subcontractor is found in 
violation of the prohibition in 203.570-2, report the matter in 
accordance with 209.406-3 or 209.407-3, and DoDD 7050.5,

[[Page 62985]]

Coordination of Remedies for Fraud and Corruption Related to 
Procurement Activities.

PART 209--CONTRACTOR QUALIFICATIONS

    6. Section 209.105-2 is added to read as follows:


209.105-2  Determinations and documentation.

    (a) When the contracting officer considers such action appropriate, 
the contracting officer must submit a copy of the determination to the 
appropriate debarring and suspending official (see 209.403).
    7. Section 209.403 is amended as follows:
    a. In the introductory text by removing the words ``Debarring 
official'' and adding in their place the words ``Debarring and 
suspending official'';
    b. In paragraph (1), in the second entry, by removing the words 
``Navy-the'' and adding in their place the words ``Navy-The'';
    c. In paragraph (2) introductory text by adding, after the word 
``debarring,'' the words ``and suspending''; and
    d. By adding paragraph (3) to read as follows:


209.403  Definitions.

* * * * *
    (3) The Defense Logistics Agency Special Assistant for Contracting 
Integrity is the exclusive representative of the Secretary of Defense 
to suspend and debar contractors from the purchase of Federal personal 
property under the Federal Property Management Regulations (41 CFR 101-
45.6) and the Defense Materiel Disposition Manual (DoD 4160.21-M).
    8. Section 209.406-3 is revised to read as follows:


209.406-3  Procedures.

    (a) Investigation and referral.
    (i) Refer all matters appropriate for consideration by an agency 
debarring and suspending official as soon as practicable to the 
appropriate debarring and suspending official identified in 209.403. 
Any person may refer a matter to the debarring and suspending official.
    (ii) Use the following format when referring a matter to the agency 
debarring and suspending official for consideration. To the extent 
practicable, provide all specified information.
    (A) Name, address, and telephone number of the point of contact for 
the activity making the report.
    (B) Name, contractor and Government entity (CAGE) code, and address 
of the contractor.
    (C) Name and addresses of the members of the board, principal 
officers, partners, owners, and managers.
    (D) Name and addresses of all known affiliates, subsidiaries, or 
parent firms, and the nature of the business relationship.
    (E) For each contract affected by the conduct being reported--
    (1) The contract number;
    (2) All office identifying numbers or symbols;
    (3) Description of supplies or services;
    (4) The amount;
    (5) The percentage of completion;
    (6) The amount paid the contractor;
    (7) Whether the contract is assigned under the Assignment of Claims 
Act and, if so, to whom; and
    (8) The amount due the contractor.
    (F) For any other contracts outstanding with the contractor or any 
of its affiliates--
    (1) The contract number;
    (2) The amount;
    (3) The amounts paid the contractor;
    (4) Whether the contract is assigned under the Assignment of claims 
Act and, if so, to whom; and
    (5) The amount due the contractor.
    (G) A complete summary of all pertinent evidence and the status of 
any legal proceedings involving the contractor.
    (H) An estimate of any damages sustained by the Government as a 
result of the contractor's action (explain how the estimate was 
calculated).
    (I) If a contracting office initiates the report, the comments and 
recommendations of the contracting officer and of each higher-level 
contracting review authority regarding--
    (1) Whether to suspend or debar the contractor;
    (2) Whether to apply limitations to the suspension or debarment;
    (3) The period of any recommended debarment; and
    (4) Whether to continue any current contracts with the contractor 
(or explain why a recommendation regarding current contracts is not 
included).
    (J) When appropriate, as an enclosure to the report--
    (1) A copy or pertinent extracts of each pertinent contract;
    (2) Witness statements or affidavits;
    (3) Copies of investigative reports when authorized by the 
investigative agency;
    (4) Certified copies of indictments, judgments, and sentencing 
actions;
    (5) A copy of any available determinations of nonresponsibility in 
accordance with FAR 9.105-2(a)(1); and
    (6) Any other appropriate exhibits or documentation.
    (iii) Send three copies of each report, including enclosures, to 
the appropriate debarring and suspending official.
    (iv) If a referral lacks sufficient evidence of a cause for 
debarment, the debarring and suspending official may initiate a review 
or investigation, as appropriate, by reporting the referral to the 
appropriate Government entity, e.g., contracting activity, inspector 
general, or criminal investigative agency.
    (b) Decisionmaking process.
    (i) The agency debarring and suspending official may initiate the 
debarment process by issuing a notice of proposed debarment in 
accordance with FAR 9.406-3(c) when the debarring and suspending 
official finds that the administrative record contains sufficient 
evidence of one or more of the causes for debarment stated in FAR 
9.406-2 or 209.406-2.
    (A) The absence of a referral in accordance with paragraph (a)(i) 
of this subsection, or the absence of any information specified in the 
report format in paragraph (a)(ii) of this subsection, will not 
preclude the debarring and suspending official from making such a 
finding.
    (B) The signature of the debarring and suspending official on the 
notice of proposed debarment is sufficient evidence that the debarring 
and spending official has made such a finding.
    (ii) The agency debarring and suspending official must use the 
decisionmaking process stated in FAR 9.406-3(b), DFARS Appendix H, and 
any agency-specific procedures that were provided to the contractor in 
advance of the decision.
    (d) Debarring official's decision. The absence of a referral in 
accordance with paragraph (a)(i) of this subsection, or the absence of 
any information specified in the report format in paragraph (a)(ii) of 
this subsection, will not preclude the debarring and suspending 
official from making a decision.
    9. Sections 209.407 and 209.407-3 are added to read as follows:


Sec. 209.407  Suspension.


209.407-3  Procedures.

    (a) Investigation and referral.
    (i) Refer all matters appropriate for consideration by an agency 
debarring and suspending official as soon as practicable to the 
appropriate debarring and suspending official identified in 209.403. 
Any person may refer a matter to the debarring and suspending official.
    (ii) Use the format at 209.406-3(a)(ii) when referring a matter to 
the agency debarring and suspending official for consideration. To the 
extent practicable, provide all information specified in the format.
    (iii) If a referral lacks sufficient evidence of a cause for 
suspension, the

[[Page 62986]]

debarring and suspending official may initiate a review or 
investigation, as appropriate, by reporting the referral to the 
appropriate Government entity, e.g., contracting activity, inspector 
general, or criminal investigative agency.
    (b) Decisionmaking process.
    (i) The agency debarring and suspending official may initiate the 
suspension process by issuing a notice of suspension in accordance with 
FAR 9.407-3(c) when the debarring and suspending official finds that 
the administrative record contains sufficient evidence of one or more 
of the causes for suspension stated in FAR 9.407-2.
    (A) The absence of a referral in accordance with paragraph (a)(i) 
of this subsection, or the absence of any information specified in the 
report format at 209.406-3(a)(ii), will not preclude the debarring and 
suspending official from making such a finding.
    (B) The signature of the debarring and suspending official on the 
notice of suspension is sufficient evidence that the debarring and 
suspending official has made such a finding.
    (ii) In deciding whether to terminate a suspension following a 
submission of matters in opposition, the agency debarring and 
suspending official must use the decisionmaking process stated in FAR 
9.407-3(b), DFARS Appendix H, and any agency-specific procedures that 
were provided to the contractor in advance of the decision.
    (d) Suspending officials's decision. The absence of a referral in 
accordance with paragraph (a)(i) of this subsection, or the absence of 
any information specified in the report format at 209.406-3(a)(ii), 
will not preclude the debarring and suspending official from making a 
decision.

PART 225--FOREIGN ACQUISITION

    10. Section 225.206 is added to read as follows:


225.206  Noncompliance.

    (c)(4) Prepare any report of noncompliance in accordance with the 
procedures at 209.406-3 or 209.407-3.

PART 249--TERMINATION OF CONTRACTS

    11. Section 249.106 is added to read as follows:


249.106  Fraud or other criminal conduct.

    If the TCO suspects fraud or other criminal conduct, the TCO must 
report the facts in accordance with the procedures at 209.406-3 or 
209.407-3.

[FR Doc. 99-29984 Filed 11-17-99; 8:45 am]
BILLING CODE 5000-04-M