[Federal Register Volume 65, Number 184 (Thursday, September 21, 2000)]
[Rules and Regulations]
[Pages 57101-57103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24316]


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ENVIRONMENTAL PROTECTION AGENCY

48 CFR Parts 1503 and 1552

[FRL-6874-7]


Acquisition Regulation

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is issuing this rule 
to amend the EPA Acquisition Regulation (EPAAR) to add a contract 
clause to Agency contracts whereby contractors, under contracts 
exceeding $1,000,000, display EPA Office of the Inspector General 
Hotline posters within contractor work areas, unless the Contractor has 
its own internal reporting mechanism and program, such as a hotline.

EFFECTIVE DATE: November 20, 2000.

FOR FURTHER INFORMATION CONTACT: Larry Wyborski, U.S. Environmental 
Protection Agency, Office of Acquisition Management (3802R), 1200 
Pennsylvania Avenue, NW Washington DC 20460, (202) 564-4369, 
[email protected]

SUPPLEMENTARY INFORMATION:

A. Background Information

    The proposed rule was published in the Federal Register (65 FR 
25899-25900) on May 4, 2000, providing for a 60 day comment period.
    Interested parties were afforded the opportunity to participate in 
the making of this rule. The following is a summary of the comments 
received and the Agency disposition of those comments.
    1. Comment: The Defense Acquisition Regulation Supplement 
regulations for hotline posters promote contractor self-governance and 
ethical behavior by allowing contractor hotlines and corresponding 
contractor hotline posters to be used in lieu of Government hotlines 
and posters.
    1. Response: EPA believes this comment has merit and is beneficial 
to the proposed rule. We will add language similar to the DoD 
regulations to our final rule which will allow contractor hotlines to 
be promoted in lieu of the Office of Inspector General hotlines, as 
long as a contractor has its own internal reporting mechanism and 
program, such as a hotline. If a contractor lacks its own internal 
reporting mechanism and program, posting of the EPA Office of Inspector 
General Hotline will be required. EPA will retain a lower reporting 
requirement threshold than DoD (contracts valued at $1,000,000 or more, 
rather than $5,000,000 or more), since analysis of EPA contract awards 
revealed that only a small percentage of EPA contracts would be subject 
to the hotline poster requirement if the $5,000,000 threshold was used 
by EPA.
    2. Comment: We believe the posting of multiple agency hotline 
posters would be confusing to contractor staff.
    2. Response: In an attempt to avoid having multiple agency hotline 
posters, representatives responsible for drafting the Federal 
Acquisition Regulation recently met but were unable to reach a 
consensus on the contents of a Government-wide Office of Inspector 
General Hotline clause. Different agencies have different requirements 
for such a clause. EPA will pattern its clause after the DoD (and 
Department of Veterans Affairs) clause. This will give contractors 
flexibility by allowing them to defer to their own established business 
ethics hotlines and internal processes, if an internal hotline process 
is available.

B. Executive Order 12866

    This is not a significant regulatory action for purposes of 
Executive Order 12866; therefore, no review is required at the Office 
of Information and Regulatory Affairs, within the Office of Management 
and Budget (OMB).

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because this rule does 
not contain information collection requirements for the approval of OMB 
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501, et seq).

D. Regulatory Flexibility Act (RFA), as Amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 
U.S.C. 601 et seq.

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute, unless the agency certifies that the rule will not have 
a significant impact on a substantial number of small entities. Small 
entities include small businesses, small organizations, and small 
governmental jurisdictions.

[[Page 57102]]

    For purposes of assessing the impact of this rule on small 
entities, small entity is defined as: (1) A small business that meets 
the definition of a small business found in the Small Business Act and 
codified at 13 CFR 121.201; (2) a small governmental jurisdiction that 
is a government of a city, county, town, school district or special 
district with a population of less than 50,000; and (3) a small 
organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    After considering the economic impacts of this proposed rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
adverse economic impact on small entities, since the primary purpose of 
the regulatory flexibility analyses is to identify and address 
regulatory alternatives ``which minimize any significant economic 
impact of the proposed rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, or otherwise has a positive economic effect 
on all of the small entities subject to the rule. This direct final 
rule does not have a significant impact on a substantial number of 
small entities. The requirements under the rule impose no reporting, 
recordkeeping, or compliance costs on small entities.

E. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) Public 
Law 104-4, establishes requirements for Federal agencies to assess 
their regulatory actions on State, local and Tribal governments and the 
private sector. This rule does not contain a Federal mandate that may 
result in expenditures of $100 million or more for State, local, and 
Tribal governments, in the aggregate, or the private sector in any one 
year. Any private sector costs for this action relate to paperwork 
requirements and associated expenditures, which would be far below the 
level established for UMRA applicability. Thus, the rule is not subject 
to the requirements of sections 202 and 205 of the UMRA.

F. Executive Order 13045

    Executive Order 13045, Protection of Children from Environmental 
Health Risks and Safety Risks (6 FR 19885, April 23, 1997), applies to 
any rule that: (1) is determined to be economically significant as 
defined under Executive Order 12866; and (2) concerns an environmental 
health or safety risk that EPA has reason to believe may have 
disproportionate effect on children. If the regulatory action meets 
both criteria, the Agency must evaluate the environmental health or 
safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    This rule is not subject to Executive Order 13045 because it is not 
a significant rule as defined by Executive Order 12866, and because it 
does not involve decisions on environmental health or safety risks.

G. Executive Order 13084

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian Tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay for the direct 
compliance costs incurred by the Tribal governments, or EPA consults 
with those governments. If EPA complies by consulting, Executive Order 
13084 requires EPA to provide to OMB, in a separately identified 
section of the preamble to the rule, a description of the extent of 
EPA's prior consultation with representatives of affected Tribal 
governments, a summary of the nature of their concerns, and a statement 
supporting the need to issue the regulation. In addition, Executive 
Order 13084 requires EPA to develop an effective process permitting 
elected and other representatives of Indian tribal governments ``to 
provide meaningful and timely input in the development of regulatory 
policies on matters that significantly or uniquely affect their 
communities.''
    This rule does not significantly or uniquely affect the communities 
of Indian Tribal governments. Accordingly, the requirements of section 
3(b) of Executive Order 13084 do not apply to this rule.

H. National Technology Transfer and Advancement Act of 1995

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This rule does not involve technical standards. Therefore, EPA did 
not consider the use of any voluntary consensus standards.

I. Executive Order 13132

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' are defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Under section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law, unless 
the Agency consults with State and local officials early in the process 
of developing the proposed regulation.
    This proposed rule does not have federalism implications. It will 
not have substantial direct effect on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. The rule amends the EPA 
Acquisition Regulation to add a contract clause to agency contracts 
whereby contractors, under contracts exceeding $1,000,000, and under 
certain circumstances, are required to display EPA Office of the 
Inspector General Hotline posters within contractor work areas. Thus, 
the

[[Page 57103]]

requirements of Section 6 of the Executive Order do not apply to this 
rule.

J. Submission to Congress and the General Accounting Office

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of Congress and to the Comptroller General of the United 
States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).

    Authority: The provisions of this regulation are issued under 5 
U.S.C. 301; section 205(c), 63 Stat. 390, as amended 40 U.S.C. 
486(c).

List of Subjects in 48 CFR Parts 1503 and 1552

    Government procurement.

    Therefore, 48 CFR Chapter 15 is amended as set forth below:
    1. The authority citation for parts 1503 and 1552 continues to read 
as follows:

    Authority: Sec. 205(c), 63 Stat. 390 as amended, 40 U.S.C. 
486(c).

    2. Subpart 1503.5, Contractor Responsibility to Avoid Improper 
Business Practices, is added as follows:
Subpart 1503.5--Contractor Responsibility to Avoid Improper Business 
Practices.
Sec.
1503.500-70   Policy.
1503.500-71   Procedures.
1503.500-72   Contract clause.
1503.500-70   Policy.
    Government contractors must conduct themselves with the highest 
degree of integrity and honesty. Contractors should have standards of 
conduct and internal control systems that:
    (a) Are suitable to the size of the company and the extent of their 
involvement in Government contracting.
    (b) Promote such standards.
    (c) Facilitate timely discovery and disclosure of improper conduct 
in connection with Government contracts, and
    (d) Ensure corrective measures are promptly instituted and carried 
out.


1503.500-71  Procedures.

    (a) A contractor's system of management controls should provide 
for:
    (1) A written code of business ethics and conduct and an ethics 
training program for all employees;
    (2) Periodic reviews of company business practices, procedures, 
policies and internal controls for compliance with standards of conduct 
and the special requirements of Government contracting;
    (3) A mechanism, such as a hotline, by which employees may support 
suspected instances of improper conduct, and instructions that 
encourage employees to make such reports;
    (4) Internal and/or external audits, as appropriate.
    (5) Disciplinary action for improper conduct;
    (6) Timely reporting to appropriate Government officials of any 
suspected or possible violation of law in connection with Government 
contracts or any other irregularities in connection with such 
contracts; and
    (7) Full cooperation with any Government agencies responsible for 
either investigation or corrective actions.
    (b) Contractors who are awarded an EPA contract of $1 million or 
more must display EPA Office of Inspector General Hotline Posters 
unless the contractor has established an internal reporting mechanism 
and program, as described in paragraph (a) of this section.


1503.500-72  Contract clause.

    As required by EPAAR 1503.500-71(b), the contracting officer shall 
insert the clause at 1552.203-71, Display of EPA Office of Inspector 
General Hotline Poster, in all contracts valued at $1,000,000 or more, 
including all contract options.

    4. Part 1552 is amended by adding section 1552.203-71 to read as 
follows:


1552.203-71  Display of EPA Office of Inspector General Hotline Poster

    As prescribed in 1503.500-72, insert the following clause in all 
contracts valued at $1,000,000 or more including all contract options.

DISPLAY OF EPA OFFICE OF INSPECTOR GENERAL HOTLINE POSTER (AUG 2000)

    (a) For EPA contracts valued at $1,000,000 or more including all 
contract options, the contractor shall prominently display EPA 
Office of Inspector General Hotline posters in contractor facilities 
where the work is performed under the contract.
    (b) Office of Inspector General hotline posters may be obtained 
from the EPA Office of Inspector General, ATTN: OIG Hotline (2443), 
1200 Pennsylvania Avenue, NW, Washington, DC 20460, or by calling 
(202) 260-5113.
    (c) The Contractor need not comply with paragraph (a) of this 
clause if it has established a mechanism, such as a hotline, by 
which employees may report suspected instances of improper conduct, 
and provided instructions that encourage employees to make such 
reports.

    Dated: September 7, 2000.
Judy S. Davis,
Acting Director, Office of Acquisition Management.
[FR Doc. 00-24316 Filed 9-20-00; 8:45 am]
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