[Federal Register Volume 66, Number 64 (Tuesday, April 3, 2001)]
[Rules and Regulations]
[Pages 17754-17756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8122]



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Part II





Department of Defense

General Services Administration

National Aeronautics and Space Administration





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48 CFR Chapter 1 and Parts 9, et al.



Federal Acquistion Regulations; Contractor Responsibility, Labor 
Relations Costs, and Costs Relating to Legal and Other Proceedings; 
Final Rule and Proposed Rule



Federal Acquistion Regulation; Small Entity Compliance Guide; Final 
Rule

  Federal Register / Vol. 66, No. 64 / Tuesday, April 3, 2001 / Rules 
and Regulations  

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 9, 14, 15, 31, and 52

[FAC 97-24, FAR Case 1999-010 (stay)]
RIN 9000-AI40


Federal Acquisition Regulation; Contractor Responsibility, Labor 
Relations Costs, and Costs Relating to Legal and Other Proceedings

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

ACTION: Interim rule--reinstatement of text; stay of final rule; 
request for comments.

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SUMMARY: The Federal Acquisition Regulation Council (FAR Council) 
published in the Federal Register at 65 FR 80255, December 20, 2000, a 
final rule addressing contractor responsibility and costs incurred in 
legal and other proceedings. After further review, the FAR Council is 
immediately staying that rule. The FAR Council intends the stay will 
last for 270 days from April 3, 2001, or until finalization of the 
proposed rule (entitled ``Contractor Responsibility, Labor Relations 
Cost, and Costs Relating to Legal and Other Proceedings'' that is being 
published concurrently with this interim rule), whichever is sooner. 
The FAR Council is requesting comments in this FAR interim rule on the 
length of the stay. During the stay, the FAR text is restored to the 
text as it existed before January 19, 2001. In a separate document 
being published today, the FAR Council is publishing a proposed rule, 
requesting comments under that FAR case on revoking the December 20, 
2000, final rule.

DATES: Effective Date: Effective April 3, 2001, the rule published in 
the Federal Register at 65 FR 80255, December 20, 2000, is stayed 
indefinitely (except for the redesignation of 9.104-3(c) and (d) as 
9.104-3(d) and (e); the designation of the text in 31.205-21 as 
paragraph (a); and the redesignation of 52.209-5(a)(1)(ii) as 52.209-
5(a)(i)(iii)). The amendments made by this rule are effective April 3, 
2001.
    Applicability Date: The FAR, as amended by this rule, is applicable 
to solicitations issued on or after January 19, 2001. Contracting 
officers must amend solicitations already issued that incorporated the 
certification provision(s) from the final rule published in the Federal 
Register on December 20, 2000 (65 FR 80255), to delete those 
certification provision(s) and insert the certification provision(s) in 
this rule.
    Comment Date: Interested parties should submit comments in writing 
on or before June 4, 2001 to be considered in the formulation of a 
final rule concerning the stay.

ADDRESSES: Submit written comments to: General Services Administration, 
FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie 
Duarte, Washington, DC 20405.
    Submit electronic comments via the Internet to: [email protected]. Please submit comments only and cite FAR case 1999-010 
(stay) in all correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington DC 20405, at (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, contact Mr. Ralph De Stefano, Procurement Analyst, at (202) 
501-1758. Please cite FAC 97-24, FAR case 1999-010 (stay).

SUPPLEMENTARY INFORMATION:

A. Background

1. The Final Rule

    The FAR Council published a proposed rule amending FAR Parts 9 and 
31 in the Federal Register at 64 FR 37360, July 9, 1999. In response to 
the proposed rule, the FAR Council received more than 1500 letters. 
After reviewing the public comments, the FAR Council decided to 
republish the proposed rule with certain changes.
    The FAR Council published a revised proposed rule amending FAR 
Parts 9, 14, 15, 31, and 52 in the Federal Register at 65 FR 40830, 
June 30, 2000. Over 300 public comments were received.
    The final rule, which was published in the Federal Register at 65 
FR 80255 on December 20, 2000, had an effective date of January 19, 
2001, 30 days from date of publication.
    The final rule included the following revisions:

FAR Part 9

    Added language stating that a satisfactory record of integrity and 
business ethics includes satisfactory compliance with the law including 
tax, labor and employment, environmental, antitrust, and consumer 
protection laws (FAR 9.104-1(d)).
    Required contracting officers to consider all relevant credible 
information but stated that the greatest weight must be given to 
offenses adjudicated within the past three years.

FAR Part 14 and 15

    Directed contracting officers to notify offerors if the offerors 
were excluded based on a nonresponsibility determination.

FAR Part 31

    At FAR 31.205-21, made unallowable those costs incurred for 
activities that assist, promote, or deter unionization.
    At FAR 31.305-47, made unallowable those costs incurred in civil or 
administrative proceedings brought by a government where the contractor 
violated, or failed to comply with a law or regulation.

FAR Part 52

    At FAR 52.209-5, amended the previous certification to require 
offerors to certify to additional violations (violations of tax, labor 
and employment, environmental, antitrust, or consumer protection laws) 
adjudicated within the last three years. It was a check-the-box 
certification. An offeror would have to provide additional detailed 
information only upon the request of the contracting officer.
    At 52.212-3(h), made an equivalent change for the certification for 
commercial items.

2. The Lawsuit

    The Business Roundtable, Chamber of Commerce of the United States, 
National Association of Manufacturers, Associated General Contractors 
of America, Inc., and Associated Builders and Contractors, Inc., filed 
a lawsuit in the United States District Court for the District of 
Columbia on December 22, 2000, seeking to overturn the final rule.

3. Letters

    The FAR Council has received letters from major industry 
associations representing thousands of firms, and from Congressional 
Representatives, requesting an effective date extension of at least six 
months. Industry concerns extend especially to contractors' ability to 
comply with the rule's new certification requirements, which apply to 
procurements over $100,000.

4. Action

    The FAR Council is reassessing the advantages and disadvantages of 
the changes made by the December 20, 2000, final rule, to determine if 
the benefits of the rule are outweighed by the burdens imposed by the 
rule. In this regard, it is not clear to the FAR Council

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that there is a justification for including the added categories of 
covered laws in the rule and its implementing certification, that the 
rule provides contracting officers with sufficient guidelines to 
prevent arbitrary or otherwise abusive implementation, or that the 
final rule is justified from a cost benefit perspective. In a proposed 
rule also published today, the FAR Council is requesting public 
comments on revoking the final rule.
    In the interim, the FAR Council has determined that the 30-day 
effective date did not give contractors, and the Government, sufficient 
time to meet the new obligations and responsibilities imposed by the 
final rule. Government contracting officers have not had sufficient 
training. Offerors have not had sufficient time to establish a system 
to track compliance with applicable laws and keep it current, in order 
to be able to properly fill out the certification. Although there is 
language in the noncommercial items certification which assures 
contractors that no system of records needs to be established to render 
the certification in good faith, this language is not found in the 
commercial items certification. There are criminal penalties for a 
false certification (18 U.S.C. 1001). The FAR Council now recognizes 
that it will take more time than it anticipated for businesses to put 
the systems in place.
    Therefore, the FAR Council has decided to stay the final rule of 
December 20, 2000. The FAR Council intends the stay to last for 270 
days from the date of publication of this interim rule, or until 
finalization of the proposed rule (published concurrently with this 
interim rule), whichever is sooner.
    The final rule has only been in effect since January 19, 2001. 
There has not been time for the public to be in a position of reliance 
upon the rule's existence.
    The previous FAR sections that were in effect, such as the previous 
version of the certification, are restored by this interim rule. The 
requirement that contractors must be responsible is statutory, and this 
stay does not relieve offerors of the requirement to have a 
satisfactory record of integrity and business ethics. Contracting 
officers will continue to have the authority and duty to make 
responsibility decisions. Agency debarring officials will continue to 
have the authority and duty to make determinations whether to suspend 
and debar a contractor. The Government still needs the information 
contained in the previous certifications, which covered such things as 
whether the contractor or its principals are presently debarred, or had 
a felony conviction for contract fraud.
    The stay is not intended to be a statement that violations of the 
additional laws discussed in the December 20, 2000, rule could not have 
been considered in the past, or could not be considered in the future, 
by contracting officers or agency debarring officials.
    The FAR Council is inviting comments in two rules. In this interim 
rule, FAR Case 1999-010, comments are requested on the length of the 
stay. In the accompanying proposed rule, FAR case 2001-014, comments 
are requested on the revocation of the December rule.
    When staying Code of Federal Regulations text, if the previous text 
is restored, the Federal Register requires different numbering from the 
stayed text. The stayed text uses the numbering that was published in 
Federal Acquisition Circular 97-21. The revised numbering of the 
restored text is not a substantive change.
    This is a significant rule and was subject to Office of Management 
and Budget review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
National Aeronautics and Space Administration certify that this action 
does not 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 action stays FAR revisions implemented 
under FAR case 1999-010 published in the Federal Register on December 
20, 2000 (65 FR 80255), that did not have a significant economic impact 
on a substantial number of small entities.

C. Paperwork Reduction Act

    This action does not impose any new information collection 
requirements that 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 stay is 
necessary because otherwise the rule imposes burdens that the 
Government and contractors are not prepared to meet. While the stay is 
in effect, the FAR Council will be collecting public comments about the 
length of the stay, and also collecting public comments on the proposed 
rule being published today rescinding the rule permanently.

List of Subjects in 48 CFR Parts 9, 14, 15, 31, and 52

    Government procurement.

    Dated: March 29, 2001.
Al Matera,
Director, Acquisition Policy Division.

Federal Acquisition Circular

    Federal Acquisition Circular (FAC) 97-24 is issued under the 
authority of the Secretary of Defense, the Administrator of General 
Services, and the Administrator for the National Aeronautics and Space 
Administration.
    All Federal Acquisition Regulation (FAR) changes and other 
directive material contained in FAC 97-24 are effective April 3, 2001.

    Dated: March 7, 2001.
Deidre A. Lee,
Director, Defense Procurement.

    Dated: February 13, 2001.
David A. Drabkin,
Deputy Associate Administrator, Office of Acquisition Policy, General 
Services Administration.

    Dated: February 15, 2001.
Tom Luedtke,
Associate Administrator for Procurement, National Aeronautics and Space 
Administration.

    Accordingly, the final rule published in the Federal Register at 65 
FR 80255, December 20, 2000, is stayed, and DoD, GSA, and NASA further 
amend 48 CFR parts 9, 14, 15, 31, and 52 as set forth below:
    1. The authority citation for 48 CFR parts 9, 14, 15, 31, and 52 
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).

PART 9--CONTRACTOR QUALIFICATIONS

    2. In section 9.103, redesignate paragraph (c) as (d); and add a 
new paragraph (c) to read as follows:


9.103  Policy.

* * * * *
    (c) No purchase or award shall be made unless the contracting 
officer makes an affirmative determination of responsibility. In the 
absence of

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information clearly indicating that the prospective contractor is 
responsible, the contracting officer shall make a determination of 
nonresponsibility. If the prospective contractor is a small business 
concern, the contracting officer shall comply with subpart 19.6, 
Certificates of Competency and Determination of Responsibility. (If 
Section 8(a) of the Small Business Act (15 U.S.C. 637) applies, see 
subpart 19.8).
* * * * *

    3. In section 9.104-1, redesignate paragraphs (e), (f), and (g) as 
(f), (g), and (h), respectively; and add a new paragraph (e) to read as 
follows:


9.104-1  General standards.

* * * * *
    (e) Have a satisfactory record of integrity and business ethics;
* * * * *

PART 14--SEALED BIDDING

    4. In section 14.404-2, redesignate paragraphs (j), (k), and (l) as 
(k), (l), and (m), respectively; and add a new paragraph (j) to read as 
follows:


14.404-2  Rejection of individual bids.

* * * * *
    (j) Low bids received from concerns determined to be not 
responsible pursuant to Subpart 9.1 shall be rejected (but if a bidder 
is a small business concern, see 19.6 with respect to certificates of 
competency).
* * * * *

PART 15--CONTRACTING BY NEGOTIATION

    5. In section 15.503, redesignate paragraph (a)(2) as (a)(3) and 
add a new paragraph (a)(2) to read as follows:


15.503  Notifications to unsuccessful offerors.

    (a) * * *
    (2) Preaward notices of exclusion from competitive range. The 
contracting officer shall notify offerors promptly in writing when 
their proposals are excluded from the competitive range or otherwise 
eliminated from the competition. The notice shall state the basis for 
the determination and that a proposal revision will not be considered.
* * * * *

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

    6. In section 31.205-47, amend paragraph (a) by adding the 
definition of ``Fraud'' and redesignate paragraphs (b)(3) through 
(b)(5) as (b)(4) through (b)(6), respectively; and add a new paragraph 
(b)(3) to read as follows:


31.205-47  Costs related to legal and other proceedings.

    (a) * * *
    Fraud, as used in this subsection, means--
    (1) Acts of fraud or corruption or attempts to defraud the 
Government or to corrupt its agents,
    (2) Acts which constitute a cause for debarment or suspension under 
9.406-2(a) and 9.407-2(a) and
    (3) Acts which violate the False Claims Act, 31 U.S.C., sections 
3729-3731, or the Anti-Kickback Act, 41 U.S.C., sections 51 and 54.
* * * * *
    (b) * * *
    (3) In a civil or administrative proceeding, either a finding of 
contractor liability where the proceeding involves an allegation of 
fraud or similar misconduct or imposition of a monetary penalty where 
the proceeding does not involve an allegation of fraud or similar 
misconduct;
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    7. In section 52.209-5--
    a. Revise the provision date (that is stayed as part of this rule); 
and
    b. Add paragraphs (a)(1)(i)(D) and (E) to read as follows:


52.209-5  Certification Regarding Debarment, Suspension, Proposed 
Debarment, and Other Responsibility Matters.

* * * * *

Certification Regarding Debarment, Suspension, Proposed Debarment, 
And Other Responsibility Matters (Apr 2001)

    (a)(1) * * *
    (i) * * *
    (D) Have [ ] have not [ ], within a three-year period preceding 
this offer, been convicted of or had a civil judgment rendered against 
them for: commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public (Federal, 
state, or local) contract or subcontract; violation of Federal or state 
antitrust statutes relating to the submission of offers; or commission 
of embezzlement, theft, forgery, bribery, falsification or destruction 
of records, making false statements, tax evasion, or receiving stolen 
property; and
    (E) Are [ ] are not [ ] presently indicted for, or otherwise 
criminally or civilly charged by a governmental entity with, commission 
of any of the offenses enumerated in subdivision (a)(1)(i)(B) of this 
provision.
* * * * *
    8. In section 52.212-3--
    a. Revise the provision date (that is stayed as part of this rule); 
and
    b. Add paragraph (i) to read as follows:


52.212-3  Offeror Representations and Certifications--Commercial Items.

* * * * *

Offeror Representations and Certifications--Commercial Items (Apr 
2001)

* * * * *
    (i) Certification Regarding Debarment, Suspension or Ineligibility 
for Award (Executive Order 12549). The offeror certifies, to the best 
of its knowledge and belief, that--
    (1) The offeror and/or any of its principals [ ] are, [ ] are not 
presently debarred, suspended, proposed for debarment, or declared 
ineligible for the award of contracts by any Federal agency; and
    (2) [ ] Have, [ ] have not, within a three-year period preceding 
this offer, been convicted of or had a civil judgment rendered against 
them for: commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a Federal, state or 
local government contract or subcontract; violation of Federal or state 
antitrust statutes relating to the submission of offers; or commission 
of embezzlement, theft, forgery, bribery, falsification or destruction 
of records, making false statements, tax evasion, or receiving stolen 
property; and [ ] are, [ ] are not presently indicted for, or otherwise 
criminally or civilly charged by a Government entity with, commission 
of any of these offenses.


(End of provision)
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[FR Doc. 01-8122 Filed 3-30-01; 8:45 am]
BILLING CODE 6820-EP-P