[Federal Register Volume 66, Number 64 (Tuesday, April 3, 2001)]
[Proposed Rules]
[Pages 17758-17760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8124]



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

[[Page 17758]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

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

[FAR Case 2001-014]
RIN 9000-AJ10


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

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

ACTION: Proposed rule with request for comment.

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SUMMARY: The Federal Acquisition Regulations 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. The FAR Council is reconsidering its 
position and requests public comments on this proposed rule revoking 
the December 20, 2000, final rule. In an interim FAR rule (under FAR 
Case 1999-010, Contractor Responsibility, Labor Relations Costs, and 
Costs Relating to Legal and other Proceedings, that is being published 
today) the FAR Council is staying the final rule.

DATES: Interested parties should submit comments in writing on or 
before June 4, 2001 to be considered in the formulation of a final 
rule.

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 2001-014 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 FAR case 2001-014.

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 Councils 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 Stay

    In the interim rule published today, under FAR case 1999-010, the 
FAR Council is staying the final rule. The FAR Council 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.
    The FAR Council intends the stay will last for 270 days from April 
3, 2001 or until finalization of this proposed rule, whichever, is 
sooner.

3. Reconsideration

    The FAR Council is reconsidering its position and requests public 
comments on this proposed rule that revokes the December 20, 2000, 
final rule.
    The FAR Council realizes that there was strong controversy about 
the merits of the two proposed rules (there were 1800 comments). The 
typical FAR rule generates about one percent of that amount. The two 
proposed rules were the most controversial ever published by the FAR 
Council. Adverse comments were made by individuals within the 
Government itself, as well as by the public.
    After the publication of the final rule, the FAR Council has 
continued to receive information that the rule is not in the best 
interests of industry or the Government, the way it was written. The 
FAR Council wants to be responsive to the needs of the contracting 
community, and is therefore continuing a dialog about the rule.
    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 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.
    The 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 requirement that contractors must be responsible is statutory. 
Offerors must have a satisfactory record of

[[Page 17759]]

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 final rule was one way the Government could assure itself that 
its contractors will have integrity. There are other ways to arrive at 
the assurance. For example, the agencies responsible for enforcement of 
the specific laws cited in the final rule may cite a pattern of 
violation as cause for debarring or suspending the violator.
    The FAR Council is inviting comments on two rules. On this proposed 
rule, FAR case 2001-014, comments are invited on the revocation of the 
December final rule. On the interim rule, FAR case 1999-010 (also 
published today), comments are requested on the length of the stay.
    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 FAR Council does not expect this proposed rule 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 proposed rule will eliminate 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. Therefore, 
an Initial Regulatory Flexibility Analysis is not required. We invite 
comments from small businesses and other interested parties. We will 
consider comments from small entities concerning the affected FAR parts 
in accordance with 5 U.S.C. 610. Small entities must submit such 
comments separately and should cite 5 U.S.C. 601, et seq. (FAR case 
2001-014).

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) applies because the 
FAR changes to Parts 9 and 52 decrease the information collection 
requirements that the Office of Management and Budget (OMB) approved 
under OMB Control Number 9000-0094.
    The FAR Council estimates that the annual reporting burden for OMB 
Control Number 9000-0094 applies to only 89,995 respondents, of which 
approximately 50,000 would be affected by the modified certification 
requirement. The 39,995 subcontractors that respond to inquiries from 
the prime contractor regarding debarment, suspension, or proposed 
debarment are not affected by the modified certification requirements. 
The total estimated responses of 500,000 per year is not affected by 
the modified certification requirements.
    The FAR Council estimates that the modified certification 
requirement would reduce the total burden by 505,000 hours, changing 
the total from 596,667 to 91,667. This is based on an estimate of 
50,000 respondents and 500,000 responses per year. The FAR Council 
estimates that the modified certification would take an average of 1 
hour less for each of the 50,000 initial responses and .3 hours less 
for each of the 450,000 subsequent responses that year, for a total of 
185,000 hours less to respond to the modified certification 
requirements. The FAR Council further estimates that in many 
acquisitions, the contracting officer only would have requested 
additional information if the otherwise apparently successful offeror 
had certified affirmatively. However, the FAR Council estimates, in 
some source selections, the contracting officer would have requested 
such information from all offerors in the competitive range that 
certified affirmatively. Therefore, we estimate a reduced burden of 
140,000 hours for providing additional information. This is based on a 
burden estimate of 4 hours per initial response and 1 hour per 
subsequent response, for a total of 140,000 hours for providing 
additional information. The FAR Council further estimates an additional 
reduction of 180,000 annual recordkeeping hours based on an estimated 
average of 6 hours per year for recordkeeping for each of the 30,000 
respondents to respond to the request for additional information.
    The revised annual reporting burden is estimated as follows:
    Respondents: 89,995.
    Responses per respondent: 12.22.
    Total annual responses: 1,100,000.
    Average hours per response: .083.*
    Total burden hours: 91,667 hours.

    * Average hours per response is calculated by dividing total 
burden hours by total annual responses.

    The Paperwork Reduction Act does not apply to FAR Part 31 cost 
principles changes because the changes do not impose information 
collection requirements that require Office of Management and Budget 
approval under 44 U.S.C. 3501, et seq.

D. Request for Comments Regarding Paperwork Burden

    Submit comments, including suggestions for reducing this burden, 
not later than June 4, 2001 to: FAR Desk Officer, OMB, Room 10102, 
NEOB, Washington, DC 20503, and a copy to the General Services 
Administration, FAR Secretariat (MVR), 1800 F Street, NW., Room 4035, 
Washington, DC 20405.
    Public comments are particularly invited on whether our estimate of 
the public burden of this collection of information is accurate, and 
based on valid assumptions and methodology; ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
ways in which we can minimize the burden of the collection of 
information on those who are to respond, through the use of appropriate 
technological collection techniques or other forms of information 
technology.

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.

    Therefore, DoD, GSA, and NASA propose that 48 CFR parts 9, 14, 15, 
31, and 52 as stayed effective April 3, 2001 be further amended 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


9.103  [Amended]

    2. Amend section 9.103 in paragraph (b) by removing the third 
sentence; and removing paragraph (c) and redesignating paragraph (d) as 
paragraph (c).
    3. In section 9.104-1, revise paragraph (d); remove paragraph (e); 
and redesignate paragraphs (f), (g), and (h) as (e), (f), and (g) to 
read as follows:


9.104-1   General standards.

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


9.104-3  [Amended]

    4. In section 9.104-3, remove paragraph (c); and redesignate 
paragraphs (d) and (e) as (c) and (d) respectively.

[[Page 17760]]

PART 14--SEALED BIDDING

    5. Revise section 14.404-2(i); remove paragraph (j); and 
redesignate paragraphs (k), (l), and (m) as (j), (k), and (l), 
respectively, to read as follows:


14.404-2  Rejection of individual bids.

* * * * *
    (i) 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

    6. Revise section 15.503(a)(1); remove paragraph (a)(2); and 
redesignate paragraph (a)(3) as (a)(2) to read as follows:


15.503  Notification to unsuccessful offerors.

    (a) Preaward notices--(1) 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 PROCEDURE


31.205-21  [Amended]

    7. Amend section 31.205-21 by removing the paragraph designation 
``(a)'', and by removing paragraph (b) in its entirety.
    8. Amend section 31.205-47 in paragraph (a) by adding, in 
alphabetical order, the definition ``Fraud'' (which was removed in the 
December 20, 2000, final rule (65 FR 80255) and stayed effective April 
3, 2001; and by removing paragraph (b)(3) and redesignating paragraphs 
(b)(4) through (b)(6) as (b)(3) through (b)(5), respectively; and 
revising paragraph (b)(2); to read as follows:


31.205-47  Costs related to legal and other proceedings.

    (a) Definitions.
* * * * *
    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) * * *
    (2) 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


52.209-5  [Amended]

    9. In section 52.209-5--
    a. Revise the date of the provision to read ``(Mar 1996)'';
    (b) In paragraph (a)(1)(i)(B), remove ``the three-year'' and add 
``a three-year'' in its place; and add ``and'' at the end of the 
paragraph;
    c. In paragraph (a)(1)(i)(C), at the end of the paragraph, remove 
``; and'' and add a period in its place; and
    d. Remove paragraphs (a)(1)(i)(D) and (E); remove paragraph 
(a)(1)(ii), and redesignate paragraph (a)(1)(iii) as (a)(1)(ii).
    10. In section 52.212-3--
    a. Revise the date of the provision;
    b. Revise paragraph (h); and
    c. Remove paragraph (i). The revised text reads as follows:


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

* * * * *

Offeror Representations and Certifications--Commercial Items (Oct. 
2000)

* * * * *
    (h) 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 offerors; 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. 01-8124 Filed 3-30-01; 8:45 am]
BILLING CODE 6820-EP-M