[Federal Register Volume 67, Number 226 (Friday, November 22, 2002)]
[Rules and Regulations]
[Pages 70518-70519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29090]



[[Page 70518]]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 17, 22, and 36

[FAC 2001-10; FAR Case 2001-016; Item II]
RIN 9000-AJ14


Federal Acquisition Regulation; Executive Order 13202, 
Preservation of Open Competition and Government Neutrality Towards 
Government Contractors' Labor Relations on Federal and Federally Funded 
Construction Projects

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

ACTION: Final rule; termination of stay of interim rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) published in the Federal 
Register at 66 FR 27414, May 16, 2001, an interim rule implementing 
Executive Order (E.O.) 13202, Preservation of Open Competition and 
Government Neutrality Towards Government Contractors' Labor Relations 
on Federal and Federally Funded Construction Projects. As a result of a 
permanent injunction against the E.O. and pending litigation to resolve 
the dispute, the Councils published an interim rule in the Federal 
Register at 67 FR 10527, March 7, 2002, staying the heart of the rule. 
The Federal Acquisition Regulatory (FAR) Council intended the stay 
would last until final judicial resolution of the dispute. The FAR 
Council requested comments on the FAR interim rule stay. This final 
rule terminates the stay and adopts the May 16, 2001, interim rule as 
final without change.

DATES: Effective November 22, 2002, the stay of 48 CFR 36.202(d) is 
terminated. As of November 22, 2002, the interim rule amending 48 CFR 
parts 17, 22, and 36 published on May 16, 2001 (66 FR 27414), is 
adopted as final without change.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501-
1900. Please cite FAC 2001-10, FAR case 2001-016.

SUPPLEMENTARY INFORMATION:

A. Background

    On February 17, 2001, President George W. Bush signed Executive 
Order (E.O.) 13202 revoking E.O. 12836 of February 1, 1993, and 
Presidential Memorandum of June 5, 1997, entitled ``Use of Project 
Labor Agreements for Federal Construction Projects.'' The E.O. was 
published in the Federal Register at 66 FR 11225, February 22, 2001, 
and amended by E.O. 13208 published in the Federal Register at 66 FR 
18717, April 11, 2001.
    The E.O. 13202 is intended to improve the internal management of 
the Executive branch by--
    [sbull] Promoting and ensuring open competition on Federal and 
federally funded or assisted construction projects;
    [sbull] Maintaining Government neutrality towards Government 
contractors' labor relations on Federal and federally funded or 
assisted construction projects;
    [sbull] Reducing construction costs to the Government and to the 
taxpayers;
    [sbull] Expanding job opportunities, especially for small and 
disadvantaged businesses;
    [sbull] Preventing discrimination against Government contractors or 
their employees based upon labor affiliation or lack thereof, thereby 
promoting the economical, nondiscriminatory, and efficient 
administration and completion of Federal and federally funded or 
assisted construction projects; and
    [sbull] Preventing the inefficiency that may result from the 
disruption of a previously established contractual relationship in 
particular cases.
    To implement Executive Order 13202, as amended, an interim rule was 
published in the Federal Register on May 16, 2001, 66 FR 27414, as part 
of Federal Acquisition Circular 97-26. Consistent with Executive Order 
13202, as amended, FAR 36.202(d) of that interim rule specified that 
agencies could not require or prohibit offerors, contractors, or 
subcontractors from entering into or adhering to agreements with one or 
more labor organizations. It also permitted agency heads to exempt a 
project from the requirements of the Executive order under special 
circumstances, but specified that such an exemption could not be 
related to a possible or an actual labor dispute. FAR 36.202(d) also 
provided for the exemption of a project governed by a project labor 
agreement in place as of February 17, 2001, which had a construction 
contract awarded as of February 17, 2001.
    In response to the interim rule, the Councils received 179 letters. 
All but one of the respondents supported the rule. The one respondent 
(Building and Construction Trades Department, AFL-CIO) that did not 
support the rule believed the Executive order in which the rule was 
based is unlawful; that the interim rule is based both on 
misapprehensions about the nature of Project Labor Agreements and on 
economic assumptions that lack any factual basis; and that the interim 
rule is so vague as to mislead affected parties about their ability to 
exercise their statutory rights. Since the rule mirrors the directives 
contained in the Executive orders, the Councils agreed that no change 
to the rule was necessary.
    This same respondent, along with other plaintiffs, commenced a 
lawsuit to enjoin the enforcement of the E.O. issued by the President. 
A permanent injunction against enforcement of Executive Order 13202 was 
issued November 7, 2001, by the U.S. District Court for the District of 
Columbia (see Building and Construction Trades Department, AFL-CIO v. 
Allbaugh, D.D.C., 172 F.Supp.2d 138, D.D.C. 2001). The Government 
submitted its appeal (No. 01-5436 (D.C. Cir.)). In order to comply with 
the court order, a stay of the heart of the interim rule with a request 
for comments was published in the Federal Register at 67 FR 10527, 
March 7, 2002, pending resolution of the litigation.
    In response to the interim rule stay, one respondent (The 
Associated General Contractors of America (AGC)) submitted comments. 
AGC believed that the unresolved legal challenge to the Executive Order 
13202 does not require a stay of the interim rule, and it is 
inappropriate for the Councils to impede the enforcement of the E.O. 
The Councils determined that the stay would remain pending resolution 
of the litigation.
    A decision by the United States Court of Appeals for the District 
of Columbia Circuit on July 12, 2002, reversed the judgment of the 
District Court and vacated the injunction (295 F.3d 28, D.C. Cir. 
2002). Accordingly, the Councils are terminating the stay and adopting 
the May 16, 2001, interim rule as final without change.
    This is not a significant regulatory action and, therefore, was not 
subject to 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.

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B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to 
this final rule. The Councils prepared a Final Regulatory Flexibility 
Analysis (FRFA), and it is summarized as follows:

    This rule amends FAR parts 17, 22, and 36 to implement Executive 
Order 13202 as amended on April 6, 2001 (E.O. 13208). The Executive 
orders require that any construction contract awarded after February 
17, 2001, or any obligation of funds pursuant to such contract, must 
not require or prohibit offerors, contractors, or subcontractors to 
enter into or adhere to agreements with one or more labor 
organizations on the same or other related construction project(s); 
or otherwise discriminate against offerors, contractors, or 
subcontractors for becoming or refusing to become or remaining 
signatories or otherwise adhere to agreements with one or more 
organizations, on the same or other related construction projects. 
The rule primarily affects the internal operating procedures of 
Government agencies. The rule will apply to all large and small 
entities that seek award of construction contracts that are Federal 
and federally funded. During fiscal year 2001, there were over 
forty-seven thousand contract actions awarded to small businesses 
according to the Federal Procurement Data System. These actions were 
worth a total of over $6 billion. It is expected that the awarding 
offices neutrality toward Government contractors' and subcontractors 
labor relations regarding project labor agreements will expand job 
opportunities to small entities, specifically nonunion small 
businesses. This gives small businesses the ability to negotiate and 
establish business relationships to deliver efficient and cost 
effective high quality construction projects.

    Interested parties may obtain a copy of the FRFA from the FAR 
Secretariat. The FAR Secretariat has submitted a copy of the FRFA to 
the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose 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 17, 22, and 36

    Government procurement.

    Dated: November 12, 2002.
Al Matera,
Director, Acquisition Policy Division.

Stay Terminated; Interim Rule Adopted as Final Without Change

    Accordingly, DoD, GSA, and NASA terminate the interim rule stay 
published in the Federal Register at 67 FR 10527 on March 7, 2002, and 
further adopt as a final rule without change the interim rule amending 
48 CFR parts 17, 22, and 36, which was published in the Federal 
Register at 66 FR 27414 on May 16, 2001.


    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

[FR Doc. 02-29090 Filed 11-21-02; 8:45 am]
BILLING CODE 6820-EP-P