[Federal Register Volume 71, Number 90 (Wednesday, May 10, 2006)]
[Rules and Regulations]
[Pages 27203-27204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-4332]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 44

RIN 2900-AK16


Loan Guaranty: Governmentwide Debarment and Suspension 
(Nonprocurement) and Requirements for Drug-Free Workplace (Grants); 
Correction

AGENCY: Department of Veterans Affairs.

ACTION: Final rule; technical amendment.

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SUMMARY: On November 26, 2003, the Department of Veterans Affairs (VA) 
published a final rule in the Federal Register at 68 FR 66534 (VA's 
portion at 66618) implementing changes to the governmentwide 
nonprocurement debarment and suspension common rule (NCR). The NCR sets 
forth the common policies and procedures that Federal Executive branch 
agencies must use in taking suspension or debarment actions. At that 
time, ``Subpart G--Limited Denial of Participation'' (LDP), was 
inadvertently eliminated instead of being redesignated as subpart J. 
This technical amendment reinstates the dropped regulatory text for 
former subpart G in the new subpart J of part 44.

DATES: Effective Date: This technical amendment is effective as of 
November 26, 2003, the date of the erroneous omission.

FOR FURTHER INFORMATION CONTACT: William White, Acting Assistant 
Director for Loan Policy and Valuation (262), Loan Guaranty Service, 
Veterans Benefits Administration, Department of Veterans Affairs, 810 
Vermont Avenue, NW., Washington, DC 20420 (202-273-7368), 
[email protected].

SUPPLEMENTARY INFORMATION: On November 26, 2003, the Department of 
Veterans Affairs (VA) joined in the publication of governmentwide 
debarment and suspension (nonprocurement) and governmentwide 
requirements for drug-free workplace (grants). Until that time, subpart 
G of 38 CFR part 44 had set forth VA's regulations governing limited 
denial of participation (LDP) authority for VA to deny participation in 
loan guaranty programs in certain limited geographic areas or for a 
certain period of time. The intent has been for VA to have at its 
disposal a lesser sanction than a governmentwide debarment for program 
participants.
    Unfortunately, the regulatory language setting out how and when 
LPDs would be administered was omitted when part 44 was revised to 
include the new governmentwide sanctions. This document reinstates the 
dropped regulatory text for former subpart G and places it in the new 
subpart J with current cross-references. VA's administration of LDPs 
during this lapsed period remained unaffected.

List of Subjects in 38 CFR Part 44

    Administrative practice and procedure, Condominiums, Debarment and 
suspension, Grant programs, Handicapped, Housing loan programs--housing 
and community development, Manufactured homes, Reporting and 
recordkeeping requirements, Veterans.

    Approved: May 4, 2006.
Robert C. McFetridge,
Acting Assistant to the Secretary for Regulation Policy and Management.

0
Accordingly, 38 CFR part 44 is amended as follows:

PART 44--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)

0
1. The authority citation for part 44 continues to read as follows:

    Authority: 38 U.S.C. 501 and 38 U.S.C. 3703(c); Sec. 2455, Pub. 
L. 103-355, 108 Stat. 3327 (31 U.S.C. 6101 note); E.O. 11738 (3 CFR, 
1973 Comp., p. 799); E.O. 12549 (3 CFR 1986 comp., p. 189); E.O. 
12689 (3 CFR 1989 Comp., p. 235.)

0
2. Subpart J is added to part 44 to read as follows:

Subpart J--Limited Denial of Participation

Sec.
44.1100 General.
44.1105 Cause for a limited denial of participation.
44.1110 Scope and period of a limited denial of participation.
44.1111 Notice.
44.1112 Conference.
44.1113 Appeal.

Subpart J--Limited Denial of Participation


Sec.  44.1100  General.

    Field Facility Directors are authorized to order a limited denial 
of participation affecting any participant or contractor and its 
affiliates except lenders and manufactured home manufacturers. In each 
case, even if the offense or violation is of a criminal, fraudulent or 
other serious nature, the decision to order a limited denial of 
participation shall be discretionary and in the best interests of the 
Government.


Sec.  44.1105  Cause for a limited denial of participation.

    (a) Causes. A limited denial of participation shall be based upon 
adequate evidence of any of the following causes:
    (1) Irregularities in a participant's or contractor's performance 
in the VA loan guaranty program;
    (2) Denial of participation in programs administered by the 
Department of Housing and Urban Development or the Department of 
Agriculture, Rural Housing Service;
    (3) Failure to satisfy contractual obligations or to proceed in 
accordance with contract specifications;
    (4) Failure to proceed in accordance with VA requirements or to 
comply with VA regulations;

[[Page 27204]]

    (5) Construction deficiencies deemed by VA to be the participant's 
responsibility;
    (6) Falsely certifying in connection with any VA program, whether 
or not the certification was made directly to VA;
    (7) Commission of an offense or other cause listed in Sec.  44.800;
    (8) Violation of any law, regulation, or procedure relating to the 
application for guaranty, or to the performance of the obligations 
incurred pursuant to a commitment to guaranty;
    (9) Making or procuring to be made any false statement for the 
purpose of influencing in any way an action of the Department;
    (10) Imposition of a limited denial of participation by any other 
VA field facility;
    (b) Indictment. A criminal indictment or information shall 
constitute adequate evidence for the purpose of limited denial of 
participation actions.
    (c) Limited denial of participation. Imposition of a limited denial 
of participation by a VA field facility shall, at the discretion of any 
other VA field facility, constitute adequate evidence for a concurrent 
limited denial of participation. Where such a concurrent limited denial 
of participation is imposed, participation may be restricted on the 
same basis without the need for an additional conference or further 
hearing.


Sec.  44.1110  Scope and period of a limited denial of participation.

    (a) Scope and period. The scope of a limited denial of 
participation shall be as follows:
    (1) A limited denial of participation extends only to participation 
in the VA Loan Guaranty Program and shall be effective only within the 
geographic jurisdiction of the office or offices imposing it.
    (2) The sanction may be imposed for a period not to exceed 12 
months except for unresolved construction deficiencies. In cases 
involving construction deficiencies, the builder may be excluded for 
either a period not to exceed 12 months or for an indeterminate period 
which ends when the deficiency has been corrected or otherwise resolved 
in a manner acceptable to VA.
    (b) Effectiveness. The sanction shall be effective immediately upon 
issuance and shall remain effective for the prescribed period. If the 
cause for the limited denial of participation is resolved before the 
expiration of the prescribed period, the official who imposed the 
sanction may terminate it. The imposition of a limited denial of 
participation shall not affect the right of the Department to suspend 
or debar any person under this part.
    (c) Affiliates. An affiliate or organizational element may be 
included in a limited denial of participation solely on the basis of 
its affiliation, and regardless of its knowledge of or participation in 
the acts providing cause for the sanction. The burden of proving that a 
particular affiliate or organizational element is capable of meeting VA 
requirements and is currently a responsible entity and not controlled 
by the primary sanctioned party (or by an entity that itself is 
controlled by the primary sanctioned party) is on the affiliate or 
organizational element.


Sec.  44.1111  Notice.

    (a) Generally. A limited denial of participation shall be initiated 
by advising a participant or contractor, and any specifically named 
affiliate, by certified mail, return receipt requested:
    (1) That the sanction is effective as of the date of the notice;
    (2) Of the reasons for the sanction in terms sufficient to put the 
participant or contractor on notice of the conduct or transaction(s) 
upon which it is based;
    (3) Of the cause(s) relied upon under Sec.  44.1105 for imposing 
the sanction;
    (4) Of the right to request in writing, within 30 days of receipt 
of the notice, a conference on the sanction, and the right to have such 
conference held within 10 business days of receipt of the request;
    (5) Of the potential effect of the sanction and the impact on the 
participant's or contractor's participation in Departmental programs, 
specifying the program(s) involved and the geographical area affected 
by the action.
    (b) Notification of action. After 30 days, if no conference has 
been requested, the official imposing the limited denial of 
participation will notify VA Central Office of the action taken and of 
the fact that no conference has been requested. If a conference is 
requested within the 30-day period, VA Central Office need not be 
notified unless a decision to affirm all or a portion of the remaining 
period of exclusion is issued. VA Central Office will notify all VA 
field offices of sanctions imposed and still in effect under this 
subpart.


Sec.  44.1112  Conference.

    Upon receipt of a request for a conference, the official imposing 
the sanction shall arrange such a conference with the participant or 
contractor and may designate another official to conduct the 
conference. The participant shall be given the opportunity to be heard 
within 10 business days of receipt of the request. This conference 
precedes, and is in addition to, the formal hearing provided if an 
appeal is taken under Sec.  44.1113. Although formal rules of procedure 
do not apply to the conference, the participant or contractor may be 
represented by counsel and may present all relevant information and 
materials to the official or designee. After consideration of the 
information and materials presented, the official shall, in writing, 
advise the participant or contractor of the decision to withdraw, 
modify or affirm the limited denial of participation. If the decision 
is made to affirm all or a portion of the remaining period of 
exclusion, the participant shall be advised of the right to request a 
formal hearing in writing within 30 days of receipt of the notice of 
decision. This decision shall be issued promptly, but in no event later 
than 20 days after the conference and receipt of materials.


Sec.  44.1113  Appeal.

    Where the decision is made to affirm all or a portion of the 
remaining period of exclusion, any participant desiring an appeal shall 
file a written request for a hearing with the Under Secretary for 
Benefits, Department of Veterans Affairs, 810 Vermont Avenue, NW., 
Washington, DC 20420. This request shall be filed within 30 days of 
receipt of the decision to affirm. If a hearing is requested, it shall 
be held in accordance with the procedures set forth at Sec. Sec.  
44.825 through 44.855. Where a limited denial of participation is 
followed by a suspension or debarment, the limited denial of 
participation shall be superseded and the appeal shall be heard solely 
as an appeal of the suspension or debarment.

[FR Doc. 06-4332 Filed 5-9-06; 8:45 am]
BILLING CODE 8320-01-P