[Federal Register Volume 74, Number 219 (Monday, November 16, 2009)]
[Rules and Regulations]
[Pages 58851-58859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-27330]


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DEPARTMENT OF HOMELAND SECURITY

48 CFR Parts 3009 and 3052

[Docket No. DHS-2009-0017]
RIN 1601-AA55


Prohibition on Federal Protective Service Guard Services 
Contracts With Business Concerns Owned, Controlled, or Operated by an 
Individual Convicted of a Felony [HSAR Case 2009-001]

AGENCY: Office of the Chief Procurement Officer, DHS.

ACTION: Final rule.

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SUMMARY: The Department of Homeland Security (DHS) is issuing a final 
rule to amend the Homeland Security Acquisition Regulation (HSAR) to 
establish guidelines under which DHS will prohibit awards of Federal 
Protective Service (FPS) contract for guard services to a business 
concern that is owned, controlled, or operated by an individual who has 
been convicted of a serious felony. The rule implements the provisions 
of the Federal Protective Service Guard Contracting Reform Act of 2008.

DATES: Effective date: December 16, 2009.
    Applicability: DHS contracting officers shall insert the clause at 
(HSAR) 48 CFR 3052.209-76 in solicitations for Federal Protective 
Service guard services issued on or after the effective date of this 
rule.

FOR FURTHER INFORMATION CONTACT: Gloria Sochon, Senior Procurement 
Analyst, at (202) 447-5307 for clarification of content.

SUPPLEMENTARY INFORMATION:

I. Background

    The Federal Protective Service Guard Contracting Reform Act of 
2008, Public Law 110-356, 122 Stat. 3996 (Oct. 8, 2008), required DHS 
to promulgate regulations establishing guidelines for the prohibition 
of awards of FPS contracts for guard services to any business concern 
that is owned, controlled, or operated by an individual who has been 
convicted of a serious felony (as determined by DHS). This final rule 
implements the prohibition; identifies which felonies are serious and 
may prohibit a business concern from being awarded a contract; requires 
contractors to provide information regarding any felony convictions 
when submitting bids or proposals; provides guidelines for the 
contracting officer to assess present responsibility, mitigating 
factors, and the risk associated with the previous conviction; and 
allows the contracting officer to award a contract under certain 
circumstances, notwithstanding the conviction of a serious felony of an 
individual who owns, controls, or operates the contractor.

II. Discussion and Analysis

A. Final Rule

    The final rule expressly defines certain types of felonies as 
serious felonies, and generally defines as serious felonies those which 
cast doubt on the integrity or business ethics of a business concern or 
are of a nature that is inconsistent with the mission of FPS. Serious 
felonies, committed by an individual who owns, controls, or operates 
the contractor, will normally prohibit a business concern from being 
awarded an FPS contract for guard services. Serious felonies include, 
but are not limited to, felony convictions for: fraud arising out of a 
contract with the federal, state or local government; bribery, graft or 
a conflict of interest; threatened or actual harm to a government 
official, family member or government property; crimes of

[[Page 58852]]

violence; threat to national security; commercial bribery; 
counterfeiting; forgery; obstruction of justice, perjury or subornation 
of perjury, or bribery of a witness; felony for attempt to evade or 
defeat Federal tax or felony for willful failure to collect or pay over 
Federal tax; trafficking in illegal drugs, alcohol, firearms, 
explosives or other weapons; immigration violations and any other 
felony that involves dishonesty, fraud, deceit, misrepresentation, or 
deliberate violence; that reflects adversely on the individual's 
honesty, trustworthiness, or fitness to own, control, or operate a 
business concern; that casts doubt on the integrity or business ethics 
of the business concern; or is of a nature that is inconsistent with 
the mission of FPS.
    The HSAR clause requires offerors to disclose whether they are or 
are not a business concern owned, controlled or operated by an 
individual convicted of a felony. If an offeror represents that it is 
owned, controlled or operated by an individual convicted of a felony, 
it will need to submit a new award request with its bid or proposal or 
a previously approved award request. The award request will provide the 
basis for the request and details regarding the felony conviction.
    The clause also provides that after award of an Indefinite 
Delivery/Indefinite Quantity Contract, Blanket Purchase Agreement, or 
other contractual instrument that may result in the issuance of task 
orders, calls, or exercise of options to extend the term of the 
contract, the contractor must provide notice of a felony conviction of 
any individual who owns, controls, or operates the business concern. 
The contracting officer will review the conviction and make a new 
determination of eligibility prior to the issuance of any task order, 
call, or exercise of any option.
    The rule allows the contracting officer to review the basis for the 
award request and assess the risk associated with the felony 
conviction. If the contracting officer assesses the felony as not 
serious, as contemplated by the Act and this regulation, he or she may 
award a contract for guard services to a business concern owned, 
controlled or operated by an individual convicted of a felony. Prior to 
such an award, the contracting officer must prepare and submit a 
recommendation to the Head of the Contracting Activity. The Head of the 
Contracting Activity must approve both the contracting officer's 
recommendation and the award request.

B. Changes Adopted in the Final Rule

    As a result of public comments received on the proposed rule, the 
final rule:
    Revises the definition of ``felony'' for consistency with the 
definition of ``individual'' as used in (HSAR) 48 CFR 3009.171-2. The 
rule defines ``individual'' to include corporations, partnerships, or 
other entities as well as persons. If the definition did not include 
business organizations, DHS could not apply the prohibition to the 
felonious conduct of a business entity that owns controls or operates 
the business concern, which conduct would otherwise disqualify the 
business concern if committed by a natural person who owns controls or 
operates it. DHS believes that a business entity that owns, operates, 
or controls the business concern, as well as the business concern 
itself, should be held to the same standard as natural persons who own, 
operate, or control the business concern.
    Revises 3009.171-5 to provide more structured and objective 
guidance to contracting officers. The rule more clearly defines serious 
felonies that will prohibit a business concern from being awarded a 
contract for FPS guard services. The list of serious felonies is 
expanded with offenses determined by DHS to be serious felonies.
    Revises (HSAR) 48 CFR 3009.171-6 and -7 to clearly establish that a 
referral of an award from the Contracting Officer to the HCA will 
include the Contracting Officer's determination and a recommendation 
for approval to promote consistency and objectivity. The HCA must 
document his or her decision in writing.
    As a result of further internal review, DHS is also making the 
following changes in the final rule. The final rule:
    Adds ``exercise'' of an option to (HSAR) 48 CFR 3009.171-3(b) for 
accuracy and clarity in describing the contractual instruments subject 
to reporting during performance.
    Revises (HSAR) 48 CFR 3009.171-7(b) for consistency with (HSAR) 48 
CFR 3009.171-6, which provides that contracting officers may consider 
the circumstances underlying a serious felony. In (HSAR) 48 CFR 
3052.209-72, replaces references to ``this regulation'' with the 
appropriate HSAR reference as the clause requires specific citations 
when incorporated into a contract.
    Replaces references to the ``HCA for U.S. Immigration and Customs 
Enforcement'' with ``HCA.'' This provides authority to the cognizant 
HCA while removing the need for a rule change in the event of a future 
reorganization or restructuring.
    Amends the Privacy Notice in (HSAR) 48 CFR 3052.209-72(e) to delete 
the reference to a Privacy Act system of records notice as DHS will not 
maintain a system of records on reported felonies. It also adds 
instructions on how to submit corrections to or remove information on 
individuals both prior to and after contract award.

C. Response to Comments Received on the Notice of Proposed Rulemaking

    DHS published a proposed rule to implement the Federal Protective 
Service Guard Contracting Reform Act in the Federal Register on March 
17, 2009. 74 FR 11512. DHS received three comments on the proposed 
rule. All three supported the rule's prohibition on awarding contracts 
for FPS guard services to convicted felons. One offered recommendations 
to extend the rule's coverage and another recommended that DHS not rely 
on self-reporting and that the rule further restrict contracting 
officers' discretion.
1. Extending the Rule's Coverage
    Comment: One comment recommended that the proposed regulation be 
amended and expanded to include the denial of contracts, as well as the 
termination of existing contracts, to security contractors that have a 
history of violating Federal laws, including but not limited to the 
National Labor Relations Act and Service Contract Act.
    Response: DHS does not agree. This rule implements the specific 
statutory prohibition established under the Federal Protective Service 
Guard Contracting Reform Act of 2008. The Federal Acquisition 
Regulation (FAR) implements statutes and policy which provide 
protection against contracting with entities that violate Federal laws. 
FAR Parts 3 and 9 in particular address requirements for determining 
contractor responsibility and procedures for suspension and debarment. 
The Department of Labor enforces and administers laws governing 
legally-mandated wages and working conditions, including suspending 
and/or debarring entities who violate these laws.
2. Reliance on Self-Reporting
    Comment: One comment advised that it is unreasonable to depend on 
self-reporting to protect the Federal government from fraud. First, the 
comment notes that the rule requires a principal to report only 
convictions that fall in certain categories. Because the categories set 
forth are broad, an individual may unnecessarily disclose a conviction 
that is not covered.

[[Page 58853]]

Unnecessary disclosure does not advance contract fraud prevention and 
may infringe upon the civil liberties of the individual making the 
disclosure. Second, the comment notes that an individual who intends to 
engage in dishonest actions after receiving a Federal contract will not 
disclose a prior criminal conviction. Thus, the rule may serve to 
actually impair the honest while promoting the nefarious.
    Response: DHS considered the advantages and disadvantages of 
relying on self-reporting. DHS had contemplated requiring business 
concerns to submit a list of all owners, controllers or operators with 
their proposal and DHS would then conduct criminal background checks on 
each of these individuals prior to contract award rather than relying 
on a self-reporting system. DHS elected not to require criminal records 
checks as a condition of award based upon related precedents and 
privacy and information collection concerns.
    Numerous statutes and regulations intended to increase 
responsibility and integrity among government contractors do not 
require criminal background checks. For example, 10 U.S.C. 2408 
prohibits felons from being employed in positions of responsibility on 
Department of Defense (DOD) contracts. The implementing Defense Federal 
Acquisition Regulation (DFARS 252.203-7001) makes no provision for 
criminal background checks in order to verify whether these individuals 
have been convicted of a fraud or felony arising out of a contract with 
the DOD, but rather relies on a similar self-reporting process. The 
Close the Contractor Fraud Loophole Act, Public Law 110-252, Tit. VI, 
ch. 1, 122 Stat. 2386 (June 30, 2008), requires contractors to 
disclose, in connection with the award, performance, or closeout of a 
contract or any subcontract, whether a principal, employee, agent, or 
subcontractor of the contractor has committed a violation of certain 
Federal criminal laws. The implementing Federal Acquisition Regulation 
(FAR 52.203-13) relies solely on the contractor to self-report such 
violations. The regulation does not require criminal background checks 
on principals, employees, agents or subcontractors in order to verify 
whether any of these individuals have violated Federal criminal law. 
Similarly, FAR 52.209-5, Certification Regarding Debarment, Suspension, 
Proposed Debarment, and Other Responsibility Matters, requires a 
contractor to report certain criminal convictions. The government 
procurement community does not normally conduct criminal records checks 
to verify the accuracy of such contractor certifications. However, a 
false certification under this FAR clause, as well as under the instant 
HSAR representation, would constitute a criminal violation of 18 U.S.C. 
1001 and, potentially, a violation of 18 U.S.C. 287.
    DHS further considered Privacy Act, 5 U.S.C. 552a, and Paperwork 
Reduction Act, 44 U.S.C. 3501, et seq., requirements. In order to 
conduct a criminal background check, DHS must collect personally 
identifiable information (i.e., name and date of birth). To 
independently verify whether an offeror is owned, controlled or 
operated by a felon, DHS would need to collect this information on all 
covered individuals for an offeror. This would cause DHS to collect and 
retain personally identifiable information on many individuals with no 
felony conviction. To protect the integrity of the procurement process 
and prevent the release of pre-decisional information, DHS would need 
to require all offerors to submit this information. If DHS were to 
request this information only from the apparent successful offeror, 
that would constitute an early release of the award decision and could 
compromise the integrity of the procurement process. However, DHS would 
use only the information provided by the apparent successful offeror to 
conduct a criminal background check (i.e., DHS would not conduct checks 
on all owners, controllers, and operators identified in all proposals 
received). The information collection burden on small businesses and 
other entities seeking to provide guard services would increase without 
concomitant value or benefits to the government. The burden on the 
government for protecting this information would also increase, along 
with the risk of inadvertent disclosure.
    DHS recognizes that some dishonest individuals may choose not to 
disclose a prior criminal conviction. The federal procurement system 
relies upon several other mechanisms which further protect the 
integrity of the procurement process. As noted above, false 
representations and claims may be prosecuted criminally, and may 
constitute a violation of the civil False Claims Act, 31 U.S.C. 3729 et 
seq. Also, felons may be precluded from participating in the federal 
procurement process by virtue of individual plea agreements or 
sentencing restrictions. Additionally, an agency may suspend or debar 
felons from receiving federal contracts for a specified period of time 
pursuant to FAR Part 9.4. The government has controls at the 
contracting officer level to determine the present responsibility of 
such vendors. For example, pursuant to FAR 9.104-1, a contractor must 
have a satisfactory record of integrity and business ethics to be 
awarded a contract. As part of this present responsibility 
determination, the contracting officer must check the Excluded Parties 
List Systems (EPLS) to verify that a vendor is not suspended, proposed 
for debarment, or barred from receiving federal contract awards. The 
FAR also imposes certain reporting requirements on potential 
contractors. Under FAR 52.209-5, a vendor must certify as to whether 
the vendor or any of its principals has been convicted of certain civil 
judgments. If the vendor certifies that a covered conviction occurred, 
the contracting officer would examine it further to determine the 
vendor's present responsibility.
    DHS notes the commenter's concerns that the rule requires only 
convictions falling into certain categories to be reported and that the 
categories of felonies in the proposed rule were so broad that 
individuals might disclose unnecessary information, which would not 
advance contract fraud prevention and may infringe upon the civil 
liberties of the individual making the disclosure. The rule requires 
business concerns to report all felony convictions for owners, 
controllers or operators, but it precludes contract award only for 
serious felony convictions. The business concern does not have 
discretion to determine that a felony is not serious, and so avoid 
reporting it. DHS is responsible for determining whether a reported 
felony casts doubt on the integrity or business ethics of the business 
concern, or is of a nature that is inconsistent with the mission of 
FPS.
    The privacy risks associated with the disclosure of this 
information were carefully assessed. The privacy risk is mitigated to 
the extent that the felony conviction information requested is limited 
to the minimum amount of information necessary for the contracting 
officer, in consultation with other authorized agents, to determine 
whether the conviction is serious under the regulation, and should 
prohibit the vendor from receiving a contract award. In addition, 
submission of the felony conviction information by the individual is 
voluntary; however, failure to provide it may result in denial of an 
award to the business concern. The business concern will be responsible 
for collecting the required felony information from the individual 
convicted of the felony, and to provide the individual with a written 
privacy notice detailing the authority and purpose of the collection, 
how the

[[Page 58854]]

information will be shared, and that providing the information is 
voluntary. Finally, DHS did not receive any comments from individuals 
or guard service companies contesting the disclosure of this 
information.
    To mitigate the concern over unnecessary disclosure, the final rule 
establishes a more structured definition of who owns, operates, or 
controls a business concern. This definition provides more effective 
guidance to assist offerors in determining which individuals are 
subject to the disclosure requirement.
    In respect to the broad scope of the felonies identified in the 
proposed rule, this final rule establishes more structured and 
objective guidance for contracting officers. The rule more clearly 
defines serious felonies that will prohibit a business concern from 
being awarded a contract for FPS guard services.
    DHS recognizes that a formal criminal background check of each 
individual with sufficient ownership interest in a contractor or 
offeror would provide a greater degree of certainty, but DHS believes 
that the risk and rewards assessment does not support the expenditure 
necessary for this function. For example, the individuals with 
sufficient ownership interest do not acquire any independent security 
access or authority from the contract and run a substantial risk of 
criminal penalties from falsely omitting a criminal felony conviction. 
This is particularly true because criminal convictions are matters of 
public record.
3. Scope of Contracting Officers' Discretion
    Comment: One comment noted that the rule gives inappropriate 
discretion to contracting officers. The contracting officer is asked to 
examine the nature and circumstances surrounding a conviction and 
whether the individual has accepted full responsibility for their past 
misconduct without appropriate training. Further, the circumstances 
that serve as mitigating factors are not delineated, allowing different 
contracting officers to arrive at vastly different decisions based on 
similar facts and leading to unfair results. A contracting officer's 
exercise of discretion should be limited to judging the external merits 
of the guard services offered, the capacity of the company to perform 
those services, and the business' record of integrity.
    Response: DHS recognizes that contracting officers may not have the 
training or law enforcement expertise to evaluate all felony conviction 
information and determine on their own whether a particular felony 
constitutes a serious felony that would preclude a firm from being 
awarded a FPS guard service contract. DHS intends to issue an internal 
policy directive which will further delineate the process contracting 
officers will use to review an award request and determine whether the 
associated felony conviction is serious enough to prohibit contract 
award. As part of the risk assessment process, the contracting officer 
may request the assistance of offices in DHS which possess the 
requisite subject matter expertise to properly evaluate felony 
conviction information and assist the contracting officer in 
determining whether the felony conviction is considered serious enough, 
by nature or circumstance, to prohibit contract award. Just as a 
contracting officer must evaluate information related to other criminal 
violations in determining present responsibility, or the Suspending 
Official or Debarring Official evaluates such information when making 
suspension and debarment decisions, it is equally important that a 
contracting officer maintain decision-making authority as to 
eligibility for award under this new HSAR clause. DHS contracting 
officers are able to make appropriate business decisions based on the 
particular facts of each given situation, consulting with appropriate 
subject matter experts where necessary.
    The final rule does make two changes that will promote objective 
and consistent application of the circumstances that serve as 
mitigating factors. As noted earlier, the rule provides more structured 
and objective guidance by more clearly defining serious felonies that 
will prohibit a business concern from being awarded a contract for FPS 
guard services. The final rule requires the contracting officer to 
provide the Head of the Contracting Activity the contracting officer's 
determination that a reported felony is either not serious or that 
circumstances are such that commission of the serious felony no longer 
calls into question the individual or business concern's integrity or 
business ethics or ability to perform consistently with FPS' mission, 
together with a recommendation for approval of the award request. The 
HCA must make a final written decision on the award approval request. 
This provides more centralized review and decision-making, promoting 
consistency and objectivity. The discretion provided to the contracting 
officer and the HCA is consistent with the Act's provision that the 
regulations ``provide guidelines for the contracting officer to assess 
present responsibility, mitigating factors, and the risk associated 
with the previous conviction, and allow the contracting officer to 
award a contract under certain circumstances.'' This provision was 
intended to avoid an overly broad prohibition which could 
disproportionately affect small businesses. The discretion that it 
provides is consistent with other acquisition statutes and regulations. 
It recognizes the need for fairness and due process. DHS believes the 
controls established in the rule will allow DHS to apply this 
discretion in a responsible manner to meet our agency needs.

III. Regulatory Requirements

A. Executive Order 12866

    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, 58 FR 51735 (Oct. 4, 1993), as amended. 
The rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    Comment: DHS received a single comment regarding the estimate of 
the economic impact of the rule on small businesses. One commenter was 
disturbed by a perception that approximately ten percent of the FPS 
contracts are held by security contractors owned or operated by a 
convicted felon.
    Response: This ten percent figure is not meant to indicate that FPS 
believes that ten percent of current guard service providers are 
operated by convicted felons. Ten percent is simply an educated 
estimate given the wide range of offenses that constitute a felony and 
the fact that felony offenses can remain on an individual's record for 
a lifetime. DHS received no comments that disputed the ten percent 
estimate or proposed an alternative.
    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601, et 
seq., DHS is required to determine whether a rule will have a 
significant economic impact on a substantial number of small 
businesses. At this time, it is unknown how many guard service 
providers are owned, controlled or operated by an individual convicted 
of a felony. Without actual statistics or the ability to quickly and 
efficiently gather this information, DHS was required to provide an 
educated estimate as to the number of firms that would be impacted by 
the proposed rule.
    The rule not only requires vendors to notify FPS of felony 
convictions at the time of proposal submission, but vendors are also 
required to notify FPS

[[Page 58855]]

if an individual that owns, controls or operates the business concern 
is convicted of a felony during actual contract performance. To date, 
FPS has had experience with a single guard service provider known to be 
owned, controlled and operated by an individual convicted of a felony. 
However, given that FPS has no other verifiable data to support an 
estimate, coupled with the facts that felonies can consist of any 
offense ranging from a violent offense to driving under the influence, 
and that a felony charge can remain on an individual's record for a 
lifetime, DHS believes this rule may impact a few firms. The figure of 
ten percent, although a high estimate, is believed to be reasonable to 
support the determination that the rule will not have a significant 
economic impact on a substantial number of small businesses.
    As a result, DHS certifies that the final rule amending (HSAR) 48 
CFR 3009.1 and 3052.209 will not have a significant impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The factual basis for 
certification is presented in the following analysis of the economic 
effects of the proposed rule. Application of the rule is limited to 
offerors or contractors providing guard services under the FPS contract 
security guard program. Further, for these offerors and contractors, 
the economic impact of the rule is not expected to be substantial. 
Currently, FPS administers a contract inventory consisting of 
approximately 125 contract vehicles for guard services with 46 
different guard service vendors. These FPS contracts provide 14,000 
contract guards to protect 9,000 federal facilities. In FY2008, DHS 
issued approximately 47 solicitations for guard services and awarded 55 
contracts. For each solicitation issued, an average of 10 offerors 
responded.
    The 46 vendors that provide guard services to FPS represent less 
than one percent of the industry. In 2005, the Small Business 
Administration, based on Bureau of Census data, estimated that there 
were 4,853 firms in Security Guards and Patrol Services Industry, North 
American Industry Classification System (NAICS) 561612. See e.g. Small 
Business Administration, Small Business Size Standards: Security Guards 
and Patrol Services, 70 FR 68368 (Nov. 10, 2005) (proposed rule); id. 
71 FR 37490 (June 30, 2006) (final rule). The Central Contractor 
Registration database (www.ccr.gov) currently lists 5,952 active 
records for NAICS 561612. Of these, 4,822, or 81 percent are identified 
as small businesses.
    Only those vendors that represent that they are owned, controlled, 
or operated by an individual convicted of a felony will need to submit 
a new award request with their bid or proposal or a previously approved 
award request. After award, a contractor will need to disclose felony 
convictions that occur during the term of the contract. DHS estimates 
that this may affect no more than ten percent of offerors (fewer than 
50 per year--47 solicitations x 10 offerors per solicitation x .1) and 
ten percent of contractors (fewer than five per year--46 guard service 
vendors x .1)). The award request must provide the basis for the 
request and details regarding the felony conviction to include: The age 
of the conviction, nature and circumstances surrounding the conviction, 
protective measures taken by the individual or business concern to 
reduce or eliminate the risk of further misconduct, whether the 
individual has made full restitution for the felony and whether the 
individual has accepted responsibility for past misconduct resulting in 
the felony conviction. Under certain circumstances, the contracting 
officer may still award a contract for guard services to a business 
concern owned, controlled or operated by an individual convicted of a 
felony. Only those felonies that cast doubt on the integrity or 
business ethics of the business concern or are of a nature that are 
inconsistent with the mission of FPS will prohibit a business concern 
from being awarded an FPS contract for guard services. Serious felony 
convictions include, but are not limited to: Fraud arising out of a 
contract with the federal, state or local government, bribery, graft or 
a conflict of interest, threatened or actual harm to a government 
official, family member or government property, crimes of violence, 
threat to national security, commercial bribery, counterfeiting, 
forgery, obstruction of justice, perjury or subornation of perjury, or 
bribery of a witness, felony for attempt to evade or defeat Federal tax 
or felony for willful failure to collect or pay over Federal tax. In 
summary, DHS anticipates that the economic impact of this rule will not 
exceed:

Solicitations:
    Respondents making the representation: 470.
    Responses per respondent: 1.
    Total annual responses: 470.
    Preparation hours per response: .25.
    Subtotal response burden hours: 117.5.
    Respondents submitting an award request: 47.
    Responses per respondent: 1.
    Total annual responses: 47.
    Preparation hours per response: 2.
    Subtotal response burden hours: 94.
    Total response burden hours: 211.5.
    Average Hourly Rate ($72 x 36.35 percent overheard): $98.
    Estimated cost: $20,763.

Active Contracts:
    Respondents submitting an award request: 13.
    Responses per respondent: 1.
    Total annual responses: 13.
    Preparation hours per response: 2.
    Total response burden hours: 26.
    Average Hourly Rate ($72 x 36.35 percent overheard): $98.
    Estimated cost: $2,552.
    Therefore, DHS has not performed either an initial or a final 
regulatory flexibility analysis.

C. Paperwork Reduction Act

    The Paperwork Reduction Act, 44 U.S.C. 3501, et seq., applies 
because the rule contains information collection requirements.
    (1) The clause at 3052.209-76 requires each offeror for FPS 
contract guard services to disclose whether it is owned, controlled or 
operated by an individual convicted of a felony. The representation is 
necessary to evaluate the offeror's responsibility related to 
performing the required services in accordance with Public Law 110-356. 
An offeror that is owned, controlled or operated by a felon must also 
submit an award request with supporting documentation. DHS has 
determined that the burden for the responses is within the total 
estimated burden for information requested from prospective contractors 
in response to agency-issued solicitations approved under OMB Control 
No. 1600-0005. Based on FY2008 statistics, DHS has approximately 470 
respondents to solicitations for contract guard services per year (47 
solicitations with an average of 10 offers per solicitation), all of 
whom will make the representation. Of these, DHS estimates that 10 
percent (47 per year) may submit award requests. DHS estimates the 
total burden on offerors to be 211.5 hours. This represents .1 percent 
of the total burden hours under OMB Control No. 1600-0005.
    (2) The clause at 3052.209-76 requires the contractor to report 
felony convictions after award of an Indefinite Delivery/Indefinite 
Quantity Contract, Blanket Purchase Agreement, or other contractual 
instrument that may result in the issuance of task orders, calls, or 
exercise of options to extend the term of the contract. The notice 
applies to a felony conviction of any individual who

[[Page 58856]]

owns, controls, or operates the business concern. DHS has determined 
that the burden for the responses is within the total estimated burden 
for information requested from contractors in response to OMB Control 
No. 1600-0003 for information requested from contractors as part of 
post-contract award administration by DHS acquisition officials. DHS 
has 125 contracts for FPS guard services. Of these, DHS estimates that 
10 percent will also submit a notice of felony conviction. DHS 
estimates the total burden on contractors to be 25 hours. This 
represents less than .001 percent of the total burden hours under OMB 
Control No. 1600-0003.

List of Subjects in 48 CFR Parts 3009 and 3052

    Government procurement.

Richard K. Gunderson,
Acting Chief Procurement Officer, Department of Homeland Security.

0
Accordingly, DHS amends 48 CFR parts 3009 and 3052 as follows:
0
1. The authority citation for 48 CFR parts 3009 and 3052 continues to 
read as follows:

    Authority: 41 U.S.C. 418b(a) and (b).

PART 3009--CONTRACTOR QUALIFICATIONS

Subpart 3009.1--Responsible Prospective Contractors

0
2. Amend Subpart 3009.1 by--
0
a. Redesignating section 3009.104-70 as section 3009.170 and 
redesignating subsections 3009.104-71 through 3009.104-75 as 
subsections 3009.170-1 through 3009.170-5, respectively; and
0
b. Adding section 3009.171 to read as follows:


3009.171  Prohibition on Federal Protective Service guard services 
contracts with business concerns owned, controlled, or operated by an 
individual convicted of a felony.

3009.171-1 General.
3009.171-2 Definitions.
3009.171-3 Determination of eligibility for award of FPS guard 
service contracts.
3009.171-4 Determination of ownership, control, or operation.
3009.171-5 Serious felonies prohibiting award.
3009.171-6 Guidelines for contracting officers.
3009.171-7 Contract award approval procedures for contractors with 
felony convictions.
3009.171-8 Ineligible contractors.
3009.171-9 Clause.


3009.171  Prohibition on Federal Protective Service guard services 
contracts with business concerns owned, controlled, or operated by an 
individual convicted of a felony.


3009.171-1  General.

    Except as provided in (HSAR) 48 CFR 3009.171-6 and 3009.171-7, 
Department of Homeland Security (DHS) contracting officers shall not 
enter into a contract for guard services under the Federal Protective 
Service (FPS) guard services program with any business concern owned, 
controlled, or operated by an individual convicted of a serious felony.


3009.171-2  Definitions.

    As used in this subpart--
    Business concern means a commercial enterprise and the people who 
constitute it.
    Felony means an offense which, if committed by a natural person, is 
punishable by death or imprisonment for a term exceeding one year.
    Convicted of a felony means any conviction of a felony in violation 
of state or federal criminal statutes, including the Uniform Code of 
Military Justice, whether entered on a verdict or plea, including a 
plea of nolo contendere, for which a sentence has been imposed.
    Individual means any person, corporation, partnership, or other 
entity with a legally independent status.


3009.171-3  Determination of eligibility for award of FPS guard service 
contracts.

    (a) Contracting officers shall make a determination of eligibility 
for award of FPS guard service contracts upon identification of the 
apparent successful offeror as a result of a solicitation for offers.
    (b) Contractors shall be required to immediately notify the 
contracting officer in writing upon any felony conviction of personnel 
who own, control or operate a business concern as defined in (HSAR) 48 
CFR 3009.171-4 at any time during the duration of an Indefinite 
Delivery/Indefinite Quantity Contract, Blanket Purchase Agreements, or 
other contractual instrument that may result in the issuance of task 
orders or calls, or exercise of an option or options to extend the term 
of a contract. Upon notification of a felony conviction, the 
contracting officer shall review and make a new determination of 
eligibility prior to the issuance of any task order, call or exercise 
of an option.


3009.171-4  Determination of ownership, control, or operation.

    (a) Whether an individual owns, controls, or operates a business 
concern is determined on the specific facts of the case, with reference 
to the factors identified in paragraphs (b) and (c) of this subsection. 
Prior to contract award, such individual must provide any additional 
documentation to the contracting officer upon the contracting officer's 
request for the agency's use in determining ownership, control, or 
operation. The refusal to provide or to timely provide such 
documentation may serve as grounds for the contracting officer to 
refuse making contract award to the business concern.
    (b) Any financial, voting, operational, or employment interest in 
the business concern of a spouse, child, or other family member of, or 
person sharing a household with, the individual will be imputed to the 
individual in determining whether and the extent to which the 
individual owns, controls, or operates the business concern.
    (c) An individual owns, controls, or operates a business concern by 
fulfilling or holding the following types of roles or interests with 
respect to the business concern:
    (1) Director or officer, including incumbents of boards and offices 
that perform duties ordinarily performed by a chairman or member of a 
board of directors, a secretary, treasurer, president, a vice 
president, or other chief official of a business concern, including 
Chief Financial Officer, Chief Operating Officer, or Chief contracting 
official.
    (2) Officials of comparable function and status to those described 
in paragraph (c)(1) of this subsection as exist in partnerships of all 
kind and other business organizations, including sole proprietorships.
    (3) A general partner in a general or limited partnership.
    (4) An individual with a limited partnership interest of 25% or 
more.
    (5) An individual that has the:
    (i) Power to vote, directly or indirectly, 25% or more interest in 
any class of voting stock of the business concern;
    (ii) Ability to direct in any manner the election of a majority of 
the business concern's directors or trustees; or
    (iii) Ability to exercise a controlling influence over the business 
concern's management, policies, or decision making.
    (d) Generally, the existence of one or more of the roles or 
interests set forth in paragraph (c) of this subsection, including 
roles or interests attributed to the individual, will be sufficient to 
determine that the individual owns, controls or operates the business 
concern. However, specific facts of the case may warrant a different

[[Page 58857]]

determination by the contracting officer, where, for example, an 
indicator in paragraph (c) of this subsection, in light of all of the 
facts and circumstances, suggests that the individual lacks sufficient 
authority or autonomy to exert authority customarily associated with 
ownership or control or the assertion of operational prerogatives (e.g. 
the individual is one of twenty on a board of directors, plays no other 
role, and holds no other interest). Conversely, ownership, control, or 
the ability to operate the business concern, if it exists in fact, can 
be reflected by other roles or interests.


3009.171-5  Serious felonies prohibiting award.

    (a) Only serious felony convictions will prohibit a business 
concern from being awarded a contract for FPS guard services. Serious 
felonies that will prohibit contract award are any felonies that 
involve dishonesty, fraud, deceit, misrepresentation, or deliberate 
violence; that reflect adversely on the individual's honesty, 
trustworthiness, or fitness to own, control, or operate a business 
concern; that cast doubt on the integrity or business ethics of the 
business concern; or are of a nature that is inconsistent with the 
mission of FPS, including, without limitation, those felonies listed in 
paragraphs (b)(1) through (12) of this subsection.
    (b) The following is a list of offenses determined by DHS to be 
serious felonies for purposes of the Federal Protective Service Guard 
Reform Act of 2008. Except as provided in (HSAR) 48 CFR 3009.171-7(f), 
award of a contract for FPS guard services will not be made to any 
business that is owned, controlled, or operated by an individual who 
has been convicted of a felony involving:
    (1) Fraud of any type, including those arising out of a procurement 
contract, cooperative agreement, grant or other assistance relationship 
with the federal, state or local government, as well as, without 
limitation, embezzlement, fraudulent conversion, false claims or 
statements, kickbacks, misappropriations of property, unfair or 
deceptive trade practices, or restraint of trade;
    (2) Bribery, graft, or a conflict of interest;
    (3) Threatened or actual harm to a government official or family 
member;
    (4) Threatened or actual harm to government property;
    (5) A crime of violence;
    (6) A threat to national security;
    (7) Commercial bribery, counterfeiting, or forgery;
    (8) Obstruction of justice, perjury or subornation of perjury, or 
bribery of a witness;
    (9) An attempt to evade or defeat Federal tax;
    (10) Willful failure to collect or pay over Federal tax;
    (11) Trafficking in illegal drugs, alcohol, firearms, explosives, 
or other weapons;
    (12) Immigration violations (e.g., 8 U.S.C. 1324, 1324c, 1326); and
    (13) Any other felony that involves dishonesty, fraud, deceit, 
misrepresentation, or deliberate violence; that reflects adversely on 
the individual's honesty, trustworthiness, or fitness to own, control, 
or operate a business concern; that casts doubt on the integrity or 
business ethics of the business concern; or is of a nature that is 
inconsistent with the mission of FPS.


3009.171-6  Guidelines for contracting officers.

    (a) In accordance with FAR Subpart 9.4 (48 CFR subpart 9.4), a 
contracting officer may not award a contract for FPS guard services to 
any business concern that is suspended, debarred or proposed for 
debarment unless the agency head determines that there is a compelling 
reason for such action.
    (b) The contracting officer shall not award a contract for FPS 
guard services to any business concern that is otherwise nonresponsible 
on the same contract.
    (c) The contracting officer shall not award an FPS guard services 
contract to any business concern that is owned, controlled or operated 
by an individual convicted of a serious felony as defined in (HSAR) 48 
CFR 3009.171-5 except as provided in under (HSAR) 48 CFR 3009.171-7.
    (d) In considering an award request under (HSAR) 48 CFR 3009.171-7, 
the contracting officer may not review the fact of the conviction 
itself, but may consider any information provided by the individual or 
business concern, and any information known to the contracting officer. 
Factors that the contracting officer may consider include, but are not 
limited to:
    (1) The age of the conviction.
    (2) The nature and circumstances surrounding the conviction.
    (3) Protective measures taken by the individual or business concern 
to reduce or eliminate the risk of further misconduct.
    (4) Whether the individual has made full restitution for the 
felony.
    (5) Whether the individual has accepted responsibility for past 
misconduct resulting in the felony conviction.


3009.171-7  Contract award approval procedures for contractors with 
felony convictions.

    (a) The HCA has sole discretion to approve a request to permit 
award of a contract for FPS guard services to a business concern owned, 
controlled, or operated by an individual convicted of a felony, for any 
reason permitted by this regulation. This authority is not delegable.
    (b) A business concern owned, operated or controlled by an 
individual convicted of any felony (including a serious felony) may 
submit an award request to the contracting officer. The basis for such 
request shall be that the subject felony is not a serious felony as 
defined by this regulation; that such individual does not or no longer 
owns, controls or operates the business concern; or that the commission 
of a serious felony no longer poses the contract risk the Act and this 
regulation were designed to guard against. The business concern shall 
bear the burden of proof for award requests.
    (c) A copy of the award approval request with supporting 
documentation or a previously approved award request shall be attached 
with the bid or proposal.
    (d) An award approval request shall contain the basis for the 
request, including, at a minimum, the following information:
    (1) Name and date of birth of individual convicted of a felony;
    (2) A full description of which roles or interests indicate that 
the individual owns, controls, or operates, or may own control or 
operate the business concern;
    (3) Date sentenced;
    (4) Statute/Charge;
    (5) Docket/Case Number;
    (6) Court/Jurisdiction;
    (7) The nature and circumstances surrounding the conviction;
    (8) Protective measures taken by the individual or business concern 
to reduce or eliminate the risk of further misconduct;
    (9) Whether the individual has made full restitution for the 
felony; and
    (10) Whether the individual has accepted responsibility for past 
misconduct resulting in the felony conviction.
    (e) If the contracting officer is unable to affirmatively determine 
that the subject felony is not a serious felony as defined in (HSAR) 48 
CFR 3009.171-5; that such individual no longer owns, controls or 
operates the business concern; or that the commission of a serious 
felony no longer calls into question the individual or business 
concern's integrity or business ethics and would be consistent with the

[[Page 58858]]

mission of FPS, then the contracting officer shall deny the award 
approval request and not forward such request to the HCA.
    (f) For a felony that meets any of the following conditions, the 
contracting officer shall refer the award request, with a copy of the 
contracting officer's determination, to the HCA with a recommendation 
for approval:
    (1) The subject felony is not a serious felony as defined by this 
regulation;
    (2) The convicted individual does not or no longer owns, controls 
or operates the business concern; or
    (3) The commission of a serious felony no longer calls into 
question the individual or business concern's integrity or business 
ethics and that an award would be consistent with the mission of the 
FPS.
    (g) The HCA shall make a final written decision on the award 
approval request following referral and after any necessary additional 
inquiry.


3009.171-8  Ineligible contractors.

    Any business concern determined to be ineligible for award under 
(HSAR) 48 CFR 3009.171-5 to 3009.171-7 shall be ineligible to receive a 
contract for guard services under the FPS guard program until such time 
as:
    (a) The concern demonstrates that it has addressed and resolved the 
issues that resulted in the determination of ineligibility, and
    (b) The HCA approves an award request under (HSAR) 48 CFR 3009.171-
7.


3009.171-9  Clause.

    Insert the clause (HSAR) 48 CFR 3052.209-76, Prohibition on Federal 
Protective Service guard services contracts with business concerns 
owned, controlled, or operated by an individual convicted of a felony, 
in all solicitations and contracts for FPS guard services.

PART 3052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Amend section 3052.209 by adding section 3052.209-76 to read as 
follows:


3052.209-76  Prohibition on Federal Protective Service guard services 
contracts with business concerns owned, controlled, or operated by an 
individual convicted of a felony.

    As prescribed at (HSAR) 48 CFR 3009.171-9, insert the following 
clause: PROHIBITION ON FEDERAL PROTECTIVE SERVICE GUARD SERVICES 
CONTRACTS WITH BUSINESS CONCERNS OWNED, CONTROLLED, OR OPERATED BY AN 
INDIVIDUAL CONVICTED OF A FELONY (AUG 2009)

    (a) Prohibitions. Section 2 of the Federal Protective Service 
Guard Contracting Reform Act of 2008, Public Law 110-356, generally 
prohibits the Department of Homeland Security from entering into a 
contract for guard services under the Federal Protective Service 
(FPS) guard services program with any business concern owned, 
controlled, or operated by an individual convicted of a serious 
felony.
    (b) Definitions. As used in this clause:
    Business concern means a commercial enterprise and the people 
who constitute it.
    Felony means an offense which, if committed by a natural person, 
would be punishable by death or imprisonment for a term exceeding 
one year.
    Individual means any person, corporation, partnership, or other 
entity with a legally independent status.
    Convicted of a felony means any conviction of a felony in 
violation of state or federal criminal statutes, including the 
Uniform Code of Military Justice, whether entered on a verdict or 
plea, including a plea of nolo contendere, for which a sentence has 
been imposed.
    (c) A business concern that is owned, controlled, or operated by 
an individual who has been convicted of any felony, and that wishes 
to submit a bid, proposal, or other offer on a solicitation to 
obtain a FPS contract for guard services, must submit with its offer 
an award request as specified in paragraph (d) of this clause.
    (1) A financial, voting, operational, or employment interest in 
the business concern of the individual's spouse, child, or other 
family member, or person with whom the individual shares his or her 
household, will be imputed to the individual in determining whether 
the individual owns, controls, or operates a business concern.
    (2) An individual owns, controls, or operates a business concern 
by fulfilling or holding the following types of roles or interests 
with respect to the business concern:
    (i) Director or officer, including incumbents of boards and 
offices that perform duties ordinarily performed by a chairman or 
member of a board of directors, a secretary, treasurer, president, a 
vice president, or other chief official of a business concern, 
including Chief Financial Officer, Chief Operating Officer, or Chief 
contracting official.
    (ii) Officials of comparable function and status to those 
described in paragraph (c)(2)(i) of this clause as exist in 
partnerships of all kind and other business organizations, including 
sole proprietorships.
    (iii) A general partner in a general or limited partnership.
    (iv) An individual with a limited partnership interest of 25% or 
more.
    (v) An individual that has the:
    (A) Power to vote, directly or indirectly, 25% or more interest 
in any class of voting stock of the business concern;
    Ability to direct in any manner the election of a majority of 
the business concern's directors or trustees; or
    (B) Ability to direct in any manner the election of a majority 
of the business concern's directors or trustees; or
    (C) Ability to exercise a controlling influence over the 
business concern's management and policies.
    (3) Generally, the existence of one or more of the roles or 
interests set forth in paragraph (c)(2) of this clause, including 
roles or interests attributed to the individual, will be sufficient 
to determine that the individual owns, controls or operates the 
business concern. However, specific facts of the case may warrant a 
different determination by Government in light of all of the facts 
and circumstances. Conversely, ownership, control, or the ability to 
operate the business concern, if it exists in fact, can be reflected 
by other roles or interests, and the offeror or contractor should 
reveal the existence of felony convictions if there is doubt as to 
whether the individual owns, controls or operates the business 
concern.
    (d) Award request.
    (1) A business concern owned, operated or controlled by an 
individual convicted of any felony may submit an award request to 
the Contracting Officer. The basis for such request shall be either 
that the subject felony is not a serious felony as defined in (HSAR) 
48 CFR 3009.171-5; that such individual no longer owns, controls or 
operates the business concern; or that commission of the serious 
felony no longer calls into question the individual or business 
concern's integrity or business ethics and that an award would be 
consistent with the mission of FPS. The business concern shall bear 
the burden of proof for award requests.
    (2) If the Contracting Officer in his or her sole discretion, is 
unable to affirmatively determine that the subject felony is not a 
serious felony as defined in (HSAR) 48 CFR 3009.171-5 or that such 
individual no longer owns, controls or operates the business 
concern, then the Contracting Officer shall deny the award request.
    (3) The Head of the Contracting Activity has sole discretion to 
approve an award request.
    (4) A copy of the award request with supporting documentation or 
a copy of a previously approved award request shall be attached with 
the bid or proposal.
    (5) An award request shall contain the basis for the request 
(i.e., that the subject felony is not a serious felony as defined by 
this regulation; that the convicted individual does not or no longer 
owns, controls or operates the business concern; or that the 
commission of a serious felony no longer calls into question the 
individual or business concern's integrity or business ethics and 
that an award would be consistent with the mission of FPS). The 
award request shall contain, at a minimum, the following 
information:
    (i) Name and Date of Birth of Individual Convicted of a felony.
    (ii) A full description of which roles or interests indicate 
that the individual owns, controls, or operates or may own control 
or operate the business concern.
    (iii) Date sentenced.
    (iv) Statute/Charge.
    (v) Docket/Case Number.

[[Page 58859]]

    (vi) Court/Jurisdiction.
    (vii) The nature and circumstances surrounding the conviction.
    (viii) Protective measures taken by the individual or business 
concern to reduce or eliminate the risk of further misconduct.
    (ix) Whether the individual has made full restitution for the 
felony.
    (x) Whether the individual has accepted responsibility for past 
misconduct resulting in the felony conviction.
    (6) Upon the request of the Contracting Officer, and prior to 
contract award, in addition to information described in paragraph 
(d)(5) of this clause, the business concern must provide such other 
documentation as is requested by the Contracting Officer to use in 
determining and evaluating ownership, control, or operation; the 
nature of the felonies committed; and such other information as is 
needed to make a decision on whether award should be made to the 
offeror under the Federal Protective Service Guard Contracting 
Reform Act of 2008. The refusal to timely provide such documentation 
may serve as grounds to preclude contract award.
    (e)(1) Privacy Statement. The offeror shall provide the 
following statement to any individual whose information will be 
submitted in an award request pursuant to (d)(5) and (6) of this 
clause.
    (2) Privacy Notice. The collection of this information is 
authorized by the Federal Protective Service Guard Contracting 
Reform Act of 2008 (Pub. L. 110-356) and Department of Homeland 
Security (DHS) implementing regulations at Homeland Security 
Acquisition Regulation (HSAR) 48 CFR 3009.171. This information is 
being collected to determine whether an individual that owns, 
controls, or operates the business concern submitting this offer has 
been convicted of a felony that would disqualify the offeror from 
receiving an award. This information will be used by and disclosed 
to DHS personnel and contractors or other agents who require this 
information to determine whether an award request should be approved 
or denied. Additionally, DHS may share this personal information 
with the U.S. Justice Department and other Federal and State 
agencies for collection, enforcement, investigatory, or litigation 
purposes, or as otherwise authorized. Submission of this information 
by the individual is voluntary, however, failure to provide it may 
result in denial of an award to the offeror. Individuals who wish to 
correct inaccurate information in or to remove their information 
from an offer that has been submitted should contact the business 
concern submitting the offer and request correction. Should 
individuals seek to correct inaccurate information or remove their 
information from an offer that has been submitted in response to a 
solicitation for FPS guard services prior to contract award, an 
authorized representative of the business concern submitting the 
offer must contact the contracting officer of record and request 
that the firm's offer be formally withdrawn or submit a correction 
to the award request. After contract award, it is recommended that 
an authorized representative of the business concern that submitted 
the inaccurate or erroneous information contact the contracting 
officer of record. The contracting officer will handle such requests 
on a case by case basis.
    (f) Disclosure. The offeror under this solicitation represents 
that [Check one]:
    --It is not a business concern owned, controlled, or operated by 
an individual convicted of a felony.
    --It is a business concern owned, controlled, or operated by an 
individual convicted of a felony, and has submitted an award request 
pursuant to paragraph (d) of this clause.
    (g) If an award request is applied for, the offeror shall attach 
the request with supporting documentation, to the bid or proposal. 
The supporting documentation may include copies of prior award 
requests granted to the offeror.
    (h) The notification in this paragraph applies if this is an 
indefinite delivery/indefinite quantity contract, blanket purchase 
agreement, or other contractual instrument that may result in the 
issuance of task orders, calls or option to extend the terms of a 
contract. The Contractor must immediately notify the Contracting 
Officer in writing upon any felony conviction of personnel who own, 
control or operate a business concern as defined in paragraph (c) of 
this clause at any time during the performance of this contract. 
Upon notification of a felony conviction the Contracting Officer 
will review and make a new determination of eligibility prior to the 
issuance of any task order, call or exercise of an option.


(End of clause)

[FR Doc. E9-27330 Filed 11-13-09; 8:45 am]
BILLING CODE 9111-28-P