[Federal Register Volume 75, Number 238 (Monday, December 13, 2010)]
[Rules and Regulations]
[Pages 77739-77741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30565]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 9 and 52

[FAC 2005-47; FAR Case 2009-036; Item V; Docket 2010-0109, Sequence 1]
RIN 9000-AL75


Federal Acquisition Regulation; Uniform Suspension and Debarment 
Requirement

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

ACTION: Interim rule with request for comments.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (the Councils) are issuing an interim 
rule amending the Federal Acquisition Regulation (FAR) to implement 
section 815 of the National Defense Authorization Act for Fiscal Year 
2010. Section 815 extends the flowdown of the restriction on 
subcontracting to lower tier subcontractors that have been suspended or 
debarred, with some exceptions for contracts for the acquisition of 
commercial items and commercially available off-the-shelf items.

DATES: Effective Date: December 13, 2010.
    Comment Date: Interested parties should submit written comments to 
the Regulatory Secretariat on or before February 11, 2011 to be 
considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-47, FAR Case 2009-
036, by any of the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by inputting ``FAR Case 
2009-036'' under the heading ``Enter Keyword or ID'' and selecting 
``Search''. Select the link ``Submit a Comment'' that corresponds with 
``FAR Case 2009-036''. Follow the instructions provided at the ``Submit 
a Comment'' screen. Please include your name, company name (if any), 
and ``FAR Case 2009-036'' on your attached document.
     Mail: General Services Administration, Regulatory 
Secretariat (MVCB), ATTN: Hada Flowers, 1275 First Street, NE., 
Washington, DC 20417.

[[Page 77740]]

    Instructions: Please submit comments only and cite FAC 2005-47, FAR 
Case 2009-036, in all correspondence related to this case. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal and/or business confidential information 
provided.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Ms. Millisa Gary, Procurement Analyst, at (202) 501-0699. Please cite 
FAC 2005-47, FAR Case 2009-036. For information pertaining to status or 
publication schedules, contact the Regulatory Secretariat at (202) 501-
4755.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule revises the FAR to implement section 815 of the 
National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-
84). Section 815 amends section 2455(c)(1) of the Federal Acquisition 
Streamlining Act of 1994 (31 U.S.C. 6101 note) by amending the 
definition of ``procurement activities'' to include subcontracts at any 
tier, except--
     It does not include subcontracts for commercially 
available off-the-shelf (COTS) items; and
     In the case of commercial items, such term includes only 
the first-tier subcontracts.
    This has the effect, except for COTS items, of expanding the 
requirement of 2455(a), which states that ``No agency shall allow a 
party to participate in any procurement * * * activity if any agency 
has debarred, suspended, or otherwise excluded * * * that party from 
participation in a procurement * * * activity.''
    Prime contractors will not be restricted from subcontracts with 
suspended or debarred entities for COTS items; subcontractors for COTS 
items will not be required to disclose to the prime contractor whether 
the subcontractor, or any of its principals, is debarred, suspended, or 
proposed for debarment at the time of subcontract award.
    This interim rule amends--
    (1) FAR 9.405-2 to exclude COTS items from the restrictions on 
subcontracting with contractors that have been debarred, suspended, or 
proposed for debarment;
    (2) The clause at FAR 52.209-6, Protecting the Government's 
Interest When Subcontracting with Contractors Debarred, Suspended, or 
Proposed for Debarment, by flowing down the requirements to check 
whether a subcontractor is suspended or debarred beyond the first-tier, 
with the stated exceptions for COTS items; and
    (3) The clause at FAR 52.212-5, Contract Terms and Conditions 
Required to Implement Statutes or Executive Orders--Commercial Items, 
because the requirement that commercial contracts must flow the 
requirement down to the first-tier is now statutory.
    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.

B. Regulatory Flexibility Act

    The Councils do not expect this interim rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act. The rule removes the current 
requirements relating to subcontracts for COTS items, and in the case 
of commercial items, the requirement extends only to the first-tier 
subcontracts. This rule will impact small entities that are awarded a 
lower-tier subcontract for a non-COTS item that exceeds $30,000, in 
that these entities must now disclose to the higher-tier subcontractor 
whether they are suspended, debarred, or proposed for suspension. 
Although a substantial number of small entities may be impacted by this 
rule, the impact is not significant. It will likely only take one 
minute to include the required information with an offer. For the other 
impact of the rule, which will require the higher-tier subcontractor to 
provide an explanation if desiring to subcontract with an entity that 
has been debarred, suspended, or proposed for debarment, the Councils 
do not expect this requirement to impact a substantial number of small 
entities, because it would only be in rare circumstances that a 
subcontractor would potentially jeopardize performance or integrity by 
knowingly contracting with an entity that is debarred, suspended or 
proposed for debarment. Therefore, an Initial Regulatory Flexibility 
Analysis has not been performed. The Councils invite comments from 
small business concerns and other interested parties on the expected 
impact of this rule on small entities.
    The Councils will also consider comments from small entities 
concerning the existing regulations in parts affected by this rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAC 2005-47, FAR Case 
2008-036) in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does apply; however, these changes to 
the FAR only impose minimal additional information collection 
requirements to the paperwork burden previously approved under OMB 
Control Number 9000-0094. Because the change in burden hours is so 
slight, no new approval by OMB is required.

D. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense, the Administrator of General Services, and the 
Administrator of the National Aeronautics and Space Administration that 
urgent and compelling reasons exist to promulgate this interim rule 
without prior opportunity for public comment. This action is necessary 
to implement the changes resulting from the enactment of Section 815 of 
the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 
111-84), effective October 28, 2009. However, pursuant to 41 U.S.C. 
418b and FAR 1.501-3(b), the Councils will consider public comments 
received in response to this interim rule in the formation of the final 
rule.

List of Subjects in 48 CFR Parts 9 and 52

    Government procurement.

    Dated: November 24, 2010.
Millisa Gary,
Acting Director, Acquisition Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 9 and 52 as set forth 
below:
0
1. The authority citation for 48 CFR parts 9 and 52 continues to read 
as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 9--CONTRACTOR QUALIFICATIONS

0
2. Amend section 9.405-2 by revising paragraph (b) introductory text to 
read as follows:


9.405-2   Restrictions on subcontracting.

* * * * *
    (b) The Government suspends or debars contractors to protect the 
Government's interests. By operation of the clause at 52.209-6, 
Protecting the Government's Interests When Subcontracting with 
Contractors Debarred, Suspended or Proposed for Debarment, contractors 
shall not enter into any subcontract in excess of $30,000, other than a 
subcontract for a commercially available off-the-shelf

[[Page 77741]]

item, with a contractor that has been debarred, suspended, or proposed 
for debarment unless there is a compelling reason to do so. If a 
contractor intends to subcontract, other than a subcontract for a 
commercially available off-the-shelf item, with a party that is 
debarred, suspended, or proposed for debarment as evidenced by the 
parties' inclusion in the EPLS (see 9.404), a corporate officer or 
designee of the contractor is required by operation of the clause at 
52.209-6, Protecting the Government's Interests when Subcontracting 
with Contractors Debarred, Suspended, or Proposed for Debarment, to 
notify the contracting officer, in writing, before entering into such 
subcontract. For contracts for the acquisition of commercial items, the 
notification requirement applies only for first-tier subcontracts. For 
all other contracts, the notification requirement applies to 
subcontracts at any tier. The notice must provide the following:
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Amend section 52.209-6 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (a) through (c) as paragraphs (b) through 
(d), respectively; and adding a new paragraph (a);
0
c. Revising the newly designated paragraphs (b), (c), and (d) 
introductory text; and
0
d. Adding paragraph (e).
    The revised and added text reads as follows:


52.209-6   Protecting the Government's Interest When Subcontracting 
With Contractors Debarred, Suspended, or Proposed for Debarment.

* * * * *

Protecting the Government's Interest When Subcontracting With 
Contractors Debarred, Suspended, or Proposed for Debarment (DEC 2010)

    (a) Definition. Commercially available off-the-shelf (COTS) 
item, as used in this clause--
    (1) Means any item of supply (including construction material) 
that is--
    (i) A commercial item (as defined in paragraph (1) of the 
definition in FAR 2.101);
    (ii) Sold in substantial quantities in the commercial 
marketplace; and
    (iii) Offered to the Government, under a contract or subcontract 
at any tier, without modification, in the same form in which it is 
sold in the commercial marketplace; and
    (2) Does not include bulk cargo, as defined in section 3 of the 
Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural 
products and petroleum products.
    (b) The Government suspends or debars Contractors to protect the 
Government's interests. Other than a subcontract for a commercially 
available off-the-shelf item, the Contractor shall not enter into 
any subcontract, in excess of $30,000 with a Contractor that is 
debarred, suspended, or proposed for debarment by any executive 
agency unless there is a compelling reason to do so.
    (c) The Contractor shall require each proposed subcontractor 
whose subcontract will exceed $30,000, other than a subcontractor 
providing a commercially available off-the-shelf item, to disclose 
to the Contractor, in writing, whether as of the time of award of 
the subcontract, the subcontractor, or its principals, is or is not 
debarred, suspended, or proposed for debarment by the Federal 
Government.
    (d) A corporate officer or a designee of the Contractor shall 
notify the Contracting Officer, in writing, before entering into a 
subcontract with a party (other than a subcontractor providing a 
commercially available off-the-shelf item) that is debarred, 
suspended, or proposed for debarment (see FAR 9.404 for information 
on the Excluded Parties List System). The notice must include the 
following:
* * * * *
    (e) Subcontracts. Unless this is a contract for the acquisition 
of commercial items, the Contractor shall include the requirements 
of this clause, including this paragraph (e) (appropriately modified 
for the identification of the parties), in each subcontract that--
    (1) Exceeds $30,000 in value; and
    (2) Is not a subcontract for commercially available off-the-
shelf items.


(End of clause)


0
4. Amend section 52.212-5 by--
0
a. Revising the date of the clause; and
0
b. Redesignating paragraphs (b)(6) through (b)(44) as paragraphs (b)(7) 
through (b)(45), respectively; and adding a new paragraph (b)(6).
    The revised and added text reads as follows:


52.212-5   Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (DEC 2010)

    (b) * * *
    (6) 52.209-6, Protecting the Government's Interest When 
Subcontracting with Contractors Debarred, Suspended, or Proposed for 
Debarment (DEC 2010) (31 U.S.C. 6101 note). (Applies to contracts 
over $30,000). (Not applicable to subcontracts for the acquisition 
of commercially available off-the-shelf items).
* * * * *

0
5. Amend section 52.213-4 by revising the date of the clause and 
paragraph (b)(2)(i) to read as follows:


52.213-4   Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Items).

* * * * *

Terms and Conditions--Simplified Acquisitions (Other Than Commercial 
Items) (DEC 2010)

    (b) * * *
    (2) * * *
    (i) 52.209-6, Protecting the Government's Interest When 
Subcontracting with Contractors Debarred, Suspended, or Proposed for 
Debarment (DEC 2010) (Applies to contracts over $30,000). (Not 
applicable to subcontracts for the acquisition of commercially 
available off-the-shelf items).
* * * * *
[FR Doc. 2010-30565 Filed 12-10-10; 8:45 am]
BILLING CODE 6820-EP-P