[Federal Register Volume 79, Number 184 (Tuesday, September 23, 2014)]
[Rules and Regulations]
[Pages 56661-56663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-22495]


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DEPARTMENT OF HOMELAND SECURITY

48 CFR Parts 3002, 3007, 3009, 3016, 3034, 3035, and 3052

[Docket No. DHS-2009-0006]
RIN 1601-AA49


Homeland Security Acquisition Regulation; Lead System Integrators 
[HSAR Case 2009-003]

AGENCY: Office of the Chief Procurement Officer, DHS

ACTION: Final rule.

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SUMMARY: This final rule implements statutory restrictions on 
contractors acting as lead system integrators in the acquisition of DHS 
major systems, if they have direct financial interests in the 
development or construction of the system.

DATES: Effective Date: This rule is effective September 23, 2014.

FOR FURTHER INFORMATION CONTACT: Nancy Harvey, Senior Procurement 
Analyst, at (202) 447-0956 for clarification of content. Please cite 
HSAR Case 2009-003.

SUPPLEMENTARY INFORMATION: 
I. Background
II. Discussion of Comments
III. Discussion of Final Rule
IV. Regulatory Analyses
    A. Executive Order 12866 Assessment
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act
    D. National Environmental Policy Act

I. Background

    DHS published an interim rule at 75 FR 41097 on July 15, 2010 to 
implement section 6405 of the U.S. Troop Readiness, Veterans' Care, 
Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, 
Public Law 110-28, 121 Stat. 112, 176 (2007) (codified as 6 U.S.C. 396; 
hereinafter ``Section 396''). Section 396 places limits on firms that 
can serve as lead system integrators on DHS acquisitions of major 
systems. Such contractors may have no direct financial interest in the 
development or construction of any individual system or element of any 
system of systems they would integrate, unless one of the exceptions 
stated in the rule has been satisfied.
    This final rule adopts the interim rule with minor changes to the 
authorities to conform to Public Law 111-350, the recodification of 
title 41 of the United States Code, and to remove references to DHS's 
internal delegation of authorities that do not directly affect the 
HSAR.

[[Page 56662]]

II. Discussion of Comments

    One source submitted comments on the interim rule. A discussion of 
the comments is provided below.
    1. Comment: One comment supported the rule, but recommended that, 
for purposes of consistency throughout the Department when executing 
the policy, the final rule be clarified to ensure that the purchase of 
Lead System Integrator services for DHS from Government-wide Agency 
Contracts, Federal Supply Schedules, Multiple Award Contracts, or 
Interagency Acquisition, also be included in the rule.
    DHS Response: DHS notes the support and recommendation but believes 
that clarification in the regulatory text is unnecessary. The rule 
prohibits, with limited exceptions, any entity performing lead system 
integrator functions in the acquisition of a major system by DHS from 
having any direct financial interest in the development or construction 
of the system or any element of it. The rule applies without regard to 
the contract type, contracting method, or contract instrument. 
Therefore, acquisitions of supplies and services under Government-wide 
Agency Contracts, Federal Supply Schedules, Multiple Award Contracts, 
or by means of Interagency Acquisition, are already covered under the 
rule.
    2. Comment: The commenter also asked two questions on the 
implementation of the interim rule. The commenter asked whether it 
would be appropriate to include the clause at 48 CFR 3052.209-75, 
Prohibited Financial Interests for Lead System Integrators, by 
reference or whether the clause should be included as full text. The 
commenter also wrote that the provision at 3052.209-74 reads as a 
representation and certification provision, and suggested that the 
provision should be included in Section K, Representations and 
Certifications, under the Uniform Contract Format, or possibly Section 
L, Instructions to Offerors.
    DHS Response: DHS notes that these comments are not requests for 
changes to the regulatory text, but, rather, are questions on the 
implementation of the rule. The DHS HSAR Provision and Clause Matrix, 
available both on the DHS.gov Web site at http://www.dhs.gov/acquisition-policies-regulations and on the FARSite Web site at http://farsite.hill.af.mil, provide answers to both questions. DHS will also 
respond to the questions in the below paragraphs.
    Both the provision at 48 CFR 3052.209-74 and the clause at 48 CFR 
3052.209-75 should be used in full text. Given that the provision and 
the clause would be used infrequently, that is, only in solicitations 
and resulting contracts for the acquisition of major systems when the 
acquisition strategy envisions the use of a lead system integrator, 
inclusion of the provision and clause in full text will ensure that the 
potential offerors are fully aware of the restrictions on the use of 
lead system integrators.
    DHS concurs that the provision is a representation and 
certification provision and should be used in Section K, which 
incorporates representations, certifications and other statements of 
offerors.

III. Discussion of Final Rule

    Accordingly, the interim HSAR rule published in the Federal 
Register at 75 FR 41097 is adopted as a final rule with minor changes 
to the authorities.

IV. Regulatory Analyses

A. Executive Order 12866 Assessment

    This is not a significant regulatory action under Section 6 of 
Executive Order 12866, Regulatory Planning and Review, dated September 
30, 1993, as amended by Executive Order 13563, dated January 21, 2011. 
The Office of Management and Budget (OMB) has not reviewed it under 
that Order. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    DHS certifies that this final rule amending (HSAR) 48 CFR 3009.5 
will not have a significant economic impact on a substantial number of 
small entities within the meaning of the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The factual basis for certification is presented in 
the following analysis of the effects of this rule. Application of the 
rule is limited to offerors or contractors providing services as lead 
system integrators or considering the provision of such services. Lead 
system integrators are limited to contracts for the development or 
production of major systems, and often involve the contractor 
performing functions closely associated with inherently governmental 
functions.
    Under this final rule, an entity that receives a contract as a lead 
system integrator cannot have any direct financial interest in the 
development or construction of any individual system or element of any 
system of systems while performing lead system integrator functions in 
the acquisition of a major system by DHS under this contract. Lead 
system integrator contracts usually extend several years, and we 
estimate that a limited number of such contracts are in effect within 
DHS at any one time. Very few contracts of this character are awarded 
in any given year.
    The limitations on entities (both large and small) apply only to 
contractors who choose to perform work for DHS as a lead system 
integrator. Such an entity could still choose to propose as a 
subcontractor under the prime contract, thereby mitigating the effect 
of this rule.
    In addition, DHS received no public comments on the interim rule 
suggesting this rule was a significant economic impact on a substantial 
number of small entities. Furthermore, this rule is not discretionary 
and is issued in accordance with the requirements of section 6405 of 
the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq 
Accountability Appropriations Act, 2007, Public Law 110-28, 121 Stat. 
112, 176 (2007) (codified as 6 U.S.C. 396; hereinafter ``Section 
396''), which requires DHS to address these matters in its acquisition 
regulation.

C. Paperwork Reduction Act

    The rule does not impose any information collection requirements 
that require the approval of the OMB under 44 U.S.C. 3501, et seq.

D. National Environmental Policy Act

    We have analyzed this rule under DHS Directive 023-01, 
Environmental Planning Program, which guides the Department in 
complying with the National Environmental Policy Act of 1969 (NEPA) (42 
U.S.C. 4321-4370f), and have concluded that this action is one of a 
category of actions which do not individually or cumulatively have a 
significant effect on the human environment. This rule, which does not 
involve any extraordinary circumstances, is categorically excluded 
under paragraphs A3(b) and A3(d) in Table I of Appendix A of Directive 
023-01 because it implements legislation by amending acquisition 
regulations without changing the regulation's environmental effect.

List of Subjects in 48 CFR Parts 3002, 3007, 3009, 3016, 3034, 
3035, and 3052

    Government procurement.

David R. Dasher,
Acting Deputy Chief Procurement Officer.


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Accordingly, DHS adopts as a final rule the interim HSAR rule published 
in the Federal Register at 75 FR 41097 on July 15, 2010, with the 
following changes:

[[Page 56663]]

PARTS 3002, 3007, 3009, 3016, 3034, 3035, and 3052--[AMENDED]

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1. The authority citation for parts 3002, 3007, 3009, 3016, 3034, 3035, 
and 3052 is revised to read as follows:

    Authority: 5 U.S.C. 301-302, 41 U.S.C. 1707, 41 U.S.C. 1702, and 
48 CFR part 1 and subpart 1.3.

[FR Doc. 2014-22495 Filed 9-22-14; 8:45 am]
BILLING CODE 9110-9B-P