[Federal Register Volume 80, Number 127 (Thursday, July 2, 2015)]
[Rules and Regulations]
[Pages 38306-38307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16208]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1 and 52
[FAC 2005-83; FAR Case 2015-006; Item II; Docket No. 2015-0006,
Sequence No. 1]
RIN 9000-AM85
Federal Acquisition Regulation; Prohibition on Contracting With
Inverted Domestic Corporations--Representation and Notification
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) to require additional actions by
contractors to assist contracting officers in ensuring compliance with
the Governmentwide statutory prohibition on the use of appropriated (or
otherwise made available) funds for contracts with any foreign
incorporated entity that is an inverted domestic corporation or to any
subsidiary of such entity.
DATES: Effective: November 1, 2015.
FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement
Analyst, at 202-208-4949, for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at 202-501-4755. Please cite FAC 2005-83, FAR Case 2015-
006.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 79 FR 74558 on December 15, 2014, to revise the provisions
of the FAR that address the continuing Governmentwide statutory
prohibition (in effect since fiscal year 2008) on the use of
appropriated (or otherwise made available) funds for contracts with any
foreign incorporated entity that is an inverted domestic corporation
(under section 835 of the Homeland Security Act of 2002, codified at 6
U.S.C. 395) or any subsidiary of such entity. The rule modifies the
existing representation and adds a requirement to notify the
contracting officer if the contractor becomes an inverted domestic
corporation, or a subsidiary of an inverted domestic corporation,
during performance of the contract.
One respondent submitted a comment in response to the proposed
rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the comments in the
development of the final rule. A discussion of the comments is provided
as follows:
A. Summary of Significant Changes
There is no change from the proposed rule in response to the public
comment received.
B. Analysis of Public Comments
Comment: The respondent stated that a particular contract is in
violation of Federal law, because the contractor merged with a
corporation outside the United States.
Response: The Councils are not enforcement agencies, and are not in
a position to assess whether the merger of two companies resulted in an
entity that meets all the criteria in the applicable definition of
``inverted domestic corporation.'' This comment does not address the
substance of the proposed rule, which proposed to require additional
actions by contractors to assist contracting officers in ensuring
compliance with the Governmentwide statutory prohibition on the use of
appropriated (or otherwise made available) funds for contracts with any
foreign incorporated entity that is an inverted domestic corporation
(under 6 U.S.C. 395) or to any subsidiary of such entity. Contractors
with the modified clause in their contracts will be required to make a
positive representation with the offer as to their status as an
inverted domestic corporation, and notify the contracting officer if
they become an inverted domestic corporation during contract
performance, as defined in the statute. The contracting activity will
take appropriate action if the contractor notifies the Government in
accordance with the clause that it has become an inverted domestic
corporation, or if investigation by the appropriate Government agency
determines that the contractor became an inverted domestic corporation
during contract performance and failed to notify the Government of its
change in status.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is not a significant regulatory action and, therefore, was not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993. This rule is not a major rule
under 5 U.S.C. 804.
IV. Regulatory Flexibility Act
DoD, GSA, and NASA certify that this rule 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., because this rule will only impact an offeror that is an inverted
domestic corporation or a subsidiary of an inverted domestic
corporation and wants to do business with the Government. It is
expected that the number of small entities impacted by this rule will
be minimal. Small business concerns are unlikely to have been
incorporated in the United States (or, if a partnership, established in
the United States) and then subsequently incorporated in a foreign
country; the major participants in these transactions are reportedly
large multinational corporations. For the definition of ``small
business'', the Regulatory Flexibility Act refers to the Small Business
Act, which in turn allows the U.S. Small Business Administration (SBA)
Administrator to specify detailed definitions or standards (5 U.S.C.
601(3) and 15 U.S.C. 632(a)). The SBA regulations at 13 CFR 121.105
discuss who is a small business: ``(a)(1) Except for small agricultural
cooperatives, a business concern eligible for assistance from SBA as a
small business is a business entity organized for profit, with a place
of business located in the United States, and which operates primarily
within the United States or which makes a significant contribution to
the U.S. economy through payment of taxes or use of American products,
materials or labor''.
V. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies. The
rule contains information collection requirements. OMB has cleared this
information collection requirement under OMB Control Number 9000-0190,
[[Page 38307]]
titled: Prohibition on Contracting with Inverted Domestic
Corporations--Representation and Notification.
List of Subjects in 48 CFR Parts 1 and 52
Government procurement.
Dated: June 18, 2015.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 1 and 52 as set
forth below:
0
1. The authority citation for 48 CFR parts 1 and 52 continues to read
as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM
1.106 [Amended]
0
2. Amend section 1.106 in the table following the introductory text, by
adding in numerical sequence, ``52.209-10'' and its corresponding OMB
Control Number ``9000-0190''.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
3. Amend section 52.209-2 by revising the date of provision and
paragraph (c) to read as follows:
52.209-2 Prohibition on Contracting With Inverted Domestic
Corporations--Representation.
* * * * *
Prohibition on Contracting with Inverted Domestic Corporations--
Representation (Nov 2015)
* * * * *
(c) Representation. The Offeror represents that--
(1) It [squ] is, [squ] is not an inverted domestic corporation;
and
(2) It [squ] is, [squ] is not a subsidiary of an inverted
domestic corporation.
(End of provision)
0
4. Amend section 52.209-10 by revising the date of the clause; and
adding paragraph (d) to read as follows:
52.209-10 Prohibition on Contracting with Inverted Domestic
Corporations.
* * * * *
Prohibition on Contracting With Inverted Domestic Corporations (Nov
2015)
* * * * *
(d) In the event the Contractor becomes either an inverted
domestic corporation, or a subsidiary of an inverted domestic
corporation during contract performance, the Contractor shall give
written notice to the Contracting Officer within five business days
from the date of the inversion event.
(End of clause)
0
5. Amend section 52.212-3 by revising the date of the provision and
paragraph (n)(2) to read as follows:
52.212-3 Offeror Representations and Certifications--Commercial
Items.
* * * * *
Offeror Representations and Certifications--Commercial Items (Nov 2015)
* * * * *
(n) * * *
(2) Representation. The Offeror represents that--
(i) It [squ] is, [squ] is not an inverted domestic corporation;
and
(ii) It [squ] is, [squ] is not a subsidiary of an inverted
domestic corporation.
* * * * *
0
6. Amend section 52.212-5 by revising the date of the clause and
paragraph (a)(1) to read 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 (Nov 2015)
* * * * *
(a) * * *
(1) 52.209-10, Prohibition on Contracting with Inverted Domestic
Corporations (Nov 2015).
* * * * *
[FR Doc. 2015-16208 Filed 7-1-15; 8:45 am]
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