[Federal Register Volume 81, Number 141 (Friday, July 22, 2016)]
[Notices]
[Pages 47802-47805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17328]


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GULF COAST ECOSYSTEM RESTORATION COUNCIL

[Docket Number: 107222016-1111-04]


Local Contracting Preference

AGENCY: Gulf Coast Ecosystem Restoration Council.

ACTION: Notice of final policy.

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SUMMARY: The Gulf Coast Ecosystem Restoration Council (Council) hereby 
issues notice of its final policy for implementing the local 
contracting preference requirement of the Resources and Ecosystems 
Sustainability, Tourist Opportunities, and Revived Economies of the 
Gulf Coast States Act of 2012 (RESTORE Act).

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DATES: Effective Date: July 22, 2016.

FOR FURTHER INFORMATION CONTACT: Mark Bisgeier, General Counsel, via 
email at [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    The RESTORE Act, Public Law 112-141 (July 6, 2012), codified at 33 
U.S.C. 1321(t) and note, makes funds available for the restoration and 
protection of the Gulf Coast Region through a new trust fund in the 
Treasury of the United States, known as the Gulf Coast Restoration 
Trust Fund (Trust Fund). The Trust Fund will contain 80 percent of the 
administrative and civil penalties paid after July 6, 2012 under the 
Federal Water Pollution Control Act by responsible parties in 
connection with the Deepwater Horizon oil spill. These funds will be 
invested and made available through five components of the RESTORE Act. 
On December 14, 2015, the Department of Treasury (Treasury) issued 
final regulations (80 FR 77239) applicable to all five components that 
generally describe the responsibilities of the Federal and State 
entities that administer RESTORE Act programs and carry out restoration 
activities in the Gulf Coast Region.
    Two of the five components, the Comprehensive Plan Component 
(sometimes referred to as the Council-Selected Restoration Component) 
and the Spill Impact Component, are administered by the Council, an 
independent federal entity created by the RESTORE Act. Under the 
Comprehensive Plan Component (33 U.S.C. 1321(t)(2)), the subject of 
this policy, 30 percent of the amount in the Trust Fund will be used to 
fund the operations of the Council and to carry out projects and 
programs adopted in the Council's Comprehensive Plan. An Initial 
Comprehensive Plan was adopted by the Council in August 2013 and is 
available at https://www.restorethegulf.gov/sites/default/files/Final%20Initial%20Comprehensive%20Plan.pdf.
    Pursuant to the RESTORE Act at 33 U.S.C. 1321(t)(2)(D)(ii)(IV)(dd), 
on December 9, 2015, the Council finalized a Funded Priorities List 
(FPL) to be included as part of the Initial Comprehensive Plan, setting 
forth programs and projects to be funded and prioritized for further 
review. These programs and projects will help to restore and protect 
the natural resources, ecosystems, fisheries, marine and wildlife 
habitats, beaches and coastal wetlands of the Gulf Coast region. The 
FPL is available at https://www.restorethegulf.gov/sites/default/files/FPL_FINAL_Dec9Vote_EC_Library_Links.pdf.
    Programs and projects selected for funding in the FPL will be 
funded either through grants to the State members of the Council (the 
Governors of the States of Alabama, Florida, Louisiana, Mississippi, 
and Texas) (State or States) or interagency agreements with the Federal 
members of the Council (the Secretaries of the Departments of 
Agriculture, the Army, Commerce, the Interior and the Department in 
which the Coast Guard is operating, and the Administrator of the 
Environmental Protection Agency). Those State and Federal members of 
the Council may in turn award grants or contracts to carry out the 
funded programs and projects.

II. Discussion of This Policy and Response to Public Comments

    The RESTORE Act requires the Council to ``develop standard terms to 
include in contracts for projects and programs awarded pursuant to the 
Comprehensive Plan that provide a preference to individuals and 
companies that reside in, are headquartered in, or are principally 
engaged in business in a Gulf Coast State.'' 33 U.S.C. 
1321(t)(2)(C)(vii)(V). On May 22, 2015, the Council published in the 
Federal Register notice of its preliminary interpretation of this local 
contracting preference and described its proposed implementation of 
that interpretation (80 FR 29708). Public comment was requested and 
three public comments were received, one each from a private 
individual, a non-profit organization and a consortium of Gulf Coast 
organizations and businesses. The latter two commenters made similar 
recommendations and are addressed together.
    Preliminarily, due to differing legal requirements in the various 
jurisdictions, the Council will apply the local contracting requirement 
at the Federal level (see comment topic 2 below) while permitting each 
State to apply any local contracting preference in conformity with 
local requirements. The Council will therefore not impose on the States 
any special grant award conditions requiring a local contracting 
preference or related contractual certifications. Each of the States 
has enacted laws pertaining to local contracting preferences, most of 
which do not address preferences for another State's local firms; in 
some cases such laws prohibit preferences for another State's local 
firms. If the Council were to require the States to provide preferences 
for another State's local firms, those States with prohibitions against 
such preferences would be unable to participate in the grant program. 
Having one or more of the States ineligible to receive grants under the 
Comprehensive Plan Component would be inconsistent with the intent and 
purposes of the RESTORE Act. Council policy for State contracting 
action using RESTORE Act funds is therefore to have each State act in 
conformance with its laws with respect to contracting preferences, with 
no further requirements. This policy is consistent with 2 CFR part 
200.319(b), which permits grant recipients to apply state or local 
geographic preferences in the evaluation of bids or proposals only 
where a Federal statute, such as the RESTORE Act, expressly mandates or 
encourages geographical preference.
    Comment topic 1: The private individual recommended that any local 
contracting preference not detract from existing Federal acquisition 
requirements, particularly those related to small business programs.
    Response to comment topic 1: The Council will comply with all 
applicable Federal acquisition requirements.
    Comment topic 2: The two comments from the non-profit organization 
and the consortium of organizations and businesses included arguments 
for a stronger local contracting preference, especially at the Federal 
level, and recommendations for various certifications and local 
workforce development plans, training and hiring process provisions.
    Response to comment topic 2: At the Federal level, a local 
contracting preference is permitted only when a statute expressly 
authorizes or requires it. See 41 U.S.C. 3304(a)(5). The Council has 
determined that 33 U.S.C. 1321(t)(2)(C)(vii)(V) provides such an 
express authorization. To implement this at the Federal level, in May 
2015 the Council proposed requiring federal agencies to either (1) 
provide a preference to Gulf Coast firms if proposals are determined 
equivalent under all other evaluation factors, or (2) include a 
weighted evaluation factor providing a preference to Gulf Coast firms 
(80 FR 29709). The non-profit organization recommended revising option 
(2) such that the agencies would be required to provide an explicit 
weight of 20% to the weighted evaluation factor. The Council has 
declined to do so. Assigning a specific weight to the local contractor 
preference factor unnecessarily limits the discretion of the 
contracting agency to tailor evaluation factors and their relative 
weights for each procurement. Further, contracting agencies are not 
required to assign specific percentage

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weights to each evaluation factor and doing so can result in a more 
quantitative than qualitative analysis of subjective evaluation 
factors. Agencies may use a variety of rating schemes, and requiring 
them to assign a specific percentage weight to the local contracting 
preference factor would be overly prescriptive and have the effect of 
restricting their ability to determine what constitutes best value for 
procurements on a case-by-case basis.
    Instead of assigning a specific weight or otherwise changing the 
two foregoing options, the Council has instead decided to provide 
Federal member contracting agencies with a third option of including in 
contracts a financial incentive that rewards contractors for specific 
local hiring thresholds. Because this third option provides an explicit 
financial incentive, the Council believes that it may actually make 
achieving a local hiring objective more likely than either of the other 
options. The Council thanks the commenters for encouraging the Council 
to devise a more robust and creative option to encourage local 
contracting.
    The two comments also included suggestions to include various 
certifications and contractual clauses to require offerors to develop 
and submit local workforce development plans and train local workers, 
and various mechanisms to process job opportunities through state and 
local hiring agencies. The Council declines to add these additional 
requirements for two reasons: First, the Council believes that 
requiring local training is beyond the scope of the RESTORE Act 
provision for a local contracting preference; and second, the Council 
is concerned that adding such additional requirements may actually 
discourage or inhibit local contractors from offering to undertake the 
work. It is the Federal members' collective experience that additional 
requirements can be burdensome to the point that potential offerors are 
discouraged from even participating in the contract proposal process. 
This is especially true with small, possibly local firms. Potentially 
discouraging local firms from participating would be inconsistent with 
the purpose of the local contracting preference.
    The Council believes that offering the choice of one of the three 
options discussed above would provide Federal agencies with sufficient 
discretion to make an award to an offeror whose proposal provides the 
best value to the Government. Furthermore, in order to prevent a Gulf 
Coast firm from serving as merely a pass-through for a firm outside the 
Gulf Coast region or other avoidance the objective of the preference, 
to be considered a ``local firm'' an offeror must certify that it 
resides, is headquartered or is principally engaged in business in a 
State. The offeror must also agree that it will perform at least a 
minimum percentage of the work under the contract with either local 
employees or local manufacturing, as the case may be. The method for 
determining whether an offeror meets these tests is adapted from the 
Small Business Administration's regulation found at 13 CFR 125.6.

III. Provisions in Council Comprehensive Plan Interagency Agreements 
With Federal Members

    The text below will therefore be included in all solicitations by 
federal Council members for Comprehensive Plan Component contracts, and 
will be incorporated into all awards for such contracts.
    (a) The offeror represents as part of its offer that it ( ) is, ( ) 
is not a firm residing, headquartered or principally engaged in 
business in a Gulf Coast state. For purposes hereof, a ``Gulf Coast 
state'' is any of the states of Alabama, Florida, Louisiana, 
Mississippi or Texas.
    (b) If the offeror (1) is a firm residing, headquartered or 
principally engaged in business in a Gulf Coast state and (2) agrees to 
the following applicable provisions and submits supporting 
documentation with its offer, then for purposes hereof the offeror will 
be deemed a ``Gulf Coast Firm'':
    (i) For a contract for services (except construction), the offeror 
will perform services representing at least fifty percent (50%) of the 
total labor costs under the contract with employees that are residents 
of a Gulf Coast state;
    (ii) For a contract for supplies or products (other than 
procurement from a non-manufacturer of such supplies or products), the 
offeror will manufacture, within a Gulf Coast state, such supplies or 
products representing at least fifty percent (50%) of the total 
manufacturing costs under the contract (excluding costs of materials); 
or
    (iii) For a contract for general construction services, the firm 
will perform services representing at least fifteen percent (15%) of 
the total labor costs under the contract with employees that are 
residents of a Gulf Coast state.
    (c) For purposes hereof, a ``resident of a Gulf Coast state'' means 
a resident as defined by the applicable Gulf Coast state law.
    Additionally, one of the three options, generally in the form set 
forth below, will be included in all solicitations for Comprehensive 
Plan Component contracts by federal Council members. This term notifies 
prospective offerors that the Federal member contracting agency will 
either prefer Gulf Coast Firms in awarding Comprehensive Plan Component 
contracts or will include an incentive for contractors that perform the 
contracts using a certain percentage of residents of a Gulf Coast 
state.
    Option 1 provides a preference to Gulf Coast Firms if proposals are 
determined to be equivalent under all other evaluation factors.
    Option 2 provides a weighted evaluation factor providing a 
preference to Gulf Coast Firm offers. The solicitation should identify 
the relative weight of the local contracting preference to the other 
stated evaluation criteria.
    Option 3 provides a financial incentive to contractors that perform 
the contract using a certain percentage of residents of a Gulf Coast 
state.
    [Option 1] It is the policy of [contracting agency] to encourage 
the participation of Gulf Coast Firms in the procurement process. This 
solicitation includes a preference for Gulf Coast Firms. If 
[contracting agency] determines all other factors to be equivalent, 
[contracting agency] will give preference to a Gulf Coast Firm. 
[contracting agency] will review your Gulf Coast Firm status at the 
time the contract solicitation closes.
    [Option 2--to be assigned relative weight by the contracting 
agency] It is the policy of [contracting agency] to encourage the 
participation of Gulf Coast Firms in the procurement process. This 
solicitation includes a preference for Gulf Coast Firms. The 
[contracting agency] will review your Gulf Coast Firm status at the 
time the contract solicitation closes.
[Option 3--Prescription]
    It is the policy of the [contracting agency] to encourage 
contractors to hire residents of Gulf Coast states in connection with 
contracts for RESTORE Act Funded Priorities List projects. Accordingly, 
[contracting agency] will include the following Local Hiring Incentive 
Award provision in any contract for which [contracting agency] 
authorizes such an award.
[Option 3--Contract Provision]
    (1) To qualify for the Local Hiring Incentive Award set forth in 
section (2) below, a contractor must, on or before [deadline date], 
submit to the cognizant contracting officer documentation verifying 
that during the contract's performance period (i.e., base period, 
option period), on average at least [percent] of the [contractor's 
employees and/or consultants and/or subcontractor employees] performing

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work on the contract were residents of a Gulf Coast state.
    (2) If the cognizant contracting officer confirms in writing that 
the contractor has satisfied the requirements of section (1) above, 
then subject to any applicable appropriations laws the contractor will 
be entitled to receive an award (''Local Hiring Incentive Award'') 
equal to [percent] of the contract amount earned during the contract's 
performance period.

Will D. Spoon,
Program Analyst, Gulf Coast Ecosystem Restoration Council.
[FR Doc. 2016-17328 Filed 7-21-16; 8:45 am]
 BILLING CODE 6560-58-P