[Federal Register Volume 86, Number 240 (Friday, December 17, 2021)]
[Proposed Rules]
[Pages 71604-71611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-27333]
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GENERAL SERVICES ADMINISTRATION
41 CFR Part 102-73
[FMR Case 2021-102-1; Docket No. GSA-FMR-2021-0020; Sequence No. 1]
RIN 3090-AK42
Federal Management Regulation; Real Estate Acquisition
AGENCY: Office of Government-wide Policy (OGP), General Services
Administration (GSA).
ACTION: Proposed rule.
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SUMMARY: The General Services Administration is amending the FMR part
regarding real property acquisition to reflect current laws and
regulatory policies and to clarify the policies for entering into
leasing agreements for high security space in accordance with the
Secure Federal LEASEs Act.
DATES: Interested parties should submit written comments at the address
shown below on or before February 15, 2022 to be considered in the
formation of the final rule.
ADDRESSES: Submit comments in response to FMR case 2021-102-1 to:
Regulations.gov: https://www.regulations.gov. Submit comments via the
Federal eRulemaking portal by searching for ``FMR Case 2021-102-1''.
Select the link ``Comment Now'' that corresponds with FMR Case 2021-
102-1. Follow the instructions provided at the ``Comment Now'' screen.
Please include your name, company name (if any), and ``FMR Case 2021-
102-1'' on your attached document. If your comment cannot be submitted
using https://www.regulations.gov, call or email the points of contact
in the FOR FURTHER INFORMATION CONTACT section of this document for
alternate instructions.
Instructions: Please submit comments only and cite FMR Case 2021-
102-1, in all correspondence related to this case. Comments received
generally will be posted without change to https://www.regulations.gov,
including any personal and/or business confidential information
provided. To confirm receipt of your comment(s), please check
www.regulations.gov, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
Mr. Chris Coneeney, Director, Real Property Policy Division, Office of
Government-wide Policy, at 202-208-2956 or [email protected]. For
information pertaining to status or publication schedules, contact the
Regulatory Secretariat Division at 202-501-4755 or [email protected].
Please cite FMR Case 2021-102-1.
SUPPLEMENTARY INFORMATION:
I. Background
The Secure Federal Leases from Espionage And Suspicious
Entanglements Act, or the Secure Federal LEASEs Act, Public Law 116-
276, 134 Stat. 3362 (2020) (the ``Act''), provides for the disclosure
of ownership information to Federal lessees leasing high-security space
that would allow the lessee to mitigate potential national security
risks. The Act was signed into law on December 31, 2020 (available at
https://www.congress.gov/116/plaws/publ276/PLAW-116publ276.pdf). The
Act imposes disclosure requirements regarding the foreign ownership,
particularly ``immediate owner'', ``highest level owner'' and
``beneficial ownership,'' of prospective lessors of ``high-security
leased space'' (i.e., property leased to the Federal government having
a security level of III or higher). GSA implemented Section 3 and
Section 5 of the Act through the interim rule General Services
Administration Acquisition Regulation (GSAR) Case 2021-G527 (86 FR
34966) (available at https://www.federalregister.gov/documents/2021/07/01/2021-14161/general-services-administration-acquisition-regulation-immediate-and-highest-level-owner-for).
The requirements of the statute are applicable to Federal lessees,
defined by the Act as leases by the U.S. General Services
Administration (GSA), the Architect of the Capitol, ``or the head of
any Federal agency, other than the
[[Page 71605]]
Department of Defense (DOD), that has independent statutory leasing
authority''. The Act is not applicable to DOD or to the intelligence
community. Section 2876 of the FY 2018 National Defense Authorization
Act (Pub. L. 115-91) already provides DOD similar authority to obtain
ownership information with respect to its high-security leased space.
The Act addresses national security risks identified in the
Government Accountability Office (GAO) report, GSA Should Inform Tenant
Agencies When Leasing High-Security Space from Foreign Owners, dated
January 2017 (GAO-17-195) (available at https://www.gao.gov/assets/gao-17-195.pdf). This report found certain high-security Federal agencies
were in buildings owned or controlled by foreign entities. According to
the report, most Federal tenants were unaware the spaces GAO identified
were subject to foreign ownership or control, exposing these agencies
to the heightened risk of surreptitious physical or cyber espionage by
foreign actors. The report also noted GAO could not identify the owners
of approximately one-third of the Federal government's high-security
leases because such ownership information was unavailable for those
buildings.
Section 4 of the Act adds the requirement for identification of
beneficial ownership information, and requires GSA to develop a
government-wide plan for identifying all immediate, highest-level, and
beneficial owners of high-security leased space. Section 4 of the Act
further requires GSA to submit a corresponding report. This proposed
rule addresses the annual collection of ownership disclosures from GSA,
delegated lease authority agencies, and independent leasing agencies to
GSA.
What is a ``beneficial owner''?
Unlike the direct control-based immediate owner and highest-level
owner, the Act defines the term ``beneficial owner'' to include any
person that--through a contract, arrangement, understanding,
relationship, or otherwise--exercises control over the covered entity
or has a substantial interest in or receives substantial economic
benefits from the assets of the covered entity, with some exceptions.
The Act is one of several recent examples of congressional concern
about foreign ownership and control and congressional action in the
world of government contracting to help address potential national
security concerns. See, e.g., FY 2021 National Defense Authorization
Act (NDAA) (Pub. L. 116-283), Sec. 819, Modifications to Mitigating
Risks Related to Foreign Ownership, Control, or Influence of DOD
Contractors and Subcontractors; Sec. 885, Disclosure of Beneficial
Owners in Database for Federal Agency Contract and Grant Officers;
Sec. 6403, Beneficial Ownership Information Reporting Requirements,
and, as of June 30, 2021, GSAR 2021-G527, Immediate and Highest-Level
Owner for High-Security Leased Space.
Because of the related rulemaking, there are several definitions of
``beneficial owner'' (or ``beneficial ownership'').
The United States Securities and Exchange Commission (SEC) Definition
Sec. 885 (Disclosure of beneficial owners in database for Federal
agency contract and grant officers) of the FY 2021 NDAA (Pub. L. 116-
283) \1\ states that beneficial ownership has the meaning given under
Sec. 847 (Mitigating risks related to foreign ownership, control, or
influence of Department of Defense contractors or subcontractors) of
the FY 2020 NDAA (Pub. L. 116-92).\2\ Sec. 847 does not specifically
define beneficial ownership but requires ``beneficial ownership'' to
``be determined in a manner that is not less stringent than the manner
set forth in section 240.13d-3 of title 17, Code of Federal
Regulations.'' This Code of Federal Regulations reference is the SEC
definition.\3\ The SEC definition mainly concerns the beneficial owner
of a security (e.g. stock/bond/option for a corporation), not the
corporation or company-at-large.
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\1\ https://www.congress.gov/bill/116th-congress/house-bill/6395/text.
\2\ https://www.congress.gov/bill/116th-congress/senate-bill/1790/text.
\3\ https://www.ecfr.gov/current/title-17/chapter-II/part-240/section-240.13d-3#p-240.13d-3(a).
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Corporate Transparency Act Definition
The Corporate Transparency Act (CTA) definition can be found at
Sec. 6403 of the FY 2021 NDAA. This section defines ``beneficial
ownership'' as, with respect to an entity, an individual who, directly
or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise (i) exercises substantial control over the
entity; or (ii) owns or controls not less than 25 percent of the
ownership interests of the entity.
Secure Federal LEASEs Act Definition
A ``beneficial owner'' is ``with respect to a covered entity, each
natural person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise--(i) exercises
control over the covered entity; or (ii) has a substantial interest in
or receives substantial economic benefits from the assets of the
covered entity.''
GSA's Interpretation
GSA interprets that the SEC definition is too limiting for use in
the representation clause because it's concerned with the beneficial
owner of a security rather than a company or corporation. The Secure
Federal LEASEs Act and the CTA definitions are similar. Both
definitions similarly characterize a beneficial owner as someone who
(i) controls a covered entity, or (ii) has a substantial interest. The
primary difference between the two is related to ``substantial
interest.'' The Secure Federal LEASEs Act states that a beneficial
owner is someone who ``. . . has a substantial interest in or receives
substantial economic benefits from the assets of the covered entity''
while the CTA definition says a beneficial owner ``owns or controls not
less than 25 percent of the ownership interests of the entity.'' GSA
interprets that the CTA definition meets the intent of the SFLA
definition. As such, GSA intends to use the CTA definition (and
therefore incorporates it into the GSAR representation clause at
552.270-33) because it's more specific (``not less than 25 percent'' as
opposed to having to define ``substantial interest'' or ``substantial
economic benefits'') and because it would allow GSA to leverage
Treasury's Financial Crimes Enforcement Network's (FinCEN) efforts to
collect beneficial owner information for all corporations. GSA does not
believe this definition to be ``not less stringent'' than the SEC
definition.
Covered entities already provide certain information on immediate
and highest-level ownership, per OMB Control Numbers 9000-0097, 9000-
0185, and 3090-0324. However, covered entities will need to provide
additional disclosure of creditors who may be deemed beneficial owners
if they either exercise substantial control over the covered entity or
owns or controls not less than 25 percent of the ownership interests of
the covered entity. Therefore, property owners will need to take this
provision into account when considering financing options for leasing
high-security space to the Federal government.
II. 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,
[[Page 71606]]
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 rule is anticipated to be a significant
regulatory action and, therefore, was subject to review under Section
6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30,
1993.
III. Congressional Review Act
This rule is not a major rule under 5 U.S.C. 804(2). Subtitle E of
the Small Business Regulatory Enforcement Fairness Act of 1996
(codified at 5 U.S.C. 801-808), also known as the Congressional Review
Act or CRA, generally provides that before a rule may take effect, the
agency promulgating the rule must submit a rule report, which includes
a copy of the rule, to each House of the Congress and to the
Comptroller General of the United States. A major rule under the CRA
cannot take effect until 60 days after it is published in the Federal
Register. OIRA anticipates that this rule is not a ``major rule'' as
defined by 5 U.S.C. 804(2).
IV. Regulatory Flexibility Act
GSA certifies this rule will not have a significant economic impact
on a substantial number of small entities because it applies only to
Federal agencies and employees.
V. Paperwork Reduction Act
The proposed rule does not contain any information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
VI. Regulatory Impact Analysis
The cost and benefit impacts of amending FMR part 102-73 regarding
real property acquisition to reflect current laws and regulatory
policies to implement the Section 4 requirements outlined in the Secure
Federal Leases Act (SFLA) (Pub. L. 116-276) are discussed in the
analysis below. This analysis was developed by GSA in consultation with
agency procurement officials and the GSA Office of Leasing. Section
VI.(h) of this rule is requesting specific feedback regarding the
impact of this rule, as well as other pertinent policy questions of
interest, in order to inform finalization of this and potential future
subsequent rulemakings.
(1) Federal Leasing--Current Processes
Potential offerors are required to report certain ownership
information to the System for Acquisition Management (SAM), including
immediate or highest-level owners.
(2) Federal Government Leasing--General Security Framework
As outlined within the Interagency Security Committee (ISC)
Standard and the GSA Leasing Desk Guide, the facility security level
(FSL) \4\ is set by the Department of Homeland Security--Federal
Protective Service (FPS) and the client agency, in consultation with
the GSA as part of the requirements development phase of a lease
acquisition. If the client agency and FPS have not already conferred,
the Federal lessee and GSA must coordinate with the necessary parties
to set the appropriate level of security before the solicitation is
drafted. This level of security will be memorialized by the Security
Organization as a preliminary FSL, which serves as a precursor to the
final FSL generally made with the tenants' post award. The Risk
Management Process for Federal Facilities: An Interagency Security
Committee Standard \5\ outlines the policies required for federal
tenants in consultation with the responsible Security Organization to
determine, set, and modify levels of security. The ownership
information collected via this rule will not affect the FSL
designation.
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\4\ A categorization based on the analysis of several security-
related facility factors, which serves as the basis for the
implementation of countermeasures specified in ISC standards. (ISC
Standard, March 2021).
\5\ https://www.cisa.gov/sites/default/files/publications/The%20Risk%20Management%20Process%20-%202021%20Edition_1.pdf.
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(3) Federal Government Leasing--Determining Countermeasures
Federal lessees follow the ISC Standard for physical security
criteria (PSC) for Federal Facilities. The standard establishes
baseline physical security countermeasures for each FSL. The standard
defines the process for determining the appropriate security measures
through the ISC Risk Management Process; it also covers any uncommon
measures required to address the unique risks at a particular facility.
The GSA Public Buildings Service Leasing Desk Guide currently uses the
PSC to prescribe the process for determining appropriate
countermeasures for a facility. Therefore, GSA assumes other federal
agency lessees adhere to ISC standards as well within their leasing
guides and use the criteria provided by ISC to calculate the level of
security required for the tenants.
(c) Compliance Plan Estimated Due to Proposed Rule
GSA assumes the following steps would most likely be part of an
agency's plan to collect and report owner disclosures using GSA's
government-wide plan and GSAR 552.270-33 and 552.270-34:
1. Government-Wide Plan and Regulatory Familiarization.
The agency reads and understands the government-wide plan and
potentially uses GSAR 552.270-33 and 552.270-34 for collection
actions.
2. Workforce Training.
The agency must educate its purchasing/procurement professionals
\6\ to heighten their familiarization with GSA's government-wide
plan's disclosure requirements (as applicable).
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\6\ GSA estimates that the purchasing/procurement professional
requiring training as a result of this rule on average would be
equal to a mid-career professional. The equivalent labor category
used to capture cost estimates therefore is a GS-12 Step 5, or
Journeyman Level 1.
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3. Compliance with the Revised Representation Clause.
The agency must identify and disclose whether entities do or do
not have a foreign beneficial owner of leased space. If an
affirmative disclosure is made for leases involving high-security
space, GSA shall be notified of the disclosure made in the
representation per the schedule set forth within the GSA government-
wide plan.
(d) Benefits
This Act requires the disclosure of the identification of all
individuals who own or benefit from partial ownership of a property
that will be leased by the federal government for high-security use.
The statute is in response to a 2017 Government Accountability Office
(GAO) report which indicated that Federal agencies were vulnerable to
espionage and other intrusions because foreign actors could gain
unauthorized access to spaces used for classified operations or to
store sensitive data. Agencies store law enforcement evidence and other
sensitive data and are often unaware of foreign ownership of their
office spaces. While many of the foreign owners identified in the 2017
GAO report were companies based in allied countries such as Canada,
Norway, Japan, or South Korea, other properties were owned and managed
by entities based in more adversarial nations. The report noted
Chinese-owned properties, in particular, presented security challenges
because of the country's proclivity for cyberespionage and the close
ties between private sector companies and
[[Page 71607]]
the Chinese government. The GAO report highlighted the dangers posed by
these properties, indicating that ``leasing space in foreign-owned
buildings could present security risks such as espionage, unauthorized
cyber and physical access to the facilities, and sabotage.''
The United States faces an expanding array of foreign intelligence
threats by adversaries who are using increasingly sophisticated methods
to harm the Nation.\7\ Threats to the United States posed by foreign
intelligence entities are becoming more complex and harmful to U.S.
interests.\8\ Foreign intelligence actors are employing innovative
combinations of traditional spying, economic espionage, and supply
chain and cyber operations to gain access to critical infrastructure
and steal sensitive information and industrial secrets.\9\ The
exploitation of key supply chains by foreign adversaries represents a
complex and growing threat to strategically important U.S. economic
sectors and critical infrastructure.\10\
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\7\ National Counterintelligence Strategy of the United States
of America 2020-2022.
\8\ National Counterintelligence Strategy of the United States
of America 2020-2022.
\9\ National Counterintelligence Strategy of the United States
of America 2020-2022.
\10\ National Counterintelligence Strategy of the United States
of America 2020-2022.
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Additionally, by requiring ``Beneficial Owner'' information in the
representation clause, Federal lessees will benefit by better
understanding how an individual's ownership position can provide them
access that could prove problematic for certain agencies. Congress
underscored that ``money launderers and others involved in commercial
activity intentionally conduct transactions through corporate
structures in order to evade detection, and may layer such structures .
. . across various secretive jurisdictions such that each time an
investigator obtains ownership records for a domestic or foreign
entity, the newly identified entity is yet another corporate entity,
necessitating a repeat of the same process.'' \11\ The ability to
engage in activity and obtain financial services in the name of a legal
entity without disclosing the identities of the natural persons who own
or control the entity--the natural persons whose interests the legal
entity most directly serves--enables those natural persons to conceal
their interests. And as the Treasury's Financial Crimes Enforcement
Network (FinCEN) has noted previously, such concealment ``facilitates
crime, threatens national security, and jeopardizes the integrity of
the financial system.'' \12\ The goal of the Act is to close security
loopholes by directing Federal agencies to notify GSA whether foreign
owners have a stake in high-security buildings leased by Federal
agencies, either through foreign-incorporated legal entities or through
ownership in United States-incorporated legal entities, even when the
leased space is used for classified operations or to store sensitive
data. While GSA and other Federal agencies have made positive changes
in response to GAO's 2017 report, this rule will help support current
best practices being followed more uniformly throughout the Federal
government.
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\11\ Corporate Transparency Act Section 6402(4).
\12\ Notice of Proposed Rulemaking: Customer Due Diligence
Requirements for Financial Institutions, 79 FR 45151, 45153 (August
4, 2014).
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Finally, this rule ensures that Federal lessees will have the
ability to obtain information on foreign ownership and provide it to
relevant Federal tenants.
(e) Public Costs
A. To estimate the aggregate burden to agencies of complying with
the Act, the number of disclosures to obtain was calculated using
numbers pulled from GSA's records and databases.\13\ As of August 2021,
GSA has approximately 7,860 leases. Of the 7,860, approximately 1,263
\14\ (or 16 percent) of the leases are for high-security lease space
(lease space in a facility with a security level of III, IV, or V).
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\13\ If not otherwise stated, numbers related to leases are
provided by the GSA Office of Leasing through surveying their
internal databases.
\14\ The GSA Office of Leasing provided this number by surveying
their internal database.
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B. GSA also delegates leasing authority to several agencies, which
are required to follow GSA's policies. GSA estimates there are 5,000
leases represented by these agencies with the Delegated Leasing
Authority from GSA.\15\ GSA does not have data available that
identifies which of these are for high-security lease space. GSA
assumes that these delegated agencies have a similar profile to GSA's
for high-security leased space to total portfolio space, i.e., 16
percent. This would bring the total number of high-security lease space
for delegated agencies to 800 (5,000 x 16 percent).
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\15\ This information is based on internal inventory data
sources provided by the GSA Office of Leasing.
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C. Agencies possessing independent leasing authority are not
required to follow GSA's policies. GSA indicates that there are 41
agencies with independent statutory authority.\16\ Further, GSA
estimates there are 25,995 leases represented by these agencies.\17\
GSA does not have data available to identify which of these are for
high-security lease space. GSA assumes these agencies have a similar
profile to GSA's for high-security leased space to total portfolio
space, i.e., 16 percent. This would bring the total number of high-
security lease space for independent agencies to 4,159 (25,995 x 16
percent).
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\16\ The GSA Office of Government-wide Policy used the Federal
Real Property Profile Management System to determine the number of
agencies with a lease authority indicator of independent statutory
authority.
\17\ This information is based on publicly available data
sources provided by the GSA Office of Government-wide Policy Real
Property Policy Division. https://www.gsa.gov/policy-regulations/policy/real-property-policy/asset-management/federal-real-property-profile-frpp/federal-real-property-public-data-set.
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D. Based on historical data maintained by GSA's Office of Leasing,
GSA estimates that 6 percent of its high-security leased space will be
solicited for a new contract each year (6 percent of 1,263 = 76
leases). These solicitations result from a mix of expiring high-
security leases or new requirements for high-security facilities. GSA
assumes these trends will continue for the time horizon outlined by
this regulatory impact. Based on historic bid rates and high current
vacancy levels, GSA further estimates that 3 lessors will make offers
for each of these high-security lease procurement for a total of 228
offers (76 high-security leases awarded x 3 lessors competing for each
solicitation; 76 x 3 = 228). GSA assumes the same profile for delegated
facilities and independent agencies.
E. Since 2014, GSA has averaged approximately 31 renewal options
per year for high-security leases (equal to approximately 17 percent of
all renewals options during the same period) and averaged approximately
106 extensions for existing high-security leases (also equal to
approximately 17 percent of all extensions during the same period). GSA
assumes the same trend will continue in subsequent years. GSA assumes
the same profile for delegated facilities and independent agencies.
F. GSA processed 380 novations from May 1, 2020 to April 30, 2021
\18\ (therefore approximately 5 percent of leases resulted in a
novation (380/7,860)). GSA does not have data on how many of those were
related to FSL III, IV, or V. GSA will assume 16 percent of those
novations were for FSL III, IV, or V leases. Therefore, it is assumed
61 novations were processed for high-security leases in the last year.
GSA
[[Page 71608]]
assumes the same profile for delegated facilities and independent
agencies.
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\18\ This information is based on internal inventory data
sources provided by the GSA Office of Leasing. GSA does not have
data on how many novations other agencies with Delegated Leasing
Authority processed.
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A breakdown is provided in the table below.
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Independent
Delegated lease
Part above GSA authority authority
agencies agencies
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A, B............................... Leased Space............... 7,860 5,000 25,995
High Security (HS) Lease 1,263 800 4,159
Space.
C.................................. New Procurements........... 76 48 250
New Offers................. 228 144 749
D.................................. Renewals................... 31 16 83
E.................................. Extensions................. 106 64 333
F.................................. Novations.................. 380 250 1,300
HS Novations............... 61 40 208
-----------------------------------------------
HS Lease Baseline.......... 6,222
-----------------------------------------------
Combined New HS Lease 2,063
Baseline.
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1. Public Total Costs
GSA notes that amendment to FMR 102.73--Real Estate Acquisition
regarding real property acquisition to reflect current laws and
regulatory policies carries no direct cost to the public. Section 4 of
the Secure Federal Lease Act focuses solely on the government's
required activities for the planning, disclosures and notifications,
reporting and implementation of the Act by GSA and Federal agencies to
Congress.
(f) Government Cost Analysis
During the first and subsequent years after publication of the
rule, leasing acquisition members (which include a combination of
Leasing Contracting Officers, Lease Administration Managers, Realty
Specialists, and General Counsel) will need to learn about GSA's
government-wide plan and disclosure requirements. GSA estimates this
cost by multiplying the time required to review the regulations and
guidance implementing the rule by the estimated compensation, on
average, of a GS-12 leasing acquisition member unless specified. GSA
assumes that leasing acquisition members will, on average, stay
consistent in subsequent years. Numbers and assumptions apply to
delegated and independent leasing agencies as well.
For consistency, the number of leases to be reviewed match the
numbers in the ``Existing HS Lease Baseline'' row (6,222 combined) and
``New annual Lease Baseline'' row (2,063 combined) found in table in
Section VI.(f).
Below is a list of compliance activities related to regulatory
familiarization that GSA anticipates will occur:
1. Government Compliance With Public Law 116-276. Section 4(a)
Development of a Government-Wide Plan
The Government must educate its leasing acquisition members via a
government-wide plan to heighten their familiarity with the collection
and reporting of the beneficial owners of high security leased space.
a. GSA calculates it will take 160 hours in the second year to
create the plan. GSA estimates this cost by multiplying the time
required to develop and approve the plan by the estimated compensation,
on average, of a GS-12. Therefore, GSA calculated the total estimated
cost for this part of the rule to be $13,466 (= 160 hours x $84.16 x
1).
GSA estimates that it will take 5 hours in outyears to update the
plan on a yearly basis. Therefore, GSA calculated the total estimated
cost for this part of the rule to be $421 (= 5 hours x $84.16 x 1).
b. GSA calculates it will take 80 hours in the second year to
submit the plan to the Committee on Homeland Security and Governmental
Affairs of the Senate and the Committee on Transportation and
Infrastructure of the House of Representatives. GSA estimates this cost
by multiplying the time required to submit the plan by the estimated
compensation, on average, of a GS-12. Therefore, GSA calculated the
total estimated cost for this part of the rule to be $6,733 (= 80 hours
x $84.16 x 1).
c. GSA estimates that it will take approximately 2,178 leasing
acquisition members 30 minutes (0.5 hour \19\) to complete training
related to the plan.\20\ Therefore, GSA calculated the total estimated
cost for this part of the rule to be $91,650 (= 0.5 hours x $84.16 x
2,178).\21\
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\19\ The hours estimated are an assumption based on historical
familiarization hours and subject matter expert judgement. Subject
matter experts include representatives from GSA's Office of Leasing,
including Realty Specialists and Leasing Contracting Officers.
\20\ Combined number of GSA/Delegate lease members and
independent authority lease members.
\21\ All totals in the Government Cost Analysis section are
rounded.
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After the initial training, GSA estimates it will take 15 minutes
(0.25 hours \22\) to maintain training related to the plan. Therefore,
GSA calculated the total estimated cost for this part of the rule to be
$45,825 (= 0.25 hours x $84.16 x 2,178).
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\22\ The hours estimated are an assumption based on historical
familiarization hours and subject matter expert judgement. Subject
matter experts include representatives from GSA's Office of Leasing,
including Realty Specialists and Leasing Contracting Officers.
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d. GSA estimates the 41 agencies with independent lease authority
may review GSAR 522.270-33 and 522.270-34 in a limited capacity to
mirror GSA's policies. Therefore, GSA estimates those agencies may
spend less time than GSA reviewing the GSARs as they may write, review,
and become familiar with their own internal policies. GSA estimated on
average, a GS-12 would spend 1 hour per year becoming familiar with
GSAR 522.270-33 and GSAR 552.270-34 therefore, it would take
independent leasing agencies 30 minutes (0.5 hours \23\) to review the
GSAR. This would only occur for those agencies in the first year of
collection and reporting. Therefore, GSA calculated the total estimated
cost for this part of the rule to be $1,725 (= 0.5 hours x $84.16 x
41).
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\23\ The hours estimated are an assumption based on historical
familiarization hours and subject matter expert judgement. Subject
matter experts include representatives from GSA's Office of Leasing,
including Realty Specialists and Leasing Contracting Officers.
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e. GSA calculates it will take 60 hours in the first year of
collection and
[[Page 71609]]
reporting for independent leasing agencies to create their own policy
in response to GSA's plan. GSA estimates this cost by multiplying the
time required to develop the policy by the estimated compensation, on
average, of a GS-12. Therefore, GSA calculated the total estimated cost
for this part of the rule to be $207,034 (= 60 hours x $84.16 x 41).
GSA calculates it will take 2.5 hours in outyears to review the policy
and possibly revise the policy. Therefore, GSA calculated the total
estimated cost for this part of the rule to be $8,626 (= 2.5 hours x
$84.16 x 41).
f. GSA estimates independent leasing agencies would spend 30
minutes (0.5 hours \24\) training their workforce on their new policy.
Therefore, GSA calculated the total estimated cost for this part of the
rule to be $61,268 (= 0.5 hours x $84.16 x 1,456).
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\24\ The hours estimated are an assumption based on historical
familiarization hours and subject matter expert judgement. Subject
matter experts include representatives from GSA's Office of Leasing,
including Realty Specialists and Leasing Contracting Officers.
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GSA estimates independent leasing agencies would spend 15 (0.25
hours \25\) minutes training their workforce on their policy in
subsequent years. Therefore, GSA calculated the total estimated cost
for this part of the rule to be $30,634 (= 0.25 hours x $84.16 x
1,456).
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\25\ The hours estimated are an assumption based on historical
familiarization hours and subject matter expert judgement. Subject
matter experts include representatives from GSA's Office of Leasing,
including Realty Specialists and Leasing Contracting Officers.
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2. Government Compliance With Public Law 116-276. Section 4(b),
Disclosures and Notifications
a. GSA estimates that of the baseline high-security lessors for GSA
and delegated authority leases each year, 10 percent \26\ (or 206
lessors) will respond affirmatively that the offeror ``does'' have an
``immediate owner'', and/or ``is'' owned or controlled by another
entity (or ``highest owner''), and/or ``does'' involve a ``foreign
entity'' and it will take leasing acquisition members approximately 5
hours to collect this information. Therefore, GSA calculated the total
estimated cost for this part of the rule to be $86,684 (= 5 hours x
$84.16 x 206).
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\26\ GSAR Case 2021-G527.
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GSA estimates it will take approximately 5 hours to collect the
information submitted by GSA lease contracting officers and delegated
authority leases. Therefore, GSA calculated the total estimated cost
for this part of the rule to be $86,684 (= 5 hours x $84.16 x 206).
b. GSA estimates that of the new high-security lessors for GSA and
delegated authority leases each year, 10 percent \27\ (or 69 lessors)
will respond affirmatively that the offeror ``does'' have an
``immediate owner'', and/or ``is'' owned or controlled by another
entity (or ``highest owner''), and/or ``does'' involve a ``foreign
entity'' and it will take leasing acquisition members approximately 1
hour to submit this information to GSA. Therefore, GSA calculated the
total estimated cost for this part of the rule to be $5,807 (= 1 hours
x $84.16 x 69).
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\27\ GSAR Case 2021-G527.
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c. GSA estimates it will take approximately 5 hours to collect the
information submitted by GSA and delegated authority leases. Therefore,
GSA calculated the total estimated cost for this part of the rule to be
$5,807 (= 1 hours x $84.16 x 69).
d. GSA estimates that of the baseline high-security lessors for
independent authority leases each year, 10 percent (or 416 lessors)
will respond affirmatively that the offeror ``does'' have an
``immediate owner'', and/or ``is'' owned or controlled by another
entity (or ``highest owner''), and/or ``does'' involve a ``foreign
entity'' and it will take leasing acquisition members approximately 5
hours to collect this information. Therefore, GSA calculated the total
estimated cost for this part of the rule to be $175,053 (= 5 hours x
$84.16 x 416).
GSA estimates it will take approximately 5 hours to collect the
information submitted by independent authority leases. Therefore, GSA
calculated the total estimated cost for this part of the rule to be
$175,053 (= 5 hours x $84.16 x 416).
e. GSA estimates that of the new high-security lessors for
independent authority leases each year, 10 percent (or 137 lessors)
will respond affirmatively that the offeror ``does'' have an
``immediate owner'', and/or ``is'' owned or controlled by another
entity (or ``highest owner''), and/or ``does'' involve a ``foreign
entity'' and it will take leasing acquisition members approximately 1
hour to collect this information. Therefore, GSA calculated the total
estimated cost for this part of the rule to be $11,530 (= 1 hours x
$84.16 x 137).
GSA estimates it will take approximately 1 hour to collect the
information submitted by independent authority leases. Therefore, GSA
calculated the total estimated cost for this part of the rule to be
$11,530 (= 1 hours x $84.16 x 137).
3. Government Compliance With Public Law 116-276. Section 4(c), Report
and Implementation
a. GSA estimates it will take 8 hours beginning in year 3 to submit
an annual report to the Committee on Homeland Security and Governmental
Affairs of the Senate and the Committee on Transportation and
Infrastructure of the House of representatives. Therefore, GSA
calculated the total estimated cost for this part of the rule to be
$673 (= 8 hours x $84.16 x 1).
4. Government Compliance With Public Law 116-276; Section 4(c)(3),
Secure Federal Lease Act Consideration of Implementation Improvements
a. GSA estimates it will take a total of 40 hours in years 3 and 4
to review and consider commercial technology offerings to improve data
collection. Therefore, GSA calculated the total estimated cost for this
part of the rule to be $3,366 (= 40 hours x $84.16 x 1).
b. GSA estimates it will take a total of 8 hours in years 5-10 to
review and consider commercial new technology offerings to improve data
collection. Therefore, GSA calculated the total estimated cost for this
part of the rule to be $673 (= 8 hours x $84.16 x 1).
5. Government Total Costs
The total cost of the above Cost Estimate is $848,376 in the first
year after publication.\28\ The total cost of the above Cost Estimate
in subsequent years is $127,738 annually.\29\
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\28\ Total costs calculated by GSA.
\29\ Total costs calculated by GSA.
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The following is a summary of the estimated costs calculated for a
10-year time horizon at a 3- and 7-percent discount rate:
------------------------------------------------------------------------
Summary Total costs
------------------------------------------------------------------------
Present Value (3 percent).................................. $1,649,361
Annualized Costs (3 percent)............................... 161,932
Present Value (7 percent).................................. 1,415,574
Annualized Costs (7 percent)............................... 134,298
------------------------------------------------------------------------
6. Overall Total Costs
The overall total cost is equal to Section VI.(f) Government Total
Costs above as there is no direct cost to the public based on the
amendment to FMR 102.73 as noted in Section VI.(e).
(g) Analysis of Alternatives
The preferred alternative is the process laid out in the Act
whereby GSA annually collects disclosures from Federal lessees and then
reports that information to Congress.
Alternative 1: GSA could take no regulatory action to implement
this
[[Page 71610]]
statute. However, this alternative would not provide any implementation
and enforcement of the important national security measures imposed by
the law. Moreover, the general public would not experience the benefits
of improved national security resulting from the rule as detailed above
in Section VI.(d). As a result, we reject this alternative.
Alternative 2: Federal lessees could send information on their
activity directly to Congress, rather than in a centralized approach
through the GSA. However, GSA rejects this approach given the
likelihood of inconsistent collection and reporting of data along with
potential additional costs and burden to government agencies.
Alternative 3: GSA could follow the implementation approach based
Section 4 of the Act directing GSA to aggregate disclosures from each
Federal lessee one year after the implementation of the plan described
in subsection (a) of the Act, and each year thereafter for 9 years,
submit a report to the Committee on Homeland Security and Governmental
Affairs of the Senate and the Committee on Transportation and
Infrastructure of the House of Representatives on the status of the
implementation of the plan, including the number of disclosures. This
is the preferred method, which will allow GSA to help close security
loopholes by designing a verification system that identifies a
property's owners if the space would be used for high-security
purposes. In addition, this rule will help support current best
practices being followed more uniformly throughout the Federal
government. Finally, this rule ensures that Federal lessees will have
the ability to obtain information on foreign ownership and provide it
to relevant Federal tenants.
(h) Specific Questions for Comment
To understand the exact scope of the impact of this rule and how
this impact could be affected, GSA welcomes input on the following
assumptions and questions regarding anticipated impact on affected
parties.
Assumption 1: GSA estimates that this rule will impact mainly
Federal agencies.
Question 1: If this assumption is not valid, are there industry(s)
to which this rule will cause significant impact or disruption?
Assumption 2: The impact of this rule will not significantly change
the way current Federal lessors interact with GSA.
Question 2: If this assumption is not valid, to what extent will
this rule, specifically the revised elements of FMR 102.73, change how
you interact with GSA?
List of Subjects in 41 CFR Part 102-73
Administrative practice and procedure, Federal buildings and
facilities, Rates and fares.
Krystal J. Brumfield,
Associate Administrator, Office of Government-wide Policy.
Therefore, GSA proposes amending 41 CFR part 102-73 as set forth
below:
PART 102-73--REAL ESTATE ACQUISITION
0
1. The authority citation for 41 CFR part 102-73 is revised to read as
follows:
Authority: 40 U.S.C. 121(c); Sec. 3(c), Reorganization Plan No.
18 of 1950 (40 U.S.C. 301 note); Sec. 1-201(b), E.O. 12072, as
amended by E.O. 13946, 85 FR 52879, Aug 27, 2020; Subpart D
Authority Pub. L. 116-276, 134 Stat. 3362.
0
2. Revise 102-73.5 to read as follows:
Sec. 102-73.5 What is the scope of this part?
The real property policies contained in this part apply to Federal
agencies, including GSA's Public Buildings Service (PBS), operating
under, or subject to, the authorities of the Administrator of General
Services; except for subpart D, which applies to Federal agencies
exercising independent lease authority in addition to those operating
under or subject to the authorities of the Administrator of General
Services.
0
3. Add subpart D to part 102-73 to read as follows:
Subpart D--Secure Federal Leases From Espionage and Suspicious
Entanglements Act, Public Law 116-276
Authority
102-73.310 What are the governing authorities for this subpart?
Definitions
102-73.315 What definitions apply to this subpart?
Applicability
102-73.320 Who must comply with these provisions?
Information Collection
102-73.325 What information must a covered entity provide to the
Federal lessee?
102-73.330 What information must a Federal lessee provide to GSA?
102-73.335 When will Federal lessees provide information to GSA?
102-73.340 How will Federal lessees provide information to GSA?
Subpart D--Secure Federal Leases From Espionage and Suspicious
Entanglements Act, Public Law 116-276
Authority
Sec. 102-73.310 What are the governing authorities for this subpart?
The governing authorities are the Secure Federal Leases from
Espionage And Suspicious Entanglements Act, Public Law 116-276, 134
Stat. 3362 (2020) (the ``Secure Federal LEASEs Act'') and 40 U.S.C.
121(c).
Definitions
Sec. 102-73.315 What definitions apply to this subpart?
Federal lessee, as defined by the Secure Federal LEASEs Act, means:
(a) The Administrator of General Services, the Architect of the
Capitol, or the head of any Federal agency, other than the Department
of Defense, that has independent statutory leasing authority; and
(b) Does not include the head of an element of the intelligence
community.
Covered entity, as defined by the Secure Federal LEASEs Act, means:
(a) A person, corporation, company, business association,
partnership, society, trust, or any other nongovernmental entity,
organization, or group; or
(b) Any governmental entity or instrumentality of a government.
Beneficial owner means, with respect to a covered entity, an
individual who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise--
(a) Exercises substantial control over the covered entity; or
(b) Owns or controls not less than 25 percent of the ownership
interests of the covered entity.
Control means, with respect to a covered entity:
(a) Having the authority or ability to determine how a covered
entity is utilized; or
(b) Having some decision-making power for the use of a covered
entity.
Highest-level owner means the entity that owns or controls an
immediate owner of the offeror or Lessor, or that owns or controls one
or more entities that control an immediate owner of the offeror or
Lessor. No entity owns or exercises control of the highest-level owner.
Immediate owner means an entity, other than the offeror or Lessor,
that has direct control of the offeror or Lessor. Indicators of control
include, but are not limited to, one or more of the following:
Ownership or interlocking management,
[[Page 71611]]
identity of interests among family members, shared facilities and
equipment, and the common use of employees.
Applicability
Sec. 102-73.320 Who must comply with these provisions?
Each Federal lessee and covered entity must cooperate and comply
with these provisions.
Information Collection
Sec. 102-73.325 What information must a covered entity provide to a
Federal lessee?
Sections 3 and 4 of the Secure Federal LEASEs Act require that,
before the Government may enter into a lease agreement or novation with
an entity for high-security leased space (defined as Facility Security
Level III, IV or V), offerors must disclose whether the immediate
owner, highest-level owner, or beneficial owner of the leased space,
including an entity involved in the financing thereof, is a foreign
person or entity, including the country associated with the ownership
entity. Other agencies may replicate GSA's approach to this
requirement, by referring to the interim rule General Services
Administration Acquisition Regulation Case 2021-G527 (86 FR 34966).
Sec. 102-73.330 What information must a Federal lessee provide to
GSA?
Federal lessees must provide the following information when sharing
their Secure Federal LEASEs Act disclosures with GSA:
(a) Name of the agency conducting the procurement
(b) Date of disclosure
(c) Solicitation number or Contract number (for novations)
(d) Type of Action (prior to entering a lease or prior to a
novation agreement)
(e) Total number of affirmative disclosures made (note--in some
instances, there may be more than one owner-of-a-type. If more than one
affirmative disclosure is made, include all disclosures)
(f) As part of the total number of disclosures made, was one of the
disclosures an affirmative immediate owner disclosure? If so, how many?
(g) As part of the total number of disclosures made, was one of the
disclosures an affirmative highest-level owner disclosure? If so, how
many?
(h) As part of the total number of disclosures made, was one of the
disclosures an affirmative beneficial owner disclosure? If so, how
many?
Sec. 102-73.335 When will Federal lessees provide information to
GSA?
Federal lessees will submit the required information on an annual
basis.
Sec. 102-73.340 How will Federal lessees provide information to GSA?
Federal lessees will submit the required information to GSA via
email at [email protected].
[FR Doc. 2021-27333 Filed 12-16-21; 8:45 am]
BILLING CODE 6820-14-P