[Federal Register Volume 87, Number 218 (Monday, November 14, 2022)]
[Proposed Rules]
[Pages 68312-68334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24569]
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Vol. 87
Monday,
No. 218
November 14, 2022
Part IV
Department of Defense
General Services Administration
National Aeronautics and Space Administration
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48 CFR Parts 1, 4, 9, et al.
Federal Acquisition Regulation: Disclosure of Greenhouse Gas Emissions
and Climate-Related Financial Risk; Proposed Rule
Federal Register / Vol. 87, No. 218 / Monday, November 14, 2022 /
Proposed Rules
[[Page 68312]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 4, 9, 23 and 52
[FAR Case 2021-015, Docket No. FAR-2021-0015, Sequence No. 1]
RIN 9000-AO32
Federal Acquisition Regulation: Disclosure of Greenhouse Gas
Emissions and Climate-Related Financial Risk
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to implement a requirement to ensure
certain Federal contractors disclose their greenhouse gas emissions and
climate-related financial risk and set science-based targets to reduce
their greenhouse gas emissions.
DATES: Interested parties should submit written comments to the
Regulatory Secretariat Division at the address shown below on or before
January 13, 2023 to be considered in the formation of the final rule.
ADDRESSES: Submit comments in response to FAR Case 2021-015 to the
Federal eRulemaking portal at https://www.regulations.gov by searching
for ``FAR Case 2021-015''. Select the link ``Comment Now'' that
corresponds with ``FAR Case 2021-015''. Follow the instructions
provided on the ``Comment Now'' screen. Please include your name,
company name (if any), and ``FAR Case 2021-015'' 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 ``FAR Case 2021-
015'' 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. Public comments may be submitted as an individual, as an
organization, or anonymously (see frequently asked questions at https://www.regulations.gov/faq). To confirm receipt of your comment(s),
please check https://www.regulations.gov, approximately two to three
days after submission to verify posting.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
Ms. Jennifer Hawes, Procurement Analyst, at 202-255-9194 or by email at
[email protected]. For information pertaining to status,
publication schedules, or alternate instructions for submitting
comments if https://www.regulations.gov cannot be used, contact the
Regulatory Secretariat Division at 202-501-4755 or [email protected].
Please cite FAR Case 2021-015.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA are proposing to revise the FAR to implement
section 5(b)(i) of Executive Order (E.O.) 14030, Climate-Related
Financial Risk, to require major Federal suppliers to publicly disclose
greenhouse gas (GHG) emissions and climate-related financial risk and
to set science-based reduction targets. As stated in the Fourth
National Climate Assessment (https://nca2018.globalchange.gov/) and the
Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment
Report (https://www.ipcc.ch/report/ar6/wg2/), the intensifying impacts
of climate change present physical risks, such as increased extreme
weather risk leading to supply chain disruptions, and increasing risks
to infrastructure, investments, and businesses. The global, rapid shift
away from carbon-intensive energy sources and industrial processes
towards decarbonized, climate-resilient economies will help to mitigate
these risks while also enhancing U.S. competitiveness and economic
growth, promoting environmental justice, and creating well-paying job
opportunities for American workers. Yet, these risks and opportunities
can remain hidden.
The foundation to properly analyze and mitigate climate risks is
public and standardized disclosure, which will enable the Federal
Government to conduct prudent fiscal management of all major Federal
suppliers. To that end, section 5(b)(i) of the E.O. directs the Federal
Acquisition Regulatory Council (FAR Council), in coordination with the
Council on Environmental Quality (CEQ) and the heads of relevant
agencies, to consider an amendment to the FAR to ensure that major
Federal suppliers disclose their GHG emissions and climate-related
financial risk and set science-based targets to reduce their GHG
emissions. The purpose of this proposed rule is to amend the FAR to
establish a policy to ensure major Federal suppliers make the required
disclosures and set targets to reduce their GHG emissions.
On December 8, 2021, the Office of Management and Budget (OMB)
issued memorandum M-22-06 pursuant to section 510(a) of E.O. 14057,
Catalyzing Clean Energy Industries and Jobs Through Federal
Sustainability. Section II.1. of the OMB memo states that the FAR
Council should leverage existing third-party standards and systems,
including the Task Force on Climate-related Financial Disclosures
(TCFD) Recommendations, the CDP (formerly Carbon Disclosure Project)
reporting system, and Science Based Targets Initiative (SBTi) criteria,
or equivalents, in the development of regulatory amendments to promote
contractor attention regarding reduced carbon emissions and Federal
sustainability.
On March 21, 2022, in response to the growth in investor demand for
and company disclosure of information about climate change risks,
impacts, and opportunities, the Securities and Exchange Commission
(SEC) published on its website at https://www.sec.gov/rules/proposed.shtml a proposed rule to facilitate the disclosure of
consistent, comparable, and reliable information on climate-related
financial risk. The proposed rule, entitled ``The Enhancement and
Standardization of Climate-Related Disclosures for Investors,'' was
subsequently published in the Federal Register on April 11, 2022 (see
87 FR 21334). The SEC is proposing to require SEC registrants,
including publicly listed/traded companies, to disclose in their
registration statements and annual reports their climate-related
financial risk and related metrics, including GHG emissions metrics.
Parts of the SEC proposed rule leverage existing standards, such as the
GHG Protocol Corporate Accounting and Reporting Standard and the
recommendations of the TCFD, the same standards that are leveraged in
this proposed rule (see section II.A. of this preamble). While the SEC
proposed rule did not include a requirement for SEC registrants to set
science-based targets, it did propose that SEC registrants disclose
targets if they have adopted one. While there are some similarities
between the content of the disclosures in the SEC and FAR proposed
rules, this proposed FAR rule specifically requires the Federal
contractors with significant Federal contracts to provide their
disclosures using the CDP Climate Change Questionnaire to maximize the
consistency, comparability, and accessibility of disclosure data for
use in managing Federal procurements and
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supply chains. In addition, per this proposed FAR rule, major
contractors will also be required to set science-based targets to
reduce their GHG emissions.
II. Discussion and Analysis
To implement the new disclosure and target requirements of E.O.
14030, DoD, GSA, and NASA are proposing to create a new FAR subpart at
23.XX, entitled ``Public Disclosure of Climate Information,'' to expand
the climate-related representations in the solicitation provisions at
FAR 52.223-22, Public Disclosure of Climate Information--
Representation, and 52.212-3, Offeror Representations and
Certifications--Commercial Products and Commercial Services, and to
establish a new standard of responsibility for certain contractors in
FAR subpart 9.1. The following is a discussion and analysis of the
proposed FAR amendments:
A. Significant and Major Contractors
Section 5(b)(i) of E.O. 14030 directs the FAR Council to consider
an amendment to the FAR to ensure major Federal suppliers disclose
their GHG emissions and climate-related financial risk and set science-
based targets to reduce their GHG emissions. This rule proposes to
separate ``major Federal suppliers'' into two categories: significant
contractors and major contractors. Per this proposed rule, both
significant contractors and major contractors would be subject to
annual Scope 1 and Scope 2 GHG emissions disclosure requirements
(discussed in section II.B.1. of this preamble), while only major
contractors would be subject to the annual climate disclosure, which
includes disclosure of Scope 3 GHG emissions, and science-based target
requirements (discussed in section II.B.2. and II.B.3. of this
preamble).
For the purposes of this rule, an offeror is considered a
``significant contractor'' if the offeror received $7.5 million or
more, but not exceeding $50 million, in Federal contract obligations
(as defined in OMB Circular A-11) in the prior Federal fiscal year as
indicated in the System for Award Management (SAM) at https://www.sam.gov. An offeror is considered a ``major contractor'' if the
offeror received more than $50 million in Federal contract obligations
(as defined in OMB Circular A-11) in the prior Federal fiscal year as
indicated in SAM. According to award data available in the Federal
Procurement Data System (FPDS), there were approximately 4,413 entities
that received between $7.5 million and $50 million in Federal contract
obligations in FY 2021, of which 2,835 (64 percent) are estimated to be
small businesses. There were approximately 1,353 entities that received
more than $50 million in Federal contract obligations in FY 2021, of
which 389 (29 percent) are estimated to be small businesses.
This distinction between major contractors and significant
contractors is important to ensure this rule collectively applies the
requirements to entities receiving the most annual Federal contract
obligations, to obtain the most responsibility for the management of
GHG emissions and climate risks impacting the Federal Government's
supply chains. The major contractor requirements would address 64
percent of Federal Government spend and approximately 69 percent of
supply chain GHG impacts, of which 31 percent of major contractors
already report disclosing their GHG emissions through SAM. Significant
contractors receive fewer contract obligations, with only 10 percent
disclosing their GHG emissions through SAM. Therefore, the reporting
burden is significantly lessened for these companies by only reporting
Scope 1 and 2 emissions. Collectively, this rule will cover 86 percent
of annual spend and about 86 percent of supply chain GHG impacts. It
will also provide a better understanding of the Federal supply chain
impacts, including Scope 3 emissions reported by major contractors.
B. Policy.
As provided in paragraph (a) of the new section at FAR 23.XX03, a
contracting officer is required to treat a significant or major
contractor as nonresponsible, unless it has (itself or through its
immediate owner or highest-level owner) inventoried its annual GHG
emissions, and the significant or major contractor has disclosed its
total annual emissions in SAM. Per paragraph (b) of FAR section
23.XX03, a major contractor shall also be treated as nonresponsible,
unless it has (itself or through its immediate owner or highest-level
owner) made available on a publicly accessible website an annual
climate disclosure that was completed using the CDP Climate Change
Questionnaire in its current or previous fiscal year and set targets to
reduce its emissions.
The following is a discussion of the specific compliance
requirements, which are subject to the exceptions and starting dates
described in sections II.C. and II.E. of this preamble. A discussion of
the various standards specified for compliance is provided in section
II.D. of this preamble.
1. GHG Inventory
A significant or major contractor (itself or through its immediate
owner or highest-level owner) is required to have completed within its
current or previous fiscal year a GHG inventory of its annual Scope 1
and Scope 2 emissions. The significant or major contractor must also
disclose in SAM at https://www.sam.gov the total annual Scope 1 and
Scope 2 emissions identified through its most recent GHG inventory. Per
OMB Memo M-22-06 (and as currently defined at FAR 23.001), greenhouse
gases include carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride, and sulfur
hexafluoride. Scope 1 emissions include GHG emissions from sources that
are owned or controlled by the reporting company. Scope 2 emissions
include GHG emissions associated with the generation of electricity,
heating and cooling, or steam, when these are purchased or acquired for
the reporting company's own consumption but occur at sources owned or
controlled by another entity. In conducting a GHG inventory, the
significant or major contractor (or their immediate or highest-level
owner) must follow the GHG Protocol Corporate Accounting and Reporting
Standard (see section II.D.1. of this preamble) to develop a quantified
list of the Scope 1 and Scope 2 GHG emissions. Companies may calculate
emissions using the calculation tool of their choice, as long as it is
in alignment with the GHG Protocol Corporate Accounting and Reporting
Standard. The Environmental Protection Agency (EPA) offers one such
tool: a simplified GHG emissions calculator (see https://www.epa.gov/climateleadership/simplified-ghg-emissions-calculator). The inventory
must represent emissions during a continuous period of 12 months,
ending not more than 12 months before the inventory is completed.
Major contractors are also required to conduct a GHG inventory of
their relevant Scope 3 emissions, as discussed in the next section of
this preamble. The requirement to inventory Scope 3 emissions is not
applicable to significant contractors.
2. Annual Climate Disclosure
A major contractor (itself or through its immediate owner or
highest-level owner) is required to complete an annual climate
disclosure within its current or previous fiscal year. The annual
climate disclosure is a set of disclosures by an entity that aligns
with recommendations of the TCFD (see section II.D.2. of this
preamble). The
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disclosure includes a GHG inventory of not only the Scope 1 and Scope 2
emissions, but also relevant Scope 3 emissions, which are emissions
that are a consequence of the operations of the reporting entity but
occur at sources other than those owned or controlled by the entity.
The annual climate disclosure also describes the entity's climate risk
assessment process and any risks identified. For the purposes of this
rule, a major contractor submits its annual climate disclosure by
completing those portions of the CDP Climate Change Questionnaire that
align with the TCFD as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) (see section II.D.3. of this
preamble) within its current or previous fiscal year. The annual
climate disclosure must be made available on a publicly accessible
website, which could be the company's own website or the CDP website.
3. Science-Based Targets
The major contractor (itself or through its immediate owner or
highest-level owner) is also required to develop science-based targets
and have the targets validated by SBTi (see section II.D.4. of this
preamble). A science-based target is a target for reducing GHG
emissions that is in line with reductions that the latest climate
science deems necessary to meet the goals of the Paris Agreement to
limit global warming to well below 2 [deg]C above pre-industrial levels
and pursue efforts to limit warming to 1.5 [deg]C (see SBTi frequently
asked questions at https://sciencebasedtargets.org/faqs#what-are-science-based-targets). For information on the latest climate science
see 2018 Intergovernmental Panel on Climate Change (IPCC) Special
Report on 1.5 [deg]C at https://www.ipcc.ch/sr15/. These targets must
be validated by SBTi within the previous five calendar years and must
also be made available on a publicly accessible website. Validated
targets published by SBTi on the SBTi website satisfy this requirement.
4. Means of Compliance
The proposed rule allows for a significant or major contractor to
be considered in compliance with the new policy at 23.XX03 if the
action was completed by the significant or major contractor itself or
through its immediate or highest-level owner, except that the
significant or major contractor itself must report the results of the
GHG inventory in SAM (see 23.XX03(a)(2)).
The definitions of ``immediate owner'' and ``highest-level owner''
currently included in the provisions at FAR 52.204-17, Ownership or
Control of Offeror, and the commercial provision at FAR 52.212-3 are
adopted for this rule. Specifically, an ``immediate owner'' is an
entity, other than the offeror, that has direct control of the offeror.
Indicators of control include, but are not limited to, one or more of
the following: ownership or interlocking management, identity of
interests among family members, shared facilities and equipment, and
the common use of employees. ``Highest-level owner'' means the entity
that owns or controls an immediate owner of the offeror, or that owns
or controls one or more entities that control an immediate owner of the
offeror. No entity owns or exercises control of the highest-level
owner.
C. Exceptions
A new FAR section at 23.XX04 outlines certain exceptions. Per FAR
23.XX04(a), a significant or major contractor is not required to
inventory its Scope 1 or Scope 2 emissions and a major contractor is
not required to complete an annual climate disclosure or set science-
based targets, as described in section II.B. of this preamble, if it
is--
An Alaska Native Corporation, a Community Development
Corporation, an Indian tribe, a Native Hawaiian Organization, or a
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
A higher education institution (defined as institutions of
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart
A, and 20 U.S.C. 1001);
A nonprofit research entity;
A state or local government; or
An entity deriving 80 percent or more of its annual
revenue from Federal management and operating (M&O) contracts that are
subject to agency annual site sustainability reporting requirements.
The exception provided for Federally-recognized tribes or tribal or
Native corporations is in accordance with related Federal procurement
policies and current commercial norms for sustainability reporting. The
exception for institutions of higher education or nonprofit research
entities is provided because a large majority of such institutions that
are significant or major contractors either already set GHG reduction
targets and make sustainability disclosures but are likely doing so (in
accordance with current commercial norms for sustainability reporting)
with standards and systems other than those specified in this rule, or
are pass-through entities with minimal Scope 1 and 2 emissions and
little capacity to manage Scope 3 emissions and climate risks.
An M&O contract is an agreement under which the Government
contracts for the operation, maintenance, or support of a Government-
owned or Government-controlled research, development, special
production, or testing establishment wholly or principally devoted to
one or more major programs of the contracting Federal agency (see FAR
subpart 17.6). A market scan indicates that a majority of current M&O
contract holders derive all, or substantially all, of their revenue
from Federal site M&O contracts. For these contractors, it was
determined that since all or substantially all their facilities and GHG
emissions are already subject to comprehensive Federal sustainability
performance and reporting requirements under their M&O contracts,
related laws, and executive orders, it would be duplicative and
unnecessary to require them to also report using the separate standards
and systems required by this rule. The market scan indicated that a
minority of current M&O contract holders are larger entities deriving
less than 80 percent of their revenue from Federal site M&O contracts,
indicating that they likely operate substantial facilities and emit
substantial GHG emissions, which are not covered by other Federal
sustainability performance and reporting requirements. For these
entities, requiring them to report using the separate standards and
systems required by this rule will allow the Government and the public
to understand the scope of climate risks and impacts attributable to
these entities' substantial non-M&O activities and encourage the
entities to reduce those risks and impacts.
FAR section 23.XX04(b) provides additional exceptions for certain
major contractors. If a major contractor is considered a small business
for the North American Industry Classification System (NAICS) code it
has identified in its SAM registration as its primary NAICS code, or if
it is a nonprofit organization, then it is not required to complete an
annual climate disclosure or to set science-based targets. However, the
major contractor is still required to complete a GHG inventory of its
Scope 1 and Scope 2 emissions and must report these total annual
emissions in SAM.
The public is invited to provide public comments on the
appropriateness of the exceptions included in this proposed rule,
including potential alternatives to be considered in the formation of
the final rule.
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D. Standards
Section II.1. of OMB memorandum M-22-06 directs the FAR Council to
leverage existing third-party standards and systems in the development
of regulatory amendments to promote contractor attention on reduced GHG
emissions and Federal sustainability. In alignment with the National
Technology Transfer and Advancement Act of 1995 and OMB Circular A-119,
which directs Federal agencies to use non-governmental private sector
standards to meet policy and procurement objectives, as described in
section II.B. of this preamble, this rule engages contractors through
widely-accepted protocols and platforms that they are already using to
publicly disclose annual climate data to a variety of other interested
parties. The rule requires contractors to use the following four
standards: the GHG Protocol Corporate Accounting and Reporting
Standards and Guidance, the 2017 Recommendations of the TCFD, the CDP
Climate Change Questionnaire, and the SBTi criteria. The public is
invited to provide public comments on the use of these standards in
this proposed rule, including potential alternatives to be considered
in the formation of the final rule. The following is a summary of the
standards proposed for disclosures by significant and major
contractors.
1. GHG Protocol Corporate Accounting and Reporting Standards and
Guidance
The GHG Protocol Corporate Accounting and Reporting Standard, 2004
revised edition (see https://ghgprotocol.org/sites/default/files//ghg-protocol-revised.pdf) is the most widely used accounting tool to track
corporate GHG emissions. It describes how to complete a comprehensive
GHG inventory across Scope 1, Scope 2, and relevant categories of Scope
3 emissions. This standard is supplemented by Required Greenhouse Gases
in Inventories: Accounting and Reporting Amendment, 2013 (see https://www.ghgprotocol.org/sites/default/files/ghgp/NF3-Amendment_052213.pdf).
Further implementing instructions for quantifying emissions can be
referenced in GHG Protocol Scope 2 Guidance, 2015 (see https://ghgprotocol.org/sites/default/files/standards/Scope%202%20Guidance_Final_Sept26.pdf) and GHG Protocol Corporate Value
Chain (Scope 3) Accounting and Reporting Standard Guidance, 2011 (see
https://ghgprotocol.org/sites/default/files/standards/Value-Chain-Accounting-Reporing-Standard_041613_2.pdf). General information on the
GHG Protocol Corporate Standard and related guidance is available at
https://ghgprotocol.org/corporate-standard.
2. Task Force on Climate-Related Financial Disclosures
In 2017, the TCFD launched recommendations to improve and increase
reporting of climate-related financial information. The TCFD
recommendations cover Governance, Strategy, Risk Management, and
Metrics and Targets. Climate-related risks are considered across two
major categories: (1) risks related to the transition to a lower-carbon
economy, and (2) risks related to the physical impacts of climate
change. Governments around the world are asking companies to provide
consistent and decision-useful information to market participants in
line with TCFD recommendations (see https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf). In 2021, the TCFD updated
its implementation guidance for the 2017 Recommendations by issuing an
annex titled ``Annex: Implementing the Recommendations of the Task
Force on Climate-related Financial Disclosures.'' The updates reflect
the evolution of disclosure practices, approaches, and user needs (see
https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf).
3. CDP Climate Change Questionnaire
CDP (formerly the Carbon Disclosure Project) is an international
non-profit organization that runs a global environmental disclosure
system. CDP's annual Climate Change Questionnaire enables companies to
report GHG emissions and climate change risk through a standard process
and make their environmental impact transparent to interested parties.
Companies disclose once annually by submitting a response to the CDP
Climate Change Questionnaire through CDP's online response system
(ORS). Companies are able to utilize the GHG Protocol Corporate
Accounting and Reporting Standard when completing their GHG inventory
to disclose through CDP. CDP's disclosure platform provides the
mechanism for reporting climate-related financial risks in line with
the TCFD recommendations as well as reporting annual progress towards
science-based targets.
CDP operates an annual disclosure cycle that enables companies to
disclose emissions and climate risk information at the request of
investors, corporate and government customers, the general public, and
other interested parties. Each year CDP issues the proposed updates to
the questionnaire, which are opened for public consultation in the fall
(approximately September) and the finalized questionnaire and guidance
are available early in the new year (approximately January). The Online
Response System (ORS) opens once annually (approximately April), and
responses must be submitted by a summer deadline (approximately July).
Updated calendars are published by CDP annually: https://www.cdp.net/en/companies-discloser/How-to-disclose-as-a-company.
CDP's Climate Change Questionnaire prompts users for some
disclosures and datapoints that are beyond the scope of this FAR rule,
which is to obtain annual climate disclosures from major contractors
(see II.B.2. of this preamble). These additional datapoints may be of
interest to investors, external non-Federal Government customers, or
the general public who also rely on CDP disclosures to evaluate
corporate climate performance. This proposed FAR rule clarifies at
23.XX03(b)(1) and in 52.223-22 and 52.212-3(t) that the offeror (itself
or through its immediate owner or highest-level owner) is only required
to complete those portions of the CDP Climate Change Questionnaire that
align with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd). This allows
companies to determine what responses in the CDP questionnaire are
appropriate or necessary to complete in order to provide a TCFD-aligned
annual climate disclosure. Questions beyond those that are necessary to
provide an annual climate disclosure for Federal use, as defined by
this rule, are considered optional for the purposes of this rule.
Neither the CDP climate scores, nor answers to questions beyond those
necessary to provide a complete annual climate disclosure, will be used
to evaluate compliance with this FAR rule. The Government seeks public
comment regarding what, if any, additional specificity is needed beyond
``those portions of the CDP Climate Change Questionnaire that align
with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd)''.
4. Science-Based Targets Initiative
SBTi is a partnership between CDP, the United Nations Global
Compact (UNGC), the World Resources Institute (WRI), and the World Wide
Fund for Nature (WWF, also known as the World Wildlife Fund). Science-
based targets provide a clearly-defined pathway for companies to reduce
GHG emissions in line with reductions that the latest
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climate science deems necessary to meet the goals of the Paris
Agreement--limiting global warming to well below 2 [deg]C above pre-
industrial levels and pursuing efforts to limit warming to 1.5 [deg]C.
Companies can commit to set a science-based target and then, within two
years, must develop a science-based target and have it validated
through the SBTi target validation process.
E. Starting Dates
This proposed rule acknowledges that significant and major
contractors will need time to come into compliance with the new policy
by including delayed starting dates. A significant or major contractor
that cannot represent on or after these starting dates that it has
complied with the new policy will be presumed to be a nonresponsible
prospective contractor for Federal procurements (see section II.G. of
this preamble).
Starting one year after publication of a final rule, a significant
or major contractor (itself or through its immediate owner or highest-
level owner) must have completed a GHG inventory and the significant or
major contractor must have disclosed the total annual Scope 1 and Scope
2 emissions from its most recent inventory in SAM. This one-year period
provides the time needed for significant or major contractors to become
familiar with the GHG Protocol Corporate Accounting and Reporting
Standard, to survey the GHG emissions, and for significant or major
contractors to report in SAM the total metric tons of carbon dioxide
equivalent (MT CO2e) of Scope 1 and Scope 2 emissions.
The compliance requirements for major contractors will start two
years after publication of a final rule. This delayed starting date
provides a major contractor (or its immediate owner or highest-level
owner) additional time to complete a GHG inventory that covers relevant
Scope 3 emissions; conduct a climate risk assessment and identify
risks; complete the CDP Climate Change Questionnaire; and commit to,
develop, and obtain SBTi validation of a science-based target.
F. Annual Representation
Amendments are proposed to the annual representations in the
solicitation provision at FAR 52.223-22, Public Disclosure of Climate
Information--Representation, and the corresponding representation in
paragraph (t) of the provision at FAR 52.212-3 for acquisitions for
commercial products or commercial services, to collect information on
whether an offeror is in compliance with the new policy. This provision
continues to be prescribed for use only when offerors are required to
be registered in SAM, though the prescription has been moved to FAR
section 23.XX07 of the new subpart. All offerors that register in SAM
will be required to represent on an annual basis whether they are a
significant contractor or a major contractor (see section II.A. of this
preamble). If an offeror represents that it is a significant or major
contractor, then the offeror will be required to represent whether it--
Is subject to an exception (see section II.C. of this
preamble);
Has completed, within its current or previous fiscal year,
a GHG inventory of the annual Scope 1 and Scope 2 emissions (evidenced
by a report in SAM of the total annual Scope 1 and Scope 2 emissions
identified in its most recent inventory);
Makes available on a publicly accessible website an annual
climate disclosure that was completed using the CDP Climate Change
Questionnaire within its current or previous fiscal year; and
Makes available on a publicly accessible website a
science-based target that has been validated by SBTi.
The new representations are intended to assist the contracting
officer in determining whether the policy at 23.XX03 applies to an
offeror and, if so, whether the offeror is in compliance. The new FAR
section 23.XX05, Procedures, provides instructions for the contracting
officer who is reviewing the representations in paragraph (d) of the
provision at FAR 52.223-22 (or the equivalent representations in the
commercial provision at FAR 52.212-3(t)). This section includes tables
to illustrate the specific responses from offerors that are required to
indicate that the offeror is in compliance. If an offeror's
representations indicate that the offeror is a significant or major
contractor and it is not in compliance with the policy at FAR 23.XX03
(or if the contracting officer has reason to question the
representations), then the contracting officer is directed to follow
the procedures at FAR 9.104-3(e) for determining whether the offeror is
responsible (see section II.G. of this preamble).
G. Responsibility Determinations
Per FAR section 23.XX05(c), the contracting officer is directed to
follow the procedures at FAR section 9.104-3(e) for determining
responsibility when an offeror represents that it is not in compliance
with the policy at 23.XX03 when it should be, or if there is reason to
question the offeror's representation.
Per the new procedures at FAR 9.104-3(e), the contracting officer
shall presume the prospective contractor is nonresponsible pursuant to
9.104-1, unless the contracting officer determines that--
Noncompliance resulted from circumstances properly beyond
the prospective contractor's control;
The prospective contractor has provided sufficient
documentation that demonstrates substantial efforts to comply; and
The prospective contractor has made a public commitment to
comply as soon as possible on a publicly accessible website (within one
year).
In making this determination the contracting officer is directed to
request information from the prospective contractor to determine what
efforts it has made to comply with each requirement at FAR 22.XX03 and
the basis for the failure to comply.
FAR 9.104-3(e)(3) also clarifies that a significant or major
contractor who meets one of the exceptions at FAR 23.XX04 (see section
II.C. of this preamble) and acquisitions that are subject to an
exemption or waiver pursuant to FAR 23.XX06 (see section II.H. of this
preamble) are not subject to the new responsibility standard and
procedures.
H. Exemptions and Waivers
The new section at 23.XX06 provides for certain exemptions from and
waivers to the new procedures for determining responsibility at 23.XX05
and the new responsibility standards at FAR 9.104-3(e) for determining
whether a significant or major contractor is responsible (discussed in
section II.G. of this preamble). For example, the new procedures do not
apply to acquisitions listed at FAR 4.1102(a) where the offeror is
exempt from the requirement to be registered in SAM at the time an
offer is submitted, since enforcement of the policy at FAR 23.XX03 is
accomplished via review of a significant or major contractor's
representations in SAM as described in FAR section 23.XX05.
The procedures at FAR section 23.XX05 may be waived by the senior
procurement executive for facilities, business units, or other defined
units for national security purposes, or for emergencies, national
security, or other mission essential purposes. The senior procurement
executive may also provide a waiver for a period not to exceed one
calendar year to enable an entity an additional year to come into
compliance. An agency must make such waivers available on its agency
website.
[[Page 68317]]
I. Definitions
Definitions of the following terms are provided in FAR section
23.XX02 and in paragraph (a) of the solicitation provisions at FAR
52.223-22 and 52.212-3: ``annual climate disclosure,'' ``GHG
inventory,'' ``major contractor,'' ``publicly accessible website,''
``science-based target,'' ``Scope 1 emissions,'' ``Scope 2 emissions,''
``Scope 3 emissions,'' and ``significant contractor.'' The definitions
of ``immediate owner'' and ``highest-level owner'' that are currently
included in the provision at FAR 52.212-3(a) are added to FAR section
23.XX02 and the solicitation provision at FAR 52.223-22. The current
definition of ``greenhouse gases'' remains at FAR section 23.001 with
minor spelling corrections.
J. Conforming Changes
Given that the policy on climate disclosures is moved to a new
subpart at FAR 23.XX, conforming changes are proposed at FAR subpart
23.8 to remove the coverage of disclosure of GHG emissions and
reduction goals. As a result, 23.802(c) and (d) and 23.804(b) are
removed and the remaining paragraphs at FAR sections 23.800 and 23.804
are renumbered accordingly. A cross-reference to the new subpart is
added at 23.800(b). Conforming updates to the cross-references to FAR
23.804 are also proposed in FAR 52.213-4, and the prescription
references at FAR 52.223-11, 52.223-12, 52.223-20, and 52.223-21. In
addition, the title of the provision at FAR 52.223-22 is updated in the
provision at FAR 52.204-8, Annual Representations and Certifications,
and in the list of provisions at FAR 4.1202(a).
K. Public Input
The public is specifically invited to provide public comments on
the following:
The appropriateness of the exceptions identified in
section II.C. of this preamble, including potential alternatives to be
considered in the formation of the final rule.
The use of the standards identified in section II.D. of
this preamble, including potential alternatives to be considered in the
formation of the final rule.
With regards to the CDP Climate Change Questionnaire
discussed in section II.D.3. of this preamble, whether any specificity
beyond ``those portions of the CDP Climate Change Questionnaire that
align with the TCFD as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd)'' is necessary.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT), for Commercial Products (Including Commercially
Available Off-the-Shelf (COTS) Items), and for Commercial Services
This rule proposes to amend the annual representation in the
solicitation provision at FAR 52.223-22, Public Disclosure of Climate
Information--Representation, and the corresponding representation in
paragraph (t) of the solicitation provision at FAR 52.212-3, Offeror
Representations and Certifications--Commercial Products and Commercial
Services. The provision at FAR 52.223-22 will continue to be prescribed
for use in solicitations that also include the provision at FAR 52.204-
7, System for Award Management. This prescription ensures that all
offerors who are required to register in SAM and who received $7.5
million or more in Federal contract obligations in the prior Federal
fiscal year, including those who compete exclusively for contracts for
commercial products or commercial services or those valued at or below
the SAT, provide a response to the revised representations.
The new procedures at FAR 22.XX05 and new standards at FAR 9.104
for determining the responsibility of a prospective contractor, if it
is a significant or major contractor, will apply to acquisitions of
commercial products (including COTS items) or commercial services, and
to acquisitions valued at or below the SAT. Failure to apply the new
procedures and standards for responsibility determinations to these
types of acquisitions would not accomplish the intended policy
objective of the Executive Order. These procedures ensure the
Government is able to enforce the disclosure requirements for
significant and major contractors.
IV. Expected Impact of the Rule
This rule proposes to create a new standard of responsibility.
Specifically, a prospective contractor that is a significant or major
contractor will be presumed to be nonresponsible unless--
Starting one year after publication of a final rule, the
significant or major contractor (itself or through its immediate owner
or highest-level owner) has completed a GHG inventory of its annual
Scope 1 and Scope 2 GHG emissions, and the significant or major
contractor has reported the total annual Scope 1 and Scope 2 emissions
from its most recent inventory in SAM at https://www.sam.gov; and
Starting two years after publication of a final rule, a
major contractor (itself or through its immediate owner or highest-
level owner) has submitted an annual climate disclosure within its
current or previous fiscal year by completing those portions of the CDP
Climate Change Questionnaire that align with the TCFD recommendations
as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) and has developed a science-based target and had
the target validated by SBTi within the previous five calendar years.
When making a responsibility determination, a contracting officer
will rely on the representation of a prospective contractor in the
revised solicitation provision at FAR 52.223-22 (or the equivalent
representations in the commercial provision at FAR 52.212-3(t))
regarding whether the prospective contractor is a significant or major
contractor and, if so, whether it is in compliance with the new
disclosure and target requirements, as applicable. If a prospective
contractor's representation indicates that it is a significant or major
contractor, is not subject to an exception, and is not in compliance,
then the contracting officer will request additional information from
the prospective contractor regarding the efforts it has made to comply
before making a responsibility determination, unless an exemption or
waiver applies.
A. General Compliance Requirements
1. Representations in SAM
All offerors that register in SAM will be required to represent in
paragraph (d)(1) of the provision at FAR 52.223-22 (or the equivalent
representations in the commercial provision at FAR 52.212-3(t)(3)(i))
whether the offeror meets the definition of a significant or major
contractor. An offeror is considered a ``significant contractor'' if
the offeror received $7.5 million or more, but not exceeding $50
million, in Federal contract obligations in the prior Federal fiscal
year. An offeror is considered a ``major contractor'' if the offeror
received more than $50 million in Federal contract obligations in the
prior Federal fiscal year. Only offerors that represent that they are a
significant or major contractor will be required to complete the
remaining representations in paragraphs (d)(2) through (d)(5) of the
provision at FAR 52.223-22 (or the equivalent representations in the
commercial provision at FAR 52.212-3(t)(3)(ii) through (v)).
An offeror will represent in paragraph (d)(2) of the provision
whether the offeror meets an exception to the new
[[Page 68318]]
policy per the new section at FAR 23.XX04. The contracting officer uses
the offeror representations in this paragraph to determine if an
offeror who represents in paragraph (d)(1) of the provision that it is
a significant or major contractor is subject to the new disclosure and
compliance requirements.
The representation in paragraph (d)(3) of the provision gathers
information about whether a significant or major contractor (itself or
through its immediate owner or highest-level owner) has completed
within its current or previous fiscal year a GHG inventory of its
annual Scope 1 and Scope 2 emissions. Offerors will be required to
report in this representation the total Scope 1 and Scope 2 emissions
identified in its most recent GHG inventory.
The representations in paragraph (d)(4) and (d)(5) of the provision
gather information regarding whether a major contractor (itself or
through its immediate owner or highest-level owner) makes available on
a publicly accessible website:
An annual climate disclosure that was completed using the
CDP Climate Change Questionnaire within its current or previous fiscal
year; and
A science-based target that has been validated by SBTi
within the previous five calendar years.
An offeror that is a major contractor is also required to report in
paragraph (e) of the provision at FAR 52.223-22 (or in paragraph (t)(4)
of the commercial provision at FAR 52.212-3) the website(s) where the
annual climate disclosure and validated science-based target are made
publicly available. While the compliance requirements referenced in the
last two representations at paragraphs (d)(4) and (d)(5) are only
applicable to major contractors, both significant and major contractors
will be required to complete these representations. This allows the
Government to monitor whether significant contractors are taking steps
to provide enhanced climate disclosures and to reduce their GHG
emissions.
2. GHG Inventory
Starting one year after publication of a final rule, a significant
and major contractor (or their immediate owner or highest-level owner)
must follow the GHG Protocol Corporate Accounting and Reporting
Standard (see section II.D.1. of this preamble) to complete a GHG
inventory of the Scope 1 and Scope 2 emissions. Starting two years
after publication of a final rule, major contractors will also
inventory relevant Scope 3 emissions. Companies completing a GHG
inventory for the first time will often begin by reviewing accounting
standards and methods, determining organizational and operational
boundaries, and choosing a reporting and base year. They will collect
data aligned to that year from across the business (including but not
limited to fuel purchases, such as gasoline and heating oil, and
electricity bills) and utilize a GHG calculator to determine the
associated GHG emissions emitted across Scope 1, Scope 2, and (if
applicable) relevant Scope 3 emissions expressed in MT CO2e. Companies
will likely develop a GHG Inventory Management Plan to formalize data
collection procedures, in order to ensure consistency on an annual
basis.
3. Annual Climate Disclosure
Starting two years after publication of a final rule, a major
contractor (or its immediate or highest-level owner) must provide an
annual climate disclosure that aligns with the 2017 recommendations of
the TCFD and the 2021 TCFD update (see sections II.B.2 and II.D.2. of
this preamble). Companies following the TCFD recommendations will
assess two types of climate risks: (1) transition risks associated with
the transition to a lower-carbon global economy, the most common of
which relate to policy and legal actions, technology changes, market
responses, and reputational considerations; and (2) physical risks
emanating from climate change, which can be event-driven (acute) such
as increased severity of extreme weather events (e.g., cyclones,
droughts, floods, and fires) as well as longer-term shifts (chronic) in
precipitation and temperature and increased variability in weather
patterns (e.g., sea level rise).
The major contractor (or its immediate or highest-level owner) must
provide its annual climate disclosures by completing those portions of
the CDP Climate Change Questionnaire that align with the TCFD as
identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd). Companies receive an invitation to disclose once annually
through CDP on behalf of all investors, corporate customers, and/or
Government customers requesting their response. Companies who have not
received an invitation can indicate their intention to disclose as a
``self-selected company (SSC)'' by contacting [email protected].
Companies complete and submit their response to the CDP Climate Change
Questionnaire through CDP's online response system (ORS). The CDP
Climate Change Questionnaire can be saved in draft form in the ORS,
exported for internal completion and review, and then submitted through
the ORS prior to the relevant deadline. CDP provides detailed guidance
to support companies in understanding and completing the questionnaire
(see https://www.cdp.net/en/guidance/guidance-for-companies).
4. Science-Based Targets
Starting two years after publication of a final rule, a major
contractor will also be required to develop (itself or through its
immediate or highest-level owner) a science-based target and have the
target validated by SBTi. Companies can commit to set a science-based
target by submitting a letter to SBTi and will be recognized as
``committed'' on the SBTi website. Once committed, a company has 24
months to submit their targets to SBTi for validation. Companies
independently develop their science-based target in line with science-
based criteria (including sector-specific guidance, where relevant),
which are available on the SBTi website (https://sciencebasedtargets.org/). Companies then submit the science-based
target to SBTi for validation. Validated targets are published one
month after validation, unless otherwise instructed. Targets not
receiving validation are provided with detailed feedback from expert
reviewers and an opportunity to resubmit. Following validation,
companies should disclose emissions annually and monitor progress on
reaching the target.
B. Benefit
The Federal Government is the world's single largest purchaser of
goods and services, spending over $650 billion in contracts in fiscal
year 2020 alone. Public procurement can shift markets, drive
innovation, and be a catalyst for adoption of new norms and global
standards. Requiring significant and major contractors to publicly
disclose their GHG emissions and requiring major contractors to
publicly disclose their climate-related financial risk and set science-
based reduction targets will give visibility to major annual sources of
GHG emissions and climate risks throughout the Federal supply chain and
could, in turn, provide insights into the entire U.S. economy. While
disclosure alone does not reduce emissions and climate risk, the
expectation of increased public transparency and accountability may
prompt suppliers to take action following a ``what gets measured gets
managed'' mantra, and thus increase the resilience of the Federal
supply chain.
Several discrete categories of benefits are expected from this
regulation to
[[Page 68319]]
include: identifying areas for increased efficiency and reduced risks;
understanding and reduction of supply chain vulnerabilities; aligning
targets to address climate change; improved transparency,
accountability, and ability of Federal agencies to collaborate with
contractors; and increased efficiency of disclosure via
standardization.
1. Identifying Areas for Increased Efficiency and Reduced Risks
Companies who are required to publicly disclose their GHG emissions
and climate risks may be prompted to thoroughly investigate their
operations and supply chains, which may, in turn, reveal opportunities
to realize efficiencies and manage risks. Any efficiency improvements
would, in turn, flow into the company's performance on Federal
contracts. The activity data that is examined (e.g., fuel and
electricity bills) to conduct a GHG inventory can reveal areas where
efficiencies may be realized. After conducting a GHG inventory, many
companies may choose to address sources of emissions. For example, the
Federal Government's assessment of its GHG footprint has revealed the
most significant areas of GHG emissions and climate risks across the
Federal Government's own operations and supply chains, which prompted
the Federal Sustainability Plan to establish ambitious programs to
address them: zero emissions vehicles, carbon pollution free
electricity, net zero buildings, and net zero procurement. Companies
take widely varied approaches to managing operational efficiencies
relevant to their GHG emissions, ranging from no action to
opportunistic system upgrades to purchasing offsets to address
emissions outside of a company's boundaries. By requiring the
development, maintenance, and public disclosure of contractor GHG
inventories and reduction targets, this rule may prompt contractors to
undertake a comprehensive analysis of their energy and fuel use,
electricity procurement, and other emissions sources (e.g.,
refrigerants, agricultural and industrial activities), which may prompt
action to invest in GHG management opportunities across their
facilities, operations, and supply chains with multi-year paybacks.
Well-managed contractors may choose to voluntarily manage GHGs and cost
savings, but these expanded expectations will set a level playing field
for a wider range of contractors to get started.
Those contractors who choose to address GHG emissions may
experience benefits in cost savings, as shown by the Government's own
experience as well as that of contractors who have voluntarily
disclosed emissions. The Federal Government has tracked and publicly
disclosed its Scope 1 and 2 emissions annually since 2008, while
implementing targets for energy and water efficiency and emissions
reduction. The Government's practice of setting and meeting these
targets has led to a reduction of 32.2 percent in Federal agency
emissions from standard operations since 2008, reduction in total
annual energy use (including all facility and mobile sources) from
approximately 1,143,000 Billion British thermal units (BBtu) in 2008 to
849,000 BBtu in 2020 (25 percent reduction), and a reduction of total
annual energy costs from $29.4 billion in 2008 to $17.1 billion in 2020
(reduction of $12.3 billion annually, or 41.8 percent, in inflation-
adjusted dollars). Similarly, in 2021, companies (including, but not
limited to, Federal contractors) disclosing emissions and climate risk
through the CDP disclosure system independently reported emissions and
cost savings from emissions reduction activities implemented in the
given reporting year; in aggregate, these benefits collectively
amounted to 1.8 billion metric tons (MT) CO2e in emissions reductions
with over $29 billion in associated cost savings for those suppliers.
Public disclosure of this information in a standardized format creates
a global database that can be utilized for tracking year-over-year
progress, sharing ideas among companies with similar emissions
profiles, and enabling benchmarking of performance.
2. Understanding and Reduction of Supply Chain Vulnerabilities
In accordance with E.O. 14030, this proposed rule would require
major contractors who have a significant share of Government business
to identify their climate-related financial risks, including physical
and transition risks. These risks could impact the contractor's
business operations in the short, medium, and long-term. The required
disclosures will prompt entities to investigate and understand these
risks, develop plans to mitigate them, and communicate the risks and
mitigation plans to the public and Federal agencies. These disclosures
will enable the Government to understand how and when the risks faced
by major contractors (some of which are mission-critical) and their
supply chains, including but not limited to increased likelihood of
disruptive climate and weather events and material and energy cost
fluctuations, may impact the agencies' own missions and activities.
This understanding will increase the effectiveness of the Federal
supply chain by enabling agencies to develop and improve their own
plans to safeguard their assets and missions, ensuring uninterrupted
provision of critical services to the U.S. public. Currently, the
Federal Government and general public have significantly reduced
visibility into the preparedness of major contractors upon whom the
Government relies on for products and services (some of which are
critical). For example, per a U.S. Government Accountability Office
report (GAO-16-32, Federal Supply Chains: Opportunities to Improve the
Management of Climate-Related Risks), in October 2012, Superstorm Sandy
caused widespread damage to logistics and transportation networks
throughout the Northeast, leading to major fuel shortages for agencies
to overcome while providing critical Federal services, such as disaster
relief and mail delivery, and causing an estimated $70 billion in
direct damages and lost economic output.
Mitigating the effects of climate change by reducing emissions can
provide important economic, ecological, and social benefits by
significantly reducing major risks to the U.S. economy. According to
the U.S. Fourth National Climate Assessment (see Key Message 2, Chapter
29) published by the U.S. Global Change Research Program in 2018, a
Congressionally mandated, joint report of thirteen U.S. agencies with
research programs and expertise on changes in the global environment
and their implications for society:
In the absence of more significant global mitigation efforts,
climate change is projected to impose substantial damages on the
U.S. economy, human health, and the environment. Under scenarios
with high emissions and limited or no adaptation, annual losses in
some sectors are estimated to grow to hundreds of billions of
dollars by the end of the century. It is very likely that some
physical and ecological impacts will be irreversible for thousands
of years, while others will be permanent.
3. Aligning Targets To Address Climate Change
The Federal Government has committed to reducing its Scope 1, 2,
and 3 GHG emissions, including those associated with Federal
procurement activities, to achieve a net zero economy by 2050. As the
single largest purchaser in the world, Federal procurement represents
both a substantial contribution to climate change emissions and a
significant opportunity to reduce them. GSA has estimated that
emissions from contractors performing Federal contracts are
significantly
[[Page 68320]]
greater (150 million MT CO2e in Fiscal Year 2019) than emissions from
Federal buildings and non-tactical fleets (37 million MT CO2e) (see
https://www.gsa.gov/Governmentwide-initiatives/Federal-highperformance-green-buildings/resource-library/sustainable-acquisition). The Federal
Government has committed to a 65 percent reduction in its Scope 1 and 2
operational emissions by 2030 (from 2008 levels), demonstrating it is
doing its part via internal operations to achieve the U.S. Nationally
Determined Contribution of a 50-52 percent economy-wide reduction in
emissions by 2030. In order to similarly reduce its much greater Scope
3 emissions, the Federal Government's best solution is to require that
its major contractors quantify their GHG emissions and set science-
based targets to align ambitions and identify areas for collaboration
on shared goals.
According to the EPA, in addition to global or national economic
benefits, forward thinking organizations also recognize internal
benefits of setting and publicly disclosing GHG reduction targets,
including increasing senior management attention and funding for
investing in GHG reduction projects, encouraging innovation, improving
employee morale, and helping to recruiting and retain qualified
employees (see https://www.epa.gov/climateleadership/target-setting).
CDP's 2021 post-disclosure survey found that 76 percent of responding
companies say climate disclosure helps ``boost their competitive
advantage'' and 86 percent say that ``protecting and improving the
reputation of my organization'' is an important benefit of disclosure
(see https://www.cdp.net/en/companies-discloser).
More than 3,600 companies globally, representing over one third of
the global economy's market capitalization, have voluntarily committed
to setting science-based targets for reducing emissions (see https://sciencebasedtargets.org/). A 2018 survey of 185 company executives from
SBTi-committed businesses found that 79 percent of companies
experienced a brand reputation boost, 63 percent saw an increase in
innovation, 55 percent reported that preparing for a low-carbon
transition led to a newly earned competitive advantage (see https://sciencebasedtargets.org/blog/six-business-benefits-of-setting-science-based-targets). Companies with targets validated by SBTi are reducing
emissions at an accelerating pace, collectively achieving 12 percent
Scope 1 and 2 emissions reduction in 2020 and a total emissions
decrease of 29 percent between 2015 and 2020. According to SBTi's
science-based target setting methodologies, an annual emissions
reduction of at least 4.2 percent is required to align organizations
with the Paris Agreement goal of 1.5[deg]C maximum global temperature
rise (see https://sciencebasedtargets.org/reports/sbti-progress-report-2021). Requiring that major contractors set, disclose, and maintain
validation of such ambitious climate targets can thus be an effective
tool for addressing the Federal Government's Scope 3 emissions and
associated risks of climate change to the national economy, while
providing economic and other benefits to the contractors themselves.
4. Improved Transparency, Accountability, and Ability To Collaborate
With Suppliers
Without knowledge of existing ``hot spots'' (emissions-intensive
sectors and activities) and cost-effective emissions reduction
opportunities, it may be difficult for Federal agencies and contractors
to understand where to start in seeking to reduce emissions, how to
prioritize emissions reduction programs and activities, and how much to
invest in each. Public disclosure provides transparency into the
historical costs and impacts of organizational strategies and
activities, the current management strategies of peer and partner
organizations, and their future-focused targets. Disclosure of climate
risks and management strategies enables benchmarking and collaborative
opportunities (1) between Federal contractors and (2) between
contractors and the Government, thereby increasing economy of efforts.
Public disclosures thus benefit collective accountability for the
shared challenge of addressing climate change throughout the global
economy and enable transparent tracking of progress over time.
Furthermore, for companies with significant Scope 3 emissions,
supply chain engagement can be an opportunity for further efficiency,
collaboration and innovation. In 2021, of the 13,000 companies
reporting through CDP, 71 percent of companies reported their Scope 1
and 2 emissions, while only 20 percent reported emissions associated
with products and goods they purchase (Scope 3). However, Scope 3
emissions for a company are, on average, over 11 times higher than
operational emissions. Companies can calculate Scope 3 emissions using
a hybrid approach of disclosed and modeled data that improves over time
as data quality and supplier engagement improve. Only 38 percent of
companies who disclose through CDP currently report that they engage
their own suppliers on sustainability, however those who do engage
suppliers realize significant cost and emissions savings; companies
engaging their suppliers through CDP resulted in a reduction of 231
million tons of CO2e in 2021. Supplier engagement represents an
opportunity for many companies to drive additional benefits for the
Federal government and national economy by encouraging contractors to
work with their suppliers, contractors, and other entities in their
supply chains to identify cost-effective ways to reduce emissions.
Through this rule, the Federal Government will communicate to its
prospective contractors and their supply chains that transparent
disclosure and management of supply chain GHG emissions and climate
risk can be a matter of social license to operate and contractual
access to important customers, thus multiplying the potential for
reducing energy costs and associated emissions.
5. Increased Efficiency of Disclosure via Standardization
In addition to the above benefits, this rule will lead to increased
efficiency in the processes and industries by which major contractors
disclose climate related financial risks. By aligning with global
standards such as the TCFD recommendations and SBTi target-setting
methodologies, as well as the leading centralized data platform CDP
(which implements and is aligned with TCFD), this rule will reinforce
existing industry trends toward standardization around these systems,
which are already used by large numbers of U.S. companies because they
are required in order to meet the demands of other entities, such as
non-Federal customers and investors. The standards and systems required
by this rule will thus allow affected companies to develop disclosures
that efficiently meet multiple requirements for Federal procurement
(this rule), access to capital markets (investors' needs), and other
existing market requirements (such as ratings and rankings systems).
Much of this standardization to date has occurred outside of the
Federal Government, led by NGOs, investors, companies and ratings and
rankings platforms as well as cities, states, and other national
governments. As discussed in section I. of this preamble, the SEC
recently proposed a regulation that if adopted would require similar
annual disclosures of climate related financial risk for SEC
registrants, including publicly listed/traded companies, many of whom
are also Federal contractors. To the extent that there may be alignment
between the
[[Page 68321]]
SEC's proposed rule and this rule if both are adopted, companies making
these disclosures and users of the information (e.g., the Federal
Government, investors, and other entities) will benefit from greater
standardization of climate-related disclosures.
C. Estimated Public Costs
The total estimated public costs associated with this FAR rule in
millions over a ten-year period (calculated at a 3-percent and 7-
percent discount rate) are as follows:
------------------------------------------------------------------------
3% Discount 7% Discount
Estimated costs rate rate
------------------------------------------------------------------------
Present Value........................... $3,935 $3,262
Annualized.............................. 461 464
------------------------------------------------------------------------
The following is a summary from the Regulatory Impact Analysis
(RIA) of the estimated costs impact for each general compliance
requirement on significant and major contractors (see section II.A. of
this preamble). The full RIA is available at https://www.regulations.gov (search for ``FAR Case 2021-015'' click ``Open
Docket,'' and view ``Supporting Documents''). The RIA includes a
detailed discussion of the assumptions and methodologies used to
estimate the cost of this regulatory action, including the specific
impact and costs for small businesses. On March 15, 2021, the SEC's
Acting Chair Allison Herren Lee posted a request for information (RFI)
on costs associated with preparation of annual climate disclosures for
consideration in the development of their proposed rule (see discussion
in section I of this preamble). Several respondents to the RFI provided
specific cost data for companies that currently provide annual climate
disclosures that align with the TCFD or other voluntary disclosure
frameworks. Additionally, consulting firms submitted information on
prices charged for associated climate consultant services. The cost
information considered by the SEC in their proposing release was used
to estimate the potential costs of this proposed FAR rule. This
includes information provided in response to the RFI and information
from the impact assessment produced by the United Kingdom (UK)
Department for Business, Energy & Industrial Strategy, as part of its
Green Finance Strategy, for a UK rule that requires certain TCFD-
aligned disclosures from suppliers (see https://assets.publishing.service.gov.uk/Government/uploads/system/uploads/attachment_data/file/1055931/tcfd-final-stage-ia.pdf).
1. Regulatory Familiarization
Regulatory familiarization includes the amount of time and effort
it takes a company to become familiar with the requirements of the
proposed rule and the references standards. A page count of the rule,
the various standards, the CDP Climate Change Questionnaire, and the
SBTi Guidance is used to calculate the cost for regulatory
familiarization. We assume individuals who review the documents will
spend 6 minutes per page. Significant contractors (regardless of
business size) and major contractors that are small businesses will be
required to become familiar with the requirements of this rule and the
GHG Protocol Corporate Standard (except Scope 3 guidance). The total
page count is 360 pages, which take 36 hours per person to review (360
pages * 0.1 hours/page). Major contractors that are other than small
business will be required to become familiar with the rule and all GHG
Protocol, TCFD, CDP, and SBTi guidance referenced in this rule. The
total page count is 967 pages, which take 97 hours per person to review
(967 pages * 0.1 hours/page rounded to the nearest whole number). The
per entity and total costs are summarized as follows:
For a significant contractor that is other than a small
business, it is estimated that 1 manager at a rate of $94 per hour, 1
management analyst at a rate of $77 per hour, and 2 business
specialists at a rate of $61 per hour will review the relevant
documents, a total cost of $10,548 per contractor. The total estimated
cost for regulatory familiarization in the first year of implementation
is $16,644,744 (1,578 contractors * $10,548/contractor).
For a significant contractor that is a small business, it
is estimated that 1 manager and 1 management analyst will review the
relevant documents, a total cost of $6,156 per contractor. The total
estimated cost is $17,452,260 (2,835 contractors * $6,156/contractor).
For a major contractor that is other than a small
business, it is estimated that 1 manager, 2 management analysts, and 4
business specialists will review the relevant documents, a total cost
of $47,724. The total estimated cost is $46,005,936 (964 contractors *
$47,724/contractor).
For a major contractor that is a small business, it is
estimated that 1 manager and 1 business specialist will review the
relevant documents, a total cost of $8,928 per contractor. The total
estimated cost is $17,452,260 (389 contractors * $8,928/contractor).
2. Annual Representations
All 491,690 entities that are registered in SAM as interested in
pursuing Government contracts, of which 364,290 entities are considered
small for their primary NAICS code, will be required to complete the
first representation in SAM for the provision at FAR 52.223-22(d)(1)
and/or the commercial provision at FAR 52.212-3(t)(3)(i) regarding
whether they meet the definition of a significant or major contractor.
It is estimated that, on average for each registration, it will take a
business specialist six minutes at an hourly rate of $61 to determine
whether they meet the definition of a significant or major contractor.
The total estimated annual cost is $2,999,309 (491,690 registrants *
0.1 hours/registrant * $61/hour), of which $2,222,169 is attributed to
364,290 small businesses. The estimated cost to complete the
representation is the same in subsequent years.
The 5,766 significant and major contractors expected to be impacted
by this rule will be required to complete the remaining representations
regarding whether the offeror meets an exemption and whether the
offeror (itself or through its immediate owner or highest-level owner)
has completed the GHG inventory of scope 1 and 2 emissions, made an
annual climate disclosure via CDP, and set science-based targets. It is
estimated that, on average for each registrant, it will take a business
specialist one hour to complete the remaining representations. The
total estimated annual cost is $351,726 (5,766 registrants * 1 hour/
registrant * $61/hour), of which $196,664 is attributed to 3,224 small
businesses. The estimated cost to complete the representations is the
same in subsequent years.
3. GHG Inventory of Scope 1 and 2 Emissions
The following is a summary of the costs for significant contractors
[[Page 68322]]
(regardless of size) and major contractors (small businesses only) to
complete inventories of their Scope 1 and Scope 2 emissions. It is
expected that a contractor will use a mix of internal personnel and
external consultants to complete the annual greenhouse gas inventory.
Internal personnel costs include the cost for contractor employees to
gather, compile, and review GHG emissions data. A contractor may use
external consultants to assist with, and advise on, GHG inventories. It
is also assumed that contractors will see a 25 percent reduction in
burden after the first year of implementation.
For a significant contractor that is other than a small business,
it is estimated that it takes two business specialists 40 hours each at
an hourly rate of $61 to gather information, one management analyst 20
hours at an hourly rate of $77 to process and compile the information,
and one senior manager 2 hours at an hourly rate of $94 to review the
compiled information. It is estimated that a significant contractor
that is other than a small business will require approximately 409
external consultant hours at an hourly rate of $104. The total
estimated cost per entity is $63,868 in the initial year of
implementation and $47,983 annually thereafter.
For significant and major contractors that are small businesses, it
is estimated that it will take half as much time to conduct a GHG
inventory, or 20 hours for one business specialist, 10 hours for one
management analyst, and 1 hour for one senior manager. These
contractors are also estimated to require approximately 153 external
consultant hours. The total estimated cost per entity is $24,724 in the
initial year of implementation and $18,640 annually thereafter.
Therefore, for the 1,578 other than small business significant
contractors, the total estimated cost to conduct Scope 1 and 2 GHG
inventories is $100,783,704 (1,578 contractors * $63,868/contractor) in
the initial year of implementation and $75,717,174 (1,578 contractors *
$47,983/contractor) annually thereafter. For the 2,835 significant
contractors and 389 major contractors that are small businesses, the
total estimated cost is $79,710,176 (3,224 contractors * $24,724/
contractor) in the initial year of implementation and $60,095,360
(3,244 contractors * $18,640/contractor) annually thereafter.
4. Annual Climate Disclosure and Science-Based Targets
The estimate of internal and external costs for major contractors
that are other than small businesses to prepare an annual climate
disclosure, submit the disclosure via the CDP Climate Change
Questionnaire, set a science-based target, and have the target
validated by SBTi, is based on cost information shared by respondents
in response to the RFI. The RIA available at https://www.regulations.gov (search for ``FAR Case 2021-015'' click ``Open
Docket,'' and view ``Supporting Documents'') includes a summary of the
respondent information and assumptions made to estimate these costs. As
stated in the SEC proposed rule, the respondents to the RFI provided
information on general costs for climate disclosures. Some respondent
estimates included costs for activities not covered by this rule, which
is similar to the FAR rule. Other respondents provided an aggregate
cost estimate making it difficult to determine how representative the
costs are. Actual costs for individual contractors impacted by this
rule may vary significantly depending on the contractor's size,
industry, business model, corporate structure, level of experience with
climate disclosures, etc.
Approximately 671 of the 964 major contractors that are other than
small businesses currently represent that they do not publicly disclose
information about their emissions or reduction goals. As such, it is
assumed that these contractors have no experience with climate
disclosures or targets. It is estimated that these contractors will
have internal personnel costs of approximately $257,103 and external
consultant costs of approximately $201,600, a total of $458,703 per
contractor in the first year of implementation. The estimated annual
cost after the first year is $412,825, a 10 percent reduction. These
contractors will also be required to pay a $9,500 fee for SBTi to
validate their science-based target every five years, an annualized
cost of $1,900 per year. Therefore, the total estimated cost for these
major contractors is $309,064,613 (671 * $460,603/contractor) in the
initial year of implementation, and $278,280,475 (671 * $414,725/
contractor) annually thereafter.
Of the 964 major contractors that are other than small business,
approximately 293 represent that they do publicly disclose information
about their emissions. An analysis of the websites reported by these
major contractors indicates that there are 122 distinct disclosures
associated with these 293 contractors. In other words, of the 293
contractors, approximately 42 percent appear to be disclosing data
attributed to (or compiled by) their immediate or highest-level owner,
whereas the other 58 percent are performing the calculations and
compiling the climate disclosures directly. Given that these major
contractors (or their owners) already have policies and procedures in
place to inventory and publicly disclose their emissions (and in many
cases to also set and disclose reduction goals), the burden associated
with complying with this FAR rule is estimated to be 50 percent of the
cost of starting with no prior disclosure experience. Therefore, it is
estimated that the internal personnel and external consultant costs
associated with these disclosures is approximately $229,390 in the
first year of implementation and $206,451 annually thereafter. The
$9,500 SBTi fee for validation of the science-based target also
applies. Therefore, the total estimated costs attributed to this rule
for the major contractors that currently disclose either themselves or
through an immediate or highest-level owner is $28,217,380 (122
disclosing entities * $231,290/entity) in the initial year of
implementation and $25,418,822 (122 disclosing entities * $208,351/
entity) annually thereafter.
5. Summary of Public Costs
The total estimated cost of compliance with this proposed rule is
$604,702,840 in the initial year of implementation and $442,826,866
annually thereafter.
D. Estimated Government Costs
The total estimated Government costs associated with this FAR rule
in millions over a ten-year period (calculated at a 3-percent and 7-
percent discount rate) are as follows:
------------------------------------------------------------------------
3% Discount 7% Discount
Estimated costs rate rate
------------------------------------------------------------------------
Present Value........................... $10 $8
Annualized.............................. 1 1
------------------------------------------------------------------------
[[Page 68323]]
This is a summary of the costs associated with this proposed rule.
Additional information on this cost estimate in the RIA available at
https://www.regulations.gov (search for ``FAR Case 2021-015'' click
``Open Docket,'' and view ``Supporting Documents'').
1. Updates to SAM
The Government will be required to update the representations
associated with FAR 52.223-22 and 52.212-3 in SAM. The adjustment to
the representation is considered a medium level of effort that will
cost approximately $260,000 to complete.
2. Workforce Development
Government contracting officers will need to become familiar with
the new policy at FAR 23.XX, the new standard of responsibility at FAR
9.104, and the representations in the provisions at FAR 52.223-22 and
52.212-3. The procedures at FAR 23.XX05 provides tables to help
contracting officers evaluate offeror representations. Similarly, FAR
9.104-3(e) includes information on the type of information a
contracting officer should request from an offeror that represents that
it is in compliance with the new policy and the minimum requirements
that must be met in order to determine a contractor responsible. No
specialized training is required for Government contracting officers.
The requirement to remain current on policies for Government
procurement, such as changes to the FAR, is considered a part of the
normal duties of contracting personnel. As such, this analysis does not
quantify the time and effort for contracting officers to become
familiar with the rule. In addition, there are Federal resources
allocated to assisting small businesses in procurement, particularly in
the Small Business Administration. It is acknowledged that this there
is time and effort for these Federal workforces to become familiar with
the rule or the tools available and to assist contractors with
compliance, though those potential burden hours and costs are not
quantified.
3. Responsibility Determinations
Starting one year after publication of a final rule, Government
contracting officers will begin validating prospective contractor
representations for FAR 52.223-22(d) and 52.212-3(t)(3) to ensure that
significant and major contractors have completed the GHG inventory of
Scope 1 and 2 emissions. Starting two years after publication of a
final rule, contracting officers will also validate that major
contractors have completed annual climate disclosures and set a
science-based targets. For each award, the contracting officer will log
into https://www.sam.gov, search ``Entity Information'' for the
prospective contractor, select the prospective contractor's
registration, click on ``Reps and Certs,'' and (depending on the type
of acquisition) click on FAR 52.212-3 or 52.223-22 to view the
offeror's representations. If the prospective contractor represents
that it is a significant or major contractor, then it must complete all
of the remaining representations in the solicitation provision. The
contracting officer may use the tables at FAR 23.XX05, Procedures, to
assist in determining whether the prospective contractor is subject to
an exception and, if not, whether the prospective contractor complies
with the policy. Per FAR 23.XX05(c), a contracting officer may rely on
these representations when making a responsibility determination,
unless the contracting officer has reason to question the
representation. If a representation indicates noncompliance, then the
contracting officer will request additional information from the
prospective contractor to assist in making a responsibility
determination.
It is not possible to quantify how often contracting officers will
need to request additional information from prospective contractors.
Most offerors registering in SAM will represent that they are not a
significant or major contractor. It is expected that the majority of
significant and major contractors will represent that they are in
compliance with the new policy. While it will take longer for a
contracting officer to review the representations for a significant or
major contractor, it is estimated that it will take the contracting
officer three minutes to review most representations. According to FPDS
data for FY 2021, there were approximately 276,467 awards valued over
the micro-purchase threshold, where contracting officers would be
required to make a responsibility determination prior to awarding a
contract. We assume that the majority of responsibility determinations
are made by a GS-12/step 5 contracting officer at a loaded rate of $66
per hour. Therefore, the total estimated cost is $912,341 (276,467
awards * 0.05 hours/award * $66/hour).
4. Policy Development
Contract policy offices for Government departments and agencies
will need to develop procedures for requesting senior procurement
executive (SPE) approval of waivers in accordance with FAR 23.XX06(b).
Specifically, the SPE approve a waiver for specific facilities,
business units, or other defined units for national security purposes
or for emergencies, national security, or other mission essential
purposes. In addition, the SPE may approve a waiver to enable a
significant or major contractor to come into compliance with the policy
at 23.XX03 for a period not to exceed 1 calendar year. Such waivers
must be made publicly available on the agency's website. Developing
policies and procedures to support the contracting activities of a
department or agency are considered a part of the normal course of
doing business for contract policy offices. As such, this analysis does
not quantify the time and effort for contracting officers to become
familiar with the rule.
5. Analysis of Annual Climate Disclosures
The Government will also use the disclosures made pursuant to this
FAR rule to inform development of policies and programs to reduce
climate risks and GHG emissions associated with Federal procurement
activities, and to incentivize and enable technologies critical to
achieving a national economy and industrial sector that are resilient
to the physical and transition risks of climate change and net zero
emissions by 2050. As stated in OMB Memo M-22-06, to assist the Federal
Government in assessing the results of efforts to reduce supply chain
emissions, and as requested by CEQ and OMB, GSA will provide periodic
recommendations on further actions to reduce supply chain emissions,
based on information and data collected through supplier disclosures
pursuant to this FAR rule and other publicly available information. The
estimated annual cost for the Government to obtain a report of the data
disclosed to CDP is $47,000. GSA further estimates that the annual cost
to analyze the data provided is approximately $200,000.
6. Summary of Government Costs
The total estimate cost to the Government in the initial year of
implementation is $1,419,341. This includes the costs to update SAM,
for reviewing offeror representations, and analyzing annual climate
disclosure information. In subsequent years, the estimate cost to the
Government is $1,159,341, which includes only the cost for reviewing
offeror representations and analyzing annual climate disclosure
information.
[[Page 68324]]
E. Total Estimated Costs
The total estimated overall costs associated with this FAR rule in
millions over a ten-year period (calculated at a 3-percent and 7-
percent discount rate) are as follows:
------------------------------------------------------------------------
3% Discount 7% Discount
Estimated costs rate rate *
------------------------------------------------------------------------
Present Value........................... $3,945 $3,270
Annualized.............................. 462 466
------------------------------------------------------------------------
* Total of Government and public costs is higher due to rounding.
F. Alternatives Considered
The Government considered other mechanisms for enforcement of the
compliance requirements. One alternative was to use a contract clause
to require submission of the GHG inventory, annual climate disclosure,
and validated science-based target as a deliverable under Government
contracts. However, given the intent to require disclosure at the
entity-level, disclosure on a contract-by-contract basis is not
appropriate.
The Government also considered making noncompliance a go/no-go
decision for award. In this alternative, a significant or major
contractor would be ineligible for award of Government contracts unless
the significant or major contractor represents that it complies with
the new policy. The Government ultimately determined that treatment of
contractor compliance as a matter of responsibility, not only
establishes the Government's position that responsible contractors take
action to address and reduce climate-related financial risk, but also
allows contracting officers some flexibility to determine what actions
a noncompliant contractor has taken to comply.
The Government also considered the following thresholds when
establishing a definition of ``major Federal supplier,'' the term used
in E.O. 14030: $7.5 million, $50 million, and $250 million. The
Government also considered whether the threshold should be based on the
total Government contract award value, or the total Government contract
funds obligated. Currently, many larger Federal suppliers provide some
disclosure, but few set science-based targets. Even fewer smaller
suppliers disclose GHG emissions and climate-related risk, and science-
based targets are very rare. Ultimately, the Government settled on dual
thresholds to ensure smaller Federal suppliers (i.e., ``significant
contractors'' with $7.5 million to $50 million in obligations in the
prior FY) take steps to understand their GHG emissions and the larger
Federal suppliers (i.e., ``major contractors'' with more than $50
million in obligations in the prior FY) take steps to disclose climate-
related financial risks and to reduce their GHG emissions.
V. 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 anticipated to be an economically 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.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD, GSA, and NASA will
send the rule and the ``Submission of Federal Rules Under the
Congressional Review Act'' form to each House of the Congress and to
the Comptroller General of the United States. A major rule cannot take
effect until 60 days after it is published in the Federal Register.
This proposed rule is anticipated to be a major rule under 5 U.S.C.
804.
VII. Regulatory Flexibility Act
DoD, GSA, and NASA expect this rule may have a significant economic
impact on a substantial number of small entities within the meaning of
the Regulatory Flexibility Act, 5 U.S.C. 601-612. An Initial Regulatory
Flexibility Analysis (IRFA) has been performed and is summarized as
follows:
DoD, GSA, and NASA are proposing to amend the FAR to implement
section 5(b)(i) of E.O. 14030, Climate-Related Financial Risk.
Section 5(b)(i) of the E.O. directs the Federal Acquisition
Regulatory Council to ensure that major Federal suppliers publicly
disclose their greenhouse gases and climate-related financial risk
and set science-based targets.
The objective of this rule is to implement the E.O. by creating
a new FAR subpart at 23.XX, which establishes the requirement for a
major Federal supplier to publicly disclose certain climate
information. For the purposes of this rule, a major Federal supplier
is categorized as either a significant contractor or a major
contractor. A significant contractor is an offeror who received $7.5
million or more, but not exceeding $50 million, in Federal contract
obligations in the prior Federal fiscal year. A major contractor is
an offeror who received more than $50 million in Federal contract
obligations in the prior Federal fiscal year. The legal basis for
this rule is 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C.
20113.
Per the new policy proposed at 23.XX03, a contracting officer
will presume that an offeror who is a significant or major
contractor is nonresponsible unless--
Starting one year after publication of a final rule,
the significant or major contractor (itself or through its immediate
owner or highest-level owner) has completed a GHG inventory of the
annual Scope 1 and Scope 2 GHG emissions within its current or
previous fiscal year, and the significant or major contractor has
reported the total annual Scope 1 and Scope 2 emissions from its
most recent inventory in SAM at https://www.sam.gov; and
Starting two years after publication of a final rule,
the major contractor (itself or through its immediate owner or
highest-level owner) has submitted an annual climate disclosure
within its current or previous fiscal year by completing those
portions of the CDP Climate Change Questionnaire that align with the
TCFD and has developed a science-based target and had the reduction
target validated by SBTi within the previous five calendar years.
This proposed rule provides exceptions at FAR 23.XX04(a). A
significant or major contractor is not required to complete a GHG
inventory of Scope 1 and Scope 2 emissions, if it is one of the
following: an Alaska Native Corporation, a Community Development
Corporation, an Indian tribe, a Native Hawaiian Organization, or a
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
a higher education institution (defined as institutions of higher
education in the OMB Uniform Guidance at 2 CFR part 200, subpart A,
and 20 U.S.C. 1001); a nonprofit research entity; or, an entity
deriving 80 percent or more of its annual revenue from Federal M&O
contracts that are subject to agency annual site sustainability
reporting requirements. Per 23.XX04(b), a major
[[Page 68325]]
contractor who is registered in SAM as a small business for its
primary NAICS code or is a nonprofit organization, is exempt from
the requirement to complete an annual climate disclosure and to set
a science-based target.
This proposed rule will revise the annual representations in the
provisions at FAR 52.223-22 and 52.212-3 to collect information a
contracting officer will need to determine whether an offeror is a
significant or major contractor is in compliance with the new
policy. The contracting officer will follow the proposed procedures
at FAR 23.XX05 and FAR 9.104-3(e) when making the responsibility
determination.
According to SAM, as of January 2022, 491,690 entities are
registered in SAM, of which approximately 364,290 (74 percent) were
registered as small for their primary NAICS code. According to award
data available in FPDS for FY 2021, there were approximately 4,413
entities that meet the definition of a significant contractors and
are not subject to an exception, of which 2,835 (64 percent) are
estimated to be small businesses. There were approximately 1,353
entities that meet the definition of a major contractor, of which
389 (29 percent) are estimated to be small businesses.
SAM registrants will be required to complete annual
representations and certifications in SAM will be required to
complete the first representation in FAR 52.223-22(d)(1) (or the
equivalent representation in the commercial provision in FAR 52.212-
3(t)(3)(i)) regarding whether the registrant meets the definitions
of a significant or major contractor. A registrant that represents
that it is a significant or major contractor, will be required to
complete the remaining representations in FAR 52.223-22(d)(2)
through (5) (or equivalent representations in FAR 52.212-3(t)(3)(ii)
through (v)) regarding whether they have conducted a GHG inventory,
made an annual climate disclosure, and a set science-based target.
Starting one year after publication of a final rule, significant or
major contractors will be required to have conducted (itself or
through its immediate or highest-level owner) within its current or
previous FY a GHG inventory of its annual Scope 1 and 2 emissions
and reported in SAM the results of its most recent inventory.
A significant or major contractor that represents that it has
not conducted a GHG inventory of its annual Scope 1 and Scope 2
emissions or has not provided the results of the most recent
inventory in SAM, will be presumed to be a nonresponsible
prospective contractor. In such cases the contracting officer will
follow the proposed procedures at FAR 9.104-3(e) and seek
information from the significant contractor on the efforts it has
made to comply before making a responsibility determination. Per the
existing procedures at FAR 9.104-3(d)(1), upon making a
determination of nonresponsibility with regard to a small business
concern, the contracting officer shall refer the matter to the Small
Business Administration, which will decide whether to issue a
Certificate of Competency (see FAR subpart 19.6).
A RIA has been prepared for this proposed FAR rule, which
includes a detailed discussion and explanation about the assumptions
and methodology used to estimate the cost of this regulatory action,
including the specific impact and costs for small businesses. Costs
for small businesses expected to be impacted by this rule include
the cost of regulatory familiarization, completing the annual SAM
representations, and conducting the Scope 1 and 2 GHG inventory each
year. The total estimated cost to small businesses is $103,054,261
(17 percent of the total estimated public costs) in the initial year
of implementation and $62,514,193 (14 percent of the total estimated
public cost) in subsequent years. The following is a summary of the
estimated cost of per entity for small business significant and
major contractors:
Estimated Cost of Compliance per Entity
----------------------------------------------------------------------------------------------------------------
Entity type Significant contractor Major contractor
----------------------------------------------------------------------------------------------------------------
Subsequent Subsequent
Compliance requirement Initial year years Initial year years
----------------------------------------------------------------------------------------------------------------
Familiarization................................. $6,156 N/A $8,928 N/A
First SAM Rep................................... 6 $6 6 $6
Other SAM Reps.................................. 61 61 61 61
GHG Inventory................................... 24,724 18,640 24,724 18,640
---------------------------------------------------------------
Total Cost.................................. 30,947 18,707 33,719 18,707
----------------------------------------------------------------------------------------------------------------
A summary of the RIA is provided in section IV. of this
preamble. The full RIA is available at https://www.regulations.gov
(search for ``FAR Case 2021-015'' click ``Open Docket,'' and view
``Supporting Documents'').
The SEC is proposing to require climate-related financial risk
disclosures from SEC registrants, including publicly listed/traded
companies (see 87 FR 21334, April 11, 2022). Both the SEC proposed
rule and the FAR proposed rule leverage the GHG Protocol Corporate
Accounting and Reporting Standard; therefore, the rules are
considered to be in alignment. Per the exceptions at FAR 23.XX04(b),
the requirement to provide an annual climate disclosure and set a
science-based target is not applicable to a company that is
registered in SAM as a small business for its primary NAICS code.
The burden imposed on small entities is the minimum necessary to
implement the requirements of section 5(b)(i) of E.O. 14030. To
minimize the burden on Federal contractors, this rule leverages
standards that are widely used by companies to inventory their GHG
emissions and analyze their climate risks. Efforts were also taken
to align with the approach of the SEC proposed rule, which further
minimizes burden for small businesses. As a result of this rule, a
small business that received $7.5 million in Federal contract
obligations in the prior Federal fiscal year is considered a
significant contractor and will be required to complete the GHG
inventory of Scope 1 and Scope 2 emissions. However, those entities
that received more than $50 million in Federal contract obligations
in the prior Federal fiscal year (a major contractor) and are
registered in SAM as a small business for their primary NAICS code
are exempt from the requirement to complete an annual climate
disclosure and set a science-based target. Several alternatives were
considered but not accepted as they would not accomplish the
intended policy objective of the E.O. The alternatives considered
include:
Exemption for small business. One alternative
considered was an exemption for small businesses who are significant
contractors from the requirement to inventory and publicly disclose
their Scope 1 and 2 emissions. It was determined that the limited
Scope 1 and 2 reporting will be beneficial for these small
businesses and the Government. By inventorying their Scope 1 and 2
emissions, small businesses--including those that are not ``carbon
intensive'' can find opportunities to minimize climate risks both in
their operations and their own supply chains. This rule will also
prepare these small businesses to respond to requests for similar
data from customers besides the Federal Government. It is also
beneficial for the Government to collect this data from these small
businesses to have a more complete understanding of the impact of
GHG emissions on the Federal supply chain and to calculate its own
emissions and set its own reduction targets.
Delayed or rolling compliance dates. Another
alternative considered was a delay in the effective date of the
Scope 1 and 2 reporting requirements for small business significant
contractors. Consideration was given to a two-year delay, or a
rolling effective date based on Federal contract obligations in the
prior fiscal year. Ultimately, it was determined that given the
widely adopted and simple exercise of quantifying Scope 1 and 2
emissions, and the E.O. target of a net-zero emissions economy by no
later than 2050, it may be confusing
[[Page 68326]]
to have separate tiers and timelines for significant contractor
reporting while failing to advance the E.O.'s stated goals.
Furthermore, since GHG emissions inventory occurs once a year
retroactively based on the previous year's data, no additional
actions or changes to business practice would need to be taken to
prepare for this reporting, and thus there would be no minimized
burden from a delay.
Use other sources of data. Other sources of data on
Scope 1 and 2 emissions were also considered, such as current CDP
data, corporate websites, and/or corporate reports. Third party
``modeled emissions'' using industry averages were also considered.
However, it was determined that this alternative would not advance
the stated target of the E.O. for a variety of reasons: the lack of
standardization, reduced accuracy of models to capture the actual
business practices unique to producing goods and services for the
Federal Government, and the lack of GHG emissions reporting by many
small businesses. Furthermore, the burden to comply with this
proposed rule for small businesses who currently inventory their GHG
emissions will be extremely low, only requiring two numbers the
entity has already generated (or are easily calculated using free
Excel tools) to be entered into SAM.
The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. DoD, GSA, and NASA invite comments from small
business concerns and other interested parties on the expected impact
of this rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2021-015),
in correspondence.
VIII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. 3501-3521) applies because
the proposed rule contains information collection requirements.
Accordingly, the Regulatory Secretariat Division has submitted to OMB a
request for approval of a revision to ``OMB Control Number 9000-0107,
Federal Acquisition Regulation Part 23 Requirements'' concerning the
information collection requirements in the provision at FAR 52.223-22
or its equivalent at FAR 52.212-3(t).
A. Public Reporting Burden
Public reporting burden for the following collections of
information include the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information in the provision
at FAR 52.223-22 or its equivalent at 52.212-3(t). The contracting
officer uses this information to determine whether a prospective
contractor is a significant or major contractor and, if so, if the
prospective contractor is responsible (see FAR 9.104-3(e)). A
prospective contractor that is a significant or major contractor is
presumed to be nonresponsible if it represents that it is not in
compliance with the GHG inventory, annual climate disclosure, and
science-based target setting requirements, as applicable. In such
situations the contracting officer will ask for additional information
from the prospective contractor to determine what efforts have been
made to comply. The Government will also use the disclosures made
pursuant to this FAR rule to inform development of policies and
programs to reduce climate risks and GHG emissions associated with
Federal procurement activities, and to incentivize and enable
technologies critical to achieving a national economy and industrial
sector that are resilient to the physical and transition risks of
climate change and net zero emissions by 2050. As stated in OMB
Memorandum M-22-06, to assist the Federal Government in assessing the
results of efforts to reduce supply chain emissions, and as requested
by CEQ and OMB, GSA will provide periodic recommendations on further
actions to reduce supply chain emissions, based on information and data
collected through supplier disclosures pursuant to this FAR rule and
other publicly available information.
1. First Representation
The representations in the provision at FAR 52.223-22 (and the
commercial equivalent at FAR 52.212-3(t)) are being revised to require
an offeror, when initially registering or when updating a registration
in SAM at https://www.sam.gov, to represent whether it is a significant
or major contractor. A significant contractor is an offeror who
received $7.5 million or more in Federal contract obligations in the
prior Federal fiscal year. A major contractor is an offeror who
received $50 million or more in Federal contract obligations in the
prior Federal fiscal year. Public reporting burden for this collection
of information is estimated to average 0.1 hours per response. The
annual reporting burden is estimated as follows:
Respondents: 491,690.
Total Annual Responses: 491,690.
Total Burden Hours: 49,169.
2. Remaining Representations
If the offeror represents that it is a significant or major
contractor, then the offeror is required to complete additional
representations in the provision regarding whether it meets an
exception and whether it has (itself or through its immediate owner or
highest-level owner) completed a GHG inventory of Scope 1 and 2
emissions, provided an annual climate disclosure, and set a science-
based target. If an offeror represents that it publicly discloses an
annual climate disclosure or science-based target, it also must report
the websites where disclosures and targets are made publicly available.
Public reporting burden for this collection of information is estimated
to average one hour per response. The annual reporting burden is
estimated as follows:
Respondents: 5,766.
Total Annual Responses: 5,766.
Total Burden Hours: 5,766.
3. GHG Inventory of Scope 1 and 2 Emissions
Unless an exception at 23.XX04(a) applies, a significant or major
contractor must (itself or through its immediate owner or highest-level
owner) conduct a GHG inventory of the annual Scope 1 and Scope 2
emissions. The significant or major contractor itself must report the
results of the most recent GHG inventory in SAM. Public reporting
burden for the GHG inventory of Scope 1 and 2 emissions is estimated to
average approximately 255 hours per response. The annual reporting
burden is estimated as follows:
Respondents: 4,802.
Total Annual Responses: 4,802.
Total Burden Hours: 1,222,983.
4. Annual Climate Disclosure and Science-Based Targets
Unless an exception at 23.XX04(b) applies, a major contractor must
submit an annual climate disclosure and set science-based targets. To
make the annual climate disclosure, the major contractor must (itself
or through its immediate owner or highest-level owner) conduct a GHG
inventory of relevant Scope 3 emissions (in addition to the Scope 1 and
2 inventory), conduct a climate risk assessment, develop disclosures
aligned with the Recommendations of the Task Force on Climate Related
Financial Risk, and complete relevant portions of the CDP (formerly
Carbon Disclosure Project) Climate Change Questionnaire within its
previous or current fiscal year. The major contractor must (itself or
through its immediate owner or highest-level
[[Page 68327]]
owner) also set science-based targets to reduce its emissions and have
the science-based targets validated by SBTi within the previous five
calendar years. A major contractor will likely support its preparation
of the disclosure and setting targets. Public reporting burden for the
annual climate disclosure is estimated to average approximately 1,946
hours per response. The annual reporting burden is estimated as
follows:
Respondents: 793.
Total Annual Responses: 793.
Total Burden Hours: 3,265,025.
B. Request for Comments Regarding Paperwork Burden
Submit comments on this collection of information no later than
January 13, 2023 through https://www.regulations.gov and follow the
instructions on the site. All items submitted must cite OMB Control No.
9000-0107, Federal Acquisition Regulation Part 23 Requirements.
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 https://www.regulations.gov, approximately two
to three days after submission to verify posting. If there are
difficulties submitting comments, contact the GSA Regulatory
Secretariat Division at 202-501-4755 or [email protected].
Public comments are particularly invited on:
The necessity of this collection of information for the
proper performance of the functions of Federal Government acquisitions,
including whether the information will have practical utility;
The accuracy of the estimate of the burden of this
collection of information;
Ways to enhance the quality, utility, and clarity of the
information to be collected; and
Ways to minimize the burden of the collection of
information on respondents, including the use of automated collection
techniques or other forms of information technology.
Requesters may obtain a copy of the supporting statement from the
General Services Administration, Regulatory Secretariat Division by
calling 202-501-4755 or emailing [email protected]. Please cite OMB
Control Number 9000-0107, Federal Acquisition Regulation Part 23
Requirements, in all correspondence.
List of Subjects in 48 CFR Parts 1, 4, 9, 23, and 52
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 1, 4,
9, 23, and 52 as set forth below:
0
1. The authority citation for 48 CFR parts 1, 4, 9, 23, 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
0
2. In section 1.106, amend the table by revising the entry for
``52.223-22'' to read as follows:
1.106 OMB approval under the Paperwork Reduction Act.
* * * * *
------------------------------------------------------------------------
OMB control
FAR segment No.
------------------------------------------------------------------------
* * * * *
52.223-22............................................... 9000-0107
* * * * *
------------------------------------------------------------------------
PART 4--ADMINISTRATIVE AND INFORMATION MATTERS
0
3. Amend section 4.1202 by revising paragraph (a)(26) to read as
follows:
4.1202 Solicitation provision and contract clause.
(a) * * *
(26) 52.223-22, Public Disclosure of Climate Information--
Representation.
* * * * *
PART 9--CONTRACTOR QUALIFICATIONS
0
4. Amend section 9.104-1 by revising paragraph (g) to read as follows:
9.104-1 General standards.
* * * * *
(g) Be otherwise qualified and eligible to receive an award under
applicable laws and regulations (for example, see the inverted domestic
corporation prohibition at 9.108 and requirements at 9.104-3(e) and
subpart 23.XX for certain contractors to disclose climate information).
0
5. Amend section 9.104-3 by adding paragraph (e) to read as follows:
9.104-3 Application of standards.
* * * * *
(e) Public disclosure of climate information. Starting on the dates
specified at 23.XX03(a) and (b), the following procedures apply:
(1) Except as provided in paragraph (e)(3) of this section, the
contracting officer shall presume that a prospective contractor is
nonresponsible pursuant to 9.104-1 if the prospective contractor is a
significant or major contractor (see definitions in 23.XX02) who has
not complied with the policy at 23.XX03 (see procedures at 23.XX05),
unless the contracting officer determines that--
(i) The noncompliance resulted from circumstances properly beyond
the prospective contractor's control;
(ii) The prospective contractor has provided documentation
sufficient for purposes of award that demonstrates substantial efforts
taken to comply, e.g., the prospective contractor has performed one or
more of the actions described in 23.XX03; and
(iii) The prospective contractor has made a public commitment to
comply as soon as possible (within 1 calendar year) on a publicly
accessible website as defined at 23.XX02.
(2) When making the determination, the contracting officer shall--
(i) Request information from the prospective contractor to
determine what efforts it has made to comply and the basis for its
failure to comply; and
(ii) Consider the information provided by the prospective
contractor relevant to each requirement at 23.XX03 and determine
responsibility based on the prospective contractor's efforts to comply
with each requirement.
(3) Upon making a determination of nonresponsibility with regard to
a small business concern, the contracting officer shall refer the
matter to the Small Business Administration in accordance with
paragraph (d)(1) of this section.
(4) A significant or major contractor is not subject to the
standard in paragraph (e)(1) of this section if--
(i) It is an entity described in 23.XX04(a);
(ii) For a major contactor, it is an entity described in
23.XX04(b); or
(iii) An exemption or waiver described in 23.XX06 applies.
PART 23--ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY
TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE
0
6. Amend section 23.001 by removing the definition ``Greenhouse gases''
and adding a definition for ``Greenhouse gas'' in its place to read as
follows:
[[Page 68328]]
23.001 Definitions.
* * * * *
Greenhouse gas means carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride, or sulfur
hexafluoride.
* * * * *
0
7. Revise section 23.800 to read as follows:
23.800 Scope of subpart.
(a) This subpart sets forth policies and procedures for the
acquisition of items that--
(1) Contain, use, or are manufactured with ozone-depleting
substances; or
(2) Contain or use high global warming potential
hydrofluorocarbons.
(b) For coverage of public disclosure of climate information,
including greenhouse gas emissions, see subpart 23.XX.
23.802 [Amended]
0
8. Amend section 23.802 by--
0
a. In paragraph (a), removing the words ``release or'' and adding
``release, or'' in its place, and adding the word ``and'' to the end of
the paragraph after the semicolon;
0
b. In paragraph (b)(2), removing the semicolon and adding a period in
its place; and
0
c. Removing paragraphs (c) and (d).
0
9. Revise section 23.804 to read as follows:
23.804 Contract clauses.
Except for contracts for supplies that will be delivered outside
the United States and its outlying areas, or contracts for services
that will be performed outside the United States and its outlying
areas, insert the following clauses:
(a) 52.223-11, Ozone-Depleting Substances and High Global Warming
Potential Hydrofluorocarbons, in solicitations and contracts for--
(1) Refrigeration equipment (in product or service code (PSC)
4110);
(2) Air conditioning equipment (PSC 4120);
(3) Clean agent fire suppression systems/equipment (e.g., installed
room flooding systems, portable fire extinguishers, aircraft/tactical
vehicle fire/explosion suppression systems) (in PSC 4210);
(4) Bulk refrigerants and fire suppressants (in PSC 6830);
(5) Solvents, dusters, freezing compounds, mold release agents, and
any other miscellaneous chemical specialty that may contain ozone-
depleting substances or high global warming potential
hydrofluorocarbons (in PSC 6850);
(6) Corrosion prevention compounds, foam sealants, aerosol mold
release agents, and any other preservative or sealing compound that may
contain ozone-depleting substances or high global warming potential
hydrofluorocarbons (in PSC 8030);
(7) Fluorocarbon lubricants (primarily aerosols) (in PSC 9150); and
(8) Any other manufactured end products that may contain or be
manufactured with ozone-depleting substances.
(b) 52.223-12, Maintenance, Service, Repair, or Disposal of
Refrigeration Equipment and Air Conditioners, in solicitations and
contracts that include the maintenance, service, repair, or disposal
of-
(1) Refrigeration equipment, such as refrigerators, chillers, or
freezers; or
(2) Air conditioners, including air conditioning systems in motor
vehicles.
(c) 52.223-20, Aerosols, in solicitations and contracts--
(1) For products that may contain high global warming potential
hydrofluorocarbons as a propellant, or as a solvent; or
(2) That involve maintenance or repair of electronic or mechanical
devices.
(d) 52.223-21, Foams, in solicitations and contracts for--
(1) Products that may contain high global warming potential
hydrofluorocarbons or refrigerant blends containing hydrofluorocarbons
as a foam blowing agent, such as building foam insulation or appliance
foam insulation; or
(2) Construction of buildings or facilities.
0
10. Add subpart 23.XX to read as follows:
Subpart 23.XX--Public Disclosure of Climate Information
Sec.
23.XX00 Scope.
23.XX01 Authorities.
23.XX02 Definitions.
23.XX03 Policy.
23.XX04 Exceptions.
23.XX05 Procedures.
23.XX06 Exemptions and waivers.
23.XX07 Solicitation provision.
Subpart 23.XX--Public Disclosure of Climate Information
23.XX00 Scope.
This subpart implements requirements for certain Federal
contractors to publicly disclose their greenhouse gas emissions and
climate-related financial risk and to set science-based targets to
reduce their greenhouse gas emissions.
23.XX01 Authorities.
(a) Section 1 of Executive Order 13990 of January 20, 2021,
Protecting Public Health and the Environment and Restoring Science to
Tackle the Climate Crisis.
(b) Section 206 of Executive Order 14008 of January 27, 2021,
Tackling the Climate Crisis at Home and Abroad.
(c) Section 5(b)(i) of Executive Order 14030 of May 20, 2021,
Climate-Related Financial Risk.
(d) Section 302 of Executive Order 14057 of December 8, 2021,
Catalyzing Clean Energy Industries and Jobs Through Federal
Sustainability, and section II.1. of the accompanying Office of
Management and Budget Memorandum M-22-06.
23.XX02 Definitions.
As used in this subpart--
Annual climate disclosure means an entity's set of disclosures
that--
(1) Aligns with--
(i) The 2017 Recommendations of the Task Force on Climate-Related
Financial Disclosures (TCFD) (see https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf), which cover governance,
strategy, risk management, and metrics and targets (see figure 4 of the
2017 recommendations for an outline of disclosures); and
(ii) The 2021 TCFD Annex: Implementing the Recommendations of the
Task Force on Climate-related Financial Disclosures, which includes
updates to reflect the evolution of disclosure practices, approaches,
and user needs (see https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf); and
(2) Includes--
(i) A greenhouse gas inventory of its Scope 1, Scope 2, and
relevant Scope 3 emissions; and
(ii) Descriptions of the entity's climate risk assessment process
and any risks identified.
Greenhouse gas inventory means a quantified list of an entity's
annual greenhouse gas emissions that--
(1) Represents emissions during a continuous period of 12 months,
ending not more than 12 months before the inventory is completed; and
(2) Is conducted in accordance with the Greenhouse Gas Protocol
Corporate Accounting and Reporting Standard, which includes the
following, as applicable:
(i) Greenhouse Gas Protocol Corporate Standard, 2004 revised
edition (see https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf).
(ii) Required Greenhouse Gases in Inventories: Accounting and
Reporting
[[Page 68329]]
Amendment, 2013 (see https://www.ghgprotocol.org/sites/default/files/ghgp/NF3-Amendment_052213.pdf).
(iii) GHG Protocol Scope 2 Guidance, 2015 (see https://ghgprotocol.org/sites/default/files/standards/Scope%202%20Guidance_Final_Sept26.pdf).
(iv) GHG Protocol Corporate Value Chain (Scope 3) Accounting and
Reporting Standard Guidance, 2011 (see https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf).
Highest-level owner means the entity that owns or controls an
immediate owner of the offeror, or that owns or controls one or more
entities that control an immediate owner of the offeror. No entity owns
or exercises control of the highest-level owner.
Immediate owner means an entity, other than the offeror, that has
direct control of the offeror. Indicators of control include, but are
not limited to, one or more of the following: ownership or interlocking
management, identity of interests among family members, shared
facilities and equipment, and the common use of employees.
Major contractor means an offeror who received more than $50
million in total Federal contract obligations (as defined in OMB
Circular A-11) in the prior Federal fiscal year as indicated in the
System for Award Management at https://www.sam.gov.
Publicly accessible website means a website that the general public
can discover using commonly used search engines and read without cost.
It includes a website of the offeror or a website managed by a
recognized third-party greenhouse gas emissions reporting program.
Science-based target means a target for reducing greenhouse gas
emissions that is in line with reductions that the latest climate
science deems necessary to meet the goals of the Paris Agreement to
limit global warming to well below 2[deg]C above pre-industrial levels
and pursue efforts to limit warming to 1.5[deg]C (see SBTi frequently
asked questions at https://sciencebasedtargets.org/faqs#what-are-science-based-targets). For information on the latest climate science
see 2018 Intergovernmental Panel on Climate Change (IPCC) Special
Report on 1.5[deg]C at https://www.ipcc.ch/sr15/.
Scope 1 emissions means direct greenhouse gas emissions from
sources that are owned or controlled by the reporting entity.
Scope 2 emissions means indirect greenhouse gas emissions
associated with the generation of electricity, heating and cooling, or
steam, when these are purchased or acquired for the reporting entity's
own consumption but occur at sources owned or controlled by another
entity.
Scope 3 emissions means greenhouse gas emissions, other than those
that are Scope 2 emissions, that are a consequence of the operations of
the reporting entity but occur at sources other than those owned or
controlled by the entity.
Significant contractor means an offeror who received $7.5 million
or more, but not exceeding $50 million, in total Federal contract
obligations (as defined in OMB Circular A-11) in the prior Federal
fiscal year as indicated in the System for Award Management at https://www.sam.gov.
23.XX03 Policy.
The Government's policy is that the contracting officer shall treat
a prospective contractor that is a significant or major contractor as
nonresponsible under 9.104-3(e), except as provided in sections 23.XX04
and 23.XX06, unless the following requirements are met:
(a) Significant and major contractors. Starting on [date 1 year
after publication of a final rule], the significant or major contractor
(see 23.XX02) has--
(1) Completed (itself or through its immediate owner or highest-
level owner) within its current or previous fiscal year a greenhouse
gas inventory of its annual Scope 1 and Scope 2 emissions; and
(2) Reported in the System for Award Management (SAM) (https://www.sam.gov) the total annual Scope 1 and Scope 2 emissions identified
through its most recent greenhouse gas inventory.
(b) Major contractors. Starting on [date 2 years after publication
of final rule], the major contractor has (itself or through its
immediate owner or highest-level owner)--
(1) Submitted an annual climate disclosure, as defined in 23.XX02,
by completing those portions of the CDP Climate Change Questionnaire
that align with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) within its
current or previous fiscal year and made the annual climate disclosure
available on a publicly accessible website; and
(2) Developed a science-based target, as defined in 23.XX02; had
the science-based target validated by the Science-Based Targets
Initiative (see https://sciencebasedtargets.org/) within the previous 5
calendar years; and made the validated science-based target available
on a publicly accessible website.
23.XX04 Exceptions.
(a) The requirements in section 23.XX03(a) and (b) do not apply to
a significant or major contractor who is--
(1) An Alaska Native Corporation, a Community Development
Corporation, an Indian tribe, a Native Hawaiian Organization, or a
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
(2) A higher education institution (defined as institutions of
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart
A, and 20 U.S.C. 1001);
(3) A nonprofit research entity;
(4) A state or local government; or
(5) An entity deriving 80 percent or more of its annual revenue
from management and operating contracts (see subpart 17.6) that are
subject to agency annual site sustainability reporting requirements.
(b) The requirements in paragraph (b) of section 23.XX03 do not
apply to a major contractor who is--
(1) Considered a small business for the North American Industry
Classification System (NAICS) code identified in its SAM registration
as its primary NAICS code; or
(2) A nonprofit organization.
23.XX05 Procedures.
(a) Starting on [date 1 year after publication of a final rule],
unless an exemption or waiver applies in accordance with section
23.XX06, the contracting officer shall review an offeror's
representations in paragraph (d) of the provision at 52.223-22 or its
equivalent at 52.212-3(t)(3) (see paragraph (b) of this section) when
determining whether the offeror is a responsible prospective contractor
(see section 9.104-3).
(1) Other than a significant or major contractor. If an offeror
represents in 52.223-22(d)(1) that it ``is not'' a significant
contractor and ``is not'' a major contractor, then the offeror is not
subject to the policy at 23.XX03 and no other representations are
required.
(2) Significant contractor. If an offeror represents that it ``is''
a significant contractor (see 52.223-22(d)(1)(i)) and ``is not'' an
excepted entity (see 52.223-22(d)(2)(i)), the following responses
indicate that the offeror is in compliance with the policy at
23.XX03(a):
[[Page 68330]]
Significant Contractors
------------------------------------------------------------------------
Representations in 52.223-22(d) or
equivalent at 52.212-3(t)(3) Offeror responses
------------------------------------------------------------------------
(i) Paragraph (d)(3)(i) or (t)(3)(iii)(A). Response must be ``has''.
Greenhouse gas inventory..
(ii) Paragraph (d)(3)(ii) or Scope 1 and Scope 2 totals
(t)(3)(iii)(B). Greenhouse gas inventory.. must be provided.
(iii) Paragraph (d)(4) or (t)(3)(iv). Response may be ``does'' or
Annual climate disclosure.. ``does not''.
(iv) Paragraph (d)(5) or (t)(3)(v). Science- Response may be ``does'' or
based targets.. ``does not''.
------------------------------------------------------------------------
(3) Major contractor. Starting on [date 2 years after publication
of a final rule], if an offeror represents that it ``is'' a major
contractor (see 52.223-22(d)(1)(ii)) and ``is not'' an excepted entity
(see 52.223-22(d)(2)(i)), the following responses indicate that the
offeror is in compliance with the policy at 23.XX03(b):
Major Contractors
------------------------------------------------------------------------
Offeror responses
----------------------------------------
Representations in 52.223-22(d) Other than small
or equivalent at 52.212-3(t)(3) Small business or business or
nonprofit nonprofit
organization organization
------------------------------------------------------------------------
(i) Paragraph (d)(2)(ii) or If Offeror checked If Offeror checked
(t)(3)(ii)(B). Excepted ``is'' for (A) or ``is not'' for
entities.. (B), then: (A) and (B),
then:
(ii) Paragraph (d)(3)(i) or Response must be Response must be
(t)(3)(iii)(A). Greenhouse gas ``has''. ``has''.
inventory..
(iii) Paragraph (d)(3)(ii) or Scope 1 and Scope 2 Scope 1 and Scope
(t)(3)(iii)(B). Greenhouse gas totals must be 2 totals must be
inventory.. provided. provided.
(iv) Paragraph (d)(4) or Response may be Response must be
(t)(3)(iv). Annual climate ``does'' or ``does ``does''.
disclosure.. not''.
(v) Para (d)(5) or (t)(3)(v). Response may be Response must be
Science-based targets.. ``does'' or ``does ``does''.
not''.
------------------------------------------------------------------------
(b) For an acquisition of commercial products or commercial
services, the contracting officer shall look for equivalent
representations from a significant or major contractor in the
solicitation provision at 52.212-3(t)(3).
(c) The contracting officer may rely on the offeror's
representations in the provisions at 52.223-22(d) or 52.212-3(t)(3)
that it is not a significant or major contractor, that it is subject to
an exception, or that it is in compliance with the policy at 23.XX03.
If the significant or major contractor's representations indicate that
the offeror is not in compliance with the policy at 23.XX03, or if the
contracting officer questions the representations, then the contracting
officer shall follow the procedures at 9.104-3(e) for determining
responsibility.
23.XX06 Exemptions and waivers.
(a) Exemptions. The procedures at 23.XX05 do not apply to
acquisitions listed at 4.1102(a) where the offeror or quoter is exempt
from the requirement to be registered in System for Award Management at
the time an offer or quotation is submitted.
(b) Waivers. The senior procurement executive may provide the
following types of waivers:
(1) Waiver of procedures. The senior procurement executive may
waive the procedures at 23.XX05 and the requirement to consider whether
a significant or major contractor is in compliance with the policy at
23.XX03 when determining responsibility for--
(i) Facilities, business units, or other defined units for national
security purposes; or
(ii) Emergencies, national security, or other mission essential
purposes; and
(2) Entity waiver. The senior procurement executive may provide a
waiver to enable a significant or major contractor to come into
compliance with the policy at 23.XX03. The period for such waivers
shall not exceed 1 calendar year. Agencies shall make such waivers
publicly available on the agency's website.
23.XX07 Solicitation provision.
The contracting officer shall insert the provision at 52.223-22,
Public Disclosure of Climate Information--Representation, in
solicitations only when 52.204-7, System for Award Management, is
included in the solicitation (see 52.204-8, Annual Representations and
Certifications).
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
11. Amend section 52.204-08 by revising the date of the provision and
paragraph (c)(1)(xix) to read as follows:
52.204-8 Annual Representations and Certifications.
* * * * *
Annual Representations and Certifications (DATE)
* * * * *
(c)(1) * * *
(xix) 52.223-22, Public Disclosure of Climate Information--
Representation. This provision applies to solicitations that include
the clause at 52.204-7.
* * * * *
0
12. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. In paragraph (a):
0
i. Adding in alphabetical order definitions for ``Annual climate
disclosure'', ``Greenhouse gas'', and ``Greenhouse gas inventory'';
0
ii. In the definition of ``Highest-level owner'' removing from the
second sentence the words ``highest level'' and adding ``highest-
level'' in its place;
0
iii. Adding in alphabetical order definitions for ``Major contractor'',
``Publicly accessible website'', ``Science-based target'', ``Scope 1
emissions'', ``Scope 2 emissions'', ``Scope 3 emissions'', and
``Significant contractor''; and
0
c. Revising paragraph (t).
The revisions and additions read as follows:
[[Page 68331]]
52.212-3 Offeror Representations and Certifications--Commercial
Products and Commercial Services.
* * * * *
Offeror Representations and Certifications-Commercial Products and
Commercial Services (DATE)
* * * * *
(a) Definitions. As used in this provision--
Annual climate disclosure means an entity's set of disclosures
that--
(1) Aligns with--
(i) The 2017 Recommendations of the Task Force on Climate-Related
Financial Disclosures (TCFD) (see https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf), which covers governance,
strategy, risk management, and metrics and targets (see figure 4 of the
2017 recommendations for an outline of disclosures); and
(ii) The 2021 TCFD Annex: Implementing the Recommendations of the
Task Force on Climate-related Financial Disclosures, which includes
updates to reflect the evolution of disclosure practices, approaches,
and user needs (see https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf); and
(2) Includes--
(i) A greenhouse gas inventory of its Scope 1, Scope 2, and
relevant Scope 3 emissions; and
(ii) Descriptions of the entity's climate risk assessment process
and any risks identified.
* * * * *
Greenhouse gas means carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride, or sulfur
hexafluoride.
Greenhouse gas inventory means a quantified list of an entity's
annual greenhouse gas emissions that--
(1) Represents emissions during a continuous period of 12 months,
ending not more than 12 months before the inventory is completed; and
(2) Is conducted in accordance with the Greenhouse Gas Protocol
Corporate Accounting and Reporting Standard, which includes the
following, as applicable:
(i) Greenhouse Gas Protocol Corporate Standard, 2004 revised
edition (see https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf).
(ii) Required Greenhouse Gases in Inventories: Accounting and
Reporting Amendment, 2013 (see https://www.ghgprotocol.org/sites/default/files/ghgp/NF3-Amendment_052213.pdf).
(iii) GHG Protocol Scope 2 Guidance, 2015 (see https://ghgprotocol.org/sites/default/files/standards/Scope%202%20Guidance_Final_Sept26.pdf).
(iv) GHG Protocol Corporate Value Chain (Scope 3) Accounting and
Reporting Standard Guidance, 2011 (see https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf).
* * * * *
Major contractor means an offeror who received more than $50
million in total Federal contract obligations (as defined in OMB
Circular A-11) in the prior Federal fiscal year as indicated in the
System for Award Management at https://www.sam.gov.
* * * * *
Publicly accessible website means a website that the general public
can discover using commonly used search engines and read without cost.
It includes a website of the offeror or a website managed by a
recognized third-party greenhouse gas emissions reporting program.
* * * * *
Science-based target means a target for reducing greenhouse gas
emissions that is in line with reductions that the latest climate
science deems necessary to meet the goals of the Paris Agreement to
limit global warming to well below 2[deg]C above pre-industrial levels
and pursue efforts to limit warming to 1.5[deg]C (see SBTi frequently
asked questions at https://sciencebasedtargets.org/faqs#what-are-science-based-targets). For information on the latest climate science
see 2018 Intergovernmental Panel on Climate Change (IPCC) Special
Report on 1.5[deg]C at https://www.ipcc.ch/sr15/.
Scope 1 emissions means direct greenhouse gas emissions from
sources that are owned or controlled by the reporting entity.
Scope 2 emissions means indirect greenhouse gas emissions
associated with the generation of electricity, heating and cooling, or
steam, when these are purchased or acquired for the reporting entity's
own consumption but occur at sources owned or controlled by another
entity.
Scope 3 emissions means greenhouse gas emissions, other than those
that are Scope 2 emissions, that are a consequence of the operations of
the reporting entity but occur at sources other than those owned or
controlled by the entity.
* * * * *
Significant contractor means an offeror who received $7.5 million
or more, but not exceeding $50 million, in total Federal contract
obligations (as defined in OMB Circular A-11) in the prior Federal
fiscal year as indicated in the System for Award Management at https://www.sam.gov.
* * * * *
(t) Public Disclosure of Climate Information (Executive Order
14030). Applies in all solicitations that require offerors to register
in SAM (12.301(d)(1)).
(1) Responsibility. Except as provided in paragraph (t)(2) of this
provision, an offeror that is a significant or major contractor will be
treated as nonresponsible pursuant to FAR section 9.104-3(e) unless the
following requirements are met:
(i) Significant or major contractor. Starting on [date 1 year after
publication of a final rule], if the offeror is a significant or major
contractor, then the offeror shall have--
(A) Completed (itself or through its immediate owner or highest-
level owner) within its current or previous fiscal year a greenhouse
gas inventory of its annual Scope 1 and Scope 2 emissions; and
(B) Reported in SAM (https://www.sam.gov) the total annual Scope 1
and Scope 2 emissions identified through its most recent greenhouse gas
inventory.
(ii) Major contractor. Starting on [date 2 years after publication
of a final rule], if the offeror is a major contractor, then the
offeror (itself or through its immediate owner or highest-level owner)
shall have completed the following:
(A) Annual climate disclosure. Submitted its annual climate
disclosure, as defined in paragraph (a) of this provision, by
completing those portions of the CDP Climate Change Questionnaire that
align with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) within its
current or previous fiscal year and made the annual climate disclosure
available on a publicly accessible website. The time periods for
submitting the CDP Climate Change Questionnaire are identified at
https://www.cdp.net/en/guidance/guidance-for-companies.
(B) Science-based target. Developed a science-based target, as
defined in paragraph (a) of this provision; had the science-based
target validated by the Science-Based Targets Initiative (see https://sciencebasedtargets.org/) within the previous 5 calendar years; and
made the validated science-based target available on a publicly
accessible website. The validation process and time period are
identified at https://sciencebasedtargets.org/set-a-target.
[[Page 68332]]
(2) Exceptions. (i) The requirements in paragraphs (t)(1)(i) and
(t)(1)(ii) of this provision do not apply to a significant or major
contractor who is--
(A) An Alaska Native Corporation, a Community Development
Corporation, an Indian tribe, a Native Hawaiian Organization, or a
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
(B) A higher education institution (defined as institutions of
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart
A, and 20 U.S.C. 1001);
(C) A nonprofit research entity;
(D) A state or local government; or
(E) An entity deriving 80 percent or more of its annual revenue
from management and operating contracts (see FAR subpart 17.6) that are
subject to agency annual site sustainability reporting requirements.
(ii) The requirements in paragraph (t)(1)(ii) of this provision do
not apply to a major contractor who is--
(A) Considered a small business for the North American Industry
Classification System (NAICS) code identified in its SAM registration
as its primary NAICS code; or
(B) A nonprofit organization.
(3) Representations. The Offeror shall complete the representation
at paragraph (t)(3)(i) of this provision. If the Offeror represents in
paragraph (t)(3)(i) that it ``is'' a significant contractor or major
contractor, then the Offeror shall complete the representations in
paragraphs (t)(3)(ii) through (v).
(i) Significant or major contractor. The Offeror represents the
following:
(A) It [ ] is, [ ] is not a significant contractor (see definition
in paragraph (a) of this provision).
(B) It [ ] is, [ ] is not a major contractor (see definition in
paragraph (a) of this provision).
(ii) Excepted entities. The Offeror represents the following:
(A) It [ ] is, [ ] is not an excepted entity described in paragraph
(t)(2)(i) of this provision.
(B) For the purposes of applying the exception to the requirement
of paragraph (t)(1)(ii) of this provision--
(1) It [ ] is, [ ] is not considered a small business for the NAICS
code identified in its SAM registration as its primary NAICS code; and
(2) It [ ] is, [ ] is not a nonprofit organization.
(iii) Greenhouse gas inventory. [Inventory is required for a
significant or major contractor, except as provided in paragraph
(t)(2)(i) of this provision.] The Offeror represents that--
(A) It [ ] has, [ ] has not (itself or through its immediate owner
or highest-level owner) completed within its current or previous fiscal
year a greenhouse gas inventory of its annual Scope 1 and Scope 2
emissions; and
(B) Its most recent greenhouse gas inventory indicates the
following total annual greenhouse gas emissions in metric tons of
carbon dioxide equivalent (MT CO2e):
Scope 1 emissions: _
[Offeror to enter total MT CO2e].
Scope 2 emissions: _
[Offeror to enter total MT CO2e].
(iv) Annual climate disclosure. [Disclosure is required for a major
contractor, except as provided in paragraphs (t)(2)(i) and (t)(2)(ii)
of this provision.] The Offeror represents that it [ ] does, [ ] does
not (itself or through its immediate owner or highest-level owner) make
available on a publicly accessible website an annual climate disclosure
that was completed using the CDP Climate Change Questionnaire in its
current or previous fiscal year.
(v) Science-based targets. [Target is required for a major
contractor, except as provided in paragraphs (t)(2)(i) and (ii) of this
provision.] The Offeror represents that it [ ] does, [ ] does not
(itself or through its immediate owner or highest-level owner) make
available on a publicly accessible website a science-based target that
has been validated by the Science-Based Targets Initiative within the
previous 5 calendar years.
(4) Website(s). If the Offeror checked ``does'' in paragraph
(t)(3)(iv) or (v) of this provision, then the Offeror shall provide the
publicly accessible website(s) where the required disclosures and
targets are reported: _.
* * * * *
0
13. Amended section 52.213-4 by
0
a. Revising the date of the clause; and
0
b. In paragraph (b)(1)(xii), removing the phrase ``at FAR
23.804(a)(1)'' and adding ``in FAR 23.804(a)'' in its place.
The revision reads as follows:
52.213-4 Terms and Conditions--Simplified Acquisitions (Other Than
Commercial Products and Commercial Services).
* * * * *
Terms and Conditions--Simplified Acquisitions (Other Than
Commercial Products and Commercial Services) (DATE)
* * * * *
0
14. Amend section 52.223-11 by revising the introductory text to read
as follows:
52.223-11 Ozone-Depleting Substances and High Global Warming
Potential Hydrofluorocarbons.
As prescribed in 23.804(a), insert the following clause:
* * * * *
0
15. Amend section 52.223-12 by revising the introductory text to read
as follows:
52.223-12 Maintenance, Service, Repair, or Disposal of Refrigeration
Equipment and Air Conditioners.
As prescribed in 23.804(b), insert the following clause:
* * * * *
0
16. Amend section 52.223-20 by revising the introductory text to read
as follows:
52.223-20 Aerosols.
As prescribed in 23.804(c), insert the following clause:
* * * * *
0
17. Amend section 52.223-21 by revising the introductory text to read
as follows:
52.223-21 Foams.
As prescribed in 23.804(d), insert the following clause:
* * * * *
0
18. Revise section 52.223-22 to read as follows:
52.223-22 Public Disclosure of Climate Information--Representation.
As prescribed in 23.XX07, insert the following provision:
Public Disclosure of Climate Information--Representation (DATE)
(a) Definitions. As used in this provision--
Annual climate disclosure means an entity's set of disclosures
that--
(1) Aligns with--
(i) The 2017 Recommendations of the Task Force on Climate-Related
Financial Disclosures (TCFD) (see https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf), which covers governance,
strategy, risk management, and metrics and targets (see figure 4 of the
2017 recommendations for an outline of disclosures); and
(ii) The 2021 TCFD Annex: Implementing the Recommendations of the
Task Force on Climate-related Financial Disclosures, which includes
updates to reflect the evolution of disclosure practices, approaches,
and user needs (see https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf); and
(2) Includes--
(i) A greenhouse gas inventory of its Scope 1, Scope 2, and
relevant Scope 3 emissions; and
(ii) Descriptions of the entity's climate risk assessment process
and any risks identified.
Greenhouse gas means carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons,
[[Page 68333]]
nitrogen trifluoride, or sulfur hexafluoride.
Greenhouse gas inventory means a quantified list of an entity's
annual greenhouse gas emissions that--
(1) Represents emissions during a continuous period of 12 months,
ending not more than 12 months before the inventory is completed; and
(2) Is conducted in accordance with the Greenhouse Gas Protocol
Corporate Accounting and Reporting Standard, which includes the
following, as applicable:
(i) Greenhouse Gas Protocol Corporate Standard, 2004 revised
edition (see https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf).
(ii) Required Greenhouse Gases in Inventories: Accounting and
Reporting Amendment, 2013 (see https://www.ghgprotocol.org/sites/default/files/ghgp/NF3-Amendment_052213.pdf).
(iii) GHG Protocol Scope 2 Guidance, 2015 (see https://ghgprotocol.org/sites/default/files/standards/Scope%202%20Guidance_Final_Sept26.pdf).
(iv) GHG Protocol Corporate Value Chain (Scope 3) Accounting and
Reporting Standard Guidance, 2011 (https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf).
Highest-level owner means the entity that owns or controls an
immediate owner of the offeror, or that owns or controls one or more
entities that control an immediate owner of the offeror. No entity owns
or exercises control of the highest-level owner.
Immediate owner means an entity, other than the offeror, that has
direct control of the offeror. Indicators of control include, but are
not limited to, one or more of the following: ownership or interlocking
management, identity of interests among family members, shared
facilities and equipment, and the common use of employees.
Major contractor means an offeror who received more than $50
million in total Federal contract obligations (as defined in OMB
Circular A-11) in the prior Federal fiscal year as indicated in the
System for Award Management at https://www.sam.gov.
Publicly accessible website means a website that the general public
can discover using commonly used search engines and read without cost.
It includes a website of the offeror or a website managed by a
recognized third-party greenhouse gas emissions reporting program.
Science-based target means a target for reducing greenhouse gas
emissions that is in line with reductions that the latest climate
science deems necessary to meet the goals of the Paris Agreement to
limit global warming to well below 2[deg]C above pre-industrial levels
and pursue efforts to limit warming to 1.5[deg]C (see SBTi frequently
asked questions at https://sciencebasedtargets.org/faqs#what-are-science-based-targets). For information on the latest climate science
see 2018 Intergovernmental Panel on Climate Change (IPCC) Special
Report on 1.5[deg]C at https://www.ipcc.ch/sr15/.
Scope 1 emissions means direct greenhouse gas emissions from
sources that are owned or controlled by the reporting entity.
Scope 2 emissions means indirect greenhouse gas emissions
associated with the generation of electricity, heating and cooling, or
steam, when these are purchased or acquired for the reporting entity's
own consumption but occur at sources owned or controlled by another
entity.
Scope 3 emissions means greenhouse gas emissions, other than those
that are Scope 2 emissions, that are a consequence of the operations of
the reporting entity but occur at sources other than those owned or
controlled by the entity.
Significant contractor means an offeror who received $7.5 million
or more, but not exceeding $50 million, in total Federal contract
obligations (as defined in OMB Circular A-11) in the prior Federal
fiscal year as indicated in the System for Award Management at https://www.sam.gov.
(b) Responsibility. Except as provided in paragraph (c) of this
provision, an offeror that is a significant or major contractor will be
treated as nonresponsible pursuant to Federal Acquisition Regulation
(FAR) section 9.104-3(e) unless the following requirements are met:
(1) Significant or major contractor. Starting on [date 1 year after
publication of a final rule], if the offeror is a significant or major
contractor, then the offeror shall have--
(i) Completed (itself or through its immediate owner or highest-
level owner) within its current or previous fiscal year a greenhouse
gas inventory of its annual Scope 1 and Scope 2 emissions; and
(ii) Reported in the System for Award Management (SAM) the total
annual Scope 1 and Scope 2 emissions identified through its most recent
greenhouse gas inventory.
(2) Major contractor. Starting on [date 2 years after publication
of a final rule], if the offeror is a major contractor, then the
offeror (itself or through its immediate owner or highest-level owner)
shall have completed the following:
(i) Annual climate disclosure. Submitted its annual climate
disclosure, as defined in paragraph (a) of this provision, by
completing those portions of the CDP Climate Change Questionnaire that
align with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) within its
current or previous fiscal year and made the annual climate disclosure
available on a publicly accessible website. The time periods for
submitting the CDP Climate Change Questionnaire are identified at
https://www.cdp.net/en/guidance/guidance-for-companies.
(ii) Science-based target. Developed a science-based target, as
defined in paragraph (a) of this provision; had the science-based
target validated by the Science-Based Targets Initiative (see https://sciencebasedtargets.org/) within the previous 5 calendar years; and
made the validated science-based target available on a publicly
accessible website. The validation process and time period are
identified at https://sciencebasedtargets.org/set-a-target.
(c) Exceptions. (1) The requirements in paragraphs (b)(1) and
(b)(2) of this provision do not apply to a significant or major
contractor who is--
(i) An Alaska Native Corporation, a Community Development
Corporation, an Indian tribe, a Native Hawaiian Organization, or a
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
(ii) A higher education institution (defined as institutions of
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart
A, and 20 U.S.C. 1001);
(iii) A nonprofit research entity;
(iv) A State or local government; or
(v) An entity deriving 80 percent or more of its annual revenue
from management and operating contracts (see FAR subpart 17.6) that are
subject to agency annual site sustainability reporting requirements.
(2) The requirements in paragraph (b)(2) of this provision do not
apply to a major contractor who is--
(i) Considered a small business for the North American Industry
Classification System (NAICS) code identified in its SAM registration
as its primary NAICS code; or
(ii) A nonprofit organization.
(d) Representations. [The Offeror shall complete the representation
at paragraph (d)(1) of this provision. If the Offeror represents in
paragraph (d)(1) that it ``is'' a significant contractor or major
contractor, then the Offeror shall
[[Page 68334]]
complete the representations in paragraphs (d)(2) through (d)(5)].
(1) Significant or major contractor. The Offeror represents the
following:
(i) It [ ] is, [ ] is not a significant contractor (see definition
in paragraph (a) of this provision).
(ii) It [ ] is, [ ] is not a major contractor (see definition in
paragraph (a) of this provision).
(2) Excepted entities. The Offeror represents the following:
(i) It [ ] is, [ ] is not an excepted entity described in paragraph
(c)(1) of this provision.
(ii) For the purposes of applying the exception to the requirements
of paragraph (b)(2) of this provision--
(A) It [ ] is, [ ] is not considered a small business for the NAICS
code identified in its SAM registration as its primary NAICS code; and
(B) It [ ] is, [ ] is not a nonprofit organization.
(3) Greenhouse gas inventory. [Inventory is required for a
significant or major contractor, except as provided in paragraph (c)(1)
of this provision.] The Offeror represents that--
(i) It [ ] has, [ ] has not (itself or through its immediate owner
or highest-level owner) completed within its current or previous fiscal
year a greenhouse gas inventory of its annual Scope 1 and Scope 2
emissions; and
(ii) Its most recent greenhouse gas inventory indicates the
following total annual greenhouse gas emissions in metric tons of
carbon dioxide equivalent (MT CO2e):
Scope 1 emissions: _
[Offeror to enter total MT CO2e].
Scope 2 emissions: _
[Offeror to enter total MT CO2e].
(4) Annual climate disclosure. [Disclosure is required for a major
contractor, except as provided in paragraphs (c)(1) and (c)(2) of this
provision.] The Offeror represents that it [ ] does, [ ] does not
(itself or through its immediate owner or highest-level owner) make
available on a publicly accessible website an annual climate disclosure
that was completed using the CDP Climate Change Questionnaire within
its current or previous fiscal year.
(5) Science-based target. [Target is required for a major
contractor, except as provided in paragraphs (c)(1) and (c)(2) of this
provision]. The Offeror represents that it [ ] does, [ ] does not
(itself or through its immediate owner or highest-level owner) make
available on a publicly accessible website a science-based target that
has been validated by the Science-Based Targets Initiative within the
previous 5 calendar years.
(e) website(s). If the Offeror checked ``does'' in paragraphs
(d)(4) or (d)(5) of this provision, then the Offeror shall provide the
publicly accessible website(s) where the required disclosures and
targets are reported: _.
(End of provision)
[FR Doc. 2022-24569 Filed 11-10-22; 8:45 am]
BILLING CODE 6820-EP-P