**Statement of the American Council on Education**

**and the**

**College and University Professional Association for Human Resources**

**on the**

# Proposed Amendments on the Federal Acquisition Regulations

**to the FAR Council meeting 2001-014**

**June 18, 2001**

Good afternoon. My name is Sheldon Elliot Steinbach. I am the Vice
President and General Counsel of the American Council on Education
(ACE). My comments today are on behalf or ACE and the College and
University Professional Association for Human Resources (CUPA-HR).
Represent more than 2,000 public and private higher education
institutions, we wish to express our appreciation for the opportunity to
present our views before the Council on amendments to the Federal
Acquisition Regulation (FAR) found at 48 CFR Part 9, 14, 15, 31, and 52,
concerning contractor responsibility, labor relations costs, and costs
relating to legal and other responsibilities.

As the recipient of over \$18 billion annually in federal grants and
contracts, American colleges and universities would be directly and
adversely affected by the FAR Council\'s final regulation of December
20, 2000. ACE, CUPA-HR, and several other higher education associations
submitted comments throughout the regulatory process, expressing concern
over the FAR Council\'s proposed regulations of July 9, 1999 and June
30, 2000. As a result, both ACE and CUPA-HR strongly support the FAR
Councils decision on April 3, 2001 to issue an interim final and
proposed regulation to stay and ultimately revoke the final FAR
regulation published on December 20, 2000.

Fully supported by ACE and CUPA-HR, the April 3 regulations restore the
structure of the FAR regulation as it existed before January 19, 2001,
requiring federal contractors to demonstrate, FAR section 9.104-1, to
having a "satisfactory record of integrity and business ethics" as it
relates to the ability carry out the specific federal contract at hand.
We also agree that federal contractors, like all entities in society,
should strive to be compliant with all federal laws and should be
subject to the penalties and remedies of those laws as created by
Congress. We support the role of government in awarding contracts only
to those organization's deemed "responsible", with the responsibility
determination being tied to the contractor's ability to carry out the
specific contract up for consideration.

As many in the audience are aware, higher education's research
institutions are responsible for groundbreaking scientific and
technological advances, often with the assistance of contracts from
federal agencies such as the National Institutes of Health, the U.S.
Department of Health and Human Services, and the U.S. Department of
Defense. Colleges and universities are progressive employers, offering
generous benefits and innovative policies which make our campuses
desirable places to work. Yet, as large, complex employers, colleges and
universities are subject to extensive regulations, which may result in
conflicts and disagreements. Despite our best efforts and our desire to
serve as progressive, model employers, some of these disputes lead to
complaints, allegations, and even findings that an institution has
violated law.

As the Council is aware, the final regulation of December 20, 2000 would
have modified the General Standards of FAR Section 9.104-1(d) to require
that a prospective contractor have a satisfactory record of integrity
and business ethics including "satisfactory compliance with the law,
including tax laws, labor and employment laws, environmental laws
antitrust laws, and consumer protection laws." Further, although the
regulation cited specific areas of law that a prospective contractor
must be in compliance with, the plain language of the statute and the
regulation indicated that the contracting officer was not limited to
reviewing only those listed, but also a prospective contractor's record
of compliance with foreign and state laws and regulations.

The higher education community continues to be opposed to the
modification and expansion of the law covered under the General Standard
provision as stated in the final rule. A responsibility determination of
a potential federal contractor should not be based on complaints,
allegations, or even administrative findings of violations of federal
tax, labor, employment, antitrust or consumer protection law; let alone
extending it to foreign and state laws.

In addition, the academic community continues to believe that federal
contracting officers or their contracting agencies are not the
appropriate source of specialized determinations of legal compliance
with the entire code of U.S. law as well as foreign and state law.
Finally, contract debarment or denial of contractor eligibility as part
of the responsibility determination operate as a sanction which is not
appropriate under the [Federal Property and Administrative Services
Act]{.underline}, (40 U.S.C. § 471 ct seq.), nor under the federal
statutes described in the final rule where those laws do not contain
such sanctions.

ACE and CUPA-HR continue to believe that a federal contracting officer
should only review a prospective contractor's compliance with federal
laws as it applies to the ability of the organization to carry out the
federal contract. The final regulations, however, has modified FAR
Section 9.104-3 to create a nexus between having a satisfactory record
of compliance with all law and the carrying out of the federal contract
by a contracting organization. The final rule stated that a satisfactory
record of compliance with the law indicates that the prospective
contractor possesses basic honesty, integrity and trustworthiness, and
that the government can trust or rely on the contractor to perform the
contract in a timely manner. To make this determination, the preamble of
the final rule indicates that a contracting officer may review a
prospective contractor's compliance with all aspects of law (federal,
state, local, and foreign) and not just those laws connected to the
contractor's ability to perform the contract. While the final regulation
in FAR 9.104-3(c) creates a hierarchical listing of relevant and
credible information, contracting officers may also consider other
information such as civil or administrative complaint or similar actions
filed by or on behalf of a federal agency, board or commission, if the
action reflects an adjudicated determination by the agency. The preamble
to the final rule indicates that while this information will likely
pertain to compliance with federal and state law, a prospective
contractor's record of compliance with foreign laws as well as
administrative complaints, and private civil cases may also be
considered as relevant and credible information. The academic community
continues to oppose the argument that there is a nexus between having a
satisfactory record of compliance with all law and the ability to carry
out of the federal contract by a contracting organization.

We also continue to oppose efforts to have these determinations based on
complaints, allegations, or even administrative findings that are far
from a final adjudication of an issue at hand. At a time when backlogged
federal agencies and overburdened federal courts are seeking to reduce
litigation through alternative dispute resolution measures such as
mediation and conciliation, the requirement that violations or alleged
violations of federal laws extraneous to the procurement process are to
be considered in every eligibility determination would actually
encourage more litigation and adversarial relationships.

For the foregoing reasons, ACE and CUPA-HR strongly support the FAR
Councils proposed regulation of April 3, 2001 to revoke the final FAR
regulation published on December 20, 2000. These actions restore the
structure of the FAR regulation as it existed before January 19, 2001
and would be consistent with the progressive procurement reforms of the
last decade, which were designed to streamline the government
contracting process and promote full, fair and open competition.

On behalf of ACE and CUPA-HR, I thank you once again for the opportunity
to comment on this matter before the Council. I would be happy to answer
any questions you may have.