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[Federal Register Volume 71, Number 206 (Wednesday, October 25, 2006)]
[Rules and Regulations]
[Pages 62394-62396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8657]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Part 29

[Docket No. OST-2005-22602]
RIN 2105-AD46

Debarment and Suspension (Nonprocurement) Requirements

AGENCY: Office of the Secretary (OST), DOT.

ACTION: Final rule.

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SUMMARY: This rule amends the Department of Transportation's 
regulations implementing the governmentwide nonprocurement debarment 
and suspension requirements. Specifically, this rule adopts the 
optional lower tier coverage prohibiting excluded persons from 
participating in subcontracts at tiers lower than the first tier below 
a covered nonprocurement transaction.

DATES: Effective Date: This final rule is in effect November 24, 2006.

FOR FURTHER INFORMATION CONTACT: Ellen Shields, Office of the Senior 
Procurement Executive, Office of Administration (M-61), (202) 366-4268, 
400 Seventh Street, SW., Washington, DC 20590-0001. Office hours are 
from 7:45 a.m. to 4:15 p.m. e.t., Monday through Friday, except Federal 
holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

    You may retrieve previously filed comments online through the 
Document Management System (DMS) at http://dmses.dot.gov. The DMS is 
available 24 hours each day, 365 days each year. Electronic retrieval 
help and guidelines are available under the help section of the Web 
site. An electronic copy of this document may be downloaded by using a 
computer, modem and suitable communications software from the 
Government Printing Office's Electronic Bulletin Board Service at (202) 
512-1661. Internet users may also reach the Office of the Federal 
Register's home page at http://www.nara.gov/fedreg and the Government 
Printing Office's Web page at: http://www.access.gpo.gov/nara.

Background

    On November 26, 2003, the Department of Transportation (DOT), along 
with twenty-nine other agencies, published its final rule implementing 
changes to the governmentwide debarment and suspension common rule (68 
FR 66533). These regulations were intended to resolve unnecessary 
technical differences between the procurement and nonprocurement 
systems, revise the existing governmentwide debarment and suspension 
regulations in a plain language style and format, and make other 
improvements consistent with the purpose of the debarment and 
suspension system. One of the changes made to the regulations included 
limiting the mandatory down-tier application of an exclusion to only 
the first procurement level. Under the previous governmentwide 
regulations, all executive agencies applied suspensions and debarments 
to all procurement levels. However, in the revised governmentwide 
regulations, each agency was given the option of applying an exclusion 
to levels below the first procurement level. This final rule adopts the 
optional lower tier coverage to make the debarment and suspension 
regulations applicable to levels below the first procurement level. 
Many of the DOT programs involve billions of dollars in grants that are 
obligated to construction projects by States, localities and other 
recipients. For instance, on August 10, 2005, the President signed into 
law the Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU), Public Law 109-59. This Act 
authorizes funding for highways, highway safety, and public 
transportation totaling $244.1 billion over five years (2005-2009) and 
is the largest surface transportation investment in our Nation's 
history. Of this $244.1 billion, a substantial portion of these funds 
will be used by States and other grantees to procure construction 
contracts. These construction contracts could involve multiple 
subcontracts that would be vulnerable to misconduct and poor 
performance if suspended or debarred contractors are allowed to 
participate in these transactions.

Discussion of Comments

    On October 5, 2005, the Office of the Secretary (OST) in the DOT 
published a notice of proposed rulemaking (NRPM) and requested comment 
on whether the DOT should adopt the lower tier coverage. In response to 
the NPRM, OST received two comments. These comments were submitted by 
the American Road and Transportation Builders Association (ARTBA) and 
the Wisconsin Department of Transportation (WisDOT).
    ARTBA commented that the transportation construction industry has a 
well-deserved reputation of being comprised of highly ethical firms. 
However, despite this reputation, some firms betray the integrity of 
the whole. In these situations, ARTBA acknowledged that suspension or 
debarment may be appropriate. Additionally, ARTBA commented on the 
importance of maintaining the contractor's due process rights. ARTBA 
stated that the basis of due process is that everyone is deemed 
innocent until proven guilty and that due process is not served if 
contractors are suspended or debarred before being afforded an 
opportunity to be heard. ARTBA noted that debarment and suspension 
cannot be taken lightly because of the interruption in the firm's 
ability to work and, as such, the DOT needs to ensure that the 
debarment and suspension process is fair.
    The DOT agrees with ARTBA that the transportation construction 
industry does indeed have a well-deserved reputation of being comprised 
of highly ethical firms. However, as ARTBA acknowledges, there are some 
firms within the industry that betray this reputation. The 
participation of these irresponsible firms and individuals in the 
transportation program could result in millions of dollars being wasted 
due to fraud. These are funds that could be used on construct more 
transportation projects. Also, the DOT agrees with

[[Page 62395]]

ARTBA on the importance of maintaining the contractor's due process 
rights. The debarment and suspension regulations promulgated in 2003 
set out detailed procedures that must be followed whenever the 
Department initiates a suspension or debarment action. These procedures 
include both notice and an opportunity to be heard.
    WisDOT commented that the language was not user friendly and 
suggested that the DOT adopt a definition of procurement as well as 
revise the proposed language by essentially substituting the word 
``nonprocurement'' with ``procurement.'' The current regulations are 
based on a governmentwide common rule that was adopted by numerous 
agencies and were drafted to be more consistent with the debarment and 
suspension rules in the Federal Acquisition Regulation (FAR). Thus, the 
DOT is hesitant to make any changes that may deviate from the 
consistency these rules are intended to create among Executive Branch 
agencies as well as the FAR. However, the DOT notes this suggestion and 
will work with the Office of Management and Budget, which is the lead 
agency on the governmentwide common rule, in this endeavor.
    The DOT feels that the language should be adopted as proposed in 
the NPRM. First, the alternate language proposed by WisDOT would apply 
to procurement transactions at the first procurement level. These types 
of transactions have unique rules already established in section 
29.220(b) of 49 CFR. Second, the language proposed by the NPRM makes it 
clear that the provision applies to contracts awarded by contractors 
under a nonprocurement transaction. Thus, the DOT is adopting the 
language proposed in the NPRM.

Rulemaking Analyses and Notices

Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    The DOT has determined preliminarily that this action is not a 
significant regulatory action within the meaning of Executive Order 
12866 and is not significant within the meaning of Department of 
Transportation regulatory policies and procedures. It is anticipated 
that the economic impact of this rulemaking would be minimal, since it 
would bring the DOT's regulations concerning the effect of a debarment 
and suspension back in line with the regulations that were in effect 
prior to November 26, 2003. These changes would not adversely affect, 
in a material way, any sector of the economy. In addition, these 
changes would not interfere with any action taken or planned by another 
agency and would not materially alter the budgetary impact of any 
entitlements, grants, user fees, or loan programs. Consequently, a full 
regulatory evaluation is not required.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601-612) the DOT has evaluated the effects of this action on 
small entities and has determined that the action would not have a 
significant economic impact on a substantial number of small entities. 
This action brings the DOT's regulations concerning the effect of a 
debarment and suspension back in line with the regulations that were in 
effect prior to November 26, 2003 by excluding persons who have been 
debarred or suspended from participating in transactions beneath the 
first procurement level under a non-procurement transaction. For these 
reasons, the DOT certifies that this action does not have a significant 
economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    This rule does not impose unfunded mandates as defined by the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 1995, 
109 Stat. 48). This rule will not result in the expenditure by State, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $100 million or more in any one year (2 U.S.C. 1532). This 
final rule provides for the exclusion of debarred or suspended persons 
from participating in transactions beneath the first procurement level 
under a non-procurement transaction, therefore, this action is not 
considered an unfunded mandate.

Executive Order 13132 (Federalism Assessment)

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132, and the DOT has determined 
that this action does not have sufficient federalism implications to 
warrant the preparation of a Federalism assessment. The DOT has also 
determined that this action does not preempt any State law or State 
regulation or affect the States' ability to discharge traditional State 
governmental functions.

Executive Order 13175

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13175 (``Consultation and 
Coordination with Indian Tribal Governments''). Because this final rule 
does not significantly or uniquely affect the communities of the Indian 
tribal governments and does not impose substantial direct compliance 
costs, the funding and consultation requirements of Executive Order 
13175 do not apply.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et 
seq.), Federal agencies must obtain approval from the Office of 
Management and Budget for each collection of information they conduct, 
sponsor, or require through regulations. The DOT has determined that 
this rule does not contain collection of information requirements for 
the purposes of the PRA.

National Environmental Policy Act

    The agency has analyzed this action for the purpose of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321) and has determined 
that this action does not have any effect on the quality of the 
environment.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the United Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross reference this action with the 
Unified Agenda.

List of Subjects in 49 CFR Part 29

    Administrative practice and procedure, Government contracts, Grant 
programs, Loan programs, Reporting and recordkeeping requirements.

    Issued on: October 6, 2006.
Maria Cino,
Acting Secretary of Transportation.

0
In consideration of the foregoing, the DOT proposes to amend, title 49, 
Code of Federal Regulations, part 29, as set forth below:

PART 29--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)

0
1. The authority citation for part 29 continues to read as follows:

    Authority: Sec. 2455, Pub. L. 103-355, 108 Stat. 3327 31 U.S.C. 
6101 note); E.O. 11738 3 CFR, 173 Comp., p. 799); E.O. 12549 (3 CFR, 
1986 Comp., p. 189); E.O. 12689 (3 CFR 1989 Comp., p. 235).

[[Page 62396]]

0
2. In Sec.  29.220, add paragraph (c) to read as follows:

Sec.  29.220  Are any procurement transactions included as covered 
transactions?

* * * * *
    (c) The contract is awarded by any contractor, subcontractor, 
supplier, consultant or its agent or representative in any transaction, 
regardless of tier, to be funded or provided by the DOT under a 
nonprocurement transaction that is expected to equal or exceed $25,000. 
[See optional lower tier coverage shown in the diagram in the appendix 
to this part.]

Sec.  29.520  [Amended]

0
3. In Sec.  29.520, in paragraph (d), remove the references: ``United 
States Coast Guard [DOT-USCG]'' and ``Research and Special Programs 
[DOT-RSPA]'' and insert the references ``Research and Innovative 
Technology Administration [RITA]'' and ``Pipeline and Hazardous 
Materials Safety Administration [DOT-PHMSA]'' in their place, 
respectively.

[FR Doc. 06-8657 Filed 10-24-06; 8:45 am]
BILLING CODE 4910-9X-M
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