```

[Federal Register Volume 76, Number 108 (Monday, June 6, 2011)]
[Proposed Rules]
[Pages 32846-32849]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-13365]

-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 203, 204, and 252

RIN 0750-AG99

Defense Federal Acquisition Regulation Supplement; Representation 
Relating to Compensation of Former DoD Officials (DFARS Case 2010-D020)

AGENCY: Defense Acquisition Regulations System; Department of Defense 
(DoD).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to require that offerors represent 
whether former DoD officials employed by the offeror are in compliance 
with post-employment restrictions.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before August 5, 2011, to be considered 
in the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2010-D020, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov.
    Submit comments via the Federal eRulemaking portal by inputting 
``DFARS Case 2010-D020'' under the heading ``Enter keyword or ID'' and 
selecting ``Search.'' Select the link ``Submit a Comment'' that 
corresponds with ``DFARS Case 2010-D020.'' Follow the instructions 
provided at the ``Submit a Comment'' screen. Please include your name, 
company name (if any), and

[[Page 32847]]

``DFARS Case 2010-D020'' on your attached document.
    [cir] E-mail: dfars@osd.mil. Include DFARS Case 2010-D020 in the 
subject line of the message.
    [cir] Fax: 703-602-0350.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 
Meredith Murphy, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 Defense 
Pentagon, Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check http://www.regulations.gov approximately two to three days after submission to 
verify posting (except allow 30 days for posting of comments submitted 
by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, Defense 
Acquisition Regulations System, OUSD (AT&L) DPAP/DARS, 3060 Defense 
Pentagon, Room 3B855, Washington, DC 20301-3060. Telephone 703-602-
1302; facsimile 703-602-0350. Please cite DFARS Case 2010-D020.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Requirements

    The principal statutory restrictions concerning post-government 
employment for DoD and other Federal employees after leaving Government 
employment are found in 18 U.S.C. 207 and 41 U.S.C. 2104 (formerly, 41 
U.S.C. 423), and 5 CFR parts 2637 and 2641.
1. 18 U.S.C. 207
    18 U.S.C. 207 prohibits an individual from representing a 
contractor to their former agency on particular matters involving 
specific parties that they handled while working for the Federal 
Government for defined cooling-off periods that vary according to the 
former official's involvement and position:
    a. Former personnel are permanently barred from representing their 
new employer to their former agencies for matters on which they were 
personally and substantially involved.
    b. Even if the former officials were not directly involved in the 
matter, former personnel may not represent their new employer to their 
former agency on matters that were pending under their official 
responsibility in their last year of service for two years after 
leaving Federal service.
    c. Former senior-level officers and employees may not contact their 
former agency on particular government matters that are pending or are 
of substantial interest to the former agency for one year after leaving 
Federal service.
2. 41 U.S.C. 2104 (Formerly, 41 U.S.C. 423)
    DoD and other Government acquisition officials may not accept 
compensation from a defense contractor during a one year cooling-off 
period if the official performed certain duties at DoD involving the 
contractor and a contract valued in excess of $10 million. However, the 
individual may accept employment from a division or affiliate that does 
not produce the same or similar items.
3. Section 847 of the National Defense Authorization Act (NDAA) for 
Fiscal Year (FY) 2008
    Section 847 requires that senior DoD officials who have been 
personally and substantially involved in contracts over $10 million 
request a written post-employment ethics opinion before receiving 
compensation from a contractor. It also applies to the employees who 
are affected by the one-year compensation ban of 41 U.S.C. 2104.

B. Current Acquisition Regulations

    1. FAR 3.104 implements 41 U.S.C 2104 and 18 U.S.C. 207.
    2. DFARS 203.104 implements procurement integrity for DoD.
    3. DFARS 203.171-3 is an implementation of section 847 of the NDAA 
for FY 2008. Pursuant to DFARS 203.171-3, defense contractors may not 
knowingly provide compensation to ``covered DoD officials'' (as defined 
by a January 2009 DFARS Clause 252.203-7000, Requirements Relating to 
Compensation of Former DoD Officials) who left Government employment on 
or after January 28, 2008, unless the contractor first determines that 
the former employee has received, or has requested at least 30 days 
prior to receiving compensation from the contractor, the post-
employment ethics opinion regarding post-employment restrictions. DFARS 
252.203-7000 incorporates this prohibition of knowingly compensating 
former DoD ``covered officials,'' into DoD contracts. The DFARS does 
not require additional action from the DoD contractor or covered 
employee in the event that the covered employee has not received an 
opinion on post-employment restrictions. In addition, the clause does 
not cover DoD employees who left the Government prior to January 28, 
2008.

C. General Accountability Office (GAO) Study GAO-08-485

    Congress included a provision in the National Defense Authorization 
Act for Fiscal Year 2007 (Pub. L. 109-364, section 851) requiring GAO 
to report on recent employment of former DoD Officials by major defense 
contractors. In May 2008, the GAO issued a report, ``Defense 
Contracting: Post-Government Employment of Former DoD Officials Needs 
Greater Transparency'' (GAO-08-485). GAO auditors focused on 52 major 
defense contractors.
    The GAO found that contractors under-reported the employment of 
former DoD officials to the extent that they employed almost twice as 
many they reported.
    GAO estimated that approximately 422 former DoD officials (post-
Government employment) were working on defense contracts under the 
responsibility of their former agency. At least nine of those 
individuals could have been performing services under the same contract 
for which they had prior program responsibility. GAO concluded that the 
results of the study indicated that defense contractors may employ a 
substantial number of former DoD officials on assignments related to 
their former positions.
    According to GAO, DoD does not have a mechanism for monitoring 
former senior officials and acquisition officials when they begin their 
new jobs with defense contractors. DoD's practice of providing written 
ethics opinions to senior and acquisition officials who request them 
provides only limited transparency, although DoD is in the process of 
implementing a single database for collecting and retaining this 
information.
    The GAO report showed that major defense contractors are not 
currently ensuring that former DoD senior officials and acquisition 
executives working on contracts are in compliance with post-employment 
restrictions. GAO concluded that greater transparency is needed by DoD 
with respect to former senior and acquisition executives (i.e., DoD 
``covered officials'') to ensure compliance with applicable post-
employment restrictions.

D. Proposed Rule

    The proposed provision will remedy this deficiency by requiring 
offerors to submit representations at the time of contract award that 
all former DoD officials that are covered by the Procurement Integrity 
Act are in compliance with post-employment restrictions set forth in 
DFARS 203.171-3 and DFARS 252.203-7000. The

[[Page 32848]]

representation goes further in also requiring a representation that 
former DoD employees employed by the contractor are also in compliance 
with additional post-employment restrictions of 18 U.S.C. 207 and 5 CFR 
parts 2637 and 2631, including FAR 3.104-2.
    This representation will be required in contracts for commercial 
items. This representation is an enforcement mechanism for DFARS clause 
252.203-7000, which is required in contracts for commercial items (see 
252.212-7001(b)(1)). Therefore, the representation has been added to 
252.212-7000.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, 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 not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    DoD does not expect this proposed rule to 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, et seq. 
Nevertheless, an initial regulatory flexibility analysis has been 
prepared, and is summarized as follows:
    This proposed rule is in response to a study by the General 
Accountability Office, ``Defense Contracting: Post-Government 
Employment of Former DoD Officials Needs Greater Transparency'' (GAO-
08-485), issued in May 2008. The GAO found that contractors under-
reported the employment of former DoD officials to the extent that they 
employed almost twice as many as they reported. The GAO report showed 
that major defense contractors are not currently ensuring that former 
DoD senior officials and acquisition executives working on contracts 
are in compliance with post-employment restrictions.
    The objective of the proposed rule is to remedy this deficiency 
reported by the GAO by requiring offerors to submit representations at 
the time of contract award that all former DoD officials that are 
covered by the Procurement Integrity Act are in compliance with post-
employment restrictions set forth in DFARS 203.171-3 and DFARS 252.203-
7000, as required by section 847 of the National Defense Authorization 
Act for Fiscal Year 2008. The representation goes further in also 
requiring a representation that former DoD employees employed by the 
contractor are also in compliance with additional post-employment 
restrictions of 18 U.S.C. 207 and 5 CFR parts 2637 and 2631, including 
FAR 3.104-2.
    The rule requires a representation from all offerors that respond 
to a DoD solicitation. However, the representation will only require 
preparatory effort if the offeror employs or otherwise provides 
compensation to former DoD officials covered by the Procurement 
Integrity Act. There is no impact on the offeror unless the former DoD 
officials covered by the Procurement Integrity Act are not in 
compliance with the post-employment restrictions. A covered DoD 
official is already defined in the clause at DFARS 252.203-7000, 
Requirements Relating to Compensation of Former DoD Employees. In the 
period of 2001-2006, 1.85 million former military and civilian 
personnel left DoD service. A ``covered DoD official'' only includes 
former DoD officials holding certain positions and who left within the 
past two years. The GAO found that the 1.85 million personnel who had 
left DoD service over a six-year period included only 35,192 who had 
served in the type of senior or acquisition official positions that 
made them subject to post-government employment restrictions, if they 
were subsequently hired by defense contractors. Dividing by 35,192 (to 
reduce the six-year period to a two-year period), we estimate that 
11,730 of those officials would have left within the last two years. We 
estimate that 7,635 of these former officials may accept employment 
with a defense contractor (about 65 percent). The GAO study found 2,435 
of these covered officials employed by 52 major defense contractors. Of 
the remaining 5,200 former officials covered by the Procurement 
Integrity Act, we estimate that 3,900 (75 percent) of them may work for 
small business concerns.
    There is no information collection requirement associated with this 
proposed rule. Offerors make the representation by submission of an 
offer. They are not allowed to submit an offer if they can not make the 
representation. In order to submit an offer, small entities that hire a 
former DoD official covered by the Procurement Integrity Act will have 
to check the compliance of such employees with various applicable post-
employment restrictions. DFARS 252.203-7000, Requirements Relating to 
Compensation of Former DoD Officials, already requires contractors to 
determine that a covered DoD official has sought and received, or has 
not received after 30 days of seeking, a written opinion from the 
appropriate DoD ethics counselor, regarding the applicability of post-
employment restrictions to the activities that the official is expected 
to undertake on behalf of the contractor. Therefore, this 
representation of compliance does not impose an additional burden on 
the offeror.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known significant alternatives to the rule that would 
achieve the objectives of the rule.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD 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 (DFARS Case 2010-D020) in 
correspondence.

IV. Paperwork Reduction Act

    The rule does not impose any new information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 203 and 252

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 203, 204, and 252 are proposed to be 
amended as follows:
    1. The authority citation for 48 CFR parts 203, 204, and 252 
continues to read as follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST

    2. Revise section 203.171-4 to read as follows:

[[Page 32849]]

203.171-4  Solicitation provisions and contract clause.

    (a) Use the clause at 252.203-7000, Requirements Relating to 
Compensation of Former DoD Officials, in all solicitations and 
contracts.
    (b) Use the provision at 252.203-70XX, Representation Relating to 
Compensation of Former DoD Officials, in all solicitations.

PART 204--ADMINISTRATIVE MATTERS

    3. Amend section 204.1202 by redesignating paragraphs (2)(i) 
through (xii) as paragraphs (2)(ii) through (xiii) and adding new 
paragraph (2)(i) to read as follows,

204.1202  Solicitation provision and contract clause.

* * * * *
    (2) * * *
    (i) 252.203-70XX, Representation Relating to Compensation of Former 
DoD Officials.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    4. Add section 252.203-70XX to read as follows:

252.203-70XX  Representation Relating to Compensation of Former DoD 
Officials.

    As prescribed in 203.171-4(b), insert the following provision:

REPRESENTATION RELATING TO COMPENSATION OF FORMER DOD OFFICIALS (DATE)

    (a) Definition. Covered DoD official is defined in the clause at 
252.203-7000, Requirements Relating to Compensation of Former DoD 
Officials.
    (b) By submission of this offer, the offeror represents, to the 
best of its knowledge and belief, that all covered DoD officials 
employed by or otherwise receiving compensation from the offeror are 
presently in compliance with--
    (1) Defense Federal Acquisition Regulation Supplement (DFARS) 
203.171-3 and DFARS 252.203-7000; and
    (2) Other post-employment restrictions covered by 18 U.S.C. 207 
and 5 CFR parts 2637 and 2631, including Federal Acquisition 
Regulation 3.104-2.

    (End of provision)
    5. Amend section 252.212-7000 by revising the clause date, revising 
paragraph (a), and adding paragraph (d) to read as follows:

252.212-7000  Offeror Representations and Certifications--Commercial 
Items.

* * * * *

OFFEROR REPRESENTATIONS AND CERTIFICATIONS--COMMERCIAL ITEMS (JUN 2011)

    (a) Definitions. As used in this clause--
    Covered DoD official is defined in the clause at 252.203-7000, 
Requirements Relating to Compensation of Former DoD Officials. 
Foreign person means any person other than a United States person as 
defined in Section 16(2) of the Export Administration Act of 1979 
(50 U.S.C. App. Sec. 2415).
    United States means the 50 States, the District of Columbia, 
outlying areas, and the outer Continental Shelf as defined in 43 
U.S.C. 1331.
    United States person is defined in section 16(2) of the Export 
Administration Act of 1979 and means any United States resident or 
national (other than an individual resident outside the United 
States and employed by other than a United States person), any 
domestic concern (including any permanent domestic establishment of 
any foreign concern), and any foreign subsidiary or affiliate 
(including any permanent foreign establishment) of any domestic 
concern which is controlled in fact by such domestic concern, as 
determined under regulations of the President.
* * * * *
    (d) Representation Relating to Compensation of Former DoD 
Officials. By submission of this offer, the offeror represents, to 
the best of its knowledge and belief, that all covered DoD officials 
employed by or otherwise receiving compensation from the offeror, 
are presently in compliance with--
    (1) Defense Federal Acquisition Regulation Supplement (DFARS) 
203.171-3 and DFARS 252.203-7000, Requirements Relating to 
Compensation of Former DoD Officials; and
    (2) Other post-employment restrictions covered by 18 U.S.C. 207 
and 5 CFR parts 2637 and 2631, including Federal Acquisition 
Regulation 3.104-2.

    (End of provision)

[FR Doc. 2011-13365 Filed 6-3-11; 8:45 am]
BILLING CODE 5001-08-P
```