[Federal Register Volume 74, Number 60 (Tuesday, March 31, 2009)]
[Rules and Regulations]
[Pages 14646-14649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-7029]


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

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 12, 13, 14, 15, and 52

[FAC 2005-32; FAR Case 2009-011; Item V; Docket 2009-0012, Sequence 1]
RIN 9000-AL20


Federal Acquisition Regulation; FAR Case 2009-011, American 
Recovery and Reinvestment Act of 2009 (the Recovery Act)--GAO/IG Access

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule with request for comments.

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

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on an interim 
rule amending the Federal Acquisition Regulation (FAR) to implement the 
American Recovery and Reinvestment Act of 2009 (Recovery Act) with 
respect to Sections 902, 1514, and 1515 of Division A.

DATES: Effective Date: March 31, 2009.
    Applicability Date: The rule applies to solicitations issued and 
contracts awarded on or after the effective date of this rule. 
Contracting officers shall modify, on a bilateral basis, in accordance 
with FAR 1.108(d)(3), existing contracts to include the FAR clauses 
(Alternates) for future orders, if Recovery Act funds will be used. In 
the event that a contractor refuses to accept such a modification, the 
contractor will not be eligible for receipt of Recovery Act funds.
    Comment Date: Interested parties should submit written comments to 
the FAR Secretariat on or before June 1, 2009 to be considered in the 
formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-32, FAR case 2009-
011, by any of the following methods:
    <bullet> Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by inputting ``FAR Case 
2009-011'' under the heading ``Comment or Submission''. Select the link 
``Send a Comment or Submission'' that corresponds with FAR Case 2009-
011. Follow the instructions provided to complete the ``Public Comment 
and Submission Form''. Please include your name, company name (if any), 
and ``FAR Case 2009-011'' on your attached document.
    <bullet> Fax: 202-501-4067.
    <bullet> Mail: General Services Administration, FAR Secretariat 
(VPR), 1800 F Street, NW., Room 4041, ATTN: Hada Flowers, Washington, 
DC 20405.
    Instructions: Please submit comments only and cite FAC 2005-32, FAR 
case 2009-011, in all correspondence related to this case. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal and/or business confidential information 
provided.

FOR FURTHER INFORMATION CONTACT: Mr. Edward N. Chambers, Procurement 
Analyst, at (202) 501-3221 for clarification of content. Please cite 
FAC 2005-32, FAR case 2009-011. For information pertaining to status or 
publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule implements the American Recovery and Reinvestment 
Act of 2009 (Recovery Act) with respect to Sections 902, 1514, and 
1515, by adding alternate clauses to 52.214-26, ``Audit and Records-
Sealed Bidding,'' 52.212-5, ``Contract Terms and Conditions Required to 
Implement Statutes or Executive Orders-Commercial Items,'' and FAR 
52.215-2, ``Audit and Records-Negotiation.''
    Further, FAR 12.504(a)(7) is amended for contracts using Recovery 
Act funds to apply 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination 
of Records of Contractor, to commercial item subcontracts that are 
otherwise exempt when subcontractors are not required to provide cost 
or pricing data.
    Likewise, 13.006(d) is amended for contracts using Recovery Act 
funds to apply 52.215-2, ``Audit and Records-Negotiation'' to contracts 
and subcontracts which are otherwise exempt because they are under the 
simplified acquisition threshold. This requirement provides further 
transparency into Federal contracting whose contracts are funded with 
Recovery Act funds.

B. Discussion

    On February 17, 2009, the President signed Public Law 111-5, the 
American Recovery and Reinvestment Act of 2009, which includes a number 
of provisions to be implemented in Federal Government contracts. Among 
these provisions are sections 902, 1514, and 1515 which serve to 
``prevent the fraud, waste, and abuse'' of Recovery Act

[[Page 14647]]

funds through the review and audit of contracts using such funds. The 
interim rule is necessary to implement these measures to both protect, 
and provide transparency in the use of, Recovery Act funds.
    Section 1514 provides for agency inspector general review of 
concerns raised by the public regarding investments of funds under the 
Recovery Act. Sections 902 and 1515 provide for respectively, 
Comptroller General and agency inspector general reviews of any records 
of the contractor or subcontractor regarding transactions using 
Recovery Act funds, and the interview of contractor officers or 
employees concerning such transactions. Section 902 also provides for 
the Comptroller General to interview subcontractor employees, while 
nowhere in the Recovery Act is corresponding authority provided to the 
agency inspector generals. The authority for Comptroller General audits 
of prime contractors already exists for Part 12 contracts under FAR 
52.212-5, ``Contract Terms and Conditions Required to Implement 
Statutes or Executive Orders-Commercial Items'' and for Part 15 
contracts under FAR 52.215-2, ``Audit and Records-Negotiation.'' FAR 
52.215-2 also provides authority to audit subcontracts, while 52.212-5 
does not provide corresponding authority. In the case of Part 13 
contracts there are no authorities for the audit of either prime 
contracts or subcontracts. Likewise, except in the case of 
modifications involving cost or pricing data, for Part 14 contracts 
there are no authorities for the audit of either prime contracts or 
subcontracts.
    In the matter of interviewing contractor or subcontractor employees 
concerning contracting transactions there are no current authorities 
under the FAR (but see changes under Item VI of this FAC 2005-32, FAR 
Case 2008-026).
    Consequently, for contracts using Recovery Act funds this interim 
rule provides the following authorities to the Comptroller General:
    <bullet> For Part 12 contracts the authority to audit subcontracts, 
and to interview contractor and subcontractor personnel, including 
contracts below the simplified acquisition threshold.
    <bullet> For Part 15 contracts the authority to interview 
contractor and subcontractor personnel, including contracts below the 
simplified acquisition threshold.
    <bullet> For Part 14 contracts the authority to audit both 
contracts and subcontracts, and to interview contractor and 
subcontractor personnel, including contracts below the simplified 
acquisition threshold.
    The interim rule provides the same authorities in the preceding 
paragraph to agency inspector generals, with the exception of 
interviewing subcontractor employees.

C. Applicability to Commercial Item Contracts

    Section 8003 of Public Law 103-355, the Federal Acquisition 
Streamlining Act (FASA) (41 U.S.C. 430), governs the applicability of 
laws to commercial items, and is intended to limit the applicability of 
laws to commercial items. FASA provides if a provision of law contains 
criminal or civil penalties, or if the Federal Acquisition Regulatory 
Council makes a written determination it is not in the best interest of 
the Federal Government to exempt commercial item contracts, the 
provision of law will apply to contracts for commercial items. The same 
applies for subcontracts for commercial items.
    Therefore, given Sections 902 and 1515 of the American Recovery and 
Reinvestment Act of 2009 (Recovery Act), which require Comptroller 
General and agency inspector general access to contractor and 
subcontractor records and contractor personnel, the FAR Council has 
determined this rule should apply to commercial items, as defined at 
2.101, both at the prime and subcontract levels.

D. Applicability to Commercially Available Off-The-Shelf (COTS) Item 
Contracts

    Section 4203 of Public Law 104-106, the Clinger-Cohen Act of 1996 
(41 U.S.C. 431), governs the applicability of laws to the procurement 
of commercially available off-the-shelf (COTS) items, and is intended 
to limit the applicability of laws to them. Clinger-Cohen provides that 
if a provision of law contains criminal or civil penalties, or if the 
Administrator for Federal Procurement Policy makes a written 
determination it is not in the best interest of the Federal Government 
to exempt COTS item contracts, the provision of law will apply.
    Therefore, given Sections 902 and 1515 of the American Recovery and 
Reinvestment Act of 2009 (Recovery Act), which require Comptroller 
General and agency inspector general access to contractor and 
subcontractor records and contractor personnel, the Administrator, 
Office of the Federal Procurement Policy, has determined the rule 
should apply to Commercially Available Off-The-Shelf (COTS) item 
contracts, as defined at FAR 2.101.

E. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold

    Section 4101 of Public Law 103-355, the Federal Acquisition 
Streamlining Act (FASA) (41 U.S.C. 429), governs the applicability of 
laws to contracts or subcontracts in amounts not greater than the 
simplified acquisition threshold. It is intended to limit the 
applicability of laws to them. FASA provides that if a provision of law 
contains criminal or civil penalties, or if the Federal Acquisition 
Regulatory Council makes a written determination it is not in the best 
interest of the Federal Government to exempt contracts or subcontracts 
at or below the simplified acquisition threshold, the law will apply to 
them. Therefore, given Sections 902 and 1515 of the American Recovery 
and Reinvestment Act of 2009 (Recovery Act), which require Comptroller 
General and agency inspector general access to contractor and 
subcontractor records and contractor personnel, the FAR Council has 
determined this rule should apply to contracts or subcontracts at or 
below the simplified acquisition threshold, as defined at 2.101.
    This is a significant regulatory action and, therefore, was subject 
to Office of Management and Budget (OMB) review under Section 6 of 
Executive Order 12866, Regulatory Planning and Review, dated September 
30, 1993. This rule is not a major rule under 5 U.S.C. 804.

F. Regulatory Flexibility Act

    The Councils do not expect this interim 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., 
because it requires contractors to make available existing records of 
transactions covered by the Act. Contractors are not obligated to 
create additional records. Therefore, an Initial Regulatory Flexibility 
Analysis has not been performed. The Councils will consider comments 
from small entities concerning the affected FAR Parts 12, 13, 14, 15, 
and 52 in accordance with 5 U.S.C. 610. Interested parties must submit 
such comments separately and should cite 5 U.S.C. 601, et seq., (FAC 
2005-32, FAR Case 2009-011) in correspondence.

G. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 96-511) applies to this 
interim rule. However, the information collection requirements imposed 
by the changes to 52.214-26 and 52.215-2 are currently covered by the 
approved collection

[[Page 14648]]

under OMB Control number 9000-0034 entitled, Examination of Records by 
Comptroller General and Contract Audit: Sections Affected 52.215-2; 
52.212-5; 52.214-26, for these existing provisions. The Councils 
believe changes due to the use of these provisions will not result in a 
substantial increase in either the burden or the number of entities. 
However, the Council welcomes comments on both of these items as part 
of the 60-day comment period.

H. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because the American Recovery and Reinvestment Act of 2009 
became effective upon enactment, and contracts using funds appropriated 
by the Recovery Act will soon be ready to award. However, pursuant to 
Public Law 98-577 and FAR 1.501, the Councils will consider public 
comments received in response to this interim rule in the formation of 
the final rule.

List of Subjects in 48 CFR Parts 12, 13, 14, 15, and 52

    Government procurement.

    Dated: March 25, 2009.
Al Matera,
Director,Office of Acquisition Policy.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 12, 13, 14, 15, and 52 
as set forth below:
0
1. The authority citation for 48 CFR parts 12, 13, 14, 15, and 52 
continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 12--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend section 12.301 by revising paragraph (b)(4) to read as 
follows:


12.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (b) * * *
    (4) The clause at 52.212-5, Contract Terms and Conditions Required 
to Implement Statutes or Executive Orders--Commercial Items. This 
clause incorporates by reference only those clauses required to 
implement provisions of law or Executive orders applicable to the 
acquisition of commercial items. The contracting officer shall attach 
this clause to the solicitation and contract and, using the appropriate 
clause prescriptions, indicate which, if any, of the additional clauses 
cited in 52.212-5(b) or (c) are applicable to the specific acquisition. 
Some of the clauses require fill-in; the fill-in language should be 
inserted as directed by 52.104(d). When cost information is obtained 
pursuant to Part 15 to establish the reasonableness of prices for 
commercial items, the contracting officer shall insert the clauses 
prescribed for this purpose in an addendum to the solicitation and 
contract. This clause may not be tailored.
    (i) Use the clause with its Alternate I when the head of the agency 
has waived the examination of records by the Comptroller General in 
accordance with 25.1001.
    (ii) If the acquisition will use funds appropriated or otherwise 
made available by the American Recovery and Reinvestment Act of 2009 
(Pub. L. 111-5), the contracting officer shall use the clause with its 
Alternate II, and may not use Alternate I.
* * * * *

0
3. Amend section 12.504 by revising paragraph (a)(7) to read as 
follows:


12.504  Applicability of certain laws to subcontracts for the 
acquisition of commercial items.

    (a) * * *
    (7) 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination of Records 
of Contractor, when a subcontractor is not required to provide cost or 
pricing data (see 15.209(b)), unless using funds appropriated or 
otherwise made available by the American Recovery and Reinvestment Act 
of 2009 (Pub. L. 111-5).
* * * * *

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

0
4. Amend section 13.006 by revising paragraph (d) to read as follows:


13.006  Inapplicable provisions and clauses.

* * * * *
    (d) 52.215-2, Audits and Records--Negotiation, except as used with 
its Alternate I, when using funds appropriated or otherwise made 
available by the American Recovery and Reinvestment Act of 2009 (Pub. 
L. 111-5).
* * * * *

PART 14--SEALED BIDDING

0
5. Amend section 14.201-7 by revising paragraph (a) to read as follows:


14.201-7  Contract Clauses.

    (a) When contracting by sealed bidding, the contracting officer 
shall insert the clause at 52.214-26, Audit and Records-Sealed Bidding, 
in solicitations and contracts as follows:
    (1) Use the basic clause if--
    (i) The acquisition will not use funds appropriated or otherwise 
made available by the American Recovery and Reinvestment Act of 2009 
(Pub. L. 111-5); and
    (ii) The contract amount is expected to exceed the threshold at 
15.403-4(a)(1) for submission of cost or pricing data.
    (2) If the acquisition will use funds appropriated or otherwise 
made available by the American Recovery and Reinvestment Act of 2009, 
use the clause with its Alternate I in all solicitations and contracts.
* * * * *

0
6. Amend section 15.209 by revising the introductory text of paragraph 
(b)(1) and adding paragraph (b)(2) to read as follows:


15.209  Solicitation provisions and contract clauses.

* * * * *
    (b)(1) Except as provided in paragraph (b)(2) of this section, the 
contracting officer shall insert the clause at 52.215-2, Audit and 
Records-Negotiation (10 U.S.C. 2313, 41 U.S.C. 254d, and OMB Circular 
No. A-133), in solicitations and contracts except those for--
* * * * *
    (2) When using funds appropriated or otherwise made available by 
the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5)--
    (i) The exceptions in paragraphs (b)(1)(i) through (b)(1)(iii) are 
not applicable; and
    (ii) Use the clause with its Alternate I.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Amend section 52.212-5 by adding Alternate II to read as follows:


52.212-5  Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *
    Alternate II (MAR 2009). As prescribed in 12.301(b)(4)(ii), 
substitute the following paragraphs (d)(1) and (e)(1) for paragraphs 
(d)(1) and (e)(1) of the basic clause as follows:

[[Page 14649]]

    (d)(1) The Comptroller General of the United States, an appropriate 
Inspector General appointed under section 3 or 8G of the Inspector 
General Act of 1978 (5 U.S.C. App.), or an authorized representative of 
either of the foregoing officials shall have access to and right to--
    (i) Examine any of the Contractor's or any subcontractors' records 
that pertain to, and involve transactions relating to, this contract; 
and
    (ii) Interview any officer or employee regarding such transactions.
    (e)(1) Notwithstanding the requirements of the clauses in 
paragraphs (a), (b), and (c), of this clause, the Contractor is not 
required to flow down any FAR clause in a subcontract for commercial 
items, other than--
    (i) Paragraph (d) of this clause. This paragraph flows down to all 
subcontracts, except the authority of the Inspector General under 
paragraph (d)(1)(ii) does not flow down; and
    (ii) Those clauses listed in this paragraph (e)(1). Unless 
otherwise indicated below, the extent of the flow down shall be as 
required by the clause--
    (A) 52.203-13, Contractor Code of Business Ethics and Conduct (Dec 
2008) (Pub. L. 110-252, Title VI, Chapter 1 (41 U.S.C. 251 note)).
    (B) 52.219-8, Utilization of Small Business Concerns (May 2004) (15 
U.S.C. 637(d)(2) and (3)), in all subcontracts that offer further 
subcontracting opportunities. If the subcontract (except subcontracts 
to small business concerns) exceeds $550,000 ($1,000,000 for 
construction of any public facility), the subcontractor must include 
52.219-8 in lower tier subcontracts that offer subcontracting 
opportunities.
    (C) 52.222-26, Equal Opportunity (Mar 2007) (E.O. 11246).
    (D) 52.222-35, Equal Opportunity for Special Disabled Veterans, 
Veterans of the Vietnam Era, and Other Eligible Veterans (Sept 2006) 
(38 U.S.C. 4212).
    (E) 52.222-36, Affirmative Action for Workers with Disabilities 
(June 1998) (29 U.S.C. 793).
    (F) 52.222-39, Notification of Employee Rights Concerning Payment 
of Union Dues or Fees (Dec 2004) (E.O. 13201).
    (G) 52.222-41, Service Contract Act of 1965 (Nov 2007) (41 U.S.C. 
351, et seq.).
    (H) 52.222-50, Combating Trafficking in Persons (Feb 2009) (22 
U.S.C. 7104(g)).
    (I) 2.222-51, Exemption from Application of the Service Contract 
Act to Contracts for Maintenance, Calibration, or Repair of Certain 
Equipment-Requirements (Nov 2007) (41 U.S.C. 351, et seq.).
    (J) 52.222-53, Exemption from Application of the Service Contract 
Act to Contracts for Certain Services-Requirements (Feb 2009) (41 
U.S.C. 351, et seq.).
    (K) 52.222-54, Employment Eligibility Verification (Jan 2009).
    (L) 52.226-6, Promoting Excess Food Donation to Nonprofit 
Organizations. (Mar 2009) (Pub. L. 110-247). Flow down required in 
accordance with paragraph (e) of FAR clause 52.226-6.
    (M) 52.247-64, Preference for Privately Owned U.S.-Flag Commercial 
Vessels (Feb 2006) (46 U.S.C. Appx. 1241(b) and 10 U.S.C. 2631). Flow 
down required in accordance with paragraph (d) of FAR clause 52.247-64.

0
8. Amend section 52.214-26 by adding Alternate I to read as follows:


52.214-26  Audit and Records--Sealed Bidding.

* * * * *
    Alternate I (MAR 2009). As prescribed in 14.201-7(a)(2) substitute 
the following paragraphs (c) and (e) for paragraphs (c) and (e) of the 
basic clause:
    (c) The Comptroller General of the United States, an appropriate 
Inspector General appointed under section 3 or 8G of the Inspector 
General Act of 1978 (5 U.S.C. App.), or an authorized representative of 
either of the foregoing officials, shall have access to and the right 
to--
    (1) Examine any of the Contractor's or any subcontractors' records 
that pertain to, and involve transactions relating to, this contract or 
a subcontract hereunder; and
    (2) Interview any officer or employee regarding such transactions.
    (e)(1) Except as provided in paragraph (e)(2), the Contractor shall 
insert a clause containing the provisions of this clause, including 
this paragraph (e), in all subcontracts.
    (2) The authority of the Inspector General under paragraph (c)(2) 
of this clause does not flow down to subcontracts.

0
9. Amend section 52.215-2 by adding Alternate I to read as follows:


52.215-2  Audit and Records--Negotiation.

* * * * *
    Alternate I (MAR 2009). As prescribed in 15.209(b)(2), substitute 
the following paragraphs (d)(1) and (g) for paragraphs (d)(1) and (g) 
of the basic clause:
    (d) Comptroller General or Inspector General. (1) The Comptroller 
General of the United States, an appropriate Inspector General 
appointed under section 3 or 8G of the Inspector General Act of 1978 (5 
U.S.C. App.), or an authorized representative of either of the 
foregoing officials, shall have access to and the right to--
    (i) Examine any of the Contractor's or any subcontractor's records 
that pertain to and involve transactions relating to this contract or a 
subcontract hereunder; and
    (ii) Interview any officer or employee regarding such transactions.
    (g)(1) Except as provided in paragraph (g)(2) of this clause, the 
Contractor shall insert a clause containing all the terms of this 
clause, including this paragraph (g), in all subcontracts under this 
contract. The clause may be altered only as necessary to identify 
properly the contracting parties and the Contracting Officer under the 
Government prime contract.
    (2) The authority of the Inspector General under paragraph 
(d)(1)(ii) of this clause does not flow down to subcontracts.

 [FR Doc. E9-7029 Filed 3-30-09; 8:45 am]
BILLING CODE 6820-EP-P