Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules and Regulations 35115

the environmental effect of the

regulation being amended.

Paperwork Reduction Act

This rulemaking contains no reporting

requirement that is subject to OMB

approval under 5 CFR Part 1320,

pursuant to the Paperwork Reduction

Act of 1980 (44 U.S.C. 3501 et seq.).

Final Rulemaking

As the foregoing discussion indicates,

the Code of Federal Regulation subparts

being removed are no longer necessary.

Accordingly, the Department has

determined, pursuant to 5 U.S.C. 553,

that there is good cause to conclude that

prior notice and opportunity for public

comment is unnecessary and contrary to

the public interest.

Regulatory Flexibility Act

The Regulatory Flexibility Act, 5

U.S.C. 601 et seq., directs agencies to

prepare a regulatory flexibility analysis

whenever an agency is required to

publish a general notice of proposed

rulemaking for a rule. As discussed

above, the Department has determined,

that prior notice and opportunity for

public comment is unnecessary and

contrary to the public interest. In

accordance with 5 U.S.C. 604(a), no

regulatory flexibility analysis has been

prepared for today’s rule.

Congressional Notification

The Small Business Regulatory

Enforcement Fairness Act of 1996

requires agencies to report to Congress

on the promulgation of certain rules

prior to their effective dates. 5 U.S.C.

801. The Department is reporting

today’s rulemaking to Congress in

accordance with 5 U.S.C. 801(a)(1)(A).

The Office of Management and Budget

has determined that this is not a major

rule as defined in 5 U.S.C. 804(2)

List of Subjects

10 CFR Part 205

Administrative practice and

procedure, Petroleum allocation,

Petroleum price regulations.

10 CFR Part 463

Public utilities.

Issued in Washington, DC on June 28,

1996.

Robert R. Nordhaus,

General Counsel.

For the reasons set forth in the

preamble, title 10 of the Code of Federal

Regulations is amended as set forth

below:

PART 205–ADMINISTRATIVE

PROCEDURES AND SANCTIONS

1. The authority citation for part 205

continues to read as follows:

Authority: Emergency Petroleum

Allocation Act of 1973, Pub. L. 93–159;

Federal Energy Administration Act of 1974,

Pub. L. 93–275 (88 Stat. 96; E.O. 11790, 39

FR 23185); 42 U.S.C. 7101 et seq., unless

otherwise noted.

Subpart L and P—[Removed]

2. Subparts L (§§ 205.160–205.162)

and P (§§ 205.200–205.204) of part 205

are removed.

PART 463—ANNUAL REPORTS FROM

STATES AND NONREGULATED

UTILITIES ON PROGRESS IN

CONSIDERING THE RATEMAKING

AND OTHER REGULATORY

STANDARDS UNDER THE PUBLIC

UTILITY REGULATORY POLICIES ACT

OF 1978 [REMOVED]

3. Part 463 of 10 CFR is removed.

[FR Doc. 96–17116 Filed 7–3–96; 8:45 am]

BILLING CODE 6450–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 367

RIN 3064–AB76

Suspension and Exclusion of

Contractors and Termination of

Contracts

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Interim final rule; request for

comments.

SUMMARY: The Board of Directors of the

Federal Deposit Insurance Corporation

(FDIC or Corporation) is adopting an

interim final rule concerning

suspension and exclusion of FDIC

contractors and termination of contracts.

The interim final rule is adopted

pursuant to section 12(f) (4) and (5) of

the Federal Deposit Insurance Act (FDI

Act), and the rule-making authority of

the FDIC found at section 9 of the Act.

Additional provisions implementing

these statutory directives appear in the

FDIC’s regulation, as published in the

Federal Register on June 6, 1996,

governing contractor conflicts of interest

and the requirements that FDIC

contractors meet minimum standards of

competence, experience, fitness and

integrity. This interim final rule is a

companion to the conflict of interest

regulation in that it sets forth

procedures for the suspension and/or

exclusion of contractors that have

violated the conflicts of interest

regulations (and hence, fail to meet

minimum standards of fitness and

integrity), or have otherwise acted in a

manner warranting such action. In

addition to FDIC contractors, this

interim final rule also applies to

subcontractors, key employees,

management officials and affiliated

business entities of FDIC contractors (all

such terms are defined herein), and is

designed to inform such contractors

regarding their rights to notice and an

opportunity to be heard on FDIC

suspension and exclusion actions.

DATES: Effective date. This interim final

rule is effective July 5, 1996.

Comment period date. Comments

must be received on or before

September 3, 1996.

ADDRESSES: Send written comments to

Jerry L. Langley, Executive Secretary,

FDIC, 550 17th Street, NW.,

Washington, DC 20429. Comments may

be hand-delivered to room 400, 1776 F

Street, NW., Washington, DC 20429 on

business days between 8:30 a.m. and

5:00 p.m. (FAX number: (202) 898–

3604; Internet: comments@FDIC.gov).

Comments will be available for

inspection and photocopying in the

FDIC Public Information Center, room

100, 801 17th Street, NW., Washington,

DC 20429, between 9:00 a.m. and 5:00

p.m. on business days.

FOR FURTHER INFORMATION CONTACT:

Peter A. Ziebert, Counsel, Legal

Division, (202) 736–0742; or Richard M.

Handy, Assistant Executive Secretary

(Ethics), Office of the Executive

Secretary, (202) 898–7271.

SUPPLEMENTARY INFORMATION:

I. Background

This interim final rule sets forth

standards and procedures governing

suspension and exclusion of FDIC

contractors, which includes

subcontractors, management officials,

key employees and affiliated business

entities of such contractors, for

violations of 12 CFR part 366, the

FDIC’s contractor conflict of interest

regulation (61 FR 28725, June 6, 1996).

This interim final rule also provides for

the termination of awarded contracts of

FDIC contractors. For the most part, this

rule is modeled after the suspension and

exclusion regulation used by the

Resolution Trust Corporation (RTC)

until RTC sunset on December 31, 1995,

which had been codified at 12 CFR part

1618. This rule also bears similarity to

the suspension and debarment

procedures utilized by other federal

entities, which have been developed

after extensive public comment and
35116 Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules and Regulations

have withstood considerable judicial

scrutiny. However, as discussed below,

the rule departs in certain respects from

the procedures used by other federal

entities because the FDIC is not subject

to the Federal Acquisition Regulation

(FAR). The rule also revises the former

RTC regulation in several ways as the

FDIC now promulgates its own

suspension and exclusion regulation.

Generally, this rule provides for more

expedited and less formal procedures

than are used by other federal agencies,

while at the same time satisfying due

process requirements regarding notice

and an opportunity to be heard. These

expedited procedures are necessary due

to the urgent need to protect the FDIC

and the public interest against further

dissipation of assets now under FDIC

control and previously under RTC

control.

As noted above, FDIC has a statutory

mandate to be vigilant in enforcing the

highest ethical standards for its

contractors. Accordingly, it is

imperative that contractor suspension

and exclusion proceedings be processed

as expeditiously as possible consistent

with due process requirements that

affected contractors be afforded notice

and an opportunity to be heard on such

enforcement actions.

II. Summary of the Interim Final Rule

The regulation is comprised of 20

sections. Section 367.1 covers the

authority, purpose, scope and

application of the regulation. It makes

clear that the regulation applies to

contractors other than attorneys or law

firms that provide services or enter into

contracts to provide services to the FDIC

acting in any capacity. The regulation is

effective as of the date of publication in

the Federal Register for reasons set out

in section III, below. Moreover, the

regulation applies to actions initiated by

the FDIC on or after the effective date

regardless of the date of the cause giving

rise to such actions. Finally, § 367.1

provides that this regulation supersedes

and replaces the RTC suspension and

exclusion regulation (12 CFR part 1618)

and that RTC actions taken under that

part will be honored as if taken by the

FDIC.

Section 367.2 contains the definitions

to be used in this part. The definitions

are generally based on the commonly

accepted definitions used in the FDIC’s

conflict of interest regulation (12 CFR

part 366) or by other federal entities.

Key terms that are defined here include

affiliated business entity, conflict of

interest, contract, contractor, control,

key employee, management official,

pattern or practice of defalcation,

subcontractor, and substantial loss to

federal deposit insurance funds.

Section 367.3 identifies the

appropriate officials in the FDIC

suspension and debarment program.

The FDIC ‘‘Ethics Counselor’’ (FDIC

Executive Secretary) is the official

responsible for rendering suspension

and exclusion decisions. The

‘‘Corporation Ethics Committee’’

provides a review forum of any

suspension or exclusion decision

appealed by a contractor.

Section 367.4 is reserved.

Section 367.5 covers exclusions.

Contractors excluded from FDIC

contracting are prohibited from entering

into any new contracts with FDIC for

the duration of the exclusion period.

The FDIC shall not solicit offers from,

award contracts to, extend or modify

existing contracts, award task orders

under existing contracts, or consent to

subcontracts with excluded contractors.

Section 367.5 (b)(1) sets forth a

significant change in the regulation from

the FAR-based debarment and

suspension regulation, and from the

former RTC regulation. FDIC exclusion

actions will only become effective upon

the Ethics Counselor’s decision to

exclude a contractor after the contractor

has received written notice of a possible

cause to exclude from FDIC and has had

an opportunity to respond. In other

words, a contractor’s receipt of a notice

of possible cause to exclude does not act

as an exclusion from the FDIC

contracting program. This provision

provides contractors with ample due

process as the exclusion matter is

considered.

Section 367.6 sets forth 13 causes for

exclusion, which generally parallel the

former RTC regulations. There are four

mandatory causes for exclusion set forth

at § 367.6 (a) (1) through (4); the

remainder are discretionary bases for

which exclusion may be warranted if a

violation is established by a

preponderance of the evidence.

Section 367.7 covers suspensions. The

same contracting prohibitions apply to

suspended contractors as is the case

with excluded contractors. An

important distinction in the regulation,

however, is that a suspension action

shall become effective immediately

upon issuance of a notice of suspension,

which as noted above differs from the

notice of possible cause to exclude.

Suspensions will be used when

immediate action is necessary to protect

the integrity of the FDIC contracting

program and/or the security of FDIC

assets during the pendency of legal or

investigative proceedings against a

contractor.

Section 367.8 lists causes for

suspension. Suspensions will be

imposed upon a showing of adequate

evidence of any of the causes listed in

§ 367.7.

Section 367.9 provides that causes to

suspend and/or exclude a contractor can

be imputed between a contractor and its

affiliated business entities, key

employees, management officials, joint

venture partners, and subcontractors.

Sections 367.10-.11 are reserved.

Section 367.12 states that FDIC

suspension and exclusion actions shall

be processed as informally as

practicable, consistent with due process

considerations.

Section 367.13 covers the issuance of

the notice of possible cause to exclude,

and notice of suspension, and the

information that will be set forth

therein.

Section 367.14 covers contractor

responses to such notices and clearly

states that the contractor shall have 15

days from the date of the notice within

which to respond.

Section 367.15 addresses those

situations where additional proceedings

may be held, as determined by the

Ethics Counselor, in situations where

the contractor’s response raises a

genuine dispute over material facts. In

such cases, the contractor shall be

afforded the opportunity to appear (with

counsel if desired) before the FDIC.

Section 367.16 covers the Ethics

Counselor’s decisions in suspension and

exclusion matters. It sets forth the

information that will be included in a

suspension or exclusion decision and

makes clear that any exclusion decision

rendered pursuant to this provision

shall include a period of exclusion.

Section 367.17 provides further

information as to the period of

suspension or exclusion.

Section 367.18 covers abrogation of

contracts (i.e., termination or recision)

as an additional remedy for the FDIC.

Section 367.19 sets forth procedures

regarding exceptions to suspensions and

exclusions and makes clear that such

exceptions are only available in unique

circumstances when there is a

compelling reason to utilize a particular

contractor for a specific task.

Section 367.20 sets forth the

procedures for the review and

reconsideration of Ethics Counselor

decisions to the Corporation Ethics

Committee.

III. Administrative Procedure Act

The FDIC is adopting this regulation

as an interim final rule effective upon

publication in the Federal Register

without the usual notice-and-comment

period or delayed effective date as
Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules and Regulations 35117

provided for under the Administrative

Procedure Act. 5 U.S.C. 551, et seq.

(APA). The APA requirements may be

waived for ‘‘good cause.’’

Promulgation of the regulation on an

expedited basis is necessary due to the

urgent need to protect the FDIC and the

public interest against further

dissipation of the assets now under

FDIC control, and formerly under RTC

control, as a consequence of the

resolution of hundreds of failed savings

associations. Furthermore, many FDIC

contractors have in their possession

extremely valuable documents and legal

instruments which can be readily

converted to private gain.

The Financial Institutions Reform,

Recovery, and Enforcement Act of 1989

(FIRREA) has imposed a duty on the

FDIC to be vigilant and aggressive in

enforcing the highest ethical standards

for its independent contractors.

Accordingly, it is imperative that a

regulation be immediately adopted

setting forth policies and procedures

pertaining to the suspension or

exclusion of FDIC contractors that have

been found to have violated those

standards. The cost of any delay in

promulgating the regulation would

ultimately be borne by the taxpaying

public in terms of additional erosion in

the value of the assets under FDIC

control.

IV. Regulatory Flexibility Analysis

The Board of Directors has concluded

that the interim final rule will not

impose a significant economic hardship

on small institutions. Therefore, the

Board of Directors hereby certifies

pursuant to section 605 of the

Regulatory Flexibility Act (5 U.S.C. 605)

that the interim final rule will not have

a significant economic impact on a

substantial number of small business

entities within the meaning of the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.). Therefore, the provisions of that

Act relating to an initial and final

regulatory flexibility analysis do not

apply.

V. Paperwork Reduction Act

No collections of information

pursuant to the Paperwork Reduction

Act are contained in this interim final

rule. Therefore, no information has been

submitted to the Office of Management

and Budget (OMB) for review.

For the above reasons, the FDIC finds

that the benefits to the public in

adopting the interim rule outweigh any

harm from the delay in seeking public

comment. The FDIC actively solicits

comments from the public and will

carefully evaluate and act upon any

such comments before adopting the rule

as final within 60 days after the close of

the public comment period.

List of Subjects in 12 CFR Part 367

Administrative practice and

procedure, Conflict of interest,

Government contracts.

For the reasons set out in the

preamble, FDIC adds part 367 to title 12,

chapter III of the Code of Federal

Regulations to read as follows:

PART 367—SUSPENSION AND

EXCLUSION OF CONTRACTORS AND

TERMINATION OF CONTRACTS

Sec.

367.1 Authority, purpose, scope and

application.

367.2 Definitions.

367.3 Appropriate officials.

367.4 [Reserved]

367.5 Exclusions.

367.6 Causes for exclusion.

367.7 Suspensions.

367.8 Causes for suspension.

367.9 Imputation of causes.

367.10–367.11 [Reserved]

367.12 Procedures.

367.13 Notices.

367.14 Responses.

367.15 Additional proceedings as to

disputed material facts.

367.16 Ethics Counselor decisions.

367.17 Duration of suspensions and

exclusions.

367.18 Abrogation of contracts.

367.19 Exceptions to suspensions and

exclusions.

367.20 Review and reconsideration of Ethics

Counselor decisions.

Authority: 12 U.S.C. 1822(f) (4) and (5).

§ 367.1 Authority, purpose, scope and

application.

(a) Authority. This part is adopted

pursuant to section 12(f) (4) and (5) of

the Federal Deposit Insurance Act, 12

U.S.C. 1822(f) (4) and (5), and the rulemaking authority of the Federal Deposit

Insurance Corporation (FDIC) found at

12 U.S.C. 1819. Other regulations

implementing these statutory directives

appear at 12 CFR part 366.

(b) Purpose. This part is designed to

inform contractors and subcontractors

(including their affiliated business

entities, key employees and

management officials) regarding their

rights to notice and an opportunity to be

heard on FDIC actions involving

suspension and exclusion from

contracting and rescission of existing

contracts. This part is in addition to,

and not in lieu of, any other statute or

regulation that may apply to such

contractual activities.

(c) Scope. (1) This part applies to:

(i) Contractors, other than attorneys or

law firms providing legal services,

submitting offers to provide services or

entering into contracts to provide

services to the FDIC acting in any

capacity; and

(ii) Subcontractors entering into

contracts to perform services under a

proposed or existing contract with the

FDIC.

(d) Application. (1) This part will

apply to entities that become

contractors, as defined in § 367.2(f), on

or after July 5, 1996. In addition, this

part will apply to contractors as defined

in § 367.2(f) that are performing

contracts on July 5, 1996.

(2) This part will also apply to actions

initiated on or after July 5, 1996

regardless of the date of the cause giving

rise to the actions.

(3) Contracts entered into by the

former Resolution Trust Corporation

(RTC) that were transferred to the FDIC

will be treated in the same manner as

FDIC contracts under this part.

(4) This part supersedes and replaces

the former RTC regulation relating to

suspension and exclusion of registered

contractors and rescission of contracts

in effect through December 31, 1995.

RTC actions taken under the RTC

regulation will be honored as if taken by

the FDIC. A contractor subject to an RTC

exclusion or suspension will be

precluded thereby from participation in

the FDIC’s contracting program unless

that exclusion or suspension is modified

or terminated under the provision of

this part.

§ 367.2 Definitions.

(a) Adequate evidence means

information sufficient to support the

reasonable belief that a particular act or

omission has occurred.

(b) Affiliated business entity means a

company that is under the control of the

contractor, is in control of the

contractor, or is under common control

with the contractor.

(c) Civil judgment means a judgment

of a civil offense or liability by any court

of competent jurisdiction in the United

States.

(d) Company means any corporation,

firm, partnership, society, joint venture,

business trust, association, consortium

or similar organization.

(e) Conflict of interest means a

situation in which:

(1) A contractor; any management

officials or affiliated business entities of

a contractor; or any employees, agents,

or subcontractors of a contractor who

will perform services under a proposed

or existing contract with the FDIC:

(i) Has one or more personal,

business, or financial interests or

relationships which would cause a

reasonable individual with knowledge

of the relevant facts to question the

integrity or impartiality of those who are
35118 Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules and Regulations

or will be acting under a proposed or

existing FDIC contract;

(ii) Is an adverse party to the FDIC,

RTC, Federal Savings and Loan

Insurance Corporation (FSLIC), or their

successors in a lawsuit; or

(iii) Has ever been suspended,

excluded, or debarred from contracting

with a federal entity or has ever had a

contract with the FDIC, RTC, FSLIC or

their successors rescinded or terminated

prior to the contract’s completion and

which rescission or termination

involved issues of conflicts of interest or

ethical responsibilities; or

(2) Any other facts exist which the

FDIC, in its sole discretion, determines

may, through performance of a proposed

or existing FDIC contract, provide a

contractor with an unfair competitive

advantage which favors the interests of

the contractor or any person with whom

the contractor has or is likely to have a

personal or business relationship.

(f) Contractor means a person or

company which has submitted an offer

to perform services for the FDIC or has

a contractual arrangement with the FDIC

to perform services. For purposes of this

part, contractor also includes:

(1) A contractor’s affiliated business

entities, key employees, and

management officials of the contractor;

(2) Any subcontractor performing

services for the FDIC and the

management officials and key

employees of such subcontractors; and

(3) Any entity or organization seeking

to perform services for the FDIC as a

minority or woman-owned business

(MWOB).

(g) Contract(s) means agreement(s)

between FDIC and a contractor,

including, but not limited to,

agreements identified as ‘‘task orders’’,

for a contractor to provide services to

FDIC. Contracts also mean contracts

between a contractor and its

subcontractor.

(h) Control means the power to vote,

directly or indirectly, 25 percent or

more of any class of the voting stock of

a company; the ability to direct in any

manner the election of a majority of a

company’s directors or trustees; or the

ability to exercise a controlling

influence over the company’s

management and policies. For purposes

of this definition, a general partner of a

limited partnership is presumed to be in

control of that partnership.

(i) Conviction means a judgment or

conviction of a criminal offense by any

court of competent jurisdiction, whether

entered upon a verdict or plea, and

includes pleas of nolo contendere.

(j) FDIC means the Federal Deposit

Insurance Corporation acting in its

receivership and corporate capacities,

and FDIC officials or committees acting

under delegated authority.

(k) Indictment shall include an

information or other filing by a

competent authority charging a criminal

offense.

(l) Key employee means an individual

who participates personally and

substantially in the negotiation of,

performance of, and/or monitoring for

compliance under a contract with the

FDIC. Such participation is made

through, but is not limited to, decision,

approval, disapproval, recommendation,

or the rendering of advice under the

contract.

(m) Management official means any

shareholder, employee or partner who

controls a company and any individual

who directs the day-to-day operations of

a company. With respect to a

partnership, all partners are deemed to

be management officials unless the

partnership is governed by a

management or executive committee

with responsibility for the day-to-day

operations. In partnerships with such

committees, management official means

only those partners who are a member

of such a committee.

(n) Material fact means one that is

necessary to determine the outcome of

an issue or case and without which the

case could not be supported.

(o) Offer means a proposal or other

written or oral offer to provide services

to FDIC.

(p) Pattern or practice of defalcation

regarding obligations means two or

more instances in which a loan or

advance from an insured depository

institution:

(1) Is in default for ninety (90) or more

days as to payment of principal,

interest, or a combination thereof, and

there remains a legal obligation to pay

an amount in excess of $50,000; or

(2) Where there has been a failure to

comply with the terms of a loan or

advance to such an extent that the

collateral securing the loan or advance

was foreclosed upon, resulting in a loss

in excess of $50,000 to the insured

depository institution.

(q) Preponderance of the evidence

means proof by information that,

compared with that opposing it, leads to

the conclusion that the fact at issue is

more probably true than not.

(r) Subcontractor means an entity or

organization that enters into a contract

with an FDIC contractor or another

subcontractor to perform services under

a proposed or existing contract with the

FDIC.

(s) Substantial loss to federal deposit

insurance funds means:

(1) A loan or advance from an insured

depository institution, which is

currently owed to the FDIC, RTC, FSLIC

or their successors, or the Bank

Insurance Fund (BIF), the Savings

Association Insurance Fund (SAIF), the

FSLIC Reserve Fund (FRF), or funds that

were maintained by the RTC for the

benefit of insured depositors, that is or

has ever been delinquent for ninety (90)

or more days as to payment of principal,

interest, or a combination thereof and

on which there remains a legal

obligation to pay an amount in excess of

$50,000;

(2) An obligation to pay an

outstanding, unsatisfied, final judgment

in excess of $50,000 in favor of the

FDIC, RTC, FSLIC, or their successors,

or the BIF, the SAIF, the FRF or the

funds that were maintained by the RTC

for the benefit of insured depositors; or

(3) A loan or advance from an insured

depository institution which is

currently owed to the FDIC, RTC, FSLIC

or their successors, or the BIF, the SAIF,

the FRF or the funds that were

maintained by the RTC for the benefit of

insured depositors, where there has

been a failure to comply with the terms

to such an extent that the collateral

securing the loan or advance was

foreclosed upon, resulting in a loss in

excess of $50,000.

§ 367.3 Appropriate officials.

(a) The Ethics Counselor is the

Executive Secretary of the FDIC. The

Ethics Counselor shall act as the official

responsible for rendering suspension

and exclusion decisions under this part.

In addition to taking suspension and/or

exclusion action under this part, the

Ethics Counselor has authority to

terminate exclusion and suspension

proceedings. As used in this part,

‘‘Ethics Counselor’’ includes any official

designated by the Ethics Counselor to

act on the Ethics Counselor’s behalf.

(b) The Corporation Ethics Committee

is the committee appointed by the

Chairman of the FDIC, or Chairman’s

designee, which provides review of any

suspension or exclusion decision

rendered by the Ethics Counselor that is

appealed by a contractor who has been

suspended and/or excluded from FDIC

contracting.

(c) Information concerning the

possible existence of any cause for

suspension or exclusion shall be

reported to the Office of the Executive

Secretary (Ethics Section). This part

does not modify the responsibility to

report allegations of fraud, waste and

abuse, including but not limited to

criminal violations, to the Office of

Inspector General.
Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules and Regulations 35119

§ 367.4 [Reserved]

§ 367.5 Exclusions.

(a) The Ethics Counselor may exclude

a contractor from the FDIC contracting

program for any of the causes set forth

in § 367.6, using procedures established

in this part.

(b) Exclusion is a serious action to be

imposed when a contractor has violated

one or more of the causes set forth in

§ 367.6. Contractors excluded from FDIC

contracting programs are prohibited

from entering into any new contracts

with FDIC for the duration of the period

of exclusion as determined pursuant to

this part. The FDIC shall not solicit

offers from, award contracts to, extend

or modify existing contracts, award task

orders under existing contracts, or

consent to subcontracts with such

contractors. Excluded contractors are

also prohibited from conducting

business with FDIC as agents or

representatives of other contractors.

(c) Exclusion actions do not become

effective upon the notification of the

contractor that there is a possible cause

to exclude under § 367.13. Rather, they

become effective only upon the Ethics

Counselor’s decision to exclude the

contractor pursuant to § 367.16.

(d) The causes for exclusion set forth

in § 367.6(a)(1) through (4) reflect

statutorily established mandatory bars

to contracting with the FDIC.

(e) Except when one or more of the

statutorily established mandatory bars

to contracting are shown to exist, the

existence of a cause for exclusion does

not necessarily require that the

contractor be excluded; the seriousness

of the contractor’s acts or omissions and

any mitigating or aggravating

circumstances shall be considered in

making any exclusion decision.

§ 367.6 Causes for exclusion.

The FDIC may exclude a contractor,

in accordance with the procedures set

forth in this part, upon a finding that:

(a) The contractor has been convicted

of any felony;

(b) The contractor has been removed

from, or prohibited from participating in

the affairs of, any insured depository

institution pursuant to any final

enforcement action by the Office of the

Comptroller of the Currency, the Office

of Thrift Supervision, the Board of

Governors of the Federal Reserve

System, or the Federal Deposit

Insurance Corporation or their

successors;

(c) The contractor has demonstrated a

pattern or practice of defalcation;

(d) The contractor has caused a

substantial loss to Federal deposit

insurance funds;

(e) The contractor has failed to

disclose, pursuant to 12 CFR 366.6, a

material fact to the FDIC;

(f) The contractor has failed to

disclosed any material adverse change

in the representations and certifications

provided to FDIC under 12 CFR 366.6;

(g) The contractor has miscertified its

status as a minority and/or woman

owned business (MWOB);

(h) The contractor has a conflict of

interest that was not waived by the

Ethics Counselor or designee;

(i) The contractor has been subject to

a final enforcement action by any

federal financial institution regulatory

agency, or has stipulated to such action;

(j) The contractor is debarred from

participating in other federal programs;

(k) The contractor has been convicted

of, or subject to a civil judgment for:

(1) Commission of fraud or a criminal

offense in connection with obtaining,

attempting to obtain, or performing a

public or private agreement or

transaction, or conspiracy to do the

same;

(2) Violation of federal or state

antitrust statutes, including those

proscribing price fixing between

competitors, allocation of customers

between competitors, and bid rigging, or

conspiracy to do the same;

(3) Commission of embezzlement,

theft, forgery, bribery, falsification or

destruction of records, making false

statements, receiving stolen property,

making false claims, obstructing of

justice, or conspiracy to do the same;

(4) Commission of any other offense

indicating a breach of trust, dishonesty

or lack of integrity, or conspiracy to do

the same;

(l) The contractor’s performance

under previous contract(s) with FDIC or

RTC has resulted in:

(1) The FDIC or RTC declaring such

contract(s) to be in default;

(2) The termination of such contract(s)

for poor performance; or

(3) A violation of the terms of a

contract that would have resulted in a

default or termination of the contract for

poor performance if that violation had

been discovered during the course of the

contract; or

(m) The contractor has engaged in any

conduct:

(1) Indicating a breach of trust,

dishonesty, or lack of integrity that

seriously and directly affects its ability

to meet standards of present

responsibility required of an FDIC

contractor; or

(2) So serious or compelling in nature

that it adversely affects the ability of a

contractor to meet the minimum ethical

standards required by 12 CFR part 366.

§ 367.7 Suspensions.

(a) The Ethics Counselor may suspend

a contractor for any of the causes in

§ 367.8 using the procedures established

in this section.

(b) Suspension is an action to be

imposed when there exists adequate

evidence of one or more of the causes

set out in § 367.8. This includes, but is

not limited to, situations where

immediate action is necessary to protect

the integrity of the FDIC contracting

program and/or the security of FDIC

assets during the pendency of legal or

investigative proceedings initiated by

FDIC, any federal agency or any law

enforcement authority.

(c) The duration of any suspension

action shall be for a temporary period

pending the completion of an

investigation and such other legal

proceedings as may ensue.

(d) A suspension shall become

effective immediately upon issuance of

the notice specified in § 367.13(b).

(e) Contractors suspended from FDIC

contracting programs are prohibited

from entering into any new contracts

with the FDIC for the duration of the

period of suspension. The FDIC shall

not solicit offers from, award contracts

to, extend or modify existing contracts,

award task orders under existing

contracts, or consent to subcontracts

with such contractors. Suspended

contractors are also prohibited from

conducting business with FDIC as

agents or representatives of other

contractors.

§ 367.8 Causes for suspension.

(a) Suspension may be imposed under

the procedures set forth in this section

upon adequate evidence:

(1) Of suspension by another federal

agency;

(2) That a cause for exclusion under

§ 367.6 may exist;

(3) Of the commission of any other

offense indicating a breach of trust,

dishonesty, or lack of integrity that

seriously and directly affects the

minimum ethical standards required of

an FDIC contractor; or

(4) Of any other cause so serious or

compelling in nature that it adversely

affects the ability of a contractor to meet

the minimal ethical standards required

by 12 CFR part 366.

(b) Indictment for any offense

described in § 367.6 is adequate

evidence to suspend a contractor.

(c) In assessing the adequacy of the

evidence, FDIC will consider how much

information is available, how credible it

is given the circumstances, whether or

not important allegations are

corroborated and what inferences can

reasonably be drawn as a result.
35120 Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules and Regulations

§ 367.9 Imputation of causes.

(a) Where there is cause to suspend

and/or exclude any affiliated business

entity of the contractor, that conduct

may be imputed to the contractor if the

conduct occurred in connection with

the affiliated business entity’s

performance of duties for or on behalf

of the contractor, or with the

contractor’s knowledge, approval, or

acquiescence. The contractor’s

acceptance of the benefits derived from

the conduct shall be evidence of such

knowledge, approval, or acquiescence.

(b) Where there is cause to suspend

and/or exclude any contractor, that

conduct may be imputed to any

affiliated business entity, key employee,

or management official of a contractor

who participated in, knew of or had

reason to know of the contractor’s

conduct.

(c) Where there is cause to suspend

and/or exclude a key employee or

management official of a contractor, that

cause may be imputed to the contractor

if the conduct occurred in connection

with the key employee or management

official’s performance of duties for or on

behalf of the contractor, or with the

contractor’s knowledge, approval, or

acquiescence. The contractor’s

acceptance of the benefits derived from

the conduct shall be evidence of such

knowledge, approval, or acquiescence.

(d) Where there is cause to suspend

and/or exclude one contractor

participating in a joint venture or

similar arrangement, that cause may be

imputed to other participating

contractors if the conduct occurred for

or on behalf of the joint venture or

similar arrangement, or with the

knowledge, approval, or acquiescence of

these contractors. Acceptance of the

benefits derived from the conduct shall

be evidence of such knowledge,

approval, or acquiescence.

(e) Where there is cause to suspend

and/or exclude a subcontractor, that

cause may be imputed to the contractor

for which the subcontractor performed

services, if the conduct occurred for or

on behalf of the contractor and with the

contractor’s knowledge, approval, or

acquiescence. Acceptance of the

benefits derived from the conduct shall

be evidence of such knowledge,

approval, or acquiescence.

§§ 367.10–367.11 [Reserved]

§ 367.12 Procedures.

(a) FDIC shall process suspension and

exclusion actions as informally as

practicable, consistent with its policy of

providing contractors with adequate

information on the grounds that give

rise to the proposed action and affording

contractors with a reasonable

opportunity to respond.

(b) For purposes of determining filing

dates for the pleadings required by this

part, including responses, notices of

appeal, appeals and requests for

reconsideration, the provisions relating

to the construction of time limits in 12

CFR 308.12 will control.

§ 367.13 Notices.

(a) Exclusions. Before excluding a

contractor, the FDIC shall send it a

written notice of possible cause to

exclude. Such notice shall include:

(1) Notification that exclusion for a

specified period of time is being

considered based on the specified

cause(s) in § 367.6 to be relied upon;

(2) Identification of the event(s),

circumstance(s), or condition(s) that

indicates that there is cause to believe

a cause for exclusion exists, described

in sufficient detail to put the contractor

on notice of the conduct or

transaction(s) upon which an exclusion

proceeding is based;

(3) Notification that the contractor is

not prohibited from contracting with the

FDIC unless and until it is either

suspended from FDIC contracting or the

FDIC Ethics Counselor issues a decision

excluding the contractor, provided

however, in any case where the possible

cause for exclusion would also be an

impediment to the contractor’s

eligibility pursuant to 12 CFR part 366,

the contractor’s eligibility for any

contract will be determined under that

part; and

(4) Notification of the regulatory

provisions governing the exclusion

proceeding and the potential effect of a

final exclusion decision.

(b) Suspensions. Before suspending a

contractor, the FDIC shall send it notice,

including:

(1) Notice that a suspension is being

imposed based on specified causes in

§ 367.8;

(2) Identification of the event(s),

circumstance(s), or condition(s) that

indicate that there is adequate evidence

to believe a cause for suspension exists,

described in sufficient detail to put the

contractor on notice of the basis for the

suspension, recognizing that the

conduct of ongoing investigations and

legal proceedings, including criminal

proceedings, place limitations on the

evidence that can be released;

(3) Notification that the suspension

prohibits the contractor from

contracting with the FDIC for a

temporary period, pending the

completion of an investigation or other

legal proceedings; and

(4) Notification of the regulatory

provisions governing the suspension

proceeding.

(c) Service of notices. Notices will be

sent to the contractor by first class mail,

postage prepaid. For purposes of

compliance with this section, notice

shall be considered to have been

received by the contractor if the notice

is properly mailed to the last known

address of such contractor. Whenever

practical, a copy of the notice will also

be transmitted to the contractor by

facsimile. In the event the notice is not

sent by facsimile, a copy will be sent by

an overnight delivery service such as

Express Mail or a commercial

equivalent.

§ 367.14 Responses.

(a) The contractor will have 15 days

from the date of the notice within which

to respond.

(b) The response shall be in writing

and may include: information and

argument in opposition to the proposed

exclusion and/or suspension, including

any additional specific information

pertaining to the possible causes for

exclusion; and information and

argument in mitigation of the proposed

period of exclusion.

(c) The response may request a

meeting with an FDIC official identified

in the notice to permit the contractor to

discuss issues of fact or law relating to

the suspension and/or proposed

exclusion or to otherwise resolve the

pending matters.

(1) Any such meetings between a

contractor and FDIC shall take such

form as the FDIC deems appropriate.

(2) In cases of suspensions, no

meeting will be held where a

representative of the Department of

Justice has advised in writing that the

substantial interests of the Government

would be prejudiced by such a meeting

and the Ethics Counselor determines

that a suspension is based on the same

facts as pending or contemplated legal

proceedings referenced by the

representative of the Department of

Justice.

(d) Failure to respond to the notice

shall be deemed an admission of the

existence of the cause(s) for suspension

and/or exclusion set forth in the notice

and an acceptance of the period of

exclusion proposed therein. In such

circumstances, the FDIC may proceed to

a final decision without further

proceedings.

(e) Where a contractor has received

more than one notice, the FDIC may

consolidate the pending proceedings,

including the scheduling of any

meetings, in accordance with this

section.
Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules and Regulations 35121

§ 367.15 Additional proceedings as to

disputed material facts.

(a) In actions not based upon a

conviction or civil judgment, if the

Ethics Counselor finds that the

contractor’s submission raises a genuine

dispute over facts material to the

proposed suspension and/or exclusion,

the contractor shall be afforded an

opportunity to appear (with counsel, if

desired), submit documentary evidence,

present witnesses, and confront any

witnesses the FDIC presents.

(b) The Ethics Counselor may refer

disputed material facts to another

official for analysis and

recommendation.

(c) If requested, a transcribed record

of any additional proceedings shall be

made available at cost to the contractor.

§ 367.16 Ethics Counselor decisions.

(a) Standard of proof:

(1) An exclusion must be based on a

finding that the cause(s) for exclusion is

established by a preponderance of the

evidence in the administrative record of

the case; and

(2) A suspension must be based on a

finding that the cause(s) for suspension

is established by adequate evidence in

the administrative record of the case.

(b) The administrative record consists

of the portion of any information,

reports, documents or other evidence

identified and relied upon in the Notice

of Possible Cause to Exclude, the Notice

of Suspension and/or supplemental

Notices, if any, together with any

material portions of the contractor’s

response. When additional proceedings

are necessary to determine disputed

material facts, the Ethics Counselor

shall base the decision on the facts as

found, together with any information

and argument submitted by the

contractor and any other information in

the administrative record.

(c) In actions based upon a

conviction, judgment, a final

enforcement action by a federal

financial institution regulatory agency,

or in which all facts and circumstances

material to the exclusion action have

been finally adjudicated in another

forum, the Ethics Counselor may

exclude a contractor without regard to

the procedures set out in §§ 367.13

through 367.14. Any such decisions will

be subject to the review and

reconsideration provisions of § 367.20.

(d) Notice of decisions. Contractors

shall be given prompt notice of the

Ethics Counselor’s decision in the

manner described in § 367.13(c). If the

Ethics Counselor suspends a contractor

or imposes a period of exclusion, the

decision shall:

(1) Set forth the cause(s) for

suspension and/or exclusion included

in the Notice that were found by a

preponderance of the evidence with

reference to the administrative record

support for that finding;

(2) Set forth the effect of the exclusion

action and the effective dates of that

action;

(3) Refer the contractor to its

procedural rights of review and

reconsideration under § 367.20; and

(4) Inform the contractor that a copy

of the exclusion decision shall be placed

in the FDIC Public Reading Room.

(e) If the FDIC Ethics Counselor

decides that a period of exclusion is not

warranted, the Notice of Possible Cause

to Exclude may be withdrawn or the

proceeding may be otherwise

terminated. A decision to terminate an

exclusion proceeding may include the

imposition of appropriate conditions on

the contractor in their future dealings

with the FDIC.

§ 367.17 Duration of suspensions and

exclusions.

(a) Suspensions. (1) Suspensions shall

be for a temporary period pending the

completion of an investigation or other

legal or exclusion proceedings.

(2) If legal or administrative

proceedings are not initiated within 12

months after the date of the suspension

notice, the suspension shall be

terminated unless a representative of the

Department of Justice requests its

extension in writing. In such cases, the

suspension may be extended for an

additional six months. In no event may

a suspension be imposed for more than

18 months, unless such proceedings

have been initiated within that period.

(3) FDIC shall notify the Department

of Justice of an impending termination

of a suspension at least 30 days before

the 12-month period expires to give the

Department of Justice an opportunity to

request an extension.

(4) The time limitations for

suspension in this section may be

waived by the affected contractor.

(b) Exclusions. (1) Exclusions shall be

for a period commensurate with the

seriousness of the cause(s) after due

consideration of mitigating evidence

presented by the contractor.

(2) If a suspension precedes an

exclusion, the suspension period shall

be considered in determining the

exclusion period.

(3) Exclusion for causes other than the

mandatory bars in 12 CFR 366.4(a)

generally should not exceed three years,

but where circumstances warrant, a

longer period of exclusion may be

imposed.

(4) The Ethics Counselor may extend

an existing exclusion for an additional

period if the Ethics Counselor

determines that an extension is

necessary to protect the integrity of the

FDIC contracting program and the

public interest. However, an exclusion

may not be extended solely on the basis

of the facts and circumstances upon

which the initial exclusion action was

based. The standards and procedures in

this part shall be applied in any

proceeding to extend an exclusion.

§ 367.18 Abrogation of contracts.

(a) The FDIC may, in its discretion,

rescind or terminate any contract in

existence at the time a contractor is

suspended or excluded.

(b) Any contract not rescinded or

terminated shall continue in force in

accordance with the terms thereof.

(c) The right to rescind or terminate

a contract in existence is cumulative

and in addition to any other remedies or

rights the FDIC may have under the

terms of the contract, at law, or

otherwise.

§ 367.19 Exceptions to suspensions and

exclusions.

(a) Exceptions to the effects of

suspensions and exclusions may be

available in unique circumstances,

where there are compelling reasons to

utilize a particular contractor for a

specific task. Requests for such

exceptions may be submitted only by

the FDIC program office requesting the

contract services.

(b) In the case of the modification or

extension of an existing contract, the

Ethics Counselor may except such a

contracting action from the effects of

suspension and/or exclusion upon a

determination, in writing, that a

compelling reason exists for utilization

of the contractor in the particular

instance. The Ethics Counselor’s

authority under this section shall not be

delegated to any lower official.

(c) In the case of new contracts, the

Corporation Ethics Committee may

except a particular new contract from

the effects of suspension and/or

exclusion upon a determination in

writing that a compelling reason exists

for utilization of the contractor in the

particular instance.

§ 367.20 Review and reconsideration of

Ethics Counselor decisions.

(a) Review. (1) A suspended and/or

excluded contractor may appeal the

exclusion decision to the Corporation

Ethics Committee.

(2) In order to avail itself of the right

to appeal, a suspended and/or excluded

contractor must file a written notice of

intent to appeal within 5 days of the

Ethics Counselor’s decision.
35122 Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Rules and Regulations

(3) The appeal shall be filed in writing

within 30 days of the decision.

(4) The Corporation Ethics

Committee, at its discretion and after

determining that it is in the best

interests of the FDIC, may stay the effect

of the suspension and/or exclusion

pending conclusion of its review of the

matter.

(b) Reconsideration. (1) A suspended

and/or excluded contractor may submit

a request to the Ethics Counselor to

reconsider the suspension and/or

exclusion decision, reduce the period of

exclusion or terminate the suspension

and/or exclusion.

(2) Such requests shall be in writing

and supported by documentation that

the requested action is justified by:

(i) Reversal of the conviction or civil

judgment upon which the suspension

and/or exclusion was based;

(ii) Newly discovered material

evidence;

(iii) Bona fide change in ownership or

management;

(iv) Elimination of other causes for

which the suspension and/or exclusion

was imposed; or

(v) Other reasons the FDIC Ethics

Counselor deems appropriate.

(3) A request for reconsideration

based on the reversal of the conviction

or civil judgment may be filed at any

time.

(4) Requests for reconsideration based

on other grounds may only be filed

during the period commencing 60 days

after the Ethics Counselor’s decision

imposing the suspension and/or

exclusion. Only one such request may

be filed in any twelve month period.

(5) The Ethics Counselor’s decision on

a request for reconsideration is subject

to the review procedure set forth in

paragraph (a) of this section.

By order of the Board of Directors.

Dated at Washington, D.C., this 17th day of

June 1996.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Deputy Executive Secretary.

[FR Doc. 96–16510 Filed 7–3–96; 8:45 am]

BILLING CODE 6714–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 94–NM–102–AD; Amendment

39–9679; AD 96–13–11]

RIN 2120–AA64

Airworthiness Directives; Airbus Model

A300 B2 and B4 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment supersedes

an existing airworthiness directive (AD),

applicable to all Airbus Model A300 B2,

B4–100, and B4–200 series airplanes,

that currently requires supplemental

structural inspections to detect fatigue

cracking, and repair of cracked

structure. This amendment requires

revising the supplemental structural

inspection (SSID) program by changing

some of the inspection techniques,

changing some of the thresholds and

intervals for inspections, expanding the

area to be inspected for some of the

inspections, and revising the Fleet

Leader Program. This amendment is

prompted by a review of recent service

history and reports received from the

current SSID program required by the

existing AD. The actions specified by

this AD are intended to prevent reduced

structural integrity of these airplanes

due to fatigue cracking.

DATES: Effective August 9, 1996.

The incorporation by reference of

Airbus Industrie A300 Supplemental

Structural Inspection Document (SSID),

Revision 2, dated June 1994, as listed in

the regulations is approved by the

Director of the Federal Register as of

August 9, 1996.

The incorporation by reference of

Airbus Industrie A300 Supplemental

Structural Inspection Document (SSID),

dated September 1989, as listed in the

regulations, was approved previously by

the Director of the Federal Register as of

March 9, 1993 (58 FR 6703, February 2,

1993).

ADDRESSES: The service information

referenced in this AD may be obtained

from Airbus Industrie, 1 Rond Point

Maurice Bellonte, 31707 Blagnac Cedex,

France. This information may be

examined at the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, Rules Docket,

1601 Lind Avenue, SW., Renton,

Washington; or at the Office of the

Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Phil

Forde, Aerospace Engineer,

Standardization Branch, ANM–113,

FAA, Transport Airplane Directorate,

1601 Lind Avenue, SW., Renton,

Washington 98055–4056; telephone

(206) 227–2146; fax (206) 227–1149.

SUPPLEMENTARY INFORMATION: A

proposal to amend part 39 of the Federal

Aviation Regulations (14 CFR part 39)

by superseding AD 93–01–24,

amendment 39–8478 (58 FR 6703,

February 2, 1993), which is applicable

to all Airbus Model A300 B2, B4–100,

and B4–200 series airplanes, was

published in the Federal Register on

January 31, 1996 (61 FR 3343). The

action proposed to continue to require

supplemental structural inspections to

detect fatigue cracking, and repair of

cracked structure. The action also

proposed to require revising the

supplemental structural inspection

program, including changing some of

the inspection techniques, changing

some of the thresholds and intervals for

certain inspections, expanding the area

to be inspected for some of the

inspections, and revising the Fleet

Leader Program.

Interested persons have been afforded

an opportunity to participate in the

making of this amendment. Due

consideration has been given to the two

comments received.

Support for the Proposal

Both commenters support the

proposed rule.

Conclusion

After careful review of the available

data, including the comment noted

above, the FAA has determined that air

safety and the public interest require the

adoption of the rule as proposed.

Cost Impact

The FAA estimates that

approximately 26 Model A300 series

airplanes of U.S. registry will be affected

by this AD.

The actions that are currently

required by AD 93–01–24 take

approximately 564 work hours per

airplane to accomplish, at an average

labor rate of $60 per work hour. Based

on these figures, the cost impact on U.S.

operators of the actions required by AD

93–01–24 is estimated to be $879,840, or

$33,840 per airplane.

Implementation of the inspections,

repairs, and replacements specified in

Revision 2 of the SSID into an operator’s

maintenance program is estimated to

require approximately 597 work hours

(including removal, inspection, and

installation work hours) per airplane per

year, at an average labor rate of $60 per