[Federal Register Volume 75, Number 188 (Wednesday, September 29, 2010)]
[Rules and Regulations]
[Pages 60258-60260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24214]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 8, 12, 15, 42, and 49

[FAC 2005-46; FAR Case 2008-016; Item III; Docket 2009-0032, Sequence 
1]
RIN 9000-AL45


Federal Acquisition Regulation; Termination for Default Reporting

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

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (the Councils) are issuing a final rule 
amending the Federal Acquisition Regulation (FAR) to establish 
procedures for contracting officers to provide contractor information, 
such as terminations for cause or default and defective cost or pricing 
data, into the Past Performance Information System (PPIRS) and Federal 
Awardee Performance and Integrity Information System (FAPIIS) module 
within PPIRS. This information will assist the contracting officer in 
making an informed source selection and award decision. Instructions on 
access to the FAPIIS module and how to input data into the FAPIIS 
module will be available at http://www.ppirs.gov/fapiis.html.

DATES: Effective Date: October 29, 2010.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Jeritta Parnell, Procurement Analyst, at (202) 501-4082. For 
information pertaining to status or publication schedules, contact the 
Regulatory Secretariat at (202) 501-4755. Please cite FAC 2005-46, FAR 
case 2008-016.

SUPPLEMENTARY INFORMATION:

A. Background

    The Councils have agreed on a final rule amending the FAR to revise 
the contractor performance information process. This case sets forth 
requirements for contracting officers to report defective cost or 
pricing data and terminations for cause or default into the FAPIIS 
module of the PPIRS. Evaluation of past performance information, 
especially terminations, manages risks associated with timely, 
effective, and cost efficient completion of contracts, a key objective 
of the President's March 4, 2009, Memorandum on Government Contracting.
    The Councils published in the Federal Register at 74 FR 45394 on 
September 2, 2009, a proposed rule with request for comments. Four 
respondents submitted fifteen comments.

B. Discussion of Public Comments

    The comments received were grouped under six general topics. A 
summary of these topics and a discussion of the comments and the 
changes made to the proposed rule as a result of those comments are 
provided below:

1. Certification Regarding Responsibility Matters

    Comment: One respondent recommended deletion of the certification 
on terminations found in FAR clause 52.209-5, Certification Regarding 
Responsibility Matters, since the information concerning terminations 
will be available to contracting officers in PPIRS. The respondent 
further suggested that conforming deletions should also be made at FAR 
52.204-8(c)(1)(v) and in the Online Representations and Certifications 
Application (ORCA) Web site.
    Response: The Councils disagree. PPIRS is the repository for

[[Page 60259]]

determinations made by contracting officers. PPIRS is not a repository 
for certifications made by contractors when certifications are 
required. Executive order 12689 requires the inclusion of the 
certification at FAR 52.209-5. FAR 9.105-1 also requires contracting 
officers to consider contractor certifications in making a contractor 
determination of responsibility.

2. Contractor Rebuttal

    Comment: Two of the four respondents submitted comments requesting 
that the contractor be given an opportunity to post rebutting 
statements and additional information into PPIRS and this information 
be retained as long as the fundamental information is retained in 
PPIRS.
    Response: When termination records are posted in the FAPIIS module 
of PPIRS, contractors will have an opportunity to provide additional 
information as required by section 872 of the Duncan Hunter National 
Defense Authorization Act of 2009 (Pub. L. 110-417). This process 
should not be confused with the rebuttal process for past performance 
information as specified in FAR 42.1503(b).

3. Defective Pricing Information

    Comment: One respondent submitted two separate comments suggesting 
that defective pricing information not be included in PPIRS.
    Response: The Councils disagree. The Councils believe that 
defective cost or pricing data is relevant to other contractor 
performance information to be considered when evaluating contractor's 
performance for award of contracts. However, the Councils did clarify 
in FAR 15.407-1(d) and 42.1503(f) that the contracting officer shall 
report only the final determination.

4. Relevance and Currency

    Comment: One respondent submitted two separate comments on 
relevance and currency. One comment stated that the FAR does not 
provide any guidance with respect to relevance when determining the 
relevance and currency of any termination for cause or default 
information in PPIRS. The second comment suggested that the rule 
explain how the contracting officer will evaluate defective pricing 
information recorded in PPIRS.
    Response: The Councils disagree with revising the rule. Relevancy 
is specific to the instant contract and based on the circumstances of 
contract performance. Contracting officers are responsible for making a 
determination of the relevancy of the information. The Councils will 
work with the Federal Acquisition Institute and the Defense Acquisition 
University to develop guidance and training for contracting officials 
on the proper use of the reported information.

5. Removal of Detrimental Information

    Comment: Two respondents submitted comments concerning removal of 
detrimental information from PPIRS. One comment suggested that the 
Government remove unfavorable information from PPIRS should it no 
longer be valid. For example, when terminations for cause or default 
are converted to termination for convenience or withdrawn the 
contracting officer should remove from PPIRS any reference to the 
termination for default. The respondent recommended changing the 
language at FAR 8.406-8 and 12.403.
    Response: The Councils disagree that a change to the rule is 
necessary. The language at FAR 8.406-4(e), 12.403(c)(4), 15.407-1, and 
49.402-8 states that the contracting officer shall report a subsequent 
withdrawal or a conversion to a termination for convenience in 
accordance with FAR 42.1503(f).
    Comment: Another respondent suggested the Government should be held 
to the same high standard of record keeping as no system is infallible. 
Determination of malice and intent should be made before contract 
termination occurs. Follow-up systems should be in place to make sure 
that when an error occurs and is corrected that the Government does 
hold up its side of the bargain and remove detrimental information.
    Response: Comment noted. Throughout the revised coverage, language 
was added that in the event a termination for cause is subsequently 
converted to a termination for convenience, or otherwise withdrawn, the 
contracting officer shall ensure that a notice of the conversion or 
withdrawal is reported in accordance with FAR 42.1503(f).

6. Timing of Posting of Defective Pricing Information

    Five comments were received from two respondents regarding the 
timing and posting of defective pricing information.
    Comment: The respondents believe that it is not clear that the 
intent of this language is to post this information before or after a 
defective pricing case has been resolved.
    Response: The Councils agree. Language was clarified at FAR 15.407-
1 to add the word ``final'' before determination in the coverage. In 
addition, a requirement was added to update PPIRS.
    Comment: One respondent expressed concern that posting within 10 
days is not likely to happen.
    Response: The Councils disagree. There were no objections to the 
10-day timeframe made by the agencies during the proposed rule comment 
period. The 10-day timeframe was changed to 3 working days to be 
synonymous with the requirements of FAPIIS.
Summary of Major Changes to the Proposed Rule
    <bullet> New coverage at FAR 8.406-8 was moved to FAR 8.406-4(e).
    <bullet> Language was clarified at FAR 15.407-1 to add 
``contracting officer's final'' before ``determination'' in the 
coverage. A requirement was added to update PPIRS.
    <bullet> In FAR 42.1503, the 10-day timeframe was changed to 3 
working days to be synonymous with the requirements of FAPIIS. Language 
was clarified on what a ``conversion'' is. Language was added to 
address agency focal points.
    This is a significant regulatory action and, therefore, was subject 
to review under section 6(b) 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.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not 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 the rule does not 
impose any additional requirements on small entities. The collection 
and reporting of past performance information is an internal process to 
the Government. The rule merely puts into effect the internal 
requirement that contracting officers report defective cost or pricing 
data and terminations for cause or default into PPIRS.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
chapter 35, et seq.

List of Subjects in 48 CFR Parts 8, 12, 15, 42, and 49

    Government procurement.


[[Page 60260]]


    Dated: September 21, 2010.
Edward Loeb,
Director, Acquisition Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 8, 12, 15, 42, and 49 
as set forth below:
0
1. The authority citation for 48 CFR parts 8, 12, 15, 42, and 49 
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 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

0
2. Amend section 8.406-4 by adding paragraph (e) to read as follows:


8.406-4   Termination for cause.

* * * * *
    (e) Reporting. An ordering activity contracting officer, in 
accordance with agency procedures, shall ensure that information 
related to termination for cause notices and any amendments are 
reported. In the event the termination for cause is subsequently 
converted to a termination for convenience, or is otherwise withdrawn, 
the contracting officer shall ensure that a notice of the conversion or 
withdrawal is reported. All reporting shall be in accordance with 
42.1503(f).

Part 12--ACQUISITION OF COMMERCIAL ITEMS

0
3. Amend section 12.403 by adding paragraph (c)(4) to read as follows:


12.403  Termination.

* * * * *
    (c) * * *
    (4) The contracting officer, in accordance with agency procedures, 
shall ensure that information related to termination for cause notices 
and any amendments are reported. In the event the termination for cause 
is subsequently converted to a termination for convenience, or is 
otherwise withdrawn, the contracting officer shall ensure that a notice 
of the conversion or withdrawal is reported. All reporting shall be in 
accordance with 42.1503(f).
* * * * *

PART 15--CONTRACTING BY NEGOTIATION

0
4. Amend section 15.407-1 by revising paragraph (d) to read as follows:


15.407-1  Defective cost or pricing data.

* * * * *
    (d) For each advisory audit received based on a postaward review 
that indicates defective pricing, the contracting officer shall make a 
determination as to whether or not the data submitted were defective 
and relied upon. Before making such a determination, the contracting 
officer should give the contractor an opportunity to support the 
accuracy, completeness, and currency of the data in question. The 
contracting officer shall prepare a memorandum documenting both the 
determination and any corrective action taken as a result. The 
contracting officer shall send one copy of this memorandum to the 
auditor and, if the contract has been assigned for administration, one 
copy to the administrative contracting officer (ACO). A copy of the 
memorandum or other notice of the contracting officer's determination 
shall be provided to the contractor. When the contracting officer 
determines that the contractor submitted defective cost or pricing 
data, the contracting officer, in accordance with agency procedures, 
shall ensure that information relating to the contracting officer's 
final determination is reported in accordance with 42.1503(f). Agencies 
shall ensure updated information that changes a contracting officer's 
prior final determination is reported into the FAPIIS module of PPIRS 
in the event of a--
    (1) Contracting officer's decision in accordance with the Contract 
Disputes Act;
    (2) Board of Contract Appeals decision; or
    (3) Court decision.
* * * * *

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
5. Amend section 42.1502 by adding paragraph (i) to read as follows:


42.1502  Policy.

* * * * *
    (i) Agencies shall promptly report other contractor information in 
accordance with 42.1503(f).
0
6. Amend section 42.1503 by revising paragraph (a) and adding paragraph 
(f) to read as follows:


42.1503   Procedures.

    (a) Agency procedures for the past performance evaluation system 
shall generally provide for input to the evaluations from the technical 
office, contracting office and, where appropriate, end users of the 
product or service. Agency procedures shall identify those responsible 
for preparing interim and final evaluations. Those individuals 
identified may obtain information for the evaluation of performance 
from the program office, administrative contracting office, audit 
office, end users of the product or service, and any other technical or 
business advisor, as appropriate. Interim evaluations shall be prepared 
as required, in accordance with agency procedures.
* * * * *
    (f) Other contractor information. (1) Agencies shall ensure 
information is reported in the FAPIIS module of PPIRS within 3 working 
days after a contracting officer--
    (i) Issues a final determination that a contractor has submitted 
defective cost or pricing data;
    (ii) Makes a subsequent change to the final determination 
concerning defective cost or pricing data pursuant to 15.407-1(d);
    (iii) Issues a final termination for cause or default notice; or
    (iv) Makes a subsequent withdrawal or a conversion of a termination 
for default to a termination for convenience.
    (2) Agencies shall establish focal points and register users to 
report data into the FAPIIS module of PPIRS (available at http://www.cpars.csd.disa.mil, then select FAPIIS). Instructions on reporting 
are available at http://www.ppirs.gov and at http://www.ppirs.gov/fapiis.html.

PART 49--TERMINATION OF CONTRACTS

0
7. Add section 49.402-8 to read as follows:


49.402-8  Reporting information.

    The contracting officer, in accordance with agency procedures, 
shall ensure that information relating to the termination for default 
notice and a subsequent withdrawal or a conversion to a termination for 
convenience is reported in accordance with 42.1503(f).

[FR Doc. 2010-24214 Filed 9-28-10; 8:45 am]
BILLING CODE 6820-EP-P