[Federal Register Volume 66, Number 248 (Thursday, December 27, 2001)]
[Rules and Regulations]
[Pages 66984-66986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31301]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 9, 14, 15, 31, and 52

[FAC 2001-03; FAR Case 1999-010 (Stay); Item I]
RIN 9000-AI40


Federal Acquisition Regulation; Contractor Responsibility, Labor 
Relations Costs, and Costs Relating to Legal and Other Proceedings

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

ACTION: Final rule; termination of stay of final rule.

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SUMMARY: The Federal Acquisition Regulatory Council (FAR Council) 
published in the Federal Register at 65 FR 80255, December 20, 2000, a 
final rule addressing contractor responsibility, labor relations costs, 
and costs incurred in legal and other proceedings. After further 
review, the FAR Council published an interim rule in the Federal 
Register at 66 FR 17754, April 3, 2001, staying that rule. The FAR 
Council intended the stay would last for 270 days from April 3, 2001, 
until December 29, 2001, or until finalization of the proposed rule 
(entitled ``Contractor Responsibility, Labor Relations Costs, and Costs 
Relating to Legal and Other Proceedings--Revocation) that was published 
in the Federal Register at 66

[[Page 66985]]

FR 17758, April 3, 2001, concurrently with the stay, whichever is 
sooner.
    The FAR Council requested comments on the FAR interim rule-stay on 
the length of the stay. During the stay, the FAR text was restored to 
the text as it existed before January 19, 2001. In a separate document 
published concurrently with the interim rule-stay, the FAR Council 
published the aforementioned proposed rule, requesting comments under 
that FAR case on revoking the December 20, 2000, final rule.
    This final rule terminates the stay.

DATES: Effective Date: December 27, 2001.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Mr. Ralph De Stefano, Procurement Analyst, at (202) 
501-1758. Please cite FAC 2001-03, FAR case 1999-010 (stay).

SUPPLEMENTARY INFORMATION:

A. Background

1. The Final Rule

    The FAR Council published a proposed rule amending FAR Parts 9 and 
31 in the Federal Register at 64 FR 37360, July 9, 1999. In response to 
the proposed rule, the FAR Council received more than 1500 letters.
    After reviewing the public comments, the FAR Council decided to 
republish the proposed rule with certain changes. The FAR Council 
published a revised proposed rule amending FAR Parts 9, 14, 15, 31, and 
52 in the Federal Register at 65 FR 40830, June 30, 2000. Over 300 
public comments were received. The final rule, which was published in 
the Federal Register at 65 FR 80255 on December 20, 2000, had an 
effective date of January 19, 2001, 30 days from date of publication.
    The final rule included the following revisions:
FAR Part 9
    Added language stating that a satisfactory record of integrity and 
business ethics includes satisfactory compliance with the law including 
tax, labor and employment, environmental, antitrust, and consumer 
protection laws (FAR 9.104-1(d)). Required contracting officers to 
consider all relevant credible information but stated that the greatest 
weight must be given to offenses adjudicated within the past three 
years.
FAR Part 14 and 15
    Directed contracting officers to notify offerors if the offerors 
were excluded based on a nonresponsibility determination.
FAR Part 31
    At FAR 31.205-21, made unallowable those costs incurred for 
activities that assist, promote, or deter unionization.
    At FAR 31.305-47, made unallowable those costs incurred in civil or 
administrative proceedings brought by a government where the contractor 
violated, or failed to comply with a law or regulation.
FAR Part 52
    At FAR 52.209-5, amended the previous certification to require 
offerors to certify to additional violations (violations of tax, labor 
and employment, environmental, antitrust, or consumer protection laws) 
adjudicated within the last three years. It was a check-the-box 
certification. An offeror would have to provide additional detailed 
information only upon the request of the contracting officer.
    At 52.212-3(h), made an equivalent change for the certification for 
commercial items.

2. The Lawsuit

    The Business Roundtable, Chamber of Commerce of the United States, 
National Association of Manufacturers, Associated General Contractors 
of America, Inc., and Associated Builders and Contractors, Inc., filed 
a lawsuit in the United States District Court for the District of 
Columbia on December 22, 2000, seeking to overturn the final rule.

3. Letters

    The FAR Council had received letters from major industry 
associations representing thousands of firms, and from Congressional 
Representatives, requesting an effective date extension of at least six 
months. Industry concerns extend especially to contractors' ability to 
comply with the rule's new certification requirements, which apply to 
procurements over $100,000.

4. Action

    The FAR Council reassessed the advantages and disadvantages of the 
changes made by the December 20, 2000, final rule, to determine if the 
benefits of the rule are outweighed by the burdens imposed by the rule. 
In this regard, it was not clear to the FAR Council that there was a 
justification for including the added categories of covered laws in the 
rule and its implementing certification, that the rule provided 
contracting officers with sufficient guidelines to prevent arbitrary or 
otherwise abusive implementation, or that the final rule was justified 
from a cost-benefit perspective. In a proposed rule published 
concurrently with the interim rule-stay, the FAR Council requested 
public comments on revoking the final rule. In the interim rule-stay, 
the FAR Council determined that the 30-day effective date did not give 
contractors, and the Government, sufficient time to meet the new 
obligations and responsibilities imposed by the final rule. Government 
contracting officers did not have sufficient training. Offerors did not 
have sufficient time to establish a system to track compliance with 
applicable laws and keep it current, in order to be able to properly 
fill out the certification. Although there was language in the 
noncommercial items certification, which assured contractors that no 
system of records needed to be established to render the certification 
in good faith, this language is not found in the commercial items 
certification. There are criminal penalties for a false certification 
(18 U.S.C. 1001). The FAR Council recognized that it will take more 
time than it anticipated for businesses to put the systems in place. 
Therefore, the FAR Council decided to stay the final rule of December 
20, 2000. The FAR Council intended the stay to last for 270 days from 
the date of publication of the interim rule until December 29, 2001, or 
until finalization of the proposed rule that was published concurrently 
with the interim rule-stay, whichever is sooner.
    The final rule had only been in effect since January 19, 2001. 
There had not been time for the public to be in a position of reliance 
upon the rule's existence. The previous FAR sections that were in 
effect, such as the previous version of the certification, were 
restored by this interim rule-stay.
    The requirement that contractors must be responsible is statutory, 
and the stay did not relieve offerors of the requirement to have a 
satisfactory record of integrity and business ethics. Contracting 
officers continued to have the authority and duty to make 
responsibility decisions. Agency debarring officials continued to have 
the authority and duty to make determinations whether to suspend and 
debar a contractor. The Government still needed the information 
contained in the previous certifications, which covered such things as 
whether the contractor or its principals are presently debarred, or had 
a felony conviction for contract fraud.
    The stay was not intended to be a statement that violations of the 
additional laws discussed in the December 20, 2000, rule could not have

[[Page 66986]]

been considered in the past, or could not be considered in the future, 
by contracting officers or agency debarring officials.
    The FAR Council invited comments on the two rules. In the interim 
rule-stay, FAR Case 1999-010, comments were requested on the length of 
the stay. Ninety-eight public comments were received. Ninety-one public 
comments, 93 percent of the public comments, generally supported the 
interim rule-stay. All comments were considered in the finalization of 
the interim rule-stay. The FAR Council has determined to finalize the 
stay to terminate with the publication of the finalization of the 
accompanying proposed rule revoking the December rule. In an 
accompanying final rule, FAR case 2001-014, published concurrently with 
this rule, the final rule revokes the December 2000 rule.
    When staying Code of Federal Regulations text, if the previous text 
is restored, the Federal Register requires different numbering from the 
stayed text. The stayed text uses the numbering that was published in 
Federal Acquisition Circular 97-21. The revised numbering of the 
restored text is not a substantive change. Terminating the stay 
reverses this process and is also not a substantive change.
    This is a significant rule and was subject to Office of Management 
and Budget 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 action terminates 
stayed FAR revisions implemented under FAR case 1999-010 published in 
the Federal Register on December 20, 2000 (65 FR 80255), that did not 
have a significant economic impact on a substantial number of small 
entities.

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. 
3501, et seq.

List of Subjects in 48 CFR Parts 9, 14, 15, 31, and 52

    Government procurement.

    Dated: December 14, 2001.
Gloria M. Sochon,
Acting Director, Acquisition Policy Division.

    Accordingly, the interim rule (stay) published in the Federal 
Register at 66 FR 17754, April 3, 2001, is terminated, and DoD, GSA, 
and NASA further amend 48 CFR parts 9, 14, 15, 31, and 52 as set forth 
below:
    1. The authority citation for 48 CFR parts 9, 14, 15, 31, and 52 
continues to read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 9--CONTRACTOR QUALIFICATIONS


9.103  [Amended]

    2. Amend section 9.103 by removing paragraph (c); and by 
redesignating paragraph (d) as paragraph (c).


9.104-1  [Amended]

    3. Amend section 9.104-1 by removing paragraph (e); and by 
redesignating paragraphs (f), (g), and (h) as (e), (f), and (g), 
respectively.

PART 14--SEALED BIDDING


14.404-2  [Amended]

    4. Amend section 14.404-2 by removing paragraph (j); and by 
redesignating paragraphs (k), (l), and (m) as (j), (k), and (l), 
respectively.

PART 15--CONTRACTING BY NEGOTIATION


15.503  [Amended]

    5. Amend section 15.503 by removing paragraph (a)(2), and by 
redesignating paragraph (a)(3) as (a)(2).

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES


31.205-47  [Amended]

    6. Amend section 31.205-47 in paragraph (a) by removing the 
definition ``Fraud''; by removing paragraph (b)(3); and by 
redesignating paragraphs (b)(4), (b)(5), and (b)(6), as (b)(3), (b)(4), 
and (b)(5), respectively.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


52.209-5  [Amended]

    7. Amend section 52.209-5 by removing paragraphs (a)(1)(i)(D) and 
(a)(1)(i)(E).


52.212-3  [Amended]

    8. Amend section 52.212-3 by removing paragraph (i); and by 
redesignating paragraph (j) as (i).
[FR Doc. 01-31301 Filed 12-26-01; 8:45 am]
BILLING CODE 6820-EP-P