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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 

# 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. 

# 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                                   ( print 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                               ( print 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

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

9.104-1 

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

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

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

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

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

52.212-3 

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