Federal Acquisition Regulation; FAR Case 2007-006, Contractor Compliance Program and Integrity Reporting (2nd Proposed Rule), 28407-28410 [E8-11137]
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Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Proposed Rules
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. E8–11043 Filed 5–15–08; 8:45 am]
BILLING CODE 6712–01–P
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 3, 9, 12, and 52
[FAR Case 2007–006; Docket 2007–0001;
Sequence 11]
RIN 9000–AK80
Federal Acquisition Regulation; FAR
Case 2007–006, Contractor
Compliance Program and Integrity
Reporting (2nd Proposed Rule)
A. Background
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Proposed rule; additional
changes proposed.
sroberts on PROD1PC70 with PROPOSALS
AGENCIES:
SUMMARY: The Civilian Agency
Acquisition Council and the Defense
Acquisition Regulations Council
(Councils) are seeking comments on
changes to the proposed rule, FAR Case
2007–006, Contractor Compliance
Program and Integrity Reporting,
published in the Federal Register at 72
FR 64019, November 14, 2007, for
which the initial comment period has
closed, that may be included in the final
rule. The Councils do not contemplate
publishing a final or interim rule until
public comments are received and
considered on the specific changes
discussed further in this document.
DATES: Interested parties should submit
written comments to the FAR
Secretariat on or before July 15, 2008 to
be considered in the formulation of a
final rule.
ADDRESSES: Submit comments
identified by FAR case 2007–006 by any
of the following methods:
• Regulations.gov: https://
www.regulations.gov.Submit comments
via the Federal eRulemaking portal by
inputting ‘‘FAR Case 2007–006’’ under
the heading ‘‘Comment or Submission’’.
Select the link ‘‘Send a Comment or
Submission’’ that corresponds with FAR
Case 2007–006. Follow the instructions
provided to complete the ‘‘Public
Comment and submission Form’’. Please
include your name, company name (if
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any), and ‘‘FAR Case 2007–006’’ on your
attached document.
• Fax: 202–501–4067.
• Mail: General Services
Administration, Regulatory Secretariat
(VPR), 1800 F Street, NW., Room 4041,
Washington, DC 20405.
Instructions: Please submit comments
only and cite FAR case 2007–006 in all
correspondence related to this case. All
comments received will be posted
without change to https://
www.regulations.gov, including any
personal and/or business confidential
information provided.
FOR FURTHER INFORMATION CONTACT:
Ernest Woodson, Procurement Analyst,
at (202) 501–3775 for clarification of
content. For information pertaining to
status or publication schedules, contact
the FAR Secretariat at (202) 501–4755.
Please cite FAR case 2007–006.
SUPPLEMENTARY INFORMATION:
The Councils published FAR Case
2007–006, Contractor Compliance
Program and Integrity Reporting, as a
proposed rule in the Federal Register at
72 FR 64019, November 14, 2007. The
proposed rule was published, at the
request of the Department of Justice
(DOJ), in order to—
• Require contractors to have a code
of ethics and business conduct;
• Establish and maintain specific
internal controls to detect and prevent
improper conduct in connection with
the award or performance of
Government contracts or subcontracts;
and
• Notify contracting officers without
delay whenever they become aware of
violations of Federal criminal law with
regard to such contracts or subcontracts.
The proposed rule was a follow-on
case to FAR Case 2006–007, published
as a final rule in the Federal Register on
November 23, 2007 (72 FR 65873).
Thirty three respondents commented
on the proposed rule. The Councils
currently are reviewing the comments
and are considering changes to the
proposed rule.
• The public and other interested
parties have expressed concerns about—
Æ The proposed exemption for
contracts to be performed entirely
outside the United States; and
Æ The proposed exemption for
contracts for the acquisition of
commercial items.
• In addition, the Department of
Justice (DOJ) proposes to add a
requirement for contractors to report
violations of the civil False Claims Act,
and add knowing failure to timely
report such violations as an additional
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28407
cause for debarment or suspension to
FAR Subpart 9.4.
Therefore, the Councils are seeking
comments and recommendations
regarding the changes to the proposed
rule FAR text listed later in this notice.
This notice includes only the sections of
the proposed rule affected by these
changes, summarized as follows:
(1) Require inclusion of the clause
FAR 52.203–13 in contracts and
subcontracts that will be performed
outside the United States (see FAR
3.1004 and 52.203–13(d) in the initial
proposed rule). This change would
result in making the clause
requirements for a contractor code of
business ethics and conduct, business
ethics awareness and compliance
program, and internal control system
applicable to contracts performed
outside the United States.
The exemption from the requirement
to include the clause 52.203–13 in
contracts and subcontracts to be
performed entirely outside the United
States was a carry-over from the
proposed and final rules under FAR
Case 2006–007, which addressed both
contractor code of business ethics and
conduct and the use of fraud hotline
posters. The final rule under FAR case
2006–007 relied heavily on the Defense
Acquisition Regulations System
(DFARS) coverage of contractor business
ethics and hotline posters (see 48 CFR
203.70 and 48 CFR 252.203–7002). The
DFARS clause on hotline posters does
not apply to overseas contracts or to
commercial items. There is no DFARS
clause on contractor code of business
ethics and conduct, just recommended
guidelines. When the Councils added
the clause at FAR 52.203–13 to
contractually require a contractor code
of business ethics and conduct, the
same exemptions as applied to the
hotline posters were perpetuated. The
proposed rule under 2007–006, which
was issued on an extremely expedited
basis, did not propose change to the
exemption for overseas contracts that
was initiated under FAR case 2006–007.
After publication of the proposed rule
under 2007–006, DOJ and other
respondents expressed concern about
the overseas exemption.
The Councils note that the proposed
rule did not exempt contracts that will
be performed entirely outside the
United States from all the requirements
of the proposed rule. The proposed
rule—
• Applied the proposed debarment/
suspension for knowing failure to timely
disclose an overpayment on a
Government contract or violations of
Federal criminal law in connection with
the award or performance of any
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Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Proposed Rules
Government contract or subcontract, to
all contracts, whether domestic or
overseas.
• Applied the policy demanding
integrity and honesty (see FAR 3.1002)
to all contractors.
• Only exempted contracts to be
performed entirely outside the United
States from inclusion of the clause.
• Had a clause requirement for an
internal control system which mandated
an internal reporting mechanism by
which employees may report suspected
instances of improper conduct, and
instructions that encourage employees
to make such reports on any of the
contractor’s contracts or subcontracts,
whether overseas or domestic.
(2) Require inclusion of the clause at
FAR 52.203–13 in contracts (and
subcontracts) for all acquisitions of a
commercial item. However, just like
small businesses, a formal business
ethics awareness and compliance
program and internal control system are
not required in contracts and
subcontracts for the acquisition of
commercial items. This would have the
effect of applying to contracts for the
acquisition of commercial items the
requirements for—
• A written code of business ethics;
• Preventing and detecting criminal
conduct; and
• Notifying, in writing, when the
contractor has reasonable grounds to
believe that violations of the civil False
Claims Act or Federal criminal law have
occurred in connection with the award
or performance of this contract or any
subcontract thereunder.
This is in some ways more fair to
contractors providing commercial items,
because even though the clause was not
included in contracts for the acquisition
of commercial items, the contractors
were still subject under the initial
proposed rule to debarment or
suspension for knowing failure to notify
the Government of violations of Federal
criminal law in connection with the
award or performance of the contract (or
subcontract). Now the requirement to
report violations is explicitly stated in
the contract.
(3) Add a new cause for suspension or
debarment to the current lists at FAR
9.407–2 and 9.406–2, respectively. For
suspension, the new cause would be
adequate evidence of a knowing failure
to timely disclose the violation of the
civil False Claims Act in connection
with the award or performance of any
Government contract, or subcontract
thereunder. For debarment, the new
cause would be a preponderance of the
evidence of a knowing failure to timely
disclose violation of the civil False
Claims Act (31 U.S.C. 3729–3733) in
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connection with the award or
performance of any Government
contract, or subcontract thereunder.
This would also be added as a required
disclosure in the contract clause.
This is not a significant regulatory
action and, therefore, was not 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 changes may 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 small
businesses will be required to notify, in
writing, the agency Office of the
Inspector General, with a copy to the
contracting officer, whenever the
contractor has reasonable grounds to
believe that a principal, employee,
agent, or subcontractor of the contractor
has committed a violation of the civil
False Claims Act or a violation of
Federal criminal law in connection with
the award or performance of this
contract or any subcontract thereunder.
An Initial Regulatory Flexibility
Analysis (IRFA) was prepared in
connection with the initial proposed
rule. The analysis is summarized as
follows:
The IRFA reported that ‘‘the clause
requirements for a formal awareness/training
program and internal control system will not
apply to small business concerns.’’ (See 72
FR 64021.) That is still true. Only the
requirements of paragraph (b) of the clause
will apply (to have a written code of business
ethics and to notify the agency Office of the
Inspector General in writing, with a copy to
the contracting officer whenever the
Contractor has reasonable grounds to believe
that a principal, employee, agency, or
subcontractor of the contractor has
committed a violation of the False Claims Act
or a violation of Federal criminal law).
The proposed changes that affect the IRFA
are as follows:
• Applies to contracts to be performed
outside the United States.
• Applies to contracts for the acquisition
of commercial items (except 52.203–13(c)).
• Requires reporting of violations of civil
False Claims Act.
The requirement in the proposed rule ‘‘to
notify the agency inspector general and the
contracting officer in writing whenever the
contractor has reasonable grounds to believe
that a principal, employee, agent, or
subcontractor of the contractor has
committed a violation of Federal criminal
law in connection with the award or
performance of any Government contract or
subcontract’’ (72 FR 64020) was applicable to
small, as well as large, businesses. The IRFA
estimated that approximately 1,400 prime
and subcontracts with small businesses
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would include the contract clause. We
estimate that by including small businesses
that offer commercial items or that perform
contracts outside the United States, the
number of small businesses impacted by the
clause may increase by 50%. We estimate
that the requirement to report violations of
the civil False Claims Act may double the
number of reports. The number of small
businesses that would actually be required by
the clause to submit a report would then be
calculated as 84 (28 × 1.5 × 2). The number
of small entities that are not impacted by the
clause requirement but would report alleged
violations of the civil False Claims Act was
estimated to be 17. This estimate has
doubled, because of the addition of
mandatory reporting of violations of the civil
False Claims Act. Therefore, the total number
of small businesses submitting a report has
increased from 45 to 118 (84+34).
The FAR Secretariat has submitted a
copy of the amended IRFA to the Chief
Counsel for Advocacy of the Small
Business Administration. A copy of the
IRFA may be obtained from the FAR
Secretariat. The Councils will consider
comments from small entities
concerning the affected FAR parts 3, 9,
12, and 52 in accordance with 5 U.S.C.
610. Comments must be submitted
separately and should cite 5 U.S.C 601,
et seq. (FAR case 2007–006), in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub.
L. 104–13) applies because the proposed
rule contains information collection
requirements. Accordingly, the FAR
Secretariat will submit a request for
approval of a revised information
collection requirement concerning
Contractor Compliance Program and
Integrity Reporting to the Office of
Management and Budget under 44
U.S.C. 3501, et seq. The estimated
reporting burden for a violation remains
3 hours. Based on the revised number of
impacted contractors and retaining the
other figures used in the initial estimate,
the annual reporting burden is revised
as follows:
Respondents: 284.
Responses per respondent: 1.
Total annual responses: 284.
Preparation hours per response: 3.
Total response burden hours: 852.
Annual Reporting Burden
Public reporting burden for this
collection of information is estimated to
average 3 hours per response, including
the time for reviewing instructions,
searching existing data sources,
gathering and maintaining the data
needed, and completing and reviewing
the collection of information.
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Federal Register / Vol. 73, No. 96 / Friday, May 16, 2008 / Proposed Rules
D. Request for Comments Regarding
Paperwork Burden
Submit comments, including
suggestions for reducing this burden,
not later than June 16, 2008 to: FAR
Desk Officer, OMB, Room 10102, NEOB,
Washington, DC 20503, and a copy to
the General Services Administration,
FAR Secretariat (VPR), 1800 F Street,
NW., Room 4041, Washington, DC
20405. Please cite OMB Control Number
9000–00XX, Contractor Compliance
Program and Integrity Reporting, in all
correspondence.
Public comments are particularly
invited on: Whether this collection of
information is necessary for the proper
performance of functions of the FAR,
and will have practical utility; whether
our estimate of the public burden of this
collection of information is accurate,
and based on valid assumptions and
methodology; ways to enhance the
quality, utility, and clarity of the
information to be collected; and ways in
which we can minimize the burden of
the collection of information on those
who are to respond, through the use of
appropriate technological collection
techniques or other forms of information
technology.
Requester may obtain a copy of the
justification from the General Services
Administration, FAR Secretariat (VPR),
Room 4041, Washington, DC 20405,
telephone (202) 501–4755. Please cite
OMB Control Number 9000–00XX,
Contractor Compliance Program and
Integrity Reporting, in all
correspondence.
List of Subjects in 48 CFR Parts 3, 9, 12,
and 52
Government procurement.
Dated: May 14, 2008.
Al Matera,
Director, Office of Acquisition Policy.
Therefore, DoD, GSA, and NASA
propose amending 48 CFR parts 3, 9, 12,
and 52 as set forth below:
1. The authority citation for 48 CFR
parts 3, 9, 12, and 52 continues to read
as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C.
chapter 137; and 42 U.S.C. 2473(c).
sroberts on PROD1PC70 with PROPOSALS
PART 3—IMPROPER BUSINESS
PRACTICES AND PERSONAL
CONFLICTS OF INTEREST
2. Amend section 3.1002 by adding
paragraph (c) to read as follows:
3.1002
Policy.
*
*
*
*
*
(c) A contractor may be suspended
and/or debarred for knowing failure to
timely disclose a violation of the civil
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False Claims Act or Federal criminal
law in connection with the award or
performance of any Government
contract performed by the contractor or
a subcontract awarded thereunder (see
9.406–2(b)(1)(v) and 9.407–2(a)(7)).
3. Revise paragraph (a) of section
3.1004 to read as follows:
3.1004
Contract clauses.
*
*
*
*
*
(a) Insert the clause at FAR 52.203–13,
Contractor Code of Business Ethics and
Conduct, in solicitations and contracts if
the value of the contract is expected to
exceed $5,000,000 and the performance
period is 120 days or more.
*
*
*
*
*
PART 9—CONTRACTOR
QUALIFICATIONS
4. Amend section 9.406–2 by revising
the introductory text of paragraph (b)(1)
and adding paragraph (b)(1)(v) to read as
follows:
9.406–2
Causes for debarment.
*
*
*
*
*
(b)(1) A contractor, based upon a
preponderance of the evidence, for any
of the following—
*
*
*
*
*
(v) Knowing failure to timely
disclose—
(A) An overpayment on a Government
contract;
(B) Violation of the civil False Claims
Act (31 U.S.C 3729–3733) in connection
with the award or performance of any
Government contract or subcontract; or
(C) Violation of Federal criminal law
in connection with the award or
performance of any Government
contract or subcontract.
*
*
*
*
*
5. Amend section 9.407–2 by adding
paragraph (a)(7) to read as follows:
9.407–2
Causes for suspension.
(a) * * *
(7) Knowing failure to timely
disclose—
(i) An overpayment on a Government
contract;
(ii) Violation of the civil False Claims
Act (31 U.S.C 3729–3733) in connection
with the award or performance of any
Government contract or subcontract; or
(iii) Violation of Federal criminal law
in connection with the award or
performance of any Government
contract or subcontract.
*
*
*
*
*
and adding a new (d)(2) to read as
follows:
12.301 Solicitation provisions and
contract clauses for the acquisition of
commercial items.
*
*
*
*
*
(d) * * *
(2) Insert the clause at 52.203–13,
Contractor Code of Business Ethics and
Conduct, as prescribed in 3.1004(a).
*
*
*
*
*
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
7. Amend section 52.203–13 by—
a. Revising the date of clause;
b. Adding paragraph (b)(3);
c. Revising the introductory text of
paragraph (c) and (c)(2)(ii);
d. Adding paragraph (c)(2)(ii)(F); and
e. Revising paragraph (d).
52.203–13 Contractor Code of Business
Ethics and Conduct.
*
*
*
*
*
Contractor Code of Business Ethics and
Conduct
([Insert Abbreviated Month and Year of
Publication in the Federal Register])
*
*
*
*
*
(b) * * *
(3) The Contractor shall notify, in writing,
the agency Office of the Inspector General,
with a copy to the Contracting Officer,
whenever the Contractor has reasonable
grounds to believe that a principal,
employee, agent, or subcontractor of the
Contractor has committed a violation of the
civil False Claims Act or a violation of
Federal criminal law in connection with the
award or performance of this contract or any
subcontract thereunder.
(c) Business ethics awareness and
compliance program and internal control
system. This paragraph (c) does not apply if
the Contractor has represented itself as a
small business concern pursuant to the
award of this contract or if 52.212–4 appears
in this contract.
*
*
*
*
*
(2) * * *
(ii) At a minimum, the Contractor’s
internal control system shall provide for the
following:
*
*
*
*
*
PART 12—ACQUISITION OF
COMMERCIAL ITEMS
(F) Timely reporting, in writing, to the
agency Office of the Inspector General, with
a copy to the Contracting Officer, whenever
the Contractor has reasonable grounds to
believe that a principal, employee, agent, or
subcontractor of the Contractor has
committed a violation of the civil False
Claims Act (31 U.S.C 3729–3733) or a
violation of Federal criminal law in
connection with the award or performance of
any Government contract performed by the
Contractor or a subcontract thereunder.
6. Amend section 12.301 by
redesignating paragraph (d)(2) as (d)(3)
(d) Subcontracts. (1) The Contractor shall
include the substance of this clause,
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including this paragraph (d), in subcontracts
that have a value in excess of $5,000,000 and
a performance period of more than 120 days.
(2) In altering this clause to identify the
appropriate parties, all reports of violation of
the civil False Claims Act or violation of
Federal criminal law shall be directed to the
agency Office of the Inspector General, with
a copy to the Contracting Officer.
(End of clause)
[FR Doc. E8–11137 Filed 5–15–08; 8:45 am]
BILLING CODE 6820–EP–P
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 17
[FWS–R6–ES–2008–0001; 92220–1113–
0000–C6]
Endangered and Threatened Wildlife
and Plants; Proposed Removal of
Erigeron maguirei From the Federal
List of Endangered and Threatened
Plants; Availability of Post-Delisting
Monitoring Plan
Fish and Wildlife Service,
Interior.
ACTION: Proposed rule; notice of
availability.
sroberts on PROD1PC70 with PROPOSALS
AGENCY:
SUMMARY: We, the U.S. Fish and
Wildlife Service (Service), under the
Endangered Species Act of 1973, as
amended (Act) (16 U.S.C. 1531 et seq.),
propose to remove the plant Erigeron
maguirei (commonly referred to as
Maguire daisy) from the List of
Endangered and Threatened Plants. The
best scientific and commercial data
available indicate that this species has
recovered and no longer meets the
definition of threatened or endangered
under the Act. Our review of the status
of this species shows that populations
are stable, threats have been addressed,
and adequate regulatory mechanisms
ensure the species is not currently and
is not likely to again become an
endangered species within the
foreseeable future in all or a significant
portion of its range. We seek
information, data, and comments from
the public regarding E. maguirei, this
proposal to delist, and the Post-Delisting
Monitoring Plan. This proposed rule
completes the 5-year status review
initiated on April 7, 2006 (71 FR 17900).
DATES: We will accept comments
received or postmarked on or before July
15, 2008. Public hearing requests must
be received by June 30, 2008.
ADDRESSES: You may submit comments
by one of the following methods:
16:08 May 15, 2008
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identifying information—will be posted
on the Web site. If you submit a
hardcopy comment that includes
personal identifying information, you
may request at the top of your document
that we withhold this information from
public review. However, we cannot
guarantee that we will be able to do so.
We will post all hardcopy comments on
https://www.regulations.gov.
Comments and materials we receive,
as well as supporting documentation we
used in preparing this proposed rule,
will be available for public inspection
on https://www.regulations.gov, or by
appointment during normal business
hours at the Utah Field Office, 2369
West Orton Circle, West Valley City, UT
84119 (801/975–3330).
Public Comments Solicited
RIN 1018–AU67
VerDate Aug<31>2005
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• U.S. mail or hand-delivery: Public
Comments Processing, Attn: RIN 1018–
AU67; Division of Policy and Directives
Management; U.S. Fish and Wildlife
Service; 4401 N. Fairfax Drive, Suite
222; Arlington, VA 22203.
We will not accept e-mail or faxes. We
will post all comments on https://
www.regulations.gov. This generally
means that we will post any personal
information you provide us (see the
Public Comments section below for
more information).
FOR FURTHER INFORMATION CONTACT:
Larry Crist, Field Supervisor, U.S. Fish
and Wildlife Service, Utah Field Office,
2369 West Orton Circle, West Valley
City, UT 84119, or telephone (801) 975–
3330. Individuals who are hearingimpaired or speech-impaired may call
the Federal Relay Service at (800) 877–
8337 for TTY assistance.
SUPPLEMENTARY INFORMATION:
Public Hearing
The Act provides for one or more
public hearings on this proposal, if
requested. Requests must be received by
June 30, 2008. Such requests must be
made in writing and addressed to the
Field Supervisor (see FOR FURTHER
INFORMATION CONTACT section).
We intend that any final action
resulting from this proposal will be as
accurate and as effective as possible.
Therefore, we hereby request data,
comments, new information, or
suggestions from the public, other
concerned governmental agencies, the
scientific community, Tribes, industry,
or any other interested party concerning
this proposed rule. We particularly seek
comments concerning:
(1) Biological information concerning
this species;
(2) Relevant data concerning any
current or likely future threats (or lack
thereof) to this species, including the
extent and adequacy of Federal and
State protection and management that
would be provided to the Erigeron
maguirei as a delisted species;
(3) Additional information concerning
the range, distribution, population size,
and population trends of this species,
including the locations of any
additional populations of this species;
(4) Current or planned activities in the
subject area and their possible impacts
on this species; and
(5) Our draft Post-Delisting
Monitoring Plan.
You may submit your comments and
materials concerning this proposed rule
by one of the methods listed in the
ADDRESSES section. We will not accept
comments sent by e-mail or fax or to an
address not listed in the ADDRESSES
section.
If you submit a comment via https://
www.regulations.gov, your entire
comment—including any personal
Previous Federal Action
Section 12 of the Act directed the
Secretary of the Smithsonian Institution
to prepare a report on those plants
considered to be endangered,
threatened, or extinct. On July 1, 1975,
the Service published a notice in the
Federal Register (40 FR 27824)
accepting the Smithsonian report as a
petition to list taxa named therein under
section 4(c)(2) (now 4(b)(3)) of the Act)
and announced our intention to review
the status of those plants. Erigeron
maguirei was included in that report (40
FR 27880, July 1, 1975). Maguire daisy
is the common name for Erigeron
maguirei, however we will use
primarily the scientific name of this
species throughout this proposed rule to
clarify taxonomic issues or the legal
status of the plant.
On June 16, 1976, we published a rule
in the Federal Register (41 FR 24524) to
designate approximately 1,700 vascular
plant species, including Erigeron
maguirei, as endangered pursuant to
section 4 of the Act. The 1978
amendments to the Act required that all
proposals over 2 years old be
withdrawn. On December 10, 1979, we
published a notice of withdrawal (44 FR
70796) of that portion of the June 16,
1976, proposal that had not been made
final, which included E maguirei.
On December 15, 1980, we published
a revised notice of review for native
plants in the Federal Register
designating Erigeron maguirei as a
candidate species (45 FR 82480).
Section 4(b)(3)(B) of the 1982
PO 00000
Frm 00039
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]]>Agencies
[Federal Register Volume 73, Number 96 (Friday, May 16, 2008)]
[Proposed Rules]
[Pages 28407-28410]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-11137]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 3, 9, 12, and 52
[FAR Case 2007-006; Docket 2007-0001; Sequence 11]
RIN 9000-AK80
Federal Acquisition Regulation; FAR Case 2007-006, Contractor
Compliance Program and Integrity Reporting (2nd Proposed Rule)
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule; additional changes proposed.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are seeking comments on
changes to the proposed rule, FAR Case 2007-006, Contractor Compliance
Program and Integrity Reporting, published in the Federal Register at
72 FR 64019, November 14, 2007, for which the initial comment period
has closed, that may be included in the final rule. The Councils do not
contemplate publishing a final or interim rule until public comments
are received and considered on the specific changes discussed further
in this document.
DATES: Interested parties should submit written comments to the FAR
Secretariat on or before July 15, 2008 to be considered in the
formulation of a final rule.
ADDRESSES: Submit comments identified by FAR case 2007-006 by any of
the following methods:
Regulations.gov: https://www.regulations.gov.Submit
comments via the Federal eRulemaking portal by inputting ``FAR Case
2007-006'' under the heading ``Comment or Submission''. Select the link
``Send a Comment or Submission'' that corresponds with FAR Case 2007-
006. Follow the instructions provided to complete the ``Public Comment
and submission Form''. Please include your name, company name (if any),
and ``FAR Case 2007-006'' on your attached document.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (VPR), 1800 F Street, NW., Room 4041, Washington, DC 20405.
Instructions: Please submit comments only and cite FAR case 2007-
006 in all correspondence related to this case. All comments received
will be posted without change to https://www.regulations.gov, including
any personal and/or business confidential information provided.
FOR FURTHER INFORMATION CONTACT: Ernest Woodson, Procurement Analyst,
at (202) 501-3775 for clarification of content. For information
pertaining to status or publication schedules, contact the FAR
Secretariat at (202) 501-4755. Please cite FAR case 2007-006.
SUPPLEMENTARY INFORMATION:
A. Background
The Councils published FAR Case 2007-006, Contractor Compliance
Program and Integrity Reporting, as a proposed rule in the Federal
Register at 72 FR 64019, November 14, 2007. The proposed rule was
published, at the request of the Department of Justice (DOJ), in order
to--
Require contractors to have a code of ethics and business
conduct;
Establish and maintain specific internal controls to
detect and prevent improper conduct in connection with the award or
performance of Government contracts or subcontracts; and
Notify contracting officers without delay whenever they
become aware of violations of Federal criminal law with regard to such
contracts or subcontracts.
The proposed rule was a follow-on case to FAR Case 2006-007,
published as a final rule in the Federal Register on November 23, 2007
(72 FR 65873).
Thirty three respondents commented on the proposed rule. The
Councils currently are reviewing the comments and are considering
changes to the proposed rule.
The public and other interested parties have expressed
concerns about--
[cir] The proposed exemption for contracts to be performed entirely
outside the United States; and
[cir] The proposed exemption for contracts for the acquisition of
commercial items.
In addition, the Department of Justice (DOJ) proposes to
add a requirement for contractors to report violations of the civil
False Claims Act, and add knowing failure to timely report such
violations as an additional cause for debarment or suspension to FAR
Subpart 9.4.
Therefore, the Councils are seeking comments and recommendations
regarding the changes to the proposed rule FAR text listed later in
this notice. This notice includes only the sections of the proposed
rule affected by these changes, summarized as follows:
(1) Require inclusion of the clause FAR 52.203-13 in contracts and
subcontracts that will be performed outside the United States (see FAR
3.1004 and 52.203-13(d) in the initial proposed rule). This change
would result in making the clause requirements for a contractor code of
business ethics and conduct, business ethics awareness and compliance
program, and internal control system applicable to contracts performed
outside the United States.
The exemption from the requirement to include the clause 52.203-13
in contracts and subcontracts to be performed entirely outside the
United States was a carry-over from the proposed and final rules under
FAR Case 2006-007, which addressed both contractor code of business
ethics and conduct and the use of fraud hotline posters. The final rule
under FAR case 2006-007 relied heavily on the Defense Acquisition
Regulations System (DFARS) coverage of contractor business ethics and
hotline posters (see 48 CFR 203.70 and 48 CFR 252.203-7002). The DFARS
clause on hotline posters does not apply to overseas contracts or to
commercial items. There is no DFARS clause on contractor code of
business ethics and conduct, just recommended guidelines. When the
Councils added the clause at FAR 52.203-13 to contractually require a
contractor code of business ethics and conduct, the same exemptions as
applied to the hotline posters were perpetuated. The proposed rule
under 2007-006, which was issued on an extremely expedited basis, did
not propose change to the exemption for overseas contracts that was
initiated under FAR case 2006-007. After publication of the proposed
rule under 2007-006, DOJ and other respondents expressed concern about
the overseas exemption.
The Councils note that the proposed rule did not exempt contracts
that will be performed entirely outside the United States from all the
requirements of the proposed rule. The proposed rule--
Applied the proposed debarment/suspension for knowing
failure to timely disclose an overpayment on a Government contract or
violations of Federal criminal law in connection with the award or
performance of any
[[Page 28408]]
Government contract or subcontract, to all contracts, whether domestic
or overseas.
Applied the policy demanding integrity and honesty (see
FAR 3.1002) to all contractors.
Only exempted contracts to be performed entirely outside
the United States from inclusion of the clause.
Had a clause requirement for an internal control system
which mandated an internal reporting mechanism by which employees may
report suspected instances of improper conduct, and instructions that
encourage employees to make such reports on any of the contractor's
contracts or subcontracts, whether overseas or domestic.
(2) Require inclusion of the clause at FAR 52.203-13 in contracts
(and subcontracts) for all acquisitions of a commercial item. However,
just like small businesses, a formal business ethics awareness and
compliance program and internal control system are not required in
contracts and subcontracts for the acquisition of commercial items.
This would have the effect of applying to contracts for the acquisition
of commercial items the requirements for--
A written code of business ethics;
Preventing and detecting criminal conduct; and
Notifying, in writing, when the contractor has reasonable
grounds to believe that violations of the civil False Claims Act or
Federal criminal law have occurred in connection with the award or
performance of this contract or any subcontract thereunder.
This is in some ways more fair to contractors providing commercial
items, because even though the clause was not included in contracts for
the acquisition of commercial items, the contractors were still subject
under the initial proposed rule to debarment or suspension for knowing
failure to notify the Government of violations of Federal criminal law
in connection with the award or performance of the contract (or
subcontract). Now the requirement to report violations is explicitly
stated in the contract.
(3) Add a new cause for suspension or debarment to the current
lists at FAR 9.407-2 and 9.406-2, respectively. For suspension, the new
cause would be adequate evidence of a knowing failure to timely
disclose the violation of the civil False Claims Act in connection with
the award or performance of any Government contract, or subcontract
thereunder. For debarment, the new cause would be a preponderance of
the evidence of a knowing failure to timely disclose violation of the
civil False Claims Act (31 U.S.C. 3729-3733) in connection with the
award or performance of any Government contract, or subcontract
thereunder. This would also be added as a required disclosure in the
contract clause.
This is not a significant regulatory action and, therefore, was not
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 changes may 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 small businesses will
be required to notify, in writing, the agency Office of the Inspector
General, with a copy to the contracting officer, whenever the
contractor has reasonable grounds to believe that a principal,
employee, agent, or subcontractor of the contractor has committed a
violation of the civil False Claims Act or a violation of Federal
criminal law in connection with the award or performance of this
contract or any subcontract thereunder.
An Initial Regulatory Flexibility Analysis (IRFA) was prepared in
connection with the initial proposed rule. The analysis is summarized
as follows:
The IRFA reported that ``the clause requirements for a formal
awareness/training program and internal control system will not
apply to small business concerns.'' (See 72 FR 64021.) That is still
true. Only the requirements of paragraph (b) of the clause will
apply (to have a written code of business ethics and to notify the
agency Office of the Inspector General in writing, with a copy to
the contracting officer whenever the Contractor has reasonable
grounds to believe that a principal, employee, agency, or
subcontractor of the contractor has committed a violation of the
False Claims Act or a violation of Federal criminal law).
The proposed changes that affect the IRFA are as follows:
Applies to contracts to be performed outside the United
States.
Applies to contracts for the acquisition of commercial
items (except 52.203-13(c)).
Requires reporting of violations of civil False Claims
Act.
The requirement in the proposed rule ``to notify the agency
inspector general and the contracting officer in writing whenever
the contractor has reasonable grounds to believe that a principal,
employee, agent, or subcontractor of the contractor has committed a
violation of Federal criminal law in connection with the award or
performance of any Government contract or subcontract'' (72 FR
64020) was applicable to small, as well as large, businesses. The
IRFA estimated that approximately 1,400 prime and subcontracts with
small businesses would include the contract clause. We estimate that
by including small businesses that offer commercial items or that
perform contracts outside the United States, the number of small
businesses impacted by the clause may increase by 50%. We estimate
that the requirement to report violations of the civil False Claims
Act may double the number of reports. The number of small businesses
that would actually be required by the clause to submit a report
would then be calculated as 84 (28 x 1.5 x 2). The number of small
entities that are not impacted by the clause requirement but would
report alleged violations of the civil False Claims Act was
estimated to be 17. This estimate has doubled, because of the
addition of mandatory reporting of violations of the civil False
Claims Act. Therefore, the total number of small businesses
submitting a report has increased from 45 to 118 (84+34).
The FAR Secretariat has submitted a copy of the amended IRFA to the
Chief Counsel for Advocacy of the Small Business Administration. A copy
of the IRFA may be obtained from the FAR Secretariat. The Councils will
consider comments from small entities concerning the affected FAR parts
3, 9, 12, and 52 in accordance with 5 U.S.C. 610. Comments must be
submitted separately and should cite 5 U.S.C 601, et seq. (FAR case
2007-006), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 104-13) applies because the
proposed rule contains information collection requirements.
Accordingly, the FAR Secretariat will submit a request for approval of
a revised information collection requirement concerning Contractor
Compliance Program and Integrity Reporting to the Office of Management
and Budget under 44 U.S.C. 3501, et seq. The estimated reporting burden
for a violation remains 3 hours. Based on the revised number of
impacted contractors and retaining the other figures used in the
initial estimate, the annual reporting burden is revised as follows:
Respondents: 284.
Responses per respondent: 1.
Total annual responses: 284.
Preparation hours per response: 3.
Total response burden hours: 852.
Annual Reporting Burden
Public reporting burden for this collection of information is
estimated to average 3 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
[[Page 28409]]
D. Request for Comments Regarding Paperwork Burden
Submit comments, including suggestions for reducing this burden,
not later than June 16, 2008 to: FAR Desk Officer, OMB, Room 10102,
NEOB, Washington, DC 20503, and a copy to the General Services
Administration, FAR Secretariat (VPR), 1800 F Street, NW., Room 4041,
Washington, DC 20405. Please cite OMB Control Number 9000-00XX,
Contractor Compliance Program and Integrity Reporting, in all
correspondence.
Public comments are particularly invited on: Whether this
collection of information is necessary for the proper performance of
functions of the FAR, and will have practical utility; whether our
estimate of the public burden of this collection of information is
accurate, and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which we can minimize the burden of the
collection of information on those who are to respond, through the use
of appropriate technological collection techniques or other forms of
information technology.
Requester may obtain a copy of the justification from the General
Services Administration, FAR Secretariat (VPR), Room 4041, Washington,
DC 20405, telephone (202) 501-4755. Please cite OMB Control Number
9000-00XX, Contractor Compliance Program and Integrity Reporting, in
all correspondence.
List of Subjects in 48 CFR Parts 3, 9, 12, and 52
Government procurement.
Dated: May 14, 2008.
Al Matera,
Director, Office of Acquisition Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 3, 9,
12, and 52 as set forth below:
1. The authority citation for 48 CFR parts 3, 9, 12, and 52
continues to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF
INTEREST
2. Amend section 3.1002 by adding paragraph (c) to read as follows:
3.1002 Policy.
* * * * *
(c) A contractor may be suspended and/or debarred for knowing
failure to timely disclose a violation of the civil False Claims Act or
Federal criminal law in connection with the award or performance of any
Government contract performed by the contractor or a subcontract
awarded thereunder (see 9.406-2(b)(1)(v) and 9.407-2(a)(7)).
3. Revise paragraph (a) of section 3.1004 to read as follows:
3.1004 Contract clauses.
* * * * *
(a) Insert the clause at FAR 52.203-13, Contractor Code of Business
Ethics and Conduct, in solicitations and contracts if the value of the
contract is expected to exceed $5,000,000 and the performance period is
120 days or more.
* * * * *
PART 9--CONTRACTOR QUALIFICATIONS
4. Amend section 9.406-2 by revising the introductory text of
paragraph (b)(1) and adding paragraph (b)(1)(v) to read as follows:
9.406-2 Causes for debarment.
* * * * *
(b)(1) A contractor, based upon a preponderance of the evidence,
for any of the following--
* * * * *
(v) Knowing failure to timely disclose--
(A) An overpayment on a Government contract;
(B) Violation of the civil False Claims Act (31 U.S.C 3729-3733) in
connection with the award or performance of any Government contract or
subcontract; or
(C) Violation of Federal criminal law in connection with the award
or performance of any Government contract or subcontract.
* * * * *
5. Amend section 9.407-2 by adding paragraph (a)(7) to read as
follows:
9.407-2 Causes for suspension.
(a) * * *
(7) Knowing failure to timely disclose--
(i) An overpayment on a Government contract;
(ii) Violation of the civil False Claims Act (31 U.S.C 3729-3733)
in connection with the award or performance of any Government contract
or subcontract; or
(iii) Violation of Federal criminal law in connection with the
award or performance of any Government contract or subcontract.
* * * * *
PART 12--ACQUISITION OF COMMERCIAL ITEMS
6. Amend section 12.301 by redesignating paragraph (d)(2) as (d)(3)
and adding a new (d)(2) to read as follows:
12.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(d) * * *
(2) Insert the clause at 52.203-13, Contractor Code of Business
Ethics and Conduct, as prescribed in 3.1004(a).
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
7. Amend section 52.203-13 by--
a. Revising the date of clause;
b. Adding paragraph (b)(3);
c. Revising the introductory text of paragraph (c) and (c)(2)(ii);
d. Adding paragraph (c)(2)(ii)(F); and
e. Revising paragraph (d).
52.203-13 Contractor Code of Business Ethics and Conduct.
* * * * *
Contractor Code of Business Ethics and Conduct
([Insert Abbreviated Month and Year of Publication in the Federal
Register])
* * * * *
(b) * * *
(3) The Contractor shall notify, in writing, the agency Office
of the Inspector General, with a copy to the Contracting Officer,
whenever the Contractor has reasonable grounds to believe that a
principal, employee, agent, or subcontractor of the Contractor has
committed a violation of the civil False Claims Act or a violation
of Federal criminal law in connection with the award or performance
of this contract or any subcontract thereunder.
(c) Business ethics awareness and compliance program and
internal control system. This paragraph (c) does not apply if the
Contractor has represented itself as a small business concern
pursuant to the award of this contract or if 52.212-4 appears in
this contract.
* * * * *
(2) * * *
(ii) At a minimum, the Contractor's internal control system
shall provide for the following:
* * * * *
(F) Timely reporting, in writing, to the agency Office of the
Inspector General, with a copy to the Contracting Officer, whenever
the Contractor has reasonable grounds to believe that a principal,
employee, agent, or subcontractor of the Contractor has committed a
violation of the civil False Claims Act (31 U.S.C 3729-3733) or a
violation of Federal criminal law in connection with the award or
performance of any Government contract performed by the Contractor
or a subcontract thereunder.
* * * * *
(d) Subcontracts. (1) The Contractor shall include the substance
of this clause,
[[Page 28410]]
including this paragraph (d), in subcontracts that have a value in
excess of $5,000,000 and a performance period of more than 120 days.
(2) In altering this clause to identify the appropriate parties,
all reports of violation of the civil False Claims Act or violation
of Federal criminal law shall be directed to the agency Office of
the Inspector General, with a copy to the Contracting Officer.
(End of clause)
[FR Doc. E8-11137 Filed 5-15-08; 8:45 am]
BILLING CODE 6820-EP-P
