Federal Acquisition Regulation; FAR Case 2006-026, Governmentwide Commercial Purchase Card Restrictions for Treasury Offset Program Debts, 65600-65605 [E9-28930]
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implementing regulations on March 30,
2009 (74 F.R. 14045).
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 Regulatory Flexibility Act does
not apply to this rule. This final rule
does not constitute a significant FAR
revision within the meaning of FAR
1.501 and Public Law 98–577, and
publication for public comments is not
required. However, the Councils will
consider comments from small entities
concerning the affected FAR parts 2, 22,
and 52 in accordance with 5 U.S.C. 610.
Interested parties must submit such
comments separately and should cite 5
U.S.C. 601, et seq. (FAC 2005–38, FAR
case 2009–017), in all correspondence.
C. Paperwork Reduction Act
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
4. Amend section 52.212–5 by—
■ a. Revising the date of the clause;
■ b. Removing paragraph (b)(26), and
redesignating paragraphs (b)(27) through
(b)(43) as (b)(26) through (b)(42),
respectively;
■ c. Removing and reserving paragraph
(e)(1)(vii); and
■ d. In Alternate II by—
■ i. Revising the date of the alternate;
and
■ ii. Removing paragraph (e)(1)(ii)(G),
and redesignating paragraphs
(e)(1)(ii)(H) through (e)(1)(ii)(N) as
paragraphs (e)(1)(ii)(G) through
(e)(1)(ii)(M), respectively.
■ The revised text reads as follows:
■
52.212–5 Contract Terms and Conditions
Required to Implement Statutes or
Executive Orders—Commercial Items.
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 2, 22,
and 52
*
*
*
*
*
*
*
*
Alternate II (DEC 2009). * * *
*
*
*
*
5. Amend section 52.213–4 by
revising the date of the clause and
paragraph (a)(2)(vi) to read as follows:
Dated: November 30, 2009.
Al Matera,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA
amend 48 CFR parts 2, 22, and 52 as set
forth below:
■ 1. The authority citation for 48 CFR
parts 2, 22, 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 2—DEFINITIONS OF WORDS
AND TERMS
52.213–4 Terms and Conditions—
Simplified Acquisitions (Other Than
Commercial Items).
*
*
*
52.222–39
[Amended]
2. Amend section 2.101 in paragraph
(b)(2), in the definition ‘‘United States’’,
by removing paragraph (5), and
redesignating paragraphs (6) through (9)
as paragraphs (5) through (8),
respectively.
PART 22—APPLICATION OF LABOR
LAWS TO GOVERNMENT
ACQUISITIONS
*
*
*
TERMS AND CONDITIONS—SIMPLIFIED
ACQUISITIONS (OTHER THAN
COMMERCIAL ITEMS) (DEC 2009)
(a) * * *
(2) * * *
(vi) 52.244–6, Subcontracts for Commercial
Items (DEC 2009).
*
■
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*
■
Government procurement.
2.101
*
CONTRACT TERMS AND CONDITIONS
REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS—COMMERCIAL
ITEMS (DEC 2009)
*
*
*
[Removed and reserved]
6. Remove and reserve section
52.222–39.
■
52.244–6
[Amended]
7. Amend section 52.244–6 by
revising the date of the clause to read
‘‘(DEC 2009)’’; and by removing and
reserving paragraph (c)(1)(vii).
■
[FR Doc. E9–28929 Filed 12–9–09; 8:45 am]
BILLING CODE 6820–EP–S
Subpart 22.16—[Removed and
reserved]
■
3. Remove and reserve subpart 22.16.
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DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 4, 8, 13, 16, 32, and 52
[FAC 2005–38; FAR Case 2006–026; Item
II; Docket 2009–0041, Sequence 1]
RIN 9000–AK87
Federal Acquisition Regulation; FAR
Case 2006–026, Governmentwide
Commercial Purchase Card
Restrictions for Treasury Offset
Program Debts
AGENCIES: Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
SUMMARY: The Civilian Agency
Acquisition Council and the Defense
Acquisition Regulations Council
(Councils) are issuing a final rule
amending the Federal Acquisition
Regulation (FAR) to restrict the use of
the Governmentwide commercial
purchase card as a method of payment
for offerors with debts subject to the
Treasury Offset Program.
DATES: Effective Date: February 1, 2010.
FOR FURTHER INFORMATION CONTACT: For
clarification of content, contact Mr.
Michael Jackson, Procurement Analyst,
at (202) 208–4949. For information
pertaining to status or publication
schedules, contact the Regulatory
Secretariat at (202) 501–4755. Please
cite FAC 2005–38, FAR case 2006–026.
SUPPLEMENTARY INFORMATION:
A. Background
The Debt Collection Improvement Act
of 1996 and other statutes provide the
tools for administering a centralized
program for the collection of delinquent,
non-tax and tax debts. The Financial
Management Service (FMS), a bureau of
the Department of the Treasury, is
charged with implementing the
Government’s delinquent debt
collection program. Since 1996, FMS
has collected more than $24.4 billion in
delinquent debt. In fiscal year 2006,
collections of delinquent debt remained
at a constant $3.1 billion. To collect
delinquent debts owed to Federal
agencies and States, FMS uses the
Treasury Offset Program (TOP).
Information on TOP is available at
https://fms.treas.gov/debt/.
TOP uses both ‘‘offsets’’ and
‘‘continuous levies’’ to collect
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delinquent debts. Offset is a process
whereby Federal payments are reduced
or ‘‘offset’’ to satisfy a person’s overdue
Federal debt, child support obligation,
or State tax debt. A payee’s name and
taxpayer identification number are
matched against a Treasury/FMS
database of delinquent debtors for
automatic offset of funds. Offset funds
are then used to satisfy payment of the
delinquent debt to the extent allowed by
law.
Under the continuous levy program,
delinquent Federal tax debts are
collected by levying non-tax payments
until the debt is satisfied, as authorized
by the 1997 Taxpayer Relief Act. The
continuous levy program includes levy
of some vendor payments (Treasury
disbursed and non-Treasury disbursed
payments), Federal employee salary
payments, the Office of Personnel
Management retirement payments, and
Social Security benefit payments.
Continuous levy is accomplished
through a process almost identical to
that of offset. FMS matches delinquent
debtor data with payment record data
for automated collection of the debt at
the time of payment, after the
delinquent taxpayer has been afforded
due process.
FMS is currently unable to offset or
apply a continuous levy to payments
made to contractors with delinquent
debts when the Governmentwide
commercial purchase card is used as the
method of payment. When the
Governmentwide commercial purchase
card is used as the method of payment,
the Government does not make a direct
payment to the contractor. Instead, the
Acquiring Bank submits the payment to
the contractor’s bank account. Acquiring
Banks (also known as Merchant Banks)
are the banks that do business with
merchants who accept charge cards. A
merchant has an account with this bank
and each day deposits the value of the
day’s charge card sales. Acquirers buy
(acquire) the merchant’s sales slips and
credit the ticket’s value to the
merchant’s account. The GSA
SmartPay® contracted banks are issuing
banks and do not directly pay the
merchants.
VISA and Master Card are
associations, not banks. VISA and
Master Card are retail electronic
payments networks and global financial
services brands. They facilitate global
commerce through the transfer of
information among financial
institutions, merchants, consumers,
businesses, and Government entities. To
assess the significance of the problem,
FMS and VISA matched VISA payments
for Governmentwide purchase card
transactions for one year. As a result of
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the match, FMS determined that
approximately $73.5 million of
delinquent debts subject to collection
under TOP were not collected because
the debtors were paid using the
Governmentwide commercial purchase
card. The individual payments that
otherwise would have been collected
were all in excess of the micro-purchase
threshold.
To help increase the collection of
delinquent debts owed to the
Government, the rule amends the FAR
to require contracting officers to
determine whether the Central
Contractor Registration (CCR) indicates
that the contractor has delinquent debt
that is subject to collection under the
TOP. If a debt indicator is found, the
Governmentwide commercial purchase
card shall not be authorized as a method
of payment. The contracting officer is
required to check for the flag at the time
of contract award or order placement or
issuance. The rule also amends the
applicable Governmentwide commercial
purchase card payment FAR clause at
52.232–36 to advise contractors that the
Governmentwide commercial purchase
card is not authorized as a method of
payment if a debt indicator is included
in the CCR for the contractor. The
proposed rule included the requirement
for the contracting officer to check CCR
prior to option exercise, but has been
removed by the Councils in the final
rule. The Councils removed the
requirement to check CCR prior to
option exercise because the proposed
rule language was considered to be a
change to the requirement for exercising
an option, which if the method of
payment was changed, would result in
a contract change outside the scope of
exercising an option. This rule will not
apply to individual travel charge cards
or centrally billed accounts for travel/
transportation services.
DoD, GSA, and NASA published a
proposed rule in the Federal Register at
72 FR 74255, December 31, 2007. The
comment period closed on February 29,
2008. The Councils received comments
from seven respondents, one of which
was inadvertently sent in error and
belonged to a National Oceanic
Atmospheric Administration proposed
rule that followed this rule in the FRN
entitled ‘‘Pacific Halibut Fisheries’’.
The Councils have made the
following changes to the proposed rule:
a. FAR 4.1103(a)(3) of the proposed
rule has been modified to change the
sentence structure from ‘‘except when
payment by the Governmentwide
commercial purchase card is
contemplated (see 32.1108 (b)(2)’’) to
‘‘except when use of the
Governmentwide commercial purchase
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card is contemplated as a method of
payment. (See 32.1108(b)(2))’’.
b. FAR 8.402(g) was added to the rule
to clarify that this rule does not apply
to orders placed at or below the micropurchase threshold.
c. FAR 13.201(h) was not in the
proposed rule and has been added as
follows: ‘‘When using the
Governmentwide commercial purchase
card as a method of payment, purchases
at or below the micro-purchase
threshold are exempt from verification
in the Central Contractor Registration
(CCR) database as to whether the
contractor has a delinquent debt subject
to collection under the Treasury Offset
Program (TOP)’’ to make it very clear
that purchases under the micropurchase threshold are exempt from
checking the CCR database for a
delinquent debt flag. This change from
the proposed rule is deemed necessary
because of the repeated public
comments received on the issue and to
provide clarity that purchases under the
micro-purchase threshold are exempt
from checking the CCR database for the
delinquent debt flag.
d. FAR 16.505(a)(11) was added to the
rule to clarify that this rule does not
apply to orders placed at or below the
micro-purchase threshold.
e. FAR 17.207(f) of the proposed rule
which included adding new
subparagraphs (1) and (2) was reinstated
as currently in the FAR.
f. FAR 32.1108(b)(2)(i) of the
proposed rule has been modified to
delete ‘‘program’’ as it was duplicated in
the proposed FAR language. FAR
32.1108(b)(2)(i) was also amended in the
final rule to require the contracting
officer to check for the debt flag
indicator only if payment by the
Governmentwide purchase card is
anticipated and the contract or order is
above the micro-purchase threshold.
The requirement was removed to check
the CCR database for the indicator prior
to option exercise.
g. FAR 32.1108(b)(2)(ii) of the
proposed rule has been modified to add
language informing contracting officers
that contracts to be paid by purchase
card must either include FAR 52.232–33
or FAR 52.232–34, so that in the event
that payment cannot be made by
purchase card, the contractor is aware of
the method of payment and the
requirements thereof, i.e., active CCR
status.
h. The last sentence of FAR
32.1108(b)(2)(ii) of the proposed rule
which read, ‘‘Contracting officers shall
not use the presence of the delinquent
debt indicator to exclude a contractor
from receipt of the contract, order, or
exercised option’’ is renumbered to be
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FAR 32.1108(b)(2)(iii) and has been
modified to correct grammar and delete
the requirement to check CCR for the
indicator when exercising an option.
i. FAR 32.1108(b)(2)(iii) of the
proposed rule has been modified to
correct grammar and reflect the new
subparagraph ‘‘iv.’’
j. Language was added at FAR
32.1110(d) of the rule to inform
contracting officers that contracts to be
paid by purchase card must either
include FAR 52.232–33 or FAR 52.232–
34, so that in the event that payment
cannot be made by purchase card, the
contractor is aware of the method of
payment and the requirements thereof,
i.e., active CCR status.
k. FAR 52.212–5 was added to the
rule in order to change the date of FAR
52.232–36 at paragraph (b)(41). The date
of FAR 52.212–5 itself was also
changed.
l. In the proposed rule at FAR 52.232–
36(a)(2), the clause read ‘‘The
Governmentwide commercial purchase
card is not authorized as a method of
payment when the Central Contractor
Registration (CCR) indicates that the
Contractor has delinquent debt...’’ In the
final rule the word ‘‘when’’ is being
replaced with ‘‘during any period’’ so
that the beginning of FAR 52.232–36
(a)(2) now reads as follows: ‘‘The
Governmentwide commercial purchase
card is not authorized as a method of
payment during any period the Central
Contractor Registration (CCR) indicates
that the Contractor has delinquent
debt...’’ The change from ‘‘when’’ in the
proposed rule to ‘‘during any period’’ in
the final rule is done for clarification to
make it clear that the contracting officer
shall not authorize the use of the
commercial purchase card for payment
at any time when the CCR registration
shows that the contractor has
delinquent debt that is subject to
collection under TOP.
The basis for each change and
analysis of all public comments follows.
1. Comment: One respondent
commented that this rule should
exclude Government card purchases
made under the simplified acquisition
procedures because non-contracting
officers will not consistently check the
CCR database for the debt collection
flag.
Response: The FAR change is
applicable to all acquisitions that
include the CCR clauses (FAR 52.204–
7 or FAR 52.212–4(t)). The only
exclusions are in FAR 4.1102. Forcing
personnel that have been designated as
cardholders, but are not contracting
officers, to perform the check for the
debt flag indicator in the CCR database
could be administratively burdensome
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and may potentially curtail card usage.
When the Governmentwide commercial
purchase card is used as a method of
payment for purchases above the micropurchase threshold then contracting
officers (COs) are required to check in
the CCR database to see if there is a
delinquent debt flag identified for the
contractor. This has been further
clarified with the added language in
FAR 13.201(h). In addition, language
has been added to the FAR text at FAR
8.402 and FAR 16.505, clarifying that
when placing orders at or below the
micro-purchase threshold, CCR does not
have to be checked for the debt flag
indicator.
2. Comment: One respondent
commented that the proceeds of
simplified acquisition procedures are
unlikely to make a serious dent in the
indebtedness of businesses.
Response: The $73.5 million is a
yearly total for the Governmentwide
commercial purchase cards only and is
considered significant. This remedy is
directed specifically at Government
contractors who owe delinquent debt,
yet continue to do business with the
Government. Collections of $73.5
million per year represent a significant
portion of the debt owed by this
population. In addition, the collection
of the $3.1 billion is being pursued
utilizing other mechanisms.
3. Comment: Five respondents
recommended this rule be applicable
only to purchases above the micropurchase threshold. One questioned
whether the requirement to check CCR
was applicable to orders placed on GSA
Advantage or DoD eMall by a purchase
cardholder who is not a warranted
contracting officer.
Response: The Councils agree that
purchases at or below the micropurchase threshold are excluded from
the requirement to check the CCR
database for the debt flag indicator
when using the Governmentwide
commercial purchase card as a method
of payment. FAR 13.201(h) has been
added to make it very clear that the CCR
database is not required to be checked
for the delinquent debt flag whenever
the purchase is below the micropurchase threshold. In addition,
language has been added at FAR 8.402
and FAR 16.505, to make it clear that
the CCR database is required to be
checked for the delinquent debt flag
whenever the order is above the micropurchase threshold when the
Governmentwide commercial purchase
card is used as a method of payment by
a contracting officer.
4. Comment: One respondent stated
that ‘‘it would also be nice if GSA
contracts specify that payments may not
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be made through the charge card for
existing and new contracts.’’
Response: The responsibility to
include the FAR clause at 52.232–36 is
whenever the purchase card will be
used as a method of payment under a
contract as outlined in the prescription
in FAR 32.1110(d). The responsibility to
check the CCR database for GSA
contractors with a delinquent debt flag
is a requirement and a duty of the GSA
contracting officer prior to award of a
contract or issuance or placement of an
order. It is the responsibility of the
ordering agency/office contracting
officer to check the CCR database for
contractors with a delinquent debt flag
prior to placing an order against a GSA
schedule contract when the purchase is
above the micro-purchase threshold and
when the Governmentwide commercial
purchase card is used as the method of
payment.
5. Comment: One respondent
expressed concern about the burden on
the contracts/procurement folks of the
Government and stated that if the
Government really wanted to solve the
problem the Government would
automate the VISA/Governmentwide
commercial purchase card system to
perform the debt collection offset.
Response: It is within the discretion
of the Government to assign duties to
Government employees in order to
achieve the Government’s policies.
The Federal Contractor Tax
Compliance (FCTC) task force and a
purchase card subgroup extensively
studied and determined that blocking
Federal payment to delinquent
contractors that way is not an option.
According to industry members, the
current commercial Merchant Category
Code blocking process and
authorization and transactions
settlement processes do not have the
capabilities to block transactions for
individual vendors. Therefore blocking
transactions at the point of sale for
merchants that are delinquent on their
taxes is not feasible. Currently there are
no commercial systems available that
have the technological capability to
subject specific purchase card payments
to the Federal Payment Levy Program
(FPLP). Therefore, it has been
determined that it is not currently
possible or feasible to implement
automating the offset of
Governmentwide commercial purchase
card payments within the VISA/
Governmentwide Purchase Card system.
6. Comment: One respondent
questioned whether transactions below
the micro-purchase threshold were
studied.
Response: The Financial Management
Service within the U.S. Department of
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Treasury did study those transactions
below the micro-purchase threshold
level and the Program Director of the
GSA Office of Charge Card Management
has stated that while purchases below
the micro-purchase threshold represent
a large percentage of the volume of
purchase card transactions, they
represent a relatively small percentage
of the dollars expended and not worthy
of the administrative burden of checking
the CCR database for the debt collection
flag.
7. Comment: One respondent
questioned whether changing the
payment method would put an
awkward burden on the front-line folks.
Response: The requirement to check
the CCR database at contract award or
order placement or issuance, should be
completed in advance so that the
payment mechanism could be worked
out between the parties. In addition, the
Contractor may choose to pay their
delinquent debt rather than change the
payment method. If the contractor pays
the debt, the debt flag will be removed
from the CCR database, and this will
enable the use of the Governmentwide
commercial purchase card as a method
of payment. Otherwise, other alternate
payment methods/clauses will have to
be utilized because the use of the
Governmentwide commercial purchase
card is prohibited as a payment method
if a debt flag is identified for the
contractor in the CCR database.
8. Comment: One respondent asked
what the contracting officer should do if
there is no CCR registration or it is
inactive when a contracting officer
attempts to place an order or exercise an
option.
Response: The contracting officer
should plan well in advance of
awarding a contract or placing or
issuing an order by checking the CCR
database to ensure the contractor
registration has not expired. If it has
expired, then the contracting officer
should encourage the contractor/offeror
to renew their registration in CCR prior
to placing the order as required by their
respective contract or agreement. By
now all contractors should have
registered in CCR unless they were
given an exception. The contracting
officer for an order for which there is no
CCR registration should assume the
contractor was given an exception at the
time of contract award and so need not
worry about checking for the flag. The
proposed rule requirement for the
contracting officer to check CCR prior to
option exercise has been removed by the
Councils in the final rule.
9. Comment: One respondent asked
what contracting officers are supposed
to do if the instant acquisition is exempt
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from being registered in the CCR
database.
Response: If the instant acquisition is
exempt from CCR as outlined in FAR
4.1102 then the contracting officer does
not have to check CCR for registration.
However, if the acquisition is not
exempt as prescribed by FAR 4.1102,
the contracting officer must make efforts
to encourage the contractor/offeror to
register in CCR or the offeror will not be
permitted to receive an award.
10. Comment: One respondent
commented that the FAR clause at
52.232–36, Payments by Third Party,
should be a required clause when
payment by the purchase card is
contemplated and therefore, the
prescription should be modified as the
clause shall be required because it is not
discretionary.
Response: The Councils agree the
clause is not discretionary and believe
it is clear in the prescription of the
clause at FAR 32.1110(d).
11. Comment: One respondent
commented that the CCR database has
not yet implemented the Federal Debt
Flag functionality in the public search
record.
Response: The CCR database has been
modified to include the debt flag
indicator and will be fully operational
and accessible by the time this case is
issued as a final rule.
12. Comment: A respondent
questioned the inappropriate terms used
in the preamble to the proposed rule in
the statements ‘‘instead, the processing
bank for the Governmentwide
commercial purchase card pays the
contractor’’ and ‘‘To assess the
significance of the problem, FMS and
Visa, one of the processing banks...’’.
The respondent asserted that the
Acquiring Bank submits the payment to
the contractor’s bank account. The GSA
SmartPay® contracted banks are issuing
banks and do not directly pay the
merchants. Acquiring Banks (a.k.a.
Merchant Banks) are the banks that do
business with merchants who accept
charge cards. A merchant has an
account with this bank and each day
deposits the value of the day’s charge
card sales. Acquirers buy (acquire) the
merchant’s sales slips and credit the
ticket’s value to the merchant’s account.
VISA is an Association, not a bank.
VISA is a retail electronic payments
network and global financial services
brand. It facilitates global commerce
through the transfer of information
among financial institutions, merchants,
consumers, businesses, and Government
entities.
Response: The Councils agree, with
the exception that not only VISA, but
Master Card also is an Association, the
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65603
Background section of the proposed rule
contained an erroneous statement.
13. Comment: One respondent stated
that, ‘‘Our primary objection to the
proposed rule is the use of delinquent
debts reported under the Treasury Offset
Program as a basis for restricting use of
a Governmentwide commercial
purchase card as a method of payment
to contractors. We believe many of the
debts reported under TOP are highly
inaccurate and do not satisfy the
requirements of the Debt Collections
Improvement Act of 1996. When the
statute was enacted in 1996, it
contained a requirement to notify
contractors of claims established under
the Act. The processes and systems
established to notify contractors failed
to comply with the statutory notification
required. There have been many reports
of cases where withholds have been
taken in error and cases where advance
notice of intent to withhold was not
received by a responsible individual in
the employ of the company.’’
Response: Before a nontax debt may
be submitted to the Treasury Offset
Program for collection by offset,
agencies must certify to Treasury that
the debt is valid and that all due process
requirements have been met (31 CFR
285.5(c)(6)). These due process
requirements include notice and an
opportunity to dispute the debt (31
U.S.C. 3716). Actual receipt of the
notice by the debtor is not required
provided the agency has made a
reasonable attempt to notify the debtor.
Debtors are afforded notice and an
opportunity to dispute debts prior to an
offset or levy under the Treasury Offset
Program. In the case of tax debts, the
notice requirements contained in the
Internal Revenue Code are followed.
Additionally, when an offset or levy
occurs, a notice is sent to the debtor that
includes contact information to address
any concerns regarding the offset or
levy.
14. Comment: One respondent stated
that the inaccurate tax information
could lead to erroneous award decisions
by contracting officers.
Response: This rule does not impact
contract award decisions by contracting
officers. The rule precludes the use of
the Governmentwide commercial
purchase card as a method of payment
only and does not affect the award.
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.
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Federal Register / Vol. 74, No. 236 / Thursday, December 10, 2009 / Rules and Regulations
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 only impacts the method by which
a contractor can be paid when the
contractor has a delinquent debt.
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 4, 8, 13,
16, 32, and 52
Government procurement.
Dated: November 30, 2009.
Al Matera,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA
amend 48 CFR parts 4, 8, 13, 16, 32, and
52 as set forth below:
■ 1. The authority citation for 48 CFR
parts 4, 8, 13, 16, 32, 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 4—ADMINISTRATIVE MATTERS
2. Amend section 4.1103 by revising
paragraph (a)(3) to read as follows:
■
4.1103
Procedures.
(a) * * *
(3) Need not verify registration before
placing an order or call if the contract
or agreement includes the clause at
52.204–7, or 52.212–4(t), or a similar
agency clause, except when use of the
Governmentwide commercial purchase
card is contemplated as a method of
payment. (See 32.1108(b)(2)).
*
*
*
*
*
PART 8—REQUIRED SOURCES OF
SUPPLIES AND SERVICES
3. Amend section 8.402 by adding
paragraph (g) to read as follows:
mstockstill on DSKH9S0YB1PROD with RULES2
■
8.402
General.
*
*
*
*
*
(g) When using the Governmentwide
commercial purchase card as a method
of payment, orders at or below the
micro-purchase threshold are exempt
from verification in the Central
VerDate Nov<24>2008
17:21 Dec 09, 2009
Jkt 220001
Contractor Registration (CCR) database
as to whether the contractor has a
delinquent debt subject to collection
under the Treasury Offset Program
(TOP).
■ 4. Revise section 8.405–7 to read as
follows:
8.405–7
Payment.
Agencies may make payments for oral
or written orders by any authorized
means, including the Governmentwide
commercial purchase card (but see
32.1108(b)(2)).
PART 13—SIMPLIFIED ACQUISITION
PROCEDURES
5. Amend section 13.003 by revising
paragraph (e) to read as follows:
■
13.003
Policy.
*
*
*
*
*
(e) Agencies shall use the
Governmentwide commercial purchase
card and electronic purchasing
techniques to the maximum extent
practicable in conducting simplified
acquisitions (but see 32.1108(b)(2)).
*
*
*
*
*
■ 6. Amend section 13.201 by adding
paragraph (h) to read as follows:
13.201
General.
*
*
*
*
*
(h) When using the Governmentwide
commercial purchase card as a method
of payment, purchases at or below the
micro-purchase threshold are exempt
from verification in the Central
Contractor Registration (CCR) database
as to whether the contractor has a
delinquent debt subject to collection
under the Treasury Offset Program
(TOP).
■ 7. Amend section 13.301 by revising
the first sentence of paragraph (a) and
(c)(3) to read as follows:
13.301 Governmentwide commercial
purchase card.
(a) Except as provided in
32.1108(b)(2), the Governmentwide
commercial purchase card is authorized
for use in making and/or paying for
purchases of supplies, services, or
construction. * * *
*
*
*
*
*
(c) * * *
(3) Make payments, when the
contractor agrees to accept payment by
the card (but see 32.1108(b)(2)).
PART 16—TYPES OF CONTRACTS
8. Amend section 16.505 by adding
paragraph (a)(11) to read as follows:
■
16.505
Ordering.
(a) * * *
PO 00000
Frm 00008
Fmt 4701
Sfmt 4700
(11) When using the Governmentwide
commercial purchase card as a method
of payment, orders at or below the
micro-purchase threshold are exempt
from verification in the Central
Contractor Registration (CCR) database
as to whether the contractor has a
delinquent debt subject to collection
under the Treasury Offset Program
(TOP).
*
*
*
*
*
PART 32—CONTRACT FINANCING
9. Amend section 32.1108 by revising
paragraph (b) to read as follows:
■
32.1108 Payment by Governmentwide
commercial purchase card.
*
*
*
*
*
(b)(1) Written contracts to be paid by
purchase card should include the clause
at 52.232–36, Payment by Third Party,
as prescribed by 32.1110(d). However,
payment by a purchase card also may be
made under a contract that does not
contain the clause to the extent the
contractor agrees to accept that method
of payment.
(2)(i) When it is contemplated that the
Governmentwide commercial purchase
card will be used as the method of
payment, and the contract or order is
above the micro-purchase threshold,
contracting officers are required to
verify (by looking in the Central
Contractor Registration (CCR)) whether
the contractor has any delinquent debt
subject to collection under the Treasury
Offset Program (TOP) at contract award
and order placement. Information on
TOP is available at https://fms.treas.gov/
debt/.
(ii) The contracting officer shall not
authorize the Governmentwide
commercial purchase card as a method
of payment during any period the CCR
indicates that the contractor has
delinquent debt subject to collection
under the TOP. In such cases, payments
under the contract shall be made in
accordance with the clause at 52.232–
33, Payment by Electronic Funds
Transfer—Central Contractor
Registration, or 52.232–34, Payment by
Electronic Funds Transfer—Other Than
Central Contractor Registration, as
appropriate (see FAR 32.1110(d)).
(iii) Contracting officers shall not use
the presence of the CCR debt flag
indicator to exclude a contractor from
receipt of the contract award or issuance
or placement of an order.
(iv) The contracting officer may take
steps to authorize payment by
Governmentwide commercial purchase
card when a contractor alerts the
contracting officer that the CCR debt flag
E:\FR\FM\10DER2.SGM
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Federal Register / Vol. 74, No. 236 / Thursday, December 10, 2009 / Rules and Regulations
indicator has been changed to no longer
show a delinquent debt.
*
*
*
*
*
■ 10. Amend section 32.1110 by adding
a new sentence to the end of paragraph
(d) to read as follows:
32.1110 Solicitation provision and
contract clauses.
*
*
*
*
*
(d) * * * When the clause at 52.232–
36 is included in a solicitation or
contract, the contracting officer shall
also insert the clause at 52.232–33,
Payment by Electronic Funds Transfer—
Central Contractor Registration, or
52.232–34, Payment by Electronic
Funds Transfer—Other Than Central
Contractor Registration, as appropriate.
*
*
*
*
*
(b) Contractor payment request. (1) Except
as provided in paragraph (b)(2) of this clause,
the Contractor shall make payment requests
through a charge to the Government account
with the third party, at the time and for the
amount due in accordance with those clauses
of this contract that authorize the Contractor
to submit invoices, contract financing
requests, other payment requests, or as
provided in other clauses providing for
payment to the Contractor.
(2) When the Contracting Officer has
notified the Contractor that the
Governmentwide commercial purchase card
is no longer an authorized method of
payment, the Contractor shall make such
payment requests in accordance with
instructions provided by the Contracting
Officer during the period when the purchase
card is not authorized.
*
*
*
*
*
[FR Doc. E9–28930 Filed 12–9–09; 8:45 am]
BILLING CODE 6820–EP–S
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
DEPARTMENT OF DEFENSE
11. Amend section 52.212–5 by
revising the date of the clause and
paragraph (b)(40) to read as follows:
GENERAL SERVICES
ADMINISTRATION
52.212–5 Contract Terms and Conditions
Required to Implement Statutes or
Executive Orders—Commercial Items.
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
*
48 CFR Parts 7, 11, 12, and 39
■
*
*
*
*
CONTRACT TERMS AND CONDITIONS
REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS—COMMERCIAL
ITEMS (FEB 2010)
*
*
*
*
*
(b) * * *
lll(40) 52.232–36, Payment by Third
Party (FEB 2010) (31 U.S.C. 3332).
*
*
*
*
12. Amend section 52.232–36 by
revising the date of the clause and
paragraphs (a) and (b) to read as follows:
■
mstockstill on DSKH9S0YB1PROD with RULES2
Payment by Third Party.
*
*
*
*
*
PAYMENT BY THIRD PARTY (FEB 2010)
(a) General. (1) Except as provided in
paragraph (a)(2) of this clause, the Contractor
agrees to accept payments due under this
contract, through payment by a third party in
lieu of payment directly from the
Government, in accordance with the terms of
this clause. The third party and, if applicable,
the particular Governmentwide commercial
purchase card to be used are identified
elsewhere in this contract.
(2) The Governmentwide commercial
purchase card is not authorized as a method
of payment during any period the Central
Contractor Registration (CCR) indicates that
the Contractor has delinquent debt that is
subject to collection under the Treasury
Offset Program (TOP). Information on TOP is
available at https://fms.treas.gov/debt/
index.html. If the CCR subsequently indicates
that the Contractor no longer has delinquent
debt, the Contractor may request the
Contracting Officer to authorize payment by
Governmentwide commercial purchase card.
VerDate Nov<24>2008
17:21 Dec 09, 2009
Jkt 220001
RIN 9000–AK57
Federal Acquisition Regulation; FAR
Case 2005–041, Internet Protocol
Version 6 (IPv6)
*
52.232–36
[FAC 2005–38; FAR Case 2005–041; Item
III; Docket 2009-0042, Sequence 1]
AGENCIES: Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
SUMMARY: The Civilian Agency
Acquisition Council and the Defense
Acquisition Regulations Council
(Councils) are issuing a final rule
amending the Federal Acquisition
Regulation (FAR) to require Internet
Protocol Version 6 (IPv6) compliant
products be included in all new
information technology (IT) acquisitions
using Internet Protocol (IP). IP is one of
the primary mechanisms that define
how and where information moves
across networks. The widely-used IP
industry standard is IP Version 4 (IPv4).
The Office of Management and Budget
(OMB) Memorandum M–05–22, dated
August 2, 2005, requires all new IT
procurements, to the maximum extent
practicable, to include IPv6 capable
products and standards.
DATES: Effective Date: December 10,
2009.
PO 00000
Frm 00009
Fmt 4701
Sfmt 4700
65605
FOR FURTHER INFORMATION CONTACT: For
clarification of content, contact Mr.
Ernest Woodson, Procurement Analyst,
at (202) 501–3775. For information
pertaining to status or publication
schedules, contact the Regulatory
Secretariat at (202) 501–4755. Please
cite FAC 2005–38, FAR case 2005–041.
SUPPLEMENTARY INFORMATION:
A. Background
To guide the Federal Government in
its transition to IPv6, OMB issued
Memorandum M–05–22, Transition
Planning for Internet Protocol Version 6,
which outlined a transition strategy for
agencies to follow and established the
goal for all Federal agency network
backbones to support IPv6 by June 30,
2008. This guidance initiated the
development for an addressing
mechanism to increase the amount of
available IP address space and support
interconnected networks to handle
increasing streams of text, voice, and
video without compromising IPv4
capability or network security. Such
benefits offered by IPv6 include (1) A
platform for innovation, collaboration,
and transparency; (2) Integrated
interoperability and mobility; (3)
Improved security features and; (4)
Unconstrained address abundance. To
begin the planning, agencies can
achieve valuable benefits from IPv6
using the ‘‘IPv6 Planning Guide and
Roadmap’’ to begin the planning for
improvement in operational efficiencies
and citizen services. This direction is
necessary due to the inability of IPv4 to
meet the Government’s long-term
business needs because of limited
robustness, scalability, and features. In
coordination with OMB, the National
Institute of Standards and Technology
(NIST) developed additional standards
and testing infrastructures to support
agency plans for IPv6 adoption. The
U.S. Government version 6 (USGv6)
profile defines effective dates for its
mandatory requirements so as to
provide vendors a 24-month lead time
to implement and test. The earliest
effective date in version 1 of the profile
is July, 2010. For NIST IPv6
information, visit https://
www.antd.nist.gov/usgv6.
DoD, GSA, and NASA published a
proposed rule in the Federal Register at
71 FR 50011, August 24, 2006, to amend
the FAR to ensure that all new IT
acquisitions using Internet Protocol are
IPv6 compliant. Proactive integration of
IPv6 requirements into Federal contracts
may reduce the costs and complexity of
transition by ensuring that Federal
applications can operate in an IPv6
E:\FR\FM\10DER2.SGM
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]]>Agencies
[Federal Register Volume 74, Number 236 (Thursday, December 10, 2009)]
[Rules and Regulations]
[Pages 65600-65605]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-28930]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 4, 8, 13, 16, 32, and 52
[FAC 2005-38; FAR Case 2006-026; Item II; Docket 2009-0041, Sequence 1]
RIN 9000-AK87
Federal Acquisition Regulation; FAR Case 2006-026, Governmentwide
Commercial Purchase Card Restrictions for Treasury Offset Program Debts
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are issuing a final rule
amending the Federal Acquisition Regulation (FAR) to restrict the use
of the Governmentwide commercial purchase card as a method of payment
for offerors with debts subject to the Treasury Offset Program.
DATES: Effective Date: February 1, 2010.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
Mr. Michael Jackson, Procurement Analyst, at (202) 208-4949. For
information pertaining to status or publication schedules, contact the
Regulatory Secretariat at (202) 501-4755. Please cite FAC 2005-38, FAR
case 2006-026.
SUPPLEMENTARY INFORMATION:
A. Background
The Debt Collection Improvement Act of 1996 and other statutes
provide the tools for administering a centralized program for the
collection of delinquent, non-tax and tax debts. The Financial
Management Service (FMS), a bureau of the Department of the Treasury,
is charged with implementing the Government's delinquent debt
collection program. Since 1996, FMS has collected more than $24.4
billion in delinquent debt. In fiscal year 2006, collections of
delinquent debt remained at a constant $3.1 billion. To collect
delinquent debts owed to Federal agencies and States, FMS uses the
Treasury Offset Program (TOP). Information on TOP is available at
https://fms.treas.gov/debt/. TOP uses both ``offsets'' and
``continuous levies'' to collect
[[Page 65601]]
delinquent debts. Offset is a process whereby Federal payments are
reduced or ``offset'' to satisfy a person's overdue Federal debt, child
support obligation, or State tax debt. A payee's name and taxpayer
identification number are matched against a Treasury/FMS database of
delinquent debtors for automatic offset of funds. Offset funds are then
used to satisfy payment of the delinquent debt to the extent allowed by
law.
Under the continuous levy program, delinquent Federal tax debts are
collected by levying non-tax payments until the debt is satisfied, as
authorized by the 1997 Taxpayer Relief Act. The continuous levy program
includes levy of some vendor payments (Treasury disbursed and non-
Treasury disbursed payments), Federal employee salary payments, the
Office of Personnel Management retirement payments, and Social Security
benefit payments. Continuous levy is accomplished through a process
almost identical to that of offset. FMS matches delinquent debtor data
with payment record data for automated collection of the debt at the
time of payment, after the delinquent taxpayer has been afforded due
process.
FMS is currently unable to offset or apply a continuous levy to
payments made to contractors with delinquent debts when the
Governmentwide commercial purchase card is used as the method of
payment. When the Governmentwide commercial purchase card is used as
the method of payment, the Government does not make a direct payment to
the contractor. Instead, the Acquiring Bank submits the payment to the
contractor's bank account. Acquiring Banks (also known as Merchant
Banks) are the banks that do business with merchants who accept charge
cards. A merchant has an account with this bank and each day deposits
the value of the day's charge card sales. Acquirers buy (acquire) the
merchant's sales slips and credit the ticket's value to the merchant's
account. The GSA SmartPay[reg] contracted banks are issuing banks and
do not directly pay the merchants.
VISA and Master Card are associations, not banks. VISA and Master
Card are retail electronic payments networks and global financial
services brands. They facilitate global commerce through the transfer
of information among financial institutions, merchants, consumers,
businesses, and Government entities. To assess the significance of the
problem, FMS and VISA matched VISA payments for Governmentwide purchase
card transactions for one year. As a result of the match, FMS
determined that approximately $73.5 million of delinquent debts subject
to collection under TOP were not collected because the debtors were
paid using the Governmentwide commercial purchase card. The individual
payments that otherwise would have been collected were all in excess of
the micro-purchase threshold.
To help increase the collection of delinquent debts owed to the
Government, the rule amends the FAR to require contracting officers to
determine whether the Central Contractor Registration (CCR) indicates
that the contractor has delinquent debt that is subject to collection
under the TOP. If a debt indicator is found, the Governmentwide
commercial purchase card shall not be authorized as a method of
payment. The contracting officer is required to check for the flag at
the time of contract award or order placement or issuance. The rule
also amends the applicable Governmentwide commercial purchase card
payment FAR clause at 52.232-36 to advise contractors that the
Governmentwide commercial purchase card is not authorized as a method
of payment if a debt indicator is included in the CCR for the
contractor. The proposed rule included the requirement for the
contracting officer to check CCR prior to option exercise, but has been
removed by the Councils in the final rule. The Councils removed the
requirement to check CCR prior to option exercise because the proposed
rule language was considered to be a change to the requirement for
exercising an option, which if the method of payment was changed, would
result in a contract change outside the scope of exercising an option.
This rule will not apply to individual travel charge cards or centrally
billed accounts for travel/transportation services.
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 72 FR 74255, December 31, 2007. The comment period closed
on February 29, 2008. The Councils received comments from seven
respondents, one of which was inadvertently sent in error and belonged
to a National Oceanic Atmospheric Administration proposed rule that
followed this rule in the FRN entitled ``Pacific Halibut Fisheries''.
The Councils have made the following changes to the proposed rule:
a. FAR 4.1103(a)(3) of the proposed rule has been modified to
change the sentence structure from ``except when payment by the
Governmentwide commercial purchase card is contemplated (see 32.1108
(b)(2)'') to ``except when use of the Governmentwide commercial
purchase card is contemplated as a method of payment. (See
32.1108(b)(2))''.
b. FAR 8.402(g) was added to the rule to clarify that this rule
does not apply to orders placed at or below the micro-purchase
threshold.
c. FAR 13.201(h) was not in the proposed rule and has been added as
follows: ``When using the Governmentwide commercial purchase card as a
method of payment, purchases at or below the micro-purchase threshold
are exempt from verification in the Central Contractor Registration
(CCR) database as to whether the contractor has a delinquent debt
subject to collection under the Treasury Offset Program (TOP)'' to make
it very clear that purchases under the micro-purchase threshold are
exempt from checking the CCR database for a delinquent debt flag. This
change from the proposed rule is deemed necessary because of the
repeated public comments received on the issue and to provide clarity
that purchases under the micro-purchase threshold are exempt from
checking the CCR database for the delinquent debt flag.
d. FAR 16.505(a)(11) was added to the rule to clarify that this
rule does not apply to orders placed at or below the micro-purchase
threshold.
e. FAR 17.207(f) of the proposed rule which included adding new
subparagraphs (1) and (2) was reinstated as currently in the FAR.
f. FAR 32.1108(b)(2)(i) of the proposed rule has been modified to
delete ``program'' as it was duplicated in the proposed FAR language.
FAR 32.1108(b)(2)(i) was also amended in the final rule to require the
contracting officer to check for the debt flag indicator only if
payment by the Governmentwide purchase card is anticipated and the
contract or order is above the micro-purchase threshold. The
requirement was removed to check the CCR database for the indicator
prior to option exercise.
g. FAR 32.1108(b)(2)(ii) of the proposed rule has been modified to
add language informing contracting officers that contracts to be paid
by purchase card must either include FAR 52.232-33 or FAR 52.232-34, so
that in the event that payment cannot be made by purchase card, the
contractor is aware of the method of payment and the requirements
thereof, i.e., active CCR status.
h. The last sentence of FAR 32.1108(b)(2)(ii) of the proposed rule
which read, ``Contracting officers shall not use the presence of the
delinquent debt indicator to exclude a contractor from receipt of the
contract, order, or exercised option'' is renumbered to be
[[Page 65602]]
FAR 32.1108(b)(2)(iii) and has been modified to correct grammar and
delete the requirement to check CCR for the indicator when exercising
an option.
i. FAR 32.1108(b)(2)(iii) of the proposed rule has been modified to
correct grammar and reflect the new subparagraph ``iv.''
j. Language was added at FAR 32.1110(d) of the rule to inform
contracting officers that contracts to be paid by purchase card must
either include FAR 52.232-33 or FAR 52.232-34, so that in the event
that payment cannot be made by purchase card, the contractor is aware
of the method of payment and the requirements thereof, i.e., active CCR
status.
k. FAR 52.212-5 was added to the rule in order to change the date
of FAR 52.232-36 at paragraph (b)(41). The date of FAR 52.212-5 itself
was also changed.
l. In the proposed rule at FAR 52.232-36(a)(2), the clause read
``The Governmentwide commercial purchase card is not authorized as a
method of payment when the Central Contractor Registration (CCR)
indicates that the Contractor has delinquent debt...'' In the final
rule the word ``when'' is being replaced with ``during any period'' so
that the beginning of FAR 52.232-36 (a)(2) now reads as follows: ``The
Governmentwide commercial purchase card is not authorized as a method
of payment during any period the Central Contractor Registration (CCR)
indicates that the Contractor has delinquent debt...'' The change from
``when'' in the proposed rule to ``during any period'' in the final
rule is done for clarification to make it clear that the contracting
officer shall not authorize the use of the commercial purchase card for
payment at any time when the CCR registration shows that the contractor
has delinquent debt that is subject to collection under TOP.
The basis for each change and analysis of all public comments
follows.
1. Comment: One respondent commented that this rule should exclude
Government card purchases made under the simplified acquisition
procedures because non-contracting officers will not consistently check
the CCR database for the debt collection flag.
Response: The FAR change is applicable to all acquisitions that
include the CCR clauses (FAR 52.204-7 or FAR 52.212-4(t)). The only
exclusions are in FAR 4.1102. Forcing personnel that have been
designated as cardholders, but are not contracting officers, to perform
the check for the debt flag indicator in the CCR database could be
administratively burdensome and may potentially curtail card usage.
When the Governmentwide commercial purchase card is used as a method of
payment for purchases above the micro-purchase threshold then
contracting officers (COs) are required to check in the CCR database to
see if there is a delinquent debt flag identified for the contractor.
This has been further clarified with the added language in FAR
13.201(h). In addition, language has been added to the FAR text at FAR
8.402 and FAR 16.505, clarifying that when placing orders at or below
the micro-purchase threshold, CCR does not have to be checked for the
debt flag indicator.
2. Comment: One respondent commented that the proceeds of
simplified acquisition procedures are unlikely to make a serious dent
in the indebtedness of businesses.
Response: The $73.5 million is a yearly total for the
Governmentwide commercial purchase cards only and is considered
significant. This remedy is directed specifically at Government
contractors who owe delinquent debt, yet continue to do business with
the Government. Collections of $73.5 million per year represent a
significant portion of the debt owed by this population. In addition,
the collection of the $3.1 billion is being pursued utilizing other
mechanisms.
3. Comment: Five respondents recommended this rule be applicable
only to purchases above the micro-purchase threshold. One questioned
whether the requirement to check CCR was applicable to orders placed on
GSA Advantage or DoD eMall by a purchase cardholder who is not a
warranted contracting officer.
Response: The Councils agree that purchases at or below the micro-
purchase threshold are excluded from the requirement to check the CCR
database for the debt flag indicator when using the Governmentwide
commercial purchase card as a method of payment. FAR 13.201(h) has been
added to make it very clear that the CCR database is not required to be
checked for the delinquent debt flag whenever the purchase is below the
micro-purchase threshold. In addition, language has been added at FAR
8.402 and FAR 16.505, to make it clear that the CCR database is
required to be checked for the delinquent debt flag whenever the order
is above the micro-purchase threshold when the Governmentwide
commercial purchase card is used as a method of payment by a
contracting officer.
4. Comment: One respondent stated that ``it would also be nice if
GSA contracts specify that payments may not be made through the charge
card for existing and new contracts.''
Response: The responsibility to include the FAR clause at 52.232-36
is whenever the purchase card will be used as a method of payment under
a contract as outlined in the prescription in FAR 32.1110(d). The
responsibility to check the CCR database for GSA contractors with a
delinquent debt flag is a requirement and a duty of the GSA contracting
officer prior to award of a contract or issuance or placement of an
order. It is the responsibility of the ordering agency/office
contracting officer to check the CCR database for contractors with a
delinquent debt flag prior to placing an order against a GSA schedule
contract when the purchase is above the micro-purchase threshold and
when the Governmentwide commercial purchase card is used as the method
of payment.
5. Comment: One respondent expressed concern about the burden on
the contracts/procurement folks of the Government and stated that if
the Government really wanted to solve the problem the Government would
automate the VISA/Governmentwide commercial purchase card system to
perform the debt collection offset.
Response: It is within the discretion of the Government to assign
duties to Government employees in order to achieve the Government's
policies.
The Federal Contractor Tax Compliance (FCTC) task force and a
purchase card subgroup extensively studied and determined that blocking
Federal payment to delinquent contractors that way is not an option.
According to industry members, the current commercial Merchant Category
Code blocking process and authorization and transactions settlement
processes do not have the capabilities to block transactions for
individual vendors. Therefore blocking transactions at the point of
sale for merchants that are delinquent on their taxes is not feasible.
Currently there are no commercial systems available that have the
technological capability to subject specific purchase card payments to
the Federal Payment Levy Program (FPLP). Therefore, it has been
determined that it is not currently possible or feasible to implement
automating the offset of Governmentwide commercial purchase card
payments within the VISA/Governmentwide Purchase Card system.
6. Comment: One respondent questioned whether transactions below
the micro-purchase threshold were studied.
Response: The Financial Management Service within the U.S.
Department of
[[Page 65603]]
Treasury did study those transactions below the micro-purchase
threshold level and the Program Director of the GSA Office of Charge
Card Management has stated that while purchases below the micro-
purchase threshold represent a large percentage of the volume of
purchase card transactions, they represent a relatively small
percentage of the dollars expended and not worthy of the administrative
burden of checking the CCR database for the debt collection flag.
7. Comment: One respondent questioned whether changing the payment
method would put an awkward burden on the front-line folks.
Response: The requirement to check the CCR database at contract
award or order placement or issuance, should be completed in advance so
that the payment mechanism could be worked out between the parties. In
addition, the Contractor may choose to pay their delinquent debt rather
than change the payment method. If the contractor pays the debt, the
debt flag will be removed from the CCR database, and this will enable
the use of the Governmentwide commercial purchase card as a method of
payment. Otherwise, other alternate payment methods/clauses will have
to be utilized because the use of the Governmentwide commercial
purchase card is prohibited as a payment method if a debt flag is
identified for the contractor in the CCR database.
8. Comment: One respondent asked what the contracting officer
should do if there is no CCR registration or it is inactive when a
contracting officer attempts to place an order or exercise an option.
Response: The contracting officer should plan well in advance of
awarding a contract or placing or issuing an order by checking the CCR
database to ensure the contractor registration has not expired. If it
has expired, then the contracting officer should encourage the
contractor/offeror to renew their registration in CCR prior to placing
the order as required by their respective contract or agreement. By now
all contractors should have registered in CCR unless they were given an
exception. The contracting officer for an order for which there is no
CCR registration should assume the contractor was given an exception at
the time of contract award and so need not worry about checking for the
flag. The proposed rule requirement for the contracting officer to
check CCR prior to option exercise has been removed by the Councils in
the final rule.
9. Comment: One respondent asked what contracting officers are
supposed to do if the instant acquisition is exempt from being
registered in the CCR database.
Response: If the instant acquisition is exempt from CCR as outlined
in FAR 4.1102 then the contracting officer does not have to check CCR
for registration. However, if the acquisition is not exempt as
prescribed by FAR 4.1102, the contracting officer must make efforts to
encourage the contractor/offeror to register in CCR or the offeror will
not be permitted to receive an award.
10. Comment: One respondent commented that the FAR clause at
52.232-36, Payments by Third Party, should be a required clause when
payment by the purchase card is contemplated and therefore, the
prescription should be modified as the clause shall be required because
it is not discretionary.
Response: The Councils agree the clause is not discretionary and
believe it is clear in the prescription of the clause at FAR
32.1110(d).
11. Comment: One respondent commented that the CCR database has not
yet implemented the Federal Debt Flag functionality in the public
search record.
Response: The CCR database has been modified to include the debt
flag indicator and will be fully operational and accessible by the time
this case is issued as a final rule.
12. Comment: A respondent questioned the inappropriate terms used
in the preamble to the proposed rule in the statements ``instead, the
processing bank for the Governmentwide commercial purchase card pays
the contractor'' and ``To assess the significance of the problem, FMS
and Visa, one of the processing banks...''.
The respondent asserted that the Acquiring Bank submits the payment
to the contractor's bank account. The GSA SmartPay[reg] contracted
banks are issuing banks and do not directly pay the merchants.
Acquiring Banks (a.k.a. Merchant Banks) are the banks that do business
with merchants who accept charge cards. A merchant has an account with
this bank and each day deposits the value of the day's charge card
sales. Acquirers buy (acquire) the merchant's sales slips and credit
the ticket's value to the merchant's account. VISA is an Association,
not a bank. VISA is a retail electronic payments network and global
financial services brand. It facilitates global commerce through the
transfer of information among financial institutions, merchants,
consumers, businesses, and Government entities.
Response: The Councils agree, with the exception that not only
VISA, but Master Card also is an Association, the Background section of
the proposed rule contained an erroneous statement.
13. Comment: One respondent stated that, ``Our primary objection to
the proposed rule is the use of delinquent debts reported under the
Treasury Offset Program as a basis for restricting use of a
Governmentwide commercial purchase card as a method of payment to
contractors. We believe many of the debts reported under TOP are highly
inaccurate and do not satisfy the requirements of the Debt Collections
Improvement Act of 1996. When the statute was enacted in 1996, it
contained a requirement to notify contractors of claims established
under the Act. The processes and systems established to notify
contractors failed to comply with the statutory notification required.
There have been many reports of cases where withholds have been taken
in error and cases where advance notice of intent to withhold was not
received by a responsible individual in the employ of the company.''
Response: Before a nontax debt may be submitted to the Treasury
Offset Program for collection by offset, agencies must certify to
Treasury that the debt is valid and that all due process requirements
have been met (31 CFR 285.5(c)(6)). These due process requirements
include notice and an opportunity to dispute the debt (31 U.S.C. 3716).
Actual receipt of the notice by the debtor is not required provided the
agency has made a reasonable attempt to notify the debtor. Debtors are
afforded notice and an opportunity to dispute debts prior to an offset
or levy under the Treasury Offset Program. In the case of tax debts,
the notice requirements contained in the Internal Revenue Code are
followed. Additionally, when an offset or levy occurs, a notice is sent
to the debtor that includes contact information to address any concerns
regarding the offset or levy.
14. Comment: One respondent stated that the inaccurate tax
information could lead to erroneous award decisions by contracting
officers.
Response: This rule does not impact contract award decisions by
contracting officers. The rule precludes the use of the Governmentwide
commercial purchase card as a method of payment only and does not
affect the award.
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.
[[Page 65604]]
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 only impacts
the method by which a contractor can be paid when the contractor has a
delinquent debt.
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 4, 8, 13, 16, 32, and 52
Government procurement.
Dated: November 30, 2009.
Al Matera,
Director, Acquisition Policy Division.
0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 4, 8, 13, 16, 32, and
52 as set forth below:
0
1. The authority citation for 48 CFR parts 4, 8, 13, 16, 32, 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 4--ADMINISTRATIVE MATTERS
0
2. Amend section 4.1103 by revising paragraph (a)(3) to read as
follows:
4.1103 Procedures.
(a) * * *
(3) Need not verify registration before placing an order or call if
the contract or agreement includes the clause at 52.204-7, or 52.212-
4(t), or a similar agency clause, except when use of the Governmentwide
commercial purchase card is contemplated as a method of payment. (See
32.1108(b)(2)).
* * * * *
PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES
0
3. Amend section 8.402 by adding paragraph (g) to read as follows:
8.402 General.
* * * * *
(g) When using the Governmentwide commercial purchase card as a
method of payment, orders at or below the micro-purchase threshold are
exempt from verification in the Central Contractor Registration (CCR)
database as to whether the contractor has a delinquent debt subject to
collection under the Treasury Offset Program (TOP).
0
4. Revise section 8.405-7 to read as follows:
8.405-7 Payment.
Agencies may make payments for oral or written orders by any
authorized means, including the Governmentwide commercial purchase card
(but see 32.1108(b)(2)).
PART 13--SIMPLIFIED ACQUISITION PROCEDURES
0
5. Amend section 13.003 by revising paragraph (e) to read as follows:
13.003 Policy.
* * * * *
(e) Agencies shall use the Governmentwide commercial purchase card
and electronic purchasing techniques to the maximum extent practicable
in conducting simplified acquisitions (but see 32.1108(b)(2)).
* * * * *
0
6. Amend section 13.201 by adding paragraph (h) to read as follows:
13.201 General.
* * * * *
(h) When using the Governmentwide commercial purchase card as a
method of payment, purchases at or below the micro-purchase threshold
are exempt from verification in the Central Contractor Registration
(CCR) database as to whether the contractor has a delinquent debt
subject to collection under the Treasury Offset Program (TOP).
0
7. Amend section 13.301 by revising the first sentence of paragraph (a)
and (c)(3) to read as follows:
13.301 Governmentwide commercial purchase card.
(a) Except as provided in 32.1108(b)(2), the Governmentwide
commercial purchase card is authorized for use in making and/or paying
for purchases of supplies, services, or construction. * * *
* * * * *
(c) * * *
(3) Make payments, when the contractor agrees to accept payment by
the card (but see 32.1108(b)(2)).
PART 16--TYPES OF CONTRACTS
0
8. Amend section 16.505 by adding paragraph (a)(11) to read as follows:
16.505 Ordering.
(a) * * *
(11) When using the Governmentwide commercial purchase card as a
method of payment, orders at or below the micro-purchase threshold are
exempt from verification in the Central Contractor Registration (CCR)
database as to whether the contractor has a delinquent debt subject to
collection under the Treasury Offset Program (TOP).
* * * * *
PART 32--CONTRACT FINANCING
0
9. Amend section 32.1108 by revising paragraph (b) to read as follows:
32.1108 Payment by Governmentwide commercial purchase card.
* * * * *
(b)(1) Written contracts to be paid by purchase card should include
the clause at 52.232-36, Payment by Third Party, as prescribed by
32.1110(d). However, payment by a purchase card also may be made under
a contract that does not contain the clause to the extent the
contractor agrees to accept that method of payment.
(2)(i) When it is contemplated that the Governmentwide commercial
purchase card will be used as the method of payment, and the contract
or order is above the micro-purchase threshold, contracting officers
are required to verify (by looking in the Central Contractor
Registration (CCR)) whether the contractor has any delinquent debt
subject to collection under the Treasury Offset Program (TOP) at
contract award and order placement. Information on TOP is available at
https://fms.treas.gov/debt/.
(ii) The contracting officer shall not authorize the Governmentwide
commercial purchase card as a method of payment during any period the
CCR indicates that the contractor has delinquent debt subject to
collection under the TOP. In such cases, payments under the contract
shall be made in accordance with the clause at 52.232-33, Payment by
Electronic Funds Transfer--Central Contractor Registration, or 52.232-
34, Payment by Electronic Funds Transfer--Other Than Central Contractor
Registration, as appropriate (see FAR 32.1110(d)).
(iii) Contracting officers shall not use the presence of the CCR
debt flag indicator to exclude a contractor from receipt of the
contract award or issuance or placement of an order.
(iv) The contracting officer may take steps to authorize payment by
Governmentwide commercial purchase card when a contractor alerts the
contracting officer that the CCR debt flag
[[Page 65605]]
indicator has been changed to no longer show a delinquent debt.
* * * * *
0
10. Amend section 32.1110 by adding a new sentence to the end of
paragraph (d) to read as follows:
32.1110 Solicitation provision and contract clauses.
* * * * *
(d) * * * When the clause at 52.232-36 is included in a
solicitation or contract, the contracting officer shall also insert the
clause at 52.232-33, Payment by Electronic Funds Transfer--Central
Contractor Registration, or 52.232-34, Payment by Electronic Funds
Transfer--Other Than Central Contractor Registration, as appropriate.
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
11. Amend section 52.212-5 by revising the date of the clause and
paragraph (b)(40) to read as follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS--COMMERCIAL ITEMS (FEB 2010)
* * * * *
(b) * * *
------(40) 52.232-36, Payment by Third Party (FEB 2010) (31
U.S.C. 3332).
* * * * *
0
12. Amend section 52.232-36 by revising the date of the clause and
paragraphs (a) and (b) to read as follows:
52.232-36 Payment by Third Party.
* * * * *
PAYMENT BY THIRD PARTY (FEB 2010)
(a) General. (1) Except as provided in paragraph (a)(2) of this
clause, the Contractor agrees to accept payments due under this
contract, through payment by a third party in lieu of payment
directly from the Government, in accordance with the terms of this
clause. The third party and, if applicable, the particular
Governmentwide commercial purchase card to be used are identified
elsewhere in this contract.
(2) The Governmentwide commercial purchase card is not
authorized as a method of payment during any period the Central
Contractor Registration (CCR) indicates that the Contractor has
delinquent debt that is subject to collection under the Treasury
Offset Program (TOP). Information on TOP is available at https://fms.treas.gov/debt/. If the CCR subsequently indicates
that the Contractor no longer has delinquent debt, the Contractor
may request the Contracting Officer to authorize payment by
Governmentwide commercial purchase card.
(b) Contractor payment request. (1) Except as provided in
paragraph (b)(2) of this clause, the Contractor shall make payment
requests through a charge to the Government account with the third
party, at the time and for the amount due in accordance with those
clauses of this contract that authorize the Contractor to submit
invoices, contract financing requests, other payment requests, or as
provided in other clauses providing for payment to the Contractor.
(2) When the Contracting Officer has notified the Contractor
that the Governmentwide commercial purchase card is no longer an
authorized method of payment, the Contractor shall make such payment
requests in accordance with instructions provided by the Contracting
Officer during the period when the purchase card is not authorized.
* * * * *
[FR Doc. E9-28930 Filed 12-9-09; 8:45 am]
BILLING CODE 6820-EP-S
