Homeland Security Acquisition Regulation; Lead System Integrators [HSAR Case 2009-003], 41097-41101 [2010-16582]

Agencies

• DEPARTMENT OF HOMELAND SECURITY

[Federal Register Volume 75, Number 135 (Thursday, July 15, 2010)]
[Rules and Regulations]
[Pages 41097-41101]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-16582]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

48 CFR Parts 3002, 3007, 3009, 3016, 3034, 3035, and 3052

[Docket No. DHS-2009-0006]
RIN 1601-AA49


Homeland Security Acquisition Regulation; Lead System Integrators 
[HSAR Case 2009-003]

AGENCY: Office of the Chief Procurement Officer, DHS.

ACTION: Interim rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Department of Homeland Security (DHS) is issuing an 
interim rule amending the Homeland Security Acquisition Regulation 
(HSAR) to implement section 6405 of the U.S. Troop Readiness, Veterans' 
Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 
2007. This section of the Act and these implementing regulations 
restrict contractors from acting as lead system integrators in the 
acquisition of DHS major systems if they have direct financial 
interests in the development or construction of any individual system 
or element of any system of systems they integrate subject to stated 
exceptions.

DATES: Effective Date: This rule is effective July 15, 2010.
    Comments Due Date: Comments must reach the Department of Homeland 
Security, Office of the Chief Procurement Officer, Acquisition Policy 
and Legislation, on or before August 16, 2010.

ADDRESSES: Please submit written comments, identified by agency name 
and docket number DHS-2009-0006, by one of the following methods:
    (1) Federal eRulemaking Portal: https://www.regulations.gov. To 
submit comments, follow instructions on www.regulations.gov and use 
docket number DHS-2009-0006.
    (2) By mail to the Department of Homeland Security, Office of the 
Chief Procurement Officer, Acquisition Policy and Legislation, ATTN: 
Timothy J. Frank, 245 Murray Drive SW., STOP 0415, Washington, DC 
20528-0415.

FOR FURTHER INFORMATION CONTACT: Timothy J. Frank, Senior Procurement 
Analyst, at (202) 447-5252 for clarification of content. Please cite 
HSAR Case 2009-003.

SUPPLEMENTARY INFORMATION: 
I. Request for Comments
II. Background
III. Discussion of Interim Rule
IV. Regulatory Analyses
    A. Executive Order 12866 Assessment
    B. Determination To Issue an Interim Rule
    C. Regulatory Flexibility Act
    D. Paperwork Reduction Act
    E. National Environmental Policy Act

I. Request for Comments

    Interested persons are invited to participate in this rulemaking by 
submitting written comments, views, or arguments on all or any aspect 
of this rule. Comments must be received by August 16, 2010. Comments 
should be organized by Homeland Security Acquisition Regulation (HSAR) 
Part, and address the specific section that is being commented on. All 
comments received will be posted without change to https://www.regulations.gov, including any personal information provided. See 
ADDRESSES above for information on how to submit comments. If you 
submit comments by mail, please submit them in an unbound format, on 
8\1/2\-by-11-inch paper, suitable for copying and optical character 
recognition. If you would like DHS to acknowledge receipt of comments 
submitted by mail, please enclose a self- addressed stamped post card 
or envelope. DHS will consider all comments and material received 
during the comment period. Access to the docket, including background 
documents and comments received, can be obtained at https://www.regulations.gov which contains relevant instructions under the FAQs tab 
on the home page.

II. Background

    The U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and 
Iraq Accountability Appropriations Act, 2007, Public Law 110-28, 
section 6405, 121 Stat. 112, 176 (2007) (codified as 6 U.S.C. 396; 
hereinafter ``Section 396''), limits firms that can serve as lead 
system integrators on DHS acquisitions of major systems. Such 
contractors may have no direct financial interest in the development or 
construction of any individual system or element of any system of 
systems they would integrate, unless one of the stated exceptions has 
been satisfied.
    One exception applies when the contractor is selected by a 
subcontractor as a lower-tier subcontractor, through a process over 
which the contractor had no control, to develop or construct an 
individual system or element of any system of systems the contractor 
would integrate. The other exception applies where the lead system 
integrator was selected using competitive procedures, DHS takes 
appropriate steps to prevent any organizational conflicts of interest 
in the selection process, and the Secretary of Homeland Security 
certifies these facts to various committees in Congress.
    Section 396 also requires DHS to update its acquisition regulations 
and to include a definition of ``lead system integrators'' modeled 
after that used by the Department of Defense and a specification of 
various types of contracts and fee structures that are appropriate for 
use with lead system integrators. This rule implements Section 396.
    This rule is issued by DHS's Chief Procurement Officer, who is the 
Senior Procurement Executive (SPE), see 41 U.S.C. 414 and DHS 
Delegation Number 0700, under authority of 5 U.S.C. 301-302, the Office 
of Federal Procurement Policy Act, Public Law 93-400, 88 Stat. 796 
(1974), including sections 22 and 25, 41 U.S.C. 418b and 421, and FAR 
48 CFR part 1, subpart 1.3.

III. Discussion of Interim Rule

    The interim rule revises (HSAR) 48 CFR 3002.101, 3007.106, 3009.5, 
3016.1, 3034.004, 3035.008, 3052.209-74 and 3052.209-75 to implement 
Public Law 110-28, Title VI, Section 6405.
    This rule changes the HSAR as follows:
     Amends the definition of ``Major system'' in (HSAR) 48 CFR 
3002.101 and removes the reference to the obsolete Management Directive 
(MD) 1400, Investment Review Process. The

[[Page 41098]]

definition of ``Major system'' for DHS has been revised in accordance 
with OMB Circular A-109, Major System Acquisitions, and FAR 2.101.
     Removes the ``Reserved'' identification from (HSAR) 48 CFR 
3007 and adds a reference to the newly-revised (HSAR) 48 CFR 3009.570 
in new (HSAR) 48 CFR 3007.106-70 to address limitations on the use of 
certain contractors as lead system integrators.
     Amends (HSAR) 48 CFR 3009 to add new section 3009.570 
which describes the limitations on the use of lead system integrators 
and provides prescriptions for a new provision and clause found at 
(HSAR) 48 CFR 3052.209-74 and 3052.209-75, respectively, for use in 
certain solicitations and contracts.
     Amends (HSAR) 48 CFR 3016 to add subpart 3016.1 to address 
selection of the most appropriate contract type and fee structure.
     Removes the (HSAR) 48 CFR 3034 ``Reserved'' identification 
and adds a reference in new section 3034.004 pointing to 3009.570 for 
the policy applicable to acquisition strategies in the use of lead 
system integrators.
     Amends (HSAR) 48 CFR 3035 to add section 3035.008, which 
refers to 3009.570 describing limitations on the use of certain 
contractors as lead system integrators.
     Adds the new provision at (HSAR) 48 CFR 3052.209-74, 
Limitations on Contractors Acting as Lead System Integrators.
     Adds the new clause at (HSAR) 48 CFR 3052.209-75, 
Prohibited Financial Interests for Lead System Integrators.

IV. Regulatory Analyses.

A. Executive Order 12866 Assessment

    This is a not a significant regulatory action under Section 6 of 
Executive Order 12866, Regulatory Planning and Review, dated September 
30, 1993. The Office of Management and Budget has not reviewed it under 
that Order. This rule is not a major rule under 5 U.S.C. 804. This rule 
helps to avoid organizational conflicts of interest in the award and 
performance of contracts awarded by the Department of Homeland Security 
that involve the use of lead system integrators. Additionally, it 
encourages the use of a larger number of contractors by establishing 
limitations on the extent of work that can be performed by lead system 
integrators.

B. Determination To Issue an Interim Rule

    DHS has determined that urgent and compelling reasons exist to 
promulgate this interim rule without prior opportunity for public 
comment. This action is necessary because it implements 6 U.S.C. 396, 
which specifies that the section applies to contracts entered into 
after July 1, 2007, and that DHS shall update the HSAR prior to that 
date. Nevertheless, pursuant to 41 U.S.C. 418(b) and FAR 1.501, DHS 
will consider public comments received in response to this interim rule 
with request for comment in the formation of a final rule.

C. Regulatory Flexibility Act

    The Department of Homeland Security certifies that the interim rule 
amending (HSAR) 48 CFR 3002.101, 3007.106, 3009.5, 3016.1, 3034.004, 
3035.008, 3052.209-74 and 3052.209-75, 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. The 
factual basis for certification is presented in the following analysis 
of the effects of this rule. Application of the rule is limited to 
offerors or contractors providing services as lead system integrators 
or considering the provision of such services. Lead system integrators 
are limited to contracts for the development or production of major 
systems, and often involve the contractor performing functions closely 
associated with inherently governmental functions.
    Under this interim rule, an entity that receives a contract as a 
lead system integrator cannot have any direct financial interest in the 
development or construction of any individual system or element of any 
system of systems while performing lead system integrator functions in 
the acquisition of a major system by the Department of Homeland 
Security under this contract. Lead system integrator contracts usually 
extend several years, and we estimate that a limited number of such 
contracts are in effect within DHS at any one time. Very few contracts 
of this character are awarded in any given year.
    The limitations on entities (both large and small) apply only to 
contractors who choose to perform work for the Department of Homeland 
Security as a lead system integrator. If an entity does believe that 
participating in the particular contract as lead system integrator 
would impose a significant economic impact on their operation, the 
entity would make a business decision whether the revenue generated by 
doing business with the Department of Homeland Security as a lead 
system integrator would provide a financial return sufficient to 
justify the restriction of not having a direct financial interest in 
the development or construction of any individual system or element of 
any system of systems while performing lead system integrator 
functions. Presumably, entities which do not receive the desired return 
on revenue to justify participating as lead system integrator would 
choose not to propose on the particular contract. Such an entity could 
still choose to propose as a subcontractor under the prime contract, 
thereby mitigating the effect even further.
    In addition, this rule is not discretionary; a statute requires 
that DHS address these matters in its acquisition regulation.

D. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

E. National Environmental Policy Act

    We have analyzed this rule under Department of Homeland Security 
Directive 023-01, which guides the Department in complying with the 
National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-
4370f), and have concluded that this action is one of a category of 
actions which do not individually or cumulatively have a significant 
effect on the human environment. This rule, which does not involve any 
extraordinary circumstances, is categorically excluded under paragraphs 
A3(b) and A3(d) in Table I of Appendix A of Directive 023-01 because it 
implements legislation by amending acquisition regulations without 
changing the regulation's environmental effect.

List of Subjects in 48 CFR Parts 3002, 3007, 3009, 3016, 3034, 
3035, and 3052

    Government procurement.

    Dated: June 30, 2010.
Richard K. Gunderson,
Acting Chief Procurement Officer, Department of Homeland Security.

0
Accordingly, DHS amends 48 CFR parts 3002, 3007, 3009, 3016, 3034, 
3035, and 3052 as follows:
0
1. Revise the authority citation for 48 CFR parts 3002, 3007, 3009, 
3016, 3034, 3035, and 3052 to read as follows:

    Authority:  5 U.S.C. 301-302, 41 U.S.C. 418b(a) and (b), 41 
U.S.C. 414, 48 CFR part 1, subpart 1.3, and DHS Delegation Number 
0700.

[[Page 41099]]

PART 3002--DEFINITIONS OF WORDS AND TERMS

0
2. Amend section 3002.101 by revising the definition of ``major 
system'' to read as follows:


3002.101  Definitions.

    Major system means, for DHS, that combination of elements that will 
function together to produce the capabilities required to fulfill a 
mission need, including hardware, equipment, software, or any 
combination thereof, but excluding construction or other improvements 
to real property. A DHS major system is one where the total lifecycle 
costs for the system are estimated to equal or exceed $300M (in 
constant 2009 dollars), or if the Deputy Secretary has designated a 
program or project as a major system. This corresponds to a DHS Level 1 
or 2 capital investment acquisition.
* * * * *

0
3. Add new part 3007 to read as follows:

PART 3007--ACQUISITION PLANNING

Subpart 3007.1--Acquisition Plans
Sec.
3007.106 Additional Requirements for Major Systems.
3007.106-70 Limitations on Lead System Integrators.

Subpart 3007.1--Acquisition Plans


3007.106  Additional Requirements for Major Systems.


3007.106-70  Limitations on Lead System Integrators.

    See (HSAR) 48 CFR 3009.570 for policy applicable to acquisition 
strategies that consider the use of lead system integrators.

PART 3009--CONTRACTOR QUALIFICATIONS

0
4. Add sections 3009.570 through 3009.570-4 to Subpart 3009.5 to read 
as follows:
Subpart 3009.5--Organizational and Consultant Conflicts of Interest
Sec.
3009.570 Limitations on contractors acting as lead system 
integrators.
3009.570-1 Definitions.
3009.570-2 Policy.
3009.570-3 Procedures.
3009.570-4 Solicitation provision and contract clause.

Subpart 3009.5--Organizational and Consultant Conflicts of Interest


3009.570  Limitations on contractors acting as lead system integrators.


3009.570-1  Definitions.

    ``Direct Financial Interest,'' as used in this section, is defined 
in the clause at HSAR 48 CFR 3052.209-75, Prohibited Financial 
Interests for Lead System Integrators.
    ``Lead system integrator,'' as used in this section, is defined in 
the clause at (HSAR) 48 CFR 3052.209-75, Prohibited Financial Interests 
for Lead System Integrators.


3009.570-2  Policy.

    (a) Except as provided in paragraph (b) of this subsection, under 6 
U.S.C. 396, no entity performing lead system integrator functions in 
the acquisition of a major system (See (HSAR) 48 CFR 3002.101) by DHS 
may have any direct financial interest in the development or 
construction of any individual system or element of any system of 
systems under the program in which the entity is performing lead system 
integrator functions.
    (b) The prohibition in paragraph (a) of this subsection does not 
apply if--
    (1) The Secretary of Homeland Security certifies to the Committees 
on Appropriations of the Senate and the House of Representatives, the 
Committee on Homeland Security of the House of Representatives, the 
Committee on Transportation and Infrastructure of the House of 
Representatives, the Committee on Homeland Security and Governmental 
Affairs of the Senate, and the Committee on Commerce, Science and 
Transportation of the Senate that--
    (i) The entity was selected by DHS as a contractor to develop or 
construct the system or element concerned through the use of 
competitive procedures, and
    (ii) DHS took appropriate steps to prevent any organizational 
conflict of interest in the selection process; or
    (2) The entity was selected by a subcontractor to serve as a lower-
tier subcontractor, through a process over which the entity exercised 
no control.
    (c) CONSTRUCTION--Nothing in this section 3009.570 shall be 
construed to preclude an entity described in paragraph (a) of this 
subsection from performing work necessary to integrate two or more 
individual systems or elements of a system of systems with each other.


3009.570-3  Procedures.

    In making a responsibility determination before awarding a contract 
for the acquisition of a major system, the contracting officer shall--
    (a) Determine whether the prospective contractor meets the 
definition of ``lead system integrator'';
    (b) Consider all information regarding the prospective contractor's 
direct financial interests in view of the prohibition at (HSAR) 48 CFR 
3009.570-2(a); and
    (c) Apply the following procedures:
    (1) After assessing the offeror's direct financial interests in the 
development or construction of any individual system or element of any 
system of systems, if the offeror--
    (i) Has no direct financial interest in such systems, the 
contracting officer shall document the contract file to that effect and 
may then further consider the offeror for award of the contract;
    (ii) Has a direct financial interest in such systems, but the 
exception in (HSAR) 3009.570-2(b)(2) applies, the contracting officer 
shall document the contract file to that effect and may then further 
consider the offeror for award of the contract;
    (iii) Has a direct financial interest in such systems and the 
exception in (HSAR) 3009.570-2(b)(2) does not apply, but the conditions 
in (HSAR) 3009.570-2(b)(1)(i) and (ii) do apply, the contracting 
officer--
    (A) Shall document the contract file to that effect;
    (B) May, in coordination with program officials, request an 
exception for the offeror from the Secretary of Homeland Security, in 
accordance with Homeland Security Acquisition Manual section 3009.570; 
and
    (C) Shall not award to the offeror unless the Secretary of Homeland 
Security grants the exception and provides the required certification 
to Congress; or
    (iv) Has a direct financial interest in such systems and the 
exceptions in (HSAR) 3009.570-2(b)(1) and (2) do not apply, the 
contracting officer shall not award to the offeror.


3009.570-4  Solicitation provision and contract clause.

    (a) Use the provision at (HSAR) 48 CFR 3052.209-74, Limitations on 
Contractors Acting as Lead System Integrators, in solicitations for the 
acquisition of a major system when the acquisition strategy envisions 
the use of a lead system integrator.
    (b) Use the clause at (HSAR) 48 CFR 3052.209-75, Prohibited 
Financial Interests for Lead System Integrators--
    (1) In solicitations that include the provision at (HSAR) 48 CFR 
3052.209-74; and
    (2) In contracts when the contractor will fill the role of a lead 
system

[[Page 41100]]

integrator for the acquisition of a major system.

PART 3016--TYPES OF CONTRACTS

0
5. Add subpart 3016.1 to read as follows:
Subpart 3016.1--Selecting Contract Types
Sec.
3016.170 Contracts with Lead System Integrators.

Subpart 3016.1--Selecting Contract Types


3016.170  Contracts with Lead System Integrators.

    The contracting officer should negotiate the most appropriate 
contract type and fee structure based on risks inherent in the work to 
be performed, in accordance with (FAR) 48 CFR 16.103(a). Contract type 
and fee structure should be commensurate with the work to be performed 
and the risks assumed. Worthwhile existing guidance on contract type 
selection, pricing, and fee structures, such as exists in Vol. I, Ch. 4 
of the Contract Reference Pricing Guides [https://www.acq.osd.mil/dpap/cpf/docs/contract_pricing_finance_guide/vol4_ch1.pdf] can be 
consulted to determine the appropriate contract type and fee structure 
for use in varied contracts with lead system integrators in the 
production, fielding and sustainment of complex systems.

0
6. Add part 3034 to read as follows:

PART 3034--MAJOR SYSTEM ACQUISITION

Subpart 3034.0--General
Sec.
3034.004 Acquisition strategy.


3034.0  General


3034.004  Acquisition strategy.

    See (HSAR) 48 CFR 3009.570 for policy applicable to acquisition 
strategies that consider the use of lead system integrators.

PART 3035--RESEARCH AND DEVELOPMENT CONTRACTING

0
7. Add section 3035.008 to read as follows:


3035.008  Evaluation for award.

    See (HSAR) 48 CFR 3009.570 for limitations on the award of 
contracts to contractors acting as lead system integrators.

PART 3052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Sections 3052.209-74 and 3052.209-75 are added to read as follows:


3052.209-74  Limitations on Contractors Acting as Lead System 
Integrators.

    As prescribed in (HSAR) 48 CFR 3009.570-4(a), use the following 
provision:

LIMITATIONS ON CONTRACTORS ACTING AS LEAD SYSTEM INTEGRATORS (JUL 2010)

    (a) Definitions. ``Direct financial interest,'' ``lead system 
integrator,'' ``lead system integrator with system responsibility,'' 
and ``lead system integrator without system responsibility,'' as 
used in this provision, have the meanings given in the clause of 
this solicitation entitled ``Prohibited Financial Interests for Lead 
System Integrators'' ((HSAR) 48 CFR 3052.209-75).
    (b) General. Unless an exception is granted, no contractor 
performing lead system integrator functions in the acquisition of a 
major system by the Department of Homeland Security may have any 
direct financial interest in the development or construction of any 
individual system or element of any system of systems.
    (c) Representations. (1) The offeror represents that it does [ ] 
does not [ ] propose to perform this contract as a lead system 
integrator with system responsibility.
    (2) The offeror represents that it does [ ] does not [ ] propose 
to perform this contract as a lead system integrator without system 
responsibility.
    (3) If the offeror answered in the affirmative in paragraph 
(c)(1) or (2) of this provision, the offeror represents that it does 
[ ] does not [ ] have any direct financial interest in the 
development or construction of any system(s), subsystem(s), system 
of systems, element of any system of systems, or services it 
proposes or intends to seek to satisfy this solicitation.
    (d) If the offeror answered in the affirmative in paragraph 
(c)(3) of this provision, the offeror should contact the Contracting 
Officer for guidance on whether an exception may apply and what 
responsibilities the offeror may have in qualifying for an 
exception.
    (e) If the offeror does have a direct financial interest, the 
offeror shall be prohibited from receiving an award under this 
solicitation, unless:
    (1) The offeror submits to the Contracting Officer appropriate 
evidence that the offeror was selected by a subcontractor to serve 
as a lower-tier subcontractor through a process over which the 
offeror exercised no control; or
    (2) the conditions described in (HSAR) 48 CFR 3009.570-
2(b)(1)(i) and (ii) exist, after an opportunity is afforded to the 
offeror to provide information or commitments as may be necessary to 
meet (HSAR) 48 CFR 3009.570-2(b)(1)(ii), assuming any such 
information or commitment will allow DHS to meet that standard.
    (f) This provision implements the requirements of 6 U.S.C. 396, 
as added by Section 6405 of the U.S. Troop Readiness, Veterans' 
Care, Katrina Recovery, And Iraq Accountability Appropriations Act, 
2007 (Pub. L. 110-28).


(End of provision)


3052.209-75  Prohibited Financial Interests for Lead System 
Integrators.

    As prescribed in (HSAR) 48 CFR 3009.570-4(b), use the following 
clause:

PROHIBITED FINANCIAL INTERESTS FOR LEAD SYSTEM INTEGRATORS (JUL 2010)

    (a) Definitions. As used in this clause--
    (1) ``Direct financial interest,'' for the purpose of this 
clause and contract, and subject to exceptions set forth 6 U.S.C. 
396(b) as implemented, means:
    (i) Developing or constructing any individual system or element 
of any system of systems for which the Contractor is the lead system 
integrator;
    (ii) Owning or being in a position to exert corporate control 
over a subcontractor at any level under the prime contract;
    (iii) Owning, or being in a position to exert corporate control 
over an entity that either--
    (A) Is a subcontractor at any level under the prime contract, or
    (B) Owns or is in a position to control another entity that is a 
subcontractor at any level under the prime contract; and
    (iv) Participating or sharing in the profits of another firm's 
development or construction of any individual system or element of 
any system of systems for which the Contractor is the lead system 
integrator or agreeing to participate in the profits of the firm 
from such development or construction.
    (2) ``Lead system integrator'' includes ``lead system integrator 
with system responsibility'' and ``lead system integrator without 
system responsibility.''
    (3) ``Lead system integrator with system responsibility'' means 
a prime contractor for the development or production of a major 
system, if the prime contractor is not expected at the time of award 
to perform a substantial portion of the work on the system and the 
major subsystems.
    (4) ``Lead system integrator without system responsibility'' 
means a prime contractor under a contract for the procurement of 
services, the primary purpose of which is to perform acquisition 
functions closely associated with inherently governmental functions 
(see section 7.503(d) of the Federal Acquisition Regulation) with 
regard to the development or production of a major system.
    (5) The phrase ``substantial portion of the work,'' as used in 
the definition of ``lead system integrator with system 
responsibility,'' may relate to the dollar value of the effort or to 
the criticality of the effort performed.
    (b) Limitations. The Contracting Officer has determined that the 
Contractor meets the definition of lead system integrator with [ ] 
without [ ] system responsibility. Unless an exception is granted, 
the Contractor shall not

[[Page 41101]]

have any direct financial interest in the development or 
construction of any individual system or element of any system of 
systems while performing lead system integrator functions in the 
acquisition of a major system by the Department of Homeland Security 
under this contract.
    (c) Agreement. The Contractor agrees that during performance of 
this contract it will not acquire any direct financial interest as 
described in paragraph (b) of this clause, or, if it does acquire or 
plan to acquire such interest, it will immediately notify the 
Contracting Officer. The Contractor further agrees to provide to the 
Contracting Officer all relevant information regarding the change in 
financial interests so that the Contracting Officer can determine 
whether an exception applies or whether the Contractor will be 
allowed to continue performance on this contract. If an 
organizational conflict of interest in the performance of this 
contract that is attributable to the Contractor's direct financial 
interest cannot be avoided, eliminated, or mitigated to the 
Contracting Officer's satisfaction, the Contracting Officer may 
terminate this contract for default or may take other remedial 
measures as appropriate in the Contracting Officer's sole 
discretion.
    (d) Notwithstanding any other clause of this contract, if the 
Contracting Officer determines that the Contractor misrepresented 
its financial interests at the time of award or has violated the 
agreement in paragraph (c) of this clause, the Government may 
terminate this contract for default or may take other remedial 
measures as appropriate in the Contracting Officer's sole 
discretion.
    (e) This clause implements the requirements of 6 U.S.C. 396, as 
added by Section 6405 of the U.S. Troop Readiness, Veterans' Care, 
Katrina Recovery, And Iraq Accountability Appropriations Act, 2007 
(Pub. L. 110-28).


(End of clause)

[FR Doc. 2010-16582 Filed 7-14-10; 8:45 am]
BILLING CODE 9110-9B-P