Adoption of Recommendations, 48789-48796 [2011-20138]
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Notices
Federal Register
Vol. 76, No. 153
Tuesday, August 9, 2011
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contains documents other than rules or
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ADMINISTRATIVE CONFERENCE OF
THE UNITED STATES
Adoption of Recommendations
Administrative Conference of
the United States.
ACTION: Notice.
AGENCY:
The Administrative
Conference of the United States adopted
four recommendations at its Fifty-fourth
Plenary Session. The appended
recommendations address electronic
rulemaking, rulemaking comments,
contractor ethics, and video hearings.
FOR FURTHER INFORMATION CONTACT: For
Recommendation 2011–1, Emily
Schleicher Bremer, Attorney Advisor;
for Recommendations 2011–2 and
2011–3, Reeve Bull, Attorney Advisor;
and for Recommendation 2011–4,
Funmi Olorunnipa, Attorney Advisor.
For all four recommendations the
address and phone number is:
Administrative Conference of the
United States, Suite 706 South, 1120
20th Street, NW., Washington, DC
20036; Telephone 202–480–2080.
SUPPLEMENTARY INFORMATION: The
Administrative Conference Act, 5 U.S.C.
591–596, established the Administrative
Conference of the United States. The
Conference studies the efficiency,
adequacy, and fairness of the
administrative procedures used by
Federal agencies and makes
recommendations for improvements to
agencies, the President, Congress, and
the Judicial Conference of the United
States (5 U.S.C. 594(1)). For further
information about the Conference and
its activities, see https://www.acus.gov.
At its Fifty-fourth Plenary Session,
held June 16–17, 2011, the Assembly of
the Conference adopted four
recommendations. Recommendation
2011–1, ‘‘Legal Considerations in
e-Rulemaking,’’ provides guidance on
issues that have arisen in light of the
change from paper to electronic
rulemaking procedures. It recommends
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that agencies (1) consider using content
analysis software to reduce the need for
agency staff to spend time reading
identical or nearly identical comments,
(2) provide timely, online access to all
studies and reports upon which they
rely, (3) implement appropriate
procedures for the handling of
confidential, trade secret, or other
protected information, (4) consider the
potential need to revise Privacy Act
notices and recordkeeping schedules to
accommodate e-Rulemaking, and (5)
replace paper files with electronic
records in the rulemaking docket and in
the record for appellate review.
Recommendation 2011–2,
‘‘Rulemaking Comments,’’ recognizes
innovations in the commenting process
that could promote public participation
and improve rulemaking outcomes. The
recommendation encourages agencies
(1) to provide public guidance on how
to submit effective comments, (2) to
leave comment periods open for
sufficient periods, generally at least 60
days for significant regulatory actions
and 30 days for other rulemakings, (3)
to post comments received online
within a specified period after
submission, (4) to announce policies for
anonymous and late-filed comments,
and (5) to consider when reply and
supplemental comment periods are
useful.
Recommendation 2011–3,
‘‘Compliance Standards for Government
Contractor Employees—Personal
Conflicts of Interest and Use of Certain
Non-Public Information’’ responds to
agencies’ need to protect integrity and
the public interest when they rely on
contractors. The Conference
recommends that the Federal
Acquisition Regulatory Council provide
model language for agency contracting
officers to use when negotiating or
administering contracts that pose
particular risks that employees of
contractors could have personal
conflicts of interest or could misuse
non-public information.
Recommendation 2011–4, ‘‘Agency
Use of Video Hearings: Best Practices
and Possibilities for Expansion,’’
encourages agencies, especially those
with a high volume of cases, to consider
the use of video teleconferencing
technology for hearings and other
administrative proceedings. The
recommendation sets forth factors
agencies should consider when deciding
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whether to use video teleconferencing
and best practices for the
implementation of this technology.
The Appendix (below) sets forth the
full text of these four recommendations.
The Conference will transmit them to
affected agencies, to appropriate
committees of the United States
Congress, and (in the case of 2011–1) to
the Judicial Conference of the United
States. The recommendations are not
binding, so the relevant agencies, the
Congress and the courts will make
decisions on their implementation.
The Conference based these
recommendations on research reports
that it has posted at: https://
www.acus.gov/events/54th-plenarysession/. The transcript of the Plenary
Session is available at the same web
address.
Dated: August 4, 2011.
Paul R. Verkuil,
Chairman.
Appendix—Recommendations of the
Administrative Conference of the
United States
Administrative Conference Recommendation
2011–1
Legal Considerations in e-Rulemaking
Adopted June 16, 2011
Agencies are increasingly turning to
e-Rulemaking to conduct and improve
regulatory proceedings. ‘‘E-Rulemaking’’ has
been defined as ‘‘the use of digital
technologies in the development and
implementation of regulations’’ 1 before or
during the informal rulemaking process, i.e.,
notice-and-comment rulemaking under the
Administrative Procedure Act (APA). It may
include many types of activities, such as
posting notices of proposed and final
rulemakings, sharing supporting materials,
accepting public comments, managing the
rulemaking record in electronic dockets, and
hosting public meetings online or using
social media, blogs, and other web
applications to promote public awareness of
and participation in regulatory proceedings.
A system that brings several of these
activities together is operated by the
eRulemaking program management office
(PMO), which is housed at the
Environmental Protection Agency and
funded by contributions from partner Federal
agencies. This program contains two
components: Regulations.gov, which is a
public Web site where members of the public
1 Cary Coglianese, E-Rulemaking: Information
Technology and the Regulatory Process at 2 (2004)
(working paper), https://lsr.nellco.org/upenn_wps/
108.
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can view and comment on regulatory
proposals, and the Federal Docket
Management System (FDMS), which includes
FDMS.gov, a restricted-access Web site
agency staff can use to manage their internal
files and the publicly accessible content on
Regulations.gov. According to the Office of
Management and Budget, FDMS ‘‘provides
* * * better internal docket management
functionality and the ability to publicly post
all relevant documents on regulations.gov
(e.g., Federal Register documents, proposed
rules, notices, supporting analyses, and
public comments).’’ 2 Electronic docketing
also provides significant costs savings to the
Federal government, while enabling agencies
to make proposed and final regulations,
supplemental materials, and public
comments widely available to the public.
These incentives and the statutory prompt of
the E-Government Act of 2002, which
required agencies to post rules online, accept
electronic comments on rules, and keep
electronic rulemaking dockets,3 have helped
ensure that over 90% of agencies post
regulatory material on Regulations.gov.4
Federal regulators, looking to embrace the
benefits of e-Rulemaking, face uncertainty
about how established legal requirements
apply to the web. This uncertainty arises
because the APA, enacted in 1946, still
provides the basic framework for notice-andcomment rulemaking. While this framework
has gone largely unchanged, the
technological landscape has evolved
dramatically.
The Conference has therefore examined
some of the legal issues agencies face in eRulemaking and this recommendation
provides guidance on these issues. The
Conference has examined the following
issues:
• Processing large numbers of similar or
identical comments. The Conference has
considered whether agencies have a legal
obligation to ensure that a person reads every
individual comment received, even when
comment-processing software reports that
multiple comments are identical or nearly
identical.
• Preventing the publication of
inappropriate or protected information. The
Conference has considered whether agencies
have a legal obligation to prevent the
publication of certain types of information
that may be included in comments submitted
in e-Rulemaking.
2 Office of Mgmt. & Budget, Executive Office of
the President, FY 2009 Report to Congress on the
Implementation of the E-Government Act of 2002,
at 10 (2009), https://www.whitehouse.gov/sites/
default/files/omb/assets/egov_docs/2009_egov_
report.pdf.
3 See Public Law 107–347 § 206.
4 Improving Electronic Dockets on
Regulations.gov and the Federal Docket
Management System: Best Practices for Federal
Agencies, p. D–1 (Nov. 30, 2010), https://
www.regulations.gov/exchange/sites/default/files/
doc_files/20101130_eRule_Best_Practices_
Document_rev.pdf. Some agencies rely on their own
electronic docketing systems, such as the Federal
Trade Commission (which uses a system called
CommentWorks) and the Federal Communications
Commission, which has its own electronic
comment filing system (https://fjallfoss.fcc.gov/
ecfs/).
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• Efficiently compiling and maintaining a
complete rulemaking docket. The Conference
has considered issues related to the
maintenance of rulemaking dockets in
electronic form, including whether an agency
is obliged to retain paper copies of comments
once they are scanned to electronic format
and how an agency that maintains its
comments files electronically should handle
comments that cannot easily be reduced to
electronic form, such as physical objects.
• Preparing an electronic administrative
record for judicial review. The Conference
has considered issues regarding the record on
review in e-Rulemaking proceedings.
This recommendation seeks to provide all
agencies, including those that do not
participate in Regulations.gov, with guidance
to navigate some of the issues they may face
in e-Rulemaking.5 With respect to the issues
addressed in this recommendation, the APA
contains sufficient flexibility to support eRulemaking and does not need to be
amended for these purposes at the present
time. Although the primary goal of this
recommendation is to dispel some of the
legal uncertainty agencies face in eRulemaking, where the Conference finds that
a practice is not only legally defensible, but
also sound policy, it recommends that
agencies use it. It bears noting, however, that
agencies may face other legal issues in eRulemaking, particularly when using wikis,
blogs, or similar technological approaches to
solicit public views, that are not addressed in
this recommendation. Such issues, and other
broad issues not addressed herein, are
beyond the scope of this recommendation,
but warrant further study.6
Recommendation
Considering Comments
1. Given the APA’s flexibility, agencies
should:
(a) Consider whether, in light of their
comment volume, they could save substantial
time and effort by using reliable comment
analysis software to organize and review
public comments.
(1) While 5 U.S.C. 553 requires agencies to
consider all comments received, it does not
require agencies to ensure that a person reads
each one of multiple identical or nearly
identical comments.
(2) Agencies should also work together and
with the eRulemaking program management
office (PMO), to share experiences and best
practices with regard to the use of such
software.
5 This report follows up on previous work of the
Administrative Conference. On October 19, 1995,
Professor Henry H. Perritt, Jr. delivered a report
entitled ‘‘Electronic Dockets: Use of Information
Technology in Rulemaking and Adjudication.’’
Although never published, the Perritt Report
continues to be a helpful resource and is available
at: https://www.kentlaw.edu/faculty/rstaudt/classes/
oldclasses/internetlaw/casebook/electronic
_dockets.htm.
6 The Conference has a concurrent
recommendation which focuses on issues relating
to the comments phase of the notice-and-comment
process independent of the innovations introduced
by e-Rulemaking. See Administrative Conference of
the United States, Recommendation 2011–2,
Rulemaking Comments.
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(b) Work with the eRulemaking PMO and
its interagency counterparts to explore
providing a method, including for members
of public, for flagging inappropriate or
protected content, and for taking appropriate
action thereon.
(c) Work with the eRulemaking PMO and
its interagency counterparts to explore
mechanisms to allow a commenter to
indicate prior to or upon submittal that a
comment filed on Regulations.gov contains
confidential or trade secret information.
(d) Confirm they have procedures in place
to review comments identified as containing
confidential or trade secret information.
Agencies should determine how such
information should be handled, in
accordance with applicable law.
Assessing Privacy Concerns
2. Agencies should assess whether the
Federal Docket Management System (FDMS)
System of Records Notice provides sufficient
Privacy Act compliance for their uses of
Regulations.gov. This could include working
with the eRulemaking PMO to consider
whether changes to the FDMS System of
Records Notice are warranted.
Maintaining Rulemaking Dockets in
Electronic Form
3. The APA provides agencies flexibility to
use electronic records in lieu of paper
records. Additionally, the National Archives
and Records Administration has determined
that agencies are not otherwise legally
required, at least under certain
circumstances, to retain paper copies of
comments properly scanned and included in
an approved electronic recordkeeping
system. The circumstances under which such
destruction is permitted are governed by each
agency’s records schedules. Agencies should
examine their record schedules and maintain
electronic records in lieu of paper records as
appropriate.
4. To facilitate the comment process,
agencies should include in a publicly
available electronic docket of a rulemaking
proposal all studies and reports on which the
proposal for rulemaking draws, as soon as
practicable, except to the extent that they
would be protected from disclosure in
response to an appropriate Freedom of
Information Act request.7
5. Agencies should include in the
electronic docket a descriptive entry or
photograph for all physical objects received
during the comment period.
Providing Rulemaking Records to Courts for
Judicial Review
6. In judicial actions involving review of
agency regulations, agencies should work
with parties and courts early in litigation to
provide electronic copies of the rulemaking
record in lieu of paper copies, particularly
where the record is of substantial size. Courts
should continue their efforts to embrace
electronic filing and minimize requirements
to file paper copies of rulemaking records.
7 See also Exec. Order No. 13,563, § 2(b), 76 FR
3,821 (Jan. 18, 2011) (requiring agencies to provide
timely online access to ‘‘relevant scientific and
technical findings’’ in the rulemaking docket on
regulations.gov).
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The Judicial Conference should consider
steps to facilitate these efforts.
Complying With Recordkeeping
Requirements in e-Rulemaking
7. In implementing their responsibilities
under the Federal Records Act, agencies
should ensure their records schedules
include records generated during eRulemaking.
Administrative Conference Recommendation
2011–2
Rulemaking Comments
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Adopted June 16, 2011
One of the primary innovations associated
with the Administrative Procedure Act
(‘‘APA’’) was its implementation of a
comment period in which agencies solicit the
views of interested members of the public on
proposed rules.1 The procedure created by
the APA has come to be called ‘‘notice-andcomment rulemaking,’’ and comments have
become an integral part of the overall
rulemaking process.
In a December 2006 report titled ‘‘Interim
Report on the Administrative Law, Process
and Procedure Project for the 21st Century,’’
the Subcommittee on Commercial and
Administrative Law of the United States
House of Representatives’ Committee on the
Judiciary identified a number of questions
related to rulemaking comments as areas of
possible study by the Administrative
Conference.2 These questions include:
• Should there be a required, or at least
recommended, minimum length for a
comment period?
• Should agencies immediately make
comments publicly available? Should they
permit a ‘‘reply comment’’ period?
• Must agencies reply to all comments,
even if they take no further action on a rule
for years? Do comments eventually become
sufficiently ‘‘stale’’ that they could not
support a final rule without further
comment?
• Under what circumstances should an
agency be permitted to keep comments
confidential and/or anonymous?
• What effects do comments actually have
on agency rules?
The Conference has studied these
questions and other, related issues
concerning the ‘‘comment’’ portion of the
notice-and-comment rulemaking process.
The Conference also has a concurrent
recommendation that deals with separate
matters, focusing specifically on legal issues
implicated by the rise of e-rulemaking. See
Administrative Conference of the United
States, Recommendation 2011–1, Legal
Considerations in e-Rulemaking.
The Conference believes that the comment
process established by the APA is
1 5 U.S.C. 553; see also Antonin Scalia, Judicial
Deference to Administrative Interpretations of Law,
1989 Duke L.J. 511, 514 (1989) (describing the
‘‘notice-and-comment procedures for rulemaking’’
under the APA as ‘‘probably the most significant
innovation of the legislation’’).
2 Subcomm. on Commercial & Admin. Law of the
Comm. on the Judiciary, 109th Cong., Interim Rep.
on the Admin. Law, Process and Procedure Project
for the 21st Century at 3–5 (Comm. Print 2006).
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fundamentally sound. Nevertheless, certain
innovations in the commenting process could
allow that process to promote public
participation and improve rulemaking
outcomes more effectively. In this light, the
Conference seeks to highlight a series of ‘‘best
practices’’ designed to increase the
opportunities for public participation and
enhance the quality of information received
in the commenting process. The Conference
recognizes that different agencies have
different approaches to rulemaking and
therefore recommends that individual
agencies decide whether and how to
implement the best practices addressed.
In identifying these best practices, the
Conference does not intend to suggest that it
has exhausted the potential innovations in
the commenting process. Individual agencies
and the Conference itself should conduct
further empirical analysis of notice-andcomment rulemaking, should study the
effects of the proposed recommendations to
the extent they are implemented, and should
adjust and build upon the proposed
processes as appropriate.
Recommendation
1. To promote optimal public participation
and enhance the usefulness of public
comments, the eRulemaking Project
Management Office should consider
publishing a document explaining what
types of comments are most beneficial and
listing best practices for parties submitting
comments. Individual agencies may publish
supplements to the common document
describing the qualities of effective
comments. Once developed, these documents
should be made publicly available by posting
on the agency Web site, Regulations.gov, and
any other venue that will promote
widespread availability of the information.
2. Agencies should set comment periods
that consider the competing interests of
promoting optimal public participation while
ensuring that the rulemaking is conducted
efficiently. As a general matter, for
‘‘[s]ignificant regulatory action[s]’’ as defined
in Executive Order 12,866, agencies should
use a comment period of at least 60 days. For
all other rulemakings, they should generally
use a comment period of at least 30 days.
When agencies, in appropriate
circumstances, set shorter comment periods,
they are encouraged to provide an
appropriate explanation for doing so.3
3. Agencies should adopt stated policies of
posting public comments to the Internet
within a specified period after submission.
Agencies should post all electronically
submitted comments on the Internet and
3 See also Administrative Conference of the
United States, Recommendation 93–4, Improving
the Environment for Agency Rulemaking (1993)
(‘‘Congress should consider amending section 553
of the APA to * * * [s]pecify a comment period of
‘no fewer than 30 days.’ ’’); Exec. Order No. 13,563,
76 FR 3,821, 3,821–22 (Jan. 18, 2011) (‘‘To the
extent feasible and permitted by law, each agency
shall afford the public a meaningful opportunity to
comment through the Internet on any proposed
regulation, with a comment period that should
generally be at least 60 days.’’).
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should also scan and post all comments
submitted in paper format.4
4. The eRulemaking Project Management
Office and individual agencies should
establish and publish policies regarding the
submission of anonymous comments.
5. Agencies should adopt and publish
policies on late comments and should apply
those policies consistently within each
rulemaking. Agencies should determine
whether or not they will accept late
submissions in a given rulemaking and
should announce the policy both in publicly
accessible forums (e.g., the agency’s Web site,
Regulations.gov) and in individual Federal
Register notices including requests for
comments. The agency may make clear that
late comments are disfavored and will only
be considered to the extent practicable.5
6. Where appropriate, agencies should
make use of reply comment periods or other
opportunities for receiving public input on
submitted comments, after all comments
have been posted. An opportunity for public
input on submitted comments can entail a
reply period for written comments on
submitted comments, an oral hearing, or
some other means for input on comments
received.6
7. Although agencies should not
automatically deem rulemaking comments to
have become stale after any fixed period of
time, agencies should closely monitor their
rulemaking dockets, and, where an agency
believes the circumstances surrounding the
rulemaking have materially changed or the
rulemaking record has otherwise become
stale, consider the use of available
4 See also Office of Information & Regulatory
Affairs, Memorandum for the President’s
Management Council on Increasing Openness in the
Rulemaking Process—Improving Electronic Dockets
at 2 (May 28, 2010) (‘‘OMB expects agencies to post
public comments and public submissions to the
electronic docket on Regulations.gov in a timely
manner, regardless of whether they were received
via postal mail, email, facsimile, or web form
documents submitted directly via
Regulations.gov.’’).
5 See, e.g., Highway-Rail Grade Crossing; Safe
Clearance, 76 Fed. Reg. 5,120, 5,121 (Jan. 28, 2011)
(Department of Transportation notice of proposed
rulemaking announcing that ‘‘[c]omments received
after the comment closing date will be included in
the DOCKET, and we will consider late comments
to the extent practicable’’).
6 See also Administrative Conference of the
United States, Recommendation 76–3, Procedures
in Addition to Notice & the Opportunity for
Comment in Informal Rulemaking (1976)
(recommending a second comment period in
proceedings in which comments or the agency’s
responses thereto ‘‘present new and important
issues or serious conflicts of data’’); Administrative
Conference of the United States, Recommendation
72–5, Procedures for the Adoption of Rules of
General Applicability (1972) (recommending that
agencies consider providing an ‘‘opportunity for
parties to comment on each other’s oral or written
submissions); Office of Information & Regulatory
Affairs, Memorandum for the Heads of Executive
Departments and Agencies, and of Independent
Regulatory Agencies, on Executive Order 13,563,
M–11–10, at 2 (Feb. 2, 2011) (‘‘[Executive Order
13,563] seeks to increase participation in the
regulatory process by allowing interested parties the
opportunity to react to (and benefit from) the
comments, arguments, and information of others
during the rulemaking process itself.’’).
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mechanisms such as supplemental notices of
proposed rulemaking to refresh the
rulemaking record.
Administrative Conference Recommendation
2011–3
Compliance Standards for Government
Contractor Employees—Personal Conflicts of
Interest and Use of Certain Non-Public
Information
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Adopted June 17, 2011
The Conference believes that it is
important to ensure that services provided by
government contractors—particularly those
services that are similar to those performed
by government employees—are performed
with integrity and that the public interest is
protected. In that light, the Conference
recommends that the Federal Acquisition
Regulatory Council (‘‘FAR Council’’)
promulgate model language in the Federal
Acquisition Regulation (‘‘FAR’’) 1 for agency
contracting officers to use when negotiating
or administering contracts that pose
particular risks of government contractor
employee personal conflicts of interest or
misuse of non-public information. In order to
ensure that, in its effort to protect the public
interest, this recommendation does not create
excessive compliance burdens for contractors
or unnecessary monitoring costs for agencies,
the Conference is limiting its
recommendation to those areas that it has
identified as the top priorities—contractor
employees who perform certain activities
identified as posing a high risk of personal
conflicts of interest or misuse of non-public
information.
Background
In recent years, the Federal government has
increasingly relied upon private contractors
to perform services previously provided inhouse by civil servants.2 Despite this
expansion in the use of government
contractors, there continues to be a
substantial disparity between the ethics rules
regulating government employees and those
applicable to government contractor
1 The FAR is a set of uniform policies and
procedures that all executive agencies must use in
procurements from sources outside of the
government. 48 CFR 1.101. All executive agencies
must comply with the FAR when purchasing from
contractors, though individual agencies can also
adopt agency-specific supplements to the FAR by
regulation or provide additional requirements in
individual contracts. See, e.g., 48 CFR ch. 2
(Defense Federal Acquisition Regulation
Supplement for the Department of Defense). The
FAR Council consists of the Administrator for
Federal Procurement Policy, the Secretary of
Defense, the Administrator of National Aeronautics
and Space, and the Administrator of General
Services. See 41 U.S.C. 1102, 1302.
2 Specifically, Federal spending on service
contracts increased by 85% in inflation adjusted
dollars between 1983 and 2007. Kathleen Clark,
Ethics for an Outsourced Government Table 3
(forthcoming), available at https://www.acus.gov/
research/the-conference-current-projects/
government-contractor-ethics. Over the same
period, the number of executive branch employees
declined by 18%. Id. In this light, the relative
`
significance of the contractor workforce vis-a-vis
the Federal employee workforce has increased
substantially in the last few decades.
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employees. Whereas an array of statutes and
regulations creates an extensive ethics regime
for government employees, the rules
currently applicable to contractor employees
vary significantly by agency.
Government employees are subject to
various statutes and regulations that create a
comprehensive ethics regime governing,
among other things, their financial interests,
use of government resources, outside
activities, and activities in which they may
engage after leaving government.3 By
contrast, the compliance standards
applicable to contractor employees are much
less comprehensive and can vary
significantly from contract to contract. A
handful of statutes apply to contractor
employees and prohibit their offering bribes
or illegal gratuities,4 serving as foreign
agents,5 disclosing procurement
information,6 or offering or receiving
kickbacks.7 The FAR requires contracting
officers to identify organizational conflicts of
interest (in which the contractor has a
corporate interest that may bias its judgment
or the advice it provides to the government)
and either address or waive such conflicts.8
The FAR also requires that contracting firms
that have entered into one or more
government contracts valued in excess of $5
million and requiring 120 days or more to
perform have in place ‘‘codes of business
ethics and conduct.’’ 9 A handful of agencies
have adopted ethics regulations
supplementing the FAR,10 and still other
agencies impose additional ethics
requirements by contract.11
Finally, certain contracting firms, most
notably some performing work for the
3 Id.
at 7.
U.S.C. 201(b)–(c).
5 Id. § 219.
6 41 U.S.C. § 2102.
7 Id. §§ 8701–07 (prohibiting kickbacks to
contractors, subcontractors, and their employees).
8 48 CFR 9.500 et seq. The FAR provision applies
only to organizational conflicts of interest, wherein
the firm itself possesses such business interests, and
not to personal conflicts of interest, wherein one of
the firm’s employees has a business or financial
interest that could influence his or her
decisionmaking in performing a contract.
9 Id. §§ 3.1000–04. These codes must ensure that
the firm has adequate systems for detecting,
preventing, and reporting illegal conduct and
violations of the civil False Claims Act and that it
‘‘[o]therwise promote[s] an organizational culture
that encourages ethical conduct.’’ Id. § 52.203–13.
The FAR does not dictate, however, what types of
potential ethical misconduct the internal corporate
codes must address.
10 Agencies that have adopted ethics regimes
supplementing those contained in the FAR include
the Department of Energy, Department of Health
and Human Services, Department of the Treasury,
Environmental Protection Agency, Nuclear
Regulatory Commission, and United States Agency
for International Development. Clark, supra note 2,
Table VII. These supplemental regimes are not
comprehensive, however, and generally apply only
to specific types of contracts. By contrast, the
Federal Deposit Insurance Corporation, though it is
not covered by the FAR, has implemented a
comprehensive ethics system that applies to all of
its contractor employees. Id.; see also 12 CFR 366.0
et seq.
11 See, e.g., USAID Acquisition Regulation 148,
available at https://www.usaid.gov/policy/ads/300/
aidar.pdf.
4 18
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Department of Defense, have voluntarily
adopted internal ethics codes, some of which
provide fairly detailed rules relating to such
important ethical issues as personal conflicts
of interest, confidentiality, gifts and
gratuities, protection of government property,
and other major ethical areas, and that
establish internal disciplinary processes for
employee violations of such codes.12
Nevertheless, the corporate codes do not
generally require that unethical conduct that
is not otherwise illegal or unlawful be
reported to the contracting agency.13
Furthermore, though the corporate codes
provide certain protections for the
government,14 they generally only require
contractor employees to protect against
personal conflicts with their employer’s
interest rather than the government’s
interest.15 Finally, many contractors
(particularly those outside of the defense
setting) do not have internal ethics codes.
Scope of the Problem
By dint of their work for and as part of the
government, contractors performing certain
services, particularly those that can influence
government decisions or have access to nonpublic information, are in a position of
public trust and responsibility for the
protection of public resources, as is the
government itself. It is therefore critical that
their employees behave with the same high
degree of integrity as government employees
and do not exploit positions of public trust
for improper personal gain. Whether or not
there is any widespread pattern of ethical
abuses, the existence of significant ethical
risks can erode public confidence in the
government procurement process and in the
government itself. Accordingly, it is entirely
appropriate to hold those contractors and
their employees to a high ethical standard of
conduct.
12 See generally Def. Indus. Initiative on Bus.
Ethics & Conduct, Public Accountability Report
(2009), available at https://www.dii.org/files/annualreport-2008.pdf. Many of the most extensive
internal codes are implemented by companies that
are members of the Defense Industry Initiative
(‘‘DII’’), which includes 95 defense contractors that
agree to implement such ethics codes and comply
with certain values in maintaining an ethical
workplace. Contractor employees can be
disciplined internally for violating their company’s
ethics code, and companies commit to disclose
violations of the law and ‘‘instances of significant
employee misconduct’’ to the contracting agency.
Id. at 49.
13 See id. at 49–50 (contractors are only required
to report those violations covered by FAR § 52.203–
13).
14 See id. at 33 (noting that DII member company
codes require them to protect government property).
15 See id. at 34 (‘‘Employees are prohibited from
having personal, business, or financial interests that
are incompatible with their responsibility to their
employer.’’); see also U.S. Gov’t Accountability
Office, GAO–08–169, Additional Personal Conflict
of Interest Safeguards Needed for Certain DOD
Contractor Employees 3 (2008) (‘‘Most of the
contractor firms have policies requiring their
employees to avoid a range of potential interests—
such as owning stock in competitors—that conflict
with the firm’s interest. However, only three of
these contractors’ policies directly require their
employees to disclose potential personal conflicts
of interest with respect to their work at DOD so they
can be screened and mitigated by the firms.’’).
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As noted above, a significant disparity
currently exists between the ethical
standards applicable to government
employees, which are comprehensive and
consist predominantly of specific rules, and
those applicable to contractor employees,
which are largely developed and applied on
an ad hoc basis and involve significantly
vaguer standards.16 Many contractors have
undertaken laudable efforts to promote a
culture of compliance through the
implementation of company-specific ethics
standards,17 but not every contractor has
such internal standards. The Conference
believes that adoption of contractor ethics
standards applicable to certain high-risk
activities would protect the public interest
and promote integrity in government
contracting. In addition, the Conference aims
to promote public confidence in the system
of government contracting and in the
integrity of the government.
Of course, the mere existence of a disparity
between government employee and
contractor ethics standards is not itself
conclusive evidence that contractor
employee ethics standards should be
expanded. Indeed, simply applying the rules
governing the ethics of government
employees (particularly those dealing with
financial disclosures to guard against
personal conflicts of interest) directly to
contractors could create excessive and
unnecessary compliance burdens for
contractors and monitoring costs for
agencies.18 To address this concern, the
Conference has focused on the most
significant ethical risks that arise in
government contracts as well as the activities
most likely to implicate those risks.
Specifically, the Conference has identified
contractor employees’ personal conflicts of
interest and use of non-public information as
two areas calling for greater measures to
prevent misconduct. Of course, those are not
necessarily the only risks in the current
system, and individual agencies have chosen
or may hereafter choose to impose ethics
requirements in other areas as well. The
16 There are pending FAR rules relating to
protection of non-public information, 76 FR 23,236
(Apr. 26, 2011), and preventing personal conflicts
of interest for contractor employees performing
acquisition activities closely related to inherently
governmental functions, 74 FR 58,584 (Nov. 13,
2009), but these proposed rules are not yet adopted
and also cover only some of the topics addressed
in this recommendation.
17 See generally Def. Indus. Initiative on Bus.
Ethics & Conduct, supra note 12.
18 Report of the Acquisition Advisory Panel 418
(Jan. 2007). Various agencies have extended certain
aspects of the ethics standards applicable to
government employees to contractor employees,
see, e.g., 12 CFR 366.0 et seq. (FDIC contractor
regulations), and their decision to do so has not
necessarily created excessive compliance or
monitoring costs. Nevertheless, extending all
government employee ethics rules to all contractor
employees serving all agencies, without
consideration of the specific ethical risks presented,
would likely impose costs that are excessive in
relation to the benefits received. Accordingly, the
Conference believes that the FAR Council and
individual agencies should proceed carefully in
ensuring that any expansion of the current ethics
regime is cost-effective, while at the same time
protecting the government’s interests.
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Conference, however, believes those two
identified areas warrant more comprehensive
measures to prevent misconduct. The
Conference believes those two identified
areas call for ethics standards, although
agencies should be mindful of risks requiring
more particularized treatment that may be
present in their specific contexts.
Personal Conflicts of Interest and Misuse of
Certain Non-Public Information
The most common ethical risks currently
addressed in specific agency supplements to
the FAR (as well as in contractors’ own
internal codes of conduct) include personal
conflicts of interest, gifts, misuse of
government property, and misuse of nonpublic information.19 Of these major ethical
risks, existing criminal laws regulate
contractors’ offering or receipt of gifts and
misuse of government property. With respect
to gifts, criminal bribery laws would prohibit
a contractor employee’s offering anything of
value to a Federal employee to obtain
favorable treatment,20 and the Anti-Kickback
Act would prohibit a contractor employee
from accepting gifts from a potential subcontractor or other party that are aimed at
improperly obtaining favorable treatment
under the contract.21 With respect to misuse
of property, traditional criminal laws against
larceny and embezzlement would prohibit a
contractor employee’s misappropriating
public property, and Federal criminal law
prohibits a contractor employee’s misusing or
abusing government property.22
On the other hand, a contractor employee
is less likely to face sanctions under existing
laws if he or she acts despite a personal
conflict of interest or exploits non-public
information for personal gain. Though the
Anti-Kickback Act would prevent a
contractor employee’s directing business to a
third party in exchange for an actual
payment,23 nothing under current law would
prevent a contractor employee from directing
business towards a company in which he or
she owns stock (i.e., a personal conflict of
interest). Similarly, though insider trading
laws would apply if a contractor employee
bought securities based upon information
learned from government contracts,24
nothing under current law would prevent a
19 See id.; Kathleen Clark, supra note 2, Table VII;
Marilyn Glynn, Public Integrity & the Multi-Sector
Workforce, 52 Wayne L. Rev. 1433, 1436–38 (2006);
Def. Indus. Initiative on Bus. Ethics & Conduct,
supra note 12, at 29–60.
20 18 U.S.C. 201(c).
21 41 U.S.C. 8702. Of course, in light of the
severity of criminal sanctions, many instances of
misconduct are likely to go unpunished under the
current regime. For instance, resource constraints
may make it unlikely that a United States Attorney
would prosecute a contractor employee for
accepting a lavish meal from a prospective subcontractor. Nevertheless, the mere threat of criminal
prosecution may deter potential misconduct.
22 18 U.S.C. 641; Morissette v. United States,
342 U.S. 246, 272 (1952). In addition, agencies often
stipulate by contract that government property may
not be used for personal benefit (e.g., a contractor
employee’s using government computers for
personal use). Glynn, supra note 19, at 1437.
23 41 U.S.C. 8702.
24 Dirks v. Sec. Exch. Comm’n, 463 U.S. 646, 655
n.14 (1983); 17 CFR 240.10b5–2(b).
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contractor employee from purchasing other
items, such as land that will appreciate upon
announcement of construction of a military
base, on the basis of information learned
while performing his or her contractual
duties.
In this light, various governmental entities
that have studied issues of contractor ethics
have singled out preventing personal
conflicts of interest and misuse of non-public
information as areas that need to be
strengthened.25 By focusing on these two
areas of risk, the Conference does not intend
to discourage agencies from adopting
additional ethics requirements regarding
procurement activities by regulations or
contract. Indeed, some agencies may choose
to adopt rules regulating ethical risks such as
contractor employee receipt of gifts or misuse
of property as an additional prophylactic
measure, notwithstanding the existence of
criminal penalties covering similar conduct.
Rather, the Conference believes that personal
conflicts of interest and protection of nonpublic information are two areas for which
greater measures to prevent misconduct are
particularly appropriate, and it therefore
recommends targeted measures designed to
address those risks. The recommendation
would serve as a floor upon which agencies
could build and would not be intended to
deter adoption of a more expansive ethics
regime, either individually or through the
FAR Council, to the extent the agencies find
it appropriate.
‘‘High Risk’’ Contracts
PCI-Risk Contracts: The Conference has
sought to identify those types of activities
most likely to create risks of personal
25 See, e.g., Preventing Personal Conflicts of
Interest for Contractor Employees Performing
Acquisition Functions, 74 FR 58,584, 58,588–89
(proposed Nov. 13, 2009) (setting forth proposed
FAR rules regulating personal conflicts of interest
and use of non-public information for private gain
in the case of contractors performing acquisition
activities closely related to inherently governmental
functions); Glynn, supra note 19, at 1436–37 (article
by general counsel of the Office of Government
Ethics recommending, inter alia, extending ethics
rules to include contractor employee conflicts of
interest and misuse of non-public information); U.S.
Gov’t Accountability Office, supra note 15, at 31
(‘‘We recommend * * * personal conflict of
interest contract clause safeguards for defense
contractor employees that are similar to those
required for DOD’s Federal employees.’’); U.S. Gov’t
Accountability Office, GAO–10–693, Stronger
Safeguards Needed for Contractor Access to
Sensitive Information 30 (2010) (recommending
that the FAR Council provide guidance on the use
of non-disclosure agreements as a condition to
contractors’ accessing sensitive information and on
‘‘establishing a requirement for prompt notification
to appropriate agency officials of a contractor’s
unauthorized disclosure or misuse of sensitive
information’’); Office of Gov’t Ethics, Report to the
President & to Congressional Committees on the
Conflict of Interest Laws Relating to Executive
Branch Employment 38–39 (2006) (noting
‘‘expressions of concern’’ the Office has received
regarding personal conflicts of interest and
highlighting the possibility of agencies’ including
contract clauses to deal with such issues); Report
of the Acquisition Advisory Panel, supra note 18,
at 423–25 (concluding that additional safeguards
were necessary in order to protect against contractor
employee personal conflicts of interest and misuse
of confidential or proprietary information).
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conflicts of interest, situations in which a
contractor employee may have some interest
that may bias his or her judgment. Several
statutes and regulations prohibit contractors
from performing ‘‘inherently governmental
functions,’’ which are defined as functions
‘‘so intimately related to the public interest’’
as to require performance by government
employees.26 The FAR also contains a list of
activities that ‘‘approach’’ being classified as
‘‘inherently governmental functions.’’ 27 As a
recent proposed policy letter from the Office
of Federal Procurement Policy recognizes,
contractors performing activities that are
similar to ‘‘inherently governmental
functions’’ should be subject to close
scrutiny, given that the work that they
perform is near the heart of the traditional
role of the Federal government.28 Several of
the functions listed as ‘‘approach[ing] * * *
inherently governmental functions’’ involve
activities wherein the contractor either
advises in agency policymaking or
participates in procurement functions, which
raise particular risks of employee personal
conflicts of interest. Other activities
identified as raising particular risks of
employee personal conflicts of interest
include ‘‘advisory and assistance services’’
and ‘‘management and operating’’
functions.29
The FAR contains provisions identifying
activities that ‘‘approach’’ being ‘‘inherently
governmental functions,’’ 30 feature ‘‘advisory
and assistance services,’’31 or involve
‘‘management and operating’’ functions.32
Many of these activities, such as those in
which a contractor employee performs tasks
that can influence government action,
including the expenditure of agency funds,
may pose a significant risk of personal
conflicts of interest. Several contracting
tasks, by their nature, elevate the risk of such
conflicts. Those include substantive (as
compared to administrative or processoriented) contract work (hereinafter referred
to as ‘‘PCI-Risk’’ contracts 33) such as:
• Developing agency policy or regulations.
• Providing alternative dispute resolution
services on contractual matters; legal advice
involving interpretation of statutes or
regulations; significant substantive input
26 Federal Activities Inventory Reform Act of
1998, Public Law 105–270, § 5(2)(A), 112 Stat. 2382,
2384; 48 CFR 2.101; OMB, Circular A–76,
Performance of Commercial Activities, Attachment
A § B.1.a. Though each of these authorities uses
slightly different wording in defining ‘‘inherently
governmental function,’’ the differences are
apparently of no legal significance. Office of
Management & Budget, Work Reserved for
Performance by Federal Government Employees,
75 FR 16,188, 16,190 (proposed Mar. 31, 2010).
27 48 CFR 7.503(d).
28 Work Reserved for Performance by Federal
Government Employees, 75 FR at 16,193–94.
29 Report of the Acquisition Advisory Panel,
supra note 18, at 411.
30 48 CFR 7.503(d).
31 Id. § 2.101.
32 Id. § 17.601.
33 The Conference believes that these activities
are particularly likely to pose a risk of personal
conflicts of interest. To the extent that the FAR
Council or individual agencies believe that other
activities pose similar risks, they should remain free
to regulate contracts for such activities.
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relevant to agency decision-making; or
professional advice for improving the
effectiveness of Federal management
processes and procedures.
• Serving as the primary authority for
managing or administering a project or
operating a facility.
• Preparing budgets, and organizing and
planning agency activities.
• Supporting substantive acquisition
planning 34 or research and development
activities.
• Evaluating another contractor’s
performance or contract proposal.
• Assisting in the development of a
statement of work or in contract
management.
• Participating as a technical advisor to a
source selection board or as a member of a
source evaluation board (i.e., boards designed
to select or evaluate bids or proposals for
procurement contracts).
Information-Risk Contracts: Existing
regulations also do not comprehensively
protect against contractor employees’
disclosure or misuse of non-public
governmental, business, or personal
information learned while performing
government contracts.35 As with personal
conflicts of interest, specific activities pose a
grave risk of contractor disclosure or misuse
of non-public information, which include
(hereinafter referred to as ‘‘Information-Risk’’
contracts 36):
• Contracts in which certain employees
will receive access to information relating to
34 The FAR Council has issued a proposed rule
that would establish personal conflict of interest
standards for contractor employees performing
acquisition activities closely associated with
inherently governmental functions. Preventing
Personal Conflicts of Interest for Contractor
Employees Performing Acquisition Functions,
74 FR at 58,588. To the extent it is ultimately
implemented, this rule would obviate the need for
any additional FAR contract clause with respect to
these contracts.
35 U.S. Gov’t Accountability Office, Stronger
Safeguards Needed for Contractor Access to
Sensitive Information, supra note 25, at 30
(recommending that the FAR Council provide
guidance on the use of non-disclosure agreements
as a condition to contractors’ accessing sensitive
information and on ‘‘establishing a requirement for
prompt notification to appropriate agency officials
of a contractor’s unauthorized disclosure or misuse
of sensitive information’’).
36 The Conference believes that these activities
are particularly likely to pose a risk of disclosure
or misuse of non-public information. This
recommendation does not define the term ‘‘nonpublic information;’’ the FAR Council would be
responsible for drafting language more precisely
defining the types of information and services
covered. In doing so, the FAR Council could choose
to draw on existing definitions created for similar
purposes. See, e.g., 5 CFR 2635.703 (defining
‘‘nonpublic information’’ and prohibiting
government employees from misusing such
information, including information routinely
withheld under 5 U.S.C. § 552(b) (FOIA
exemptions)); U.S. Gov’t Accountability Office,
Stronger Safeguards Needed for Contractor Access
to Sensitive Information, supra note 25, at 4–5
(defining a category of information that requires
safeguards against unauthorized disclosure). To the
extent that the FAR Council or individual agencies
believe that other activities pose similar risks, they
should remain free to regulate such activities
through appropriate solicitation provisions or
contract clauses.
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an agency’s deliberative processes,
management operations, or staff that is not
generally released to the public.
• Contracts in which certain employees
will have access to certain business-related
information, including trade secrets, nonpublic financial information, or other nonpublic information that could be exploited
for financial gain.37
• Contracts in which certain employees
will have access to personally identifying or
other non-public personal information, such
as social security numbers, bank account
numbers, or medical records.38
Recommendation
1. The Federal Acquisition Regulatory
Council (‘‘FAR Council’’) should promulgate
model language for use in contracts posing a
high risk of either personal conflicts of
interest or misuse of certain non-public
information.39 Current law does not
adequately regulate against the risks of
contractor employee personal conflicts of
interest and misuse of non-public
information. On occasion certain agencies
impose additional ethics requirements by
supplemental regulation or contract. In
addition, certain contractors, especially large
companies, have adopted and enforced
internal ethics codes. Nevertheless, coverage
varies significantly from agency to agency
and contract to contract. In order to bring
consistency to this process and ensure that
the government’s interests are adequately
protected, the FAR Council should draft
model language in the Federal Acquisition
Regulation (‘‘FAR’’) for agency contracting
officers to use, with modifications
appropriate to the nature of the contractual
services and risks presented, when soliciting
and negotiating contracts that are particularly
likely to raise issues of personal conflicts of
interest or misuse of non-public information.
2. The model FAR provisions or clauses
should apply to PCI-Risk and InformationRisk Contracts.40 The proposed FAR
37 For instance, if an employee of a contractor
performing auditing functions for the government
were to learn that a large manufacturing firm
intends to open a new plant in coming months, the
employee could purchase property near the plant
and reap a substantial financial windfall. The
contemplated regime would require that the
contractor train employees privy to such
information on their obligations to keep the
information confidential and to avoid transacting
business on the basis of such information, penalize
employees who violate such obligations, and report
any employee violations to the contracting agency.
38 U.S. Gov’t Accountability Office, Stronger
Safeguards Needed for Contractor Access to
Sensitive Information, supra note 24, at 6.
39 The Conference takes no position on whether
the contractual language adopted in individual
contracts should ‘‘flow down’’ to sub-contractors
and other persons besides prime contractors
performing work on government contracts. That
issue is best left to the discretion of the FAR
Council.
40 The draft language would appear in part 52 of
the FAR and would consist of draft solicitation
provisions (which are used in soliciting contracts)
and contract clauses (which are integrated into
negotiated contracts). The use of the plural forms
‘‘provisions’’ and ‘‘clauses’’ is not intended to
exclude the possibility that the FAR Council could
implement the recommendations with a single
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provisions or clauses would apply only to
PCI-Risk and Information-Risk contracts (or
solicitations for such contracts). At the same
time, contracting agencies should remain free
to incorporate contract language (or to
promulgate agency-specific supplemental
regulations) dealing with other ethical risks
they deem important whether or not the
contract at issue qualifies as a PCI-Risk or
Information-Risk contract. Thus, the model
FAR provisions or clauses adopted in
response to this recommendation would
serve as a floor upon which agencies could
build if they deemed it appropriate, but
would not supplant existing programs that
now provide or may in the future provide
more demanding or expansive ethical
protections.
3. Agencies should have the discretion
whether to use or modify the model FAR
provisions or clauses. An agency contracting
officer would have the option to use the
model FAR provisions or clauses when
soliciting and/or contracting for activities
falling into the PCI-Risk or Information-Risk
categories. Because the provisions or clauses
would be optional, the contracting agency
would enjoy the discretion to modify the
FAR language on a case-by-case basis to fit
the circumstances, and to decide to forego
including any such language if it deems that
the particular contract at issue is unlikely to
pose a significant risk of personal conflicts of
interest or misuse of non-public information
by contractor personnel. Nevertheless, the
FAR Council should encourage contracting
officers to use the model FAR language when
applicable.
4. The FAR should include model
provisions or clauses for use in PCI-Risk
procurements. The FAR Council should
encourage agencies to include these model
provisions or clauses in contracting actions
involving PCI–Risk procurements.
The proposed FAR provisions or clauses
should require the contractor to certify 41 that
none of its employees who is in a position
to influence government actions 42 has a
conflict of interest or that conflicted
employees will be screened from performing
work under any contract. Once a contractor
provision or clause. See the Preamble for the
definition of ‘‘PCI-Risk’’ and ‘‘Information-Risk’’
contracts.
41 The FAR should include a certification
requirement rather than a disclosure process in
order to minimize the burden on contractors. In
order to fully perform their contractual obligations,
contractors should be required to train their key
personnel on recognizing and disclosing personal
conflicts of interest. In the case of an anticipated
conflict, a contractor employee should disclose the
issue to the contractor, who must screen the
employee from performing under the contract. The
contractor should be responsible for disciplining
employees who fail to disclose conflicts or honor
a screening policy, and for disclosing such
violations to the government.
42 Every employee performing under the contract
need not certify that he or she does not possess
conflicting financial interests. For instance, in the
case of a contractor assisting in the development of
agency policy (a function falling within one of the
‘‘high risk’’ categories), employees performing
administrative or other non-discretionary
(particularly ministerial) tasks, such as those
making copies of the report that the contractor will
submit, need not perform such a certification.
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is selected, the contract itself should include
a clause requiring the contractor to train
employees on recognizing conflicts, to
implement a system for employees who can
influence government action to report
conflicts to the contractor, to screen any
conflicted employees from contract
performance, to report to the agency
periodically on its efforts to protect against
employee conflicts, and to disclose to the
agency any instances of employee
misconduct (as well as disciplinary action
taken against any offending employee). A
contractor’s failure to implement an adequate
system for employee conflict certification, to
disclose or correct instances of employee
misconduct, or to take appropriate
disciplinary measures against employees
who commit misconduct may be grounds for
contract termination. In addition, a
contractor that repeatedly proves incapable
or unwilling to honor such contractual
obligations may be subject to suspension or
debarment in appropriate circumstances.
5. The FAR should include model
provisions or clauses for use in InformationRisk procurements. The FAR Council should
encourage agencies to include these model
provisions or clauses in contracting actions
involving Information-Risk procurements.
The FAR language should require the
contractor to ensure that its employees who
have access to certain non-public information
identified as posing an information risk are
made aware of their duties to maintain the
secrecy of such information and to avoid
using it for personal gain. To the extent an
employee breaches either of these
obligations, the contractor should be
responsible for reporting the breach to the
government, minimizing the effects of the
breach, and, where appropriate, disciplining
the offending employee. A contractor’s
failure to observe these contractual
requirements may be grounds for contract
termination. In addition, a contractor that
proves repeatedly incapable or unwilling to
fulfill its duties may be subject to suspension
or debarment in appropriate circumstances.
6. Agencies not covered by the FAR also
should consider using or modifying the
model FAR provisions or clauses when
negotiating contracts for activities falling in
either of the ‘‘high risk’’ categories. Agencies
and government instrumentalities not
covered by the FAR should nevertheless
familiarize themselves with the FAR
language promulgated in response to this
recommendation. To the extent that they
plan to enter into contracts for activities
listed in the PCI-Risk or Information-Risk
categories, they should consider employing
or, if necessary, modifying these solicitation
provisions and/or contract clauses.
Administrative Conference Recommendation
2011–4
Agency Use of Video Hearings: Best
Practices and Possibilities for Expansion
Adopted June 17, 2011
Since the early 1990s, video
teleconferencing technology (‘‘VTC’’) has
been explored by various entities in the
public and private sectors for its potential
use in administrative hearings and other
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adjudicatory proceedings.1 In the last 10
years, advances in technology and carrier
services coupled with reduced personnel and
increased travel costs have made the use of
VTC more attractive to local, state and
Federal governments. The rise in the use of
VTC by Federal and state courts has also
been noted by academics.2 Similarly, in the
past 10 years, there has been an increase in
the use of video hearings by Federal agencies
with high volume caseloads. Since pilot
programs for video hearings at agencies first
began in the early 1990s, VTC technology has
become more advanced, more readily
available and less expensive.
Certain Federal agencies, such as the Social
Security Administration’s Office of Disability
Adjudication and Review (‘‘ODAR’’), the
Department of Veteran Affairs’ Board of
Veteran Appeals (‘‘BVA’’) and the
Department of Justice’s Executive Office for
Immigration Review (‘‘EOIR’’) have taken
advantage of VTC for various adjudicatory
proceedings. For example, in 2010, ODAR
conducted a total of 120,624 video hearings,
and a cost-benefit analysis conducted for the
agency by outside consultants found that
ODAR’s current use of video hearings saves
the agency a projected estimated amount of
approximately $59 million dollars annually
and $596 million dollars over a 10-year
period. A study by the agency has also
determined that the use of VTC has no effect
on the outcome of cases.
Other agencies, such as the Railroad
Retirement Board, the United States Postal
Service, the Department of Health and
Human Services’ Office of Medicare Hearings
and Appeals, specifically have regulations
allowing for the use of video
teleconferencing.3 Similarly, agencies such as
the U.S. Merit Systems Protection Board and
the Commerce Trademark Trial and Appeal
Board use VTC to conduct administrative
hearings and other adjudicatory proceedings
as a matter of practice under the broad
statutory and/or regulatory discretion given
to them.4
Despite the fact that some agencies within
the Federal government have been using VTC
to conduct mass adjudications for years,
other agencies have yet to employ such
technology. This may be because the use of
VTC for administrative hearings is not
without controversy. Some applaud the use
of VTC by administrative agencies because it
offers potential efficiency benefits, such as
1 See, e.g., Robert Anderson, The Impact of
Information Technology on Judicial Administration:
A Research Agenda for the Future, 66 S. Cal. L. Rev.
1762, 1770 (1993).
2 See, e.g., Richard K. Sherwin, Neal Feigenson,
& Christina Spiesel, Law in the Digital Age: How
Visual Communication Technologies are
Transforming the Practice, Theory, and Teaching of
Law, 12 B.U. J. Sci. & Tech. L. 227, 229 (2006);
Cathy Catterson, Changes in Appellate Caseload
and Its Processing, 48 Ariz. L. Rev. 287, 295 (2006);
Fredric Lederer, The Road to the Virtual
Courtroom? A Consideration of Today’s—and
Tomorrow’s—High Technology Courtrooms, (State
Justice Inst. 1999), reprinted in 50 S.C. L. Rev. 799,
801 (2000).
3 See, e.g., 20 CFR 260.5; 39 CFR 966.9; and 42
CFR 405.
4 See, e.g., 5 U.S.C. 1204(a)(1) and 37 CFR
2.129(a).
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sroberts on DSK5SPTVN1PROD with NOTICES
reducing the need for travel and the costs
associated with it, reducing caseload backlog,
and increasing scheduling flexibility for
agencies and attorneys as well as increasing
access for parties.5 Critics, however, have
suggested that hearings and other
adjudicatory proceedings conducted by video
may hamper communication between a party
and the decision-maker; may hamper
communication between parties and their
attorneys or representatives; and/or may
hamper a decision-maker’s ability to make
credibility determinations.6
Recognizing both the praise for and
critique of the use of VTC in administrative
hearings and other adjudicatory proceedings,
the Administrative Conference issues this
Recommendation regarding the use of VTC in
Federal agencies with high volume caseloads.
The Conference has a long standing
commitment to the values inherent in the
agency adjudicatory process: Efficiency,
fairness and acceptability/satisfaction.7
These values should drive decisions to use
VTC. Therefore, this Recommendation
suggests that agencies should use VTC only
after conducting an analysis of the costs and
benefits of VTC use and determining that
such use would improve efficiency (i.e.,
timeliness and costs of adjudications) and
would not impair the fairness of the
proceedings or the participants’ satisfaction
with them. In addition, this Recommendation
supports the Conference’s statutory mandate
of making improvements to the regulatory
and adjudicatory process by improving the
effectiveness and fairness of applicable laws.
See generally Administrative Conference Act,
5 U.S.C §§ 591–596.
Accordingly, this Recommendation is
directed at those agencies with high volume
caseloads that do not currently use VTC as
a regular practice in administrative hearings
and/or other adjudicatory proceedings and
that may benefit from the use of it to improve
efficiency and/or reduce costs. Agencies with
high volume caseloads are likely to receive
the most benefit and/or cost savings from the
use of VTC. However, the Conference
encourages all agencies (including those with
lower volume caseloads) to consider whether
the use of VTC would be beneficial as a way
to improve efficiency and/or reduce costs
while also preserving the fairness and
participant satisfaction of proceedings. This
Recommendation sets forth some nonexclusive criteria that agencies should
consider. For those agencies that determine
5 See Meghan Dunn & Rebecca Norwick, Federal
Judicial Center Report of a Survey of
Videoconferencing in the Court of Appeals (2006),
pp. 1–2, available at https://www.fjc.gov/public/
pdf.nsf/lookup/vidconca.pdf/$file/vidconca.pdf.
6 See American Bar Association’s Commission on
Immigration Report entitled ‘‘Reforming the
Immigration System’’ (2010), pp. 2–26–2–27.
7 See Roger C. Cramton, A Comment on TrialType Hearings in Nuclear Power Plant Siting, 58
Va. L. Rev. 585, 591–93 (1972) (Professor Cramton
is a former Chairman of the Conference); see also
Paul R. Verkuil, A Study of Informal Adjudication
Procedures, 43 U. Chi. L. Rev. 739 (1976)
(describing the values of efficiency, fairness and
satisfaction) (Mr. Verkuil is the current Chairman of
the Conference). The balancing of these procedural
values was undertaken in Mathews v. Eldridge, 424
U.S. 319 (1976).
VerDate Mar<15>2010
19:06 Aug 08, 2011
Jkt 223001
that the use of VTC would be beneficial, this
Recommendation also sets forth best
practices provided in part by agencies
currently using VTC.
Recommendation
1. Federal agencies with high volume
caseloads should consider using video
teleconferencing technology (‘‘VTC’’) to
conduct administrative hearings and other
aspects of adjudicatory proceedings.
Agencies with lower volume caseloads may
also benefit from this recommendation.
2. Federal agencies with high volume
caseloads should consider the following nonexclusive criteria when determining whether
to use video teleconferencing technology in
administrative hearings and other
adjudicatory proceedings:
(a) Whether an agency’s use of VTC is
legally permissible under its organic
legislation and other laws;
(b) Whether the nature and type of
administrative hearings and other
adjudicatory proceedings conducted by the
agency are conducive to the use of VTC;
(c) Whether VTC can be used without
affecting the outcome of cases heard by the
agency;
(d) Whether the agency’s budget would
allow for investment in appropriate and
secure technology given the costs of VTC;
(e) Whether the use of VTC would create
cost savings, such as savings associated with
reductions in personnel travel and with
increased productivity resulting from
reductions in personnel time spent on travel;
(f) Whether the use of VTC would result in
a reduction of the amount of wait time for an
administrative hearing;
(g) Whether users of VTC, such as
administrative law judges, hearing officers
and other court staff, parties, witnesses and
attorneys (or other party representatives),
would find the use of such technology
beneficial;
(h) Whether the agency’s facilities and
administration, both national and regional (if
applicable), can be equipped to handle the
technology and administration required for
use of VTC;
(i) Whether the use of VTC would
adversely affect the representation of a party
at an administrative hearing or other
adjudicatory proceeding; and
(j) Whether the communication between
the various individuals present at a hearing
or proceeding (including parties, witnesses,
judges, hearing officers and other agency
staff, translators and attorneys (or other party
representatives)) would be adversely affected.
3. Federal agencies with high volume
caseloads that decide to use video
teleconferencing technology to conduct
administrative hearings and other
adjudicatory proceedings should consider the
following best practices:
(a) Use VTC on a voluntary basis and allow
a party to have an in-person hearing or
proceeding if the party chooses to do so.
(b) Periodically evaluate the use of VTC to
make sure that the use is outcome-neutral
(i.e., does not affect the decision rendered)
and that the use is meeting the needs of its
users.
(c) Solicit feedback and comments
(possibly through notice-and-comment
PO 00000
Frm 00008
Fmt 4703
Sfmt 4703
rulemaking) about VTC from those who
would use it regularly (e.g., administrative
law judges, hearing officers and other
administrative staff, parties, witnesses and
attorneys (or other party representatives)).
(d) Begin the use of VTC with a pilot
program and then evaluate the pilot program
before moving to wider use.
(e) Structure training at the outset of
implementation of VTC use and have
technical support available for
troubleshooting and implementation
questions.
(f) Consult the staff of the Administrative
Conference of the United States and/or
officials at other agencies that have used VTC
for best practices, guidance, advice, and the
possibilities for shared resources and
collaboration.
[FR Doc. 2011–20138 Filed 8–8–11; 8:45 am]
BILLING CODE 6110–01–P
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
[Doc. No. AMS–LS–11–0065]
Plan for Estimating Daily Livestock
Slaughter Under Federal Inspection;
Request for Extension of a Currently
Approved Information Collection
Agricultural Marketing Service,
USDA.
ACTION: Request for comments.
AGENCY:
In accordance with the
Paperwork Reduction Act of 1995 (44
U.S.C. chapter 35), this document
announces the Agricultural Marketing
Service’s (AMS) intention to request
approval from the Office of Management
and Budget, for an extension of the
currently approved information
collection used to compile and generate
the Federally Inspected Estimated Daily
Slaughter Report.
DATES: Comments must be received by
October 11, 2011.
ADDRESSES: Comments should be
submitted electronically at https://
www.regulations.gov. Comments may
also be submitted to Jennifer Porter,
Deputy Director, Livestock and Grain
Market News Division, Livestock and
Seed Program, Agricultural Marketing
Service, U.S. Department of Agriculture;
Stop 0252; 1400 Independence Avenue
SW.; Room 2619–S; Washington, DC
20250–0252. All comments should
reference document number AMS–LS–
11–0065 and note the date and page
number of this issue of the Federal
Register.
Submitted comments will be available
for public inspection at https://
www.regulations.gov or at the above
address during regular business hours.
Comments submitted in response to this
SUMMARY:
E:\FR\FM\09AUN1.SGM
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]]>Agencies
[Federal Register Volume 76, Number 153 (Tuesday, August 9, 2011)]
[Notices]
[Pages 48789-48796]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20138]
========================================================================
Notices
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains documents other than rules
or proposed rules that are applicable to the public. Notices of hearings
and investigations, committee meetings, agency decisions and rulings,
delegations of authority, filing of petitions and applications and agency
statements of organization and functions are examples of documents
appearing in this section.
========================================================================
Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 /
Notices
[[Page 48789]]
=======================================================================
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ADMINISTRATIVE CONFERENCE OF THE UNITED STATES
Adoption of Recommendations
AGENCY: Administrative Conference of the United States.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Administrative Conference of the United States adopted
four recommendations at its Fifty-fourth Plenary Session. The appended
recommendations address electronic rulemaking, rulemaking comments,
contractor ethics, and video hearings.
FOR FURTHER INFORMATION CONTACT: For Recommendation 2011-1, Emily
Schleicher Bremer, Attorney Advisor; for Recommendations 2011-2 and
2011-3, Reeve Bull, Attorney Advisor; and for Recommendation 2011-4,
Funmi Olorunnipa, Attorney Advisor. For all four recommendations the
address and phone number is: Administrative Conference of the United
States, Suite 706 South, 1120 20th Street, NW., Washington, DC 20036;
Telephone 202-480-2080.
SUPPLEMENTARY INFORMATION: The Administrative Conference Act, 5 U.S.C.
591-596, established the Administrative Conference of the United
States. The Conference studies the efficiency, adequacy, and fairness
of the administrative procedures used by Federal agencies and makes
recommendations for improvements to agencies, the President, Congress,
and the Judicial Conference of the United States (5 U.S.C. 594(1)). For
further information about the Conference and its activities, see https://www.acus.gov.
At its Fifty-fourth Plenary Session, held June 16-17, 2011, the
Assembly of the Conference adopted four recommendations. Recommendation
2011-1, ``Legal Considerations in e-Rulemaking,'' provides guidance on
issues that have arisen in light of the change from paper to electronic
rulemaking procedures. It recommends that agencies (1) consider using
content analysis software to reduce the need for agency staff to spend
time reading identical or nearly identical comments, (2) provide
timely, online access to all studies and reports upon which they rely,
(3) implement appropriate procedures for the handling of confidential,
trade secret, or other protected information, (4) consider the
potential need to revise Privacy Act notices and recordkeeping
schedules to accommodate e-Rulemaking, and (5) replace paper files with
electronic records in the rulemaking docket and in the record for
appellate review.
Recommendation 2011-2, ``Rulemaking Comments,'' recognizes
innovations in the commenting process that could promote public
participation and improve rulemaking outcomes. The recommendation
encourages agencies (1) to provide public guidance on how to submit
effective comments, (2) to leave comment periods open for sufficient
periods, generally at least 60 days for significant regulatory actions
and 30 days for other rulemakings, (3) to post comments received online
within a specified period after submission, (4) to announce policies
for anonymous and late-filed comments, and (5) to consider when reply
and supplemental comment periods are useful.
Recommendation 2011-3, ``Compliance Standards for Government
Contractor Employees--Personal Conflicts of Interest and Use of Certain
Non-Public Information'' responds to agencies' need to protect
integrity and the public interest when they rely on contractors. The
Conference recommends that the Federal Acquisition Regulatory Council
provide model language for agency contracting officers to use when
negotiating or administering contracts that pose particular risks that
employees of contractors could have personal conflicts of interest or
could misuse non-public information.
Recommendation 2011-4, ``Agency Use of Video Hearings: Best
Practices and Possibilities for Expansion,'' encourages agencies,
especially those with a high volume of cases, to consider the use of
video teleconferencing technology for hearings and other administrative
proceedings. The recommendation sets forth factors agencies should
consider when deciding whether to use video teleconferencing and best
practices for the implementation of this technology.
The Appendix (below) sets forth the full text of these four
recommendations. The Conference will transmit them to affected
agencies, to appropriate committees of the United States Congress, and
(in the case of 2011-1) to the Judicial Conference of the United
States. The recommendations are not binding, so the relevant agencies,
the Congress and the courts will make decisions on their
implementation.
The Conference based these recommendations on research reports that
it has posted at: https://www.acus.gov/events/54th-plenary-session/. The
transcript of the Plenary Session is available at the same web address.
Dated: August 4, 2011.
Paul R. Verkuil,
Chairman.
Appendix--Recommendations of the Administrative Conference of the
United States
Administrative Conference Recommendation 2011-1
Legal Considerations in e-Rulemaking
Adopted June 16, 2011
Agencies are increasingly turning to e-Rulemaking to conduct and
improve regulatory proceedings. ``E-Rulemaking'' has been defined as
``the use of digital technologies in the development and
implementation of regulations'' \1\ before or during the informal
rulemaking process, i.e., notice-and-comment rulemaking under the
Administrative Procedure Act (APA). It may include many types of
activities, such as posting notices of proposed and final
rulemakings, sharing supporting materials, accepting public
comments, managing the rulemaking record in electronic dockets, and
hosting public meetings online or using social media, blogs, and
other web applications to promote public awareness of and
participation in regulatory proceedings.
---------------------------------------------------------------------------
\1\ Cary Coglianese, E-Rulemaking: Information Technology and
the Regulatory Process at 2 (2004) (working paper), https://lsr.nellco.org/upenn_wps/108.
---------------------------------------------------------------------------
A system that brings several of these activities together is
operated by the eRulemaking program management office (PMO), which
is housed at the Environmental Protection Agency and funded by
contributions from partner Federal agencies. This program contains
two components: Regulations.gov, which is a public Web site where
members of the public
[[Page 48790]]
can view and comment on regulatory proposals, and the Federal Docket
Management System (FDMS), which includes FDMS.gov, a restricted-
access Web site agency staff can use to manage their internal files
and the publicly accessible content on Regulations.gov. According to
the Office of Management and Budget, FDMS ``provides * * * better
internal docket management functionality and the ability to publicly
post all relevant documents on regulations.gov (e.g., Federal
Register documents, proposed rules, notices, supporting analyses,
and public comments).'' \2\ Electronic docketing also provides
significant costs savings to the Federal government, while enabling
agencies to make proposed and final regulations, supplemental
materials, and public comments widely available to the public. These
incentives and the statutory prompt of the E-Government Act of 2002,
which required agencies to post rules online, accept electronic
comments on rules, and keep electronic rulemaking dockets,\3\ have
helped ensure that over 90% of agencies post regulatory material on
Regulations.gov.\4\
---------------------------------------------------------------------------
\2\ Office of Mgmt. & Budget, Executive Office of the President,
FY 2009 Report to Congress on the Implementation of the E-Government
Act of 2002, at 10 (2009), https://www.whitehouse.gov/sites/default/files/omb/assets/egov_docs/2009_egov_report.pdf.
\3\ See Public Law 107-347 Sec. 206.
\4\ Improving Electronic Dockets on Regulations.gov and the
Federal Docket Management System: Best Practices for Federal
Agencies, p. D-1 (Nov. 30, 2010), https://www.regulations.gov/exchange/sites/default/files/doc_files/20101130_eRule_Best_Practices_Document_rev.pdf. Some agencies rely on their own
electronic docketing systems, such as the Federal Trade Commission
(which uses a system called CommentWorks) and the Federal
Communications Commission, which has its own electronic comment
filing system (https://fjallfoss.fcc.gov/ecfs/ ecfs/).
---------------------------------------------------------------------------
Federal regulators, looking to embrace the benefits of e-
Rulemaking, face uncertainty about how established legal
requirements apply to the web. This uncertainty arises because the
APA, enacted in 1946, still provides the basic framework for notice-
and-comment rulemaking. While this framework has gone largely
unchanged, the technological landscape has evolved dramatically.
The Conference has therefore examined some of the legal issues
agencies face in e-Rulemaking and this recommendation provides
guidance on these issues. The Conference has examined the following
issues:
Processing large numbers of similar or identical
comments. The Conference has considered whether agencies have a
legal obligation to ensure that a person reads every individual
comment received, even when comment-processing software reports that
multiple comments are identical or nearly identical.
Preventing the publication of inappropriate or
protected information. The Conference has considered whether
agencies have a legal obligation to prevent the publication of
certain types of information that may be included in comments
submitted in e-Rulemaking.
Efficiently compiling and maintaining a complete
rulemaking docket. The Conference has considered issues related to
the maintenance of rulemaking dockets in electronic form, including
whether an agency is obliged to retain paper copies of comments once
they are scanned to electronic format and how an agency that
maintains its comments files electronically should handle comments
that cannot easily be reduced to electronic form, such as physical
objects.
Preparing an electronic administrative record for
judicial review. The Conference has considered issues regarding the
record on review in e-Rulemaking proceedings.
This recommendation seeks to provide all agencies, including
those that do not participate in Regulations.gov, with guidance to
navigate some of the issues they may face in e-Rulemaking.\5\ With
respect to the issues addressed in this recommendation, the APA
contains sufficient flexibility to support e-Rulemaking and does not
need to be amended for these purposes at the present time. Although
the primary goal of this recommendation is to dispel some of the
legal uncertainty agencies face in e-Rulemaking, where the
Conference finds that a practice is not only legally defensible, but
also sound policy, it recommends that agencies use it. It bears
noting, however, that agencies may face other legal issues in e-
Rulemaking, particularly when using wikis, blogs, or similar
technological approaches to solicit public views, that are not
addressed in this recommendation. Such issues, and other broad
issues not addressed herein, are beyond the scope of this
recommendation, but warrant further study.\6\
---------------------------------------------------------------------------
\5\ This report follows up on previous work of the
Administrative Conference. On October 19, 1995, Professor Henry H.
Perritt, Jr. delivered a report entitled ``Electronic Dockets: Use
of Information Technology in Rulemaking and Adjudication.'' Although
never published, the Perritt Report continues to be a helpful
resource and is available at: https://www.kentlaw.edu/faculty/rstaudt/classes/oldclasses/internetlaw/casebook/electronic_dockets.htm.
\6\ The Conference has a concurrent recommendation which focuses
on issues relating to the comments phase of the notice-and-comment
process independent of the innovations introduced by e-Rulemaking.
See Administrative Conference of the United States, Recommendation
2011-2, Rulemaking Comments.
---------------------------------------------------------------------------
Recommendation
Considering Comments
1. Given the APA's flexibility, agencies should:
(a) Consider whether, in light of their comment volume, they
could save substantial time and effort by using reliable comment
analysis software to organize and review public comments.
(1) While 5 U.S.C. 553 requires agencies to consider all
comments received, it does not require agencies to ensure that a
person reads each one of multiple identical or nearly identical
comments.
(2) Agencies should also work together and with the eRulemaking
program management office (PMO), to share experiences and best
practices with regard to the use of such software.
(b) Work with the eRulemaking PMO and its interagency
counterparts to explore providing a method, including for members of
public, for flagging inappropriate or protected content, and for
taking appropriate action thereon.
(c) Work with the eRulemaking PMO and its interagency
counterparts to explore mechanisms to allow a commenter to indicate
prior to or upon submittal that a comment filed on Regulations.gov
contains confidential or trade secret information.
(d) Confirm they have procedures in place to review comments
identified as containing confidential or trade secret information.
Agencies should determine how such information should be handled, in
accordance with applicable law.
Assessing Privacy Concerns
2. Agencies should assess whether the Federal Docket Management
System (FDMS) System of Records Notice provides sufficient Privacy
Act compliance for their uses of Regulations.gov. This could include
working with the eRulemaking PMO to consider whether changes to the
FDMS System of Records Notice are warranted.
Maintaining Rulemaking Dockets in Electronic Form
3. The APA provides agencies flexibility to use electronic
records in lieu of paper records. Additionally, the National
Archives and Records Administration has determined that agencies are
not otherwise legally required, at least under certain
circumstances, to retain paper copies of comments properly scanned
and included in an approved electronic recordkeeping system. The
circumstances under which such destruction is permitted are governed
by each agency's records schedules. Agencies should examine their
record schedules and maintain electronic records in lieu of paper
records as appropriate.
4. To facilitate the comment process, agencies should include in
a publicly available electronic docket of a rulemaking proposal all
studies and reports on which the proposal for rulemaking draws, as
soon as practicable, except to the extent that they would be
protected from disclosure in response to an appropriate Freedom of
Information Act request.\7\
---------------------------------------------------------------------------
\7\ See also Exec. Order No. 13,563, Sec. 2(b), 76 FR 3,821
(Jan. 18, 2011) (requiring agencies to provide timely online access
to ``relevant scientific and technical findings'' in the rulemaking
docket on regulations.gov).
---------------------------------------------------------------------------
5. Agencies should include in the electronic docket a
descriptive entry or photograph for all physical objects received
during the comment period.
Providing Rulemaking Records to Courts for Judicial Review
6. In judicial actions involving review of agency regulations,
agencies should work with parties and courts early in litigation to
provide electronic copies of the rulemaking record in lieu of paper
copies, particularly where the record is of substantial size. Courts
should continue their efforts to embrace electronic filing and
minimize requirements to file paper copies of rulemaking records.
[[Page 48791]]
The Judicial Conference should consider steps to facilitate these
efforts.
Complying With Recordkeeping Requirements in e-Rulemaking
7. In implementing their responsibilities under the Federal
Records Act, agencies should ensure their records schedules include
records generated during e-Rulemaking.
Administrative Conference Recommendation 2011-2
Rulemaking Comments
Adopted June 16, 2011
One of the primary innovations associated with the
Administrative Procedure Act (``APA'') was its implementation of a
comment period in which agencies solicit the views of interested
members of the public on proposed rules.\1\ The procedure created by
the APA has come to be called ``notice-and-comment rulemaking,'' and
comments have become an integral part of the overall rulemaking
process.
---------------------------------------------------------------------------
\1\ 5 U.S.C. 553; see also Antonin Scalia, Judicial Deference to
Administrative Interpretations of Law, 1989 Duke L.J. 511, 514
(1989) (describing the ``notice-and-comment procedures for
rulemaking'' under the APA as ``probably the most significant
innovation of the legislation'').
---------------------------------------------------------------------------
In a December 2006 report titled ``Interim Report on the
Administrative Law, Process and Procedure Project for the 21st
Century,'' the Subcommittee on Commercial and Administrative Law of
the United States House of Representatives' Committee on the
Judiciary identified a number of questions related to rulemaking
comments as areas of possible study by the Administrative
Conference.\2\ These questions include:
---------------------------------------------------------------------------
\2\ Subcomm. on Commercial & Admin. Law of the Comm. on the
Judiciary, 109th Cong., Interim Rep. on the Admin. Law, Process and
Procedure Project for the 21st Century at 3-5 (Comm. Print 2006).
---------------------------------------------------------------------------
Should there be a required, or at least recommended,
minimum length for a comment period?
Should agencies immediately make comments publicly
available? Should they permit a ``reply comment'' period?
Must agencies reply to all comments, even if they take
no further action on a rule for years? Do comments eventually become
sufficiently ``stale'' that they could not support a final rule
without further comment?
Under what circumstances should an agency be permitted
to keep comments confidential and/or anonymous?
What effects do comments actually have on agency rules?
The Conference has studied these questions and other, related
issues concerning the ``comment'' portion of the notice-and-comment
rulemaking process. The Conference also has a concurrent
recommendation that deals with separate matters, focusing
specifically on legal issues implicated by the rise of e-rulemaking.
See Administrative Conference of the United States, Recommendation
2011-1, Legal Considerations in e-Rulemaking.
The Conference believes that the comment process established by
the APA is fundamentally sound. Nevertheless, certain innovations in
the commenting process could allow that process to promote public
participation and improve rulemaking outcomes more effectively. In
this light, the Conference seeks to highlight a series of ``best
practices'' designed to increase the opportunities for public
participation and enhance the quality of information received in the
commenting process. The Conference recognizes that different
agencies have different approaches to rulemaking and therefore
recommends that individual agencies decide whether and how to
implement the best practices addressed.
In identifying these best practices, the Conference does not
intend to suggest that it has exhausted the potential innovations in
the commenting process. Individual agencies and the Conference
itself should conduct further empirical analysis of notice-and-
comment rulemaking, should study the effects of the proposed
recommendations to the extent they are implemented, and should
adjust and build upon the proposed processes as appropriate.
Recommendation
1. To promote optimal public participation and enhance the
usefulness of public comments, the eRulemaking Project Management
Office should consider publishing a document explaining what types
of comments are most beneficial and listing best practices for
parties submitting comments. Individual agencies may publish
supplements to the common document describing the qualities of
effective comments. Once developed, these documents should be made
publicly available by posting on the agency Web site,
Regulations.gov, and any other venue that will promote widespread
availability of the information.
2. Agencies should set comment periods that consider the
competing interests of promoting optimal public participation while
ensuring that the rulemaking is conducted efficiently. As a general
matter, for ``[s]ignificant regulatory action[s]'' as defined in
Executive Order 12,866, agencies should use a comment period of at
least 60 days. For all other rulemakings, they should generally use
a comment period of at least 30 days. When agencies, in appropriate
circumstances, set shorter comment periods, they are encouraged to
provide an appropriate explanation for doing so.\3\
---------------------------------------------------------------------------
\3\ See also Administrative Conference of the United States,
Recommendation 93-4, Improving the Environment for Agency Rulemaking
(1993) (``Congress should consider amending section 553 of the APA
to * * * [s]pecify a comment period of `no fewer than 30 days.' '');
Exec. Order No. 13,563, 76 FR 3,821, 3,821-22 (Jan. 18, 2011) (``To
the extent feasible and permitted by law, each agency shall afford
the public a meaningful opportunity to comment through the Internet
on any proposed regulation, with a comment period that should
generally be at least 60 days.'').
---------------------------------------------------------------------------
3. Agencies should adopt stated policies of posting public
comments to the Internet within a specified period after submission.
Agencies should post all electronically submitted comments on the
Internet and should also scan and post all comments submitted in
paper format.\4\
---------------------------------------------------------------------------
\4\ See also Office of Information & Regulatory Affairs,
Memorandum for the President's Management Council on Increasing
Openness in the Rulemaking Process--Improving Electronic Dockets at
2 (May 28, 2010) (``OMB expects agencies to post public comments and
public submissions to the electronic docket on Regulations.gov in a
timely manner, regardless of whether they were received via postal
mail, email, facsimile, or web form documents submitted directly via
Regulations.gov.'').
---------------------------------------------------------------------------
4. The eRulemaking Project Management Office and individual
agencies should establish and publish policies regarding the
submission of anonymous comments.
5. Agencies should adopt and publish policies on late comments
and should apply those policies consistently within each rulemaking.
Agencies should determine whether or not they will accept late
submissions in a given rulemaking and should announce the policy
both in publicly accessible forums (e.g., the agency's Web site,
Regulations.gov) and in individual Federal Register notices
including requests for comments. The agency may make clear that late
comments are disfavored and will only be considered to the extent
practicable.\5\
---------------------------------------------------------------------------
\5\ See, e.g., Highway-Rail Grade Crossing; Safe Clearance, 76
Fed. Reg. 5,120, 5,121 (Jan. 28, 2011) (Department of Transportation
notice of proposed rulemaking announcing that ``[c]omments received
after the comment closing date will be included in the DOCKET, and
we will consider late comments to the extent practicable'').
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6. Where appropriate, agencies should make use of reply comment
periods or other opportunities for receiving public input on
submitted comments, after all comments have been posted. An
opportunity for public input on submitted comments can entail a
reply period for written comments on submitted comments, an oral
hearing, or some other means for input on comments received.\6\
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\6\ See also Administrative Conference of the United States,
Recommendation 76-3, Procedures in Addition to Notice & the
Opportunity for Comment in Informal Rulemaking (1976) (recommending
a second comment period in proceedings in which comments or the
agency's responses thereto ``present new and important issues or
serious conflicts of data''); Administrative Conference of the
United States, Recommendation 72-5, Procedures for the Adoption of
Rules of General Applicability (1972) (recommending that agencies
consider providing an ``opportunity for parties to comment on each
other's oral or written submissions); Office of Information &
Regulatory Affairs, Memorandum for the Heads of Executive
Departments and Agencies, and of Independent Regulatory Agencies, on
Executive Order 13,563, M-11-10, at 2 (Feb. 2, 2011) (``[Executive
Order 13,563] seeks to increase participation in the regulatory
process by allowing interested parties the opportunity to react to
(and benefit from) the comments, arguments, and information of
others during the rulemaking process itself.'').
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7. Although agencies should not automatically deem rulemaking
comments to have become stale after any fixed period of time,
agencies should closely monitor their rulemaking dockets, and, where
an agency believes the circumstances surrounding the rulemaking have
materially changed or the rulemaking record has otherwise become
stale, consider the use of available
[[Page 48792]]
mechanisms such as supplemental notices of proposed rulemaking to
refresh the rulemaking record.
Administrative Conference Recommendation 2011-3
Compliance Standards for Government Contractor Employees--Personal
Conflicts of Interest and Use of Certain Non-Public Information
Adopted June 17, 2011
The Conference believes that it is important to ensure that
services provided by government contractors--particularly those
services that are similar to those performed by government
employees--are performed with integrity and that the public interest
is protected. In that light, the Conference recommends that the
Federal Acquisition Regulatory Council (``FAR Council'') promulgate
model language in the Federal Acquisition Regulation (``FAR'') \1\
for agency contracting officers to use when negotiating or
administering contracts that pose particular risks of government
contractor employee personal conflicts of interest or misuse of non-
public information. In order to ensure that, in its effort to
protect the public interest, this recommendation does not create
excessive compliance burdens for contractors or unnecessary
monitoring costs for agencies, the Conference is limiting its
recommendation to those areas that it has identified as the top
priorities--contractor employees who perform certain activities
identified as posing a high risk of personal conflicts of interest
or misuse of non-public information.
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\1\ The FAR is a set of uniform policies and procedures that all
executive agencies must use in procurements from sources outside of
the government. 48 CFR 1.101. All executive agencies must comply
with the FAR when purchasing from contractors, though individual
agencies can also adopt agency-specific supplements to the FAR by
regulation or provide additional requirements in individual
contracts. See, e.g., 48 CFR ch. 2 (Defense Federal Acquisition
Regulation Supplement for the Department of Defense). The FAR
Council consists of the Administrator for Federal Procurement
Policy, the Secretary of Defense, the Administrator of National
Aeronautics and Space, and the Administrator of General Services.
See 41 U.S.C. 1102, 1302.
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Background
In recent years, the Federal government has increasingly relied
upon private contractors to perform services previously provided in-
house by civil servants.\2\ Despite this expansion in the use of
government contractors, there continues to be a substantial
disparity between the ethics rules regulating government employees
and those applicable to government contractor employees. Whereas an
array of statutes and regulations creates an extensive ethics regime
for government employees, the rules currently applicable to
contractor employees vary significantly by agency.
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\2\ Specifically, Federal spending on service contracts
increased by 85% in inflation adjusted dollars between 1983 and
2007. Kathleen Clark, Ethics for an Outsourced Government Table 3
(forthcoming), available at https://www.acus.gov/research/the-conference-current-projects/government-contractor-ethics. Over the
same period, the number of executive branch employees declined by
18%. Id. In this light, the relative significance of the contractor
workforce vis-[agrave]-vis the Federal employee workforce has
increased substantially in the last few decades.
---------------------------------------------------------------------------
Government employees are subject to various statutes and
regulations that create a comprehensive ethics regime governing,
among other things, their financial interests, use of government
resources, outside activities, and activities in which they may
engage after leaving government.\3\ By contrast, the compliance
standards applicable to contractor employees are much less
comprehensive and can vary significantly from contract to contract.
A handful of statutes apply to contractor employees and prohibit
their offering bribes or illegal gratuities,\4\ serving as foreign
agents,\5\ disclosing procurement information,\6\ or offering or
receiving kickbacks.\7\ The FAR requires contracting officers to
identify organizational conflicts of interest (in which the
contractor has a corporate interest that may bias its judgment or
the advice it provides to the government) and either address or
waive such conflicts.\8\ The FAR also requires that contracting
firms that have entered into one or more government contracts valued
in excess of $5 million and requiring 120 days or more to perform
have in place ``codes of business ethics and conduct.'' \9\ A
handful of agencies have adopted ethics regulations supplementing
the FAR,\10\ and still other agencies impose additional ethics
requirements by contract.\11\
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\3\ Id. at 7.
\4\ 18 U.S.C. 201(b)-(c).
\5\ Id. Sec. 219.
\6\ 41 U.S.C. Sec. 2102.
\7\ Id. Sec. Sec. 8701-07 (prohibiting kickbacks to
contractors, subcontractors, and their employees).
\8\ 48 CFR 9.500 et seq. The FAR provision applies only to
organizational conflicts of interest, wherein the firm itself
possesses such business interests, and not to personal conflicts of
interest, wherein one of the firm's employees has a business or
financial interest that could influence his or her decisionmaking in
performing a contract.
\9\ Id. Sec. Sec. 3.1000-04. These codes must ensure that the
firm has adequate systems for detecting, preventing, and reporting
illegal conduct and violations of the civil False Claims Act and
that it ``[o]therwise promote[s] an organizational culture that
encourages ethical conduct.'' Id. Sec. 52.203-13. The FAR does not
dictate, however, what types of potential ethical misconduct the
internal corporate codes must address.
\10\ Agencies that have adopted ethics regimes supplementing
those contained in the FAR include the Department of Energy,
Department of Health and Human Services, Department of the Treasury,
Environmental Protection Agency, Nuclear Regulatory Commission, and
United States Agency for International Development. Clark, supra
note 2, Table VII. These supplemental regimes are not comprehensive,
however, and generally apply only to specific types of contracts. By
contrast, the Federal Deposit Insurance Corporation, though it is
not covered by the FAR, has implemented a comprehensive ethics
system that applies to all of its contractor employees. Id.; see
also 12 CFR 366.0 et seq.
\11\ See, e.g., USAID Acquisition Regulation 148, available at
https://www.usaid.gov/policy/ads/300/aidar.pdf.
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Finally, certain contracting firms, most notably some performing
work for the Department of Defense, have voluntarily adopted
internal ethics codes, some of which provide fairly detailed rules
relating to such important ethical issues as personal conflicts of
interest, confidentiality, gifts and gratuities, protection of
government property, and other major ethical areas, and that
establish internal disciplinary processes for employee violations of
such codes.\12\ Nevertheless, the corporate codes do not generally
require that unethical conduct that is not otherwise illegal or
unlawful be reported to the contracting agency.\13\ Furthermore,
though the corporate codes provide certain protections for the
government,\14\ they generally only require contractor employees to
protect against personal conflicts with their employer's interest
rather than the government's interest.\15\ Finally, many contractors
(particularly those outside of the defense setting) do not have
internal ethics codes.
---------------------------------------------------------------------------
\12\ See generally Def. Indus. Initiative on Bus. Ethics &
Conduct, Public Accountability Report (2009), available at https://www.dii.org/files/annual-report-2008.pdf. Many of the most extensive
internal codes are implemented by companies that are members of the
Defense Industry Initiative (``DII''), which includes 95 defense
contractors that agree to implement such ethics codes and comply
with certain values in maintaining an ethical workplace. Contractor
employees can be disciplined internally for violating their
company's ethics code, and companies commit to disclose violations
of the law and ``instances of significant employee misconduct'' to
the contracting agency. Id. at 49.
\13\ See id. at 49-50 (contractors are only required to report
those violations covered by FAR Sec. 52.203-13).
\14\ See id. at 33 (noting that DII member company codes require
them to protect government property).
\15\ See id. at 34 (``Employees are prohibited from having
personal, business, or financial interests that are incompatible
with their responsibility to their employer.''); see also U.S. Gov't
Accountability Office, GAO-08-169, Additional Personal Conflict of
Interest Safeguards Needed for Certain DOD Contractor Employees 3
(2008) (``Most of the contractor firms have policies requiring their
employees to avoid a range of potential interests--such as owning
stock in competitors--that conflict with the firm's interest.
However, only three of these contractors' policies directly require
their employees to disclose potential personal conflicts of interest
with respect to their work at DOD so they can be screened and
mitigated by the firms.'').
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Scope of the Problem
By dint of their work for and as part of the government,
contractors performing certain services, particularly those that can
influence government decisions or have access to non-public
information, are in a position of public trust and responsibility
for the protection of public resources, as is the government itself.
It is therefore critical that their employees behave with the same
high degree of integrity as government employees and do not exploit
positions of public trust for improper personal gain. Whether or not
there is any widespread pattern of ethical abuses, the existence of
significant ethical risks can erode public confidence in the
government procurement process and in the government itself.
Accordingly, it is entirely appropriate to hold those contractors
and their employees to a high ethical standard of conduct.
[[Page 48793]]
As noted above, a significant disparity currently exists between
the ethical standards applicable to government employees, which are
comprehensive and consist predominantly of specific rules, and those
applicable to contractor employees, which are largely developed and
applied on an ad hoc basis and involve significantly vaguer
standards.\16\ Many contractors have undertaken laudable efforts to
promote a culture of compliance through the implementation of
company-specific ethics standards,\17\ but not every contractor has
such internal standards. The Conference believes that adoption of
contractor ethics standards applicable to certain high-risk
activities would protect the public interest and promote integrity
in government contracting. In addition, the Conference aims to
promote public confidence in the system of government contracting
and in the integrity of the government.
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\16\ There are pending FAR rules relating to protection of non-
public information, 76 FR 23,236 (Apr. 26, 2011), and preventing
personal conflicts of interest for contractor employees performing
acquisition activities closely related to inherently governmental
functions, 74 FR 58,584 (Nov. 13, 2009), but these proposed rules
are not yet adopted and also cover only some of the topics addressed
in this recommendation.
\17\ See generally Def. Indus. Initiative on Bus. Ethics &
Conduct, supra note 12.
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Of course, the mere existence of a disparity between government
employee and contractor ethics standards is not itself conclusive
evidence that contractor employee ethics standards should be
expanded. Indeed, simply applying the rules governing the ethics of
government employees (particularly those dealing with financial
disclosures to guard against personal conflicts of interest)
directly to contractors could create excessive and unnecessary
compliance burdens for contractors and monitoring costs for
agencies.\18\ To address this concern, the Conference has focused on
the most significant ethical risks that arise in government
contracts as well as the activities most likely to implicate those
risks. Specifically, the Conference has identified contractor
employees' personal conflicts of interest and use of non-public
information as two areas calling for greater measures to prevent
misconduct. Of course, those are not necessarily the only risks in
the current system, and individual agencies have chosen or may
hereafter choose to impose ethics requirements in other areas as
well. The Conference, however, believes those two identified areas
warrant more comprehensive measures to prevent misconduct. The
Conference believes those two identified areas call for ethics
standards, although agencies should be mindful of risks requiring
more particularized treatment that may be present in their specific
contexts.
---------------------------------------------------------------------------
\18\ Report of the Acquisition Advisory Panel 418 (Jan. 2007).
Various agencies have extended certain aspects of the ethics
standards applicable to government employees to contractor
employees, see, e.g., 12 CFR 366.0 et seq. (FDIC contractor
regulations), and their decision to do so has not necessarily
created excessive compliance or monitoring costs. Nevertheless,
extending all government employee ethics rules to all contractor
employees serving all agencies, without consideration of the
specific ethical risks presented, would likely impose costs that are
excessive in relation to the benefits received. Accordingly, the
Conference believes that the FAR Council and individual agencies
should proceed carefully in ensuring that any expansion of the
current ethics regime is cost-effective, while at the same time
protecting the government's interests.
---------------------------------------------------------------------------
Personal Conflicts of Interest and Misuse of Certain Non-Public
Information
The most common ethical risks currently addressed in specific
agency supplements to the FAR (as well as in contractors' own
internal codes of conduct) include personal conflicts of interest,
gifts, misuse of government property, and misuse of non-public
information.\19\ Of these major ethical risks, existing criminal
laws regulate contractors' offering or receipt of gifts and misuse
of government property. With respect to gifts, criminal bribery laws
would prohibit a contractor employee's offering anything of value to
a Federal employee to obtain favorable treatment,\20\ and the Anti-
Kickback Act would prohibit a contractor employee from accepting
gifts from a potential sub-contractor or other party that are aimed
at improperly obtaining favorable treatment under the contract.\21\
With respect to misuse of property, traditional criminal laws
against larceny and embezzlement would prohibit a contractor
employee's misappropriating public property, and Federal criminal
law prohibits a contractor employee's misusing or abusing government
property.\22\
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\19\ See id.; Kathleen Clark, supra note 2, Table VII; Marilyn
Glynn, Public Integrity & the Multi-Sector Workforce, 52 Wayne L.
Rev. 1433, 1436-38 (2006); Def. Indus. Initiative on Bus. Ethics &
Conduct, supra note 12, at 29-60.
\20\ 18 U.S.C. 201(c).
\21\ 41 U.S.C. 8702. Of course, in light of the severity of
criminal sanctions, many instances of misconduct are likely to go
unpunished under the current regime. For instance, resource
constraints may make it unlikely that a United States Attorney would
prosecute a contractor employee for accepting a lavish meal from a
prospective sub-contractor. Nevertheless, the mere threat of
criminal prosecution may deter potential misconduct.
\22\ 18 U.S.C. 641; Morissette v. United States, 342 U.S. 246,
272 (1952). In addition, agencies often stipulate by contract that
government property may not be used for personal benefit (e.g., a
contractor employee's using government computers for personal use).
Glynn, supra note 19, at 1437.
---------------------------------------------------------------------------
On the other hand, a contractor employee is less likely to face
sanctions under existing laws if he or she acts despite a personal
conflict of interest or exploits non-public information for personal
gain. Though the Anti-Kickback Act would prevent a contractor
employee's directing business to a third party in exchange for an
actual payment,\23\ nothing under current law would prevent a
contractor employee from directing business towards a company in
which he or she owns stock (i.e., a personal conflict of interest).
Similarly, though insider trading laws would apply if a contractor
employee bought securities based upon information learned from
government contracts,\24\ nothing under current law would prevent a
contractor employee from purchasing other items, such as land that
will appreciate upon announcement of construction of a military
base, on the basis of information learned while performing his or
her contractual duties.
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\23\ 41 U.S.C. 8702.
\24\ Dirks v. Sec. Exch. Comm'n, 463 U.S. 646, 655 n.14 (1983);
17 CFR 240.10b5-2(b).
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In this light, various governmental entities that have studied
issues of contractor ethics have singled out preventing personal
conflicts of interest and misuse of non-public information as areas
that need to be strengthened.\25\ By focusing on these two areas of
risk, the Conference does not intend to discourage agencies from
adopting additional ethics requirements regarding procurement
activities by regulations or contract. Indeed, some agencies may
choose to adopt rules regulating ethical risks such as contractor
employee receipt of gifts or misuse of property as an additional
prophylactic measure, notwithstanding the existence of criminal
penalties covering similar conduct. Rather, the Conference believes
that personal conflicts of interest and protection of non-public
information are two areas for which greater measures to prevent
misconduct are particularly appropriate, and it therefore recommends
targeted measures designed to address those risks. The
recommendation would serve as a floor upon which agencies could
build and would not be intended to deter adoption of a more
expansive ethics regime, either individually or through the FAR
Council, to the extent the agencies find it appropriate.
---------------------------------------------------------------------------
\25\ See, e.g., Preventing Personal Conflicts of Interest for
Contractor Employees Performing Acquisition Functions, 74 FR 58,584,
58,588-89 (proposed Nov. 13, 2009) (setting forth proposed FAR rules
regulating personal conflicts of interest and use of non-public
information for private gain in the case of contractors performing
acquisition activities closely related to inherently governmental
functions); Glynn, supra note 19, at 1436-37 (article by general
counsel of the Office of Government Ethics recommending, inter alia,
extending ethics rules to include contractor employee conflicts of
interest and misuse of non-public information); U.S. Gov't
Accountability Office, supra note 15, at 31 (``We recommend * * *
personal conflict of interest contract clause safeguards for defense
contractor employees that are similar to those required for DOD's
Federal employees.''); U.S. Gov't Accountability Office, GAO-10-693,
Stronger Safeguards Needed for Contractor Access to Sensitive
Information 30 (2010) (recommending that the FAR Council provide
guidance on the use of non-disclosure agreements as a condition to
contractors' accessing sensitive information and on ``establishing a
requirement for prompt notification to appropriate agency officials
of a contractor's unauthorized disclosure or misuse of sensitive
information''); Office of Gov't Ethics, Report to the President & to
Congressional Committees on the Conflict of Interest Laws Relating
to Executive Branch Employment 38-39 (2006) (noting ``expressions of
concern'' the Office has received regarding personal conflicts of
interest and highlighting the possibility of agencies' including
contract clauses to deal with such issues); Report of the
Acquisition Advisory Panel, supra note 18, at 423-25 (concluding
that additional safeguards were necessary in order to protect
against contractor employee personal conflicts of interest and
misuse of confidential or proprietary information).
---------------------------------------------------------------------------
``High Risk'' Contracts
PCI-Risk Contracts: The Conference has sought to identify those
types of activities most likely to create risks of personal
[[Page 48794]]
conflicts of interest, situations in which a contractor employee may
have some interest that may bias his or her judgment. Several
statutes and regulations prohibit contractors from performing
``inherently governmental functions,'' which are defined as
functions ``so intimately related to the public interest'' as to
require performance by government employees.\26\ The FAR also
contains a list of activities that ``approach'' being classified as
``inherently governmental functions.'' \27\ As a recent proposed
policy letter from the Office of Federal Procurement Policy
recognizes, contractors performing activities that are similar to
``inherently governmental functions'' should be subject to close
scrutiny, given that the work that they perform is near the heart of
the traditional role of the Federal government.\28\ Several of the
functions listed as ``approach[ing] * * * inherently governmental
functions'' involve activities wherein the contractor either advises
in agency policymaking or participates in procurement functions,
which raise particular risks of employee personal conflicts of
interest. Other activities identified as raising particular risks of
employee personal conflicts of interest include ``advisory and
assistance services'' and ``management and operating''
functions.\29\
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\26\ Federal Activities Inventory Reform Act of 1998, Public Law
105-270, Sec. 5(2)(A), 112 Stat. 2382, 2384; 48 CFR 2.101; OMB,
Circular A-76, Performance of Commercial Activities, Attachment A
Sec. B.1.a. Though each of these authorities uses slightly
different wording in defining ``inherently governmental function,''
the differences are apparently of no legal significance. Office of
Management & Budget, Work Reserved for Performance by Federal
Government Employees, 75 FR 16,188, 16,190 (proposed Mar. 31, 2010).
\27\ 48 CFR 7.503(d).
\28\ Work Reserved for Performance by Federal Government
Employees, 75 FR at 16,193-94.
\29\ Report of the Acquisition Advisory Panel, supra note 18, at
411.
---------------------------------------------------------------------------
The FAR contains provisions identifying activities that
``approach'' being ``inherently governmental functions,'' \30\
feature ``advisory and assistance services,''\31\ or involve
``management and operating'' functions.\32\ Many of these
activities, such as those in which a contractor employee performs
tasks that can influence government action, including the
expenditure of agency funds, may pose a significant risk of personal
conflicts of interest. Several contracting tasks, by their nature,
elevate the risk of such conflicts. Those include substantive (as
compared to administrative or process-oriented) contract work
(hereinafter referred to as ``PCI-Risk'' contracts \33\) such as:
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\30\ 48 CFR 7.503(d).
\31\ Id. Sec. 2.101.
\32\ Id. Sec. 17.601.
\33\ The Conference believes that these activities are
particularly likely to pose a risk of personal conflicts of
interest. To the extent that the FAR Council or individual agencies
believe that other activities pose similar risks, they should remain
free to regulate contracts for such activities.
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Developing agency policy or regulations.
Providing alternative dispute resolution services on
contractual matters; legal advice involving interpretation of
statutes or regulations; significant substantive input relevant to
agency decision-making; or professional advice for improving the
effectiveness of Federal management processes and procedures.
Serving as the primary authority for managing or
administering a project or operating a facility.
Preparing budgets, and organizing and planning agency
activities.
Supporting substantive acquisition planning \34\ or
research and development activities.
---------------------------------------------------------------------------
\34\ The FAR Council has issued a proposed rule that would
establish personal conflict of interest standards for contractor
employees performing acquisition activities closely associated with
inherently governmental functions. Preventing Personal Conflicts of
Interest for Contractor Employees Performing Acquisition Functions,
74 FR at 58,588. To the extent it is ultimately implemented, this
rule would obviate the need for any additional FAR contract clause
with respect to these contracts.
---------------------------------------------------------------------------
Evaluating another contractor's performance or contract
proposal.
Assisting in the development of a statement of work or
in contract management.
Participating as a technical advisor to a source
selection board or as a member of a source evaluation board (i.e.,
boards designed to select or evaluate bids or proposals for
procurement contracts).
Information-Risk Contracts: Existing regulations also do not
comprehensively protect against contractor employees' disclosure or
misuse of non-public governmental, business, or personal information
learned while performing government contracts.\35\ As with personal
conflicts of interest, specific activities pose a grave risk of
contractor disclosure or misuse of non-public information, which
include (hereinafter referred to as ``Information-Risk'' contracts
\36\):
---------------------------------------------------------------------------
\35\ U.S. Gov't Accountability Office, Stronger Safeguards
Needed for Contractor Access to Sensitive Information, supra note
25, at 30 (recommending that the FAR Council provide guidance on the
use of non-disclosure agreements as a condition to contractors'
accessing sensitive information and on ``establishing a requirement
for prompt notification to appropriate agency officials of a
contractor's unauthorized disclosure or misuse of sensitive
information'').
\36\ The Conference believes that these activities are
particularly likely to pose a risk of disclosure or misuse of non-
public information. This recommendation does not define the term
``non-public information;'' the FAR Council would be responsible for
drafting language more precisely defining the types of information
and services covered. In doing so, the FAR Council could choose to
draw on existing definitions created for similar purposes. See,
e.g., 5 CFR 2635.703 (defining ``nonpublic information'' and
prohibiting government employees from misusing such information,
including information routinely withheld under 5 U.S.C. Sec. 552(b)
(FOIA exemptions)); U.S. Gov't Accountability Office, Stronger
Safeguards Needed for Contractor Access to Sensitive Information,
supra note 25, at 4-5 (defining a category of information that
requires safeguards against unauthorized disclosure). To the extent
that the FAR Council or individual agencies believe that other
activities pose similar risks, they should remain free to regulate
such activities through appropriate solicitation provisions or
contract clauses.
---------------------------------------------------------------------------
Contracts in which certain employees will receive
access to information relating to an agency's deliberative
processes, management operations, or staff that is not generally
released to the public.
Contracts in which certain employees will have access
to certain business-related information, including trade secrets,
non-public financial information, or other non-public information
that could be exploited for financial gain.\37\
---------------------------------------------------------------------------
\37\ For instance, if an employee of a contractor performing
auditing functions for the government were to learn that a large
manufacturing firm intends to open a new plant in coming months, the
employee could purchase property near the plant and reap a
substantial financial windfall. The contemplated regime would
require that the contractor train employees privy to such
information on their obligations to keep the information
confidential and to avoid transacting business on the basis of such
information, penalize employees who violate such obligations, and
report any employee violations to the contracting agency.
---------------------------------------------------------------------------
Contracts in which certain employees will have access
to personally identifying or other non-public personal information,
such as social security numbers, bank account numbers, or medical
records.\38\
---------------------------------------------------------------------------
\38\ U.S. Gov't Accountability Office, Stronger Safeguards
Needed for Contractor Access to Sensitive Information, supra note
24, at 6.
---------------------------------------------------------------------------
Recommendation
1. The Federal Acquisition Regulatory Council (``FAR Council'')
should promulgate model language for use in contracts posing a high
risk of either personal conflicts of interest or misuse of certain
non-public information.\39\ Current law does not adequately regulate
against the risks of contractor employee personal conflicts of
interest and misuse of non-public information. On occasion certain
agencies impose additional ethics requirements by supplemental
regulation or contract. In addition, certain contractors, especially
large companies, have adopted and enforced internal ethics codes.
Nevertheless, coverage varies significantly from agency to agency
and contract to contract. In order to bring consistency to this
process and ensure that the government's interests are adequately
protected, the FAR Council should draft model language in the
Federal Acquisition Regulation (``FAR'') for agency contracting
officers to use, with modifications appropriate to the nature of the
contractual services and risks presented, when soliciting and
negotiating contracts that are particularly likely to raise issues
of personal conflicts of interest or misuse of non-public
information.
---------------------------------------------------------------------------
\39\ The Conference takes no position on whether the contractual
language adopted in individual contracts should ``flow down'' to
sub-contractors and other persons besides prime contractors
performing work on government contracts. That issue is best left to
the discretion of the FAR Council.
---------------------------------------------------------------------------
2. The model FAR provisions or clauses should apply to PCI-Risk
and Information-Risk Contracts.\40\ The proposed FAR
[[Page 48795]]
provisions or clauses would apply only to PCI-Risk and Information-
Risk contracts (or solicitations for such contracts). At the same
time, contracting agencies should remain free to incorporate
contract language (or to promulgate agency-specific supplemental
regulations) dealing with other ethical risks they deem important
whether or not the contract at issue qualifies as a PCI-Risk or
Information-Risk contract. Thus, the model FAR provisions or clauses
adopted in response to this recommendation would serve as a floor
upon which agencies could build if they deemed it appropriate, but
would not supplant existing programs that now provide or may in the
future provide more demanding or expansive ethical protections.
---------------------------------------------------------------------------
\40\ The draft language would appear in part 52 of the FAR and
would consist of draft solicitation provisions (which are used in
soliciting contracts) and contract clauses (which are integrated
into negotiated contracts). The use of the plural forms
``provisions'' and ``clauses'' is not intended to exclude the
possibility that the FAR Council could implement the recommendations
with a single provision or clause. See the Preamble for the
definition of ``PCI-Risk'' and ``Information-Risk'' contracts.
---------------------------------------------------------------------------
3. Agencies should have the discretion whether to use or modify
the model FAR provisions or clauses. An agency contracting officer
would have the option to use the model FAR provisions or clauses
when soliciting and/or contracting for activities falling into the
PCI-Risk or Information-Risk categories. Because the provisions or
clauses would be optional, the contracting agency would enjoy the
discretion to modify the FAR language on a case-by-case basis to fit
the circumstances, and to decide to forego including any such
language if it deems that the particular contract at issue is
unlikely to pose a significant risk of personal conflicts of
interest or misuse of non-public information by contractor
personnel. Nevertheless, the FAR Council should encourage
contracting officers to use the model FAR language when applicable.
4. The FAR should include model provisions or clauses for use in
PCI-Risk procurements. The FAR Council should encourage agencies to
include these model provisions or clauses in contracting actions
involving PCI-Risk procurements.
The proposed FAR provisions or clauses should require the
contractor to certify \41\ that none of its employees who is in a
position to influence government actions \42\ has a conflict of
interest or that conflicted employees will be screened from
performing work under any contract. Once a contractor is selected,
the contract itself should include a clause requiring the contractor
to train employees on recognizing conflicts, to implement a system
for employees who can influence government action to report
conflicts to the contractor, to screen any conflicted employees from
contract performance, to report to the agency periodically on its
efforts to protect against employee conflicts, and to disclose to
the agency any instances of employee misconduct (as well as
disciplinary action taken against any offending employee). A
contractor's failure to implement an adequate system for employee
conflict certification, to disclose or correct instances of employee
misconduct, or to take appropriate disciplinary measures against
employees who commit misconduct may be grounds for contract
termination. In addition, a contractor that repeatedly proves
incapable or unwilling to honor such contractual obligations may be
subject to suspension o
