Defense Federal Acquisition Regulation Supplement; Contractors Performing Private Security Functions (DFARS Case 2011-D023), 35883-35887 [2012-14304]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 77, Number 116 (Friday, June 15, 2012)]
[Rules and Regulations]
[Pages 35883-35887]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14304]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 216, 225, and 252

RIN 0750-AH28


Defense Federal Acquisition Regulation Supplement; Contractors 
Performing Private Security Functions (DFARS Case 2011-D023)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is adopting as final, with changes, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement those sections of several National Defense Authorization 
Acts which establish minimum processes and requirements for the 
selection, accountability, training, equipping, and conduct of 
personnel performing private security functions under DoD contracts.

DATES: Effective Date: June 15, 2012.

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, telephone 571-
372-6098.

SUPPLEMENTARY INFORMATION:

I. Background

    The interim rule implemented the legislation by establishing (1) 
Regulations addressing the selection, training, equipping, and conduct 
of personnel performing private security functions in areas of 
contingency operations, complex contingency operations, or other 
military operations or exercises that are designated by the combatant 
commander, (2) a contract clause, and (3) remedies. DoD published the 
interim rule in the Federal Register at 76 FR 52133 on August 19, 2011, 
to implement section 862, as amended, of the National Defense 
Authorization Act (NDAA) for Fiscal Year (FY) 2008. Section 862 was 
amended by section 853 of the NDAA for FY 2009 and sections 831 and 832 
of the NDAA for FY 2011. In addition, the DoD Instruction addressing 
private Security Contractors (DoDI 3020.50) was revised on August 1, 
2011, and the final rule to implement section 862 of the NDAA for FY 
2008, as amended, 32 CFR part 159, Private Security Contractors 
Operating in Contingency Operations, was published in the Federal 
Register on August 11, 2011 (76 FR 49651). Public comments on the final 
rule at 32 CFR part 159 had been solicited by publication of an interim 
rule on July 17, 2009.

II. Discussion and Analysis of the Public Comments

    Three respondents submitted comments on the interim rule. A 
discussion of the comments and the changes made to the rule as a result 
of those comments are provided as follows:

A. Summary of Significant Changes

    The following significant changes to the DFARS are being made by 
this rule:
     The definition of ``private security functions'' in the 
clause at DFARS 225.370-3 was revised to conform to the DoDI, and limit 
the definition to the specified criteria.
     The types of active, non-lethal countermeasures that must 
be reported when used has been added at DFARS 225.370-4(c)(1)(iv)(E) 
and 252.225-7039(b)(1)(iv)(E).
     The types of Government-authorized investigations with 
which the contractor is required to cooperate are more narrowly 
described in order to conform to the limitations in the statute. 
Changes have been made to DFARS 225.370-4(c)(3) and the clause at DFARS 
252.225-7039(b)(3). In addition, a definition of ``full cooperation'' 
has been added to the clause at DFARS 252.225-7039 to allay concerns 
about waiver of attorney-client privilege.
     The remedies at DFARS 225.370-5(a) have been revised to 
remove paragraph (a)(4), a discussion of the right to terminate for 
default, because this right is already covered by the contract 
termination clauses.
     The applicability of the rule (DFARS 225.370-2, 225.370-
4(b), and 225.370-6) and references to the title of DoDI 3020.50 at 
DFARS 225.370-4 and 252.225-7039(b)(2)(i)) have been updated to conform 
to the revised DoDI 3020.50.

 B. Analysis of Public Comments

1. Definition of Private Security Functions
    Comment: Two respondents commented that the definition of ``private 
security functions'' was (a) too broad and (b) inconsistent among the 
DoDI, the DFARS text, and the clause at DFARS 252.225-7039, Contractors 
Performing Private Security Functions.
    Response: The definition of ``private security functions'' has been 
revised to limit the definition to the specified criteria all inclusive 
(rather than just ``including'' the criteria), consistent with the 
DoDI. The essence of the definition cannot be changed substantially in 
the DFARS from that in the controlling DoDI.
2. The Contractor's Requirement To Ensure Compliance of Contractor 
Personnel Performing Private Security Functions
    Comment: One respondent stated that the requirement for prime 
contractors to ensure that personnel performing private security 
functions comply with numerous administrative and reporting 
requirements and are briefed on and understand various enumerated laws, 
regulations, orders, directives, instructions, and rules related to the 
private security function imposes ``untenable oversight, policing, and 
enforcement obligations,'' particularly for non-private security 
function prime contractors that subcontract with a private security 
function provider. The respondent recommended that the prime 
contractor's obligation be limited to the administrative functions of 
passing the requirements on to the private security function provider 
and conducting audits or other administrative review functions to 
verify compliance.
    Response: No change has been made in the final rule because the 
law, at

[[Page 35884]]

section 862(b)(2), as amended, requires the contractor, without regard 
to whether it is a direct provider of private security functions, to 
``ensure'' that its employees and any subcontractors' employees who are 
responsible for performing private security functions comply with the 
regulations prescribed under subsection (a) of section 862 implemented 
as DoDI 3020.50. In addition, the clause at DFARS 252.225-7039(b)(1), 
requires DoD to identify the applicable private security functions in 
the contract and make available to the contractor the relevant orders, 
directives, and instructions.
3. Contractors' Obligation To Cooperate With Government investigations
    Comment: One respondent noted that DFARS 225.370-4(c)(3) imposes on 
contractors the obligation to cooperate with any Government-authorized 
investigation ``by providing access to employees performing private 
security functions and relevant information in the possession of the 
contractor,'' but fails to provide any explanation of the scope and 
limitations on this requirement. The respondent recommended that the 
final rule define the contractor's obligation to cooperate, as in the 
mandatory disclosure provisions of FAR 52.203-13, Contractor Code of 
Business Ethics and Conduct, by specifying that such cooperation does 
not require the contractor to waive attorney-client privilege or the 
protections afforded by the attorney work-product doctrine.
    Response: The final rule has been amended to more clearly define 
the scope and limitations of the contractor's obligation to cooperate 
with Government investigations. The revised text reflects the 
limitations on the investigations specifically addressed by the 
statute, as amended (see DFARS 225.370-4(c)(3) and 252.225-7039(b)(3)). 
The limitation on information to that in the contractor's possession 
regarding the incident concerned was in the interim rule. Additionally, 
the final rule requires the contractor to provide ``full cooperation'' 
with any Government-authorized investigation. In addition, the 
definition of ``full cooperation'' included in the clause reflects the 
mandatory disclosure provisions of FAR 52.203-13, Contractor Code of 
Business Ethics and Conduct, with minor edits, as recommended by the 
respondent.
4. Removal of Personnel for Failure To Comply With ``Applicable 
Requirements''
    Comment: One respondent stated that the interim rule, at DFARS 
225.370-5(a)(1), grants the Government the very broad power to direct a 
contractor to remove any personnel at its own expense if the personnel 
fail to comply with or violate applicable requirements. The respondent 
believed that it is unclear whether the ``applicable requirements'' are 
solely limited to those spelled out in the interim rule or if they 
include additional requirements not identified in the interim rule.
    Response: No change has been made in the final rule because the 
applicable requirements for contracts performed outside the United 
Sates have been clearly defined in DFARS subpart 225.3 and paragraph 
(b) of the clause at DFARS 252.225-7039, Contractors Performing Private 
Security Functions. As noted in the response to comment category B.2 
above, relevant orders, directives, and instructions must be made 
available to the contractor in a single location, including an internet 
Web site (see section 862(a)(3) of the statute, as amended), and they 
must be updated as they change, e.g., a change in guidance from a 
geographic combatant commander.
5. Award Fee Reduction or Denial for Failure To Comply With Private 
Security Functions Requirements
    Comment: One respondent was concerned with the implementation of 
section 862(d), as amended. The respondent concluded that the DFARS 
interim rule went beyond the requirements of the statute ``by requiring 
the contracting officer to include this evaluation requirement in an 
award-fee plan. This subpart then provides the contracting officer the 
flexibility to determine whether to reduce, deny, or recover all or 
part of award fees.''
    Response: No change has been made in the final rule in response to 
this comment. FAR 16.401(e)(2) states that the determination of the 
amount of award fee and the methodology for determining the award fee 
are unilateral decisions made solely at the discretion of the 
Government. In addition, FAR 16.401(e)(3) requires that all contracts 
providing for award fees must be supported by an award-fee plan that 
establishes the procedures for evaluating award fee and an award-fee 
board for conducting the award-fee evaluation. The use of an award-fee 
type contract provides the Government the maximum, subjective 
flexibility in the determination of the factors that will be 
considered, i.e., the award-fee plan, and the amount of award fee 
granted in a performance period. The statute requires that an 
additional factor, i.e., the failure of a contractor to comply with 
contractual requirements pertaining to the performance of private 
security functions, must always be a consideration for award fees on 
any award-fee contract calling for performance in the applicable areas.
6. Applicability
    Comments: One respondent submitted two comments on the 
applicability of the interim rule. First, the respondent stated that 
the statute limits the regulations to ``combat operations or other 
significant military operations'' and the interim rule goes beyond 
that. Second, the respondent noted that the interim rule requires DoD 
subcontractors for commercial items and commercial components to comply 
with requirements imposed on private security providers and recommended 
that the applicability of the DFARS coverage be modified to require 
coverage only for contracts and subcontracts that provide security as a 
primary function.
    Response: The applicability of the DFARS final rule has been 
revised, at DFARS 225.370-2, to encompass the categories as specified 
in the DoDI, except that ``combat operations'' are identified 
separately from ``contingency operations,'' as specified in the 
statute. ``Complex contingency operations'' are now identified as 
``humanitarian or peacekeeping operations,'' which is a term defined in 
statute and FAR 2.101. The Secretary of Defense has not formally 
designated Iraq or Afghanistan as ``combat operations,'' yet these 
areas are clearly intended to be covered by the regulations for private 
security functions. Therefore, ``contingency operations'' are covered. 
Whereas Governmentwide implementation will be restricted to combat 
operations and other significant military operations, the DoDI requires 
somewhat broader application for DoD contracts.
    Congress did not contemplate limiting applicability of the 
regulations to only those contractors providing primarily private 
security functions. To do so would have resulted in anomalies such as 
sanctions for a private security contractor whose employee wounded or 
killed a civilian while not sanctioning a contractor providing 
construction goods or foodstuffs whose personnel providing security 
wounded or killed a civilian. These requirements are applicable only 
when the contract or subcontract performance is outside the United 
States.
7. Reporting Requirements
    Comment: One respondent noted a number of perceived shortcomings in 
the reporting requirements at DFARS

[[Page 35885]]

225.370-4(c)(1)(iv). Specifically, the respondent was concerned that 
the requirement to report any property destruction could overwhelm 
industry and Government employees alike with reports of incidental and 
de minimis damage to property. The respondent was concerned that the 
requirement to report incidents in which a firearm is discharged would 
include planned firearm discharges occurring during training and 
maintenance. In addition, the respondent requested that the DFARS 
include examples of active, non-lethal countermeasures.
    Response: The statute requires contractors, at section 
862(b)(2)(A)(iv), to report incidents in which (1) A weapon is 
discharged by personnel performing private security functions; (2) 
personnel performing private security functions are killed or injured; 
or (3) persons are killed or injured, or property is destroyed, as a 
result of conduct by contractor personnel. The second comment resulted 
in the addition of a listing of active, non-lethal countermeasures in 
both the DFARS text see DFARS 225.370-4(c)(1)(iv)(E) and the clause at 
252.225-7039.
8. Statutory Remedies Do Not Include Contract Termination
    Comment: One respondent stated that the legislation does not allow 
the Government to terminate a contract for default in the case of 
noncompliance.
    Response: The Government has the right to terminate a contract for 
default pursuant to one of the termination clauses at FAR 52.249-6 
(cost-reimbursement), -8 (fixed-price supply and service), -10 
(construction), or -11 (personal services) that is included in every 
contract, as applicable. DoD does not acquire new or additional 
termination-for-default rights by including such coverage in the clause 
at DFARS 252.225-7039. Therefore, the final rule has removed the 
termination language from DFARS 225.370-5 and the clause at DFARS 
252.225-7039.
    While the statute does not specifically list termination of a 
contract for default when a contractor's failure to comply is severe, 
prolonged, or repeated, it does provide that the contractor must be 
referred to the agency suspension or debarment official and that the 
failure may be a cause for suspension or debarment of the contractor. 
Once a contractor appears on the Excluded Parties List System (FAR 
9.404), all Government agencies are prohibited from awarding contracts 
or consenting to subcontracts with the contractor, unless there is an 
agency head determination to do so (FAR 9.405(a)).

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

IV. Regulatory Flexibility Act

    A final regulatory flexibility analysis has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
and is summarized as follows:
    DoD is adopting as final, with changes, an interim rule amending 
the Defense Federal Acquisition Regulation Supplement (DFARS) to 
implement section 862 of the National Defense Authorization Act (NDAA) 
for Fiscal Year (FY) 2008, as amended by section 853 of the NDAA for FY 
2009 and sections 831 and 832 of the NDAA for FY 2011. The final rule 
has been updated to conform with the governmentwide regulation at 32 
CFR part 159, entitled ``Private Security Contractors Operating in 
Contingency Operations.'' In addition, this final rule implements DoDI 
3020.50, ``Private Security Contractors (PSCs) Operating in Contingency 
Operations, Humanitarian or Peace Operations, or Other Military 
Operations or Exercises,'' which provides procedures for personnel 
performing private security functions for DoD. This final rule impacts 
only private security contractors performing outside the United States 
in areas of combat operations and other significant military operations 
designated by the Secretary of Defense, contingency operations, or 
other military operations designated by the combatant commanders. DoD 
does not expect this final rule to have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because it impacts 
only private security contractors performing outside the United States.
    In FY 2010, DoD awarded 1,839 contracts for performance in Iraq and 
Afghanistan. Of this total, 361, or 20 percent, were awarded to small 
businesses. Firms performing private security functions in these areas 
were already required to report the occurrence of incidences such as 
those listed in the clause at DFARS 252.225-7039, Contractors 
Performing Private Security Functions, but there was no consistency in 
the manner of reporting or the individual to whom the report was to be 
made. This DFARS final rule provides this consistency and clarity and, 
in that sense, serves to relieve the burdens on small businesses.
    No comments were received from the Chief Counsel for Advocacy of 
the Small Business Administration in response to the rule.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules. No alternatives have been identified that accomplish the 
stated objectives of the applicable statutes.

V. Paperwork Reduction Act

    This rule contains information collection requirements that require 
the approval of the Office of Management and Budget under the Paperwork 
Reduction Act (44 U.S.C. chapter 35). The rule affects the 
certification and information collection requirements in the provisions 
at DFARS 225.7402-3, currently approved under OMB Control Number 0704-
0460, titled ``Synchronized Predeployment and Operational Tracker 
(SPOT) System,'' effective through March 31, 2013. No impact is 
anticipated, however, because DoD contractors operating in areas of 
combat operations, contingency operations, or other military operations 
or exercises are currently required to use SPOT for registering 
personnel and weapons, as well as armored vehicles, helicopters, and 
other military vehicles operated by personnel performing private 
security functions, and to report the incidents addressed in the clause 
at DFARS 252.225-7039.

List of Subjects in 48 CFR Parts 216, 225, and 252

    Foreign currencies, Government procurement, Reporting and 
recordkeeping requirements.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

    Accordingly, the interim rule amending 48 CFR parts 216, 225, and 
252, which was published at 76 FR 52133 on August 19, 2011, is adopted 
as a final rule with the following changes:

0
1. The authority citation for 48 CFR parts 225 and 252 continues to 
read as follows:


[[Page 35886]]


    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 225--FOREIGN ACQUISITION

0
2. Sections 225.370-2 and 225.370-3 are revised to read as follows:


225.370-2  Applicability.

    This section applies to acquisitions for supplies and services that 
require the performance of private security functions outside the 
United States in areas of--
    (a) Combat and other significant military operations designated by 
the Secretary of Defense;
    (b) Contingency operations (see FAR 2.101);
    (c) Humanitarian or peacekeeping operations; or
    (d) Other military operations or exercises designated by the 
combatant commander.


225.370-3  Definitions.

    As used in this section--
    Full cooperation and private security functions are defined in the 
clause at 252.225-7039, Contractors Performing Private Security 
Functions.

0
3. Section 225.370-4 is amended--
0
a. By revising paragraphs (a) and (b);
0
b. In paragraph (c)(1) introductory text by removing ``Ensure that all 
employees'' and adding ``Ensure that the contractor and all employees'' 
in its place;
0
c. By revising paragraph (c)(1)(iv)(E);
0
d. In paragraph (c)(2) introductory text by removing ``Ensure that all 
employees'' and adding ``Ensure that the contractor and all employees'' 
in its place; and
0
e. By revising paragraph (c)(3).
    The revisions read as follows:


225.370-4  Policy.

    (a) The policy, responsibilities, procedures, accountability, 
training, equipping, and conduct of personnel performing private 
security functions in designated areas are addressed in Department of 
Defense Instruction (DoDI) 3020.50, Private Security Contractors (PSCs) 
Operating in Contingency Operations, Humanitarian or Peace Operations, 
or Other Military Operations or Exercises, at https://www.dtic.mil/whs/directives/corres/pdf/302050p.pdf.
    (b) The requirements of this section apply to contractors that 
employ private security contractors outside the United States in areas 
of combat and other significant military operations designated by the 
Secretary of Defense, contingency operations, humanitarian or 
peacekeeping operations, or other military operations or exercises 
designated by the combatant commander, whether the contract is for the 
performance of private security functions or other supplies or 
services.
    (c) * * *
    (1) * * *
    (iv) * * *
    (E) Active, non-lethal countermeasures (other than the discharge of 
a weapon, including laser optical distracters, acoustic hailing 
devices, electromuscular TASER guns, blunt-trauma devices like rubber 
balls and sponge grenades, and a variety of other riot control agents 
and delivery systems) are employed by personnel performing private 
security functions in response to a perceived immediate threat;
* * * * *
    (3) Provide full cooperation with any Government-authorized 
investigation into incidents reported pursuant to paragraph (b)(1)(iv) 
of the clause at 252.225-7039, Contractors Performing Private Security 
Functions, and incidents of alleged misconduct by personnel performing 
private security functions by providing access to employees performing 
private security functions and relevant information in the possession 
of the contractor.


225.370-5  [Amended]

0
4. Section 225.370-5 is amended--
0
a. In paragraph (a)(2), by adding ``and'' at the end of the sentence;
0
b. In paragraph (a)(3), by removing ``paid for such period; and'' and 
adding ``paid for such period (see 216.405-2-71).'' in its place;
0
c. By removing paragraph (a)(4); and
0
d. In paragraph (b), by removing ``significant, or repeated'' and 
adding ``significant, severe, prolonged, or repeated'' in its place.

0
5. Section 225.370-6 is revised to read as follows:


225.370-6  Contract clause.

    Use the clause at 252.225-7039, Contractors Performing Private 
Security Functions, in all solicitations and contracts to be performed 
outside the United States in areas of--
    (a) Combat and other significant military operations designated by 
the Secretary of Defense;
    (b) Contingency operations (see FAR 2.101);
    (c) Humanitarian or peacekeeping operations; or
    (d) Other military operations or exercises designated by the 
combatant commander.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Section 252.225-7039 is amended--
0
a. By removing the clause date and adding ``(JUN 2012)'' in its place;
0
b. By revising paragraph (a);
0
c. In introductory sentence (b)(1), by removing ``Ensure that all 
employees'' and adding ``Ensure that the Contractor and all employees'' 
in its place;
0
d. In paragraph (b)(1)(i), by removing ``Personnel Identity 
Verification of Contractor Personnel'' and adding ``Personal Identity 
Verification of Contractor Personnel'' in its place;
0
e. By revising paragraph (b)(1)(iv)(E);
0
f. In introductory sentence (b)(2), by removing ``Ensure that all 
employees'' and adding ``Ensure that the Contractor and all employees'' 
in its place;
0
g. In paragraph (b)(2)(i), by removing ``Combat Operations, or Other 
Significant Military Operations'' and adding ``Humanitarian or Peace 
Operations, or Other Military Operations or Exercises'' in its place;
0
h. By revising paragraph (b)(3);
0
i. In paragraph (c)(2), by adding ``and'' at the end of the sentence;
0
j. In paragraph (c)(3), by removing ``paid for such period; and'' and 
adding ``paid for such period.'' in its place;
0
k. By revising paragraph (c)(4); and
0
l. By revising paragraph (e).
    The revisions read as follows:


252.225-7039  Contractors Performing Private Security Functions.

* * * * *
    (a) Definitions.
    Full cooperation--
    (i) Means disclosure to the Government of the information 
sufficient to identify the nature and extent of the incident and the 
individuals responsible for the conduct. It includes providing timely 
and complete response to Government auditors' and investigators' 
requests for documents and access to employees with information;
    (ii) Does not foreclose any Contractor rights arising in law, the 
FAR, the DFARS, or the terms of the contract. It does not require--
    (A) The Contractor to waive its attorney-client privilege or the 
protections afforded by the attorney work product doctrine; or
    (B) Any officer, director, owner, or employee of the Contractor, 
including a sole proprietor, to waive his or her attorney-client 
privilege or Fifth Amendment rights; and
    (C) Does not restrict the Contractor from--

[[Page 35887]]

    (1) Conducting an internal investigation; or
    (2) Defending a proceeding or dispute arising under the contract or 
related to a potential or disclosed violation.
    Private security functions means the following activities engaged 
in by a contractor:
    (i) Guarding of personnel, facilities, designated sites, or 
property of a Federal agency, the contractor or subcontractor, or a 
third party.
    (ii) Any other activity for which personnel are required to carry 
weapons in the performance of their duties.
    (b) * * *
    (1) * * *
    (iv) * * *
    (E) Active, non-lethal countermeasures (other than the discharge of 
a weapon, including laser optical distracters, acoustic hailing 
devices, electromuscular TASER guns, blunt-trauma devices like rubber 
balls and sponge grenades, and a variety of other riot control agents 
and delivery systems) are employed by personnel performing private 
security functions in response to a perceived immediate threat;
* * * * *
    (3) Provide full cooperation with any Government-authorized 
investigation into incidents reported pursuant to paragraph (b)(1)(iv) 
of this clause and incidents of alleged misconduct by personnel 
performing private security functions by providing access to employees 
performing private security functions and relevant information in the 
possession of the Contractor regarding the incident concerned.
    (c) * * *
    (4) If the performance failures are significant, severe, prolonged, 
or repeated, the contracting officer shall refer the contractor to the 
appropriate suspension and debarment official.
* * * * *
    (e) Subcontracts. The Contractor shall include the substance of 
this clause, including this paragraph (e), in all subcontracts that 
will be performed outside the United States in areas of combat and 
other significant military operations designated by the Secretary of 
Defense, contingency operations, humanitarian or peacekeeping 
operations, or other military operations or exercises designated by the 
Combatant Commander.

[FR Doc. 2012-14304 Filed 6-14-12; 8:45 am]
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