Federal Acquisition Regulation; Information on Corporate Contractor Performance and Integrity, 11988-11991 [2016-04773]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 81, Number 44 (Monday, March 7, 2016)]
[Rules and Regulations]
[Pages 11988-11991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04773]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 4, 9, 22, and 52

[FAC 2005-87; FAR Case 2013-020; Item I; Docket 2013-0020, Sequence 1]
RIN 9000-AM74


Federal Acquisition Regulation; Information on Corporate 
Contractor Performance and Integrity

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement section 852 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013 to 
include in the Federal Awardee Performance and Integrity Information 
System (FAPIIS), to the extent practicable, identification of any 
immediate owner or subsidiary, and all predecessors of an offeror that 
held a Federal contract or grant within the last three years. The 
objective is to provide a more comprehensive understanding of the 
performance and integrity of the corporation before awarding a Federal 
contract.

DATES: Effective: April 6, 2016.

[[Page 11989]]


FOR FURTHER INFORMATION CONTACT: Ms. Cecelia Davis, Procurement 
Analyst, at 202-219-0202, for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAC 2005-87, FAR Case 2013-
020.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 79 FR 71975 on December 4, 2014. The comment period closed 
on February 2, 2015. Two respondents submitted comments on the proposed 
rule.
    The final rule implements section 852 of the NDAA for FY 2013 (Pub. 
L. 112-239) with regard to Federal contracts. Section 852 requires that 
the FAPIIS include, to the extent practicable, information on any 
parent, subsidiary, or successor entities to a corporation in a manner 
designed to give the acquisition officials using the database a 
comprehensive understanding of the performance and integrity of the 
corporation in carrying out Federal contracts and grants. This final 
rule addresses the collection of information with regard to offerors 
that are responding to a solicitation for a Federal contract. The data 
on the immediate owner and direct subsidiaries of an entity will be 
available through FAPIIS, based on the data obtained from offerors in 
response to the FAR provision 52.204-17, Ownership or Control of 
Offeror, which was published in the Federal Register at 79 FR 31187 on 
May 30, 2014, as a final rule under FAR Case 2012-024.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the comments in the 
development of the final 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

    There were no changes made in the final rule in response to the 
public comments received.

B. Analysis of Public Comments

    Comment: One respondent commented that it would be helpful if the 
relevant FAR provisions and FAR clause 52.204-20 clarified whether the 
three year ``lookback'' period starts on the effective date of when the 
predecessor merged or was acquired by the successor or the date the 
contracts of the predecessor were novated from the predecessor to the 
successor.
    Response: The ``lookback'' period starts on the date the offeror 
signs the representation. If, within the three years prior to signing 
the representation, there was a merger or acquisition, it shall be 
reported. The date of novation is not relevant for purposes of this 
rule.
    Comment: One respondent supported the statute because it requires 
that information be provided to the contracting officers to aid in 
making responsibility determinations, and supported the position that 
the ``further the distance between entities, the less relevant the 
information is likely to be for establishing responsibility of the 
offeror.''
    Response: Noted.
    Comment: One respondent commented that the proposed rule's 
requirement to report data on all predecessors of the offeror that 
received a Federal contract or grant within the last three years would 
apply an undue burden on prospective contractors and not achieve the 
Government's stated objective of providing a more comprehensive 
understanding of a potential contractor's performance and integrity. 
The respondent proposed that publicly traded companies subject to 
Securities and Exchange Commission requirements be exempt from this 
requirement because it instills a burden without benefit to the 
Government.
    Response: The statute does not allow for this exemption.
    Comment: One respondent commented that large multi-national 
organizations many times reorganize business units in order to 
effectively respond to changing needs of the marketplace. These 
reorganizations can include alternate legal structures. The assets of 
one legal entity may pass through three or four more before landing at 
the new entity. The respondent proposed that where the ultimate owner 
remains the same before and after a transaction, the contractor be 
exempted from providing information on predecessor entities. According 
to the respondent, this is consistent with the Government's exclusion 
of a ``new offices/divisions of the same company'' from the definition 
of ``successor''.
    Response: This recommendation does not meet the requirements of the 
statute.
    Comment: One respondent commented that contracting officers and 
their counsel perform a rigorous review and analysis to deal with the 
novation process and feels that there should be no requirement to 
identify prior owners within the FAPIIS because the required 
responsibility determination would have been conducted through 
novation.
    Response: The statute requires collection of information on 
predecessor, regardless of any novation action by the Government.
    Comment: The respondent commented that the reporting of the 
ultimate owners became effective on November 1, 2014, and believe that 
agencies should allow contractors and contracting officers time to 
implement and evaluate the results of this new requirement before 
adding more requirements that may not aid contracting officers in 
responsibility and integrity evaluations.
    Response: The statute does not allow the Government to delay the 
implementation of this Act.
    Comment: The respondent feels that commercially available off-the-
shelf (COTS) items should be excluded from this requirement.
    Response: The Administrator of the Office of Federal Procurement 
Policy has determined that this rule applies to COTS items.

C. Applicability

    Based on determinations by the FAR signatories (DoD, GSA, and NASA) 
and the Administrator for Federal Procurement Policy, in accordance 
with 41 U.S.C. 1905, 1906, and 1907, this rule applies to all 
solicitations and resultant contracts, including contracts and 
subcontracts for acquisitions in amounts not greater than the 
simplified acquisition threshold, and contracts and subcontracts for 
the acquisition of commercial items, (including commercially available 
off-the-shelf items). Because the emphasis of section 852 of the NDAA 
for FY 2013 (Pub. L. 112-239) is to provide acquisition officials using 
FAPIIS with a comprehensive understanding of the performance and 
integrity of the corporation in carrying out Federal contracts, it is 
not in the best interest of the Federal Government to waive the 
applicability of section 852 to contracts and subcontracts in amounts 
not greater than the simplified acquisition threshold, or for the 
acquisition of commercial items (including COTS items).

III. Executive Order 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

[[Page 11990]]

and benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This is not a significant regulatory action and, 
therefore, was not 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

    DoD, GSA, and NASA do not expect this 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 the burden is minimal to provide the CAGE Code and the name of 
all predecessors that held a Federal contract or grant within the last 
three years. However, a Final Regulatory Flexibility Analysis has been 
performed and is summarized as follows:

    This case implements section 852 of the NDAA for FY 2013 (Pub. 
L. 112-239). The objective of this rule is to provide acquisition 
officials using the Federal Awardee Performance and Integrity 
Information System (FAPIIS) a comprehensive understanding of the 
performance and integrity of the corporation in carrying out Federal 
contracts. The legal basis for the rule is section 852 of the NDAA 
for FY 2013 (Pub. L. 112-239).
    No comments were received from the public relative to the 
initial regulatory flexibility analysis.
    It is not expected that this rule will have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because the burden is minimal to provide the CAGE Code and the name 
of all predecessors that held a Federal contract or grant within the 
last three years.
    The data on immediate owner and direct subsidiaries of an entity 
will be available through FAPIIS, based on the data obtained from 
offerors in response to the FAR provision 52.204-17, Ownership or 
Control of Offeror, that requires this information for the CAGE 
code. The Federal Government received offers from approximately 
413,800 unique vendors in FY 2011. Approximately 275,900 of these 
offers were from unique small businesses, which will be required to 
respond to the proposed provision.
    The rule requires approximately one submission per year, with an 
estimated average of .1 preparation hours per response. The response 
time will be less for most respondents, who will only be required to 
check a box. Only those respondents that check ``is'' will have to 
provide a minimal amount of information (CAGE Code and legal name of 
all predecessors that held a Federal contract or grant within the 
last three years). A mid-level professional skill would be required 
in some instances to know whether the entity is a successor, as 
defined in the rule.
    There are no exemptions from the rule for small entities, 
because the law does not provide for any such exemption. However, 
the final rule limits the review of predecessor entities to three 
years, and only requires information relating to the most recent 
predecessor, if any.
    DoD, GSA and NASA did not identify any significant alternatives 
that would reduce impact on small business and still accomplish the 
objectives of the statute and the polices.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy 
of the FRFA to the Chief Counsel for Advocacy of the Small Business 
Administration.

V. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The 
rule contains information collection requirements. The Office of 
Management and Budget (OMB) has cleared this information collection 
requirement under OMB Control Number 9000-0189, titled: Identification 
of Predecessors.

List of Subjects in 48 CFR Parts 1, 4, 9, 22, and 52

    Government procurement.

    Dated: February 29, 2016.
William Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.
    Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 4, 9, 22, and 
52 as set forth below:

0
1. The authority citation for 48 CFR parts 1, 4, 9, 22, and 52 
continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM


1.106  [Amended]

0
2. Amend section 1.106, in the table following the introductory text, 
by adding in numerical sequence, FAR segment ``52.204-20'' and its 
corresponding OMB Control No. ``9000-0189''.

PART 4--ADMINISTRATIVE MATTERS

0
3. Amend section 4.1202 by redesignating paragraphs (a)(6) through (30) 
as paragraphs (a)(7) through (31), respectively, and adding paragraph 
(a)(6) to read as follows.


4.1202  Solicitation provision and contract clause.

    (a) * * *
    (6) 52.204-20, Predecessor of Offeror.
* * * * *


0
4. Amend section 4.1804 by adding paragraph (d) to read as follows:


4.1804  Solicitation provisions and contract clause.

* * * * *
    (d) Insert the provision at 52.204-20, Predecessor of Offeror, in 
all solicitations that include the provision at 52.204-16, Commercial 
and Government Entity Code Reporting.

PART 9--CONTRACTOR QUALIFICATIONS

0
5. Amend section 9.104-6 by revising paragraphs (a) and (b) to read as 
follows:


9.104-6  Federal Awardee Performance and Integrity Information System.

    (a)(1) Before awarding a contract in excess of the simplified 
acquisition threshold, the contracting officer shall review the 
performance and integrity information available in the Federal Awardee 
Performance and Integrity Information System (FAPIIS), (available at 
www.ppirs.gov, then select FAPIIS), including FAPIIS information from 
the System for Award Management (SAM) Exclusions and the Past 
Performance Information Retrieval System (PPIRS).
    (2) In accordance with 41 U.S.C. 2313(d)(3), FAPIIS also 
identifies--
    (i) An affiliate that is an immediate owner or subsidiary of the 
offeror, if any (see 52.204-17, Ownership or Control of Offeror); and
    (ii) All predecessors of the offeror that held a Federal contract 
or grant within the last three years (see 52.204-20, Predecessor of 
Offeror).
    (b)(1) When making a responsibility determination, the contracting 
officer shall consider all the information available through FAPIIS 
with regard to the offeror and any immediate owner, predecessor, or 
subsidiary identified for that offeror in FAPIIS, as well as other past 
performance information on the offeror (see subpart 42.15).
    (2) For evaluation of information available through FAPIIS relating 
to an affiliate of the offeror, see 9.104-3(c).
    (3) For source selection evaluations of past performance, see 
15.305(a)(2). Contracting officers shall use sound judgment in 
determining the weight and relevance of the information contained in 
FAPIIS and how it relates to the present acquisition.
    (4) Since FAPIIS may contain information on any of the offeror's 
previous contracts and information covering a five-year period, some of 
that information may not be relevant to a determination of present 
responsibility, e.g., a prior administrative action such as debarment 
or suspension that has expired or otherwise been resolved, or

[[Page 11991]]

information relating to contracts for completely different products or 
services.
    (5) Because FAPIIS is a database that provides information about 
prime contractors, the contracting officer posts information required 
to be posted about a subcontractor, such as trafficking in persons 
violations, to the record of the prime contractor (see 
42.1503(h)(1)(v)). The prime contractor has the opportunity to post in 
FAPIIS any mitigating factors. The contracting officer shall consider 
any mitigating factors posted in FAPIIS by the prime contractor, such 
as degree of compliance by the prime contractor with the terms of FAR 
clause 52.222-50.
* * * * *

0
6. Amend section 9.105-1 by revising the introductory text of paragraph 
(c) to read as follows:


9.105-1  Obtaining information.

* * * * *
    (c) In making the determination of responsibility, the contracting 
officer shall consider information available through FAPIIS (see 9.104-
6) with regard to the offeror and any immediate owner, predecessor, or 
subsidiary identified for that offeror in FAPIIS, including information 
that is linked to FAPIIS such as from SAM, and PPIRS, as well as any 
other relevant past performance information on the offeror (see 9.104-
1(c) and subpart 42.15). In addition, the contracting officer should 
use the following sources of information to support such 
determinations:
* * * * *

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS


22.1006  [Amended]

0
7. Amend section 22.1006 by removing from paragraph (a)(2)(i)(C) 
``52.204-8(c)(2)(iii) or (iv)'' and adding ``52.204-8(c)(2)'' in its 
place; removing from paragraph (e)(2)(i) ``52.204-8(c)(2)(iii)'' and 
adding ``52.204-8(c)(2)'' in its place; and removing from paragraph 
(e)(4)(i) ``52.204-8(c)(2)(iv)'' and adding ``52.204-8(c)(2)'' in its 
place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Amend section 52.204-8 by--
0
a. Revising the date of provision;
0
b. Redesignating paragraphs (c)(2)(ii) through (vii) as paragraphs 
(c)(2)(iii) through (viii), respectively; and
0
c. Adding paragraph (c)(2)(ii).
    The revision and addition read as follows:


52.204-8  Annual Representations and Certifications.

* * * * *

Annual Representations and Certifications (APR 2016)

* * * * *
    (c) * * *
    (2) * * *
    ____ (ii) 52.204-20, Predecessor of Offeror.
* * * * *

0
9. Add section 52.204-20 to read as follows:


52.204-20  Predecessor of Offeror.

    As prescribed in 4.1804(d), insert the following provision:

Predecessor of Offeror (APR 2016)

    (a) Definitions. As used in this provision--
    Commercial and Government Entity (CAGE) code means--
    (1) An identifier assigned to entities located in the United 
States and its outlying areas by the Defense Logistics Agency (DLA) 
Contractor and Government Entity (CAGE) Branch to identify a 
commercial or government entity, or
    (2) An identifier assigned by a member of the North Atlantic 
Treaty Organization (NATO) or by NATO's Support Agency (NSPA) to 
entities located outside the United States and its outlying areas 
that DLA Contractor and Government Entity (CAGE) Branch records and 
maintains in the CAGE master file. This type of code is known as an 
NCAGE code.
    Predecessor means an entity that is replaced by a successor and 
includes any predecessors of the predecessor.
    Successor means an entity that has replaced a predecessor by 
acquiring the assets and carrying out the affairs of the predecessor 
under a new name (often through acquisition or merger). The term 
``successor'' does not include new offices/divisions of the same 
company or a company that only changes its name. The extent of the 
responsibility of the successor for the liabilities of the 
predecessor may vary, depending on State law and specific 
circumstances.
    (b) The Offeror represents that it [square] is or [square] is 
not a successor to a predecessor that held a Federal contract or 
grant within the last three years.
    (c) If the Offeror has indicated ``is'' in paragraph (b) of this 
provision, enter the following information for all predecessors that 
held a Federal contract or grant within the last three years (if 
more than one predecessor, list in reverse chronological order):
    Predecessor CAGE code: ____ (or mark ``Unknown'').
    Predecessor legal name: ____.
    (Do not use a ``doing business as'' name).
    (End of provision)

0
10. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. Removing from the introductory text of the provision ``paragraphs 
(c) through (q)'' and adding ``paragraphs (c) through (r)'' in its 
place;
0
c. Adding to paragraph (a), in alphabetical order, the definitions 
``Predecessor'' and ``Successor'';
0
d. Removing from the first undesignated paragraph following paragraph 
(b)(2) ``paragraphs (c) through (q)'' and adding ``paragraphs (c) 
through (r)'' in its place; and
0
e. Adding paragraph (r).
    The revision and additions read as follows:


52.212-3  Offeror Representations and Certifications--Commercial Items.

* * * * *

Offeror Representations and Certifications--Commerical Items (APR 2016)

* * * * *
    (a) * * *
    Predecessor means an entity that is replaced by a successor and 
includes any predecessors of the predecessor.
* * * * *
    Successor means an entity that has replaced a predecessor by 
acquiring the assets and carrying out the affairs of the predecessor 
under a new name (often through acquisition or merger). The term 
``successor'' does not include new offices/divisions of the same 
company or a company that only changes its name. The extent of the 
responsibility of the successor for the liabilities of the 
predecessor may vary, depending on State law and specific 
circumstances.
* * * * *
    (r) Predecessor of Offeror. (Applies in all solicitations that 
include the provision at 52.204-16, Commercial and Government Entity 
Code Reporting.)
    (1) The Offeror represents that it [square] is or [square] is 
not a successor to a predecessor that held a Federal contract or 
grant within the last three years.
    (2) If the Offeror has indicated ``is'' in paragraph (r)(1) of 
this provision, enter the following information for all predecessors 
that held a Federal contract or grant within the last three years 
(if more than one predecessor, list in reverse chronological order):
    Predecessor CAGE code: ____ (or mark ``Unknown'').
    Predecessor legal name: ____.
    (Do not use a ``doing business as'' name).
* * * * *

[FR Doc. 2016-04773 Filed 3-4-16; 8:45 am]
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