General Services Administration Acquisition Regulation; Immediate and Highest Level Owner for High-Security Leased Space, 34966-34979 [2021-14161]

Download as PDF 34966 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations Community Channel No. * * * Bristol .................................... * * * * * 35 * * [FR Doc. 2021–13565 Filed 6–30–21; 8:45 am] BILLING CODE 6712–01–P GENERAL SERVICES ADMINISTRATION 48 CFR Parts 501, 552 and 570 [GSAR Case 2021–G527; Docket No. GSA– GSAR–2021–0014; Sequence No. 1] RIN 3090–AK44 General Services Administration Acquisition Regulation; Immediate and Highest Level Owner for High-Security Leased Space Office of Acquisition Policy, General Services Administration (GSA). ACTION: Interim rule. AGENCY: GSA is amending the General Services Administration Acquisition Regulation (GSAR) to implement Section 3 and Section 5 requirements of the Secure Federal Leases from Espionage and Suspicious Entanglement Act (the Act or Secure Federal LEASEs Act). The Act addresses the risks of foreign ownership of Governmentleased real estate and requires the disclosure of ownership information for high-security space leased to accommodate a Federal agency. DATES: Effective: June 30, 2021. Applicability: This interim rule applies to new lease awards, the exercise of options for current leases, lease extensions, and ownership changes for high-security leased space. Except where otherwise provided, the Act’s disclosure requirements shall apply with respect to any lease or novation agreement entered into on or after June 30, 2021, involving highsecurity leased space. That includes new, renewal, succeeding, expansion, superseding, extension, and replacing leases and novations. Comment Date: Interested parties should submit written comments to the Regulatory Secretariat Division at the address shown below on or before August 30, 2021 to be considered in the formation of the final rule. ADDRESSES: Submit comments in response to GSAR Case 2021–G527 to the Federal eRulemaking portal at https://www.regulations.gov by searching for ‘‘GSAR Case 2021–G527’’. Select the link ‘‘Comment Now’’ that khammond on DSKJM1Z7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 17:28 Jun 30, 2021 Jkt 253001 corresponds with ‘‘GSAR Case 2021– G527’’. Follow the instructions provided at the ‘‘Comment Now’’ screen. Please include your name, company name (if any), and ‘‘GSAR Case 2021–G527’’ on your attached document. If your comment cannot be submitted using https://www.regulations.gov, call or email the points of contact in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions. Instructions: Please submit comments only and cite ‘‘GSAR Case 2021–G527’’ in all correspondence related to this case. Comments received generally will be posted without change to https:// www.regulations.gov, including any personal and/or business confidential information provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission to verify posting. FOR FURTHER INFORMATION CONTACT: Mr. Stephen Carroll, Procurement Analyst, at 817–253–7858 or GSARPolicy@ gsa.gov, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202– 501–4755 or GSARegSec@gsa.gov. Please cite GSAR Case 2021–G527. SUPPLEMENTARY INFORMATION: I. Background On Dec. 31, 2020, the then president signed into law the Secure Federal Leases from Espionage and Suspicious Entanglements Act (Secure Federal LEASEs Act), (Pub. L. 116–276, 134 Stat. 3362). The Act imposes disclosure requirements regarding the foreign ownership, particularly ‘‘beneficial ownership,’’ of prospective lessors of ‘‘high-security leased space’’ (i.e., property leased to the Federal government having a security level of III or higher). Section 3 and Section 5 of the Act regarding immediate and highest-level ownership applies to a lease or lease novation for high-security leased space entered into six months after the date of the enactment of the Act. GSA will modify existing leases to reflect the requirements of the Act when any of the various actions highlighted in the Applicability section arise. These requirements of the statute are applicable to leases by the U.S. General Services Administration (GSA), the Architect of the Capitol, ‘‘or the head of any Federal agency, other than the Department of Defense (DOD), that has independent statutory leasing authority’’ (Federal lessees). The Act is not applicable to DOD or to the intelligence community. In that regard, Section 2876 of the FY 2018 National PO 00000 Frm 00062 Fmt 4700 Sfmt 4700 Defense Authorization Act (NDAA) (Pub. L. 115–91) already provides DOD similar authority to obtain ownership information with respect to its highsecurity leased space. GSA’s regulatory action applies to GSA and to agencies relying upon GSA’s leasing authority. The Act addresses national security risks identified in the Government Accountability Office (GAO) report, GSA Should Inform Tenant Agencies When Leasing High-Security Space from Foreign Owners, dated January 2017 (GAO–17–195). This report found certain high-security Federal agencies were in buildings owned or controlled by foreign entities. According to the report, most Federal tenants were unaware the spaces GAO identified were subject to foreign ownership or control, exposing these agencies to the heightened risk of surreptitious physical or cyber espionage by foreign actors. The report also noted GAO could not identify the owners of approximately one-third of the Federal government’s high-security leases because such ownership information was unavailable for those buildings. As the US Government’s ‘‘landlord,’’ GSA serves as the central leasing agent for Federal leases and is responsible for managing and obtaining space on behalf of multiple Federal agencies. When GSA enters into a leasing agreement, the agency becomes the ‘‘tenant’’ of GSA, with GSA acting as the lessee of the property. GSA currently uses information contained in the System for Award Management (SAM) to collect foreign ownership information for potential lessors, including immediate or highest-level owners. However, as Congress recognized in the Act, SAM does not capture more nuanced forms of foreign control such as entities involved in financing properties or beneficial ownership. GSA is currently reviewing and investigating potential future implementation steps and potential updates through electronic means to implement the requirements of the Act, including externally (System for Award Management) or internally (GSA’s Lease Offer Platform). As these alternatives are not yet available, this interim rule will require reporting on an action-by-action basis. What is ‘‘high-security leased space’’? The statute defines ‘‘high security leased space’’ as ‘‘space leased by a Federal lessee that—(A) will be occupied by Federal employees for nonmilitary activities; and (B) has a facility security level of III, IV or V, as E:\FR\FM\01JYR1.SGM 01JYR1 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations determined by the Federal tenant in consultation with the Interagency Security Committee, the Department of Homeland Security, and the General Services Administration.’’ Facility security levels and the process for determining these are outlined in the Interagency Security Committees publication ‘‘The Risk Management Process.’’ 1 khammond on DSKJM1Z7X2PROD with RULES New Disclosure Requirements Section 3 of the Act imposes the following requirements: • Prior to entering into a lease agreement with a ‘‘covered entity’’ or allowing such a landlord to convey its interest in a leased space that qualifies as a ‘‘high-security leased space’’— meaning a lease with a security level of Level III, IV, or V—a Federal lessee must require the landlord to identify and disclose whether the ‘‘immediate owner’’ or ‘‘highest-level owner’’ of the leased space, including an entity involved in the financing thereof, is a foreign person or a foreign entity, and to identify the country associated with each ownership entity. A ‘‘covered entity’’ is a person, corporation, company, business association, partnership, society, trust, or any other nongovernmental entity, organization, or group, or any governmental entity or instrumentality of a government. Leases entered into by the Department of Defense and for Federal tenants within the intelligence community (as defined in the National Security Act of 1947, 50 U.S.C. 3003) are expressly excluded from these requirements. • The Act requires disclosure of the ‘‘immediate owner’’ (the entity that has direct control of the offeror of a lease, as defined by ownership or interlocking management, identity of interests among family members, shared facilities and equipment, and the common use of employees) and ‘‘highest-level owner’’ (the entity that owns or controls an immediate owner of the offeror of a lease or that owns or controls one or more entities that control the immediate owner). • The Act also requires disclosure of whether an entity is involved in the financing of the leased space is a foreign person or entity. GSA has provided a definition of ‘‘financing’’ at 552.270–33. • Once a lease is executed, the Act requires annual disclosure of the foreign ownership of the landlord (and financing of the property) with respect to each prior one year period. 1 Interagency Security Committees publication ‘‘The Risk Management Process’’, March 2021 VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 • Section 3 of the Act applies to any lease or novation agreement entered into on or after June 30, 2021. • This Section of the Act requires that a covered entity (i.e., ‘‘a person, corporation, company, business association, partnership, society, trust, or any other nongovernmental entity, organization, or group’’; or ‘‘any governmental entity or instrumentality of a government’’) identify and disclose whether the immediate or highest-level owner of the leased space, including an entity involved in financing of the property, is a foreign person or a foreign entity, including the country of origin associated with the ownership, before a Federal lessee enters into a lease agreement with a covered entity or approves a novation agreement with a covered entity that involves a change of ownership under a lease for highsecurity leased space. • Under the Act, an ‘‘immediate owner’’ is ‘‘an entity, other than the offeror of a lease, that has direct control of the offeror, including ownership or interlocking management, identity of interests among family members, shared facilities and equipment, and the common use of employees’’ and a ‘‘highest-level owner’’ is ‘‘the entity that owns or controls an immediate owner of the offeror of a lease, or that owns or controls 1 or more entities that control an immediate owner of the offeror.’’ If a disclosure is made, the Federal lessee is required to notify the Federal tenant of the building (or other improvement) that will be used for high-security space and to consult with the Federal tenant regarding security concerns and to determine whether mitigation measures are necessary prior to lease award or approval of the novation agreement. • A covered entity is required to provide this ownership information in response to a solicitation for offers issued by the Federal lessee or before approving a novation agreement for a lease. Covered entities also must update the information provided to the Federal lessee annually. The information that must be provided on an annual basis includes: The list of immediate or highest-level owners of the covered entity during the preceding one-year period of Federal occupancy or the information required to be provided relating to each such immediate or highest-level owner. Section 4 of the Act is not addressed in this regulation. It will be implemented through separate rulemaking and is outlined here for awareness. Section 4 also imposes disclosure requirements for beneficial ownership: PO 00000 Frm 00063 Fmt 4700 Sfmt 4700 34967 • Subject to the development of GSA’s government-wide plan for obtaining ownership information outlined in Section 4 of the Act, covered entities also will be required to disclose information about beneficial ownership. A ‘‘beneficial owner’’ is ‘‘with respect to a covered entity, each natural person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise—(i) exercises control over the covered entity; or (ii) has a substantial interest in or receives substantial economic benefits from the assets of the covered entity.’’ However, a beneficial owner of a covered entity does not include: A minor child, a person acting as a nominee, intermediary, custodian, or agent on behalf of another person; a person acting solely as an employee of the covered entity and whose control over or economic benefits from the covered entity derives solely from the employment status of the person; a person whose only interest in the covered entity is through a right of inheritance or a creditor of the covered entity unless either also meets the definition of ‘‘beneficial owner.’’ This disclosure will be addressed in a future rule. • Comments are welcome on foreign ownership, including beneficial ownership, with the understanding that such comments may help inform a future regulatory action. Additional Lease Language Lease agreements for high-security leased space will be required to include language that limits the access to the leased space by the covered entity and any member of the property management company responsible for the space without prior approval from the Federal tenant. The Federal tenant may only grant access to the highsecurity leased space (or any property or information located in the space) if the tenant determines that access is ‘‘clearly consistent with [its] mission and responsibilities.’’ The Federal lessee is required to have written procedures, signed by both the Federal lessee and the covered entity, that govern ‘‘access to the high-security leased space in case of emergencies that may damage the leased property.’’ Government-Wide Plan for Obtaining Ownership Information Section 4 of the Act requires GSA, in conjunction with the Office of Management and Budget (OMB), to develop a government-wide plan for agencies to identify all immediate, highest-level, or beneficial owners of high-security leased spaces before E:\FR\FM\01JYR1.SGM 01JYR1 34968 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES entering into a lease agreement with a covered entity for the accommodation of a Federal tenant in a high-security leased space. The plan must require the disclosure of any immediate, highest-level, or beneficial owner that is a foreign person and notification by the Federal lessee of high-security space to the affected Federal tenant of such foreign ownership. The plan, however, must exclude collecting ownership information on widely held pooledinvestment vehicles, mutual funds, trusts, or other pooled-investment vehicles. The Act requires GSA to submit the plan to specific Congressional committees by Dec. 31, 2021 and to implement the plan by Dec. 31, 2022. This plan will be separately addressed in a future rule, and is not included in this interim rule. Unlike the direct control-based immediate owner and highest-level owner, the Act defines the term ‘‘beneficial owner’’ to include any person that—through a contract, arrangement, understanding, relationship, or otherwise—exercises control over the covered entity or has a substantial interest in or receives substantial economic benefits from the assets of the covered entity, with some exceptions. GSA and OMB’s plan must require the Federal lessee to collect the foreign ownership information for any immediate, highest-level, or beneficial owner that is a foreign person and, upon such a disclosure of foreign ownership, to notify and consult with the Federal tenant. Implications of the Act and Related Rulemakings This Act is one of several recent examples of congressional concern about foreign ownership and control and congressional action in the world of government contracting to help address potential national security concerns. See, e.g., FY 2021 NDAA (Pub. L. 116– 283), § 819, Modifications to Mitigating Risks Related to Foreign Ownership, Control, or Influence of DOD Contractors and Subcontractors; § 885, Disclosure of Beneficial Owners in Database for Federal Agency Contract and Grant Officers; § 6403, Beneficial Ownership Information Reporting Requirements. Covered entities already provide certain information on immediate and highest-level ownership through the System for Award Management registration process, per OMB Control Numbers 9000–0097 and 9000–0185. However, covered entities will need to provide additional information through a manual representation regarding any VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 financing entities and foreign ownership details for the enhanced requirements per Section 3 of the Act. Additionally, subject to the development and implementation of GSA’s governmentwide plan for Section 4 of the Act, through separate rulemaking, covered entities will need to provide disclosure of creditors who may be deemed beneficial owners if they either exercise control over the covered entity or have a substantial interest in or receive substantial economic benefits from the covered entity’s assets. Therefore, property owners will need to take this provision into account when considering financing options for leasing high-security space to the Federal government. II. Requirements Contained in This Rulemaking and Related Rulemakings With this rule, GSA is implementing Section 3 and Section 5 of the Act. Section 3— • Requires Federal lessees for highsecurity leased space to require covered entities to identify and disclose whether the owner of the leased space, including an entity involved in the financing thereof, is a foreign person or a foreign entity, including the country associated with the ownership entity, before entering into a lease agreement. Covered entities must provide Federal lessees such information— Æ when first submitting proposals in response to a solicitation for offers issued by the lessee; and Æ annually, to include the list of immediate or highest level owners of the covered entity during the preceding one-year period of occupancy. • Requires the Federal lessee to notify the Federal tenant in writing if such a disclosure of foreign ownership is made and consult with the tenant regarding any security concerns prior to awarding a new lease agreement. Section 5— • Requires that leases for highsecurity space include certain language regarding access to the high-security leased space by the covered entity and any member of the property management company. Section 4 of the Act requires the identification of beneficial owners of high-security leased spaces and will be addressed in a subsequent rulemaking through GSAR Case 2021–G522 and FMR Case 2021–102–1. In addition, the FAR Council has opened FAR Case 2021–005 which will implement sections 885 and 6403 of the NDAA for FY 2021 (Pub. L. 116–283) to require certain offerors to disclose beneficial PO 00000 Frm 00064 Fmt 4700 Sfmt 4700 ownership information in their offers for contracts over the simplified acquisition threshold. Finally, other agencies may need to do additional rulemaking because the GSAR only governs the contract terms and conditions for leased space procured by GSA and its delegated agencies. III. Authority for This Rulemaking Title 40 of the United States Code (U.S.C.) Section 121 authorizes GSA to issue regulations, including in the GSAR, to control the relationship between GSA and contractors. In addition, the Secure Federal LEASEs Act, authorizes the collection of ownership information for high-security leased space. IV. New GSAR Requirements With this rule, GSA is implementing one new GSAR representation and one new GSAR clause. The new representation is 552.270–33 (Foreign Ownership and Financing Representation for High-Security Leased Space) and the new clause is 552.270– 34 (Access to Limitations for HighSecurity Leased Space). Both apply to new lease awards, the exercise of options for current leases, lease extensions, and ownership changes for high-security leased space. Except where otherwise provided, the Act’s disclosure requirements shall apply with respect to any lease or novation agreement entered into on or after June 30, 2021, involving high-security leased space. That includes new, renewal, succeeding, expansion, superseding, extension, and replacing leases and novations. The new GSAR representation implemented in 552.270–33 requires offerors for high-security leased space to identify whether the immediate owner, highest-level owner, or an entity involved in the financing of the lease is foreign-owned. If so, they must represent the associated country. Awardees will also be required to rerepresent on an annual basis. This representation also applies upon extensions, exercise of renewal options and change of ownership/novations. The new GSAR clause at 552.270–34 requires lessors for high-security leased space to limit access to the space unless approved by an authorized Government representative. V. Expected Impact of the Rule GSA anticipates that this rule will have an impact on current Federal lessors of high-security leased space, future potential lessors of high-security leased space, and the Federal lessor E:\FR\FM\01JYR1.SGM 01JYR1 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations industry of high-security leased space. The rule seeks to ensure effective implementation and enforcement of the national security measures imposed by the Secure Federal LEASEs Act with minimal disruption to the mission of GSA and its Federal tenants and Federal lessors. As set forth in Section VI.(d) below, GSA recognizes the benefits that will result from this rule. GSA notes that this rule is one of several actions with regard to the Secure Federal LEASEs Act and other statutes regarding foreign ownership by GSA, other agencies with lease authority promulgating their own rules, and by the FAR Council. GSA understands that the impact of actions dealing with foreign ownership, including specifically beneficial owners, is not well understood and is still being assessed. In addition, while this interim rule, specific to Sections 3 and 5 of the Secure Federal LEASEs Act, will be effective June 30, 2021, GSA is seeking public comment, including, as indicated below, on the potential impact of this rule on Federal lessors. After considering the comments received, a final rule will be issued, taking into account and addressing the public comments, as well as helping to shape implementation of future rules like beneficial ownership. GSA plans to share public comments received on such questions with other agencies and the FAR Council. khammond on DSKJM1Z7X2PROD with RULES VI. Regulatory Impact Analysis The cost and benefit impacts of amending the General Services Administration Acquisition Regulation (GSAR) to implement certain requirements outlined in the Secure Federal LEASEs Act (SFLA) (Pub. L. 116–276) are discussed in the analysis below. This analysis was developed by GSA in consultation with agency procurement officials and the GSA Office of Leasing. Section VI.(h) of this rule is requesting specific feedback regarding the impact of this rule, as well as other pertinent policy questions of interest, in order to inform finalization of this and potential future subsequent rulemakings. (a) Risks to Industry of Not Complying With SFLA As a strictly contractual matter, an organization’s failure to submit an accurate representation to the Government constitutes a breach of contract that can lead to cancellation, termination, and financial consequences. Therefore, it is important for contractors to develop a compliance plan that will allow them to submit VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 accurate representations to the Government in the course of their offers. GSA notes that this interim rule does not authorize GSA lease contracting officers to use the information disclosed by offerors as a differentiating factor for selection of a lease award, nor does it authorize GSA to terminate a lease, prevent a novation, or otherwise decline to make an award based on the disclosure. As such, GSA estimates that this rule will not result in these activities, and therefore no moving costs have been included in this regulatory impact analysis. (b) Contractor Actions Needed for Compliance GSA assumes that most Federal lessors maintaining high-security leased space or Federal lessors that are competing for solicitations for highsecurity leased space are already familiar with the majority of the requirements of this rule, or, similarly, will not find the requirements of this interim rule as anything significantly more than what is currently expected. GSA previously implemented ownership disclosures requirements through internal policy 2, GSA’s Request for Lease Proposals (or solicitations), and GSA’s guidance through its publicfacing Leasing Desk Guide 3 and Leasing Alerts and Lease Acquisition Circulars.4 (1) GSA Leasing—Current Processes Regardless of who owns the leased space, Federal agencies are already taking risk management measures appropriate for the security level of the space. The GSA Leasing Desk Guide 5 outlines requirements and standards for new and replacement space. In Chapter 19 (issued in 2012), it provides 2 In March 2017, GSA’s Office of Leasing issued Leasing Alert LA–FY17–06 requiring Lease Contracting Officers (LCOs) to determine whether the ownership of leased space is identified as a foreign-owned entity and to notify the client agency in such instances, so that the agency can take any needed security mitigation measures. The Leasing Alert outlined the procedures to make this determination which involved a review of the entity’s SAM registration; the Leasing Alert also required this review for all lease procurements and novations, regardless of the Facility Security Level (FSL). In October 2018, GSA added a ‘‘Foreign Ownership and Financing Representation,’’ to be included with all Request for Lease Proposals (RLP) packages issued for prospectus-level lease projects. This ‘‘paper’’ representation required the offeror to confirm both foreign ownership and foreign financing. 3 GSA’ Leasing Desk Guide (Desk Guide). 4 GSA’s Leasing Alerts and Lease Acquisition Circulars (LAC). 5 The Desk Guide chapters contain authorities, policies, technical and procedural guides, and administrative limitations governing the acquisition by lease of real property. Chapter 19 is specific to security requirements. PO 00000 Frm 00065 Fmt 4700 Sfmt 4700 34969 instructions for competitive procurements based on the Interagency Security Committee (ISC),6 Physical Security Standards, and it outlines the Public Buildings Service’s (PBS) responsibilities for performing background investigations on the lessors’ contractors. In addition, a 2018 GSA Leasing Alert,7 provided required and recommended measures for lessors related to cybersecurity protections and precautions in leased facilities. It establishes lease language that prohibits lessors from connecting any portion of their building and access control systems (BACS) to any federally-owned or operated IT network and requires notification for cybersecurity incidents that impact a federal tenant’s safety, security, or proper functioning. The lease language also outlines recommended cybersecurity measures that lessors are encouraged to follow. Lessors are already currently required to report certain ownership information. As previously outlined, GSA currently uses information contained in the System for Award Management (SAM) to collect foreign ownership information for potential lessors, including immediate or highest-level owners, and provides such information to tenant agencies. While this rule requires additional information related to the lessor’s financing, the review of immediate or highest-level owner detail has already been in place and is a requirement Federal lessor’s are familiar with. (2) GSA Leasing—General Security Framework As outlined in the GSA Leasing Desk Guide, the facility security level (FSL) 8 for each space requirement is set by the Department of Homeland SecurityFederal Protective Service (FPS) and the client agency, in consultation with the GSA as part of the requirements development phase of a lease acquisition. If the client agency and FPS have not already conferred, GSA must coordinate with the necessary parties to set the appropriate level of security before the solicitation is drafted. The Desk Guide states that GSA Leasing 6 A Federal committee dedicated to the protection of Federal civilian facilities in the United States. It has 21 primary member agencies and 30 associate member agencies. The ISC has developed standards applicable to all civilian Federal facilities, including leased facilities. 7 LA–FY18–05, Cybersecurity Measures for Leased Facilities. 8 A categorization based on the analysis of several security-related facility factors, which serves as the basis for the implementation of countermeasures specified in ISC standards. (CISA ISC Standard, March 2021). E:\FR\FM\01JYR1.SGM 01JYR1 34970 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations acquisition members must maintain contact as necessary with the appropriate FPS inspector throughout the lease administration. The facility security level designation does not change solely based on lessor ownership information collected via this rule. khammond on DSKJM1Z7X2PROD with RULES (3) GSA Leasing—Determining Countermeasures GSA follows the Interagency Security Committee (ISC) provided standard for Physical Security Criteria (PSC) for Federal Facilities. This standard establishes baseline physical security measures for each FSL. This standard defines the process for determining the appropriate security measures; it also covers any uncommon measures required to address the unique risks at a particular facility. The GSA Desk Guide currently uses the PSC to prescribe the process for determining appropriate countermeasures for a facility. Adherence to this process (1) ensures that all security criteria will be considered; (2) defines the relationship between the levels of risk determined for each undesirable event and; (3) mitigates risk through countermeasures that provide a commensurate Level of Protection (LOP). The lessor ownership information does not affect the PSCs for Federal Facilities and therefore GSA does not anticipate this rule to have a significant impact on the security standards used by GSA tenants. (c) Compliance Plan Estimated Due to Interim Rule GSA assumes the following steps would most likely be part of a lessor’s plan that would need to be developed by any entity to stay in compliance with the new representation clause at GSAR 552.270–33 and other clause at GSAR 552.207–34 being implemented by this rule: 1. Regulatory Familiarization. The entity must read and understand the GSAR rules and the resulting necessary actions for compliance. 2. Workforce Training. The entity must educate its purchasing/ procurement professionals 9 to ensure that they are familiar with the representation and clause and their disclosure requirements (as applicable). 3. Compliance with Clauses. The entity must identify and disclose whether the immediate or highest-level owner of the leased space, including an entity involved in the financing thereof, 9 GSA estimates that the purchasing/procurement professional requiring training as a result of this rule on average would be equal to a mid-career professional. The equivalent labor category used to capture cost estimates therefore is a GS–12 Step 5, or Journeyman Level 1. VerDate Sep<11>2014 18:36 Jun 30, 2021 Jkt 253001 is a foreign person or a foreign entity, including the country associated with the ownership entity. If a disclosure is made, the Federal lessee shall notify the Federal tenant of the building or other improvement that will be used for highsecurity space in writing, and consult with the Federal tenant regarding security concerns and necessary mitigation measures, if any, prior to award of the lease or approval of the novation agreement. (d) Benefits This Act requires the identification of all individuals who own or benefit from partial ownership of a property that will be leased by the federal government for high-security use. The statute is in response to a 2017 Government Accountability Office (GAO) report which indicated that Federal agencies were vulnerable to espionage and other intrusions because foreign actors could gain unauthorized access to spaces used for classified operations or to store sensitive data. Agencies store law enforcement evidence and other sensitive data and are often unaware of foreign ownership of their office spaces. While many of the foreign owners identified in the 2017 GAO report were companies based in allied countries such as Canada, Norway, Japan or South Korea, other properties were owned and managed by entities based in more adversarial nations. The report noted Chinese-owned properties, in particular, presented security challenges because of the country’s proclivity for cyberespionage and the close ties between private sector companies and the Chinese government. The GAO report highlighted the dangers posed by these properties, indicating that ‘‘leasing space in foreign-owned buildings could present security risks such as espionage, unauthorized cyber and physical access to the facilities, and sabotage.’’ The United States faces an expanding array of foreign intelligence threats by adversaries who are using increasingly sophisticated methods to harm the Nation.10 Threats to the United States posed by foreign intelligence entities are becoming more complex and harmful to U.S. interests.11 Foreign intelligence actors are employing innovative combinations of traditional spying, economic espionage, and supply chain and cyber operations to gain access to critical infrastructure, and steal sensitive information and industrial 10 National Counterintelligence Strategy of the United States of America 2020–2022. 11 National Counterintelligence Strategy of the United States of America 2020–2022. PO 00000 Frm 00066 Fmt 4700 Sfmt 4700 secrets.12 The exploitation of key supply chains by foreign adversaries represents a complex and growing threat to strategically important U.S. economic sectors and critical infrastructure.13 Additionally, by requiring ‘‘Financing Entity’’ information in the representation clause, GSA will benefit by better understanding the source of funds used to finance projects. Risks associated with financing, such as money laundering, involve disguising financial assets so they can be used without detection of the illegal activity that produced them.14 These transactions further shield the entity from a recorded connection to the funds by providing a plausible explanation for the source of the funds.15 Typical examples used for this type of activity include the purchase and resale of real estate, investment securities, foreign trusts, or other assets.16 By collecting this information, GSA will be able to share more transparent information on foreign financing of leases with tenant agencies. The goal of the Act is to close security loopholes by directing the GSA to design a verification system that identifies a property’s owners if the space would be used for high-security purposes. While GSA and other Federal agencies have made positive changes in response to GAO’s 2017 report, this rule will help support current best practices being followed more uniformly throughout the Federal government. Finally, this Act ensures that GSA (and all agencies particularly with independent leasing authority) will have the ability to obtain information on foreign ownership and provide it to relevant Federal tenants. (e) Public Costs During the first and subsequent years after publication of the rule, lessors will need to learn about the clauses and its requirements. GSA estimates this cost by multiplying the time required to review the regulations and guidance implementing the rule by the estimated compensation of a purchasing/ 12 National Counterintelligence Strategy of the United States of America 2020–2022. 13 National Counterintelligence Strategy of the United States of America 2020–2022. 14 Government Accountability Office Report ((GAO–17–195), GSA Should Inform Tenant Agencies When Leasing High-Security Space from Foreign Owners, dated January 2017. 15 Government Accountability Office Report ((GAO–17–195), GSA Should Inform Tenant Agencies When Leasing High-Security Space from Foreign Owners, dated January 2017. 16 Government Accountability Office Report ((GAO–17–195), GSA Should Inform Tenant Agencies When Leasing High-Security Space from Foreign Owners, dated January 2017. E:\FR\FM\01JYR1.SGM 01JYR1 34971 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations procurement mid-career professional. The equivalent labor category used to capture cost estimates therefore is a GS– 12 Step 5. A. To estimate the aggregate burden to Government lessors of complying with the rule, the number of lessors that will be impacted was calculated using numbers pulled from GSA’s records and databases.17 As of June 2021, GSA has approximately 7,860 leases totaling approximately 183,000,000 in Rentable Square Footage (RSF) and approximately $5,600,000,000 in annual rent ($2,800,000,000 of that total represents small entities). Of the 7,860, approximately 1,263 18 (or 16 percent) of the leases are for high-security lease space (lease space in a facility with a security level of III, IV, or V) totaling approximately 87,000,000 in RSF and approximately $3,000,000,000 in annual rent. Approximately 68 percent 19 of the leasing entities are small entities. Highsecurity leases with these small entities represents $1,370,000,000 in annual rent covering approximately 37,000,000 RSF. B. GSA also delegates leasing authority to several agencies, which are required to follow GSA’s policies. GSA estimates there are 1,300 20 buildings represented by these agencies with Delegated Leasing Authority 21 from GSA. GSA does not have data available that identifies which of these are for high-security lease space. GSA assumes that these delegated agencies have a similar profile to GSA’s for highsecurity leased space to total portfolio space, i.e., 16 percent. This would bring the total number of high-security lease space for delegated agencies to 208 (1,300 × 16 percent). GSA also assumes the same profile for small entities of 68 percent. C. Based on historical data maintained by GSA’s Office of Leasing, GSA estimates that 6 percent of its highsecurity leased space will be solicited for a new contract each year (6 percent of 1,263 = 76 leases). These solicitations result from a mix of expiring highsecurity leases or new requirements for high-security facilities. GSA assumes these trends will continue for the time horizon outlined by this regulatory impact. Based on historic bid rates and high current vacancy levels, GSA further estimates that 3 lessors will make offers for these high-security lease procurement for a total of 228 offers (76 high-security leases awarded * 3 lessors competing for each solicitation. 76 * 3 = 228) GSA assumes the same profile for delegated facilities. D. Since 2014, GSA has averaged approximately 31 renewal options per year for high-security leases (equal to approximately 17 percent of all renewals options during the same period) and averaged approximately 106 extensions for existing high-security leases (also equal to approximately 17 percent of all extensions during the same period). GSA assumes the same trend will continue in subsequent years. GSA assumes the same profile for delegated facilities. E. GSA processed 380 novations from May 1, 2020 to April 30, 2021 22 23 (therefore approximately 5 percent of leases resulted in a novation (380/ 7,860)). GSA does not have data on how many of those were related to FSL III, IV, or V. GSA will assume 16 percent of those novations were for FSL III, IV, or V leases. Therefore, it is assumed 61 novations were processed for highsecurity leases in the last year. A breakdown is provided in the table below. Par above A,B .......................... A,B .......................... Leased Space ......................................................................................................... High-Security (HS) Space Leases (16 percent) ..................................................... Total HS Portfolio ............................................................................................ 7,860 1,263 1,263 1,300 208 208 Existing HS Lease Baseline ................................................................................... 1,263 208 Combined HS Lease Baseline ............................................................................... C ............................. C ............................. D D E E ............................. ............................. ............................. ............................. 1,471 (1,263 + 208) New Procurements (6 percent HS) ........................................................................ New Offers (x3) ...................................................................................................... Total New Responses ............................................................................................ Renewals (17 percent HS) ..................................................................................... Extensions (17 percent HS) ................................................................................... Novations (5 percent Leases) ................................................................................ High-Security Space Novations (16 percent) ......................................................... 76 228 228 31 106 380 61 12 36 36 35 35 65 10 Total HS Novations ................................................................................................. 61 10 New HS Lease Baseline ......................................................................................... 426 (228+31+106+61) 116 (36+35+35+10) khammond on DSKJM1Z7X2PROD with RULES Combined New HS Lease Baseline ....................................................................... 17 If not otherwise stated, numbers related to leases are provided by the GSA Office of Leasing through surveying their internal databases. 18 The GSA Office of Leasing provided this number by surveying their internal database. 19 This information is based on internal inventory data sources provided by the GSA Office of Leasing. VerDate Sep<11>2014 Delegated authority agencies GSA 15:54 Jun 30, 2021 Jkt 253001 20 This information is based on internal inventory data sources provided by the GSA Office of Leasing. 21 Federal Management Regulation (FMR) Bulletin 2008–B1 limits the square footage permissible under a General Purpose lease delegation to 19,999 usable ANSI/BOMA (‘‘ABOA’’) square feet of space; since FSL designations are tied PO 00000 Frm 00067 Fmt 4700 Sfmt 4700 542 (426 + 116) to square footage in addition to other factors,this estimate is likely higher than actual. 22 This information is based on internal inventory data sources provided by the GSA Office of Leasing. 23 GSA does notg have data on how many novation other agencies with Delegated Leasing Authority processed. E:\FR\FM\01JYR1.SGM 01JYR1 34972 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations b. Familiarization With GSAR 552.270– 34, Access to Limitations for HighSecurity Leased Space Steps to Compliance 1. Regulatory Familiarization Below is a list of compliance activities related to regulatory familiarization that GSA anticipates will occur: a. Familiarization With GSAR 552.270– 33, Foreign Ownership and Financing Representation for High-Security Leased Space khammond on DSKJM1Z7X2PROD with RULES i. GSA estimates that it will take existing high-security lessors approximately 3 hours 24 each to familiarize themselves with the new GSAR representation. Therefore, GSA calculated the total estimated cost for this part of the rule to be $372,000 25 (= 3 hours × $84.16 26 × 1,471). Of the 1,471 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 1,000 lessors, are small entities. After the initial familiarization in the first year for each current awardee or subsequent awardee, GSA estimates it will take 15 minutes (0.25 hours 27) to stay familiar with the representation. Therefore, GSA calculated the total estimated cost for this part of the rule to be $31,000 (= 0.25 hours × $84.16 × 1,471). ii. GSA estimates that new highsecurity lessors each year will take approximately 3 hours 28 each to familiarize themselves with the new GSAR representation. Therefore, GSA calculated the total estimated cost for this part of the rule to be $137,000 29 (= 3 hours × $84.16 × 542). Of the 542 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 369 lessors, are small entities. 24 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 25 Totals are rounded. 26 This hourly rate, $84.16, is the 2021 GS rate for a GS–12 Step 5 of $42.08 per hour (using the rate for the rest of the United States) adjusted upward by 100 percent to account for fringe benefits and overhead. 27 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 28 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 29 Totals are rounded. VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 i. GSA estimates that it will take existing high-security lessors approximately 2 hours 30 each to familiarize themselves with the clause at GSAR 552.270–34. Therefore, GSA calculated the total estimated cost for this part of the rule to be $248,000 (= 2 hours × $84.16 × 1,471). Of the 1,471 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 1,000 lessors, are unique small entities. After the initial familiarization in the first year for each current awardee or subsequent awardee, GSA estimates it will take 15 minutes (0.25 hours 31) to stay familiar with the representation. Therefore, GSA calculated the total estimated cost for this part of the rule to be $31,000 (= 0.25 hours × $84.16 × 1,471). ii. GSA estimates that new highsecurity lessors each year will take approximately 2 hours 32 each to familiarize themselves with the clause at GSAR 552.270–34. Therefore, GSA calculated the total estimated cost for this part of the rule to be $108,000 (= 2 hours × $84.16 × 542). Of the 542 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 369 lessors, are small entities. The total estimated cost to become familiar with the representation clause (GSAR 552.270–33) and the other new clause (GSAR 552.270–34) is estimated to be $619,000 for the existing highsecurity lessors. In subsequent years, this cost is estimated to be $290,000 for new high-security lessors annually. 2. Implementation of Workforce Training a. GSA estimates that it will take existing high-security lessors approximately 6 hours 33 each to train their workforce on the representation clause at GSAR 552.270–33 and the GSAR clause at 552.270–34. Therefore, GSA calculated the total estimated cost for this part of the rule to be $743,000 (= 6 hours × $84.16 × 1,471). Of the 1,263 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 1,000 lessors, are small entities. After the initial training in the first year for each current awardee or subsequent awardee, GSA estimates it will take 30 minutes (0.50 hours 34) to conduct continuing additional workforce training. Therefore, GSA calculated the total estimated cost for this part of the rule to be $62,000 (= 0.50 hours × $84.16 × 1,471). b. GSA estimates that new highsecurity lessors each year will take approximately 6 hours each to train their workforce on the representation clause at GSAR 552.270–33 and the GSAR clause at 552.270–34. Therefore, GSA calculated the total estimated cost for this part of the rule to be $274,000 (= 6 hours × $84.16 × 542). Of the 542 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 369 lessors, are small entities. The total estimated cost to implement workforce training for the representation clause (GSAR 552.270–33) and the access limitation clause (GSAR 552.270–34) is estimated to be $743,000 for the existing high-security lessors. In subsequent years, this cost is estimated to be $336,000 for new high-security lessors annually. 3. Compliance With Clauses The entity must educate its purchasing/procurement professionals to ensure that they are familiar with the representation and clause and their disclosure requirements (as applicable). a. GSAR 552.270–33, Foreign Ownership and Financing Representation for High-Security Leased Space i. GSA estimates that it will take existing high-security lessors approximately 2 hours 35 each to 30 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 31 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 32 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 33 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 34 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 35 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. PO 00000 Frm 00068 Fmt 4700 Sfmt 4700 E:\FR\FM\01JYR1.SGM 01JYR1 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES complete the representation at sections (c)(1), (d)(1), and (e)(1) (essentially no required disclosures required) of the representation clause. Therefore, GSA calculated the total estimated cost for this part of the rule to be $248,000 (= 2 hours × $84.16 × 1,471). Of the 1,471 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 1000 lessors, are small entities. ii. GSA estimates that new highsecurity lessors each year will take approximately 2 hours each to complete the representation at sections (c)(1), (d)(1), and (e)(1) (essentially no required disclosures required) of the representation clause. Therefore, GSA calculated the total estimated cost for this part of the rule to be $91,000 (= 2 hours × $84.16 × 542). Of the 542 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 369 lessors, are small entities. iii. GSA further estimates that of the existing high-security lessors, 10 percent 36 (or 147 lessors) will respond affirmatively to one or more sections at (c)(1), (d)(1), and (e)(1) of the representation clause that the offeror ‘‘does’’ have an ‘‘immediate owner’’, and/or ‘‘is’’ owned or controlled by another entity (or ‘‘highest owner’’), and/or ‘‘does’’ involve a ‘‘foreign entity’’ and will be required to complete additional section at (c)(2) and (c)(3), potentially (c)(4), (d)(2) and (d)(3), potentially (d)(4), and (e)(2). GSA estimates that it will take these offerors an additional 10 hours 37 to complete those various sections of the representation clause. Therefore, GSA calculated the total estimated cost for this part of the rule to be $124,000 (= 10 hours × $84.16 × 147). Of the 147 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 100 lessors, are unique small entities. iv. GSA estimates that of the new high-security lessors each year, 10 percent 38 (or 54 lessors) will respond affirmatively to one or more sections at (c)(1), (d)(1), and (e)(1) of the representation clause that the offeror ‘‘does’’ have an ‘‘immediate owner’’, and/or ‘‘is’’ owned or controlled by 36 The amount of lessors impacted is an assumption based on subject matter expert judgment. 37 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 38 The amount of lessors impacted is an assumption based on subject matter expert judgment. VerDate Sep<11>2014 18:36 Jun 30, 2021 Jkt 253001 another entity (or ‘‘highest owner’’), and/or ‘‘does’’ involve a ‘‘foreign entity’’ and will be required to complete additional sections at (c)(2) and (c)(3), potentially (c)(4), (d)(2) and (d)(3), potentially (d)(4), and (e)(2). Thus, approximately 54 lessors (10 percent of 542) need to fully complete GSAR 552.270–33. Therefore, GSA calculated the total estimated cost for this part of the rule to be $45,000 (= 10 hours × $84.16 × 54). Of the 54 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 37 lessors, are small entities. After the existing and new highsecurity lessors complete the representations, GSA estimates it will take 15 minutes (0.25 hours 39) to update any information as necessary and as required annually. Therefore, GSA calculated the total estimated cost for this part of the rule to be $34,000 (= [0.25 hours × $84.16 × 1,471] + [.25 × $84.16 × 147]). b. GSAR 552.270–34, Access to Limitations for High-Security Leased Space i. GSAR 552.270–34 requires lessors for high-security leased space to limit access to the space unless approved by an authorized Government representative. GSA estimates that 10 percent of lessors, or 147 (10 percent of 1,471) will request approval once per lease and will take an estimated 3 hours 40 to submit each request. Therefore, GSA calculated the total estimated cost for this part of the rule to be $37,000 (= 3 hours × $84.16 × 147). Of the 147 lessors impacted by this part of the rule, GSA assumes that 68 percent, or 100 lessors, are small entities. ii. GSA estimates that 10 percent, or 54 (10 percent of 542) of new highsecurity lessors each year will request approval once per lease and will take an estimated 3 hours 41 to submit each request. Therefore, GSA calculated the total estimated cost for this part of the rule to be $14,000 (= 3 hours × $84.16 39 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 40 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 41 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. PO 00000 Frm 00069 Fmt 4700 Sfmt 4700 34973 × 54). Of the 54 lessors impacted by this part of the rule, GSA assumes that 68 percent, or 37 lessors, are small entities. iii. GSA acknowledges that existing high-security lessors will be required to establish written procedures, as documented in the Government’s Occupant Emergency Plan, governing access to the high-security leased space in case of emergencies. GSA estimates that reviewing these procedures will take approximately 3 hours.42 Therefore, GSA calculated the total estimated cost for this part of the rule to be $371,000 (= 3 hours × $84.16 × 1,471). Of the 1,471 lessors impacted by this part of the rule, GSA assumes that 68 percent, or approximately 1000 lessors, are small entities. iv. GSA acknowledges that new highsecurity lessors will be required to sign written procedures, as documented in the Government’s Occupant Emergency Plan, governing access to the highsecurity leased space in case of emergencies. GSA estimates that reviewing these procedures will take approximately 3 hours.43 Therefore, GSA calculated the total estimated cost for this part of the rule to be $137,000 (= 3 hours × $84.16 × 542). Of the 542 lessors impacted by this part of the rule, GSA assumes that 68 percent, or 369 lessors, are small entities. After the existing high-security lessors initially establishes the written procedures, GSA estimates it will take 15 minutes (0.25 hours 44) to update any information as necessary. Therefore, GSA calculated the total estimated cost for this part of the rule to be $31,000 (= 0.25 hours × $84.16 × 1,471). The total estimated cost to complete both the representations and the clause is estimated to be $780,000 the existing high-security lessors. In subsequent years, this cost is estimated to be $351,000 for new high-security lessors annually. 4. Public Total Costs The total cost of the above Cost Estimate is $2,100,000 in the first year 42 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 43 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. 44 The hours estimated are an assumption based on historical familiarization hours and subject matter expert judgement. Subject matter experts include representatives from GSA’s Office of Leasing, including Realty Specialists and Leasing Contracting Officers. E:\FR\FM\01JYR1.SGM 01JYR1 34974 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES after publication. The total cost of the above Cost Estimate in subsequent years is $977,000 annually. The following is a summary of the estimated costs calculated for a 10 year time horizon in perpetuity at a 3- and 7-percent discount rate: the ‘‘Existing HS Lease Baseline’’ row (1,471 combined) and ‘‘New annual Lease Baseline’’ row (542 combined) found in table in section VI.(e). 1. Regulatory Familiarization a. GSA estimates that it will take approximately 516 leasing acquisition Summary Total costs members 1.5 hours to become familiar with the GSAR 552.270–33 Present Value (3 percent) ........ $9,500,000 representation. Therefore, GSA Annualized Costs (3 percent) ... 1,100,000 calculated the total estimated cost for Present Value (7 percent) ........ 7,950,000 this part of the rule to be $65,000 45 (= Annualized Costs (7 percent) ... 1,330,000 1.5 hours × $84.16 × 516). After the initial familiarization, GSA GSA notes that this interim rule does estimates it will take 15 minutes (0.25 not authorize GSA lease contracting hours) to stay familiar with the officers to use the information disclosed representation in subsequent years. by offerors as a differentiating factor for Therefore, GSA calculated the total selection of a lease award, nor does it estimated cost for this part of the rule authorize GSA to terminate a lease, to be $11,000 (= 0.25 hours × $84.16 × prevent a novation, or otherwise decline 516). to make an award based on the b. GSA estimates that it will take disclosure. As such, GSA estimates that approximately 516 leasing acquisition this rule will not result in these members 30 minutes (0.5 hours) to activities, and therefore no moving costs become familiar with the GSAR have been included in this regulatory 552.270–34 representation. Therefore, impact analysis. GSA calculated the total estimated cost GSA acknowledges that there is for this part of the rule to be $22,000 (= uncertainty underlying these estimates, 0.50 hours × $84.16 × 516). including elements for which an After the initial familiarization, GSA estimate is unavailable given inadequate estimates it will take 6 minutes (0.10 information. As more information hours) to stay familiar with the becomes available, including through representation in subsequent years. comment in response to this notice, Therefore, GSA calculated the total GSA will seek to update these estimates estimated cost for this part of the rule which could increase the estimated to be $4,300 (= 0.10 hours × $84.16 × costs. 516). (f) Government Cost Analysis 2. Workforce Training During the first and subsequent years The Government must educate its after publication of the rule, leasing leasing acquisition members to ensure acquisition members (which includes a that they are familiar with the combination of Leasing Contracting representation and clause and how to Officers, Lease Administration review and act on the submitted Managers, Realty Specialists, and information, access requests, and General Counsel) will need to learn written procedures. about the clauses and its requirements. a. GSA estimates that it will take GSA estimates this cost by multiplying approximately 516 leasing acquisition the time required to review the members 1 hour to complete training regulations and guidance implementing related GSAR 552.270–33 the rule by the estimated compensation, representation. Therefore, GSA on average, of a GS–12 leasing calculated the total estimated cost for acquisition member. GSA assumes that this part of the rule to be $43,000 (= 1 leasing acquisition members will, on hours × $84.16 × 516). average, stay consistent in subsequent After the initial training, GSA years. Numbers and assumptions apply estimates it will take 6 minutes (0.10 to delegated agencies as well. hours) to maintain training related to GSA anticipates several areas of the representation. Therefore, GSA impact as a result of this rule. These calculated the total estimated cost for impacts mirror the public impacts and this part of the rule to be $4,300 (= 0.10 will appear as regulatory hours × $84.16 × 516). familiarization, workforce training, and b. GSA estimates that it will take time to review compliance with clauses. approximately 516 leasing acquisition These costs are justified in light of the members 30 minutes (0.50 hours) to compelling national security objective complete training related to the GSAR that this rule will advance. For consistency, the number of leases 45 All totals in the Government Cost Analysis to be reviewed match the numbers in section are rounded. VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 PO 00000 Frm 00070 Fmt 4700 Sfmt 4700 552.270–34 clause. Therefore, GSA calculated the total estimated cost for this part of the rule to be $22,000 (= 0.50 hours × $84.16 × 516). After the initial training, GSA estimates it will take 3 minutes (0.05 hours) to maintain training related to the clause. Therefore, GSA calculated the total estimated cost for this part of the rule to be $2,200 (= 0.05 hours × $84.16 × 516). 3. Review of Compliance With Clauses The primary cost to GSA will be to review the representations required by GSAR 552.270–33 and the compliance with GSAR 552.270–34. a. GSAR 552.270–33, Foreign Ownership and Financing Representation for High-Security Leased Space i. GSA estimates that it will take leasing acquisition members approximately 6 minutes (0.10 hours) to review the representation at sections (c)(1), (d)(1), and (e)(1) (essentially no required disclosures required) of the representation clause at GSAR 552.270– 33 for existing high-security lessors. Therefore, GSA calculated the total estimated cost for this part of the rule to be $12,000 (= 0.10 hours × $84.16 × 1,471). ii. GSA estimates that for new highsecurity lessors each year, it will take leasing acquisition members approximately 6 minutes (0.10 hours) to review the representation at sections (c)(1), (d)(1), and (e)(1) (essentially no required disclosures required). Therefore, GSA calculated the total estimated cost for this part of the rule to be $4,600 (= 0.10 hours × $84.16 × 542). iii. GSA estimates that for existing high-security lessors, 10 percent (or 147 lessors) will respond affirmatively to one or more sections at (c)(1), (d)(1), and (e)(1) of the representation clause that the offeror ‘‘does’’ have an ‘‘immediate owner’’, and/or ‘‘is’’ owned or controlled by another entity (or ‘‘highest owner’’), and/or ‘‘does’’ involve a ‘‘foreign entity’’ and will be required to complete additional sections at (c)(2) and (c)(3), potentially (c)(4), (d)(2) and (d)(3), potentially (d)(4), and (e)(2). GSA estimates that it will take leasing acquisition members 5 hours to complete the reviews on those various sections of the representation clause, notify the Federal tenant of the building or other improvement of any security concerns and necessary mitigation measures (if any) prior to award or approval of a novation agreement. Therefore, GSA calculated the total E:\FR\FM\01JYR1.SGM 01JYR1 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES estimated cost for this part of the rule to be $62,000 (= 5 hours × $84.16 × 147). iv. GSA estimates 10 percent, or 54 lessors, of new high-security lessors each year will respond affirmatively to one or more sections at (c)(1), (d)(1), and (e)(1) of the representation clause that the offeror ‘‘does’’ have an ‘‘immediate owner’’, and/or ‘‘is’’ owned or controlled by another entity (or ‘‘highest owner’’), and/or ‘‘does’’ involve a ‘‘foreign entity’’ and will be required to complete additional sections at (c)(2) and (c)(3), potentially (c)(4), (d)(2) and (d)(3), potentially (d)(4), and (e)(2). GSA estimates that it will take leasing acquisition members 5 hours to complete the reviews on those various sections of the representation clause, notify the Federal tenant of the building or other improvement of any security concerns and necessary mitigation measures (if any) prior to award or approval of a novation agreement. Therefore, GSA calculated the total estimated cost for this part of the rule to be $23,000 (= 5 hours × $84.16 × 54). b. GSAR 552.270–34, Access to Limitations for High-Security Leased Space i. GSAR 552.270–34 requires lessors for high-security leased space to limit access to the space unless approved by an authorized Government representative. GSA estimates that 10 percent of lessors, or 147 (10 percent of 1,471) will request approval once per lease and it will take the leasing acquisition member an estimated 3 hours to review and approve the request. Therefore, GSA calculated the total estimated cost for this part of the rule to be $37,000 (= 3 hours × $84.16 × 147). ii. GSA estimates that for new highsecurity lessors, 10 percent of lessors (or approximately 54) will request approval once per lease and it will take the leasing acquisition members an estimated 3 hours to review and approve the request. Therefore, GSA calculated the total estimated cost for this part of the rule to be $14,000 (= 3 hours × $84.16 × 54). iii. GSA acknowledges that the rule will require written procedures, as documented in the Government’s Occupant Emergency Plan,46 governing access to the high-security leased space in case of emergencies. GSA estimates that writing these procedures will take approximately 2 hours. Therefore, GSA calculated the total estimated cost for 46 The GSA Office of Leasing will develop a templated Plan for all leasing acquisition members to use. Therefore, it will not require individual development of each plan by each member. This will lessen the burden. VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 this part of the rule to be $248,000 (= 2 hours × $84.16 × 1,471). iv. GSA acknowledges that the rule will require, for new high-security leases, written procedures, as documented in the Government’s Occupant Emergency Plan, governing access to the high-security leased space in case of emergencies. GSA estimates that writing these procedures will take approximately 2 hours. Therefore, GSA calculated the total estimated cost for this part of the rule to be $91,000 (= 2 hours × $84.16 × 542). After the first year the rule is implemented, GSA estimates it will take 6 minutes (0.10 hours) to update any information in the subsequent years for the written procedures. GSA does not estimate any additional significant burden with access requests. Therefore, GSA calculated the total estimated cost for this part of the rule to be $12,000 (= 0.10 hours × $84.16 × 1,471). The total estimated cost to GSA to review representations and written procedures is estimated to be $359,000 in the first year after publication. The total estimated cost to GSA to review representations and written procedures annually is estimated to be $145,000. 4. Reduced Competition GSA acknowledges both new clauses may lead to reduced competition. Some lessors may choose to exit the Federal market, particularly lessors that primarily lease to the private sector, because of the additional disclosure requirements, and the subsequent reduced level of competition may increase prices. However, estimated costs faced by contractors represent a small fraction of lease payments, and therefore GSA expects effects along these lines to be minimal. 5. Government Total Costs The total cost of the above Cost Estimate is $511,000 in the first year after publication. The total cost of the above Cost Estimate in subsequent years is $166,000 annually. The following is a summary of the estimated costs calculated for a 10 year time horizon at a 3- and 7-percent discount rate: Summary Total costs Present Value (3 percent) ................... Annualized Costs (3 percent) .............. Present Value (7 percent) ................... Annualized Costs (7 percent) .............. $1,750,000 205,000 1,488,000 212,000 GSA notes that this interim rule does not authorize GSA lease contracting officers to use the information disclosed by offerors as a differentiating factor for selection of a lease award, nor does it PO 00000 Frm 00071 Fmt 4700 Sfmt 4700 34975 authorize GSA to terminate a lease, prevent a novation, or otherwise decline to make an award based on the disclosure. As such, GSA estimates that this rule will not result in these activities, and therefore no moving costs have been included for in this regulatory impact analysis. 6. Overall Total Costs The overall total cost of the above Cost Estimate, including both Public and Government costs, is $2,653,000 in the first year after publication. The overall total cost of the above Cost Estimate, including both Public and Government costs in subsequent years, is $1,143,000 annually. The following is a summary of the estimated overall total costs calculated for a 10 year time horizon at a 3- and 7-percent discount rate inclusive of both Public and Government costs: Summary Present Value (3 percent) ................. Annualized Costs (3 percent) ............ Present Value (7 percent) ................. Annualized Costs (7 percent) ............ Total costs $11,216,000 1,315,000 9,439,000 1,344,000 (g) Analysis of Alternatives Alternative 1: GSA could take no regulatory action to implement this statute. However, this alternative would not provide any implementation and enforcement of the important national security measures imposed by the law. Moreover, the general public would not experience the benefits of improved national security resulting from the rule as detailed above in Section VI.(d). As a result, we reject this alternative. Alternative 2: GSA could take a more stringent approach to the requirements of the Act and apply the new clauses to not only all GSA leases and delegated leases for FSL III, IV, or V space but for all FSL designations. However, given the relatively low levels of risk at those facilities, as described by the ISC, compared with the costs and burden applying this new representation clause and access clause,47 no additional benefit would be gained. As a result, we reject this alternative. GSA also considered issuing an acquisition letter, but concluded the best alternative was to issue this interim rule directly implementing the statute and allowing for public comment. 47 As this Regulatory Impact Analysis only considers 1,471 high-security leases (or approximately 16% of the GSA leasing portfolio), it’s reasonable to estimate that if the entire portfolio was included, costs could be approximately 5X more costly than currently shown. E:\FR\FM\01JYR1.SGM 01JYR1 34976 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES (h) Specific Questions for Comment To understand the exact scope of the impact of this rule and how this impact could be affected in subsequent rulemaking, GSA welcomes input on the following assumptions and questions regarding anticipated impact on affected parties. Assumption 1: As previously stated, GSA assumes that most Federal lessors maintaining high-security leased space or Federal lessors that are competing for solicitations for high-security leased space are already familiar with the majority of the requirements of this rule, or, similarly, will not find the requirements of this interim rule as anything significantly more than what is currently expected. GSA previously implemented ownership disclosures requirements through internal policy,48 GSA’s Request for Lease Proposals (or solicitations), GSA’s guidance through its public-facing Leasing Desk Guide,49 Leasing Alerts and Lease Acquisition Circulars.50 Question 1: If this assumption is not valid, to what extent are the requirements in this rule significantly different from what GSA has currently been doing as part of its procedures for foreign ownership disclosure? Assumption 2: GSA estimates that this rule will impact mainly the Federal lessor industry. Question 2: If this assumption is not valid, is there another industry(s) to which this rule will cause significant impact or disruption? Assumption 3: The impact of this rule will not significantly change the way current Federal lessors interact with GSA (or other Federal agencies with independent leasing authority). Question 3: If this assumption is not valid, to what extent will this rule change how you interact with GSA (or other Federal agencies with independent leasing authority)? 48 In March 2017, GSA’s Office of Leasing issued Leasing Alert LA–FY17–06 requiring Lease Contracting Officers (LCOs) to determine whether the ownership of leased space is identified as a foreign-owned entity and to notify the client agency in such instances, so that the agency can take any needed security mitigation measures. The Leasing Alert outlined the procedures to make this determination which involved a review of the entity’s SAM registration; the Leasing Alert also required this review for all lease procurements and novations, regardless of the Facility Security Level (FSL). In October 2018, GSA added a ‘‘Foreign Ownership and Financing Representation,’’ to be included with all Request for Lease Proposals (RLP) packages issued for prospectus-level lease projects. This ‘‘paper’’ representation required the offeror to confirm both foreign ownership and foreign financing. 49 GSA’ Leasing Desk Guide (Desk Guide). 50 GSA’s Leasing Alerts and Lease Acquisition Circulars (LAC). VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 Assumption 4: The impact of this rule will not significantly reduce the number of lessors competing for High-Security Leased Space solicitations. Question 4: If this assumption is not valid, to what extent will this rule reduce the likelihood of you—lessor to the Federal Government for HighSecurity Leased Space—from not competing for future solicitations of High-Security Leased Space? Assumption 5: The compliance activities, and associated costs, estimated by GSA are stated at Section VI.(e). Question 5: Is there a compliance activity that GSA has failed to consider? If so, please specify the activity, explain the activity, describe the impact of the activity, and please estimate the annual cost of such activities and subsequent yearly activity costs. Question 6: Is there a compliance activity that GSA has noted that is significantly understated (in terms of annual and subsequent costs)? If so, which compliance activity and what specifically was understated? Please explain how the compliance activity should be estimated. Assumption 7: Other agencies relying upon GSA’s leasing authority have similar profiles of high security leases in their inventory. Question 7: What information is available to better estimate high security leases in other agency inventories? Assumption 8: GSA sufficiently detailed all compliance requirements for the rule. Question 9: What additional information or guidance do you view as necessary to effectively comply with this rule? Question 10: What other challenges do you anticipate facing in effectively complying with this rule? Question 11: What thoughts or observations would you like to share regarding foreign ownership, including beneficial ownership, for GSA to consider in subsequent rule-making? VII. 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 and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This interim rule has been reviewed in accordance with E.O. 12866 PO 00000 Frm 00072 Fmt 4700 Sfmt 4700 Section 6(b) and determined by OMB to be a significant regulatory action. See Section VI for a regulatory impact analysis of the rule. VIII. Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a ‘‘major rule’’ may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. A major rule cannot take effect until 60 days after it is published in the Federal Register. This interim rule has been reviewed and determined by OMB not to be a ‘‘major rule’’ under 5 U.S.C. 804(2). IX. Regulatory Flexibility Act The General Services Administration does not expect this interim 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. However, an Initial Regulatory Flexibility Analysis has been performed, and is summarized as follows: The purpose of this interim rule is to implement certain requirements outlined in the Secure Federal LEASEs Act (Pub. L. 116– 276) into the GSAR. The objective of the rule is to prescribe appropriate policies and procedures to address the risks of foreign ownership of Government-leased real estate and requires the disclosure of ownership information for high-security space leased to accommodate a Federal agency. One new representation and one new clause have been developed to support these policies and procedures: GSAR 552.270–33 (representation) and GSAR 552.270–34 (clause). Both will be required in all novations, solicitations and contracts for leased space that (1) will be occupied by Federal employees for nonmilitary activities; and (2) have a facility security level of III, IV, or V. A new representation requirement at GSAR 552.270–33 will be incorporated into all new lease awards, options exercised for current leases, lease extensions, and ownership changes for high-security leased space. Except where otherwise provided, the statutory disclosure requirements shall apply with respect to any lease or novation agreement entered into on or after June 30, 2021, involving high-security leased space. That includes new, replacing, succeeding, and superseding leases, renewal options, extensions, and novations. This includes actions involving small entities. The representation requires offerors for highsecurity leased space to identify whether the immediate owner, highest-level owner, or an entity involved in the financing of the lease is foreign-owned. If so, they must represent E:\FR\FM\01JYR1.SGM 01JYR1 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES the associated country. Awardees will also be required to re-represent on an annual basis. This representation also applies upon change of ownership/novations. As of June 2021, GSA has approximately 7,860 leases in total. Approximately 68 percent (5,345) of leasing entities were small entities. This information is based on internal inventory data sources. Approximately 1,263 of GSA portfolio leases are for high-security lease space (lease space in a facility with a security level of III, IV, or V). 76 leases per year are estimated to be solicited for new high-security space procurements. These solicitations result from a mix of expiring high-security leases or new requirements for high-security facilities. Using the approximation above (68 percent), GSA estimates that for the 1,263 lessors already maintaining leased space at a Level III, IV, or V secure facility approximately 859 will be small entities (1,263*68 percent). If GSA includes agencies with delegated leasing authority, the approximate number of total leases at a Level III, IV, or V is 1,471. This would increase the approximate number of small entities to 1000 (from 859). For the estimated 76 solicitations in subsequent years, assuming 3 offerors per solicitation, approximately 155 will be submitted by small entities. The clause at GSAR 552.270–34 requires lessors for high-security leased space to limit access to the space unless approved by an authorized Government representative. This rule does not duplicate, overlap, or conflict with any other Federal rules. Because of the requirements outlined by the statute, it is not possible to establish different compliance or reporting requirements or timetables that take into account the resources available to small entities or to exempt small entities from coverage of the rule, or any part thereof. However, in order to reduce the burden imposed on the public, GSA is currently reviewing and investigating potential future implementation through electronic means, including externally (System for Award Management) or internally (GSA’s Lease Offer Platform). Entities that provide affirmative responses when completing the representation at 552.270–33 would be required to provide additional representation information in their offers for high-security leases. The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. GSA invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities. GSA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (GSAR Case 2021–G527) in correspondence. VerDate Sep<11>2014 17:28 Jun 30, 2021 Jkt 253001 X. Paperwork Reduction Act The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. GSA has requested, and OMB authorized, emergency processing of the collection of information involved in this rule, consistent with 5 CFR 1320.13. GSA has determined the following conditions have been met: a. The collection of information is needed prior to the expiration of time periods normally associated with a routine submission for review under the provisions of the PRA, because the immediate and highest level owner disclosure requirement for high-security leased space in the Secure Federal LEASEs Act goes into effect on June 30, 2021. b. The collection of information is essential to the mission of GSA to ensure compliance with the Secure Federal LEASEs Act and protect the Government supply chain from risks posed by foreign owners. c. Moreover, GSA cannot comply with existing representations because public harm is reasonably likely to result if current procedures are followed. Specifically, authorizing collection of this information will ensure that GSA does not enter into leases that are in violation of the Secure Federal LEASEs Act or enter into, extend, or renew leases with any entity or lessor that is in violation of the Secure Federal LEASEs Act. This requirement supports implementation of Section 3 of the Secure Federal LEASEs Act (Pub. L. 116–276) for high-security leased space. This section requires offerors to identify the immediate or highest-level owner of the space, including any financing entity, and disclose whether that owner or financing entity is a foreign person or entity, including the country associated with the ownership entity. The offerors shall (1) provide such identification and disclosure when first submitting a proposal in response to a solicitation; and, if awarded the lease, (2) update such information annually. This requirement is partially implemented in the Federal Acquisition Regulation (FAR) through the provisions at FAR 52.204–3, Taxpayer Identification, FAR 52.204–7, System for Award Management, FAR 52.204– 17, Ownership and Control of Offeror, and clause at FAR 52.204–13, System for Award Management Maintenance. OMB Control Numbers 9000–0097 and 9000–0185 cover the FAR provisions and clause. However, the FAR does not account for foreign financing as required by the Act. PO 00000 Frm 00073 Fmt 4700 Sfmt 4700 34977 The annual public reporting burden for this collection of information through GSAR 552.270–33 is estimated based on the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. The annual reporting burden is estimated as follows: 1. Initial Disclosure Baseline Representation Estimated annual responses: 542. Estimated hours per response: 2. Additional Representation Estimated annual responses: 54. Estimated hours per response: 10. Total Initial Response Burden Hours: 1,624. 2. Annual Updates Estimated annual responses: 542. Estimated hours per response: 0.25. Total Update Response Burden Hours: 136. Public comments are particularly invited on: Whether this collection of information is necessary; whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology. XI. Determination To Issue an Interim Rule A determination has been made under the authority of the Administrator of General Services (GSA) that urgent and compelling circumstances necessitate that this interim rule go into effect earlier than 60 days after its publication date. Since the Secure Federal LEASEs Act was signed on December 30, 2020, GSA has been working diligently to implement the statute, which has multiple effective dates embedded. Specifically, Section 7 requires implementation of the Section 3 requirements by June 30, 2021. Given the complexity of the Secure Federal LEASEs Act, this rule required thorough efforts to reach out to other agencies and conduct up-front analysis. These factors have left GSA with insufficient time to publish the rule with 60 days before the legislatively established effective date of June 30, 2021, or to complete full public notice and comment before the rule becomes E:\FR\FM\01JYR1.SGM 01JYR1 34978 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations effective. As noted, however, GSA is seeking public comment on this interim rule and will consider and address those comments. It is worth noting this rule follows FAR rules dealing with ownership disclosure and supply chain security, such as FAR Case 2012–024 which added FAR provision 52.204–17 and FAR Case 2019–009 which added FAR provision 52.204–24. As such, Government agencies are already authorized to collect certain immediate and highest-level owner information (reference OMB Control Numbers 9000– 0097 and 9000–0185). Having an implementing regulation in place by the effective date is important to avoid confusion, uncertainty, and potentially substantial legal consequences for agencies and the lessor community. The statute requires lessors to identify and disclose whether the immediate or highest-level owner of the leased space, including an entity involved in the financing thereof, is a foreign person or a foreign entity, including the country associated with the ownership entity. If they did so without an implementing regulation in place, contractors would have no guidance as to how to comply with the requirement. For the foregoing reasons, pursuant to 41 U.S.C. 1707(d), GSA finds that urgent and compelling circumstances make compliance with the notice and comment and delayed effective date requirements of 41 U.S.C. 1707(a) and (b) impracticable, and invokes the exception to those requirements under 1707(d). While a public comment process will not be completed prior to the rule’s effective date, GSA will consider comments submitted in response to this interim rule in issuing a subsequent rulemaking. List of Subjects in 48 CFR Parts 501, 552, and 570 Government procurement. Jeffrey A. Koses, Senior Procurement Executive, Office of Acquisition Policy, Office of Governmentwide Policy, General Services Administration. khammond on DSKJM1Z7X2PROD with RULES Therefore, GSA amends 48 CFR parts 501, 552, and 570 as set forth below: ■ 1. The authority citation for 48 CFR parts 501, 552, and 570 continues to read as follows: Authority: 40 U.S.C. 121(c). PART 501—GENERAL SERVICES ADMINISTRATION ACQUISITION REGULATION SYSTEM 2. In section 501.106, amend table 1 by adding entries for ‘‘552.270–33’’ and ■ VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 ‘‘570.703(c)’’ in numerical order to read as follows: 501.106 OMB approval under the Paperwork Reduction Act. OMB control No. GSAR reference * * * * * 552.270–33 ............................. 3090–0324 570.703(c) ............................... 3090–0324 * * * * * PART 552—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 3. Add sections 552.270–33 and 552.270–34 to read as follows: ■ 552.270–33 Foreign Ownership and Financing Representation for High-Security Leased Space. As prescribed in 570.703(c), use the following clause: Foreign Ownership and Financing Representation For High Security Leased Space (JUN 2021) (a) Definitions. As used in this clause— Financing means the process of raising or providing funds through debt or equity for purposes of meeting the requirements of the Lease, including, but not limited to, acquisition, maintenance, and construction of, or improvements to, the Property. Foreign entity means a: (i) Corporation, company, business association, partnership, society, trust, or any other nongovernmental entity, organization, or group that is headquartered or organized under the laws of a country that is not the United States or a state, local government, tribe, or territory within the United States; or (ii) Government or governmental instrumentality that is not the United States Government. Foreign person means an individual who is not: (i) A United States citizen; or (ii) An alien lawfully admitted for permanent residence in the United States. Highest-level owner means the entity that owns or controls an immediate owner of the offeror or Lessor, or that owns or controls one or more entities that control an immediate owner of the offeror or Lessor. No entity owns or exercises control of the highest-level owner. Immediate owner means an entity, other than the offeror or Lessor, that has direct control of the offeror or Lessor. Indicators of control include, but are not limited to, one or more of the following: Ownership or interlocking management, identity of interests among family members, shared facilities and equipment, and the common use of employees. Unique entity identifier means a number or other identifier used to identify a specific commercial, nonprofit, or Government entity. PO 00000 Frm 00074 Fmt 4700 Sfmt 4700 See www.sam.gov for the designated entity for establishing unique entity identifiers. (b) Timing. The Offeror or Lessor shall complete this representation when submitting a proposal. If the Offeror is the successful awardee, the Offeror (now Lessor) shall review, update, and provide this representation on an annual basis, reflecting all changes to immediate owner, highestlevel owner and financing during the preceding 1-year period, starting one year from the Lease Term Effective Date through final payment of any contract. If the Lessor intends to transfer the lease to a successor in interest under the circumstances set forth in FAR 42.1204, the Lessor shall submit this representation to the Lease Contracting Officer with any request to novate the lease. The Offeror or Lessor is responsible for the currency, accuracy and completeness of the data disclosed, and for any liability resulting from the Government’s reliance on inaccurate or incomplete data. (c) Immediate owner. (1) The Offeror or Lessor represents that it b does or b does not have an immediate owner. (2) If the Offeror or Lessor indicates ‘‘does’’ in paragraph (c)(1) of this clause, then enter the following information for the immediate owner. If the offeror or Lessor has more than one immediate owner (e.g., joint venture), then the offeror or Lessor shall provide the information for each entity. Legal name (do not use a ‘‘doing business as’’ name). Unique entity identifier (if available). (3) If the Offeror or Lessor indicates ‘‘does’’ in paragraph (c)(1) of this clause, then complete this additional representation: Is the immediate owner a foreign entity?: b Yes or b No. (4) If the Offeror or Lessor indicates ‘‘does’’ in paragraph (c)(1) of this clause, then complete this additional representation: Is the immediate owner a foreign person?: b Yes or b No. (5) If the Offeror or Lessor indicates ‘‘Yes’’ in either paragraph (c)(3) or (4) of this clause, indicating that there is foreign ownership (as a foreign entity or foreign person), then enter the following information for the foreign owner (respond for each as applicable). Physical address. Country. (d) Highest-level owner. (1) The Offeror or Lessor represents that the immediate owner, if any, b is or b is not owned or controlled by another entity? (2) If the Offeror or Lessor indicates ‘‘is’’ in paragraph (d)(1) of this clause, indicating that the immediate owner is owned or controlled by another entity, then enter the following information for the highest-level owner. Legal name (do not use a ‘‘doing business as’’ name). Unique entity identifier (if available). E:\FR\FM\01JYR1.SGM 01JYR1 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations (3) If the Offeror or Lessor indicates ‘‘is’’ in paragraph (d)(1) of this clause, then complete this additional representation: Is the highest-level owner a foreign entity?: b Yes or b No. (4) If the Offeror or Lessor indicates ‘‘is’’ in paragraph (d)(1) of this clause, then complete this additional representation: Is the highest-level owner a foreign person?: b Yes or b No. (5) If the Offeror or Lessor indicates ‘‘Yes’’ in either paragraph (d)(3) or (4) of this clause, indicating that there is foreign ownership (as a foreign entity or foreign person), then enter the following information for the foreign owner (respond for each as applicable). Physical address. Country. (e) Financing entity. (1) The Offeror or Lessor represents that the financing b does or b does not involve a foreign entity? (2) The Offeror or Lessor represents that the financing b does or b does not involve a foreign person? (3) If the Offeror or Lessor indicates ‘‘does’’ in either paragraph (e)(1) or (2) of this clause, indicating foreign financing (as a foreign entity or foreign person), then enter the following information for the foreign financing (respond for each as applicable). Legal name (do not use a ‘‘doing business as’’ name). Unique entity identifier (if available). (End of clause) DEPARTMENT OF THE INTERIOR PART 570—ACQUIRING LEASEHOLD INTERESTS IN REAL PROPERTY Fish and Wildlife Service 50 CFR Part 17 4. Add section 570.118 to subpart 570.1 to read as follows: [Docket No. FWS–R4–ES–2019–0059; FF09E21000 FXES11110900000 212] 570.118 RIN 1018–BD09 ■ Foreign Ownership Disclosure. If a foreign ownership disclosure is made pursuant to clause 552.270–33: (a) The contracting officer shall notify the Federal tenant for the leased space in writing: (1) If the disclosure is made during the lease acquisition process, the contracting officer shall notify the Federal tenant prior to lease award. (2) If the disclosure is made concurrent with a request for novation, the contracting officer shall notify the Federal tenant prior to executing the novation. (3) If the disclosure is made concurrent with a renewal option or extension, the contracting officer shall notify the Federal tenant prior to executing the renewal option or extension. (b) The contracting officer shall coordinate with the Federal tenant regarding security concerns and any necessary mitigation measures. Physical address. 5. Amend section 570.703 by adding paragraphs (c) and (d) to read as follows: Country. 570.703 (End of clause) * ■ 552.270–34 Access Limitations for HighSecurity Leased Space. As prescribed in 570.703(d), use the following clause: khammond on DSKJM1Z7X2PROD with RULES Access Limitations for High-Security Leased Space (Jun 2021) (a) The Lessor, including representatives of the Lessor’s property management company responsible for operation and maintenance of the leased space, shall not— (1) Maintain access to the leased space; or (2) Have access to the leased space without prior approval of the authorized Government representative. (b) Access to the leased space or any property or information located within that Space will only be granted by the Government upon determining that such access is consistent with the Government’s mission and responsibilities. (c) Written procedures governing access to the leased space in the event of emergencies shall be documented as part of the Government’s Occupant Emergency Plan, to be signed by both the Government and the Lessor. VerDate Sep<11>2014 15:54 Jun 30, 2021 Jkt 253001 34979 GSAR contract clauses. * * * * (c) Insert the representation clause at 552.270–33, Foreign Ownership and Financing Representation for HighSecurity Leased Space, in novations, solicitations and contracts for leased space that: (1) Will be occupied by Federal employees for nonmilitary activities; and (2) Has a facility security level of III, IV, or V. (d) Insert the clause at 552.270–34 Access Limitations for High-Security Leased Space, in novations, solicitations and contracts for leased space that: (1) Will be occupied by Federal employees for nonmilitary activities; and (2) Has a facility security level of III, IV, or V. [FR Doc. 2021–14161 Filed 6–30–21; 8:45 am] BILLING CODE 6820–61–P PO 00000 Frm 00075 Fmt 4700 Sfmt 4700 Endangered and Threatened Wildlife and Plants; Designation of Critical Habitat for Suwannee Moccasinshell Fish and Wildlife Service, Interior. ACTION: Final rule. AGENCY: We, the U.S. Fish and Wildlife Service (Service), designate critical habitat for the Suwannee moccasinshell (Medionidus walkeri) under the Endangered Species Act of 1973 (Act), as amended. In total, approximately 190 miles (306 kilometers) of stream channels in Alachua, Bradford, Columbia, Dixie, Gilchrist, Hamilton, Lafayette, Madison, Suwannee, and Union Counties, Florida, and Brooks and Lowndes Counties, Georgia, fall within the boundaries of the critical habitat designation. The effect of this regulation is to designate critical habitat for the Suwannee moccasinshell under the Act. DATES: This rule is effective August 2, 2021. ADDRESSES: This final rule is available on the internet at http:// www.regulations.gov under Docket No. FWS–R4–ES–2019–0059 and at https:// www.fws.gov/panamacity/. Comments and materials we received, as well as some supporting documentation we used in preparing this rule, are available for public inspection at http:// www.regulations.gov. All of the comments, materials, and documentation that we considered in this rulemaking are available upon mailed request from U.S. Fish and Wildlife Service, Panama City Ecological Services Field Office, 1601 Balboa Avenue, Panama City, FL 32405; or by telephone 850–769–0552. The coordinates or plot points or both from which the maps are generated are included in the administrative record for this critical habitat designation and are available at http:// www.regulations.gov at Docket No. FWS–R4–ES–2019–0059, and at the Panama City Ecological Services Field Office at https://www.fws.gov/ panamacity/ (see FOR FURTHER INFORMATION CONTACT). Any additional tools or supporting information that we developed for this critical habitat designation will also be available at the SUMMARY: E:\FR\FM\01JYR1.SGM 01JYR1

Agencies

[Federal Register Volume 86, Number 124 (Thursday, July 1, 2021)]
[Rules and Regulations]
[Pages 34966-34979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-14161]


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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 501, 552 and 570

[GSAR Case 2021-G527; Docket No. GSA-GSAR-2021-0014; Sequence No. 1]
RIN 3090-AK44


General Services Administration Acquisition Regulation; Immediate 
and Highest Level Owner for High-Security Leased Space

AGENCY: Office of Acquisition Policy, General Services Administration 
(GSA).

ACTION: Interim rule.

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SUMMARY: GSA is amending the General Services Administration 
Acquisition Regulation (GSAR) to implement Section 3 and Section 5 
requirements of the Secure Federal Leases from Espionage and Suspicious 
Entanglement Act (the Act or Secure Federal LEASEs Act). The Act 
addresses the risks of foreign ownership of Government-leased real 
estate and requires the disclosure of ownership information for high-
security space leased to accommodate a Federal agency.

DATES: Effective: June 30, 2021.
    Applicability: This interim rule applies to new lease awards, the 
exercise of options for current leases, lease extensions, and ownership 
changes for high-security leased space. Except where otherwise 
provided, the Act's disclosure requirements shall apply with respect to 
any lease or novation agreement entered into on or after June 30, 2021, 
involving high-security leased space. That includes new, renewal, 
succeeding, expansion, superseding, extension, and replacing leases and 
novations.
    Comment Date: Interested parties should submit written comments to 
the Regulatory Secretariat Division at the address shown below on or 
before August 30, 2021 to be considered in the formation of the final 
rule.

ADDRESSES: Submit comments in response to GSAR Case 2021-G527 to the 
Federal eRulemaking portal at https://www.regulations.gov by searching 
for ``GSAR Case 2021-G527''. Select the link ``Comment Now'' that 
corresponds with ``GSAR Case 2021-G527''. Follow the instructions 
provided at the ``Comment Now'' screen. Please include your name, 
company name (if any), and ``GSAR Case 2021-G527'' on your attached 
document. If your comment cannot be submitted using https://www.regulations.gov, call or email the points of contact in the FOR 
FURTHER INFORMATION CONTACT section of this document for alternate 
instructions.
    Instructions: Please submit comments only and cite ``GSAR Case 
2021-G527'' in all correspondence related to this case. Comments 
received generally will be posted without change to https://www.regulations.gov, including any personal and/or business 
confidential information provided. To confirm receipt of your 
comment(s), please check https://www.regulations.gov, approximately two 
to three days after submission to verify posting.

FOR FURTHER INFORMATION CONTACT: Mr. Stephen Carroll, Procurement 
Analyst, at 817-253-7858 or [email protected], for clarification of 
content. For information pertaining to status or publication schedules, 
contact the Regulatory Secretariat Division at 202-501-4755 or 
[email protected]. Please cite GSAR Case 2021-G527.

SUPPLEMENTARY INFORMATION:

I. Background

    On Dec. 31, 2020, the then president signed into law the Secure 
Federal Leases from Espionage and Suspicious Entanglements Act (Secure 
Federal LEASEs Act), (Pub. L. 116-276, 134 Stat. 3362). The Act imposes 
disclosure requirements regarding the foreign ownership, particularly 
``beneficial ownership,'' of prospective lessors of ``high-security 
leased space'' (i.e., property leased to the Federal government having 
a security level of III or higher). Section 3 and Section 5 of the Act 
regarding immediate and highest-level ownership applies to a lease or 
lease novation for high-security leased space entered into six months 
after the date of the enactment of the Act. GSA will modify existing 
leases to reflect the requirements of the Act when any of the various 
actions highlighted in the Applicability section arise.
    These requirements of the statute are applicable to leases by the 
U.S. General Services Administration (GSA), the Architect of the 
Capitol, ``or the head of any Federal agency, other than the Department 
of Defense (DOD), that has independent statutory leasing authority'' 
(Federal lessees). The Act is not applicable to DOD or to the 
intelligence community. In that regard, Section 2876 of the FY 2018 
National Defense Authorization Act (NDAA) (Pub. L. 115-91) already 
provides DOD similar authority to obtain ownership information with 
respect to its high-security leased space. GSA's regulatory action 
applies to GSA and to agencies relying upon GSA's leasing authority.
    The Act addresses national security risks identified in the 
Government Accountability Office (GAO) report, GSA Should Inform Tenant 
Agencies When Leasing High-Security Space from Foreign Owners, dated 
January 2017 (GAO-17-195). This report found certain high-security 
Federal agencies were in buildings owned or controlled by foreign 
entities. According to the report, most Federal tenants were unaware 
the spaces GAO identified were subject to foreign ownership or control, 
exposing these agencies to the heightened risk of surreptitious 
physical or cyber espionage by foreign actors. The report also noted 
GAO could not identify the owners of approximately one-third of the 
Federal government's high-security leases because such ownership 
information was unavailable for those buildings.
    As the US Government's ``landlord,'' GSA serves as the central 
leasing agent for Federal leases and is responsible for managing and 
obtaining space on behalf of multiple Federal agencies. When GSA enters 
into a leasing agreement, the agency becomes the ``tenant'' of GSA, 
with GSA acting as the lessee of the property. GSA currently uses 
information contained in the System for Award Management (SAM) to 
collect foreign ownership information for potential lessors, including 
immediate or highest-level owners. However, as Congress recognized in 
the Act, SAM does not capture more nuanced forms of foreign control 
such as entities involved in financing properties or beneficial 
ownership.
    GSA is currently reviewing and investigating potential future 
implementation steps and potential updates through electronic means to 
implement the requirements of the Act, including externally (System for 
Award Management) or internally (GSA's Lease Offer Platform). As these 
alternatives are not yet available, this interim rule will require 
reporting on an action-by-action basis.

What is ``high-security leased space''?

    The statute defines ``high security leased space'' as ``space 
leased by a Federal lessee that--(A) will be occupied by Federal 
employees for nonmilitary activities; and (B) has a facility security 
level of III, IV or V, as

[[Page 34967]]

determined by the Federal tenant in consultation with the Interagency 
Security Committee, the Department of Homeland Security, and the 
General Services Administration.'' Facility security levels and the 
process for determining these are outlined in the Interagency Security 
Committees publication ``The Risk Management Process.'' \1\
---------------------------------------------------------------------------

    \1\ Interagency Security Committees publication ``The Risk 
Management Process'', March 2021
---------------------------------------------------------------------------

New Disclosure Requirements

    Section 3 of the Act imposes the following requirements:
     Prior to entering into a lease agreement with a ``covered 
entity'' or allowing such a landlord to convey its interest in a leased 
space that qualifies as a ``high-security leased space''--meaning a 
lease with a security level of Level III, IV, or V--a Federal lessee 
must require the landlord to identify and disclose whether the 
``immediate owner'' or ``highest-level owner'' of the leased space, 
including an entity involved in the financing thereof, is a foreign 
person or a foreign entity, and to identify the country associated with 
each ownership entity. A ``covered entity'' is a person, corporation, 
company, business association, partnership, society, trust, or any 
other nongovernmental entity, organization, or group, or any 
governmental entity or instrumentality of a government. Leases entered 
into by the Department of Defense and for Federal tenants within the 
intelligence community (as defined in the National Security Act of 
1947, 50 U.S.C. 3003) are expressly excluded from these requirements.
     The Act requires disclosure of the ``immediate owner'' 
(the entity that has direct control of the offeror of a lease, as 
defined by ownership or interlocking management, identity of interests 
among family members, shared facilities and equipment, and the common 
use of employees) and ``highest-level owner'' (the entity that owns or 
controls an immediate owner of the offeror of a lease or that owns or 
controls one or more entities that control the immediate owner).
     The Act also requires disclosure of whether an entity is 
involved in the financing of the leased space is a foreign person or 
entity. GSA has provided a definition of ``financing'' at 552.270-33.
     Once a lease is executed, the Act requires annual 
disclosure of the foreign ownership of the landlord (and financing of 
the property) with respect to each prior one year period.
     Section 3 of the Act applies to any lease or novation 
agreement entered into on or after June 30, 2021.
     This Section of the Act requires that a covered entity 
(i.e., ``a person, corporation, company, business association, 
partnership, society, trust, or any other nongovernmental entity, 
organization, or group''; or ``any governmental entity or 
instrumentality of a government'') identify and disclose whether the 
immediate or highest-level owner of the leased space, including an 
entity involved in financing of the property, is a foreign person or a 
foreign entity, including the country of origin associated with the 
ownership, before a Federal lessee enters into a lease agreement with a 
covered entity or approves a novation agreement with a covered entity 
that involves a change of ownership under a lease for high-security 
leased space.
     Under the Act, an ``immediate owner'' is ``an entity, 
other than the offeror of a lease, that has direct control of the 
offeror, including ownership or interlocking management, identity of 
interests among family members, shared facilities and equipment, and 
the common use of employees'' and a ``highest-level owner'' is ``the 
entity that owns or controls an immediate owner of the offeror of a 
lease, or that owns or controls 1 or more entities that control an 
immediate owner of the offeror.'' If a disclosure is made, the Federal 
lessee is required to notify the Federal tenant of the building (or 
other improvement) that will be used for high-security space and to 
consult with the Federal tenant regarding security concerns and to 
determine whether mitigation measures are necessary prior to lease 
award or approval of the novation agreement.
     A covered entity is required to provide this ownership 
information in response to a solicitation for offers issued by the 
Federal lessee or before approving a novation agreement for a lease. 
Covered entities also must update the information provided to the 
Federal lessee annually. The information that must be provided on an 
annual basis includes: The list of immediate or highest-level owners of 
the covered entity during the preceding one-year period of Federal 
occupancy or the information required to be provided relating to each 
such immediate or highest-level owner.
    Section 4 of the Act is not addressed in this regulation. It will 
be implemented through separate rulemaking and is outlined here for 
awareness. Section 4 also imposes disclosure requirements for 
beneficial ownership:
     Subject to the development of GSA's government-wide plan 
for obtaining ownership information outlined in Section 4 of the Act, 
covered entities also will be required to disclose information about 
beneficial ownership. A ``beneficial owner'' is ``with respect to a 
covered entity, each natural person who, directly or indirectly, 
through any contract, arrangement, understanding, relationship, or 
otherwise--(i) exercises control over the covered entity; or (ii) has a 
substantial interest in or receives substantial economic benefits from 
the assets of the covered entity.'' However, a beneficial owner of a 
covered entity does not include: A minor child, a person acting as a 
nominee, intermediary, custodian, or agent on behalf of another person; 
a person acting solely as an employee of the covered entity and whose 
control over or economic benefits from the covered entity derives 
solely from the employment status of the person; a person whose only 
interest in the covered entity is through a right of inheritance or a 
creditor of the covered entity unless either also meets the definition 
of ``beneficial owner.'' This disclosure will be addressed in a future 
rule.
     Comments are welcome on foreign ownership, including 
beneficial ownership, with the understanding that such comments may 
help inform a future regulatory action.

Additional Lease Language

    Lease agreements for high-security leased space will be required to 
include language that limits the access to the leased space by the 
covered entity and any member of the property management company 
responsible for the space without prior approval from the Federal 
tenant. The Federal tenant may only grant access to the high-security 
leased space (or any property or information located in the space) if 
the tenant determines that access is ``clearly consistent with [its] 
mission and responsibilities.'' The Federal lessee is required to have 
written procedures, signed by both the Federal lessee and the covered 
entity, that govern ``access to the high-security leased space in case 
of emergencies that may damage the leased property.''

Government-Wide Plan for Obtaining Ownership Information

    Section 4 of the Act requires GSA, in conjunction with the Office 
of Management and Budget (OMB), to develop a government-wide plan for 
agencies to identify all immediate, highest-level, or beneficial owners 
of high-security leased spaces before

[[Page 34968]]

entering into a lease agreement with a covered entity for the 
accommodation of a Federal tenant in a high-security leased space.
    The plan must require the disclosure of any immediate, highest-
level, or beneficial owner that is a foreign person and notification by 
the Federal lessee of high-security space to the affected Federal 
tenant of such foreign ownership. The plan, however, must exclude 
collecting ownership information on widely held pooled-investment 
vehicles, mutual funds, trusts, or other pooled-investment vehicles. 
The Act requires GSA to submit the plan to specific Congressional 
committees by Dec. 31, 2021 and to implement the plan by Dec. 31, 2022. 
This plan will be separately addressed in a future rule, and is not 
included in this interim rule.
    Unlike the direct control-based immediate owner and highest-level 
owner, the Act defines the term ``beneficial owner'' to include any 
person that--through a contract, arrangement, understanding, 
relationship, or otherwise--exercises control over the covered entity 
or has a substantial interest in or receives substantial economic 
benefits from the assets of the covered entity, with some exceptions. 
GSA and OMB's plan must require the Federal lessee to collect the 
foreign ownership information for any immediate, highest-level, or 
beneficial owner that is a foreign person and, upon such a disclosure 
of foreign ownership, to notify and consult with the Federal tenant.

Implications of the Act and Related Rulemakings

    This Act is one of several recent examples of congressional concern 
about foreign ownership and control and congressional action in the 
world of government contracting to help address potential national 
security concerns. See, e.g., FY 2021 NDAA (Pub. L. 116-283), Sec.  
819, Modifications to Mitigating Risks Related to Foreign Ownership, 
Control, or Influence of DOD Contractors and Subcontractors; Sec.  885, 
Disclosure of Beneficial Owners in Database for Federal Agency Contract 
and Grant Officers; Sec.  6403, Beneficial Ownership Information 
Reporting Requirements.
    Covered entities already provide certain information on immediate 
and highest-level ownership through the System for Award Management 
registration process, per OMB Control Numbers 9000-0097 and 9000-0185. 
However, covered entities will need to provide additional information 
through a manual representation regarding any financing entities and 
foreign ownership details for the enhanced requirements per Section 3 
of the Act. Additionally, subject to the development and implementation 
of GSA's government-wide plan for Section 4 of the Act, through 
separate rulemaking, covered entities will need to provide disclosure 
of creditors who may be deemed beneficial owners if they either 
exercise control over the covered entity or have a substantial interest 
in or receive substantial economic benefits from the covered entity's 
assets. Therefore, property owners will need to take this provision 
into account when considering financing options for leasing high-
security space to the Federal government.

II. Requirements Contained in This Rulemaking and Related Rulemakings

    With this rule, GSA is implementing Section 3 and Section 5 of the 
Act.

Section 3--

     Requires Federal lessees for high-security leased space to 
require covered entities to identify and disclose whether the owner of 
the leased space, including an entity involved in the financing 
thereof, is a foreign person or a foreign entity, including the country 
associated with the ownership entity, before entering into a lease 
agreement. Covered entities must provide Federal lessees such 
information--
    [cir] when first submitting proposals in response to a solicitation 
for offers issued by the lessee; and
    [cir] annually, to include the list of immediate or highest level 
owners of the covered entity during the preceding one-year period of 
occupancy.
     Requires the Federal lessee to notify the Federal tenant 
in writing if such a disclosure of foreign ownership is made and 
consult with the tenant regarding any security concerns prior to 
awarding a new lease agreement.

Section 5--

     Requires that leases for high-security space include 
certain language regarding access to the high-security leased space by 
the covered entity and any member of the property management company.
    Section 4 of the Act requires the identification of beneficial 
owners of high-security leased spaces and will be addressed in a 
subsequent rulemaking through GSAR Case 2021-G522 and FMR Case 2021-
102-1. In addition, the FAR Council has opened FAR Case 2021-005 which 
will implement sections 885 and 6403 of the NDAA for FY 2021 (Pub. L. 
116-283) to require certain offerors to disclose beneficial ownership 
information in their offers for contracts over the simplified 
acquisition threshold.
    Finally, other agencies may need to do additional rulemaking 
because the GSAR only governs the contract terms and conditions for 
leased space procured by GSA and its delegated agencies.

III. Authority for This Rulemaking

    Title 40 of the United States Code (U.S.C.) Section 121 authorizes 
GSA to issue regulations, including in the GSAR, to control the 
relationship between GSA and contractors. In addition, the Secure 
Federal LEASEs Act, authorizes the collection of ownership information 
for high-security leased space.

IV. New GSAR Requirements

    With this rule, GSA is implementing one new GSAR representation and 
one new GSAR clause. The new representation is 552.270-33 (Foreign 
Ownership and Financing Representation for High-Security Leased Space) 
and the new clause is 552.270-34 (Access to Limitations for High-
Security Leased Space). Both apply to new lease awards, the exercise of 
options for current leases, lease extensions, and ownership changes for 
high-security leased space. Except where otherwise provided, the Act's 
disclosure requirements shall apply with respect to any lease or 
novation agreement entered into on or after June 30, 2021, involving 
high-security leased space. That includes new, renewal, succeeding, 
expansion, superseding, extension, and replacing leases and novations.
    The new GSAR representation implemented in 552.270-33 requires 
offerors for high-security leased space to identify whether the 
immediate owner, highest-level owner, or an entity involved in the 
financing of the lease is foreign-owned. If so, they must represent the 
associated country. Awardees will also be required to re-represent on 
an annual basis. This representation also applies upon extensions, 
exercise of renewal options and change of ownership/novations.
    The new GSAR clause at 552.270-34 requires lessors for high-
security leased space to limit access to the space unless approved by 
an authorized Government representative.

V. Expected Impact of the Rule

    GSA anticipates that this rule will have an impact on current 
Federal lessors of high-security leased space, future potential lessors 
of high-security leased space, and the Federal lessor

[[Page 34969]]

industry of high-security leased space. The rule seeks to ensure 
effective implementation and enforcement of the national security 
measures imposed by the Secure Federal LEASEs Act with minimal 
disruption to the mission of GSA and its Federal tenants and Federal 
lessors. As set forth in Section VI.(d) below, GSA recognizes the 
benefits that will result from this rule.
    GSA notes that this rule is one of several actions with regard to 
the Secure Federal LEASEs Act and other statutes regarding foreign 
ownership by GSA, other agencies with lease authority promulgating 
their own rules, and by the FAR Council. GSA understands that the 
impact of actions dealing with foreign ownership, including 
specifically beneficial owners, is not well understood and is still 
being assessed.
    In addition, while this interim rule, specific to Sections 3 and 5 
of the Secure Federal LEASEs Act, will be effective June 30, 2021, GSA 
is seeking public comment, including, as indicated below, on the 
potential impact of this rule on Federal lessors. After considering the 
comments received, a final rule will be issued, taking into account and 
addressing the public comments, as well as helping to shape 
implementation of future rules like beneficial ownership. GSA plans to 
share public comments received on such questions with other agencies 
and the FAR Council.

VI. Regulatory Impact Analysis

    The cost and benefit impacts of amending the General Services 
Administration Acquisition Regulation (GSAR) to implement certain 
requirements outlined in the Secure Federal LEASEs Act (SFLA) (Pub. L. 
116-276) are discussed in the analysis below. This analysis was 
developed by GSA in consultation with agency procurement officials and 
the GSA Office of Leasing. Section VI.(h) of this rule is requesting 
specific feedback regarding the impact of this rule, as well as other 
pertinent policy questions of interest, in order to inform finalization 
of this and potential future subsequent rulemakings.

(a) Risks to Industry of Not Complying With SFLA

    As a strictly contractual matter, an organization's failure to 
submit an accurate representation to the Government constitutes a 
breach of contract that can lead to cancellation, termination, and 
financial consequences. Therefore, it is important for contractors to 
develop a compliance plan that will allow them to submit accurate 
representations to the Government in the course of their offers.
    GSA notes that this interim rule does not authorize GSA lease 
contracting officers to use the information disclosed by offerors as a 
differentiating factor for selection of a lease award, nor does it 
authorize GSA to terminate a lease, prevent a novation, or otherwise 
decline to make an award based on the disclosure. As such, GSA 
estimates that this rule will not result in these activities, and 
therefore no moving costs have been included in this regulatory impact 
analysis.

(b) Contractor Actions Needed for Compliance

    GSA assumes that most Federal lessors maintaining high-security 
leased space or Federal lessors that are competing for solicitations 
for high-security leased space are already familiar with the majority 
of the requirements of this rule, or, similarly, will not find the 
requirements of this interim rule as anything significantly more than 
what is currently expected. GSA previously implemented ownership 
disclosures requirements through internal policy \2\, GSA's Request for 
Lease Proposals (or solicitations), and GSA's guidance through its 
public-facing Leasing Desk Guide \3\ and Leasing Alerts and Lease 
Acquisition Circulars.\4\
---------------------------------------------------------------------------

    \2\ In March 2017, GSA's Office of Leasing issued Leasing Alert 
LA-FY17-06 requiring Lease Contracting Officers (LCOs) to determine 
whether the ownership of leased space is identified as a foreign-
owned entity and to notify the client agency in such instances, so 
that the agency can take any needed security mitigation measures. 
The Leasing Alert outlined the procedures to make this determination 
which involved a review of the entity's SAM registration; the 
Leasing Alert also required this review for all lease procurements 
and novations, regardless of the Facility Security Level (FSL).
    In October 2018, GSA added a ``Foreign Ownership and Financing 
Representation,'' to be included with all Request for Lease 
Proposals (RLP) packages issued for prospectus-level lease projects. 
This ``paper'' representation required the offeror to confirm both 
foreign ownership and foreign financing.
    \3\ GSA' Leasing Desk Guide (Desk Guide).
    \4\ GSA's Leasing Alerts and Lease Acquisition Circulars (LAC).
---------------------------------------------------------------------------

(1) GSA Leasing--Current Processes
    Regardless of who owns the leased space, Federal agencies are 
already taking risk management measures appropriate for the security 
level of the space. The GSA Leasing Desk Guide \5\ outlines 
requirements and standards for new and replacement space. In Chapter 19 
(issued in 2012), it provides instructions for competitive procurements 
based on the Interagency Security Committee (ISC),\6\ Physical Security 
Standards, and it outlines the Public Buildings Service's (PBS) 
responsibilities for performing background investigations on the 
lessors' contractors.
---------------------------------------------------------------------------

    \5\ The Desk Guide chapters contain authorities, policies, 
technical and procedural guides, and administrative limitations 
governing the acquisition by lease of real property. Chapter 19 is 
specific to security requirements.
    \6\ A Federal committee dedicated to the protection of Federal 
civilian facilities in the United States. It has 21 primary member 
agencies and 30 associate member agencies. The ISC has developed 
standards applicable to all civilian Federal facilities, including 
leased facilities.
---------------------------------------------------------------------------

    In addition, a 2018 GSA Leasing Alert,\7\ provided required and 
recommended measures for lessors related to cybersecurity protections 
and precautions in leased facilities. It establishes lease language 
that prohibits lessors from connecting any portion of their building 
and access control systems (BACS) to any federally-owned or operated IT 
network and requires notification for cybersecurity incidents that 
impact a federal tenant's safety, security, or proper functioning. The 
lease language also outlines recommended cybersecurity measures that 
lessors are encouraged to follow.
---------------------------------------------------------------------------

    \7\ LA-FY18-05, Cybersecurity Measures for Leased Facilities.
---------------------------------------------------------------------------

    Lessors are already currently required to report certain ownership 
information. As previously outlined, GSA currently uses information 
contained in the System for Award Management (SAM) to collect foreign 
ownership information for potential lessors, including immediate or 
highest-level owners, and provides such information to tenant agencies. 
While this rule requires additional information related to the lessor's 
financing, the review of immediate or highest-level owner detail has 
already been in place and is a requirement Federal lessor's are 
familiar with.
(2) GSA Leasing--General Security Framework
    As outlined in the GSA Leasing Desk Guide, the facility security 
level (FSL) \8\ for each space requirement is set by the Department of 
Homeland Security- Federal Protective Service (FPS) and the client 
agency, in consultation with the GSA as part of the requirements 
development phase of a lease acquisition. If the client agency and FPS 
have not already conferred, GSA must coordinate with the necessary 
parties to set the appropriate level of security before the 
solicitation is drafted. The Desk Guide states that GSA Leasing

[[Page 34970]]

acquisition members must maintain contact as necessary with the 
appropriate FPS inspector throughout the lease administration. The 
facility security level designation does not change solely based on 
lessor ownership information collected via this rule.
---------------------------------------------------------------------------

    \8\ A categorization based on the analysis of several security-
related facility factors, which serves as the basis for the 
implementation of countermeasures specified in ISC standards. (CISA 
ISC Standard, March 2021).
---------------------------------------------------------------------------

(3) GSA Leasing--Determining Countermeasures
    GSA follows the Interagency Security Committee (ISC) provided 
standard for Physical Security Criteria (PSC) for Federal Facilities. 
This standard establishes baseline physical security measures for each 
FSL. This standard defines the process for determining the appropriate 
security measures; it also covers any uncommon measures required to 
address the unique risks at a particular facility. The GSA Desk Guide 
currently uses the PSC to prescribe the process for determining 
appropriate countermeasures for a facility. Adherence to this process 
(1) ensures that all security criteria will be considered; (2) defines 
the relationship between the levels of risk determined for each 
undesirable event and; (3) mitigates risk through countermeasures that 
provide a commensurate Level of Protection (LOP). The lessor ownership 
information does not affect the PSCs for Federal Facilities and 
therefore GSA does not anticipate this rule to have a significant 
impact on the security standards used by GSA tenants.

(c) Compliance Plan Estimated Due to Interim Rule

    GSA assumes the following steps would most likely be part of a 
lessor's plan that would need to be developed by any entity to stay in 
compliance with the new representation clause at GSAR 552.270-33 and 
other clause at GSAR 552.207-34 being implemented by this rule:
    1. Regulatory Familiarization. The entity must read and understand 
the GSAR rules and the resulting necessary actions for compliance.
    2. Workforce Training. The entity must educate its purchasing/
procurement professionals \9\ to ensure that they are familiar with the 
representation and clause and their disclosure requirements (as 
applicable).
---------------------------------------------------------------------------

    \9\ GSA estimates that the purchasing/procurement professional 
requiring training as a result of this rule on average would be 
equal to a mid-career professional. The equivalent labor category 
used to capture cost estimates therefore is a GS-12 Step 5, or 
Journeyman Level 1.
---------------------------------------------------------------------------

    3. Compliance with Clauses. The entity must identify and disclose 
whether the immediate or highest-level owner of the leased space, 
including an entity involved in the financing thereof, is a foreign 
person or a foreign entity, including the country associated with the 
ownership entity. If a disclosure is made, the Federal lessee shall 
notify the Federal tenant of the building or other improvement that 
will be used for high-security space in writing, and consult with the 
Federal tenant regarding security concerns and necessary mitigation 
measures, if any, prior to award of the lease or approval of the 
novation agreement.

(d) Benefits

    This Act requires the identification of all individuals who own or 
benefit from partial ownership of a property that will be leased by the 
federal government for high-security use. The statute is in response to 
a 2017 Government Accountability Office (GAO) report which indicated 
that Federal agencies were vulnerable to espionage and other intrusions 
because foreign actors could gain unauthorized access to spaces used 
for classified operations or to store sensitive data. Agencies store 
law enforcement evidence and other sensitive data and are often unaware 
of foreign ownership of their office spaces. While many of the foreign 
owners identified in the 2017 GAO report were companies based in allied 
countries such as Canada, Norway, Japan or South Korea, other 
properties were owned and managed by entities based in more adversarial 
nations. The report noted Chinese-owned properties, in particular, 
presented security challenges because of the country's proclivity for 
cyberespionage and the close ties between private sector companies and 
the Chinese government. The GAO report highlighted the dangers posed by 
these properties, indicating that ``leasing space in foreign-owned 
buildings could present security risks such as espionage, unauthorized 
cyber and physical access to the facilities, and sabotage.''
    The United States faces an expanding array of foreign intelligence 
threats by adversaries who are using increasingly sophisticated methods 
to harm the Nation.\10\ Threats to the United States posed by foreign 
intelligence entities are becoming more complex and harmful to U.S. 
interests.\11\ Foreign intelligence actors are employing innovative 
combinations of traditional spying, economic espionage, and supply 
chain and cyber operations to gain access to critical infrastructure, 
and steal sensitive information and industrial secrets.\12\ The 
exploitation of key supply chains by foreign adversaries represents a 
complex and growing threat to strategically important U.S. economic 
sectors and critical infrastructure.\13\
---------------------------------------------------------------------------

    \10\ National Counterintelligence Strategy of the United States 
of America 2020-2022.
    \11\ National Counterintelligence Strategy of the United States 
of America 2020-2022.
    \12\ National Counterintelligence Strategy of the United States 
of America 2020-2022.
    \13\ National Counterintelligence Strategy of the United States 
of America 2020-2022.
---------------------------------------------------------------------------

    Additionally, by requiring ``Financing Entity'' information in the 
representation clause, GSA will benefit by better understanding the 
source of funds used to finance projects. Risks associated with 
financing, such as money laundering, involve disguising financial 
assets so they can be used without detection of the illegal activity 
that produced them.\14\ These transactions further shield the entity 
from a recorded connection to the funds by providing a plausible 
explanation for the source of the funds.\15\ Typical examples used for 
this type of activity include the purchase and resale of real estate, 
investment securities, foreign trusts, or other assets.\16\ By 
collecting this information, GSA will be able to share more transparent 
information on foreign financing of leases with tenant agencies.
---------------------------------------------------------------------------

    \14\ Government Accountability Office Report ((GAO-17-195), GSA 
Should Inform Tenant Agencies When Leasing High-Security Space from 
Foreign Owners, dated January 2017.
    \15\ Government Accountability Office Report ((GAO-17-195), GSA 
Should Inform Tenant Agencies When Leasing High-Security Space from 
Foreign Owners, dated January 2017.
    \16\ Government Accountability Office Report ((GAO-17-195), GSA 
Should Inform Tenant Agencies When Leasing High-Security Space from 
Foreign Owners, dated January 2017.
---------------------------------------------------------------------------

    The goal of the Act is to close security loopholes by directing the 
GSA to design a verification system that identifies a property's owners 
if the space would be used for high-security purposes. While GSA and 
other Federal agencies have made positive changes in response to GAO's 
2017 report, this rule will help support current best practices being 
followed more uniformly throughout the Federal government.
    Finally, this Act ensures that GSA (and all agencies particularly 
with independent leasing authority) will have the ability to obtain 
information on foreign ownership and provide it to relevant Federal 
tenants.

(e) Public Costs

    During the first and subsequent years after publication of the 
rule, lessors will need to learn about the clauses and its 
requirements. GSA estimates this cost by multiplying the time required 
to review the regulations and guidance implementing the rule by the 
estimated compensation of a purchasing/

[[Page 34971]]

procurement mid-career professional. The equivalent labor category used 
to capture cost estimates therefore is a GS-12 Step 5.
    A. To estimate the aggregate burden to Government lessors of 
complying with the rule, the number of lessors that will be impacted 
was calculated using numbers pulled from GSA's records and 
databases.\17\ As of June 2021, GSA has approximately 7,860 leases 
totaling approximately 183,000,000 in Rentable Square Footage (RSF) and 
approximately $5,600,000,000 in annual rent ($2,800,000,000 of that 
total represents small entities). Of the 7,860, approximately 1,263 
\18\ (or 16 percent) of the leases are for high-security lease space 
(lease space in a facility with a security level of III, IV, or V) 
totaling approximately 87,000,000 in RSF and approximately 
$3,000,000,000 in annual rent. Approximately 68 percent \19\ of the 
leasing entities are small entities. High-security leases with these 
small entities represents $1,370,000,000 in annual rent covering 
approximately 37,000,000 RSF.
---------------------------------------------------------------------------

    \17\ If not otherwise stated, numbers related to leases are 
provided by the GSA Office of Leasing through surveying their 
internal databases.
    \18\ The GSA Office of Leasing provided this number by surveying 
their internal database.
    \19\ This information is based on internal inventory data 
sources provided by the GSA Office of Leasing.
---------------------------------------------------------------------------

    B. GSA also delegates leasing authority to several agencies, which 
are required to follow GSA's policies. GSA estimates there are 1,300 
\20\ buildings represented by these agencies with Delegated Leasing 
Authority \21\ from GSA. GSA does not have data available that 
identifies which of these are for high-security lease space. GSA 
assumes that these delegated agencies have a similar profile to GSA's 
for high-security leased space to total portfolio space, i.e., 16 
percent. This would bring the total number of high-security lease space 
for delegated agencies to 208 (1,300 x 16 percent). GSA also assumes 
the same profile for small entities of 68 percent.
---------------------------------------------------------------------------

    \20\ This information is based on internal inventory data 
sources provided by the GSA Office of Leasing.
    \21\ Federal Management Regulation (FMR) Bulletin 2008-B1 limits 
the square footage permissible under a General Purpose lease 
delegation to 19,999 usable ANSI/BOMA (``ABOA'') square feet of 
space; since FSL designations are tied to square footage in addition 
to other factors,this estimate is likely higher than actual.
---------------------------------------------------------------------------

    C. Based on historical data maintained by GSA's Office of Leasing, 
GSA estimates that 6 percent of its high-security leased space will be 
solicited for a new contract each year (6 percent of 1,263 = 76 
leases). These solicitations result from a mix of expiring high-
security leases or new requirements for high-security facilities. GSA 
assumes these trends will continue for the time horizon outlined by 
this regulatory impact. Based on historic bid rates and high current 
vacancy levels, GSA further estimates that 3 lessors will make offers 
for these high-security lease procurement for a total of 228 offers (76 
high-security leases awarded * 3 lessors competing for each 
solicitation. 76 * 3 = 228) GSA assumes the same profile for delegated 
facilities.
    D. Since 2014, GSA has averaged approximately 31 renewal options 
per year for high-security leases (equal to approximately 17 percent of 
all renewals options during the same period) and averaged approximately 
106 extensions for existing high-security leases (also equal to 
approximately 17 percent of all extensions during the same period). GSA 
assumes the same trend will continue in subsequent years. GSA assumes 
the same profile for delegated facilities.
    E. GSA processed 380 novations from May 1, 2020 to April 30, 2021 
22 23 (therefore approximately 5 percent of leases resulted 
in a novation (380/7,860)). GSA does not have data on how many of those 
were related to FSL III, IV, or V. GSA will assume 16 percent of those 
novations were for FSL III, IV, or V leases. Therefore, it is assumed 
61 novations were processed for high-security leases in the last year.
---------------------------------------------------------------------------

    \22\ This information is based on internal inventory data 
sources provided by the GSA Office of Leasing.
    \23\ GSA does notg have data on how many novation other agencies 
with Delegated Leasing Authority processed.
---------------------------------------------------------------------------

    A breakdown is provided in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                                                   Delegated
               Par above                                                           GSA             authority
                                                                                                    agencies
----------------------------------------------------------------------------------------------------------------
A,B...................................  Leased Space......................              7,860              1,300
A,B...................................  High-Security (HS) Space Leases                 1,263                208
                                         (16 percent).
                                           Total HS Portfolio.............              1,263                208
                                                                           -------------------------------------
                                        Existing HS Lease Baseline........              1,263                208
----------------------------------------------------------------------------------------------------------------
                                        Combined HS Lease Baseline........           1,471 (1,263 + 208)
                                                                           -------------------------------------
C.....................................  New Procurements (6 percent HS)...                 76                 12
C.....................................  New Offers (x3)...................                228                 36
                                        Total New Responses...............                228                 36
D.....................................  Renewals (17 percent HS)..........                 31                 35
D.....................................  Extensions (17 percent HS)........                106                 35
E.....................................  Novations (5 percent Leases)......                380                 65
E.....................................  High-Security Space Novations (16                  61                 10
                                         percent).
                                                                           -------------------------------------
                                        Total HS Novations................                 61                 10
----------------------------------------------------------------------------------------------------------------
                                        New HS Lease Baseline.............                426                116
                                                                              (228+31+106+61)      (36+35+35+10)
----------------------------------------------------------------------------------------------------------------
                                        Combined New HS Lease Baseline....             542 (426 + 116)
----------------------------------------------------------------------------------------------------------------


[[Page 34972]]

Steps to Compliance
1. Regulatory Familiarization
    Below is a list of compliance activities related to regulatory 
familiarization that GSA anticipates will occur:
a. Familiarization With GSAR 552.270-33, Foreign Ownership and 
Financing Representation for High-Security Leased Space
    i. GSA estimates that it will take existing high-security lessors 
approximately 3 hours \24\ each to familiarize themselves with the new 
GSAR representation. Therefore, GSA calculated the total estimated cost 
for this part of the rule to be $372,000 \25\ (= 3 hours x $84.16 \26\  
x 1,471). Of the 1,471 lessors impacted by this part of the rule, GSA 
assumes that 68 percent, or approximately 1,000 lessors, are small 
entities.
---------------------------------------------------------------------------

    \24\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
    \25\ Totals are rounded.
    \26\ This hourly rate, $84.16, is the 2021 GS rate for a GS-12 
Step 5 of $42.08 per hour (using the rate for the rest of the United 
States) adjusted upward by 100 percent to account for fringe 
benefits and overhead.
---------------------------------------------------------------------------

    After the initial familiarization in the first year for each 
current awardee or subsequent awardee, GSA estimates it will take 15 
minutes (0.25 hours \27\) to stay familiar with the representation. 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $31,000 (= 0.25 hours x $84.16 x 1,471).
---------------------------------------------------------------------------

    \27\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    ii. GSA estimates that new high-security lessors each year will 
take approximately 3 hours \28\ each to familiarize themselves with the 
new GSAR representation. Therefore, GSA calculated the total estimated 
cost for this part of the rule to be $137,000 \29\  (= 3 hours x $84.16 
x 542). Of the 542 lessors impacted by this part of the rule, GSA 
assumes that 68 percent, or approximately 369 lessors, are small 
entities.
---------------------------------------------------------------------------

    \28\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
    \29\ Totals are rounded.
---------------------------------------------------------------------------

b. Familiarization With GSAR 552.270-34, Access to Limitations for 
High-Security Leased Space
    i. GSA estimates that it will take existing high-security lessors 
approximately 2 hours \30\ each to familiarize themselves with the 
clause at GSAR 552.270-34. Therefore, GSA calculated the total 
estimated cost for this part of the rule to be $248,000 (= 2 hours x 
$84.16 x 1,471). Of the 1,471 lessors impacted by this part of the 
rule, GSA assumes that 68 percent, or approximately 1,000 lessors, are 
unique small entities.
---------------------------------------------------------------------------

    \30\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    After the initial familiarization in the first year for each 
current awardee or subsequent awardee, GSA estimates it will take 15 
minutes (0.25 hours \31\) to stay familiar with the representation. 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $31,000 (= 0.25 hours x $84.16 x 1,471).
---------------------------------------------------------------------------

    \31\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    ii. GSA estimates that new high-security lessors each year will 
take approximately 2 hours \32\ each to familiarize themselves with the 
clause at GSAR 552.270-34. Therefore, GSA calculated the total 
estimated cost for this part of the rule to be $108,000 (= 2 hours x 
$84.16 x 542). Of the 542 lessors impacted by this part of the rule, 
GSA assumes that 68 percent, or approximately 369 lessors, are small 
entities.
---------------------------------------------------------------------------

    \32\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    The total estimated cost to become familiar with the representation 
clause (GSAR 552.270-33) and the other new clause (GSAR 552.270-34) is 
estimated to be $619,000 for the existing high-security lessors. In 
subsequent years, this cost is estimated to be $290,000 for new high-
security lessors annually.
2. Implementation of Workforce Training
    The entity must educate its purchasing/procurement professionals to 
ensure that they are familiar with the representation and clause and 
their disclosure requirements (as applicable).
    a. GSA estimates that it will take existing high-security lessors 
approximately 6 hours \33\ each to train their workforce on the 
representation clause at GSAR 552.270-33 and the GSAR clause at 
552.270-34. Therefore, GSA calculated the total estimated cost for this 
part of the rule to be $743,000 (= 6 hours x $84.16 x 1,471). Of the 
1,263 lessors impacted by this part of the rule, GSA assumes that 68 
percent, or approximately 1,000 lessors, are small entities.
---------------------------------------------------------------------------

    \33\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    After the initial training in the first year for each current 
awardee or subsequent awardee, GSA estimates it will take 30 minutes 
(0.50 hours \34\) to conduct continuing additional workforce training. 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $62,000 (= 0.50 hours x $84.16 x 1,471).
---------------------------------------------------------------------------

    \34\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    b. GSA estimates that new high-security lessors each year will take 
approximately 6 hours each to train their workforce on the 
representation clause at GSAR 552.270-33 and the GSAR clause at 
552.270-34. Therefore, GSA calculated the total estimated cost for this 
part of the rule to be $274,000 (= 6 hours x $84.16 x 542). Of the 542 
lessors impacted by this part of the rule, GSA assumes that 68 percent, 
or approximately 369 lessors, are small entities.
    The total estimated cost to implement workforce training for the 
representation clause (GSAR 552.270-33) and the access limitation 
clause (GSAR 552.270-34) is estimated to be $743,000 for the existing 
high-security lessors. In subsequent years, this cost is estimated to 
be $336,000 for new high-security lessors annually.
3. Compliance With Clauses
a. GSAR 552.270-33, Foreign Ownership and Financing Representation for 
High-Security Leased Space
    i. GSA estimates that it will take existing high-security lessors 
approximately 2 hours \35\ each to

[[Page 34973]]

complete the representation at sections (c)(1), (d)(1), and (e)(1) 
(essentially no required disclosures required) of the representation 
clause. Therefore, GSA calculated the total estimated cost for this 
part of the rule to be $248,000 (= 2 hours x $84.16 x 1,471). Of the 
1,471 lessors impacted by this part of the rule, GSA assumes that 68 
percent, or approximately 1000 lessors, are small entities.
---------------------------------------------------------------------------

    \35\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    ii. GSA estimates that new high-security lessors each year will 
take approximately 2 hours each to complete the representation at 
sections (c)(1), (d)(1), and (e)(1) (essentially no required 
disclosures required) of the representation clause. Therefore, GSA 
calculated the total estimated cost for this part of the rule to be 
$91,000 (= 2 hours x $84.16 x 542). Of the 542 lessors impacted by this 
part of the rule, GSA assumes that 68 percent, or approximately 369 
lessors, are small entities.
    iii. GSA further estimates that of the existing high-security 
lessors, 10 percent \36\ (or 147 lessors) will respond affirmatively to 
one or more sections at (c)(1), (d)(1), and (e)(1) of the 
representation clause that the offeror ``does'' have an ``immediate 
owner'', and/or ``is'' owned or controlled by another entity (or 
``highest owner''), and/or ``does'' involve a ``foreign entity'' and 
will be required to complete additional section at (c)(2) and (c)(3), 
potentially (c)(4), (d)(2) and (d)(3), potentially (d)(4), and (e)(2). 
GSA estimates that it will take these offerors an additional 10 hours 
\37\ to complete those various sections of the representation clause. 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $124,000 (= 10 hours x $84.16 x 147). Of the 147 lessors 
impacted by this part of the rule, GSA assumes that 68 percent, or 
approximately 100 lessors, are unique small entities.
---------------------------------------------------------------------------

    \36\ The amount of lessors impacted is an assumption based on 
subject matter expert judgment.
    \37\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    iv. GSA estimates that of the new high-security lessors each year, 
10 percent \38\ (or 54 lessors) will respond affirmatively to one or 
more sections at (c)(1), (d)(1), and (e)(1) of the representation 
clause that the offeror ``does'' have an ``immediate owner'', and/or 
``is'' owned or controlled by another entity (or ``highest owner''), 
and/or ``does'' involve a ``foreign entity'' and will be required to 
complete additional sections at (c)(2) and (c)(3), potentially (c)(4), 
(d)(2) and (d)(3), potentially (d)(4), and (e)(2). Thus, approximately 
54 lessors (10 percent of 542) need to fully complete GSAR 552.270-33. 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $45,000 (= 10 hours x $84.16 x 54). Of the 54 lessors 
impacted by this part of the rule, GSA assumes that 68 percent, or 
approximately 37 lessors, are small entities.
---------------------------------------------------------------------------

    \38\ The amount of lessors impacted is an assumption based on 
subject matter expert judgment.
---------------------------------------------------------------------------

    After the existing and new high-security lessors complete the 
representations, GSA estimates it will take 15 minutes (0.25 hours 
\39\) to update any information as necessary and as required annually. 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $34,000 (= [0.25 hours x $84.16 x 1,471] + [.25 x $84.16 x 
147]).
---------------------------------------------------------------------------

    \39\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

b. GSAR 552.270-34, Access to Limitations for High-Security Leased 
Space
    i. GSAR 552.270-34 requires lessors for high-security leased space 
to limit access to the space unless approved by an authorized 
Government representative. GSA estimates that 10 percent of lessors, or 
147 (10 percent of 1,471) will request approval once per lease and will 
take an estimated 3 hours \40\ to submit each request. Therefore, GSA 
calculated the total estimated cost for this part of the rule to be 
$37,000 (= 3 hours x $84.16 x 147). Of the 147 lessors impacted by this 
part of the rule, GSA assumes that 68 percent, or 100 lessors, are 
small entities.
---------------------------------------------------------------------------

    \40\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    ii. GSA estimates that 10 percent, or 54 (10 percent of 542) of new 
high-security lessors each year will request approval once per lease 
and will take an estimated 3 hours \41\ to submit each request. 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $14,000 (= 3 hours x $84.16 x 54). Of the 54 lessors 
impacted by this part of the rule, GSA assumes that 68 percent, or 37 
lessors, are small entities.
---------------------------------------------------------------------------

    \41\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    iii. GSA acknowledges that existing high-security lessors will be 
required to establish written procedures, as documented in the 
Government's Occupant Emergency Plan, governing access to the high-
security leased space in case of emergencies. GSA estimates that 
reviewing these procedures will take approximately 3 hours.\42\ 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $371,000 (= 3 hours x $84.16 x 1,471). Of the 1,471 lessors 
impacted by this part of the rule, GSA assumes that 68 percent, or 
approximately 1000 lessors, are small entities.
---------------------------------------------------------------------------

    \42\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    iv. GSA acknowledges that new high-security lessors will be 
required to sign written procedures, as documented in the Government's 
Occupant Emergency Plan, governing access to the high-security leased 
space in case of emergencies. GSA estimates that reviewing these 
procedures will take approximately 3 hours.\43\ Therefore, GSA 
calculated the total estimated cost for this part of the rule to be 
$137,000 (= 3 hours x $84.16 x 542). Of the 542 lessors impacted by 
this part of the rule, GSA assumes that 68 percent, or 369 lessors, are 
small entities.
---------------------------------------------------------------------------

    \43\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    After the existing high-security lessors initially establishes the 
written procedures, GSA estimates it will take 15 minutes (0.25 hours 
\44\) to update any information as necessary. Therefore, GSA calculated 
the total estimated cost for this part of the rule to be $31,000 (= 
0.25 hours x $84.16 x 1,471).
---------------------------------------------------------------------------

    \44\ The hours estimated are an assumption based on historical 
familiarization hours and subject matter expert judgement. Subject 
matter experts include representatives from GSA's Office of Leasing, 
including Realty Specialists and Leasing Contracting Officers.
---------------------------------------------------------------------------

    The total estimated cost to complete both the representations and 
the clause is estimated to be $780,000 the existing high-security 
lessors. In subsequent years, this cost is estimated to be $351,000 for 
new high-security lessors annually.
4. Public Total Costs
    The total cost of the above Cost Estimate is $2,100,000 in the 
first year

[[Page 34974]]

after publication. The total cost of the above Cost Estimate in 
subsequent years is $977,000 annually.
    The following is a summary of the estimated costs calculated for a 
10 year time horizon in perpetuity at a 3- and 7-percent discount rate:

------------------------------------------------------------------------
                          Summary                            Total costs
------------------------------------------------------------------------
Present Value (3 percent)..................................   $9,500,000
Annualized Costs (3 percent)...............................    1,100,000
Present Value (7 percent)..................................    7,950,000
Annualized Costs (7 percent)...............................    1,330,000
------------------------------------------------------------------------

    GSA notes that this interim rule does not authorize GSA lease 
contracting officers to use the information disclosed by offerors as a 
differentiating factor for selection of a lease award, nor does it 
authorize GSA to terminate a lease, prevent a novation, or otherwise 
decline to make an award based on the disclosure. As such, GSA 
estimates that this rule will not result in these activities, and 
therefore no moving costs have been included in this regulatory impact 
analysis.
    GSA acknowledges that there is uncertainty underlying these 
estimates, including elements for which an estimate is unavailable 
given inadequate information. As more information becomes available, 
including through comment in response to this notice, GSA will seek to 
update these estimates which could increase the estimated costs.

(f) Government Cost Analysis

    During the first and subsequent years after publication of the 
rule, leasing acquisition members (which includes a combination of 
Leasing Contracting Officers, Lease Administration Managers, Realty 
Specialists, and General Counsel) will need to learn about the clauses 
and its requirements. GSA estimates this cost by multiplying the time 
required to review the regulations and guidance implementing the rule 
by the estimated compensation, on average, of a GS-12 leasing 
acquisition member. GSA assumes that leasing acquisition members will, 
on average, stay consistent in subsequent years. Numbers and 
assumptions apply to delegated agencies as well.
    GSA anticipates several areas of impact as a result of this rule. 
These impacts mirror the public impacts and will appear as regulatory 
familiarization, workforce training, and time to review compliance with 
clauses. These costs are justified in light of the compelling national 
security objective that this rule will advance.
    For consistency, the number of leases to be reviewed match the 
numbers in the ``Existing HS Lease Baseline'' row (1,471 combined) and 
``New annual Lease Baseline'' row (542 combined) found in table in 
section VI.(e).
1. Regulatory Familiarization
    a. GSA estimates that it will take approximately 516 leasing 
acquisition members 1.5 hours to become familiar with the GSAR 552.270-
33 representation. Therefore, GSA calculated the total estimated cost 
for this part of the rule to be $65,000 \45\  (= 1.5 hours x $84.16 x 
516).
---------------------------------------------------------------------------

    \45\ All totals in the Government Cost Analysis section are 
rounded.
---------------------------------------------------------------------------

    After the initial familiarization, GSA estimates it will take 15 
minutes (0.25 hours) to stay familiar with the representation in 
subsequent years. Therefore, GSA calculated the total estimated cost 
for this part of the rule to be $11,000 (= 0.25 hours x $84.16 x 516).
    b. GSA estimates that it will take approximately 516 leasing 
acquisition members 30 minutes (0.5 hours) to become familiar with the 
GSAR 552.270-34 representation. Therefore, GSA calculated the total 
estimated cost for this part of the rule to be $22,000 (= 0.50 hours x 
$84.16 x 516).
    After the initial familiarization, GSA estimates it will take 6 
minutes (0.10 hours) to stay familiar with the representation in 
subsequent years. Therefore, GSA calculated the total estimated cost 
for this part of the rule to be $4,300 (= 0.10 hours x $84.16 x 516).
2. Workforce Training
    The Government must educate its leasing acquisition members to 
ensure that they are familiar with the representation and clause and 
how to review and act on the submitted information, access requests, 
and written procedures.
    a. GSA estimates that it will take approximately 516 leasing 
acquisition members 1 hour to complete training related GSAR 552.270-33 
representation. Therefore, GSA calculated the total estimated cost for 
this part of the rule to be $43,000 (= 1 hours x $84.16 x 516).
    After the initial training, GSA estimates it will take 6 minutes 
(0.10 hours) to maintain training related to the representation. 
Therefore, GSA calculated the total estimated cost for this part of the 
rule to be $4,300 (= 0.10 hours x $84.16 x 516).
    b. GSA estimates that it will take approximately 516 leasing 
acquisition members 30 minutes (0.50 hours) to complete training 
related to the GSAR 552.270-34 clause. Therefore, GSA calculated the 
total estimated cost for this part of the rule to be $22,000 (= 0.50 
hours x $84.16 x 516).
    After the initial training, GSA estimates it will take 3 minutes 
(0.05 hours) to maintain training related to the clause. Therefore, GSA 
calculated the total estimated cost for this part of the rule to be 
$2,200 (= 0.05 hours x $84.16 x 516).
3. Review of Compliance With Clauses
    The primary cost to GSA will be to review the representations 
required by GSAR 552.270-33 and the compliance with GSAR 552.270-34.
a. GSAR 552.270-33, Foreign Ownership and Financing Representation for 
High-Security Leased Space
    i. GSA estimates that it will take leasing acquisition members 
approximately 6 minutes (0.10 hours) to review the representation at 
sections (c)(1), (d)(1), and (e)(1) (essentially no required 
disclosures required) of the representation clause at GSAR 552.270-33 
for existing high-security lessors. Therefore, GSA calculated the total 
estimated cost for this part of the rule to be $12,000 (= 0.10 hours x 
$84.16 x 1,471).
    ii. GSA estimates that for new high-security lessors each year, it 
will take leasing acquisition members approximately 6 minutes (0.10 
hours) to review the representation at sections (c)(1), (d)(1), and 
(e)(1) (essentially no required disclosures required). Therefore, GSA 
calculated the total estimated cost for this part of the rule to be 
$4,600 (= 0.10 hours x $84.16 x 542).
    iii. GSA estimates that for existing high-security lessors, 10 
percent (or 147 lessors) will respond affirmatively to one or more 
sections at (c)(1), (d)(1), and (e)(1) of the representation clause 
that the offeror ``does'' have an ``immediate owner'', and/or ``is'' 
owned or controlled by another entity (or ``highest owner''), and/or 
``does'' involve a ``foreign entity'' and will be required to complete 
additional sections at (c)(2) and (c)(3), potentially (c)(4), (d)(2) 
and (d)(3), potentially (d)(4), and (e)(2). GSA estimates that it will 
take leasing acquisition members 5 hours to complete the reviews on 
those various sections of the representation clause, notify the Federal 
tenant of the building or other improvement of any security concerns 
and necessary mitigation measures (if any) prior to award or approval 
of a novation agreement. Therefore, GSA calculated the total

[[Page 34975]]

estimated cost for this part of the rule to be $62,000 (= 5 hours x 
$84.16 x 147).
    iv. GSA estimates 10 percent, or 54 lessors, of new high-security 
lessors each year will respond affirmatively to one or more sections at 
(c)(1), (d)(1), and (e)(1) of the representation clause that the 
offeror ``does'' have an ``immediate owner'', and/or ``is'' owned or 
controlled by another entity (or ``highest owner''), and/or ``does'' 
involve a ``foreign entity'' and will be required to complete 
additional sections at (c)(2) and (c)(3), potentially (c)(4), (d)(2) 
and (d)(3), potentially (d)(4), and (e)(2). GSA estimates that it will 
take leasing acquisition members 5 hours to complete the reviews on 
those various sections of the representation clause, notify the Federal 
tenant of the building or other improvement of any security concerns 
and necessary mitigation measures (if any) prior to award or approval 
of a novation agreement. Therefore, GSA calculated the total estimated 
cost for this part of the rule to be $23,000 (= 5 hours x $84.16 x 54).
b. GSAR 552.270-34, Access to Limitations for High-Security Leased 
Space
    i. GSAR 552.270-34 requires lessors for high-security leased space 
to limit access to the space unless approved by an authorized 
Government representative. GSA estimates that 10 percent of lessors, or 
147 (10 percent of 1,471) will request approval once per lease and it 
will take the leasing acquisition member an estimated 3 hours to review 
and approve the request. Therefore, GSA calculated the total estimated 
cost for this part of the rule to be $37,000 (= 3 hours x $84.16 x 
147).
    ii. GSA estimates that for new high-security lessors, 10 percent of 
lessors (or approximately 54) will request approval once per lease and 
it will take the leasing acquisition members an estimated 3 hours to 
review and approve the request. Therefore, GSA calculated the total 
estimated cost for this part of the rule to be $14,000 (= 3 hours x 
$84.16 x 54).
    iii. GSA acknowledges that the rule will require written 
procedures, as documented in the Government's Occupant Emergency 
Plan,\46\ governing access to the high-security leased space in case of 
emergencies. GSA estimates that writing these procedures will take 
approximately 2 hours. Therefore, GSA calculated the total estimated 
cost for this part of the rule to be $248,000 (= 2 hours x $84.16 x 
1,471).
---------------------------------------------------------------------------

    \46\ The GSA Office of Leasing will develop a templated Plan for 
all leasing acquisition members to use. Therefore, it will not 
require individual development of each plan by each member. This 
will lessen the burden.
---------------------------------------------------------------------------

    iv. GSA acknowledges that the rule will require, for new high-
security leases, written procedures, as documented in the Government's 
Occupant Emergency Plan, governing access to the high-security leased 
space in case of emergencies. GSA estimates that writing these 
procedures will take approximately 2 hours. Therefore, GSA calculated 
the total estimated cost for this part of the rule to be $91,000 (= 2 
hours x $84.16 x 542).
    After the first year the rule is implemented, GSA estimates it will 
take 6 minutes (0.10 hours) to update any information in the subsequent 
years for the written procedures. GSA does not estimate any additional 
significant burden with access requests. Therefore, GSA calculated the 
total estimated cost for this part of the rule to be $12,000 (= 0.10 
hours x $84.16 x 1,471).
    The total estimated cost to GSA to review representations and 
written procedures is estimated to be $359,000 in the first year after 
publication. The total estimated cost to GSA to review representations 
and written procedures annually is estimated to be $145,000.
4. Reduced Competition
    GSA acknowledges both new clauses may lead to reduced competition. 
Some lessors may choose to exit the Federal market, particularly 
lessors that primarily lease to the private sector, because of the 
additional disclosure requirements, and the subsequent reduced level of 
competition may increase prices. However, estimated costs faced by 
contractors represent a small fraction of lease payments, and therefore 
GSA expects effects along these lines to be minimal.
5. Government Total Costs
    The total cost of the above Cost Estimate is $511,000 in the first 
year after publication. The total cost of the above Cost Estimate in 
subsequent years is $166,000 annually.
    The following is a summary of the estimated costs calculated for a 
10 year time horizon at a 3- and 7-percent discount rate:

------------------------------------------------------------------------
                          Summary                            Total costs
------------------------------------------------------------------------
Present Value (3 percent)..................................   $1,750,000
Annualized Costs (3 percent)...............................      205,000
Present Value (7 percent)..................................    1,488,000
Annualized Costs (7 percent)...............................      212,000
------------------------------------------------------------------------

    GSA notes that this interim rule does not authorize GSA lease 
contracting officers to use the information disclosed by offerors as a 
differentiating factor for selection of a lease award, nor does it 
authorize GSA to terminate a lease, prevent a novation, or otherwise 
decline to make an award based on the disclosure. As such, GSA 
estimates that this rule will not result in these activities, and 
therefore no moving costs have been included for in this regulatory 
impact analysis.
6. Overall Total Costs
    The overall total cost of the above Cost Estimate, including both 
Public and Government costs, is $2,653,000 in the first year after 
publication. The overall total cost of the above Cost Estimate, 
including both Public and Government costs in subsequent years, is 
$1,143,000 annually.
    The following is a summary of the estimated overall total costs 
calculated for a 10 year time horizon at a 3- and 7-percent discount 
rate inclusive of both Public and Government costs:

------------------------------------------------------------------------
                          Summary                            Total costs
------------------------------------------------------------------------
Present Value (3 percent).................................   $11,216,000
Annualized Costs (3 percent)..............................     1,315,000
Present Value (7 percent).................................     9,439,000
Annualized Costs (7 percent)..............................     1,344,000
------------------------------------------------------------------------

(g) Analysis of Alternatives

    Alternative 1: GSA could take no regulatory action to implement 
this statute. However, this alternative would not provide any 
implementation and enforcement of the important national security 
measures imposed by the law. Moreover, the general public would not 
experience the benefits of improved national security resulting from 
the rule as detailed above in Section VI.(d). As a result, we reject 
this alternative.
    Alternative 2: GSA could take a more stringent approach to the 
requirements of the Act and apply the new clauses to not only all GSA 
leases and delegated leases for FSL III, IV, or V space but for all FSL 
designations. However, given the relatively low levels of risk at those 
facilities, as described by the ISC, compared with the costs and burden 
applying this new representation clause and access clause,\47\ no 
additional benefit would be gained. As a result, we reject this 
alternative.
---------------------------------------------------------------------------

    \47\ As this Regulatory Impact Analysis only considers 1,471 
high-security leases (or approximately 16% of the GSA leasing 
portfolio), it's reasonable to estimate that if the entire portfolio 
was included, costs could be approximately 5X more costly than 
currently shown.
---------------------------------------------------------------------------

    GSA also considered issuing an acquisition letter, but concluded 
the best alternative was to issue this interim rule directly 
implementing the statute and allowing for public comment.

[[Page 34976]]

(h) Specific Questions for Comment

    To understand the exact scope of the impact of this rule and how 
this impact could be affected in subsequent rulemaking, GSA welcomes 
input on the following assumptions and questions regarding anticipated 
impact on affected parties.
    Assumption 1: As previously stated, GSA assumes that most Federal 
lessors maintaining high-security leased space or Federal lessors that 
are competing for solicitations for high-security leased space are 
already familiar with the majority of the requirements of this rule, 
or, similarly, will not find the requirements of this interim rule as 
anything significantly more than what is currently expected. GSA 
previously implemented ownership disclosures requirements through 
internal policy,\48\ GSA's Request for Lease Proposals (or 
solicitations), GSA's guidance through its public-facing Leasing Desk 
Guide,\49\ Leasing Alerts and Lease Acquisition Circulars.\50\
---------------------------------------------------------------------------

    \48\ In March 2017, GSA's Office of Leasing issued Leasing Alert 
LA-FY17-06 requiring Lease Contracting Officers (LCOs) to determine 
whether the ownership of leased space is identified as a foreign-
owned entity and to notify the client agency in such instances, so 
that the agency can take any needed security mitigation measures. 
The Leasing Alert outlined the procedures to make this determination 
which involved a review of the entity's SAM registration; the 
Leasing Alert also required this review for all lease procurements 
and novations, regardless of the Facility Security Level (FSL).
    In October 2018, GSA added a ``Foreign Ownership and Financing 
Representation,'' to be included with all Request for Lease 
Proposals (RLP) packages issued for prospectus-level lease projects. 
This ``paper'' representation required the offeror to confirm both 
foreign ownership and foreign financing.
    \49\ GSA' Leasing Desk Guide (Desk Guide).
    \50\ GSA's Leasing Alerts and Lease Acquisition Circulars (LAC).
---------------------------------------------------------------------------

    Question 1: If this assumption is not valid, to what extent are the 
requirements in this rule significantly different from what GSA has 
currently been doing as part of its procedures for foreign ownership 
disclosure?
    Assumption 2: GSA estimates that this rule will impact mainly the 
Federal lessor industry.
    Question 2: If this assumption is not valid, is there another 
industry(s) to which this rule will cause significant impact or 
disruption?
    Assumption 3: The impact of this rule will not significantly change 
the way current Federal lessors interact with GSA (or other Federal 
agencies with independent leasing authority).
    Question 3: If this assumption is not valid, to what extent will 
this rule change how you interact with GSA (or other Federal agencies 
with independent leasing authority)?
    Assumption 4: The impact of this rule will not significantly reduce 
the number of lessors competing for High-Security Leased Space 
solicitations.
    Question 4: If this assumption is not valid, to what extent will 
this rule reduce the likelihood of you--lessor to the Federal 
Government for High-Security Leased Space--from not competing for 
future solicitations of High-Security Leased Space?
    Assumption 5: The compliance activities, and associated costs, 
estimated by GSA are stated at Section VI.(e).
    Question 5: Is there a compliance activity that GSA has failed to 
consider? If so, please specify the activity, explain the activity, 
describe the impact of the activity, and please estimate the annual 
cost of such activities and subsequent yearly activity costs.
    Question 6: Is there a compliance activity that GSA has noted that 
is significantly understated (in terms of annual and subsequent costs)? 
If so, which compliance activity and what specifically was understated? 
Please explain how the compliance activity should be estimated.
    Assumption 7: Other agencies relying upon GSA's leasing authority 
have similar profiles of high security leases in their inventory.
    Question 7: What information is available to better estimate high 
security leases in other agency inventories?
    Assumption 8: GSA sufficiently detailed all compliance requirements 
for the rule.
    Question 9: What additional information or guidance do you view as 
necessary to effectively comply with this rule?
    Question 10: What other challenges do you anticipate facing in 
effectively complying with this rule?
    Question 11: What thoughts or observations would you like to share 
regarding foreign ownership, including beneficial ownership, for GSA to 
consider in subsequent rule-making?

VII. 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 and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This interim rule has been reviewed in accordance with E.O. 12866 
Section 6(b) and determined by OMB to be a significant regulatory 
action. See Section VI for a regulatory impact analysis of the rule.

VIII. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996, 
generally provides that before a ``major rule'' may take effect, the 
agency promulgating the rule must submit a rule report, which includes 
a copy of the rule, to each House of the Congress and to the 
Comptroller General of the United States. A major rule cannot take 
effect until 60 days after it is published in the Federal Register. 
This interim rule has been reviewed and determined by OMB not to be a 
``major rule'' under 5 U.S.C. 804(2).

IX. Regulatory Flexibility Act

    The General Services Administration does not expect this interim 
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. However, an Initial Regulatory Flexibility Analysis 
has been performed, and is summarized as follows:

    The purpose of this interim rule is to implement certain 
requirements outlined in the Secure Federal LEASEs Act (Pub. L. 116-
276) into the GSAR.
    The objective of the rule is to prescribe appropriate policies 
and procedures to address the risks of foreign ownership of 
Government-leased real estate and requires the disclosure of 
ownership information for high-security space leased to accommodate 
a Federal agency. One new representation and one new clause have 
been developed to support these policies and procedures: GSAR 
552.270-33 (representation) and GSAR 552.270-34 (clause). Both will 
be required in all novations, solicitations and contracts for leased 
space that (1) will be occupied by Federal employees for nonmilitary 
activities; and (2) have a facility security level of III, IV, or V.
    A new representation requirement at GSAR 552.270-33 will be 
incorporated into all new lease awards, options exercised for 
current leases, lease extensions, and ownership changes for high-
security leased space. Except where otherwise provided, the 
statutory disclosure requirements shall apply with respect to any 
lease or novation agreement entered into on or after June 30, 2021, 
involving high-security leased space. That includes new, replacing, 
succeeding, and superseding leases, renewal options, extensions, and 
novations. This includes actions involving small entities. The 
representation requires offerors for high-security leased space to 
identify whether the immediate owner, highest-level owner, or an 
entity involved in the financing of the lease is foreign-owned. If 
so, they must represent

[[Page 34977]]

the associated country. Awardees will also be required to re-
represent on an annual basis. This representation also applies upon 
change of ownership/novations.
    As of June 2021, GSA has approximately 7,860 leases in total. 
Approximately 68 percent (5,345) of leasing entities were small 
entities. This information is based on internal inventory data 
sources. Approximately 1,263 of GSA portfolio leases are for high-
security lease space (lease space in a facility with a security 
level of III, IV, or V). 76 leases per year are estimated to be 
solicited for new high-security space procurements. These 
solicitations result from a mix of expiring high-security leases or 
new requirements for high-security facilities. Using the 
approximation above (68 percent), GSA estimates that for the 1,263 
lessors already maintaining leased space at a Level III, IV, or V 
secure facility approximately 859 will be small entities (1,263*68 
percent). If GSA includes agencies with delegated leasing authority, 
the approximate number of total leases at a Level III, IV, or V is 
1,471. This would increase the approximate number of small entities 
to 1000 (from 859). For the estimated 76 solicitations in subsequent 
years, assuming 3 offerors per solicitation, approximately 155 will 
be submitted by small entities.
    The clause at GSAR 552.270-34 requires lessors for high-security 
leased space to limit access to the space unless approved by an 
authorized Government representative.
    This rule does not duplicate, overlap, or conflict with any 
other Federal rules.
    Because of the requirements outlined by the statute, it is not 
possible to establish different compliance or reporting requirements 
or timetables that take into account the resources available to 
small entities or to exempt small entities from coverage of the 
rule, or any part thereof. However, in order to reduce the burden 
imposed on the public, GSA is currently reviewing and investigating 
potential future implementation through electronic means, including 
externally (System for Award Management) or internally (GSA's Lease 
Offer Platform).
    Entities that provide affirmative responses when completing the 
representation at 552.270-33 would be required to provide additional 
representation information in their offers for high-security leases.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the Regulatory 
Secretariat Division. GSA invites comments from small business concerns 
and other interested parties on the expected impact of this rule on 
small entities.
    GSA will also consider comments from small entities concerning the 
existing regulations in subparts affected by the rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (GSAR Case 2021-G527) in 
correspondence.

X. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. GSA has 
requested, and OMB authorized, emergency processing of the collection 
of information involved in this rule, consistent with 5 CFR 1320.13. 
GSA has determined the following conditions have been met:
    a. The collection of information is needed prior to the expiration 
of time periods normally associated with a routine submission for 
review under the provisions of the PRA, because the immediate and 
highest level owner disclosure requirement for high-security leased 
space in the Secure Federal LEASEs Act goes into effect on June 30, 
2021.
    b. The collection of information is essential to the mission of GSA 
to ensure compliance with the Secure Federal LEASEs Act and protect the 
Government supply chain from risks posed by foreign owners.
    c. Moreover, GSA cannot comply with existing representations 
because public harm is reasonably likely to result if current 
procedures are followed. Specifically, authorizing collection of this 
information will ensure that GSA does not enter into leases that are in 
violation of the Secure Federal LEASEs Act or enter into, extend, or 
renew leases with any entity or lessor that is in violation of the 
Secure Federal LEASEs Act.
    This requirement supports implementation of Section 3 of the Secure 
Federal LEASEs Act (Pub. L. 116-276) for high-security leased space. 
This section requires offerors to identify the immediate or highest-
level owner of the space, including any financing entity, and disclose 
whether that owner or financing entity is a foreign person or entity, 
including the country associated with the ownership entity. The 
offerors shall (1) provide such identification and disclosure when 
first submitting a proposal in response to a solicitation; and, if 
awarded the lease, (2) update such information annually.
    This requirement is partially implemented in the Federal 
Acquisition Regulation (FAR) through the provisions at FAR 52.204-3, 
Taxpayer Identification, FAR 52.204-7, System for Award Management, FAR 
52.204-17, Ownership and Control of Offeror, and clause at FAR 52.204-
13, System for Award Management Maintenance. OMB Control Numbers 9000-
0097 and 9000-0185 cover the FAR provisions and clause. However, the 
FAR does not account for foreign financing as required by the Act.
    The annual public reporting burden for this collection of 
information through GSAR 552.270-33 is estimated based on the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The annual reporting burden is estimated as follows:

1. Initial Disclosure
Baseline Representation
    Estimated annual responses: 542.

    Estimated hours per response: 2.
    Additional Representation
    Estimated annual responses: 54.
    Estimated hours per response: 10.
    Total Initial Response Burden Hours: 1,624.
2. Annual Updates
    Estimated annual responses: 542.
    Estimated hours per response: 0.25.
    Total Update Response Burden Hours: 136.
    Public comments are particularly invited on: Whether this 
collection of information is necessary; whether it will have practical 
utility; whether our estimate of the public burden of this collection 
of information is accurate, and based on valid assumptions and 
methodology; ways to enhance the quality, utility, and clarity of the 
information to be collected; and ways in which we can minimize the 
burden of the collection of information on those who are to respond, 
through the use of appropriate technological collection techniques or 
other forms of information technology.

XI. Determination To Issue an Interim Rule

    A determination has been made under the authority of the 
Administrator of General Services (GSA) that urgent and compelling 
circumstances necessitate that this interim rule go into effect earlier 
than 60 days after its publication date.
    Since the Secure Federal LEASEs Act was signed on December 30, 
2020, GSA has been working diligently to implement the statute, which 
has multiple effective dates embedded. Specifically, Section 7 requires 
implementation of the Section 3 requirements by June 30, 2021.
    Given the complexity of the Secure Federal LEASEs Act, this rule 
required thorough efforts to reach out to other agencies and conduct 
up-front analysis. These factors have left GSA with insufficient time 
to publish the rule with 60 days before the legislatively established 
effective date of June 30, 2021, or to complete full public notice and 
comment before the rule becomes

[[Page 34978]]

effective. As noted, however, GSA is seeking public comment on this 
interim rule and will consider and address those comments.
    It is worth noting this rule follows FAR rules dealing with 
ownership disclosure and supply chain security, such as FAR Case 2012-
024 which added FAR provision 52.204-17 and FAR Case 2019-009 which 
added FAR provision 52.204-24. As such, Government agencies are already 
authorized to collect certain immediate and highest-level owner 
information (reference OMB Control Numbers 9000-0097 and 9000-0185).
    Having an implementing regulation in place by the effective date is 
important to avoid confusion, uncertainty, and potentially substantial 
legal consequences for agencies and the lessor community. The statute 
requires lessors to identify and disclose whether the immediate or 
highest-level owner of the leased space, including an entity involved 
in the financing thereof, is a foreign person or a foreign entity, 
including the country associated with the ownership entity. If they did 
so without an implementing regulation in place, contractors would have 
no guidance as to how to comply with the requirement.
    For the foregoing reasons, pursuant to 41 U.S.C. 1707(d), GSA finds 
that urgent and compelling circumstances make compliance with the 
notice and comment and delayed effective date requirements of 41 U.S.C. 
1707(a) and (b) impracticable, and invokes the exception to those 
requirements under 1707(d). While a public comment process will not be 
completed prior to the rule's effective date, GSA will consider 
comments submitted in response to this interim rule in issuing a 
subsequent rulemaking.

List of Subjects in 48 CFR Parts 501, 552, and 570

    Government procurement.

Jeffrey A. Koses,
Senior Procurement Executive, Office of Acquisition Policy, Office of 
Governmentwide Policy, General Services Administration.

    Therefore, GSA amends 48 CFR parts 501, 552, and 570 as set forth 
below:

0
1. The authority citation for 48 CFR parts 501, 552, and 570 continues 
to read as follows:

    Authority:  40 U.S.C. 121(c).

PART 501--GENERAL SERVICES ADMINISTRATION ACQUISITION REGULATION 
SYSTEM

0
2. In section 501.106, amend table 1 by adding entries for ``552.270-
33'' and ``570.703(c)'' in numerical order to read as follows:


501.106   OMB approval under the Paperwork Reduction Act.

------------------------------------------------------------------------
                                                             OMB control
                      GSAR reference                             No.
------------------------------------------------------------------------
 
                                * * * * *
552.270-33................................................     3090-0324
570.703(c)................................................     3090-0324
 
                                * * * * *
------------------------------------------------------------------------

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Add sections 552.270-33 and 552.270-34 to read as follows:


552.270-33   Foreign Ownership and Financing Representation for High-
Security Leased Space.

    As prescribed in 570.703(c), use the following clause:

Foreign Ownership and Financing Representation For High Security Leased 
Space (JUN 2021)

    (a) Definitions. As used in this clause--
    Financing means the process of raising or providing funds 
through debt or equity for purposes of meeting the requirements of 
the Lease, including, but not limited to, acquisition, maintenance, 
and construction of, or improvements to, the Property.
    Foreign entity means a:
    (i) Corporation, company, business association, partnership, 
society, trust, or any other nongovernmental entity, organization, 
or group that is headquartered or organized under the laws of a 
country that is not the United States or a state, local government, 
tribe, or territory within the United States; or
    (ii) Government or governmental instrumentality that is not the 
United States Government.
    Foreign person means an individual who is not:
    (i) A United States citizen; or
    (ii) An alien lawfully admitted for permanent residence in the 
United States.
    Highest-level owner means the entity that owns or controls an 
immediate owner of the offeror or Lessor, or that owns or controls 
one or more entities that control an immediate owner of the offeror 
or Lessor. No entity owns or exercises control of the highest-level 
owner.
    Immediate owner means an entity, other than the offeror or 
Lessor, that has direct control of the offeror or Lessor. Indicators 
of control include, but are not limited to, one or more of the 
following: Ownership or interlocking management, identity of 
interests among family members, shared facilities and equipment, and 
the common use of employees.
    Unique entity identifier means a number or other identifier used 
to identify a specific commercial, nonprofit, or Government entity. 
See www.sam.gov for the designated entity for establishing unique 
entity identifiers.
    (b) Timing. The Offeror or Lessor shall complete this 
representation when submitting a proposal. If the Offeror is the 
successful awardee, the Offeror (now Lessor) shall review, update, 
and provide this representation on an annual basis, reflecting all 
changes to immediate owner, highest-level owner and financing during 
the preceding 1-year period, starting one year from the Lease Term 
Effective Date through final payment of any contract. If the Lessor 
intends to transfer the lease to a successor in interest under the 
circumstances set forth in FAR 42.1204, the Lessor shall submit this 
representation to the Lease Contracting Officer with any request to 
novate the lease. The Offeror or Lessor is responsible for the 
currency, accuracy and completeness of the data disclosed, and for 
any liability resulting from the Government's reliance on inaccurate 
or incomplete data.
    (c) Immediate owner. (1) The Offeror or Lessor represents that 
it [square] does or [square] does not have an immediate owner.
    (2) If the Offeror or Lessor indicates ``does'' in paragraph 
(c)(1) of this clause, then enter the following information for the 
immediate owner. If the offeror or Lessor has more than one 
immediate owner (e.g., joint venture), then the offeror or Lessor 
shall provide the information for each entity.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Legal name (do not use a ``doing business
 as'' name).
------------------------------------------------------------------------
Unique entity identifier (if available)...  ............................
------------------------------------------------------------------------

    (3) If the Offeror or Lessor indicates ``does'' in paragraph 
(c)(1) of this clause, then complete this additional representation: 
Is the immediate owner a foreign entity?: [square] Yes or [square] 
No.
    (4) If the Offeror or Lessor indicates ``does'' in paragraph 
(c)(1) of this clause, then complete this additional representation: 
Is the immediate owner a foreign person?: [square] Yes or [square] 
No.
    (5) If the Offeror or Lessor indicates ``Yes'' in either 
paragraph (c)(3) or (4) of this clause, indicating that there is 
foreign ownership (as a foreign entity or foreign person), then 
enter the following information for the foreign owner (respond for 
each as applicable).

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Physical address..........................
------------------------------------------------------------------------
Country...................................
------------------------------------------------------------------------

    (d) Highest-level owner. (1) The Offeror or Lessor represents 
that the immediate owner, if any, [square] is or [square] is not 
owned or controlled by another entity?
    (2) If the Offeror or Lessor indicates ``is'' in paragraph 
(d)(1) of this clause, indicating that the immediate owner is owned 
or controlled by another entity, then enter the following 
information for the highest-level owner.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Legal name (do not use a ``doing business
 as'' name).
------------------------------------------------------------------------
Unique entity identifier (if available)...
------------------------------------------------------------------------


[[Page 34979]]

    (3) If the Offeror or Lessor indicates ``is'' in paragraph 
(d)(1) of this clause, then complete this additional representation: 
Is the highest-level owner a foreign entity?: [square] Yes or 
[square] No.
    (4) If the Offeror or Lessor indicates ``is'' in paragraph 
(d)(1) of this clause, then complete this additional representation: 
Is the highest-level owner a foreign person?: [square] Yes or 
[square] No.
    (5) If the Offeror or Lessor indicates ``Yes'' in either 
paragraph (d)(3) or (4) of this clause, indicating that there is 
foreign ownership (as a foreign entity or foreign person), then 
enter the following information for the foreign owner (respond for 
each as applicable).

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Physical address..........................
------------------------------------------------------------------------
Country...................................
------------------------------------------------------------------------

    (e) Financing entity. (1) The Offeror or Lessor represents that 
the financing [square] does or [square] does not involve a foreign 
entity?
    (2) The Offeror or Lessor represents that the financing [square] 
does or [square] does not involve a foreign person?
    (3) If the Offeror or Lessor indicates ``does'' in either 
paragraph (e)(1) or (2) of this clause, indicating foreign financing 
(as a foreign entity or foreign person), then enter the following 
information for the foreign financing (respond for each as 
applicable).

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Legal name (do not use a ``doing business
 as'' name).
------------------------------------------------------------------------
Unique entity identifier (if available)...  ............................
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Physical address..........................
------------------------------------------------------------------------
Country...................................
------------------------------------------------------------------------

(End of clause)


552.270-34   Access Limitations for High-Security Leased Space.

    As prescribed in 570.703(d), use the following clause:

Access Limitations for High-Security Leased Space (Jun 2021)

    (a) The Lessor, including representatives of the Lessor's 
property management company responsible for operation and 
maintenance of the leased space, shall not--
    (1) Maintain access to the leased space; or
    (2) Have access to the leased space without prior approval of 
the authorized Government representative.
    (b) Access to the leased space or any property or information 
located within that Space will only be granted by the Government 
upon determining that such access is consistent with the 
Government's mission and responsibilities.
    (c) Written procedures governing access to the leased space in 
the event of emergencies shall be documented as part of the 
Government's Occupant Emergency Plan, to be signed by both the 
Government and the Lessor.

(End of clause)

PART 570--ACQUIRING LEASEHOLD INTERESTS IN REAL PROPERTY

0
4. Add section 570.118 to subpart 570.1 to read as follows:


570.118   Foreign Ownership Disclosure.

    If a foreign ownership disclosure is made pursuant to clause 
552.270-33:
    (a) The contracting officer shall notify the Federal tenant for the 
leased space in writing:
    (1) If the disclosure is made during the lease acquisition process, 
the contracting officer shall notify the Federal tenant prior to lease 
award.
    (2) If the disclosure is made concurrent with a request for 
novation, the contracting officer shall notify the Federal tenant prior 
to executing the novation.
    (3) If the disclosure is made concurrent with a renewal option or 
extension, the contracting officer shall notify the Federal tenant 
prior to executing the renewal option or extension.
    (b) The contracting officer shall coordinate with the Federal 
tenant regarding security concerns and any necessary mitigation 
measures.

0
5. Amend section 570.703 by adding paragraphs (c) and (d) to read as 
follows:


570.703   GSAR contract clauses.

* * * * *
    (c) Insert the representation clause at 552.270-33, Foreign 
Ownership and Financing Representation for High-Security Leased Space, 
in novations, solicitations and contracts for leased space that:
    (1) Will be occupied by Federal employees for nonmilitary 
activities; and
    (2) Has a facility security level of III, IV, or V.
    (d) Insert the clause at 552.270-34 Access Limitations for High-
Security Leased Space, in novations, solicitations and contracts for 
leased space that:
    (1) Will be occupied by Federal employees for nonmilitary 
activities; and
    (2) Has a facility security level of III, IV, or V.

[FR Doc. 2021-14161 Filed 6-30-21; 8:45 am]
BILLING CODE 6820-61-P