Homeland Security Acquisition Regulation (HSAR); United States Coast Guard Contract Termination Policy (HSAR Case 2020-001), 9766-9772 [2023-02318]
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Federal Register / Vol. 88, No. 31 / Wednesday, February 15, 2023 / Rules and Regulations
On July 1,
2021, GSA amended the General
Services Administration Acquisition
Regulation (GSAR) through an interim
rule (86 FR 34966 1). The interim rule
for GSAR Case 2021–G527, Immediate
and Highest Level Owner for HighSecurity Leased Space, was issued 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 interim rule
amended 48 CFR 501, 552, and 570. 48
CFR 501 and 552 were appropriately
updated in the CFR at the time of
publication. 48 CFR 570 was not.
Therefore, this correcting amendment
updates the CFR by adding paragraphs
(c) and (d) at GSAR 570.703.
SUPPLEMENTARY INFORMATION:
List of Subjects in 48 CFR Part 570
Government procurement.
Jeffrey Koses,
Senior Procurement Executive, Office of
Acquisition Policy, Office of Governmentwide
Policy, General Services Administration.
Therefore, GSA amends 48 CFR part
570 by making the following correcting
amendment:
PART 570—ACQUIRING LEASEHOLD
INTERESTS IN REAL PROPERTY
1. The authority citation for 48 CFR
part 570 continues to read as follows:
■
Authority: 40 U.S.C. 121(c).
2. Amend section 570.703 by adding
paragraphs (c) and (d) to read as follows:
■
570.703
GSAR contract clauses.
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*
*
*
*
*
(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. 2023–03143 Filed 2–14–23; 8:45 am]
BILLING CODE 6820–61–P
1 86
FR 34966.
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DEPARTMENT OF HOMELAND
SECURITY
48 CFR Parts 3049 and 3052
[Docket No. DHS–2022–0046]
RIN 1601–AB08
Homeland Security Acquisition
Regulation (HSAR); United States
Coast Guard Contract Termination
Policy (HSAR Case 2020–001)
Office of the Chief Procurement
Officer, Department of Homeland
Security (DHS).
ACTION: Final rule.
AGENCY:
DHS adopts, as final, with
minor editorial changes, the proposed
rule amending the Homeland Security
Acquisition Regulation (HSAR). This
rule implements a new subpart and new
contract clause to establish contract
termination policies for the United
States Coast Guard (USCG) and amends
a clause to address the applicability of
USCG’s contract termination policy to
commercial items.
DATES: This rule is effective March 17,
2023.
FOR FURTHER INFORMATION CONTACT: Ms.
Linda Stivaletti-Petty, Procurement
Analyst, DHS, Office of the Chief
Procurement Officer, Acquisition Policy
and Legislation at (202) 447–5639 or
email HSAR@hq.dhs.gov. When using
email, include HSAR Case 2020–001 in
the ‘‘Subject’’ line.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Table of Contents for Preamble
I. Background
II. Discussion of Comments and the Final
Rule
III. Regulatory Analyses
A. Executive Orders 12866 and 13563
Assessment
B. Affected Population
C. Cost Analysis of the Final Rule
D. Benefit Analysis of the Final Rule
E. Alternatives of the Final Rule
IV. Regulatory Flexibility Act
V. Paperwork Reduction Act
VI. National Environmental Policy Act
I. Background
The Federal Acquisition Regulations
(FAR), found in 48 CFR part 1, is a
uniform regulation regarding the
acquisition of goods and services for
Federal Government agencies. 48 CFR
part 12, ‘‘Acquisition of Commercial
Products and Commercial Services,’’
deals with the acquisition of
commercial items, while part 49
discusses the termination of contracts or
solicitations. Under 48 CFR 49.101
contracts or solicitations may be
terminated, either for convenience or
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default, only when it is in the
government’s interest. The use of a
termination provision depends on the
contract type such as a supply contract,
service contract, construction contract,
research and development contract and
the method of payment, i.e., fixed price
or cost type.1
Section 3523 of the John S. McCain
National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2019 (Pub.
L. 115–232) (14 U.S.C. 1155(a)) requires
that before terminating a procurement or
acquisition contract with a total value of
more than $1,000,000, the Commandant
of the Coast Guard shall notify each
vendor under such contract and require
the vendor to maintain all work product
related to the contract until the earlier
of—(A) not less than 1 year after the
date of the notification; or (B) the date
the Commandant notifies the vendor
that maintenance of such work product
is no longer required.2
Specifically, 14 U.S.C. 1155(b) defines
‘‘work product’’ to mean: (1) tangible
and intangible items and information
produced or possessed as a result of a
contract and (2) includes—(A) any
completed end items; (B) any
uncompleted end items; and (C) any
property in the contractor’s possession
in which the United States Government
has an interest. Section 1155(c)
establishes a penalty such that any
vendor that fails to maintain the work
product is liable to the United States for
a civil penalty of not more than $25,000
for each day on which the work product
is unavailable.
II. Discussion of Comments and the
Final Rule
The Department of Homeland
Security (DHS) did not receive any
comments on the proposed rule titled
‘‘Homeland Security Acquisition
Regulation (HSAR); United States Coast
Guard Contract Termination Policy
(HSAR Case 2020–001)’’ published on
September 7, 2022 (87 FR 54663). With
this rule, DHS adds a new subpart
regarding contract termination policy
for the United States Coast Guard
(USCG) in the Homeland Security
Acquisition Regulation (HSAR) 3 to
1 See
48 CFR 49.5.
section of the NDAA was originally
codified at 14 U.S.C. 657. However, section 108(b)
of the Frank LoBiondo Coast Guard Authorization
Act of 2018 (Pub. L. 115–282) subsequently
redesignated section 657 as 14 U.S.C. 1155.
3 The HSAR is issued for Departmental guidance
according to the policy cited in the FAR at 48 CFR
1.301. The HSAR establishes uniform DHS policies
and procedures for all acquisition activities within
the DHS and is issued by the Chief Procurement
Officer who is the DHS Senior Procurement
Executive. The HSAR is located at 48 CFR chapter
30.
2 This
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ensure all USCG contractors and
subcontractors have access to and
comply with Coast Guard’s contract
termination policies. Thus, it aligns the
USCG’s contract termination regulatory
requirements with 14 U.S.C. 1155,
requiring inclusion of the Coast Guard’s
termination policy and the notification
of termination procedures in contracts,
including contracts for commercial
items, with a total value of more than
$1 million. This final rule requires that
before terminating a contract with a
value of more than $1,000,000, the
Commandant of the Coast Guard shall
notify the contractor and the contractor
shall be required to maintain all work
product related to the contract until the
earlier of—(1) not less than 1 year after
the date of the notification; or (2) the
date the Commandant notifies the
vendor that maintenance of such work
product is no longer required. A
contractor that fails to maintain a work
product is liable to the United States for
a civil penalty of not more than $25,000
for each day on which such work
product is unavailable. The USCG must
also insert the contract termination
policy in all its solicitations and
contracts with a total value of more than
$1,000,000.
Accordingly, DHS adopts the
proposed regulations in the published
HSAR proposed rule as final, with two
minor editorial changes. The minor
changes include updating the clause
date in § 3052.212–70 from ‘‘SEP 2012’’
to the month this provision will become
effective ‘‘MAR 2023’’. In addition, we
added paragraph headings within
§§ 3049.9001 and 3052.249–90 to align
with the CFR formatting requirements.
The paragraph headings provide
information to the public on what each
paragraph contains. For a detailed
description of the proposed rule
changes, please see the proposed rule
and section III of this final rule.
III. Regulatory Analyses
A. Executive Orders 12866 and 13563
Assessment
Executive Orders 12866 (Regulatory
Planning and Review) and 13563
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(Improving Regulation and Regulatory
Review) direct agencies to assess the
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). Executive Order 13563
emphasizes the importance of
quantifying costs and benefits, reducing
costs, harmonizing rules, and promoting
flexibility.
The Office of Management and Budget
(OMB) has not designated this final rule
a significant regulatory action under
section 3(f) of Executive Order 12866.
Accordingly, OMB has not reviewed it.
A regulatory analysis (RA) follows.
DHS did not receive public comments
on the regulatory analysis for the
proposed rule, so the analysis is the
same as set out in the proposed rule.
Table 1 presents a summary of
impacts of the final rule.
TABLE 1—SUMMARY OF IMPACTS OF THE FINAL RULE
Category
Summary
Applicability ..........................
Addition of contract termination and notification requirements for the Coast Guard in chapter 30 of the HSAR for
contracts that are terminated by the Coast Guard, this will apply to new contracts, including contracts for commercial items of more than $1 million.
Contractors and subcontractors whose contracts are terminated by the Coast Guard. Approximately 2 contracts
annually.
There are no new costs of the final rule as its requirements already exist in other regulations and statutes.
The final rule will provide consistency between existing statutes and regulations for contractors and subcontractors whose contracts are terminated by the Coast Guard.
Affected Population ..............
Costs ....................................
Unquantified Benefits ...........
The Federal Government seeks
contractual work with the general
public when it wishes to purchase, rent,
lease, or otherwise obtain supplies or
services from non-Federal sources. The
FAR defines this process as
‘‘contracting.’’ 4 This final rule revises
the HSAR to require Coast Guard to
insert termination and notification
requirements into its new contracts (this
rulemaking would not apply to existing
Coast Guard contracts), including
contracts for commercial items, with a
total value of more than $1 million.
The Coast Guard incorporates contract
termination clauses in accordance with
the FAR, the HSAR, the Homeland
Security Acquisition Manual (HSAM),
and the Coast Guard Acquisition
Procedures (CGAP) into contracts as
applicable and using this clause when
deemed necessary for the Coast Guard to
exercise its right to do so.
Based on our analysis, we do not
estimate that this final rule will impose
any new requirements or regulatory
costs on contractors and subcontractors
who perform contractual work, with a
total value of more than $1 million, for
the Federal Government. Our analysis
also shows that the Federal Government
will not incur any new regulatory costs
as a result of this final rule. We present
a summary of the estimated impacts of
the final rule in Table 2.
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TABLE 2—FINAL RULE CHANGES AND THE ESTIMATED IMPACTS
HSAR Part or subpart
affected
Description of final rule changes
Basis for no cost impact
3049 ................................
Removes the term ‘‘Reserved’’ in the Homeland Security
Acquisition Regulation (HSAR).
Administrative, 5 we do not estimate a cost for this item
because it contains the insertion of the text, with no requirements, in part 3049 of the HSAR.
4 Readers should reference the FAR for a full
definition of the term ‘‘contracting’’.
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TABLE 2—FINAL RULE CHANGES AND THE ESTIMATED IMPACTS—Continued
HSAR Part or subpart
affected
3049.90 ...........................
Basis for no cost impact
Adds terms to the HSAR:
—‘‘Part 3049’’ to Termination of Contracts.
—‘‘Subpart 3049.90 Contract Termination (USCG)’’.
—‘‘3049.9001 Policy (USCG).’’.
—‘‘3049.9002 Contract Clause (USCG)’’, part and subpart titles.
Adds term ‘‘Contract Termination (USCG).’’—subpart
title, to the HSAR.
3049.9001 .......................
Adds term ‘‘Policy (USCG)’’—title, to the HSAR ...............
3049.9001(a) ..................
Adds paragraph (a) to the HSAR and will implement requirements of 14 U.S.C. 1155, which provides contract
termination policy for procurement or acquisition contracts, including commercial contracts greater than $1
million.
3049.9001(b) ..................
Adds paragraph (b) to the HSAR, ‘‘Notification’’—title ......
Paragraph will implement requirements of 14 U.S.C.
1155, which states the Commandant of the Coast
Guard must notify the contractor before terminating a
procurement or acquisition contract of greater than $1
million and the contractor must maintain work product
as specified in the Code.
3049.9001(c) ...................
Adds paragraph (c) ‘‘Work Product Defined’’—title, to the
HSAR.
3049.9001(d) ..................
Adds paragraph (d) ‘‘Penalty’’—title, to the HSAR ............
3049.9001(e) ..................
Adds paragraph (e) to the HSAR, which states the substance of the clause shall be inserted by the contractor
in contracts and subcontracts and for commercial
items with a total value of more than $1 million.
3049.9002 .......................
Adds the term ‘‘Contract Clause (USCG)’’—title, to the
HSAR; states Coast Guard contracting officers shall insert the clause at 3052.249–90 in all solicitations and
contracts, including commercial items with a total value
of more than $1 million.
3052 ................................
In subpart 3052.2 of the HSAR, ‘‘Texts of Provisions and
Clauses’’, adds term ‘‘3052.249–90 Contract Termination (USCG)’’.
—Adds text ‘‘Contract Termination (USCG)’’—title, to part
3052 of the HSAR.
—Adds sentence to part 3052 of the HSAR, ‘‘As prescribed in the USCG guidance at (HSAR) 48 CFR
3049.9002, insert the following clause.’’
—Adds text ‘‘Contract Termination (USCG) (March
2023)’’ and paragraphs (a) through (e) to part 3052 of
the HSAR.
Adds
term
‘‘3052.249–90 Contract
Termination
(USCG)’’ to the HSAR. Updates date of clause provision.
3052.249–90 ...................
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Description of final rule changes
3052.212–70 ...................
Administrative, we do not estimate a cost for this item
because it contains the insertion of text, with no requirements, in part 3049 of the HSAR.
Administrative, we do not estimate a cost for this item
because it contains the insertion of text, with no requirements, in part 3049 of the HSAR.
We do not estimate a cost for this regulatory provision
because the FAR, title 48 of the CFR, currently requires the Federal Government to include similar language in applicable Federal contracts. Termination and
notification requirements are addressed in subpart 49.1
of the FAR. The statutory language for contract termination is currently in 14 U.S.C. 1155(a)(1) for all contracts, including commercial contracts, with a total
value of more than $1 million.
We do not estimate a cost for this regulatory provision
because subpart 49.1 of the FAR currently contains
notification requirements for the Federal Government.
The statutory language for notification of contract termination is currently in 14 U.S.C. 1155(a)(1) for procurement or acquisition contracts of more than $1 million (14 U.S.C. 1155(b) defines work product).
Maintaining of records is required by subpart 4.7 of the
FAR. The Federal Government is currently required to
include similar language in applicable Federal contracts.
Administrative—we do not estimate a cost for the addition of this regulatory provision because there is no requirement, 14 U.S.C. 1155 currently contains the definition of the term ‘‘work product’’.
We do not estimate a cost for this provision because 14
U.S.C. 1155 currently contains the statutory language
for ‘‘penalty’’. This item has not been levied for past
Coast Guard contracts since the statute was enacted
in 2019.
We do not estimate a cost for this provision because
subpart 49.5 of the FAR requires the contracting officer
to insert similar language in applicable contracts. The
relevant clauses are in sections 52.249–1 through
52.249–10 of the FAR.
Administrative—we do not estimate a cost for the addition of the title to this subpart of the HSAR. We do not
estimate a cost for this regulatory provision itself because the contracting officer of the Coast Guard currently inserts similar language in applicable contracts,
including contracts for commercial items, with a total
value of more than $1 million.
Administrative—we do not estimate a cost for this item
because it includes the insertion of the regulatory text,
with no requirements, in part 3052 of the HSAR.
Administrative—we do not estimate a cost for the insertion of the regulatory text that will be added to part
3052 of the HSAR. We do not estimate costs for the
regulatory text in paragraphs (a) through (e) of this
subpart because the requirements are currently contained in subpart 49.5 of the FAR. The statutory language currently exists in 14 U.S.C. 1155. The requirements are also in 3049.9001(a) through (e).
Administrative—we do not estimate a cost for this item
because it contains the insertion of the regulatory text,
with no requirements, in part 3052 of the HSAR.
5 We use the term ‘‘administrative’’ to mean editorial changes or changes to the regulatory text that contain no regulatory requirements or impacts to the affected population of the final rule. The provisions we identified as ‘‘administrative’’ in Table 2 do not have quantifiable costs, cost
savings, or benefits associated with them. See Table 1 for the unquantified benefits of the final rule.
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B. Affected Population
The affected population of this final
rule is a contractor (if a contractor enters
into a contract with a subcontractor,
then the subcontractor is counted as
part of the main or primary contract)
whose contract is terminated by the
Coast Guard; this would apply only to
a contract, including a commercial
contract, with a total value of more than
$1 million.
DHS and the Coast Guard worked
collaboratively to provide the
information for this regulatory analysis.
The Coast Guard collected acquisition
data from the Coast Guard’s Office of
Procurement Policy and Oversight to
obtain the population or the number of
contracts it has acquired over the past
11 years. To collect this acquisition
data, the Coast Guard used the Federal
Procurement Data System-Next
Generation (FPDS–NG) database.6 The
Coast Guard acquired a total of 7,228
contracts, including commercial items,
with a total value of more than $1
million, from fiscal year 2010 (FY 2010)
through fiscal year 2020 (FY 2020),
which ended on September 30, 2020.
Included in this number are an
unknown number of subcontracts. For
accounting purposes, the Coast Guard
counts the main contract or the contract
it awards as the primary contract, along
with subcontracts, if applicable, as 1
contract.7 During this period of time, the
Coast Guard terminated 25 contracts
with a value of more than $1 million, or
an average of about 2.3 contracts a year.
Of the 7,228 total contracts, the Coast
Guard awarded contracts to 3,947 small
businesses.8 Out of the 25 contracts,
6 The Federal Government retains data on Federal
procurements through the FPDS–NG. Readers can
reference the FPDS–NG website for information on
the procurement of Federal contracts at: https://
www.gsa.gov/tools-overview/buying-and-sellingtools/federal-procurement-data-system.
7 A fiscal year in the Federal Government is the
period of time from October 1 in one calendar year
to September 30 of the following calendar year. It
is the accounting period when Federal agencies
submit budget requests to the Office of Management
and Budget (OMB) for planning and operational
purposes. The data we collected are through fiscal
year 2020; the Coast Guard generally awards
contracts, through its budget and acquisition
process, in the preceding fiscal year for the
following fiscal year.
8 When a small business wishes to obtain a
Federal contract, it can do so by ‘‘self-certification’’
on the Small Business Administration’s (SBA)
website before it registers for contract opportunities
with the Federal Government. Readers can learn
more about this process using the General Services
Administration’s (GSA) website at: https://
www.gsa.gov/small-business#gsa-now. A small
business is one that meets SBA’s size standards
based upon the North American Industry
Classification System (NAICS). Readers can
reference SBA’s table of size standards and the
NAICS codes at: https://www.sba.gov/document/
support-table-size-standards. For more information
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including commercial contracts, with a
value of more than $1 million, that the
Coast Guard terminated during this
period of time, 8 of them were
associated with small businesses. This
is an average of less than 1 small
business contract a year being
terminated by the Coast Guard. (We
discuss the impacts to small entities in
section IV, ‘‘Regulatory Flexibility Act’’,
of this ‘‘Regulatory Analysis.’’)
C. Cost Analysis of the Final Rule
This final rule will not impose any
new regulatory costs on contractors,
subcontractor, and the Federal
Government because the requirements
of this final rule currently exist in the
FAR and in the statute (see 48 CFR
chapter 1). We explain our reasoning
below for each regulatory provision of
this final rule. However, the FAR does
not contain the penalty clause that
exists in 14 U.S.C. 1155 that we will
implement in section 3049.9001,
paragraph (d).
We do not estimate a cost for the
items we identified as ‘‘administrative’’
in Table 2 because they will contain the
addition of the regulatory text in the
HSAR. This includes adding part,
subpart, and section titles to the HSAR.
This covers 48 CFR part 3049, subpart
3049.90 (with sections 3049.9001 and
3049.9002), part 3052, and 3052.212–70
of the HSAR (see Table 2).
Subpart 3049.90 of the HSAR will
contain the contract termination policy
and notification of termination
requirements for the Coast Guard.
Section 3049.9001 implements the
requirements of the NDAA. Paragraph
(a) implements the current statutory
language in 14 U.S.C. 1155(a)(1), which
provides the contract termination policy
for Coast Guard contracts, including
contracts for commercial items, with a
total value of more than $1 million.
Additionally, subpart 49.1 (49.101) of
the FAR currently provides the
authority for Federal agencies and more
specifically contracting officers to
terminate contracts ‘‘. . . for the
convenience of the Government, or for
default . . .’’. Because this final rule
uses the statutory language, which
supplements the existing regulatory
requirement for contract termination of
subpart 49.1 of the FAR, we do not
estimate a cost for this final change.
on NAICS codes, readers should reference the U.S.
Census Bureau’s website at: https://
www.census.gov/naics/. Small businesses may also
obtain Federal contracts through GSA’s ‘‘One
Acquisition Solution for Integrated Services’’
(OASIS) Small Business (OASIS SB) contracts, see:
https://www.gsa.gov/buying-selling/productsservices/professional-services/buy-services/oasisand-oasis-small-business.
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Paragraph (b) of section 3049.9001
contains the notification requirement for
the Commandant of the Coast Guard to
notify the contractor before terminating
a contract, including contracts for
commercial items, with a total value of
more than $1 million, and for the
contractor to maintain all work product
related to the contract until the earlier
of—
(1) Not less than 1 year after the date
of notification; or
(2) The date the Commandant notifies
the vendor that maintenance of such
work product is no longer required.
Title 14 U.S.C. 1155(a)(1), currently
provides the statutory authority for the
Commandant of the Coast Guard to
notify the contractor before terminating
a procurement or acquisition contract
with a total value of more than $1
million. It also states the contractor
must maintain all work product related
to the contract as we previously
mentioned. Subpart 49.1, specifically
section 49.102 of the FAR currently
contains the regulatory requirement that
Federal contracting officers notify the
contractor before terminating a contract
for convenience or default. Title 14
U.S.C. 1155 does not specify the method
of notification; however, the FAR states
it must be by written notice or it ‘‘may
be expedited by means of electronic
communication capable of providing
confirmation of receipt by the
contractor’’. It has been the past (and
current) practice of the Coast Guard to
notify contractors of contract
termination by electronic means and for
the contractor to reply by electronic
means; therefore, this is not a new
requirement, and it will not impose any
new costs on the contractor and the
Coast Guard for this method of
notification. Because the rule uses the
statutory language for the notification of
contract termination, which section
49.102 of the FAR allows by electronic
means, we do not estimate a cost for this
final change (the statutory language for
this provision also exists in 14 U.S.C.
1155).
We also do not estimate a cost for the
requirement of the contractor to
maintain all work product related to the
contract because 14 U.S.C. 1155(b)
statutorily requires the contractor to
perform this function for the timeframe
specified in the statute. Furthermore,
subpart 4.7 [specifically sections
4.703(a) through (d)] of the FAR requires
a contractor to retain records for the
time specified in these regulations
(readers should refer to subpart 4.7 of
the FAR for contractor records
retention).
Additionally, this is not a new
Information Collection Request (ICR)
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nor will it amend an existing ICR under
the Paperwork Reduction Act of 1995
(44 U.S.C. 3501).9 The rule uses the
statutory language, codified in 14 U.S.C.
1155, in the HSAR and will ensure the
contractor maintains the work product
for the timeframes specified in the
statute. Lastly, because the Coast Guard
terminated an average of about 2
contracts a year over the past 11 years,
this number does not exceed the
threshold of 10 or more persons for a
collection of information as defined in
5 CFR part 1320.10
Paragraph (c) of 3049.9001 states the
definition of the term ‘‘work product’’
and will be titled ‘‘Work Product
Defined.’’ We classify this as an
administrative provision without a
regulatory requirement. We do not
estimate a cost for this provision
because this final rule will add this
definition to the HSAR, which is
codified in the statute in 14 U.S.C. 1155.
Paragraph (d) of 3049.9001 contains
the penalty a contractor would incur if
it fails to maintain the work product
defined in paragraph (c) of this section.
The Coast Guard does not believe it is
likely it will levy this penalty in the
future because for the contracts that it
has terminated, the Coast Guard has
generally been able to access the
maintained work product when
necessary. Because this regulatory
language is codified in the statute in 14
U.S.C. 1155, we do not estimate a cost
for this final change to the HSAR.
Paragraph (e) of 3049.9001 contains
the requirement for the contractor to
insert the substance of the clause into
contracts and subcontracts, including
contracts and for commercial items with
a total value of more than $1 million.
Subpart 49.5 (‘‘Contract Termination
Clauses’’) of the FAR requires
contracting officers to insert the
substance of the clause into solicitations
and contracts as specified in the statute.
As a result, we classify this regulatory
language and addition to the HSAR as
an administrative item; therefore, we do
not estimate a cost for this final change.
The final rule adds section 3049.9002,
‘‘Contract Clause (USCG)’’, to subpart
3049.90 of the HSAR. It states Coast
Guard contracting officers shall insert
the clause at 3052.249–90, ‘‘Contract
Termination (USCG)’’, in all
solicitations and contracts, including
9 Readers should reference the PRA for further
information at: https://www.govinfo.gov/content/
pkg/PLAW-104publ13/html/PLAW-104publ13.htm.
10 Readers should reference the CFR for a full
definition of the term ‘‘collection of information’’
and for further information on controlling
paperwork burdens on the public at: https://
www.govinfo.gov/content/pkg/CFR-2010-title5-vol3/
xml/CFR-2010-title5-vol3-part1320.xml.
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contracts for commercial items, with a
total value of more than $1 million.
Similar to the paragraph (e) of subpart
3049.9001, the contracting officer of the
Coast Guard is required in subpart 49.5
of the FAR to insert this language into
all solicitations and contracts.11 As a
result, we classify this regulatory
language and addition to the HSAR as
an administrative item; therefore, we do
not estimate a cost for this change.
Lastly, the final rule will add section
3052.249–90, ‘‘Contract Termination
(USCG)’’, to the HSAR. We classify this
change as an administrative item, which
adds the regulatory language with the
same requirements that are contained in
section 3049.9001, paragraphs (a)
through (e) of HSAR. As a result, we do
not estimate a cost for this change (see
table 2 for a summary of these changes).
D. Benefit Analysis of the Final Rule
The primary benefit of this rule is to
provide contractors and subcontractors,
a consistent regulatory environment
between the U.S.C., the FAR, and the
HSAR, in the event the Coast Guard
terminates a contract, including
contracts for commercial items, with a
total value of more than $1 million. The
regulatory consistency also includes the
notification of termination to a
contractor by the Commandant of the
Coast Guard. The HSAR will contain the
requirement of the U.S.C. for the
contractor to maintain the work product
specified and the penalty to be levied
against a contractor for not maintaining
the work product as defined in the
statute.
E. Alternatives of the Final Rule
DHS considered two alternatives to
this rule. Neither alternative would
align the HSAR with the statutory
requirements of 14 U.S.C. 1155, nor
would they provide the consistent
regulatory environment of the chosen
alternative.
1. No Action Alternative. We rejected
this alternative because the HSAR
would not align with the relevant
statute, which contain the statutory
requirements for contract termination
and notification for the Coast Guard,
specifically, the National Defense
Authorization Act (NDAA) for Fiscal
11 The final rule includes all Coast Guard
contracts. The Coast Guard, however, issues
primarily fixed-price contracts or firm fixed-price
contracts. The FAR defines fixed-price contracts as
types of contracts that ‘‘. . . provide for a firm price
or, in appropriate cases, an adjustable price . . . the
contracting officer shall use firm fixed-price or
fixed price with economic price adjustment
contracts when acquiring commercial items, except
as provided in 12.207(b)’’. Readers should refer to
the FAR for information about other types of
contracts.
PO 00000
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Sfmt 4700
Year 2019 (Pub. L. 115–232), 14 U.S.C.
1155, and subpart 49.5 of the FAR.12
The statutory requirements are
applicable to contracts, including
contracts for commercial items, with a
total value of more than $1 million. The
HSAR would also not contain the
requirement for the contractor to
maintain the work product as defined in
the U.S.C. Lastly, the HSAR would not
contain the penalty specified in the
U.S.C. levied against a contractor for not
maintaining the work product.
2. Issue a policy letter referencing the
FAR and the U.S.C. for contract
termination policy and notification for
the Coast Guard. We rejected this
alternative because the policy letter
would not revise the HSAR and thus it
would not contain the requirements
found in 14 U.S.C. 1155. A policy letter
would merely provide guidance for
contractors regarding the Coast Guard’s
contract termination policy, including
the penalty clause, and notification
procedures for requirements that
currently exist in the relevant statutes
and regulations. There would be no
costs associated with this alternative.
IV. Regulatory Flexibility Act
Under the Regulatory Flexibility Act,
5 U.S.C. 601–612, we have considered
whether this rule will have a significant
economic impact on a substantial
number of small entities. The term
‘‘small entities’’ comprises small
businesses, not-for-profit organizations
that are independently owned and
operated and are not dominant in their
fields, and governmental jurisdictions
with populations of less than 50,000.
This rule will not impose any new
requirements or costs on small entities.
This rule codifies the Coast Guard’s
termination policy and the notification
of termination procedures for contracts,
including contracts for commercial
items, with a total value of more than
$1 million, into DHS’ HSAR. The
requirements for contract termination
and notification are currently in subpart
49.5 of the FAR and 14 U.S.C. 1155.
The Coast Guard collected data on
contracts it terminated over the past 11
years, including contracts for
commercial items, with a total value of
more than $1 million. Over this period
of time, the Coast Guard terminated 8
contracts (or less than 1 a year on
average) awarded to small businesses
that met this total dollar value.
Although these 8 companies registered
as a ‘‘small business’’ with the SBA in
12 For further information, readers should
reference the NDAA for fiscal year 2019 at: https://
www.congress.gov/115/bills/hr5515/BILLS115hr5515enr.pdf.
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ddrumheller on DSK120RN23PROD with RULES
order to obtain a contract with the
Federal Government as a small business,
we researched these companies to
determine the type of small entity that
they are in order to correctly classify
them in this Regulatory Flexibility Act
(RFA) analysis. This is necessary
because a ‘‘small business’’ is one type
of small entity as stated previously in
this section.
We obtained the NAICS codes from
the FPDS–NG for all 8 companies. We
found company-specific information on
6 of the 8 companies by using the
publicly-available online database of
businesses in the United States,
ReferenceUSAgov.com (we did not find
revenue or employee information for 2
companies, and assumed they are
small).13 Nevertheless, based on each
company’s NAICS code, and using
SBA’s table of size standards for each
NAICS code, we found all of the 8
companies, who had contracts with a
total value of more than $1 million that
were terminated by the Coast Guard, to
be small businesses, and not
governmental jurisdictions or not-forprofit organizations that are
independently owned and operated and
are not dominant in their fields.
As noted above, that the Coast Guard
terminated an average of less than 1
contract a year (over the past 11 years)
that was associated with a small entity
and that the rule will not impose any
new requirements or costs on small
entities. Therefore, DHS certifies under
5 U.S.C. 605(b) that this rule will not
have a significant economic impact on
a substantial number of small entities.
V. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520) requires agencies
to consider the impact of paperwork and
other information collection burdens
imposed on the public. According to the
1995 amendments to the Paperwork
Reduction Act, an agency may not
collect or sponsor the collection of
information, nor may it impose an
information collection requirement
unless it displays a currently valid
Office of Management and Budget
(OMB) control number. As defined in 5
CFR 1320.3(c), ‘‘collection of
information’’ comprises reporting,
recordkeeping, monitoring, posting,
labeling, and other similar actions.
DHS has determined that there is no
new requirement for information
collection associated with this rule. This
rule will not change the burden in the
collections currently approved by OMB
under OMB Control Numbers, 1600–
13 We accessed this database in October 2021.
https://www.referenceusagov.com/Home/Home.
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Jkt 259001
0002, ‘‘Various Contract Related Forms
that will be Included in the Homeland
Security Acquisition Regulation’’, 1600–
0003, ‘‘Post-Contract Award
Information’’, and 1600–0005,
‘‘Solicitation of Proposal Information for
Award of Public Contracts’’. There are
no Coast Guard Information Collection
Requests (ICRs) associated with nonFederal contracts.
VI. Environment
We have analyzed this rule under
Department of Homeland Security
Management Directive 023–01, Rev. 1,
associated implementing instructions,
and Environmental Planning
COMDTINST 5090.1 (series), which
guide the Department in complying
with the National Environmental Policy
Act of 1969 (42 U.S.C. 4321–4370f), and
have made a determination that this
action is one of a category of actions that
do not individually or cumulatively
have a significant effect on the human
environment. This rule is categorically
excluded under paragraph A3 of
Appendix A, Table 1 of DHS Instruction
Manual 023–01–001–01, Rev 1.
Paragraph A3 pertains to promulgation
of rules that are an administrative or
procedural nature or those that
implement, without substantive change,
statutory or regulatory requirements.
This rule involves adopting a statutorily
required contract cancelation provision
that outline the Coast Guard’s
procedural requirements for canceling
applicable contracts.
List of Subjects in 48 CFR Parts 3049
and 3052
Government procurement.
contracts for commercial items, with a
total value of more than $1,000,000.
(b) Notification. Before terminating a
contract with a total value of more than
$1,000,000, the Commandant of the
Coast Guard shall notify the contractor
and the contractor shall be required to
maintain all work product related to the
contract until the earlier of—
(1) not less than 1 year after the date
of the notification;
or
(2) the date the Commandant notifies
the vendor that maintenance of such
work product is no longer required.
(c) Work Product Defined. The term
‘‘work product’’—
(1) Means tangible and intangible
items and information produced or
possessed as a result of a contract
referred to in subsection (b); and
(2) Includes—
(i) Any completed end items;
(ii) Any uncompleted end items; and
(iii) Any property in the Contractor’s
possession in which the United States
Government has an interest.
(d) Penalty. A Contractor that fails to
maintain work product as required
under subsection (b) is liable to the
United States for a civil penalty of not
more than $25,000 for each day on
which such work product is
unavailable.
(e) Requirement. The Contractor shall
insert the substance of this clause in
contracts and subcontracts, including
contracts and for commercial items,
with a total value of more than
$1,000,000.
3049.9002
Paul Courtney,
Chief Procurement Officer, Department of
Homeland Security.
Therefore, DHS amends 48 CFR
chapter 30 as follows:
■ 1. Add part 3049 to read as follows:
9771
Contract clause (USCG).
USCG contracting officers shall insert
the clause at 3052.249–90, Contract
Termination (USCG), in all solicitations
and contracts, including contracts for
commercial items, with a total value of
more than $1,000,000.
PART 3049—TERMINATION OF
CONTRACTS
PART 3052—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
Subpart 3049.90—Contract
Termination (USCG)
■
Sec.
3049.9001
3049.9002
Authority: 5 U.S.C. 301–302, 14 U.S.C.
1155, 41 U.S.C. 1303, 41 U.S.C. 1707, 41
U.S.C. 1702, and 48 CFR subpart 1.3.
2. The authority citation for part 3052
is revised to read as follows:
Policy (USCG).
Contract clause (USCG).
Authority: 14 U.S.C. 1155.
3049.9001
■
(a) Applicability. This section
implements 14 U.S.C. 1155 and
provides the policy for the USCG to use
for contract terminations. This contract
termination policy applies to USCG
contract terminations, including
PO 00000
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Fmt 4700
Sfmt 4700
3. Amend § 3052.212–70 by:
a. Revising the heading of the clause;
and
■ b. In paragraph (b), add an entry for
‘‘HSAR 3052.249–90’’ at the end of the
list of clauses in the second Alternate I.
The revision and addition read as
follows:
■
Policy (USCG).
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3052.212–70 Contract Terms and
Conditions Applicable to DHS Acquisition
of Commercial Items.
Contract Terms and Conditions
Applicable to DHS Acquisition of
Commercial Items (Mar 2023)
*
*
*
*
*
(b) * * *
Alternate I * * *
llHSAR 3052.249–90 Contract
Termination (USCG).
*
*
*
*
*
4. Add section 3052.249–90 to subpart
3052.2 to read as follows:
■
3052.249–90
(USCG).
Contract Termination
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As prescribed in the USCG guidance
at (HSAR) 48 CFR 3049.9002, insert the
following clause:
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Contract Termination (USCG) (Mar
2023)
(a) This contract is subject to Section 3523
of the John S. McCain National Defense
Authorization Act for Fiscal Year 2019 (Pub.
L. 115–232), 14 U.S.C. 1155, pertaining to
contract terminations for the United States
Coast Guard (USCG).
(b) Notification. As required by 14 U.S.C.
1155(b), before terminating a contract with a
total value of more than $1,000,000, the
Commandant of the Coast Guard shall notify
the contractor and the contractor shall be
required to maintain all work product related
to the contract until the earlier of—
(1) not less than 1 year after the date of the
notification;
or
(2) the date the Commandant notifies the
vendor that maintenance of such work
product is no longer required.
(c) Work Product Defined. In this clause
the term ‘‘work product’’—
PO 00000
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Fmt 4700
Sfmt 9990
(1) means tangible and intangible items
and information produced or possessed as a
result of a contract referred to in subsection
(b); and
(2) includes—
(i) any completed end items;
(ii) any uncompleted end items; and
(iii) any property in the Contractor’s
possession in which the United States
Government has an interest.
(d) Penalty. A Contractor that fails to
maintain work product as required under
subsection (b) is liable to the United States
for a civil penalty of not more than $25,000
for each day on which such work product is
unavailable.
(e) The Contractor shall insert the
substance of this clause in contracts and
subcontracts, including contracts for
commercial items, with a total value of more
than $1,000,000.
(End of clause)
[FR Doc. 2023–02318 Filed 2–14–23; 8:45 am]
BILLING CODE 4410–10–P
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]]>Agencies
[Federal Register Volume 88, Number 31 (Wednesday, February 15, 2023)]
[Rules and Regulations]
[Pages 9766-9772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-02318]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
48 CFR Parts 3049 and 3052
[Docket No. DHS-2022-0046]
RIN 1601-AB08
Homeland Security Acquisition Regulation (HSAR); United States
Coast Guard Contract Termination Policy (HSAR Case 2020-001)
AGENCY: Office of the Chief Procurement Officer, Department of Homeland
Security (DHS).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DHS adopts, as final, with minor editorial changes, the
proposed rule amending the Homeland Security Acquisition Regulation
(HSAR). This rule implements a new subpart and new contract clause to
establish contract termination policies for the United States Coast
Guard (USCG) and amends a clause to address the applicability of USCG's
contract termination policy to commercial items.
DATES: This rule is effective March 17, 2023.
FOR FURTHER INFORMATION CONTACT: Ms. Linda Stivaletti-Petty,
Procurement Analyst, DHS, Office of the Chief Procurement Officer,
Acquisition Policy and Legislation at (202) 447-5639 or email
[email protected]. When using email, include HSAR Case 2020-001 in the
``Subject'' line.
SUPPLEMENTARY INFORMATION:
Table of Contents for Preamble
I. Background
II. Discussion of Comments and the Final Rule
III. Regulatory Analyses
A. Executive Orders 12866 and 13563 Assessment
B. Affected Population
C. Cost Analysis of the Final Rule
D. Benefit Analysis of the Final Rule
E. Alternatives of the Final Rule
IV. Regulatory Flexibility Act
V. Paperwork Reduction Act
VI. National Environmental Policy Act
I. Background
The Federal Acquisition Regulations (FAR), found in 48 CFR part 1,
is a uniform regulation regarding the acquisition of goods and services
for Federal Government agencies. 48 CFR part 12, ``Acquisition of
Commercial Products and Commercial Services,'' deals with the
acquisition of commercial items, while part 49 discusses the
termination of contracts or solicitations. Under 48 CFR 49.101
contracts or solicitations may be terminated, either for convenience or
default, only when it is in the government's interest. The use of a
termination provision depends on the contract type such as a supply
contract, service contract, construction contract, research and
development contract and the method of payment, i.e., fixed price or
cost type.\1\
---------------------------------------------------------------------------
\1\ See 48 CFR 49.5.
---------------------------------------------------------------------------
Section 3523 of the John S. McCain National Defense Authorization
Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232) (14 U.S.C.
1155(a)) requires that before terminating a procurement or acquisition
contract with a total value of more than $1,000,000, the Commandant of
the Coast Guard shall notify each vendor under such contract and
require the vendor to maintain all work product related to the contract
until the earlier of--(A) not less than 1 year after the date of the
notification; or (B) the date the Commandant notifies the vendor that
maintenance of such work product is no longer required.\2\
---------------------------------------------------------------------------
\2\ This section of the NDAA was originally codified at 14
U.S.C. 657. However, section 108(b) of the Frank LoBiondo Coast
Guard Authorization Act of 2018 (Pub. L. 115-282) subsequently
redesignated section 657 as 14 U.S.C. 1155.
---------------------------------------------------------------------------
Specifically, 14 U.S.C. 1155(b) defines ``work product'' to mean:
(1) tangible and intangible items and information produced or possessed
as a result of a contract and (2) includes--(A) any completed end
items; (B) any uncompleted end items; and (C) any property in the
contractor's possession in which the United States Government has an
interest. Section 1155(c) establishes a penalty such that any vendor
that fails to maintain the work product is liable to the United States
for a civil penalty of not more than $25,000 for each day on which the
work product is unavailable.
II. Discussion of Comments and the Final Rule
The Department of Homeland Security (DHS) did not receive any
comments on the proposed rule titled ``Homeland Security Acquisition
Regulation (HSAR); United States Coast Guard Contract Termination
Policy (HSAR Case 2020-001)'' published on September 7, 2022 (87 FR
54663). With this rule, DHS adds a new subpart regarding contract
termination policy for the United States Coast Guard (USCG) in the
Homeland Security Acquisition Regulation (HSAR) \3\ to
[[Page 9767]]
ensure all USCG contractors and subcontractors have access to and
comply with Coast Guard's contract termination policies. Thus, it
aligns the USCG's contract termination regulatory requirements with 14
U.S.C. 1155, requiring inclusion of the Coast Guard's termination
policy and the notification of termination procedures in contracts,
including contracts for commercial items, with a total value of more
than $1 million. This final rule requires that before terminating a
contract with a value of more than $1,000,000, the Commandant of the
Coast Guard shall notify the contractor and the contractor shall be
required to maintain all work product related to the contract until the
earlier of--(1) not less than 1 year after the date of the
notification; or (2) the date the Commandant notifies the vendor that
maintenance of such work product is no longer required. A contractor
that fails to maintain a work product is liable to the United States
for a civil penalty of not more than $25,000 for each day on which such
work product is unavailable. The USCG must also insert the contract
termination policy in all its solicitations and contracts with a total
value of more than $1,000,000.
---------------------------------------------------------------------------
\3\ The HSAR is issued for Departmental guidance according to
the policy cited in the FAR at 48 CFR 1.301. The HSAR establishes
uniform DHS policies and procedures for all acquisition activities
within the DHS and is issued by the Chief Procurement Officer who is
the DHS Senior Procurement Executive. The HSAR is located at 48 CFR
chapter 30.
---------------------------------------------------------------------------
Accordingly, DHS adopts the proposed regulations in the published
HSAR proposed rule as final, with two minor editorial changes. The
minor changes include updating the clause date in Sec. 3052.212-70
from ``SEP 2012'' to the month this provision will become effective
``MAR 2023''. In addition, we added paragraph headings within
Sec. Sec. 3049.9001 and 3052.249-90 to align with the CFR formatting
requirements. The paragraph headings provide information to the public
on what each paragraph contains. For a detailed description of the
proposed rule changes, please see the proposed rule and section III of
this final rule.
III. Regulatory Analyses
A. Executive Orders 12866 and 13563 Assessment
Executive Orders 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review) direct agencies to assess
the 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). Executive
Order 13563 emphasizes the importance of quantifying costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
The Office of Management and Budget (OMB) has not designated this
final rule a significant regulatory action under section 3(f) of
Executive Order 12866. Accordingly, OMB has not reviewed it. A
regulatory analysis (RA) follows.
DHS did not receive public comments on the regulatory analysis for
the proposed rule, so the analysis is the same as set out in the
proposed rule.
Table 1 presents a summary of impacts of the final rule.
Table 1--Summary of Impacts of the Final Rule
------------------------------------------------------------------------
Category Summary
------------------------------------------------------------------------
Applicability................ Addition of contract termination and
notification requirements for the Coast
Guard in chapter 30 of the HSAR for
contracts that are terminated by the
Coast Guard, this will apply to new
contracts, including contracts for
commercial items of more than $1
million.
Affected Population.......... Contractors and subcontractors whose
contracts are terminated by the Coast
Guard. Approximately 2 contracts
annually.
Costs........................ There are no new costs of the final rule
as its requirements already exist in
other regulations and statutes.
Unquantified Benefits........ The final rule will provide consistency
between existing statutes and
regulations for contractors and
subcontractors whose contracts are
terminated by the Coast Guard.
------------------------------------------------------------------------
The Federal Government seeks contractual work with the general
public when it wishes to purchase, rent, lease, or otherwise obtain
supplies or services from non-Federal sources. The FAR defines this
process as ``contracting.'' \4\ This final rule revises the HSAR to
require Coast Guard to insert termination and notification requirements
into its new contracts (this rulemaking would not apply to existing
Coast Guard contracts), including contracts for commercial items, with
a total value of more than $1 million.
---------------------------------------------------------------------------
\4\ Readers should reference the FAR for a full definition of
the term ``contracting''.
---------------------------------------------------------------------------
The Coast Guard incorporates contract termination clauses in
accordance with the FAR, the HSAR, the Homeland Security Acquisition
Manual (HSAM), and the Coast Guard Acquisition Procedures (CGAP) into
contracts as applicable and using this clause when deemed necessary for
the Coast Guard to exercise its right to do so.
Based on our analysis, we do not estimate that this final rule will
impose any new requirements or regulatory costs on contractors and
subcontractors who perform contractual work, with a total value of more
than $1 million, for the Federal Government. Our analysis also shows
that the Federal Government will not incur any new regulatory costs as
a result of this final rule. We present a summary of the estimated
impacts of the final rule in Table 2.
Table 2--Final Rule Changes and the Estimated Impacts
----------------------------------------------------------------------------------------------------------------
HSAR Part or subpart affected Description of final rule changes Basis for no cost impact
----------------------------------------------------------------------------------------------------------------
3049....................................... Removes the term ``Reserved'' in Administrative, \5\ we do not
the Homeland Security estimate a cost for this item
Acquisition Regulation (HSAR). because it contains the
insertion of the text, with no
requirements, in part 3049 of
the HSAR.
[[Page 9768]]
Adds terms to the HSAR:
--``Part 3049'' to Termination of
Contracts..
--``Subpart 3049.90 Contract
Termination (USCG)''..
--``3049.9001 Policy (USCG).''...
--``3049.9002 Contract Clause
(USCG)'', part and subpart
titles..
3049.90.................................... Adds term ``Contract Termination Administrative, we do not
(USCG).''--subpart title, to the estimate a cost for this item
HSAR. because it contains the
insertion of text, with no
requirements, in part 3049 of
the HSAR.
3049.9001.................................. Adds term ``Policy (USCG)''-- Administrative, we do not
title, to the HSAR. estimate a cost for this item
because it contains the
insertion of text, with no
requirements, in part 3049 of
the HSAR.
3049.9001(a)............................... Adds paragraph (a) to the HSAR We do not estimate a cost for
and will implement requirements this regulatory provision
of 14 U.S.C. 1155, which because the FAR, title 48 of
provides contract termination the CFR, currently requires the
policy for procurement or Federal Government to include
acquisition contracts, including similar language in applicable
commercial contracts greater Federal contracts. Termination
than $1 million. and notification requirements
are addressed in subpart 49.1
of the FAR. The statutory
language for contract
termination is currently in 14
U.S.C. 1155(a)(1) for all
contracts, including commercial
contracts, with a total value
of more than $1 million.
3049.9001(b)............................... Adds paragraph (b) to the HSAR, We do not estimate a cost for
``Notification''--title. this regulatory provision
Paragraph will implement because subpart 49.1 of the FAR
requirements of 14 U.S.C. 1155, currently contains notification
which states the Commandant of requirements for the Federal
the Coast Guard must notify the Government. The statutory
contractor before terminating a language for notification of
procurement or acquisition contract termination is
contract of greater than $1 currently in 14 U.S.C.
million and the contractor must 1155(a)(1) for procurement or
maintain work product as acquisition contracts of more
specified in the Code.. than $1 million (14 U.S.C.
1155(b) defines work product).
Maintaining of records is
required by subpart 4.7 of the
FAR. The Federal Government is
currently required to include
similar language in applicable
Federal contracts.
3049.9001(c)............................... Adds paragraph (c) ``Work Product Administrative--we do not
Defined''--title, to the HSAR. estimate a cost for the
addition of this regulatory
provision because there is no
requirement, 14 U.S.C. 1155
currently contains the
definition of the term ``work
product''.
3049.9001(d)............................... Adds paragraph (d) ``Penalty''-- We do not estimate a cost for
title, to the HSAR. this provision because 14
U.S.C. 1155 currently contains
the statutory language for
``penalty''. This item has not
been levied for past Coast
Guard contracts since the
statute was enacted in 2019.
3049.9001(e)............................... Adds paragraph (e) to the HSAR, We do not estimate a cost for
which states the substance of this provision because subpart
the clause shall be inserted by 49.5 of the FAR requires the
the contractor in contracts and contracting officer to insert
subcontracts and for commercial similar language in applicable
items with a total value of more contracts. The relevant clauses
than $1 million. are in sections 52.249-1
through 52.249-10 of the FAR.
3049.9002.................................. Adds the term ``Contract Clause Administrative--we do not
(USCG)''--title, to the HSAR; estimate a cost for the
states Coast Guard contracting addition of the title to this
officers shall insert the clause subpart of the HSAR. We do not
at 3052.249-90 in all estimate a cost for this
solicitations and contracts, regulatory provision itself
including commercial items with because the contracting officer
a total value of more than $1 of the Coast Guard currently
million. inserts similar language in
applicable contracts, including
contracts for commercial items,
with a total value of more than
$1 million.
3052....................................... In subpart 3052.2 of the HSAR, Administrative--we do not
``Texts of Provisions and estimate a cost for this item
Clauses'', adds term ``3052.249- because it includes the
90 Contract Termination (USCG)''. insertion of the regulatory
text, with no requirements, in
part 3052 of the HSAR.
3052.249-90................................ --Adds text ``Contract Administrative--we do not
Termination (USCG)''--title, to estimate a cost for the
part 3052 of the HSAR. insertion of the regulatory
--Adds sentence to part 3052 of text that will be added to part
the HSAR, ``As prescribed in the 3052 of the HSAR. We do not
USCG guidance at (HSAR) 48 CFR estimate costs for the
3049.9002, insert the following regulatory text in paragraphs
clause.''. (a) through (e) of this subpart
--Adds text ``Contract because the requirements are
Termination (USCG) (March currently contained in subpart
2023)'' and paragraphs (a) 49.5 of the FAR. The statutory
through (e) to part 3052 of the language currently exists in 14
HSAR.. U.S.C. 1155. The requirements
are also in 3049.9001(a)
through (e).
3052.212-70................................ Adds term ``3052.249-90 Contract Administrative--we do not
Termination (USCG)'' to the estimate a cost for this item
HSAR. Updates date of clause because it contains the
provision. insertion of the regulatory
text, with no requirements, in
part 3052 of the HSAR.
----------------------------------------------------------------------------------------------------------------
\5\ We use the term ``administrative'' to mean editorial changes or changes to the regulatory text that contain
no regulatory requirements or impacts to the affected population of the final rule. The provisions we
identified as ``administrative'' in Table 2 do not have quantifiable costs, cost savings, or benefits
associated with them. See Table 1 for the unquantified benefits of the final rule.
[[Page 9769]]
B. Affected Population
The affected population of this final rule is a contractor (if a
contractor enters into a contract with a subcontractor, then the
subcontractor is counted as part of the main or primary contract) whose
contract is terminated by the Coast Guard; this would apply only to a
contract, including a commercial contract, with a total value of more
than $1 million.
DHS and the Coast Guard worked collaboratively to provide the
information for this regulatory analysis. The Coast Guard collected
acquisition data from the Coast Guard's Office of Procurement Policy
and Oversight to obtain the population or the number of contracts it
has acquired over the past 11 years. To collect this acquisition data,
the Coast Guard used the Federal Procurement Data System-Next
Generation (FPDS-NG) database.\6\ The Coast Guard acquired a total of
7,228 contracts, including commercial items, with a total value of more
than $1 million, from fiscal year 2010 (FY 2010) through fiscal year
2020 (FY 2020), which ended on September 30, 2020. Included in this
number are an unknown number of subcontracts. For accounting purposes,
the Coast Guard counts the main contract or the contract it awards as
the primary contract, along with subcontracts, if applicable, as 1
contract.\7\ During this period of time, the Coast Guard terminated 25
contracts with a value of more than $1 million, or an average of about
2.3 contracts a year.
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\6\ The Federal Government retains data on Federal procurements
through the FPDS-NG. Readers can reference the FPDS-NG website for
information on the procurement of Federal contracts at: https://www.gsa.gov/tools-overview/buying-and-selling-tools/federal-procurement-data-system.
\7\ A fiscal year in the Federal Government is the period of
time from October 1 in one calendar year to September 30 of the
following calendar year. It is the accounting period when Federal
agencies submit budget requests to the Office of Management and
Budget (OMB) for planning and operational purposes. The data we
collected are through fiscal year 2020; the Coast Guard generally
awards contracts, through its budget and acquisition process, in the
preceding fiscal year for the following fiscal year.
---------------------------------------------------------------------------
Of the 7,228 total contracts, the Coast Guard awarded contracts to
3,947 small businesses.\8\ Out of the 25 contracts, including
commercial contracts, with a value of more than $1 million, that the
Coast Guard terminated during this period of time, 8 of them were
associated with small businesses. This is an average of less than 1
small business contract a year being terminated by the Coast Guard. (We
discuss the impacts to small entities in section IV, ``Regulatory
Flexibility Act'', of this ``Regulatory Analysis.'')
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\8\ When a small business wishes to obtain a Federal contract,
it can do so by ``self-certification'' on the Small Business
Administration's (SBA) website before it registers for contract
opportunities with the Federal Government. Readers can learn more
about this process using the General Services Administration's (GSA)
website at: https://www.gsa.gov/small-business#gsa-now. A small
business is one that meets SBA's size standards based upon the North
American Industry Classification System (NAICS). Readers can
reference SBA's table of size standards and the NAICS codes at:
https://www.sba.gov/document/support-table-size-standards. For more
information on NAICS codes, readers should reference the U.S. Census
Bureau's website at: https://www.census.gov/naics/. Small businesses
may also obtain Federal contracts through GSA's ``One Acquisition
Solution for Integrated Services'' (OASIS) Small Business (OASIS SB)
contracts, see: https://www.gsa.gov/buying-selling/products-services/professional-services/buy-services/oasis-and-oasis-small-business.
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C. Cost Analysis of the Final Rule
This final rule will not impose any new regulatory costs on
contractors, subcontractor, and the Federal Government because the
requirements of this final rule currently exist in the FAR and in the
statute (see 48 CFR chapter 1). We explain our reasoning below for each
regulatory provision of this final rule. However, the FAR does not
contain the penalty clause that exists in 14 U.S.C. 1155 that we will
implement in section 3049.9001, paragraph (d).
We do not estimate a cost for the items we identified as
``administrative'' in Table 2 because they will contain the addition of
the regulatory text in the HSAR. This includes adding part, subpart,
and section titles to the HSAR. This covers 48 CFR part 3049, subpart
3049.90 (with sections 3049.9001 and 3049.9002), part 3052, and
3052.212-70 of the HSAR (see Table 2).
Subpart 3049.90 of the HSAR will contain the contract termination
policy and notification of termination requirements for the Coast
Guard.
Section 3049.9001 implements the requirements of the NDAA.
Paragraph (a) implements the current statutory language in 14 U.S.C.
1155(a)(1), which provides the contract termination policy for Coast
Guard contracts, including contracts for commercial items, with a total
value of more than $1 million. Additionally, subpart 49.1 (49.101) of
the FAR currently provides the authority for Federal agencies and more
specifically contracting officers to terminate contracts ``. . . for
the convenience of the Government, or for default . . .''. Because this
final rule uses the statutory language, which supplements the existing
regulatory requirement for contract termination of subpart 49.1 of the
FAR, we do not estimate a cost for this final change.
Paragraph (b) of section 3049.9001 contains the notification
requirement for the Commandant of the Coast Guard to notify the
contractor before terminating a contract, including contracts for
commercial items, with a total value of more than $1 million, and for
the contractor to maintain all work product related to the contract
until the earlier of--
(1) Not less than 1 year after the date of notification; or
(2) The date the Commandant notifies the vendor that maintenance of
such work product is no longer required.
Title 14 U.S.C. 1155(a)(1), currently provides the statutory
authority for the Commandant of the Coast Guard to notify the
contractor before terminating a procurement or acquisition contract
with a total value of more than $1 million. It also states the
contractor must maintain all work product related to the contract as we
previously mentioned. Subpart 49.1, specifically section 49.102 of the
FAR currently contains the regulatory requirement that Federal
contracting officers notify the contractor before terminating a
contract for convenience or default. Title 14 U.S.C. 1155 does not
specify the method of notification; however, the FAR states it must be
by written notice or it ``may be expedited by means of electronic
communication capable of providing confirmation of receipt by the
contractor''. It has been the past (and current) practice of the Coast
Guard to notify contractors of contract termination by electronic means
and for the contractor to reply by electronic means; therefore, this is
not a new requirement, and it will not impose any new costs on the
contractor and the Coast Guard for this method of notification. Because
the rule uses the statutory language for the notification of contract
termination, which section 49.102 of the FAR allows by electronic
means, we do not estimate a cost for this final change (the statutory
language for this provision also exists in 14 U.S.C. 1155).
We also do not estimate a cost for the requirement of the
contractor to maintain all work product related to the contract because
14 U.S.C. 1155(b) statutorily requires the contractor to perform this
function for the timeframe specified in the statute. Furthermore,
subpart 4.7 [specifically sections 4.703(a) through (d)] of the FAR
requires a contractor to retain records for the time specified in these
regulations (readers should refer to subpart 4.7 of the FAR for
contractor records retention).
Additionally, this is not a new Information Collection Request
(ICR)
[[Page 9770]]
nor will it amend an existing ICR under the Paperwork Reduction Act of
1995 (44 U.S.C. 3501).\9\ The rule uses the statutory language,
codified in 14 U.S.C. 1155, in the HSAR and will ensure the contractor
maintains the work product for the timeframes specified in the statute.
Lastly, because the Coast Guard terminated an average of about 2
contracts a year over the past 11 years, this number does not exceed
the threshold of 10 or more persons for a collection of information as
defined in 5 CFR part 1320.\10\
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\9\ Readers should reference the PRA for further information at:
https://www.govinfo.gov/content/pkg/PLAW-104publ13/html/PLAW-104publ13.htm.
\10\ Readers should reference the CFR for a full definition of
the term ``collection of information'' and for further information
on controlling paperwork burdens on the public at: https://www.govinfo.gov/content/pkg/CFR-2010-title5-vol3/xml/CFR-2010-title5-vol3-part1320.xml.
---------------------------------------------------------------------------
Paragraph (c) of 3049.9001 states the definition of the term ``work
product'' and will be titled ``Work Product Defined.'' We classify this
as an administrative provision without a regulatory requirement. We do
not estimate a cost for this provision because this final rule will add
this definition to the HSAR, which is codified in the statute in 14
U.S.C. 1155.
Paragraph (d) of 3049.9001 contains the penalty a contractor would
incur if it fails to maintain the work product defined in paragraph (c)
of this section. The Coast Guard does not believe it is likely it will
levy this penalty in the future because for the contracts that it has
terminated, the Coast Guard has generally been able to access the
maintained work product when necessary. Because this regulatory
language is codified in the statute in 14 U.S.C. 1155, we do not
estimate a cost for this final change to the HSAR.
Paragraph (e) of 3049.9001 contains the requirement for the
contractor to insert the substance of the clause into contracts and
subcontracts, including contracts and for commercial items with a total
value of more than $1 million. Subpart 49.5 (``Contract Termination
Clauses'') of the FAR requires contracting officers to insert the
substance of the clause into solicitations and contracts as specified
in the statute. As a result, we classify this regulatory language and
addition to the HSAR as an administrative item; therefore, we do not
estimate a cost for this final change.
The final rule adds section 3049.9002, ``Contract Clause (USCG)'',
to subpart 3049.90 of the HSAR. It states Coast Guard contracting
officers shall insert the clause at 3052.249-90, ``Contract Termination
(USCG)'', in all solicitations and contracts, including contracts for
commercial items, with a total value of more than $1 million. Similar
to the paragraph (e) of subpart 3049.9001, the contracting officer of
the Coast Guard is required in subpart 49.5 of the FAR to insert this
language into all solicitations and contracts.\11\ As a result, we
classify this regulatory language and addition to the HSAR as an
administrative item; therefore, we do not estimate a cost for this
change.
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\11\ The final rule includes all Coast Guard contracts. The
Coast Guard, however, issues primarily fixed-price contracts or firm
fixed-price contracts. The FAR defines fixed-price contracts as
types of contracts that ``. . . provide for a firm price or, in
appropriate cases, an adjustable price . . . the contracting officer
shall use firm fixed-price or fixed price with economic price
adjustment contracts when acquiring commercial items, except as
provided in 12.207(b)''. Readers should refer to the FAR for
information about other types of contracts.
---------------------------------------------------------------------------
Lastly, the final rule will add section 3052.249-90, ``Contract
Termination (USCG)'', to the HSAR. We classify this change as an
administrative item, which adds the regulatory language with the same
requirements that are contained in section 3049.9001, paragraphs (a)
through (e) of HSAR. As a result, we do not estimate a cost for this
change (see table 2 for a summary of these changes).
D. Benefit Analysis of the Final Rule
The primary benefit of this rule is to provide contractors and
subcontractors, a consistent regulatory environment between the U.S.C.,
the FAR, and the HSAR, in the event the Coast Guard terminates a
contract, including contracts for commercial items, with a total value
of more than $1 million. The regulatory consistency also includes the
notification of termination to a contractor by the Commandant of the
Coast Guard. The HSAR will contain the requirement of the U.S.C. for
the contractor to maintain the work product specified and the penalty
to be levied against a contractor for not maintaining the work product
as defined in the statute.
E. Alternatives of the Final Rule
DHS considered two alternatives to this rule. Neither alternative
would align the HSAR with the statutory requirements of 14 U.S.C. 1155,
nor would they provide the consistent regulatory environment of the
chosen alternative.
1. No Action Alternative. We rejected this alternative because the
HSAR would not align with the relevant statute, which contain the
statutory requirements for contract termination and notification for
the Coast Guard, specifically, the National Defense Authorization Act
(NDAA) for Fiscal Year 2019 (Pub. L. 115-232), 14 U.S.C. 1155, and
subpart 49.5 of the FAR.\12\ The statutory requirements are applicable
to contracts, including contracts for commercial items, with a total
value of more than $1 million. The HSAR would also not contain the
requirement for the contractor to maintain the work product as defined
in the U.S.C. Lastly, the HSAR would not contain the penalty specified
in the U.S.C. levied against a contractor for not maintaining the work
product.
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\12\ For further information, readers should reference the NDAA
for fiscal year 2019 at: https://www.congress.gov/115/bills/hr5515/BILLS-115hr5515enr.pdf.
---------------------------------------------------------------------------
2. Issue a policy letter referencing the FAR and the U.S.C. for
contract termination policy and notification for the Coast Guard. We
rejected this alternative because the policy letter would not revise
the HSAR and thus it would not contain the requirements found in 14
U.S.C. 1155. A policy letter would merely provide guidance for
contractors regarding the Coast Guard's contract termination policy,
including the penalty clause, and notification procedures for
requirements that currently exist in the relevant statutes and
regulations. There would be no costs associated with this alternative.
IV. Regulatory Flexibility Act
Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have
considered whether this rule will have a significant economic impact on
a substantial number of small entities. The term ``small entities''
comprises small businesses, not-for-profit organizations that are
independently owned and operated and are not dominant in their fields,
and governmental jurisdictions with populations of less than 50,000.
This rule will not impose any new requirements or costs on small
entities. This rule codifies the Coast Guard's termination policy and
the notification of termination procedures for contracts, including
contracts for commercial items, with a total value of more than $1
million, into DHS' HSAR. The requirements for contract termination and
notification are currently in subpart 49.5 of the FAR and 14 U.S.C.
1155.
The Coast Guard collected data on contracts it terminated over the
past 11 years, including contracts for commercial items, with a total
value of more than $1 million. Over this period of time, the Coast
Guard terminated 8 contracts (or less than 1 a year on average) awarded
to small businesses that met this total dollar value. Although these 8
companies registered as a ``small business'' with the SBA in
[[Page 9771]]
order to obtain a contract with the Federal Government as a small
business, we researched these companies to determine the type of small
entity that they are in order to correctly classify them in this
Regulatory Flexibility Act (RFA) analysis. This is necessary because a
``small business'' is one type of small entity as stated previously in
this section.
We obtained the NAICS codes from the FPDS-NG for all 8 companies.
We found company-specific information on 6 of the 8 companies by using
the publicly-available online database of businesses in the United
States, ReferenceUSAgov.com (we did not find revenue or employee
information for 2 companies, and assumed they are small).\13\
Nevertheless, based on each company's NAICS code, and using SBA's table
of size standards for each NAICS code, we found all of the 8 companies,
who had contracts with a total value of more than $1 million that were
terminated by the Coast Guard, to be small businesses, and not
governmental jurisdictions or not-for-profit organizations that are
independently owned and operated and are not dominant in their fields.
---------------------------------------------------------------------------
\13\ We accessed this database in October 2021. https://www.referenceusagov.com/Home/Home.
---------------------------------------------------------------------------
As noted above, that the Coast Guard terminated an average of less
than 1 contract a year (over the past 11 years) that was associated
with a small entity and that the rule will not impose any new
requirements or costs on small entities. Therefore, DHS certifies under
5 U.S.C. 605(b) that this rule will not have a significant economic
impact on a substantial number of small entities.
V. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) requires
agencies to consider the impact of paperwork and other information
collection burdens imposed on the public. According to the 1995
amendments to the Paperwork Reduction Act, an agency may not collect or
sponsor the collection of information, nor may it impose an information
collection requirement unless it displays a currently valid Office of
Management and Budget (OMB) control number. As defined in 5 CFR
1320.3(c), ``collection of information'' comprises reporting,
recordkeeping, monitoring, posting, labeling, and other similar
actions.
DHS has determined that there is no new requirement for information
collection associated with this rule. This rule will not change the
burden in the collections currently approved by OMB under OMB Control
Numbers, 1600-0002, ``Various Contract Related Forms that will be
Included in the Homeland Security Acquisition Regulation'', 1600-0003,
``Post-Contract Award Information'', and 1600-0005, ``Solicitation of
Proposal Information for Award of Public Contracts''. There are no
Coast Guard Information Collection Requests (ICRs) associated with non-
Federal contracts.
VI. Environment
We have analyzed this rule under Department of Homeland Security
Management Directive 023-01, Rev. 1, associated implementing
instructions, and Environmental Planning COMDTINST 5090.1 (series),
which guide the Department in complying with the National Environmental
Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a
determination that this action is one of a category of actions that do
not individually or cumulatively have a significant effect on the human
environment. This rule is categorically excluded under paragraph A3 of
Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev 1.
Paragraph A3 pertains to promulgation of rules that are an
administrative or procedural nature or those that implement, without
substantive change, statutory or regulatory requirements. This rule
involves adopting a statutorily required contract cancelation provision
that outline the Coast Guard's procedural requirements for canceling
applicable contracts.
List of Subjects in 48 CFR Parts 3049 and 3052
Government procurement.
Paul Courtney,
Chief Procurement Officer, Department of Homeland Security.
Therefore, DHS amends 48 CFR chapter 30 as follows:
0
1. Add part 3049 to read as follows:
PART 3049--TERMINATION OF CONTRACTS
Subpart 3049.90--Contract Termination (USCG)
Sec.
3049.9001 Policy (USCG).
3049.9002 Contract clause (USCG).
Authority: 14 U.S.C. 1155.
3049.9001 Policy (USCG).
(a) Applicability. This section implements 14 U.S.C. 1155 and
provides the policy for the USCG to use for contract terminations. This
contract termination policy applies to USCG contract terminations,
including contracts for commercial items, with a total value of more
than $1,000,000.
(b) Notification. Before terminating a contract with a total value
of more than $1,000,000, the Commandant of the Coast Guard shall notify
the contractor and the contractor shall be required to maintain all
work product related to the contract until the earlier of--
(1) not less than 1 year after the date of the notification;
or
(2) the date the Commandant notifies the vendor that maintenance of
such work product is no longer required.
(c) Work Product Defined. The term ``work product''--
(1) Means tangible and intangible items and information produced or
possessed as a result of a contract referred to in subsection (b); and
(2) Includes--
(i) Any completed end items;
(ii) Any uncompleted end items; and
(iii) Any property in the Contractor's possession in which the
United States Government has an interest.
(d) Penalty. A Contractor that fails to maintain work product as
required under subsection (b) is liable to the United States for a
civil penalty of not more than $25,000 for each day on which such work
product is unavailable.
(e) Requirement. The Contractor shall insert the substance of this
clause in contracts and subcontracts, including contracts and for
commercial items, with a total value of more than $1,000,000.
3049.9002 Contract clause (USCG).
USCG contracting officers shall insert the clause at 3052.249-90,
Contract Termination (USCG), in all solicitations and contracts,
including contracts for commercial items, with a total value of more
than $1,000,000.
PART 3052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
2. The authority citation for part 3052 is revised to read as follows:
Authority: 5 U.S.C. 301-302, 14 U.S.C. 1155, 41 U.S.C. 1303, 41
U.S.C. 1707, 41 U.S.C. 1702, and 48 CFR subpart 1.3.
0
3. Amend Sec. 3052.212-70 by:
0
a. Revising the heading of the clause; and
0
b. In paragraph (b), add an entry for ``HSAR 3052.249-90'' at the end
of the list of clauses in the second Alternate I.
The revision and addition read as follows:
[[Page 9772]]
3052.212-70 Contract Terms and Conditions Applicable to DHS
Acquisition of Commercial Items.
Contract Terms and Conditions Applicable to DHS Acquisition of
Commercial Items (Mar 2023)
* * * * *
(b) * * *
Alternate I * * *
__HSAR 3052.249-90 Contract Termination (USCG).
* * * * *
0
4. Add section 3052.249-90 to subpart 3052.2 to read as follows:
3052.249-90 Contract Termination (USCG).
As prescribed in the USCG guidance at (HSAR) 48 CFR 3049.9002,
insert the following clause:
Contract Termination (USCG) (Mar 2023)
(a) This contract is subject to Section 3523 of the John S.
McCain National Defense Authorization Act for Fiscal Year 2019 (Pub.
L. 115-232), 14 U.S.C. 1155, pertaining to contract terminations for
the United States Coast Guard (USCG).
(b) Notification. As required by 14 U.S.C. 1155(b), before
terminating a contract with a total value of more than $1,000,000,
the Commandant of the Coast Guard shall notify the contractor and
the contractor shall be required to maintain all work product
related to the contract until the earlier of--
(1) not less than 1 year after the date of the notification;
or
(2) the date the Commandant notifies the vendor that maintenance
of such work product is no longer required.
(c) Work Product Defined. In this clause the term ``work
product''--
(1) means tangible and intangible items and information produced
or possessed as a result of a contract referred to in subsection
(b); and
(2) includes--
(i) any completed end items;
(ii) any uncompleted end items; and
(iii) any property in the Contractor's possession in which the
United States Government has an interest.
(d) Penalty. A Contractor that fails to maintain work product as
required under subsection (b) is liable to the United States for a
civil penalty of not more than $25,000 for each day on which such
work product is unavailable.
(e) The Contractor shall insert the substance of this clause in
contracts and subcontracts, including contracts for commercial
items, with a total value of more than $1,000,000.
(End of clause)
[FR Doc. 2023-02318 Filed 2-14-23; 8:45 am]
BILLING CODE 4410-10-P
