[Federal Register: March 31, 2009 (Volume 74, Number 60)]
[Rules and Regulations]
[Page 14646-14649]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31mr09-22]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 12, 13, 14, 15, and 52
[FAC 2005-32; FAR Case 2009-011; Item V; Docket 2009-0012, Sequence 1]
RIN 9000-AL20
Federal Acquisition Regulation; FAR Case 2009-011, American
Recovery and Reinvestment Act of 2009 (the Recovery Act)--GAO/IG Access
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Interim rule with request for comments.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on an interim
rule amending the Federal Acquisition Regulation (FAR) to implement the
American Recovery and Reinvestment Act of 2009 (Recovery Act) with
respect to Sections 902, 1514, and 1515 of Division A.
DATES: Effective Date: March 31, 2009.
Applicability Date: The rule applies to solicitations issued and
contracts awarded on or after the effective date of this rule.
Contracting officers shall modify, on a bilateral basis, in accordance
with FAR 1.108(d)(3), existing contracts to include the FAR clauses
(Alternates) for future orders, if Recovery Act funds will be used. In
the event that a contractor refuses to accept such a modification, the
contractor will not be eligible for receipt of Recovery Act funds.
Comment Date: Interested parties should submit written comments to
the FAR Secretariat on or before June 1, 2009 to be considered in the
formulation of a final rule.
ADDRESSES: Submit comments identified by FAC 2005-32, FAR case 2009-
011, by any of the following methods:
Regulations.gov: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by inputting ``FAR Case
2009-011'' under the heading ``Comment or Submission''. Select the link
``Send a Comment or Submission'' that corresponds with FAR Case 2009-
011. Follow the instructions provided to complete the ``Public Comment
and Submission Form''. Please include your name, company name (if any),
and ``FAR Case 2009-011'' on your attached document.
Fax: 202-501-4067.
Mail: General Services Administration, FAR Secretariat
(VPR), 1800 F Street, NW., Room 4041, ATTN: Hada Flowers, Washington,
DC 20405.
Instructions: Please submit comments only and cite FAC 2005-32, FAR
case 2009-011, in all correspondence related to this case. All comments
received will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov,
including any personal and/or business confidential information
provided.
FOR FURTHER INFORMATION CONTACT: Mr. Edward N. Chambers, Procurement
Analyst, at (202) 501-3221 for clarification of content. Please cite
FAC 2005-32, FAR case 2009-011. For information pertaining to status or
publication schedules, contact the FAR Secretariat at (202) 501-4755.
SUPPLEMENTARY INFORMATION:
A. Background
This interim rule implements the American Recovery and Reinvestment
Act of 2009 (Recovery Act) with respect to Sections 902, 1514, and
1515, by adding alternate clauses to 52.214-26, ``Audit and Records-
Sealed Bidding,'' 52.212-5, ``Contract Terms and Conditions Required to
Implement Statutes or Executive Orders-Commercial Items,'' and FAR
52.215-2, ``Audit and Records-Negotiation.''
Further, FAR 12.504(a)(7) is amended for contracts using Recovery
Act funds to apply 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination
of Records of Contractor, to commercial item subcontracts that are
otherwise exempt when subcontractors are not required to provide cost
or pricing data.
Likewise, 13.006(d) is amended for contracts using Recovery Act
funds to apply 52.215-2, ``Audit and Records-Negotiation'' to contracts
and subcontracts which are otherwise exempt because they are under the
simplified acquisition threshold. This requirement provides further
transparency into Federal contracting whose contracts are funded with
Recovery Act funds.
B. Discussion
On February 17, 2009, the President signed Public Law 111-5, the
American Recovery and Reinvestment Act of 2009, which includes a number
of provisions to be implemented in Federal Government contracts. Among
these provisions are sections 902, 1514, and 1515 which serve to
``prevent the fraud, waste, and abuse'' of Recovery Act
[[Page 14647]]
funds through the review and audit of contracts using such funds. The
interim rule is necessary to implement these measures to both protect,
and provide transparency in the use of, Recovery Act funds.
Section 1514 provides for agency inspector general review of
concerns raised by the public regarding investments of funds under the
Recovery Act. Sections 902 and 1515 provide for respectively,
Comptroller General and agency inspector general reviews of any records
of the contractor or subcontractor regarding transactions using
Recovery Act funds, and the interview of contractor officers or
employees concerning such transactions. Section 902 also provides for
the Comptroller General to interview subcontractor employees, while
nowhere in the Recovery Act is corresponding authority provided to the
agency inspector generals. The authority for Comptroller General audits
of prime contractors already exists for Part 12 contracts under FAR
52.212-5, ``Contract Terms and Conditions Required to Implement
Statutes or Executive Orders-Commercial Items'' and for Part 15
contracts under FAR 52.215-2, ``Audit and Records-Negotiation.'' FAR
52.215-2 also provides authority to audit subcontracts, while 52.212-5
does not provide corresponding authority. In the case of Part 13
contracts there are no authorities for the audit of either prime
contracts or subcontracts. Likewise, except in the case of
modifications involving cost or pricing data, for Part 14 contracts
there are no authorities for the audit of either prime contracts or
subcontracts.
In the matter of interviewing contractor or subcontractor employees
concerning contracting transactions there are no current authorities
under the FAR (but see changes under Item VI of this FAC 2005-32, FAR
Case 2008-026).
Consequently, for contracts using Recovery Act funds this interim
rule provides the following authorities to the Comptroller General:
For Part 12 contracts the authority to audit subcontracts,
and to interview contractor and subcontractor personnel, including
contracts below the simplified acquisition threshold.
For Part 15 contracts the authority to interview
contractor and subcontractor personnel, including contracts below the
simplified acquisition threshold.
For Part 14 contracts the authority to audit both
contracts and subcontracts, and to interview contractor and
subcontractor personnel, including contracts below the simplified
acquisition threshold.
The interim rule provides the same authorities in the preceding
paragraph to agency inspector generals, with the exception of
interviewing subcontractor employees.
C. Applicability to Commercial Item Contracts
Section 8003 of Public Law 103-355, the Federal Acquisition
Streamlining Act (FASA) (41 U.S.C. 430), governs the applicability of
laws to commercial items, and is intended to limit the applicability of
laws to commercial items. FASA provides if a provision of law contains
criminal or civil penalties, or if the Federal Acquisition Regulatory
Council makes a written determination it is not in the best interest of
the Federal Government to exempt commercial item contracts, the
provision of law will apply to contracts for commercial items. The same
applies for subcontracts for commercial items.
Therefore, given Sections 902 and 1515 of the American Recovery and
Reinvestment Act of 2009 (Recovery Act), which require Comptroller
General and agency inspector general access to contractor and
subcontractor records and contractor personnel, the FAR Council has
determined this rule should apply to commercial items, as defined at
2.101, both at the prime and subcontract levels.
D. Applicability to Commercially Available Off-The-Shelf (COTS) Item
Contracts
Section 4203 of Public Law 104-106, the Clinger-Cohen Act of 1996
(41 U.S.C. 431), governs the applicability of laws to the procurement
of commercially available off-the-shelf (COTS) items, and is intended
to limit the applicability of laws to them. Clinger-Cohen provides that
if a provision of law contains criminal or civil penalties, or if the
Administrator for Federal Procurement Policy makes a written
determination it is not in the best interest of the Federal Government
to exempt COTS item contracts, the provision of law will apply.
Therefore, given Sections 902 and 1515 of the American Recovery and
Reinvestment Act of 2009 (Recovery Act), which require Comptroller
General and agency inspector general access to contractor and
subcontractor records and contractor personnel, the Administrator,
Office of the Federal Procurement Policy, has determined the rule
should apply to Commercially Available Off-The-Shelf (COTS) item
contracts, as defined at FAR 2.101.
E. Applicability to Contracts at or Below the Simplified Acquisition
Threshold
Section 4101 of Public Law 103-355, the Federal Acquisition
Streamlining Act (FASA) (41 U.S.C. 429), governs the applicability of
laws to contracts or subcontracts in amounts not greater than the
simplified acquisition threshold. It is intended to limit the
applicability of laws to them. FASA provides that if a provision of law
contains criminal or civil penalties, or if the Federal Acquisition
Regulatory Council makes a written determination it is not in the best
interest of the Federal Government to exempt contracts or subcontracts
at or below the simplified acquisition threshold, the law will apply to
them. Therefore, given Sections 902 and 1515 of the American Recovery
and Reinvestment Act of 2009 (Recovery Act), which require Comptroller
General and agency inspector general access to contractor and
subcontractor records and contractor personnel, the FAR Council has
determined this rule should apply to contracts or subcontracts at or
below the simplified acquisition threshold, as defined at 2.101.
This is a significant regulatory action and, therefore, was subject
to Office of Management and Budget (OMB) review under Section 6 of
Executive Order 12866, Regulatory Planning and Review, dated September
30, 1993. This rule is not a major rule under 5 U.S.C. 804.
F. Regulatory Flexibility Act
The Councils do 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.,
because it requires contractors to make available existing records of
transactions covered by the Act. Contractors are not obligated to
create additional records. Therefore, an Initial Regulatory Flexibility
Analysis has not been performed. The Councils will consider comments
from small entities concerning the affected FAR Parts 12, 13, 14, 15,
and 52 in accordance with 5 U.S.C. 610. Interested parties must submit
such comments separately and should cite 5 U.S.C. 601, et seq., (FAC
2005-32, FAR Case 2009-011) in correspondence.
G. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 96-511) applies to this
interim rule. However, the information collection requirements imposed
by the changes to 52.214-26 and 52.215-2 are currently covered by the
approved collection
[[Page 14648]]
under OMB Control number 9000-0034 entitled, Examination of Records by
Comptroller General and Contract Audit: Sections Affected 52.215-2;
52.212-5; 52.214-26, for these existing provisions. The Councils
believe changes due to the use of these provisions will not result in a
substantial increase in either the burden or the number of entities.
However, the Council welcomes comments on both of these items as part
of the 60-day comment period.
H. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense (DoD), the Administrator of General Services (GSA), and the
Administrator of the National Aeronautics and Space Administration
(NASA) that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. This action
is necessary because the American Recovery and Reinvestment Act of 2009
became effective upon enactment, and contracts using funds appropriated
by the Recovery Act will soon be ready to award. However, pursuant to
Public Law 98-577 and FAR 1.501, the Councils will consider public
comments received in response to this interim rule in the formation of
the final rule.
List of Subjects in 48 CFR Parts 12, 13, 14, 15, and 52
Government procurement.
Dated: March 25, 2009.
Al Matera,
Director,Office of Acquisition Policy.
0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 12, 13, 14, 15, and 52
as set forth below:
0
1. The authority citation for 48 CFR parts 12, 13, 14, 15, and 52
continues to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 12--ACQUISITION OF COMMERCIAL ITEMS
0
2. Amend section 12.301 by revising paragraph (b)(4) to read as
follows:
12.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(b) * * *
(4) The clause at 52.212-5, Contract Terms and Conditions Required
to Implement Statutes or Executive Orders--Commercial Items. This
clause incorporates by reference only those clauses required to
implement provisions of law or Executive orders applicable to the
acquisition of commercial items. The contracting officer shall attach
this clause to the solicitation and contract and, using the appropriate
clause prescriptions, indicate which, if any, of the additional clauses
cited in 52.212-5(b) or (c) are applicable to the specific acquisition.
Some of the clauses require fill-in; the fill-in language should be
inserted as directed by 52.104(d). When cost information is obtained
pursuant to Part 15 to establish the reasonableness of prices for
commercial items, the contracting officer shall insert the clauses
prescribed for this purpose in an addendum to the solicitation and
contract. This clause may not be tailored.
(i) Use the clause with its Alternate I when the head of the agency
has waived the examination of records by the Comptroller General in
accordance with 25.1001.
(ii) If the acquisition will use funds appropriated or otherwise
made available by the American Recovery and Reinvestment Act of 2009
(Pub. L. 111-5), the contracting officer shall use the clause with its
Alternate II, and may not use Alternate I.
* * * * *
0
3. Amend section 12.504 by revising paragraph (a)(7) to read as
follows:
12.504 Applicability of certain laws to subcontracts for the
acquisition of commercial items.
(a) * * *
(7) 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination of Records
of Contractor, when a subcontractor is not required to provide cost or
pricing data (see 15.209(b)), unless using funds appropriated or
otherwise made available by the American Recovery and Reinvestment Act
of 2009 (Pub. L. 111-5).
* * * * *
PART 13--SIMPLIFIED ACQUISITION PROCEDURES
0
4. Amend section 13.006 by revising paragraph (d) to read as follows:
13.006 Inapplicable provisions and clauses.
* * * * *
(d) 52.215-2, Audits and Records--Negotiation, except as used with
its Alternate I, when using funds appropriated or otherwise made
available by the American Recovery and Reinvestment Act of 2009 (Pub.
L. 111-5).
* * * * *
PART 14--SEALED BIDDING
0
5. Amend section 14.201-7 by revising paragraph (a) to read as follows:
14.201-7 Contract Clauses.
(a) When contracting by sealed bidding, the contracting officer
shall insert the clause at 52.214-26, Audit and Records-Sealed Bidding,
in solicitations and contracts as follows:
(1) Use the basic clause if--
(i) The acquisition will not use funds appropriated or otherwise
made available by the American Recovery and Reinvestment Act of 2009
(Pub. L. 111-5); and
(ii) The contract amount is expected to exceed the threshold at
15.403-4(a)(1) for submission of cost or pricing data.
(2) If the acquisition will use funds appropriated or otherwise
made available by the American Recovery and Reinvestment Act of 2009,
use the clause with its Alternate I in all solicitations and contracts.
* * * * *
0
6. Amend section 15.209 by revising the introductory text of paragraph
(b)(1) and adding paragraph (b)(2) to read as follows:
15.209 Solicitation provisions and contract clauses.
* * * * *
(b)(1) Except as provided in paragraph (b)(2) of this section, the
contracting officer shall insert the clause at 52.215-2, Audit and
Records-Negotiation (10 U.S.C. 2313, 41 U.S.C. 254d, and OMB Circular
No. A-133), in solicitations and contracts except those for--
* * * * *
(2) When using funds appropriated or otherwise made available by
the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5)--
(i) The exceptions in paragraphs (b)(1)(i) through (b)(1)(iii) are
not applicable; and
(ii) Use the clause with its Alternate I.
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
7. Amend section 52.212-5 by adding Alternate II to read as follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
Alternate II (MAR 2009). As prescribed in 12.301(b)(4)(ii),
substitute the following paragraphs (d)(1) and (e)(1) for paragraphs
(d)(1) and (e)(1) of the basic clause as follows:
[[Page 14649]]
(d)(1) The Comptroller General of the United States, an appropriate
Inspector General appointed under section 3 or 8G of the Inspector
General Act of 1978 (5 U.S.C. App.), or an authorized representative of
either of the foregoing officials shall have access to and right to--
(i) Examine any of the Contractor's or any subcontractors' records
that pertain to, and involve transactions relating to, this contract;
and
(ii) Interview any officer or employee regarding such transactions.
(e)(1) Notwithstanding the requirements of the clauses in
paragraphs (a), (b), and (c), of this clause, the Contractor is not
required to flow down any FAR clause in a subcontract for commercial
items, other than--
(i) Paragraph (d) of this clause. This paragraph flows down to all
subcontracts, except the authority of the Inspector General under
paragraph (d)(1)(ii) does not flow down; and
(ii) Those clauses listed in this paragraph (e)(1). Unless
otherwise indicated below, the extent of the flow down shall be as
required by the clause--
(A) 52.203-13, Contractor Code of Business Ethics and Conduct (Dec
2008) (Pub. L. 110-252, Title VI, Chapter 1 (41 U.S.C. 251 note)).
(B) 52.219-8, Utilization of Small Business Concerns (May 2004) (15
U.S.C. 637(d)(2) and (3)), in all subcontracts that offer further
subcontracting opportunities. If the subcontract (except subcontracts
to small business concerns) exceeds $550,000 ($1,000,000 for
construction of any public facility), the subcontractor must include
52.219-8 in lower tier subcontracts that offer subcontracting
opportunities.
(C) 52.222-26, Equal Opportunity (Mar 2007) (E.O. 11246).
(D) 52.222-35, Equal Opportunity for Special Disabled Veterans,
Veterans of the Vietnam Era, and Other Eligible Veterans (Sept 2006)
(38 U.S.C. 4212).
(E) 52.222-36, Affirmative Action for Workers with Disabilities
(June 1998) (29 U.S.C. 793).
(F) 52.222-39, Notification of Employee Rights Concerning Payment
of Union Dues or Fees (Dec 2004) (E.O. 13201).
(G) 52.222-41, Service Contract Act of 1965 (Nov 2007) (41 U.S.C.
351, et seq.).
(H) 52.222-50, Combating Trafficking in Persons (Feb 2009) (22
U.S.C. 7104(g)).
(I) 2.222-51, Exemption from Application of the Service Contract
Act to Contracts for Maintenance, Calibration, or Repair of Certain
Equipment-Requirements (Nov 2007) (41 U.S.C. 351, et seq.).
(J) 52.222-53, Exemption from Application of the Service Contract
Act to Contracts for Certain Services-Requirements (Feb 2009) (41
U.S.C. 351, et seq.).
(K) 52.222-54, Employment Eligibility Verification (Jan 2009).
(L) 52.226-6, Promoting Excess Food Donation to Nonprofit
Organizations. (Mar 2009) (Pub. L. 110-247). Flow down required in
accordance with paragraph (e) of FAR clause 52.226-6.
(M) 52.247-64, Preference for Privately Owned U.S.-Flag Commercial
Vessels (Feb 2006) (46 U.S.C. Appx. 1241(b) and 10 U.S.C. 2631). Flow
down required in accordance with paragraph (d) of FAR clause 52.247-64.
0
8. Amend section 52.214-26 by adding Alternate I to read as follows:
52.214-26 Audit and Records--Sealed Bidding.
* * * * *
Alternate I (MAR 2009). As prescribed in 14.201-7(a)(2) substitute
the following paragraphs (c) and (e) for paragraphs (c) and (e) of the
basic clause:
(c) The Comptroller General of the United States, an appropriate
Inspector General appointed under section 3 or 8G of the Inspector
General Act of 1978 (5 U.S.C. App.), or an authorized representative of
either of the foregoing officials, shall have access to and the right
to--
(1) Examine any of the Contractor's or any subcontractors' records
that pertain to, and involve transactions relating to, this contract or
a subcontract hereunder; and
(2) Interview any officer or employee regarding such transactions.
(e)(1) Except as provided in paragraph (e)(2), the Contractor shall
insert a clause containing the provisions of this clause, including
this paragraph (e), in all subcontracts.
(2) The authority of the Inspector General under paragraph (c)(2)
of this clause does not flow down to subcontracts.
0
9. Amend section 52.215-2 by adding Alternate I to read as follows:
52.215-2 Audit and Records--Negotiation.
* * * * *
Alternate I (MAR 2009). As prescribed in 15.209(b)(2), substitute
the following paragraphs (d)(1) and (g) for paragraphs (d)(1) and (g)
of the basic clause:
(d) Comptroller General or Inspector General. (1) The Comptroller
General of the United States, an appropriate Inspector General
appointed under section 3 or 8G of the Inspector General Act of 1978 (5
U.S.C. App.), or an authorized representative of either of the
foregoing officials, shall have access to and the right to--
(i) Examine any of the Contractor's or any subcontractor's records
that pertain to and involve transactions relating to this contract or a
subcontract hereunder; and
(ii) Interview any officer or employee regarding such transactions.
(g)(1) Except as provided in paragraph (g)(2) of this clause, the
Contractor shall insert a clause containing all the terms of this
clause, including this paragraph (g), in all subcontracts under this
contract. The clause may be altered only as necessary to identify
properly the contracting parties and the Contracting Officer under the
Government prime contract.
(2) The authority of the Inspector General under paragraph
(d)(1)(ii) of this clause does not flow down to subcontracts.
[FR Doc. E9-7029 Filed 3-30-09; 8:45 am]
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