82 FR 4717 - Federal Acquisition Regulation; Contractor Employee Internal Confidentiality Agreements or Statements
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION Federal Register Volume 82, Issue 9 (January 13, 2017)
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
Federal Register Volume 82, Issue 9 (January 13, 2017)
| Page Range | 4717-4724 | |
| FR Document | 2016-31497 |
[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)] [Rules and Regulations] [Pages 4717-4724] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-31497] ----------------------------------------------------------------------- DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 3, 4, and 52 [FAC 2005-95; FAR Case 2015-012; Item III; Docket No. 2015-0012, Sequence No. 1] RIN 9000-AN04 Federal Acquisition Regulation; Contractor Employee Internal Confidentiality Agreements or Statements AGENCY: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement a section of the Consolidated and Further Continuing Appropriations Act, 2015, that prohibits the use of funds, appropriated or otherwise made available, for a contract with an entity that requires employees or subcontractors to sign an internal confidentiality agreement that restricts such employees or subcontractors from lawfully reporting waste, fraud, or abuse to a designated Government representative authorized to receive such information. DATES: Effective: January 19, 2017. Applicability: This rule applies to all solicitations and contracts, using fiscal year 2015 or subsequent fiscal year funds that do not already contain a comparable provision/clause. FOR FURTHER INFORMATION CONTACT: Ms. Cecelia L. Davis, Procurement Analyst, at 202-219-0202 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755. Please cite FAC 2005-95, FAR Case 2015-012. SUPPLEMENTARY INFORMATION: I. Background DoD, GSA, and NASA published a proposed rule in the Federal Register at 81 FR 3763 on January 22, 2016, to implement section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions) (i.e., section 743 of Division E of Pub. L. 114-113). Section 743 prohibits the use of funds appropriated or otherwise made available by Division E or any other Act for a contract, grant, or cooperative agreement with an entity that requires employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information. Four respondents submitted comments on the interim rule. II. Discussion and Analysis The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows: A. Summary of Significant Changes From the Proposed Rule The following significant changes are included in the final rule:Adds definitions of ``internal confidentiality agreement or statement,'' ``subcontract,'' and ``subcontractor'' (FAR 3.901, 52.203-18(a), and 52.203-19(a)). Clarifies that the representation applies to future internal confidentiality agreements or statements that restrict reporting of waste, fraud, or abuse related to the performance of a Government contract, and specifically cites the agency Office of the Inspector General as a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information (FAR 3.909-2, 52.203-18(d), 52.203-19(b), and 52.212- 3(s)(3)). [[Page 4718]] Clarifies that the contractor is required to give notice only to current employees and subcontractors that any prohibitions and restrictions of any preexisting confidentiality agreements or statements covered by the clause are no longer in effect, to the extent that such prohibitions and restrictions are in conflict with the prohibitions of the clause (FAR 52.203-19(c)). B. Analysis of Public Comments 1. General Support for the Rule Comment: All respondents were in general support of the rule. For example, one respondent stated its support of the intent of section 743 and the proposed rule to provide appropriate protection for employees looking to report waste, fraud, or abuse. Response: Noted. 2. Internal Confidentiality Agreement or Statement Several respondents raised questions about the meaning of ``internal confidentiality agreements or statement'' and their scope. Comment: One respondent questioned use of the term ``internal confidentiality agreement'' to apply to an agreement with a subcontractor, because ``internal'' would imply an agreement with employees of the company. The respondent questioned how the rule applies to subcontractors and subcontracts and suggested that the application to subcontractors is only through flowdown, rather than direct application to the prime contractor. Response: Notwithstanding the word ``internal,'' which would normally apply to inside the company, the statute specifically addresses the situation in which the contractor requires employees or subcontractors to sign internal confidentiality agreements or statements. The clause does flow down to subcontracts, but it also prohibits the prime contractor from requiring subcontractors to sign internal confidentiality agreements or statements. Comment: One respondent asked whether the rule covers confidentiality agreements arising out of civil litigation. The respondent also questioned whether it applies to confidentiality agreements that employees sign at the behest of a Federal agency. Response: A definition of ``internal confidentiality agreement or statement'' has been added to the final rule. This definition excludes confidentiality agreements arising out of civil litigation or confidentiality agreements that contractor employees or subcontractors sign at the behest of a Federal agency. 3. Definitions of ``Entity,'' ``Employee,'' and ``Subcontractor'' a. ``Entity'' Comment: One respondent noted that the proposed rule did not define ``entity'' and sometimes used the term ``contractor'' or ``offeror'' in a manner that appears to be intended to mean ``entity.'' Response: The term ``entity'' is a well-known legal term, frequently used in the FAR with its standard dictionary meaning, and does not require further definition in the acquisition regulations. According to Black's Law Dictionary, ``entity'' is a generic term inclusive of a person, partnership, organization, or business, which can be legally bound, and is uniquely identifiable from any other entity. All offerors and contractors are entities, but not all entities are offerors or contractors. The statute prohibits making funds available to entities that require employees or subcontractors to sign certain confidentiality agreements or statements due to this prohibition. Therefore, it is very possible that such entities will not submit offers or be awarded contracts. The terms ``offeror'' and ``contractor'' are used when the rule is specifically addressing an entity that has submitted an offer or bid or an entity that has been awarded a contract. b. ``Employee'' Comment: One respondent requested a definition of the term ``employee.'' The respondent suggested the term be defined to mean ``any officer, partner, employee, or agent of a prime contractor,'' consistent with the definition of ``prime contractor employee'' at FAR 3.502-1. The respondent noted that this definition would clarify that the term encompasses only current employees, reducing the burden of who would be covered for purposes of implementing the rule. Response: The term ``employee'' is used throughout the FAR, generally without definition. The definition of ``prime contractor employee'' at FAR 3.502-1 was first included in the FAR in FAC 84-24 (February 6, 1987), to implement the Anti-Kickback Enforcement Act of 1986. According to the Senate Report 99-435, the statute added a definition of ``prime contractor employee'' to parallel the language of 41 U.S.C. 51, which prohibits payments to any prime contractor, or to any officer, partner, employee, or agent of a prime contractor. All of these separate terms were included in the expanded definition of ``prime contractor employee'' in order to cover all those persons that might be acting to benefit or on behalf of the prime contractor when participating in a kick-back scheme. In general usage, an ``officer'' is an employee, but a ``partner'' is a co-owner, not an employee. An ``agent'' also is not necessarily an employee and instead is frequently a subcontractor. More importantly, the difference between an employee and an independent contractor is not an issue in this rule, because the rule equally covers both employees and subcontractors (including consultants). However, the rule has been modified at FAR 52.203-19(c) to specify that the contractor is only required to notify current employees and subcontractors. c. ``Subcontractor'' Comment: Several respondents were concerned about limiting the meaning of the term subcontractor. One respondent stated that ``subcontractor'' should cover only current subcontractors that have fully executed subcontracts under which work is currently being performed. Both respondents commented that the subcontract should be directly in support of a Government contract. The respondents consider that it would be a substantial burden to cover subcontractors that they do business with commercially that do not operate under a Government contract (e.g., cafeteria and lawn services). Response: Definitions of ``subcontract'' and ``subcontractor'' have been added to the final rule to specify that the term ``subcontract'' applies to contracts entered into by a prime contractor or by a subcontractor ``to furnish supplies or services for performance of a prime contract or subcontract.'' ``Subcontractor'' means any supplier, distributor, vendor, or firm (including a consultant) that furnishes supplies or services to or for a prime contractor or another subcontractor. As stated in the responses in section II.B.2.b. of this preamble, the rule has been modified at FAR 52.203-19(c) to specify that the contractor is only required to notify current employees and subcontractors. 4. Clarify Scope of Representation Comment: One respondent was concerned that the rule as proposed could be construed in a manner broader than the stated policy for the proposed rule. The policy states that the proposed rule is intended to reduce waste, fraud, and abuse in all Federal acquisitions. The respondent recommended that the rule be clarified that it only addresses those agreements or statements involving the employees or contractors [[Page 4719]] directly performing work on a Federal contract. Response: The definition of ``subcontractor'' limits the applicability of the rule to subcontracts under the Government contract. However, the statute focuses on reporting of waste, fraud, and abuse related to the performance of a Government contract. It is very possible that employees of the contractor not directly employed on the Government contract may have information to report relating to waste, fraud, or abuse on such contract. Therefore, the prohibition applies to all employees of the contractor, whether or not they are directly employed on the Government contract. 5. Timeframe of Representation One respondent recommended that the representation be revised to provide for prospective applicability. Retrospective representation would require offerors to locate and review all of its employee and subcontract agreements, which could be a time-consuming and costly task. The respondent recommended that the rule be revised to require offerors to represent that ``they have no such agreements in place with regard to current employees and current subcontracts used for performance of government contracts and it agrees that it will not enter into any new confidentiality agreements or statements that include prohibited limitations on reporting.'' Response: The rule does not require retrospective representation. It allows contractors to make a blanket notice of nonenforcement (FAR 52.203-19(b)). The respondent's proposed wording requiring contractors to represent they have no such agreements in place with current employees or subcontractors appears more burdensome that the current rule. However, the representation has been modified to accept the latter part of the recommendation, changing it to read that the offeror ``will not require its employees or subcontractors'' to sign such internal confidentiality agreements or statements. 6. Reporting Comment: One respondent recommended that the FAR clause be modified so that the scope of the reporting is limited to waste, fraud, and abuse related to the execution of Government contracts. Response: The final rule has been amended at FAR 3.909-2 to specify that the policy applies to the reporting of waste, fraud, or abuse related to the performance of a Government contract. The same change is also incorporated in the associated provision and clause. Comment: Another respondent recommended that the rule should more precisely identify the ``designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information.'' The respondent recommended that clarification would avoid creating a situation such as where the report is inadvertently made to the wrong agency, or to entities that have no responsibility for the procurement. Response: The purpose of the quoted phrase is to eliminate protection for disclosures to unauthorized people. The final rule has been amended to add ``(e.g., agency Office of the Inspector General)'' at the end of FAR 52.203-18(d) and 52.203-19(b). Comment: One respondent was concerned that the proposed rule does not apply to disclosures made to Congress. Response: Other statutes cover disclosures to Congress (see e.g., the whistleblower rights at FAR 3.907 and 3.908). This statute does not address disclosure to Congress. 7. Notice Requirements Comment: One respondent recommended that the preamble be amended to validate more flexible forms of notification, other than email, that could be selected by the contractor/offeror. Response: The rule does not specify how the notification is to be made. The preamble to the proposed rule only used email as an example, stating that ``This notice could be accomplished through normal business communication channels, such as email.'' 8. Protection of Controlled Unclassified Information Comment: One respondent recommended that the rule should address the interplay with procedures for handling controlled unclassified information. An employee or subcontractor who wished to report fraud, waste, or abuse, should still be responsible for the proper protection and handling of controlled unclassified information. When an agency has a reason to limit the reporting of waste, fraud, or abuse to a limited chain of individuals, the rule should be revised to respect those limits. Another respondent stated concern that the rule does not acknowledge that contractors have a legitimate interest in protecting their privileged and confidential information. The respondent recommended a change to the clauses to acknowledge the ability of contractors to protect this information. Response: Information that is reported to the agency Office of the Inspector General is protected from further disclosure outside of the Government, respecting all markings on any data or confidential information that is received. 9. Safe Harbor Comment: One respondent requested examples of or guidance about confidentiality agreements or statements that would help contractors comply. The respondent recommended that the rule should include definitive guidance as to language to be included in a confidentiality statement or agreement that would comply with the requirements of the statute. The respondent suggested the following: ``Neither the confidentiality provision contained in the ___ [insert title of agreement, statement, policy], nor confidentiality provisions contained in any existing employment or contract with ___ [insert name of contractor] shall be construed to prohibit or otherwise restrict you, as an employee or {sub{time} contractor of ___ [insert name of contractor] from lawfully reporting waste, fraud, or abuse to a designated investigative or law enforcement representative of a federal department or agency authorized to receive such information under the procurement.'' Response: Although the Councils do not consider it appropriate to prescribe specific language in the regulations, the language provided by the respondent is provided in full text in the preamble. The Councils concur that the sample contains appropriate language that could be included in an internal confidentiality agreement or statement, and could be tailored for use in the notice required by FAR 52.203-19(c). 10. Applicability to Contracts Valued at or Below the Simplified Acquisition Threshold (SAT) and for the Acquisition of Commercial Items Comment: One respondent was pleased that the rule also applies to contracts and subcontracts for acquisitions in amounts not greater than the simplified acquisition threshold, and to contracts and subcontracts for the acquisition of commercial items, including commercially available off-the-shelf (COTS) items. Response: Noted. Comment: Another respondent recommended that the rule be revised to exclude contracts for commercial items, including COTS items, and purchases [[Page 4720]] below the simplified acquisition threshold. This rule would interfere with customary commercial practices and may deter certain valued commercial vendors from participating in Government procedures. Nothing in the statute indicates that commercial items or purchases below the simplified acquisition threshold are a significant source of this type of waste, fraud, or abuse. Government should determine whether commercial item suppliers routinely enter into such restrictive confidentiality agreements with their employees and subcontractors. The conclusion that the burdens imposed by this rule are minimal does not acknowledge the due diligence and effort necessary before a contractor can accurately represent compliance. According to the respondent, contractors will be required to review current internal confidentiality agreements, identify any conflicts with the regulatory requirement, and modify or enter into new confidentiality agreements to the extent necessary to ensure compliance. At a minimum, the clause should not require flowdown to commercial item subcontractors. Response: This is an appropriations act restriction on use of funds, passed by Congress to protect the Government's interests in preventing waste, fraud, and abuse on Federal contracts. The FAR signatories and the Administrator for Federal Procurement Policy have determined that it would not be in the best interest of the Government to waive applicability of this statute to acquisitions valued at or below the SAT and contracts and subcontracts for the acquisition of commercial items (including COTS items). In response to the specific comments of the respondent, the Government has no insight into when a contractor requires internal confidentiality agreements or statements from its employees and subcontractors. The concern that this rule will interfere with common commercial practice implies that it is common commercial practice to require internal confidentiality agreements or statements. Nothing in the statute indicates that acquisitions below the SAT and for the acquisition of commercial items are not a significant source of waste, fraud, and abuse. (See also section IV of this preamble.) Furthermore, the rule imposes far less burden than envisioned by the respondent (see response to the comments in section II.B.11. of this preamble.) Although the preamble for the proposed rule stated the clear intent to flow the clause down to subcontracts for the acquisition of commercial items, the rule did not actually implement this flowdown. The final rule implemented the flowdown requirement by adding the FAR clause 52.203-19 to the lists at 52.212-5(e) and 52.244-6. 11. Implementation Burden Comment: Several respondents commented that implementation of the proposed requirements would be immensely burdensome, without implementation of the recommended changes to limit scope and applicability. In particular, one respondent was especially concerned about the significant burden for contractors to track and trace all existing confidentiality agreements and statements, which may be freestanding or incorporated into other agreements. According to the respondent, an offeror would have to review each agreement and statement to determine whether it would be covered and compliant. Response: There is no requirement to track and trace all existing internal confidentiality agreements and statements. That is the purpose of the notification at FAR 52.203-19(c), to override the prohibitions and restrictions of any preexisting internal confidentiality agreements or statements covered by the clause that are in conflict with the new requirement. 12. Law Does Not Go Far Enough Comment: One respondent was concerned that the law does not go far enough and should be expanded to-- Eliminate ``nondisclosure agreements'' to hide any criminal activity, including but not limited to fraud, waste, and abuse; Be worldwide; and Not be limited to just businesses with Government contracts. Response: The final rule implements the requirements of the statute. The Councils note that-- Certain crimes are covered by existing whistleblower statutes; see FAR 3.908-3 and 3.907; Agreements are covered worldwide, but only for agreements applying to disclosures made to U.S. Federal officials; and The FAR cannot cover businesses that do not have Government contracts. C. Other Changes The title of the FAR provision 52.203-18 and clause 52.203-19 were changed to include ``or Statements'' and the clause title was revised from ``Prohibition on Contracting with Entities that Require . . .'' to ``Prohibition on Requiring . . .'' (since the contract has already been awarded). III. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. IV. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT) and for Commercial Items, Including Commercially Available Off-the-Shelf (COTS) Items Based on determinations by the FAR signatories (DoD, GSA, and NASA) and the Administrator for Federal Procurement Policy, in accordance with 41 U.S.C. 1905, 1906, and 1907, this rule applies to all solicitations and resultant contracts that are funded with fiscal year (FY) 2015 funds or subsequent FY funds that are subject to the same prohibition on confidentiality agreements, including contracts and subcontracts for acquisitions in amounts not greater than the SAT, and contracts and subcontracts for the acquisition of commercial items, (including COTS items). This is an appropriations act restriction that prohibits use of funds appropriated or otherwise made available by Division E of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 112-235), or any other act, for a contract with an entity that requires employees or subcontractors to sign certain internal confidentiality agreements or statements. It is not in the best interest of the Federal Government to waive the applicability of section 743 to contracts and subcontracts in amounts not greater than the SAT, or for the acquisition of commercial items (including COTS items). In FY 2015, about 90 percent of all awards were below the SAT, and commercial procedures were used in more than 50 percent of all awards, so that excluding these awards from [[Page 4721]] application of the law would seriously weaken the impact of the law. Because the emphasis of section 743 is to prohibit restrictions on the ability of employees and subcontractors to report waste, fraud, or abuse to appropriate Government authorities, it is not in the best interest of the Federal Government to waive the applicability of section 743 to contracts and subcontracts in amounts not greater than the SAT. The suggested exception would exclude a significant number of acquisitions and thereby further limit the number of contractor/ subcontractor employees protected by section 743. Furthermore, this rule imposes a minimal burden on offerors and contractors, requiring only that offerors represent by submission of the offer that they will not require certain internal confidentiality agreements. Contractors only need to notify employees that the prohibition and restrictions of any preexisting internal confidentiality agreements covered by the clause, are no longer in effect to the extent that the restrictions are inconsistent with the prohibitions of the clause. Therefore, contractors are not required to conduct an exhaustive and burdensome search of all preexisting agreements to conform to the rule. V. Regulatory Flexibility Act DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows: This rule implements section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and successor provisions in subsequent appropriations acts (and as extended in continuing resolutions). Section 743 prohibits the use of funds appropriated or otherwise made available by Division E or any other Act for a contract, grant, or cooperative agreement with an entity that requires employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information. The objective of the rule is to remove restrictions on the ability of employees and subcontractors to report waste, fraud, or abuse to the appropriate Government authorities. The legal basis for the rule is the above-cited statute. There were no public comments in response to the initial regulatory flexibility analysis. This rule will apply to all small entities that receive Government contracts awarded using funds subject to the restriction of section 743, or successor provisions in subsequent appropriations acts with the same prohibition (and as extended in continuing resolutions). Based on FPDS data for FY 2014, this rule may affect up to 108,500 small entities per year (75,000 small entities receiving new awards, 33,500 modifications). However, it is doubtful that most small entities have any such prohibited internal confidentiality agreements with their employees and subcontractors. There are no reporting or recordkeeping burdens associated with this rule and the other compliance requirements do not have significant impact, because the rule does not impose any significant burdens--it merely requires that contractors (1) not prohibit their employees and subcontractors from reporting fraud, waste, or abuse to appropriate Government authorities; and (2) notify employees previously subject to such agreements, that the prohibited sections of the agreements are no longer in effect (e.g., an email to all affected employees). The rule has no significant economic impact on small entities. DoD, GSA, and NASA did not identify any significant alternatives that would reduce the impact on small entities and still meet the objectives of the statute. Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration. VI. Paperwork Reduction Act The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). List of Subjects in 48 CFR Parts 3, 4, and 52 Government procurement. Dated: December 21, 2016. William F. Clark, Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. Therefore, DoD, GSA, and NASA amend 48 CFR parts 3, 4, and 52 as set forth below: 0 1. The authority citation for 48 CFR parts 3, 4, and 52 continues to read as follows; Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113. PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTERESTS 0 2. Amend section 3.900 by-- 0 a. Removing from the introductory text ``three different'' and adding ``various'' in its place; 0 b. Redesignating paragraph (c) as paragraph (d); and 0 c. Adding a new paragraph (c). The addition reads as follows: 3.900 Scope of subpart. * * * * * (c) Section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions), implemented in 3.909, applicable to all agencies. * * * * * 0 3. Amend section 3.901 by adding, in alphabetical order, definitions for ``Internal confidentiality agreement or statement'', ``Subcontract'', and ``Subcontractor'' to read as follows: 3.901 Definitions. * * * * * Internal confidentiality agreement or statement means a confidentiality agreement or any other written statement that the contractor requires any of its employees or subcontractors to sign regarding nondisclosure of contractor information, except that it does not include confidentiality agreements arising out of civil litigation or confidentiality agreements that contractor employees or subcontractors sign at the behest of a Federal agency. Subcontract means any contract as defined in subpart 2.1 entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract. It includes but is not limited to purchase orders, and changes and modifications to purchase orders. Subcontractor means any supplier, distributor, vendor, or firm (including a consultant) that furnishes supplies or services to or for a prime contractor or another subcontractor. 0 4. Add sections 3.909, 3.909-1, 3.909-2, and 3.909-3 to read as follows: 3.909 Prohibition on providing funds to an entity that requires certain internal confidentiality agreements or statements. 3.909-1 Prohibition. (a) The Government is prohibited from using fiscal year 2015 and subsequent fiscal year funds for a contract with an entity that requires employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law [[Page 4722]] enforcement representative of a Federal department or agency authorized to receive such information. See section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions.) (b) The prohibition in paragraph (a) of this section does not contravene requirements applicable to Standard Form 312 (Classified Information Nondisclosure Agreement), Form 4414 (Sensitive Compartmented Information Nondisclosure Agreement), or any other form issued by a Federal department or agency governing the nondisclosure of classified information. 3.909-2 Representation by the offeror. (a) In order to be eligible for contract award, an offeror must represent that it will not require its employees or subcontractors to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting waste, fraud, or abuse related to the performance of a Government contract to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information (e.g., agency Office of the Inspector General). Any offeror that does not so represent is ineligible for award of a contract. (b) The contracting officer may rely on an offeror's representation unless the contracting officer has reason to question the representation. 3.909-3 Solicitation provision and contract clause. When using funding subject to the prohibitions in 3.909-1(a), the contracting officer shall-- (a)(1) Include the provision at 52.203-18, Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or Statements--Representation, in all solicitations, except as provided in paragraph (a)(2) of this section; and (2) Do not insert the provision in solicitations for a personal services contract with an individual if the services are to be performed entirely by the individual, rather than by an employee of the contractor or a subcontractor. (b)(1) Include the clause at 52.203-19, Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements, in all solicitations and resultant contracts, other than personal services contracts with individuals. (2) Modify existing contracts, other than personal services contracts with individuals, to include the clause before obligating FY 2015 or subsequent FY funds that are subject to the same prohibition on internal confidentiality agreements or statements. PART 4--ADMINISTRATIVE MATTERS 0 5. Amend section 4.1202 by-- 0 a. Redesignating paragraphs (a)(3) through (33) as paragraphs (a)(4) through (34), respectively; 0 b. Revising the heading and first sentence of the Note in newly redesignated paragraph (a)(22); and 0 c. Adding new paragraph (a)(3). The addition and revision reads as follows: 4.1202 Solicitation provision and contract clause. (a) * * * (3) 52.203-18, Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or Statements-- Representation. * * * * * (22) * * * Note to paragraph (a)(22): By a court order issued on October 24, 2016, this paragraph (a)(22) is enjoined indefinitely as of the date of the order. * * * * * PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES 0 6. Add sections 52.203-18 and 52.203-19 to read as follows: 52.203-18 Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or Statements-- Representation. As prescribed in 3.909-3(a), insert the following provision: Prohibition on Contracting With Entities That Require Certain Internal Confidentiality Agreements or Statements--Representation (JAN 2017) (a) Definition. As used in this provision-- Internal confidentiality agreement or statement, subcontract, and subcontractor, are defined in the clause at 52.203-19, Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements. (b) In accordance with section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions), Government agencies are not permitted to use funds appropriated (or otherwise made available) for contracts with an entity that requires employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information. (c) The prohibition in paragraph (b) of this provision does not contravene requirements applicable to Standard Form 312, (Classified Information Nondisclosure Agreement), Form 4414 (Sensitive Compartmented Information Nondisclosure Agreement), or any other form issued by a Federal department or agency governing the nondisclosure of classified information. (d) Representation. By submission of its offer, the Offeror represents that it will not require its employees or subcontractors to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting waste, fraud, or abuse related to the performance of a Government contract to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information (e.g., agency Office of the Inspector General). (End of provision) 52.203-19 Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements. As prescribed in 3.909-3(b), insert the following clause: Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements (JAN 2017) (a) Definitions. As used in this clause-- Internal confidentiality agreement or statement means a confidentiality agreement or any other written statement that the contractor requires any of its employees or subcontractors to sign regarding nondisclosure of contractor information, except that it does not include confidentiality agreements arising out of civil litigation or confidentiality agreements that contractor employees or subcontractors sign at the behest of a Federal agency. Subcontract means any contract as defined in subpart 2.1 entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract. It includes but is not limited to purchase orders, and changes and modifications to purchase orders. Subcontractor means any supplier, distributor, vendor, or firm (including a consultant) that furnishes supplies or services to or for a prime contractor or another subcontractor. (b) The Contractor shall not require its employees or subcontractors to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting waste, fraud, or abuse related to the performance of a Government contract to a designated investigative or law enforcement [[Page 4723]] representative of a Federal department or agency authorized to receive such information (e.g., agency Office of the Inspector General). (c) The Contractor shall notify current employees and subcontractors that prohibitions and restrictions of any preexisting internal confidentiality agreements or statements covered by this clause, to the extent that such prohibitions and restrictions are inconsistent with the prohibitions of this clause, are no longer in effect. (d) The prohibition in paragraph (b) of this clause does not contravene requirements applicable to Standard Form 312 (Classified Information Nondisclosure Agreement), Form 4414 (Sensitive Compartmented Information Nondisclosure Agreement), or any other form issued by a Federal department or agency governing the nondisclosure of classified information. (e) In accordance with section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015, (Pub. L. 113-235), and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions) use of funds appropriated (or otherwise made available) is prohibited, if the Government determines that the Contractor is not in compliance with the provisions of this clause. (f) The Contractor shall include the substance of this clause, including this paragraph (f), in subcontracts under such contracts. (End of clause) 0 7. Amend section 52.204-8 by-- 0 a. Revising the date of the provision; 0 b. Redesignating paragraphs (c)(1)(iii) through (xxiv) as paragraphs (c)(1)(iv) through (xxv), respectively; 0 c. In the note to newly redesignated paragraph (c)(1)(xvi), remove ``paragraph (c)(1)(xv)'' and add ``paragraph (c)(1)(xvi)'' in its place; and 0 d. Adding a new paragraph (c)(1)(iii). The revision and addition reads as follows: 52.204-8 Annual Representations and Certifications. * * * * * Annual Representations and Certifications (JAN 2017) * * * * * (c)(1) * * * (iii) 52.203-18, Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or Statements-- Representation. This provision applies to all solicitations. * * * * * 0 8. Amend section 52.212-3 by-- 0 a. Revising the date of provision; 0 b. Removing from the introductory text of the provision ``through (t)'' and adding ``through (u)'' in its place; 0 c. Removing from paragraph (b)(2), in the bracketed paragraph, ``through (t)'' and adding ``through (u)'' in its place; and 0 d. Adding paragraph (u). The revision and addition reads as follows: 52.212-3 Offeror Representations and Certifications--Commercial Items. * * * * * Offeror Representations and Certifications--Commercial Items (JAN 2017) * * * * * (u)(1) In accordance with section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions), Government agencies are not permitted to use appropriated (or otherwise made available) funds for contracts with an entity that requires employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information. (2) The prohibition in paragraph (u)(1) of this provision does not contravene requirements applicable to Standard Form 312 (Classified Information Nondisclosure Agreement), Form 4414 (Sensitive Compartmented Information Nondisclosure Agreement), or any other form issued by a Federal department or agency governing the nondisclosure of classified information. (3) Representation. By submission of its offer, the Offeror represents that it will not require its employees or subcontractors to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting waste, fraud, or abuse related to the performance of a Government contract to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information (e.g., agency Office of the Inspector General). 0 9. Amend section 52.212-5 by-- 0 a. Revising the date of clause; 0 b. Redesignating paragraphs (a)(1) through (3) as paragraphs (a)(2) through (4), respectively; 0 c. Adding a new paragraph (a)(1); 0 d. Redesignating paragraphs (e)(1)(ii) through (xxii) as (e)(1)(iii) through (xxiii), respectively; 0 e. In the note to newly redesignated paragraph (e)(1)(xvii), remove ``paragraph (e)(1)(xvi)'' and add ``paragraph (e)(1)(xvii)'' in its place; and 0 f. Adding a new paragraph (e)(1)(ii). The revision and additions read as follows: 52.212-5 Contract Terms and Conditions Required to Implement Statutes of Executive Orders--Commercial Items. * * * * * Contract Terms and Conditions Required to Implement Statutes or Executive Orders--Commercial Items (JAN 2017) * * * * * (a) * * * (1) 52.203-19, Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements (JAN 2017) (section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions)). * * * * * (e) * * * (1) * * * (ii) 52.203-19, Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements (JAN 2017) (section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions)). * * * * * 0 10. Amend section 52.213-4-- 0 a. Revising the date of the clause; 0 b. Redesignating paragraphs (a)(1)(i) through (vi) as (a)(1)(ii) through (vii), respectively; 0 c. Adding a new paragraph (a)(1)(i); and 0 d. Revising paragraph (a)(2)(viii). The revisions and addition reads as follows: 52.213-4 Terms and Conditions-simplified Acquisitions (Other Than Commercial Items). * * * * * Terms and Conditions--Simplified Acquisitions (Other Than Commercial Items) (JAN 2017) (a) * * * (1) * * * (i) 52.203-19, Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements (JAN 2017) (section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions)). * * * * * (2) * * * [[Page 4724]] (viii) 52.244-6, Subcontracts for Commercial Items (JAN 2017). * * * * * 0 11. Amend section 52.244-6 by-- 0 a. Revising the date of the clause; 0 b. Redesignating paragraphs (c)(1)(iii) through (xix) as paragraphs (c)(1)(iv) through (c)(1)(xx); 0 c. In the note to newly redesignated paragraph (c)(1)(xiv), remove ``paragraph (c)(1)(xiii)'' and add ``paragraph (c)(1)(xiv)'' in its place; and 0 d. Adding a new paragraph (c)(1)(iii). The revision and addition reads as follows: 52.244-6 Subcontracts for Commercial Items. * * * * * Subcontracts for Commercial Items (JAN 2017) * * * * * (c) * * * (1) * * * (iii) 52.203-19, Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements (JAN 2017). * * * * * [FR Doc. 2016-31497 Filed 1-12-17; 8:45 am] BILLING CODE 6820-EP-P
![Federal Register / Vol. 82, No. 9 / Friday, January 13, 2017 / Rules and Regulations 4717
2015. Between $1 million and the increase to PART 19—SMALL BUSINESS the Regulatory Secretariat Division at
$1.5 million, 56 total awards were made of PROGRAMS 202–501–4755. Please cite FAC 2005–
which 10 or 17 percent were to small 95, FAR Case 2015–012.
businesses in FY 2014, and 29 total awards 19.203 [Amended] SUPPLEMENTARY INFORMATION:
were made of which 9 or 31 percent were to ■ 4. Amend section 19.203 by removing
small businesses in FY 2015. I. Background
from paragraph (b) ‘‘$300,000’’ and
The final rule imposes no reporting, adding ‘‘$750,000’’ in its place. DoD, GSA, and NASA published a
recordkeeping, or other information proposed rule in the Federal Register at
collection requirements. 19.502–2 [Amended] 81 FR 3763 on January 22, 2016, to
There are no known significant alternatives ■ 5. Amend section 19.502–2 by implement section 743 of Division E,
to the rule. The impact of this final rule on removing from paragraph (a) ‘‘$300,000’’ Title VII, of the Consolidated and
small business is not expected to be and adding ‘‘$750,000’’ in its place. Further Continuing Appropriations Act,
significant. 2015 (Pub. L. 113–235) and its successor
[FR Doc. 2016–31496 Filed 1–12–17; 8:45 am]
provisions in subsequent appropriations
Interested parties may obtain a copy BILLING CODE 6820–EP–P
acts (and as extended in continuing
of the FRFA from the Regulatory resolutions) (i.e., section 743 of Division
Secretariat. The Regulatory Secretariat E of Pub. L. 114–113). Section 743
Division has submitted a copy of the DEPARTMENT OF DEFENSE
prohibits the use of funds appropriated
FRFA to the Chief Counsel for Advocacy or otherwise made available by Division
GENERAL SERVICES
of the Small Business Administration. ADMINISTRATION E or any other Act for a contract, grant,
V. Paperwork Reduction Act or cooperative agreement with an entity
NATIONAL AERONAUTICS AND that requires employees or
The rule does not contain any SPACE ADMINISTRATION subcontractors of such entity seeking to
information collection requirements that report waste, fraud, or abuse to sign
require the approval of the Office of 48 CFR Parts 3, 4, and 52 internal confidentiality agreements or
Management and Budget under the statements prohibiting or otherwise
[FAC 2005–95; FAR Case 2015–012; Item
Paperwork Reduction Act (44 U.S.C. restricting such employees or
III; Docket No. 2015–0012, Sequence No.
chapter 35). 1] subcontractors from lawfully reporting
such waste, fraud, or abuse to a
List of Subjects in 48 CFR Parts 2, 13, RIN 9000–AN04 designated investigative or law
and 19 enforcement representative of a Federal
Federal Acquisition Regulation; department or agency authorized to
Government procurement. Contractor Employee Internal receive such information.
Dated: December 21, 2016. Confidentiality Agreements or Four respondents submitted
William F. Clark, Statements comments on the interim rule.
Director, Office of Government-wide AGENCY: Department of Defense (DoD), II. Discussion and Analysis
Acquisition Policy, Office of Acquisition General Services Administration (GSA),
Policy, Office of Government-wide Policy. The Civilian Agency Acquisition
and National Aeronautics and Space
Council and the Defense Acquisition
Administration (NASA).
Therefore, DoD, GSA, and NASA Regulations Council (the Councils)
amend 48 CFR parts 2, 13, and 19 as set ACTION: Final rule. reviewed the public comments in the
forth below: SUMMARY: DoD, GSA, and NASA are development of the final rule. A
issuing a final rule amending the discussion of the comments and the
■ 1. The authority citation for 48 CFR
Federal Acquisition Regulation (FAR) to changes made to the rule as a result of
parts 2, 13, and 19 continues to read as
implement a section of the Consolidated those comments are provided as
follows:
and Further Continuing Appropriations follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C.
Act, 2015, that prohibits the use of A. Summary of Significant Changes
chapter 137; and 51 U.S.C. 20113.
funds, appropriated or otherwise made From the Proposed Rule
PART 2—DEFINITIONS WORDS AND available, for a contract with an entity
The following significant changes are
that requires employees or
TERMS included in the final rule:
subcontractors to sign an internal • Adds definitions of ‘‘internal
2.101 [Amended] confidentiality agreement that restricts confidentiality agreement or statement,’’
such employees or subcontractors from ‘‘subcontract,’’ and ‘‘subcontractor’’
■ 2. Amend section 2.101, in paragraph lawfully reporting waste, fraud, or abuse (FAR 3.901, 52.203–18(a), and 52.203–
(b)(2), in the definition ‘‘Simplified to a designated Government 19(a)).
acquisition threshold’’ by removing representative authorized to receive • Clarifies that the representation
from paragraphs (1)(i) and (ii) such information. applies to future internal confidentiality
‘‘$300,000’’ and ‘‘$1 million’’ and DATES: Effective: January 19, 2017. agreements or statements that restrict
adding ‘‘$750,000’’ and ‘‘$1.5 million’’ Applicability: This rule applies to all reporting of waste, fraud, or abuse
in their places, respectively. solicitations and contracts, using fiscal related to the performance of a
asabaliauskas on DSK3SPTVN1PROD with RULES
year 2015 or subsequent fiscal year Government contract, and specifically
PART 13—SIMPLIFIED ACQUISITION funds that do not already contain a cites the agency Office of the Inspector
PROCEDURES comparable provision/clause. General as a designated investigative or
13.003 [Amended] FOR FURTHER INFORMATION CONTACT: Ms. law enforcement representative of a
Cecelia L. Davis, Procurement Analyst, Federal department or agency
■ 3. Amend section 13.003 by removing at 202–219–0202 for clarification of authorized to receive such information
from paragraph (b)(1) ‘‘$300,000’’ and content. For information pertaining to (FAR 3.909–2, 52.203–18(d), 52.203–
adding ‘‘$750,000’’ in its place. status or publication schedules, contact 19(b), and 52.212–3(s)(3)).
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![Federal Register / Vol. 82, No. 9 / Friday, January 13, 2017 / Rules and Regulations 4719
directly performing work on a Federal The same change is also incorporated in the clauses to acknowledge the ability of
contract. the associated provision and clause. contractors to protect this information.
Response: The definition of Comment: Another respondent Response: Information that is reported
‘‘subcontractor’’ limits the applicability recommended that the rule should more to the agency Office of the Inspector
of the rule to subcontracts under the precisely identify the ‘‘designated General is protected from further
Government contract. However, the investigative or law enforcement disclosure outside of the Government,
statute focuses on reporting of waste, representative of a Federal department respecting all markings on any data or
fraud, and abuse related to the or agency authorized to receive such confidential information that is
performance of a Government contract. information.’’ The respondent received.
It is very possible that employees of the recommended that clarification would
contractor not directly employed on the 9. Safe Harbor
avoid creating a situation such as where
Government contract may have the report is inadvertently made to the Comment: One respondent requested
information to report relating to waste, wrong agency, or to entities that have no examples of or guidance about
fraud, or abuse on such contract. responsibility for the procurement. confidentiality agreements or statements
Therefore, the prohibition applies to all Response: The purpose of the quoted that would help contractors comply.
employees of the contractor, whether or phrase is to eliminate protection for The respondent recommended that the
not they are directly employed on the disclosures to unauthorized people. The rule should include definitive guidance
Government contract. final rule has been amended to add as to language to be included in a
5. Timeframe of Representation ‘‘(e.g., agency Office of the Inspector confidentiality statement or agreement
General)’’ at the end of FAR 52.203– that would comply with the
One respondent recommended that requirements of the statute. The
18(d) and 52.203–19(b).
the representation be revised to provide respondent suggested the following:
Comment: One respondent was
for prospective applicability. ‘‘Neither the confidentiality provision
Retrospective representation would concerned that the proposed rule does
not apply to disclosures made to contained in the lll [insert title of
require offerors to locate and review all
Congress. agreement, statement, policy], nor
of its employee and subcontract
Response: Other statutes cover confidentiality provisions contained in
agreements, which could be a time-
disclosures to Congress (see e.g., the any existing employment or contract
consuming and costly task. The
whistleblower rights at FAR 3.907 and with lll [insert name of contractor]
respondent recommended that the rule
3.908). This statute does not address shall be construed to prohibit or
be revised to require offerors to
disclosure to Congress. otherwise restrict you, as an employee
represent that ‘‘they have no such
or {sub}contractor of lll [insert
agreements in place with regard to 7. Notice Requirements name of contractor] from lawfully
current employees and current
Comment: One respondent reporting waste, fraud, or abuse to a
subcontracts used for performance of
recommended that the preamble be designated investigative or law
government contracts and it agrees that
amended to validate more flexible forms enforcement representative of a federal
it will not enter into any new
of notification, other than email, that department or agency authorized to
confidentiality agreements or statements
could be selected by the contractor/ receive such information under the
that include prohibited limitations on
offeror. procurement.’’
reporting.’’
Response: The rule does not require Response: The rule does not specify Response: Although the Councils do
retrospective representation. It allows how the notification is to be made. The not consider it appropriate to prescribe
contractors to make a blanket notice of preamble to the proposed rule only used specific language in the regulations, the
nonenforcement (FAR 52.203–19(b)). email as an example, stating that ‘‘This language provided by the respondent is
The respondent’s proposed wording notice could be accomplished through provided in full text in the preamble.
requiring contractors to represent they normal business communication The Councils concur that the sample
have no such agreements in place with channels, such as email.’’ contains appropriate language that
current employees or subcontractors could be included in an internal
8. Protection of Controlled Unclassified confidentiality agreement or statement,
appears more burdensome that the Information
current rule. However, the and could be tailored for use in the
representation has been modified to Comment: One respondent notice required by FAR 52.203–19(c).
accept the latter part of the recommended that the rule should
10. Applicability to Contracts Valued at
recommendation, changing it to read address the interplay with procedures
or Below the Simplified Acquisition
that the offeror ‘‘will not require its for handling controlled unclassified
Threshold (SAT) and for the Acquisition
employees or subcontractors’’ to sign information. An employee or
of Commercial Items
such internal confidentiality agreements subcontractor who wished to report
or statements. fraud, waste, or abuse, should still be Comment: One respondent was
responsible for the proper protection pleased that the rule also applies to
6. Reporting and handling of controlled unclassified contracts and subcontracts for
Comment: One respondent information. When an agency has a acquisitions in amounts not greater than
recommended that the FAR clause be reason to limit the reporting of waste, the simplified acquisition threshold,
modified so that the scope of the fraud, or abuse to a limited chain of and to contracts and subcontracts for the
asabaliauskas on DSK3SPTVN1PROD with RULES
reporting is limited to waste, fraud, and individuals, the rule should be revised acquisition of commercial items,
abuse related to the execution of to respect those limits. including commercially available off-
Government contracts. Another respondent stated concern the-shelf (COTS) items.
Response: The final rule has been that the rule does not acknowledge that Response: Noted.
amended at FAR 3.909–2 to specify that contractors have a legitimate interest in Comment: Another respondent
the policy applies to the reporting of protecting their privileged and recommended that the rule be revised to
waste, fraud, or abuse related to the confidential information. The exclude contracts for commercial items,
performance of a Government contract. respondent recommended a change to including COTS items, and purchases
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![4724 Federal Register / Vol. 82, No. 9 / Friday, January 13, 2017 / Rules and Regulations
(viii) 52.244–6, Subcontracts for Analyst, at 703–605–2868, or by email 2. Potential Conflict With Other
Commercial Items (JAN 2017). at mahruba.uddowla@gsa.gov, for Statutorily Mandated Socioeconomic
* * * * * clarification of content. For information Programs
■ 11. Amend section 52.244–6 by—
pertaining to status or publication
schedules, contact the Regulatory Comment: Two respondents
■ a. Revising the date of the clause; expressed concern that the proposed
■ b. Redesignating paragraphs (c)(1)(iii)
Secretariat Division at 202–501–4755.
Please cite FAC 2005–95, FAR Case language at FAR 19.815 appeared to be
through (xix) as paragraphs (c)(1)(iv) in conflict with other socioeconomic
through (c)(1)(xx); 2012–022.
SUPPLEMENTARY INFORMATION:
programs, such as the Javits-Wagner-
■ c. In the note to newly redesignated O’Day (JWOD) Act (now codified at 41
paragraph (c)(1)(xiv), remove I. Background U.S.C. chapter 85). The proposed rule at
‘‘paragraph (c)(1)(xiii)’’ and add FAR section 19.815, Release for non-8(a)
DoD, GSA, and NASA published a
‘‘paragraph (c)(1)(xiv)’’ in its place; and procurement, implies that the SBA
proposed rule in the Federal Register at
■ d. Adding a new paragraph (c)(1)(iii).
79 FR 6135 on February 3, 2014, Associate Administrator for Business
The revision and addition reads as Development will only consider
soliciting public comments regarding
follows: releasing requirements from the 8(a)
the implementation of regulatory
52.244–6 Subcontracts for Commercial clarifications made by the Small program when there are assurances that
Items. Business Administration (SBA) under the requirement will be procured under
* * * * * section 8(a) of the Small Business Act another small business program.
(15 U.S.C. 637(a)). The proposed rule However, the proposed rule does not
Subcontracts for Commercial Items provided additional guidance for the mention that another reason a
(JAN 2017) evaluation, offering, and acceptance requirement must be released is when it
* * * * * process; procedures for releasing a can be procured under a statutory
(c) * * * requirement for non-8(a) procurement; authority other than the Small Business
(1) * * * and information on the effect exiting the Act. For example, if the requirement has
(iii) 52.203–19, Prohibition on 8(a) program will have on its current been placed on the Procurement List by
Requiring Certain Internal contractual obligations and the firm’s the Committee for Purchase from People
Confidentiality Agreements or ability to receive new 8(a) requirements. Who are Blind or Severely Disabled
Statements (JAN 2017). Six respondents submitted comments (AbilityOne), it must, by law, be
* * * * * on the proposed rule. procured under JWOD, using the
[FR Doc. 2016–31497 Filed 1–12–17; 8:45 am] procedures at FAR subpart 8.7. These
II. Discussion and Analysis
BILLING CODE 6820–EP–P
respondents asked for further
The Civilian Agency Acquisition clarification of this point in the FAR.
Council and the Defense Acquisition
Response: The purpose of FAR 19.815
DEPARTMENT OF DEFENSE Regulations Council (the Councils)
is to clarify that the contracting officer
reviewed the comments in the
must submit a formal request to the SBA
GENERAL SERVICES development of the final rule. A
Associate Administrator for the release
ADMINISTRATION discussion of the comments is provided.
of a requirement that is currently
A. Summary of Significant Changes accepted into the 8(a) program, if he or
NATIONAL AERONAUTICS AND she intends to procure the item from a
SPACE ADMINISTRATION The final rule contains revisions to
the language at FAR 19.804–6(a) to non-8(a) source. It further clarifies the
clarify that offers and acceptances are factors SBA will take into consideration
48 CFR Parts 5, 6, 18, 19 and 52 when determining whether to release
required for individual orders under
[FAC 2005–95; FAR Case 2012–022; Item multiple-award contracts that were not the requirement from the 8(a) program.
IV; Docket No. 2012–0022, Sequence No. set aside for competition among 8(a) This clarification does not conflict or
1] contractors. The final rule also revises eliminate an agency’s obligation to
RIN 9000–AM68 the language at FAR 19.814(a) to follow the procedures at FAR 8.002,
indicate that the SBA Inspector General Priorities for use of mandatory
Federal Acquisition Regulation; can request a formal size determination. Government sources, and FAR 8.003,
Contracts Under the Small Business In addition, the final rule revises the Use of other mandatory sources. As
Administration 8(a) Program language at FAR 19.815 regarding the stated in these sections of the FAR, an
release of requirements from the 8(a) agency may consider satisfying its
AGENCY: Department of Defense (DoD), program. Language has been added to requirement(s) through a commercial
General Services Administration (GSA), clarify that any follow-on 8(a) source, such as a small business, only
and National Aeronautics and Space requirement shall remain in the 8(a) after it has exhausted the possibility of
Administration (NASA). program unless there is a mandatory fulfilling its requirement through one of
ACTION: Final rule. source for the requirement pursuant to the mandatory sources identified in
FAR 8.002 or 8.003 or SBA agrees to FAR 8.002 or 8.003. However, new
SUMMARY: DoD, GSA, and NASA are release the requirement for procurement
issuing a final rule amending the language has been added at FAR
outside the 8(a) program. 19.815(a) and (b), to clarify that a
Federal Acquisition Regulation (FAR) to
asabaliauskas on DSK3SPTVN1PROD with RULES
implement regulatory clarifications B. Analysis of Public Comments requirement accepted into the 8(a)
made by the Small Business program shall remain in the 8(a)
1. Support Proposed Changes program unless the requirement can be
Administration regarding the 8(a)
program. Comment: One respondent stated satisfied through one of the mandatory
support for the changes made in the sources listed at FAR 8.002 or 8.003 or
DATES: Effective: January 13, 2017. proposed rule. the SBA Associate Administrator for
FOR FURTHER INFORMATION CONTACT: Ms. Response: The Councils acknowledge Business Development agrees to release
Mahruba Uddowla, Procurement receipt of this comment. it.
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Document Created: 2017-01-13 02:45:09
Document Modified: 2017-01-13 02:45:09
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | Effective: January 19, 2017. | |
| Contact | Ms. Cecelia L. Davis, Procurement Analyst, at 202-219-0202 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755. Please cite FAC 2005-95, FAR Case 2015-012. | |
| FR Citation | 82 FR 4717 | |
| RIN Number | 9000-AN04 | |
| CFR Citation | 48
CFR
3 48 CFR 4 48 CFR 52 |
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