83 FR 31037 - OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)

OFFICE OF MANAGEMENT AND BUDGET

Federal Register Volume 83, Issue 128 (July 3, 2018)

The Office of Management and Budget (OMB) is amending the OMB guidance to agencies on governmentwide nonprocurement debarment and suspension (nonprocurement) to implement a section of the National Defense Authorization Act for Fiscal Year 2017 (NDAA) that prohibits awards to persons or entities involved in activities that violate arms control treaties or agreements with the United States. The NDAA requires revision of these OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. To fully implement the NDAA requirement necessitates revision of OMB Guidelines to agencies on Governmentwide Debarment and Suspension (Nonprocurement).

[Federal Register Volume 83, Number 128 (Tuesday, July 3, 2018)]
[Rules and Regulations]
[Pages 31037-31038]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-14279]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Rules 
and Regulations

[[Page 31037]]



OFFICE OF MANAGEMENT AND BUDGET

2 CFR Part 180


OMB Guidelines to Agencies on Governmentwide Debarment and 
Suspension (Nonprocurement)

AGENCY: Office of Management and Budget.

ACTION: Interim final action.

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SUMMARY: The Office of Management and Budget (OMB) is amending the OMB 
guidance to agencies on governmentwide nonprocurement debarment and 
suspension (nonprocurement) to implement a section of the National 
Defense Authorization Act for Fiscal Year 2017 (NDAA) that prohibits 
awards to persons or entities involved in activities that violate arms 
control treaties or agreements with the United States. The NDAA 
requires revision of these OMB's Uniform Administrative Requirements, 
Cost Principles, and Audit Requirements for Federal Awards. To fully 
implement the NDAA requirement necessitates revision of OMB Guidelines 
to agencies on Governmentwide Debarment and Suspension 
(Nonprocurement).

DATES: 
    Effective date: July 3, 2018.
    Comments due date: Interested parties should submit comments 
electronically to www.regulations.gov on or before September 4, 2018 to 
be considered in the formation of the final guidance.

ADDRESSES: Comments on this interim action must be submitted 
electronically before the comment closing date to www.regulations.gov. 
In submitting comments, please search for recent submissions by OMB to 
find docket OMB-2018-0001. The public comments received by OMB will be 
a matter of public record and will be posted at www.regulations.gov. 
Accordingly, please do not include in your comments any confidential 
business information or information of a personal-privacy nature. If 
you send an email comment, your email address will be automatically 
captured and included as part of the comment that is placed in the 
public docket. Please note that responses to this public comment 
request containing any routine notice about the confidentiality of the 
communication will be treated as public comments notwithstanding the 
inclusion of the routine notice.

FOR FURTHER INFORMATION CONTACT: Gil Tran, OMB, Office of Federal 
Financial Management at 202-395-3052 or [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The System for Award Management (SAM) Exclusions is a list of 
persons and entities ineligible for Federal awards. Currently, Federal 
awarding agencies are required to check the list before making Federal 
awards to determine whether the person or entity is excluded, debarred, 
suspended, or otherwise prohibited from receiving Federal awards. If 
the person or entity is identified as prohibited from receiving Federal 
awards, Federal awarding agencies cannot make the award unless the 
Federal agency head or designee allows an exception consistent with 
existing law. This requirement flows down to Federal award recipients, 
who are required to check SAM Exclusions for all subawards and 
contracts equal to or exceeding $25,000. However, these requirements do 
not currently apply to a limited number of Federal awards given to 
certain types of foreign entities. The purpose of this interim action 
is to amend OMB Guidelines to agencies on Governmentwide Debarment and 
Suspension (Nonprocurement) to extend these requirements of potential 
Federal awards to persons, entities, or organizations that have engaged 
in any activity that contributed to or is a significant factor in a 
country's non-compliance with its obligations under arms control, 
nonproliferation, or disarmament agreements or commitments with the 
United States.
    Pursuant to 22 U.S.C. 2593e(a)(1), the Secretary of the Treasury is 
required to submit to the appropriate Congressional committees a 
report, consistent with the protection of intelligence sources and 
methods, identifying every person with respect to whom there is 
credible information indicating that the person is an individual who is 
a citizen, national, or permanent resident of, or an entity organized 
under the laws of, a noncompliant country as described in 22 U.S.C. 
2593e(a)(2); and has engaged in any activity that contributed to or is 
a significant factor in the President's or the Secretary of State's 
determination that such country is noncompliant.
    The Secretary of the Treasury also identifies any person or entity 
that has provided material support for such noncompliance to a person 
or entity engaged in the noncompliant activities. The Secretary of 
Treasury posts this information, as appropriate and consistent with the 
protection of intelligence sources and methods, as an exclusion record 
in the SAM database. If the person or entity is on the SAM Exclusions 
list, the person or entity may not receive Federal awards and awards 
may not be renewed or extended.
    With respect to each person or entity identified by the Secretary 
of the Treasury as having provided material support, the NDAA calls for 
the imposition of certain measures. Specifically, section 1290(c)(1) 
requires that the head of any executive agency may not enter into, 
renew, or extend a contract for the procurement of goods or services 
with such person or entity. Furthermore, section 1290(c)(3) directs 
that the Federal Acquisition Regulation (FAR), the Defense Federal 
Acquisition Regulation Supplement, and the Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards be revised accordingly to implement the NDAA requirement. The 
revisions to the FAR were published in the Federal Register on June 15, 
2018 (83 FR 28145, FAR Case 2017-018). This action amends 2 CFR 180.215 
to implement section 1290 of the NDAA.

Discussion and Analysis

    This action amends 2 CFR part 180 to ensure that entities who have 
engaged in activity that contributed to or is a significant factor in a 
country's non-compliance with its obligations under arms control, 
nonproliferation or disarmament agreements or commitments with the 
United States are restricted from receiving non-procurement and 
procurement transactions. Currently, 2 CFR part 180

[[Page 31038]]

restricts Federal awards that are considered covered transactions to 
persons or entities that are listed in SAM Exclusions and these 
requirements flow down to all covered transactions, including: (1) All 
nonprocurement subawards; and (2) contracts that equal or exceed 
$25,000. However, 2 CFR 180.215 provides specific exceptions from what 
are considered covered transactions, including awards to certain types 
of foreign entities. This action revises 2 CFR 180.215 to define 
``covered transactions'' to include direct awards, regardless of tier 
or amount for non-procurement and procurement transaction, to exempt 
foreign persons, entities and organizations if such persons, entities, 
or organizations have engaged in any activity that contributed to or is 
a significant factor in a country's non-compliance with its obligations 
under arms control, nonproliferation or disarmament agreements or 
commitments with the United States.

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 not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of E.O. 12866. In addition, this 
action is not a major rule under 5 U.S.C. 804.

Executive Order 13771

    This action is not an E.O. 13771 regulatory action because it is 
not significant under E.O. 12866.

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., requires 
that an agency provide a final regulatory flexibility analysis or 
certify that the rule will not have a significant economic impact on a 
substantial number of small entities. OMB does not expect this interim 
action to have a significant economic impact on a substantial number of 
small entities within the meaning of the Regulatory Flexibility Act.
    This interim action implements the provisions of section 1290 of 
the NDAA and will not have a significant economic impact on a 
substantial number of small entities because it will affect only a 
small number of Federal awards that are currently excluded from the 
definition of covered transactions. Currently, the vast majority of 
Federal awards are subject to the 2 CFR part 180 provisions that apply 
to covered transactions.

Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 2 
CFR part 180 do not impose incremental recordkeeping or information 
collection requirements, or the collection of information that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

Determination To Issue Interim Action

    As this regulatory action involves a matter relating to Federal 
awards, it is not subject to the public procedure requirements of the 
informal rulemaking provisions of the Administrative Procedure Act. See 
5 U.S.C. 553(a)(2). Nevertheless, OMB is voluntarily seeking comment to 
be considered in the formation of the final action.

List of Subjects in 2 CFR Part 180

    Administrative practice and procedure, Debarment and suspension, 
Grant programs, Reporting and recordkeeping requirements.

Timothy F. Soltis,
Deputy Controller.

    For the reasons stated in the preamble, the Office of Management 
and Budget amends 2 CFR part 180, as set forth below:

PART 180--OMB GUIDELINES TO AGENCIES ON GOVERNMENTWIDE DEBARMENT 
AND SUSPENSION (NONPROCUREMENT)

0
1. The authority citation for part 180 is revised to read as follows:

    Authority: Pub. L. 109-282; 31 U.S.C. 6102, Sec. 2455, Pub. L. 
103-355, 108 Stat. 3327; E.O. 12549, 3 CFR, 1986 Comp., p. 189; E.O. 
12689, 3 CFR, 1989 Comp., p. 235.


0
2. In Sec.  180. 215, add paragraph (h) to read as follows:


Sec.  180. 215  Which nonprocurement transactions are not covered 
transactions?

* * * * *
    (h) Notwithstanding paragraph (a) of this section, covered 
transactions must include non-procurement and procurement transactions 
involving entities engaged in activity that contributed to or is a 
significant factor in a country's non-compliance with its obligations 
under arms control, nonproliferation or disarmament agreements or 
commitments with the United States. Federal awarding agencies and 
primary tier non-procurement recipients must not award, renew, or 
extend a non-procurement transaction or procurement transaction, 
regardless of amount or tier, with any entity listed in the System for 
Award Management Exclusions List on the basis of involvement in 
activities that violate arms control, nonproliferation or disarmament 
agreements or commitments with the United States, pursuant to section 
1290 of the National Defense Authorization Act for Fiscal Year 2017, 
unless the head of a Federal agency grants an exception pursuant to 2 
CFR 180.135 with the concurrence of the OMB Director.

[FR Doc. 2018-14279 Filed 6-29-18; 8:45 am]
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