[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]

[Rules and Regulations]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2016-31494]

Vol. 82

Friday,

No. 9

January 13, 2017

Part V

Department of Defense

General Services Administration

National Aeronautics and Space Administration

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48 CFR Chapter 1

Federal Acquisition Regulation; Federal Acquisition Circular 2005-95; Introduction; Uniform Use of Line Items; Acquisition Threshold for Special Emergency Procurement Authority; Contractor Employee Internal Confidentiality Agreements or Statements; Contracts Under the Small Business Administration 8(a) Program; Prohibition on Reimbursement for Congressional Investigations and Inquiries; and Federal Acquisition Circular 2005-95; Small Entity Compliance Guide; Final Rules

Federal Register / Vol. 82 , No. 9 / Friday, January 13, 2017 / Rules and Regulations

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

[Docket No. FAR 2016-0051, Sequence No. 9]

Federal Acquisition Regulation; Federal Acquisition Circular 2005-95; Introduction

AGENCY: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Summary presentation of final rules.

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SUMMARY: This document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) in this Federal Acquisition Circular (FAC) 2005-95. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, is available via the Internet at http://www.regulations.gov.

DATES: For effective dates see the separate documents, which follow.

FOR FURTHER INFORMATION CONTACT: The analyst whose name appears in the table below in relation to the FAR case. Please cite FAC 2005-95 and the specific FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755.

Rules Listed in FAC 2005-95

Item

Subject

FAR Case

Analyst

I

Uniform Use of Line Items

2013-014

Francis.

II

Acquisition Threshold for Special Emergency Procurement Authority.

2016-004

Francis.

III

Contractor Employee Internal Confidentiality Agreements or Statements.

2015-012

Davis.

IV

Contracts Under the Small Business Administration 8(a) Program.

2012-022

Uddowla.

V

Prohibition on Reimbursement for Congressional Investigations and Inquiries.

2015-016

Delgado.

SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these rules, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005-95 amends the FAR as follows:

Item I--Uniform Use of Line Items (FAR Case 2013-014)

This final rule amends the FAR to establish standards for the uniform use of line items in Federal procurement. These standards are designed to improve the accuracy, traceability, and usability of procurement data. The implementation of these standards will facilitate the identification and traceability of spending from appropriation through expenditure, supporting automated collection of information using key identifiers. The implementation date for FAR 4.1002 through 4.1008 will be October 1, 2019.

The requirements in the rule have the potential to impact any entity, small or large, that does business with the Federal Government because the proposed rule would apply to purchases of items, including commercial items and commercially available off-the-shelf items, and purchases under the simplified acquisition threshold. Any small business that contracts with a Federal agency could be impacted to at least some extent.

Item II--Acquisition Threshold for Special Emergency Procurement Authority (FAR Case 2016-004)

This final rule amends the FAR by increasing the simplified acquisition threshold (SAT) for special emergency procurement authority from $300,000 to $750,000 (within the United States) and from $1 million to $1.5 million (outside the United States) for acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack. This change implements Section 816 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92). This rule provides contracting officers with more flexibility when contracting in support of contingency operations.

The rule is not anticipated to have a significant economic impact on small business entities, because the rule raises the SAT for special emergency procurements, an arena in which a smaller percentage of small businesses participate, as compared to larger businesses. This final rule does not place any new requirements on small entities.

Item III--Contractor Employee Internal Confidentiality Agreements or Statements (FAR Case 2015-012)

This final rule revises the FAR to implement 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. Section 743 prohibits the use of funds appropriated or otherwise made available by Division E or any other act, for a contract with an entity that requires employees and subcontractors of such entity to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors 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 (e.g., agency office of the Inspector General). This rule is not expected to have a significant impact on small entities contracting with the Government.

Item IV--Contracts Under the Small Business Administration 8(a) Program (FAR Case 2012-022)

This final rule amends the Federal Acquisition Regulation (FAR) to implement clarifications made by the Small Business Administration in its final rule, which published in the Federal Register at 76 FR 8222 on February 11, 2011. This final rule clarifies in the FAR the procedures and requirements used when contracting under the 8(a) program. Clarifications include the evaluation, offering, and acceptance process, procedures for acquiring SBA's consent to procure an 8(a) requirement outside the 8(a) program, and the impact of exiting the 8(a) program in terms of the firm's ability to receive future 8(a) requirements and its current contractual commitments.

This final rule does not place any new requirements, financial or otherwise, on small entities, and serves mainly to provide more explicit guidance to Federal contracting officials.

Item V--Prohibition on Reimbursement for Congressional Investigations and Inquiries (FAR Case 2015-016)

This rule amends the FAR to implement section 857 of the Carl Levin and Howard P. `Buck' McKeon National Defense Authorization Act for Fiscal Year 2015. Section 857 imposes additional requirements relative to the allowability of costs incurred by a contractor in connection with a congressional investigation or inquiry. Contracting officers need to be aware of these new restrictions on certain costs, which cannot be charged under contracts. Although small businesses subject to FAR part 31 will need to maintain accounting records, this rule does not place any new requirements on small entities.

Dated: December 21, 2016.

William F. Clark,

Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy.

Federal Acquisition Circular (FAC) 2005-95 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration.

Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2005-95 is effective January 13, 2017 except for item III, which is effective January 19, 2017.

Dated: December 21, 2016.

Claire M. Grady,

Director, Defense Procurement and Acquisition Policy.

Dated: December 21, 2016.

William F. Clark,

Acting, Senior Procurement Executive, Office of Acquisition Policy, U.S. General Services Administration.

Dated: December 19, 2016.

William P. McNally,

Assistant Administrator, Office of Procurement National Aeronautics and Space Administration.

[FR Doc. 2016-31494 Filed 1-12-17; 8:45 am]

BILLING CODE 6820-EP-P

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[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]

[Rules and Regulations]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2016-31495]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 3, 4, 5, 7, 8, 9, 12, 14, 15, 16, 17, 27, 32, 42, 48, 49, and 52

[FAC 2005-95; FAR Case 2013-014; Item I; Docket No. 2013-0014, Sequence No. 1]

RIN 9000-AM73

Federal Acquisition Regulation; Uniform Use of Line Items

AGENCY: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to establish uniform use of line items in Federal procurement.

DATES: Effective: January 13, 2017. In order to provide agencies with time to transition their information systems, agencies have until October 1, 2019, to apply the requirements of FAR 4.1002 through 4.1008 of subpart 4.10.

FOR FURTHER INFORMATION CONTACT: Ms. Camara Francis, Procurement Analyst, at 202-550-0935 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 2013-014.

SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published a proposed rule in the Federal Register at 79 FR 45408 on August 5, 2014, to establish uniform use of line items in Federal procurement. The uniform line item structure is designed to improve the accuracy, traceability, and usability of procurement data. The need for this rule stems from the lack of access to reliable and comprehensive data on Federal procurement actions that is essential to management and program decisions that result in delivering services to taxpayers in the most efficient and effective manner. Lack of standards for identifying and tracing tax dollars across the acquisition contributes to duplication in spending, gaps in reporting, and inefficiencies in management decisions. The implementation of these standards will facilitate the identification and traceability of spending from appropriation through expenditure, supporting automated collection of information using key identifiers. Three respondents submitted comments on the proposed 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

1. The rule provides agencies time to transition their information systems and appropriately train the workforce. Accordingly, agencies have until October 1, 2019, to apply the requirements of FAR 4.1002 through 4.1008 of subpart 4.10.

2. The term ``line item unique identifier'' was removed and replaced with ``line item number'' for consistency with the current version of the FAR text. The term ``unique'' is no longer necessary due to changes made by the Uniform Procurement Identification rule (FAR Case 2012-023) published in the Federal Register at 79 FR 61739 on October 14, 2014.

B. Analysis of Public Comments

1. Alternative Line Item Structure

Comment: One respondent suggested removing text that would allow offerors to propose their own alternative line item structure, because this would be counterproductive to the goal of standardized reporting.

Response: The language on alternative line items was intended to allow flexibility, consistent with the requirements at FAR subpart 4.10. To clarify that the Government is not requesting contractors to create line items inconsistent with the rule, the clause is renamed ``Alternative Line Item Proposal'' and the explanatory text will no longer use the term ``structure,'' as this seemed to be the cause of some confusion.

2. Accounting Classification Citation

Comment: One respondent asked if each subline item is expected to have its own accounting classification citation.

Response: It is not a requirement for each subline item to have its own accounting classification citation. However, each deliverable subline item is expected to have its own accounting classification citation. This should not be construed to mean that the same accounting classification citation cannot apply to multiple line items.

Comment: One respondent opined that a contract line item number or subline item number should not be created for the sole purpose of addressing an accounting classification, because this information is already tracked in financial systems. The respondent also questioned the specificity of the required accounting data on subline item numbers, because this data could not be gathered effectively through automated means.

Response: Only a deliverable subline item is expected to have its own accounting classification citation. While it is true that some Government systems are integrated to trace accounting classification citations to specific line items, this is not the case for all systems and this rule allows for linking accounting classification citations directly to line items in contract writing systems.

3. Exceptions

Comment: One respondent recommended adding exceptions to the text related to the requirement to include accounting classification citations on line items.

Response: There is no need for an exception to include accounting classification citations on line items, as this is not required, but is allowed. The text at FAR 4.1003(c) is modified to make it clear that multiple accounting classification citations can be provided on a line item.

4. Implementation

Comment: One respondent requested pushing the implementation date of the line item requirement further into the future, beyond October 1, 2016, due to the associated burden.

Response: The implementation date of this requirement for uniform line item use is now set for October 1, 2019.

5. Contract Milestone

Comment: One respondent inquired if a contact milestone will be considered a deliverable for the purpose of assigning contract line item numbers, based on the proposed definition of ``line item'' in FAR 2.101.

Response: Yes, a deliverable line item can be created for a contract milestone, but it is not required to be used for this purpose.6. Existing Systems

Comment: One respondent challenged the background of the case ``funding traceability is limited to contract-level information'' by pointing out that NASA has systems in place that can capture financial data with great detail, including units and prices, descriptions, and accounting line information.

Response: This may be the case for some existing systems; however, not all Government systems have these capabilities.

Comment: One respondent pointed out that accounting information is already collected in Federal Procurement Data System--Next Generation (FPDS-NG) for appropriated funds, and questioned the need to gather more explicit accounting information that would burden contractors with tracking Government accounting lines.

Response: FPDS-NG captures data related to the preponderance of the spending on a contract, not details on contract line items. This rule does not require contractors to track any new information.

7. Delete Text (FAR 4.1003 & 4.1005(a)(4))

Comment: One respondent suggested removing the proposed text at FAR 4.1003(c) and 4.1005-1(a)(4), because contractors do not need to be informed of Government accounting information and because this information is already available to the Government in accounting and contract reporting systems.

Response: While some Government systems are capable of tracing accounting data to specific line items through other means, most of them are not. The recommended text is not removed from the final rule.

8. Exhibit Line Item

Comment: One respondent asked if the FAR Council plans to address exhibit lines and formally define them as part of the Governmentwide initiative for standardized line item structures.

Response: No, not at this time.

9. Acronyms

Comment: One respondent asked if the FAR Council intends to minimize the use of acronyms, specifically CLIN, SLIN, and ELIN.

Response: The FAR currently does not use SLIN or ELIN. The instances where the FAR uses CLIN were removed by this rule. Accordingly, there is no intent to address the use of these acronyms in this rule.

10. Defense Federal Acquisition Regulation Supplement (DFARS)

Procedure, Guidance, and Information (PGI)

Comment: One respondent asked if there is a plan to incorporate the entire DFARS PGI in the FAR for Governmentwide use, beyond DoD.

Response: This is outside the scope of this rule.

C. Other Changes

1. The definition of ``line item'' is modified to clarify that this term is inclusive of subline items when it is applicable.

2. The term ``line item number'' is now defined to clarify that a line item may be identified in a numeric or alphanumeric format.

3. FAR 4.1003(c) and 4.1005-1(a)(4) are modified to note that multiple accounting classification citations can be provided on a single line item.

4. FAR 4.1004 is modified to clarify that the characteristics in 4.1003 apply to subline items that are deliverable but not informational subline items.

5. The requirement to include the national stock number or special item number at FAR 8.406-4(c)(3)(i)(C) is removed.

6. FAR 15.203(a)(2) is amended to clarify the process for allowing and evaluating proposals with alternative line item structures.

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. 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 final rule establishes uniform use of line items in Federal procurement. The uniform use of line items is designed to improve the accuracy, traceability, and usability of procurement data. This rule continues Federal procurement efforts to more robustly implement the objectives of the Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282), including promoting achievement of rigorous accountability of procurement dollars and processes.

The requirements in this rule have the potential to have an impact on any entity, small or large, that does business with the Federal Government, because the rule would apply to purchases of items, including commercial items and commercially available off-the-shelf items, and purchases under the simplified acquisition threshold. However, line item pricing is a common commercial practice; therefore, the impact may not be significant.

None of the public comments addressed the initial regulatory flexibility analysis.

Any small business that contracts with a Federal agency could be impacted to at least some extent. Using data from the Federal Procurement Data System, there were 107,172 such small entities in fiscal year (FY) 2010, 97,626 in FY 2011, 85,749 in FY 2012, and 73,987 in FY 2013 doing business with the Federal Government.

The rule could require some contractors to restructure their proposal pricing process as well as their systems to accommodate the line item identification system. This change may also require contractors to make changes to their pricing and electronic systems. Contractors may also have to develop more extensive pricing data to conform to a new line item structure. However, this consistent line item identification policy should be beneficial to contractors doing business with executive branch agencies. This is especially true if contractors already have contracts with the Department of Defense (DoD), because these identification standards are already in use. Accordingly, contractors that currently contract with DoD will not be impacted. There is no data at this time on cost impacts to contractors in making this change.

The rule contains no reporting, recordkeeping, or other compliance requirements on the vendor community.

DoD, GSA, and NASA have not identified any significant alternatives to accomplish the stated objectives of this rule that would reduce impact on small entities.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

V. 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 2, 3, 4, 5, 7, 8, 9, 12, 14, 15, 16, 17, 27, 32, 42, 48, 49, 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 2, 3, 4, 5, 7, 8, 9, 12, 14, 15, 16, 17, 27, 32, 42, 48, 49, and 52 as set forth below:

1. The authority citation for 48 CFR parts 2, 3, 4, 5, 7, 8, 9, 12, 14, 15, 16, 17, 27, 32, 42, 48, 49, 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 2--DEFINITION OF WORDS AND TERMS

2. Amend section 2.101 in paragraph (b)(2) by adding, in alphabetical order, the definitions ``Line item'', ``Line item number'', and ``Subline item'' to read as follows:

2.101 Definitions.

* * * * *

(b) * * *

(2) * * *

Line item means the basic structural element in a procurement instrument that describes and organizes the required product or service for pricing, delivery, inspection, acceptance, invoicing, and payment. The use of the term ``line item'' includes ``subline item,'' as applicable.

Line item number means either a numeric or alphanumeric format to identify a line item.

* * * * *

Subline item means a subset of a line item.

* * * * *

PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

3.302 [Amended]

3. Amend section 3.302 by removing the definition ``Line item''.

PART 4--ADMINISTRATIVE MATTERS

4. Revise subpart 4.10 to read as follows:

Subpart 4.10--Uniform Use of Line Items

Sec.

4.1000 Scope.

4.1001 Policy.

4.1002 Applicability.

4.1003 Establishing line items.

4.1004 Establishing subline items.

4.1005 Data elements for line items and subline items.

4.1005-1 Required data elements.

4.1005-2 Exceptions.

4.1006 Modifications.

4.1007 Solicitation alternative line item proposal.

4.1008 Solicitation provision.

SUBPART 4.10--Uniform Use of Line Items

4.1000 Scope.

This subpart prescribes policies and procedures for assigning line items and subline items and their identifiers. However, in order to provide agencies with time to transition their information systems, agencies have until October 1, 2019, to apply the requirements of 4.1002 through 4.1008.

4.1001 Policy.

In order to improve the accuracy, traceability, and usability of procurement data, procurement instruments shall identify the supplies or services to be acquired as separately identified line items and, as needed, subline items.

(a) Line items are established to define deliverables or organize information about deliverables. Each line item describes characteristics for the item purchased, e.g., pricing, delivery, and funding information.

(b) Each line item may be subdivided into separate unique subsets (called subline items) to ease administration. If a line item has deliverable subline items, the line item is informational. Subline items differentiate between or among certain characteristics of the line item, such as colors or sizes, dates of delivery, destinations, or places of performance. Subline items are established to define deliverables or organize information about deliverables.

4.1002 Applicability.

The policies of this subpart shall apply to the following procurement instruments, to include amendments, modifications, and change orders thereto:

(a) Solicitations.

(b) Contracts, including, but not limited to, Governmentwide acquisition contracts (GWACs), multi-agency contracts (MACs), Federal Supply Schedule (FSS) contracts, indefinite-delivery contracts, and purchase orders.

(c) Agreements that include pre-priced supplies or services.

(d) Task and delivery orders.

4.1003 Establishing line items.

Establish separate line items for deliverables that have the following characteristics except as provided at 4.1005-2:

(a) Separately identifiable.

(1) A supply is separately identifiable if it has its own identification (e.g., national stock number (NSN), item description, manufacturer's part number).

(2) Services are separately identifiable if they have no more than one statement of work or performance work statement.

(3) If the procurement instrument involves a first article (see subpart 9.3), establish a separate line item for each item requiring a separate approval. If the first article consists of a lot composed of a mixture of items that will be approved as a single lot, a single line item may be used.

(b) Single unit price or total price.

(c) Single accounting classification citation. A single deliverable may be funded by multiple accounting classifications when the deliverable effort cannot be otherwise subdivided.

(d) Separate delivery schedule, destination, period of performance, or place of performance.

(e) Single contract pricing type (e.g., fixed-price or cost-reimbursement).

4.1004 Establishing subline items.

Subline items may be used to facilitate tracking of performance, deliverables, payment, and contract funds accounting or for other management purposes. Subline items may be either deliverable or informational. The list of characteristics at 4.1003 applies to deliverable subline items, but it is not applicable to informational subline items. A line item with subline items shall contain only that information that is common to all subline items thereunder. All subline items under one line item shall be the same contract type as the line item.

(a) Deliverable subline items. Deliverable subline items may be used for several related items that require separate identification. For example, instead of establishing multiple separate line items, subline items may be established for--

(1) Items that are basically the same, except for minor variations such as--

(i) Size or color;

(ii) Accounting classification, but see also 4.1005-1(a)(4); or

(iii) Date of delivery, destination, or period or place of performance;

(2) Separately priced collateral functions that relate to the primary product, such as packaging and handling, or transportation; or

(3) Items to be separately identified at the time of shipment or performance.

(b) Informational subline items. (1) Informational subline items may be used by agencies for administrative purposes. This type of subline item identifies information that relates directly to the line item and is an integral part of it (e.g., parts of an assembly or parts of a kit).

(2) Position informational subline items within the line item description, not in the quantity or price fields.

4.1005 Data elements for line items and subline items.

4.1005-1 Required data elements.

(a) Except as provided in 4.1005-2, each line item or subline item shall include in the schedule (described at 12.303(b)(4), 14.201-2, or 15.204-2, or in a comparable section of the procurement instrument), at a minimum, the following information as separate, distinct data elements:

(1) Line item or subline item number established in accordance with agency procedures.

(2) Description of what is being purchased.

(3) Product or Service Code (PSC).

(4) Accounting classification citation.

(i) Line items or deliverable subline items. If multiple accounting classifications for a single deliverable apply, include the dollar amount for each accounting classification in the schedule (or a comparable section of the procurement instrument).

(ii) Informational subline items. An accounting classification citation is not required. (See 4.1004).

(5)(i) For fixed-price line items:

(A) Unit of measure.

(B) Quantity.

(C) Unit price.

(D) Total price.

(ii) For cost-reimbursement line items:

(A) Unit of measure.

(B) Quantity.

(C) Estimated cost.

(D) Fee (if any).

(E) Total estimated cost plus any fee.

(b) If a contract contains a combination of fixed-price, time-and-materials, labor-hour, or cost-reimbursable line items, identify the contract type for each line item in the schedule (or a comparable section of the procurement instrument) to facilitate payment.

(c) Each deliverable line item or deliverable subline item shall have its own delivery schedule, destination, period of performance, or place of performance expressly stated in the appropriate section of the procurement instrument (``as required'' constitutes an expressly stated delivery term). When a line item has deliverable subline items, the delivery schedule, destination, period of performance, or place of performance shall be identified at the subline item level, rather than the line item level.

(d) Terms and conditions in other sections of the contract (such as contract clauses or payment instructions) shall also specify applicability to individual line items if not applicable to the contract as a whole.

4.1005-2 Exceptions.

(a) Indefinite-delivery contracts--(1) General. The following required data elements are not known at time of issuance of an indefinite-delivery contract, but shall be provided in each order at the time of issuance: Accounting classification, delivery date and destination, or period and place of performance.

(2) Indefinite-delivery indefinite-quantity (IDIQ) and requirements contracts. IDIQ and requirements contracts may omit the quantity at the line item level for the base award provided that the total contract minimum and maximum, or the estimate, respectively, is stated.

(b) Item description and PSC. These data elements are not required in the line item if there are associated deliverable subline items that include the actual detailed identification. When this exception applies, use a general narrative description for the line item.

(c) Single unit price or single total price. The requirement for a single unit price or single total price at the line item level does not apply if any of the following conditions are present:

(1) There are associated deliverable subline items that are priced.

(2) The line item or subline item is not separately priced.

(3) The supplies or services are being acquired on a cost-reimbursement, time-and-materials, or labor-hour basis.

(4) The procurement instrument is for services and firm prices have been established for elements of the total price, but the actual number of the elements is not known until performance (e.g., a labor-hour contract for maintenance/repair). The contracting officer may structure these procurement instruments to reflect a firm or estimated total amount for each line item.

4.1006 Modifications.

(a) When a new item (such as an increased quantity) is added to the procurement instrument, assign a new line item number.

(b) If the modification relates to existing line items, the modification shall refer to those items.

4.1007 Solicitation alternative line item proposal.

Solicitations should be structured to allow offerors to propose alternative line items (see 4.1008 and 52.212-1(e)). For example, when soliciting certain items using units of measure such as kit, set, or lot, the offeror may not be able to group and deliver all items in a single shipment.

4.1008 Solicitation provision.

Insert the provision at 52.204-22, Alternative Line Item Proposal, in all solicitations.

PART 5--PUBLICIZING CONTRACT ACTIONS

5.207 [Amended]

5. Amend section 5.207 by removing from paragraph (a)(13) the word ``Contract''.

PART 7--ACQUISITION PLANNING

6. Amend section 7.105 by revising paragraph (b)(5)(iv) to read as follows:

7.105 Contents of written acquisition plans.

* * * * *

(b) * * *

(5) * * *

(iv) For each contract (and order) contemplated, discuss the strategy to transition to firm-fixed-price contracts to the maximum extent practicable. During the requirements development stage, consider structuring the contract requirements, i.e., line items, in a manner that will permit some, if not all, of the requirements to be awarded on a firm-fixed-price basis, either in the current contract, future option years, or follow-on contracts. This will facilitate an easier transition to a firm-fixed-price contract, because a cost history will be developed for a recurring definitive requirement.

* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

7. Amend section 8.402 by revising paragraph (f)(3) to read as follows:

8.402 General.

* * * * *

(f) * * *

(3) The items are clearly labeled on the order as items not on the Federal Supply Schedule and they conform to the rules for numbering line items at subpart 4.10; and

* * * * *

8. Amend section 8.404 by adding paragraph (j) to read as follows:

8.404 Use of Federal Supply Schedules.

* * * * *

(j) Line items. When placing orders or establishing BPAs, ordering activities shall reference the special item number and the corresponding line or subline item awarded (established per 4.1005) in the schedule. If an ordering activity contracting officer adds an item not on the Federal Supply Schedule in accordance with 8.402(f), establish a new line item in accordance with subpart 4.10.

9. Amend section 8.406-1 by--

a. Redesignating paragraphs (d)(8) through (16) as paragraphs (d)(9) through (17), respectively; and

b. Adding a new paragraph (d)(8).

The addition reads as follows:

8.406-1 Order placement.

* * * * *

(d) * * *

(8) Line item or subline item.

* * * * *

10. Amend section 8.406-4 by revising paragraph (c)(3)(i)(C) to read as follows:

8.406-4 Termination for cause.

* * * * *

(c) * * *

(3) * * *

(i) * * *

(C) Line item number(s) and a brief description of the item(s).

* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

9.307 [Amended]

11. Amend section 9.307 by removing from third sentence of paragraph (b) ``contract line item number'' and adding ``line item number'' in its place.

PART 12--ACQUISITION OF COMMERCIAL ITEMS

12.303 [Amended]

12. Amend section 12.303 by removing from paragraph (b)(3) the word ``contract''.

13. Amend section 12.603 by revising paragraph (c)(2)(v) to read as follows:

12.603 Streamlined solicitation for commercial items.

* * * * *

(c) * * *

(2) * * *

(v) A list of line item number(s) and items, quantities, and units of measure (including option(s), if applicable).

* * * * *

PART 14--SEALED BIDDING

14. Amend section 14.201--2 by revising the first sentence of paragraph

(b) to read as follows:

14.201-2 Part I--The Schedule.

* * * * *

(b) * * * Include a brief description of the supplies or services; e.g., line item number, national stock number/part number if applicable, title or name identifying the supplies or services, and quantities (see part 11). * * *

* * * * *

15. Amend section 14.201-9 by revising paragraphs (b) introductory text and (b)(1) to read as follows:

14.201-9 Simplified contract format.

* * * * *

(b) Contract schedule. Include the following for each line item:

(1) Line item number.

* * * * *

PART 15--CONTRACTING BY NEGOTIATION

16. Amend section 15.203 by revising paragraph (a)(2) to read as follows:

15.203 Requests for proposals.

(a) * * *

(2) Anticipated terms and conditions that will apply to the contract. The solicitation may authorize offerors to propose alternative terms and conditions. If the solicitation permits offerors to submit one or more additional proposals with alternative line items (see 52.204-22 or 52.212-1(e)), the evaluation approach should consider the potential impact of the alternative line items on other terms and conditions or the requirement (e.g., place of performance or payment and funding requirements) (see 15.206);

* * * * *

17. Amend section 15.404-1 by revising the second sentence of paragraph (g)(1) to read as follows:

15.404-1 Proposal analysis techniques.

* * * * *

(g) * * *

(1) * * * Unbalanced pricing exists when, despite an acceptable total evaluated price, the price of one or more line items is significantly over or understated as indicated by the application of cost or price analysis techniques. * * *

* * * * *

18. Amend section 15.408 in Table 15-2 by--

a. Under the heading I. General Instructions, revising the first sentence of paragraph D. and removing from paragraph E. the word ``contract''; and

b. Under the heading II. Cost Elements, removing from the first sentence of paragraph A. the word ``contract''.

The revision reads as follows:

15.408 Solicitation provisions and contract clauses.

* * * * *

Table 15-2--Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data Are Required

* * * * *

I. General Instructions

* * * * *

D. You must show the relationship between line item prices and the total contract price. * * *

* * * * *

PART 16--TYPES OF CONTRACTS

16.203-4 [Amended]

19. Amend section 16.203-4 by removing from paragraph (b)(4) ``contract line items'' and adding ``line items'' in its place.

20. Amend section 16.505 by revising paragraph (a)(7)(iii) to read as follows:

16.505 Ordering.

(a) * * *

(7) * * *

(iii) For supplies and services, line item number, subline item number (if applicable), description, quantity, and unit price or estimated cost and fee (as applicable). The corresponding line item number and subline item number from the base contract shall also be included.

* * * * *

PART 17--SPECIAL CONTRACTING METHODS

17.106-1 [Amended]

21. Amend section 17.106-1 by removing from the fifth sentence of paragraph (c)(1), ``Table 15-2, Formats for Submission of Line Items'' and adding ``Table 15-2, III. Formats for Submission of Line Item'' in its place.

17.203 [Amended]

22. Amend section 17.203 by removing from paragraph (g)(2) ``contract line item'' and adding ``line item'' in its place.

17.208 [Amended]

23. Amend section 17.208 by removing from paragraph (e) ``basic contract line item'' and adding ``line item'' in its place.

PART 27--PATENTS, DATA, AND COPYRIGHTS

27.406-1 [Amended]

24. Amend section 27.406-1 by removing from the second sentence of paragraph (b) ``contract line items'' and adding ``line items'' in its place.

PART 32--CONTRACT FINANCING

32.903 [Amended]

25. Amend section 32.903 by removing from paragraph (b) introductory text ``contract line item'' and adding ``line item'' in its place.

32.905 [Amended]

26. Amend section 32.905 by removing from paragraph (b)(1)(iii) ``contract line item'' and adding ``line item'' in its place.

32.1004 [Amended]

27. Amend section 32.1004 by removing from the introductory text and paragraph (a)(2)(v) ``contract line item'' and adding ``line item'' in their places (three times).

32.1110 [Amended]

28. Amend section 32.1110 by removing from paragraph (f) ``contract line item'' and adding ``line item'' in its place.

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

42.302 [Amended]

29. Amend section 42.302 by removing from paragraph (b)(9) ``contract line item'' and adding ``line item'' in its place.

PART 48--VALUE ENGINEERING

48.104-2 [Amended]

30. Amend section 48.104-2 by removing from paragraph (a)(4) ``contract line item'' and adding ``line item'' in its place.

PART 49--TERMINATION OF CONTRACTS

49.601-2 [Amended]

31. Amend section 49.601-2 by removing from the introductory text of the Notice of Termination to Prime Contractors ``items, etc.'' and adding ``line items, etc.'' in its place.

49.603-2 [Amended]

32. Amend section 49.603-2 by removing from paragraph (b)(1) ``(i) item'' and adding ``(i) line item'' in its place.

49.603-5 [Amended]

33. Amend section 49.603-5 by removing from paragraph (b)(1) ``(i) item'' and adding ``(i) line item'' in its place.

49.603-7 [Amended]

34. Amend section 49.603-7 by removing from paragraph (b)(1) ``(i) item'' and adding ``(i) line item'' in its place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

35. Add section 52.204-22 to read as follows:

52.204-22 Alternative Line Item Proposal.

As prescribed in 4.1008, insert the following provision:

Alternative Line Item Proposal (JAN 2017)

(a) The Government recognizes that the line items established in this solicitation may not conform to the Offeror's practices. Failure to correct these issues can result in difficulties in acceptance of deliverables and processing payments. Therefore, the Offeror is invited to propose alternative line items for which bids, proposals, or quotes are requested in this solicitation to ensure that the resulting contract is economically and administratively advantageous to the Government and the Offeror.

(b) The Offeror may submit one or more additional proposals with alternative line items, provided that alternative line items are consistent with subpart 4.10 of the Federal Acquisition Regulation. However, acceptance of an alternative proposal is a unilateral decision made solely at the discretion of the Government. Offers that do not comply with the line items specified in this solicitation may be determined to be nonresponsive or unacceptable.

(End of provision)

36. Amend section 52.212-1 by revising the date of the provision and paragraph (e) to read as follows:

52.212-1 Instructions to Offerors--Commercial Items.

* * * * *

Instructions to Offerors--Commercial Items (JAN 2017)

* * * * *

(e) Multiple offers. Offerors are encouraged to submit multiple offers presenting alternative terms and conditions, including alternative line items (provided that the alternative line items are consistent with subpart 4.10 of the Federal Acquisition Regulation), or alternative commercial items for satisfying the requirements of this solicitation. Each offer submitted will be evaluated separately.

* * * * *

37. Amend section 52.212-4 by--

a. Revising the date of the clause;

b. Removing from paragraph (g)(1)(iii) ``contract line item'' and adding ``line item'' in its place;

c. Removing from paragraph (i)(5)(i)(C) the word ``contract''; and

d. In Alternate I--

1. Revising the date of Alternate I; and

2. Removing from paragraph (i)(5)(i)(C) the word ``contract''.

The revisions read as follows:

52.212-4 Contract Terms and Conditions--Commercial Items.

* * * * *

Contract Terms and Conditions--Commercial Items (JAN 2017)

* * * * *

Alternate I (JAN 2017)* * *

* * * * *

38. Amend section 52.212-5 by revising the date of the clause and paragraph (b)(55) to read as follows:

52.212-5 Contract Terms and Conditions Required To Implement Statutes or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or Executive Orders--Commercial Items (JAN 2017)

* * * * *

(b) * * *

__(55) 52.232-30, Installment Payments for Commercial Items (JAN 2017) (41 U.S.C. 4505, 10 U.S.C. 2307(f)).

* * * * *

39. Amend section 52.213-4 by revising the date of the clause and paragraph (a)(2)(iv) to read 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) * * *

(2) * * *

(iv) 52.232-25, Prompt Payment (JAN 2017)

* * * * *

40. Amend section 52.214-21 in Alternate I by revising the date of the alternate and removing from paragraph (f) ``Contract line'' and adding ``Line'' in its place to read as follows:

52.214-21 Descriptive Literature.

* * * * *

Alternate I (JAN 2017)* * *

* * * * *

41. Amend section 52.215-1 by revising the date of the provision and removing from the second sentence of paragraph (f)(8) the word ``contract'' to read as follows:

52.215-1 Instructions to Offerors--Competitive Acquisition.

* * * * *

Instructions to Offerors--Competitive Acquisition (JAN 2017)

* * * * *

42. Amend section 52.216-4 by revising the date of the clause and removing from the second sentence of paragraph (c)(3) the word ``contract'' to read as follows:

52.216-4 Economic Price Adjustment--Labor and Material.

* * * * *

Economic Price Adjustment--Labor and Material (JAN 2017)

* * * * *

43. Amend section 52.222-32 by revising the date of the clause and removing from the fourth sentence of paragraph (f)(2) ``contract line item'' and adding ``line item'' in its place'' to read as follows:

52.222-32 Construction Wage Rate Requirements--Price Adjustment (Actual Method).

* * * * *

Construction Wage Rate Requirements--Price Adjustment (Actual Method) (JAN 2017)

* * * * *

44. Amend section 52.232-25 by--

a. Revising the date of the clause;

b. Removing from paragraph (a)(3)(iii) ``contract line item'' and adding ``line item'' in its place; and

c. Removing from paragraph (d)(1)(iii) ``contract line item'' and adding ``line item'' in its place.

The revision reads as follows:

52.232-25 Prompt Payment.

* * * * *

Prompt Payment (JAN 2017)

* * * * *

45. Amend section 52.232-26 by--

a. Revising the section heading and the date of the clause;

b. Removing from paragraph (a)(2)(iii) ``contract line item'' and adding ``line item'' in its place; and

c. Removing from paragraph (c)(1)(iii) ``contract line item'' and adding ``line item'' in its place.

The revision reads as follows:

52.232-26 Prompt Payment for Fixed-Price Architect-Engineer Contracts.

* * * * *

Prompt Payment for Fixed-Price Architect-Engineer Contracts (JAN 2017)

* * * * *

46. Amend section 52.232-27 by--

a. Revising the section heading and the date of the clause;

b. Removing from paragraph (a)(2)(iii) ``contract line item'' and adding ``line item'' in its place; and

c. Removing from paragraph (l)(1)(iii) ``contract line item'' and adding ``line item'' in its place.

The revision reads as follows:

52.232-27 Prompt Payment for Construction Contracts.

* * * * *

Prompt Payment for Construction Contracts (JAN 2017)

* * * * *

47. Amend section 52.232-30 by--

a. Revising the date of the clause;

b. Removing from paragraph (b) introductory text ``contract line item'' and adding ``line item'' in its place;

c. Removing from paragraph (b)(1) ``contract line item'' and adding ``line item'' in their places (six times);

d. Removing from paragraph (b)(2) ``contract line item'' and adding ``line item'' in its place;

e. Removing from paragraph (b)(3) ``contract line item'' and adding ``line item'' in their places (three times);

f. Removing from paragraph (b)(4) ``contract line item'' and adding ``line item'' in its place;

g. Removing from paragraph (e) ``contract line item'' and adding ``line item'' in its place; and

h. Removing from paragraph (i)(4) ``contract line item'' and adding ``line item'' in its place;

The revision reads as follows:

52.232-30 Installment Payments for Commercial Items.

* * * * *

Installment Payments for Commercial Items (JAN 2017)

* * * * *

48. Amend section 52.243-7 by revising the date of the clause and removing from paragraph (b)(5)(i) ``contract line items'' and adding ``line items'' in its place to read as follows:

52.243-7 Notification of Changes.

* * * * *

Notification of Changes (JAN 2017)

* * * * *

49. Amend section 52.245-1 by revising the date of the clause and removing from paragraph (e)(3) ``contract line items'' and adding ``line items'' in its place to read as follows:

52.245-1 Government Property.

* * * * *

Government Property (JAN 2017)

* * * * *

50. Amend section 52.247-60 by revising the date of the clause and adding a sentence to the end of paragraph (a)(1)(xi) to read as follows:

52.247-60 Guaranteed Shipping Characteristics.

* * * * *

Guaranteed Shipping Characteristics (JAN 2017)

(a) * * *

(1) * * *

(xi) * * *

Number of complete units (line item) to be shipped in carrier's equipment.

* * * * *

51. Amend section 52.248-1 in Alternate II by revising the date of the alternate and removing from paragraph (a) ``contract line items'' and adding ``line items'' in its place to read as follows:

52.248-1 Value Engineering.

* * * * *

Alternate II (JAN 2017) * * *

* * * * *

[FR Doc. 2016-31495 Filed 1-12-17; 8:45 am]

BILLING CODE 6820-EP-P

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[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]

[Rules and Regulations]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2016-31496]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 13, and 19

[FAC 2005-95; FAR Case 2016-004; Item II; Docket No. 2016-0004, Sequence No. 1]

RIN 9000-AN18

Federal Acquisition Regulation; Acquisition Threshold for Special Emergency Procurement Authority

AGENCY: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement a section of the National Defense Authorization Act for Fiscal Year 2016 to raise the simplified acquisition threshold for special emergency procurement authority.

DATES: Effective: January 13, 2017.

FOR FURTHER INFORMATION CONTACT: Ms. Camara Francis, Procurement Analyst, at 202-550-0935, 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 2016-004.

SUPPLEMENTARY INFORMATION:

I. Background

DOD, GSA, and NASA published a proposed rule in the Federal Register at 81 FR 39882 on June 20, 2016, to implement section 816 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92). FAR 2.101, 13.003, 19.203, and 19.502-2 are being revised to increase the simplified acquisition threshold for special emergency procurement authority from $300,000 to $750,000 (within the United States) and from $1 million to $1.5 million (outside the United States). The rule would apply to acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack. Two respondents provided comments on the proposed rule.

II. Discussion and Analysis

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the comments in the development of the final rule. A discussion of the comments is provided.

A. Summary of Changes

There was no change made to the rule as a result of the comments received. There were no comments on the Initial Regulatory Flexibility Analysis.

B. Analysis of Public Comments

1. Small Business

Comment: The respondent identified that the proposed rule did not recognize that the automatic set-asides for small business would apply up to the threshold in paragraph (1)(ii) of the simplified acquisition threshold definition at FAR 2.101 in the case of an emergency acquisition in an outlying area as defined in FAR 2.101.

Response: The proposed rule did not address the issue of the outlying areas. While the comment is out of scope of this rule, the Councils will take the comment under consideration.

2. Increased Simplified Acquisition Threshold

Comment: The respondent opposes the increase in the special emergency procurement threshold, because increases to the acquisition threshold threaten to compromise the integrity of the Berry amendment, outsource critical portions of the domestic industrial base, and hurt American manufacturers.

Response: The Councils appreciate the comment and acknowledge the concern; however, the increase in the special emergency procurement threshold is statutory in nature.

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 not a significant regulatory action and, therefore, was not 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. 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 final rule implements section 816 of the National Authorization Act for Fiscal Year (FY) 2016, Public Law 114-92. Therefore, the FAR is revised to raise the simplified acquisition thresholds for special emergency procurement authority.

The objective of this final rule is to increase the simplified acquisition thresholds for special emergency procurement authority from $300,000 to $750,000 (within the United States) and $1 million to $1.5 million (outside the United States) for acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack.

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule.

There was no change made to the rule as a result of the comments received. There were no comments on the Regulatory Flexibility Analysis.

DoD, GSA, and NASA do not expect this final 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 the rule raises the simplified acquisition threshold for special emergency procurements, an arena in which a smaller percentage of small businesses participate, as compared to larger businesses. Between $300,000 and the increase to $750,000, 188 total awards were made of which 45 or 24 percent were to small businesses in FY 2014, and 219 total awards were made of which 66 or 30 percent were to small businesses in FY 2015. Between $1 million and the increase to $1.5 million, 56 total awards were made of which 10 or 17 percent were to small businesses in FY 2014, and 29 total awards were made of which 9 or 31 percent were to small businesses in FY 2015.

The final rule imposes no reporting, recordkeeping, or other information collection requirements.

There are no known significant alternatives to the rule. The impact of this final rule on small business is not expected to be significant.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

V. 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 2, 13, and 19

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 2, 13, and 19 as set forth below:

1. The authority citation for 48 CFR parts 2, 13, and 19 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 2--DEFINITIONS WORDS AND TERMS

2.101 [Amended]

2. Amend section 2.101, in paragraph (b)(2), in the definition ``Simplified acquisition threshold'' by removing from paragraphs (1)(i) and (ii) ``$300,000'' and ``$1 million'' and adding ``$750,000'' and ``$1.5 million'' in their places, respectively.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

13.003 [Amended]

3. Amend section 13.003 by removing from paragraph (b)(1) ``$300,000'' and adding ``$750,000'' in its place.

PART 19--SMALL BUSINESS PROGRAMS

19.203 [Amended]

4. Amend section 19.203 by removing from paragraph (b) ``$300,000'' and adding ``$750,000'' in its place.

19.502-2 [Amended]

5. Amend section 19.502-2 by removing from paragraph (a) ``$300,000'' and adding ``$750,000'' in its place.

[FR Doc. 2016-31496 Filed 1-12-17; 8:45 am]

BILLING CODE 6820-EP-P

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[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]

[Rules and Regulations]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[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.

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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)).

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 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 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 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:

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

2. Amend section 3.900 by--

a. Removing from the introductory text ``three different'' and adding ``various'' in its place;

b. Redesignating paragraph (c) as paragraph (d); and

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.

* * * * *

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.

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 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

5. Amend section 4.1202 by--

a. Redesignating paragraphs (a)(3) through (33) as paragraphs (a)(4) through (34), respectively;

b. Revising the heading and first sentence of the Note in newly redesignated paragraph (a)(22); and

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

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 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)

7. Amend section 52.204-8 by--

a. Revising the date of the provision;

b. Redesignating paragraphs (c)(1)(iii) through (xxiv) as paragraphs (c)(1)(iv) through (xxv), respectively;

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

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.

* * * * *

8. Amend section 52.212-3 by--

a. Revising the date of provision;

b. Removing from the introductory text of the provision ``through (t)'' and adding ``through (u)'' in its place;

c. Removing from paragraph (b)(2), in the bracketed paragraph, ``through (t)'' and adding ``through (u)'' in its place; and

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).

9. Amend section 52.212-5 by--

a. Revising the date of clause;

b. Redesignating paragraphs (a)(1) through (3) as paragraphs (a)(2) through (4), respectively;

c. Adding a new paragraph (a)(1);

d. Redesignating paragraphs (e)(1)(ii) through (xxii) as (e)(1)(iii) through (xxiii), respectively;

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

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)).

* * * * *

10. Amend section 52.213-4--

a. Revising the date of the clause;

b. Redesignating paragraphs (a)(1)(i) through (vi) as (a)(1)(ii) through (vii), respectively;

c. Adding a new paragraph (a)(1)(i); and

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) * * *

(viii) 52.244-6, Subcontracts for Commercial Items (JAN 2017).

* * * * *

11. Amend section 52.244-6 by--

a. Revising the date of the clause;

b. Redesignating paragraphs (c)(1)(iii) through (xix) as paragraphs (c)(1)(iv) through (c)(1)(xx);

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

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

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[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]

[Rules and Regulations]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2016-31498]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 5, 6, 18, 19 and 52

[FAC 2005-95; FAR Case 2012-022; Item IV; Docket No. 2012-0022, Sequence No. 1]

RIN 9000-AM68

Federal Acquisition Regulation; Contracts Under the Small Business Administration 8(a) Program

AGENCY: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement regulatory clarifications made by the Small Business Administration regarding the 8(a) program.

DATES: Effective: January 13, 2017.

FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement Analyst, at 703-605-2868, or by email at, 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 2012-022.

SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published a proposed rule in the Federal Register at 79 FR 6135 on February 3, 2014, soliciting public comments regarding the implementation of regulatory clarifications made by the Small Business Administration (SBA) under section 8(a) of the Small Business Act (15 U.S.C. 637(a)). The proposed rule provided additional guidance for the evaluation, offering, and acceptance process; procedures for releasing a requirement for non-8(a) procurement; and information on the effect exiting the 8(a) program will have on its current contractual obligations and the firm's ability to receive new 8(a) requirements. Six respondents submitted comments on the proposed rule.

II. Discussion and Analysis

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the comments in the development of the final rule. A discussion of the comments is provided.

A. Summary of Significant Changes

The final rule contains revisions to the language at FAR 19.804-6(a) to clarify that offers and acceptances are required for individual orders under multiple-award contracts that were not set aside for competition among 8(a) contractors. The final rule also revises the language at FAR 19.814(a) to indicate that the SBA Inspector General can request a formal size determination. In addition, the final rule revises the language at FAR 19.815 regarding the release of requirements from the 8(a) program. Language has been added to clarify that any follow-on 8(a) requirement shall remain in the 8(a) program unless there is a mandatory source for the requirement pursuant to FAR 8.002 or 8.003 or SBA agrees to release the requirement for procurement outside the 8(a) program.

B. Analysis of Public Comments

1. Support Proposed Changes

Comment: One respondent stated support for the changes made in the proposed rule.

Response: The Councils acknowledge receipt of this comment.

2. Potential Conflict With Other Statutorily Mandated Socioeconomic Programs

Comment: Two respondents expressed concern that the proposed language at FAR 19.815 appeared to be in conflict with other socioeconomic programs, such as the Javits-Wagner-O'Day (JWOD) Act (now codified at 41 U.S.C. chapter 85). The proposed rule at FAR section 19.815, Release for non-8(a) procurement, implies that the SBA Associate Administrator for Business Development will only consider releasing requirements from the 8(a) program when there are assurances that the requirement will be procured under another small business program. However, the proposed rule does not mention that another reason a requirement must be released is when it can be procured under a statutory authority other than the Small Business Act. For example, if the requirement has been placed on the Procurement List by the Committee for Purchase from People Who are Blind or Severely Disabled (AbilityOne), it must, by law, be procured under JWOD, using the procedures at FAR subpart 8.7. These respondents asked for further clarification of this point in the FAR.

Response: The purpose of FAR 19.815 is to clarify that the contracting officer must submit a formal request to the SBA Associate Administrator for the release of a requirement that is currently accepted into the 8(a) program, if he or she intends to procure the item from a non-8(a) source. It further clarifies the factors SBA will take into consideration when determining whether to release the requirement from the 8(a) program.

This clarification does not conflict or eliminate an agency's obligation to follow the procedures at FAR 8.002, Priorities for use of mandatory Government sources, and FAR 8.003, Use of other mandatory sources. As stated in these sections of the FAR, an agency may consider satisfying its requirement(s) through a commercial source, such as a small business, only after it has exhausted the possibility of fulfilling its requirement through one of the mandatory sources identified in FAR 8.002 or 8.003. However, new language has been added at FAR 19.815(a) and (b), to clarify that a requirement accepted into the 8(a) program shall remain in the 8(a) program unless the requirement can be satisfied through one of the mandatory sources listed at FAR 8.002 or 8.003 or the SBA Associate Administrator for Business Development agrees to release it.

3. The Rule Gives Preference to 8(a)Program Participants Over Other Small Businesses or Other Small Business Socioeconomic Programs

Comment: One respondent remarked that FAR 19.800(d) appears to give preferential treatment to 8(a) awards over other small business or other socioeconomic goals. FAR 19.800(d) of the proposed rule states the following: ``the contracting officer shall consider 8(a) set-asides or sole source awards before considering small business set-asides . . . .'' This respondent stated that each agency should have autonomy in achieving its own socioeconomic goals.

Response: The language in question already existed in the FAR as 19.800(e), but was renumbered as 19.800(d) by the proposed rule. The intent of the language at FAR 19.800(d) of the proposed rule is to further convey the policy established at FAR 19.203(c), i.e., for acquisitions above the simplified acquisition threshold (SAT), the contracting officer shall first consider small business socioeconomic contracting programs, such as the HUBZone program, the service-disabled veteran-owned small business (SDVOSB) program, the women-owned small business program (WOSB), and the 8(a) program, before considering a small business set-aside, thus allowing agencies to independently tailor acquisition strategies based on their small business and small business socioeconomic goaling achievements. Similar language appears in FAR subparts 19.13, 19.14, and 19.15, though it is adapted to suit the specific socioeconomic program under discussion, i.e., HUBZone, SDVOSB program, or the WOSB program. For further information on the socioeconomic parity rules within the small business programs, refer to the final rule for FAR case 2011-004, Socioeconomic Program Parity, published in the Federal Register at 77 FR 12930 on March 2, 2012.4. Further Clarification of 8(a) Offer and Acceptance Procedures Is Needed

Comment: A respondent recommended that the language at FAR 19.804-3(c)(2), which discusses sole source awards where the contracting officer has not nominated a specific 8(a) participant, be amended to allow the contracting officer to have input in the selection process and the opportunity to concur with SBA's selection.

Response: The guidance provided in the FAR for ``open'' sole source requirements is consistent with SBA's regulations at 13 CFR part 124. In open sole source requirements, the agency provides input into the selection through its offering letter, including such criteria as the special capabilities or disciplines needed for contract performance. Concurrence with SBA's selection is evidenced by the contracting officer's signature on the tripartite agreement or, where SBA has delegated 8(a) contract execution functions to an agency, the contracting officer's signature on the contract award document.

Comment: One respondent requested additional guidance to clarify when the contracting office may assume SBA's acceptance of a requirement valued below the SAT that is not offered on behalf of a specific 8(a) participant. For acquisitions at or below the SAT, FAR 19.804-3(a)(2) states that the contracting office may assume SBA's acceptance has occurred within two working days when the offer was made on behalf of a specific 8(a) participant; however, the FAR is silent regarding when the contracting officer may assume SBA's acceptance of a requirement that was not offered on behalf of a specific 8(a) participant.

Response: Although the proposed rule contained minor editorial revisions in this paragraph, the basic guidance was not changed because it is consistent with SBA's regulations. In order for SBA to make the decision to accept an offer of a requirement into the 8(a) program, it must have reasonable assurance that an eligible 8(a) participant is available.

In the case of a sole source requirement at or below the SAT, when the contracting officer has identified a specific 8(a) participant, SBA will normally respond within two working days. This quick turnaround is attributed to the fact that SBA will usually accept the requirement on behalf of the 8(a) program in support of the specific participant nominated in the offering letter. However, when a contracting officer submits an open requirement to SBA, i.e., does not identify a specific participant for the performance of the sole source requirement, the matching process is more complicated, and SBA will require variable amounts of time to pair the offered requirement with an 8(a) participant possessing the competencies needed for successful performance. For this reason, a definitive time frame for assuming SBA's acceptance of an open requirement below the SAT is not provided in the FAR.

5. Editorial Recommendations

Comment: One respondent recommended the inclusion of a definitions section, rather than defining all the terms at FAR 19.800(a). This respondent suggested that the new Definitions section should define the terms ``offering letter'' and ``competitive threshold.''

Response: The intent of the rule is to provide needed clarification of certain aspects of the 8(a) program relating to Federal procurement. In its present format, the definitions of certain terms such as ``offering letter'' and ``competitive threshold'' occur in the FAR section where the phrase is introduced and the primary discussion of these subjects takes place. For example, the meaning of the term ``offering letter'' is explained in FAR 19.804-2, Agency offering, which is the area where the subject matter is introduced and where the primary discussion of offering letters is located. Similarly, the discussion of ``competitive threshold'' occurs in two back-to-back sections of FAR subpart 19.8, where the term is defined and its primary discussion takes place.

Comment: One respondent stated that the language at FAR 19.816(a) pertaining to an 8(a) contractor's eligibility to receive contracts after exiting the 8(a) program requires further explanation, since it appears to conflict with FAR 19.804-6 as well as section 19.816(c). This respondent suggested that the verbiage ``except as provided in FAR 19.804-6 and paragraph 19.816(c) . . .'' be added to ensure these exceptions are made clear.

Response: FAR 19.816(a) has been revised to add ``[e]xcept as provided in 19.816(c) . . . .'' However, FAR 19.804-6 addresses different subject matter. FAR 19.804-6 discusses the conditions by which an 8(a) prime contractor may continue to accept new orders under its existing multiple-award, indefinite-delivery, indefinite-quantity contract. On the other hand, FAR 19.816 discusses the contractual obligations upon exiting the 8(a) program.

Comment: One respondent stated that the language at FAR 19.816(c) pertaining to a contractor's eligibility to receive contracts after exiting the program should be further clarified. Based on the assumption that an 8(a) contractor would necessarily have new North American Industry Classification System (NAICS) code applicability upon exiting the program, the respondent recommended that additional language be added to stipulate that the contractor must have been eligible for contract award in the specific NAICS code(s) identified in the contract on the initial date specified for receipt of offers.

Response: The recommended change is unnecessary since 8(a) program eligibility is already addressed in FAR sections 19.802, 19.803, and 19.805 of the rule.

Comment: Two respondents suggested a few minor editorial changes.

Response: All suggested minor editorial changes have been incorporated.

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. 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 final rule amends the FAR to implement regulatory changes that SBA made to the 8(a) program. The final rule clarifies procedures and requirements used when agencies are contracting under the 8(a) Program. Among other issues, these changes include clarification of the evaluation, offering, and acceptance process; procedures for acquiring SBA's consent to procure an 8(a) requirement outside the 8(a) program; and the impact of exiting the 8(a) program in terms of the firm's ability to receive future 8(a) requirements and its current contractual commitments. These revisions do not place any new requirements, financial or otherwise, on small entities, and serve mainly to provide more explicit guidance to Federal contracting officials.

There were no significant issues raised by the public in response to the Initial Regulatory Flexibility Analysis provided in the proposed rule.

Currently, the 8(a) Program has approximately 6,885 active Participants, and of these, approximately 1,289 are owned by Native Americans. These entities may be economically impacted by the changes addressed in this final rule.

This rule does not impose any new information collection requirements on small businesses. The rule will have no direct negative impact on any small business concern, since it merely provides clarification of existing procedures and requirements used by agencies when contracting under the 8(a) Program.

There are no alternative approaches that will accomplish the stated objectives of the rule.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

V. 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 5, 6, 18, 19 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 5, 6, 18, 19 and 52 as set forth below:

1. The authority citation for 48 CFR parts 5, 6, 18, 19 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 5--PUBLICIZING CONTRACT ACTIONS

2. Amend section 5.205 by revising paragraph (f) to read as follows:

5.205 Special situations.

* * * * *

(f) Section 8(a) competitive acquisition. When a national buy requirement is being considered for competitive acquisition limited to eligible 8(a) participants under subpart 19.8, the contracting officer must transmit a synopsis of the proposed contract action to the GPE. The synopsis may be transmitted to the GPE concurrent with submission of the agency offering (see 19.804-2) to the Small Business Administration (SBA). The synopsis should also include information--

(1) Advising that the acquisition is being offered for competition limited to eligible 8(a) participants;

(2) Specifying the North American Industry Classification System (NAICS) code;

(3) Advising that eligibility to participate may be restricted to 8(a) participants in either the developmental stage or the developmental and transitional stages; and

(4) Encouraging interested 8(a) participants to request a copy of the solicitation as expeditiously as possible since the solicitation will be issued without further notice upon SBA acceptance of the requirement for the section 8(a) program.

* * * * *

PART 6--COMPETITION REQUIREMENTS

3. Revise section 6.204 to read as follows:

6.204 Section 8(a) competition.

(a) To fulfill statutory requirements relating to section 8(a) of the Small Business Act, as amended by Public Law 100-656, contracting officers may limit competition to eligible 8(a) participants (see subpart 19.8).

(b) No separate justification or determination and findings is required under this part to limit competition to eligible 8(a) participants. (But see 6.302-5 and 6.303-1 for sole source 8(a) awards over $22 million.)

PART 18--EMERGENCY ACQUISITIONS

18.114 [Amended]

4. Amend section 18.114 by removing ``firms'' and adding ``participants'' in its place.

PART 19--SMALL BUSINESS PROGRAMS

19.000 [Amended]

5. Amend section 19.000 by removing from paragraph (a)(3) ``business development''.

6. Revise section 19.800 to read as follows:

19.800 General.

(a) Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) established a program that authorizes the Small Business Administration (SBA) to enter into all types of contracts with other agencies and award subcontracts for performing those contracts to firms eligible for program participation. This program is the ``8(a) Business Development Program,'' commonly referred to as the ``8(a) program.'' A small business that is accepted into the 8(a) program is known as a ``participant.'' SBA's subcontractors are referred to as ``8(a) contractors.'' As used in this subpart, an 8(a) contractor is an 8(a) participant that is currently performing on a Federal contract or order that was set aside for 8(a) participants.

(b) Contracts may be awarded to the SBA for performance by eligible 8(a) participants on either a sole source or competitive basis.

(c) Acting under the authority of the program, the SBA certifies to an agency that SBA is competent and responsible to perform a specific contract. The contracting officer has the discretion to award the contract to the SBA based upon mutually agreeable terms and conditions.

(d) The contracting officer shall comply with 19.203 before deciding to offer an acquisition to a small business concern under the 8(a) program. For acquisitions above the simplified acquisition threshold, the contracting officer shall consider 8(a) set-asides or sole source awards before considering small business set-asides.

(e) When SBA has delegated its 8(a) program contract execution authority to an agency, the contracting officer must refer to its agency supplement or other policy directives for appropriate guidance.

7. Revise section 19.802 to read as follows:

19.802 Determining eligibility for the 8(a) program.

Determining the eligibility of a small business to be a participant in the 8(a) program is the responsibility of the SBA. SBA's regulations on eligibility requirements for participation in the 8(a) program are found at 13 CFR 124.101 through 124.112.

8. Revise section 19.803 to read as follows:

19.803 Selecting acquisitions for the 8(a) program.

Through their cooperative efforts, the SBA and an agency match the agency's requirements with the capabilities of 8(a) participants to establish a basis for the agency to contract with the SBA under the program. Selection is initiated in one of three ways:

(a) The SBA advises the contracting activity of an 8(a) participant's capabilities through a search letter and requests the contracting activity to identify acquisitions to support the participant's business plans. In these instances, the SBA will provide at a minimum the following information in order to enable the contracting activity to match an acquisition to the participant's capabilities:

(1) Identification of the participant and its owners.

(2) Background information on the participant, including any and all information pertaining to the participant's technical ability and capacity to perform.

(3) The participant's present production capacity and related facilities.

(4) The extent to which contracting assistance is needed in the present and the future, described in terms that will enable the agency to relate the participant's plans to present and future agency requirements.

(5) If construction is involved, the request shall also include the following:

(i) A participant's capabilities in and qualifications for accomplishing various categories of construction work typically found in North American Industrial Category System subsector 236 (construction of buildings), subsector 237 (heavy and civil engineering construction), or subsector 238 (specialty trade contractors).

(ii) The participant's capacity in each construction category in terms of estimated dollar value (e.g., electrical, up to $100,000).

(b) The SBA identifies a specific requirement for one or more 8(a) participant(s) and sends a requirements letter to the agency's Office of Small and Disadvantaged Business Utilization, or for the Department of Defense, Office of Small Business Programs, requesting the contracting office offer the acquisition to the 8(a) program. In these instances, in addition to the information in paragraph (a) of this section, the SBA will provide--

(1) A clear identification of the acquisition sought; e.g., project name or number;

(2) A statement as to how the required equipment and real property will be provided in order to ensure that the participant will be fully capable of satisfying the agency's requirements;

(3) If construction, information as to the bonding capability of the participant(s); and

(4) Either--

(i) If a sole source request--

(A) The reasons why the participant is considered suitable for this particular acquisition; e.g., previous contracts for the same or similar supply or service; and

(B) A statement that the participant is eligible in terms of its small business size status relative to the assigned NAICS code, business support levels, and business activity targets; or

(ii) If competitive, a statement that at least two 8(a) participants are considered capable of satisfying the agency's requirements and a statement that the participants are also eligible in terms of their small business size status relative to the assigned NAICS code, business support levels, and business activity targets. If requested by the contracting office, SBA will identify at least two such participants and provide information concerning the participants' capabilities.

(c) Agencies may also review other proposed acquisitions for the purpose of identifying requirements which may be offered to the SBA. Where agencies independently, or through the self marketing efforts of an 8(a) participant, identify a requirement for the 8(a) program, they may offer on behalf of a specific 8(a) participant, for the 8(a) program in general, or for 8(a) competition.

9. Revise section 19.804-1 to read as follows:

19.804-1 Agency evaluation.

In determining the extent to which a requirement should be offered in support of the 8(a) program, the agency should evaluate--

(a) Current and future plans to acquire the specific items or work that 8(a) participants are seeking to provide, identified in terms of--

(1) Estimated quantities of the supplies or services required or the estimated number of construction projects planned; and

(2) Performance or delivery requirements, including--

(i) Required monthly production rates, when applicable; and

(ii) For construction, the geographical location where work is to be performed;

(b) The impact of any delay in delivery;

(c) Whether the items or work have previously been acquired using small business set-asides, and the date the items or work were acquired;

(d) Problems encountered in previous acquisitions of the items or work from the 8(a) participants or other contractors; and

(e) Any other pertinent information about known 8(a) participants, the items, or the work. This includes any information concerning the participants' products or capabilities. When necessary, the contracting agency shall make an independent review of the factors in 19.803(a) and other aspects of the participants' capabilities which would ensure the satisfactory performance of the requirement being considered for commitment to the 8(a) program.

10. Amend section 19.804-2 by--

a. Revising paragraphs (a) introductory text and (a)(10);

b. Redesignating paragraphs (a)(12) through (15) as paragraphs (a)(13) through (16), respectively;

c. Adding a new paragraph (a)(12);

d. Removing from the newly redesignated paragraph (a)(13) ``Program'' and adding ``program'' in its place;

e. Removing from paragraph (b)(3) ``firm'' and adding ``8(a) participant'' in its place (twice).

The revisions and addition read as follows:

19.804-2 Agency offering.

(a) After completing its evaluation, the contracting office shall notify the SBA of the extent of its plans to place 8(a) contracts with the SBA for specific quantities of items or work. The notification, referred to as an offering letter, shall identify the time frames within which resulting 8(a) awards must be completed in order for the agency to meet its responsibilities. The offering letter shall also contain the following information applicable to each prospective contract:

* * * * *

(10) Identification of any particular 8(a) participant designated for consideration, including a brief justification, such as--

(i) The 8(a) participant, through its own efforts, marketed the requirement and caused it to be reserved for the 8(a) program; or

(ii) The acquisition is a follow-on or renewal contract and the nominated 8(a) participant is the incumbent.

* * * * *

(12) Identification of all 8(a) participants which have expressed an interest in being considered for the acquisition.

* * * * *

11. Revise section 19.804-3 to read as follows:

19.804-3 SBA acceptance.

(a) Upon receipt of the contracting office's offering letter, SBA will determine whether to accept the requirement for the 8(a) program. SBA's decision whether to accept the requirement will be transmitted to the contracting office in writing within 10 working days of receipt of the offer if the contract is likely to exceed the simplified acquisition threshold and within two working days of receipt if the contract is at or below the simplified acquisition threshold. The contracting office may grant an extension of these time periods, if requested by SBA.

(1) For acquisitions exceeding the simplified acquisition threshold, if SBA does not respond to an offering letter within ten working days, the contracting office may seek SBA's acceptance through the Associate Administrator for Business Development. The contracting office may assume that SBA has accepted the requirement into the 8(a) program if it does not receive a reply from the Associate Administrator for Business Development within five calendar days of receipt of the contracting office's request.

(2) For acquisitions not exceeding the simplified acquisition threshold, when the contracting office makes an offer to the 8(a) program on behalf of a specific 8(a) participant and does not receive a reply to its offering letter within two working days, the contracting office may assume the offer is accepted and proceed with award of an 8(a) contract.

(b) As part of the acceptance process, SBA will review the appropriateness of the NAICS code designation assigned to the requirement by the contracting officer.

(1) SBA will not challenge the NAICS code assigned to the requirement by the contracting officer if it is reasonable, even though other NAICS codes may also be reasonable.

(2) If SBA and the contracting officer are unable to agree on a NAICS code designation for the requirement, SBA may refuse to accept the requirement for the 8(a) program, appeal the contracting officer's determination to the head of the agency pursuant to 19.810, or appeal the NAICS code designation to the SBA Office of Hearings and Appeals under subpart C of 13 CFR part 134.

(c) Sole source 8(a) awards. If an appropriate match exists, SBA

will advise the contracting officer whether it will participate in contract negotiations or whether SBA will authorize the contracting officer to negotiate directly with the identified 8(a) participant. Where SBA has delegated its contract execution functions to a contracting agency, SBA will also identify that delegation in its acceptance letter.

(1) Sole source award where the contracting officer nominates a specific 8(a) participant. SBA will determine whether an appropriate match exists where the contracting officer identifies a particular participant for a sole source award.

(i) Once SBA determines that a procurement is suitable to be accepted as an 8(a) sole source contract, SBA will normally accept it on behalf of the 8(a) participant recommended by the contracting officer, provided that the 8(a) participant complies with the requirements of 13 CFR 124.503(c)(1).

(ii) If an appropriate match does not exist, SBA will notify the 8(a) participant and the contracting officer, and may then nominate an alternate 8(a) participant.

(2) Sole source award where the contracting officer does not nominate a specific 8(a) participant. When a contracting officer does not nominate an 8(a) participant for performance of a sole source 8(a) contract, SBA will select an 8(a) participant for possible award from among two or more eligible and qualified 8(a) participants. The selection will be based upon relevant factors, including business development needs, compliance with competitive business mix requirements (if applicable), financial condition, management ability, technical capability, and whether award will promote the equitable distribution of 8(a) contracts. (For construction requirements see 13 CFR 124.503(d)(1)).

12. Amend section 19.804-4--

a. Removing from the introductory text ``Program'' and adding ``program'' in its place;

b. Revising paragraph (b); and

c. Removing from paragraph (d) ``Program'' and adding ``program'' in its place.

The revision reads as follows:

19.804-4 Repetitive acquisitions.

* * * * *

(b) A nominated 8(a) participant's eligibility, and whether or not it is the same 8(a) participant that performed the previous contract;

* * * * *

13. Amend section 19.804-5 by revising paragraphs (a) and (c) to read as follows:

19.804-5 Basic ordering agreements.

(a) The contracting office shall submit an offering letter for, and SBA must accept, each order under a basic ordering agreement (BOA) in addition to the agency offering and SBA accepting the BOA itself.

* * * * *

(c) Once an 8(a) participant's program term expires, the participant otherwise exits the 8(a) program, or becomes other than small for the NAICS code assigned under the BOA, SBA will not accept new orders for the participant.

14. Revise section 19.804-6 to read as follows:

19.804-6 Indefinite-delivery contracts.

(a) Separate offers and acceptances are not required for individual orders under multiple-award contracts (including the Federal Supply Schedules managed by GSA, multi-agency contracts or Governmentwide acquisition contracts, or indefinite-delivery, indefinite-quantity (IDIQ) contracts) that have been set aside for exclusive competition among 8(a) contractors. SBA's acceptance of the original contract is valid for the term of the contract. Offers and acceptances are required for individual orders under multiple-award contracts that have not been set aside for exclusive competition among 8(a) contractors.

(b) An 8(a) contractor may continue to accept new orders under the contract, even if it exits the 8(a) program, or becomes other than small for the NAICS code assigned to the contract.

(c) Agencies may continue to take credit toward their prime contracting small disadvantaged business or small business goals for orders awarded to 8(a) participants, even after the contractor's 8(a) program term expires, the contractor otherwise exits the 8(a) program, or the contractor becomes other than small for the NAICS code assigned under the 8(a) contract. However, if an 8(a) contractor rerepresents that it is other than small for the NAICS code assigned under the contract in accordance with 19.301-2 or, where ownership or control of the 8(a) contractor has changed and SBA has granted a waiver to allow the contractor to continue performance (see 13 CFR 124.515), the agency may not credit any subsequent orders awarded to the contractor towards its small disadvantaged business or small business goals.

15. Amend section 19.805-1 by--

a. Revising paragraph (a) introductory text;

b. Removing from paragraph (a)(1) ``firms'' and adding ``participants'' in its place;

c. Revising paragraph (b) introductory text;

d. Removing from paragraph (b)(1) ``firms'' and adding ``participants'' in its place; and

e. Revising paragraph (d).

The revisions read as follows:

19.805-1 General.

(a) Except as provided in paragraph (b) of this section, an acquisition offered to the SBA under the 8(a) program shall be awarded on the basis of competition limited to eligible 8(a) participants when--

* * * * *

(b) Where an acquisition exceeds the competitive threshold (see paragraph (a)(2) of this section), the SBA may accept the requirement for a sole source 8(a) award if--

* * * * *

(d) The SBA Associate Administrator for Business Development may approve a contracting office's request for a competitive 8(a) award below the competitive thresholds. Such requests will be approved only on a limited basis and will be primarily granted where technical competitions are appropriate or where a large number of responsible 8(a) participants are available for competition. In determining whether a request to compete below the threshold will be approved, the SBA Associate Administrator for Business Development will, in part, consider the extent to which the contracting activity is supporting the 8(a) program on a noncompetitive basis. The agency may include recommendations for competition below the threshold in the offering letter or by separate correspondence to the SBA Associate Administrator for Business Development.

16. Revise section 19.805-2 to read as follows:

19.805-2 Procedures.

(a) Offers shall be solicited from those sources identified in accordance with 19.804-3.

(b) The SBA will determine the eligibility of the participants for award of the contract. Eligibility will be determined by the SBA as of the time of submission of initial offers which include price. Eligibility is based on Section 8(a) program criteria. An 8(a) participant must represent that it is a small business in accordance with the size standard corresponding to the NAICS code assigned to the contract.

(1) In either negotiated or sealed bid competitive 8(a) acquisitions SBA will determine the eligibility of the apparent successful offeror and advise the contracting office within 5 working days after receipt of the contracting office's request for an eligibility determination.

(i) If SBA determines that the apparent successful offeror is ineligible, the contracting office will then send to SBA the identity of the next highest evaluated offeror for an eligibility determination. The process is repeated until SBA determines that an identified offeror is eligible for award.

(ii) If the contracting officer believes that the apparent successful offeror (or the offeror SBA has determined eligible for award) is not responsible to perform the contract, the contracting officer must refer the matter to SBA for Certificate of Competency consideration under subpart 19.6.

(2) In any case in which an 8(a) participant is determined to be ineligible, SBA will notify the 8(a) participant of that determination.

(c) Any party with information questioning the eligibility of an 8(a) participant to continue participation in the 8(a) program or for the purposes of a specific 8(a) award may submit such information to the SBA in accordance with 13 CFR 124.112(c).

17. Amend section 19.808-1 by removing from paragraph (c) ``activity'' and ``contractor'' and adding ``officer'' and ``participant'' in their places, respectively, and adding paragraphs (d) and (e) to read as follows:

19.808-1 Sole source.

* * * * *

(d) An 8(a) participant must represent that it is a small business in accordance with the size standard corresponding to the NAICS code assigned to the contract.

(e) An 8(a) participant owned by an Alaska Native Corporation, Indian Tribe, Native Hawaiian Organization, or Community Development Corporation may not receive an 8(a) sole source award that is a follow-on contract to an 8(a) contract, if the predecessor contract was performed by another 8(a) participant (or former 8(a) participant) owned by the same Alaska Native Corporation, Indian Tribe, Native Hawaiian Organization, or Community Development Corporation (See 13 CFR 124.109 through 124.111).

18. Revise section 19.808-2 to read as follows.

19.808-2 Competitive.

In competitive 8(a) acquisitions subject to part 15, the contracting officer conducts negotiations directly with the competing 8(a) participants. Conducting competitive negotiations among 8(a) participants prior to SBA's formal acceptance of the acquisition for the 8(a) program may be grounds for SBA's not accepting the acquisition for the 8(a) program.

19. Revise section 19.809 to read as follows.

19.809 Preaward considerations.

The contracting officer should request a preaward survey of the 8(a) participant whenever considered useful. If the results of the preaward survey or other information available to the contracting officer raise substantial doubt as to the participant's ability to perform, the contracting officer must refer the matter to SBA for Certificate of Competency consideration under subpart 19.6.

20. Amend section 19.810 by--

a. Removing from paragraph (a)(2) ``firm'' and ``Program'' and adding ``participant'' and ``program'' in their places, respectively;

b. Removing from paragraph (a)(3) ``activity's'' and adding ``officer's'' in its place;

c. Revising paragraph (b); and

d. Removing from paragraph (c) ``firm'' and adding ``participant'' in its place.

The revision reads as follows:

19.810 SBA appeals.

* * * * *

(b)(1) Notification by SBA of an intent to appeal to the agency head--

(i) Must be received by the contracting officer within 5 working days after SBA is formally notified of the contracting officer's decision; and

(ii) Must be provided to the contracting agency Director for Small and Disadvantaged Business Utilization or, for the Department of Defense, the Director of Small Business Programs.

(2) SBA must send the written appeal to the agency head within 15 working days of SBA's notification of intent to appeal or the appeal may be considered withdrawn. Pending issuance of a decision by the agency head, the contracting officer shall suspend action on the acquisition. The contracting officer need not suspend action on the acquisition if the contracting officer makes a written determination that urgent and compelling circumstances that significantly affect the interests of the United States will not permit waiting for a decision.

* * * * *

21. Amend section 19.811-1 by revising paragraph (b) introductory text to read as follows:

19.811-1 Sole source.

* * * * *

(b) The contracting officer shall prepare the contract that the SBA will award to the 8(a) participant in accordance with agency procedures, as if awarding the contract directly to the 8(a) participant, except for the following:

* * * * *

19.811-3 [Amended]

22. Amend section 19.811-3 by--

a. Removing from paragraph (d) introductory text ``Concerns'' and adding ``Participants'' in its place; and

b. Removing from paragraphs (d)(1) and (e) ``concerns'' and adding ``participants'' in its place, respectively.

23. Amend section 19.812 by removing from paragraph (b) ``firm'' and adding ``8(a) contractor'' in its place and revising paragraph (d) to read as follows:

19.812 Contract administration.

* * * * *

(d) An 8(a) contract, whether in the base or an option year, must be terminated for convenience if the 8(a) contractor to which it was awarded transfers ownership or control of the firm or if the contract is transferred or novated for any reason to another firm, unless the Administrator of the SBA waives the requirement for contract termination (13 CFR 124.515). The Administrator may waive the termination requirement only if certain conditions exist. Moreover, a waiver of the requirement for termination is permitted only if the 8(a) contractor's request for waiver is made to the SBA prior to the actual relinquishment of ownership or control, except in the case of death or incapacity where the waiver must be submitted within 60 calendar days after such an occurrence. The clauses in the contract entitled ``Special 8(a) Contract Conditions'' and ``Special 8(a) Subcontract Conditions'' require the SBA and the 8(a) subcontractor to notify the contracting officer when ownership of the firm is being transferred. When the contracting officer receives information that an 8(a) contractor is planning to transfer ownership or control to another firm, the contracting officer shall take action immediately to preserve the option of waiving the termination requirement. The contracting officer shall determine the timing of the proposed transfer and its effect on contract performance and mission support. If the contracting officer determines that the SBA does not intend to waive the termination requirement, and termination of the contract would severely impair attainment of the agency's program objectives or mission, the contracting officer shall immediately notify the SBA in writing that the agency is requesting a waiver. Within 15 business days thereafter, or such longer period as agreed to by the agency and the SBA, the agency head must either confirm or withdraw the request for waiver. Unless a waiver is approved by the SBA, the contracting officer must terminate the contract for convenience upon receipt of a written request by the SBA. This requirement for a convenience termination does not affect the Government's right to terminate for default if the cause for termination of an 8(a) contract is other than the transfer of ownership or control.

24. Add sections 19.813 through 19.816 to read as follows:

Sec.

19.813 Protesting an 8(a) participant's eligibility or size status.

19.814 Requesting a formal size determination (8(a) sole source requirements).

19.815 Release for non-8(a) procurement.

19.816 Exiting the 8(a) program.

19.813 Protesting an 8(a) participant's eligibility or size status.

(a) The eligibility of an 8(a) participant for a sole source or competitive 8(a) requirement may not be challenged by another 8(a) participant or any other party, either to SBA or any administrative forum as part of a bid or other contract protest (see 13 CFR 124.517).

(b) The size status of an 8(a) participant nominated for an 8(a) sole source contract may not be protested by another 8(a) participant or any other party.

(c) The size status of the apparent successful offeror for competitive 8(a) awards may be protested. The filing of a size status protest is limited to--

(1) Any offeror whom the contracting officer has not eliminated for reasons unrelated to size;

(2) The contracting officer; or

(3) The SBA District Director in either the district office serving the geographical area in which the contracting activity is located or the district office that services the apparent successful offeror, or the Associate Administrator for Business Development.

(d) Protests of competitive 8(a) awards shall follow the procedures at 19.302. For additional information, refer to 13 CFR 121.1001.

19.814 Requesting a formal size determination (8(a) sole source requirements).

(a) If the size status of an 8(a) participant nominated for award of an 8(a) sole source contract is called into question, a request for a formal size determination may be submitted to SBA pursuant to 13 CFR 121.1001(b)(2)(ii) by--

(1) The 8(a) participant nominated for award of the particular sole source contract;

(2) The contracting officer who has been delegated SBA's 8(a) contract execution functions, where applicable, or the SBA program official with authority to execute the 8(a) contract;

(3) The SBA District Director in the district office that services the 8(a) participant or the Associate Administrator for Business Development; or

(4) The SBA Inspector General.

(b) SBA's Government Contracting Area Director will issue a formal size determination within 15 business days, if possible, after SBA receives the request for a formal size determination.

(c) An appeal of an SBA size determination shall follow the procedures at 19.302.

19.815 Release for non-8(a) procurement.

(a) Once a requirement has been accepted by SBA into the 8(a) program, any follow-on requirements shall remain in the 8(a) program unless there is a mandatory source (see 8.002 or 8.003) or SBA agrees to release the requirement from the 8(a) program in accordance with 13 CFR 124.504(d).

(b) To obtain release of a requirement for a non-8(a) procurement (other than a mandatory source listed at 8.002 or 8.003), the contracting officer shall make a written request to, and receive concurrence from, the SBA Associate Administrator for Business Development.

(c)(1) The written request to the SBA Associate Administrator for Business Development shall indicate--

(i) Whether the agency has achieved its small disadvantaged business goal;

(ii) Whether the agency has achieved its HUBZone, SDVOSB, WOSB, or small business goal(s); and

(iii) Whether the requirement is critical to the business development of the 8(a) contractor that is currently performing the requirement.

(2) Generally, a requirement that was previously accepted into the 8(a) program will only be released for procurements outside the 8(a) program when the contracting activity agency agrees to set aside the requirement under the small business, HUBZone, SDVOSB, or WOSB programs.

(3) The requirement that a follow-on procurement must be released from the 8(a) program in order for it to be fulfilled outside the 8(a) program does not apply to task or delivery orders offered to and accepted into the 8(a) program, where the basic contract was not accepted into the 8(a) program.

19.816 Exiting the 8(a) program.

(a) Except as provided in paragraph (c) of this section, when a contractor exits the 8(a) program, it is no longer eligible to receive new 8(a) contracts. However, the contractor remains under contractual obligation to complete existing contracts, and any priced options that may be exercised.

(b) If an 8(a) contractor is suspended from the program (see 13 CFR 124.305), it may not receive any new 8(a) contracts unless the head of the contracting agency makes a determination that it is in the best interest of the Government to issue the award and SBA adopts that determination.

(c) A contractor that has completed its term of participation in the 8(a) program may be awarded a competitive 8(a) contract if it was an 8(a) participant eligible for award of the contract on the initial date specified for receipt of offers contained in the solicitation, and if the contractor continues to meet all other applicable eligibility criteria.

(d) SBA's regulations on exiting the 8(a) program are found at 13 CFR 124.301 through 124.305, and 13 CFR 124.507(d).

19.1304 [Amended]

25. Amend section 19.1304 by removing from paragraph (d) ``Program'' and adding ``program'' in its place (twice).

19.1404 [Amended]

26. Amend section 19.1404 by removing from paragraph (d) ``Program'' and adding ``program'' in its place (twice).

27. Amend section 19.1504 by revising paragraph (a) to read as follows:

19.1504 Exclusions.

* * * * *

(a) Requirements that an 8(a) contractor is currently performing under the 8(a) program or that SBA has accepted for performance under the authority of the 8(a) program, unless SBA has consented to release the requirements from the 8(a) program;

* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

28. Amend section 52.212-5 by revising the date of the clause and paragraph (b)(19) to read as follows:

52.212-5 Contract Terms and Conditions Required to Implement Statutes or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or Executive Orders--Commercial Items (JAN 2017)

* * * * *

(b) * * *

(19) 52.219-14, Limitations on Subcontracting (JAN 2017) (15 U.S.C. 637(a)(14)).

* * * * *

29. Amend section 52.219-11 by revising the date of the clause and removing from paragraph (c) ``and advance payments'' to read as follows:

52.219-11 Special 8(a) Contract Conditions.

* * * * *

Special 8(a) Contract Conditions (JAN 2017)

* * * * *

30. Amend section 52.219-12 by revising the date of the clause and paragraph (b)(2) to read as follows:

52.219-12 Special 8(a) Subcontract Conditions.

* * * * *

Special 8(a) Subcontract Conditions (JAN 2017)

* * * * *

(b) * * *

(2) That the SBA has delegated responsibility, except for novation agreements, for the administration of this subcontract to the _____ [insert name of contracting agency] with complete authority to take any action on behalf of the Government und_d conditions of this subcontract.

* * * * *

31. Amend section 52.219-14 by revising the date of the clause and removing from paragraphs (b)(1), (2), and (3) ``8(a) concerns'' and adding ``8(a) participants'' in its place to read as follows:

52.219-14 Limitations on Subcontracting.

* * * * *

Limitations on Subcontracting (JAN 2017)

* * * * *

32. Amend section 52.219-17 by revising the date of the clause and removing from paragraph (a)(2) ``and advance payments'' to read as follows:

52.219-17 Section 8(a) Award.

* * * * *

Section 8(a) Award (JAN 2017)

* * * * *

33. Amend section 52.219-18 by--

a. Revising the section and clause headings; and

b. In Alternate I, revising the date of the alternate and removing ``concerns'' and adding ``participants'' in its place.

The revisions read as follows:

52.219-18 Notification of Competition Limited to Eligible 8(a)

Participants.

* * * * *

Notification of Competition Limited to Eligible 8(a) Participants (JAN 2017)

* * * * *

Alternate I (JAN 2017) * * *

* * * * *

[FR Doc. 2016-31498 Filed 1-12-17; 8:45 am]

BILLING CODE 6820-EP-P

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[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]

[Rules and Regulations]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2016-31499]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 31

[FAC 2005-95; FAR Case 2015-016; Item V; Docket No. 2015-0016; Sequence No. 1]

RIN 9000-AM97

Federal Acquisition Regulation; Prohibition on Reimbursement for Congressional Investigations and Inquiries

AGENCY: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule to amend the Federal Acquisition Regulation (FAR) to implement section 857 of the Carl Levin and Howard P. `Buck' McKeon National Defense Authorization Act for Fiscal Year 2015. This section provides additional requirements relative to the allowability of costs incurred by a contractor in connection with a Congressional investigation or inquiry.

DATES: Effective: January 13, 2017.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact Ms. Zenaida Delgado, Procurement Analyst, at 202-969-7207. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755. Please cite FAC 2005-95, FAR Case 2015-016.

SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published a proposed rule in the Federal Register at 81 FR 8031 on February 17, 2016, soliciting public comments on implementing section 857 of the Carl Levin and Howard P. `Buck' McKeon National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113-291).

This statute amended 10 U.S.C. 2324(e)(1) to disallow costs incurred by a contractor in connection with a Congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition as described in 10 U.S.C. 2324(k)(2).

While section 857 only applies to contracts with DoD, NASA, and the Coast Guard, for the purpose of promoting consistency in the accounting systems of Federal contractors, it was decided to apply the section's requirements to all agencies subject to the FAR.

Additionally, conforming language on unallowable costs is added to FAR 31.603-16 and 31.603-15 (to update language associated with whistleblower complaints).

Two respondents submitted public comments.

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. Summary of Significant Changes

Several editorial changes are made to the rule as a result of the comments received; these were aimed at simplifying sentence structure for clarification purposes. There were no comments on the Initial

Regulatory Flexibility Analysis.

B. Analysis of Public Comments

1. Unfair Withholding of Costs

Comment: One respondent stressed that contractors should not be penalized until guilt is determined by a court of law. Contractors should be reimbursed for their costs, as incurred, at the time of their participation in a Congressional investigation or inquiry. While affirming that it only makes sense that a contractor found guilty of defrauding or cheating the Government in association with their work should forfeit their reimbursement, the respondent maintained that, until guilt is determined by a court of law, the contractor should be reimbursed for its costs. Then, if the contractor is found guilty of defrauding or cheating the Government, it should pay those costs back to the Government.

Response: The disallowance of costs in accordance with 10 U.S.C. 2324(e)(1)(Q) (i.e., any costs incurred by a contractor in connection with a Congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition that meets conditions at FAR 31.205-47(b)(1) through (5)) does not constitute a penalty. The regulation clearly states that costs are unallowable if incurred in connection with a Congressional investigation or inquiry into an issue that is the subject matter of a proceeding that results in a specified disposition. Absent a specified disposition, no disallowance of costs would exist.

Comment: The same respondent stated that the ``guilty verdict'' must come from an impartial court, and must be associated with the inquiry.

Response: The Councils appreciate this concern, but note that it extends beyond the scope of this case.

2. Use of Congressional Investigations

Comment: One respondent suggested fixing ``the real problem'' by writing regulations to penalize politicians who use Congressional investigations to promote their personal or their affiliated party's agenda. The respondent noted that, in many cases, small businesses incur hundreds of thousands of dollars in costs associated with the inquiry, despite the fact that the only thing they did wrong was work for a Government entity that was targeted by a political party.

Response: The Councils appreciate this concern, but note that it extends beyond the scope of this case.

3. Clarify Relationship Among the FAR 31.205-47 Paragraphs

Comment: One respondent questioned whether FAR 31.205-47(c) or (d) would impact the allowability of the cost of a Congressional investigation or inquiry. Specifically, the respondent asked if the cost of a Congressional investigation or inquiry related to an issue that is the subject matter of a FAR 31.205-47(b) proceeding, whose result is described in FAR 31.205-47(b)(1) through (5), would be unallowable if one of the circumstances described in FAR 31.205-47(c) or (d) existed.

Response: The cost of a Congressional investigation or inquiry cannot be treated the same as the cost of a proceeding under FAR 31.205-47(c) or (d). Although the section 857 language ties the cost of the Congressional investigation or inquiry to an issue that is the subject matter of a proceeding resulting in a disposition as described in 10 U.S.C. 2324(k)(2), Congress did not enact parallel treatment. 10 U.S.C. 2324(e)(1)(O) disallows ``Costs incurred by a contractor in connection with any criminal, civil, or administrative proceeding commenced by the United States or a State, to the extent provided in subsection (k),'' which includes the exceptions in paragraphs (k)(3) and (k)(4), covered in the FAR at 31.205-47(c) and (d). Section 857, as implemented in 10 U.S.C. 2324(e)(1)(Q), references only paragraph (k)(2) and does not reference paragraph (k) in its entirety; nor does it reference paragraphs (k)(3) or (k)(4) specifically. Therefore, the statute requires that the costs incurred in connection with a Congressional investigation or inquiry be treated differently than the costs incurred in connection with other criminal, civil, or administrative proceedings in which costs may be allowable under certain circumstances.

Comment: The same respondent questioned whether the limitations at FAR 31.205-47(e) would be applicable to the costs incurred in connection with a Congressional investigation or inquiry. Specifically, the respondent asked if the costs of a Congressional investigation or inquiry into a subject matter of a FAR 31.205-47(b) proceeding, whose result is not one described in FAR 31.205-47(b)(1) through (5), would be subject to the limitations in FAR 31.205-47(e).

Response: FAR 31.205-47(e) relates to costs not made unallowable by paragraph (b), while the new paragraph (f)(9) relates to costs made unallowable by paragraphs (b)(1) through (5), which describe the outcomes that would deem the costs unallowable. Because there is no overlap between the two concepts, there is no need to clarify that relationship in the FAR text.

Comment: The same respondent questioned whether requirements in FAR 31.205-47(g), regarding costs that may be unallowable under FAR 31.205-47(b), would be applicable to costs that may be unallowable under FAR 31.205-47(f)(9).

Response: FAR 31.205-47(g) pertains to all unallowable costs under 31.205-47.

4. Clarify the Relationship Between FAR 31.205-47(g) and FAR 31.603(b)(15) and FAR 31.603(b)(16)

Comment: One respondent questioned whether the FAR 31.205-47(g) segregation of cost requirements are to be imposed regarding costs that may be made unallowable based on FAR 31.603(b)(15) or (16). Since the proposed rule does not address this issue, there was a question as to whether FAR 31.205-47(g) is applicable to costs that may be made unallowable based on FAR 31.603(b)(15) or (16). For costs that may be made unallowable under FAR 31.205-47, the respondent argued that it would be in the Government's best interest for: (1) State, local, and federally recognized Indian tribal governments to segregate and account separately for costs that may be made unallowable under FAR 31.603(b)(15) and FAR 31.603(b)(16) during the pendency of a related proceeding, and (2) the contracting officer to normally withhold payment of such costs. Accordingly, the respondent recommended that FAR 31.603(b)(15) and (16) be revised to incorporate requirements similar to those in FAR 31.205-47(g).

Response: The Councils appreciate this concern, but note that adding this as a requirement would require a separate FAR case. Although segregation of potentially unallowable costs (as described at FAR 31.205-47(g)) is a prudent business practice for State, local, and federally recognized Indian tribal governments, section 857 of the NDAA for FY 2016 did not extend this requirement to such entities.

5. Clarification of Regulatory Intent of FAR 31.205-47(f)(9)

Comment: One respondent focused a question upon Congressional inquiry or investigation activities that predate the existence of the proceeding, noting that the proposed version of FAR 31.205-47(f)(9) makes unallowable costs incurred in connection with a Congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition as described in FAR 31.205-47(b)(1) through (5). The respondent interpreted this to mean that, in order for the costs of the Congressional investigation or inquiry to be unallowable, a proceeding would have to be in process. Therefore, it would follow that costs incurred in connection with a Congressional investigation or inquiry that predate the existence of a proceeding are allowable. Specifically, even if the issue becomes the subject matter of a FAR 31.205-47 proceeding at a later date, there is no intention under the proposed rule to retroactively make costs incurred in connection with a Congressional investigation or inquiry that is the subject matter of the proceeding unallowable. If that understanding is incorrect and the rule's intent is to make the costs incurred in connection with a Congressional investigation or inquiry that pre-date the existence of a proceeding unallowable, then the proposed rule should be revised to state that requirement in the cost principle.

Response: The statutory language states: ``. . . congressional investigation or inquiry into an issue that is [emphasis added] the subject matter of a proceeding.'' Therefore, the proceeding must be a known event, whether it has already commenced or is known to be commencing on a future date. Preparation (i.e., segregation of costs) for a potential disallowance begins when it is known that a proceeding will ensue.

Comment: The same respondent asked about Government Accountability Office (GAO) investigations, noting that the proposed version of FAR 31.205-47(f)(9) makes unallowable the costs incurred in connection with a Congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition described in FAR paragraphs 31.205-47(b)(1) through (5). The respondent stated that no specifics are provided in the proposed rule concerning what is considered a Congressional investigation or inquiry into an issue that is the subject matter of a proceeding, cautioning that this could lead to different interpretations concerning costs incurred to facilitate or respond to a GAO audit or request, in the event that the project was suggested or specifically required by a Congressional committee or subcommittee. The respondent posited that some might conclude that the proposed rule makes such costs unallowable, and requested confirmation that there is, in fact, no intent to make such costs unallowable.

Response: The Councils believe that Congress intended 10 U.S.C. 2324(e)(1)(Q) to apply only to investigations and inquiries conducted by Congress, per se. Therefore, under FAR 31.205-47(f)(9), the potential disallowance and requisite segregation of costs would not be triggered by the GAO's efforts, but rather by an actual investigation or inquiry conducted by Congress. Further, the language is clear in its applicability to a Congressional investigation or inquiry into an issue--one that is the subject matter of a proceeding, a known event.

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 has been deemed 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. 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:

DoD, GSA, and NASA do not expect this 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 the rule will be manifested as a cost principle to which only select small businesses are subject. Pursuant to FAR 31.000, the cost principles are applicable to contracts, subcontracts, and modifications whenever cost analysis is performed, or when a contract clause requires the determination or negotiation of costs. An analysis of contracts awarded during Fiscal Year 2014, the most recent full year for which information was available, revealed that fewer than 200 small businesses were performing contracts subject to FAR 31.

Again, the rule merely disallows costs incurred in the extremely rare instances when a contractor incurs costs in connection with a Congressional investigation or inquiry into an issue resulting in a disposition (e.g., conviction, liability, corrective action, etc.), as described in 10 U.S.C. 2324(k)(2). Accordingly, given the miniscule segment of the small business population that could potentially be impacted by the rule, and the low likelihood of the conditions being met, the impact on small businesses is insignificant.

There were no significant issues raised by the public in response to the Initial Regulatory Flexibility Analysis provided in the proposed rule. The final rule applies to all entities, both small and other than small, performing as contractors or subcontractors on U.S. Government contracts, and who are required to abide by the Cost Principles at FAR part 31. However, the rule is not expected to have a significant impact.

There are no reporting, recordkeeping, or other information collection requirements of the rule.

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.

V. Paperwork Reduction Act

This 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 Part 31

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 part 31 as set forth below:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

1. The authority citation for 48 CFR part 31 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.

2. Amend section 31.205-47 by--

a. In paragraph (a):

i. In the definition of ``Fraud'', removing ``Fraudmeans'' and adding ``Fraud means'' in its place;

ii. In the definition of ``Penalty'', removing the comma after the word ``Penalty'';

iii. In the definition of ``Proceeding'', removing the comma after the word ``Proceeding'';

b. Revising paragraph (b) introductory text; and

c. Adding paragraph (f)(9).

The addition reads as follows:

31.205-47 Costs related to legal and other proceedings.

* * * * *

(b) Costs incurred in connection with any proceeding brought by: A Federal, State, local, or foreign government for a violation of, or failure to comply with, law or regulation by the contractor (including its agents or employees) (41 U.S.C. 4310 and 10 U.S.C. 2324(k)); a contractor or subcontractor employee submitting a whistleblower complaint of reprisal in accordance with 41 U.S.C. 4712 or 10 U.S.C. 2409; or a third party in the name of the United States under the False Claims Act, 31 U.S.C. 3730, are unallowable if the result is--

* * * * *

(f) * * *

(9) A Congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition as described in paragraphs (b)(1) through (5) of this section (see 10 U.S.C. 2324(e)(1)(Q)).

* * * * *

3. Amend section 31.603 by--

a. Revising paragraphs (b) introductory text and (b)(15); and

b. Adding paragraph (b)(16).

The revisions and addition reads as follows:

31.603 Requirements.

* * * * *

(b) Agencies are not expected to place additional restrictions on individual items of cost. However, under 10 U.S.C. 2324, 41 U.S.C. 4304, 31 U.S.C. 3730, and 41 U.S.C. 4310, the following costs are unallowable:

* * * * *

(15) Unless any of the exceptions at 31.205-47(c) or (d) apply, costs incurred by a contractor in connection with any criminal, civil, or administrative proceedings that result in dispositions described at 31.205-47(b)(1) through (5) commenced by: A Federal, State, local, or foreign government, for a violation of, or failure to comply with, law or regulation by the contractor (including its agents or employees); a contractor or subcontractor employee submitting a whistleblower complaint of reprisal in accordance with 41 U.S.C. 4712 or 10 U.S.C. 2409; or a third party in the name of the United States under the False Claims Act, 31 U.S.C. 3730. For any such proceeding that does not result in a disposition described at 31.205-47(b)(1) through (5), or to which 31.205-47(c) exceptions apply, the cost of that proceeding shall be subject to the limitations in 31.205-47(e).

(16) Costs incurred in connection with a Congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition as described at 31.205-47(b)(1) through (5).

[FR Doc. 2016-31499 Filed 1-12-17; 8:45 am]

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[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]

[Rules and Regulations]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2016-31500]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

[Docket No. FAR 2016-0051, Sequence No. 9]

Federal Acquisition Regulation; Federal Acquisition Circular 2005-95; Small Entity Compliance Guide

AGENCY: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Small Entity Compliance Guide.

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SUMMARY: This document is issued under the joint authority of DOD, GSA, and NASA. This Small Entity Compliance Guide has been prepared in accordance with section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996. It consists of a summary of the rules appearing in Federal Acquisition Circular (FAC) 2005-95, which amends the Federal Acquisition Regulation (FAR). An asterisk (*) next to a rule indicates that a regulatory flexibility analysis has been prepared. Interested parties may obtain further information regarding these rules by referring to FAC 2005-95, which precedes this document. These documents are also available via the Internet at http://www.regulations.gov.

DATES: January 13, 2017.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact the analyst whose name appears in the table below. Please cite FAC 2005-95 and the FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755.

Rules Listed in FAC 2005-95

Item

Subject

FAR Case

Analyst

I

Uniform Use of Line Items

2013-014

Francis.

II

Acquisition Threshold for Special Emergency Procurement Authority.

2016-004

Francis.

III

Contractor Employee Internal Confidentiality Agreements or Statements.

2015-012

Davis.

IV

Contracts Under the Small Business Administration 8(a) Program.

2012-022

Uddowla.

V

Prohibition on Reimbursement for Congressional Investigations and Inquiries.

2015-016

Delgado.

SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these rules, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005-95 amends the FAR as follows:

Item I--Uniform Use of Line Items (FAR Case 2013-014)

This final rule amends the FAR to establish standards for the uniform use of line items in Federal procurement. These standards are designed to improve the accuracy, traceability, and usability of procurement data. The implementation of these standards will facilitate the identification and traceability of spending from appropriation through expenditure, supporting automated collection of information using key identifiers. The implementation date for FAR 4.1002 through 4.1008 will be October 1, 2019.

The requirements in the rule have the potential to impact any entity, small or large, that does business with the Federal Government because the proposed rule would apply to purchases of items, including commercial items and commercially available off-the-shelf items, and purchases under the simplified acquisition threshold. Any small business that contracts with a Federal agency could be impacted to at least some extent.

Item II--Acquisition Threshold for Special Emergency Procurement Authority (FAR Case 2016-004)

This final rule amends the FAR by increasing the simplified acquisition threshold (SAT) for special emergency procurement authority from $300,000 to $750,000 (within the United States) and from $1 million to $1.5 million (outside the United States) for acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack. This change implements Section 816 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92). This rule provides contracting officers with more flexibility when contracting in support of contingency operations.

The rule is not anticipated to have a significant economic impact on small business entities, because the rule raises the SAT for special emergency procurements, an arena in which a smaller percentage of small businesses participate, as compared to larger businesses. This final rule does not place any new requirements on small entities.

Item III--Contractor Employee Internal Confidentiality Agreements or Statements (FAR Case 2015-012)

This final rule revises the FAR to implement 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. Section 743 prohibits the use of funds appropriated or otherwise made available by Division E or any other act, for a contract with an entity that requires employees and subcontractors of such entity to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors 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 (e.g., agency office of the Inspector General). This rule is not expected to have a significant impact on small entities contracting with the Government.

Item IV--Contracts Under the Small Business Administration 8(a) Program (FAR Case 2012-022)

This final rule amends the Federal Acquisition Regulation (FAR) to implement clarifications made by the Small Business Administration in its final rule, which published in the Federal Register at 76 FR 8222 on February 11, 2011. This final rule clarifies in the FAR the procedures and requirements used when contracting under the 8(a) program. Clarifications include the evaluation, offering, and acceptance process, procedures for acquiring SBA's consent to procure an 8(a) requirement outside the 8(a) program, and the impact of exiting the 8(a) program in terms of the firm's ability to receive future 8(a) requirements and its current contractual commitments.

This final rule does not place any new requirements, financial or otherwise, on small entities, and serves mainly to provide more explicit guidance to Federal contracting officials.

Item V--Prohibition on Reimbursement for Congressional Investigations and Inquiries (FAR Case 2015-016)

This rule amends the FAR to implement section 857 of the Carl Levin and Howard P. `Buck' McKeon National Defense Authorization Act for Fiscal Year 2015. Section 857 imposes additional requirements relative to the allowability of costs incurred by a contractor in connection with a congressional investigation or inquiry. Contracting officers need to be aware of these new restrictions on certain costs, which cannot be charged under contracts. Although small businesses subject to FAR part 31 will need to maintain accounting records, this rule does not place any new requirements on small entities.

Dated: December 21, 2016.

William F. Clark,

Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy.

[FR Doc. 2016-31500 Filed 1-12-17; 8:45 am]

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