[Federal Register Volume 79, Number 233 (Thursday, December 4, 2014)]
[Proposed Rules]
[Pages 71975-71979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28484]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 4, 9, 22, and 52
[FAR Case: 2013-020; Docket No. 2013-0020; Sequence No. 1]
RIN 9000-AM74
Federal Acquisition Regulation: Information on Corporate
Contractor Performance and Integrity
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to implement a section of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013 to include
in the Federal Awardee Performance and Integrity Information System
(FAPIIS), to the extent practicable, identification of any immediate
owner or subsidiary, and all predecessors of an offeror that held a
Federal contract or grant within the last three years. The objective is
to provide a more comprehensive understanding of the performance and
integrity of the corporation before awarding a Federal contract.
DATES: Interested parties should submit written comments to the
Regulatory Secretariat at one of the addresses shown below on or before
February 2, 2015 to be considered in the formation of the final rule.
ADDRESSES: Submit comments in response to FAR Case 2013-020 by any of
the following methods:
Regulations.gov: http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by searching for ``FAR Case
2013-020''. Select the link ``Comment Now'' that corresponds with ``FAR
Case 2013-020.'' Follow the instructions provided at the ``Comment
Now'' screen. Please include your name, company name (if any), and
``FAR Case 2013-020'' on your attached document.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (MVCB), ATTN: Ms. Hada Flowers, 1800 F Street NW., 2nd
floor, Washington, DC 20405.
Instructions: Please submit comments only and cite ``FAR Case 2013-
020'' in all correspondence related to this case. All comments received
will be posted without change to http://www.regulations.gov, including
any personal and/or business confidential information provided.
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 FAR Case 2013-020.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA are proposing to revise the FAR to implement
section 852 of the National Defense Authorization Act for Fiscal Year
2013 (Pub. L. 112-239) with regard to Federal contracts. Section 852
requires that the FAPIIS include, to the extent practicable,
information on any parent, subsidiary, or successor entities to a
corporation in a manner designed to give the acquisition officials
using the database a comprehensive understanding of the performance and
integrity of the corporation in carrying out Federal contracts and
grants. This proposed rule addresses the collection of information with
regard to offerors that are responding to a solicitation for a Federal
contract. The data on immediate owner and direct subsidiaries of an
entity will be available through FAPIIS, based on the data obtained
from offerors in response to the FAR provision 52.204-17, Ownership or
Control of Offeror, which was published in the Federal Register at 79
FR 31187, on May 30, 2014, as a final rule under FAR Case 2012-024.
II. Discussion and Analysis
A. Information Required
1. Owner/Subsidiary (Proposed FAR 9.104-6(a)(2)(i))
After reviewing section 852, the Defense Acquisition Regulation
Council and the Civilian Agency Acquisition
[[Page 71976]]
Council (the Councils) determined that the further the distance between
the entities, the less relevant the information is likely to be for
establishing responsibility of the offeror. Furthermore, the cost and
complexity maintaining a system that monitors the interrelationships of
companies and their changes in ownership, and direct and indirect
subsidiaries that could occur may be resource intensive for both the
Government and the contractor and outweigh the benefits. Therefore, the
Councils have determined that it is not practicable to establish
interrelationships beyond the immediate owner and the direct
subsidiary. The data on the immediate owner of an entity will be
available through FAPIIS, based on the data obtained from offerors in
response to the FAR provision 52.204-17, Ownership or Control of
Offeror, which was published in the Federal Register at 79 FR 31187, on
May 30, 2014, as a final rule under FAR Case 2012-024, effective
November 1, 2014. This proposed rule 2013-020 will not be finalized
until after the final rule under FAR Case 2012-024 becomes effective.
For discussion of subsidiaries, see the information below in paragraph
B.
2. Predecessor/Successor (Proposed FAR 9.1046(a)(2)(ii))
Although the law requested information on successor entities, the
Councils concluded that any entity making an offer would have to be the
successor, because by definition the predecessor no longer exists,
having been replaced by the successor. Therefore, the proposed
provision requests offerors to provide information about all
predecessors of the offeror that received a Federal contract or grant
within the last three years. The information on predecessors of the
offeror provided from the proposed provision at FAR 52.204-WW will be
shown with the entity's record in the System for Award Management (SAM)
and in FAPIIS.
With regard to identification of predecessors, the Councils have
limited the identification of predecessor entities to within the last
three years. This timeframe is consistent with the period required by
FAR 42.1503(g) for consideration of most past performance information,
and the timeframe generally used when reviewing prospective
contractor's integrity and past performance information within the last
three years to make a responsibility determination.
B. Source of Information on Ownership and Predecessor of Offeror
By obtaining the information on ownership directly from each
offeror, the Government can define exactly what information it is
seeking. Furthermore, there is already a final FAR rule (FAR case 2012-
024, Commercial and Government Entity Code (CAGE), published in the
Federal Register at 79 FR 3118, on May 30, 2014; effective November 1,
2014) that provides information on owners of each offeror. It is not
necessary to request information on subsidiaries from the offeror,
because if the subsidiary is in the SAM database, the subsidiary will
provide the information on its immediate owner, which would then be
shared with FAPIIS. If the subsidiary has not received any Government
awards, the subsidiary will have no information available in FAPIIS,
making it unnecessary for the owner to identify such a relationship.
The following example demonstrates how FAPIIS will link owners with
subsidiaries:
If companies B, C, and D have reported that--
B is owned by A;
C is owned by A; and
D is owned by C,
Then FAPIIS will identify--
Subsidiaries B and C for offeror A;
Owner A for offeror B;
Owner A and subsidiary D for offeror C; and
Immediate owner C (not higher-level owner A) for offeror D.
The Councils propose a new provision 52.204-WW, entitled
``Predecessor of Offeror'' to gather information on all predecessors of
the offeror that held a Federal contract or grant within the last three
years.
C. Definitions (Proposed FAR 52.204-WW and FAR 52.204-17(a))
1. ``Owner.'' The proposed definition of the term ``owner'' is
consistent with the definition in the provision 52.204-17, Ownership or
Control of Offeror (see final rule for FAR Case 2012-024, Commercial
and Government Entity Code, published in the Federal Register at 79 FR
31187, on May 30, 2014 and effective November 1, 2014).
2. ``Subsidiary.'' The term ``subsidiary'' is used throughout the
FAR without definition, except as used with regard to inverted domestic
corporations (FAR 9.108-1). The Councils have not defined
``subsidiary'' in this case, because it is necessary for the term
``subsidiary'' to be the exact reverse of the term ``immediate owner.''
Any offeror that identifies an entity as its immediate owner is the
subsidiary of that other entity. These relationships will be identified
in FAPIIS, based on the identified immediate owners. Therefore, it is
unnecessary to define ``subsidiary.''
3. ``Predecessor'' and ``successor.'' The Councils have proposed
definitions of ``predecessor'' and ``successor'' to be included in
paragraph (a) of the proposed provision 52.204-WW, Predecessor of
Offeror. The term ``successor'' does not include new offices/divisions
of the same company. An entity that has only changed its name will not
be considered to be a successor. Identification of changes in name is
not necessary for purposes of this case, because as long as the CAGE
Code is still the same, FAPIIS will provide the prior information
relating to the entity. A ``predecessor'' means an entity that is
replaced by a successor and includes any predecessors of the
predecessor. A ``successor'' means an entity that has replaced a
predecessor by acquiring the assets and carrying out the affairs of the
predecessor under a new name (often through acquisition or merger). The
term ``successor'' does not include new offices/divisions of the same
company or a company that only changes its name. The extent of the
responsibility of the successor for the liabilities of the predecessor
may vary, depending on State law and specific circumstances.
D. Use of Information on Other Entities
FAR 9.104-3(c) already sets forth the FAR policy on consideration
of the integrity and past performance of affiliates, which as defined
in the FAR includes owners and subsidiaries, when they may adversely
affect the prospective contractor's responsibility. The Councils have
not proposed any change to this policy because it is adequate to
protect the interests of the Government.
E. Availability to the Public
The statute specifically requires the additional information on
corporate structure to be available ``in a manner designed to give the
acquisition officials using the database a comprehensive understanding
of the performance and integrity of the corporation in carrying out
Federal contracts and grants.'' However, section 3010 of the
Supplemental Appropriations Act, 2010 (Pub. L. 111-212) added the
requirement that all the information in FAPIIS, except for past
performance information, shall be posted on a publicly available
Internet Web site. Therefore, any information in FAPIIS with regard to
immediate owner, subsidiaries, and predecessors, will be available to
the public.
[[Page 71977]]
F. Applicability
This rule applies to commercial items, including commercially
available off-the-shelf items, as well as acquisitions below the
simplified acquisition threshold.
The information on predecessors is needed for all offerors for
which a CAGE code is required. The information will be stored in the
SAM database.
Determinations and findings were signed in February 2010 under FAR
Case 2008-027, that section 872 of the NDAA for FY 2009, which
established the FAPIIS database, applies to the acquisition of
commercial items, including commercially available off-the-shelf (COTS)
items. That determination stated that an exemption for commercial item
acquisitions (including COTS items) would exclude a significant portion
of Federal contractors, thereby undermining an overarching public
policy to achieve greater integrity and performance quality in
contracting. We should apply extensions of information to be used in
FAPIIS to acquisitions of commercial items, including COTS items, for
the same reasons we stated with regard to the original statute that
established FAPIIS.
The representation will also apply to solicitations that do not
exceed the simplified acquisition threshold.
Determinations and findings will be approved by the appropriate
authorities prior to publication of the final rule.
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 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 burden is minimal to provide the CAGE Code and the name of
all predecessors that held a Federal contract or grant within the last
three years. However, an Initial Regulatory Flexibility Analysis (IRFA)
has been performed and is summarized as follows:
The objective of this rule is to provide acquisition officials
using FAPIIS a comprehensive understanding of the performance and
integrity of the corporation in carrying out Federal contracts. The
legal basis for the rule is section 852 of the National Defense
Authorization Act for Fiscal Year 2013 (Pub. L. 112-239).
The proposed provision in this rule would require each offeror
to represent whether the offeror is or is not, within the last three
years, a successor to a predecessor that held a Federal contract or
grant within the last three years. If the offeror has indicated that
it is such a successor, then the offeror must provide the CAGE code
and legal name of all predecessors that held a Federal contract or
grant within the last three years. The data on immediate owner and
direct subsidiaries of an entity will be available through FAPIIS,
based on the data obtained from offerors in response to the FAR
provision 52.204-17, Ownership or Control of Offeror, that requires
this information for the CAGE code. The Federal Government received
offers from approximately 413,800 unique vendors in FY 2011.
Approximately 275,900 of these offers were by unique small
businesses, which will be required to respond to the proposed
provision.
The proposed rule requires approximately one submission per
year, with an estimated average of .1 preparation hours per
response. The response time will be less for most respondents, only
required to check a box. Only those respondents that check ``is''
will have to provide a minimal amount of information (CAGE Code and
legal name of all predecessors that held a Federal contract or grant
within the last three years). A mid-level professional skill would
be required in some instances to know whether the entity is a
successor, as defined in the proposed rule.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no exemptions from the rule for small entities,
because the law does not provide for any such exemption. However,
the proposed rule limits the review of predecessor entities to three
years.
The Regulatory Secretariat has submitted a copy of the IRFA to the
Chief Counsel for Advocacy of the Small Business Administration. A copy
of the IRFA may be obtained from the Regulatory Secretariat. DoD, GSA
and NASA invite comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2013-020),
in correspondence.
V. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The
proposed rule contains information collection requirements.
Accordingly, the Regulatory Secretariat has submitted a request for
approval of a new information collection requirement concerning
Identification of Predecessor Entities to the Office of Management and
Budget.
A. Public reporting burden for this collection of information is
estimated to average .1 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
The annual reporting burden estimated as follows:
Respondents: 413,800.
Responses per respondent: 1.
Total annual responses: 413,800.
Preparation hours per response: .1.
Total response Burden Hours: 41,380.
B. Request for Comments Regarding Paperwork Burden.
Submit comments, including suggestions for reducing this burden,
not later than February 2, 2015 to: FAR Desk Officer, OMB, Room 10102,
NEOB, Washington, DC 20503, and a copy to the General Services
Administration, Regulatory Secretariat Division (MVCB), ATTN: Ms. Hada
Flowers, 1800 F Street NW., 2nd floor, Washington, DC 20405.
Public comments are particularly invited on: whether this
collection of information is necessary for the proper performance of
functions of the FAR, and will have practical utility; Whether our
estimate of the public burden of this collection of information is
accurate, and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which we can minimize the burden of the
collection of information on those who are to respond, through the use
of appropriate technological collection techniques or other forms of
information technology.
Requesters may obtain a copy of the supporting statement from the
General Services Administration, Regulatory Secretariat Division
(MVCB), ATTN: Ms. Hada Flowers, 1800 F Street NW., 2nd floor,
Washington, DC 20405. Please cite ``OMB Control Number 9000-00XX;
Identification of Predecessors,'' in all correspondence.
[[Page 71978]]
List of Subjects in 48 CFR Parts 1, 4, 9, 22, and 52
Government procurement.
Dated: November 25, 2014.
William Clark,
Acting Director, Office of Government-wide Acquisition Policy, Office
of Acquisition Policy, Office of Government-wide Policy.
Therefore, the DoD, GSA, and NASA propose amending 48 CFR parts 1,
4, 9, 22, and 52 as set forth below:
0
1. The authority citation for 48 CFR parts 1, 4, 9, 22, 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 1--FEDERAL ACQUISITION REGULATIONS SYSTEM
1.106 [Amended]
0
2. Amend section 1.106, in the table following the introductory text,
by adding in numerical sequence, FAR segment ``52.204-WW'' and its
corresponding OMB Control No. ``9000-00XX''.
PART 4--ADMINISTRATIVE MATTERS
0
3. Amend section 4.1202 by redesignating paragraphs (a)(6) through (29)
as paragraphs (a)(7) through (30), respectively; and adding a new
paragraph (6) to read as follows;
4.1202 Solicitation provision and contract clause.
(a) * * *
(6) 52.204-WW, Predecessor of Offeror.
* * * * *
0
4. Amend section 4.1804 by adding paragraph (d) to read as follows:
4.1804 Solicitation provisions and contract clause.
* * * * *
(d) Insert the provision at 52.204-WW, Predecessor of Offeror, in
all solicitations that include the provision at 52.204-16, Commercial
and Government Entity Code Reporting.
PART 9--CONTRACTOR QUALIFICATIONS
0
5. Amend section 9.104-6 by revising paragraphs (a) and (b) to read as
follows:
9.104-6 Federal Awardee Performance and Integrity Information System.
(a)(1) Before awarding a contract in excess of the simplified
acquisition threshold, the contracting officer shall review the
integrity and performance information available in the Federal Awardee
Performance and Integrity Information System (FAPIIS), available at
www.ppirs.gov, then select FAPIIS, including FAPIIS information from
the System for Award Management Exclusions and the Past Performance
Information Retrieval System (PPIRS).
(2) In accordance with 41 U.S.C. 2313(d)(3), FAPIIS also
identifies--
(i) An affiliate that is an immediate owner or subsidiary of the
offeror, if any (see 52.204-17, Ownership or Control of Offeror); and
(ii) All predecessors of the offeror that held a Federal contract
or grant within the last three years (see 52.204-WW, Predecessor of
Offeror).
(b) When making a responsibility determination, the contracting
officer shall consider all the information available through FAPIIS
with regard to the offeror and any immediate owner, predecessor, or
subsidiary identified for that offeror in FAPIIS, as well as other past
performance information on the offeror (see subpart 42.15).
(1) For evaluation of information available through FAPIIS relating
to an affiliate of the offeror, see 9.104-3(c).
(2) For source selection evaluations of past performance, see
15.305(a)(2). Contracting officers shall use sound judgment in
determining the weight and relevance of the information contained in
FAPIIS and how it relates to the present acquisition. Since FAPIIS may
contain information on any of the offeror's previous contracts and
information covering a five-year period, some of that information may
not be relevant to a determination of present responsibility, e.g., a
prior administrative action such as debarment or suspension that has
expired or otherwise been resolved, or information relating to
contracts for completely different products or services.
* * * * *
0
6. Amend section 9.105-1 by revising introductory paragraph (c) to read
as follows:
9.105-1 Obtaining information.
* * * * *
(c) In making the determination of responsibility, the contracting
officer shall consider information available through FAPIIS (see 9.104-
6) with regard to the offeror and any immediate owner, predecessor, or
subsidiary identified for that offeror in FAPIIS, including information
that is linked to FAPIIS such as from the System for Award Management
Exclusions, and the Past Performance Information Retrieval System
(PPIRS), as well as any other relevant past performance information on
the offeror (see 9.104-1(c) and subpart 42.15). In addition, the
contracting officer should use the following sources of information to
support such determinations:
* * * * *
PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS
22.1006 [Amended]
0
7. Amend section 22.1006 by removing from paragraph (a)(2)(i)(C) the
words ``52.204-8(c)(2)(iii) or (iv)'' and adding ``52.204-8(c)(2)'' in
its place; and removing from paragraph (e)(4)(i) the words ``52.204-
8(c)(2)(iv)'' and adding ``52.204-8(c)(2)'' in its place.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
8. Amend section 52.204-8 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (c)(2)(ii) thru (vii) as paragraphs
(c)(2)(iii) thru (viii), respectively; and
0
c. Adding new paragraph (c)(2)(ii).
The revised and added text reads as follows:
52.204-8 Annual Representations and Certifications.
* * * * *
Annual Representations and Certifications (Date)
* * * * *
(c) * * *
(2) * * *
_-- (ii) 52.204-WW, Predecessor of Offeror.
* * * * *
0
9. Add section 52.204-WW, to read as follows:
52.204-WW Predecessor of Offeror.
As prescribed in 4.1804(d), insert the following provision:
Predecessor of Offeror (Date)
(a) Definitions. As used in this provision--
Commercial and Government Entity (CAGE) code means--
(1) An identifier assigned to entities located in the United
States and its outlying areas by the Defense Logistics Agency (DLA)
Logistics Information Service to identify a commercial or government
entity, or
(2) An identifier assigned by a member of the North Atlantic
Treaty Organization (NATO) or by NATO's Maintenance and Supply
Agency (NAMSA) to entities located outside the United States and its
outlying areas that DLA Logistics Information Service records and
maintains in the CAGE master file. This type of code is known as an
NCAGE code.
Predecessor means an entity that is replaced by a successor and
includes any predecessors of the predecessor.
Successor means an entity that has replaced a predecessor by
acquiring the assets and carrying out the affairs of the
[[Page 71979]]
predecessor under a new name (often through acquisition or merger).
The term ``successor'' does not include new offices/divisions of the
same company or a company that only changes its name. The extent of
the responsibility of the successor for the liabilities of the
predecessor may vary, depending on State law and specific
circumstances.
(b) The offeror represents that it [shabox1] is or [shabox1] is
not a successor to a predecessor that held a Federal contract or
grant within the last three years.
(c) If the offeror has indicated ``is'' in paragraph (b) of this
provision, enter the following information for all predecessors of
the offeror that held a Federal contract or grant within the last
three years (If more than one predecessor list in reverse
chronological order):
Predecessor CAGE code: ___-- (or mark ``Unknown'').
Predecessor legal name: ___--.
(Do not use a ``doing business as'' name.)
(End of provision)
* * * * *
0
10. Amend section 52.212-3 by--
0
a. Revising the date of the clause;
0
b. Removing from the introductory paragraph the words ``paragraphs (c)
through (p)'' and adding ``paragraphs (c) through (q)'' in its place;
0
c. Adding to paragraph (a), in alphabetical order, the definitions
``predecessor'' and ``successor'';
0
d. Removing from paragraph (b)(2) the words ``paragraphs at (c) through
(p)'' and adding ``paragraphs at (c) through (q)'' in its place; and
0
e. Adding paragraph (q).
The revised text reads as follows:
52.212-3 Offeror Representations and Certifications--Commercial Items.
* * * * *
Offeror Representations and Certifications--Commercial Items (Date)
* * * * *
(a) * * *
Predecessor means an entity that is replaced by a successor and
includes any predecessors of the predecessor.
* * * * *
Successor means an entity that has replaced a predecessor by
acquiring the assets and carrying out the affairs of the predecessor
under a new name (often through acquisition or merger). The term
``successor'' does not include new offices/divisions of the same
company or a company that only changes its name. The extent of the
responsibility of the successor for the liabilities of the
predecessor may vary, depending on State law and specific
circumstances.
* * * * *
(q) Predecessor of Offeror. (Applies in all solicitations that
include the provision at 52.204-16, Commercial and Government Entity
Code Reporting.)
(1) The offeror represents that it [shabox1] is or [shabox1] is
not a successor to a predecessor that held a Federal contract or
grant within the last three years.
(2) If the offeror has indicated ``is'' in paragraph (q)(1) of
this provision, enter the following information for all predecessors
that held a Federal contract or grant within the last three years
(If more than one predecessor, list in reverse chronological order):
Predecessor CAGE code: ___-- (or mark ``Unknown'').
Predecessor legal name: ___--.
(Do not use a ``doing business as'' name)
* * * * *
[FR Doc. 2014-28484 Filed 12-3-14; 8:45 am]
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