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Debarment and Suspension (Nonprocurement) Requirements

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Information about this document as published in the Federal Register.

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Office of the Secretary (OST), DOT.


Final rule.


This rule amends the Department of Transportation's regulations implementing the governmentwide nonprocurement debarment and suspension requirements. Specifically, this rule adopts the optional lower tier coverage prohibiting excluded persons from participating in subcontracts at tiers lower than the first tier below a covered nonprocurement transaction.


Effective Date: This final rule is in effect November 24, 2006.

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Ellen Shields, Office of the Senior Procurement Executive, Office of Administration (M-61), (202) 366-4268, 400 Seventh Street, SW., Washington, DC 20590-0001. Office hours are from 7:45 a.m. to 4:15 p.m. e.t., Monday through Friday, except Federal holidays.

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On November 26, 2003, the Department of Transportation (DOT), along with twenty-nine other agencies, published its final rule implementing changes to the governmentwide debarment and suspension common rule (68 FR 66533). These regulations were intended to resolve unnecessary technical differences between the procurement and nonprocurement systems, revise the existing governmentwide debarment and suspension regulations in a plain language style and format, and make other improvements consistent with the purpose of the debarment and suspension system. One of the changes made to the regulations included limiting the mandatory down-tier application of an exclusion to only the first procurement level. Under the previous governmentwide regulations, all executive agencies applied suspensions and debarments to all procurement levels. However, in the revised governmentwide regulations, each agency was given the option of applying an exclusion to levels below the first procurement level. This final rule adopts the optional lower tier coverage to make the debarment and suspension regulations applicable to levels below the first procurement level. Many of the DOT programs involve billions of dollars in grants that are obligated to construction projects by States, localities and other recipients. For instance, on August 10, 2005, the President signed into law the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), Public Law 109-59. This Act authorizes funding for highways, highway safety, and public transportation totaling $244.1 billion over five years (2005-2009) and is the largest surface transportation investment in our Nation's history. Of this $244.1 billion, a substantial portion of these funds will be used by States and other grantees to procure construction contracts. These construction contracts could involve multiple subcontracts that would be vulnerable to misconduct and poor performance if suspended or debarred contractors are allowed to participate in these transactions.

Discussion of Comments

On October 5, 2005, the Office of the Secretary (OST) in the DOT published a notice of proposed rulemaking (NRPM) and requested comment on whether the DOT should adopt the lower tier coverage. In response to the NPRM, OST received two comments. These comments were submitted by the American Road and Transportation Builders Association (ARTBA) and the Wisconsin Department of Transportation (WisDOT).

ARTBA commented that the transportation construction industry has a well-deserved reputation of being comprised of highly ethical firms. However, despite this reputation, some firms betray the integrity of the whole. In these situations, ARTBA acknowledged that suspension or debarment may be appropriate. Additionally, ARTBA commented on the importance of maintaining the contractor's due process rights. ARTBA stated that the basis of due process is that everyone is deemed innocent until proven guilty and that due process is not served if contractors are suspended or debarred before being afforded an opportunity to be heard. ARTBA noted that debarment and suspension cannot be taken lightly because of the interruption in the firm's ability to work and, as such, the DOT needs to ensure that the debarment and suspension process is fair.

The DOT agrees with ARTBA that the transportation construction industry does indeed have a well-deserved reputation of being comprised of highly ethical firms. However, as ARTBA acknowledges, there are some firms within the industry that betray this reputation. The participation of these irresponsible firms and individuals in the transportation program could result in millions of dollars being wasted due to fraud. These are funds that could be used on construct more transportation projects. Also, the DOT agrees with Start Printed Page 62395ARTBA on the importance of maintaining the contractor's due process rights. The debarment and suspension regulations promulgated in 2003 set out detailed procedures that must be followed whenever the Department initiates a suspension or debarment action. These procedures include both notice and an opportunity to be heard.

WisDOT commented that the language was not user friendly and suggested that the DOT adopt a definition of procurement as well as revise the proposed language by essentially substituting the word “nonprocurement” with “procurement.” The current regulations are based on a governmentwide common rule that was adopted by numerous agencies and were drafted to be more consistent with the debarment and suspension rules in the Federal Acquisition Regulation (FAR). Thus, the DOT is hesitant to make any changes that may deviate from the consistency these rules are intended to create among Executive Branch agencies as well as the FAR. However, the DOT notes this suggestion and will work with the Office of Management and Budget, which is the lead agency on the governmentwide common rule, in this endeavor.

The DOT feels that the language should be adopted as proposed in the NPRM. First, the alternate language proposed by WisDOT would apply to procurement transactions at the first procurement level. These types of transactions have unique rules already established in section 29.220(b) of 49 CFR. Second, the language proposed by the NPRM makes it clear that the provision applies to contracts awarded by contractors under a nonprocurement transaction. Thus, the DOT is adopting the language proposed in the NPRM.

Rulemaking Analyses and Notices

Executive Order 12866 (Regulatory Planning and Review) and DOT Regulatory Policies and Procedures

The DOT has determined preliminarily that this action is not a significant regulatory action within the meaning of Executive Order 12866 and is not significant within the meaning of Department of Transportation regulatory policies and procedures. It is anticipated that the economic impact of this rulemaking would be minimal, since it would bring the DOT's regulations concerning the effect of a debarment and suspension back in line with the regulations that were in effect prior to November 26, 2003. These changes would not adversely affect, in a material way, any sector of the economy. In addition, these changes would not interfere with any action taken or planned by another agency and would not materially alter the budgetary impact of any entitlements, grants, user fees, or loan programs. Consequently, a full regulatory evaluation is not required.

Regulatory Flexibility Act

In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 5 U.S.C. 601-612) the DOT has evaluated the effects of this action on small entities and has determined that the action would not have a significant economic impact on a substantial number of small entities. This action brings the DOT's regulations concerning the effect of a debarment and suspension back in line with the regulations that were in effect prior to November 26, 2003 by excluding persons who have been debarred or suspended from participating in transactions beneath the first procurement level under a non-procurement transaction. For these reasons, the DOT certifies that this action does not have a significant economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

This rule does not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 1995, 109 Stat. 48). This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (2 U.S.C. 1532). This final rule provides for the exclusion of debarred or suspended persons from participating in transactions beneath the first procurement level under a non-procurement transaction, therefore, this action is not considered an unfunded mandate.

Executive Order 13132 (Federalism Assessment)

This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, and the DOT has determined that this action does not have sufficient federalism implications to warrant the preparation of a Federalism assessment. The DOT has also determined that this action does not preempt any State law or State regulation or affect the States' ability to discharge traditional State governmental functions.

Executive Order 13175

This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”). Because this final rule does not significantly or uniquely affect the communities of the Indian tribal governments and does not impose substantial direct compliance costs, the funding and consultation requirements of Executive Order 13175 do not apply.

Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et seq.), Federal agencies must obtain approval from the Office of Management and Budget for each collection of information they conduct, sponsor, or require through regulations. The DOT has determined that this rule does not contain collection of information requirements for the purposes of the PRA.

National Environmental Policy Act

The agency has analyzed this action for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321) and has determined that this action does not have any effect on the quality of the environment.

Regulation Identification Number

A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the United Agenda in April and October of each year. The RIN contained in the heading of this document can be used to cross reference this action with the Unified Agenda.

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List of Subjects in 49 CFR Part 29

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Issued on: October 6, 2006.

Maria Cino,

Acting Secretary of Transportation.

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In consideration of the foregoing, the DOT proposes to amend, title 49, Code of Federal Regulations, part 29, as set forth below:

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1. The authority citation for part 29 continues to read as follows:

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Authority: Sec. 2455, Pub. L. 103-355, 108 Stat. 3327 31 U.S.C. 6101 note); E.O. 11738 3 CFR, 173 Comp., p. 799); E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O. 12689 (3 CFR 1989 Comp., p. 235).

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2. In § 29.220, add paragraph (c) to read as follows:

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Are any procurement transactions included as covered transactions?
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(c) The contract is awarded by any contractor, subcontractor, supplier, consultant or its agent or representative in any transaction, regardless of tier, to be funded or provided by the DOT under a nonprocurement transaction that is expected to equal or exceed $25,000. [See optional lower tier coverage shown in the diagram in the appendix to this part.]

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3. In § 29.520, in paragraph (d), remove the references: “United States Coast Guard [DOT-USCG]” and “Research and Special Programs [DOT-RSPA]” and insert the references “Research and Innovative Technology Administration [RITA]” and “Pipeline and Hazardous Materials Safety Administration [DOT-PHMSA]” in their place, respectively.

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[FR Doc. 06-8657 Filed 10-24-06; 8:45 am]