SUPPLEMENTARY INFORMATION:

A. Background

This interim rule revises the FAR to implement section 815 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84). Section 815 amends section 2455(c)(1) of the Federal Acquisition Streamlining Act of 1994 (31 U.S.C. 6101 note) by amending the definition of “procurement activities” to include subcontracts at any tier, except—

• It does not include subcontracts for commercially available off-the-shelf (COTS) items; and
• In the case of commercial items, such term includes only the first-tier subcontracts.

This has the effect, except for COTS items, of expanding the requirement of 2455(a), which states that “No agency shall allow a party to participate in any procurement * * * activity if any agency has debarred, suspended, or otherwise excluded * * * that party from participation in a procurement * * * activity.”

Prime contractors will not be restricted from subcontracts with suspended or debarred entities for COTS items; subcontractors for COTS items will not be required to disclose to the prime contractor whether the subcontractor, or any of its principals, is debarred, suspended, or proposed for debarment at the time of subcontract award.

This interim rule amends—

(1) FAR 9.405-2 to exclude COTS items from the restrictions on subcontracting with contractors that have been debarred, suspended, or proposed for debarment;

(2) The clause at FAR 52.209-6, Protecting the Government's Interest When Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment, by flowing down the requirements to check whether a subcontractor is suspended or debarred beyond the first-tier, with the stated exceptions for COTS items; and

(3) The clause at FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items, because the requirement that commercial contracts must flow the requirement down to the first-tier is now statutory.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Councils do not expect this interim rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act. The rule removes the current requirements relating to subcontracts for COTS items, and in the case of commercial items, the requirement extends only to the first-tier subcontracts. This rule will impact small entities that are awarded a lower-tier subcontract for a non-COTS item that exceeds $30,000, in that these entities must now disclose to the higher-tier subcontractor whether they are suspended, debarred, or proposed for suspension. Although a substantial number of small entities may be impacted by this rule, the impact is not significant. It will likely only take one minute to include the required information with an offer. For the other impact of the rule, which will require the higher-tier subcontractor to provide an explanation if desiring to subcontract with an entity that has been debarred, suspended, or proposed for debarment, the Councils do not expect this requirement to impact a substantial number of small entities, because it would only be in rare circumstances that a subcontractor would potentially jeopardize performance or integrity by knowingly contracting with an entity that is debarred, suspended or proposed for debarment. Therefore, an Initial Regulatory Flexibility Analysis has not been performed. The Councils invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

The Councils will also consider comments from small entities concerning the existing regulations in parts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (FAC 2005-47, FAR Case 2008-036) in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does apply; however, these changes to the FAR only impose minimal additional information collection requirements to the paperwork burden previously approved under OMB Control Number 9000-0094. Because the change in burden hours is so slight, no new approval by OMB is required.

D. Determination to Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator of the National Aeronautics and Space Administration that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comment. This action is necessary to implement the changes resulting from the enactment of Section 815 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84), effective October 28, 2009. However, pursuant to 41 U.S.C. 418b and FAR 1.501-3(b), the Councils will consider public comments received in response to this interim rule in the formation of the final rule.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 9 and 52 as set forth below:

1. The authority citation for 48 CFR parts 9 and 52 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

2. Amend section 9.405-2 by revising paragraph (b) introductory text to read as follows:

3. Amend section 52.209-6 by—

a. Revising the date of the clause;

b. Redesignating paragraphs (a) through (c) as paragraphs (b) through (d), respectively; and adding a new paragraph (a);

c. Revising the newly designated paragraphs (b), (c), and (d) introductory text; and

d. Adding paragraph (e).

The revised and added text reads as follows:

4. Amend section 52.212-5 by—

a. Revising the date of the clause; and

b. Redesignating paragraphs (b)(6) through (b)(44) as paragraphs (b)(7) through (b)(45), respectively; and adding a new paragraph (b)(6).

The revised and added text reads as follows:

5. Amend section 52.213-4 by revising the date of the clause and paragraph (b)(2)(i) to read as follows: