Contractor responsibility rule stayed

The Federal Acquisition Regulation Council (FAR Council) published in the Federal Register at 65 FR 80255, Dec. 20, 2000, a final rule addressing contractor responsibility and costs incurred in legal and other proceedings. After further review, the FAR Council is immediately staying that rule. The FAR Council intends the stay will last for 270 days from April 3, 2001, or until finalization of the proposed rule (entitled ‘‘Contractor Responsibility, Labor Relations Cost, and Costs Relating to Legal and Other Proceedings'' that is being published concurrently with this interim rule), whichever is sooner. The FAR Council is requesting comments in this FAR interim rule on the length of the stay. During the stay, the FAR text is restored to the text as it existed before Jan. 19, 2001. In a separate document, the FAR Council is publishing a proposed rule, requesting comments under that FAR case on revoking the Dec. 20, 2000, final rule.

The FAR, as amended by this rule, is applicable to solicitations issued on or after Jan. 19, 2001. Contracting officers must amend solicitations already issued that incorporated the certification provision(s) from the final rule published in the Federal Register on Dec. 20, 2000 (65 FR 80255), to delete those certification provision(s) and insert the certification provision(s) in this rule.

Interested parties should submit comments in writing on or before June 4, 2001 to be considered in the formulation of a final rule concerning the stay. Submit written comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405. Submit electronic comments via the Internet to: farcase.1999–010@gsa.gov. Please submit comments only and cite FAR case 1999–010 (stay) in all correspondence related to this case.

To learn more, get in touch with the FAR Secretariat, Room 4035, GS Building, Washington DC 20405, at 202-501–4755 for information pertaining to status or publication schedules. For clarification of content, contact Mr. Ralph De Stefano, Procurement Analyst, at 202-501–1758. Please cite FAC 97–24, FAR case 1999–010 (stay).

What was the final rule?
The FAR Council published a proposed rule amending FAR Parts 9 and 31 in the Federal Register at 64 FR 37360, July 9, 1999. In response to the proposed rule, the FAR Council received more than 1,500 letters. After reviewing the public comments, the FAR Council decided to republish the proposed rule with certain changes. The FAR Council published a revised proposed rule amending FAR Parts 9, 14, 15, 31, and 52 in the Federal Register at 65 FR 40830, June 30, 2000. Over 300 public comments were received.

The final rule, which was published in the Federal Register at 65 FR 80255 on Dec. 20, 2000, had an effective date of Jan. 19, 2001, 30 days from date of publication. The final rule included the following revisions:

• FAR Part 9 — added language stating that a satisfactory record of integrity and business ethics includes satisfactory compliance with the law including tax, labor and employment, environmental, antitrust, and consumer protection laws (FAR 9.104–1(d)). Required contracting officers to consider all relevant credible information but stated that the greatest weight must be given to offenses adjudicated within the past three years.
  
• FAR Part 14 and 15 — directed contracting officers to notify offerors if the offerors were excluded based on a non-responsibility determination.
  
• FAR Part 31 — at FAR 31.205–21, made unallowable those costs incurred for activities that assist, promote, or deter unionization.
  
• At FAR 31.305–47, made unallowable those costs incurred in civil or administrative proceedings brought by a government where the contractor violated, or failed to comply with a law or regulation.
  
• FAR Part 52 — at FAR 52.209–5, amended the previous certification to require offerors to certify to additional violations (violations of tax, labor and employment, environmental, antitrust, or consumer protection laws) adjudicated within the last three years. It was a check-the-box certification. An offeror would have to provide additional detailed information only upon the request of the contracting officer. At 52.212–3(h), made an equivalent change for the certification for commercial items.

Assorted groups file suit
On Dec. 22, 2000, a lawsuit was filed in the United States District Court for the District of Columbia seeking to overturn the final rule. The lawsuit was brought by The Business Roundtable, Chamber of Commerce of the United States, National Association of Manufacturers, Associated General Contractors of America, Inc., and Associated Builders and Contractors, Inc.

The FAR Council has received letters from major industry associations representing thousands of firms, and from Congressional Representatives, requesting an effective date extension of at least six months. Industry concerns extend especially to contractors' ability to comply with the rule's new certification requirements, which apply to procurements over $100,000.

The FAR Council is reassessing the advantages and disadvantages of the changes made by the Dec. 20, 2000, final rule, to determine if the benefits of the rule are outweighed by the burdens imposed by the rule. In this regard, it is not clear to the FAR Council that:

• there is a justification for including the added categories of covered laws in the rule and its implementing certification,
  
• the rule provides contracting officers with sufficient guidelines to prevent arbitrary or otherwise abusive implementation, or
  
• the final rule is justified from a cost benefit perspective.

In a proposed rule also published today, the FAR Council is requesting public comments on revoking the final rule.

In the interim, the FAR Council has determined that the 30-day effective date did not give contractors, and the Government, sufficient time to meet the new obligations and responsibilities imposed by the final rule. Government contracting officers have not had sufficient training. Offerors have not had sufficient time to establish a system to track compliance with applicable laws and keep it current, in order to be able to properly fill out the certification. Although there is language in the noncommercial items certification which assures contractors that no system of records needs to be established to render the certification in good faith, this language is not found in the commercial items certification. There are criminal penalties for a false certification (18 U.S.C. 1001).

Seeing the light?
The FAR Council now recognizes that it will take more time than it anticipated for businesses to put the systems in place. Therefore, the FAR Council has decided to stay the final rule of Dec. 20, 2000. The FAR Council intends the stay to last for 270 days from the date of publication of this interim rule, or until finalization of the proposed rule (published concurrently with this interim rule), whichever is sooner. The final rule has only been in effect since Jan. 19, 2001. There has not been time for the public to be in a position of reliance upon the rule's existence.

The previous FAR sections that were in effect, such as the previous version of the certification, are restored by this interim rule. The requirement that contractors must be responsible is statutory, and this stay does not relieve offerors of the requirement to have a satisfactory record of integrity and business ethics. Contracting officers will continue to have the authority and duty to make responsibility decisions. Agency debarring officials will continue to have the authority and duty to make determinations whether to suspend and debar a contractor. The government still needs the information contained in the previous certifications, which covered such things as whether the contractor or its principals are presently debarred, or had a felony conviction for contract fraud. The stay is not intended to be a statement that violations of the additional laws discussed in the Dec. 20, 2000, rule could not have been considered in the past, or could not be considered in the future, by contracting officers or agency debarring officials.

The FAR Council is inviting comments on two rules. In this interim rule, FAR Case 1999–010, comments are requested on the length of the stay. In the accompanying proposed rule, FAR case 2001–014, comments are requested on the revocation of the December rule. When staying Code of Federal Regulations text, if the previous text is restored, the Federal Register requires different numbering from the stayed text. The stayed text uses the numbering that was published in Federal Acquisition Circular 97–21. The revised numbering of the restored text is not a substantive change.