Proposed Rule2022-18814
Homeland Security Acquisition Regulation (HSAR); United States Coast Guard Contract Termination Policy (HSAR Case 2020-001)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 7, 2022
Issuing agencies
Homeland Security Department
Abstract
DHS is proposing to amend the Homeland Security Acquisition Regulation (HSAR) to add a new subpart and new contract clause to establish contract termination policy for the United States Coast Guard (USCG) and amend a clause to address the applicability of USCG's contract termination policy to commercial items.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 172 (Wednesday, September 7, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 172 (Wednesday, September 7, 2022)]
[Proposed Rules]
[Pages 54663-54669]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18814]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
48 CFR Parts 3049 and 3052
[Docket No. DHS-2022-0046]
RIN 1601-AB08
Homeland Security Acquisition Regulation (HSAR); United States
Coast Guard Contract Termination Policy (HSAR Case 2020-001)
AGENCY: Office of the Chief Procurement Officer, Department of Homeland
Security (DHS).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: DHS is proposing to amend the Homeland Security Acquisition
Regulation (HSAR) to add a new subpart and new contract clause to
establish contract termination policy for the United States Coast Guard
(USCG) and amend a clause to address the applicability of USCG's
contract termination policy to commercial items.
DATES: Interested parties should submit written comments to one of the
addresses shown below on or before November 7, 2022, to be considered
in the formation of the final rule.
ADDRESSES: Submit comments identified by HSAR Case 2020-001, Contract
Termination Policy for the United States Coast Guard, using any of the
following methods:
[[Page 54664]]
<bullet> <a href="http://Regulations.gov">Regulations.gov</a>: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Submit comments via the Federal eRulemaking portal by entering
``HSAR Case 2020-001'' under the heading ``Enter Keyword or ID'' and
selecting ``Search.'' Select the link ``Submit a Comment'' that
corresponds with ``HSAR Case 2020-001.'' Follow the instructions
provided at the ``Submit a Comment'' screen. Please include your name,
company name (if any), and ``HSAR Case 2020-001'' on your attached
document.
Comments received generally will be posted without change to
<a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal information
provided. To confirm receipt of your comment(s), please check
<a href="http://www.regulations.gov">www.regulations.gov</a>, approximately two to three days after submission
to verify posting. The Department is not accepting mailed comments at
this time.
FOR FURTHER INFORMATION CONTACT: Ms. Linda Stivaletti-Petty,
Procurement Analyst, DHS, Office of the Chief Procurement Officer,
Acquisition Policy and Legislation at (202) 447-5639 or email
<a href="/cdn-cgi/l/email-protection#18504b594a587069367c706b367f776e"><span class="__cf_email__" data-cfemail="6f273c2e3d2f071e410b071c41080019">[email protected]</span></a>. When using email, include HSAR Case 2020-001 in the
``Subject'' line.
SUPPLEMENTARY INFORMATION:
I. Background
The Federal Acquisition Regulations (FAR), found in 48 CFR part 1,
is a uniform regulation regarding the acquisition of goods and services
for Federal Government agencies. 48 CFR part 12, ``Acquisition of
Commercial Products and Commercial Services,'' deals with the
acquisition of commercial items, while part 49 discusses the
termination of contracts or solicitations. Under 48 CFR 49.101
contracts or solicitations may be terminated, either for convenience or
default, only when it is in the government's interest. The use of a
termination provision depends on the contract type such as a supply
contract, service contract, construction contract, research and
development contract and the method of payment, i.e., fixed price or
cost type.\1\
---------------------------------------------------------------------------
\1\ See 48 CFR 49.5.
---------------------------------------------------------------------------
Section 3523 of the John S. McCain National Defense Authorization
Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232)(14 U.S.C.
1155(a)) requires that before terminating a procurement or acquisition
contract with a total value of more than $1,000,000, the Commandant of
the Coast Guard shall notify each vendor under such contract and
require the vendor to maintain all work product related to the contract
until the earlier of-- (A) not less than 1 year after the date of the
notification; or (B) the date the Commandant notifies the vendor that
maintenance of such work product is no longer required.\2\
---------------------------------------------------------------------------
\2\ This section of the NDAA was originally codified at 14
U.S.C. 657. However, section 108(b) of the Frank LoBiondo Coast
Guard Authorization Act of 2018 (Pub. L. 115-282) subsequently
redesignated Sec. 657 as 14 U.S.C. 1155.
---------------------------------------------------------------------------
Specifically, 14 U.S.C. 1155(b) defines ``work product'' to mean:
(1) tangible and intangible items and information produced or possessed
as a result of a contract and (2) includes--(A) any completed end
items; (B) any uncompleted end items; and (C) any property in the
contractor's possession in which the United States Government has an
interest. Section 1155(c) establishes a penalty such that any vendor
that fails to maintain the work product is liable to the United States
for a civil penalty of not more than $25,000 for each day on which the
work product is unavailable.
Department of Homeland Security (DHS) is proposing to add a new
subpart regarding contract termination policy for the United States
Coast Guard (USCG) in the Homeland Security Acquisition Regulation
(HSAR) \3\ to ensure all USCG contractors and subcontractors comply
with contract termination policy.
---------------------------------------------------------------------------
\3\ The HSAR is issued for Departmental guidance according to
the policy cited in the FAR at 48 CFR 1.301. The HSAR establishes
uniform DHS policies and procedures for all acquisition activities
within the DHS and is issued by the Chief Procurement Officer who is
the DHS Senior Procurement Executive. The HSAR is located at 48 CFR
Chapter 30.
---------------------------------------------------------------------------
II. Proposed Changes
This rule proposes to amend the HSAR to:
Add new subpart 3049.90 Contract Termination (USCG) to part 3049
Termination of Contracts. This new subpart would consist of two
sections, section 3049.9001 Policy (USCG) and section 3049.9002
Contract Clause (USCG). The proposed addition of this subpart and
sections would align the USCG's contract termination regulatory
requirements with 14 U.S.C. 1155. HSAR 3049.9001 Policy (USCG) would
incorporate the provisions laid out in 14 U.S.C. 1155(a), regarding the
termination of contracts and maintenance of all work product related to
contracts. The proposed policy would require that before terminating a
contract with a value of more than $1,000,000, the Commandant of the
Coast Guard shall notify the contractor and the contractor shall be
required to maintain all work product related to the contract until the
earlier of--(1) not less than 1 year after the date of the
notification; or (2) the date the Commandant notifies the vendor that
maintenance of such work product is no longer required. The proposed
definition of ``Work Product'' is also taken from 14 U.S.C. 1155. This
proposed new subpart would state that a contractor that fails to
maintain a work product is liable to the United States for a civil
penalty of not more than $25,000 for each day on which such work
product is unavailable. This subpart would require the USCG to insert
this contract termination policy in all contracts, including contracts
for commercial items, with a total value of more than $1,000,000. These
proposed revisions to the HSAR are necessary to ensure USCG contractors
understand their roles and responsibilities to maintain work product in
the event of a termination, as required by 14 U.S.C. 1155.
This proposal would add a new HSAR clause, ``3052.249-90 Contract
Termination (USCG),'' that would implement 3049.9001 Policy (USCG).
This clause would be required in all USCG solicitations and contracts,
including contracts for commercial items, with a total value of more
than $1,000,000.
This proposed rule would also amend HSAR clause 3052.212-70
``Contract Terms and Conditions Applicable to DHS Acquisition of
Commercial Items'' to add HSAR clause 3052.249-90 ``Contract
Termination (USCG) that would implement 3049.9-9001 Policy (USCG)''.
This clause would be required in all USCG solicitations and contracts,
including contracts for commercial items, with a total value of more
than $1,000,000.
III. Applicability to Commercial Item Acquisitions, Including
Commercially Available Off-the-Shelf (COTS) Items, and Acquisitions
Below the Simplified Acquisition Threshold (SAT)
Section 3523 of the NDAA also provides for a civil penalty and does
not limit the application of the requirements of the statute to non-
commercial contracts. Consistent with 41 U.S.C. 1905, 1906, and 1907,
the DHS Chief Procurement Officer has determined that section 3523 of
the NDAA does apply to the acquisition of commercial items, including
COTS items. Because 41 U.S.C. 3523 states it applies to contracts with
a total value of more than $1,000,000, the requirements of the statute
do not apply to contracts below the SAT.
[[Page 54665]]
IV. Executive Orders 12866 and 13563
Executive Orders 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review) direct agencies to assess
the 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). Executive
Order 13563 emphasizes the importance of quantifying costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
The Office of Management and Budget (OMB) has not designated this
proposed rule a significant regulatory action under section 3(f) of
Executive Order 12866. Accordingly, OMB has not reviewed it. A
regulatory analysis (RA) follows.
Table 1 presents a summary of impacts of the proposed rule.
Table 1--Summary of Impacts of the NPRM
------------------------------------------------------------------------
Category Summary
------------------------------------------------------------------------
Applicability..................... Addition of contract termination and
notification requirements for the
Coast Guard in Chapter 30 of the
HSAR for contracts that are
terminated by the Coast Guard, this
would apply to new contracts,
including contracts for commercial
items of more than $1 million.
Affected Population............... Contractors and subcontractors whose
contracts are terminated by the
Coast Guard. Approximately 2
contracts annually.
Costs............................. There are no new costs of the
proposed rule as its proposed
requirements already exist in other
regulations and statutes.
Unquantified Benefits............. The proposed rule would provide
consistency between existing
statutes and regulations for
contractors and subcontractors
whose contracts are terminated by
the Coast Guard.
------------------------------------------------------------------------
The Federal Government seeks contractual work with the general
public when it wishes to purchase, rent, lease, or otherwise obtain
supplies or services from non-Federal sources. The FAR defines this
process as ``contracting.'' \4\ This proposed rule would revise the
HSAR to require Coast Guard to insert termination and notification
requirements into its new contracts (this rulemaking would not apply to
existing Coast Guard contracts), including contracts for commercial
items, with a total value of more than $1 million.
---------------------------------------------------------------------------
\4\ Readers should reference the FAR for a full definition of
the term ``contracting''.
---------------------------------------------------------------------------
The Coast Guard incorporates contract termination clauses in
accordance with the FAR, the HSAR, the Homeland Security Acquisition
Manual (HSAM), and the Coast Guard Acquisition Procedures (CGAP) into
contracts as applicable and using this clause when deemed necessary for
the Coast Guard to exercise its right to do so.
Based on our analysis, we do not estimate that this proposed rule
would impose any new requirements or regulatory costs on contractors
and subcontractors who perform contractual work, with a total value of
more than $1 million, for the Federal Government. Our analysis also
shows that the Federal Government would not incur any new regulatory
costs as a result of this proposed rule. We present a summary of the
estimated impacts of the proposed rule in Table 2.
Table 2--Proposed Changes and the Estimated Impacts
------------------------------------------------------------------------
HSAR part or subpart Description of
affected proposed change Basis for no cost impact
------------------------------------------------------------------------
3049..................... Removes the term Administrative,\5\ we do
``Reserved'' in not estimate a cost for
the Homeland this item because it
Security contains the insertion
Acquisition of the text, with no
Regulation (HSAR). requirements, in part
Adds terms to the 3049 of the HSAR.
HSAR:.
--``Part 3049'' to
Termination of
Contracts.
--``Subpart 3049.90
Contract
Termination
(USCG)''.
--``3049.9001
Policy (USCG)''.
--``3049.9002
Contract Clause
(USCG)'', part and
subpart titles.
3049.90.................. Adds term Administrative, we do
``Contract not estimate a cost for
Termination this item because it
(USCG)''--subpart contains the insertion
title, to the HSAR. of text, with no
requirements, in part
3049 of the HSAR.
3049.9001................ Adds term ``Policy Administrative, we do
(USCG)''--title, not estimate a cost for
to the HSAR. this item because it
contains the insertion
of text, with no
requirements, in part
3049 of the HSAR.
3049.9001(a)............. Adds paragraph (a) We do not estimate a
to the HSAR and cost for this
would implement regulatory provision
requirements of 14 because the FAR, Title
U.S.C. 1155, which 48 of the CFR,
provides contract currently requires the
termination policy Federal Government to
for procurement or include similar
acquisition language in applicable
contracts, Federal contracts.
including Termination and
commercial notification
contracts greater requirements are
than $1 million. addressed in subpart
49.1 of the FAR. The
statutory language for
contract termination is
currently in 14 U.S.C.
1155(a)(1) for all
contracts, including
commercial contracts,
with a total value of
more than $1 million.
[[Page 54666]]
3049.9001(b)............. Adds paragraph (b) We do not estimate a
to the HSAR, cost for this
``Notification''-- regulatory provision
title. because subpart 49.1 of
Paragraph would the FAR currently
implement contains notification
requirements of 14 requirements for the
U.S.C. 1155, which Federal Government. The
states the statutory language for
Commandant of the notification of
Coast Guard must contract termination is
notify the currently in 14 U.S.C.
contractor before 1155(a)(1) for
terminating a procurement or
procurement or acquisition contracts
acquisition of more than $1 million
contract of (14 U.S.C. 1155(b)
greater than $1 defines work product).
million and the Maintaining of records
contractor must is required by section
maintain work 4.7 of the FAR. The
product as Federal Government is
specified in the currently required to
Code. include similar
language in applicable
Federal contracts.
3049.9001(c)............. Adds paragraph (c) Administrative--we do
``Work Product not estimate a cost for
Defined''--title, the addition of this
to the HSAR. regulatory provision
because there is no
requirement, 14 U.S.C.
1155 currently contains
the definition of the
term ``work product''.
3049.9001(d)............. Adds paragraph (d) We do not estimate a
``Penalty''--title cost for this provision
, to the HSAR. because 14 U.S.C. 1155
currently contains the
statutory language for
``penalty''. This item
has not been levied for
past Coast Guard
contracts since the
statute was enacted in
2019.
3049.9001(e)............. Adds paragraph (e) We do not estimate a
to the HSAR, which cost for this provision
states the because subpart 49.5 of
substance of the the FAR requires the
clause shall be contracting officer to
inserted by the insert similar language
contractor in in applicable
contracts and contracts. The relevant
subcontracts and clauses are in subpart
for commercial 52.249-1 through 10 of
items with a total the FAR.
value of more than
$1 million.
3049.9002................ Adds the term Administrative--we do
``Contract Clause not estimate a cost for
(USCG)''-title, to the addition of the
the HSAR; states title to this subpart
Coast Guard of the HSAR. We do not
contracting estimate a cost for
officers shall this regulatory
insert the clause provision itself
at 3052.249-90 in because the contracting
all solicitations officer of the Coast
and contracts, Guard currently inserts
including similar language in
commercial items applicable contracts,
with a total value including contracts for
of more than $1 commercial items, with
million. a total value of more
than $1 million.
3052..................... In subpart 3052.2 Administrative--we do
of the HSAR, not estimate a cost for
``Texts of this item because it
Provisions and includes the insertion
Clauses'', adds of the regulatory text,
term ``3052.249-90 with no requirements,
Contract in part 3052 of the
Termination HSAR.
(USCG)''.
3052.249-90.............. --Adds text Administrative--we do
``Contract not estimate a cost for
Termination the insertion of the
(USCG)''--title, regulatory text that
to part 3052 of would be added to part
the HSAR. 3052 of the HSAR. We do
--Adds sentence to not estimate costs for
part 3052 of the the regulatory text in
HSAR, ``As paragraphs (a) through
prescribed in the (e) of this subpart
USCG guidance at because the
(HSAR) 48 CFR requirements are
3049.9002, insert currently contained in
the following 49.5 of the FAR. The
clause:''. statutory language
--Adds text currently exists in 14
``Contract U.S.C. 1155. The
Termination (USCG) requirements are also
(Month 2022)'' and in 3049.9001(a) through
paragraphs (a) (e).
through (e) to
part 3052 of the
HSAR.
3052.212-70.............. Adds term Administrative--we do
``3052.249-90 not estimate a cost for
Contract this item because it
Termination contains the insertion
(USCG)'' to the of the regulatory text,
HSAR. with no requirements,
in part 3052 of the
HSAR.
------------------------------------------------------------------------
Affected Population
---------------------------------------------------------------------------
\5\ We use the term ``administrative'' to mean proposed
editorial changes or proposed changes to the regulatory text that
contain no regulatory requirements or impacts to the affected
population of the proposed rule. The provisions we identified as
``administrative'' in Table 2 do not have quantifiable costs, cost
savings, or benefits associated with them. See Table 1 for the
unquantified benefits of the proposed rule.
---------------------------------------------------------------------------
The affected population of this proposed rule is a contractor (if a
contractor enters into a contract with a subcontractor, the
subcontractor would be counted as part of the main or primary contract)
whose contract is terminated by the Coast Guard; this would apply only
to a contract, including a commercial contract, with a total value of
more than $1 million.
DHS and the Coast Guard worked collaboratively to provide the
information for this regulatory analysis. The Coast Guard collected
acquisition data from the Coast Guard's Office of Procurement Policy
and Oversight to obtain the population or the number of contracts it
has acquired over the past 11 years. We used the Federal Procurement
Data System-Next Generation (FPDS-NG) database to collect the
acquisition data.\6\ The Coast Guard acquired a total of 7,228
contracts, including commercial items, with a total value of more than
$1 million, from fiscal year 2010 (FY 2010) through fiscal year 2020
(FY 2020), which ended on September 30, 2020. Included in this number
are an unknown number of subcontracts. For accounting purposes, the
Coast Guard counts the main contract or the contract it awards as the
primary contract, along with subcontracts, if applicable, as 1
contract.\7\ During this period of time, the Coast Guard terminated 25
contracts with a value of more than $1 million, or an average of about
2.3 contracts a year.
---------------------------------------------------------------------------
\6\ The Federal Government retains data on Federal procurements
through the FPDS-NG. Readers can reference the FPDS-NG website for
information on the procurement of Federal contracts at: <a href="https://www.gsa.gov/tools-overview/buying-and-selling-tools/federal-procurement-data-system">https://www.gsa.gov/tools-overview/buying-and-selling-tools/federal-procurement-data-system</a>.
\7\ A fiscal year in the Federal Government is the period of
time from October 1 in one calendar year to September 30 of the
following calendar year. It is the accounting period when Federal
agencies submit budget requests to the Office of Management and
Budget (OMB) for planning and operational purposes. The data we
collected are through fiscal year 2020; the Coast Guard generally
awards contracts, through its budget and acquisition process, in the
preceding fiscal year for the following fiscal year.
---------------------------------------------------------------------------
Of the 7,228 total contracts, the Coast Guard awarded contracts to
3,947 small businesses.\8\ Out of the 25 contracts,
[[Page 54667]]
including commercial contracts, with a value of more than $1 million,
that the Coast Guard terminated during this period of time, 8 of them
were associated with small businesses. This is an average of less than
1 small business contract termination a year (we discuss the impacts to
small entities in Section IV, ``Regulatory Flexibility Act'', of this
``Regulatory Analysis'').
---------------------------------------------------------------------------
\8\ When a small business wishes to obtain a Federal contract,
it can do so by ``self-certification'' on the Small Business
Administration's (SBA) website before it registers for contract
opportunities with the Federal Government. Readers can learn more
about this process using the General Services Administration's (GSA)
website at: <a href="https://www.gsa.gov/small-business#gsa-now">https://www.gsa.gov/small-business#gsa-now</a>. A small
business is one that meets SBA's size standards based upon the North
American Industry Classification System (NAICS). Readers can
reference SBA's table of size standards and the NAICS codes at:
<a href="https://www.sba.gov/document/support-table-size-standards">https://www.sba.gov/document/support-table-size-standards</a>. For more
information on NAICS codes, readers should reference the U.S. Census
Bureau's website at: <a href="https://www.census.gov/naics/">https://www.census.gov/naics/</a>. Small businesses
may also obtain Federal contracts through GSA's ``One Acquisition
Solution for Integrated Services'' (OASIS) Small Business (OASIS SB)
contracts, see: <a href="https://www.gsa.gov/buying-selling/products-services/professional-services/buy-services/oasis-and-oasis-small-business">https://www.gsa.gov/buying-selling/products-services/professional-services/buy-services/oasis-and-oasis-small-business</a>.
---------------------------------------------------------------------------
Cost Analysis of the Proposed Rule
This proposed rule would not impose any new regulatory costs on
contractors, subcontractor, and the Federal Government because the
requirements of this proposed rule currently exist in the FAR and in
the statute (see 48 CFR chapter 1). We explain our reasoning below for
each regulatory provision of this proposed rule. However, the FAR does
not contain the penalty clause that exists in 14 U.S.C. 1155 that we
would implement in section 3049.9001, paragraph (d).
We do not estimate a cost for the items we identified as
``administrative'' in Table 2 because they would contain the addition
of the regulatory text in the HSAR. This includes adding part, subpart,
and section titles to the HSAR. This would cover part 3049, subpart
3049.90 (with sections 3049.9001 and 3049.9002), part 3052, and
3052.212-70 of the HSAR (see Table 2).
Subpart 3049.90 of the HSAR would contain the contract termination
policy and notification of termination requirements for the Coast
Guard.
Section 3049.9001 would implement the requirements of the NDAA.
Paragraph (a) would implement the current statutory language in 14
U.S.C. 1155(a)(1), which provides the contract termination policy for
Coast Guard contracts, including contracts for commercial items, with a
total value of more than $1 million. Additionally, subpart 49.1
(49.101) of the FAR currently provides the authority for Federal
agencies and more specifically contracting officers to terminate
contracts ``. . . for the convenience of the Government, or for default
. . .''. Because the proposed rule would add the statutory language,
which supplements the existing regulatory requirement for contract
termination of subpart 49.1 of the FAR, we do not estimate a cost for
this proposed change.
Paragraph (b) of section 3049.9001 would contain the notification
requirement for the Commandant of the Coast Guard to notify the
contractor before terminating a contract, including contracts for
commercial items, with a total value of more than $1 million, and for
the contractor to maintain all work product related to the contract
until the earlier of--
(1) Not less than 1 year after the date of notification; or
(2) The date the Commandant notifies the vendor that maintenance of
such work product is no longer required.
Title 14 U.S.C. 1155(a)(1), currently provides the statutory
authority for the Commandant of the Coast Guard to notify the
contractor before terminating a procurement or acquisition contract
with a total value of more than $1 million. It also states the
contractor must maintain all work product related to the contract as we
previously mentioned. Subpart 49.1, specifically section 49.102 of the
FAR currently contains the regulatory requirement that Federal
contracting officers notify the contractor before terminating a
contract for convenience or default. Title 14 U.S.C. 1155 does not
specify the method of notification; however, the FAR states it must be
by written notice or it ``may be expedited by means of electronic
communication capable of providing confirmation of receipt by the
contractor''. It has been the past (and current) practice of the Coast
Guard to notify contractors of contract termination by electronic means
and for the contractor to reply by electronic means; therefore, this is
not a new requirement and it would not impose any new costs on the
contractor and the Coast Guard for this method of notification. Because
the proposed rule would add the statutory language for the notification
of contract termination, which section 49.102 of the FAR allows by
electronic means, we do not estimate a cost for this proposed change
(the statutory language for this provision also exists in 14 U.S.C.
1155).
We also do not estimate a cost for the requirement of the
contractor to maintain all work product related to the contract because
14 U.S.C. 1155(b) statutorily requires the contractor to perform this
function for the timeframe specified in the statute. Furthermore,
subpart 4.7 [specifically sections 4.703(a) through (d)] of the FAR
requires a contractor to retain records for the time specified in these
regulations (readers should refer to subpart 4.7 of the FAR for
contractor records retention).
Additionally, this is not a new Information Collection Request
(ICR) nor would it amend an existing ICR under the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501).\9\ The proposed rule would add the
statutory language, codified in 14 U.S.C. 1155, to this subpart and
paragraph of the HSAR and would ensure the contractor maintains the
work product for the timeframes specified in the statute. Lastly,
because the Coast Guard terminated an average of about 2 contracts a
year over the past 11 years, this number does not exceed the threshold
of 10 or more persons for a collection of information as defined in
Title 5 part 1320 of the CFR.\10\
---------------------------------------------------------------------------
\9\ Readers should reference the PRA for further information at:
<a href="https://www.govinfo.gov/content/pkg/PLAW-104publ13/html/PLAW-104publ13.htm">https://www.govinfo.gov/content/pkg/PLAW-104publ13/html/PLAW-104publ13.htm</a>.
\10\ Readers should reference the CFR for a full definition of
the term ``collection of information'' and for further information
on controlling paperwork burdens on the public at: <a href="https://www.govinfo.gov/content/pkg/CFR-2010-title5-vol3/xml/CFR-2010-title5-vol3-part1320.xml">https://www.govinfo.gov/content/pkg/CFR-2010-title5-vol3/xml/CFR-2010-title5-vol3-part1320.xml</a>.
---------------------------------------------------------------------------
Paragraph (c) of 3049.9001 would contain the definition of the term
``work product'' and would be titled ``Work Product Defined.'' We
classify this as an administrative provision without a regulatory
requirement. We do not estimate a cost for this provision because this
proposed rule would add this definition to the HSAR, which is codified
in the statute in 14 U.S.C. 1155.
Paragraph (d) of 3049.9001 would add the penalty a contractor would
incur if it fails to maintain the work product defined in paragraph (c)
of this section. The Coast Guard does not believe it is likely it will
levy this penalty in the future because for the contracts that it has
terminated, the Coast Guard has generally been able to access the
maintained work product when necessary. Because this regulatory
language is codified in the statute in 14 U.S.C. 1155, we do not
estimate a cost for this proposed change to the HSAR.
Paragraph (e) of 3049.9001 would contain the requirement for the
contractor to insert the substance of the clause into contracts and
subcontracts, including contracts and for commercial items with a total
value of more than $1 million. Subpart 49.5 (``Contract Termination
Clauses'') of the FAR requires contracting officers to insert the
substance of the clause into solicitations and contracts as specified
in the statute. As a result, we classify this regulatory language and
addition to the HSAR as an administrative item; therefore, we do not
estimate a cost for this proposed change.
[[Page 54668]]
The proposed rule would add section 3049.9002, ``Contract Clause
(USCG''), to subpart 3049.90 of the HSAR. It states Coast Guard
contracting officers shall insert the clause at 3052.249-90, ``Contract
Termination (USCG)'', in all solicitations and contracts, including
contracts for commercial items, with a total value of more than $1
million. Similar to the proposed paragraph (e) of subpart 3049.9001,
the contracting officer of the Coast Guard is required in subpart 49.5
of the FAR to insert this language into all solicitations and
contracts.\11\ As a result, we classify this regulatory language and
addition to the HSAR as an administrative item; therefore, we do not
estimate a cost for this proposed change.
---------------------------------------------------------------------------
\11\ The proposed rule includes all Coast Guard contracts. The
Coast Guard, however, issues primarily fixed-price contracts or firm
fixed-price contracts. The FAR defines fixed-price contracts as
types of contracts that ``. . . provide for a firm price or, in
appropriate cases, an adjustable price . . . the contracting officer
shall use firm fixed-price or fixed price with economic price
adjustment contracts when acquiring commercial items, except as
provided in 12.207(b)''. Readers should refer to the FAR for
information about other types of contracts.
---------------------------------------------------------------------------
Lastly, the proposed rule would add section 3052.249-90, ``Contract
Termination (USCG)'', to the HSAR. We classify this proposed change as
an administrative item, which would add the regulatory language with
the same requirements that would be contained in section 3049.9001,
paragraphs (a) through (e) of HSAR. As a result, we do not estimate a
cost for this proposed change.
Benefit Analysis of the Proposed Rule
The primary benefit of this proposed rule is to provide contractors
and subcontractors, a consistent regulatory environment between the
U.S.C., the FAR, and the HSAR, in the event the Federal Government
terminates a contract, including contracts for commercial items, with a
total value of more than $1 million. The regulatory consistency also
includes the notification of termination to a contractor by the
Commandant of the Coast Guard. The HSAR would contain the requirement
of the U.S.C. for the contractor to maintain the work product specified
and the penalty to be levied against a contractor for not maintaining
the work product as defined in the statute.
Alternatives of the Proposed Rule
DHS considered two alternatives to this proposed rule. Neither
alternative would align the HSAR with the statutory requirements of 14
U.S.C. 1155, nor would they provide the consistent regulatory
environment of the chosen alternative.
1. No Action Alternative. We rejected this alternative because the
HSAR would not align with the relevant statute, which contain the
statutory requirements for contract termination and notification for
the Coast Guard, specifically, the National Defense Authorization Act
(NDAA) for Fiscal Year 2019 (Pub. L. 115-232), 14 U.S.C. 1155, and
subpart 49.5 of the FAR.\12\ The statutory requirements are applicable
to contracts, including contracts for commercial items, with a total
value of more than $1 million. The HSAR would also not contain the
requirement for the contractor to maintain the work product as defined
in the U.S.C. Lastly, the HSAR would not contain the penalty specified
in the U.S.C. levied against a contractor for not maintaining the work
product.
---------------------------------------------------------------------------
\12\ For further information, readers should reference the NDAA
for fiscal year 2019 at: <a href="https://www.congress.gov/115/bills/hr5515/BILLS-115hr5515enr.pdf">https://www.congress.gov/115/bills/hr5515/BILLS-115hr5515enr.pdf</a>.
---------------------------------------------------------------------------
2. Issue a policy letter referencing the FAR and the U.S.C. for
contract termination policy and notification for the Coast Guard. We
rejected this alternative because the a policy letter would not revise
the HSAR and thus it would not contain the requirements found in 14
U.S.C. 1155. A policy letter would merely provide guidance for
contractors regarding the Coast Guard's contract termination policy,
including the penalty clause, and notification procedures for
requirements that currently exist in the relevant statutes and
regulations. There would be no costs associated with this alternative.
V. Regulatory Flexibility Act
Under the Regulatory Flexibility Act, 5 U.S.C. 601 612, we have
considered whether this proposed rule would have a significant economic
impact on a substantial number of small entities. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000.
This proposed rule would not impose any new requirements or costs
on small entities. This proposed rule would insert the Coast Guard's
termination policy and the notification of termination procedures for
contracts, including contracts for commercial items, with a total value
of more than $1 million, into DHS' HSAR. The requirements for contract
termination and notification are currently in subpart 49.5 of the FAR
and 14 U.S.C. 1155.
The Coast Guard collected data on contracts it terminated over the
past 11 years, including contracts for commercial items, with a total
value of more than $1 million. Over this period of time, the Coast
Guard terminated 8 contracts (or less than 1 a year on average) awarded
to small businesses that met this total dollar value. Although these 8
companies registered as a ``small business'' with the SBA in order to
obtain a contract with the Federal Government as a small business, we
researched these companies to determine the type of small entity that
they are in order to correctly classify them in this Regulatory
Flexibility Act (RFA) analysis. This is necessary because a ``small
business'' is one type of small entity as stated previously in this
section.
We obtained the NAICS codes from the FPDS-NG for all 8 companies.
We found company-specific information on 6 of the 8 companies by using
the publicly-available online database of businesses in the United
States, ReferenceUSAgov (we did not find revenue or employee
information for 2 companies, and assumed they were small).\13\
Nevertheless, based on each company's NAICS code, and using SBA's table
of size standards for each NAICS code, we found all of the 8 companies,
who had contracts with a total value of more than $1 million that were
terminated by the Coast Guard, to be small businesses, and not
governmental jurisdictions or not-for-profit organizations that are
independently owned and operated and are not dominant in their fields.
---------------------------------------------------------------------------
\13\ Readers can access the database at: <a href="https://www.referenceusagov.com/Home/Home">https://www.referenceusagov.com/Home/Home</a>.
---------------------------------------------------------------------------
As noted above, that the Coast Guard terminated an average of less
than 1 contract a year (over the past 11 years) that was associated
with a small entity and that the proposed rule would not impose any new
requirements or costs on small entities. Therefore, DHS certifies under
5 U.S.C. 605(b) that this proposed rule would not have a significant
economic impact on a substantial number of small entities.
If you think that your business, organization, or governmental
jurisdiction qualifies as a small entity and that this proposed rule
would have a significant economic impact on it, please submit a comment
to the docket at the address listed in the ADDRESSES section of this
preamble. In your comment, explain why you think it qualifies and how
and to what degree this proposed rule would economically affect it.
[[Page 54669]]
VI. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 3520) requires
agencies to consider the impact of paperwork and other information
collection burdens imposed on the public. According to the 1995
amendments to the Paperwork Reduction Act, an agency may not collect or
sponsor the collection of information, nor may it impose an information
collection requirement unless it displays a currently valid Office of
Management and Budget (OMB) control number. As defined in 5 CFR
1320.3(c), ``collection of information'' comprises reporting,
recordkeeping, monitoring, posting, labeling, and other similar
actions.
DHS has determined that there would be no new requirement for
information collection associated with this proposed rule. This
proposed rule would not change the burden in the collections currently
approved by OMB under OMB Control Numbers, 1600-0002, ``Various
Contract Related Forms that will be Included in the Homeland Security
Acquisition Regulation'', 1600-0003, ``Post-Contract Award
Information'', and 1600-0005, ``Solicitation of Proposal Information
for Award of Public Contracts''. There are no Coast Guard Information
Collection Requests (ICRs) associated with non-Federal contracts.
List of Subjects in 48 CFR Parts 3049 and 3052
Government procurement.
Paul Courtney,
Chief Procurement Officer, Department of Homeland Security.
Therefore, DHS proposes to amend 48 CFR parts 3049 and 3052 as
follows:
PART 3049--TERMINATION OF CONTRACTS
0
1. The authority citation for part 3049 is revised to read as follows:
Authority: 14 U.S.C. 1155.
0
2. Add subpart 3049.90 to read as follows:
Subpart 3049.90 Contract Termination (USCG)
3049.9001 Policy (USCG).
3049.9002 Contract clause (USCG).
3049.9001 Policy (USCG).
(a) This section implements 14 U.S.C. 1155 and provides the policy
for the USCG to use for contract terminations. This contract
termination policy applies to USCG contract terminations, including
contracts for commercial items, with a total value of more than
$1,000,000.
(b) Notification. Before terminating a contract with a total value
of more than $1,000,000, the Commandant of the Coast Guard shall notify
the contractor and the contractor shall be required to maintain all
work product related to the contract until the earlier of--
(1) not less than 1 year after the date of the notification; or
(2) the date the Commandant notifies the vendor that maintenance of
such work product is no longer required.
(c) Work Product Defined. The term ``work product''--
(1) means tangible and intangible items and information produced or
possessed as a result of a contract referred to in subsection (b); and
(2) includes--
(i) any completed end items;
(ii) any uncompleted end items; and
(iii) any property in the Contractor's possession in which the
United States Government has an interest.
(d) Penalty. A Contractor that fails to maintain work product as
required under subsection (b) is liable to the United States for a
civil penalty of not more than $25,000 for each day on which such work
product is unavailable.
(e) The Contractor shall insert the substance of this clause in
contracts and subcontracts, including contracts and for commercial
items, with a total value of more than $1,000,000.
3049.9002 Contract clause (USCG).
USCG contracting officers shall insert the clause at 3052.249-90,
Contract Termination (USCG), in all solicitations and contracts,
including contracts for commercial items, with a total value of more
than $1,000,000.
PART 3052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
3. The authority citation for part 3052 is revised to read as follows:
Authority: 5 U.S.C. 301-302, 14 U.S.C. 1155, 41 U.S.C. 1303, 41
U.S.C. 1707, 41 U.S.C. 1702, and 48 CFR subpart 1.3.
0
4. Add Sec. 3052.249-90 to read as follows:
Sec. 3052.249-90 Contract Termination (USCG).
As prescribed in the USCG guidance at (HSAR) 48 CFR 3049.9002,
insert the following clause:
Contract Termination (USCG) (Month 2022)
(a) This contract is subject to Section 3523 of the John S.
McCain National Defense Authorization Act for Fiscal Year 2019 (Pub.
L. 115-232), 14 U.S.C. 1155, pertaining to contract terminations for
the United States Coast Guard (USCG).
(b) Notification. As required by 14 U.S.C. 1155(b), before
terminating a contract with a total value of more than $1,000,000,
the Commandant of the Coast Guard shall notify the contractor and
the contractor shall be required to maintain all work product
related to the contract until the earlier of--
(1) not less than 1 year after the date of the notification; or
(2) the date the Commandant notifies the vendor that maintenance
of such work product is no longer required.
(c) Work Product Defined. In this clause the term ``work
product''--
(1) means tangible and intangible items and information produced
or possessed as a result of a contract referred to in subsection
(b); and
(2) includes--
(i) any completed end items;
(ii) any uncompleted end items; and
(iii) any property in the Contractor's possession in which the
United States Government has an interest.
(d) Penalty. A Contractor that fails to maintain work product as
required under subsection (b) is liable to the United States for a
civil penalty of not more than $25,000 for each day on which such
work product is unavailable.
(e) The Contractor shall insert the substance of this clause in
contracts and subcontracts, including contracts for commercial
items, with a total value of more than $1,000,000.
(End of clause)
Sec. 3052.212-70 Contract Terms and Conditions Applicable to DHS
Acquisition of Commercial Items. [Amended]
0
5. In Sec. 3052.212-70, add the text ``_HSAR 3052.249-90 Contract
Termination (USCG)'' at the end of the section, after the text
``_3052.247-72 F.o.B. Destination Only.'' and before the text ``(End of
clause)''.
[FR Doc. 2022-18814 Filed 9-6-22; 8:45 am]
BILLING CODE 4410-10-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on September 7, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.