On December 5, 2014, in order to implement Section 852 of the 2013 National Defense Authorization Act (NDAA), the Federal Acquisition Regulation (FAR) Council issued a proposed rule modifying contractor reporting requirements in the Federal Awardee Performance and Integrity System (FAPIIS). FAPIIS, which has been in existence since 2010, provides information regarding the business ethics and quality of prospective contractors competing for Federal Contracts. Section 852 of the 2013 NDAA modifies contractor reporting requirements in FAPIIS by adding a general requirement that "information in the database on [corporations] shall, to the extent practicable, include information on any parent, subsidiary, or successor entities to the 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 implementing Section 852 of the 2013 NDAA, the Proposed Rule does the following:
The relevant definitions used in the Proposed Rule are:
Significantly, the Proposed Rule excludes from the definition of "successor," new offices or divisions of the same company or a company that simply changes its name. In addition, the Council chose to limit reporting to immediate owner because they "determined that the further the distanced between the entities, the less relevant the information is likely to be for establishing responsibility of the offeror."
About a month ago, the revised SAM reporting requirements regarding reporting of immediate and highest-level owners went into effect. This Proposed Rule seems to be reconciling and providing more consistency with respect to the information contractors are required to report in the various databases. Contractors should keep in mind the fact that information pertaining to immediate owners, predecessors, successors and subsidiaries will be available to the public through the respective databases.
More importantly, Contractors should be aware that the Proposed Rule provides Contracting Officers with significant discretion in terms of how they choose to interpret or apply the information contained in FAPIIS, SAM and/or PPIRS with respect to not only the offeror, but also regarding the offeror's immediate owner, predecessor or subsidiaries in making a responsibility determination. In general, negative responsibility determinations are overturned only in cases of bad faith or where there is a lack of reasonable basis for the determination. Small businesses that receive a negative responsibility determination may, however, enlist the assistance of the SBA through their Certificate of Competency (COC) Program.
The Proposed Rule is open for comments until February 2, 2015.
- Before awarding a contract in excess of the Simplified Acquisition Threshold, the Contracting Officer is required to review integrity and performance information contained in FAPIIS, SAM and PPIRS;
- FAPIIS will identify an affiliate that is an immediate owner or subsidiary of the offeror;
- FAPIIS will identify all predecessors of the offeror that held a Federal contract or grant within the last three (3) years;
- When making a responsibility determination, the Contracting Officer shall consider the information in FAPIIS regarding the offeror and its immediate owner, predecessor or subsidiary, including past performance information.
The relevant definitions used in the Proposed Rule are:
- "Immediate Owner": An entity, other than the offeror, that has direct control of the offeror (see FAR 52.204-17)
- "Predecessor": An entity that is replaced by a successor and includes any predecessors of the predecessor.
- "Successor": 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).
Significantly, the Proposed Rule excludes from the definition of "successor," new offices or divisions of the same company or a company that simply changes its name. In addition, the Council chose to limit reporting to immediate owner because they "determined that the further the distanced between the entities, the less relevant the information is likely to be for establishing responsibility of the offeror."
About a month ago, the revised SAM reporting requirements regarding reporting of immediate and highest-level owners went into effect. This Proposed Rule seems to be reconciling and providing more consistency with respect to the information contractors are required to report in the various databases. Contractors should keep in mind the fact that information pertaining to immediate owners, predecessors, successors and subsidiaries will be available to the public through the respective databases.
More importantly, Contractors should be aware that the Proposed Rule provides Contracting Officers with significant discretion in terms of how they choose to interpret or apply the information contained in FAPIIS, SAM and/or PPIRS with respect to not only the offeror, but also regarding the offeror's immediate owner, predecessor or subsidiaries in making a responsibility determination. In general, negative responsibility determinations are overturned only in cases of bad faith or where there is a lack of reasonable basis for the determination. Small businesses that receive a negative responsibility determination may, however, enlist the assistance of the SBA through their Certificate of Competency (COC) Program.
The Proposed Rule is open for comments until February 2, 2015.
