May 24, 2001

Federal Acquisition Regulation; Contractor Responsibility, Labor Relations Cost, and Costs Relating to Legal and Other Proceedings-Revocation

Key materials
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Rulemaking:

Federal Acquisition Regulation; Contractor Responsibility, Labor Relations Cost, and Costs Relating to Legal and Other Proceedings-Revocation

Stated Purpose:

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

Summary of RSP Comment:

The FAR Council's proposed rule to revoke the final rule on contractor responsibility is in the best interest of American taxpayers, and businesses. The final rule was ill-conceived and did not accomplish its stated purpose. If implemented, it would have eroded recent improvements made in the procurement process.

Problems with the December 20, 2000 rule are threefold. First, because existing rules for contractor responsibility and a separate process of debarment are superior remedies for contractor misconduct, the final rule is unnecessary. Second, the expansion of contractor responsibility determinations carries no clear guidelines for the contracting officers charged with executing the policy. This could lead to irregular and inconsistent application of the rules, thereby reducing the effectiveness and fairness of the procurement process at best and introducing political manipulations at worst. By transferring authority to enforce and punish federal regulatory laws to contracting officers, the proposed rule violates due process considerations. Accused parties may have no chance to respond to charges against them before punishment (i.e. denial of contract) is carried out. Finally, implementation of the final rule would increase the costs of government procurement both to contract bidders and to the government, which ultimately means to the taxpaying public. Costs would be incurred in paperwork and administration as well as inefficiencies and legal actions. Paperwork costs alone may be as high as $500 million annually by some estimates.