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Enron Mail |
THIS DOCUMENT IS BEING SENT ON BEHALF OF VINSON & ELKINS L.L.P.
GOVERNMENT CONTRACTS UPDATE Bush Administration Issues Interim Rule Suspending Clinton Administration "Blacklisting" Rule; Issues Proposed Rule Permanently Revoking Clinton Rule and Reinstating Former Contractor Responsibility Provisions<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /< On December 20, 2000, the Clinton Administration issued a final rule addressing contractor responsibility which took effect on January 19, 2001. 65 Fed. Reg. 80256 (Dec. 20, 2000) (the "Clinton rule"). Federal agencies are required to award contracts to "responsible" sources and contracting officers are required to determine whether prospective contractors are responsible before awarding federal contracts. The Clinton rule addressed the procedures to be employed by a contracting officer in arriving at a responsibility determination and under what circumstances contracting officers may disqualify companies from contracting with the federal government. The rule was extremely controversial and was effectively overturned on April 3, 2001 by the Bush Administration, in a move that has been described as a rebuff to organized labor and a nod to business. Provisions of the Clinton Rule ? The Clinton rule included a number of notable provisions: o Added language stating that a "satisfactory record of integrity and business ethics" included compliance with the law, including (for the first time) tax, labor and employment, environmental, antitrust, and consumer protection laws. o Required contracting officers to consider all relevant credible information, although the rule included guidelines for considering various types of violations. o Expanded the scope of a pre-award contractor certification to require offerors to certify to additional violations (violations of tax, labor and employment, environmental, antitrust and consumer protection laws) adjudicated within the last three years. ? Although the rule contained certain procedural safeguards and had its supporters, the rule was widely assailed by business groups and even by some government officials for its broad scope. Strong Criticism of the Clinton Rule ? Businesses argued that the broad scope of the new regulations could be used by contracting officers to improperly "blacklist" contractors from doing business with the federal government. Detractors argued that under the new rule, a contractor could technically be disqualified based on (among other things) a relatively insignificant violation of law that did not reasonably reflect the contractor's record of integrity or business ethics or even based on unproven allegations set forth in civil or administrative complaints by third parties, such as labor unions. ? Businesses also expressed concern about a contractor's ability to comply with the new certification requirement. ? The Federal Acquisition Regulation ("FAR") Council admitted that the rule generated "strong controversy". According to the FAR Council, the proposed rules generated 1,800 public comments (the typical FAR rule generates only about 1% of that amount) and after the final rule was issued, the FAR Council continued to receive negative comments. The Business Roundtable, Chamber of Commerce, National Association of Manufacturers, Associated General Contractors of America, Inc., and Associated Builders and Contractors, Inc. even filed a lawsuit seeking to overturn the final rule. The Bush Administration Responds ? In response to enormous pressure, the FAR Council published an interim rule which stayed the Clinton rule and reinstated the FAR text as it existed prior to January 19, 2001 (although an arcane requirement of the federal register requires that the stayed text retains its numbering and the restored text is renumbered accordingly). 66 Fed. Reg. 17754 (Apr. 3, 2001). The FAR Council provided in the interim rule that the stay will last for 270 days from April 3, 2001 or until finalization of a proposed rule that was concurrently published with the interim rule. ? The proposed rule permanently revokes the Clinton rule and restores the original FAR text. 66 Fed. Reg. 17758 (Apr. 3, 2001). ? In both notices, the FAR Council indicated that it was reconsidering its position and reassessing the advantages and disadvantages of the December 20, 2000 rule. The FAR Council noted that it was not clear whether there is justification for including the added categories of covered laws in the rule and its implementing certifications, whether the rule provides sufficient guidelines to prevent arbitrary or otherwise abusive implementation or whether the final rule is justified from a cost benefit perspective. The FAR Council also 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 new rule. The FAR Council noted that the final rule has only been effect since January 19, 2001 and there has not been time for the public to be in a position of reliance upon the rule's existence. ? Written comments related to the interim and proposed rules must be submitted on or before June 4, 2001 to be considered. If you have any questions about the new rules, please contact Michael Charness at (202) 639-6780, Kathleen Little at (202) 639-6663, David Johnson at (202) 639-6706 or Suzanne Reifman at (202) 639-6577. ++++++CONFIDENTIALITY NOTICE+++++ The information in this email may be confidential and/or privileged. This email is intended to be reviewed by only the individual or organization named above. If you are not the intended recipient or an authorized representative of the intended recipient, you are hereby notified that any review, dissemination or copying of this email and its attachments, if any, or the information contained herein is prohibited. If you have received this email in error, please immediately notify the sender by return email and delete this email from your system. Thank You
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