Defense Federal Acquisition Regulation Supplement: Preventing Conflicts of Interest for Certain Consulting Services (DFARS Case 2024-D007)

DEPARTMENT OF DEFENSE <SUBAGY>Defense Acquisition Regulations System</SUBAGY> <CFR>48 CFR Parts 209, 212, 237, and 252</CFR> <DEPDOC>[Docket DARS-2024-0029]</DEPDOC> <RIN>RIN 0750-AM04</RIN> <SUBJECT>Defense Federal Acquisition Regulation Supplement: Preventing Conflicts of Interest for Certain Consulting Services (DFARS Case 2024-D007)</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Defense Acquisition Regulations System, Department of Defense (DoD). <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2024 that prohibits contracting officers from awarding contracts assigned certain North American Industry Classification System codes to offerors that hold contracts that involve consulting services with certain covered foreign entities. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments on the proposed rule should be submitted in writing to the address shown below on or before November 25, 2024, to be considered in the formation of a final rule. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Submit comments identified by DFARS Case 2024-D007, using either of the following methods: ○ <E T="03">Federal eRulemaking Portal:</E> <E T="03">https://www.regulations.gov</E> . Search for DFARS Case 2024-D007. Select “Comment” and follow the instructions to submit a comment. Please include “DFARS Case 2024-D007” on any attached documents. ○ <E T="03">Email:</E> <E T="03">osd.dfars@mail.mil</E> . Include DFARS Case 2024-D007 in the subject line of the message. Comments received generally will be posted without change to <E T="03">https://www.regulations.gov,</E> including any personal information provided. To confirm receipt of your comment(s), please check <E T="03">https://www.regulations.gov,</E> approximately two to three days after submission to verify posting. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Mr. Jon Snyder, telephone 703-945-5341. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> DoD is proposing to revise the DFARS to implement section 812 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2024 (Pub. L. 118-31). Section 812 prohibits contracting officers from awarding contracts assigned a North American Industry Classification System (NAICS) code beginning with 5416 to offerors who hold contracts that involve consulting services with certain covered foreign entities. NAICS codes beginning with 5416 are for management, scientific, and technical consulting services. Section 812 allows an offeror to submit a conflict-of-interest mitigation plan and allows the prohibition to be waived under certain circumstances. <HD SOURCE="HD1">II. Discussion and Analysis</HD> This proposed rule includes a new section 209.57X, Conflicts of Interest in Certain Consulting Services, to implement section 812 of the NDAA for FY 2024. This new section 209.57X provides contracting officers the scope, definitions, prohibition, and waiver procedures for conflicts of interest in consulting services. DFARS 209.57X(c) prohibits contracting officers from awarding contracts assigned a NAICS code beginning with 5416 to an offeror that holds a contract for consulting services with one or more covered foreign entities if the offeror does not have an approved conflict-of-interest mitigation plan. DFARS 209.57X(b) contains the definitions of “consulting services”, “contract oversight entity”, “covered contract”, and “covered foreign entity”. The proposed rule also includes DFARS 209.503-70, which specifies the waiver authority for the prohibition at 209.57X(c). A new solicitation provision is proposed at DFARS 252.209-70XX, Prohibition Relating to Conflicts of Interest in Consulting Services—Certification, for use in solicitations assigned a NAICS code beginning with 5416 that involve consulting services, including solicitations using Federal Acquisition Regulation (FAR) part 12 procedures for the acquisition of commercial services. DFARS 252.209-70XX requires an offeror to certify whether or not the offeror, its subsidiaries, or its affiliates hold a contract for consulting services with one or more covered foreign entities. If the offeror cannot certify to this, the offeror may contact the contracting officer for guidance on submitting an existing conflict-of-interest mitigation plan. If such a plan is submitted and approved, the provision specifies that the plan will be incorporated into any resulting contract awarded to the offeror. The new solicitation provision is prescribed at 209.57X(e). The new solicitation provision is proposed to be added to the list of provisions and clauses for use in solicitations and contracts for commercial products and commercial services at DFARS 212.301. <HD SOURCE="HD1">III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT), for Commercial Products (Including Commercially Available Off-the-Shelf (COTS) Items), and for Commercial Services</HD> This proposed rule proposes a new provision at DFARS 252.209-70XX, Prohibition Relating to Conflicts of Interest in Consulting Services—Certification, to implement the requirements of section 812 of the NDAA for FY 2024. The provision at DFARS 252.209-70XX is prescribed at DFARS 209.57X(e) for use in solicitations assigned a NAICS code beginning with 5416 that involve consulting services, including solicitations using FAR part 12 procedures for the acquisition of commercial services. DoD does intend to apply the proposed rule to contracts at or below the SAT and for the acquisition of commercial services. DoD does not intend to apply the proposed rule to contracts for the acquisition of commercial products, including COTS items. <HD SOURCE="HD2">A. Applicability to Contracts at or Below the Simplified Acquisition Threshold</HD> The statute at 41 U.S.C. 1905 governs the applicability of laws to contracts or subcontracts in amounts not greater than the simplified acquisition threshold. It is intended to limit the applicability of laws to such contracts or subcontracts. The statute at 41 U.S.C. 1905 provides that if a provision of law contains criminal or civil penalties, or if the Federal Acquisition Regulatory Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT, the law will apply to them. The Principal Director, Defense Pricing, Contracting, and Acquisition Policy (DPCAP), is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the Federal Acquisition Regulation system of regulations. DoD does intend to make that determination. Therefore, this proposed rule will apply at or below the simplified acquisition threshold. <HD SOURCE="HD2">B. Applicability to Contracts for the Acquisition of Commercial Products Including COTS Items and for the Acquisition of Commercial Services</HD> The statue at 10 U.S.C. 3452 exempts contracts and subcontracts for the acquisition of commercial products including COTS items, and commercial services from provisions of law enacted after October 13, 1994, unless the Under Secretary of Defense (Acquisition and Sustainment) (USD(A&S)) makes a written determination that it would not be in the best interest of DoD to exempt contracts for the procurement of commercial products and commercial services from the applicability of the provision or contract requirement, except for a provision of law that— • Provides for criminal or civil penalties; • Requires that certain articles be bought from American sources pursuant to 10 U.S.C. 4862 (previously 10 U.S.C. 2533c), or that strategic materials critical to national security be bought from American sources pursuant to 10 U.S.C. 4863 (previously 10 U.S.C. 2533b); or • Specifically refers to 10 U.S.C. 3452 and states that it shall apply to contracts and subcontracts for the acquisition of commercial products (including COTS items) and commercial services. The statute implemented in this proposed rule does not impose criminal or civil penalties, does not require purchase pursuant to 10 U.S.C. 4862 or 4863, and does not refer to 10 U.S.C. 3452. Therefore, section 812 of the NDAA for FY 2024 will not apply to the acquisition of commercial services or commercial products including COTS items unless a written determination is made. Due to delegations of authority, the Principal Director, DPCAP is the appropriate authority to make this determination. DoD intends to make that determination to apply this statute to the acquisition of commercial services. DoD does not intend to make that determination to apply this statute to the acquisition of commercial products including COTS items. Therefore, this proposed rule will apply to the acquisition of commercial services but will not apply to the acquisition of commercial products including COTS items. <HD SOURCE="HD2">C. Determinations</HD> Given that the requirements of section 812 of the NDAA for FY 2024 were enacted to ensure the integrity and security of contracted consulting services, it is in the best interest of the Federal Government to apply the statute to contracts valued at or below the SAT and for the acquisition of commercial services, as defined at Federal Acquisition Regulation 2.101. Acquisitions below the SAT represent 42 percent of the consulting services contracts awarded in the last three fiscal years. Therefore, excluding these contracts would result in a significant national security risk. Consulting services are commercial services, as defined at FAR 2.101. Therefore, an exception for contracts for the acquisition of commercial services would ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 32k characters. 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