Tomorrow – April 22, 2010 – is the effective date of the final FAR Rule (.pdf) implementing the Federal Awardee Performance and Integrity Information System, known as FAPIIS. If the expected value of a contract (or grant) exceeds $500,000, agencies must insert a new implementing clause (FAR 52.209-7) that requires certified disclosures from contractors pertaining to certain criminal, civil, and administrative proceedings. We previously posted information (.pdf) about the required disclosures. Vendors will provide this information through the Central Contracting Registration ("CCR") database.
In anticipation of these new reporting requirements (and because the questions are already “live” in CCR) (.pdf), contractors are wrestling with some very challenging issues, such as:
- The Rule requires disclosure of certain proceedings “in connection with the award to or performance by” the offeror of a Federal contract or grant. The CCR questions broaden the inquiry to include State contracts and grants. How should contractors resolve this inconsistency?
- What does it mean to have proceedings “in connection with” government contracts? Are labor or environmental disputes, which could impact the entire business, reportable? If so, must a contractor list every government contract or grant and report these disputes in connection with each contractor grant?
- Under the new Rule, disclosures must be made about the offeror and/or “its principals.” Although the Preamble to the Rule suggests that principal refers to a “person within the business entity,” the definition incorporated into the clause defines principal as an “officer, director, owner, partner, or a person having primary management or supervisory responsibilities within a business entity.” Does the word inclusion of “owner” cover a situation where one business entity owns another, thereby making a parent corporation’s “proceedings” reportable?
- The new Rule defines an “administrative proceeding” as a “non-judicial process that is adjudicatory in nature in order to make a determination of fault or liability.” If a government agency unilaterally makes a finding and assesses a fine, and the contractor accepts the finding and pays the fine, is that reportable as an administrative proceeding?
OMB has issued proposed guidance (.pdf) to help agencies implement this Rule and the underlying statute, but there will be many challenges and questions in the weeks ahead as this new Rule is rolled out.