Acquisition council delays contractor ethics rules

The Civilian Agency Acquisition Council (CAAC) has told agencies they may postpone implementation of a controversial rule that sets ethics standards for government contractors. Agencies have been urged to delay implementation of the so-called 'blacklisting' rule until July 19, in what officials said was a first step toward scrapping the rule. The CAAC received numerous complaints from contractors and members of Congress that agencies and vendors needed more time to implement the rule. "The effective date extension will allow the federal government and federal contractors sufficient time to meet the new obligations and new responsibilities imposed by the final rule," CAAC Chairman Al Matera said in a memorandum issued last week that contained the group's recommendations. The council's action allows agencies to gain an exemption from the rule under a "class deviation." A class deviation allows certain groups to be exempt from any new regulation. Since the rule has been in effect since Jan. 19, agencies now must decide whether to implement the rule or to put it on hold for six months. "It's a necessary first step, but it's not the solution we're looking for," said David Marin, a spokesman for Rep. Tom Davis, R-Va., who is chairman of the House Government Reform Subcommittee on Technology and Procurement Policy. Davis has repeatedly asked the administration for more time to implement the rule. "The deviation allows time for the Bush administration to begin reversing the rule through the rulemaking process," Marin said. The blacklisting rule took effect just one day before President Clinton left office. It requires federal contracting officers to review a company's compliance with labor, employment, tax, environmental and antitrust laws to determine if it is fit to do business with the federal government. Marin and others expressed concern that the CAAC's action would lead to uneven implementation of the rule, since agencies have the discretion to decide whether to apply the rule immediately or not. But the Federal Acquisition Regulation Council, which includes both the CAAC and the Defense Acquisition Regulation Council, is working on imposing a governmentwide, six-month moratorium on the blacklisting rule, according to a senior government official familiar with the process. This stay could include a notice requesting comment on revoking the rule, a necessary precursor to revoking the rule entirely, the official said. "It's very possible that [the FAR Council] will publish a rule which will have the effect of staying the [blacklisting] rule through July 19. It's very possible that the council will ask for additional comments on whether the rule should be revoked, and it's possible that a final rule will be issued disposing of the matter," said the official. Some agencies have already moved to postpone implementation of the rule under the guidelines spelled out by the CAAC. Friday, the General Services Administration and Department of Interior moved first to adopt the six-month stay on the rule. The Department of Transportation has also adopted the stay, Marin said. The Departments of Health and Human Services, Energy and Agriculture, and the Environmental Protection Agency, also plan to postpone the rule, the official said, but spokespersons at these departments were unable to confirm what action their agencies have taken on the rule. Not all agencies are poised to postpone the rule. The State Department intends to continue implementing the rule until otherwise directed, said Marin. The Pentagon is rumored to be waiting for a governmentwide order from the FAR Council before taking action, according to another senior government official. Industry representatives lauded the CAAC decision and encouraged agencies to follow the lead of GSA and Interior in adopting the six-month stay. "The rule as written is terrible," said Stan Soloway, president of the Professional Services Council and former deputy undersecretary of Defense for acquisition reform. "It presents enormous problems to the entire procurement process, and won't solve the problem it was designed to solve." Union officials defended the rule and criticized the Bush administration for using the "class deviation" exemption to undermine the rule without public comment. "By quietly and secretly blocking the rules through a 'deviation'… the administration has in effect nullified the public policy-making process and unilaterally overturned these important new rules," John J. Sweeney, president of the AFL-CIO, said in a statement Friday. The CAAC's action also directs agency procurement officers to amend solicitations already issued that include the rule. Solicitation requests made by procurement officers at EPA, Defense Department, and the National Institutes of Health have included the rule's language, Soloway said. The CAAC directive has no effect on a lawsuit that seeks to revoke the rule, according to Steve Bokat, general counsel for the U.S. Chamber of Commerce. The Chamber of Commerce, Business Roundtable and other business groups filed suit to challenge the new rule in late December.