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DEPARTMENT OF HOMELAND SECURITY

Veterans Affairs Department

CFR Citation: 48 CFR Chapter 30

Docket ID: [Docket Number USCG-2003-16571]

RIN ID: RIN 1601-AA16

NOTICE: Part II

DOCUMENT ACTION: Interim rule with request for comments.

SUBJECT CATEGORY: Department of Homeland Security Acquisition Regulation

DATES: This rule is effective on December 4, 2003. Comments must reach the Department of Homeland Security, Office of the Chief Procurement Officer, Acquisition Policy on or before January 5, 2004, to be considered in the formation of the final rule. Comments on collection of information sent to the Office of Management and Budget (OMB) must reach OMB on or before January 5, 2004.

DOCUMENT SUMMARY: The Department of Homeland Security (DHS) is issuing an interim rule to establish the Department of Homeland Security Acquisition Regulation (HSAR). The HSAR is intended as regulatory guidance. The HSAR reflects recent changes to the Federal Acquisition Regulation (FAR) and it establishes and encourages participation in the DHS MentorProege Program.

SUMMARY: Homeland Security Department,

SUPPLEMENTAL INFORMATION

Request for Comments

We encourage you to participate in this rulemaking by submitting comments and related material. Your comments will be considered for the final rule we plan to issue to replace this interim rule. If you choose to comment on this rule, please include your name and address, indicate the specific heading of this document to which each comment applies, and give the reason for each comment. Comments should be organized by HSAR Part, and address the specific section (e.g. (HSAR) 48 CFR 3006.3027) that is being commented on. You may submit your comments and material by mail or electronic means to the address under ADDRESSES. Please submit your comments and material by only one means. If you submit them by mail, submit them in an unbound format, no larger than 8\1/2\ by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know that they reached the Department of Homeland Security, Office of Chief Procurement Officer, please enclose a stamped, selfaddressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this rule in view of them.

Background and Purpose

DHS is issuing the Homeland Security Acquisition Regulation (HSAR) to establish a uniform departmentwide acquisition policy and regulation. The HSAR uses plain language for clarity and understanding; does not contain internal operating procedures that do not have a significant effect beyond DHS; and establishes the DHS MentorProtege Program.

The Department formed a HSAR Work Group that included both acquisition and legal staff from both the Department and its organizational elements. The team's approach was to develop and issue a regulation that delegates authority, where appropriate, to the lowest levels, is concise, and is simple for contractor's, offerors, and DHS contracting personnel to use.

Discussion of Interim Rule

The parts that contain no coverage and have been reserved are parts 3007, 3008, 3010, 3012, 3014, 3018, 3020, 3021, 3025, 3026, 3029, 3034, 3038, 3039, 3040, 3041, 3043, 3044, 3048, 3049, 3050, and 3051.

Part 3001, Federal Acquisition System, sets forth basic policies and general information about the Department of Homeland Security Regulation system including purpose, guiding principles, applicability, issuance, arrangement, numbering, dissemination, publication and codification, deviations, career development, contracting authority, and policy regarding determinations, waivers, exceptions, approvals and reviews.

Part 3002, Definitions and Abbreviations of Words and Terms, provides definitions and abbreviations for commonly used terms.

Part 3003, Improper Business Practices and Personal Conflicts of Interest, lists the authorities for Standards of Conduct and defines the Federal Acquisition Regulation (FAR) term ``authorized official of an agency.'' The Part also contains procedures for reporting suspected violations of the Gratuities clause, and reports of suspected antitrust violations, Contingent Fees and subcontractor kickbacks.

Part 3004, Administrative Matters, prescribes an Approval of Contract clause, and a Security Requirements for Unclassified Information Technology Resources clause. The Part also establishes when quick close out procedures can be used, as well as the applicable forms to be used in contract close out.

Part 3005, Publicizing Contract Actions, includes a requirement that releases of information to the general public will follow Freedom of Information Act (FOIA) rules, and a United States Coast Guard (USCG) exemption for publicizing contract actions for personal medical services contracting.

Part 3006, Competition Requirements, includes policies and procedures for establishing or maintaining alternative sources; circumstances permitting other than full and open competition, public interest; and Competition Advocates requirements, duties and responsibilities. The Part also includes a USCG exemption from competition requirements for personal medical services contracting.

Part 3009, Contractor Qualifications, sets forth policy on responsible prospective contractors; debarment, suspension and ineligibility; and a solicitation provision for organizational and consultant conflicts of interest.

Part 3011, Describing Agency Needs, includes a policy on selecting and developing requirements documents; solicitation and contract clauses for using and maintaining requirements documents; liquidated damages; and priorities and allocations.

Part 3013, Simplified Acquisition Procedures, includes a solicitation provision, and contract and purchase order clauses for the USCG bar coding requirement. It also includes the implementation of DHS special streamlined acquisition authorities.

Part 3015, Contracting By Negotiation, prescribes a Key Personnel or Facilities
[[Page 67869]]
clause that will be used when selection for award is substantially based on offeror's possession of special capabilities. A policy on handling proposals and information, payment of profit or fee, and unsolicited proposals is also included in this Part.

Part 3016, Types of Contracts, includes a policy on fixed price, incentive, indefinitedelivery contracts, and a settlement of letter contract clause.

Part 3017, Special Contracting Methods, includes guidance on use of options, leader company contracting, energy savings performance contracts, and USCG clauses for fixed price contracts for vessel repair, alteration or conversion.

Part 3019, Small Business Programs, sets forth general policies for the small business and small business subcontracting program. This Part prescribes that a provision and clause be placed in all respective solicitations and contracts requiring a subcontracting plan. Also, two clauses are prescribed for DHS' MentorProtege Program, which assists qualified small businesses in receiving developmental assistance from DHS prime contractors in order to increase the base of small businesses eligible to perform DHS contracts and subcontracts.

Part 3022, Application of Labor Laws to Government Acquisitions, sets forth DHS' policy on the admittance of union representatives to DHS installations. Prescriptions for HSAR 3052.22270, Strikes or Picketing Affecting Timely Completion of the Contract Work, and HSAR 3052.22271, Strikes or Picketing Affecting Access to a DHS Facility, are included. Guidance on withholding from or suspension of contract payments is also included. This part sets forth the USCG policy, provision and clause for local hires in all solicitations and contracts for construction or services with regard to a State's unemployment rate.

Part 3023, Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and DrugFree Workplace, includes a provision and clause for removal or disposal of hazardous substances. It also includes drugfree workplace applicability guidance and sets forth approval authorities for a determination to suspend payments, terminate contracts or debar and suspend as it relates to this part. This Part also includes a requirement for Accident and Fire reporting when work will be performed on governmentowned or leased property.

Part 3024, Protection of Privacy and Freedom of Information, specifies where DHS policies and procedures for implementing the Privacy Act of 1974 and the FOIA are found.

Part 3027, Patents, Data, and Copyrights, provides general guidance on patents, adjustment of royalties and use of patented technology under the North American Free Trade Agreements Act; patent rights clauses; and approval and justification requirements for administration of licensing background patent rights to third parties. Also, it includes guidance on use of an appropriate rights in data clause.

Part 3028, Bonds and Insurance, includes a requirement for the contracting officer to furnish surety information, and it includes policy on execution and administration of bonds. There is a requirement for the USCG to insert a provision or clause on Notification of Miller Act Payment Bond Protection. There are also USCG clauses for the insurance requirements for contracts for lease of aircraft. An insurance provision or clause requirement is found in this part.

Part 3030, Cost Accounting Standards Administration, provides that the Head of the Contracting Activity (HCA) is authorized to waive application of Cost Accounting Standards to individual commercial item, firmfixed priced contracts.

Part 3031, Contract Cost Principles and Procedures, includes policy for precontract costs.

Part 3032, Contract Financing, provides guidance on contract financing for simplified acquisitions and specifies that the Chief Procurement Officer (CPO) is the DHS remedy coordination official. It also contains the Payment by Electronic Funds TransferCentral Contractor Registration (CCR) requirement for all solicitations and contracts.

Part 3033, Protests, Disputes, and Appeals includes the designation of Department of Transportation Board of Contract Appeals as the DHS BCA.

Part 3035, Research and Development Contracting, includes policy on cost sharing and recoupment.

Part 3036, Construction and Architect and Engineering Contracts, includes a policy on performance reports and a contract clause for special precautions for work at operating airports.

Part 3037, Service Contracting, includes guidance on contract personnel access application, and conditional access to sensitive but unclassified information. The Part also provides policy for personal services contracts.

Part 3042, Contract Administration and Audit Services, includes prescriptions for clauses for dissemination of contract information; contracting officer's technical representative, and a requirement to use the Contractor Performance System for evaluating contractor performance.

Part 3045, Government Property, sets for reporting and auditing requirements, and a provision for a contract clause.

Part 3046, Quality Assurance, includes definitions relative to warranties; criteria for use of warranties; and terms and conditions. The Part also includes additional requirements for the USCG.

Part 3047, Transportation, sets forth the provisions for the transportation clauses for use, when applicable.

Part 3052, Solicitation Provisions and Contract Clauses, provides the text of the provisions and clauses. It also includes the text for the USCG specific provisions and clauses.

Part 3053, Forms, includes five forms that require completion by contractors or contract employees. The forms will be available and linked to the DHS website after they are approved by OMB, and upon publication of the final rule.

The Matrix lists the provisions and clauses, and illustrates whether a provision or clause is required or to be used when applicable.

Regulatory Assessment

This interim rule is not subject to review by the Office of Management and Budget (OMB) under Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13132, Federalism, and is not a major rule under 5 U.S.C. 804. It therefore does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under Executive Order 12866. It is not significant under the regulatory policies and procedures of the Department of Homeland Security.

Small Entities

Under the Regulatory Flexibility Act (5 U.S.C. 601612), we have considered whether this interim rule would have a significant economic impact on a substantial number of small entities. The term ``small entities'' comprises small businesses, notforprofit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. This interim rule is not expected to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act. An Initial Regulatory [[Page 67870]]

Flexibility Analysis has not been performed.

The MentorProt[eacute]g[eacute] Program does apply to large business and small business firms that receive a form of incentive for assuming the role of mentor to small businesses, other small disadvantaged businesses, qualified HUBZone small businesses, small businesses owned and controlled by service disabled veterans, and small womenowned businesses. It is expected that the prot[eacute]g[eacute] entities would directly benefit from the forms of mentoring provided for in this rule. The interim regulation provides consistency with the FAR.

Collection of Information

This interim rule contains information collection requirements subject to the Paperwork Reduction Act (44 U.S.C. 35013520) that are being submitted to OMB for approval. As defined in 5 CFR 1320.3(c), ``collection of information'' comprises reporting, recordkeeping, monitoring, posting, labeling, and other, similar actions. DHS is awaiting approval from OMB for the five (5) forms that are referenced in the HSAR, and that can be found in Part 3053. DHS is also awaiting approval and the assignment of numbers for contract, solicitations and protests.

This information will be shown in HSAR Section 3001.106 and Part 3053, and will be published separately. This information is required by the Office of the Chief Procurement Officer in order to solicit, negotiate, award, and administer contracts in accordance with the Federal Acquisition Regulation, other regulations and statutes; in order to evaluate offers, ensure appropriate contract cost controls, and minimize conditions conducive to fraud, waste, and abuse; and in order to collect appropriate information from prospective contractors when protests are filed.

Additionally, the collections of information in this rule in part 3053 are for DHS Forms 070001 through 070005. These forms will be used when applicable for the following purposes: Cumulative Claim and Reconciliation Statement; Contractor's Assignment of Refunds, Rebates, Credits, and Other Amounts; Contractor's Release; Contractor Report of Government Property; and Employee Claim for Wage Restitution.

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), we have submitted a copy of this interim rule to the Office of Management and Budget (OMB) for its review of the collection of information. Due to the circumstances surrounding this temporary rule, we asked for ``emergency processing'' of our request.

We ask for public comment on the collection of information to help us determine how useful the information is; whether it can help us perform our functions better; whether it is readily available elsewhere; how accurate our estimate of the burden of collection is; how valid our methods for determining burden are; how we can improve the quality, usefulness, and clarity of the information; and how we can minimize the burden of collection.

If you submit comments on the collection of information, submit them both to OMB and to DHS at the address indicated under ADDRESSES, by the date under DATES.

You need not respond to a collection of information unless it displays a currently valid control number from OMB.

Federalism

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. This rule is not subject to the requirements of Executive Order 13132. DHS has determined that this proposed rule does not contain federalism implications and would not preempt State laws.

Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary of Homeland Security that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Sections 833 and 835 of the Homeland Security Act (Public Law 107296), signed on November 25, 2002. The act provides authorities to be used in contracting for supplies and services required to accomplish the DHS mission of preventing and reducing terrorist attacks as well as minimizing damage and assisting in recovery from terrorist attacks for the Department and its organizational elements (OEs). Comments received in response to this interim rule will be considered in the formation of the final rule.

Under 5 U.S.C. 553(b)(B), the Department of Homeland Security (DHS) finds that good cause exists for not publishing a general notice of proposed rulemaking (NPRM). DHS consists of agencies and other operating elements of Government that preexisted the formation of DHS. Prior to DHS's formation, those agencies used supplemental acquisition regulations as a foundation for the conduct of their procurement and acquisition functions. For example, the Coast Guard utilized the Department of Transportation (DOT) Acquisition Regulations found at 48 CFR Chapter 12. The Coast Guard can no longer rely on the DOT regulations since they no longer are a part of DOT. Similarly, organizations that used the Department of Treasury's or Department of Justice's acquisition supplements can no longer rely on those regulations.

DHS finds that due to an urgent need for seamless continued acquisition and contracting operations of the previous agencies and organizations that now comprise DHS, it is impracticable to afford the public an opportunity to comment prior to issuing this interim rule. Currently, there are no Departmentlevel acquisition regulations governing DHS's vital contracting business. Consequently, a delay in issuing this regulation would be contrary to the public interest. This regulation realigns contracting authority within the Department and provides uniform regulatory guidance for the acquisition of supplies and services required to accomplish DHS's mission of preventing and reducing terrorist attacks as well as minimizing damage and assisting in recovery from terrorist attacks.

Under 5 U.S.C. 553(d)(3), DHS also finds that for the same reasons discussed above respecting 5 U.S.C. 553(b)(B), good cause exists for making this rule effective in less than 30 days after publication in the Federal Register.
List of Subjects in 48 CFR Parts 3001 Through 3053

Government procurement.

Dated: November 21, 2003.
Gregory D. Rothwell,
Chief Procurement Officer.
For the reasons discussed in the preamble, the Department of Homeland Security is adding chapter 30 of title 48 in the CFR to read as follows:
CHAPTER 30DEPARTMENT OF HOMELAND SECURITY, HOMELAND SECURITY ACQUISITION REGULATION (HSAR)
SUBCHAPTER AGENERAL
PART 3001FEDERAL ACQUISITION REGULATIONS SYSTEM
PART 3002DEFINITIONS OF WORDS AND TERMS
PART 3003IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST
PART 3004ADMINISTRATIVE MATTERS
SUBCHAPTER BACQUISITION PLANNING
[[Page 67871]]
PART 3005PUBLICIZING CONTRACT ACTIONS
PART 3006COMPETITION REQUIREMENTS
PART 3007ACQUISITION PLANNING[RESERVED]
PART 3008REQUIRED SOURCES OF SUPPLIES AND SERVICES[RESERVED] PART 3009CONTRACTOR QUALIFICATIONS
PART 3010MARKET RESEARCH[RESERVED]
PART 3011DESCRIBING AGENCY NEEDS
PART 3012ACQUISITION OF COMMERCIAL ITEMS[RESERVED]
SUBCHAPTER CCONTRACT METHODS AND CONTRACT TYPES
PART 3013SIMPLIFIED ACQUISITION PROCEDURES
PART 3014SEALED BIDDING[RESERVED]
PART 3015CONTRACTING BY NEGOTIATION
PART 3016TYPES OF CONTRACTS
PART 3017SPECIAL CONTRACTING METHODS
PART 3018[RESERVED]
SUBCHAPTER DSOCIOECONOMIC PROGRAMS
PART 3019SMALL BUSINESS PROGRAMS
PART 3020[RESERVED]
PART 3021[RESERVED]
PART 3022APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS PART 3023ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND DRUG FREE WORKPLACE
PART 3024PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION
PART 3025FOREIGN ACQUISITION[RESERVED]
PART 3026OTHER SOCIOECONOMIC PROGRAMS[RESERVED]
PART 3027PATENTS, DATA AND COPYRIGHTS
PART 3028BONDS AND INSURANCE
SUBCHAPTER EGENERAL CONTRACTING REQUIREMENTS
PART 3029TAXES[RESERVED]
PART 3030COST ACCOUNTING STANDARDS ADMINISTRATION
PART 3031CONTRACT COST PRINCIPLES AND PROCEDURES
PART 3032CONTRACT FINANCING
PART 3033PROTESTS, DISPUTES, AND APPEALS
PART 3034MAJOR SYSTEM ACQUISITION[RESERVED]
SUBCHAPTER FSPECIAL CATEGORIES OF CONTRACTING
PART 3035RESEARCH AND DEVELOPMENT CONTRACTING
PART 3036CONSTRUCTION AND ARCHITECTENGINEER CONTRACTS
PART 3037SERVICE CONTRACTING
PART 3038FEDERAL SUPPLY SCHEDULE CONTRACTING[RESERVED]
PART 3039ACQUISITION OF INFORMATION TECHNOLOGY[RESERVED]
PART 3040[RESERVED]
PART 3041ACQUISITION OF UTILITY SERVICES[RESERVED]
SUBCHAPTER GCONTRACT MANAGEMENT
PART 3042CONTRACT ADMINISTRATION AND AUDIT SERVICES
PART 3043CONTRACT MODIFICATIONS[RESERVED]
PART 3044SUBCONTRACTING POLICIES AND PROCEDURES[RESERVED]
PART 3045GOVERNMENT PROPERTY
PART 3046QUALITY ASSURANCE
PART 3047TRANSPORTATION
PART 3048VALUE ENGINEERING[RESERVED]
PART 3049TERMINATION OF CONTRACTS[RESERVED]
PART 3050EXTRAORDINARY CONTRACTUAL ACTIONS[RESERVED]
PART 3051USE OF GOVERNMENT SOURCES BY CONTRACTORS[RESERVED] SUBCHAPTER HCLAUSES AND FORMS
PART 3052SOLICITATION PROVISIONS AND CONTRACT CLAUSES
PART 3053FORMS
1. The authority citation for parts 3001 through 3053 reads as follows:

Authority: 41 U.S.C. 418b (a) and (b).
2. The text of parts 3001 through 3053 reads as follows:
PART 3001FEDERAL ACQUISITION REGULATIONS SYSTEM
Subpart 3001.1Purpose, Authority, Issuance
Sec.
3001.101 Purpose.
3001.102 Statement of Guiding Principles for the Federal Acquisition System.
3001.104 Applicability.
3001.105 Issuance.
3001.1051 Publication and code arrangement.
3001.1052 Arrangement of regulations.
3001.1053 Copies.
3001.106 OMB Approval under the Paperwork Reduction Act.
Subpart 3001.3Agency Acquisition Regulations
3001.301 Policy.
3001.30170 Amendment of HSAR.
3001.30171 Effective date.
3001.30172 HSAC or HSAR Notice numbering.
3001.303 Publication and codification.
3001.304 Agency control and compliance procedures.
Subpart 3001.4Deviations from the FAR
3001.403 Individual deviations.
3001.404 Class deviations.
Subpart 3001.6Career Development, Contracting Authority, and Responsibilities
3001.601 General.
3001.602 Contracting Officers.
3001.6023 Ratification of unauthorized commitments.
3001.603 Selection, appointment, and termination of appointment. 3001.6031 General.
Subpart 3001.7Determinations and Findings
3001.704 Content.
Subpart 3001.70Other Determinations, Waivers, Exceptions, Approvals, Reviews, and Submittals.
3001.7000 Coordination and approval.
3001.7001 Content.
Subpart 3001.1Purpose, Authority, Issuance

3001.101 Purpose.

The Department of Homeland Security Acquisition Regulation (HSAR) establishes uniform acquisition policies and procedures, which implement and supplement the Federal Acquisition Regulation (FAR). 3001.102 Statement of Guiding Principles for the Federal Acquisition System.
(d) The FAR and this supplement are to be interpreted permissively, if consistent with statutory and regulatory requirements, policy, and sound professional judgment.
3001.104 Applicability.
(a) The following order of precedence applies to resolve any acquisition regulation or procedural inconsistency found within HSAR or the Homeland Security Acquisition Manual (HSAM):
(1) Statute;
(2) FAR or other applicable regulation or Executive Order; (3) HSAR;
(4) Department of Homeland Security (DHS) Directives; and (5) HSAM.
(b) The Transportation Security Administration (TSA) exception to this regulation is authorized by the Aviation and Transportation Security Act of 2001 (Section 101(a) of Public Law 10771). However, see (HSAR) 48 CFR 3033.211, regarding Board of Contract Appeals (BCA). (c) For nonappropriated fund contracts, the FAR and HSAR will be followed to the maximum extent feasible excluding provisions determined by counsel not to apply to Nonappropriated Fund institutions (NAFIs). Contracting terms may provide for mutual agreement as to the Board of Contract Appeals jurisdiction but this policy will not confer court jurisdiction concerning NAFIs that does not otherwise exist. 3001.105 Issuance.
3001.1051 Publication and code arrangement.
(a) The HSAR is published in:
(1) The Federal Register and
(2) Cumulated form in the Code of Federal Regulations (CFR). 3001.1052 Arrangement of regulations.
(a) General. The HSAR, which encompasses both Departmentwide and [[Page 67872]]
organizational elementunique guidance, conforms to the arrangement and numbering system prescribed by (FAR) 48 CFR 1.1052. Guidance that is unique to an organization with Head of the Contracting Activity (HCA) authority contains the organization's acronym directly preceding the cite. The following acronyms apply:
Bureau of Customs and Border Protection (CBP)
Bureau of Immigration and Customs Enforcement (ICE)
DHS Office of Procurement Operations (OPO)
Federal Emergency and Management Agency (FEMA) (Includes all elements of the Emergency Preparedness and Response Directorate)
Federal Law Enforcement Training Center (FLETC)
Transportation Security Administration (TSA)
U.S. Coast Guard (USCG)
U.S. Secret Service (Secret Service)

3001.1053 Copies.

The HSAR is available in the Federal Register and electronically at http://www.dhs.gov/dhspublic/. 3001.106 OMB Approval under the Paperwork Reduction Act.
(a) The Office of Management and Budget (OMB) has assigned the following control numbers that must appear on the upper righthand corner of the face page of each solicitation, contract, modification, and order:
OMB Control No. 1600002 (Contract related forms)
OMB Control No. 1600005 (Offeror submissions)
OMB Control No. 1600003 (Contractor submissions)
OMB Control No. 1600004 (Protests)
(b) OMB regulations and OMB's approval and assignment of control numbers are conditioned upon not requiring more than three copies (including the original) of any document of information. OMB has granted a waiver to permit the Department to require up to eight copies of proposal packages, including proprietary data, for solicitations, provided that contractors who submit only an original and two copies will not be placed at a disadvantage.
Subpart 3001.3Agency Acquisition Regulations
3001.301 Policy.
(a)(1) The HSAR is issued for Departmental guidance according to the policy cited in (FAR) 48 CFR 1.301. The HSAR establishes uniform Homeland Security policies and procedures for all acquisition activities within the Department of the Homeland Security, except the TSA. OE supplemental acquisition regulations to be inserted in the HSAR as a HSAR supplement regulation must be reviewed and approved by the Chief Procurement Officer (CPO) before the CPO submits the proposed coverage for publication in the Federal Register according to (FAR) 48 CFR 1.501.
(2)(i) The CPO is authorized to issue internal agency guidance at any organizational level. Departmentwide procedures are contained in the HSAM. The HCA may implement internal procedures or supplement the FAR, HSAR, or HSAM as provided in HSAM 3001.3. The HCA may issue procedures or delegate this authority to any organizational level deemed appropriate. OE procedures may be more restrictive or require higher approval levels than those permitted by the HSAM, unless otherwise specified.
(ii) Individuals granted authority in the HSAR may delegate that authority, unless the FAR or HSAR specifically state that the authority is not delegable.
(b) The Under Secretary of Management established procedures through Management Directive (MD) 0490.1, entitled Federal Register Notice and Rules, to ensure that agency acquisition regulations are published for comment in the Federal Register in conformance with FAR procedures at (FAR) 48 CFR subpart 1.5.
3001.30170 Amendment of HSAR.
(a) Request for changes to the regulation may be recommended by DHS personnel, other Government agencies, or the public. Change requests are to be submitted in the following format to the Department of Homeland Security, Attn: Office of the Under Secretary of Management, Chief Procurement Officer, Washington, DC 20598.
(1) Problem: Succinctly state the problem(s) created by current HSAR requirements or processes and describe the factual or legal reasons for requesting a regulatory change.
(2) Recommendation: Identify the recommended change by using the current language and lining through the words to be deleted and inserting proposed language in brackets. If the change is extensive, deleted language may be displayed by forming a box with diagonal lines connecting the corners.
(3) Discussion: Explain why the change is necessary and how the change will solve the problem. Address any cost or administrative impact on Government activities, offerors, and contractors. Provide any other helpful information and documents such as statutes, legal decisions, regulations, reports, etc.
(4) Point of Contact: Provide a point of contact for answering questions regarding the recommendation, along with a telephone number, email or other method of reaching the contact.
(b) The HSAR is maintained by the CPO through the HSAR/HSAM change process (i.e., input from various OEs including representatives specifically designated to formulate Departmental acquisition policies and procedures).
(1) Homeland Security Acquisition Circular (HSAC). HSAC (see (HSAR) 48 Chapter 3001.30172) will be used to amend (HSAR) 48 Chapter 30. (2) HSAR Notices will be issued (with a specified expiration date) when interim guidance is necessary under any of the following circumstances:
(i) To promulgate, as rapidly as possible, selected material in a general or narrative manner, in advance of a HSAC issuance; (ii) To disseminate other acquisition related information; or (iii) To issue guidance that is expected to be effective for a period of 1 year or less.
3001.30171 Effective date.

Unless otherwise stated, the following applies
(a) Statements in HSACs or HSAR Notices that the content is ``upon a specified date,'' or that changes in the document are ``to be used upon receipt,'' mean that any new or revised provisions, clauses, procedures, or forms must be included in solicitations or contracts issued thereafter; and
(b) Unless expressly directed by statute or regulation, if solicitations have been issued prior to the HSAC or HSAR notice receipt or publication, the new information (e.g., forms and clauses) need not be included if the Chief of the Contracting Office (COCO) determines, in writing, that including the new information would not be in the best interests of the Government.

3001.30172 HSAC or HSAR Notice numbering.

HSACs and HSAR Notices will be numbered consecutively on a fiscal year basis beginning with number ``01'' prefixed by the last two digits of the fiscal year (e.g., HSAR Notices 0301 and 0302 indicate the first two HSAR Notices issued in fiscal year 2003).
3001.303 Publication and codification.
(a) The HSAR is issued as chapter 30 of Title 48 of the CFR. [[Page 67873]]
(1) The FAR numbering illustrations at (FAR) 48 CFR 1.1052 apply to the HSAR.
(2) Coverage within HSAR 48 CFR chapter 30 is identified by the prefix ``30'' followed by the complete FAR cite which may extend downward to the subparagraph level (e.g., (HSAR) 48 CFR 3001.101). (3) Coverage in HSAR Chapter 30 that supplements the FAR will use part, subpart, section and subsection numbers ending in ``70'' through ``89''. A series of numbers beginning with ``70'' is used for provisions and clauses (e.g., (HSAR) 48 CFR 3001.30170).
(4) Coverage in HSAR 48 CFR chapter 30, other than that identified with a ``70'' or higher number, which implements the FAR uses the identical number sequence and caption of the FAR segment being implemented which may extend downward to the subparagraph level. Subparagraph numbers/letters may not be shown as sequential, but may be shown by the specific paragraph/subparagraph implemented from the FAR (e.g., (HSAR) 48 CFR 3003.301 contains subparagraphs (a) and (b) because only these subparagraphs, correlating to FAR, are being supplemented by (HSAR) 48 CFR chapter 30).
(5) Organizational Elementunique guidance. Supplementary material for which there is no counterpart in the FAR or HSAR shall be identified using chapter, part, subpart, section, or subsection numbers of ``90'' and up (e.g., the U.S. Coast Guard's acronym is ``USCG''; an USCGunique clause pertaining to ``Inspection and/or Acceptance'' would be designated ``USCG 3052.24690'').
(6) References and citations. Cross references to the FAR in the HSAR will be cited by ``FAR'' followed by the FAR numbered cite, and cross reference to the HSAM in the HSAR will be cited by ``HSAM'' followed by the HSAM numbered cite.
(7) Department/agency and OE supplements must parallel the FAR and HSAR numbering, except department/agency supplemental numbering uses subsection numbering of 90 and up, instead of 70 and up.
Table 11.HSAR Numbering FAR Is implemented as Is supplemented as 19.............................................................. 3019 3019.70 19.5............................................................ 3019.5 3019.570 19.501.......................................................... 3019.501 3019.50170 19.5011........................................................ 3019.5011 3019.501170 3001.304 Agency control and compliance procedures.
(a) The HSAR is under the direct oversight and control of the Homeland Security, Office of the Chief Procurement Officer (OCPO), which is responsible for evaluation, review, and issuance of all Departmentwide acquisition regulations and guidance. Each HCA may supplement the HSAR with OE guidance. Supplementation should be kept to a minimum. OEs proposing to issue regulatory supplements or use solicitation or contract clauses on a repetitive basis must obtain legal review by the OE's legal counsel and forward supplements to the CPO for concurrence prior to publication in the Federal Register. (c) The CPO is responsible for evaluating all regulatory coverage in agency acquisition regulations to determine if the substance could apply to other agencies and to make recommendation for inclusion in the FAR.
Subpart 3001.4Deviations from the FAR and HSAR

3001.403 Individual deviations.

Unless precluded by law, executive order, or other regulation, the HCA is authorized to approve individual deviation (except with respect to (FAR) 48 CFR 30.2013, 30.2014; the requirements of the Cost Accounting Standards board rules and regulations at 48 CFR chapter 99 (FAR appendix); and part 50). Submit requests per (HSAR) 48 CFR 3001.7000(a), including complete documentation of the justification for the deviation (See HSAM 3001.403).
3001.404 Class deviations.
(a) Unless precluded by law, executive order, or other regulation, the CPO is authorized to approve class deviations (except (FAR) 48 CFR 30.2013, 30.2014; the requirements of the Cost Accounting Standards board rules and regulations at 48 CFR Chapter 99 (FAR Appendix); and Part 50). Submit requests per (HSAR) 48 CFR 3001.7000(a), including complete documentation of the justification for the deviation, and the number and type of contract actions affected. Include a copy of the approved deviation in each contract file. The CPO will transmit a copy of each approved deviation to the FAR Secretariat.
Subpart 3001.6Career Development, Contracting Authority, and Responsibilities

3001.601 General.

DHS Delegation Number 0200.1, Delegation to the Directorate of Management, delegates authority from the Secretary to the Under Secretary of Management to manage the acquisition function. DHS Delegation 0700, Delegation to the Chief Procurement Officer for Acquisition and Financial Assistance Management, delegates this authority from the Under Secretary of Management to the Chief Procurement Officer.
3001.602 Contracting officers.

3001.6023 Ratification of unauthorized commitments.

Department of Homeland Security (DHS) policy requires that acquisitions be made only by Government officials having authority to enter into such acquisitions. Acquisitions made by other than authorized personnel are contrary to Departmental policy and may be considered matters of serious misconduct on the part of an employee making an unauthorized commitment, and may result in disciplinary action being taken against an employee who makes an unauthorized commitment.
3001.603 Selection, appointment, and termination of appointment. 3001.6031 General.

Under DHS Delegations, the Heads of the Contracting Activity (HCA), with authority to redelegate no lower than the COCO, are authorized to select and appoint contracting officers and terminate their appointment.
Subpart 3001.7Determinations and Findings

3001.704 Content.

The following format shall be used for all determinations and findings (D&Fs), unless otherwise specified in the FAR or the HSAR. The contracting officer is responsible for preparing D&Fs, and
[[Page 67874]]
requirements and technical personnel are responsible for the accuracy and adequacy of the supporting factual information, which shall be furnished to the contracting officer.

Insert specific information indicated in brackets. Determination and Findings

Under [insert citation for appropriate statutory and/or regulatory basis for D&F], the Department of Homeland Security, [insert contracting activity], is granted authority to [insert nature and/or description of the action being approved].
Findings
[Findings that detail the particular circumstances, facts, or reasoning essential to support the determination.]
Determination
[A determination, based on the findings, that the proposed action is justified under the applicable statute or regulation.] [Expiration date of the D&F, if required.]
[Signature of authorized official]
Name and Title
[month, day, and year]
Date
Subpart 3001.70Other Determinations, Waivers, Exceptions,
Approvals, Reviews, and Submittals

3001.7000 Coordination and approval.

Documents requiring CPO approval. Requests shall be prepared in writing by the contracting officer and submitted through the HCA to the CPO for approval.

3001.7001 Content.

The general format at (HSAR) 48 CFR 3001.704 shall be used to provide a justification to support the requested determination, waiver, exception or approval.
PART 3002DEFINITIONS OF WORDS AND TERMS
Subpart 3002.1Definitions
Sec.
3002.101 Definitions.
Subpart 3002.2Abbreviations
3002.270 Abbreviations.
Subpart 3002.1Definitions

3002.101 Definitions.

Chief Information Officer (CIO) means the Director of the Office of the CIO.

Chief of the Contracting Office (COCO) means the individual(s) responsible for managing the contracting office(s) within an organizational element (OE).

Chief Procurement Officer (CPO) means the Senior Procurement Executive (SPE).

Contracting activity includes all the contracting offices within an OE and is the same as the term ``procuring activity.''

Contracting officer means an individual authorized by virtue of position or by appointment to perform the functions assigned by the Federal Acquisition Regulation and the Homeland Security Acquisition Regulation.

Head of Contracting Activity (HCA) means the individual responsible for direct management of the entire acquisition function within an organizational element.

Head of the Agency means the Secretary of the Department of Homeland Security, or, by delegation, the Under Secretary of Management. ``Legal counsel'' means the Department of Homeland Security Office of General Counsel or OE office providing legal services to the contracting organization.

Legal review means review by legal counsel.

Major system means an acquisition as defined in Management Directive Number 1400, Investment Review Process.

Micropurchase threshold means $2,500 (see (HSAR) 48 CFR 301370), except it means
(1) $2,000 for construction subject to the DavisBacon Act; and (2) $7,500 for acquisitions of supplies or services, except for construction subject to the DavisBacon, if the Secretary determines in writing that the mission of the Department (described in Pub. L. 107 296, Sec. 101) would be seriously impaired without the use of such authorities, Act (Pub. L. 107296, section 833).

Organizational Element (OE) means the following entities for purposes of this chapter:
(1) Bureau of Customs and Border Protection (CBP);
(2) Bureau of Immigration and Customs Enforcement (ICE); (3) DHS Office of Procurement Operations (OPO);
(4) Federal Emergency Management Agency (FEMA) (Includes all elements of the Emergency Preparedness and Response Directorate); (5) Federal Law Enforcement Training Center (FLETC);
(6) Transportation Security Administration (TSA); (TSA is exempt from the HSAR and HSAM according to the ``Aviation and Transportation Security Act of 2001'');
(7) U.S. Coast Guard (USCG); and

(8) U.S. Secret Service (Secret Service).

Senior Procurement Executive (SPE) for the Department of Homeland Security is the Chief Procurement Officer (CPO).

Simplified acquisition threshold means $100,000 (see (HSAR) 48 CFR 301370), except that for acquisitions of supplies or services that, if the Secretary determines in writing that the mission of the Department (described in Pub. L. 107296, section 101) would be seriously impaired without the use of such authorities from November 25, 2002 to December 30, 2007 (Pub. L. 107296, section 833(c)), the term means
(1) $200,000 for any contract to be awarded and performed, or purchase to be made, inside the United States; and
(2) $300,000 for any contract to be awarded and performed, or purchase to be made, outside the United States.
Subpart 3002.2Abbreviations
3002.270 Abbreviations.
CFO Chief Financial Officer
CIO Chief Information Officer
COCO Chief of the Contracting Office
COR Contracting Officers Representative
COTR Contracting Officer's Technical Representative
CPO Chief Procurement Officer
D&F Determination and Findings
DOTBCA Department of Transportation Board of Contract Appeals FOIA Freedom of Information Act
HCA Head of Contracting Activity
J & A Justification and Approval for Other than Full and Open Competition
KO Contracting officer
MD Management Directive
OCPO Office of the Chief Procurement Officer
OE Organizational Element
OIG Office of the Inspector General
OSDBU Office of Small and Disadvantaged Business Utilization PCR SBA's Procurement Center Representative
RFP Request for Proposal
SBA Small Business Administration
SBS Small Business Specialist
SPE Senior Procurement Executive
PART 3003IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST
Subpart 3003.1Safeguards
Sec.
3003.101 Standards of conduct.
3003.1013 Agency regulations.
Subpart 3003.2Contractor Gratuities to Government Personnel 3003.203 Reporting suspected violations of the Gratuities clause. 3003.204 Treatment of violations.
Subpart 3003.3Reports Of Suspected Antitrust Violations
3003.301 General.
[[Page 67875]]
Subpart 3003.4Contingent Fees
3003.405 Misrepresentations or violations of the Covenant Against Contingent Fees.
Subpart 3003.5Other Improper Business Practices
3003.502 Subcontractor kickbacks.
3003.5022 Subcontractor kickbacks.
Subpart 3003.9Whistleblower Protections for Contractor Employees 3003.901 Definitions.
Subpart 3003.1Safeguards
3003.101 Standards of conduct.
3003.1013 Agency regulations.
(a) Governmentwide and Department of Homeland Security regulations governing the conduct and responsibilities of employees are contained in 5 CFR parts 2635 and 3101, and MD 0480, Ethics/Standards of Conduct. Subpart 3003.2Contractor Gratuities to Government Personnel 3003.203 Reporting suspected violations of the Gratuities clause. (a) Suspected violations of the Gratuities clause shall be reported to the contracting officer responsible for the acquisition (or the COCO if the contracting officer is suspected of the violation). The contracting officer (or the COCO) shall obtain from the person reporting the violation, and any witnesses to the violation, the following information:
(1) The date, time, and place of the suspected violation; (2) The name and title (if known) of the individual(s) involved in the violation; and
(3) The details of the violation (e.g., the gratuity offered or intended) to obtain a contract or favorable treatment under a contract. (4) The person reporting the violation and witnesses (if any) shall be requested to sign and date the information certifying that the information furnished is true and correct.
(b) The contracting officer shall submit the report to the COCO (unless the alleged violation was directly reported to the COCO) and the Head of the Contracting Activity (HCA) for further action. The COCO and HCA will determine, with the advice of OE legal counsel, whether the case warrants submission to the OIG, or other investigatory organization.
3003.204 Treatment of violations.
(a) The HCA is the individual to determine whether a Gratuities clause violation has occurred. If the HCA has been personally and substantially involved in the specific procurement, the advice of Government legal counsel should be sought to determine whether an alternate decision maker should be designated.
(b) The COCO shall ensure that the hearing procedures required by (FAR) 48 CFR 3.204(b) are afforded to the contractor. Government legal counsel shall be consulted regarding the appropriateness of the hearing procedures that are established.
(c) If the HCA determines that the alleged gratuities violation occurred during the ``conduct of an agency procurement'' the COCO shall consult with Government legal counsel regarding the approach for appropriate processing of either the Procurement Integrity Act violation or the Gratuities violation.
Subpart 3003.3Reports Of Suspected Antitrust Violations
3003.301 General.
(b) The procedures at (HSAR) 48 CFR 3003.203 shall be followed for suspected antitrust violations, except reports of suspected antitrust violations shall be coordinated with legal counsel for referral to the Department of Justice, if deemed appropriate.
Subpart 3003.4Contingent Fees
3003.405 Misrepresentations or violations of the Covenant Against Contingent Fees.
(a) The procedures at (HSAR) 48 CFR 3003.203 shall be followed for misrepresentation or violations of the covenant against contingent fees.
(b)(4) The procedures at (HSAR) 48 CFR 3003.203 shall be followed for misrepresentation or violations of the covenant against contingent fees, except reports of misrepresentation or violations of the covenant against contingent fees shall be coordinated with legal counsel for referral to the Department of Justice, if deemed appropriate. Subpart 3003.5Other Improper Business Practices
3003.502 Subcontractor kickbacks.
3003.5022 Subcontractor kickbacks.
(g) The DHS OIG shall receive the prime contractor or
subcontractors written report.
Subpart 3003.9Whistleblower Protections for Contractor Employees 3003.901 Definitions.

Authorized official of an agency means the Department of Homeland Security's CPO.
PART 3004ADMINISTRATIVE MATTERS
Subpart 3004.1Contract Execution
Sec.
3004.103 Contract clause.
Subpart 3004.4Contract Clause
3004.4704 Contract clause.
Subpart 3004.8Government Contract Files
3004.804 Closeout of contract files.
3004.8041 Closeout by the office administering the contract. 3004.8045 Procedures for closing out contract files.
3004.804570 Supporting closeout documents.
Subpart 3004.1Contract Execution

3004.103 Contract clause.

Insert the clause at (FAR) 48 CFR 52.2041, Approval of Contract, in each solicitation where approval to award the resulting contract is required above the contracting officer level.
Subpart 3004.4Contract Clause

3004.4704 Contract clause.

The contracting officer shall insert a clause substantially the same as the clause at (HSAR) 48 CFR 3052.20470, Security Requirements for Unclassified Information Technology Resources, in solicitations and contracts which require submission of an IT Security Plan.
Subpart 3004.8Government Contract Files
3004.804 Closeout of contract files.
3004.8041 Closeout by the office administering the contract. (b) The quick closeout procedures under (FAR) 48 CFR 42.708 may be used for the settlement of indirect costs under contracts when the estimated amount (excluding any fixed fee) of the contract is $3 million or less if determined appropriate by the contracting officer. 3004.8045 Procedures for closing out contract files.
3004.804570 Supporting closeout documents.
(a) When applicable and prior to contract closure, the contracting officer shall obtain the listed DHS and Department of Defense (DOD) forms from the contractor for closeout.
(1) DHS Form 070003, Contractor's Release (e.g., see (FAR) 48 CFR 52.2167);
(2) DHS Form 070002, Contractor's Assignment of Refunds, Rebates, Credits and Other Amounts (e.g., see (FAR) 48 CFR 52.2167); [[Page 67876]]
(3) DHS Form 070001, Cumulative Claim and Reconciliation Statement (e.g., see (FAR) 48 CFR 4.8045(a)(13); and
(4) DD Form 882, Report of Inventions and Subcontracts (e.g., see (FAR) 48 CFR 52.22714).
(b) The forms listed in this section (see (HSAR) 48 CFR part 3053) are used primarily for the closeout of costreimbursement, timeand materials, and laborhour contracts. The forms may also be used for closeout of other contract types to protect the Government's interest. PART 3005PUBLICIZING CONTRACT ACTIONS
Subpart 3005.4Release of Information
Sec.
3005.402 General public.
Subpart 3005.90Publicizing Contract Actions for Personal Services Contracting
3005.9000 Applicability (USCG).
Subpart 3005.4Release of Information

3005.402 General public.

Requests for other specific records information shall be processed according to the DHS Freedom of Information Act rules and regulations (HSAR) 48 CFR 3024.203.
Subpart 3005.90Publicizing Contract Actions for Personal Services Contracting.

3005.9000 Applicability (USCG).

Contracts awarded by the U.S. Coast Guard using the procedures in (HSAR) 48 CFR 3037.10491 are expressly authorized under section 1091 of Title 10 U.S.C. as amended by Public Law 107296, for the Coast Guard and are exempt from the requirements of (FAR) 48 CFR part 5. PART 3006COMPETITION REQUIREMENTS
Subpart 3006.2Full and Open Competition After Exclusion of Sources Sec.
3006.202 Establishing or maintaining alternative sources.
Subpart 3006.3Other Than Full and Open Competition
3006.302 Circumstances permitting other than full and open competition.
3006.3027 Public interest.
Subpart 3006.5Competition Advocates
3006.501 Requirement.
3006.502 Duties and responsibilities.
Subpart 3006.90Competition Requirements for Personal Services Contracting
3006.9000 Applicability (USCG).
Subpart 3006.2Full and Open Competition After Exclusion of Sources
3006.202 Establishing or maintaining alternative sources.
(b)(1) The HCA is delegated authority to approve a D&F in support of a contract action award under the authority of (FAR) 48 CFR 6.202(a). Submit D&F in the format per (HSAR) 48 CFR 3001.704. Subpart 3006.3Other Than Full and Open Competition
3006.302 Circumstances permitting other than full and open competition.
3006.3027 Public interest.
(c)(1)(ii) Requests shall be prepared in writing by the contracting officer, using the format found in (HSAR) 48 CFR 3001.704, and submitted through the HCA to the CPO for review and transmittal to the Secretary for approval.
Subpart 3006.5Competition Advocates

3006.501 Requirement.

The DHS Senior Competition Advocate (SCA) is located in the Office of the Chief Procurement Officer (OCPO).
3006.502 Duties and responsibilities.
(a) OE competition advocates will submit an annual report to the Departmental Advocate for Competition.
Subpart 3006.90Competition Requirements For Personal Services Contracting

3006.9000 Applicability (USCG).

Contracts awarded by the U.S. Coast Guard using the procedures in (HSAR) 48 CFR 3037.10491 are expressly authorized under Section 1091 of Title 10 U.S.C. as amended, for the Coast Guard and are exempt from the competition requirements of (FAR) 48 CFR part 6.
PART 3007ACQUISITION PLANNING [RESERVED]
PART 3008REQUIRED SOURCES OF SUPPLIES AND SERVICES [RESERVED] PART 3009CONTRACTOR QUALIFICATIONS
Subpart 3009.1Responsible Prospective Contractors
Sec.
3009.10470 Prohibition on contracts with corporate expatriates. 3009.10471 General.
3009.10472 Definitions.
3009.10473 Special rules.
3009.10474 Waiver.
3009.10475 Clause.
Subpart 3009.4Debarment, Suspension, and Ineligibility
3009.470 Reserve Officer Training Corps and military recruiting on campus.
3009.4701 Definition.
3009.4702 Policy.
3009.4703 Procedures.
3009.4704 Contract clause.
Subpart 3009.5Organizational and Consultant Conflicts of Interest 3009.507 Solicitation provisions.
Subpart 3009.1Responsible Prospective Contractors
3009.10470 Prohibition on contracts with corporate expatriates. 3009.10471 General.

DHS may not enter into any contract with a foreign incorporated entity, which is treated as an inverted domestic corporation under subsection (b) of section 835 of the Homeland Security Act, Pub. L. 107296.
3009.10472 Definitions.

As used in this subpart

Expanded Affiliated Group means an affiliated group as defined in section 1504(a) of the Internal Revenue Code of 1986 (without regard to section 1504(b) of such Code), except that section 1504 of such Code shall be applied by substituting `more than 50 percent' for `at least 80 percent' each place it appears.

Foreign Incorporated Entity means any entity which is, or but for subsection (b) of section 835 of the Homeland Security Act, Pub. L. 107296, would be, treated as a foreign corporation for purposes of the Internal Revenue Code of 1986.

Inverted Domestic Corporation. A foreign incorporated entity shall be treated as an inverted domestic corporation if, pursuant to a plan (or a series of related transactions)
[[Page 67877]]
(1) The entity completes after the date of enactment of this Act, the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation or substantially all of the properties constituting a trade or business of a domestic partnership;
(2) After the acquisition at least 80 percent of the stock (by vote or value) of the entity is held
(i) In the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation; or
(ii) In the case of an acquisition with respect to a domestic partnership, by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership; and
(3) The expanded affiliated group which after the acquisition includes the entity does not have substantial business activities in the foreign country in which or under the law of which the entity is created or organized when compared to the total business activities of such expanded affiliated group.

Person, domestic, and foreign have the meanings given such terms by paragraphs (1), (4), and (5) of section 7701(a) of the Internal Revenue Code of 1986, respectively.

3009.10473 Special rules.

The following special rules shall apply when determining whether a foreign incorporated entity should be treated as an inverted domestic corporation.
(a) Certain stock disregarded. For the purpose of treating a foreign incorporated entity as an inverted domestic corporation these shall not be taken into account in determining ownership:
(1) Stock held by members of the expanded affiliated group which includes the foreign incorporated entity; or
(2) Stock of such entity which is sold in a public offering related to the acquisition described in subsection (b)(1) of section 835 of the Homeland Security Act (the Act), Pub. L. 107296.
(b) Plan deemed in certain cases. If a foreign incorporated entity acquires directly or indirectly substantially all of the properties of a domestic corporation or partnership during the 4year period beginning on the date which is after the date of enactment of this Act and which is 2 years before the ownership requirements of subsection (b)(2) of the Act are met, such actions shall be treated as pursuant to a plan.
(c) Certain transfers disregarded. The transfer of properties or liabilities (including by contribution or distribution) shall be disregarded if such transfers are part of a plan a principal purpose of which is to avoid the purposes of this section.
(d) Special rule for related partnerships. For purposes of applying subsection (b) to the acquisition of a domestic partnership, except as provided in regulations, all domestic partnerships which are under common control (within the meaning of section 482 of the Internal Revenue Code of 1986) shall be treated as a partnership.
(e) Treatment of certain rights. (1) Certain rights shall be treated as stocks to the extent necessary to reflect the present value of all equitable interests incident to the transaction, as follows: (i) Warrants;
(ii) Options;
(iii) Contracts to acquire stock;
(iv) Convertible debt instruments;
(v) Others similar interests.
(2) Rights labeled as stocks shall not be treated as stocks whenever it is deemed appropriate to do so to reflect the present value of the transaction or to disregard transactions whose recognition would defeat the purpose of section 835 of the Act.
3009.10474 Waiver.
(a) The Secretary shall waive subsection (a) of section 835 of Pub. L. 107296 with respect to any specific contract if the Secretary determines that the waiver is required in the interest of homeland security, or to prevent the loss of any jobs in the United States or prevent the Government from incurring any additional costs that otherwise would not occur.
(b) Contractors shall submit waiver requests to the CPO. If a waiver is granted, a copy of the approved waiver shall be attached with the bid or proposal.

3009.10475 Clause.

Insert the provision (HSAR) 48 CFR 3052.20970, Prohibition on Contracts with Corporate Expatriates, in all solicitations and contracts.
Subpart 3009.4Debarment, Suspension, and Ineligibility
3009.470 Reserve Officer Training Corps and military recruiting on campus.

3009.4701 Definition.

Institution of higher education as used in this section, means an institution that meets the requirements of 20 U.S.C. 1001 and includes all subelements of such an institution.
3009.4702 Policy.
(a) Except as provided in paragraph (b) of this subsection, 10 U.S.C. 983 prohibits the Department of Homeland Security from providing funds by contract or grant to an institution of higher education if the Secretary of Defense determines that the institution has a policy or practice that prohibits or in effect prevents
(1) The Secretary of a military department from maintaining, establishing, or operating a unit of the Senior Reserve Officer Training Corps (ROTC) at that institution;
(2) A student at that institution from enrolling in a unit of the Senior ROTC at another institution of higher education;
(3) The Secretary of a military department or the Secretary of Homeland Security from gaining entry to campuses, or access to students on campuses, for purposes of military recruiting; or
(4) Military recruiters from accessing certain information pertaining to students enrolled at that institution.
(b) The prohibition in paragraph (a) of this subsection does not apply to an institution of higher education if the Secretary of Defense determines that
(1) The institution (and each subelement of that institution) has ceased the policy or practice described in paragraph (a) of this subsection; or
(2) The institution involved has a longstanding policy of pacifism based on historical religious affiliation.

3009.4703 Procedures.

Whenever the Secretary of Defense determines that an institution of higher education (including any subelement of such institution) is ineligible and the provisions of 10 U.S.C. 983 apply:
(a) The Secretary of Defense will list the institution on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs published by the General Services Administration (also see (FAR) 48 CFR 9.404 and 32 CFR part 216); and
(b) The Department of Homeland Security
(1) Shall not solicit offers from, award contracts to, or consent to subcontracts with the institution;
(2) Shall make no further payments under existing contracts with the institution; and
(3) Shall terminate existing contracts with the institution. 3009.4704 Contract clause.

Insert the clause at (HSAR) 48 CFR 3052.300971, Reserve Officer Training Corps and Military Recruiting on Campus, in all solicitations and
[[Page 67878]]
contracts with institutions of higher education.
Subpart 3009.5Organizational and Consultant Conflicts of Interest 3009.507 Solicitation provisions.

The contracting officer may insert the provision at (HSAR) 48 CFR 3052.20972, ``Disclosure of Conflicts of Interest'' in all solicitations for negotiated acquisitions, and when simplified acquisitions procedures in (FAR) 48 CFR Part 13, are not used. The contracting officer shall ensure the conditions enumerated in (FAR) 48 CFR 9.5072 warrant inclusion.
PART 3010MARKET RESEARCH [RESERVED]
PART 3011DESCRIBING AGENCY NEEDS
Subpart 3011.1Selecting and Developing Requirements Documents Sec.
3011.103 Market acceptance.
Subpart 3011.2Using and Maintaining Requirements
3011.20470 Solicitation provisions and contract clauses.
3011.20490 Solicitation provisions and contract clause (USCG). Subpart 3011.5Liquidated Damages
3011.501 Policy.
Subpart 3011.6Priorities and Allocations
3011.602 General.
Subpart 3011.1Selecting and Developing Requirements Documents 3011.103 Market acceptance.
(a) Contracting officers may act on behalf of the head of the agency in this subpart only. Contracting officers may, under appropriate circumstances, require offerors to make the required demonstrations.
Subpart 3011.2Using and Maintaining Requirements Documents

3011.20470 Solicitation provisions and contract clauses.

The contracting officer shall insert the clause at (HSAR) 48 CFR 3052.21170, Index for Specifications, when an index or table of contents may be furnished with the specification.
3011.20490 Solicitation provision and contract clause (USCG). (a) For U.S. Coast Guard contracts, the contracting officer shall insert the USCG clause at (HSAR) 48 CFR 3052.21190, Bar Coding Requirement, (also see (HSAR) 48 CFR 3013.30270) when the bar coding of supplies is necessary.
(b) See (HSAR) 48 CFR 3013.302590 for a provision which is required when the USCG clause at HSAR 3052.21190, Bar Coding Requirement, is used with simplified acquisition procedures. Subpart 3011.5Liquidated Damages
3011.501 Policy.
(d) The HCA may reduce or waive the amount of liquidated damages assessed under a contract, if the Commissioner, Financial Management Service, or designee approves.
Subpart 3011.6Priorities and Allocations
3011.602 General.
(c) The following DHS OEs may assign priority ratings on contracts and orders placed with contractors to acquire products, materials, and services under the Defense Priorities and Allocations System (DPAS) regulations (15 CFR part 700):
(1) The U.S. Coast Guard in support of certified national defense related programs; and
(2) The Federal Emergency Management Agency in support of emergency preparedness activities.
PART 3012ACQUISITION OF COMMERCIAL ITEMS [RESERVED]
PART 3013SIMPLIFIED ACQUSITION PROCEDURES
Subpart 3013.1Procedures
Sec.
3013.106 Soliciting competition, evaluation of quotations or offers, award and documentation.
3013.106190 Soliciting competition (USCG).
Subpart 3013.3Simplified Acquisition Methods
3013.302 Purchase orders.
3013.302590 Clauses (USCG).
Subpart 3013.70Special Streamlined Acquisition Authority
3013.7000 General.
3013.7001 Delegations.

FOR FURTHER INFORMATION CONTACT Kathy Strouss, Department of Homeland Security, Office of the Chief Procurement Officer, Acquisition Policy, at (202) 2050141.