Acquisition Regulation Concerning Conflicts of Interest; Final Rule ENVIRONMENTAL PROTECTION AGENCY

SUMMARY: This final rule amends the EPA Acquisition Regulation (EPAAR)

coverage on organizational conflicts of interest for all EPA contracts.

In addition, it adds EPAAR coverage on conflicts of interest related to

contractor personnel working under EPA Superfund contracts and

conflicts of interest related to contractors' future work which may

jeopardize Superfund work. Under this rule, contracts funded through

EPA's Superfund program will contain clauses: requiring contractor

employees working on EPA Superfund contracts to sign confidentiality

agreements; requiring a contractor to notify the Agency immediately of

any conflicts of interest regarding contractor personnel working on the

EPA contract; and restricting a contractor's future contracts, outside

of those with EPA, when such contracts may conflict with the work

performed for EPA. These changes are necessary to avoid actual or

potential conflicts of interest in work performed under EPA Superfund

contracts.

EFFECTIVE DATE: This rule is effective May 19, 1994.

FOR FURTHER INFORMATION CONTACT: Environmental Protection Agency,

Office of Acquisition Management (3802F), 401 M Street SW., Washington,

DC 20460, attn: Calvin C. McWhirter (202) 260-9165.

SUPPLEMENTARY INFORMATION:

A. Background

Federal Acquisition Regulation (FAR) section 9.501 defines an

organizational conflict of interest as existing when ``because of other

activities or relationships with other persons, a person is unable or

potentially unable to render impartial assistance or advice to the

Government, or the person's objectivity in performing the contract work

is or might be otherwise impaired, or a person has an unfair

competitive advantage.'' Under EPA's Superfund program, contractors are

often asked to assist the Agency in designing remedial actions to clean

up hazardous waste sites, in identifying potentially responsible

parties (PRPs) at hazardous waste sites and in implementing actions to

effect the cleanup. After identification of PRPs for specific sites,

the Agency will attempt to secure private party conducted response

action or to expend Superfund Trust Funds to conduct response action

and to recover costs expended for cleanup either through consent

agreements or litigation.

Under the Superfund program it is essential that contractors not

enter into outside contracts or use personnel which might result in an

actual or potential conflict of interest. In addition, since litigation

may continue for several years after a contractor has completed work

and the contractor may be asked to testify on the work performed for

EPA, it is essential that actual or potential conflicts of interest be

avoided even after the contract work has been completed.

In addition to organizational conflicts of interest, EPA must

ensure that contractor personnel assigned to work on EPA contracts are

free from personal conflicts of interest that might impair their

ability to perform the required work in an impartial manner. EPAAR

clauses have been developed which will require EPA's Superfund

contractors to ensure that actual or potential personal conflicts of

interest regarding contractor personnel are identified and reported to

the EPA Contracting Officer.

These clauses shall be incorporated into new solicitations and new

contracts. Clauses for contracts existing as of the effective date of

this rule shall be negotiated by the EPA Contracting Officer, on a

case-by-case basis, and shall be substantially similar to the clauses

required by this rule.

The Agency has developed a Long Term Contracting Strategy to more

effectively manage the Superfund program over the next ten years. The

clauses in this rule reflect the changing nature of the Superfund

program. Although we intend to implement the Strategy with minimal

program disruption, there may be some changes to the form of some

existing Superfund contracts. Therefore, we anticipate the clauses in

this rule may require updating to reflect ongoing changes to the

Superfund program.

This rule was published as a proposed rule in the Federal Register

on April 26, 1990, at 55 FR 17724. Twenty-two public comments were

received. We express our appreciation to all the interested

organizations for the time they took in studying the proposed rule and

preparing comments. As a result of these comments, we have made a

number of revisions to the rule. In seriously considering all of the

comments, we implemented recommendations that would improve the quality

of the rule and minimize the burden to the contractor community, yet

ensure that EPA's programs are adequately protected. Part B of the

preamble summarizes the general issues raised and provides EPA's

response and Part C of the preamble addresses section-specific

comments.

In addition, the numbering in EPAAR subpart 1509.5 is being amended

to conform with numbering changes to FAR subpart 9.5. These changes are

made solely to conform to the FAR numbering scheme and do not otherwise

affect the existing EPAAR.

B. General Comments

1. Response to EPA Conflict of Interest Rule

Many commenters expressed support for an EPA rule on conflict of

interest although some recommended that EPA withdraw the proposed rule.

We welcome public support and are committed to implementing a conflict

of interest rule that protects the integrity of the Superfund and other

EPA programs.

2. Previously Issued Conflict of Interest Guidance

Many commenters expressed concern that the January 1990, memorandum

from the Director of the EPA's Procurement and Contracts Management

Division, which conveyed general guidance on conflict of interest to

Superfund contract staff and Superfund contractors, was not published

with the proposed rule and formally open for public comments. Some also

expressed concern with issues it raised and requested that it be

rescinded. Others mentioned that they were pleased that the proposed

rule was a considerable improvement over the January 1990, guidance. It

was EPA's intent that the proposed rule supersede the January 1990,

guidance. We would like to make it clear that this final rule and its

preamble discussion supersedes the January 1990, guidance and the

proposed rule.

3. Justification for Special Conflict of Interest Provisions

Some commenters questioned EPA's authority to implement a conflict

of interest rule and questioned the need for an EPA rule on conflicts

of interest stating that adequate safeguards exist. Others contended

that there is no balance between the benefits to be achieved compared

to the cost of compliance.

We disagree. FAR subpart 1.3 provides agencies with the authority

to implement supplemental acquisition regulations to satisfy specific

needs of the agency. We have developed the conflict of interest rule to

address the specific requirements of EPA's Superfund and other programs

since sufficient coverage is not provided by existing regulations.

In the past few years, the General Accounting Office (GAO) in

conducting reviews of EPA's programs, the EPA in performing management

studies of the Superfund program, and Congressional Committees have all

concluded that EPA's existing conflict of interest procedures are

inadequate to protect its programs. The GAO in its report ``Superfund

Contracts: EPA's Procedures for Preventing Conflicts of Interest Need

Strengthening'' (GAO/RCED-899-57), dated February 1989, and EPA, in the

Administrator's Management Review of the Superfund Program (1989),

pointed out the special vulnerability of the Superfund program and

strongly recommended that action be taken to strengthen EPA's existing

procedures.

EPA is responsible for leading the nation's efforts to protect and

clean up the environment. This includes the development of

environmental standards, control of toxic substances and the cleanup of

hazardous wastes, as well as enforcement of applicable laws and

regulations. Historically, the Agency has relied heavily upon

contractors to accomplish its mission, and much of this work is highly

sensitive, particularly in the Superfund program. The Comprehensive

Environmental Response, Compensation, and Liability Act of 1980 (CERCLA

or Superfund) 42 U.S.C. 9601-9675, consists of Public Law 96-510 (Dec.

11, 1980) and the amendments made by subsequent enactments. It provides

for liability, compensation, cleanup and emergency response for

hazardous substances released into the environment and the cleanup of

hazardous waste disposal sites. Because EPA has the dual responsibility

of cleanup and enforcement and because its contractors are often

involved in both activities, and may conduct work for EPA and the

private sector, it is imperative that EPA contractors are free of

conflicts so as not to jeopardize CERCLA response and enforcement/cost

recovery actions (hereinafter referred to as enforcement).

This rule focuses primarily on performance after contract award,

unlike FAR which focuses on conflict of interest issues related to

contractor eligibility for award. Under Superfund contracts, work is

performed at multiple sites and new and constantly changing cleanup

priorities make it impossible for EPA to identify, prior to contract

award, all site locations where work will be performed. In addition, it

is impossible for EPA to predict, prior to contract award, enforcement

actions against PRPs at specific sites. Moreover, such cases may take

years to resolve. Therefore, EPA must address conflicts of interest

during and after contract performance to effectively monitor conflicts

and safeguard Superfund enforcement.

U.S. Department of Justice and EPA attorneys, enforcing CERCLA,

stress the importance of avoiding conflicts of interest in the

Superfund program. Conflicts of interest discovered after work has

begun can create costly delays in cleanup of sites when EPA must

mitigate damage resulting from conflicts to safeguard cleanup work and

enforcement from further prejudice. Therefore, it is imperative that

EPA contractors do not perform work for PRPs that conflicts with work

performed for the Agency. Conflicts arise because of differing

interests of the EPA and PRPs. EPA's primary concern is to assure that

adequate environmental protection is provided, as opposed to the

primary interests of PRPs, who are usually motivated to keep costs

minimized. Because these conflicts often arise in the context of

adversarial enforcement proceedings, such conflicts and leaks of

sensitive enforcement information not only jeopardize cases at the

litigation stage, but also weaken the Government's position both in

obtaining PRP commitment to clean up sites and in cost recovery

negotiations with PRPs. To date, EPA has the potential to seek over

$4.5 billion in cost recovery; the stakes are high.

EPA must preserve the integrity of the Superfund Program from

conflicts of interest and cannot afford to jeopardize the success of

cost recovery actions and impede PRP cleanup of hazardous waste sites.

A contractor's conflict of interest can harm our Superfund litigation

(either cost recovery litigation under section 107 of CERCLA, or

litigation for injunctive relief under section 106) in several ways:

(1) By creating a conduit for confidential government information,

including potential litigation and negotiation strategies, which may be

leaked to the parties with opposing interests in the litigation, (2) by

subjecting the credibility of EPA witnesses and/or the work they

perform on behalf of EPA to attack, and (3) by causing the work

performed by that contractor to be redone, raising potential issues in

cost recovery litigation as to whether the cost of the extra work is

recoverable. This rule requires EPA contractors to disclose all

conflicts of interest so that EPA will have the opportunity to consider

the significance of the conflict and to take appropriate measures to

avoid, mitigate, or neutralize the conflict of interest.

EPA has indeed faced several actual conflict situations which

demonstrate the need for the Agency to strengthen its conflict of

interest procedures in order to protect the public interest: One such

conflict involved a contractor which had performed a removal action for

EPA on a hazardous waste-contaminated site and which was currently

doing research work for EPA pertaining to that site. Another office of

the contractor's company agreed to serve as an expert witness in the

EPA cost recovery litigation on behalf of one of the PRPs and, thus,

against EPA, without knowledge or approval of the Agency. The

contractor's work in performing the removal action and research for EPA

in anticipation of cost recovery litigation conflicted directly with

the contractor's serving as an expert witness on behalf of one of the

PRPs. Further, the contractor proceeded to convey confidential

information to the PRP in the context of trying to explain to the PRP

why there was no conflict. Although settlement negotiations proceeded

in this case, the strength of the Agency's position was significantly

weakened because the contractor was working for both parties and

confidential sensitive information had been divulged to the PRP.

Many of the issues in Superfund litigation ultimately are matters

of expert technical opinion for which EPA relies on contractor

personnel, e.g., support of remedy selection and findings that sites

present ``imminent and substantial endangerment'' to the public. In

that role, contractors may be privy to the government's litigation and

negotiation strategies and other privileged and confidential

information. The above case has taught us that contractor ``side

switching'' carries a strong potential for the passing of confidential

information to defendants, even if unintentionally.

In another actual case, a contractor was performing remedial

investigation/feasibility study work for both the EPA and a major PRP

on a contiguous site. Well over a quarter of a million dollars had been

expended by EPA prior to the discovery of the conflict. Work

subsequently had to be stopped and all work which had been completed by

the contractor had to be either redone and/or verified for accuracy and

completeness by another independent contractor. In addition to the

fiscal drain on the Superfund Program that this causes, we are also

likely to be faced in cost recovery litigation with a defense argument

that such ``double expense'' is unnecessary and unrecoverable. This may

also increase the time and expense that the litigation and negotiation

require, not including the potential millions of dollars at risk during

the cost recovery/enforcement action itself.

Still another conflict case in which cost recovery litigation was

adversely impacted involved a subcontractor who was performing PRP

searches, negotiation support, and oversight of PRP work on a site for

the EPA. The subcontractor not only had a significant financial

relationship with the PRPs of that site, but was also representing and

performing related work for the PRPs on the same site. The

repercussions of this conflict involved not only a significant delay in

the Agency's ability to cleanup the site, but also tens of thousands of

dollars in transition costs to remove and replace the subcontractor.

EPA's concerns regarding conflicts of interest are very real. As

EPA continues to clean up the environment and to try to recover the

costs of the cleanup from PRPs, EPA seeks, through this rule, to

protect the public from delays and increased costs. For example, EPA

contractors may perform remedial design work for EPA by developing

plans and specifications for a selected cleanup remedy at a site. If

that contractor also works for a PRP to assess the contamination at the

same site, EPA, PRPs, and the public may question the integrity and

objectivity of the work the contractor has performed for EPA. Moreover,

EPA could face difficulty in utilizing the contractor's expertise and

experience in supporting the merits of EPA's enforcement case. Judges

and juries may doubt the credibility of a factual or expert witness who

has performed conflicting work and may have inconsistent opinions.

Another example of how EPA's enforcement could be jeopardized in the

future would be if a contractor who performs technical enforcement

support for EPA, including searches for and case histories of PRPs,

subsequently or concurrently worked for the PRP on the same case.

Again, contractors performing this and other types of Superfund work

are often privy to sensitive EPA litigation information and case

management plans and could divulge such information to the PRP. If such

information was leaked or otherwise divulged intentionally or

unintentionally, the Government's case may be damaged by disclosure to

the PRP of litigation strategy. In addition, if documents deemed

confidential and privileged were released, such documents could then be

admitted into evidence in opposition to the Government's case.

We disagree with commenters that the Agency has not considered the

balance between the cost of the rule and the benefits to EPA of

avoiding conflicts. We believe there must be uniform regulatory

requirements to raise contractors' awareness and understanding of

conflict of interest problems and the procedures needed to prevent

them. Over the past few years, the development of this rule with its

strong conflict of interest provisions has created a heightened

sensitivity to conflict of interest matters throughout EPA's programs

and the contractor community. As a result, we are already seeing an

increase in contractors reporting of potential conflicts to the Agency.

Certainly, with the tremendous cost of cleaning up the environment, we

need to ensure the integrity of our procurement program and cannot

afford to jeopardize our enforcement actions and impede PRP cleanup of

hazardous waste sites. EPA has seriously considered the cost of the

rule and has worked to minimize the rule's burden to the contractor

community, yet ensure adequate protection of its programs.

4. Pending FAR Regulations and Consistency With OFPP Policy Letter 89-1

Some commenters expressed concern with the publication of EPA's

rule prior to the publication of the pending FAR regulations, and some

expressed concern that the proposed rule is inconsistent with and goes

beyond the existing regulations and OFPP Policy Letter 89-1. On October

22, 1990, the interim regulations were published as FAC 90-1, amending

the FAR subpart 9.5 on conflicts of interest. On October 25, 1991, the

interim rule was converted to a final rule. We have carefully reviewed

our rule to ensure its harmony with FAR subpart 9.5. The rule

specifically addresses the unique requirements of the Superfund program

which are not covered by other regulations. To safeguard our

enforcement actions and ensure the integrity of our cleanup program, it

is essential that we monitor not only conflicts of interest prior to

award, but also conflicts during and after performance. These special

provisions are not inconsistent with FAR subpart 9.5.

5. Definition of Conflicts of Interest

A number of comments concerned the definition of types of conflicts

of interest. The term ``conflict of interest'' in this rule has the

same definition as contained in FAR Subpart 9.5. EPA has not adopted

any unique or agency specific definitions for types of conflicts of

interest. EPA also has included the term ``personal conflicts of

interest'' which is not defined in the FAR. For clarity, we have

provided a definition of personal conflict of interest in EPAAR Clause

1552.209-73, Notification of Conflicts of Interest Regarding Personnel.

A personal conflict of interest is ``a relationship of an employee,

subcontractor employee, or consultant with an entity that may impair

the objectivity of the employee, subcontractor employee, or consultant

in performing the contract work.''

6. Apparent Conflict of Interest

A number of commenters objected to the expansion of conflict of

interest to include the term ``apparent'' and indicated that the term

was too vague and was not defined in the rule. To be consistent with

FAR Subpart 9.5, this term has been removed from the rule.

Nevertheless, EPA strongly supports the OFPP approach on this issue and

will fully comply with section 6(d) of OFPP Policy Letter 89-1, which

mandates, ``Federal procurement officials shall encourage contractors

to consider carefully the potential for conflicts of interest in all of

their activities associated with federal procurement, and shall be

sensitive to the appearance of conflicts of interest in any contracting

actions.'' A comment was also received which stressed that contractors

that work for both private and public parties should avoid and mitigate

both actual conflicts of interest and the appearance of conflicts in

order to protect the public interest. Accordingly, our contractors

should be sensitive to the appearance of conflicts of interest in all

contract actions.

7. Potential and Actual Conflicts of Interest

Several commenters took exception to EPA's inclusion of the term

``potential'' to describe a particular type of conflict as being too

vague and overly restrictive, and one commenter stated that the term

``actual conflict'' was undefined and contrary to the FAR. We disagree

and are retaining the terms in the rule. The concept of potential

conflicts is well established in acquisition regulations. FAR Subpart

9.5 provides examples of situations involving potential conflicts of

interest and also includes the term ``actual'' conflict of interest.

8. Significant Conflict of Interest

Some commenters recommended that EPA only be concerned with the

reporting of significant conflicts of interest. We disagree. It is

unacceptable for contractors to report only conflicts which they

consider significant. All actual and potential conflicts of interest

that are identified must be reported to the appropriate EPA Contracting

Officer. In accordance with the process set out in FAR Section 9.504,

the EPA Contracting Officer identifies and evaluates conflicts, makes a

determination of whether a conflict is significant and determines if

the conflict can be avoided, mitigated, or neutralized.

9. Restriction of Contracting Officer's Decision Making Authority

Two comments received expressed concern that the rule will infringe

upon or eliminate the Contracting Officer's decision making authority

on conflicts of interest. In particular, the comments stressed that it

is important that Contracting Officers make decisions on a case-by-case

basis and that EPA is abrogating its responsibilities by placing the

full burden on contractors to disclose conflicts of interest no matter

how insignificant or immaterial.

Nothing in this rule restricts the Contracting Officer from making

decisions on conflicts of interest on a case-by-case basis. In fact,

Contracting Officers are required to make decisions on a case-by-case

basis in accordance with FAR subpart 9.5. The existing EPAAR requires

contractor disclosure of conflicts and the rule does not change this

responsibility. This disclosure requirement does not mean that the

Contracting Officer will find that every reported conflict is

significant or that it cannot be avoided, neutralized, or effectively

mitigated, but rather allows the Contracting Officer the opportunity to

carefully evaluate the facts of each case and make an informed

determination that protects our programs and the public interest.

Clearly, both EPA and its contractors have a continuing responsibility

to identify and prevent conflicts of interest in federal procurement.

However, it is not feasible or practicable for EPA to routinely search

and review contractors' business records to unearth conflicts. Such

action would be inappropriate and intrusive. Therefore, as a practical

matter, we must require contractors to report conflicts.

10. Limitation of Disclosure

One commenter recommended that EPA revise the rule to address

disclosure of client information regarding the same subject matter as

the instant solicitation, or directly relating to such subject matter

as the instant solicitation. The commenter recommended either limiting

disclosure to information connected to the solicitation or to work

performed in the same state or region where the work for EPA will be

performed.

EPA requires disclosure of conflict of interest information related

to the work performed or that will be performed for EPA. We do not

require the submission of unrelated client or other information. All

that is required is sufficient information for the EPA Contracting

Officer to make an informed conflict of interest determination.

11. Disclosure of Client Information

One comment raised the concern that contractors may be unable to

divulge work performed for clients and the dollar value, since this

information as well as client lists are routinely claimed to be

confidential.

The rule does not require the release of client lists or the

reporting of the dollar value of work performed for clients. Rather, we

require that a contractor disclose sufficient information to the

Contracting Officer so that the Contracting Officer can make an

informed decision. In most cases, this would involve the name of a

client creating the potential conflict or the contractor, particularly

if the client is a PRP on the site, and information regarding the

nature of the work. Each case is different and there may be occasions

where a client routinely claims confidentiality for the release of its

name and other information concerning the conflict. If a disclosure

waiver cannot be obtained from the client, the contractor should

explore with the Contracting Officer suitable alternatives for

providing information sufficient to permit the Contracting Officer to

render an informed decision on the conflict. We urge contractors to

identify confidential business information and stress that EPA is

committed to protecting sensitive business and other information to the

full extent permitted by law.

12. Availability of PRP Listings

Commenters expressed the concern that contractors can not identify

all conflicts of interest unless EPA informs contractors of all of the

PRPs and of the possibility of future enforcement actions. They further

stated that contractors are unable to sign the certifications

accurately unless they know these facts. Several commenters also

suggested that to avoid delays in contractor disclosure and

certifications, EPA should furnish up-to-date listings of PRPs.

EPA acknowledges the fact that PRPs are continually being

identified and that contractors will not always have sufficient

knowledge of all PRPs at the time certification is submitted. We

require contractors to certify to the best of their knowledge and

belief at the time of the certification. It is not EPA's intention to

hold a contractor accountable for information which the contractor did

not know or have reason to know at the time the certification was

executed. We wish to stress, however, that disclosure of conflicts is a

continuing obligation, and certification is a statement that should

demonstrate a contractor has made a good faith effort to disclose all

potential conflicts of interest. In order to alleviate contractors'

concerns, the time period for the submission of the work assignment

certification has been extended to permit a more reasonable time period

for contractors to contact EPA and obtain the most current information

concerning PRPs and future enforcement actions pertaining to sites

identified in the work assignments or contract. The term ``work

assignment'' in this rule includes other similar tasking documents such

as a delivery order or a technical direction document. EPA is committed

to providing contractors with the list of known PRPs for sites at the

time of work assignment issuance. EPA is currently working to make

available to all Contracting Officers the Superfund Enforcement

Tracking System (SETS) report, which tracks PRPs by site. This report

is available to the public through the National Technical Information

Service (NTIS), Springfield, Virginia.

13. Period of Record for Conflict of Interest Checks

One commenter requested clarification of the period to be searched

for organizational and personal conflicts of interest. The commenter

suggested that the organizational check include all prior work

performed by the contractor but that the personal conflict of interest

check be limited to the period of time that the individual is employed

by the company or for a one year period, whichever is greater.

In accordance with FAR 9.5, EPA will require all contractors who

have at least three years of records to search back through the

immediately preceding three years of records. For contractors who do

not have three years of records to search, a transition period for

searches will be implemented requiring the contractor to search any

records that it has until, over time, three years of records are

accumulated. Contractors, however, are always required to report any

conflicts of which they are aware. We emphasize that a contractor is

not required to collect, maintain or search records on personal

conflicts of interest. The requirement on the contractor is to inform

its employees, performing work under or related to EPA contracts, of

their obligation to report conflicts of interest. It is the employees'

responsibility to review their current and past activities and to

report potential conflicts of interest to their employers.

14. Elimination of Conflicts by Full Disclosure of Contractor Roles

One commenter stated that EPA should focus on full disclosure of

roles, since where full and open disclosure of a contractor's role

exists no conflict of interest can occur. We disagree. Although we

certainly believe in openness regarding the role of contractors in

EPA's procurement program, we fail to see how full disclosure of the

role of contractors eliminates the existence of conflicts. Rather, it

is contractor disclosure of potential conflicts to EPA that provides

the opportunity to avoid, mitigate, or neutralize conflicts.

15. Centralized Decision Making

Many comments were received recommending the establishment of a

centralized decision making function with an administrative contracting

officer at EPA headquarters having the responsibility for decisions on

all conflict of interest requests. It was pointed out that this would

achieve consistency in conflict of interest determinations.

We have seriously considered this as an option and have rejected

it. A central administrative contracting officer would not have the

necessary background or knowledge of the individual contracts to make

well informed conflict of interest determinations. We believe that a

decentralized approach to conflict of interest decision making, where

determinations are made by the EPA Contracting Officer for the contract

on a case-by-case basis, is the more effective approach.

16. Objective Standards for Determining Conflicts of Interest

One commenter requested that meaningful objective standards be

adopted to evaluate significant personal and organizational conflicts

of interest.

FAR subpart 9.5 provides definitions and general rules pertaining

to conflict of interest, but do not include objective standards.

Conflict of interest is a subject for which objective standards are

difficult to formulate. However, this does not mean that conflicts

cannot be described through definitions and general rules. In addition

to the examples included in the FAR, EPA Contracting Officers receive

training and assistance on conflict of interest issues from the

conflict of interest staff within EPA's Office of Acquisition

Management. Therefore, Contracting Officers will have available

examples and precedents to assist them in their conflict of interest

determinations.

17. Limited EPA Resources To Administer Conflict of Interest

One commenter expressed concern that EPA would not have the

resources to efficiently administer the rule, and other commenters

recommended that EPA provide examples of conflicts of interest to help

Contracting Officers respond consistently and wisely and prevent delays

associated with these new regulations.

We believe the Agency has sufficient staff to administer these

regulations. In the past, response times were sometimes delayed not

because of a lack of resources but because of insufficient training and

experience. EPA is committed to a comprehensive conflict of interest

training program for its Contracting Officers and project personnel.

The training will include a collection of case studies and examples

upon which to base conflict of interest decisions.

18. Applicability of the Rule to Superfund Work Outside EPA

Another commenter, expressing support for the rule, suggested that

the EPA should consider and clarify how the provisions in the rule can

be enforced equally with respect to all Superfund contracts, whether

they are let by EPA or other Federal agencies, such as the U.S. Army

Corps of Engineers, or the States.

This rule applies only to contracts awarded by EPA. EPA can

encourage the use of similar provisions in contracts for Superfund work

awarded by other agencies or States. However, it cannot require

agencies or States to include similar provisions in those contracts.

EPA is currently exploring the possibility of including its clauses in

agreements that pertain to Superfund work in contracts awarded by other

agencies or States.

19. Applicability of the Rule to Contractor Work for the Public Sector

Some commenters suggested that the rule apply to EPA contracts only

and have no bearing on work performed for other Federal agencies. It

was pointed out that the rule lacks a discussion of how the

restrictions in this rule bear on the ability of contractors to seek

similar work from other Federal agencies and the States. Particular

concern was raised that EPA not restrict its contractors from working

simultaneously for other agencies such as the Department of Energy

(DOE) and the Department of Defense (DOD) since this would be contrary

to the public interest.

The EPA is committed to working closely with other agencies and

States to ensure the effective and expedited cleanup of hazardous waste

sites throughout the country and encourages the use of the best cleanup

technology available. It is not our intention to restrict EPA

contractors from working for the public sector. We strongly encourage

contractors to perform work for other Federal agencies and States when

such work does not create a conflict of interest problem which would

impair the contractor's objectivity in performing work for EPA or

damage the integrity of the EPA's cleanup and enforcement actions. We

have intentionally made no distinction between the public and private

sector in the rule's reporting requirements. To safeguard our programs,

we must require that all actual or potential conflicts of interest be

identified, avoided, mitigated, or neutralized.

The EPA has the responsibility to ensure compliance by Federal and

State agencies with the requirements of CERCLA and the amendments made

by subsequent enactments. Because of EPA's enforcement responsibility,

the interests of EPA and other public organizations will not always be

parallel and may at times be distinctly at odds. For example, the

interests of the EPA and DOD or DOE may be very different regarding the

terms of Federal Facility cleanup agreements. Therefore, it is

important that our contractors are not placed in conflict situations.

When an actual or potential conflict of interest exists with work that

a contractor may wish to perform with another organization, whether

public or private, the contractor shall report it to its EPA

Contracting Officer so that an informed determination can be made based

on a careful review of the facts, the legal and program considerations,

and the best interest of the United States.

20. Qualified Contractors

One commenter stated that EPA may not attract the most qualified

contractors or best expertise as a result of implementing the conflict

of interest regulations. We disagree. EPA promotes full and open

competition and attracts the most highly qualified contractors to its

procurement program. Securing qualified contractors and eliminating

conflicts of interest are not opposing goals. In fact, most of the

highly qualified firms which compete for EPA contracts have systems

established within their organizations to identify and eliminate

conflicts of interest.

21. Flow Down of the Clause to Subcontractors and Consultants

A number of commenters stated that the categories of subcontractors

and consultants exempted from the flow down of the conflict of interest

clauses are too limited. They specifically questioned why the ``non-

discretionary technical or engineering services, including treatability

studies,'' exempted in the proposed clause, EPAAR 1552.209-74,

Limitation of Future Contracting (LOFC), are not included in the flow

down exemptions of all of the rule's conflict of interest clauses.

In developing this rule, we carefully evaluated the types of work

performed by subcontractors and consultants under EPA's contracts, and

identified certain classes of work that pose a minimal risk of conflict

of interest. They include well drilling, fence erecting, plumbing,

utility hookups, security guard services, and electrical services. We

exempted these classes from the flow down provisions of all of the

rule's EPAAR conflict of interest clauses. In addition, for the LOFC

clause only, we also exempted subcontractors and consultants who

perform ``non-discretionary technical and engineering services,

including treatability studies.'' Although we believe that non-

discretionary technical and engineering services could pose some risk

to the Agency, particularly since this category is so broad, we were

able to exempt this work from the LOFC clause because sufficient

protection was provided through coverage by the basic conflict of

interest clauses, (EPAAR 1552.209-71 Organizational Conflicts of

Interest, EPAAR 1552.209-73 Notification of Conflicts of Interest

Regarding Personnel, and EPAAR 1552.227-76 Project Employee

Confidentiality Agreement.)

In the case of ``treatability studies'', we recognize that this

type of work may have a high risk of conflict of interest, yet we

believe it is in the public interest to promote innovative technology

and exempt such subcontract work from any limitations on future

contracting. However, because there may be a high risk of conflict for

this type of work, it is essential that protection is provided by flow

down of the basic conflict of interest clauses.

22. Expansion of the Class of Exemptions for Subcontractor Flow Down

Several commenters requested that we broaden the classes of work to

be exempt from the flow down requirements which apply to subcontractors

and consultants in all of the conflict of interest clauses. Some

provided specific suggestions of additional categories to be exempted

including: Laboratory services, industrial hygiene, selected

geotechnical consulting, medical surveillance, transportation services,

and graphics printing.

We have given serious consideration to the commenters'

recommendations and believe that categorically exempting these types of

work from flow down would pose an unacceptable risk of conflict of

interest to the Agency. For example, if a laboratory services

subcontractor were also providing environmental consulting services for

a specific site in support of a PRP's legal position, it would be a

conflict of interest for the same subcontractor to then take or analyze

samples for the EPA from the same site. In addition, if a

transportation subcontractor has a relationship with a disposal

facility that is a PRP on a site, it would be a conflict of interest

for that same transportation subcontractor to also perform work at or

relating to the site for EPA, or involving the disposal facility. Each

of the other recommended categories also poses such risks, and the

Agency cannot categorically exempt them. However, we recognize there

may be special cases in which these type of activities can be excluded

and each clause allows for Contracting Officers to authorize such

exemptions. Thus, we have added a provision permitting a contractor to

request in writing that the Contracting Officer exempt from the flow-

down requirements of the Limitation of Future Contracting clauses a

particular subcontract or consultant agreement for nondiscretionary

technical or engineering services not specifically exempted in the

clauses, including laboratory analysis. The Contracting Officer will

review and evaluate each request on a case-by-case basis, before

approving or disapproving the request.

23. Costs Associated With Flow Down of Clauses to Subcontractors

Commenters expressed concern about the costs associated with the

flow down requirements of the rule's clauses. One commenter asked if

EPA is willing to pay for the costs associated with the LOFC flow down

provision.

The allowable and allocable costs associated with this rule may be

chargeable to EPA contracts in accordance with the provisions of FAR

part 31. This would also apply to allowable and allocable costs

associated with this rule, which are incurred by non-exempt

subcontractors or consultants, except that such costs would be

submitted to EPA's prime contractor rather than to EPA. We anticipate

that costs associated with future contracting requests under an LOFC

clause will be minimal and would be performed as a part of the normal

bid and proposal effort.

24. Expansion of Subcontractor Flow Down Exemption To Apply To Prime

Contractors

Some commenters also requested that prime contractors be exempt

from the LOFC or other conflict of interest clauses when work to be

performed under the prime contract is one of the exemptions identified

in the flow down section of the clauses.

We disagree. EPA prime contracts include a wide variety of tasks,

many of which pose a high risk for conflict of interest. However, in

the unlikely event that an EPA prime contractor only performed the type

of work exempted in a specific subcontractor flow down provision, the

contractor could request from the Contracting Officer an exemption from

inclusion of that conflict of interest clause.

25. Small and Minority Business Concerns

Two commenters raised concern that the rule conflicts with the EPA

Administrator's initiative to provide more work to small and minority

owned businesses and with Congressional intent to promote contracting

with small business. The commenters asserted that small firms cannot

absorb the high costs of maintaining complex conflict of interest

systems. Other commenters expressed concern that the LOFC clause will

hurt small businesses that need local markets because small businesses

do not have the operational breadth that larger firms possess to avoid

regions where conflicts may exist.

It is essential that we avoid, mitigate, or neutralize conflicts of

interest in all EPA contracting. However, we recognize the importance

of small and minority owned businesses and strongly support their

active participation in our procurement programs. We are currently

implementing a Long Term Contracting Strategy for the Superfund program

that will enhance the competitive environment and provide greater

opportunities for small business participation by creating smaller,

regionally based contracts and subcontracting opportunities under these

contracts.

Small businesses currently participate in the Superfund and other

EPA programs primarily as subcontractors. As detailed in our discussion

of flow down exemptions, a number of categories of subcontracts are

specifically exempt from the requirements of the entire rule and ``non-

discretionary technical and engineering services'' subcontract work is

exempt from all LOFC clause provisions. This substantially minimizes

cost and associated burdens for many small businesses participating in

our programs at both the local and national level. Moreover, at any

time, a small business operating as either a prime contractor or a

subcontractor may request waiver of clause requirements for

nondiscretionary work which poses a minimal risk of conflict of

interest.

EPA does not require any special type of system to identify and

report conflicts. Each contractor determines its own procedures for

searching and identifying conflicts of interest, and in some cases, it

may already have a process in place to identify conflicts in its

commercial business. We anticipate that the scope of a company's

procedures would be commensurate with the company's size and

complexity, and for small businesses any system would be less complex

and detailed.

26. Applicability of Rule to Related Organizations

Several comments were received concerning the applicability of the

rule to affiliates and other related organizations. A few commenters

encouraged EPA to publish a uniform policy regarding the disclosure

burden of contractors for work performed by parent and affiliate

corporations as well as partnerships and other businesses. Most

commenters opposed the burden of extending disclosure to conflicts of

interest associated with related organizations, and stressed that it

may be difficult to obtain information from affiliates regardless of

common ownership.

The issues regarding applicability of the rule to related

organizations are complex. The rule does not specifically address

related organizations, and it is not our intent to extend search and

certification requirements to related organizations and create

unnecessary reporting burdens. However, we do require our contractors

to make a good faith effort to report conflicts as they are identified.

If an EPA contractor is aware of a potential conflict or has reason to

believe a related organization may create a conflict of interest for

the contractor, checking with that organization to verify whether a

conflict exists would certainly be warranted.

If a contractor reports a conflict of interest involving a related

organization and includes information which is designated as sensitive

or proprietary, the EPA will protect such information from unauthorized

disclosure. An opportunity to so mark such information shall be

afforded to the submitter of the information.

27. Application of the Rule to Other Units of a contractor's

Organization Which Do Not Perform Environmental Work

One commenter wanted to know the extent to which the rule applies

to other units of a contractor's organization which do not perform

environmental work. The commenter further stated that it is unfair to

restrict service areas of a firm that are unrelated to environmental

consulting work or to the contractor unit working on an EPA contract.

This rule applies to the corporation or other legal entity that has

entered into a contract with EPA, and makes no distinction between

separate divisions or units of the EPA contractor's organization. The

fact that a part of the organization does not perform environmental

work does not necessarily mean it would not have a conflict of

interest. EPA only restricts its contractors from work which poses a

significant conflict of interest to the Agency. We require our

contractors to identify all potential conflicts of interest and notify

the EPA prior to entering into a contract for types of work identified

in the LOFC clause as posing a significant risk of conflict. This

provides the EPA an opportunity to evaluate such work and prevent

conflicts that may jeopardize work performed for EPA or ongoing

enforcement actions.

28. Establishment of New Organizational Units To Avoid Conflicts of

Interest

A comment was received that expressed concern about a contractor

establishing new ``units'' with the purpose of allowing the contractor

to perform in different program areas where it might otherwise be

precluded due to a conflict of interest. The comment included a

suggestion that there should be a deterrent to allowing this type of

loophole.

EPA requires that contractors report to the EPA Contracting Officer

all potential conflicts of interest with work performed for EPA. While

there may be instances where an organizational conflict of interest may

be mitigated effectively, all such potential conflict situations must

be reported to the EPA so that the Contracting Officer can make an

informed determination based on a careful evaluation of the facts and

program and enforcement concerns.

29. Contractor Authority To Decline EPA Work

One comment stated that an EPA contractor should be allowed to

decline specific work assignments because of a conflict with other work

that the contractor may have accepted after the EPA contract was

awarded. We disagree. The contractor does not have the discretion to

reject a work assignment. The contractor must report all conflicts of

interest to the EPA Contracting Officer who evaluates conflicts, makes

a determination of whether a conflict is significant and determines if

the conflict can be avoided, mitigated, or neutralized. Under the terms

of an EPA contract, a contractor is required to accept and perform work

issued under work assignments. Where there is an overriding public

interest to perform the work when a conflict of interest exists, the

Contracting Officer may decide that the work should be performed

despite the inability to avoid, mitigate, or neutralize the conflict.

For example, if an emergency situation exists and immediate action is

needed to stabilize a site to prevent injury to nearby residents, the

Contracting Officer may determine that performance on the work

assignment is necessary regardless of the contractor's inability to

avoid, mitigate, or neutralize a conflict at the site.

30. Contractor's Right To Stop Work

Commenters stated that a contractor should have the right to stop

performance if it reasonably believes that there would not be a

significant impact upon the Agency as a result of the work stoppage. We

disagree. The contract requires performance, and work may be stopped

only by the Contracting Officer. The Government's right to control

costs incurred as a result of stopping work must be protected.

31. Time Limit for Responding to Conflict of Interest Requests

Several commenters stated there should be a time limit, such as

three or ten days, established for Contracting Officers to respond to

any conflict of interest notification or LOFC request. Commenters

further suggested that contractors should be able to assume that

approval, if required, has been given if a response has not been

received from EPA within ten days. The commenters stated that

contractors may not only be placed in a position which may cause them

to lose business due to slow responses by EPA, but also may be subject

to bid bond forfeitures or other penalties for failure to accept a

contract if time limits are not included in the rule. Also, for Federal

contracts, contractors may risk having their bids found non-responsive

if the bid is conditioned upon EPA granting approval to enter into the

contract.

Since each conflict of interest situation is unique and has varying

degrees of complexity and because contractors often do not initially

provide sufficient information for a Contracting Officer to make a

timely decision, the establishment of an arbitrary time limit is not

appropriate. We do not agree with the suggestion that failure to

respond within ten days should automatically be interpreted as

approval. Arbitrary time limits can result in procedural questions over

submission and receipt dates and create delays. Although set response

times are not included in the rule, EPA is committed to providing

timely responses. We have clarified our LOFC clauses to indicate that

contractors may seek an expedited response regarding their initial LOFC

requests by submitting their requests to the Contracting Officer and

the next level within the Contracting Officer's organization.

32. Review Process

Several comments recommended that EPA institute an appeal process

for contractors that want a review of an adverse conflict of interest

decision made by a Contracting Officer. The decision on any conflict of

interest determination is the responsibility of the EPA Contracting

Officer. We have clarified the review process available for LOFC

requests if a contractor disagrees with the decision of a Contracting

Officer. The contractor may file a request with the Contracting Officer

for reconsideration or the contractor may request that a Contracting

Officer determination be reviewed at a higher administrative level.

Filing a request for reconsideration however, does not preclude a

contractor from seeking review at the next administrative level. The

LOFC clause has been modified to include the review process.

33. Modification of Existing Contracts

Comments were received which took exception to a unilateral

placement of conflict of interest clauses into existing contracts. EPA

does not intend to unilaterally place the new EPAAR clauses into

existing contracts. Clauses substantially similar to these clauses

shall be negotiated by the Contracting Officer for existing contracts,

on a case-by-case basis, as stated in the general prescription to the

clauses. The general prescription to the clauses, cited in the proposed

rule as paragraph (c), EPAAR 1509.508, Solicitation provision and

contract clauses, is redesignated, under the final rule, as EPAAR

1509.507-2, Contract clause, to conform with recent numbering changes

to FAR Subpart 9.5.

34. General Comments Concerning Improper Restriction of Competition and

Its Effects

Commenters expressed concern about a restriction of competition on

Superfund work resulting from this rule. Commenters also stated that

EPA has improperly restricted competition by placing overly broad

future contracting limitations affecting sites, types of contracts, and

parties with whom the contractor may contract. Commenters questioned

the authority to impose ``post contract'' restrictions and stated that

such activity should be governed by internal guidelines and market

forces. Others stated that these clauses prevent EPA from having access

to the most qualified sources in its contracting program. Other

comments reflected an interpretation that the restrictions apply to

affiliates and to contractor clients.

We disagree with these comments. The LOFC clause and its alternates

are not overly broad nor do they improperly restrict competition. The

LOFC clause and each alternate are focused narrowly upon areas which

have a high potential for conflict. The authority for ``post contract''

restriction is recognized in FAR Section 9.507.

Many EPA Superfund solicitations and contracts currently include

clauses similar to those contained in this rule. EPA has attracted

qualified contractors and competition has not diminished. The comment

concerning the limitation of competition based upon the flow down of

restrictions to affiliates or to clients reflects an assumption based

upon a misreading of the proposed rule. There is no flow down of

restrictions to affiliates or to clients.

35. Negotiation of Specific LOFC Clauses

One comment suggested that the LOFC clause be negotiated separately

for each contract. This will occur for existing contracts. However, the

rule's EPAAR clauses are required for all solicitations and new

contracts. The Contracting Officer may, however, consider a deviation

to the inclusion or for the modification of the clause.

36. Assessment of the Cost and Economic Impacts of Limiting Work on

Existing Contracts

Commenters were concerned about the limitation on business as a

result of the inclusion of the LOFC clauses in existing contracts. One

commenter stated that an assessment of the economic impacts of the rule

has not been performed for existing contracts. The commenter further

stated that the limitations contained in the LOFC clause, which will be

included by modification into existing contracts, will adversely affect

its future activities. The commenter's concern is that these effects

were not envisioned by the contractor at the time it submitted its

offer to the EPA.

The rule states that the EPAAR clauses are to be placed in all

solicitations and new contracts unless a deviation is obtained. For

contracts existing as of the effective date of the rule, clauses

substantially similar to those in the rule are to be negotiated and

incorporated into those contracts, on a case-by-case basis. EPA will

not unilaterally incorporate these new clauses into existing contracts.

Concerning the cost and economic impacts of the rule, EPA has

performed a cost burden analysis of the rule and recognizes that there

will be some economic impact as a result of implementing these clauses.

During the formulation of the LOFC clause for each existing contract,

the negotiation process will assure that any specific economic

attributes associated with the contract are taken into consideration.

37. Unduly Burdensome and Redundant Certifications

Several commenters stated that the certifications required by the

rule are unduly burdensome and redundant, and should be deleted from

the rule. Specifically, the commenters took exception to requirements

for an annual certification and to the work assignment and work plan

certifications.

To respond to these concerns, we have made significant reductions

in the proposed rule's certification requirements. Under the final

rule, all Superfund contractors are required to submit certifications,

but they are no longer required to submit both annual and work

assignment certifications. In addition, the requirement for work plan

certifications has been eliminated, and the number of work assignment

certifications has been reduced. Under the final rule, a work

assignment certification is required within 20 days from the time the

contractor receives a work assignment. If a subsequent work assignment

is issued to the contractor under the same contract for additional work

at the same site(s) covered by the initial work assignment, an

additional certification for the new work assignment is not required.

This is not intended to relieve the contractor from reporting any

future conflicts of interest relating to the site(s). The contractor

will still be expected to search and report any conflicts of interest

based upon new information which has been identified. These

certification changes will significantly reduce the burden on

contractors.

38. Multiple Sites Under Work Assignments, Addition of Sites to a Work

Assignment and the Allocation of Costs

One commenter expressed concern that since sites and PRPs may be

added to the work assignments during performance, contractors cannot

certify at the work assignment acceptance phase that all conflicts have

been disclosed. This concern also applies to a multi-site work

assignment where sites are identified as the work arises. The commenter

also expressed concern about the recovery of costs incurred for records

retention pertaining to sites under multi-site contracts.

The work assignment clause requires that the contractor certify to

the best of its knowledge and belief that all conflicts of interest

have been reported or that no conflicts of interest exist. We recognize

that all site and PRP information may not be available at the time of

the certification, which under the final rule is 20 days after the

contractor receives the work assignment. If a site is added to the work

assignment after the certification is submitted, a subsequent

certification is not required for the additional site. The

certification includes a statement that the contractor recognizes its

continuing obligation to identify and report any conflicts arising

during performance of the work assignment pertaining to all sites.

Allowable costs associated with work performed under the contract,

including records retention pertaining to sites, shall be allocated

consistent with the contractor's cost accounting system. Since work

assignments are so diverse, questions concerning the proper

allocability of costs on a specific work assignment should be directed

to the Contracting Officer.

39. Cost to Contractors Associated With Requesting Approval for Future

Work After Contract Performance

Several comments were received concerning the reimbursement of

costs associated with the submission of LOFC requests, filed after the

expiration of the EPA contract. Another commenter expressed concern

about costs contractors may incur as a result of involvement in future

litigation matters.

The LOFC clause identifies work that is high risk to the Agency.

The purpose of this clause is to avoid conflicts that jeopardize the

Superfund program and EPA's enforcement efforts. After expiration of

the contract or work assignment, contractors only have to request

approval for future contracting identified in the LOFC clause. Costs

associated with this approval process should be minimal and would be

performed as a part of the normal bid and proposal effort.

The issue of costs associated with future involvement in litigation

matters is not within the scope of this rule. However, generally if EPA

requires expert witness or special litigation support for a Superfund

case, it would enter into a contract for such services. For costs

associated with other witness testimony, the Federal Rules of Criminal

Procedure or the Federal Rules of Civil Procedure would apply.

40. FAR Coverage of Paperwork

One commenter stated that the FAR requires detailed paperwork only

when necessary to examine ``significant potential conflicts'' and to

determine appropriate mitigation measures. We agree. In accordance with

FAR section 9.505, EPA's Contracting Officers examine each situation on

the basis of its particular facts and exercise common sense, good

judgment and sound discretion in order to minimize the paperwork

burden. Only information which is sufficient to permit the Contracting

Officer to identify and evaluate conflicts of interest shall be

requested.

41. Paperwork Requirement and EPA Objectives

One commenter stated that the paperwork required violates the

Paperwork Reduction Act and is unnecessary to achieve EPA's program

objectives. We do not agree. EPA has not violated the Paperwork

Reduction Act and has made every effort to minimize the paperwork

burden associated with this rule consistent with achieving its

objectives in the area of conflict of interest. The final rule reflects

a substantial reduction in the paperwork burden to contractors

participating in EPA's procurement program.

42. Paperwork Burden Concerns

Many commenters expressed concerns about the burden the rule would

impose upon contractors. Several commenters stated that EPA's burden

estimate was too low. One commenter stated that its conflict of

interest review effort required much less time than that which was

estimated by EPA. Others offered suggestions on how EPA could reduce

the paperwork burden and still accomplish its objectives. These

suggestions included elimination of duplicative certifications.

EPA has considered these suggestions and has made significant

reductions to the paperwork burden associated with this rule. Under the

final rule, contractors will not be required to submit certifications

on both an annual and a work assignment basis. In addition, the work

plan certification requirement has been eliminated from the proposed

rule's amendment to the work assignment clause. Under the final rule, a

single certification will be submitted within twenty days from the time

the contractor receives the work assignment, and it will cover

conflicts of interest for all effort to be performed or related to

sites under the work assignment. Furthermore, if a subsequent work

assignment is issued to the contractor under the same contract for

additional work at the same site, an additional certification for the

new work assignment is not required. The initial certification is

sufficient because it requires a continuing obligation by the

contractor to report any conflicts associated with the site(s). The

paperwork burden associated with the LOFC clause and its alternates has

been reduced because the time frames for requesting approval commence

at the conclusion of the work assignment instead of the expiration date

of the contract. In many cases, this will reduce the LOFC request

period by several years. In the final rule, EPA has also eliminated the

requirement for an annual update of the conflict of interest plan in

order to reduce reporting requirements.

43. Data Base Searches and Cost Reimbursement for Paperwork Burden

Commenters stated that contractor data bases do not contain the

type of information that EPA is requesting and, therefore, contractors

would not be able to provide complete certifications on conflicts of

interest. Other commenters expressed concerns that the development of

data bases and the other administrative costs associated with the rule

will not be recovered by the contractors and have not been included in

the total cost for conflict of interest systems. They recommended that

EPA provide a mechanism for contractors to recoup these costs.

EPA does not require that contractors establish any particular kind

of information retrieval system. EPA recognizes that contractors often

do not have all of the information readily accessible upon which to

base their certifications. Therefore, the certifications contain the

statement that the contractor is certifying to the best of its

knowledge and belief as of the date of the certification.

Concerning the costs associated with the rule and a conflict of

interest system, the rule states that costs associated with conflicts

of interest may be chargeable to Government contracts under the

provisions of FAR Part 31. Following the expiration of the contract, no

certifications are required. For expired contracts, which involved

efforts at sites, the costs associated with search effort associated

with the LOFC clause should be minimal. These post contract costs would

normally be allocated to the contractor's bid and proposal pool.

C. Section by Section Analysis

The following is a description of the final rule's EPAAR clauses

and our response to comments on the specific clauses and their

prescriptions which are not addressed in the preceding general comments

section.

EPAAR 1552.209-71, Organizational Conflicts of Interest, is

modified to specify that notification of actual or potential

organizational conflicts of interest should be made prior to

commencement of work. However, in emergency situations, work may begin

with notification being made within five work days. The clause also

identifies specific subcontracts and consultant agreements for which

this clause is not required.

As a result of public comment, the following changes have been made

to the proposed modification of this clause and its prescription:

--The term ``apparent'' has been removed from this clause and all other

clauses in the rule in response to comments that the term is vague and

difficult to define.

--The prescription to this clause, paragraph (c)(1) of EPAAR 1509.508,

Solicitation provision and contract clauses, has been redesignated as

paragraph (a), EPAAR 1509.507-2, Contract clause. In addition, the

reference to FAR 9.508-2 has been removed from this paragraph since FAC

90-1 removed this section from the FAR. These minor changes have been

made to conform with the numbering changes to FAR subpart 9.5 based on

FAC 90-1, and are in accord with public comments urging that the final

rule be consistent with any changes to the FAR.

Other comments and EPA's response include:

1. Clarification of ``any work''. One commenter requested that the

term ``any work'' in paragraph (b) of the clause be clarified. ``Any

work'' would generally refer to any billable hours to the issued work

assignment. The term ``work assignment'' in this rule includes other

similar tasking documents such as a delivery order or a technical

direction document. Our intent is for contractors to report potential

conflicts prior to beginning work on a contract or a work assignment

issued under a contract.

2. Immediate reporting of whether a conflict of interest exists.

Some commenters objected to EPA's requiring the immediate reporting of

whether or not a conflict of interest exists and recommended that such

reporting not be required until ten days after a work assignment is

issued. Some also pointed out the difficulty in responding without

knowledge of future assignments and access to reliable data on PRPs.

We disagree. Conflicts of interest must be identified immediately

so we can avoid issuing work when a conflict exists. We recognize that

contractors may not always have sufficient information to identify all

conflicts when work assignments are issued since PRPs are continually

being identified, but this should not delay a good faith disclosure of

any conflicts that can be identified prior to beginning work. Moreover,

in response to comments, the final rule does not require contractors to

certify regarding conflicts of interest related to work assignments

until 20 days after receipt of the work assignment. (See EPAAR

1552.212-71, Work Assignments, Alternate I.) Additionally, it should be

noted that in emergency situations contractors may begin work

immediately with notification to follow within five days.

3. Removal of Alternate I to paragraph (e). One commenter

recommended that Alternate I of paragraph (e) of the clause, which

applies to non-Superfund contracts, be removed. We disagree. Since the

types of work exempted from flow down in paragraph (e) are unlikely to

be performed in non-Superfund contracts, it would be confusing to

include this language in such contracts. In the event these types of

work are included in the contract, the Contracting Officer may

authorize exemption.

EPAAR 1552.209-73, Notification of Conflicts of Interest Regarding

Personnel, is added for Superfund contracts to ensure that contractors

notify the Contracting Officer of actual or potential personal

conflicts of interest prior to incurring costs for an employee where

the contractor is aware that the employee has a personal conflict of

interest. The clause also identifies specific subcontracts and

consultant agreements for which this clause is not required.

As a result of public comment, the following changes have been

made:

--The term ``apparent'' has been removed in response to comments that

the term is vague and difficult to define.

--Paragraph (a) has been modified slightly to make the language clearer

that the provisions with regard to employee personnel performing under

this contract shall apply until the earlier ``of the following two

dates: the termination date of the affected employee(s) or the

expiration date of this contract.''

--Paragraph (b) has been rewritten to clarify that a contractor is

responsible for reporting personal conflicts of interest regarding its

subcontractor employees and consultants when such conflicts have been

reported to the contractor. This clarification is made in response to

public concern that a contractor is unlikely to have knowledge of the

personal conflicts of interest of its subcontractors' employees and

should not be held responsible for identifying such personal conflicts

of interest unless they have been brought to its attention.

--The prescription to this clause, paragraph (c)(2) of EPAAR 1509.508,

Solicitation provision and contract clauses, has been redesignated as

paragraph (b), EPAAR 1509.507-2, Contract clause, to conform with

recent numbering changes to FAR Subpart 9.5.

--The prescription language to this clause has also been changed to be

consistent with the prescription to the Organizational Conflict of

Interest Clause. The final prescription, paragraph (b), EPAAR 1509.507-

2 Contract clause, includes a small purchase limitation threshold.

Other comments and EPA's response include:

1. Personal conflict of interest certification and disclosure. A

number of commenters expressed concern that it is unfair and too

burdensome to require contractors to certify that all personal

conflicts had been reported. They stressed that since contractors have

to rely on their employees to report such conflicts that all that

should be required is a good faith effort to obtain such information.

Some requested that disclosure be limited to those personal conflicts

of which the contractor has knowledge. A concern was also raised that

prime contractors should not be put in a position to certify that there

are no personal conflicts of interest regarding subcontractor

employees.

We agree and have eliminated the personal conflict of interest

certification that was included as part of the annual certification and

the work plan/work assignment certification in the proposed rule. Under

the final rule, all that contractors must certify, as part of either a

work assignment or annual conflict of interest certification, is that

they have informed their employees, working under the requirements of

the work assignment or EPA contract, of their obligation to report

organizational and personal conflicts of interest. (See EPAAR 1552.212-

71, Work Assignments. Alternate I, and EPAAR 1552.210-80, Annual

Certification.) When a contractor has been informed of a personal

conflict, either by an employee or a subcontractor, or has knowledge of

such a conflict, it should then report this to the EPA Contracting

Officer.

2. Applicability of Privacy Act of 1974 and collection of records.

One commenter raised concern that this clause could have the effect of

requiring contractors to develop and maintain ``systems of records [as

defined in the Privacy Act of 1974 (5 U.S.C. 552a)] on individuals on

behalf of the agency to accomplish an agency function.'' Commenters

also stated that the systems of records needed would be excessively

burdensome. Some also expressed concern about the flow down provisions

of the clause to subcontractors in terms of records and the use of this

material at the prime contractor level.

It is not EPA's intention to require contractors or their

subcontractors to keep records tracking the personal conflicts

individual employees may have, nor is it our intention that prime

contractors keep personal conflict of interest records of their

subcontractors. Such records are not necessary to comply with our

reporting requirements. EPA's intent is to minimize any paperwork and

administrative burden by having both prime contractors and

subcontractors make their employees aware of the sensitivity and

importance of conflict of interest when working on EPA projects and to

place with their employees the responsibility for identifying

conflicts. When the contractor is informed of a personal conflict, it

should then report the conflict to EPA. When a personal conflict would

arise at the subcontractor level, the subcontractor would notify the

prime contractor of the conflict of interest, along with a description

of actions taken to avoid, mitigate, or neutralize the conflict. The

prime contractor would in turn notify EPA. If subcontractor information

is sensitive, the prime contractor will consult with the Contracting

Officer to determine a procedure that will allow the prime contractor

to fulfill the conditions of the contract and simultaneously providing

protection for the information.

3. Ownership of stock and objectivity of individuals. One commenter

suggested that without criteria about ownership of stock or the

knowledge about the psychology of individuals, the concept of personal

conflict of interest is impossible to define in practice. We recognize

that analysis of conflict situations may be difficult, and there are no

objective criteria that can address every situation that might arise.

The critical test that a contractor must use regarding any potential

conflict is whether a conflict exists which would impair the person's

objectivity in performing the work under an EPA contract.

4. Limiting disclosure requirements to key project personnel. Some

commenters stated that the proposed clause was too broad and should

apply to key personnel and not to personnel, such as clerical or

accounting employees, who have no influence over work on a project.

Some commenters connected this requirement to the system of records

issue previously addressed, to demonstrate the prohibitive expense

associated with the notification requirement by all personnel.

EPA has carefully considered exempting certain personnel working

under an EPA contract from the requirements of the clause and has

decided not to change the clause which extends the notification

requirements to all personnel performing work under an EPA contract. We

do not agree that employees below the level of ``key personnel'' do not

contribute to and influence work on EPA projects. One cannot assume

that personnel will always perform tasks which are limited to their

generic job categories, and that such employees never have access to

sensitive information and never exercise discretion that may impact

work performed for EPA. The final rule simply requires that a

contractor inform its employees about their responsibility to report

conflicts of interest. This process is a significantly less burdensome

approach to managing personal conflicts of interest. The development or

maintenance of a system of records about a contractor's employees is

not necessary to comply with the requirements of the Notification of

Conflicts of Interest Regarding Personnel clause. Therefore, the

concern about the expense associated with a system of records is not

central to the issue of which personnel would be subject to the

provisions of the clause.

5. Conflict of interest applied to employee level. One commenter

stated that it is not clear why EPA is applying conflict of interest

rules at the individual employee level and that the regulation should

clarify how the ``objectivity/bias'' rule could be compromised at this

level.

Throughout this rule, we have emphasized the special nature of

Superfund work and the importance of ensuring integrity of work at

sites so that the enforcement actions are not jeopardized. We believe

that a contractor employee with a personal conflict of interest that

impaired his objectivity in performing work for EPA could impact

Superfund work. Persons working on our contracts must be able to render

impartial assistance so that the integrity of the work product is not

questioned. For example, if a contractor employee performed work for

EPA at a site on which the employee had performed work for a PRP, and

the individual was called upon to testify in court to support prior

actions taken by the PRP, as well as to testify to support actions by

the EPA, the credibility of the employee's testimony may be questioned.

Moreover, a contractor employee with a conflict of interest stemming

from a relationship with a PRP at a site could pose an unacceptable

risk of disclosure of sensitive information that could impact cost

recovery strategy or other enforcement action regarding the site. All

we require is that personal conflicts of interest be reported so that

we have the opportunity to avoid, mitigate, or neutralize conflicts

that may jeopardize our programs.

6. Relationships covered by personal conflict of interest clause.

One commenter requested a definition concerning the types of

``relationships'' that might be covered by the personal conflict of

interest clause. ``Relationships'' may include personal, financial or

business affiliations/connections which would impair a person's

objectivity in performing the contract work.

7. Individual ownership of stock and mutual funds. One commenter

pointed out that the term ``relationship'' in this clause can be

interpreted either narrowly or broadly, and asked how EPA views the

ownership of stock in an entity or the owning of shares in a mutual

fund which owns stock in the entity.

Since each situation is different and should be examined on a case-

by-case basis, it is not appropriate to establish a position on whether

certain ownership of stock in an entity would or would not create a

conflict. We would generally view substantial ownership of stock in an

entity as having a higher conflict of interest risk than the more

passive investment in a mutual fund which normally conducts

transactions without the active participation of the shareholders.

However, specialized mutual funds may exist which invest in a very

narrow group of stocks. Therefore, each situation should be considered

on its own merits.

8. Notification to the Project Officer and to the Contracting

Officer. One commenter stated that notification to the EPA Project

Officer and to the Contracting Officer is redundant and unnecessary and

that notification to the Contracting Officer should suffice. We have

reviewed this recommendation and have decided to retain notification to

the Project Officer. Personal conflicts can have an immediate impact

upon work that is performed. Notification directly to the Project

Officer will expedite the EPA response time in avoiding mitigating, or

neutralizing such conflicts which would be beneficial to both the

Agency and the contractor.

9. Remedies for non-disclosure. One commenter stated that the rule

does not identify what remedies, if any, would be available to the

Government in the event that EPA concludes that a personal conflict of

interest was not disclosed by a contractor. The commenter further

stated that appropriate action referenced in the clause could only be

termination for convenience. We disagree. Remedies may include

avoidance, mitigation, and neutralization of the conflict as well as

any other remedies which would be permitted under the terms and

conditions of the contract.

EPAAR 1552.209-74, Limitation of Future Contracting, is added for

Superfund contracts to ensure that contractors do not perform work that

may conflict with work performed for EPA and jeopardize Superfund

enforcement actions. The clause identifies work which poses a high risk

of conflict of interest and requires contractors to request approval

from EPA prior to entering into such contracts. Alternates are provided

that are tailored to specific types of Superfund contracts. The basic

Limitation of Future Contracting (LOFC) clause is for Alternative

Remedial Contracting Strategy (ARCS) contracts, and alternates are for

Time Critical Rapid Response (TCRR), Technical Assistance Team (TAT),

Environmental Services Assistant Team (ESAT), Technical Enforcement

Support (TES), Headquarters Support, and Site Specific contracts.

Depending on the type of EPA work performed, this limitation may extend

for the period of the contract or from three to seven years after

completion of a work assignment. The clause does not prevent

contractors from submitting bids/proposals for outside work prior to

receiving Contracting Officer approval. However, the clause provides

that any bids/proposals are submitted at the contractor's own risk and

expense. This clause must also be placed in subcontract and consultant

agreements except for specific types of services listed in the clause

unless otherwise authorized by the Contracting Officer.

As a result of public comment, including recommendations that the

applicability of the LOFC clause and its alternates be clarified, the

following changes have been made:

--The prescription to this clause, paragraph (c)(3) of EPAAR 1509.508,

Solicitation provision and contract clauses, has been redesignated as

paragraph (c), EPAAR 1509.507-2, Contract clause, to conform with

recent numbering changes to FAR Subpart 9.5.

--The prescription to this clause has also been changed to be

consistent with the prescription for the Organizational Conflict of

Interest Clause. The final prescription, paragraph (c), EPAAR 1509.507-

2, Contract clause, includes a small purchase limitation threshold.

--In the basic LOFC clause (ARCS) and all alternates except Alternative

VI, two additional paragraphs have been added to set forth procedures

for an expedited response to an initial LOFC request and for review of

an adverse determination. For Alternative VI, three additional

paragraphs have been added to set forth procedures for a request for

waiver or modification of the clause, for an expedited response to an

initial future contracting request, and for review of an LOFC adverse

determination. This responds to recommendations that we identify a

review process available for contractors who may question an EPA

Contracting Officer's decision on an LOFC request.

--In the basic LOFC clause (ARCS) and all alternates, all references to

``zone'' have been changed to ``assigned geographical area.'' This adds

clarity by reflecting the new terminology in the Superfund program.

--In the basic LOFC Clause (ARCS) and all alternates, the type of

Superfund contract covered by each clause is now added at the top of

each clause. This reduces confusion in reading the text.

--Alternate I has been renamed ``Time Critical Rapid Response'' (TCRR),

and we have noted in the clause prescription that this term includes

TCRR, Emergency Response Cleanup Services (ERCS) and other emergency

type solicitations and contracts. This change has been made to clarify

the clause's applicability.

--In Alternate I (TCRR), Alternate II (TAT) and Alternate V

(Headquarters Support), all references to ERCS have been changed to

TCRR.

--The Field Investigative Team (FIT) Alternate LOFC clause has been

removed since such work is to be included in the ARCS Superfund

contracts.

--All alternates to this clause have been renumbered to reflect the

removal of the FIT Alternate. All further references will be to the new

numbers of the rule.

--Basic LOFC clause (ARCS) has been changed to reflect the inclusion of

FIT work in ARCS contracts. Since the proposed rule's FIT LOFC clause

is less restrictive than the basic LOFC clause (ARCS), language

specifically tailored to FIT work in ARCS contracts is added to

minimize contractor burden.

--Basic LOFC clause (ARCS) paragraph (a) has been changed in accordance

with comments recommending it be consistent with paragraph (a) of its

alternates, which include ``free to compete for contracts on an equal

basis'' language. All further references will be to the new paragraph

(a).

--Basic LOFC clause (ARCS) paragraphs have been relettered to reflect

the change in paragraph (a) and the inclusion of a paragraph addressing

FIT work. Paragraphs (a)(1) and (a)(2) are redesignated as paragraphs

(b) and (c). The new FIT paragraph is designated as paragraph (d).

Paragraphs previously designated as (b), (c) and (d) have been

redesignated as paragraphs (e), (f), and (g). All further references

will be to the new lettering of the final clause.

--In the basic LOFC clause (ARCS) and all alternates, paragraph (a)

language has been changed from ``It is agreed by the parties to this

contract* * *'' to ``The parties to this contract agree* * *'' This

minor change was made so the LOFC clause language conforms with the use

of the active voice in other EPAAR clauses.

--Basic LOFC clause (ARCS) paragraphs (c) and (d), parallel paragraphs

(c) of Alternates I (TCRR) and II (TAT) and (d) of Alternate IV (TES),

and similar paragraph (c) of Alternate VI (Site Specific) have been

changed as follows:

(1) These paragraphs have been rewritten to emphasize that all that

is required is that contractors obtain approval prior to entering into

a contract with respect to the type of work identified. This gives EPA

the opportunity to evaluate such requests on a case-by-case basis and

limit its contractors from performing work which would jeopardize work

performed for EPA or ongoing enforcement actions. This change was made

in response to public concern that this paragraph absolutely prohibited

the nature of work described.

(2) In further response to public comment on these paragraphs,

``other than EPA'' has been added after ``any party'' to clarify that

this clause does not cover future work a contractor may enter into for

EPA.

--Basic LOFC clause (ARCS) paragraphs (c) and (d), and parallel

paragraphs (c) of Alternates I (TCRR) and II (TAT) and (d) of Alternate

IV (TES) have also been modified in response to comments questioning

the scope of the limitation. We have clarified that all that is

required is reporting of: ``(1) Any work relating to CERCLA activities

which pertain to a site where the Contractor previously performed work

for EPA under this contract; or (2) any work that may jeopardize CERCLA

enforcement actions which pertain to a site where the Contractor

previously performed work for the EPA under this contract.'' We are

concerned with evaluating future contractor work related to Superfund

work performed for EPA on a site to ensure it does not jeopardize

ongoing EPA Superfund work or enforcement action.

--Alternate VI (Site Specific) paragraph (c), which contains similar

language addressing Site Specific contracts, has also been modified in

response to comments questioning its scope. We have clarified that all

that is required is reporting of: ``(1) Any work relating to CERCLA

activities which pertain to the site where the Contractor previously

performed work for EPA under this contract; or (2) any work that may

jeopardize CERCLA enforcement actions which pertain to the site where

the Contractor previously performed work for the EPA under this

contract.'' We are concerned with evaluating future contractor work

related to Superfund work performed for EPA on the site covered by its

contract to ensure it does not jeopardize ongoing EPA Superfund work or

enforcement action.

--Alternate I (TCRR) paragraph (c) and parallel paragraphs (c) of

Alternate II (TAT) and (d) of Alternate IV (TES) have further been

revised. The language ``during the life of the contract'' and ``after

completion of the contract'' has been changed to be consistent with the

basic LOFC clause (ARCS), which tracks by tasking document, not by

contract. This change is made in response to commenters'

recommendations. It substantially minimizes the burden to contractors

by reducing the time period for which the contractor must request

approval for future work.

The new language in paragraph (c) of Alternate I (TCRR) is ``during

the life of the delivery order or tasking document'' and ``after the

completion of the delivery order or tasking document''. The new

language in paragraph (c) of Alternate II (TAT) is ``during the life of

the technical direction document'' and ``after the completion of the

technical direction document''. The language in paragraph (d) of

Alternate IV (TES) is now ``during the life of the work assignment''

and ``after completion of the work assignment''.

--Basic LOFC clause (ARCS) paragraph (f) and identical paragraphs (f)

of Alternates I (TCRR), II (TAT), IV (TES), VI (Site Specific), (c) of

Alternate III (ESAT) and (e) of Alternate V (Headquarters Support) have

been modified. The language ``agrees not to use it to compete with such

companies'' is removed. This change was made to clarify that it is not

EPA's intent to restrict its contractors from using their experience

gained in working on EPA contracts from competing with other companies.

--Alternate I (TCRR) paragraph (d)(3), Alternate II (TAT) paragraph

(d)(3), and Alternate VI (Site Specific) paragraph (d)(2) have been

revised to include ``CERCLA administrative order''. This modification

is made in response to public comment that we cover contracts let prior

to final issuance of a CERCLA or Resource Conservation and Recovery Act

(RCRA) consent decree or court order.

--Alternate I (TCRR) paragraphs (d)(1) and (d)(2) language describing

TAT work is changed from ``Technical Assistance Team activities (TAT

contracts)'' to ``Technical Assistance Team (TAT) type activities

(e.g., TAT contracts)''. This change clarifies that this provision

applies to TAT type activities and that ``TAT contracts'' is an example

of such work.

--Alternate VI (Site Specific) paragraph (d)(1) language is also

changed from ``Technical Assistance Team activities (TAT contracts)''

to ``Technical Assistance Team (TAT) type activities (e.g., TAT

contracts)''. This change clarifies that this provision applies to TAT

type activities and that ``TAT contracts'' is an example of such work.

--In Alternate I (TCRR), paragraph (g), ``treatability studies'' has

been added to the flow down exemptions to make this Alternate clause

consistent with all other LOFC clauses in the rule. In addition,

because the term ``treatability studies'' is not routinely used in TCRR

contracts, we have noted in the prescription that this term includes

``TCRR pilot scale studies.''

--In Alternate IV (TES), we have retained the clause's paragraph (b)

language instead of choosing the proposed rule's option to paragraph

(b). This responds to public comment that the initial paragraph (b) is

more cost effective and that implementing the other proposed option

would be extremely cumbersome and expensive. In addition, we have added

``during the performance period of this contract'' at the beginning of

the paragraph in response to comments requesting we clarify the period

of applicability.

--In Alternate V (Headquarters Support), paragraph (c), we have added

``unless otherwise authorized by the Contracting Officer.'' This change

is made in response to public comments expressing concern that there

may be circumstances where the nature of the work under such contracts

would not pose a significant conflict for the EPA, and this clause

should not categorically exempt contractors from performing work

without examining requests on a case-by-case basis. We agree that the

Contracting Officer shall make conflict of interest determinations on a

case-by-case basis and this change reflects our intent. The objective

of this and all of the LOFC clauses is to identify work which we

believe may pose significant risk of conflict of interest and provide

EPA the opportunity to avoid conflicts that would damage the integrity

of the Superfund program.

In Alternate V (Headquarters Support) paragraph (c), FIT and

Remedial Engineering Management (REM) contracts are removed from the

list of examples of contracts which include response action work.

Although FIT and REM contracts included response action work, it is no

longer appropriate to include them as examples since these contracts

are being phased out of the Superfund program.

Other public comments and EPA's response include:

1. Applicability of LOFC clauses to types of work. One commenter

requested that the LOFC clauses should be unambiguously keyed to types

of work since the nature of work in different contract types overlap.

We disagree. The basic LOFC clause and each alternate are identified by

the Superfund program contract type, i.e., ARCS, TCRR, TAT, ESAT, TES,

Headquarters Support, and Site Specific. These are the standard terms

used in the Superfund program to describe types of contracts by nature

of Superfund work. To key the LOFC clauses to other types of work would

be confusing, ambiguous and difficult to track both for contractors and

the EPA.

2. Different time periods for LOFC clause and alternates. Several

commenters expressed concern that there was no justification provided

for the different time periods and suggested that EPA make the

reporting time frames in the LOFC clauses consistent. Additionally,

commenters stated the reporting requirements should either be

applicable after completion of the work assignment or reporting should

be limited to the duration of the contract. Still other commenters

suggested the reporting period should be no longer than three years

after work assignment completion. And other commenters stated the

reporting requirement after contract completion was overly restrictive

if it is to be applied to any new contracting activity but would be

less objectionable if site references were restricted to only National

Priorities List (NPL) sites.

We agree reporting requirements for work performed at a site should

be limited to a period of time after completion of the work assignment

rather than after contract completion and have made the changes in the

appropriate LOFC clauses. Each LOFC clause has been carefully studied

and specifically tailored to fit each program with appropriate time

periods based on the nature of work performed under the contract and

the risk of conflict. Because each of the different programs requiring

an LOFC clause has a different role in Superfund cleanup and

enforcement, it is necessary for some programs to have different

reporting requirements. The establishment of each time period was made

after extensive discussion of program and enforcement issues. Every

attempt was made, however, to be as consistent as possible without

jeopardizing the Superfund program.

We disagree that reporting requirements should be limited to the

duration of the contract or for only three years. These time limits

would not adequately protect the interests of the Superfund program.

Because environmental enforcement cases are averaging seven years from

start to completion, it would be very damaging to EPA's enforcement

cases if an EPA contractor could at will perform related work for a PRP

at or relating to the same site after it had performed work for EPA.

For example, the TES reporting requirement of seven years is necessary

to avoid the potential for compromising highly sensitive enforcement

support information. To reduce this time frame would significantly

jeopardize our ability to enforce CERCLA. Therefore, to prevent such

occurrences, it is absolutely necessary for EPA to have procedures in

place which require contractors to request approval before entering

into future work with PRPs that could negatively impact the work

performed for EPA.

3. Limit LOFC clause to NPL sites. Several commenters recommended

that the LOFC clause and its alternates apply only to NPL sites. Some

expressed concern whether ``sites'' includes Federal Facilities and

requested clarification.

We disagree that the clause should be limited to NPL sites and

stress that the rule makes no distinction between private party sites

and Federal Facilities. Restricting the clause's applicability to work

on NPL sites would provide insufficient protection to the Superfund

program. The NPL is a priority listing of hazardous waste sites which

have been identified for possible long-term remedial cleanup action

under Superfund. Most sites are not placed on the NPL until they have

been formally evaluated and meet a Hazard Ranking System threshold.

Contractors perform emergency Superfund work and pre-remedial work for

EPA on many hazardous waste sites that may or may not later be placed

on the NPL and also provide support for enforcement activities at non-

NPL sites. It is important to protect such work from conflicts of

interest particularly since we may initiate cost recovery action

against PRPs for cleanup work at sites that are not yet on the NPL and

may never be placed on the NPL. Moreover, work an EPA contractor may

wish to perform for a private party on a non-NPL site may directly

conflict with work performed for EPA and jeopardize CERCLA enforcement

activities. Therefore, the LOFC clause intentionally makes no

distinction between NPL and non-NPL site work in its reporting

requirements.

4. ``Any party''. Some commenters expressed concern that the term

``any party'' used in the LOFC clause was too broad, and stated that

the term could be interpreted to include another Federal agency. We

disagree that the term is too broad and it is our intent that it

include Federal agencies. The rule makes no distinction between private

and public sector work in its reporting requirements. Contractors must

report work which is identified as having a high risk of conflict

whether it is for a private party or a Federal agency.

5. ``Jeopardize CERCLA enforcement actions''. One commenter

recommended that the language in paragraph (c) and (d) of the basic

LOFC clause (ARCS) and the parallel language in the Alternates be

removed since it is difficult for contractors to determine whether

proposed actions will jeopardize CERCLA enforcement actions. We

disagree with this recommendation. The language is included to require

contractors to request approval from the EPA Contracting Officer before

entering into a contract for work which may damage our Superfund

enforcement actions so that EPA has the opportunity to protect its

enforcement actions from prejudice. When a contractor believes that

there is a risk that work may jeopardize CERCLA enforcement actions,

the contractor shall submit a request to the EPA Contracting Officer

who will make the determination.

6. Define ``CERCLA activities''. Several commenters requested that

we define ``CERCLA activities'' and one commenter specifically

requested that we exempt from the definition activities under Sections

312 and 313 of the Superfund Amendments and Reauthorization Act of 1986

(SARA).

The scope of CERCLA activities is set out in Section 101 of CERCLA.

``CERCLA activities'' includes the terms ``remove or removal'' the

terms ``remedy or remedial action'' and the terms ``respond or

response'' as defined in Sections 101 (23), (24) and (25). Activities

under Sections 312 and 313 of SARA are by definition excluded from the

term ``CERCLA activities''. Sections 312 and 313 are reporting

requirements in SARA Title III, ``Emergency Planning and Community

Right-To-Know Act of 1986'', which is not part of CERCLA.

7. LOFC and unrelated sites. Commenters stated that the LOFC

clauses should not be broadened but should only cover a site where a

contractor previously worked for EPA. One commenter stated that EPA had

no authority to deny private contracting on an unrelated site. Another

commenter stated that it would be almost impossible to administer or

enforce the abstract concept of doing CERCLA work for a private client

at a given site where work had not been performed before.

The first comment refers to the LOFC clause for ARCS and its

alternates for TCRR, TAT, TES, and Site Specific contracts. Each of

these clauses contains restrictions pertaining to sites where the

contractor previously worked for EPA and on any work that may

jeopardize CERCLA enforcement actions which pertain to a site where the

contractor previously performed work for the EPA under the contract.

This limitation is required because work on related sites could

adversely affect EPA's CERCLA enforcement action at a site where the

contractor previously performed work for EPA. The LOFC alternates for

TCRR, TAT and TES contain limitations for geographic areas. These

limitations apply only during the period of performance of the

contract. They are included in the TCRR and TAT clauses because these

two types of work cannot be performed by the same contractor in the

same geographic area because the risk of a conflict occurring is too

great. In the TES contracts, the geographic limitation on remedial and

implementation work is necessary because of the risk associated with

extremely sensitive litigation information, the unauthorized disclosure

of which would jeopardize EPA's enforcement actions.

The second commenter uses the term ``unrelated sites'' in the

comment concerning restrictions on private contracting. We are unclear

as to the commenter's definition of this term. EPA's LOFC clause and

alternates limit CERCLA work which pertains to a site, or limit work

that may jeopardize enforcement actions which pertain to a site, where

the contractor previously performed work for EPA under the contract.

The only other site limitations are those in the TCRR, TAT and TES

Alternates which pertain to sites within the geographic area of the

contract. There are no restrictions to sites outside these limitations.

We agree with the commenter that stated that it would be difficult

to administer or enforce the limitations that pertain to the

performance of CERCLA work or work which jeopardizes enforcement

actions at sites where a contractor has not performed previous work for

EPA. However, EPA's intent in the LOFC clause is not to require

excessive administration but rather to have contractors rely on

information of which they are aware at the time they consider entering

into a contract for work at other sites. No extensive searches,

certifications, or control systems associated with administration are

required.

8. Basic LOFC clause (ARCS) paragraphs (a) and (b)--Contractors

right to compete. One commenter suggested that the clause include the

same ``free to compete on an equal basis'' language in the alternate

LOFC clauses. The commenter further stated that the clauses require

clarification that, when a contractor has prepared the statement of

work or other solicitation package for a private party, the restriction

of the clause does not apply. Another commenter requested that the

clause be expanded to provide that any contractor that contributes to

the development of the statement of work or the solicitation package

should be ineligible to participate in follow-on Superfund remedial

action projects.

We agree with the recommendation that the clause be changed to be

consistent with its alternates, which include ``free to compete on an

equal basis'' language, and have made this change in the final clause

language. We also agree with the commenter's conclusion that the

restriction when a contractor has prepared a statement of work or

solicitation package under the terms and conditions of a Government

contract, as either a prime contractor or subcontractor, would not

apply to work performed for private contractors. EPA does not generate

statements of work or solicitations for the use and benefit of a

private party. Therefore, no clarification to the clause is necessary.

The ARCS contracts provide for a contractor's involvement with the

complete cleanup of a site from the beginning to the end, including

follow-on remedial action projects. The LOFC clause for the ARCS

contracts has been specifically written to accommodate the special

nature of the ARCS program to take advantage of a contractor's

expertise and keep the competitive base as open as possible, especially

when EPA has purchased the technology. Therefore, we disagree with the

comment that the clause should be expanded to make any contractors,

which participate in the development of the statement of work or

solicitation package, ineligible from participating in such activities.

To make ARCS contractors ineligible would be overly restrictive and

disruptive to the Superfund program.

9. Basic LOFC clause (ARCS) paragraph (c)--Broaden limitation. One

commenter recommended that we broaden this paragraph to exclude a

contractor from working for any party on any contract for the types of

work specified. We disagree. Such a change would be too restrictive to

ARCS contractors.

10. Alternate I (TCRR) paragraph (d)(3)--Applicability of TAT

restriction. One commenter recommended that the clause be clarified to

indicate the TAT restriction in the TCRR clause only applies to TAT

type contracts offered by the Federal Government because if it applied

to both Government and the private sector it would be overly broad and

restrictive.

We disagree. The clause as written clearly requires TCRR

contractors to request approval prior to performing TAT type

activities, regardless of whether another Federal agency or a private

party issues the contract. A TCRR contractor is required to provide

cleanup services on numerous sites within its respective geographic

area and this work often involves work performed in ``emergency''

situations. It is vital that TCRR contractors be free of conflicts to

perform work for the Agency. Therefore, it is necessary to require TCRR

contractors to request approval before performing any TAT type

activities for any other party within its respective geographic area

that result from a CERCLA administrative order, a CERCLA or RCRA

consent decree or a court order.

11. Alternate II (TAT) paragraph (d)(2)--Expand competition

restriction. One commenter requested we delete the language ``Unless an

individual design for the site has been prepared by a third party''.

The commenter contended that any knowledge of a site is critical and a

contractor having access to a site over a long period of time would be

in a better position to plan and price for unforeseen contingencies.

Therefore, this would be patently unfair to other contractors.

We disagree. If the clause were to be modified as suggested, it

would have the opposite effect by making the clause overly restrictive

for contractors performing TAT work. Although such a contractor may

have gained some knowledge about a site while working there, it would

not necessarily be an unfair competitive advantage when a third party

has prepared the design.

12. Alternate II (TAT) paragraph (d)(2)--Inability to plan future

TAT work. One commenter suggested that this paragraph not include TAT

work that a contractor plans to perform because contractors have no

role in determining future TAT work and TAT work dealing with

emergencies cannot be planned.

We disagree. In many cases, TAT work is planned and advance site

information is provided to contractors by EPA. Therefore, the final

clause includes the requirement that a contractor shall not perform

remedial construction work on a site where it has knowledge that it

will be performing TAT work for EPA, unless otherwise authorized by the

EPA Contracting Officer.

13. Alternate II (TAT) paragraph (d)(3)--Site specific limitations.

One commenter suggested the restriction on TAT contractors be site

specific rather than a restriction covering the entire zone. The

commenter further stated that alternate zone contractors should be used

if conflicts arise.

We disagree. TAT contracts are established to provide TAT type

activities, including TCRR oversight, on potentially all sites within

the geographic area. If contractors perform work for PRPs on sites

within the geographic area, and if EPA were to require oversight on

these sites, EPA's ability to plan and promptly commence oversight work

would be significantly impaired. Geographic crossovers are possible in

a few unusual circumstances. However, the administrative cost and

additional time associated with this process for a number of sites pose

too large a risk to the effective operation of the TAT program.

14. Alternate III (ESAT)--LOFC applicability to ESAT. One commenter

recommended we delete this Alternate since an LOFC clause is not

appropriate for ESAT work. We disagree. This clause contains the

limitation on future performance where the contractor develops the

specifications or statement of work under a Superfund contract. This

limitation is common to all Superfund contracts including ESAT.

15. Alternate IV (TES) paragraph (b)--Remove or limit restriction.

One commenter suggested that the TES LOFC clause be limited to CERCLA

activities by a private party at the NPL sites where work was performed

under TES contracts. The commenter stated that requiring future

contracting requests for any work of a remedial nature within the

regions covered by a TES contract is arbitrary and inconsistent with

the requirements of actual site work required under other EPA

contracts.

It is our intent for paragraph (b) to cover the entire geographic

area covered by the contract. The TES clause coverage is different than

the other clauses because of the special sensitivity of TES work which

includes support for enforcement cases. We have seriously considered

the recommendation to change this language. However, because of the

high sensitivity of enforcement work, we believe this provision is

necessary to best protect the Agency's enforcement and cost recovery

cases. Moreover, because of the sensitivity of all Superfund

enforcement work, the clause cannot just be limited to CERCLA

activities at NPL sites.

16. Alternate IV (TES) paragraph (d)--Broaden TES LOFC restriction.

One commenter recommended TES contractors should be absolutely

prohibited from working for private sector PRPs in order to avoid the

potential for compromising enforcement related data. Although we agree

that TES work is highly sensitive, we believe the rule provides

adequate measures to protect EPA's interests. To broaden the LOFC

clause would be too restrictive to competition.

17. Alternate V (Headquarters Support) paragraph (c)--Response

action work. Several commenters expressed concern about the vagueness

of the term ``response action work'' and asked if it had the same

meaning as the SARA definition of ``response action contract''. To

clarify the term ``response action work'', we included a number of

examples in the proposed and the final clause. The examples in the

final clause include ARCS, TCRR, TAT, and TES contracts. It is our

intention that ``response action work'' have the same definition as

``response action contract'' provided in CERCLA Section 119, as amended

by SARA. However, we have included, in the prescription to this clause,

authorization for the Contracting Officer to modify this paragraph to

reflect any unique limitations applicable to the program requirements.

18. Alternate VI (Site Specific)--Site specific contracts for

construction or other non-discretionary work. Some commenters assumed

that this clause would primarily affect construction contractors and

recommended that EPA not apply this clause to site specific contracts

which are for construction. Another commenter suggested that work which

a contractor believes is non-discretionary should also be exempted.

We disagree. When a solicitation, prime contract or work assignment

is issued solely for construction work or for work that the contractor

believes is non-discretionary, the offeror or contractor can request

that the LOFC clause be modified or waived. The Contracting Officer has

the authority to approve the request if the work does not pose a high

risk of conflict to the Superfund program. Under Alternate VI, to

ensure that prime contractors clearly understand they have the option

of requesting a waiver from or modification of this clause when non-

discretionary work is performed, language has been added to Alternate

VI, describing how to obtain a waiver or modification from the

Contracting Officer.

19. Alternate VI (Site Specific) paragraph (b)--Site

specifications. One commenter suggested that the words ``for the site''

be inserted in paragraph (b) of the clause so that the clause would

only apply to EPA solicitations for the site. We disagree.

Specifications could be developed under a site specific contract which

may be included in other EPA solicitations.

EPAAR 1552.210-80, Annual Certification, is added to require all

Superfund contractors that do not provide other EPA conflict of

interest certifications during contract performance to certify annually

that all organizational conflicts of interest have been reported to

EPA, and contractor employees have been informed of their obligation to

report conflicts.

As a result of public comment, the following changes are made to

the clause and its prescription:

--The proposed annual certification requirement is changed from

applying to all Superfund contracts to only contracts where the

contract does not include the submission of other conflict of interest

certifications during contract performance. Superfund contracts

requiring annual certification include: Site Specific contracts and the

Contract Laboratory Program (CLP) and the Sample Management Office

(SMO) contracts. This change is made in response to comments that

multiple certification requirements are duplicative and overburdensome.

--To reduce reporting requirements, the update of conflict of interest

plan requirement, which was included in the proposed rule's clause,

EPAAR 1552.210-78, Annual Certification and Update of Conflict of

Interest Plan, has been deleted. Its prescription has also been removed

from the proposed rule's prescription, EPAAR 1510.011-78, Annual

Certification and Update of Conflict of Interest Plan.

--The annual certification requirement in the proposed rule's EPAAR

1552.210-78 and the prescription EPAAR 1510.011-78 is designated, under

the final rule, as EPAAR 1552.210-80, Annual Certification, and its

prescription is EPAAR 1510.011-80, Annual Certification.

--The requirement that contractors certify annually that all personal

conflicts of interest have been reported is changed to ``the Contractor

shall certify that it has informed its personnel who perform work under

EPA contracts or relating to EPA contracts of their obligation to

report personal and organizational conflicts of interest to the

contractors.'' This change was made in response to public comments that

it is unfair and overburdensome to require contractors to certify that

personal conflicts have been reported since contractors have to rely on

their personnel to report such conflicts.

--The term ``apparent'' has been removed in response to comments that

the term is vague and difficult to define.

--The prescription to this clause has been changed to be consistent

with the prescription to the Organizational Conflict of Interest

Clause. The final prescription, EPAAR 1510.011-80, Annual

Certification, includes a small purchase limitation threshold.

Other comments and our response include:

1. Timing of submittal of annual certification. One comment

expressed concern that the timing of the annual certification should be

changed to a date certain or tied to a company's fiscal year calendar.

We retain the requirement that the annual certification cover a one

year period from time of award, and all subsequent certifications shall

cover successive annual periods thereafter. Such certification must be

received by the Contracting Officer no later than 45 days after the

close of the certification period covered. However, if a contractor has

sufficient justification to change the filing date, the contractor may

submit a request to the Contracting Officer who can consider the

request for an adjustment and has the authority to modify the contract

accordingly.

Other comments and our response include:

1. Clarification of conflict of interest plan, evaluation process

and confidential data. Some commenters recommended that we clarify what

should be in a conflict of interest plan and the evaluation process and

exclude confidential data. Conflict of interest plans are only required

for solicitations in which the Contracting Officer makes a

determination that a significant potential for conflict of interest

exists. Any requirements for conflict of interest plans and information

regarding their evaluation will be included in individual

solicitations. If any confidential information is provided, e.g.,

sensitive corporate structure information, the contractor should mark

it accordingly and it will be safeguarded to the full extent of the

law.

EPAAR 1552.212-71, Work Assignments, is amended to add two

alternate clauses to be used for all Superfund contracts which do not

require annual certifications. The alternate clauses require

contractors to certify within 20 days of receipt of a work assignment

that all actual or potential organizational conflicts of interest have

been reported to the Contracting Officer, or that no actual, or

potential organizational conflicts of interest exist. Where work

assignments are issued under a contract for work related to a site, a

contractor is only required to provide a certification for the first

work assignment issued for that site under the contract. In addition,

the clauses require a contractor to certify that its personnel who

perform work under this work assignment or relating to this work

assignment have been informed of their obligation to report personal

and organizational conflicts of interest.

In response to public comments the following changes have been

made:

--The work assignment certification requirement under the proposed rule

has been reduced from applying to all Superfund contracts to only

Superfund contracts that are not required to submit annual

certifications in accordance with EPAAR 1552.210-80. This change was

made in response to comments that the certification requirements were

overly burdensome and duplicative.

--The final rule's prescription to the work assignment clause,

paragraph (b) of EPAAR 1512.104, Contract clauses, reflects the

reduction in certification requirement by stating that the work

assignment certification provision is not used for contracts which

require annual conflict of interest certifications (e.g., Site Specific

contracts and the Contract Laboratory Program (CLP) and the Sample

Management Office (SMO) contracts).

--The number of work assignment certifications required has also been

reduced to minimize contractor burden. Where contracts include site

work, the final clause only requires contractors to provide a conflict

of interest certification for the first work assignment under the

contract issued for that site. For all subsequent work for that site,

under the contract, the contractor has a continuing obligation to

search and report any actual or potential conflicts but no additional

conflict of interest certifications are required. To reflect this

obligation, the certification includes a statement that the contractor

recognizes its continuing obligation to identify and report any actual

or potential conflict of interest arising during performance of this

work assignment or other work related to this site.

--The time of work assignment certification has been extended to 20

days after receipt of work assignment. This change was made in response

to comments that five days is insufficient time to search and certify.

--Alternate I affirmatively provides that a contractor must, as a

minimum requirement, search through its immediate past three years of

records prior to submitting its certification. Language has been added

to the clause to minimize any misunderstandings about how far back

contractors must search. Although contractors are only required to

affirmatively search back through the past three years of records,

contractors are always required to report any conflicts of which they

are aware.

--The requirement that a contractor certify that all personal conflicts

of interest have been reported has been removed. The final clause

requires a contractor to certify only that it has informed its

personnel who perform work under this work assignment or relating to

this work assignment of their obligation to report personal and

organizational conflicts of interest to the contractor. This change was

made in response to public comments that it is unfair and too

burdensome to require contractors to certify that personal conflicts

have been reported since contractors have to rely on their personnel to

report such conflicts and all that should be required is a good faith

effort to obtain such information.

--The term ``apparent'' has been removed from this clause in response

to comments that the term is vague and difficult to define.

--Alternate II to the Work Assignment clause provides for a transition

period for contractors who do not have three years of records to

search. The contractor will be required to search any records that it

has, until over time, three years of records are accumulated. The

contractor is still always required to report any conflicts of which it

is aware.

EPAAR 1552.227-76, Project Employee Confidentiality Agreement, is

added to ensure that EPA enforcement efforts under the Superfund

program are not damaged by contractor employees' release of information

which has either been provided to the contractor by the Government or

first generated under contract. Employees of contractors will be

prohibited from release of such information to any parties external to

EPA, the Department of Justice or the contractor without permission of

the EPA Contracting Officer. Superfund contractors will be required to

obtain confidentiality agreements from all employees working on

requirements under the contract. The contractor must also include the

clause in all subcontracts and consultant agreements unless

specifically excluded under this clause.

As a result of public comment, the following changes have been

made:

--``Including subcontractors and consultants'' is removed from

paragraph (a) in response to: (1) Comments that it is redundant because

of the mandatory flow down provision; and (2) commenters' mistaken

interpretation that the proposed clause required contractors to

maintain files for their subcontractors.

--The language in the prescription to this clause, EPAAR 1527.409

Solicitation provisions and contract clauses, has been changed to be

consistent with prescription for the Organizational Conflict of

Interest Clause. The final prescription includes a small purchase

limitation threshold.

Other comments and EPA's response include:

1. Exemption of lower level employees. Some commenters stated that

contractors' lower level employees should be exempted from the

requirement that contractors obtain confidentiality agreements from all

employees working under requirements of the EPA contract. We disagree.

Because of the sensitivity of Superfund work and the potential for

serious damage to enforcement efforts as a result of unauthorized

release of information at any level, we cannot exempt any employees

working under the requirements of the EPA contract. However, it is not

our intention to impose an undue hardship on our contractors. To comply

with this clause, it would suffice for contractors to obtain one non-

disclosure agreement from its employees who work on multiple EPA

contracts.

2. Scope of information. One commenter stated that it is

unrealistic to limit discussion of information already in the public

domain and one commenter stated that this clause should not preclude

disclosure of information routinely disclosed in the normal course of

business. We disagree. This clause's limitation is on data of a

sensitive nature provided by the Government or first generated during

contract performance. Such information should not be categorically

authorized for release. However, if a contractor believes such

information may be releasable, the contractor may, on a case-by-case

basis, request written permission from the EPA Contracting Officer to

disclose such information. Such requests will be carefully evaluated to

ensure adequate protection of sensitive information.

3. Liability for post-employment release of information. One

commenter expressed concern that contractors have no control over

employees after their employment and that EPA should make it clear that

contractors are not liable for employees who have left their

employment. We agree that contractors should not be held liable for

employees breaching confidentiality agreements after they have left the

firm. The intent of this clause is to have contractors obtain

confidentiality agreements from employees to ensure that employees are

aware of their obligation not to disclose sensitive information.

D. Executive Order 12866

Under Executive Order 12866, [58 FR 51735 (October 4, 1993)] the

Agency must determine whether the regulatory action is ``significant''

and therefore subject to OMB review and the requirements of the

Executive Order. The Order defines ``significant regulatory action'' as

one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof; or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

It has been determined that this rule is not a ``significant

regulatory action'' under the terms of Executive Order 12866 and is

therefore not subject to OMB review.

E. Paperwork Reduction Act

The information collection requirements in this rule have been

approved by OMB under the Paperwork Reduction Act, 44 U.S.C. 3501 et

seq. and have been assigned OMB control number 2030-0023.

Public reporting burden for this collection of information is

estimated to average 16 hours per response, including time for

reviewing instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

Send comments regarding the burden estimate or any other aspect of

this collection of information, including suggestions for reducing this

burden to Chief, Information Policy Branch; EPA; 401 M Street SW.

(2136); Washington, DC 20460; and to the Office of Information and

Regulatory Affairs, Office of Management and Budget, Washington, DC

20530, marked ``Attention: Desk Officer for EPA.''

F. Regulatory Flexibility Act

The rule may have moderate economic impact upon a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq. The following regulatory

flexibility analysis has been prepared.

Regulatory Flexibility Analysis

Conflict of Interest

1. Purpose. The EPA is strengthening its existing Organizational

Conflict of Interest EPAAR Clause and adding additional coverage in the

EPAAR to guard against conflicts of interest in work performed under

Superfund contracts. Prime contractors, non-exempted subcontractors and

consultants working under EPA Superfund contracts will be required to

have employees working on requirements under contract sign

confidentiality agreements. Prime contractors will be required to:

notify EPA immediately of any conflicts of interest regarding

contractor or subcontractor personnel working on the EPA contract;

submit to EPA either a one time per site certification for work issued

under a work assignment or an annual certification concerning

disclosure of conflicts of interest; and seek Contracting Officer

approval of other work when such work might conflict with work

performed under an EPA contract.

2. Affected small entities. Small entities awarded EPA Superfund

contracts or small entities serving as subcontractors or consultants

under EPA Superfund contracts will be affected. Presently,

approximately 75 small entities are performing such contracts and

subcontracts. It is impossible to estimate the number of small

businesses that ultimately will receive EPA Superfund contracts or

serve as subcontractors or consultants under these contracts and,

thereby, be affected by this rule.

3. Description of projected reporting and recordkeeping

requirements. We estimate that businesses generally maintain data on

the work previously performed by the company in their normal business

practices which may also be used to prevent conflicts of interest. For

entities that maintain this data, there will be limited additional

costs associated with reviewing, evaluating, and reporting work

previously performed and future work being considered that may pose a

conflict of interest. EPA does not require any special type of system

to identify and report conflicts. Each contractor determines its own

procedures for searching and identifying conflicts of interest, and in

some cases, it may already have a process in place to identify

conflicts in its commercial business. An automated system to store and

retrieve information is not required in order to perform the functions

associated with a conflict of interest system. We anticipate that the

scope of a company's procedures would be commensurate with the

company's size and complexity, and for small businesses any system

should be less complex and detailed.

Since a significant portion of small business participation in EPA

programs occurs under subcontracts for classes of work which are exempt

under EPA's conflict of interest clauses, many small businesses will

not be affected by the provisions of this rule. Moreover, at any time,

a small business operating as either a prime contractor or a

subcontractor may request waiver of clause requirements for non-

discretionary work which poses a minimal risk of conflict of interest.

The total impact upon small business should be significantly less than

the impact upon large business.

Depending on the specific contract, contractors will either be

required to certify annually that all actual or potential conflicts of

interest have been reported to EPA during the preceding year of the

contract or certify on a work assignment basis for work first performed

at a site. The significant change to the final rule, in which

certifications have been reduced from three to one, results in a

substantial reduction in the total effort required to comply with the

requirements of this rule. Because small businesses generally have less

complex organizational structures and less data to maintain and search,

the burden associated with search and certification requirements for

small business should be substantially less than the burden applicable

to a large business.

EPA anticipates that any cost increases experienced by these

entities may be chargeable to Government contracts under the provisions

of FAR Part 31.

In addition to concerns about data and certification burden which

have been addressed above, a comment was submitted expressing concern

that responding to the questionnaire, which EPA included in a January

1990, memorandum regarding conflicts of interest, would add

significantly to the contractor burden. As stated in Part B of the

preamble to this rule, General Comments, this memorandum has been

superseded, and the questionnaire is not required. Another commenter

expressed concern that the burden associated with requests for future

contracting had not been considered in the calculation of burden. In

fact, the burden associated with requests for future contracting was

considered in this analysis and is reflected in the calculations

contained in the initial and final Information Collection Request.

4. Federal rules which may duplicate, overlap, or conflict with the

rule. The EPA reviewed the FAR coverage on organizational conflicts of

interest and rights in data, which this rule supplements.

The FAR requires Contracting Officers to identify and evaluate

potential organizational conflicts of interest before contract award

and to avoid, neutralize or mitigate significant potential conflicts.

This rule fulfills and is consistent with these requirements. In

addition, this rule will address limitations on a firm's other

contracting efforts during contract performance, and in some cases

after completion of the work assignment or other similar tasking

document, or after performance of the EPA work contract. The FAR also

recognizes that Federal agencies may restrict a contractor's right to

distribute or use data first produced in performance of a contract when

necessary in the furtherance of the agency mission objectives. The

rule's requirement for contractor employees working under Superfund

contracts to sign confidentiality agreements restricting release of

contract data and other information generally conforms to these FAR

requirements.

The EPA also reviewed FAR subpart 9.5 Organizational and Consultant

Conflicts of Interest which deals with conflict of interest standards

for advisory and assistance service contracts and marketing consultants

to contractors. The EPA rule specifically addresses EPA contracts and

subcontracts under the Superfund program. Although the FAR guidance and

the EPA rule have the same general objectives of identifying, avoiding

mitigating, and neutralizing conflicts of interest, the EPA provisions

include reporting requirements to ensure that conflicts of interest are

reviewed not only prior to contract award, but also during the period

of contract performance and after contract performance to ensure

enforcement actions are not jeopardized. It is only in this way that

EPA can examine whether a contractor's work efforts, which may be

initiated during the EPA contract performance period or in some cases

thereafter, may present an unacceptable risk to the Agency. This rule

does not duplicate, overlap, or conflict with other Federal rules.

5. Alternatives to the rule. EPA considered alternatives to the

final rule, such as establishing different compliance or reporting

requirements or simplifying the requirements for small entities. EPA

also considered exempting small entities from all or part of the rule.

EPA concluded that the stated objectives cannot be met under such

alternatives. An undisclosed conflict of interest poses the same risk

to EPA whether it is a conflict involving a large or small business

contractor. EPA believes the final rule, along with other established

internal controls within the Agency, will avoid actual or potential

conflicts of interest that may jeopardize future actions by the Agency.

List of Subjects in 48 CFR Parts 1501, 1509, 1510, 1512, 1527 and 1552

General contract clauses, Contract delivery or performance,

Contractor qualifications, Copyrights, Data, Government procurement,

Patents, Purchase descriptions, Solicitation provisions,

Specifications, Standards.

Dated: April 7, 1994.

Betty L. Bailey,

Director, Office of Acquisition Management.

For the reasons set out in the preamble, Chapter 15 of Title 48

Code of Federal Regulations is amended as set forth below:

1. The authority citation for parts 1501, 1509, 1510, 1512, 1527,

and 1552 continues to read as follows:

Authority: Sec. 205(c), 63 Stat. 390, as amended, 40 U.S.C.

486(c).

(a) Section 1501.370 is revised to read as follows:

Sec. 1501.370 OMB control numbers.

The information collection activities contained in the EPAAR

sections listed below have been approved by the Office of Management

and Budget (OMB) and have been issued OMB numbers in accordance with

section 3504(h) of the Paperwork Reduction Act of 1980, 44 U.S.C. 3501,

et seq.

------------------------------------------------------------------------

OMB control

48 CFR citation No.

------------------------------------------------------------------------

Specification, Standards and other Purchase Descriptions

1510.011-70 through 1510.011-74............................ 2030-0005

1510.011-80 through 1510.011-81............................ 2030-0023

Contract delivery or performance 1512.104.................. 2030-0023

Small Purchase and Other Simplified Purchase Procedures

1513.505 through 1513.570.................................. 2030-0007

Solicitation Provisions and Contract Clauses

1552.209-71................................................ 2030-0023

1552.209-73 through 1552.209-74............................ 2030-0023

1552.210-71 through 1552.210-73............................ 2030-0005

1552.210-80................................................ 2030-0023

1552.212-71................................................ 2030-0023

1552.215-72 through 1552.215-76............................ 2030-0006

1552.227-76................................................ 2030-0023

------------------------------------------------------------------------

PART 1509--CONTRACTOR QUALIFICATIONS

1509.506 [Redesignated as 1509.505-70] 1509.507 [Redesignated as

1509.506] 1509.508 [Redesignated as 1509.507-

1] 1509.509 [Redesignated as 1509.508]

2. Subpart 1509.5 is amended by: Redesignating section 1509.506 as

1509.505-70; redesignating section 1509.507 as 1509.506 and amending

paragraph (b) by placing a period after ``Contracting Officer's

decision'' and removing the remainder of the paragraph; redesignating

section 1509.508 as 1509.507-1, revising the section heading to read

``Solicitation provisions'' and removing paragraph (c); revising ``FAR

9.508-1'' in newly designated 1509.507-1(a)(1) to read ``(FAR) 48 CFR

9.507-1''; revising ``1509.508(a)'' in newly designated 1509.507-1(b)

to read ``1509.507-1(a)(1)''; and redesignating section 1509.509 as

1509.508.

3. Section 1509.507-2 is added to read as follows:

1509.507-2 Contract clause.

(a) The Contracting Officer shall include the clause at 1552.209-71

in all contracts in excess of the small purchase limitation and, as

appropriate, in small purchases. Contracts for other than Superfund

work shall include Alternate I in this clause in lieu of paragraph (e).

(b) The Contracting Officer shall include the clause at 1552.209-73

in all solicitations and contracts for Superfund work in excess of the

small purchase limitation and, as appropriate, in small purchases for

Superfund work.

(c) The Contracting Officer shall include the clause at 1552.209-74

or its alternates in the following solicitations and contracts for

Superfund work in excess of the small purchase limitation and, as

appropriate, in small purchases for Superfund work. The Contracting

Officer shall include the clause at 1552.209-74 in all Alternative

Remedial Contracting Strategy (ARCS) solicitations and contracts,

except Site Specific solicitations and contracts. Alternate I shall be

used in all Time Critical Rapid Response (TCRR) solicitations and

contracts, except site specific solicitations and contracts. The term

``TCRR'' in the Limitation of Future Contracting clauses includes not

only TCRR solicitations and contracts but Emergency Response Cleanup

Services (ERCS) and other emergency type solicitations and contracts.

TCRR pilot scale studies are included in the term ``treatability

studies''. Alternate II shall be used in all Technical Assistance Team

(TAT) solicitations and contracts. Alternate III shall be used in all

Environmental Services Assistance Team (ESAT) solicitations and

contracts. Alternate IV shall be used in all Technical Enforcement

Support (TES) solicitations and contracts. Alternate V shall be used in

all Superfund Headquarters Support solicitations and contracts. The

Contracting Officer is authorized to modify paragraph (c) of Alternate

V to reflect any unique limitations applicable to the program

requirements. Alternate VI shall be used in all Site Specific

solicitations and contracts.

(d) Clauses for incorporation into contracts existing as of May 19,

1994 shall be negotiated by the EPA Contracting Officer, on a case-by-

case basis, and shall be substantially similar to those prescribed in

this section.

PART 1510--SPECIFICATIONS, STANDARDS, AND OTHER DESCRIPTIONS

4. Part 1510 is amended by adding section 1510.011-80 to read as

follows:

1510.011-80 Annual Certification.

The Contracting Officer shall insert the clause at 1552.210-80 in

Superfund solicitations and contracts in excess of the small purchase

limitation, where the solicitation or contract does not include EPAAR

1552.212-71, Work Assignments, Alternate I, or a similar clause

requiring conflict of interest certifications during contract

performance.

This clause requires an annual conflict of interest certification

from contractors when the contract does not require the submission of

other conflict of interest certifications during contract performance.

Contracts requiring annual certifications include: Site Specific

contracts and the Contract Laboratory Program (CLP) and the Sample

Management Office (SMO) contracts.

The annual certification requires a contractor to certify that all

organizational conflicts of interest have been reported, and that its

personnel performing work under EPA contracts or relating to EPA

contracts have been informed of their obligation to report personal and

organizational conflicts of interest to the Contractor. The annual

certification shall cover the one-year period from the date of contract

award for the initial certification, and a one-year period since the

previous certification for subsequent certifications. The certification

must be received by the Contracting Officer no later than 45 days after

the close of the certification period covered.

PART 1512--CONTRACT DELIVERY OR PERFORMANCE

5. Section 1512.104 is amended by adding three sentences at the end

of paragraph (b) to read as follows:

1512.104 Contract clauses.

* * * * *

(b) * * * For Superfund contracts, except for contracts which

require annual conflict of interest certifications (e.g., Site Specific

contracts and the Contract Laboratory Program (CLP) and Sample

Management Office (SMO) contracts), the Contracting Officer shall use

the clause with either Alternate I or Alternate II. Alternate I shall

be used for contractors who have at least 3 years of records that may

be searched for certification purposes. Alternate II shall be used for

contractors who do not have at least three years of records that may be

searched.

PART 1527--PATENTS, DATA, AND COPYRIGHTS

6. Part 1527 is amended by adding section 1527.409, to read as

follows:

1527.409 Solicitation provisions and contract clauses.

The Contracting Officer shall insert the clause in 1552.227-76 in

all Superfund solicitations and contracts in excess of the small

purchase limitation and, as appropriate, in small purchases. The clause

may be used in other contracts if considered necessary by the

Contracting Officer.

PART 1552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

7. Sections 1552.209-70 and 1552.209-72 are amended by revising the

reference ``1509.508(b)'' in the introductory text to read ``1509.507-

1(b)''.

8. Section 1552.209-71 is amended by revising the reference

``1509.508(c)'' in the introductory text to read ``1509.507-2'';

revising the clause heading; removing paragraph (d) of the clause;

redesignating paragraph (c) of the clause as paragraph (d); in newly

redesignated paragraph (d) inserting the word ``it'' after the word

``disclose''; revising paragraph (b) of the clause; and adding new

paragraphs (c) and (e) and Alternate I to the clause to read as

follows:

1552.209-71 Organizational conflicts of interest.

* * * * *

Organizational Conflicts of Interest (May 1994)

* * * * *

(b) Prior to commencement of any work, the Contractor agrees to

notify the Contracting Officer immediately that, to the best of its

knowledge and belief, no actual or potential conflict of interest

exists or to identify to the Contracting Officer any actual or

potential conflict of interest the firm may have. In emergency

situations, however, work may begin but notification shall be made

within five (5) working days.

(c) The Contractor agrees that if an actual or potential

organizational conflict of interest is identified during

performance, the Contractor will immediately make a full disclosure

in writing to the Contracting Officer. This disclosure shall include

a description of actions which the Contractor has taken or proposes

to take, after consultation with the Contracting Officer, to avoid,

mitigate, or neutralize the actual or potential conflict of

interest. The Contractor shall continue performance until notified

by the Contracting Officer of any contrary action to be taken.

* * * * *

(e) The Contractor agrees to insert in each subcontract or

consultant agreement placed hereunder, except for subcontracts or

consultant agreements for well drilling, fence erecting, plumbing,

utility hookups, security guard services, or electrical services,

provisions which shall conform substantially to the language of this

clause, including this paragraph (e), unless otherwise authorized by

the Contracting Officer.

(End of clause)

Alternate I to Paragraph (e)

(e) The Contractor agrees to insert in each subcontract or

consultant agreement placed hereunder provisions which shall conform

substantially to the language of this clause, including this

paragraph (e), unless otherwise authorized by the Contracting

Officer.

9. Section 1552.209-73 is added to read as follows:

1552.209-73 Notification of conflicts of interest regarding personnel.

As prescribed in 1509.507-2(b) insert the following clause:

Notification of Conflicts of Interest Regarding Personnel (May 1994)

(a) In addition to the requirements of the contract clause

entitled ``Organizational Conflicts of Interest,'' the following

provisions with regard to employee personnel performing under this

contract shall apply until the earlier of the following two dates:

the termination date of the affected employee(s) or the expiration

date of the contract.

(b) The Contractor agrees to notify immediately the EPA Project

Officer and the Contracting Officer of (1) any actual or potential

personal conflict of interest with regard to any of its employees

working on or having access to information regarding this contract,

or (2) any such conflicts concerning subcontractor employees or

consultants working on or having access to information regarding

this contract, when such conflicts have been reported to the

Contractor. A personal conflict of interest is defined as a

relationship of an employee, subcontractor employee, or consultant

with an entity that may impair the objectivity of the employee,

subcontractor employee, or consultant in performing the contract

work.

(c) The Contractor agrees to notify each Project Officer and

Contracting Officer prior to incurring costs for that employee's

work when an employee may have a personal conflict of interest. In

the event that the personal conflict of interest does not become

known until after performance on the contract begins, the Contractor

shall immediately notify the Contracting Officer of the personal

conflict of interest. The Contractor shall continue performance of

this contract until notified by the Contracting Officer of the

appropriate action to be taken.

(d) The Contractor agrees to insert in any subcontract or

consultant agreement placed hereunder, except for subcontracts or

consultant agreements for well drilling, fence erecting, plumbing,

utility hookups, security guard services, or electrical services,

provisions which shall conform substantially to the language of this

clause, including this paragraph (d), unless otherwise authorized by

the Contracting Officer.

(End of clause)

10. Section 1552.209-74 is added to read as follows:

1552.209-74 Limitation of future contracting.

As prescribed in 1509.507-2(c), insert the following clause or

alternate:

Limitation of Future Contracting (ARCS) (May 1994)

(a) The parties to this contract agree that the Contractor will

be restricted in its future contracting in the manner described

below. Except as specifically provided in this clause, the

Contractor shall be free to compete for contracts on an equal basis

with other companies.

(b) The Contractor will be ineligible to enter into a contract

for remedial action projects for which the Contractor has developed

the statement of work or the solicitation package.

(c) The following applies when ARCS work is performed under this

contract and when both ARCS work and Field Investigative Team (FIT)

work are performed on the same site under this contract: Unless

prior written approval is obtained from the cognizant EPA

Contracting Officer, the Contractor, during the life of the work

assignment and for a period of five (5) years after the completion

of the work assignment, agrees not to enter into a contract with or

to represent any party, other than EPA, with respect to: (1) any

work relating to CERCLA activities which pertain to a site where the

Contractor previously performed work for EPA under this contract; or

(2) any work that may jeopardize CERCLA enforcement actions which

pertain to a site where the Contractor previously performed work for

the EPA under this contract.

(d) The following applies to FIT work at sites under this

contract where only FIT work is performed, except for those sites

where EPA has made a determination of ``no further remedial action

planned'' (NFRAP): Unless prior written approval is obtained from

the cognizant EPA Contracting Officer, the Contractor, during the

life of the work assignment and for a period of three (3) years

after the completion of the work assignment, agrees not to enter

into a contract with or to represent any party, other than EPA, with

respect to: (1) Any work relating to CERCLA activities which pertain

to a site where the Contractor previously performed work for EPA

under this contract; or (2) any work that may jeopardize CERCLA

enforcement actions which pertain to a site where the Contractor

previously performed work for the EPA under this contract.

(e) The Contractor agrees in advance that if any bids/proposals

are submitted for any work that would require written approval of

the Contracting Officer prior to entering into a contract subject to

the restrictions of this clause, then the bids/proposals are

submitted at the Contractor's own risk. Therefore, no claim shall be

made against the Government to recover bid/proposal costs as a

direct cost whether the request for authorization to enter into the

contract is denied or approved.

(f) To the extent that the work under this contract requires

access to proprietary or confidential business or financial data of

other companies, and as long as such data remains proprietary or

confidential, the Contractor shall protect such data from

unauthorized use and disclosure.

(g) The Contractor agrees to insert in each subcontract or

consultant agreement placed hereunder, except for subcontracts or

consultant agreements for nondiscretionary technical or engineering

services, including treatability studies, well drilling, fence

erecting, plumbing, utility hookups, security guard services, or

electrical services, provisions which shall conform substantially to

the language of this clause, including this paragraph (g) unless

otherwise authorized by the Contracting Officer. The Contractor may

request in writing that the Contracting Officer exempt from this

clause a particular subcontract or consultant agreement for

nondiscretionary technical or engineering services not specifically

listed above, including laboratory analysis. The Contracting Officer

will review and evaluate each request on a case-by-case basis before

approving or disapproving the request.

(h) If the Contractor seeks an expedited decision regarding its

initial future contracting request, the Contractor may submit its

request to both the Contracting Officer and the next administrative

level within the Contracting Officer's organization.

(i) A review process available to the Contractor when an adverse

determination is received shall consist of a request for

reconsideration to the Contracting Officer or a request for review

submitted to the next administrative level within the Contracting

Officer's organization. An adverse determination resulting from a

request for reconsideration by the Contracting Officer will not

preclude the contractor from requesting a review by the next

administrative level. Either a request for review or a request for

reconsideration must be submitted to the appropriate level within 30

calendar days after receipt of the initial adverse determination.

(End of clause)

Limitation of Future Contracting Alternate I (TCRR) (May 1994)

(a) The parties to this contract agree that the Contractor will

be restricted in its future contracting in the manner described

below. Except as specifically provided in this clause, the

Contractor shall be free to compete for contracts on an equal basis

with other companies.

(b) If the Contractor, under the terms of this contract, or

through the performance of work pursuant to this contract, is

required to develop specifications or statements of work and such

specifications or statements of work are incorporated into an EPA

solicitation, the Contractor shall be ineligible to perform the work

described in that solicitation as a prime Contractor or

subcontractor under an ensuing EPA contract.

(c) Unless prior written approval is obtained from the cognizant

EPA Contracting Officer, the Contractor, during the life of the

delivery order or tasking document and for a period of five (5)

years after the completion of the delivery order or tasking

document, agrees not to enter into a contract with or to represent

any party, other than EPA, with respect to: (1) any work relating to

CERCLA activities which pertain to a site where the Contractor

previously performed work for EPA under this contract; or (2) any

work that may jeopardize CERCLA enforcement actions which pertain to

a site where the Contractor previously performed work for the EPA

under this contract.

(d) During the life of this contract, including any options, the

Contractor agrees that unless otherwise authorized by the

Contracting Officer:

(1) It will not provide any Technical Assistance Team (TAT) type

activities (e.g., TAT contracts) to EPA within the Contractor's Time

Critical Rapid Response (TCRR) assigned geographical area(s), either

as a prime contractor, subcontractor, or consultant.

(2) It will not provide any Technical Assistance Team (TAT) type

activities (e.g., TAT contracts) to EPA as a prime contractor,

subcontractor or consultant at a site where it has performed or

plans to perform TCRR work.

(3) It will be ineligible for award of TAT type activities

contracts for sites within its respective TCRR assigned geographical

area(s) which result from a CERCLA administrative order, a CERCLA or

RCRA consent decree or a court order.

(e) The Contractor agrees in advance that if any bids/proposals

are submitted for any work that would require written approval of

the Contracting Officer prior to entering into a contract subject to

the restrictions of this clause, then the bids/proposals are

submitted at the Contractor's own risk. Therefore, no claim shall be

made against the Government to recover bid/proposal costs as a

direct cost whether the request for authorization to enter into the

contract is denied or approved.

(f) To the extent that the work under this contract requires

access to proprietary or confidential business or financial data of

other companies, and as long as such data remains proprietary or

confidential, the Contractor shall protect such data from

unauthorized use and disclosure.

(g) The Contractor agrees to insert in each subcontract or

consultant agreement placed hereunder, except for subcontracts or

consultant agreements for nondiscretionary technical or engineering

services, including treatability studies, well drilling, fence

erecting, plumbing, utility hookups, security guard services, or

electrical services, provisions which shall conform substantially to

the language of this clause, including this paragraph (g) unless

otherwise authorized by the Contracting Officer. The Contractor may

request in writing that the Contracting Officer exempt from this

clause a particular subcontract or consultant agreement for

nondiscretionary technical or engineering services not specifically

listed above, including labor

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