F. Subcontract Award Data

Comment: A respondent was concerned about the reporting of information, FAR 52.204-10(c)(1)(ix) (now (d)(2)(ix)), which requires the prime to report by prime contract number and order number. The respondent wanted to know if they should provide the subcontractor data not only by prime contract, but by prime contract task/delivery order, as well. A respondent stated that per FAR 52.204-10(c)(1)(xi) (now (d)(2)(xi)), the contractor must provide first-tier subcontract information, including the funding agency name and code. Since many contracts are Governmentwide contract vehicles used by multiple funding agencies, and the respondent wanted to know if they are required to report by prime contract, by task/delivery order, and funding entity as well.

Response: The clause requires the contractor, by the end of the month of award of a first-tier subcontract with a value of $25,000 or more, to report information for the first-tier subcontract. Reporting of the information is required at whatever level the first-tier subcontract is awarded. If the prime signs separate first-tier subcontracts with the same subcontractor valued at $25,000 or more, at both the contract level and the order level, then the information should be reported at both the contract and order level, regardless of funding entity. The clause requires reporting of a separate subcontract number.

Comment: A respondent indicated that it is unfamiliar with the term "Treasury Account Symbol" used in FAR 52.204-10(c)(1)(xiii) (now (d)(2)(xiii)). The respondent questioned whether or not the Treasury Account Symbol is the fund cite.

Response: The Treasury Account Symbol reporting element will be pre-populated from FPDS. The fund cite is not captured at the FPDS level, or at FSRS.

Comment: A respondent stated that FAR 52.204-10(c)(1)(xiv) (now (d)(2)(xiv)) requires the North American Industry Classification System (NAICS) code of the prime contract. Furthermore, subparagraph (c)(1)(v) (now (d)(2)(v)) requires a description of the product or services the subcontractor provides under the subcontract, and the NAICS of the prime contract would not necessarily be descriptive enough to provide complete information on the subcontract. The respondent noted that the narrative description alone without a standardized method for reporting the industry/products/services under the subcontract will make it difficult for large and small businesses and industry groups to use the data to find opportunities to perform as subcontractors.

Response: The purpose of the Act is to reduce "wasteful and unnecessary spending" by establishing a free, public, online database containing full disclosure of all Federal contract award information. In regard to business opportunities, the primary purpose of notices through the Governmentwide Point of Entry at http://www.fedbizopps.gov is to provide large and small businesses access to contracting opportunities.

Comment: A respondent recommended that the rule clarify that the required NAICS code is the code applicable to the prime contract rather than the NAICS code for the subcontract, which may differ.

Response: The NAICS code is pre-populated based on the input of the FPDS information for the contract award. The prime's NAICS code is used for reporting purposes.

Comment: One respondent recommends that every entity receiving Federal funds above some de minimus amount, regardless of how many degrees removed from the prime contractor, report directly to a centralized Web site, giving the public a full picture of who is receiving Federal contracting dollars.

Response: Although the Transparency Act reporting requirements flow down to all subcontracts, regardless of tier, OMB Memorandum, "Open Government Directive-Federal Spending Transparency," April 6, 2010, directed that the FAR be amended to limit the reporting of subcontract awards to the contractor's first-tier subcontractors.

Comment: Several respondents recommended that the rule be revised to identify what data, if any, in the reporting forms will be pre-populated by the Government and ensure that it is consistently available across the board. Inconsistent pre-population of data fields will greatly burden contractors in designing reports to support the reporting obligation. Another respondent suggested a way to reduce the administrative burden of compliance could include an assurance that all awarding agencies in the Government will provide the appropriate codes necessary for complete reporting, e.g. the awarding agency code, the funding agency code, and the Treasury account symbol.

Response: When contracting officers report the contract action to the FPDS in accordance with FAR subpart 4.6, certain data will then pre-populate from FPDS, to assist contractors in completing and submitting their reports. Information on the Web site at https://www.fsrs.gov/documents/data_definitions_contracts.pdf specifies which items are pre-populated. In addition, the rule has been revised to indicate that if data originating from FPDS is found to be in error when the contractor completes the subcontract report, the Government contracting officer is responsible for correcting that data in FPDS. However, the contractor is responsible for correcting all other information.

Comment: A respondent recommended that the rule at FAR 52.204-10(c)(1)(v) (now (d)(2)(v)) be revised to modify the reporting requirement to delete the words "including the overall purpose and expected outcomes or results of the subcontract" from the information that must be reported. Contractor procurement systems typically contain a brief description of the work required by the contract. The respondent further opined that if a contractor must manually supplement what is captured in its automated system, compliance with the reporting requirement on a timely basis will be virtually impossible.

Response: The Government expects only a brief description of the requirement to comply with this reporting element. In addition, there is a capability in FSRS to allow contractors to connect their system directly to FSRS for electronic system-to-system reporting.

Comment: A respondent recommended that the rule be revised to modify the reporting requirement to avoid the release to the public of proprietary information, such as the aggregate value of all first-tier subcontracts issued under each prime contract. Some respondents stated that the disclosure of subcontracts conflicts with the Federal Trade Secrets Act, 18 U.S.C. 1905, with the FOIA exemption for trade secrets and privileged and confidential commercial, and financial information, 5 U.S.C. 552(b)(4), and with the intent of the Procurement Integrity Act, 41 U.S.C. 423 and implementing regulations at FAR 3.104-4 and 24.202. Several respondents believed that there is no equivalent commercial practice by which such information is collected or reported internally.

Response: Congress mandated that the executive compensation of Government prime contractors and subcontractors be public information under the Transparency Act. The Transparency Act created an exception to the usual handling of contractor proprietary information. The FOIA exemption for contractor proprietary information does not forbid release of this information. The rule does not require the contractor to report any trade secrets, export controlled information, or proprietary information.

Comment: One respondent stated that double reporting under the Recovery Act and the Transparency Act is unnecessary. The respondent recommended that the Councils amend the rule to exempt contractors already reporting under the Recovery Act rules, which would reduce the burden without sacrificing transparency.

Response: Double reporting as required by the Recovery Act and Transparency Act may be necessary under certain circumstances. For American Recovery and Reinvestment Act (ARRA)-funded Federal contracts that are subject to the Transparency Act reporting requirements, the prime recipient will be required to report the ARRA-funded Federal contracts to both FederalReporting.gov, and FSRS if the contract so requires.

Comment: A respondent recommended that the follow-on subcontract reporting requirement be amended to provide for a report whenever a modification increases the subcontract to a value of $25,000 or more.

Response: The respondent's recommendation would increase the burden on the public and the Government. However, the Councils revised FAR 52.204-10 to state that the contractor shall not split or break down first-tier subcontract awards to a value less than $25,000 to avoid the reporting requirements.

Comment: One respondent recommended clarification of the reporting responsibilities that apply to prime contractors versus first-tier subcontractors. Another respondent saw the interim rule as unreasonably placing the burden of ensuring subcontractor compliance on prime contractors, and recommends that the information is reported directly to the Government by first-tier subcontractors.

Response: The requirements in the clause apply to the prime contractor. The Federal Government has privity of contract only with the prime contractor. Therefore, the contractor will be held accountable for ensuring their subcontractors provide the necessary information for contract compliance. The prime contractor could encourage its first-tier subcontractor to register in CCR because information in FSRS is pre-populated from CCR. However, the prime contractor should also make the first-tier subcontractor aware that the same data will have to be completed (including criminal proceedings information for the Federal Awardee Performance and Integrity Information System (FAPIIS)), taxpayer identification number, and electronic funds transfer information, as any other registrant.

Comment: A respondent thought that the interim rule could force a prime contractor to breach the terms of a subcontract if the subcontract includes a requirement for nondisclosure agreements and/or "release of information to the public". The respondent recommended that the requirement to include the clause only be applied to new solicitations first issued at least 60 days after the effective date of any subsequently issued new rule, so that companies will be able to structure their business transactions with full knowledge of this disclosure requirement.

Response: The interim rule implements a statute. The statute was originally passed in 2006, and amended in 2008 to require reporting of executive compensation. There was a previous FAR case implementing the statute on a pilot basis. There has been sufficient notice to the public of the requirements that would be implemented in this FAR case (2008-039). The clause as implemented included a phased-in approach to mitigate the impact on the contractor (e.g., business arrangements between prime contractors and subcontractors).

Comment: Some respondents indicated that many reporting elements of the rule conflict with non-disclosure requirements in certain clauses (e.g., 52.227-17(d), DFARS 252.204-7000, etc.). According to the respondents, most agencies require written contracting officer approval before disclosing to the public. The FAR rule must clarify if such preapproval requirement applies, and if it does, provide additional time to obtain such clearance prior to reporting, or provide that any limitation is over-ridden and no longer applicable.

Response: The majority of the information required for reporting in accordance with this rule is publicly available through other Government systems (e.g., CCR, FPDS, etc.), and will be pre-populated by the Government. Information not pre-populated (e.g., first-tier subcontractor name, address, primary place of performance, subcontract number, subcontract amount, description of product or service, etc.), should not conflict with non-disclosure requirements appearing in agency contracts. However, contractors should consult with the contracting officer of the agency contract.

Comment: Two respondents recommended splitting the reporting requirement into two clauses, one for subcontractor reporting and the other for executive compensation.

Response: There is no need to separate the requirements into two clauses, because the requirements are related and the prescription for use of each clause would be the same. The Councils revised the clause to more clearly distinguish the prime contractor's requirements for reporting first-tier subcontractor information and reporting the names and total compensation of each of the five most highly compensated executives for the prime contractor's preceding completed fiscal year in CCR.

Comment: A respondent stated that public disclosure of subcontracts serves no useful purpose. The disclosure of subcontracts on a Government Web site implies the Government plays a role in the selection of subs. The requirement for the prime to list each sub's "congressional district" is pernicious, as it implies and invites politicization of the subcontractor selection process.

Response: The disclosure of subcontract information on a Government Web site and reporting the subcontractor's "congressional district" is required by the Transparency Act. Such disclosure does not imply a Government role in the selection of subcontractors. However, consent to subcontract is required by the Government in certain circumstances in accordance with FAR subpart 44.2.

Comment: A respondent suggested that a way to reduce the administrative burden of compliance is to automate the reporting process, through an XML upload, as was originally conceived and implemented under section 1512 of the American Recovery and Reinvestment Act.

Response: The FSRS reporting system currently has the capability for an XML upload. Details on this process are at https://www.fsrs.gov/resources.

Comment: A respondent suggested that a way to reduce the administrative burden of compliance would be to use a single deadline, such as the anniversary date of the prime award, for the annual update of subcontractor information, as opposed to an update annually from the issue date of each subcontract.

Response: FAR 52.204-10 has been revised to require reporting of the names and total compensation of each of the five most highly compensated executives of the first-tier subcontractor, for the first-tier subcontractor's preceding completed fiscal year, annually based on the prime contract award date.

Comment: A respondent was concerned about the potential penalties concerning violations of the reporting requirements, and how they will be assumed by or imposed on the prime contractor.

Response: Generally, the model for Federal contracts is that the Government will hold prime contractors responsible for performance, and prime contractors hold their subcontractors responsible for performance. Standard contractual remedies apply for failure to perform contractual requirements, as with any other contractual performance requirement in a Federal contract. In accordance with FAR 1.602-2, contracting officers are responsible for ensuring performance of all necessary actions for effective contracting, ensuring compliance with the terms of the contract, and ensuring that contractors receive impartial, fair, and equitable treatment.