I. Other Concerns About the Rule

Comment: A number of respondents expressed concern that the rule is costly to the taxpayer and businesses, and questioned how the rule could accomplish the objective of deterring wasteful and unnecessary spending or empower the taxpayer with information that may be used to demand greater fiscal discipline from the executive and legislative branches of Government. The respondents were also concerned with the rule's overall impact on their practice of doing business with the Government.

Response: The requirements are statutory. The changes to the rule summarized at section III. of this preamble may lessen the burden on businesses.

Comment: A respondent believed that complete transparency requires the prime contractors to list their first-tier subcontracts when submitting their bid. The respondent believed the list of first-tier subcontractors needs to be made available to the taxpayers at the time of bid submission. Furthermore, according to the respondent, delaying the reporting of this information until a month after the award allows time for prime and subcontractors in the construction industry to participate in unethical practices.

Response: The Transparency Act, which is the impetus for the rule, contains no requirement for bid information to be made available to the public unless an award is made.

Comment: A respondent believed since the majority of first-tier subcontractors in the health care industry are also prime contractors, they should not have to supply the same information multiple times. The respondent believed that is unduly burdensome for multiple distributers to gather and submit information identical to that which the Government has already received directly from that source. To the extent that the data is not already being collected under the Act, the respondent would incur the costs to provide the needed information.

Response: The Transparency Act may unavoidably require some duplicate data collection. The rule has been revised to the extent possible, in response to public comments, to lessen the burden on contractors. The revisions are summarized later in this preamble. There are also exceptions which will eliminate some companies, which would otherwise be covered, such as the 80 percent/$25 million exception and the $300,000 gross income exception.

Comment: A respondent believed that the preamble to the interim rule was incorrect in stating that FAR clause 52.204-10 flows down to subcontracts. Inclusion of this clause in subcontracts would result in flowing down the subcontract reporting requirement to the second-tier of subcontractors. The respondent felt that the preamble should clarify that the only part of the clause which 'flows' down is the requirement to report executive compensation.

Response: The interim rule preamble stated that OMB directed that the FAR be amended to initiate subcontract award reporting under the Transparency Act. However, OMB Memorandum, "Open Government Directive-Federal Spending Transparency," April 6, 2010, limited the subcontract reporting only to first-tier subcontracts.

Comment: A respondent believed that the final FAR rule should allow contracts awarded under the interim rule to be modified, without consideration, to incorporate the final rule. The respondent believed that this will be less burdensome on the contractors than having two different reporting schemes.

Response: The Applicability section of this preamble provides the direction for modifying existing contracts. This should avoid having two different reporting schemes.

Comment: A respondent believed that the reporting requirements should be extended beyond the first-tier of subcontracts to fully realize transparency in Government contracting.

Response: Extending the reporting requirements beyond the first-tier would significantly increase the burden on subcontractors. OMB directed the implementation of the Transparency Act at the first-tier subcontract level.