IV.  Regulatory Flexibility Act

A final regulatory flexibility analysis has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., and is summarized as follows:

This rule is being issued in response to a study by the General Accountability Office (GAO), entitled "Defense Contracting: Post-Government Employment of Former DoD Officials Needs Greater Transparency" (GAO-08-485), issued in May 2008. The GAO found that contractors under-reported the employment of former DoD officials to the extent that the contractors employed almost twice as many former DoD officials as had been reported. The GAO report showed that major defense contractors are not currently ensuring that former DoD senior officials and acquisition executives working on contracts are complying with post-employment restrictions.

The final rule requires offerors to submit, as part of the proposal, a representation that all former DoD officials who will be working on any resultant contract are in compliance with post-employment restrictions at 18 U.S.C. 207, 41 U.S.C. 2101-2107, and 5 CFR parts 2637 and 2641, as well as FAR 3.104-2.

The rule requires a representation from all offerors responding to a DoD solicitation, including commercial item acquisitions. A "covered DoD official" is already defined in the clause at DFARS 252.203-7000, Requirements Relating to Compensation of Former DoD Employees. That same clause also implements section 847 of the National Defense Authorization Act for Fiscal Year 2008 by prohibiting any DoD contractor from knowingly providing compensation to a covered DoD official within two years after the official leaves DoD service. There is no impact on an offeror from this new representation unless the contractor has not been monitoring its employees who are former covered DoD officials to ensure compliance with DFARS 252.203-7000.

No comments from small entities were received in response to the Federal Register Notice of the proposed rule, published June 6, 2011, at 76 FR 32846. However, a "think tank" requested the "addition of language making it clear that the offeror has no duty to establish systems and procedures to police and define compliance * * *" No language has been added in response to this request. Companies are prohibited, pursuant to subsection 3 of DFARS 203.171, entitled "Senior DoD officials seeking employment with defense contractors," from "knowingly provid(ing) compensation to a covered DoD official within two years after the official leaves DoD service unless the contractor first determines that the official has received * * * the post-employment ethics opinion" pursuant to section 847 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

In the period of 2001-2006, 1.85 million former military and civilian personnel left DoD service. A "covered DoD official" is defined to include former DoD officials who held certain positions and who left DoD within the past two years (see DFARS 203.171-3(a) and 252.203-7000). The GAO found that the 1.85 million personnel who had left DoD service over a six-year period included only 35,192 who had served in the type of senior or acquisition official positions that made them subject to post-Government employment restrictions, if they were subsequently hired by defense contractors. Dividing 35,192 by three (to reduce the six-year period to a two-year period), we estimate that 11,730 of those officials would have left within the last two years. We estimate that 7,635 of these former officials may accept employment with a defense contractor (about 65 percent). The GAO study found that 2,435 of these covered officials were employed by 52 major defense contractors. Of the remaining 5,200 former officials covered by the Procurement Integrity Act, we estimate that 3,900 (75 percent) of them may work for small business concerns.

There were no comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the rule.

There is no reporting, recordkeeping, or other compliance requirement associated with this rule. Offerors make the representation by submission of an offer. By the terms of the representation, an offeror is prohibited from submitting an offer if it cannot make the representation. In order to submit an offer, small entities that hire a former DoD official covered by the Procurement Integrity Act will have to check the compliance of such employees with various applicable post-employment restrictions. DFARS clause 252.203-7000, Requirements Relating to Compensation of Former DoD Officials, already requires contractors to determine that a covered DoD official has sought and received, or has not received after 30 days of seeking, a written opinion from the appropriate DoD ethics counselor, regarding the applicability of post-employment restrictions to the activities that the official is expected to undertake on behalf of the contractor. This representation of compliance does not impose an additional burden on the offeror.

There were no known significant alternatives identified that would achieve the objectives of the rule.