Federal Register: March 28, 2002 (Volume 67, Number 60)[Rules and Regulations           

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DEPARTMENT OF ENERGY

48 CFR Parts 904, 952, and 970

RIN 1991-AB42

 
Acquisition Regulation: Security Amendments to Implement 
Executive Order 12829, National Industrial Security Program

AGENCY: Department of Energy (DOE).

ACTION: Interim final rule.

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SUMMARY: The Department of Energy (DOE) is amending the Department of 
Energy Acquisition Regulation (DEAR) to implement Executive Order 
12829, National Industrial Security Program, dated January 6, 1993, and 
Section 828 of the National Defense Authorization Act for Fiscal Year 
1997, and to bring the DEAR into conformance with existing practices. 
DOE is making these changes to its security system to ensure a uniform 
and simplified security system for contractors and others requiring 
access authorization for classified national security or restricted 
atomic energy information. The changes also include a provision to 
allow the Secretary of Energy to waive the prohibition on award of a 
national security contract to an entity controlled by a foreign 
government if an environmental restoration requirement is involved.

EFFECTIVE DATE: This interim final rule will be effective May 28, 2002.
    Comment date: Comments should be submitted on or before April 29, 
2002.

ADDRESSES: Mail comments to Richard Langston, Office of Procurement and 
Assistance Policy (MA-51), U.S. Department of Energy, 1000 Independence 
Ave. SW., Washington, DC 20585.
    Submit electronic comments to [email protected]

FOR FURTHER INFORMATION CONTACT: Richard B. Langston, Office of 
Procurement and Assistance Policy (MA-51), 202-586-8247 or by 
electronic mail addressed as above.

SUPPLEMENTARY INFORMATION:

I. Background
II. Explanation of Revisions
III. Procedural Requirements
    A. Review Under Executive Order 12866.
    B. Review Under Executive Order 12988.
    C. Review Under the Regulatory Flexibility Act.
    D. Review Under the Paperwork Reduction Act.
    E. Review Under the National Environmental Policy Act.
    F. Review Under Executive Order 13132.
    G. Review Under the Unfunded Mandates Reform Act of 1995.
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999.
    I. Review Under the Small Business Regulatory Enforcement 
Fairness Act of 1996.
    J. Review Under Executive Order 13211.

I. Background

    Executive Order 12829, National Industrial Security Program 
(January 6, 1993), requires a uniform system for classifying, 
safeguarding, and declassifying national security information. DOE is 
making these changes to its security system to ensure a uniform and 
simplified security system for contractors and others requiring access 
authorization for classified national security or restricted atomic 
energy information. The Federal agencies are adopting the National 
Industrial Security Program (NISP) as the uniform Federal industrial 
security program within the limitations of their separate statutory 
requirements. Among the more significant features of the new rule is 
the use of a Standard Form 328, Certificate Pertaining to Foreign 
Interests, to gather information relative to foreign ownership, control 
or influence. Previously, DOE used a separate questionnaire of its own 
with more and somewhat different questions. Now all agencies will 
collect the same information. This feature will result in the greatest 
savings for both contractors and Federal agencies because agencies

[[Page 14874]]

will accept each others' clearances on a reciprocal basis, in most 
circumstances. A DOE clearance was not previously valid for a 
Department of Defense (DOD) contract and vice versa. In most instances, 
a contractor interested in seeking a contract requiring a DOE clearance 
will already have either a DOD or a DOE clearance, and there will be no 
need to submit the detailed information required to establish a 
Facility Clearance.
    Section 2536(a) of 10 U.S.C. prohibits award of a DOD or DOE 
contract under a national security program to an entity controlled by a 
foreign government if it is necessary for that entity to be given 
access to a proscribed category of information to perform the contract. 
The cognizant Secretary is authorized to waive this prohibition if the 
Secretary determines that a waiver is essential to the national 
security interests of the United States. That prohibition is 
implemented by Subpart 904.7100 of the Department of Energy Acquisition 
Regulation (DEAR).
    Section 2536(b)(1)(B) of 10 U.S.C. provides separate waiver 
authority for a contract for environmental restoration, remediation, or 
waste management at a DOD or DOE facility. For such a contract, the 
prohibition on award of a contract under a national security program to 
an entity controlled by a foreign government which requires access to a 
proscribed category of information to perform the contract may be 
waived only if the Secretary concerned determines that (1) a waiver 
will advance the environmental restoration, remediation, or waste 
management objectives of the cognizant Department, (2) a waiver will 
not harm the national security interests of the United States, and (3) 
the entity to which the contract is to be awarded is controlled by a 
foreign government with which the cognizant Secretary has authority to 
exchange Restricted Data under section 144.c. of the Atomic Energy Act 
of 1954 (42 U.S.C. 2164(c)). Section 904.7102 of the DEAR is being 
revised to reflect this waiver authority.
    In order to implement 10 U.S.C. 2536 and the National Industrial 
Security Program in a timely manner, the Department previously issued 
interim guidance to its personnel in two Acquisition Letters. 
Acquisition Letter 97-03 was issued February 4, 1997 to implement the 
requirements of 10 U.S.C. 2536. Acquisition Letter 99-03 was issued 
April 2, 1999 to implement the National Industrial Security Program. 
These issuances will be cancelled upon the effective date of this rule.

II. Explanation of Revisions

    We have made the following changes to the DEAR:
    1. Restated the authority citation.
    2. Added definitions of "Access Authorization" and "Facility 
Clearance," revised the definitions of "Classified Information" and 
"Restricted Data," and updated the Executive Order reference at 
904.401;
    3. Added the word "industrial" between "DOE" and "security" 
to reflect the uniform nature of the DOD and DOE industrial security 
programs, added references to the applicable Executive Orders, and 
substituted the words "Restricted Data" for the words "national 
security information" in the reference to 10 CFR part 1045 at 904.402;
    4. At 904.404, the title is changed from "Contract clause" to 
"Solicitation provision and contract clause," revisions are made in 
paragraphs (d)(1) and (d)(2), and a new paragraph (d)(5) is added;
    5. Changed the title of Subpart 904.70 "Foreign Ownership, Control 
or Influence Over Contractors" to "Facility Clearance";
    6. Revised the text of 904.7000 to substitute terminology better 
suited to the National Industrial Security Program;
    7. Added a definition for "Facility Clearance" at 904.7002;
    8. Revised 904.7003 by making minor wording changes at paragraphs 
(a) and (b) for brevity and clarity;
    9. Removed 904.7005, Solicitation provision and contract clause;
    10. Removed the words "a company owned by" which precede the 
words "an entity controlled by a foreign government" and changed 
"company" to "entity" following the words "for that" in 904.7100, 
Scope of Subpart.
    11. Added an additional waiver authority for projects involving 
environmental restoration, remediation or waste management at a DOE 
site from the prohibition for the national security program on 
contracting with foreign government controlled entities in 904.7102;
    12. Revised 904.7103, Solicitation provision and contract clause, 
by removing the words "with its Alternate I" at the end of paragraph 
(a) and changing the citation "952.204-74" to read "952.204-2" at 
the end of paragraph (b).
    13. Revised the Security clause at 952.204-2 by removing the 
existing paragraph (j) and adding a new paragraph (j), Foreign 
Ownership Control and Influence;
    14. Replaced the current "Foreign Ownership, Control or Influence 
Over Contractor" with a new provision entitled "Facility Clearance" 
at 952.204-73;
    15. Removed the clause "Foreign Ownership, Control or Influence 
Over Contractor" at 952.204-74;
    16. Restated the authority citation for Part 970.
    17. Revised 970.0404-1, Definitions, to add definitions for 
"Access Authorization" and "Facility Clearance" and to revise the 
definition of Restricted Data;
    18. Revised 970.0404-2, General, to substitute a revised paragraph 
(a), delete paragraphs (b) through (d) and to redesignate the existing 
paragraph (e) as paragraph (b);
    19. Revised 970.0404-3, Responsibilities of contracting officers, 
to delete paragraph (a) which is inconsistent with National Industrial 
Security Program procedures. Paragraphs (b) and (c) will be retained 
but will be designated paragraphs (a) and (b).

III. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined not to be a 
"significant regulatory action" under Executive Order 12866, 
"Regulatory Planning and Review" (58 FR 51735, October 4, 1993). 
Accordingly, this rule is not subject to review under that Executive 
Order by the Office of Information and Regulatory Affairs of the Office 
of Management and Budget (OMB).

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
"Civil Justice Reform," 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6)

[[Page 14875]]

addresses other important issues affecting clarity and general 
draftsmanship under any guidelines issued by the Attorney General. 
Section 3(c) of Executive Order 12988 requires Executive agencies to 
review regulations in light of applicable standards in section 3(a) and 
section 3(b) to determine whether they are met or it is unreasonable to 
meet one or more of them. DOE has completed the required review and 
determined that, to the extent permitted by law, this interim final 
rule meets the relevant standards of Executive Order 12988.

C. Review Under the Regulatory Flexibility Act

    This interim final rule has been reviewed under the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq., which requires preparation of an 
initial regulatory flexibility analysis for any rule that is likely to 
have significant economic impact on a substantial number of small 
entities. This rule, which would implement provisions of Executive 
Order 13101 concerning use of recycled materials, would not have a 
significant economic impact on small entities. While rule requirements 
may flow down to subcontractors in certain circumstances, the costs of 
compliance are not estimated to be large and, in any event, would be 
reimbursable expenses under the contract or subcontract.
    Accordingly, DOE certifies that this rule would not have a 
significant economic impact on a substantial number of small entities, 
and, therefore, no regulatory flexibility analysis has been prepared.

D. Review Under the Paperwork Reduction Act

    Information collection or record keeping requirements contained in 
this rulemaking have been previously cleared under Office of Management 
and Budget paperwork clearance package Number 1910-0300. There are no 
new burdens imposed by this rule.

E. Review Under the National Environmental Policy Act

    DOE has concluded that promulgation of this rule falls into a class 
of actions which would not individually or cumulatively have 
significant impact on the human environment, as determined by DOE's 
regulations (10 CFR part 1021, subpart D) implementing the National 
Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.). 
Specifically, this rule is categorically excluded from NEPA review 
because the amendments to the DEAR would be strictly procedural 
(categorical exclusion A6). Therefore, this rule does not require an 
environmental impact statement or environmental assessment pursuant to 
NEPA.

F. Review Under Executive Order 13132

    Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. DOE has examined today's rule and has 
determined that it does not preempt State law and does not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each agency to assess the effects of Federal regulatory 
action on State, local and tribal governments, and the private sector. 
The Department has determined that today's regulatory action does not 
impose a Federal mandate on State, local or tribal governments or on 
the private sector.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277), requires Federal agencies to issue a 
Family Policymaking Assessment for any rule or policy that may affect 
family well-being. This rulemaking will have no impact on family well-
being.

I. Review Under the Small Business Regulatory Enforcement Fairness Act 
of 1996

    As required by 5 U.S.C. 801, the Department of Energy will report 
to Congress promulgation of this rule prior to its effective date. The 
report will state that it has been determined that the rule is not a 
"major rule" as defined by 5 U.S.C. 804(3).

J. Review Under Executive Order 13211

    Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use, (66 FR 28355, 
May 22, 2001) requires Federal agencies to prepare and submit to the 
Office of Information and Regulatory Affairs (OIRA), Office of 
Management and Budget, a Statement of Energy Effects for any proposed 
significant energy action. A "significant energy action" is defined 
as any action by an agency that promulgates or is expected to lead to 
promulgation of a final rule, and that: (1) Is a significant regulatory 
action under Executive Order 12866, or any successor order; and (2) is 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy, or (3) is designated by the 
Administrator of OIRA as a significant energy action. For any proposed 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution, and use.
    Today's rule is not a significant energy action. Accordingly, DOE 
has not prepared a Statement of Energy Effects.

List of Subjects in 48 CFR Parts 904, 952 and 970

    Government procurement.

    Issued in Washington, DC, on March 19, 2002.
Spencer Abraham,
Secretary of Energy.

    For the reasons set out in the preamble, Chapter 9 of Title 48 of 
the Code of Federal Regulations is amended as set forth below.
    1. The authority citation for parts 904 and 952 is revised to read 
as follows:

    Authority: 42 U.S.C. 7101 et seq.; 41 U.S.C. 418b; 50 U.S.C. 
2401 et seq.

PART 904--ADMINISTRATIVE MATTERS

    2. Section 904.401 is revised to read as follows:

904.401  Definitions.

    Access Authorization means an administrative determination that an 
individual is eligible for access to classified information or is 
eligible for access to, or control over, special nuclear material.
    Classified Information means information that is classified as 
Restricted Data or Formerly Restricted Data under the Atomic Energy Act 
of 1954, as amended, or information determined to require protection 
against unauthorized disclosure under Executive Order 12958, or prior 
Executive Orders, which is identified as National Security Information.
    Facility Clearance means an administrative determination that a

[[Page 14876]]

facility is eligible to access, produce, use or store classified 
information, or special nuclear material.
    Restricted Data means all data concerning the design, manufacture, 
or utilization of atomic weapons; the production of special nuclear 
material; or the use of special nuclear material in the production of 
energy, but does not include data declassified or removed from the 
Restricted Data category pursuant to section 142 of the Atomic Energy 
Act of 1954, as amended (42 U.S.C. 2162).
    3. Section 904.402 is revised to read as follows:


904.402  General.

    (a) The basis of DOE's industrial security requirements is the 
Atomic Energy Act of 1954, as amended, and Executive Orders 12958 and 
12829.
    (b) DOE security regulations concerning restricted data are 
codified at 10 CFR part 1045.
    4. Section 904.404 is amended by revising the title and paragraph 
(d)(1), revising the paragraph (d)(2) heading, revising the phrase 
"included in DOE 1240.2 (see current version.), Attachment 3, and any 
subsequent changes" to read "referenced in DOE N 142.1" in the 
second sentence of paragraph (d)(3), and by adding (d)(5) to read as 
follows:


904.404  Solicitation provision and contract clause. [DOE Coverage--
Paragraph (d)]

    (d) * * *
    (1) Security, 952.204-2. This clause is required in contracts and 
subcontracts, the performance of which involves or is likely to involve 
classified information. DOE utilizes the National Industrial Security 
Program but DOE's security authority is derived from the Atomic Energy 
Act which contains specific language not found in other agencies' 
authorities. For this reason, DOE contracts must contain the clause at 
952.204-2 rather than the clause at FAR 52.204-2.
    (2) Classification/Declassification, 952.204-70 * * *
* * * * *
    (5) Facility Clearance, 952.204-73. This solicitation provision 
should be used in solicitations expected to result in contracts and 
subcontracts that require employees to possess access authorizations.


904.70  [Amended]

    5. Subpart 904.70 is amended by revising the title "Foreign 
Ownership, Control, or Influence Over Contractors" to read "Facility 
Clearance."
    6. Section 904.7000 is revised to read as follows:


904.7000  Purpose.

    This subpart sets forth the Department of Energy policies and 
procedures regarding Facility Clearances for contractors and 
subcontractors that require access to classified information or special 
nuclear material. A Facility Clearance is based upon a determination 
that satisfactory safeguards and security measures are carried out for 
classified activities being performed at the facility and upon a 
favorable foreign ownership, control, or influence (FOCI) 
determination.
    7. Section 904.7002 is amended by adding the definition of 
"Facility Clearance" in alphabetical order to read as follows:


904.7002  Definitions.

* * * * *
    Facility Clearance means an administrative determination that a 
facility is eligible to access, produce, use, or store classified 
information, or special nuclear material.
* * * * *
    8. Section 904.7003 is amended by revising paragraphs (a) and (b) 
as follows:


904.7003  Disclosure of foreign ownership, control, or influence.

    (a) If a contract requires a contractor to have a Facility 
Clearance, DOE must determine whether the contractor is or may be 
subject to foreign ownership, control or influence before a contract 
can be awarded.
    (b) If, during the performance of a contract, the contractor comes 
under FOCI, then the DOE must determine whether a continuation of the 
Facility Clearance may pose an undue risk to the common defense and 
security through the possible compromise of that information or 
material. If the DOE determines that such a threat or potential threat 
exists, the contracting officer shall consider the alternatives of 
negotiating an acceptable method of isolating the foreign interest 
which owns, controls, or influences the contractor or terminating the 
contract.
* * * * *


904.7005  [Removed]

    9. Section 904.7005, Solicitation provision and contract clause, is 
removed.


904.7100  [Amended]

    10. In Section 904.7100, remove the words "a company owned by" 
and revise the word "company" following the words "for that" to 
read "entity'.
    11. Section 904.7102 is revised to read as follows:


904.7102  Waiver by the Secretary.

    (a) 10 U.S.C. 2536(b)(1)(A) allows the Secretary of Energy to waive 
the prohibition on the award of contracts set forth in 10 U.S.C. 
2536(a) if the Secretary determines that a waiver is essential to the 
national security interests of the United States. Any request for a 
waiver regarding award of a contract or execution of a novation 
agreement shall address:
    (1) Identification of the proposed awardee and description of the 
control by a foreign government;
    (2) Description of the procurement and performance requirements;
    (3) Description of why a waiver is essential to the national 
security interests of the United States;
    (4) The availability of other entities to perform the work; and
    (5) A description of alternate means available to satisfy the 
requirement.
    (b) 10 U.S.C. 2536(b)(1)(B) allows the Secretary of Energy to waive 
the prohibition on the award of contracts set forth in 10 U.S.C. 
2536(a) for environmental restoration, remediation or waste management 
contracts at a DOE facility if the Secretary determines that a waiver 
will advance the environmental restoration, remediation or waste 
management objectives of DOE; will not harm the national security 
interests of the United States; and may be authorized because the 
entity to which the contract is to be awarded is controlled by a 
foreign government with which the Secretary is authorized to exchange 
Restricted Data under Section 144.c. of the Atomic Energy Act of 1954 
(42 U.S.C. 2164(c)). Any request for such a waiver regarding award of a 
contract or execution of a novation agreement shall address:
    (1) Identification of the proposed awardee and description of the 
control by a foreign government;
    (2) Description of the procurement and performance requirements;
    (3) A description of how the Department's environmental 
restoration, remediation, or waste management objectives will be 
advanced;
    (4) A description of why a waiver will not harm the national 
security interests of the United States;
    (5) The availability of other entities to perform the work;
    (6) A description of alternate means available to satisfy the 
requirement; and
    (7) Evidence that the entity to which a contract is to be awarded 
is controlled by a foreign government with which the Secretary is 
authorized to exchange Restricted Data under Section 144.c. of the 
Atomic Energy Act of 1954 (42 U.S.C. 2164(c)).

[[Page 14877]]

    (c) Any request for a waiver under paragraph (a) or (b) of this 
section shall be forwarded by the Head of the Contracting Activity to 
the Office of Contract Management within the Headquarters procurement 
organization.
    (d) If the Secretary decides to grant a waiver for an environmental 
restoration, remediation, or waste management contract, the Secretary 
shall notify Congress of this decision. The contract may be awarded or 
the novation agreement executed only after the end of the 45-day period 
beginning on the date notification is received by the Senate Committee 
on Armed Services and the House Committee on National Security.
    (e) Any request for a waiver under this subpart shall be 
accompanied by the information required by DEAR 952.204-73 that has 
been developed by the Safeguards and Security Lead Responsible Office 
at the contracting activity.
    12. Section 904.7103, Solicitation provision and contract clause, 
is amended by deleting the words "with its Alternate I" at the end of 
paragraph (a) and by revising paragraph (b) to read as follows:


904.7103  Solicitation Provision and Contract Clause.

    (a) * * *
    (b) Any contract, including those awarded under simplified 
acquisition procedures, under the national security program which 
require access to proscribed information to enable performance, shall 
include the clause at 48 CFR 952.204-2.

PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    13. Section 952.204-2 is amended by revising the clause date and 
paragraph (j) to read as follows:


952.204-2  Security Requirements.

* * * * *

Security (May 2002)

* * * * *
    (j) Foreign Ownership, Control or Influence.
    (1) The Contractor shall immediately provide the cognizant 
security office written notice of any change in the extent and 
nature of foreign ownership, control or influence over the 
Contractor which would affect any answer to the questions presented 
in the Certificate Pertaining to Foreign Interests, Standard Form 
328 or the Foreign Ownership, Control or Influence questionnaire 
executed by the Contractor prior to the award of this contract. In 
addition, any notice of changes in ownership or control which are 
required to be reported to the Securities and Exchange Commission, 
the Federal Trade Commission, or the Department of Justice shall 
also be furnished concurrently to the Contracting Officer.
    (2) If a Contractor has changes involving foreign ownership, 
control or influence, DOE must determine whether the changes will 
pose an undue risk to the common defense and security. In making 
this determination, DOE will consider proposals made by the 
Contractor to avoid or mitigate foreign influences.
    (3) If the cognizant security office at any time determines that 
the Contractor is, or is potentially, subject to foreign ownership, 
control or influence, the Contractor shall comply with such 
instructions as the Contracting Officer shall provide in writing to 
safeguard any classified information or special nuclear material.
    (4) The Contractor agrees to insert terms that conform 
substantially to the language of this clause, including this 
paragraph, in all subcontracts under this contract that will require 
subcontractor employees to possess access authorizations. 
Additionally, the Contractor must require subcontractors to have an 
existing DOD or DOE Facility Clearance or submit a completed 
Certificate Pertaining to Foreign Interests, Standard Form 328, 
required in DEAR 952.204-73 prior to award of a subcontract. 
Information to be provided by a subcontractor pursuant to this 
clause may be submitted directly to the Contracting Officer. For 
purposes of this clause, subcontractor means any subcontractor at 
any tier and the term "Contracting Officer" means the DOE 
Contracting Officer. When this clause is included in a subcontract, 
the term "Contractor" shall mean Subcontractor and the term 
"contract" shall mean subcontract.
    (5) The Contracting Officer may terminate this contract for 
default either if the Contractor fails to meet obligations imposed 
by this clause or if the Contractor creates a FOCI situation in 
order to avoid performance or a termination for default. The 
Contracting Officer may terminate this contract for convenience if 
the Contractor becomes subject to FOCI and for reasons other than 
avoidance of performance of the contract, cannot, or chooses not to, 
avoid or mitigate the FOCI problem.

    14. Section 952.204-73 is revised to read as follows:


952.204-73  Facility Clearance.

    As prescribed in 904.404(d)(5), insert the following provision in 
all solicitations which require the use of Standard Form 328, 
Certificate Pertaining to Foreign Interests for contracts or 
subcontracts subject to the provisions of 904.70.

Facility Clearance (May 2002)

Notices

    Section 2536 of title 10, United States Code, prohibits the 
award of a contract under a national security program to an entity 
controlled by a foreign government if it is necessary for that 
entity to be given access to information in a proscribed category of 
information in order to perform the contract unless a waiver is 
granted by the Secretary of Energy. In addition, a Facility 
Clearance and foreign ownership, control and influence (FOCI) 
information are required when the contract or subcontract to be 
awarded is expected to require employees to have access 
authorizations.
    Offerors who have either a Department of Defense or a Department 
of Energy Facility Clearance generally need not resubmit the 
following foreign ownership information unless specifically 
requested to do so. Instead, provide your DOE Facility Clearance 
code or your DOD assigned commercial and government entity (CAGE) 
code. If uncertain, consult the office which issued this 
solicitation.
    (a) Use of Certificate Pertaining to Foreign Interests, Standard 
Form 328.
    (1) The contract work anticipated by this solicitation will 
require access to classified information or special nuclear 
material. Such access will require a Facility Clearance for the 
Contractor organization and access authorizations (security 
clearances) for Contractor personnel working with the classified 
information or special nuclear material. To obtain a Facility 
Clearance the offeror must submit a Certificate Pertaining to 
Foreign Interests, Standard Form 328, and all required supporting 
documents to form a complete Foreign Ownership, Control or Influence 
(FOCI) Package.
    (2) Information submitted by the offeror in response to the 
Standard Form 328 will be used solely for the purposes of evaluating 
foreign ownership, control or influence and will be treated by DOE, 
to the extent permitted by law, as business or financial information 
submitted in confidence.
    (3) Following submission of a Standard Form 328 and prior to 
contract award, the Contractor shall immediately submit to the 
Contracting Officer written notification of any changes in the 
extent and nature of FOCI which could affect the offeror's answers 
to the questions in Standard Form 328. Following award of a 
contract, the Contractor must immediately submit to the cognizant 
security office written notification of any changes in the extent 
and nature of FOCI which could affect the offeror's answers to the 
questions in Standard Form 328. Notice of changes in ownership or 
control which are required to be reported to the Securities and 
Exchange Commission, the Federal Trade Commission, or the Department 
of Justice must also be furnished concurrently to the cognizant 
security office.
    (b) Definitions.
    (1) Foreign Interest means any of the following:
    (i) A foreign government, foreign government agency, or 
representative of a foreign government;
    (ii) Any form of business enterprise or legal entity organized, 
chartered or incorporated under the laws of any country other than 
the United States or its possessions and trust territories; and
    (iii) Any person who is not a citizen or national of the United 
States.
    (2) Foreign Ownership, Control, or Influence (FOCI) means the 
situation where the degree of ownership, control, or influence over 
a Contractor by a foreign interest is such

[[Page 14878]]

that a reasonable basis exists for concluding that compromise of 
classified information or special nuclear material may result.
    (c) Facility Clearance means an administrative determination 
that a facility is eligible to access, produce, use or store 
classified information, or special nuclear material. A Facility 
Clearance is based upon a determination that satisfactory safeguards 
and security measures are carried out for the activities being 
performed at the facility. It is DOE policy that all Contractors or 
Subcontractors requiring access authorizations be processed for a 
Facility Clearance at the level appropriate to the activities being 
performed under the contract. Approval for a Facility Clearance 
shall be based upon:
    (1) A favorable foreign ownership, control, or influence (FOCI) 
determination based upon the Contractor's response to the ten 
questions in Standard Form 328 and any required, supporting data 
provided by the Contractor;
    (2) A contract or proposed contract containing the appropriate 
security clauses;
    (3) Approved safeguards and security plans which describe 
protective measures appropriate to the activities being performed at 
the facility;
    (4) An established Reporting Identification Symbol code for the 
Nuclear Materials Management and Safeguards Reporting System if 
access to nuclear materials is involved;
    (5) A survey conducted no more than 6 months before the Facility 
Clearance date, with a composite facility rating of satisfactory, if 
the facility is to possess classified matter or special nuclear 
material at its location;
    (6) Appointment of a Facility Security Officer, who must possess 
or be in the process of obtaining an access authorization equivalent 
to the Facility Clearance; and, if applicable, appointment of a 
Materials Control and Accountability Representative; and
    (7) Access authorizations for key management personnel who will 
be determined on a case-by-case basis, and must possess or be in the 
process of obtaining access authorizations equivalent to the level 
of the Facility Clearance.
    (d) A Facility Clearance is required prior to the award of a 
contract requiring access to classified information and the granting 
of any access authorizations under a contract. Prior to award of a 
contract, the DOE must determine that award of the contract to the 
offeror will not pose an undue risk to the common defense and 
security as a result of its access to classified information or 
special nuclear material in the performance of the contract. The 
Contracting Officer may require the offeror to submit such 
additional information as deemed pertinent to this determination.
    (e) A Facility Clearance is required even for contracts that do 
not require the Contractor's corporate offices to receive, process, 
reproduce, store, transmit, or handle classified information or 
special nuclear material, but which require DOE access 
authorizations for the Contractor's employees to perform work at a 
DOE location. This type facility is identified as a non-possessing 
facility.
    (f) Except as otherwise authorized in writing by the Contracting 
Officer, the provisions of any resulting contract must require that 
the contractor insert provisions similar to the foregoing in all 
subcontracts and purchase orders. Any Subcontractors requiring 
access authorizations for access to classified information or 
special nuclear material shall be directed to provide responses to 
the questions in Standard Form 328, Certificate Pertaining to 
Foreign Interests, directly to the prime contractor or the 
Contracting Officer for the prime contract.

Notice to Offerors--Contents Review (Please Review Before Submitting)

    Prior to submitting the Standard Form 328, required by paragraph 
(a)(1) of this clause, the offeror should review the FOCI submission 
to ensure that:
    (1) The Standard Form 328 has been signed and dated by an 
authorized official of the company;
    (2) If publicly owned, the Contractor's most recent annual 
report, and its most recent proxy statement for its annual meeting 
of stockholders have been attached; or, if privately owned, the 
audited, consolidated financial information for the most recently 
closed accounting year has been attached;
    (3) A copy of the company's articles of incorporation and an 
attested copy of the company's by-laws, or similar documents filed 
for the company's existence and management, and all amendments to 
those documents;
    (4) A list identifying the organization's owners, officers, 
directors, and executive personnel, including their names, social 
security numbers, citizenship, titles of all positions they hold 
within the organization, and what clearances, if any, they possess 
or are in the process of obtaining, and identification of the 
government agency(ies) that granted or will be granting those 
clearances; and
    (5) A summary FOCI data sheet.

    Note: A FOCI submission must be attached for each tier parent 
organization (i.e. ultimate parent and any intervening levels of 
ownership). If any of these documents are missing, award of the 
contract cannot be completed.

952.204-74  [Removed]

    15. Section 952.204-74 is removed.

    16. The authority citation for Part 970 continues to read as 
follows:

    Authority: 42 U.S.C. 2201; 42 U.S.C. 7101 et seq.; 50 U.S.C. 
2401 et seq.

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

    17. Section 970.0404-1, Definitions, is amended by adding, in 
alphabetical order, definitions for "Access Authorization" and 
"Facility Clearance" and revising the definition of "Restricted 
Data" to read as follows:


970.0404-1  Definitions.

    Access Authorization means an administrative determination that an 
individual is eligible for access to classified information or is 
eligible for access to, or control over, special nuclear material.
* * * * *
    Facility Clearance means an administrative determination that a 
facility is eligible to access, produce, use or store classified 
information or special nuclear material.
    Restricted Data means all data concerning design, manufacture, or 
utilization of atomic weapons; the production of special nuclear 
material; or the use of special nuclear material in the production of 
energy; but shall not include data declassified or removed from the 
Restricted Data category pursuant to section 142 of the Atomic Energy 
Act of 1954, as amended, (42 U.S.C. 2162).
    18. Section 970.0404-2, General, is revised to read as follows:


970.0404-2  General.

    (a) Guidance regarding the National Industrial Security Program as 
implemented by the Department of Energy may be found at 904.4, 
Safeguarding Classified Information Within Industry. Additional 
information concerning contractor ownership when national security or 
atomic energy information is involved may be found at 904.70. 
Information regarding contractor ownership involving national security 
program contracts may be found at 904.71.
    (b) Executive Order 12333, United States Intelligence Activities, 
provides for the organization and control of United States foreign 
intelligence and counterintelligence activities. DOE has established a 
counterintelligence program subject to this Executive Order which is 
described in DOE Order 5670.3 (as amended). All DOE elements, including 
management and operating contractors and other contractors managing 
DOE-owned facilities which require access authorizations, should 
undertake the necessary precautions to ensure that DOE and covered 
Contractor personnel, programs and resources are properly protected 
from foreign intelligence threats and activities.
    19. Section 970.0404-3, Responsibilities of contracting officers, 
is amended by removing paragraph (a) and redesignating paragraphs (b) 
and (c) as paragraphs (a) and (b).
[FR Doc. 02-7298 Filed 3-27-02; 8:45 am]
BILLING CODE 6450-01-P