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Federal Register / Vol. 86, No. 163 / Thursday, August 26, 2021 / Rules and Regulations
final rule includes a new provision at paragraph c of 2011.302, which makes clear that after the FASC issues a recommendation and the source submits a response, the FASC has the discretion to rescind the recommendation. The final rule thus makes explicit that, if a source demonstrates through its response to the FASC that a removal or exclusion order is unwarranted, the FASC may withdraw its recommendation.
One commenter asked that the FASC
clarify whether the FASC may release its recommendation even if no related exclusion or removal order is issued.
The final rule addresses that issue in paragraph f3 of 2011.201, providing that if a recommendation is rescinded, or the relevant officials determine that no exclusion or removal order will be issued based upon it, the recommendation will be kept confidential and will not be released to entities, other than the source, outside of the Federal Government.
Two commenters suggested that exclusion or removal orders should be narrowly tailored, or should incorporate a finding that the action ordered represents the least intrusive measure reasonably available to address a given supply chain risk. No change to the rule was made in response to these comments. As the interim rule did, the final rule requires the FASC to include in a recommendation for an exclusion or removal order a discussion of less intrusive measures that were considered and why such measures were not reasonably available to reduce supply chain risk. 2011.301a4. That requirement ensures that the FASC will consider the disruption that may result from a contemplated action, weigh it against the threat to be addressed, and issue a recommendation of appropriate scope.
Several comments requested rule provisions establishing the nature and extent of contractors and subcontractors obligations under exclusion or removal orders. The FASC
anticipates that such obligations will vary widely depending on the nature of the circumstances addressed by an exclusion or removal order. As a result, it is not feasible to attempt to prescribe those obligations categorically through this rulemaking. Instead, those obligations must be ascertained based upon the content of the order in question and any guidance issued by the ordering agency or the agencies implementing that order, as well as any applicable contract terms or procurement regulations.
One commenter recommended that the FASC adopt a rule requiring the
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notification of prime contractors whenever a subcontractor is the subject of a recommendation. The FASC
declines to follow that suggestion. If a FASC recommendation is not implemented through the issuance of one or more exclusion or removal orders, then there may never be a need for prime contractors to react to that recommendation. Furthermore, alerting primes to the issuance of a recommendation that may never yield an order may conflict with national security interests and/or the named sources interest in confidentiality.
One commenter requested further detail on the manner in which an agency can obtain a waiver relieving it of obligations under an exclusion or removal order. The final rule includes a new paragraph in 2011.304 that clarifies the waiver process. An agency seeking an exception to some or all of the requirements of an order must submit a request for that exception to the ordering official. The request must identify the relevant order and the covered article or source affected, describe precisely the exception sought, and provide a compelling justification for the grant of an exception as well as an account of any alternative risk reduction techniques the agency will employ in lieu of complying with the order. The official who issued the order has the authority to decide whether an exception will be granted.
3. Miscellaneous Comments Some commenters urged the FASC to adopt rule provisions creating a permanent or standardized relationship between the FASC and the private sector. Although the FASC recognizes that the private sector has a great deal of knowledge about and experience with supply chain risk analysis and mitigation, the final rule does not provide for a particular type of formal relationship or engagement with industry. The FASC is still in the early stages of its operations and requires further informationgained from experienceto determine the most effective ways to interact with the private sector. It is premature to prescribe regulations dictating the nature of that engagement at this time.
Some comments suggested that the FASC rely upon an already existing task force housed within the Department of Homeland Security. Although the FASC
certainly intends to draw upon the knowledge and experience of that task force to the extent feasible, the final rule does not mandate a role for it. The task force managed by the Department of Homeland Security is not a permanent entity. It would therefore be impractical
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to mandate a role for that task force in FASC operations.
Other comments emphasized the numerous supply chain risk initiatives within the Federal Government and requested that the FASC make efforts to bring coherence to the standards and activities stemming from those various initiatives. The FASC recognizes that the Federal Governments supply chain risk management activities may benefit from greater consistency and coordination and intends to work toward those goals.
Similarly, one comment urged the FASC to operate through an interagency process that accounts for other supply chain-related laws, regulations, and risk mitigation measures. The FASC emphasizes that it is itself an interagency body drawing upon the efforts and resources of its constituent members. The final rule, like the interim rule, provides that the FASC will be supported by a FASC Task Force composed of SCRM experts drawn from across the Federal Government. Because the FASCs activities necessarily constitute an inter-agency process, no changes have been made to the interim rule in response to this comment.
One commenter protested that exclusion or removal orders could have disparate impacts on small businesses. But that commenter did not suggest any specific change that might address that putative problem while ensuring the FASC retained its ability to address supply chain risks. Both the interim and the final rule require the FASC to consider the intrusiveness of its recommendations; the effect of a recommended order on contractors, including small business, may be considered as appropriate as part of that analysis. As a result, no change to the rule has been made based on this comment.
No change to the rule has been made in response to a comment asserting that complying with exclusion and removal orders is likely to be incredibly expensive to American companies. The FASC expects to weigh the burden likely to result from a recommended order against the anticipated benefit and would not lightly recommend an order that would be incredibly expensive either to the Federal Government or to the private sector. The final rule requires the FASC to include in a recommendation for an exclusion or removal order a discussion of less intrusive measures that were considered and why such measures were not reasonably available to reduce supply chain risk. That requirement will help to ensure that the costs of exclusion and
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