The Federal Acquisition Regulation (“FAR”) Council (the Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”)), recently finalized a rule that imposes significant restrictions on federal agencies in contracting with corporations that have federal tax liability or a recent federal felony conviction. The final rule implements requirements created by the Consolidated and Further Continuing Appropriations Act of 2015, Pub. L. 113-235 (the “CFCAA”) and imposed by a December 4, 2015 interim FAR rule, which we wrote about previously.
The rule applies broadly to all DoD, GSA, and NASA procurements, and requires contractors to report any unpaid federal tax liabilities and to represent whether they have been convicted of a felony criminal violation within the previous twenty-four months. In addition, for certain contracts in excess of $5 million, contractors must also certify that they: (1) have filed all federal tax returns in the past three years; (2) have not been convicted of a criminal offense under the Internal Revenue Code; and (3) do not have any outstanding, unsatisfied federal tax assessments. The rule imposes new requirements on procuring agencies as well: if a corporation discloses any tax delinquencies or felony convictions, the agency may only contract with it after first determining that suspension or debarment of the corporation is not necessary to protect the government’s interests.