FAR Council Issues Proposed Rule on Private Security Contractors Supporting US Government Programs Abroad

August 14, 2012

On July 23, 2012, the Federal Acquisition Regulation (FAR) Council issued a proposed rule, which would amend the FAR to implement Government-wide requirements in National Defense Authorization Acts (NDAAs) that establish minimum processes and requirements for the selection, accountability, training, equipping, and conduct of personnel performing private security functions outside the United States.  The rule sets forth contract language and FAR coverage similar to an existing DFARS provision that establishes standards and requirements for DoD contractors performing private security services in battle space and contingency operations areas.  The proposed rule will not supersede the DFARS Rule, nor address non-DOD contractors’ operations in contingency operations that have not been designated for enhanced PSC coordination, but DoD ultimately plans to align the DFARS rule with the final FAR rule to eliminate any overlap.

By way of background, Section 862 of the NDAA for FY 2008, entitled “Contractors Performing Private Security Functions in Areas of Combat Operations,” as amended by section 853 of the NDAA for FY 2009, and sections 831 and 832 of the NDAA for FY 2012, requires: (1) the establishment of Government-wide policies for the selection, accountability, training, equipping, and conduct of personnel performing private security functions outside the United States, and (2) FAR coverage implementing the Government-wide policies, as well the Government-wide policies specified in section 862, as amended. 

On August 11, 2011, the DoD issued a final rule, codified at 32 CFR part 159  to meet the first requirement of section 862 of the NDAA for FY 2008, as amended.  Part 159 establishes policy and provides procedures for the regulation of and conduct of personnel performing private security functions for DoD private security companies (PSCs), PSC personnel performing private security functions during contingency operations outside the United States on behalf of other agencies, and U.S. Government-funded PSCs and PSC personnel performing private security functions in an area of designated combat operation or an area of agreed other significant military operations.  On August 19, 2011, the DoD issued an interim rule to meet the second requirement of section 862 of the NDAA for FY 2008, as amended, but applicable to DoD contracts only. 

This proposed rule is focused solely on meeting the second requirement of section 862 of the NDAA for FY 2008, as amended, to develop regulations applicable to all U.S.  Government contracts for supplies and services under a contract that requires performance in a designated combat operations area or an area of agreed other significant military operations.  The FAR coverage is proposed to be located at a new FAR section 25.302.  As indicated, DFARS coverage will be amended to delete duplicative text when a final rule is published.

Applicability

FAR 25.302 would apply to:

  • Non-DoD (and DoD) contracts performed in areas of combat operations as designated by the Secretary of Defense.
  • Non-DoD contracts performed in areas of other significant military operations as designated by the Secretary of Defense and agreed to by the Secretary of State. 
  • DoD contracts performed in areas of contingency operations outside the United States.
  • DOD contracts performed in areas of other significant military operations as designated by the Secretary of Defense. 

Designation lists can be found at Defense Procurement and Acquisition Policy (DPAP) website for areas of combat operations and areas of other significant military operations (there are no designated areas for either category as of Aug. 9, 2012).

In addition, FAR 25.302 would apply regardless of whether the contract is a prime contract for PSC services or private security is merely a permissible cost as part of performing the prime contract.  For example, FAR 25.302 would apply to a reconstruction contract in a designated combat operations area if the contract permitted the prime contractor to employ private security to protect its supplies and employees during contract performance.

FAR 25.302 would not apply to the performance of private security functions within the United States.  It would also not apply outside the United States in areas that are not (a) combat operations, (b) contingency operations, or (c) other significant military operations, as designated by the Secretary of Defense and agreed to by the Secretary of State.  Finally, it would not apply to contracts entered into by elements of the intelligence community in support of intelligence activities, and temporary arrangements entered into by non-DoD contractors for the performance of private security functions by individual indigenous personnel not affiliated with a local or expatriate security company.  These temporary arrangements must still comply with local law.

Policy

When the applicability requirements are met, FAR 25.302 would require that contractors and subcontractors comply with the policy, responsibilities, procedures, accountability, training, equipping, and conduct of personnel performing private security functions in designated combat operations and other significant military operations areas.  Furthermore, FAR 25.302-4 would assign the following responsibilities to the contractor: ensuring that employees are aware of, and comply with, relevant orders, directives, and instructions; keeping appropriate personnel records; accounting for weapons; registering and identifying armored vehicles, helicopters, and other military vehicles; and reporting specified incidents in which personnel performing private security functions under a contract are involved.

In addition, potentially controversially, FAR 25.302-4 would require that contractors cooperate with any Government-authorized investigation into incidents reported pursuant to paragraph (b)(3) of the clause at 52.225-XX, Contractors Performing Private Security Functions Outside the United States, by providing access to employees performing private security functions and relevant information in the possession of the contractor regarding the incident concerned.

While the rule and associated clause attempt to implement uniform control over private security contractors in these areas where the U.S. military is conducting operations, there are still potential places for conflict.  For example, the clause provides that a contractors’ employee subject to the clause must follow rules for the use of force, but does not resolve the situation where both DoD and State maintain rules for the use of force in the area.  Specifically, the new rule does not require that PSC employees follow the same rules for the use of force in future designated operations.  The only guidance for harmonizing the procedures is in 25.302-4(b)(2), which primarily parrots the language in 32 C.F.R. § 159.4(c):

In a designated area of combat operations, or areas of other significant military operations . . . the relevant Chief of Mission will provide implementing instructions for non-DoD private security contractors and their personnel consistent with the standards set forth by the geographic combatant commander. In a designated area of combat operations, 32 CFR 159.4(c) gives the Chief of Mission the option of instructing non-DoD private security contractors and their personnel to follow the guidance and procedures of the geographic Combatant Commander and/or a sub-unified commander or joint force commander.  (emphasis added).

Therefore, while the Chief of Mission may be required to coordinate with DoD the activities of all non-DoD PSCs, the Chief of Mission is free to diverge from DoD on key guidance, such as use of force, in areas where DoD is performing combat operations.  The potential use of force policy differences are particularly important because, as the Army’s Counterinsurgency Manual (FM3-24) states, “In a [counterinsurgency] environment, it is vital for commanders to adopt appropriate and measured levels of force and apply that force precisely so that it accomplishes the mission without causing unnecessary loss of life or suffering.”

The proposed FAR rule also fails to resolve, or even address, the longstanding issue of resolving conflicts between contracting officer’s direction/authority and the orders of the Combatant Commander or subordinate commanders, or, for that matter, direction from the Chief of Mission.  Because the proposed FAR rule will apply to non-DoD, including non-State Department contractors, private security contractor personnel could be faced with multiple sets of conflicting guidance and directives. 

Remedies

The proposed section 25.302-5 includes specific remedies for violations of the responsibilities and procedures in the law.  Without impinging on the Government’s usual contractual remedies (e.g., termination for default), FAR 25.302-5 would allow the Government, at its discretion, to direct the contractor to remove or replace any personnel who fail to comply with, or violate, applicable requirements of the clause at FAR 52.225-XX.  Such corrective actions would be required to be taken at the contractor’s own expense and without prejudice to any other contractual rights.

Proposed section 25.302-5 also includes sets out standard remedies against poor performing government contractors including negative past performance and award fee assessments.   The proposed FAR rule also states that if the contractor’s performance failures are severe, prolonged, or repeated, the contracting officer “shall refer the matter to the appropriate suspension and debarment official.”

Contract Clause

FAR 25.302-4 would also require that the clause at 52.225-XX, Contractors Performing Private Security Functions Outside the United States, be included in contracts and solicitations where FAR 25.302 is applicable (see Applicability above).  The clause would incorporate the policy provisions set out above into subject contracts, including the provisions regarding cooperation with Government-authorized investigations and the remedies the Government would have for failure to adhere to the policies incorporated by the clause. 

In addition, the clause at 52.225-XX would require that the contractor ensure that employees are briefed and understand their obligation to comply with: security requirements established by 32 CFR part 159; applicable laws and regulations of the United States and the host country and applicable treaties and international agreements; orders, directives, and instructions issued by the applicable commander of a combatant command or relevant Chief of Mission relating to weapons, equipment, force protection, security, health, safety, or relations and interactions with locals; and, as noted above, rules on the use of force issued by the applicable commander of a combatant command or relevant Chief of Mission. 

Finally, the clause at 52.225-XX requires that the contractor include the substance of this clause in all subcontracts where FAR 25.302 is applicable (see Applicability above).

Conclusion

There are important differences between DFARS 225.370, which is currently in force and applicable to DoD contracts only, and proposed FAR 25.302.  Namely, in addition to contracts performed in contingency operations, and combat and other significant military operations designated by the Secretary of Defense, DFARS 225.370 also applies to DoD contracts performed in areas of humanitarian or peacekeeping operations, and other military operations or exercises designated by the combatant commander.  DFARS 225.370 also includes some additional record keeping requirements for personnel, and additional registration and identification requirements for weapons, armored vehicles, helicopters, and other military vehicles. 

Comments on the proposed rule are due September 21, 2012.

If you have any questions about this advisory, please contact: Andy Irwin at 202.429.8177 in our Washington office or at 310.734.1926 in our Century City, LA office; or Michael Navarre at 202.429.8081 and Henry Smith at 202.429-3775 in our Washington office.

For any questions regarding international regulation of private security contractors, please contact Stephen Heifetz at 202.429.6227, Meredith Rathbone at 202.429.6437 or Marc Frey (Senior Director) at 202.429.6414 in our Washington office and for questions regarding government contracting generally, please contact Tom Barletta at 202.429.8058 in our Washington office.