[Federal Register Volume 68, Number 99 (Thursday, May 22, 2003)]
[Rules and Regulations]
[Pages 28093-28094]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12304]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 4
[FAC 2001-14; FAR Case 2000-304; Item IV]
RIN 9000-AI94
Federal Acquisition Regulation; Electronic Signatures
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending the Federal Acquisition Regulation (FAR) to clarify that
agencies are permitted to accept electronic signatures and records in
connection with Government contracts.
DATES: Effective Date: June 23, 2003.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC, 20405, (202) 501-4755, for information
pertaining to status or publication schedules. For clarification of
content, contact Ms. Laura Smith, Procurement Analyst, at (202) 501-
7279. Please cite FAC 2001-14, FAR case 2000-304.
SUPPLEMENTARY INFORMATION:
A. Background
On October 21, 1998, the Government Paperwork Elimination Act
(Title XVII of Division C of Public Law 105-277) was enacted. On June
30, 2000, the Electronic Signatures in Global and National Commerce Act
(E-SIGN) (Pub. L. 106-229) was enacted. These laws eliminate legal
barriers to using electronic technology in business transactions, such
as the formation and signing of contracts. The Office of Management and
Budget (OMB) has issued guidance on both of these laws. See Memorandum
M-00-15, ``OMB Guidance on Implementing the Electronic Signatures in
Global and National Commerce Act,'' dated September 25, 2000, and
Memorandum M-00-10, ``OMB Procedures and Guidance on Implementing the
Government Paperwork Elimination Act,'' dated April 25, 2000. These
memoranda are available on the OMB Homepage at http://www.omb.gov.
This final rule furthers Government participation in electronic
commerce when conducting Government procurements by adding a statement
at FAR Subpart 4.5, Electronic Commerce in Contracting, clarifying that
agencies are permitted to accept electronic signatures and records in
connection with Government contracts.
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 65 FR 65698, November 1, 2000. In addition to proposing a
policy statement recognizing the use of electronic signatures, the
proposed rule would have revised the current FAR definitions of ``in
writing'' and ``signature'' at FAR 2.101 to clarify that these terms
include electronic, in addition to paper, transactions. It also would
have made minor changes to the definition of electronic commerce.
Twenty-five sources submitted comments in response to the proposed
rule. All comments were considered in the development of the final
rule.
Several surety companies expressed support for greater use of
electronic technologies for the filing of bid, performance, and payment
bonds and associated powers of attorney. They noted that such
technologies will ``streamline the procurement process, reduce costs,
and increase efficiency for all trading partners.'' However, they
cautioned that FAR coverage should not result in reliance on a single
proprietary system for electronic signatures for the entire Federal
government. They further recommended a phase-in period so sureties that
are not yet automated have alternative means of transacting with the
Government in the near term.
With respect to the choice of technology, the final rule simply
states, ``agencies may accept electronic signatures and records in
connection with Government contracts.'' The choice of technology for
implementing electronic signatures is left to each agency. As for the
execution of bonds and powers of attorney, the rule does not require
that these documents be submitted electronically, which will allow time
for parties to effectively transition to electronic transactions.
One commenter made several recommendations regarding the
definitions. In particular, the commenter asserted that--
[sbull] A definition for ``electronic commerce'' is unnecessary and
should be removed from the FAR;
[sbull] The current FAR definition of ``signature'' should be
replaced by the E-SIGN definition of ``electronic signature''; and
[sbull] The E-SIGN definition of electronic record should be
substituted for the
[[Page 28094]]
current and proposed definitions of ``in writing,'' ``writing,'' and
``written,'' because the latter definitions are too narrow. The
Councils disagree with the recommended changes to the definitions.
The current FAR definition of ``electronic commerce'' is consistent
with that set forth in section 30 of the Office of Federal Procurement
Policy Act. The Councils believe the statutory definition should be
reflected in the FAR. At the same time, the Councils recognize the
value in evaluating the continued need for, and appropriateness of this
definition as electronic commerce continues to become more
institutionalized in the Government.
The commenter's proposed definition of electronic signature does
not reflect intention to authenticate. This concept is important to
contracting-related transactions, electronic or otherwise. As noted in
a September 12, 1951, Comptroller General decision (B-104590), courts
have held that ``a signature consists of the writing of one's name and
of the intention that it authenticate the instrument, and, therefore,
any symbol adopted as one's signature when affixed with his knowledge
and consent is a binding and legal signature * * *'' This was
reiterated in a September 20, 1984, Comptroller General decision (B-
216035). Consistent with this reasoning, FAR case 91-104 incorporated
the concept of authentication into the definition of ``signature.''
That case established the premise that either hand scribed or other
format signatures indicate an intent to authenticate (or be bound).
Similarly, the Councils believe that the proposed definition for
``electronic record'' is insufficient. The Councils maintain that the
definition of ``in writing'' should reflect the requirement to store
because agencies ask for information in writing when they intend to
keep it as a record. Therefore, storage, reproduction, and later
retrieval are all salient characteristics of a record. After further
deliberation and consideration of the public comments regarding the
proposed changes to the definitions, the Councils have determined that
the current FAR definitions are sufficient and appropriately capture
the necessary salient characteristics required of a ``writing'' and a
``signature.'' Likewise, the Councils concluded that there was no
significant value achieved through the proposed change to the
definition of ``electronic commerce.''
Therefore, this final rule makes no changes to the current FAR
definitions.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not have a significant economic impact on a substantial
number of small entities within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., because the rule does not
change the procedures for award or administration of contracts, but
rather, clarifies that the use of electronic signatures and electronic
methods are permitted in Government procurement.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose information collection requirements that require
the approval of the Office of Management and Budget under 44 U.S.C.
3501, et seq.
List of Subjects in 48 CFR Part 4
Government procurement.
Dated: May 13, 2003.
Laura G. Smith,
Director, Acquisition Policy Division.
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Therefore, DoD, GSA, and NASA amend 48 CFR part 4 as set forth below:
PART 4--ADMINISTRATIVE MATTERS
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1. The authority citation for 48 CFR part 4 is revised to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
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2. Amend section 4.502 by adding paragraph (d) to read as follows:
4.502 Policy.
* * * * *
(d) Agencies may accept electronic signatures and records in
connection with Government contracts.
[FR Doc. 03-12304 Filed 5-22-03; 8:45 am]
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