[Federal Register: November 12, 2004 (Volume 69, Number 218)]
[Proposed Rules]
[Page 65395-65401]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12no04-21]
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COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR SEVERELY DISABLED
41 CFR Parts 51-2, 51-3, and 51-4
[Docket No. 2004-01-01]
RIN 3037-AA00
Governance Standards for Central Nonprofit Agencies and Nonprofit
Agencies Participating in the Javits-Wagner-O'Day Program
AGENCY: Committee for Purchase From People Who Are Blind or Severely
Disabled.
ACTION: Notice of proposed rulemaking; request for comments.
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SUMMARY: The Committee for Purchase From People Who Are Blind or
Severely Disabled (The Committee), which is responsible for
administering and overseeing the implementation of the Javits-Wagner-
O'Day (JWOD) Act, proposes to amend its regulations by requiring
nonprofit agencies awarded Government contracts under the authority of
the JWOD Act, as well as central nonprofit agencies designated by the
Committee and nonprofit agencies that would like to qualify for
participation in the JWOD Program, to comply with new governance
standards. The proposed governance standards are primarily based on
standards that are common practice in nonprofit and business
communities. These new standards would include, among other things,
standards concerning the practices of boards of directors and the
reasonableness of executive and other employee compensation. Recent
accounts alleging, and public concern regarding, isolated instances of
excessive compensation packages for nonprofit agency executives; a
perceived lack of full disclosure in the financial reporting of
nonprofit agencies; and the absence of formal guidelines to establish
independent boards of directors for JWOD-affiliated central nonprofit
agencies and nonprofit agencies prompted this proposed change. If fully
implemented, this change would help promote sound governance procedures
for central nonprofit agencies and nonprofit agencies participating in
the JWOD Program, help ensure the effective and transparent
administration of Government contract funds, and continue to maintain a
high level of public support for the JWOD Program's employment mission.
DATES: Submit your written comments on this proposed rule on or before
January 11, 2005. No public meeting will be held.
Comments on the information collection aspects of this proposed
rule will be considered if received by January 11, 2005. The Office of
Management and Budget (OMB) has up to 60 days to approve or disapprove
information collection but may respond after 30 days. Therefore, to
ensure maximum consideration, your comments should be received by OMB
by December 13, 2004.
ADDRESSES: Send your comments on the proposed rule in one of the
following ways:
By electronic mail (preferred method) to
rulecomments@jwod.gov;
By fax, to the attention of G. John Heyer, to (703) 603-
0655;
By postal mail to Committee for Purchase From People Who
Are Blind or Severely Disabled, 1421 Jefferson Davis Highway, Jefferson
Plaza 2, Suite 10800, Arlington, VA 22202-3259; or
Through the Federal eRulemaking Portal at http://www.regulations.gov.
Follow the instructions on the site for submitting
comments.
For more information on how to submit your comments, please refer
to the ``Public Comments Solicited'' section below.
You may submit comments on the information collection aspects of
the
[[Page 65396]]
proposed rule to the Desk Officer for the Committee for Purchase From
People Who Are Blind or Severely Disabled, OMB, Office of Information
and Regulatory Affairs, via facsimile or e-mail using the following fax
number and e-mail address: 202/395-6566 (fax); OIRA_DOCKET@omb.eop.gov
(e-mail). Please provide a copy of your comments to Janet Yandik,
Information Management Specialist, Committee for Purchase From People
Who Are Blind or Severely Disabled, 1421 Jefferson Davis Highway,
Jefferson Plaza 2, Suite 10800, Arlington, VA, 22202-3259; (703) 603-
0655 (fax); or rulecomments@jwod.gov (e-mail).
Comments will be made available for public inspection, from 9 a.m.
to 4 p.m. on weekdays, at the Committee for Purchase From People Who
Are Blind or Severely Disabled, 1421 Jefferson Davis Highway, Jefferson
Plaza 2, Suite 10800, Arlington, VA 22202-3259.
FOR FURTHER INFORMATION CONTACT: G. John Heyer, by telephone at (703)
603-0665, by fax at (703) 603-0655, by e-mail at jheyer@jwod.gov, or by
postal mail at Committee for Purchase From People Who Are Blind or
Severely Disabled, 1421 Jefferson Davis Highway, Jefferson Plaza 2,
Suite 10800, Arlington, VA, 22202-3259.
SUPPLEMENTARY INFORMATION:
Background
The regulations at 41 CFR Chapter 51, titled ``Committee for
Purchase From People Who Are Blind or Severely Disabled,'' provide the
requirements, standards, and procedures for the JWOD Program. The JWOD
Program creates jobs and training opportunities for people who are
blind or who have other severe disabilities. Its primary means of doing
so is by requiring Government agencies to purchase selected products
and services from nonprofit agencies employing such individuals. As a
result, JWOD employees are able to lead more productive, independent
lives.
Named for its enabling legislation, the Javits-Wagner-O'Day Act of
1971 (41 U.S.C. 46-48c), the JWOD Program is a mandatory source of
supply for Federal employees. The JWOD Program is administered by the
Committee for Purchase From People Who Are Blind or Severely Disabled.
Two national, independent organizations, National Industries for the
Blind (NIB) and NISH, have been designated by the Committee as central
nonprofit agencies, and these organizations help State and private
nonprofit agencies participate in the JWOD Program.
Governance Standards
The Committee proposes to require nonprofit agencies awarded
Government contracts under the authority of the JWOD Act, as well as
central nonprofit agencies designated by the Committee and nonprofit
agencies that would like to qualify for participation in the JWOD
Program, to comply with new governance standards. For the purposes of
this proposal, the term governance includes, but is not limited to, the
structure of the central nonprofit agency's or nonprofit agency's
governing authority, such as its Board of Directors; auditing and
reporting of the central nonprofit agency's or nonprofit agency's
finances; executive compensation packages provided by the central
nonprofit agency or nonprofit agency; and the central nonprofit
agency's or nonprofit agency's conflict of interest policy. Adopting
the proposed governance standards would mean adding a new Sec. 51-2.10
to the regulations to provide the standards for central nonprofit
agencies, qualified nonprofit agencies participating in the JWOD
Program, and nonprofit agencies that would like to qualify for
participation in the JWOD Program; adding two new paragraphs to the
regulations at Sec. 51-3.2 to provide a reference to the standards and
reporting requirements for central nonprofit agencies; and adding a new
paragraph to the regulations at Sec. 51-4.3 to provide a reference to
the standards for nonprofit agencies.
To date, the Committee's regulations have not included governance
standards. While the Committee believes, based on its experience
managing the JWOD Program, that the overwhelming majority of JWOD-
affiliated central nonprofit agencies and nonprofit agencies operate in
an ethical and accountable manner, recent accounts alleging (and public
concern regarding) isolated instances of excessive compensation
packages for nonprofit agency executives, a perceived lack of full
disclosure in the financial reporting of nonprofit agencies, and the
absence of formal guidelines to establish independent boards of
directors for JWOD-affiliated central nonprofit agencies and nonprofit
agencies have prompted the need for explicitly stated standards.
Therefore, in order to help maintain the integrity of the JWOD Program,
the Committee is proposing to add the governance standards listed below
to the regulations at 41 CFR 51-2.10.
Each central nonprofit agency, qualified nonprofit agency
participating in the JWOD Program, and nonprofit agency that would like
to qualify for participation in the JWOD Program would have to comply
with Committee-approved governance standards. In evaluating the
governance of designated central nonprofit agencies and nonprofit
agencies, the Committee would consider compliance to be certification,
as described under the heading ``Certification'' below, by the agency
that the Board of Directors (or, in the case of noncorporate entities
such as State and local governments, an equivalent governing
authority):
Does not include family members of the central nonprofit
agency's or nonprofit agency's management team;
Does not have the Chairperson also serving as the central
nonprofit agency's or nonprofit agency's Chief Executive Officer (CEO),
President, Executive Director, or equivalent;
Has an audit committee to oversee the central nonprofit
agency's or nonprofit agency's financial affairs, and audits are
conducted by an independent auditing firm that is overseen by the audit
committee;
Reviews and certifies executive compensation packages, and
develops and implements an annual evaluation process for the Board or
other governing authority, as well as for the central nonprofit
agency's or nonprofit agency's CEO, President, Executive Director, or
equivalent;
Has adopted a conflict of interest policy, and discloses
all members' business relationships with the central nonprofit agency
or nonprofit agency as a part of that policy;
Turns over Board, or other governing authority, membership
on a recurring schedule;
Reviews and validates all Internal Revenue Service (IRS)
Form 990s and all attachments, and certifies that such filings identify
all sources of compensation income from the central nonprofit agency or
nonprofit agency and related entities;
Has at least one financial expert serving; and
Publishes and makes public the minutes of Board, or other
governing authority, meetings.
Further, in assessing the reasonableness of executive and other
employee compensation, the Committee would consider:
The size and complexity of the central nonprofit agency's
or nonprofit agency's charter or mission;
The mission area, geographic size, and financial condition
of the central nonprofit agency or nonprofit agency;
The technical and professional qualifications required for
positions in
[[Page 65397]]
the central nonprofit agency or nonprofit agency;
Compensation packages paid at comparable central nonprofit
agencies or nonprofit agencies;
The percentage of the net revenues to the central
nonprofit agency or nonprofit agency realized from the JWOD Program
paid to employees and to senior management;
The extent to which the central nonprofit agency's or
nonprofit agency's executive compensation packages exceed the total
compensation offered to the typical, highest paid (excluding any
retention allowances and Presidential rank awards), senior executive
service (SES), career Federal government employee, as explained below;
and
For only nonprofit agencies (not central nonprofit
agencies), the median compensation package for the nonprofit agency's
direct labor hour workers and how that median compares to the
compensation packages offered to executives.
Currently, the total compensation package offered to the typical,
highest paid (excluding any retention allowances and Presidential rank
awards), SES, career Federal government employee amounts to
approximately $207,000 per year. This amount changes annually,
according to adjustments in the salary and benefits for Federal
government employees. The Committee would generally consider a central
nonprofit agency's or nonprofit agency's executive compensation package
unreasonable if it exceeds the total compensation offered to the
typical, highest paid (excluding any retention allowances and
Presidential rank awards), SES, career Federal government employee,
unless the central nonprofit agency or nonprofit agency can provide
adequate justification for the level of executive compensation to the
Committee. The basis for comparing a central nonprofit agency's or
nonprofit agency's executive compensation to a Federal employee's
compensation lies in the fact that the JWOD Program is a Federal
program and the funds obtained through the JWOD Program are Federal
contract funds.
The proposed standards also include procedures that the Committee
would follow if a central nonprofit agency or qualified nonprofit
agency participating in the JWOD Program violates the governance
standards set forth at 41 CFR 51-2.10. Violation by a qualified
nonprofit agency participating in the JWOD Program would be handled in
accordance with established procedures at 41 CFR 51-4.5, ``Violations
by nonprofit agencies.'' Violation by a central nonprofit agency would
be investigated by the Committee's staff. The central nonprofit agency
concerned would be afforded an opportunity to submit a statement of
facts and evidence. The Committee staff would report its findings to
the Committee, together with its recommendation. In reviewing the case,
the Committee may request the submission of additional evidence or may
conduct its own investigation. If a central nonprofit agency failed to
correct its violations of the governance standards, the Committee,
after affording the central nonprofit agency an opportunity to address
the Committee on the matter, may terminate the central nonprofit
agency's designation as a central nonprofit agency and its eligibility
to participate in the JWOD Program.
Further, if a nonprofit agency that would like to qualify for
participation in the JWOD Program was in violation of the proposed
governance standards set forth at 41 CFR 51-2.10, that agency could
fail to qualify for participation in the JWOD Program.
These new standards should help promote an environment of sound
governance and adequate internal controls for JWOD-affiliated central
nonprofit agencies and nonprofit agencies, as well as help ensure the
effective and transparent administration of Government contract funds
obtained through the JWOD Program. Further, these proposed standards
should not impose an undue burden on central nonprofit agencies, nor on
nonprofit agencies, because such standards are common practice in
nonprofit and business communities.
Certification
Certification by a central nonprofit agency that the governance
standards set forth in the proposed Sec. 51-2.10 have or have not yet
been met would occur on a new annual certification form, due to the
Committee by November 1 of each year. Certification by a qualified
nonprofit agency participating in the JWOD Program that the governance
standards set forth in the proposed Sec. 51-2.10 have or have not yet
been met would occur on the existing annual certification forms
(Committee Form 403, Annual Certification--Qualified Nonprofit Agencies
Serving People Who Are Blind, or Committee Form 404, Annual
Certification--Qualified Nonprofit Agencies Serving People Who Are
Severely Disabled), due to the Committee by December 1 of each year.
Certification by a nonprofit agency that would like to qualify for
participation in the JWOD Program that the governance standards set
forth in the proposed Sec. 51-2.10 have or have not yet been met would
occur on the existing initial certification forms (Committee Form 401,
Initial Certification--Qualified Nonprofit Agency Serving People Who
Are Blind, or Committee Form 402, Initial Certification--Qualified
Nonprofit Agency Serving People Who Are Severely Disabled). These
certifications are explained in more detail below, under the heading
``Paperwork Reduction Act.''
As a part of the certification, central nonprofit agencies and
nonprofit agencies would have to supply information on the total (cash
and noncash) compensation paid to their key employees during either the
fiscal year for which they are submitting an annual certification (for
central nonprofit agencies and qualified nonprofit agencies
participating in the JWOD Program) or the dates covered by the report
(for initial certification of nonprofit agencies that would like to
participate in the JWOD Program). We base our definition of a ``key
employee'' on the definition provided by the IRS in the instructions to
the IRS Form 990; a ``key employee'' is any person having
responsibilities or powers similar to those of officers, directors, or
trustees. The term includes the chief management and administrative
officials of an organization (such as a CEO, President, Executive
Director, or equivalent) but does not include the heads of separate
departments or smaller units within an organization. A chief financial
officer and the officer in charge of administration or program
operations are both key employees if they have the authority to control
the organization's activities, its finances, or both. The ``heads of
separate departments'' are managers within their specific areas but not
for the organization as a whole and, therefore, are not key employees.
The information we would require would consist of:
The name, address, and title of each key employee;
A numerical estimate of the average hours per week each
key employee worked in his or her position;
The salary, fees, bonuses, and severance payments paid to
each key employee;
All forms of deferred compensation and future severance
payments and all payments to welfare benefit plans (including, but not
limited to, medical, dental, life insurance, severance pay, and
disability plans) paid on behalf of each key employee; and
All taxable and nontaxable fringe benefits (including, but
not limited to, payments made under indemnification arrangements, the
value of personal use
[[Page 65398]]
of housing, automobiles, or other assets owned or leased by the agency
or provided for the agency's use without charge) provided to each key
employee.
In summary, the information that central nonprofit agencies and
nonprofit agencies would provide to us would be the same as what is
required under Part IV of the IRS Form 990.
We are proposing to require this information instead of a photocopy
of an agency's most recently compiled IRS Form 990s because, due to
differing cycles of fiscal years and filing for extensions of the
deadline to submit IRS Form 990s, central nonprofit agencies and
nonprofit agencies may be two or three years behind the current fiscal
year in filing their IRS Form 990s. Out-of-date information would do
little to help the Committee determine whether a central nonprofit
agency or nonprofit agency is currently meeting the requirements of the
Committee's regulations. Therefore, we would require central nonprofit
agencies and nonprofit agencies to submit current information on the
total compensation packages offered to key employees.
Public Comments Solicited
We invite public comments on this proposed rule. Please submit your
comments by the date given in the DATES section using one of the
options offered in the ADDRESSES section. Please mention the docket
number (2004-01-01) at the top of your comments. As all comments
received will be made available for public inspection, please do not
include any information, such as your street address or telephone
number, that you would prefer to remain private. If you choose to send
your comments by postal mail, please include a DOS-formatted 3\1/2\-
inch disk with your written comments. If you have any questions about
how to comment on this proposed rule, please contact the person listed
under FOR FURTHER INFORMATION CONTACT.
All comments we receive will be made available for public
inspection, from 9 a.m. to 4 p.m. on weekdays, at the address listed in
the ADDRESSES section. To facilitate public inspection of comments,
please call (703) 603-7740 to notify us of your intention to inspect
comments before coming to the Committee office.
Certifications and Required Determinations
Regulatory Flexibility Act
I certify that the changes proposed in this rule would not have a
significant impact on a substantial number of small entities
(Regulatory Flexibility Act, 5 U.S.C. 605(b)). The major factors
considered for this certification were:
1. If approved, the action will not result in any additional
reporting, recordkeeping, or compliance requirements for small entities
other than the small organizations that will furnish the service to the
Government.
2. There are no known regulatory alternatives which would
accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 46-
48c).
We invite comments on this certification. Please submit your
comments by the date given in the DATES section using one of the
options offered in the ADDRESSES section. Commenters should identify
the statement(s) underlying the certification on which they are
providing additional information.
Executive Order 12866
The Office of Management and Budget has determined that this
proposal is ``not significant'' for purposes of Executive Order 12866.
a. If adopted, this proposal would not have an annual economic
effect of $100 million or adversely affect an economic sector,
productivity, jobs, the environment, or other units of government. A
cost-benefit and economic analysis is not required. This proposal would
have minimal effects on regulated entities.
b. If adopted, this proposal would not create inconsistencies with
other agencies' actions. No other Federal agency has any role in
managing the JWOD Program.
c. If adopted, this proposal would not materially affect
entitlements, grants, user fees, loan programs, or the rights and
obligations of their recipients.
d. If adopted, this proposal would not raise novel legal or policy
issues. This proposal is designed to incorporate standard, high-quality
business practices into the requirements for central nonprofit agencies
and nonprofit agencies participating in the JWOD Program.
Executive Order 12988
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. If this proposed rule is adopted: (1) It will
have no preemptive effect on State and local laws and regulations; (2)
no retroactive effect will be given to this rule; and (3)
administrative proceedings will not be required before parties may file
suit in court challenging this rule.
Executive Order 13132
This proposal does not contain policies with federalism
implications sufficient to warrant preparation of a Federalism
Assessment under Executive Order 13132 (August 4, 1999).
Unfunded Mandates Reform Act
This proposed rule has been reviewed under the Unfunded Mandates
Reform Act (2 U.S.C. 1501 et seq.). If adopted, this proposed rule
would not impose an unfunded mandate on State, local, or Tribal
governments or the private sector of more than $100 million per year,
nor would it have a significant or unique effect on State, Tribal, or
local governments or the private sector.
Paperwork Reduction Act
Office of Management and Budget (OMB) regulations at 5 CFR 1320
implement provisions of the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.). A Federal agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
unless it displays a currently valid OMB control number.
The OMB regulations at 5 CFR 1320.3(c) define a ``collection of
information'' as the obtaining of information by or for an agency by
means of identical questions posed to, or identical reporting,
recordkeeping, or disclosure requirements imposed on, 10 or more
persons. In addition, the OMB regulations at 5 CFR 1320.3(c)(4)(i)
state that any recordkeeping, reporting, or disclosure requirement
contained in a rule of general applicability (such as this proposed
rule) is deemed to involve 10 or more persons. This proposal would
require a new certification from central nonprofit agencies, qualified
nonprofit agencies participating in the JWOD Program, and nonprofit
agencies that would like to qualify for participation in the JWOD
Program and would require these agencies to supply information on the
total (cash and noncash) compensation paid to their key employees (as
explained above under the heading ``Certification''). These new
information collections would require OMB approval under the Paperwork
Reduction Act.
Simultaneous with the publication of this proposed rule, we have
submitted an application for information collection approval from OMB
to require a new annual certification from central nonprofit agencies
that the governance standards in proposed 41 CFR 51-2.10 have or have
not yet been met. This certification would include a requirement that
central nonprofit agencies supply information on the total (cash and
noncash) compensation paid to their key employees during the fiscal
year for which they are submitting an annual certification. The
application for
[[Page 65399]]
information collection approval from OMB also requests a revision to
our existing annual certification forms, which are due to us from
qualified nonprofit agencies participating in the JWOD Program by
December 1 of each year. The revised forms would include the new
certification proposed in this document and a requirement that
nonprofit agencies supply information on the total (cash and noncash)
compensation paid to their key employees during the fiscal year for
which they are submitting an annual certification. In addition, the
application for information collection approval from OMB requests a
revision to our existing initial certification forms, which are
required for nonprofit agencies that would like to participate in the
JWOD Program. The revised forms would include the new certification
proposed in this document and a requirement that nonprofit agencies
supply information on the total (cash and noncash) compensation paid to
their key employees during the dates covered by the report. We will
notify the public of OMB's response to our application in the final
rule for this regulation.
We are asking OMB to approve, for the first time, a new Committee
Form 405, which would be the Annual Certification-Central Nonprofit
Agencies. The new form would be due to the Committee by November 1 of
each year from the two designated central nonprofit agencies (currently
NIB and NISH). The new form would require each central nonprofit
agency's Officer of the Board and Agency Executive to certify, via
signature, that the governance standards in Sec. 51-2.10 have or have
not yet been met. If the governance standards have not yet been met, an
explanation (with relevant documentation attached) would be required.
The new form would also require central nonprofit agencies to supply,
and certify the accuracy and completeness of, information on the total
(cash and noncash) compensation paid to their key employees during the
fiscal year for which they are submitting an annual certification.
Lastly, the new form would ask if any changes have been made during the
past year to the central nonprofit agency's articles of incorporation
or bylaws. This last piece of information has been offered sporadically
over the years by central nonprofit agencies; including it on the new
form would standardize the collection of this information.
We expect that completing this new certification form would require
a moderate amount of time for central nonprofit agencies even though
the certification and any documents to support the certification do not
exceed the knowledge and information normally possessed by a prudent
person in the ordinary course of business dealings. We estimate that it
would take an average of 20 hours for a respondent to complete the
form, including reading the appropriate instructions; referring to and
reading the new governance standards (as provided in Sec. 51-2.10,
below); certifying that the new standards have or have not been met; if
necessary, providing a brief explanation concerning why the governance
standards have not yet been met and attaching appropriate
documentation; gathering and recording information on the total (cash
and noncash) compensation paid to the agency's key employees during the
fiscal year for which the agency is submitting an annual certification;
certifying that the central nonprofit agency's articles of
incorporation or bylaws have or have not changed during the most recent
fiscal year; and, if necessary, attaching any changes to the articles
of incorporation or bylaws. Therefore, for the total number of
respondents completing this form (2), the new information collection
requirements would result in a total annual burden of 40 hours.
Committee Form 403 (Annual Certification--Qualified Nonprofit
Agencies Serving People Who Are Blind) and Committee Form 404 (Annual
Certification--Qualified Nonprofit Agencies Serving People Who Are
Severely Disabled) are already approved by OMB and assigned OMB control
numbers 3037-0001 and 3037-0002, respectively. Both of these control
numbers expire on March 31, 2006. We have submitted a revision request
to OMB to update these two forms to include a new certification
statement that would require each nonprofit agency's Officer of the
Board and Agency Executive to certify, via signature, that the
governance standards in Sec. 51-2.10 have or have not yet been met. If
the governance standards have not yet been met, an explanation (with
relevant documentation attached) would be required. In addition, each
nonprofit agency would have to supply, and certify the accuracy and
completeness of, information on the total (cash and noncash)
compensation paid to their key employees during the fiscal year for
which they are submitting an annual certification.
We expect the additional certification on Committee Form 403 or 404
would require a moderate time for respondents even though the
certification and any documents to support the certification do not
exceed the knowledge and information normally possessed by a prudent
person in the ordinary course of business dealings. We estimate that it
would take an average of 19 hours for a respondent to read the
appropriate instructions; refer to and read the new standards (as
provided in Sec. 51-2.10, below); certify that the new standards have
or have not been met; if necessary, provide a brief explanation
concerning why the governance standards have not yet been met and
attach appropriate documentation; and gather and record information on
the total (cash and noncash) compensation paid to the agency's key
employees during the fiscal year for which the agency is submitting an
annual certification. Therefore, for the total number of respondents
completing both of these forms (642; 77 for Form 403, and 565 for Form
404), the new information collection requirements would result in an
additional annual burden of 12,198 hours (1,463 hours for Form 403, and
10,735 hours for Form 404). In addition, in accordance with 41 CFR 51-
4.3(b)(4), relevant records would have to be made available for
inspection at any reasonable time to representatives of the Committee
or the central nonprofit agency representing the nonprofit agency.
In addition, Committee Form 401 (Initial Certification-Qualified
Nonprofit Agency Serving People Who Are Blind) and Committee Form 402
(Initial Certification-Qualified Nonprofit Agency Serving People Who
Are Severely Disabled) are already approved by OMB and assigned OMB
control numbers 3037-0004 and 3037-0003, respectively. Both of these
control numbers expire on March 31, 2005. We have submitted a revision
request to OMB to update these two forms to include a new certification
statement that would require each nonprofit agency's Officer of the
Board and Agency Executive to certify, via signature, that the
governance standards in Sec. 51-2.10 have or have not yet been met. If
the governance standards have not yet been met, an explanation (with
relevant documentation attached) would be required. In addition, each
nonprofit agency would have to supply, and certify the accuracy and
completeness of, information on the total (cash and noncash)
compensation paid to their key employees during the dates covered by
the report.
We expect the additional certification on Committee Form 401 or 402
would require a moderate time for respondents even though the
certification and any documents to support the certification do not
exceed the knowledge and
[[Page 65400]]
information normally possessed by a prudent person in the ordinary
course of business dealings. We estimate that it would take an average
of 19 hours for a respondent to read the appropriate instructions;
refer to and read the new standards (as provided in Sec. 51-2.10,
below); certify that the new standards have or have not been met; if
necessary, provide a brief explanation concerning why the governance
standards have not yet been met and attach appropriate documentation;
and gather and record information on the total (cash and noncash)
compensation paid to the agency's key employees during the dates
covered by the report. Therefore, for the total number of respondents
completing both of these forms (32; 2 for Form 401, and 30 for Form
402), the new information collection requirements would result in an
additional annual burden of 608 hours (38 hours for Form 401, and 570
hours for Form 402).
OMB regulations at 5 CFR part 1320 require that interested members
of the public and affected agencies have an opportunity to comment on
information collection and recordkeeping activities. We invite comments
on: (1) Whether the collection of information is necessary for the
proper performance of the functions of the agency, including whether
the information will have practical utility; (2) the accuracy of the
agency's estimate of burden, including the validity of the methodology
and assumptions used; (3) ways to enhance the quality, utility, and
clarity of the information on those who are to respond, including
through the use of appropriate automated, electronic, mechanical, or
other technological collection techniques or other forms of information
technology; and (4) ways to minimize the burden of the collection of
information on those who are to respond. See the DATES and ADDRESSES
sections of this proposed rule for information on submitting your
comments on this information collection.
List of Subjects
41 CFR Part 51-2
Organization and functions (Government agencies).
41 CFR Part 51-3
Government procurement, Handicapped.
41 CFR Part 51-4
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Committee proposes
to amend parts 51-2, 51-3, and 51-4 of title 41, chapter 51 of the Code
of Federal Regulations as follows:
1. The authority citation for parts 51-2, 51-3, and 51-4 continues
to read as follows:
Authority: 41 U.S.C. 46-48c.
PART 51-2--COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR
SEVERELY DISABLED
2. Add a new Sec. 51-2.10 to read as follows:
Sec. 51-2.10 Program participant governance.
Each central nonprofit agency, qualified nonprofit agency
participating in the JWOD Program, and nonprofit agency that would like
to qualify for participation in the JWOD Program must comply with
Committee-approved governance standards.
(a) In evaluating the governance of central nonprofit agencies and
nonprofit agencies, the Committee will consider compliance to be
certification by the agency, in accordance with paragraph (d) of this
section, that the Board of Directors (or, in the case of noncorporate
entities such as State and local governments, an equivalent governing
authority):
(1) Does not include family members of the central nonprofit
agency's or nonprofit agency's management team;
(2) Does not have the Chairperson also serving as the central
nonprofit agency's or nonprofit agency's Chief Executive Officer (CEO),
President, Executive Director, or equivalent;
(3) Has an audit committee to oversee the central nonprofit
agency's or nonprofit agency's financial affairs, and audits are
conducted by an independent auditing firm that is overseen by the audit
committee;
(4) Reviews and certifies executive compensation packages, and
develops and implements an annual evaluation process for the Board or
other governing authority, as well as for the central nonprofit
agency's or nonprofit agency's CEO, President, Executive Director, or
equivalent;
(5) Has adopted a conflict of interest policy, and discloses all
members' business relationships with the central nonprofit agency or
nonprofit agency as a part of that policy;
(6) Turns over Board, or other governing authority, membership on a
recurring schedule;
(7) Reviews and validates all Internal Revenue Service (IRS) Form
990s and all attachments, and certifies that such filings identify all
sources of compensation income from the central nonprofit agency or
nonprofit agency and related entities;
(8) Has at least one financial expert serving; and
(9) Publishes and makes public the minutes of Board, or other
governing authority, meetings.
(b) In assessing the reasonableness of executive and other employee
compensation, the Committee will consider:
(1) The size and complexity of the central nonprofit agency's or
nonprofit agency's charter or mission;
(2) The mission area, geographic size, and financial condition of
the central nonprofit agency or nonprofit agency;
(3) The technical and professional qualifications required for
positions in the central nonprofit agency or nonprofit agency;
(4) Compensation packages paid at comparable central nonprofit
agencies or nonprofit agencies;
(5) The percentage of the net revenues to the central nonprofit
agency or nonprofit agency realized from the JWOD Program paid to
employees and to senior management;
(6) The extent to which the central nonprofit agency's or nonprofit
agency's executive compensation packages exceed the total compensation
offered to the typical, highest paid (excluding any retention
allowances and Presidential rank awards), senior executive service,
career Federal government employee; and
(7) For only nonprofit agencies, the median compensation package
for the nonprofit agency's direct labor hour workers and how that
median compares to the compensation packages offered to executives.
(c) Certification. (1) A central nonprofit agency must certify that
the governance standards set forth in paragraphs (a) and (b) of this
section have or have not yet been met by completing the annual
certification form (Committee Form 405) and providing the completed
form to the Committee by November 1 of each year.
(2) Qualified nonprofit agencies participating in the JWOD Program
must certify that the governance standards set forth in paragraphs (a)
and (b) of this section have or have not yet been met on the annual
certification form required by Sec. 51-4.3(a) of this chapter.
(3) Nonprofit agencies that would like to qualify for participation
in the JWOD Program must certify that the governance standards set
forth in paragraphs (a) and (b) of this section have or have not yet
been met on the initial certification form required by Sec. 51-4.2(c)
of this chapter.
(d) Violations. (1) Violations of the governance standards set
forth in paragraphs (a) and (b) of this section by
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central nonprofit agencies will be investigated by the Committee's
staff. The central nonprofit agency concerned will be afforded an
opportunity to submit a statement of facts and evidence. The Committee
staff will report its findings to the Committee, together with its
recommendation. In reviewing the case, the Committee may request the
submission of additional evidence or may conduct its own investigation.
If a central nonprofit agency fails to correct its violations of the
governance standards set forth in paragraphs (a) and (b) of this
section, the Committee, after affording the central nonprofit agency an
opportunity to address the Committee on the matter, may terminate the
central nonprofit agency's designation as a central nonprofit agency
and its eligibility to participate in the JWOD Program.
(2) Violations of the governance standards set forth in paragraphs
(a) and (b) of this section by qualified nonprofit agencies
participating in the JWOD Program will be handled in accordance with 41
CFR 51-4.5, ``Violations by nonprofit agencies,'' of this chapter.
(e) The information collection requirements set forth in this
section for central nonprofit agencies are included on Committee Form
405, which has approved by the Office of Management and Budget (OMB)
under OMB control number 3037-xxxx. The information collection
requirements set forth in this section for qualified nonprofit agencies
participating in the JWOD Program are included on Committee Forms 403
and 404, which have been approved by the Office of Management and
Budget (OMB) under OMB control numbers 3037-0001 and 3037-0002,
respectively. The information collection requirements set forth in this
section for nonprofit agencies that would like to qualify for
participation in the JWOD Program are included on Committee Forms 401
and 402, which have been approved by the Office of Management and
Budget (OMB) under OMB control numbers 3037-0004 and 3037-0003,
respectively. A Federal agency may not conduct or sponsor, and a person
is not required to respond to, a collection of information unless it
displays a currently valid OMB control number.
PART 51-3--CENTRAL NONPROFIT AGENCIES
3. Amend Sec. 51-3.2 by adding new paragraphs (o) and (p) to read
as follows:
Sec. 51-3.2 Responsibilities under the JWOD Program.
* * * * *
(o) Submit to the Committee, by November 1 of each year, a
completed copy of the Annual Certification--Central Nonprofit Agency
(Committee Form 405) covering the fiscal year ending the preceding
September 30.
(p) Comply with Committee-approved governance standards, as
provided in Sec. 51-2.10 of this chapter.
PART 51-4--NONPROFIT AGENCIES
4. Amend Sec. 51-4.3 by adding a new paragraph (b)(10) to read as
follows:
Sec. 51-4.3 Maintaining qualification.
* * * * *
(b) * * *
(10) Comply with Committee-approved governance standards, as
provided in Sec. 51-2.10 of this chapter.
* * * * *
Dated: November 5, 2004.
Leon A. Wilson, Jr.,
Executive Director, Committee for Purchase From People Who Are Blind or
Severely Disabled.
[FR Doc. 04-25233 Filed 11-10-04; 8:45 am]
BILLING CODE 6353-01-P