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General Services Administration Acquisition Regulation; Immediate and Highest Level Owner for High-Security Leased Space (2021)

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The General Services Administration Acquisition Regulation; Immediate and Highest Level Owner for High-Security Leased Space rule is a significant rule issued by the U.S. General Services Administration (GSA) effective June 30, 2021, that implemented Sections 3 and 5 of the Secure Federal Leases from Espionage and Suspicious Entanglement (LEASE) Act.[1]

HIGHLIGHTS
  • Name: General Services Administration Acquisition Regulation; Immediate and Highest Level Owner for High-Security Leased Space
  • Code of Federal Regulations: 48 CFR 501, 48 CFR 552, 48 CFR 570
  • Type of significant rule: Other significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    Background

    The Secure Federal LEASEs Act, enacted in December 2020, mandates disclosure of foreign ownership, particularly beneficial ownership, of prospective lessors of high-security leased space to federal agencies excluding the Department of Defense and the intelligence community. The Act addresses national security risks highlighted in a 2017 GAO report, requiring agencies like the General Services Administration (GSA) to modify existing leases to reflect the disclosure requirements.[1]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:[1]

    “ GSA is amending the General Services Administration Acquisition Regulation (GSAR) to implement Section 3 and Section 5 requirements of the Secure Federal Leases from Espionage and Suspicious Entanglement Act (the Act or Secure Federal LEASEs Act). The Act addresses the risks of foreign ownership of Government-leased real estate and requires the disclosure of ownership information for high-security space leased to accommodate a Federal agency.[2] ”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[1]

    “ With this rule, GSA is implementing Section 3 and Section 5 of the Act.

    Section 3—

    • Requires Federal lessees for high-security leased space to require covered entities to identify and disclose whether the owner of the leased space, including an entity involved in the financing thereof, is a foreign person or a foreign entity, including the country associated with the ownership entity, before entering into a lease agreement. Covered entities must provide Federal lessees such information—
      • when first submitting proposals in response to a solicitation for offers issued by the lessee; and
      • annually, to include the list of immediate or highest level owners of the covered entity during the preceding one-year period of occupancy.
    • Requires the Federal lessee to notify the Federal tenant in writing if such a disclosure of foreign ownership is made and consult with the tenant regarding any security concerns prior to awarding a new lease agreement.

    Section 5—

    • Requires that leases for high-security space include certain language regarding access to the high-security leased space by the covered entity and any member of the property management company.

    Section 4 of the Act requires the identification of beneficial owners of high-security leased spaces and will be addressed in a subsequent rulemaking through GSAR Case 2021-G522 and FMR Case 2021-102-1. In addition, the FAR Council has opened FAR Case 2021-005 which will implement sections 885 and 6403 of the NDAA for FY 2021 (Pub. L. 116-283) to require certain offerors to disclose beneficial ownership information in their offers for contracts over the simplified acquisition threshold.

    Finally, other agencies may need to do additional rulemaking because the GSAR only governs the contract terms and conditions for leased space procured by GSA and its delegated agencies.[2]

    		”

    Significant impact

    See also: Significant regulatory action

    Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.

    Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]


    The text of the General Services Administration Acquisition Regulation; Immediate and Highest Level Owner for High-Security Leased Space rule states that OMB deemed this rule significant, but not economically significant:

    “ This interim rule has been reviewed in accordance with E.O. 12866 Section 6(b) and determined by OMB to be a significant regulatory action.[2] ”

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Federal Register, "General Services Administration Acquisition Regulation; Immediate and Highest Level Owner for High-Security Leased Space," July 1, 2021
    2. ↑ 2.0 2.1 2.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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