[Federal Register Volume 61, Number 145 (Friday, July 26, 1996)]
[Rules and Regulations]
[Pages 39207-39210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18505]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 19 and 52
[FAC 90-40; FAR Case 94-782; Item VIII]
RIN 9000-AH08
Federal Acquisition Regulation; Small Business/Simplified
Acquisition Threshold
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: This final rule is issued pursuant to the Federal Acquisition
Streamlining Act of 1994, Public Law 103-355 (the Act). The Federal
Acquisition Regulatory Council has agreed to amend the Federal
Acquisition Regulation (FAR) to implement section 4004 of the Act. This
regulatory action was subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993,
[[Page 39208]]
but is not a major rule under 5 U.S.C. 804.
EFFECTIVE DATE: July 26, 1996.
FOR FURTHER INFORMATION CONTACT: Ms. Victoria Moss at (202) 501-4764 in
reference to this FAR case. For general information, contact the FAR
Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-40, FAR case 94-782.
SUPPLEMENTARY INFORMATION:
A. Background
The Small Business Team drafted FAR coverage to implement sections
4004, 7101(a), 7102 and 7106 of the Act. The proposed rule was
published in the Federal Register at 60 FR 2302, January 6, 1995, and
was published in the Federal Register at 60 FR 48258, September 18,
1995, as a final rule in FAR case 94-780, FAC 90-32.
In order to facilitate the issuance of the Simplified Acquisition
Threshold/Federal Acquisition Computer Network (SAT/FACNET) rule (FAR
Case 94-770), those portions of the Small Business Rule dealing with
simplified acquisitions were included in the SAT/FACNET rule and issued
as an interim rule in the Federal Register at 60 FR 34741, July 3,
1995, and finalized under that case. Those portions primarily
implemented section 4004 of the Act which reserves each contract for
the purchase of goods or services that has an anticipated value greater
than $2,500, but not greater than $100,000, for exclusive small
business participation, unless the contracting officer determines there
is no reasonable expectation of obtaining offers from two or more small
businesses that are competitive with market price, quality, and
delivery.
One of the most significant issues in this case was the
relationship between simplified acquisitions and the Small Business
Administration's (SBA's) ``nonmanufacturer rule.'' On January 31, 1996,
SBA issued a final rule in the Federal Register at 61 FR 3280 revising
its nonmanufacturer rule to provide that, where the procurement of a
manufactured item processed under the procedures set forth in FAR Part
13 is set aside for small business, and where the anticipated cost of
the procurement will not exceed $25,000, the offeror need not supply
the end product of a small business concern as long as the product
acquired is manufactured or produced in the United States (13 CFR
121.406(d)). This final rule reflects that change.
B. Regulatory Flexibility Act
The final rule is expected to have a significant impact on a
substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because it
implements changes to the SBA's regulations pertaining to the
nonmanufacturer rule. The Act created a conflict between the FAR and 13
CFR 121.906(d) which authorized a small business dealer to furnish any
domestically manufactured end product under a small business/small
purchase set-aside. Public Law 103-355 eliminated the procedures
entitled ``small business/small purchase'' and created new procedures
called ``simplified acquisitions.'' However, SBA had not revised its
regulations to recognize ``simplified acquisitions''. In preparing the
interim rule, SBA advised the drafting team that the automatic waiver
to the nonmanufacturer rule for small purchases did NOT extend to
simplified acquisitions. Consequently, the interim rule required a
small business submitting an offer on all small business set-asides to
furnish the products of small businesses unless the SBA had issued a
waiver. Since issuance of the interim rule, SBA has revisited this
issue and has issued changes to their nonmanufacturer rule. This final
rule reflects the changes issued by SBA. A Final Regulatory Flexibility
Analysis (FRFA) was prepared by the Small Business Administration under
its rule dated January 31, 1996 (61 FR 3280), and provided to the Chief
Counsel for Advocacy for the Small Business Administration.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose recordkeeping or information collection
requirements, or collections of information from offerors, contractors,
or members of the public which require the approval of the Office of
Management and Budget under 44 U.S.C. 3501, et seq.
D. Public Comments
An interim rule was published in the Federal Register at 60 FR
34741, July 3, 1995, as FAR case 94-770. In response to the notice of
proposed rulemaking, 12 responses containing 28 comments relating to
the small business coverage were received. The comments of all
respondents were considered in developing this final rule. As a result
of public comments and changes in SBA regulations, the following
significant changes have been made:
The regulation has been revised to provide that, where the
procurement of a manufactured item processed under the procedures set
forth in FAR Part 13 is set aside for small business, and where the
anticipated cost of the procurement will not exceed $25,000, the
offeror need not supply the end product of a small business concern as
long as the product acquired is manufactured or produced in the United
States.
Language in FAR Part 19 concerning acquisitions reserved for small
businesses was expanded.
List of Subjects in 48 CFR Parts 19 and 52
Government procurement.
Dated: July 16, 1996.
Edward C. Loeb,
Deputy Project Manager for the Implementation of the Federal
Acquisition Streamlining Act of 1994.
Therefore, 48 CFR Parts 19 and 52 are amended as set forth below:
1. The authority citation for 48 CFR Parts 19 and 52 continues to
read as follows:
-Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 19--SMALL BUSINESS PROGRAMS-
2. Section 19.102 is amended in the first sentence of paragraph
(f)(1) by removing ``(f)(2) through (f)(5)'' and inserting ``(f)(4)
through (f)(7)'' in its place; revising (f)(4); and adding (f)(7) to
read as follows:
19.102 Size standards.
* * * * *-
(f) * * *-
(4) In the case of acquisitions set aside for small business or
awarded under section 8(a) of the Small Business Act, when the
acquisition is for a specific product (or a product in a class of
products) for which the SBA has determined that there are no small
business manufacturers or processors in the Federal market, then the
SBA may grant a class waiver so that a nonmanufacturer does not have to
furnish the product of a small business. For the most current listing
of classes for which SBA has granted a waiver, contact an SBA Office of
Government Contracting. A listing is also available in the SBA's
Procurement Automated Source System (PASS) and on SBA's Internet
Homepage at http://www.sbaonline.sba.gov/GC/nonmanuf.html. Contracting
officers may request that the SBA waive the
[[Page 39209]]
nonmanufacturer rule for a particular class of products.
* * * * *-
(7) The SBA provides for an exception to the nonmanufacturer rule
where the procurement of a manufactured item processed under the
procedures set forth in part 13 is set aside for small business and
where the anticipated cost of the procurement will not exceed $25,000.
In those procurements, the offeror need not supply the end product of a
small business concern as long as the product acquired is manufactured
or produced in the United States.
* * * * *
3. Section 19.502-2 is amended by revising paragraphs (a) and (c);
and in the first sentence of (b)(2) by removing the ``s'' in the word
``awards'', and in the third sentence of paragraph (b)(2) by removing
``the item'' and inserting ``an item'' in its place. The revised text
reads as follows:
19.502-2 Total set-asides.-
(a) Each acquisition of supplies or services that has an
anticipated dollar value exceeding $2,500, but not over $100,000, is
automatically reserved exclusively for small business concerns and
shall be set aside unless the contracting officer determines there is
not a reasonable expectation of obtaining offers from two or more
responsible small business concerns that are competitive in terms of
market prices, quality, and delivery. If the contracting officer does
not proceed with the small business set-aside and purchases on an
unrestricted basis, the contracting officer shall include in the
contract file the reason for this unrestricted purchase. If the
contracting officer receives only one acceptable offer from a
responsible small business concern in response to a set-aside, the
contracting officer should make an award to that firm. If the
contracting officer receives no acceptable offers from responsible
small business concerns, the set-aside shall be withdrawn and the
requirement, if still valid, shall be resolicited on an unrestricted
basis. The small business reservation does not preclude the award of a
contract with a value not greater than $100,000 under subpart 19.8,
Contracting with the Small Business Administration, or under
19.1006(c), Emerging small business set-aside.
* * * * * -
(c) For set-asides other than for construction or services, any
concern proposing to furnish a product which it did not itself
manufacture must furnish the product of a small business manufacturer
unless the SBA has granted either a waiver or exception to the
nonmanufacturer rule (see 19.102(f)). In industries where the SBA finds
that there are no small business manufacturers, it may issue a waiver
to the nonmanufacturer rule (see 19.102(f) (4) and (5)). In addition,
SBA has excepted procurements processed under simplified acquisition
procedures (see part 13), where the anticipated cost of the procurement
will not exceed $25,000, from the nonmanufacturer rule. Waivers permit
small businesses to provide any firm's product. The exception permits
small businesses to provide any domestic firm's product. In both of
these cases, the contracting officer's determination in paragraph
(b)(1) of this subsection or the decision not to set aside a
procurement reserved for small business under paragraph (a) of this
subsection will be based on the expectation of receiving offers from at
least two responsible small businesses, including nonmanufacturers,
offering the products of different concerns.
* * * * *
4. Section 19.508 is amended in paragraphs (c) and (d) by revising
the second sentences to read as follows:
19.508 Solicitation provisions and contract clauses.
* * * * *-
(c) * * * The clause at 52.219-6 with its Alternate I will be used
when the acquisition is for a product in a class for which the Small
Business Administration has waived the nonmanufacturer rule (see
19.102(f) (4) and (5)).-
(d) * * * The clause at 52.219-7 with its Alternate I will be used
when the acquisition is for a product in a class for which the Small
Business Administration has waived the nonmanufacturer rule (see
19.102(f) (4) and (5)).
* * * * *-
5. Section 19.811-3 is amended by revising paragraph (d)(3) to read
as follows:
19.811-3 Contract clauses.
* * * * *-
(d) * * *-
(3) The clause at 52.219-18 with its Alternate III will be used
when the acquisition is for a product in a class for which the Small
Business Administration has waived the nonmanufacturer rule (see
19.102(f) (4) and (5)).
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES-
4. Section 52.219-6 is amended by revising the introductory text,
the clause date, and paragraph (c) to read as follows:
52.219-6 Notice of Total Small Business Set-Aside.-
As prescribed in 19.508(c), insert the following clause:
NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE (JUL 1996)
* * * * *-
(c) Agreement. A small business concern submitting an offer in
its own name agrees to furnish, in performing the contract, only end
items manufactured or produced by small business concerns in the
United States. The term ``United States'' includes its territories
and possessions, the Commonwealth of Puerto Rico, the Trust
Territory of the Pacific Islands, and the District of Columbia. If
this procurement is processed under simplified acquisition
procedures and the total amount of this contract does not exceed
$25,000, a small business concern may furnish the product of any
domestic firm. This paragraph does not apply in connection with
construction or service contracts.
* * * * *
(End of clause)-
5. Section 52.219-7 is amended by revising the clause date and
paragraph (c) to read as follows:
52.219-7 Notice of Partial Small Business Set-Aside.
* * * * *
NOTICE OF PARTIAL SMALL BUSINESS SET-ASIDE (JUL 1996)
* * * * *-
(c) Agreement. For the set-aside portion of the acquisition, a
small business concern submitting an offer in its own name agrees to
furnish, in performing the contract, only end items manufactured or
produced by small business concerns in the United States. The term
``United States'' includes its territories and possessions, the
Commonwealth of Puerto Rico, the Trust Territory of the Pacific
Islands, and the District of Columbia. If this procurement is
processed under simplified acquisition procedures and the total
amount of this contract does not exceed $25,000, a small business
concern may furnish the product of any domestic firm. This paragraph
does not apply in connection with construction or service contracts.
* * * * *
(End of clause)-
6. Section 52.219-18 is amended in the clause by revising the date
and paragraph (d)(1); and in Alternate III by revising the date to read
``(JUL 1996)'' and removing the phrase ``paragraph (d)'' and inserting
``subparagraph (d)(1)'' in its place. The revised text reads as
follows:
[[Page 39210]]
52.219-18 Notification of Competition Limited to Eligible 8(a)
Concerns.
* * * * *
NOTIFICATION OF COMPETITION LIMITED TO ELIGIBLE 8(a) CONCERNS (JUL
1996)
* * * * *-
(d)(1) Agreement. A small business concern submitting an offer
in its own name agrees to furnish, in performing the contract, only
end items manufactured or produced by small business concerns in the
United States. The term ``United States'' includes its territories
and possessions, the Commonwealth of Puerto Rico, the Trust
Territory of the Pacific Islands, and the District of Columbia. If
this procurement is processed under simplified acquisition
procedures and the total amount of this contract does not exceed
$25,000, a small business concern may furnish the product of any
domestic firm. This subparagraph does not apply in connection with
construction or service contracts.
* * * * *
[FR Doc. 96-18505 Filed 7-25-96; 8:45 am]
BILLING CODE 6820-EP-P
