[Federal Register Volume 63, Number 125 (Tuesday, June 30, 1998)]
[Rules and Regulations]
[Pages 35719-35726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17197]
Federal Register / Vol. 63, No. 125 / Tuesday, June 30, 1998 / Rules
and Regulations
[[Page 35719]]
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 12, 14, 15, 19, 33, and 52
[FAC 97-06; FAR Case 97-004A]
RIN 9000-AH59
Federal Acquisition Regulation; Reform of Affirmative Action in
Federal Procurement
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Interim rule with request for comment.
-----------------------------------------------------------------------
SUMMARY: The Department of Defense, the General Services
Administration, and the National Aeronautics and Space Administration
have agreed to issue Federal Acquisition Circular 97-06, as an interim
rule to make amendments to the Federal Acquisition Regulation (FAR)
concerning programs for small disadvantaged business (SDB) concerns.
These amendments conform to a Department of Justice (DoJ) proposal to
reform affirmative action in Federal procurement. DoJ's proposal is
designed to ensure compliance with the constitutional standards
established by the Supreme Court in Adarand Constructors, Inc. v. Pena,
115 S. Ct. 2097 (1995). This regulatory action was subject to Office of
Management and Budget review under Executive Order 12866, dated
September 30, 1993. This is a major rule under 5 U.S.C. 804.
DATES: Effective Date: October 1, 1998.
Applicability Date: The policies, provisions, and clauses of this
interim rule are effective for all solicitations issued on or after
October 1, 1998.
Comment Date: Comments should be submitted to the FAR Secretariat
at the address shown below on or before August 31, 1998 to be
considered in the formulation of a final rule.
ADDRESSES: Interested parties should submit written comments to:
General Services Administration, FAR Secretariat (MVR), 1800 F Street,
NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405.
E-Mail comments submitted over the Internet should be addressed to:
[email protected]
Please cite FAC 97-06, FAR case 97-004A in all correspondence
related to this case.
FOR FURTHER INFORMATION CONTACT:
Ms. Victoria Moss, Procurement Analyst, Federal Acquisition Policy
Division, General Services Administration, 1800 F Street NW, Washington
DC 20405, Telephone: (202) 501-4764
or
Mr. Mike Sipple, Procurement Analyst, Contract Policy and
Administration, Director, Defense Procurement, Department of Defense,
3060 Defense Pentagon, Washington DC 20301-3060, Telephone: (703) 695-
8567.
For general information call the FAR Secretariat at (202) 501-4755.
SUPPLEMENTARY INFORMATION:
A. Background
In Adarand, the Supreme Court extended strict judicial scrutiny to
Federal affirmative action programs that use racial or ethnic criteria
as a basis for decisionmaking. In procurement, this means that any use
of race in the decision to award a contract is subject to strict
scrutiny. Under strict scrutiny, any Federal programs that make race a
basis for contract decisionmaking must be narrowly tailored to serve a
compelling Government interest.
DoJ developed a proposed structure to reform affirmative action in
Federal procurement designed to ensure compliance with the
constitutional standards established by the Supreme Court in Adarand.
The DoJ proposal was published in the Federal Register for public
notice and invitation for comments at 61 FR 26042, May 23, 1996. The
DoJ model is expected to be implemented in several parts: revisions to
the FAR and the FAR supplements; Small Business Administration (SBA)
regulations; and procurement mechanisms and applicable factors
(percentages) determined by the Department of Commerce (DoC). The SBA
regulations were published for public comment on August 14, 1997 (62 FR
23584). This interim rule contains certain FAR revisions. On May 9,
1997, proposed amendments to the FAR, based on the DoJ Model, were
published as a proposed rule in the Federal Register (62 FR 25786). All
public comments received in response to the proposed rule were
considered in the formulation of this interim rule. 143 letters
containing approximately 222 comments were received in response to the
proposed rule. The following significant changes were made to the rule
based on the comments received:
1. Changes were made to conform it to the regulations issued by the
Small Business Administration. These changes include conforming protest
and appeal and certification procedures in the FAR to those prescribed
by SBA.
2. Clarifying that the annual DoC determination of procurement
mechanisms shall only affect solicitations that are issued on or after
the effective date of the DoC determination.
3. Clarifying that any decisions to limit use of the mechanisms
because of a finding of undue burden will not affect on-going
acquisitions.
4. Clarifying that an individual or business concern need only
provide supporting rationale in a request for an undue burden
determination.
5. Clarifying that fair market price under the price evaluation
adjustment shall be determined in accordance with the procedures in
15.404-1(b) (referenced in 19.202-6).
6. Removing the prohibition against use of the price evaluation
adjustment for acquisitions under the Competitiveness Demonstration
Program.
7. Revising the provisions at 52.212-3 and 52.219-1, and the clause
at 52.219-23 to facilitate their use by all agencies.
Other changes have been made to make the rule effective at the
earliest practicable date, taking account of the time required for SBA
to determine eligibility of SDB firms. This rule implements the price
evaluation adjustment for SDB concerns. It is anticipated that coverage
pertaining to the SDB participation program will be issued 1 day
following publication of this rule under FAR Case 97-004B.
B. Regulatory Flexibility Act
These changes may 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 through the
rule small business concerns may be provided benefits in Federal
contracting. An Initial Regulatory Flexibility Analysis (IRFA) was
prepared and submitted to the Chief Counsel for Advocacy of the Small
Business Administration (SBA). A summary of the IRFA was published
along with the FAR proposed rule in the Federal Register at 62 FR
25786, May 9, 997. The economic impact associated with certification
and associated costs, as well as other program requirements addressed
in the SBA's changes to 13 CFR Parts 121, 124, and 134 have been
addressed in analyses prepared by the SBA. The following information is
provided to update the IRFA related to this FAR interim rule:
This interim rule would establish in the FAR a procurement
mechanism benefiting
[[Page 35720]]
small disadvantaged businesses (SDBs). The mechanism is a price
evaluation adjustment of up to ten percent in certain Standard
Industrial Classification (SIC) Major Groups as determined by the
Department of Commerce. This price evaluation adjustment would be
mandatory for those competitive procurements to which it applied. It
would not, however, apply to several major categories of
acquisition, including, for example, acquisitions within the
simplified acquisition threshold, acquisitions set aside for small
business, and acquisitions conducted pursuant to the 8(a) program.
The main impact of the rule is expected to be on SDBs seeking to
obtain contracts from Federal government agencies. The best
available estimate of the number of such firms is 30,000. The basis
for this estimate is the IRFA prepared by SBA addressing the changes
to 13 CFR Parts 121, 124, and 134. The anticipated costs for
certification and protest and appeal procedures are addressed in
SBA's IRFA. The primary impact of this interim rule is expected to
be the increase in contract awards to qualified firms and a
corresponding decrease in contract awards to firms that are not
qualified as SDBs.
Within the constraints imposed by the need to implement the DoJ-
proposed reforms, the rule was crafted throughout to select
alternatives that would minimize any adverse economic impact on
small business.
A copy of the IRFA may be obtained from the FAR Secretariat.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies
because the interim rule contains reporting and recordkeeping
requirements. Requests for approval of new information collection
requirements were submitted to the Office of Management and Budget
under 44 U.S.C. 3501, et seq. The information collections required by
this rule were approved under clearance 9000-0150 through June 30,
2000. Public comments concerning this request were invited through a
Federal Register notice published on May 9, 1997. No comments were
received.
D. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense (DOD), the Administrator of General Services (GSA), and the
Administrator of the National Aeronautics and Space Administration
(NASA) that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. This action
is necessary to conform the FAR to the model program designed by the
Department of Justice to ensure compliance with Constitutional
standards established by the Supreme Court and, thereby, avoid
unnecessary litigation. A proposed FAR rule on this subject was
published for public comment at 62 FR 25786 on May 9, 1997. As a result
of public comments received in response to the proposed rule, changes
have been made to the rule. This interim rule would qualify for
publication as a final rule; however, further public comments are
requested. Pursuant to Public Law 98-577 and FAR 1.501, public comments
received in response to this interim rule will be considered in the
formation of the final rule.
List of Subjects in 48 CFR Parts 1, 12, 14, 15, 19, 33, and 52
Government procurement.
Dated: June 23, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Federal Acquisition Circular--FAC 97-06
Federal Acquisition Circular (FAC) 97-06 is issued under the
authority of the Secretary of Defense, the Administrator of General
Services, and the Administrator for the National Aeronautics and
Space Administration.
The policies, provisions, and clauses of this interim rule are
effective for all solicitations issued on or after October 1, 1998.
Dated: June 17, 1998.
R.D. Kerrins,
Col., USA, Dep Director, Defense Procurement.
Dated: June 16, 1998.
Ida M. Ustad,
Deputy Associate Administrator, Office of Acquisition Policy, General
Services Administrator, Office of Acquisition Policy, General Services
Administration.
Dated: June 17, 1998.
Deidre A. Lee,
Associate Administrator for Procurement, NASA.
Therefore, 48 CFR Parts 1, 12, 14, 15, 19, 33, and 52 are amended
as set forth below:
1. The authority citation for 48 CFR Parts 1, 12, 14, 15, 19, 33,
and 52 continues to read as follows:
Authority: 41 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM
2. Section 1.106 is amended in the table following the introductory
paragraph by adding, in numerical order, the following entries:
1.106 OMB approval under the Paperwork Reduction Act.
* * * * *
------------------------------------------------------------------------
OMB control
FAR segment No.
------------------------------------------------------------------------
* * * * *
52.219-22............................................... 9000-0150
52.219-23............................................... 9000-0150
* * * * *
------------------------------------------------------------------------
PART 12--ACQUISITION OF COMMERCIAL ITEMS
3. Section 12.301 is amended by revising paragraph (b)(2) to read
as follows:
12.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(b) * * *
(2) The provision at 52.212-3, Offeror Representations and
Certifications-Commercial Items. This provision provides a single,
consolidated list of certifications and representations for the
acquisition of commercial items and is attached to the solicitation for
offerors to complete and return with their offer. This provision may
not be tailored except in accordance with Subpart 1.4. Use the
provision with its Alternate I in solicitations issued by DoD, NASA, or
the Coast Guard that are expected to exceed the threshold at 4.601(a);
* * * * *
4. Section 12.303(b)(1) is revised to read as follows:
12.303 Contract format.
* * * * *
(b) * * *
(1) Block 10 if a price evaluation adjustment for small
disadvantaged business concerns is applicable (the contracting officer
shall indicate the percentage(s) and applicable line item(s)), or if
set aside for emerging small businesses;
* * * * *
PART 14--SEALED BIDDING
5. The section heading for 14.206 is revised to read as set forth
below.
14.206 Small business set-asides and price evaluation adjustments for
small disadvantaged business concerns.
6. Section 14.502 is amended by redesignating paragraph (b)(4) as
(b)(5) and adding a new (b)(4) to read as follows:
14.502 Conditions for use.
* * * * *
(b) * * *
[[Page 35721]]
(4) The use of the price evaluation adjustment for small
disadvantaged business concerns (see Subpart 19.11).
* * * * *
PART 15--CONTRACTING BY NEGOTIATION
7. Section 15.503 is amended by revising paragraph (a)(2) to read
as follows:
15.503 Notifications to unsuccessful offerors.
(a) * * *
(2) Preaward notices for small business programs. In addition to
the notice in paragraph (a)(1) of this section, when using a small
business set-aside (see Subpart 19.5), or when a small disadvantaged
business concern receives a benefit based on its disadvantaged status
(see Subpart 19.11) and is the apparently successful offeror, upon
completion of negotiations and determinations of responsibility, and
completion of the process in 19.304(d), if necessary, but prior to
award, the contracting officer shall notify each offeror in writing of
the name and address of the apparently successful offeror. The notice
shall also state that the Government will not consider subsequent
revisions of the offeror's proposal; and no response is required unless
a basis exists to challenge the disadvantaged status and/or small
business size status of the apparently successful offeror. The notice
is not required when the contracting officer determines in writing that
the urgency of the requirement necessitates award without delay or when
the contract is entered into under the 8(a) program (see 19.805-2).
* * * * *
PART 19--SMALL BUSINESS PROGRAMS
8. Section 19.000 is amended by revising the introductory text of
paragraph (a); at the end of (a)(6) by removing ``and''; at the end of
(a)(7) by removing the period and inserting''; and''; and by adding
paragraph (a)(8) to read as follows:
19.000 Scope of part.
(a) This part implements the acquisition-related sections of the
Small Business Act (15 U.S.C. 631, et seq.), applicable sections of the
Armed Services Procurement Act (10 U.S.C. 2302, et seq.), the Federal
Property and Administrative Services Act (41 U.S.C. 252), section 7102
of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-
355), 10 U.S.C. 2323, and Executive Order 12138, May 18, 1979. It
covers--
* * * * *
(8) The use of a price evaluation adjustment for small
disadvantaged business concerns.
* * * * *
9. Section 19.001 is amended in the definition of ``Small
disadvantaged business concern'' by revising its introductory
paragraph; by redesignating paragraphs (a) and (b) introductory text as
(a)(1) and (a)(2) introductory text; (b)(1), (b)(2), and (b)(3) as
(a)(2)(i), (a)(2)(ii), and (a)(2)(iii); and (c) and (d) as (a)(3) and
(a)(4); and by adding paragraphs (a) introductory text and (b) to read
as follows:
19.001 Definitions.
* * * * *
Small disadvantaged business concern, as used in this part, means--
(a) For subcontractors, a small business concern that is at least
51 percent unconditionally owned by one or more individuals who are
both socially and economically disadvantaged, or a publicly owned
business that has at least 51 percent of its stock unconditionally
owned by one or more socially and economically disadvantaged
individuals and that has its management and daily business controlled
by one or more such individuals. This term also means a small business
concern that is at least 51 percent unconditionally owned by an
economically disadvantaged Indian tribe or Native Hawaiian
Organization, or a publicly owned business that has at least 51 percent
of its stock unconditionally owned by one of these entities, that has
its management and daily business controlled by members of an
economically disadvantaged Indian tribe or Native Hawaiian
Organization, and that meets the requirements of 13 CFR 124.
* * * * *
(b) For prime contractors, (except for 52.212-3(c)(2) and 52.219-
1(b)(2) for general statistical purposes and 52.212-3(c)(7)(ii),
52.219-22(b)(2), and 52.219-23(a) for joint ventures under the price
evaluation adjustment for small disadvantaged business concerns) an
offeror that represents, as part of its offer, that it is a small
business under the size standard applicable to the acquisition; and
either--
(1) It has received certification from the Small Business
Administration as a small disadvantaged business concern consistent
with 13 CFR 124, Subpart B, and
(i) No material change in disadvantaged ownership and control has
occurred since its certification;
(ii) Where the concern is owned by one or more disadvantaged
individuals, the net worth of each individual upon whom the
certification is based does not exceed $750,000 after taking into
account the applicable exclusions set forth at 13 CFR 124.104(c)(2);
and
(iii) It is listed, on the date of its representation, on the
register of small disadvantaged business concerns maintained by the
Small Business Administration; or
(2) It has submitted a completed application to the Small Business
Administration or a Private Certifier to be certified as a small
disadvantaged business concern in accordance with 13 CFR 124, Subpart
B, and a decision on that application is pending, and that no material
change in disadvantaged ownership and control has occurred since its
application was submitted. In this case, a contractor must receive
certification as an SDB by the SBA prior to contract award.
10. Section 19.201 is amended by redesignating paragraphs (b), (c),
and (d) as (c), (d), and (e), respectively; and by adding new
paragraphs (b) and (f) to read as follows:
19.201 General policy.
* * * * *
(b) The Department of Commerce will determine on an annual basis,
by Major Groups as contained in the Standard Industrial Classification
(SIC) manual, and region, if any, the authorized small disadvantaged
business (SDB) procurement mechanisms and applicable factors
(percentages). The Department of Commerce determination shall only
affect solicitations that are issued on or after the effective date of
the determination. The effective date of the Department of Commerce
determination shall be no less than 60 days after its publication date.
The Department of Commerce determination shall not affect ongoing
acquisitions. The Department of Commerce determination shall include
the applicable factors, by SIC Major Group, to be used in the price
evaluation adjustment for SDB concerns (see 19.1104). The authorized
procurement mechanisms shall be applied consistently with the policies
and procedures in this subpart. The agencies shall apply the SDB
procurement mechanisms determined by the Department of Commerce. The
Department of Commerce, in making its determination, is not limited to
the price evaluation adjustment for SDB concerns where the Department
of Commerce has found substantial and persuasive evidence of--
[[Page 35722]]
(1) A persistent and significant underutilization of minority firms
in a particular industry, attributable to past or present
discrimination; and
(2) A demonstrated incapacity to alleviate the problem by using
those mechanisms.
* * * * *
(f)(1) Each agency shall designate, at levels it determines
appropriate, personnel responsible for determining whether, in order to
achieve the contracting agency's goal for SDB concerns, the use of the
SDB mechanism in Subpart 19.11 has resulted in an undue burden on non-
SDB firms in one of the major industry groups and regions identified by
Department of Commerce following paragraph (b) of this section, or is
otherwise inappropriate. Determinations under this subpart are for the
purpose of determining future acquisitions and shall not affect ongoing
acquisitions. Requests for a determination, including supporting
rationale, may be submitted to the agency designee. If the agency
designee makes an affirmative determination that the SDB mechanism has
an undue burden or is otherwise inappropriate, the determination shall
be forwarded through agency channels to the OFPP, which shall review
the determination in consultation with the Department of Commerce and
the Small Business Administration. At a minimum, the following
information should be included in any submittal:
(i) A determination of undue burden or other inappropriate effect,
including proposed corrective action.
(ii) The SIC Major Group affected.
(iii) Supporting information to justify the determination,
including, but not limited to, dollars and percentages of contracts
awarded by the contracting activity under the affected SIC Major Group
for the previous two fiscal years and current fiscal year to date for--
(A) Total awards;
(B) Total awards to SDB concerns;
(C) Awards to SDB concerns awarded contracts under the SDB price
evaluation adjustment where the SDB concerns would not otherwise have
been the successful offeror;
(D) Number of successful and unsuccessful SDB offerors; and
(E) Number of successful and unsuccessful non-SDB offerors.
(iv) A discussion of the pertinent findings, including any
peculiarities related to the industry, regions or demographics.
(v) A discussion of other efforts the agency has undertaken to
ensure equal opportunity for SDBs in contracting with the agency.
(2) After consultation with OFPP, or if the agency does not receive
a response from OFPP within 90 days after notice is provided to OFPP,
the contracting agency may limit the use of the SDB mechanism in
Subpart 19.11 until the Department of Commerce determines the updated
price evaluation adjustment, as required by this section. This
limitation shall not apply to solicitations that already have been
synopsized.
11. Section 19.202-6 is amended by revising the introductory
paragraph and paragraph (a) to read as follows:
19.202-6 Determination of fair market price.
Agencies shall determine the fair market price as follows:
(a) For total and partial small business set-aside contracts and
contracts utilizing the price evaluation adjustment for small
disadvantaged business concerns, the fair market price shall be the
price achieved in accordance with the reasonable price guidelines in
15.404-1(b).
* * * * *
Subpart 19.3--Determination of Status as a Small Disadvantaged
Business Concern or a Small Business Concern
12. The heading for Subpart 19.3 is revised to read as set forth
above.
13. Section 19.302 is amended at the end of the introductory text
of paragraph (d) by adding the following sentence:
19.302 Protesting a small business representation.
* * * * *
(d) * * * SBA's regulations on timeliness related to protests of
disadvantaged status are contained in 13 CFR 124, Subpart B.
19.304 [Redesignated as 19.306]
14a. Section 19.304 is redesignated as 19.306.
14b. New sections 19.304 and 19.305 are added to read as follows:
19.304 Disadvantaged business status.
(a) To be eligible to receive a benefit as a prime contractor based
on its disadvantaged status, a concern, at the time of its offer, must
either be certified as a small disadvantaged business (SDB) concern or
have a completed SDB application pending at the SBA or a Private
Certifier (see 19.001).
(b) The contracting officer may accept an offeror's representation
that it is an SDB concern for general statistical purposes. The
provision at 52.219-1, Small Business Program Representations, or
52.212-3(c)(2), Offeror Representations and Certifications-Commercial
Items, is used to collect SDB data for general statistical purposes.
(c) The provision at 52.219-22, Small Disadvantaged Business
Status, or 52.212-3(c)(7), Offeror Representations and Certifications--
Commercial Items, is used to obtain SDB status when the prime
contractor may receive a benefit based on its disadvantaged status. The
mechanism that may provide benefits on the basis of disadvantaged
status as a prime contractor is a price evaluation adjustment for SDB
concerns (see Subpart 19.11).
(1) If the apparently successful offeror has represented that it is
currently certified as an SDB, the contracting officer may confirm that
the concern is listed on the SBA's register by accessing the list at
http://www.sba.gov or by contacting the SBA's Office of Small
Disadvantaged Business Certification and Eligibility.
(2) If the apparently successful offeror has represented that its
SDB application is pending at the SBA or a Private Certifier, and its
position as the apparently successful offeror is due to the application
of the price evaluation adjustment, the contracting officer shall
follow the procedure in paragraph (d) of this section.
(d) Notifications to SBA of potential awards to offerors with
pending SDB applications. (1) The contracting officer shall notify the
Small Business Administration Assistant Administrator for SDBCE 409
Third Street, SW Washington, DC 20416. The notification shall contain
the name of the apparently successful offeror, and the names of any
other offerors that have represented that their applications for SDB
status are pending at the SBA or a Private Certifier and that could
receive the award due to the application of a price evaluation
adjustment if the apparently successful offeror is determined not to be
an SDB by the SBA.
(2) The SBA will, within 15 calendar days after receipt of the
notification, determine the disadvantaged status of the apparently
successful offeror and, as appropriate, any other offerors referred by
the contracting officer and will notify the contracting officer.
(3) If the contracting officer does not receive an SBA
determination within 15 calendar days after the SBA's receipt of the
notification, the contracting officer shall presume that the apparently
successful offeror, and any other offerors referred by the contracting
officer, are not disadvantaged, and shall make award accordingly,
unless the contracting officer grants an extension to the 15-day
response period. No
[[Page 35723]]
written determination is required for the contracting officer to make
award at any point following the expiration of the 15-day response
period.
(4) When the contracting officer makes a written determination that
award must be made to protect the public interest, the contracting
officer may proceed to contract award without notifying SBA or before
receiving a determination of SDB status from SBA during the 15-day
response period. In both cases, the contracting officer shall presume
that the apparently successful offeror, or any other offeror referred
to the SBA whose SDB application is pending, is not an SDB and shall
make award accordingly.
19.305 Protesting a representation of disadvantaged business status.
(a) This section applies to protests of a small business concern's
disadvantaged status as a prime contractor. Protests of a small
business concern's disadvantaged status as a subcontractor are
processed under 19.703(a)(2). Protests of a concern's size as a prime
contractor are processed under 19.302. Protests of a concern's size as
a subcontractor are processed under 19.703(b). An offeror, the
contracting officer, or the SBA may protest the apparently successful
offeror's representation of disadvantaged status if the concern is
eligible to receive a benefit based on its disadvantaged status (see
Subpart 19.11).
(b) An offeror, excluding an offeror determined by the contracting
officer to be non-responsive or outside the competitive range, or an
offeror that SBA has previously found to be ineligible for the
requirement at issue, may protest the apparently successful offeror's
representation of disadvantaged status by filing a protest in writing
with the contracting officer. SBA regulations concerning protests are
contained in 13 CFR 124, Subpart B. The protest--
(1) Must be filed within the times specified in 19.302(d)(1); and
(2) Must contain specific facts or allegations supporting the basis
of protest.
(c) The contracting officer or the SBA may protest in writing a
concern's representation of disadvantaged status at any time following
bid opening or notification of intended award.
(1) If a contracting officer's protest is based on information
provided by a party ineligible to protest directly or ineligible to
protest under the timeliness standard, the contracting officer must be
persuaded by the evidence presented before adopting the grounds for
protest as his or her own.
(2) The SBA may protest a concern's representation of disadvantaged
status by filing directly with its Assistant Administrator for Small
Disadvantaged Business Certification and Eligibility and notifying the
contracting officer.
(d) The contracting officer shall return premature protests to the
protestor. A protest is considered to be premature if it is submitted
before bid opening or notification of intended award. SBA normally will
not consider a postaward protest. SBA may consider a postaward protest
in its discretion where it determines that an SDB determination after
award is meaningful (e.g., where the contracting officer agrees to
terminate the contract if the protest is sustained).
(e) Upon receipt of a protest that is not premature, the
contracting officer shall withhold award and forward the protest to
Small Business Administration, Assistant Administrator for SDBCE, 409
Third Street, SW, Washington, DC 20416. The contracting officer shall
send to SBA--
(1) The written protest and any accompanying materials;
(2) The date the protest was received;
(3) A copy of the protested concern's representation as a small
disadvantaged business, and the date of such representation; and
(4) The date of bid opening or date on which notification of the
apparently successful offeror was sent to unsuccessful offerors.
(f) When the contracting officer makes a written determination that
award must be made to protect the public interest, award may be made
notwithstanding the protest.
(g) The SBA Assistant Administrator for Small Disadvantaged
Business Certification and Eligibility will notify the protestor and
the contracting officer of the date the protest was received and
whether it will be processed or dismissed for lack of timeliness or
specificity. For protests that are not dismissed, the SBA will, within
15 working days after receipt of the protest, determine the
disadvantaged status of the challenged offeror and will notify the
contracting officer, the challenged offeror, and the protestor. Award
may be made on the basis of that determination. The determination is
final for purposes of the instant acquisition, unless it is appealed
and--
(1) The contracting officer receives the SBA's decision on the
appeal before award; or
(2) The contracting officer has agreed to terminate the contract,
as appropriate, based on the outcome of the appeal (see 13 CFR 124,
Subpart B).
(h) If the contracting officer does not receive an SBA
determination within 15 working days after the SBA's receipt of the
protest, the contracting officer shall presume that the challenged
offeror is disadvantaged and may award the contract, unless the SBA
requests and the contracting officer grants an extension to the 15-day
response period.
(i) An SBA determination may be appealed by--
(1) The party whose protest has been denied;
(2) The concern whose status was protested; or
(3) The contracting officer.
(j) The appeal must be filed with the SBA's Administrator or
designee within five working days after receipt of the determination.
If the contracting officer receives the SBA's decision on the appeal
before award, the decision shall apply to the instant acquisition. If
the decision is received after award, it will not apply to the instant
acquisition (but see paragraph (g)(2) of this section).
15. Newly redesignated 19.306 is amended in paragraph (a) by adding
a sentence at the end of the paragraph; and by redesignating paragraph
(b) as (c) and adding a new paragraph (b) to read as follows:
19.306 Solicitation provision and contract clause.
(a) * * * The provision shall be used with its Alternate I in
solicitations issued by DoD, NASA, or the Coast Guard that are expected
to exceed the threshold at 4.601(a).
(b) The contracting officer shall insert the provision at 52.219-
22, Small Disadvantaged Business Status, in solicitations that include
the clause at 52.219-23, Notice of Price Evaluation Adjustment for
Small Disadvantaged Business Concerns.
* * * * *
16. Subpart 19.11, consisting of sections 19.1101 through 19.1104,
is added to read as follows:
Subpart 19.11--Price Evaluation Adjustment for Small Disadvantaged
Business Concerns
Sec.
19.1101 General.
19.1102 Applicability.
19.1103 Procedures.
19.1104 Solicitation provisions and contract clauses.
Authority: 41 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
[[Page 35724]]
Subpart 19.11--Price Evaluation Adjustment for Small Disadvantaged
Business Concerns
19.1101 General.
A price evaluation adjustment for small disadvantaged business
concerns shall be applied as determined by the Department of Commerce
(see 19.201(b)). Joint ventures may qualify provided the requirements
set forth in 13 CFR 124.1002(f) are met.
19.1102 Applicability.
(a) The price evaluation adjustment shall be used in competitive
acquisitions.
(b) The price evaluation adjustment shall not be used in
acquisitions that--
(1) Are not greater than the simplified acquisition threshold;
(2) Are awarded pursuant to the 8(a) program; or
(3) Are set aside for small business concerns.
19.1103 Procedures.
(a) Give offers from small disadvantaged business concerns a price
evaluation adjustment by adding the factor determined by the Department
of Commerce to all offers, except--
(1) Offers from small disadvantaged business concerns that have not
waived the evaluation adjustment;
(2) Otherwise successful offers of eligible products under the
Trade Agreements Act when the acquisition equals or exceeds the dollar
threshold in 25.402;
(3) Otherwise successful offers where application of the factor
would be inconsistent with a Memorandum of Understanding or other
international agreement with a foreign government;
(4) For DOD, NASA, and Coast Guard acquisitions, otherwise
successful offers from historically black colleges and universities or
minority institutions; or
(5) For DOD acquisitions, otherwise successful offers of qualifying
country end products (see DFARS 225.000-70 and 252.225-7001).
(b) Apply the factor on a line item basis or apply it to any group
of items on which award may be made. Add other evaluation factors such
as transportation costs or rent-free use of Government facilities to
the offers before applying the price evaluation adjustment.
(c) Do not evaluate offers using the price evaluation adjustment
when it would cause award, as a result of this adjustment, to be made
at a price that exceeds fair market price by more than the factor as
determined by the Department of Commerce (see 19.202-6(a)).
19.1104 Solicitation provisions and contract clauses.
The contracting officer shall insert the clause at 52.219-23,
Notice of Price Evaluation Adjustment for Small Disadvantaged Business
Concerns, in solicitations and contracts when the circumstances in
19.1102 apply. The contracting officer shall insert the authorized
price evaluation adjustment factor. The clause shall be used with its
Alternate I when the contracting officer determines that there are no
small disadvantaged business manufacturers that can meet the
requirements of the solicitation.
PART 33--PROTESTS, DISPUTES, AND APPEALS
17. Section 33.102 is amended in paragraph (a) by revising the last
sentence to read as follows:
33.102 General.
(a) * * * (See 19.302 for protests of small business status, and
19.305 for protests of disadvantaged business status.)
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
18. Section 52.212-3 is amended by revising the date of the
provision; removing the definition of ``Small disadvantaged business
concern''; revising paragraph (c)(2); adding (c)(7); and adding
Alternate I following ``(End of provision)'' to read as follows:
52.212-3 Offeror Representations and Certifications--Commercial Items.
* * * * *
Offeror Representations and Certifications--Commercial Items (Oct 1998)
* * * * *
(c) * * *
(2) Small disadvantaged business concern. The offeror
represents, for general statistical purposes, that it {time} is,
{time} is not, a small disadvantaged business concern as defined in
13 CFR 124.1002.
* * * * *
(7) (Complete only if the solicitation contains the clause at
FAR 52.219-23, Notice of Price Evaluation Adjustment for Small
Disadvantaged Business Concerns, and the offeror desires a benefit
based on its disadvantaged status.)
(i) General. The offeror represents that either--
(A) It {time} is, {time} is not certified by the Small
Business Administration as a small disadvantaged business concern
and is listed, on the date of this representation, on the register
of small disadvantaged business concerns maintained by the Small
Business Administration, and that no material change in
disadvantaged ownership and control has occurred since its
certification, and, where the concern is owned by one or more
individuals claiming disadvantaged status, the net worth of each
individual upon whom the certification is based does not exceed
$750,000 after taking into account the applicable exclusions set
forth at 13 CFR 124.104(c)(2); or
(B) It {time} has, {time} has not submitted a completed
application to the Small Business Administration or a Private
Certifier to be certified as a small disadvantaged business concern
in accordance with 13 CFR 124, Subpart B, and a decision on that
application is pending, and that no material change in disadvantaged
ownership and control has occurred since its application was
submitted.
(ii) Joint Ventures under the Price Evaluation Adjustment for
Small Disadvantaged Business Concerns. The offeror represents, as
part of its offer, that it is a joint venture that complies with the
requirements in 13 CFR 124.1002(f) and that the representation in
paragraph (c)(7)(i) of this provision is accurate for the small
disadvantaged business concern that is participating in the joint
venture. [The offeror shall enter the name of the small
disadvantaged business concern that is participating in the joint
venture: ____________.]
* * * * *
(End of provision)
Alternate I (Oct 1998). As prescribed in 12.301(b)(2), add the
following paragraph (c)(8) to the basic provision:
(8) (Complete if the offeror has represented itself as
disadvantaged in paragraph (c)(2) or (c)(7) of this provision.) [The
offeror shall check the category in which its ownership falls]:
____Black American.
____Hispanic American.
____Native American (American Indians, Eskimos, Aleuts, or
Native Hawaiians).
____Asian-Pacific American (persons with origins from Burma,
Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China,
Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines,
U.S. Trust Territory of the Pacific Islands (Republic of Palau),
Republic of the Marshall Islands, Federated States of Micronesia,
the Commonwealth of the Northern Mariana Islands, Guam, Samoa,
Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru).
____Subcontinent Asian (Asian-Indian) American (persons with
origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the
Maldives Islands, or Nepal).
____Individual/concern, other than one of the preceding.
19. Section 52.212-5 is amended by revising the clause date;
redesignating paragraphs (b)(6) through (b)(17) as (b)(7) through
(b)(18), respectively; and adding a new paragraph (b)(6) to read as
follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
[[Page 35725]]
Contract Terms and Conditions Required to Implement Statutes or
Executive Orders-Commercial Items (Oct 1998)
* * * * *
(b) * * *
____(6)(i) 52.219-23, Notice of Price Evaluation
Adjustment for Small Disadvantaged Business Concerns (Pub. L.
103-355, section 7102, and 10 U.S.C. 2323) (if the offeror elects to
waive the adjustment, it shall so indicate in its offer).
(ii) ____Alternate I of 52.219-23.
* * * * *
20. Section 52.219-1 is amended by revising the introductory text
of the provision; the provision date and paragraph (b)(2); by deleting
the definitions of ``Joint venture'' and ``Small disadvantaged business
concern''; and adding an Alternate I to read as follows:
52.219-1 Small Business Program Representations.
As prescribed in 19.306(a), insert the following provision:
Small Business Program Representations (Oct 1998)
* * * * *
(b) * * *
(2) (Complete only if offeror represented itself as a small
business concern in paragraph (b)(1) of this provision.) The offeror
represents, for general statistical purposes, that it {time} is,
{time} is not, a small disadvantaged business concern as defined in
13 CFR 124.1002.
* * * * *
Alternate I (Oct 1998). As prescribed in 19.306(a), add the
following paragraph (b)(4) to the basic provision:
(4) (Complete if offeror represented itself as disadvantaged in
paragraph (b)(2) of this provision). [The offeror shall check the
category in which its ownership falls]:
____Black American.
____Hispanic American.
____Native American (American Indians, Eskimos, Aleuts, or
Native Hawaiians).
____Asian-Pacific American (persons with origins from Burma,
Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China,
Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines,
U.S. Trust Territory of the Pacific Islands (Republic of Palau),
Republic of the Marshall Islands, Federated States of Micronesia,
the Commonwealth of the Northern Mariana Islands, Guam, Samoa,
Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru).
____Subcontinent Asian (Asian-Indian) American (persons with
origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the
Maldives Islands, or Nepal).
____Individual/concern, other than one of the preceding.
52.219-2 [Amended]
21. Section 52.219-2 is amended in the introductory paragraph by
revising ``19.304(b)'' to read ``19.306(c)''.
22. Sections 52.219-22 and 52.219-23 are added to read as follows:
52.219-22 Small Disadvantaged Business Status.
As prescribed in 19.306(b), insert the following provision:
Small Disadvantaged Business Status (Oct 1998)
(a) General. This provision is used to assess an offeror's small
disadvantaged business status for the purpose of obtaining a benefit
on this solicitation. Status as a small business and status as a
small disadvantaged business for general statistical purposes is
covered by the provision at FAR 52.219-1, Small Business Program
Representation.
(b) Representations.
(1) General. The offeror represents, as part of its offer, that
it is a small business under the size standard applicable to this
acquisition; and either--
{time} (i) It has received certification by the Small Business
Administration as a small disadvantaged business concern consistent
with 13 CFR 124, Subpart B; and
(A) No material change in disadvantaged ownership and control
has occurred since its certification;
(B) Where the concern is owned by one or more disadvantaged
individuals, the net worth of each individual upon whom the
certification is based does not exceed $750,000 after taking into
account the applicable exclusions set forth at 13 CFR 124.104(c)(2);
and
(C) It is listed, on the date of this representation, on the
register of small disadvantaged business concerns maintained by the
Small Business Administration; or
{time} (ii) It has submitted a completed application to the
Small Business Administration or a Private Certifier to be certified
as a small disadvantaged business concern in accordance with 13 CFR
124, Subpart B, and a decision on that application is pending, and
that no material change in disadvantaged ownership and control has
occurred since its application was submitted.
(2){time} For Joint Ventures. The offeror represents, as part of
its offer, that it is a joint venture that complies with the
requirements at 13 CFR 124.1002(f) and that the representation in
paragraph (b)(1) of this provision is accurate for the small
disadvantaged business concern that is participating in the joint
venture. [The offeror shall enter the name of the small
disadvantaged business concern that is participating in the joint
venture: ____________.]
(c) Penalties and Remedies. Anyone who misrepresents any aspects
of the disadvantaged status of a concern for the purposes of
securing a contract or subcontract shall:
(1) Be punished by imposition of a fine, imprisonment, or both;
(2) Be subject to administrative remedies, including suspension
and debarment; and
(3) Be ineligible for participation in programs conducted under
the authority of the Small Business Act.
(End of provision)
52.219-23 Notice of Price Evaluation Adjustment for Small
Disadvantaged Business Concerns.
As prescribed in 19.1104, insert the following clause:
Notice of Price Evaluation Adjustment for Small Disadvantaged Business
Concerns (Oct 1998)
(a) Definitions. As used in this clause--
Small disadvantaged business concern means an offeror that
represents, as part of its offer, that it is a small business under
the size standard applicable to this acquisition; and either--
(1) It has received certification by the Small Business
Administration as a small disadvantaged business concern consistent
with 13 CFR 124, Subpart B; and
(i) No material change in disadvantaged ownership and control
has occurred since its certification;
(ii) Where the concern is owned by one or more disadvantaged
individuals, the net worth of each individual upon whom the
certification is based does not exceed $750,000 after taking into
account the applicable exclusions set forth at 13 CFR 124.104(c)(2);
and
(iii) It is listed, on the date of its representation, on the
register of small disadvantaged business concerns maintained by the
Small Business Administration;
(2) It has submitted a completed application to the Small
Business Administration or a Private Certifier to be certified as a
small disadvantaged business concern in accordance with 13 CFR 124,
Subpart B, and a decision on that application is pending, and that
no material change in disadvantaged ownership and control has
occurred since its application was submitted. In this case, in order
to receive the benefit of a price evaluation adjustment, an offeror
must receive certification as a small disadvantaged business concern
by the Small Business Administration prior to contract award; or
(3) Is a joint venture as defined in 13 CFR 124.1002(f).
Historically black college or university means an institution
determined by the Secretary of Education to meet the requirements of
34 CFR 608.2. For the Department of Defense (DoD), the National
Aeronautics and Space Administration (NASA), and the Coast Guard,
the term also includes any nonprofit research institution that was
an integral part of such a college or university before November 14,
1986.
Minority institution means an institution of higher education
meeting the requirements of Section 1046(3) of the Higher Education
Act of 1965 (20 U.S.C. 1135d-5(3)) which, for purposes of this
clause, includes a Hispanic-serving institution of higher education
as defined in Section 316(b)(1) of the Act (20 U.S.C. 1059c(b)(1)).
United States means the United States, its territories and
possessions, the Commonwealth of Puerto Rico, the U.S. Trust
Territory of the Pacific Islands, and the District of Columbia.
(b) Evaluation adjustment. (1) Offers will be evaluated by
adding a factor of ____________ [percentage to be inserted by
[[Page 35726]]
the contracting officer] percent to the price of all offers,
except--
(i) Offers from small disadvantaged business concerns that have
not waived the adjustment;
(ii) For DOD, NASA, and Coast Guard acquisitions, otherwise
successful offers from historically black colleges or universities
or minority institutions;
(iii) Otherwise successful offers of eligible products under the
Trade Agreements Act when the dollar threshold for application of
the Act is equaled or exceeded (see section 25.402 of the Federal
Acquisition Regulation (FAR));
(iv) Otherwise successful offers where application of the factor
would be inconsistent with a Memorandum of Understanding or other
international agreement with a foreign government; and
(v) For DOD acquisitions, otherwise successful offers of
qualifying country end products (see sections 225.000-70 and
252.225-7001 of the Defense FAR Supplement).
(2) The factor shall be applied on a line item basis or to any
group of items on which award may be made. Other evaluation factors
described in the solicitation shall be applied before application of
the factor. The factor may not be applied if using the adjustment
would cause the contract award to be made at a price that exceeds
the fair market price by more than the factor in paragraph (b)(1) of
this clause.
(c) Waiver of evaluation adjustment. A small disadvantaged
business concern may elect to waive the adjustment, in which case
the factor will be added to its offer for evaluation purposes. The
agreements in paragraph (d) of this clause do not apply to offers
that waive the adjustment.
____Offeror elects to waive the adjustment.
(d) Agreements. (1) A small disadvantaged business concern, that
did not waive the adjustment, agrees that in performance of the
contract, in the case of a contract for--
(i) Services, except construction, at least 50 percent of the
cost of personnel for contract performance will be spent for
employees of the concern;
(ii) Supplies (other than procurement from a nonmanufacturer of
such supplies), at least 50 percent of the cost of manufacturing,
excluding the cost of materials, will be performed by the concern;
(iii) General construction, at least 15 percent of the cost of
the contract, excluding the cost of materials, will be performed by
employees of the concern; or
(iv) Construction by special trade contractors, at least 25
percent of the cost of the contract, excluding the cost of
materials, will be performed by employees of the concern.
(2) A small disadvantaged business concern submitting an offer
in its own name agrees to furnish in performing this contract only
end items manufactured or produced by small disadvantaged business
concerns in the United States. This paragraph does not apply in
connection with construction or service contracts.
(End of clause)
Alternate I (Oct 1998). As prescribed in 19.1104, substitute the
following paragraph (d)(2) for paragraph (d)(2) of the basic clause:
(2) A small disadvantaged business concern submitting an offer
in its own name agrees to furnish in performing this contract only
end items manufactured or produced by small business concerns in the
United States. This paragraph does not apply in connection with
construction or service contracts.
[FR Doc. 98-17197 Filed 6-26-98; 8:45 am]
BILLING CODE 6820-EP-P
