[Federal Register Volume 64, Number 42 (Thursday, March 4, 1999)]
[Rules and Regulations]
[Pages 10535-10538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5204]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 5, 8, 12, 19, and 52
[FAC 97-11; FAR Case 98-013; Item II]
RIN 9000-AI29
Federal Acquisition Regulation; Very Small Business Concerns
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Interim rule with request for comments.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council have agreed on an interim rule amending
the Federal Acquisition Regulation (FAR) to implement the Small
Business Administration's Very Small Business Pilot Program (13 CFR
parts 121 and 125).
DATES: Effective Date: March 4, 1999.
Applicability Date: This rule applies to solicitations issued on or
after March 4, 1999.
Comment Date: Comments should be submitted to the FAR Secretariat
at the address shown below on or before May 3, 1999, 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:
farcase.98-013@gsa.gov
Please cite FAC 97-11, FAR case 98-013 in all correspondence
related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC 20405, (202) 501-4755, for information
pertaining to status or publication schedules. For clarification of
content, contact Ms. Victoria Moss, Procurement Analyst, at (202) 501-
4764. Please cite FAC 97-11, FAR case 98-013.
SUPPLEMENTARY INFORMATION:
A. Background
Section 304 of the Small Business Administration Reauthorization
and Amendments Act of 1994 (Pub. L. 103-403) authorized the SBA
Administrator to establish and carry out a pilot program for very small
business (VSB) concerns. The Small Business Administration (SBA)
published a final rule in the Federal Register on September 2, 1998 (63
FR 46640), amending 13 CFR parts 121 and 125 to establish a pilot
program for VSB business concerns. The purpose of the program is to
improve access to Government contract opportunities for concerns that
are substantially below SBA's size standards by reserving certain
acquisitions for competition among such VSB concerns. Implementation of
the program is limited to geographic areas served by 10 SBA district
offices. A VSB concern is defined as a small business that has 15 or
fewer employees together with average annual receipts that do not
exceed $1 million. Any procurement that has an anticipated dollar value
exceeding $2,500 but not greater than $50,000 may be set aside for VSB
concerns. A contracting officer must set aside for VSB concerns any
such service or construction requirement that will be performed within
the geographical boundaries served by a designated SBA district office
if there is a reasonable expectation of obtaining fair and reasonable
offers from two or more responsible VSB concerns headquartered within
the geographical area served by that designated SBA district. In the
case of a procurement for supplies, a contracting officer must set
aside any such requirement for VSBs if the contracting office is
located within the geographical area served by a designated SBA
district, and there is a reasonable expectation of obtaining fair and
reasonable offers from two or more responsible VSB concerns
headquartered within the geographical area served by that designated
SBA district office. A decision chart to assist contracting personnel
in making the decision to set aside an acquisition for VSB concerns is
located at http://www.arnet.gov/References/VerySmall.html. The program
will expire on September 30, 2000, unless further extended through
legislation.
This regulatory action was not subject to Office of Management and
Budget review under Executive Order 12866, dated September 30, 1993,
and is not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The 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 Section 304 of the Small
Business Administration Reauthorization and Amendments Act of 1994
(Pub. L. 103-403) called for the Small Business Administration (SBA) to
conduct a pilot program to improve access to Federal Government
contract opportunities for concerns that are substantially below SBA's
size standards by reserving certain procurements for competition among
such very small business (VSB) concerns. SBA's final rule implementing
the pilot program was published in the Federal Register on September 2,
1998 (63 FR 46640).
The SBA provides, in its final rule, that the rule should have no
effect on the amount of dollar value of any contract requirement or the
number of requirements reserved for the small business set-aside
program, since it is administered within and is a component of the
small business set-aside program. Estimates of the number of entities
to which the rule will apply were submitted by SBA in its regulatory
flexibility analysis prepared for the final SBA rule. An Initial
Regulatory Flexibility Analysis (IRFA) has been prepared and will be
provided to the Chief Counsel for Advocacy for the Small Business
Administration. A copy of the IRFA may be obtained from the FAR
Secretariat. Comments are invited. Comments from small entities
concerning the affected FAR subpart will be considered in accordance
with 5 U.S.C. 610. Such comments must be submitted separately and
should cite 5 U.S.C 601, et seq. (FAC 97-11, FAR Case 98-013), in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose information collection requirements that require
the approval of the Office of Management and Budget under 44 U.S.C.
3501, et seq.
[[Page 10536]]
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 Federal Acquisition Regulation to revisions
made to the Small Business Administration's small business size and
Government contracting assistance regulations to incorporate the Very
Small Business Set-Aside Pilot Program. The Small Business
Administration's rule is effective on January 4, 1999. However,
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 5, 8, 12, 19, and 52
Government procurement.
Dated: February 25, 1999.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, 48 CFR Parts 5, 8, 12, 19, and 52 are amended as set
forth below:
1. The authority citation for 48 CFR Parts 5, 8, 12, 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 5--PUBLICIZING CONTRACT ACTIONS
2. Section 5.207 is amended by adding paragraph (c)(2)(xviii); and
by revising paragraph (d) to read as follows:
5.207 Preparation and transmittal of synopses.
* * * * *
(c)(2) * * *
(xviii) In the case of a very small business set-aside, identify
the Designated Region (see subpart 19.9).
(d) Set-asides. When the proposed acquisition provides for a total,
partial, or very small business set-aside, or a HUBZone small business
set-aside, the appropriate CBD Numbered Note will be cited.
* * * * *
PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES
3. Section 8.404 is amended by revising paragraph (a) to read as
follows:
8.404 Using schedules.
(a) General. When agency requirements are to be satisfied through
the use of Federal Supply Schedules as set forth in this subpart, the
simplified acquisition procedures of Part 13 and the small business
provisions of Part 19 do not apply, except for the provision at 13.303-
2(c)(3). Orders placed pursuant to a Multiple Award Schedule (MAS),
using the procedures in this subpart, are considered to be issued
pursuant to full and open competition (see 6.102(d)(3)). Therefore,
when placing orders under Federal Supply Schedules, ordering offices
need not seek further competition, synopsize the requirement, make a
separate determination of fair and reasonable pricing, or consider
small business programs. GSA has already determined the prices of items
under schedule contracts to be fair and reasonable. By placing an order
against a schedule using the procedures in this section, the ordering
office has concluded that the order represents the best value and
results in the lowest overall cost alternative (considering price,
special features, administrative costs, etc.) to meet the Government's
needs.
* * * * *
PART 12--ACQUISITION OF COMMERCIAL ITEMS
12.303 [Amended]
4. Section 12.303 is amended at the end of paragraph (b)(1) by
removing the semicolon and adding ``, or set-aside for very small
business concerns;''.
PART 19--SMALL BUSINESS PROGRAMS
5. Section 19.000 is amended at the end of paragraph (a)(8) by
removing ``and''; in paragraph (a)(9) by removing the period and adding
``; and''; and by adding paragraph (a)(10) to read as follows:
19.000 Scope of part.
(a) * * *
(10) The Very Small Business Pilot Program.
* * * * *
6. Section 19.001 is amended by adding, in alphabetical order, the
definition ``Very small business concern'' to read as follows:
19.001 Definitions.
* * * * *
Very small business concern means a small business concern--
(1) Whose headquarters is located within the geographic area served
by a designated SBA district; and
(2) Which, together with its affiliates, has no more than 15
employees and has average annual receipts that do not exceed $1
million.
* * * * *
7. Section 19.102 is amended by redesignating paragraph ``(g)'' as
``(h)''; and by adding a new paragraph (g) to read as follows:
19.102 Size standards.
* * * * *
(g) In the case of acquisitions set aside for very small business
in accordance with 19.904, offerors may not have more than 15 employees
and may not have average annual receipts that exceed $1 million.
* * * * *
19.502-2 [Amended]
8. Section 19.502-2 is amended in the first sentence of paragraph
(a) by removing ``Each'' and adding ``Except for those acquisitions set
aside for very small business concerns (see subpart 19.9), each''.
9. Subpart 19.9, consisting of sections 19.901 through 19.905, is
added to read as follows:
Subpart 19.9--Very Small Business Pilot Program
Sec.
19.901 General.
19.902 Definition.
19.903 Applicability.
19.904 Procedures.
19.905 Solicitation provision and contract clause.
Authority: 41 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
Subpart 19.9--Very Small Business Pilot Program
19.901 General.
(a) The Very Small Business Pilot Program was established under
Section 304 of the Small Business Administration Reauthorization and
Amendments Act of 1994 (Public Law 103-403).
(b) The purpose of the program is to improve access to Government
contract opportunities for concerns that are substantially below SBA's
size standards by reserving certain acquisitions for competition among
such concerns.
(c) This pilot program terminates on September 30, 2000. Therefore,
any award under this program must be made on or before this date.
19.902 Definition.
Designated SBA district means the geographic area served by any of
the following SBA district offices:
[[Page 10537]]
(1) Albuquerque, NM, serving New Mexico.
(2) Los Angeles, CA, serving the following counties in California:
Los Angeles, Santa Barbara, and Ventura.
(3) Boston, MA, serving Massachusetts.
(4) Louisville, KY, serving Kentucky.
(5) Columbus, OH, serving the following counties in Ohio: Adams,
Allen, Ashland, Athens, Auglaize, Belmont, Brown, Butler, Champaign,
Clark, Clermont, Clinton, Coshocton, Crawford, Darke, Delaware,
Fairfield, Fayette, Franklin, Gallia, Greene, Guernsey, Hamilton,
Hancock, Hardin, Highland, Hocking, Holmes, Jackson, Knox, Lawrence,
Licking, Logan, Madison, Marion, Meigs, Mercer, Miami, Monroe,
Montgomery, Morgan, Morrow, Muskingum, Noble, Paulding, Perry,
Pickaway, Pike, Preble, Putnam, Richland, Ross, Scioto, Shelby, Union,
Van Wert, Vinton, Warren, Washington, and Wyandot.
(6) New Orleans, LA, serving Louisiana.
(7) Detroit, MI, serving Michigan.
(8) Philadelphia, PA, serving the State of Delaware and the
following counties in Pennsylvania: Adams, Berks, Bradford, Bucks,
Carbon, Chester, Clinton, Columbia, Cumberland, Dauphin, Delaware,
Franklin, Fulton, Huntington, Juniata, Lackawanna, Lancaster, Lebanon,
Lehigh, Luzerne, Lycoming, Mifflin, Monroe, Montgomery, Montour,
Northampton, Northumberland, Philadelphia, Perry, Pike, Potter,
Schuylkill, Snyder, Sullivan, Susquehanna, Tioga, Union, Wayne,
Wyoming, and York.
(9) El Paso, TX, serving the following counties in Texas: Brewster,
Culberson, El Paso, Hudspeth, Jeff Davis, Pecos, Presidio, Reeves, and
Terrell.
(10) Santa Ana, CA, serving the following counties in California:
Orange, Riverside, and San Bernadino.
19.903 Applicability.
(a) The Very Small Business Pilot Program applies to acquisitions,
including construction acquisitions, with an estimated value exceeding
$2,500 but not greater than $50,000, when--
(1) In the case of an acquisition for supplies, the contracting
office is located within the geographical area served by a designated
SBA district; or
(2) In the case of an acquisition for other than supplies, the
contract will be performed within the geographical area served by a
designated SBA district.
(b) The Very Small Business Pilot Program does not apply to--
(1) Acquisitions that will be awarded pursuant to the 8(a) Program;
or
(2) Any requirement that is subject to the Small Business
Competitiveness Demonstration Program (see Subpart 19.10).
19.904 Procedures.
(a) A contracting officer shall set-aside for very small business
concerns each acquisition that has an anticipated dollar value
exceeding $2,500 but not greater than $50,000 if--
(1) In the case of an acquisition for supplies--
(i) The contracting office is located within the geographical area
served by a designated SBA district; and
(ii) There is a reasonable expectation of obtaining offers from two
or more responsible very small business concerns headquartered within
the geographical area served by the designated SBA district that are
competitive in terms of market prices, quality, and delivery; or
(2) In the case of an acquisition for services--
(i) The contract will be performed within the geographical area
served by a designated SBA district; and
(ii) There is a reasonable expectation of obtaining offers from two
or more responsible very small business concerns headquartered within
the geographical area served by the designated SBA district that are
competitive in terms of market prices, quality, and delivery.
(b) Contracting officers shall determine the applicable designated
SBA district office as defined at 19.902. The geographic areas served
by the SBA Los Angeles and Santa Ana District offices will be treated
as one designated SBA district for the purposes of this subpart.
(c) If no reasonable expectation exists under paragraphs (a)(1)(ii)
and (a)(2)(ii) of this section, the contracting officer shall document
the file and proceed with the acquisition in accordance with Subpart
19.5.
(d) If the contracting officer receives only one acceptable offer
from a responsible very small business concern in response to a very
small business set-aside, the contracting officer should make an award
to that firm. If there is no offer received from a very small business
concern, the contracting officer shall cancel the very small business
set-aside and proceed with the acquisition in accordance with Subpart
19.5.
19.905 Solicitation provision and contract clause.
The contracting officer shall use the clause at 52.219-5, Very
Small Business Set-Aside, in solicitations and contracts if the
acquisition is set aside for very small business concerns.
(a) The contracting officer shall use the clause at 52.219-5 with
its Alternate I--
(1) In construction or service contracts; or
(2) 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)).
(b) The contracting officer shall use the clause at 52.219-5 with
its Alternate II when Alternate I does not apply, the acquisition is
processed under simplified acquisition procedures, and the total amount
of the contract does not exceed $25,000.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
10. Section 52.212-5 is amended by revising the clause date; and by
redesignating paragraphs (b)(2) through (b)(8) as (b)(4) through
(b)(10), and (b)(9) and (b)(10) as (b)(2) and (b)(3), respectively; and
by revising newly designated paragraph (b)(4) of the clause to read as
follows:
52.212-5 Contract Terms and Conditions Required To Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
Contract Terms and Conditions Required To Implement Statutes or
Executive Orders--Commercial Items (Mar 1999)
* * * * *
(b) * * *
____(4)(i) 52.219-5, Very Small Business Set-Aside (Pub. L. 103-
403, section 304, Small Business Reauthorization and Amendments Act
of 1994).
____(ii) Alternate I to 52.219-5.
____(iii) Alternate II to 52.219-5.
* * * * *
11. Section 52.219-5 is added to read as follows:
52.219-5 Very Small Business Set-Aside.
As prescribed in 19.905, insert the following clause:
Very Small Business Set-Aside (Mar 1999)
(a) Definition. Very Small Business Concern, as used in this
clause, means a concern whose headquarters is located within the
geographical area served by a designated SBA district (see 13 CFR
125.7(b)); which, together with its affiliates, has no more than 15
employees and has average annual receipts that do not exceed $1
million.
(b) Eligibility. (1) Only those firms headquartered in the ----
------------------------------ Small Business Administration (SBA)
district [Contracting Officer shall insert the applicable SBA
designated district. If the geographic area is served by the SBA Los
Angeles or Santa Ana District offices, list both] are eligible for
this acquisition.
[[Page 10538]]
(2) Offers or quotations under this acquisition are solicited
from very small business concerns only. Offers that are from other
than an eligible very small business concern shall not be considered
and shall be rejected. The offeror represents that it is an eligible
very small business concern by submission of an offer or quotation.
(c) Agreement. A very 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. As used in this clause, 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.
(End of clause)
Alternate I (Mar 1999). As prescribed in 19.905(a), delete
paragraph (c) of the basic clause.
Alternate II (Mar 1999). As prescribed in 19.905(b), substitute
the following paragraph (c) for paragraph (c) of the basic clause:
(c) Agreement. A very small business concern submitting an offer
in its own name agrees to furnish, in performing the contract, only
end items manufactured or produced by domestic firms in the United
States. As used in this clause, 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.
[FR Doc. 99-5204 Filed 3-3-99; 8:45 am]
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