[Federal Register Volume 64, Number 127 (Friday, July 2, 1999)]
[Rules and Regulations]
[Pages 36222-36225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16855]
[[Page 36221]]
_______________________________________________________________________
Part VII
Department of Defense
General Services Administration
National Aeronautics and Space Administration
_______________________________________________________________________
48 CFR Part 1 et al.
Federal Acquisition Regulation; Reform of Affirmative Action in Federal
Procurement and Small Entity Compliance Guide; Final Rules
Federal Register / Vol. 64, No. 127 / Friday, July 2, 1999 / Rules
and Regulations
[[Page 36222]]
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 12, 14, 15, 19, 26, 33, 52, and 53
[FAC 97-13; FAR Case 97-004]
RIN 9000-AH59
Federal Acquisition Regulation; Reform of Affirmative Action in
Federal Procurement
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (the Councils) have agreed to adopt the
interim rules published in the Federal Register at 63 FR 35719, June
30, 1998; 63 FR 36120, July 1, 1998; 63 FR 52426, September 30, 1998;
and 63 FR 71721, December 29, 1998, as final rules with changes. These
amendments conform to a Department of Justice (DoJ) model for reform of
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).
DATES: Effective Date: October 1, 1999.
Applicability Date: The policies, provisions, and clauses of this
final rule are effective for all solicitations issued on or after
October 1, 1999.
FOR FURTHER INFORMATION CONTACT: Ms. Victoria Moss, Procurement
Analyst, Federal Acquisition Policy Division, General Services
Administration, at (202) 501-4764, or Mr. Charles Zuckerman, Office of
the Director of Defense Procurement, Department of Defense, at (703)
697-0895. For general information, contact the FAR Secretariat, Room
4035, GS Building, Washington, DC, 20405, (202) 501-4755. Please cite
FAC 97-13, FAR case 97-004.
SUPPLEMENTARY INFORMATION:
A. Background
DoD, GSA, and NASA issued the following Federal Acquisition
Circulars (FACs) to make amendments to the FAR concerning programs for
small disadvantaged business concerns:
FAC 97-06, 63 FR 35719, June 30, 1998
FAC 97-07, 63 FR 36120, July 1, 1998
FAC 97-08, 63 FR 52426, September 30, 1998
FAC 97-07 Addendum, 63 FR 71721, December 29, 1998
These amendments conformed to the DoJ model for reform of affirmative
action in Federal procurement. This rule revises and finalizes the
above interim rules. The Councils received twenty-four letters
containing 63 comments in response to the interim rules and considered
them in the formulation of this final rule. The Councils made only one
significant change to the rule, as follows:
FAC 97-07 Addendum amended the FAR to allow contractors acting in
good faith to rely upon the self-representations of their
subcontractors as to their status as small disadvantaged business
concerns. The change provided an additional period of time for
subcontractors to become certified under rules issued by the Small
Business Administration. That time period is being extended to
September 30, 1999. Accordingly, this final rule, which becomes
effective on October 1, 1999, rescinds the change made by FAC 97-07
Addendum.
Also, the Councils made several clarifying amendments in this final
rule, including removing all references to a list of SDBs to be
maintained by the Small Business Administration and referring instead
to SBA's PRO-Net database.
This rule was subject to Office of Management and Budget review
under Section 6(b) of Executive Order 12866, Regulatory Planning and
Review, dated September 30, 1993. This is 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 the rule provides
preferences through which the Government may provide small business
concerns benefits in Federal contracting. The Final Regulatory
Flexibility Analysis (FRFA) is summarized as follows:
In Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097 (1995),
the Supreme Court extended strict judicial scrutiny to Federal
affirmative action programs that use racial or ethnic criteria as a
basis for decision-making. Following the decision, the Department of
Justice (DoJ) published, at 61 FR 26042 (May 23, 1996), Proposed
Reforms to Affirmative Action in Federal Procurement. This DoJ model
was implemented in several parts: Small Business Administration
(SBA) regulations; publication of the Department of Commerce price
evaluation adjustments for use in Federal procurements; and interim
FAR rules.
Four interim FAR rules established in the FAR three procurement
mechanisms benefiting small disadvantaged businesses (SDBs). The
first mechanism is a price evaluation adjustment of up to 10 percent
in certain two-digit Standard Industrial Classification (SIC) Major
Groups. The second mechanism is a source selection evaluation factor
or subfactor for planned SDB participation in the performance of a
contract. The third mechanism provides for a monetary incentive for
subcontracting with SDBs.
We received one public comment that specifically addressed the
Initial Regulatory Flexibility Analysis. That comment provided that
the rule imposes a complicated tracking system and will not increase
opportunities for small disadvantaged businesses. We made no changes
to the rule based on this comment. While we recognize that the rule
calls for more detailed reporting of SDB subcontractors in order to
comply with the DoJ proposal, no alternatives to that reporting
exist. The commenter provided no evidence to support the commenter's
opinion that this rule will not increase opportunities for small
disadvantaged businesses. It is our opinion that, to the contrary,
this rule will increase opportunities for such firms, particularly
in the award of prime contracts by civilian agencies that, unlike
DoD, have not previously granted procurement preferences to SDBs.
The FAR Secretariat has submitted a copy of the FRFA to the Chief
Counsel for Advocacy of the Small Business Administration. Interested
parties may obtain a copy from the FAR Secretariat. The Council will
consider comments from small entities concerning the affected FAR
subpart in accordance with 5 U.S.C. 610. Interested parties must submit
such comments separately and should cite 5 U.S.C 601, et seq. (FAC 97-
13, FAR Case 97-004), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 104-13) applies because the
rules being converted to a final rule contain reporting and
recordkeeping requirements. OMB approved the information collections
under OMB clearance numbers 9000-0007 through June 30, 2000, and 9000-
0150 through June 30, 2000. This final rule does not affect those
previously approved information collection requirements.
List of Subjects in 48 CFR Parts 1, 12, 14, 15, 19, 26, 33, 52, and
53
Government procurement.
[[Page 36223]]
Dated: June 25, 1999.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Federal Acquisition Circular
Federal Acquisition Circular (FAC) 97-13 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 final rule are
effective for all solicitations issued on or after October 1, 1999.
Eleanor R. Spector,
Director, Defense Procurement.
Dated: June 15, 1999
Ida M. Ustad,
Deputy Associate Administrator, Office of Acquisition Policy, General
Services Administration.
June 16, 1999.
Tom Luedtke,
Associate Administrator for Procurement, National Aeronautics and Space
Administration.
June 11, 1999.
Interim Rules Adopted as Final With Changes
Accordingly, DoD, GSA, and NASA adopt the interim rules amending 48
CFR parts 1, 12, 14, 15, 19, 26, 33, 52, and 53, which were published
at 63 FR 35719, June 30, 1998; 63 FR 36120, July 1, 1998; 63 FR 52426,
September 30, 1998; and 63 FR 71721, December 29, 1998, as final with
the following changes:
1. The authority citation for 48 CFR parts 1, 12, 14, 15, 19, 26,
33, 52, and 53 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. Amend section 19.001 to revise the definition ``Small
disadvantaged business concern'' to read as follows:
19.001 Definitions.
* * * * *
Small disadvantaged business concern, as used in this part (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), means 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 as a small disadvantaged business
concern consistent with 13 CFR part 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 identified, on the date of its representation, as a
certified small disadvantaged business (SDB) concern in the database
maintained by the Small Business Administration (PRO-Net); or
(2) For a prime contractor, 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 part 124, subpart B, and a decision on that application is
pending, and that no material change in disadvantaged ownership and
control has occurred since it submitted its application. In this case,
a contractor must receive certification as an SDB by the SBA prior to
contract award.
* * * * *
3. Amend section 19.304 to revise paragraph (c)(1) to read as
follows:
19.304 Disadvantaged business status.
* * * * *
(c) * * *
(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 identified as a small disadvantaged business concern by
accessing SBA's database (PRO-Net) or by contacting the SBA's Office of
Small Disadvantaged Business Certification and Eligibility.
* * * * *
4. Amend section 19.703 to add two new sentences after the first
sentence of paragraph (b) to read as follows:
19.703 Eligibility requirements for participating in the program.
* * * * *
(b) * * * The clause at 52.219-25, Small Disadvantaged Business
Participation Program--Disadvantaged Status and Reporting, requires the
contractor to obtain representations of small disadvantaged status from
subcontractors through use of a provision substantially the same as
paragraph (b)(1)(i) of the provision at 52.219-22, Small Disadvantaged
Business Status. The clause requires the contractor to confirm that a
subcontractor representing itself as a small disadvantaged business
concern is identified by SBA as a small disadvantaged business concern
by accessing SBA's database (PRO-Net) or by contacting the SBA's Office
of Small Disadvantaged Business Certification and Eligibility. * * *
5. Revise section 19.1102 to read as follows:
19.1102 Applicability.
(a) Use the price evaluation adjustment in competitive acquisitions
in the authorized SIC Major Groups.
(b) Do not use the price evaluation adjustment in acquisitions--
(1) That are less than or equal to the simplified acquisition
threshold;
(2) That are awarded pursuant to the 8(a) Program;
(3) That are set aside for small business concerns;
(4) That are set aside for HUBZone small business concerns;
(5) Where price is not a selection factor so that a price
evaluation adjustment would not be considered (e.g., architect/engineer
acquisitions); or
(6) Where all fair and reasonable offers are accepted (e.g., the
award of multiple award schedule contracts).
6. Amend section 19.1103 to revise paragraphs (a)(2), (a)(3),
(a)(4), (a)(5), and (b) to read as follows:
19.1103 Procedures.
(a) * * *
(2) An otherwise successful offer of eligible products under the
Trade Agreements Act when the acquisition equals or exceeds the dollar
threshold in 25.402;
(3) An otherwise successful offer 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, an otherwise
successful offer from a historically black college or university or
minority institution; or
(5) For DoD acquisitions, an otherwise successful offer of
qualifying country end products (see DFARS 225.000-70 and 252.225-
7001).
(b) Apply the factor to a line item or a group of line 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.
* * * * *
7. Amend section 19.1104 to revise the heading and the first
sentence to read as follows:
19.1104 Contract clause.
Insert the clause at 52.219-23, Notice of Price Evaluation
Adjustment for
[[Page 36224]]
Small Disadvantaged Business Concerns, in solicitations and contracts
when the circumstances in 19.1101 and 19.1102 apply. * * *
8. Amend section 19.1202-3 to revise the introductory text to read
as follows:
19.1202-3 Considerations in developing an evaluation factor or
subfactor.
In developing an SDB participation evaluation factor or subfactor
for the solicitation, agencies may consider
* * * * *
19.1202-4 [Amended]
9. In section 19.1202-4, remove paragraph (c).
PART 26--OTHER SOCIOECONOMIC PROGRAMS
10. Revise section 26.304 to read as follows:
26.304 Solicitation provision.
Insert the provision at 52.226-2, Historically Black College or
University and Minority Institution Representation, in solicitations
exceeding the micro-purchase threshold, for research, studies,
supplies, or services of the type normally acquired from higher
educational institutions. For DoD, NASA, and Coast Guard acquisitions,
also insert the provision in solicitations that contain the clause at
52.219-23, Notice of Price Evaluation Adjustment for Small
Disadvantaged Business Concerns.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
11. Amend section 52.212-3 to revise the date of the provision and
paragraph (c)(7)(i)(A) to read as follows:
52.212-3 Offeror Representations and Certifications--Commercial Items.
* * * * *
Offeror Representations and Certifications--Commercial Items (Oct 1999)
* * * * *
(c) * * *
(7) * * *
(i) * * *
(A) It /__/ is, /__/ is not certified by the Small Business
Administration as a small disadvantaged business concern and
identified, on the date of this representation, as a certified small
disadvantaged business concern in the database maintained by the
Small Business Administration (PRO-Net), 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
* * * * *
12. Amend section 52.219-8 to revise the date of the clause and
paragraph (c)(3) to read as follows:
52.219-8 Utilization of Small Business Concerns.
* * * * *
Utilization of Small Business Concerns (Oct 1999)
* * * * *
(c) * * *
(3) Small business concern owned and controlled by socially and
economically disadvantaged individuals and small disadvantaged
business concern mean a small business concern that represents, as
part of its offer that--
(i) It has received certification as a small disadvantaged
business concern consistent with 13 CFR 124, Subpart B;
(ii) No material change in disadvantaged ownership and control
has occurred since its certification;
(iii) Where the concern is owned by one or more 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
(iv) It is identified, on the date of its representation, as a
certified small disadvantaged business in the database maintained by
the Small Business Administration (PRO-Net).
* * * * *
13. Amend section 52.219-9 to revise the date of the clause and
paragraph (d)(5) to read as follows:
52.219-9 Small Business Subcontracting Plan.
* * * * *
SMALL BUSINESS SUBCONTRACTING PLAN (OCT 1999)
* * * * *
(d) * * *
(5) A description of the method used to identify potential
sources for solicitation purposes (e.g., existing company source
lists, the Procurement Marketing and Access Network (PRO-Net) of the
Small Business Administration (SBA), the National Minority
Purchasing Council Vendor Information Service, the Research and
Information Division of the Minority Business Development Agency in
the Department of Commerce, or small, HUBZone, small disadvantaged,
and women-owned small business trade associations). A firm may rely
on the information contained in PRO-Net as an accurate
representation of a concern's size and ownership characteristics for
the purposes of maintaining a small, HUBZone, small disadvantaged
and women-owned small business source list. Use of PRO-Net as its
source list does not relieve a firm of its responsibilities (e.g.,
outreach, assistance, counseling, or publicizing subcontracting
opportunities) in this clause.
* * * * *
14. Amend section 52.219-22 to revise the date of the provision and
paragraph (b)(1)(i)(C) to read as follows:
52.219-22 Small Disadvantaged Business Status.
* * * * *
SMALL DISADVANTAGED BUSINESS STATUS (OCT 1999)
* * * * *
(b) * * *
(1) * * *
(i) * * *
(C) It is identified, on the date of its representation, as a
certified small disadvantaged business concern in the database
maintained by the Small Business Administration (PRO-Net); or
* * * * *
15. Amend section 52.219-23 to revise the date of the clause and
paragraphs (a)(1)(iii) and (b) to read as follows:
52.219-23 Notice of Price Evaluation Adjustment for Small
Disadvantaged Business Concerns.
* * * * *
NOTICE OF PRICE EVALUATION ADJUSTMENT FOR SMALL DISADVANTAGED BUSINESS
CONCERNS (OCT 1999)
(a) * * *
(1) * * *
(iii) It is identified, on the date of its representation, as a
certified small disadvantaged business concern in the database
maintained by the Small Business Administration (PRO-Net).
* * * * *
(b) Evaluation adjustment. (1) The Contracting Officer will
evaluate offers by adding a factor of ______ [Contracting Officer
insert the percentage] percent to the price of all offers, except--
(i) Offers from small disadvantaged business concerns that have
not waived the adjustment;
(ii) An otherwise successful offer 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));
(iii) An otherwise successful offer where application of the
factor would be inconsistent with a Memorandum of Understanding or
other international agreement with a foreign government;
(iv) For DoD, NASA, and Coast Guard acquisitions, an otherwise
successful offer from a historically black college or university or
minority institution; and
(v) For DoD acquisitions, an otherwise successful offer of
qualifying country end products (see sections 225.000-70 and
252.225-7001 of the Defense FAR Supplement).
(2) The Contracting Officer will apply the factor to a line item
or a group of line items on which award may be made. The Contracting
Officer will apply other evaluation factors described in the
solicitation before application of the factor.
[[Page 36225]]
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.
* * * * *
16. Amend section 52.219-25 to revise the date of the clause and
paragraph (a) to read as follows:
52.219-25 Small Disadvantaged Business Participation Program--
Disadvantaged Status and Reporting.
* * * * *
SMALL DISADVANTAGED BUSINESS PARTICIPATION PROGRAM--DISADVANTAGED
STATUS AND REPORTING (OCT 1999)
(a) Disadvantaged status for joint venture partners, team
members, and subcontractors. This clause addresses disadvantaged
status for joint venture partners, teaming arrangement members, and
subcontractors and is applicable if this contract contains small
disadvantaged business (SDB) participation targets. The Contractor
shall obtain representations of small disadvantaged status from
joint venture partners, teaming arrangement members, and
subcontractors through use of a provision substantially the same as
paragraph (b)(1)(i) of the provision at FAR 52.219-22, Small
Disadvantaged Business Status. The Contractor shall confirm that a
joint venture partner, team member, or subcontractor representing
itself as a small disadvantaged business concern, is identified as a
certified small disadvantaged business in the database maintained by
the Small Business Administration (PRO-Net) or by contacting the
SBA's Office of Small Disadvantaged Business Certification and
Eligibility.
* * * * *
[FR Doc. 99-16855 Filed 7-1-99; 8:45 am]
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