01-26300. Federal Acquisition Regulation; Veterans Entrepreneurship and Small Business Development Act of 1999

AGENCIES:

Department of Defense (DoD), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA).

ACTION:

Interim rule with request for comments.

SUMMARY:

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed on an interim rule to amend the Federal Acquisition Regulation (FAR) to implement section 803 of the Small Business Reauthorization Act of 2000, part of the Consolidated Appropriations Act, 2001. Section 803 amended section 8(d) of the Small Business Act by adding an additional subcontracting plan goal requirement for service-disabled veteran-owned small business concerns.

DATES:

Effective Date: October 22, 2001.

Comment Date: Interested parties should submit comments to the FAR Secretariat at the address shown below on or before December 21, 2001 to be considered in the formulation of a final rule.

ADDRESSES:

Submit written comments to: General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW., Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405.

Submit electronic comments via the Internet to: farcase.2000—[e-mail]

Please submit comments only and cite FAC 2001-01, FAR case 2000-302, in all correspondence related to this case.

FOR FURTHER INFORMATION CONTACT:

The FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, [phone], for information pertaining to status or publication schedules. For clarification of content, contact Ms. Rhonda Cundiff at [phone]. Please cite FAR case 2000-302.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule amends the FAR to implement section 803 of the Small Business Reauthorization Act of 2000, part of the Consolidated Appropriations Act, 2001 (Pub. L. 106-554).

The Veterans Entrepreneurship and Small Business Development Act of 1999 (Pub. L. 106-50) established new assistance programs for veterans and service-disabled veterans who own and operate small businesses. Specifically, the Act—

• Defines the terms “small business concern owned and controlled by veterans” and “small business concern owned and controlled by service-disabled veterans”;
• Establishes that veteran-owned and service-disabled veteran-owned small businesses be afforded maximum practical opportunity to participate in the performance of contracts and subcontracts awarded by any Federal agency;
• Establishes a requirement to include a goal for veteran-owned small businesses in subcontracting plans under FAR 52.219-9;
• Establishes a 3 percent Governmentwide goal (based on the total value of all prime contract and subcontract awards) for participation by service-disabled veteran-owned small businesses; and
• Adds data collection requirements for prime and subcontract awards to veteran-owned small businesses and service disabled veteran-owned small business concerns.

DoD, GSA, and NASA published an interim FAR rule in the Federal Register at 65 FR 60542, October 11, 2000, to implement this statute. Twenty-nine respondents submitted comments in response to the interim rule. The Councils considered all comments and made no changes as a result. Two public comments merit noting. The first recommended that the FAR specifically reference the statutory 3 percent goal for service-disabled veteran-owned small business. The Councils have not adopted this recommendation. The FAR does not specify the statutory Governmentwide goals for any small business category because they have no regulatory purpose for agencies. Statutory goals for small businesses are established on a Governmentwide basis. Within these Governmentwide goals, SBA negotiates separate annual goals for each small business category with each agency. The individual agency goals attempt to reflect the agency mission and its contracting requirements, and these individual agency goals may be higher or lower than the Governmentwide goal. SBA then tracks cumulative agency achievements against the Governmentwide goal. Accordingly, specifying the 3 percent service-disabled veteran-owned small business goals in the FAR is inappropriate in that only the goal negotiated with SBA is relevant to that agency. The second public comment recommended that the FAR establish a requirement for a separate subcontracting plan goal for service-disabled veteran-owned small business. The Councils concur in this recommendation, but could not make this change in the first interim rule. That rule was based solely on the Veterans Entrepreneurship and Small Business Development Act of 1999. Section 501(c) of the Act established a subcontracting plan goal requirement for veteran-owned small businesses, but not for service-disabled veteran-owned small businesses. The interim rule accurately reflected this statutory change.

However, section 803 of the Small Business Reauthorization Act of 2000, part of the Consolidated Appropriations Act, 2001 (Pub. L. 106-554) was subsequently enacted on December 21, 2000. Section 803 amended section 8(d) of the Small Business Act (15 U.S.C 637(d)) by adding an additional subcontracting plan goal requirement for service-disabled veteran-owned small business concerns. This interim rule adds the new statutory subcontracting plan goal requirement for service-disabled veteran-owned small business concerns.

Public comments are specifically sought on the service-disabled veteran-owned small business subcontracting plan goal changes. Since public comments received in response to the first interim rule have already been addressed, only comments on the issue unique to the second interim rule need to be submitted.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This 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 the rule adds a new statutory subcontracting plan goal requirement for service-disabled veteran-owned small business concerns. An Initial Regulatory Flexibility Analysis (IRFA) has been prepared and is summarized as follows:

This interim rule amends the Federal Acquisition Regulation to implement section 803 of the Small Business Reauthorization Act of 2000, part of the Consolidated Appropriations Act, 2001 (Pub. L. 106-554). Section 803 supplements the Veterans Entrepreneurship and Small Business Development Act of 1999 (Pub. L. 106-50) by adding a separate subcontracting plan goal requirement for service-disabled veteran-owned small business concerns. There are approximately 4 to 5.5 million small businesses owned and controlled by veterans and 100,000 to 300,000 small businesses owned and controlled by service-disabled veterans. This rule does not duplicate, overlap, or conflict with other relevant Federal regulations. There are no alternatives to the interim rule that would accomplish the stated objectives.

The FAR Secretariat has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. Interested parties may obtain a copy from the FAR Secretariat. The Councils will consider comments from small entities concerning the affected FAR Parts 19, 52, and 53 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 2001-01, FAR case 2000—302), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 104-13) applies; however, this interim rule only requires contractors to report, as a separate item, information already collected and reported under OMB Control Numbers 9000-0006 and 9000-0007. The impact on the information collection hours of these OMB clearances is so small as to be within the estimating parameters of these clearances. Therefore, the clearances have not been changed.

D. Determination to Issue an Interim Rule

A determination has been made under 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 in order to implement section 803 of the Small Business Reauthorization Act of 2000, part of the Consolidated Appropriations Act, 2001 (Pub. L. 106-554). However, pursuant to Pub. L. 98-577 and FAR 1.501, the Councils will consider public comments received in response to this interim rule in formulating the final rule.

List of Subjects in 48 CFR parts 19, 52, and 53

• Government procurement

Dated: October 12, 2001.

Al Matera,

Director, Acquisition Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 19, 52, and 53 as set forth below:

1. The authority citation for 48 CFR parts 19, 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

19.704 and 19.705

[Amended]

2. Amend sections 19.704 and 19.705 as follows:

a. Add “service-disabled veteran-owned small business,” after the phrase “veteran-owned small business,” in the following sections:

19.704(a)(1), (a)(2), (a)(3), (a)(6), (a)(8), and (a)(11)

19.705-4(c) (twice)

19.705-4(d)(1) and (d)(5);

and

b. Remove “(including service-disabled veteran-owned small business)” and add “, service-disabled veteran-owned small business” in the following sections:

19.705-2(d)

19.705-7(a)

19.705-7(d) (twice)

19.706(b)

19.706(c)

19.708(c)(1), (c)(2), and (c)(3).

PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

3. Amend section 52.219-9 as follows:

a. Revise the date of the clause;

b. Add “service-disabled veteran-owned small business,” after the phrase “veteran-owned small business,” in the following sections:

52.219-9(c) (twice)

52.219-9(d)(1), (d)(8), (d)(11), (d)(11)(i), and (d)(11)(ii)

52.219-9(e)(1) (twice), (e)(2) and (e)(3)

Alternate I(c) (twice)

Alternate II(c) (twice);

and

c. Redesignate paragraphs (d)(2)(iv) through (d)(2)(vi) as (d)(2)(v) through (d)(2)(vii), respectively; and add a new paragraph (d)(2)(iv);

d. Redesignate paragraphs (d)(3)(iii) through (d)(3)(v) as (d)(3)(iv) through (d)(3)(vi), respectively; and add a new paragraph (d)(3)(iii);

e. In the second sentence of paragraph (d)(5), add “service-disabled veteran-owned small,” after the phrase “veteran-owned small,”;

f. Redesignate paragraphs (d)(6)(iii) through (d)(6)(v) as (d)(6)(iv) through (d)(6)(vi), respectively; and add a new paragraph (d)(6)(iii);

g. In the second sentence of paragraph (d)(10)(iii), add “HUBZone small business concerns,” after the phrase “service-disabled veteran-owned small business concerns,”;

h. Redesignate paragraphs (d)(11)(iii)(C) through (d)(11)(iii)(F) as (d)(11)(iii)(D) through (d)(11)(iii)(G), respectively; and add a new paragraph (d)(11)(iii)(C); and

i. In Alternates I and II of the clause, remove “( Oct 2000)” and add “(Oct 2001)” in their places.

The revised and added text reads as follows:

52.219-9

Small Business Subcontracting Plan.

* * * * *

SMALL BUSINESS SUBCONTRACTING PLAN (OCT 2001)

* * * * *

(d) * * *

(2) * * *

(iv) Total dollars planned to be subcontracted to service-disabled veteran-owned small business;

* * * * *

(3) * * *

(iii) Service-disabled veteran-owned small business concerns;

* * * * *

(6) * * *

(iii) Service-disabled veteran-owned small business concerns;

* * * * *

(11) * * *

(iii) * * *

(C) Whether service-disabled veteran-owned small business concerns were solicited and, if not, why not;

* * * * *

4. In section 52.219-10, revise the date of the clause; and in paragraph (a) and the first sentence of paragraph (b) of the clause, remove “(including service-disabled veteran-owned small business)” and add “, service-disabled veteran-owned small business” in their places. The revised text reads as follows:

52.219-10

Incentive Subcontracting Program.

* * * * *

INCENTIVE SUBCONTRACTING PROGRAM (OCT 2001)

* * * * *

PART 53—FORMS

53.219

[Amended]

5. Amend section 53.219 in paragraphs (a) and (b) by removing “(Rev. 10/00)” and adding “(Rev. 10/01)” in their places.

6. Revise sections 53.301-294 and 53.301-295 to read as follows: