[Federal Register Volume 64, Number 195 (Friday, October 8, 1999)]
[Notices]
[Pages 54918-54920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26217]
[[Page 54918]]
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OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
OFPP Policy Letter 99-1 on Small Business Procurement Goals
AGENCY: Executive Office of the President, Office of Management and
Budget (OMB), Office of Federal Procurement Policy (OFPP).
ACTION: Notice of final policy directive; rescission of OFPP Policy
Letter 91-1.
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SUMMARY: OFPP is issuing OFPP Policy Letter 99-1 which contains
guidance on implementing government-wide goals for procurement
contracts awarded to small businesses, HUBZone small businesses, small
disadvantaged businesses, and women-owned small businesses. The goals
for each of these small business categories are stated as a percentage
of overall Federal procurement dollars. The policy letter also provides
guidance on reporting requirements that will help the Small Business
Administration (SBA) determine whether executive agencies are reaching
these goals. This policy letter supersedes OFPP Policy Letter 91-1. As
a result of comments received following publication of the proposed
policy letter in the Federal Register on April 2, 1999 (64 FR 16003),
we are making minor changes to the policy letter as follows: (1) The
title of the policy letter is shortened to read: ``Small Business
Procurement Goals'' (2) A new subparagraph is added in Section 6 to
make clear that--in addition to working with each agency to establish
goals for awarding prime contracts--SBA also negotiates with the
agencies goals for subcontract awards made by prime contractors; and
(3) The last sentence in Section 7a.2 is revised to make clear that an
agency's narrative report should include plans for improvement if the
agency fails to achieve their small business goals.
EFFECTIVE DATE: November 8, 1999.
FOR FURTHER INFORMATION CONTACT: Michael Gerich or Keith Coleman, OFPP,
at 202-395-3501. To obtain a copy of this policy letter, please log on
to the Acquisition Reform Network at: www.arnet.gov/References/
Fwd__Index.html.
SUPPLEMENTARY INFORMATION:
A. Background
We issued an earlier Policy Letter, 91-1, entitled ``Government-
Wide Small Business and Small Disadvantaged Business Goals for
Procurement Contracts'' on March 11, 1991. That policy letter addressed
sections 502 and 503 of the Business Opportunity Development Act of
1988. Section 502 establishes goals for contract awards to small
business concerns and small disadvantaged businesses. Section 503
requires the President to include the agencies' actual goal
achievements in the ``State of Small Business'' report. The report also
includes an analysis of an agency's failure to achieve the goals, and
the number and dollar value of prime contracts awarded to small firms
through noncompetitive negotiated procurements, restricted and
unrestricted competitions, and information on subcontract awards.
We need to issue this new policy letter because of statutory
changes made in 1994 and 1997. Section 7106 of the Federal Acquisition
Streamlining Act of 1994 (FASA) establishes a 5 percent women-owned
small business goal. Section 603 of the Small Business Reauthorization
Act of 1997 increases the annual government-wide goal for prime
contract awards to small business concerns from not less than 20
percent to not less than 23 percent. The Act also adds a 3 percent
HUBZone small business goal phased-in over the next 5 years.
This policy letter supports SBA's policies of establishing its own
guidance on the goals by: (1) Establishing with each agency separate
goals for prime contracts and subcontracts in each of the small
business categories; (2) Establishing for each agency goals for awards
made under section 8(a) of the Small Business Act; (3) Requiring use of
Federal procurement data in the Federal Procurement Data System (FPDS)
to measure goal achievements rather than requiring agencies to provide
this information in separate reports; and (4) Requiring that, prior to
the beginning of each fiscal year, SBA mutually establish with each
agency goals for each of the small business categories.
B. Comments
We received fourteen letters in response to the request for
comments on proposed OFPP Policy Letter 99-1 (64 FR 16003; April 2,
1999). A summary of the main issues and concerns raised in the comments
follows:
1. Comment: OFPP should cancel this policy letter because it is
unnecessary since SBA issues its own guidance.
Response: This policy letter supports SBA's comprehensive policy
guidance on establishing with each agency mutually acceptable prime and
subcontract goals to implement statutory goaling requirements. The
policy letter provides, among other things, guidance to implement the
statutory five percent goals for small disadvantaged businesses (SDBs)
and women-owned small businesses. The Small Business Act requires a
goal of at least five percent for the combination of prime and
subcontract awards. To implement this requirement, the policy letter
establishes a separate five percent goal for prime contracts and a
separate five percent goal for subcontracts for these two small
business categories. This policy helps to promote small disadvantaged
business and women-owned small business participation in federal
contracting, and ensures easy and reasonable tracking of data to
measure goal achievements. Therefore, we believe it is essential to
issue this policy letter.
2. Comment: The policy letter should not impose mandatory goals for
HUBZones until SBA certifies a significant number of HUBZone small
businesses. Some commenters suggested that we consider an alternative
phase-in process or rely on self-certification to implement the HUBZone
goals.
Response: Section 603 of the Small Business Reauthorization Act of
1997 (Pub. L. 105-135) requires the three percent HUBZone small
business goal to be phased in over five years beginning with one
percent of prime contract awards to be awarded to such firms in fiscal
year 1999. In addition, section 603 requires prime contractors to
establish goals for subcontracts with HUBZone small businesses. While
we realize that only a small number of HUBZone small businesses have
been certified by SBA, the statute does not provide the authority to
implement alternative dates. Further, the statute requires SBA to
certify HUBZone small business concerns and maintain a list of all
qualified firms. Therefore, agencies and prime contractors may not rely
on self-certification to determine the status of HUBZone small business
concerns.
3. Comment: For sake of brevity, the title of the policy letter
should be shortened.
Response: We will change the title to read ``Small Business
Procurement Goals.''
4. Comment: The chart in section 6b. of the policy letter that
lists the statutorily-required goals and percentages should include all
reportable goaling categories--even those without a statutorily
established percentage, such as prime 8(a) awards and small business
subcontract awards.
Response: The primary purpose of the policy letter is to provide
guidance to implement the statutory government-wide small business
goals, including goals for SDBs, women-owned small businesses, and
HUBZone small business concerns. While agencies must
[[Page 54919]]
negotiate with SBA goals for 8(a) prime awards and subcontract goals
for each small business category, we believe the charts in sections 6b.
and 6c. should be limited to implementation of the statutory
government-wide goals. However, we will add a new subparagraph in
section 6 to make clear that agencies must establish goals for
subcontract awards to small businesses, SDBs, women-owned small
businesses, and HUBZone small businesses.
5. Comment: Section 6e. of the policy letter indicates that
agencies may count prime contract awards to small businesses toward
more than one goal. This practice has historically been recognized as
``double counting'' and may provide opportunities for inaccuracies.
This section should be clarified to indicate how ``double counting''
may be utilized.
Response: The policy letter recognizes that the government-wide
small business goal of 23 percent includes all the goals for the
specific categories of small businesses. Therefore, agencies may count
awards to small businesses toward more than one goal. We do not view
this as ``double counting'' since the goals for each small business
category are a subset of the overall small business goal. SBA's
``Guidelines on Goals Under Procurement Preference Programs'' provides
more detailed guidance on the goal-setting process.
6. Comment: Section 7a.(2) of the policy letter should be clarified
to require ``plans for improving performance'' only from agencies that
fail to meet their goals.
Response: Section (h)(2)(C) of the Small Business Act requires the
SBA Administrator to include in the report to the President an analysis
of why the government-wide goals or any individual agency goals were
not met. The commenter suggests that section 7a.(2) should make clear
that an agency's narrative report should include plans for improvement
if the agency fails to achieve their goals. If the agency achieves its
goals, the narrative report would not include a plan for improvement.
We will revise the last sentence in section 7a.(2) to clarify this
point.
7. Comment: The policy letter correctly emphasizes the importance
of accurate and complete prime and subcontract data in the Federal
Procurement Data System (FPDS) since SBA uses FPDS data to measure an
agency's small business goal achievements. However, agencies should
have timely and easy access to their FPDS data. There should be a
government-wide standard for which agencies can take small business
credit when ordering from another agency's contract. Also, there should
be an initiative to improve the quality and reporting of subcontracting
data.
Response: We realize that providing agencies with easy access to
their FPDS data would help to improve the quality of the data. We are
working with GSA's Federal Procurement Data Center, which operates the
FPDS, to provide agencies easier on-line access to their data.
Currently, the FPDC does provide agencies with reports of their data
upon request. We have drafted government-wide policy that would allow
agencies to take small business credit when ordering from another
agency's contract, e.g., Federal Supply Schedules, government-wide
agency contracts, and multi-agency contracts. When finalized, this
guidance should help to improve the FPDS data and permit an agency to
properly reflect its level of small business participation. We also
agree that there should be an initiative to improve the subcontracting
data collection process. In that regard, we plan to work with SBA and
the Procurement Executives Council to identify problem areas where
improvements can be made.
8. Comment: The second bullet in section 7b.(4)(ii) of the policy
letter should read ``competition restricted to small business concerns
owned and controlled by socially and economically disadvantaged
individuals' to coincide with the requirements of section 503 of Public
Law 100-656, Presidential Reports on Contracting Goals. As currently
written, it seems to imply that agencies have the authority to set-
aside acquisitions for SDBs, a statutory authority that has been
superseded by the provisions in FAR Part 19 which allow for price
evaluation adjustments.
Response: Throughout the policy letter, we refer to ``small
business concerns owned and controlled by socially and economically
disadvantaged individuals' as ``small disadvantaged businesses.'' We
are using procurement mechanisms like price evaluation adjustments set
forth in FAR Part 19 instead of set-asides for small disadvantaged
businesses. However, competition restricted to small disadvantaged
businesses also includes competitive 8(a) awards. We do not believe the
policy letter should be changed.
Dated: October 1, 1999.
Deidre A. Lee,
Administrator.
POLICY LETTER 99-1
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Small Business Procurement Goals
1. Purpose. This policy letter provides guidance to Executive
Branch departments and agencies on government-wide goals for
procurement contracts awarded to small businesses, HUBZone small
businesses, small disadvantaged businesses and women-owned small
businesses (``small businesses''). It also provides guidance on
reporting requirements that will help the Small Business Administration
(SBA) determine whether agencies are reaching these goals.
2. Supersession Information. This policy letter replaces OFPP
Policy Letter 91-1, ``Government-Wide Small Business and Small
Disadvantaged Business Goals for Procurement Contracts,'' dated March
11, 1991, which is rescinded.
3. Authority. This policy letter is based on the Small Business
Act, the Office of Federal Procurement Policy Act, the Business
Opportunity Development Reform Act of 1988, the Federal Acquisition
Streamlining Act of 1994, and the Small Business Reauthorization Act of
1997.
4. Background. The Small Business Act requires executive agencies,
in consultation with SBA, to develop annual goals for contract awards
to small businesses. SBA monitors agency performance and reports their
achievements to the President. The Office of Federal Procurement Policy
Act, 41 U.S.C. 405, empowers the Administrator for Federal Procurement
Policy to prescribe government-wide procurement policies.
The Business Opportunity Development Reform Act establishes
government-wide goals for small businesses and small disadvantaged
businesses and requires the President to include the agencies' actual
goal achievements in the ``State of Small Business'' report. The report
must also include an analysis of any failure to achieve the goals, and
the number and dollar value of prime contracts awarded to small
businesses through noncompetitive negotiated procurements, restricted
and unrestricted competitions, and information on subcontract awards.
The Federal Acquisition Streamlining Act of 1994 (FASA) establishes a 5
percent women-owned small business goal. The Small Business
Reauthorization Act of 1997 (SBRA) adds a 3 percent HUBZone small
business goal phased-in over the next 5 years. It also increases the
annual government-wide goal for prime contract awards to small business
concerns to not less than 23 percent.
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In March 1991, the OFPP issued Policy Letter 91-1 to implement
government-wide goals for small businesses and small disadvantaged
businesses. This policy letter includes the guidance from Policy Letter
91-1, and also implements the more recent statutory provisions of FASA
and SBRA.
This policy letter also supports the Small Business
Administration's (SBA) policies of establishing its own guidance on the
goals, establishing with each agency mutually acceptable prime contract
goals for awards made under section 8(a) of the Small Business Act, and
using procurement data in the Federal Procurement Data System to
measure accomplishments rather than requiring agencies to provide this
information in separate reports.
5. Policy. Prior to the beginning of each fiscal year, SBA will
mutually establish with each agency goals for participation by small
businesses, small disadvantaged businesses, HUBZone small businesses,
and women-owned small businesses. The agencies' cumulative goals shall
count toward accomplishment of the government-wide goals.
6. Goals.
a. The government-wide small business goal is not less than 23
percent of the total value of all prime contracts awarded for the
fiscal year. This includes all the goals for the specific categories of
small businesses.
b. The following table lists the specific goals for small
disadvantaged and women-owned small businesses.
------------------------------------------------------------------------
The goal for . . . is . . .
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Small disadvantaged business prime Not less than 5 percent of
contracts. the value of all prime
contract awards.
Small disadvantaged business subcontracts. Not less than 5 percent of
the value of all
subcontract awards.
Women-owned small business prime contracts Not less than 5 percent of
the value of all prime
contract awards.
Women-owned small business subcontracts... Not less than 5 percent of
the value of all
subcontract awards.
------------------------------------------------------------------------
c. The following table lists the specific goals for HUBZone small
businesses.
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the percentage goal is at
For FY . . . least . . .
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1999...................................... 1 percent of the value of
all prime contract awards
2000...................................... 1.5 percent of the value of
all prime contract awards.
2001...................................... 2 percent of the value of
all prime contract awards.
2002...................................... 2.5 percent of the value of
all prime contract awards.
2003 and after............................ 3 percent of the value of
all prime contract awards.
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d. There is no specific statutory requirement to establish goals
for awards made pursuant to section 8(a) of the Small Business Act.
However, agencies must mutually establish with SBA acceptable goals for
awards to 8(a) firms.
e. Agencies must mutually establish with SBA acceptable goals for
prime contract awards as well as subcontract awards by prime
contractors to small businesses, small disadvantaged businesses, women-
owned small businesses, and HUBZone small businesses.
f. Agencies may count prime contract awards to small businesses
toward more than one goal. Prime contract awards to small businesses,
women-owned small businesses, small disadvantaged businesses, 8(a)
firms, and HUBZone small businesses count toward the government-wide
small business goal.
7. Responsibilities.
a. Agency Responsibilities
(1) Each department or agency must negotiate annually in good faith
with SBA to establish its specific prime and subcontract goals for
small businesses, woman-owned small businesses, small disadvantaged
businesses, HUBZone small businesses, and 8(a) firms. These goals
should provide the maximum practicable opportunity for all these
categories of small businesses to participate in contracts let by the
agency. SBA's annual guidance on establishing small business goals,
entitled ``Guidelines on Goals Under Procurement Preference Programs,''
covers the goal-setting process.
(2) At the end of the fiscal year, each agency must submit a
narrative report to SBA analyzing its achievements and any failures to
achieve its small business goals for the year. If an agency fails to
achieve its goals, the report also must include plans for improving
performance in the next year.
(3) Agencies must ensure that their prime and subcontract data in
the Federal Procurement Data System is accurate and complete in order
to measure their small business goal accomplishments.
b. SBA Responsibilities
(1) Prior to the beginning of each fiscal year, SBA will work with
each agency to establish mutually acceptable prime and subcontract
goals for the different categories of small businesses.
(2) SBA must ensure that the mutually established cumulative goals
for all agencies meet or exceed the government-wide small business goal
of 23%.
(3) SBA must compile and analyze agencies' achievements against
their individual small business procurement goals and report the
results to the President.
(4) SBA will use data in the Federal Procurement Data System to
determine:
(i) Agencies' success in reaching their procurement goals for prime
contracts and subcontracts;
(ii) The number and dollar value of prime contracts awarded to
small business concerns, HUBZone small business concerns, small
disadvantaged business concerns, and women-owned small business
concerns through:
Noncompetitive negotiation,
Competition restricted to small disadvantaged business
concerns,
Competition restricted to small business concerns and
HUBZone small business concerns, and
Unrestricted competitions; and
(iii) The dollar value of subcontracts awarded to small business
concerns, HUBZone small business concerns, small disadvantaged business
concerns, and women-owned small business concerns.
8. Information Contact. Direct any questions regarding this policy
letter to Michael Gerich or Keith Coleman, OFPP, 202-395-3501.
9. Effective Date. The policy letter is effective 30 days after
issuance.
Deidre A. Lee,
Administrator.
[FR Doc. 99-26217 Filed 10-7-99; 8:45 am]
BILLING CODE 3110-01-P
