[Federal Register Volume 63, Number 249 (Tuesday, December 29, 1998)]
[Notices]
[Page 71724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34364]
Federal Register / Vol. 63, No. 249 / Tuesday, December 29, 1998 /
Notices
[[Page 71724]]
OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
Small Disadvantaged Business Procurement: Reform of Affirmative
Action in Federal Procurement
AGENCY: Office of Federal Procurement Policy (OFPP), OMB.
ACTION: Notice of Determination Concerning the Small Disadvantaged
Business (SDB) Participation Program.
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SUMMARY: The Federal Acquisition Regulation (FAR), 48 CFR Subpart
19.12, contains regulations providing for an SDB Participation Program
to be used when evaluating the extent of participation of SDB concerns
in performance of contracts in authorized standard industrial
classification code (SIC) major groups. The FAR provides further that
the Department of Commerce (DOC) will determine the authorized SIC
major groups for use in the SDB Participation Program. The DOC, in the
attached memorandum, determines that the SIC major groups eligible for
the price evaluation adjustment program shall be applicable for the SDB
Participation Program. OFPP published on June 30, 1998, the listing of
the eligible SIC major groups [63 FR 35714 (1998)] for the price
evaluation adjustment program.
EFFECTIVE DATE: January 1, 1999.
FOR FURTHER INFORMATION CONTACT: Ms. Linda G. Williams, Deputy
Associate Administrator, Office of Federal Procurement Policy,
Telephone 202-395-3302. For information on the Commerce determination,
contact Jeffrey Mayer, Director of Policy Development, Economics and
Statistics Administration, U.S. Department of Commerce, Telephone 202-
482-1728.
SUPPLEMENTARY INFORMATION:
Procurement Mechanisms and Factors
FAR Subpart 19.12 provides for an SDB Participation Program that
consists of two mechanisms: (1) An evaluation factor or subfactor when
evaluating the extent of participation of SDBs in performance of
contracts in authorized SIC major groups, and (2) an incentive
subcontracting program for SDB concerns in authorized SIC major groups.
OFPP gives notice that the attached Memorandum from the DOC determines
that the SIC major groups eligible for the price evaluation adjustment
program shall be applicable for the SDB Participation Program.
(See 63 FR 35714 (June 30, 1998)) for the listing of the eligible SIC
major groups.) The SDB Participation Program is authorized for use in
solicitations issued on or after January 1, 1999.
Deidre A. Lee,
Administrator.
December 15, 1998.
MEMORANDUM FOR OFFICE OF FEDERAL PROCUREMENT POLICY
From: Jeffrey L. Mayer, Director of Policy Development.
Subject: Department of Commerce Determination on the Small
Disadvantaged Business Participation Program.
Pursuant to new Federal Acquisition Regulation (FAR) subpart
19.12, transmitted herein is a Department of Commerce (DOC)
determination on the Small Disadvantaged Business Participation
Program for use in Federal procurements.
DOC transmitted a Notice of Determination Concerning Price
Evaluation Adjustments to the Office of Federal Procurement Policy
(OFPP), which was published in the Federal Register on June 30, 1998
(see 63 Fed. Reg. 35714 (1998)). The Notice identified the standard
industrial classification (SIC) major industry groups in which
offers by small disadvantaged businesses (SDBs) on certain federal
prime contracts would be eligible for price evaluation adjustments.
In addition, FAR 19.1202-1 and 19.1203 required DOC to identify
the SIC major industry groups in which the extent of participation
of SDB concerns as subcontractors in performance of federal prime
contracts would: (a) make certain offerors on these prime contracts
eligible for an evaluation factor or subfactor; and (b) make
successful offerors eligible for an incentive subcontracting
program.
DOC was asked to identify eligible major industry groups at the
subcontract level for use in the Small Disadvantaged Business
Participation Program that becomes effective January 1, 1999. To
make its determination, DOC considered prime contracting data and
published information on SDB participation in subcontracting.
DOC's analysis of prime contracting revealed that in 59 out of
98 major industry groups (and regions, in the case of the
construction sector), SDBs win a smaller than expected (given their
age and size) share of federal prime contract dollars. Evidence
cited in U.S. Department of Justice, ``The Compelling Interest for
Affirmative Action in Federal Procurement: A Preliminary Survey''
[see 61 Fed. Reg. 26050 (1996)] provides no indication that SDB
subcontractors deal with substantially different financial
institutions, private sector customers, and suppliers than do SDB
prime contractors in the same industry, i.e., there is no basis for
believing that SDB subcontractors face lower barriers to effective
competition than those encountered by SDB prime contractors in the
same industry. In addition, subcontracting tends to be dominated by
informal networks of personal contacts, in which information is
exchanged about prospective projects, low-cost suppliers, and credit
opportunities. In those industries in which minority entrepreneurs
have been excluded from these networks, their ability to participate
in federal contracting as subcontractors has likely been diminished
compared with their ability to participate as prime contractors.
Therefore, SDBs are unlikely to win larger-than-expected shares of
federal subcontract awards in the same major industry groups in
which SDBs win smaller-than-expected shares of federal prime
contract awards.
Based on the reasons explained above which indicate that, in any
given major industry group, discrimination affects federal prime
contractors and subcontractors similarly, and on the basis of
currently available data, DOC determines that the SIC major industry
groups eligible for the price evaluation adjustment program (i.e.,
the prime contractor program) shall be applicable to the small
disadvantaged business participation program (i.e., the
subcontractors program). (See 63 Fed. Reg. 35714 (1998) for a
listing of the eligible SIC major industry groups.)
[FR Doc. 98-34364 Filed 12-28-98; 8:45 am]
BILLING CODE 3110-01-P
