06-1636. Defense Federal Acquisition Regulation Supplement; Small Business Programs (DFARS Case 2003-D047)

AGENCY:

Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION:

Proposed rule with request for comments.

SUMMARY:

DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to update text pertaining to small business programs. This proposed rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES:

Comments on the proposed rule should be submitted in writing to the address shown below on or before April 24, 2006, to be considered in the formation of the final rule.

ADDRESSES:

You may submit comments, identified by DFARS Case 2003-D047, using any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• E-mail: [e-mail]. Include DFARS Case 2003-D047 in the subject line of the message.
• Fax: [phone].
• Mail: Defense Acquisition Regulations System, Attn: Ms. Deborah Tronic, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.
• Hand Delivery/Courier: Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

Comments received generally will be posted without change to http://www.regulations.gov,, including any personal information provided.

FOR FURTHER INFORMATION CONTACT:

Ms. Deborah Tronic, [phone].

SUPPLEMENTARY INFORMATION:

A. Background

DFARS Transformation is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/​dpap/​dars/​dfars/​transformation/​index.htm.

This proposed rule is a result of the DFARS Transformation initiative. The proposed DFARS changes—

• Update and clarify requirements for contracting with small business and small disadvantaged business concerns; and
• Delete text containing procedures for referring matters to the Small Business Administration; procedures for processing contract awards under the 8(a) Program; and information on the DoD test program for negotiation of comprehensive small business subcontracting plans. Text on these subjects will be relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI). Additional information on PGI is available at http://www.acq.osd.mil/​dpap/​dars/​pgi.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

DoD does not expect this rule to 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 updates and clarifies DFARS text, but makes no significant change to DoD policy for contracting with small business concerns. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2003-D047.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 219 and 252

• Government procurement

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, DoD proposes to amend 48 CFR parts 219 and 252 as follows:

1. The authority citation for 48 CFR parts 219 and 252 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 219—SMALL BUSINESS PROGRAMS

2. Section 219.000 is revised to read as follows:

219.000

Scope of part.

This part also implements 10 U.S.C. 2323, which—

(1) Is applicable to DoD through fiscal year 2009; and

(2) Establishes goals for awards to small disadvantaged business (SDB) concerns, historically black colleges and universities (HBCUs), and minority institutions (MIs). See subpart 226.70 for policy on contracting with HBCU/MIs.

219.202-1

[Removed]

3. Section 219.202-1 is removed.

4. Section 219.602 is revised to read as follows:

219.602

Procedures.

When making a nonresponsibility determination for a small business concern, follow the procedures at PGI 219.602.

219.602-1 and 219.602-3

[Removed]

5. Sections 219.602-1 and 219.602-3 are removed.

6. Section 219.702 is revised to read as follows:

219.702

Statutory requirements.

(1) Section 834 of Public Law 101-189, as amended (15 U.S.C. 637 note), requires DoD to establish a test program to determine whether comprehensive subcontracting plans on a corporate, division, or plant-wide basis will reduce administrative burdens while enhancing subcontracting opportunities for small and small disadvantaged business concerns. See PGI 219.702 for the requirements of the test program.

(2) Comprehensive subcontracting plans shall not be subject to application of liquidated damages during the period of the test program (Section 402, Public Law 101-574).

219.703

[Amended]

7. Section 219.703 is amended in paragraph (a)(2)(B) by removing “Small, Small Disadvantaged and Women-Owned”.

8. Section 219.704 is revised to read as follows:

219.704

Subcontracting plan requirements.

(1) The goal for use of small disadvantaged business concerns shall include subcontracts with historically black colleges and universities and minority institutions (see subpart 226.70), in addition to subcontracts with small disadvantaged business concerns. Subcontracts with historically black colleges and universities and minority institutions do not have to be included in the small disadvantaged business goal in commercial items subcontracting plans.

(2) In those subcontracting plans which specifically identify small businesses, prime contractors shall notify the administrative contracting officer of any substitutions of such firms. Notifications shall be in writing and shall occur within a reasonable period of time after award of the subcontract. Contractor-specified formats shall be acceptable.

(3) See 215.304 for evaluation of offers in acquisitions that require a subcontracting plan.

219.705-2

[Removed]

9. Section 219.705-2 is removed.

10. Section 219.708 is amended by revising paragraph (b)(1) to read as follows:

219.708

Solicitation provisions and contract clauses.

(b)(1)(A) Use the clause at 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), in solicitations and contracts that contain the clause at FAR 52.219-9, Small Business Subcontracting Plan.

(B) In contracts with contractors that have comprehensive subcontracting plans approved under the test program described in 219.702, use the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), instead of the clauses at 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), and FAR 52.219-9, Small Business Subcontracting Plan.

* * * * *

11. Section 219.800 is amended by revising paragraph (a) to read as follows:

219.800

General.

(a) By Partnership Agreement (PA) between the Small Business Administration (SBA) and the Department of Defense (DoD), the SBA delegated to the Under Secretary of Defense (Acquisition, Technology, and Logistics) its authority under paragraph 8(a)(1)(A) of the Small Business Act (15 U.S.C. 637(a)) to enter into 8(a) prime contracts, and its authority under 8(a)(1)(B) of the Small Business Act to award the performance of those contracts to eligible 8(a) Program participants. However, the SBA remains the prime contractor on all 8(a) contracts, continues to determine eligibility of concerns for contract award, and retains appeal rights under FAR 19.810. The SBA delegates only the authority to sign contracts on its behalf. Consistent with the provisions of the PA, this authority is hereby redelegated to DoD contracting officers. This authority expires on September 30, 2006. A copy of the PA is available at PGI 219.800.

* * * * *

12. Section 219.803 is revised to read as follows:

219.803

Selecting acquisitions for the 8(a) Program.

When selecting acquisitions for the 8(a) Program, follow the procedures at PGI 219.803.

13. Section 219.804-2 is revised to read as follows:

219.804-2

Agency offering.

When processing requirements under the PA, follow the procedures at PGI 219.804-2.

219.804-3

[Removed]

14. Section 219.804-3 is removed.

15. Section 219.805-2 is revised to read as follows:

219.805-2

Procedures.

When processing requirements under the PA, follow the procedures at PGI 219.805-2 for requesting eligibility determinations.

16. Sections 219.808-1 and 219.811 are revised to read as follows:

219.808-1

Sole source.

For sole source requirements processed under the PA, follow the procedures at PGI 219.808-1.

219.811

Preparing the contracts.

For preparing awards under the PA, follow the procedures at PGI 219.811.

219.811-1 and 219.811-2

[Removed]

17. Sections 219.811-1 and 219.811-2 are removed.

18. Section 219.811-3 is amended by revising paragraph (3) to read as follows:

219.811-3

Contract clauses.

* * * * *

(3) Use the clause at 252.219-7011, Notification to Delay Performance, in solicitations and purchase orders issued under the PA cited in 219.800.

219.812

[Removed]

19. Section 219.812 is removed.

20. Section 219.1101 is added to read as follows:

219.1101

General.

The determination to use or suspend the price evaluation adjustment for DoD acquisitions can be found at http://www.acq.osd.mil/​dpap/​dars/​classdev/​index.htm.

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

21. Section 252.219-7003 is amended by revising the section heading, the clause title and date, the introductory text preceding paragraph (a), and paragraph (g) to read as follows:

252.219-7003

Small business subcontracting plan (DoD contracts).

* * * * *

SMALL BUSINESS SUBCONTRACTING PLAN (DOD CONTRACTS) (XXX 2006)

This clause supplements the Federal Acquisition Regulation 52.219-9, Small Business Subcontracting Plan, clause of this contract.

* * * * *

(g) In those subcontracting plans which specifically identify small businesses, the Contractor shall notify the Administrative Contracting Officer of any substitutions of such firms. Notifications shall be in writing and shall occur within a reasonable period of time after award of the subcontract. Contractor-specified formats shall be acceptable.

22. Section 252.219-7004 is amended by revising the section heading, the clause title and date, and paragraph (d) to read as follows:

252.219-7004

Small business subcontracting plan (test program).

* * * * *

SMALL BUSINESS SUBCONTRACTING PLAN (TEST PROGRAM) (XXX 2006)

* * * * *

(d) The failure of the Contractor or subcontractor to comply in good faith with (1) the clause of this contract entitled “Utilization of Small Business Concerns,” or (2) an approved plan required by this clause, shall be a material breach of the contract.