[Federal Register Volume 60, Number 25 (Tuesday, February 7, 1995)]
[Notices]
[Pages 7227-7229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2912]
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OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
Policy Letter on Subcontracting Plans for Companies Supplying
Commercial Items
AGENCY: Office of Federal Procurement Policy, OMB.
ACTION: The Office of Federal Procurement Policy (OFPP) is requesting
comments on a proposed policy letter on subcontracting plans for
companies supplying commercial items.
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SUMMARY: Section 8(d) of the Small Business Act (15 U.S.C. 637(d))
requires that each contract that exceeds $500,000 ($1 million in the
case of construction), and that offers subcontracting opportunities,
include a requirement that the apparent successful offeror negotiate a
subcontracting plan which shall become a material part of the contract.
These requirements have been implemented by prior OFPP Policy Letters
and subsequent promulgation in the Federal Acquisition Regulation
(FAR).
Sections 8104 and 8203 of the Federal Acquisition Streamlining Act
of 1994 (FASA), Public Law 103-355, establish a preference for the
acquisition of commercial items. In establishing this preference,
Congress expressed concern that implementing policies ease the burden
of government-unique requirements for companies supplying commercial
items. In response to this concern, the policy on subcontracting plans
is being revised to reduce the burden of government-unique requirements
on contractors that supply commercial items.
This proposed Policy Letter focuses on contracts and subcontracts
for ``commercial items'' as defined in section 8001 of FASA. Annual,
commercial company-wide, division-wide, or plant-wide, subcontracting
plans that relate to a company's commercial and noncommercial
production are authorized for:
(a) Prime contracts for commercial items, or
(b) Subcontractors that provide commercial items under a prime
contract, whether or not the prime contractor is supplying a commercial
item.
In addition, the proposed Policy Letter states that commercial
company-wide plans, when authorized under the Policy Letter, shall be
the preferred method of compliance with the requirements of section
8(d) of the Small Business Act. The policy letter reinforces that these
provisions for subcontracting plans for commercial item contractors do
not in any way relieve contracting officers, prime contractors or
subcontractors of their responsibilities for assuring that small, small
disadvantaged, and women-owned small businesses have the maximum
practicable opportunity to participate in contracts awarded by Federal
agencies.
COMMENT DATE: Comments must be received on or before April 10, 1995.
ADDRESSES: Comments should be submitted to William Coleman, Deputy
Administrator, Office of Federal Procurement Policy, New Executive
Office Building, Room 9013, 725 17th Street NW., Washington, DC 20503.
FOR FURTHER INFORMATION CONTACT:
William Coleman, Deputy Administrator, 202-395-3503.
Steven Kelman,
Administrator.
Policy Letter 95-
To The Heads of Executive Departments and Establishments
Subject: Subcontracting Plans for Companies Supplying Commercial
Items
1. Purpose. The purpose of this Policy Letter is to establish
policies on the requirement for subcontracting plans for companies
supplying commercial items.
2. Authority. This Policy Letter is issued pursuant to section 6
of the Office of Federal Procurement Policy Act, as amended, 41
U.S.C. 405.
3. Background. Section 8(d) of the Small Business Act (15 U.S.C.
637(d)) requires that each contract that exceeds $500,000 ($1
million in the case of construction), and that offers subcontracting
opportunities, include a requirement that the apparent successful
offeror negotiate a subcontracting plan which shall become a
material part of the contract. The requirement for subcontracting
plans does not apply to small businesses. The above requirements
have been implemented by OFPP Policy Letter 80-2 ``Regulatory
Guidance on Section 211 of Public Law 95-507'' dated April 29, 1980,
and Supplement No. 1 dated May 29, 1981, and further implemented in
part 19 of the Federal Acquisition Regulation (FAR). That Policy
Letter specifically authorized the use of a company-wide annual
subcontracting plan that relates to the contractor's commercial and
noncommercial production when the government is acquiring a
commercial product.
Sections 8104 and 8203 of the Federal Acquisition Streamlining
Act of 1994 (FASA), Public Law 103-355, establish a preference for
the acquisition of commercial items by the Department of Defense and
civilian agencies. In establishing this preference, Congress
expressed concern that implementing policies ease the burden of
government-unique requirements for companies supplying commercial
items. The Conference Report (H.R. 103-712) recognizes the unique
circumstance faced by commercial contractors and the specific
authority already provided in regulation and policy for company-wide
plans rather than contract-by-contract plans.
The report cites OFPP Policy Letter 80-2, FAR 52.219-9(g), and
519.704(b) of the General Services Administration Acquisition
Regulation which provide express authority for company-wide,
division-wide or plant-wide plans. The Report states:
Because contractors and subcontractors offering commercial items
tend to rely on their existing network of suppliers rather than
entering new subcontracts to fill government orders, the
requirements applicable to the company-wide subcontracting plans of
commercial companies differ from the requirements applicable to
individual subcontracting plans of noncommercial companies. See e.g.
sections 519.704(c)(2), 519.705-5 and 519.705-6(b) of the GSA FAR
Supplement. For example, a single company-wide plan authorized by
these regulations is likely to address subcontracting opportunities
at both the prime contract and subcontract levels, obviating the
need for the filing of individual contract-by-contract or
subcontract-by-subcontract plans. Title VIII of the bill is not
intended to require any changes to such practices.'' (emphasis
added)
In response to this concern, the policy on subcontracting plans
is being revised to reduce the burdens of government-unique
requirements on contractors that supply commercial items.
4. Policy. The following policy applies to contracts and
subcontracts for ``commercial items'' as defined in section 8001 of
FASA. (1) It is a fundamental policy of the Federal Government that
a fair proportion of its contracts be placed with small businesses,
small businesses owned and controlled by socially and economically
disadvantaged individuals, and small businesses owned and controlled
by women and that such businesses participate in subcontracting
under government prime contracts.
(2) When the requirements for a subcontracting plan under
section 8(d) of the Small Business Act apply, annual, commercial
company-wide, division-wide, or plant-wide subcontracting plans that
relate to a company's commercial and noncommercial production are
authorized for:
(a) Prime contracts for commercial items, or
(b) Subcontractors that provide commercial items under a prime
contract, whether or not the prime contractor is supplying a
commercial item.
(3) Furthermore, it is the policy of the United States
Government that commercial company-wide plans, when authorized under
this Policy Letter, shall be the preferred method of compliance with
the requirements of section 8(d) of the Small Business Act. In all
solicitations expected to offer subcontracting opportunities which
trigger the requirements for a subcontracting plan, the Government
shall inform prospective offerors of the opportunity for themselves
and/or their subcontractors to develop commercial company-wide plans
if they are supplying commercial items. This would apply whether or
not the prime contractor is supplying a commercial
item. [[Page 7229]]
(4) This policy is in addition to the existing policies cited in
paragraph 3 of this Policy Letter.
(5) These provisions for subcontracting plans for commercial
item contractors do not in any way relieve contracting officers,
prime contractors or subcontractors of their responsibilities for
assuring that small, small disadvantaged and women-owned small
businesses have the maximum practicable opportunity to participate
in contracts awarded by Federal agencies.
5. Responsibilities. The Federal Acquisition Regulatory Council
shall ensure that the policies established herein are incorporated
in the FAR within 210 days from the date this Policy Letter is
published in the Federal Register. Promulgation of final regulations
within the 210-day period shall be considered issuance in a ``timely
manner'' as prescribed in 41 U.S.C. 405(b).
6. Information Contact. Questions regarding this Policy Letter
should be directed to William Coleman, Deputy Administrator, Office
of Federal Procurement Policy, 725 17th Street, NW, Washington, DC
20503, telephone 202-395-3503, facsimile 202-395-5105.
7. Judicial Review. This Policy Letter is not intended to
provide a constitutional or statutory interpretation of any kind and
it is not intended, and should not be construed, to create any right
or benefit, substantive or procedural, enforceable at law by a party
against the United States, its agencies, its officers, or any
persons. It is intended only to provide policy guidance to agencies
in the exercise of their discretion concerning Federal contracting.
Thus, this Policy Letter is not intended, and should not be
construed, to create any substantive or procedural basis on which to
challenge any agency action or inaction on the ground that such
action or inaction was not in accordance with this Policy Letter.
8. Effective Date. The Policy Letter is effective 30 days after
the date of issuance.
Steven Kelman,
Administrator.
[FR Doc. 95-2912 Filed 2-6-95; 8:45 am]
BILLING CODE 3110-01-M
