[Federal Register Volume 62, Number 97 (Tuesday, May 20, 1997)]
[Proposed Rules]
[Pages 27556-27562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13182]
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DEPARTMENT OF COMMERCE
15 CFR Part 3
[Docket No. 960828234-7093-04]
RIN 0690-AA25
Empowerment Contracting
AGENCY: Department of Commerce.
ACTION: Proposed regulations; request for comment.
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SUMMARY: The Department of Commerce is reissuing these proposed
guidelines requesting public comment on policies and procedures
intended to promote economy and efficiency in Federal procurement by
grating qualified large businesses and qualified small businesses
appropriate incentives to encourage business activity in areas of
general and severe economic distress. This actions taken in accordance
with the President's Executive Order entitled, ``Empowerment
Contracting.'' The standards and procedures set forth in these proposed
guidelines serve as the basis for a proposed revision to the Federal
Acquisition Regulation (``FAR''): Information obtained from public
comment on these guidelines will be used to help draft the final
Commerce and FAR regulations.
DATES: Comments must be submitted on or before July 21, 1997.
ADDRESSES: Comments may be mailed to the Department of Commerce, Office
of the Assistant General Counsel for Finance and Litigation, Room 5896,
14th and Constitution Street, NW., Washington, DC 20230.
FOR FURTHER INFORMATION CONTACT: Joe Levine, 202-482-1071.
SUPPLEMENTARY INFORMATION:
A. Background
On May 21, 1996, President Clinton issued Executive Order 13005,
``Empowerment Contracting'' (the ``Order''). The purpose of the Order
is to strengthen the economy and secure broad-based competition for
Federal contracts by fostering growth of Federal contractors in
economically distressed communities. In the Order, the President
charged the Secretary of Commerce (the ``Secretary''), in consultation
with the Secretaries of Housing and Urban Development, Labor and
Defense; and the Administrators of the General Services Administration,
the National Aeronautics and Space Administration, the Small Business
Administration, and the Office of Federal Procurement Policy, to
develop policies and procedures to ensure that Federal agencies, when
awarding contracts in unrestricted competitions, grant qualified large
and small businesses appropriate price or evaluation incentives to
encourage business activity in areas of general economic distress.
Specifically, the Order requires the Secretary to ``develop
policies and procedures to ensure that agencies, to the extent
permitted by law, grant qualified large businesses and qualified small
businesses appropriate incentives to encourage business activity in
areas of general economic distress, including a price or a non-price
evaluation credit, when assessing offers for government contracts in
unrestricted competitions, where the incentives would promote the
policy set forth in this Order.'' The Order also calls upon the
Secretary to (1) monitor the implementation and operation of the
procedures developed; (2) ensure proper administration of the program
and reduce the potential for fraud by intended beneficiaries; (3)
develop a process to evaluate the effectiveness of the procedures
developed; and (4) issue an annual report to the President on the
status and effectiveness of the program. In addition, the Secretary
must ensure that all policies, procedures and regulations developed
pursuant to the Order minimize the administrative burden on affected
agencies and the procurement process.
On September 13, 1996, the Department published, in the Federal
Register, its proposed Guidelines for implementing Executive Order
13005 (61 FR 48463). After several extensions, the period for public
comment closed on January 6, 1997. These revised Guidelines, and the
proposed amendments to the FAR, which were published on April 18, 1997
(62 FR 19200), for a 60 day public comment period, are based on
comments received under that process and further internal analysis.
B. Public Comments
Comments were received from 40 commentors. They included businesses
of all sizes, not-for-profit entities, industry and trade associations,
Federal agencies, State and local governments and one member of
Congress.
Federal agency comments included the following recommended
revisions to the proposed guidelines:
(1) Firms should be required to have met the eligibility criteria
prior to award of contracts. Eligibility based on prospective criteria
will raise monitoring and compliance problems.
(2) If firms are required to meet the eligibility criteria prior to
award of contracts, challenges to their status can be resolved prior to
award.
(3) The initial test phase of six months is too short. It should be
eighteen months.
(4) The third test of significant economic activity, ``ownership'',
should be deleted as not relevant.
(5) Criteria should apply to areas, not an area.
(6) The areas of general economic distress should include labor
surplus areas.
(7) The criteria for ``eligibility'' should not have ranges, but
rather a fixed percentage and higher targets.
(8) The threshold for applicability is too low. It should be $1
million.
(9) Qualification should be based on pre-certifications, not a
``showing''.
(10) The incentives should be revised to reflect the increasing
number of ``best value'' awards.
(11) The Department of Commerce needs to establish regulations to
cover challenges of eligibility.
(12) The preferences/incentives should not be cumulative with
incentives of other programs implemented through the procurement
system. To allow cumulative preferences will encourage ``front''
companies.
(13) The incentives are too high. The application of cumulative
incentives
[[Page 27557]]
will have an adverse impact on agency budgets.
A number of commentors suggested that special treatment be afforded
to firms located in areas with particularly high levels of economic
distress.
Other commentors, including several not-for-profits, expressed
support for the program and suggested various technical adjustments.
These comments included such recommendations as:
(1) The subcontracting criterion of 15% for the previous six months
is too high as a criterion for significant economic activity.
(2) Employment percentages of 40% to 50% are achievable within the
eligible areas.
(3) Certification and challenges should be delegated to local
government economic agencies.
(4) The $100,000 threshold is too high. A lower threshold would
offer more opportunities to small businesses.
(5) The incentives should be higher.
(6) Monitoring is essential to the success of the program.
(7) Firms track their data on a yearly basis, therefore, a six
month first phase is inadequate.
(8) The definition for ``not-for-profit'' should be expanded to
include government units, universities, and hospitals.
(9) Credit should be given for banking with minority firms.
(10) Preferences should be given to business enterprises owned by
American Indian tribes, Alaskan natives, tribal or native-American
corporations, and tribal organizations.
C. Guideline Revisions
Revisions have been made to the guidelines that respond to many of
these comments. These changes will enhance the program while remaining
consistent with the goals, policies and provisions of Executive Order
13005.
I. General
The guidelines have been reformatted to become a new part 3 to 15
CFR.
II. Definitions
The definitions pertaining to eligibility have been revised to
refer to areas, rather than an area, to allow businesses to receive
credit for economic activity in any eligible area.
Two additional definitions have been added. An ``area of severe
economic distress'', is defined as any census tract that has a poverty
rate of at least 50% A new category of firm, identified as an
``eligible business'', has also been established. An eligible business
is a business, regardless of size, that meets any one of the three
``significant'' tests in an area of severe economic distress. These
provisions recognize the goal of encouraging business activity in areas
of very high poverty. The 50% poverty rate was chosen to set a higher
standard for relaxed eligibility requirements for such businesses,
because the benefit of relaxed qualification standards is appropriate
only in areas of substantial deprivation. Initiating and sustaining
private activity in areas of severe distress is essential to the
economic recovery of those areas and it is felt that only through
special consideration could such areas receive the benefits intended by
this program.
Two separate processes have been established for firms to qualify
for preferences. One process will enable business to qualify by self-
certifying that they will meet prospective eligibility criteria. Such
firms will be subjected to detailed reporting and audit requirements,
and will be required to pay preference recoupment should they not meet
the required levels of performance. In addition, the definitions were
modified to measure the overall contribution of the business to
economic activity in eligible areas, rather than tying such measures to
a particular contract. Public comment is particularly requested on this
change in measurement standard.
A second process was added to allow businesses to seek pre-
qualification of eligibility to receive incentives under this program.
For this new process the definitions are written to measure the
businesses impact in eligible areas during the previous six months.
This process was established to accommodate situations, such as
provision of supplies and other manufactured items, where the product
being sold was already in inventory, and sealed bid awards, where
detailed reporting and post performance audits are not the norm.
Finally, the definitions pertaining to ``significant physical
presence'' were revised to measure the number of employees working in
eligible areas. It was decided that the original definition, which
merely measured the percentage of physical plant in eligible areas,
created too large a loophole in situations where firms might have large
amounts of land devoted to such things as warehouses, storage and
garages, where very little time was spent by employees.
III. Eligibility Processes
The processes under which businesses will establish their
eligibility have been added. Firms seeking to self-certify will have to
prepare plans setting forth how they plan to attain the necessary
economic activity in eligible areas. The Department of Commerce, on its
own initiative, or in response to challenges, will rule on the
achievability of these plans. Firms seeking pre-qualification will
submit the information required for the Department to decide on their
request for pre-qualification.
IV. Challenges
An outline of the procedures the Department proposes to utilize to
handle challenges is now set forth. Comments on its appropriateness,
and any alternative mechanism are solicited.
V. Applicability
The simplified acquisition threshold (currently $100,000) has been
retained. Any adjustment below this amount would create an
administrative burden on agencies that would greatly outweigh the
potential benefits of the program. No sound reason was perceived for
raising the threshold for applicability.
VI. Incentive Structure
The comments regarding elimination of cumulative incentives have
not been accepted. The Order requires that the incentives of this
program be applied in addition to any incentives available under
already existing programs. This provision was included to comply with
the Administration's policy thrust that the Empowerment Contracting
Program is to be used by all types of qualifying businesses in
distressed areas, and not to negatively impact existing preference
programs. Adding this Program and not allowing accumulation with other
preferences would have a negative impact on businesses eligible for
other preferences. A price preference of up to 10% or an evaluation
preference of up to 15% will be available. The incentive provisions
have been modified to accommodate the use of non-numeric selection
procedures.
VII. Phased Implementation
In response to several comments, the length of the first phase has
been revised from 6 months to 18 months. This longer period for phase
one will allow for accumulation of a larger base of data regarding the
effectiveness of the Program. Review of phase one will begin after 12
months. Eleven two digit Standard Industrial Code (SIC) major group
identifiers have been selected for inclusion in phase one. These SIC
codes were selected because they represent areas of business which are
likely to have viability in eligible areas. Several were suggested by
commentors. They represent a sufficiently broad base of activity that
will facilitate matching the needs of a wide range of Federal
[[Page 27558]]
agencies with potential sources in eligible areas.
The goal of the first phase is to see if the Program is most
effective luring current government contractors to distressed areas,
luring businesses in growth industries to distressed areas, or
encouraging sales for businesses located in distressed areas. Using a
broad array of contracts in various industries over an 18 month period,
will provide information to refine and expand the program.
D. Classification
It has been determined that these proposed guidelines are
significant for purposes of Executive Order 12866 dated September 30,
1993. This is a major rule under 5 U.S.C. 804. Because these proposed
guidelines relate to a matter of public property, loans, grants,
benefits, or contracts, they are exempted from all the procedural
requirements of the Administrative Procedure Act (5 U.S.C. 553).
Because notice and comment are not required by 5 U.S.C. 553 or any
other law, a Regulatory Flexibility Analysis is not required and was
not done for purpose of the Regulatory Flexibility Act. However, an
Initial Regulatory Flexibility Analysis (IRFA) was prepared in
connection with the proposed FAR amendments and may be obtained from
the FAR Secretariat.
Notwithstanding any other provision of law, no person is required
to respond to, nor shall a person be subject to, a penalty for failure
to comply with a collection of information subject to the requirements
of the Paperwork Reduction Act unless that collection of information
displays a currently valid control number. This rule contains
collection-of-information requirements subject to the Paperwork
Reduction Act. A request for approval of the paperwork burdens has been
submitted to the Office of Management and Budget. These relate to the
pre-qualification process, the self-certification process and the
challenge procedures. These requirements are estimated to take,
respectively, eight, two, and one hours, including the time to gather
records, make copies, and mail documents to the Department of Commerce.
Public comment is sought regarding: Whether this proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information has
practical utility; the accuracy of the burden estimate; ways to enhance
the quality, utility, and clarity of the information to be collected;
and ways to minimize the burden of the collection of information,
including through the use of automated collection techniques or other
forms of information technology. Comments on the collection of
information burden may be sent to Joseph Levine, Room 5896, U.S.
Department of Commerce, Washington DC 20230, and to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Washington DC 20503.
List of Subjects in 15 CFR Part 3
Business and industry, Government procurement.
Therefore, it is proposed that a new 15 CFR part 3 be added to read
as follows:
PART 3--EMPOWERMENT CONTRACTING
Sec.
3.01 Purpose.
3.02 Definitions.
3.03 Eligible areas.
3.04 Self-certification of eligibility.
3.05 Pre-qualification for eligibility.
3.06 Challenges--self-certification.
3.07 Challenges--pre-qualification.
3.08 Applicability.
3.09 Incentive structure.
3.10 Monitoring and evaluation.
3.11 Phased implementation of the Program.
Authority: Executive Order 13005 (61 FR 26069, May 24, 1996).
Sec. 3.01 Purpose.
The purpose of this part is to set forth the policies and
procedures applicable to the Empowerment Contracting Program
established by Executive Order 13005.
Sec. 3.02 Definitions.
(a) General.
(1) Agency means any authority of the United States that is an
``agency'' under 44 U.S.C. 3502(1), other than those considered
independent regulatory agencies as defined in 44 U.S.C. 3502(10).
(2) Area of general economic distress means, for all urban and
rural communities, any census tract that has a poverty rate of at least
20 percent or any designated Federal Empowerment Zone, Supplemental
Empowerment Zone, Enhanced Enterprise Community, or Enterprise
Community. Area of general economic distress also means any rural area
or Indian reservation that currently meet the criteria for designation
as a redevelopment area under section 401(a) of the Public Works and
Economic Development Act of 1965, as amended (42 U.S.C. 3161(a)), as
set forth at 13 CFR 301.2 (loss of population); 13 CFR 301.4 (Indian
Lands) and 13 CFR 301.7 (special impact areas).
(3) Area of severe economic distress means any census tract that
has a poverty rate of at least 50 percent.
(4) Business means the legal entity responsible for performance of
the contract for which a preference is sought.
(5) Qualified small business means a small for-profit or not-for-
profit trade or business that:
(i) Employs a significant number of residents from areas of general
economic distress;
(ii) Has a significant physical presence in areas of general
economic distress; or
(iii) Has a direct impact on generating significant economic
activity in areas of general economic distress.
(6) Qualified large business means a large for-profit or not-for-
profit trade or business that:
(i) Employs a significant number of residents from areas of general
economic distress; and
(ii)(A) Either has a significant physical presence in areas of
general economic distress or
(B) Has a direct impact on generating significant economic activity
in areas of general economic distress.
(7) Qualified eligible business means any business that meets one
of the following criteria:
(i) Employs a significant number of residents from areas of severe
economic distress;
(ii) Has a significant physical presence in areas of severe
economic distress; or
(iii) Has a direct impact on generating significant economic
activity in areas of severe economic distress. (See Secs. 3.04(b)(4)
and 3.05(b)(4) for qualification procedures.)
(8) Small Business is defined by the definitions and procedures set
forth by the Small Business Administration for determining size
eligibility for government procurements. (13 CFR 121.901-911).
(9) Small not-for-profit businesses--Notwithstanding 13 CFR 121.403
(the SBA regulation that defines ``business or concern'' to mean for-
profit entities) size determinations for not-for-profits entities will
follow the same procedures as those of for-profit entities, i.e., the
Standard Industrial Code (SIC) of the procurement will govern.
(10) Large business means any business that is not a small
business.
(b) Definitions applicable to Pre-Qualification. The following
definitions apply to businesses seeking pre-qualification based on
their current operations:
(1) Employs a significant number of residents from the area. This
means a
[[Page 27559]]
business which, during the six months preceding the date of its request
for pre-qualification, has expended at least 25 percent of its total
labor costs in wages and benefits to residents from areas of general
economic distress.
(2) Has a significant physical presence in the area. This means a
business with physical plant(s) in areas of general economic distress
where, for the six months preceding the date of its request, at least
25 percent of the employees of the business perform their job.
Employees will be considered to perform their job at the location where
they spend the most time working, so long as it is at least 6 hours per
work week.
(3) Has a direct impact on generating significant economic activity
in the area. This means a business which.
(i) During the six months preceding the date of its request for
pre-qualification, has expended at least 50 percent of its total labor
costs in wages and benefits to residents from areas of general economic
distress; or
(ii) During the six months prior to submitting its request for pre-
qualification, has incurred at least 25 percent of its expenses on
goods, materials, and services from firms located in areas of general
economic distress.
(c) Definitions for Self-Certification. The following definitions
apply to businesses which seek to self-certify their eligibility based
on future operations:
(1) Employs a significant number of residents from the area. This
means a business which, during the period of performance of the
contract, will expend at least 25 percent of its total labor costs in
wages and benefits to residents from areas of general economic
distress.
(2) Has a significant physical presence in the area. This means a
business with physical plant(s) in areas of general economic distress
where, during the period of performance of the contract, at least 25
percent of the employees of the business will perform their job.
Employees will be considered to perform their job at the location where
they spend the most time working, so long as it is at least 6 hours per
work week.
(3) Has a direct impact on generating significant economic activity
in the area. This means a business which:
(i) During the period of performance of the contract, will expend
at least 50 percent of its total labor costs in wages and benefits to
residents from areas of general economic distress; or
(ii) During the period of performance of the contract, will incur
at least 25 percent of its expenses on goods, materials, and services
from firms located in areas of general economic distress.
Sec. 3.03 Eligible areas.
The Department of Commerce will maintain the official listing of
eligible areas, based on the 1990 decennial Census of Population data.
The listing shall contain the Census tract and block numbering for all
eligible areas. This listing will be available on the internet at
xxxxx@doc.gov.
Sec. 3.04 Self-Certification of Eligibility.
(a) When responding to solicitations, businesses may ``self-
certify'' their qualifications at the time of submission of their
proposal/bid, pursuant to the definitions set forth in Sec. 3.02(c) of
this part.
(b) At the time they self-certify their eligibility, businesses
will be expected to have prepared a short description of their plan for
achieving the requirements of this program. The description, which will
be kept in their files, should contain sufficient detail to enable the
Department to reach an informed judgment of the likelihood of the
plan's success.
(1) For Secs. 3.02(c)(1) and (c)(3)(i) the description should also
identify the areas of general economic distress where employees will be
recruited, the types of positions they will occupy, and evidence that
those types of employees are available in sufficient quantity from
those areas;
(2) For Sec. 3.02(c)(2) the description should identify the areas
of general economic distress where the physical plant(s) likely will we
located, the types of plant that are required, evidence that such
plants(s) are available, and the types and numbers of individuals who
will be employed there;
(3) For Sec. 3.02(c)(3)(ii) the description should identify the
types of goods and services that likely would be purchased, and likely
sources of those goods and services located in areas of general
economic distress.
(4) For qualification under the definition of Sec. 3.02(a)(7) as a
``qualified eligible business'', the information called for in
paragraphs (b)(1)-(3) of this section should be supplied, substituting
data for areas of severe economic distress for areas of general
economic distress.
(c) The Department will conduct random reviews of the self-
certifications submitted by businesses to verify their eligibility.
(d) If there is reason to believe that a business has submitted
false information, withheld relevant information, or otherwise violated
federal law, the matter will be promptly referred to the Department's
Inspector General for investigation.
Sec. 3.05 Pre-Qualification for Eligibility.
(a) Upon request, the Department will issue certificates that
businesses have met the pre-qualification requirement(s) set forth in
Sec. 3.026(b) of this part. Such requests shall be submitted to the
Office of Empowerment Contracting, Rm xxxx, U.S. Department of
Commerce, Washington, DC 20230.
(b) In addition to having available the full details of the
documentation needed to establish their eligibility, businesses shall
submit the following with their request:
(1) For qualification under Sec. 3.02(b)(1), a summary of the
number of employees of the firm, the number of employees living in
areas of general economic distress, the wages and benefits paid to each
group in the last six months, and a list of eligible areas in which
employees live;
(2) For qualification under Sec. 3.02(b)(2), the addresses of each
of the businesses plants, indicating which are in areas of general
economic distress, a brief description of the activities conducted at
each site, and the number of employees who perform their job at each
site;
(3)(i) For qualification under Sec. 3.02(b)(3)(i), business should
submit the same information as called for under Sec. 3.05(b)(1) of this
part;
(ii) For qualification under Sec. 3.02(b)(3)(ii), the names and
addresses of all firms located in areas of general economic distress
from which the business has purchased goods, materials or services in
the past six months, the dollar total of such purchases, and the dollar
total of all goods, materials and services purchased by the business in
the past six months.
(4) For qualification under the definition of Sec. 3.02(a)(7) as a
``qualified eligible business'', the information called for in
paragraphs (b)(1)-(3) of this section should be supplied, substituting
data for areas of severe economic distress for areas of general
economic distress.
(c) Businesses may submit requests for pre-qualification under,
one, several or all of the above. If it is determined that they meet
the requirements for Sec. 3.02(b)(1) and either Sec. 3.02(b)(2),
(b)(3)(ii); or they meet one of the alternative tests to be a qualified
eligible business, the Department will issue a certificate of
eligibility. If a business meets one or more of the requirements of
Sec. 3.02(b) but does not meet all the requirements to be a qualified
large
[[Page 27560]]
business or qualified eligible business, the Department will certify as
to its pre-qualification under the requirements(s) it has met. This
last certification will qualify them for participation in the program
if they are a small business in the context of a particular
procurement.
(d) Businesses receiving such certificates of pre-qualification may
submit copies thereof in lieu of the self-certification of eligibility,
when responding to solicitations.
(e) Any business may seek pre-qualification, however, it is likely
that solicitations will have limitations on subcontracting or similar
requirements that could affect their eligibility to receive an award.
(f) Determinations as to whether a firm is a small business will be
made in the context of each particular solicitation, based on SBA
procedures and the four digit SIC code applicable to that solicitation
(g) Pre-qualification certificates will be effective for one year
from their date of issue.
(h) businesses shall notify the Department of Commerce of material
changes that would affect their eligibility status (e.g. plant closing
or major scale backs that would significantly alter their employment
data or location).
(i) Upon receipt of a request, the Department will publish notice
in the Federal Register seeking public comment. The notice will include
the name of the requesting business, the definition(s) for which it
seeks to pre-qualify, and the principal eligible areas from which
employees are employed, in which plant are located, and/or goods and
services have been obtained.
(j) After preliminary review of a request the Department will
request such additional information as it believes necessary and/or
conduct a site visit. The Department will issue or deny a request
within 30 business days of receipt, or provide the business with the
reason for delay and an expected decision date.
(k) Appeals of denials of requests for pre-qualification must be
submitted, in writing within 30 working days of the date of the denial.
The appeal should be addressed to Office of xxxx and explain why the
decision was in error. The appellant will be notified, in writing, of
the Department's final decision, which will also be entered into the
Empowerment Contracting Database.
(l) If there is reason to believe that a business has submitted
false information, withheld relevant information, or otherwise violated
federal law, the matter will be promptly referred to the Department's
Inspector General for investigation.
Sec. 3.06 Challenges--Self-Certification.
(a) An offeror may protest a concern's self-certification by filing
a protest with the contracting officer in accordance with the procuring
agency's protest procedures.
(b) The contracting officer or the Department of Commerce may
protest a concern's self-certification at any time. The Department of
Commerce protests a concern's self-certification by filing directly
with its Office of EC and notifying the contracting officer.
(c) Upon receipt of a timely protest, the contracting officer shall
withhold award and forward the protest to the Department of Commerce
Office of EC, 14th and Constitution Ave. NW, Washington, DC. 20230. The
contracting officer shall send to the Department of Commerce--
(1) The protest;
(2) The date the protest was received and a determination of
timeliness;
(3) A copy of the protested concern's submittals regarding self-
certification; and
(4) The date of bid opening or date on which notification of the
apparently successful offeror was sent to unsuccessful offerors.
(d) When the contracting officer makes a written determination that
award must be made to protect the public interest, award shall be made
notwithstanding the protest.
(e) Upon receipt of notification that a challenge has been filed,
the apparently successful offeror shall, by 5 p.m. of the business day
following the date of receipt of the notice, submit to the Office of
EC, rm xxxx U.S. Department of Commerce, Washington DC 20230, fax no.
(202) 482-xxxx., a copy of its description called for in Sec. 3.04(b).
If the description is not received in a timely manner the challenge
will be upheld.
(f) The Department will review the description, request any
additional information it may require, and conduct on site verification
if it is considered advisable, and allow the apparently successful
offeror to submit such information as it may desire to refute the
challenge. Based on this data the Department will determine whether the
business is likely to achieve the performance required to qualify.
(g) The Department of Commerce, Office of EC, will determine the
qualification status of the challenged offeror and notify the
contracting officer, the challenged offeror, and the protestor. Award
may be made on the basis of that determination. The determination is
final for purposes of the instant acquisition, unless--
(1) It is appealed; and
(2) The contracting officer receives the Department of Commerce's
decision on the appeal before award.
(h) If the contracting officer does not receive a Department of
Commerce determination within 15 business days after the Department of
Commerce's receipt of the protest, the contracting officer shall
presume that the challenged offeror's self-certification is valid.
(i) A Department of Commerce determination may be appealed by the
interested party whose protest has been denied; the concern whose
status was protested; or the contracting officer. The appeal must be
filed with the Department of Commerce's Office of EC within five
business days after receipt of the determination. The appeal should
contain significant evidence beyond that submitted previously.
(j) Following receipt of the appeal the Department will notify the
other side (challenger or apparently successful offeror). Every effort
will be made to issue a final decision prior to award of the contract
in question.
(k) Both parties and the contracting officer will be notified, in
writing, of the Department's final determination, which will be entered
into the Empowerment Contracting Database.
Sec. 3.07 Challenges--Pre-Qualification.
(a) The Department reserves the right to revoke certificates of
pre-qualification if it determines that there are material changes in a
businesses eligibility status. Accordingly, anyone who has information
that might indicate such a change in status is encouraged to submit it,
in writing, to the Office of EC, rm. xxxx. U.S. Department of Commerce,
at any time. In addition, an offeror may protest a concern's pre-
qualification by filing a protest with the contracting officer in
accordance with the procuring agency's protest procedures. The
contracting officer or the Department of Commerce may protest a
concern's pre-qualified status at any time. The Department of Commerce
protests a concern's pre-qualification by filing directly with its
Office of EC and notifying the contracting officer.
(b) Upon receipt of a timely protest, or other adverse information,
the Department will decide whether it merits further investigation. If
further action is justified the Department will request the pre-
qualified firm to submit a response to the adverse information and
conduct such other inquiry as it deems appropriate to ascertain whether
there has been a material change in
[[Page 27561]]
circumstances that would justify revoking the pre-qualification.
(c) For protests concerning particular awards, the provisions of
paragraphs (c), (d), (g), (h), (i), (j) and (k) of Sec. 3.06 of this
part shall apply.
(d) For challenges not covered by paragraph (c) of this section,
the Department of Commerce, Office of EC, will notify the challenged
business and the challenger, of its decision.
(e) Decisions to revoke pre-qualifications will become effective
upon issuance and entered into the Empowerment Contracting Database.
(f) Appeals of decisions covered by paragraph (d) of this section,
must be submitted, in writing within 30 working days of the date of the
decision. The appeal should be addressed to Office of EC and explain
why the decision was in error. The appellant will be notified, in
writing, of the Department's final decision, which will be also be
entered into the Empowerment Contracting Database.
(g) If there is reason in believe that a business has submitted
false information, withheld relevant information, or otherwise violated
federal law, the matter will be promptly referred to the Department's
Inspector General for investigation.
Sec. 3.08 Applicability.
Subject to the provisions contained in Sec. 3.11, these guidelines
shall apply to unrestricted competitions for contracts exceeding the
simplified acquisition threshold, other than those where performance
will not take place in the United States.
Sec. 3.09 Incentive Structure.
(a) Incentives, in the form of price or non-price, shall be
available in contracts subject to these guidelines. While applying
these incentives, the Contracting Officer/Source Selection Official
shall have the discretion to determine the size and type of incentive
to apply to any particular procurement.
(b) Preferences in the form of incentives shall represent a price
preference of up to 10 percent or an evaluation credit of up to 15
percent. For procurements in which source selection will be made on a
non-numerical basis, the Contracting Officer/Source Selection Official
shall ensure that the incentive selected will be given sufficient
weight to be meaningful.
(c) Any preference a business receives under these guidelines shall
be added to the preferences it may receive pursuant to other statutory
or regulatory programs.
Sec. 3.10 Montitoring and Evaluation.
Subject to the provisions of the ``Phased Implementation of the
Program'' section of these guidelines, the Commerce Department, in
conjunction with procuring agencies, shall monitor the process as
follows:
(a) Monitoring the Federal Procurement process. We would expect
that the benefit to the federal procurement system would begin to be
realized during the latter years of phase two of the program. To assist
in monitoring and evaluating the efficiency of this new program,
agencies awarding contracts to qualified businesses shall provide the
following information to the Department of Commerce:
(1) The number and dollar amount of solicitations in which an
empowerment contracting preference was offered. This information will
be broken down by SIC Major Group and by the use of the price
evaluation preference and non-price evaluation factor;
(2) The contract numbers, dollar amounts, names of awardees, and
price premiums paid (if identifiable) for awards made as a result of an
empowerment preference. This information will be broken down by SIC
Major Group;
(3) Comments on the advantages and disadvantages of the Empowerment
Contracting Program, including comments on whether the program had any
impact on the quality of supplies and services procured through its
use.
(b) Monitoring the impact on business development. Evaluation
criteria shall be established on national goals and objectives. A
sample of businesses receiving contracts under the program would be
examined with the following issues being addressed:
(1) Did the business locate or remain in a particular place so that
it would be eligible for preferences under these guidelines?
(2) Did the business hire new workers or provide additional
benefits to existing workers from eligible areas so that it would be
eligible for preferences under these guidelines?
(3) Did the business purchase additional goods and services from
firms located in eligible areas so that it would be eligible for
preferences under these guidelines?
(4) Did the business propose to hire more workers in eligible areas
as a result of bidding or proposing under the subject contract?
(5) Is this contract new work that the business would not have
received but for this program?
(c)(1) Monitoring the impact on distressed communities. In order to
examine impacts of the program on distressed communities, outcomes
should be measured in the context of local conditions and community
priorities, as well as broad national goals. The local vision for a
community's transformation should provide the principal criteria for
measuring local outcomes. The monitoring and evaluation process should
have both an initial and a longer term phase. The principal objectives
of the initial phase would be to:
(i) Establish baseline measurements of demographics, economic
indicators, physical infrastructure conditions and needs, and social
conditions;
(ii) Identify local outcome measures and common national measures
toward which long-term evaluation will be directed, including
employment, crime, education, and poverty; and
(iii) Develop a strategy and mechanism for evaluating progress
toward local and national goals over time.
(2) The longer-term evaluation should have the capacity to answer
fundamental questions about the efficacy of targeted Federal
contracting, specifically its ability to revitalize distressed
communities and to improve the social and economic well-being of
residents. This phase will examine such questions as:
(i) To what extent does the program create or improve the quality
of jobs and economic opportunities in the distressed area?
(ii) To what extent does the program result in new businesses
locating in the community or increased rates of business retention in
the community?
(iii) To what extent does the program affect areas outside the
distressed community by either connecting residents with opportunities
in the larger community or by increasing growth in the larger areas?
(iv) How have the changes in these communities affected the
jurisdictions in which they are located?
(v) How have areas (and residents) adjacent to the distressed
communities been affected?
(vi) At what cost have these outcomes been achieved? The evaluation
must ultimately provide an empirical basis for assessing program costs
relative to benefits.
(vii) How effectively does the program interact with other
government programs designed to promote the development of economically
distressed communities?
(d) In monitoring the program, the Department of Commerce may
request additional information to the extent that it deems appropriate.
[[Page 27562]]
Sec. 3.11 Phased Implementation of the Program.
(a) First phase--eighteen month period. The guidelines will apply
initially, during a first phase of eighteen months' duration, only to
contracts involving industries whose two digit Standard Industrial
Classification (``SIC'') Code major group identifiers are listed below.
Each agency will establish procedures to ensure that the Empowerment
Contracting program is applied to approximately 25 percent of the
dollar value of its eligible procurements in these SIC codes, and will
inform the Department of Commerce as to how it will ensure that this is
done.
(b) At the end of the first year of the program, the Department of
Commerce, in coordination with the agencies listed in Executive Order
13005, will evaluate the program and develop any necessary changes to
improve performance. The revised procedures will become effective in
the second phase.
(c) The two digit SIC code major group identifiers to which the
first phase will apply are:
15--Construction
20--Food and Kindred Products
23--Apparel and Other Textile Products
25--Furniture and Fixtures
27--Printing and Publishing
30--Rubber and Miscellaneous
34--Fabricated Metal Products
42--Trucking and Warehousing
51--Wholesale Trade and Durable Goods
73--Business Services
87--Management Consulting Services
(d) Second phase--further implementation. Further implementation of
the order will be instituted in the second phase of the program, which
will begin after the first phase of the program has ended, and will
extend for a period of 5 years. If the evaluation of phase one so
justifies, the second phase of the program will applied to a larger
number of contracts within selected two digit SIC Code industries
involved in competitive Federal procurements, consistent with efficient
administration of the program and the development of new sources of
supplies and services. Industries included in the second phase will be
identified in advance of being included. The efficacy of the program
will be monitored and evaluated during the second phase, subject to the
criteria set forth in the ``Monitoring and Evaluation'' section of
these guidelines. At the end of this five-year period, the Department
of Commerce in consultation with the agencies designated in the
Executive Order will ascertain whether the program is meeting its
goals. Specifically, it will be determined whether the program
stimulated economic activity (through, among other things, job creation
or new business investment) in areas of general economic distress and
benefited the federal procurement system. If the program meets these
objectives, it will be expanded to other selected industries for
similar implementation and evaluation.
William M. Daley,
Secretary of Commerce.
[FR Doc. 97-13182 Filed 5-19-97; 8:45 am]
BILLING CODE 3510-17-M
