[Federal Register Volume 79, Number 198 (Tuesday, October 14, 2014)]

[Rules and Regulations]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2014-24233]

Vol. 79

Tuesday,

No. 198

October 14, 2014

Part III

Department of Defense

General Services AdministrationNational Aeronautics and Space Administration

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42 CFR Parts 1, 2, 4, et al.

Federal Acquisition Regulation; Final Rules

Federal Register / Vol. 79 , No. 198 / Tuesday, October 14, 2014 / Rules and Regulations

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

[Docket No. FAR 2014-0051, Sequence No. 5]

Federal Acquisition Regulation; Federal Acquisition Circular 2005-77; Introduction

AGENCIES: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Summary presentation of final rules.

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SUMMARY: This document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) in this Federal Acquisition Circular (FAC) 2005-77. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, is available via the Internet at http://www.regulations.gov.

DATES: For effective dates and comment dates see separate documents, which follow.

FOR FURTHER INFORMATION CONTACT: The analyst whose name appears in the table below in relation to the FAR case. Please cite FAC 2005-77 and the specific FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755.

Rules Listed in FAC 2005-77

Item

Subject

FAR case

Analyst

I

Federal Contracting Programs for Minority-Owned and Other Small Businesses.

2009-016

Uddowla

II.

Irrevocable Letters of Credit.

2011-023

Davis

III

Uniform Procurement Identification.

2012-023

Loeb

SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these rules, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005-77 amends the FAR as specified below:

Item I--Federal Contracting Programs for Minority-Owned and Other Small Businesses (FAR Case 2009-016)

This final rule amends the FAR to remove certain coverage involving procurements with small disadvantaged business concerns and certain institutions of higher education that is based on authority which has expired and been found to be unconstitutional by the Court of Appeals for the Federal Circuit. These changes harmonize the FAR with current statutory authorities. The impact of this rule on small businesses should be minimal, given that the coverage applied only to prime contracting opportunities in specific North American Industry Classification System codes, and was applicable to only three Government agencies, (DoD, NASA and U.S. Coast Guard). The obligation of Federal Agencies to meet or exceed the statutory five percent small disadvantaged business goals at the prime and subcontracting levels are not affected by this rule.

Item II--Irrevocable Letters of Credit (FAR Case 2011-023)

This final rule amends the FAR to remove all references to Office of Federal Procurement Policy (OFPP) Pamphlet No. 7, Use of Irrevocable Letters of Credit (ILC). This change is necessary to update the sources of data required to verify the credit worthiness of a financial entity issuing or confirming an ILC.

This final rule has no significant impact on the Government and contractors including small business entities and imposes no new requirements. Contracting Officers are currently required to verify the credit worthiness of a financial entity issuing or confirming an ILC and will benefit from this updated information to conduct an accurate analysis.

Item III--Uniform Procurement Identification (FAR Case 2012-023)

This final rule amends the FAR to implement a uniform Procurement Instrument Identification (PIID) numbering system, which will require the use of Activity Address Codes (AACs) as the unique identifier for contracting offices and other offices, in order to standardize procurement transactions across the Federal Government. Agencies shall comply with the new PIID procedures in FAR subpart 4.16 by October 1, 2017, for new solicitations and contract awards.

Dated: September 30, 2014.

William Clark,

Acting Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy.

Federal Acquisition Circular (FAC) 2005-77 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration.

Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2005-77 is effective October 14, 2014 except for items II and III which are effective November 13, 2014.

Dated: October 1, 2014.

Richard Ginman,

Director, Defense Procurement and Acquisition Policy.

Dated: August 11, 2014.

Jeffrey A. Koses,

Senior Procurement Executive/Deputy CAO, Office of Acquisition Policy, U.S. General Services Administration.

Dated: September 29, 2014.

William P. McNally,

Assistant Administrator for Procurement, National Aeronautics and Space Administration.

[FR Doc. 2014-24233 Filed 10-10-14; 8:45 am]

BILLING CODE 6820-20-P

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[Federal Register Volume 79, Number 198 (Tuesday, October 14, 2014)]

[Rules and Regulations]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2014-24240]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2 and 4

[FAC 2005-77; FAR Case 2012-023; Item III; Docket 2012-0023, Sequence 1]

RIN 9000-AM60

Federal Acquisition Regulation; Uniform Procurement Identification

AGENCIES: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement a uniform Procurement Instrument Identification (PIID) numbering system, which will require the use of Activity Address Codes (AACs) as the unique identifier for contracting offices and other offices, in order to standardize procurement transactions across the Federal Government.

DATES: Effective: November 13, 2014.

FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb, Procurement Analyst, at 202-501-0650, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755. Please cite FAC 2005-77, FAR Case 2012-023.

SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published a proposed rule in the Federal Register at 78 FR 34020 on June 6, 2013, to implement recommendation number 3 of the Government Accountability and Transparency Board (GAT Board). Recommendation number 3 was to implement a uniform award identification system among various financial transactions conducted across the Federal Government by a number of communities, e.g., procurement, grants, and finance. This final FAR rule is consistent with the goals of GAT Board recommendation 3 for the procurement community. Application of the GAT Board recommendation for the other communities is not the subject of this rule. Four respondents submitted comments on the proposed rule. Three of these respondents were representatives of Federal agencies.

II. Discussion and Analysis

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows:

A. Summary of Significant Changes From the Proposed Rule 1. At FAR 4.1601 the implementation deadline for new unique procurement instrument identifiers has been rescheduled and will now be no later than October 1, 2017. In the proposed rule there was a FAR multistep transition process being proposed, but the Councils have delayed the implementation date and deleted what was identified at FAR 4.1601 as the ``transition'' requirement, so that all agencies will be responsible for completing the transition to the PIID procedures of this rule by October 1, 2017.

2. At FAR 4.1601 the ``End state'' requirement is modified to read ``No later than October 1, 2017, agencies shall comply with paragraph (a) of this section and use the requirements in 4.1602 and 4.1603 for all new solicitations and awards.'' This clarifies that the rule does not intend to modify the identifiers for existing solicitations or contracts.

B. Analysis of Public Comments

1. System Compatibility

Comment: One respondent expressed concern that this rule will require expensive modifications to agency contracting writing software and financial systems. The respondent also indicated that the changes required by the rule could cause problems interacting with other Government systems. The respondent also expressed concern about the requirement to convert all contract actions already in effect to the new structure by October 1, 2016, and the effects this will have across other enterprise systems as well as effects on maintaining historical and legacy information.

Response: The final rule has been changed so it only applies to new solicitations and contracts, and with a modified implementation deadline of October 1, 2017 (see FAR 4.1601(b)(2)). This does not preclude agencies from implementing the changes in advance (see FAR 4.1601(b)(2)). Agencies are being provided additional time to comply with the new requirements to be sure that all systems compatibility issues can be resolved.

2. Applicability

Comment: One respondent recommended not applying the new requirements to historical documents due to the major system changes and cross referencing issues that would result. Another respondent considered the prospect of modifying existing awards to be infeasible due to the changes that would be necessary across other systems such as SAM, FPDS-NG, FAADS Plus/USASpending.gov, FedBizOpps, and Grants.gov. Response: The final rule only applies the new requirements to new solicitations and contracts, with an implementation deadline of October 1, 2017 (see FAR 4.1601(b)(2)).

3. Contract Modifications

Comment: One respondent raised concerns regarding how systems would be able to handle modifying current actions to the new paradigm and how this would affect historical data on these actions. The respondent was also concerned with the number of contract modifications being limited to 1,000. Another respondent noted that moving from a two character modification number to a four character modification number would not be possible due to system constraints.

Response: The prescribed numbering format for supplementary PIIDs, at FAR 4.1603(b), allows for up to 9,999 solicitation amendments and 99,999 contract modifications. In addition, the final rule has been modified to allow agencies until October 1, 2017, to comply with the new requirements, giving agencies additional time to modify existing systems.

4. Implementation

Comment: One respondent detailed a number of specific, significant, and costly changes to current systems to comply with the proposed changes. The respondent also noted that there would be costs associated with necessary training of staff to use the new system. The respondent projected the cost of this rule to their agency as $4,155,000 for labor and systems and an additional $80,000 for training. Another respondent asked what mitigation strategies are in place in the event that one or several of the integration partner's systems are not ready to support the proposed changes.

Response: It is understood that this rule may have a significant cost for implementation; however, the GAT Board, Office of Management and Budget (OMB) and the FAR Council have determined that in order to achieve the noted accountability and transparency goals of the rule, the changes must be made. Office of Federal Procurement Policy (OFPP) will monitor agency progress in implementing this rule to ascertain if any changes are required.5. FAR 4.1602(c), Clarification Concerning ``Additional Agency Information''

Comment: One respondent requested clarification of what is meant by the language at FAR 4.1602(c) regarding ``Additional agency specific identification information.''

Response: This language is included in the rule to make it clear that agencies will likely establish additional requirements at their FAR supplement level.

6. FAR 4.1603, Clarification Concerning ``Until It Has Been Determined''

Comment: One respondent requested clarification of what is meant by the language at FAR 4.1603(b)(2)(iii) regarding ``until it has been determined.''

Response: This language is included in the rule to make it clear that modification numbers should not be created in advance of the need for the modification.

7. Impact on Contractor Systems

Comment: One respondent noted that many contractors have structured their award numbering system to mirror the Government's, and will need to make associated revisions to their systems, which could have associated cost implications.

Response: If a contractor chose to structure their contract management system to mirror an agency's contract writing system, then they may find it necessary to modify their system capabilities to match the new contract identification requirements.

8. Impacts on Assistance Awards

Comment: One respondent stated that assistance actions are not covered by the FAR, but should this proposed rule become final, for consistency purposes, it will be critical that parallel efforts be taken to ensure that assistance actions follow a similar numbering format.

Response: Assistance actions are outside of the scope of this rule. However, this comment has been provided to OMB for consideration.9. Address Activity Codes

Comment: One respondent noted that for Address Activity Codes (AAC), DoD agencies begin with an alpha character and non-DoD agencies begin with a two-digit number. The respondent asked if there is a consistent hierarchy for the remaining positions.

Response: The FAR does not prescribe a hierarchy for the remaining positions in an AAC, as this is left to agency procedures in accordance with the Federal supply program. Information on locating an existing AAC or obtaining a new AAC is located at FAR 4.1603(a)(1).

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

This rule is needed to further the President's commitment to make the Federal Government transparent and accountable to the American people. The rule requires use of a standardized procurement instrument identification (PIID) number configuration across the federal procurement community. The numbering configuration will contain an Activity Address Code unique to each contracting office. This change will lead to increases in data traceability and transparency, thereby broadening the Government's ability to report procurement data accurately and to provide more effective oversight of reporting responsibilities.

The final rule is internal to the Government procedures and does not directly impose any requirements on the vendor community. However, the rule may affect certain entities if those entities have arranged any of their business systems to utilize, accept, or otherwise recognize the PIID of agencies they interact with, if those agencies do not currently use the PIID configuration of this rule.

In FY11 awards were made to 67,280 unique vendors, of which 48,281 were small businesses. These small businesses likely interact with agencies that do not currently use the proposed uniform procurement identification configuration.

One respondent stated that small businesses that do the majority of their business with the Government will be adversely affected by changes to the Government systems as they have structured their systems to mirror the Government. The final rule extends the implementation deadline for agencies to allow for a more efficient transition; however, contractors with system limitations may incur some cost to adapt to the changes.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

V. Paperwork Reduction Act

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 2 and 4

Government procurement.

Dated: September 30, 2014.

William Clark,

Acting Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 2 and 4 as set forth below:

1. The authority citation for 48 CFR parts 2 and 4 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.

PART 2--DEFINITIONS OF WORDS AND TERMS

2. Amend section 2.101 in paragraph (b)(2) by adding, in alphabetical order, the definition ``Activity Address Code (AAC)'' to read as follows:

2.101 Definitions.

* * * * *

(b) * * *

(2) * * *

Activity Address Code (AAC) means a distinct six-position code consisting of a combination of alpha and/or numeric characters assigned to identify specific agency offices, units, activities, or organizations by the General Services Administration for civilian agencies and by the Department of Defense for defense agencies.

* * * * *

PART 4--ADMINISTRATIVE MATTERS

3. Amend section 4.605 by--

a. Removing from paragraph (a) ``4.1601,'' and adding ``4.601 to 4.1603,'' in its place; and

b. Adding paragraph (e).

The addition reads as follows:

4.605 Procedures.

* * * * *

(e) Office codes. Agencies shall by October 1, 2015--

(1) Use the Activity Address Code (AAC), as defined in 2.101, assigned to the issuing contracting office as the contracting office code, and

(2) Use the AAC assigned to the program/funding office providing the predominance of funding for the contract action as the program/funding office code.

4. Revise section 4.1601 to read as follows:

4.1601 Policy.

(a) Establishment of a Procurement Instrument Identifier (PIID). Agencies shall have in place a process that ensures that each PIID used to identify a solicitation or contract action is unique Governmentwide, and will remain so for at least 20 years from the date of contract award. The PIID shall be used to identify all solicitation and contract actions. The PIID shall also be used to identify solicitation and contract actions in designated support and reporting systems (e.g., Federal Procurement Data System, System for Award Management), in accordance with regulations, applicable authorities, and agency policies and procedures.)

(b) Transition of PIID numbering. No later than October 1, 2017, agencies shall comply with paragraph (a) of this section and use the requirements in 4.1602 and 4.1603 for all new solicitations and contract awards. Until an agency's transition is complete, it shall maintain its 2013 PIID format that is on record with the General Services Administration's Integrated Award Environment Program Office (which maintains a registry of the agency unique identifier scheme). The 2013 PIID format consisted of alpha characters in the first positions to indicate the agency, followed by alpha-numeric characters; the 2017 format instead has the AAC in the beginning 6 positions.

(c) Change in the Procurement Instrument Identifier after its assignment. (1) Agencies shall not change the PIID unless one of the following two circumstances apply:

(i) The PIID serial numbering system is exhausted. In this instance, the contracting officer may assign a new PIID by issuing a contract modification.

(ii) Continued use of a PIID is administratively burdensome (e.g., for implementations of new agency contract writing systems). In this instance, the contracting officer may assign a new PIID by issuing a contract modification.

(2) The modification shall clearly identify both the original and the newly assigned PIID. Issuance of a new PIID is an administrative change (see 43.101).

5. Amend section 4.1602 by revising paragraph (c) to read as follows:

4.1602 Identifying the PIID and supplementary PIID.

* * * * *

(c) Additional agency specific identification information. If agency procedures require additional identification information in solicitations, contracts, or other related procurement instruments for administrative purposes, separate and clearly identify the additional information from the PIID.

6. Add section 4.1603 to read as follows:

4.1603 Procedures.

(a) Elements of a PIID. The PIID consists of a combination of thirteen to seventeen alpha and/or numeric characters sequenced to convey certain information. Do not use special characters (such as hyphens, dashes, or spaces).

(1) Positions 1 through 6. The first six positions identify the department/agency and office issuing the instrument. Use the AAC assigned to the issuing office for positions 1 through 6. Civilian agency points of contact for obtaining an AAC are on the AAC Contact list maintained by the General Services Administration and can be found at http://www.gsa.gov/graphics/fas/Civilian_contacts.pdf. For Department of Defense (DoD) inquiries, contact the service/agency Central Service Point or DoDAAC Monitor, or if unknown, email DODAADHQ@DLA.MIL for assistance.

(2) Positions 7 through 8. The seventh and eighth positions are the last two digits of the fiscal year in which the procurement instrument is issued or awarded. This is the date the action is signed, not the effective date if the effective date is different.

(3) Position 9. Indicate the type of instrument by entering one of the following upper case letters in position nine. Departments and independent agencies may assign those letters identified for department use below in accordance with their agency policy; however, any use must be applied to the entire department or agency.

Instrument

Letter designation

(i) Blanket purchase agreements.

A

(ii) Invitations for bids

B

(iii) Contracts of all types except indefinite-delivery contracts (see subpart 16.5)

C

(iv) Indefinite-delivery contracts (including Federal Supply Schedules, Governmentwide acquisition contracts(GWACs), and multi-agency contracts

D

(v) Reserved for future Federal Governmentwide us

E

(vi) Task orders, delivery orders or calls under--Indefinite-delivery contracts (including Federal Supply Schedules, Governmentwide acquisition contracts (GWACs), and multi-agency contracts); Blanket purchase agreements; or Basic ordering agreements.

F

(vii) Basic ordering agreements

G

(viii) Agreements, including basic agreements and loan agreements, but excluding blanket purchase agreements, basic ordering agreements, and leases. Do not use this code for contracts or agreements with provisions for orders or calls.

H

(ix) Do not use this letter`

I

(x) Reserved for future Federal Governmentwide use

J

(xi) Reserved for departmental or agency use.

K

(xii) Lease agreements

L

(xiii) Reserved for departmental or agency use

M

(xiv) Reserved for departmental or agency use

N

(xv) Do not use this letter

O

(xvi) Purchase orders (assign V if numbering capacity of P is exhausted during a fiscal year)

P

(xvii) Requests for quotations (assign U if numbering capacity of Q is exhausted during a fiscal year).

Q

(xviii) Requests for proposals

R

(xix) Reserved for departmental or agency use

S

(xx) Reserved for departmental or agency use

T

(xxi) See Q, requests for quotations

U

(xxii) See P, purchase orders.

V

(xxiii) Reserved for future Federal Governmentwide use.

W

(xxiv) Reserved for future Federal Governmentwide use.

X

(xxv) Imprest fund

Y

(xxvi) Reserved for future Federal Governmentwide use.

Z

   

numbers or alpha-numeric numbers for use by its various components.

(5) Illustration of PIID. The following illustrates a properly configured PIID using four characters in the final positions:

(b) Elements of a supplementary PIID. Use the supplementary PIID to identify amendments to solicitations and modifications to contracts, orders, and agreements.

(1) Amendments to solicitations. Number amendments to solicitations sequentially using a four position numeric serial number added to the 13-17 character PIID beginning with 0001.

(2) Modifications to contracts, orders, and agreements. Number

modifications to contracts, orders, and agreements using a six position alpha or numeric, or a combination thereof, added to the 13-17 character PIID. For example, a modification could be numbered P00001. This would be added to the end of the 13-17 character PIID illustrated in (a)(5) of this section.

(i) Position 1. Identify the office issuing the modification. The letter P shall be designated for modifications issued by the procuring contracting office. The letter A shall be used for modifications issued by the contract administration office (if other than the procuring contracting office).

(ii) Positions 2 through 6. These positions may be alpha, numeric, or a combination thereof, in accordance with agency procedures.

(iii) Each office authorized to issue modifications shall assign the supplementary identification numbers in sequence (unless provided otherwise in agency procedures). Do not assign the numbers until it has been determined that a modification is to be issued.

[FR Doc. 2014-24240 Filed 10-10-14; 8:45 am]

BILLING CODE 6820-EP-P

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[Federal Register Volume 79, Number 198 (Tuesday, October 14, 2014)]

[Rules and Regulations]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2014-24239]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 28, and 52

[FAC 2005-77; FAR Case 2011-023; Item II; Docket 2011-0023, Sequence 1]

RIN 9000-AM53

Federal Acquisition Regulation; Irrevocable Letters of Credit

AGENCY: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to remove all references to Office of Federal Procurement Policy (OFPP) Pamphlet No. 7, Use of Irrevocable Letters of Credit, and also provide updated sources of data required to verify the credit worthiness of a financial entity issuing or confirming an irrevocable letter of credit (ILC).

DATES: Effective: November 13, 2014.

FOR FURTHER INFORMATION CONTACT: Ms. Cecelia L. Davis, Procurement Analyst, at 202-219-0202, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-

4755. Please cite FAC 2005-77, FAR Case 2011-023.

SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published a proposed rule in the Federal Register at 78 FR 26573 on May 7, 2013, to remove all references to OFPP Pamphlet No. 7, Use of Irrevocable Letters of Credit, and provide updated sources of data required to verify the credit worthiness of a financial entity issuing or confirming an ILC.

OFPP Pamphlet No. 7 provided detailed guidance for implementing policy letter 91-4, Use of Irrevocable Letters of Credit, for Government contracts. A prior FAR final rule (FAR Case 2000-605, Rescission of Office of Federal Procurement Policy Letters, 65 FR 36014) removed the FAR references to OFPP Policy Letter 91-4 along with several other policy letters that were rescinded by OFPP, effective March 30, 2000 (see 65 FR 16968). However, the reference to OFPP Pamphlet No. 7 remained in FAR part 28 because the information was considered relevant and provided, among other information, a listing of available quantitative and qualitative credit rating institutions and resources, formats for ILCs, and other useful data.

FAR 28.204-3 currently cites OFPP Pamphlet No. 7 at paragraphs (g)(1) and (h)(1) as an available resource that may be used to obtain information on credit rating services or investment grade ratings of financial entities issuing or confirming ILCs because it provides overarching policy and specific guidance on the use of ILCs, but some of the information is outdated. Therefore, instead of referencing the OFPP Pamphlet, this rule--

(1) Extracts from the OFPP Pamphlet the relevant and current information for inclusion in the FAR; and

(2) Provides additional sources of data required to verify the credit worthiness of a financial entity issuing or confirming an ILC, as summarized on the Web sites of the Federal Deposit Insurance Corporation (http://www2.fdic.gov/idasp/index.asp) and Securities and Exchange Commission http://www.sec.gov/answers/nrsro.htm).

Five respondents submitted comments on the proposed rule.

II. Discussion and Analysis

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the comments in the development of the final rule. A discussion of the comments is provided as follows:

A. Summary of Significant Changes

This final rule reflects no change to the proposed rule.

B. Analysis of Public Comments

The Regulatory Secretariat received public comments from five entities in response to the proposed rule. A discussion of these comments is provided as follows:

1. Support for the Proposed Rule

Comment: Two respondents expressed support for the rule.

Response: The Councils acknowledge the public support for this rule.

2. Standby Letters of Credit

Comment: Five respondents recommended that the proposed rule recognize and permit the use of standby letters of credit, in accordance with International Standby Practices (ISP 98), as described in International Chamber of Commerce Publication No. 590.

Response: The intent of the proposed rule, as stated in the

published preamble is as follows: ``. . . to remove all references to the Office of Federal Procurement Policy (OFPP) Pamphlet No. 7, Use of Irrevocable Letters of Credit (ILC), and also provide updated sources of data required to verify the credit worthiness of a financial entity issuing or confirming an ILC.'' As a result, the inclusion of ISP 98 is considered to be a substantive change and thus beyond the scope of this case.

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

This action is necessary to remove all references to OFPP Pamphlet No. 7, Use of Irrevocable Letters of Credit, and provide updated sources of data required to verify credit worthiness of a financial entity issuing or confirming an ILC.

The objective of the rule is to provide up-to-date and readily available information on requirements regarding credit rating for the financial institution issuing or confirming an ILC.

This will apply to all contracts for services, supplies, or construction, when a bid guarantee or performance and payment bonds are required. 40 U.S.C. 3131 requires performance and payment bonds for any construction contract exceeding $100,000; this was raised for inflation to $150,000 (see FAR 1.109). Any person required to furnish a bond has the option to furnish a bond secured by an ILC.

For construction contracts valued at $30,000 to $150,000, alternative payment protection is required, which may involve an ILC. Generally, agencies do not require bonds for other than construction contracts. According to data from the Federal Procurement Data System, in FY 2011 there were about 58,000 new awards for construction and construction maintenance, of which 41,000 were awarded to small businesses (about 70 percent). If we estimate that 10 percent of these awards involve an ILC, then this rule applies to approximately 4,100 small businesses.

The rule only removes references to OFPP Pamphlet No. 7 and replaces these references with information relative to sources of data required to verify an ILC that generally replicates what was in the pamphlet. There are no new reporting, recordkeeping, or compliance requirements. The rule does not duplicate, overlap, or conflict with any other Federal rules.

No significant alternatives to the rule were identified that would accomplish the objectives of the rule. We do not foresee any significant economic impact of the rule on small entities. The basic requirements remain unchanged; the requirements of the pamphlet are directly stated, some of the references have been updated, and a Web site provided for access to a list of Nationally Recognized Statistical Rating Organizations.

There were no significant issues raised by the public in response to the Initial Regulatory Flexibility Analysis.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

V. Paperwork Reduction Act

The rule does not contain any new information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. Chapter 35). However, there is a pre-existing requirement at FAR 52.228-14 for offerors/contractors to provide the contacting officer a credit rating that indicates the financial institutions have the required credit rating as of the date of issuance of the ILC. OMB Control Number 9000-0045, titled: Bid Guarantees, Performance and Payment Bonds, and Alternative Payment Protections, covers the information collection requirements associated with alternative payment protections (including ILCs) and acceptable security for bonds (including ILCs). ILCs are seldom offered as alternative payment protection or security for a bid bond, performance bond, or payment bond. The negligible burden of providing a credit rating along with the required ILC is already sufficiently covered by the approved burden hours in 9000-0045.

List of Subjects in 48 CFR Parts 1, 28, and 52

Government procurement.

Dated: September 30, 2014.

William F. Clark,

Acting Director, Office of Government-Wide Acquisition Policy, Office of Acquisition Policy, Office of Government-Wide Policy.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 28, and 52 as set forth below:

1. The authority citation for 48 CFR parts 1, 28, and 52 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

1.106 [Amended]

2. Amend section 1.106, in the list following the introductory text, by adding in numerical sequence, FAR segment ``52.228-14'' and its corresponding OMB Control No. ``9000-0045''.

PART 28--BONDS AND INSURANCE

3. Amend section 28.204-3 by revising the section heading and paragraphs (a), (g), and (h) to read as follows:

28.204-3 Irrevocable letter of credit.

(a) Any person required to furnish a bond has the option to furnish a bond secured by an irrevocable letter of credit (ILC) in an amount equal to the penal sum required to be secured (see 28.204). A separate ILC is required for each bond.

* * * * *

(g) Only federally insured financial institutions rated investment grade shall issue or confirm the ILC. Unless the financial institution issuing the ILC had letter of credit business of at least $25 million in the past year, ILCs over $5 million must be confirmed by another acceptable financial institution that had letter of credit business of at least $25 million in the past year.

(1) The offeror/contractor is required by paragraph (d) of the clause at 52.228-14, Irrevocable Letter of Credit, to provide the contracting officer a credit rating from a recognized commercial rating service that indicates the financial institution has the required rating(s) as of the date of issuance of the ILC.

(2) To support the credit rating of the financial institution(s) issuing or confirming the ILC, the contracting officer shall verify the following information: (i) Federal insurance: Each financial institution is federally insured. Verification of federal insurance is available through the Federal Deposit Insurance Corporation (FDIC) institution directory at the Web site http://www2.fdic.gov/idasp/index.asp.

(ii) Current credit rating. The current credit rating for each financial institution is investment grade and that the credit rating is from a Nationally Recognized Statistical Rating Organization (NRSRO). NRSROs can be located at the Web site http://www.sec.gov/answers/nrsro.htm maintained by the SEC.

(3) The rating services listed in the Web site http://www.sec.gov/answers/nrsro.htm use different rating scales (e.g., AAA, AA, A, BBB, BB, B, CCC, CC, C, and D; or Aaa, Aa, A, Baa, Ba, B, Caa, Ca, and C) to provide evaluations of institutional credit risk; however, all such systems specify the range of investment grade ratings (e.g., BBB-AAA or Baa-Aaa in the examples in this section) and permit evaluation of the relative risk associated with a specific institution. If the contracting officer learns that a financial institution's rating has dropped below investment grade level, the contracting officer shall give the contractor 30 days to substitute an acceptable ILC or shall draw on the ILC using the sight draft in paragraph (g) of the clause at 52.228-14.

(h) A copy of the Uniform Customs and Practice (UCP) for Documentary Credits, 2006 Edition, International Chamber of Commerce Publication No. 600, is available from: ICC Books USA, 1212 Avenue of the Americas, 21st Floor, New York, NY 10036; Phone: 212-703-5066; Fax: 212-391-6568; E-Mail: iccbooks@uscib.org; Via the Internet at: http://store.iccbooksusa.net.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Amend section 52.228-14 by revising the date of the clause and paragraphs (d), (e)5, and (f)5 to read as follows:

52.228-14 Irrevocable Letter of Credit.

* * * * *

IRREVOCABLE LETTER OF CREDIT (Nov 2014)

* * * * *

(d)(1) Only federally insured financial institutions rated investment grade by a commercial rating service shall issue or confirm the ILC.

(2) Unless the financial institution issuing the ILC had letter of credit business of at least $25 million in the past year, ILCs over $5 million must be confirmed by another acceptable financial institution that had letter of credit business of at least $25 million in the past year.

(3) The Offeror/Contractor shall provide the Contracting Officer a credit rating that indicates the financial institutions have the required credit rating as of the date of issuance of the ILC.

(4) The current rating for a financial institution is available through any of the following rating services registered with the U.S. Securities and Exchange Commission (SEC) as a Nationally Recognized Statistical Rating Organization (NRSRO). NRSRO's can be located at the Web site http://www.sec.gov/answers/nrsro.htm maintained by the SEC.

(e) * * *

5. This Letter of Credit is subject to the Uniform Customs and Practice (UCP) for Documentary Credits, International Chamber of Commerce Publication No.__-- (Insert version in effect at the time of ILC issuance, e.g., ``Publication 600, 2006 edition'') and to the extent not inconsistent therewith, to the laws of __--[State of confirming financial institution, if any, otherwise State of issuing financial institution].

* * * * *

(f) * * *

5. This confirmation is subject to the Uniform Customs and Practice (UCP) for Documentary Credits, International Chamber of Commerce Publication No.__-- (Insert version in effect at the time of ILC issuance, e.g., ``Publication 600, 2006 edition'') and to the extent not inconsistent therewith, to the laws of__--[State of confirming financial institution].

* * * * *

[FR Doc. 2014-24239 Filed 10-10-14; 8:45 am]

BILLING CODE 6820-EP-P

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[Federal Register Volume 79, Number 198 (Tuesday, October 14, 2014)]

[Rules and Regulations]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2014-24236]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 2, 4, 12, 14, 15, 19, 22, 26, 36, 52, and 53

[FAC 2005-77; FAR Case 2009-016; Item I; Docket 2011-0090, Sequence 1]

RIN 9000-AM05

Federal Acquisition Regulation; Federal Contracting Programs for Minority-Owned and Other Small Businesses

AGENCIES: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to remove certain coverage involving procurements with small disadvantaged business (SDB) concerns and certain institutions of higher education that is based on authority which has expired and been found to be unconstitutional by the Court of Appeals for the Federal Circuit. These changes harmonize the FAR with current statutory authorities.

DATES: Effective: October 14, 2014.

FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement Analyst, at 703-605-2868, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755. Please cite FAC 2005-77, FAR Case 2009-016.

SUPPLEMENTARY INFORMATION:

I. Background

DoD, GSA, and NASA published a proposed rule in the Federal Register at 76 FR 55849 on September 9, 2011, to remove certain procurement mechanisms authorized by section 1207 of the National Defense Authorization Act for Fiscal Year (FY) 1987, Public Law 99-661, (10 U.S.C. 2323) from the FAR. The basis for this action is the U.S. Court of Appeals for the Federal Circuit's ruling on November 4, 2008, which found the current 10 U.S.C. 2323 to be unconstitutional. Rothe Development Corp. v. U.S. Department of Defense, et al, 545 F.3d 1023 (Fed. Cir. 2008) (Rothe). On February 27, 2009, the United States District Court, Western District of Texas, San Antonio (the Court), pursuant to instructions from the U.S. Court of Appeals for the Federal Circuit, declared the current 10 U.S.C. 2323 unconstitutional and enjoined its further application in DoD, U.S. Coast Guard, and NASA procurements. Rothe Development Corp. v. U.S. Department of Defense, SA-98-CV-1011-XR (W.D. TX), 606 F.Supp.2d 648 (W.D.Tex., 2009).

The Court's injunction, coupled with the expiration of the law on September 30, 2009, necessitates the removal of all language in the FAR deriving its authority solely from 10 U.S.C. 2323. This includes FAR subpart 19.11, Price Evaluation Adjustment for Small Disadvantaged Business Concerns, and FAR subpart 19.12, Small Disadvantaged Business Participation Program. However, the other policies, practices, and programs that agencies have been relying on to encourage SDB participation in the Federal marketplace since the Court of Appeals decision in Rothe remain in full effect, including the Government-wide goal of awarding not less than five percent of Federal contracting dollars to SDBs for both prime and subcontract awards, as required by section 15(g) of the Small Business Act, Public Law 85-536, as amended, (15 U.S.C. 644(g)).

In addition, section 8(d)(4)(E) of the Small Business Act (15 U.S.C. 637(d)(4)(E)) authorizes Federal agencies to provide incentives for encouraging prime contractors to subcontract with any type of small business, which includes SDBs, qualified Historically Underutilized Business Zone (HUBZone) small businesses, veteran-owned small businesses, service-disabled veteran-owned small businesses (SDVOSBs), and women-owned small businesses (WOSBs). To mirror the statutory authority's coverage of all small businesses, the FAR's coverage allowing monetary incentives for businesses subcontracting with SDBs (currently in FAR 19.1203) has been incorporated into the overall incentive subcontracting program at FAR subpart 19.7. This provision, along with the accompanying FAR clause 52.219-10, Incentive Subcontracting Program (authorized to be included in Federal solicitations and contracts that require subcontracting plans), provide guidance for the use of incentives to encourage prime contractors to expand their subcontracting opportunities with all small businesses, including SDBs.

The procurement mechanism found in FAR 19.1202, which allows an SDB to receive credit as an evaluation factor or subfactor during source selection for its status as an SDB when competing for a prime contract, is deleted in its entirety as its authority derived solely from 10 U.S.C. 2323. However, there is nothing in this final rule that precludes an agency from using evaluation factors and subfactors for subcontracting. Small Business Administration's (SBA) regulations (13 CFR 125.3(g)) allow the use of small business as an evaluation factor or subfactor for an offeror's proposed approach to subcontracting with any small businesses, including SDBs, WOSBs, HUBZone small businesses, and SDVOSBs. As part of a recently opened FAR case 2014-003, Small Business Subcontracting Improvements, to implement sections 1321 and 1322 of the Small Business Jobs Act, including SBA's regulations relating to these sections, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) are conferring with SBA to consider if it would be helpful to develop guidance in the FAR regarding the use of such source selection factors and subfactors.

To clarify the purpose and intent of this FAR change, Office of Federal Procurement Policy (OFPP) held outreach sessions with internal and external stakeholders of the small disadvantaged business community to discuss concerns, dispel misconceptions about the rule, clarify the basis of the change, and restate available programs and existing obligations under the Small Business Act.

II. Discussion and Analysis

The Councils reviewed the comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows:

A. Summary of Significant Changes

The changes made to the proposed rule reflected in the final rule are summarized as follows:

The definition of a ``small disadvantaged business concern'' at FAR 2.101(b)(2), 52.219-1(a), and 52.219-8(a), has been clarified, and added to 52.212-3(a);

The definition of ``historically black college or university'' at FAR 2.101 and 52.226-2 has been amended to delete the inclusion of nonprofit research institutions that were an integral part of such a college or university before November 14, 1986, from the definition.

FAR 19.000(a)(8), which was inadvertently omitted in the proposed rule, has been partially reinstated;

FAR 19.304 and 19.305 have been revised to ensure the guidance is aligned with the subject matter of these sections;

FAR 19.1307(d) and FAR 52.219-4(b)(3) have been removed;

The definitions included at FAR 52.219-1(c), and 52.219-8(c) were moved to 52.219-1(a) and 52.219-8(a), respectively;

FAR 52.219-9(l)(2)(iii) and its Alternate III (l)(2)(iii) Requirement for the Year-End Supplementary Report for Small Disadvantaged Businesses, have been removed; and

The Standard Form 294, Subcontracting Report for Individual Contracts, has been revised. Prime contractors under DoD and the U.S. Coast Guard contracts will no longer count subcontract awards to Historically Black Colleges and Universities and Minority Institutions towards their small disadvantaged business goal. Only NASA, pursuant to its unique statutory authority at 51 U.S.C. 30304, will continue to credit Historically Black Colleges and Universities and Minority Institutions subcontracting data as part of its small disadvantaged business goal.

FAR 53.302-312, Optional Form 312, Small Disadvantaged Business (SDB) Participation Report, has been removed.

B. Analysis of Public Comments

1. General Support for the Proposed Rule

a. Fully Supports the Rule

Comment: One respondent expressed support for the rule, noting that the proposed amendments reflect policy changes Federal agencies have already put into effect pursuant to the Court's decision in Rothe. The respondent also pointed out that the proposed rule does not affect the Government-wide five percent SDB goal for prime contracts and subcontracts mandated by section 15(g) of the Small Business Act.

Response: The Councils acknowledge receipt of this comment.

b. Support for All SDBs

Comment: One respondent specifically acknowledged the impact the Federal Government has in promoting SDBs. Though it is understood that removing the SDB price adjustment has little practical effect on SDBs, the respondent urged the Government to support all SDBs as they grow their businesses. Further, the respondent reminded the Councils of the unique relationship between the United States and its indigenous people and asked that the trust responsibility for Native Americans and the government-to-government relationship continue to be honored.

Response: The Councils acknowledge receipt of this comment.

2. Removal of Barriers to SDB Participation in Federal Procurement

Comment: While recognizing that the Court's decision in Rothe may necessitate some changes to the FAR, many respondents stated that minority contracting programs that assist SDBs and women-owned businesses are entirely constitutional and should be maintained. They stated that minority contracting programs serve to remedy historical patterns of discrimination in Federal procurement and are narrowly tailored to serve this purpose. The respondents noted that despite concerted efforts to address procurement disparities for SDBs, minority, and women-owned businesses by the Federal Government, discrimination persists in Federal procurement and, therefore, they asked the Councils to take into consideration the compelling interest of contracting preferences.

Response: This rule is limited only to contracting programs that were authorized solely by 10 U.S.C. 2323. Programs created to assist businesses owned by socially and economically disadvantaged individuals that were not based solely on this legal authority are unaffected by this rule. For instance, section 8(a) of the Small Business Act (Pub. L. 85-536, as amended, (15 U.S.C. 637(a)), otherwise known as the ``8(a) Program'' is a tool used to assist socially and economically disadvantaged businesses to develop their company's ability to compete for Federal contracting opportunities. The 8(a) Program is, and continues to be, successful in assisting small businesses as well as a means for Federal agencies to achieve the statutory goal for prime contract awards to SDBs.

3. Concerns Related to Rule

a. Ability To Achieve the Five Percent Goal

Comment: Several respondents, who thought that the rule removes the five percent statutory goal for contracting with SDBs, expressed concern that the rule will likely end programs that are beneficial to disadvantaged businesses, and potentially place all small business programs in jeopardy by removing agency accountability.

Response: The final rule does not, in any way, alter the Governmentwide goal of participation by SDBs of not less than five percent of the total value of all prime contract and subcontract awards each fiscal year. In addition, the policies, practices, and programs that agencies have been relying on since the Court of Appeals decision in Rothe and the expiration of the statute to achieve SDB participation, including contracting officers' authority to continue making set-aside awards to SDBs who are participants in SBA's 8(a) business development program, remain in full effect. Agencies have successfully used these authorities to provide meaningful opportunities for SDBs.

b. Retention of Price Evaluation Adjustment Authority

Comment: A number of respondents expressed concern regarding the removal of FAR subpart 19.11, which gave DoD, the United States Coast Guard (USCG), and NASA the authority to apply the Price Evaluation Adjustment (PEA). The respondents stated that doing so will deny SDBs the maximum, practicable opportunity to be considered for Federal contract awards. Further, the respondents pointed out that because the PEA had not been used in a decade was no justification to delete it.

Response: Section 801 of the National Defense Authorization Act for FY 1999, (Pub. L. 105-261) amended 10 U.S.C. 2323 by mandating that the Secretary of Defense suspend the PEA if DoD achieved the five percent SDB goal in the previous fiscal year. DoD has met or exceeded the five percent SDB goal since FY 2001; therefore, in accordance with the mandate, DoD suspended the use of the PEA.

In addition, the Court's decision in Rothe, coupled with the subsequent expiration of 10 U.S.C. 2323 on September 30, 2009, requires the permanent removal of the statutory basis for the PEA for DoD, USCG, and NASA.

c. Retention of SDB Subcontracting Incentive

Comment: Some respondents expressed concern regarding the removal of the incentive subcontracting program for SDB concerns. One respondent remarked that the preamble of the Federal Register notice indicates that FAR 19.1203, ``Incentive subcontracting with small disadvantaged business concerns'' has been retained but moved to FAR subpart 19.7; however, the list of proposed amendments indicates that FAR subpart 19.12 has been deleted with no corresponding amendments to FAR subpart 19.7. Since Rothe did not nullify the basis for FAR subpart 19.12, FAR subpart 19.12 should not be removed unless, and until, an amendment to FAR subpart 19.7 implementing the suggested realignment has been executed.

Response: The authority to use monetary incentives to increase subcontracting opportunities for SDBs remains in the FAR; however, it was relocated to FAR subpart 19.7. The clause at 52.219-10 has also been amended accordingly. By doing so, the SDB incentive provisions are now aligned with other subcontracting incentives authorized under section 8(d)(4)(E) of the Small Business Act, as amended, (15 U.S.C. 637(d)(4)(E)).

d. Removal of SDB Evaluation Factors and Subfactors

Comment: Some respondents expressed concern regarding the removal of FAR 19.1202, which established a requirement for contracting officers to use an evaluation factor or subfactor to assess the participation of SDB concerns during contract performance when formulating the contract award decision. The respondents stated that the proposed FAR changes would have a negative impact on SDBs seeking prime contract awards, foster an environment that discourages business relationships between large prime contractors and SDBs, and further weaken SDBs' ability to compete for Federal contracts.

Response: It is necessary to remove FAR subpart 19.12 to accommodate the Court's decision in Rothe and the fact that the underlying statutory authority for the specific procurement mechanisms in FAR subpart 19.12 has expired. However, there is nothing in this rulemaking that precludes an agency from using evaluation factors and subfactors during source selection to ascertain the commitment of the offeror to the small business community, to include SDBs.

4. Focus of the Rule

a. Other Socioeconomic Programs

Comment: A few respondents noted that the proposed revisions to the FAR were written to address only section 1207. Some of these respondents argued that the issues addressed in Rothe also make the SBA 8(a) and 8(d) programs indefensible. In addition, they argued that Rothe challenges the constitutionality of setting aside contracts under the AbilityOne and Randolph Sheppard programs and to concerns owned by Alaska Native Corporations. These respondents concluded that the FAR rule needs to address these issues.

Response: The Court's decision in Rothe was specifically limited to the constitutionality of section 1207 of the National Defense Authorization Act for FY 1987. The Court's decision did not address the merits of other statutorily-mandated programs. Sections 8(a) and 8(d) of the Small Business Act, as well as the AbilityOne and Randolph Sheppard programs, are not within the purview of 10 U.S.C. 2323 and, therefore, are not the subject matter of this rule.

b. Disparity Studies

Comment: One respondent suggested that the Administration should address historical and present discrimination in Federal contracting practices by conducting the disparate impact studies referenced in the court decision Adarand Constructors, Inc. v. Pena, Secretary of Transportation, et al. The respondent recommended that any remedies the Administration implements should be based on the result of those studies.

Response: The comment is addressed to constitutionality standards; however, the scope of this rule is limited to harmonizing the FAR with current statutory authority.

5. Impact of the Rule on Historically Black Colleges and Universities (HBCUs) and Minority Institutions (MIs)

Comment: A few respondents expressed concern regarding the impact of a Defense Federal Acquisition Regulations Supplement (DFARS) deviation regarding HBCUs and MIs. The respondents stated the changes will eliminate small disadvantaged business credits for prime contractors who subcontract with HBCUs and MIs. This in turn could reduce the incentives for prime contractors to award subcontracts to HBCUs and MIs. The respondents cautioned that DoD must ensure that the proposed rule does not inadvertently impede its current efforts to implement 10 U.S.C. 2362 objectives (e.g., engage prime contractors and small businesses in partnership with HBCUs and MIs as a way of increasing the schools' research, development, test, and engineering involvement).

Response: This rule implements changes needed to conform the FAR to the Court's decision in Rothe and the expiration of 10 U.S.C. 2323. The issues raised by these respondents involve statutes that are external to the Rothe decision and address DFARS regulations rather than the FAR and, therefore, are outside the scope of this rule.

6. Technical Clarifications

Comment: One respondent noticed a number of technical errors in the rule: (1) The respondent questioned the requirement at FAR 12.303(b)(1), which requires the contracting officer to use a continuation sheet to provide the incentive subcontracting percentage in Block 10 of the Standard Form (SF) 1449, ``Solicitation/Contract/Order For Commercial Items.'' The respondent stated this requirement was unnecessary since the contracting officer is already required to provide the same information when using FAR 52.219-10; (2) The respondent noticed that paragraph (a)(8) was inadvertently omitted when the paragraphs in the Scope section of part 19 were renumbered; and (3) The respondent commented that the clarification at 19.1307(d) and 52.219-4(b)(3) was unnecessary and potentially confusing. The respondent recommended either deleting the paragraphs entirely, or including a clearer explanation of the mechanics of the historically underutilized business zone (HUBZone) price evaluation preference.

Response: (1) The guidance at FAR 12.303(b)(1) must remain. FAR 52.219-10 can be incorporated into solicitations and contracts by reference, in which case the contracting officer must use the SF 1449 in order to provide the subcontracting incentive percentage.

(2) FAR 19.000 Scope, paragraph (a)(8) has not been removed but instead modified to remove the reference to the PEA for small disadvantaged businesses.

(3) FAR 19.1307(d) and FAR 52.219-4(b)(3) have been deleted. FAR 19.1307(d) and the clause at 52.219-4(b)(3) were originally used to clarify that an offeror could receive both the HUBZone price evaluation preference and the SDB PEA, if eligible, under the same solicitation. However, the removal of the SDB PEA renders this guidance unnecessary.

(4) FAR 53.302-312, Optional Form 312, Small Disadvantaged Business (SDB) Participation Report, has been removed.

(5) Standard Form 294, Subcontracting Report for Individual Contracts, has been revised to remove the HBCU/MI subcontracting data collection requirement for DoD and USCG since the collection of this data resided in 10 U.S.C. 2323. However, under a separate law, 51 U.S.C. 30304, NASA is still required to collect HBCU/MI subcontracting data. The revised form reflects this distinction.

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

DoD, GSA, and NASA published a proposed rule in the Federal Register at 76 FR 55849 on September 9, 2011, to remove certain procurement mechanisms authorized by section 1207 of the National Defense Authorization Act for Fiscal Year (FY) 1987, Pub. L. 99-661, (10 U.S.C. 2323) from the Federal Acquisition Regulation (FAR). The basis for this action is the U.S. Court of Appeals for the Federal Circuit's ruling on November 4, 2008, which found the current 10 U.S.C. 2323 to be unconstitutional. On February 27, 2009, the United States District Court, Western District of Texas, San Antonio (the Court), pursuant to instructions from the U.S. Court of Appeals for the Federal Circuit, declared the current 10 U.S.C. 2323 unconstitutional and enjoined its further application in DoD, U.S. Coast Guard, and NASA procurements.

As a result of the District Court's injunction of 10 U.S.C. 2323, and the subsequent expiration of the law on September 30, 2009, there no longer is a statutory basis for a unique DoD, USCG, and NASA Small Disadvantaged Business Participation Program.

The final rule amends the FAR to remove language based on the expired statutory authority at 10 U.S.C. 2323.

This rule will apply to SDBs seeking to obtain prime contracts with the Federal Government and subcontracts with the Federal prime contractors. There are approximately 24,490 SDBs currently listed in the Central Contractor Registration that could potentially be affected.

Although there were no significant issues raised by the public regarding the Initial Regulatory Flexibility Analysis, several respondents commented that the removal of FAR subparts 19.11 and 19.12 would deny small disadvantaged businesses the maximum, practicable opportunity to be considered for Federal contract awards. The final rule reiterates that contracting programs authorized by 10 U.S.C. 2323 were found unconstitutional, and the statute expired September 30, 2009. Therefore, the FAR must be amended to reflect the current statutory environment. These amendments are expected to have negligible effect on SDBs as the price evaluation adjustment at issue has not been used for approximately a decade.

The rule imposes no new reporting or recordkeeping requirements for any small business or small entity. Pursuant with this final rule, Federal agencies will no longer be authorized to apply certain procurement mechanisms (FAR subparts 19.11 and 19.12) that had offered a benefit for SDB prime awards.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

V. Paperwork Reduction Act

The final rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). The rule removes FAR coverage at FAR subparts 19.11 and 19.12, and the corresponding clauses at FAR 52.219-22, Small Disadvantaged Business Status, FAR 52.219-23, Notice of Price Evaluation Adjustment for Small Disadvantaged Business Concerns, FAR 52.219-24, Small Disadvantaged Business Participation Program-Targets, FAR 52.219-25, Small Disadvantaged Business Participation Program-Disadvantaged Status and Reporting, and FAR 52.219-26, Small Disadvantaged Business Participation Program-Incentive Subcontracting. This rule also removes the Optional Form 312, Small Disadvantaged Business (SDB) Participation Report. With these changes, the information collection associated with this rule under OMB Control number 9000-0150 will be removed, reducing the information collection burden imposed by the Federal Government on the public by 15,000 burden hours.

This rule will also change the information collection methodology for subcontracting. As a result, the information collection burden imposed by the Federal Government on the public by the Federal Government associated with OMB Control numbers 9000-0006 and 9000-0007 will be reduced by approximately 741,903 and 178,402 hours respectively.

No action is required to remove any hours related to the data collection requirement for the Year End Supplementary Report for Small Disadvantaged Businesses identified at FAR 52.219-9(l)(2)(iii) and Alternate III of the same clause, since these reporting requirements are not associated with any current OMB information collection clearances.

List of Subjects in 48 CFR Parts 1, 2, 4, 12, 14, 15, 19, 22, 26, 36, 52, and 53

Government procurement.

Dated: September 30, 2014.

William Clark,

Acting Director, Office of Government-Wide Acquisition Policy, Office of Acquisition Policy, Office of Government-Wide Policy.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 2, 4, 12, 14, 15, 19, 22, 26, 36, 52, and 53 as set forth below:

1. The authority citation for 48 CFR parts 1, 2, 4, 12, 14, 15, 19, 22, 26, 36, 52, and 53 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

1.106 [Amended]

2. Amend section 1.106 in the table following the introductory text, by removing FAR segments ``19.12'', ``52.219-22'', ``52.219-23'', and ``52.219-25'' and their corresponding OMB Control Number ``9000-0150''.

PART 2--DEFINITIONS OF WORDS AND TERMS

3. Amend section 2.101 in paragraph (b)(2), in the definition ``Historically black college or university'' by removing the last sentence; and revising the definition ``Small disadvantaged business concern'' to read as follows:

2.101 Definitions.

* * * * *

(b) * * *

(2) * * *

Small disadvantaged business concern, consistent with 13 CFR 124.1002, means a small business concern under the size standard applicable to the acquisition, that

(1) Is at least 51 percent unconditionally and directly owned (as defined at 13 CFR 124.105) by--

(i) One or more socially disadvantaged (as defined at 13 CFR 124.103) and economically disadvantaged (as defined at 13 CFR 124.104) individuals who are citizens of the United States; and

(ii) Each individual claiming economic disadvantage has a net worth not exceeding $750,000 after taking into account the applicable exclusions set forth at 13 CFR 124.104(c)(2); and

(2) The management and daily business operations of which are controlled (as defined at 13 CFR 124.106) by individuals who meet the criteria in paragraphs (1)(i) and (ii) of this definition.

* * *

PART 4--ADMINISTRATIVE MATTERS

4.1202 [Amended]

4. Amend section 4.1202 by removing and reserving paragraph (k).

PART 12--ACQUISITION OF COMMERCIAL ITEMS

12.301 [Amended]

5. Amend section 12.301 by removing the last sentence from paragraph (b)(2).

6. Amend section 12.303 by revising paragraph (b)(1) to read as follows:

12.303 Contract format.

* * * * *

(b) * * *

(1) Block 10 if an incentive subcontracting clause is used (the contracting officer shall indicate the applicable percentage);

* * * * *

PART 14--SEALED BIDDING

14.502 [Amended]

7. Amend section 14.502 by removing paragraph (b)(4); redesignating paragraphs (b)(5) through (8) as paragraphs (b)(4) through (7), respectively; and removing from the newly designated paragraph (b)(5) ``Subpart'' and adding ``subpart'' in its place.

PART 15--CONTRACTING BY NEGOTIATION

15.304 [Amended]

8. Amend section 15.304 by removing paragraph (c)(4); and redesignating paragraphs (c)(5) and (6) as paragraphs (c)(4) and (5), respectively.

9. Amend section 15.305 by revising paragraph (a)(2)(v) and removing from paragraph (a)(5) ``(c)(5)'' and adding ``(c)(4)'' in its place.

The revision reads as follows:

15.305 Proposal evaluation.

(a) * * *

(2) * * *

(v) The evaluation should include the past performance of offerors in complying with subcontracting plan goals for small disadvantaged business (SDB) concerns (see subpart 19.7).

* * * * *

10. Amend section 15.503 by--

a. Revising the introductory text of paragraph (a)(2)(i);

b. Removing paragraph (a)(2)(i)(B); and

c. Redesignating paragraphs (a)(2)(i)(C) through (E) as paragraphs (a)(2)(i)(B) through (D), respectively.

The revision reads as follows:

15.503 Notifications to unsuccessful offerors.

(a) * * *

(2) * * *

(i) In addition to the notice in paragraph (a)(1) of this section, the contracting officer shall notify each offeror in writing prior to award and upon completion of negotiations and determinations of responsibility--

* * * * *

PART 19--SMALL BUSINESS PROGRAMS

11. Amend section 19.000 by--

a. Revising paragraphs (a) introductory text and (a)(8);

0

b. Removing paragraphs (a)(9) and (10); and

c. Redesignating paragraphs (a)(11) and (12) as paragraphs (a)(9) and

(10), respectively.

The revisions read as follows:

19.000 Scope of part.

(a) This part implements the acquisition-related sections of the Small Business Act (15 U.S.C. 631, et seq.), applicable sections of the Armed Services Procurement Act (10 U.S.C. 2302, et seq.), 41 U.S.C. 3104, and Executive Order 12138, May 18, 1979. It covers--

* * * * *

(8) The use of a price evaluation preference for HUBZone small business concerns;

* * * * *

19.201 [Amended]

12. Amend section 19.201 by--

a. Removing paragraph (b);

b. Redesignating paragraphs (c) through (f) as paragraphs (b) through

(e), respectively;

c. Removing from the newly designated paragraph (c)(12) ``(d)(11)'' and adding ``(c)(11)'' in its place; and

d. Removing newly designated paragraph (e).

19.202-6 [Amended]

13. Amend section 19.202-6 by removing paragraph (a)(3) and redesignating paragraphs (a)(4) through (6) as paragraphs (a)(3) through (5), respectively.

14. Revise section 19.304 to read as follows:

19.304 Small disadvantaged business status.

(a) The contracting officer may accept an offeror's representation that it is a small disadvantaged business concern (SDB) concern.

(b) The provision at 52.219-1, Small Business Program Representations, or 52.212-3(c)(4), Offeror Representations and Certifications--Commercial Items, is used to collect SDB data.

(c) A representation of SDB status on a Federal prime contract will be deemed a misrepresentation of SDB status if the firm does not meet the requirements of 13 CFR 124.1001(b).

(d) Any person or entity that misrepresents a firm's status as an SDB concern in order to obtain a contracting opportunity in accordance with section 8(d) of the Small Business Act, (15 U.S.C. 637(d)) will be subject to the penalties imposed by section 16(d) of the Small Business Act, (15 U.S.C. 645(d)), as well as any other penalty authorized by law.

15. Revise section 19.305 to read as follows:

19.305 Reviews and protests of SDB status.

This section applies to reviews and protests of a small business concern's SDB status as a prime contractor or subcontractor.

(a) SBA may initiate the review of SDB status on any firm that has represented itself to be an SDB on a prime contract or subcontract to a Federal prime contract whenever it receives credible information calling into question the SDB status of the firm.

(b) Requests for an SBA review of SDB status may be forwarded to the Small Business Administration, Assistant Administrator for SDBCE, 409 Third Street SW., Washington, DC 20416.

(c) An SBA review of a subcontractor's SDB status differs from a formal protest. Protests of a small business concern's SDB status as a subcontractor are processed under 19.703(a)(2). Protests of a concern's size as a prime contractor are processed under 19.302. Protests of a concern's size as a subcontractor are processed under 19.703(b).

19.309 [Amended]

16. Amend section 19.309 by removing paragraph (b) and redesignating paragraphs (c) and (d) as paragraphs (b) and (c), respectively.

17. Amend section 19.703 by revising the first sentence of paragraph (a)(2) to read as follows:

19.703 Eligibility requirements for participating in the program.

(a) * * *

(2) In connection with a subcontract, the contracting officer or the SBA may protest the disadvantaged status of a proposed subcontractor. * * *

* * * * *

19.705-1 [Amended]

18. Amend section 19.705-1 by removing the second sentence.

19. Amend section 19.705-4 by revising the last sentence of paragraph (c) to read as follows:

19.705-4 Reviewing the subcontracting plan.

* * * * *

(c) * * * An incentive subcontracting clause (see 52.219-10, Incentive Subcontracting Program), may be used when additional and unique contract effort, such as providing technical assistance, could significantly increase subcontract awards to small business, small disadvantaged business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, or women-owned small business concerns.

* * * * *

19.708 [Amended]

20. Amend section 19.708 in paragraphs (c)(1), (2), and (3) by removing ``business, HUBZone small business, and'' and adding ``business, HUBZone small business, small disadvantaged business, and'' in its place.

Subpart 19.11 [Removed and Reserved]

21. Remove and reserve subpart 19.11, consisting of sections 19.1101 through 19.1104.

Subpart 19.12 [Removed and Reserved]

22. Remove and reserve subpart 19.12, consisting of sections 19.1201 through 19.1204.

19.1307 [Amended]

23. Amend section 19.1307 by removing paragraph (d) and redesignating paragraph (e) as paragraph (d).

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

22.1006 [Amended]

24. Amend section 22.1006 by--

a. Removing from paragraph (a)(2)(i)(C) ``52.204-8(c)(2)(iii) or (iv)'' and adding ``52.204-8(c)(2)(ii) or (iii)'' in its place;

b. Removing from paragraph (e)(2)(i) ``52.204-8(c)(2)(iii)'' and adding ``52.204-8(c)(2)(ii)'' in its place; and

c. Removing from paragaraph (e)(4)(i) ``52.204-8(c)(2)(iv)'' and adding ``52.204-8(c)(2)(iii)'' in its place.

PART 26--OTHER SOCIOECONOMIC PROGRAMS

26.304 [Amended]

25. Amend section 26.304 by removing the last sentence.

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

36.501 [Amended]

26. Amend section 36.501 by removing from paragraph (b) ``19.11,''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

27. Amend section 52.204-5 by revising the date of the provision and by removing from paragraph (b) ``(b)(1) of FAR 52.219-1,'' and adding ``(c)(1) of FAR 52.219-1,'' in its place.

The revision reads as follows:

52.204-5 Women-Owned Business (Other Than Small Business).

* * * * *

Women-Owned Business (Other Than Small Business) (Oct 2014)

* * * * *

28. Amend section 52.204-8 by--

a. Revising the date of the provision;

b. Revising paragraph (c)(1)(xxi);

c. Removing paragraph (c)(2)(i); and

d. Redesignating paragraphs (c)(2)(ii) through (vii) as (c)(2)(i) through (vi), respectively.

The revisions read as follows:

52.204-8 Annual Representations and Certifications.

* * * * *

Annual Representations and Certifications (Oct 2014)

* * * * *

(c) * * *

(1) * * *

(xxi) 52.226-2, Historically Black College or University and Minority Institution Representation. This provision applies to solicitations for research, studies, supplies, or services of the type normally acquired from higher educational institutions.

* * * * *

29. Amend section 52.212-2 by--

a. Revising the date of the provision; and

b. Removing from paragraph (a) ``(iv) small disadvantaged business participation;''

The revision reads as follows:

52.212-2 Evaluation--Commercial Items.

* * * * *

Evaluation--Commercial Items (Oct 2014)

30. Amend section 52.212-3 by--

a. Revising the date of the provision;

b. Adding in paragraph (a), in alphabetical order, the definition ``Small disadvantaged business concern'';

c. Removing from paragraph (c)(4) ``, for general statistical purposes,'';

d. Removing paragraph (c)(10);

e. Redesignating paragraph (c)(11) as paragraph (c)(10);

f. Removing from the newly designated paragraph (c)(10)(ii) ``representation in paragraph (c)(11)(i)'' and adding ``representation in paragraph (c)(10)(i)'' in its place;

g. Revising Alternate I; and

h. Removing Alternate II.

The revisions and additions read as follows:

52.212-3 Offeror Representations and Certifications--Commercial Items.

* * * * *

Offeror Representations and Certifications--Commercial ITEMS (Oct 2014)

* * * * *

(a) * * *

Small disadvantaged business concern, consistent with 13 CFR 124.1002, means a small business concern under the size standard applicable to the acquisition, that--

(1) Is at least 51 percent unconditionally and directly owned (as defined at 13 CFR 124.105) by--

(i) One or more socially disadvantaged (as defined at 13 CFR 124.103) and economically disadvantaged (as defined at 13 CFR 124.104) individuals who are citizens of the United States; and

(ii) Each individual claiming economic disadvantage has a net worth not exceeding $750,000 after taking into account the applicable exclusions set forth at 13 CFR 124.104(c)(2); and

(2) The management and daily business operations of which are controlled (as defined at 13.CFR 124.106) by individuals, who meet the criteria in paragraphs (1)(i) and (ii) of this definition.

* * * * *

Alternate I (OCT 2014)_. As prescribed in 12.301(b)(2), add the following paragraph (c)(11) to the basic provision:

(11) (Complete if the offeror has represented itself as disadvantaged in paragraph (c)(4) of this provision.)

_Black American.

_Hispanic American.

_Native American (American Indians, Eskimos, Aleuts, or Native Hawaiians).

_Asian-Pacific American (persons with origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China, Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines, Republic of Palau, Republic of the Marshall Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru).

_Subcontinent Asian (Asian-Indian) American (persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands, or Nepal).

_Individual/concern, other than one of the preceding.

31. Amend 52.212-5 by--

a. Revising the date of the clause;

b. Revising paragraphs (b)(11), (b)(12), (b)(16), (b)(17)(i), and (b)(17)(iv);

c. Removing paragraphs (b)(21) through (23);

d. Redesignating paragraphs (b)(24) through (56) as paragraphs (b)(21) through (53), respectively;

e. Revising paragraph (e)(1)(ii); and

f. Revising the date and paragraph (e)(1)(ii)(C) of Alternate II.

The revisions read as follows:

52.212-5 Contract Terms and Conditions Required to Implement Statutes or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required to Implement Statutes or Executive Orders--Commercial Items (Oct 2014)

* * * * *

(b) * * *

_(11)(i) 52.219-3, Notice of HUBZone Set-Aside or Sole-Source Award (NOV 2011) (15 U.S.C. 657a).

_(ii) Alternate I (NOV 2011) of 52.219-3.

_(12)(i) 52.219-4, Notice of Price Evaluation Preference for HUBZone Small Business Concerns (OCT 2014) (if the offeror elects to waive the preference, it shall so indicate in its offer) (15 U.S.C. 657a).

_(ii) Alternate I (JAN 2011) of 52.219-4.

* * * * *

_(16) 52.219-8, Utilization of Small Business Concerns (OCT 2014) (15 U.S.C. 637(d)(2) and (3)).

_(17)(i) 52.219-9, Small Business Subcontracting Plan (OCT 2014) (15 U.S.C. 637(d)(4)).

* * * * *

_(iv) Alternate III (OCT 2014) of 52.219-9.

* * * * *

(e)(1) * * *

(ii) 52.219-8, Utilization of Small Business Concerns (OCT 2014) (15 U.S.C. 637(d)(2) and (3)), in all subcontracts that offer further subcontracting opportunities. If the subcontract (except subcontracts to small business concerns) exceeds $650,000 ($1.5 million for construction of any public facility), the subcontractor must include 52.219-8 in lower tier subcontracts that offer subcontracting opportunities.

* * * * *

Alternate II (OCT 2014) * * *

(e)(1)(ii) * * *

(C) 52.219-8, Utilization of Small Business Concerns (OCT 2014) (15 U.S.C. 637(d)(2) and (3)), in all subcontracts that offer further subcontracting opportunities. If the subcontract (except subcontracts to small business concerns) exceeds $650,000 ($1.5 million for construction of any public facility), the subcontractor must include 52.219-8 in lower tier subcontracts that offer subcontracting opportunities.

* * * * *

32. Amend section 52.213-4 by revising the date of the clause and paragraph (a)(2)(viii) to read as follows:

52.213-4 Terms and Conditions--Simplified Acquisitions (Other Than Commercial Items).

* * * * *

Terms and Conditions--Simplified Acquisitions (Other Than Commercial Items) (Oct 2014)

(a) * * *

(2) * * *

(viii) 52.244-6, Subcontracts for Commercial Items (OCT 2014)_

* * * * *

33. Amend section 52.219-1 by revising the date of the provision and paragraphs (a) through (c) to read as follows:

52.219-1 Small Business Program Representations.

* * * * *

Small Business Program Representations (Oct 2014)

(a) Definitions. As used in this provision--

Economically disadvantaged women-owned small business (EDWOSB) concern means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the United States and who are economically disadvantaged in accordance with 13 CFR part 127. It automatically qualifies as a women-owned small business concern eligible under the WOSB Program.

Service-disabled veteran-owned small business concern--

(1) Means a small business concern--

(i) Not less than 51 percent of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service-disabled veterans; and

(ii) The management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a service-disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran.

(2) Service-disabled veteran means a veteran, as defined in 38 U.S.C. 101(2), with a disability that is service-connected, as defined in 38 U.S.C. 101(16).

Small business concern means a concern, including its affiliates, that is independently owned and operated, not dominant in the field of operation in which it is bidding on Government contracts, and qualified as a small business under the criteria in 13 CFR Part 121 and the size standard in paragraph (b) of this provision.

Small disadvantaged business concern, consistent with 13 CFR 124.1002, means a small business concern under the size standard applicable to the acquisition, that--

(1) Is at least 51 percent unconditionally and directly owned (as defined at 13 CFR 124.105) by--

(i) One or more socially disadvantaged (as defined at 13 CFR 124.103) and economically disadvantaged (as defined at 13 CFR 124.104) individuals who are citizens of the United States, and

(ii) Each individual claiming economic disadvantage has a net worth not exceeding $750,000 after taking into account the applicable exclusions set forth at 13 CFR 124.104(c)(2); and

(2) The management and daily business operations of which are controlled (as defined at 13 CFR 124.106) by individuals who meet the criteria in paragraphs (1)(i) and (ii) of this definition.

Veteran-owned small business concern means a small business concern--

(1) Not less than 51 percent of which is owned by one or more veterans (as defined at 38 U.S.C. 101(2)) or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and

(2) The management and daily business operations of which are controlled by one or more veterans.

Women-owned small business concern means a small business concern-- (1) That is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and

(2) Whose management and daily business operations are controlled by one or more women.

Women-owned small business (WOSB) concern eligible under the WOSB Program (in accordance with 13 CFR part 127), means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the United States.

(b)(1) The North American Industry Classification System (NAICS) code for this acquisition is______--[insert NAICS code].

(2) The small business size standard is __--[insert size standard].

(3) The small business size standard for a concern which submits an offer in its own name, other than on a construction or service contract, but which proposes to furnish a product which it did not itself manufacture, is 500 employees.

(c) Representations. (1) The offeror represents as part of its offer that it [square] is, [square] is not a small business concern.

(2) [Complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] The offeror represents that it [square] is, [square] is not, a small disadvantaged business concern as defined in 13 CFR 124.1002.

(3) [Complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] The offeror represents as part of its offer that it [square] is, [square] is not a women-owned small business concern.

(4) Women-owned small business (WOSB) concern eligible under the WOSB Program. [Complete only if the offeror represented itself as a women-owned small business concern in paragraph (c)(3) of this provision.] The offeror represents as part of its offer that--

(i) It [square] is, [square] is not a WOSB concern eligible under the WOSB Program, has provided all the required documents to the WOSB Repository, and no change in circumstances or adverse decisions have been issued that affects its eligibility; and (ii) It [square] is, [square] is not a joint venture that complies with the requirements of 13 CFR part 127, and the representation in paragraph (c)(4)(i) of this provision is accurate for each WOSB concern eligible under the WOSB Program participating in the joint venture. [The offeror shall enter the name or names of the WOSB concern eligible under the WOSB Program and other small businesses that are participating in the joint venture: ___--.] Each WOSB concern eligible under the WOSB Program participating in the joint venture shall submit a separate signed copy of the WOSB representation.

(5) Economically disadvantaged women-owned small business (EDWOSB) concern. [Complete only if the offeror represented itself as a women-owned small business concern eligible under the WOSB Program in (c)(4) of this provision.] The offeror represents as part of its offer that--

(i) It [square] is, [square] is not an EDWOSB concern eligible under the WOSB Program, has provided all the required documents to the WOSB Repository, and no change in circumstances or adverse decisions have been issued that affects its eligibility; and

(ii) It [square] is, [square] is not a joint venture that complies with the requirements of 13 CFR part 127, and the representation in paragraph (c)(5)(i) of this provision is accurate for each EDWOSB concern participating in the joint venture. [The offeror shall enter the name or names of the EDWOSB concern and other small businesses that are participating in the joint venture: ___--.] Each EDWOSB concern participating in the joint venture shall submit a separate signed copy of the EDWOSB representation.

(6) [Complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] The offeror represents as part of its offer that it [square] is, [square] is not a veteran-owned small business concern.

(7) [Complete only if the offeror represented itself as a veteran-owned small business concern in paragraph (c)(6) of this provision.] The offeror represents as part of its offer that it [square] is, [square] is not a service-disabled veteran-owned small business concern.

(8) [Complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] The offeror represents, as part of its offer, that--

(i) It [square] is, [square] is not a HUBZone small business concern listed, on the date of this representation, on the List of Qualified HUBZone Small Business Concerns maintained by the Small Business Administration, and no material changes in ownership and control, principal office, or HUBZone employee percentage have occurred since it was certified in accordance with 13 CFR Part 126; and

(ii) It [square] is, [square] is not a HUBZone joint venture that complies with the requirements of 13 CFR Part 126, and the representation in paragraph (c)(8)(i) of this provision is accurate for each HUBZone small business concern participating in the HUBZone joint venture. [The offeror shall enter the names of each of the HUBZone small business concerns participating in the HUBZone joint venture: ___--.] Each HUBZone small business concern participating in the HUBZone joint venture shall submit a separate signed copy of the HUBZone representation.

* * * * *

34. Amend section 52.219-2 by revising the introductory text to read as follows:

52.219-2 Equal Low Bids.

As prescribed in 19.309(b), insert the following provision:

* * * * *

35. Amend section 52.219-4 by--

a. Revising the date of the clause;

b. Removing paragraph (b)(3); and

c. Redesignating paragraph (b)(4) as (b)(3).

The revision reads as follows:

52.219-4 Notice of Price Evaluation Preference for HUBZone Small Business Concerns.

* * * * *

Notice of Price Evaluation Preference for HUBZone Small Business Concerns (Oct 2014)

* * * * *

36. Amend section 52.219-8 by revising the date of the clause and paragraphs (a) through (c) to read as follows:

52.219-8 Utilization of Small Business Concerns.

* * * * *

Utilization of Small Business Concerns (Oct 2014)

(a) Definitions. As used in this contract--

HUBZone small business concern means a small business concern that appears on the List of Qualified HUBZone Small Business Concerns maintained by the Small Business Administration.

Service-disabled veteran-owned small business concern--

(1) Means a small business concern--

(i) Not less than 51 percent of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service-disabled veterans; and

(ii) The management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a service-disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran.

(2) Service-disabled veteran means a veteran, as defined in 38 U.S.C. 101(2), with a disability that is service-connected, as defined in 38 U.S.C. 101(16).

Small business concern means a small business as defined pursuant to Section 3 of the Small Business Act and relevant regulations promulgated pursuant thereto.

Small disadvantaged business concern, consistent with 13 CFR 124.1002, means a small business concern under the size standard applicable to the acquisition, that--

(1) Is at least 51 percent unconditionally and directly owned (as defined at 13 CFR 124.105) by--

(i) One or more socially disadvantaged (as defined at 13 CFR 124.103) and economically disadvantaged (as defined at 13 CFR 124.104) individuals who are citizens of the United States; and

(ii) Each individual claiming economic disadvantage has a net worth not exceeding $750,000 after taking into account the applicable exclusions set forth at 13 CFR 124.104(c)(2); and

(2) The management and daily business operations of which are controlled (as defined at 13.CFR 124.106) by individuals, who meet the criteria in paragraphs (1)(i) and (ii) of this definition.

Veteran-owned small business concern means a small business concern--

(1) Not less than 51 percent of which is owned by one or more veterans (as defined at 38 U.S.C. 101(2)) or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and

(2) The management and daily business operations of which are controlled by one or more veterans.

Women-owned small business concern means a small business concern--

(1) That is at least 51 percent owned by one or more women, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and

(2) Whose management and daily business operations are controlled by one or more women.

(b) It is the policy of the United States that small business concerns, veteran-owned small business concerns, service-disabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns shall have the maximum practicable opportunity to participate in performing contracts let by any Federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business concerns, veteran-owned small business concerns, service-disabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns.

(c) The Contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with efficient contract performance. The Contractor further agrees to cooperate in any studies or surveys as may be conducted by the United States Small Business Administration or the awarding agency of the United States as may be necessary to determine the extent of the Contractor's compliance with this clause.

* * * * *

37. Amend section 52.219-9 by--

a. Revising the date of the clause;

b. Removing from paragraph (d)(10)(iii) ``Historically'' and adding ``for NASA only, Historically'' in its place; and

c. Removing paragraph (l)(2)(iii); and

d. Amend Alternate III by--

1. Revising the date of the Alternate III;

2. Removing from paragraph (d)(10)(iii) ``Historically'' and adding ``for NASA only, Historically'' in its place; and

3. Removing paragraph (l)(2)(iii).

The revisions read as follows:

52.219-9 Small Business Subcontracting Plan.

* * * * *

Small Business Subcontracting Plan (Oct 2014)

* * * * *

Alternate III (Oct 2014). * * *

* * * * *

38. Amend section 52.219-10 by revising the date of the clause and removing from paragraph (b) ``and women-owned'' and adding ``small disadvantaged business, and women-owned'' in its place.

The revision reads as follows:

52.219-10 Incentive Subcontracting Program.

* * * * *

Incentive Subcontracting Program (Oct 2014)

* * * * *

52.219-22, 52.219-23, 52.219-24, 52.219-25, and 52.219-26 [Removed and Reserved]

39. Remove and reserve sections 52.219-22, 52.219-23, 52.219-24, 52.219-25, and 52.219-26.

40. Amend section 52.219-28 by revising the introductory text to read as follows:

52.219-28 Post-Award Small Business Program Rerepresentation.

As prescribed in 19.309(c), insert the following clause:

* * * * *

41. Amend section 52.226-2 by revising the date of the provision, and in paragraph (a) the definition ``Historically black college or university'' to read as follows:

52.226-2 Historically Black College or University and Minority Institution Representation.

* * * * *

Historically Black College or University and Minority Institution Representation (Oct 2014)

(a) * * *

Historically black college or university means an institution determined by the Secretary of Education to meet the requirements of 34 CFR 608.2.

* * * * *

42. Amend section 52.244-6 by revising the date of the clause and paragraph (c)(1)(iii) to read as follows:

52.244-6 Subcontracts for Commercial Items.

* * * * *

Subcontracts for Commercial Items (Oct 2014)

* * * * *

(c)(1) * * *

(iii) 52.219-8, Utilization of Small Business Concerns (OCT 2014) (15 U.S.C. 637(d)(2) and (3)), if the subcontract offers further subcontracting opportunities. If the subcontract (except subcontracts to small business concerns) exceeds $650,000 ($1.5 million for construction of any public facility), the subcontractor must include 52.219-8 in lower tier subcontracts that offer subcontracting opportunities.

* * * * *

PART 53--FORMS

43. Revise section 53.219 to read as follows:

53.219 Small business programs.

The following standard form is prescribed for use in reporting small business (including Alaska Native Corporations and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including Alaska Native Corporations and Indian tribes) and women-owned small business subcontracting data, as specified in part 19: SF 294, (Rev. OCT 2014) Subcontracting Report for Individual Contracts. SF 294 is authorized for local reproduction.

44. Amend section 53.301-294 by revising the form to read as follows:

53.301-294 Subcontracting Report for Individual Contracts.

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53.302-312 [Removed]

45. Remove section 53.302-312.

[FR Doc. 2014-24236 Filed 10-10-14; 8:45 am]

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[Federal Register Volume 79, Number 198 (Tuesday, October 14, 2014)]

[Rules and Regulations]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2014-24242]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

[Docket No. FAR 2014-0052, Sequence No. 5]

Federal Acquisition Regulation; Federal Acquisition Circular 2005-77; Small Entity Compliance Guide

AGENCIES: Department of Defense (DoD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Small Entity Compliance Guide.

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SUMMARY: This document is issued under the joint authority of DOD, GSA, and NASA. This Small Entity Compliance Guide has been prepared in accordance with section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996. It consists of a summary of the rules appearing in Federal Acquisition Circular (FAC) 2005-77, which amends the Federal Acquisition Regulation (FAR). An asterisk (*) next to a rule indicates that a regulatory flexibility analysis has been prepared. Interested parties may obtain further information regarding these rules by referring to FAC 2005-77, which precedes this document. These documents are also available via the Internet at http://www.regulations.gov.

DATES: October 14, 2014.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact the analyst whose name appears in the table below. Please cite FAC 2005-77 and the FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755.

Rules Listed in FAC 2005-77

Item

Subject

FAR case

Analyst

I

Federal Contracting Programs for Minority-Owned and Other Small Businesses.

2009-016

Uddowla

II.

Irrevocable Letters of Credit.

2011-023

Davis

III

Uniform Procurement Identification.

2012-023

Loeb

SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these rules, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005-77 amends the FAR as specified below:

Item I--Federal Contracting Programs for Minority-Owned and Other Small Businesses (FAR Case 2009-016)

This final rule amends the FAR to remove certain coverage involving procurements with small disadvantaged business concerns and certain institutions of higher education that is based on authority which has expired and been found to be unconstitutional by the Court of Appeals for the Federal Circuit. These changes harmonize the FAR with current statutory authorities. The impact of this rule on small businesses should be minimal, given that the coverage applied only to prime contracting opportunities in specific North American Industry Classification System codes, and was applicable to only three Government agencies, (DoD, NASA and U.S. Coast Guard). The obligation of Federal Agencies to meet or exceed the statutory five percent small disadvantaged business goals at the prime and subcontracting levels are not affected by this rule.

Item II--Irrevocable Letters of Credit (FAR Case 2011-023)

This final rule amends the FAR to remove all references to Office of Federal Procurement Policy (OFPP) Pamphlet No. 7, Use of Irrevocable Letters of Credit (ILC). This change is necessary to update the sources of data required to verify the credit worthiness of a financial entity issuing or confirming an ILC.

This final rule has no significant impact on the Government and contractors including small business entities and imposes no new requirements. Contracting Officers are currently required to verify the credit worthiness of a financial entity issuing or confirming an ILC and will benefit from this updated information to conduct an accurate analysis.

Item III--Uniform Procurement Identification (FAR Case 2012-023)

This final rule amends the FAR to implement a uniform Procurement Instrument Identification (PIID) numbering system, which will require the use of Activity Address Codes (AACs) as the unique identifier for contracting offices and other offices, in order to standardize procurement transactions across the Federal Government. Agencies shall comply with the new PIID procedures in FAR subpart 4.16 by October 1, 2017, for new solicitations and contract awards.

Dated: September 30, 2014.

William Clark,

Acting Director, Office of Government-Wide Acquisition Policy, Office of Acquisition Policy, Office of Government-Wide Policy.

[FR Doc. 2014-24242 Filed 10-10-14; 8:45 am]

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