[Federal Register: December 18, 1998 (Volume 63, Number 243)]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

Part VI

Department of Defense

General Services Administration

National Aeronautics and Space Administration

48 CFR Chapter 1 et al.

Federal Acquisition Regulations; Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

Federal Acquisition Circular 97-10; Introduction

AGENCIES: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Summary presentation of final and interim rules, and technical amendments and corrections.

SUMMARY: This document summarizes the Federal Acquisition Regulation (FAR) rules issued by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in this Federal Acquisition Circular (FAC) 97-10. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, may be located on the Internet at http://www.arnet.gov/far.

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

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, (202) 501-4755, for information pertaining to status or publication schedules. For clarification of content, contact the analyst whose name appears in the table below in relation to each FAR case or subject area. Please cite FAC 97-10 and specific FAR case number(s). Interested parties may also visit our website at http://www.arnet.gov/far.

SUPPLEMENTARY INFORMATION:

Item

FAR case

Subject

Analyst

I

97-307

Historically Underutilized Business Zone (HUBZone) Empowerment Contracting Program(Interim).

Moss

II

98-016

Limits for Indefinite-Quantity Contracts

DeStefano

III

98-607

Office of Federal Contract Compliance Programs National Pre-Award Registry

O'Neill

IV

97-303

Limitation on Allowability of Compensation or Certain Contractor Personnel.

Nelson

V

97-016

Contractor Purchasing System Review Exclusions

Klein

VI

96-009

Contract Quality Requirements

Klein

VII

97-027

Mandatory Government Source Inspection

Klein

VIII

96-011

No-Cost Value Engineering Change Proposals

Klein.

IX

97-011

Evidence of Shipment in Electronic Data Interchange Transactions

Nelson

X

 

Technical Amendments

 

Summaries for each FAR rule follow. For the actual revisions and/or amendments to these FAR cases, refer to the specific item number and subject set forth in the documents following these item summaries.

Federal Acquisition Circular 97-10 amends the Federal Acquisition Regulation (FAR) as specified below:

Item I-Historically Underutilized Business Zone (HUBZone)

Empowerment Contracting Program

[FAR Case 97-307]

This interim rule amends FAR Parts 5, 6, 7, 8, 12, 13, 14, 15, 19, 26, 52, and 53 to implement the Small Business Administration Historically Underutilized Business Zone (HUBZone) Empowerment Contracting Program. The purpose of the program is to provide Federal contracting assistance for qualified small business concerns located in historically underutilized business zones in an effort to increase employment opportunities, investment, and economic development in these areas. The program provides for set-asides, sole source awards, and price evaluation preferences for HUBZone small business concerns and establishes goals for awards to such concerns.

Item II-Limits for Indefinite-Quantity Contracts

[FAR Case 98-016]

This final rule amends FAR 16.504(a) to clarify that maximum and minimum limits for indefinite-quantity contracts may be expressed as a number of units or dollar value.

Item III-Office of Federal Contract Compliance Programs National

Pre-Award Registry

[FAR Case 98-607]

This final rule amends FAR part 22 and related clauses at part 52 to (1) inform the procurement community of the availability of the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) National Pre-Award Registry (Registry), accessible through the Internet, that contains contractor establishments who have received a preaward clearance within the preceding 24 months, and the option to use the information in the Registry in lieu of submitting a written request for a preaward clearance; and (2) implement revised Department of Labor (DoL) regulations pertaining to equal employment opportunity and affirmative action requirements for Federal contractors and subcontractors.

Item IV-Limitation on Allowability of Compensation for Certain

Contractor Personnel

[FAR Case 97-303]

The interim rule published as Item XIII of FAC 97-04 is converted to a final rule with minor clarifying amendments at FAR 31.205-6(p)(2). The rule implements Section 808 of the National Defense Authorization Act for Fiscal Year 1998 (Pub. L. 105-85). Section 808 limits allowable compensation costs for senior executives of contractors to the benchmark year by the Administrator, Office of Federal Procurement Policy (OFPP). The benchmark compensation amount is $340,650 for contractor fiscal year 1998, and subsequent contractor fiscal years, unless and until revised by OFPP.

Item V-Contractor Purchasing System Review Exclusions

[FAR Case 97-016]

This final rule amends FAR 44.302 and 44.303 to exclude

competitively awarded firm-fixed-price and competitively awarded fixed-

price contracts with economic price adjustment, and sales of commercial

items pursuant to FAR part 12, from the dollar amount used to determine

if a contractor's level of sales to the Government warrants the conduct

of a CPSR; and to exclude subcontracts awarded by a contractor

exclusively in support of Government contracts that are competitively awarded firm-fixed-price, competitively awarded fixed-price with economic price

adjustment, or awarded for commercial items pursuant to FAR part 12, from evaluation during a CPSR.

Item VI-Contract Quality Requirements

[FAR Case 96-009]

This final rule amends FAR 46.202-4, 46.311, and 52.246-11 to replace references to Government specifications with references to commercial quality standards as examples of higher-level contract quality requirements; to require the contracting officer to indicate in the solicitation which higher-level quality standards will satisfy the Government's requirement; and, if more than one standard is listed in the solicitation, to require the offeror to indicate its selection by checking a block.

Item VII-Mandatory Government Source Inspection

[FAR Case 97-027]

This final rule amends FAR 46.402 to facilitate the elimination of unnecessary requirements for Government contract quality assurance at source. This rule deletes the mandatory requirements for Government contract quality assurance at source on all contracts that include a higher-level contract quality requirement, and for supplies requiring inspection that are destined for overseas shipment.

Item VIII-No-Cost Value Engineering Change Proposals

[FAR Case 96-011]

The interim rule published as Item X of FAC 97-05 is converted to a final rule without change. The rule revises FAR 48.104-3 to clarify that no-cost value engineering change proposals (VECPs) may be used when, in the contracting officer's judgment, reliance on other VECP approaches likely would not be more cost-effective, and the no-cost settlement would provide adequate consideration to the Government.

Item IX-Evidence of Shipment in Electronic Data Interchange (EDI)

Transactions

[FAR Case 97-011]

This final rule revises the clause at FAR 52.247-48 to facilitate the use of electronic data interchange (EDI) transactions and to streamline the payment process when supplies are purchased on a free on board (f.o.b.) destination basis with inspection and acceptance at origin.

Item X-Technical Amendments

Amendments are being made at FAR 1.106, 19.102, 19.502-5, 32.908, 37.602-3, 42.203, 52.212-5, 52.219-9, 52.222-37, 53.228 and 53.301 in order to update references and make editorial changes.

Dated: December 14, 1998.

Ralph DeStafano,

Acting Director, Federal Acquisition Policy Division.

Federal Acquisition Circular

FAC 97-10

Federal Acquisition Circular (FAC) 97-10 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 97-10 are effective February 16, 1999, except for Item VIII which is effective December 18, 1998, and Items I and X which are effective January 4, 1999.

Dated: December 14, 1998.

Eleanor R. Spector,

Director, Defense Procurement.

Dated: December 11, 1998.

Ida M. Ustad,

Deputy Associate Administrator, Office of Acquisition Policy, General Services Administration.

Tom Luedtke,

Acting Associate Administrator for Procurement, National Aeronautics and Space Administration.

Dated: December 11, 1998.

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 5, 6, 7, 8, 12, 13, 14, 15, 19, 26, 52, and 53

[FAC 97-10; FAR Case 97-307; Item I]

Federal Acquisition Regulation; Historically Underutilized

Business Zone (HUBZone) Empowerment Contracting Program

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

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

ACTION: Interim rule with request for comments.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on an interim rule amending

the Federal Acquisition Regulation (FAR) to implement revisions made to

Small Business Administration (SBA) regulations covering the

Historically Underutilized Business Zone (HUBZone) Empowerment

Contracting Program (hereinafter referred to as the HUBZone Program).

EFFECTIVE DATE: January 4, 1999.

Comment Date: Comments should be submitted to the FAR Secretariat

at the address shown below on or before February 16, 1999 to be

considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (MVR), 1800 F Street,

NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405.

E-Mail comments submitted over the Internet should be addressed to:

farcase.97-307@gsa.gov

Please cite FAC 97-10, FAR case 97-307 in all correspondence

related to this case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Victoria Moss, Procurement Analyst, at (202) 501-

4764. Please cite FAC 97-10, FAR case 97-307.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule amends FAR parts 5, 6, 7, 8, 12, 13, 14, 15, 19,

26, 52, and 53 to comply with the SBA's HUBZone Program regulations

contained in 13 CFR parts 121, 125, and 126 (63 FR 31896, June 11,

1998). The purpose of the HUBZone Program is to provide Federal

contracting assistance for qualified small business concerns located in

distressed communities in an effort to increase employment

opportunities, investment, and economic development in these

communities. The Program provides for set-asides for firms that meet

the definition of a HUBZone small business concern (SBC), sole source

awards to HUBZone SBCs, and price evaluation preferences for HUBZone

SBCs in acquisitions conducted using full and open competition; and

establishes a Governmentwide goal for HUBZone awards. Until September

30, 2000, ten Government agencies are required to comply with the prime

contract HUBZone Program. After that date, the Program will apply to

all Federal agencies employing one or more contracting officers.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

This interim rule may have a significant economic impact on a

substantial number of small entities within the meaning of the

Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because the purpose

of the HUBZone Program is to provide Federal contracting assistance for

qualified small business concerns located in historically underutilized

business zones in an effort to increase employment opportunities,

investment, and economic development in these zones. An Initial

Regulatory Flexibility Analysis has been prepared and is summarized as

follows:

It is anticipated that the HUBZone Program will benefit small

business concerns by increasing the number of Government contracts

awarded to them. There is a statutory goal for Government HUBZone

small business concerns to receive 3 percent of contract dollars by

fiscal year 2003. The HUBZone Act of 1997, Title VI of Public Law

105-135, 111 Stat. 2592 (December 2, 1997), created the HUBZone

Program and directed the Administrator of the Small Business

Administration (SBA) to promulgate regulations to implement it. This

rule further implements the SBA rule. The small entities affected by

this rule are those that fit within the definition of a small

business concern, as defined by SBA in 13 CFR part 121 and new part

126, and that participate in Government contracting. Because the

program is new, we cannot estimate precisely the number or classes

of small entities that this rule will affect. However, the SBA

estimated that more than 30,000 small businesses will apply for

certification as qualified HUBZone small business concerns. This

rule requires that a firm be listed on SBA's list of eligible

HUBZone small business concerns in order to receive a contracting

preference. That requirement is addressed in SBAs rule. This FAR

rule requires that Government prime contractors with contracts that

require subcontracting plans seek out HUBZone small business

concerns as subcontractors as well as maintain records and report on

those subcontracts awarded to HUBZone small business concerns. These

requirements do not apply to small businesses. This rule does not

duplicate, overlap, or conflict with any other Federal rules. In

general, the drafters of this rule modeled its procurement

mechanisms, to the extent permitted by the SBA rule, on those

already in use within the Federal Government. This approach should

make the requirements of the rule immediately familiar to many small

businesses that already have extensive experience in dealing with

Government contracting offices. Moreover, each individual mechanism

was structured to strike an appropriate balance between the

interests of HUBZone and non-HUBZone small businesses, and to

minimize the overall burden of compliance on small business.

A copy of the analysis has been submitted to the Chief Counsel for

Advocacy of the Small Business Administration and may be obtained from

the FAR Secretariat. Comments are invited. Comments from small entities

concerning the affected FAR subparts also will be considered in

accordance with 5 U.S.C. 610. Such comments must be submitted

separately and should cite FAR case 97-307 in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. 3501, et seq.) is deemed to

apply because the interim rule contains information collection

requirements. The interim rule increases the collection requirements

currently approved under OMB Control Numbers 9000-0006 and 9000-0007.

OMB Control No. 9000-0006 burden hours have increased from 428,035

to 640,837 to reflect the additional burden of planning, maintaining

and reporting subcontract award data on HUBZone small businesses. In

addition, burden inappropriately attached to OMB Control No. 9000-0007

that related to planning and maintaining data was transferred to this

clearance. OMB Control No. 9000-0007 burden hours have been adjusted to

remove hours inappropriately included in this clearance and to add

hours to reflect the additional burden associated with reporting

HUBZone data. The net difference is an increase, from 90,924 to 91,570

hours. The appropriate paperwork has been forwarded to OMB.

D. Request for Comments Regarding Paperwork Burden

Members of the public are invited to comment on the recordkeeping

and information collection requirements and estimates set forth above.

Please send comments to: Office of Information and Regulatory Affairs,

Office of Management and Budget, Attn: Mr. Peter N. Weiss, FAR Desk

Officer, New Executive Office Building, Room 10102, 725 17th Street,

NW, Washington, DC 20503.

Also send a copy of any comments to the FAR Secretariat at the

address shown under ADDRESSES. Please cite the corresponding OMB

Clearance Number in all correspondence related to the estimate.

E. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary

of Defense (DoD), the Administrator of General Services (GSA), and the

Administrator of the National Aeronautics and Space Administration

(NASA) that urgent and compelling reasons exist to promulgate this

interim rule without prior opportunity for public comment. This action

is necessary to conform the Federal Acquisition Regulation to revisions

made in 13 CFR parts 121, 125, and 126 on June 11, 1998, pertaining to

the Small Business Administration (SBA) HUBZone Program. The SBA final

rule became effective on September 9, 1998. Section 605 of the Small

Business Reauthorization Act of 1997 (Title VI of Public Law 105-135)

requires that, 180 days after the SBA issues its final regulations to

carry out the HUBZone Program, conforming amendments must be made to

the Federal Acquisition Regulation (December 8, 1998). However,

pursuant to Public Law 98-577 and FAR 1.501, public comments received

in response to this interim rule will be considered in formulating the

final rule.

List of Subjects in 48 CFR Parts 5, 6, 7, 8, 12, 13, 14, 15, 19,

26, 52, and 53

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 5, 6, 7, 8, 12, 13, 14, 15, 19, 26, 52, and

53 are amended as set forth below:

1. The authority citation for 48 CFR Parts 5, 6, 7, 8, 12, 13, 14,

15, 19, 26, 52, and 53 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 5--PUBLICIZING CONTRACT ACTIONS

2. Section 5.207 is amended by revising paragraph (d) to read as

follows:

5.207 Preparation and transmittal of synopses.

* * * * *

(d) Set-asides. When the proposed acquisition provides for a total

or partial small business set-aside or a HUBZone small business set-

aside, the appropriate CBD Numbered Note will be cited.

* * * * *

PART 6--COMPETITION REQUIREMENTS

3. Section 6.205 is added to read as follows:

6.205 Set-asides for HUBZone small business concerns.

(a) To fulfill the statutory requirements relating to the HUBZone

Act of 1997 (15 U.S.C. 631 note), contracting officers in participating

agencies (see 19.1302) may set aside solicitations to allow only

qualified HUBZone small business concerns to compete (see 19.1305).

(b) No separate justification or determination and findings is

required under this part to set aside a contract action for qualified

HUBZone small business concerns.

4. Section 6.302-5 is amended by adding paragraph (b)(6) to read as

follows:

6.302-5 Authorized or required by statute.

* * * * *

(b) * * *

(6) Sole source awards under the HUBZone Act of 1997--15 U.S.C.

657a (see 19.1306).

* * * * *

PART 7--ACQUISITION PLANNING

5. Section 7.105 is amended by revising the third sentence of

paragraph (b)(1) to read as follows:

7.105 Contents of written acquisition plans.

* * * * *

(b) Plan of action--(1) Sources. * * * Include consideration of

small business, HUBZone small business, small disadvantaged business,

and women-owned small business concerns (see part 19). * * *

* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

6. Section 8.404 is amended by revising the first sentence of

paragraph (a) to read as follows:

8.404 Using schedules.

(a) General. When agency requirements are to be satisfied through

the use of Federal Supply Schedules as set forth in this subpart, the

simplified acquisition procedures of part 13, the small business set-

aside provisions of subpart 19.5, and the HUBZone program of subpart

19.13 do not apply, except for the provision at 13.303-2(c)(3). * * *

* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

7. Section 9.104-3 is amended by revising the last sentence of

paragraph (b) to read as follows:

9.104-3 Application of standards.

* * * * *

(b) * * * If the pending contract requires a subcontracting plan

pursuant to Subpart 19.7, The Small Business Subcontracting Program,

the contracting officer shall also consider the prospective

contractor's compliance with subcontracting plans under recent

contracts.

* * * * *

PART 12--ACQUISITION OF COMMERCIAL ITEMS

8. Section 12.301 is amended at the end of paragraph (b)(2) by

removing the semicolon and adding a period; and adding a sentence to

read as follows:

12.301 Solicitation provisions and contract clauses for the

acquisition of commercial items.

* * * * *

(b) * * *

(2) * * * Use the provision with its Alternate III in solicitations

issued by Federal agencies subject to the requirements of the HUBZone

Act of 1997 (see 19.1302);

* * * * *

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

9. Section 13.003 is amended by redesignating paragraph (b)(2) as

(b)(3) and adding a new paragraph (b)(2) to read as follows:

13.003 Policy.

* * * * *

(b) * * *

(2) The contracting officer may set aside for HUBZone small

business concerns (see 19.1305) an acquisition of supplies or services

that has an anticipated dollar value exceeding $2,500 and not exceeding

the simplified acquisition threshold. The contracting officer's

decision not to set aside an acquisition for HUBZone participation

below the simplified acquisition threshold is not subject to review

under subpart 19.4.

* * * * *

10. Section 13.005 is amended by adding paragraph (a)(9) to read as

follows:

13.005 Federal Acquisition Streamlining Act of 1994 list of

inapplicable laws.

(a) * * *

(9) 15 U.S.C. 631 note (HUBZone Act of 1997), except for 15 U.S.C.

657a(b)(2)(B), which is optional for the agencies subject to the

requirements of the Act.

* * * * *

PART 14--SEALED BIDDING

14.206 [Reserved]

11. Section 14.206 is removed and reserved.

12. Section 14.502 is amended by redesignating paragraph (b)(5) as

(b)(6) and adding a new paragraph (b)(5) to read as follows:

14.502 Conditions for use.

* * * * *

(b) * * *

(5) The use of a set-aside or price evaluation preference for

HUBZone small business concerns (see subpart 19.13).

* * * * *

PART 15--CONTRACTING BY NEGOTIATION

13. Section 15.503 is amended by revising paragraph (a)(2) to read

as follows:

15.503 Notifications to unsuccessful offerors.

(a) * * *

(2) Preaward notices for small business programs. (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, upon

completion of negotiations, determinations of responsibility, and, if

necessary, the process in 19.304(d)--

(A) When using a small business set-aside (see subpart 19.5);

(B) When a small disadvantaged business concern receives a benefit

based on its disadvantaged status (see subpart 19.11 and 19.1202) and

is the apparently successful offeror; or

(C) When using the HUBZone procedures in 19.1305 or 19.1307.

(ii) The notice shall state--

(A) The name and address of the apparently successful offeror;

(B) That the Government will not consider subsequent revisions of

the offeror's proposal; and

(C) That no response is required unless a basis exists to challenge

the small business size status, disadvantaged status, or HUBZone status

of the apparently successful offeror.

(iii) The notice is not required when the contracting officer

determines in writing that the urgency of the requirement necessitates

award without delay or when the contract is entered into under the 8(a) program (see 19.805-2).

* * * * *

PART 19--SMALL BUSINESS PROGRAMS

14. Section 19.000 is amended by revising paragraphs (a)(3) and

(a)(8) to read as follows:

19.000 Scope of part.

(a) * * *

(3) Setting acquisitions aside for exclusive competitive

participation by small business concerns and HUBZone small business

concerns, and sole source awards to HUBZone small business concerns;

* * * * *

(8) The use of a price evaluation adjustment for small

disadvantaged business concerns, and the use of a price evaluation

preference for HUBZone small business concerns; and

* * * * *

15. Section 19.001 is amended by adding, in alphabetical order, the

definitions ``HUBZone'' and ``HUBZone small business concern'' to read

as follows:

19.001 Definitions.

* * * * *

HUBZone means a historically underutilized business zone, which is

an area located within one or more qualified census tracts, qualified

nonmetropolitan counties, or lands within the external boundaries of an

Indian reservation.

HUBZone small business concern means a small business concern that

appears on the List of Qualified HUBZone Small Business Concerns

maintained by the SBA.

* * * * *

16. Section 19.201 is amended by revising the first sentence of

paragraph (a); in paragraph (c) by removing the words ``small, small

disadvantaged and women-owned''; and revising paragraphs (d)(4),

(d)(6), (d)(7)(ii), (d)(8), and (d)(9) to read as follows:

19.201 General policy.

(a) It is the policy of the Government to provide maximum

practicable opportunities in its acquisitions to small business,

HUBZone small business, small disadvantaged business, and women-owned

small business concerns. * * *

* * * * *

(d) * * *

(4) Be responsible for the agency carrying out the functions and

duties in sections 8, 15, and 31 of the Small Business Act.

* * * * *

(6) Have supervisory authority over agency personnel to the extent

that their functions and duties relate to sections 8, 15, and 31 of the

Small Business Act.

(7) * * *

(ii) Whose principal duty is to assist the SBA's assigned

representative in performing functions and duties relating to sections

8, 15, and 31 of the Small Business Act;

(8) Cooperate and consult on a regular basis with the SBA in

carrying out the agency's functions and duties in sections 8, 15, and

31 of the Small Business Act;

(9) Make recommendations in accordance with agency procedures as to

whether a particular acquisition should be awarded under subpart 19.5

as a small business set-aside, under subpart 19.8 as a Section 8(a)

award, or under subpart 19.13 as a HUBZone set-aside.

* * * * *

19.202 [Amended]

17. Section 19.202 is amended in the first sentence by removing

``Subpart 19.5 or 19.8'' and adding ``subpart 19.5, 19.8, or 19.13.''

18. Section 19.202-2 is amended by revising the introductory

paragraph; and in paragraph (a) by adding ``and HUBZones'' after the

word ``areas''. The revised text reads as follows:

19.202-2 Locating small business sources.

The contracting officer shall, to the extent practicable, encourage

maximum participation by small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns in

acquisitions by taking the following actions:

* * * * *

19. Section 19.202-4 is amended by revising the introductory

paragraph to read as follows:

19.202-4 Solicitation.

The contracting officer shall encourage maximum response to

solicitations by small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns by

taking the following actions:

* * * * *

20. Section 19.202-5 is amended by revising paragraphs (a) and (b)

to read as follows:

19.202-5 Data collection and reporting requirements.

* * * * *

(a) Require each prospective contractor to represent whether it is

a small business, HUBZone small business, small disadvantaged business,

or women-owned small business concern (see the provision at 52.219-1,

Small Business Program Representations).

(b) Accurately measure the extent of participation by small

business, HUBZone small business, small disadvantaged business, and

women-owned small business concerns in Government acquisitions in terms

of the total value of contracts placed during each fiscal year, and

report data to the SBA at the end of each fiscal year (see subpart

4.6).

21. Section 19.202-6 is amended by removing the introductory text

and revising paragraph (a) to read as follows:

19.202-6 Determination of fair market price.

(a) The fair market price shall be the price achieved in accordance

with the reasonable price guidelines in 15.404-1(b) for--

(1) Total and partial small business set-asides (see subpart 19.5);

(2) HUBZone set-asides (see subpart 19.13);

(3) Contracts utilizing the price evaluation adjustment for small

disadvantaged business concerns (see subpart 19.11); and

(4) Contracts utilizing the price evaluation preference for HUBZone

small business concerns (see subpart 19.13).

* * * * *

Subpart 19.3--Determination of Status as a Small Business, HUBZone

Small Business, or Small Disadvantaged Business Concern

22. The heading of Subpart 19.3 is revised to read as set forth

above.

23. Section 19.301 is amended by revising the first sentence of

paragraph (d) to read as follows:

19.301 Representation by the offeror.

* * * * *

(d) If the SBA determines that the status of a concern as a small

business, HUBZone small business, small disadvantaged business, or

women-owned small business has been misrepresented in order to obtain a

set-aside contract, an 8(a) subcontract, a subcontract that is to be

included as part or all of a goal contained in a subcontracting plan,

or a prime or subcontract to be awarded as a result, or in furtherance

of any other provision of Federal law that specifically references Section 8(d) of the Small Business Act for a definition of program eligibility, the SBA may take action as specified in Section 16(d) of the Act. * * *

24. Section 19.306 is redesignated as 19.307; and a new 19.306 is

added to read as follows:

19.306 Protesting a firm's status as a HUBZone small business concern.

(a) For sole source acquisitions, the SBA or the contracting

officer may protest the apparently successful offeror's HUBZone small

business status. For all other acquisitions, an offeror, the

contracting officer, or the SBA may protest the apparently successful

offeror's HUBZone small business concern status.

(b) Protests relating to whether a HUBZone small business concern

is a small business for purposes of any Federal program are subject to

the procedures of subpart 19.3. Protests relating to small business

size status for the acquisition and the HUBZone qualifying requirements

will be processed concurrently by SBA.

(c) All protests shall be in writing and shall state all specific

grounds for the protest. Assertions that a protested concern is not a

HUBZone small business concern, without setting forth specific facts or

allegations, is insufficient. An offeror shall submit its protest to

the contracting officer. The contracting officer and the SBA shall

submit their protests to SBA's Associate Administrator for the HUBZone

Program (AA/HUB).

(d) An offeror's protest must be received by close of business on

the fifth business day after bid opening (in sealed bid acquisitions)

or by close of business on the fifth business day after notification by

the contracting officer of the apparently successful offeror (in

negotiated acquisitions). Any protest received after these time limits

is untimely. Any protest received prior to bid opening or notification

of intended award, whichever applies, is premature and shall be

returned to the protester.

(e) Except for premature protests, the contracting officer shall

forward any protest received, notwithstanding whether the contracting

officer believes that the protest is insufficiently specific or

untimely, to: AA/HUB, U.S. Small Business Administration, 409 3rd

Street, SW, Washington, DC 20416.

(f) SBA will determine the HUBZone status of the protested HUBZone

small business concern within 15 business days after receipt of a

protest. If SBA does not contact the contracting officer within 15

business days, the contracting officer may award the contract to the

apparently successful offeror, unless the contracting officer has

granted SBA an extension. The contracting officer may award the

contract after receipt of a protest if the contracting officer

determines in writing that an award must be made to protect the public

interest.

(g) SBA will notify the contracting officer, the protester, and the

protested concern of its determination. The determination is effective

immediately and is final unless overturned on appeal by SBA's Associate

Deputy Administrator for Government Contracting and 8(a) Business

Development (ADA/GC&8(a)BD).

(h) The protested HUBZone small business concern, the protester, or

the contracting officer may file appeals of protest determinations with

SBA's ADA/GC&8(a)BD. The ADA/GC&8(a)BD must receive the appeal no later

than 5 business days after the date of receipt of the protest

determination. SBA will dismiss any appeal received after the 5-day

period.

(i) The appeal must be in writing. The appeal must identify the

protest determination being appealed and must set forth a full and

specific statement as to why the decision is erroneous or what

significant fact the AA/HUB failed to consider.

(j) The party appealing the decision must provide notice of the

appeal to the contracting officer and either the protested HUBZone

small business concern or the original protester, as appropriate. SBA

will not consider additional information or changed circumstances that

were not disclosed at the time of the AA/HUB's decision or that are

based on disagreement with the findings and conclusions contained in

the determination.

(k) The ADA/GC&8(a)BD will make its decision within 5 business days

of the receipt of the appeal, if practicable, and will base its

decision only on the information and documentation in the protest

record as supplemented by the appeal. SBA will provide a copy of the

decision to the contracting officer, the protester, and the protested

HUBZone small business concern. The ADA/GC&8(a)BD's decision is the

final decision.

24a. In newly redesignated 19.307, the section heading and

paragraph (a) are revised to read as follows:

19.307 Solicitation provision.

(a)(1) The contracting officer shall insert the provision at

52.219-1, Small Business Program Representations, in solicitations

exceeding the micro-purchase threshold when the contract is to be

performed inside the United States, its territories or possessions,

Puerto Rico, the Trust Territory of the Pacific Islands, or the

District of Columbia.

(2) The provision shall be used with its Alternate I in

solicitations issued by DoD, NASA, or the Coast Guard that are expected

to exceed the threshold at 4.601(a).

(3)(i) The provision shall be used with its Alternate II in

solicitations issued by the following agencies on or before September

30, 2000:

(A) Department of Agriculture.

(B) Department of Defense.

(C) Department of Energy.

(D) Department of Health and Human Services.

(E) Department of Housing and Urban Development.

(F) Department of Transportation.

(G) Department of Veterans Affairs.

(H) Environmental Protection Agency.

(I) General Services Administration.

(J) National Aeronautics and Space Administration.

(ii) The provision shall be used with its Alternate II in

solicitations issued by all Federal agencies after September 30, 2000.

* * * * *

25. Section 19.402 is amended by revising paragraph (c)(1) to read

as follows:

19.402 Small Business Administration procurement center

representatives.

* * * * *

(c) * * *

(1) Reviewing proposed acquisitions to recommend--

(i) The setting aside of selected acquisitions not unilaterally set

aside by the contracting officer.

(ii) New qualified small, HUBZone small, small disadvantaged, and

women-owned small business sources, and

(iii) Breakout of components for competitive acquisitions.

* * * * *

26. Section 19.501 is amended--

(a) In the third and fourth sentences of paragraph (a) by adding

``small business'' after the word ``A'' in each instance;

(b) In the first sentence of paragraph (b) by adding ``small

business'' after the word ``a''; and in the second and third sentences

by removing the word ``which'' and adding ``that'' in each instance;

and

(c) By redesignating paragraphs (c) through (g) as (d) through (h),

respectively; adding a new paragraph (c); and by revising newly

designated paragraphs (d) and (h) to read as follows:

19.501 General.

* * * * *

(c) For acquisitions exceeding the simplified acquisition

threshold, the requirement to set aside an acquisition for HUBZone

small business concerns (see 19.1305) takes priority over the

requirement to set aside the acquisition for small business concerns.

(d) The contracting officer shall review acquisitions to determine

if they can be set aside for small business, giving consideration to

the recommendations of agency personnel having cognizance of the

agency's small business programs. The contracting officer shall

document why a small business set-aside is inappropriate when an

acquisition is not set aside for small business, unless a HUBZone small

business set-aside or HUBZone small business sole source award is

anticipated. If the acquisition is set aside for small business based

on this review, it is a unilateral set-aside by the contracting

officer. Agencies may establish threshold levels for this review

depending upon their needs.

* * * * *

(h) Except as authorized by law, a contract may not be awarded as a

result of a small business set-aside if the cost to the awarding agency

exceeds the fair market price.

27. Section 19.502-1 is revised to read as follows:

19.502-1 Requirements for setting aside acquisitions.

(a) The contracting officer shall set aside an individual

acquisition or class of acquisitions for competition among small

businesses when--

(1) It is determined to be in the interest of maintaining or

mobilizing the Nations full productive capacity, war or national

defense programs; or

(2) Assuring that a fair proportion of Government contracts in each

industry category is placed with small business concerns; and the

circumstances described in 19.502-2 or 19.502-3(a) exist.

(b) This requirement does not apply to purchases of $2,500 or less,

or purchases from required sources of supply under part 8 (e.g.,

Federal Prison Industries, Committee for Purchase from People Who are

Blind or Severely disabled, and Federal Supply Schedule contracts).

28. Section 19.502-2 is amended by revising the section heading; in

the first sentence of paragraph (a) by adding ``for small business''

after the word ``aside''; and revising the last sentence; in the first

sentence of paragraph (c) by adding ``small business'' after the word

``For'', and removing the word ``which'' and adding ``that''; and in

paragraph (d) by adding ``small business'' after the word ``when''. The

revised text reads as follows:

19.502-2 Total small business set-asides.

(a) * * * The small business reservation does not preclude the

award of a contract with a value not greater than $100,000 under

Subpart 19.8, Contracting with the Small Business Administration, under

19.1006(c), Emerging small business set-aside, or under 19.1305,

HUBZone set-aside procedures.

* * * * *

19.502-4 [Amended]

29. Section 19.502-4 is amended in the first sentence of paragraph

(a) by adding ``small business'' after the word ``Total''.

19.502-5 [Amended]

30. Section 19.502-5 is amended in the second sentences of

paragraphs (b) and (c) by adding ``small business'' after the word

``total'' in each instance; and in paragraph (g) by adding ``small

business'' after the word ``class''.

31. Section 19.503 is amended by revising the section heading to

read as set forth below; in the second sentence of paragraph (a) by

adding ``small business'' after the word ``class''; in paragraph (b) by

adding ``for small business'' after the word ``acquisitions''; in

paragraph (c) introductory text by adding ``small business'' after the

word ``class''; and in the first sentence of paragraph (d) by adding

``small business'' after the word ``class'' both times it appears.

19.503 Setting aside a class of acquisitions for small business.

32. Section 19.506 is amended by revising the section heading,

paragraph (a), the last sentence of paragraph (b), and paragraph (c) to

read as follows:

19.506 Withdrawing or modifying small business set-asides.

(a) If, before award of a contract involving a small business set-

aside, the contracting officer considers that award would be

detrimental to the public interest (e.g., payment of more than a fair

market price), the contracting officer may withdraw the small business

set-aside determination whether it was unilateral or joint. The

contracting officer shall initiate a withdrawal of an individual small

business set-aside by giving written notice to the agency small

business specialist and the SBA procurement center representative, if

one is assigned, stating the reasons. In a similar manner, the

contracting officer may modify a unilateral or joint class small

business set-aside to withdraw one or more individual acquisitions.

(b) * * * However, the procedures are not applicable to automatic

dissolutions of small business set-asides (see 19.507) or dissolution

of small business set-asides under $100,000.

(c) The contracting officer shall prepare a written statement

supporting any withdrawal or modification of a small business set-aside

and include it in the contract file.

33. Section 19.507 is amended by revising the section heading to

read as set forth below; and in the first sentence of paragraph (a) by

adding ``small business'' after the word ``a''.

19.507 Automatic dissolution of a small business set-aside.

Subpart 19.7--The Small Business Subcontracting Program

34. The heading of Subpart 19.7 is revised to read as set forth

above.

35. Section 19.702 is amended by revising the introductory

paragraph and (b)(4) to read as follows:

19.702 Statutory requirements.

Any contractor receiving a contract for more than the simplified

acquisition threshold shall agree in the contract that small business,

HUBZone small business, small disadvantaged business, and women-owned

small business concerns shall have the maximum practicable opportunity

to participate in contract performance consistent with its efficient

performance. 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, HUBZone small business, small disadvantaged business, and

women-owned small business concerns.

* * * * *

(b) * * *

(4) For modifications to contracts within the general scope of the

contract that do not contain the clause at 52.219-8, Utilization of

Small Business Concerns (or equivalent prior clauses; e.g., contracts

awarded before the enactment of Public Law 95-507).

* * * * *

36. Section 19.703 is amended by revising the introductory text of

paragraph (a) and (a)(1); in paragraph (b) by revising the first

sentence and adding a sentence to the end of the paragraph to read as

follows:

19.703 Eligibility requirements for participating in the program.

(a) To be eligible as a subcontractor under the program, a concern

must

[[Page 70271]]

represent itself as a small business, HUBZone small business, small

disadvantaged business, or woman-owned small business concern.

(1) To represent itself as a small business, HUBZone small

business, or women-owned small business concern, a concern must meet

the appropriate definition in 19.001.

* * * * *

(b) A contractor acting in good faith may rely on the written

representation of its subcontractor regarding the subcontractor's

status as a small business, HUBZone small business, or women-owned

small business concern. * * * Protests challenging HUBZone small

business concern status shall be filed in accordance with 13 CFR

126.800.

37. Section 19.704 is amended by revising paragraphs (a)(1),

(a)(2), (a)(3), (a)(6), (a)(8), (a)(9), (a)(11), and the first sentence

of paragraph (b) to read as follows:

19.704 Subcontracting plan requirements.

(a) * * *

(1) Separate percentage goals for using small business, HUBZone

small business, small disadvantaged business, and women-owned small

business concerns as subcontractors;

(2) A statement of the total dollars planned to be subcontracted

and a statement of the total dollars planned to be subcontracted to

small business, HUBZone small business, small disadvantaged business,

and women-owned small business concerns;

(3) A description of the principal types of supplies and services

to be subcontracted and an identification of types planned for

subcontracting to small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns;

* * * * *

(6) A statement as to whether or not the offeror included indirect

costs in establishing subcontracting goals, and a description of the

method used to determine the proportionate share of indirect costs to

be incurred with small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns;

* * * * *

(8) A description of the efforts the offeror will make to ensure

that small business, HUBZone small business, small disadvantaged

business, and women-owned small business concerns have an equitable

opportunity to compete for subcontracts;

(9) Assurances that the offeror will include the clause at 52.219-

8, Utilization of Small Business Concerns (see 19.708(a)), in all

subcontracts that offer further subcontracting opportunities, and that

the offeror will require all subcontractors (except small business

concerns) that receive subcontracts in excess of $500,000 ($1,000,000

for construction) to adopt a plan that complies with the requirements

of the clause at 52.219-9, Small Business Subcontracting Plan (see

19.708(b));

* * * * *

(11) A description of the types of records that will be maintained

concerning procedures adopted to comply with the requirements and goals

in the plan, including establishing source lists; and a description of

the offeror's efforts to locate small business, HUBZone small business,

small disadvantaged business, and women-owned small business concerns

and to award subcontracts to them.

(b) Contractors may establish, on a plant or division-wide basis, a

master plan (see 19.701) that contains all the elements required by the

clause at 52.219-9, Small Business Subcontracting Plan, except goals. *

* *

* * * * *

38. Section 19.705-2 is amended by revising the last sentence of

paragraph (d) to read as follows:

19.705-2 Determining the need for a subcontracting plan.

* * * * *

(d) * * * In determining when subcontracting plans should be

required, as well as when and with whom plans should be negotiated, the

contracting officer shall consider the integrity of the competitive

process, the goal of affording maximum practicable opportunity for

small business, HUBZone small business, small disadvantaged business,

and women-owned small business concerns to participate, and the burden

placed on offerors.

39. Section 19.705-4 is amended by revising the last sentence of

paragraph (b), the second and last sentences of paragraph (c), the

first sentence of paragraph (d)(1), (d)(5), and the first sentence of

paragraph (d)(6) to read as follows:

19.705-4 Reviewing the subcontracting plan.

* * * * *

(b) * * * If the plan, although responsive, evidences the bidder's

intention not to comply with its obligations under the clause at

52.219-8, Utilization of Small Business Concerns, the contracting

officer may find the bidder nonresponsible.

(c) * * * Subcontracting goals should be set at a level that the

parties reasonably expect can result from the offeror expending good

faith efforts to use small business, HUBZone small business, small

disadvantaged business, and women-owned small business subcontractors

to the maximum practicable extent. * * * 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, HUBZone small business, or women-owned small business

concerns.

(d) * * *

(1) Obtain information available from the cognizant contract

administration office, as provided for in 19.706(a), and evaluate the

offeror's past performance in awarding subcontracts for the same or

similar products or services to small business, HUBZone small business,

small disadvantaged business, and women-owned small business concerns.

* * *

* * * * *

(5) Evaluate subcontracting potential, considering the offeror's

make-or-buy policies or programs, the nature of the supplies or

services to be subcontracted, the known availability of small business,

HUBZone small business, small disadvantaged business, and women-owned

small business concerns in the geographical area where the work will be

performed, and the potential contractor's long-standing contractual

relationship with its suppliers.

(6) Advise the offeror of available sources of information on

potential small business, HUBZone small business, small disadvantaged

business, and women-owned small business subcontractors, as well as any

specific concerns known to be potential subcontractors. * * *

* * * * *

40. Section 19.705-6 is amended by revising paragraphs (a) and (b)

to read as follows:

19.705-6 Postaward responsibilities of the contracting officer.

* * * * *

(a) Notifying the SBA of the award by sending a copy of the award

document to the Area Director, Office of Government Contracting, in the

SBA area office where the contract will be performed.

(b) Forwarding a copy of each commercial plan and any associated

approvals to the Area Director, Office of Government Contracting, in

the SBA area office where the contractor's headquarters is located.

* * * * *

41. Section 19.705-7 is amended in the first sentence of paragraph

(a), and in the third and fourth sentences of paragraph (d) by removing

the words ``small, small disadvantaged'' and adding ``small business,

HUBZone small business, small disadvantaged business,'' in each

instance; and revising the introductory text of paragraph (f) to read

as follows:

19.705-7 Liquidated damages.

* * * * *

(f) With respect to commercial plans approved under the clause at

52.219-9, Small Business Subcontracting Plan, the contracting officer

that approved the plan shall--

* * * * *

42. Section 19.706 is amended by revising paragraphs (b) and (c) to

read as follows:

19.706 Responsibilities of the cognizant administrative contracting

officer.

* * * * *

(b) Information on the extent to which the contractor is meeting

the plan's goals for subcontracting with eligible small business,

HUBZone small business, small disadvantaged business, and women-owned

small business concerns;

(c) Information on whether the contractor's efforts to ensure the

participation of small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns are in

accordance with its subcontracting plan;

* * * * *

43. Section 19.708 is amended by revising the section heading; in

the introductory text of paragraph (a) by removing the words ``Small,

Small Disadvantaged and Women-Owned''; by revising paragraph (b); and

in paragraphs (c)(1), (c)(2), and (c)(3) by adding ``business, HUBZone

small business,'' after the word ``small'' the first time it is used.

The revised text reads as follows:

19.708 Contract clauses.

* * * * *

(b)(1) The contracting officer shall, when contracting by

negotiation, insert the clause at 52.219-9, Small Business

Subcontracting Plan, in solicitations and contracts that offer

subcontracting possibilities, are expected to exceed $500,000

($1,000,000 for construction of any public facility), and are required

to include the clause at 52.219-8, Utilization of Small Business

Concerns, unless the acquisition is set aside or is to be accomplished

under the 8(a) program. When contracting by sealed bidding rather than

by negotiation, the contracting officer shall use the clause with its

Alternate I. When contracting by negotiation, and subcontracting plans

are required with initial proposals as provided for in 19.705-2(d), the

contracting officer shall use the clause with its Alternate II.

(2) The contracting officer shall insert the clause at 52.219-16,

Liquidated Damages--Subcontracting Plan, in all solicitations and

contracts containing the clause at 52.219-9, Small Business

Subcontracting Plan, or the clause with its Alternate I or II.

* * * * *

44. Section 19.800 is amended by adding paragraph (d) to read as

follows:

19.800 General.

* * * * *

(d) Before deciding to set aside an acquisition in accordance with

subpart 19.5 or 19.13, the contracting officer should review the

acquisition for offering under the 8(a) Program. In making this

decision, contracting officers in participating agencies (see 19.1302)

are advised that SBA will give first priority to HUBZone 8(a) concerns.

19.803 [Amended]

45. Section 19.803 is amended at the end of paragraph (c) by

removing the period and adding ``(but see 19.800(d)).''.

46. Section 19.804-2 is amended by revising paragraph (a)(12) to

read as follows:

19.804-2 Agency offering.

(a) * * *

(12) Identification of all known 8(a) concerns, including HUBZone

8(a) concerns, that have expressed an interest in this specific

requirement as a result of self-marketing, response to sources sought,

or publication of advanced acquisition requirements.

* * * * *

47. Section 19.1006 is amended by revising the last sentence of

paragraph (b)(1) to read as follows:

19.1006 Procedures.

* * * * *

(b) Designated industry groups. (1) * * * Acquisitions in the

designated industry groups shall continue to be considered for

placement under the 8(a) Program (see subpart 19.8) and the HUBZone

Program (see subpart 19.13).

* * * * *

48. Section 19.1102 is amended by revising paragraph (b) to read as

follows:

19.1102 Applicability.

* * * * *

(b) The price evaluation adjustment shall not be used in

acquisitions that--

(1) Are less than or equal to the simplified acquisition threshold;

(2) Are awarded pursuant to the 8(a) Program;

(3) Are set aside for small business concerns; or

(4) Are set aside for HUBZone small business concerns.

49. Section 19.1202-2 is amended by revising paragraph (b)(1) to

read as follows:

19.1202-2 Applicability.

* * * * *

(b) * * *

(1) Small business set-asides (see subpart 19.5) and HUBZone set-

asides (see subpart 19.13);

* * * * *

50. Subpart 19.13, consisting of sections 19.1301 through 19.1308,

is added to read as follows:

Subpart 19.13--Historically Underutilized Business Zone (HUBZone) Program

Sec.

19.1301 General.

19.1302 Applicability.

19.1303 Status as a qualified HUBZone small business concern.

19.1304 Exclusions.

19.1305 HUBZone set-aside procedures.

19.1306 HUBZone sole source awards.

19.1307 Price evaluation preference for HUBZone small business concerns.

19.1308 Contract clauses.

Authority: 41 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

Subpart 19.13--Historically Underutilized Business Zone (HUBZone)

Program

19.1301 General.

(a) The Historically Underutilized Business Zone (HUBZone) Act of

1997 (15 U.S.C. 631 note) created the HUBZone Program (sometimes

referred to as the ``HUBZone Empowerment Contracting Program'').

(b) The purpose of the HUBZone Program is to provide Federal

contracting assistance for qualified small business concerns located in

historically underutilized business zones, in an effort to increase

employment opportunities, investment, and economic development in those

areas.

19.1302 Applicability.

(a) Until September 30, 2000, the procedures in this subpart apply

only to acquisitions made by the following Federal agencies:

(1) Department of Agriculture.

(2) Department of Defense.

(3) Department of Energy.

(4) Department of Health and Human Services.

(5) Department of Housing and Urban Development.

(6) Department of Transportation.

(7) Department of Veterans Affairs.

(8) Environmental Protection Agency.

(9) General Services Administration.

(10) National Aeronautics and Space Administration.

(b) On or after September 30, 2000, the procedures in this subpart

will apply to all Federal agencies that employ one or more contracting

officers.

19.1303 Status as a qualified HUBZone small business concern.

(a) Status as a qualified HUBZone small business concern is

determined by the Small Business Administration (SBA) in accordance

with 13 CFR part 126.

(b) If the SBA determines that a concern is a qualified HUBZone

small business concern, it will issue a certification to that effect

and will add the concern to the List of Qualified HUBZone Small

Business Concerns on its Internet website at http://www.sba.gov/

hubzone. The concern must appear on the list to be a HUBZone small

business concern.

(c) A joint venture (see 19.101) may be considered a HUBZone small

business if the business entity meets all the criteria in 13 CFR

126.616.

(d) Except for construction or services, any HUBZone small business

concern (nonmanufacturer) proposing to furnish a product that it did

not itself manufacture must furnish the product of a HUBZone small

business concern manufacturer to receive a benefit under this subpart.

19.1304 Exclusions.

This subpart does not apply to--

(a) Requirements that can be satisfied through award to--

(1) Federal Prison Industries, Inc. (see subpart 8.6); or

(2) Javits-Wagner-O'Day Act participating non-profit agencies for

the blind or severely disabled (see subpart 8.7);

(b) Orders under indefinite delivery contracts (see subpart 16.5);

(c) Orders against Federal Supply Schedules (see subpart 8.4);

(d) Requirements currently being performed by an 8(a) participant

or requirements SBA has accepted for performance under the authority of

the 8(a) Program, unless SBA has consented to release the requirements

from the 8(a) Program;

(e) Requirements that do not exceed the micro-purchase threshold;

or

(f) Requirements for commissary or exchange resale items.

19.1305 HUBZone set-aside procedures.

(a) A participating agency contracting officer shall set aside

acquisitions exceeding the simplified acquisition threshold for

competition restricted to HUBZone small business concerns when the

requirements of paragraph (b) of this section can be satisfied. The

contracting officer shall consider HUBZone set-asides before

considering HUBZone sole source awards (see 19.1306) or small business

set-asides (see subpart 19.5).

(b) To set aside an acquisition for competition restricted to

HUBZone small business concerns, the contracting officer must have a

reasonable expectation that--

(1) Offers will be received from two or more HUBZone small business

concerns; and

(2) Award will be made at a fair market price.

(c) A participating agency may set aside acquisitions exceeding the

micro-purchase threshold, but not exceeding the simplified acquisition

threshold, for competition restricted to HUBZone small business

concerns at the sole discretion of the contracting officer, provided

the requirements of paragraph (b) of this section can be satisfied.

(d) If the contracting officer receives only one acceptable offer

from a qualified HUBZone small business concern in response to a set

aside, the contracting officer should make an award to that concern. If

the contracting officer receives no acceptable offers from HUBZone

small business concerns, the HUBZone set-aside shall be withdrawn and

the requirement, if still valid, set aside for small business concerns,

as appropriate (see subpart 19.5).

(e) The procedures at 19.202-1 and, except for acquisitions not

exceeding the simplified acquisition threshold, at 19.402 apply to this

section. When the SBA intends to appeal a contracting officer's

decision to reject a recommendation of the SBA procurement center

representative to set aside an acquisition for competition restricted

to HUBZone small business concerns, the SBA procurement center

representative shall notify the contracting officer, in writing, of its

intent within 5 working days of receiving the contracting officer's

notice of rejection. Upon receipt of notice of SBA's intent to appeal,

the contracting officer shall suspend action on the acquisition unless

the head of the contracting activity makes a written determination that

urgent and compelling circumstances, which significantly affect the

interests of the Government, exist. Within 15 working days of SBA's

notification to the contracting officer, SBA shall file its formal

appeal with the head of the contracting activity, or that agency may

consider the appeal withdrawn. The head of the contracting activity

shall reply to SBA within 15 working days of receiving the appeal. The

decision of the head of the contracting activity shall be final.

19.1306 HUBZone sole source awards.

(a) A participating agency contracting officer may award contracts

to HUBZone small business concerns on a sole source basis without

considering small business set-asides (see subpart 19.5), provided--

(1) Only one HUBZone small business concern can satisfy the

requirement;

(2) The anticipated price of the contract, including options, will

not exceed--

(i) $5,000,000 for a requirement within the Standard Industrial

Classification (SIC) codes for manufacturing; or

(ii) $3,000,000 for a requirement within any other SIC code;

(3) The requirement is not currently being performed by a non-

HUBZone small business concern;

(4) The acquisition is greater than the simplified acquisition

threshold (see part 13);

(5) The HUBZone small business concern has been determined to be a

responsible contractor with respect to performance; and

(6) Award can be made at a fair and reasonable price.

(b) The SBA has the right to appeal the contracting officer's

decision not to make a HUBZone sole source award.

19.1307 Price evaluation preference for HUBZone small business

concerns.

(a) The price evaluation preference for HUBZone small business

concerns shall be used in acquisitions conducted using full and open

competition. The preference shall not be used--

(1) In acquisitions expected to be less than or equal to the

simplified acquisition threshold;

(2) Where price is not a selection factor so that a price

evaluation preference would not be considered (e.g., Architect/Engineer

acquisitions);

(3) Where all fair and reasonable offers are accepted (e.g., the

award of multiple award schedule contracts).

(b) The contracting officer shall give offers from HUBZone small

business concerns a price evaluation preference by adding a factor of

10 percent to all offers, except--

(1) Offers from HUBZone small business concerns that have not

waived the evaluation preference;

(2) Otherwise successful offers from small business concerns;

(3) Otherwise successful offers of eligible products under the

Trade Agreements Act when the acquisition equals or exceeds the dollar

threshold in 25.402; and

(4) Otherwise successful offers where application of the factor

would be inconsistent with a Memorandum of Understanding or other

international agreement with a foreign government (see agency

supplement).

(c) The factor of 10 percent shall be applied on a line item basis

or to any group of items on which award may be made. Other evaluation

factors, such as transportation costs or rent-free use of Government

facilities, shall be added to the offer to establish the base offer

before adding the factor of 10 percent.

(d) A concern that is both a HUBZone small business concern and a

small disadvantaged business concern shall receive the benefit of both

the HUBZone small business price evaluation preference and the small

disadvantaged business price evaluation adjustment (see subpart 19.11).

Each applicable price evaluation preference or adjustment shall be

calculated independently against an offeror's base offer. These

individual preference and adjustment amounts shall both be added to the

base offer to arrive at the total evaluated price for that offer.

19.1308 Contract clauses.

(a) The contracting officer shall insert the clause 52.219-3,

Notice of Total HUBZone Set-Aside, in solicitations and contracts for

acquisitions that are set aside for HUBZone small business concerns

under 19.1305 or 19.1306.

(b) The contracting officer shall insert the clause at 52.219-4,

Notice of Price Evaluation Preference for HUBZone Small Business

Concerns, in solicitations and contracts for acquisitions conducted

using full and open competition. The clause shall not be used in

acquisitions that do not exceed the simplified acquisition threshold.

PART 26--OTHER SOCIOECONOMIC PROGRAMS

26.104 [Amended]

51. Section 26.104 is amended in paragraph (a) by removing the

words ``Small, Small Disadvantaged and Women-Owned''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

52. Section 52.212-3 is amended by adding Alternate III following

Alternate II to read as follows:

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

* * * * *

Alternate III (Jan 1999). As prescribed in 12.301(b)(2), add the

following paragraph (c)(9) to the basic provision:

(9) HUBZone small business concern. [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 {time} is, {time} 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 change in ownership and

control, principal place of ownership, or HUBZone employee

percentage has occurred since it was certified by the Small Business

Administration in accordance with 13 CFR part 126; and

(ii) It {time} is, {time} is not a joint venture that complies

with the requirements of 13 CFR part 126, and the representation in

paragraph (c)(9)(i) of this provision is accurate for the HUBZone

small business concern or concerns that are participating in the

joint venture. [The offeror shall enter the name or names of the

HUBZone small business concern or concerns that are participating in

the joint venture: ________________________________.] Each HUBZone

small business concern participating in the joint venture shall

submit a separate signed copy of the HUBZone representation.

53. Section 52.212-5 is amended in the clause by revising (b)(3)

and (b)(4); redesignating (b)(9) through (b)(20) as (b)(12) through

(b)(23), respectively; and adding new paragraphs (b)(9), (b)(10), and

(b)(11) to 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 (Jan. 1999)

* * * * *

(b) * * *

__ (3) 52.219-8, Utilization of Small Business Concerns (15

U.S.C. 637 (d)(2) and (3)).

__ (4) 52.219-9, Small Business Subcontracting Plan (15 U.S.C.

637(d)(4)).

* * * * *

__ (9) 52.219-3, Notice of HUBZone Small Business Set-Aside (Jan

1999).

__ (10) 52.219-4, Notice of Price Evaluation Preference for

HUBZone Small Business Concerns (Jan 1999) (if the offeror elects to

waive the preference, it shall so indicate in its offer).

__ (11) 52.222-21, Prohibition of Segregated Facilities (Feb

1999).

* * * * *

54. Section 52.219-1 is amended by revising the introductory

paragraph; in the introductory text of Alternate I by revising

``19.306(a)(1)'' to read ``19.307(a)(1)''; and adding Alternate II

following Alternate I to read as follows:

52.219-1 Small Business Program Representations.

As prescribed in 19.307(a)(1), insert the following provision:

* * * * *

Alternate II (Jan 1999). As prescribed in 19.307(a)(3), add the

following paragraph (b)(5) to the basic provision:

(5) [Complete only if offeror represented itself as a small

business concern in paragraph (b)(1) of this provision.] The offeror

represents, as part of its offer, that--

(i) It {time} is, {time} 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 change in ownership and

control, principal place of ownership, or HUBZone employee

percentage has occurred since it was certified by the Small Business

Administration in accordance with 13 CFR part 126; and

(ii) It {time} is, {time} is not a joint venture that complies

with the requirements of 13 CFR part 126, and the representation in

paragraph (b)(5)(i) of this provision is accurate for the HUBZone

small business concern or concerns that are participating in the

joint venture. [The offeror shall enter the name or names of the

HUBZone small business concern or concerns that are participating in

the joint venture: ____________.] Each HUBZone small business

concern participating in the joint venture shall submit a separate

signed copy of the HUBZone representation.

52.219-2 [Amended]

55. Section 52.219-2 is amended in the introductory text by

revising ``19.306(c)'' to read ``19.307(c)''.

56. Sections 52.219-3 and 52.219-4 are added to read as follows:

52.219-3 Notice of total HUBZone set-aside.

As prescribed in 19.1308(a), insert the following clause:

Notice of Total HUBZone Set-Aside (Jan 1999)

(a) Definition. HUBZone small business concern, as used in this

clause, means a small business concern that appears on the List of

Qualified HUBZone Small Business Concerns maintained by the Small

Business Administration.

(b) General. (1) Offers are solicited only from HUBZone small

business concerns. Offers received from concerns that are not

HUBZone small business concerns shall not be considered.

(2) Any award resulting from this solicitation will be made to a

HUBZone small business concern.

(c) Agreement. A HUBZone small business concern agrees that in

the performance of the contract, in the case of a contract for--

(1) Services (except construction), at least 50 percent of the

cost of personnel for contract performance will be spent for

employees of the concern or employees of other HUBZone small

business concerns;

(2) Supplies (other than acquisition from a nonmanufacturer of

the supplies), at least 50 percent of the cost of manufacturing,

excluding the cost of materials, will be performed by the concern or

other HUBZone small business concerns;

(3) General construction, at least 15 percent of the cost of the

contract performance incurred for personnel will be spent on the

concern's employees or the employees of other HUBZone small business

concerns; or

(4) Construction by special trade contractors, at least 25

percent of the cost of the contract performance incurred for

personnel will be spent on the concern's employees or the employees

of other HUBZone small business concerns.

(d) A HUBZone joint venture agrees that, in the performance of

the contract, the applicable percentage specified in paragraph (c)

of this clause will be performed by the HUBZone small business

participant or participants.

(e) A HUBZone small business concern nonmanufacturer agrees to

furnish in performing this contract only end items manufactured or

produced by HUBZone small business manufacturer concerns. This

paragraph does not apply in connection with construction or service

contracts.

(End of clause)

52.219-4 Notice of price evaluation preference for HUBZone small

business concerns.

As prescribed in 19.1308(b), insert the following clause:

Notice of Price Evaluation Preference for HUBZone Small Business

Concerns (Jan 1999)

(a) Definition. HUBZone small business concern, as used in this

clause, means a small business concern that appears on the List of

Qualified HUBZone Small Business Concerns maintained by the Small

Business Administration.

(b) Evaluation preference. (1) Offers will be evaluated by

adding a factor of 10 percent to the price of all offers, except--

(i) Offers from HUBZone small business concerns that have not

waived the evaluation preference;

(ii) Otherwise successful offers from small business concerns;

(iii) Otherwise successful offers of eligible products under the

Trade Agreements Act when the dollar threshold for application of

the Act is exceeded (see 25.402 of the Federal Acquisition

Regulation (FAR)); and

(iv) Otherwise successful offers where application of the factor

would be inconsistent with a Memorandum of Understanding or other

international agreement with a foreign government.

(2) The factor of 10 percent shall be applied on a line item

basis or to any group of items on which award may be made. Other

evaluation factors described in the solicitation shall be applied

before application of the factor.

(3) A concern that is both a HUBZone small business concern and

a small disadvantaged business concern will receive the benefit of

both the HUBZone small business price evaluation preference and the

small disadvantaged business price evaluation adjustment (see FAR

clause 52.219-23). Each applicable price evaluation preference or

adjustment shall be calculated independently against an offeror's

base offer.

These individual preference amounts shall be added together to

arrive at the total evaluated price for that offer.

(c) Waiver of evaluation preference. A HUBZone small business

concern may elect to waive the evaluation preference, in which case

the factor will be added to its offer for evaluation purposes. The

agreements in paragraph (d) of this clause do not apply if the

offeror has waived the evaluation preference.

{time} Offeror elects to waive the evaluation preference.

(d) Agreement. A HUBZone small business concern agrees that in

the performance of the contract, in the case of a contract for

(1) Services (except construction), at least 50 percent of the

cost of personnel for contract performance will be spent for

employees of the concern or employees of other HUBZone small

business concerns;

(2) Supplies (other than procurement from a nonmanufacturer of

such supplies), at least 50 percent of the cost of manufacturing,

excluding the cost of materials, will be performed by the concern or

other HUBZone small business concerns;

(3) General construction, at least 15 percent of the cost of the

contract performance incurred for personnel will be spent on

the concern's employees or the employees of other HUBZone small

business concerns; or

(4) Construction by special trade contractors, at least 25

percent of the cost of the contract performance incurred for

personnel will be spent on the concern's employees or the employees

of other HUBZone small business concerns.

(e) A HUBZone joint venture agrees that in the performance of

the contract, the applicable percentage specified in paragraph (d)

of this clause will be performed by the HUBZone small business

participant or participants.

(f) A HUBZone small business concern nonmanufacturer agrees to

furnish in performing this contract only end items manufactured or

produced by HUBZone small business manufacturer concerns. This

paragraph does not apply in connection with construction or service

contracts.

(End of clause)

57. Section 52.219-8 is revised to read as follows:

52.219-8 Utilization of small business concerns.

As prescribed in 19.708(a), insert the following clause:

Utilization of Small Business Concerns (Jan 1999)

(a) It is the policy of the United States that small business

concerns, HUBZone small business concerns, small business concerns

owned and controlled by socially and economically disadvantaged

individuals, and small business concerns owned and controlled by

women 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, HUBZone small

business concerns, small business concerns owned and controlled by

socially and economically disadvantaged individuals, and small

business concerns owned and controlled by women.

(b) 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.

(c) Definitions. As used in this contract

(1) Small business concern means a small business as defined

pursuant to section 3 of the Small Business Act and relevant

regulations promulgated pursuant thereto.

(2) 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.

(3) Small business concern owned and controlled by socially and

economically disadvantaged individuals means an offeror that

represents, as part of its offer, that--

(i) It is a small business under the size standard applicable to

the acquisition;

(ii) It has received certification as a small disadvantaged

business concern consistent with 13 CFR part 124, Subpart B;

(iii) No material change in disadvantaged ownership and control

has occurred since its certification;

(iv) Where the concern is owned by one or more individuals, the

net worth of each individual upon whom the certification is based

does not exceed $750,000 after taking into account the applicable

exclusions set forth at 13 CFR 124.104(c)(2); and

(v) It is listed, on the date of its representation, on the

register of small disadvantaged business concerns maintained by the

Small Business Administration.

(4) Small business concern owned and controlled by women means a

small business concern--

(i) Which 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

(ii) Whose management and daily business operations are

controlled by one or more women; and

(d) Contractors acting in good faith may rely on written

representations by their subcontractors regarding their status as a

small business concern, a HUBZone small business concern, a small

business concern owned and controlled by socially and economically

disadvantaged individuals, or a small business concern owned and

controlled by women.

(End of clause)

58. Section 52.219-9 is amended--

a. By revising the section and clause headings;

b. By revising the first and second sentences of paragraph (c);

c. By revising the first sentence of paragraph (d)(1);

d. By redesignating (d)(2)(iii) and (d)(2)(iv) as (d)(2)(iv) and

(d)(2)(v) and adding a new (d)(2)(iii);

e. By revising paragraph (d)(3);

f. In the first sentence of paragraph (d)(5) by adding ``HUBZone

small,'' after the words ``or small,'';

g. By revising paragraph (d)(6);

h. In paragraph (d)(8) by adding ``business, HUBZone small

business,'' after the words ``that small''; and adding ``business,''

after ``small disadvantaged'';

i. In paragraph (d)(9) by removing the word ``in'' the first time

it is used and adding ``of'' in its place; and removing the words

``Small, Small Disadvantaged and Women-Owned'';

j. By revising paragraph (d)(11);

k. By revising paragraphs (e)(1), (e)(2), (e)(3), and (e)(4);

l. In paragraph (i)(1) by removing the words ``Small, Small

Disadvantaged and Women-Owned''; and

m. By revising Alternates I and II to read as follows:

52.219-9 Small business subcontracting plan.

* * * * *

Small Business Subcontracting Plan (Jan 1999)

* * * * *

(c) The offeror, upon request by the Contracting Officer, shall

submit and negotiate a subcontracting plan, where applicable, that

separately addresses subcontracting with small business, HUBZone

small business concerns, small disadvantaged business, and women-

owned small business concerns. If the offeror is submitting an

individual contract plan, the plan must separately address

subcontracting with small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns,

with a separate part for the basic contract and separate parts for

each option (if any). * * *

(d) * * *

(1) Goals, expressed in terms of percentages of total planned

subcontracting dollars, for the use of small business, HUBZone small

business, small disadvantaged business, and women-owned small

business concerns as subcontractors. * * *

(2) * * *

(iii) Total dollars planned to be subcontracted to HUBZone small

business concerns;

* * * * *

(3) A description of the principal types of supplies and

services to be subcontracted, and an identification of the types

planned for subcontracting to--

(i) Small business concerns;

(ii) HUBZone small business concerns;

(iii) Small disadvantaged business concerns; and

(iv) Women-owned small business concerns.

* * * * *

(6) A statement as to whether or not the offeror in included

indirect costs in establishing subcontracting goals, and a

description of the method used to determine the proportionate share

of indirect costs to be incurred with--

(i) Small business concerns;

(ii) HUBZone small business concerns;

(iii) Small disadvantaged business concerns; and

(iv) Women-owned small business concerns.

* * * * *

(11) A description of the types of records that will be

maintained concerning procedures that have been adopted to comply

with the requirements and goals in the plan, including establishing

source lists; and a description of the offeror's efforts to locate

small business, HUBZone small business, small disadvantaged

business, and women-owned small business concerns and award

subcontracts to them. The records shall include at least the

following (on a plant-wide or company-wide basis, unless otherwise

indicated):

(i) Source lists (e.g., PRO-Net), guides, and other data that

identify small business, HUBZone small business, small disadvantaged

business, and women-owned small business concerns.

(ii) Organizations contacted in an attempt to locate sources

that are small business, HUBZone small business, small disadvantaged

business, or women-owned small business concerns.

(iii) Records on each subcontract solicitation resulting in an

award of more than $100,000, indicating--

(A) Whether small business concerns were solicited and, if not,

why not;

(B) Whether HUBZone small business concerns were solicited and,

if not, why not;

(C) Whether small disadvantaged business concerns were solicited

and, if not, why not;

(D) Whether women-owned small business concerns were solicited

and, if not, why not; and

(E) If applicable, the reason award was not made to a small

business concern.

(iv) Records of any outreach efforts to contact--

(A) Trade associations;

(B) Business development organizations; and

(C) Conferences and trade fairs to locate small, HUBZone small,

small disadvantaged, and women-owned small business sources.

(v) Records of internal guidance and encouragement provided to

buyers through--

(A) Workshops, seminars, training, etc.; and

(B) Monitoring performance to evaluate compliance with the

program's requirements.

(vi) On a contract-by-contract basis, records to support award

data submitted by the offeror to the Government, including the name,

address, and business size of each subcontractor. Contractors having

commercial plans need not comply with this requirement.

(e) * * *

(1) Assist small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns by

arranging solicitations, time for the preparation of bids,

quantities, specifications, and delivery schedules so as to

facilitate the participation by such concerns. Where the

Contractor's lists of potential small business, HUBZone small

business, small disadvantaged business, and women-owned small

business subcontractors are excessively long, reasonable effort

shall be made to give all such small business concerns an

opportunity to compete over a period of time.

(2) Provide adequate and timely consideration of the

potentialities of small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns in

all ``make-or-buy'' decisions.

(3) Counsel and discuss subcontracting opportunities with

representatives of small business, HUBZone small business, small

disadvantaged business, and women-owned small business firms.

(4) Provide notice to subcontractors concerning penalties and

remedies for misrepresentations of business status as small, HUBZone

small, small disadvantaged, or women-owned small business for the

purpose of obtaining a subcontract that is to be included as part or

all of a goal contained in the Contractor's subcontracting plan.

* * * * *

Alternate I (Jan 1999). When contracting by sealed bidding rather

than by negotiation, substitute the following paragraph (c) for

paragraph (c) of the basic clause:

(c) The apparent low bidder, upon request by the Contracting

Officer, shall submit a subcontracting plan, where applicable, that

separately addresses subcontracting with small business, HUBZone

small business, small disadvantaged business, and women-owned small

business concerns. If the bidder is submitting an individual

contract plan, the plan must separately address subcontracting with

small business, HUBZone small business, small disadvantaged

business, and women-owned small business concerns, with a separate

part for the basic contract and separate parts for each option (if

any). The plan shall be included in and made a part of the resultant

contract. The subcontracting plan shall be submitted within the time

specified by the Contracting Officer. Failure to submit the

subcontracting plan shall make the bidder ineligible for the award of a contract.

Alternate II (Jan 1999). As prescribed in 19.708(b)(1), substitute

the following paragraph (c) for paragraph (c) of the basic clause:

(c) Proposals submitted in response to this solicitation shall

include a subcontracting plan that separately addresses

subcontracting with small business, HUBZone small business, small

disadvantaged business, and women-owned small business concerns. If

the offeror is submitting an individual contract plan, the plan must

separately address subcontracting with small business, HUBZone small

business, small disadvantaged business, and women-owned small

business concerns, with a separate part for the basic contract and

separate parts for each option (if any). The plan shall be included

in and made a part of the resultant contract. The subcontracting

plan shall be negotiated within the time specified by the

Contracting Officer. Failure to submit and negotiate a

subcontracting plan shall make the offeror ineligible for award of a

contract.

59. Section 52.219-10 is amended by revising paragraph (a) of the

clause; and in the first sentence of paragraph (b) by removing

``concerns'' the first time it is used and adding ``HUBZone small

business,'' in its place. The revised text reads as follows:

52.219-10 Incentive Subcontracting Program.

* * * * *

Incentive Subcontracting Program (Jan 1999)

(a) Of the total dollars it plans to spend under subcontracts,

the Contractor has committed itself in its subcontracting plan to

try to award certain percentages to small business, HUBZone small

business, small disadvantaged business, and women-owned small

business concerns, respectively.

* * * * *

52.219-16 [Amended]

60. Section 52.219-16 is amended by revising the date of the clause

to read ``(JAN 1999)''; and in paragraph (a) and the second sentence of

paragraph (b) of the clause by removing the words ``Small, Small

Disadvantaged and Women-Owned''.

52.219-22 [Amended]

61. Section 52.219-22 is amended in the introductory paragraph by

revising ``19.306(b)'' to read ``19.307(b)''.

52.226-1 [Amended]

62. Section 52.226-1 is amended by revising the date of the clause

to read ``(JAN 1999)''; and in paragraph (a) of the clause by removing

the words ``Small, Small Disadvantaged and Women-Owned''.

PART 53--FORMS

63. Section 53.219 is amended by revising paragraph (a); and in

paragraph (b) by revising the revision date of the form to read ``(Rev.

12/98)''.

53.219 Small business programs.

* * * * *

(a) SF 294 (Rev. 12/98), Subcontracting Report for Individual

Contracts. (See 19.704(a)(10).) SF 294 is authorized for local

reproduction and a copy is furnished for this purpose in part 53 of the

loose-leaf edition of the FAR.

* * * * *

64. Sections 53.301-294 and 53.301-295 are revised to read as

follows:

53.301-294 Subcontracting Report for Individual Contracts.

[GRAPHIC] [TIFF OMITTED] TR18DE98.001

[GRAPHIC] [TIFF OMITTED] TR18DE98.002

53.301-295 Summary Subcontract Report.

[GRAPHIC] [TIFF OMITTED] TR18DE98.003

[GRAPHIC] [TIFF OMITTED] TR18DE98.004

DEPARTMENT OF DEFENSE

General Services Administration

National Aeronautics and Space Administration

48 CFR Part 16

[FAC 97-10; FAR Case 98-016; Item II]

Federal Acquisition Regulation; Limits for Indefinite-Quantity Contracts

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

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to clarify guidance regarding

how limits on indefinite-quantity contracts are expressed.

EFFECTIVE DATE: February 16, 1999.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC, 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Mr. Ralph DeStefano, Procurement Analyst, at (202)

501-1758. Please cite FAC 97-10, FAR case 98-016.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends FAR 16.504(a) to clarify that maximum and

minimum limits for indefinite-quantity contracts may be expressed as a

number of units or dollar value.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The final rule does not constitute a significant FAR revision

within the meaning of FAR 1.501 and Pub. L. 98-577, and publication for

public comments is not required. However, comments from small entities

concerning the affected FAR subpart will be considered in accordance

with 5 U.S.C. 610. Such comments must be submitted separately and

should cite 5 U.S.C. 601, et seq. (FAC 97-10, FAR case 98-016), in

correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 16

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Therefore, 48 CFR part 16 is amended as set forth below:

PART 16--TYPES OF CONTRACTS

1. The authority citation for 48 CFR part 16 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

2. Section 16.504 is amended at the end of paragraph (a) by adding

a sentence; in paragraph (a)(1) by revising the first sentence and

adding a new second sentence; and by revising paragraph (a)(4)(ii). The

revised text reads as follows:

16.504 Indefinite-quantity contracts.

(a) * * * Quantity limits may be expressed in terms of numbers of

units or as dollar values.

(1) The contract shall require the Government to order and the

contractor to furnish at least a stated minimum quantity of supplies or

services. In addition, if ordered, the contractor shall furnish any

additional quantities, not to exceed the stated maximum. * * *

* * * * *

(4) * * *

(ii) Specify the total minimum and maximum quantity of supplies or

services to be acquired under the contract;

* * * * *

DEPARTMENT OF DEFENSE

General Services Administration

National Aeronautics and Space Administration

48 CFR Parts 22 and 52

[FAC 97-10; FAR Case 98-607; Item III]

Federal Acquisition Regulation; Office of Federal Contract

Compliance Programs National Pre-Award Registry

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

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to inform the procurement

community of the availability of the Department of Labor's Office of

Federal Contract Compliance Programs (OFCCP) National Pre-Award

Registry (Registry), accessible through the Internet, that contains

contractor establishments that have been reviewed within the preceding

24 months and found in compliance with the equal opportunity laws

enforced by OFCCP, and the option to use the information in the

Registry in lieu of submitting a written request for a preaward

clearance; and implement revised Department of Labor (DoL) regulations

pertaining to equal employment opportunity and affirmative action

requirements for Federal contractors and subcontractors.

EFFECTIVE DATE: February 16, 1999.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC, 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Mr. Jack O'Neill, Procurement Analyst, at (202) 501-

3856. Please cite FAC 97-10, FAR case 98-607.

SUPPLEMENTARY INFORMATION:

A. Background

Section 60-1.29 of Title 41 of the Code of Federal Regulations

provides that agencies shall not enter into contracts or approve the

entry into contracts or subcontracts for $10 million or more with any

bidder, prospective prime contractor, or proposed subcontractor until a

preaward compliance evaluation has been conducted and the Deputy

Assistant Secretary or his designee has approved a determination that the bidder,

prospective prime contractor, or proposed subcontractor will be able to

comply with the provisions of the equal employment opportunity

regulations.

To streamline the process for obtaining preaward clearance, the

Office of Federal Contract Compliance Programs (OFCCP) has developed

and implemented the OFCCP National Pre-Award Registry which contains

contractor establishments that have been evaluated within the past 24

months and found to be in compliance with its Equal Employment

Opportunity regulations.

Since April 15, 1998, agencies who have inquired have been verbally

advised by OFCCP that they may review the Registry to search for

prospective contractor establishments to whom they intend to award

contracts of $10 million or more. If the specific contractor

establishment receiving the contract is listed on the Registry, the

agency is not required to request a written preaward clearance from

OFCCP. The use of the Registry will reduce the number of requests from

the contracting agencies to OFCCP and responses back from OFCCP to the

agency. Thus, use of the Registry will reduce the administrative burden

of paperwork for both agencies.

Also, this final rule amends FAR subpart 22.8 and the provisions

and clauses at FAR 52.212-3, 52.222-21 through 52.222-24, and 52.222-26

through 52.222-29, to implement revised Department of Labor (DoL)

regulations, published as a final rule in the Federal Register at 62 FR

44173, August 19, 1997. The DoL rule increased, from $1 million to $10

million, the threshold for obtaining preaward compliance clearance from

OFCCP, and amended administrative procedures for obtaining such

clearances; eliminated the requirement for OFCCP clearance of

subcontracts after award of the prime contract; and eliminated the

requirement to obtain a certification of nonsegregated facilities from

prospective contractors.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The final rule does not constitute a significant FAR revision

within the meaning of FAR 1.501 and Public Law 98-577, and publication

for public comments is not required. However, comments from small

entities concerning the affected FAR subparts will be considered in

accordance with 5 U.S.C. 610. Such comments must be submitted

separately and should cite 5 U.S.C. 601, et seq. (FAC 97-10, FAR case

98-607), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 22 and 52

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Therefore, 48 CFR parts 22 and 52 are amended as set forth below:

1. The authority citation for 48 CFR Parts 22 and 52 continues to

read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

22.800 [Amended]

2. Section 22.800 is amended by removing ``Government.''

3. Section 22.801 is revised to read as follows:

22.801 Definitions.

As used in this subpart--

Affirmative action program means a contractor's program that

complies with Department of Labor regulations to ensure equal

opportunity in employment to minorities and women.

Compliance evaluation means any one or combination of actions that

the Office of Federal Contract Compliance Programs (OFCCP) may take to

examine a Federal contractor's compliance with one or more of the

requirements of E.O. 11246.

Contractor includes the terms ``prime contractor'' and

``subcontractor.''

Deputy Assistant Secretary means the Deputy Assistant Secretary for

Federal Contract Compliance, U.S. Department of Labor, or a designee.

Equal Opportunity clause means the clause at 52.222-26, Equal

Opportunity, as prescribed in 22.810(e).

E.O. 11246 means Parts II and IV of Executive Order 11246,

September 24, 1965 (30 FR 12319), and any Executive order amending or

superseding this order (see 22.802). This term specifically includes

the Equal Opportunity clause at 52.222-26, and the rules, regulations,

and orders issued pursuant to E.O. 11246 by the Secretary of Labor or a

designee.

Prime contractor means any person who holds, or has held, a

Government contract subject to E.O. 11246.

Recruiting and training agency means any person who refers workers

to any contractor or provides or supervises apprenticeship or training

for employment by any contractor.

Site of construction means the general physical location of any

building, highway, or other change or improvement to real property that

is undergoing construction, rehabilitation, alteration, conversion,

extension, demolition, or repair; and any temporary location or

facility at which a contractor or other participating party meets a

demand or performs a function relating to a Government contract or

subcontract.

Subcontract means any agreement or arrangement between a contractor

and any person (in which the parties do not stand in the relationship

of an employer and an employee)--

(1) For the purchase, sale, or use of personal property or

nonpersonal services that, in whole or in part, are necessary to the

performance of any one or more contracts; or

(2) Under which any portion of the contractor's obligation under

any one or more contracts is performed, undertaken, or assumed.

Subcontractor means any person who holds, or has held, a

subcontract subject to E.O. 11246. The term first-tier subcontractor

means a subcontractor holding a subcontract with a prime contractor.

United States means the several states, the District of Columbia,

the Virgin Islands, the Commonwealth of Puerto Rico, Guam, American

Samoa, the Commonwealth of the Northern Mariana Islands, and Wake

Island.

22.802 [Amended]

4. Section 22.802 is amended in paragraph (a) by removing

``Government contracting'' and ``Govvernment prime''; and in paragraph

(b) by removing ``Director'' and adding ``Deputy Assistant Secretary''.

5. Section 22.803 is amended in paragraph (b) by removing

``Director'' and adding ``Deputy Assistant Secretary''; and by revising

paragraph (d) to read as follows:

22.803 Responsibilities.

* * * * *

(d) In the event the applicability of E.O. 11246 and implementing

regulations is questioned, the contracting officer shall forward the

matter to the Deputy Assistant Secretary, through agency channels, for

resolution.

6. Section 22.804-1 is revised to read as follows:

22.804-1 Nonconstruction.

Except as provided in 22.807, each nonconstruction prime contractor

and each subcontractor with 50 or more employees and either a contract

or subcontract of $50,000 or more, or Government bills of lading that

in any 12-month period total, or can reasonably be expected to total,

$50,000 or more, is required to develop a written affirmative action

program for each of its establishments. Each contractor and

subcontractor shall develop its written affirmative action programs

within 120 days from the commencement of its first such Government

contract, subcontract, or Government bill of lading.

22.804-2 [Amended]

7. Section 22.804-2 is amended in the first sentence of paragraph

(b) by removing ``contracting''.

8. Section 22.805 is amended by revising the introductory text of

paragraph (a); revising paragraphs (a)(1), (a)(2), and (a)(3); by

redesignating paragraphs (a)(4) thru (a)(8) as (a)(5) thru (a)(9),

respectively, and adding a new paragraph (a)(4); by revising the

introductory text of the newly designated paragraph (a)(5); revising

newly designated paragraphs (a)(5)(ii) and (v); (a)(6), (a)(7), (a)(8),

and (a)(9); and in paragraph (b) by adding ``Employment'' after

``Equal''. The revised text reads as follows:

22.805 Procedures.

(a) Preaward clearances for contracts and subcontracts of $10

million or more (excluding construction). (1) Except as provided in

paragraphs (a)(4) and (a)(8) of this section, if the estimated amount

of the contract or subcontract is $10 million or more, the contracting

officer shall request clearance from the appropriate OFCCP regional

office before--

(i) Award of any contract, including any indefinite delivery

contract or letter contract; or

(ii) Modificaton of an existing contract for new effort that would

constitute a contract award.

(2) Preaward clearance for each proposed contract and for each

proposed first-tier subcontract of $10 million or more shall be

requested by the contracting officer directly from the OFCCP regional

office(s). Verbal requests shall be confirmed by letter or facsimile

transmission.

(3) When the contract work is to be performed outside the United

States with employees recruited within the United States, the

contracting officer shall send the request for a preaward clearance to

the OFCCP regional office serving the area where the proposed

contractor's corporate home or branch office is located in the United

States, or the corporate location where personnel recruiting is

handled, if different from the contractor's corporate home or branch

office. If the proposed contractor has no corporate office or location

within the United States, the preaward clearance request action should

be based on the location of the recruiting and training agency in the

United States.

(4) The contracting officer does not need to request a preaward

clearance if--

(i) The specific proposed contractor is listed in OFCCP's National

Preaward Registry via the Internet at http://www.dol-esa.gov/preaward/;

(ii) The projected award date is within 24 months of the proposed

contractor's Notice of Compliance completion date in the Registry; and

(iii) The contracting officer documents the Registry review in the

contract file.

(5) The contracting officer shall include the following information

in the preaward clearance request:

* * * * *

(ii) Name, address, and telephone number of each proposed first-

tier subcontractor with a proposed subcontract estimated at $10 million

or more.

* * * * *

(v) Place or places of performance of the prime contract and first-

tier subcontracts estimated at $10 million or more, if known.

* * * * *

(6) The contracting officer shall allow as much time as feasible

before award for the conduct of necessary compliance evaluation by

OFCCP. As soon as the apparently successful offeror can be determined,

the contracting officer shall process a preaward clearance request in

accordance with agency procedures, assuring, if possible, that the

preaward clearance request is submitted to the OFCCP regional office at

least 30 days before the proposed award date.

(7) Within 15 days of the clearance request, OFCCP will inform the

awarding agency of its intention to conduct a preaward compliance

evaluation. If OFCCP does not inform the awarding agency within that

period of its intention to conduct a preaward compliance evaluation,

clearance shall be presumed and the awarding agency is authorized to

proceed with the award. If OFCCP informs the awarding agency of its

intention to conduct a preaward compliance evaluation, OFCCP shall be

allowed an additional 20 days after the date that it so informs the

awarding agency to provide its conclusions. If OFCCP does not provide

the awarding agency with its conclusions within that period, clearance

shall be presumed and the awarding agency is authorized to proceed with

the award.

(8) If the procedures specified in paragraphs (a)(6) and (a)(7) of

this section would delay award of an urgent and critical contract

beyond the time necessary to make award or beyond the time specified in

the offer or extension thereof, the contracting officer shall

immediately inform the OFCCP regional office of the expiration date of

the offer or the required date of award and request clearance be

provided before that date. If the OFCCP regional office advises that a

preaward evaluation cannot be completed by the required date, the

contracting officer shall submit written justification for the award to

the head of the contracting activity, who, after informing the OFCCP

regional office, may then approve the award without the preaward

clearance. If an award is made under this authority, the contracting

officer shall immediately request a postaward evaluation from the OFCCP

regional office.

(9) If, under the provisions of paragraph (a)(8) of this section, a

postaward evaluation determines the contractor to be in noncompliance

with E.O. 11246, the Deputy Assistant Secretary may authorize the use

of the enforcement procedures at 22.809 against the noncomplying

contractor.

* * * * *

9. Section 22.806 is revised to read as follows:

22.806 Inquiries.

(a) An inquiry from a contractor regarding status of its compliance

with E.O. 11246, or rights of appeal to any of the actions in 22.809,

shall be referred to the OFCCP regional office.

(b) Labor union inquiries regarding the revision of a collective

bargaining agreement in order to comply with E.O. 11246 shall be

referred to the Deputy Assistant Secretary.

10. Section 22.807 is amended--

a. In paragraph (a)(1) by removing ``Director'' and adding ``Deputy

Assistant Secretary'';

b. By revising paragraph (a)(2);

c. In the second sentence of paragraph (b)(1) by removing ``or

subcontractor'';

d. In paragraph (b)(3) by adding a comma following

``instrumentality'' the second time it appears;

e. By revising paragraph (b)(5);

f. In paragraph (b)(6) by adding a hyphen between ``Indefinite

quantity'' (both times it appears);

g. By revising paragraph (c);

h. By revising the introductory text of (d); and

i. In paragraph (d)(2) by removing ``calendar''.

The revised text read as follows:

22.807 Exemptions.

(a) * * *

(2) Specific contracts. The Deputy Assistant Secretary may exempt

an agency from requiring the inclusion of one or more of the

requirements of E.O. 11246 in any contract if the Deputy Assistant

Secretary deems that special circumstances in the national interest so

require. Groups or categories of contracts of the same type may also be

exempted if the Deputy Assistant Secretary finds it impracticable to

act upon each request individually or if group exemptions will

contribute to convenience in the administration of E.O. 11246.

(b) * * *

(5) Facilities not connected with contracts. The Deputy Assistant

Secretary may exempt from the requirements of E.O. 11246 any of a

contractor's facilities that the Deputy Assistant Secretary finds to be

in all respects separate and distinct from activities of the contractor

related to performing the contract, provided, that the Deputy Assistant

Secretary also finds that the exemption will not interfere with, or

impede the effectiveness of, E.O. 11246.

* * * * *

(c) To request an exemption under paragraph (a)(2) or (b)(5) of

this section, the contracting officer shall submit, under agency

procedures, a detailed justification for omitting all, or part of, the

requirements of E.O. 11246. Requests for exemptions under paragraph

(a)(2) or (b)(5) of this section shall be submitted to the Deputy

Assistant Secretary for approval.

(d) The Deputy Assistant Secretary may withdraw the exemption for a

specific contract, or group of contracts, if the Deputy Assistant

Secretary deems that such action is necessary and appropriate to

achieve the purposes of E.O. 11246. Such withdrawal shall not apply--

* * * * *

22.809 [Amended]

11. Section 22.809 is amended in the introductory text by removing

``Director'' and adding ``Deputy Assistant Secretary''; in paragraph

(a) by removing ``their'' and adding ``its''; and in paragraph (d) by

removing Director and adding ``Deputy Assistant Secretary''.

12. Section 22.810 is amended--

a. By revising paragraph (a);

b. In paragraph (b) by adding ``for Construction'' after

``Opportunity'' the first time it appears;

c. By revising paragraph (c);

d. By revising paragraph (e),

e. In paragraph (f) by removing ``and'' the second time it appears

and adding ``when'';

f. By removing paragraph (g); and

g. By redesignating paragraph (h) as (g).

The revised paragraphs read as follows:

22.810 Solicitation provisions and contract clauses.

(a) When a contract is contemplated that will include the clause at

52.222-26, Equal Opportunity, the contracting officer shall insert--

(1) The clause at 52.222-21, Prohibition of Segregated Facilities,

in the solicitation and contract; and

(2) The provision at 52.222-22, Previous Contracts and Compliance

Reports, in the solicitation.

* * * * *

(c) The contracting officer shall insert the provision at 52.222-

24, Preaward On-Site Equal Opportunity Compliance Evaluation, in

solicitations other than those for construction when a contract is

contemplated that will include the clause at 52.222-26, Equal

Opportunity, and the amount of the contract is expected be $10 million

or more.

* * * * *

(e) The contracting officer shall insert the clause at 52.222-26,

Equal Opportunity, in solicitations and contracts (see 22.802) unless

the contract is exempt from all of the requirements of E.O. 11246 (see

22.807(a)). If the contract is exempt from one or more, but not all, of

the requirements of E.O. 11246, the contracting officer shall use the

clause with its Alternate I.

* * * * *

22.802, 22.803, 22.807, 22.808, 22.809 [Amended]

13. In addition to the amendments set forth above, subpart 22.8 is

also amended by removing ``EO'' and adding ``E.O.'' in the following

places:

a. Section 22.802 (b), and (c);

b. Section 22.803 (a)(1), (a)(2) and (b);

c. Section 22.807 (a) introductory text (twice), (b)(2), (b)(3),

and (b)(4) (twice);

d. Section 22.808; and

e. Section 22.809 introductory text, (c), and (d).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

14. Section 52.212-3 is amended by revising the provision date; by

removing (d)(1); and redesignating paragraphs (d)(2) and (d)(3) as

(d)(1) and (d)(2) respectively; by revising the newly designated

(d)(1); and in the newly redesignated paragraph (d)(2)(i) by removing

``Subparts'' and adding ``parts''. The revised text reads as follows:

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

* * * * *

Offeror Representations and Certifications--Commercial Items (Feb 1999)

* * * * *

(d) Certifications and representations required to implement

provisions of Executive Order 11246--(1) Previous contracts and

compliance. The offeror represents that--

(i) It {time} has, {time} has not participated in a previous

contract or subcontract subject to the Equal Opportunity clause of

this solicitation; and

(ii) It {time} has, {time} has not filed all required

compliance reports.

* * * * *

15. Section 52.222-21 is revised to read as follows:

52.222-21 Prohibition of segregated facilities.

As prescribed in 22.810(a)(1), insert the following clause:

Prohibition of Segregated Facilities (Feb 1999)

(a) Segregated facilities, as used in this clause, means any

waiting rooms, work areas, rest rooms and wash rooms, restaurants

and other eating areas, time clocks, locker rooms and other storage

or dressing areas, parking lots, drinking fountains, recreation or

entertainment areas, transportation, and housing facilities provided

for employees, that are segregated by explicit directive or are in

fact segregated on the basis of race, color, religion, sex, or

national origin because of written or oral policies or employee

custom. The term does not include separate or single-user rest rooms

or necessary dressing or sleeping areas provided to assure privacy

between the sexes.

(b) The Contractor agrees that it does not and will not maintain

or provide for its employees any segregated facilities at any of its

establishments, and that it does not and will not permit its

employees to perform their services at any location under its

control where segregated facilities are maintained. The Contractor

agrees that a breach of this clause is a violation of the Equal

Opportunity clause in this contract.

(c) The Contractor shall include this clause in every

subcontract and purchase order that is subject to the Equal Opportunity

clause of this contract.

(End of clause)

16. Section 52.222-22 is amended by revising the introductory text,

the date of the provision, and paragraph (a) to read as follows:

52.222-22 Previous Contracts and Compliance Reports.

As prescribed in 22.810(a)(2), insert the following provision:

Previous Contracts and Compliance Reports (Feb 1999)

* * * * *

(a) It {time} has, {time} has not participated in a previous

contract or subcontract subject to the Equal Opportunity clause of

this solicitation;

* * * * *

17. Section 52.222-23 is amended by revising the section heading,

the introductory text, the provision heading, and the introductory text

of paragraph (d) to read as follows:

52.222-23 Notice of Requirement for Affirmative Action To Ensure Equal

Employment Opportunity for Construction.

As prescribed in 22.810(b), insert the following provision:

Notice of Requirement for Affirmative Action To Ensure Equal Employment

Opportunity for Construction (Feb 1999)

* * * * *

(d) The Contractor shall provide written notification to the

Deputy Assistant Secretary for Federal Contract Compliance, U.S.

Department of Labor, within 10 working days following award of any

construction subcontract in excess of $10,000 at any tier for

construction work under the contract resulting from this

solicitation. The notification shall list the --

* * * * *

18. Section 52.222-24 is revised to read as follows:

52.222-24 Preaward On-Site Equal Opportunity Compliance Evaluation.

As prescribed in 22.810(c), insert the following provision:

Preaward On-Site Equal Opportunity Compliance Evaluation (Feb 1999)

If a contract in the amount of $10 million or more will result

from this solicitation, the prospective Contractor and its known

first-tier subcontractors with anticipated subcontracts of $10

million or more shall be subject to a preaward compliance evaluation

by the Office of Federal Contract Compliance Programs (OFCCP),

unless, within the preceding 24 months, OFCCP has conducted an

evaluation and found the prospective Contractor and subcontractors

to be in compliance with Executive Order 11246.

(End of provision)

19. Section 52.222-25 is amended by revising the introductory text

to read as follows:

52.222-25 Affirmative Action Compliance.

As prescribed in 22.810(d), insert the following provision:

* * * * *

20. Section 52.222-26 is amended--

a. By revising the introductory text and the clause date;

b. In paragraph (a) by removing ``below'' and adding ``of this

clause'';

c. By revising paragraphs (b) introductory text and (b)(1);

d. In paragraph (b)(4) by adding ``s'' to ``advertisement'';

e. By revising paragraphs (b)(7), (b)(8), and the last sentence of

(b)(9);

f. In paragraph (b)(10) by adding ``s'' to ``subparagraph'';

g. In paragraph (b)(11) by removing ``contracting agency'' and

adding ``contracting officer''; and

h. By revising the introductory text of Alternate I.

The revised text reads as follows:

52.222-26 Equal Opportunity.

As prescribed in 22.810(e), insert the following clause:

Equal Opportunity (Feb 1999)

* * * * *

(b) During performance of this contract, the Contractor agrees

as follows:

(1) The Contractor shall not discriminate against any employee

or applicant for employment because of race, color, religion, sex,

or national origin. However, it shall not be a violation of this

clause for the Contractor to extend a publicly announced preference

in employment to Indians living on or near an Indian reservation, in

connection with employment opportunities on or near an Indian

reservation, as permitted by 41 CFR 60-1.5.

* * * * *

(7) The Contractor shall furnish to the contracting agency all

information required by Executive Order 11246, as amended, and by

the rules, regulations, and orders of the Secretary of Labor. The

Contractor shall also file Standard Form 100 (EEO-1), or any

successor form, as prescribed in 41 CFR part 60-1. Unless the

Contractor has filed within the 12 months preceding the date of

contract award, the Contractor shall, within 30 days after contract

award, apply to either the regional Office of Federal Contract

Compliance Programs (OFCCP) or the local office of the Equal

Employment Opportunity Commission for the necessary forms.

(8) The Contractor shall permit access to its premises, during

normal business hours, by the contracting agency or the OFCCP for

the purpose of conducting on-site compliance evaluations and

complaint investigations. The Contractor shall permit the Government

to inspect and copy any books, accounts, records (including

computerized records), and other material that may be relevant to

the matter under investigation and pertinent to compliance with

Executive Order 11246, as amended, and rules and regulations that

implement the Executive Order.

(9) * * * In addition, sanctions may be imposed and remedies

invoked against the Contractor as provided in Executive Order 11246,

as amended; in the rules, regulations, and orders of the Secretary

of Labor; or as otherwise provided by law.

* * * * *

Alternate I (Feb 1999). As prescribed in 22.810(e), add the

following as a preamble to the clause:

* * * * *

21. Section 52.222-27 is amended--

a. By revising the introductory text and the date of the clause;

b. In paragraph (a) by removing the definition of ``Director'' and

adding ``Deputy Assistant Secretary'';

(c) In paragraph (g)(4) by removing ``Director'' and adding

``Deputy Assistant Secretary'';

d. In paragraph (g)(5) by removing ``above'' and adding ``of this

clause'';

e. In paragraph (g)(7) by removing ``onsite'' and adding ``on-

site'' in its place;

f. By revising paragraph (g)(14);

g. In paragraph (h) by adding ``of this clause'' after ``(16)''

(both times it appears); and

h. In paragraph (m) by removing ``above'' and ``Director'' and

adding ``of this clause'' and ``Deputy Assistant Secretary'',

respectively.

The revised text reads as follows:

52.222-27 Affirmative Action Compliance Requirements for Construction.

As prescribed in 22.810(f), insert the following clause:

Affirmative Action Compliance Requirements for Construction (Feb 1999)

(a) * * *

Deputy Assistant Secretary, as used in this clause, means the

Deputy Assistant Secretary for Federal Contract Compliance, U.S.

Department of Labor, or a designee.

* * * * *

(g) * * *

(14) Ensure that all facilities and company activities are

nonsegregated except that separate or single-user rest rooms and

necessary dressing or sleeping areas shall be provided to assure

privacy between the sexes.

* * * * *

52.222-28 [Reserved]

22. Section 52.222-28 is removed and reserved.

23. Section 52.222-29 is revised to read as follows:

52.222-29 Notification of visa denial.

As prescribed in 22.810(g), insert the following clause:

Notification of Visa Denial (Feb 1999)

It is a violation of Executive Order 11246, as amended, for a

Contractor to refuse to employ any applicant or not to assign any

person hired in the United States, on the basis that the

individual's race, color, religion, sex, or national origin is not compatible with the

policies of the country where the work is to be performed or for

whom the work will be performed (41 CFR 60-1.10). The Contractor

agrees to notify the U.S. Department of State, Assistant Secretary,

Bureau of Political-Military Affairs (PM), 2201 C Street NW, Room

7325, Washington, DC 20520, and the U.S. Department of Labor, Deputy

Assistant Secretary for Federal Contract Compliance, when it has

knowledge of any employee or potential employee being denied an

entry visa to a country in which the Contractor is required to

perform this contract, and it believes the denial is attributable to

the race, color, religion, sex, or national origin of the employee

or potential employee.

(End of clause)

DEPARTMENT OF DEFENSE

General Services Administration

National Aeronautics and Space Administration

48 CFR Part 31

[FAC 97-10; FAR Case 97-303; Item IV]

Federal Acquisition Regulation; Limitation on Allowability of

Compensation for Certain Contractor Personnel

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

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

ACTION: Interim rule adopted as final with changes.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed to adopt as final, with

changes, the interim rule published in the Federal Register at 63 FR

9066, February 23, 1998, as Item XIII of Federal Acquisition Circular

97-04. The rule amends the Federal Acquisition Regulation (FAR) to

implement Section 808 of the National Defense Authorization Act for

Fiscal Year 1998 (Pub. L. 105-85) by limiting the allowable

compensation costs for senior executives of contractors to the

benchmark compensation amount determined applicable for each fiscal

year by the Administrator for Federal Procurement Policy.

EFFECTIVE DATE: February 16, 1999.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501-

1900. Please cite FAC 97-10, FAR case 97-303.

SUPPLEMENTARY INFORMATION:

A. Background

Section 808 of the National Defense Authorization Act for Fiscal

Year 1998 (Pub. L. 105-85) limits allowable compensation costs of

senior executives of contractors for a fiscal year to the benchmark

compensation amount determined applicable for each fiscal year by the

Administrator, Office of Federal Procurement Policy (OFPP). Section 808

requires OFPP to review commercially available surveys of executive

compensation and, on the basis of the results of the review, determine

the benchmark compensation amount for each fiscal year. This

determination shall be made in consultation with the Defense Contract

Audit Agency and other executive agencies as the Administrator deems

appropriate.

On February 23, 1998, a notice was published in the Federal

Register (63 FR 8981) that indicated the Acting Administrator of OFPP

had determined the benchmark compensation amount to be $340,650. The

notice further indicated that this amount is to be used as the

benchmark amount for contractor fiscal year 1998, and subsequent

contractor fiscal years, unless and until revised by OFPP. To date,

OFPP has not revised the amount.

An interim FAR rule was published in the Federal Register on

February 23, 1998 (63 FR 9066). Public comments were received from five

sources. All comments were considered in developing the final rule.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq., because most contracts awarded

to small entities use simplified acquisition procedures or are awarded

on a competitive, fixed-price basis and do not require application of

the cost principle contained in this rule.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 31

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Interim Rule Adopted as Final With Changes

Accordingly, the interim rule amending 48 CFR Part 31, which was

published at 63 FR 9066, February 23, 1998, is adopted as a final rule

with the following changes:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

1. The authority citation for 48 CFR Part 31 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

2. Section 31.205-6 is amended in paragraph (k) by revising the

heading; and by revising paragraphs (p)(2)(ii) and adding (p)(2)(iv) to

read as follows:

31.205-6 Compensation for personal services.

* * * * *

(k) Deferred compensation other than pensions. * * *

* * * * *

(p) * * *

(2) * * *

* * * * *

(ii) Senior executive means--

(A) The Chief Executive Officer (CEO) or any individual acting in a

similar capacity at the contractor's headquarters;

(B) The four most highly compensated employees in management

positions at the contractor's headquarters, other than the CEO; and

(C) If the contractor has intermediate home offices or segments

that report directly to the contractor's headquarters, the five most

highly compensated employees in management positions at each such

intermediate home office or segment.

* * * * *

(iv) Contractor's headquarters means the highest organizational

level from which executive compensation costs are allocated to Government

contracts.

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 44

[FAC 97-10; FAR Case 97-016; Item V]

Federal Acquisition Regulation; Contractor Purchasing System

Review Exclusions

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

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to eliminate unnecessary

contractor purchasing system reviews (CPSRs).

EFFECTIVE DATE: February 16, 1999.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501-

3775. Please cite FAC 97-10, FAR case 97-016.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends--

(1) FAR 44.302 to exclude competitively awarded firm-fixed-price

and competitively awarded fixed-price with economic price adjustment

contracts, and sales of commercial items pursuant to FAR Part 12, from

the dollar amount used to determine if a contractor's level of sales to

the Government warrants the conduct of a CPSR; and

(2) FAR 44.303 to exclude subcontracts awarded by a contractor

exclusively in support of Government contracts that are competitively

awarded firm-fixed-price, competitively awarded fixed-price with

economic price adjustment, or awarded for commercial items pursuant to

FAR Part 12, from evaluation during a CPSR.

A proposed rule was published in the Federal Register at 63 FR 649,

January 6, 1998. Two respondents submitted comments on the proposed

rule. All comments were considered in the development of the final

rule.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq., because the rule only applies

to contractors with sales to the Government (excluding competitively

awarded firm fixed-price and competitively awarded fixed-price with

economic price adjustment contracts and sales of commercial items

pursuant to FAR Part 12) that are expected to exceed $25 million during

the next 12 months, and no small entities meet this criterion.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 44

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 44 is amended as set forth below:

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES

1. The authority citation for 48 CFR Part 44 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

2. Section 44.302 is revised to read as follows:

44.302 Requirements.

(a) The ACO shall determine the need for a CPSR based on, but not

limited to, the past performance of the contractor, and the volume,

complexity and dollar value of subcontracts. If a contractor's sales to

the Government (excluding competitively awarded firm-fixed-price and

competitively awarded fixed-price with economic price adjustment

contracts and sales of commercial items pursuant to Part 12) are

expected to exceed $25 million during the next 12 months, perform a

review to determine if a CPSR is needed. Sales include those

represented by prime contracts, subcontracts under Government prime

contracts, and modifications. Generally, a CPSR is not performed for a

specific contract. The head of the agency responsible for contract

administration may raise or lower the $25 million review level if it is

considered to be in the Government's best interest.

(b) Once an initial determination has been made under paragraph (a)

of this section, at least every three years the ACO shall determine

whether a purchasing system review is necessary. If necessary, the

cognizant contract administration office will conduct a purchasing

system review.

3. Section 44.303 is amended by revising the introductory text to

read as follows:

44.303 Extent of review.

A CPSR requires an evaluation of the contractor's purchasing

system. Unless segregation of subcontracts is impracticable, this

evaluation shall not include subcontracts awarded by the contractor

exclusively in support of Government contracts that are competitively

awarded firm-fixed-price, competitively awarded fixed-price with

economic price adjustment, or awarded for commercial items pursuant to

part 12. The considerations listed in 44.202-2 for consent evaluation

of particular subcontracts also shall be used to evaluate the

contractor's purchasing system, including the contractor's policies,

procedures, and performance under that system. Special attention shall

be given to--

* * * * *

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 46 and 52

[FAC 97-10; FAR Case 96-009; Item VI]

Federal Acquisition Regulation; Contract Quality Requirements

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

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to reflect a preference for

commercial contract quality requirements, rather than Federal or

military specifications, and to permit greater flexibility in

specifying higher-level contract quality requirements.

EFFECTIVE DATE: February 16, 1999.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501-

3775. Please cite FAC 97-10, FAR case 96-009.

SUPPLEMENTARY INFORMATION:

A. Background

A proposed rule was published in the Federal Register at 62 FR

35891, July 2, 1997. The revisions in the final rule are based on the

analysis of public comments and further clarification of the rule. The

rule revises FAR 46.202-4, 46.311, and the clause at 52.246-11 to

replace references to Government specifications with references to

commercial quality standards as examples of higher-level contract

quality requirements; to require the contracting officer to indicate in

the solicitation which higher-level quality standards will satisfy the

Government's requirement; and, if more than one standard is listed in

the solicitation, to require the offeror to indicate its selection by

checking a block.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities under the Regulatory Flexibility Act, 5 U.S.C.

601, et seq., because the rule merely clarifies procedures for, and

permits greater flexibility in, specifying higher-level quality

requirements in Government contracts.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 46 and 52

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 46 and 52 are amended as set forth below:

1. The authority citation for 48 CFR Parts 46 and 52 continues to

read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 46--QUALITY ASSURANCE

2. Section 46.202-4 is revised to read as follows:

46.202-4 Higher-level contract quality requirements.

(a) Requiring compliance with higher-level quality standards is

appropriate in solicitations and contracts for complex or critical

items (see 46.203(b) and (c)) or when the technical requirements of the

contract require--

(1) Control of such things as work operations, in-process controls,

and inspection; or

(2) Attention to such factors as organization, planning, work

instructions, documentation control, and advanced metrology.

(b) When the contracting officer, in consultation with technical

personnel, finds it is in the Government's interest to require that

higher-level quality standards be maintained, the contracting officer

shall use the clause prescribed at 46.311. The contracting officer

shall indicate in the clause which higher-level quality standards will

satisfy the Government's requirement. Examples of higher-level quality

standards are ISO 9001, 9002, or 9003; ANSI/ASQC Q9001, Q9002, or

Q9003; QS-9000; AS-9000; ANSI/ASQC E4; and ANSI/ASME NQA-1.

3. Section 46.311 is revised to read as follows:

46.311 Higher-level contract quality requirement.

The contracting officer shall insert the clause at 52.246-11,

Higher-Level Contract Quality Requirement, in solicitations and

contracts when the inclusion of a higher-level contract quality

requirement is appropriate (see 46.202-4).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

4. Section 52.246-11 is revised to read as follows:

52.246-11 Higher-Level Contract Quality Requirement.

As prescribed in 46.311, insert the following clause:

Higher-Level Contract Quality Requirement (Feb 1999)

The Contractor shall comply with the higher-level quality

standard selected below. [If more than one standard is listed, the

offeror shall indicate its selection by checking the appropriate

block.]

Title Number Date Tailoring

__________________________. __________________________ __________________________ __________________________

__________________________. __________________________ __________________________ __________________________

__________________________. __________________________ __________________________ __________________________

__________________________. __________________________ __________________________ __________________________

[Contracting Officer insert the title, number (if any), date, and

tailoring (if any) of the higher-level quality standards.]

(End of clause)

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 46

[FAC 97-10; FAR Case 97-027; Item VII]

Federal Acquisition Regulation; Mandatory Government Source Inspection

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

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to facilitate the elimination

of unnecessary requirements for Government contract quality assurance

at source. This rule deletes the mandatory requirement for Government

contract quality assurance at source on all contracts that include a

higher-level contract quality requirement, and for supplies requiring

inspection that are destined for overseas shipment.

EFFECTIVE DATE: February 16, 1999.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC, 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501-

3775. Please cite FAC 97-10, FAR case 97-027.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends FAR 46.402 to eliminate unnecessary

requirements for Government contract quality assurance at source. The

rule eliminates mandatory Government source inspection under contracts

that contain higher-level quality requirements or that cover supplies

to be shipped overseas.

A proposed rule was published in the Federal Register at 63 FR

13770, March 20, 1998. Nine respondents submitted comments on the

proposed rule. All comments were considered in the development of the

final rule.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

A Final Regulatory Flexibility Analysis (FRFA) has been prepared

and submitted to the Chief Counsel for Advocacy of the Small Business

Administration. The analysis is summarized as follows:

No public comments were received in response to the Initial

Regulatory Flexibility Analysis.

We expect both large and small entities to experience a

reduction in the administrative burden by eliminating unnecessary

Government source inspection under contracts that contain higher-

level quality requirements or that cover supplies to be shipped

overseas. DoD and civilian agencies administer the contracts of

approximately 20,289 large businesses and 51,691 small entities.

Approximately 20 percent have contracts that contain the clause at

FAR 52.246-11, Higher level Contract Quality Requirement (Government

Specification).

There are no reporting, recordkeeping, or other compliance

requirements likely to result from the rule.

No significant negative economic impacts of the rule were

identified during our analysis or during the public comment period.

The rule is expected to reduce costs and administrative burdens for

both contractors and the Government.

We expect these revisions to contribute to an efficient and

effective acquisition process. We initially considered making all of

the requirements at FAR 46.402 discretionary but decided that this

would be premature since a Defense Contract Management Command

process action team reviewing source inspection and acceptance

policies has not completed its review and made its final

recommendations.

A copy of the FRFA may be obtained from the FAR Secretariat.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 46

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 46 is amended as set forth below:

PART 46--QUALITY ASSURANCE

1. The authority citation for 48 CFR Part 46 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

46.402 [Amended]

2. Section 46.402 is amended--

a. By removing paragraphs (e) and (g);

b. By redesignating paragraphs (f) and (h) as (e) and (f),

respectively; and

c. In the newly designated paragraph (e) by adding ``or'' at the

end of the paragraph.

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 48

[FAC 97-10; FAR Case 96-011; Item VIII]

Federal Acquisition Regulation; No-Cost Value Engineering Change

Proposals

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

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

ACTION: Interim rule adopted as final without change.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed to convert the interim rule

published as Item X of Federal Acquisition Circular 97-05 at 63 FR

34078, June 22, 1998, to a final rule without change. The rule amends

the Federal Acquisition Regulation (FAR) to clarify that no-cost value

engineering change proposals (VECPs) may be used when, in the

contracting officer's judgment, reliance on other VECP approaches

likely would not be more cost-effective, and the no-cost settlement

would provide adequate consideration to the Government.

EFFECTIVE DATE: December 18, 1998.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501-

3775. Please cite FAC 97-10, FAR case 96-011.

SUPPLEMENTARY INFORMATION:

A. Background

An interim rule was published at 63 FR 34078, June 22, 1998, to

clarify that the no-cost VECP guidance at FAR 48.104-3 permits the use

of no-cost settlements when the contracting officer has balanced the

administrative costs of negotiating a settlement against the

anticipated savings; and when, in the contracting officer's judgment,

reliance on other VECP approaches likely would not be more cost-

effective, and the no-cost settlement would provide adequate

consideration to the Government. The no-cost VECP alternative was not

intended for use when significant cost savings are anticipated on the

instant contract.

No public comments were received in response to the interim FAR

rule. Therefore, the interim FAR rule is being converted to a final

rule without change.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. applies to

this final rule. A Final Regulatory Flexibility Analysis (FRFA) has

been performed and is summarized as follows:

This rule clarifies that the guidance at FAR 48.104-3, Sharing

alternatives--no-cost settlement method, permits use of no-cost VECP

settlements when the contracting officer has balanced the

administrative costs of negotiating a settlement against the

anticipated savings; and, in the contracting officer's judgment,

reliance on other VECP approaches likely would not be more cost-

effective, and the no-cost settlement would provide adequate

consideration to the Government. The no-cost VECP alternative was

not intended for use when significant cost savings are anticipated

on the instant contract.

The FRFA has been provided to the Chief Counsel for Advocacy of the

Small Business Administration. A copy of the FRFA may be obtained from

the FAR Secretariat.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 48

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR Part 48, which was

published at 63 FR 34078, June 22, 1998, is adopted as a final rule

without change. [NOTE: see FAC 97-05]

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 52

[FAC 97-10; FAR Case 97-011; Item IX]

Federal Acquisition Regulation; Evidence of Shipment in

Electronic Data Interchange (EDI) Transactions

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

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

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to facilitate the use of

electronic data interchange (EDI) transactions and to streamline the

payment process when supplies are purchased on a free on board (f.o.b.)

destination basis with inspection and acceptance at origin.

EFFECTIVE DATE: February 16, 1999.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501-

1900. Please cite FAC 97-10, FAR case 97-011.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule revises the clause at FAR 52.247-48 to facilitate

the use of EDI for submission of invoices under contracts awarded on an

f.o.b. destination basis with inspection and acceptance at origin. The

rule eliminates requirements for contractors to provide evidence of

shipment with invoices for payment under such contracts. However,

contractors are required to retain, and to make available to the

Government for review as necessary, the evidence of shipment

documentation for a period of 3 years after final payment under the

contract.

A proposed rule was published on January 27, 1998 (63 FR 4074). Six

sources submitted comments in response to the proposed rule. All

comments were considered in the development of the final rule.

This regulatory action was not subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993,

and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq., because the rule applies to a

limited number of contracts, i.e., contracts for the purchase of

supplies on an f.o.b. destination basis with inspection and acceptance

at origin. Therefore, the rule is estimated to affect only a small

number of entities, both large and small.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) is deemed to apply

because the final rule contains information collection requirements.

Accordingly, a revised paperwork burden under OMB Clearance 9000-0061

reflecting a slight increase to the hours will be forwarded to the

Office of Management and Budget under 44 U.S.C. 3501, et seq. Public

comments concerning this request were invited through a Federal

Register notice published on January 27, 1998. No comments were

received.

List of Subjects in 48 CFR Part 52

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 52 is amended as set forth below:

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

1. The authority citation for 48 CFR Part 52 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

2. Section 52.247-48 is revised to read as follows:

52.247-48 F.o.b. Destination--Evidence of Shipment.

As prescribed in 47.305-4(c), insert the following clause:

F.o.b. Destination--Evidence of Shipment (Feb 1999)

(a) If this contract is awarded on a free on board (f.o.b.)

destination basis, the Contractor--

(1) Shall not submit an invoice for payment until the supplies

covered by the invoice have been shipped to the destination; and

(2) Shall retain, and make available to the Government for

review as necessary, the following evidence of shipment

documentation for a period of 3 years after final payment under the

contract:

(i) If transportation is accomplished by common carrier, a

signed copy of the commercial bill of lading for the supplies

covered by the Contractor's invoice, indicating the carrier's intent

to ship the supplies to the destination specified in the contract.

(ii) If transportation is accomplished by parcel post, a copy of

the certificate of mailing.

(iii) If transportation is accomplished by other than common

carrier or parcel post, a copy of the delivery document showing

receipt at the destination specified in the contract.

(b) The Contractor is not required to submit evidence of

shipment documentation with its invoice.

(End of clause)

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 19, 32, 37, 42, 52, and 53

[FAC 97-10; Item X]

Federal Acquisition Regulation; Technical Amendments

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

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

ACTION: Technical amendments.

SUMMARY: This document makes amendments to the Federal Acquisition

Regulation in order to update references and make editorial changes.

EFFECTIVE DATE: January 4, 1999.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755.

List of Subjects in 48 CFR Parts 1, 19, 32, 37, 42, 52, and 53

Government procurement.

Dated: December 14, 1998.

Ralph DeStefano,

Acting Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 1, 19, 32, 37, 42, 52, and 53 are amended

as set forth below:

1. The authority citation for 48 CFR Parts 1, 19, 32, 37, 42, 52,

and 53 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

2. The table in section 1.106 is amended by removing the FAR

segment and the corresponding OMB Control Number entry for Part 30; and

by adding entry 52.247-48, in numerical order, to read as follows:

1.106 OMB Approval under the Paperwork Reduction Act.

* * * * *

OMB Control

FAR segment No.

* * * * *

52.247-48.................................................. 9000-0061

* * * * *

PART 19--SMALL BUSINESS PROGRAMS

3. Section 19.102(g) is amended in the tables by revising the

parentheticals following ``DIVISION F--WHOLESALE TRADE'' and ``DIVISION

G--RETAIL TRADE'' to read as follows:

19.102 Size standards.

* * * * *

Division F--Wholesale Trade

(The following size standards are not applicable to Government

procurement of supplies. The nonmanufacturer size standard of 500

employees shall be used for purposes of Government procurement of

supplies.)

* * * * *

Division G--Retail Trade

(The following size standards are not applicable to Government

procurement of supplies. The nonmanufacturer size standard of 500

employees shall be used for purposes of Government procurement of

supplies.)

* * * * *

19.502-5 [Amended]

4. Section 19.502-5 is amended in paragraph (e) by revising the

word ``contract'' to read ``acquisition''.

PART 32--CONTRACTING FINANCING

32.908 [Amended]

5. Section 32.908 is amended in paragraph (a)(3) by revising

``(iii)'' to read ``(ii)'', and in paragraph (c)(3) by revising the

word ``paragraph'' to read ``paragraphs''; and inserting ``and (ii)''

after ``(a)(1)(i)''.

PART 37--SERVICE CONTRACTING

37.602-3 [Amended]

6. Section 37.602-3 is amended by revising ``15.605'' to read

``15.304''.

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

42.203 [Amended]

6A. Section 42.203 is amended in the last sentence by revising

``http://www.dcmc.dcrb.dla.mil'' to read ``http://www.dcmc.hq.dla.mil/

casbook/casbook.htm''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

52.212-5 [Amended]

7. Section 52.212-5 is amended by revising the date of the clause

to read ``(Jan 1999)''; in paragraph (b)(5) by revising ``Limitation''

to read ``Limitations''; and in paragraph (e)(4) by revising ``Flagged'' to

read ``Flag''.

52.219-9 [Amended]

8. Section 52.219-9 is amended in the first sentence of paragraph

(d)(5) by revising ``Assistance'' to read ``Access''; and by revising

the term ``PRONET'' to read ``PRO-Net'' (three times).

52.222-37 [Amended]

9. Section 52.222-37 is amended by revising the date of the clause

to read ``(Jan 1999)''; and in paragraph (c) by revising ``March 31''

to read ``September 30'' both times it appears.

PART 53--FORMS

10. Section 53.228 is amended by revising paragraphs (a), (b), (c),

(e), (j), and (m) to read as follows:

53.228 Bonds and insurance.

* * * * *

(a) SF 24 (Rev. 10/98) Bid Bond. (See 28.106-1.) SF 24 is

authorized for local reproduction and a copy is furnished for this

purpose in Part 53 of the looseleaf edition of the FAR.

(b) SF 25 (Rev. 5/96) Performance Bond. (See 28.106-1(b).) SF 25 is

authorized for local reproduction and a copy is furnished for this

purpose in Part 53 of the looseleaf edition of the FAR.

(c) SF 25-A (Rev. 10/98) Payment Bond. (See 28.106-1(c).) SF 25-A

is authorized for local reproduction and a copy is furnished for this

purpose in Part 53 of the looseleaf edition of the FAR.

* * * * *

(e) SF 28 (Rev. 6/96) Affidavit of Individual Surety. (See 28.106-

1(e) and 28.203(b).) SF 28 is authorized for local reproduction and a

copy is furnished for this purpose in Part 53 of the looseleaf edition

of the FAR.

* * * * *

(j) SF 275 (Rev. 10/98) Reinsurance Agreement in Favor of the

United States. (See 28.106-1(j) and 28.202-1(a)(4).) SF 275 is

authorized for local reproduction and a copy is furnished for this

purpose in Part 53 of the looseleaf edition of the FAR.

* * * * *

(m) SF 1416 (Rev. 10/98) Payment Bond for Other than Construction

Contracts. (See 28.106-1(m).) SF 1416 is authorized for local

reproduction and a copy is furnished for this purpose in Part 53 of the

looseleaf edition of the FAR.

* * * * *

11. Section 53.301-24 is revised to read as follows:

53.301-24 Bid Bond.

[GRAPHIC] [TIFF OMITTED] TR18DE98.005

[GRAPHIC] [TIFF OMITTED] TR18DE98.006

12. Section 53.301-25 is revised to read as follows:

53.301-25 Performance Bond.

[GRAPHIC] [TIFF OMITTED] TR18DE98.007

[GRAPHIC] [TIFF OMITTED] TR18DE98.008

13. Section 53.301-25A is revised to read as follows:

53.301-25-A Payment Bond.

[GRAPHIC] [TIFF OMITTED] TR18DE98.009

[GRAPHIC] [TIFF OMITTED] TR18DE98.010

14. Section 53.301-28 is revised to read as follows:

53.301-28 Affidavit of Individual Surety.

[GRAPHIC] [TIFF OMITTED] TR18DE98.011

[GRAPHIC] [TIFF OMITTED] TR18DE98.012

15. Section 53.301-275 is revised to read as follows:

53.301-275 Reinsurance Agreement in Favor of the United States.

[GRAPHIC] [TIFF OMITTED] TR18DE98.013

[GRAPHIC] [TIFF OMITTED] TR18DE98.014

16. Section 53.301-1416 is revised to read as follows:

53.301-1416 Payment Bond for Other than Construction Contracts.

[GRAPHIC] [TIFF OMITTED] TR18DE98.015

[GRAPHIC] [TIFF OMITTED] TR18DE98.016