[Federal Register: December 29, 1998 (Volume 63, Number 249)]

[Rules and Regulations]

[Page 71721-71723]

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

[Part VII

Department of Defense

General Services Administration

National Aeronautics and Space Administration

Office of Management and Budget

48 CFR Parts 19 and 52

Reform of Affirmative Action in Federal Procurement; Interim Final Rule

and Notice

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 19 and 52

[FAC 97-07 Addendum; FAR Case 97-004B Correction]

Federal Acquisition Regulation; Reform of Affirmative Action in

Federal Procurement; Corrections

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

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

ACTION: Interim rule; Correcting amendments.

SUMMARY: The Department of Defense, the General Services

Administration, and the National Aeronautics and Space Administration

have agreed to issue an addendum to correct Federal Acquisition

Circular (FAC) 97-07 to make amendments to the Federal Acquisition

Regulation (FAR) concerning programs for small disadvantaged business

(SDB) concerns. These changes are needed to provide additional time for

subcontractors to become certified under rules issued by the Small

Business Administration. These amendments allow contractors acting in

good faith to accept the self-representation of subcontractors as to

their status as small disadvantaged business concerns. It is

anticipated that by July 1, 1999, a sufficient number of firms will

have been certified and the changes made by this rule rescinded. After

that date, solicitations will require contractors to use certified SDBs

as subcontractors to take advantage of the SDB Participation Program.

No other aspects of FAC 97-07 are being modified.

DATES: Effective Date: January 1, 1999.

Applicability Date: The policies, provisions, and clauses of this

Addendum apply for all solicitations issued on or after January 1,

1999.

Comment Date: Comments should be submitted to the FAR Secretariat

at the address shown below on or before March 1, 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.97-004B@gsa.gov

Please cite FAC 97-07 Addendum, FAR case 97-004B, in all

correspondence related to this case.

FOR FURTHER INFORMATION CONTACT:

Ms. Victoria Moss, Procurement Analyst Federal Acquisition Policy

Division, General Services Administration, 1800 F Street, NW,

Washington, DC 20405, Telephone: (202) 501-4764 or

Mr. Mike Sipple, Procurement Analyst, Contract Policy and

Administration, Director, Defense Procurement, Department of Defense

3060 Defense Pentagon, Washington, DC 20301-3060, Telephone: (703) 695-

8567.

For general information, call the FAR Secretariat at (202) 501-

4755.

SUPPLEMENTARY INFORMATION:

A. Background

On July 1, 1998, DoD, GSA, and NASA issued FAC 97-07 to make

amendments to the FAR concerning programs for small disadvantaged

business concerns. This document revises the rule published at 63 FR

36120, July 1, 1998, to allow contractors acting in good faith to rely

upon the self-representations of their subcontractors as to their

status as a small disadvantaged business concern.

Urgent and compelling reasons exist to promulgate this rule without

prior opportunity for public comment. This action is necessary to amend

regulations that will become effective on January 1, 1999, to reflect

the current scarcity of certified small disadvantaged business

subcontractors.

This regulatory action was not subject to Office of Management and

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

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

B. Regulatory Flexibility Act

These changes modify the manner in which a firm, acting as a

subcontractor, may indicate that it is a small disadvantaged business

concern (SDB). On June 30, 1998, the Small Business Administration

(SBA) issued rules concerning the certification and eligibility of

SDBs. SBA prepared and issued an analysis of that rule's impact on

small entities at that time. The acquisition programs designed to

assist SDB subcontractors were issued in Federal Acquisition Circular

97-07 at 63 FR 36120, July 1, 1998. At that time, an Initial Regulatory

Flexibility Analysis was prepared discussing the impact of the

programs. The changes in this Addendum do not affect the impact of the

acquisition programs on small entities; they merely revise the manner

in which a firm is considered eligible under the programs. Therefore,

the Initial Regulatory Flexibility Analysis published with FAC 97-07 is

unaffected by these changes and remains valid.

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 collection of information from offerors, contractors,

or members of the public which require the approval of OMB under 44

U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 19 and 52

Government procurement.

Dated: December 22, 1998.

Victoria Moss,

Acting Director, Federal Acquisition Policy Division.

FEDERAL ACQUISITION CIRCULAR

FAC 97-07 Addendum

Federal Acquisition Circular (FAC) 97-07 Addendum 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.

The policies, provisions, and clauses of this Addendum are

effective for all solicitations issued on or after January 1, 1999.

Dated: December 21, 1998.

Carol F. Covey,

Acting Director, Defense Procurement.

Ida M. Ustad,

Deputy Associate Administrator, Office of Acquisition Policy, General

Services Administration.

Dated: December 22, 1998.

James A. Balinskas,

Acting Associate Administrator for Procurement, National Aeronautics

and Space Administration.

Therefore, 48 CFR Parts 19 and 52 are amended as set forth below:

1. The authority citation for 48 CFR Parts 19 and 52 continues to

read as follows:

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

U.S.C. 2473(c).

PART 19--SMALL BUSINESS PROGRAMS

2. Section 19.001 is amended by revising the definition of ``Small

disadvantaged business concern'' to read as follows:

19.001 Definitions.

* * * * *

Small disadvantaged business concern, as used in this part, means--

(1) For prime contractors (except for 52.212-3(c)(2) and 52.219-

1(b)(2) for general statistical purposes and 52.212-3(c)(7)(ii),

52.219-22(b)(2), and 52.219-23(a) for joint ventures under the price

evaluation adjustment for small disadvantaged business concerns), an

offeror that represents, as part of its offer, that it is a small

business under the size standard applicable to the acquisition; and

either--

(i) It has received certification as a small disadvantaged business

concern consistent with 13 CFR part 124, subpart B; and

(A) No material change in disadvantaged ownership and control has

occurred since its certification;

(B) Where the concern is owned by one or more disadvantaged

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

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

register of small disadvantaged business concerns maintained by the

Small Business Administration; or

(ii) It has submitted a completed application to the Small Business

Administration or a private certifier to be certified as a small

disadvantaged business concern in accordance with 13 CFR part 124,

subpart B, and a decision on that application is pending, and that no

material change in disadvantaged ownership and control has occurred

since its application was submitted. In this case, a contractor must

receive certification as an SDB by the SBA prior to contract award.

(2) For subcontractors, an offeror that represents, as part of its

offer, that it is a small business under the size standard applicable

to the acquisition and that it meets the definition of a small

disadvantaged business in 13 CFR 124.1002.

* * * * *

3. Section 19.703 is amended by revising paragraph (b) to read as

follows:

19.703 Eligibility requirements for participating in the program.

* * * * *

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

representation of its subcontractor regarding the subcontractor's

status as a small, small disadvantaged, or a woman-owned small business

concern. The contractor, the contracting officer, or any other

interested party can challenge a subcontractor's size status

representation by filing a protest, in accordance with 13 CFR 121.1601

through 121.1608. Protests challenging a subcontractor's small

disadvantaged business representation shall be filed in accordance with

13 CFR 124.1015 through 124.1022.

4. Section 19.1202-4 is amended by adding paragraph (c) to read as

follows:

19.1202-4 Procedures.

* * * * *

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

representation of its subcontractor regarding the subcontractor's

status as a small disadvantaged business concern.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Section 52.219-8 is amended by revising paragraph (c) of the

clause to read as follows:

52.219-8 Utilization of Small, Small Disadvantaged, and Women-Owned

Small Business Concerns.

* * * * *

Utilization of Small, Small Disadvantaged, and Women-Owned Small

Business Concerns (Jan 1999)

* * * * *

(c) As used in this clause, the term ``small business concern''

shall mean a small business as defined pursuant to section 3 of the

Small Business Act and relevant regulations promulgated pursuant

thereto. The term ``small business concern owned and controlled by

socially and economically disadvantaged individuals'' shall mean a

small business concern that represents, as part of its offer, that

it meets the definition of a small disadvantaged business concern in

13 CFR 124.1002.

* * * * *

6. Section 52.219-25 is amended by revising paragraph (a) of the

clause to read as follows:

52.219-25 Small Disadvantaged Business Participation Program--

Disadvantaged Status and Reporting.

* * * * *

Small Disadvantaged Business Participation Program--Disadvantaged

Status and Reporting (Jan 1999)

(a) Disadvantaged status for joint venture partners, team

members, and subcontractors. This clause addresses disadvantaged

status for joint venture partners, teaming arrangement members, and

subcontractors and is applicable if this contract contains small

disadvantaged business (SDB) participation targets. The Contractor

shall obtain representations of small disadvantaged status from

joint venture partners and teaming arrangement members through use

of a provision substantially the same as paragraph (b)(1)(i) of the

provision at FAR 52.219-22, Small Disadvantaged Business Status. The

Contractor shall confirm that a joint venture partner or team

member, representing itself as a small disadvantaged business

concern, is included in the SBA's on-line list of SDBs at http://

www.sba.gov or by contacting the SBA's Office of Small Disadvantaged

Business Certification and Eligibility. The Contractor acting in

good faith may rely on a written representation of its subcontractor

regarding the subcontractor's status as a small disadvantaged

business concern as defined in 13 CFR 124.1002.

* * * * *