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Proposed Rule

Federal Acquisition Regulation: FAR Case 2006-034, Socioeconomic Program Parity

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Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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AGENCIES:

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

ACTION:

Proposed rule.

SUMMARY:

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) are proposing to amend the Federal Acquisition Regulation (FAR) to ensure that the FAR reflects the Small Business Administration's (SBA) interpretation of the Small Business Act and SBA regulations with regard to the relationship among various small business programs.

DATES:

Comment date: Interested parties should submit written comments to the Regulatory Secretariat at the address shown below on or before May 9, 2008, to be considered in the formation of the final rule.

ADDRESSES:

Submit comments, identified by FAR Case 2006-034, by any of the following methods:

Submit comments via the Federal eRulemaking portal by inputting “FAR Case 2006-034” under the heading “Comment or Submission”. Select the link “Send a Comment or Submission” that corresponds with FAR Case 2006-034. Follow the instructions provided to complete the “Public Comment and Submission Form”. Please include your name, company name (if any), and “FAR Case 2006-034” on your attached document.

  • Fax: 202-501-4067.
  • Mail: General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW., Room 4035, ATTN: Diedra Wingate, Washington, DC 20405.

Instructions: Please submit comments only and cite FAR case 2006-034 in all correspondence related to this case. All comments received will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information provided.

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FOR FURTHER INFORMATION CONTACT:

Ms. Rhonda Cundiff, Procurement Analyst, at (202) 501-0044 for clarification of content. The FAR Secretariat at (202) 501-4755 for information pertaining to status or publication schedules. Please cite FAR case 2006-034.

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SUPPLEMENTARY INFORMATION:

A. Background

The purpose of this rule is to ensure that the FAR clearly reflects SBA's interpretation of the Small Business Act and SBA's interpretation of its regulations with regard to the order of precedence that applies when deciding whether to satisfy a requirement through an award to a small business, a HUBZone small business concern, a service-disabled veteran-owned small business (SDVOSB) concern or a small business participating in the 8(a) Business Development Program (8(a) Program).

This FAR rule is intended to make the following clear:

(1) There is no order of precedence among the 8(a), HUBZone, or SDVOSB Programs. However, if a requirement has been accepted by SBA under the 8(a) Program, it must remain in the 8(a) Program unless SBA agrees to its release in accordance with 13 CFR 124, 125 and 126.

(2) For acquisitions exceeding $100,000, the contracting officer must consider making award under the 8(a), HUBZone or SDVOSB Programs (either set-aside or sole source) before the contracting officer proceeds with a small business set-aside. See 19.203(b) and 19.502-2(b).

After having considered making award under the 8(a), HUBZone or SDVOSB Programs, the contracting officer may set aside an acquisition for small business, with one exception. By statute (15 U.S.C. 657a(b)(2)(B)), the contracting officer cannot set the acquisition aside for small business if the criteria for setting it aside for HUBZone small business are met.

(3) FAR 19.502-2(a) sets forth the requirement to exclusively reserve acquisitions for small business between $3,000 and $100,000 unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more small businesses that are competitive in terms of market prices, quality, and delivery. This proposed rule clarifies that these small business set-asides do not preclude award of a contract to a qualified HUBZone small business concern pursuant to the HUBZone Program, an 8(a) Program participant pursuant to the 8(a) Program, or to a SDVOSB concern pursuant to the SDVOSB Program because the SBA's regulations give the contracting officer discretionary authority to use the HUBZone, 8(a), or SDVOSB Programs at these dollar levels. In addition, the rule shows that, unlike procurements that are expected to exceed $100,000, it is not mandatory that the contracting officer set aside an acquisition for HUBZone small business concerns before setting aside the requirement for small businesses.

(4) SBA believes that progress in fulfilling the various small business goals, as well as other factors such as the results of market research and the acquisition history, should be considered in making a decision as to which program to use for the acquisition.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. The rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

This change may have a significant economic impact on a significant number of small entities within the meaning of the Regulatory Flexibility Act 5 U.S.C. 601, et seq., because it will clarify the relationship among various small business programs with regard to whether one has priority over another for acquisition purposes. It has been unclear to the acquisition community if there is an order of precedence that applies when deciding whether to satisfy a requirement through an award to small business, HUBZone small business, service disabled veteran-owned small business or a small business participating in the 8(a) Business Development Program. This proposed rule will have both a negative and positive impact on the 8(a) Business Development Program, the HUBZone Program, the Service-Disabled Veteran-Owned Small Business Program and the Small Business Program. Start Printed Page 12700

Viewed as a whole, there is no impact on the small business community, as this rule does not increase or decrease the number of contracts awarded to small businesses. However, there will be a negative impact on contractors with a particular preference who lose a contract set-aside to another socioeconomic category of contractors with a different preference who gain the contract set-aside, who thereby will receive a positive impact. The FAR Secretariat has submitted a copy of the Initial Regulatory Flexibility Analysis (IRFA) to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat. The Councils will consider comments from small entities concerning the affected FAR parts in accordance with 5 U.S.C. 610. Comments must be submitted separately and should cite 5 U.S.C. 601, et seq., FAR Case 2006-034, in correspondence. The analysis is summarized as follows:

The purpose of this proposed rule is to revise the FAR to ensure that it complies with SBA's interpretation of the Small Business Act and the SBA regulations that implement that Act. The entities that will be affected are small businesses that do business with the Federal Government. Generally, all current and potential Government contractors must register in the Central Contractor Registration (CCR) to be eligible for contract award and payment. There are approximately 313,512 small business firms; 13,000 HUBZone firms; 9,947 8(a) firms and 9,614 SDVO SBC currently registered in CCR that may be affected by this proposed rule.

There are no significant alternatives that would reduce any impact on small businesses. The FAR rule is implementing SBA's interpretation of the Small Business Act and SBA's implementing regulations.

C. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. Chapter 35) does not apply because the proposed rule does not contain information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

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List of Subjects in 48 CFR Parts 13 and 19

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Al Matera,

Director, Office of Acquisition Policy.

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Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 13 and 19 as set forth below:

1. The authority citation for 48 CFR parts 13 and 19 continue to read as follows:

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Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

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PART 13—SIMPLIFIED ACQUISITION PROCEDURES

2. Amend section 13.003 by revising the first sentence in paragraph (b)(2) to read as follows:

Policy.
* * * * *

(b) * * *

(2) The contracting officer may make an award under the 8(a) Program (see Subpart 19.8) or set aside for HUBZone small business concerns (see 19.1305) or service-disabled veteran-owned small business concerns (see 19.1405) an acquisition of supplies or services that has an anticipated dollar value exceeding the micro-purchase threshold and not exceeding the simplified acquisition threshold. * * *

* * * * *
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PART 19—SMALL BUSINESS PROGRAMS

3. Amend section 19.202 by revising the first sentence to read as follows:

Specific policies.

In order to further the policy in 19.201(a), contracting officers shall comply with the specific policies listed in this section and shall consider recommendations of the agency Director of Small and Disadvantaged Business Utilization, or the Director's designee, as to whether a particular acquisition should be awarded under Subparts 19.5, 19.8, 19.13, or 19.14. * * *

4. Amend subpart 19.2 by adding section 19.203 to read as follows:

Relationship among small business programs.

(a) Acquisitions subject to the small business set-aside at 19.502-2(a).

The requirement to exclusively reserve acquisitions for small business at 19.502-2(a) does not preclude the contracting officer from awarding a contract under the—

(1) 8(a) Program (Subpart 19.8);

(2) HUBZone Program (Subpart 19.13); or

(3) Service-Disabled Veteran-Owned Small Business Procurement Program (SDVOSB)(Subpart 19.14).

(b) Acquisitions subject to the small business set-aside at 19.502-2(b). (1) The contracting officer must consider the 8(a), HUBZone, and SDVOSB programs before using a small business set-aside. There is no order of precedence among the 8(a), HUBZone, and SDVOSB programs. However, if a requirement has been accepted by SBA under the 8(a) Program, it must remain in the 8(a) Program unless SBA agrees to its release in accordance with 13 CFR 124, 125 and 126; and

(2) The contracting officer must set aside an acquisition for HUBZone small business concerns if the conditions at 19.1305 are met, before considering a small business set-aside.

5. Amend section 19.501 by—

a. Removing paragraphs (c) and (d);

b. Redesignating paragraphs (e), (f), (g), (h), and (i) as (c), (d), (e), (f), and (g), respectively; and

c. Revising the second sentence of new paragraph (c) to read as follows:

General.
* * * * *

(c) * * *. The contracting officer shall perform market research and document why a small business set-aside is inappropriate when an acquisition is not set aside for small business, unless an award is anticipated under the 8(a), HUBZone or service-disabled veteran-owned small business programs. * * *

* * * * *

6. Amend section 19.502-2 by adding a new first sentence and revising the last sentence in paragraph (a) and adding a new first sentence in paragraph (b) to read as follows:

Total small business set-asides.

(a) Before setting aside an acquisition under this paragraph, refer to 19.203(a). * * *. The small business reservation does not preclude the award of a contract as described in 19.203 or 19.1007(c).

(b) Before setting aside an acquisition under this paragraph, follow 19.203(b). * * *

* * * * *

7. Amend section 19.800 by revising paragraph (e) to read as follows:

General.
* * * * *

(e) Before deciding to set aside an acquisition in accordance with Subpart 19.5, the contracting officer must consider offering the acquisition under the 8(a) Program (see 19.203).

* * * * *

8. Amend section 19.1305 by revising paragraphs (a) through (d) to read as follows:

HUBZone set-aside procedures.

(a) The contracting officer—

(1) May 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 (see 19.203);

(2) Must set-aside acquisitions exceeding the simplified acquisition threshold for HUBZone small business Start Printed Page 12701concerns before setting them aside for small business concerns or conducting the acquisition using full and open competition if the conditions in paragraph (b) of this section are met; and

(3) Must consider HUBZone set-asides before considering HUBZone sole source awards (see 19.1306).

(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 contracting officer 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.

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9. Amend section 19.1405 by revising paragraph (a) and the second sentence of paragraph (c) to read as follows:

Service-disabled veteran-owned small business set-aside procedures.

(a) The contracting officer—

(1) May set aside acquisitions exceeding the micro-purchase threshold for competition restricted to service-disabled veteran-owned small business concerns when the requirements of paragraph (b) of this section can be satisfied (see 19.203); and

(2) Must consider service-disabled veteran-owned small business set-asides before considering service-disabled veteran-owned small business sole source awards (see 19.1406) or small business set-asides (see 19.5).

* * * * *

(c) * * *. If the contracting officer receives no acceptable offers from service-disabled veteran-owned small business concerns, the service-disabled veteran-owned set-aside shall be withdrawn.

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[Amended]

10. Amend introductory paragraph (a) by removing “19.501(d)” and adding “19.203” in its place.

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[FR Doc. E8-4561 Filed 3-7-08; 8:45 am]

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