Federal Acquisition Regulation; Small Business

SUMMARY: This proposed rule is issued pursuant to the Federal

Acquisition Streamlining Act of 1994, Public Law 103-355 (the Act). The

Federal Acquisition Regulatory Council is considering amending the

Federal Acquisition Regulation (FAR) as a result of changes to 41

U.S.C. 22 by Sections 4004, 7101, 7102, and 7106 of the Act. This

regulatory action was not subject to Office of Management and Budget

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

DATES: Comment Due Date: Comments should be submitted on or before

March 7, 1995 to be considered in the formulation of a final rule.

Public Meeting: A public meeting will be held on February 3, 1995,

at 9:30 a.m.-

Oral/Written Statements: Views to be presented at the public

meeting should be sent, in writing, to the FAR Secretariat, at the

address given below, not later than January 31, 1995.

ADDRESSES: Interested parties should submit written comments to: -

General Services Administration, FAR Secretariat (VRS), 18th & F

Streets, NW, Room 4037, Washington, DC 20405, Telephone: (202) 501-

4755.

The public meeting will be held at:- General Services

Administration Auditorium, 18th & F Streets, NW, First Floor,

Washington, DC 20405.

Please cite FAR case 94-780 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: Ms. Victoria Moss, Small Business Team

Leader, at (202) 501-1143 in reference to this FAR case. For general

information, contact the FAR Secretariat, Room 4037, GS Building,

Washington, DC 20405 (202) 501-4755. Please cite FAR case 94-780.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355

(the Act), provides authorities that streamline the acquisition process

and minimize burdensome government-unique requirements. Major changes

that can be expected in the acquisition process as a result of the

Act's implementation include changes in the areas of Commercial Item

Acquisition, Simplified Acquisition Procedures, the Truth in

Negotiations Act, and introduction of the Federal Acquisition Computer

Network. In order to promptly achieve the benefits of the provisions of

the Act, the Government is issuing implementing regulations on an

expedited basis. We believe prompt publication of proposed rules

provides the public the opportunity to participate more fully in the

process of developing regulations.

This notice announces FAR revisions developed under FAR case 94-

780. The following sections of the Federal Acquisition Streamlining Act

are implemented by this proposed rule:

a. Section 4004, Small Business Reservation, amends section 15(j)

of the Small Business Act to reserve each contract for the purchase of

goods or services that have an anticipated value greater than $2,500,

but not greater than $100,000, for exclusive small business

participation unless the contracting officer is unable to obtain offers

from two or more small businesses that are competitive with market

price, quality and delivery.-

b. Section 7101, Repeal of Certain Requirements, paragraph (a)

deletes sections 15(e) and (f) from the Small Business Act. These

sections established the priority for the award of contracts and

subcontracts in carrying out the set-aside programs.

c. Section 7102, Contracting Program for Certain Small Business

Concerns (not applicable to DOD, NASA, and the Coast Guard), amends

Section 15(g)(1) of the Small Business Act to permit the Head of an

Agency to enter into competition using less than full and open

competition by restricting competition to small disadvantaged

businesses (SDB's) or by using a price evaluation preference of up to

10 percent when evaluating SDB offers received as a result of an

unrestricted solicitation.-

d. Section 7106, Procurement Goals for Small Business Concerns

Owned by Women, establishes a Governmentwide goal for participation by

women-owned small business concerns in prime contracts and subcontracts

and revises sections 8 and 15 of the Small Business Act to accommodate

the goal.

Public Meeting

The FAR Council is interested in an exchange of ideas and opinions

with respect to the regulatory implementation of the Act. For that

reason, the FAR Council is conducting a series of public meetings. The

public is encouraged to furnish its views; the FAR Council anticipates

that public comments will be very helpful in formulating final rules.

A public meeting will be held on February 3, 1995, to enable the

public to present its views on this rule. This rule will only be

discussed at the public meeting session. Any subsequent public meetings

will be devoted to other revisions to the FAR.

Persons or organizations wishing to make presentations will be

allowed 10 minutes each to present their views, provided they notify

the FAR Secretariat at (202) 501-4755. Written statements for

presentation should be submitted to the FAR Secretariat by January 31,

1995. Persons or organizations with similar positions are encouraged to

select a common spokesman for presentation of their views. This

meeting, in conjunction with the Federal Register notice soliciting

public comments on the rule, will be the only opportunity for the

public to present its views.

B. Regulatory Flexibility Act

The proposed rule contains a number of amendments that will have a

beneficial effect on a substantial number of small entities within the

meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.; e.g.,

the rule provides for the targeting for procurements to small

disadvantaged businesses through small disadvantaged business set-

asides and an evaluation preference in unrestricted procurements; puts

women-owned small businesses on an equal footing with small

disadvantaged businesses in subcontracting plan requirements;

automatically sets aside acquisitions greater than $2,500 but not

greater than $100,000 for small business; and simplifies and clarifies

the small business representations. Since the rule is considered

significantly beneficial to small entities, an Initial Regulatory

Flexibility Analysis has not been performed. Comments from small

entities concerning the affected FAR subpart will be considered in

accordance with 5 U.S.C. 610 of the Act. Such comments must be

submitted separately and should cite 5 U.S.C. 601, et seq. (FAR case

94-780, Small Business (Pub. L. 103-355, Federal

[[Page 2303]] Acquisition Streamlining Act of 1994)), in

correspondence.

C. Paperwork Reduction Act-

The Paperwork Reduction Act does apply because the proposed changes

to the FAR affect recordkeeping and 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. Requests for

approval of revised clearances 9000-0006 and 9000-0007 have been

submitted to OMB under separate cover.

List of Subjects in 48 CFR Chapter 1

Government procurement.

Dated: December 27, 1994.

Capt. Barry Cohen,

SC, USN, Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.-

Therefore, it is proposed that 48 CFR Chapter 1 be amended as set

forth below:-

1. The authority citation for 48 CFR Chapter 1 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 4--ADMINISTRATIVE MATTERS

2. Section 4.602 is amended by revising paragraph (a)(2) to read as

follows:

4.602 Federal Procurement Data System.-

(a) * * *-

(2) a means of measuring and assessing the impact of Federal

contracting on the Nation's economy and the extent to which small,

small disadvantaged and women-owned small business concerns are sharing

in Federal contracts; and

* * * * *-

3. Section 4.603 is added to read as follows:

4.603 Solicitation provision.-

The contracting officer shall insert the provision at 52.204-00,

Women-Owned Business, in all solicitations exceeding the simplified

acquisition threshold in part 13 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.

PART 5--PUBLICIZING CONTRACT ACTIONS

5.002 [Amended]-

4. Section 5.002 is amended in paragraph (c) by removing ``labor

surplus area'' and inserting in its place ``women-owned small

business''.

5. Section 5.207 is amended in paragraph (c)(2)(xii) by removing

``labor surplus area concerns'' and inserting in its place ``small

disadvantaged businesses''; and 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 small disadvantaged business set

aside, the appropriate CBD Numbered Note will be cited.

* * * * *

5.404-1 [Amended]

6. Section 5.404-1 is amended in paragraph (b)(6)(ii) by removing

``LSA'' and inserting in its place ``small disadvantaged business''.

7. Section 5.503 is amended by revising the second sentence of

paragraph (a) to read as follows:

5.503 Procedures.

(a) * * * Contracting officers shall give small, small

disadvantaged and women-owned small business concerns maximum

opportunity to participate in these acquisitions.

* * * * *

PART 6--COMPETITION REQUIREMENTS

8. Section 6.203 is revised to read as follows:

6.203 Set-asides for small and small disadvantaged business concerns.-

(a) To fulfill the statutory requirements relating to small and

small disadvantaged business concerns, contracting officers may set

aside solicitations to allow only such business concerns to compete.

This includes contract actions conducted under the Small Business

Innovation Research Program established under Pub. L. 97-219.

(b) No separate justification or determination and findings is

required under this part to set aside a contract action for small or

small disadvantaged business concerns.

(c) Subpart 19.5 prescribes policies and procedures that shall be

followed with respect to set-asides.

PART 7--ACQUISITION PLANNING-

9. 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) * * *-

(1) * * * Include consideration of small business and small

disadvantaged business concerns (see part 19). * * *

* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

10. Section 8.404 is amended by revising the last sentence of

paragraph (a) to read as follows:

8.404 Using schedules.

(a) * * * When placing orders under a Federal Supply Schedule,

ordering activities need not seek further competition, synopsize the

requirement, make a separate determination of fair and reasonable

pricing, or consider set-asides in accordance with 19.503.

* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

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

paragraph (c) to read as follows:

9.104-3 Application of standards.

* * * * *-

(c) * * *

If the pending contract requires a subcontracting plan pursuant to

Subpart 19.7, Subcontracting with Small, Small Disadvantaged and Women-

Owned Small Business Concerns, the contracting officer shall also

consider the prospective contractor's compliance with subcontracting

plans under recent contracts.

* * * * *

PART 14--SEALED BIDDING

14.205-4 [Amended]

12. Section 14.205-4 is amended in the fourth sentence of paragraph

(b) by inserting after the word ``small'' the phrase ``, small

disadvantaged and women-owned small''; and removing ``and labor surplus

areas (see 20.104(e) and (f))''; and in the last sentence of (b)(3) by

removing ``parts 19 and 20'' and inserting in its place ``part 19''.

13. Section 14.206 is revised to read as follows:

14.206 Small business and small disadvantaged business set-asides.-

(See part 19.)

14.407-6 [Amended]

14. Section 14.407-6 is amended by removing paragraph (a)(3) and

redesignating (a)(4) as (a)(3).

14.502 [Amended]-

15. Section 14.502(b)(3) is amended by removing the text following

the word [[Page 2304]] ``business'' and inserting in its place ``or

total small disadvantaged business set-aside (see 19.503-2 and 19.503-

3).''

PART 15--CONTRACTING BY NEGOTIATION

15.705 [Amended]-

16. Section 15.705 is amended in paragraph (b) by removing

``business and labor surplus area'' and inserting in its place ``,

small disadvantaged and women-owned small business''.

15.706 [Amended]-

17. Section 15.706 is amended in paragraph (d)(4) by removing

``labor surplus area'' and inserting in its place ``women-owned small

business''.

15.905-1 [Amended]

18. Section 15.905-1 is amended in the first sentence of paragraph

(c) by inserting after the word ``individuals,'' the phrase ``women-

owned small businesses,''; and removing the phrase ``labor surplus

areas,''.

15.1001 [Amended]

19. Section 15.1001 is amended in paragraph (b)(2) by

a. inserting after the word ``small'' the first place it occurs the

phrase ``or small disadvantaged'';--

b. removing the comma after ``19.5)'' and inserting the phrase ``or

an award based on an evaluation preference (subpart 19.11),'' in its

place; and--

c. in (b)(2)(ii) by inserting after the word ``size'' the phrase

``or small disadvantaged business''.

PART 16--TYPES OF CONTRACTS

16.103 [Amended]-

20. Section 16.103 is amended in paragraph (d)(3) by removing the

words ``or labor surplus area concerns''.

16.505 [Amended]

21. Section 16.505 is amended in paragraphs (d)(4) and (d)(5)(ii)

by removing the phrase ``or labor surplus area''.

PART 17--SPECIAL CONTRACTING METHODS

17.104-1 [Amended]

22. Section 17.104-1 is amended--

a. in paragraph (a) by removing the phrase ``labor surplus area''

and inserting in its place ``small disadvantaged business'';--

b. in paragraph (b) by removing the phrase ``or labor surplus

area''; and--

c. in paragraph (b)(2) by removing ``(Partial labor surplus area

set-asides are only authorized for DOD activities at this time.)''.

PART 19--SMALL BUSINESS PROGRAMS

23. The title of Part 19 is revised to read as set forth above.

24. Section 19.000 is amended in paragraph (a)(3) by inserting

after the word ``small'' the phrase ``and small disadvantaged''; in

(a)(6) by removing the word ``and''; in (a)(7) by removing the period

at the end of the sentence and replacing it with ``; and''; and by

adding (a)(8) to read as follows:

19.000 Scope of part.

(a) * * *

(8) The evaluation preference for small disadvantaged business

concerns.

* * * * *

25. Section 19.001 is amended by--

a. adding, in alphabetical order, the definitions Labor surplus

area, Labor surplus area concern, Set-aside, and Women-owned small

business concern; and

b. revising the definition Small disadvantaged business concern to

read as follows:

19.001 Definitions.

* * * * *

Labor surplus area means a geographical area identified by the

Department of Labor in accordance with 20 CFR part 654, subpart A, as

an area of concentrated unemployment or underemployment or an area of

labor surplus.-

Labor surplus area concern means a concern that together with its

first-tier subcontractors will perform substantially in labor surplus

areas. Performance is substantially in labor surplus areas if the costs

incurred under the contract on account of manufacturing, production, or

performance of appropriate services in labor surplus areas exceed 50

percent of the contract price.

* * * * *

Set-aside means an acquisition procedure under which competition is

limited exclusively to small business or small disadvantaged business

concerns.

* * * * *

Small disadvantaged business concern means a small business concern

that is at least 51 percent unconditionally owned by one or more

individuals who are both socially and economically disadvantaged, or a

publicly owned business that has at least 51 percent of its stock

unconditionally owned by one or more socially and economically

disadvantaged individuals and that has its management and daily

business controlled by one or more such individuals. This term also

means a small business concern that is at least 51 percent

unconditionally owned by an economically disadvantaged Indian tribe or

Native Hawaiian Organization, or a publicly owned business that has at

least 51 percent of its stock unconditionally owned by one of these

entities, that has its management and daily business controlled by

members of an economically disadvantaged Indian tribe or Native

Hawaiian Organization, and that meets the requirements of 13 CFR part

124. The definition of small disadvantaged business concern is

different for DOD, NASA and Coast Guard; see agency regulations.

(a) Socially disadvantaged individuals means individuals who have

been subjected to racial or ethnic prejudice or cultural bias because

of their identity as a member of a group without regard to their

qualities as individuals. Individuals who certify that they are members

of named groups (Black Americans, Hispanic Americans, Native Americans,

Asian-Pacific Americans, Subcontinent-Asian Americans) are to be

considered socially and economically disadvantaged.

(1) Subcontinent Asian Americans means United States citizens whose

origins are in India, Pakistan, Bangladesh, Sri Lanka, Bhutan, or

Nepal.

(2) Asian Pacific Americans means United States citizens whose

origins are in Japan, China, the Philippines, Vietnam, Korea, Samoa,

Guam, the U.S. Trust Territory of the Pacific Islands (Republic of

Palau), the Northern Mariana Islands, Laos, Kampuchea (Cambodia),

Taiwan, Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei,

Republic of the Marshall Islands, or the Federated States of

Micronesia.

(3) Native Americans means American Indians, Eskimos, Aleuts, and

Native Hawaiians.

(b) Economically disadvantaged individual is defined as a socially

disadvantaged individual whose ability to compete in the free

enterprise system is impaired due to diminished opportunities to obtain

capital and credit as compared to others in the same line of business

who are not socially disadvantaged (see 13 CFR part 124).

(c) Native Hawaiian Organization means any community service

organization serving Native Hawaiians in, and chartered as a not-for-

profit organization by, the State of Hawaii, which is controlled by

Native Hawaiians, and whose business activities will principally

benefit such Native Hawaiians.

(d) Indian tribe means any Indian tribe, band, nation, or other

organized group or community of Indians, [[Page 2305]] including any

Alaska Native Corporation as defined in 13 CFR 124.100 which is

recognized as eligible for the special programs and services provided

by the U.S. to Indians because of their status as Indians, or which is

recognized as such by the State in which such tribe, band, nation,

group, or community resides.

Women-owned small business concern means a small business concern

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 whose management and daily

business operations are controlled by one or more women.

26. Section 19.102 is amended by removing paragraph (f)(3);

redesignating paragraphs (f)(4) through (f)(7) as (f)(3) through

(f)(6); in the first sentence of redesignated paragraph (f)(4)(i) by

removing the word ``domestic''; and revising redesignated paragraph

(f)(5) to read as follows:

19.102 Size standards.

* * * * *

(f) * * *-

(5) For a specific solicitation set-aside for small business under

19.503-3 or 8(a) under subpart 19.8, a contracting officer may request

a waiver of that part of the nonmanufacturer rule which requires that

the actual manufacturer or processor be a small business concern if no

known domestic small business manufacturers or processors can

reasonably be expected to offer a product meeting the requirements of

the solicitation.

* * * * *-

27. Section 19.201 is amended by revising paragraphs (a), (b),

(c)(9), and (d) to read as follows:

19.201 General policy.-

(a) It is the policy of the Government to place a fair proportion

of its acquisitions, including contracts and subcontracts for

subsystems, assemblies, components, and related services for major

systems, with small business concerns, small disadvantaged business

concerns, and women-owned small business concerns. Such concerns shall

also have the maximum practicable opportunity to participate as

subcontractors in the contracts awarded by any executive agency,

consistent with efficient contract performance. The Small Business

Administration (SBA) counsels and assists small business concerns and

assists contracting personnel to ensure that a fair proportion of

contracts for supplies and services is placed with small business.

(b) Heads of contracting activities are responsible for effectively

implementing the small business programs within their activities,

including achieving program goals. They are to ensure that contracting

and technical personnel maintain knowledge of small, small

disadvantaged and women-owned small business program requirements and

take all reasonable action to increase participation in their

activities' contracting processes by these businesses.

(c) * * *

(9) Make recommendations in accord with agency regulations as to

whether a particular acquisition should be awarded under subpart 19.5

as a set-aside, or under subpart 19.8 as a section 8(a) award.

(d) Small Business Specialists shall be appointed and act in accord

with agency regulations.

28. Section 19.202 is amended by revising the first sentence to

read as follows:

19.202 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 subpart 19.5

or 19.8. * * *

29. Section 19.202-3 is revised to read as follows:

19.202-3 Labor Surplus Area Priority.

Priority shall be given to awarding of contracts and the placement

of subcontracts to small business concerns which will perform

substantially in labor surplus areas. In the event of equal low bids

(see 14.407-6), awards shall be made first to small business concerns

which are also labor surplus area concerns, and second to small

business concerns which are not also labor surplus area concerns.

30. 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, small disadvantaged business or women-owned small

business (see the provision at 52.219-1, Small Business Program

Representations).

(b) Accurately measure the extent of participation by small, small

disadvantaged, and women-owned small businesses 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).-

31. Section 19.202-6 is amended by revising the introductory text

and paragraph (a) to read as follows:

19.202-6 Determination of fair market price.

Agencies shall determine the fair market price of small business

set-aside, small disadvantaged business set-aside, and 8(a) contracts

as follows:-

(a) For total small business set-asides, total small disadvantaged

business set-asides and partial small business set-aside contracts, the

fair market price shall be the price achieved in accordance with the

reasonable price guidelines in 15.805-2.

* * * * *-

32. Section 19.301 is amended by revising paragraphs (a), (b), (c),

and the first sentence of paragraph (d) to read as follows:

19.301 Representation by the offeror.

(a) To be eligible for award as a small or a small disadvantaged

business, an offeror must represent in good faith as to its status at

the time of written self certification. An offeror may represent that

it is a small business concern or a small disadvantaged business

concern in connection with a specific solicitation if it meets the

definitions applicable to the solicitation and has not been determined

by the Small Business Administration (SBA) to be other than a small or

small disadvantaged business.-

(b) The contracting officer shall accept an offerors representation

in a specific bid or proposal that it is a small or small disadvantaged

business unless (1) another offeror or interested party challenges the

concern's representation or (2) the contracting officer has a reason to

question the representation. Challenges of and questions concerning a

specific representation shall be referred to the SBA in accordance with

19.302.

(c) An offerors representation that it is a small or small

disadvantaged business is not binding on the SBA. If an offeror's

status is challenged, the SBA will evaluate the status of the concern

and make a determination, which will be binding on the contracting

officer, as to whether the offeror is a small or small disadvantaged

business. A concern cannot become eligible for a specific award by

taking action to meet the definition of a small business concern or

small disadvantaged business concern [[Page 2306]] after the SBA has

issued its determination.

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

business'', a ``small disadvantaged business'' or a ''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. * * *

33. Section 19.302 is redesignated as 19.302-1; in paragraphs

(d)(1), introductiry text, (f), (g)(1), and (h)(1)(ii) of newly

designated 19.302-1, remove the words ``business day'' or ``business

days'' and insert ``workday'' or ``workdays'' in their place; and new

19.302 heading and 19.302-2 are added to read as follows:

19.302 Protesting a small or small disadvantaged business

representation.

19.302-1 Protesting a small business representation.

* * * * *

19.302-2 Protesting a small disadvantaged business representation.

Any offeror, the contracting officer, the Small Business

Administration (SBA), or other interested party may protest a concern's

representation of disadvantaged status.

(a) An offeror may protest a concern's representation status by

filing a protest with the contracting officer. The protest must be

filed within the times specified in (FAR) 48 CFR 19.302-1(d)(1) and

must contain specific detailed evidence supporting the basis of

protest.

(b) The contracting officer or the SBA may protest a concern's

representation of disadvantaged status at any time. If a contracting

officer's protest is based on information provided by a party

ineligible to protest directly or ineligible to protest under the

timeliness standards, the contracting officer must be persuaded by the

evidence presented before adopting the grounds for protest as his or

her own. The SBA protests a concern's representation of disadvantaged

status by filing directly with its Office of Program Eligibility and

notifying the contracting officer.

(c) The contracting officer shall return untimely protests to the

protester. This includes protests filed before bid opening or

notification of apparent successful offeror.

(d) Upon receipt of a timely protest, the contracting officer shall

withhold award and forward the protest to the SBA Office of Program

Eligibility, Office of Minority Small Business and Capitol Ownership

Development, 409 3rd Street, SW., Washington, DC 20416. Send SBA

(1) The protest;

(2) The date the protest was received and a determination of

timeliness;-

(3) A copy of the protested concern's self-certification of

disadvantaged status; and-

(4) The date of bid opening or date on which notification of

apparent successful offeror was sent to unsuccessful offerors.-

(e) Do not withhold award when the contracting officer makes a

written determination that award must be made to protect the public

interest.

(f) The SBA Director, Office of Program Eligibility, will determine

the disadvantaged status of the challenged offeror and notify the

contracting officer, the challenged offeror, and the protester. Award

may be made on the basis of that determination. The determination is

final for purposes of the instant acquisition, unless (1) it is

appealed and (2) the contracting officer receives the appeal decision

before award.-

(g) If the contracting officer does not receive an SBA

determination within 15 working days after the SBA's receipt of the

protest, the contracting officer shall presume that the challenged

offeror is socially and economically disadvantaged. Do not use the

presumption as a basis for award without first inquiring as to when a

determination can be expected and waiting for the determination, unless

further delay in award would be disadvantageous to the Government.-

(h) An SBA determination may be appealed by (1) The interested

party whose protest has been denied; (2) The concern whose status was

protested; or (3) The contracting officer. The appeal must be filed

with the SBA's Associate Administrator for Minority Small Business and

Capital Ownership Development within five working days after receipt of

the determination. If the contracting officer receives the SBA's

decision of the appeal before award, the decision shall apply to the

instant acquisition. If the decision is received after award, it will

apply to future acquisitions.-

34. Section 19.303 is amended by revising paragraph (a) to read as

follows:

19.303 Determining product or service classifications.-

(a) The contracting officer shall determine the appropriate

standard industrial classification code and related small business size

standard and include them in solicitations above the micro-purchase

threshold in (FAR) 48 CFR 13.106.

* * * * *

35. Section 19.304 is revised to read as follows:

19.304 Solicitation provisions and clause.-

(a) 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.

(b) The contracting officer shall insert the clause at 52.219-01,

Priority for Labor Surplus Area Concerns, in solicitations and

contracts that exceed the simplified acquisition threshold in part 13

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.

19.401 [Amended]-

36. Section 19.401 is amended in paragraph (a) by removing the

phrase ``and small disadvantaged business''.-

37. Section 19.402 is amended by revising paragraph (c)(1)(ii) to

read as follows:

19.402 Small Business Administration procurement center

representatives.

* * * * *

(c) * * *

(1) * * *

(ii) new qualified small, small disadvantaged and women-owned small

business sources, and

* * * * *

38. Subpart 19.5 is revised to read as follows:

Subpart 19.5--Set-Asides for Small and Small Disadvantaged Businesses

Sec.

19.501 General.

19.502 Set-aside program order of precedence.

19.503 Setting aside acquisitions.

19.503-1 Requirements for setting aside acquisitions.

19.503-2 Total Small Disadvantaged Business (SDB) set-asides.

19.503-3 Total small business set-asides.

19.503-4 Partial small business set-asides.

19.503-5 Methods of conducting set-asides.

19.503-6 Insufficient causes for not setting aside an ---

acquisition. [[Page 2307]]

19.504 Setting aside a class of acquisitions.

19.505 Rejecting Small Business Administration ---recommendations.

19.506 Withdrawing or modifying set-asides.

19.507 Automatic dissolution of a set-aside.

19.508 Solicitation provisions and contract clauses.

Sec. 19.501 General.-

(a) The purpose of set-asides is to award certain acquisitions

exclusively to small business or small disadvantaged business concerns.

Under a ``small business set-aside'', competition is limited to small

business concerns. Under a ``small disadvantaged business set-aside'',

competition is limited to small disadvantaged business concerns. A

small business set-aside of a single acquisition or a class of

acquisitions may be total or partial.-

(b) The determination to make a set-aside may be unilateral or

joint. A unilateral determination is one which is made by the

contracting officer. A joint determination is one which is recommended

by the Small Business Administration (SBA) procurement center

representative and concurred in by the contracting officer.-

(c) The contracting officer shall review acquisitions to determine

if they can be set aside, giving consideration to the recommendations

of agency personnel having cognizance of the agencys small business

programs and documenting why a set-aside is inappropriate when the

acquisition is not set aside. If the acquisition is set aside 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. Automated contracting systems are not exempt from the

requirements of this subpart.-

(d) At the request of an SBA procurement center representative, the

contracting officer shall make available for review at the contracting

office (to the extent of the SBA representatives security clearance)

all proposed acquisitions in excess of the micro-purchase limitation in

13.106 that have not been unilaterally set aside.-

(e) To the extent practicable, unilateral determinations initiated

by a contracting officer shall be used as the basis for set-asides

rather than joint determinations by an SBA procurement center

representative and a contracting officer.-

(f) All solicitations involving set-asides must specify the

applicable small business size standard and product classification (see

19.303).-

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

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

fair market price.-

(h) Section 305 of Public Law 103-403 authorizes public and private

organizations for the handicapped to participate for fiscal year 1995

in acquisitions set-aside for small business concerns. Status as a

small business concern is not accorded a public or private organization

for the handicapped for the purposes of other preferential provisions

available to small business concerns; e.g., eligibility for

certificates of competency or higher progress payment rates.-

(1) The contracting officer shall rely on the offeror's self-

certification in a specific bid or proposal that it is a public or

private organization for the handicapped unless another offeror or

interested party files a protest. An interested party may file a

protest challenging an offeror's self-certification by forwarding the

protest to the contracting officer by close of business on the fifth

working day after bid opening or receipt of the 15.1001(b)(2) notice

from the contracting officer of the apparently successful offeror. Upon

receipt of any protest, whether timely or untimely, the contracting

officer shall promptly forward the protest and its supporting

documentation directly to the Associate Administrator for procurement

Assistance, Small Business Administration. Upon receipt of a protest,

the SBA will notify the contracting officer and the protester of the

date it was received, and that the status of the public or private

organization for the handicapped being challenged is under

consideration by the SBA. Within 10 working days after receiving a

protest, the SBA will determine the eligibility of the public or

private organization for the handicapped and notify the contracting

officer, the protester, and the challenged offeror of its decision by

certified mail, return receipt requested. The determination of the

Associate Administrator for Procurement Assistance, SBA, is final.

Award will be made based on this determination. After receiving a

protest involving the status of a public or private organization for

the handicapped, the contracting officer shall not award the contract

until (i) the SBA has made a status determination or (ii) 10 working

days have expired since SBA's receipt of a protest, whichever occurs

first. However, award shall not be withheld when the contracting

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

public interest.-

(2) Any small business offeror which experiences or is likely to

experience severe economic injury as a result of award to a public or

private organization for the handicapped may file an appeal of the

award with the contracting officer. The appeal must be received by

close of business on the tenth working day after bid opening or receipt

of the 15.1001(b)(2) notice from the contracting officer of the

apparently successful offeror. Upon receipt of any appeal, whether

timely or untimely, or whether received before or after award, the

contracting officer shall forward the appeal and supporting

documentation directly to the Associate Administrator for Procurement

Assistance, Small Business Administration, whose decision shall be

final. The contracting officer should, when practical, withhold award

until expiration of the 10-day appeal period, or; when an appeal is

filed, withhold award until the contracting officer receives the SBA

determination of appeal, unless delay would be disadvantageous to the

Government. The SBA shall notify the contracting officer of the SBA

determination and advise the agency or department to take such action

as may be appropriate to alleviate economic injury sustained or likely

to be sustained by the concern.

19.502 Set-aside program order of precedence.-

(a) In carrying out set-aside programs, contracting officers shall

award contracts in the following order of precedence:-

(1) A total set-aside for small disadvantaged business concerns.

(2) A total set-aside for small business concerns.

(3) A partial set-aside for small business concerns.

(b) Set-aside priorities of the Department of Defense, the National

Aeronautics and Space Administration, and the Coast Guard are set forth

in the respective agency FAR Supplements.

19.503 Setting aside acquisitions.

19.503-1 Requirements for setting aside acquisitions.

Using the order of precedence in 19.502, the contracting officer

shall set aside an individual acquisition or class of acquisitions when

it is determined to be in the interest of (a) maintaining or mobilizing

the Nations full productive capacity, (b) war or national defense

programs, or (c) assuring that a fair proportion of Government

contracts in each industry category is placed with small business

concerns, and when the circumstances described in 19.503-2, 19.503-3,

or 19.503-4 exist. This requirement does not affect the responsibility

of agencies to make purchases from required sources of

[[Page 2308]] supply such as Federal Prison Industries, Industries for

People who are Blind or Severely Disabled, and multiple-award Federal

Supply Schedule contracts.

19.503-2 Total Small Disadvantaged Business (SDB) set-asides.

(a) The contracting officer shall set aside any acquisition over

the micro-purchase threshold for small disadvantaged business

participation when there is a reasonable expectation that--

(1) Offers will be obtained from at least two responsible SDB

concerns offering the products of different small disadvantaged

business (but see paragraph (c) of this subsection); and

(2) Awards will be made at fair market prices unless otherwise

provided by law.

(b) The contracting officer shall not set aside acquisitions for

small disadvantaged business concerns when:

(1) The supply or service has been successfully acquired as a small

business set aside;

(2) The acquisition is reserved for the 8(a) program;

(3) The Small Business Administration has determined that no small

business manufacturer exists (see 19.102(f)(4); or

(4) As otherwise determined by the Agency Head or designee.

(c) For industries where the contracting officer finds that there

are no small disadvantaged business manufacturers, the contracting

officer may authorize the small disadvantaged business regular dealers

to provide the product of any small business concern.

(d) The Agency head or designee is authorized to determine whether

use of small disadvantaged business set-asides has caused a particular

industry category to bear a disproportionate share of the contracts

awarded by a particular contracting activity to achieve its small

disadvantaged business goal. Upon making a determination that a

particular industry is bearing a disproportionate share, the Agency

Head or designee may limit the use of small disadvantaged business set-

asides in the affected industry category, at the contracting activity.

This limitation shall not apply to solicitations that already have been

publicized as small disadvantaged business set-asides. Requests for

determinations shall be forwarded through agency channels to the Agency

head or designee and include--

(1) The standard industrial classification (SIC) code(s) affected;

(2) Supporting information to justify the request, including

dollars and percentages by the contracting activity, under the affected

SIC code(s) for the previous two fiscal years and current fiscal year

to date for--

(i) Total awards;

(ii) Total awards to small businesses;

(iii) Total awards to small disadvantaged businesses; and

(iv) Awards to small disadvantaged businesses under small

disadvantaged business set-asides.

(e) Small disadvantaged business set-aside requirements and

procedures for DOD, NASA and Coast Guard are different and are set

forth in agency supplements.

19.503-3 Total small business set-asides.

(a) Except as provided in paragraph (b), each acquisition of

supplies or services that has an anticipated dollar value exceeding the

micro-purchase threshold in 13.106 but not over $100,000, is

automatically reserved exclusively for small business concerns and

shall be set-aside. This requirement does not preclude the award of a

contract with a value not greater than $100,000 under 19.8, Contracting

with the Small Business Administration; 19.1006(c), emerging small

business set-asides; or 19.503-2, as a small disadvantaged business

set-aside.

(b) This requirement does not apply to acquisitions over $25,000

during the period when set-asides cannot be considered for the four

designated industry groups (see 19.1006(b)).

(c) The contracting officer shall set aside any acquisition over

$100,000 for small business participation when there is a reasonable

expectation that (1) offers will be obtained from at least two

responsible small business concerns offering the products of different

small business concerns (but see paragraph (e) of this section); and

(2) awards will be made at fair market prices. Total set-asides shall

not be made unless such a reasonable expectation exists (but see

19.503-4 as to partial set-asides). Although past acquisition history

of the item or similar items is always important, it is not the only

factor to be considered in determining whether a reasonable expectation

exists. In making R&D small business set-asides, there must also be a

reasonable expectation of obtaining from small businesses the best

scientific and technological sources consistent with the demands of the

proposed acquisition for the best mix of cost, performances, and

schedules.-

(d) Acquisitions shall not be totally set-aside for small business

concerns when (1) the supply or service has been successfully acquired

as a small disadvantaged business set-aside; or (2) the acquisition is

reserved under the 8(a) program.

(e) In industries where the SBA finds that there are no small

business manufacturers, it may waive the nonmanufacturers rule for

regular dealers (see 19.102(f)(4)). This would permit small business

regular dealers to provide any firm's product. In these cases, the

contracting officer's determination in paragraph (c)(1) of this

subsection will be based on offers from at least two responsible small

business regular dealers offering the products of different concerns.

19.503-4 Partial small business set-asides.

(a) The contracting officer shall set aside a portion of an

acquisition, except for construction, for exclusive small business

participation when--

(1) A total small business or small disadvantaged business set-

aside is not appropriate;

(2) The requirement is severable into two or more economic

production runs or reasonable lots;

(3) One or more small business concerns are expected to have the

technical competence and productive capacity to satisfy the set-aside

portion of the requirement at a fair market price;

(4) The acquisition is not subject to simplified acquisition

procedures; and

(5) A partial set-aside shall not be made if there is a reasonable

expectation that only two concerns (one large and one small) with

capability will respond with offers unless authorized by the head of a

contracting activity on a case-by-case basis. Similarly, a class of

acquisitions, not including construction, may be partially set aside.

Under certain specified conditions, partial set-asides may be used in

conjunction with multiyear contracting procedures.

(b) When the contracting officer determines that a portion of an

acquisition is to be set aside, the requirement shall be divided into a

set-aside portion and a non-set-aside portion, each of which shall (1)

be an economic production run or reasonable lot and (2) have terms and

a delivery schedule comparable to the other. When practicable, the set-

aside portion should make maximum use of small business capacity.-

(c)(1) The contracting officer shall award the non-set-aside

portion using normal contracting procedures.-

(2)(i) After all awards have been made on the non-set-aside

portion, the contracting officer shall negotiate with eligible concerns

on the set-aside portion, as provided in the solicitation, and make

award. Negotiations shall be conducted only with those offerors who

have submitted responsive offers on the non-set-aside portion.

Negotiations shall [[Page 2309]] be conducted with small business

concerns in the order of priority as indicated in the solicitation (but

see paragraph (c)(2)(ii) of this section). The set-aside portion shall

be awarded as provided in the solicitation. An offeror entitled to

receive the award for quantities of an item under the non-set-aside

portion and who accepts the award of additional quantities under the

set-aside portion shall not be requested to accept a lower price

because of the increased quantities of the award, nor shall negotiation

be conducted with a view to obtaining such a lower price based solely

upon receipt of award of both portions of the acquisition. This does

not prevent acceptance by the contracting officer of voluntary

reductions in the price from the low eligible offeror before award,

acceptance of voluntary refunds, or the change of prices after award by

negotiation of a contract modification.-

(ii) If equal low offers are received on the non-set-aside portion

from concerns eligible for the set-aside portion, the concern that is

awarded the non-set-aside part of the acquisition shall have first

priority with respect to negotiations for the set-aside.

19.503-5 Methods of conducting set-asides.-

Total set-asides may be conducted by using simplified acquisition

procedures (see part 13), sealed bids (see part 14), competitive

proposals (see part 15), or procedures for acquisition of commercial

items (see part 12). Partial small business set-asides may be conducted

using sealed bids (see part 14), competitive proposals (see part 15),

or procedures for acquisition of commercial items (see part 12).

19.503-6 Insufficient causes for not setting aside an acquisition.-

None of the following is, in itself, sufficient cause for not

setting aside an acquisition:-

(a) A large percentage of previous contracts for the required

item(s) has been placed with small business concerns.-

(b) The item is on an established planning list under the

Industrial Readiness Planning Program. However, a total set-aside shall

not be made when the list contains a large business Planned Emergency

Producer of the item(s) who has conveyed a desire to supply some or all

of the required items.-

(c) The item is on a Qualified Products List. However, a total set-

aside shall not be made if the list contains the products of large

businesses unless none of the large businesses desire to participate in

the acquisition.-

(d) A period of less than 30 days is available for receipt of

offers.-

(e) The contract is classified.-

(f) Small business concerns are already receiving a fair proportion

of the agency's contracts for supplies and services.-

(g) A class set-aside of the item or service has been made by

another contracting activity.-

(h) A ``brand name or equal'' product description will be used in

the solicitation.

19.504 Setting aside a class of acquisitions.-

(a) A class of acquisitions of selected products or services, or a

portion of the acquisitions, may be set aside for exclusive

participation by small business concerns if individual acquisitions in

the class will meet the criteria in 19.503-1, 19.503-3, or 19.503-4.

The determination to make a class set-aside shall not depend on the

existence of a current acquisition if future acquisitions can be

clearly foreseen.-

(b) The determination to set aside a class of acquisitions may be

either unilateral or joint.-

(c) Each class small business set-aside determination shall be in

writing and must---

(1) Specifically identify the product(s) and service(s) it covers;-

(2) Provide that the set-aside does not apply to any acquisition of

$100,000 or less;

(3) Provide that the set-aside applies only to the (named)

contracting office(s) making the determination; -

(4) Provide that the set-aside does not apply to any individual

acquisition if the requirement is not severable into two or more

economic production runs or reasonable lots, in the case of a partial

class set-aside; and-

(5) Provide that the procurement was not previously set aside for

small disadvantaged business by the (named) contracting office(s).-

(d) The contracting officer shall review each individual

acquisition arising under a class set-aside to identify any changes in

the magnitude of requirements, specifications, delivery requirements,

or competitive market conditions that have occurred since the initial

approval of the class set-aside. If there are any changes of such a

material nature as to result in probable payment of more than a fair

market price by the Government or in a change in the capability of

small business concerns to satisfy the requirements, the contracting

officer may withdraw or modify (see 19.506(a)) the unilateral or joint

set-aside by giving written notice to the SBA procurement center

representative (if one is assigned), stating the reasons.

19.505 Rejecting Small Business Administration recommendations.-

(a) If the contracting officer rejects a recommendation of the SBA

procurement center representative or breakout procurement center

representative, written notice shall be furnished to the appropriate

SBA center representative within 5 workdays of the contracting

officer's receipt of the recommendation.-

(b) The SBA procurement center representative may appeal the

contracting officer's rejection to the head of the contracting activity

(or designee) within 2 workdays after receiving the notice. The head of

the contracting activity (or designee) shall render a decision in

writing, and provide it to the SBA representative within 7 workdays.

Pending issuing the decision to the SBA procurement center

representative, the contracting officer shall suspend action on the

acquisition.-

(c) If the head of the contracting activity agrees that the

contracting officer's rejection was appropriate, the SBA procurement

center representative may--

(1) Within 1 workday, request the contracting officer to suspend

action on the acquisition until the SBA Administrator appeals to the

agency head (see paragraph (f) of this section); and-

(2) The SBA shall be allowed 15 workdays after making such a

written request, within which the Administrator of SBA (i) may appeal

to the Secretary of the Department concerned, and (ii) shall notify the

contracting officer whether the further appeal has, in fact, been

taken. If notification is not received by the contracting officer

within the 15-day period, it shall be deemed that the SBA request to

suspend contracting action has been withdrawn and that an appeal to the

Secretary was not taken.-

(d) When the contracting officer has been notified within the 15-

day period that the SBA has appealed to the agency head, the head of

the contracting activity (or designee) shall forward justification for

its decision to the agency head. The contracting officer shall suspend

contract action until notification is received that the SBA appeal has

been settled.-

(e) The agency head shall reply to the SBA within 30 workdays after

receiving the appeal. The decision of the agency head shall be final.-

(f) A request to suspend action on an acquisition need not be

honored if the contracting officer determines that

[[Page 2310]] proceeding to contract award and performance is in the

public interest. The contracting officer shall include in the contract

file a statement of the facts justifying the determination, and shall

promptly notify the SBA representative of the determination and provide

a copy of the justification.-

(g) Procedures for rejecting SDB set-aside recommendations are

different for DOD, NASA, and Coast Guard and are set forth in agency

supplements.

19.506 Withdrawing or modifying set-asides.-

(a) If, before award of a contract involving a 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 set-aside determination whether it

was unilateral or joint. The contracting officer shall initiate a

withdrawal of an individual 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

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

(b) If the agency small business specialist does not agree to a

withdrawal or modification, the case shall be promptly referred to the

SBA representative (if one is assigned) for review. If an SBA

representative is not assigned, disagreements between the agency small

business specialist and the contracting officer shall be resolved using

agency procedures. However, the procedures are not applicable to

automatic dissolutions of set-asides (see 19.507) or dissolution of

set-asides under $100,000. -

(c) The contracting officer shall prepare a written statement

supporting any withdrawal or modification of a set-aside and include it

in the contract file.

19.507 Automatic dissolution of a set-aside.-

(a) If a set-aside acquisition or portion of an acquisition is not

awarded, the unilateral or joint determination to set the acquisition

aside is automatically dissolved for the unawarded portion of the set-

aside. The required supplies and/or services for which no award was

made may be acquired by sealed bidding or negotiation, as appropriate.-

(b) Before issuing a solicitation for the items called for in a

set-aside that was dissolved, the contracting officer shall ensure that

the delivery schedule is realistic in the light of all relevant

factors, including the capabilities of small or small disadvantaged

business concerns.

19.508 Solicitation provisions and contract clauses.-

(a)-(b) [Reserved] -

(c) The contracting officer shall insert the clause at 52.219-6,

Notice of Total Small Business Set-Aside, in solicitations and

contracts involving total small business set-asides (see 19.503-3). The

clause at 52.219-6 with its Alternate I will be used when the

acquisition is for a product in a class for which the Small Business

Administration has determined that there are not small business

manufacturers in the Federal market in accordance with 19.503-3(e).-

(d) The contracting officer shall insert the clause at 52.219-7,

Notice of Partial Small Business Set-Aside, in solicitations and

contracts involving partial small business set-asides (see 19.503-4).

The clause at 52.219-7 with its Alternate I will be used when the

acquisition is for a product in a class for which the Small Business

Administration has determined that there are not small business

manufacturers in the Federal market in accordance with 19.503-3(e).-

(e) The contracting officer shall insert the clause at 52.219-14,

Limitations on Subcontracting, in solicitations and contracts expected

to exceed $100,000 for supplies, services, and construction, if any

portion of the requirement is to be set aside for small or small

disadvantaged business, or if the contract is to be awarded under

subpart 19.8.-

(f) The contracting officer shall insert the clause at 52.219-15,

Notice of Participation by Organizations for the Handicapped, in

solicitations and contracts issued through September 30, 1995,

involving total or partial small business set-asides.-

(g) The contracting officer shall insert the clause at 52.219-00,

Notice of Total Small Disadvantaged Business Set-Aside, in

solicitations and contracts involving total small disadvantaged

business set-asides (see 19.503-2). The clause at 52.219-00 with its

Alternate I will be used when the acquisition is for a product in a

class for which the contracting officer has determined that there are

not small disadvantaged business manufacturers or processors in

accordance with 19.503-2(c).

Subpart 19.7--Subcontracting With Small Business, Small

Disadvantaged Business and Women-Owned Small Business Concerns

39. The title of Subpart 19.7 is revised to read as set forth

above.-

40. Section 19.702 is amended by revising the introductory text and

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

19.702 Statutory requirements.-

Any contractor receiving a contract for more than the simplified

acquisition threshold in 13.000 shall agree in the contract that small

business concerns, small disadvantaged business concerns 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 concerns, small disadvantaged business concerns and

women-owned small business concerns.

* * * * *

(b)* * *

(4) For modifications to contracts that do not contain the clause

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

Small Business Concerns (or equivalent prior clauses).

* * * * *

41. Section 19.703 is amended by revising paragraph (a)

introductory text, (a)(1), and (b) 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 represent itself as a small business concern, small disadvantaged

business concern or a woman-owned small business concern.

(1) To represent itself as a small business concern or a 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. 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 disadvantaged

status representation shall be filed in accordance with 13 CFR 124.601

through 124.610. Protests challenging a subcontractor's status as a

women-owned small business concern shall be filed in accordance with

Small Business Administration procedures. [[Page 2311]]

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

(a)(3), (a)(4), (a)(6), and (b) to read as follows:

19.704 Subcontracting plan requirements.

(a)* * *

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

small disadvantaged business concerns and women-owned small business

concerns as subcontractors;

* * * * *

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

that small business concerns, small disadvantaged business concerns and

women-owned small business concerns will have an equitable opportunity

to compete for subcontracts;

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

8, Utilization of Small, Small Disadvantaged and Women-owned Small

Business Concerns (see 19.708(b)), 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 similar to the plan required by the clause at 52.219-9,

Small, Small Disadvantaged and Women-Owned Small Business

Subcontracting Plan (see 19.708(c));

* * * * *

(6) A recitation of the types of records the offeror will maintain

to demonstrate 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, small

disadvantaged 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 subcontracting plan which contains all the elements required by

the clause at 52.219-9, Small, Small Disadvantaged and Women-Owned

Small Business Subcontracting Plan, except goals. Master plans shall be

effective for a 1-year period after approval by the contracting

officer; however, a master plan when incorporated in an individual plan

shall apply to that contract throughout the life of the contract.

* * * * *

19.705-1 [Amended].

43. Section 19.705-1 is amended in the first sentence by removing

the phrase ``for Small and Small Disadvantaged Business Concerns''.

44. Section 19.705-4 is amended by revising the last sentences of

paragraphs (b) and (c); the first sentence of paragraphs (d)(1) and

(d)(5); and revising (d)(4) 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, Small Disadvantaged and Women-owned

Small Business Concerns, the contracting officer may find the bidder

nonresponsible.

(c) * * * An incentive subcontracting clause (see 52.219-10,

Incentive Subcontracting Program), may be used when additional and

unique contract effort, such as providing technical assistance, could

significantly increase subcontract awards to small, small disadvantaged

or women-owned small businesses.

(d) * * * (1) Evaluate the offeror's past performance in awarding

subcontracts for the same or similar products or services to small,

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

* * * * *

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

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

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

disadvantaged 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.

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

potential small, small disadvantaged and women-owned small business

subcontractors, as well as any specific concerns known to be potential

subcontractors. * * *

* * * * *

19.705-7 [Amended].

45. Section 19.705-7 is amended--

a. in the first sentence of paragraph (a) by removing the word

``and'' the first time it is used and replacing it with a comma; and

adding the phrase ``and women-owned small'' after the word

``disadvantaged'';

b. in the third sentence of paragraph (d) by removing the words

``business and'' and replacing them with a comma; and adding the phrase

``and women-owned small'' after the word ''disadvantaged'';

c. in paragraph (f) by removing the words ``Business and'' and

replacing them with a comma; and adding the phrase ``and Women-Owned

Small'' after the word ``Disadvantaged''.

46. Section 19.706 is amended by revising paragraphs (a)(2) and

(a)(3) to read as follows:

19.706 Responsibilities of the cognizant administrative contracting

officer.

(a) * * *

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

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

disadvantaged and women-owned small business concerns;

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

participation of small, small disadvantaged and women-owned small

business concerns are in accordance with its subcontracting plan;

* * * * *

47. Section 19.708 is amended by revising paragraph (a)

introductory text, (b) and (c) to read as follows:

19.708 Solicitation provisions and contract clauses.

(a) The contracting officer shall insert the clause at 52.219-8,

Utilization of Small, Small Disadvantaged and Women-Owned Small

Business Concerns, in solicitations and contracts when the contract

amount is expected to be over the simplified acquisition threshold in

13.000 unless--

* * * * *

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

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

and Women-Owned Small Business Subcontracting Plan, in solicitations

and contracts that (i) offer subcontracting possibilities, (ii) are

expected to exceed $500,000 ($1,000,000 for construction of any public

facility), and (iii) are required to include the clause at 52.219-8,

Utilization of Small, Small Disadvantaged and Women-Owned Small

Business Concerns, unless the acquisition has been 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.

(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, Small Disadvantaged

and Women-Owned Small Business Subcontracting Plan, or its Alternate

I.-

(c)(1) The contracting officer may, when contracting by

negotiation, insert in solicitations and contracts a clause

substantially the same as the clause at 52.219-10, Incentive

Subcontracting [[Page 2312]] Program, when a subcontracting plan is

required (see 19.702(a)(1)), and inclusion of a monetary incentive is,

in the judgment of the contracting officer, necessary to increase

subcontracting opportunities for small, small disadvantaged and women-

owned small business concerns, and is commensurate with the efficient

and economical performance of the contract; unless the conditions in

paragraph (c)(3) of this section are applicable. The contracting

officer may vary the terms of the clause as specified in paragraph

(c)(2) of this section.

(2) Various approaches may be used in the development of small,

small disadvantaged and women-owned small business concerns'

subcontracting incentives. They can take many forms, from a fully

quantified schedule of payments based on actual subcontract achievement

to an award-fee approach employing subjective evaluation criteria (see

paragraph (c)(3) of this section). The incentive should not reward the

contractor for results other than those that are attributable to the

contractor's efforts under the incentive subcontracting program.

(3) As specified in paragraph (c)(2) of this section, the

contracting officer may include small, small disadvantaged and women-

owned small business subcontracting as one of the factors to be

considered in determining the award-fee in a cost-plus-award-fee

contract; in such cases, however, the contracting officer shall not use

the clause at 52.219-10, Incentive Subcontracting Program.

Subpart 19.9--[Removed and Reserved]

48. Subpart 19.9, consisting of sections 19.901 and 19.902, is

removed and reserved.

49. Section 19.1006 is amended by revising paragraph (b)(1); in

paragraph (c)(1)(i) by removing ``13.105 or''; and in paragraph (c)(3)

by removing ``small purchase'' and inserting in its place ``simplified

acquisition''. The revised text reads as follows:

19.1006 Procedures.

* * * * *

(b) * * *

(1) Solicitations for acquisitions in any of the four designated

industry groups issued from January 1, 1989, through September 30,

1996, that have an anticipated dollar value greater than $25,000 shall

not be considered for small business set-asides under subpart 19.503-3

or 19.503-4 (however, see paragraphs (b)(2) and (c)(1) of this

section). Acquisitions in the designated industry groups shall continue

to be considered for placement under the 8(a) program (see subpart

19.8) or as small disadvantaged business set-asides (see 19.503-2).

During the period when set-asides cannot be considered for acquisitions

in the four designated industry groups, the evaluation preference at

19.11 shall not be used.

* * * * *

50. Subpart 19.11 is added to read as follows:

Subpart 19.11--Evaluation Preference for Small Disadvantaged Business

Concerns

Sec.

19.1100 Policy.

19.1101 Applicability.

19.1102 Procedures.

19.1103 Contract clause.

19.1100 Policy.

Offers from small disadvantaged business concerns shall be given an

evaluation preference in accordance with this subpart. Evaluation

preference for small disadvantaged business concerns is different for

DOD, NASA and Coast Guard, see agency supplements.

19.1101 Applicability.

The evaluation preference shall be used in unrestricted,

competitive acquisitions where award is based on price and price-

related factors. The preference may be used at the discretion of the

source selection authority in other competitive acquisitions. Do not

use the evaluation preference in acquisitions which are set-aside under

subpart 19.5.

19.1102 Procedures.

(a) Give offers from small disadvantaged business concerns a

preference in evaluation by adding a factor of 10 percent (or a

different percentage not exceeding 10 percent, if required by agency

regulations) to the price of all offers, except--

(1) Offers from small disadvantaged business concerns which have

not waived the evaluation preference;

(2) Otherwise successful offers of eligible products under the

Trade Agreements Act when the acquisition equals or exceeds the dollar

threshold in (FAR) 48 CFR 25.402; or

(3) Offers where application of the factor would be inconsistent

with a Memorandum of Understanding or other international agreement

with a foreign government.

(b) Apply the factor on a line item by line item basis or apply it

to any group on which award may be made. Add other evaluation factors

such as transportation costs or rent-free use of Government facilities

to the offers before applying the 10 percent factor.

(c) Do not evaluate offers using the preference when it would cause

award to be made at a price which exceeds fair market price by more

than 10 percent.

19.1103 Contract clause.

-Use the clause at 52.219.02, Notice of Evaluation Preference for

Small Disadvantaged Business Concerns, in solicitations and contracts

involving unrestricted, competitive acquisitions where award is based

on price and price related factors. Use the clause with its Alternate I

when the contracting officer determines that there are not small

disadvantaged business manufacturers that can meet the requirements of

the solicitation.

PART 20--[RESERVED]

51. Part 20 is removed and reserved.

PART 25--FOREIGN ACQUISITION

25.105 [Amended]

52. Section 25.105 is amended in paragraph (a)(1) by removing the

phrase ``that is not a labor surplus area concern''; and in paragraph

(a)(2) by removing the phrase ``or any labor surplus area concern''.

25.404 [Reserved]

53. Section 25.404 is removed and reserved.

25.1002 [Amended]

54. Section 25.1002 is amended in paragraph (b)(2) by removing the

text following the word ``small'' and inserting in its place ``or small

disadvantaged business set asides under 19.503-2 and 19.503-3.''

PART 26--OTHER SOCIOECONOMIC PROGRAMS

26.104 [Amended]

55. Section 26.104 is amended in paragraphs (a) and (b) by removing

``Business and'' and inserting a comma in its place; and inserting

after the word ``Disadvantaged'' the phrase ``and Women-Owned Small''.

PART 42--CONTRACT ADMINISTRATION

56. Section 42.302 is amended by revising paragraphs (a)(52)

through (a)(55) to read as follows:

42.302 Contract administration functions.

* * * * *

(a) * * *

(52) Review, evaluate, and approve plant or division-wide small,

small disadvantaged and women-owned small business master

subcontracting plans.

(53) Obtain the contractor's currently approved company- or

division-wide [[Page 2313]] plans for small, small disadvantaged and

women-owned small business subcontracting for its commercial products,

or, if there is no currently approved plan, assist the contracting

officer in evaluating the plans for those products.

(54) Assist the contracting officer, upon request, in evaluating an

offeror's proposed small, small disadvantaged and women-owned small

business subcontracting plans, including documentation of compliance

with similar plans under prior contracts.

(55) By periodic surveillance, ensure the contractor's compliance

with small, small disadvantaged and women-owned small business

subcontracting plans and any labor surplus area contractual

requirements; maintain documentation of the contractor's performance

under and compliance with these plans and requirements; and provide

advice and assistance to the firms involved, as appropriate.

* * * * *

42.501 [Amended]

57. Section 42.501 is amended in paragraph (b) by removing the word

``and'' and inserting a comma in its place; and inserting after the

word ``disadvantaged'' the phrase ``and women-owned small''.

58. Section 42.502 is amended by revising paragraphs (i) and (j) to

read as follows:

42.502 Selecting contracts for postaward orientation.

* * * * *

(i) Contractor's status, if any, as a small business, small

disadvantaged or women-owned small business concern;

(j) Contractor's performance history with small, small

disadvantaged and women-owned small business subcontracting programs;

* * * * *

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES

44.202-2 [Amended]

59. Section 44.202-2 is amended in paragraph (a)(4) by removing the

phrase ``labor surplus area or''; removing the words ``business

concerns and'' and inserting a comma in its place; and inserting after

the word ``disadvantaged'' the phrase ``and women-owned small''.

44.303 [Amended]

59. Section 44.303 is amended in paragraph (e) by removing the

phrase ``labor surplus area concerns and''; and inserting after the

word ``disadvantaged'' the phrase ``and women-owned small''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

60. Section 52.204-00 is added to read as follows:

52.204-00 Women-Owned Business.

As prescribed in 4.603, insert the following provision:

Women-Owned Business (Date)

(a) Representation. The offeror represents that it {time} is,

{time} is not a women-owned business concern.

(b) Definition. ``Women-owned business concern,'' as used in

this provision, means a concern 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 whose management and daily business operations are

controlled by one or more women.

52.216-21 [Amended]

61. Section 52.216-21 is amended in the introductory text of

Alternates III and IV by removing the phrase ``or labor surplus area''.

62. Section 52.219-1 is revised to read as follows:

52.219-1 Small Business Program Representations.

As prescribed in 19.304(a), insert the following provision:

Small Business Program Representations (Date)

-(a)(1) The standard industrial classification (SIC) code for

this acquisition is ________________ (insert SIC code).

(2) The small business size standard is ________________ (insert

size standard).

(3) The small business size standard for a concern which submits

an offer in its own name, other than on a construction or service

contract, but which proposes to furnish a product which it did not

itself manufacture, is 500 employees.

(b) Representations. (1) The offeror represents and certifies as

part of its offer that it {time} is, {time} is not a small

business concern.

(2) The offeror represents and certifies as part of its offer

that it {time} is, {time} is not a small disadvantaged business

concern.

(3) The offeror represents as part of its offer that it {time}

is, {time} is not a women-owned small business concern.

(c) Definitions. Small business concern, as used in this

provision, means a concern, including its affiliates, that is

independently owned and operated, not dominant in the field of

operation in which it is bidding on Government contracts, and

qualified as a small business under the criteria in 13 CFR part 121

and size standard above.

Small disadvantaged business concern, as used in this provision,

means a small business concern that (1) is at least 51 percent

unconditionally owned by one or more individuals who are both

socially and economically disadvantaged, or a publicly owned

business having at least 51 percent of its stock unconditionally

owned by one or more socially and economically disadvantaged

individuals and (2) has its management and daily business controlled

by one or more such individuals. This term also means a small

business concern that is at least 51 percent unconditionally owned

by an economically disadvantaged Indian tribe or Native Hawaiian

Organization, or a publicly owned business having at least 51

percent of its stock unconditionally owned by one or more of these

entities which has its management and daily business controlled by

members of an economically disadvantaged Indian tribe or Native

Hawaiian Organization, and which meets the requirements of 13 CFR

part 124.

Women-owned small business concern, as used in this provision,

means a small business concern at least 51 percent owned by a woman

or women or, in the case of any publicly owned business, at least 51

percent of the stock is owned by one or more women; and whose

management and daily business operations are controlled by one or

more women.

(d) Notice. Under 15 U.S.C. 645(d), any person who misrepresents

a firm's status as a small or small disadvantaged business concern

in order to obtain a contract to be awarded under the preference

programs established pursuant to sections 8(a), 8(d), 9, or 15 of

the Small Business Act or any other provision of Federal law that

specifically references section 8(d) for a definition of program

eligibility, shall--

(1) Be punished by imposition of fine, imprisonment, or both;

(2) Be subject to administrative remedies, including suspension

and debarment; and

(3) Be ineligible for participation in programs conducted under

the authority of the Act.

(End of provision)

52.219-2 thru 52.219-5 [Reserved]

63. Sections 52.219-2 through 52.219-5 are removed and reserved.-

64. Section 52.219-6 is amended by revising Alternate I to read as

follows:

52.219-6 Notice of Total Small Business Set-Aside.

* * * * *-

Alternate I (DATE). When the acquisition is for a product in a

class for which the Small Business Administration has determined

that there are no small business manufacturers or processors in the

Federal market in accordance with 19.503-3(e), delete paragraph (c).

65. Section 52.219-7 is amended by revising the date of the clause;

in paragraph (a) by removing the definitions Labor surplus area, Labor

surplus area concern, and Perform substantially in labor surplus areas;

and by revising paragraphs (b)(4) and (c) and Alternate I to read as

follows:

52.219-7 Notice of Partial Small Business Set-Aside.

* * * * * [[Page 2314]]

Notice of Partial Small Business Set-Aside (Date)

* * * * *

(b) * * *

(4) The contractor(s) for the set-aside portion will be selected

from among the small business concerns that submitted responsive

offers on the non-set-aside portion. Negotiations will be conducted

with the concern that submitted the lowest responsive offer on the

non-set-aside portion. If the negotiations are not successful or if

only part of the set-aside portion is awarded to that concern,

negotiations will be conducted with the concern that submitted the

second-lowest responsive offer on the non-set-aside portion. This

process will continue until a contract or contracts are awarded for

the entire set-aside portion.

* * * * *

(c) Agreement. For the set-aside portion of the acquisition, a

manufacturer or regular dealer submitting an offer in its own name

agrees to furnish, in performing the contract, only end items

manufactured or produced by small business concerns inside the

United States, its territories and possessions, the Commonwealth of

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

District of Columbia. However, this requirement does not apply in

connection with construction or service contracts.

(End of clause)

Alternate I (DATE). When the acquisition is for a product in a

class for which the Small Business Administration has determined

that there are no small business manufacturers or processors in the

Federal market in accordance with 19.503-3(e), delete paragraph

(c).-

66. Section 52.219-8 is amended by revising the section heading;

the clause title and date; paragraph (a); redesignating paragraph (d)

as (e) and revising it; and adding a new paragraph (d) 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 (Date)

(a) It is the policy of the United States that 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, small business concerns owned and

controlled by socially and economically disadvantaged individuals

and small business concerns owned and controlled by women.

* * * * *

(d) The term ``small business concern owned and controlled by

women'' shall mean 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;

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

representations by their subcontractors regarding their status as a

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)

67. Section 52.219-9 is amended by revising--

a. The section heading;

b. The clause title and date;

c. The first sentence of paragraph (c);

d. Paragraphs (d), (e), (i), and Alternate I to read as follows:

52.219-9 Small, Small Disadvantaged and Women-Owned Small Business

Subcontracting Plan.

* * * * *

Small, Small Disadvantaged and Women-Owned Small Business

Subcontracting Plan (Date)

* * * * *

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

submit and negotiate a subcontracting plan, where applicable, which

separately addresses subcontracting with small business concerns,

with small disadvantaged business concerns and with women-owned

small business concerns. * * *

(d) The offeror's subcontracting plan shall include the

following:-

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

subcontracting dollars, for the use of small business concerns,

small disadvantaged business concerns and women-owned small business

concerns as subcontractors. The offeror shall include all

subcontracts that contribute to contract performance, and may

include a proportionate share of products and services that are

normally allocated as indirect costs.-

(2) A statement of--

(i) Total dollars planned to be subcontracted;

(ii) Total dollars planned to be subcontracted to small business

concerns;

(iii) Total dollars planned to be subcontracted to small

disadvantaged business concerns; and

(iv) Total dollars planned to be subcontracted to women-owned

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)

small disadvantaged business concerns and (iii) women-owned small

business concerns.

(4) A description of the method used to develop the

subcontracting goals in (1) above.

(5) A description of the method used to identify potential

sources for solicitation purposes (e.g., existing company source

lists, the Procurement Automated Source System (PASS) of the Small

Business Administration, the National Minority Purchasing Council

Vendor Information Service, the Research and Information Division of

the Minority Business Development Agency in the Department of

Commerce, or small, small disadvantaged and women-owned small

business concerns trade associations).-

(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 (i) small business concerns,

(ii) small disadvantaged business concerns and (iii) women-owned

small business concerns.

(7) The name of the individual employed by the offeror who will

administer the offerors subcontracting program, and a description of

the duties of the individual.

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

that small, small disadvantaged and women-owned small business

concerns have an equitable opportunity to compete for subcontracts.

(9) Assurances that the offeror will include the clause in this

contract entitled ``Utilization Of Small, Small Disadvantaged And

Women-Owned Small Business Concerns in all subcontracts that offer

further subcontracting opportunities, and that the offeror will

require all subcontractors (except small business concerns) who

receive subcontracts in excess of $500,000 ($1,000,000 for

construction of any public facility), to adopt a plan similar to the

plan agreed to by the offeror.

(10) Assurances that the offeror will (i) cooperate in any

studies or surveys as may be required, (ii) submit periodic reports

in order to allow the Government to determine the extent of

compliance by the offeror with the subcontracting plan, (iii) submit

Standard Form (SF) 294, Subcontracting Report for Individual

Contracts, and/or SF 295, Summary Subcontract Report, in accordance

with the instructions on the forms, and (iv) ensure that its

subcontractors agree to submit Standard Forms 294 and 295.

(11) A recitation of the types of records the offeror will

maintain to demonstrate procedures that have been adopted to comply

with the requirements and goals in the plan, including establishing

source lists; and a description of its efforts to locate small,

small disadvantaged 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, guides, and other data that identify small,

small disadvantaged and women-owned small business concerns.

(ii) Organizations contacted in an attempt to locate sources

that are small, small disadvantaged or women-owned small business

concerns. [[Page 2315]]

(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 small

disadvantaged business concerns were solicited and if not, why not,

(C) whether women-owned small business concerns were solicited and

if not, why not, and (D) 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, 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

company or division-wide annual plans need not comply with this

requirement.

(e) In order to effectively implement this plan to the extent

consistent with efficient contract performance, the Contractor shall

perform the following functions:

(1) Assist small, small disadvantaged 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 Contractors lists of potential small, small disadvantaged

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, small disadvantaged and women-owned small

business concerns in all ``make-or-buy'' decisions.

(3) Counsel and discuss subcontracting opportunities with

representatives of small, small disadvantaged and women-owned small

business firms.

(4) Provide notice to subcontractors concerning penalties and

remedies for misrepresentations of business status as 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.

* * * * *

(i) The failure of the Contractor or subcontractor to comply in

good faith with (1) the clause of this contract entitled

``Utilization Of Small, Small Disadvantaged And Women-Owned Small

Business Concerns,'' or (2) an approved plan required by this

clause, shall be a material breach of the contract.

(End of clause)

Alternate I (DATE). 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, which

separately addresses subcontracting with small business concerns,

with small disadvantaged business concerns and with women-owned

small business concerns. If the bidder is submitting an individual

contract plan, the plan must separately address subcontracting with

small business concerns, with small disadvantaged business concerns

and with 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.

52.219-10 [Amended]

68. Section 52.219-10 is amended in--

a. The section heading and clause title by removing ``for Small and

Small Disadvantaged Business Concerns'' and revising the date;

b. The introductory text of the clause by removing the text

following ``19.708(c)(1),'' and inserting in its place ''insert the

following clause:''; and

c. Paragraph (a) of the clause by removing the word ''and'',

inserting a comma in its place, and removing the period at the end of

the sentence and inserting in its place ``and a certain percentage to

women-owned small business concerns.''

52.219-13 [Reserved]

69. Section 52.219-13 is removed and reserved.

70. Section 52.219-16 is amended by revising the section heading,

clause title and date; paragraph (a); the first sentence of paragraph

(b); and paragraphs (d) and (f) to read as follows:

52.219-16 Liquidated Damages--Subcontracting Plan.

* * * * *

Liquidated Damages--Subcontracting Plan (Date)

(a) Failure to make a good faith effort to comply with the

subcontracting plan, as used in this clause, means a willful or

intentional failure to perform in accordance with the requirements

of the subcontracting plan approved under the clause in this

contract entitled ``Small, Small Disadvantaged and Women-Owned Small

Business Subcontracting Plan,'' or willful or intentional action to

frustrate the plan.

(b) If, at contract completion, or in the case of a commercial

products plan, at the close of the fiscal year for which the plan is

applicable, the Contractor has failed to meet its subcontracting

goals and the Contracting Officer decides in accordance with

paragraph (c) of this clause that the Contractor failed to make a

good faith effort to comply with its subcontracting plan,

established in accordance with the clause in this contract entitled

Small, Small Disadvantaged and Women-Owned Small Business

Subcontracting Plan, the Contractor shall pay the Government

liquidated damages in an amount stated.* * *

* * * * *

(d) With respect to commercial products plans; i.e., company-

wide or division-wide subcontracting plans approved under paragraph

(g) of the clause in this contract entitled, Small, Small

Disadvantaged and Women-Owned Small Business Subcontracting Plan,

the Contracting Officer of the agency that originally approved the

plan will exercise the functions of the Contracting Officer under

this clause on behalf of all agencies that awarded contracts covered

by that commercial products plan.

* * * * *

(f) Liquidated damages shall be in addition to any other

remedies that the Government may have.

(End of clause)

52.219-22 [Reserved]

71. Section 52.219-22 is removed and reserved.

72. Section 52.219-00 is added to read as follows:

52.219-00 Notice of Total Small Disadvantaged Business Set-Aside.

As prescribed in 19.508(g), insert the following clause in

solicitations and contracts:

Notice of Total Small Disadvantaged Business Set-Aside (Date)

(a) Definition--Small disadvantaged business concern, as used in

this clause, means a small business concern that (a) is at least 51

percent unconditionally owned by one or more individuals who are

both socially and economically disadvantaged, or a publicly owned

business having at least 51 percent of its stock unconditionally

owned by one or more socially and economically disadvantaged

individuals and (b) has its management and daily business controlled

by one or more such individuals. This term also means a small

business concern that is at least 51 percent unconditionally owned

by an economically disadvantaged Indian tribe or Native Hawaiian

Organization, or a publicly owned business having at least 51

percent of its stock unconditionally owned by one of these entities

which has its management and daily business controlled by members of

an economically disadvantaged Indian tribe or Native Hawaiian

Organization, and which meets the requirements of 13 CFR part 124.

(b) General--(1) Offers are solicited only from small

disadvantaged business concerns. Offers received from concerns that

are not small disadvantaged business concerns shall be considered

nonresponsive and will be rejected.

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

small disadvantaged business concern.

(c) Agreement. A manufacturer or regular dealer submitting an

offer in its own name [[Page 2316]] agrees to furnish, in performing

the contract, only end items manufactured or produced by small

disadvantaged business concerns inside the United States, its

territories and possessions, the Commonwealth of Puerto Rico, the

Trust Territory of the Pacific Islands, or the District of Columbia.

However, this requirement does not apply in connection with

construction or service contracts.

(End of clause)

Alternate I (Date). When the acquisition is for a product in a

class for which the contracting officer has determined that there

are no small disadvantaged business manufacturers or processors in

accordance with 19.503-2(c), substitute the following paragraph (c)

for paragraph (c) of the basic clause:

(c) Agreement. A manufacturer or regular dealer submitting an

offer in its own name agrees to furnish, in performing the contract,

only end items manufactured or produced by small business concerns

inside the United States, its territories and possessions, the

Commonwealth of Puerto Rico, the Trust Territory of the Pacific

Islands, or the District of Columbia. However, this requirement does

not apply in connection with construction or service contracts.

73. Section 52.220-1 is redesignated as 52.219-01 and revised to

read as follows:

52.219-01 Priority for Labor Surplus Area Concerns.

As prescribed in 19.304(b), insert the following provision:

Priority for Labor Surplus Area Concerns (Date)

(a) The offeror's status as a labor surplus area concern may

affect entitlement to award in case of tie offers. In order to

determine whether the offeror is entitled to a priority, the offeror

must identify, below, the LSA in which the costs to be incurred on

account of manufacturing or production (by the offeror or the first-

tier subcontractors) amount to more than 50 percent of the contract

price.

----------------------------------------------------------------------

----------------------------------------------------------------------

(b) Failure to identify the labor surplus areas as specified

above will preclude the offeror from receiving priority

consideration. If the offeror is awarded a contract as a result of

receiving priority consideration under this clause and would not

have otherwise qualified for award, the offeror shall perform the

contract or cause the contract to be performed in accordance with

the obligations of an LSA concern.

(End of provision)

74. Section 52.219-02 is added to read as follows:

52.219-02 Notice of Evaluation Preference for Small Disadvantaged

Business Concerns.

As prescribed in 19.1103, insert the following clause:

Notice of Evaluation Preference for Small Disadvantaged Business

Concerns (Date)

(a) Definition--Small disadvantaged business concern, as used in

this clause, means a small business concern that (a) is at least 51

percent unconditionally owned by one or more individuals who are

both socially and economically disadvantaged, or a publicly owned

business having at least 51 percent of its stock unconditionally

owned by one or more socially and economically disadvantaged

individuals and (b) has its management and daily business controlled

by one or more such individuals. This term also means a small

business concern that is at least 51 percent unconditionally owned

by an economically disadvantaged Indian tribe or Native Hawaiian

Organization, or a publicly owned business having at least 51

percent of its stock unconditionally owned by one of these entities

which has its management and daily business controlled by members of

an economically disadvantaged Indian tribe or Native Hawaiian

Organization, and which meets the requirements of 13 CFR part 124.

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

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

(i) Offers from small disadvantaged business concerns, which

have not waived the preference;

(ii) Otherwise successful offers of eligible products under the

Trade Agreements Act when the dollar threshold for application of

the Act is exceeded;

(iii) Offers where application of the factor would be

inconsistent with a Memorandum of Understanding or other

international agreement with a foreign government.

(2) The ten percent factor will be applied on a line item by

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

Other evaluation factors described in the solicitation will be

applied before application of the ten percent factor. The ten

percent factor will not be applied if using the preference would

cause the contract award to be made at a price which exceeds the

fair market price by more than ten percent.

(c) Waiver of evaluation preference. A small disadvantaged

business may elect to waive the preference, in which case the ten

percent factor will be added to its offer for evaluation purposes.

The agreements in paragraph (d) do not apply to offers which waive

the preference.

________ Offeror elects to waive the preference.

(d) Agreements--(1) A small disadvantaged business concern which

did not waive the preference, agrees that in performance of the

contract, in the case of a contract for--

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

cost of personnel for contract performance will be spent for

employees of the concern.-

(ii) Supplies, at least 50 percent of the cost of manufacturing,

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

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

the contract, excluding the cost of materials, will be performed by

employees of the concern.

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

percent of the cost of the contract, excluding the cost of

materials, will be performed by employees of the concern.

(2) A small disadvantaged business submitting an offer in its

own name agrees to furnish in performing this contract only end

items manufactured or produced by small disadvantaged business

concerns.

Alternate I (Date). When the acquisition is for a product in a

class for which the contracting officer has determined that there

are no small disadvantaged business manufacturers or processors in

accordance with 19.503-2(c), substitute the following paragraph

(d)(2) for paragraph (d)(2) of the basic clause:

(d)(2) A small disadvantaged business submitting an offer in its

own name agrees to furnish, in performing the contract, only end

items manufactured or produced by small business concerns inside the

United States, its territories and possessions, the Commonwealth of

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

District of Columbia. However, this requirement does not apply in

connection with construction or service contracts.

52.220-1 [Redesignated]

52.220-2, 52.220-3, and 52.220-4 [Removed and reserved]

75. Sections 52.220-2, 52.220-3, and 52.220-4 are removed and

reserved.

PART 53--FORMS

76. Section 53.219 is revised to read as follows:

53.219 Small business programs.

The following standard forms are prescribed for use in reporting

small, small disadvantaged and women-owned small business

subcontracting data, as specified in part 19:

(a) SF 294 (REV XX), Subcontracting Report for Individual

Contracts. (See 19.704(a)(5).)

(b) SF 295 (REV XX), Summary Subcontract Report. (See

19.704(a)(5).) SF 295 is authorized for local reproduction and a copy

is furnished for this purpose in part 53 of the loose-leaf edition of

the FAR.

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

follows:

53.301-294 Subcontracting Reporting for Individual Contracts.

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[[Page 2317]]

[GRAPHIC][TIFF OMITTED]TP06JA95.029

[[Page 2318]]

[GRAPHIC][TIFF OMITTED]TP06JA95.030

53.301-295 Summary Subcontract Report.

[[Page 2319]]

[GRAPHIC][TIFF OMITTED]TP06JA95.031

[[Page 2320]]

[GRAPHIC][TIFF OMITTED]TP06JA95.032

[FR Doc. 95-2 Filed 1-5-95; 8:45 am]

BILLING CODE 6820-34-C