[Federal Register Volume 59, Number 81 (Thursday, April 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9960]


[Federal Register: April 28, 1994]


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DEPARTMENT OF DEFENSE

Defense Logistics Agency

48 CFR Parts 5419 and 5452


DLA Acquisition Regulation; Small Business and Small 
Disadvantaged Business Concerns

AGENCY: Defense Logistics Agency, DOD.

ACTION: Proposed rule and request for comments.

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SUMMARY: The Defense Logistics Agency (DLA) proposes to establish a new 
48 CFR Chapter 54 to contain Defense Logistics Agency acquisition 
regulations. New parts 5419 and 5452 provide regulatory coverage which 
incorporates two nonstandard clauses in domestic bulk petroleum 
solicitations and contracts concerning small business set asides and 
evaluation preference for Small Disadvantaged Business Concerns into 
DLAR on a permanent basis. Comments are hereby requested on the 
proposed coverage which supplements the contract quality requirements 
of the Defense Federal Acquisition Regulation Supplement (DFARS) by 
adding prescriptive language and contract clauses to satisfy the 
specific needs of DLA. The proposed coverage is being published in the 
Federal Register because it is expected to have an effect beyond the 
internal operating procedures of DLA and, in some cases, a significant 
cost or administrative impact on contractors, when required.

DATES: Comments on the proposed DLAR rules must be submitted in writing 
to the address shown below on or before June 27, 1994, to be considered 
in the formulation of the final rules.

ADDRESSES: Interested parties should submit written comments to Defense 
Logistics Agency, Directorate of Procurement, Contract Policy Team 
(AQPLL), Ms. Melody Reardon, Cameron Station, Alexandria, Virginia 
22306-6100 FAX: (703) 274-0310.

FOR FURTHER INFORMATION CONTACT: Ms. Melody Reardon, Defense Logistics 
Agency, AQPLL (703) 274-6431.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 1207 of Public Law 99-661, as amended, sets a goal for the 
Department of Defense to award five percent of contract and performance 
dollars to small disadvantaged business (SDB) concerns, historically 
black colleges and universities, and minority institutions. Defense 
Fuel Supply Center has historically utilized deviations to DFARS 
252.219-7001 and 252.219-7006 which are reviewed and approved on an 
annual basis by the Director of Defense Procurement. Defense Fuel 
Supply Center proposes incorporating two nonstandard clauses in DLAR in 
order to eliminate the need for the class deviation. An additional 
objective of the two clauses is to include the term small disadvantaged 
joint ventures in the definition of small disadvantaged business 
concerns. Small disadvantaged joint ventures will now be eligible to 
receive the evaluation preference for those items solicited under these 
clauses if the small disadvantaged business or small disadvantaged 
joint venture manufactures or supplies the products of small 
disadvantaged businesses.

B. Regulatory Flexibility Act

    The proposed clauses are not expected to have significant economic 
impacts on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. since the clauses 
have been utilized for many years by Defense Fuel Supply Center as 
deviations to DFARS. Comments are invited from small businesses and 
other interested parties. Comments from small entities concerning the 
affected DFARS sections will also be considered in accordance with 
section 610 of the Act. Such comments must be submitted separately and 
cite this case in correspondence.

C. Paperwork Reduction Act

    The proposed rules do not impose any reporting or record keeping 
requirements which require the approval of OMB under 44 U.S.C. 3501, et 
seq.

List of Subjects in 48 CFR 5419 and 5452

    Government procurement.

    Therefore, it is proposed that 48 CFR chapter 54 consisting of 
parts 5419 and 5452, be added to read as follows:

CHAPTER 54--DEFENSE LPGISTICS AGENCY, DEPARTMENT OF DEFENSE

PART 5419--SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS

PART 5452--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

PART 5419--SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS

    Authority: 5 U.S.C. 301, 10 U.S.C. 2202, 48 CFR Part 1, subpart 
1.3 and 48 CFR Part 201, subpart 201.3.


5419.001  Definitions.

    The definition of ``small disadvantaged business concern'' to be 
used for DFSC competitive bulk solicitions and contracts is in the 
provision at 5452.219-9F06 and is different from the definition in 
DFARS 252.219-7001. For purposes of contract opportunities, Small 
Disadvantaged Business Joint Ventures, as defined in 252.219-7001 have 
the same status as small disadvantaged business concerns.

PART 5452--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

Subpart 5452.2--Texts of Provisions and Clauses

Sec.
5452.219-F05  Notice of Evaluation Preference for Small 
Disadvantaged Business Concerns
5452.219-F06  Notice of Partial Small Business Set-Aside with 
Preferential Consideration for Small Disadvantaged Business Concerns

    Authority: 5 U.S.C. 301, 10 U.S.C. 2202, 48 CFR part 1, subpart 
1.3 and 48 CFR part 201, subpart 201.3


5452.219-9F05.  Notice of Evaluation Preference for Small Disadvantaged 
Business Concerns.

    As prescribed by DFARS 219.7003, the Defense Fuel Supply Center 
will use the following clause in competitive domestic bulk 
solicitations and contracts when (a) solicitation contains one or more 
DOD set-aside items, and (b) when Small Disadvantaged Business (SDB) or 
Small Disadvantaged Business Joint Ventures are expected to offer:


5452.219-9F05  Notice of Evaluation Preference for Small Disadvantaged 
Business Concerns (Dec 1991   (DFSC) (Deviation).

    (a) Definitions. (1) The term ``small disadvantaged business 
(SDB) concern,'' has the meaning set forth in the Representation 
clause of this contract and includes the term small disadvantaged 
business joint venture. SDB concerns must supply petroleum product 
from an SDB manufacturer who complies with the petroleum products 
size standards at 13 CFR part 121, to be eligible for the evaluation 
preference.
    (b) Evaluation preference. (1) After all evaluation factors 
described in this solicition are applied, offers will be evaluated 
by adding a factor of 10 percent to the price of all offers except--
    (i) Offers from SDB concerns which have not waived the 
preferenced;
    (ii) Otherwise successful offers of eligible products under the 
Trade Agreements Act when the dollar threshold for application of 
the Act is exceeded.
    (2) The 10 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 10 percent factor. However, in no 
event may award be made to an SDB concern at a price which exceeds 
fair market price (as determined under FAR 19.806-2) by more than 
ten percent (10%).
    (c) Waiver of Evaluation Preference.
    An SDB may elect to waive the preference, in which case the 10 
percent factor will be added to its offer for evaluation purposes.
    [ ] Offeror elects to waive the preference in paragraph (6) 
above.
    [End of Clause]


5452.219-9F06  Notice of Partial Small Business Set-Aside with 
Preferential Consideration for Small Disadvantaged Business Concerns.

    As prescribed in DFARS 219.7002(d), the Defense Fuel Supply Center 
will use the following clause in lieu of DFARS clause 52.219-7001 in 
competitive domestic bulk solicitations and contracts when the 
solicitation contains one or more DOD set-aside items:


5452.219-9F06  Notice of Partial Small Business Set-Aside with 
Preferential Consideration for Small Disadvantaged Business Concerns. 
(DEC 1991)(DFSC) (Deviation).

    (a) Definitions. (1) Small Business concern means a concern 
including its affiliates, that is independently owned and operated, 
not dominant in the field of operation in which it is bidding on 
Government contracts, and qualified as a small business under the 
size standards in this solicitation.
    (2) Small disadvantaged business concern means a small business 
concern or small disadvantaged joint venture, owned and controlled 
by individuals who are both socially and economically disadvantaged, 
as defined by the Small Business Administration at 13 CFR part 124, 
the majority of earnings which directly accrue to such individuals. 
This term also means a small business concern owned and controlled 
by an economically disadvantaged Indian tribe or native Hawaiian 
organization which meets the requirements of 24 CFR 124.112 or 13 
CFR 124.113, respectively. In order to be eligible for preferential 
consideration set forth in paragraph (c) below, SDB concerns must 
supply product from an SDB manufacturer.
    (b) General.
    (1) A portion of certain items of this procurement, as listed in 
the Schedule, has (have) been set aside for award to eligible small 
businesses, with preferential consideration for SDB concerns. The 
quantities indicated for such items in the Schedule include the set-
aside portion. All offerors are urged to offer the maximum 
quantities they desire and are capable of delivering. Small 
businesses and SDB concerns interested in receiving a set-aside 
contract should submit an offer in the same manner as though there 
were no set-aside. Volumes offered by qualified small businesses or 
SDB concerns will be evaluated for the non set-aside and set-aside 
portions of the procurement. Separate offers should not be submitted 
on the non set-aside and set-aside portions.
    (2) The partial small business set-aside of the procurement is 
based on a determination by the Contracting Officer that it is in 
the interest of maintaining or mobilizing the nation's full 
production capacity or in the interest of national defense programs, 
or in the interest of assuring that a fair portion of Government 
procurement is placed with small business concerns.
    (3) All of the offers received under this solicitation will be 
first negotiated as to price and an evaluation will be made as 
though there were no set-aside.
    (4) For the purposes of set-aside evaluation, when an offer 
contains increments at different prices, each increment will be 
considered a separate offer. Except as provided in paragraph (e) 
below, negotiations will be limited to the offered quantities not 
awarded under the provisions of subparagraph (d)(2).
    (c) Set-aside award procedure (preferential consideration for 
SDB concerns).
    (1) Offers from SDBs and small business concerns will be 
evaluated with preferential consideration, as described below, given 
to eligible SDB concerns.
    (2) Offers from SDB concerns will be reviewed first to determine 
if an award can be made to an SDB concern at its offered price, 
beginning with the SDB concern offering the lowest evaluated price 
for that item. Awards to SDB concerns on the set-aside portion of 
this procurement will be made at the price offered by the SDB 
concern if that evaluated price does not exceed the highest award 
price on the non set-aside portion by more than 10 percent, as 
adjusted for transportation charges and other factors. If the SDB 
price exceeds the highest non set-aside price by more than 10 
percent, the SDB will be treated as a small business and the 
procedures set forth in paragraph (d) below will apply.
    (3) Any volumes remaining on the set-aside portion that are not 
awarded to the lowest priced eligible SDB concern under subparagraph 
(c)(2) will be awarded to any other SDBs eligible for award under 
the procedures set forth above, beginning with the SDB concern 
offering the next lowest price.
    (d) Set-aside award procedure (small business concerns).
    (1) After evaluation and award to eligible SDB concerns, if any, 
negotiations will be conducted with small business concerns for any 
set-aside volumes not awarded to eligible SDB concerns under 
paragraph (c).
    (2) The price for the small business set-aside portion will be 
negotiated by the Contracting Officer based upon prices the 
Government would otherwise pay under this solicitation had there 
been no set-aside for supply of the location at which the set-aside 
is placed, adjusted for transportation charges, and other factors. 
For the set-aside portion of an item not already awarded to SDB 
concerns, awards will be made to the small business concern whose 
offer is determined by this evaluation to be low without further 
negotiations. Contracts for the remaining set-aside portions will be 
negotiated with those eligible small business concerns who have 
submitted a responsive offer on the various items for which a set-
aside has been established.
    (3) Negotiations for small business set-aside awards will begin 
with the small business concern with the lowest evaluated price and 
a quantity of offered product remaining. If the low small business 
concern on the item does not offer to supply product at the set-
aside price, the next low small business concern on the item will be 
given the same opportunity and continuing with the next low small 
business concern until all small business concerns have been 
contacted.
    (e) After the set-aside negotiations have been concluded, a 
final evaluation will be accomplished. All eligible offerors, 
without regard to the size of the company, will be afforded an 
opportunity to compete for non set-aside quantities. The Government 
reserves the right to make awards to the otherwise low offeror for 
all or any portion of the set-aside quantities, without regard to 
the size of the company, if eligible SDB or small business concerns 
do not offer a quantity of product sufficient to meet a set-aside 
requirement or do not offer to supply at the set-aside prices. The 
total quantity which will be awarded a small business or an SDB 
offeror on both the unreserved and reserved portions will not exceed 
the total quantity offered under this solicitation by such small 
business or SDB offerors. However, if insufficient product is 
offered by small business and SDB concerns to meet the quantity set-
aside for small business, SDB and small business concerns with whom 
the Government has already commenced negotiations may be given an 
opportunity to offer additional product.
    (f) Where the Trade Agreement Act applies to the non set-aside 
portion, offers of eligible products will be treated as if they were 
qualifying country end products.
    (g) Token offers. The Government reserves the right to not 
consider token offers or offers designed to secure an unfair 
advantage over other offerors eligible for the set-aside portion.
    [End of Clause]
Marilyn S. Barnett,
Executive Director, (Procurement).
[FR Doc. 94-9960 Filed 4-26-94; 8:45 am]
BILLING CODE 3620-01-M