[Federal Register Volume 59, Number 194 (Friday, October 7, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24914]


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[Federal Register: October 7, 1994]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1815, 1819, 1852, and 1870

RIN 2700-AB94

 

Revision to NASA FAR Supplement Coverage on Contracting and 
Subcontracting Policies and Procedures To Achieve Goals for Designated 
Entities

agency: Office of Procurement, Contract Management Division, National 
Aeronautics and Space Administration (NASA).

action: Proposed rule.

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summary: NASA proposes to provide further implementation of the 
statutory goal to make at least eight percent of the funding for prime 
contracts and subcontracts available to small business concerns or 
other organizations owned or controlled by socially and economically 
disadvantaged individuals, which include women, Historically Black 
Colleges and Universities, and other minority educational institutions. 
These categories of entities listed in the applicable statutes are 
collectively identified as ``designated entities.''

dates: Comments are due no later than December 6, 1994.

addresses: Submit comments to Ms. Deborah O'Neill, Contract Management 
Division (Code HK), Office of Procurement, NASA Headquarters, 
Washington, DC 20546.

for further information contact: Ms. Deborah O'Neill, (202) 358-0440.

SUPPLEMENTARY INFORMATION:

Background

    This rule establishes major policies with respect to contracting 
and subcontracting with designated entities. With respect to prime 
contracting, it ensures that designated entities are fully considered 
for awards. Also, the consolidation or bundling of contract 
requirements is controlled. With respect to subcontracting, it requires 
specifying mandatory goals in solicitations for subcontracting with 
designated entities, evaluating designated entity subcontracting goals 
proposed by offerors, and including in contracts the designated entity 
subcontracting goals in addition to the goals included in the 
subcontracting plan required by 15 U.S.C. 637(d) as implemented in FAR 
Subpart 19.7. NFS Subpart 1819.70 and the clause at 1852.219-76 are 
substantially revised. A new subsection is added to NFS 1815.608. NFS 
1870.303, Appendix I, Chapter 301, is amended to cover proposal 
evaluation.

Availability of NASA FAR Supplement

    The NASA FAR Supplement, of which this proposed coverage will 
become a part, is codified in 48 CFR chapter 18, and is available in 
its entirety on a subscription basis from the Superintendent of 
Documents, Government Printing Office, Washington, DC 20402. Cite GPO 
Subscription Stock Number 933-003-00000-1. It is not distributed to the 
public, whether in whole or in part, directly by NASA.

Executive Order 12866

    The Office of Information and Regulatory Affairs has determined 
that this rule is significant under E.O. 12866. This regulation is 
needed, because it provides the NASA policy regarding contracting and 
subcontracting with designated entities. Regarding prime contract 
awards, the policy ensures that designated entities are fully 
considered for awards. Regarding subcontracting issues, the policy 
requires specifying mandatory goals in solicitations for subcontracting 
with designated entities, evaluating designated entity subcontracting 
goals proposed by offerors, and including in contracts the designated 
entity subcontracting goals in addition to the goals included in the 
subcontracting plan required by 15 U.S.C. 637(d) as implemented in FAR 
Subpart 19.7. Current regulations do not address these prime 
contracting and subcontracting policies. The potential costs for this 
regulatory action are nominal and are not quantifiable. Because the 
subcontracting goals are included in the contract, costs for 
contracting with or subcontracting to designated entities would 
normally be charged to the Government. The potential benefits are the 
increased direct awards or subcontracting awards to designated entities 
which will broaden the base of NASA contractors. The value of 
increasing the contract and subcontract opportunities to designated 
entities cannot be measured, because it involves not only increases to 
NASA's business base of qualified and eligible contractors but also 
additional opportunities for designated entities to receive a fair 
proportion of NASA awards to the maximum extent practicable.

Regulatory Flexibility Act

    NASA certifies that this proposed rule will not have a significant 
economic impact on a substantial number of small entities under the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

Paperwork Reduction Act

    This rule does not impose any information collection subject to 44 
U.S.C. chapter 35.

List of Subjects in 48 CFR Parts 1815, 1819, 1852, and 1870

    Government procurement.
Diedre A. Lee,
Associate Administrator for Procurement.

    Accordingly, 48 CFR parts 1815, 1819, 1852, and 1870 are proposed 
to be amended as follows:
    1. The authority citation for 48 CFR parts 1815, 1819, 1852, and 
1870 continues to read as follows:

    Authority: 42 U.S.C. 2473(c)(1).

PART 1815--CONTRACTING BY NEGOTIATION

    2. Section 1815.608-72 is added to read as follows:


1815.608-72  NASA subcontracting goal.

    In all solicitations which contain the clause at 1852.219-76, NASA 
Subcontracting Goal, the contracting officer is required to prescribe a 
mandatory goal for the use of ``designated entities'' as subcontractors 
(See 1819.7005). Offers will be evaluated on the proposed designated 
entity subcontracting goal, in comparison to the goal specified in the 
solicitation, and on the offeror's proposed method of achieving the 
goal. Evaluation of the designated entity subcontracting goal shall be 
accomplished, at a minimum, as a separate element under a management 
subfactor under the Mission Suitability factor so that it may have an 
impact on the source selection decision.

PART 1819--SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS

    3. Subpart 1819.70 is revised to read as follows:
Subpart 1819.70--Contracting and Subcontracting Policies and Procedures 
To Achieve Goals for Designated Entities
Sec.
1819.7001  Scope of subpart.
1819.7002  Definitions.
1819.7003  General policy.
1819.7004  Prime contracting policy.
1819.7005  Subcontracting policy.
1819.7006  Solicitation provisions and contract clauses.


1819.7001  Scope of subpart.

    This subpart implements legislative provisions (Public Laws 101-
144, 101-507, and 102-389) which require the NASA Administrator to 
ensure, to the fullest extent possible, that at least eight percent 
(8%) of Federal funding for prime and subcontracts awarded in support 
of authorized programs, including the space station by the time 
operational status is obtained, be made available to small business 
concerns or other organizations owned or controlled by socially and 
economically disadvantaged individuals (within the meaning of section 
8(a)(5) and (6) of the Small Business Act (15 U.S.C. 637(a) (5) and 
(6)), including Historically Black Colleges and Universities and 
minority educational institutions. For purposes of this subpart, 
socially and economically disadvantaged individuals shall be deemed to 
include women.


Sec. 1819.7002  Definitions.

    Designated entities, as used in this subpart, means small business 
concerns or other organizations owned and controlled by socially and 
economically disadvantaged individuals, which include women, 
Historically Black Colleges and Universities, and other minority 
educational institutions.
    Historically Black Colleges and Universities, as used in this 
subpart, means institutions determined by the Secretary of Education to 
meet the requirements of 34 CFR 608.2 and listed therein.
    Minority educational institutions as used in this subpart, means 
institutions determined by the Secretary of Education to meet the 
requirements of 34 CFR 637.4.
    Socially and economically disadvantaged individuals has the meaning 
given such terms in section 8(a)(5) and (6) of the Small Business Act 
(15 U.S.C. 637 (a)(5) and (6)). Public Law 101-507 designated that for 
purposes of NASA's 8% goal, economically and socially disadvantaged 
individuals shall be deemed to include women.


1819.7003  General policy.

    (a) The Congress has indicated its desire to increase the 
participation of designated entities in the aerospace industry, 
particularly as NASA contractors and subcontractors. The agency's goal 
is to award to such entities at least 8% of the funding provided for 
prime contracts and subcontracts in support of authorized programs by 
the end of fiscal year 1994. The participation of NASA prime 
contractors, through their subcontracting practices, is essential to 
meeting this goal.
    (b) The 8% goal applies to the annual dollar obligations of the 
agency. It is not an absolute goal for each center or program or an 
absolute percentage to be placed in each contract containing a 
subcontracting plan. While some procurement requirements (contracts) 
offer subcontracting opportunities for designated entities equal to 8% 
of the contract value, others will offer greater, and some less, 
subcontracting opportunities. The aggregate comprises the agency's 
total accomplishment in response to the legislative mandate.


1819.7004  Prime contracting policy.

    (a) Contracting officers must seek out designated entities as 
sources and give full consideration to these entities to satisfy 
requirements in all NASA procurements. Since contracts with eligible 
8(a) firms under the Small Business Administration section 8(a) program 
count toward the attainment of NASA's goal, contracting officers must 
make maximum use of this program in awarding prime contracts (see 
procedures set forth in (FAR) 48 CFR Subpart 19.8).
    (b) Existing contracts or options will normally not be reduced in 
scope or otherwise restructured to increase opportunities for 
designated entities at the prime contract level. In rare instances, 
taking such action may be accomplished with approval of the Associate 
Administrator for Procurement.
    (c) Consolidated Contracts. Prior to effecting a contracting 
consolidation valued at $5 million or more, including options, which 
will not be exclusively reserved for small or 8(a) firms, an impact 
assessment on the effects of consolidation on present and future 
contracting and subcontracting opportunities of designated entities 
shall be prepared by the center, submitted to Headquarters Code HS, 
concurred in by Code K and the cognizant Associate Administrator, and 
approved by the Associate Deputy Administrator (Technical).
    (d) Protests involving size status and those involving designated 
entity status for other than women-owned businesses shall be referred 
to the U.S. Small Business Administration for handling. Protests to 
NASA regarding women-owned businesses claiming designated entity status 
shall be resolved by the agency.
    (e) Public Laws 101-144, 101-507, and 102-389 state that the status 
of a small business concern or other organization as a designated 
entity is determined by whether the entity is owned or controlled by 
socially and economically disadvantaged individuals, including women. 
To provide consistency with section 8(a)(4) of the Small Business Act 
(15 U.S.C. 637(a)(4)), NASA applies a restrictive interpretation of 
this legislation by requiring ownership and control by socially and 
economically disadvantaged individuals.


1819.7005  Subcontracting policy.

    (a) All contracts which are required to include a subcontracting 
plan (see (FAR) 48 CFR 19.702) must contain a separate percentage goal 
for using designated entities as subcontractors. This separate goal 
will not be entered on the subcontracting plan but will be specified in 
the clause at 1852.219-76, NASA Subcontracting Goal. The total dollars 
planned to be subcontracted to small disadvantaged business concerns 
stated in the subcontracting plan will be included in determining the 
designated entity subcontracting goal. The designated entity 
subcontracting goal also includes planned subcontracts with small 
business concerns owned and controlled by women, Historically Black 
Colleges and Universities, and other minority educational institutions.
    (b) After a careful assessment of the statement of work associated 
with each procurement, contracting officers would insert in 
solicitations that have subcontracting opportunities an appropriate 
subcontracting goal for designated entities. The contracting officer 
shall confer with the small business specialist during the assessment 
stage since the specialist has knowledge and information regarding the 
pool of designated entities available to fulfill the subcontracting 
opportunities. The goals should be set at a level that can be 
reasonably achieved by the contractor expending good faith efforts to 
use designated entities as subcontractors to the maximum practicable 
extent. The designated entity subcontracting goals will be stated as 
mandatory goals in solicitations.
    (c) Contracting officers shall include the mandatory designated 
entity subcontracting goal in the presolicitation notice (see (FAR) 48 
CFR 5.204) and in any draft Request for Proposal that is issued. The 
contracting officer and the small business specialist will consider all 
comments received in response to either the presolicitation notice or 
the draft Request for Proposal prior to determining the mandatory goal 
in the formal solicitation.
    (d) In negotiated acquisitions, an initial proposal will not be 
rejected as unacceptable solely as a result of an offeror proposing a 
goal that is less than the mandatory goal. Subsequent to the evaluation 
of proposals, in which the proposed goal shall be evaluated as a 
separate element under a management subfactor under the Mission 
Suitability factor, consistent with NFS 1815.608-72, the contracting 
officer shall negotiate with the apparently successful offeror(s) to 
establish the designated entity subcontracting goal to be inserted in 
the contract.
    (e) If a bidder, in response to a sealed bid solicitation, takes 
exception to the specified mandatory subcontracting goal, the bid shall 
not be rejected as nonresponsive. If the bidder is selected for award, 
the contracting officer may request the bidder to offer a revised 
designated entity subcontracting goal by a specified date. If the 
bidder's response indicates that the bidder does not intend to use its 
best efforts to provide the designated entities the maximum practicable 
opportunity to participate in performance of the contract, the 
contracting officer may find the bidder nonresponsible.
    (f) In solicitations, proposals, and resulting contracts, the 
designated entity subcontracting goal should be stated as a percentage 
of the total contract value rather than as a percentage of the total 
planned subcontracting dollars. Subcontracting plans shall conform to 
the requirements of (FAR) 48 CFR 52.219-9, i.e., the goals included in 
the plans shall be expressed in terms of percentages of total planned 
subcontracting dollars. Also, SF 294 and SF 295 reports shall continue 
to be completed in accordance with the instructions on these forms.


1819.7006  Solicitation provisions and contract clauses.

    (a) The contracting officer shall insert the provision at 1852.219-
73, Small Business and Small Disadvantaged Business Subcontracting 
Plan, in solicitations containing the clause at (FAR) 48 CFR 52.219-9. 
Insert in the last sentence the number of calendar days after the 
contracting officer's request that the offeror must submit a complete 
plan. When offerors are to include subcontracting plans in their 
initial offers as contemplated by (FAR) 48 CFR 19.705-2(d), or if a 
noncompetitive solicitation will be issued, the contracting officer may 
use the provision with its Alternate I.
    (b) The contracting officer shall insert the clause at 1852.219-75, 
Small Business and Small Disadvantaged Business Subcontracting 
Reporting, in solicitations and contracts containing the clause at 
(FAR) 48 CFR 52.219-9. Those current contracts containing 
subcontracting plans and designated by NASA Headquarters (Code HC) 
shall be amended to require quarterly submission of the SF 295.
    (c) In all solicitations and contracts which contain the clause at 
(FAR) 48 CFR 52.219-9, Small Business and Small Disadvantaged Business 
Subcontracting Plan, the contracting officer shall insert the clause at 
1852.219-76, NASA Subcontracting Goal, when contracting by negotiation. 
In all solicitations and contracts which contain the clause at (FAR) 48 
CFR 52.219-9, the contracting officer shall insert the clause at 
1852.219-76 with its Alternate I, when contracting by sealed bidding.
    (1) In solicitations and contracts which do not contain the clause 
at (FAR) 48 CFR 52.219-9, and when the contract value is expected to 
exceed the small purchase limitation, the contracting officer shall 
insert the clause at 1852.219-76 with its Alternate II, except as 
provided in paragraph (c)(2) of this section.
    (2) In solicitations and contracts which do not contain the clause 
at (FAR) 48 CFR 52.219-9, and when the contract value is expected to 
exceed $500,000 ($1,000,000 for construction), and the contractor is a 
small business which is not a designated entity, the contracting 
officer may use the clause at 1852.219-76 instead of the clause at 
1852.219-76 with its Alternate II. The basic clause should be used when 
the contracting officer determines that the procurement offers 
subcontracting opportunities with designated entities.

PART 1852--SOLICITATION AND CONTRACT CLAUSES

    4. Section 1852.219-76 is revised to read as follows:


1852.219-76  NASA Subcontracting Goal.

    As prescribed in 1819.7006(c), insert the following clause:

NASA Subcontracting Goal (XXX 1994)

(a) Definitions.

    Designated entities, as used in this clause, means small 
business concerns or other organizations owned and controlled by 
socially and economically disadvantaged individuals, which include 
women, Historically Black Colleges and Universities, and other 
minority educational institutions.
    Historically Black Colleges and Universities, as used in this 
clause, means institutions determined by the Secretary of Education 
to meet the requirements of 34 CFR 608.2 and listed therein.
    Minority educational institutions, as used in this clause, means 
institutions determined by the Secretary of Education to meet the 
requirements of 34 CFR 637.4.
    Socially and economically disadvantaged individuals has the 
meaning given such terms in section 8(a) (5) and (6) of the Small 
Business Act (15 U.S.C. 637(a) (5) and (6)) and includes women for 
purposes of this clause.
    (b) The NASA Administrator is required to ensure, to the fullest 
extent possible, that at least 8% of the funding provided for prime 
and subcontracts awarded in support of authorized programs, 
including the space station by the time operational status is 
obtained, is made available to designated entities.
    (c)(1) A mandatory goal of ____ percent [the Contracting Officer 
shall insert the goal] for the use of designated entities as 
subcontractors is established for this acquisition. This designated 
entity subcontracting goal is stated as a percentage of the total 
contract value, not the total planned subcontracting dollars. The 
goal shall include the value of subcontracts with designated 
entities that contribute directly to contract performance.
    (2) The offeror should make an independent assessment of its 
subcontracting opportunities and is encouraged to propose a goal 
higher than that specified in paragraph (c)(1) of this clause. The 
designated entity subcontracting goal proposed by the offeror, and 
the methods for achieving the proposed goal, will be evaluated as 
indicated in the solicitation.
    (3) To effectively achieve the goal specified in paragraph 
(c)(1) of this clause consistent with efficient contract 
performance, the Contractor shall perform the functions listed in 
paragraph (e) of the clause at (FAR) 48 CFR 52.219-9, Small Business 
and Small Business Disadvantaged Subcontracting Plan, for all 
designated entities which may become potential subcontractors.
    (d) The Contractor may rely in good faith on a written 
representation of a subcontractor that such subcontractor has the 
status of a designated entity.
    (e) Failure of the Contractor to comply in good faith with the 
requirements of this clause shall constitute a material breach of 
the contract.

(End of clause)

Alternate I (XXX 1994)

    When contracting by sealed bidding rather than by negotiation, 
substitute the following paragraph (c)(2) for paragraph (c)(2) of the 
basic clause:
    (c)(2) Failure of the bidder to accept the goal specified in 
paragraph (c)(1) of this clause may make the bidder ineligible for 
award.

Alternate II (XXX 1994)

    When the solicitation and contract do not contain the clause at 
(FAR) 48 CFR 52.219-9, Small Business and Small Disadvantaged Business 
subcontracting Plan, and when the contract amount is expected to exceed 
the small purchase limitation, substitute the following paragraph (c) 
for paragraph (c) of the basic clause:
    (c) The Contractor agrees to assist NASA to achieve the statutory 
goal described in paragraph (b) of this clause by using its best 
efforts to award subcontracts to designated entities to the fullest 
extent consistent with efficient contract performance.

PART 1870--NASA SUPPLEMENTARY REGULATIONS

    4. In Appendix I to section 1870.303, Chapter 3, the introductory 
text to paragraph 301.1.a is revised to read as follows:

Appendix I to 1870.303--NASA Source Evaluation Board Procedures 
(Handbook)

* * * * *

Chapter 3--Evaluation Factors, Subfactors and Elements

* * * * *

301  Mission Suitability

1. Evaluation subfactors
    a. Evaluation subfactors are the weighted areas within the Mission 
Suitability factor that further identify, for proposal preparation and 
evaluation purposes, the content of the factor. Examples of Mission 
Suitability subfactors found by experience to be relevant to many 
procurements are: understanding of the Requirement; Management Plan; 
Key Personnel; Corporate or Company Resources; and Excellence of 
Proposed Design for hardware procurements. Citation of these specific 
subfactors is not intended to be restrictive or all inclusive. However, 
as stated in NFS 1815.608-72, evaluation of the designated entities 
subcontracting goal shall be accomplished, at a minimum, as a separate 
element under a management subfactor under the Mission Suitability 
factor. The nature and thrust of the requirements and objectives of the 
procurement may logically call for the use of some subfactors titled 
and described in a somewhat different manner than those described 
below:
* * * * *
    5. In Appendix I to section 1870.303, chapter 3, paragraph 
301.1.e.(1) is revised to read as follows:

Appendix I to 1870.303--NASA Source Evaluation Board Procedures 
(Handbook)

* * * * *

Chapter 3--Evaluation Factors, Subfactors and Elements

* * * * *

301  Mission Suitability

    1. * * *
    e. (1) In structuring evaluation subfactors and elements, emphasis 
should be placed on identification of significant discriminators, or 
``key swingers''--the essential information required to support a 
source selection decision. Too many subfactors and elements are 
detrimental to effective evaluation of proposals and may result in a 
leveling or averaging out of scores over all proposals. To avoid this 
negative effect, the number of subfactors under Mission Suitability 
shall be no more than 4 and the number of elements no more than 8 
except for the separate evaluation of designated entities either as a 
separate element or a separate subfactor under Mission Suitability (See 
NFS 1815.608-72). Other evaluation factors shall also be limited to 
only essential subfactors and elements. Further, care should be taken 
to avoid overlap and redundancy by clearly defining each evaluation 
subfactor and element. Avoiding such overlap assures an offeror is not 
scored in two or more areas for the same work.
* * * * *
[FR Doc. 94-24914 Filed 10-6-94; 8:45 am]
BILLING CODE 7510-01-M