[Federal Register Volume 61, Number 246 (Friday, December 20, 1996)]
[Rules and Regulations]
[Pages 67420-67422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32007]


48 CFR Parts 19 and 52

[FAC 90-43, FAR Case 95-028, Item VII]
RIN 9000-AH34

Federal Acquisition Regulation; Minority Small Business and 
Capital Ownership

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

ACTION: Interim rule with request for comment.


SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed to an interim rule that 
amends the Federal Acquisition Regulation (FAR) to reflect changes to 
the Small Business Administration's (SBA) regulations at 13 CFR Parts 
121 and 124, which address the Minority Small Business and Capital 
Ownership Development Program. The rule clarifies eligibility and 
procedural requirements for procurements under the 8(a) Program. This 
regulatory action was not subject to Office of Management and Budget 
review under Executive Order 12866, dated September 30, 1993, and is 
not a major rule under 5 U.S.C. 804.

DATES: Effective Date: December 20, 1996.
    Comment Date: Comments should be submitted to the FAR Secretariat 
at the address shown below on or before February 18, 1997 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVRS), 18th & F 
Streets, NW, Room 4035, Attn: Ms. Beverly Fayson, Washington, DC 20405.
    Please cite FAC 90-43, FAR case 95-028, in all correspondence 
related to this case.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Klein at (202) 501-3775 in 
reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4035, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-43, FAR case 95-028.


A. Background

    On June 7, 1995, SBA published changes in their regulations at 13 
CFR Parts 121 and 124, which cover the Minority Small Business and 
Capital Ownership Development Program (60 FR 29969). As a result of 
these modifications, the FAR has some inconsistencies regarding who is 
eligible for a particular 8(a) procurement. Amended FAR sections 
include: 19.801, 19.804-2, 19.804-3, 19.805-1, 19.805-2, 19.808-1, 
19.809, 19.811-1, 19.811-3, 52.219-1, 52.219-11 (Alternate I), 52.219-
12 (Alternate I), 52.219-17, and 52.219-18 (Alternate II).

B. Regulatory Flexibility Act

    This interim rule is not expected to have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. This rule does 
not impose any new requirements on contractors. The rule amends the FAR 
to reflect changes at 13 CFR 121 and 124 designed to streamline the 
operation of the 8(a) program and to ease certain restrictions 
perceived to be burdensome on Program Participants. The FAR is changed 
to eliminate inconsistencies with respect to who is eligible for 
particular 8(a) procurements; to eliminate obsolete definitions; and to 
eliminate coverage on certain aspects of the 8(a) program that are 
obsolete. An Initial Regulatory Flexibility Analysis has, therefore, 
not been performed. Comments are invited from small businesses and 
other interested parties. Comments from small entities concerning the 
affected FAR parts also will be considered in accordance with 5 U.S.C. 
610. Such comments must be submitted separately and cite 5 U.S.C

[[Page 67421]]

601, et seq. (FAR case 95-028), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose recordkeeping or information collection 
requirements, or 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.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DOD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary in order to implement the changes in the Small Business 
Administration (SBA) Minority Small Business and Capital Ownership 
Development Program that are applicable for all 8(a) requirements 
accepted by the SBA on or after August 7, 1995. However, pursuant to 
Public Law 98-577 and FAR 1.501, public comments received in response 
to this interim rule will be considered in the formulation of the final 

List of Subjects in 48 CFR Parts 19 and 52

    Government procurement.

    Dated: December 11, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
    Therefore, 48 CFR Parts 19 and 52 are amended as set forth below:
    1. The authority citation for 48 CFR Parts 19 and 52 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


19.801  [Reserved]

    2. Section 19.801 is removed and reserved.
    3. Section 19.804-2 is amended by revising paragraph (b) and adding 
(c) to read as follows:

19.804-2  Agency offering.

* * * * *
    (b)(1) An agency offering a construction requirement should submit 
it to the SBA District Office for the geographical area where the work 
is to be performed.
    (2) Sole source requirements, other than construction, should be 
forwarded directly to the district office that services the nominated 
firm. If the contracting officer is not nominating a specific firm, the 
offering letter should be sent to SBA Headquarters, Office of Minority 
and Capital Ownership Development, 409 3rd Street, SW, Washington, DC 
    (c) In order to ensure consistency and uniformity, all requirements 
for 8(a) competition shall be offered to and processed by the Division 
of Business Development, SBA Headquarters. All requirements, including 
construction, shall be synopsized in the Commerce Business Daily by the 
cognizant procuring agency. For construction, the synopsis shall 
include the geographical area of the competition as determined by the 
Assistant Administrator, Division of Business Development, in 
consultation with the local SBA district office where the work is to be 

19.804-3  [Amended]

    4. Section 19.804-3 is amended by removing paragraph (c).
    5. Section 19.805-1 is amended by redesignating paragraph (c) as 
(d) and revising the last sentence, and by adding a new paragraph (c). 
The added and revised text reads as follows:

19.805-1  General.

* * * * *
    (c) A proposed 8(a) requirement with an estimated value exceeding 
the applicable competitive threshold amount shall not be divided into 
several requirements for lesser amounts in order to use 8(a) sole 
source procedures for award to a single firm.
    (d) * * * Agency recommendations for competition below the 
threshold may be included in the offering letter or may be submitted by 
separate correspondence to the SBA Headquarters.
    6. Section 19.805-2 is amended by revising the introductory text of 
paragraph (c) to read as follows:

19.805-2  Procedures.

* * * * *
    (c) The SBA will determine the eligibility of the firms for award 
of the contract. Eligibility will be determined by the SBA as of the 
time of submission of initial offers which include price. Eligibility 
is based on Section 8(a) Program criteria.
* * * * *
    7. Section 19.808-1(b) is revised to read as follows:

19.808-1  Sole source.

* * * * *
    (b) The SBA should participate, whenever practicable, in 
negotiating the contracting terms. When mutually agreeable, the SBA may 
authorize the contracting activity to negotiate directly with the 8(a) 
contractor. Whether or not direct negotiations take place, the SBA is 
responsible for approving the resulting contract before award.
    8. Section 19.809 is amended by revising the fourth sentence to 
read as follows:

19.809  Preaward considerations.

    * * * Within 15 working days of the receipt of the referral or a 
longer period agreed to by the SBA and the contracting activity, the 
SBA local district office that services the 8(a) firm will advise the 
contracting officer as to the SBA's willingness to certify its 
competency to perform the contract using the 8(a) concern in question 
as its subcontractor. * * *

19.811-1  [Amended]

    9. Section 19.811-1 is amended by removing paragraph (b)(5).
    10. Section 19.811-3 is amended by revising paragraphs (a), (b), 
and (d)(1); by removing (d)(2); and by redesignating (d)(3) as (d)(2), 
and in newly-designated (d)(2) by revising ``Alternate III'' to read 
``Alternate II''. The revised text reads as follows:

19.811-3  Contract clauses.

    (a) The contracting officer shall insert the clause at 52.219-11, 
Special 8(a) Contract Conditions, in contracts between the SBA and the 
agency when the acquisition is accomplished using the procedures of 
19.811-1(a) and (b).
    (b) The contracting officer shall insert the clause at 52.219-12, 
Special 8(a) Subcontract Conditions, in contracts between the SBA and 
its 8(a) contractor when the acquisition is accomplished using the 
procedures of 19.811-1(a) and (b).
* * * * *
    (d) * * *
    (1) The clause at 52.219-18 with its Alternate I will be used when 
competition is to be limited to 8(a) concerns within one or more 
specific SBA districts pursuant to 19.804-2.
* * * * *


    11. Section 52.219-1 is amended by revising the provision date, and 
in paragraph (c) by adding, in alphabetical order, the definition for 
``Joint venture'' to read as follows:

[[Page 67422]]

52.219-1  Small Business Program Representations.

* * * * *


* * * * *
    (c) Definitions. Joint venture, for purposes of a small 
disadvantaged business (SDB) set-aside or price evaluation 
preference (as prescribed at 13 CFR 124.321), is a concern that is 
owned and controlled by one or more socially and economically 
disadvantaged individuals entering into a joint venture agreement 
with one or more business concerns and is considered to be 
affiliated for size purposes with such other concern(s). The 
combined annual receipts or employees of the concerns entering into 
the joint venture must meet the applicable size standard 
corresponding to the SIC code designated for the contract. The 
majority of the venture's earnings must accrue directly to the 
socially and economically disadvantaged individuals in the SDB 
concern(s) in the joint venture. The percentage of the ownership 
involvement in a joint venture by disadvantaged individuals must be 
at least 51 percent.
* * * * *

(End of provision)

52.219-11  [Amended]

    12. Section 52.219-11 is amended by removing Alternate I.

52.219-12  [Amended]

    13. Section 52.219-12 is amended by removing Alternate I.
    14. Section 52.219-17 is amended by revising the clause date and by 
adding paragraphs (a)(5) and (c) to read as follows:

52.219-17  Section 8(a) Award.

* * * * *


    (a) * * *
    (5) That the subcontractor awarded a subcontract hereunder shall 
have the right of appeal from decisions of the cognizant Contracting 
Officer under the ``Disputes'' clause of the subcontract.
* * * * *
    (c) The offeror/subcontractor agrees that it will not 
subcontract the performance of any of the requirements of this 
subcontract to any lower tier subcontractor without the prior 
written approval of the SBA and the cognizant Contracting Officer of 
the __________ [insert name of contracting agency].

(End of clause)

52.219-18  [Amended]

    15. Section 52.219-18 is amended by removing Alternate II and by 
redesignating Alternate III as Alternate II.

[FR Doc. 96-32007 Filed 12-19-96; 8:45 am]