[Federal Register Volume 62, Number 75 (Friday, April 18, 1997)]
[Proposed Rules]
[Pages 19200-19205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10060]



[[Page 19199]]

_______________________________________________________________________

Part III

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Part 12, et al.



Empowerment Contracting Federal Acquisition Regulations and Empowerment 
Contracting Proposed Information Collection Requirement Comment 
Request; Proposed Rule and Notice

  Federal Register / Vol. 62, No. 75 / Friday, April 18, 1997 / 
Proposed Rules  

[[Page 19200]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 12, 14, 15, 26, 36, and 52

[FAR Case 97-603]
RIN 9000-AH58


Federal Acquisition Regulation; Empowerment Contracting

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

ACTION: Proposed rule with request for comments.

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

SUMMARY: The Department Of Defense, General Services Administration, 
National Aeronautics And Space Administration are proposing amendments 
to the Federal Acquisition Regulation (FAR) to establish phase one of 
an Empowerment Contracting Program that provides procurement incentives 
to both large and small businesses to encourage their activity in areas 
of general and severe economic distress. This action is being taken to 
implement Presidential Executive Order 13005 of May 21, 1996, 
Empowerment Contracting. On September 13, 1996, the Department of 
Commerce (DoC) published in the Federal Register proposed guidelines 
for implementing Executive Order 13005 in the FAR. The amendments to 
the FAR that are being proposed in this rule are largely based on those 
guidelines. However, the amendments to the FAR in this proposed rule do 
depart from the September 13, 1996, guidelines in certain respects 
based either on comments received in response to the guidelines' 
publication or on the need to develop a program that could more readily 
be implemented. This regulatory action was subject to Office of 
Management and Budget review under Executive Order 12866, dated 
September 30, 1993. This is a major rule under 5 U.S.C. 804.

DATES: Comment Closing Date: Comments on the proposed rule should be 
submitted in writing to the address below on or before June 17, 1997, 
to be considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVRS), 1800 F Street 
NW., Room 4035, Washington DC 20405.
    Please cite FAR case 97-603 in all correspondence related to this 
issue.

FOR FURTHER INFORMATION CONTACT: Ms. Victoria Moss, Procurement 
Analyst, Federal Acquisition Policy Division, General Services 
Administration, Telephone: (202) 501-4764 or Mr. Mike Sipple, 
Procurement Analyst, Office of the Director of Defense Procurement, 
Department of Defense, Telephone: (703) 695-8567. For general 
information pertaining to publication and scheduling call the FAR 
Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

    Executive Order 13005 established the Empowerment Contracting 
Program to encourage business activity in areas of general economic 
distress by providing procurement incentives to qualified businesses. 
The procurement incentive program prescribed in the Executive order 
applies to both large and small businesses and is race neutral. DoC has 
published for comment proposed guidelines for implementing the 
Empowerment Contracting Program in the FAR (61 FR 48463, September 13, 
1996). That program is expected to be implemented through revisions to 
the FAR and the FAR Supplements and through the issuance of DoC 
regulations. This proposed rule contains the FAR revisions. The program 
that is described in this proposed rule represents phase one of a 
phased implementation that will likely be amended following the 
evaluation of its results. The planned duration of phase one of the 
program is 18 months following the issuance of an interim or final FAR 
rule. Agencies shall select the contracting activities that will 
participate in phase one. Agencies shall select a sufficient number of 
contracting activities such that approximately twenty five percent (in 
terms of dollars) of the applicable acquisitions awarded during phase 
one of the program, in each of the applicable Standard Industrial 
Classification (SIC) major groups, are subject to an empowerment 
contracting preference.

B. Regulatory Flexibility Act

    This proposed rule may 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., because the rule 
provides preferences through which small and large business concerns 
may be provided benefits in Federal contracting. An Initial Regulatory 
Flexibility Analysis (IRFA) has been prepared and may be obtained from 
the FAR Secretariat. A copy of the IRFA has been submitted to the Chief 
Counsel for Advocacy of the Small Business Administration. Comments are 
invited. Comments from small entities concerning the affected FAR 
subparts will be considered in accordance with Section 610 of the 
Regulatory Flexibility Act. Such comments must be submitted separately 
and cite FAR Case 97-603 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies 
because the proposed rule contains reporting and recordkeeping 
requirements. This proposed rule provides two means by which a firm can 
apply for an evaluation preference. Under the first process, 
prequalification with the DoC, a firm may submit information to DoC 
under rules being developed by that agency and receive a qualification 
certification which will be valid for the period of time determined by 
DoC. When competing for Federal contracts, these firms need only show 
that they are prequalified in order to receive the preference.
    Firms that are not prequalified may self-certify on individual 
solicitations. Under self-certification, a firm must indicate how it 
will qualify against the stated empowerment criteria, report on its 
actual performance against those criteria, and grant the Government 
certain audit rights.
    A request for approval of the paperwork burden has been submitted 
to the Office of Management and Budget and a notice of that request 
appears elsewhere in this issue.

List of Subjects in 48 CFR Parts 12, 14, 15, 26, 36, and 52

    Government procurement.

    Dated: April 14, 1997.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Parts 12, 14, 15, 26, 36, and 52 are proposed to 
be amended as follows:
    1. The authority citation for 48 CFR 12, 14, 15, 26, 36, 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).

PART 12--COMMERCIAL ITEMS

    2. Section 12.301 is amended by adding paragraph (g) to read as 
follows:


12.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (g) Empowerment Contracting Program. The contracting officer shall

[[Page 19201]]

ensure that solicitations and contracts subject to the Empowerment 
Contracting Program (see subpart 26.4) include the appropriate 
solicitation provisions and contract clauses (see 26.409).

PART 14--SEALED BIDDING

    3. Section 14.206 is revised to read as follows:


14.206  Small business set-asides and the Empowerment Contracting 
Program.

    See part 19 for small business set-asides, and part 26 for the 
Empowerment Contracting Program.

PART 15--CONTRACTING BY NEGOTIATION

    4. Section 15.605 is amended by adding paragraph (b)(1)(v) to read 
as follows:


15.605  Evaluation factors and subfactors.

* * * * *
    (b)(1) * * *
    (v) For acquisitions subject to subpart 26.4, Empowerment 
Contracting Program, a 10 percent price evaluation preference shall be 
used in acquisitions when cost or price is a significant evaluation 
factor; a non-price empowerment contracting evaluation factor shall be 
used when price or cost is not a significant evaluation factor (see 
subpart 26.4).
* * * * *
    5. Section 15.1003 is amended by adding paragraph (a)(3) to read as 
follows:


15.1003  Notifications to unsuccessful offerors.

    (a) * * *
    (3) Preaward notices for the Empowerment Contracting Program. When 
the apparently successful offeror has received an empowerment 
contracting preference (see subpart 26.4) that was the determining 
factor in its selection, upon completion of negotiations and 
determinations of responsibility, but prior to award, the contracting 
officer shall notify each unsuccessful offeror in writing of the name 
and location of the apparently successful offeror. The notice shall 
indicate whether the apparently successful offeror represented itself 
as prequalified or self-certified, and shall indicate the type of 
prequalification or self-certification. The notice also shall state 
that--
    (i) The Government will not consider subsequent revisions of the 
unsuccessful offeror's proposal; and
    (ii) No response is required unless a basis exists to challenge the 
empowerment contracting status of the apparently successful offeror. 
The notice is not required when the contracting officer determines in 
writing that the urgency of the requirement necessitates award without 
delay.
* * * * *

PART 26--OTHER SOCIOECONOMIC PROGRAMS

    6. Part 26 is amended by adding subpart 26.4 to read as follows:

Subpart 26.4--Empowerment Contracting Program

26.401  General.
26.402  Definitions.
26.403  Status as a qualified business.
26.404  Protesting a firm's status as a qualified business.
26.405  Applicability.
26.406  Preferences.
26.406-1  Price evaluation preference.
26.406-2  Non-price evaluation factor.
26.407  Contractor obligations.
26.408  Agency reporting requirements.
26.409  Solicitation provisions and contract clauses.


26.401  General.

    This subpart implements Executive Order 13005, Empowerment 
Contracting. The Order provides for procurement preferences in certain 
acquisition categories to encourage business activity by both large and 
small businesses in areas of general economic distress. The program 
that is described in this subpart represents phase one of a phased 
implementation that will likely be amended following the evaluation of 
its results. The planned duration of phase one of the program is 18 
months following the issuance of an interim or final FAR rule. The head 
of the agency shall select the contracting activities that will 
participate in phase one. The head of the agency shall select a 
sufficient number of contracting activities such that approximately 25 
percent (in terms of dollars) of the applicable acquisitions awarded 
during phase one of the program, in each of the applicable Standard 
Industrial Classification (SIC) major groups (see 26.405), are subject 
to an empowerment contracting preference.


26.402  Definitions.

    ``Qualified business,'' as used in this subpart, means a for-profit 
or not-for-profit business concern that has represented itself as 
prequalified by the Department of Commerce for the Empowerment 
Contracting Program or has self-certified to specific definitions in 
accordance with the clause at 52.226-3, Empowerment Contracting--
Qualified Business Status.


26.403  Status as a qualified business.

    (a) Size. The appropriate size standard for each acquisition shall 
be established consistent with 19.102. Notwithstanding the definition 
of business or concern at 13 CFR 121.403, the size standard for each 
acquisition shall also apply to not-for-profit entities.
    (b) Qualification process. In order to qualify for the procurement 
preferences of this subpart, a business concern may obtain status as a 
qualified business through either prequalification by the Department of 
Commerce (DoC) or self-certification on a solicitation-by-solicitation 
basis. Prequalification may be used when a business concern believes 
that it already meets the qualification criteria established by DoC (XX 
CFR Part XXX). Self-certification may be used when a business concern 
can meet established criteria during the period of performance of a 
contract (see 52.226-3). If a business concern is prequalified, it is 
entitled to receive preferences for the effective period of its 
prequalification. If a business concern chooses to qualify by self-
certifying, it must grant the Government certain audit rights and shall 
be required to pay the amount of any premium paid due to an empowerment 
contracting preference should it not fulfill its promises. 
Prequalification by DoC will be conducted according to DoC regulations 
at XX CFR Part XXX. Offerors shall represent to the contracting officer 
whether they have obtained prequalification from DoC in the clause at 
52.226-3. Self-certification also shall be accomplished using the 
clause at 52.226-3. For an apparently successful offeror that 
represented itself as prequalified or self-certified, the contracting 
officer shall ensure that the offeror is not listed on DoC's List of 
Ineligible Contractors for Empowerment Contracting Preferences by 
accessing DoC's website at [insert URL].


26.404  Protesting a firm's status as a qualified business.

    This section applies to protests of a business concern's status as 
a qualified business. Protests of a concern's size shall be processed 
in accordance with 19.302. Issues related to the Empowerment 
Contracting Program, other than size, shall be resolved in accordance 
with the procedures in this section. If a protest includes both size 
and other issues, the protest shall be processed concurrently under the 
procedures in 19.302 and this section. Any offeror, the contracting 
officer, or the DoC may protest the apparently successful offerors 
prequalified status or self-certification.

[[Page 19202]]

    (a) An offeror may protest a concern's prequalified status or self-
certification by filing a protest with the contracting officer. The 
protest--
    (1) Must be filed within the times specified in paragraph (b) of 
this section; and
    (2) Must contain specific detailed evidence supporting the basis of 
protest.
    (b) In order to affect a specific solicitation, a protest must be 
timely.
    (1) To be timely, a protest by an interested party must be received 
by the contracting officer by the close of business on the 5th business 
day after bid opening (in sealed bid acquisitions) or by the close of 
business on the 5th business day after receipt of the notification from 
the contracting officer that identifies the apparently successful 
offeror (in negotiated acquisitions) (see 15.1003(a)(3)).
    (i) An oral protest must be confirmed in writing. The written 
confirmation must be delivered to the contracting officer within the 5-
day period or sent by U.S. mail postmarked no later than one day after 
the oral protest.
    (ii) A written protest must be delivered to the contracting officer 
within the 5-day period, or sent by U.S. mail postmarked within the 5-
day period.
    (2) A contracting officer's protest is always considered timely 
whether filed before or after award.
    (c) The contracting officer or the DoC may protest a concern's 
prequalified status or self-certification at any time.
    (1) 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 standard, the contracting officer must be 
persuaded by the evidence presented before adopting the grounds for 
protest as his or her own.
    (2) The DoC may protest a concern's prequalified status or self-
certification by filing directly with its Office of XXXXX and notifying 
the contracting officer.
    (d) The contracting officer shall return untimely protests to the 
protestor, including protests filed before bid opening or notification 
of the apparently successful offeror.
    (e) Upon receipt of a timely protest, the contracting officer shall 
withhold award and forward the protest to the DoC Office of XXXXX, 14th 
and Constitution Ave. NW, Washington, DC 20230. The contracting officer 
shall send to DoC--
    (1) The protest;
    (2) The date the protest was received and a determination of 
timeliness;
    (3) A copy of the protested concern's submittals regarding 
prequalified status or self-certification; and
    (4) The date of bid opening or date on which notification of the 
apparently successful offeror was sent to unsuccessful offerors.
    (f) When the contracting officer makes a written determination that 
award must be made to protect the public interest, award may be made 
notwithstanding the protest.
    (g) The DoC, Office of XXXXX, will determine the qualification 
status of the challenged offeror and will notify the contracting 
officer, the challenged offeror, and the protestor. 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 DoC's decision on the 
appeal before award.
    (h) If the contracting officer does not receive a DoC determination 
within 15 business days after the DoC's receipt of the protest, the 
contracting officer shall presume that the challenged offeror's 
prequalified status or self-certification is valid.
    (i) A DoC 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 
DoC's Office of XXXXX within five business days after receipt of the 
determination.


26.405  Applicability.

    (a) Except as stated in paragraph (b) of this section, the 
empowerment contracting preferences shall be applied in competitive 
acquisitions, at contracting activities designated by the head of the 
agency, in the following Standard Industrial Classification (SIC) Major 
Groups:

15  Building Construction-General Contractors and Operative 
Builders;
20  Food and Kindred Products;
23  Apparel and Other Finished Products Made from Fabrics and 
Similar Materials;
25  Furniture and Fixtures;
27  Printing, Publishing, and Allied Industries;
30  Rubber and Miscellaneous Plastic Products;
34  Fabricated Metal Products, Except Machinery and Transportation 
Equipment;
42  Motor Freight Transportation and Warehousing;
51  Wholesale Trade-Nondurable Goods;
73  Business Services; and
87  Engineering, Accounting, Research, Management, and Related 
Services.

    (b) Do not use the empowerment contracting preferences in 
acquisitions that--
    (1) Are not greater than the simplified acquisition threshold;
    (2) Are set-aside for small business concerns;
    (3) Are awarded pursuant to the 8(a) program;
    (4) Are awarded to required sources of supply under part 8 (e.g., 
Federal Prison Industries, Committee for Purchase from People Who are 
Blind or Severely Disabled, and Federal Supply Schedule Contracts); or
    (5) Will be performed entirely outside of any State, territory, or 
possession of the United States, the District of Columbia, and the 
Commonwealth of Puerto Rico.


26.406  Preferences.

    For each acquisition subject to this subpart, the contracting 
officer shall use a 10 percent price evaluation preference or a non-
price evaluation factor. When the non-price evaluation factor is used, 
and the source selection uses a numerical rating system, the non-price 
evaluation factor for empowerment contracting may be given a weight of 
up to 15 percent. The Empowerment Contracting Program shall not 
displace the agencies' authority or responsibilities, as authorized by 
law, regarding any other programs designed to promote the development 
of small, small disadvantaged, or woman-owned small businesses. 
Accordingly, any preference a business receives under this program 
shall be added to the preference it may receive pursuant to other 
statutory or regulatory programs.


26.406-1  Price evaluation preference.

    (a) Policy. A price evaluation preference of 10 percent shall be 
used in acquisitions subject to this subpart when price or cost is a 
significant evaluation factor.
    (b) Procedures. (1) The contracting officer shall--
    (i) Give offers from qualified businesses a price evaluation 
preference by adding ten percent to all offers, except offers from 
qualified businesses;
    (ii) Apply the preference on a line item basis or apply it to any 
group of items on which award may be made; and
    (iii) Add other evaluation factors such as transportation costs or 
rent-free use of Government facilities to the offers before applying 
the price evaluation preference.
    (2) This preference shall be additive along with any other price 
evaluation preferences. Preferences shall not be calculated based on an 
offer with

[[Page 19203]]

another preference added, but rather on the base offer alone. For 
example, if an acquisition is subject to this subpart and a price 
evaluation preference or adjustment for small disadvantaged business 
concerns, each of the preferences shall be applied to the initial 
offers and the preferences combined to arrive at total evaluated 
prices.


26.406-2  Non-price evaluation factor.

    A non-price evaluation factor shall be used in acquisitions when 
price or cost is not a significant evaluation factor. The contracting 
officer shall ensure that the factor will be given sufficient weight to 
be meaningful when source selection is made on a best value basis. When 
the non-price evaluation factor is used, and the source selection uses 
a numerical rating system, the non-price evaluation factor for 
empowerment contracting may be given a weight of up to 15 percent. The 
solicitation shall describe the empowerment contracting non-price 
evaluation factor.


26.407  Contractor obligations.

    (a) All qualified business contractors shall comply with the 
limitations on subcontracting specified in the clause at 52.226-5.
    (b) Contractors that qualify by self-certification--(1) Reporting 
requirement. Not later than 30 days after completion of the contract, 
the contractor shall submit a report to the contracting officer that 
documents its compliance or failure to comply with the criteria by 
which the contractor self-certified its status as a qualified business.
    (2) Government right to audit. The contracting officer, or an 
authorized representative of the contracting officer, shall have the 
right to examine and audit all of the contractor's records necessary to 
determine whether the contractor complied with the terms of the self-
certification. ``Records'' includes books, documents, accounting 
procedures and practices, and other data, regardless of type and 
regardless of whether such items are in written form, in the form of 
computer data, or in any other form.
    (3) Failure to comply with the terms of the self-certification. In 
addition to other remedies available to the Government, the following 
apply:
    (i) Preference recoupment. When a contractor does not comply with 
the terms of a self-certification, the Government shall require a 
preference recoupment. If the contracting officer finds that the 
contractor failed to comply with the terms of the self-certification, 
the contracting officer shall issue a final decision to the contractor 
to that effect and require recoupment of the dollar amount of the 
premium paid by the Government due to an empowerment contracting 
preference. The contracting officer's final decision shall state that 
the contractor has the right to appeal under the clause in the contract 
entitled Disputes. Preference recoupments shall be in addition to any 
other remedies that the Government may have.
    (ii) List of Ineligible Contractors for the Empowerment Contracting 
Program. If the contracting officer suspects that the contractor failed 
to make a good faith effort to comply with the terms of its self-
certification, the matter shall be referred to DoC's Office of XXXXX 
for a determination on whether the contractor should be included on the 
List of Ineligible Contractors for Empowerment Contracting Program. 
This is in addition to other remedies, including suspension, debarment, 
and ineligibility under Part 9.


26.408  Agency reporting requirements.

    Each agency shall submit to the DoC Office of XXXXX, 14th and 
Constitution Ave. NW, Washington, DC 20230, a report covering each 
fiscal year in which it has conducted procurements under the 
Empowerment Contracting Program described in this subpart. The report 
shall be submitted within three months after the end of the fiscal year 
and shall contain the following information:
    (a) The number and dollar amount of solicitations in which an 
empowerment contracting preference was offered. This information will 
be broken down by SIC Major Group and by the use of the 10 percent 
price evaluation preference and non-price evaluation factor;
    (b) The contract numbers, dollar amounts, names of awardees, and 
price premiums paid (if identifiable) for awards made as a result of an 
empowerment contracting preference. This information will be broken 
down by SIC Major Group.
    (c) Comments on the advantages and disadvantages of the Empowerment 
Contracting Program, including comments on whether the program had any 
impact on the quality of supplies and services procured through its 
use.


26.409  Solicitation provisions and contract clauses.

    (a) The contracting officer shall insert the clause at 52.226-3, 
Empowerment Contracting--Qualified Business Status, in solicitations 
and contracts that include an empowerment contracting preference.
    (b) The contracting officer shall insert the provision at 52.226-4, 
Empowerment Contracting--Notice of Price Evaluation Preference, in 
solicitations that include an empowerment contracting price evaluation 
preference.
    (c) The contracting officer shall insert the clause at 52.226-5, 
Empowerment Contracting--Contractor Obligations, in solicitations and 
contracts that include an empowerment contracting preference. The 
clause shall be used with its Alternate I when the contracting officer 
believes that the amount of the preference recoupment should be 
specified in the contract.

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

    7. 36.602-1 is amended by adding paragraph (a)(8) to read as 
follows:


36.602-1  Selection criteria.

    (a) * * *
    (8) Status as a qualified business, if the acquisition is subject 
to subpart 26.4, Empowerment Contracting.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    8. Part 52 is amended by adding 52.226-3, 52.226-4, and 52.226-5 to 
read as follows:


52.226-3 Empowerment Contracting--Qualified Business Status.

    As prescribed in 26.409(a), use the following clause:

EMPOWERMENT CONTRACTING--QUALIFIED BUSINESS STATUS (XXX 1997)

    (a) Definitions. As used in this clause--
    ``Area of general economic distress'' means, for all urban and 
rural communities, any census tract that has a poverty rate of at 
least 20 percent or any designated Federal Empowerment Zone, 
Supplemental Empowerment Zone, Enhanced Enterprise Community, or 
Enterprise Community. It also means any rural area or Indian 
reservation that currently meets the criteria for designation as a 
redevelopment area under section 401(a) of the Public Works and 
Economic Development Act of 1965, as amended (42 U.S.C. 3161(a)), as 
set forth at 13 CFR 301.2 (loss of population), 13 CFR 301.4 (Indian 
Lands), and 13 CFR 301.7 (special impact areas). Note: These areas 
have been identified by the Department of Commerce (DoC) and are 
available on the DoC website at [enter URL].
    ``Area of severe economic distress'' means any census tract that 
has a poverty rate of at least 50 percent. Note: These areas have 
been identified by DoC and are available on the DoC website at 
[enter URL].
    (b) General. This clause is used to assess an offeror's 
qualified status for the purpose of obtaining an empowerment 
contracting preference for this acquisition. Status as a

[[Page 19204]]

small business is covered by 52.219-1, Small Business Program 
Representations or 52.212-3, Offeror Representations and 
Certifications--Commercial Items. An offeror claiming qualified 
business status must either represent that it has obtained 
prequalification from DoC or certify to specified definitions. (The 
offeror shall check one of the following.)

____ The offeror is claiming qualified business status on the basis 
of prequalification by DoC (the offeror must complete subparagraph 
(b)(1)).
____ The offeror is claiming qualified business status on the basis 
of self-certification to specified definitions (the offeror must 
complete subparagraph (b)(2)).

    (1) Prequalification by the Department of Commerce. If DoC has 
prequalified the offeror as meeting one or more of the definitions 
for qualification (see XX CFR XXX), the offeror shall provide a copy 
of its current prequalification certificate with its offer. Based on 
its current prequalification certificate and the size standard 
applicable to this acquisition, the offeror represents its status as 
a (the offeror shall check one of the following):

____ Qualified small business.
____ Qualified large business in areas of general economic distress.
____ Qualified business in areas of severe economic distress.

    (2) Self-certification. The offeror certifies, as part of its 
offer, that it meets the definitions of qualified small business, 
qualified large business in areas of general economic distress, or 
qualified business in areas of severe economic distress for the 
Standard Industrial Classification (SIC) Major Group of this 
acquisition (the offeror shall check the applicable criterion or 
criteria):

____ (i) Qualified small business (check one of the following).
____ The contractor will pay, during the period of performance of 
the contract, at least 25 percent of its total wages and benefits to 
residents from areas of general economic distress; or
____ The contractor will maintain, during the period of performance 
of the contract, physical plant(s) in areas of general economic 
distress where at least 25 percent of its employees will perform 
their jobs (employees will be considered to perform their jobs at 
the location where they spend the most time working, as long as it 
is at least six hours per work week); or
____ The contractor will incur, during the period of performance of 
the contract, at least 25 percent of its expenses on goods, 
materials, and services from firms located in areas of general 
economic distress.
____ (ii) Qualified large business in areas of general economic 
distress. The contractor will pay, during the period of performance 
of the contract, at least 25 percent of its total wages and benefits 
to residents from areas of general economic distress; and at least 
one of the following:
____ The contractor will maintain, during the period of performance 
of the contract, physical plant(s) in areas of general economic 
distress where at least 25 percent of its employees will perform 
their jobs (employees will be considered to perform their jobs at 
the location where they spend the most time working, as long as it 
is at least six hours per work week); or
____ The contractor will pay, during the period of performance of 
the contract, at least 50 percent of its total wages and benefits to 
residents from areas of general economic distress; or
____ The contractor will incur, during the period of performance of 
the contract, at least 25 percent of its expenses on goods, 
materials, and services from firms located in areas of general 
economic distress.
____ (iii) Qualified business in areas of severe economic distress 
(check one of the following).
____ The contractor will pay, during the period of performance of 
the contract, at least 25 percent of its total wages and benefits to 
residents from areas of severe economic distress; or
____ The contractor will maintain, during the period of performance 
of the contract, physical plant(s) in areas of severe economic 
distress where at least 25 percent of its employees will perform 
their jobs (employees will be considered to perform their jobs at 
the location where they spend the most time working, as long as it 
is at least six hours per work week); or
____ The contractor will incur, during the period of performance of 
the contract, at least 25 percent of its expenses on goods, 
materials, and services from firms located in areas of severe 
economic distress.

(End of clause)


52.226-4  Empowerment Contracting--Notice of Price Evaluation 
Preference.

    As prescribed in 26.409(b), use the following provision:

EMPOWERMENT CONTRACTING--NOTICE OF PRICE EVALUATION PREFERENCE (XXX 
1997)

    (a) Definition.
    ``Qualified business,'' as used in this provision, means a for-
profit or not-for-profit business concern that has represented 
itself as prequalified by the Department of Commerce for the 
Empowerment Contracting Program or has self-certified to specific 
definitions in accordance with the clause at 52.226-3, Empowerment 
Contracting--Qualified Business Status.
    (b) Evaluation preference.
    (1) Offers will be evaluated by adding a factor of ten percent 
to the price of all offers, except offers from qualified businesses.
    (2) The preference shall be applied on a line item basis or to 
any group of items on which award may be made. Other evaluation 
factors described in the solicitation shall be applied before 
application of the factor described in paragraph (b)(1) of this 
provision.
    (3) This preference is additive along with any other price 
evaluation preferences. Preferences shall not be calculated based on 
an offer with another preference added, but rather on the base offer 
alone.

(End of provision)


52.226-5, Empowerment  Contracting--Contractor Obligations.

    As prescribed in 26.409(a), use the following clause:

EMPOWERMENT CONTRACTING--CONTRACTOR OBLIGATIONS (XXX 1997)

    This clause applies to Contractors that claim qualified business 
status under the Empowerment Contracting Program.
    (a) Limitations on subcontracting. The Contractor agrees that in 
performance of this contract in the case of a contract for--
    (1) Services, except construction, at least 50 percent of the 
cost of personnel for contract performance will be spent for 
employees of the concern.
    (2) Supplies, at least 50 percent of the cost of manufacturing, 
excluding the cost of materials, will be performed by the concern.
    (3) 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.
    (4) 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.
    (b) Additional requirements. This paragraph applies if the 
Contractor self-certified its status as a qualified business in the 
clause at 52.226-3, Empowerment Contracting--Qualified Business 
Status.
    (1) Reporting requirement. Not later than 30 days after the 
completion of this contract, the Contractor shall submit a report to 
the Contracting Officer that documents its compliance or failure to 
comply with the criteria by which the Contractor self-certified its 
status as a qualified business.
    (2) Government right to audit. The Contracting Officer, or an 
authorized representative of the Contracting Officer, shall have the 
right to examine and audit all of the Contractor's records necessary 
to determine whether the Contractor complied with the terms of its 
self-certification. ``Records'' includes books, documents, 
accounting procedures and practices, and other data, regardless of 
type and regardless of whether such items are in written form, in 
the form of computer data, or in any other form.
    (3) Failure to comply with the terms of the self-certification--
(i) Preference recoupment. If the Contractor does not comply with 
the terms of the self-certification, the Government shall require a 
preference recoupment. If the Contracting Officer finds that the 
Contractor failed to comply with the terms of the self-
certification, the Contracting Officer shall issue a final decision 
to the Contractor to that effect and unilaterally reduce the price 
of the contract by the dollar amount of the premium paid by the 
Government due to an empowerment contracting preference. The 
Contractor has the right to appeal the Contracting Officer's

[[Page 19205]]

final decision in accordance with the Disputes clause of this 
contract. Preference recoupment shall be in addition to any other 
remedies that the Government may have.
    (ii) List of Ineligible Contractors for the Empowerment 
Contracting Program. If the Contracting Officer suspects that the 
Contractor failed to make a good faith effort to comply with the 
terms of its self-certification, the Contracting Officer shall refer 
the Contractor to Department of Commerce's Office of XXXXX for a 
determination on whether or not the contractor should be included on 
the List of Ineligible Contractors for Empowerment Contracting 
Program.

(End of clause)

    Alternate I (XXX 1997). As prescribed in 26.409(c), substitute 
the following paragraph (b)(3)(i) for paragraph (b)(3)(i) of the 
basic clause:
    (i) Preference recoupment. If the Contractor does not comply 
with the terms of the self-certification, the contract price shall 
be reduced by an amount equal to ______ (Contracting Officer shall 
insert an amount equal to the dollar amount of the premium paid by 
the Government due to an empowerment contracting preference). If the 
Contracting Officer finds that the Contractor failed to comply with 
the terms of the self-certification, the Contracting Officer shall 
issue a final decision to the Contractor to that effect, reduce the 
contract price, and require payment of the preference recoupment in 
the amount stated in this paragraph. The Contractor has the right to 
appeal the Contracting Officer's final decision in accordance with 
the Disputes clause of this contract. Preference recoupment shall be 
in addition to any other remedies that the Government may have.

[FR Doc. 97-10060 Filed 4-17-97; 8:45 am]
BILLING CODE 6820-EP-P