[Federal Register Volume 62, Number 90 (Friday, May 9, 1997)]
[Proposed Rules]
[Pages 25786-25795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12264]



[[Page 25785]]

_______________________________________________________________________

Part VIII

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 12, 14, 15, 19, 33, 52, and 53



Federal Acquisition Regulation; Reform of Affirmative Action in Federal 
Procurement; Proposed Rule



Proposed Collection; Comment Request Entitled Summary Subcontract 
Support; Notice



Proposed Collection Entitled Reform of Affirmative Action in Federal 
Procurement; Notice

  Federal Register / Vol. 62, No. 90 / Friday, May 9, 1997 / Proposed 
Rules  

[[Page 25786]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 12, 14, 15, 19, 33, 52, and 53

[FAR Case 97-004]
RIN 9000-AH59


Federal Acquisition Regulation; Reform of Affirmative Action in 
Federal Procurement

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

ACTION: Proposed rule with request for comments.

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SUMMARY: The Department of Defense, the General Services 
Administration, and the National Aeronautics and Space Administration 
are proposing amendments to the Federal Acquisition Regulation (FAR) 
concerning programs for small disadvantaged business concerns. These 
amendments conform to a Department of Justice (DoJ) proposal to reform 
affirmative action in Federal procurement. DoJ's proposal is designed 
to ensure compliance with the constitutional standards established by 
the Supreme Court in Adarand Constructors, Inc. v. Pena, 115 S.Ct. 2097 
(1995). This proposed rule is not requesting public comments on the DoJ 
proposal or its disposition of the public comments received. This 
proposed rule requests public comments only on the FAR implementation 
of the DoJ proposal. Comments on the DoJ proposal will not be 
considered. 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: Comments on the proposed rule should be submitted to the address 
below on or before July 8, 1997 to be considered in the formulation of 
a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVR), 1800 F Street, 
NW, Room 4035, Washington, DC 20405.
    E-mail comments submitted over Internet should be addressed to: www.arnet.gov">97-
004@www.arnet.gov. Please cite FAR case 97-004 in all correspondence 
related to this case.

FOR FURTHER INFORMATION CONTACT: Ms. Victoria Moss, Procurement 
Analyst, Federal Acquisition Policy Division, General Services 
Administration, telephone (202) 501-4764, or Mike Sipple, Procurement 
Analyst, Office of the Director of Defense Procurement, Department of 
Defense, telephone (703) 695-8567. For general information, contact the 
FAR Secretariat, 1800 F Street, NW, Room 4035, GS Building, Washington, 
DC 20405 (202) 501-4755. Please cite FAR case 97-004.

SUPPLEMENTARY INFORMATION:

A. Background

    In Adarand, the Supreme Court extended strict judicial scrutiny to 
Federal affirmative action programs that use racial or ethnic criteria 
as a basis for decisionmaking. In procurement, this means that any use 
of race in the decision to award a contract is subject to strict 
scrutiny. Under strict scrutiny, any Federal programs that make race a 
basis for contract decisionmaking must be narrowly tailored to serve a 
compelling government interest.
    DoJ developed a proposed structure to reform affirmative action in 
Federal procurement designed to ensure compliance with the 
constitutional standards established by the Supreme Court in Adarand. 
The DoJ proposal was previously published for public notice and 
invitation for comments (61 FR 26042, May 23, 1996). Its proposal, and 
its disposition of the public comments which is discussed elsewhere in 
this publication, are within the purview of DoJ. The DoJ model is 
expected to be implemented in several parts: Small Business 
Administration regulations; Department of Commerce regulations; and 
revisions to the FAR and the FAR supplements. This proposed rule 
contains the FAR revisions.

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 mechanisms through which small disadvantaged business concerns 
may be provided a benefit 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. The IRFA is 
summarized as follows:

    This proposed rule would establish in the FAR three procurement 
mechanisms benefiting small disadvantaged businesses (SDBs). These 
mechanisms will be authorized in certain two-digit Standard 
Industrial Classification (SIC) Major Groups authorized by the 
Administrator of the Office of Federal Procurement Policy (OFPP). 
The first mechanism is a price evaluation adjustment of up to 10 
percent. This price evaluation adjustment would be mandatory for 
those competitive procurements to which it applied. The second 
mechanism is a source selection evaluation factor or subfactor for 
planned SDB participation, primarily at the subcontract level, in 
the performance of a contract. This evaluation factor or subfactor 
would be used in competitive, negotiated acquisitions expected to 
exceed $500,000 ($1,000,000 for construction). A third mechanism 
provides for a monetary incentive for subcontracting with SDBs.
    The main impact of the proposed rule is expected to be on SDBs 
seeking to obtain from Federal Government agencies, or Federal 
Government agency prime contractors, contracts and subcontracts that 
are subject to the procurement mechanisms described above. The best 
available estimate of the number of such firms is 17,350. The 
proposed rule would also directly affect, although to a lesser 
degree, all non-SDB small businesses seeking Federal Government 
contracts that are subject to any of the procurement mechanisms 
described above, except the price evaluation adjustment (this 
mechanism applies only to SDB prime contractors).

    Comments are invited. Comments from small entities concerning the 
affected FAR subparts will be considered in accordance with section 610 
of the Act. Such comments must be submitted separately and should cite 
5 U.S.C. 601, et seq. (FAR case 97-004), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (Public Law 104-13) applies 
because the proposed rule contains reporting and recordkeeping 
requirements. This proposed rule provides mechanisms through which 
businesses may be provided a benefit in Federal contracting through 
their status as small disadvantaged business concerns or their 
utilization of small disadvantaged business concerns. In order to 
obtain these benefits, businesses must provide information supporting 
their status. In addition, firms claiming an advantage on the basis of 
their utilization of small disadvantaged business concerns must report 
on their actual accomplishments.
    In addition, this proposed rule requires contractors that submit 
reports under small, small disadvantaged and women-owned small business 
subcontracting plans to annually provide a breakout of awards (in 
dollars) to small disadvantaged business concerns by Standard 
Industrial Classification Major Group.

[[Page 25787]]

    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, 19, 33, 52, and 53

    Government procurement.

    Dated: May 6, 1997.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
    Therefore, it is proposed that 48 CFR Parts 12, 14, 15, 9, 33, 52, 
and 53 be amended as set forth below:
    1. The authority citation for 48 CFR Parts 12, 14, 15, 9, 33, 52, 
and 53 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--ACQUISITION OF COMMERCIAL ITEMS

    2. Section 12.303 is amended by revising paragraph (b)(1) to read 
as follows:


12.303  Contract format.

* * * * *
    (b) * * *
    (1) Block 10 if set-aside for emerging small businesses, if a price 
evaluation adjustment for small disadvantaged business concerns is 
applicable (the contracting officer shall indicate the percentage(s) 
and applicable line item(s)), or if an incentive subcontracting clause 
is used (the contracting officer shall indicate the applicable 
percentage);
* * * * *

PART 14--SEALED BIDDING


14.206  Small business set-asides, and price evaluation adjustments for 
small disadvantaged business concerns.

    3. The section heading for 14.206 is revised to read as set forth 
above.
    4. Section 14.502 is amended by redesignating paragraph (b)(4) as 
(b)(5) and adding a new (b)(4) to read as follows:


14.502  Conditions for use.

* * * * *
    (b) * * *
    (4) The use of the price evaluation adjustment for small 
disadvantaged business concerns (see subpart 19.11).
* * * * *

PART 15--CONTRACTING BY NEGOTIATION

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


15.605  Evaluation factors and subfactors.

* * * * *
    (b)(1) * * *
    (v) The extent of participation of small disadvantaged business 
concerns in performance of the contract shall be evaluated in 
unrestricted acquisitions expected to exceed $500,000 ($1,000,000 for 
construction) subject to certain limitations (see 19.201 and 19.1202).
* * * * *
    6. Section 15.608 is amended in paragraph (a)(2)(ii) by adding the 
following sentence after the fourth sentence:


15.608  Proposal evaluation.

    (a) * * *
    (2) * * *
    (ii) * * * Where past performance is to be evaluated, the 
evaluation should include the past performance of offerors in complying 
with subcontracting plan goals for small disadvantaged business (SDB) 
concerns (see subpart 19.7), monetary targets for SDB participation 
(see 19.1202), and notifications submitted under 19.1202-4(b). * * *
* * * * *
    7. Section 15.1003 is amended by revising paragraph (a)(2) to read 
as follows:


15.1003  Notifications to unsuccessful offerors.

    (a) * * *
    (2) Preaward notices for small business set-asides. (i) In a small 
business set-aside (see subpart 19.5), or when a small disadvantaged 
business concern receives a benefit based on its disadvantaged status 
(see subpart 19.11 and 19.1202) and is the apparently successful 
offeror, 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 also--
    (A) Include, when applicable, the name and address of the 
organization that certified ownership and control of the small 
disadvantaged business concern;
    (B) State that the Government will not consider subsequent 
revisions of the unsuccessful offerors proposal; and
    (C) State that no response is required unless a basis exists to 
challenge the disadvantaged status and/or small business size status of 
the apparently successful offeror.
    (ii) The notice is not required when the contracting officer 
determines in writing that the urgency of the requirement necessitates 
award without delay.
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

    8. Section 19.000 is amended by revising paragraph (a) introductory 
text; at the end of (a)(6) by removing and; at the end of (a)(7) by 
removing the period and inserting a semicolon in its place; and adding 
(a)(8) and (a)(9) to read as follows:


19.000  Scope of part.

    (a) This part implements the acquisition-related sections of the 
Small Business Act (15 U.S.C. 631, et seq.), applicable sections of the 
Armed Services Procurement Act (10 U.S.C. 2302, et seq.), the Federal 
Property and Administrative Services Act (41 U.S.C. 252), section 7102 
of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-
355), 10 U.S.C. 2323, and Executive Order 12138, May 18, 1979. It 
covers--
* * * * *
    (8) The use of a price evaluation adjustment for small 
disadvantaged business concerns; and
    (9) The Small Disadvantaged Business Participation Program.
* * * * *
    9. Section 19.201 is amended by redesignating paragraphs (b), (c), 
and (d) as (c), (d), and (e), respectively; and adding new paragraphs 
(b) and (f) to read as follows:


19.201  General policy.

* * * * *
    (b) The Administrator of the Office of Federal Procurement Policy 
(OFPP), based upon a recommendation by the Department of Commerce, will 
publish on an annual basis, by two-digit Major Groups as contained in 
the Standard Industrial Classification (SIC) Manual, and by region, if 
any, the authorized small disadvantaged business (SDB) procurement 
mechanisms, and their effective dates for new solicitations for the 
upcoming year. The SDB procurement mechanisms currently authorized are 
a price evaluation adjustment for SDB concerns (see subpart 19.11), an 
evaluation factor or subfactor for participation of SDB concerns (see 
19.1202), and monetary subcontracting incentive clauses for SDB 
concerns (see 19.1203). This issuance shall also include the applicable 
factors, by SIC Major Group, to be used in the price evaluation 
adjustment for SDB concerns (see 19.1104). The authorized procurement 
mechanisms shall be applied

[[Page 25788]]

consistently with the policies and procedures in this subpart. No SDB 
procurement mechanisms recommended by the Department of Commerce may be 
used unless authorized by the Administrator of OFPP. The Department of 
Commerce, in making its recommendations to the Administrator of OFPP, 
is not limited to the SDB procurement mechanisms identified in this 
section where the Department of Commerce has found substantial and 
persuasive evidence of--
    (1) A persistent and significant underutilization of minority firms 
in a particular industry, attributable to past or present 
discrimination; and
    (2) A demonstrated incapacity to alleviate the problem by using 
those mechanisms.
* * * * *
    (f)(1) Each agency shall designate, at levels it determines 
appropriate, personnel responsible for determining whether use of the 
SDB mechanism in subpart 19.11 has caused a particular industry 
category to bear a disproportionate share of the contracts awarded by a 
contracting activity of the agency to achieve its goal for SDB 
concerns. Requests for a determination may be submitted by any 
individual or business concern to the agency designee. If that person 
makes an affirmative determination of disproportionate impact, the 
determination shall be forwarded through agency channels for submittal 
to the Department of Commerce [name and address]. The following 
information should be included in any submittal:
    (i) A determination of disproportionate impact, including proposed 
corrective action;
    (ii) The SIC code(s) affected;
    (iii) Supporting information to justify the determination, 
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--
    (A) Total awards;
    (B) Total awards to small businesses;
    (C) Total awards to SDBs; and
    (D) Awards to SDBs categorized as SDB price evaluation adjustment, 
8(a), small business set-aside, and other; and
    (iv) A discussion of the pertinent findings, including any 
peculiarities related to the industry, regions, or demographics.
    (2) If the determination is approved by the Department of Commerce, 
the contracting activity shall limit the use of the SDB mechanism in 
subpart 19.11. This limitation shall not apply to solicitations that 
already have been synopsized.

Subpart 19.3--Determination of Status as a Small Disadvantaged 
Business Concern or a Small Business Concern

    10. The heading of subpart 19.3 is revised to read as set forth 
above.
    11. Section 19.304 is redesignated as 19.306 and new 19.304 and 
19.305 are added to read as follows:


19.304  Disadvantaged business status.

    (a) The contracting officer may accept an offeror's representation 
that it is a small disadvantaged business (SDB) concern for general 
statistical purposes.
    (b) For a prime contractor to be eligible to receive a benefit 
based on its disadvantaged status, the concern must be a small business 
and must, no later than the date specified by the contracting officer 
in the solicitation (see 19.306(b)), qualify as a disadvantaged 
business concern. The mechanisms that may provide benefits on the basis 
of disadvantaged status as a prime contractor are a price evaluation 
adjustment for SDB concerns (see subpart 19.11), and an evaluation 
factor or subfactor for SDB participation (see 19.1202). Disadvantaged 
status is determined by two factors: Social and economic disadvantage; 
and ownership and control by the designated socially and economically 
disadvantaged individuals. Status as a small business is addressed in 
19.301.
    (1) The contracting officer shall grant members of designated 
minority groups (see the provision at 52.219-22, Small Disadvantaged 
Business Status) a presumption of social and economic disadvantage. An 
offeror must represent in good faith its minority status. Offerors that 
are not members of designated minority groups shall be required to 
establish social and economic disadvantage. For non-presumed offerors, 
a determination of social and economic disadvantage shall be obtained 
by the offeror from the Small Business Administration (SBA). When a 
non-presumed offeror represents that it has a current determination of 
social and economic disadvantage from the SBA, the contracting officer 
may assess the validity of the representation of social and economic 
disadvantage by accessing the SBA's on-line central registry at 
[Internet address].
    (2) To claim disadvantaged status, an offeror must also submit to 
the contracting officer a certification, obtained within the prior 
three years, that the business is owned and controlled by the 
designated socially and economically disadvantaged individuals. Such a 
certification must come from an SBA approved organization, a list of 
which is maintained by the SBA.
    (3) Non-presumed offerors must obtain a determination of social and 
economic disadvantage, and all offerors claiming a disadvantaged status 
must provide a certification of ownership and control, no later than 
the date specified by the contracting officer in the solicitation (see 
19.306(b)).


Sec. 19.305  Protesting a determination of disadvantaged business 
status.

    This section applies to protests of a small business concern's 
disadvantaged status as a prime contractor. Protests of a small 
business concern's disadvantaged status as a subcontractor are 
processed under 19.703(a)(2). Protests of a concern's size as a prime 
contractor are processed under 19.302. Protests of a concern's size as 
a subcontractor are processed under 19.703(b). Any offeror, the 
contracting officer, or the SBA may protest the apparently successful 
offeror's representation of disadvantaged status if the concern is 
eligible to receive a benefit based on its disadvantaged status (see 
subpart 19.11 and 19.1202).
    (a) An offeror may protest a concern's representation of 
disadvantaged status by filing a protest with the contracting officer. 
The protest--
    (1) Must be filed within the times specified in 19.302(d)(1); and
    (2) 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.
    (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 SBA may protest a concern's representation of disadvantaged 
status by filing directly with its Office of Program Certification and 
Eligibility and by 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 the apparently 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 
Certification and Eligibility, Office of Minority Enterprise 
Development, 409 Third Street, SW, Washington, DC 20416. The 
contracting officer shall send to SBA--
    (1) The protest;
    (2) The date the protest was received and a determination of 
timeliness;

[[Page 25789]]

    (3) A copy of the protested concern's submittals regarding 
disadvantaged status; and
    (4) The date of bid opening or date on which notification of the 
apparently successful offeror was sent to unsuccessful offerors.
    (e) 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.
    (f) The SBA, Office of Program Certification and Eligibility, will 
determine the disadvantaged status of the challenged offeror and will 
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 SBA's decision on the 
appeal before award.
    (g) If the contracting officer does not receive an SBA 
determination within 15 business days after the SBA's receipt of the 
protest, the contracting officer shall presume that the challenged 
offeror is disadvantaged.
    (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.
    (i) The appeal must be filed with the SBA's Associate Administrator 
for Minority Enterprise Development within five business days after 
receipt of the determination. If the contracting officer receives the 
SBA's decision on 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.
    12. Newly redesignated 19.306 is amended by redesignating paragraph 
(b) as (c) and adding a new (b) to read as follows:


19.306  Solicitation provision and contract clause.

* * * * *
    (b) The contracting officer shall insert the provision at 52.219-
22, Small Disadvantaged Business Status, in solicitations that include 
the clause at 52.219-23, Notice of Price Evaluation Adjustment for 
Small Disadvantaged Business Concerns, or 52.219-25, Small 
Disadvantaged Business Participation Program--Disadvantaged Status and 
Reporting. The contracting officer shall insert a date that allows 
offerors a reasonable time, consistent with the needs of the 
procurement, to obtain a determination of social and economic 
disadvantage and a certification of ownership and control.
* * * * *
    13. Section 19.703 is amended in paragraph (a)(2) by inserting the 
following sentence after the first sentence; in the new sixth sentence 
by removing ``Small Business and Capital Ownership'' and inserting 
``Enterprise'' in its place; and in paragraph (b) by removing the first 
sentence. The new text reads as follows:


19.703  Eligibility requirements for participating in the program.

    (a) * * *
    (2) * * * A prime contractor, acting in good faith, may accept, for 
general statistical purposes or for purposes of a subcontracting plan, 
a subcontractor's representation that it is a small disadvantaged 
business concern. * * *
* * * * *
    14. Section 19.705-1 is amended by inserting the following sentence 
after the first sentence of the undesignated paragraph to read as 
follows:


19.705-1  General support of the program.

    * * * This subsection does not apply to small disadvantaged 
business subcontracting (see 19.1203). * * *


19.705-4  [Amended]

    15. Section 19.705-4 is amended in the last sentence of paragraph 
(c) by removing '', small disadvantaged''.


19.708  [Amended]

    16. Section 19.708 is amended in the first sentence of paragraphs 
(c)(1), (c)(2), and (c)(3) by removing ``, small disadvantaged''.
    17. Section 19.1001 is amended by designating the undesignated 
introductory paragraph as (a); redesignating paragraphs (a) and (b) as 
(a)(1) and (a)(2), respectively; and adding paragraph (b) to read as 
follows:


19.1001  General.

* * * * *
    (b) Notwithstanding the Small Business Competitiveness 
Demonstration Program, the following apply to acquisitions in the 
designated industry groups if authorized by the Administrator of the 
Office of Federal Procurement Policy (see 19.201(b)):
    (1) A price evaluation adjustment for small disadvantaged business 
concerns (see subpart 19.11), provided this mechanism may only be used 
when small business set-asides are authorized in the designated 
industry groups;
    (2) An evaluation factor or subfactor for participation of small 
disadvantaged business concerns (see 19.1202); and
    (3) Monetary subcontracting incentive clauses for small 
disadvantaged business concerns (see 19.1203).
    18. Subparts 19.11 and 19.12, consisting of sections 19.1101 
through 19.1204, are added to read as follows:

Subpart 19.11--Price Evaluation Adjustment for Small Disadvantaged 
Business Concerns

Sec.
19.1101  General.
19.1102  Applicability.
19.1103  Procedures.
19.1104  Solicitation provisions and contract clauses.


19.1101  General.

    A price evaluation adjustment for small disadvantaged business 
concerns shall be applied when authorized by the Administrator of the 
Office of Federal Procurement Policy (OFPP) (see 19.201(b)). The 
Administrator of OFPP will publish an annual listing of price 
evaluation adjustment percentages, by Standard Industrial 
Classification Major Group, to be used in solicitations for the 
upcoming year.


19.1102  Applicability.

    (a) The price evaluation adjustment shall be used in competitive 
acquisitions.
    (b) The price evaluation adjustment shall not be used in 
acquisitions that--
    (1) Are not greater than the simplified acquisition threshold;
    (2) Are awarded pursuant to the 8(a) program;
    (3) Are set-aside for small business concerns; or
    (4) Are for long distance telecommunications services.


19.1103  Procedures.

    (a) Give offers from small disadvantaged business concerns a price 
evaluation adjustment by adding the factor authorized by OFPP to all 
offers, except--
    (1) Offers from small disadvantaged business concerns that have not 
waived the evaluation adjustment;
    (2) Otherwise successful offers of eligible products under the 
Trade Agreements Act when the acquisition equals or exceeds the dollar 
threshold in 25.402;
    (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 basis or apply it to any group 
of items on which award may be made. Add other evaluation factors such 
as transportation costs or rent-free use of

[[Page 25790]]

Government facilities to the offers before applying the price 
evaluation adjustment.
    (c) Do not evaluate offers using the price evaluation adjustment 
when it would cause award to be made at a price that exceeds fair 
market price by more than 10 percent (10 U.S.C. 2323(e)(3) and section 
7102(a)(1)(B) of Public Law 103-355).


19.1104  Solicitation provisions and contract clauses.

    The contracting officer shall insert the clause at 52.219-23, 
Notice of Price Evaluation Adjustment for Small Disadvantaged Business 
Concerns, in solicitations and contracts when the circumstances in 
19.1102 apply. The contracting officer shall insert the authorized 
price evaluation adjustment factor. The clause shall be used with its 
Alternate I when the contracting officer determines that there are no 
small disadvantaged business manufacturers that can meet the 
requirements of the solicitation. This clause does not apply to the 
Department of Defense, the National Aeronautics and Space 
Administration, or the Coast Guard.

Subpart 19.12--Small Disadvantaged Business Participation Program

Sec.
19.1201   General.
19.1202  Evaluation factor or subfactor.
19.1202-1  General.
19.1202-2  Applicability.
19.1202-3  Considerations in developing an evaluation factor or 
subfactor.
19.1202-4 Procedures.
19.1203  Incentive subcontracting with small disadvantaged business 
concerns.
19.1204  Solicitation provisions and contract clauses.


19.1201  General.

    This subpart addresses the evaluation of the extent of 
participation of small disadvantaged business (SDB) concerns in 
performance of contracts in the Standard Industrial Classification 
(SIC) Major Groups authorized by the Administrator of the Office of 
Federal Procurement Policy (OFPP) (see 19.201(b)) and to the extent 
authorized by law. Two mechanisms are addressed in this subpart:
    (a) An evaluation factor or subfactor for the participation of SDB 
concerns in performance of the contract; and
    (b) An incentive subcontracting program for SDB concerns.


19.1202  Evaluation factor or subfactor.


19.1202-1  General.

    The extent of participation of SDB concerns in performance of the 
contract, in the SIC Major Groups authorized by the Administrator of 
OFPP and to the extent authorized by law, shall be evaluated consistent 
with this section. Participation in performance of the contract 
includes joint ventures, teaming arrangements, and subcontracts. Credit 
under the evaluation factor or subfactor is not available to SDB 
concerns that receive a price evaluation adjustment under subpart 
19.11. If an SDB concern waives the price evaluation adjustment at 
subpart 19.11, participation in performance of that contract includes 
the work expected to be performed by the SDB concern at the prime 
contract level.


19.1202-2  Applicability.

    (a) Except as stated in paragraph (b) of this subsection, the 
extent of participation of SDB concerns in performance of the contract 
in the authorized SIC Major Groups shall be evaluated in competitive, 
negotiated acquisitions expected to exceed $500,000 ($1,000,000 for 
construction).
    (b) The extent of participation of SDB concerns in performance of 
the contract in the authorized SIC Major Groups (see paragraph (a) of 
this subsection) shall not be evaluated in--
    (1) Small business set-asides (see subpart 19.5);
    (2) 8(a) acquisitions (see subpart 19.7);
    (3) Negotiated acquisitions where source selection is based on cost 
or price competition between proposals that meet the Government's 
minimum requirements stated in the solicitation (see 15.602); or
    (4) Contract actions that 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.


19.1202-3  Considerations in developing an evaluation factor or 
subfactor.

    In developing an SDB participation evaluation factor or subfactor, 
agencies may consider: The extent to which such concerns are 
specifically identified; the extent to which identified concerns have 
obtained disadvantaged status (for example, non-presumed offerors that 
have already obtained disadvantaged status (i.e., obtained a 
determination of social and economic disadvantage and a certification 
of ownership and control) are to receive greater consideration than 
non-presumed offerors that have only applied for disadvantaged 
status)); the extent of commitment to use such concerns (for example, 
enforceable commitments are to be weighted more heavily than non-
enforceable ones); the complexity and variety of the work small 
disadvantaged concerns are to perform; the realism of the proposal; 
past performance of offerors in complying with subcontracting plan 
goals for SDB concerns and monetary targets for SDB participation; and 
the extent of participation of such firms in terms of the value of the 
total acquisition.


19.1202-4  Procedures.

    (a) The solicitation shall describe the SDB participation 
evaluation factor or subfactor. The solicitation shall require offerors 
to provide, with their offers, targets, expressed as dollars and 
percentages of total contract value, in each of the applicable, 
authorized SIC Major Groups, and total targets for SDB participation 
segregated by joint venture partners, team members, and subcontractors. 
The solicitation shall require an SDB offeror that waives the SDB price 
evaluation adjustment in the clause at 52.219-23 to provide with its 
offer a target for the work that it intends to perform as the prime 
contractor. The solicitation shall state that any targets will be 
incorporated into and become part of any contract. Contractors with SDB 
participation targets shall be required to report SDB participation.
    (b) When an evaluation includes an SDB participation evaluation 
factor or subfactor that considers the extent to which SDB firms are 
specifically identified, the SDBs considered in the evaluation shall be 
listed in the contract, and the contractor shall be required to notify 
the contracting officer of any substitutions of firms that are not SDB 
concerns.


19.1203  Incentive subcontracting with small disadvantaged business 
concerns.

    The contracting officer may encourage increased subcontracting 
opportunities in the SIC Major Groups authorized by the Administrator 
of OFPP for SDB concerns in negotiated acquisitions by providing 
monetary incentives (see the clause at 52.219-26, Incentive 
Subcontracting Program for Small Disadvantaged Business Concerns, and 
19.1204(c)). Monetary incentives shall be based on actual achievement 
as compared to proposed monetary targets for SDB subcontracting (see 
19.1202) or award fee contracting. The incentive subcontracting program 
is separate and distinct from the establishment, monitoring, and 
enforcement of SDB subcontracting goals in a subcontracting plan.


19.1204  Solicitation provisions and contract clauses.

    (a) The contracting officer may insert a provision substantially 
the same as the provision at 52.219-24, Small

[[Page 25791]]

Disadvantaged Business Participation Targets, in solicitations that 
consider the extent of participation of SDB concerns in performance of 
the contract. The contracting officer may vary the terms of this 
provision consistent with the policies in 19.1202-4.
    (b) The contracting officer shall insert the clause at 52.219-25, 
Small Disadvantaged Business Participation Program--Disadvantaged 
Status and Reporting, in solicitations and contracts that consider the 
extent of participation of small disadvantaged business concerns in 
performance of the contract.
    (c) The contracting officer may, when contracting by negotiation, 
insert in solicitations and contracts containing the clause at 52.219-
25, Small Disadvantaged Business Participation Program--Disadvantaged 
Status and Reporting, a clause substantially the same as the clause at 
52.219-26, Incentive Subcontracting Program for Small Disadvantaged 
Business Concerns, when authorized (see 19.1203). The contracting 
officer may include an award fee provision in lieu of the incentive; in 
such cases, however, the contracting officer shall not use the clause 
at 52.219-26.

PART 33--PROTESTS, DISPUTES, AND APPEALS

    19. Section 33.102 is amended by revising the last sentence of 
paragraph (a) to read as follows:


33.102  General.

    (a) * * * (See 19.302 for protests of small business status and 
19.305 for protests of disadvantaged business status.)
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


52.212-2  [Amended]

    20. Section 52.212-2 is amended by revising the provision date; and 
in the parenthetical following paragraph (a) of the provision by 
inserting ``; (iv) small disadvantaged business participation;'' after 
``(see FAR 15.605)''.
    21. Section 52.212-3 is amended by revising the provision date; and 
adding two sentences at the end of paragraph (c)(2) to read as follows:


52.212-3  Offeror Representations and Certifications--Commercial Items.

* * * * *

Offeror Representations and Certifications--Commercial Items (Date)

* * * * *
    (c) * * *
    (2) * * * See the clause at 52.212-5, Contract Terms and 
Conditions Required to Implement Statutes or Executive Orders--
Commercial Items. If the Contracting Officer has checked 52.219-23, 
Notice of Price Evaluation Adjustment for Small Disadvantaged 
Business Concerns, or 52.219-25, Small Disadvantaged Business 
Participation Program--Disadvantaged Status and Reporting, and the 
offeror desires a benefit based on its disadvantaged status, the 
offeror shall submit a completed copy of the provision at 52.219-22, 
Small Disadvantaged Business Status, together with any documents 
required by that provision.
* * * * *
    22. Section 52.212-5 is amended by revising the clause date; 
redesignating paragraphs (b)(6) through (b)(17) as (b)(9) through 
(b)(20), respectively; and adding paragraphs (b)(6), (b)(7), and (b)(8) 
to read as follows:


52.212-5  Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (Date)

* * * * *
    (b) * * *
    ______ (6) 52.219-23, Notice of Price Evaluation Adjustment for 
Small Disadvantaged Business Concerns (Pub. L. 103-355, section 7102). 
(______Alternate I). If the offeror elects to waive the adjustment, it 
shall so indicate in its offer.
    ______ (7) 52.219-25, Small Disadvantaged Business Participation 
Program--Disadvantaged Status and Reporting.
    ______ (8) 52.219-26, Incentive Subcontracting Program for Small 
Disadvantaged Business Concerns.
* * * * *
    23. Section 52.219-9 is amended by revising the clause date and 
paragraph (d)(10)(iii); and by adding paragraph (j) 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)

* * * * *
    (d)(10) * * * (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 in paragraph (j) of this clause, and * * *
* * * * *
    (j) The Contractor shall submit the following reports:
    (1) Standard Form 294, Subcontracting Report for Individual 
Contracts. This report shall be submitted to the Contracting Officer 
semiannually and at contract completion. The reports cover 
subcontract award data related to this contract. This report is not 
required for company-wide or division-wide subcontracting plans.
    (2) Standard Form 295, Summary Subcontract Report. This report 
encompasses all the contracts with the awarding agency. It must be 
submitted semi-annually for contracts with the Department of Defense 
and annually for contracts with civilian agencies. If the reporting 
activity is covered by a company-wide or division-wide plan, the 
reporting activity must report annually all subcontract awards under 
that plan. All reports submitted at the close of each fiscal year 
(both individual and company-wide or division-wide plans) shall 
include a breakout of subcontract awards, in whole dollars, to small 
disadvantaged business concerns by Standard Industrial 
Classification (SIC) Major Group. For a company-wide or division-
wide plan, the Contractor may obtain from each of its subcontractors 
a predominant SIC code and report all awards to that subcontractor 
under its predominant SIC code.
* * * * *


52.219-10  [Amended]

    24. Section 52.219-10 is amended by revising the clause date; and 
in the first sentence of paragraph (b) of the clause by inserting ``for 
small business concerns and women-owned small business concerns'' after 
the word ``goals''.
    25. Sections 52.219-22 through 52.219-26 are added to read as 
follows:


52.219-22  Small Disadvantaged Business Status.

    As prescribed in 19.306(b), insert the following provision:

Small Disadvantaged Business Status (Date)

    (a) Definition. Small disadvantaged business concern, as used in 
this provision, means--
    (1) A small business concern that--
    (i) 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;
    (ii) Has its management and daily business controlled by one or 
more such individuals; and
    (iii) For the Department of Defense, National Aeronautics and 
Space Administration, and Coast Guard only, the majority of earnings 
of which accrue to such individuals; or
    (2) 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.

[[Page 25792]]

    (b) General. This provision is used to assess an offeror's small 
disadvantaged business status for the purpose of obtaining a benefit 
as a result of this solicitation. Status as a small business concern 
and status as a small disadvantaged business concern for general 
statistical purposes is covered by the provision at 52.219-1, Small 
Business Program Representation. Offerors claiming disadvantaged 
business status must demonstrate social and economic disadvantage 
and ownership and control by the designated individuals. [The 
offeror shall check one of the following:]
    ______ The offeror is not claiming disadvantaged business 
status.
    ______ The offeror is claiming disadvantaged business status. 
[The offeror shall enter the name(s), title(s) and business 
address(es) of the socially and economically disadvantaged 
individuals and paragraphs (b)(1) and (b)(2) of this provision.] The 
socially and economically disadvantaged individual(s) are:

----------------------------------------------------------------------

----------------------------------------------------------------------

----------------------------------------------------------------------

    (1) Social and Economic Disadvantage. Individuals who are 
members of the groups named in paragraph (b)(1)(i) of this provision 
are entitled to a presumption of social and economic disadvantage 
and must check the applicable categories. However, these 
presumptions are rebuttable (see the criteria for social 
disadvantage at 13 CFR 124.105 and economic disadvantage at 13 CFR 
124.106). Individuals who are not members of the named groups must 
complete paragraph (b)(1)(ii) of this provision.
    (i) Individuals with a Presumption of Social and Economic 
Disadvantage. The offeror represents that its ownership falls within 
at least one of the following categories [the offeror shall check 
the applicable categories]:
    ______ Black American;
    ______ Hispanic American;
    ______ Native American (American Indians, Eskimos, Aleuts, or 
Native Hawaiians);
    ______ Asian-Pacific American (persons with origins from Burma, 
Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China, 
Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, the Philippines, 
U.S. Trust Territory of the Pacific Islands (Republic of Palau), 
Republic of the Marshall Islands, Federated States of Micronesia, 
the Commonwealth of the Northern Mariana Islands, Guam, Samoa, 
Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru);
    ______ Subcontinent Asian (Asian-Indian) American (persons with 
origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the 
Maldives Islands, or Nepal).
    ______ Individual/concern, other than one of the preceding, 
currently certified for participation in the Minority Enterprise 
Development Program under section 8(a) of the Small Business Act (15 
U.S.C. 637(a)).
    (ii) Individuals without a Presumption of Social and Economic 
Disadvantage. Offerors must obtain a determination of social and 
economic disadvantage from the Small Business Administration dated 
no earlier than three years prior to the date of the solicitation. 
The offeror shall check one of the following:
    ______ The offeror represents, as part of its offer, that the 
Small Business Administration has made a determination concerning 
the individual's or individuals' status as socially and economically 
disadvantaged. The offeror certifies that it was found by the Small 
Business Administration to be socially and economically 
disadvantaged as a result of that determination and that no 
circumstances have changed to alter that determination.
    ______ The offeror represents that it will obtain a 
determination of social and economic disadvantage from the Small 
Business Administration by
    ____________ [contracting officer shall insert date] or forego 
any benefits based on disadvantaged status.
    (2) Ownership and Control. Both presumed and non-presumed 
offerors must demonstrate ownership and control by providing a 
certification from an organization approved by the Small Business 
Administration dated no earlier than three years prior to the date 
of the solicitation. [The offeror shall check one of the following:]
    ______Attached is a certification of ownership and control. The 
offeror certifies that no circumstances have changed to alter the 
validity of the certification.
    ______The offeror represents that it will provide a 
certification of ownership and control from an organization approved 
by the Small Business Administration by __________ [contracting 
officer shall insert date] or forego any benefits based on 
disadvantaged status.
    (c) Penalties and Remedies. Anyone who misrepresents any aspects 
of the disadvantaged status of a concern for the purposes of 
securing a contract or subcontract shall--
    (1) Be punished by imposition of a fine, imprisonment, or both;
    (2) Be subject to administrative remedies, including suspension 
and debarment; and
    (3) Be ineligible for participation in programs conducted under 
authority of the Small Business Act.

(End of provision)


52.219-23  Notice of Price Evaluation Adjustment for Small 
Disadvantaged Business Concerns.

    As prescribed in 19.1104, insert the following clause:

Notice of Price Evaluation Adjustment for Small Disadvantaged Business 
Concerns (Date)

    (a) Definitions. Small disadvantaged business concern, as used 
in this clause, means--
    (1) A small business concern that--
    (i) 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
    (ii) Has its management and daily business controlled by one or 
more such individuals; or
    (2) 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.
    United States, as used in this clause, means the United States, 
its territories and possessions, the Commonwealth of Puerto Rico, 
the U.S. Trust Territory of the Pacific Islands, and the District of 
Columbia.
    (b) Evaluation adjustment. (1) Offers will be evaluated by 
adding a factor of __________ [percentage to be inserted by the 
contracting officer] percent to the price of all offers, except--
    (i) Offers from small disadvantaged business concerns that have 
not waived the adjustment;
    (ii) Otherwise successful offers of eligible products under the 
Trade Agreements Act when the dollar threshold for application of 
the Act is exceeded (see section 25.402 of the Federal Acquisition 
Regulation); and
    (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 factor 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. The factor may not be applied if using the adjustment 
would cause the contract award to be made at a price that exceeds 
the fair market price by more than 10 percent.
    (c) Waiver of evaluation adjustment. A small disadvantaged 
business concern may elect to waive the adjustment, in which case 
the factor will be added to its offer for evaluation purposes. The 
agreements in paragraph (d) of this clause do not apply to offers 
that waive the adjustment.
    ______ Offeror elects to waive the adjustment.
    (d) Agreements. (1) A small disadvantaged business concern, that 
did not waive the adjustment, 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 (other than procurement from a nonmanufacturer of 
such 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.

[[Page 25793]]

    (2) A small disadvantaged business concern 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 in the United States. This paragraph does not apply in 
connection with construction or service contracts.

(End of clause)

    Alternate I (Date). As prescribed in 19.1104, substitute the 
following paragraph (d)(2) for paragraph (d)(2) of the basic clause:
    (d)(2) A small disadvantaged business concern submitting an 
offer in its own name agrees to furnish in performing this contract 
only end items manufactured or produced by small business concerns 
in the United States. This paragraph does not apply in connection 
with construction or service contracts.


52.219-24  Small Disadvantaged Business Participation Targets.

    As prescribed in 19.1204(a), insert a provision substantially as 
follows:

Small Disadvantaged Business Participation Targets (Date)

    (a) This solicitation contains a source selection factor or 
subfactor related to the participation of small disadvantaged 
business (SDB) concerns in the contract. Credit under that 
evaluation factor or subfactor is not available to an SDB concern 
that qualifies for a price evaluation adjustment under the clause at 
FAR 52.219-23, Notice of Price Evaluation Adjustment for Small 
Disadvantaged Business Concerns, unless the SDB concern specifically 
waives the price evaluation adjustment.
    (b) In order to receive credit under the source selection factor 
or subfactor, the offeror must provide, with its offer, targets, 
expressed as dollars and percentages of total contract value, for 
SDB participation in any of the Standard Industrial Classification 
(SIC) Major Groups for which the Administrator of the Office of 
Federal Procurement Policy has authorized the use of an evaluation 
factor or subfactor for SDB participation. A listing of those SIC 
codes may be found at: gopher://www.sbaonline.sba.gov:70/00/
Government-Contracting/Size/sizeall.txt. The targets may provide for 
participation by a prime contractor, joint venture partner, teaming 
arrangement member, or subcontractor; however, the targets for 
subcontractors must be listed separately.

(End of provision)


52.219-25  Small Disadvantaged Business Participation Program--
Disadvantaged Status and Reporting.

    As prescribed in 19.1204(b), insert the following clause:

Small Disadvantaged Business Participation Program--Disadvantaged 
Status and Reporting (Date)

    (a) Disadvantaged status for joint venture partners, team 
members, and subcontractors. This clause addresses disadvantaged 
status for joint venture partners, teaming arrangement members, and 
subcontractors and is applicable if this contract contains small 
disadvantaged business (SDB) participation targets. Disadvantaged 
status consists of a determination of social and economic 
disadvantage, and a certification of ownership and control by the 
designated socially and economically disadvantaged individuals.
    (1) Social and economic disadvantage. The Contractor, acting in 
good faith, may rely on the representations of joint venture 
partners, teaming arrangement members, and subcontractors regarding 
membership in designated minority groups. Representations shall be 
obtained from joint venture partners, teaming arrangement members, 
and subcontractors by way of a provision substantially the same as 
the provision at FAR 52.219-22, Small Disadvantaged Business Status. 
The Contractor shall grant members of designated minority groups a 
presumption of social and economic disadvantage. The Contractor 
shall also consider individuals to be socially and economically 
disadvantaged if they have obtained a determination of social and 
economic disadvantage from the Small Business Administration (SBA). 
The Contractor shall assess the validity of the determination by 
accessing the SBA's on-line registry at [INTERNET ADDRESS].
    (2) Ownership and control. To claim disadvantaged status, a 
joint venture partner, teaming arrangement member or subcontractor 
must submit to the Contractor a certification that the business is 
owned and controlled by the designated socially and economically 
disadvantaged individuals. Such a certification must come from an 
SBA approved organization dated no earlier than three years from the 
date of the joint venture or teaming arrangement or subcontract 
solicitation. A list of approved certifying organizations is 
maintained by the SBA.
    (b) Reporting requirement. If this contract contains SDB 
participation targets, the Contractor shall report on the 
participation of SDB concerns at contract completion, or as 
otherwise provided in this contract. Reporting may be on the 
Optional Form XX, Small Disadvantaged Business Participation Report, 
or in the Contractor's own format providing the same information. 
This report is required for each contract containing SDB 
participation targets. If this contract contains an individual 
Small, Small Disadvantaged and Women-owned Small Business 
Subcontracting Plan, reports may be submitted with the final 
Subcontracting Report for Individual Contracts (Standard Form 294) 
at the completion of the contract.

(End of clause)


52.219-26  Incentive Subcontracting Program for Small Disadvantaged 
Business Concerns.

    As prescribed in 19.1204(c), insert the following clause:

Incentive Subcontracting Program for Small Disadvantaged Business 
Concerns (Date)

    (a) Of the total dollars it plans to spend under subcontracts, 
the Contractor has committed itself in its offer to try to award a 
certain amount to small disadvantaged business concerns in the 
Standard Industrial Classification (SIC) Major Groups authorized by 
the Administrator of the Office of Federal Procurement Policy.
    (b) If the Contractor exceeds its total monetary target for 
subcontracting to small disadvantaged business concerns in the 
authorized SIC Major Groups, it will receive __________ [insert the 
appropriate number between 0 and 10] percent of the dollars in 
excess of the monetary target, unless the Contracting Officer 
determines that the excess was not due to the Contractor's efforts 
(e.g., a subcontractor cost overrun caused the actual subcontract 
amount to exceed that estimated in the offer, or the excess was 
caused by the award of subcontracts that had been planned but had 
not been disclosed in the offer during contract negotiations). 
Determinations made under this paragraph are not subject to the 
Disputes clause.
    (c) If this is a cost-plus-fixed-fee contract, the sum of the 
fixed fee and the incentive fee earned under this contract may not 
exceed the limitations in Subpart 15.9 of the Federal Acquisition 
Regulation.

(End of clause)

PART 53--FORMS

    26. Section 53.219 is amended by adding paragraph (c) to read as 
follows:


Sec. 53.219  Small business programs.

* * * * *
    (c) OF XX (DATE), Small Disadvantaged Business Participation 
Report. (See subpart 19.12.)
    27. Section 53.302-XX is added to read as follows:


53.302-XX  OF XX, Small Disadvantaged Business Participation Report.

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