[Federal Register Volume 63, Number 58 (Thursday, March 26, 1998)]
[Notices]
[Pages 14681-14683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7709]


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DEPARTMENT OF DEFENSE


Test Program for Negotiation of Comprehensive Small Business 
Subcontracting Plans

AGENCY: Department of Defense (DoD).

ACTION: Notice of test program.

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SUMMARY: The Department of Defense is amending its Test Program for 
Negotiation of Comprehensive Small Business Subcontracting Plans to 
implement Section 822 of the National Defense Authorization Act for 
Fiscal Year 1988.

EFFECTIVE DATE: March 26, 1998.

FOR FURTHER INFORMATION CONTACT:
Mr. Ivory Fisher, Office of Small and Disadvantaged Business 
Utilization, OUSD (A&T) SADBU, 3061 Defense Pentagon, Washington, DC 
20301-3061, telephone (703) 697-1688, telefax (703) 693-7014.

SUPPLEMENTARY INFORMATION:

A. Background

    In accordance with Section 834 of Public Law 101-189, as amended, 
the Department of Defense (DoD) established a Test Program for 
Negotiation of Comprehensive Small Business Subcontracting Plans (the 
Program) to determine whether the use of comprehensive subcontracting 
plans on a corporate, division, or plant-wide basis would increase 
subcontracting opportunities for small business concerns. DoD is 
amending the Program to implement the requirements of Section 822 of 
the National Defense Authorization Act for Fiscal Year 1998 (Public Law 
105-85). The amendments (1) provide for subcontracts that are awarded 
by participating contractors performing as subcontractors, under DoD 
contracts, to be included in comprehensive small business 
subcontracting plans, and (2) extend the Program through September 30, 
2000.
Ivory Fisher,
Office of Small and Disadvantaged Business Utilization.
    The revised test plan is as follows:

Test Program for Negotiation of Comprehensive Small Business 
Subcontracting Plans

I. Purpose

    This document implements Section 834 of Public Law 101-189, the 
National Defense Authorization Act for Fiscal Years 1990 and 1991, as 
amended. The primary purpose of the Comprehensive Small Business 
Subcontracting Plan Test Program (the Program) is to determine whether 
the negotiation and administration of comprehensive small business 
subcontracting plans will reduce administrative burdens on contractors 
while enhancing subcontracting opportunities for small business 
concerns and small business concerns owned and controlled by socially 
and economically disadvantaged individuals under Department of Defense 
DoD contracts.

II. Authority

    The Program is established pursuant to Section 834 of the National 
Defense Authorization Act for Fiscal Years 1990 and 1991, as amended.

III. Program Requirements

    A. The Program shall be conducted from October 1, 1990, through 
September 30, 2000.
    B. The selection of contractors for participation in the Program 
shall be in accordance with Section 811(b)(3) of the National Defense 
Authorization Act For Fiscal Year 1996, Public Law 104-106. Eligible 
contractors are large business concerns at the major (total) corporate 
level that, during the preceding fiscal year:
    1. Were performing under at least three DoD prime contracts; 
furnished supplies or services (including professional services) to 
DoD, engaged

[[Page 14682]]

in research and development for DoD, or performed construction for DoD; 
and were paid $5,000,000 or more for such contract activities; and
    2. Achieved a small disadvantaged business (SDB) subcontracting 
participation rate of 5 percent or more during the preceding fiscal 
year. However, this requirement does not apply to the eight original 
contractors accepted into the Program. Additionally, a large business 
with an SDB subcontracting participation rate of less than 5 percent 
during the preceding fiscal year may request, through the designated 
contracting activity, to participate in the Program if the firm submits 
a detailed plan with milestones leading to attainment of at least a 5 
percent SDB subcontracting participation rate by September 30, 2000.
    C. Contractors selected for participation shall:
    1. Be eligible in accordance with paragraph III(B);
    2. Establish their comprehensive subcontracting plans on the same 
corporate, division or plant-wide basis under which they submitted the 
Standard Form (SF) 295 during the preceding fiscal year, except that a 
division or plant that historically reported through a higher-level 
division, but would meet the criteria of paragraph III(B)(2), shall be 
permitted to participate in the Program if the lower-level division, 
plant or profit center can demonstrate a 5 percent or greater 
subcontract performance level with SDB concerns;
    3. Have reported to DoD on the SF 295 for the previous fiscal year, 
except as provided in paragraph III(C)(2);
    4. Accept an SDB goal for each fiscal year of not less than 5 
percent, or an SDB goal that is in accordance with the milestone 
established under paragraph III(B)(2);
    5. Comply with the requirements of Defense Federal Acquisition 
Regulation Supplement (DFARS) Section 215.605 for source selection 
purposes;
    6. Offer a broad range of subcontracting opportunities;
    7. Voluntarily agree to participate; and
    8. Have at least one active contract that requires a subcontracting 
plan at the designated DoD buying activity responsible for negotiating 
the Comprehensive Subcontracting Plan.

IV. Elements of the Comprehensive Small Business Subcontracting Plan

    A. The comprehensive small business subcontracting plan shall 
address each of the 11 elements set forth in paragraph (d) of the 
clause at FAR 52.219-9, ``Small, Small Disadvantaged and Women-Owned 
Small Business Subcontracting Plan.''
    1. The subcontracting plan, percentage and corresponding dollar 
goals for awards to small business, small disadvantaged business and 
women-owned small business concerns shall be developed by the 
contractor for its entire business operation in support of all DoD 
contracts and subcontracts under DoD contracts regardless of dollar 
value.
    2. Participating contractors shall include separate specific goals 
and timetables for the awarding of subcontracts in two industry 
categories which have not historically been made available to small 
business and small disadvantaged business concerns. These industry 
categories will be recommended by the contractor and approved by the 
contracting officer. Subcontract awards made in support of the specific 
industry categories shall also count towards attainment of the overall 
small business and small disadvantaged business goals.
    3. The subcontracting plan shall set forth the prime contractor's 
actions to publicize prospective subcontract opportunities for small 
business, small disadvantaged business and women-owned small business 
concerns.
    B. Subcontracting plans to be established under the Program shall 
be submitted each year by participating contractors to the designated 
contracting officer 45 days prior to the end of the Government's fiscal 
year (September 30). However, new contractors requesting participation 
under the Program shall submit subcontracting plans to the contracting 
officer as far in advance as possible to the beginning of the fiscal 
year in which the contractor proposes to participate.

V. Procedures

    A. The Service Acquisition Executive within each military 
department and defense agency having contractors that meet the 
requirements of paragraphs III(B) and (C) shall designate at least 
three but more than five contracting activities to participate in the 
Program. In selecting the contracting activities to participate in the 
Program, the Service Acquisition Executive shall ensure that the 
designated activities cover a broad range of supplies and services.
    B. The designated contracting activity will accomplish the 
following:
    1. With the coordination of the Director, Office of Small and 
Disadvantaged Business Utilization, for their military department of 
defense agency, select as many eligible prime contractors (at least 
five) for participation under the Program as deemed appropriate.
    2. Establish a ``Comprehensive Small Business Subcontracting Plan'' 
negotiating team(s) composed as follows:
    a. A contracting officer(s) who will be responsible for negotiation 
and approval of the comprehensive subcontracting plan(s) as well as the 
responsibilities at FAR 19.705.
    b. The contracting activity's Small and Disadvantaged Business 
Utilization Specialist.
    c. The Small and Disadvantaged Business Utilization Specialist of 
the cognizant administration activity that administers the 
preponderance of the selected prime contractor's contracts and/or the 
appropriate individual who will administer contractor performance under 
the test in accordance with FAR 19.706 and the provisions herein.
    d. Production specialist, price analyst and other functional 
specialists as appropriate.
    C. The designated contracting officer shall:
    1. Encourage prime contractors interested in participating in the 
Program to enter the Program on a plant or facility basis.
    2. Solicit proposed comprehensive subcontracting plans from 
selected contractor(s) as soon as possible and by July 1, annually 
thereafter.
    3. By October 1, and annually thereafter, review, negotiate and 
approve on behalf of DoD a comprehensive subcontracting plan for each 
selected contractor.
    4. Distribute copies of the approved subcontracting plan in 
accordance with paragraph VI(A).
    5. Upon negotiation and acceptance of the comprehensive 
subcontracting plan, obtain from the contractor:
    a. A listing of all active DoD contracts that contain individual 
subcontracting plans required by Section 211 of Public Law 95-507.
    b. The listing shall include the following:
    i. Contract number.
    ii. Name and address of the contracting activity.
    iii. Contracting Officer's name and phone number.
    6. Upon receipt of the information provided by the participating 
contractor under paragraph V(C)(4), direct the designated 
administrative contracting officer to issue a comprehensive change 
order, which modifies all of the contractor's active DoD contracts that 
include subcontracting plans. The modification will substitute the 
contractor's approved comprehensive subcontracting plan for the 
individual

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plans, will substitute the clause at DFARS 252.219-7004 for the clause 
at FAR 52.219-9, and will delete the clauses at FAR 52.219-10 and 
52.219-16 and DFARS 252.219-7003 and 252.219-7005, as appropriate.
    7. Review annually, with the contract administration activity, the 
contractor's performance under the plan. Document the review findings 
and distribute, in accordance with paragraph VI(A), within 45 days of 
the end of the fiscal year.
    8. By November 15 of the year after acceptance, and annually 
thereafter, determine whether the contractor has met its comprehensive 
subcontracting goals. If the goals have not been met, determine whether 
there is any indication that the contractor failed to make a good faith 
effort and take appropriate action.
    9. By December 15, 2000, prepare and submit a report on each 
participating contractor's performance which details the results of the 
Program. The report must compare the contractor's performance under the 
Program with its performance for the three fiscal years prior to 
acceptance into the Program. The report distribution will be in 
accordance with paragraph VI(A).
    D. Participating contractors:
    1. Shall establish their comprehensive subcontracting plans on the 
same corporate, division or plant-wide basis under which they submitted 
the SF 295 during the preceding fiscal year, except that those 
contractors that historically reported through a higher headquarters 
can elect to participate as a separate (lower-level) reporting profit 
center, plant or division if the contractor achieved an SDB 
subcontracting performance rate of 5 percent or greater in the 
preceding fiscal year.
    2. Upon negotiation of an acceptable comprehensive subcontracting 
plan, shall be exempt from individual contract-by-contract reporting 
requirements for DoD contracts and subcontracts under DoD contracts 
unless otherwise required in accordance with paragraph III(C)(5).
    3. Shall continue individual contract reporting on non-DoD 
contracts.
    4. Shall comply with the flow-down provisions of Section 211 of 
Public Law 95-507 for large business subcontractors which are not 
participating in the Program. Consequently, large business concerns 
which are not participating in the Program receiving a DoD subcontract 
in excess of $500,000 ($1,000,000 for construction) are required to 
adopt a plan similar to that mandated by the clause at FAR 52.219-9. 
Participating contractors are prohibited from flowing down the 
``Comprehensive'' subcontracting deviation provisions of DFARS 252.219-
7004. Accordingly, large business subcontractors to the participating 
contractors who themselves are not participating in the Program shall 
be required to establish individual subcontracting plans with specific 
goals for awards to small business, small disadvantaged business and 
women-owned small business concerns.
    5. Upon expulsion from the Program or Program termination on 
September 30, 2000, shall negotiate and establish individual 
subcontracting plans on all future DoD contracts that otherwise meet 
the requirements of Section 211 of Public Law 95-507.

VI. Monitoring and Reporting of Comprehensive Subcontracting Plans and 
Goals

    A. Upon negotiation and acceptance of comprehensive subcontracting 
plans and goals, the designated activity shall immediately forward one 
copy of the plan to each of the following:
    1. Director, Office of Small and Disadvantaged Business 
Utilization, Office of the Deputy Under Secretary of Defense 
(Acquisition and Technology), 3061 Defense Pentagon, Room 2A338, 
Washington, DC 20301-3061.
    2. Director, Small and Disadvantaged Business Utilization, for the 
military department or defense agency of the activity that negotiated 
and accepted the comprehensive subcontracting plan.
    3. The cognizant contract administration office.
    B. Each participating contractor shall complete the SF 295 
``Summary Subcontract Report'' in accordance with the instructions on 
the back of the form on a semi-annual basis, except as noted below.
    1. One copy of the SF 295 and attachments shall be submitted to 
Director, Office of Small and Disadvantaged Business Utilization, 
Office of the Deputy Under Secretary of Defense (Acquisition and 
Technology), 3061 Defense Pentagon, Room 2A338, Washington, DC 20301-
3061.
    2. Participating contractors shall enter in Item 14 ``Remarks'' 
block the annual corporate, division or plant-wide small business, 
small disadvantaged business and women-owned small business percentage 
and corresponding dollar goals.
    3. Participating contractors shall also enter separately in Item 14 
the percentage and corresponding dollar goals for each of the two 
selected industry categories (see paragraph IV(A)(2)).
    4. Participating contractors shall also enter separately in Item 14 
on a semi-annual cumulative basis the percentage and corresponding 
dollar amount of subcontract awards made in each of the two selected 
industry categories.
    5. Participating contractors shall be exempt from the completion of 
SF 294 ``Subcontract Report For Individual Contracts'' for DoD 
contracts during their participation in the Program.

[FR Doc. 98-7709 Filed 3-25-98; 8:45 am]
BILLING CODE 5000-04-M