[Federal Register Volume 63, Number 94 (Friday, May 15, 1998)]
[Rules and Regulations]
[Pages 26996-26998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12842]


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DEPARTMENT OF AGRICULTURE

Office of Procurement and Property Management

48 CFR Parts 426 and 452

[AGAR Case 96-01]
RIN 0599-AA00


Agriculture Acquisition Regulation; Preference for Selected 
Biobased Products

AGENCY: Office of Procurement and Property Management, USDA.

ACTION: Final rule.

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SUMMARY: This document amends the Agriculture Acquisition Regulation 
(AGAR) to establish policy and procedures for set-asides and 
preferences for products developed with assistance provided by the 
Alternative Agricultural Research and Commercialization Corporation 
(AARCC). This amendment is needed to implement the set-asides and 
preferences described in section 1665 of the Food, Agriculture, 
Conservation and Trade Act of 1990 (7 U.S.C. 5909). USDA will use these 
new policies and procedures to increase its acquisition of AARCC 
supported products.

DATES: This rule is effective July 14, 1998.

FOR FURTHER INFORMATION CONTACT: J.R. Holcombe, Jr., (202) 720-8484.

SUPPLEMENTARY INFORMATION:

I. Background
II. Analysis of Comments
III. Procedural Requirements
    A. Executive Order Nos. 12866 and 12988.
    B. Regulatory Flexibility Act.
    C. Paperwork Reduction Act.
    D. Small Business Regulatory Enforcement Fairness Act
IV. Electronic Access Addresses

I. Background

    The AGAR implements the Federal Acquisition Regulation (FAR) (48 
CFR Ch. 1) where further implementation is needed, and supplements the 
FAR when coverage is needed for subject matter not covered by the FAR. 
This rule amends the AGAR to establish acquisition preferences for 
selected biobased products; i.e., nonfood, nonfeed products made from 
agricultural and forestry materials and animal by-products.
    The Alternative Agricultural Research and Commercialization 
Corporation (AARCC), a wholly-owned government corporation of the 
Department of Agriculture (USDA), provides financial assistance to 
private companies and other parties to commercialize biobased products. 
Section 1665 of the Food, Agriculture, Conservation, and Trade Act of 
1990 (7 U.S.C. 5909), added by section 729 of the Federal Agriculture 
Improvement and Reform Act of 1996 (Section 1665), authorizes Federal 
executive agencies to establish set-asides and preferences for biobased 
products that have been commercialized with assistance provided by 
AARCC.
    In a Notice of Proposed Rulemaking (62 FR 52081, October 6, 1997), 
USDA announced that this proposed amendment to the AGAR was available 
for public review and comment during a 60-day comment period. One 
commenter, a trade association, submitted comments on the proposed rule 
to USDA. We considered these comments and concluded that no changes to 
the proposed rule were required. In this rulemaking document, USDA is 
finalizing the proposed amendment to the AGAR.
    We are making the following changes to the AGAR:
    (a) We are adding AGAR part 426, Other Socioeconomic Programs, with 
a subpart 426.70, Preference for Selected Biobased Products. This 
subpart establishes policy and procedures for preferences and set-
asides for products developed with AARCC assistance.
    (b) Provisions 452.226-70, Preferred Products, 452.226-71, Set-
aside for Mandatory Products, and 452.226-72, Price Preference for 
Award, are added to AGAR part 452.

II. Analysis of Comments

    We received one comment in response to the Notice of Public 
Rulemaking. A trade association commented that it would be appropriate 
to include biodiesel fuels and related biobased products on Preference 
Lists for biobased products established in accordance with AGAR 
426.7005. To the extent that such fuels are products developed with 
assistance from AARCC (AARCC products), they would be eligible for 
inclusion on the Preference List. Biodiesel fuels that are not AARCC 
products are outside the scope of the rule and of Section 1665. Since 
establishing preferences for other than AARCC products is outside the 
scope of this rule, we did not make any change to the rule.

III. Procedural Requirements

A. Executive Order Nos. 12866 and 12988

    A work plan was prepared for this regulation and submitted to the 
Office of Management and Budget pursuant to Executive Order No. 12866. 
The rule has been determined to be not significant for the purposes of 
Executive Order No. 12866. Therefore, the rule has not been reviewed by 
the Office of Management and Budget. This rule has been reviewed in 
accordance with Executive Order No. 12988, Civil Justice Reform. The 
rule meets the applicable standards in section 3 of Executive Order No. 
12988.

B. Regulatory Flexibility Act

    This rule was reviewed under the Regulatory Flexibility Act, 5 
U.S.C. 601-611, which requires preparation of a regulatory flexibility 
analysis for any rule which is likely to have significant economic 
impact on a substantial number of small entities. This final rule will 
not have an adverse impact on a substantial number of small businesses. 
In Fiscal Year 1997, USDA contract purchases from small business 
concerns totaled $710 million, not including commodity purchases. USDA 
purchases of AARCC products are unlikely to exceed $1 million annually, 
even with preferences. The anticipated dollar volume of AARCC product 
purchases thus would be less than 0.1% of the volume of products and 
services USDA now purchases from small businesses. Furthermore, AARCC 
product purchases will be made almost entirely from small businesses.
    Our analysis of the impact of AARCC preferences suggests that the 
AARCC

[[Page 26997]]

preference program will benefit small business concerns. While Section 
1665 does not require that all AARCC products be manufactured by or 
provided by small business concerns, the AARCC program concentrates on 
assistance for small businesses in the development of new commercial 
items. Almost all AARCC products eligible for set-asides or preferences 
under this rule will be provided by small businesses. The majority of 
businesses supported by AARCC are start-up companies. Thus, the overall 
impact of this final rule on small entities will be positive.
    USDA solicited comments from small entities concerning the impact 
of the proposed rule in the Notice of Proposed Rulemaking publicizing 
the proposed rule for comment (62 FR 52081, October 6, 1997). No 
comments from small entities were received.
    USDA certifies that this rule will not have a significant economic 
effect on a substantial number of small entities, and, therefore, no 
regulatory flexibility analysis has been prepared.

C. Paperwork Reduction Act

    No information collection or recordkeeping requirements are imposed 
on the public by this rule. Accordingly no OMB clearance is required by 
section 350(h) of the Paperwork Reduction Act, 44 U.S.C. 3501, et. 
seq., or OMB's implementing regulation at 5 CFR Part 1320.

D. Small Business Regulatory Enforcement Fairness Act

    This rule has been submitted to each House of Congress and the 
Comptroller General in accordance with the Small Business Regulatory 
Enforcement Fairness Act of 1996, 5 U.S.C. 801, et seq.

IV. Electronic Access Addresses

    You may send electronic mail (E-mail) to [email protected], or 
contact us via fax at (202) 720-8972, if you would like additional 
information about this rule.

List of Subjects in 48 CFR Parts 426 and 452

    Agriculture, Government procurement.

    For the reasons set out in this preamble, the Department is 
amending Chapter 4 of Title 48 of the Code of Federal Regulations as 
follows:
    1. Add Part 426 to read as follows:

PART 426--OTHER SOCIOECONOMIC PROGRAMS

Subpart 426.70--Preference for Selected Biobased Products

Sec.
426.7000  Scope of subpart.
426.7001  Applicability.
426.7002  Authority.
426.7003  Policy.
426.7004  Definitions.
426.7005  Preference list.
426.7006  Use of a set-aside or a price preference.
426.7007  Use of a technical evaluation preference.
426.7008  Identification of preferred products.
426.7009  Contract provisions.

    Authority: 5 U.S.C. 301; 7 U.S.C. 5909; 40 U.S.C. 486(c).

Subpart 426.70--Preference for Selected Biobased Products


426.7000  Scope of subpart.

    This subpart supplements the FAR to implement the set-asides and 
preferences described in section 1665 of the Food, Agriculture, 
Conservation and Trade Act of 1990 (7 U.S.C. 5909).


426.7001  Applicability.

    This subpart applies to USDA and all of its components, including 
corporations.


426.7002  Authority.

    Section 1665 of the Food, Agriculture, Conservation and Trade Act 
of 1990 (7 U.S.C. 5909) authorizes USDA to establish set-asides and 
other preferences for products that have been assisted by the 
Alternative Agricultural Research and Commercialization Corporation 
(AARCC).


426.7003  Policy.

    (a) AARCC provides financial assistance to private companies and 
other parties to commercialize nonfood, nonfeed products made from 
agricultural and forestry materials and animal by-products (biobased 
products). Biobased products by their nature are environmentally 
friendly, and, in many instances, use agricultural material that 
otherwise would be waste. It is the policy of USDA to acquire AARCC 
products to the maximum extent practicable. This policy applies to all 
acquisitions of products regardless of dollar value.
    (b) USDA shall satisfy its requirements for products the same or 
essentially the same as AARCC products by applying the preferences or 
set-asides described by this subpart.


426.7004  Definitions.

    As used in this subpart--
    AARCC products are products developed with assistance provided by 
AARCC as authorized by 7 U.S.C. 5905.
    Acquisitions of products means an acquisition of one or more 
products for the use of the Government.
    Acquisitions involving the use of products means an acquisition in 
which a Government contractor uses products in contract performance.
    Price preference means an amount, expressed as a percentage, to be 
used in the evaluation of offers in an acquisition of products.
    Set-aside means a requirement that vendors responding to a 
solicitation offer AARCC products.
    Solicitation includes actions taken under parts 12, 13, 14, 15, and 
36 of the Federal Acquisition Regulation.
    Technical evaluation preference means the use of an award factor or 
subfactor in which the Government expresses its preference for AARCC 
products.


426.7005  Preference list.

    (a) The Office of Procurement and Policy Management (OPPM) and 
AARCC jointly shall establish and maintain a Preference List for AARCC 
products.
    (b) The Preference List shall contain the list of preferred 
products, source information for these products, the type(s) of 
preference to be applied, the beginning and ending dates for the use of 
preferences, and other terms established to define the preference given 
to a product.
    (c) The Preference List will be publicized within USDA by means of 
AGAR Advisories (see 401.371). Copies of the Preference List may be 
obtained from OPPM. The Preference List will also be posted on the 
World Wide Web at the USDA Procurement Home Page.


426.7006  Use of a set-aside or a price preference.

    Acquisitions for products the same or essentially the same as those 
products appearing on the Preference List shall either be set-aside 
exclusively or shall include a price preference for those products 
shown on the Preference List. The actual price preference to be used 
shall be determined by the requiring office but may not exceed the 
percentage shown on the Preference List.


426.7007  Use of a technical evaluation preference.

    Acquisitions involving the use of products the same or essentially 
the same as those products appearing on the Preference List shall 
include a technical evaluation preference, if authorized in

[[Page 26998]]

the Preference List. The technical evaluation preference may be 
determined by the contracting officer specifically for each 
acquisition.


426.7008  Identification of preferred products.

    (a) Products subject to a set-aside or technical preference shall 
be separately listed in the schedule, specification, or performance 
work statement.
    (b) Products subject to a price preference shall be separately 
listed in the schedule.


426.7009  Contract provisions.

    (a) Each solicitation containing a price or technical preference 
under this subpart shall contain the provision 452.226-70, Preferred 
Products.
    (b) Each solicitation for products subject to a set-aside shall 
include the provision 452.226-71, Set-Aside For Mandatory Products.
    (c) Each solicitation for products subject to a price preference 
shall include the provision 452.226-72, Price Preference for Award.
    (d) Solicitations for products may contain both the provision in 
452.226-71 and the provision found in 452.226-72.
    (e) The provisions prescribed in this section are not required for 
acquisitions accomplished using the purchase card as a stand alone 
tool.

PART 452--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    2. The authority citation for Part 452 continues to read as 
follows:

    Authority: 5 U.S.C. 301 and 40 U.S.C. 486(c).

    3. Add sections 452.226-70, 452.226-71, and 452.226-72 to read as 
follows:


452.226-70  Preferred Products.

    As prescribed in 426.7009(a), include the following provision:

Preferred Products (May 1998)

    Specific products required by this solicitation and resulting 
contract are subject to a price or a technical preference. A list of 
these products, the specific preference, and the manufacturer or 
producer is included below.

Contract Line Item (or other location in this solicitation): *---------

Product:---------------------------------------------------------------

Manufacturer/Producer: *-----------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------

Preference: *----------------------------------------------------------
----------------------------------------------------------------------

(End of provision)

    * For each line item to which a preference applies, Contracting 
officer shall insert appropriate information.


452.226-71  Set-aside for Mandatory Products.

    As prescribed in 426.7009(b), include the following provision:

Set-Aside for Mandatory Products (May 1998)

    Specific products are set-aside as mandatory products. These are 
separately listed in the schedule, specifications, or performance 
work statement. Specific terms governing the set-aside, and source 
information for the products are shown below.

Contract Line Item (or other location in this solicitation): *---------
----------------------------------------------------------------------

Product: *-------------------------------------------------------------

Manufacturer/Producer: *-----------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------

Set-Aside Terms: *-----------------------------------------------------
----------------------------------------------------------------------

(End of provision)

    * For each line item to which a set-aside applies, Contracting 
officer shall insert appropriate information.


452.226-72  Price Preference for Award.

    As prescribed in 426.7009(c), include the following provision:

Price Preference for Award (May 1998)

    Certain products listed in the schedule of this solicitation are 
subject to a price preference. A list of these products, the amount 
of the preference, and source information is included in provision 
452.226-70, Preferred Products. For purposes of evaluation of offers 
only, the offered prices for these products will be reduced by the 
price preference listed in the solicitation.

(End of provision)

    Done at Washington, D.C., this 7th day of May, 1998.
W.R. Ashworth,
Director, Office of Procurement and Property Management.
[FR Doc. 98-12842 Filed 5-14-98; 8:45 am]
BILLING CODE 3410-XE-P