Federal Register, Volume 63 Issue 188 (Tuesday, September 29, 1998)

[Federal Register Volume 63, Number 188 (Tuesday, September 29, 1998)]
[Notices]
[Pages 51981-51990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26060]

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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

Small Business Administration

Interim Policy Directive, Small Business Competitiveness
Demonstration Program

AGENCY: Office of Federal Procurement Policy (OFPP); Small Business
Administration (SBA).

ACTION: Interim policy directive with request for comments.

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SUMMARY: The OFPP and SBA are revising the interim policy directive and
test plan dated April 16, 1993, (which revised the final policy
directive and test plan dated August 31, 1989) to implement amendments
to the Small Business Competitiveness Demonstration Program made by the
Small Business Reauthorization Act of 1997, Pub. L. 105-135. Section
401 of Pub. L. 105-135 extends the Program indefinitely; section 402
requires monitoring of goal attainment on an annual basis; and sections
403-405 contain other technical changes to the

[[Page 51982]]

Program. This interim policy directive implements conforming revisions
to reflect these amendments and also responds to comments that we
received on the April 16, 1993, interim policy directive and test plan.

DATES: Effective: September 29, 1998.
Comment Date: Comments on the interim policy directive should be
submitted to the addresses shown below on or before November 30, 1998.

ADDRESSES: Comments on the policy directive should be submitted to:
Deidre A. Lee, Administrator, Office of Federal Procurement Policy,
Room 352, Old Executive Office Building, Washington, DC 20503.
Comments on the information collection requirements contained in
Sections III.D.4. and III.E.7. of the policy directive should be
submitted both to the OFPP Administrator at the above address and to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, 725 17th Street, NW, Washington, DC 20503--Attention: Desk
Officer for the Federal Acquisition Regulation.

FOR FURTHER INFORMATION CONTACT: Linda G. Williams, Deputy Associate
Administrator (202) 395-3302.

SUPPLEMENTARY INFORMATION:

A. Background

Congress established the Small Business Competitiveness
Demonstration Program in 1988 to test the effectiveness of eliminating
small business set-asides in certain industries. (See Pub. L. 100-656
the Small Business Competitiveness Demonstration Program Act of 1988
(``Act''), as amended, at 15 U.S.C. 644 note.) The program has two
primary objectives: (1) To demonstrate whether or not small businesses
in certain industry groups can compete successfully on an unrestricted
basis for Federal contracts, and (2) to demonstrate whether or not
targeted goaling and management techniques can expand Federal contract
opportunities for small businesses in industry categories where such
opportunities historically have been low despite adequate numbers of
small business contractors in the economy. A separate program to expand
small business participation in the dredging industry, to be overseen
by the Department of the Army, was also included in the Act. As
originally established, the Demonstration Program extended through
December 31, 1992.
To implement the Program, Congress in section 715(a) of the Act,
authorized the OFPP Administrator to issue a test plan pursuant to
section 15 of the Office of Federal Procurement Policy Act (41 U.S.C.
413). In addition, in section 715(b), Congress directed the OFPP
Administrator, in cooperation with the SBA Administrator, to issue a
policy directive (binding on all participating agencies) to ensure
consistent government-wide implementation of the Act in the Federal
Acquisition Regulation (FAR).
After requesting public comment on an interim policy directive and
test plan 53 FR 52889 (December 29, 1988), OFPP implemented the Program
by issuing a final policy directive and test plan dated August 31,
1989. 54 FR 37741 (September 12, 1989). In accordance with section
715(b) of the Act, the policy directive and test plan were implemented
in the Federal Acquisition Regulation (48 CFR Subpart 19.10).
In 1992, Congress in Sections 201-203 of the Small Business Credit
and Business Opportunity Enhancement Act of 1992 (Pub. L. 102-366;
``1992 Act''), extended the Demonstration Program through September 30,
1996, and made amendments to the Program. To carry out these
amendments, Congress in Section 202(I) of the 1992 Act directed the
OFFP Administrator to issue conforming modifications to the test plan
and policy directive. The conforming modifications were issued in an
interim policy directive with request for comments (58 FR 19849, April
16, 1993), and were incorporated into the Federal Acquisition
Regulation (48 CFR Subpart 19.10). In 1996, Congress extended the
Demonstration Program for one year, through September 30, 1997. Pub. L.
104-208, Div. D, Title I, Sec. 108. In 1997, Congress also extended the
aspect of the Program covering expansion of small business
participation in the dredging industry. Pub. L. 105-18, Title II, Sec.
2002.
In December 1997, the Small Business Reauthorization Act of 1997
(Pub. L. 105-135) was enacted into law (``1997 Act''). Sections 401-405
of the 1997 Act made the Demonstration Program permanent, and made
further amendments to the Program.
In order to respond to the comments that we received on the April
1993 interim policy directive and test plan, and to make conforming
changes to reflect the amendments made by the 1997 Act, we are now
issuing a newly revised interim OFPP policy directive and
implementation plan. In addition to making conforming revisions to
reflect the amendments made by Congress in the 1997 Act, we also have
made non-substantive revisions in various parts of the document, which
are intended to improve its clarity. For ease of reading, we are re-
issuing the interim policy directive and implementation plan in its
entirety for comment.

B. Comments on April 16, 1993, Policy Directive and Test Plan

OFPP received three comment letters in response to the request for
comments on the April 16, 1993, interim policy directive and test plan.
The main issues and concerns raised in the comments are summarized
below:
1. Comment: The policy directive should establish goals for small
and small disadvantaged business participation as a requirement of all
solicitations with no restricted competition at all.
Response: This comment suggests that several economic and practical
benefits would result from such an approach. However, elimination of
all restricted competition is not within the scope of the Small
Business Competitiveness Demonstration Program. The legislation that
governs the Program requires that set-asides be reinstituted if
agencies do not meet established small business goals; consequently, it
does not authorize the elimination of set-asides altogether. See
section 713(b) of the Act, at 15 U.S.C. 644 note.
2. Comment: Awarding agencies, rather than the General Services
Administration, should be given credit for awards under multiple award
schedule contracts.
Response: This comment appears to be based on a misinterpretation
of the Program. Contract awards made under multiple award schedule
contracts are not covered by the Program. We did not include these
contracts because SBA historically did not count such awards toward
agencies' attainment of the government-wide small business goals.
3. Comment: The Defense Acquisition Regulation requirement that
small disadvantaged business set-asides be utilized conflicts with the
Program's requirements for the use of unrestricted competition.
Response: The requirement in question is based on 10 U.S.C. 2323
(formerly section 1207 of the Fiscal Year 1987 National Defense
Authorization Act). Procurements under section 2323 are exempt from the
Program's requirement for unrestricted competition. (See section 713(a)
of the Act, at 15 U.S.C. 644 note.)
4. Comment: The $25,000 reserve amount for emerging small
businesses should be raised for the construction industry because a
vast majority of construction projects are above that amount.
Response: The emerging small business reserve amount is set at
$25,000 by law (see section 712(b) of the

[[Page 51983]]

Act, at 15 U.S.C. 644 note). OFPP is authorized to adjust the reserve
amount if agencies do not attain the statutory goal of awarding
emerging small business concerns 15 percent of the total dollar value
of contracts in a designated industry group. The 15 percent goal has
consistently been exceeded for the construction industry. Accordingly,
raising the reserve amount is not appropriate.
5. Comment: FAR architectural and engineering (A&E) service
selection methods do not include small or small disadvantaged business
preferences; as a result, there is still no protection for emerging
small business A&E firms under the Program.
Response: The Program, which is implemented in the FAR at 48 CFR
subpart 19.10, provides that all contracts under $50,000 for A&E
services shall be set-aside for emerging small businesses. Accordingly,
we do not agree that there is no protection for emerging small business
A&E firms under the Program.
6. Comment: The Defense Mapping Agency should be included under the
Program.
Response: The test plan exempts the Defense Mapping Agency (now the
National Imagery and Mapping Agency (NIMA)) from the Program. We
received a comment suggesting that the rule be revised to require that
all surveying and mapping activities of NIMA comply with the Program.
The commenter relied on subsection 202(c) of Pub. L. 102-366 which
requires that ``solicitations for the award of contracts for
architectural and engineering services (including surveying and
mapping) issued by a Military Department or a Defense agency'' comply
with 10 U.S.C. sections 2855(a) and (b). Section 2855(a) requires that
``contracts for architectural and engineering services and construction
design in connection with a military family housing project'' be
awarded in accordance with 40 U.S.C. section 541 (the Brooks A-E Act).
Section 2855(b) generally establishes thresholds for setting aside the
contracts described in section 2855(a) for award to small business
concerns. In our opinion, neither Pub. L. 102-366 nor 10 U.S.C. section
2855 support the commenter's position. We read these provisions to
apply only to those contracts specifically described in 10 U.S.C.
2855(a), i.e., contracts for A&E services and construction design in
connection with military construction or family housing projects. The
NIMA does not conduct such procurements.

C. Revisions to the April 16, 1993 Interim Policy Directive and
Test Plan

In the Small Business Reauthorization Act of 1997, Congress made
several changes to the Act, which are summarized below and incorporated
into the interim policy directive.
Section 401 of the 1997 Act amends section 711(c) of the Small
Business Competitiveness Demonstration Program Act (the Act) to make
the Program permanent. We have revised Section III.A.1 of the
Implementation Plan (formerly the ``Test Plan'') to delete the
Program's expiration date.
Section 402 of the 1997 Act amends section 712(d)(1) of the Act to
require participating agencies to monitor the attainment of their small
business participation goals on an annual basis. An annual review and
reports to the Small Business Administration (SBA) must be completed by
each participating agency not later than January 31 of each year, based
on the data for the preceding fiscal year, from October 1 through
September 30. We have revised section IV.A.1. of the Implementation
Plan to reflect annual monitoring of goal attainment.
Section 403 of the 1997 Act amends section 716(a) of the Act to
transfer to the Small Business Administration the responsibility for
reporting to Congress the results of the Program. Reports to Congress
are due within 180 days after data for each of fiscal years 1991
through 2000 are available from the Federal Procurement Data Center.
The section also updates the name of the Committee on Government Reform
and Oversight of the House of Representatives.
Section 404 of the 1997 Act amends section 722(a) of the Act to
make the dredging program permanent. As indicated above, under the Act,
the Department of the Army (Corps of Engineers) is responsible for
conducting the dredging program.
Section 405 of the 1997 Act amends section 717 of the Act to
recognize that either the standard industrial classification (SIC)
codes or the successor North American Industrial Classification System
(NAICS) codes may be used to identify the designated industry groups
covered by the Program. OMB issued the NAICS codes in 1997 (62 FR 17288
(April 9, 1997). The Implementation Plan will continue to reference SIC
codes until SBA and the FAR Council implement the NAICS codes.
One provision of the Act that has expired is section 714(b), which
required the OFPP Administrator to develop a simplified data collection
system to collect data on the participation of small business concerns
as subcontractors under prime contracts for A&E services. It also set a
temporary 35 percent small business participation goal for A&E services
until the simplified data collection system was implemented. The
purpose of the system was to collect subcontracting data below the
first tier of subcontracting to demonstrate if the actual rate of small
business participation under A&E prime contracts was substantially
higher than was reflected in the government's existing subcontracting
data collection system. OFPP implemented the simplified data collection
data on October 27, 1993 (58 FR 57869). The requirement for this system
expired on September 30, 1997. Accordingly, the Implementation Plan
excludes the subcontracting reporting system previously described in
Section V.C.1. of the April 16, 1993, Interim Policy Directive. It also
deletes the reference in section III.C.1. to the temporary 35 percent
goal for A&E services.
This interim Policy Directive also recognizes that section 4201 of
the Federal Acquisition Streamlining Act of 1994 authorizes agencies to
use competition to ``the maximum extent practicable'' for procurements
below the simplified acquisition threshold. Accordingly, we revised the
implementation plan to substitute ``unrestricted competition'' for
``full and open competition'' throughout the document. This allows
agencies to use the ``maximum practicable competition'' standard for
procurements below the simplified acquisition threshold but above the
emerging small business reserve. Agencies will continue to use full and
open competition for unrestricted procurements above the simplified
acquisition threshold.
This interim Policy Directive also authorizes prime contract awards
to small businesses pursuant to the HUBZone Act of 1997, Title VI of
the Small Business Reauthorization Act of 1997 (Pub. L. 105-135), to
count toward goal attainment. In addition, the interim Policy Directive
recognizes that participating agencies may set aside procurements in
the DIGs, under the HUBZone Empowerment Contracting Program, that
exceed the emerging small business reserve amount even though the
agency's 40 percent small business goal is being attained. (This is
consistent with the Small Business Regulations implementing the HUBZone
Act, 63 FR 31896, 31902.) We revised Sections III.C.3., III.D.1,
III.D.2, and IV.A.6 of the Implementation Plan to reflect these
changes.

[[Page 51984]]

We also made two minor changes as follows: (1) Section III.D.3.a.
was revised to reflect that the emerging small business reserve amount
for A&E services has been raised to $50,000, and (2) the citations to
the Code of Federal Regulations (C.F.R.) at section III.E.4 have been
updated.
Finally, to improve the clarity of the document, we have made non-
substantive changes in various parts of the text.
We intend to issue a final policy directive by April 30, 1999.

D. Cumulative Report on the Demonstration Program for Fiscal Years
1991-1995

Section 716(a) of the Act, as amended by the Omnibus Consolidated
Appropriations Act of 1997 (Pub. L. 104-208, Division D, Section 108),
required a cumulative report of the results of the Demonstration Test
Program for FYs 1991-1995. The report indicated that, at the macro
level, small and emerging small businesses could maintain a significant
market share without the benefits of preferences. In three of the four
industries, awards to small and emerging small businesses exceeded the
40 and 15 percent goals set by the Program, respectively. Upon
examination at the micro level, however, it appeared that the market
share of these firms declined to some extent without preferences,
compared to their share prior to the commencement of the Program.
Therefore, although the Test Program demonstrated that small and
emerging small businesses could maintain a significant market share
without preferences, the Program also appeared to have reduced total
small business awards in the construction, refuse, A&E services and
non-nuclear ship repair industries. When viewed collectively, both the
small business and emerging small business shares declined for every
DIG from FYs 1991-1995.
SBA will continue to evaluate the economic impact of the Program in
its subsequent reports to Congress.

E. Regulatory Flexibility Act and E.O. 12866

This interim policy directive incorporates changes to the Small
Business Reauthorization Act of 1997 (Sections 401-405 of Pub. L. 105-
135). This Act merely extended the Program indefinitely and modified
the reporting procedures of the participating Federal agencies. The Act
made no substantive changes to the Program as originally designed.
The changes required by the Act do not impose any new requirements
or additional burdens on small businesses and are unlikely to have an
annual economic effect of $100 million or more, result in a major
increase in cost or prices, or have a significant effect on competition
in the U.S. economy. Accordingly, this directive is not considered a
significant rule within the meaning of Executive Order 12866 and will
not 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. In addition, because this interim policy directive makes
ministerial changes to conform the directive to amendments mandated by
the 1997 Act (which amendments were effective upon the date of
enactment), we have determined that advance comment on these conforming
changes is unnecessary and thus we are issuing this document on an
interim basis. We will respond to any comments received in the coming
months.

F. Paperwork Reduction Act

The information collection requirements related to this policy
directive and implementation plan were previously approved by OMB and
assigned OMB control number 9000-0100. A revised information collection
request has been submitted to OMB for approval under the Paperwork
Reduction Act (44 U.S.C. Chapter 35).
Deidre A. Lee,
Administrator, Office of Federal Procurement Policy.

Richard L. Hayes,
Associate Deputy Administrator for Government Contracting and Minority
Enterprise Development, Small Business Administration.

September 21, 1998.

MEMORANDUM FOR:
THE SECRETARY OF AGRICULTURE
THE SECRETARY OF DEFENSE
THE SECRETARY OF ENERGY
THE SECRETARY OF HEALTH AND HUMAN SERVICES
THE SECRETARY OF THE INTERIOR
THE SECRETARY OF TRANSPORTATION
THE ADMINISTRATOR OF THE ENVIRONMENTAL PROTECTION AGENCY
THE ADMINISTRATOR OF GENERAL SERVICES
THE ADMINISTRATOR OF THE NATIONAL AERONAUTICS AND SPACE
ADMINISTRATION
THE SECRETARY OF VETERANS AFFAIRS

SUBJECT: The Small Business Competitiveness Demonstration Program

1. Purpose. This memorandum provides policy direction to the
participating agencies for implementation of the Small Business
Competitiveness Demonstration Program Act of 1988 (Title VII, Public
Law 100-656), as amended by Sections 23-27 of the Business
Opportunity Development Reform Act Technical Corrections Act (Public
Law 101-37), Sections 201 and 202 of the Small Business Credit and
Business Opportunity Enhancement Act of 1992 (Public Law 102-366),
Section 108 of the Omnibus Consolidation Appropriation Act of 1997
(Public Law 104-208), and Sections 401-405 of the Small Business
Reauthorization Act of 1997 (Public Law 105-135).
2. Authority. This memorandum is issued pursuant to Section 715
of Public Law 100-656, which requires that the Office of Federal
Procurement Policy (OFPP) and the Small Business Administration
(SBA) issue a policy directive to ensure consistent government-wide
implementation of Title VII in the Federal Acquisition Regulation
(FAR); Section 202(i) of the Small Business Credit and Business
Opportunity Enhancement Act of 1992 (Public Law 102-366), which
requires appropriate modifications to the policy directive to
conform to amendments made by that Act; Sections 401-405 of the
Small Business Reauthorization Act of 1997 (Public Law 105-135),
which further amends Title VII; and Section 15 of the Office of
Federal Procurement Policy Act, 41 U.S.C. 413, which provides for
the testing of innovative procurement methods and procedures.
3. Background. Section 15(a) of the Small Business Act mandates
that small businesses receive a fair proportion of Federal
procurements. To achieve this goal, Subpart 19.5 of the FAR requires
that Federal agencies reserve, or set aside, procurements for
exclusive small business participation when a contracting officer
determines that two or more small businesses are capable of
providing the goods or services at reasonable prices. While
restricting procurements for exclusive small business participation
has been very effective in assuring a small business share of
Federal contracts, one unintended result is a concentration of
awards in certain industries often dominated by small businesses. A
further result is that agencies expend resources in those industries
that are conducive to high levels of small business participation
rather than expand the base of small business contracting into areas
where small businesses do not traditionally obtain a significant
share of procurement awards.
4. Policy. The goals of the Program are to assess the ability of
small businesses in certain designated industry groups to retain a
fair proportion of procurement awards in unrestricted competition in
those industry groups and to expand small business participation in
a broader range of industry categories. The Act designates the Small
Business Administration as OFPP's executive agent to monitor the
Program. The procedures for implementing the Program are set forth
in the attached implementation plan.
5. Implementation. This policy directive shall be implemented in
FAR Part 19. Pursuant to Section 715(a) of the Small Business
Competitiveness Demonstration Program Act, provisions of the FAR
that are inconsistent with this policy directive and the attached
implementation plan are hereby waived.

[[Page 51985]]

6. Expiration Date. The Small Business Competitiveness
Demonstration Program has no expiration date.
Deidre A. Lee,
Administrator, Office of Federal Procurement Policy.

Richard L. Hayes,
Associate Deputy Administrator for Government Contracting and Minority
Enterprise Development, Small Business Administration.

Small Business Competitiveness Demonstration Program Implementation
Plan

I. Purpose

This document implements the Small Business Competitiveness
Demonstration Program Act of 1988 (Title VII, Public Law 100-656), as
amended by Sections 23-27 of the Business Opportunity Development
Reform Act Technical Corrections Act (Public Law 101-37), Sections 201
and 202 of the Small Business Credit and Business Opportunity
Enhancement Act of 1992 (Public Law 102-366), Section 108 of the
Omnibus Consolidation Appropriations Act of 1997 (Public Law 104-208),
and Sections 401-405 of the Small Business Reauthorization Act of 1997
(Public Law 105-135). The Program seeks to assess whether or not the
competitive capabilities of small business firms in certain industry
groups will enable them to successfully compete on an unrestricted
basis for Federal contracts. In addition, the Program attempts to
assess whether or not the use of targeted goaling and management
techniques by procuring agencies, in conjunction with the Small
Business Administration (SBA), will expand small business participation
in Federal contracting opportunities that have been historically low
despite adequate numbers of qualified small business contractors in the
economy. The Program further seeks to assess whether or not expanded
use of unrestricted competition adversely affects small business
participation in certain industry groups, taking into consideration the
numerical dominance of small firms, the size and scope of most
contracting opportunities, and the competitive capabilities of small
firms.

II. Authority

The Program is established pursuant to the Small Business
Competitiveness Demonstration Program Act of 1988 (Title VII, Public
Law 100-656), Sections 201 and 202 of the Small Business Credit and
Business Opportunity Enhancement Act of 1992 (Public Law 102-366),
Sections 401-405 of the Small Business Reauthorization Act of 1997
(Public Law 105-135), and Section 15 of the Office of Federal
Procurement Policy Act, 41 U.S.C. 413.

III. Program Requirements

A. Applicability

1. The Program began on January 1, 1989 and consists of two major
components: (1) unrestricted competition in four Designated Industry
Groups, and (2) enhanced small business participation in agencies' ten
Targeted Industry Categories. Contracts resulting from solicitations
issued on or after January 1, 1989 and any subsequent modifications to
such contracts, are covered by this Program.
2. Contract awards in the following designated industry groups are
covered by this Program:
a. Construction under standard industrial classification (SIC)
codes that comprise major groups 15, 16, and 17 (excluding dredging--
Federal Procurement Data System (FPDS) service codes Y216 and Z216);
b. Refuse systems and related services, including portable
sanitation services, under SIC code 4212 or 4953, limited to FPDS
service code S205;
c. Architectural and engineering (A&E) services (including
surveying and mapping) under SIC codes 7389, 8711, 8712, or 8713
(limited to FPDS service codes C111 through C216, C219, T002, T004,
T008, T009, T014, and R404), awarded under the qualification-based
selection procedures required by 40 U.S.C. 541 et seq. (the ``Brooks A-
E Act''); and
d. Non-nuclear ship repair--ship repair (including overhauls and
conversions) performed on non-nuclear propelled and nonpropelled ships
under SIC code 3731, limited to FPDS service codes J998 (repair
performed east of the 108th meridian) and J999 (repair performed west
of the 108th meridian).
3. Upon regulatory implementation by SBA and the FAR Council, the
North American Industrial Classification (NAIC) Coding System will be
substituted for SIC codes.
4. Targeted industry categories for enhanced participation are
determined by each participating agency, in conjunction with SBA.
5. Contract awards under the Federal Schedule Program are not
covered by the Program.
6. Contract awards to educational and non-profit institutions or
governmental entities are not covered by the Program.

B. Participating Agencies

The following agencies are participants in the Program:
1. The Department of Agriculture,
2. The Department of Defense, except the National Imagery and
Mapping Agency,
3. The Department of Energy,
4. The Department of Health and Human Services,
5. The Department of Transportation,
6. The Environmental Protection Agency,
7. The General Services Administration,
8. The National Aeronautics and Space Administration,
9. The Department of Veterans Affairs, and
10. The Department of the Interior.

C. Agency Goals for the Four Designated Industry Groups

1. Each participating agency shall have a small business
participation goal that is 40 percent of the agency's total contract
dollars awarded for construction major group 15, major group 16, and
major group 17; A&E services; refuse systems and related services; and
non-nuclear ship repair. The 40 percent goal applies to each
construction major group. In addition, each participating agency must
make a good faith effort to assure that emerging small businesses
receive not less than 15 percent of the agency's total contract dollars
awarded for each of the four designated industry groups.
2. The Small Business Competitiveness Demonstration Program Act of
1988 defines an emerging small business as one whose size is no greater
than 50 percent of the numerical size standard applicable to the SIC
Code assigned to the procurement. Subject to the requirements of
paragraph III.D.3 below, contract opportunities in the four designated
industry groups, which have an estimated award value equal to or less
than the reserve amount established for emerging small businesses, are
reserved for such businesses.
3. Contract awards made to fulfill the 15 percent goal for emerging
small businesses also count toward attainment of the 40 percent goal.
All prime contract awards to small businesses, including awards under
section 8(a) of the Small Business Act; 10 U.S.C. 2323; section 7102 of
the Federal Acquisition Streamlining Act of 1994; the HUBZone Act of
1997 (Title VI of the Small Business Reauthorization Act, Public Law
105-135); and sole source awards, count toward attainment of goals.

D. Procurement Procedures for the Four Designated Industry Groups

Participating agencies shall use the following procedures for
procurements in the four designated industry groups.

[[Page 51986]]

1. Unrestricted Competition for Contracts in Excess of the Emerging
Small Business Reserve Amount
a. Subject to the requirements of the Competition in Contracting
Act of 1984 and section 4201 of the Federal Acquisition Streamlining
Act of 1994, participating agencies are required to use unrestricted
competition for all solicitations in the four designated industry
groups, if the anticipated award value exceeds the dollar amount
reserved for emerging small businesses (unless the procurement is
placed under section 8(a) of the Small Business Act; or is set aside
under 10 U.S.C. 2323, section 7102 of the Federal Acquisition
Streamlining Act of 1994, or the HUBZone Act of 1997 (Title VI of the
Small Business Reauthorization Act, Public Law 105-135). Each
participating agency shall continue to use unrestricted competition as
long as annual reviews show that the agency's 40 percent goal is being
attained. The continued use of unrestricted competition is not affected
by an agency's failure to meet its 15 percent award goals for emerging
small businesses.
b. Notwithstanding the provisions of paragraph III.D.1.a., above,
the Department of Defense shall solicit contracting opportunities for
A&E services (including surveying and mapping), in accordance with the
provisions of subsections (a) and (b) of section 2855 of title 10,
United States Code.
2. Restricted Competition for Contracts in Excess of the Emerging Small
Business Reserve Amount
a. If any participating agency's annual review of its awards to
small businesses in the four designated industry groups shows that the
agency has failed to attain its 40 percent goal for any of the groups,
subsequent contracting opportunities, in excess of the amount reserved
for emerging small businesses, shall be solicited through competition
restricted to eligible small businesses only at the organizational
unit(s) within the agency that failed to attain the small business
participation goals. (Organizational unit(s) shall be no larger than
the major agency components or services, e.g., Army, Air Force, Navy,
etc. for Department of Defense, regional offices for the General
Services Administration, or space flight and research centers for the
National Aeronautics and Space Administration.) Such solicitations
(unless placed under section 8(a) of the Small Business Act or set
aside under 10 U.S.C. 2323, section 7102 of the Federal Acquisition
Streamlining Act of 1994, or the HUBZone Act of 1997 (Title VI of the
Small Business Reauthorization Act, Public Law 105-135) shall be
conducted in accordance with section 15(a) of the Small Business Act
and Subpart 19.5 of the Federal Acquisition Regulation (FAR).
b. Agencies shall return to the use of unrestricted competition
upon determining, after their annual review, that their contract awards
to small business concerns again meet the required goals.
c. Modifications to agency solicitation practices (instituting
restricted competition and reinstituting unrestricted competition)
shall be made as soon as practicable, but no later than 30 days
following completion of the review indicating the need for such change.
The reinstitution of restricted competition or unrestricted competition
shall be announced to the public through a notice published in the
Federal Register if restricted or unrestricted competition is to be
reimposed broadly by a participating agency. ``Special notices'' in the
Commerce Business Daily shall be used periodically to supplement such
Federal Register notices, and may be used as an alternative means of
providing such notices, if the reinstitution of restricted competition
or unrestricted competition will affect only a limited number of buying
activities.
3. Reserve Program for Emerging Small Businesses
a. The emerging small business reserve amount is $25,000, or such
higher amount as OFPP sets in the event that emerging small concerns
are not receiving 15 percent of the total dollar value of contract
awards in one or more of the four designated industry groups. The
emerging small business reserve amount for architectural and
engineering services is $50,000 (56 FR 46656, September 13, 1991). Any
required adjustments to the emerging small business reserve amount will
be made annually by industry group.
b. Competition for all contract opportunities in the four
designated industry groups with an estimated award value that is equal
to or less than the emerging small business reserve amount shall be
restricted to emerging small businesses, provided that the contracting
officer determines that there is a reasonable expectation of obtaining
offers from two or more responsible emerging small businesses that will
be competitive in terms of market price, quality, and delivery. If no
such reasonable expectation exists, requirements will be processed in
accordance with FAR 19.5 or FAR 19.8. However, if no such reasonable
expectation exists where OFPP has raised the small business reserve
amount to a level over $25,000, requirements over $25,000 will be
processed in accordance with paragraphs III.D.1 and III.D.2 above.
c. The use of simplified acquisition procedures is not required
under the reserve program; any competitive source selection method may
be used. The reserve program applies only to new awards within the
emerging small business reserve threshold. Modifications within the
scope of work of contracts having an initial award value in excess of
the emerging small business reserve amount are not subject to the
reserve program.
d. Each solicitation under the Program that utilizes simplified
acquisition procedures shall include the applicable SIC code and size
standard for the procurement.
4. Solicitation Provisions for Procurements in the Four Designated
Industry Groups
a. The provision set forth in FAR 52.219-19 entitled ``Small
Business Concern Representation for the Small Business Competitiveness
Demonstration Program'' shall be inserted in full text in all
solicitations issued by the participating agencies under the Small
Business Competitiveness Demonstration Program for the four designated
industry groups.
b. The provision set forth in FAR 52.219-20 entitled ``Notice of
Emerging Small Business Set-Aside'' shall be inserted in full text in
all solicitations and resulting contracts restricted to emerging small
businesses pursuant to paragraph III.D.3.
c. The face of each award issued by a participating agency under
the Small Business Competitiveness Demonstration Program for the four
designated industry groups shall contain a statement that the award is
being issued pursuant to such Program.

E. Agency Programs for Targeted Industry Categories With Limited Small
Business Participation

1. Each participating agency is required to select ten industry
categories (four-digit SIC Code or some segmented portion(s) of such
code(s), as identified by FPDS product or service code) as targeted
categories for expansion of small business participation.
2. In order to achieve such expanded participation, agencies shall
select categories that represent products and services purchased in
substantial

[[Page 51987]]

quantities by the agency; that historically have had a small business
participation rate of less than 10 percent by category, and in which
there is a significant amount of small business productive capacity
that has not been utilized by the Government.
3. Each participating agency shall consult with the Administrator
of SBA in selecting the ten targeted categories, developing the plan
for expanded small business participation, and establishing the goals
for the Program. Upon completion of their consultation with SBA,
participating agencies shall publish in the Federal Register, an
announcement soliciting public comment on that agency's program for
expansion of small business participation in the targeted categories.
Each participating agency shall notify SBA of any additions or
deletions to the ten targeted industry categories. Subsequent to the
SBA notification, the participating agency shall publish the changes in
the Federal Register.
4. Each plan shall be submitted to the Administrator of SBA and
shall contain a detailed time-phased strategy with incremental goals,
including reporting on goal attainment. To the extent practicable,
provisions that encourage and promote teaming and joint ventures shall
be included. These provisions should permit small business firms to
effectively compete for contracts that individual small businesses
would be ineligible to compete for because of lack of production
capacity or capability. Such joint ventures or teams shall comply with
the applicable small business guidelines. (See 13 CFR Secs. 121.103(f)
and 121.105(b)).
5. Participating agencies shall report to SBA on the results of the
expansion program regarding the ten targeted categories on the same
annual schedule as required for the four designated industry groups.
6. Goal attainment for the ten targeted industry categories shall
be determined on the basis of awards to U.S. business firms.
Participating agencies may use the format in Attachment A to report
accomplishments.
7. The provision set forth in FAR 52.219-21 entitled ``Small
Business Size Representation For Targeted Industry Categories Under the
Small Business Competitiveness Demonstration Program'' shall be
inserted in full text in any solicitation issued in each of the ten
targeted industry categories under the Small Business Competitiveness
Demonstration Program that is expected to result in a contract award in
excess of $25,000.
8. The face of each award issued in any of the ten targeted
industry categories under the Small Business Competitiveness
Demonstration Program shall contain a statement that the award is being
issued pursuant to such Program.

IV. Monitoring and Reporting for Four Designated Industry Groups

A. Monitoring of Goals for the Four Designated Industry Groups

1. Each participating agency shall monitor attainment of its small
business and emerging small business participation goals on an annual
basis and provide the information in a written report to SBA. The
report shall specify the industry groups for which restricted or
unrestricted competition have been imposed. Agencies shall complete
their annual reviews and submit their reports not later than January 31
of each year, based on the data for the preceding fiscal year, from
October 1 through September 30. The Department of Defense shall submit
a report that separately identifies performance by the Army, Air Force,
Navy and the Defense Agencies. The report submitted by the General
Services Administration shall separately identify performance by the
Public Building Service.
2. Monitoring and reporting of goal attainment will be based on
awards (and any subsequent modifications to those awards) in the
individual codes comprising the industry, as specified in paragraph
IV.B., below.
3. Any necessary modifications to agency solicitation practices for
the purpose of achieving the agency's small business participation
goals (instituting restricted competition or reinstituting unrestricted
competition) will be accomplished for each of the industry groups as
follows:
a. Construction (excluding dredging)
i. Major group 15
ii. Major group 16
iii. Major group 17
b. Refuse systems and related services.
c. A&E services (including surveying and mapping), limited to
contracts awarded under the qualification-based selection procedures
required by 40 U.S.C. 541 et seq. (the ``Brooks A-E Act'').
d. Non-nuclear ship repair.
However, if goal attainment for any individual FPDS service code
within the A&E services or non-nuclear ship repair industry groups
falls below 35 percent, the agency shall reinstitute set-asides for
that individual service code at the organizational unit(s) within the
agency that failed to achieve the 35 percent goal, even if overall goal
attainment in the industry group is 40 percent or more. In addition, if
goal attainment for any individual SIC code within one of the major
groups comprising the construction industry group falls below 35
percent, the agency shall reinstitute set-asides for that individual
SIC code at the organizational unit(s) within the agency that failed to
achieve the 35 percent goal, even if overall goal attainment in the
major group is 40 percent or more.
4. Agencies shall monitor goal attainment in the four designated
industry groups by reviewing total prime contract award dollars to (a)
all U.S. business firms, (b) small U.S. business concerns and (c)
emerging small U.S. business concerns. Awards to educational and non-
profit institutions or governmental entities are not part of the
Program and do not count towards goal attainment.
5. SBA will closely monitor the Program to ensure that each
participating agency makes a consistent effort to achieve goals evenly
across all individual codes that comprise a designated industry group.
Data shall be monitored using the format set forth at Attachment A.
6. All prime contract awards to small businesses, including awards
under section 8(a) of the Small Business Act; 10 U.S.C. 2323; section
7102 of the Federal Acquisition Streamlining Act of 1994; the HUBZone
Act of 1997 (Title VI of the Small Business Reauthorization Act, Public
Law 105-135); and sole source awards, count toward attainment of goals.

B. Codes for Monitoring and Reporting Goal Attainment for the Four
Designated Industry Groups

1. Refuse Systems and Related Services
The Small Business Competitiveness Demonstration Program Act of
1988 outlines the SICs that are included in the designated industry
groups. However, in the area of refuse systems and related services,
SIC codes 4212 and 4953 include services that should not be included in
the Program. The Program is designed to assess small firms'
competitiveness generally in procurements for the collection,
transportation, and disposal of residential and nonhazardous commercial
garbage, refuse, and waste materials. For example, contracts for the
regular collection and disposal at publicly or privately operated
landfills of residential and nonhazardous commercial solid waste,
garbage, debris, or other refuse from military installations, federal
office buildings, and other federal facilities, and garbage processing
and recycling activities,

[[Page 51988]]

should be included. Contracts for the operation of those facilities,
collection and disposal of acid, radioactive, or other hazardous waste
should not be included. Therefore, participating agencies shall use
FPDS service code S205 (trash/garbage collection services--including
portable sanitation services) to monitor goal attainment for refuse
systems and related services.
2. Architectural and Engineering Services
a. The Small Business Competitiveness Demonstration Act of 1988
provides that A&E services (including surveying and mapping) shall
include contracts assigned SIC codes 8711, 8712, 8713, and 7389 (if
identified as mapping), and awarded under the qualification-based
selection procedures required by 40 U.S.C. 541 et seq. (the ``Brooks A-
E Act''). Since SIC code 7389 includes many more services than mapping,
participating agencies shall use the following FPDS service codes to
monitor goal attainment for mapping services:

T002 Cartography services
T004 Charting services
T008 Photogrammetry services
T009 Aerial photographic services
T014 Topography services

b. Participating agencies shall use the following FPDS service
codes to monitor A&E services under SICcodes 8711, 8712, and 8713:

C111 Administrative and Service Buildings
C112 Airfield, Communication and Missile Facilities
C113 Educational Buildings
C114 Hospital Buildings
C115 Industrial Buildings
C116 Residential Buildings
C117 Warehouse Buildings
C118 Research and Development Facilities
C119 Other Buildings
C121 Conservation and Development
C122 Highways, Roads, Streets and Bridges
C123 Electric Power Generation (EPG)
C124 Utilities
C129 Other Non-Building Structures
C130 Restoration
C211 Architect--Engineer Services (non-construction)
C212 Engineering Drafting Services
C213 A&E Inspection Services (non-construction)
C214 A&E Management Engineering Services
C215 A&E Production Engineering Services
C216 Marine A&E Services
C219 Other Architect and Engineering Services
R404 Land Surveys, Cadastral Services--non-construction
3. Non-nuclear Ship Repair
Non-nuclear ship repair is included within SIC code 3731. Since
this SIC includes all ship repair as well as shipbuilding,
participating agencies shall use the following FPDS service codes to
monitor goal attainment for non-nuclear ship repair: J998 (Ship Repair,
Including Overhauls and Conversions, Performed on Non-nuclear Propelled
and Nonpropelled Ships East of the 108th Meridian) or J999 (Ship
Repair, Including Overhauls and Conversions, Performed on Non-nuclear
Propelled and Nonpropelled Ships West of the 108th Meridian).
4. Construction
Goal attainment for construction shall be monitored through the use
of the SIC codes identified in Attachment A.

V. FPDS Data Collection Requirements

Participating agencies shall maintain and report procurement data
to the Federal Procurement Data System (FPDS) in order to determine the
level of small business participation in the four designated industry
groups and the ten targeted industry categories for the small business
expansion program.

A. Awards in Excess of $25,000

For contract awards in excess of $25,000, the FPDS (1) has
information on the SIC code of the procurement and (2) can distinguish
awards to small business concerns and small disadvantaged business
concerns, as required by section 714(c) of the Small Business
Competitiveness Demonstration Program Act of 1988. However, for
purposes of the Program, the FPDS reporting requirements have been
revised to also:
1. Distinguish awards resulting from solicitations issued under the
Program from awards resulting from solicitations issued prior to
January 1, 1989, in the four designated industry groups. A distinction
must be made between contract actions awarded from solicitations issued
under the Program and contract actions awarded from solicitations
issued prior to January 1, 1989.
2. Distinguish emerging small business firms from other small
businesses. Participating agencies must make a good faith effort to
award not less than 15 percent of the dollar value of awards in the
four designated industry groups to emerging small businesses.
3. Distinguish awards to emerging small business firms in the small
business reserve program. Participating agencies must reserve for
exclusive competition among emerging small business concerns all
contracts of $25,000 or less in the four designated industry groups or
a greater amount set by OFPP if the 15 percent goal is not attained.
Emerging small businesses can also receive awards above the small
business reserve threshold.
4. Provide the size of the small business concern in terms of
number of employees or dollar volume of sales for awards in the four
designated industry categories and ten targeted industry categories.
Section 714(c) of the Small Business Competitiveness Demonstration
Program Act requires each participating agency to collect data
pertaining to the size of the small business concern receiving any
award for services in the four designated industry groups and products
or services in the ten targeted industry categories. The number of
employees shall be based on the average of the pay periods for the last
twelve months. The volume of sales shall be based on the average annual
gross revenue for the last three fiscal years (See FAR 19.101).
5. Limit A&E services to contracts awarded under the qualification-
based selection procedures of 40 U.S.C. 541 et seq. (the ``Brooks A-E
Act'').
6. Specific details outlining the FPDS changes have been included
in the FPDS Reporting Manual (September 1997).

B. Awards of $25,000 or Less

Each award of $25,000 or less made by a participating agency for
the procurement of a service in the four designated industry groups
shall be reported to the Federal Procurement Data Center in the same
manner as if the award was in excess of $25,000. This means that all
applicable data collected in the FPDS via the Individual Contract
Action Report (SF 279), or agencies' equivalent computer-generated
format, shall be reported for these purchases. It should be noted that
awards of $500 or less are not reportable to the FPDS.
Specific details outlining the FPDS changes have been included in
the FPDS Reporting Manual (September 1997).

[[Page 51989]]

Attachment A

Report on Small Business Participation Under the Small Business
Competitiveness Demonstration Program for Designated Industry
Groups

Fiscal Year ____________ Quarter ____________

Agency:----------------------------------------------------------------

Subagency (if applicable)----------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Emerging
Total U.S. Small disadvantaged small
Designated Groups Business business Percentage business Percentage business Percentage
actions/ actions/ of dollars actions/ of dollars actions/ of dollars
dollars dollars* dollars dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
I. Construction, excluding dredging (Dollars in Thousands; Percentage in Whole Numbers)
SIC Group 15:
1521............................................. ............ ............ ............ ............. ............ ............ ............
1522............................................. ............ ............ ............ ............. ............ ............ ............
1531............................................. ............ ............ ............ ............. ............ ............ ............
1541............................................. ............ ............ ............ ............. ............ ............ ............
1542............................................. ............ ............ ............ ............. ............ ............ ............
Subtotal.....................................
SIC Group 16:
1611............................................. ............ ............ ............ ............. ............ ............ ............
1622............................................. ............ ............ ............ ............. ............ ............ ............
1623............................................. ............ ............ ............ ............. ............ ............ ............
1629............................................. ............ ............ ............ ............. ............ ............ ............
Subtotal..................................... ............ ............ ............ ............. ............ ............ ............
SIC Group 17:
1711............................................. ............ ............ ............ ............. ............ ............ ............
1721............................................. ............ ............ ............ ............. ............ ............ ............
1731............................................. ............ ............ ............ ............. ............ ............ ............
1741............................................. ............ ............ ............ ............. ............ ............ ............
1742............................................. ............ ............ ............ ............. ............ ............ ............
1743............................................. ............ ............ ............ ............. ............ ............ ............
1751............................................. ............ ............ ............ ............. ............ ............ ............
1752............................................. ............ ............ ............ ............. ............ ............ ............
1761............................................. ............ ............ ............ ............. ............ ............ ............
1771............................................. ............ ............ ............ ............. ............ ............ ............
1781............................................. ............ ............ ............ ............. ............ ............ ............
1791............................................. ............ ............ ............ ............. ............ ............ ............
1793............................................. ............ ............ ............ ............. ............ ............ ............
1794............................................. ............ ............ ............ ............. ............ ............ ............
1795............................................. ............ ............ ............ ............. ............ ............ ............
1796............................................. ............ ............ ............ ............. ............ ............ ............
1799............................................. ............ ............ ............ ............. ............ ............ ............
Subtotal..................................... ............ ............ ............ ............. ............ ............ ............
Grand Total.................................. ............ ............ ............ ............. ............ ............ ............
II. Refuse Systems and Related Services (Dollars in Thousands; Percentages in Whole Numbers)
PSC S205............................................. ............ ............ ............ ............. ............ ............ ............
Total.......................................... ............ ............ ............ ............. ............ ............ ............
III. Architectural and Engineering Services, including mapping and surveying (Dollars in Thousands; Percentages in Whole Numbers)
SIC 7389: ............ ............ ............ ............. ............ ............ ............
PSC T002......................................... ............ ............ ............ ............. ............ ............ ............
PSC T004......................................... ............ ............ ............ ............. ............ ............ ............
PSC T008......................................... ............ ............ ............ ............. ............ ............ ............
PSC T009......................................... ............ ............ ............ ............. ............ ............ ............
PSC T014......................................... ............ ............ ............ ............. ............ ............ ............
Subtotal..................................... ............ ............ ............ ............. ............ ............ ............
SIC 8711 or SIC 8712 or 8713:
PSC C111......................................... ............ ............ ............ ............. ............ ............ ............
PSC C112......................................... ............ ............ ............ ............. ............ ............ ............
PSC C113......................................... ............ ............ ............ ............. ............ ............ ............
PSC C114......................................... ............ ............ ............ ............. ............ ............ ............
PSC C115......................................... ............ ............ ............ ............. ............ ............ ............
PSC C116......................................... ............ ............ ............ ............. ............ ............ ............
PSC C117......................................... ............ ............ ............ ............. ............ ............ ............
PSC C118......................................... ............ ............ ............ ............. ............ ............ ............
PSC C119......................................... ............ ............ ............ ............. ............ ............ ............
PSC C121......................................... ............ ............ ............ ............. ............ ............ ............
PSC C122......................................... ............ ............ ............ ............. ............ ............ ............
PSC C123......................................... ............ ............ ............ ............. ............ ............ ............
PSC C124......................................... ............ ............ ............ ............. ............ ............ ............
PSC C129......................................... ............ ............ ............ ............. ............ ............ ............
PSC C130......................................... ............ ............ ............ ............. ............ ............ ............
PSC C211......................................... ............ ............ ............ ............. ............ ............ ............
PSC C212......................................... ............ ............ ............ ............. ............ ............ ............

[[Page 51990]]

PSC C213......................................... ............ ............ ............ ............. ............ ............ ............
PSC C214......................................... ............ ............ ............ ............. ............ ............ ............
PSC C215......................................... ............ ............ ............ ............. ............ ............ ............
PSC C216......................................... ............ ............ ............ ............. ............ ............ ............
PSC C219......................................... ............ ............ ............ ............. ............ ............ ............
PSC R404......................................... ............ ............ ............ ............. ............ ............ ............
Subtotal..................................... ............ ............ ............ ............. ............ ............ ............
Grand Total.................................. ............ ............ ............ ............. ............ ............ ............
IV. Non-nuclear Ship Repair (Dollars in Thousands; Percentages in Whole Numbers)
SIC 3731: ............ ............ ............ ............. ............ ............ ............
PSC J998......................................... ............ ............ ............ ............. ............ ............ ............
PSC J999......................................... ............ ............ ............ ............. ............ ............ ............
Total........................................ ............ ............ ............ ............. ............ ............ ............
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Small Business Dollars include dollars to Emerging Small Businesses.

[FR Doc. 98-26060 Filed 9-28-98; 8:45 am]
BILLING CODE 3110-01-P