[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