[Federal Register Volume 63, Number 189 (Wednesday, September 30, 1998)]
[Rules and Regulations]
[Pages 52426-52428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26158]



[[Page 52425]]

_______________________________________________________________________

Part VI

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 12, 19, and 52



Federal Acquisition Regulation; Reform of Affirmative Action in Federal 
Procurement; Final Rules

  Federal Register / Vol. 63, No. 189 / Wednesday, September 30, 1998 / 
Rules and Regulations  

[[Page 52426]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

[FAC 97-08; FAR Case 97-004C]
RIN 9000-AH59

48 CFR Parts 12, 19, and 52


Federal Acquisition Regulation; Reform of Affirmative Action in 
Federal Procurement

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

ACTION: Interim rule with request for comment.

-----------------------------------------------------------------------

SUMMARY: The Department of Defense, the General Services 
Administration, and the National Aeronautics and Space Administration 
have agreed to issue Federal Acquisition Circular 97-08, as an interim 
rule to make amendments to the Federal Acquisition Regulation (FAR) 
concerning programs for small disadvantaged business (SDB) concerns. 
These amendments accommodate the use of the price evaluation adjustment 
for small disadvantaged business concerns in those Standard Industrial 
Classification (SIC) Major Groups where eligibility has been determined 
by region. This regulatory action was not subject to Office of 
Management and Budget review under Executive Order 12866, dated 
September 30, 1993. This is not a major rule under 5 U.S.C. 804.

DATES: Effective Date: October 1, 1998.
    Applicability Date: The policies, provisions, and clauses of this 
interim rule are effective for all solicitations issued on or after 
October 1, 1998.
    Comment Date: Comments should be submitted to the FAR Secretariat 
at the address shown below on or before November 30, 1998 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVR), 1800 F Street, 
NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405.
    E-Mail comments submitted over the Internet should be addressed to: 
[email protected].
    Please cite FAC 97-08, FAR case 97-004C in all correspondence 
related to this case.

FOR FURTHER INFORMATION CONTACT:
Ms. Victoria Moss, Procurement Analyst, Federal Acquisition Policy 
Division, General Services Administration, 1800 F Street NW, 
Washington, DC 20405, Telephone: (202) 501-4764
    or
Mr. Mike Sipple, Procurement Analyst, Contract Policy and 
Administration, Director, Defense Procurement, Department of Defense, 
3060 Defense Pentagon, Washington, DC 20301-3060, Telephone: (703) 695-
8567

    For general information call the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

    In Adarand, the Supreme Court extended strict judicial scrutiny to 
Federal affirmative action programs that use racial or ethnic criteria 
as a basis for decisionmaking. In procurement, this means that any use 
of race in the decision to award a contract is subject to strict 
scrutiny. Under strict scrutiny, any Federal programs that make race a 
basis for contract decisionmaking must be narrowly tailored to serve a 
compelling Government interest.
    The Department of Justice (DoJ) developed a proposed structure to 
reform affirmative action in Federal procurement designed to ensure 
compliance with the constitutional standards established by the Supreme 
Court in Adarand. The DoJ proposal was published in the Federal 
Register for public notice and invitation for comments at 61 FR 26042, 
May 23, 1996. The DoJ model is being implemented in several parts: 
revisions to the FAR and the FAR supplements; Small Business 
Administration (SBA) regulations; and procurement mechanisms and 
applicable factors (percentages) determined by the Department of 
Commerce (DoC). This interim rule revises the FAR rule published in the 
Federal Register at 63 FR 35719, June 30, 1998 (FAR Case 97-004A, 
Reform of Affirmative Action in Federal Procurement), to accommodate 
the use of the price evaluation adjustment for small disadvantaged 
business concerns in those Standard Industrial Classification (SIC) 
Major Groups where eligibility has been determined by region. The DoC 
determination was issued on June 30, 1998.

B. Regulatory Flexibility Act

    The interim rule is not expected to have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule 
merely reflects eligibility requirements in the FAR that are governed 
by the Small Business Administration. An Initial Regulatory Flexibility 
Analysis has, therefore, not been performed. Comments are invited from 
small businesses and other interested parties. Comments from small 
entities concerning the affected FAR subparts also will be considered 
in accordance with 5 U.S.C. 610. Such comments must be submitted 
separately and should cite 5 U.S.C. 601, et seq. (FAC 97-08, FAR Case 
97-004C), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq.) 
applies because the interim rule contains reporting requirements. This 
rule amends the information collection requirements contained in the 
FAR rule published at 63 FR 35719, June 30, 1998. Those requirements 
were submitted to the Office of Management and Budget (OMB) under 44 
U.S.C. 3501, et seq., and were approved under OMB clearance number 
9000-0150 through June 30, 2000. The clearance 9000-0150 has been 
amended to add the certification requirements in this rule.

D. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary to accommodate the determination by the Department of 
Commerce (DoC) to limit eligibility for a price evaluation adjustment 
to businesses within specific regions for certain industry categories. 
The DoC determination was issued on June 30, 1998. This interim rule 
must be published immediately because it revises FAR case 97-004A, 
which goes into effect on October 1, 1998. Pursuant to Public Law 98-
577 and FAR 1.501, public comments received in response to this interim 
rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 12, 19, and 52

    Government procurement.

    Dated: September 25, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

Federal Acquisition Circular

FAC 97-08

    Federal Acquisition Circular (FAC) 97-08 is issued under the 
authority of the Secretary

[[Page 52427]]

of Defense, the Administrator of General Services, and the 
Administrator for the National Aeronautics and Space Administration.
    The policies, provisions, and clauses of this interim rule are 
effective for all solicitations issued on or after October 1, 1998.

    Dated: September 24, 1998.
Eleanor R. Spector,
Director, Defense Procurement.

Ida M. Ustad,
Deputy Associate Administrator, Office of Acquisition Policy, General 
Services Administration.

    Dated: September 24, 1998.
Tom Luedtke,
Acting Associate Administrator for Procurement, National Aeronautics 
and Space Administration.

    Therefore, 48 CFR Parts 12, 19, and 52 are amended as set forth 
below:
    1. The authority citation for 48 CFR Parts 12, 19, and 52 continues 
to read as follows:

    Authority: 41 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 12--ACQUISITION OF COMMERCIAL ITEMS

    2. Section 12.301 is amended at the end of paragraph (b)(2) by 
adding a sentence to read as follows:


12.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (b) * * *
    (2) * * * Use the provision with its Alternate II in solicitations 
for acquisitions for which small disadvantaged business procurement 
mechanisms are authorized on a regional basis;
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

    3. Section 19.201 is amended in the introductory text of paragraph 
(b) by adding a sentence after the fifth sentence to read as follows:


19.201  General policy.

* * * * *
    (b) * * * The General Services Administration shall post the 
Department of Commerce determination at http://www.arnet.gov/
References/sdbadjustments.htm. * * *
* * * * *
    4. Section 19.306 is amended at the end of paragraph (b) by adding 
a sentence to read as follows:


19.306  Solicitation provision and contract clause.

* * * * *
    (b) * * * Use the provision with its Alternate I in solicitations 
for acquisitions for which a price evaluation adjustment for small 
disadvantaged business concerns is authorized on a regional basis.
* * * * *
    5. Section 19.1103 is amended by revising paragraph (a)(1) to read 
as follows:


19.1103  Procedures.

    (a) * * *
    (1) Offers from small disadvantaged business concerns that have not 
waived the evaluation adjustment; or, if a price evaluation adjustment 
for small disadvantaged business concerns is authorized on a regional 
basis, offers from small disadvantaged business concerns, whose address 
is in such a region, that have not waived the evaluation adjustment;
* * * * *
    6. Section 19.1104 is revised to read as follows:


19.1104  Solicitation provisions and contract clauses.

    The contracting officer shall insert the clause at 52.219-23, 
Notice of Price Evaluation Adjustment for Small Disadvantaged Business 
Concerns, in solicitations and contracts when the circumstances in 
19.1101 and 19.1102 apply. If a price evaluation adjustment is 
authorized on a regional basis, the clause shall be included in the 
solicitation even if the place of performance is outside an authorized 
region. The contracting officer shall insert the authorized price 
evaluation adjustment factor. The clause shall be used with its 
Alternate I when the contracting officer determines that there are no 
small disadvantaged business manufacturers that can meet the 
requirements of the solicitation. The clause shall be used with its 
Alternate II when a price evaluation adjustment is authorized on a 
regional basis.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    7. Section 52.212-3 is amended by adding Alternate II following 
Alternate I to read as follows:


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

* * * * *
(End of provision)
* * * * *
    Alternate II (Oct 1998). As prescribed in 12.301(b)(2), add the 
following paragraph (c)(7)(iii) to the basic provision:
    (iii) Address. The offeror represents that its address______is, 
______is not in a region for which a small disadvantaged business 
procurement mechanism is authorized and its address has not changed 
since its certification as a small disadvantaged business concern or 
submission of its application for certification. The list of 
authorized small disadvantaged business procurement mechanisms and 
regions is posted at http://www.arnet.gov/References/
sdbadjustments.htm. The offeror shall use the list in effect on the 
date of this solicitation. ``Address,'' as used in this provision, 
means the address of the offeror as listed on the Small Business 
Administration's register of small disadvantaged business concerns 
or the address on the completed application that the concern has 
submitted to the Small Business Administration or a Private 
Certifier in accordance with 13 CFR part 124, subpart B. For joint 
ventures, ``address'' refers to the address of the small 
disadvantaged business concern that is participating in the joint 
venture.

    8. Section 52.219-22 is amended by adding Alternate I following 
``(End of provision)'' to read as follows:


52.219-22  Small Disadvantaged Business Status.

* * * * *
(End of provision)
    Alternate I (Oct 1998). As prescribed in 19.306(b), add the 
following paragraph (b)(3) to the basic provision:
    (3) Address. The offeror represents that its address______is, 
______is not in a region for which a small disadvantaged business 
procurement mechanism is authorized and its address has not changed 
since its certification as a small disadvantaged business concern or 
submission of its application for certification. The list of 
authorized small disadvantaged business procurement mechanisms and 
regions is posted at http://www.arnet.gov/References/
sdbadjustments.htm. The offeror shall use the list in effect on the 
date of this solicitation. ``Address,'' as used in this provision, 
means the address of the offeror as listed on the Small Business 
Administrations register of small disadvantaged business concerns or 
the address on the completed application that the concern has 
submitted to the Small Business Administration or a Private 
Certifier in accordance with 13 CFR part 124, subpart B. For joint 
ventures, ``address'' refers to the address of the small 
disadvantaged business concern that is participating in the joint 
venture.

    9. Section 52.219-23 is amended by adding Alternate II following 
Alternate I to read as follows:


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

* * * * *
(End of clause)
* * * * *
    Alternate II (Oct 1998). As prescribed in 19.1104, substitute 
the following paragraph (b)(i) for paragraph (b)(i) of the basic 
clause:

[[Page 52428]]

    (i) Offers from small disadvantaged business concerns, that have 
not waived the adjustment, whose address is in a region for which an 
evaluation adjustment is authorized;

[FR Doc. 98-26158 Filed 9-29-98; 8:45 am]
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