Federal Register, Volume 64 Issue 105 (Wednesday, June 2, 1999)

[Federal Register Volume 64, Number 105 (Wednesday, June 2, 1999)]
[Notices]
[Pages 29693-29702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13879]

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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy; Small Business Administration

Final Policy Directive, Small Business Competitiveness
Demonstration Program

AGENCIES: Office of Federal Procurement Policy (OFPP), and Small
Business Administration (SBA), OMB.

ACTION: Notice of final policy directive.

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SUMMARY: The OFPP and SBA are issuing a final policy directive and
implementation plan to implement the Small Business Competitiveness
Demonstration Program established by the Small Business Competitiveness
Demonstration Program Act of 1988 (Pub. L. 100-656), as amended, 15
U.S.C. 644 note. As a result of comments received following publication
of an interim policy directive and implementation plan in the Federal
Register on September 19, 1998 (63 FR 51981), we are revising the
interim policy directive and implementation plan as indicated below.
The changes to the implementation plan include:
1. We added a new subparagraph 7. in section III.A. to make clear
that the very small business pilot program does not apply to any
requirement that is subject to the Small Business Competitiveness
Demonstration Program.
2. We revised section IIIC.1. to allow participating agencies to
apply the 40 percent small business goal separately for east coast non-
nuclear ship repair and west coast non-nuclear ship repair.
3. We revised section IVA.5. to clarify that SBA has the authority
to request quarterly reports from the Federal Procurement Data System
(FPDS) to monitor agencies' progress towards meeting their annual
goals.
4. We revised section V.A.1 to delete reference to the solicitation
date, but retained the requirement for agencies to distinguish awards
made under the Program from other contract awards.

EFFECTIVE DATE: October 1, 1999.

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 FAR (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 FAR (48 CFR subpart 19.10).
In 1996, Congress extended the Demonstration Program for one year,
through September 30, 1997. Public Law 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.
Public Law 105-18, Title II, Sec. 2002.
In December 1997, the Small Business Reauthorization Act of 1997
(Public Law 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 issued a
newly revised interim OFPP policy directive and implementation plan on
September 29, 1998. In addition to making conforming revisions to
reflect the amendments made by Congress in the 1997 Act, we made non-
substantive revisions in various parts of the document, which are
intended to improve its clarity. For ease of reading, we reissued the
interim policy directive and implementation plan in its entirety for
comment.

B. Public Comments

OFPP received seven letters in response to the request for comments
on the September 29, 1998, interim policy directive and implementation
plan. A summary of the main issues and concerns raised in the comments
follows:
1. Comment: SBA should change the small business size standard for
the construction industry to make appropriate adjustments for
inflation.
Response: SBA is reviewing the size standards for construction and
will make adjustments for inflation if deemed necessary. SBA will
publish

[[Page 29694]]

any new size standards in the Federal Register for public comment. No
changes to the policy directive and implementation plan would be
necessary because they do not contain the size standards. SBA size
standards are published in the FAR.
2. Comment: The policy directive should allow subcontract awards to
count towards the 40 percent small business goal in construction. OFPP
should continue and expand the use of the simplified data collection
system for architectural and engineering (A&E) services, which expired
on September 30, 1997, to allow participating agencies to track
subcontract awards under construction contracts. If agencies cannot
count subcontracts to small businesses towards their goal
accomplishments, the policy directive should exempt task order
contracts for construction. In addition, the policy directive ignores
the provision at 713(b) of Public Law 100-656, which establishes a 35
percent goal for A&E until the subcontracting reporting system is
implemented.
Response: The commenter states that agencies with recurring
construction needs use task order IDIQ contracts to respond quickly to
maintenance, alteration, and repair services. Under these task order
contracts, small businesses perform more than 75 percent of the work as
subcontracts. We support the use of small businesses as subcontractors
under construction projects. However, there is no statutory basis to
require participating agencies to count subcontracts to small
businesses toward goal achievement for A&E services or to expand the
subcontracting reporting system to other industries. As the commenter
recognizes, section 714(b) of Public Law 100-656, which required OFPP
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, expired on September 30, 1997. Accordingly,
the implementation plan excludes the subcontracting reporting system
and deletes reference to the 35 percent goal for A&E services. Under
current law, each participating agency has a small business goal that
is 40 percent of the agency's total contract dollars awarded in each
designated industry group. Participating agencies determine their small
business goal achievement using prime contract award data.
3. Comment: The policy directive should not refer to the Program as
a ``demonstration'' program since it was extended indefinitely by the
Small Business Reauthorization Act of 1997.
Response: The Small Business Reauthorization Act did not amend
section 711(a) of Public Law 100-656 to rename the Program. Section
711(a) established the Program as the ``Small Business Competitiveness
Demonstration Program.'' Therefore, we do not believe it is appropriate
to change the Program title.
4. Comment: The policy directive substitutes ``unrestricted
competition'' for ``full and open competition'' throughout the document
whenever it refers to procurements below the simplified acquisition
threshold (SAT) but above the emerging small business reserve amount.
The directive also allows for ``maximum practicable competition'' below
the simplified acquisition threshold. The references to ``unrestricted
competition'' and ``maximum practicable competition'' should be amended
to confirm that neither phrase excludes ``Brooks Act A&E procurements''
from its terms.
Response: Contrary to the commenter's statement, the policy
directive substitutes ``unrestricted competition'' for ``full and open
competition'' throughout the interim policy directive for all
procurements, not just those below the SAT and above the emerging small
business reserve amount. As explained in the preamble to the Sept. 29,
1998 interim policy directive, we used the term ``unrestricted
competition'' to encompass both agencies' use of ``maximum practicable
competition'' for procurements below the SAT and ``full and open
competition'' for procurements above the SAT. This is necessary because
the Federal Acquisition Streamlining Act and the Competition in
Contracting Act establish different competition standards for
procurements above and below the SAT. This change does not affect the
qualification-based selection procedures for acquiring A&E services
because these procedures are considered full and open competition under
FAR subpart 6.102.
5. Comment: FAR 19.1202-2 provides that the extent of small
disadvantaged business (SDB) participation shall be an evaluation
factor in competitive procurements over $500,000 ($1 million in
construction) and does not list the Small Business Competitiveness
Demonstration Program as an exception. This is contrary to the intent
of the Program which seeks to provide an open competition among firms
with qualifications and experience related to the scope of work. By
reference to ``construction'' it is clear that FAR 19.1202-2 does not
recognize the exemption for the four designated industry groups from
restraints on their competition. FAR 19.1202-2 seeks to impose an
evaluation factor inconsistent with either the ``unrestricted
competition'' or full and open competition terminology used in the
Program. OFPP should change the final directive to resolve the conflict
with FAR 19.1202-2.
Response: The policy directive and the SDB reform program are
consistent. FAR subpart 19.12 requires agencies to use the SDB
participation evaluation factor (FAR 19.1202) in certain unrestricted
negotiated procurements. Agencies use the SDB participation evaluation
factor along with other evaluation factors or subfactors to determine
the successful contractor. The use of this evaluation factor is
consistent with the ``unrestricted competition'' terminology used in
the Program.
6. Comment: There is no statutory basis to reimpose set-asides in
the event small business participation in a SIC code falls below 35
percent even if the major group exceeded the 40 percent small business
goal.
Response: The legislative history supporting Public Law 100-656
states that consistent efforts shall be made to achieve the 40 percent
small business goal and the 15 percent emerging small business goal
evenly across all the SIC codes that comprise a designated industry
group. Firms within individual SIC codes shall not be disproportionally
burdened. Therefore, to comply with the legislative intent, we included
the requirement for set-asides to be reimposed when an individual SIC
code falls below 35 percent even if the industry group exceeded 40
percent.
7. Comment: Transferring from OFPP to SBA the responsibility to
report to the Congress within 180 days after FPDS data are available
should not deter or disrupt an agency's process of maintaining or
returning, by the start of the calendar year, to open competition where
such action is supported by the data. The directive should make clear
that there is no congressional action required prior to agency action
on data from the prior fiscal year.
Response: The Federal Register notice preamble mentions SBA's
responsibility to report to the Congress on the results of the Program.
However, there is no mention of a Congressional requirement in the
directive and implementation plan. Rather, the implementation plan
(Paragraph IIID.2.c.) makes clear that agencies must make appropriate
changes to solicitation practices (reinstituting restricted competition
or reinstituting unrestricted competition)

[[Page 29695]]

not later than 30 days following their annual reviews.
8. Comment: The final policy directive should separate east and
west coast non-nuclear ship repair when monitoring goal achievement
rather than considering performance of the industry as a whole.
Response: The comments suggest that small business participation in
non-nuclear ship repair is significantly different on the east coast
and the west coast. Small firms are performing above the 40 percent
goal on the east coast while performance on the west coast is below the
40 percent goal. The comments suggest that the policy directive should
recognize the non-nuclear ship repair industry as two separate markets,
rather than monitoring small business performance for the industry as a
whole. We believe this suggestion has merit. Therefore, we will revise
the Policy Directive and Implementation Plan to allow participating
agencies to apply the 40 percent small business goal separately for
east coast non-nuclear ship repair and west coast non-nuclear ship
repair.
9. Comment: The policy directive should allow organizational units
within a participating agency to return to unrestricted competition
independent of the overall agency review to determine if the goal has
been met.
Response: Section 712(d) of Public Law 100-656 requires
participating agencies to monitor attainment of small business goals.
Any modification to a participating agency's solicitation practices
(using restricted or unrestricted competitions) shall be made as soon
as possible after the agency's annual review. Allowing organizational
units within a participating agency to return to unrestricted or
restricted competition independent of the overall agency review would
be contrary to the statutory intent.
10. Comment: It is not clear why the policy directive excludes
awards made under Federal supply schedules (FSS) contracts from being
covered by the Program. Given the increased emphasis on the use of FSS
contracts, exclusion of these awards could distort small business
participation in the designated industry groups. Consideration should
be given to allowing participating agencies to count awards under FSS
contracts in the designated industry groups toward their small business
goals under this program.
Response: We did not include FSS contracts when the Program began
because there were no FSS contracts for the services in the four
designated industries groups. In addition, SBA historically did not
count such awards toward attainment of the government-wide small
business goal. Although SBA now allows agencies to count awards under
the FSS contracts toward the government-wide goal, there still are no
schedule contracts for the designated industry groups covered by the
Program. Therefore, the Policy Directive will continue to exclude
awards under the FSS from coverage in the Program.
11. Comment: The policy directive should include language that
gives SBA the authority to obtain regular quarterly reports from the
Federal Procurement Data System to monitor agencies' progress in
meeting their goal attainment under the Program.
Response: SBA already has the authority to obtain quarterly
reports from the Federal Procurement Data System to monitor agencies'
progress toward meeting their annual goals. For purposes of clarity,
however, we will revise section IV.A.5. of the implementation plan to
include SBA's authority.
12. Comment: OFPP should establish a web site to maintain a current
statement of the emerging small business reserve amount and include the
web site in the implementation plan.
Response: OFPP has made only one adjustment to the emerging small
business reserve amount (for architectural and engineering services)
since the beginning of the Program. Therefore, we believe a Federal
Register notice is the most appropriate way to provide notice of any
change in the reserve amount. We also will include the final policy
directive and any subsequent changes to it on the Acquisition Reform
Network (ARNet).
13. Comment: The policy directive should no longer require
participating agencies to track awards made outside the Program because
the requirement has outlived its usefulness.
Response: It is essential that participating agencies distinguish
awards made under the Program from other contract awards so that SBA
and other data users can easily retrieve information about the Program.
We do, however, believe that a reference to the solicitation date is no
longer necessary. Therefore, we will revise the language in section
V.A.1 accordingly.

C. Regulatory Flexibility Act Statement and Review Under E.O. 12866

OFPP and SBA certify that the changes made by this final directive
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. because this final directive makes ministerial
changes to the Program required by the Small Business Reauthorization
Act of 1997 (Sections 401-405 of Pub. L. 105-135). For this same
reason, the changes made by this final directive are not
``significant'' under Executive Order 12866.
For those interested in the overall economic scope and effect of
this Program, we note that SBA forwards a report to Congress on an
annual basis describing the economic impact of the program, and that
copies of such report are available from SBA.

D. 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 was submitted to OMB for approval under the Paperwork Reduction
Act (44 U.S.C. Chapter 35). Public comments concerning this request
were invited through a Federal Register notice published on September
29, 1998. No comments were received.
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.

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

Dated: May 25, 1999.

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, Pub. L.
100-656), as amended by sections 23-27 of the Business Opportunity
Development Reform Act Technical Corrections Act (Pub. L. 101-37),
sections 201 and 202 of the Small

[[Page 29696]]

Business Credit and Business Opportunity Enhancement Act of 1992 (Pub.
L. 102-366), section 108 of the Omnibus Consolidation Appropriation Act
of 1997 (Pub. L. 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 (Pub. L. 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.
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, Pub. L. 100-656), as
amended by sections 23-27 of the Business Opportunity Development
Reform Act Technical Corrections Act (Pub. L. 101-37), sections 201 and
202 of the Small Business Credit and Business Opportunity Enhancement
Act of 1992 (Pub. L. 102-366), section 108 of the Omnibus Consolidation
Appropriations Act of 1997 (Pub. L. 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, Pub. L.
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 Industry Classification System (NAICS) codes will be
substituted for SIC codes.
4. Targeted industry categories for enhanced participation are
determined

[[Page 29697]]

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.
7. The Very Small Business Pilot Program does not apply to any
requirement that is 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; east
coast non-nuclear ship repair; and west coast non-nuclear ship repair.
The 40 percent goal applies separately to each construction major group
and to east coast and west coast non-nuclear ship repair. 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.
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

[[Page 29698]]

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 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 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

[[Page 29699]]

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.
i. FPDS Code J998 (East Coast)
ii. FPDS Code J999 (West Coast)
However, if goal attainment for any individual FPDS service code
within the A&E services industry group 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. The 35 percent rule does not apply to refuse systems
and related services, east coast non-nuclear ship repair, and west
coast non-nuclear ship repair because there are no individual FPDS
service codes or SIC codes within the major group.
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.
SBA may obtain quarterly reports from the FPDS using the format set
forth at Attachment A to monitor agencies' progress during the fiscal
year.
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, 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 SIC codes 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

[[Page 29700]]

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 made under the Program in the four designated
industry groups and the targeted industry categories.
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).

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
Total US Small business disadvantaged Emerging small
Designated groups business actions/ Percentage of business Percentage of business Percentage of
actions/ dollars* dollars Actions/ dollars Actions/ 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................................ .............. .............. .............. .............. .............. .............. ..............

[[Page 29701]]

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............................ .............. .............. .............. .............. .............. .............. ..............
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.

[[Page 29702]]

[FR Doc. 99-13879 Filed 6-1-99; 8:45 am]
BILLING CODE 3110-01-U