[Federal Register Volume 64, Number 185 (Friday, September 24, 1999)]
[Rules and Regulations]
[Pages 51830-51832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24411]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 5, 6, 7, 8, 12, 13, 14, 15, 19, 26, 52, and 53

[FAC 97-14; FAR Case 97-307; Item II]
RIN 9000-AI20


Federal Acquisition Regulation; Historically Underutilized 
Business Zone (HUBZone) Empowerment Contracting Program

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

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed to adopt the 
interim rule published in the Federal Register as Item I of Federal 
Acquisition Circular 97-10 at 63 FR 70265, December 18, 1998, and the 
correcting amendment published at 64 FR 3196, January 20, 1999, as a 
final rule with changes. The rule amends the Federal Acquisition 
Regulation (FAR) to implement revisions made to Small Business 
Administration (SBA) regulations covering the Historically 
Underutilized Business Zone (HUBZone) Program.

EFFECTIVE DATE: November 23, 1999.


[[Page 51831]]


FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Victoria Moss, Procurement Analyst, at (202) 501-
4764. Please cite FAC 97-14, FAR case 97-307.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD, GSA, and NASA published an interim rule in the Federal 
Register at 63 FR 70265, December 18, 1998, and a correcting amendment 
at 64 FR 3196, January 20, 1999. This final rule amends FAR Parts 6, 
19, and 52 to comply with revisions made to the SBA's HUBZone Program 
contained in 13 CFR Parts 121, 125, and 126 (63 FR 31896, June 11, 
1998), and to make editorial revisions. The purpose of the HUBZone 
Program is to provide Federal contracting assistance for qualified 
small business concerns located in distressed communities in an effort 
to increase employment opportunities, investment, and economic 
development in these communities. The program provides for set-asides 
for firms that meet the definition of a HUBZone small business concern 
(SBC), sole source awards to HUBZone SBCs, and price evaluation 
preferences for HUBZone SBCs in acquisitions conducted using full and 
open competition, and establishes a Governmentwide goal for HUBZone 
awards. Until September 30, 2000, ten Government agencies are required 
to comply with the prime contract HUBZone Program. After that date, the 
program will apply to all Federal agencies employing one or more 
contracting officers.
    Seven respondents submitted comments in response to the interim 
rule. The Councils considered all comments in the development of the 
final rule.
    This rule was subject to Office of Management and Budget review 
under Section 6(b) of Executive Order 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is a major rule under 5 
U.S.C. 804.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies to 
this final rule. Therefore, the Councils completed a Final Regulatory 
Flexibility Analysis (FRFA). Interested parties may obtain a copy of 
the FRFA from the FAR Secretariat. It is summarized as follows:

    The purpose of the HUBZone Program is to provide Federal 
contracting assistance for qualified small business concerns (SBCs) 
located in historically underutilized business zones in an effort to 
increase employment opportunities, investment, and economic 
development in such areas. The HUBZone Program will benefit SBCs by 
increasing the number of Federal Government contracts awarded to 
them. There is a statutory goal for HUBZone SBCs to receive 3 
percent of contract dollars by fiscal year 2003. The HUBZone Act of 
1997, Title VI of Public Law 105-135, 111 Stat. 2592 (December 2, 
1997), created the HUBZone Program and directed the Administrator of 
the Small Business Administration to promulgate implementing 
regulations. On June 11, 1998, the SBA issued a final rule setting 
forth the program requirements for qualification as a HUBZone SBC, 
the Federal contracting assistance available to qualified HUBZone 
SBCs, and other aspects of this program. This Federal Acquisition 
Regulation (FAR) rule further implements the SBA rule. There were no 
public comments received in response to the Initial Regulatory 
Flexibility Analysis. The small entities affected by this rule are 
those who fit within the definition of a small business concern as 
defined by SBA in 13 CFR Part 121 and new Part 126 and who 
participate in Government contracting. Because the program is new, 
we cannot estimate precisely the number or classes of small entities 
that this rule will affect. However, SBA estimates that more than 
30,000 SBCs will apply for certification as qualified HUBZone SBCs. 
These 30,000 HUBZone SBCs will be spread over about 7,000 census 
tracts, about 900 non-metropolitan counties, 310 Indian 
reservations, and 217 Alaska Native villages. With respect to 
projected reporting and recordkeeping requirements, this FAR rule 
requires that Government prime contractors with contracts that 
require subcontracting plans to seek out HUBZone SBCs as 
subcontractors, as well as to maintain records and report on those 
subcontracts awarded to HUBZone SBCs. These requirements do not 
apply to small businesses. We selected alternatives that would 
minimize any adverse economic impact on small business. In general, 
we modeled the rule's procurement mechanisms, to the extent 
permitted by the SBA rule, on those already in use within the 
Government. This approach should make the requirements of the rules 
immediately familiar to many small businesses that already have 
extensive experience in dealing with Government contracting offices. 
Moreover, we structured each individual mechanism to strike an 
appropriate balance between the interests of HUBZone and non-HUBZone 
small businesses, and to minimize the overall burden of compliance 
on small business. For example, we did not make the price evaluation 
adjustment applicable to all competitive procurements, but rather 
only to acquisitions that are not reserved or set aside for small 
business concerns, or where a small business would not be displaced.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) applies because the 
final rule contains information collection requirements currently 
approved under OMB Control Numbers 9000-0006 and 9000-0007.

List of Subjects in 48 CFR Parts 5, 6, 7, 8, 12, 13, 14, 15, 19, 
26, 52, and 53

    Government procurement.

    Dated: September 14, 1999.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

Interim Rule Adopted as Final With Changes

    Accordingly, DoD, GSA, and NASA adopt the interim rule amending 48 
CFR parts 5, 6, 7, 8, 12, 13, 14, 15, 19, 26, 52, and 53 that was 
published at 63 FR 70265, December 18, 1998, and the correcting 
amendment published at 64 FR 3196, January 20, 1999, as a final rule 
with the following changes:
    1. The authority citation for 48 CFR parts 6, 19, and 52, continues 
to read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 6--COMPETITION REQUIREMENTS

    2. Revise section 6.201 to read as follows:


6.201   Policy.

    Acquisitions made under this subpart require use of the competitive 
procedures prescribed in 6.102.

PART 19--SMALL BUSINESS PROGRAMS

    3. Amend section 19.306 to revise paragraphs (c), (e), and (k) to 
read as follows:


19.306   Protesting a firm's status as a HUBZone small business 
concern.

* * * * *
    (c) All protests must be in writing and must state all specific 
grounds for the protest. Assertions that a protested concern is not a 
qualified HUBZone small business concern, without setting forth 
specific facts or allegations, are insufficient. An offeror must submit 
its protest to the contracting officer. The contracting officer and the 
SBA must submit protests to SBA's Associate Administrator for the 
HUBZone Program (AA/HUB).
* * * * *
    (e) Except for premature protests, the contracting officer must 
forward any protest received, notwithstanding whether the contracting 
officer believes that the protest is insufficiently specific or 
untimely, to: AA/HUB, U.S. Small Business Administration, 409 3rd 
Street, SW, Washington, DC 20416. The AA/HUB will notify the protester 
and the contracting officer of the date the protest was received and 
whether the protest

[[Page 51832]]

will be processed or dismissed for lack of timeliness or specificity.
* * * * *
    (k) The ADA/GC&8(a)BD will make its decision within 5 business days 
of the receipt of the appeal, if practicable, and will base its 
decision only on the information and documentation in the protest 
record as supplemented by the appeal. SBA will provide a copy of the 
decision to the contracting officer, the protester, and the protested 
HUBZone small business concern. The SBA decision, if received before 
award, will apply to the pending acquisition. SBA rulings received 
after award will not apply to that acquisition. The ADA/GC&8(a)BD's 
decision is the final decision.
    4. Revise section 19.307 to read as follows:


19.307  Solicitation provisions.

    (a)(1) Insert the provision at 52.219-1, Small Business Program 
Representations, in solicitations exceeding the micro-purchase 
threshold when the contractor will perform the contract inside the 
United States, its territories or possessions, Puerto Rico, the Trust 
Territory of the Pacific Islands, or the District of Columbia.
    (2)(i) Use the provision with its Alternate I in solicitations 
issued by the following agencies on or before September 30, 2000:
    (A) Department of Agriculture.
    (B) Department of Defense.
    (C) Department of Energy.
    (D) Department of Health and Human Services.
    (E) Department of Housing and Urban Development.
    (F) Department of Transportation.
    (G) Department of Veterans Affairs.
    (H) Environmental Protection Agency.
    (I) General Services Administration.
    (J) National Aeronautics and Space Administration.
    (ii) Use the provision with its Alternate I in solicitations issued 
by all Federal agencies after September 30, 2000.
    (3) Use the provision with its Alternate II in solicitations issued 
by DoD, NASA, or the Coast Guard that the contracting officer expects 
will exceed the threshold at 4.601(a).
    (b) Insert the provision at 52.219-22, Small Disadvantaged Business 
Status, in solicitations that include the clause at 52.219-23, Notice 
of Price Evaluation Adjustment for Small Disadvantaged Business 
Concerns, or 52.219-25, Small Disadvantaged Business Participation 
Program--Disadvantaged Status and Reporting. 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.
    (c) When contracting by sealed bidding, insert the provision at 
52.219-2, Equal Low Bids, in solicitations and contracts when the 
contractor will perform the contract inside the United States, its 
territories or possessions, Puerto Rico, the Trust Territory of the 
Pacific Islands, or the District of Columbia.
    5. Amend section 19.800 to revise paragraph (e) to read as follows:


19.800  General.

* * * * *
    (e) Before deciding to set aside an acquisition in accordance with 
Subpart 19.5 or 19.13, the contracting officer should review the 
acquisition for offering under the 8(a) Program. If the acquisition is 
offered to the SBA, SBA regulations (13 CFR 126.607(b)) give first 
priority to HUBZone 8(a) concerns.
* * * * *
    6. Amend section 19.1303 to revise paragraph (b) to read as 
follows:


19.1303  Status as a qualified HUBZone small business concern.

* * * * *
    (b) If the SBA determines that a concern is a qualified HUBZone 
small business concern, it will issue a certification to that effect 
and will add the concern to the List of Qualified HUBZone Small 
Business Concerns on its Internet website at http://www.sba.gov/
hubzone. A firm on the list is eligible for HUBZone program preferences 
without regard to the place of performance. The concern must appear on 
the list to be a HUBZone small business concern.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    7. Amend section 52.219-1 to revise Alternates I and II to read as 
follows:


52.219-1  Small Business Program Representations.

* * * * *
    Alternate I (Nov 1999). As prescribed in 19.307(a)(2), add the 
following paragraph (b)(4) to the basic provision:
    (4) [Complete only if offeror represented itself as a small 
business concern in paragraph (b)(1) of this provision.] The offeror 
represents, as part of its offer, that--
    (i) It____is, ____is not a HUBZone small business concern 
listed, on the date of this representation, on the List of Qualified 
HUBZone Small Business Concerns maintained by the Small Business 
Administration, and no material change in ownership and control, 
principal office, or HUBZone employee percentage has occurred since 
it was certified by the Small Business Administration in accordance 
with 13 CFR Part 126; and
    (ii) It ____ is, ____ is not a joint venture that complies with 
the requirements of 13 CFR Part 126, and the representation in 
paragraph (b)(4)(i) of this provision is accurate for the HUBZone 
small business concern or concerns that are participating in the 
joint venture. [The offeror shall enter the name or names of the 
HUBZone small business concern or concerns that are participating in 
the joint venture: ____________.] Each HUBZone small business 
concern participating in the joint venture shall submit a separate 
signed copy of the HUBZone representation.
    Alternate II (Nov 1999). As prescribed in 19.307(a)(3), add the 
following paragraph (b)(5) to the basic provision:
    (5) [Complete if offeror represented itself as disadvantaged in 
paragraph (b)(2) of this provision.] The offeror shall check the 
category in which its ownership falls:
    ____ Black American.
    ____ Hispanic American.
    ____ Native American (American Indians, Eskimos, Aleuts, or 
Native Hawaiians).
    ____ Asian-Pacific American (persons with origins from Burma, 
Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China, 
Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines, 
U.S. Trust Territory of the Pacific Islands (Republic of Palau), 
Republic of the Marshall Islands, Federated States of Micronesia, 
the Commonwealth of the Northern Mariana Islands, Guam, Samoa, 
Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru).
    ____ Subcontinent Asian (Asian-Indian) American (persons with 
origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the 
Maldives Islands, or Nepal).
    ____ Individual/concern, other than one of the preceding.
[FR Doc. 99-24411 Filed 9-23-99; 8:45 am]
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