[Federal Register Volume 65, Number 16 (Tuesday, January 25, 2000)]
[Notices]
[Pages 3942-3944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1544]


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DEPARTMENT OF DEFENSE


Test Program for Negotiation of Comprehensive Small Business 
Subcontracting Plans

AGENCY:  Department of Defense (DoD).

ACTION:  Notice of test program.

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[[Page 3943]]

SUMMARY:  The Department of Defense is amending its Test Program for 
Negotiation of Comprehensive Small Business Subcontracting Plans to 
implement Section 817 of the National Defense Authorization Act for 
Fiscal Year 2000. Section 817 provides for a five year extension of the 
DoD Test Program for negotiation of comprehensive small business 
subcontracting plans from September 30, 2000 to September 30, 2005.

EFFECTIVE DATE: January 24, 2000.

FOR FURTHER INFORMATION CONTACT:  Mr. Ivory Fisher, Office of Small and 
Disadvantaged Business Utilization, OUSD (A&T) SADBU, 1777 North Kent 
Street, Suite 9100, Arlington, VA 22209, telephone (703) 588-8616, 
telefax (703) 588-7561.

SUPPLEMENTARY INFORMATION:  

A. Background

    In accordance with Section 834 of Public Law 101-189, as amended, 
the Department of Defense (DoD) established a Test Program for 
Negotiation of Comprehensive Small Business Subcontracting Plans (the 
Program) to determine whether the use of comprehensive subcontracting 
plans on a corporate, division, or plant-wide basis would increase 
subcontracting opportunities for small business concerns. DoD amended 
the Program to implement the requirements of Section 822 of the 
National Defense Authorization Act for Fiscal Year 1998 (Public Law 
105-85). The amendments: (1) Provide for subcontracts that are awarded 
by participating contractors performing as subcontractors, under DoD 
contracts, to be included in comprehensive small business 
subcontracting plans, and (2) to cover the HUBZone Act of 1997 
implementation in the Federal Acquisition Regulation (FAR), which 
results in the addition of HUBZone small businesses to the categories 
of small business concerns that must be addressed by comprehensive 
small business subcontracting plans.

Ivory Fisher,
Office of Small and Disadvantaged Business Utilization.

    The revised test plan is as follows:

Test Program for Negotiation of Comprehensive Small Business 
Subcontracting Plans

I. Purpose

    This document implements Section 834 of Public Law 101-189, the 
National Defense Authorization Act for Fiscal Years 1990 and 1991, 
as amended. The primary purpose of the Comprehensive Small Business 
Subcontracting Plan Test Program (the Program) is to determine 
whether the negotiation and administration of comprehensive small 
business subcontracting plans will reduce administrative burdens on 
contractors while enhancing subcontracting opportunities for small 
business concerns and small business concerns owned and controlled 
by socially and economically disadvantaged individuals under 
Department of Defense (DoD) contracts.

II. Authority

    The Program is established pursuant to Section 834 of the 
National Defense Authorization Act for Fiscal Years 1990 and 1991, 
as amended.

III. Program Requirements

    A. The Program shall be conducted from October 1, 1990, through 
September 30, 2005.
    B. The selection of contractors for participation in the Program 
shall be in accordance with Section 811(b)(3) of the National 
Defense Authorization Act For Fiscal Year 1996, Public Law 104-106. 
Eligible contractors are large business concerns at the major 
(total) corporate level that, during the preceding fiscal year:
    1. Were performing under at least three DoD prime contracts; 
furnished supplies or services (including professional services) to 
DoD, engaged in research and development for DoD, or performed 
construction for DoD; and were paid $5,000,000 or more for such 
contract activities; and
    2. Achieved a small disadvantaged business (SDB) subcontracting 
participation rate of 5 percent or more during the preceding fiscal 
year. However, this requirement does not apply to the eight original 
contractors accepted into the Program. Additionally, a large 
business with an SDB subcontracting participation rate of less than 
5 percent during the preceding fiscal year may request, through the 
designated contracting activity, to participate in the Program if 
the firm submits a detailed plan with milestones leading to 
attainment of at least a 5 percent SDB subcontracting participation 
rate by September 30, 2000, 2005.
    C. Contractors selected for participation shall:
    1. Be eligible in accordance with paragraph III(B);
    2. Establish their comprehensive subcontracting plans on the 
same corporate, division or plant-wide basis under which they 
submitted the Standard Form (SF) 295 during the preceding fiscal 
year, except that a division or plant that historically reported 
through a higher-level division, but would meet the criteria of 
paragraph III(B)(2), shall be permitted to participate in the 
Program if the lower-level division, plant or profit center can 
demonstrate a 5 percent or greater subcontract performance level 
with SDB concerns;
    3. Have reported to DoD on the SF 295 for the previous fiscal 
year, except as provided in paragraph III(C)(2);
    4. Accept an SDB goal for each fiscal year of not less than 5 
percent, or an SDB goal that is in accordance with the milestone 
established under paragraph III(B)(2);
    5. Comply with the requirements of Defense Federal Acquisition 
Regulation Supplement (DFARS) Section 215.605 for source selection 
purposes;
    6. Offer a broad range of subcontracting opportunities;
    7. Voluntarily agree to participate; and
    8. Have at least one active contract that requires a 
subcontracting plan at the designated DoD buying activity 
responsible for negotiating the Comprehensive Subcontracting Plan.

IV. Elements of the Comprehensive Small Business Subcontracting 
Plan

    A. The comprehensive small business subcontracting plan shall 
address each of the 11 elements set forth in paragraph (d) of the 
clause at FAR 52.219-9, ``Small Business Subcontracting Plan.''
    1. The subcontracting plan, percentage and corresponding dollar 
goals for awards to small business, HUBZone small business, small 
disadvantaged business and women-owned small business concerns shall 
be developed by the contractor for its entire business operation in 
support of all DoD contracts and subcontracts under DoD contracts 
regardless of dollar value.
    2. Participating contractors shall include separate specific 
goals and timetables for the awarding of subcontracts in two 
industry categories which have not historically been made available 
to small business and small disadvantaged business concerns. These 
industry categories will be recommended by the contractor and 
approved by the contracting officer. Subcontract awards made in 
support of the specific industry categories shall also count towards 
attainment of the overall small business and small disadvantaged 
business goals.
    3. The subcontracting plan shall set forth the prime 
contractor's actions to publicize prospective subcontract 
opportunities for small business, HUBZone small business, small 
disadvantaged business and women-owned small business concerns.
    B. Subcontracting plans to be established under the Program 
shall be submitted each year by participating contractors to the 
designated contracting officer 45 days prior to the end of the 
Government's fiscal year (September 30). However, new contractors 
requesting participation under the Program shall submit 
subcontracting plans to the contracting officer as far in advance as 
possible to the beginning of the fiscal year in which the contractor 
proposes to participate.

Procedures

    A. The Service Acquisition Executive within each military 
department and defense agency having contractors that meet the 
requirements of paragraphs III(B) and (C) shall designate at least 
three but nor more than five contracting activities to participate 
in the Program. In selecting the contracting activities to 
participate in the Program, the Services Acquisition Executive shall 
ensure that the designated activities cover a broad range of 
supplies and services.
    B. The designated contracting activity will accomplish the 
following:
    1. With the coordination of the Director, Office of Small and 
Disadvantaged Business

[[Page 3944]]

Utilization, for their military department or defense agency, select 
as many eligible prime contractors (at least five) for participation 
under the Program as deemed appropriate.
    2. Establish a ``Comprehensive Small Business Subcontracting 
Plan'' negotiating team(s) composed as follows:
    a. A contracting officer(s) who will be responsible for 
negotiation and approval of the comprehensive subcontracting plan(s) 
as well as the responsibilities at FAR 19.705.
    b. The contracting activity's Small and Disadvantaged Business 
Utilization Specialist.
    c. The Small and Disadvantaged Business Utilization Specialist 
of the cognizant contract administration activity that administers 
the preponderance of the selected prime contractor's contracts and/
or the appropriate individual who will administer contractor 
performance under the test in accordance with FAR 19.706 and the 
provisions herein.
    d. Production specialist, price analyst and other functional 
specialists as appropriate.
    C. The designated contracting officer shall:
    1. Encourage prime contractors interested in participating in 
the program to enter the program on a plant or facility basis.
    2. Solicit proposed comprehensive subcontracting plans from 
selected contractor(s) as soon as possible and by July 1, annually 
thereafter.
    3. By October 1, and annually thereafter, review, negotiate and 
approve on behalf of DoD a comprehensive subcontracting plan for 
each selected contractor.
    4. Distribute copies of the approved subcontracting plan in 
accordance with paragraph VI(A).
    5. Upon negotiation and acceptance of the comprehensive 
subcontracting plan, obtain from the contractor:
    a. A listing of all active DoD contracts that contain individual 
subcontracting plans required by Section 211 of Public Law 95-507.
    b. The listing shall include the following:
    i. Contract number.
    ii. Name and address of the contracting activity.
    iii. Contracting officer's name and phone number.
    6. Upon receipt of the information provided by the participating 
contractor under paragraph V(C)(4), direct the designated 
administrative contracting officer to issue a comprehensive change 
order, which modifies all of the contractor's active DoD contracts 
that include subcontracting plans. The modification will substitute 
the contractor's approved comprehensive subcontracting plan for the 
individual plans, will substitute the clause at DFARS 252.219-7004 
for the clause at FAR 52.219-9, and will delete the clauses at FAR 
52.219-10 and 52.219-16 and DFARS 252.219-7003 and 252.219-7005, as 
appropriate.
    7. Review annually, with the contract administration activity, 
the contractor's performance under the plan. Document the review 
findings and distribute, in accordance with paragraph VI(A), within 
45 days of the end of the fiscal year.
    8. By November 15 of the year after acceptance, and annually 
thereafter, determine whether the contractor has met its 
comprehensive subcontracting goals. If the goals have not been met, 
determine whether there is any indication that the contractor failed 
to make a good faith effort and take appropriate action.
    9. By December 15, 2005, prepare and submit a report on each 
participating contractor's performance which details the results of 
the Program. The report must compare the contractor's performance 
under the Program with its performance for the three fiscal years 
prior to acceptance into the Program. The report distribution will 
be in accordance with paragraph VI(A).
    D. Participating contractors:
    1. Shall establish their comprehensive subcontracting plans on 
the same corporate, division or plant-wide basis under which they 
submitted the SF 295 during the preceding fiscal year, except that 
those contractors that historically reported through a higher 
headquarters can elect to participate as a separate (lower-level) 
reporting profit center, plant or division if the contractor 
achieved an SDB subcontracting performance rate of 5 percent or 
greater in the preceding fiscal year.
    2. Upon negotiation of an acceptable comprehensive 
subcontracting plan, shall be exempt from individual contract-by-
contract reporting requirements for DoD contracts and subcontracts 
under DoD contracts unless otherwise required in accordance with 
paragraph III(C)(5).
    3. Shall continue individual contract reporting on non-DoD 
contracts.
    4. Shall comply with the flow-down provisions of Section 211 of 
Public Law 95-507 for large business subcontractors which are not 
participating in the Program. Consequently, large business concerns 
which are not participating in the Program receiving a DoD 
subcontract in excess of $500,000 ($1,000,000 for construction) are 
required to adopt a plan similar to that mandated by the clause at 
FAR 52.219-9. Participating contractors are prohibited from flowing 
down the ``Comprehensive'' subcontracting deviation provisions of 
DFARS 252.219-7004. Accordingly, large business subcontractors to 
the participating contractors who themselves are not participating 
in the Program shall be required to establish individual 
subcontracting plans with specific goals for awards to small 
business, small disadvantaged business and women-owned small 
business concerns.
    5. Upon expulsion from the Program or Program termination on 
September 10, 2005, shall negotiate and establish individual 
subcontracting plan son all future DoD contracts that otherwise meet 
the requirements of Section 211 of Public Law 95-507.

VI. Monitoring and Reporting of Comprehensive Subcontracting Plans 
and Goals

    A. Upon negotiation and acceptance of comprehansive 
subcontracting plans and goals, the designated activity shall 
immediately forward one copy of the plan to each of the following:
    1. Director, Office of Small and Disadvantaged Business 
Utilization, Office of the Deputy Under Secretary of Defense 
(Acquisition and Technology), 1777 North Kent Street, Suite 9100, 
Arlington, VA 22209
    2. Director, Small and Disadvantaged Business Utilization, for 
the military department or defense agency of the activity that 
negotiated and accepted the comprehensive subcontracting plan.
    3. The cognizant contract administration office.
    B. Each participating contractor shall complete the SF 295 
``Summary Subcontract Report'' in accordance with the instructions 
on the back of the form on a semi-annual basis, except as noted 
below:
    1. One copy of the SF 295 and attachments shall be submitted to 
Director, Office of Small and Disadvantaged Business Utilization, 
Office of the Deputy Under Secretary of Defense (Acquisition and 
Technology), 1777 North Kent Street, Suite 9100, Arlington, VA 
22209.
    2. Participating contractors shall enter in Item 14 Remarks 
block the annual corporate, division or plant-wide small business, 
small disadvantaged business and women-owned small business 
percentage and corresponding dollar goals.
    3. Participating contractors shall also enter separately in Item 
14 the percentage and corresponding dollar goals for each of the two 
selected industry categories (see paragraph IV(A) (2)).
    4. Participating contractors shall also enter separately in Item 
14 on a semi-annual cumulative basis the percentage and 
corresponding dollar amount of subcontract awards made in each of 
the two selected industry categories.
    5. Participating contractors shall be exempt from the completion 
of SF 294 ``Subcontract Report For Individual Contracts'' for DoD 
contracts during their participation in the Program.

    January 18, 2000.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 00-1544 Filed 1-21-00; 8:45 am]
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