[Federal Register Volume 66, Number 176 (Tuesday, September 11, 2001)]
[Rules and Regulations]
[Pages 47108-47110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22423]


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DEPARTMENT OF DEFENSE

48 CFR Parts 219 and 252 and Appendix I to Chapter 2

[DFARS Case 2001-D006]


Defense Federal Acquisition Regulation Supplement; DoD Pilot 
Mentor-Protege Program

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement Section 807 of 
the National Defense Authorization Act for Fiscal Year 2001. Section 
807 adds women-owned small businesses to the types of concerns that may 
participate as protege firms in the DoD Pilot Mentor-Protege Program.

DATES: Effective date: September 11, 2001.
    Comment date: Comments on the interim rule should be submitted to 
the address shown below on or before November 13, 2001, to be 
considered in the formation of the final rule.

ADDRESSES: Respondents may submit comments directly on the World Wide 
Web at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an 
alternative, respondents may e-mail comments to: [email protected]. 
Please cite DFARS Case 2001-D006 in the subject line of e-mailed 
comments.
    Respondents that cannot submit comments using either of the above 
methods may submit comments to: Defense Acquisition Regulations 
Council, Attn: Ms. Angelena Moy, OUSD (AT&l) DP (DAR), IMD 3C132, 3062 
Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-0350. 
Please cite DFARS Case 2001-D006.
    At the end of the comment period, interested parties may view 
public comments on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf.

FOR FURTHER INFORMATION CONTACT: Ms. Angelena Moy, (703) 602-1302.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule implements Section 807 of the National Defense 
Authorization Act for Fiscal Year 2001 (Public Law 106-398). Section 
807 adds women-owned small businesses to the types of concerns that may 
participate as protege firms in the DoD Pilot Mentor-Protege Program. 
The rule also clarifies that business concerns owned and controlled by 
an Indian tribe or a Native Hawaiian organization are eligible to 
participate as protege firms in the Program.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD expects this rule to have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. An initial regulatory 
flexibility analysis has been prepared and is summarized as follows: 
This interim rule permits women-owned small business concerns to 
participate as protege firms in the DoD Pilot Mentor-Protege Program. 
DoD expects this rule to have a beneficial impact on women-owned small 
business concerns, as participation in the Program provides protege 
firms an opportunity to enhance their capabilities and increase their 
participation as subcontractors. Presently, there are 3,471 women-owned 
small business concerns that do business with DoD. Since the inception 
of the Pilot Mentor-Protege Program, 160 mentor firms and 509 protege 
firms have participated in the Program.
    A copy of the analysis may be obtained from the point of contact 
specified herein. DoD invites comments from small businesses and other 
interested parties. DoD also will consider comments from small entities 
concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. 
Such comments should be submitted separately and should cite DFARS Case 
2001-D006.

C. Paperwork Reduction Act

    The information collection requirements of the DoD Pilot Mentor-
Protege Program have been approved by the Office of Management and 
Budget under Control Number 0704-0332, for use through March 31, 2004.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to publish this 
interim rule prior to affording the public an opportunity to comment. 
This interim rule implements Section 807 of the National Defense 
Authorization Act for Fiscal Year 2001 (Public Law 106-398). Section 
807 adds women-owned small businesses to the types of concerns that may 
participate as protege firms in the DoD Pilot Mentor-Protege Program. 
Section 807 became effective upon enactment on October 30, 2000. 
Comments received in response to this interim rule will be considered 
in the formation of the final rule.

List of Subjects in 48 CFR Parts 219 and 252

    Government procurement.

Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 219 and 252 and Appendix I to Chapter 2 are 
amended as follows:
    1. The authority citation for 48 CFR Parts 219 and 252 and Appendix 
I to Subchapter I continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

    2. Section 219.7100 is revised to read as follows:


219.7100  Scope.

    This subpart implements the Pilot Mentor-Protege Program 
established under Section 831 of the National Defense Authorization Act 
for Fiscal Year 1991 (Public Law 101-510; 10 U.S.C. 2302 note). The 
purpose of the Program is to provide incentives for DoD contractors to 
assist protege firms in enhancing their capabilities and to increase 
participation of such firms in Government and commercial contracts.
    3. Section 219.7102 is amended by revising paragraph (b); and in 
paragraph (d)(2) by removing ``SDB'' and adding in its place 
``applicable''. The revised text reads as follows:


219.7102  General.

* * * * *
    (b) Protege firms that are--
    (1)(i) small disadvantaged business concerns as defined at 
219.001(1);
    (ii) Business entities owned and controlled by an Indian tribe;

[[Page 47109]]

    (iii) business entities owned and controlled by a Native Hawaiian 
Organization;
    (iv) Qualified organizations employing the severely disabled; or
    (v) Women-owned small business concerns;
    (2) Eligible for receipt of Federal contracts; and
    (3) Selected by the mentor firm.
* * * * *


219.7103-2  [Amended]

    4. Section 219.7103-2 is amended in paragraph (c) by removing 
``small disadvantaged businesses'' and adding in its place ``protege 
firms''.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    5. Section 252.232-7005 is amended by revising the clause date and 
paragraph (a) introductory text to read as follows:


252.232-7005  Reimbursement of Subcontractor Advance Payments--DoD 
Pilot Mentor-Protege Program.

* * * * *

REIMBURSEMENT OF SUBCONTRACTOR ADVANCE PAYMENTS--DOD PILOT MENTOR-
PROTEGE PROGRAM (SEP 2001)

    (a) The Government will reimburse the Contractor for any advance 
payments made by the Contractor, as a mentor firm, to a protege firm, 
pursuant to an approved mentor-protege agreement, provided--
* * * * *

    6. Appendix I to Chapter 2 is amended by revising Section I-100 to 
read as follows:

Appendix I--Policy and Procedures for the DoD Pilot Mentor-Protege 
Program

* * * * *


I-100  Purpose.

    (a) This Appendix I to 48 CFR Chapter 2 implements the Pilot 
Mentor-Protege Program (hereinafter referred to as the ``Program'') 
established under Section 831 of Public Law 101-510, the National 
Defense Authorization Act for Fiscal Year 1991 (10 U.S.C. 2302 
note). The purpose of the Program is to--
    (1) Provide incentives to major DoD contractors, performing 
under at least one active approved subcontracting plan negotiated 
with DoD or another Federal agency, to assist protege firms in 
enhancing their capabilities to satisfy DoD and other contract and 
subcontract requirements;
    (2) Increase the overall participation of protege firms as 
subcontractors and suppliers under DoD contracts, other Federal 
agency contracts, and commercial contracts; and
    (3) Foster the establishment of long-term business relationships 
between protege firms and such contractors.
    (b) Under the Program, eligible companies approved as mentor 
firms will enter into mentor-protege agreements with eligible 
protege firms to provide appropriate developmental assistance to 
enhance the capabilities of the protege firms to perform as 
subcontractors and suppliers. According to the law, DoD may provide 
the mentor firm with either cost reimbursement or credit against 
applicable subcontracting goals established under contracts with DoD 
or other Federal agencies.
    (c) DoD will measure the overall success of the Program by the 
extent to which the Program results in--
    (1) An increase in the dollar value of contract and subcontract 
awards to protege firms (under DoD contracts, contracts awarded by 
other Federal agencies, and commercial contracts) from the date of 
their entry into the Program until 2 years after the conclusion of 
the agreement;
    (2) An increase in the number and dollar value of subcontracts 
awarded to a protege firm (or former protege firm) by its mentor 
firm (or former mentor firm);
    (3) An increase in subcontracting with small disadvantaged 
business (SDB) and women-owned small business (WOSB) concerns in 
industry categories where SDBs and WOSBs traditionally have not 
participated within the mentor firm's vendor base;
    (4) The involvement of emerging SDB protege firms in the 
Program; and
    (5) An increase in the employment level of protege firms from 
the date of entry into the Program until 2 years after the 
completion of the agreement.
    (d) This policy sets forth the procedures for participation in 
the Program applicable to companies that are interested in 
receiving--
    (1) Reimbursement through a separate contract line item in a DoD 
contract or a separate contract with DoD; or
    (2) Credit toward applicable subcontracting goals for costs 
incurred under the Program.


    7. Appendix I to Chapter 2 is amended by revising Section I-101.1 
to read as follows:


I-101.1  Emerging SDB protege firm.

    A small disadvantaged business whose size is no greater than 50 
percent of the Small Business Administration (SBA) numerical size 
standard applicable to the North American Industry Classification 
System (NAICS) code for the supplies or services that the protege 
firm provides or would provide to the mentor firm.


I-102  [Amended]

    8. Appendix I to Chapter 2 is amended in Section I-102 in paragraph 
(a) by removing ``SDB'' and adding in its place ``applicable''.
    9. Appendix I to Chapter 2 is amended in Section I-103 by revising 
paragraph (c) to read as follows:


I-103  Program duration.

* * * * *
    (c) From October 1, 1991, until September 30, 2005, a mentor 
firm may receive credit toward the attainment of its applicable 
subcontracting goals, for unreimbursed costs incurred in providing 
developmental assistance to its protege firms, only if such costs 
are incurred pursuant to an approved mentor-protege agreement.

    10. Appendix I to Chapter 2 is amended by revising Section I-104 to 
read as follows:


I-104  Eligibility requirements for a protege firm.

    (a) An entity may qualify as a protege firm if it is--
    (1)(i) An SDB concern as defined at 219.001, paragraph (1) of 
the definition of ``small disadvantaged business concern'';
    (ii) A business entity owned and controlled by an Indian tribe 
as defined in Section 8(a)(13) of the Small Business Act (15 U.S.C. 
637(a)(13));
    (iii) A business entity owned and controlled by a Native 
Hawaiian Organization as defined in Section 8(a)(15) of the Small 
Business Act (15 U.S.C. 637(a)(15));
    (iv) A qualified organization employing the severely disabled as 
defined in Section 8064A of Public Law 102-172; or
    (v) A small business concern owned and controlled by women, as 
defined in Section 8(d)(3)(D) of the Small Business Act (15 U.S.C. 
637(d)(3)(D));
    (2) Eligible for the award of Federal contracts; and
    (3) A small business according to the SBA size standard for the 
NAICS code that represents the contemplated supplies or services to 
be provided by the protege firm to the mentor firm, if the firm is 
representing itself as a qualifying entity under paragraph (a)(1)(i) 
or (v) of this section.
    (b) A protege firm may self-certify to a mentor firm that it 
meets the eligibility requirements in paragraph (a) of this section. 
Mentor firms may rely in good faith on a written representation that 
the entity meets the requirements of paragraph (a) of this section, 
except for a protege's status as a small disadvantaged business 
concern (see FAR 19.703(b)).
    (c) A protege firm may have only one active DoD mentor-protege 
agreement.

    11. Appendix I to Chapter 2 is amended in Section I-105 as follows:
    a. In paragraph (a) by revising the second sentence;
    b. In paragraph (c) by removing the parenthetical ``(1)''; and
    c. By revising paragraph (e) to read as follows:


I-105  Selection of protege firms.

    (a) * * * Mentor firms are encouraged to identity and select 
concerns that are defined as emerging SDB protege firms.
* * * * *
    (e) If at any time pursuant to paragraph (c) of this section, 
the SBA determines that a protege firm is ineligible, assistance 
that the mentor firm furnishes to such a concern after the date of 
the determination may not be

[[Page 47110]]

considered assistance furnished under the Program.


I-106  [Amended]

    12. Appendix I to Chapter 2 is amended in Section I-106 as follows:
    a. In paragraph (a) in the first sentence by removing ``SDB'' and 
adding in its place ``applicable'';
    b. In paragraph (b)(3) by removing ``SDB'' and adding in its place 
``small and disadvantaged business utilization'';
    c. In paragraph (b)(8) in the first sentence by adding, after 
``SDB'', the phrase ``and WOSB'';
    d. In paragraph (c)(1) by adding, after ``SDBs'', the phrase ``and 
WOSBs'';
    e. In paragraph (c)(2)(iii) by removing ``(1) or (2)''; and
    f. In paragraph (e) in the first sentence by removing ``SDB'' and 
adding in its place ``applicable''.
    13. Appendix I to Chapter 2 is amended in Section I-107 by revising 
paragraph (b)(2) and the last sentence of paragraph (f)(3) to read as 
follows:


I-107  Mentor-protege agreements.

* * * * *
    (b) * * *
    (2) The NAICS code(s) that represent the contemplated supplies 
or services to be provided by the protege firm to the mentor firm 
and a statement that, at the time the agreement is submitted for 
approval, the protege firm, if an SDB or WOSB concern, does not 
exceed the size standard for the appropriate NAICS code;
* * * * *
    (f) * * *
    (3) * * * Provision of progress payments by a mentor firm to a 
protege firm at a rate other than the customary rate for the firm 
must be implemented in accordance with FAR 32.504(c).
* * * * *
    14. Appendix I to Chapter 2 is amended in Section I-108 by revising 
paragraph (c) to read as follows:


I-108  Reimbursement procedures.

* * * * *
    (c) Assistance provided in the form of progress payments to a 
protege firm in excess of the customary progress payment rate for 
the firm will be reimbursed only if implemented in accordance with 
FAR 32.504(c).
* * * * *
    15. Appendix I to Chapter 2 is amended in Section I-109 as follows:
    a. By revising paragraph (a);
    b. In paragraph (b) in the first sentence by removing ``SDB'' and 
adding in its place ``applicable'';
    c. By revising paragraph (e) introductory text and paragraph (f);
    d. In paragraph (g)(1) by removing ``SDB'';
    e. In paragraph (h) introductory text by revising the first 
sentence;
    f. In paragraph (h)(1) by removing ``SDB'' and adding in its place 
``small business''; and
    g. In paragraph (m) by removing ``SDB'' and adding in its place 
``applicable''. The revised text reads as follows:


I-109   Credit for unreimbursed developmental assistance costs.

    (a) Developmental assistance costs incurred by a mentor firm for 
providing assistance to a protege firm pursuant to an approved 
mentor-protege agreement, that have not been reimbursed through a 
separate contract, cooperative agreement, or other agreement entered 
into between DoD and the mentor firm, or through a separately priced 
contract line item added to a DoD contract, may be credited as if it 
were a subcontract award to that protege for determining the 
performance of the mentor firm in attaining an applicable 
subcontracting goal established under any contract containing a 
subcontracting plan pursuant to the clause at FAR 52.219-9, Small 
Business Subcontracting Plan. Unreimbursed developmental assistance 
costs incurred for a protege firm that is a qualified organization 
employing the severely disabled may be credited toward the mentor 
firm's small disadvantaged business subcontracting goal, even if the 
protege firm is not a small disadvantaged business concern.
* * * * *
    (e) A mentor firm may receive credit toward the attainment of an 
SDB subcontracting goal for each subcontract awarded for a product 
or a service by the mentor firm to an entity that qualifies as an 
SDB protege firm pursuant to I-104(a)(1)(i) through (iv). With 
respect to former SDB protege firm(s), a mentor may take credit for 
awards to such concern(s) that, except for its size would be a small 
business concern owned and controlled by socially and economically 
disadvantaged individuals, but only if--
* * * * *
    (f) Amounts credited toward applicable subcontracting goal(s) 
for unreimbursed costs under the Program must be separately 
identified from the amounts credited toward the goal resulting from 
the award of actual subcontracts to protege firms. The combination 
of the two must equal the mentor firm's overall accomplishment 
toward the applicable goal(s).
* * * * *
    (h) The mentor firm must be afforded the opportunity to explain 
the decline in small business subcontract awards before imposition 
of any such limitation on credit. * * *
* * * * *


I-111  [Amended]

    16. Appendix I to Chapter 2 is amended in Section I-111 as follows:
    a. In paragraph (a)(1) by removing ``SDB'' and adding in its place 
``applicable'';
    b. In paragraph (a)(2)(i) by removing ``SDB subcontract'' and 
adding in its place ``applicable subcontracting'';
    c. In paragraph (a)(3)(i) by removing ``SDB'' and adding in its 
place ``applicable subcontracting'', and by removing the ``a'' before 
the word ``protege''; and
    d. In paragraph (c)(1) by removing ``SDB'' and adding in its place 
``applicable''.

[FR Doc. 01-22423 Filed 9-10-01; 8:45 am]
BILLING CODE 5000-04-M