[Federal Register Volume 68, Number 21 (Friday, January 31, 2003)]
[Proposed Rules]
[Pages 5133-5138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-2158]



[[Page 5133]]

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Part V





Department of Defense

General Services Administration

National Aeronautics and Space Administration

Small Business Administration





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13 CFR Part 125 and 48 CFR Parts 2, 7, et al.



Small Business Government Contracting Programs; Federal Acquisition 
Regulation; Contract Bundling; Proposed Rules

Federal Register / Vol. 68, No. 21 / Friday, January 31, 2003 / 
Proposed Rules

[[Page 5134]]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 125

RIN: 3245-AF07


Small Business Government Contracting Programs

AGENCY: Small Business Administration (SBA).

ACTION: Proposed rule.

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SUMMARY: The U.S. Small Business Administration (SBA) proposes to amend 
its regulations governing small business prime contracting assistance, 
to implement the recommendations of the Office of Management and Budget 
(OMB) in its report entitled ``Contract Bundling, A Strategy for 
Increasing Federal Contracting Opportunities for Small Businesses.'' 
The proposed changes would: revise the definition of bundling to 
expressly include multiple award contract vehicles and task and 
delivery orders under such contracting vehicles; require procuring 
activities to coordinate with the Small Business Specialist (SBS) 
proposed acquisition strategies or plans contemplating award of a 
contract or order above specified dollar thresholds and require the SBS 
to notify the agency Office of Small and Disadvantaged Business 
Utilization (OSDBU) when those strategies include contract bundling 
that is unnecessary, unjustified, or not identified as such by the 
procuring activity; reduce the threshold and revise the documentation 
required for ``substantial bundling;'' require contracting officers to 
provide bundling justification documentation to the agency OSDBU when 
``substantial bundling'' is involved; and require agency OSDBUs to 
perform certain oversight functions.

DATES: Comments must be received on or before April 1, 2003.

ADDRESSES: Send Comments to Linda G. Williams, Associate Administrator 
for Government Contracting, 409 Third Street, SW., Mail Code 6530, 
Washington, DC, 20416, by email to [email protected], or by facsimile 
to (202) 205-6390. Upon request, SBA will make all public comments 
available.

FOR FURTHER INFORMATION CONTACT: Dean Koppel, Assistant Administrator, 
Office of Policy and Research, by telephone at (202) 401-8150, or by 
email at [email protected].

SUPPLEMENTARY INFORMATION:

A. Background

    On March 19, 2002, the President unveiled a Small Business Agenda 
that proposed several substantive steps toward creating a dynamic 
environment where small businesses and entrepreneurs can flourish. 
Included in the President's plan were several proposals designed to 
improve the access of small businesses to Federal contracting 
opportunities. Among other things, the President called upon the Office 
of Management and Budget (OMB) to prepare a strategy for unbundling 
Federal contracts.
    Contract bundling is defined in Section 3(o) of the Small Business 
Act to mean the consolidation of two or more requirements for goods and 
services into a single procurement that is ``unlikely to be suitable 
for award to a small business concern.'' 15 U.S.C. 632(o). Over the 
past decade, the number and size of bundled contracts have increased 
sharply and have resulted in a dramatic decline in small business 
Federal contracting opportunities.
    In response to the President's call for a strategy to unbundle 
contracts, the Office of Federal Procurement Policy (OFPP), within OMB, 
created an interagency working group to develop a plan for increasing 
contracting opportunities for small businesses. As part of the working 
group's efforts, OFPP published a notice in the Federal Register 
soliciting public comments and held a public meeting on June 14, 2002, 
to provide interested parties an opportunity to express their views on 
contract bundling. By the end of the comment period, OFPP received 27 
public comments and 14 individual presentations at the June 14 public 
meeting.
    Based on the working group's analysis of available data and 
information, including the public comments received in writing and at 
the June 14, 2002, public meeting, OMB issued a report in October 2002, 
entitled ``Contract Bundling: A Strategy for Increasing Federal 
Contracting Opportunities for Small Business.'' See http://www.acqnet.gov/Notes/contractbundlingreport.pdf or http://www.acqnet.gov/). The report cites data indicating that for every 100 
``bundled'' contracts, 106 individual contracts are no longer available 
to small businesses. See OMB Report at 3. The report also notes that 
for every $100 awarded on a ``bundled'' contract, there is a $33 
decrease to small businesses. Id.
    To address the harmful effects of contract bundling on the Nation's 
small businesses, OMB's report offers a 9-point action item plan 
designed to hold agencies accountable for eliminating unnecessary 
contract bundling and mitigating the effects of necessary contract 
bundling. Several of these action items, such as the action items 
calling for greater accountability of senior agency management, and for 
the collection and dissemination of best practices for maximizing prime 
and subcontracting opportunities for small businesses, will be 
implemented through separate agency initiatives including OMB, SBA and 
agency Offices of Small and Disadvantaged Business Utilization 
(OSDBUs).
    Other action items, however, require a series of amendments to 
SBA's regulations and applicable provisions of the Federal Acquisition 
Regulation (FAR), to ensure maximum compliance with current contract 
bundling laws. Specifically, to close the loophole that enables 
agencies to avoid bundling reviews of consolidated task and delivery 
orders, Action Item 3 dictates regulatory changes to expressly require 
bundling reviews of multiple award contract vehicles and task and 
delivery orders under such procurements. OMB's report notes that there 
has been a significant increase in the use of such contracting 
vehicles. Since neither the FAR nor SBA's regulations specifically 
require bundling reviews of orders under multiple award contracts, 
multi-agency contracts, Government-wide Acquisition Contracts and the 
General Services Administration (GSA) Multiple Award Schedule Program, 
an explicit regulatory amendment mandating such reviews is essential.
    Action Item 4 proposes the establishment of agency-specific 
acquisition dollar thresholds, within the range of $2 million and $7 
million, that would trigger bundling reviews by the agency OSDBU. In 
addition, to ensure that agencies explore alternative acquisition 
strategies before bundling contracts above those thresholds, Action 
Item 5 mandates that when an agency contemplates a bundled procurement 
above the established threshold, the agency must identify alternative 
acquisition strategies and justify the rationale for selecting a 
particular strategy over another that would involve less bundling.
    Finally, as a means of mitigating contract bundling determined to 
be necessary and justified, Action Item 6 calls for measures to 
strengthen compliance with the plans of large business prime 
contractors for subcontracting with small businesses. In addition, 
Action Item 7 further requires measures to facilitate small business 
teams including joint ventures to effectively compete for bundled 
contracts. In connection with Action Item 7, the report requires that 
SBA determine whether regulatory changes are appropriate to encourage 
the

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development of such small business teaming arrangements.
    This rule proposes to amend part 125 of SBA's regulations to 
implement these specific Action Items. SBA invites comments on this 
proposed rule. The proposed amendments were drafted in conjunction with 
a companion proposal to amend applicable provisions of the FAR, which 
is also published for comment in the Federal Register as a separate 
rulemaking action.

B. Section-by-Section Analysis

    SBA proposes to amend Sec.  125.2(b) to assign additional 
responsibilities to SBA Procurement Center Representatives (PCRs) and 
procuring activities in the acquisition planning process. With respect 
to PCRs, the proposed rule would revise Sec.  125.2(b)(1) to require 
that when a PCR reviews an acquisition not set-aside for small 
businesses, the PCR must also identify alternative strategies to 
maximize the participation of small businesses in the procurement. 
Currently, Sec.  125.2(b)(1) provides only that PCRs must review 
acquisitions not set-aside for small businesses to determine whether a 
set-aside would be appropriate. This proposed change would further 
OMB's general recommendation for the identification of alternative 
acquisition strategies to increase small business participation in 
procurements.
    As required in connection with Action Items 4 and 5 of OMB's 
report, the proposed rule would add a new Sec.  125.2(b)(2) to require 
bundling reviews of proposed acquisition strategies or plans 
contemplating award of a contract or order above specified dollar 
thresholds. As proposed, Sec.  125.2(b)(2) would require that if an 
agency's contemplated acquisition strategy or plan exceeds the 
applicable acquisition threshold established in the proposed Sec.  
125.2(b)(2)(i) and is not set-aside for small businesses, the agency 
must coordinate the acquisition strategy or plan with the cognizant 
Small Business Specialist (SBS). The proposed Sec.  125.2(b)(2) would 
also require the SBS to notify the agency OSDBU if the proposed 
acquisition strategy or plan includes bundled requirements that the 
agency has not identified as bundled or includes unnecessary or 
unjustified bundling of requirements. To ensure that the procuring 
activity consults the SBS at the earliest practical stage of the 
acquisition planning process, the proposed Sec.  125.2(b)(2) would 
require the agency to coordinate the acquisition strategy or plan with 
the SBS as early in the planning process as practicable, but no later 
than 30 days before the issuance of the solicitation.
    The acquisition dollar thresholds established in the proposed Sec.  
125.2(b)(2)(i) consist of 3 separate agency-specific dollar thresholds: 
$7 million or more for the Department of Defense; $5 million or more 
for the National Aeronautics and Space Administration, the Department 
of Energy and GSA; and $2 million or more for all other agencies. The 
dollar amounts of the 3-tier acquisition threshold are based on a 
comparative analysis of the number and size of the contracting actions 
of the major procuring activities, and are intended to target 
contracting actions that would most likely involve contract bundling, 
while at the same time, minimize the extent to which the bundling 
reviews would disrupt the procurement process of the individual agency. 
SBA specifically invites public comment on the proposed 3-tier 
acquisition threshold and on alternatives that would best achieve the 
intended purposes of Action Items 4 and 5.
    Consistent with OMB's Action Item 6 proposal to mitigate the 
effects of contract bundling by strengthening compliance with small 
business subcontracting plans, the proposed rule would clarify the 
language in Sec.  125.2(b)(5)(iii)(C), redesignated as Sec.  
125.2(b)(5)(iii)(C), to make clear that as part of their 
responsibilities to ensure that small business participation is 
maximized through subcontracting opportunities, PCRs may review an 
agency's oversight of its subcontracting programs, including its 
overall and individual assessment of contractor compliance. As 
currently written, the existing Sec.  125.2(b)(5)(iii)(C) suggests that 
PCRs need only review an agency's assessment of a contractor's 
subcontracting plan compliance under bundled contracts. Based on the 
findings of the General Accounting Office (GAO) that agency oversight 
of large business compliance with subcontracting plans has been 
inconsistent, this proposed change contemplates a more systemic review 
of an agency's general oversight as well as its individual assessment 
of contractor subcontracting plan compliance to facilitate greater 
consistency in agency oversight in the future. See GAO Report, ``Small 
Business Subcontracting Report Validation Can Be Improved,'' GAO-02-
166R Subcontracting Data, December 13, 2001.
    The proposed rule would also redesignate Sec.  125.2(b)(7) as Sec.  
125.2(b)(8), and revise it to clarify that PCRs must work with the 
cognizant SBS and agency OSDBU as early in the acquisition process as 
practicable to identify acquisitions involving bundling and to revise 
acquisition strategies to increase the probability of small business 
participation through small business teams as prime contractors. The 
existing Sec.  125.2(b)(7) does not expressly encourage early bundling 
reviews and does not specifically require OSDBU involvement. As a 
result, this proposed change will not only make early coordination 
among the appropriate small business contracting personnel more likely, 
but it will also further OMB's call for bundling reviews of proposed 
acquisition strategies.
    Furthermore, since the proposed Sec.  125.2(b)(8) specifically 
requires PCRs, the cognizant SBS and the agency OSDBU to recommend the 
restructuring of acquisitions as necessary to increase small business 
prime contract participation through small business teams, this 
provision also effectuates the recommendation in Action Item 7 for 
measures to encourage small business teams and joint ventures to 
mitigate the effects of contract bundling.
    To implement OMB's Action Item 3 requirement for bundling reviews 
of task and delivery orders under multiple award contract vehicles, the 
proposed rule would add a new Sec.  125.2(d)(1)(iii) to define a 
``single contract'' to include: (1) An indefinite quantity contract 
awarded to two or more sources under a single solicitation for the same 
or similar supplies and services; and (2) an order under a Federal 
Supply Schedule contract or a task or delivery order contract awarded 
by another agency (i.e., government-wide acquisition contract or multi-
agency contract). This proposed rule would also add a new Sec.  
125.2(d)(1)(iv) to define an ``order'' to mean an order placed under a 
Federal Supply Schedule contract or a task or delivery order contract 
awarded by another agency. By adding these definitions of a ``single 
contract'' and an ``order,'' the regulations would make clear that task 
and delivery orders under multiple award contract vehicles may fall 
within the scope of the definition of contract bundling and are 
therefore subject to the applicable requirements for bundling reviews 
and justifications.
    In an effort to streamline the requirements for reviewing and 
justifying bundled requirements, the proposed Sec.  125.2(d)(1)(v) 
revises the existing Sec.  125.2(d)(1)(iii) to define ``substantial 
bundling'' as any bundling that meets the dollar amounts specified in 
the proposed Sec.  125.2(b)(2)(i). This change will simplify the 
application of Sec.  125.2(b)(2)(i) and Sec.  125.2(d)(7), by using the 
same dollar thresholds to trigger SBS reviews under the proposed Sec.  
125.2(b)(2)(i), and to require supporting documentation for

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substantial bundling under Sec.  125.2(d)(7).
    In the nature of a technical amendment, this proposed rule would 
revise Sec.  125.2(d)(2) to specify each category of small business 
concerns for which the Small Business Act requires agencies to foster 
participation in Federal procurements. This rule also proposes 
technical amendments to Sec.  125.2(d)(5), to clarify that bundled 
orders are subject to the same benefits analysis for demonstrating that 
the bundling is necessary and justified.
    In keeping with OMB's recommendation in Action Item 5 that agencies 
identify alternative acquisition strategies for proposed bundling of 
contracts and justify the reason for not selecting an alternative that 
would involve less bundling, the proposed rule would add a new Sec.  
125.2(d)(7)(i)(E). This section would require that in the event of 
substantial bundling, the agency must identify the alternative 
strategies that would reduce or minimize the scope of the bundling and 
the rationale for not selecting those alternatives. Further, under the 
proposed new Sec.  125.2(d)(7)(ii), at least 30 days prior to the 
release of a solicitation, the procuring agency would be required to 
provide both the PCR and the agency OSDBU a copy of the proposed 
acquisition strategy, including the analysis required under Sec.  
125.2(b)(3) and (d)(7).
    Finally, in connection with OMB's general call for strengthening 
OSDBU oversight and greater utilization of their resources, the 
proposed rule would add a new Sec.  125.2(e) to impose a new OSDBU 
oversight function. Under this proposed Sec.  125.2(e), OSDBUs would be 
required to conduct periodic reviews to assess: (1) The extent to which 
small businesses are receiving their fair share of Federal 
procurements; (2) the adequacy of bundling documentation and 
justification; and (3) the adequacy of actions taken to mitigate the 
effects of necessary and justified contracting bundling, including the 
agency's oversight of large business prime contractor compliance with 
their subcontracting plans. OSDBUs would also be required to submit a 
copy of their assessment to the Agency Head and SBA Administrator.

C. Compliance With Executive Orders 12866, 12988, and 13132, the 
Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory 
Flexibility Act (5 U.S.C. 601-602)

    OMB has determined that this rule is a significant regulatory 
action under Executive Order 12866. The proposed rule implements the 
recommendations of the OMB report: ``Contract Bundling, A Strategy for 
Increasing Federal Contracting Opportunities for Small Business.'' This 
plan is part of the President's initiative for small business growth.
    For purposes of Executive Order 12988, SBA has drafted this 
proposed rule, to the extent practicable, in accordance with the 
standards set forth in section 3 of that Order.
    For purposes of Executive Order 13132, SBA has determined that this 
proposed rule has no federalism implications warranting the preparation 
of a Federalism Assessment.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
determines that this proposed rule imposes no new reporting or 
recordkeeping requirements.
    The proposed rule may have a significant beneficial economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule 
proposes to implement the recommendations of OMB to increase Federal 
contracting opportunities for small businesses. Therefore, an Initial 
Regulatory Flexibility Analysis (IRFA) was prepared and is provided 
below.

Initial Regulatory Flexibility Analysis

13 CFR Revision--Contract Bundling

    The proposed rule may have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule 
proposes to implement the recommendations of the Office of Management 
and Budget to increase Federal contracting opportunities for small 
businesses. Therefore, an Initial Regulatory Flexibility Analysis has 
been prepared and is as follows:
1. Reasons for Proposed Rule
    This rule proposes to amend 13 Codified Federal Regulation (CFR) 
Subpart 125.2 to implement the recommendations of the Office of 
Management and Budget (OMB) in its report entitled ``Contract Bundling, 
A Strategy for Increasing Opportunities for Small Business.'' The 
proposed CFR changes will: (1) Clarify the definition of ``bundling'' 
to expressly include task and delivery orders placed against Federal 
Supply Schedules, Government-wide Acquisition Contracts (GWACs), and 
multi-agency contracts when those orders meet the definition; (2) 
require procuring activities to coordinate acquisition strategies above 
specified dollar thresholds with the Small Business Specialist (SBS) 
and require the SBS to notify the agency Office of Small and 
Disadvantaged Business Utilization (OSDBU) when those strategies 
include contract bundling that is unnecessary, unjustified, or not 
identified as such by the procuring activity; (3) reduce the threshold 
and revise the documentation required for ``substantial bundling;'' (4) 
require contracting officers to provide bundling justification 
documentation to the agency OSDBU when ``substantial bundling'' is 
involved; (5) require agency OSDBUs to perform certain oversight 
functions.
    The rule is expected to have a positive economic impact on small 
prime contractors and subcontractors by providing more Federal 
contracting opportunities for small businesses. It imposes no 
reporting, recordkeeping, or other compliance requirements. No relevant 
Federal rules duplicate, overlap, or conflict with the rule and 
currently, there are no practical alternatives that will accomplish the 
objectives of this proposed rule.
2. Objectives of and Legal Basis for This Rule
    The objective of this proposed rule is to further the 
Administration's commitment of creating a Government strategy for 
unbundling Federal contracts to increase Federal contracting 
opportunities for small business. In order to accomplish the 
Administration's commitment, this proposed rule is to provide CFR 
coverage implementing the recommendations of the Office of Management 
and Budget (OMB) in its report entitled ``Contract Bundling, A Strategy 
for Increasing Opportunities for Small Business.''
3. Description of and Estimate of the Number of Small Entities to Which 
the Rule Will Apply, or an Explanation if Such Estimate Is Not 
Available
    The proposed rule will indirectly apply to all large and small 
entities that seek award of Federal contracts. The rule is expected to 
have a positive economic impact on small prime contractors and 
subcontractors by providing more Federal contracting opportunities for 
small businesses. In the Small Business Administration's 2001 State of 
Small Business Report filed with the House and Senate Small Business 
Committees, using data obtained from the Federal Procurement Data 
Center, the Agency identified only 4 material bundling cases with a 
total value of $60 million for the first 3 quarters of Fiscal Year (FY) 
2001. This represents 0.0004% of Federal contract

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dollar activity ($60 million divided by $150 billion for the first 3 
quarters of the fiscal year). Based on FY 2001 data, the proposed rule 
will impact approximately $3 billion in orders placed against Federal 
Supply Schedules (FSS), GWACs, and multi-agency contracts. Applying the 
contract bundling estimate of 0.0004% to these un-reviewed orders, SBA 
expects approximately $1 million will be identified as bundled. This 
proposed rule establishes 3 dollar thresholds ranging from $2 million 
or more for the majority of civilian agencies to $7 million or more for 
the Department of Defense. The dollar amounts are based on a 
comparative analysis of the number and size of the contracting actions 
of the major procuring activities and are intended to target reviews of 
the contracting actions that would most likely involve contract 
bundling without unduly disruption the acquisition process of the 
individual agency.
4. Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Rule, Including an Estimate of the 
Classes of Small Entities Which Will Be Subject to the Requirement and 
the Type of Professional Skills Necessary for Preparation of the Report 
or Record
    The proposed rule imposes no reporting, recordkeeping, or other 
compliance requirements.
5. Relevant Federal Rules That May Duplicate, Overlap, or Conflict With 
the Rule
    None.
6. Description of Any Significant Alternatives to the Proposed Rule 
Which Accomplish the Stated Objectives of Applicable Statutes and Which 
Minimize the Rule's Economic Impact on Small Entities
    Currently, there are no practical alternatives that will accomplish 
the objectives of this proposed rule. However, SBA invites alternative 
proposals from the public.

List of Subjects in 13 CFR Part 125

    Government contracts, Government procurement, Reporting and 
Recordkeeping requirements, Small business, Technical assistance.

    For the reasons set forth in the preamble, SBA proposes to amend 
part 125 of title 13 of the Code of Federal Regulations as follows:

PART 125--GOVERNMENT CONTRACTING PROGRAMS

    1. The authority citation for 13 CFR part 125 continues to read as 
follows:

    Authority: 15 U.S.C. 634(b)(6), 637 and 644; 31 U.S.C. 9701 and 
9702.

    2. Amend Sec.  125.2 as follows:
    a. By revising the heading of paragraph (b);
    b. By revising paragraph (b)(1);
    c. By redesignating paragraphs (b)(2) through (b)(7) as paragraphs 
(b)(3) through (b)(8);
    d. By adding paragraph (b)(2);
    e. By revising redesignated paragraph (b)(3), introductory text, 
(b)(6)(iii), and (b)(8);
    f. By revising paragraphs (d)(1)(iii), (d)(2) (i) and (ii), 
(d)(5)(i) (A) and (B) and (d)(7), and adding paragraphs (d)(1) (iv) and 
(v);
    g. By adding paragraph (e).
    The revisions and additions to Sec.  125.2 read as follows:


Sec.  125.2  Prime contracting assistance.

* * * * *
    (b) Responsibilities in the acquisition planning process. (1) SBA 
Procurement Center Representatives (PCRs) are generally located at 
Federal agencies and buying activities which have major contracting 
programs. PCRs are responsible for reviewing all acquisitions not set-
aside for small businesses to determine whether a set-aside is 
appropriate and to identify alternative strategies to maximize the 
participation of small businesses in the procurement.
    (2) As early in the acquisition planning process as practicable, 
but no later than 30 days before the issuance of a solicitation, the 
procuring activity must coordinate with the procuring activity's Small 
Business Specialist (SBS) when the acquisition strategy contemplates 
award of a contract or order meeting the dollar amounts in paragraph 
(b)(2)(i) of this section, unless the contract or order is entirely 
reserved or set-aside for small business concerns as authorized under 
the Small Business Act. The SBS must notify the agency Office of Small 
and Disadvantaged Business Utilization (OSDBU) if the strategy or plan 
includes bundled requirements that the agency has not identified as 
bundled or includes unnecessary or unjustified bundling of 
requirements.
    (i) The procuring activity must coordinate the acquisition strategy 
with the cognizant SBS in accordance with paragraph (b)(2) of this 
section if the estimated contract or order value is:
    (A) $7 million or more for the Department of Defense;
    (B) $5 million or more for the National Aeronautics and Space 
Administration, the General Services Administration, and the Department 
of Energy; and
    (C) $2 million or more for all other agencies.
    (3) A procuring activity must provide a copy of a proposed 
acquisition strategy (e.g., Department of Defense Form 2579, or 
equivalent) to the applicable PCR (or to the SBA Office of Government 
Contracting Area Office serving the area in which the buying activity 
is located if a PCR is not assigned to the procuring activity) at least 
30 days prior to a solicitation's issuance whenever a proposed 
acquisition strategy: * * *
* * * * *
    (6) * * *
    (iii) The PCR will also work to ensure that small business 
participation is maximized through teaming arrangements and 
subcontracting opportunities. This may include:
    (A) Recommending that the solicitation and resultant contract 
specifically state the small business subcontracting goals, which are 
expected of the contractor awardee;
    (B) Recommending that the small business subcontracting goals be 
based on total contract dollars instead of subcontract dollars; and
    (C) Reviewing an agency's oversight of its subcontracting program, 
including its overall and individual assessment of a contractor's 
compliance with its small business subcontracting plans. The PCR will 
furnish a copy of the information to the SBA Commercial Market 
Representative (CMR) servicing the contractor.
* * * * *
    (8) PCRs will work with the cognizant SBS and agency OSDBU as early 
in the acquisition process as practicable to identify proposed 
solicitations that involve bundling, and with the agency acquisition 
officials to revise the acquisition strategies for such proposed 
solicitations, where appropriate, to increase the probability of 
participation by small businesses, including small business contract 
teams, as prime contractors. If small business participation as prime 
contractors appears unlikely, the SBS and PCR will facilitate small 
business participation as subcontractors or suppliers.
* * * * *
    (d) * * *
    (1) * * *
    (iii) Single contract, as used in this definition, includes:
    (A) An indefinite quantity contract awarded to two or more sources 
under a single solicitation for the same or similar supplies and 
services; and
    (B) An order placed against an indefinite quantity contract under a 
Federal Supply Schedule contract or a

[[Page 5138]]

task or delivery order contract awarded by another agency (i.e., 
Government-wide acquisition contract or multi-agency contract).
    (iv) Order means an order placed under:
    (A) Federal Supply Schedule contract; or
    (B) Task-order contract or delivery-order contract awarded by 
another agency, (i.e., Government-wide acquisition contract or multi-
agency contract).
    (v) Substantial bundling means any bundling that meets the dollar 
amounts specified in paragraph (b)(2)(i) of this section.
    (2) * * *
    (i) Structure procurement requirements to facilitate competition by 
and among small business concerns, including small business concerns 
owned and controlled by veterans, small business concerns owned and 
controlled by service-disabled veterans, qualified HUBZone small 
business concerns, small business concerns owned and controlled by 
socially and economically disadvantaged individuals and small business 
concerns owned and controlled by women; and
    (ii) Avoid unnecessary and unjustified bundling of contract 
requirements that inhibits or precludes small business participation in 
procurements as prime contractors.
* * * * *
    (5) * * *
    (i) * * *
    (A) Benefits equivalent to 10 percent of the contract or order 
value (including options) where the contract or order value is $75 
million or less; or
    (B) Benefits equivalent to 5 percent of the contract or order value 
(including options) or $7.5 million, whichever is greater, where the 
contract or order value exceeds $75 million.
* * * * *
    (7) Substantial bundling. (i) Where a proposed procurement strategy 
involves a substantial bundling of contract requirements, the procuring 
agency must, in the documentation of that strategy, include a 
determination that the anticipated benefits of the proposed bundled 
contract justify its use, and must include, at a minimum:
    (A) The analysis for bundled requirements set forth in paragraph 
(d)(5)(i) of this section;
    (B) An assessment of the specific impediments to participation by 
small business concerns as prime contractors that will result from the 
substantial bundling;
    (C) Actions designed to maximize small business participation as 
prime contractors, including provisions that encourage small business 
teaming for the substantially bundled requirement;
    (D) Actions designed to maximize small business participation as 
subcontractors (including suppliers) at any tier under the contract or 
contracts that may be awarded to meet the requirements; and
    (E) The identification of the alternative strategies that would 
reduce or minimize the scope of the bundling, and the rationale for not 
choosing those alternatives (i.e., consider the strategies under 
paragraphs (b)(6) (i) and (d) of this section).
    (ii) At least 30 days prior to the solicitation release, the 
procuring activity shall provide the PCR and the agency OSDBU a copy of 
the proposed acquisition, including the analysis required by paragraph 
(d)(7) of this section, the acquisition plan, any bundling information 
required under paragraph (b)(3) of this section, and any other relevant 
information. The PCR and agency OSDBU or SBS, as applicable, shall work 
together to develop alternative acquisition strategies identified in 
paragraph (b)(6) of this section to enhance small business 
participation.
* * * * *
    (e) OSDBU Oversight Functions. The Agency OSDBU must:
    (1) Conduct periodic reviews to assess the:
    (i) Extent to which small businesses are receiving their fair share 
of Federal procurements, including contract opportunities under 
programs administered under the Small Business Act;
    (ii) Adequacy of the bundling documentation and justification; and
    (iii) Adequacy of actions taken to mitigate the effects of 
necessary and justified contract bundling on small businesses (e.g., 
review agency oversight of prime contractor subcontracting plan 
compliance under the subcontracting program).
    (2) Provide a copy of the assessment under paragraph (e)(1) of this 
section to the Agency Head and SBA Administrator.

    Dated: January 22, 2003.
Hector V. Barreto,
Administrator.
[FR Doc. 03-2158 Filed 1-30-03; 8:45 am]
BILLING CODE 8025-01-P