[Federal Register Volume 69, Number 87 (Wednesday, May 5, 2004)]
[Rules and Regulations]
[Pages 25274-25280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9752]



[[Page 25273]]

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Part V





Department of Defense





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General Services Administration





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National Aeronautics and Space Administration





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48 CFR Parts 2, 5, 6, et al.



Federal Acquisition Regulation; Procurement Program for Service-
Disabled Veteran-Owned Small Business Concerns; Small Entity Compliance 
Guide; Interim Rules

  Federal Register / Vol. 69, No. 87 / Wednesday, May 5, 2004 / Rules 
and Regulations  

[[Page 25274]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 5, 6, 13, 14, 15, 19, 33, 36, and 52

[FAC 2001-23; FAR Case 2004-002]
RIN 9000-AJ92


Federal Acquisition Regulation; Procurement Program for Service-
Disabled Veteran-Owned Small Business Concerns

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

ACTION: Interim rule with request for comments.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on an interim 
rule amending the Federal Acquisition Regulation (FAR) to implement 
Section 308 of the Veterans Benefits Act of 2003, Procurement Program 
for Small Business Concerns Owned and Controlled by Service-Disabled 
Veterans (Pub. L. 108-183). The law provides for set-aside and sole 
source procurement authority for service-disabled veteran-owned small 
business (SDVOSB) concerns. This interim rule is published in 
conjunction with the interim rule proposed by the Small Business 
Administration.

DATES: Effective Date: May 5, 2004.
    Comment Date: Interested parties should submit comments to the FAR 
Secretariat at the address shown below on or before July 6, 2004, to be 
considered in the formulation of a final rule.

ADDRESSES: Submit electronic comments via the Internet to--
[email protected] or http://www.regulations.gov. Submit written 
comments to--General Services Administration, FAR Secretariat (MVA), 
1800 F Street, NW., Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 
20405. Please submit comments only and cite FAC 2001-23, FAR case 2004-
002, in all correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755, 
for information pertaining to status or publication schedules. For 
clarification of content, contact Ms. Rhonda Cundiff, Procurement 
Analyst, at (202) 501-0044. Please cite FAC 2001-23, FAR case 2004-002.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 308 of the Veterans Benefits Act of 2003, Procurement 
Program for Small Business Concerns Owned and Controlled by Service-
Disabled Veterans (Pub. L. 108-183) provides that the contracting 
officer may--
     Award contracts on the basis of competition restricted to 
SDVOSB concerns if there is a reasonable expectation that two or more 
SDVOSB concerns will submit offers for the contracting opportunity and 
that the award can be made at a fair market price; or
     Award a sole source contract to a responsible SDVOSB 
concern if there is not a reasonable expectation that two or more 
SDVOSB concerns will submit an offer, the anticipated contract price 
(including options) will not exceed $5 million (for manufacturing) or 
$3 million otherwise, and the contract award can be made at a fair and 
reasonable price.
    The law limits use of SDVOSB procurement authority to procurements 
that would not otherwise be made from Federal Prison Industries 
(section 4124 or 4125 of title 18, United States Code) or the Javits-
Wagner-O'Day (JWOD) Act (41 U.S.C. 46 et seq).
    The interim rule amends the FAR to--
     Establish the SDVOSB set-aside and sole source procurement 
authority;
     Correct an ambiguity in the definition of SDVOSB at FAR 
2.101, 52.212-3, 52.219-1 and 52.219-8;
     Correct appropriate references to all authorized small 
business categories at FAR 5.206;
     Require the use of a numbered note when setting aside for 
SDVOSB at FAR 5.207(d). A new note to accomplish this task has been 
provided to FedBizOpps;
     Identify SDVOSB set-asides as another method of providing 
for full and open competition after exclusion of sources, without the 
need for a separate justification or determination and findings at FAR 
Subpart 6.2;
     Recognize that SDVOSB set-asides above the micro-purchase 
threshold, but below the simplified acquisition threshold are at the 
sole discretion of the contracting officer and are not subject to 
review by the Small Business Administration (SBA) Procurement Center 
Representatives, FAR 13.003 and 19.1405;
     Add correct references in FAR 19.301 regarding penalties 
for misrepresentations and false statements;
     Add FAR 19.307 to address the procedures for protesting a 
firm's status as an SDVOSB and cross-reference this subpart in FAR 
33.102;
     Add FAR Subpart 19.14 to incorporate policy and procedures 
for the SDVOSB Procurement Program consistent with SBA regulations;
     Revise FAR 36.501 to identify SDVOSB procurements (FAR 
Subpart 19.14) and awards pursuant to FAR Subpart 19.11 or FAR Subpart 
19.13. SBA requested this technical correction regarding FAR Subparts 
19.11 and 19.13; and
     Add FAR clause 52.219-27, Notice of Total Service-Disabled 
Veteran-Owned Small Business Set-Aside, to cover both sole source and 
competitive awards pursuant to this authority.
    The Federal Procurement Data System-Next Generation (FPDS-NG) will 
be updated to reflect SDVOSB procurement authorities.
    This is a significant regulatory action and, therefore, was subject 
to review under section 6(b) of Executive Order 12866, Regulatory 
Planning and Review, dated September 30, 1993. This rule is not a major 
rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The changes 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 law provides that 
the contracting officer may use the set-aside and sole source 
procurement authority when contracting with SDVOSB concerns. Therefore, 
an Initial Regulatory Flexibility Analysis (IRFA) has been prepared and 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration. Interested parties may obtain a copy from the FAR 
Secretariat. The Councils will consider comments from small entities 
concerning the affected FAR parts 2, 5, 6, 13, 14, 15, 19, 33, 36, and 
52 in accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 601, et seq. (FAC 2001-23, 
FAR case 2004-002), in correspondence. The analysis is as follows:

    This Initial Regulatory Flexibility Analysis has been prepared 
in accordance with section 603, title 5, of the United States Code.
    1. Description of the reasons why action by the agency is being 
considered. This interim rule revises the Federal Acquisition 
Regulation in order to comply with recently enacted Public Law 108-
183, Veterans Benefits Act of 2003 (Dec. 16, 2003), section 308, 
Procurement Program for Small Business Concerns Owned and Controlled 
by Service-Disabled Veterans. This legislation provides for 
discretionary set-aside and sole source procurement authority for 
service-

[[Page 25275]]

disabled veteran-owned small business (SDVOSB) concerns. It expands 
upon existing legislation that provides assistance and support to 
SDVOSBs to better equip them to form and expand small business 
enterprises and to increase procurement opportunities, thereby 
enabling them to realize the American dream that they fought to 
protect, becoming disabled while serving our country.
    2. Succinct statement of the objectives of, and legal basis for, 
the interim rule. This interim rule implements section 308 of Public 
Law 108-183 and provides for discretionary set-aside and sole source 
procurement authority for SDVOSB concerns. The objective is to 
provide Federal contracting officials a means to improve their 
performance toward the statutorily mandated 3% government-wide goal 
for procurement from service-disabled veteran-owned small business 
concerns.
    3. Description of, and, where feasible, estimate of the number 
of small entities to which the interim rule will apply. The changes 
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 law provides that the contracting 
officer may use the set-aside and sole source procurement authority 
when contracting with SDVOSB concerns. Specifically, a query of the 
Central Contractor Registration system indicates there are 198,732 
small businesses registered, but only 4,714 (or 2.3%) of these small 
businesses are categorized as SDVOSBs. Further, a search of the web 
site maintained by the Veterans Administration only resulted in the 
identification of 775 SDVOSBs. However, these numbers may not be 
accurate as terminology has not always been used consistently in all 
databases and regulations. Although the percentage is less than 2.5% 
it will undoubtedly impact the contracting dollars and opportunities 
afforded small business entities in the various small business 
categories as well as service-disabled veteran-owned small business 
entities.
    4. Description of projected reporting, recordkeeping, and other 
compliance requirements of the interim 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 rule will impose no new 
reporting or recordingkeeping requirements on large or small 
entities.
    5. Identification, to the extent practicable, of all relevant 
Federal rules which may duplicate, overlap, or conflict with the 
interim rule. The companion interim rule by SBA will be published at 
the same time as the FAR interim rule.
    6. Description of any significant alternatives to the interim 
rule which accomplish the stated objectives of applicable statutes 
and which minimize any significant economic impact of the interim 
rule on small entities. There are not any alternatives to publishing 
this interim rule that will accomplish the stated objectives of 
Public Law 108-183, Veterans Benefits Act of 2003 (Dec. 16, 2003), 
Section 308. The rule includes only FAR text revisions required to 
implement the statute cited herein.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

D. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because this interim rule includes FAR text revisions 
required to implement recently enacted Public Law 108-183, Veterans 
Benefits Act of 2003 (December 16, 2003), Section 308, Procurement 
Program for Small Business Concerns Owned and Controlled by Service-
Disabled Veterans.
    However, pursuant to Public Law 98-577 and FAR 1.501, the Councils 
will consider public comments received in response to this interim rule 
in the formation of the final rule.

List of Subjects in 48 CFR Parts 2, 5, 6, 13, 14, 15, 19, 33, 36, 
52

    Government procurement.

    Dated: April 26, 2004.
Laura Auletta,
Director, Acquisition Policy Division.

    Federal Acquisition Circular (FAC) 2001-23 is issued under the 
authority of the Secretary of Defense, the Administrator of General 
Services, and the Administrator for the National Aeronautics and Space 
Administration.
    Unless otherwise specified, all Federal Acquisition Regulation 
(FAR) and other directive material contained in FAC 2001-23 are 
effective May 5, 2004.

    Dated: April 23, 2004.
Deidre A. Lee,
Director, Defense Procurement and Acquisition Policy.

    Dated: April 23, 2004.
David A. Drabkin,
Deputy Associate Administrator, Office of Acquisition Policy, General 
Services Administration.

    Dated: April 21, 2004.
Tom Luedtke,
Assistant Administrator for Procurement, National Aeronautics and Space 
Administration.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 5, 6, 13, 14, 15, 
19, 33, 36, and 52 as set forth below:
0
1. The authority citation for 48 CFR parts 2, 5, 6, 13, 14, 15, 19, 33, 
36, and 52 is revised to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 2--DEFINITIONS OF WORDS AND TERMS

0
2. Amend section 2.101 in paragraph (b) in the definition ``Service-
disabled veteran-owned small business concern'' by revising paragraph 
(1)(ii) to read as follows:


2.101  Definitions.

* * * * *
    (b) * * *
    Service-disabled veteran-owned small business concern--
    (1) * * *
    (ii) The management and daily business operations of which are 
controlled by one or more service-disabled veterans or, in the case of 
a service-disabled veteran with permanent and severe disability, the 
spouse or permanent caregiver of such veteran.
* * * * *

PART 5--PUBLICIZING CONTRACT ACTIONS

0
3. Amend section 5.206 by revising the introductory text of paragraph 
(a) to read as follows:


5.206  Notices of subcontracting opportunities.

    (a) The following entities may transmit a notice to the GPE to seek 
competition for subcontracts, to increase participation by qualified 
HUBZone small business, small, small disadvantaged, women-owned small 
business, veteran-owned small business and service-disabled veteran-
owned small business concerns, and to meet established subcontracting 
plan goals:
* * * * *

[[Page 25276]]


0
4. Amend section 5.207 by revising paragraph (d) to read as follows:


5.207  Preparation and transmittal of synopses.

* * * * *
    (d) Set-asides. When the proposed acquisition provides for a total 
or partial small business set-aside, very small business set aside, 
HUBZone small business set-aside, or a service-disabled veteran-owned 
small business set-aside, the appropriate Numbered Note will be cited.
* * * * *

PART 6--COMPETITION REQUIREMENTS

0
5. Add section 6.206 to read as follows:


6.206  Set-asides for service-disabled veteran-owned small business 
concerns.

    (a) To fulfill the statutory requirements relating to the Veterans 
Benefits Act of 2003 (15 U.S.C. 657f), contracting officers may set-
aside solicitations to allow only service-disabled veteran-owned small 
business concerns to compete (see 19.1405).
    (b) No separate justification or determination and findings are 
required under this part to set aside a contract action for service-
disabled veteran-owned small business concerns.

0
6. Amend section 6.302-5 by adding paragraph (b)(7) to read as follows:


6.302-5  Authorized or required by statute.

* * * * *
    (b) * * *
    (7) Sole source awards under the Veterans Benefits Act of 2003 (15 
U.S.C. 657f).
* * * * *

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

0
7. Amend section 13.003 by revising paragraph (b)(2) to read as 
follows:


13.003  Policy.

* * * * *
    (b) * * *
    (2) The contracting officer may set aside for HUBZone small 
business concerns (see 19.1305) or service-disabled veteran-owned small 
business concerns (see 19.1405) an acquisition of supplies or services 
that has an anticipated dollar value exceeding the micro-purchase 
threshold and not exceeding the simplified acquisition threshold. The 
contracting officer's decision not to set aside an acquisition for 
HUBZone small business or service-disabled veteran-owned small business 
concerns participation below the simplified acquisition threshold is 
not subject to review under Subpart 19.4.
* * * * *

PART 14--SEALED BIDDING

0
8. Amend section 14.502 by redesignating paragraph (b)(6) as (b)(7) and 
adding a new paragraph (b)(6) to read as follows:


14.502  Conditions for use.

* * * * *
    (b) * * *
    (6) The use of a set-aside for service-disabled veteran-owned small 
business concerns (see Subpart 19.14).
* * * * *

PART 15--CONTRACTING BY NEGOTIATION

0
9. Amend section 15.503 in paragraph (a)(2) by--
0
a. Removing ``or'' from the end of paragraph (a)(2)(i)(B);
0
b. Removing the period from the end of paragraph (a)(2)(i)(C) and 
adding ``; or'' in its place;
0
c. Adding a new paragraph (a)(2)(i)(D); and
0
d. Revising paragraph (a)(2)(ii)(C) to read as follows:


15.503  Notifications to unsuccessful offerors.

* * * * *
    (a) * * *
    (2) * * *
    (i) * * *
    (D) When using the service-disabled veteran-owned small business 
procedures in 19.1405.
    (ii) * * *
    (C) That no response is required unless a basis exists to challenge 
the small business size status, disadvantaged status, HUBZone status, 
or service-disabled veteran-owned status of the apparently successful 
offeror.
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

0
10. Amend section 19.000 by revising paragraph (a)(3); removing ``and'' 
from the end of paragraph (a)(10); revising paragraph (a)(11); and 
adding paragraph (a)(12) to read as follows:


19.000  Scope of part.

    (a) * * *
    (3) Setting acquisitions aside for exclusive competitive 
participation by small business, HUBZone small business, and service-
disabled veteran-owned small business concerns;
* * * * *
    (11) The use of veteran-owned small business concerns; and
    (12) Sole source awards to HUBZone small business and service-
disabled veteran-owned small business concerns.
* * * * *

0
11. Amend section 19.201 by revising paragraph (d)(10) to read as 
follows:


19.201  General policy.

* * * * *
    (d) * * *
    (10) Make recommendations in accordance with agency procedures as 
to whether a particular acquisition should be awarded under Subpart 
19.5 as a small business set-aside, under Subpart 19.8 as a Section 
8(a) award, under Subpart 19.13 as a HUBZone set-aside, or under 
Subpart 19.14 as a service-disabled veteran-owned small business set-
aside;
* * * * *

0
12. Amend section 19.202-6 by--
0
a. Removing ``and'' from the end of paragraph (a)(3);
0
b. Removing the period from the end of paragraph (a)(4) and adding ``; 
and'' in its place; and
0
c. Adding paragraph (a)(5) to read as follows:


19.202-6  Determination of fair market price.

    (a) * * *
    (5) Service-disabled veteran-owned small business set-asides (see 
Subpart 19.14).
* * * * *

0
13. Amend section 19.301 by revising paragraph (d) to read as follows:


19.301  Representation by the offeror.

* * * * *
    (d) If the SBA determines that the status of a concern as a small 
business, veteran-owned small business, service-disabled veteran-owned 
small business, HUBZone small business, small disadvantaged business, 
or women-owned small business has been misrepresented in order to 
obtain a set-aside contract, an 8(a) subcontract, a subcontract that is 
to be included as part or all of a goal contained in a subcontracting 
plan, or a prime or subcontract to be awarded as a result, or in 
furtherance of any other provision of Federal law that specifically 
references Section 8(d) of the Small Business Act for a definition of 
program eligibility, the SBA may take action as specified in Sections 
16(a) or 16(d) of the Act. If the SBA declines to take action, the 
agency may initiate the process. The SBA's regulations on penalties for 
misrepresentations and false statements are contained in 13 CFR 121.108 
for

[[Page 25277]]

small business, 13 CFR 124.501 for 8(a) small business, 13 CFR 124.1011 
for small disadvantaged business, 13 CFR 125.29 for veteran or service-
disabled veteran-owned small business, and 13 CFR 126.900 for HUBZone 
small business.

0
14. Redesignate section 19.307 as section 19.308 and add a new section 
19.307 to read as follows:


19.307  Protesting a firm's status as a service-disabled veteran-owned 
small business concern.

    (a) For sole source acquisitions, the SBA or the contracting 
officer may protest the apparently successful offeror's service-
disabled veteran-owned small business status. For service-disabled 
veteran-owned small business set-asides, any interested party may 
protest the apparently successful offeror's service-disabled veteran-
owned small business concern status.
    (b) Protests relating to whether a service-disabled veteran-owned 
small business concern is a small business for purposes of any Federal 
program are subject to the procedures of Subpart 19.3. Protests 
relating to small business size status for the acquisition and the 
service-disabled veteran-owned small business status requirements will 
be processed concurrently by SBA.
    (c) All protests must be in writing and must state all specific 
grounds for the protest. Assertions that a protested concern is not a 
service-disabled veteran-owned 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 
Government Contracting. The SBA regulations are found at 13 CFR 125.24 
through 125.28.
    (d) An offeror's protest must be received by close of business on 
the fifth business day after bid opening (in sealed bid acquisitions) 
or by close of business on the fifth business day after notification by 
the contracting officer of the apparently successful offeror (in 
negotiated acquisitions). Any protest received after these time limits 
is untimely. Any protest received prior to bid opening or notification 
of intended award, whichever applies, is premature and shall be 
returned to the protester.
    (e) Except for premature protests, the contracting officer must 
forward to SBA by mail or facsimile transmission (202-205-6390) any 
protest received, notwithstanding whether the contracting officer 
believes that the protest is insufficiently specific or untimely. The 
protest must be accompanied by a referral letter, with the notation on 
the envelope or facsimile cover sheet: ``Attn: Service-Disabled Veteran 
Status Protest,'' and be sent to Associate Administrator for Government 
Contracting, U.S. Small Business Administration, 409 3rd Street, SW., 
Washington, DC 20416.
    (f) The referral letter must include information pertaining to the 
solicitation that may be necessary for SBA to determine timeliness and 
standing, including the solicitation number; the name, address, 
telephone number and facsimile number of the contracting officer; 
whether the contract was sole-source or set-aside; whether the 
protestor submitted an offer; whether the protested concern was the 
apparent successful offeror; whether the procurement was conducted 
using sealed bid or negotiated procedures; the bid opening date, if 
applicable; when the protest was submitted; and whether a contract has 
been awarded.
    (g) The Associate Administrator for Government Contracting will 
notify the protester and the contracting officer of the date the 
protest was received and whether the protest will be processed or 
dismissed for lack of timeliness or specificity.
    (h) All questions about service-disabled veteran-owned small 
business size or status must be referred to the SBA for resolution. 
When making its determinations of veteran or service-disabled veteran's 
status, the SBA will rely upon existing Department of Veteran's Affairs 
or Department of Defense determinations. SBA will determine the 
service-disabled veteran-owned small business status of the protested 
concern within 15 business days after receipt of a protest. If SBA does 
not contact the contracting officer within 15 business days, the 
contracting officer may award the contract to the apparently successful 
offeror, unless the contracting officer has granted SBA an extension. 
The contracting officer may award the contract after receipt of a 
protest if the contracting officer determines in writing that an award 
must be made to protect the public interest.
    (i) SBA will notify the contracting officer, the protester, and the 
protested concern of its determination. The determination is effective 
immediately and is final unless overturned on appeal by SBA's Associate 
Deputy Administrator for Government Contracting and Office of Hearings 
and Appeals (OHA) pursuant to 13 CFR part 134.
    (j) The protested service-disabled veteran-owned small business 
concern, the protester, or the contracting officer may file appeals of 
protest determinations with SBA's OHA. The OHA must receive the appeal 
no later than 5 business days after the date of receipt of the protest 
determination. SBA will dismiss any appeal received after the 5-day 
period.
    (k) The appeal must be in writing. The appeal must identify the 
protest determination being appealed and must set forth a full and 
specific statement as to why the decision is erroneous or what 
significant fact the Office of Government Contracting (OGC) failed to 
consider.
    (l) The party appealing the decision must provide notice of the 
appeal to the contracting officer and either the protested service-
disabled veteran-owned small business concern or the original 
protester, as appropriate. SBA will not consider additional information 
or changed circumstances that were not disclosed at the time of the 
OGC's decision or that are based on disagreement with the findings and 
conclusions contained in the determination.
    (m) The OHA 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 service-
disabled veteran-owned 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 
OHA's decision is the final decision.

0
15. Amend section 19.501 by redesignating paragraphs (d) thru (h) as 
paragraphs (e) thru (i), respectively; adding a new paragraph (d); and 
revising the second sentence of newly designated paragraph (e) to read 
as follows:


19.501  General.

* * * * *
    (d) The small business reservation and set-asides requirements at 
19.502-2 do not preclude award of a contract to a service-disabled 
veteran-owned small business concern under Subpart 19.14.
    (e) * * * The contracting officer shall document why a small 
business set-aside is inappropriate when an acquisition is not set 
aside for small business, unless a HUBZone or service-disabled veteran-
owned small business set-aside or HUBZone or service-disabled veteran-
owned small business sole source award is anticipated. * * *
* * * * *

[[Page 25278]]

19.800  General.

0
16. Amend section 19.800 in the first sentence of paragraph (e) by 
removing ``19.5 or 19.13,'' and adding ``19.5, 19.13, or 19.14,'' in 
its place.

0
17. Amend section 19.804-2 by revising paragraph (a)(9) to read as 
follows:


19.804-2  Agency offering.

    (a) * * *
    (9) A statement that prior to the offering no solicitation for the 
specific acquisition has been issued as a small business, HUBZone, or 
service-disabled veteran-owned small business set-aside and that no 
other public communication (such as a notice through the Governmentwide 
point of entry (GPE)) has been made showing the contracting agency's 
clear intention to set-aside the acquisition for small business, 
HUBZone small business, or service-disabled veteran-owned small 
business concerns.
* * * * *

0
18. Amend section 19.1007 by revising paragraphs (b)(2) and (c)(1)(i) 
to read as follows:


19.1007  Procedures.

* * * * *
    (b) * * *
    (2) Acquisitions in the designated industry groups must continue to 
be considered for placement under the 8(a) Program (see Subpart 19.8), 
the HUBZone Program (see Subpart 19.13), and the Service-Disabled 
Veteran-Owned Small Business Procurement Program (see Subpart 19.14).
    (c) * * *
    (1) * * *
    (i) For acquisitions $25,000 or less, proceed in accordance with 
Subpart 19.5, 19.8, 19.13, or 19.14; or
* * * * *

0
19. Amend section 19.1102 by redesignating paragraphs (b)(5) and (b)(6) 
as (b)(6) and (b)(7), respectively; and adding a new paragraph (b)(5) 
to read as follows:


19.1102  Applicability.

* * * * *
    (b) * * *
    (5) That are set-aside for service-disabled veteran-owned small 
business concerns;
* * * * *

0
20. Amend section 19.1202-2 by revising paragraph (b)(1) to read as 
follows:


19.1202-2  Applicability.

* * * * *
    (b) * * *
    (1) Small business set-asides (see Subpart 19.5), HUBZone set-
asides (see Subpart 19.13), and service-disabled veteran-owned small 
business set-asides (see Subpart 19.14);
* * * * *

0
21. Add Subpart 19.14, consisting of sections 19.1401 through 19.1407, 
to read as follows:

Subpart 19.14--Service-Disabled Veteran-Owned Small Business 
Procurement Program

Sec.
19.1401 General.
19.1402 Applicability.
19.1403 Status as a service-disabled veteran-owned small business 
concern.
19.1404 Exclusions.
19.1405 Service-disabled veteran-owned small business set-aside 
procedures.
19.1406 Sole source awards to service-disabled veteran-owned small 
business concerns.
19.1407 Contract clauses.


19.1401  General.

    (a) The Veterans Benefit Act of 2003 (15 U.S.C. 657f) created the 
procurement program for small business concerns owned and controlled by 
service-disabled veterans (commonly referred to as the ``Service-
Disabled Veteran-owned Small Business (SDVOSB) Procurement Program'').
    (b) The purpose of the Service-Disabled Veteran-Owned Small 
Business Program is to provide Federal contracting assistance to 
service-disabled veteran-owned small business concerns.


19.1402  Applicability.

    The procedures in this subpart apply to all Federal agencies that 
employ one or more contracting officers.


19.1403  Status as a service-disabled veteran-owned small business 
concern.

    (a) Status as a service-disabled veteran-owned small business 
concern is determined in accordance with 13 CFR parts 125.8 through 
125.13; also see 19.307.
    (b) At the time that a service-disabled veteran-owned small 
business concern submits its offer, it must represent to the 
contracting officer that it is a--
    (1) Service-disabled veteran-owned small business concern; and
    (2) Small business concern under the North American Industry 
Classification System (NAICS) code assigned to the procurement.
    (c) A joint venture may be considered a service-disabled veteran 
owned small business concern if--
    (1) At least one member of the joint venture is a service-disabled 
veteran-owned small business concern, and makes the representations in 
paragraph (b) of this section;
    (2) Each other concern is small under the size standard 
corresponding to the NAICS code assigned to the procurement;
    (3) The joint venture meets the requirements of paragraph 7 of the 
explanation of Affiliates in 19.101; and
    (4) The joint venture meets the requirements of 13 CFR 125.15(b).
    (d) Any service-disabled veteran-owned small business concern 
(nonmanufacturer) must meet the requirements in 19.102(f) to receive a 
benefit under this program.


19.1404  Exclusions.

    This subpart does not apply to--
    (a) Requirements that can be satisfied through award to--
    (1) Federal Prison Industries, Inc. (see Subpart 8.6);
    (2) Javits-Wagner-O'Day Act participating non-profit agencies for 
the blind or severely disabled (see Subpart 8.7);
    (b) Orders under indefinite delivery contracts (see Subpart 16.5);
    (c) Orders against Federal Supply Schedules (see Subpart 8.4);
    (d) Requirements currently being performed by an 8(a) participant 
or requirements SBA has accepted for performance under the authority of 
the 8(a) Program, unless SBA has consented to release the requirements 
from the 8(a) Program; or
    (e) Requirements for commissary or exchange resale items.


19.1405  Service-disabled veteran-owned small business set-aside 
procedures.

    (a) The contracting officer may set-aside acquisitions exceeding 
the micro-purchase threshold for competition restricted to service-
disabled veteran-owned small business concerns when the requirements of 
paragraph (b) of this section can be satisfied. The contracting officer 
shall consider service-disabled veteran-owned small business set-asides 
before considering service-disabled veteran-owned small business sole 
source awards (see 19.1406).
    (b) To set aside an acquisition for competition restricted to 
service-disabled veteran-owned small business concerns, the contracting 
officer must have a reasonable expectation that--
    (1) Offers will be received from two or more service-disabled 
veteran-owned small business concerns; and
    (2) Award will be made at a fair market price.
    (c) If the contracting officer receives only one acceptable offer 
from a service-disabled veteran-owned small business concern in 
response to a set-aside, the contracting officer should make an award 
to that concern. If the contracting

[[Page 25279]]

officer receives no acceptable offers from service-disabled veteran-
owned small business concerns, the service-disabled veteran-owned set-
aside shall be withdrawn and the requirement, if still valid, set aside 
for small business concerns, as appropriate (see Subpart 19.5).
    (d) The procedures at 19.202-1 and, except for acquisitions not 
exceeding the simplified acquisition threshold, at 19.402 apply to this 
section. When the SBA intends to appeal a contracting officer's 
decision to reject a recommendation of the SBA procurement center 
representative to set aside an acquisition for competition restricted 
to service-disabled veteran-owned small business concerns, the SBA 
procurement center representative shall notify the contracting officer, 
in writing, of its intent within 5 working days of receiving the 
contracting officer's notice of rejection. Upon receipt of notice of 
SBA's intent to appeal, the contracting officer shall suspend action on 
the acquisition unless the head of the contracting activity makes a 
written determination that urgent and compelling circumstances, which 
significantly affect the interests of the Government, exist. Within 15 
working days of SBA's notification to the contracting officer, SBA 
shall file its formal appeal with the head of the contracting activity, 
or that agency may consider the appeal withdrawn. The head of the 
contracting activity shall reply to SBA within 15 working days of 
receiving the appeal. The decision of the head of the contracting 
activity shall be final.


19.1406  Sole source awards to service-disabled veteran-owned small 
business concerns.

    (a) A contracting officer may award contracts to service-disabled 
veteran-owned small business concerns on a sole source basis (see 
19.501(d) and 6.302-5), provided--
    (1) Only one service-disabled veteran-owned small business concern 
can satisfy the requirement;
    (2) The anticipated award price of the contract (including options) 
will not exceed--
    (i) $5 million for a requirement within the NAICS codes for 
manufacturing; or
    (ii) $3 million for a requirement within any other NAICS code;
    (3) The service-disabled veteran-owned small business concern has 
been determined to be a responsible contractor with respect to 
performance; and
    (4) Award can be made at a fair and reasonable price.
    (b) The SBA has the right to appeal the contracting officer's 
decision not to make a service-disabled veteran-owned small business 
sole source award.


19.1407  Contract clauses.

    The contracting officer shall insert the clause 52.219-27, Notice 
of Total Service-Disabled Veteran-Owned Small Business Set-Aside, in 
solicitations and contracts for acquisitions under 19.1405 and 19.1406.

PART 33--PROTESTS, DISPUTES, AND APPEALS

0
22. Amend section 33.102 by revising the last sentence of paragraph (a) 
to read as follows:


33.102  General.

    (a) * * * (See 19.302 for protests of small business status, 19.305 
for protests of disadvantaged business status, and 19.307 for protests 
of service-disabled veteran-owned small business status.)
* * * * *

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS


36.501  [Amended]

0
23. Amend section 36.501 in the first sentence of paragraph (b) by 
removing ``19.5 or 19.8,'' and adding ``19.5, 19.8, 19.11, 19.13, or 
19.14'' in its place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


52.212-3  Offeror Representations and Certifications--Commercial Items.

0
24. Amend section 52.212-3 by revising the date of the provision to 
read ``(May 2004)''; and in paragraph (a) of the provision in the 
definition ``Service-disabled veteran-owned small business concern'', 
paragraph (1)(ii), by removing ``case of a'' and adding ``case of a 
service-disabled'' in its place.

0
25. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Removing ``(Oct 2000)'' from paragraph (b)(7) and adding ``(May 
2004)'' in its place;
0
c. Redesignating paragraphs (b)(13) through (b)(33) as (b)(14) through 
(b)(34), respectively;
0
d. Adding a new paragraph (b)(13); and
0
e. Removing ``(Oct 2000)'' from paragraph (e)(1)(i) and adding ``(May 
2004)'' in its place. The revised and added text reads as follows:


52.212-5  Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (May 2004)

* * * * *
    (b) * * *
    (13) 52.219-27, Notice of Total Service-Disabled Veteran-Owned 
Small Business Set-Aside (May 2004).
* * * * *


52.213-4  [Amended]

0
26. Amend section 52.213-4 by revising the date of the clause to read 
``(May 2004)''; and by removing ``(Apr 2003)'' from paragraph 
(a)(2)(vi) of the clause and adding ``(May 2004)'' in its place.


52.219-1  [Amended]

0
27. Amend section 52.219-1 by--
0
a. Revising the date of the provision to read ``(May 2004)'';
0
b. Removing ``case of a'' from paragraph (c), in the definition 
``Service-disabled veteran-owned small business concern'', paragraph 
(1)(ii), and adding ``case of a service-disabled'' in its place; and
0
c. Removing ``19.307(a)(2)'' from Alternate I and adding 
``19.308(a)(2)'' in its place.


52.219-2  [Amended]

0
28. In the introductory text of section 52.219-2, remove ``19.307(c)'' 
and add ``19.308(c)'' in its place.


52.219-8  [Amended]

0
29. Amend section 52.219-8 by revising the date of the clause to read 
``(May 2004)''; and in paragraph (c) in the definition ``Service-
disabled veteran-owned small business concern'', remove ``case of a'' 
from paragraph (1)(ii) and add ``case of a service-disabled'' in its 
place.


52.219-22  [Amended]

0
30. Amend section 52.219-22 by removing ``19.307(b)'' from the 
introductory paragraph and the introductory paragraph of Alternate I 
and adding ``19.308(b)'' in their place.

0
31. Add section 52.219-27 to read as follows:


52.219-27  Notice of Total Service-Disabled Veteran-Owned Small 
Business Set-Aside.

    As prescribed in 19.1407, insert the following clause:

Notice of Total Service-Disabled Veteran-Owned Small Business Set-Aside 
(May 2004)

    (a) Definition. Service-disabled veteran-owned small business 
concern--
    (1) Means a small business concern--
    (i) Not less than 51 percent of which is owned by one or more 
service-disabled

[[Page 25280]]

veterans or, in the case of any publicly owned business, not less 
than 51 percent of the stock of which is owned by one or more 
service-disabled veterans; and
    (ii) The management and daily business operations of which are 
controlled by one or more service-disabled veterans or, in the case 
of a service-disabled veteran with permanent and severe disability, 
the spouse or permanent caregiver of such veteran.
    (2) Service-disabled veteran means a veteran, as defined in 38 
U.S.C. 101(2), with a disability that is service-connected, as 
defined in 38 U.S.C. 101(16).
    (b) General. (1) Offers are solicited only from service-disabled 
veteran-owned small business concerns. Offers received from concerns 
that are not service-disabled veteran-owned small business concerns 
shall not be considered.
    (2) Any award resulting from this solicitation will be made to a 
service-disabled veteran-owned small business concern.
    (c) Agreement. A service-disabled veteran-owned small business 
concern agrees that in the performance of the contract, in the case 
of a contract for--
    (1) Services (except construction), at least 50 percent of the 
cost of personnel for contract performance will be spent for 
employees of the concern or employees of other service-disabled 
veteran-owned small business concerns;
    (2) Supplies (other than acquisition from a nonmanufacturer of 
the supplies), at least 50 percent of the cost of manufacturing, 
excluding the cost of materials, will be performed by the concern or 
other service-disabled veteran-owned small business concerns;
    (3) General construction, at least 15 percent of the cost of the 
contract performance incurred for personnel will be spent on the 
concern's employees or the employees of other service-disabled 
veteran-owned small business concerns; or
    (4) Construction by special trade contractors, at least 25 
percent of the cost of the contract performance incurred for 
personnel will be spent on the concern's employees or the employees 
of other service-disabled veteran-owned small business concerns.
    (d) A joint venture may be considered a service-disabled veteran 
owned small business concern if--
    (1) At least one member of the joint venture is a service-
disabled veteran-owned small business concern, and makes the 
following representations: That it is a service-disabled veteran-
owned small business concern, and that it is a small business 
concern under the North American Industry Classification Systems 
(NAICS) code assigned to the procurement;
    (2) Each other concern is small under the size standard 
corresponding to the NAICS code assigned to the procurement; and
    (3) The joint venture meets the requirements of paragraph 7 of 
the explanation of Affiliates in 19.101 of the Federal Acquisition 
Regulation.
    (4) The joint venture meets the requirements of 13 CFR 125.15(b)
    (e) Any service-disabled veteran-owned small business concern 
(nonmanufacturer) must meet the requirements in 19.102(f) of the 
Federal Acquisition Regulation to receive a benefit under this 
program.

(End of Clause)


52.244-6  [Amended]

0
32. Amend section 52.244-6 by revising the date of the clause to read 
``(May 2004)''; and by removing ``(Oct 2000)'' from paragraph (c)(1)(i) 
of the clause and adding ``(May 2004)'' in its place.

[FR Doc. 04-9752 Filed 5-4-04; 8:45 am]
BILLING CODE 6820-EP-P