[Federal Register Volume 70, Number 143 (Wednesday, July 27, 2005)]
[Rules and Regulations]
[Pages 43581-43583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14669]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 19 and 52

[FAC 2005-05; FAR Case 2005-009; Item IV]
RIN 9000-AK22


Federal Acquisition Regulation; Confirmation of HUBZone 
Certification

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 to an interim 
rule amending the Federal Acquisition Regulation (FAR) to clarify that 
prime contractors must confirm that a subcontractor representing itself 
as a Historically Underutilized Business Zone (HUBZone) small business 
concern is certified, consistent with the requirements of 15 U.S.C. 632 
et seq., as amended.

DATES: Effective Date: July 27, 2005.
    Comment Date: Interested parties should submit comments to the FAR 
Secretariat at the address shown below on or before September 26, 2005 
to be considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-05, FAR case

[[Page 43582]]

2005-009, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web Site: http://www.acqnet.gov/far/ProposedRules/proposed.htm. Click on the FAR case number to submit comments.
     E-mail: [email protected]. Include FAC 2005-05, FAR 
case 2005-009 in the subject line of the message.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite FAC 2005-05, FAR 
case 2005-009, in all correspondence related to this case. All comments 
received will be posted without change to http://www.acqnet.gov/far/ProposedRules/proposed.htm, including any personal information 
provided.

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 2005-05, FAR case 2005-009.

SUPPLEMENTARY INFORMATION:

A. Background

    Title 15 of the United States Code, section 632 requires that a 
qualified Historically Underutilized Business Zone (HUBZone) small 
business concern be certified by the Small Business Administration 
(SBA). A Department of Defense Inspector General report D-2003-019 
``DoD Contractor Subcontracting With Historically Underutilized 
Business Zones (HUBZones) Small Businesses'' found that prime 
contractors were overstating their HUBZone accomplishments because 
subcontractor's representations were not being verified. The FAR is 
being revised to clarify that prime contractors must confirm a 
subcontractor representing itself as a HUBZone small business concern 
is certified, consistent with the requirements of 15 U.S.C. 632 et 
seq., as amended.
    The specific changes revise FAR 19.703 and the clause at 52.219-9 
to clarify that contractors shall confirm that a subcontractor 
representing itself as a HUBZone small business concern is certified by 
SBA as a HUBZone small business concern by accessing the Central 
Contractor Registration or by contacting the SBA.
    This is not a significant regulatory action and, therefore, was not 
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 this rule change will 
have a positive effect on small businesses who are certified HUBZone 
small business concerns and are losing subcontracting opportunities 
taken by another company falsely claiming to be a certified HUBZone 
small business concern. The FAR Secretariat has submitted a copy of the 
Initial Regulatory Flexibility Analysis to the Chief Counsel for 
Advocacy of the Small Business Administration. The analysis is 
summarized as follows:
    Title 15 of the United States Code, section 632 requires that a 
qualified Historically Underutilized Business Zone (HUBZone) small 
business concern be on the list of qualified HUBZone small business 
concerns maintained by the Small Business Administration. A 
Department of Defense Inspector General report D-2003-019 ``DoD 
Contractor Subcontracting With Historically Underutilized Business 
Zones (HUBZones) Small Businesses'' found that prime contractors 
were overstating their HUBZone accomplishments because 
subcontractor's representations were not being verified. This 
interim rule revises the Federal Acquisition Regulation to require 
prime contractors to verify that its HUBZone small business concerns 
are qualified as required by 15 U.S.C. 632 et seq., as amended.
    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 certified 
HUBZone small business concerns will have additional subcontracting 
opportunities previously taken by other companies falsely claiming 
to be certified HUBZone small business concerns.
    Interested parties may obtain a copy from the FAR Secretariat. The 
Councils will consider comments from small entities concerning the 
affected FAR Parts 19 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 2005-05, FAR case 2005-009), in 
correspondence.

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 some subcontractors incorrectly claim to be 
certified HUBZone small business concerns. Since prime contractors are 
not currently required to verify their subcontractors' HUBZone 
certifications through the SBA prior to reporting their subcontracting 
awards to DoD, many real HUBZone small business concerns are losing 
opportunities that they should have. This also results in the reporting 
of inaccurate data on the HUBZone program to Congress and SBA. Awards 
to improperly certified subcontractors can be stopped immediately, if 
prime contractors make a simple check on the CCR database or contact 
SBA. 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 19 and 52

    Government procurement.

    Dated: July 20. 2005.
Julia B. Wise,
Director, Contract Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 19 and 52 as set forth 
below:
0
1. The authority citation for 48 CFR parts 19 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 19--SMALL BUSINESS PROGRAMS

0
2. Amend section 19.703 by--
0
a. Removing ``HUBZone small business,'' from the first sentence of 
paragraph (b);
0
b. Removing the last sentence of paragraph (b); and
0
c. Adding paragraph (c) to read as follows:


19.703  Eligibility requirements for participating in the program.

* * * * *
    (c)(1) The contractor shall confirm that a subcontractor 
representing itself

[[Page 43583]]

as a HUBZone small business concern is certified by SBA as a HUBZone 
small business concern by accessing the Central Contractor Registration 
(CCR) database or by contacting the SBA. Options for contacting the SBA 
include--
    (i) HUBZone web page at http://dsbs.sba.gov/dsbs/dsp_searchhubzone.cfm;
    (ii) In writing to the AA/HUB at U.S. Small Business 
Administration, 409 3rd Street, S.W., Washington DC 20416; or
    (iii) E-mail at [email protected].
    (2) Protests challenging HUBZone small business concern size status 
must be filed in accordance with 13 CFR 121.411.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Amend section 52.212-5 by--
0
a. Revising the date of the clause; and
0
b. Removing from paragraph (b)(8)(i) ``(JAN 2002'') and adding ``(JUL 
2005'').
    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 (JUL 2005)

* * * * *
0
4. Amend section 52.219-9 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraph (e)(4) as paragraph (e)(5); and
0
c. Adding a new paragraph (e)(4).
    The revised and added text reads as follows:


52.219-9  Small Business Subcontracting Plan.

* * * * *

SMALL BUSINESS SUBCONTRACTING PLAN (JUL 2005)

* * * * *
    (e) * * *
    (4) Confirm that a subcontractor representing itself as a HUBZone 
small business concern is identified as a certified HUBZone small 
business concern by accessing the Central Contractor Registration (CCR) 
database or by contacting SBA.
* * * * *
[FR Doc. 05-14669 Filed 7-26-05; 8:45 am]
BILLING CODE 6820-EP-S