[Federal Register Volume 71, Number 150 (Friday, August 4, 2006)]
[Rules and Regulations]
[Pages 44546-44549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-6672]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 6, 12, 26, and 52

[FAC 2005-12; FAR Case 2006-014; Docket 2006-0020, Sequence 8]
RIN 9000-AK54


Federal Acquisition Regulation; FAR Case 2006-014, Local 
Community Recovery Act of 2006

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 the 
Local Community Recovery Act of 2006. The Local Community Recovery Act 
of 2006 amended the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act to authorize set-asides for major disaster or emergency 
assistance acquisitions to businesses that reside or primarily do 
business in the geographic area affected by the disaster or emergency.

DATES: Effective Date: August 4, 2006.
    Comment Date: Interested parties should submit written comments to 
the FAR Secretariat on or before October 3, 2006 to be considered in 
the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-12, FAR case 2006-
014, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov/far. Follow the instructions for submitting comments.
     Agency Web Site: http://www.acquisition.gov/comp/far/ProposedRules/comments.htm. Click on the FAR case number to submit 
comments.
     E-mail: farcase.2006-014@gsa.gov. Include FAC 2005-12, FAR 
case 2006-014 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 2005-12, FAR 
case 2006-014, in all correspondence related to this case. All comments 
received will be posted without change to http://www.acquisition.gov/
comp/far/

[[Page 44547]]

ProposedRules/comments.htm, including any personal and/or business 
confidential information provided.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Ms. Rhonda Cundiff, Procurement Analyst, at (202) 501-0044. Please cite 
FAC 2005-12, FAR case 2006-014. For information pertaining to status or 
publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule implements the Local Community Recovery Act of 
2006 (Pub. L. 109-218). The Local Community Recovery Act of 2006 
amended the Robert T. Stafford Disaster Relief and Emergency Assistance 
Act (42 U.S.C. 5150) to authorize set-asides for debris clearance, 
distribution of supplies, reconstruction, and other major disaster or 
emergency assistance acquisitions to businesses that reside or 
primarily do business in the geographic area affected by the disaster 
or emergency. The set-aside may be used together with other authorized 
set-asides, for example, those in FAR Part 19 for small businesses.
    The contracting officer determines the geographic area for a 
specific local area set-aside. The local area set-aside may be the 
whole of, or some subpart of, the affected area (e.g., one or more 
counties, including across state lines). However, it may not be outside 
of the declared disaster/emergency area.
    This rule also imposes subcontracting restrictions when a local 
area set-aside is used. To promote local recovery efforts, the rule 
requires certain percentages of the contract to be expended for 
employees of the contractor or employees of other local area 
businesses. If the contract includes other subcontracting restrictions 
(e.g., FAR 52.219-3, 52.219-14, 52.219-27, 52.226-5, or 52.236-1), the 
contractor must meet all the subcontracting restrictions in the 
contract.
    In addition, the rule establishes a new FAR Subpart 6.6 to clarify 
the competition justification requirements for Stafford Act 
acquisitions. The coverage on the Stafford Act previously located at 
FAR 6.302-5 has been moved to the new subpart.
    The Councils would like to hear the views of interested parties on 
the sufficiency of these provisions. In particular, the Councils are 
interested in input on whether the ``Restrictions on Subcontracting 
Outside Disaster or Emergency Area'' and the ``Disaster or Emergency 
Area Representation'' should apply to preferences other than local area 
set-asides; and whether the percentages for general or specialty 
construction should be raised. The Councils are also interested in 
input regarding the placement of various Stafford-Act-related coverage 
in the FAR: that is, comments addressing the optimal combination of 
regulatory treatment in FAR Subparts such as 6.2, 6.3, 6.6, and 26.2.
    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 interim rule is not expected 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., because it 
authorizes a set-aside for local businesses in an area affected by a 
major disaster or emergency to promote economic recovery. The set-aside 
does not replace the small business set-aside. Both set-asides can 
apply to the acquisition. The local set-aside will encourage use of 
local small businesses. Therefore, an Initial Regulatory Flexibility 
Analysis has not been performed. The Councils will consider comments 
from small entities concerning the affected FAR Parts 6, 12, 26, 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 2005-12, 
FAR case 2006-014), 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 this interim rule implements the Local Community 
Recovery Act of 2006 (Pub. L. 109-218). The Local Community Recovery 
Act of 2006 amended the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5150) to authorize set-asides for 
major disaster or emergency assistance acquisitions to businesses that 
reside or primarily do business in the geographic area affected by the 
disaster or emergency. This action is necessary to improve the 
Government's ability to target local businesses and promote local 
economic recovery in an affected area. The statute went into effect 
April 20, 2006. 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 6, 12, 26, and 52

    Government procurement.

    Dated: July 28, 2006.
Ralph De Stefano,
Director, Contract Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 6, 12, 26, and 52 as 
set forth below:
0
1. The authority citation for 48 CFR parts 6, 12, 26, and 52 continues 
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 6--COMPETITION REQUIREMENTS


6.302-5  [Amended]

0
2. Amend Sec.  6.302-5 by removing paragraph (b)(5) and redesignating 
paragraphs (b)(6) and (b)(7) as (b)(5) and (b)(6), respectively.
0
3. Add Subpart 6.6 to read as follows:

Subpart 6.6--Stafford Act Preference for Local Area Contractor

Sec.
6.601 Scope of subpart.
6.602 Set-asides for local firms during a major disaster or 
emergency.
6.603 Use of procedures other than set-aside.


6.601   Scope of subpart.

    This subpart prescribes competition policies and procedures for 
procurements under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5150).


6.602   Set-asides for local firms during a major disaster or 
emergency.

    (a) To fulfill the statutory requirements relating to Pub. L. 109-
218, part of the Stafford Act, contracting officers may set-aside 
solicitations to allow only offerors residing or doing business 
primarily in the area affected by such major disaster or emergency to 
compete (see Subpart 26.2).

[[Page 44548]]

    (b) No separate justification or determination and findings are 
required under this part to set-aside a contract action. The set-aside 
shall be based on a specific geographic area, within a Presidential 
declaration(s) of disaster or emergency.


6.603   Use of procedures other than set-aside.

    When implementing the Stafford Act preference by using procedures 
other than a set-aside under section 6.602, the requirements for a 
justification to support the use of this authority are in 6.303. These 
procurements qualify as other than full and open competition.

PART 12--ACQUISITION OF COMMERCIAL ITEMS

0
4. Amend Sec.  12.301 by adding paragraph (e)(4) to read as follows:


12.301   Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (e) * * *
    (4) When setting aside under the Stafford Act (Subpart 26.2), 
include the representation at 52.226-3, the notice at 52.226-4, and the 
clause at 52.226-5 in the solicitation. This representation is not in 
the Online Representations and Certifications Application (ORCA) 
Database.
* * * * *

PART 26--OTHER SOCIOECONOMIC PROGRAMS

0
5. Amend Sec.  26.200 by removing ``6.302-5'' and adding ``Subpart 
6.6'' in its place.
0
6. Add Sec. Sec.  26.202 and 26.203 to read as follows:


26.202   Procedures to accomplish the local area preference.

    (a) Local area set-aside. The contracting officer may set-aside 
solicitations to allow only offerors residing or doing business 
primarily in the area affected by such major disaster or emergency to 
compete (see 6.602).
    (1) The contracting officer, in consultation with the requirements 
office, shall define the specific geographic area for the local set-
aside.
    (2) A major disaster may result in numerous Presidential 
declarations spanning counties in several contiguous States. The 
designated area need not include all the counties in the declared 
disaster/emergency area(s), but cannot go outside it.
    (3) The contracting officer shall also consider whether a local 
area set-aside should be further restricted to small business concerns 
in the designated area (see Part 19).
    (b) Other appropriate procedures. The contracting officer may use 
other appropriate procedures to give preference to those organizations, 
firms, or individuals residing or doing business primarily in the area 
affected by the major disaster or emergency to the extent feasible and 
practicable. For example, the contracting officer may implement the 
preference by using an evaluation factor. (See 6.603).


26.203   Solicitation provisions and contract clause.

    (a) The contracting officer shall insert the provision at 52.226-3, 
Disaster or Emergency Area Representation, for acquisitions using the 
local area set-aside. For commercial items see 12.301(e)(4).
    (b) The contracting officer shall insert the provision 52.226-4, 
Notice of Disaster or Emergency Area Set-aside in solicitations and 
contracts for acquisitions that are set-aside for a Disaster or 
Emergency Area under 26.203(a).
    (c) The contracting officer shall insert clause 52.226-5, 
Restrictions on Subcontracting Outside Disaster or Emergency Area, in 
all solicitations and contracts that contain the provision at 52.226-3.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Amend Sec.  52.212-5 by revising the date of the clause and 
paragraphs (b)(27) and (b)(28) to read 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 (AUG 2006)
* * * * *
    (b) * * *
    ---- (27) 52.226-4, Notice of Disaster or Emergency Area Set-Aside 
(42 U.S.C. 5150).
    ---- (28) 52.226-5, Restrictions on Subcontracting Outside Disaster 
or Emergency Area (42 U.S.C. 5150).
* * * * *
0
8. Add Sec. Sec.  52.226-3, 52.226-4, and 52.226-5 to read as follows:


52.226-3   Disaster or Emergency Area Representation.

    As prescribed in 26.203(a), insert the following provision:
    DISASTER OR EMERGENCY AREA REPRESENTATION (AUG 2006)
    (a) Set-aside area. The area covered in this contract is: --------
------------ [Contracting Officer to fill in with definite geographic 
boundaries.]
    (b) Representations. The offeror represents as part of its offer 
that it [square] is, [square] is not a firm residing or primarily doing 
business in the designated area.
    (c) Factors to be considered in determining whether a firm resides 
or primarily does business in the designated area include--
    (1) Location(s) of the firm's permanent office(s) and date any 
office in the designated area(s) was established;
    (2) Existing state licenses;
    (3) Record of past work in the designated area(s) (e.g., how much 
and for how long);
    (4) Contractual history the firm has had with subcontractors and/or 
suppliers in the designated area;
    (5) Percentage of the firm's gross revenues attributable to work 
performed in the designated area;
    (6) Number of permanent employees the firm employs in the 
designated area;
    (7) Membership in local and state organizations in the designated 
area; and
    (8) Other evidence that establishes the firm resides or primarily 
does business in the designated area.
    (d) If the offeror represents it is a firm residing or primarily 
doing business in the designated area, the offeror shall furnish 
documentation to support its representation if requested by the 
Contracting Officer. The solicitation may require the offeror to submit 
with its offer documentation to support the representation.
    (End of provision)


52.226-4   Notice of Disaster or Emergency Area Set-Aside.

    As prescribed in 26.203(b), insert the following provision:
    NOTICE OF DISASTER OR EMERGENCY AREA SET-ASIDE (AUG 2006)
    (a) Set-aside area. Offers are solicited only from businesses 
residing or primarily doing business in -------------------- 
[Contracting Officer to fill in with definite geographic boundaries.] 
Offers received from other businesses shall not be considered.
    (b) This set-aside is in addition to any small business set-aside 
contained in this contract.
    (End of provision)


52.226-5   Restrictions on Subcontracting Outside Disaster or Emergency 
Area.

    As prescribed in 26.203(c), insert the following clause:
    RESTRICTIONS ON SUBCONTRACTING OUTSIDE DISASTER OR EMERGENCY 
AREA (AUG 2006)
    The Contractor agrees that in performance of the contract in the 
case of a contract for--

[[Page 44549]]

    (a) Services (except construction). At least 50 percent of the cost 
of contract performance incurred for personnel shall be expended for 
employees of the Contractor or employees of other businesses residing 
or primarily doing business in the area designated in FAR 52.226-4;
    (b) Supplies (other than procurement from a nonmanufacturer of such 
supplies). The Contractor or employees of other businesses residing or 
primarily doing business in the designated area shall perform work for 
at least 50 percent of the cost of manufacturing the supplies, not 
including the cost of materials;
    (c) General construction. The Contractor will perform at least 15 
percent of the cost of the contract, not including the cost of 
materials, with its own employees or employees of other businesses 
residing or primarily doing business in the designated area; or
    (d) Construction by special trade Contractors. The Contractor will 
perform at least 25 percent of the cost of the contract, not including 
the cost of materials, with its own employees or employees of other 
businesses residing or primarily doing business in the designated area.
    (End of clause)
[FR Doc. 06-6672 Filed 8-3-06; 8:45 am]
BILLING CODE 6820-EP-S