[Federal Register Volume 73, Number 47 (Monday, March 10, 2008)]
[Proposed Rules]
[Pages 12699-12701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-4561]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 13 and 19

[FAR Case 2006-034; Docket 2007-0001; Sequence 15]
RIN 9000-AK92


Federal Acquisition Regulation: FAR Case 2006-034, Socioeconomic 
Program Parity

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to ensure that the FAR reflects 
the Small Business Administration's (SBA) interpretation of the Small 
Business Act and SBA regulations with regard to the relationship among 
various small business programs.

DATES: Comment date: Interested parties should submit written comments 
to the Regulatory Secretariat at the address shown below on or before 
May 9, 2008, to be considered in the formation of the final rule.

ADDRESSES: Submit comments, identified by FAR Case 2006-034, by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov.
    Submit comments via the Federal eRulemaking portal by inputting 
``FAR Case 2006-034'' under the heading ``Comment or Submission''. 
Select the link ``Send a Comment or Submission'' that corresponds with 
FAR Case 2006-034. Follow the instructions provided to complete the 
``Public Comment and Submission Form''. Please include your name, 
company name (if any), and ``FAR Case 2006-034'' on your attached 
document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VPR), 1800 F Street, NW., Room 4035, ATTN: Diedra Wingate, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2006-
034 in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: Ms. Rhonda Cundiff, Procurement 
Analyst, at (202) 501-0044 for clarification of content. The FAR 
Secretariat at (202) 501-4755 for information pertaining to status or 
publication schedules. Please cite FAR case 2006-034.

SUPPLEMENTARY INFORMATION:

A. Background

    The purpose of this rule is to ensure that the FAR clearly reflects 
SBA's interpretation of the Small Business Act and SBA's interpretation 
of its regulations with regard to the order of precedence that applies 
when deciding whether to satisfy a requirement through an award to a 
small business, a HUBZone small business concern, a service-disabled 
veteran-owned small business (SDVOSB) concern or a small business 
participating in the 8(a) Business Development Program (8(a) Program).
    This FAR rule is intended to make the following clear:
    (1) There is no order of precedence among the 8(a), HUBZone, or 
SDVOSB Programs. However, if a requirement has been accepted by SBA 
under the 8(a) Program, it must remain in the 8(a) Program unless SBA 
agrees to its release in accordance with 13 CFR 124, 125 and 126.
    (2) For acquisitions exceeding $100,000, the contracting officer 
must consider making award under the 8(a), HUBZone or SDVOSB Programs 
(either set-aside or sole source) before the contracting officer 
proceeds with a small business set-aside. See 19.203(b) and 19.502-
2(b).
    After having considered making award under the 8(a), HUBZone or 
SDVOSB Programs, the contracting officer may set aside an acquisition 
for small business, with one exception. By statute (15 U.S.C. 
657a(b)(2)(B)), the contracting officer cannot set the acquisition 
aside for small business if the criteria for setting it aside for 
HUBZone small business are met.
    (3) FAR 19.502-2(a) sets forth the requirement to exclusively 
reserve acquisitions for small business between $3,000 and $100,000 
unless the contracting officer determines there is not a reasonable 
expectation of obtaining offers from two or more small businesses that 
are competitive in terms of market prices, quality, and delivery. This 
proposed rule clarifies that these small business set-asides do not 
preclude award of a contract to a qualified HUBZone small business 
concern pursuant to the HUBZone Program, an 8(a) Program participant 
pursuant to the 8(a) Program, or to a SDVOSB concern pursuant to the 
SDVOSB Program because the SBA's regulations give the contracting 
officer discretionary authority to use the HUBZone, 8(a), or SDVOSB 
Programs at these dollar levels. In addition, the rule shows that, 
unlike procurements that are expected to exceed $100,000, it is not 
mandatory that the contracting officer set aside an acquisition for 
HUBZone small business concerns before setting aside the requirement 
for small businesses.
    (4) SBA believes that progress in fulfilling the various small 
business goals, as well as other factors such as the results of market 
research and the acquisition history, should be considered in making a 
decision as to which program to use for the acquisition.
    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. The rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    This change may have a significant economic impact on a significant 
number of small entities within the meaning of the Regulatory 
Flexibility Act 5 U.S.C. 601, et seq., because it will clarify the 
relationship among various small business programs with regard to 
whether one has priority over another for acquisition purposes. It has 
been unclear to the acquisition community if there is an order of 
precedence that applies when deciding whether to satisfy a requirement 
through an award to small business, HUBZone small business, service 
disabled veteran-owned small business or a small business participating 
in the 8(a) Business Development Program. This proposed rule will have 
both a negative and positive impact on the 8(a) Business Development 
Program, the HUBZone Program, the Service-Disabled Veteran-Owned Small 
Business Program and the Small Business Program.

[[Page 12700]]

    Viewed as a whole, there is no impact on the small business 
community, as this rule does not increase or decrease the number of 
contracts awarded to small businesses. However, there will be a 
negative impact on contractors with a particular preference who lose a 
contract set-aside to another socioeconomic category of contractors 
with a different preference who gain the contract set-aside, who 
thereby will receive a positive impact. The FAR Secretariat has 
submitted a copy of the Initial Regulatory Flexibility Analysis (IRFA) 
to the Chief Counsel for Advocacy of the Small Business Administration. 
A copy of the IRFA may be obtained from the Regulatory Secretariat. The 
Councils will consider comments from small entities concerning the 
affected FAR parts in accordance with 5 U.S.C. 610. Comments must be 
submitted separately and should cite 5 U.S.C. 601, et seq., FAR Case 
2006-034, in correspondence. The analysis is summarized as follows:

    The purpose of this proposed rule is to revise the FAR to ensure 
that it complies with SBA's interpretation of the Small Business Act 
and the SBA regulations that implement that Act. The entities that 
will be affected are small businesses that do business with the 
Federal Government. Generally, all current and potential Government 
contractors must register in the Central Contractor Registration 
(CCR) to be eligible for contract award and payment. There are 
approximately 313,512 small business firms; 13,000 HUBZone firms; 
9,947 8(a) firms and 9,614 SDVO SBC currently registered in CCR that 
may be affected by this proposed rule.
    There are no significant alternatives that would reduce any 
impact on small businesses. The FAR rule is implementing SBA's 
interpretation of the Small Business Act and SBA's implementing 
regulations.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. Chapter 35) does not apply 
because the proposed rule does not contain information collection 
requirements that require the approval of the Office of Management and 
Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 13 and 19

    Government procurement.

Al Matera,
Director, Office of Acquisition Policy.

    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 13 and 
19 as set forth below:
    1. The authority citation for 48 CFR parts 13 and 19 continue 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 13--SIMPLIFIED ACQUISITION PROCEDURES

    2. Amend section 13.003 by revising the first sentence in paragraph 
(b)(2) to read as follows:


13.003  Policy.

* * * * *
    (b) * * *
    (2) The contracting officer may make an award under the 8(a) 
Program (see Subpart 19.8) or 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. * * *
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

    3. Amend section 19.202 by revising the first sentence to read as 
follows:


19.202  Specific policies.

    In order to further the policy in 19.201(a), contracting officers 
shall comply with the specific policies listed in this section and 
shall consider recommendations of the agency Director of Small and 
Disadvantaged Business Utilization, or the Director's designee, as to 
whether a particular acquisition should be awarded under Subparts 19.5, 
19.8, 19.13, or 19.14. * * *
    4. Amend subpart 19.2 by adding section 19.203 to read as follows:


19.203  Relationship among small business programs.

    (a) Acquisitions subject to the small business set-aside at 19.502-
2(a).
    The requirement to exclusively reserve acquisitions for small 
business at 19.502-2(a) does not preclude the contracting officer from 
awarding a contract under the--
    (1) 8(a) Program (Subpart 19.8);
    (2) HUBZone Program (Subpart 19.13); or
    (3) Service-Disabled Veteran-Owned Small Business Procurement 
Program (SDVOSB)(Subpart 19.14).
    (b) Acquisitions subject to the small business set-aside at 19.502-
2(b). (1) The contracting officer must consider the 8(a), HUBZone, and 
SDVOSB programs before using a small business set-aside. There is no 
order of precedence among the 8(a), HUBZone, and SDVOSB programs. 
However, if a requirement has been accepted by SBA under the 8(a) 
Program, it must remain in the 8(a) Program unless SBA agrees to its 
release in accordance with 13 CFR 124, 125 and 126; and
    (2) The contracting officer must set aside an acquisition for 
HUBZone small business concerns if the conditions at 19.1305 are met, 
before considering a small business set-aside.
    5. Amend section 19.501 by--
    a. Removing paragraphs (c) and (d);
    b. Redesignating paragraphs (e), (f), (g), (h), and (i) as (c), 
(d), (e), (f), and (g), respectively; and
    c. Revising the second sentence of new paragraph (c) to read as 
follows:


19.501  General.

* * * * *
    (c) * * *. The contracting officer shall perform market research 
and document why a small business set-aside is inappropriate when an 
acquisition is not set aside for small business, unless an award is 
anticipated under the 8(a), HUBZone or service-disabled veteran-owned 
small business programs. * * *
* * * * *
    6. Amend section 19.502-2 by adding a new first sentence and 
revising the last sentence in paragraph (a) and adding a new first 
sentence in paragraph (b) to read as follows:


19.502-2  Total small business set-asides.

    (a) Before setting aside an acquisition under this paragraph, refer 
to 19.203(a). * * *. The small business reservation does not preclude 
the award of a contract as described in 19.203 or 19.1007(c).
    (b) Before setting aside an acquisition under this paragraph, 
follow 19.203(b). * * *
* * * * *
    7. Amend section 19.800 by revising paragraph (e) to read as 
follows:


19.800  General.

* * * * *
    (e) Before deciding to set aside an acquisition in accordance with 
Subpart 19.5, the contracting officer must consider offering the 
acquisition under the 8(a) Program (see 19.203).
* * * * *
    8. Amend section 19.1305 by revising paragraphs (a) through (d) to 
read as follows:


19.1305  HUBZone set-aside procedures.

    (a) The contracting officer--
    (1) May set aside acquisitions exceeding the simplified acquisition 
threshold for competition restricted to HUBZone small business concerns 
when the requirements of paragraph (b) of this section can be satisfied 
(see 19.203);
    (2) Must set-aside acquisitions exceeding the simplified 
acquisition threshold for HUBZone small business

[[Page 12701]]

concerns before setting them aside for small business concerns or 
conducting the acquisition using full and open competition if the 
conditions in paragraph (b) of this section are met; and
    (3) Must consider HUBZone set-asides before considering HUBZone 
sole source awards (see 19.1306).
    (b) To set aside an acquisition for competition restricted to 
HUBZone small business concerns, the contracting officer must have a 
reasonable expectation that--
    (1) Offers will be received from two or more HUBZone small business 
concerns; and
    (2) Award will be made at a fair market price.
    (c) A contracting officer may set aside acquisitions exceeding the 
micro-purchase threshold but not exceeding the simplified acquisition 
threshold for competition restricted to HUBZone small business concerns 
at the sole discretion of the contracting officer, provided the 
requirements of paragraph (b) of this section can be satisfied.
    (d) If the contracting officer receives only one acceptable offer 
from a qualified HUBZone small business concern in response to a set-
aside, the contracting officer should make an award to that concern. If 
the contracting officer receives no acceptable offers from HUBZone 
small business concerns, the HUBZone set-aside shall be withdrawn.
* * * * *
    9. Amend section 19.1405 by revising paragraph (a) and the second 
sentence of paragraph (c) to read as follows:


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

    (a) The contracting officer--
    (1) 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 (see 19.203); and
    (2) Must consider service-disabled veteran-owned small business 
set-asides before considering service-disabled veteran-owned small 
business sole source awards (see 19.1406) or small business set-asides 
(see 19.5).
* * * * *
    (c) * * *. If the contracting officer receives no acceptable offers 
from service-disabled veteran-owned small business concerns, the 
service-disabled veteran-owned set-aside shall be withdrawn.
* * * * *


19.1406  [Amended]

    10. Amend introductory paragraph (a) by removing ``19.501(d)'' and 
adding ``19.203'' in its place.

[FR Doc. E8-4561 Filed 3-7-08; 8:45 am]
BILLING CODE 6820-EP-P