Federal Acquisition Regulation; FAR Case 2006-005, HUBZone Program Revisions, 16823-16829 [E9-8318]

Agencies

• General Services Administration
• National Aeronautics and Space Administration
• DEPARTMENT OF DEFENSE

[Federal Register Volume 74, Number 69 (Monday, April 13, 2009)]
[Proposed Rules]
[Pages 16823-16829]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-8318]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 19 and 52

[FAR Case 2006-005; Docket 2009-0014; Sequence 1]
RIN 9000-AL18


Federal Acquisition Regulation; FAR Case 2006-005, HUBZone 
Program Revisions

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

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to implement revisions to the 
Small Business Administration's HUBZone Program as a result of 
revisions to the Small Business Administration's regulations.

DATES: Interested parties should submit written comments to the FAR 
Secretariat on or before June 12, 2009 to be considered in the 
formulation of a final rule.

ADDRESSES: Submit comments identified by FAR case 2006-005 by any of 
the following methods:
     Regulations.gov: https://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by inputting ``FAR Case 
2006-005'' under the heading ``Comment or Submission''. Select the link 
``Send a Comment or Submission'' that corresponds with FAR Case 2006-
005. Follow the instructions provided to complete the ``Public Comment 
and Submission Form''. Please include your name, company name (if any), 
and ``FAR Case 2006-005'' on your attached document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW., Room 4041, ATTN: Hada Flowers, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2006-
005 in all correspondence related to this case. All comments received 
will be posted without change to https://www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: Rhonda Cundiff, Procurement Analyst, 
at (202) 501-0044 for clarification of content. For information 
pertaining to status or publication schedules, contact the FAR 
Secretariat at (202) 501-4755. Please cite FAR case 2006-005.

SUPPLEMENTARY INFORMATION: 

A. Background

    On May 24, 2004, the Small Business Administration (SBA) published 
a final rule in the Federal Register at 69 FR 29411, and on August 30, 
2005, an interim rule at 70 FR 51243 amending its HUBZone regulations 
at 13 CFR Part 126 to implement the Small Business Reauthorization Act 
of 2000, the Consolidated Appropriations Act, 2005, and other various 
policy changes. This rule proposes to amend the FAR, as follows, to 
implement changes in the HUBZone regulations:
     FAR 19.1303(d), Status as a qualified HUBZone small 
business concern; 52.219-3, Notice of Total HUBZone Set-Aside; and 
52.219-4, Notice of Price Evaluation Preference for HUBZone Small 
Business Concerns, are revised to stipulate that to be eligible for a 
HUBZone contract, a HUBZone small business concern must be a HUBZone 
small business concern both at the time of its initial offer and at the 
time of contract award. SBA revised the HUBZone regulations to require 
HUBZone small business concerns to ``certify,'' at the time of their 
initial offers and again at the time of contract award, their HUBZone 
small business concern status. While the SBA regulations use the term 
``certify,'' the certification is intended to be a ``representation'' 
as used in the FAR. Small business concern offerors are already 
required to ``represent'' their HUBZone small business concern status 
at the time of their initial offer.
     FAR 52.219-3 and 52.219-4 are revised to add a requirement 
that the HUBZone concern provide to the contracting officer a copy of 
the notice required by 13 CFR 126.501 if material changes occur before 
award that could affect its HUBZone eligibility.
     The performance of work requirements of sections 52.219-3 
and 52.219-4 are revised to be consistent with the SBA HUBZone 
regulations. Alternate I would be used if there are not at least two 
HUBZones that can meet the 50 percent requirement. FAR 19.1308, 
Performance of work requirements (limitations on subcontracting), is 
also revised to reflect the changes in the performance of work 
requirements.
     The definition of ``HUBZone contract,'' which is used in 
the SBA

[[Page 16824]]

regulations, is added at section 2.101, Definitions.
    This rule also proposes to revise the FAR as follows:
     Adds ``qualified base closure areas'' and ``redesignated 
areas'' to the list of HUBZone locations in the definition of 
``HUBZone'' at section 2.101 as required by the Small Business 
Reauthorization Act of 2000 and the Consolidated Appropriations Act, 
2005.
     Adds ``HUBZone joint ventures'' to the list of affiliates 
that are controlled through contractual relationships at section 
19.101, Explanation of terms, to recognize that HUBZone joint ventures, 
comprised of members who are individually small under the appropriate 
size standard, can qualify as HUBZone small business concerns when the 
aggregate total of the joint venture is small under the size standard 
for the NAICS code assigned to the contract, or alternative, when the 
aggregate total of the joint venture is not small, and then either: (1) 
for a procurement having a revenue-based size standard, the estimated 
contract value exceeds half the size standard corresponding to the 
NAICS code assigned to the contract; or (2) for a procurement having an 
employee-based size standard, the estimated contract value exceeds $10 
million.
     Adds a definition in Subpart 19.3, Determination of Small 
Business Status for Small Business Programs, for ``interested party'' 
and a notice that SBA will dismiss protests from offerors SBA 
determines are not ``interested parties.''
     Changes the protest procedures in 19.306, Protesting a 
firm's status as a HUBZone small business concern, to require protests 
to be ``submitted'' instead of ``received'' by certain specified dates 
consistent with SBA regulations.
     At 19.800, General, removes an obsolete reference to 
priority of HUBZone 8(a) concerns, deleted from SBA regulations.
     Adds options for obtaining information on HUBZone small 
business concerns at 19.1303, Status as a qualified HUBZone small 
business concern.
     Changes the nonmanufacturer rule at 19.102, Size 
standards, paragraph (f)(8), 19.1303(e), 52.219-3(e), and 52.219-4(f) 
to be consistent with SBA HUBZone regulations.
     Changes the HUBZone set-aside procedures at 19.1305 to 
business days, and changes 19.1305(e)(3), HUBZone set-aside procedures, 
to require SBA to file its formal appeal with the head of the agency.
     Changes procedures for HUBZone sole source awards at 
19.1306, HUBZone sole source awards, to be consistent with the HUBZone 
regulations.
     Adds procedures at 19.1307, Price evaluation preference 
for HUBZone small business concerns, and 52.219-4 for how to make award 
when, after considering the price evaluation preference, an offer 
submitted by a qualified HUBZone is equal to an offer submitted by a 
large business.
     Retitles clause 52.219-3, ``Notice of Total HUBZone Set-
Aside,'' to ``Notice of Total HUBZone Set-Aside or Sole Source Award,'' 
and clarifies the clause prescription for sole source awards to 
implement the performance of the work requirements of the clause in 
sole source HUBZone awards.
     In 52.219-3 and 52-219-4, adds a reference to SBA 
definitions on limitations on subcontracting.
     Adds to 52.219-8(d), Utilization of Small Business 
Concerns, the requirement that the contractor shall confirm that a 
subcontractor is certified by SBA as a HUBZone small business by 
accessing the Central Contractor Registration database or contacting 
SBA. Additional language to 52.219-8(d) requires that for a competitive 
subcontract, the contractor must inform each unsuccessful subcontract 
offeror in writing of the name and location of the apparent successful 
offeror prior to award of the contract to the successful subcontract 
offer.
    In addition to these HUBZone small business changes, this rule 
proposes to amend the FAR as follows:
     Changes the term ``8(a) program'' at 19.000, Scope of part 
to ``8(a) business development program'' to reflect the complete title 
of the program. To avoid confusion, however, other references to the 
8(a) program are unchanged since nothing other than the title of the 
program is changed.
     Deletes the terminology ``acquisition and property sale 
assistance'' from ``joint venture--acquisition and property sales 
assistance'' at 19.101 because the term ``acquisition'' added no 
meaning and ``property sales'' are beyond the scope of the FAR. The 
proposed rule also deletes the other reference to a ``property sale'' 
in the same paragraph.
    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

    On May 24, 2004, the Small Business Administration (SBA) published 
a final rule in the Federal Register at 69 FR 29411, and on August 30, 
2005, an interim rule at 70 FR 51243 amending its HUBZone regulations 
at 13 CFR Part 126 to implement the Small Business Reauthorization Act 
of 2000, the Consolidated Appropriations Act, 2005, and other various 
policy changes. This rule proposes to revise the Federal Acquisition 
Regulation (FAR) in order to update the FAR to comply with the Small 
Business Administration's regulations as they pertain to acquisition.
    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.
    An Initial Regulatory Flexibility Analysis (IRFA) has been prepared 
and will be provided to the Chief Counsel for Advocacy for the Small 
Business Administration. The reason these changes may have a 
significant economic impact on a substantial number of small entities 
is because the small entities must comply with additional HUBZone 
requirements as discussed below. In addition, the proposed rule adds 
``qualified base closure areas'' and ``redesignated areas'' to the list 
of HUBZone locations in the definition of ``HUBZone''. This means that 
there will be more qualified HUBZone contractors competing for HUBZone 
contracts. The analysis is summarized as follows:
    The proposed FAR rule requires a HUBZone small business concern to 
be eligible for the HUBZone Program both at the time of its initial 
offer and at the time of contract award in addition to requiring the 
HUBZone concern to provide to the contracting officer a copy of the 
notice required by 13 CFR 126.501 if material changes occur before 
award that could affect its HUBZone eligibility. These requirements 
will eliminate some small businesses that are not eligible in both 
instances. The requirement for a HUBZone small business concern to 
provide to the contracting officer a copy of the notice required by 13 
CFR 126.501 if material changes occur before award that could affect 
its HUBZone eligibility will eliminate those vendors that are no longer 
a HUBZone concern. This will result in those HUBZone concerns that are 
still eligible to compete having to compete only among other eligible 
HUBZone concerns, thus increasing their chances for award.
    In addition, the proposed rule impacts some small business concerns 
by revising the FAR to state that except for construction or service 
contracts, when the total value of the contract exceeds

[[Page 16825]]

$25,000, a HUBZone small business concern nonmanufacturer must agree to 
furnish in performing the contract only end items manufactured or 
produced by HUBZone small business manufacturer concerns. In SBA's 
final rule dated August 30, 2005, SBA states that it is difficult to 
obtain a precise quantitative estimate of the impact these changes 
might have on small businesses. However, SBA estimates that 220 
counties will be added as HUBZones a result of base closures.
    The FAR Secretariat has submitted a copy of the IRFA to the Chief 
Counsel for Advocacy of the Small Business Administration. A copy of 
the IRFA may be obtained from the FAR Secretariat. The Councils will 
consider comments from small entities concerning the affected FAR parts 
2, 19 and 52 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 
2006-005), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
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. Chapter 35, et seq.

List of Subjects in 48 CFR Parts 2, 19 and 52

    Government procurement.

    Dated: March 20, 2009.
Al Matera,
Director, Office of Acquisition Policy.

    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 19 
and 52 as set forth below:
    1. The authority citation for 48 CFR parts 2, 19 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 2--DEFINITIONS OF WORDS AND TERMS

    2. Amend section 2.101 in paragraph (b)(2) by revising the 
definition ``HUBZone''; adding, in alphabetical order, the definition 
``HUBZone contract''; and adding a second sentence to the definition 
``HUBZone small business concern''. The revised and added text read as 
follows:


2.101  Definitions.

* * * * *
    (b) * * *
    (2) * * *
    HUBZone means a historically underutilized business zone that is an 
area located within one or more qualified census tracts, qualified 
nonmetropolitan counties, lands within the external boundaries of an 
Indian reservation, qualified base closure areas, or redesignated 
areas, as defined in 13 CFR 126.103.
    HUBZone contract means a contract awarded to a ``HUBZone small 
business'' concern through any of the following procurement methods:
    (1) A sole source award to a HUBZone small business concern;
    (2) Set-aside awards based on competition restricted to HUBZone 
small business concerns; or
    (3) Awards to HUBZone small business concerns through full and open 
competition after a price evaluation preference in favor of HUBZone 
small business concerns.
    HUBZone small business concern * * * 13 CFR 126.103.
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

    3. Amend section 19.000 by revising paragraph (a)(6) to read as 
follows:


19.000  Scope of part.

    (a) * * *
    (6) The ``8(a)'' business development program (hereafter referred 
to as 8(a) program), under which agencies contract with the SBA for 
goods or services to be furnished under a subcontract by a small 
disadvantaged business concern;
* * * * *
    4. Amend section 19.101, in the definition ``Affiliates'' by 
redesignating paragraphs (7)(ii) through (7)(v) as (7)(iii) through 
(7)(vi), respectively, and adding a new paragraph (7)(ii); and revising 
the paragraph heading and first sentence of the newly redesignated 
paragraph (7)(iii) to read as follows:


19.101  Explanation of terms.

* * * * *
    Affiliates. * * *
    (7) * * *
    (ii) HUBZone joint venture. A HUBZone joint venture of two or more 
HUBZone small business concerns may submit an offer for a HUBZone 
contract as long as each concern is small under the size standard 
corresponding to the NAICS code assigned to the requirement, provided 
one of the following conditions apply:
    (A) The aggregate total of the joint venture is small under the 
size standard corresponding to the NAICS code assigned to the contract.
    (B) The aggregate total of the joint venture is not small under the 
size standard corresponding to the NAICS code assigned to the contract 
and either--
    (1) For a revenue-based size standard, the estimated contract value 
exceeds half the size standard corresponding to the NAICS code assigned 
to the contract; or
    (2) For an employee-based size standard, the estimated contract 
value exceeds $10 million.
    (iii) Joint venture. Concerns submitting offers on a particular 
acquisition as joint ventures are considered as affiliated and 
controlling or having the power to control each other with regard to 
performance of the contract. * * *
* * * * *
    5. Amend section 19.102 by adding paragraph (f)(8) to read as 
follows:


19.102  Size standards.

* * * * *
    (f) * * *
    (8) For non-manufacturer rules pertaining to HUBZone contracts, see 
19.1303(e).
* * * * *
    6. Revise section 19.306 to read as follows:


19.306  Protesting a firm's status as a HUBZone small business concern.

    (a) Definition as used in this section--
    Interested party has the meaning given in 13 CFR 126.103.
    (b) HUBZone Small Business Status. (1) For sole source 
acquisitions, the SBA or the contracting officer may protest the 
apparently successful offeror's HUBZone small business concern status.
    (2) For all other acquisitions, an offeror that is an interested 
party, the contracting officer, or the SBA may protest the apparently 
successful offeror's HUBZone small business concern status.
    (c) Protests relating to whether a HUBZone 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 HUBZone qualifying requirements 
will be processed concurrently by SBA.
    (d) All protests must be in writing and must state all specific 
grounds for the protest. Assertions that a protested concern is not a 
qualified HUBZone 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

[[Page 16826]]

Administrator for the HUBZone Program (AA/HUB).
    (e) The protest of an offeror that is an interested party must be 
submitted 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 
submitted after these time limits is untimely, unless it is submitted 
by the SBA or the contracting officer. Any protest received prior to 
bid opening or notification of intended award, whichever applies, is 
premature and shall be returned to the protester.
    (f) Except for premature protests, the contracting officer shall 
forward all protests received, notwithstanding whether the contracting 
officer believes that the protest is not sufficiently specific, timely, 
or submitted by an interested party. The contracting officer shall also 
forward a referral letter with the information required by 13 CFR 
126.801(e).
    (g) Protests may be submitted in person or by facsimile, express 
delivery service, or U.S. mail (postmarked within the applicable time 
period) to: Associate Administrator/Historically Underutilized 
Business, AA/HUB, U.S. Small Business Administration, 409 3rd Street, 
SW., Washington, DC 20416; Fax (202) 205-7167. The AA/HUB will notify 
the protester and the contracting officer that the protest was received 
and indicate whether the protest will be processed or dismissed for 
lack of timeliness or specificity. A protest will be dismissed if SBA 
determines the protester is not an interested party.
    (h) SBA will determine the HUBZone status of the protested HUBZone 
small business 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 Business 
Development (ADA/GC&BD).
    (j) The protested HUBZone small business concern, the protester, or 
the contracting officer may file appeals of protest determinations with 
SBA's ADA/GC&BD. The ADA/GC&BD 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 AA/HUB failed to consider.
    (l) The party appealing the decision must provide notice of the 
appeal to the contracting officer and either the protested HUBZone 
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 AA/HUB's decision or that are 
based on disagreement with the findings and conclusions contained in 
the determination.
    (m) The ADA/GC&BD 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 HUBZone 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 ADA/GC&BD's decision is the final 
decision.
    7. Amend section 19.703 by revising paragraph (d)(1)(i) to read as 
follows:


19.703  Eligibility requirements for participating in the program.

* * * * *
    (d) * * *
    (1) * * *
    (i) HUBZone web page at https://dsbs.sba.gov/dsbs/dsp_searchhubzone.cfm or https://eweb1.sba.gov/hubzone/internet/general/approved-firms.cfm;
* * * * *


19.800  [Amended]

    8. Amend section 19.800 by removing the second sentence of 
paragraph (e).


19.803  [Amended]

    9. Amend section 19.803 by removing from the end of paragraph (c) 
``(but see 19.800(e))''.


19.804-3  [Amended]

    10. Amend section 19.804-3 by removing from the end of paragraph 
(a) ``(AA)/8(a)BD'' and adding ``AA/BD'' in its place.


19.805-1  [Amended]

    11. Amend section 19.805-1 by removing from paragraph (d) ``(AA/
8(a)BD)'' each time it appears and adding ``AA/BD'' in its place.
    12. Amend section 19.1301 by revising paragraph (a) to read as 
follows:


19.1301  General.

    (a) The Historically Underutilized Business Zone (HUBZone) Act of 
1997 (15 U.S.C. 631 note) created the HUBZone Program.
* * * * *
    13. Amend section 19.1303 by revising the section heading and 
paragraphs (b), (c), and (d) and adding paragraph (e). The revised and 
added text read as follows:


19.1303  Status as a HUBZone small business concern.

* * * * *
    (b) If the SBA determines that a concern is a HUBZone small 
business concern, it will issue a certification to that effect and will 
add the concern to the List of Qualified HUBZone Small Business 
Concerns https://eweb1.sba.gov/hubzone/internet/general/approved-firms.cfm. Only firms on the list are HUBZone small business concerns, 
eligible for HUBZone preferences. HUBZone preferences apply without 
regard to the place of performance. Information on HUBZone small 
business concerns can also be obtained at https://dsbs.sba.gov/dsbs/dsp_dsbs.cfm or by writing to the Associate Administrator for the 
HUBZone Program (AA/HUB) at U.S. Small Business Administration, 409 3rd 
Street, SW., Washington, DC 20416 or at hubzone@sba.gov.
    (c) A joint venture (see 19.101) may be considered a HUBZone small 
business concern if it meets the criteria in the explanation of 
affiliates in 19.101.
    (d) To be eligible for a HUBZone contract under this section, a 
HUBZone small business concern must be a HUBZone small business concern 
both at the time of its initial offer and at the time of contract 
award.
    (e) A HUBZone small business concern may submit an offer for 
supplies as a nonmanufacturer if it meets the requirements of the 
nonmanufacturer rule set forth at 13 CFR 121.406(b)(1) and if the small 
manufacturer providing the end item is also a HUBZone small business 
concern.

[[Page 16827]]

    (1) There are no waivers to the nonmanufacturer rule for HUBZone 
contracts.
    (2) For HUBZone contracts at or below $25,000 in total value, a 
HUBZone small business concern may supply the end item of any 
manufacturer, including a large business, so long as the product 
acquired is manufactured or produced in the United States.
    14. Amend section 19.1305 by removing from paragraph (a) ``A 
participating agency'' and adding ``The'' in its place; and revising 
paragraphs (c) and (e) to read as follows:


19.1305  HUBZone set-aside procedures.

* * * * *
    (c) A contracting officer may set aside acquisitions exceeding the 
micro-purchase threshold that do not exceed 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.
* * * * *
    (e) The procedures at 19.202-1 and, except for acquisitions not 
exceeding the simplified acquisition threshold, at 19.402 apply to this 
section.
    (1) When the SBA intends to appeal a contracting officer's decision 
to reject a recommendation of the SBA procurement center representative 
(or, if a procurement center representative is not assigned, see 
19.402(a)) to set aside an acquisition for competition restricted to 
HUBZone small business concerns, the SBA procurement center 
representative shall notify the contracting officer, in writing, of its 
intent within 5 business days of receiving the contracting officer's 
notice of rejection.
    (2) 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.
    (3) Within 15 business days of SBA's notification to the 
contracting officer, SBA must file its formal appeal with the head of 
the agency, or the appeal will be deemed withdrawn. The head of the 
agency shall reply to SBA within 15 business days of receiving the 
appeal. The decision of the head of the agency shall be final.
    15. Amend section 19.1306 by revising paragraph (a) to read as 
follows:


19.1306  HUBZone sole source awards.

    (a) An agency contracting officer may award contracts to HUBZone 
small business concerns on a sole source basis without considering 
small business set-asides (see Subpart 19.5), provided none of the 
exclusions at 19.1304 apply and--
    (1) The contracting officer does not have a reasonable expectation 
that offers would be received from two or more HUBZone small business 
concerns;
    (2) The anticipated price of the contract, including options, will 
not exceed--
    (i) $5.5 million for a requirement within the NAICS codes for 
manufacturing; or
    (ii) $3.5 million for a requirement within all other NAICS codes;
    (3) The acquisition is greater than the simplified acquisition 
threshold (see part 13);
    (4) The HUBZone small business concern has been determined to be a 
responsible contractor with respect to performance; and
    (5) Award can be made at a fair and reasonable price.
* * * * *
    16. Amend section 19.307 by adding paragraph (e) to read as 
follows:


19.1307  Price evaluation preference for HUBZone small business 
concerns.

* * * * *
    (e) When the two highest rated offerors are a HUBZone small 
business concern and a large business, and the evaluated offer of the 
HUBZone small business concern is equal to the evaluated offer of the 
large business after considering the price evaluation preference, the 
contracting officer shall award the contract to the HUBZone small 
business concern.


19.1308  [Redesignated as 19.1309]

    17. Redesignate section 19.1308 as 19.1309; and add a new section 
19.1308 to read as follows:


19.1308  Performance of work requirements (limitations on 
subcontracting).

    (a) Before issuing a solicitation for general construction or 
construction by special trade contractors, the contracting officer must 
determine if at least two HUBZone small business concerns can 
individually perform at least 50 percent of the cost of contract 
performance incurred for personnel, using its own employees or 
subcontract employees of other HUBZone small business concerns. If not, 
the clause at 52.219-3 Notice of Total HUBZone Set-Aside or Sole Source 
Award, or 52.219-4, Notice of Price Evaluation Preference for HUBZone 
Small Business Concerns, shall be used, as applicable, with its 
Alternate I (see 19.1309).
    (b) See 13 CFR 125.6 for definitions of terms used in paragraph (a) 
of this section.
    18. Revise the newly designated section 19.1309 to read as follows:


19.1309  Contract clauses.

    (a) The contracting officer shall insert the clause 52.219-3, 
Notice of Total HUBZone Set-Aside or Sole Source Award, in 
solicitations and contracts for acquisitions that are set aside for, or 
awarded on a sole source basis to, HUBZone small business concerns 
under 19.1305 or 19.1306. The contracting officer shall insert the 
clause with its Alternate I if market research indicates that there are 
not at least two HUBZone small business concerns that can meet the 
requirements of 19.1308.
    (b) The contracting officer shall insert the clause at FAR 52.219-
4, Notice of Price Evaluation Preference for HUBZone Small Business 
Concerns, in solicitations and contracts for acquisitions conducted 
using full and open competition. The clause shall not be used in 
acquisitions that do not exceed the simplified acquisition threshold. 
The contracting officer shall insert the clause with its Alternate I if 
market research indicates that there are not at least two HUBZone small 
business concerns that can meet the requirements of 19.1308.

PART 33--PROTESTS, DISPUTES, AND APPEALS

    19. Amend section 33.102 by revising the second 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, 19.306 for protests of 
HUBZone small business status, and 19.307 for protests of service-
disabled veteran-owned small business status.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    20. Amend section 52.212-3 by revising the date of the provision; 
removing from paragraph (c)(10)(i) the word ``change'' and adding 
``changes'' in its place and removing the word ``has'' and adding 
``have'' in its place; and revising paragraph (c)(10)(ii). The revised 
text reads as follows:


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

* * * * *

[[Page 16828]]

Offeror Representations and Certifications--Commercial Items (Date)

* * * * *
    (c) * * *
    (10) * * *
    (ii) It [ballot] is, [ballot] is not a HUBZone joint venture 
that complies with the requirements of 13 CFR Part 126, and the 
representation in paragraph (c)(10)(i) of this provision is accurate 
for each HUBZone small business concern participating in the HUBZone 
joint venture. [The offeror shall enter the names of each of the 
HUBZone small business concerns participating in the HUBZone joint 
venture: --------------------.] Each HUBZone small business concern 
participating in the HUBZone joint venture shall submit a separate 
signed copy of the HUBZone representation.
* * * * *
    (End of provision)
    21. Amend section 52.212-5 by revising the date of the clause, 
paragraphs (b)(3), (b)(4), and (b)(8); and removing from paragraph 
(e)(1)(ii) ``Feb 2009'' and adding ``(Date)'' in its place. The revised 
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 (DATE)

* * * * *
    (b) * * *
    ----(3) 52.219-3, Notice of Total HUBZone Set-Aside or Sole 
Source Award (Date) (15 U.S.C. 657a).
    ----(4) 52.219-4, Notice of Price Evaluation Preference for 
HUBZone Small Business Concerns (Date) (if the offeror elects to 
waive the preference, it shall so indicate in its offer) (15 U.S.C. 
657a).
* * * * *
    ------(8) 52.219-8, Utilization of Small Business Concerns 
(Date) (15 U.S.C. 637(d)(2) and (3)).
* * * * *
    (End of clause)
    22. Amend section 52.213-4 by revising the date of the clause and 
paragraph (a)(2)(vi) to read as follows:


52.213-4  Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Items).

* * * * *

TERMS AND CONDITIONS--SIMPLIFIED ACQUISITIONS (OTHER THAN COMMERCIAL 
ITEMS) (DATE)

* * * * *
    (a) * * *
    (2) * * *
    (vi) 52.244-6, Subcontracts for Commercial Items (Date).
* * * * *
    (End of clause)
    23. Amend section 52.219-1 by revising the date of the clause and 
paragraphs (b)(6)(i) and (b)(6)(ii) to read as follows:


52.219-1  Small Business Program Representations.

* * * * *

SMALL BUSINESS PROGRAM REPRESENTATIONS (DATE)

* * * * *
    (b) * * *
    (6) * * *
    (i) It [ballot] is, [ballot] is not a HUBZone small business 
concern listed, on the date of this representation, on the List of 
Qualified HUBZone Small Business Concerns maintained by the Small 
Business Administration; and no material changes in ownership and 
control, principal office, or HUBZone employee percentage have 
occurred since it was certified in accordance with 13 CFR Part 126; 
and
    (ii) It [ballot] is, [ballot] is not a HUBZone joint venture 
that complies with the requirements of 13 CFR Part 126, and the 
representation in paragraph (b)(6)(i) of this provision is accurate 
for each HUBZone small business concern participating in the HUBZone 
joint venture. [The offeror shall enter the names of each of the 
HUBZone small business concerns participating in the HUBZone joint 
venture: --------------------.] Each HUBZone small business concern 
participating in the HUBZone joint venture shall submit a separate 
signed copy of the HUBZone representation.
* * * * *
    24. Revise section 52.219-3 to read as follows:


52.219-3  Notice of Total HUBZone Set-Aside or Sole Source Award.

    As prescribed in 19.1309(a), insert the following clause:

NOTICE OF TOTAL HUBZONE SET-ASIDE OR SOLE SOURCE AWARD (DATE)

    (a) Definitions. See 13 CFR 125.6(e) for definitions of terms 
used in paragraph (c).
    (b) General. (1) Offers are solicited only from HUBZone small 
business concerns. Offers received from concerns that are not 
HUBZone small business concerns will not be considered.
    (2) Any award resulting from this solicitation will be made to a 
HUBZone small business concern.
    (c) Agreement. A HUBZone 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 HUBZone 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 HUBZone small business concerns;
    (3) General construction, at least 50 percent of the cost of the 
contract performance incurred for personnel will be spent on the 
concern's employees or on a combination of the concern's employees 
and employees of HUBZone small business concern subcontractors. At 
least 15 percent of the cost of contract performance incurred for 
personnel will be spent on the concern's employees. No more than 50 
percent of the cost of contract performance incurred for personnel 
will be subcontracted to concerns that are not HUBZone small 
business concerns; or
    (4) Construction by special trade contractors, at least 50 
percent of the cost of the contract performance incurred for 
personnel will be spent on the concern's employees or on a 
combination of the concern's employees and employees of HUBZone 
small business concern subcontractors. At least 25 percent of the 
cost of contract performance incurred for personnel will be spent on 
the concern's employees. No more than 50 percent of the cost of 
contract performance incurred for personnel will be subcontracted to 
concerns that are not HUBZone small business concerns.
    (d) A HUBZone joint venture agrees that, in the performance of 
the contract, the applicable percentage specified in paragraph (c) 
of this clause will be performed by the aggregate of the HUBZone 
small business participants.
    (e)(1) When the total value of the contract exceeds $25,000, a 
HUBZone small business concern nonmanufacturer agrees to furnish in 
performing this contract only end items manufactured or produced by 
HUBZone small business concern manufacturers.
    (2) When the total value of the contract is equal to or less 
than $25,000, a HUBZone small business concern nonmanufacturer may 
provide end items manufactured by other than a HUBZone small 
business concern manufacturer provided the end items are produced or 
manufactured in the United States.
    (3) Paragraphs 1 and 2 do not apply in connection with 
construction or service contracts.
    (f) Notice. If this solicitation has been set-aside for HUBZone 
small business concerns or the price evaluation preference for 
HUBZone small business concerns applies, the HUBZone small business 
offeror acknowledges the requirement that a prospective HUBZone 
awardee must be a HUBZone small business concern at the time of 
award of this contract. The HUBZone offeror shall provide the 
Contracting Officer a copy of the notice required by 13 CFR 126.501 
if material changes occur before contract award that could affect 
its HUBZone eligibility. If the apparently successful HUBZone 
offeror is not a HUBZone small business concern at the time of award 
of this contract, the Contracting Officer will proceed to award to 
the next otherwise successful HUBZone small business concern or 
other offeror.

[[Page 16829]]

    (End of Clause)
    Alternate I (Date). As prescribed in 19.1309(a), substitute the 
following paragraphs (c)(3) and (c)(4) for paragraphs (c)(3) and (c)(4) 
of the basic clause:
    (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
    (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.

    25. Amend section 52.219-4 by--
    a. Revising the prescription, date of the clause, and paragraph 
(a);
    b. Adding paragraph (b)(4);
    c. Removing from paragraph (c) ``paragraph (d) of'' and adding 
``paragraphs (d) and (e) of'' in its place;
    d. Revising paragraphs (d)(3), (d)(4), (e) and (f);
    e. Adding paragraph (g) and Alternate I.
    The revised and added text reads as follows:


52.219-4  Notice of Price Evaluation Preference for HUBZone Small 
Business Concerns.

    As prescribed in 19.1309(b), insert the following clause:

NOTICE OF PRICE EVALUATION PREFERENCE FOR HUBZONE SMALL BUSINESS 
CONCERNS (DATE)

    (a) Definitions. See 13 CFR 125.6(e) for definitions of terms 
used in paragraph (d).
    (b) * * *
    (4) When the two highest rated offerors are a HUBZone small 
business concern and a large business, and the evaluated offer of 
the HUBZone small business concern is equal to the evaluated offer 
of the large business after considering the price evaluation 
preference, award will be made to the HUBZone small business 
concern.
    (d) * * *
    (3) General construction, at least 50 percent of the cost of the 
contract performance incurred for personnel will be spent on the 
concern's employees or on a combination of the concern's employees 
and employees of HUBZone small business concern subcontractors. At 
least 15 percent of the cost of contract performance incurred for 
personnel will be spent on the concern's employees. No more than 50 
percent of the cost of contract performance incurred for personnel 
will be subcontracted to concerns that are not HUBZone small 
business concerns; or
    (4) Construction by special trade contractors, at least 50 
percent of the cost of the contract performance incurred for 
personnel will be spent on the concern's employees or on a 
combination of the concern's employees and employees of HUBZone 
small business concern subcontractors. At least 25 percent of the 
cost of contract performance incurred for personnel will be spent on 
the concern's employees. No more than 50 percent of the cost of 
contract performance incurred for personnel will be subcontracted to 
concerns that are not HUBZone small business concerns.
    (e) A HUBZone joint venture agrees that the aggregate of the 
HUBZone small business concerns to the joint venture, not each 
concern separately, will perform the applicable percentage of work 
requirements.
    (f)(1) When the total value of the contract exceeds $25,000, a 
HUBZone small business concern nonmanufacturer agrees to furnish in 
performing this contract only end items manufactured or produced by 
HUBZone small business concern manufacturers.
    (2) When the total value of the contract is equal to or less 
than $25,000, a HUBZone small business concern nonmanufacturer may 
provide end items manufactured by other than a HUBZone small 
business concern manufacturer provided the end items are produced or 
manufactured in the United States.
    (3) Paragraphs 1 and 2 do not apply in connection with 
construction or service contracts.
    (g) Notice. If this solicitation has been set aside for HUBZone 
small business concerns or the price evaluation preference for 
HUBZone small business concerns applies, the HUBZone small business 
offeror acknowledges the requirement that a prospective HUBZone 
awardee must be a HUBZone small business concern at the time of 
award of this contract. The HUBZone offeror shall provide the 
Contracting Officer a copy of the notice required by 13 CFR 126.501 
if material changes occur before contract award that could affect 
its HUBZone eligibility. If the apparently successful HUBZone 
offeror is not a HUBZone small business concern at the time of award 
of this contract, the Contracting Officer will proceed to award to 
the next otherwise successful HUBZone small business concern or 
other offeror.
    (End of Clause)
    Alternate I (Date). As prescribed in 19.1309(b), substitute the 
following paragraphs (d)(3) and (d)(4) for paragraphs (d)(3) and (d)(4) 
of the basic clause:
    (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
    (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.
    26. Amend section 52.219-8 by revising the date of the clause and 
paragraph (d) to read as follows:


52.219-8  Utilization of Small Business Concerns.

* * * * *

UTILIZATION OF SMALL BUSINESS CONCERNS (DATE)

* * * * *
    (d)(1) Contractors acting in good faith may rely on written 
representations by their subcontractors regarding their status as a 
small business concern, a veteran-owned small business concern, a 
service-disabled veteran-owned small business concern, a small 
disadvantaged business concern, or a women-owned small business 
concern.
    (2) The Contractor 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 (CCR) database or by contacting the SBA. 
Options for contacting the SBA include--
    (i) HUBZone web page at https://dsbs.sba.gov/dsbs/dsp_searchhubzone.cfm;
    (ii) In writing to the--AA/HUB, U.S. Small Business 
Administration, 409 3rd Street, SW., Washington DC 20416; or
    (iii) E-mail at hubzone@sba.gov.
    (3) Upon determination of the successful subcontract offeror for 
a competitive subcontract, the Contractor must inform each 
unsuccessful subcontract offeror in writing of the name and location 
of the apparent successful offeror prior to award of the contract.
    (End of clause)


52.244-6  [Amended]

    27. Amend section 52.244-6 by removing from the clause heading 
``(Dec 2008)'' and adding ``(Date)'' in its place; and by removing from 
paragraph (c)(1)(ii) ``(May 2004)'' and adding ``(Date)'' in its place.

[FR Doc. E9-8318 Filed 4-10-09; 8:45 am]
BILLING CODE 6820-EP-P