Federal Acquisition Regulation: Socioeconomic Program Parity, 12930-12933 [2012-4488]
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Federal Register / Vol. 77, No. 42 / Friday, March 2, 2012 / Rules and Regulations
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 13 and 19
[FAC 2005–56; FAR Case 2011–004; Item
IV; Docket 2011–0004, Sequence 1]
RIN 9000–AL88
Federal Acquisition Regulation:
Socioeconomic Program Parity
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
DoD, GSA, and NASA have
adopted as final, with changes, the
interim rule amending the Federal
Acquisition Regulation (FAR) to
implement a section of the Small
Business Jobs Act of 2010 that clarifies
that there is no order of precedence
among the small business
socioeconomic contracting programs.
Accordingly, this final rule amends the
FAR to clarify the existence of
socioeconomic parity and that
contracting officers may exercise
discretion when determining whether
an acquisition will be restricted to small
businesses participating in the 8(a)
Business Development Program (8(a)),
Historically Underutilized Business
Zones (HUBZone) Program, ServiceDisabled Veteran-Owned Small
Business (SDVOSB) Program, or the
Women-Owned Small Business (WOSB)
Program.
DATES: Effective Date: April 2, 2012.
FOR FURTHER INFORMATION CONTACT: Mr.
Karlos Morgan, Procurement Analyst, at
202–501–2364 for clarification of
content. For information pertaining to
status or publication schedules, contact
the Regulatory Secretariat at 202–501–
4755. Please cite FAC 2005–56, FAR
Case 2011–004.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Background
DoD, GSA, and NASA published an
interim rule in the Federal Register at
76 FR 14566 on March 16, 2011, to
implement section 1347 of the Small
Business Jobs Act of 2010 (Pub. L. 111–
240). (A correcting amendment was
issued in the Federal Register at 76 FR
26220 on May 6, 2011, to reinsert text
that was inadvertently omitted in the
March 16, 2011, publication.) Section
1347(b) clarifies at section 31(b)(2)(B) of
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the Small Business Act, 15 U.S.C.
657a(b)(2)(B), that a contract
opportunity ‘‘may’’ be awarded on the
basis of competition restricted to
qualified Historically Underutilized
Business Zone (HUBZone) small
business concerns if the contracting
officer has a reasonable expectation that
not less than two qualified HUBZone
small business concerns will submit
offers and the award can be made at a
fair market price. The interim rule
clarified that there is no order of
precedence among the small business
socioeconomic contracting programs
(i.e., 8(a), HUBZone, SDVOSB, or the
WOSB programs) and clarified the
contracting officer’s authority to use
discretion when determining whether
an acquisition will be restricted to small
businesses participating in those
programs. Eighteen respondents
submitted comments on the interim
rule.
II. Discussion and Analysis
The Civilian Agency Acquisition
Council and the Defense Acquisition
Regulations Council (the Councils)
reviewed the public comments in the
development of the final rule. A
discussion of the comments and the
changes made to the rule are provided
as follows:
A. Socioeconomic Program Preferences
Below the Simplified Acquisition
Threshold
Comment: Several respondents
submitted comments suggesting that the
Councils misinterpreted the intent of
section 1347 of the Small Business Jobs
Act of 2010 by eliminating the
preference for 8(a), HUBZone, SDVOSB,
and WOSB programs at or below the
simplified acquisition threshold (SAT).
These respondents further suggested
that FAR 19.203 be amended to include
language stating that the small business
socioeconomic contracting programs
(i.e., 8(a), HUBZone, SDVOSB, and
WOSB programs) shall be considered
before a general small business set-aside
for acquisitions below the SAT.
Response: The interim rule did not
change the relationship among the small
business socioeconomic contracting
programs (i.e., 8(a), HUBZone, SDVOSB
and WOSB programs) at or below the
SAT. It clarified that the mandatory
requirement to reserve each acquisition
for supplies or services with an
anticipated dollar value at or below the
SAT for small businesses does not
preclude the contracting officer from
making an award under the small
business socioeconomic contracting
programs. The text provided at FAR
19.203(b) is consistent with the Small
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Business Administration’s (SBA)
regulations at 13 CFR 125.2(f)(1),
124.503(j)(1), 125.19(b)(1),
126.607(b)(1), and 127.503(d)(1). FAR
19.203(b) is clarified to reflect that the
paragraph applies to acquisitions with
an anticipated value above the micropurchase threshold but not exceeding
the SAT.
B. Set-Aside Procedures Over the SAT;
Omitted Language (FAR 19.502–2(b))
Comment: A few respondents
commented that the reference to setaside procedures over the SAT,
commonly referred to as ‘‘Rule of Two,’’
was omitted.
Response: As published in the
Federal Register at 76 FR 14566 on
March 16, 2011, the regulation
contained a technical error which
accidently deleted the Rule of Two in
the promulgated rule. A correcting
amendment was issued in the Federal
Register at 76 FR 26220 on May 6, 2011,
reinstating the Rule of Two.
C. Sole Source Dollar Thresholds Vary
Among the Socioeconomic Programs
Comment: One respondent noted that
socioeconomic parity could not be
implemented until all socioeconomic
programs had the same sole source
dollar threshold.
Response: The sole source dollar
thresholds associated with the small
business socioeconomic contracting
programs (i.e., 8(a), HUBZone, SDVOSB,
and WOSB programs) were established
by their applicable statutes and the
applicable inflationary adjustments that
occur to acquisition-related thresholds
(see FAR 1.109). These dollar thresholds
have no impact on the ability of a
contracting officer to exercise discretion
when selecting the type of small
business socioeconomic contracting
program to utilize.
D. Sole Source Authority Under the
SDVOSB Program
Comment: A number of respondents
suggested that the omission of the
SDVOSB sole source reference at FAR
13.003 and the revisions to FAR 19.1406
suggest that the use of a SDVOSB sole
source before considering a small
business set-aside is discretionary above
and below the SAT. It was further
suggested that FAR 19.1405 should be
revised to state that the contracting
officer shall consider SDVOSB setasides before considering SDVOSB sole
source awards.
Response: For acquisitions above the
SAT, the contracting officer shall
consider a SDVOSB sole source award
before considering a general small
business set-aside; however,
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competitive SDVOSB set-asides should
be considered before a SDVOSB sole
source. Below the SAT, the contracting
officer has the discretion to award a
general small business set-aside or to
utilize the SDVOSB program. FAR
13.003(b)(2) is revised to remove the
reference to SDVOSB concerns and to
add a reference to the SDVOSB program
(FAR subpart 19.14). Additionally, FAR
19.1406(a) was revised to remove the
discretionary ‘‘may’’ and add ‘‘shall
consider’’ to be consistent with FAR
19.203.
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E. Discretionary Use of the 8(a) Program
Comment: One respondent
commented that revisions to FAR
19.800(e) suggest that the use of the 8(a)
program rather than a small business
set-aside is discretionary.
Response: For acquisitions above the
SAT, the contracting officer shall
consider an award under the 8(a)
program before considering a general
small business set-aside. An acquisition
offered under the 8(a) program shall be
awarded on the basis of competition
when the conditions in FAR 19.805–1
are met. Below the SAT, the contracting
officer has the discretion to award a
general small business set-aside or to
utilize the 8(a) program. FAR 19.800(e)
is revised to clarify that the contracting
officer shall consider 8(a) set-asides or
sole source awards before considering a
general small business set-aside.
F. Discretionary Use of the HUBZone
Program
Comment: A number of respondents
commented that revisions to FAR
19.1306 suggest that the use of
HUBZone sole source over a small
business set-aside is discretionary. It
was further suggested that FAR 19.1305
should be revised to state that the
contracting officer shall consider
HUBZone set-asides before considering
HUBZone sole source awards.
Response: For acquisitions above the
SAT, the contracting officer shall
consider a HUBZone sole source award
before considering a general small
business set-aside. However, a
competitive HUBZone set-aside should
be considered before a HUBZone sole
source. Below the SAT, the contracting
officer has the discretion to award a
general small business set-aside or to
utilize the HUBZone program.
Additionally, in accordance with FAR
19.1306(a)(4), HUBZone sole source
awards are not permitted at or below the
simplified acquisition threshold. FAR
13.003(b)(2) is revised to remove the
reference to HUBZone small business
concerns and to add a reference to FAR
19.1305 and 19.1306(a)(4) for the
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HUBZone program. Additionally, FAR
19.1306(a) is revised to remove the
discretionary ‘‘may’’ and add ‘‘shall
consider’’ to be consistent with FAR
19.203.
G. Definition of Term ‘‘Shall First
Consider’’
Comment: A few respondents
commented that the interim rule
requires that contracting officers ‘‘shall
first consider’’ socioeconomic programs;
however, the rule does not define what
constitutes consideration.
Response: FAR 19.203(d) was added
to include language consistent with 13
CFR 125.2(f)(2)(ii) regarding the
minimum elements a contracting officer
should examine when choosing a
socioeconomic program: The results of
market research and progress in
fulfilling agency small business goals.
H. Relationship of Small Business
Socioeconomic Contracting Programs
(8(a), HUBZone, SDVOSB, and WOSB)
With Small Businesses
Comment: A number of respondents
commented that the parity rule favors
the small business socioeconomic
contracting programs over general small
businesses and that FAR 19.203 could
be interpreted to mean a contracting
officer is mandated to make an award
under one of the small business
socioeconomic contracting programs, to
the exclusion of other small businesses.
Response: SBA’s regulations require
acquisitions above the micro-purchase
threshold and at or below the SAT to be
reserved for small business. This
requirement does not preclude the
contracting officer from having the
discretion to award under one of the
small business socioeconomic
contracting programs (8(a), HUBZone,
SDVOSB, and WOSB). However, above
the SAT, the contracting officer shall
consider the small business
socioeconomic contracting programs
before a general small business setaside.
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alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This is a significant
regulatory action and, therefore, was
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
IV. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared
a Final Regulatory Flexibility Analysis
(FRFA) consistent with the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq. The
FRFA is summarized as follows:
I. Other Changes
In addition to the changes made in
response to public comments, an
introductory statement was added at
FAR 19.800(e), 19.1305(a), and
19.1405(a) to clarify that the contracting
officer must keep in mind the priorities
and considerations set forth in FAR
19.203 when planning an acquisition
under the 8(a), HUBZone, or SDVOSB
programs.
The objective of this final rule is to clarify
that there is no order of precedence among
the small business socioeconomic programs,
and to clarify that the contracting officer’s
authority to use discretion when determining
whether an acquisition will be restricted to
small businesses participating in the 8(a),
HUBZone, SDVOSB, or WOSB programs.
Small businesses that participate in Federal
Government contracting are the specific
group of small entities affected by this final
rule.
There were no significant issues raised by
the public in response to the Initial
Regulatory Flexibility Analysis provided in
the interim rule. This final rule adopts the
interim rule with minor changes.
Generally, this rule is applicable to all
current and potential small businesses that
wish to participate in Federal procurement.
Firms interested in obtaining Federal
contract awards must register in the Central
Contractor Registration (CCR) to be eligible
for contract award and payment.
Examination of the CCR reveals there are
approximately 349,992 small business firms;
9,303 HUBZone firms, 9,234 8(a) firms,
18,213 SDVOSB concerns, and 80,477 WOSB
concerns currently registered that may be
affected by this final rule.
This final rule will impose no new
reporting or record keeping requirements on
large or small entities. There are no relevant
Federal rules which duplicate, overlap, or
conflict with this rule.
Promulgation of this final rule may have a
positive impact on small businesses as it
presents the maximum practicable
opportunity for small business concerns
qualified under the socioeconomic programs
to participate in the performance of contracts,
and assist Federal agencies in meeting each
of the Government’s small business
contracting goals.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
13563 direct agencies to assess all costs
and benefits of available regulatory
Interested parties may obtain a copy
of the FRFA from the Regulatory
Secretariat. The Regulatory Secretariat
has submitted a copy of the FRFA to the
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12932
Federal Register / Vol. 77, No. 42 / Friday, March 2, 2012 / Rules and Regulations
Chief Counsel for Advocacy of the Small
Business Administration.
V. Paperwork Reduction Act
The final rule does not contain any
information collection requirements that
require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
chapter 35).
List of Subjects in 48 CFR Parts 13 and
19
Government procurement.
Dated: February 21, 2012.
Laura Auletta,
Director, Office of Governmentwide
Acquisition Policy, Office of Acquisition
Policy, Office of Governmentwide Policy.
PART 19—SMALL BUSINESS
PROGRAMS
Interim Rule Adopted as Final With
Changes
3. Amend section 19.203 by revising
paragraphs (b) and (c); redesignating
paragraph (d) as paragraph (e); and
adding a new paragraph (d) to read as
follows:
■
Accordingly, the interim rule
amending 48 CFR parts 13 and 19,
which was published in the Federal
Register at 76 FR 14566, March 16,
2011, is adopted as final with the
following changes:
■ 1. The authority citation for 48 CFR
parts 13 and 19 continues to read as
follows:
19.203 Relationship among small
business programs.
*
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
paragraph (b) to read as follows:
■
13.003
Policy.
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*
*
*
*
*
(b)(1) Acquisitions of supplies or
services that have an anticipated dollar
value exceeding $3,000 ($15,000 for
acquisitions as described in
13.201(g)(1)) but not exceeding $150,000
($300,000 for acquisitions described in
paragraph (1) of the simplified
acquisition threshold definition at
2.101) are reserved exclusively for small
business concerns and shall be set aside
(see 19.000, 19.203, and subpart 19.5).
(2) The contracting officer may make
an award to a small business concern
under the—
(i) 8(a) Program (see subpart 19.8);
(ii) Historically Underutilized
Business Zone (HUBZone) Program (but
see 19.1305 and 19.1306(a)(4));
(iii) Service-Disabled Veteran-Owned
Small Business (SDVOSB) Program (see
subpart 19.14); or
(iv) Women-Owned Small Business
(WOSB) Program (see subpart 19.15).
(3) The following contracting officer’s
decisions for acquisitions at or below
the simplified acquisition threshold are
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not subject to review under subpart
19.4:
(i) A decision not to make an award
under the 8(a) Program.
(ii) A decision not to set aside an
acquisition for HUBZone small business
concerns, service-disabled veteranowned small business concerns, or
EDWOSB concerns and WOSB concerns
eligible under the WOSB Program.
(4) Each written solicitation under a
set-aside shall contain the appropriate
provisions prescribed by part 19. If the
solicitation is oral, however,
information substantially identical to
that in the provision shall be given to
potential quoters.
*
*
*
*
*
*
*
*
*
(b) At or below the simplified
acquisition threshold. For acquisitions
of supplies or services that have an
anticipated dollar value exceeding
$3,000 ($15,000 for acquisitions as
described in 13.201(g)(1)), but not
exceeding $150,000 ($300,000 for
acquisitions described in paragraph (1)
of the simplified acquisition threshold
definition at 2.101), the requirement at
19.502–2(a) to exclusively reserve
acquisitions for small business concerns
does not preclude the contracting officer
from awarding a contract to a small
business under the 8(a) Program,
HUBZone Program, SDVOSB Program,
or WOSB Program.
(c) Above the simplified acquisition
threshold. For acquisitions of supplies
or services that have an anticipated
dollar value exceeding the simplified
acquisition threshold definition at
2.101, the contracting officer shall first
consider an acquisition for the small
business socioeconomic contracting
programs (i.e., 8(a), HUBZone, SDVOSB,
or WOSB programs) before considering
a small business set-aside (see 19.502–
2(b)). However, if a requirement has
been accepted by the SBA under the 8(a)
Program, it must remain in the 8(a)
Program unless the SBA agrees to its
release in accordance with 13 CFR parts
124, 125, and 126.
(d) In determining which
socioeconomic program to use for an
acquisition, the contracting officer
should consider, at a minimum—
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(1) Results of market research that was
done to determine if there are
socioeconomic firms capable of
satisfying the agency’s requirement; and
(2) Agency progress in fulfilling its
small business goals.
*
*
*
*
*
■ 4. Amend section 19.800 by revising
paragraph (e) to read as follows:
19.800
General.
*
*
*
*
*
(e) The contracting officer shall
comply with 19.203 before deciding to
offer an acquisition to a small business
concern under the 8(a) Program. For
acquisitions above the simplified
acquisition threshold, the contracting
officer shall consider 8(a) set-asides or
sole source awards before considering
small business set-asides.
*
*
*
*
*
■ 5. Amend section 19.1305 by revising
paragraph (a) to read as follows:
19.1305
HUBZone set-aside procedures.
(a) The contracting officer—
(1) Shall comply with 19.203 before
deciding to set aside an acquisition
under the HUBZone Program;
(2) May set aside acquisitions
exceeding the micro-purchase threshold
for competition restricted to HUBZone
small business concerns when the
requirements of paragraph (b) of this
section can be satisfied; and
(3) Shall consider HUBZone set-asides
before considering HUBZone sole
source awards (see 19.1306) or small
business set-asides (see subpart 19.5).
*
*
*
*
*
■ 6. Amend section 19.1306 by revising
the introductory text of paragraph (a) to
read as follows:
19.1306
HUBZone sole source awards.
(a) A contracting officer shall consider
a contract award to a HUBZone small
business concern on a sole source basis
(see 6.302–5(b)(5)) before considering a
small business set-aside (see 19.203 and
subpart 19.5), provided none of the
exclusions at 19.1304 apply; and—
*
*
*
*
*
■ 7. Amend section 19.1405 by revising
paragraph (a) to read as follows:
19.1405 Service-disabled veteran-owned
small business set-aside procedures.
(a) The contracting officer—
(1) Shall comply with 19.203 before
deciding to set aside an acquisition
under the SDVOSB Program;
(2) May set-aside acquisitions
exceeding the micro-purchase threshold
for competition restricted to SDVOSB
concerns when the requirements of
paragraph (b) of this section can be
satisfied; and
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(3) Shall consider SDVOSB set-asides
before considering SDVOSB sole source
awards (see 19.1406) or small business
set-asides (see subpart 19.5).
*
*
*
*
*
8. Amend section 19.1406 by revising
the introductory text of paragraph (a) to
read as follows:
■
application of the World Trade
Organization Government Procurement
Agreement and the Free Trade
Agreements, as determined by the
United States Trade Representative.
DATES: Effective Date: March 2, 2012.
FOR FURTHER INFORMATION CONTACT: Ms.
Cecelia L. Davis, Procurement Analyst,
at 202–219–0202 for clarification of
content. For information pertaining to
status or publication schedules, contact
the Regulatory Secretariat at 202–501–
4755. Please cite FAC 2005–56, FAR
Case 2012–002.
SUPPLEMENTARY INFORMATION:
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 22, 25, and 52
19.1406 Sole source awards to servicedisabled veteran-owned small business
concerns.
[FAC 2005–56; FAR Case 2012–002; Item
V; Docket 2012–0002, Sequence 1]
(a) A contracting officer shall consider
a contract award to a SDVOSB concern
on a sole source basis (see 6.302–
5(b)(6)), before considering small
business set-asides (see 19.203 and
subpart 19.5) provided none of the
exclusions of 19.1404 apply and—
*
*
*
*
*
Federal Acquisition Regulation: Trade
Agreements Thresholds
[FR Doc. 2012–4488 Filed 3–1–12; 8:45 am]
SUMMARY:
RIN 9000–AM17
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
I. Background
DoD, GSA, and NASA are
issuing a final rule amending the
Federal Acquisition Regulation (FAR) to
incorporate adjusted thresholds for
BILLING CODE 6820–EP–P
AGENCIES:
Every two years, the trade agreements
thresholds are adjusted according to a
pre-determined formula set forth in the
agreements. The United States Trade
Representative has specified the
following new thresholds in the Federal
Register (see 76 FR 76808, published on
December 8, 2011):
Supply contract
(equal to or
exceeding)
Trade agreement
WTO GPA ..................................................................................................................
FTAs:
Australia FTA ......................................................................................................
Bahrain FTA .......................................................................................................
CAFTA–DR (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua) ....................................................................................
Chile FTA ............................................................................................................
Morocco FTA ......................................................................................................
NAFTA:
—Canada ....................................................................................................
—Mexico ......................................................................................................
Oman FTA ...................................................................................................
Peru FTA .....................................................................................................
Singapore FTA ...................................................................................................
Israeli Trade Act ........................................................................................................
Service contract
(equal to or
exceeding)
Construction
contract
(equal to or
exceeding)
$202,000
$202,000
$7,777,000
77,494
202,000
77,494
202,000
7,777,000
10,074,262
77,494
77,494
202,000
..............................
25,000
77,494
202,000
202,000
77,494
50,000
77,494
77,494
202,000
..............................
77,494
77,494
202,000
202,000
77,494
..............................
7,777,000
7,777,000
7,777,000
..............................
10,074,262
10,074,262
10,074,262
7,777,000
7,777,000
..............................
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II. Discussion and Analysis
III. Executive Orders 12866 and 13563
IV. Regulatory Flexibility Act
This final rule implements the new
thresholds in FAR subpart 25.4, Trade
Agreements, and other sections in the
FAR that include trade agreements
thresholds (i.e., 22.1503, 25.202, 25.603,
25.1101, and 25.1102).
In addition, changes are required to
FAR clause 52.204–8, Annual
Representations and Certifications, and
FAR clause 52.222–19, Child LaborCooperation with Authorities and
Remedies. Conforming changes are also
required to the clause dates in FAR
clause 52.212–5, Contract Terms and
Conditions Required to Implement
Statutes or Executive OrdersCommercial Items, and FAR clause
52.213–4, Terms and ConditionsSimplified Acquisitions (Other Than
Commercial Items).
Executive Orders (E.O.s) 12866 and
13563 direct agencies to assess all costs
and benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This is not a significant
regulatory action and, therefore, was not
subject to review under Section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
The Regulatory Flexibility Act does
not apply to this rule because this final
rule does not constitute a significant
FAR revision within the meaning of
FAR 1.501–1 and 41 U.S.C. 1707 and
does not require publication for public
comment.
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V. Paperwork Reduction Act
The final rule does not contain any
information collection requirements that
require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
chapter 35).
List of Subjects in 48 CFR Parts 22, 25,
and 52
Government procurement.
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]]>Agencies
[Federal Register Volume 77, Number 42 (Friday, March 2, 2012)]
[Rules and Regulations]
[Pages 12930-12933]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4488]
[[Page 12930]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 13 and 19
[FAC 2005-56; FAR Case 2011-004; Item IV; Docket 2011-0004, Sequence 1]
RIN 9000-AL88
Federal Acquisition Regulation: Socioeconomic Program Parity
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: DoD, GSA, and NASA have adopted as final, with changes, the
interim rule amending the Federal Acquisition Regulation (FAR) to
implement a section of the Small Business Jobs Act of 2010 that
clarifies that there is no order of precedence among the small business
socioeconomic contracting programs. Accordingly, this final rule amends
the FAR to clarify the existence of socioeconomic parity and that
contracting officers may exercise discretion when determining whether
an acquisition will be restricted to small businesses participating in
the 8(a) Business Development Program (8(a)), Historically
Underutilized Business Zones (HUBZone) Program, Service-Disabled
Veteran-Owned Small Business (SDVOSB) Program, or the Women-Owned Small
Business (WOSB) Program.
DATES: Effective Date: April 2, 2012.
FOR FURTHER INFORMATION CONTACT: Mr. Karlos Morgan, Procurement
Analyst, at 202-501-2364 for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at 202-501-4755. Please cite FAC 2005-56, FAR Case 2011-
004.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published an interim rule in the Federal
Register at 76 FR 14566 on March 16, 2011, to implement section 1347 of
the Small Business Jobs Act of 2010 (Pub. L. 111-240). (A correcting
amendment was issued in the Federal Register at 76 FR 26220 on May 6,
2011, to reinsert text that was inadvertently omitted in the March 16,
2011, publication.) Section 1347(b) clarifies at section 31(b)(2)(B) of
the Small Business Act, 15 U.S.C. 657a(b)(2)(B), that a contract
opportunity ``may'' be awarded on the basis of competition restricted
to qualified Historically Underutilized Business Zone (HUBZone) small
business concerns if the contracting officer has a reasonable
expectation that not less than two qualified HUBZone small business
concerns will submit offers and the award can be made at a fair market
price. The interim rule clarified that there is no order of precedence
among the small business socioeconomic contracting programs (i.e.,
8(a), HUBZone, SDVOSB, or the WOSB programs) and clarified the
contracting officer's authority to use discretion when determining
whether an acquisition will be restricted to small businesses
participating in those programs. Eighteen respondents submitted
comments on the interim rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule. A discussion of the comments and the
changes made to the rule are provided as follows:
A. Socioeconomic Program Preferences Below the Simplified Acquisition
Threshold
Comment: Several respondents submitted comments suggesting that the
Councils misinterpreted the intent of section 1347 of the Small
Business Jobs Act of 2010 by eliminating the preference for 8(a),
HUBZone, SDVOSB, and WOSB programs at or below the simplified
acquisition threshold (SAT). These respondents further suggested that
FAR 19.203 be amended to include language stating that the small
business socioeconomic contracting programs (i.e., 8(a), HUBZone,
SDVOSB, and WOSB programs) shall be considered before a general small
business set-aside for acquisitions below the SAT.
Response: The interim rule did not change the relationship among
the small business socioeconomic contracting programs (i.e., 8(a),
HUBZone, SDVOSB and WOSB programs) at or below the SAT. It clarified
that the mandatory requirement to reserve each acquisition for supplies
or services with an anticipated dollar value at or below the SAT for
small businesses does not preclude the contracting officer from making
an award under the small business socioeconomic contracting programs.
The text provided at FAR 19.203(b) is consistent with the Small
Business Administration's (SBA) regulations at 13 CFR 125.2(f)(1),
124.503(j)(1), 125.19(b)(1), 126.607(b)(1), and 127.503(d)(1). FAR
19.203(b) is clarified to reflect that the paragraph applies to
acquisitions with an anticipated value above the micro-purchase
threshold but not exceeding the SAT.
B. Set-Aside Procedures Over the SAT; Omitted Language (FAR 19.502-
2(b))
Comment: A few respondents commented that the reference to set-
aside procedures over the SAT, commonly referred to as ``Rule of Two,''
was omitted.
Response: As published in the Federal Register at 76 FR 14566 on
March 16, 2011, the regulation contained a technical error which
accidently deleted the Rule of Two in the promulgated rule. A
correcting amendment was issued in the Federal Register at 76 FR 26220
on May 6, 2011, reinstating the Rule of Two.
C. Sole Source Dollar Thresholds Vary Among the Socioeconomic Programs
Comment: One respondent noted that socioeconomic parity could not
be implemented until all socioeconomic programs had the same sole
source dollar threshold.
Response: The sole source dollar thresholds associated with the
small business socioeconomic contracting programs (i.e., 8(a), HUBZone,
SDVOSB, and WOSB programs) were established by their applicable
statutes and the applicable inflationary adjustments that occur to
acquisition-related thresholds (see FAR 1.109). These dollar thresholds
have no impact on the ability of a contracting officer to exercise
discretion when selecting the type of small business socioeconomic
contracting program to utilize.
D. Sole Source Authority Under the SDVOSB Program
Comment: A number of respondents suggested that the omission of the
SDVOSB sole source reference at FAR 13.003 and the revisions to FAR
19.1406 suggest that the use of a SDVOSB sole source before considering
a small business set-aside is discretionary above and below the SAT. It
was further suggested that FAR 19.1405 should be revised to state that
the contracting officer shall consider SDVOSB set-asides before
considering SDVOSB sole source awards.
Response: For acquisitions above the SAT, the contracting officer
shall consider a SDVOSB sole source award before considering a general
small business set-aside; however,
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competitive SDVOSB set-asides should be considered before a SDVOSB sole
source. Below the SAT, the contracting officer has the discretion to
award a general small business set-aside or to utilize the SDVOSB
program. FAR 13.003(b)(2) is revised to remove the reference to SDVOSB
concerns and to add a reference to the SDVOSB program (FAR subpart
19.14). Additionally, FAR 19.1406(a) was revised to remove the
discretionary ``may'' and add ``shall consider'' to be consistent with
FAR 19.203.
E. Discretionary Use of the 8(a) Program
Comment: One respondent commented that revisions to FAR 19.800(e)
suggest that the use of the 8(a) program rather than a small business
set-aside is discretionary.
Response: For acquisitions above the SAT, the contracting officer
shall consider an award under the 8(a) program before considering a
general small business set-aside. An acquisition offered under the 8(a)
program shall be awarded on the basis of competition when the
conditions in FAR 19.805-1 are met. Below the SAT, the contracting
officer has the discretion to award a general small business set-aside
or to utilize the 8(a) program. FAR 19.800(e) is revised to clarify
that the contracting officer shall consider 8(a) set-asides or sole
source awards before considering a general small business set-aside.
F. Discretionary Use of the HUBZone Program
Comment: A number of respondents commented that revisions to FAR
19.1306 suggest that the use of HUBZone sole source over a small
business set-aside is discretionary. It was further suggested that FAR
19.1305 should be revised to state that the contracting officer shall
consider HUBZone set-asides before considering HUBZone sole source
awards.
Response: For acquisitions above the SAT, the contracting officer
shall consider a HUBZone sole source award before considering a general
small business set-aside. However, a competitive HUBZone set-aside
should be considered before a HUBZone sole source. Below the SAT, the
contracting officer has the discretion to award a general small
business set-aside or to utilize the HUBZone program. Additionally, in
accordance with FAR 19.1306(a)(4), HUBZone sole source awards are not
permitted at or below the simplified acquisition threshold. FAR
13.003(b)(2) is revised to remove the reference to HUBZone small
business concerns and to add a reference to FAR 19.1305 and
19.1306(a)(4) for the HUBZone program. Additionally, FAR 19.1306(a) is
revised to remove the discretionary ``may'' and add ``shall consider''
to be consistent with FAR 19.203.
G. Definition of Term ``Shall First Consider''
Comment: A few respondents commented that the interim rule requires
that contracting officers ``shall first consider'' socioeconomic
programs; however, the rule does not define what constitutes
consideration.
Response: FAR 19.203(d) was added to include language consistent
with 13 CFR 125.2(f)(2)(ii) regarding the minimum elements a
contracting officer should examine when choosing a socioeconomic
program: The results of market research and progress in fulfilling
agency small business goals.
H. Relationship of Small Business Socioeconomic Contracting Programs
(8(a), HUBZone, SDVOSB, and WOSB) With Small Businesses
Comment: A number of respondents commented that the parity rule
favors the small business socioeconomic contracting programs over
general small businesses and that FAR 19.203 could be interpreted to
mean a contracting officer is mandated to make an award under one of
the small business socioeconomic contracting programs, to the exclusion
of other small businesses.
Response: SBA's regulations require acquisitions above the micro-
purchase threshold and at or below the SAT to be reserved for small
business. This requirement does not preclude the contracting officer
from having the discretion to award under one of the small business
socioeconomic contracting programs (8(a), HUBZone, SDVOSB, and WOSB).
However, above the SAT, the contracting officer shall consider the
small business socioeconomic contracting programs before a general
small business set-aside.
I. Other Changes
In addition to the changes made in response to public comments, an
introductory statement was added at FAR 19.800(e), 19.1305(a), and
19.1405(a) to clarify that the contracting officer must keep in mind
the priorities and considerations set forth in FAR 19.203 when planning
an acquisition under the 8(a), HUBZone, or SDVOSB programs.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
IV. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared a Final Regulatory Flexibility
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is summarized as follows:
The objective of this final rule is to clarify that there is no
order of precedence among the small business socioeconomic programs,
and to clarify that the contracting officer's authority to use
discretion when determining whether an acquisition will be
restricted to small businesses participating in the 8(a), HUBZone,
SDVOSB, or WOSB programs. Small businesses that participate in
Federal Government contracting are the specific group of small
entities affected by this final rule.
There were no significant issues raised by the public in
response to the Initial Regulatory Flexibility Analysis provided in
the interim rule. This final rule adopts the interim rule with minor
changes.
Generally, this rule is applicable to all current and potential
small businesses that wish to participate in Federal procurement.
Firms interested in obtaining Federal contract awards must register
in the Central Contractor Registration (CCR) to be eligible for
contract award and payment. Examination of the CCR reveals there are
approximately 349,992 small business firms; 9,303 HUBZone firms,
9,234 8(a) firms, 18,213 SDVOSB concerns, and 80,477 WOSB concerns
currently registered that may be affected by this final rule.
This final rule will impose no new reporting or record keeping
requirements on large or small entities. There are no relevant
Federal rules which duplicate, overlap, or conflict with this rule.
Promulgation of this final rule may have a positive impact on
small businesses as it presents the maximum practicable opportunity
for small business concerns qualified under the socioeconomic
programs to participate in the performance of contracts, and assist
Federal agencies in meeting each of the Government's small business
contracting goals.
Interested parties may obtain a copy of the FRFA from the
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy
of the FRFA to the
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Chief Counsel for Advocacy of the Small Business Administration.
V. Paperwork Reduction Act
The final rule does not contain any information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 13 and 19
Government procurement.
Dated: February 21, 2012.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of
Acquisition Policy, Office of Governmentwide Policy.
Interim Rule Adopted as Final With Changes
Accordingly, the interim rule amending 48 CFR parts 13 and 19,
which was published in the Federal Register at 76 FR 14566, March 16,
2011, is adopted as final with the following changes:
0
1. The authority citation for 48 CFR parts 13 and 19 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 13--SIMPLIFIED ACQUISITION PROCEDURES
0
2. Amend section 13.003 by revising paragraph (b) to read as follows:
13.003 Policy.
* * * * *
(b)(1) Acquisitions of supplies or services that have an
anticipated dollar value exceeding $3,000 ($15,000 for acquisitions as
described in 13.201(g)(1)) but not exceeding $150,000 ($300,000 for
acquisitions described in paragraph (1) of the simplified acquisition
threshold definition at 2.101) are reserved exclusively for small
business concerns and shall be set aside (see 19.000, 19.203, and
subpart 19.5).
(2) The contracting officer may make an award to a small business
concern under the--
(i) 8(a) Program (see subpart 19.8);
(ii) Historically Underutilized Business Zone (HUBZone) Program
(but see 19.1305 and 19.1306(a)(4));
(iii) Service-Disabled Veteran-Owned Small Business (SDVOSB)
Program (see subpart 19.14); or
(iv) Women-Owned Small Business (WOSB) Program (see subpart 19.15).
(3) The following contracting officer's decisions for acquisitions
at or below the simplified acquisition threshold are not subject to
review under subpart 19.4:
(i) A decision not to make an award under the 8(a) Program.
(ii) A decision not to set aside an acquisition for HUBZone small
business concerns, service-disabled veteran-owned small business
concerns, or EDWOSB concerns and WOSB concerns eligible under the WOSB
Program.
(4) Each written solicitation under a set-aside shall contain the
appropriate provisions prescribed by part 19. If the solicitation is
oral, however, information substantially identical to that in the
provision shall be given to potential quoters.
* * * * *
PART 19--SMALL BUSINESS PROGRAMS
0
3. Amend section 19.203 by revising paragraphs (b) and (c);
redesignating paragraph (d) as paragraph (e); and adding a new
paragraph (d) to read as follows:
19.203 Relationship among small business programs.
* * * * *
(b) At or below the simplified acquisition threshold. For
acquisitions of supplies or services that have an anticipated dollar
value exceeding $3,000 ($15,000 for acquisitions as described in
13.201(g)(1)), but not exceeding $150,000 ($300,000 for acquisitions
described in paragraph (1) of the simplified acquisition threshold
definition at 2.101), the requirement at 19.502-2(a) to exclusively
reserve acquisitions for small business concerns does not preclude the
contracting officer from awarding a contract to a small business under
the 8(a) Program, HUBZone Program, SDVOSB Program, or WOSB Program.
(c) Above the simplified acquisition threshold. For acquisitions of
supplies or services that have an anticipated dollar value exceeding
the simplified acquisition threshold definition at 2.101, the
contracting officer shall first consider an acquisition for the small
business socioeconomic contracting programs (i.e., 8(a), HUBZone,
SDVOSB, or WOSB programs) before considering a small business set-aside
(see 19.502-2(b)). However, if a requirement has been accepted by the
SBA under the 8(a) Program, it must remain in the 8(a) Program unless
the SBA agrees to its release in accordance with 13 CFR parts 124, 125,
and 126.
(d) In determining which socioeconomic program to use for an
acquisition, the contracting officer should consider, at a minimum--
(1) Results of market research that was done to determine if there
are socioeconomic firms capable of satisfying the agency's requirement;
and
(2) Agency progress in fulfilling its small business goals.
* * * * *
0
4. Amend section 19.800 by revising paragraph (e) to read as follows:
19.800 General.
* * * * *
(e) The contracting officer shall comply with 19.203 before
deciding to offer an acquisition to a small business concern under the
8(a) Program. For acquisitions above the simplified acquisition
threshold, the contracting officer shall consider 8(a) set-asides or
sole source awards before considering small business set-asides.
* * * * *
0
5. Amend section 19.1305 by revising paragraph (a) to read as follows:
19.1305 HUBZone set-aside procedures.
(a) The contracting officer--
(1) Shall comply with 19.203 before deciding to set aside an
acquisition under the HUBZone Program;
(2) May set aside acquisitions exceeding the micro-purchase
threshold for competition restricted to HUBZone small business concerns
when the requirements of paragraph (b) of this section can be
satisfied; and
(3) Shall consider HUBZone set-asides before considering HUBZone
sole source awards (see 19.1306) or small business set-asides (see
subpart 19.5).
* * * * *
0
6. Amend section 19.1306 by revising the introductory text of paragraph
(a) to read as follows:
19.1306 HUBZone sole source awards.
(a) A contracting officer shall consider a contract award to a
HUBZone small business concern on a sole source basis (see 6.302-
5(b)(5)) before considering a small business set-aside (see 19.203 and
subpart 19.5), provided none of the exclusions at 19.1304 apply; and--
* * * * *
0
7. Amend section 19.1405 by revising paragraph (a) to read as follows:
19.1405 Service-disabled veteran-owned small business set-aside
procedures.
(a) The contracting officer--
(1) Shall comply with 19.203 before deciding to set aside an
acquisition under the SDVOSB Program;
(2) May set-aside acquisitions exceeding the micro-purchase
threshold for competition restricted to SDVOSB concerns when the
requirements of paragraph (b) of this section can be satisfied; and
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(3) Shall consider SDVOSB set-asides before considering SDVOSB sole
source awards (see 19.1406) or small business set-asides (see subpart
19.5).
* * * * *
0
8. Amend section 19.1406 by revising the introductory text of paragraph
(a) to read as follows:
19.1406 Sole source awards to service-disabled veteran-owned small
business concerns.
(a) A contracting officer shall consider a contract award to a
SDVOSB concern on a sole source basis (see 6.302-5(b)(6)), before
considering small business set-asides (see 19.203 and subpart 19.5)
provided none of the exclusions of 19.1404 apply and--
* * * * *
[FR Doc. 2012-4488 Filed 3-1-12; 8:45 am]
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