Federal Acquisition Regulation: Socioeconomic Program Parity, 12930-12933 [2012-4488]

Download as PDF 12930 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: mstockstill on DSK4VPTVN1PROD with RULES2 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 VerDate Mar<15>2010 18:06 Mar 01, 2012 Jkt 226001 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 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 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, E:\FR\FM\02MRR2.SGM 02MRR2 Federal Register / Vol. 77, No. 42 / Friday, March 2, 2012 / Rules and Regulations 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. mstockstill on DSK4VPTVN1PROD with RULES2 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 VerDate Mar<15>2010 18:06 Mar 01, 2012 Jkt 226001 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. 12931 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 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:\FR\FM\02MRR2.SGM 02MRR2 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. mstockstill on DSK4VPTVN1PROD with RULES2 * * * * * (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 VerDate Mar<15>2010 18:06 Mar 01, 2012 Jkt 226001 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— PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 (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 E:\FR\FM\02MRR2.SGM 02MRR2 12933 Federal Register / Vol. 77, No. 42 / Friday, March 2, 2012 / Rules and Regulations (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 .............................. mstockstill on DSK4VPTVN1PROD with RULES2 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. VerDate Mar<15>2010 18:06 Mar 01, 2012 Jkt 226001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 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. E:\FR\FM\02MRR2.SGM 02MRR2

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]]

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

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.

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

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,

[[Page 12931]]

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

[[Page 12932]]

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

[[Page 12933]]

    (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]
BILLING CODE 6820-EP-P