Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 77727 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 2, 19, 33, and 52 

[FAC 2005–47; FAR Case 2006–005; Item 

II; Docket 2009–0014, Sequence 2] 

RIN 9000–AL18 

Federal Acquisition Regulation; 

HUBZone Program Revisions 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council 

(Councils) are issuing a final rule 

amending the Federal Acquisition 

Regulation (FAR) to implement 

revisions to the Small Business 

Administration’s HUBZone Program. 

This case requires that, for award of a 

HUBZone contract, a HUBZone small 

business concern must be a HUBZone 

small business concern both at the time 

of its initial offer and at the time of 

contract award. In addition, for general 

construction or construction by special 

trade contractors, a HUBZone small 

business concern must spend at least 50 

percent of the cost of contract 

performance incurred for personnel on 

its own employees or subcontract 

employees of other HUBZone small 

business concerns. The 50 percent 

requirement may be waived in some 

circumstances. 

DATES: Effective Date: January 12, 2011. 

FOR FURTHER INFORMATION CONTACT: For 

clarification of content, contact Mr. 

Karlos Morgan, Procurement Analyst, at 

(202) 501–2364. For information 

pertaining to status or publication 

schedules, contact the FAR Secretariat 

at (202) 501–4755. Please cite FAR Case 

2006–005. 

SUPPLEMENTARY INFORMATION: 

A. Background 

DoD, GSA, and NASA published a 

proposed rule in the Federal Register at 

74 FR 16823 on April 13, 2009. This 

FAR final rule implements the Small 

Business Administration (SBA) final 

rule published in the Federal Register at 

69 FR 29411 on May 24, 2004, and an 

interim rule amending its HUBZone 

regulations at 13 CFR part 126 to 

implement the Small Business 

Reauthorization Act of 2000, the 

Consolidated Appropriations Act, 2005, 

and other various policy changes 

published in the Federal Register at 70 

FR 51243 on August 30, 2005. The 

public comment period for the FAR 

proposed rule closed June 12, 2009. 

Seven respondents submitted comments 

on the proposed rule. A discussion of 

the comments and the changes made to 

the rule as a result of those comments 

are provided below. 

1. Comment: Confirmation of 

subcontractors’ representation. The 

respondent expressed concern that the 

addition of paragraph (d)(2) to FAR 

52.219–8, Utilization of Small Business 

Concerns, requiring prime contractors to 

confirm that a subcontractor’s 

representation as a HUBZone concern 

has been certified by the SBA, would 

add time and expense to the solicitation 

and award of subcontracts, particularly 

when Web sites are down for 

maintenance or experiencing technical 

issues and prime contractors must rely 

on a written response from the SBA to 

a letter or e-mail. The respondent is 

concerned that this requirement 

imposes an additional burden on prime 

contractors that will result in no direct 

improvement in the existing process. 

Response: The revision to FAR 

52.219–8(d)(2) makes it clear that the 

contractor is required to verify the 

‘‘qualified’’ HUBZone small business 

status of its subcontractor, using any of 

the suggested sources in the regulation. 

Section 3(p)(5)(D) of the Small 

Business Act requires SBA to establish 

a ‘‘List of Qualified HUBZone Small 

Business Concerns’’ which is available 

‘‘to any Federal agency or other entity.’’ 

This final rule includes the SBA 

Internet site at http://dsbs.sba.gov/dsbs/ 

search/dsp_searchhubzone.cfm 

available to the public where the list of 

qualified HUBZone small businesses 

may be accessed. The list can also be 

obtained by accessing http:// 

www.sba.gov/hubzone. HUBZone 

qualified subcontractors are required to 

be certified by SBA pursuant to the 

Small Business Act and SBA’s 

regulations and this clause ensure that 

HUBZone subcontracts are awarded to, 

and goaling credit received for, eligible 

concerns. 

2. Comment: Applicability of 

additional paragraph. Three 

respondents expressed concern with the 

addition of paragraph (d)(3) in FAR 

clause 52.219–8, Utilization of Small 

Business Concerns. According to the 

respondents, the proposed requirement 

is not limited in scope. It would 

apparently apply to all subcontract 

competitions, even competitions in 

which a small business did not 

compete. One of the respondents 

believes that there will be a significant 

impact to the procurement process 

should this proposed rule be adopted as 

published, and the respondent also 

believes that protests are not allowed at 

the subcontract level. The proposed 

requirement for advance notice will 

delay subcontract awards, impact 

program schedules, require significantly 

more effort, increase the number of 

disputes, and increase administrative 

costs. One of the respondents requested 

an exception for those contractors that 

have successfully undergone an 

approved Contractor Purchasing System 

Review in accordance with FAR subpart 

44.3 and maintain an approved system. 

A respondent requested a waiver of the 

clause if the contractor has undergone a 

successful Contractor Purchasing 

System Review. 

Response: The final rule amends the 

FAR to conform to existing SBA 

regulations (13 CFR 125.3(c)(1)(v) for 

subcontracts above $100,000, and 13 

CFR 125.3(c)(1)(vi) which addresses best 

practices for under $100,000). The SBA 

regulations prescribe written 

notification which must include the 

name and location of the apparent 

successful offeror and its small business 

program status. The intent of the 

notification requirement is to allow the 

unsuccessful small business 

subcontractor to protest the size status 

of the successful subcontractor to the 

contracting officer or SBA (see FAR 

19.703). The SBA regulation was not 

adequately addressed in the proposed 

rule and the coverage has been 

narrowed and moved to FAR 52.219–9, 

Small Business Subcontracting Plan. 

The requirement for notification applies 

only to prime contractors with contracts 

requiring subcontracting plans. The 

notification applies to those 

subcontracts over the simplified 

acquisition threshold in which a small 

business concern received a preference. 

The Councils do not agree with waiver 

of the clause if the contractor has 

undergone a successful Contractor 

Purchasing System Review. 

3. Comment: Commercial items. Two 

respondents urge the FAR Council not 

to apply the proposed FAR 52.219–8(d) 

successful subcontractor notification to 

prime contractors that are suppliers of 

commercial items. One respondent 

stated that the FAR does not define 

‘‘subcontractor’’ in the context of 

commercial item acquisition and 

believes that the clause requires the 

prime contractor to reveal competitive 

information about its subcontractor. The 

respondents state that it is impractical 

to segregate the purchases of materials 

and other supplies and services for 

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77728 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 

products sold under Government 

contracts from those sold under other 

commercial contracts. In addition, the 

proposed rule is not required by statute 

and SBA is not obligated or permitted 

to impose this requirement on 

commercial item acquisitions. 

Response: The respondents 

misinterpreted the commercial item 

statute. The SBA regulation upon which 

this is based, 13 CFR 125.3(c)(1)(v), is 

not required by statute and cannot be 

waived under FAR subpart 12.5 

procedures. However, the SBA 

regulation was not adequately addressed 

in the proposed rule, and the coverage 

has been narrowed and moved to FAR 

52.219–9(e)(6). The requirement for 

notification applies only to prime 

contractors with contracts requiring 

subcontracting plans. The notification 

applies to those subcontracts over the 

simplified acquisition threshold in 

which a small business concern 

received a preference. In addition, 

‘‘subcontract’’ is defined in FAR 2.101, 

and the Councils determined that there 

was no need to create a special 

definition for this case. Further, the 

notification releases only the name of 

the apparent successful small business 

subcontractor, its location, and its small 

business status so that others may 

protest its size; this does not reveal 

competitive information about the 

subcontractor. 

4. Comment: Task orders. The 

respondent requested that the 

regulations address the use of 

HUBZones in task-order contracts. The 

respondent is concerned with the 

accountability of firms and the oversight 

afforded them by the contracting officer. 

Response: If the contracting officer is 

notified of possible contractor violations 

of Federal law involving fraud, waste, or 

abuse, or a violation of the False Claims 

Act, the contracting officer must either 

coordinate the matter with the agency 

Office of the Inspector General, or take 

action in accordance with agency 

procedures and in accordance with FAR 

part 3, Improper Business Practices and 

Personal Conflicts of Interest. 

Additionally, the FAR requires the 

contracting officer to monitor the 

contractor’s performance throughout the 

life of the contract. Where the contractor 

is found to be in noncompliance with 

the terms and conditions of the contract, 

such as compliance with the Limitations 

on Subcontracting clause (FAR 52.219– 

14), the contracting officer is required to 

take appropriate action in accordance 

with FAR part 42. 

5. Comment: Geographical restriction. 

The respondent requested that the rule 

contain a geographic restriction for 

HUBZone performance and address 

contract administration and other 

enforcement issues. 

Response: The comment is outside the 

scope of this FAR case. 

6. Comment: Use of terminology. The 

respondent noted that FAR 19.1303(a) 

should be changed to reflect deletion of 

the word ‘‘qualified’’ in the title of this 

section. 

Response: The final rule deletes the 

word ‘‘qualified.’’ 

7. Comment: Sole source authority. 

The respondent suggested replacing the 

language at FAR 19.1306, HUBZone sole 

source awards, to be consistent with the 

proposed Service-Disabled VeteranOwned Small Business rule addressing 

sole source award authority (74 FR 

23373, May 19, 2009). 

Response: FAR Case 2008–023, 

Clarification of Criteria for Sole Source 

Awards to Service Disabled Veteran 

Owned Small Business Concerns, was 

published as a final rule in the Federal 

Register at 75 FR 38687 on July 2, 2010. 

The changes in that rule have been 

reflected in this case. 

8. Comment: Clause numbering. The 

respondent stated that the proposed 

rule, at FAR 52.212–5, Contract Terms 

and Conditions Required to Implement 

Statutes or Executive Orders— 

Commercial Items, appears to have 

inadvertently used the wrong 

subparagraph numbers for the clauses 

listed in paragraph (b) of the clause. 

Response: The paragraph numbering 

has been revised in the final rule to 

reflect the current FAR baseline. 

9. Comment: Program parity. The 

respondent stated that the proposed rule 

should address ‘‘parity’’ among all of 

SBA’s programs, i.e., HUBZone, 8(a), 

and Service-Disabled Veteran-Owned 

Small Business. 

Response: This comment is outside 

the scope of this FAR case. 

10. Comment: Price preference. The 

respondent stated that the newly 

designated FAR 19.1309(b) is 

inconsistent with the statute creating 

the HUBZone program and therefore the 

second sentence should be deleted. The 

HUBZone Act requires that a HUBZone 

price preference be applied in the 

evaluation process for all full and open 

competitions. 

Response: The sentence was deleted. 

The HUBZone Price Evaluation 

Preference applies to those contracting 

actions that are awarded through full 

and open competition to HUBZone 

Small Business Concerns. FAR 

19.1307(a)(1) has also been deleted. 

11. Comment: HUBZone certification 

by contracting officer. The respondent 

has requested deletion of the second 

sentence of FAR 52.219–3(f) and 

52.219–4(g) from the final rule, which 

mandates that a HUBZone offeror 

provide the contracting officer a copy of 

its HUBZone eligibility if material 

changes occur before contract award 

that could affect its eligibility. The 

respondent states that the contracting 

officer is not the authority allowed to 

take action on such facts; only the SBA 

has the authority to certify or de-certify 

a HUBZone small business. In addition, 

the HUBZone small business may be 

able to resolve any issue which would 

prevent the SBA from taking action to 

de-certify the firm. 

Response: The contracting officer 

does not have the authority to certify or 

de-certify a HUBZone program 

participant. If the contracting officer 

receives a notice of a material change 

from a HUBZone small business 

concern, then he/she should file a 

HUBZone status protest before awarding 

a HUBZone contract to that concern. 

This is not a significant regulatory 

action and, therefore, was not subject to 

review under Section 6(b) of Executive 

Order 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act, 5 

U.S.C. 601, et seq., applies to this final 

rule. The Councils prepared a Final 

Regulatory Flexibility Analysis (FRFA), 

and it is summarized as follows: 

The FAR rule requires a HUBZone small 

business concern to be eligible for the 

HUBZone Program both at the time of its 

initial offer and at the time of contract award. 

This requirement will eliminate some small 

businesses that are not eligible in both 

instances. In addition, it is estimated that 

approximately 220 counties will be added as 

HUBZones as a result of base closures. The 

requirements for percentage of work that 

must be performed by the HUBZone 

contractor’s own employees or a HUBZone 

subcontractor has been increased for the 

‘‘performance of work’’ requirements for 

general and specialty construction. The rule 

impacts some small business concerns by 

revising the FAR to state that except for 

construction or service contracts, when the 

total value of the contract exceeds $25,000, 

a HUBZone small business concern 

nonmanufacturer must agree to furnish in 

performing the contract only end items 

manufactured or produced by HUBZone 

small business manufacturer concerns. 

Interested parties may obtain a copy 

of the FRFA from the Regulatory 

Secretariat. The Regulatory Secretariat 

will be submitting a copy of the FRFA 

to the Chief Counsel for Advocacy of the 

Small Business Administration. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply because the changes to the 

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Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 77729 

FAR do not impose information 

collection requirements that require the 

approval of the Office of Management 

and Budget under 44 U.S.C. chapter 35, 

et seq. 

List of Subjects in 48 CFR Parts 2, 19, 

33, and 52 

Government procurement. 

Dated: November 24, 2010. 

Millisa Gary, 

Acting Director, Acquisition Policy Division. 

■ Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 2, 19, 33, and 52 

as set forth below: 

■ 1. The authority citation for 48 CFR 

parts 2, 19, 33, and 52 continues to read 

as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 42 U.S.C. 2473(c). 

PART 2—DEFINITIONS OF WORDS 

AND TERMS 

■ 2. Amend section 2.101 in paragraph 

(b)(2) in the definitions by— 

■ a. Revising the definition of 

‘‘HUBZone’’; 

■ b. Adding in alphabetical order the 

definition of ‘‘HUBZone contract’’; and 

■ c. Removing from the definition of 

‘‘HUBZone small business concern’’ the 

word ‘‘Administration’’ and adding 

‘‘Administration (13 CFR 126.103)’’. 

The revised and added text reads as 

follows: 

2.101 Definitions. 

* * * * * 

(b) * * * 

(2) * * * 

HUBZone means a historically 

underutilized business zone that is an 

area located within one or more 

qualified census tracts, qualified 

nonmetropolitan counties, lands within 

the external boundaries of an Indian 

reservation, qualified base closure areas, 

or redesignated areas, as defined in 13 

CFR 126.103. 

HUBZone contract means a contract 

awarded to a ‘‘HUBZone small business’’ 

concern through any of the following 

procurement methods: 

(1) A sole source award to a HUBZone 

small business concern. 

(2) Set-aside awards based on 

competition restricted to HUBZone 

small business concerns. 

(3) Awards to HUBZone small 

business concerns through full and open 

competition after a price evaluation 

preference in favor of HUBZone small 

business concerns. 

* * * * * 

PART 19—SMALL BUSINESS 

PROGRAMS 

■ 3. Amend section 19.000 by revising 

paragraph (a)(6) to read as follows: 

19.000 Scope of part. 

(a) * * * 

(6) The ‘‘8(a)’’ business development 

program (hereafter referred to as 8(a) 

program), under which agencies 

contract with the SBA for goods or 

services to be furnished under a 

subcontract by a small disadvantaged 

business concern; 

* * * * * 

■ 4. Amend section 19.101 in the 

definition ‘‘Affiliates’’, in paragraph (7) 

by— 

■ a. Redesignating paragraphs (7)(ii) 

through (7)(v) as paragraphs (7)(iii) 

through (7)(vi); 

■ b. Adding a new paragraph (7)(ii); and 

■ c. Revising the first sentence of newly 

redesignated paragraph (7)(iii). 

The added and revised text reads as 

follows: 

19.101 Explanation of terms. 

* * * * * 

Affiliates * * * 

(7) * * * 

(ii) HUBZone joint venture. A 

HUBZone joint venture of two or more 

HUBZone small business concerns may 

submit an offer for a HUBZone contract 

as long as each concern is small under 

the size standard corresponding to the 

NAICS code assigned to the contract, 

provided one of the following 

conditions apply: 

(A) The aggregate total of the joint 

venture is small under the size standard 

corresponding to the NAICS code 

assigned to the contract. 

(B) The aggregate total of the joint 

venture is not small under the size 

standard corresponding to the NAICS 

code assigned to the contract and 

either— 

(1) For a revenue-based size standard, 

the estimated contract value exceeds 

half the size standard corresponding to 

the NAICS code assigned to the 

contract; or 

(2) For an employee-based size 

standard, the estimated contract value 

exceeds $10 million. 

(iii) Joint venture. Concerns 

submitting offers on a particular 

acquisition as joint ventures are 

considered as affiliated and controlling 

or having the power to control each 

other with regard to performance of the 

contract. * * * 

* * * * * 

■ 5. Amend section 19.102 by adding 

paragraph (f)(8) to read as follows: 

19.102 Size standards. 

* * * * * 

(f) * * * 

(8) For non-manufacturer rules 

pertaining to HUBZone contracts, see 

19.1303(e). 

* * * * * 

■ 6. Amend section 19.306 by— 

■ a. Redesignating paragraphs (a) 

through (k) as paragraphs (b) through (l); 

■ b. Adding new paragraph (a); 

■ c. Revising the newly redesignated 

paragraph (b); 

■ d. Removing from end of newly 

redesignated paragraph (d) ‘‘(AA/HUB)’’ 

and adding ‘‘(Director/HUB)’’ in its 

place; 

■ e. Revising the newly redesignated 

paragraphs (e) and (f); 

■ f. Redesignating newly redesignated 

paragraphs (g) through (l) as (h) through 

(m); 

■ g. Adding a new paragraph (g); 

■ h. Removing from the second sentence 

of the newly redesignated paragraph (i) 

‘‘8(a) Business Development (ADA/ 

GC&8(a)BD).’’ and adding 

‘‘Administrator for Government 

Contracting and 8(a) Business 

Development(AA/GC&BD).’’ in its place; 

■ i. Removing from the newly 

redesignated paragraph (j) ‘‘ADA/ 

GC&8(a)BD’’ and adding ‘‘AA/GC&BD’’ 

in its place (twice). 

■ j. Removing from the newly 

redesignated paragraph (k) ‘‘AA/HUB’’ 

and adding ‘‘Director/HUB’’ in its place; 

■ k. Removing from the newly 

redesignated paragraph (l) ‘‘AA/HUB’s’’ 

and adding ‘‘Director/HUB’s’’ in its 

place; and 

■ l. Removing from the first sentence of 

the newly redesignated paragraph (m) 

‘‘ADA/GC&8(a)BD’’ and adding ‘‘AA/ 

GC&BD’’ in its place and removing from 

the last sentence ‘‘ADA/GC&8(a)BD’s’’ 

and adding ‘‘AA/GC&BD’s’’ in its place. 

The added and revised text reads as 

follows: 

19.306 Protesting a firm’s status as a 

HUBZone small business concern. 

(a) Definition. As used in this 

section— 

Interested party has the meaning 

given in 13 CFR 126.103. 

(b) HUBZone Small Business Status. 

(1) For sole source acquisitions, the SBA 

or the contracting officer may protest 

the apparently successful offeror’s 

HUBZone small business concern 

status. 

(2) For all other acquisitions, an 

offeror that is an interested party, the 

contracting officer, or the SBA may 

protest the apparently successful 

offeror’s qualified HUBZone small 

business concern status. 

* * * * * 

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77730 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 

(e)(1) The protest of an offeror that is 

an interested party must be submitted 

by— 

(i) For sealed bids: 

(A) The close of business on the fifth 

business day after bid opening; or 

(B) The close of business on the fifth 

business day from the date of 

identification of the apparent successful 

offeror, if the price evaluation 

preference was not applied at the time 

of bid opening. 

(ii) For negotiated acquisitions, the 

close of business on the fifth business 

day after notification by the contracting 

officer of the apparently successful 

offeror. 

(2) Any protest submitted after these 

time limits is untimely, unless it is 

submitted by the SBA or the contracting 

officer. Any protest received prior to bid 

opening or notification of intended 

award, whichever applies, is premature 

and shall be returned to the protester. 

(f) Except for premature protests, the 

contracting officer shall forward all 

protests received, notwithstanding 

whether the contracting officer believes 

that the protest is not sufficiently 

specific, timely, or submitted by an 

interested party. The contracting officer 

shall also forward a referral letter with 

the information required by 13 CFR 

126.801(e). 

(g)(1) Protests may be submitted in 

person or by facsimile, express delivery 

service, or U.S. mail (postmarked within 

the applicable time period) to the 

Director/HUB, U.S. Small Business 

Administration, 409 3rd Street, SW., 

Washington, DC 20416, Fax (202) 205– 

7167. 

(2) The Director/HUB will notify the 

protester and the contracting officer that 

the protest was received and indicate 

whether the protest will be processed or 

dismissed for lack of timeliness or 

specificity. A protest will be dismissed 

if SBA determines the protester is not an 

interested party. 

* * * * * 

■ 7. Amend section 19.703 by revising 

paragraphs (d)(1)(i) and (ii) to read as 

follows: 

19.703 Eligibility requirements for 

participating in the program. 

* * * * * 

(d)(1) * * * 

(i) HUBZone small business database 

search application Web page at http:// 

dsbs.sba.gov/dsbs/ 

dsp_searchhubzone.cfm or http:// 

www.sba.gov/hubzone. 

(ii) In writing to the Director/HUB, 

U.S. Small Business Administration, 

409 3rd Street, SW., Washington DC 

20416; or 

* * * * * 

19.800 [Amended] 

■ 8. Amend section 19.800 in paragraph 

(e) by removing the last sentence. 

19.803 [Amended] 

■ 9. Amend section 19.803 in paragraph 

(c) by removing from the end of the last 

sentence ‘‘(but see 19.800(e))’’. 

19.804–3 [Amended] 

■ 10. Amend section 19.804–3 in 

paragraph (a) by removing from the last 

sentence ‘‘(AA)/8(a)/BD’’. 

19.805–1 [Amended] 

■ 11. Amend section 19.805–1 in 

paragraph (d) by removing ‘‘(AA/ 

8(a)BD)’’ and adding ‘‘(AA/BD)’’ in its 

place; and removing ‘‘AA/8(a)BD’’ and 

adding ‘‘AA/BD’’ in its place each time 

it appears (two times). 

■ 12. Amend section 19.1301 by 

revising paragraph (a) to read as follows: 

19.1301 General. 

(a) The Historically Underutilized 

Business Zone (HUBZone) Act of 1997 

(15 U.S.C. 631 note) created the 

HUBZone Program. 

* * * * * 

■ 13. Amend section 19.1303 by— 

■ a. Revising the section heading; 

■ b. Removing from paragraph (a) 

‘‘qualified’’; 

■ c. Revising paragraphs (b), (c), and (d); 

and 

■ d. Adding paragraph (e). 

The revised and added text reads as 

follows: 

19.1303 Status as a HUBZone small 

business concern. 

* * * * * 

(b) If the SBA determines that a 

concern is a HUBZone small business 

concern, it will issue a certification to 

that effect and will add the concern to 

the List of Qualified HUBZone Small 

Business Concerns at http:// 

dsbs.sba.gov/dsbs/search/ 

dsp_searchhubzone.cfm. Only firms on 

the list are HUBZone small business 

concerns, eligible for HUBZone 

preferences. HUBZone preferences 

apply without regard to the place of 

performance. Information on HUBZone 

small business concerns can also be 

obtained at http://www.sba.gov/hubzone 

or by writing to the Director for the 

HUBZone Program (Director/HUB) at 

U.S. Small Business Administration, 

409 3rd Street, SW., Washington, DC 

20416 or at hubzone@sba.gov. 

(c) A joint venture may be considered 

a HUBZone small business concern if it 

meets the criteria in the explanation of 

affiliates (see 19.101). 

(d) To be eligible for a HUBZone 

contract under this section, a HUBZone 

small business concern must be a 

HUBZone small business concern both 

at the time of its initial offer and at the 

time of contract award. 

(e) A HUBZone small business 

concern may submit an offer for 

supplies as a nonmanufacturer if it 

meets the requirements of the 

nonmanufacturer rule set forth at 13 

CFR 121.406(b)(1) and if the small 

business manufacturer providing the 

end item is also a HUBZone small 

business concern. 

(1) There are no waivers to the 

nonmanufacturer rule for HUBZone 

contracts. 

(2) For HUBZone contracts at or 

below $25,000 in total value, a 

HUBZone small business concern may 

supply the end item of any 

manufacturer, including a large 

business, so long as the product 

acquired is manufactured or produced 

in the United States. 

■ 14. Amend section 19.1305 by— 

■ a. Removing from paragraph (a) ‘‘A 

participating agency contracting’’ and 

adding ‘‘The contracting’’ in its place; 

■ b. Removing from paragraph (c) ‘‘A 

participating agency’’ and adding ‘‘A 

contracting officer’’ in its place; and 

■ c. Revising paragraph (e) to read as 

follows: 

19.1305 HUBZone set-aside procedures. 

* * * * * 

(e) The procedures at 19.202–1 and, 

except for acquisitions not exceeding 

the simplified acquisition threshold, at 

19.402 apply to this section. 

(1) When the SBA intends to appeal 

a contracting officer’s decision to reject 

a recommendation of the SBA 

procurement center representative (or, if 

a procurement center representative is 

not assigned, see 19.402(a)) to set aside 

an acquisition for competition restricted 

to HUBZone small business concerns, 

the SBA procurement center 

representative shall notify the 

contracting officer, in writing, of its 

intent within 5 business days of 

receiving the contracting officer’s notice 

of rejection. 

(2) Upon receipt of notice of SBA’s 

intent to appeal, the contracting officer 

shall suspend action on the acquisition 

unless the head of the contracting 

activity makes a written determination 

that urgent and compelling 

circumstances, which significantly 

affect the interests of the Government, 

exist. 

(3) Within 15 business days of SBA’s 

notification to the contracting officer, 

SBA must file its formal appeal with the 

head of the agency, or the appeal will 

be deemed withdrawn. The head of the 

agency shall reply to SBA within 15 

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Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 77731 

business days of receiving the appeal. 

The decision of the head of the agency 

shall be final. 

■ 15. Amend section 19.1306 by 

revising paragraph (a) introductory text 

and paragraph (a)(2)(ii) to read as 

follows: 

19.1306 HUBZone sole source awards. 

(a) A contracting officer may award 

contracts to HUBZone small business 

concerns on a sole source basis (see 

19.501(c) and 6.302–5(b)(5)) before 

considering small business set-asides 

(see subpart 19.5), provided none of the 

exclusions at 19.1304 apply; and— 

* * * * * 

(2) * * * 

(ii) $4 million for a requirement 

within all other NAICS codes; 

* * * * * 

■ 16. Amend section 19.1307 by 

removing paragraph (a)(1); redesignating 

paragraphs (a)(2) and (a)(3) as 

paragraphs (a)(1) and (a)(2), 

respectively; amending newly 

redesignated paragraph (a)(1) by adding 

‘‘or’’ to the end of the paragraph; and 

adding paragraph (e) to read as follows: 

19.1307 Price evaluation preference for 

HUBZone small business concerns. 

* * * * * 

(e) When the two highest rated 

offerors are a HUBZone small business 

concern and a large business, and the 

evaluated offer of the HUBZone small 

business concern is equal to the 

evaluated offer of the large business 

after considering the price evaluation 

preference, the contracting officer shall 

award the contract to the HUBZone 

small business concern. 

19.1308 [Redesignated as 19.1309] 

■ 17a. Redesignate section 19.1308 as 

section 19.1309 

■ 17b. Add new section 19.1308 to read 

as follows: 

19.1308 Performance of work 

requirements (limitations on 

subcontracting) for general construction or 

construction by special trade contractors. 

(a) Before issuing a solicitation for 

general construction or construction by 

special trade contractors, the contracting 

officer shall determine if at least two 

HUBZone small business concerns can 

spend at least 50 percent of the cost of 

contract performance to be incurred for 

personnel on their own employees or 

subcontract employees of other 

HUBZone small business concerns. 

(b) The clause at 52.219–3, Notice of 

Total HUBZone Set-Aside or Sole 

Source Award, or 52.219–4, Notice of 

Price Evaluation Preference for 

HUBZone Small Business Concerns, 

shall be used, as applicable, with its 

Alternate I to waive the 50 percent 

requirement (see 19.1309) if at least two 

HUBZone small business concerns 

cannot meet the conditions of paragraph 

(a); but, the HUBZone prime contractor 

can still meet the following— 

(1) For general construction, at least 

15 percent of the cost of the contract 

performance to be incurred for 

personnel using the concern’s 

employees; or 

(2) For construction by special trade 

contractors, at least 25 percent of the 

cost of contract performance to be 

incurred for personnel using the 

concern’s employees. 

(c) See 13 CFR 125.6 for definitions of 

terms used in paragraph (a) of this 

section. 

■ 17c. Revise newly redesignated 

section 19.1309 to read as follows: 

19.1309 Contract clauses. 

(a) The contracting officer shall insert 

the clause 52.219–3, Notice of Total 

HUBZone Set-Aside or Sole Source 

Award, in solicitations and contracts for 

acquisitions that are set aside for, or 

awarded on a sole source basis to, 

HUBZone small business concerns 

under 19.1305 or 19.1306. 

(1) The contracting officer shall use 

the clause with its Alternate I to waive 

the 50 percent requirement if the 

conditions at 19.1308(b) apply. 

(2) If a waiver is granted, the 

HUBZone small business prime 

contractor must still meet the 

performance of work requirements set 

forth in 13 CFR 125.6(c). 

(b) The contracting officer shall insert 

the clause at FAR 52.219–4, Notice of 

Price Evaluation Preference for 

HUBZone Small Business Concerns, in 

solicitations and contracts for 

acquisitions conducted using full and 

open competition. 

(1) The contracting officer shall use 

the clause with its Alternate I to waive 

the 50 percent requirement if the 

conditions at 19.1308(b) apply. 

(2) If a waiver is granted, the 

HUBZone small business prime 

contractor must still meet the 

performance of work requirements set 

forth in 13 CFR 125.6(c). 

PART 33—PROTESTS, DISPUTES, 

AND APPEALS 

■ 18. Amend section 33.102 in 

paragraph (a) by revising the second 

sentence to read as follows: 

33.102 General. 

(a) * * * (See 19.302 for protests of 

small business status, 19.305 for 

protests of disadvantaged business 

status, 19.306 for protests of HUBZone 

small business status, and 19.307 for 

protests of service-disabled veteranowned small business status. 

* * * * * 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

■ 19. Amend section 52.212–3 by 

revising the date of the provision and 

paragraphs (c)(10)(i) and (ii) to read as 

follows: 

52.212–3 Offeror Representations and 

Certifications—Commercial Items. 

* * * * * 

Offeror Representations and 

Certifications—Commercial Items (JAN 

2011) 

* * * * * 

(c) * * * 

(10) * * * 

(i) It b is, b is not a HUBZone small 

business concern listed, on the date of this 

representation, on the List of Qualified 

HUBZone Small Business Concerns 

maintained by the Small Business 

Administration, and no material changes in 

ownership and control, principal office, or 

HUBZone employee percentage have 

occurred since it was certified in accordance 

with 13 CFR Part 126; and 

(ii) It b is, b is not a HUBZone joint 

venture that complies with the requirements 

of 13 CFR Part 126, and the representation in 

paragraph (c)(10)(i) of this provision is 

accurate for each HUBZone small business 

concern participating in the HUBZone joint 

venture. [The offeror shall enter the names of 

each of the HUBZone small business 

concerns participating in the HUBZone joint 

venture: llll.] Each HUBZone small 

business concern participating in the 

HUBZone joint venture shall submit a 

separate signed copy of the HUBZone 

representation. 

* * * * * 

■ 20. Amend section 52.212–5 by— 

■ a. Revising the date of the clause and 

paragraph (b)(7); 

■ b. Removing from paragraph (b)(8) 

‘‘(July 2005)’’ and adding ‘‘(JAN 2011)’’ in 

its place; 

■ c. Removing from paragraph (b)(12) 

‘‘(May 2004)’’ and adding ‘‘(JAN 2011)’’ 

in its place; and 

■ d. Removing from paragraph (b)(13)(i) 

‘‘(Oct 2010)’’ and adding ‘‘(JAN 2011)’’ in 

its place. 

The revised text reads as follows: 

52.212–5 Contract Terms and Conditions 

Required to Implement Statutes or 

Executive Orders—Commercial Items. 

* * * * * 

Contract Terms and Conditions 

Required To Implement Statutes or 

Executive Orders—Commercial Items 

(JAN 2011) 

* * * * * 

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77732 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 

(b) * * * 

(7) 52.219–3, Notice of Total HUBZone SetAside or Sole-Source Award (JAN 2011) (15 

U.S.C. 657a). 

* * * * * 

■ 21. Amend section 52.213–4 by 

revising the date of the clause and 

paragraph (a)(2)(vii) to read as follows: 

52.213–4 Terms and Conditions— 

Simplified Acquisitions (Other Than 

Commercial Items). 

* * * * * 

Terms and Conditions—Simplified 

Acquisitions (Other Than Commercial 

Items) (JAN 2011) 

(a) * * * 

(2) * * * 

(vii) 52.244–6, Subcontracts for 

Commercial Items (JAN 2011). 

* * * * * 

■ 22. Amend section 52.219–1 by 

revising the date of the provision and 

paragraphs (b)(6)(i) and (ii) to read as 

follows: 

52.219–1 Small Business Program 

Representations. 

* * * * * 

Small Business Program 

Representations (JAN 2011) 

* * * * * 

(b) * * * 

(6) * * * 

(i) It b is, b is not a HUBZone small 

business concern listed, on the date of this 

representation, on the List of Qualified 

HUBZone Small Business Concerns 

maintained by the Small Business 

Administration, and no material changes in 

ownership and control, principal office, or 

HUBZone employee percentage have 

occurred since it was certified in accordance 

with 13 CFR Part 126; and 

(ii) It b is, b is not a HUBZone joint 

venture that complies with the requirements 

of 13 CFR Part 126, and the representation in 

paragraph (b)(6)(i) of this provision is 

accurate for each HUBZone small business 

concern participating in the HUBZone joint 

venture. [The offeror shall enter the names of 

each of the HUBZone small business 

concerns participating in the HUBZone joint 

venture: llll.] Each HUBZone small 

business concern participating in the 

HUBZone joint venture shall submit a 

separate signed copy of the HUBZone 

representation. 

* * * * * 

■ 23. Amend section 52.219–3 by— 

■ a. Revising the section heading, the 

introductory text, the date of the clause, 

and paragraph (a); 

■ b. Removing from paragraph (b)(1) 

‘‘concerns shall’’ and adding ‘‘concerns 

will’’ in its place; 

■ c. Revising paragraphs (c)(3), (c)(4), 

(d), and (e); and 

■ d. Adding paragraph (f) and Alternate 

I. 

The revised and added text reads as 

follows: 

52.219–3 Notice of Total HUBZone SetAside or Sole Source Award. 

As prescribed in 19.1309(a), insert the 

following clause: 

Notice of Total Hubzone Set-Aside or 

Sole Source Award (JAN 2011) 

(a) Definitions. See 13 CFR 125.6(e) for 

definitions of terms used in paragraph (c). 

* * * * * 

(c) * * * 

(3) General construction. (i) At least 15 

percent of the cost of contract performance to 

be incurred for personnel will be spent on 

the HUBZone prime contractor’s employees; 

(ii) At least 50 percent of the cost of the 

contract performance to be incurred for 

personnel will be spent on the HUBZone 

prime contractor’s employees or on a 

combination of the HUBZone prime 

contractor’s employees and employees of 

HUBZone small business concern 

subcontractors; and 

(iii) No more than 50 percent of the cost 

of contract performance to be incurred for 

personnel will be subcontracted to concerns 

that are not HUBZone small business 

concerns; or 

(4) Construction by special trade 

contractors. (i) At least 25 percent of the cost 

of contract performance to be incurred for 

personnel will be spent on the HUBZone 

prime contractor’s employees; 

(ii) At least 50 percent of the cost of the 

contract performance to be incurred for 

personnel will be spent on the HUBZone 

prime contractor’s employees or on a 

combination of the HUBZone prime 

contractor’s employees and employees of 

HUBZone small business concern 

subcontractors; 

(iii) No more than 50 percent of the cost 

of contract performance to be incurred for 

personnel will be subcontracted to concerns 

that are not HUBZone small business 

concerns. 

(d) A HUBZone joint venture agrees that, 

in the performance of the contract, the 

applicable percentage specified in paragraph 

(c) of this clause will be performed by the 

aggregate of the HUBZone small business 

participants. 

(e)(1) When the total value of the contract 

exceeds $25,000, a HUBZone small business 

concern nonmanufacturer agrees to furnish in 

performing this contract only end items 

manufactured or produced by HUBZone 

small business concern manufacturers. 

(2) When the total value of the contract is 

equal to or less than $25,000, a HUBZone 

small business concern nonmanufacturer 

may provide end items manufactured by 

other than a HUBZone small business 

concern manufacturer provided the end 

items are produced or manufactured in the 

United States. 

(3) Paragraphs (e)(1) and (e)(2) of this 

section do not apply in connection with 

construction or service contracts. 

(f) Notice. The HUBZone small business 

offeror acknowledges that a prospective 

HUBZone awardee must be a HUBZone small 

business concern at the time of award of this 

contract. The HUBZone offeror shall provide 

the Contracting Officer a copy of the notice 

required by 13 CFR 126.501 if material 

changes occur before contract award that 

could affect its HUBZone eligibility. If the 

apparently successful HUBZone offeror is not 

a HUBZone small business concern at the 

time of award of this contract, the 

Contracting Officer will proceed to award to 

the next otherwise successful HUBZone 

small business concern or other offeror. 

(End of clause) 

Alternate I (JAN 2011). As prescribed 

in 19.1309(a)(1), substitute the following 

paragraphs (c)(3) and (c)(4) for 

paragraphs (c)(3) and (c)(4) of the basic 

clause: 

(c)(3) General construction, at least 15 

percent of the cost of the contract 

performance to be incurred for personnel will 

be spent on the concern’s employees; or 

(c)(4) Construction by special trade 

contractors, at least 25 percent of the cost of 

the contract performance to be incurred for 

personnel will be spent on the concern’s 

employees. 

■ 24. Amend section 52.219–4 by— 

■ a. Revising the introductory 

paragraph, the date of the clause, and 

paragraph (a); 

■ b. Adding paragraph (b)(4); 

■ c. Removing from the second sentence 

of paragraph (c) introductory text 

‘‘paragraph (d)’’ and adding ‘‘paragraphs 

(d) and (e)’’ in its place; 

■ d. Revising paragraphs (d)(3), (d)(4), 

(e), and (f); and 

■ e. Adding paragraph (g) and Alternate 

I. 

The revised and added text reads as 

follows: 

52.219–4 Notice of Price Evaluation 

Preference for HUBZone Small Business 

Concerns. 

As prescribed in 19.1309(b), insert the 

following clause: 

Notice of Price Evaluation preference 

for HUBZone Small Business Concerns 

(JAN 2011) 

(a) Definitions. See 13 CFR 125.6(e) for 

definitions of terms used in paragraph (d). 

(b) * * * 

(4) When the two highest rated offerors are 

a HUBZone small business concern and a 

large business, and the evaluated offer of the 

HUBZone small business concern is equal to 

the evaluated offer of the large business after 

considering the price evaluation preference, 

award will be made to the HUBZone small 

business concern. 

* * * * * 

(d) * * * 

(3) General construction. (i) At least 15 

percent of the cost of contract performance to 

be incurred for personnel will be spent on 

the prime contractor’s employees; 

(ii) At least 50 percent of the cost of the 

contract performance to be incurred for 

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Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 77733 

personnel will be spent on the prime 

contractor’s employees or on a combination 

of the prime contractor’s employees and 

employees of HUBZone small business 

concern subcontractors; 

(iii) No more than 50 percent of the cost 

of contract performance to be incurred for 

personnel will be subcontracted to concerns 

that are not HUBZone small business 

concerns; or 

(4) Construction by special trade 

contractors. (i) At least 25 percent of the cost 

of contract performance to be incurred for 

personnel will be spent on the prime 

contractor’s employees; 

(ii) At least 50 percent of the cost of the 

contract performance to be incurred for 

personnel will be spent on the prime 

contractor’s employees or on a combination 

of the prime contractor’s employees and 

employees of HUBZone small business 

concern subcontractors; 

(iii) No more than 50 percent of the cost 

of contract performance to be incurred for 

personnel will be subcontracted to concerns 

that are not HUBZone small business 

concerns. 

(e) A HUBZone joint venture agrees that 

the aggregate of the HUBZone small business 

concerns to the joint venture, not each 

concern separately, will perform the 

applicable percentage of work requirements. 

(f)(1) When the total value of the contract 

exceeds $25,000, a HUBZone small business 

concern nonmanufacturer agrees to furnish in 

performing this contract only end items 

manufactured or produced by HUBZone 

small business concern manufacturers. 

(2) When the total value of the contract is 

equal to or less than $25,000, a HUBZone 

small business concern nonmanufacturer 

may provide end items manufactured by 

other than a HUBZone small business 

concern manufacturer provided the end 

items are produced or manufactured in the 

United States. 

(3) Paragraphs (f)(1) and (f)(2) of this 

section do not apply in connection with 

construction or service contracts. 

(g) Notice. The HUBZone small business 

offeror acknowledges that a prospective 

HUBZone awardee must be a HUBZone small 

business concern at the time of award of this 

contract. The HUBZone offeror shall provide 

the Contracting Officer a copy of the notice 

required by 13 CFR 126.501 if material 

changes occur before contract award that 

could affect its HUBZone eligibility. If the 

apparently successful HUBZone offeror is not 

a HUBZone small business concern at the 

time of award of this contract, the 

Contracting Officer will proceed to award to 

the next otherwise successful HUBZone 

small business concern or other offeror. 

(End of clause) 

Alternate I (JAN 2011). As prescribed 

in 19.1309(b)(1), substitute the 

following paragraphs (d)(3) and (d)(4) 

for paragraphs (d)(3) and (d)(4) of the 

basic clause: 

(3) General construction, at least 15 percent 

of the cost of the contract performance to be 

incurred for personnel will be spent on the 

concern’s employees; or 

(4) Construction by special trade 

contractors, at least 25 percent of the cost of 

the contract performance to be incurred for 

personnel will be spent on the concern’s 

employees. 

■ 25. Amend section 52.219–8 by 

revising the date of the clause; and 

paragraph (d) to read as follows: 

52.219–8 Utilization of small business 

concerns. 

* * * * * 

Utilization of Small Business Concerns 

(JAN 2011) 

* * * * * 

(d)(1) Contractors acting in good faith may 

rely on written representations by their 

subcontractors regarding their status as a 

small business concern, a veteran-owned 

small business concern, a service-disabled 

veteran-owned small business concern, a 

small disadvantaged business concern, or a 

women-owned small business concern. 

(2) The Contractor shall confirm that a 

subcontractor representing itself as a 

HUBZone small business concern is certified 

by SBA as a HUBZone small business 

concern by accessing the Central Contractor 

Registration (CCR) database or by contacting 

the SBA. Options for contacting the SBA 

include— 

(i) HUBZone small business database 

search application Web page at http:// 

dsbs.sba.gov/dsbs/search/ 

dsp_searchhubzone.cfm; or http:// 

www.sba.gov/hubzone; 

(ii) In writing to the Director/HUB, U.S. 

Small Business Administration, 409 3rd 

Street, SW., Washington DC 20416; or 

(iii) The SBA HUBZone Help Desk at 

hubzone@sba.gov. 

■ 26. Amend section 52.219–9 by 

revising the date of the clause and 

adding paragraph (e)(6) to read as 

follows: 

52.219–9 Small business subcontracting 

plan. 

* * * * * 

Small Business Subcontracting Plan 

(JAN 2011) 

* * * * * 

(e) * * * 

(6) For all competitive subcontracts over 

the simplified acquisition threshold in which 

a small business concern received a small 

business preference, upon determination of 

the successful subcontract offeror, the 

Contractor must inform each unsuccessful 

small business subcontract offeror in writing 

of the name and location of the apparent 

successful offeror prior to award of the 

contract. 

* * * * * 

[FR Doc. 2010–30560 Filed 12–10–10; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 2, 4, 8, 9, 17, 18, 35, and 

41 

[FAC 2005–47; FAR Case 2008–032; Item 

III; Docket 2010–0107, Sequence 1] 

RIN 9000–AL69 

Federal Acquisition Regulation; 

Preventing Abuse of Interagency 

Contracts 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council 

(Councils) are issuing an interim rule 

amending the Federal Acquisition 

Regulation (FAR) to implement 

provisions regarding, the Duncan 

Hunter National Defense Authorization 

Act (NDAA) for Fiscal Year 2009 

requirements for preventing abuse of 

interagency contracts. 

DATES: Effective Date: December 13, 

2010. 

Comment Date: Interested parties 

should submit written comments to the 

Regulatory Secretariat on or before 

February 11, 2011 to be considered in 

the formulation of a final rule. 

ADDRESSES: Submit comments 

identified by FAC 2005–47, FAR Case 

2008–032, by any of the following 

methods: 

• Regulations.gov: http:// 

www.regulations.gov. Submit comments 

via the Federal eRulemaking portal by 

inputting ‘‘FAR Case 2008–032’’ under 

the heading ‘‘Enter Keyword or ID’’ and 

selecting ‘‘Search.’’ Select the link 

‘‘Submit a Comment’’ that corresponds 

with ‘‘FAR Case 2008–032.’’ Follow the 

instructions provided at the ‘‘Submit a 

Comment’’ screen. Please include your 

name, company name (if any), and ‘‘FAR 

Case 2008–032’’ on your attached 

document. 

• Mail: General Services 

Administration, Regulatory Secretariat 

(MVCB), ATTN: Hada Flowers, 1275 

First Street, NE., Washington, DC 20417. 

Instructions: Please submit comments 

only and cite FAC 2005–47, FAR Case 

2008–032, in all correspondence related 

to this case. All comments received will 

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