[Federal Register Volume 75, Number 238 (Monday, December 13, 2010)]
[Rules and Regulations]
[Pages 77727-77733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30560]



[[Page 77727]]

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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.

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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

[[Page 77728]]

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 Veteran-Owned 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

[[Page 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.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 19, 33, and 52 as 
set forth below:
0
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

0
2. Amend section 2.101 in paragraph (b)(2) in the definitions by--
0
a. Revising the definition of ``HUBZone'';
0
b. Adding in alphabetical order the definition of ``HUBZone contract''; 
and
0
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

0
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;
* * * * *

0
4. Amend section 19.101 in the definition ``Affiliates'', in paragraph 
(7) by--
0
a. Redesignating paragraphs (7)(ii) through (7)(v) as paragraphs 
(7)(iii) through (7)(vi);
0
b. Adding a new paragraph (7)(ii); and
0
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. * * *
* * * * *

0
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).
* * * * *

0
6. Amend section 19.306 by--
0
a. Redesignating paragraphs (a) through (k) as paragraphs (b) through 
(l);
0
b. Adding new paragraph (a);
0
c. Revising the newly redesignated paragraph (b);
0
d. Removing from end of newly redesignated paragraph (d) ``(AA/HUB)'' 
and adding ``(Director/HUB)'' in its place;
0
e. Revising the newly redesignated paragraphs (e) and (f);
0
f. Redesignating newly redesignated paragraphs (g) through (l) as (h) 
through (m);
0
g. Adding a new paragraph (g);
0
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;
0
i. Removing from the newly redesignated paragraph (j) ``ADA/GC&8(a)BD'' 
and adding ``AA/GC&BD'' in its place (twice).
0
j. Removing from the newly redesignated paragraph (k) ``AA/HUB'' and 
adding ``Director/HUB'' in its place;
0
k. Removing from the newly redesignated paragraph (l) ``AA/HUB's'' and 
adding ``Director/HUB's'' in its place; and
0
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.
* * * * *

[[Page 77730]]

    (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.
* * * * *

0
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]

0
8. Amend section 19.800 in paragraph (e) by removing the last sentence.


19.803  [Amended]

0
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]

0
10. Amend section 19.804-3 in paragraph (a) by removing from the last 
sentence ``(AA)/8(a)/BD''.


19.805-1  [Amended]

0
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).

0
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.
* * * * *

0
13. Amend section 19.1303 by--
0
a. Revising the section heading;
0
b. Removing from paragraph (a) ``qualified'';
0
c. Revising paragraphs (b), (c), and (d); and
0
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 <a href="/cdn-cgi/l/email-protection#741c01160e1b1a11340716155a131b02"><span class="__cf_email__" data-cfemail="9ff7eafde5f0f1fadfecfdfeb1f8f0e9">[email protected]</span></a>.
    (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.

0
14. Amend section 19.1305 by--
0
a. Removing from paragraph (a) ``A participating agency contracting'' 
and adding ``The contracting'' in its place;
0
b. Removing from paragraph (c) ``A participating agency'' and adding 
``A contracting officer'' in its place; and
0
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

[[Page 77731]]

business days of receiving the appeal. The decision of the head of the 
agency shall be final.

0
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;
* * * * *

0
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]

0
17a. Redesignate section 19.1308 as section 19.1309

0
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.

0
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

0
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 veteran-owned small business status.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
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 [squ] is, [squ] 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 [squ] is, [squ] is not a HUBZone joint venture that 
complies with the requirements of 13 CFR Part 126, and the 
representation in paragraph (c)(10)(i) of this provision is accurate 
for each HUBZone small business concern participating in the HUBZone 
joint venture. [The offeror shall enter the names of each of the 
HUBZone small business concerns participating in the HUBZone joint 
venture: --------.] Each HUBZone small business concern 
participating in the HUBZone joint venture shall submit a separate 
signed copy of the HUBZone representation.
* * * * *

0
20. Amend section 52.212-5 by--
0
a. Revising the date of the clause and paragraph (b)(7);
0
b. Removing from paragraph (b)(8) ``(July 2005)'' and adding ``(JAN 
2011)'' in its place;
0
c. Removing from paragraph (b)(12) ``(May 2004)'' and adding ``(JAN 
2011)'' in its place; and
0
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)

* * * * *

[[Page 77732]]

    (b) * * *
    (7) 52.219-3, Notice of Total HUBZone Set-Aside or Sole-Source 
Award (JAN 2011) (15 U.S.C. 657a).
* * * * *

0
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).
* * * * *

0
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 [squ] is, [squ] 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 [squ] is, [squ] is not a HUBZone joint venture that 
complies with the requirements of 13 CFR Part 126, and the 
representation in paragraph (b)(6)(i) of this provision is accurate 
for each HUBZone small business concern participating in the HUBZone 
joint venture. [The offeror shall enter the names of each of the 
HUBZone small business concerns participating in the HUBZone joint 
venture: --------.] Each HUBZone small business concern 
participating in the HUBZone joint venture shall submit a separate 
signed copy of the HUBZone representation.
* * * * *

0
23. Amend section 52.219-3 by--
0
a. Revising the section heading, the introductory text, the date of the 
clause, and paragraph (a);
0
b. Removing from paragraph (b)(1) ``concerns shall'' and adding 
``concerns will'' in its place;
0
c. Revising paragraphs (c)(3), (c)(4), (d), and (e); and
0
d. Adding paragraph (f) and Alternate I.
    The revised and added text reads as follows:


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

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

Notice of Total Hubzone Set-Aside or Sole Source Award (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.


0
24. Amend section 52.219-4 by--
0
a. Revising the introductory paragraph, the date of the clause, and 
paragraph (a);
0
b. Adding paragraph (b)(4);
0
c. Removing from the second sentence of paragraph (c) introductory text 
``paragraph (d)'' and adding ``paragraphs (d) and (e)'' in its place;
0
d. Revising paragraphs (d)(3), (d)(4), (e), and (f); and
0
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

[[Page 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.


0
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 <a href="/cdn-cgi/l/email-protection#d1b9a4b3abbebfb491a2b3b0ffb6bea7"><span class="__cf_email__" data-cfemail="b1d9c4d3cbdedfd4f1c2d3d09fd6dec7">[email protected]</span></a>.


0
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


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