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###### Department of Defense

###### General Services Administration

###### National Aeronautics and Space Administration

          - 48 CFR Parts 6, 12, 26, and 52
          - [FAC 2005-12; FAR Case 2006-014; Docket 2006-0020, Sequence 8]
          - RIN 9000-AK54

# 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) have agreed on an interim rule amending the Federal Acquisition Regulation (FAR) to implement the Local Community Recovery Act of 2006.  The Local Community Recovery Act of 2006 amended the Robert T. Stafford Disaster Relief and Emergency Assistance Act to authorize set-asides for major disaster or emergency assistance acquisitions to businesses that reside or primarily do business in the geographic area affected by the disaster or emergency.

# DATES:

*Effective Date:*                             August 4, 2006.                        

*Comment Date:*                         Interested parties should submit written comments to the FAR Secretariat on or before October 3, 2006 to be considered in the formulation of a final rule.                    

# ADDRESSES:

Submit comments identified by FAC 2005-12, FAR case 2006-014, by any of the following methods:
      - Federal eRulemaking Portal: http://www.regulations.gov/​far .  Follow the instructions for submitting comments.                    
      - Agency Web Site: http://www.acquisition.gov/​comp/​far/​ProposedRules/​comments.htm .  Click on the FAR case number to submit comments.                    
      - E-mail: farcase.2006-014@gsa.gov .  Include FAC 2005-12, FAR case 2006-014 in the subject line of the message.                    
      - Fax: 202-501-4067.
      - Mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405.

*Instructions:*                         Please submit comments only and cite FAC 2005-12, FAR case 2006-014, in all correspondence related to this case.  All comments received will be posted without change to                         *http://www.acquisition.gov/​comp/​far/​      ( print page 44547)    ProposedRules/​comments.htm*, including any personal and/or business confidential information provided.                    

# FOR FURTHER INFORMATION CONTACT:

For clarification of content, contact Ms. Rhonda Cundiff, Procurement Analyst, at (202) 501-0044.  Please cite FAC 2005-12, FAR case 2006-014.  For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.

# SUPPLEMENTARY INFORMATION:

## A.  Background

This interim rule implements the Local Community Recovery Act of 2006 (Pub. L. 109-218).  The Local Community Recovery Act of 2006 amended the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5150) to authorize set-asides for debris clearance, distribution of supplies, reconstruction, and other major disaster or emergency assistance acquisitions to businesses that reside or primarily do business in the geographic area affected by the disaster or emergency.  The set-aside may be used together with other authorized set-asides, for example, those in FAR Part 19 for small businesses.

                        The contracting officer determines the geographic area for a specific local area set-aside.  The local area set-aside may be the whole of, or some subpart of, the affected area (                        *e.g.*, one or more counties, including across state lines).  However, it may not be outside of the declared disaster/emergency area.                    

                        This rule also imposes subcontracting restrictions when a local area set-aside is used.  To promote local recovery efforts, the rule requires certain percentages of the contract to be expended for employees of the contractor or employees of other local area businesses.  If the contract includes other subcontracting restrictions (                        *e.g.*, FAR 52.219-3, 52.219-14, 52.219-27, 52.226-5, or 52.236-1), the contractor must meet all the subcontracting restrictions in the contract.                     

In addition, the rule establishes a new FAR Subpart 6.6 to clarify the competition justification requirements for Stafford Act acquisitions.  The coverage on the Stafford Act previously located at FAR 6.302-5 has been moved to the new subpart. 

The Councils would like to hear the views of interested parties on the sufficiency of these provisions.  In particular, the Councils are interested in input on whether the “Restrictions on Subcontracting Outside Disaster or Emergency Area” and the “Disaster or Emergency Area Representation” should apply to preferences other than local area set-asides; and whether the percentages for general or specialty construction should be raised. The Councils are also interested in input regarding the placement of various Stafford-Act-related coverage in the FAR:  that is, comments addressing the optimal combination of regulatory treatment in FAR Subparts such as 6.2, 6.3, 6.6, and 26.2. 

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 interim rule is not expected to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601,                         *et seq.*, because it authorizes a set-aside for local businesses in an area affected by a major disaster or emergency to promote economic recovery.  The set-aside does not replace the small business set-aside.  Both set-asides can apply to the acquisition.  The local set-aside will encourage use of local small businesses.  Therefore, an Initial Regulatory Flexibility Analysis has not been performed.  The Councils will consider comments from small entities concerning the affected FAR Parts 6, 12, 26, and 52 in accordance with 5 U.S.C. 610.  Interested parties must submit such comments separately and should cite 5 U.S.C 601,                         *et seq.*                         (FAC 2005-12, FAR case 2006-014), in correspondence.                    

## C.  Paperwork Reduction Act

                        The Paperwork Reduction Act does not apply because the changes to the FAR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501,                         *et seq.*

## D.  Determination to Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense (DoD), the Administrator of General Services (GSA), and the Administrator of the National Aeronautics and Space Administration (NASA) that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comment.  This action is necessary because this interim rule implements the Local Community Recovery Act of 2006 (Pub. L. 109-218).  The Local Community Recovery Act of 2006 amended the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5150) to authorize set-asides for major disaster or emergency assistance acquisitions to businesses that reside or primarily do business in the geographic area affected by the disaster or emergency.  This action is necessary to improve the Government's ability to target local businesses and promote local economic recovery in an affected area.  The statute went into effect April 20, 2006.  However, pursuant to Public Law 98-577 and FAR 1.501, the Councils will consider public comments received in response to this interim rule in the formation of the final rule.

# List of Subjects in 48 CFR Parts 6, 12, 26, and 52

      - Government procurement

Dated: July 28, 2006.

Ralph De Stefano,

Director, Contract Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 6, 12, 26, and 52 as set forth below:

1.  The authority citation for 48 CFR parts 6, 12, 26, 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 6—COMPETITION REQUIREMENTS

6.302-5

2.  Amend § 6.302-5 by removing paragraph (b)(5) and redesignating paragraphs (b)(6) and (b)(7) as (b)(5) and (b)(6), respectively. 

3.  Add Subpart 6.6 to read as follows: 

# Subpart 6.6—Stafford Act Preference for Local Area Contractor

      - 6.601
      -  Scope of subpart.
      - 6.602
      -  Set-asides for local firms during a major disaster or emergency. 
      - 6.603
      -  Use of procedures other than set-aside.

6.601

This subpart prescribes competition policies and procedures for procurements under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5150).

6.602

                                (a)  To fulfill the statutory requirements relating to Pub. L. 109-218, part of the Stafford Act, contracting officers may set-aside solicitations to allow only offerors residing or doing business primarily in the area affected by such major disaster or emergency to compete (see Subpart 26.2).                                       ( print page 44548)    

(b) No separate justification or determination and findings are required under this part to set-aside a contract action.  The set-aside shall be based on a specific geographic area, within a Presidential declaration(s) of disaster or emergency.

6.603

When implementing the Stafford Act preference by using procedures other than a set-aside under section 6.602, the requirements for a justification to support the use of this authority are in 6.303.  These procurements qualify as other than full and open competition.

# PART 12—ACQUISITION OF COMMERCIAL ITEMS

4.  Amend § 12.301 by adding paragraph (e)(4) to read as follows: 

12.301

(e)  *  *  *

(4)  When setting aside under the Stafford Act (Subpart 26.2), include the representation at 52.226-3, the notice at 52.226-4, and the clause at 52.226-5 in the solicitation.  This representation is not in the Online Representations and Certifications Application (ORCA) Database.

# PART 26—OTHER SOCIOECONOMIC PROGRAMS

5.  Amend § 26.200 by removing “6.302-5” and adding “Subpart 6.6” in its place. 

6.  Add §§ 26.202 and 26.203 to read as follows: 

26.202

                                (a)                                 *Local area set-aside.*                                 The contracting officer may set-aside solicitations to allow only offerors residing or doing business primarily in the area affected by such major disaster or emergency to compete (see 6.602).                            

(1)  The contracting officer, in consultation with the requirements office, shall define the specific geographic area for the local set-aside.

(2)  A major disaster may result in numerous Presidential declarations spanning counties in several contiguous States.  The designated area need not include all the counties in the declared disaster/emergency area(s), but cannot go outside it.

(3) The contracting officer shall also consider whether a local area set-aside should be further restricted to small business concerns in the designated area (see Part 19).

                                (b)                                 *Other appropriate procedures.*                                 The contracting officer may use other appropriate procedures to give preference to those organizations, firms, or individuals residing or doing business primarily in the area affected by the major disaster or emergency to the extent feasible and practicable.  For example, the contracting officer may implement the preference by using an evaluation factor.  (See 6.603).                             

26.203

(a)  The contracting officer shall insert the provision at 52.226-3, Disaster or Emergency Area Representation, for acquisitions using the local area set-aside.  For commercial items see 12.301(e)(4).

(b) The contracting officer shall insert the provision 52.226-4, Notice of Disaster or Emergency Area Set-aside in solicitations and contracts for acquisitions that are set-aside for a Disaster or Emergency Area under 26.203(a). 

(c)  The contracting officer shall insert clause 52.226-5, Restrictions on Subcontracting Outside Disaster or Emergency Area, in all solicitations and contracts that contain the provision at 52.226-3.

# PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

7.  Amend § 52.212-5 by revising the date of the clause and paragraphs (b)(27) and (b)(28) to read as follows: 

52.212-5

CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS—COMMERCIAL ITEMS (AUG 2006)

(b)  *  *  *

__ (27)  52.226-4, Notice of Disaster or Emergency Area Set-Aside (42 U.S.C. 5150).

__ (28)  52.226-5, Restrictions on Subcontracting Outside Disaster or Emergency Area (42 U.S.C. 5150).

8.  Add §§ 52.226-3, 52.226-4, and 52.226-5 to read as follows: 

52.226-3

As prescribed in 26.203(a), insert the following provision:

DISASTER OR EMERGENCY AREA REPRESENTATION (AUG 2006)

                                (a)                                 *Set-aside area.*                                 The area covered in this contract is: __________ [                                *Contracting Officer to fill in with definite geographic boundaries.*]                            

                                (b)                                 *Representations.*                                 The offeror represents as part of its offer that it □ is, □  is not a firm residing or primarily doing business in the designated area.                            

(c)  Factors to be considered in determining whether a firm resides or primarily does business in the designated area include—

(1)  Location(s) of the firm's permanent office(s) and date any office in the designated area(s) was established;

(2)  Existing state licenses;

                                (3)  Record of past work in the designated area(s) (                                *e.g.*, how much and for how long);                            

(4)  Contractual history the firm has had with subcontractors and/or suppliers in the designated area;

(5)  Percentage of the firm's gross revenues attributable to work performed in the designated area;

(6)  Number of permanent employees the firm employs in the designated area;

(7)  Membership in local and state organizations in the designated area; and 

(8)  Other evidence that establishes the firm resides or primarily does business in the designated area.

(d)  If the offeror represents it is a firm residing or primarily doing business in the designated area, the offeror shall furnish documentation to support its representation if requested by the Contracting Officer.  The solicitation may require the offeror to submit with its offer documentation to support the representation.

(End of provision)

52.226-4

As prescribed in 26.203(b), insert the following provision:

NOTICE OF DISASTER OR EMERGENCY AREA SET-ASIDE (AUG 2006)

                                (a)                                 *Set-aside area.*                                 Offers are solicited only from businesses residing or primarily doing business in __________ [                                *Contracting Officer to fill in with definite geographic boundaries.*]  Offers received from other businesses shall not be considered.                             

(b)  This set-aside is in addition to any small business set-aside contained in this contract.

(End of provision)

52.226-5

As prescribed in 26.203(c), insert the following clause:

RESTRICTIONS ON SUBCONTRACTING OUTSIDE DISASTER OR EMERGENCY AREA (AUG 2006)

                                The Contractor agrees that in performance of the contract in the case of a contract for—                                      ( print page 44549)    

                                (a)                                 *Services (except construction).*                                 At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the Contractor or employees of other businesses residing or primarily doing business in the area designated in FAR 52.226-4;                            

                                (b)                                 *Supplies (other than procurement from a nonmanufacturer of such supplies).*                                 The Contractor or employees of other businesses residing or primarily doing business in the designated area shall perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials;                             

                                (c)                                 *General construction.*                                 The Contractor will perform at least 15 percent of the cost of the contract, not including the cost of materials, with its own employees or employees of other businesses residing or primarily doing business in the designated area; or                            

                                (d)                                 *Construction by special trade Contractors*.  The Contractor will perform at least 25 percent of the cost of the contract, not including the cost of materials, with its own employees or employees of other businesses residing or primarily doing business in the designated area.                             

(End of clause)

[FR Doc. 06-6672 Filed 8-3-06; 8:45 am]

BILLING CODE 6820-EP-S