[Federal Register Volume 72, Number 80 (Thursday, April 26, 2007)]
[Rules and Regulations]
[Pages 20761-20763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-7906]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 219 and 252

RIN 0750-AE93


Defense Federal Acquisition Regulation Supplement; Small Business 
Programs (DFARS Case 2003-D047)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending Defense Federal 
Acquisition Regulation Supplement (DFARS) text pertaining to small 
business programs. The rule updates and clarifies policy for 
contracting with small business and small disadvantaged business 
concerns and relocates text to the DFARS companion resource, 
Procedures, Guidance, and Information.

EFFECTIVE DATE: April 26, 2007.

FOR FURTHER INFORMATION CONTACT: Ms. Deborah Tronic, Defense 
Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 
Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289; 
facsimile (703) 602-0350. Please cite DFARS Case 2003-D047.

SUPPLEMENTARY INFORMATION: 

A. Background

    This final rule amends DFARS Part 219 and corresponding contract 
clauses. The DFARS changes--
    <bullet> Update and clarify requirements for contracting with small 
business and small disadvantaged business concerns; and
    <bullet> Delete text containing procedures for referring matters to 
the Small Business Administration; procedures for processing contract 
awards under the 8(a) Program; and information on the DoD test program 
for negotiation of comprehensive small business subcontracting plans. 
Text on these subjects has been relocated to the DFARS companion 
resource, Procedures, Guidance, and Information (PGI), available at 
http://www.acq.osd.mil/dpap/dars/pgi.
    DoD published a proposed rule at 71 FR 9303 on February 23, 2006. 
Three respondents submitted comments on the proposed rule. A discussion 
of the comments is provided below.
    1. Comment: One respondent stated that the proposed changes to 
subcontracting plan requirements at DFARS 219.704(2) and 252.219-
7003(g) would create an ambiguity. These changes proposed to amend text 
requiring contractors to notify the administrative contracting officer 
(ACO) of any substitutions of ``firms that are not small, small 
disadvantaged, or women-owned small businesses for the firms listed in 
the subcontracting plan,'' to instead indicate that the contractor must 
notify the ACO of any substitutions of small businesses specifically 
identified in the subcontracting plan. The respondent stated that ACOs 
and contractors could interpret this change to mean that contractors 
would be required to provide notification when substituting any firm, 
even one that is a small business concern, for one that is listed in 
the subcontracting plan. The respondent recommended that the rule 
instead require contractors to notify the ACO of any substitutions of 
``firms that are not small business concerns'' for the firms listed in 
the subcontracting plan.
    DoD Response: DoD agrees that the language in the proposed rule 
could be ambiguous. Therefore, the final rule has been written to 
clarify the existing policy, i.e., that the contractor must notify the 
ACO of any substitutions of firms that are not small business firms, 
for the small business firms specifically identified in the 
subcontracting plan.
    2. Comment: One respondent recommended deleting the proposed text 
at 219.704(3), which contains a reference to the procedures in DFARS 
215.304 regarding evaluation of offers that require a subcontracting 
plan. The respondent recommended that the proposed 219.704(3) be 
replaced with text stating that offerors with approved commercial or 
comprehensive subcontracting plans are not required to submit contract-
specific goals, and that those offerors will be evaluated based on 
Standard Form 295 information and Defense Contract Management Agency 
evaluations of company-wide performance under their small business 
programs. In addition, the respondent recommended that 219.704 state 
that contracting officers may accept commercial subcontracting plans 
for both commercial item and noncommercial item contracts, provided the 
plan covers the entire production of both commercial and noncommercial 
items as set forth at FAR 52.219-9(g).
    DoD Response: The issues addressed in this comment go beyond the 
scope of the changes being made under this DFARS case. DoD recognizes 
the importance of the issues raised by the respondent and is currently 
working independently of this case to resolve those issues. Any 
proposed changes to the DFARS that might result would be published 
under a separate case for public comment.
    3. Comment: One respondent stated that deleting DFARS text and 
putting it in PGI requires contracting officers to research multiple 
locations to ensure they are complying with all the necessary 
requirements. The respondent stated that deleting requirements would be 
streamlining, not moving them to another area which may cause 
uncertainty and ambiguity.
    DoD Response: DoD has moved non-regulatory requirements and 
guidance that do not significantly impact the public, from DFARS to PGI 
to facilitate rapid dissemination of any future changes, thus 
streamlining the process. Where there is related text in PGI, a link to 
this text is imbedded in DFARS. Through these links, the user is able 
to view the related PGI text side-by-side with the DFARS text. PGI also 
contains information on training, deviations, policy memoranda, and 
other information (e.g., guidebooks) that is not available in the 
DFARS.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD certifies that this final rule will not 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 the rule makes no significant change to DoD policy for 
contracting with small business and small disadvantaged business 
concerns.

C. Paperwork Reduction Act

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

List of Subjects in 48 CFR Parts 219 and 252

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

0
Therefore, 48 CFR parts 219 and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 219 and 252 continues to 
read as follows:


[[Page 20762]]


    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 219--SMALL BUSINESS PROGRAMS

0
2. Section 219.000 is revised to read as follows:


219.000  Scope of part.

    This part also implements 10 U.S.C. 2323, which--
    (1) Is applicable to DoD through fiscal year 2009; and
    (2) Establishes goals for awards to small disadvantaged business 
(SDB) concerns, historically black colleges and universities (HBCUs), 
and minority institutions (MIs). See 226.370 for policy on contracting 
with HBCU/MIs.


219.202-1  [Removed]

0
3. Section 219.202-1 is removed.

0
4. The heading of Subpart 219.6 is revised to read as follows:

Subpart 219.6--Certificates of Competency and Determinations of 
Responsibility

0
5. Section 219.602 is revised to read as follows:


219.602  Procedures.

    When making a nonresponsibility determination for a small business 
concern, follow the procedures at PGI 219.602.


219.602-1 and 219.602-3  [Removed]

0
6. Sections 219.602-1 and 219.602-3 are removed.

0
7. Section 219.702 is revised to read as follows:


219.702  Statutory requirements.

    (1) Section 834 of Public Law 101-189, as amended (15 U.S.C. 637 
note), requires DoD to establish a test program to determine whether 
comprehensive subcontracting plans on a corporate, division, or plant-
wide basis will reduce administrative burdens while enhancing 
subcontracting opportunities for small and small disadvantaged business 
concerns. See PGI 219.702 for the requirements of the test program.
    (2) Comprehensive subcontracting plans shall not be subject to 
application of liquidated damages during the period of the test program 
(Section 402, Pub. L. 101-574).


219.703  [Amended]

0
8. Section 219.703 is amended in paragraph (a)(2)(B) by removing 
``Small, Small Disadvantaged and Women-Owned''.

0
9. Section 219.704 is revised to read as follows:


219.704  Subcontracting plan requirements.

    (1) The goal for use of small disadvantaged business concerns shall 
include subcontracts with historically black colleges and universities 
and minority institutions (see Subpart 226.70), in addition to 
subcontracts with small disadvantaged business concerns. Subcontracts 
with historically black colleges and universities and minority 
institutions do not have to be included in the small disadvantaged 
business goal in commercial items subcontracting plans.
    (2) In those subcontracting plans which specifically identify small 
businesses, prime contractors shall notify the administrative 
contracting officer of any substitutions of firms that are not small 
business firms, for the small business firms specifically identified in 
the subcontracting plan. Notifications shall be in writing and shall 
occur within a reasonable period of time after award of the 
subcontract. Contractor-specified formats shall be acceptable.
    (3) See 215.304 for evaluation of offers in acquisitions that 
require a subcontracting plan.


219.705-2  [Removed]

0
10. Section 219.705-2 is removed.

0
11. Section 219.708 is amended by revising the section heading and 
paragraph (b)(1) to read as follows:


219.708  Contract clauses.

    (b)(1)(A) Use the clause at 252.219-7003, Small Business 
Subcontracting Plan (DoD Contracts), in solicitations and contracts 
that contain the clause at FAR 52.219-9, Small Business Subcontracting 
Plan.
    (B) In contracts with contractors that have comprehensive 
subcontracting plans approved under the test program described in 
219.702, use the clause at 252.219-7004, Small Business Subcontracting 
Plan (Test Program), instead of the clauses at 252.219-7003, Small 
Business Subcontracting Plan (DoD Contracts), and FAR 52.219-9, Small 
Business Subcontracting Plan.
* * * * *

0
12. Section 219.800 is amended by revising paragraph (a) to read as 
follows:


219.800  General.

    (a) By Partnership Agreement (PA) between the Small Business 
Administration (SBA) and the Department of Defense (DoD), the SBA has 
delegated to the Under Secretary of Defense (Acquisition, Technology, 
and Logistics) its authority under paragraph 8(a)(1)(A) of the Small 
Business Act (15 U.S.C. 637(a)) to enter into 8(a) prime contracts, and 
its authority under 8(a)(1)(B) of the Small Business Act to award the 
performance of those contracts to eligible 8(a) Program participants. 
However, the SBA remains the prime contractor on all 8(a) contracts, 
continues to determine eligibility of concerns for contract award, and 
retains appeal rights under FAR 19.810. The SBA delegates only the 
authority to sign contracts on its behalf. Consistent with the 
provisions of the PA, this authority is hereby redelegated to DoD 
contracting officers. A copy of the PA, which includes the PA's 
expiration date, is available at PGI 219.800.
* * * * *

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13. Section 219.803 is revised to read as follows:


219.803  Selecting acquisitions for the 8(a) Program.

    When selecting acquisitions for the 8(a) Program, follow the 
procedures at PGI 219.803.

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14. Section 219.804 is revised to read as follows:


219.804  Evaluation, offering, and acceptance.

    When processing requirements under the PA, follow the procedures at 
PGI 219.804.


219.804-2 and 219.804-3  [Removed]

0
15. Sections 219.804-2 and 219.804-3 are removed.

0
16. Section 219.805-2 is revised to read as follows:


219.805-2  Procedures.

    When processing requirements under the PA, follow the procedures at 
PGI 219.805-2 for requesting eligibility determinations.

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17. Sections 219.808-1 and 219.811 are revised to read as follows:


219.808-1  Sole source.

    For sole source requirements processed under the PA, follow the 
procedures at PGI 219.808-1.


219.811  Preparing the contracts.

    When preparing awards under the PA, follow the procedures at PGI 
219.811.


219.811-1 and 219.811-2  [Removed]

0
18. Sections 219.811-1 and 219.811-2 are removed.

0
19. Section 219.811-3 is amended by revising paragraph (3) to read as 
follows:


219.811-3  Contract clauses.

* * * * *
    (3) Use the clause at 252.219-7011, Notification to Delay 
Performance, in

[[Page 20763]]

solicitations and purchase orders issued under the PA cited in 219.800.


219.812  [Removed]

0
20. Section 219.812 is removed.

0
21. Section 219.1101 is added to read as follows:


219.1101  General.

    The determination to use or suspend the price evaluation adjustment 
for DoD acquisitions can be found at http://www.acq.osd.mil/dpap/dars/classdev/index.htm.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
22. Section 252.212-7001 is amended by revising the clause date and 
paragraphs (b)(2) and (3) to read as follows:


252.212-7001  Contract terms and conditions required to implement 
Statutes or Executive orders applicable to Defense acquisitions of 
commercial items.

* * * * *

CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR 
EXECUTIVE ORDERS APPLICABLE TO DEFENSE ACQUISITIONS OF COMMERCIAL ITEMS 
(APR 2007)

* * * * *
    (b) * * *
    (2) ---- 252.219-7003, Small Business Subcontracting Plan (DoD 
Contracts) (APR 2007) (15 U.S.C. 637).
    (3) ---- 252.219-7004, Small Business Subcontracting Plan (Test 
Program) (APR 2007) (15 U.S.C. 637 note).
* * * * *

0
23. Section 252.219-7003 is amended by revising the section heading, 
the clause title and date, the introductory text preceding paragraph 
(a), and paragraph (g) to read as follows:


252.219-7003  Small business subcontracting plan (DoD contracts).

* * * * *

SMALL BUSINESS SUBCONTRACTING PLAN (DOD CONTRACTS) (APR 2007)

    This clause supplements the Federal Acquisition Regulation 
52.219-9, Small Business Subcontracting Plan, clause of this 
contract.
* * * * *
    (g) In those subcontracting plans which specifically identify 
small businesses, the Contractor shall notify the Administrative 
Contracting Officer of any substitutions of firms that are not small 
business firms, for the small business firms specifically identified 
in the subcontracting plan. Notifications shall be in writing and 
shall occur within a reasonable period of time after award of the 
subcontract. Contractor-specified formats shall be acceptable.


0
24. Section 252.219-7004 is amended by revising the section heading, 
the clause title and date, and paragraph (d) to read as follows:


252.219-7004  Small business subcontracting plan (test program).

* * * * *

SMALL BUSINESS SUBCONTRACTING PLAN (TEST PROGRAM) (APR 2007)

* * * * *
    (d) The failure of the Contractor or subcontractor to comply in 
good faith with (1) the clause of this contract entitled 
``Utilization of Small Business Concerns,'' or (2) an approved plan 
required by this clause, shall be a material breach of the contract.

[FR Doc. E7-7906 Filed 4-25-07; 8:45 am]
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