Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Rules and Regulations 44819

terms of the applicable schedule

contract.

* * * * *

PART 51—USE OF GOVERNMENT

SOURCES BY CONTRACTORS

51.103 [Amended]

6. Section 51.103 is amended by

removing paragraph (c) and

redesignating paragraph (d) as (c).

[FR Doc. 97–21493 Filed 8–21–97; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 9 and 19

[FAC 97–01; FAR Case 96–002; Item IX]

RIN 9000–AH66

Federal Acquisition Regulation;

Certificate of Competency

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 have

agreed on an interim rule amending the

Federal Acquisition Regulation (FAR) to

implement revisions made to the Small

Business Administration’s regulations

covering the procurement assistance

programs. This regulatory action was

not subject to Office of Management and

Budget review under Executive Order

12866, dated September 30, 1993, and is

not a major rule under 5 U.S.C. 804.

DATES: Effective date: August 22, 1997

Comment Date: Comments should be

submitted to the FAR Secretariat at the

address shown below on or before

October 21, 1997 to be considered in the

formulation of a final rule.

ADDRESSES: Interested parties should

submit written comments to: General

Services Administration, FAR

Secretariat (MVRS), 1800 F Street, NW,

Room 4035, Washington, DC 20405.

E-Mail comments submitted over the

Internet should be addressed to:

farcase.96–002@gsa.gov.

Please cite FAC 97–01, FAR case 96–

002 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: The

FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405 (202)

501–4755 for information pertaining to

status or publication schedules. For

clarification of content, contact Ms.

Victoria Moss, Procurement Analyst, at

(202) 501–4764. Please cite FAC 97–01,

FAR case 96–002.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule amends FAR Parts 9

and 19 to comply with revisions made

to the Small Business Administration’s

(SBA) procurement assistance programs

contained in 13 CFR Part 125 (61 FR

3310, January 31, 1996). This rule

increases the threshold over which

contracting officers may appeal the

award of a Certificate of Competency

(COC) from $25,000 to $100,000;

updates the names of SBA offices

involved in processing COCs; and

implements the requirement that

compliance with the limitations on

subcontracting be considered an

element of responsibility. Also, this

interim rule removes language

implementing Section 15(c) of the Small

Business Act (15 U.S.C. 644(c)) as

amended by Section 305 of Public Law

103–403, Small Business

Administration Reauthorization and

Amendments Act of 1994. Section 305,

which authorized public and private

organizations for the handicapped to

participate in acquisitions set aside for

small businesses, has expired.

B. Regulatory Flexibility Act

This 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 the rule does not impose any

new requirements on contractors, large

or small. The Small Business

Administration has certified that the

revisions to 13 CFR 125 being

implemented by this rule will not have

a significant economic impact on a

substantial number of small entities

within the meaning of the Regulatory

Flexibility Act. An initial regulatory

flexibility analysis has therefore not

been performed. Comments are invited

from small businesses and other

interested parties. Comments from small

entities concerning the affected FAR

subparts also will be considered in

accordance with 5 U.S.C. 610. Such

comments must be submitted separately

and cite 5 U.S.C. 601, et seq. (FAC 97–

01, FAR case 96–002) in

correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the changes to the

FAR do not impose recordkeeping or

information collection requirements, or

collections of information from offerors,

contractors, or members of the public

which 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 to conform the

Federal Acquisition Regulation to

revisions made in 13 CFR Part 125,

pertaining to the Small Business

Administration (SBA) procurement

assistance programs. The SBA revisions

became effective on March 1, 1996.

However, pursuant to Public Law 98–

577 and FAR 1.501, public comments

received in response to this interim rule

will be considered in formulating the

final rule.

List of Subjects in 48 CFR Parts 9 and

19

Government procurement.

Dated: August 7, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 9 and 19 are

amended as set forth below:

1. The authority citation for 48 CFR

Parts 9 and 19 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

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

PART 9—CONTRACTOR

QUALIFICATIONS

2. Section 9.103 is amended in

paragraph (b) by revising the third

sentence to read as follows:

9.103 Policy.

(b) * * * If the prospective contractor

is a small business concern, the

contracting officer shall comply with

subpart 19.6, Certificates of Competency

and Determinations of Responsibil-

* * *

* * * * *

3. Section 9.104–3 is amended in

paragraph (a) by adding a sentence at

the end, and in paragraph (d) by

redesignating the text as paragraph
44820 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Rules and Regulations

(d)(1) and by adding (d)(2) to read as

follows:

9.104–3 Application of standards.

(a) * * * Consideration of a prime

contractor’s compliance with limitations

on subcontracting shall take into

account the time period covered by the

contract base period or quantities plus

option periods or quantities, if such

options are considered when evaluating

offers for award.

* * * * *

(d) * * * (1) * * *

(2) A small business that is unable to

comply with the limitations on

subcontracting at 52.219–14 may be

considered nonresponsible.

PART 19—SMALL BUSINESS

PROGRAMS

19.001 [Amended]

4. Section 19.001 is amended by

removing definitions for ‘‘Handicapped

individual’’ and ‘‘Public or private

organization for the handicapped’’, and

in the definition of ‘‘Nonmanufacturer

rule’’ by removing ‘‘121.906’’ and

inserting ‘‘121.406’’ in its place.

19.201 [Amended]

5. Section 19.201(c) is amended in the

introductory text by removing ‘‘and 13

CFR 125.4(g)(7)’’.

19.302 [Amended]

6. Section 19.302 is amended:

(a) In paragraph (c)(1) by removing the

word ‘‘Regional’’ and inserting ‘‘Area’’

in its place;

(b) In the introductory text of

paragraph (d) by removing ‘‘13 CFR

121.9’’ and inserting ‘‘13 CFR 121.10’’ in

its place;

(c) In paragraphs (g)(2) and (i)(1) by

removing ‘‘Regional Administrator’’ and

inserting ‘‘Area Director’’ in its place;

(d) In (i)(2) by removing ‘‘a Regional

Administrator’s’’ and inserting ‘‘an Area

Director’s’’ in its place;

(e) In (i)(3) by removing ‘‘121.11’’ and

inserting ‘‘121.1001’’ in its place; and

(f) In (j), in the first and third

sentences, by removing the word

‘‘regional’’ and inserting ‘‘area’’ in its

place; and in the first sentence

parenthetical by removing ‘‘above’’ and

inserting ‘‘of this section’’ in its place.

7. Section 19.508(e) is revised to read

as follows:

19.508 Solicitation provisions and

contract clauses.

* * * * *

(e) The contracting officer shall insert

the clause at 52.219–14, Limitations on

Subcontracting, in solicitations and

contracts for supplies, services, and

construction, if any portion of the

requirement is to be set aside for small

business and the contract amount is

expected to exceed $100,000.

Subpart 19.6—Certificates of

Competency and Determinations of

Responsibility

8. The heading of Subpart 19.6 is

revised to read as set forth above.

9. Section 19.601 is amended by

revising paragraph (a); by redesignating

(c) as (e); and by adding new paragraphs

(c) and (d) to read as follows:

19.601 General.

(a) A Certificate of Competency (COC)

is the certificate issued by the Small

Business Administration (SBA) stating

that the holder is responsible (with

respect to all elements of responsibility,

including, but not limited to, capability,

competency, capacity, credit, integrity,

perseverance, tenacity, and limitations

on subcontracting) for the purpose of

receiving and performing a specific

Government contract.

* * * * *

(c) The COC program is applicable to

all Government acquisitions. A

contracting officer shall, upon

determining an apparent successful

small business offeror to be

nonresponsible, refer that small

business to the SBA for a possible COC,

even if the next acceptable offer is also

from a small business.

(d) When a solicitation requires a

small business to adhere to the

limitations on subcontracting, a

contracting officer’s finding that a small

business cannot comply with the

limitation shall be treated as an element

of responsibility and shall be subject to

the COC process. When a solicitation

requires a small business to adhere to

the definition of a nonmanufacturer, a

contracting officer’s determination that

the small business does not comply

shall be processed in accordance with

subpart 19.3.

* * * * *

10. Section 19.602–1 is amended by

revising the introductory text of

paragraphs (a) and (a)(2), (c)

introductory text, and (c)(2); and by

adding (e) to read as follows:

19.602–1 Referral.

(a) Upon determining and

documenting that an apparent

successful small business offeror lacks

certain elements of responsibility

(including, but not limited to,

capability, competency, capacity, credit,

integrity, perseverance, tenacity, and

limitations on subcontracting), the

contracting officer shall—

* * * * *

(2) Refer the matter to the cognizant

SBA Government Contracting Area

Office (Area Office) serving the area in

which the headquarters of the offeror is

located, in accordance with agency

procedures, except that referral is not

necessary if the small business

concern—

* * * * *

(c) The referral shall include—

* * * * *

(2) If applicable, a copy of the

following:

(i) Solicitation.

(ii) Final offer submitted by the

concern whose responsibility is at issue

for the procurement.

(iii) Abstract of bids or the contracting

officer’s price negotiation

memorandum.

(iv) Preaward survey.

(v) Technical data package (including

drawings, specifications and statement

of work).

(vi) Any other justification and

documentation used to arrive at the

nonresponsibility determination.

* * * * *

(e) Contract award shall be withheld

by the contracting officer for a period of

15 business days (or longer if agreed to

by the SBA and the contracting officer)

following receipt by the appropriate

SBA Area Office of a referral that

includes all required documentation.

11. Section 19.602–2 is revised to read

as follows:

19.602–2 Issuing or denying a Certificate

of Competency (COC).

Within 15 business days (or a longer

period agreed to by the SBA and the

contracting agency) after receiving a

notice that a small business concern

lacks certain elements of responsibility,

the SBA Area Office will take the

following actions:

(a) Inform the small business concern

of the contracting officer’s

determination and offer it an

opportunity to apply to the SBA for a

COC. (A concern wishing to apply for a

COC should notify the SBA Area Office

serving the geographical area in which

the headquarters of the offeror is

located.)

(b) Upon timely receipt of a complete

and acceptable application, elect to visit

the applicant’s facility to review its

responsibility.

(1) The COC review process is not

limited to the areas of nonresponsibility

cited by the contracting officer.

(2) The SBA may, at its discretion,

independently evaluate the COC

applicant for all elements of

responsibility, but may presume

responsibility exists as to elements other

than those cited as deficient.
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Rules and Regulations 44821

(c) Consider denying a COC for

reasons of nonresponsibility not

originally cited by the contracting

officer.

(d) When the Area Director

determines that a COC is warranted (for

contracts valued at $25,000,000 or less),

notify the contracting officer and

provide the following options:

(1) Accept the Area Director’s

decision to issue a COC and award the

contract to the concern. The COC

issuance letter will then be sent,

including as an attachment a detailed

rationale for the decision; or

(2) Ask the Area Director to suspend

the case for one or more of the following

purposes:

(i) To permit the SBA to forward a

detailed rationale for the decision to the

contracting officer for review within a

specified period of time.

(ii) To afford the contracting officer

the opportunity to meet with the Area

Office to review all documentation

contained in the case file and to attempt

to resolve any issues.

(iii) To submit any information to the

SBA Area Office that the contracting

officer believes the SBA did not

consider (at which time the SBA Area

Office will establish a new suspense

date mutually agreeable to the

contracting officer and the SBA).

(iv) To permit resolution of an appeal

by the contracting agency to SBA

Headquarters under 19.602–3. However,

there is no contracting officer’s appeal

when the Area Office proposes to issue

a COC valued at $100,000 or less.

(e) At the completion of the process,

notify the concern and the contracting

officer that the COC is denied or is being

issued.

(f) Refer recommendations for issuing

a COC on contracts greater than

$25,000,000 to SBA Headquarters.

12. Section 19.602–3 is revised to read

as follows:

19.602–3 Resolving differences between

the agency and the Small Business

Administration.

(a) COCs valued between $100,000

and $25,000,000. (1) When

disagreements arise about a concern’s

ability to perform, the contracting

officer and the SBA shall make every

effort to reach a resolution before the

SBA takes final action on a COC. This

shall be done through the complete

exchange of information and in

accordance with agency procedures. If

agreement cannot be reached between

the contracting officer and the SBA Area

Office, the contracting officer shall

request that the Area Office suspend

action and refer the matter to SBA

Headquarters for review. The SBA Area

Office shall honor the request for a

review if the contracting officer agrees

to withhold award until the review

process is concluded. Without an

agreement to withhold award, the SBA

Area Office will issue the COC in

accordance with applicable SBA

regulations.

(2) SBA Headquarters will furnish

written notice to the procuring agency’s

Director, Office of Small and

Disadvantaged Business Utilization

(OSDBU) or other designated official

(with a copy to the contracting officer)

that the case file has been received and

that an appeal decision may be

requested by an authorized official.

(3) If the contracting agency decides

to file an appeal, it must notify SBA

Headquarters through its procuring

agency’s Director, OSDBU, or other

designated official, within 10 business

days (or a time period agreed upon by

both agencies) that it intends to appeal

the issuance of the COC.

(4) The appeal and any supporting

documentation shall be filed by the

procuring agency’s Director, OSDBU, or

other designated official, within 10

business days (or a period agreed upon

by both agencies) after SBA

Headquarters receives the agency’s

notification in accordance with

paragraph (a)(3) of this subsection.

(5) The SBA Associate Administrator

for Government Contracting will make a

final determination, in writing, to issue

or to deny the COC.

(b) SBA Headquarters’ decisions on

COCs valued over $25,000,000. (1) Prior

to taking final action, SBA Headquarters

will contact the contracting agency and

offer it the following options:

(i) To request that the SBA suspend

case processing to allow the agency to

meet with SBA Headquarters personnel

and review all documentation contained

in the case file; or

(ii) To submit to SBA Headquarters

for evaluation any information that the

contracting agency believes has not been

considered.

(2) After reviewing all available

information, the SBA will make a final

decision to either issue or deny the

COC.

(c) Reconsideration of a COC after

issuance. (1) The SBA reserves the right

to reconsider its issuance of a COC,

prior to contract award, if—

(i) The COC applicant submitted false

information or omitted materially

adverse information; or

(ii) The COC has been issued for more

than 60 days (in which case the SBA

may investigate the firm’s current

circumstances).

(2) When the SBA reconsiders and

reaffirms the COC, the procedures in

subsection 19.602–2 do not apply.

(3) Denial of a COC by the SBA does

not preclude a contracting officer from

awarding a contract to the referred

concern, nor does it prevent the concern

from making an offer on any other

procurement.

[FR Doc. 97–21494 Filed 8–21–97; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Part 19

[FAC 97–01; FAR Case 97–008; Item X]

RIN 9000–AH65

Federal Acquisition Regulation;

Economically Disadvantaged

Individuals

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 have

agreed on a final rule amending the

Federal Acquisition Regulation (FAR) to

update the definition of ‘‘small

disadvantaged business concern’’ for

conformance with Small Business

Administration regulations. This

regulatory action was not subject to

Office of Management and Budget

review under Executive Order 12866,

dated September 30, 1993. This is not a

major rule under 5 U.S.C. 804.

DATES: Effective October 21, 1997.

FOR FURTHER INFORMATION CONTACT: The

FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405 (202)

501–4755 for information pertaining to

status or publication schedules. For

clarification of content, contact Ms.

Victoria Moss, Procurement Analyst, at

(202) 501–4764. Please cite FAC 97–01,

FAR case 97–008.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends the definition

of ‘‘small disadvantaged business

concern’’ at FAR 19.001 to update the

categories of individuals considered to

be socially and economically