[Federal Register Volume 63, Number 118 (Friday, June 19, 1998)]
[Rules and Regulations]
[Pages 33586-33589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16282]


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DEPARTMENT OF DEFENSE

48 CFR Parts 213, 219, 252, and 253

[DFARS Case 90-D011]


Defense Federal Acquisition Regulation Supplement; Direct Award 
of 8(a) Contracts

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: The Director of Defense Procurement has issued an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement a Memorandum of Understanding (MOU) dated May 6, 1998, 
between the Small Business Administration (SBA) and DoD. The MOU 
streamlines the processing procedures for contract awards under the 
SBA's 8(a) Program.

DATES: Effective date: June 19, 1998.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before August 18, 1998, to be 
considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, Attn: Ms. Sandra G. Haberlin, 
PDUSD (A&T)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 
20301-3062. Telefax number (703) 602-0350.
    E-mail comments submitted over the Internet should be addressed to: 
<a href="/cdn-cgi/l/email-protection#afcbc9cedddcefceccde81c0dccb81c2c6c3"><span class="__cf_email__" data-cfemail="89edefe8fbfac9e8eaf8a7e6faeda7e4e0e5">[email protected]</span></a>
    Please cite DFARS Case 98-D011 in all correspondence related to 
this issue. E-mail comments should cite DFARS Case 98-D011 in the 
subject line.

FOR FURTHER INFORMATION CONTACT:
Ms. Sandra G. Haberlin, (703) 601-0131.

SUPPLEMENTARY INFORMATION:

A. Background

    The SBA's 8(a) Program, named for the section of the Small Business 
Act (Pub. L. 85-536, as amended) which it implements, helps small 
disadvantaged businesses compete for Federal contracts. The program 
authorizes the SBA to enter into all types of contracts with other 
agencies and award subcontracts for performing these contracts to firms 
eligible for program participation. The SBA's subcontractors are 
referred to as ``8(a) contractors.''
    Section 8(a) requires the SBA to function as an intermediary for 
8(a) contracts, but permits the SBA to delegate its authority through 
special agreements. One such agreement is the Memorandum of 
Understanding dated May 6, 1998, between SBA and DoD. The MOU 
streamlines the processing procedures for contract awards under the 
SBA's 8(a) Program by authorizing DoD to award contracts directly to 
8(a) contractors; by reducing SBA's response time to a DoD offering and 
for making an eligibility determination; and by providing a number of 
other changes to procurement procedures under the 8(a) Program. This 
interim rule amends Parts 213, 219, 252, and 253 of the DFARS to 
implement the MOU.

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 the rule 
only affects the administrative process established for award of 8(a) 
contracts. 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 DFARS subparts also will be considered in accordance with 5 
U.S.C. 610. Such comments should be submitted separately and should 
cite 5 U.S.C. 601, et seq. (DFARS Case 98-D011), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the interim rule 
does not impose any information collection requirements that require 
Office of Management and Budget approval 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 that urgent and compelling reasons exist to publish this 
interim rule prior to affording the public an opportunity to comment. 
This action is necessary to implement a MOU dated May 6, 1998, between 
the SBA and DoD. The MOU streamlines the processing procedures for 
contract awards under the SBA's 8(a)

[[Page 33587]]

Program by authorizing DoD to award contracts directly to 8(a) 
concerns; by reducing SBA's response times; and by providing a number 
of other changes to procurement procedures under the 8(a) Program. 
However, comments received in response to the publication of this 
interim rule will be considered in formulating the final rule.

List of Subjects in 48 CFR Parts 213, 219, 252, and 253

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 213, 219, 252, and 253 are amended as 
follows:
    1. The authority citation for 48 CFR parts 213, 219, 252, and 253 
continues to read as follows:

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

PART 213--SIMPLIFIED ACQUISITION PROCEDURES

    2. Subpart 213.70 is added to read as follows:

Subpart 213.70--Simplified Acquisition Procedures Under the 8(a) 
Program

Sec.
213.7001  Policy.
213.7002  Procedures.
213.7003  Purchase orders.
213.7003-1  Obtaining contractor acceptance and modifying purchase 
orders.
213.7003-2  Contract clauses.

Subpart 213.70--Simplified Acquisition Procedures Under the 8(a) 
Program


213.7001  Policy.

    For sole source acquisitions under the 8(a) Program, contracting 
officers may use the procedures established in the Memorandum of 
Understanding cited in 219.800.


213.7002  Procedures.

    For acquisitions that are otherwise appropriate to be conducted 
using procedures set forth in this part, and also eligible for the 8(a) 
Program, contracting officers may use--
    (1)(i) For sole source purchase orders not exceeding the simplified 
acquisition threshold, the procedures in 219.804-2(2); or
    (ii) For other types of acquisitions, the procedures in subpart 
219.8, excluding the procedures in 219.804-2(2); or
    (2) The procedures for award to the Small Business Administration 
in FAR subpart 19.8.


213.7003  Purchase orders


213.7003-1  Obtaining contractor acceptance and modifying purchase 
orders.

    The contracting officer need not obtain a contractor's written 
acceptance of a purchase order or modification of a purchase order for 
an acquisition under the 8(a) Program pursuant to 219.804-2(2).


213.7003-2  Contract clauses.

    Use the clauses prescribed in 219.811-3(1) and (3) for purchase 
orders under the 8(a) Program pursuant to the Memorandum of 
Understanding cited in 219.800.

PART 219--SMALL BUSINESS PROGRAMS

    3. Section 219.800 is added to read as follows:


219.800  General.

    (a) By Memorandum of Understanding (MOU) dated May 6, 1998, between 
the Small Business Administration (SBA) and the Department of Defense 
(DoD), the SBA delegated to the Under Secretary of Defense for 
Acquisition and Technology its authority under paragraph 8(a)(1)(A) of 
the Small Business Act (5 U.S.C. 637(a)) to enter into 8(a) prime 
contracts, and its authority under paragraph 8(a)(1)(B) of the Small 
Business Act to award the performance of those contracts to eligible 
8(a) Program participants. Consistent with the provisions of this 
subpart, this authority is hereby redelegated to DoD contracting 
officers within the United States, its territories and possessions, 
Puerto Rico, the Trust Territory of the Pacific Islands, and the 
District of Columbia, to the extent that it is consistent with any 
dollar or other restrictions established in individual warrants. This 
authority is being delegated and redelegated on a pilot test basis and 
shall expire on May 5, 2001. Notwithstanding this MOU, contracting 
officers may elect to award the contract pursuant to the provisions of 
FAR subpart 19.8.
    (b) Awards under the MOU may be awarded directly to the 8(a) 
participant on either a sole source or competitive basis.
    (c) Contracts awarded under the MOU may be awarded directly to the 
8(a) participant. An SBA signature on the contract is not required.
    4. Sections 219.804-2, 219.804-3, 219.805, 219.805-2, 219.806, 
219.808, 219.808-1, 219.811, 219.811-1, 219.811-2, 219.811-3, and 
219.812 are added to read as follows:


219.804-2  Agency offering.

    (1) For requirements processed under the MOU cited in 219.80 (but 
see paragraph (2) of this subsection for procedures related to purchase 
orders that do not exceed the simplified acquisition threshold), the 
notification to the SBA shall clearly indicate that the requirement is 
being processed under the MOU. All notifications should be submitted in 
writing, using facsimile or electronic mail, when possible, and shall 
specify that--
    (i) Under the MOU, an SBA acceptance or rejection of the offering 
is required within 5 working days of receipt of the offering; and
    (ii) (A) For sole source requirements, an SBA acceptance shall 
include a size verification and a determination of the 8(a) firm's 
eligibility, and, upon acceptance, the contracting officer will solicit 
a proposal, conduct negotiations, and make award directly to the 8(a) 
firm; or
    (B) For competitive requirements, upon acceptance, the contracting 
officer will solicit offers, conduct source selection, and, upon 
receipt of an eligibility verification, award a contract directly to 
the selected 8(a) firm.
    (2) Under the MOU cited in 219.800, no separate agency offering or 
SBA acceptance is needed for requirements that are issued under 
purchase orders that do not exceed the simplified acquisition 
threshold. After an 8(a) contractor has been identified, the 
contracting officer shall establish the prices, terms, and conditions 
with the 8(a) contractor and shall prepare a purchase order consistent 
with the procedures in part 213 and FAR part 13, including the 
applicable clauses required by this subpart. No later than the day that 
the purchase order is provided to the 8(a) contractor, the contracting 
officer shall provide to the cognizant SBA Business Opportunity 
Specialist, using facsimile or electronic mail--
    (i) A copy of the purchase order; and
    (ii) A notice stating that the purchase order is being processed 
under the MOU. The notice also shall indicate that the 8(a) contractor 
will be deemed eligible for award and will automatically begin work 
under the purchase order unless, within 2 working days after SBA's 
receipt of the purchase order, the 8(a) contractor and the contracting 
officer are notified that the 8(a) contractor is ineligible for award.


219.804-3  SBA acceptance.

    For requirements processed under the MOU cited in 219.800, SBA's 
acceptance is required within 5 working days (but see 219.804-2(2) for 
purchase

[[Page 33588]]

orders that do not exceed the simplified acquisition threshold).


219.805  Competitive 8(a).


219.805-2  Procedures.

    (c) For requirements processed under the MOU cited in 219.800--
    (i) For sealed bid and negotiated acquisitions, the SBA will 
determine the eligibility of the firms and will advise the contracting 
officer within 2 working days after its receipt of a request for an 
eligibility determination; and
    (ii) For negotiated acquisitions, the contracting officer may 
submit a request for an eligibility determination on as many as three 
of the most highly rated offerors.


219.806  Pricing the 8(a) contract.

    For requirements processed under the MOU cited in 219.800--
    (1) The contracting officer shall obtain cost or pricing data from 
the 8(a) contractor, if required by FAR subpart 15.4; and
    (2) SBA concurrence in the negotiated price is not required. 
However, except for purchase orders not exceeding the simplified 
acquisition threshold, the contracting officer shall notify the SBA 
prior to withdrawing a requirement from the 8(a) Program due to failure 
to agree on price or other terms and conditions.


219.808  Contract negotiations.


219.808-1  Sole source.

    For requirements processed under the MOU cited in 219.800--
    (1) The agency may negotiate directly with the 8(a) contractor. The 
contracting officer is responsible for initiating negotiations;
    (2) The 8(a) contractor is responsible for negotiating within the 
time established by the contracting officer;
    (3) If the 8(a) contractor does not negotiate within the 
established time and the agency cannot allow additional time, the 
contracting officer may, after notifying the SBA, proceed with the 
acquisition from other sources;
    (4) If requested by the 8(a) contractor, the SBA may participate in 
negotiations; and
    (5) SBA approval of the contract is not required.


219.811  Preparing the contracts.


219.811-1  Sole source.

    (a) Awards under the MOU cited in 219.800 may be made directly to 
the 8(a) contractor and, except as provided in paragraph (b) of this 
subsection and in 219.811-3, award documents shall be prepared in 
accordance with procedures established for non-8(a) contracts, using 
any otherwise authorized award forms. The ``Issued by'' block shall 
identify the awarding DoD contracting office. The contractor's name and 
address shall be that of the 8(a) participant.
    (b) Use the following alternative procedures for direct awards made 
under the MOU cited in 219.800:
    (i) Cite 10 U.S.C. 2304(c)(5) as the authority for use of other 
than full and open competition;
    (ii) Include the clause at 252.219-7009, which allows for direct 
award to the 8(a) contractor, and identify the cognizant SBA district 
office for the 8(a) contractor;
    (iii) No SBA contract number is required; and
    (iv) Do not require an SBA signature on the award document.


219.811-2  Competitive.

    Awards made under the MOU cited in 219.800 shall be prepared in 
accordance with 219.811-1.


219.811-3  Contract clauses.

    (1) Use the clause at 252.219-7009, Section 8(a) Direct Award, 
instead of the clauses at FAR 52.219-11, Special 8(a) Contract 
Conditions, FAR 52.219-12, Special 8(a) Subcontract Conditions, and FAR 
52.219-17, Section 8(a) Award, in solicitations and contracts processed 
in accordance with the MOU cited in 219.800.
    (2) Use the clause at FAR 52.219-18, Notification of Competition 
Limited to Eligible 8(a) Concerns, with 252.219-7010, Alternate A, in 
solicitations and contracts processed in accordance with the MOU cited 
in 219.800.
    (3) Use the clause at 252.219-7011, Notification to Delay 
Performance, in solicitations and purchase orders issued in accordance 
with 219.804-2(2).


219.812  Contract administration.

    (d) Awards under the MOU cited in 219.800 are subject to Section 
407 of Pub. L. 100-656. These contracts include the clause at 252.219-
7009, Section 8(a) Direct Award, which requires the 8(a) contractor to 
notify the SBA and the contracting officer when ownership of the firm 
is being transferred.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    5. Sections 252.219-7009, 252.219-7010, and 252.219-7011 are added 
to read as follows:


252.219-7009  Section 8(a) Direct Award.

    As prescribed in 219.811-3(1), use the following clause:

Section 8(a) Direct Award (Jun 1998)

    (a) This contract is issued as a direct award between the 
contracting office and the 8(a) Contractor pursuant to the 
Memorandum of Understanding dated May 6, 1998, between the Small 
Business Administration (SBA) and the Department of Defense. 
Accordingly, the SBA is not a party to this contract. SBA does 
retain responsibility for 8(a) certification, for 8(a) eligibility 
determinations and related issues, and for providing counseling and 
assistance to the 8(a) Contractor under the 8(a) Program. The 
cognizant SBA district office is:

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[To be completed by the Contracting Officer at the time of award]

    (b) The contracting office is responsible for administering the 
contract and for taking any action on behalf of the Government under 
the terms and conditions of the contract; provided that the 
contracting office shall give advance notice to the SBA before it 
issues a final notice terminating performance, either in whole or in 
part, under the contract. The contracting office also shall 
coordinate with the SBA prior to processing any novation agreement. 
The contracting office may assign contract administration functions 
to a contract administration office.
    (c) The Contractor agrees that--
    (1) It will notify the Contracting Officer, simultaneous with 
its notification to the SBA (as required by SBA's 8(a) regulations 
at 13 CFR 124.308), when the owner or owners upon whom 8(a) 
eligibility is based plan to relinquish ownership or control of the 
concern. Consistent with Section 407 of Pub. L. 100-656, transfer of 
ownership or control shall result in termination of the contract for 
convenience, unless the SBA waives the requirement for termination 
prior to the actual relinquishing of ownership and control; and
    (2) It will not subcontract the performance of any of the 
requirements of this contract without the prior written approval of 
the SBA and the Contracting Officer.

(End of clause)


252.219-7010  Alternate A.

Alternate A (Jun 1998)
    As prescribed in 219.811-3(2), substitute the following paragraph 
(c) for paragraph (c) of the clause at FAR 52.219-18:

    (c) Any award resulting from this solicitation will be made 
directly by the Contracting Officer to the successful 8(a) offeror 
selected through the evaluation criteria set forth in this 
solicitation.


252.219-7011  Notification to Delay Performance.

    As prescribed in 219.811-3 (3), use the following clause 
NOTIFICATION TO DELAY PERFORMANCE (JUN 1998)
    The Contractor shall not begin performance under this purchase 
order until 2 working days have passed from the date of its receipt. 
Unless the Contractor receives notification from the Small Business 
Administration that

[[Page 33589]]

it is ineligible for this 8(a) award, or otherwise receives 
instructions from the Contracting Officer, performance under this 
purchase order may begin on the third working day following receipt 
of the purchase order. If a determination of ineligibility is issued 
within the 2-day period, the purchase order shall be considered 
canceled.

(End of clause)

PART 253--FORMS

    6. Section 253.204-70 is amended by revising paragraph 
(d)(5)(iv)(B)(2) to read as follows:


253.204-70  DD Form 350, Individual Contracting Action Report.

* * * * *
    (d) * * *
    (5) * * *
    (iv) * * *
    (B) * * *
    (2) Code B--Section 8(a). Enter code B if the contract was awarded 
to--
    (i) The Small Business Administration (SBA) under Section 8(a) of 
the Small Business Act (FAR subpart 19.8); or
    (ii) An 8(a) contractor under the direct award procedures at 
219.811.
* * * * *
    7. Section 253.204-71 is amended by revising paragraph 
(g)(2)(ii)(A) to read as follows:


253.204-71  DD Form 1057, Monthly Contracting Summary of Actions 
$25,000 or Less.

* * * * *
    (g) * * *
    (2) * * *
    (ii) * * *
    (A) Block E2a, Through SBA-Section 8(a). Enter actions with the 
Small Business Administration pursuant to Section 8(a) of the Small 
Business Act (FAR subpart 19.8) or under the 8(a) direct award 
procedures at 219.811.
* * * * *
[FR Doc. 98-16282 Filed 6-18-98; 8:45 am]
BILLING CODE 5000-04-M


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