63084 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 5, 6, 12, 18, 26, and 52 

[FAC 2005–21; FAR Case 2006–014; Item 

VI; Docket 2007–0001, Sequence 7] 

RIN 9000–AK54 

Federal Acquisition Regulation; FAR 

Case 2006–014, Local Community 

Recovery Act of 2006 

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 a second 

interim rule amending the Federal 

Acquisition Regulation (FAR) to 

implement amendments to the Robert T. 

Stafford Disaster Relief and Emergency 

Assistance Act (Stafford Act). The Local 

Community Recovery Act of 2006 

amended the Stafford 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. Section 

694 of the Department of Homeland 

Security (DHS) Appropriations Act of 

2007, Pub. L 109–295, enacted 

requirements for transitioning work 

under existing contracts. 

DATES: Effective Date: November 7, 

2007. 

Comment Date: Interested parties 

should submit written comments to the 

FAR Secretariat on or before January 7, 

2008 to be considered in the 

formulation of a final rule. 

ADDRESSES: Submit comments 

identified by FAC 2005–21, FAR case 

2006–014, by any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. To search for any 

document, first select under ‘‘Step 1,’’

‘‘Documents with an Open Comment 

Period’’ and select under ‘‘Optional Step 

2,’’ ‘‘Federal Acquisition Regulation’’ as 

the agency of choice. Under ‘‘Optional 

Step 3,’’ select ‘‘Rules’’. Under 

‘‘Optional Step 4,’’ from the drop down 

list, select ‘‘Document Title’’ and type 

the FAR case number ‘‘2006–014’’. Click 

the ‘‘Submit’’ button. Please include 

your name and company name (if any) 

inside the document. You may also 

search for any document by clicking on 

the ‘‘Search for Documents’’ tab at the 

top of the screen. Select from the agency 

field ‘‘Federal Acquisition Regulation’’, 

and type ‘‘2006–014’’ in the ‘‘Document 

Title’’ field. Select the ‘‘Submit’’ button. 

• 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 2005–21, FAR case 

2006–014, in all correspondence related 

to this case. All comments received will 

be posted without change to http:// 

www.regulations.gov. Please include 

your name and company name (if any) 

inside the document. 

FOR FURTHER INFORMATION CONTACT Mr. 

William Clark, Procurement Analyst, at 

(202) 219–1813, for clarification of 

content. For information pertaining to 

status or publication schedules, contact 

the FAR Secretariat at (202) 501–4755. 

Please cite FAC 2005–21, FAR case 

2006–014. 

SUPPLEMENTARY INFORMATION: 

A. Background 

An interim rule was published August 

4, 2006 (71 FR 44546), implementing an 

amendment to the Stafford Act at 42 

U.S.C. 5150. This second interim rule is 

necessary because of a later statutory 

amendment to this section. This second 

rule also addresses the public comments 

received on the first rule. The Councils 

request comments on the new language 

added for this second interim rule, and 

on whether branch offices should 

qualify for the set-aside. 

Local area set-aside. The first interim 

rule implemented the 42 U.S.C. 5150 

authorization of 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 setaside 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 

major disaster or emergency area. 

Residing or doing business primarily 

in the area. Congress directed that 

preference be given to ‘‘organizations, 

firms, and individuals residing or doing 

business primarily in the area affected 

by such major disaster or emergency,’’

without defining the terms. The 

Councils consider that an offeror who in 

the last twelve months had its main 

operating office in the area, which 

generated at least half of the offeror’s 

gross revenues and employed at least 

half of the offeror’s permanent 

employees is, therefore, residing or 

primarily doing business in the set-aside 

area. 

Branch offices. A public comment 

questioned the exclusion of branch 

offices. The Councils believe the intent 

of Congress was to favor firms in the 

local area who hire local people. A local 

branch office is local and hires local 

people, but the contract would not be 

restricted to the branch office, because 

the branch office is not the contracting 

entity. The Councils invite further 

comment on this issue. 

Transition of work; justification. The 

recent amendment to 42 U.S.C. 5150 

provided: (1) that any expenditure of 

funds on contracts not awarded to local 

area organizations, firms or individuals 

must be justified in writing in the 

contract file; and (2) that work 

performed under contracts already in 

effect be transitioned to local area 

organizations, firms or individuals, 

unless the head of the agency 

determines it is not feasible or 

practicable. 

This second interim rule implements 

these requirements. The rule 

emphasizes the wisdom of awarding 

contracts in advance of an emergency, 

but not awarding orders so lengthy that 

they make transition to a local firm 

awkward. 

The rule also gives factors for the 

agencies to consider prior to 

determining that a transition is not 

feasible or practicable. The 

determination not to transition may be 

done within a reasonable time. Class 

determinations and class justifications 

are allowed. 

Competition justification. The first 

interim rule established a new FAR 

Subpart 6.6 to clarify the competition 

justification requirements for Stafford 

Act acquisitions, but that was to be 

revisited in the final (now second 

interim) rule. This second interim rule 

moves to section 6.207 the section 

declaring that no competition 

justification is needed for the local area 

set-aside. The rest of the subpart has 

been deleted as unnecessary. No 

justification for other than full and open 

competition is needed for the use of an 

evaluation factor if preference is 

afforded local firms through such a 

mechanism. The revised statute 

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Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 63085 

establishes a new justification, but this 

is not a full and open competition 

justification, so it is being placed in Part 

26, not Part 6. 

Definitions. The Councils established 

a new definition for ‘‘Major disaster or 

emergency area’’ to clarify the role of 

the Presidential declaration and DHS. 

DHS has a website where the public and 

contracting officers can easily find 

information on recently declared major 

disasters and recently declared 

emergencies. This website is added to 

the definition. 

New definitions are also added for 

‘‘emergency response contract’’ and 

‘‘local firm’’ to clarify how these 

concepts are used in the rule. 

The term ‘‘designated area’’ was not 

defined in the first interim rule. To 

avoid confusion, the second interim rule 

changes it everywhere to more precisely 

read ‘‘set-aside area.’’

A reference to the Small Business 

Administration (SBA) regulatory 

definitions of terms used in the 

‘‘Restrictions on Subcontracting Outside 

Disaster or Emergency Area’’ clause is 

added to that clause. 

Public comments. No public 

comments were received in response to 

the Councils’ request in the first rule for 

views 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; or whether the 

percentages for general or specialty 

construction should be raised. 

The Councils received nine public 

comments from four respondents 

regarding the first interim rule. A 

summary of the comments and the 

Councils’ responses follows. 

1. Comment: One respondent 

recommended that it would be more 

appropriate to create a new section 

within FAR Subpart 6.2 (i.e., section 

6.207) for consistency with the content 

of sections 6.205 and 6.206 which 

describes set-asides as a type of full and 

open competition after the exclusion of 

sources rather than to maintain the 

interim rule FAR Subpart 6.6, Stafford 

Act Preference for Local Area 

Contractor. The recommendation also 

suggested removal of FAR section 6.603 

entirely since it implies that 

implementing the local area preference 

by using an evaluation factor would 

qualify as other than full and open 

competition. 

Response: The recommendation was 

accepted and this second interim rule 

moves to FAR 6.207 the section 

declaring that no competition 

justification is needed for the local area 

set-aside. The rest of the previous FAR 

Subpart 6.6 has been removed. 

2. Comment: One respondent 

expressed an opinion that the 

instructions in FAR 12.301(e)(4) for FAR 

52.226–4 and 52.226–5 were 

unnecessary because they are already 

included in the list of clauses contained 

in FAR 52.212–5, which is a mandatory 

clause in commercial item contracts. 

The respondent also suggested replacing 

the phrase, ‘‘when setting aside under 

the Stafford Act’’ due to its 

inconsistency with the language used in 

the FAR 26.203 prescription. A new 

FAR subparagraph 12.301(e)(4) was 

suggested as follows: ‘‘The contracting 

officer shall insert the provision at 

52.226–3, Disaster or Emergency Area 

Representation, in solicitations for 

acquisitions that are set-aside for a 

Disaster or Emergency Area under 

26.203(a). This representation is not in 

the Online Representations and 

Certifications Application (ORCA) 

Database.’’

Response: The recommendation was 

partially accepted in that only the 

provision, not the clauses, is mentioned 

at FAR subparagraph 12.301(e)(4). 

Regarding the suggested rewording of 

FAR subparagraph 12.301(e)(4), the 

Councils believe the reference to the 

Stafford Act should be kept, rather than 

adding a second reference to the 

‘‘Disaster or Emergency Area’’ in the 

same sentence. 

3. Comment: The rule should revise 

the text at FAR 26.202(a)(2) to state, ‘‘A 

major disaster or emergency may result 

in numerous Presidential declarations 

spanning counties in several contiguous 

States’’ for consistency with 6.602(a) 

and (b), which refer to both ‘‘disasters’’

and ‘‘emergencies.’’

Response: The respondent’s comment 

was accepted. The second interim rule 

contains the correction as 

recommended. 

4. Comment: A comment was 

submitted indicating that 26.203(a) 

content is inconsistent with FAR 

26.203(b). The respondent suggested 

replacing paragraph (a) with the 

following, ‘‘The contracting officer shall 

insert the provision at 52.226–3, 

Disaster or Emergency Area 

Representation, in solicitations for 

acquisitions that are set-aside for a 

Disaster or Emergency Area under 

26.203(a). For commercial items see 

12.301(e)(4).’’

Response: Partially accepted. The 

prescription content was revised for 

consistency with the FAR conventions 

on prescription format. 

5. Comment: FAR 52.212–5(b)(27) and 

(28) did not contain clause dates and 

‘‘Aug 2006’’ should be inserted into 

parentheses after the title of each clause. 

Response: Accepted, however the 

dates for both clauses have been revised 

due to amendment of the clauses. 

6. Comment: The rule does not 

discuss whether the phrase, ‘‘offerors 

residing or doing business primarily in 

the area affected * * *,’’ excludes branch 

offices of corporations headquartered 

elsewhere. The comment described a 

scenario where a branch office could 

meet all of the tests imposed at FAR 

52.226–3(c) and still not have the 

corporate business meet the adjective 

test of ‘‘primarily’’ doing business 

within the affected region. The 

respondent suggested adding the term 

‘‘* * * to include branches, divisions, or 

other sub units of corporation 

headquartered outside of the affected 

area * * *’’ after ‘‘* * * offerors residing 

or doing business primarily in the area 

affected’’ in FAR 26.202, 52.226–3, 

52.226–4, and 52.226–5. 

Response: The recommendation was 

not adopted for the second interim rule. 

However, the Councils are seeking 

further public views on this comment as 

indicated in the Preamble to this rule. 

7. Comment: Several respondents 

commented on the designation of FAR 

52.226–4, Notice of Disaster or 

Emergency, as a ‘‘provision’’ vice a 

‘‘clause’’. Another comment on the 

prescription for FAR 52.226–4 suggested 

clarifying the prescription by replacing 

the phrase, ‘‘* * * that are set-aside for 

a Disaster or Emergency Area under 

26.203(a)’’ with ‘‘* * * that contain the 

provision at 52.226–3.’’

Response: The second interim rule 

changes FAR 52.226–4 to a ‘‘clause.’’

The prescription for FAR 52.226–4 and 

52.226–5 are revised for consistency 

with the FAR conventions on 

prescription format. 

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. This 

second interim rule continues the setaside 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 setasides can apply to an acquisition. The 

local set-aside will encourage use of 

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63086 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

local small businesses. The rule also 

implements a new requirement that 

work performed under contracts already 

in effect be transitioned to local area 

organizations, firms, or individuals, 

unless the agency head determines it is 

not feasible or practicable. The Councils 

expect that more work will be 

transitioned to small businesses than 

away from them. The Government 

Accountability Office (GAO) report on 

Hurricane Katrina Small Business 

Contracts (GAO–07–205) found that 

businesses in the three states primarily 

affected by the hurricane received $1.9 

billion, which was 18% of the $11.6 

billion spent by DHS, GSA, DoD and the 

Army Corps of Engineers between 

August 1, 2005, and June 30, 2006. 

Small businesses received 66% of the 

$1.9 billion awarded to those local 

businesses. The Councils believe this 

shows that small businesses would not 

be hurt by a local area set-aside. 

Therefore, an Initial Regulatory 

Flexibility Analysis has not been 

performed. The Councils will consider 

comments from small entities 

concerning the affected FAR Parts 5, 6, 

12, 18, 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 

2005–21, 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 DoD, GSA, and 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), and section 694 of the DHS 

Appropriations Act of 2007 (DHS 

Appropriations Act) (Pub. L. 109–295). 

These statutes amended the Stafford Act 

at 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. Section 694 of 

the DHS Appropriations Act enacted 

requirements for transitioning work 

under existing contracts to local area 

organizations, firms, or individuals. 

This action is necessary to improve the 

Government’s ability to target local 

businesses and promote local economic 

recovery in an affected area. The 

statutes went into effect April 20, 2006, 

and October 4, 2006, respectively. 

However, pursuant to Pub. L. 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 5, 6, 12, 

18, 26, and 52 

Government procurement. 

Dated: October 31, 2007. 

Al Matera, 

Director, Office of Acquisition Policy. 

■ Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 5, 6, 12, 18, 26, and 

52 as set forth below: 

■ 1. The authority citation for 48 CFR 

parts 5, 6, 12, 18, 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 5–PUBLICIZING CONTRACT 

ACTIONS 

■ 2. Amend section 5.207 by revising 

paragraph (d) to read as follows: 

5.207 Preparation and transmittal of 

synopses. 

* * * * * 

(d) Set-asides. When the proposed 

acquisition provides for a total or partial 

small business set-aside, HUBZone 

small business set-aside, or a servicedisabled veteran-owned small business 

set-aside, the appropriate Numbered 

Note will be cited. When the proposed 

acquisition provides for a local area setaside (see Subpart 26.2) the contracting 

officer shall identify his set-aside in the 

synopsis. 

* * * * * 

PART 6—COMPETITION 

REQUIREMENTS 

■ 3. Add section 6.207 to read as 

follows: 

6.207 Set-asides for local firms during a 

major disaster or emergency. 

(a) To fulfill the statutory 

requirements relating to 42 U.S.C. 5150, 

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). 

(b) No separate justification or 

determination and findings is required 

under this part to set aside a contract 

action. The set-aside area specified by 

the contracting officer shall be a 

geographic area within the area 

identified in a Presidential 

declaration(s) of major disaster or 

emergency and any additional 

geographic areas identified by the 

Department of Homeland Security. 

Subpart 6.6 [Removed] 

■ 4. Remove subpart 6.6. 

PART 12—ACQUISITION OF 

COMMERCIAL ITEMS 

■ 5. Amend section 12.301 by revising 

paragraphs (b)(4) and (e)(4) to read as 

follows: 

12.301 Solicitation provisions and 

contract clauses for the acquisition of 

commercial items. 

* * * * * 

(b) * * * 

(4) The clause at 52.212–5, Contract 

Terms and Conditions Required to 

Implement Statutes or Executive 

Orders—Commercial Items. This clause 

incorporates by reference only those 

clauses required to implement 

provisions of law or executive orders 

applicable to the acquisition of 

commercial items. The contracting 

officer shall attach this clause to the 

solicitation and contract and, using the 

appropriate clause prescriptions, 

indicate which, if any, of the additional 

clauses cited in 52.212–5(b) or (c) are 

applicable to the specific acquisition. 

Some of the clauses require fill-in; the 

fill-in language should be inserted as 

directed by 52.104(d). When cost 

information is obtained pursuant to Part 

15 to establish the reasonableness of 

prices for commercial items, the 

contracting officer shall insert the 

clauses prescribed for this purpose in an 

addendum to the solicitation and 

contract. This clause may not be 

tailored. Use the clause with its 

Alternate I when the head of the agency 

has waived the examination of records 

by the Comptroller General in 

accordance with 25.1001. 

* * * * * 

(e) * * * 

(4) When setting aside under the 

Stafford Act (Subpart 26.2), include the 

provision at 52.226–3, Disaster or 

Emergency Area Representation, in the 

solicitation. The representation in this 

provision is not in the Online 

Representations and Certifications 

Application (ORCA) Database. 

* * * * * 

PART 18—EMERGENCY 

ACQUISITIONS 

■ 6. Amend section 18.203 by: 

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Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 63087 

■ a. Removing paragraph (a); 

■ b. Redesignating paragraphs (b) and 

(c) as (a) and (b) respectively; and 

■ c. Revising redesignated paragraph (a) 

to read as follows: 

18.203 Incidents of national significance, 

emergency declaration, or major disaster 

declaration. 

(a) Disaster or emergency assistance 

activities. Preference will be given to 

local organizations, firms, and 

individuals when contracting for major 

disaster or emergency assistance 

activities when the President has made 

a declaration under the Robert T. 

Stafford Disaster Relief and Emergency 

Assistance Act. Preference may take the 

form of local area set-asides or an 

evaluation preference. (See 6.207 and 

Subpart 26.2.) 

* * * * * 

PART 26—OTHER SOCIOECONOMIC 

PROGRAMS 

■ 7. Revise subpart 26.2 to read as 

follows: 

Subpart 26.2—Disaster or Emergency 

Assistance Activities 

Sec. 

26.200 Scope of subpart. 

26.201 Definitions. 

26.202 Local area preference. 

26.202–1 Local area set-aside. 

26.202–2 Evaluation preference. 

26.203 Transition of work. 

26.204 Justification for expenditures to 

other than local firms. 

26.205 Solicitation provision and contract 

clauses. 

26.200 Scope of subpart. 

This subpart implements the Robert 

T. Stafford Disaster Relief and 

Emergency Assistance Act (42 U.S.C. 

5150), which provides a preference for 

local organizations, firms, and 

individuals when contracting for major 

disaster or emergency assistance 

activities. 

26.201 Definitions. 

Emergency response contract means a 

contract with private entities that 

supports assistance activities in a major 

disaster or emergency area, such as 

debris clearance, distribution of 

supplies, or reconstruction. 

Local firm means a private 

organization, firm, or individual 

residing or doing business primarily in 

a major disaster or emergency area. 

Major disaster or emergency area 

means the area included in the official 

Presidential declaration(s) and any 

additional areas identified by the 

Department of Homeland Security. 

Major disaster declarations and 

emergency declarations are published in 

the Federal Register and are available at 

http://www.fema.gov/news/ 

disasters.fema. 

26.202 Local area preference. 

When awarding emergency response 

contracts during the term of a major 

disaster or emergency declaration by the 

President of the United States under the 

authority of the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act (42 U.S.C.5121, et seq.), 

preference shall be given, to the extent 

feasible and practicable, to local firms. 

Preference may be given through a local 

area set-aside or an evaluation 

preference. 

26.202–1 Local area set-aside. 

The contracting officer may set aside 

solicitations to allow only local firms 

within a specific geographic area to 

compete (see 6.207). 

(a) The contracting officer, in 

consultation with the requirements 

office, shall define the specific 

geographic area for the local set-aside. 

(b) A major disaster or emergency area 

may span counties in several contiguous 

States. The set-aside area need not 

include all the counties in the declared 

disaster/emergency area(s), but cannot 

go outside it. 

(c) The contracting officer shall also 

determine whether a local area set-aside 

should be further restricted to small 

business concerns in the set-aside area 

(see Part 19). 

26.202–2 Evaluation preference. 

The contracting officer may use an 

evaluation preference, when authorized 

in agency regulations. 

26.203 Transition of work. 

(a) In anticipation of potential 

emergency response requirements, 

agencies involved in response planning 

should consider awarding emergency 

response contracts before a major 

disaster or emergency occurs to ensure 

immediate response and relief. These 

contracts should be structured to 

respond to immediate emergency 

response needs, and should not be 

structured in any way that may inhibit 

the transition of emergency response 

work to local firms (e.g., unnecessarily 

broad scopes of work or long periods of 

performance). 

(b) 42 U.S.C. 5150(b)(2) requires that 

agencies performing response, relief, 

and reconstruction activities transition 

to local firms any work performed under 

contracts in effect on the date on which 

the President declares a major disaster 

or emergency, unless the head of such 

agency determines in writing that it is 

not feasible or practicable. This 

determination may be made on an 

individual contract or class basis. The 

written determination shall be prepared 

within a reasonable time given the 

circumstances of the emergency. 

(c) In effecting the transition, agencies 

are not required to terminate or 

renegotiate existing contracts. Agencies 

should transition the work at the earliest 

practical opportunity after consideration 

of the following: 

(1) The potential duration of the 

disaster or emergency. 

(2) The severity of the disaster or 

emergency. 

(3) The scope and structure of the 

existing contract, including its period of 

performance and the milestone(s) at 

which a transition is reasonable (e.g., 

before exercising an option). 

(4) The potential impact of a 

transition, including safety, national 

defense, and mobilization. 

(5) The expected availability of 

qualified local offerors who can provide 

the products or services at a reasonable 

price. 

(d) The agency shall transition the 

work to local firms using the local area 

set-aside identified in 26.202–1. 

26.204 Justification for expenditures to 

other than local firms. 

(a) 42 U.S.C. 5150(b)(1) requires that, 

subsequent to any Presidential 

declaration of a major disaster or 

emergency, any expenditure of Federal 

funds, under an emergency response 

contract not awarded to a local firm, 

must be justified in writing in the 

contract file. The justification should 

include consideration for the scope of 

the major disaster or emergency and the 

immediate requirements or needs of 

supplies and services to ensure life is 

protected, victims are cared for, and 

property is protected. 

(b) The justification may be made on 

an individual or class basis. The 

contracting officer approves the 

justification. 

26.205 Solicitation provision and contract 

clauses. 

(a) The contracting officer shall insert 

the provision at 52.226–3, Disaster or 

Emergency Area Representation, in 

solicitations involving the local area setaside. For commercial items, see 

12.301(e)(4). 

(b) The contracting officer shall insert 

the clause at 52.226–4, Notice of 

Disaster or Emergency Area Set-aside in 

solicitations and contracts involving 

local area set-asides. 

(c) The contracting officer shall insert 

the clause at 52.226–5, Restrictions on 

Subcontracting Outside Disaster or 

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63088 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

Emergency Area, in all solicitations and 

contracts that involve local area setasides. 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

■ 8. Revise section 52.212–5 in clause 

heading and paragraphs (b)(30) and 

(b)(31) to read 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 (Nov 2007) 

* * * * * 

(b) * * * 

ll (30) 52.226–4, Notice of Disaster 

or Emergency Area Set-Aside (Nov 

2007) (42 U.S.C. 5150). 

ll (31) 52.226–5, Restrictions on 

Subcontracting Outside Disaster or 

Emergency Area (Nov 2007) (42 U.S.C. 

5150). 

* * * * * 

■ 9. Revise section 52.226–3 to read as 

follows: 

52.226—3 Disaster or Emergency Area 

Representation. 

As prescribed in 26.205(a), insert the 

following provision: 

DISASTER OR EMERGENCY AREA 

REPRESENTATION (Nov 2007) 

(a) Set-aside area. The area covered in 

this contract is: lllllllllll 

[Contracting Officer to fill in with 

definite geographic boundaries.] 

(b) Representations. The offeror 

represents that it llldoes llll 

does not reside or primarily do business 

in the set-aside area. 

(c) An offeror is considered to be 

residing or primarily doing business in 

the set-aside area if, during the last 

twelve months—

(1) The offeror had its main operating 

office in the area; and 

(2) That office generated at least half 

of the offeror’s gross revenues and 

employed at least half of the offeror’s 

permanent employees. 

(d) If the offeror does not meet the 

criteria in paragraph (c) of this 

provision, factors to be considered in 

determining whether an offeror resides 

or primarily does business in the setaside area include—

(1) Physical location(s) of the offeror’s 

permanent office(s) and date any office 

in the set-aside area(s) was established; 

(2) Current state licenses; 

(3) Record of past work in the setaside area(s) (e.g., how much and for 

how long); 

(4) Contractual history the offeror has 

had with subcontractors and/or 

suppliers in the set-aside area; 

(5) Percentage of the offeror’s gross 

revenues attributable to work performed 

in the set-aside area; 

(6) Number of permanent employees 

the offeror employs in the set-aside area; 

(7) Membership in local and state 

organizations in the set-aside area; and 

(8) Other evidence that establishes the 

offeror resides or primarily does 

business in the set-aside area. For 

example, sole proprietorships may 

submit utility bills and bank statements. 

(e) If the offeror represents it resides 

or primarily does business in the setaside 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) 

■ 10. Revise section 52.226–4 to read as 

follows: 

52.226—4 Notice of Disaster or 

Emergency Area Set-Aside. 

As prescribed in 26.205(b), insert the 

following clause: 

NOTICE OF DISASTER OR EMERGENCY 

AREA SET-ASIDE (Nov 2007) 

(a) Set-aside area. Offers are solicited 

only from businesses residing or 

primarily doing business in 

llllllllll [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 clause) 

■ 11. Revise section 52.226–5 to read as 

follows: 

52.226—5 Restrictions on Subcontracting 

Outside Disaster or Emergency Area. 

As prescribed in 26.205(c), insert the 

following clause: 

RESTRICTIONS ON SUBCONTRACTING 

OUTSIDE DISASTER OR EMERGENCY 

AREA (Nov 2007) 

(a) Definitions. The definitions of the 

following terms used in this clause are 

found in the Small Business 

Administration regulations at 13 CFR 

125.6(e): cost of the contract, cost of 

contract performance incurred for 

personnel, cost of manufacturing, cost of 

materials, personnel, and 

subcontracting. 

(b) The Contractor agrees that in 

performance of the contract in the case 

of a contract for—

(1) 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 clause at FAR 52.226—

4, Notice of Disaster or Emergency Area 

Set-Aside; 

(2) Supplies (other than procurement 

from a nonmanufacturer of such 

supplies). The Contractor or employees 

of other businesses residing or primarily 

doing business in the set-aside area 

shall perform work for at least 50 

percent of the cost of manufacturing the 

supplies, not including the cost of 

materials; 

(3) 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 set-aside area; or 

(4) 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 setaside area. 

(End of clause) 

[FR Doc. 07–5482 Filed 11–6–07; 8:45 am] 

BILLING CODE 6820–EP–S 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Part 22 

[FAC 2005–21; FAR Case 2007–001; Item 

VII; Docket 2007–0001; Sequence 9] 

RIN 9000–AK81 

Federal Acquisition Regulation; FAR 

Case 2007–001, Labor Standards for 

Contracts Containing Construction 

Requirements—Contract Pricing 

Method References 

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 

(Councils) have agreed on a final rule 

amending the Federal Acquisition 

Regulation (FAR) to revise references to 

published pricing sources available to 

the contracting officer. The revision will 

mstockstill on PROD1PC66 with RULES3