[Federal Register Volume 60, Number 2 (Wednesday, January 4, 1995)]
[Notices]
[Pages 456-458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7]



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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy


Small Disadvantaged and Women-Owned Businesses

AGENCY: Executive Office of the President, Office of Management and 
Budget (OMB), Office of Federal Procurement Policy (OFPP).

ACTION: OFPP is requesting comments on its plans to comply with the 
review requirements of small disadvantaged and women-owned businesses 
in accordance with the Federal Acquisition Streamlining Act of 1994.

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BACKGROUND: The Federal Acquisition Streamlining Act of 1994, Public 
Law 103-355, provides, in section 7107, that the Administrator for 
Federal Procurement Policy shall conduct a comprehensive review of 
Federal laws, in effect on November 1, 1994, to identify and catalogue 
all of the provisions in such laws that define (or describe for 
definitional purposes) the following small business concerns: (1) 
Concerns owned and controlled by socially and economically 
disadvantaged individuals; (2) minority-owned concerns; (3) concerns 
owned and controlled by women; and, (4) woman-owned concerns. (In this 
notice, these 4 categories will also be referred to as disadvantaged 
and women-owned businesses.) The definitions of concern are those which 
authorize the participation of such small business concerns as prime 
contractors or subcontractors in (1) contracts awarded directly by the 
Federal Government or subcontracts awarded under such contracts, and 
(2) contracts and subcontracts funded, in whole or in part, by Federal 
financial assistance under grants, cooperative agreements, or other 
forms of Federal assistance.
    In conducting this review, the Administrator shall provide for the 
participation in the review by representatives of (1) the Small 
Business Administration (SBA) (including the Office of the Chief 
Counsel for Advocacy); (2) the Minority Business Development Agency 
(MBDA) of the Department of Commerce; (3) the Department of 
Transportation (DOT); (4) the Environmental Protection Agency (EPA); 
and (5) such other executive departments and agencies as the 
Administrator considers appropriate. The Administrator must also 
consult with representatives of organizations representing (1) 
minority-owned business enterprises; (2) women-owned business 
enterprises; and (3) other organizations that the Administrator 
considers appropriate.
    On the basis of the results of the review, the Administrator is to 
develop (1) uniform definitions for disadvantaged and women-owned 
business concerns; (2) uniform agency certification standards and 
procedures for (A) determinations of whether a small business concern 
qualifies as a disadvantaged or women-owned business concern under an 
applicable standard for purposes of the types of contracts and 
subcontracts referred to above, and (B) reciprocal recognition by an 
agency of a decision of another agency regarding whether a small 
business concern qualifies as a disadvantaged or women-owned business 
concern; and (3) such other related recommendations as the 
Administrator determines appropriate, consistent with the review 
results.
    Section 7107 requires the Administrator, not later than 60 days 
after the date of the enactment of the Act, to publish in the Federal 
Register a notice which (1) lists the provisions of law identified in 
the review carried out during the first 60 days; (2) describes the 
matters to be developed on the basis of the results of the review; (3) 
solicits public comment regarding the matters described in the notice 
for a period of not less than 60 days; and (4) addresses such other 
matters as the Administrator considers appropriate in order to ensure 
the comprehensiveness of the review.
    Finally, section 7107 requires that not later than May 1, 1966, the 
Administrator for Federal Procurement Policy shall submit to the 
Committees on Small Business of the Senate and the House of 
Representatives a report on the results of the review. The report shall 
include a discussion of the results of the review, a description of the 
consultations conducted and public comments received, and the 
Administrator's recommendations.

PERFORMANCE OF REVIEW: In response to this direction, the Administrator 
for Federal Procurement Policy, through the Office of Federal 
Procurement Policy (OFPP), has conducted a review of the 
[[Page 457]] various laws defining the business concerns listed in 
section 7107, and has formed an informal task force with 
representatives of the SBA (including its Office of Chief Counsel for 
Advocacy), the MBDA, the DOT, the EPA, the Department of Defense, the 
Department of Energy, and the General Services Administration. 
Additionally, the Administrator has held meetings with representatives 
of 21 organizations or companies representing minority-owned, women-
owned, and other appropriate business enterprises to discuss the 
review. During these meetings, OFPP has discussed the need for uniform 
definitions and the desirability of uniform certification standards and 
procedures.
    This review has indicated that there are divergent definitions of 
the terms section 7107 covers. The primary problem appears to be that 
while the Small Business Act contains comprehensive definitions of 
socially and economically disadvantaged small businesses and women-
owned small businesses, other statutes contain either differing 
definitions or similar terms with no definitions. Consequently, to 
further their program implementation responsibilities, agencies have, 
in some instances, adopted through the regulatory process definitions 
which differ from those of the Small Business Act. This tends to cause 
confusion and inefficiency within the government and within the small 
business community.
    Statutory definitions: It is not always clear from the relevant 
statutes as to which of the four terms in section 7107 the statutes 
would apply. However, after reviewing the laws and discussing the 
issues with representatives of Federal Government agencies and of 
minority and women-owned businesses, the Administrator has determined 
that the following provisions of law are relevant to defining (a) 
concerns owned and controlled by socially and economically 
disadvantaged individuals; (b) minority-owned concerns; (c) concerns 
owned and controlled by women; and, (d) woman-owned concerns:
    1. Concerns Owned and Controlled by Socially and Economically 
Disadvantaged Individuals and Minority-owned Concerns:

10 U.S.C. Sec. 2323(a) (Armed Forces)
15 U.S.C. Sec. 637(a)(4) (Small Business Act)
15 U.S.C. Sec. 637(a)(5) (Small Business Act)
15 U.S.C. Sec. 637(a)(6) (Small Business Act)
15 U.S.C. Sec. 637(a)(13) (Small Business Act)
15 U.S.C. Sec. 637(a)(14) (Small Business Act)
15 U.S.C. Sec. 637(a)(15) (Small Business Act)
15 U.S.C. Sec. 637(a)(17) (Small Business Act)
15 U.S.C. Sec. 637(d)(3)(C) (Small Business Act)
49 U.S.C. Sec. 332 (Transportation)
49 U.S.C. Sec. 47113(a) (Transportation)
Public Law 101-165, Department of Defense Appropriations Act, 1990, 
Section 9004

    2. Concerns Owned and Controlled by Women and Woman-owned Concerns:

15 U.S.C. Sec. 632(n) (Small Business Act)
15 U.S.C. Sec. 637(d)(3)(D) (Small Business Act)
49 U.S.C. Sec. 332 (Transportation)
49 U.S.C. Sec. 47113(a) (Transportation)
Public Law 102-377, Section 304 (a)&(b) Energy and Water Development 
Appropriations Act, 1993
Public Law 102-486, the Energy Policy Act of 1992, Section 3021
Public Law 102-240, Intermodel Surface Transportation Efficiency Act of 
1991, Section 1003(b)

    Example of Statutory Discrepancy: The Small Business Act, at 15 
U.S.C. Sec. 637(d)(3)(D), provides as follows: ``The term `small 
business concern owned and controlled by women' shall mean a small 
business concern--(i) which is at least 51 per centum owned by one or 
more women; or, in the case of any publicly owned business, at least 51 
per centum of the stock of which is owned by one or more women; and 
(ii) whose management and daily business operations are controlled by 
one or more women.'' Section 1003(b)(2)(B) of the Intermodel Surface 
Transportation Efficiency Act of 1991 provides as follows: ``Socially 
and Economically Disadvantaged Individuals.--The term ``socially and 
economically disadvantaged individuals'' has the meaning such term has 
under section 8(d) of the Small Business Act (15 U.S.C. Sec. 737(d)) 
and relevant subcontracting regulations promulgated pursuant thereto; 
except that women shall be presumed to be socially and economically 
disadvantaged individuals for purposes of this subsection.'' For their 
respective programs, these two statutes provide differing coverage for 
women-owned businesses. One provides a separate definition; the other 
includes women within the definition of socially and economically 
disadvantaged individuals.
    Regulatory definitions: In addition, the following provisions of 
federal regulations, which represent the implementing guidance of the 
various federal departments and agencies, are relevant to the 
interpretation of the statutes cited above:

48 CFR Part 19 (Federal Acquisition Regulation System)
7 CFR Part 3403 (Agriculture)
10 CFR Part 470 (Energy)
13 CFR Part 124 (Business Credit and Assistance) (Small Business 
Administration)
48 CFR Part 219 (Federal Acquisition Regulation System) (Defense)
49 CFR Part 23 (Transportation)
49 CFR Part 265 (Transportation)

    Review of statutory definitions: OFPP has reviewed the above listed 
statutes and regulations. OFPP interprets the provisions of section 
7107 as directing the Administrator to recommend a single, uniform 
definition for socially and economically disadvantaged and minority 
owned small businesses. It makes the same interpretation regarding 
small businesses owned and controlled by women and woman-owned small 
businesses. Consequently, the Administrator does not intend to 
recommend substantive changes in the definitions of these terms, other 
than those necessary to arrive at a uniform definition. The 
Administrator does intend to recommend adoption of a single, uniform 
definition for small disadvantaged businesses and for women-owned small 
businesses, respectively. Furthermore, the Administrator currently 
intends to recommend statutory provisions which would provide that the 
definitions of these terms contained in the Small Business Act, as it 
would be amended, would supersede all other similar definitions of 
these terms contained in various other laws.
    Certifications: Certification of firms as eligible participants in 
a program for small disadvantaged or small women-owned businesses is 
one of the most important features of such a program. A reliable 
certification program ensures that only eligible firms participate, 
while preventing ineligible firms from taking advantage of the program. 
A certification program that meets this objective may range from the 
simple to the complex and may, depending on the nature of the program 
adopted, impose significant administrative and financial burdens on 
agencies and small businesses. Several issues have been raised 
regarding possible changes to certification standards and procedures. 
The preliminary discussions held to date indicate a wide variety of 
views as to the most desirable method of performing certifications of 
small businesses as socially and economically disadvantaged and as 
women-owned. The possible methods of accomplishing this include the 
following:
    a. Creation of a uniform federal government-wide certification 
program. [[Page 458]] Such a program could be administered by one 
agency or by several agencies of the government. In any case, once a 
certification was granted to a business concern, that certification 
would be good for all other federal departments and agencies for the 
period of time set for the certification. Potential problems that would 
have to be addressed include availability of resources to administer 
the program and availability of local information on applicants.
    b. Adoption of certifications by non-federal agencies, possibly 
state and local governments or private organizations. Such governments 
or organizations would have to first qualify as applying standards 
compatible with those of the federal government. After such 
qualification, they would act in the place of the federal government 
for purposes of granting certifications or on behalf of the federal 
government. This might be accomplished either by creating a program 
granting them the necessary authority or by contracting with them to 
perform the service for the federal government. Certification by such 
organizations would be good for all federal departments and agencies 
for the period of time set for the certification.
    c. In addition to the issues of who might grant certifications or 
how, the question of auditing was also raised. Currently, under the 
Small Business Act 8(d) program (for subcontractors) and certain 
Department of Defense programs, businesses can self-certify. If a self-
certification program of this type were extended to other federal 
programs, local certifying authorities, if they were adopted, could 
engage in an auditing program, whether universal or random in nature. 
Potential problems that would have to be addressed include utility of 
the program in preventing ``fronts'' from exploiting the program and 
availability of resources to administer the auditing program.
    Various aspects of these approaches could also be combined.

MATTERS TO BE DEVELOPED: The Administrator intends to develop 
recommendations for uniform definitions relating to small disadvantaged 
businesses and to women-owned small businesses. These definitions will 
be applicable to all federal departments and agencies in their 
contracting, grants, and cooperative agreements actions. In addition, 
the Administrator intends to develop recommendations for a single, 
uniform system of standards and procedures for federal certification of 
small disadvantaged and small women-owned businesses. The Administrator 
also intends to consider whether the term ``socially and economically 
disadvantaged business'' should be changed to some other appropriate 
term.

PUBLIC COMMENTS: The Administrator solicits the comments of interested 
agencies and parties regarding their views of the matters to be 
developed. These comments may include references to additional statutes 
that the commentor believes relevant, to proposals regarding terms to 
be used in the uniform definitions, to proposals for ways and means of 
creating a uniform system of certifications, and suggestions as to what 
form it should take. Additionally, commentors may address the goals to 
be achieved by creating uniform definitions and uniform standards and 
procedures, differences in procurements under contracts, grants, and 
cooperative agreements, and means of avoiding unnecessary disruption of 
existing programs.

DATES: Comments in response to this notice should be received at OFPP 
by close of business on February 20, 1995.

ADDRESSES: Comments should be submitted to the OFPP, New Executive 
Office Building, Room 9001, 725 17th Street, NW, Washington, DC 20503, 
Attention: Ms. Linda Mesaros.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Mesaros at 202-395-4821.
Steven Kelman,
Administrator.
[FR Doc. 95-7 Filed 1-3-95; 8:45 am]
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