3310 Federal Register / Vol. 61, No. 21 / Wednesday, January 31, 1996 / Rules and Regulations

(1) Refinance indebtedness which you

incurred prior to the disaster event;

(2) Make payments on loans owned by

another federal agency (including SBA)

or a Small Business Investment

Company licensed under the Small

Business Investment Act;

(3) Pay, directly or indirectly, any

obligations resulting from a federal,

state or local tax penalty as a result of

negligence or fraud, or any non-tax

criminal fine, civil fine, or penalty for

non-compliance with a law, regulation,

or order of a federal, state, regional, or

local agency or similar matter;

(4) Repair physical damage; or

(5) Pay dividends or other

disbursements to owners, partners,

officers or stockholders, except for

reasonable remuneration directly related

to their performance of services for the

business.

Dated: January 19, 1996.

Philip Lader,

Administrator.

[FR Doc. 96–1162 Filed 1–30–96; 8:45 am]

BILLING CODE 8025–01–P

13 CFR Part 125

Government Contracting Assistance

AGENCY: Small Business Administration.

ACTION: Final rule.

SUMMARY: In response to President

Clinton’s Government-wide regulatory

reform initiative, the Small Business

Administration (SBA) has completed a

page-by-page, line-by-line review of all

of its existing regulations to determine

which should be revised or eliminated.

This rule would eliminate seven

sections which are currently contained

in 13 CFR Part 125 pertaining to SBA’s

procurement assistance programs. The

Part will be retitled Government

Contracting Assistance.

EFFECTIVE DATE: This rule is effective on

March 1, 1996.

FOR FURTHER INFORMATION CONTACT: John

W. Klein, Chief Counsel for Special

Programs, at (202) 205–6645.

SUPPLEMENTARY INFORMATION: Part 125 of

chapter I of title 13 of the Code of

Federal Regulations sets forth the

policies and procedures by which SBA

regulates Government contracting. On

November 27, 1995 (60 FR 58276), SBA

published a proposed rule in the

Federal Register to reorganize part 125,

eliminating seven sections and

streamlining other sections. SBA

proposed minor, but substantive, rule

changes—notably, removing WalshHealey determinations from the

Certificate of Competency process;

increasing the threshold over which a

contracting officer could appeal the

award of a Certificate of Competency to

Headquarters from $25,000 to $100,000,

and clarifying that prospective

limitations on subcontracting applied to

base year contracts, irrespective of

option years.

SBA received sixteen timely

comments to this proposed revision.

Eleven of the comments were directed at

proposed § 125.4, which concerns

Government property sale assistance.

One was directed at the proposed

elimination of § 125.10, the

Procurement Automated Source System

(PASS). The remainder raised objections

to proposed § 125.6, dealing with

subcontracting limitations.

SBA proposed a streamlined section

on government property sales at § 125.4.

The proposed section described the

purpose of the Government property

sales assistance program; described

what the program does; described what

sorts of economic activities are covered

by the program; and referred the reader

to the appropriate sections in Part 121

to obtain the size standards for the

program. This section replaces present

§ 125.8, which recites the size standards

in detail, describes who in SBA is

responsible for administering the

program, sets forth what interagency

agreements SBA has concerning the

program and with whom, sets forth the

form number of the applicable

certification, describes penalties for

contract breach, and sets forth the

program’s ‘‘emphasis’’, not only in the

present but in the past as well.

Eight of the eleven comments

discussing this section expressed the

mistaken belief that the proposed

revision would eliminate all references

to the Government property sales

assistance program. All eleven of the

comments expressed concern that in the

absence of the current detailed

regulation, the general public, the

timber industry and employees of the

Federal Government would lack

sufficient information to properly utilize

the program. Some of these commenters

expressed concern that in the absence of

the particulars of present § 125.8, other

agencies having interagency agreements

with the SBA would be unaware of their

responsibilities under those agreements.

Conversely, other commenters were

concerned that the proposed revision

would somehow ‘‘signal’’ those other

agencies that they were no longer bound

by their agreements. Some commenters

were concerned that without a

regulation which assigns specific duties

to specific SBA employees, SBA would

soon eliminate those employees.

Finally, one commenter claims that

were SBA not to designate in the Code

of Federal Regulations which employees

were to carry out which responsibilities

under the Government property sales

assistance program, SBA would be in

violation of the Freedom of Information

Act (5 U.S.C. 552).

SBA has considered all of these

comments, but believes that § 125.4 as

proposed is an appropriate regulation.

Current § 125.8 has little useful

information for either interested small

businesses or for federal agencies

conducting sales under the program.

The statutory language replicated in

current § 125.8 is among the most

general in the entire Small Business Act,

guaranteeing only that a ‘‘fair’’

proportion of sales and leases be given

to small businesses. The bare recitation

of which agencies have Interagency

Agreements with SBA which relate to

the Government Property Sales

Assistance Program provides no useful

information to the interested small

business. The contents of those

agreements, which may be obtained

from the Small Business Administration

upon request, may be of help, but they

are not printed in the present regulation,

and to include them in the Code of

Federal Regulations would be

impractical. The agencies themselves, of

course, know what the agreements

require them to do, and a regulation is

not needed to create enforceability.

SBA’s own obligations under the

Government Property Sales Assistance

Program remain unaffected by removing

specific references to which SBA

employee performs which task.

Descriptions of duties of employees and

other internal management matters need

not be contained in regulations.

The size standards relevant to the

timber set-aside program will be

restated, with more clarity, in new

§§ 121.506–121.508 of this chapter. A

proposed rule revising Part 121 of these

regulations was published on November

24, 1995, and will become final when

this rule becomes effective. There is no

substantive change to the size standard.

SBA disagrees with the contention

that the Freedom of Information Act

requires that SBA set forth in regulation

the responsibilities of the property sales

industrial representative, as the current

regulation does. FOIA merely requires

that agencies publish descriptions of

their organization, not that they publish

specific responsibilities for specific

staff. Moreover, FOIA merely requires

that this publication be in the Federal

Register, not in regulations.

One commenter urges that § 125.10 be

retained if its deletion ‘‘in any way

diminishes the quality, availability, or

emphasis for this program.’’ The
Federal Register / Vol. 61, No. 21 / Wednesday, January 31, 1996 / Rules and Regulations 3311

deletion of this regulation will have

none of these adverse effects.

Three of the commenters objected to

proposed § 125.6(e), which would

measure a small business offeror’s

compliance with subcontracting

limitation percentages on the basis of

the work it will perform during the base

contract period only, regardless of the

work it does during contract option

years.

The commenters argued that SBA’s

proposed regulation was contrary to the

legislative intent behind the statute,

which was to apply the subcontracting

limitations to the anticipated length of

the contract, rather than to individual

task orders. One of the commenters also

argued that such a regulation would

make it particularly difficult for small

businesses to bid in high-tech fields,

where the common practice of the

industry is to subcontract large portions

of the contract at the beginning phases

and to gradually perform more and more

of the work in-house. Another

commenter also pointed out that the

proposed rule was inconsistent with

§ 17.206(a) of the Federal Acquisition

Regulation (48 CFR § 17.206(a)), which

requires purchasing agencies to evaluate

proposals over their full length, rather

than simply the base year.

Unfortunately, the mere existence of

option years in a contract is not

necessarily dispositive of the question

of the anticipated length of that

contract. Some agencies offer contracts

with short base periods and many

option years as the best way to protect

the agency’s interests, without any real

expectation that the awardee will

perform the contract for the full period.

It would defeat the purpose of § 644(o)

to permit, for example, an award to a

concern which ends up subcontracting

most of the performance during the

actual period of performance on the

basis of its promise to perform with its

own personnel during option years

which are never awarded.

However, SBA agrees that where the

purchasing activity awards the contract

on the basis of an evaluation of more

than the base period, SBA should accept

this evaluation as evidence of the

anticipated length of the contract.

Accordingly, SBA has modified new

§ 125.6(e) so that where a proposal is

evaluated on the basis of more than the

base year, the contract awardee must

perform the statutory minimum over the

period of time upon which the

evaluation is made. In all other

instances, the contract awardee must

perform the statutory minimum over the

base period.

Another commenter objected to the

language of § 125.6(a), which sets forth

the subcontracting limitations, where

applicable, for each type of

procurement. This commenter

contended that the language of present

§ 124.314, which sets forth

subcontracting limitations on 8(a)

concerns, is more clear. SBA disagrees.

SBA believes the wording of § 125.6

merely eliminates unnecessary wording.

No substantive difference is intended.

One commenter asked why proposed

§ 125.6(a)(2), which establishes a 50%

performance of work requirement for

contractors for supplies (other than

procurement from a regular dealer in

such supplies) establishes no

performance or work requirement for

regular dealers. SBA believes that the

statute imposes no requirement on

regular dealers to perform any

percentage of the work.

A commenter noted that the language

of proposed § 125.6(b), which

establishes the definition of certain

accounting terms for purposes of

complying with the limitations on

subcontracting, may be too burdensome

for small business offerors who

normally have less formal accounting

procedures. SBA does not consider it

unduly burdensome for small business

offerors to employ these terms. The

terms need defining in a consistent way

and the definitions are not overly

complex.

Two commenters noted that in many

instances small business offerors have

not made at the time of their offer the

decisions they need to make in order to

determine how much of the contract

they intend to subcontract. SBA must

respect the need of federal agencies to

determine the eligibility of small

business bidders by a date certain. In

the instance of a sealed bid, the

contracting officer must be able to

determine whether a bidder is

responsible at the time of bid opening

and, if it is not, must be able to move

on to the next bidder. Similarly, in the

instance of a negotiated procurement,

the small business offeror will have

substantially completed its

subcontracting intentions by the time it

makes its best and final offer, and must

be able to commit to compliance with

statutory limitations on subcontracting

at that point.

A commenter noted proposed

§ 125.6(d) treated subcontracting

limitations as a responsibility, rather

than a size, issue and stated that this

decision would raise questions as to

whether the proposed regulation was a

renunciation of the ostensible

subcontractor rule found in

§ 121.401(l)(4). SBA has decided to treat

limitations on subcontracting as a

responsibility matter because it relates

to how a contractor intends to perform

a specific contract and is analogous to

traditional responsibility issues such as

capacity and credit. Moreover, treating

the issue in this way places the

obligation to question compliance with

the contracting officer, and insures that

the contracting agency will be consulted

before a negative determination is

overruled by SBA. This new rule will

not affect the ostensible subcontractor

rule, which is being restated in new

§ 121.103(f)(3). Size protests will

continue to be processed where the

protester alleges an anticipated awardee

exceeds the applicable size standard

due to a joint venture relationship with

a purported subcontractor, regardless of

whether the limitations on

subcontracting percentages will be met

by the awardee.

Another comment was an objection to

the provision of § 125.6(f), which

provides that work which a concern

intends to subcontract to subsidiaries

and affiliates would not count as work

performed by the concern. The

commenter points out that SBA does not

treat the affiliate as a separate entity for

purposes of size determination and

argues that it is inconsistent to treat the

affiliate as a separate entity for purposes

of subcontracting. The commenter also

points out that an applicant can easily

defeat this restriction by bidding as a

joint venture with its affiliate.

SBA believes that the governing

statute, 15 U.S.C. 644(o), urges this

result. That statute refers to ‘‘employees

of the concern’’ (contracts for services)

and ‘‘the concern will perform work’’

(contracts for supplies). SBA regulations

define a ‘‘concern’’ as ‘‘a business entity

organized for profit * * * (which) may

be in the legal form of an individual

proprietorship, partnership,

corporation, joint venture, association,

trust or a cooperative * * *.’’ (13 CFR

121.403).

An offeror and its affiliates are

separate legal entities. Even if the

statute were construed to permit a

different rule, SBA believes a regulation

defining ‘‘concern’’ differently for

different purposes could be burdensome

and confusing. While it is true that SBA

aggregates for size purposes the

employees or revenues of subsidiaries or

affiliates of a concern, SBA does not

treat the different legal entities as

having merged or lost their separate

identities in terms of ownership,

management, assets and liabilities. To

credit work performed by a subsidiary

or an affiliate as work performed by the

concern itself would be inconsistent

with this approach.

Finally, two commenters inquired as

to how SBA or a contracting officer can
3312 Federal Register / Vol. 61, No. 21 / Wednesday, January 31, 1996 / Rules and Regulations

determine an offeror’s compliance with

subcontracting restrictions before an

award. As a responsibility matter, the

contracting officer will determine

whether an offeror intends to comply

and if so, whether it is capable of

complying. SBA may then review

adverse determinations. If award occurs,

the contracting officer will have a

continuing responsibility to monitor

contract performance to assure

compliance with contract terms,

including subcontracting limitations.

In addition to modifying the provision

governing the period of time considered

for measuring compliance with statutory

subcontracting limitations, the final rule

makes minor changes from the proposed

rule in order to further streamline the

part. SBA has removed the list of

‘‘additional responsibilities’’ assigned to

commercial marketing representatives

(CMRs) set forth in proposed § 125.3(e).

CMRs will be assigned responsibilities

in addition to their matching tasks as

the need arises. SBA has also deleted

the last sentence of proposed

§ 125.6(b)(4), which was inadvertently

included in the proposed regulation.

The treatment of leasing utility

distribution facilities in the context of

this section is still under review. SBA

also corrected an inadvertent error

contained in the proposed rule as to the

eligibility of kit assemblers for a

certificate of competency

(§ 125.5(b)(1)(v)(B) of the proposed

rule). The final rule will continue SBA’s

policy of making COCs available to kit

assemblers regardless of the size of the

manufacturer where the procurement is

unrestricted, and of making COCs

available to kit assemblers on small

business set-asides only where they

provide components manufactured only

by domestic small businesses. SBA has

also removed language in that

subparagraph relating to the treatment

of components manufactured by

directed sources where the sources are

large businesses. Under current

regulations, contracting agencies must

first obtain a waiver of the

nonmanufacturing rule from SBA before

they may direct large business sources

in a small business set-aside.

Accordingly, there is no need to include

additional language governing directed

sources.

Compliance With Executive Orders

12612, 12778, and 12866, the

Regulatory Flexibility Act (5 U.S.C. 601,

et seq.), and the Paperwork Reduction

Act (44 U.S.C. Ch. 35)

SBA certifies that this rule will not

have a significant economic impact on

a substantial number of small entities

within the meaning of Executive Order

12866 or the Regulatory Flexibility Act,

5 U.S.C. 601, et seq. This rule eliminates

seven sections of SBA’s regulations that

SBA has determined to be obsolete,

unnecessary, or duplicative. The

remaining regulations have been

rewritten for clarity and ease of use. No

contracting opportunities for small

business will be affected by this rule.

Therefore, it is not likely to have an

annual economic impact of $100 million

or more, result in a major increase in

costs or prices, or have a significant

adverse effect on competition or the

U.S. economy.

For purposes of the Paperwork

Reduction Act, 44 U.S.C. Ch. 35, SBA

certifies that this rule contains no new

reporting or recordkeeping

requirements.

For purposes of Executive Order

12612, SBA certifies that this rule does

not have any federalism implications

warranting the preparation of a

Federalism Assessment.

For purposes of Executive Order

12778, SBA certifies that this rule is

drafted, to the extent practicable, in

accordance with the standards set forth

in Section 2 of that Order.

List of Subjects in 13 CFR Part 125

Government contracts, Government

procurement, Reporting and

recordkeeping requirements, Small

businesses, Technical assistance.

Accordingly, pursuant to the

authority set forth in Section 4 of Public

Law 101–515 (104 Stat. 2140), Section

610(a) of Public Law 100–202 (101 Stat.

1329–39), sections 5(b)(6), 8 and 15 of

the Small Business Act, 72 Stat. 384, as

amended (15 U.S.C. 631, et seq.), 31

U.S.C. 9701, 9702, SBA hereby revises

Part 125 of Title 13 of the Code of

Federal Regulations to read as follows:

PART 125—GOVERNMENT

CONTRACTING PROGRAMS

Sec.

125.1 Programs included.

125.2 Prime contracting assistance.

125.3 Subcontracting assistance.

125.4 Government property sales

assistance.

125.5 Certificate of Competency program.

125.6 Prime contractor performance

requirements (limitations on

subcontracting).

Authority: 15 U.S.C. 634(b)(6), 637, and

644; 31 U.S.C. 9701, 9702.

§ 125.1 Programs included.

The regulations in this part relate to

the Government contracting assistance

programs of SBA. There are four main

programs: Prime contracting assistance;

Subcontracting assistance; Government

property sales assistance; and the

Certificate of Competency program. The

objective of the programs is to assist

small businesses in obtaining a fair

share of Federal Government contracts,

subcontracts, and property sales.

§ 125.2 Prime contracting assistance.

(a) Traditional PCR responsibilities.

(1) SBA Procurement Center

Representatives (PCRs) are located at

Federal agencies and buying activities

which have major contracting programs.

PCRs review all acquisitions not set

aside for small businesses to determine

whether a set-aside would be

appropriate. In cases where there is

disagreement between a PCR and the

contracting officer over the suitability of

a particular acquisition for a small

business set-aside, the PCR may initiate

an appeal to the head of the contracting

activity. If the head of the contracting

activity agrees with the contracting

officer, SBA may appeal to the secretary

of the department or head of the agency.

The procedures and time limits for such

appeals are set forth in § 19.505 of the

Federal Acquisition Regulation (FAR)

(48 CFR 19.505).

(2) PCRs review and evaluate the

small business programs of Federal

agencies and buying activities and make

recommendations for improvement.

They also recommend small business,

small women-owned business, and

small disadvantaged business sources

for use by contracting activities and

assist these businesses in obtaining

Federal contracts and subcontracts.

Other authorized duties of a PCR are set

forth in the FAR in 48 CFR 19.402(c)

and in the Small Business Act (the Act)

in Section 15(a) (15 U.S.C. 644(a)).

(b) BPCR responsibilities. (1) SBA is

required by section 403 of Public Law

98–577 (15 U.S.C. 644(l)) to assign a

breakout PCR (BPCR) to major

contracting centers. A major contracting

center is a center that, as determined by

SBA, purchases substantial dollar

amounts of other than commercial

items, and which has the potential to

achieve significant savings as a result of

the assignment of a BPCR.

(2) BPCRs advocate full and open

competition in the Federal contracting

process and recommend the breakout

for competition of items and

requirements which previously have not

been competed. They may appeal the

failure by the buying activity to act

favorably on a recommendation in

accord with the appeal procedures set

forth in § 19.505 of the FAR (48 CFR

19.505). BPCRs also review restrictions

and obstacles to competition and make

recommendations for improvement.

Other authorized functions of a BPCR

are set forth in 48 CFR 19.403(c) of the
Federal Register / Vol. 61, No. 21 / Wednesday, January 31, 1996 / Rules and Regulations 3313

FAR and Section 15(l) of the Act (15

U.S.C. 644(l)).

§ 125.3 Subcontracting assistance.

(a) The purpose of the subcontracting

assistance program is to achieve

maximum utilization of small business

by major prime contractors. The Act

requires other-than-small firms awarded

contracts that offer subcontracting

possibilities by the Federal Government

in excess of $500,000, or $1 million for

construction of a public facility, to

submit a subcontracting plan to the

contracting agency. The FAR sets forth

the requirements for subcontracting

plans in 48 CFR part 19, subpart 19.7,

and 48 CFR 52.219–9.

(b) Upon determination of the

successful subcontract offeror, but prior

to award, the prime contractor must

inform each unsuccessful subcontract

offeror in writing of the name and

location of the apparent successful

offeror. This is applicable to all

subcontracts over $10,000.

(c) SBA Commercial Market

Representatives (CMRs) facilitate the

process of matching large prime

contractors with small, small

disadvantaged, and small womenowned subcontractors. CMRs identify,

develop, and market small businesses to

the prime contractors and assist the

small firms in obtaining subcontracts.

(d) Each CMR has a portfolio of prime

contractors and conducts periodic

compliance reviews and needs

assessments of the companies in this

portfolio. CMRs are also required to

perform opportunity development and

source identification. Opportunity

development means assessing the

current and future needs of the prime

contractors. Source identification means

identifying those small, small

disadvantaged, and small womenowned firms which can fulfill the needs

assessed from the opportunity

development process.

§ 125.4 Government property sales

assistance.

(a) The purpose of SBA’s Government

property sales assistance program is to:

(1) Insure that small businesses obtain

their fair share of all Federal real and

personal property qualifying for sale or

other competitive disposal action; and

(2) Assist small businesses in

obtaining Federal property being

processed for disposal, sale, or lease.

(b) SBA property sales assistance

primarily consists of two activities:

(1) Obtaining small business setasides when necessary to insure that a

fair share of Government property sales

are made to small businesses; and

(2) Providing advice and assistance to

small businesses on all matters

pertaining to sale or lease of

Government property.

(c) The program is intended to cover

the following categories of Government

property:

(1) Sales of timber and related forest

products;

(2) Sales of strategic material from

national stockpiles;

(3) Sales of royalty oil by the

Department of Interior’s Minerals

Management Service;

(4) Leases involving rights to

minerals, petroleum, coal, and

vegetation; and

(5) Sales of surplus real and personal

property.

(d) SBA has established specific small

business size standards and rules for the

sale or lease of the different kinds of

Government property. These provisions

are contained in §§ 121.501 through

121.514 of this chapter.

§ 125.5 Certificate of Competency

Program.

(a) General. (1) The Certificate of

Competency (COC) Program is

authorized under section 8(b)(7) of the

Small Business Act. A COC is a written

instrument issued by SBA to a

Government contracting officer,

certifying that one or more named small

business concerns possess the

responsibility to perform a specific

Government procurement (or sale)

contract. The COC Program is applicable

to all Government procurement actions.

For purposes of this Section, the term

‘‘United States’’ includes its territories,

possessions, and the Commonwealth of

Puerto Rico.

(2) A contracting officer must, upon

determining an apparent low small

business offeror to be nonresponsible,

refer that small business to SBA for a

possible COC, even if the next low

apparently responsible offeror is also a

small business.

(3) A small business offeror referred to

SBA as nonresponsible may apply to

SBA for a COC. Where the applicant is

a non-manufacturing offeror on a supply

contract, the COC applies to the

responsibility of the non-manufacturer,

not to that of the manufacturer.

(b) COC Eligibility. (1) The offeror

seeking a COC has the burden of proof

to demonstrate its eligibility for COC

review. To be eligible for the COC

program, a firm must meet the following

criteria:

(i) It must qualify as a small business

concern under the size standard

applicable to the procurement. Where

the solicitation fails to specify a size

standard or Standard Industrial

Classification (SIC) code, SBA will

assign the appropriate size standard to

determine COC eligibility. SBA

determines size eligibility as of the date

described in § 121.404 of this chapter.

(ii) A manufacturing, service, or

construction concern must demonstrate

that it will perform a significant portion

of the proposed contract with its own

facilities, equipment, and personnel.

The contract must be performed or the

end item manufactured within the

United States.

(iii) A non-manufacturer making an

offer on a small business set-aside

contract for supplies must furnish end

items that have been manufactured in

the United States by a small business. A

waiver of this requirement may be

requested under §§ 121.1301 through

121.1305 of this chapter for either the

type of product being procured or the

specific contract at issue.

(iv) A non-manufacturer making an

offer on an unrestricted procurement or

a procurement utilizing simplified

acquisition threshold procedures with a

cost that does not exceed $25,000 must

furnish end items manufactured in the

United States to be eligible for a COC.

(v) An offeror intending to provide a

kit consisting of finished components or

other components provided for a special

purpose, is eligible if:

(A) It meets the Size Standard for the

SIC code assigned to the procurement;

(B) Each component comprising the

kit was manufactured in the United

States; and

(C) In the case of a set-aside, each

component comprising the kit was

manufactured by a small business under

the size standard applicable to the

component provided. A waiver of this

requirement may be requested under

§§ 121.1301 through 121.1305 of this

chapter.

(2) SBA will determine a concern

ineligible for a COC if the concern, or

any of its principals, appears in the

‘‘Parties Excluded From Federal

Procurement Programs’’ section found

in the U.S. General Services

Administration Office of Acquisition

Policy Publication: List of Parties

Excluded From Federal Procurement or

Nonprocurement Programs. If a

principal is unable to presently control

the applicant concern, and appears in

the Procurement section of the list due

to matters not directly related to the

concern itself, responsibility will be

determined in accordance with

paragraph (f)(2) of this section.

(3) An eligibility determination will

be made on a case-by-case basis, where

a concern or any of its principals

appears in the Nonprocurement Section

of the publication referred to in

paragraph (b)(2) of this section.
3314 Federal Register / Vol. 61, No. 21 / Wednesday, January 31, 1996 / Rules and Regulations

(c) Referral of nonresponsibility

determination to SBA. (1) A contracting

officer who determines that an

apparently successful offeror that has

certified itself to be a small business

with respect to a specific Government

procurement lacks any element of

responsibility (including competency,

capability, capacity, credit, integrity or

tenacity or perseverance) must refer the

matter in writing to the SBA

Government Contracting Area Office

(Area Office) serving the area in which

the headquarters of the offeror is

located. The referral must include a

copy of the following:

(i) Solicitation;

(ii) Offer submitted by the concern

whose responsibility is at issue for the

procurement (its Best and Final Offer for

a negotiated procurement);

(iii) Abstract of Bids, where

applicable, or the Contracting Officer’s

Price Negotiation Memorandum;

(iv) Preaward survey, where

applicable;

(v) Contracting officer’s written

determination of nonresponsibility;

(vi) Technical data package (including

drawings, specifications, and Statement

of Work); and

(vii) Any other justification and

documentation used to arrive at the

nonresponsibility determination.

(2) Contract award must be withheld

by the contracting officer for a period of

15 working days (or longer if agreed to

by SBA and the contracting officer)

following receipt by the appropriate

Area Office of a referral which includes

all required documentation.

(3) The COC referral must indicate

that the offeror has been found

responsive to the solicitation, and also

identify the reasons for the

nonresponsibility determination.

(d) Application for COC. (1) Upon

receipt of the contracting officer’s

referral, the Area Office will inform the

concern of the contracting officer’s

negative responsibility determination,

and offer it the opportunity to apply to

SBA for a COC by a specified date.

(2) The COC application must include

all information and documentation

requested by SBA and any additional

information which the firm believes will

demonstrate its ability to perform on the

proposed contract. The application

should be returned as soon as possible,

but no later than the date specified by

SBA.

(3) Upon receipt of a complete and

acceptable application, SBA may elect

to visit the applicant’s facility to review

its responsibility. Where a service or

construction contract will be performed

outside the United States, SBA will rely

solely on documentation and other

relevant information obtained within

the United States. SBA personnel may

obtain clarification or confirmation of

information provided by the applicant

by directly contacting suppliers,

financial institutions, and other third

parties upon whom the applicant’s

responsibility depends.

(e) Incomplete applications. If an

application for a COC is materially

incomplete or is not submitted by the

date specified by SBA, SBA will close

the case without issuing a COC and will

notify the contracting officer and the

concern with a declination letter.

(f) Reviewing an application. (1) The

COC review process is not limited to the

areas of nonresponsibility cited by the

contracting officer. SBA may, at its

discretion, independently evaluate the

COC applicant for all elements of

responsibility, but it may presume

responsibility exists as to elements other

than those cited as deficient. SBA may

deny a COC for reasons of

nonresponsibility not originally cited by

the contracting officer.

(2) A small business will be rebuttably

presumed nonresponsible if any of the

following circumstances are shown to

exist:

(i) Within three years before the

application for a COC, the concern, or

any of its principals, has been convicted

of an offense or offenses that would

constitute grounds for debarment or

suspension under FAR subpart 9.4 (48

CFR part 9, subpart 9.4), and the matter

is still under the jurisdiction of a court

(e.g., the principals of a concern are

incarcerated, on probation or parole, or

under a suspended sentence); or

(ii) Within three years before the

application for a COC, the concern or

any of its principals has had a civil

judgment entered against it or them for

any reason that would constitute

grounds for debarment or suspension

under FAR subpart 9.4 (48 CFR part,

subpart 9.4).

(g) Decision by Area Director

(‘‘Director’’). After reviewing the

information submitted by the applicant

and the information gathered by SBA,

the Area Director will make a

determination, either final or

recommended as set forth in the

following chart:

Contracting actions SBA official or office with authority to make

decision

Finality of decision; options for contracting

agencies

$100,000 or less, or in accordance with Simplified Acquisition Threshold procedures.Director may approve or deny .......................... Final. The Director will notify both applicant

and contracting agency in writing of the decision.

Between $100,000 and $25 million .................. (1) Director may deny ....................................... (1) Final.

(2) Director may approve, subject to right of

appeal and other options.

(2) Contracting agency may proceed under

paragraph (h) or paragraph (i) of this section.

Exceeding $25 million ....................................... (1) Director may deny ....................................... (1) Final.

(2) Director must refer to SBA Headquarters

recommendation for approval.

(2) Contracting agency may proceed under

paragraph (j) of this section.

(h) Notification of intent to issue on

a contract with a value between

$100,000 and $25 million. Where the

Director determines that a COC is

warranted, he or she will notify the

contracting officer of the intent to issue

a COC, and of the reasons for that

decision, prior to issuing the COC. At

the time of notification, the contracting

officer has the following options:

(1) Accept the Director’s decision to

issue the COC and award the contract to

the concern. The COC issuance letter

will then be sent, including as an

attachment a detailed rationale of the

decision; or

(2) Ask the Director to suspend the

case for one of the following purposes:

(i) 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;

(iii) To submit any information which

the contracting officer believes SBA has

not considered (at which time, SBA will

establish a new suspense date mutually
Federal Register / Vol. 61, No. 21 / Wednesday, January 31, 1996 / Rules and Regulations 3315

agreeable to the contracting officer and

SBA); or

(iv) To permit resolution of an appeal

by the contracting agency to SBA

Headquarters under paragraph (i) of this

section.

(i) Appeals of Area Director

determinations. For COC actions with a

value exceeding $100,000, contracting

agencies may appeal a Director’s

decision to issue a COC to SBA

Headquarters by filing an appeal with

the Area Office processing the COC

application. The Area Office must honor

the request to appeal if the contracting

officer agrees to withhold award until

the appeal process is concluded.

Without such an agreement from the

contracting officer, the Director must

issue the COC. When such an agreement

has been obtained, the Area Office will

immediately forward the case file to

SBA Headquarters.

(1) The intent of the appeal procedure

is to allow the contracting agency the

opportunity to submit to SBA

Headquarters any documentation which

the Area Office may not have

considered.

(2) SBA Headquarters will furnish

written notice to the Director, Office of

Small and Disadvantaged Business

Utilization (OSDBU) at the secretariat

level of the procuring agency (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 at that level. If the

contracting agency decides to file an

appeal, it must notify SBA Headquarters

through its Director, OSDBU, within 10

working days (or a time period agreed

upon by both agencies) of its receipt of

the notice under paragraph (h) of this

section. The appeal and any supporting

documentation must be filed within 10

working days (or a different time period

agreed to by both agencies) after SBA

receives the request for a formal appeal.

(3) The SBA Associate Administrator

for Government Contracting (AA/GC)

will make a final determination, in

writing, to issue or to deny the COC.

(j) Decision by SBA Headquarters

where contract value exceeds $25

million. (1) Prior to taking final action,

SBA Headquarters will contact the

contracting agency at the secretariat

level or agency equivalent and afford it

the following options:

(i) Ask SBA Headquarters to suspend

the case so that the agency can meet

with Headquarters personnel and

review all documentation contained in

the case file; or

(ii) Submit to SBA Headquarters for

evaluation any information which the

contracting agency believes has not been

considered.

(2) After reviewing all available

information, the AA/GC will make a

final decision to either issue or deny the

COC. If the AA/GC’s decision is to deny

the COC, the applicant and contracting

agency will be informed in writing by

the Area Office. If the decision is to

issue the COC, a letter certifying the

responsibility of the firm will be sent to

the contracting agency by Headquarters

and the applicant will be informed of

such issuance by the Area Office. Except

as set forth in paragraph (l) of this

section, there can be no further appeal

or reconsideration of the decision of the

AA/GC.

(k) Notification of denial of COC. The

notification to an unsuccessful

applicant following either an Area

Director or a Headquarters denial of a

COC will briefly state all reasons for

denial and inform the applicant that a

meeting may be requested with

appropriate SBA personnel to discuss

the denial. Upon receipt of a request for

such a meeting, the appropriate SBA

personnel will confer with the applicant

and explain the reasons for SBA’s

action. The meeting does not constitute

an opportunity to rebut the merits of the

SBA’s decision to deny the COC, and is

for the sole purpose of giving the

applicant the opportunity to correct

deficiencies so as to improve its ability

to obtain future contracts either directly

or, if necessary, through the issuance of

a COC.

(l) Reconsideration of COC after

issuance. (1) An approved COC may be

reconsidered and possibly rescinded, at

the sole discretion of SBA, where an

award of the contract has not occurred,

and one of the following circumstances

exists:

(i) The COC applicant submitted false

or omitted materially adverse

information;

(ii) New materially adverse

information has been received relating

to the current responsibility of the

applicant concern; or

(iii) The COC has been issued for

more than 60 days (in which case SBA

may investigate the firm’s current

circumstances).

(2) Where SBA reconsiders and

reaffirms the COC the procedures under

paragraph (h) of this section do not

apply.

(m) Effect of a COC. By the terms of

the Act, a COC is conclusive as to

responsibility. Where SBA issues a COC

on behalf of a small business with

respect to a particular contract,

contracting officers are required to

award the contract without requiring the

firm to meet any other requirement with

respect to responsibility.

(n) Effect of Denial of COC. Denial of

a COC by SBA does not preclude a

contracting officer from awarding a

contract to the referred firm, nor does it

prevent the concern from making an

offer on any other procurement.

(o) Monitoring performance. Once a

COC has been issued and a contract

awarded on that basis, SBA may

monitor contractor performance.

§ 125.6 Prime contractor performance

requirements (limitations on

subcontracting).

(a) In order to be awarded a full or

partial small business set-aside contract,

an 8(a) contract, or an unrestricted

procurement where a concern has

claimed a 10 percent small

disadvantaged business (SDB) price

evaluation preference, a small business

concern must agree that:

(1) In the case of a contract for

services (except construction), the

concern will perform at least 50 percent

of the cost of the contract incurred for

personnel with its own employees.

(2) In the case of a contract for

supplies or products (other than

procurement from a regular dealer in

such supplies or products), the concern

will perform at least 50 percent of the

cost of manufacturing the supplies or

products (not including the costs of

materials).

(3) In the case of a contract for general

construction, the concern will perform

at least 15 percent of the cost of the

contract with its own employees (not

including the costs of materials).

(4) In the case of a contract for

construction by special trade

contractors, the concern will perform at

least 25 percent of the cost of the

contract with its own employees (not

including the cost of materials).

(b) Definitions. The following

definitions apply to this section:

(1) Cost of the contract. All allowable

direct and indirect costs allocable to the

contract, excluding profit or fees.

(2) Cost of contract performance

incurred for personnel. Direct labor

costs and any overhead which has only

direct labor as its base, plus the

concern’s General and Administrative

rate multiplied by the labor cost.

(3) Cost of manufacturing. Those costs

incurred by the firm in the production

of the end item being acquired. These

are costs associated with the

manufacturing process, including the

direct costs of fabrication, assembly, or

other production activities, and indirect

costs which are allocable and allowable.

The cost of materials, as well as the

profit or fee from the contract, are

excluded.

(4) Cost of materials. Includes costs of

the items purchased, handling and
3316 Federal Register / Vol. 61, No. 21 / Wednesday, January 31, 1996 / Rules and Regulations

associated shipping costs for the

purchased items (which includes raw

materials), off-the-shelf items (and

similar proportionately high-cost

common supply items requiring

additional manufacturing or

incorporation to become end items),

special tooling, special testing

equipment, and construction equipment

purchased for and required to perform

on the contract. In the case of a supply

contract, the acquisition of services or

products from outside sources following

normal commercial practices within the

industry are also included.

(5) Off-the-shelf item. An item

produced and placed in stock by a

manufacturer, or stocked by a

distributor, before orders or contracts

are received for its sale. The item may

be commercial or may be produced to

military or Federal specifications or

description. Off-the-shelf items are also

known as Nondevelopmental Items

(NDI).

(6) Personnel. Individuals who are

‘‘employees’’ under § 121.106 of this

chapter.

(7) Subcontracting. That portion of

the contract performed by a firm, other

than the concern awarded the contract,

under a second contract, purchase

order, or agreement for any parts,

supplies, components, or subassemblies

which are not available off-the-shelf,

and which are manufactured in

accordance with drawings,

specifications, or designs furnished by

the contractor, or by the government as

a portion of the solicitation. Raw

castings, forgings, and moldings are

considered as materials, not as

subcontracting costs. Where the prime

contractor has been directed by the

Government to use any specific source

for parts, supplies, components

subassemblies or services, the costs

associated with those purchases will be

considered as part of the cost of

materials, not subcontracting costs.

(c) SBA will determine compliance

with the Prime Contractor Performance

Requirements as of the following dates:

(1) In a sealed bid procurement, as of

the date the bid was submitted;

(2) In a negotiated procurement, as of

the date the concern submits its best

and final offer. If a concern is

determined not to be in compliance at

the time it submits its best and final

offer, it may not come into compliance

later for that procurement by revising its

subcontracting plan.

(d) Compliance will be considered an

element of responsibility and not a

component of size eligibility.

(e) The period of time used to

determine compliance will be the

period of performance which the

evaluating agency uses to evaluate the

proposal or bid. If the evaluating agency

fails to articulate in its solicitation the

period of performance it will use to

evaluate the proposal or bid, the base

contract period, excluding options, will

be used to determine compliance. In

indefinite quantity contracts,

performance over the guaranteed

minimum will be used to determine

compliance unless the evaluating

agency articulates a different period of

performance which it will use to

evaluate the proposal or bid in its

solicitation.

(f) Work to be performed by

subsidiaries or other affiliates of a

concern is not counted as being

performed by the concern for purposes

of determining whether the concern will

perform the required percentage of

work.

(g) The procedures of § 125.5 apply

where the contracting officer determines

non-compliance, the procurement is a

full or partial small business set-aside or

an SDB has claimed a preference, and

refers the matter to SBA for a COC

determination.

Dated: January 19, 1996.

Philip Lader,

Administrator.

[FR Doc. 96–1157 Filed 1–30–96; 8:45 am]

BILLING CODE 8025–01–P

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 165

[CGD 05–96–002]

Regulated Navigation Area:

Chesapeake Bay Ice Navigation

Season

AGENCY: Coast Guard, DOT.

ACTION: Notice of implementation.

SUMMARY: Coast Guard Captain of the

Port (COTP) Baltimore is placing in

effect from January 4, 1996 to April 15,

1996 the Regulated Navigation Area for

the Maryland portion of the Chesapeake

Bay, the District of Columbia, the

Potomac River and its tributaries on the

Maryland side, and the Maryland

portion of the Chesapeake and Delaware

Canal. Operators of specified vessels are

required to contact COTP Baltimore

prior to entering or getting underway

within the Regulated Navigation Area to

determine if operating restrictions have

been imposed due to ice conditions.

EFFECTIVE DATES: Section 165.503 of 33

CFR is effective from 12:01 a.m., January

4, 1996 to 12:01 a.m., April 15, 1996,

unless sooner terminated by the Captain

of the Port Baltimore by publication of

a notice in the Federal Register.

SUPPLEMENTARY INFORMATION: Call the 24

Hour recorded message at (410) 576–

2682, or U.S. Coast Guard Activities

Baltimore Duty Officer at (410) 576–

2520 for COTP ice information.

Drafting Information. The drafters of this

regulation are Lieutenant Eric Bautz, project

officer, Captain of the Port, Baltimore,

Maryland, and Lieutenant Kathleen A.

Duignan, project attorney, Fifth Coast Guard

District Legal Staff.

Discussion

Ice conditions frequently exist during

winter months on the northern portion

of Chesapeake Bay and its tributaries,

including the Chesapeake and Delaware

Canal. Severe ice conditions may

threaten the safety of persons, vessels

and the environment. COTP Baltimore

may issue specific COTP orders

imposing operating restrictions due to

ice conditions, vessel construction, and

cargo. Mariners are also encouraged to

monitor Broadcast Notices to Mariners

to determine if ice conditions exist in a

specific area.

Section 165.503 of 33 CFR establishes

a Regulated Navigation Area (RNA).

Operators of vessels carrying oil or

hazardous materials in bulk as cargo or

residue, power-driven vessels of three

hundred gross tons or more, vessels of

one hundred gross tons or more carrying

one or more passengers for hire, and

towing vessels of 26 feet or more in

length must contact COTP Baltimore

before entering or getting underway

within the RNA to obtain current COTP

orders. Section 165.503 will remain in

effect from January 4, 1996 to April 15,

1996.

Dated: January 3, 1996.

G.S. Cope,

Captain, U.S. Coast Guard, Captain of the

Port, Baltimore, Maryland.

[FR Doc. 96–1882 Filed 1–30–96; 8:45 am]

BILLING CODE 4910–14–M

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 82

[FRL–5406–3]

Protection of Stratospheric Ozone

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Notice of stay and

reconsideration.

SUMMARY: This action announces a

three-month stay and reconsideration of