[Federal Register Volume 73, Number 162 (Wednesday, August 20, 2008)]
[Proposed Rules]
[Pages 49141-49155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-19261]


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DEPARTMENT OF VETERANS AFFAIRS

48 CFR Parts 802, 804, 808, 809, 810, 813, 815, 819, 828, and 852

RIN 2900-AM92


VA Acquisition Regulation: Supporting Veteran-Owned and Service-
Disabled Veteran-Owned Small Businesses

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement portions of the Veterans 
Benefits, Health Care, and Information Technology Act of 2006 and 
Executive Order 13360, Providing Opportunities for Service-Disabled 
Veteran Businesses to Increase Their Federal Contracting and 
Subcontracting. The Public Law and Executive Order authorize the 
Department of Veterans Affairs (VA) to establish special methods for 
contracting with service-disabled veteran-owned small businesses 
(SDVOSBs) and veteran-owned small businesses (VOSBs). Under this 
proposed rule, a VA contracting officer could restrict competition in 
contracting for SDVOSBs or VOSBs under certain conditions. Likewise, 
sole source contracts with SDVOSBs or VOSBs would be permitted under 
certain conditions. The proposed rule would implement these special 
acquisition methods as a change to the VA Acquisition Regulation 
(VAAR).

DATES: Comments on the proposed rule should be submitted on or before 
October 20, 2008 to be considered in the formulation of the final rule.

ADDRESSES: Written comments may be submitted through 
www.Regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (02REG), Department of Veterans Affairs, 810 Vermont Ave., 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AM92--VA Acquisition Regulation: Supporting Veteran-Owned and 
Service-Disabled Veteran-Owned Small Businesses.'' All comments 
received will be available for public inspection in the Office of 
Regulation Policy and Management, Room 1063B, between the hours of 8 
a.m. and 4:30 p.m., Monday through Friday (except holidays). Please 
call (202) 461-4902 for an appointment. This is not a toll-free number. 
In addition, during the comment period, comments are available online 
through the Federal Docket Management System (FDMS) at 
www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Derek Underwood, Acquisition Policy 
Division (049P1A), Office of Acquisition and Logistics, Department of 
Veterans Affairs, 810 Vermont Ave., NW., Washington, DC, 20420, 
telephone number (202) 461-6865 (not a toll-free number) or e-mail 
<a href="/cdn-cgi/l/email-protection#296d4c5b4c42077c474d4c5b5e46464d695f48074e465f"><span class="__cf_email__" data-cfemail="86c2e3f4e3eda8d3e8e2e3f4f1e9e9e2c6f0e7a8e1e9f0">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Background

    VA's mission is to serve veterans. Buying from SDVOSBs and VOSBs 
directly supports VA's mission. Supporting service-disabled veterans 
who own businesses contributes significantly in restoring their quality 
of life while enhancing transition from active duty to civilian life. 
Such acquisitions maintain the socioeconomic well-being of the Nation 
and carry out VA's strategic goals. Section 1.102-2(d) of the Federal 
Acquisition Regulation (FAR) (codified at 48 CFR chapter 1) provides 
that the Federal Acquisition System ``must support the attainment of 
public policy goals adopted by the Congress and the President.'' It is 
public policy, as expressed in 15 U.S.C. 637 and 644 that SDVOSBs and 
VOSBs, among others, shall have the maximum practicable opportunity to 
participate in the

[[Page 49142]]

performance of contracts let by any Federal agency.
    Sections 502 and 503 of Public Law 109-461, the Veterans Benefits, 
Health Care, and Information Technology Act of 2006, (codified at 38 
U.S.C. 8127 and 8128) contain provisions that authorize VA to create a 
unique procurement program among Federal agencies. This program would 
permit VA contracting officers to conduct acquisition actions limited 
to SDVOSBs or VOSBs for the Department's requirements. The law requires 
the Secretary to give priority to a small business concern owned and 
controlled by veterans.
    On October 20, 2004, the President issued Executive Order 13360, 
Providing Opportunities for Service-Disabled Veteran Businesses to 
Increase Their Federal Contracting and Subcontracting. The Executive 
Order directs the heads of agencies to significantly increase 
opportunities for service-disabled veteran businesses in Federal prime 
contracting and subcontracting actions. To achieve that objective, the 
Executive Order requires agencies to more effectively implement section 
15(g) of the Small Business Act (15 U.S.C. 644(g)) through various 
efforts, including the development of a strategic plan to implement 
Executive Order 13360. VA has developed its strategic plan, which is 
posted at the following Internet Web site: http://www.vetbiz.gov/fpp/fpp.htm.
    VA proposes to amend the VAAR to implement the changes required by 
38 U.S.C. 8127 and 8128 and some rulemaking aspects of VA's strategic 
plan for Executive Order 13360. Specifically, this proposed rule would 
allow VA contracting officers to:
    <bullet> Under certain conditions, permit non-competitive sourcing 
under the simplified acquisition threshold with SDVOSBs or VOSBs.
    <bullet> Require set-asides for SDVOSBs or VOSBs above the 
simplified acquisition threshold when the contracting officer has a 
reasonable expectation that two or more eligible SDVOSBs or VOSBs will 
submit offers and that the award can be made at a fair and reasonable 
price that offers the best value to the United States.
    <bullet> Under certain conditions, permit non-competitive sourcing 
for SDVOSBs or VOSBs above the simplified acquisition threshold when 
the contracting officer determines that a fair and reasonable price 
will be obtained as a result of negotiations for requirements not to 
exceed $5 million.
    <bullet> Include evaluation factors in negotiated acquisitions that 
give preference to SDVOSBs and VOSBs and preference to offerors who 
propose to include such businesses as subcontractors.
    <bullet> Require offerors who propose to use SDVOSBs or VOSBs as 
subcontractors to utilize eligible businesses.
    <bullet> Require VOSBs participating in the Department's 
acquisitions to register in VetBiz.gov's Vendor Information Pages (VIP) 
database and verify that the business meets eligibility requirements.
    <bullet> Establish a VA Mentor-Prot[eacute]g[eacute] Program and 
give large businesses that participate in the program a preference in 
the award of VA prime contracts.
    <bullet> Encourage prime contractors and mentors to assist SDVOSBs 
and VOSBs in obtaining bonding when required.
    <bullet> Revise the eligibility definition for ``service-disabled 
veteran-owned small business concerns'' to include a spouse who obtains 
ownership rights upon the death of a 100 percent service-disabled 
veteran or a veteran who died as a direct result of a service-connected 
injury for a period of 10 years unless the spouse remarries or sells 
the interest in the business.
    <bullet> Recommend debarment of any business that willfully or 
deliberately misrepresents ownership and control of the business for 
purposes of registering in the VetBiz.gov Vendor Information Pages 
database or other Federal databases.
    <bullet> Under certain conditions, authorize Contracting Officers 
to acquire supplies and services from SDVOSBs and VOSBs in lieu of 
Federal Prison Industries (FPI) and the Government Printing Office 
(GPO).

Section 802.101 Definitions

    In proposed section 802.101, VA adopts and incorporates various 
statutory definitions. FAR 2.101 defines ``service-disabled veteran-
owned small business (SDVOSB) concern'' and ``veteran-owned small 
business (VOSB) concern.'' Prime and subcontracting actions conducted 
under the authority of 38 U.S.C. 8127, as implemented in VAAR subpart 
819.70, revise the definition of ``service-disabled veteran-owned small 
business concern'' and require that SDVOSBs and VOSBs must be 
registered in the Vendor Information Pages (VIP) and that the ownership 
and control of such businesses has been verified by VA. In addition, 
section 8127(h) enables a surviving spouse who obtains ownership rights 
to a business upon the death of a veteran with a service-connected 
disability rated at 100 percent, or a veteran who dies as a direct 
result of a service-connected disability, to have VA treat the business 
as a ``service-disabled veteran-owned small business'' for a 10-year 
period after the death of the veteran, unless the surviving spouse 
remarries, sells the interest in the business or the business outgrows 
the small business size standards. This section also includes a 
definition of VIP.

Section 804.1102 Vendor Information Pages

    FAR 4.1102 currently requires all businesses to be registered in 
the Central Contractor Registration (CCR). Proposed section 804.1102 
would require VOSBs, including SDVOSBs, to register in the VIP 
database, available at http://www.VetBiz.gov, in order to be eligible 
to participate in set-asides for SDVOSBs and VOSBs issued by VA 
contracting officers. In completing registration, businesses would 
provide information establishing that the business is owned and 
controlled by eligible parties, according to the criteria defined in 38 
U.S.C. 8127 and FAR 19.1403.

Section 808.603 Purchase Priorities

    Under certain conditions, this section would authorize contracting 
officers to purchase supplies and services produced or provided by FPI 
from eligible SDVOSBs and VOSBs, in accordance with procedures set 
forth in proposed VAAR subpart 819.70, without seeking a waiver from 
FPI. We interpret section 8128 and the legislative history to mean that 
SDVOSBs and VOSBs must receive priority in VA contracting opportunities 
without regard to other provisions of law concerning contracting 
preferences. This interpretation conflicts with the current contracting 
priorities in law, and as implemented in the FAR, for Federal agencies 
buying from FPI. VA finds that section 8128, being directly applicable 
solely to VA and providing authority without regard to any other 
provision of law, requires VA contracting officers to have the 
authority to override other statutory contracting preferences to 
provide priority to SDVOSBs and VOSBs to meet VA's socioeconomic goals 
for such concerns. Therefore, proposed section 808.603 is the only 
means available to VA to implement the requirement in section 8128 that 
veterans' small businesses have priority in VA acquisitions that would 
normally be awarded under FPI.

Section 808.803 Priority for Acquisition of Printing and Related 
Supplies

    This section would authorize contracting officers to acquire 
government printing from eligible service-disabled veteran-owned small 
businesses and veteran-owned small businesses, in accordance with

[[Page 49143]]

procedures set forth in VAAR subpart 819.70, in lieu of the Government 
Printing Office (GPO). We interpret section 8128 and the relevant 
legislative history as authorizing VA to give priority in contracting 
to SDVOSBs and VOSBs without regard to other provisions of law 
concerning contracting preferences. This interpretation conflicts with 
the current contracting priority in law, and as implemented in the FAR, 
which provides that Federal agencies buying printing services must 
procure such services from GPO. VA finds that section 8128, being 
directly applicable solely to VA and providing authority for priority 
in VA contracting without regard to any other provision of law, 
requires VA contracting officers to have the authority to override the 
statutory contracting preference for GPO services and instead provide 
priority in contracting to SDVOSBs and VOSBs for printing services and 
related supplies. Therefore, proposed section 808.803 is the only means 
available to VA to implement section 8128.

Section 809.406-2 Causes for Debarment

    FAR 9.406-2 lists several reasons for which a debarring official 
may initiate a debarment action. Proposed VAAR 809.406-2 adds one 
additional reason: misrepresentation of status as an SDVOSB or a VOSB, 
in accordance with section 8127(g).

Section 810.001 Market Research Policy

    FAR 10.001 requires agencies to conduct market research on an 
ongoing basis and to effectively identify the capabilities of small 
businesses to meet agency requirements. VAAR section 810.001 would 
establish that, when conducting market research, VA contracting teams 
shall use the VIP database, in addition to other sources of 
information.

Section 810.002 Market Research Procedures

    This section would require contracting officers to record VIP 
queries in the solicitation file.

Section 813.106 Soliciting Competition, Evaluation of Quotations or 
Offers, Award and Documentation

    This section would clarify that contracting officers may use other 
than competitive procedures to enter into a contract with an SDVOSB or 
VOSB when the amount is less than the simplified acquisition threshold 
not to exceed $5 million. Contracting officers would give first 
consideration to SDVOSBs.

Section 813.202 Purchase Guidelines

    FAR 13.202(a)(1) provides that, to the extent practicable, open 
market micro-purchases shall be distributed equitably among qualified 
suppliers. The set-aside provisions of FAR Part 19 do not apply to 
micro-purchases. However, in accordance with sections 8127 and 8128, VA 
would make an exception to this FAR requirement when supplies are 
available from SDVOSBs or VOSBs. We would add section 813.202 to allow 
preference for SDVOSB and VOSB sources when making local open market 
micro-purchases using the purchase card. In such cases, equitable 
distribution of open market micro-purchases among all qualified 
suppliers would not be required. Instead, open market micro-purchases 
would be equitably distributed among all qualified SDVOSBs or VOSBs, 
respectively, to the maximum extent practicable. We believe that this 
change would assist VA in meeting its statutory goals for award of 
contracts to SDVOSBs and VOSBs.

Sections 815.304 and 852.215-70 Evaluation Factors and Significant 
Subfactors

    To implement sections 8127 and 8128, VA would add sections 815.304 
and 852.215-70 to require VA contracting officers to: (1) Include 
provisions in negotiated solicitations giving preference to offers 
received from VOSBs and additional preference to offers received from 
SDVOSBs; (2) use past performance in meeting SDVOSB subcontracting 
goals as a non-price evaluation factor in selecting offers for award; 
(3) use the proposed inclusion of SDVOSBs or VOSBs as subcontractors as 
an evaluation factor when competitively negotiating the award of 
contracts or task or delivery orders; and (4) consider participation in 
VA's Mentor-Prot[eacute]g[eacute] Program as an evaluation factor when 
competitively negotiating the award of contracts or task or delivery 
orders. VA is particularly interested in receiving comments on the 
proposed mandatory inclusion of evaluation preferences for SDVOSBs and 
VOSBs in negotiated acquisitions.

Section 815.304-70 Evaluation Factor Commitments

    In accordance with section 8127(a)(4), we propose to require prime 
contractors who offer to use one or more SDVOSBs or VOSBs as 
subcontractors in accordance with proposed section 852.215-70, Veteran-
Owned Small Business Evaluation Factors, to actually use those 
subcontractors or to replace any proposed subcontractor who is not used 
for the specified subcontract with another SDVOSB or VOSB 
subcontractor. This subsection would be implemented under proposed new 
sections 815.304-70 and 852.215-71. Further, this subsection would help 
ensure that SDVOSBs and VOSBs receive subcontract awards under VA prime 
contracts, as prime contractors will be required to report only 
utilization of companies appearing in the VIP database as ``verified'' 
to be owned and controlled by eligible veterans or surviving spouses.

Section 815.304-71 Solicitation Clauses

    This section would prescribe insertion of certain contract clauses 
in acquisitions from SDVOSBs and VOSBs, including section 852.215-70, 
Service-Disabled Veteran-Owned and Veteran-Owned Small Business 
Evaluation Factors, and section 852.215-71, Evaluation Factor 
Commitments, for applicable solicitations and contracts.

Section 819.201 General Policy

    This section would authorize the Secretary to establish goals for 
each fiscal year for participation in Department contracts by SDVOSBs 
and VOSBs. Furthermore, in order to establish contracting priority for 
veteran-owned and -controlled small businesses in accordance with 
section 8128, the Secretary may decrease other status-specific small 
business goals set forth by section 15(g)(1) of the Small Business Act 
(15 U.S.C. 644(g)(1)) upon consultation with the Administrator of the 
U.S. Small Business Administration.

Section 819.307 Protests

    FAR 19.307 contains instructions for processing protests of status 
as a SDVOSB concern. Section 8127 contains additional eligibility 
criteria for VA's processing of protests and authorizes VA to conduct 
VOSB set-asides. Proposed VAAR section 819.307 would address protest 
procedures and other information specific to VA's unique acquisition 
program.

Section 819.704 Subcontracting Plan Requirements

    In accordance with section 8127, proposed section 819.704 would 
require contracting officers to include suggested subcontracting goals 
in acquisitions that may require a subcontracting plan. To receive 
subcontracting plan accomplishment credit for subcontracting with 
SDVOSBs and VOSBs, prime contractors would be

[[Page 49144]]

required to use eligible businesses identified in the VIP database.

Section 819.705 Appeals of Contracting Officer Decisions

    This section would prescribe procedures for appeals of VA 
contracting officers' SDVOSB set-aside decisions, VOSB set-aside 
decisions, and prime contractor credits for subcontracting.

Section 819.709 Contract Clause

    This section would require contracting officers to insert the 
clause in section 852.219-9, Small Business Subcontracting Plan Minimum 
Requirements, for solicitations and contracts that include the FAR 
clause at 52.219-9, Small Business Subcontracting Plan.

Subpart 819.70 Service-Disabled Veteran-Owned and Veteran-Owned Small 
Business Acquisition Program

    This subpart would establish sole source contracting procedures for 
acquisitions under $5 million and create a new set-aside program for 
SDVOSBs and VOSBs.

Subpart 819.71 VA Mentor-Prot[eacute]g[eacute] Program

    In accordance with paragraph (3)(a) of VA's Executive Order 13360 
strategic plan, we propose to establish a SDVOSB mentor-
prot[eacute]g[eacute] program within VA under new subpart 819.71, 
consisting of sections 819.7101 through 819.7115, and at sections 
852.219-71 and 852.219-72. We propose to establish this program to help 
SDVOSBs receive developmental support from VA prime contractors in 
order to increase the base of SDVOSBs eligible to perform VA prime 
contracts and to participate as subcontractors on VA prime contracts.

Sections 828.106-71, 828.106-72, and 852.228-72 Assisting Service-
Disabled Veteran-Owned and Veteran-Owned Small Businesses in Obtaining 
Bonds

    In accordance with paragraph (3)(f) of VA's Executive Order 13360 
strategic plan, we propose to add new sections 828.106-71, 828.107-72, 
and 852.228-72, to encourage prime contractors to assist SDVOSBs and 
VOSBs in obtaining subcontractor performance and payment bonds and to 
encourage mentor firms to assist prot[eacute]g[eacute] SDVOSBs and 
VOSBs in obtaining acceptable bid, payment, and performance bonds as 
prime contractors. The ability to obtain acceptable surety bonds is one 
of the major concerns for small businesses in contracting with the 
Federal government for construction.

Regulatory Flexibility Act

    This regulation may have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the law 
provides that the Secretary shall give priority to small business 
concerns owned and controlled by veterans. Service-disabled veteran-
owned small businesses (SDVOSBs) and veteran-owned small businesses 
(VOSBs) may benefit from this regulation. Other small businesses may be 
indirectly affected if a greater portion of VA's small business 
contracts are awarded to SDVOSBs and VOSBs. However, this regulation 
may result in an increase in VA contracts awarded to the overall total 
of small businesses.
    An Initial Regulatory Flexibility Analysis (IRFA) has been prepared 
and submitted to the Chief Counsel for Advocacy of the Small Business 
Administration in accordance with 5 U.S.C. 603. Interested parties are 
invited to submit comments on VA's regulatory flexibility analysis. The 
analysis is as follows:
    1. Description of the reasons why action by the agency is being 
considered.
    These proposed changes to the Veterans Affairs Acquisition 
Regulation (VAAR) implement sections 502 and 503 of Public Law 109-461, 
the Veterans Benefits, Health Care, and Information Technology Act of 
2006 (38 U.S.C. 8127 and 8128). The changes will also implement the 
rulemaking portions of VA's Strategic Plan for Executive Order 13360, 
Providing Opportunities for Service-Disabled Veteran Businesses to 
Increase Their Federal Contracting and Subcontracting (http://www.vetbiz.gov/fpp/fpp.htm). VA exists to serve veterans, and buying 
from SDVOSBs and VOSBs directly supports that mission. Such 
acquisitions support the socioeconomic well-being of the Nation and 
support VA's Strategic Goals. The proposed changes to the VA 
Acquisition Regulation reflect the intent of Congress that VA fulfill 
its special mission to serve veterans and enable them to realize the 
American dream that they fought to protect, especially those who became 
disabled while serving their country.
    2. Succinct statement of the objectives of, and legal basis for, 
the proposed rule.
    Sections 502 and 503 of Public Law 109-461 require VA to create a 
unique acquisition program among Federal agencies that permits 
preferences for SDVOSBs and VOSBs. This proposed rule would permit VA 
contracting officers to conduct acquisition actions with preferences 
for SDVOSBs or VOSBs. Specifically, this proposed rule will allow VA 
contracting officers to:
    a. Under certain conditions, permit non-competitive sourcing under 
the simplified acquisition threshold with SDVOSBs or VOSBs;
    b. Require set-asides for SDVOSBs or VOSBs above the simplified 
acquisition threshold when the contracting officer has a reasonable 
expectation that two or more eligible SDVOSBs or VOSBs will submit 
offers and that the award can be made at a fair and reasonable price 
that offers the best value to the United States;
    c. Under certain conditions, permit non-competitive sourcing for 
SDVOSBs or VOSBs above the simplified acquisition threshold when the 
contracting officer determines that a fair and reasonable price will be 
obtained as a result of negotiations for requirements not to exceed $5 
million;
    d. Include evaluation factors in negotiated acquisitions that give 
preference to SDVOSBs and VOSBs and preference to offerors who propose 
to include such businesses as subcontractors;
    e. Require offerors who propose to use SDVOSBs or VOSBs as 
subcontractors to utilize eligible businesses;
    f. Require VOSBs participating in the Department's acquisitions to 
register in VetBiz.gov's Vendor Information Pages (VIP) database and 
verify that the business meets eligibility requirements;
    g. Establish a VA Mentor-Prot[eacute]g[eacute] Program and give 
large businesses that participate in the program a preference in the 
award of VA prime contracts;
    h. Encourage prime contractors and mentors to assist SDVOSBs and 
VOSBs in obtaining bonding when required;
    i. Recommend debarment of any business that willfully or 
deliberately misrepresents ownership and control of the business for 
purposes of registering in the VetBiz.gov VIP database or other federal 
databases; and
    j. Under certain conditions, acquire supplies and services from 
SDVOSBs and VOSBs in lieu of FPI and GPO.
    3. Description of, and, where feasible, estimate of the number of 
small entities to which the proposed rule will apply.
    VA cannot accurately determine how many concerns would be 
participating in these SDVOSB/VOSB contract awards because there is 
insufficient data on SDVOSBs/VOSBs that are ready and able to perform 
under VA requirements to support a reasonable estimate.
    To establish the likely number of SDVOSBs or VOSBs that may benefit 
from VA's unique procurement authority there are two principal data 
sources, the Central Contractor

[[Page 49145]]

Registration (CCR) database, in which a business must be listed to 
receive a payment from a Federal agency, and VA's VetBiz.gov VIP 
database. A CCR Dynamic Small Business Search query conducted on March 
13, 2008, returned 40,163 VOSBs, including 11,465 SDVOSBs. A VIP query 
returned 10,695 VOSBs, including 6,354 SDVOSBs. The VIP database 
requires that businesses answer eligibility questions before they are 
permitted to register their business. The CCR is a self-representation 
database.
    Under this proposed rule, VA contracting teams will be required to 
give priority consideration to SDVOSBs and VOSBs when using other 
contracting programs, like set-asides for the Historically 
Underutilized Business (HUB) Zone Program or 8(a) Business Development 
Program reserved actions or the Small Business Set-aside program. A CCR 
Dynamic Small Business Search conducted on March 13, 2008, returned 
13,848 active HUBZone firms. Of this population, 2,565, or 19 percent, 
are also VOSBs. A search of active 8(a) businesses identified 9,822 
current firms, which includes 1,285 VOSBs, or 14 percent of the total 
population. There are 63,395 woman-owned small businesses (WOSBs) in 
the Central Contractor Registration, of which 4,471 appear to also be 
VOSBs. VA notes that the SBA is in the process of establishing a WOSB 
set-aside program, making the percentage of WOSBs who are also VOSB 
eligible of interest to the Department.
    There are some concerns that the proposed rule will displace 
business opportunities for non-veteran-owned businesses, based on the 
following speculations:
    <bullet> Additional businesses may be opened by veterans seeking to 
participate in the sole source or set-aside procurement actions;
    <bullet> Veteran-owned small businesses not currently in the 
Federal market may be expected to explore selling to VA;
    <bullet> The VOSB population may increase as these businesses 
register in the VetBiz.gov VIP database;
    <bullet> Public Law 109-461 procurement authority also requires 
that VA's large prime contractors use eligible businesses in order to 
receive subcontracting program credit for VOSBs and SDVOSBs; and
    <bullet> On June 6, 2008, the Office of Federal Procurement Policy 
issued new guidance regarding Interagency Agreements. Under this 
policy, other Federal agencies with which VA executes such agreements 
will be governed by the procurement rules contained in this regulation. 
In FY 2007, interagency acquisitions were approximately $15,444,709.39, 
or 0.13% of total contract dollars.
    The Department of Veterans Affairs has a strong commitment to 
supporting all types of small businesses, as demonstrated in the 
procurement chart below:

----------------------------------------------------------------------------------------------------------------
                                                         FY 2006                        FY 2007
                                                   -------------------------------------------------------------
                                                           ($)            (%)             ($)            (%)
----------------------------------------------------------------------------------------------------------------
Total Procurement.................................    10,282,566,304  ...........    11,784,896,886  ...........
Total Small Business..............................     3,028,055,461        29.45     3,878,901,724        32.91
Small and Disadvantaged Business..................       507,442,123         4.93       603,502,602         5.12
8(a)..............................................       402,659,565         3.92       406,996,187         3.45
Woman-Owned Small Business........................       513,104,216         4.99       573,355,381         4.87
Veteran-Owned Small Business......................       666,825,417         6.49     1,193,853,547        10.13
Service-Disabled Veteran-Owned Small Business.....       348,077,159         3.39       818,698,785         6.95
HUBZone...........................................       336,856,889         3.28       381,875,493         3.24
----------------------------------------------------------------------------------------------------------------

    The preliminary Total Small Business procurement for FY2007 was 
$3,878,901,724.00 or 32.91%. Procurement totals for SDVOSBs and VOSBs 
were $2,012,552,332.00 or 17.08% and procurement totals for non-
veteran-owned businesses were $1,965,729,663.00 or 16.68%, a mere .40% 
difference. Although, SDVOSBs and VOSBs gained 7.2% of procurements 
from FY2006 to FY2007 and non-veteran-owned businesses lost .44% of 
procurements, the non-veteran-owned businesses still received increased 
procurement dollars totaling $205,666,870.00 from FY2006 to FY2007. 
Assuming this trend and/or this new procurement authority does increase 
procurement percentages for SDVOSBs and VOSBs and the procurement 
percentages for non-veteran-owned businesses decrease, as previously 
demonstrated from FY2006 to FY2007, the contracting dollars and/or 
opportunities for non-veteran-owned businesses were not adversely 
impacted economically. VA also estimates that it would be unrealistic 
for SDVOSBs and VOSBs to absorb the entire 16.68% of procurements that 
are currently being awarded to the non-veteran-owned businesses. The 
SDVOSBs and VOSBs are more likely to sub-contract with the non-veteran-
owned businesses with existing contracts rather than investing in 
costly business expansions. Based on prior procurement trends, VA 
believes there would not be an adverse economic impact on non-veteran-
owned businesses, but requests comment from the public on other 
possible impacts this rule may have on small entities.
    This rule also creates a Mentor-Prot[eacute]g[eacute] Program for 
SDVOSBs and VOSBs. It is the expectation that at such time as this rule 
is finalized, those Prot[eacute]g[eacute] entities would directly 
benefit from the forms of Mentoring described in this proposed rule. VA 
believes there would not be an adverse economic impact on small 
contractors or subcontractors, but requests comment from the public on 
other possible impacts this rule may have on small entities. Comments 
will be used as a factual basis upon which VA would certify that this 
rule will not have a significant economic impact on a substantial 
number of small entities.
    For the reasons outlined above, given the relatively small number 
of businesses owned and controlled by veterans in the Federal 
marketplace and with the understanding that this rule would apply only 
to VA and its large prime contractors, VA believes this rule would not 
have a major impact on small entities doing business in the Federal 
marketplace.
    VA welcomes comments concerning the potential number of small 
entities that could become eligible under this rule. VA also 
specifically requests comments concerning the rule's impact on small 
entities that are not VOSBs.
    4. Description of projected reporting, recordkeeping, and other 
compliance requirements of the proposed rule, including an estimate of 
the classes of small entities which will be subject to the requirement 
and the type of professional skills necessary for preparation of the 
report or record.

[[Page 49146]]

    There are two categories of coverage in this proposed rule that 
could potentially require the collection of information from 
contractors. VA will collect information from prime contractors seeking 
a preference for subcontracting with SDVOSBs or VOSBs. That information 
would include identity of the SDVOSBs or VOSBs, the approximate dollar 
value of the proposed subcontracts, and confirmation that the proposed 
subcontractors are eligible SDVOSBs or VOSBs as verified by the 
VetBiz.gov VIP database. VA estimates the cost to an individual 
business to be less than $100.00 for 70-75% of the businesses seeking 
verification, and the average cost to the entire population of veterans 
seeking to become verified is less than $325.00 on average. VA also 
will collect information in conjunction with preferences associated 
with the VA Mentor-Prot[eacute]g[eacute] Program. That information 
would include the program agreement, developmental plan, and reports on 
the success of the program.
    5. Identification, to the extent practicable, of all relevant 
Federal rules which may duplicate, overlap, or conflict with the 
proposed rule.
    The VAAR (48 CFR chapter 8) supplements the FAR (48 CFR chapter 1). 
This proposed rule would affect 48 CFR parts 802, 804, 808, 809, 810, 
813, 815, 819, 828, and 852 and corresponding parts of the FAR.
    6. Description of any significant alternatives to the proposed rule 
which would accomplish the stated objectives of applicable statutes and 
which would minimize any significant economic impact of the proposed 
rule on small entities. This proposed rule is designed to benefit 
SDVOSBs and VOSBs. There are no alternatives which would accomplish the 
stated objectives of sections 502 and 503 of Public Law 109-461 to give 
contracting priority to SDVOSBs and VOSBs.

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Executive 
Order classifies a ``significant regulatory action,'' requiring review 
by the Office of Management and Budget (OMB) unless OMB waives such 
review, as any regulatory action that is likely to result in a rule 
that may: (1) Have an annual effect on the economy of $100 million or 
more or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities; (2) create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) materially alter 
the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the Executive 
Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this proposed rule have been examined, and it has been 
determined to be a significant regulatory action under Executive Order 
12866 because it is likely to result in a rule that may raise novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or principles set forth in the Executive Order.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before developing any rule that may result in an expenditure 
by State, local, or tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any given year. This proposed rule would have no such 
effect on State, local, or tribal governments, or the private sector.

Paperwork Reduction Act

    Under the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-
3521), collections of information are contained in this proposed rule. 
These collections are contained in new sections that were not 
previously contained in the VAAR. This notice is to obtain an OMB 
control number for these new sections. As required under section 
3507(d) of the Act, VA has submitted a copy of this rulemaking action 
to OMB for its review of the collection of information.
    OMB assigns control numbers to collections of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number.
    Comments on the collection of information should be submitted to 
OMB, Attention: Desk Officer for the Department of Veterans Affairs, 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Washington, DC 20503, with copies to the Director, Regulations 
Management (00REG), Department of Veterans Affairs, 810 Vermont Ave., 
NW., Washington, DC 20420. Comments should indicate that they are 
submitted in response to ``RIN 2900-AM92.''
    There are categories of coverage in this proposed rule that could 
potentially require the collection of information from contractors: (1) 
Section 852.215-70, Veteran-Owned Small Business Evaluation Factors; 
and (2) subpart 819.71, VA Mentor-Prot[eacute]g[eacute] Program, 
specifically sections 819.7101 through 819.7115 and the related clauses 
at sections 852.219-71 and 852.219-72. There is no information 
available upon which to judge the impact of these PRA requirements, but 
since the provisions are limited to SDVOSBs and VOSBs, rather than to 
all small businesses, collection efforts are estimated to be minimal.
    Title and section number: 852.215-70, Veteran-Owned Small Business 
Evaluation Factors.
    Summary of collection of information: VA is proposing to give 
preference to prime contractors who offer to subcontract with SDVOSBs 
or VOSBs. VA must collect information from offerors regarding: (1) 
Proposed SDVOSB and VOSB subcontractors; (2) the approximate dollar 
value of the proposed subcontracts; and (3) eligibility of the proposed 
subcontractors as verified in VetBiz.gov VIP database (http://www.VetBiz.gov).
    Description of need for information and proposed use of 
information: The information is submitted on a voluntary basis by those 
offerors who wish to qualify for this evaluation factor. The 
information will be used by the contracting officer to determine 
whether or not the offeror qualifies for extra credit in the selection 
of the contract awardee. Those offerors who qualify will be afforded a 
preference in the selection.
    Description of likely respondents: Any offeror, on a negotiated 
solicitation that includes the applicable evaluation factor, who 
intends to subcontract with one or more SDVOSBs or VOSBs and who wishes 
to obtain a preference in the award selection.
    Estimated number of respondents: 125.
    Estimated frequency of responses: 1 response for each solicitation.
    Estimated average burden per collection: 5 minutes.
    Estimated total annual reporting and recordkeeping burden: 10 
hours.

    Title and section number: Subpart 819.71, VA Mentor-
Prot[eacute]g[eacute] Program, subpart 819.71's related sections

[[Page 49147]]

819.7101 through 819.7115, and the related clauses at section 852.219-
71, VA Mentor-Prot[eacute]g[eacute] Program, and section 852.219-72, 
Evaluation Factor for Participation in the VA Mentor-
Prot[eacute]g[eacute] Program.
    Summary of collection of information: VA is proposing to institute 
a Mentor-Prot[eacute]g[eacute] Program, whereby a large business agrees 
to provide developmental support to a VOSB or SDVOSB. VA must approve 
the Mentor-Prot[eacute]g[eacute] Agreement entered into by the two 
parties, and VA requires both parties to report on the success of the 
program. Mentors can qualify for additional preference on negotiated 
solicitations by furnishing evidence of participation in the program 
with their offer.
    Description of need for information and proposed use of 
information: The information is needed for the review and evaluation of 
mentor applications for realism, validity, and accuracy of provided 
information and for conducting a mid-term evaluation at the mid-point 
interval to measure prot[eacute]g[eacute] progress against the 
developmental plan contained in the approved agreement. The information 
will also be used to evaluate the status of a business as a participant 
in VA's Mentor-Prot[eacute]g[eacute] Program for possible credit in 
negotiated contracts.
    Description of likely respondents: Large business prime contractors 
and SDVOSBs or VOSBs.
    Estimated number of respondents: 50.
    Estimated frequency of responses: Each prot[eacute]g[eacute] 
program participant will be required to submit 3 sets of data 
consisting of the application and the mid- and end-term reports. Each 
mentor program participant will be required to submit 4 sets of data 
consisting of the application, the mid- and end-term reports, and, when 
submitting an offer, information to verify their participation in the 
program in order to receive evaluation credit.
    Estimated average burden per collection: 1 hour weighted average 
per data submission.
    Estimated total annual reporting and recordkeeping burden: 200 
hours (4 data submissions @ 1 hour each times 50 program participants).
    The Department considers comments by the public on collections of 
information in--
    <bullet> Evaluating whether the collections of information are 
necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
    <bullet> Evaluating the accuracy of the Department's estimate of 
the burden of the collections of information, including the validity of 
the methodology and assumptions used;
    <bullet> Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
    <bullet> Minimizing the burden of the collections of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    OMB is required to make a final decision concerning the collection 
of information contained in this proposed rule between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed rule.

List of Subjects

48 CFR Parts 802, 804, 809, 810, 813, and 815

    Government procurement, Reporting and recordkeeping requirements.

48 CFR Part 819

    Administrative practice and procedure, Government procurement, 
Reporting and recordkeeping requirements, Small business, Veterans.

48 CFR Part 828

    Government procurement, Insurance, Surety bonds.

48 CFR Part 852

    Government procurement, Reporting and recordkeeping requirements.

    Approved: April 21, 2008.
James B. Peake,
Secretary of Veterans Affairs.

    Editorial Note: This document was received at the Office of the 
Federal Register on August 15, 2008.

    For the reasons set out in the preamble, the Department of Veterans 
Affairs proposes to amend 48 CFR Chapter 8 as follows:

CHAPTER 8--DEPARTMENT OF VETERANS AFFAIRS

Subchapter A--General

PART 802--DEFINITIONS OF WORDS AND TERMS

    1. The authority citation for part 802 is revised to read as 
follows:

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 
and 48 CFR 1.301-1.304.

    2. Section 802.101 is amended by adding in alphabetical order the 
following terms:


802.101  Definitions.

* * * * *
    Service-disabled veteran-owned small business concern (SDVOSB) has 
the same meaning as defined in FAR Part 2.101, except for businesses 
participating in set-asides or subcontracts authorized by VAAR subpart 
819.70. These businesses must be listed as verified on the Vendor 
Information Pages (VIP) at http://www.vetbiz.gov. In addition, some 
businesses may be owned and controlled by a surviving spouse.
* * * * *
    Surviving Spouse means an individual who has been listed in the 
Department of Veterans Affairs' (VA) Veterans Benefits Administration 
(VBA) database of veterans and family members. To be eligible for 
inclusion in the VetBiz.gov VIP database, the following conditions must 
apply:
    (1) If the death of the veteran causes the small business concern 
to be less than 51 percent owned by one or more service-disabled 
veterans, the surviving spouse of such veteran who acquires ownership 
rights in such small business shall, for the period described below, be 
treated as if the surviving spouse were that veteran for the purpose of 
maintaining the status of the small business concern as a service-
disabled veteran-owned small business.
    (2) The period referred to above is the period beginning on the 
date on which the veteran dies and ending on the earliest of the 
following dates:
    (i) The date on which the surviving spouse remarries;
    (ii) The date on which the surviving spouse relinquishes an 
ownership interest in the small business concern;
    (iii) The date that is 10 years after the date of the veteran's 
death; or
    (iv) The date on which the business concern is no longer small 
under Federal small business size standards.
    (3) The veteran must have had a 100 percent service-connected 
disability rating or the veteran died as a direct result of a service-
connected disability.
* * * * *
    Vendor Information Pages (VIP) means the VetBiz.gov Vendor 
Information Pages at http://www.vetbiz.gov.
    Veteran-owned small business concern (VOSB) has the same meaning as 
defined in FAR Part 2.101, except for businesses participating in set-
asides or subcontracts authorized by VAAR Part 819.7001. These 
businesses must be

[[Page 49148]]

listed as verified on the VetBiz.gov VIP database.
* * * * *

PART 804--ADMINISTRATIVE MATTERS

    3. The authority citation for part 804 is revised to read as 
follows:

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 
and 48 CFR 1.301-1.304.

    4. Section 804.1102 is added to read as follows:


804.1102  Vendor Information Pages (VIP) Database.

    In addition to registering in the Central Contractor Registration 
(CCR), all VOSBs, including SDVOSBs, must register in the VIP database, 
available at http://www.VetBiz.gov, to be eligible to participate in 
VA's Veteran-owned Small Business prime contracting and subcontracting 
opportunities programs.

PART 808--REQUIRED SOURCES OF SUPPLIES AND SERVICES

    5. The authority citation for part 808 is revised to read as 
follows:

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 
and 48 CFR 1.301-1.304.

    6. Subpart 808.6 and section 808.603 are added to read as follows:

Subpart 808.6--Acquisition From Federal Prison Industries, Inc. 
(FPI)


808.603  Purchase priorities.

    Contracting officers may purchase supplies and services produced or 
provided by FPI from eligible service-disabled veteran-owned small 
businesses and veteran-owned small businesses, in accordance with 
procedures set forth in VAAR subpart 819.70, without seeking a waiver 
from FPI, in accordance with 38 U.S.C. 8128, Small business concerns 
owned and controlled by veterans: Contracting priority.

Subpart 808.8--Acquisition of Printing and Related Supplies

    7. Section 808.803 is added to read as follows:


808.803  Priority for acquisition of printing and related supplies.

    Contracting officers may acquire government printing from eligible 
service-disabled veteran-owned small businesses and veteran-owned small 
businesses, in accordance with procedures set forth in VAAR subpart 
819.70, in lieu of the Government Printing Office (GPO), in accordance 
with 38 U.S.C. 8128, small business concerns owned and controlled by 
veterans: Contracting priority (See FAR 8.802(a)(4)).

PART 809--CONTRACTOR QUALIFICATIONS

    8. The authority citation for part 809 is revised to read as 
follows:

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 
and 48 CFR 1.301-1.304.

    9. Section 809.406-2 is added to read as follows:


809.406-2  Cause for debarment.

    Misrepresentations of VOSB or SDVOSB eligibility may result in 
action taken by VA officials to debar the business concern for a period 
not to exceed 5 years from contracting with VA as a prime contractor or 
a subcontractor.
    10. Part 810 is added to read as follows:

PART 810--MARKET RESEARCH

Sec.
810.001 Market research policy.
810.002 Market research procedures.

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 
and 48 CFR 1.301-1.304.


810.001  Market research policy.

    When conducting market research, VA contracting teams shall use the 
VIP database, at http://www.VetBiz.gov, in addition to other sources of 
information.


810.002  Market research procedures.

    Contracting officers shall record VIP queries in the solicitation 
file by printing the results of the search(es) along with specific 
query used to generate the search(es).

PART 813--SIMPLIFIED ACQUISITION PROCEDURES

    11. The authority citation for part 813 is revised to read as 
follows:

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 
and 48 CFR 1.301-1.304.

    12. Section 813.106 is revised to read as follows:


813.106  Soliciting competition, evaluation of quotations or offers, 
award and documentation.

    Contracting officers may use other than competitive procedures to 
enter into a contract with an SDVOSB or VOSB when the amount is less 
than the simplified acquisition threshold. Contracting officers shall 
give first consideration to SDVOSBs.
    13. Section 813.202 is added to read as follows:


813.202  Purchase guidelines.

    Open market micro-purchases shall be equitably distributed among 
all qualified SDVOSBs or VOSBs, respectively, to the maximum extent 
practicable.

PART 815--CONTRACTING BY NEGOTIATION

    14. The authority citation for part 815 is revised to read as 
follows:

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c); and 48 CFR 
1.301-1.304.

    15. Section 815.304 is added to read as follows:


815.304  Evaluation factors and significant subfactors.

    (a) In an effort to assist SDVOSBs and VOSBs, contracting officers 
shall include evaluation factors in competitively negotiated 
solicitations that are not set aside for SDVOSBs or VOSBs.
    (b) Additional consideration shall also be given to any offeror, 
regardless of size status, that proposes to subcontract with SDVOSBs or 
VOSBs.
    16. Section 815.304-70 is added to read as follows:


815.304-70  Evaluation factor commitments.

    (a) VA contracting officers shall:
    (1) Include provisions in negotiated solicitations giving 
preference to offers received from VOSBs and additional preference to 
offers received from SDVOSBs;
    (2) Use past performance in meeting SDVOSB subcontracting goals as 
a non-price evaluation factor in selecting offers for award;
    (3) Use the proposed inclusion of SDVOSBs or VOSBs as 
subcontractors as an evaluation factor when competitively negotiating 
the award of contracts or task or delivery orders; and
    (4) Consider participation in VA's Mentor-Prot[eacute]g[eacute] 
Program as an evaluation factor when competitively negotiating the 
award of contracts or task or delivery orders.
    (b) If an offeror proposes to use an SDVOSB or VOSB subcontractor 
in accordance with the clause at 852.215-70, Service-Disabled Veteran-
owned and Veteran-owned Small Business Evaluation Factors, the 
contracting officer shall ensure that the offeror, if awarded the 
contract, actually does use the proposed subcontractor or another 
SDVOSB or VOSB subcontractor for that subcontract or for work of 
similar value.
    17. Section 815.304-71 is added to read as follows:

[[Page 49149]]

815.304-71  Solicitation provision and clause.

    (a) The contracting officer shall insert the provision at 852.215-
70, Service-Disabled Veteran-owned and Veteran-owned Small Business 
Evaluation Factors, in competitively negotiated solicitations that are 
not set aside for SDVOSBs or VOSBs.
    (b) The contracting officer shall insert the clause at 852.215-71, 
Evaluation Factor Commitments, in solicitations and contracts that 
include the clause at 852.215-70, Service-Disabled Veteran-owned and 
Veteran-owned Small Business Evaluation Factors.

PART 819--SMALL BUSINESS PROGRAMS

    18. The authority citation for part 819 is revised to read as 
follows:

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 48 
CFR 1.301-1.304; and 15 U.S.C. 637(d)(4)(E).

Subpart 819.2--Policies

    19. Section 819.201 is revised to read as follows:


819.201  General policy.

    The Secretary shall establish goals for each fiscal year for 
participation in Department contracts by SDVOSBs and VOSBs. In order to 
establish contracting priority for veteran owned and controlled small 
businesses in accordance with 38 U.S.C. 8128, the Secretary may 
decrease other status-specific small business goals set forth by 
section 15(g)(1) of the Small Business Act (15 U.S.C. 644(g)(1)) upon 
consultation with the Administrator of the U.S. Small Business 
Administration.
    20. Section 819.307 is added to read as follows:


819.307  Protests.

    For acquisitions under the authority of VAAR part 819.70, regarding 
eligibility of SDVOSB and VOSB concerns, contracting officers shall 
forward all protests to the Associate Administrator for Government 
Contracting AA/GC, U.S. Small Business Administration (ATTN: Veterans 
Business Program Protest), 409 3rd Street, SW., Washington, DC 20416, 
for disposition.
    21. Section 819.704 is added to read as follows:


819.704.  Subcontracting plan requirements.

    (a) The contracting officer shall ensure that any subcontracting 
plans submitted by offerors include a goal that is at least 
commensurate with the annual VA SDVOSB prime contracting goal for the 
total value of planned subcontracts.
    (b) The contracting officer shall ensure that any subcontracting 
plans submitted by offerors include a goal that is at least 
commensurate with the annual VA VOSB prime contracting goal for the 
total value of all planned subcontracts.
    (c) VA's Office of Small and Disadvantaged Business Utilization 
(OSDBU) shall review all prime contractors' subcontracting plan 
achievement reports to ensure that, in the case of a subcontract that 
is counted for purposes of meeting a goal in accordance with 
subparagraphs (a) and (b) above, the subcontract was actually awarded 
to a business concern that is eligible to be counted toward meeting the 
goal, as provided in VAAR 804.1102.
    22. Section 819.705 is added as follows:


819.705  Appeal of Contracting Officer Decisions.

    (a) Acquisitions not exceeding the SAT and sections 819.7007 and 
819.7008 are excluded from this section.
    (b) When an interested party intends to appeal a contracting 
officer's decision to not use the set-aside authority contained in VAAR 
819.70, the party shall notify the contracting officer, in writing, of 
its intent to challenge the decision. The contracting officer has 5 
working days to reply to the challenge by either revising the strategy 
or indicating the rationale for not setting-aside the requirement. Upon 
receipt of the decision, the interested party may appeal to the Head of 
the Contracting Activity (HCA). Such appeal shall be filed within 5 
working days of receipt of the contracting officer's decision. The HCA 
has 5 working days to respond to the appeal. The contracting officer 
shall suspend action on the acquisition unless the HCA makes a written 
determination that urgent circumstances exist which would significantly 
affect the interests of the Government. The decision of the HCA shall 
be final.
    (c) Prime contractors submitting businesses declared ineligible for 
credit in SDVOSB and/or VOSB subcontracting plans may appeal to the 
Director, Office of Small and Disadvantaged Business Utilization 
(OSDBU), within 5 working days of receipt of information declaring 
their subcontractor ineligible. The Director, OSDBU, shall have 5 
working days to respond. The decision of the Director, OSDBU, may be 
appealed to the Senior Procurement Executive (SPE) within 5 working 
days. The SPE shall have 15 working days to respond and that decision 
shall be final.
    23. Section 819.709 is added to read as follows:


819.709  Contract clause.

    The contracting officer shall insert the clause at 852.219-9, Small 
Business Subcontracting Plan Minimum Requirements, in solicitations and 
contracts that include the FAR clause at 52.219-9, Small Business 
Subcontracting Plan.
    24. Subpart 819.70 is revised to read as follows:

Subpart 819.70--Service-Disabled Veteran-Owned and Veteran-Owned 
Small Business Acquisition Program


819.7001  General.

    (a) The Veterans Benefits, Health Care, and Information Technology 
Act of 2006 (38 U.S.C. 8127) created an acquisition program for small 
business concerns owned and controlled by service-disabled veterans and 
those owned and controlled by veterans for VA.
    (b) The purpose of the program is to provide contracting assistance 
to SDVOSBs and VOSBs.


819.7002  Applicability.

    This subpart applies to VA contracting activities and to its prime 
contractors.


819.7003  Eligibility.

    (a) Eligibility of SDVOSBs and VOSBs continues to be governed by 
the Small Business Administration regulations, 13 CFR subparts 125.8 
through 125.13, as well as the FAR, except where expressly directed 
otherwise by the VAAR, and 38 CFR verification regulations for SDVOSBs 
and VOSBs.
    (b) At the time of submission of offer, the offeror must represent 
to the contracting officer that it is a--
    (1) Service-disabled veteran-owned small business concern or 
veteran-owned small business concern;
    (2) Small business concern under the North American Industry 
Classification System (NAICS) code assigned to the acquisition; and
    (3) Verified for eligibility in the Vendor Information Pages 
database.
    (c) A joint venture may be considered an SDVOSB or VOSB concern 
if--
    (1) At least one member of the joint venture is an SDVOSB or VOSB 
concern, and makes the representations in paragraph (b) of this 
section;
    (2) Each other concern is small under the size standard 
corresponding to the NAICS code assigned to the procurement;

[[Page 49150]]

    (3) The joint venture meets the requirements of paragraph 7 of the 
size standard explanation of Affiliates in FAR 19.101; and
    (4) The joint venture meets the requirements of 13 CFR 125.15(b), 
modified to include veteran-owned small businesses where this CFR 
section refers to SDVOSB concerns.
    (d) Any SDVOSB or VOSB concern (nonmanufacturer) must meet the 
requirements in FAR 19.102(f) to receive a benefit under this program.


819.7004  Contracting order of priority.

    In determining the acquisition strategy applicable to an 
acquisition, the contracting officer shall consider, in the following 
order of priority, contracting preferences that ensure contracts will 
be awarded:
    (a) To SDVOSBs;
    (b) To VOSB, including but not limited to SDVOSBs;
    (c) Pursuant to--
    (1) Section 8(a) of the Small Business Act (15 U.S.C. 637(a)); or
    (2) The Historically-Underutilized Business Zone (HUBZone) Program 
(15 U.S.C. 657a); and
    (d) Pursuant to any other small business contracting preference.


819.7005  Service-disabled veteran-owned small business set-aside 
procedures.

    (a) The contracting officer shall consider SDVOSB set-asides before 
considering VOSB set-asides. Except as authorized by 819.7007 and 
819.7008, the contracting officer shall set-aside an acquisition for 
competition restricted to SDVOSB concerns upon a reasonable expectation 
that--
    (1) Offers will be received from two or more eligible SDVOSB 
concerns; and
    (2) Award will be made at a fair and reasonable price.
    (b) When conducting SDVOSB set-asides, the contracting officer 
shall ensure--
    (1) Eligibility is extended to businesses owned and operated by 
surviving spouses; and
    (2) Businesses are registered and verified as eligible in Vendor 
Information Pages prior to making an award.
    (c) If the contracting officer receives only one acceptable offer 
at a fair and reasonable price from an eligible SDVOSB concern in 
response to a SDVOSB set-aside, the contracting officer should make an 
award to that concern. If the contracting officer receives no 
acceptable offers from eligible SDVOSB concerns, the set-aside shall be 
withdrawn and the requirement, if still valid, set aside for VOSB 
competition, if appropriate.


819.7006  Veteran-owned small business set-aside procedures.

    (a) The contracting officer shall consider SDVOSB set-asides before 
considering VOSB set-asides. Except as authorized by 819.7007 and 
819.7008, the contracting officer shall set aside an acquisition for 
competition restricted to VOSB concerns upon a reasonable expectation 
that--
    (1) Offers will be received from two or more eligible VOSB 
concerns; and
    (2) Award will be made at a fair and reasonable price.
    (b) If the contracting officer receives only one acceptable offer 
at a fair and reasonable price from an eligible VOSB concern in 
response to a VOSB set-aside, the contracting officer should make an 
award to that concern. If the contracting officer receives no 
acceptable offers from eligible VOSB concerns, the set-aside shall be 
withdrawn and the requirement, if still valid, set aside for other 
small business programs, as appropriate.
    (c) When conducting VOSB set-asides, the contracting officer shall 
ensure the business is registered and verified as eligible in the 
Vendor Information Pages prior to making an award.


819.7007.  Sole source awards to service-disabled veteran-owned small 
business concerns.

    (a) A contracting officer may award contracts to SDVOSB concerns on 
a sole source basis provided--
    (1) The anticipated award price of the contract (including options) 
will not exceed $5 million;
    (2) The requirement is synopsized in accordance with FAR part 5;
    (3) The SDVOSB concern has been determined to be a responsible 
contractor with respect to performance; and
    (4) Award can be made at a fair and reasonable price.
    (b) The contracting officer's determination whether to make a sole 
source award is a business decision wholly within the discretion of the 
contracting officer. A determination that only one service-disabled 
veteran-owned small business concern is available to meet the 
requirement is not required. No protest is authorized in connection 
with the issuance or proposed issuance of a contract under this 
section, on the basis that more than one service-disabled veteran-owned 
small business concern is available to meet the requirement.
    (c) When conducting a SDVOSB sole source acquisition, the 
contracting officer shall ensure businesses are registered and verified 
as eligible in the Vendor Information Pages prior to making an award.


819.7008  Sole source awards to veteran-owned small business concerns.

    (a) A contracting officer may award contracts to VOSB concerns on a 
sole source basis provided--
    (1) The anticipated award price of the contract (including options) 
will not exceed $5 million;
    (2) The requirement is synopsized in accordance with FAR part 5;
    (3) The VOSB concern has been determined to be a responsible 
contractor with respect to performance;
    (4) Award can be made at a fair and reasonable price; and
    (5) No responsible SDVOSB concern has been identified.
    (b) The contracting officer's determination whether to make a sole 
source award is a business decision wholly within the discretion of the 
contracting officer. A determination that only one veteran-owned small 
business concern is available to meet the requirement is not required. 
No protest is authorized in connection with the issuance or proposed 
issuance of a contract under this section, on the basis that more than 
one veteran-owned small business concern is available to meet the 
requirement.
    (c) When conducting a VOSB sole source acquisition, the contracting 
officer shall ensure businesses are registered and verified as eligible 
in the Vendor Information Pages prior to making an award.


819.7009  Contract clauses.

    The contracting officer shall insert the clause 852.219-10, Notice 
of Total Service-Disabled Veteran-Owned Small Business Set-Aside or 
852.219-11, Notice of Total Veteran-Owned Small Business Set-Aside in 
solicitations and contracts for acquisitions under this subpart.
    25. Subpart 819.71, consisting of sections 819.7101 through 
819.7115, is added to read as follows:
Subpart 819.71--VA Mentor-Prot[eacute]g[eacute] Program
Sec.
819.7101 Purpose.
819.7102 Definitions.
819.7103 Non-affiliation.
819.7104 General policy.
819.7105 Incentives for mentor participation.
819.7106 Eligibility of Mentor and Prot[eacute]g[eacute] firms.
819.7107 Selection of Prot[eacute]g[eacute] firms.
819.7108 Application process.
819.7109 VA review of application.
819.7110 Developmental assistance.
819.7111 Obligations under the Mentor-Prot[eacute]g[eacute] Program.
819.7112 Internal controls.
819.7113 Reports.
819.7114 Measurement of program success.

[[Page 49151]]

819.7115 Solicitation provisions.

    Authority: 38 U.S.C. 501.

Subpart 819.71--VA Mentor-Prot[eacute]g[eacute] Program


819.7101  Purpose.

    The VA Mentor-Prot[eacute]g[eacute] Program is designed to assist 
service-disabled veteran-owned small businesses (SDVOSBs) and veteran-
owned small businesses (VOSBs) in enhancing their capabilities to 
perform contracts and subcontracts for VA. The Mentor-
Prot[eacute]g[eacute] Program is also designed to improve the 
performance of VA contractors and subcontractors by providing 
developmental assistance to Prot[eacute]g[eacute] entities, fostering 
the establishment of long-term business relationships between SDVOSBs, 
VOSBs and prime contractors, and increasing the overall number of 
SDVOSBs and VOSBs that receive VA contract and subcontract awards. A 
firm's status as a Prot[eacute]g[eacute] under a VA contract shall not 
have an effect on the firm's eligibility to seek other prime contracts 
or subcontracts.


819.7102  Definitions.

    (a) A Mentor is a prime contractor that elects to promote and 
develop SDVOSB and/or VOSB subcontractors by providing developmental 
assistance designed to enhance the business success of the 
Prot[eacute]g[eacute]. A mentor may be a large or small business 
concern.
    (b) OSDBU is the Office of Small and Disadvantaged Business 
Utilization. This is the VA office responsible for administering, 
implementing and coordinating the Department's small business programs, 
including the Mentor-Prot[eacute]g[eacute] Program.
    (c) Program refers to the VA Mentor-Prot[eacute]g[eacute] Program 
as described in this Chapter.
    (d) Prot[eacute]g[eacute] means a service-disabled veteran-owned 
small business or veteran-owned small business, as defined in VAAR 
802.101, which meets Federal small business size standards in its 
primary North American Industrial Classification System (NAICS) code 
and which is the recipient of developmental assistance pursuant to a 
Mentor-Prot[eacute]g[eacute] agreement.


819.7103  Non-affiliation.

    A Prot[eacute]g[eacute] firm will not be considered an affiliate of 
a Mentor firm solely on the basis that the Prot[eacute]g[eacute] firm 
is receiving developmental assistance from the Mentor firm under VA's 
Mentor-Prot[eacute]g[eacute] Program. The determination of affiliation 
is a function of the Small Business Administration.


819.7104  General policy.

    (a) To be eligible, Mentors and Prot[eacute]g[eacute]s must not be 
listed on the Excluded Parties List System, located at http://www.epls.gov. Mentors will provide appropriate developmental assistance 
to enhance the capabilities of Prot[eacute]g[eacute]s to perform as 
prime contractors and/or subcontractors.
    (b) VA reserves the right to limit the number of participants in 
the program in order to ensure its effective management of the Mentor-
Prot[eacute]g[eacute] Program.


819.7105  Incentives for prime contractor participation.

    (a) Under the Small Business Act, 15 U.S.C. 637(d)(4)(e), VA is 
authorized to provide appropriate incentives to encourage 
subcontracting opportunities for small business consistent with the 
efficient and economical performance of the contract. This authority is 
limited to negotiated procurements. FAR 19.202-1 provides additional 
guidance.
    (b) Costs incurred by a Mentor to provide developmental assistance, 
as described in 819.7110 to fulfill the terms of their agreement(s) 
with a Prot[eacute]g[eacute] firm(s), are not reimbursable as a direct 
cost under a VA contract. If VA is the Mentor's responsible audit 
agency under FAR 42.703-1, VA will consider these costs in determining 
indirect cost rates. If VA is not the responsible audit agency, Mentors 
are encouraged to enter into an advance agreement with their 
responsible audit agency on the treatment of such costs when 
determining indirect cost rates.
    (c) In addition to subparagraph (b) of this section, contracting 
officers may give Mentors evaluation credit under 852.219-52, 
Evaluation Factor for Participation in the VA Mentor-
Prot[eacute]g[eacute] Program, considerations for subcontracts awarded 
pursuant to their Mentor-Prot[eacute]g[eacute] Agreements and their 
subcontracting plans. Therefore:
    (1) Contracting officers may evaluate subcontracting plans 
containing Mentor-Prot[eacute]g[eacute] arrangements more favorably 
than subcontracting plans without Mentor-Prot[eacute]g[eacute] 
Agreements.
    (2) Contracting officers may assess the prime contractor's 
compliance with the subcontracting plans submitted in previous 
contracts as a factor in evaluating past performance under FAR 
15.305(a)(2)(v) and determining contractor responsibility 19.705-
5(a)(1).
    (d) OSDBU Mentoring Award. A non-monetary award will be presented 
annually to the Mentoring firm providing the most effective 
developmental support of a Prot[eacute]g[eacute]. The Mentor-
Prot[eacute]g[eacute] Program Manager will recommend an award winner to 
the OSDBU Director.
    (e) OSDBU Mentor-Prot[eacute]g[eacute] Annual Conference. At the 
conclusion of each year in the Mentor-Prot[eacute]g[eacute] Program, 
Mentor firms will be invited to brief contracting officers, program 
leaders, office directors and other guests on Program progress.


819.7106  Eligibility of Mentor and Prot[eacute]g[eacute] firms.

    Eligible business entities approved as Mentors may enter into 
agreements (hereafter referred to as ``Mentor-Prot[eacute]g[eacute] 
Agreement'' or ``Agreement'' and explained in 819.7108) with eligible 
Prot[eacute]g[eacute]s. Mentors provide appropriate developmental 
assistance to enhance the capabilities of Prot[eacute]g[eacute]s to 
perform as contractors and/or subcontractors. Eligible small business 
entities capable of providing developmental assistance may be approved 
as Mentors. Prot[eacute]g[eacute]s may participate in the Program in 
pursuit of a prime contract or as subcontractors under the Mentor's 
prime contract with VA, but are not required to be a subcontractor to a 
VA prime contractor or be a VA prime contractor.
    (a) Eligibility. A Mentor: (1) May be either a large or small 
business entity;
    (2) Must be able to provide developmental assistance that will 
enhance the ability of Prot[eacute]g[eacute]s to perform as prime 
contractors or subcontractors; and
    (3) Will be encouraged to enter into arrangements with entities 
with which it has established business relationships.
    (b) Eligibility. A Prot[eacute]g[eacute]:
    (1) Must be a service-disabled veteran-owned small business or 
veteran-owned small business as defined in VAAR 802.101;
    (2) Must meet the size standard corresponding to the NAICS code 
that the Mentor prime contractor believes best describes the product or 
service being acquired by the subcontract; and
    (c) Prot[eacute]g[eacute]s may have multiple Mentors. 
Prot[eacute]g[eacute]s participating in Mentor-Prot[eacute]g[eacute] 
programs in addition to VA's Program should maintain a system for 
preparing separate reports of mentoring activity so that results of 
VA's Program can be reported separately from any other agency program.
    (d) A Prot[eacute]g[eacute] firm shall self-represent to a Mentor 
firm that it meets the requirements set forth in paragraph (b) of this 
section. Mentors shall confirm eligibility by documenting the verified 
status of the prot[eacute]g[eacute] in the VetBiz.gov Vendor 
Information Pages database. Prot[eacute]g[eacute]s must maintain 
verified status throughout the term of the Mentor-

[[Page 49152]]

Prot[eacute]g[eacute] Agreement. Failure to do so shall result in 
cancellation of the Agreement.


819.7107  Selection of Prot[eacute]g[eacute] firms.

    (a) Mentor firms will be solely responsible for selecting 
Prot[eacute]g[eacute] firms. Mentors are encouraged to select from a 
broad base of service-disabled veteran-owned small business or veteran-
owned small business firms whose core competencies support VA's 
mission; and choose SDVOSB and/or VOSB prot[eacute]g[eacute]s in 
addition to firms with whom they have established business 
relationships.
    (b) Mentors may have multiple Prot[eacute]g[eacute]s. However, to 
preserve the integrity of the Program and assure the quality of 
developmental assistance provided to Prot[eacute]g[eacute]s, VA 
reserves the right to limit the total number of Prot[eacute]g[eacute]s 
participating under each Mentor firm for the Mentor-
Prot[eacute]g[eacute] Program.
    (c) The selection of Prot[eacute]g[eacute] firms by Mentor firms 
may not be protested, except that any protest regarding the size or 
eligibility status of an entity selected by a Mentor shall be handled 
in accordance with the Federal Acquisition Regulation (FAR) and the 
Small Business Administration regulations.


819.7108  Application process.

    (a) Firms interested in becoming approved Mentor-
Prot[eacute]g[eacute] participants must submit a joint written VA 
Mentor-Prot[eacute]g[eacute] Agreement to the VA OSDBU for review and 
approval. The proposed Mentor-Prot[eacute]g[eacute] Agreement will be 
evaluated on the extent to which the Mentor plans to provide 
developmental assistance. Evaluations will consider the nature and 
extent of technical and managerial support as well as any proposed 
financial assistance in the form of equity investment, loans, joint-
venture, and traditional subcontracting support.
    (b) The Mentor-Prot[eacute]g[eacute] Agreement must contain:
    (1) Names, addresses, phone numbers, and e-mail addresses (if 
available) of the Mentor and Prot[eacute]g[eacute] firm(s) and a point 
of contact for both Mentor and Prot[eacute]g[eacute] who will oversee 
the agreement;
    (2) A statement from the Prot[eacute]g[eacute] firm that the firm 
is currently eligible as a SDVOSB or VOSB to participate in VA's 
Mentor-Prot[eacute]g[eacute] Program;
    (3) A description of the Mentor's ability to provide developmental 
assistance to the Prot[eacute]g[eacute] and the type of developmental 
assistance that will be provided, to include a description of the types 
and dollar amounts of subcontract work, if any, that may be awarded to 
the Prot[eacute]g[eacute] firm;
    (4) Duration of the Agreement, including rights and 
responsibilities of both parties (Mentor and Prot[eacute]g[eacute]), 
with bi-annual reviews;
    (5) Termination procedures, including procedures for the parties' 
voluntary withdrawal from the Program. The Agreement shall require the 
Mentor or the Prot[eacute]g[eacute] to notify the other firm and VA 
OSDBU in writing at least 30 days in advance of its intent to 
voluntarily terminate the Agreement;
    (6) A schedule with milestones for providing assistance;
    (7) Criteria for evaluation of the Prot[eacute]g[eacute]'s 
developmental success;
    (8) A plan addressing how the Mentor will increase the quality of 
the Prot[eacute]g[eacute] firm's technical capabilities and contracting 
and subcontracting opportunities;
    (9) An estimate of the total cost of the planned mentoring 
assistance to be provided to the Prot[eacute]g[eacute];
    (10) An agreement by both parties to comply with the reporting 
requirements of VAAR 819.7113;
    (11) A plan for accomplishing unfinished work should the agreement 
be voluntarily cancelled;
    (12) Other terms and conditions, as appropriate; and
    (13) Signatures and date(s).
    (c) The Agreement defines the relationship between the Mentor and 
the Prot[eacute]g[eacute] firms only. The Agreement does not create any 
privity of contract between the Mentor and VA or the 
Prot[eacute]g[eacute] and VA.


819.7109  VA review of application.

    (a) VA OSDBU will review the information to establish the Mentor 
and Prot[eacute]g[eacute] eligibility and to ensure that the 
information that is in section 819.7108 is included. If the application 
relates to a specific contract, then OSDBU will consult with the 
responsible contracting officer on the adequacy of the proposed 
Agreement, as appropriate. OSDBU will complete its review no later than 
30 calendar days after receipt of the application or after consultation 
with the contracting officer, whichever is later. There is no charge to 
apply for the Mentor-Prot[eacute]g[eacute] Program.
    (b) After OSDBU completes its review and provides written approval, 
the Mentor may execute the Agreement and implement the developmental 
assistance as provided under the Agreement. OSDBU will provide a copy 
of the Mentor-Prot[eacute]g[eacute] Agreement to the VA contracting 
officer for any VA contracts affected by the Agreement.
    (c) If the application is disapproved, the Mentor may provide 
additional information for reconsideration. OSDBU will complete review 
of any supplemental material no later than 30 days after its receipt. 
Upon finding deficiencies that VA considers correctable, OSDBU will 
notify the Mentor and Prot[eacute]g[eacute] and request correction of 
deficiencies to be provided within 15 days.


819.7110  Developmental assistance.

    The forms of developmental assistance a Mentor can provide to a 
Prot[eacute]g[eacute] include, but are not limited to, the following:
    (a) Guidance relating to--
    (1) Financial management;
    (2) Organizational management;
    (3) Overall business management/planning;
    (4) Business development; and
    (5) Technical assistance.
    (b) Loans.
    (c) Rent-free use of facilities and/or equipment.
    (d) Property.
    (e) Temporary assignment of personnel to a Prot[eacute]g[eacute] 
for training.
    (f) Any other types of permissible, mutually beneficial assistance.


819.7111  Obligations under the Mentor-Prot[eacute]g[eacute] Program.

    (a) A Mentor or Prot[eacute]g[eacute] may voluntarily withdraw from 
the Program. However, in no event shall such withdrawal impact the 
contractual requirements under any prime contract.
    (b) Mentors and prot[eacute]g[eacute]s shall submit reports to VA 
OSDBU in accordance with 819.7113.


819.7112  Internal controls.

    (a) OSDBU will oversee the Program and will work cooperatively with 
relevant contracting officers to achieve Program objectives. OSDBU will 
establish internal controls as checks and balances applicable to the 
Program. These controls will include:
    (1) Reviewing and evaluating Mentor applications for validity of 
the provided information;
    (2) Reviewing bi-annual progress reports submitted by Mentors and 
Prot[eacute]g[eacute]s on Prot[eacute]g[eacute] development to measure 
Prot[eacute]g[eacute] progress against the plan submitted in the 
approved Agreement;
    (3) Reviewing and evaluating financial reports and invoices 
submitted by the Mentor to verify that VA is not charged by the Mentor 
for providing developmental assistance to the Prot[eacute]g[eacute]; 
and
    (4) Limiting the number of participants in the Mentor-
Prot[eacute]g[eacute] Program within a reporting period, in order to 
insure the effective management of the Program.

[[Page 49153]]

    (b) VA may rescind approval of an existing Mentor-
Prot[eacute]g[eacute] Agreement if it determines that such action is in 
VA's best interest. The rescission shall be in writing and sent to the 
Mentor and Prot[eacute]g[eacute] after approval by the OSDBU Director. 
Rescission of an Agreement does not change the terms of any subcontract 
between the Mentor and the Prot[eacute]g[eacute].


819.7113  Reports.

    (a) Mentor and Prot[eacute]g[eacute] entities shall submit to VA's 
Office of Small and Disadvantaged Business Utilization bi-annual 
reports on progress under the Mentor-Prot[eacute]g[eacute] Agreement. 
VA will evaluate reports by considering the following:
    (1) Specific actions taken by the Mentor during the evaluation 
period to increase the participation of their Prot[eacute]g[eacute](s) 
as suppliers to VA, other government agencies and to commercial 
entities;
    (2) Specific actions taken by the Mentor during the evaluation 
period to develop technical and administrative expertise of a 
Prot[eacute]g[eacute] as defined in the Agreement;
    (3) The extent to which the Prot[eacute]g[eacute] has met the 
developmental objectives in the Agreement;
    (4) The extent to which the Mentor's participation in the Mentor-
Prot[eacute]g[eacute] Program impacted the Prot[eacute]g[eacute]'(s') 
ability to receive contract(s) and subcontract(s) from private firms 
and Federal agencies other than VA; and, if deemed necessary;
    (5) Input from the Prot[eacute]g[eacute] on the nature of the 
developmental assistance provided by the Mentor.
    (b) OSDBU will submit annual reports to the relevant contracting 
officer regarding participating prime contractor'(s') performance in 
the Program.
    (c) In addition to the written progress report in paragraph (a) of 
this section, at the mid-term point in the Mentor-Prot[eacute]g[eacute] 
agreement, the Mentor and the Prot[eacute]g[eacute] shall formally 
brief the VA OSDBU regarding program accomplishments as pertains to the 
approved agreement.
    (d) Mentor and Prot[eacute]g[eacute] firms shall submit an 
evaluation to OSDBU at the conclusion of the mutually agreed upon 
Program period, the conclusion of the contract, or the voluntary 
withdrawal by either party from the Program, whichever comes first.


819.7114  Measurement of program success.

    The overall success of the VA Mentor-Prot[eacute]g[eacute] Program 
encompassing all participating mentors and prot[eacute]g[eacute]s will 
be measured by the extent to which it results in:
    (a) An increase in the quality of the technical capabilities of the 
prot[eacute]g[eacute] firm.
    (b) An increase in the number and dollar value of contract and 
subcontract awards to prot[eacute]g[eacute] firms since the time of 
their entry into the program attributable to the Mentor-
Prot[eacute]g[eacute] relationship (under VA contracts, contracts 
awarded by other Federal agencies and under commercial contracts.)


819.7115  Solicitation provisions.

    (a) Insert the provision at 852.219-71, VA Mentor-
Prot[eacute]g[eacute] Program, in solicitations that include the FAR 
clause at 52.219-9, Small Business Subcontracting Plan.
    (b) Insert the provision at 852.219-72, Evaluation Factor for 
Participation in the VA Mentor-Prot[eacute]g[eacute] Program, in 
solicitations that include an evaluation factor for participation in 
VA's Mentor-Prot[eacute]g[eacute] Program in accordance with 819.7105 
and that also include the FAR clause at 52.219-9, Small Business 
Subcontracting Plan.

PART 828--BONDS AND INSURANCE

    26. The authority citation for part 828 is revised to read as 
follows:

    Authority: 38 U.S.C. 501, 8127, 8128 and 8151-8153; 40 U.S.C. 
121(c); and 48 CFR 1.301-1.304.

    27. Section 828.106-71 is added to read as follows:


828.106-71  Assisting service-disabled veteran-owned and veteran-owned 
small businesses in obtaining bonding.

    VA prime contractors are encouraged to assist SDVOSB concerns and 
VOSB concerns in obtaining subcontractor performance and payment bonds. 
Mentors are especially encouraged to assist their 
Prot[eacute]g[eacute]s in obtaining bid, payment, and performance bonds 
as prime contractors and bonds as subcontractors when bonds are 
required.
    28. Section 828.106-72 is added to read as follows:


828.106-72  Contract provision.

    Insert the provision at 852.228-72, Assisting Service-Disabled 
Veteran-Owned and Veteran-Owned Small Businesses in Obtaining Bonds, in 
solicitations that include the FAR clause at 52.228-1, Bid Guarantee.

PART 852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    29. The authority citation for part 852 is revised to read as 
follows:

    Authority: 38 U.S.C. 501, 8127, 8128, and 8151-8153; 40 U.S.C. 
121(c); and 48 CFR 1.301-1.304.

    30. Section 852.215-70 is added to read as follows:


852.215-70  Service-Disabled Veteran-Owned and Veteran-Owned Small 
Business Evaluation Factors.

    As prescribed in 815.304-71(a), insert the following clause:
Service-Disabled Veteran-Owned and Veteran-Owned Small Business 
Evaluation Factors (Date)
    (a) In an effort to achieve socioeconomic small business goals, 
depending on the evaluation factors included in the solicitation, VA 
may evaluate offerors based on their service-disabled veteran-owned 
or veteran-owned small business status and their proposed use of 
eligible service-disabled veteran-owned small businesses and 
veteran-owned small businesses as subcontractors.
    (b) Eligible service-disabled veteran-owned offerors will 
receive full credit, and offerors qualifying as veteran-owned small 
businesses will receive partial credit for the Service-Disabled 
Veteran-Owned and Veteran-Owned Small Business Status evaluation 
factor. To receive credit, an offeror must be registered and 
verified in Vendor Information Pages. (http://www.VetBiz.gov).
    (c) Non-veteran offerors proposing to use service-disabled 
veteran-owned small businesses or veteran-owned small businesses as 
subcontractors will receive some consideration under this evaluation 
factor. Offerors must state in their proposals the names of the 
SDVOSBs and VOSBs with whom they intend to subcontract and provide a 
brief description of the proposed subcontracts and the approximate 
dollar values of the proposed subcontracts. In addition, the 
proposed subcontractors must be registered and verified in the 
VetBiz.gov Vendor Information Pages (VIP) (http://www.vetbiz.gov).

    (End of Clause)
    31. Section 852.215-71 is added to read as follows:


852.215-71  Evaluation Factor Commitments.

    As prescribed in 815.304-71(b), insert the following clause:
Evaluation Factor Commitments (Date)
    The offeror agrees, if awarded a contract, to use the service-
disabled veteran-owned small businesses or veteran-owned small 
businesses proposed as subcontractors in accordance with clause 
852.215-70, Service-Disabled Veteran-Owned and Veteran-Owned Small 
Business Evaluation Factors, or to substitute one or more service-
disabled veteran-owned small businesses or veteran-owned small 
businesses for subcontract work of the same or similar value.

    (End of Clause)
    32. Section 852.219-9 is added to read as follows:

[[Page 49154]]

852.219-9  VA Small Business Subcontracting Plan Minimum Requirements.

    As prescribed in 819.9, insert the following clause:
VA Small Business Subcontracting Plan Minimum Requirements (Date)
    (a) This clause does not apply to small business concerns.
    (b) If the offeror is required to submit an individual 
subcontracting plan, the minimum goals for award of subcontracts to 
service-disabled veteran-owned small business concerns and veteran-
owned small business concerns shall be at least commensurate with 
the Department's annual service-disabled veteran-owned small 
business and veteran-owned small business prime contracting goals 
for the total dollars planned to be subcontracted.
    (c) For a commercial plan, the minimum goals for award of 
subcontracts to service-disabled veteran-owned small business 
concerns and veteran-owned small businesses shall be at least 
commensurate with the Department's annual service-disabled veteran-
owned small business and veteran-owned small business prime 
contracting goals for the total value of projected subcontracts to 
support the sales for the commercial plan.
    (d) To be credited toward goal achievements, businesses must be 
verified as eligible in the Vendor Information Pages database. The 
contractor shall annually submit a listing of service-disabled 
veteran-owned small businesses and veteran-owned small businesses 
for which credit toward goal achievement is to be applied for the 
review of personnel in the Office of Small and Disadvantaged 
Business Utilization.
    (e) The contractor may appeal any businesses determined not 
eligible for crediting toward goal achievements by following the 
procedures contained in VAAR subpart 819.407.

    (End of Clause)
    33. Section 852.219-10 is added to read as follows:


852.219-10  VA Notice of Total Service-Disabled Veteran-Owned Small 
Business Set-Aside.

    As prescribed in 819.7009, insert the following clause:
VA Notice of Total Service-Disabled Veteran-Owned Small Business Set-
Aside (Date)
    (a) Definition. For the Department of Veterans Affairs, 
``Service-disabled veteran-owned small business concern''--
    (1) Means a small business concern--
    (i) Not less than 51 percent of which is owned by one or more 
service-disabled veterans or, in the case of any publicly owned 
business, not less than 51 percent of the stock of which is owned by 
one or more service-disabled veterans (or eligible surviving 
spouses);
    (ii) The management and daily business operations of which are 
controlled by one or more service-disabled veterans (or eligible 
surviving spouses) or, in the case of a service-disabled veteran 
with permanent and severe disability, the spouse or permanent 
caregiver of such veteran;
    (iii) The business meets Federal small business size standards 
for the applicable North American Industry Classification System 
(NAICS) code identified in the solicitation document; and
    (iv) The business has been verified for ownership and control 
and is so listed in the Vendor Information Pages, (http://www.VetBiz.gov).
    (2) ``Service-disabled veteran'' means a veteran, as defined in 
38 U.S.C. 101(2), with a disability that is service-connected, as 
defined in 38 U.S.C. 101(16).
    (b) General.
    (1) Offers are solicited only from service-disabled veteran-
owned small business concerns. Offers received from concerns that 
are not service-disabled veteran-owned small business concerns shall 
not be considered.
    (2) Any award resulting from this solicitation shall be made to 
a service-disabled veteran-owned small business concern.
    (c) Agreement. A service-disabled veteran-owned small business 
concern agrees that in the performance of the contract, in the case 
of a contract for--
    (1) Services (except construction), at least 50 percent of the 
cost of personnel for contract performance will be spent for 
employees of the concern or employees of other eligible service-
disabled veteran-owned small business concerns;
    (2) Supplies (other than acquisition from a nonmanufacturer of 
the supplies), at least 50 percent of the cost of manufacturing, 
excluding the cost of materials, will be performed by the concern or 
other eligible service-disabled veteran-owned small business 
concerns;
    (3) General construction, at least 15 percent of the cost of the 
contract performance incurred for personnel will be spent on the 
concern's employees or the employees of other eligible service-
disabled veteran-owned small business concerns; or
    (4) Construction by special trade contractors, at least 25 
percent of the cost of the contract performance incurred for 
personnel will be spent on the concern's employees or the employees 
of other eligible service-disabled veteran-owned small business 
concerns.
    (d) A joint venture may be considered a service-disabled 
veteran-owned small business concern if--
    (1) At least one member of the joint venture is a service-
disabled veteran-owned small business concern, and makes the 
following representations: That it is a service-disabled veteran-
owned small business concern, and that it is a small business 
concern under the North American Industry Classification Systems 
(NAICS) code assigned to the procurement;
    (2) Each other concern is small under the size standard 
corresponding to the NAICS code assigned to the procurement; and
    (3) The joint venture meets the requirements of paragraph 7 of 
the explanation of Affiliates in 19.101 of the Federal Acquisition 
Regulation.
    (4) The joint venture meets the requirements of 13 CFR 
125.15(b).
    (e) Any service-disabled veteran-owned small business concern 
(nonmanufacturer) must meet the requirements in 19.102(f) of the 
Federal Acquisition Regulation to receive a benefit under this 
program.

    (End of Clause)
    34. Section 852.219-11 is added to read as follows:


852.219-11  VA Notice of Total Veteran-Owned Small Business Set-Aside.

    As prescribed in 819.7009, insert the following clause:
VA Notice of Total Veteran-Owned Small Business Set-Aside (Date)
    (a) Definition. For the Department of Veterans Affairs, 
``Veteran-owned small business concern''--
    (1) Means a small business concern--
    (i) Not less than 51 percent of which is owned by one or more 
veterans or, in the case of any publicly owned business, not less 
than 51 percent of the stock of which is owned by one or more 
veterans;
    (ii) The management and daily business operations of which are 
controlled by one or more veterans;
    (iii) The business meets Federal small business size standards 
for the applicable North American Industry Classification System 
(NAICS) code identified in the solicitation document; and
    (iv) The business has been verified for ownership and control 
and is so listed in the Vendor Information Pages (http://www.VetBiz.gov).
    (2) ``Veteran'' is defined in 38 U.S.C. 101(2).
    (b) General.
    (1) Offers are solicited only from veteran-owned small business 
concerns. All service-disabled veteran-owned small businesses are 
also determined to be veteran-owned small businesses if they meet 
the criteria identified in paragraph (a)(1) of this section. Offers 
received from concerns that are not veteran-owned small business 
concerns shall not be considered.
    (2) Any award resulting from this solicitation shall be made to 
a veteran-owned small business concern.
    (c) Agreement. A veteran-owned small business concern agrees 
that in the performance of the contract, in the case of a contract 
for--
    (1) Services (except construction), at least 50 percent of the 
cost of personnel for contract performance will be spent for 
employees of the concern or employees of other eligible veteran-
owned small business concerns;
    (2) Supplies (other than acquisition from a nonmanufacturer of 
the supplies), at least 50 percent of the cost of manufacturing, 
excluding the cost of materials, will be performed by the concern or 
other eligible veteran-owned small business concerns;
    (3) General construction, at least 15 percent of the cost of the 
contract performance incurred for personnel will be spent on the 
concern's employees or the employees of other eligible veteran-owned 
small business concerns; or

[[Page 49155]]

    (4) Construction by special trade contractors, at least 25 
percent of the cost of the contract performance incurred for 
personnel will be spent on the concern's employees or the employees 
of other eligible veteran-owned small business concerns.
    (d) A joint venture may be considered a veteran-owned small 
business concern if--
    (1) At least one member of the joint venture is a veteran-owned 
small business concern, and makes the following representations: 
That it is a veteran-owned small business concern, and that it is a 
small business concern under the NAICS code assigned to the 
procurement;
    (2) Each other concern is small under the size standard 
corresponding to the NAICS code assigned to the procurement;
    (3) The joint venture meets the requirements of paragraph 7 of 
the explanation of Affiliates in 19.101 of the Federal Acquisition 
Regulation; and
    (4) The joint venture meets the requirements of 13 CFR 
125.15(b), except that the principal company may be a veteran-owned 
small business concern or a service-disabled veterans-owned small 
business concern.
    (e) Any veteran-owned small business concern (nonmanufacturer) 
must meet the requirements in 19.102(f) of the Federal Acquisition 
Regulation to receive a benefit under this program.

    (End of Clause)
    35. Section 852.219-71 is added to read as follows:


852.219-71  VA Mentor-Prot[eacute]g[eacute] Program.

    As prescribed in 819.7115(a), insert the following clause:
VA Mentor-Prot[eacute]g[eacute] Program (Date)

    (a) Large businesses are encouraged to participate in the VA 
Mentor-Prot[eacute]g[eacute] Program for the purpose of providing 
developmental assistance to eligible service-disabled veteran-owned 
small businesses and veteran-owned small businesses to enhance the 
small businesses' capabilities and increase their participation as 
VA prime contractors and as subcontractors.
    (b) The program consists of:
    (1) Mentor firms, which are prime contractors capable of 
providing developmental assistance;
    (2) Prot[eacute]g[eacute] firms, which are service-disabled 
veteran-owned small business concerns or veteran-owned small 
business concerns; and
    (3) Mentor-Prot[eacute]g[eacute] Agreements approved by the VA 
Office of Small and Disadvantaged Business Utilization.
    (c) Mentor participation in the program means providing business 
developmental assistance to aid Prot[eacute]g[eacute]s in developing 
the requisite expertise to effectively compete for and successfully 
perform VA prime contracts and subcontracts.
    (d) Large business prime contractors serving as Mentors in the 
VA Mentor-Prot[eacute]g[eacute] Program are eligible for an 
incentive for subcontracting plan credit. VA will recognize the 
costs incurred by a Mentor firm in providing assistance to a 
Prot[eacute]g[eacute] firm and apply those costs for purposes of 
determining whether the mentor firm attains its subcontracting plan 
participation goals under a VA contract. The amount of credit given 
to a Mentor firm for these Prot[eacute]g[eacute] developmental 
assistance costs shall be calculated on a dollar-for-dollar basis 
and reported by the large business prime contractor via the 
Electronic Subcontracting Reporting System (eSRS).
    (e) Contractors interested in participating in the program are 
encouraged to contact the VA Office of Small and Disadvantaged 
Business Utilization for more information.

    (End of Clause)
    36. Section 852.219-72 is added to read as follows:


852.219-72  Evaluation Factor for Participation in the VA Mentor-
Prot[eacute]g[eacute] Program.

    As prescribed in 819.7115(b), insert the following clause:
Evaluation Factor for Participation in the VA Mentor-
Prot[eacute]g[eacute] Program (Date)
    This solicitation contains an evaluation factor or sub-factor 
regarding participation in the VA Mentor-Prot[eacute]g[eacute] 
Program. In order to receive credit under the evaluation factor or 
sub-factor, the offeror must provide with its proposal a copy of a 
signed letter issued by the VA Office of Small and Disadvantaged 
Business Utilization approving the offeror's Mentor-
Prot[eacute]g[eacute] Agreement.

    (End of Clause)
    37. Section 852.228-72 is added to read as follows:


852.228-72  Assisting Service-Disabled Veteran-owned and Veteran-owned 
Small Businesses in Obtaining Bonds.

    As prescribed in 828.106-71, insert the following clause:
Assisting Service-Disabled Veteran-Owned Small Businesses and Veteran-
Owned Small Businesses in Obtaining Bonds (Date)
    Prime contractors are encouraged to assist service-disabled 
veteran-owned and veteran-owned small business potential 
subcontractors in obtaining bonding, when required. Mentor firms are 
encouraged to assist Prot[eacute]g[eacute] firms under VA's Mentor-
Prot[eacute]g[eacute] Program in obtaining acceptable bid, payment, 
and performance bonds, when required, as a prime contractor under a 
solicitation or contract and in obtaining any required bonds under 
subcontracts.

    (End of Provision)

[FR Doc. E8-19261 Filed 8-19-08; 8:45 am]
BILLING CODE 8320-01-P


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