Subject: To Director of Acquisition Policy (VP) Guidelines for Implementing Section 211 of Public Law 95-507, Amendments to the : Heads of Services All Regional Administrators The purpose of this letter is to bring together in one document all regulatory material and instructions associated with implementing Section 211 of P.L. 95-507. Addressees shall ensure that copies of this letter and its enclosures are provided to all your contracting personnel. Certain guidance on implementing the requirements of Section 211 of P.L. 95-507 was previously issued for solicitations currently being issued and all future solicitations, both advertised and negotiated. These include: a. The Federal Procurement Regulations Temporary Regulation 50 (enclosure 1) contains new clauses and procedures which implement Section 211 of P.L. 95-507. b. Priority message, dated November 30, 1979, (enclosure 2) advised addressees to amend all outstanding Invitations for Bids (IFBs) that have not opened and negotiated solicitations that have not closed, which should, but do not, contain the subcontracting provisions required by Temporary Regulation 50 and to ensure that all future solicitations include the provisions required by this temporary regulation. c. Priority message, dated December 5, 1979, (enclosure 3) advised addressees that the part of the OFPP issuance (enclosure 4) entitled "Instructions to Contracting Officers," should be used as a supplement to Temporary Regulation 50. The following guidance will be used for solicitations that have already been issued, are presently in the evaluation process, and meet the threshold for requiring a subcontracting plan, but do not contain the required subcontracting clause: a. On negotiated solicitations, a case by case review will be made to determine the advisability of issuing a revised solicitation and canceling the current solicitation where the delay involved would not adversely affect the timely delivery of goods and services or be otherwise inconsistent with the best interests of the Government. Documentation of this determination will be included in the purchase file. If the determination not to resolicit is made, the solicitation will proceed to award and negotiation of the required subcontracting plan will commence after the award is made, in accordance with instructions in the subsequent paragraphs for modifying contracts. b. Formally advertised solicitations will proceed to award and negotiation of the required subcontracting plan will begin after the award is made in accordance The Comptroller General has indicated (B-114835, October 19, 1979), that contracts awarded after issuance of the regulations that should, but do not, contain subcontracting plans are legally deficient. The General Accounting Office (GAO) offered three alternatives to correct these contracts. These are: contract modification; contract termination; and where urgency or other valid reasons exist, no modification is necessary. Accordingly, on contracts awarded after April 10, 1979, to other than small businesses, that meet the thresholds in Temporary Regulation 50 for requiring subcontracting plans, addressees will initiate action to modify these contracts to incorporate the applicable provisions and negotiate acceptable subcontracting plans unless the Head of Service or Regional Administrator determines that the contract modification is not consistent with the best interests of the Government. Guidelines for the contracting officers to use in the modification of contracts are at enclosure 5. Generally, the more recently awarded contracts appear to offer the greatest opportunity for positive results. To initiate action on modifying contracts that require subcontracting plans, the letter at enclosure 6 should be sent to the contractors. The guidelines, the standard letter, and the suggested plan form are tailor-made to the situation and are only to be used for modifying those contracts not in compliance with P.L. 95-507 and implementing regulations. With respect to solicitations 'on the street" and future solicitations, you are to comply with Temporary Regulation 50. In conjunction with the effort to modify solicitations and contracts requiring subcontracting provisions, addressees are asked to provide this office the following information by January 19, 1980: a. The number and dollar amount of IFBs issued that met the thresholds for requiring a subcontracting plan and did not contain the applicable provisions; b. The number and dollar amount of these IFBS amended to include the applicable subcontracting provisions; c. The number and dollar amount of RFPs and SFOS issued that met the thresholds for requiring a subcontracting plan and did not contain the applicable provisions; d. The number and dollar amount of these RFPs and SFOS amended to include the applicable subcontracting provisions; e. The number and dollar amount of solicitations issued which contain the required clauses; f. The number and dollar amount of contracts awarded that met the thresholds for requiring a subcontracting plan but did not contain a subcontracting plan; g. The number and dollar amount of these contracts where negotiations have begun on a subcontracting plan; (i.e., termination for the convenience of the Government) h. The number of subcontracting plans incorporated as part of an existing contract; and 1. The number and dollar amount of contracts awarded between $10,000 and $500,000, except $1 million for construction, that required but did not contain the subcontracting utilization clause. Each of the preceding data elements is to be broken down by month (that is, April, May, June, etc.) for the period April 10, 1979, through December 31, 1980. We appreciate the complexity associated with the implementation of Section 211 of P.L. 95-507. In this respect, when substantive problems arise in the course of the implementation process, addressees are invited to advise us of the nature of the problem, the problem's operational impact, the course of action taken and, if the problem will be a recurring one, recommendations on alternative solutions. 1. Purpose. This temporary regulation prescribes new clauses and procedures on the awarding of subcontracts to small business concerns and small business concerns that are socially and economically disadvantaged. 2. Effective date. This regulation became effective April 10, 1979. 3. Expiration date. 4. Background. The Administrator, Office of Federal Procurement Policy (OFPP), published April 10 and June 15, 1979, notices in the Federal Register (44 FR 23610, Apr. 20, 1979 and 44 FR 35068, June 18, 1979) which set forth clauses and other procedures on the award of subcontracts to small business concerns and small business concerns that are socially economically disadvantaged. GSA was requested to incorporate the clauses and procedures into the Federal Procurement Regulations. The clauses and procedures implement Public Law 95-507, October 24, 1978. A May 22, 1979, TWX from GSA to Agency heads authorized the use of the clauses and procedures. This regulation expires on April 10, 1981. 5. Explanation of changes. The policies and procedures in ss 1-1.710 and 1-1.1310 are rescinded, and the sections are reserved. 6. Agency action. Pending the publication of a permanent FPR amendment, agencies shall employ the contract clauses and procedure set forth in the Federal Register notices referenced in paragraph 4 The clauses should be included in solicitations as soon as practicable after issuance of this temporary regulation. clauses and procedures are illustrated in attachment A. Paul E. Goulding Acting Administrator of General Services These Attachment Enclosure 1 June 20, 1979 23610 Federal Register/Vol. 44, No. 78/Friday, Apr. 20, 1979/Notices OFFICE OF MANAGEMENT AND BUDGET Office of Federal Procurement Policy Subcontracting Under Federal AGENCY: Office of Federal Procurement ACTION Notice of changes to be made in SUMMARY: This document sets forth changes to be made in the Federal Procurement Regulation (FPR) and the Defense Acquisition Regulation (DAR) in partial implementation of Section 211 of Pub. L. 95-507. On October 24, 1978, the President signed into law Pub. L. 95-507 amending the Small Business Act and the Small Business Investment Act of 1958. Section 211 of Pub. L. 95-507 relates to subcontracting under Federal Contracts. On January 16, 1979, the Office of Federal Procurement Policy published in the Federal Register a proposed policy statement relating to changes in the FPR and DAR regarding Section 211 (Subcontracting) and Section 223) (reservation for small business of contracts under $10,000.) Comments were received with respect to the proposed implementation of both sections. Section 211: final changes regarding Section 221(j) will be published in the near future. The comments received on the implementation of Section 211 were carefully considered and the final rules reflect the views set forth in some of those comments. Finally, additional comments are invited regarding the desirability and potential impact of including, for the purposes of the subcontracting plan, purchases whose costs are normally allocated as indirect or overbead costs. DATE The changes set forth herein are effective immediately. FOR FURTHER INFORMATION CONTACT: Dated: April 10, 1978. Louis A. Puttig Adamount. Subcontracting A. Utilization of Small Business and Small Disadvantaged Business Concerns (Over $10,000). DOD and CSA are requested to provide in Section 7 of the DAR and part 1-7 of the FPR for the use of a contract clause as follows: The following clause shall be included in all contracts of over $10.000 except (1) contracts for services which are personal in nature and (2) contracts which will be performed entirely (including all subcontracts) outside any State, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico: Utilization of Small Business Concerns and Small Business Concerns Owned and Controlled by Socially and Economically Disadvantaged Individuals (a) It is the policy of the United States that small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals shall have the maximum practicable opportunity to participate in the performance of contracts let by any Federal agency. (b) The contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with the efficient performance of this contract. The contractor further agrees to cooperate in any studies or surveys that may be conducted by the Small Business Administration or the contracting agency which may be necessary to determine the extent of the contractor's compliance with this clause. (c)(1) The term "small business concern shall mean a small business as defined pursuant to Section 3 of the Small Business Act and in relevant regulations promulgated pursuant thereto.' (2) The term "small business concern owned and controlled by socially and economically disadvantaged individuals shall mean a small business concern (1) which is at least 51 per centum owned by one or more socially and economically disadvantaged individuals; or in the case of any publicly owned business, at least 51 per centum of the stock of which is owned by one or more socially and economically disadvantaged individuals; and Regulations of the Small Business (ii) whose management and daily (d) Subcontractors shall provide a B. Definitions. DOD and CSA are requested to provide in Section 3–332 of the DAR and subpart 3-1.13 of the FPR as follows: 1. Business owners who certify that they are members of named groups (Black Americans. Hispanic Americans. Native Americans) are to be considered socially and economically disadvantaged. 2. The term "Native Americans" means American Indians, Eskimos, Aleuts and native Hawaiians. 3. Other individuals may qualify as socially and economically disadvantaged under procedures to be separately established by the Small Business Administration using the following guidelines: Socially disadvantaged individuals are those individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities. Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged. 4. The Office of Minority Small Business Capital Ownership Development in the Small Business Administration shall answer inquiries from prime contractors and others relative to the class of eligibles. C. Small Business and Small Disadvantaged Business Subcontracting (Negotioled). DOD and GSA are. requested to provide in Section 3-332 and Section 2. Part 7 of the DAR and subparts 3-1.13 and 1-1.7 of the FPR as follows |