Small Disadvantaged Business Procurement: Reform of Affirmative Action in Federal Procurement

OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

Small Disadvantaged Business Procurement: Reform of Affirmative Action in Federal Procurement

AGENCY: Office of Federal Procurement Policy (OFPP)

ACTION: Notice of Determination Concerning the Price Evaluation Adjustment Program and the Small Disadvantaged Business (SDB) Participation Program

SUMMARY: The Federal Acquisition Regulation (FAR), 48 CFR Subparts 19.11 and 19.12 contain procurement mechanisms applicable to the SDB reform program. FAR Subpart 19.11 permits eligible SDBs to receive price evaluation adjustments in Federal procurement programs. FAR Subpart 19.12 provides for an SDB participation program that evaluates the extent of participation of SDB concerns in contract performance. The FAR provides further that the Department of Commerce will determine on an annual basis the price evaluation adjustment by standard industrial classification (SIC) major groups for the price evaluation adjustment program and the authorized SIC major groups for the SDB participation program.

The Commerce Department, in the attached memorandum, determines that for fiscal year 2000 the price evaluation adjustment and the authorized SIC major groups are the same as used in fiscal year 1999. The OFPP notice of June 30, 1998 (63 Fed. Reg. 35714) includes the Commerce determination for fiscal year 1999 of the price evaluation adjustment by SIC major groups for the price evaluation adjustment program. Subsequently, OFPP published on December 29, 1998 (63 Fed. Reg. 71724) the Commerce determination of authorized SIC major groups for the SDB participation program which were the same SIC major groups applicable to the price evaluation adjustment program.

EFFECTIVE DATE: September 30, 1999

FOR FURTHER INFORMATION CONTACT: Michael Gerich, Deputy Associate Administrator, Office of Federal Procurement Policy, Telephone, 202-395-3501. For information on the Commerce determination, contact Jeffrey Mayer, Director of Policy Development, Economics and Statistics Administration, U.S. Department of Commerce, Telephone 202-482-1728.

SUPPLEMENTARY INFORMATION

PROCUREMENT MECHANISMS AND FACTORS

FAR Subparts 19.11 and 19.12 contain procurement mechanisms applicable to the SDB reform program. FAR Subpart 19.11 provides for the use of a price evaluation adjustment for eligible SDBs. FAR Subpart 19.12 provides for an SDB participation program that consists of two mechanisms: (1) an evaluation factor or subfactor for evaluating the extent of participation of SDBs in performance of the contract; and (2) an incentive subcontracting program for exceeding SDB participation targets. OFPP gives notice that the attached memorandum from the Commerce Department determines that for fiscal year 2000 the price evaluation adjustment and the authorized SIC major groups are the same as used in fiscal year 1999. (See 63 Fed. Reg. 35714 (June 30, 1998) for the price evaluation adjustment and the listing of the eligible SIC major groups applicable in fiscal year 1999.) This determination affects solicitations issued on or after October 1, 1999.

Deidre A. Lee
Administrator

Attachment

MEMORANDUM FOR OFFICE OF FEDERAL PROCUREMENT POLICY

Pursuant to Federal Acquisition Regulation paragraph 19.201(b) and subparts 19.11 and 19.12, transmitted herein is the Department of Commerce (DOC) determination on the Price Evaluation Adjustments for Small Disadvantaged Business Concerns and the Small Disadvantaged Business Participation Program for use in Federal procurements in FY 2000.

 

DOC transmitted a Notice of Determination Concerning Price Evaluation Adjustments to the Office of Federal Procurement Policy, which was published in the Federal Register on June 30, 1998 (see 63 Fed. Reg. 35714 (1998)). The Notice identified the standard industrial classification (SIC) major industry groups in which offers by small disadvantaged businesses on certain federal prime contracts would be eligible for ten percent price evaluation adjustments in FY 1999. In addition, DOC transmitted a Notice of Determination Concerning the Small Disadvantaged Business Participation Program to the Office of Federal Procurement Policy, which was published in the Federal Register on December 29, 1998 (see 63 Fed. Reg. 71724 (1998)). In both cases, the determinations were based on DOC's benchmark and utilization estimates derived from FY 1996 data.

 

In order to develop new benchmarks and utilization estimates for its FY 2001 determination, DOC plans to collect and analyze FY 1999 data along the lines of the methodology outlined in the June 30, 1998 Notice. The determination based on the resulting estimates will be published in June 2000 and will take effect on October 1, 2000. Based on its assessment of the consistency in recent federal procurement patterns, DOC proposes to develop new benchmarks and utilization estimates every three years. DOC will monitor procurement annually to see if benchmarks and utilization estimates should be updated more frequently than every three years.

 

DOC's determination of industries eligible for both the Price Evaluation Adjustment for Small Disadvantaged Business Concerns and the Small Disadvantaged Business Participation Program for FY 2000 is the same as its determination for FY 1999 and is reproduced in the table below.

 

Industries Eligible for a Ten Percent Price Evaluation Adjustment and the Small Disadvantaged Business Participation Program

SIC Major Industry Group	Eligibility (*)	Description of Industry Grouping
AGRICULTURE, FORESTRY, AND FISHING
01		Agricultural production -- crops
02		Agricultural production -- livestock
07		Agricultural services
08		Forestry
09		Fishing, hunting, & trapping
MINING
10	*	Metal mining
12	*	Coal mining
13	*	Oil & gas extraction
14	*	Extraction of nonmetallic minerals, ex. Fuels
CONSTRUCTION
15		Building construction -- general contractors
15	*	East North Central
15	*	East South Central
15	*	Middle Atlantic
15		Mountain
15		New England
15		Pacific
15		South Atlantic
15		West North Central
15	*	West South Central
16		Heavy construction other than buildings -- contractors
16		East North Central
16	*	East South Central
16		Middle Atlantic
16		Mountain
16		New England
16		Pacific
16		South Atlantic
16		West North Central
16	*	West South Central
17		Construction -- special trade contractors
17		East North Central
17		East South Central
17		Middle Atlantic
17		Mountain
17	*	New England
17		Pacific
17		South Atlantic
17	*	West North Central
17		West South Central
MANUFACTURING
20		Food & kindred products
21		Tobacco products
22	*	Textile mill products
23	*	Apparel & other finished products made from fabrics
24	*	Lumber & wood products, ex. Furniture
25	*	Furniture & fixtures
26	*	Paper & allied products
27	*	Printing, publishing, & allied industries
28	*	Chemicals & allied products
29	*	Petroleum refining & related industries
30	*	Rubber & miscellaneous plastics products
31	*	Leather & leather products
32		Stone, clay, glass, & concrete products
33		Primary metal industries
34	*	Fabricated metal products
35		Industrial & commercial machinery & computer equipment
36	*	Electronic & other electrical equipment & components, ex. Computers
37	*	Transportation equipment
38	*	Measuring, analyzing, & controlling instruments; photographic, medical & optical goods; watches & clocks
39	*	Miscellaneous manufacturing industries
TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS, SANITARY SERVICES
40		Railroad transportation
41	*	Local & suburban transit & interurban highway passenger transportation
42	*	Motor freight transportation & warehousing
44	*	Water transportation
45		Transportation by air
46	*	Pipelines, exc. natural gas
47	*	Transportation services
48	*	Communications
49	*	Electric, gas, & sanitary services
WHOLESALE TRADE
50	*	Wholesale trade -- durable goods
51	*	Wholesale trade -- nondurable goods
RETAIL TRADE
52	*	Building materials, hardware, garden supply, & mobile home dealers
53	*	General Merchandise stores
54	*	Food stores
55	*	Automotive dealers & gasoline service stations
56	*	Apparel & accessory stores
57	*	Home furniture, furnishings, & equipment stores
58	*	Eating & drinking places
59	*	Miscellaneous retail
FINANCE, INSURANCE, AND REAL ESTATE
60	*	Depository institutions
61	*	Nondepository adjustment institutions
62	*	Security & commodity brokers, dealers, exchanges, & services
63	*	Insurance carriers
64	*	Insurance agents, brokers, & services
65	*	Real estate
67	*	Holding & other investment offices
SERVICES
70	*	Hotels, rooming houses, camps, & other lodging places
72		Personal services
73	*	Business services
75	*	Automotive repair, services, & parking
76	*	Miscellaneous repair services
78		Motion pictures
79		Amusement & recreation services
80	*	Health services
81		Legal services
82	*	Educational services
83		Social services
84		Museums, art galleries, & botanical & zoological gardens
86		Membership organizations
87	*	Engineering, accounting, research, management, & related services
88		Private households
89	*	Miscellaneous services

Recommendations specific to major industry groups (and combinations thereof) apply nation-wide for all industry groupings except the major construction industry groups (SIC Major Industry Groups 15, 16, and 17). Determinations in these three major groups apply regionally rather than nationally. Regional definitions are based on the nine multi-state Divisions used by the Bureau of the Census when it reports certain sub-national data. DOC augmented the Bureau's basic definitions for the Divisions by including Guam in the Pacific Region and Puerto Rico and the Virgin Islands in the South Atlantic Region. A complete list of the states and outlying areas that comprise each of the nine regions used by DOC follows:

 

East North Central: Illinois, Indiana, Michigan, Ohio, Wisconsin

East South Central: Alabama, Kentucky, Mississippi, Tennessee

Middle Atlantic: New Jersey, New York, Pennsylvania

Mountain: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming

New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont

Pacific: Alaska, California, Guam, Hawaii, Oregon, Washington

South Atlantic: Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina,
Puerto Rico, South Carolina, Virgin Islands, Virginia, West Virginia

West North Central: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota,
South Dakota

West South Central: Arkansas, Louisiana, Oklahoma, Texas