[Federal Register: July 26, 2000 (Volume 65, Number 144)]
[Rules and Regulations]               
[Page 46074-46075]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]





48 CFR Chapter 1

Federal Acquisition Regulation; Small Entity Compliance Guide

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Small Entity Compliance Guide.


SUMMARY: This document is issued under the joint authority of the 
Secretary of Defense, the Administrator of General Services, and the 
Administrator for the National Aeronautics and Space Administration. 
This Small Entity Compliance Guide has been prepared in accordance with 
Section 212 of the Small Business Regulatory Enforcement Fairness Act 
of 1996 (Public Law 104-121). It consists of a summary of rules 
appearing in Federal Acquisition Circular (FAC) 97-19 which amend the 
FAR. An asterisk (*) next to a rule indicates that a regulatory 
flexibility analysis has been prepared in accordance with 5 U.S.C. 604. 
Interested parties may obtain further information regarding these rules 
by referring to FAC 97-19 which precedes this document. These documents 
are also available via the Internet at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.arnet.gov/far.

FOR FURTHER INFORMATION CONTACT: Laurie Duarte, FAR Secretariat, (202) 
501-4225. For clarification of content, contact the analyst whose name 
appears in the table below.

                       List of Rules in FAC 97-19
    Item              Subject             FAR case         Analyst
I..........  Contract Bundling*.......     1997-306  De Stefano
II.........  North American Industry       2000-604  Moss
              Classification System
              (NAICS) (Interim).
III........  Liquidated Damages.......     1999-003  Moss
IV.........  Service Contract Act,         1998-605  Klein
              Commercial Item
V..........  Small Business                1999-012  Moss
              Demonstration Program.
VI.........  Construction Industry         1999-302  De Stefano
              Payment Protection Act
              of 1999*.
VII........  Deferred Research and
              Development (R&D) Costs
              1999-013  Nelson.
VIII.......  Time-and-Materials or         1999-606  Klein
              Labor Hours.
IX.........  Repeal of Reporting           2000-006  Klein
              Requirements under
              Public Law 85-804.

Item I--Contract Bundling (FAR Case 1997-306 (97-306))

    This final rule converts the interim rule published as Item III of 
FAC 97-15 to a final rule with minor changes. The rule amends the FAR 
to implement Sections 411-417 of the Small Business Reauthorization Act 
of 1997. Sections 411-417 amend Title 15 of the United States Code to 
define ``contract bundling,'' and to require agencies to avoid 
unnecessary bundling that precludes small business participation in the 
performance of Federal contracts.
    This rule affects all contracting officers that may combine 
requirements that were previously awarded to a small business or 
requirements for which a small business could have competed. In 
accordance with the statute and Small Business Administration 
regulations, agencies must establish procedures for processing bundled 
requirements to ensure maximum small business participation in bundled 
acquisitions. Specifically, agencies and contracting officers must--
     Perform market research when bundled requirements are 
     Justify bundling in acquisition strategies;
     Meet specific estimated benefit thresholds before bundling 
     Assess the impact of bundling on small businesses;
     Submit solicitations containing bundled requirements to 
the Small Business Administration (SBA)

[[Page 46075]]

procurement center representatives for review; and
     Include, in negotiated competitions for bundled 
requirements, a source selection factor for the offerors' proposed use 
of small businesses as subcontractors and their past performance in 
meeting subcontracting goals.

Item II--North American Industry Classification System (NAICS) (FAR 
Case 2000-604)

    This interim rule revises the FAR to convert size standards and 
other programs in the FAR that are currently based on the Standard 
Industrial Classification (SIC) system to the North American Industry 
Classification System (NAICS). NAICS is a new system that classifies 
establishments according to how they conduct their economic activity. 
It is a significant improvement over the SIC because it more accurately 
identifies industries. Beginning October 1, 2000, NAICS will be used to 
establish the size standards for acquisitions. In addition, the interim 
rule converts the designated industry groups in FAR 19.1005 to NAICS 
and requires agencies to report contract actions using the NAICS code 
rather than the SIC code.

Item III--Liquidated Damages (FAR Case 1999-003)

    This final rule clarifies coverage on liquidated damages. This rule 
will make it easier for contracting officers to understand the policy 
for administering liquidated damages.
    The only substantive change is at FAR 11.501(d). The authority to 
approve reductions in or waivers to liquidated damages was changed from 
the Comptroller General to the Commissioner, Financial Management 

Item IV--Service Contract Act, Commercial Item Subcontracts (FAR 
Case 1998-605)

    This final rule deletes the Service Contract Act of 1965 from the 
list of laws inapplicable to subcontracts for commercial items. FAR 
12.504(a) contains this list.

Item V--Small Business Competitiveness Demonstration Program (FAR 
Case 1999-012)

    This final rule converts the interim rule published as Item I of 
FAC 97-16 to a final rule without change.
    The rule amends FAR Part 19 to clarify language pertaining to the 
Competitiveness Demonstration Program, consistent with revisions to the 
Program that were required by the OFPP and SBA joint final policy 
directive dated May 25, 1999. The rule revises FAR Subpart 19.10 to--
    1. Advise the contracting officer to consider the 8(a) Program and 
HUBZone Program when there is not a reasonable expectation that offers 
will be received from two or more emerging small businesses; and
    2. Add a new section 19.1006, Exclusions, to reflect the exclusions 
of orders under the Federal Supply Schedule Program and contract awards 
to educational and nonprofit institutions or governmental entities.

Item VI--Construction Industry Payment Protection Act of 1999 (FAR 
Case 1999-302)

    This final rule amends FAR 28.102-2 and the clauses at 52.228-13, 
52.228-15, and 52.228-16 to implement the Construction Industry Payment 
Protection (CIPP) Act of 1999. The CIPP Act amends the Miller Act to 
provide that the amount of a payment bond must equal the total amount 
payable by the terms of the contract, unless the contracting officer 
determines that a payment bond in that amount is impractical. The final 
rule also provides enhanced payment protection for Government contracts 
not subject to the Miller Act. The contracting officer must determine 
the appropriate amount of payment protection in each construction 
contract that exceeds $25,000, and in any other contract that requires 
a performance bond in accordance with FAR 28.103-2.

Item VII--Deferred Research and Development (R&D) Costs (FAR Case 

    This final rule amends the FAR by clarifying and simplifying the 
``deferred research and development costs'' cost principle at FAR 
31.205-48. The rule will only affect contracting officers that price 
contracts using cost analysis, or that are required by a contract 
clause to use cost principles for the determination, negotiation, or 
allowance of contractor costs.

Item VIII--Time-and-Materials or Labor Hours (FAR Case 1999-606)

    This final rule clarifies the requirements regarding changes to 
time-and-materials and labor-hour contracts. The rule changes the 
clause at FAR 52.243-3, Changes--Time-and-Materials or Labor-Hours, to 
be consistent with Alternate II of the clause at FAR 52.243-1, 
Changes--Fixed-Price. Alternate II is used in service contracts and 
most of the work performed under time-and-materials or labor-hour 
contracts also involves services.

Item IX--Repeal of Reporting Requirements under Public Law 85-804 
(FAR Case 2000-006)

    This final rule amends the FAR to implement paragraph 901(r)(1) of 
the Federal Reports Elimination Act of 1998 (Pub. L. 105-362). 
Paragraph 901(r)(1) repealed section 4 of Public Law 85-804 (50 U.S.C. 
1434). Section 4 required each department and agency to report annually 
to Congress any contract action in excess of $50,000 issued under the 
authority of this law. The rule revises FAR 50.000 to update the 
reference to Public Law 85-804 and eliminates the reporting 
requirements at FAR Part 50.104. Agencies are no longer required to 
submit to Congress annually a report of actions taken on requests for 
relief under the authority of Public Law 85-804.

    Dated: July 19, 2000.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
[FR Doc. 00-18678 Filed 7-25-00; 8:45 am]