Unknown. Final rule

6,571 words·~30 min read·/register/2000/07/26/00-18795

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

--- schema: federal-register doc_type: fedreg source_file: FR-2000-07-26.xml --- 65 144 Wednesday, July 26, 2000 Contents Agriculture Agriculture Department See Forest Service See National Agricultural Statistics Service See Rural Housing Service Civil Civil Rights Commission NOTICES Meetings; State advisory committees: Arizona, 45963 00-18834 Coast Guard Coast Guard RULES Ports and waterways safety: Chicago Harbor, IL; safety zone, 45911-45912 00-18939 Massachusetts Bay, MA; safety zone, 45910-45911 00-18938 San Juan Harbor, PR; safety zone, 45908-45910 00-18937 PROPOSED RULES Merchant marine officers and seamen:

Manning requirements— Federal pilotage for foreign-trade vessels in Maryland; termination, 45955-45956 00-18935 NOTICES Agency information collection activities: Submission for OMB review; comment request, 46033 00-18898 Environmental statements; availability, etc.: Great Lakes icebreaking operations, 46034 00-18936 Vessel inspections: Seagoing motor vessels; exemption pilot program, 46034-46035 00-18934 Commerce Commerce Department See Economic Development Administration See Export Administration Bureau See National Oceanic and Atmospheric Administration Corporation Corporation for National and Community Service NOTICES Grants and cooperative agreements; availability, etc.:

Individuals with disabilities participation in national service; outreach activities, 45964-45966 00-18911 Customs Customs Service RULES Merchandise, special classes: Products of forced or indentured child labor; seizure and forfeiture, 45873-45875 00-18819 Defense Defense Department See Navy Department RULES Federal Acquisition Regulation (FAR): Construction Industry Payment Protection Act; implementation, 46068-46071 00-18673 Contract bundling, 46052-46055 00-18668 Deferred research and development costs, 46070-46072 00-18674 Introduction, 46051-46053 00-18667 Liquidated damages, 46063-46068 00-18670 North American Industry Classification System, 46054-46063 00-18669 Reporting requirements repeal, 46072-46073 00-18676 Service Contract Act; commercial item subcontracts, 46067-46069 00-18671 Small Business Competitiveness Demonstration Program, 46068-46069 00-18672 Small entity compliance guide, 46073-46075 00-18678 Technical amendments, 46073-46074 00-18677 Time-and-materials or labor-hours, 46071-46073 00-18675 Economic Economic Development Administration NOTICES Trade adjustment assistance eligibility determination petitions:

BBFV Manufacturing Co., Inc., et al., 45963 00-18856 Education Education Department NOTICES Agency information collection activities: Submission for OMB review; comment request, 45967 00-18854 Grants and cooperative agreements; availability, etc.: Student Support Services Program, 45967-45968 00-18863 Employment Employment and Training Administration PROPOSED RULES Aliens: Permanent employment in U.S.; labor certification process— Applications refiling, 46081-46084 00-18865 NOTICES Agency information collection activities:

Proposed collection; comment request, 45999-46000 00-18864 Federal-State unemployment compensation program: Unemployment insurance program letters— Federal unemployment insurance law interpretation, 46000-46003 00-18867 Energy Energy Department See Federal Energy Regulatory Commission See Western Area Power Administration EPA Environmental Protection Agency RULES Air quality implementation plans; approval and promulgation; various States: California, 45912-45915 00-18435 Pennsylvania, 45918-45920 00-18785 Texas, 45915-45918 00-18787 Hazardous waste program authorizations:

Indiana, 45925-45929 00-18789 Pesticides; tolerances in food, animal feeds, and raw agricultural commodities: Fenbuconazole, 45920-45922 00-18907 Imidacloprid, 45922-45925 00-18908 PROPOSED RULES Air programs: Ambient air quality standards, national— Northern Ada County/Boise, ID; PM-10 standards nonapplicability finding rescinded, 45953-45954 00-18884 Air quality implementation plans; approval and promulgation; various States: Pennsylvania, 45954-45955 00-18786 Texas, 45954 00-18788 Hazardous waste program authorizations:

Indiana, 45955 00-18790 NOTICES Hazardous waste: Land disposal restrictions; exemptions— Safety-Kleen (Deer Park), Inc., TX, 45978-45980 00-18906 Pesticide programs: Organophosphates; risk assessments and public participation in risk management— Phosalone, 45982-45983 00-18930 Pesticide registration, cancellation, etc.: CYTEC Industries, Inc., 45980-45982 00-18929 Prohexadione calcium, etc., 45983-45985 00-18645 Executive Executive Office of the President See Management and Budget Office Export Export Administration Bureau RULES Export administration regulations:

India and Pakistan; entity list; entities added and removed, 45842-45844 00-18820 Farm Farm Credit Administration PROPOSED RULES Farm credit system: Loan policies and operations— Loan purchases and sales; definitions, 45931-45934 00-18873 FAA Federal Aviation Administration RULES Airworthiness directives: Stemme GmbH & Co., 45835-45837 00-18597 Class D and Class E airspace, 45840-45841 00-18888 00-18889 Class E airspace, 00-18890 45837-45839, 00-18891 00-18892 45842 00-18893 Class E airspace; correction, 45841-45842 00-18887 PROPOSED RULES Airworthiness directives:

Empresa Brasileira de Aeronautica S.A., 45934-45936 00-18915 Fokker, 45936-45937 00-18913 NOTICES Exemption petitions; summary and disposition, 46035-46039 00-18895 00-18896 00-18897 FCC Federal Communications Commission RULES Common carrier services: Truth-in-billing and billing format; principles and guidelines Correction, 45929-45930 00-18883 Federal Energy Federal Energy Regulatory Commission RULES Electric utilities (Federal Power Act): Rate schedules filings— Regional Transmission Organizations, 45854-45856 00-18874 Natural gas companies (Natural Gas Act):

Section 7 new service applications; optional certificate and abandonment procedures, 45856-45859 00-18499 Practice and procedure: Well category determinations, 45859-45873 00-18498 PROPOSED RULES Electric utilities (Federal Power Act): Open Access Same-Time Information System (OASIS) Phase II, 45938-45941 00-18500 NOTICES Electric rate and corporate regulation filings: PPL Electric Utilities Corp. et al., 45972-45975 00-18875 Environmental statements; availability, etc.: El Dorado Irrigation District, 45975 00-18876 Hydroelectric applications, 45975-45976 00-18879 *Applications, hearings, determinations, etc.:* Distrigas of Massachusetts Corp., 45968-45969 00-18853 Eastern Shore Natural Gas Co. et al., 45969 00-18880 Mississippi River Transmission Corp., 45969-45970 00-18878 Northwest Alaskan Pipeline Co., 45970 00-18877 Southern Natural Gas Co., 45970 00-18851 Texas Eastern Transmission Corp., 45970-45972 00-18852 Federal Highway Federal Highway Administration RULES Payment procedures:

Intermodal Surface Transportation Efficiency Act; implementation— Temporary matching fund waiver; regulation removed, 45882-45883 00-18685 Transportation Equity Act for 21st Centruy; implementation— Payroll and related expenses of public employees; general administration and other overhead; cost accumulation centers and distribution methods; rescission, 45883-45885 00-18776 PROPOSED RULES Intelligent transportation system architecture and standards, 45942-45943 00-18916 Transportation Equity Act for 21st Century; implementation:

Engineering services; State transportation departments; administrative costs eligibility, 45941-45942 00-18684 Federal Housing Federal Housing Finance Board RULES Federal home loan bank system: Acquired member assets, core mission activities, and investments and advances Correction, 46049 C0-17663 FMC Federal Maritime Commission NOTICES Agreements filed, etc., 45985-45986 00-18933 Ocean transportation intermediary licenses: Combitrans Consolidators, Inc., et al., 45986 00-18932 Federal Reserve Federal Reserve System NOTICES Banks and bank holding companies:

Formations, acquisitions, and mergers, 45986 00-18926 Formations, acquisitions, and mergers; correction, 45986-45987 00-18927 Permissible nonbanking activities, 45987 00-18928 Financial Financial Management Service See Fiscal Service Fiscal Fiscal Service NOTICES Agency information collection activities: Proposed collection; comment request, 46044-46045 00-18843 00-18844 Fish Fish and Wildlife Service PROPOSED RULES Endangered and threatened species: Gray wolves; meetings and hearings, 45956-45957 00-18912 Migratory bird hunting:

Tungsten-matrix shot; final approval as nontoxic for waterfowl and coots hunting, 45957-45960 00-18806 Food Food and Drug Administration RULES Animal drugs, feeds, and related products: Chlortetracycline, 45881-45882 00-18823 Ivermectin sustained-release bolus, 45876 00-18827 Ketamine hydrochloride injection, 45877-45878 00-18871 Monensin, 45879-45880 00-18821 Neomycin sulfate, 45880-45881 00-18826 Penicillin, 45880 00-18872 Sponsor name and address changes— Pharmacia & Upjohn Co., 45878 00-18825 Phoenix Scientific, Inc., 45876-45877 00-18828 Wellmark International, 45875-45876 00-18824 Trenbolone and estradiol, 45878-45879 00-18822 NOTICES Agency information collection activities:

Proposed collection; comment request, 45987-45990 00-18943 00-18944 Proposed collection; comment request; correction, 45990-45991 00-18942 Committees; establishment, renewal, termination, etc.: Pharmaceutical Science Advisory Committee, 45991 00-18829 Reports and guidance documents; availability, etc.: Medical devices— Surveillance and detention without physical examination of surgeons’ and/or patient examination gloves, 45991-45992 00-18830 Forest Forest Service NOTICES Committees; establishment, renewal, termination, etc.:

California Coast Provincial Advisory Committee, 45961 00-18918 Meetings: California Coast Provincial Advisory Committee, 45961 00-18917 GSA General Services Administration RULES Federal Acquisition Regulation (FAR): Construction Industry Payment Protection Act; implementation, 46068-46071 00-18673 Contract bundling, 46052-46055 00-18668 Deferred research and development costs, 46070-46072 00-18674 Introduction, 46051-46053 00-18667 Liquidated damages, 46063-46068 00-18670 North American Industry Classification System, 46054-46063 00-18669 Reporting requirements repeal, 46072-46073 00-18676 Service Contract Act; commercial item subcontracts, 46067-46069 00-18671 Small Business Competitiveness Demonstration Program, 46068-46069 00-18672 Small entity compliance guide, 46073-46075 00-18678 Technical amendments, 46073-46074 00-18677 Time-and-materials or labor-hours, 46071-46073 00-18675 Health Health and Human Services Department See Food and Drug Administration See Health Care Financing Administration See Health Resources and Services Administration See Substance Abuse and Mental Health Services Administration Health Health Care Financing Administration NOTICES Agency information collection activities:

Proposed collection; comment request, 45992-45993 00-18835 Health Health Resources and Services Administration NOTICES Agency information collection activities: Proposed collection; comment request, 45993-45994 00-18832 Organization, functions, and authority delegations: Health Professions Bureau, 45994-45995 00-18831 Interior Interior Department See Fish and Wildlife Service See Land Management Bureau See National Park Service IRS Internal Revenue Service NOTICES Agency information collection activities:

Proposed collection; comment request, 46045-46046 00-18817 Taxable substances, imported: Polyether polyols substances, 46046-46048 00-18818 International International Trade Commission NOTICES Import investigations: Heavy forged handtools from— China, 45998 00-18925 Prescription drugs pricing, 45998-45999 00-18924 Spiral grill products including ducted fans and components, 45999 00-18923 Meetings; Sunshine Act, 45999 00-19036 Justice Justice Department See Parole Commission Labor Labor Department See Employment and Training Administration See Labor Statistics Bureau See Occupational Safety and Health Administration RULES Service Contract Act;

Federal service contracts; labor standards, 45903-45908 00-18635 PROPOSED RULES Service Contract Act; Federal service contracts; labor standards, 45943-45952 00-18636 Labor Labor Statistics Bureau NOTICES Agency information collection activities: Proposed collection; comment request, 46003-46004 00-18868 Land Land Management Bureau NOTICES Alaska Native claims selection: Chugach Alaska Corp., 45995 00-18859 Old Harbor Native Corp., 45995-45996 00-18860 Closure of public lands:

Colorado, 45996 00-18861 Public land orders: California, 45996-45997 00-18886 Recreation management restrictions, etc.: Gamlin Lake Area, ID; overnight camping, off-road vehicle use, and equestrian prohibitions, 45997 00-18836 Glenwood Springs, Horseshoe Bend Area, CO; camping closure, 45997 00-18837 Management Management and Budget Office NOTICES Budget rescissions and deferrals Cumulative reports, 46023-46027 00-18855 NASA National Aeronautics and Space Administration RULES Federal Acquisition Regulation (FAR):

Construction Industry Payment Protection Act; implementation, 46068-46071 00-18673 Contract bundling, 46052-46055 00-18668 Deferred research and development costs, 46070-46072 00-18674 Introduction, 46051-46053 00-18667 Liquidated damages, 46063-46068 00-18670 North American Industry Classification System, 46054-46063 00-18669 Reporting requirements repeal, 46072-46073 00-18676 Service Contract Act; commercial item subcontracts, 46067-46069 00-18671 Small Business Competitiveness Demonstration Program, 46068-46069 00-18672 Small entity compliance guide, 46073-46075 00-18678 Technical amendments, 46073-46074 00-18677 Time-and-materials or labor-hours, 46071-46073 00-18675 National Agricultural National Agricultural Statistics Service NOTICES Agency information collection activities:

Proposed collection; comment request, 45961-45962 00-18900 NOAA National Oceanic and Atmospheric Administration RULES Fishery conservation and management: Alaska; fisheries of Exclusive Economic Zone— American Fisheries Act; emergency implementation; correction, 45930 00-18772 Northeastern United States fisheries— Atlantic bluefish and spiny dogfish, 45844-45854 00-18648 NOTICES Agency information collection activities: Submission for OMB review; comment request, 45963-45964 00-18901 National Park National Park Service NOTICES Environmental statements; availability, etc.:

Death Valley National Park, CA; Timbisha Shoshone Tribal Homeland, 45998 00-18841 Recreation management restrictions, etc.: Golden Gate National Recreation Area, CA; year-round closure at Fort Funston; comment request; correction, 45998 00-18842 National Science National Science Foundation NOTICES Meetings; Sunshine Act, 46004 00-18972 Navy Navy Department NOTICES Meetings Naval Postgraduate School Board of Advisors to Superintendent, 45966-45967 00-18885 Nuclear Nuclear Regulatory Commission NOTICES Agency information collection activities:

Submission for OMB review; comment request, 46004 00-18920 Meetings; Sunshine Act, 46004-46005 00-19002 Operating licenses; amendments; no significant hazards considerations; biweekly notices, 46005-46023 00-18771 Reports and guidance documents; availability, etc.: Mill tailings sites; reclamation plan review; standard review plan, 46023 00-18919 Occupational Occupational Safety and Health Administration NOTICES Nationally recognized testing laboratories, etc.: Southwest Research Institute, 46077-46079 00-18866 Office Office of Management and Budget See Management and Budget Office Parole Parole Commission RULES Federal prisoners; paroling and releasing, etc.:

District of Columbia Code— Prisoners serving sentences, 45885-45903 00-18602 Public Public Debt Bureau See Fiscal Service Public Public Health Service See Food and Drug Administration See Health Resources and Services Administration See Substance Abuse and Mental Health Services Administration Rural Rural Housing Service NOTICES Agency information collection activities: Proposed collection; comment request, 45962 00-18850 SEC Securities and Exchange Commission NOTICES Self-regulatory organizations; proposed rule changes:

Philadelphia Stock Exchange, Inc., 46027-46028 00-18882 SBA Small Business Administration RULES Government contracting programs: Contract bundling, 45831-45835 00-18795 NOTICES Disaster loan areas: Minnesota, 46028 00-18838 Meetings: Regulatory Fairness Boards— Midwestern States, 46028 00-18840 Northwestern States, 46029 00-18839 State State Department NOTICES Grants and cooperative agreements; availability, etc.: New Independent States College and University Partnerships Program, 46029-46032 00-18931 State State Justice Institute NOTICES Meetings;

Sunshine Act, 46032-46033 00-19003 Statistical Statistical Reporting Service See National Agricultural Statistics Service Substance Substance Abuse and Mental Health Services Administration NOTICES Agency information collection activities: Submission for OMB review; comment request, 45995 00-18857 Surface Surface Transportation Board NOTICES Rail carriers: Railroad revenue adequacy determinations; Class I railroads, 46040 00-18881 Railroad operation, acquisition, construction, etc.:

Northeast Texas Rural Rail Transportation District, 46039-46040 00-18799 Union Pacific Railroad Co., 46040 00-18800 Transportation Transportation Department See Coast Guard See Federal Aviation Administration See Federal Highway Administration See Surface Transportation Board Treasury Treasury Department See Customs Service See Fiscal Service See Internal Revenue Service NOTICES Agency information collection activities: Proposed collection; comment request, 46041 00-18910 Submission for OMB review; comment request, 46041-46044 00-18845 00-18846 00-18847 00-18848 Veterans Veterans Affairs Department PROPOSED RULES Adjudication; pensions, compensation, dependency, etc.:

Signature by mark, 45952-45953 00-18688 Western Western Area Power Administration NOTICES Power marketing plans: Sierra Nevada Customer Service Region; 2005 Resource Pool, 45976-45977 00-18870 Separate Parts In This Issue Part II Department of Defense, General Services Administration, National Aeronautics and Space Administration, 46051-46075 00-18667 00-18668 00-18669 00-18670 00-18671 00-18672 00-18673 00-18674 00-18675 00-18676 00-18677 00-18678 Part III Department of Labor, Occupational Safety and Health Administration, 46077-46079 00-18866 Part IV Department of Labor, Employment and Training Administration, 46081-46084 00-18865 Reader Aids Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws. 65 144 Wednesday, July 26, 2000 Rules and Regulations SMALL BUSINESS ADMINISTRATION 13 CFR Parts 121 and 125 Government Contracting Programs AGENCY:

Small Business Administration. ACTION: Final rule. SUMMARY: The Small Business Administration

(SBA)is finalizing its regulations to address contract bundling due to changes set forth in the Small Business Reauthorization Act of 1997. This rule implements the statutory amendments that recognize that the consolidation of contract requirements may be necessary and justified, in some cases. It also implements the statutory requirement that each Federal agency, to the maximum extent practicable, take steps to avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation as prime contractors as well as to eliminate obstacles to small business participation as prime contractors. In addition, this rule restates SBA's current authority to appeal to the head of a procuring agency decisions made by the agency that SBA believes to adversely affect small businesses. DATES: This rule is effective July 26, 2000. FOR FURTHER INFORMATION CONTACT: Anthony Robinson, Office of Government Contracting,

(202)205-6465. SUPPLEMENTARY INFORMATION: Section 15(a) of the Small Business Act, 15 U.S.C. 644(a), authorizes SBA to appeal to the head of a procuring agency certain decisions made by the agency that SBA believes adversely affects small businesses, including proposed procurements that include “goods or services currently being performed by a small business” and which are in a “quantity or estimated dollar value the magnitude of which renders small business prime contract participation unlikely.” Section 413(b)(1) of Public Law 105-135 added an appeal right to section 15(a) of the Small Business Act for “an unnecessary or unjustified bundling of contract requirements.” It left intact, however, SBA's current appeal rights. In this regard, the Joint Explanatory Statement of the bundling provisions contained in Public Law 105-135 as set forth in the Congressional Record specifically provided that “[n]othing in [the bundling amendments] is intended to amend or change in any way the existing obligations imposed on a procuring activity or the authority granted to the Small Business Administration under section 15(a) of the Small Business Act.” 143 Cong. Rec. S11522, S11526 (daily ed. Oct. 31, 1997). On October 25, 1999, SBA published an interim rule with request for comments in the **Federal Register** requesting public comments on implementation of Sections 411-417 of the Small Business Reauthorization Act of 1997 (Public Law 105-135, 111 Stat. 2617). *See* 64 FR 57366, October 25, 1999. The statutory amendments recognize that the consolidation of contract requirements may be necessary and justified, in some cases. The rule requires that each Federal agency, to the maximum extent practicable, take steps to avoid unnecessary and unjustified bundling of contract requirements that preclude small business participation as prime contractors. The rule also requires each agency to eliminate obstacles to small business participation as prime contractors. The comment period for the interim rule (64 FR 57366) closed on December 27, 1999. Consistent with the statutory amendments, the interim rule defined “bundling,” identified the circumstances under which such “bundling” may be necessary and justified, and permitted SBA to appeal bundling actions that it believes to be unnecessary and unjustified to the head of the procuring agency. The rule also restated SBA's current authority to appeal to the head of an agency other procurement decisions made by procuring activities that SBA believes will adversely affect small business. SBA received 19 comments in response to the interim rule. The comments are comprised of three from Government agencies, four from trade associations, ten from small businesses, and two from members of Congress. Most of the comments, particularly those from small business, did not offer specific changes to the rule, but rather strongly endorsed the government taking action against contract bundling. Since these comments offered no specific changes, SBA responds by noting the strong opposition to contract bundling by the small business community. The four comments from trade associations focused on the impact of bundling requirements on the architect and engineering industry. Specifically, these comments were concerned with the consolidation of architect and engineering services with requirements from other industries. The bundling statute and SBA's rule permit various contract requirements to be consolidated provided that the consolidation results in substantial benefits. The statute does not limit the scope and diversity of consolidated contracts. As long as there are measurably substantial benefits, a procuring agency is authorized to consolidate or bundle contract requirements. Thus, this rule also does not limit the scope and diversity of consolidated contracts. When a procuring activity intends to proceed with a “bundled” requirement, it must document that the bundling is necessary and justified. If it cannot do so, the procuring activity cannot go forward with the intended consolidation. In order for bundling to be necessary and justified, the consolidation must achieve “measurably substantial benefits.” In finalizing this rule, SBA again examined the interim rule's two-tier approach to determining what constitutes measurably substantial benefits. SBA continues to believe that the two-tier approach represents a reasonable application of determining what “measurably substantial benefits” means. Pursuant to the statutory language, benefits must be “substantial.” SBA believes that benefits equivalent to 10% of the contract value (including options) is a substantial benefit relative to the amount of the contract where the contract value is $75 million or less. Similarly, SBA believes that benefits equivalent to at least $7.5 million or 5% of the contract value (including options) is a substantial benefit in absolute dollars where the contract value exceeds $75 million. SBA notes that most bundled requirements that SBA has reviewed over the past four years have had a contract value (including options) that was less than $75 million. Thus, most bundled contracts will be subject to a 10% savings test. The remainder of the contracts will be subject to a minimum absolute savings of $7.5 million. This final rule clarifies the two-tier approach to achieve this result of a minimum savings for contracts having a value (including options) between $75 million and $150 million. The interim rule required agencies to achieve a benefit equivalent to at least 5% of the contract value (including options) for any contract having a value exceeding $75 million, but without specifying a minimum savings of $7.5 million. Under the interim rule, for contracts having a value between $75 million and $150 million, the required benefits could have ranged from $3.25 million to $7.5 million. Thus, contracts having a value between $75 million and $150 million required less of a benefit than contracts having a value between $32.5 million and $75 million. For example, an agency needed to demonstrate a $6 million benefit for a contract having a $60 million value, while it had to show only a $4 million benefit for a contract having a value of $80 million. SBA believes that this result would have been illogical. As such, SBA has amended this provision to require that an agency must show a benefit of 5% or $7.5 million, whichever is greater, for any bundled contract having a value that exceeds $75 million. Contracts awarded in reliance on the interim rule which met the 5% benefits test but would not satisfy this minimum savings test will be unaffected by this final rule. One commenter suggested that the “critical to the agency's mission success” exemption (125.2(d)(3)(iii)(B)) could be subject to abuse. SBA does not agree. SBA believes that because these exemptions are made at the agency's highest procurement levels, abuses of this authority are unlikely. The interim final rule included a provision addressing the application of the regulation to procurements that are awarded in accordance with a cost comparison conducted under OMB Circular A-76 (“Performance of Commercial Functions”). We did not receive any comments on this provision. The final rule retains the provision, with clarifying revisions. Circular A-76 establishes a cost-comparison process for evaluating whether a commercial activity that is conducted by a Federal agency should be performed in-house or by contract. This process compares the estimated cost of in-house performance by the “Most Efficient Organization”

(MEO)with the cost of contract performance as determined by offers that are submitted in response to an A-76 solicitation. Under the Circular, the simple fact that contract performance is found to be *less costly* than in-house performance by the MEO is not sufficient to justify a conversion from in-house to contract performance. Instead, an activity will not be converted to contract performance (i.e., it will be retained in-house) unless the savings will exceed 10 percent or $10 million over the performance period, whichever is less. Under the A-76 cost-comparison process, the required MEO (which is also required by statute at 10 U.S.C. 2461 for the Department of Defense) may include a mix of Federal employees and contract support. In other words, the scope of an A-76 cost comparison, the solicitation, and the in-house MEO may consist of a workload performed by Federal employees and one or more existing contractors. Thus, it is possible under an A-76 cost comparison process that activities that have been performed by Federal employees (along with activities performed under two or more small business contracts) will be converted to performance under one contract awarded to a large business. In such cases, the methodology of the A-76 process will have ensured that the Federal Government will derive “measurably substantial benefits” from the conversion. This occurs in two ways. First, through the agency's development of a management plan and the in-house MEO (which concludes in the MEO's written “certification”), significant and measurable savings and performance enhancements can be achieved even before competing with any private offeror. Second, through the cost comparison itself, measurable savings and performance enhancements are quantified, and a decision to convert requires substantial savings (10 percent or $10 million over the performance period, whichever is less). SBA has added clarifying language to the rule so that it is clear that a bundling analysis is not required when an agency conducts a similar analysis under an A-76 study. Compliance With Executive Orders 13132, 12988 and 12866, the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and the Paperwork Reduction Act (44 U.S.C. Chapter 3501 et seq.) The Office of Management and Budget reviewed this rule as a “significant” regulatory action under Executive Order 12866. SBA has determined that this final rule may have a significant beneficial economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. SS 601-612. The rule can potentially apply to all small businesses that are performing or may want to perform on the prime contract opportunities of the Federal Government. While there is no precise estimate of the number of small entities or the extent of the economic impact, SBA believes that a significant number of small businesses would be affected. SBA has submitted a complete Final Regulatory Flexibility Analysis of this final rule to the Chief Counsel for Advocacy of the Small Business Administration. For a copy of this analysis, please contact Anthony Robinson at

(202)205-6465. For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA certifies that this rule would not impose new reporting or record keeping requirements. For purposes of Executive Order 13132, SBA certifies that this rule does not have any federalism implications warranting the preparation of a Federalism Assessment. For purposes of Executive Order 12978, SBA certifies that this rule is drafted, to the extent practicable, in accordance with the standards set forth in section 2 of this order. List of Subjects 13 CFR Part 121 Administrative practice and procedure, Government procurement, Government property, Grant programs—business, Individuals with disabilities, Loan programs—business, Reporting and recordkeeping requirements, Small businesses. 13 CFR Part 125 Government contracts, Government procurement, Reporting and recordkeeping requirements, Small businesses, Technical assistance. For the reasons stated in the preamble, SBA adopts the interim rule amending 13 CFR parts 121 and 125 which was published at 64 FR 57366 on October 25, 1999, as final with the following changes: PART 121—SMALL BUSINESS SIZE REGULATIONS 1. The authority citation for 13 CFR part 121 continues to read as follows: Authority: 15 U.S.C. 632(a), 634(b)(6), 637(a), 644(c), and 662(5); and Sec. 304, Pub. L. 103-403, 108 Stat. 4175, 4188. 2. In 121.103 currently in effect, revise paragraph (f)(3)(i). § 121.103 What is affiliation?

(f)* * *

(3)* * *

(i)A joint venture or teaming arrangement of two or more business concerns may submit an offer as a small business for a Federal procurement without regard to affiliation under this paragraph

(f)so long as each concern is small under the size standard corresponding to the SIC code assigned to the contract, provided:

(A)The procurement qualifies as a “bundled” requirement, at any dollar value, within the meaning of § 125.2(d)(1)(i) of this chapter; or

(B)The procurement is other than a “bundled” requirement within the meaning of § 125.2(d)(1)(i) of this chapter, and: ( *1* ) For a procurement having a revenue-based size standard, the dollar value of the procurement, including options, exceeds half the size standard corresponding to the SIC code assigned to the contract; or ( *2* ) For a procurement having an employee-based size standard, the dollar value of the procurement, including options, exceeds $10 million. PART 125—GOVERNMENT CONTRACTING PROGRAMS 1. The authority citation for 13 CFR part 125 continues to read as follows: Authority: 15 U.S.C. 634(b)(6), 637 and 644; 31 U.S.C. 9701, 9702. 2. In § 125.2, revise paragraphs (a),

(b)and

(d)to read as follows: § 125.2 Prime contracting assistance.

(a)*General. * Small business concerns must receive any award or contract, or any contract for the sale of Government property, that SBA and the procuring or disposal agency determine to be in the interest of:

(1)Maintaining or mobilizing the Nation's full productive capacity;

(2)War or national defense programs;

(3)Assuring that a fair proportion of the total purchases and contracts for property, services and construction for the Government in each industry category are placed with small business concerns; or

(4)Assuring that a fair proportion of the total sales of Government property is made to small business concerns.

(b)*PCR and procuring activity responsibilities.*

(1)SBA Procurement Center Representatives

(PCRs)are generally located at Federal agencies and buying activities which have major contracting programs. PCRs review all acquisitions not set-aside for small businesses to determine whether a set-aside is appropriate.

(2)A procuring activity must provide a copy of a proposed acquisition strategy (e.g., Department of Defense Form 2579, or equivalent) to the applicable PCR (or to the SBA Office of Government Contracting Area Office serving the area in which the buying activity is located if a PCR is not assigned to the procuring activity) at least 30 days prior to a solicitation's issuance whenever a proposed acquisition strategy:

(i)Includes in its description goods or services currently being performed by a small business and the magnitude of the quantity or estimated dollar value of the proposed procurement would render small business prime contract participation unlikely;

(ii)Seeks to package or consolidate discrete construction projects; or

(iii)Meets the definition of a bundled requirement as defined in paragraph (d)(1)(i) of this section.

(3)Whenever any of the circumstances identified in paragraph (b)(2) of this section exist, the procuring activity must also submit to the applicable PCR (or to the SBA Office of Government Contracting Area Office serving the area in which the buying activity is located if a PCR is not assigned to the procuring activity) a written statement explaining why:

(i)If the proposed acquisition strategy involves a bundled requirement, the procuring activity believes that the bundled requirement is necessary and justified under the analysis required by paragraph (d)(3)(iii) of this section; or

(ii)If the description of the requirement includes goods or services currently being performed by a small business and the magnitude of the quantity or estimated dollar value of the proposed procurement would render small business prime contract participation unlikely, or if a proposed procurement for construction seeks to package or consolidate discrete construction projects:

(A)The proposed acquisition cannot be divided into reasonably small lots to permit offers on quantities less than the total requirement;

(B)Delivery schedules cannot be established on a basis that will encourage small business participation;

(C)The proposed acquisition cannot be offered so as to make small business participation likely; or

(D)Construction cannot be procured as separate discrete projects.

(4)In conjunction with their duties to promote the set-aside of procurements for small business, PCRs will identify small businesses that are capable of performing particular requirements, including teams of small business concerns for larger or bundled requirements (see § 121.103(f)(3) of this chapter). (5)(i) If a PCR believes that a proposed procurement will render small business prime contract participation unlikely, or if a PCR does not believe a bundled requirement to be necessary and justified, the PCR shall recommend to the procurement activity alternative procurement methods which would increase small business prime contract participation. Such alternatives may include:

(A)Breaking up the procurement into smaller discrete procurements;

(B)Breaking out one or more discrete components, for which a small business set-aside may be appropriate; and

(C)Reserving one or more awards for small companies when issuing multiple awards under task order contracts.

(ii)Where bundling is necessary and justified, the PCR will work with the procuring activity to tailor a strategy that preserves small business prime contract participation to the maximum extent practicable.

(iii)The PCR will also work to ensure that small business participation is maximized through subcontracting opportunities. This may include:

(A)Recommending that the solicitation and resultant contract specifically state the small business subcontracting goals which are expected of the contractor awardee; and

(B)Recommending that the small business subcontracting goals be based on total contract dollars instead of subcontract dollars.

(6)In cases where there is disagreement between a PCR and the contracting officer over the suitability of a particular acquisition for a small business set-aside, whether or not the acquisition is a bundled or substantially bundled requirement within the meaning of paragraph

(d)of this section, the PCR may initiate an appeal to the head of the contracting activity. If the head of the contracting activity agrees with the contracting officer, SBA may appeal the matter to the secretary of the department or head of the agency. The time limits for such appeals are set forth in 19.505 of the Federal Acquisition Regulation

(FAR)(48 CFR 19.505).

(7)PCRs will work with a procuring activity's Small Business Specialist

(SBS)to identify proposed solicitations that involve bundling, and with the agency acquisition officials to revise the acquisition strategies for such proposed solicitations, where appropriate, to increase the probability of participation by small businesses, including small business contract teams, as prime contractors. If small business participation as prime contractors appears unlikely, the SBS and PCR will facilitate small business participation as subcontractors or suppliers.

(d)*Contract bundling* —(1) *Definitions* —(i) *Bundled requirement or bundling. * The term *bundled requirement or bundling * refers to the consolidation of two or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small business concern due to:

(A)The diversity, size, or specialized nature of the elements of the performance specified;

(B)The aggregate dollar value of the anticipated award;

(C)The geographical dispersion of the contract performance sites; or

(D)Any combination of the factors described in paragraphs (d)(1)(i) (A), (B), and

(C)of this section.

(ii)*Separate smaller contract. * A separate smaller contract is a contract that has previously been performed by one or more small business concerns or was suitable for award to one or more small business concerns.

(iii)*Substantial bundling. * Substantial bundling is any contract consolidation, which results in an award whose average annual value is $10 million or more.

(2)*Requirement to foster small business participation. * The Small Business Act requires each Federal agency to foster the participation of small business concerns as prime contractors, subcontractors, and suppliers in the contracting opportunities of the Government. To comply with this requirement, agency acquisition planners must:

(i)Structure procurement requirements to facilitate competition by and among small business concerns, including small disadvantaged, 8(a) and women-owned business concerns; and

(ii)Avoid unnecessary and unjustified bundling of contract requirements that inhibits or precludes small business participation in procurements as prime contractors.

(3)*Requirement for market research. * In addition to the requirements of paragraph (b)(2) of this section and before proceeding with an acquisition strategy that could lead to a contract containing bundled or substantially bundled requirements, an agency must conduct market research to determine whether bundling of the requirements is necessary and justified. During the market research phase, the acquisition team should consult with the applicable PCR (or if a PCR is not assigned to the procuring activity, the SBA Office of Government Contracting Area Office serving the area in which the buying activity is located).

(4)*Requirement to notify current small business contractors of intent to bundle.* The procuring activity must notify each small business which is performing a contract that it intends to bundle that requirement with one or more other requirements at least 30 days prior to the issuance of the solicitation for the bundled or substantially bundled requirement. The procuring activity, at that time, should also provide to the small business the name, phone number and address of the applicable SBA PCR (or if a PCR is not assigned to the procuring activity, the SBA Office of Government Contracting Area Office serving the area in which the buying activity is located).

(5)*Determining requirements to be necessary and justified. * When the procuring activity intends to proceed with an acquisition involving bundled or substantially bundled procurement requirements, it must document the acquisition strategy to include a determination that the bundling is necessary and justified, when compared to the benefits that could be derived from meeting the agency's requirements through separate smaller contracts.

(i)The procuring activity may determine a consolidated requirement to be necessary and justified if, as compared to the benefits that it would derive from contracting to meet those requirements if not consolidated, it would derive measurably substantial benefits. The procuring activity must quantify the identified benefits and explain how their impact would be measurably substantial. The benefits may include cost savings and/or price reduction, quality improvements that will save time or improve or enhance performance or efficiency, reduction in acquisition cycle times, better terms and conditions, and any other benefits that individually, in combination, or in the aggregate would lead to:

(A)Benefits equivalent to 10 percent of the contract value (including options) where the contract value is $75 million or less; or

(B)Benefits equivalent to 5 percent of the contract value (including options) or $7.5 million, whichever is greater, where the contract value exceeds $75 million.

(ii)Notwithstanding paragraph (d)(5)(i) of this section, the Assistant Secretaries with responsibility for acquisition matters (Service Acquisition Executives) or the Under Secretary of Defense for Acquisition and Technology (for other Defense Agencies) in the Department of Defense and the Deputy Secretary or equivalent in civilian agencies may, on a non-delegable basis determine that a consolidated requirement is necessary and justified when:

(A)There are benefits that do not meet the thresholds set forth in paragraph (d)(5)(i) of this section but, in the aggregate, are critical to the agency's mission success; and

(B)Procurement strategy provides for maximum practicable participation by small business.

(iii)The reduction of administrative or personnel costs alone shall not be a justification for bundling of contract requirements unless the administrative or personnel cost savings are expected to be substantial, in relation to the dollar value of the procurement to be consolidated (including options). To be substantial, such cost savings must be at least 10 percent of the contract value (including options).

(iv)In assessing whether cost savings and/or a price reduction would be achieved through bundling, the procuring activity and SBA must compare the price that has been charged by small businesses for the work that they have performed and, where available, the price that could have been or could be charged by small businesses for the work not previously performed by small business.

(6)*OMB Circular A-76 Cost Comparison Analysis.* The substantial benefit analysis set forth in paragraph (d)(5)(i) of this section is not required where a requirement is subject to a Cost Comparison Analysis under OMB Circular A-76 (See 5 CFR 1310.3 for availability).

(7)*Substantial bundling.* Where a proposed procurement strategy involves a substantial bundling of contract requirements, the procuring agency must, in the documentation of that strategy, include a determination that the anticipated benefits of the proposed bundled contract justify its use, and must include, at a minimum:

(i)The analysis for bundled requirements set forth in paragraph (d)(5)(i) of this section;

(ii)An assessment of the specific impediments to participation by small business concerns as prime contractors that will result from the substantial bundling;

(iii)Actions designed to maximize small business participation as prime contractors, including provisions that encourage small business teaming for the substantially bundled requirement; and

(iv)Actions designed to maximize small business participation as subcontractors (including suppliers) at any tier under the contract or contracts that may be awarded to meet the requirements.

(8)*Significant subcontracting opportunity.*

(i)Where a bundled or substantially bundled requirement offers a significant opportunity for subcontracting, the procuring agency must designate the following factors as significant factors in evaluating offers:

(A)A factor that is based on the rate of participation provided under the subcontracting plan for small business in the performance of the contract; and

(B)For the evaluation of past performance of an offeror, a factor that is based on the extent to which the offeror attained applicable goals for small business participation in the performance of contracts.

(ii)Where the offeror for such a bundled contract qualifies as a small business concern, the procuring agency must give to the offeror the highest score possible for the evaluation factors identified in paragraph (d)(5)(i) of this section. 5. In § 125.6, revise paragraph

(g)to read as follows: § 125.6 Prime contractor performance requirements (limitations on subcontracting).

(g)Where an offeror is exempt from affiliation under § 121.103(f)(3) of this chapter and qualifies as a small business concern, the performance of work requirements set forth in this section apply to the cooperative effort of the team or joint venture, not its individual members. Dated: June 20, 2000. Aida Alvarez, Administrator. [FR Doc. 00-18795 Filed 7-25-00; 8:45 am]

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