[Federal Register: September 17, 2004 (Volume 69, Number 180)]
[Rules and Regulations]
[Page 55989-55991]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17se04-19]
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DEPARTMENT OF DEFENSE
48 CFR Parts 226 and 252
[DFARS Case 2002-D033]
Defense Federal Acquisition Regulation Supplement; Indian
Incentive Program
AGENCY: Department of Defense (DoD).
ACTION: Final rule.
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[[Page 55990]]
SUMMARY: DoD has adopted as final, with changes, an interim rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to implement DoD Appropriations Act provisions pertaining to the Indian
Incentive Program. The Program permits incentive payments to
contractors, and subcontractors at any tier, that use Indian
organizations, Indian-owned economic enterprises, and Native Hawaiian
small business concerns as subcontractors.
EFFECTIVE DATE: September 17, 2004.
FOR FURTHER INFORMATION CONTACT: Ms. Donna Hairston-Benford, Defense
Acquisition Regulations Council, OUSD (AT&L)DPAP(DAR),IMD 3C132, 3062
Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289;
facsimile (703) 602-0350. Please cite DFARS Case 2002-D033.
SUPPLEMENTARY INFORMATION:
A. Background
DoD published an interim rule at 68 FR 56561 on October 1, 2003, to
implement Section 8021 of the DoD Appropriations Act for Fiscal Year
2003 (Public Law 107-248). Section 8021 revised the criteria for
application of the Indian Incentive Program by establishing a >$500,000
threshold for contracts and subcontracts under which incentives may be
paid; by authorizing incentive payments for subcontracts awarded to
Native Hawaiian small business concerns; and by adding contracts and
subcontracts for commercial items to the Program. Section 8021 of the
DoD Appropriations Act for Fiscal Year 2004 (Public Law 108-87) and
Section 8021 of the DoD Appropriations Act for Fiscal Year 2005 (Public
Law 108-287) contain similar provisions.
Fourteen sources submitted comments on the interim rule. A
discussion of the comments is provided below. Differences between the
interim and final rules are addressed in the response to Comments 1 and
6.
1. Comment: Revise requirements for use of the Indian incentive
clause at DFARS 252.226-7001, to require inclusion of the clause in all
contracts and subcontracts exceeding $500,000, instead of the present
requirement for inclusion of the clause in contracts and subcontracts
exceeding $500,000 when ``subcontracting opportunities may exist.''
This change would eliminate the possibility that a subcontracting
opportunity might be overlooked.
DoD Response: Concur. The recommended change has been made in the
final rule at 226.104 and 252.226-7001(g).
2. Comment: The rule should include the statutory requirement for
inclusion of the incentive clause in subcontracts exceeding $500,000 at
any tier.
DoD Response: The rule requires inclusion of the clause, including
the flowdown requirement, in all subcontracts exceeding $500,000. This
covers all subcontracts exceeding $500,000 at all tiers.
3. Comment: The $500,000 threshold for inclusion of the incentive
clause in contracts and subcontracts is restrictive and should be
lowered to $100,000 or less.
DoD Response: Do not concur. The $500,000 threshold is consistent
with the Appropriations Act provisions.
4. Comment: With regard to the requirement for subcontracted
commercial items to be produced or manufactured in whole or in part by
a Native firm, the phrase ``produced or manufactured in whole or in
part'' should be clarified. Solutions offered were: Use of the
manufacturing standards established by the North American Industry
Classification System (NAICS) codes; use of a percentage such as that
contained in the nonmanufacturer rule at FAR 19.102(f)(2); or a
reference to the Small Business Administration regulations at 13 CFR
121.406.
DoD Response: Do not concur. Placing such a restriction on the
eligibility of a subcontract awarded to a Native firm would be without
statutory basis.
5. Comment: Can an Indian business provide a non-commercial item as
a reseller for the actual manufacturer?
DoD Response: Neither the Appropriations Act provisions nor the
DFARS rule place any manufacturing conditions on non-commercial items
subcontracted under the Program.
6. Comment: The rule should clarify that Alaska Native Corporations
are eligible for participation in Program.
DoD Response: The rule already provides for participation of Alaska
Native Corporations, through the definitions of ``Indian'' and
``Indian-owned economic enterprise'' in the clause at 252.226-7001.
Minor changes have been made to the definition of ``Indian'' to clarify
this point.
7. Comment: Are businesses owned by individual Federally recognized
American Indians eligible for participation in the Program, as well as
those businesses owned by Federally recognized tribes and
organizations?
DoD Response: Yes. The definitions at 252.226-7001 provide for
participation by Indian-owned businesses that are individually owned or
tribally owned.
8. Comment: The Indian Incentive Program should also be applied to
DoD Family Housing Privatization contracts. Presently, the incentive
clause cannot be included in these contracts, because the privatization
contracts are not considered DoD contracts.
DoD Response: This comment is outside the scope of the DFARS rule.
Therefore, no change has been made to the rule as a result of this
comment.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
This rule 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. DoD has prepared a final
regulatory flexibility analysis. A copy of the analysis may be obtained
from the point of contact specified herein. The analysis is summarized
as follows:
This rule amends the DFARS to implement Section 8021 of the DoD
Appropriations Act for Fiscal Year 2003 (Public Law 107-248), Section
8021 of the DoD Appropriations Act for Fiscal Year 2004 (Public Law
108-87), and Section 8021 of the DoD Appropriations Act for Fiscal Year
2005 (Public Law 108-287) pertaining to the Indian Incentive Program.
The Program permits incentive payments to contractors, and
subcontractors at any tier, that use Indian organizations, Indian-owned
economic enterprises, and Native Hawaiian small business concerns as
subcontractors. DoD received no comments on the initial regulatory
flexibility analysis. However, as a result of comments received on the
interim rule, the final rule includes a change that prescribes use of
the Indian incentive clause at DFARS 252.226-7001 in all contracts and
subcontracts exceeding $500,000, rather than in only those exceeding
$500,000 for which subcontracting opportunities are deemed to exist at
the time of award of the contract or subcontract. The rule requires
that maximum practicable opportunity be provided for Indian
organizations, Indian-owned economic enterprises, and Native Hawaiian
small business concerns to receive subcontract awards; and provides
that a contractor or subcontractor that awards a subcontract to such an
entity may receive an incentive payment of 5 percent of the amount of
the subcontract. There are no practical alternatives that would
accomplish the objectives of the applicable statutes.
[[Page 55991]]
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the rule does
not impose any information collection requirements that require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
List of Subjects in 48 CFR Parts 226 and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
0
Accordingly, the interim rule amending 48 CFR parts 226 and 252, which
was published at 68 FR 56561 on October 1, 2003, is adopted as a final
rule with the following changes:
0
1. The authority citation for 48 CFR parts 226 and 252 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 226--OTHER SOCIOECONOMIC PROGRAMS
226.104 [Amended]
0
2. Section 226.104 is amended by removing the phrase ``for which
subcontracting opportunities may exist''.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
3. Section 252.212-7001 is amended as follows:
0
a. By revising the clause date to read ``(SEP 2004)''; and
0
b. In paragraph (b) by revising entry ``252.226-7001'' to read as
follows:
252.212-7001 Contract Terms and Conditions Required to Implement
Statutes or Executive Orders Applicable to Defense Acquisitions of
Commercial Items.
* * * * *
(b) * * *
----252.226-7001 Utilization of Indian Organizations, Indian-Owned
Economic Enterprises, and Native Hawaiian Small Business Concerns (SEP
2004) (Section 8021 of Public Law 107-248 and similar sections in
subsequent DoD appropriations acts).
* * * * *
0
4. Section 252.226-7001 is amended as follows:
0
a. By revising the clause date to read ``(SEP 2004)'';
0
b. In paragraph (a) by revising the definition of ``Indian''; and
0
c. By revising paragraph (g) to read as follows:
252.226-7001 Utilization of Indian Organizations, Indian-Owned
Economic Enterprises, and Native Hawaiian Small Business Concerns.
* * * * *
(a) * * *
Indian means--
(1) Any person who is a member of any Indian tribe, band, group,
pueblo, or community that is recognized by the Federal Government as
eligible for services from the Bureau of Indian Affairs (BIA) in
accordance with 25 U.S.C. 1452(c); and
(2) Any ``Native'' as defined in the Alaska Native Claims
Settlement Act (43 U.S.C. 1601 et seq.).
* * * * *
(g) The Contractor shall insert the substance of this clause,
including this paragraph (g), in all subcontracts exceeding $500,000.
[FR Doc. 04-21015 Filed 9-16-04; 8:45 am]
BILLING CODE 5001-08-P