[Federal Register Volume 74, Number 234 (Tuesday, December 8, 2009)]
[Rules and Regulations]
[Pages 64619-64638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28461]
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DEPARTMENT OF VETERANS AFFAIRS
48 CFR Parts 802, 804, 808, 809, 810, 813, 815, 817, 819, 828, and
852
RIN 2900-AM92
VA Acquisition Regulation: Supporting Veteran-Owned and Service-
Disabled Veteran-Owned Small Businesses
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: This document implements portions of the Veterans Benefits,
Health Care, and Information Technology Act of 2006 (the Act) and
Executive Order 13360, providing opportunities for service-disabled
veteran-owned small businesses (SDVOSB) to increase their Federal
contracting and subcontracting. The Act and the Executive Order
authorize the Department of Veterans Affairs (VA) to establish special
methods for contracting with SDVOSBs and veteran-owned small businesses
(VOSB). Under this final rule, a VA contracting officer may restrict
competition to contracting with SDVOSBs or VOSBs under certain
conditions. Likewise, sole source contracts with SDVOSBs or VOSBs are
permissible under certain conditions. This final rule implements these
special acquisition methods as a change to the VA Acquisition
Regulation (VAAR).
This document additionally amends SDVOSB/VOSB, Small Business
Status Protests, where VA provided that VA would utilize the U.S. Small
Business Administration (SBA) to consider and decide SDVOSB and VOSB
status protests. This requires VA and SBA to execute an interagency
agreement pursuant to the Economy Act. Negotiations of this interagency
agreement have not yet been finalized. Therefore, VA has amended these
regulations with an interim rule to provide that VA's Executive
Director, Office of Small and Disadvantaged Business Utilization
(OSDBU) shall consider and decide SDVOSB and VOSB status protests, and
provides procedures there for, until such time as the interagency
agreement is executed by the agencies. VA hereby solicits comments on
this regulatory amendment only.
DATES: January 7, 2010. Comment date: Comments on the amendments
regarding section 819.307, only, must be received on or before January
7, 2010.
FOR FURTHER INFORMATION CONTACT: Arita Tillman, Acquisition Policy
Division (001AL-P1A), Office of Acquisition and Logistics, Department
of Veterans Affairs, 810 Vermont Ave., NW., Washington, DC 20420,
telephone (202) 461-6859, or e-mail [email protected].
SUPPLEMENTARY INFORMATION: On August 20, 2008, VA published in the
Federal Register (73 FR 49141-49155) a proposed rule to revise the VAAR
to implement portions of Public Law 109-461, the Veterans Benefits,
Health Care and Information Technology Act of 2006, and Executive Order
13360, providing opportunities for SDVOSBs and VOSBs to increase their
federal contracting and subcontracting. Comments were solicited
concerning the proposal for 60 days, ending October 20, 2008. VA
received 97 comments, many of which were groups of identical responses
in form letters. Most commenters raised more than one issue. The issues
raised in the comments are discussed below.
1. SDVOSB and VOSB Verification
Comment: Several comments were received regarding the validity of
VA's Vendor Information Pages (VIP) database registration process,
expressing concern for ``pass through'' business relationships and the
potential for other fraudulent actions.
Response: The regulations governing the verification of VOSB
status, which are in 38 CFR Part 74, are not the subject of this
rulemaking. Accordingly, we will not make any changes based upon the
comments. In the past, vendors could register themselves in the VA
vendor database and self certify the accuracy of the information
provided. However, section 502 of Public Law 109-461 requires VA to
maintain a database of SDVOSBs and VOSBs and that VA verify that
status. Section 74.2 sets out the eligibility requirements for VIP
verification, and 38 CFR 74.3 sets out the criteria for a VOSB.
Further, this final rule under section 802.101, Definitions, prescribes
that SDVOSBs
[[Page 64620]]
and VOSBs must be listed as verified in the VIP database to participate
in the Veterans First Contracting Program. The verification process is
set out in 38 CFR 74.20 and requires VA Center for Veteran Enterprise
officials to verify the accuracy of information vendors provide as part
of the VetBiz VIP Verification application process. This verification
process should alleviate some of the commenters' concern about ``pass
through'' business relationships since the information contained in
applications is subject to review and verification. Section 804.1102 of
the proposed rule requires that SDVOSBs and VOSBs must be registered in
the VIP database, available at http://www.VetBitz.gov, in addition to
being registered in the Central Contractor Registration (CCR), as
required by 48 CFR subpart 4.11, to be eligible to participate in VA's
Veteran-owned Small Business prime contracting and subcontracting
opportunities programs. To further address the validity of the VIP
database registration process, to clarify the requirement of this
section, and to allow VA time to adequately verify firms, this section
is revised to state that prior to January 1, 2012, SDVOSBs and VOSBs
must be listed in the VIP database and registered in CCR to receive new
contract awards under this program. After December 31, 2011, SDVOSBs
and VOSBs must be listed as verified in the VIP database and registered
in CCR to receive new awards under this program.
2. Clarification of Section 813.106
Comment: One commenter stated that proposed section 813.106 in the
SUPPLEMENTARY INFORMATION section of the Proposed Rule is confusing.
Therein, it states that: ``contracting officers may use other than
competitive procedures to enter into a contract with a SDVOSB or VOSB
when the amount is less than the simplified acquisition threshold not
to exceed $5 million.''
Response: Proposed section 813.106 stated that ``Contracting
officers may use other than competitive procedures to enter into a
contract with a SDVOSB or VOSB when the amount is less than the
simplified acquisition threshold.'' However, as noted by the commenter,
the SUPPLEMENTARY INFORMATION section in the proposed rule addressing
section 813.106 describes the amount as ``less than the simplified
acquisition threshold not to exceed $5 million.'' First, 38 U.S.C.
8127(b) provides that VA may conduct other than competitive
procurements up to the simplified acquisition threshold. Next, 38
U.S.C. 8127(c) provides that a VA contracting officer may award a
contract to veteran owned small business concerns using other than
competitive procedures if the anticipated award price including options
will exceed the simplified acquisition threshold (as defined in the
section 4 of the Office of Federal Procurement Policy Act (41 U.S.C.
403) but will not exceed $5 million.
In order to address the comment and provide clarification, proposed
section 813.106 has been renumbered as section 813.106(a) and revised
to state: ``Contracting officers may use other than competitive
procedures to enter into a contract with a SDVOSB or VOSB when the
amount exceeds the micro-purchase threshold up to $5 million.'' This
change will provide that VA contracting officers can award any
procurement from the micro-purchase, which is currently $3,000 for
supplies, up to $5 million using other than competitive procedures to
be in accordance with both sections 8127(b) and (c). Purchases under
the micro-purchase threshold are still available for award to any
source, large or small, to promote administrative and economic
efficiency of internal VA operations. However, section 813.202 does
provide that micro-purchases shall be equitably distributed among
SDVOSBs and VOSBs to the maximum extent practical.
Comment: A commenter recommended that in section 813.106, the word
``may'' be changed to ``shall.''
Response: We disagree with the commenter and believe the regulation
clearly implements the discretion provided in 38 U.S.C. 8127(c) in
accordance with the statute. The statutory language states a
contracting officer may award a contract to a small business concern
owned and controlled by veterans using other than competitive
procedures. We believe the determination whether or not to use other
than competitive procedures under this section is a business decision
that is left to the discretion of the contracting officer. Therefore,
no change is being made to the rule based on this comment.
3. Applicability to Architect-Engineering (A/E) Services
Comment: Several commenters asked whether proposed subpart 819.70
applies to the award of sole source VOSB and SDVOSB contracts for A/E
contracts.
Response: This rule does not apply to the procedures to procure A/E
services. Pursuant to the Brooks Act (Pub. L. 92-582), A/E services
cannot be awarded on a sole source basis. The Brooks Act requires
Federal agencies to publicly announce all requirements for A/E
services, and to negotiate contracts for A/E services on the basis of
demonstrated competence and qualification for the type of professional
services required at fair and reasonable prices. The sole source
authority in 38 U.S.C. 8127 does not override the Brooks Act because
under general principles of statutory interpretation the specific
governs over general language. In this instance, A/E contracting
statutes govern versus contracting in general. However, since the Small
Business Competitiveness Demonstration Program in subpart 19.10 of the
Federal Acquisition Regulation (FAR) includes A/E services as a
designated industry group (DIG), VA contracting officers may use the
provisions of 38 U.S.C. 8127 and this rule when procuring DIG
requirements. Section 19.1007(b)(2) of the FAR, 48 CFR 19.1007(b)(2),
establishes that Section 8(a), Historically Underutilized Business
(HUB) Zone and SDVOSB set-asides, must be considered in DIG
acquisitions. However, using the provisions of 38 U.S.C. 8127 and this
rule, VA personnel may change the order of priority to consider SDVOSB
and VOSB set-asides before Section 8(a) and HUB Zone set-asides when
procuring A/E services under the Small Business Competitiveness
Demonstration Program.
Comment: One commenter noted that section 852.219-10(c) indicates
that for services (except construction), at least 50 percent of the
personnel costs must be spent for employees of the particular concern
or for employees of other eligible SDVOSB concerns. The commenter
stated that because A/E type services are very similar to those in the
construction field (e.g., specialty trade), which only require
subcontractors to perform just 25 percent of the total work, A/E
contractors should also be permitted to perform 25 percent (versus 50
percent) of the work.
Response: This rule follows guidance in the generally applicable,
government-wide U.S. Small Business Administration (SBA) regulations
and the Federal Acquisition Regulations that set out subcontracting
requirement limits for government-wide set-aside programs. See 13 CFR
125.6; 48 CFR part 19. These regulations require for a services
contract (except construction) that the small business concern will
perform at least 50 percent of the cost of the contract incurred for
personnel with its own employees. In the case of a contract for
supplies or products (other than procurement from a non-manufacturer in
such supplies or products), the concern will perform at least 50
percent of the cost of
[[Page 64621]]
manufacturing the supplies or products (not including the costs of
materials). In the case of a contract for general construction, the
concern will perform at least 15 percent of the cost of the contract
with its own employees (not including the costs of materials). VA's
rule follows the SBA model as these percentages are commonly applied
and accepted in government-wide set aside authorities. VA has no
rational basis to adjust these percentages and, for administrative
ease, does not want to have to enforce separate sets of subcontracting
limitations for set asides with SDVOSB/VOSBs versus other socio-
economic set aside programs. Further, these subcontracting limitations
ensure that the services will be performed by the veteran business
owner's employees. We believe the 50 percent requirement contained in
this rule is appropriate and consistent with generally accepted
guidance on small business programs regarding subcontracting
limitations. Therefore, no change will be made.
4. Definition of SDVOSB Concern and Succession of the Business
Comment: Several commenters suggested that the definition of SDVOSB
be amended to add the following information: ``The management and daily
operations of the business are controlled by one or more service-
disabled veteran(s) or in the case of a veteran with a permanent and
severe disability, the spouse or permanent caregiver of such veteran be
authorized to participate in the program on his or her behalf.''
Two commenters suggested the ``SDVOSB concern'' definition be
expanded to include spouses who gain ownership of a business upon the
death of any service-disabled veteran or a veteran regardless of the
cause or the percent of disability. The SDVOSB status would last for a
period of 2 years or until the spouse re-marries or sells the interest
in the business.
Several commenters felt that the current succession definition is
restrictive since surviving spouses of deceased veterans may only
succeed the business if the veteran had a 100 percent disability.
One commenter suggested that the surviving spouse should be able to
continue the business for at least 10 years regardless of the
disability rating of the veteran.
Another commenter suggested that spouses of any service-disabled
veteran of any level of disability or a veteran who died for any reason
should have a 2-year period to ``sunset'' the business to protect all
employees from predatory takeovers and to safeguard the value of the
business concern.
Other commenters suggested that any surviving children or permanent
care giver of the veteran also should be afforded the opportunity to
participate in this program.
Response: The criteria for treatment of the business after the
death of the veteran owner are in 38 U.S.C. 8127(h). Under current law,
the surviving spouse of a veteran with a service connected disability
rating of 100 percent disabled or who died as a result of a service
connected disability would maintain the SDVOSB status. The surviving
spouse would retain this status until he or she re-marries,
relinquishes an ownership interest in the small business, or for 10
years after the death of the veteran, whichever occurs first. VA cannot
interpret section 8127(h) as suggested by the commenters because the
plain statutory language clearly prescribes the criteria for surviving
spouse succession. There is no statutory authority to include
participation of a spouse who is the caregiver to a living veteran
owner, permanent caregiver of a disabled veteran or surviving children
in the program. Furthermore, the length of participation by a surviving
spouse is prescribed in section 8127(h). The commenter's suggestion to
include a 2-year participation period for the spouse of a service-
disabled veteran regardless of the disability rating goes beyond the
authority provided in the current law. The only succession of the
business authorized for the program by Congress in section 8127(h) is
to the surviving spouse of a veteran who had a service connected
disability rating of 100 percent or who died as a result of a service
connected disability. Congress has not otherwise authorized other
categories of persons to maintain SDVOSB status for business succession
purposes. Given that any change to the current definition would require
revised statutory authority, no change may be made through this
rulemaking process. The definition provided in proposed section 802.101
for SDVOSB concerns is adequate and consistent with the criteria in 38
U.S.C. 8127(h).
5. Synopsis Requirements
Comment: One commenter stated that proposed section 819.7007,
requiring synopsis of prospective sole source contracts, conflicts with
VA Information Letter 049-07-08. The commenter further stated that the
Small Business Administration (SBA) Section 8(a) program does not
require a synopsis for sole source awards.
Response: The commenter is correct that there is a difference
between the synopsis requirement in VA Information Letter 049-07-08 and
as proposed in this rule. The letter states that a synopsis is not
required, but this final rule states a contracting officer may award
contracts to SDVOSBs or VOSBs on a sole source basis provided that
``the requirement is synopsized in accordance with the Federal
Acquisition Regulations Part 5.'' The provisions contained in this rule
will supersede those contained in the letter. Further, the synopsis
requirement is changed in order to ensure that all activity under VA's
Veterans First Contracting Program has full transparency for all
concerns, including those of the American taxpayer. Therefore, a notice
of intent to issue a sole source contract will be published prior to
the award of sole source contracts. Note that VA's Veterans First
Contracting Program, unlike SBA's Section 8(a) program, is not a
business development program. The Section 8(a) program addresses small
business that must be unconditionally owned and controlled by one or
more socially and economically disadvantaged individuals who are of
good character and citizens of the United States. This socio-economic
program is designed to aid fledgling small businesses controlled by
such disadvantaged individuals so that they may become familiar with
the federal procurement process and eventually grow in size and
capability to graduate from the Section 8(a) program. VA does not
consider veterans to fall into the same category as Section 8(a)
individuals. While veterans' service will entitle them to priority in
many contracting opportunities with VA, VA finds that the goals of the
Section 8(a) program (aiding socially disadvantaged individuals) are
separate and distinct from those in this proposed regulation (priority
for veteran small businesses in most procurement opportunities). As
stated, VA desires transparency in SDVOSB/VOSB sole source procurements
as the number of awards under this authority is likely to be
significantly greater than Section 8(a) awards.
In addition, section 813.106(b) has been added to the final rule to
include a synopsis requirement for contracting actions estimated to
exceed $25,000, which are performed under the purview of section
813.106(a). This synopsis requirement will likewise provide for greater
transparency within the Veterans First Contracting Program with regard
to non-competitive procurements under this section.
[[Page 64622]]
6. Priorities of SDVOSB Contractors
Comment: One commenter stated there should be a distinction made
between those service-disabled veterans who were injured in combat and
those veterans who sustained non-combat related injuries.
Response: The criteria for priority for contracting preferences are
prescribed in 38 U.S.C. 8127(i). Under current law, VA makes no
distinction between combat and non-combat disabled veterans. The only
distinction authorized by Congress in section 8127 is between small
business concerns owned by veterans generally and those owned by
veterans with service-connected disabilities. Congress has not
otherwise authorized any preference for combat veterans. Given that any
change to the current categories would require revised statutory
authority, no changes will be made based upon the comment.
7. Change to Federal Acquisition Regulation (FAR)
Comment: One commenter questioned why this is a change to the VA
Acquisition Regulations (VAAR) and not the FAR. Another commenter
stated he would like to see the same wording in the FAR or a Federal
Acquisition Circular.
Response: Sections 8127 and 8128 of title 38, U.S.C., contain
provisions that authorize VA to create a VA-specific procurement
program to provide contracting preference to SDVOSBs and VOSBs. VA is
required to give priority in contracting to small businesses owned and
controlled by veterans, but the program is not intended to have
government-wide applicability under the FAR. Congress has not
authorized a similar procurement program applicable to all federal
agency contracting. Accordingly, this rulemaking is limited to VA and
therefore, can only be implemented in VA's FAR supplement, the VAAR.
This VA specific rule is a logical extension of VA's mission to care
for and assist veterans in returning to private life. It provides VA
with the new contracting flexibilities to assist veterans in doing
business with VA. SDVOSBs and VOSBs will obtain valuable experience
through this VA program that can be useful in obtaining contracts and
subcontracts with other government agencies as well.
8. Equitable Distribution of Small Business Opportunities
Comment: One commenter stated concern over the equitable
distribution of procurement opportunities available to small
businesses. As a small business owner, the commenter sees few
opportunities for a small construction company to work with VA given
the recent legislation authorizing set-aside and negotiated
procurements for veterans, HUBZone contractors, woman-owned, and
Section 8(a) firms. The commenter also stated VA is paying a premium
for construction contracts that are awarded as small business set-
asides.
Response: VA is required to adhere to a strict order of priority as
prescribed in 38 U.S.C. 8127(i). Further, in accordance with both the
Federal Acquisition Regulations (FAR) and VA Acquisition Regulations,
contracting officers are required to conduct a thorough cost and/or
price analysis to ensure that the government is receiving a fair and
reasonable price. However, because the Small Business Competitiveness
Demonstration Program in FAR subpart 19.10 includes construction as a
designated industry group (DIG), VA contracting officers may use the
provisions of 38 U.S.C. 8127 and this rule when procuring DIG
requirements. FAR 19.1007(b)(2) establishes that Section 8(a), HUBZone
and SDVOSB set-asides must be considered. However, using the provisions
of 38 U.S.C. 8127, as implemented in this rule, VA personnel may change
the order of priority to consider SDVOSB and VOSB set-asides before
Section 8(a) and HUB Zone set-asides when procuring construction
contracts under the Small Business Competitiveness Demonstration
Program. Due to this statutorily prescribed contracting preference for
SDVOSBs and VOSBs in VA acquisitions, other small-business owners may
be disadvantaged by this rule in securing contracts with VA.
Nevertheless, VA is obligated to implement the public policy set forth
in statute that favors SDVOSBs and VOSBs over other small business
concerns.
9. AbilityOne Program Procurement List Protection
Comment: A comment was received stating the AbilityOne Network is
the largest source of employment for people who are blind or have
severe disabilities, including service-disabled veterans. The commenter
stated that not all veterans are interested in owning a business as
many prefer employment support, which is available through AbilityOne.
One commenter expressed concern that this rule may adversely affect
future AbilityOne contracts, which may result in fewer employment
opportunities for veterans. The commenter stated the set-asides do not
offer protection for disabled veterans who cannot or do not want to own
their own businesses.
Response: This rule will not negatively impact AbilityOne and its
ability to continue to provide employment to disabled veterans. This
rulemaking does not alter AbilityOne's status in the ordering
preference for current or future items on the AbilityOne procurement
list.
Comment: Many commenters stated that the language in the rule does
not offer sufficient protection for current AbilityOne program
procurement list projects. The commenters request that while VA
acquisition personnel may provide VOSB and SDVOSB with priority for new
requirements, there should be no ``poaching'' of current AbilityOne
projects. The commenter further stated that once a project is on the
procurement list, the item should remain on the list unless VA receives
consent to take the item out of the AbilityOne program.
Response: We appreciate the comments; however, AbilityOne's
priority status has not been changed as a result of this rule. Further,
this rule does not impact items currently on the AbilityOne procurement
list or items that may be added to the procurement list in the future.
10. AbilityOne Opportunities for Partnership
Comment: Several commenters stated that this is an opportunity for
VOSBs and SDVOSBs to partner with AbilityOne to increase VA procurement
opportunities for these socioeconomic groups. Several commenters
requested that VA modify section 819.7003(c) be modified to include
AbilityOne-qualified Non-Profit Agencies (NPAs) who represent people
who are blind or severely disabled be eligible to participate in a
joint venture under VA's Veterans First Contracting Program. Several
other commenters suggested that VA may have difficulty locating veteran
organizations with the needed capacity and capability to fully use the
authority contained in this rule. These commenters suggested that
veteran businesses working with AbilityOne NPAs as subcontractors be
given a preference priority. Some commenters suggested that VA revise
the purchase priorities in section 808.603 to reflect the following
order: SDVOSBs, VOSBs, then SDVOSBs or VOSBs partnering with qualified
subcontractors to AbilityOne NPAs.
Response: This rule adopts the SBA's Joint Venture regulations,
which provide that a SDVOSB concern may enter into a joint venture
agreement with one or more other small business
[[Page 64623]]
concerns for the purpose of performing a service disabled veteran owned
contract. See 13 CFR 125.15(b)(1)(i). A joint venture of at least one
SDVOSB concern and one or more other business concerns may submit an
offer as a small business for a competitive service disabled veteran
owned contract procurement so long as each concern is under the size
standard corresponding to the North American Industrial Classification
System (NAICS) code assigned to the contract. All companies must
qualify under the SBA guidelines to be considered under section
819.7003. By definition, a small business must be a for profit entity.
AbilityOne NPA's are non-profit agencies, therefore, no change can be
made to create a blanket joint venture relationship authority between
AbilityOne NPAs and SDVOSBs or VOSBs. At present, there is no statutory
authority to create an order of priority for AbilityOne contractors
working as subcontractors to SDVOSBs or VOSBs.
11. Request for a Specific Order of Preference
Comment: One commenter suggested revising proposed section 808.603
to specifically define the purchase priority hierarchy for use by VA
contracting personnel.
Response: We disagree with the commenter and believe that this rule
clearly implements the priority purchasing preference for SDVOSB and
VOSB in accordance with the statute. Under section 8128(a), VA must
give priority to small business concerns owned and controlled by
veterans, if the business concern meets the requirements of that
contracting preference. In this rule, VA will provide discretion to its
contracting officers to override certain statutory priority
preferences, such as Federal Prison Industries and Government Printing
Office. Under section 8128, VA is implementing priority for SDVOSBs and
VOSBs to the extent authorized by the law. Otherwise, if VA's proposed
VAAR change does not address other priority preferences set forth in
the FAR, then the FAR will govern. On this basis, VA has determined
that including a specific hierarchy of priority is not required and no
such change will be made to the rule based upon the comment.
12. Conversion of Commercial Activities to Private Sector
Comment: One commenter stated that the proposed rule does not
address converting commercial activities to the private sector. The
commenter noted that the proposed rule lacks provisions that address a
situation where an SDVOSB makes an unsolicited proposal to a VA
facility, for example, for housekeeping services.
Response: OMB Circular No. A-76 sets the policies and procedures
that federal agencies must use in identifying commercial-type
activities and determining whether these activities are best provided
by the private sector, by government employees, or by another agency
through a fee-for-service agreement. The determination of whether
services should be performed by the private sector or government
employees is outside the purview of the Veterans First Contracting
Program. The term ``unsolicited proposal'' is defined in Federal
Acquisition Regulation (FAR) 2.101, as a written proposal for a new or
innovative idea that is submitted to an agency on the initiative of the
offeror for the purpose of obtaining a contract with the government,
and is not in response to a request for proposals, Broad Agency
Announcement, Small Business Innovation Research topic, Small Business
Technology Transfer Research topic, Program Research and Development
Announcement, or any other Government-initiated solicitation or
program. VA continues to adhere to the procedures in FAR 15.6 and VA
Acquisition Regulation section 815.6 as adequate procedures to address
the evaluation of unsolicited proposals. The comment is outside the
purview of the proposed rule and VA will make no changes to the
procedures for evaluating unsolicited proposals.
13. Non-Manufacturers Rule
Comment: Several commenters questioned whether VA would achieve its
SDVOSB goals if the non-manufacturer rule is not waived. One commenter
stated most small businesses, especially SDVOSBs, are distributors and
not manufacturers.
Response: VA did not propose to make any changes to the Federal
Acquisition Regulation (FAR) requirements of the non-manufacturer rule.
Therefore, the FAR requirements of the non-manufacturer rule will
continue to apply to SDVOSB/VOSB procurements under this authority. The
non-manufacturers rule provides that a contractor under a small
business set-aside contract shall be a small business that does not
exceed 500 employees and that provides either its own product or that
of another domestic small business manufacturing or processing concern.
See 13 CFR 121.406(b)(1)(i)-(iii). The underlying intent of the non-
manufacturer rule is to aid small business by ensuring that the
government only buy products under set asides that are actually
manufactured by small businesses. Since the effective date of section
8127, VA has met its SDVSOB and VOSB goals as established by the
Secretary of Veterans Affairs. Therefore, no change is being made to
the rule based on this comment.
14. Federal Prison Industries (FPI)
Comment: One commenter stated that inclusion of the FPI in the
proposed rule totally circumvents recent legislation amending FAR 8.601
and 18 U.S.C. 4121-4128.
Response: The enabling statute for the FPI is 18 U.S.C. 4121-4128.
Federal Acquisition Regulation (FAR) subpart 8.6 implements the
provisions of 18 U.S.C. 4121-4128. Generally, FPI is a priority source
in federal procurement for items contained on FPI's procurement list.
However, FPI's status as a required source for VA acquisitions will be
changed by this rule. This rule at section 808.603 states that VA
contracting officers may purchase supplies and services on FPI's
procurement list from eligible SDVOSBs and VOSBs without regard to the
FAR and other statutory priority status rules for FPI based on the
priority provided for SDVOSBs and VOSBs without regard to any other
provision of law in 38 U.S.C. 8128. Therefore, we will not change the
rule based on the comment.
15. Limitations on Subcontracting
Comment: One commenter stated that the requirement for an SDVOSB to
perform 50 percent of the labor costs should not be mandatory since
SDVOSBs cannot typically support the labor force mandated by this
requirement.
Response: VA is applying the percentages that are common for all
government set-aside programs. The current regulation regarding the
limitation on subcontracting requirements for other set-aside programs
is 13 CFR 125.6. The regulation requires (except construction) that the
small business concern will perform at least 50 percent of the cost of
the contract incurred for personnel with its own employees. In the case
of a contract for supplies or products (other than procurement from a
non-manufacturer in such supplies or products), the concern will
perform at least 50 percent of the cost of manufacturing the supplies
or products (not including the costs of materials). In the case of a
contract for general construction, the concern will perform at least 15
percent of the cost of the contract with its own employees (not
including the costs of materials). The Federal Acquisition Regulation
(FAR) clauses, which implement these
[[Page 64624]]
subcontracting limitation requirements, include FAR 52.219-4, 52.219-
14, and 52.219-27. The language included in this rule is consistent
with these current limitations on subcontracting requirements typical
to all manner of small business set-asides. Also, requiring SDVOSBs and
VOSBs to perform 50 percent of the labor costs furthers the intent of
this rule, which is to promote SDVOSBs and VOSBs. Therefore, no change
will be made to the rule based on this comment.
16. Mentor-Prot[eacute]g[eacute] Program
Comment: One commenter stated the SDVOSB goal to perform 50 percent
of the cost of the contract should be removed if VA is to achieve its
SDVOSB goal.
Response: The VA Mentor-Prot[eacute]g[eacute] Program is designed
to encourage mentors to provide assistance to SDVOSB and VOSB
prot[eacute]g[eacute]s to enhance their capabilities to successfully
perform contracts and subcontracts for VA. The program is designed to
foster long term business relationships between SDVOSBs, VOSBs and
prime contractors. We believe the goal to perform 50 percent of the
work is consistent with other government-wide Mentor-
Prot[eacute]g[eacute] Programs. The rationale for the requirement that
the SDVOSB or VOSB perform 50 percent of the cost of the contract
relates to the limitation on subcontracting requirements previously
discussed in response to comment 15. Therefore, no change will be made
to the rule based on this comment.
Comment: One commenter stated that proposed sections 815.304 and
852.215-70 should be revised to delete participation in the VA Mentor-
Prot[eacute]g[eacute] Program as an evaluation factor when
competitively negotiating the award of contracts, tasks, or delivery
orders. The commenter stated that finding a mentor is a difficult and
time consuming task that is of little value for start-up SDVOSBs. The
commenter also stated that being in a mentor-prot[eacute]g[eacute]
program does not provide additional competitive advantage any more than
any other teaming arrangement, joint venture, or prime/subcontractor
relationship. Finally, the commenter stated that the rule would give
large businesses a back door into negotiations intended for small
business through their prot[eacute]g[eacute].
Response: We believe the use of participation in VA's Mentor-
Prot[eacute]g[eacute] Program as an evaluation factor is consistent
with the government-wide practice used in similar programs. Large
business participation in the program is encouraged to assist SDVOSBs
and VOSBs in successfully performing VA contracts and subcontracts and
increasing their business. VA finds that the likelihood of any abuse of
the program by large businesses is minimal. As addressed above, in
small business set-asides conducted under this rule, the SDVOSB or VOSB
must perform defined percentages of work. Therefore, for example, a
large business subcontractor mentor cannot control the performance or
management of a VA contract awarded under this rule. In unrestricted
acquisitions where a large business mentor may be a prime contractor,
VA has included evaluation criteria in solicitations to provide extra
evaluation credit to the large business offeror to encourage support
for VOSBs and SDVOSBs. Proposed section 815.304-70(a)(4) prescribed
that VA contracting officers shall ``consider participation in VA's
Mentor-Prot[eacute]g[eacute] Program as an evaluation factor when
competitively negotiating the award of contracts or task orders or
delivery orders.'' Because VA intended in the proposed rule that
``consider'' be mandatory, in this final rule the word ``consider'' is
changed to ``use,'' which requires contracting officers to actively use
a contractor's participation in the Mentor-Prot[eacute]g[eacute]
Program as an evaluation factor and creates consistency with
subsections (a)(2) and (a)(3) of this section. Also, the rule requires
that VA ensure the large business actually utilizes the SDVOSB or VOSB
that it proposes to use to ensure the integrity of the program.
17. Applicability to GSA Federal Supply Schedule (FSS) Procurements
Comment: VA received a comment stating that the proposed rule was
unclear whether it was intended to be applicable to task and delivery
orders under the Federal Supply Schedule (FSS). The commenter indicated
that although GSA has delegated to VA the authority to administer
certain schedules, the delegation does not extend to policy
implementation. The commenter recommended a revision stating that
SDVOSB and VOSB set-asides and sole source provisions do not apply at
the FSS order level.
Response: We disagree with the commenter and reject the suggestion
because this rule does not apply to FSS task or delivery orders. VA
does not believe a change to the regulation is needed, and 48 CFR part
8 procedures in the FAR will continue to apply to VA FSS task/delivery
orders. Further, VA will continue to follow GSA guidance regarding
applicability of 48 CFR part 19 of the FAR, Small Business Programs,
which states that set-asides do not apply to FAR part 8 FSS
acquisitions.
Comment: Many commenters stated that the proposed rule should apply
to FSS orders since VA purchases approximately 60 percent of its goods
and services through the FSS. The commenters believed that to have the
greatest impact, any policy designed to maximize the participation of
SDVOSBs and VOSBs in VA's purchasing process should apply to purchases
made pursuant to the FSS program. The commenters stated 48 CFR subpart
8.4 governs FSS contracts. Federal Acquisition Regulation (FAR) 8.404
states that 48 CFR parts 13, 14, 15, and 19 do not apply to blanket
purchase agreements or orders placed against FSS contracts. The
commenters stated that failure to apply the rule to orders made under
FSS contracts would severely limit the rule's effectiveness.
Response: We disagree with these commenters. FSS contracts are
governed by policy developed by GSA, which has determined that set-
asides do not apply to FSS orders. VA has no authority to include set-
aside procedures for FSS orders under this rule; however, VA provides
evaluation preferences for SDVOSBs and VOSBs in the proposed rule as
follows. GSA Acquisition Letter V-05-12, dated June 6, 2005, and FAR
8.405-1(c) provide guidance on evaluation factors that may be included
in FSS orders when price is not the sole consideration for award.
Socioeconomic status (meaning the type of small business) may be an
evaluation factor for competitive delivery or task orders under the
FSS. The rule requires inclusion of SDVOSB and VOSB status as an
evaluation factor when competitively negotiating the award of contracts
or task/delivery orders under FSS when price is not the sole basis for
award. We are revising the rule to add section 808.405-2, Ordering
procedures for services requiring a statement of work, which provides
that when developing the statement of work and any evaluation criteria
in addition to price the Government shall adhere to and apply the
evaluation factor commitments in section 815.304-70.
18. Applicability to Interagency Agreements
Comment: One commenter stated the rule should apply to other
government entities that award contracting vehicles for VA. The
commenter stated acquisition personnel may circumvent this rule by
having interagency agreements done outside of VA.
Response: We agree with this comment. The criteria for the
applicability of this rule to interagency agreements are written in
statute at 38 U.S.C. 8127(j). Under current law, any
[[Page 64625]]
contract, memorandum of understanding, agreement, or other arrangement
with any governmental entity to acquire goods and services, shall
include in the contract, memorandum, agreement, or other arrangement a
requirement that the entity will comply, to the maximum extent
feasible, with the provisions of 38 U.S.C. 8127 and 8128, as
implemented in the VA Acquisition Regulations, when acquiring such
goods or services. We are revising the rule to add a provision in
section 817.502, which requires other governmental agencies performing
purchases on behalf VA to comply with 38 U.S.C. 8127 and 8128 to the
maximum extent feasible. The inclusion of this provision holds other
agencies accountable to VA's order of priority for SDVOSBs and VOSBs
when procuring services and supplies for VA pursuant to an interagency
agreement.
19. Site Visits in the Verification Process
Comment: One commenter stated that mandatory site visits should not
be used to verify the SDVOSB or VOSB status of companies. Instead, the
commenter believes VA should rely on the veteran's disability rating
letter as confirmation of their veteran status.
Response: Verification of VOSB status is governed by 38 CFR part
74, VA Veteran Owned Small Business Verification Guidelines. In
accordance with 38 CFR 74.20(b), the VA Center for Veteran Enterprise
may perform a site visit at the contractor's site. Site visits are not
mandatory, but may be used in determining ownership and control of a
business for verification purposes. This rulemaking did not propose to
alter the current verification procedures. Accordingly, no changes will
be made based upon the comment.
20. Government Printing Office (GPO)
Comment: One comment was received applauding the overall goals of
the rule, but the commenter stated one section directly conflicts with
section 501 of title 44, United States Code, which is the enabling
statute for the GPO. The commenter stated that 38 U.S.C. 8128 allows VA
to supersede other provisions of law concerning contracting
preferences, but not mandates like the one contained in title 44. The
commenter believes that VA has no authority to ignore the requirements
of title 44 as to the expenditure of appropriated funds for printing
through GPO. The commenter also stated that proposed section 808.803 is
not VA's only means to implement 38 U.S.C. 8128.
Response: VA agrees with the commenter that there are other means
by which VA can effectively implement 38 U.S.C. 8128. Therefore, VA
will delete section 808.803. In the alternative, VA will negotiate a
memorandum of agreement with GPO to foster greater business
opportunities for and stronger outreach efforts to SDVOSBs and VOSBs,
including, but not necessarily limited to, the following. First, VA
shall seek to enhance its ability under GPO's Simplified Purchase
Agreement (SPA) authority whereby, for publishing and information
products and services up to $10,000, upon executing a SPA agreement
with GPO, VA may solicit quotations from a database of all contractors
who have been certified to participate in the SPA program and what type
of products that they produce. VA may select qualified SDVOSBs and
VOSBs or include criteria providing a preference for such firms in
these acquisitions. Based on recent information from GPO, acquisitions
under $10,000 amount to nearly 40 percent of VA's business with GPO. In
addition, VA will work with GPO to enhance its outreach efforts to
SDVOSBs and VOSBs by assisting GPO in modifying its internal policy
directive(s) to add these socio-economic categories to the list of
small businesses with whom GPO encourages contracting. Finally, VA will
provide GPO with information about its Vendor Information Page at
vetbiz.gov where VA maintains a list of veteran small businesses for
research purposes. GPO will provide information regarding qualification
requirements for contracting with GPO that VA may publish or link to on
VA's small business website.
21. Past Performance Is an Evaluation Factor
Comment: One commenter recommended that any reference to past
performance as an evaluation factor as indicated in section 815.304-70,
not include specific past performance regarding the required services
or goods for the agency issuing the solicitation. The commenter is
concerned that if a contractor does not have a proven track record with
the procuring agency, the contractor cannot effectively compete. The
commenter suggests that if a SDVOSB or VOSB has experience with another
government entity, then they should be allowed to compete. Further, the
commenter expressed concern about solicitations being written in a
manner to award projects to a known entity that has worked with the
agency. The commenter stated this is an unfair and deceptive
procurement practice.
Response: VOSBs and SDVOSBs are not precluded from using their past
performance records while under contract with another agency. VA
evaluates past performance in accordance with Federal Acquisition
Regulation 15.305(a)(2)(ii)-(iv). VA contracting officers are required
to evaluate past performance information regarding an offeror's past or
current contracts with Federal, State, or local governments for efforts
similar to VA's advertised requirement. Further, VA contracting
officers may consider past performance information associated with
predecessor companies, key personnel who have relevant experience, or
subcontractors that will perform major or critical aspects of the
requirement when such information is relevant to the current
acquisition. If an offeror does not have a record of relevant past
performance or if there is no past performance information available,
the offeror may not be evaluated favorably or unfavorably on past
performance. See 48 CFR 15.305(a)(2)(iv). Based on the foregoing, we
disagree with the commenter's concern that VA's consideration of past
performance may prejudice veterans that lack a proven past performance
record. No change will be made to the rule because we do not believe
the provision unduly affects competition between contractors on the
basis of past performance.
22. Subcontracting Goals
Comment: One commenter stated that a provision should be added to
proposed part 819, which states that the subcontracting goals must be
higher for SDVOSBs and VOSBs than for other small business concerns.
For example, the annual goals for SDVOSB and VOSB might be 10 percent
and 7.5 percent respectively, followed by Section 8(a) at 5 percent and
HubZone at 3 percent. Another commenter suggested that contracting
officers should ensure that any subcontracting plans include a goal
that is at least commensurate with the annual SDVOSB prime contracting
goal for the total value of planned subcontracts.
Response: We believe the best practice is to negotiate the
subcontracting goals based on the requirements of each discrete
contract. The subcontracting goals should be set based on the nature of
the requirement. It may be unrealistic to set mandatory goals
applicable to all types of requirements. Furthermore, the goals for all
other socioeconomic programs are set by statute and cannot be amended
through this rulemaking process.
[[Page 64626]]
23. Eligibility for Participants in VA Mentor-Prot[eacute]g[eacute]
Program
Comment: One commenter stated the rule should clarify the
eligibility of mentors and prot[eacute]g[eacute]s pursuant to the VA
Mentor-Prot[eacute]g[eacute] Program. It is unclear whether a
participating Mentor must be a prime contractor to its
prot[eacute]g[eacute]. In proposed section 819.7102, a mentor is
defined as a prime contractor that elects to promote and develop SDVOSB
and/or VOSB subcontractors by providing developmental assistance
designed to enhance the business success of the prot[eacute]g[eacute].
As defined in section 802.101, a prot[eacute]g[eacute] is defined as a
SDVOSB or VOSB, which meets federal small business size standards in
its primary NAICS code and is the recipient of developmental assistance
pursuant to a mentor-prot[eacute]g[eacute] agreement. These definitions
indicate the mentor must be the prime contractor and the
prot[eacute]g[eacute] must be the subcontractor in an eligible mentor-
prot[eacute]g[eacute] relationship. However, proposed section 819.7106
stated that prot[eacute]g[eacute]s may participate in the program in
pursuit of a prime contract or as a subcontractor under the mentor's
prime contract with VA, but are not required to be a subcontractor to a
VA prime contractor or be a VA prime contractor. The commenter states
that the proposed rule should clarify that eligible mentors are not
limited to act as prime contractors and eligible prot[eacute]g[eacute]s
are not limited to act as subcontractors.
Response: We concur with these comments and have made changes to
clarify this matter. The word ``prime'' has been deleted from the
definition of mentor in sections 819.7102 and 852.219-71(b)(1). In
section 819.7102, ``SDVOSB and/or VOSB subcontractors'' is revised to
indicate ``SDVOSBs and/or VOSBs.'' Section 819.7106(a), Eligibility,
has been revised to state that a mentor may be either a large or small
business entity or either a prime contractor or subcontractor.
24. Mentor-Prot[eacute]g[eacute] Agreement Approval
Comment: One commenter stated that VA's Office of Small and
Disadvantaged Business Utilization (OSDBU) should have the approval
authority for VA Mentor-Prot[eacute]g[eacute] Agreements. The commenter
stated that OSDBU is genuinely suited to meet this initiative.
Response: We agree with this comment and note that section 819.7108
clearly indicates that VA Mentor-Prot[eacute]g[eacute] Agreements must
be submitted to VA OSDBU for review and approval.
25. Training and Guidance to VA Contracting Officers
Comment: Several commenters suggested that VA contracting officers
receive training and specific guidance regarding implementation of VA's
Veterans First Contracting Program to ensure it is implemented
effectively. Some commenters wanted to ensure that contracting officers
at the local level are accountable for implementing the rule. Others
voiced concern about the use of the Prime Vendor Program instead of
SDVOSBs and VOSBs.
Response: VA provides extensive training to acquisition
professionals, program managers/officials, and purchase card holders.
In addition, VA's OSDBU enhances this training by serving as expert
advisors for any questions about the process and expends significant
effort to market the statutory changes to VA contracting officers as
well as VA's industry partners. VA will continue to provide ongoing
training to its acquisition professionals to ensure that VA's Veterans
First Contracting Program is fully understood. No change to the rule is
required based on this comment.
26. Determination of Affiliation
Comment: One commenter stated that unless specified, SBA may
classify participants in a Mentor-Prot[eacute]g[eacute] Program as a
joint venture. The commenter notes that SBA states on its website that
it excludes its Section 8(a) program from joint ventures. The commenter
stated that if the affiliation definition is not clarified, VA's
Veterans First Contracting Program would be negatively impacted.
Response: We do not believe that this needs to be addressed any
further in the rule. Section 819.7103 states that a
prot[eacute]g[eacute] firm is not considered an affiliate of a mentor
firm based solely on the fact the prot[eacute]g[eacute] firm is
receiving developmental assistance from the mentor firm under the VA
Mentor-Prot[eacute]g[eacute] Program. The determination of affiliation
is a SBA function; therefore, no clarification will be made to the
rule.
27. Mentor Prot[eacute]g[eacute] Relationships Subject to Joint Venture
Restrictions
Comment: One commenter stated given the SBA's definition of joint
venture, it could be argued that participants in the Mentor-
Prot[eacute]g[eacute] Program that are classified as a joint venture,
either by their own agreement or by the SBA, would fall into the joint
venture restrictions such as three bids in 2 years and the 51 percent
to 49 percent work and investment. The commenter stated further that it
is not the intent of the Mentor-Prot[eacute]g[eacute] Program to be
restricted by the joint venture guidelines.
Response: A joint venture is an association of individuals and/or
concerns with interests in any degree or proportion by way of contract,
express or implied, for which purpose they combine their efforts,
property, money, skill, or knowledge, but not on a continuing or
permanent basis for conducting business generally. 38 CFR 74.1. First,
section 819.7003 provides that a prot[eacute]g[eacute] firm will not be
considered an affiliate of the mentor solely on the basis that the
prot[eacute]g[eacute] is receiving assistance from the mentor under
VA's Mentor-Prot[eacute]g[eacute] program. Further, SBA regulations on
mentor-prot[eacute]g[eacute] arrangements also provide that a
prot[eacute]g[eacute] firm is not an affiliate of a mentor firm solely
because the prot[eacute]g[eacute] firm receives assistance from the
mentor firm under other Federal Mentor-Prot[eacute]g[eacute] programs.
See 13 CFR 121.103(b)(6). Affiliation is an important issue because it
means that the size status of the two or more businesses included in
the joint venture arrangement are combined to determine small business
size status of the vendor. Since section 819.7003 provides that mentor-
prot[eacute]g[eacute] participants will not be subject to a size status
determination that combines the joint ventures' size solely on the
basis of the mentor-prot[eacute]g[eacute] relationship they have
established, the commenter's concern is unfounded. No change will be
made to the final rule based on this comment. VA has noted that on
October 28, 2009, SBA published in the Federal Register a proposed rule
to amend Sec. 121.103(b)(6) to limit the exclusion from affiliation to
``a Federal Mentor-Prot[eacute]g[eacute] program where an exception to
affiliation is specifically authorized by statute or by SBA under
procedures set forth in Sec. 121.903.'' 74 FR 55694.
28. Debarment Time Limits
Comment: One commenter recommended a minimum of 2 years and a
maximum of 5 years debarment for any business that willfully or
deliberately misrepresents ownership and control of the business for
purposes of registering in the VetBiz.gov Vendor Information Pages
database or other Federal databases.
Response: Debarment time periods are inherently discretionary in
nature. In accordance with guidance in Federal Acquisition Regulation
9.406, debarment shall be for a period commensurate with the
seriousness of the cause(s) but generally not to exceed 3 years. VA has
taken a harder stance in this proposed rule. For example,
misrepresenting veteran small business
[[Page 64627]]
status could result in debarment for up to a maximum of 5 years.
However, we believe imposing a mandatory minimum debarment period in
this rule would diminish VA's discretion because the period of
debarment should be commensurate with the violation based upon findings
in administrative proceedings required for debarment actions.
Therefore, no change will be made to the rule based on the comment.
29. Causes for Debarment
Comment: Several comments recommended adding to proposed section
809.406-2, Causes for Debarment, misrepresentation of status as an
SDVOSB/VOSB, debarment of large businesses that are used as a
subcontractor that actually do more than 50 percent of the labor,
including supervision of the project, as well as any SDVOSB that is a
party to such action.
Response: We appreciate the comments and believe that expansion of
the proposed debarment actions for violating subcontracting limitations
is viable. Accordingly, we will revise the rule to add that violations
of the limitation on subcontracting requirements under subpart 819.70
may result in the debarment of any large business concern and SDVOSB or
VOSB concern that deliberately violates the small business
subcontracting clause.
30. Market Research
Comment: One commenter stated that proposed section 810.001 should
be revised to require VA contracting teams to use the VIP database as
their first means of performing market research, in addition to other
sources of information.
Response: We believe the existing language in proposed section
810.001 satisfies the commenter's suggestion and makes clear that VA
contracting teams will utilize the VIP database, as well as other
sources of information. Therefore, no change will be made to the rule.
31. Requirement for Mentors To Submit Subcontracting Plan
Comment: One commenter was concerned that under the Mentor-
Prot[eacute]g[eacute] Program, mentors would be excused from the
requirement to submit subcontracting plans for its largest federal
procurement opportunities with VA or other agencies, citing the VA
Mentor Prot[eacute]g[eacute] Program as its reason for noncompliance.
Response: We believe that the existing language in section 819.7105
indicates that mentors must continue to file subcontracting plans. No
change will be made to the rule based on the comment.
32. SDVOSB/VOSB Small Business Status Protests
At section 819.307 of the proposed rule, VA included a provision
that VA would utilize SBA to consider and decide SDVOSB and VOSB status
protests. This requires VA and SBA to execute an interagency agreement
pursuant to the Economy Act, 31 U.S.C. 1535. Negotiations of this
interagency agreement have not yet been finalized. Therefore, VA has
amended section 819.307 with an interim rule to provide that VA's
Executive Director, OSDBU shall consider and decide SDVOSB and VOSB
status protests, and provides procedures there for, until such time as
the interagency agreement is executed by the agencies. VA hereby
solicits comments on this regulatory amendment only. Furthermore,
819.307 is also revised to clarify that VA regulations at 38 CFR Part
74, regarding the issues of ownership and control of SDVOSB and VOSBs,
shall apply to status protests for procurements under Subpart 819.70
and that, otherwise, the procedures of FAR Part 19.307 shall apply to
both VOSB and SDVOSB status protests; however, VA contracting officers
shall be solely responsible for ensuring SDVOSB and VOSB compliance
with the requirement to be listed on the Vendor Information Pages at
VetBiz.gov in accordance with section 804.1102. Lastly, 819.307 is
clarified to explain that if a SDVOSB or VOSB status protest is
granted, if contract award has already been made, VA will not be
required to terminate the award but will not be able to count that
award towards its small business accomplishments, which is consistent
with current Government Accountability Office protest decisions on
similar matters.
Administrative Procedure Act
This document additionally revises section 819.307, SDVOSB/VOSB
Small Business Status Protests, of the proposed rule, where VA provided
that VA would utilize the SBA to consider and decide SDVOSB and VOSB
status protests. This requires VA and SBA to execute an interagency
agreement pursuant to the Economy Act, 31 U.S.C. 1535. Negotiations of
this interagency agreement have not yet been finalized. Therefore, VA
has amended section 819.307 with an interim rule to provide that VA's
Executive Director, OSDBU shall consider and decide SDVOSB and VOSB
status protests, and provides procedures there for, until such time as
the interagency agreement is executed by the agencies. Good cause
exists for the agency to include this change as an interim rule because
it is essential for this contracting program to function. Without a
SDVOSB/VOSB status protest resolution process in place for acquisitions
under this authority, performance of any contract award so challenged
would be suspended thus depriving VA and veterans of necessary services
and/or supplies. VA hereby solicits comments on this regulatory
amendment only.
Other Non-Substantive Changes
The changes below serve to clarify particular items from the
proposed rule in this final rule.
Section 802.101 has been revised to state that the term ``small
business concern'' has the same meaning as in Federal Acquisition
Regulation 2.101.
The proposed rule contained a provision at sections 819.7007(b) and
819.7008(b) indicating no protest is authorized in connection with the
issuance or proposed issuance of a contract under this section, on the
basis that more than one SDVOSB or VOSB, respectively, is available to
meet the requirement. In the proposed rule, VA sought to remove this
question as an issue subject to protest. Upon further consideration, VA
has determined that it is not legally proper to affect protest
jurisdiction established by 31 U.S.C. 3551 et seq. or 28 U.S.C. 1491 by
this rule. In addition, these provisions are being removed in the final
rule to provide the added benefit of transparency of the procurement
process.
In the proposed rule it was stated in section 819.7109(b) that
OSBDU would forward copies of approved Mentor-Prot[eacute]g[eacute]
Agreements to the VA contracting officer for any VA contracts affected
by that Agreement. Section 819.7109(b) is revised in the final rule to
state that approved Mentor-Prot[eacute]g[eacute] Agreements will be
posted on a VA Web site, which will be accessible to VA contracting
officers for their review. This change is being made to more
efficiently use the resources that are available and to increase the
transparency of VA's procurement process. Electronic posting of
agreements obviates the need to forward paper copies of the agreements
to VA contracting officers and makes the agreements more accessible to
contracting officers.
Regulatory Flexibility Act
VA has determined that this rule establishing priority to small
business concerns owned and controlled by veterans may have a
significant economic impact on a substantial number of small entities
within the
[[Page 64628]]
meaning of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601, et seq.
Accordingly, VA prepared an Initial Regulatory Flexibility Analysis
(IRFA) addressing the impact of the proposed rule in accordance with 5
U.S.C. 603. The IRFA examined the objectives and legal basis for the
proposed rule; the kind and number of small entities that may be
affected; the projected recordkeeping, reporting, and other
requirements; whether there were any federal rules that may duplicate,
overlap, or conflict with the proposed rule; and whether there were any
significant alternatives to the proposed rule.
VA's Final Regulatory Flexibility Analysis (FRFA) is set forth
below:
1. What are the reasons for, and objectives of, this final rule?
Sections 502 and 503 of Public Law 109-461 require VA to create a
unique acquisition program among Federal agencies that permits
preferences for SDVOSBs and VOSBs. This final rule will permit VA
contracting officers to conduct acquisition actions with preferences
for SDVOSBs or VOSBs. Specifically, this final rule will allow VA
contracting officers to:
a. Under certain conditions, permit other than competitive
procedures under the simplified acquisition threshold with SDVOSBs or
VOSBs;
b. Require set-asides for SDVOSBs or VOSBs above the simplified
acquisition threshold when the contracting officer has a reasonable
expectation that two or more eligible SDVOSBs or VOSBs will submit
offers and that the award can be made at a fair and reasonable price
that offers the best value to the United States;
c. Under certain conditions, permit other than competitive sourcing
for SDVOSBs or VOSBs above the simplified acquisition threshold when
the contracting officer determines that a fair and reasonable price
will be obtained as a result of negotiations for requirements not to
exceed $5 million;
d. Include evaluation factors in negotiated acquisitions and FSS
acquisitions that give preference to SDVOSBs and VOSBs and preference
to offerors who propose to include such businesses as subcontractors;
e. Require offerors who propose to use SDVOSBs or VOSBs as
subcontractors to use eligible businesses;
f. Require VOSBs participating in the Department's acquisitions to
register in the VetBiz.gov VIP database and VA verify that the business
meets eligibility requirements;
g. Establish a VA Mentor-Prot[eacute]g[eacute] Program and give
large businesses that participate in the program a preference in the
award of VA prime contracts;
h. Encourage prime contractors and mentors to assist SDVOSBs and
VOSBs in obtaining bonding when required;
i. Recommend debarment of any business that misrepresents ownership
and control of the business for purposes of registering in the
VetBiz.gov VIP database or other Federal databases; and
j. Under certain conditions, acquire supplies and services from
SDVOSBs and VOSBs in lieu of FPI.
2. Summary of the Significant Issues Raised by the Public Comments
in Response to the Initial Regulatory Flexibility Analysis, a Summary
of the Assessment of the Agency of Such Issues, and a Statement of any
Changes Made as a Result of Such Comments.
VA has set forth an analysis of the public comments on the Proposed
Rule in the supplementary information section of this final rule. VA
received one comment in response to the IRFA. The commenter, an SDVOSB
owner, urged VA to maintain the economic categories and keep constant
the number of contracts awarded to certified HUBZone, 8(a), and woman-
owned small business (WOSB) concerns. The commenter stated that the
increase of contracts to SDVOSB/VOSBs under the Veterans First rule
should come at the expense of the 65-percent allocated for large
businesses and not the 35-percent for small businesses. The Veterans
First rule does provide a priority for SDVOSB/VOSBs over other small
business concerns and implements a new small business set-aside
authority for SDVOSB/VOSBs. The underlying statutory authority for this
rule does not authorize VA to provide that all awards to SDVOSB/VOSBs
come solely at the expense of large businesses. Therefore, VA believes
that the IRFA analysis was accurate.
3. What is VA's description and estimate of the number of small
entities to which the rule will apply?
The RFA directs agencies to provide a description, and where
feasible, an estimate of the number of small business concerns that may
be affected by the rule. It is difficult to estimate the number of
concerns that will participate in this program because there is
insufficient data on SDVOSBs or VOSBs that are ready and able to
perform on VA requirements. To establish the likely number of SDVOSBs
or VOSBs that may benefit from VA's unique procurement authority, there
are two principal data sources: VA's VetBiz.gov VIP database and the
Central Contractor Registration (CCR) database. VA maintains a list of
veteran small businesses in its VetBiz.gov VIP database. A VIP query
returned 15,904 VOSBs, including 9,020 SDVOSBs. The VIP database
requires that businesses answer eligibility questions before they are
permitted to register their business. VA finds that these searches
reasonably represent the number of SDVOSBs and VOSBs that may be
affected by the rule.
The CCR is a self-representation database where small businesses
are responsible for identifying their size and socio-economic status. A
CCR Dynamic Small Business Search query conducted on March 6, 2009,
returned 43,273 VOSBs, including 14,093 SDVOSBs.
Under this final rule, VA contracting teams will be required to
give priority consideration to SDVOSBs and VOSBs when using other
contracting programs, like set-asides for the Historically
Underutilized Business (HUB) Zone Program or the Section 8(a) Business
Development Program reserved actions or the Small Business Set-aside
Program. A CCR Dynamic Small Business Search conducted on March 6,
2009, returned 10,697 active HUBZone firms. Of this population, 1,961,
or 18 percent, are also VOSBs. A search of active Section 8(a)
businesses identified 9,385 current firms, which includes 1,267 VOSBs,
or 13.5 percent of the total population. There are 69,865 woman-owned
small businesses (WOSBs) in the CCR, of which 4,419 appear to also be
VOSBs. VA notes that SBA is in the process of establishing a WOSB Set-
aside Program, making the percentage of WOSBs who are also VOSBs
eligible of interest to the Department.
Based on this unique procurement authority, VA believes the final
rule will be small business neutral and that teams will organize with
different lead parties. VA has a long tradition of performing well with
small business programs. In July 2008, SBA certified the performance
data for fiscal year (FY) 2007. In a report which appears on SBA's Web
site, ``FY 2007 Small Business Goaling Report,'' VA reported the
following actions, dollars and percentages of total procurement with
small business programs:
Small Business Actions: 2,506,303; Small Business Dollars:
$3,854,687,943.57; Percentage of Total Procurement: 32.85.
VOSB Actions: 399,541; VOSB Dollars: $1,216,580,370.73;
Percentage of Total Procurement: 10.37.
SDBVOSB Actions: 51,304; SDVOSB Dollars: $831,811,813.84;
Percentage of Total Procurement: 7.09.
Small Disadvantaged Business (SDB) Actions: 89,767; SDB
Dollars: $1,029,410,495.34; Percentage of Total Procurement: 8.77.
[[Page 64629]]
Section 8(a) Business Development Program Actions: 4,352;
Section 8(a) Dollars: $450,897,322.73; Percentage of Total Procurement:
3.84.
WOSB Actions: 260,491; WOSB Dollars: $583,657,495.86;
Percentage of Total Procurement: 4.97.
HUBZone Actions: 171,540; HUBZone Dollars:
$388,439,407.06; Percentage of Total Procurement: 3.31.
As noted above, only a small percentage of veterans own small
businesses. With this new procurement authority, additional businesses
may be opened by veterans seeking to participate in the sole source or
set-aside procurement actions. More likely, VOSBs not currently in the
Federal market may be expected to explore selling to VA. Thus, the
population of known VOSBs may increase as these businesses register in
the VetBiz.gov VIP database. This growth is necessary as section 502 of
Public Law 109-461 also requires that VA's large prime contractors use
eligible businesses to receive subcontracting program credit for VOSBs
and SDVOSBs. With respect to who will benefit from this regulation, VA
believes that SDVOSBs and VOSBs and the Department will benefit from
the greater flexibility to contract with veterans in business,
enhancing their unique relationship with VA.
4. What Are the Projected Reporting, Recordkeeping, Paperwork
Reduction Act and Other Compliance Requirements?
There are two categories of coverage in this final rule that could
potentially require the collection of information from contractors. VA
will ask prime contractors who seek a preference for subcontracting
with SDVOSBs or VOSBs to provide information about the identity of
SDVOSBs or VOSBs, the approximate dollar value of the proposed
subcontracts, and confirmation that the proposed subcontractors are
eligible SDVOSBs or VOSBs as verified by the VetBiz.gov VIP database.
VA also will collect information from participants in VA's Mentor-
Prot[eacute]g[eacute] Program, to include the program agreement,
developmental plan, and reports on the success of the program.
5. Description of the Steps VA Has Taken To Minimize the
Significant Economic Impact on Small Entities Consistent With the
Stated Objectives of Applicable Statutes, Including a Statement of the
Factual, Policy, and Legal Reasons for Selecting the Alternative
Adopted in the Final Rule.
This final rule is designed to benefit SDVOSBs and VOSBs. There are
no alternatives which would accomplish the stated objectives of
sections 502 and 503 of Public Law 109-461 to give contracting priority
to SDVOSBs and VOSBs.
Executive Order 12866
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity). The Executive
Order classifies a ``significant regulatory action,'' requiring review
by the Office of Management and Budget (OMB) unless OMB waives such
review, as any regulatory action that is likely to result in a rule
that may: (1) Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local, or tribal governments or
communities; (2) create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the Executive
Order.
The economic, interagency, budgetary, legal, and policy
implications of this final rule have been examined, and it has been
determined to be a significant regulatory action under Executive Order
12866 because it is likely to result in a rule that may raise novel
legal or policy issues arising out of legal mandates, the President's
priorities, or principles set forth in the Executive Order.
Unfunded Mandates
The Unfunded Mandates Reform Act of 1995, at 2 U.S.C. 1532,
requires that agencies prepare an assessment of anticipated costs and
benefits before issuing any rule that may result in an expenditure by
state, local, or tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any given year. This rule would have no such effect on
state, local, or tribal governments, or on the private sector.
Paperwork Reduction Act
This final rule contains provisions in VAAR sections 819.7108 and
819.7113 that constitute collections of information under the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501-3521). OMB has approved the
proposed collections and has assigned control number 2900-0723 to them.
List of Subjects
48 CFR Parts 802, 804, 808, 809, 810, 813, 815, and 817
Government procurement, Reporting and recordkeeping requirements,
Utilities.
48 CFR Part 819
Administrative practice and procedure, Government procurement,
Reporting and recordkeeping requirements, Small business, Veterans.
48 CFR Part 828
Government procurement, Insurance, Surety bonds.
48 CFR Part 852
Government procurement, Reporting and recordkeeping requirements.
Approved: August 25, 2009.
John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.
0
For the reasons stated in the preamble, the Department of Veterans
Affairs amends 48 CFR Chapter 8 as follows:
CHAPTER 8--DEPARTMENT OF VETERANS AFFAIRS
Subchapter A--General
PART 802--DEFINITIONS OF WORDS AND TERMS
0
1. The authority citation for part 802 is revised to read as follows:
Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d);
and 48 CFR 1.301-1.304.
0
2. Amend section 802.101 by adding in alphabetical order the following
terms:
802.101 Definitions.
* * * * *
Service-disabled veteran-owned small business concern (SDVOSB) has
the same meaning as defined in the Federal Acquisition Regulation (FAR)
part 2.101, except for acquisitions authorized by 813.106 and subpart
819.70. These businesses must then be listed as verified on the Vendor
Information Pages (VIP) database at http://www.vetbiz.gov. In addition,
some businesses may be owned and controlled by a surviving spouse.
* * * * *
Small business concern has the same meaning as defined in FAR
2.101.
Surviving spouse means an individual who has been listed in the
Department of Veterans Affairs' (VA) Veterans
[[Page 64630]]
Benefits Administration (VBA) database of veterans and family members.
To be eligible for inclusion in the VetBiz.gov VIP database, the
following conditions must apply:
(1) If the death of the veteran causes the small business concern
to be less than 51 percent owned by one or more service-disabled
veterans, the surviving spouse of such veteran who acquires ownership
rights in such small business shall, for the period described below, be
treated as if the surviving spouse were that veteran for the purpose of
maintaining the status of the small business concern as a service-
disabled veteran-owned small business.
(2) The period referred to above is the period beginning on the
date on which the veteran dies and ending on the earliest of the
following dates:
(i) The date on which the surviving spouse remarries;
(ii) The date on which the surviving spouse relinquishes an
ownership interest in the small business concern;
(iii) The date that is 10 years after the date of the veteran's
death; or
(iv) The date on which the business concern is no longer small
under federal small business size standards.
(3) The veteran must have had a 100 percent service-connected
disability rating or the veteran died as a direct result of a service-
connected disability.
* * * * *
Vendor Information Pages (VIP) means the VetBiz.gov Vendor
Information Pages database at http://www.vetbiz.gov.
Veteran-owned small business concern (VOSB) has the same meaning as
defined in FAR 2.101, except for acquisitions authorized by 813.106 and
819.70. These businesses must then be listed as verified in the
VetBiz.gov VIP database.
* * * * *
PART 804--ADMINISTRATIVE MATTERS
0
3. The authority citation for part 804 is revised to read as follows:
Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d);
and 48 CFR 1.301-1.304.
0
4. Add section 804.1102 to read as follows:
804.1102 Vendor Information Pages (VIP) Database
Prior to January 1, 2012, all VOSBs and SDVOSBs must be listed in
the VIP database, available at http://www.VetBiz.gov, and also must be
registered in the Central Contractor Registration (CCR) (see 48 CFR
subpart 4.11) to receive contract awards under VA's Veteran-owned Small
Business prime contracting and subcontracting opportunities program.
After December 31, 2011, all VOSBs, including SDVOSBs, must be listed
as verified in the VIP database, and also must be registered in the CCR
to be eligible to participate in order to receive new contract awards
under this program.
PART 808--REQUIRED SOURCES OF SUPPLIES AND SERVICES
0
5. The authority citation for part 808 is revised to read as follows:
Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d);
and 48 CFR 1.301-1.304.
0
6. Section 808.405-2 is added to read as follows:
808.405-2 Ordering procedure for services requiring a statement of
work.
When placing an order or establishing a BPA for supplies or
services requiring a statement of work, the ordering activity, when
developing the statement of work and any evaluation criteria in
addition to price, shall adhere to and apply the evaluation factor
commitments at 815.304-70.
0
7. Add subpart 808.6 consisting of section 808.603 to read as follows:
Subpart 808.6--Acquisition From Federal Prison Industries, Inc.
(FPI)
808.603 Purchase Priorities
Contracting officers may purchase supplies and services produced or
provided by FPI from eligible service-disabled veteran-owned small
businesses and veteran-owned small businesses, in accordance with
procedures set forth in subpart 819.70, without seeking a waiver from
FPI, in accordance with 38 U.S.C. 8128, Small business concerns owned
and controlled by veterans: Contracting priority.
PART 809--CONTRACTOR QUALIFICATIONS
0
8. The authority citation for part 809 is revised to read as follows:
Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d);
and 48 CFR 1.301-1.304.
0
9. Add section 809.406-2 to read as follows:
809.406-2 Cause for debarment.
(a) Misrepresentation of VOSB or SDVOSB eligibility may result in
action taken by VA officials to debar the business concern for a period
not to exceed 5 years from contracting with VA as a prime contractor or
a subcontractor.
(b) Any deliberate violation of the limitation on subcontracting
clause requirements for acquisitions under subpart 819.70 may result in
action taken by VA officials to debar any service-disabled veteran-
owned, veteran-owned small business concern or any large business
concern involved in such action.
0
10-12. Part 810 is added to read as follows:
PART 810--MARKET RESEARCH
810.001 Market research policy.
810.002 Market research procedures.
Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d);
and 48 CFR 1.301-1.304.
810.001 Market research policy.
When conducting market research, VA contracting teams shall use the
VIP database, at http://www.VetBiz.gov, in addition to other sources of
information.
810.002 Market research procedures.
Contracting officers shall record VIP queries in the solicitation
file by printing the results of the search(s) along with specific query
used to generate the search(s).
PART 813--SIMPLIFIED ACQUISITION PROCEDURES
0
13. The authority citation for part 813 is revised to read as follows:
Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d);
and 48 CFR 1.301-1.304.
0
14. Revise section 813.106 to read as follows:
813.106 Soliciting competition, evaluation of quotations or offers,
award and documentation.
(a) Contracting officers may use other than competitive procedures
to enter into a contract with a SDVOSB or VOSB when the amount exceeds
the micro-purchase threshold up to $5 million.
(b) Requirements exceeding $25,000 must be synopsized in accordance
with FAR Part 5.
0
15. Add subpart 813.2, consisting of section 813.202, to read as
follows:
Subpart 813.2--Actions at or Below the Micro-Purchase Threshold
813.202 Purchase guidelines.
Open market micro-purchases shall be equitably distributed among
all qualified SDVOSBs or VOSBs, respectively, to the maximum extent
practicable.
[[Page 64631]]
PART 815--CONTRACTING BY NEGOTIATION
0
16. The authority citation for part 815 is revised to read as follows:
Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c); and 48 CFR
1.301-1.304.
0
17. Add section 815.304 to read as follows:
815.304 Evaluation factors and significant subfactors.
(a) In an effort to assist SDVOSBs and VOSBs, contracting officers
shall include evaluation factors providing additional consideration to
such offerors in competitively negotiated solicitations that are not
set aside for SDVOSBs or VOSBs.
(b) Additional consideration shall also be given to any offeror,
regardless of size status, that proposes to subcontract with SDVOSBs or
VOSBs.
0
18. Add section 815.304-70 to read as follows:
815.304-70 Evaluation factor commitments.
(a) VA contracting officers shall:
(1) Include provisions in negotiated solicitations giving
preference to offers received from VOSBs and additional preference to
offers received from SDVOSBs;
(2) Use past performance in meeting SDVOSB subcontracting goals as
a non-price evaluation factor in selecting offers for award;
(3) Use the proposed inclusion of SDVOSBs or VOSBs as
subcontractors as an evaluation factor when competitively negotiating
the award of contracts or task or delivery orders; and
(4) Use participation in VA's Mentor-Prot[eacute]g[eacute] Program
as an evaluation factor when competitively negotiating the award of
contracts or task or delivery orders.
(b) If an offeror proposes to use an SDVOSB or VOSB subcontractor
in accordance with 852.215-70, Service-Disabled Veteran-Owned and
Veteran-Owned Small Business Evaluation Factors, the contracting
officer shall ensure that the offeror, if awarded the contract,
actually does use the proposed subcontractor or another SDVOSB or VOSB
subcontractor for that subcontract or for work of similar value.
0
19. Add section 815.304-71 to read as follows:
815.304-71 Solicitation provision and clause
(a) The contracting officer shall insert the provision at 852.215-
70, Service-Disabled Veteran-Owned and Veteran-Owned Small Business
Evaluation Factors, in competitively negotiated solicitations that are
not set aside for SDVOSBs or VOSBs.
(b) The contracting officer shall insert the clause at 852.215-71,
Evaluation Factor Commitments, in solicitations and contracts that
include VAAR clause 852.215-70, Service-Disabled Veteran-Owned and
Veteran-Owned Small Business Evaluation Factors.
PART 817--SPECIAL CONTRACTING METHODS
0
20. The authority citation for part 817 is added to read as follows:
Authority: 38 U.S.C. 8127.
0
21. Add subpart 817.5 consisting of section 817.502 to read as follows:
Subpart 817.5--Interagency Acquisitions Under the Economy Act
817.502 General
(a) After December 31, 2008, any contract, memorandum of
understanding, agreement, or other arrangement with any governmental
entity to acquire goods and services, shall include in such contract,
memorandum, agreement, or other arrangement a requirement that the
entity will comply, to the maximum extent feasible, with the provisions
of 38 U.S.C. 8127 and 8128, as implemented by the VA Acquisition
Regulation, in acquiring such goods or services.
(b) Nothing in this subsection shall be construed to supersede or
otherwise affect the authorities provided under the Small Business Act
(15 U.S.C. 631 et seq.).
PART 819--SMALL BUSINESS PROGRAMS
0
22. The authority citation for part 819 is revised to read as follows:
Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 48
CFR 1.301-1.304; and 15 U.S.C. 637(d)(4)(E).
0
23. Revise section 819.201 to read as follows:
819.201 General policy
The Secretary shall establish goals for each fiscal year for
participation in Department contracts by SDVOSBs and VOSBs. In order to
establish contracting priority for veteran-owned and controlled small
businesses in accordance with 38 U.S.C. 8128, the Secretary may
decrease other status-specific small business goals set forth by
section 15(g)(1) of the Small Business Act (15 U.S.C. 644(g)(1)) upon
consultation with the Administrator of the U.S. Small Business
Administration (SBA).
0
24. Add subpart 819.3 consisting of section 819.307 to read as follows:
Subpart 819.3--Determination of Small Business Status for Small
Business Programs
819.307 SDVOSB/VOSB Small Business Status Protests
(a) All protests relating to whether an eligible VOSB or SDVOSB is
a ``small'' business for the purposes of any Federal program are
subject to 13 CFR Part 121 and must be filed in accordance with that
part. For acquisitions under the authority of subpart 819.70, upon
execution of an interagency agreement between VA and the SBA pursuant
to the Economy Act (31 U.S.C. 1535), regarding service-disabled
veteran-owned or veteran-owned small business status, contracting
officers shall forward all status protests to the Director, Office of
Government Contracting (D/GC), U.S. Small Business Administration
(ATTN: VAAR Part 819 SDVOSB/VOSB Small Business Status Protests), 409
3rd Street, SW., Washington, DC 20416, for disposition. Except for
ownership and control issues to be determined in accordance with 38 CFR
Part 74, protests shall follow the procedures set forth in FAR 19.307
for both service-disabled veteran-owned and veteran-owned small
business status. However, contracting officers shall be solely
responsible for determining VOSB and SDVOSB compliance with VAAR
804.1102.
(b) If SBA sustains a service-disabled veteran-owned or veteran-
owned small business status protest and the contract has already been
awarded, then the contracting officer cannot count the award as an
award to a VOSB or SDVOSB and the concern cannot submit another offer
as a VOSB or SDVOSB on a future VOSB or SDVOSB procurement under this
part, as applicable, unless it demonstrates to VA that it has overcome
the reasons for the determination of ineligibility.
(c) Until execution of the interagency agreement referenced in
subsection (a), for acquisitions under the authority of subpart 819.70,
the Executive Director, VA Office of Small and Disadvantaged Business
Utilization (OSDBU) shall decide all protests on service-disabled
veteran-owned or veteran-owned small business status whether raised by
the contracting officer or an offeror. Ownership and control shall be
determined in accordance with 38 CFR Part 74. The Executive Director's
decision shall be final.
(1) All protests must be in writing and must state all specific
grounds for the protest. Assertions that a protested
[[Page 64632]]
concern is not a service-disabled veteran-owned or veteran-owned small
business concern, without setting forth specific facts or allegations,
are insufficient. An offeror must submit its protest to the contracting
officer. An offeror must deliver their protest in person, by facsimile,
by express delivery service, or by the U.S. Postal Service within the
applicable time period to the contracting officer.
(2) An offeror's protest must be received by close of business on
the fifth business day after bid opening (in sealed bid acquisitions)
or by close of business on the fifth business day after notification by
the contracting officer of the apparently successful offeror (in
negotiated acquisitions). Any protest received after these time limits
is untimely. Any protest received prior to bid opening or notification
of intended award, whichever applies, is premature and shall be
returned to the protester.
(3) If the Executive Director sustains a service-disabled veteran-
owned or veteran-owned small business status protest and the contract
has already been awarded, then the contracting officer cannot count the
award as an award to a VOSB or SDVOSB and the concern cannot submit
another offer as a VOSB or SDVOSB on a future VOSB or SDVOSB
procurement under this part, as applicable, unless it demonstrates to
VA that it has overcome the reasons for the determination of
ineligibility.
0
25-27. Add subpart 819.7 consisting of sections 819.704, 819.705, and
819.709 to read as follows:
Subpart 819.7--The Small Business Subcontracting Program
819.704 Subcontracting plan requirements.
(a) The contracting officer shall ensure that any subcontracting
plans submitted by offerors include a goal that is at least
commensurate with the annual VA SDVOSB prime contracting goal for the
total value of planned subcontracts.
(b) The contracting officer shall ensure that any subcontracting
plans submitted by offerors include a goal that is at least
commensurate with the annual VA VOSB prime contracting goal for the
total value of all planned subcontracts.
(c) VA's OSDBU shall review all prime contractor's subcontracting
plan achievement reports to ensure that, in the case of a subcontract
that is counted for purposes of meeting a goal in accordance with
subparagraphs (a) and (b) of this section, the subcontract was actually
awarded to a business concern that is eligible to be counted toward
meeting the goal, as provided in 804.1102.
819.705 Appeal of Contracting Officer Decisions.
(a) Acquisitions not exceeding the simplified acquisition threshold
(SAT) and 819.7007 and 819.7008 are excluded from this section.
(b) When an interested party intends to appeal a contracting
officer's decision to not use the set-aside authority contained in
subpart 819.70, the party shall notify the contracting officer, in
writing, of its intent to challenge the decision. The contracting
officer has 5 working days to reply to the challenge by either revising
the strategy or indicating the rationale for not setting-aside the
requirement. Upon receipt of the decision, the interested party may
appeal to the Head of the Contracting Activity (HCA). Such appeal shall
be filed within 5 working days of receipt of the contracting officer's
decision. The HCA has 5 working days to respond to the appeal. The
contracting officer shall suspend action on the acquisition unless the
HCA makes a written determination that urgent circumstances exist which
would significantly affect the interests of the government. The
decision of the HCA shall be final.
(c) Prime contractors submitting businesses declared ineligible for
credit in SDVOSB and/or VOSB subcontracting plans may appeal to the
Executive Director, Office of Small and Disadvantaged Business
Utilization and Center for Veterans Enterprise (00VE), U.S. Department
of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420,
within 5 working days of receipt of information declaring their
subcontractor ineligible. The Executive Director shall have 5 working
days to respond. The decision of the Executive Director may be appealed
to the Senior Procurement Executive (SPE) within 5 working days. The
SPE shall have 15 working days to respond and that decision shall be
final.
819.709 Contract clause.
The contracting officer shall insert VAAR clause 852.219-9, Small
Business Subcontracting Plan Minimum Requirements, in solicitations and
contracts that include FAR clause 52.219-9, Small Business
Subcontracting Plan.
0
28. Revise subpart 819.70 to read as follows:
Subpart 819.70--Service-Disabled Veteran-Owned and Veteran-Owned
Small Business Acquisition Program
Sec.
819.7001 General.
819.7002 Applicability.
819.7003 Eligibility.
819.7004 Contracting Order of Priority.
819.7005 Service-disabled veteran-owned small business set-aside
procedures.
819.7006 Veteran-owned small business set-aside procedures.
819.7007. Sole source awards to service-disabled veteran-owned small
business concerns.
819.7008 Sole source awards to veteran-owned small business
concerns.
819.7009 Contract clauses.
819.7001 General.
(a) Sections 502 and 503 of the Veterans Benefits, Health Care, and
Information Technology Act of 2006 (38 U.S.C. 8127-8128), created an
acquisition program for small business concerns owned and controlled by
service-disabled veterans and those owned and controlled by veterans
for VA.
(b) The purpose of the program is to provide contracting assistance
to SDVOSBs and VOSBs.
819.7002 Applicability.
This subpart applies to VA contracting activities and to its prime
contractors. Also, this subpart applies to any government entity that
has a contract, memorandum of understanding, agreement, or other
arrangement with VA to acquire goods and services for VA in accordance
with 817.502.
819.7003 Eligibility.
(a) Eligibility of SDVOSBs and VOSBs continues to be governed by
the Small Business Administration regulations, 13 CFR subparts 125.8
through 125.13, as well as the FAR, except where expressly directed
otherwise by the VAAR, and 38 CFR verification regulations for SDVOSBs
and VOSBs.
(b) At the time of submission of offer, the offeror must represent
to the contracting officer that it is a--
(1) SDVOSB concern or VOSB concern;
(2) Small business concern under the North American Industry
Classification System (NAICS) code assigned to the acquisition; and
(3) Verified for eligibility in the VIP database.
(c) A joint venture may be considered an SDVOSB or VOSB concern if
(1) At least one member of the joint venture is an SDVOSB or VOSB
concern, and makes the representations in paragraph (b) of this
section;
[[Page 64633]]
(2) Each other concern is small under the size standard
corresponding to the NAICS code assigned to the procurement;
(3) The joint venture meets the requirements of paragraph 7 of the
size standard explanation of affiliates in FAR 19.101; and
(4) The joint venture meets the requirements of 13 CFR 125.15(b),
modified to include veteran-owned small businesses where this CFR
section refers to SDVOSB concerns.
(d) Any SDVOSB or VOSB concern (nonmanufacturer) must meet the
requirements in FAR 19.102(f) to receive a benefit under this program.
819.7004 Contracting Order of Priority.
In determining the acquisition strategy applicable to an
acquisition, the contracting officer shall consider, in the following
order of priority, contracting preferences that ensure contracts will
be awarded:
(a) To SDVOSBs;
(b) To VOSB, including but not limited to SDVOSBs;
(c) Pursuant to--
(1) Section 8(a) of the Small Business Act (15 U.S.C. 637(a)); or
(2) The Historically-Underutilized Business Zone (HUBZone) Program
(15 U.S.C. 657a); and
(d) Pursuant to any other small business contracting preference.
819.7005 Service-disabled veteran-owned small business set-aside
procedures.
(a) The contracting officer shall consider SDVOSB set-asides before
considering VOSB set-asides. Except as authorized by 813.106, 819.7007
and 819.7008, the contracting officer shall set-aside an acquisition
for competition restricted to SDVOSB concerns upon a reasonable
expectation that,
(1) Offers will be received from two or more eligible SDVOSB
concerns; and
(2) Award will be made at a fair and reasonable price.
(b) When conducting SDVOSB set-asides, the contracting officer
shall ensure:
(1) Eligibility is extended to businesses owned and operated by
surviving spouses; and
(2) Businesses are registered and verified as eligible in the VIP
database prior to making an award.
(c) If the contracting officer receives only one acceptable offer
at a fair and reasonable price from an eligible SDVOSB concern in
response to a SDVOSB set-aside, the contracting officer should make an
award to that concern. If the contracting officer receives no
acceptable offers from eligible SDVOSB concerns, the set-aside shall be
withdrawn and the requirement, if still valid, set aside for VOSB
competition, if appropriate.
819.7006 Veteran-owned small business set-aside procedures.
(a) The contracting officer shall consider SDVOSB set-asides before
considering VOSB set-asides. Except as authorized by 813.106, 819.7007
and 819.7008, the contracting officer shall set aside an acquisition
for competition restricted to VOSB concerns upon a reasonable
expectation that:
(1) Offers will be received from two or more eligible VOSB
concerns; and
(2) Award will be made at a fair and reasonable price.
(b) If the contracting officer receives only one acceptable offer
at a fair and reasonable price from an eligible VOSB concern in
response to a VOSB set-aside, the contracting officer should make an
award to that concern. If the contracting officer receives no
acceptable offers from eligible VOSB concerns, the set-aside shall be
withdrawn and the requirement, if still valid, set aside for other
small business programs, as appropriate.
(c) When conducting VOSB set-asides, the contracting officer shall
ensure the business is registered and verified as eligible in the VIP
database prior to making an award.
819.7007 Sole source awards to service-disabled veteran-owned small
business concerns.
(a) A contracting officer may award contracts to SDVOSB concerns on
a sole source basis provided:
(1) The anticipated award price of the contract (including options)
will not exceed $5 million;
(2) The requirement is synopsized in accordance with FAR part 5;
(3) The SDVOSB concern has been determined to be a responsible
contractor with respect to performance; and
(4) Award can be made at a fair and reasonable price.
(b) The contracting officer's determination whether to make a sole
source award is a business decision wholly within the discretion of the
contracting officer. A determination that only one SDVOSB concern is
available to meet the requirement is not required.
(c) When conducting a SDVOSB sole source acquisition, the
contracting officer shall ensure businesses are registered and verified
as eligible in the VIP database prior to making an award.
819.7008 Sole source awards to veteran-owned small business concerns.
(a) A contracting officer may award contracts to VOSB concerns on a
sole source basis provided:
(1) The anticipated award price of the contract (including options)
will not exceed $5 million;
(2) The requirement is synopsized in accordance with FAR part 5;
(3) The VOSB concern has been determined to be a responsible
contractor with respect to performance;
(4) Award can be made at a fair and reasonable price; and
(5) No responsible SDVOSB concern has been identified.
(b) The contracting officer's determination whether to make a sole
source award is a business decision wholly within the discretion of the
contracting officer. A determination that only one VOSB concern is
available to meet the requirement is not required.
(c) When conducting a VOSB sole source acquisition, the contracting
officer shall ensure businesses are registered and verified as eligible
in the VIP database prior to making an award.
819.7009 Contract clauses.
The contracting officer shall insert VAAR clause 852.219-10, Notice
of Total Service-Disabled Veteran-Owned Small Business Set-Aside or
852.219-11, Notice of Total Veteran-Owned Small Business Set-Aside in
solicitations and contracts for acquisitions under this subpart.
0
29. Add subpart 819.71 to read as follows:
Subpart 819.71--VA Mentor-Prot[eacute]g[eacute] Program
Sec.
819.7101 Purpose.
819.7102 Definitions.
819.7103 Non-affiliation.
819.7104 General policy.
819.7105 Incentives for mentor participation.
819.7106 Eligibility of Mentor and Prot[eacute]g[eacute] firms.
819.7107 Selection of Prot[eacute]g[eacute] firms.
819.7108 Application process.
819.7109 VA review of application.
819.7110 Developmental assistance.
819.7111 Obligations under the Mentor-Prot[eacute]g[eacute] Program.
819.7112 Internal controls.
819.7113 Reports.
819.7114 Measurement of program success.
819.7115 Solicitation provisions.
Authority: 38 U.S.C. 501.
Subpart 819.71--VA Mentor-Prot[eacute]g[eacute] Program
819.7101 Purpose.
The VA Mentor-Prot[eacute]g[eacute] Program is designed to assist
service-disabled
[[Page 64634]]
veteran-owned small businesses (SDVOSBs) and veteran-owned small
businesses (VOSBs) in enhancing their capabilities to perform contracts
and subcontracts for VA. The Mentor-Prot[eacute]g[eacute] Program is
also designed to improve the performance of VA contractors and
subcontractors by providing developmental assistance to
prot[eacute]g[eacute] entities, fostering the establishment of long-
term business relationships between SDVOSBs, VOSBs and prime
contractors, and increasing the overall number of SDVOSBs and VOSBs
that receive VA contract and subcontract awards. A firm's status as a
prot[eacute]g[eacute] under a VA contract shall not have an effect on
the firm's eligibility to seek other prime contracts or subcontracts.
819.7102 Definitions.
(a) A Mentor is a contractor that elects to promote and develop
SDVOSBs and/or VOSBs by providing developmental assistance designed to
enhance the business success of the prot[eacute]g[eacute]. A mentor may
be a large or small business concern.
(b) OSDBU is the Office of Small and Disadvantaged Business
Utilization. This is the VA office responsible for administering,
implementing and coordinating the Department's small business programs,
including the Mentor-Prot[eacute]g[eacute] Program.
(c) Program refers to the VA Mentor-Prot[eacute]g[eacute] Program
as described in this Subpart.
(d) Prot[eacute]g[eacute] means a SDVOSB or VOSB, as defined in
802.101, which meets federal small business size standards in its
primary NAICS code and which is the recipient of developmental
assistance pursuant to a Mentor-Prot[eacute]g[eacute] agreement.
819.7103 Non-affiliation.
A Prot[eacute]g[eacute] firm will not be considered an affiliate of
a mentor firm solely on the basis that the prot[eacute]g[eacute] firm
is receiving developmental assistance from the mentor firm under VA's
Mentor-Prot[eacute]g[eacute] Program. The determination of affiliation
is a function of the SBA.
819.7104 General policy.
(a) To be eligible, mentors and prot[eacute]g[eacute]s must not be
listed on the Excluded Parties List System, located at http://www.epls.gov. Mentors will provide appropriate developmental assistance
to enhance the capabilities of prot[eacute]g[eacute]s to perform as
prime contractors and/or subcontractors.
(b) VA reserves the right to limit the number of participants in
the program in order to ensure its effective management of the Mentor-
Prot[eacute]g[eacute] Program.
819.7105 Incentives for prime contractor participation.
(a) Under the Small Business Act, 15 U.S.C. 637(d)(4)(e), VA is
authorized to provide appropriate incentives to encourage
subcontracting opportunities for small business consistent with the
efficient and economical performance of the contract. This authority is
limited to negotiated procurements. FAR 19.202-1 provides additional
guidance.
(b) Costs incurred by a mentor to provide developmental assistance,
as described in 819.7110 to fulfill the terms of their agreement(s)
with a prot[eacute]g[eacute] firm(s), are not reimbursable as a direct
cost under a VA contract. If VA is the mentor's responsible audit
agency under FAR 42.703-1, VA will consider these costs in determining
indirect cost rates. If VA is not the responsible audit agency, mentors
are encouraged to enter into an advance agreement with their
responsible audit agency on the treatment of such costs when
determining indirect cost rates.
(c) In addition to subparagraph (b) of this section, contracting
officers shall give mentors evaluation credit under 852.219-52,
Evaluation Factor for Participation in the VA Mentor-
Prot[eacute]g[eacute] Program, considerations for subcontracts awarded
pursuant to their Mentor-Prot[eacute]g[eacute] Agreements and their
subcontracting plans. Therefore:
(1) Contracting officers may evaluate subcontracting plans
containing mentor-prot[eacute]g[eacute] arrangements more favorably
than subcontracting plans without Mentor-Prot[eacute]g[eacute]
Agreements.
(2) Contracting officers may assess the prime contractor's
compliance with the subcontracting plans submitted in previous
contracts as a factor in evaluating past performance under FAR
15.305(a)(2)(v) and determining contractor responsibility 19.705-
5(a)(1).
(d) OSDBU Mentoring Award. A non-monetary award will be presented
annually to the mentoring firm providing the most effective
developmental support to a prot[eacute]g[eacute]. The Mentor-
Prot[eacute]g[eacute] Program Manager will recommend an award winner to
the OSDBU Director.
(e) OSDBU Mentor-Prot[eacute]g[eacute] Annual Conference. At the
conclusion of each year in the Mentor-Prot[eacute]g[eacute] Program,
mentor firms will be invited to brief contracting officers, program
leaders, office directors and other guests on program progress.
819.7106 Eligibility of Mentor and Prot[eacute]g[eacute] firms.
Eligible business entities approved as mentors may enter into
agreements (hereafter referred to as ``Mentor-Prot[eacute]g[eacute]
Agreement'' or ``Agreement'' and explained in 819.7108) with eligible
prot[eacute]g[eacute]s. Mentors provide appropriate developmental
assistance to enhance the capabilities of prot[eacute]g[eacute]s to
perform as contractors and/or subcontractors. Eligible small business
entities capable of providing developmental assistance may be approved
as mentors. Prot[eacute]g[eacute]s may participate in the program in
pursuit of a prime contract or as subcontractors under the mentor's
prime contract with VA, but are not required to be a subcontractor to a
VA prime contractor or be a VA prime contractor.
(a) Eligibility. A Mentor:
(1) May be either a large or small business entity and either a
prime contractor or subcontractor;
(2) Must be able to provide developmental assistance that will
enhance the ability of Prot[eacute]g[eacute]s to perform as prime
contractors or subcontractors; and
(3) Will be encouraged to enter into arrangements with entities
with which it has established business relationships.
(b) Eligibility. A Prot[eacute]g[eacute]:
(1) Must be a SDVOSB or VOSB as defined in 802.101;
(2) Must meet the size standard corresponding to the NAICS code
that the Mentor prime contractor believes best describes the product or
service being acquired by the subcontract; and
(c) Prot[eacute]g[eacute]s may have multiple mentors.
Prot[eacute]g[eacute]s participating in mentor-prot[eacute]g[eacute]
programs in addition to VA's Program should maintain a system for
preparing separate reports of mentoring activity so that results of
VA's Program can be reported separately from any other agency program.
(d) A prot[eacute]g[eacute] firm shall self-represent to a mentor
firm that it meets the requirements set forth in paragraph (b) of this
section. Mentors shall confirm eligibility by documenting the verified
status of the prot[eacute]g[eacute] in the VetBiz.gov VIP database.
Prot[eacute]g[eacute]s must maintain verified status throughout the
term of the Mentor-Prot[eacute]g[eacute] Agreement. Failure to do so
shall result in cancellation of the Agreement.
819.7107 Selection of Prot[eacute]g[eacute] firms.
(a) Mentor firms will be solely responsible for selecting
prot[eacute]g[eacute] firms. Mentors are encouraged to select from a
broad base of SDVOSB or VOSB firms whose core competencies support VA's
mission; and choose SDVOSB and/or VOSB prot[eacute]g[eacute]s in
addition to firms with whom they have established business
relationships.
[[Page 64635]]
(b) Mentors may have multiple prot[eacute]g[eacute]s. However, to
preserve the integrity of the Program and assure the quality of
developmental assistance provided to prot[eacute]g[eacute]s, VA
reserves the right to limit the total number of prot[eacute]g[eacute]s
participating under each mentor firm for the Mentor-
Prot[eacute]g[eacute] Program.
(c) The selection of prot[eacute]g[eacute] firms by mentor firms
may not be protested, except that any protest regarding the size or
eligibility status of an entity selected by a mentor shall be handled
in accordance with the FAR and SBA regulations.
819.7108 Application process.
(a) Firms interested in becoming approved mentor-
prot[eacute]g[eacute] participants must submit a joint written VA
Mentor-Prot[eacute]g[eacute] Agreement to the VA OSDBU for review and
approval. The proposed Mentor-Prot[eacute]g[eacute] Agreement will be
evaluated on the extent to which the mentor plans to provide
developmental assistance. Evaluations will consider the nature and
extent of technical and managerial support as well as any proposed
financial assistance in the form of equity investment, loans, joint-
venture, and traditional subcontracting support.
(b) The Mentor-Prot[eacute]g[eacute] Agreement must contain:
(1) Names, addresses, phone numbers, and e-mail addresses (if
available) of the mentor and prot[eacute]g[eacute] firm(s) and a point
of contact for both mentor and prot[eacute]g[eacute] who will oversee
the agreement;
(2) A statement from the prot[eacute]g[eacute] firm that the firm
is currently eligible as a SDVOSB or VOSB to participate in VA's
Mentor-Prot[eacute]g[eacute] Program;
(3) A description of the mentor's ability to provide developmental
assistance to the prot[eacute]g[eacute] and the type of developmental
assistance that will be provided, to include a description of the types
and dollar amounts of subcontract work, if any, that may be awarded to
the prot[eacute]g[eacute] firm;
(4) Duration of the Agreement, including rights and
responsibilities of both parties (mentor and prot[eacute]g[eacute]),
with bi-annual reviews;
(5) Termination procedures, including procedures for the parties'
voluntary withdrawal from the Program. The Agreement shall require the
mentor or the prot[eacute]g[eacute] to notify the other firm and VA
OSDBU in writing at least 30 days in advance of its intent to
voluntarily terminate the Agreement;
(6) A schedule with milestones for providing assistance;
(7) Criteria for evaluation of the prot[eacute]g[eacute]'s
developmental success;
(8) A plan addressing how the mentor will increase the quality of
the prot[eacute]g[eacute] firm's technical capabilities and contracting
and subcontracting opportunities;
(9) An estimate of the total cost of the planned mentoring
assistance to be provided to the Prot[eacute]g[eacute];
(10) An agreement by both parties to comply with the reporting
requirements of 819.7113;
(11) A plan for accomplishing unfinished work should the Agreement
be voluntarily cancelled;
(12) Other terms and conditions, as appropriate; and
(13) Signatures and date(s).
(c) The Agreement defines the relationship between the mentor and
the prot[eacute]g[eacute] firms only. The Agreement does not create any
privity of contract between the mentor and VA or the
prot[eacute]g[eacute] and VA.
819.7109 VA review of application.
(a) VA OSDBU will review the information to establish the mentor
and prot[eacute]g[eacute] eligibility and to ensure that the
information that is in VAAR 819.7108 is included. If the application
relates to a specific contract, then OSDBU will consult with the
responsible contracting officer on the adequacy of the proposed
Agreement, as appropriate. OSDBU will complete its review no later than
30 calendar days after receipt of the application or after consultation
with the contracting officer, whichever is later. There is no charge to
apply for the Mentor-Prot[eacute]g[eacute] Program.
(b) After OSDBU completes its review and provides written approval,
the mentor may execute the Agreement and implement the developmental
assistance as provided under the Agreement. OSDBU will post a copy of
the Mentor-Prot[eacute]g[eacute] Agreements to a VA Web site to be
accessible to VA contracting officers for review for any VA contracts
affected by the Agreement.
(c) If the application is disapproved, the mentor may provide
additional information for reconsideration. OSDBU will complete review
of any supplemental material no later than 30 days after its receipt.
Upon finding deficiencies that VA considers correctable, OSDBU will
notify the mentor and prot[eacute]g[eacute] and request correction of
deficiencies to be provided within 15 days.
819.7110 Developmental assistance.
The forms of developmental assistance a mentor can provide to a
prot[eacute]g[eacute] include, but are not limited to, the following:
(a) Guidance relating to--
(1) Financial management;
(2) Organizational management;
(3) Overall business management/planning;
(4) Business development; and
(5) Technical assistance.
(b) Loans.
(c) Rent-free use of facilities and/or equipment.
(d) Property.
(e) Temporary assignment of personnel to a Prot[eacute]g[eacute]
for training.
(f) Any other types of permissible, mutually beneficial assistance.
819.7111 Obligations under the Mentor-Prot[eacute]g[eacute] Program.
(a) A mentor or prot[eacute]g[eacute] may voluntarily withdraw from
the Program. However, in no event shall such withdrawal impact the
contractual requirements under any prime contract with VA.
(b) Mentors and prot[eacute]g[eacute]s shall submit reports to VA
OSDBU in accordance with 819.7113.
819.7112 Internal controls.
(a) OSDBU will oversee the Program and will work cooperatively with
relevant contracting officers to achieve Program objectives. OSDBU will
establish internal controls as checks and balances applicable to the
Program. These controls will include:
(1) Reviewing and evaluating mentor applications for validity of
the provided information;
(2) Reviewing bi-annual progress reports submitted by mentors and
prot[eacute]g[eacute]s on prot[eacute]g[eacute] development to measure
prot[eacute]g[eacute] progress against the plan submitted in the
approved Agreement;
(3) Reviewing and evaluating financial reports and invoices
submitted by the mentor to verify that VA is not charged by the mentor
for providing developmental assistance to the prot[eacute]g[eacute];
and
(4) Limiting the number of participants in the Mentor-
Prot[eacute]g[eacute] Program within a reporting period, in order to
insure the effective management of the Program.
(b) VA may rescind approval of an existing Mentor-
Prot[eacute]g[eacute] Agreement if it determines that such action is in
VA's best interest. The rescission shall be in writing and sent to the
mentor and prot[eacute]g[eacute] after approval by the OSDBU Director.
Rescission of an Agreement does not change the terms of any subcontract
between the mentor and the prot[eacute]g[eacute].
819.7113 Reports.
(a) Mentor and prot[eacute]g[eacute] entities shall submit to VA's
OSDBU bi-annual reports on progress under the Mentor-
[[Page 64636]]
Prot[eacute]g[eacute] Agreement. VA will evaluate reports by
considering the following:
(1) Specific actions taken by the mentor during the evaluation
period to increase the participation of their prot[eacute]g[eacute](s)
as suppliers to VA, other government agencies and to commercial
entities;
(2) Specific actions taken by the mentor during the evaluation
period to develop technical and administrative expertise of a
prot[eacute]g[eacute] as defined in the Agreement;
(3) The extent to which the prot[eacute]g[eacute] has met the
developmental objectives in the Agreement;
(4) The extent to which the mentor's participation in the Mentor-
Prot[eacute]g[eacute] Program impacted the prot[eacute]g[eacute]'(s)
ability to receive contract(s) and subcontract(s) from private firms
and federal agencies other than VA; and, if deemed necessary;
(5) Input from the prot[eacute]g[eacute] on the nature of the
developmental assistance provided by the mentor.
(b) OSDBU will submit annual reports to the relevant contracting
officer regarding participating prime contractor(s)' performance in the
Program.
(c) In addition to the written progress report in paragraph (a) of
this section, at the mid-term point in the Mentor-Prot[eacute]g[eacute]
Agreement, the mentor and the prot[eacute]g[eacute] shall formally
brief the VA OSDBU regarding program accomplishments as pertains to the
approved agreement.
(d) Mentor and prot[eacute]g[eacute] firms shall submit an
evaluation to OSDBU at the conclusion of the mutually agreed upon
Program period, the conclusion of the contract, or the voluntary
withdrawal by either party from the Program, whichever comes first.
819.7114 Measurement of program success.
The overall success of the VA Mentor-Prot[eacute]g[eacute] Program
encompassing all participating mentors and prot[eacute]g[eacute]s will
be measured by the extent to which it results in:
(a) An increase in the quality of the technical capabilities of the
prot[eacute]g[eacute] firm.
(b) An increase in the number and dollar value of contract and
subcontract awards to prot[eacute]g[eacute] firms since the time of
their entry into the program attributable to the mentor-
prot[eacute]g[eacute] relationship (under VA contracts, contracts
awarded by other Federal agencies and under commercial contracts.)
819.7115 Solicitation provisions.
(a) Insert 852.219-71, VA Mentor-Prot[eacute]g[eacute] Program, in
solicitations that include FAR clause 52.219-9, Small Business
Subcontracting Plan.
(b) Insert 852.219-72, Evaluation Factor for Participation in the
VA Mentor-Prot[eacute]g[eacute] Program, in solicitations that include
an evaluation factor for participation in VA's Mentor-
Prot[eacute]g[eacute] Program in accordance with 819.7105 and that also
include FAR clause 52.219-9, Small Business Subcontracting Plan.
PART 828--BONDS AND INSURANCE
0
30. The authority citation for part 828 is revised to read as follows:
Authority: 38 U.S.C. 501, 8127, 8128 and 8151-8153; 40 U.S.C.
121(c); and 48 CFR 1.301-1.304.
0
31. Add section 828.106-71 to read as follows:
828.106-71 Assisting service-disabled veteran-owned and veteran-owned
small businesses in obtaining bonding.
VA prime contractors are encouraged to assist SDVOSB concerns and
VOSB concerns in obtaining subcontractor performance and payment bonds.
Mentors are especially encouraged to assist their
prot[eacute]g[eacute]s in obtaining bid, payment, and performance bonds
as prime contractors and bonds as subcontractors when bonds are
required.
0
32. Add section 828.106-72 to read as follows:
828.106-72 Contract provision.
Insert 852.228-72, Assisting Service-Disabled Veteran-Owned and
Veteran-Owned Small Businesses in Obtaining Bonds, in solicitations
that include FAR clause 52.228-1, Bid Guarantee.
PART 852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
33. The authority citation for part 852 is revised to read as follows:
Authority: 38 U.S.C. 501, 8127, 8128, and 8151-8153; 40 U.S.C.
121(c); and 48 CFR 1.301-1.304.
0
34. Add section 852.215-70 to read as follows:
852.215-70 Service-Disabled Veteran-Owned and Veteran-Owned Small
Business Evaluation Factors.
As prescribed in 815.304-71(a), insert the following clause:
Service-Disabled Veteran-Owned and Veteran-Owned Small Business
Evaluation Factors
(DEC2009)
(a) In an effort to achieve socioeconomic small business goals,
depending on the evaluation factors included in the solicitation, VA
shall evaluate offerors based on their service-disabled veteran-
owned or veteran-owned small business status and their proposed use
of eligible service-disabled veteran-owned small businesses and
veteran-owned small businesses as subcontractors.
(b) Eligible service-disabled veteran-owned offerors will
receive full credit, and offerors qualifying as veteran-owned small
businesses will receive partial credit for the Service-Disabled
Veteran-Owned and Veteran-owned Small Business Status evaluation
factor. To receive credit, an offeror must be registered and
verified in Vendor Information Pages (VIP) database. (http://
www.VetBiz.gov).
(c) Non-veteran offerors proposing to use service-disabled
veteran-owned small businesses or veteran-owned small businesses as
subcontractors will receive some consideration under this evaluation
factor. Offerors must state in their proposals the names of the
SDVOSBs and VOSBs with whom they intend to subcontract and provide a
brief description of the proposed subcontracts and the approximate
dollar values of the proposed subcontracts. In addition, the
proposed subcontractors must be registered and verified in the
VetBiz.gov VIP database (http://www.vetbiz.gov).
(End of Clause)
0
35. Add section 852.215-71 to read as follows:
852.215-71 Evaluation Factor Commitments.
As prescribed in 815.304-71(b), insert the following clause:
Evaluation Factor Commitments
(Dec2009)
The offeror agrees, if awarded a contract, to use the service-
disabled veteran-owned small businesses or veteran-owned small
businesses proposed as subcontractors in accordance with 852.215-70,
Service-Disabled Veteran-Owned and Veteran-Owned Small Business
Evaluation Factors, or to substitute one or more service-disabled
veteran-owned small businesses or veteran-owned small businesses for
subcontract work of the same or similar value.
(End of Clause)
0
36. Add section 852.219-9 to read as follows:
852.219-9 VA Small Business Subcontracting Plan Minimum Requirements.
As prescribed in subpart 819.709, insert the following clause:
VA Small Business Subcontracting Plan Minimum Requirements
(DEC2009)
(a) This clause does not apply to small business concerns.
(b) If the offeror is required to submit an individual
subcontracting plan, the minimum goals for award of subcontracts to
service-disabled veteran-owned small business concerns and veteran-
owned small business concerns shall be at least
[[Page 64637]]
commensurate with the Department's annual service-disabled veteran-
owned small business and veteran-owned small business prime
contracting goals for the total dollars planned to be subcontracted.
(c) For a commercial plan, the minimum goals for award of
subcontracts to service-disabled veteran-owned small business
concerns and veteran-owned small businesses shall be at least
commensurate with the Department's annual service-disabled veteran-
owned small business and veteran-owned small business prime
contracting goals for the total value of projected subcontracts to
support the sales for the commercial plan.
(d) To be credited toward goal achievements, businesses must be
verified as eligible in the Vendor Information Pages database. The
contractor shall annually submit a listing of service-disabled
veteran-owned small businesses and veteran-owned small businesses
for which credit toward goal achievement is to be applied for the
review of personnel in the Office of Small and Disadvantaged
Business Utilization.
(e) The contractor may appeal any businesses determined not
eligible for crediting toward goal achievements by following the
procedures contained in 819.407.
(End of Clause)
0
37. Add section 852.219-10 to read as follows:
852.219-10 VA Notice of Total Service-Disabled Veteran-Owned Small
Business Set-Aside.
As prescribed in 819.7009, insert the following clause:
VA Notice of Total Service-Disabled Veteran-Owned Small Business Set-
Aside
(DEC2009)
(a) Definition. For the Department of Veterans Affairs,
``Service-disabled veteran-owned small business concern'':
(1) Means a small business concern:
(i) Not less than 51 percent of which is owned by one or more
service-disabled veterans or, in the case of any publicly owned
business, not less than 51 percent of the stock of which is owned by
one or more service-disabled veterans (or eligible surviving
spouses);
(ii) The management and daily business operations of which are
controlled by one or more service-disabled veterans (or eligible
surviving spouses) or, in the case of a service-disabled veteran
with permanent and severe disability, the spouse or permanent
caregiver of such veteran;
(iii) The business meets Federal small business size standards
for the applicable North American Industry Classification System
(NAICS) code identified in the solicitation document; and
(iv) The business has been verified for ownership and control
and is so listed in the Vendor Information Pages database, (http://
www.VetBiz.gov).
(2) ``Service-disabled veteran'' means a veteran, as defined in
38 U.S.C. 101(2), with a disability that is service-connected, as
defined in 38 U.S.C. 101(16).
(b) General. (1) Offers are solicited only from service-disabled
veteran-owned small business concerns. Offers received from concerns
that are not service-disabled veteran-owned small business concerns
shall not be considered.
(2) Any award resulting from this solicitation shall be made to
a service-disabled veteran-owned small business concern.
(c) Agreement. A service-disabled veteran-owned small business
concern agrees that in the performance of the contract, in the case
of a contract for:
(1) Services (except construction), at least 50 percent of the
cost of personnel for contract performance will be spent for
employees of the concern or employees of other eligible service-
disabled veteran-owned small business concerns;
(2) Supplies (other than acquisition from a nonmanufacturer of
the supplies), at least 50 percent of the cost of manufacturing,
excluding the cost of materials, will be performed by the concern or
other eligible service-disabled veteran-owned small business
concerns;
(3) General construction, at least 15 percent of the cost of the
contract performance incurred for personnel will be spent on the
concern's employees or the employees of other eligible service-
disabled veteran-owned small business concerns; or
(4) Construction by special trade contractors, at least 25
percent of the cost of the contract performance incurred for
personnel will be spent on the concern's employees or the employees
of other eligible service-disabled veteran-owned small business
concerns.
(d) A joint venture may be considered a service-disabled veteran
owned small business concern if--
(1) At least one member of the joint venture is a service-
disabled veteran-owned small business concern, and makes the
following representations: That it is a service-disabled veteran-
owned small business concern, and that it is a small business
concern under the North American Industry Classification Systems
(NAICS) code assigned to the procurement;
(2) Each other concern is small under the size standard
corresponding to the NAICS code assigned to the procurement; and
(3) The joint venture meets the requirements of paragraph 7 of
the explanation of Affiliates in 19.101 of the Federal Acquisition
Regulation.
(4) The joint venture meets the requirements of 13 CFR
125.15(b).
(e) Any service-disabled veteran-owned small business concern
(non-manufacturer) must meet the requirements in 19.102(f) of the
Federal Acquisition Regulation to receive a benefit under this
program.
(End of Clause)
0
38. Add section 852.219-11 to read as follows:
852.219-11 VA Notice of Total Veteran-Owned Small Business Set-Aside.
As prescribed in 819.7009, insert the following clause:
VA Notice of Total Veteran-Owned Small Business Set-Aside
(DEC2009)
(a) Definition. For the Department of Veterans Affairs,
``Veteran-owned small business concern''--
(1) Means a small business concern--
(i) Not less than 51 percent of which is owned by one or more
veterans or, in the case of any publicly owned business, not less
than 51 percent of the stock of which is owned by one or more
veterans;
(ii) The management and daily business operations of which are
controlled by one or more veterans;
(iii) The business meets Federal small business size standards
for the applicable North American Industry Classification System
(NAICS) code identified in the solicitation document; and
(iv) The business has been verified for ownership and control
and is so listed in the Vendor Information Pages database, (http://
www.VetBiz.gov).
(2) ``Veteran'' is defined in 38 U.S.C. 101(2).
(b) General. (1) Offers are solicited only from veteran-owned
small business concerns. All service-disabled veteran-owned small
businesses are also determined to be veteran-owned small businesses
if they meet the criteria identified in paragraph (a)(1) of this
section. Offers received from concerns that are not veteran-owned
small business concerns shall not be considered.
(2) Any award resulting from this solicitation shall be made to
a veteran-owned small business concern.
(c) Agreement. A veteran-owned small business concern agrees
that in the performance of the contract, in the case of a contract
for--
(1) Services (except construction), at least 50 percent of the
cost of personnel for contract performance will be spent for
employees of the concern or employees of other eligible veteran-
owned small business concerns;
(2) Supplies (other than acquisition from a non-manufacturer of
the supplies), at least 50 percent of the cost of manufacturing,
excluding the cost of materials, will be performed by the concern or
other eligible veteran-owned small business concerns;
(3) General construction, at least 15 percent of the cost of the
contract performance incurred for personnel will be spent on the
concern's employees or the employees of other eligible veteran-owned
small business concerns; or
(4) Construction by special trade contractors, at least 25
percent of the cost of the contract performance incurred for
personnel will be spent on the concern's employees or the employees
of other eligible veteran-owned small business concerns.
(d) A joint venture may be considered a veteran-owned small
business concern if:
(1) At least one member of the joint venture is a veteran-owned
small business concern, and makes the following representations:
That it is a veteran-owned small business concern, and that it is a
small business concern under the NAICS code assigned to the
procurement;
[[Page 64638]]
(2) Each other concern is small under the size standard
corresponding to the NAICS code assigned to the procurement;
(3) The joint venture meets the requirements of paragraph 7 of
the explanation of Affiliates in 19.101 of the Federal Acquisition
Regulation; and
(4) The joint venture meets the requirements of 13 CFR
125.15(b), except that the principal company may be a veteran-owned
small business concern or a service-disabled veteran-owned small
business concern.
(e) Any veteran-owned small business concern (non-manufacturer)
must meet the requirements in 19.102(f) of the Federal Acquisition
Regulation to receive a benefit under this program.
(End of Clause)
0
39. Add section 852.219-71 to read as follows:
852.219-71 VA Mentor-Prot[eacute]g[eacute] Program.
As prescribed in 819.7115(a), insert the following clause:
VA Mentor-Prot[eacute]g[eacute] Program
(DEC2009)
(a) Large businesses are encouraged to participate in the VA
Mentor-Prot[eacute]g[eacute] Program for the purpose of providing
developmental assistance to eligible service-disabled veteran-owned
small businesses and veteran-owned small businesses to enhance the
small businesses' capabilities and increase their participation as
VA prime contractors and as subcontractors.
(b) The program consists of:
(1) Mentor firms, which are contractors capable of providing
developmental assistance;
(2) Prot[eacute]g[eacute] firms, which are service-disabled
veteran-owned small business concerns or veteran-owned small
business concerns; and
(3) Mentor-Prot[eacute]g[eacute] Agreements approved by the VA
Office of Small and Disadvantaged Business Utilization.
(c) Mentor participation in the program means providing business
developmental assistance to aid prot[eacute]g[eacute]s in developing
the requisite expertise to effectively compete for and successfully
perform VA prime contracts and subcontracts.
(d) Large business prime contractors serving as mentors in the
VA Mentor-Prot[eacute]g[eacute] Program are eligible for an
incentive for subcontracting plan credit. VA will recognize the
costs incurred by a mentor firm in providing assistance to a
prot[eacute]g[eacute] firm and apply those costs for purposes of
determining whether the mentor firm attains its subcontracting plan
participation goals under a VA contract. The amount of credit given
to a mentor firm for these prot[eacute]g[eacute] developmental
assistance costs shall be calculated on a dollar-for-dollar basis
and reported by the large business prime contractor via the
Electronic Subcontracting Reporting System (eSRS).
(e) Contractors interested in participating in the program are
encouraged to contact the VA Office of Small and Disadvantaged
Business Utilization for more information.
(End of Clause)
0
40. Add section 852.219-72 to read as follows:
852.219-72 Evaluation Factor for Participation in the VA Mentor-
Prot[eacute]g[eacute] Program.
As prescribed in 819.7115(b), insert the following clause:
Evaluation Factor for Participation in the VA Mentor-
Prot[eacute]g[eacute] Program
(DEC2009)
This solicitation contains an evaluation factor or sub-factor
regarding participation in the VA Mentor-Prot[eacute]g[eacute]
Program. In order to receive credit under the evaluation factor or
sub-factor, the offeror must provide with its proposal a copy of a
signed letter issued by the VA Office of Small and Disadvantaged
Business Utilization approving the offeror's Mentor-
Prot[eacute]g[eacute] Agreement.
(End of Clause)
0
41. Add section 852.228-72 to read as follows:
852.228-72 Assisting Service-Disabled Veteran-Owned and Veteran-Owned
Small Businesses in Obtaining Bonds.
As prescribed in 828.106-71, insert the following clause:
Assisting Service-Disabled Veteran-Owned Small Businesses and Veteran-
Owned Small Businesses in Obtaining Bonds
(DEC2009)
Prime contractors are encouraged to assist service-disabled
veteran-owned and veteran-owned small business potential
subcontractors in obtaining bonding, when required. Mentor firms are
encouraged to assist prot[eacute]g[eacute] firms under VA's Mentor-
Prot[eacute]g[eacute] Program in obtaining acceptable bid, payment,
and performance bonds, when required, as a prime contractor under a
solicitation or contract and in obtaining any required bonds under
subcontracts.
[FR Doc. E9-28461 Filed 12-7-09; 8:45 am]
BILLING CODE 8320-01-P