DATE: January 4, 2005

SUBJECT: Small Disadvantaged Business Price Evaluation Adjustment Expires for Civilian Agencies

SOURCE: Small Business Administration Memorandum dated December 22, 2004

AGENCIES: Small Business Administration (SBA)

ACTION: Notice

SYNOPSIS: SBA has notified Chief Acquisition Officers and Senior Procurement Executives that the statutory authority for Federal Acquisition Regulation (FAR) Subpart 19.11, Price Evaluation Adjustment for Small Disadvantaged Business Concerns, expired for civilian agencies on December 9, 2004.

EDITOR'S NOTE: The memorandum was forwarded by the Civilian Agency Acquisition Council (CAAC) to civilian agencies on December 27, 2004. Both the SBA memorandum and the CAAC forwarding memorandum are available at http://www.acqnet.gov/CommCouncil/CAAC/caacletters/2004-04.pdf.

EFFECTIVE DATE: December 9, 2004.

FOR FURTHER INFORMATION CONTACT: Denise Benjamin, SBA, 202-619-1799.

SUPPLEMENTAL INFORMATION: Congress has established a 5% governmentwide goal for contract awards to small disadvantaged business (SDBs). To help agencies achieve the 5% SDB goal, Section 7102 of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355) authorized civilian agencies to apply a price evaluation adjustment to competitive offers of SDBs that exceed the simplified acquisition threshold and are not set aside for small businesses in industries determined by the Department of Commerce (DOC) to have "persistent and significant underutilization of minority firms." DOC has determined that a 10% price evaluation adjustment is appropriate for 56 industries. This provision was implemented by FAR Subpart 19.11.

Although the program was continued under the SBA's temporary authorizations, the authority for the program was omitted from the Small Business Reauthorization and Manufacturing Assistance Act of 2004 (Public Law 108-447). Therefore, civilian agencies have no statutory authority to apply the SDB price evaluation adjustment as of December 9, 2004.

The SDB price evaluation adjustment for the Department of Defense (DOD), National Aeronautics and Space Administration (NASA), and the Coast Guard is governed by a different statutory authority, and that authority is not affected by the lapse of authority for civilian agencies. However, the National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261) contains a provision that prohibits DOD from paying a price that exceeds the fair market cost if the secretary of defense determines that DOD achieved the 5% goal in the most recent fiscal year. On January 23, 2004, the director of defense procurement and acquisition policy determined that DOD exceeded the 5% goal for contract awards to SDBs in fiscal year 2003, so the FAR Subpart 19.11 price evaluation adjustment is suspended for DOD from February 24, 2004, through February 23, 2005 (see the January 29, 2004, FEDERAL CONTRACTS DISPATCH "Department of Defense; Suspension of the Price Evaluation Adjustment for Small Disadvantaged Businesses").

The 5% governmentwide SDB contracting goal remains in effect for both civilian and defense agencies.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.

Copyright 2005 by Panoptic Enterprises. All Rights Reserved.

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