09-03

Procurement Information Circular


March 17, 2009

  CLASS DEVIATION TO SUSPEND THE USE OF SUBPART 19.11 REGARDING PRICE EVALUATION ADJUSTMENTS

FOR SMALL DISADVANAGED BUSINESS CONCERNS

 

PURPOSE:  To provide a class deviation suspending the use of subpart 19.11 of the Federal Acquisition Regulation (FAR) regarding price evaluation adjustments for small disadvantaged business (SDB) concerns, pending cancellation of the subpart in the FAR or until there is new authority for subpart 19.11.

 

BACKGROUND:  10 U.S.C. § 2323, which expires on September 30, 2009, provides the statutory authority for the price evaluation adjustment in FAR subpart 19.11.  The statute and the implementing regulation apply only to the Department of Defense, NASA, and the Coast Guard. The Rothe Development Corporation (Rothe) challenged the constitutionally of 10 U.S.C. § 2323 in a suit against the Department of Defense and the Department of the Air Force.  On November 4, 2008, the United States Court of Appeals for the Federal Circuit issued Rothe Development Corp. v. Department of Defense and Department of Air Force, 545 F.3d 1023 (Fed Cir. 2008) “declaring Section 1207 as enacted in 2006 (i.e., the current 10 U.S.C. § 2323) facially unconstitutional” and “enjoining application of the current 10 U.S. C. § 2323.”   The Office of Procurement and the Office of Small Business Programs did not attempt to implement the Rothe decision until a Government-wide position was developed giving the Department of Justice time to determine whether to file a writ of certiorari appealing the decision to the United States Supreme Court.  NASA planned to follow the FAR Council’s direction as to how extensively the Rothe decision would be interpreted should the Department of Justice choose not to appeal the decision.

 

On February 19, 2009, Honeywell International, Inc. (Honeywell) filed a protest with the United States Court of Federal Claims under Solicitation No. NNG08214467R alleging that NASA’s inclusion of the clause at FAR 52.219-23, Notice of Price Evaluation Adjustment for Small Disadvantaged Business Concerns (OCT 2008) was “arbitrary and capricious, an abuse of discretion and otherwise contrary to law” because of the Rothe decision.  Among other things, Honeywell requested the Court of Federal Claims enjoin NASA from awarding any contract on the basis of the price evaluation adjustment in subpart 19.11 of the FAR.  During the course of defending the Honeywell protest, on February 24, 2009, the Department of Justice submitted a Notice of Filing pursuant to the Court’s Instructions informing the Court of Federal Claims that the Government would not seek an appeal of the Rothe decision.

 

GUIDANCE:  This deviation precludes contracting officers from providing SDB concerns with a price evaluation adjustment under the authority in subpart 19.11 of the FAR.   This class deviation applies to all solicitations released after the effective date of this PIC.  If the contracting officer is planning to invoke the Price Evaluation Adjustment for Small Disadvantaged Business Concerns under FAR 52.219-23 on solicitations issued prior to the effective date of this PIC, the contracting officer shall notify Sandra Morris, Contract Management Division, (202) 358-0532, e-mail: sandra.morris@nasa.gov.

       

EFFECTIVE DATE:  This PIC is effective as dated and shall remain in effect until this change is implemented in FAR, or otherwise rescinded.

 

HEADQUARTERS CONTACT:  Sandra Morris, Contract Management Division, (202) 358-0532, e-mail: sandra.morris@nasa.gov.

 

      /s/

William P. McNally

Assistant Administrator for Procurement


DISTRIBUTION:

  PIC LIST