Incorporated in the FAR

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Procurement Information Circular

October 2, 1991


PURPOSE: To increase the emerging small business reserve amount for architectural and engineering services under the Small Business Competitiveness Demonstration Program.

BACKGROUND: The chief provisions of the Small Business Competitiveness Demonstration Program apply to procurements in four Designated Industry Groups (DIGs), i.e., construction, refuse systems, architectural and engineering services, and non-nuclear ship repair. During the program, participating agencies generally must use full and open competition for contracts in each DIG. However, there are exceptions to this requirement. If an agency fails to award to small business 40 percent of its total contract dollars for any one DIG, set-asides must be used until that percentage is reached. For example, NASA now sets aside all its A-E contracts for small businesses.

Another exception to the requirement for full and open competition relates to what is called an 'emerging small business." This new type of firm is a business in one of the four DIGs whose size is no greater than 50 percent of the numerical size standard applicable to the SIC Code assigned to the procurement. The program also establishes an 'emerging small business reserve amount' of $25,000 and below. Procurements in the reserve amount (that is, procurements of $25,000 and below) are reserved for emerging small business.

In addition to the requirement to set aside all buys in the reserve amount for emerging firms, government agencies must meet a minimum percentage goal of the dollars awarded in each DIG to emerging small business. The program specifies that each participating agency will make a good faith effort to ensure that emerging small businesses receive not less than 15 percent of the agency's total contract dollars awarded for each of the four designated industry groups. In the event that the emerging small business participation goal of 15 percent is not reached in a designated industry group, the OFPP Administrator must adjust the dollar reserve amount, i.e., raise the $25,000 threshold for contracts reserved for emerging small businesses in that DIG. The intent of this change is to create a larger number of procurements exclusively available to emerging small businesses with a better chance for 15 percent of the contract dollars to go to those firms.

OFPP is now raising the emerging small business reserve amount for one of the DIGs. Because emerging A-E firms had received less than 15 percent of A-E awards government-wide through calendar 1990 year, OFPP is raising the amount for those firms from $25,000 to $50,000. This PIC is intended to implement this change pending its implementation in the FAR.

GUIDANCE.- Effective October 15, 1991, the emerging small business reserve amount for emerging A&E small businesses is $50,OOD.

EFFECTIVE DATE.- This PIC is effective.% October 15, 1991, and automatically expires when the FAR is amended at 19.1006 to reflect the larger emerging small business reserve amount for A-E procurements.

HEADQUARTERS CONTACTS. Ken Jeffries, Code HP (202) 453-8253; Eugene Rosen, Code K (202) 453-2088; or Herbert Baker, Jr., HK (202) 453-8994.

Darleen A. Druyun

Assistant Administrator
for Procurement