Section 802.101 Definitions

In proposed section 802.101, VA adopts and incorporates various statutory definitions. FAR 2.101 defines ``servicedisabled veteran owned small business (SDVOSB) concern'' and ``veteranowned small business (VOSB) concern.'' Prime and subcontracting actions conducted under the authority of 38 U.S.C. 8127, as implemented in VAAR subpart 819.70, revise the definition of ``servicedisabled veteranowned small business concern'' and require that SDVOSBs and VOSBs must be registered in the Vendor Information Pages (VIP) and that the ownership and control of such businesses has been verified by VA. In addition, section 8127(h) enables a surviving spouse who obtains ownership rights to a business upon the death of a veteran with a serviceconnected disability rated at 100 percent, or a veteran who dies as a direct result of a serviceconnected disability, to have VA treat the business as a ``servicedisabled veteranowned small business'' for a 10year period after the death of the veteran, unless the surviving spouse remarries, sells the interest in the business or the business outgrows the small business size standards. This section also includes a definition of VIP.

Section 804.1102 Vendor Information Pages

FAR 4.1102 currently requires all businesses to be registered in the Central Contractor Registration (CCR). Proposed section 804.1102 would require VOSBs, including SDVOSBs, to register in the VIP database, available at http://www.VetBiz.gov, in order to be eligible to participate in setasides for SDVOSBs and VOSBs issued by VA contracting officers. In completing registration, businesses would provide information establishing that the business is owned and controlled by eligible parties, according to the criteria defined in 38 U.S.C. 8127 and FAR 19.1403.

Section 808.603 Purchase Priorities

Under certain conditions, this section would authorize contracting officers to purchase supplies and services produced or provided by FPI from eligible SDVOSBs and VOSBs, in accordance with procedures set forth in proposed VAAR subpart 819.70, without seeking a waiver from FPI. We interpret section 8128 and the legislative history to mean that SDVOSBs and VOSBs must receive priority in VA contracting opportunities without regard to other provisions of law concerning contracting preferences. This interpretation conflicts with the current contracting priorities in law, and as implemented in the FAR, for Federal agencies buying from FPI. VA finds that section 8128, being directly applicable solely to VA and providing authority without regard to any other provision of law, requires VA contracting officers to have the authority to override other statutory contracting preferences to provide priority to SDVOSBs and VOSBs to meet VA's socioeconomic goals for such concerns. Therefore, proposed section 808.603 is the only means available to VA to implement the requirement in section 8128 that veterans' small businesses have priority in VA acquisitions that would normally be awarded under FPI.
Section 808.803 Priority for Acquisition of Printing and Related Supplies

This section would authorize contracting officers to acquire government printing from eligible servicedisabled veteranowned small businesses and veteranowned small businesses, in accordance with [[Page 49143]]
procedures set forth in VAAR subpart 819.70, in lieu of the Government Printing Office (GPO). We interpret section 8128 and the relevant legislative history as authorizing VA to give priority in contracting to SDVOSBs and VOSBs without regard to other provisions of law concerning contracting preferences. This interpretation conflicts with the current contracting priority in law, and as implemented in the FAR, which provides that Federal agencies buying printing services must procure such services from GPO. VA finds that section 8128, being directly applicable solely to VA and providing authority for priority in VA contracting without regard to any other provision of law, requires VA contracting officers to have the authority to override the statutory contracting preference for GPO services and instead provide priority in contracting to SDVOSBs and VOSBs for printing services and related supplies. Therefore, proposed section 808.803 is the only means available to VA to implement section 8128.

Section 809.4062 Causes for Debarment

FAR 9.4062 lists several reasons for which a debarring official may initiate a debarment action. Proposed VAAR 809.4062 adds one additional reason: misrepresentation of status as an SDVOSB or a VOSB, in accordance with section 8127(g).

Section 810.001 Market Research Policy

FAR 10.001 requires agencies to conduct market research on an ongoing basis and to effectively identify the capabilities of small businesses to meet agency requirements. VAAR section 810.001 would establish that, when conducting market research, VA contracting teams shall use the VIP database, in addition to other sources of information.

Section 810.002 Market Research Procedures

This section would require contracting officers to record VIP queries in the solicitation file.
Section 813.106 Soliciting Competition, Evaluation of Quotations or Offers, Award and Documentation

This section would clarify that contracting officers may use other than competitive procedures to enter into a contract with an SDVOSB or VOSB when the amount is less than the simplified acquisition threshold not to exceed $5 million. Contracting officers would give first consideration to SDVOSBs.

Section 813.202 Purchase Guidelines

FAR 13.202(a)(1) provides that, to the extent practicable, open market micropurchases shall be distributed equitably among qualified suppliers. The setaside provisions of FAR Part 19 do not apply to micropurchases. However, in accordance with sections 8127 and 8128, VA would make an exception to this FAR requirement when supplies are available from SDVOSBs or VOSBs. We would add section 813.202 to allow preference for SDVOSB and VOSB sources when making local open market micropurchases using the purchase card. In such cases, equitable distribution of open market micropurchases among all qualified suppliers would not be required. Instead, open market micropurchases would be equitably distributed among all qualified SDVOSBs or VOSBs, respectively, to the maximum extent practicable. We believe that this change would assist VA in meeting its statutory goals for award of contracts to SDVOSBs and VOSBs.
Sections 815.304 and 852.21570 Evaluation Factors and Significant Subfactors

To implement sections 8127 and 8128, VA would add sections 815.304 and 852.21570 to require VA contracting officers to: (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 nonprice 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) consider participation in VA's MentorProt[eacute]g[eacute] Program as an evaluation factor when competitively negotiating the award of contracts or task or delivery orders. VA is particularly interested in receiving comments on the proposed mandatory inclusion of evaluation preferences for SDVOSBs and VOSBs in negotiated acquisitions.

Section 815.30470 Evaluation Factor Commitments

In accordance with section 8127(a)(4), we propose to require prime contractors who offer to use one or more SDVOSBs or VOSBs as subcontractors in accordance with proposed section 852.21570, Veteran Owned Small Business Evaluation Factors, to actually use those subcontractors or to replace any proposed subcontractor who is not used for the specified subcontract with another SDVOSB or VOSB
subcontractor. This subsection would be implemented under proposed new sections 815.30470 and 852.21571. Further, this subsection would help ensure that SDVOSBs and VOSBs receive subcontract awards under VA prime contracts, as prime contractors will be required to report only utilization of companies appearing in the VIP database as ``verified'' to be owned and controlled by eligible veterans or surviving spouses. Section 815.30471 Solicitation Clauses

This section would prescribe insertion of certain contract clauses in acquisitions from SDVOSBs and VOSBs, including section 852.21570, ServiceDisabled VeteranOwned and VeteranOwned Small Business Evaluation Factors, and section 852.21571, Evaluation Factor Commitments, for applicable solicitations and contracts.

Section 819.201 General Policy

This section would authorize the Secretary to establish goals for each fiscal year for participation in Department contracts by SDVOSBs and VOSBs. Furthermore, in order to establish contracting priority for veteranowned and controlled small businesses in accordance with section 8128, the Secretary may decrease other statusspecific 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.

Section 819.307 Protests

FAR 19.307 contains instructions for processing protests of status as a SDVOSB concern. Section 8127 contains additional eligibility criteria for VA's processing of protests and authorizes VA to conduct VOSB setasides. Proposed VAAR section 819.307 would address protest procedures and other information specific to VA's unique acquisition program.

Section 819.704 Subcontracting Plan Requirements

In accordance with section 8127, proposed section 819.704 would require contracting officers to include suggested subcontracting goals in acquisitions that may require a subcontracting plan. To receive subcontracting plan accomplishment credit for subcontracting with SDVOSBs and VOSBs, prime contractors would be
[[Page 49144]]
required to use eligible businesses identified in the VIP database. Section 819.705 Appeals of Contracting Officer Decisions

This section would prescribe procedures for appeals of VA contracting officers' SDVOSB setaside decisions, VOSB setaside decisions, and prime contractor credits for subcontracting. Section 819.709 Contract Clause

This section would require contracting officers to insert the clause in section 852.2199, Small Business Subcontracting Plan Minimum Requirements, for solicitations and contracts that include the FAR clause at 52.2199, Small Business Subcontracting Plan.
Subpart 819.70 ServiceDisabled VeteranOwned and VeteranOwned Small Business Acquisition Program

This subpart would establish sole source contracting procedures for acquisitions under $5 million and create a new setaside program for SDVOSBs and VOSBs.

Subpart 819.71 VA MentorProt[eacute]g[eacute] Program

In accordance with paragraph (3)(a) of VA's Executive Order 13360 strategic plan, we propose to establish a SDVOSB mentor
prot[eacute]g[eacute] program within VA under new subpart 819.71, consisting of sections 819.7101 through 819.7115, and at sections 852.21971 and 852.21972. We propose to establish this program to help SDVOSBs receive developmental support from VA prime contractors in order to increase the base of SDVOSBs eligible to perform VA prime contracts and to participate as subcontractors on VA prime contracts. Sections 828.10671, 828.10672, and 852.22872 Assisting Service Disabled VeteranOwned and VeteranOwned Small Businesses in Obtaining Bonds

In accordance with paragraph (3)(f) of VA's Executive Order 13360 strategic plan, we propose to add new sections 828.10671, 828.10772, and 852.22872, to encourage prime contractors to assist SDVOSBs and VOSBs in obtaining subcontractor performance and payment bonds and to encourage mentor firms to assist prot[eacute]g[eacute] SDVOSBs and VOSBs in obtaining acceptable bid, payment, and performance bonds as prime contractors. The ability to obtain acceptable surety bonds is one of the major concerns for small businesses in contracting with the Federal government for construction.

Regulatory Flexibility Act

This regulation may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the law provides that the Secretary shall give priority to small business concerns owned and controlled by veterans. Servicedisabled veteran owned small businesses (SDVOSBs) and veteranowned small businesses (VOSBs) may benefit from this regulation. Other small businesses may be indirectly affected if a greater portion of VA's small business contracts are awarded to SDVOSBs and VOSBs. However, this regulation may result in an increase in VA contracts awarded to the overall total of small businesses.

An Initial Regulatory Flexibility Analysis (IRFA) has been prepared and submitted to the Chief Counsel for Advocacy of the Small Business Administration in accordance with 5 U.S.C. 603. Interested parties are invited to submit comments on VA's regulatory flexibility analysis. The analysis is as follows:

1. Description of the reasons why action by the agency is being considered.

These proposed changes to the Veterans Affairs Acquisition Regulation (VAAR) implement sections 502 and 503 of Public Law 109461, the Veterans Benefits, Health Care, and Information Technology Act of 2006 (38 U.S.C. 8127 and 8128). The changes will also implement the rulemaking portions of VA's Strategic Plan for Executive Order 13360, Providing Opportunities for ServiceDisabled Veteran Businesses to Increase Their Federal Contracting and Subcontracting (http:// www.vetbiz.gov/fpp/fpp.htm). VA exists to serve veterans, and buying from SDVOSBs and VOSBs directly supports that mission. Such acquisitions support the socioeconomic wellbeing of the Nation and support VA's Strategic Goals. The proposed changes to the VA Acquisition Regulation reflect the intent of Congress that VA fulfill its special mission to serve veterans and enable them to realize the American dream that they fought to protect, especially those who became disabled while serving their country.

2. Succinct statement of the objectives of, and legal basis for, the proposed rule.

Sections 502 and 503 of Public Law 109461 require VA to create a unique acquisition program among Federal agencies that permits preferences for SDVOSBs and VOSBs. This proposed rule would permit VA contracting officers to conduct acquisition actions with preferences for SDVOSBs or VOSBs. Specifically, this proposed rule will allow VA contracting officers to:

a. Under certain conditions, permit noncompetitive sourcing under the simplified acquisition threshold with SDVOSBs or VOSBs;

b. Require setasides 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 noncompetitive 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 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 utilize eligible businesses;

f. Require VOSBs participating in the Department's acquisitions to register in VetBiz.gov's Vendor Information Pages (VIP) database and verify that the business meets eligibility requirements;

g. Establish a VA MentorProt[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 willfully or deliberately 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 and GPO.

3. Description of, and, where feasible, estimate of the number of small entities to which the proposed rule will apply.

VA cannot accurately determine how many concerns would be participating in these SDVOSB/VOSB contract awards because there is insufficient data on SDVOSBs/VOSBs that are ready and able to perform under VA requirements to support a reasonable estimate.

To establish the likely number of SDVOSBs or VOSBs that may benefit from VA's unique procurement authority there are two principal data sources, the Central Contractor
[[Page 49145]]
Registration (CCR) database, in which a business must be listed to receive a payment from a Federal agency, and VA's VetBiz.gov VIP database. A CCR Dynamic Small Business Search query conducted on March 13, 2008, returned 40,163 VOSBs, including 11,465 SDVOSBs. A VIP query returned 10,695 VOSBs, including 6,354 SDVOSBs. The VIP database requires that businesses answer eligibility questions before they are permitted to register their business. The CCR is a selfrepresentation database.

Under this proposed rule, VA contracting teams will be required to give priority consideration to SDVOSBs and VOSBs when using other contracting programs, like setasides for the Historically
Underutilized Business (HUB) Zone Program or 8(a) Business Development Program reserved actions or the Small Business Setaside program. A CCR Dynamic Small Business Search conducted on March 13, 2008, returned 13,848 active HUBZone firms. Of this population, 2,565, or 19 percent, are also VOSBs. A search of active 8(a) businesses identified 9,822 current firms, which includes 1,285 VOSBs, or 14 percent of the total population. There are 63,395 womanowned small businesses (WOSBs) in the Central Contractor Registration, of which 4,471 appear to also be VOSBs. VA notes that the SBA is in the process of establishing a WOSB setaside program, making the percentage of WOSBs who are also VOSB eligible of interest to the Department.

There are some concerns that the proposed rule will displace business opportunities for nonveteranowned businesses, based on the following speculations:

The Department of Veterans Affairs has a strong commitment to supporting all types of small businesses, as demonstrated in the procurement chart below:
FY 2006 FY 2007
($) (%) ($) (%) Total Procurement................................. 10,282,566,304 ........... 11,784,896,886 ........... Total Small Business.............................. 3,028,055,461 29.45 3,878,901,724 32.91 Small and Disadvantaged Business.................. 507,442,123 4.93 603,502,602 5.12 8(a).............................................. 402,659,565 3.92 406,996,187 3.45 WomanOwned Small Business........................ 513,104,216 4.99 573,355,381 4.87 VeteranOwned Small Business...................... 666,825,417 6.49 1,193,853,547 10.13 ServiceDisabled VeteranOwned Small Business..... 348,077,159 3.39 818,698,785 6.95 HUBZone........................................... 336,856,889 3.28 381,875,493 3.24

The preliminary Total Small Business procurement for FY2007 was $3,878,901,724.00 or 32.91%. Procurement totals for SDVOSBs and VOSBs were $2,012,552,332.00 or 17.08% and procurement totals for non veteranowned businesses were $1,965,729,663.00 or 16.68%, a mere .40% difference. Although, SDVOSBs and VOSBs gained 7.2% of procurements from FY2006 to FY2007 and nonveteranowned businesses lost .44% of procurements, the nonveteranowned businesses still received increased procurement dollars totaling $205,666,870.00 from FY2006 to FY2007. Assuming this trend and/or this new procurement authority does increase procurement percentages for SDVOSBs and VOSBs and the procurement percentages for nonveteranowned businesses decrease, as previously demonstrated from FY2006 to FY2007, the contracting dollars and/or opportunities for nonveteranowned businesses were not adversely impacted economically. VA also estimates that it would be unrealistic for SDVOSBs and VOSBs to absorb the entire 16.68% of procurements that are currently being awarded to the nonveteranowned businesses. The SDVOSBs and VOSBs are more likely to subcontract with the nonveteran owned businesses with existing contracts rather than investing in costly business expansions. Based on prior procurement trends, VA believes there would not be an adverse economic impact on nonveteran owned businesses, but requests comment from the public on other possible impacts this rule may have on small entities.

This rule also creates a MentorProt[eacute]g[eacute] Program for SDVOSBs and VOSBs. It is the expectation that at such time as this rule is finalized, those Prot[eacute]g[eacute] entities would directly benefit from the forms of Mentoring described in this proposed rule. VA believes there would not be an adverse economic impact on small contractors or subcontractors, but requests comment from the public on other possible impacts this rule may have on small entities. Comments will be used as a factual basis upon which VA would certify that this rule will not have a significant economic impact on a substantial number of small entities.

For the reasons outlined above, given the relatively small number of businesses owned and controlled by veterans in the Federal marketplace and with the understanding that this rule would apply only to VA and its large prime contractors, VA believes this rule would not have a major impact on small entities doing business in the Federal marketplace.

VA welcomes comments concerning the potential number of small entities that could become eligible under this rule. VA also specifically requests comments concerning the rule's impact on small entities that are not VOSBs.

4. Description of projected reporting, recordkeeping, and other compliance requirements of the proposed rule, including an estimate of the classes of small entities which will be subject to the requirement and the type of professional skills necessary for preparation of the report or record.

[[Page 49146]]

There are two categories of coverage in this proposed rule that could potentially require the collection of information from contractors. VA will collect information from prime contractors seeking a preference for subcontracting with SDVOSBs or VOSBs. That information would include identity of the 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 estimates the cost to an individual business to be less than $100.00 for 7075% of the businesses seeking verification, and the average cost to the entire population of veterans seeking to become verified is less than $325.00 on average. VA also will collect information in conjunction with preferences associated with the VA MentorProt[eacute]g[eacute] Program. That information would include the program agreement, developmental plan, and reports on the success of the program.

5. Identification, to the extent practicable, of all relevant Federal rules which may duplicate, overlap, or conflict with the proposed rule.

The VAAR (48 CFR chapter 8) supplements the FAR (48 CFR chapter 1). This proposed rule would affect 48 CFR parts 802, 804, 808, 809, 810, 813, 815, 819, 828, and 852 and corresponding parts of the FAR.

6. Description of any significant alternatives to the proposed rule which would accomplish the stated objectives of applicable statutes and which would minimize any significant economic impact of the proposed rule on small entities. This proposed 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 109461 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 proposed 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 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before developing 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 proposed rule would have no such effect on State, local, or tribal governments, or the private sector. Paperwork Reduction Act

Under the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501 3521), collections of information are contained in this proposed rule. These collections are contained in new sections that were not previously contained in the VAAR. This notice is to obtain an OMB control number for these new sections. As required under section 3507(d) of the Act, VA has submitted a copy of this rulemaking action to OMB for its review of the collection of information.

OMB assigns control numbers to collections of information it approves. VA may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

Comments on the collection of information should be submitted to OMB, Attention: Desk Officer for the Department of Veterans Affairs, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503, with copies to the Director, Regulations Management (00REG), Department of Veterans Affairs, 810 Vermont Ave., NW., Washington, DC 20420. Comments should indicate that they are submitted in response to ``RIN 2900AM92.''

There are categories of coverage in this proposed rule that could potentially require the collection of information from contractors: (1) Section 852.21570, VeteranOwned Small Business Evaluation Factors; and (2) subpart 819.71, VA MentorProt[eacute]g[eacute] Program, specifically sections 819.7101 through 819.7115 and the related clauses at sections 852.21971 and 852.21972. There is no information available upon which to judge the impact of these PRA requirements, but since the provisions are limited to SDVOSBs and VOSBs, rather than to all small businesses, collection efforts are estimated to be minimal.

Title and section number: 852.21570, VeteranOwned Small Business Evaluation Factors.

Summary of collection of information: VA is proposing to give preference to prime contractors who offer to subcontract with SDVOSBs or VOSBs. VA must collect information from offerors regarding: (1) Proposed SDVOSB and VOSB subcontractors; (2) the approximate dollar value of the proposed subcontracts; and (3) eligibility of the proposed subcontractors as verified in VetBiz.gov VIP database (http:// www.VetBiz.gov).

Description of need for information and proposed use of information: The information is submitted on a voluntary basis by those offerors who wish to qualify for this evaluation factor. The information will be used by the contracting officer to determine whether or not the offeror qualifies for extra credit in the selection of the contract awardee. Those offerors who qualify will be afforded a preference in the selection.

Description of likely respondents: Any offeror, on a negotiated solicitation that includes the applicable evaluation factor, who intends to subcontract with one or more SDVOSBs or VOSBs and who wishes to obtain a preference in the award selection.

Estimated number of respondents: 125.

Estimated frequency of responses: 1 response for each solicitation.

Estimated average burden per collection: 5 minutes.

Estimated total annual reporting and recordkeeping burden: 10 hours.

Title and section number: Subpart 819.71, VA Mentor Prot[eacute]g[eacute] Program, subpart 819.71's related sections [[Page 49147]]
819.7101 through 819.7115, and the related clauses at section 852.219 71, VA MentorProt[eacute]g[eacute] Program, and section 852.21972, Evaluation Factor for Participation in the VA Mentor

Prot[eacute]g[eacute] Program.

Summary of collection of information: VA is proposing to institute a MentorProt[eacute]g[eacute] Program, whereby a large business agrees to provide developmental support to a VOSB or SDVOSB. VA must approve the MentorProt[eacute]g[eacute] Agreement entered into by the two parties, and VA requires both parties to report on the success of the program. Mentors can qualify for additional preference on negotiated solicitations by furnishing evidence of participation in the program with their offer.

Description of need for information and proposed use of information: The information is needed for the review and evaluation of mentor applications for realism, validity, and accuracy of provided information and for conducting a midterm evaluation at the midpoint interval to measure prot[eacute]g[eacute] progress against the developmental plan contained in the approved agreement. The information will also be used to evaluate the status of a business as a participant in VA's MentorProt[eacute]g[eacute] Program for possible credit in negotiated contracts.

Description of likely respondents: Large business prime contractors and SDVOSBs or VOSBs.

Estimated number of respondents: 50.

Estimated frequency of responses: Each prot[eacute]g[eacute] program participant will be required to submit 3 sets of data consisting of the application and the mid and endterm reports. Each mentor program participant will be required to submit 4 sets of data consisting of the application, the mid and endterm reports, and, when submitting an offer, information to verify their participation in the program in order to receive evaluation credit.

Estimated average burden per collection: 1 hour weighted average per data submission.

Estimated total annual reporting and recordkeeping burden: 200 hours (4 data submissions @ 1 hour each times 50 program participants).

The Department considers comments by the public on collections of information in

OMB is required to make a final decision concerning the collection of information contained in this proposed rule between 30 and 60 days after publication of this document in the Federal Register. Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. This does not affect the deadline for the public to comment on the proposed rule.
List of Subjects

48 CFR Parts 802, 804, 809, 810, 813, and 815

Government procurement, Reporting and recordkeeping requirements. 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: April 21, 2008.
James B. Peake,

Secretary of Veterans Affairs.

Editorial Note: This document was received at the Office of the Federal Register on August 15, 2008.

For the reasons set out in the preamble, the Department of Veterans Affairs proposes to amend 48 CFR Chapter 8 as follows:
CHAPTER 8DEPARTMENT OF VETERANS AFFAIRS
Subchapter AGeneral

PART 802DEFINITIONS OF WORDS AND TERMS

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 1.3011.304.

2. Section 802.101 is amended by adding in alphabetical order the following terms:
802.101 Definitions.

* * * * *

Servicedisabled veteranowned small business concern (SDVOSB) has the same meaning as defined in FAR Part 2.101, except for businesses participating in setasides or subcontracts authorized by VAAR subpart 819.70. These businesses must be listed as verified on the Vendor Information Pages (VIP) at http://www.vetbiz.gov. In addition, some businesses may be owned and controlled by a surviving spouse. * * * * *

Surviving Spouse means an individual who has been listed in the Department of Veterans Affairs' (VA) Veterans 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 servicedisabled 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 veteranowned 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 serviceconnected 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 at http://www.vetbiz.gov.

Veteranowned small business concern (VOSB) has the same meaning as defined in FAR Part 2.101, except for businesses participating in set asides or subcontracts authorized by VAAR Part 819.7001. These businesses must be
[[Page 49148]]
listed as verified on the VetBiz.gov VIP database.
* * * * *

PART 804ADMINISTRATIVE MATTERS

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 1.3011.304.

4. Section 804.1102 is added to read as follows: 804.1102 Vendor Information Pages (VIP) Database.

In addition to registering in the Central Contractor Registration (CCR), all VOSBs, including SDVOSBs, must register in the VIP database, available at http://www.VetBiz.gov, to be eligible to participate in VA's Veteranowned Small Business prime contracting and subcontracting opportunities programs.

PART 808REQUIRED SOURCES OF SUPPLIES AND SERVICES

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 1.3011.304.

6. Subpart 808.6 and section 808.603 are added to read as follows: Subpart 808.6Acquisition From Federal Prison Industries, Inc. (FPI)

808.603 Purchase priorities.

Contracting officers may purchase supplies and services produced or provided by FPI from eligible servicedisabled veteranowned small businesses and veteranowned small businesses, in accordance with procedures set forth in VAAR 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.
Subpart 808.8Acquisition of Printing and Related Supplies

7. Section 808.803 is added to read as follows:
808.803 Priority for acquisition of printing and related supplies.

Contracting officers may acquire government printing from eligible servicedisabled veteranowned small businesses and veteranowned small businesses, in accordance with procedures set forth in VAAR subpart 819.70, in lieu of the Government Printing Office (GPO), in accordance with 38 U.S.C. 8128, small business concerns owned and controlled by veterans: Contracting priority (See FAR 8.802(a)(4)).

PART 809CONTRACTOR QUALIFICATIONS

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 1.3011.304.

9. Section 809.4062 is added to read as follows: 809.4062 Cause for debarment.

Misrepresentations 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.

10. Part 810 is added to read as follows:
PART 810MARKET RESEARCH
Sec.
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 1.3011.304.

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(es) along with specific query used to generate the search(es).

PART 813SIMPLIFIED ACQUISITION PROCEDURES

11. 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 1.3011.304.

12. Section 813.106 is revised to read as follows: 813.106 Soliciting competition, evaluation of quotations or offers, award and documentation.

Contracting officers may use other than competitive procedures to enter into a contract with an SDVOSB or VOSB when the amount is less than the simplified acquisition threshold. Contracting officers shall give first consideration to SDVOSBs.

13. Section 813.202 is added to read as follows: 813.202 Purchase guidelines.

Open market micropurchases shall be equitably distributed among all qualified SDVOSBs or VOSBs, respectively, to the maximum extent practicable.

PART 815CONTRACTING BY NEGOTIATION

14. 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 1.3011.304.

15. Section 815.304 is added 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 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.

16. Section 815.30470 is added to read as follows: 815.30470 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 nonprice 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) Consider participation in VA's MentorProt[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 the clause at 852.21570, ServiceDisabled Veteran owned and Veteranowned 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.

17. Section 815.30471 is added to read as follows: [[Page 49149]]
815.30471 Solicitation provision and clause.
(a) The contracting officer shall insert the provision at 852.215 70, ServiceDisabled Veteranowned and Veteranowned 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 852.21571, Evaluation Factor Commitments, in solicitations and contracts that include the clause at 852.21570, ServiceDisabled Veteranowned and Veteranowned Small Business Evaluation Factors.

PART 819SMALL BUSINESS PROGRAMS

18. 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 1.3011.304; and 15 U.S.C. 637(d)(4)(E).

Subpart 819.2Policies

19. Section 819.201 is revised 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 statusspecific 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.

20. Section 819.307 is added to read as follows: 819.307 Protests.

For acquisitions under the authority of VAAR part 819.70, regarding eligibility of SDVOSB and VOSB concerns, contracting officers shall forward all protests to the Associate Administrator for Government Contracting AA/GC, U.S. Small Business Administration (ATTN: Veterans Business Program Protest), 409 3rd Street, SW., Washington, DC 20416, for disposition.

21. Section 819.704 is added to read as follows: 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 Office of Small and Disadvantaged Business Utilization (OSDBU) shall review all prime contractors' 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) above, the subcontract was actually awarded to a business concern that is eligible to be counted toward meeting the goal, as provided in VAAR 804.1102.

22. Section 819.705 is added as follows:
819.705 Appeal of Contracting Officer Decisions.
(a) Acquisitions not exceeding the SAT and sections 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 setaside authority contained in VAAR 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 settingaside 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 Director, Office of Small and Disadvantaged Business Utilization (OSDBU), within 5 working days of receipt of information declaring their subcontractor ineligible. The Director, OSDBU, shall have 5 working days to respond. The decision of the Director, OSDBU, 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.

23. Section 819.709 is added to read as follows: 819.709 Contract clause.

The contracting officer shall insert the clause at 852.2199, Small Business Subcontracting Plan Minimum Requirements, in solicitations and contracts that include the FAR clause at 52.2199, Small Business Subcontracting Plan.

24. Subpart 819.70 is revised to read as follows: Subpart 819.70ServiceDisabled VeteranOwned and VeteranOwned Small Business Acquisition Program
819.7001 General.
(a) The Veterans Benefits, Health Care, and Information Technology Act of 2006 (38 U.S.C. 8127) created an acquisition program for small business concerns owned and controlled by servicedisabled 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.
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) Servicedisabled veteranowned small business concern or veteranowned small business 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 Vendor Information Pages 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;
(2) Each other concern is small under the size standard corresponding to the NAICS code assigned to the procurement; [[Page 49150]]
(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 veteranowned 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 HistoricallyUnderutilized Business Zone (HUBZone) Program (15 U.S.C. 657a); and
(d) Pursuant to any other small business contracting preference. 819.7005 Servicedisabled veteranowned small business setaside procedures.
(a) The contracting officer shall consider SDVOSB setasides before considering VOSB setasides. Except as authorized by 819.7007 and 819.7008, the contracting officer shall setaside 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 setasides, 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 Vendor Information Pages 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 setaside, the contracting officer should make an award to that concern. If the contracting officer receives no acceptable offers from eligible SDVOSB concerns, the setaside shall be withdrawn and the requirement, if still valid, set aside for VOSB competition, if appropriate.
819.7006 Veteranowned small business setaside procedures.
(a) The contracting officer shall consider SDVOSB setasides before considering VOSB setasides. Except as authorized by 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 setaside, the contracting officer should make an award to that concern. If the contracting officer receives no acceptable offers from eligible VOSB concerns, the setaside shall be withdrawn and the requirement, if still valid, set aside for other small business programs, as appropriate.
(c) When conducting VOSB setasides, the contracting officer shall ensure the business is registered and verified as eligible in the Vendor Information Pages prior to making an award.
819.7007. Sole source awards to servicedisabled veteranowned 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 servicedisabled veteranowned small business concern is available to meet the requirement is not required. 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 servicedisabled veteranowned small business concern is available to meet the requirement. (c) When conducting a SDVOSB sole source acquisition, the contracting officer shall ensure businesses are registered and verified as eligible in the Vendor Information Pages prior to making an award. 819.7008 Sole source awards to veteranowned 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 veteranowned small business concern is available to meet the requirement is not required. 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 veteranowned small business concern is available to meet the requirement.
(c) When conducting a VOSB sole source acquisition, the contracting officer shall ensure businesses are registered and verified as eligible in the Vendor Information Pages prior to making an award.

819.7009 Contract clauses.

The contracting officer shall insert the clause 852.21910, Notice of Total ServiceDisabled VeteranOwned Small Business SetAside or 852.21911, Notice of Total VeteranOwned Small Business SetAside in solicitations and contracts for acquisitions under this subpart.

25. Subpart 819.71, consisting of sections 819.7101 through 819.7115, is added to read as follows:
Subpart 819.71VA MentorProt[eacute]g[eacute] Program
Sec.
819.7101 Purpose.
819.7102 Definitions.
819.7103 Nonaffiliation.
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 MentorProt[eacute]g[eacute] Program. 819.7112 Internal controls.
819.7113 Reports.
819.7114 Measurement of program success.
[[Page 49151]]
819.7115 Solicitation provisions.

Authority: 38 U.S.C. 501.
Subpart 819.71VA MentorProt[eacute]g[eacute] Program

819.7101 Purpose.

The VA MentorProt[eacute]g[eacute] Program is designed to assist servicedisabled veteranowned 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 longterm 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 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]. 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 MentorProt[eacute]g[eacute] Program.
(c) Program refers to the VA MentorProt[eacute]g[eacute] Program as described in this Chapter.
(d) Prot[eacute]g[eacute] means a servicedisabled veteranowned small business or veteranowned small business, as defined in VAAR 802.101, which meets Federal small b

FOR FURTHER INFORMATION CONTACT Derek Underwood, Acquisition Policy Division (049P1A), Office of Acquisition and Logistics, Department of Veterans Affairs, 810 Vermont Ave., NW., Washington, DC, 20420, telephone number (202) 4616865 (not a tollfree number) or email Derek.Underwood@va.gov.