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Office of Small and Disadvantaged Business UtilizationSmall Business Program Policy ManualSmall Disadvantaged Business (SDB) Assistance Program****This chapter is pending revision**** A. SMALL DISADVANTAGED BUSINESS (SDB) CERTIFICATION PROGRAM The Federal Acquisition Regulation (FAR), Part 19.304 requires that small disadvantaged business concern must be certified by the Small Business Administration (SBA) to be eligible to receive a benefit as a prime or subcontractor based on its disadvantaged status. The small disadvantaged business must be certified as a small disadvantaged business (SDB) concern or have a completed SDB application pending at the SBA or a Private Certifier. The certification period for all SDBs is three years. All small disadvantaged businesses that want to claim their status must be certified by October 1, 1999. 8(a) firms have been automatically certified by the Small Business Administration. The contracting officer may accept an offeror’s representation that it is an SDB concern for general statistical purposes. The provision at FAR 52.219-1, Small Business Program Representations, or 52.212-3(c)(2), Offeror Representations and Certifications - Commercial Items, is used to collect SDB data for general statistical purposes. This philosophy expresses the basis for Federal programs supporting minority business enterprise, begun in 1969. At that time, Federal contracts were viewed as an effective means to stimulate the growth of the minority business community. Section 8(a) of the Small Business Investment Act of 1958 was determined to be an appropriate mechanism for awarding those contracts. B. PRICE EVALUATION ADJUSTMENT FOR A SDB A price evaluation adjustment for SDBs shall be applied as determined by the U.S. Department of Commerce (DOC) to use in Federal procurement programs. In addition, it determines adjustments (in the form of percentages) by North American Industry Code System (NAICS) major groups (the first two digits of the NAICS Code) and U.S. regions annually. The listing of the industries eligible for an adjustment is located at http://www.arnet.gov/. The price evaluation adjustment shall be used in competitive acquisitions. The adjustment shall not be used in acquisitions that (1) are less than or equal to the simplified acquisition threshold; (2) are awarded pursuant to the 8(a) Program; (3) are set aside for small business concerns; or (4) are set aside for HUBZone small business concerns, (5) where price is not a selection factor so that a price evaluation adjustment would not be considered (e.g., architect/engineer acquisitions); or (6) where all fair and reasonable offers are accepted (e.g., the award of multiple award schedule contracts). The price evaluation adjustment shall be used for competitive, unrestricted Commercial Item Acquisitions. SDBs must elect to accept or waive the evaluation adjustment. The price evaluation adjustment gives offers from SDBs a price evaluation adjustment by adding the factor determined by the DOC to all offers, except - (1) Offers from SDBs that have not waived the evaluation adjustment, or if a price evaluation adjustment for SDBs is authorized on a regional basis, offers from SDBs, whose address is in such a region, that have not waived the evaluation adjustment; (2) An otherwise successful offer of eligible products under the Trade Agreements Act when the acquisition equals or exceeds the dollar threshold in 25.402; and (3) An otherwise successful offers where application of the factor would be inconsistent with a Memorandum of Understanding or other international agreement with a foreign government. An example of the use of the price evaluation adjustment is detailed below:
Do not evaluate offers using the price evaluation adjustment when it would cause award as a result of this adjustment to be made at a price that exceeds fair market price by more than the factor as determined by the DOC (see FAR 19.202-6(a)). C. SMALL DISADVANTAGED BUSINESS PARTICIPATION PROGRAM (EVALUATION FACTOR) Two mechanisms are addressed in Federal Acquisition Regulation (FAR) Part 19.12, Small Disadvantaged Business Participation Program. These two mechanisms are: (a) an evaluation factor or sub-factor for the participation of SDB concerns in performance of the contract; and (b) an incentive subcontracting program for SDB concerns.
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Last Revised: June 3, 2008