Federal Acquisition Regulation; North American Industry Classification System (NAICS)

AGENCIES:

Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION:

Interim rule with request for comments.

SUMMARY:

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed on an interim rule amending the Federal Acquisition Regulation (FAR) to convert size standards and other programs in the FAR based on the Standard Industrial Classification (SIC) system to the North American Industry Classification System (NAICS).

DATES:

Effective Date: October 1, 2000.

Comment Date: Interested parties should submit comments to the FAR Secretariat at the address shown below on or before September 25, 2000 to be considered in the formulation of a final rule.

ADDRESSES:

Submit written comments to: General Services Administration, FAR Secretariat (MVR), 1800 F Street, NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405.

Submit electronic comments via the Internet to: farcase.2000-604@gsa.gov

Please submit comments only and cite FAC 97-19, FAR case 2000-604 in all correspondence related to this case.

FOR FURTHER INFORMATION CONTACT:

The FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, (202) 501-4755, for information pertaining to status or publication schedules. For clarification of content, contact Ms. Victoria Moss, Procurement Analyst, at (202) 501-4764. Please cite FAC 97-19, FAR case 2000-604.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule amends the FAR to convert size standards and other programs in the FAR that are based on the Standard Industrial Classification (SIC) system to the North American Industry Classification System (NAICS).

The Small Business Administration (SBA) amended its regulations to convert small business size standards from the Standard Industrial Classification (SIC) System to the North American Industry Classification System (NAICS). These new size standards were published in the Federal Register at 65 FR 30836, May 15, 2000, and are effective on October 1, 2000. NAICS is a new system that classifies business concerns according to how they conduct their economic activity. SBA has determined that NAICS is a better description of industries in the U.S. economy than the SIC system for purposes of establishing size standards. This interim rule adopts the NAICS-based size standards effective October 1, 2000.

This rule conforms the FAR to the final SBA size standards and converts other programs in the FAR currently based on SIC codes to NAICS codes. These programs include the Small Business Competitiveness Demonstration Program at Subpart 19.10, the Price Evaluation Adjustment for Small Disadvantaged Business Concerns at Subpart 19.11, the Small Disadvantaged Business Participation Program at Subpart 19.12, and the Historically Underutilized Business Zone (HUBZone) Program at Subpart 19.13.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The interim rule is not expected to 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 coding changes are primarily internal to the Government. External uses of the codes under the small business subcontracting program and small disadvantaged business participation programs are primarily limited to large businesses. This rule includes implementation of SBA's final rule, and SBA has certified that the impact of the SIC to NAICS change on each business will not be substantial. Therefore, an Initial Regulatory Flexibility Analysis has not been performed. The Councils will consider comments from small entities concerning the affected FAR Parts in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 601, et seq. (FAC 97-19, FAR case 2000-604), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies; however, this interim rule does not impose new reporting and recordkeeping requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq. This rule will require restructuring of contractors' record systems to collect data on small disadvantaged businesses under small business subcontracting plans and small disadvantaged business participation plans by NAICS rather than SIC. Because this merely involves use of a different industry classification system, this interim rule does not affect existing OMB clearances (9000-0006, 9000-0007, and 9000-0150).

D. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense (DoD), the Administrator of General Services (GSA), and the Administrator for the National Aeronautics and Space Administration (NASA) that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comment. This action is necessary because the Small Business Administration (SBA) issued a final rule on May 15, 2000, providing a new size standards listing that is based on NAICS rather than SIC codes. The SBA rule requires Federal agencies to use the new size standards, beginning October 1, 2000, to determine whether a business is a small business concern. Changes to the FAR are needed to establish policy for use of the new size standards in Government acquisitions. The required implementation date of October 1, 2000, does not permit time to issue a proposed FAR rule and evaluate public comments. However, pursuant to Public Law 98-577 and FAR 1.501, the Councils will consider public comments received in response to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 5, 12, 19, 23, 52, and 53

• Government procurement

Therefore, DoD, GSA, and NASA amend 48 CFR parts 5, 12, 19, 23, 52, and 53 as set forth below:

1. The authority citation for 48 CFR parts 5, 12, 19, 23, 52, and 53 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

PART 5—PUBLICIZING CONTRACT ACTIONS

2. Amend section 5.205 by revising paragraph (f)(2) to read as follows:

PART 12—ACQUISITION OF COMMERCIAL ITEMS

3. Amend section 12.603 in the first sentence of paragraph (c)(2)(iv) by removing “standard industrial classification” and adding, in its place, “NAICS”.

PART 19—SMALL BUSINESS PROGRAMS

4. Amend section 19.001 by revising the definition “Industry” to read as follows:

5. Amend section 19.102 by revising paragraphs (b)(1) and (h) to read as follows:

6. Amend section 19.201—

a. In the first sentence of paragraph (b) by removing “Major Groups as contained in the Standard Industrial Classification (SIC) manual” and adding, in its place, “North American Industry Classification System (NAICS) Industry Subsector”;

b. In the sixth sentence of paragraph (b) by removing “SIC MAJOR Group” and adding, in its place, “NAICS Industry Subsector”;

c. In the first sentence of the introductory text of paragraph (f)(1) by removing “major industry groups” and adding, in its place, “Industry subsectors”; and

d. In paragraphs (f)(1)(ii) and (f)(1)(iii) by removing “SIC Major Group” and adding, in their place, “Industry subsector”.

7. Amend section 19.303 by revising the section heading to read as set forth above; and in paragraph (a) by removing “standard industrial classification” and adding “NAICS” in its place.

8. Amend section 19.501 in paragraph (g) by removing “product classification” and adding “NAICS code” in its place.

9. Amend section 19.805-1 in paragraph (a)(2) by removing “standard industrial classification (SIC)” and adding “North American Industry Classification System (NAICS)” in its place.

10. Amend section 19.1002 in the definition “Emerging small business” by removing “standard industrial classification” and adding “North American Industry Classification System (NAICS)” in its place.

11. Amend section 19.1005 by revising paragraph (a) to read as follows:

12. Revise the introductory text of section 19.1201 to read as follows:

13. Amend section 19.1306 by revising paragraph (a)(2)(i) to read as follows:

14. In addition to the amendments set forth above, in the table below, for each section indicated in the left column, remove the text indicated in the middle column from wherever it appears in the section, and add the text indicated in the right column:

PART 23—ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE

15. Amend section 23.906 by revising paragraph (a)(2)(iv) to read as follows:

PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

16. Amend section 52.212-1 by revising the date and paragraph (a) of the provision to read as follows:

17. Amend section 52.212-3 by revising the date of the clause to read “(Oct 2000)”; and in paragraph (a) of the clause, in the definition “Emerging small business,” by removing “standard industrial classification” and adding, in its place, “NAICS”.

18. Amend section 52.219-1 by revising the date and paragraph (a)(1) of the provision to read as follows:

19. Amend section 52.219-9 by revising the date and paragraph (j)(2) of the clause to read as follows:

20. Amend section 52.219-19 by revising the date of the provision to read “(Oct. 2000)” and in paragraph (a) by removing “standard industrial classification” and adding, in its place, “North American Industry Classification System (NAICS)”.

21. Amend section 52.219-24 by—

a. Revising the date of the provision to read “(Oct. 2000)”; and

b. In paragraph (b) of the provision by removing “Standard Industrial Classification (SIC) Major Groups” and adding, in its place, “North American Industry Classification System (NAICS) Industry Subsectors”.

22. Amend section 52.219-26 by—

a. Revising the date of the clause to read “(Oct. 2000);”

b. In paragraph (a) of the clause by removing “Standard Industrial Classification (SIC) Major Groups” and adding, in its place, “North American Industry Classification System (NAICS) Industry Subsectors”; and

c. In paragraph (b) of the clause by removing “SIC Major Groups” and adding, in its place, “NAICS Industry Subsectors.”

23. Amend section 52.223-13 by revising the date of the provision and paragraph (b)(2)(iv) to read as follows:

24. Amend section 52.223-14 by revising the date of the clause and paragraph (b)(4) to read as follows:

PART 53—FORMS

25. Amend section 53.204-2—

a. In paragraph (a) by removing “( Rev. 10/97)” and adding in its place “(Rev 10/00)”; and

b. In paragraph (b) by removing “( Rev. 5/96)” and adding in its place “(Rev 10/00)”.

26. Amend section 53.219 in paragraph (c) by removing “( 1/99)” and adding in its place “(10/00)”.

27. Revise section 53.301-279 to read as follows:

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28. Revise section 53.301-281 to read as follows:

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29. Revise section 53.302-312 to read as follows:

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