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IMMEDIATE RELEASE

Release No: 660-95
December 14, 1995

DEPARTMENT OF DEFENSE ANNOUNCES PROPOSED NEW INITIATIVES TO LIMIT THE ADVERSEIMPACT OF THE "RULE OF TWO" SUSPENSION ON SMALL DISADVANTAGED BUSINESSES

The Department of Defense announced several proposed new initiatives as part ofcontinuing efforts designed to expand contracting for small disadvantagedbusinesses (SDBs). The initiatives, published for comment in the FederalRegister, are proposed amendments to the Defense Federal Acquisition RegulationSupplement that are intended as initial steps toward limiting the adverseimpact of the suspension of the "rule of two" set-aside program.

DoD announced on October 23, 1995 that it had suspended its "rule of two"set-aside program for SDBs as part of the government's on-going review of allfederal affirmative action programs in light of the Supreme Court's Junedecision in Adarand v. Pena.

The proposed new contracting procedures include: (1) expanding the mandatoryuse of the 10 percent price preference for SDBs, to include competitive awardsbased on other than price or price related factors; (2) consideration ofsmall, small disadvantaged, and women-owned small business subcontracting as afactor in the evaluation of past performance; (3) requiring prime contractorsto notify the contracting officer of any substitutions of firms that are notsmall, small disadvantaged, or women-owned small businesses for the firmslisted in the subcontracting plan; and (4) establishing a test program of anSDB evaluation preference that would remove bond cost differentials betweenSDBs and other businesses as a factor in most source selections forconstruction acquisitions. The Department believes these strong and positiveproposals will significantly enhance the opportunities for SDBs to participateas important elements of the defense industrial base.

Today's proposed changes represent an initial step to ameliorate the effect ofthe suspension of the "rule of two". The Department of Justice continues tocoordinate efforts to review programs to ensure that they are in compliancewith Adarand and the President's July policy directive. Justice also iscontinuing efforts to reform federal government procurement to meet thesestandards while ensuring that individuals traditionally excluded from businessopportunities have a chance to compete meaningfully for government contracts.The Justice Department advises that it anticipates this effort will producefurther reforms.