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"Rule of Two" Suspensions Proposed

American Forces Press Service

WASHINGTON, Jan. 2, 1996 – DoD announced several initiatives to expand contracting for small, disadvantaged businesses. These initiatives, published for comment in the Federal Register, would amend the Defense Federal Acquisition Regulation Supplement.

Defense officials said these proposals are initial steps toward limiting the adverse impact of suspending the "rule of two" set-aside program. DoD announced last October it suspended its rule of two set-aside programs as part of the government's review of federal affirmative action programs.

The rule of two program enables small, disadvantaged businesses to competitively bid on defense contracts. Under the rule, if two or more small business bid on a contract and those bids are 10 percent over the lowest bidder, the small, disadvantaged business will receieve the contract.

Officials said the proposed contracting procedures include expanding the mandatory use of the 10 percent price preference for small, disadvantaged businesses. This includes competitive awards based on other than price or price-related factors.

The proposal also includes consideration of small, small disadvantaged and women-owned small businesses subcontracting as a factor in the evaluation of past performance. It requires prime contractors to notify their contracting officer of substitutions of firms that are not small, small disadvantaged or women-owned small business for the firms listed in the subcontracting plan.

Finally, the new procedures establish a test program of a small, disadvantaged business evaluation preference -- a process that removes bond cost differentials between the smaller businesses and others as a factor in most source selections for construction acquisitions.

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