99-o0004

OFFICE OF THE UNDER SECRETARY OF DEFENSE

3000 DEFENSE, PENTAGON

WASHINGTON, DC, 20301-3000

January 25, 1999

ACQUISTION AND TECHNOLOGY

In reply refer to:

DAR Tracking Number: 99-00004

MEMORANDUM FOR DIRECT'ORS OF DEFEENSE AGENCIES

DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT,

ASN (RD&A) /ABM

DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE (CONTRACTING) SAF/AQC

DEPUTY ASSISTANT SECRETARY OF THE ARMY (PROCUREMENT)

COMMANDER, DEFENSE CONTRACT MANAGEMENT COMMAND, DEFENSE LOGISTICS AGENCY

SUBJECT : Suspension of the Price Evaluation Adjustment for Small Disadvantaged Businesses

Effective 30 days after the date Of this memorandum, all Department of Defense contracting. activities shall suspend the use of the. price evaluation adjustment for small disadvantaged businesses (SDBs) in DoD procurements, as prescribed in the Federal Acquisition Regulation (FAR), Subpart 19.11.

Subsection 2323(e) of title 10, United States Code (USC) as amended by section 801 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999, prohibits DoD from exercising the authority for a price exceeding fair market cost if the Secretary determines at the beginning of the fiscal year that DoD achieved the 5 percent goat established by subsection 2323(a) in the most recent fiscal year for which data are available. The determination has been made that in fiscal year 1998 DoD exceeded the 5 percent goal established in 10 USC 2323(a) for contract awards to SDBs. Accordingly, the use of the price adjustment prescribed in FAR 19.11 is suspended for DoD.

This suspension is in effect for a one-year period beginning 30 days after the date of this memorandum for new solicitations issued on or after that date.

Signed,

Eleanor R. Spector

Director, Defense Procurement