[Federal Register Volume 59, Number 62 (Thursday, March 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7716]
[[Page Unknown]]
[Federal Register: March 31, 1994]
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COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR SEVERELY DISABLED
Procurement List Addition
AGENCY: Committee for Purchase From People Who Are Blind or Severely
Disabled.
ACTION: Addition to the procurement list.
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SUMMARY: This action adds to the Procurement List a service to be
furnished by nonprofit agencies employing persons who are blind or have
other severe disabilities.
EFFECTIVE DATE: May 2, 1994.
ADDRESSES: Committee for Purchase From People Who Are Blind or Severely
Disabled, Crystal Square 3, suite 403, 1735 Jefferson Davis Highway,
Arlington, Virginia 22202-3461.
FOR FURTHER INFORMATION CONTACT: Beverly Milkman, (703) 603-7740.
SUPPLEMENTARY INFORMATION: On January 21, 1994, the Committee for
Purchase From People Who Are Blind or Severely Disabled published
notice (59 FR 3332) of proposed addition to the Procurement List.
After consideration of the material presented to it concerning
capability of qualified nonprofit agencies to provide the service, fair
market price, and impact of the addition on the current or most recent
contractors, the Committee has determined that the service listed below
are suitable for procurement by the Federal Government under 41 U.S.C.
46-48c and 41 CFR 51-2.4.
Comments were made by the current contractor for this service,
which also addressed the Committee at its March 10, 1994 meeting. The
commenter indicated that addition of the service to the Procurement
List would have a severe impact on the company. The comments also
addressed two areas: What information the Committee's regulations
permit it to consider when assessing the impact of its action on the
contractor, and the changing nature of the market for Government food
service contracting.
The commenter indicated that the Committee's regulations require it
to focus solely on the legal entity which is the ``current contractor''
when it makes a determination whether addition of an item to the
Procurement List would have a severe adverse impact on that contractor.
According to the commenter, the regulations would not permit the
Committee to consider affiliated companies in making its determination.
The commenter also indicated that the Committee cannot consider in its
impact determination the fact that the Government intends to offer this
service to the Small Business Administration (SBA)'s 8(a) program if it
is not added to the Procurement List because SBA regulations indicate
that SBA will not place the service in the 8(a) program if the
commenter as a small business can demonstrate that the placement would
have a severe adverse impact on it by SBA's standards.
The Committee does not agree with the commenter's interpretation of
its regulations. The Committee has long taken a broader view of what
constitutes a ``current contractor'' impacted by its actions.
For example, it is the Committee's practice when it discovers that
an impacted contractor is a subsidiary of another company to look to
the sales of the parent company when making its impact calculations.
The Committee does not believe that the mere absence of a reference to
affiliated companies in its regulatory provisions concerning contractor
impact bars it from considering affiliates in appropriate
circumstances.
In this case, the legal entity performing the service in question
is owned by a woman who is the wife of the owner of several other
companies which deal exclusively in Government food service
contracting. The husband is currently the sole Government
representative of both his and his wife's companies. The Committee has
discovered that at one Government facility where the wife's company is
the current contractor, one of her husband's companies has bid for the
next contract for this service in place of the wife's company. The two
companies involved in that situation have names that are identical
except one contains a reference to a city which is the location of both
companies' headquarters.
Under these circumstances, the Committee believes that the
Government food service contracting companies owned by this couple
should be considered together as the ``current contractor'' which will
be impacted by the addition of this service to the Procurement List. A
more limited definition of the contractor would permit a business
concern to distort the Committee's impact calculations by moving
contracts around among its affiliated companies. The Committee has
excluded another company owned by the husband from its calculations
because he was able to demonstrate that company is not involved in
Government food service contracting.
The percentage of total sales of the affiliated food service
companies which the value of the commenter's contract for the food
service in question represents is not large enough to reach the level
which the Committee normally considers to constitute severe adverse
impact. The percentage of total sales of the legal entity performing
the contract which this contract represents is also not large enough to
be considered severe adverse impact, so even if the Committee accepted
the commenter's argument on this point there would not be a severe
adverse impact. The Committee has not considered the possible placement
of the service in the SBA 8(a) program in these impact determinations.
The commenter provided projections for its 1994 sales to
demonstrate its contention that these sales will be less than in 1993,
so the impact of losing the service in question will be greater.
However, the commenter's projections have not been consistent with each
other. Consequently, the Committee does not believe it can rely on the
accuracy of the projections enough to use them in determining the
severity of impact on the commenter rather than actual sales data.
In regard to the nature of the market for Government food service
contracts, the commenter claimed that contracting opportunities
available to it have sharply declined in recent years because of SBA's
8(a) and small disadvantaged business programs and additions of
Government food services to the Procurement List. The commenter
provided data which it claimed indicated that less than twenty percent
of its former market remained available to small businesses like itself
which do not qualify as small disadvantaged businesses.
A review of this data disclosed that only thirteen percent of the
Government food services identified as set aside by these programs were
added to the Procurement List. The remaining 87 percent were removed
from the commenter's market by the two SBA programs. The Committee
believes the commenter, as a small business, should seek redress for
this state of affairs with SBA, which controls the programs largely
responsible for the commenter's predicament. Because the impact of the
Committee's program on the commenter's market is not a substantial part
of the losses the market has suffered, the Committee does not believe
it adds enough to the impact on the commenter's sales to raise the
total impact to a level which would constitute severe adverse impact on
the commenter.
Comments were also received via the Department of Labor (DOL) from
the union representing the current contractor's employees at the
affected food service facilities. The union objected to adding the
service to the Procurement List because it claimed the action would
eliminate the jobs of all the union workers. These workers, according
to the union, receive a good hourly wage and excellent benefits which
they would be unable to replace in the local economy because of the
high unemployment rate. The union also indicated the service would cost
the Government substantially more once it had been added to the
Procurement List, and the new workers would be paid less because they
would receive a subminimum wage and no benefits.
The Committee recognizes that this and most of its other actions
necessarily displace some individuals, including union members, who
have been employed by the current contractor for the item being added
to the Procurement List. The Committee believes such displacement is
justified because the individuals with severe disabilities it serves
are much less likely to obtain employment without its intervention than
are the employees of current contractors. Nonetheless, given the
union's concerns and the request of the nonprofit agency (which is
sensitive to the concerns of those local residents who are being
displaced), the Committee has agreed to allow a longer phase-in period
for the conversion of direct labor to people with severe disabilities,
so workers who will eventually be displaced will be able to remain for
longer than usual.
It should also be noted that a significant percentage of the direct
labor jobs associated with this contract will continue to be performed
by people without severe disabilities, so not all union workers will be
displaced. In addition, DOL regulations addressing successor
contractors, including those participating in the Committee's program,
require the successor contractor to pay equal wages to those paid by
the union contractor for the first year, so remaining employees will
not have their wages reduced as the union feared.
The Committee is required by its law to establish a fair market
price for services added to the Procurement List, which precludes it
from charging an unfairly high price. For contracts of this type, a
large part of the price is labor costs. Direct labor wages are set by
DOL and would apply to any contractor performing the service. The scope
of work of the service has been increased from that performed by the
current contractor due to personnel reassignments from military bases
in the region which are being closed, which would account for the
increase in price of this service under the Committee's program.
All the employees of the new contractor, regardless of their
disability status, will receive the benefits included in the DOL wage
determination, which was based on the current union wage and benefit
structure, and will be paid the union wage (commensurate with their
productivity if they have severe disabilities). No one will be paid a
subminimum wage.
I certify that the following action will not have a significant
impact on a substantial number of small entities. The major factors
considered for this certification were:
1. The action will not result in any additional reporting,
recordkeeping or other compliance requirements for small entities other
than the small organizations that will furnish the service to the
Government.
2. The action does not appear to have a severe economic impact on
current contractors for the service.
3. The action will result in authorizing small entities to furnish
the service to the Government.
4. There are no known regulatory alternatives which would
accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 46-
48c) in connection with the service proposed for addition to the
Procurement List.
Accordingly, the following service is hereby added to the
Procurement List:
Food Service Attendant, McGuire Air Force Base, New Jersey.
This action does not affect current contracts awarded prior to the
effective date of this addition or options exercised under those
contracts.
E.R. Alley, Jr.,
Deputy Executive Director.
[FR Doc. 94-7716 Filed 3-30-94; 8:45 am]
BILLING CODE 6820-33-P