BUD Memorandum 98-09

Department of Commerce Price Evaluation Adjustments
for Construction (BUDM 98-09)

September 16, 1998

D-7800
ACM-1.10

MEMORANDUM

To:           Regional Director, PN, MP, LC, UC, GP
                   Attention: PN-3702, PN-3703, MP-825, LC-3103, UC-458, GP-3800
                Director, Administrative Service Center
                  Attention: D-2945
                Director, Management Services
                  Attention: D-7810

From: Ron Simonich, Manager, Business & Economic Development Program

Subject: Business Utilization and Development Memorandum (BUDM) 98-09
Department of Commerce Price Evaluation Adjustments for Construction

FAC 97-06 is effective for solicitations issued after October 1, 1998. This interim rule implements a portion of the Department of Justice's structure to reform affirmative action in Federal procurement in the aftermath of Adarand Constructors, Inc. v. Pena. The FAC establishes a procurement mechanism benefiting small disadvantaged businesses (SDBs), i.e., a price evaluation adjustment of up to ten percent in certain Standard Industrial Classification (SIC) Major Groups as determined by the Department of Commerce. This mechanism will be mandatory for those competitive procurements to which it applies. It will not, however, apply to acquisitions that are not greater than the simplified acquisition threshold; are awarded pursuant to the 8(a) program; or are set aside for small business concerns.

To establish price evaluation adjustments, Commerce conducted an economic analysis to identify industries eligible for the adjustments and determined that an adjustment of 10% should be employed for all designated SIC major industry groups. The notice of determination concerning price evaluation adjustments was published in the Federal Register on June 30, 1998 (pages 35713 - 35718). It contains the complete list of eligible industries.
For construction, eligibility for the adjustment is determined by both SIC major group and Census division:

SIC Major Group	Industry	Census Division
15	Building Construction --General Contractors and Operative Builders	East North Central, East South Central, Mid Atlantic, and West South Central
16	Heavy Construction other than Building Construction -- Contractors	East South Central and West South Central
17	Construction --Special Trade Contractors	New England and West North Central

Census regions are groupings of States that subdivide the Untied States for the presentation of data. There are four regions. Each region is divided into two or more census divisions. There are nine divisions. This arrangement is depicted in the following table.

Census Region	Census Division	States
Northeast	New England	Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut
	Middle Atlantic	New York, New Jersey, and Pennsylvania,
Midwest	East North Central	Ohio, Indiana, Illinois, Michigan, and Wisconsin
	West North Central	Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, and Kansas
South	South Atlantic	Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, and Florida
	East South Central	Kentucky, Tennessee, Alabama, and Mississippi
	West South Central	Arkansas, Louisiana, Oklahoma, and Texas
West	Mountain	Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, and Nevada
	Pacific	Washington, Oregon, California, Alaska, and Hawaii

As of the date of this BUDM, policy makers have not decided if location of project or location of construction contractor home office will determine eligibility for the price preference. However, they have indicated that a resolution is imminent. We will advise as soon we are notified or become aware of their decision.

Designation of eligible industries and applicable price adjustment factors is subject to annual redetermination by the Department of Commerce.

Please distribute this information to all acquisition personnel in your region/office.

bc: D-7800
WBR:RSIMONICH:jl:09/16/98:445-2447

Department of Commerce Price Evaluation Adjustments for Construction (BUDM 98-09)

Department of Commerce Price Evaluation Adjustments
for Construction (BUDM 98-09)