Empowerment Contracting

Executive Order 13005 of May 21, 1996

Empowerment Contracting

 In order to promote economy and efficiency in Federal
procurement, it is necessary to secure broad-based
competition for Federal contracts. This broad
competition is best achieved where there is an
expansive pool of potential contractors capable of
producing quality goods and services at competitive
prices. A great and largely untapped opportunity for
expanding the pool of such contractors can be found in
this Nation's economically distressed communities.

 Fostering growth of Federal contractors in
economically distressed communities and ensuring that
those contractors become viable businesses for the long
term will promote economy and efficiency in Federal
procurement and help to empower those communities.
Fostering growth of long-term viable contractors will
be promoted by offering appropriate incentives to
qualified businesses.

 Accordingly, by the authority vested in me as
President by the Constitution and the laws of the
United States, including section 486(a) of title 40,
United States Code, and section 301 of title 3, United
States Code, it is hereby ordered as follows:

 Section 1. Policy. The purpose of this order is to
strengthen the economy and to improve the efficiency of
the Federal procurement system by encouraging business
development that expands the industrial base and
increases competition.

 Sec. 2. Empowerment Contracting Program. In
consultation with the Secretaries of the Departments of
Housing and Urban Development, Labor, and Defense; the
Administrator of General Services; the Administrator of
the National Aeronautics and Space Administration; the
Administrator of the Small Business Administration; and
the Administrator for Federal Procurement Policy, the
Secretary of the Department of Commerce shall develop
policies and procedures to ensure that agencies, to the
extent permitted by law, grant qualified large
businesses and qualified small businesses appropriate
incentives to encourage business activity in areas of
general economic distress, including a price or an
evaluation credit, when assessing offers for government
contracts in unrestricted competitions, where the
incentives would promote the policy set forth in this
order. In developing such policies and procedures, the
Secretary shall consider the size of the qualified
businesses.

 Sec. 3. Monitoring and Evaluation. The Secretary
shall:

     (a) monitor the implementation and operation of
the policies and procedures developed in accordance
with this order;
     (b) develop a process to ensure the proper
administration of the program and to reduce the
potential for fraud by the intended beneficiaries of
the program;
     (c) develop principles and a process to evaluate
the effectiveness of the policies and procedures
developed in accordance with this order; and
     (d) by December 1 of each year, issue a report to
the President on the status and effectiveness of the
program.

 Sec. 4. Implementation Guidelines. In implementing
this order, the Secretary shall:

     (a) issue rules, regulations, and guidelines
necessary to implement this order, including a
requirement for the periodic review of the eligibility
of qualified businesses and distressed areas;
     (b) draft all rules, regulations, and guidelines
necessary to implement this order within 90 days of the
date of this order; and
     (c) ensure that all policies and procedures and
all rules, regulations, and guidelines adopted and
implemented in accordance with this order minimize the
administrative burden on affected agencies and the
procurement process.

 Sec. 5. Definitions. For purposes of this Executive
order:

     (a) “Agency” means any authority of the United
States that is an “agency” under 44 U.S.C. 3502(1),
other than those considered to be independent
regulatory agencies, as defined in 44 U.S.C. 3502(10).
     (b) “Area of general economic distress” shall be
defined, for all urban and rural communities, as any
census tract that has a poverty rate of at least 20
percent or any designated Federal Empowerment Zone,
Supplemental Empowerment Zone, Enhanced Enterprise
Community, or Enterprise Community. In addition, the
Secretary may designate as an area of general economic
distress any additional rural or Indian reservation
area after considering the following factors:
     (1) Unemployment rate;
     (2) Degree of poverty;
     (3) Extent of outmigration; and
     (4) Rate of business formation and rate of
business growth.
     (c) “Qualified large business” means a large
for-profit or not-for-profit trade or business that (1)
employs a significant number of residents from the area
of general economic distress; and (2) either has a
significant physical presence in the area of general
economic distress or has a direct impact on generating
significant economic activity in the area of general
economic distress.
     (d) “Qualified small business” means a small
for-profit or not-for-profit trade or business that (1)
employs a significant number of residents from the area
of general economic distress; (2) has a significant
physical presence in the area of general economic
distress; or (3) has a direct impact on generating
significant economic activity in the area of general
economic distress.
     (e) “Secretary” means the Secretary of Commerce.

 Sec. 6. Agency Authority. Nothing in this Executive
order shall be construed as displacing the agencies'
authority or responsibilities, as authorized by law,
including specifically other programs designed to
promote the development of small or disadvantaged
businesses.

 Sec. 7. Judicial Review. This Executive order does not
create any right or benefit, substantive or procedural,
enforceable at law or equity by a party against the
United States, its agencies or instrumentalities, its
officers or employees, or any other person.

    (Presidential Sig.)

THE WHITE HOUSE,

    May 21, 1996.