TEXT

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
for 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 out migration; 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.

                         /s/William J. Clinton


THE WHITE HOUSE,
May 21, 1996.