Federal Acquisition Regulation; FAR Case 2006-032, Small Business Size Rerepresentation, 11821-11826 [E9-5871]
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Federal Register / Vol. 74, No. 52 / Thursday, March 19, 2009 / Rules and Regulations
compliance at the start of contract
performance.
Item IV—Least Developed Countries
that are Designated Countries (FAR
Case 2008–021)
This final rule amends the Federal
Acquisition Regulation (FAR) to revise
the definition of designated country,
adding Liberia and removing Cape
Verde. Least Developed Countries form
a subset of designated countries. The list
of Least Developed Countries is derived
from a United Nations list of Least
Developed Countries. The United States
Trade Representative has updated the
list of Least Developed Countries that
are treated as designated countries. In
acquisitions that are covered by the
World Trade Organization Government
Procurement Agreement, contracting
officers must acquire only U.S.-made or
designated country end products, or
U.S. or designated-country services,
unless offers of such end products or
services are not received or are
insufficient to fulfill the requirement
(FAR 25.403(c)).
Item V—Federal Food Donation Act of
2008 (Pub. L. 110–247) (FAR Case 2008–
017) (Interim)
This interim rule amends the Federal
Acquisition Regulation (FAR) Parts 26,
31, and 52 to encourage executive
agencies and their contractors to donate
apparently wholesome excess food to
nonprofit organizations that provide
assistance to food-insecure people in the
United States. This change implements
the Federal Food Donation Act of 2008
(Pub. L. 110–247) which encourages
executive agencies and their contractors,
in contracts for the provision, service, or
sale of food to encourage the
contractors, to the maximum extent
practicable and safe, to donate
apparently wholesome excess food to
nonprofit organizations that provide
assistance to food-insecure people in the
United States. The rule is effective for
all solicitations and contracts greater
than $25,000 for the provision, service,
or sale of food in the United States
issued on or after the effective date of
the rule.
Item VI—Technical Amendments
Editorial changes are made at FAR
3.503–2, 47.103–1, and 52.225–11.
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Dated: March 13, 2009
Al Matera,
Director, Office of Acquisition Policy.
Federal Acquisition Circular
Federal Acquisition Circular (FAC)
2005-31 is issued under the authority of
the Secretary of Defense, the
Administrator of General Services, and
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the Administrator for the National
Aeronautics and Space Administration.
Unless otherwise specified, all
Federal Acquisition Regulation (FAR)
and other directive material contained
in FAC 2005-31 is effective March 19,
2009, except for Items I and III, which
are effective April 20, 2009.
Dated: March 12, 2009.
Amy G. Williams,
Acting Deputy Director, Defense Procurement
and Acquisition Policy (Defense Acquisition
Regulations System).
Dated: March 11, 2009.
Rodney P. Lantier,
Acting Senior Procurement Executive &
Acting Deputy Chief Acquisition Officer,
Office of the Chief Acquisition Officer, U.S.
General Services Administration.
Dated: March 11, 2009.
William P. McNally,
Assistant Administrator for Procurement,
National Aeronautics and Space
Administration.
[FR Doc. E9–5874 Filed 3–18–09; 8:45 am]
BILLING CODE 6820–EP–S
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 1, 4, 17, 19, and 52
[FAC 2005–31; FAR Case 2006–032; Item
I; Docket 2007–0002; Sequence 11]
RIN 9000–AK78
Federal Acquisition Regulation; FAR
Case 2006–032, Small Business Size
Rerepresentation
AGENCIES: Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
SUMMARY: The Civilian Agency
Acquisition Council and the Defense
Acquisition Regulations Council
(Councils) have agreed on a final rule
amending the Federal Acquisition
Regulation (FAR) to implement the
Small Business Administration’s (SBA)
final rule published on November 15,
2006 (71 FR 66434) entitled, Small
Business Size Regulations; Size for
Purposes of Governmentwide
Acquisition Contracts, Multiple Award
Schedule Contracts and Other LongTerm Contracts; 8(a) Business
Development/Small Disadvantaged
Business; Business Status
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11821
Determinations. The purpose of the SBA
rule is to improve the accuracy of small
business size status reporting over the
life of certain contracts.
DATES: Effective Date: April 20, 2009.
Applicability date: This rule applies
to solicitations issued and contracts
awarded on or after April 20, 2009. All
long-term contracts as defined in this
rule, awarded to small business
concerns prior to June 30, 2007, that
have not yet been modified to include
FAR 52.219–28, must be modified to
include FAR 52.219–28 within 90 days
after the effective date of this final rule.
FOR FURTHER INFORMATION CONTACT: Ms.
Rhonda Cundiff, Procurement Analyst,
at (202) 501–0044 for clarification of
content. For information pertaining to
status or publication schedules, contact
the FAR Secretariat at (202) 501–4755.
Please cite FAC 2005–31, FAR case
2006–032.
SUPPLEMENTARY INFORMATION:
A. Background
DoD, GSA, and NASA published an
interim rule in the Federal Register at
72 FR 36852 on July 5, 2007, to
implement the Small Business
Administration’s (SBA) final rule
published on November 15, 2006 (71 FR
66434) entitled, Small Business Size
Regulations; Size for Purposes of
Governmentwide Acquisition Contracts,
Multiple Award Schedule Contracts and
Other Long-Term Contracts; 8(a)
Business Development/Small
Disadvantaged Business; Business
Status Determinations.
Four commenters submitted
comments on the interim rule. The
comments recommend substantive
changes to the rule, request clarification,
and recommend editorial changes to the
language for clarity and consistency. A
discussion of these comments and the
changes made to the rule as a result of
them is provided below:
Comment: One commenter states that
the interim rule is ineffective at
preventing ongoing misrepresentation
and miscoding on individual contracts
because it does not impose a time limit
on when existing contracts have to be
modified in order to incorporate the
small business rerepresentation
requirements. This time period could
easily be several years, until the time
that the base period runs out and the
agency must face the choice to exercise
options. The commenter recommends
that the rule be modified to impose a
reasonable period of 30–90 days
requiring all contracts to be modified for
inclusion of the rerepresentation
requirements, and further provide that
these requirements will be included by
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Federal Register / Vol. 74, No. 52 / Thursday, March 19, 2009 / Rules and Regulations
operation of law regardless of whether
the contracts were modified.
Response: The interim rule was
effective on June 30, 2007. The
Councils’ expectation was that the
process of modifying long-term
contracts awarded to small businesses
prior to June 30, 2007, to include the
FAR clause at 52.219–28, Post-Award
Small Business Program
Rerepresentation, would begin
immediately and would be completed
within a reasonable period of time. It
was also expected that other contracts
awarded prior to June 30, 2007, to small
businesses, would be modified to
include the clause at the time an option
is exercised. To make the Councils’
expectation more clear, the preamble to
this Federal Register notice states that
all long-term contracts awarded to small
businesses prior to June 30, 2007, that
have not yet been modified to include
FAR 52.219–28, must be modified
within 90 days after the effective date of
this final rule.
The Councils do not concur with the
recommendation to add language to the
final rule stating that the
rerepresentation requirements will be
included by operation of law regardless
of whether the contracts were modified.
This is a matter to be determined by the
courts and not addressed by the
Councils.
Comment: One commenter states that
the interim rule does not make it clear
that companies that have been acquired
by large businesses must recertify their
small business status (or lack thereof)
within 30 days as well as in connection
with individual task orders.
Response: The Councils believe the
interim rule is clear and changes are not
necessary. Contractors are required to
complete rerepresentation of their size
status at the prime contract level in
accordance with FAR 19.301–2 and
52.219–28 within 30 days after
execution of a novation agreement, or
within 30 days after a merger or
acquisition that does not require a
novation agreement. Further, as set forth
at FAR 19.301–2(d) of the final rule,
after a contractor rerepresents it is other
than small, and the contracting officer
modifies the contract to reflect the
rerepresentation, the agency no longer
includes the value of options exercised,
modifications issued, orders issued, or
purchases made under blanket purchase
agreements on that contract in its small
business prime contracting goal
achievements.
Comment: One commenter
recommends that the interim rule be
modified to clearly require certification
by merged or acquired firms for
purposes of bidding on task orders.
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Response: The Councils do not
concur. The purpose of the rule is to
improve the accuracy of size status
reporting over the life of certain
contracts. Under this FAR rule, a
rerepresentation at the contract level
that the contractor is no longer small,
results in the task orders being reported
as awarded to a concern that is not
small. FAR clause 52.219–28 requires
that contractors rerepresent size status
by updating their representations and
certifications at the prime contract level
in the Online Representations and
Certifications Application (ORCA). The
contractor must notify the contracting
office that it has made the required
rerepresentation. In accordance with
FAR 19.301–2(d) of the final rule, after
a contractor rerepresents it is other than
small, and the contracting officer
modifies the contract to reflect the
rerepresentation, the agency no longer
includes the value of options exercised,
modifications issued, orders issued, or
purchases made under blanket purchase
agreements on that contract in its small
business prime contracting goal
achievements.
The Councils do not agree that
rerepresentation for purposes of
competing for task orders should be
required. This FAR rule at paragraph
19.301–2(e), and the SBA regulation that
it implements, state that a change in size
status does not change the terms and
conditions of the contract.
Comment: One commenter states the
purpose of the interim rule is to
improve the accuracy of size status
representations in the Central
Contractor Registration (CCR) and the
Online Representations and
Certifications Applications (ORCA)
databases. The rule does not do this
because it does not require contractors
to recertify their status in these
databases unless and until directed to
by individual contracting officers. The
integrity of these databases and future
competitions is then at the mercy of
individual contracting officers and their
agencies who may have a vested interest
in doing business with a large business
under a contract vehicle with a small
business.
Response: As stated in the interim
rule, the primary purpose of this rule is
to improve the accuracy of size status
reporting over the life of certain
contracts. This is done by revising the
size status in the reporting database,
Federal Procurement Data System
(FPDS). Size status is revised in FPDS
for actions under a particular contract
from the point when the contracting
officer modifies the contract to reflect
the rerepresentation, forward. Although
the rule does improve the accuracy of
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CCR and ORCA by keeping the
information more current for future
competitions, that is not its primary
purpose. Further, the accuracy of the
data in these Government-wide
databases is not dependent on the
actions of an individual contracting
officer.
The FAR already requires contractors
to update the information in CCR at
least annually to ensure that it is
current, accurate and complete. This
rule adds a requirement for contractors
to additionally update the information
in CCR and ORCA when any of the
events requiring rerepresentation occur.
This means that the contractor may now
be updating the information more often
than annually. Neither the annual nor
the rerepresentation update is
dependent on an individual contracting
officer directing it.
When a contractor is submitting a bid
or proposal in response to a solicitation,
the contractor is required by a FAR
provision in the solicitation to verify
that the representations and
certifications in ORCA, including those
related to the size standard applicable to
the solicitation, have been updated
within the last 12 months, are current,
accurate, and complete. Therefore, there
is already a requirement in the FAR for
representations to be accurate, complete
and current for future competitions.
This rule adds a requirement for ORCA
also to be updated when any of the
events requiring rerepresentation occur.
These requirements are in standard FAR
provisions and clauses and are not
dependent on individual contracting
officer direction.
Comment: One commenter states that
the interim rule does not utilize the
authorities in SBA regulations, 13 CFR
121.1001, which give SBA Government
Contracting Area Directors and the Head
of the SBA Office of Government
Contracting in Washington, DC the
authority to initiate size determinations
for the purpose of cleaning up
government-wide databases. The
commenter recommends that the
interim rule be modified to provide for
notice and dual reporting to the SBA
Area Directors and/or the Office of
Government Contracting on any
recertification requests.
Response: The Councils have not
adopted this recommendation since the
SBA final rule published on November
15, 2006 did not amend 13 CFR
121.1001(b)(9). The rerepresentation
rule does not affect SBA’s authority to
initiate a formal size determination for
purposes of validating firms listed in the
Central Contractor Registration.
Comment: One commenter states that
the interim rule is ineffective at
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applying the anti-misrepresentation
provisions of the Small Business Act.
The Small Business Act contains
procedures for debarring companies that
misrepresent their size status.
Recommend contracting officers refer
companies representing themselves as
small businesses to the SBA to
determine size status and possible
misrepresentation. Additionally, the
interim rule should permit referral to
agency suspension and debarment
officials.
Response: The Councils do not
concur. The FAR already addresses the
remedies for misrepresentation of size
status. FAR 19.301–1(b) states, ‘‘The
contracting officer shall accept an
offeror’s representation in a specific bid
or proposal that it is a small business
unless (1) another offeror or interested
party challenges the concern’s small
business representation, or (2) the
contracting officer has a reason to
question the representation.’’ The
interim rule provided at FAR
19.302(c)(1) that a protest concerning a
specific rerepresentation shall be
referred to the SBA. Nothing in this FAR
rule precludes agencies from taking
actions that are otherwise justified and
permitted under the FAR.
Comment: One commenter states that
the purpose of the interim rule is to
promote consistency with the SBA
Recertification Regulations. However,
these regulations are in conflict. Federal
agencies will follow the FAR only
without any additional guidance. The
commenter recommends that the
interim rule be modified to specifically
direct Contracting Officers to follow the
SBA Recertification Regulations.
Response: The Councils do not agree.
The stated purpose of the interim rule
is to improve the accuracy of small
business size status reporting, at the
prime contract level, over the life of
certain contracts. Contracting officers
under the Executive Branch are required
to follow the FAR. In cases where there
are inconsistencies between Title 13
(SBA regulations) and Title 48 (FAR) of
the Code of Federal Regulations,
contracting officers follow the FAR.
Comment: One commenter states that
the interim rule fails to utilize existing
authorities concerning nonresponsibility, fraud and
misrepresentation in Government
contracting. The interim rule does not
address penalties when there is a small
business size and status
misrepresentation. As a result, the
interim rule sends a message that
misconduct in small business programs
is acceptable.
Response: The Councils do not agree
that the interim rule sends a message
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that misconduct in small business
programs is acceptable. The same
penalties that are currently available
when a misrepresentation has occurred
for initial award of a contract apply
when a firm rerepresents its size status.
The contractor is required to provide its
rerepresentation in the Online
Representations and Certifications
Application (ORCA). ORCA alerts the
contractor that it may be subject to
penalties if information submitted in
ORCA is not ‘‘current, accurate and
complete.’’ As part of the signatory
process in ORCA, the contractor is
notified that, ‘‘By submitting the
representations and certifications in
ORCA, you are attesting to the accuracy
of the information and may be subject
to penalties for misrepresentations.’’
Comment: One commenter
recommends amending the last sentence
of FAR 19.301–2, paragraph (a), to read:
‘‘or as authorized under another
appropriate authority.’’
Response: The Councils do not
concur. The Councils believe that the
language, as written, is sufficient and
the recommended change could be read
as changing the meaning. The intent is
that whatever authority is used the
period of performance will not be
extended by more than six months.
Comment: One commenter stated that
FPDS-NG needs to allow an effective
date for a change to be entered,
regardless of the modification date.
Response: FAR 19.301–2(d) has been
revised to state that agencies should
issue a modification to the contract
capturing the rerepresentation and
report it to FPDS within 30 days after
notification of the rerepresentation. The
modification date is the effective date
for changing status in FPDS.
Comment: One commenter stated that
the requirements are unclear for existing
contracts. This commenter asked, under
the rule, is a contracting officer required
to modify a contract awarded to a small
business that is other than long-term if
the contract does not include an option
to exercise?
Response: No. There are two instances
when the contracting officer is required
to modify contracts awarded to small
business concerns prior to June 30,
2007, to include the FAR clause at
52.219–28: 1) when the contract is a
long-term contract; and 2) when the
contract is not a long-term contract but
the contract is being modified to
exercise any option as defined in FAR
2.101. If a contract that is not a longterm contract does not include any
options that have not yet been
exercised, then the contract would not
be modified.
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Comment: One commenter asked with
regard to FAR 19.301–2(b)(1) and (2): Do
the words ‘‘within 30 days after
execution of a novation agreement’’ and
‘‘within 30 days of a merger or
acquisition’’ assume that FAR clause
52.219–28 is already in the contract?
The language here can be interpreted
two different ways. One scenario is that
the small business must rerepresent
upon three different sets of
circumstances, (1) after execution of a
novation agreement, (2) after merger or
acquisition, or (3) after the FAR clause
52.219–28 is added to the contract. In
this scenario, if the clause is not already
in the contract, how would a small
business rerepresent after execution of a
novation agreement or a merger/
acquisition? The second scenario
assumes that the clause is already in the
contract and upon execution of a
novation agreement or after a merger/
acquisition, the small business
rerepresents itself.
Response: This rule addresses two
circumstances with the same end result:
1) contracts awarded on or after June 30,
2007, where the clause is in the contract
at time of award; and 2) contracts
awarded prior to June 30, 2007, where
the clause is incorporated into the
contract through a contract
modification. In the first circumstance,
the contractor must rerepresent its size
status within 30 days after an
acquisition or merger, or within 30 days
after execution of a novation agreement.
In the second circumstance, the
contractor must rerepresent its size
status within 30 days of the contract
being modified to incorporate FAR
clause 52.219–28, if a novation
agreement was executed, or a merger or
acquisition occurred, prior to inclusion
of the clause in the contract. In either
case, the clause would be in the contract
before the contractor is required to
rerepresent its size status.
Comment: One commenter states that
the rule appears to be focused on (1)
size classification issues; (2) statistical
reporting; and (3) unrestricted singleaward contract scenarios. The
commenter asked, how does a
contracting officer treat a former small
business acquired by a large business on
a small business set-aside multipleaward indefinite-delivery indefinitequantity contract?
Response: The purpose of the rule is
to improve the accuracy of small
business size status reporting, at the
prime contract level, over the life of
certain contracts. As set forth at FAR
19.301–2(e), a change in size status does
not change the terms and conditions of
the contract. How a contracting officer
treats a concern that has rerepresented
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that it is no longer a small business will
depend on the terms and conditions of
the contract and will be case specific.
Comment: One commenter
recommends changing ‘‘the conditions’’
to ‘‘any of the conditions’’ at FAR
4.1201(b)(2), 19.202–5(c), and 19.301–
3(a).
Response: The Councils concur that
revising FAR 4.1201(b)(2) to read ‘‘any
of the conditions’’ would be more clear
and have made this change to the rule.
However, the Councils do not agree that
a change at FAR 19.202–5(c) or 19.301–
3(a) is necessary because clause 52.219–
28, which is referenced at 19.202–5(c)
and 19.301(b), already states ‘‘upon the
occurrence of any [emphasis added] of
the following.’’ FAR 19.301–3(a) refers
to 19.301(b).
Comment: One commenter
recommends changing ‘‘consider’’ to
‘‘take into account’’ in FAR 17.207(e)(2).
Response: Non-Concur. The term
‘‘consider’’ is used and understood
throughout the FAR. Making the
recommended change would not add
clarity or improve understanding.
Comment: One commenter
recommends changing ‘‘small business’’
to ‘‘small business concern’’ at FAR
19.202–5(c)(2), 19.301–2(b), and 19.301–
3(b).
Response: Concur, for consistency
within the FAR. The rule has been
revised accordingly.
Comment: One commenter
recommends amending FAR 19.202–5 to
include the following to be consistent
with 52.219–28(b), (f), and (g): ‘‘Require
a contractor that does not have
representations and certifications in
ORCA, or that does not have a
representation in ORCA for the North
American Industry Classification
System code applicable to the contract,
to complete and submit the
representation required by paragraph (g)
of clause 52.219–28, or. . .’’
Response: The Councils do not
concur. FAR 19.202–5(c) contains the
requirement to rerepresent. The various
methods for rerepresenting are
contained in FAR clause 52.219–28. It is
not necessary nor would it add clarity
to restate the methods for rerepresenting
since they are contained in FAR clause
52.219–28 to which 19.202–5(c) refers.
Comment: One commenter
recommends amending FAR clause
52.219–28, paragraph (a) ‘‘Definitions’’,
‘‘Small Business Concern,’’ to be
consistent with the definition in section
19.001. The commenter recommends
the following language, which appears
to have been omitted from FAR clause
52.219–28, be appended to paragraph
(a): ‘‘Such a concern is ‘not dominant in
its field of operation’ when it does not
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exercise a controlling or major influence
on a national basis in a kind of business
activity in which a number of business
concerns are primarily engaged. In
determining whether dominance exists,
consideration shall be given to all
appropriate factors, including volume of
business, number of employees,
financial resources, competitive status
or position, ownership or control of
materials, processes, patents, license
agreements, facilities, sales territory,
and nature of business activity.’’
Response: The Councils have
included the recommended language in
FAR 52.219–28(a) for consistency. The
definition which was in FAR 19.001 is
now in 2.101.
Comment: One commenter
recommends amending FAR 52.219–
28(2)(ii)(sic) to change the language
from, ‘‘Within 60 to 120 days prior to
the exercise date specified in the
contract for any option thereafter,’’ to
‘‘Within 60 to 120 days prior to the date
specified in the contract for exercising
any option thereafter.’’
Response: The Councils have revised
the language at FAR 52.219–28(b)(3)(ii)
as recommended for overall ease of
understanding.
Comment: One commenter
recommends amending FAR 52.219–
28(e) to read as follows: ‘‘to ensure that
they reflect the Contractor’s current
status.’’
Response: The Councils have adopted
the recommended change to FAR
52.219–28(e) for overall ease of
understanding.
In addition to the changes made in the
final rule in response to public
comments, the Councils made
additional changes to make the rule
more clear.
In FAR paragraph 19.202–5(c), ‘‘and
the conditions in paragraph (b) of the
clause are met’’ was changed to ‘‘and
the conditions in the clause for
rerepresenting are met.’’ The reason for
the change is that paragraph 19.202–
5(c)(2) refers to paragraph (f) of the
clause which was not specifically
covered in the introductory language in
FAR 19.202–5(c), which only referred to
paragraph (b) of the clause. By stating
the conditions in the clause for
rerepresenting are met, both paragraphs
(b) and (f) are clearly covered.
FAR paragraph 19.301–2(d) was
replaced with, ‘‘After a contractor
rerepresents it is other than small in
accordance with 52.219–28, the agency
may no longer include the value of
options exercised, modifications issued,
orders issued, or purchases made under
blanket purchase agreements on that
contract in its small business prime
contracting goal achievements. Agencies
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must issue a modification to the
contract capturing the rerepresentation
and report it to FPDS within 30 days
after notification of the
rerepresentation.’’
This change was made to make it
clear that the rerepresentation impacts
all funding obligations under the
contract, not just options exercised and
orders issued. The Councils believe that
this was implicit since the purpose of
the rule is to improve the accuracy of
size status reporting, which would cover
all funds that are reported. However, the
Councils have now made the language
more clear by making it more explicit.
A thirty-day timeframe has been added
for making the change in FPDS. The
Councils believe that it was understood
that the change to FPDS would be done
expeditiously, this thirty-day timeframe
makes that more clear.
FAR paragraph 52.219–28(e) has been
revised to read in part, ‘‘The contractor
shall notify the contracting office in
writing within the time frames specified
in paragraph (b) of this clause.’’
The Councils believe that it was
implicit in the former language that the
contractor must notify the Government
within the time frames established for
rerepresentation. However, this change
ensures that it is clear. The phrase ‘‘by
e-mail or otherwise’’ was deleted as
unnecessary since ‘‘in writing’’ covers
all forms of written submissions
including e-mails.
This is a significant regulatory action
and, therefore, was subject to review
under Executive Order 12866,
Regulatory Planning and Review, dated
September 30, 1993. The rule is not a
major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5
U.S.C. 601, et seq., applies to this final
rule. The Councils prepared a Final
Regulatory Flexibility Analysis (FRFA),
and it is summarized as follows:
These changes may have a significant
economic impact on a substantial number of
small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et
seq. The purpose of the SBA’s final rule,
which this FAR rule implements, is to enable
the Government to report more accurate
small business prime contracting statistics.
The rule provides for more accurate statistics
through rerepresentations on contracts and
using the size status in effect at the time of
the rerepresentation.
Improving the accuracy of the statistics
may benefit small businesses. The premise of
the SBA rule is that if agencies can no longer
take credit toward their small business goals
for funds obligated to contracts where, over
the course of the contract, the contractor has
become other than small, agencies will need
to make up the shortfall in meeting their
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goals by seeking new procurement
opportunities with the present universe of
small businesses.
In the preamble to its rule, SBA estimated
that potentially 2,300 concerns could be
initially impacted by the requirement to
rerepresent on long-term contracts, and 250
concerns may be impacted annually,
thereafter. In addition, it is estimated that
300 concerns may be affected annually by the
requirement to rerepresent size status as a
result of novations, acquisitions, or mergers.
This rule will not impose any additional
recordkeeping requirements on small
businesses because they are already required
to review and update their size status data,
at a minimum, on an annual basis.
Interested parties may obtain a copy
of the FRFA from the FAR Secretariat.
The FAR Secretariat has submitted a
copy of the FRFA to the Chief Counsel
for Advocacy of the Small Business
Administration.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub.
L. 104–13) applies because the final rule
contains information collection
requirements. The FAR clause at
52.219–28, Post-Award Small Business
Program Rerepresentation requires the
contractor to rerepresent size status and
then notify the contracting office in
writing that the data have been
validated or updated, and provide the
date of the validation or update. Public
comments were solicited for the
information collection at the interim
rule stage (72 FR 36852). No comments
were received. Accordingly, the FAR
Secretariat will forward a request for
approval of a new information
collection requirement concerning
9000–0163 to the Office of Management
and Budget under 44 U.S.C. Chapter 35.
Public comments concerning this
request will be invited through a
subsequent Federal Register notice.
List of Subjects in 48 CFR Parts 1, 4, 19,
and 52
Government procurement.
Dated: March 13, 2009.
Al Matera,
Director, Office of Acquisition Policy.
Accordingly, the interim rule
published in the Federal Register at 72
FR 36852, July 5, 2007, is adopted as a
final rule with the following changes:
■ 1. The authority citation for 48 CFR
parts 1, 4, 19, and 52 continues to read
as follows:
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■
Authority: 40 U.S.C. 121(c); 10 U.S.C.
chapter 137; and 42 U.S.C. 2473(c).
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11825
PART 1—FEDERAL ACQUISITION
REGULATIONS SYSTEM
19.301–3 Rerepresentation by a contractor
that represented itself as other than a small
business concern.
1.106
*
[Amended]
2. Amend section 1.106 by adding, in
numerical sequence, FAR segment
‘‘52.219–28’’ and its corresponding
OMB Control Number ‘‘9000–0163’’.
■
PART 4—ADMINISTRATIVE MATTERS
4.1201
[Amended]
3. Amend section 4.1201 by removing
from paragraph (b)(2) ‘‘When the’’ and
adding ‘‘When any of the’’ in its place.
■
PART 19—SMALL BUSINESS
PROGRAMS
4. Amend section 19.202–5 by
revising the introductory text of
paragraph (c); and removing from
paragraphs (c)(1) and (c)(2) ‘‘business’’
and adding ‘‘business concern’’ in its
place.
■
19.202–5 Data collection and reporting
requirements.
*
*
*
*
*
(c) When the contract includes the
clause at 52.219–28, Post Award Small
Business Program Rerepresentation, and
the conditions in the clause for
rerepresenting are met—
*
*
*
*
*
■ 5. Amend section 19.301–2 by
revising the section heading as set forth
below; by removing from the
introductory text of paragraph (b)
‘‘business’’ and adding ‘‘business
concern’’ in its place; and by revising
paragraph (d) to read as follows:
19.301–2 Rerepresentation by a contractor
that represented itself as a small business
concern.
*
*
*
*
*
(d) After a contractor rerepresents it is
other than small in accordance with
52.219–28, the agency may no longer
include the value of options exercised,
modifications issued, orders issued, or
purchases made under blanket purchase
agreements on that contract in its small
business prime contracting goal
achievements. Agencies should issue a
modification to the contract capturing
the rerepresentation and report it to
FPDS within 30 days after notification
of the rerepresentation.
*
*
*
*
*
■ 6. Amend section 19.301–3 by
revising the section heading as set forth
below; and by removing from paragraph
(b) ‘‘business’’ and adding ‘‘business
concern’’ in its place. The revised text
reads as follows:
PO 00000
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Fmt 4701
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*
*
*
*
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
7. Amend section 52.212–5 by
revising the date of the clause and
paragraph (b)(16) to read as follows:
■
52.212–5 Contract Terms and Conditions
Required to Implement Statutes or
Executive Orders—Commercial Items.
*
*
*
*
*
CONTRACT TERMS AND CONDITIONS
REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS—COMMERCIAL
ITEMS (MAR 2009)
*
*
*
*
*
(b) * * *
(16) 52.219–28, Post Award Small Business
Program Rerepresentation (MAR 2009) (15
U.S.C. 632(a)(2)).
*
*
*
*
*
(End of Clause)
■ 8. Amend section 52.219–28 by
revising the date of the clause; by
adding in paragraph (a), in the
definition ‘‘Small business concern’’
two new sentences to the end of the
paragraph; and by revising paragraphs
(b)(3)(ii) and (e) to read as follows:
52.219–28 Post-Award Small Business
Program Rerepresentation.
*
*
*
*
*
POST-AWARD SMALL BUSINESS
PROGRAM REREPRESENTATION (MAR
2009)
(a) Definitions. * * *
Small business concern * * * Such a
concern is ‘‘not dominant in its field of
operation’’ when it does not exercise a
controlling or major influence on a national
basis in a kind of business activity in which
a number of business concerns are primarily
engaged. In determining whether dominance
exists, consideration shall be given to all
appropriate factors, including volume of
business, number of employees, financial
resources, competitive status or position,
ownership or control of materials, processes,
patents, license agreements, facilities, sales
territory, and nature of business activity.
(b) * * *
(3) * * *
(ii) Within 60 to 120 days prior to the date
specified in the contract for exercising any
option thereafter.
*
*
*
*
*
(e) Except as provided in paragraph (g) of
this clause, the Contractor shall make the
rerepresentation required by paragraph (b) of
this clause by validating or updating all its
representations in the Online
Representations and Certifications
Application and its data in the Central
Contractor Registration, as necessary, to
ensure that they reflect the Contractor’s
current status. The Contractor shall notify the
contracting office in writing within the
timeframes specified in paragraph (b) of this
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Federal Register / Vol. 74, No. 52 / Thursday, March 19, 2009 / Rules and Regulations
clause that the data have been validated or
updated, and provide the date of the
validation or update.
*
*
*
*
(End of clause)
*
[FR Doc. E9–5871 Filed 3–18–09; 8:45 am]
BILLING CODE 6820–EP–S
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Part 15
[FAC 2005–31; FAR Case 2008–012; Item
II; Docket 2008–0001, Sequence 10]
RIN 9000–AL12
Federal Acquisition Regulation; FAR
Case 2008–012, Clarification of
Submission of Cost or Pricing Data on
Non-Commercial Modifications of
Commercial Items
AGENCIES: Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Interim rule with request for
comments.
The Civilian Agency
Acquisition Council and the Defense
Acquisition Regulations Council
(Councils) have agreed on an interim
rule amending the Federal Acquisition
Regulation (FAR) to implement Section
814 of the National Defense
Authorization Act for Fiscal Year 2008.
Section 814 required the harmonization
of the thresholds for cost or pricing data.
Specifically, Section 814 required
alignment of the threshold for cost or
pricing data on non-commercial
modifications of commercial items with
the Truth In Negotiation Act (TINA)
threshold for cost and pricing data.
DATES: Effective Date: March 19, 2009.
Comment Date: Interested parties
should submit written comments to the
FAR Secretariat on or before May 18,
2009 to be considered in the
formulation of a final rule.
ADDRESSES: Submit comments
identified by FAC 2005–31, FAR case
2008–012, by any of the following
methods:
• Regulations.gov: https://
www.regulations.gov.
Submit comments via the Federal
eRulemaking portal by inputting ‘‘FAR
Case 2008–012’’ under the heading
‘‘Comment or Submission’’. Select the
link ‘‘Send a Comment or Submission’’
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SUMMARY:
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17:29 Mar 18, 2009
Jkt 217001
that corresponds with FAR Case 2008–
012. Follow the instructions provided to
complete the ‘‘Public Comment and
Submission Form’’. Please include your
name, company name (if any), and
‘‘FAR Case 2008–012’’ on your attached
document.
• Fax: 202–501–4067.
• Mail: General Services
Administration, Regulatory Secretariat
(VPR), 1800 F Street, NW, Room 4041,
ATTN: Hada Flowers, Washington, DC
20405.
Instructions: Please submit comments
only and cite FAC 2005–31, FAR case
2008–012, in all correspondence related
to this case. All comments received will
be posted without change to https://
www.regulations.gov, including any
personal and/or business confidential
information provided.
FOR FURTHER INFORMATION CONTACT: Mr.
Edward N. Chambers, Procurement
Analyst, at (202) 501–3221 for
clarification of content. Please cite FAC
2005–31, FAR case 2008–012. For
information pertaining to status or
publication schedules, contact the FAR
Secretariat at (202) 501–4755.
SUPPLEMENTARY INFORMATION:
A. Background
The National Defense Authorization
Act (NDAA) for Fiscal Year 2008,
Section 814, implemented two areas of
clarification with regards to the
submission of cost or pricing data on
non-commercial modifications of
commercial items. The first area dealt
with clarifying at what point during the
life of the contract that the cost or
pricing data threshold should be
applied. Section 814 of the NDAA for
FY 2008 clarified this point by inserting
‘‘(at the time of contract award’’) after
‘‘total price of the contract’’ language
already contained in this FAR section.
The second area dealt with the
harmonization of the thresholds for cost
or pricing data. Section 814 of the
NDAA for FY 2008 deleted the current
threshold amount ($500,000) for cost or
pricing data relative to non-commercial
modifications of commercial items and
aligned this threshold with the current
Truth In Negotiation Act (TINA)
threshold for cost or pricing data of
$650,000. Thus, as the TINA threshold
for cost or pricing data is adjusted in the
future so will the threshold for
obtaining cost or pricing data on noncommercial modifications of
commercial items. This case will make
the necessary changes within the FAR.
This is not a significant regulatory
action and, therefore, was not subject to
review under Section 6(b) of Executive
Order 12866, Regulatory Planning and
PO 00000
Frm 00008
Fmt 4701
Sfmt 4700
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
B. Regulatory Flexibility Act
The interim rule is not expected to
have a significant economic impact on
a substantial number of small entities
within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq.,
since it is harmonizing this FAR section
with other parts of the FAR and should
actually reduce the administrative
burden on contractors by not requiring
them to track two separate dollar
thresholds for submitting cost or pricing
data. It is also increasing this dollar
threshold relative to the submittal of
cost or pricing data in this situation and
thus contractors will experience a
reduced administrative burden since
they no longer will be required to
submit cost or pricing data on this lower
threshold amount. Therefore, an Initial
Regulatory Flexibility Analysis has not
been performed. The Councils will
consider comments from small entities
concerning the affected FAR Part 15 in
accordance with 5 U.S.C. 610. Interested
parties must submit such comments
separately and should cite 5 U.S.C. 601,
et seq. (FAC 2005–31, FAR case 2008–
012), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does
not apply because the changes to the
FAR do not impose information
collection requirements that require the
approval of the Office of Management
and Budget under 44 U.S.C. Chapter 35,
et seq.
D. Determination to Issue an Interim
Rule
A determination has been made under
the authority of the Secretary of Defense
(DoD), the Administrator of General
Services (GSA), and the Administrator
of the National Aeronautics and Space
Administration (NASA) that urgent and
compelling reasons exist to promulgate
this interim rule without prior
opportunity for public comment. This
action is necessary because this
provision of the National Defense
Authorization Act for Fiscal Year 2008,
Section 814 went into effect upon
enactment, on January 28, 2008.
However, pursuant to Pub. L. 98–577
and FAR 1.501, the Councils will
consider public comments received in
response to this interim rule in the
formation of the final rule.
List of Subjects in 48 CFR Part 15
Government procurement.
E:\FR\FM\19MRR2.SGM
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]]>Agencies
[Federal Register Volume 74, Number 52 (Thursday, March 19, 2009)]
[Rules and Regulations]
[Pages 11821-11826]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-5871]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 4, 17, 19, and 52
[FAC 2005-31; FAR Case 2006-032; Item I; Docket 2007-0002; Sequence 11]
RIN 9000-AK78
Federal Acquisition Regulation; FAR Case 2006-032, Small Business
Size Rerepresentation
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending the Federal Acquisition Regulation (FAR) to implement the
Small Business Administration's (SBA) final rule published on November
15, 2006 (71 FR 66434) entitled, Small Business Size Regulations; Size
for Purposes of Governmentwide Acquisition Contracts, Multiple Award
Schedule Contracts and Other Long-Term Contracts; 8(a) Business
Development/Small Disadvantaged Business; Business Status
Determinations. The purpose of the SBA rule is to improve the accuracy
of small business size status reporting over the life of certain
contracts.
DATES: Effective Date: April 20, 2009.
Applicability date: This rule applies to solicitations issued and
contracts awarded on or after April 20, 2009. All long-term contracts
as defined in this rule, awarded to small business concerns prior to
June 30, 2007, that have not yet been modified to include FAR 52.219-
28, must be modified to include FAR 52.219-28 within 90 days after the
effective date of this final rule.
FOR FURTHER INFORMATION CONTACT: Ms. Rhonda Cundiff, Procurement
Analyst, at (202) 501-0044 for clarification of content. For
information pertaining to status or publication schedules, contact the
FAR Secretariat at (202) 501-4755. Please cite FAC 2005-31, FAR case
2006-032.
SUPPLEMENTARY INFORMATION:
A. Background
DoD, GSA, and NASA published an interim rule in the Federal
Register at 72 FR 36852 on July 5, 2007, to implement the Small
Business Administration's (SBA) final rule published on November 15,
2006 (71 FR 66434) entitled, Small Business Size Regulations; Size for
Purposes of Governmentwide Acquisition Contracts, Multiple Award
Schedule Contracts and Other Long-Term Contracts; 8(a) Business
Development/Small Disadvantaged Business; Business Status
Determinations.
Four commenters submitted comments on the interim rule. The
comments recommend substantive changes to the rule, request
clarification, and recommend editorial changes to the language for
clarity and consistency. A discussion of these comments and the changes
made to the rule as a result of them is provided below:
Comment: One commenter states that the interim rule is ineffective
at preventing ongoing misrepresentation and miscoding on individual
contracts because it does not impose a time limit on when existing
contracts have to be modified in order to incorporate the small
business rerepresentation requirements. This time period could easily
be several years, until the time that the base period runs out and the
agency must face the choice to exercise options. The commenter
recommends that the rule be modified to impose a reasonable period of
30-90 days requiring all contracts to be modified for inclusion of the
rerepresentation requirements, and further provide that these
requirements will be included by
[[Page 11822]]
operation of law regardless of whether the contracts were modified.
Response: The interim rule was effective on June 30, 2007. The
Councils' expectation was that the process of modifying long-term
contracts awarded to small businesses prior to June 30, 2007, to
include the FAR clause at 52.219-28, Post-Award Small Business Program
Rerepresentation, would begin immediately and would be completed within
a reasonable period of time. It was also expected that other contracts
awarded prior to June 30, 2007, to small businesses, would be modified
to include the clause at the time an option is exercised. To make the
Councils' expectation more clear, the preamble to this Federal Register
notice states that all long-term contracts awarded to small businesses
prior to June 30, 2007, that have not yet been modified to include FAR
52.219-28, must be modified within 90 days after the effective date of
this final rule.
The Councils do not concur with the recommendation to add language
to the final rule stating that the rerepresentation requirements will
be included by operation of law regardless of whether the contracts
were modified. This is a matter to be determined by the courts and not
addressed by the Councils.
Comment: One commenter states that the interim rule does not make
it clear that companies that have been acquired by large businesses
must recertify their small business status (or lack thereof) within 30
days as well as in connection with individual task orders.
Response: The Councils believe the interim rule is clear and
changes are not necessary. Contractors are required to complete
rerepresentation of their size status at the prime contract level in
accordance with FAR 19.301-2 and 52.219-28 within 30 days after
execution of a novation agreement, or within 30 days after a merger or
acquisition that does not require a novation agreement. Further, as set
forth at FAR 19.301-2(d) of the final rule, after a contractor
rerepresents it is other than small, and the contracting officer
modifies the contract to reflect the rerepresentation, the agency no
longer includes the value of options exercised, modifications issued,
orders issued, or purchases made under blanket purchase agreements on
that contract in its small business prime contracting goal
achievements.
Comment: One commenter recommends that the interim rule be modified
to clearly require certification by merged or acquired firms for
purposes of bidding on task orders.
Response: The Councils do not concur. The purpose of the rule is to
improve the accuracy of size status reporting over the life of certain
contracts. Under this FAR rule, a rerepresentation at the contract
level that the contractor is no longer small, results in the task
orders being reported as awarded to a concern that is not small. FAR
clause 52.219-28 requires that contractors rerepresent size status by
updating their representations and certifications at the prime contract
level in the Online Representations and Certifications Application
(ORCA). The contractor must notify the contracting office that it has
made the required rerepresentation. In accordance with FAR 19.301-2(d)
of the final rule, after a contractor rerepresents it is other than
small, and the contracting officer modifies the contract to reflect the
rerepresentation, the agency no longer includes the value of options
exercised, modifications issued, orders issued, or purchases made under
blanket purchase agreements on that contract in its small business
prime contracting goal achievements.
The Councils do not agree that rerepresentation for purposes of
competing for task orders should be required. This FAR rule at
paragraph 19.301-2(e), and the SBA regulation that it implements, state
that a change in size status does not change the terms and conditions
of the contract.
Comment: One commenter states the purpose of the interim rule is to
improve the accuracy of size status representations in the Central
Contractor Registration (CCR) and the Online Representations and
Certifications Applications (ORCA) databases. The rule does not do this
because it does not require contractors to recertify their status in
these databases unless and until directed to by individual contracting
officers. The integrity of these databases and future competitions is
then at the mercy of individual contracting officers and their agencies
who may have a vested interest in doing business with a large business
under a contract vehicle with a small business.
Response: As stated in the interim rule, the primary purpose of
this rule is to improve the accuracy of size status reporting over the
life of certain contracts. This is done by revising the size status in
the reporting database, Federal Procurement Data System (FPDS). Size
status is revised in FPDS for actions under a particular contract from
the point when the contracting officer modifies the contract to reflect
the rerepresentation, forward. Although the rule does improve the
accuracy of CCR and ORCA by keeping the information more current for
future competitions, that is not its primary purpose. Further, the
accuracy of the data in these Government-wide databases is not
dependent on the actions of an individual contracting officer.
The FAR already requires contractors to update the information in
CCR at least annually to ensure that it is current, accurate and
complete. This rule adds a requirement for contractors to additionally
update the information in CCR and ORCA when any of the events requiring
rerepresentation occur. This means that the contractor may now be
updating the information more often than annually. Neither the annual
nor the rerepresentation update is dependent on an individual
contracting officer directing it.
When a contractor is submitting a bid or proposal in response to a
solicitation, the contractor is required by a FAR provision in the
solicitation to verify that the representations and certifications in
ORCA, including those related to the size standard applicable to the
solicitation, have been updated within the last 12 months, are current,
accurate, and complete. Therefore, there is already a requirement in
the FAR for representations to be accurate, complete and current for
future competitions. This rule adds a requirement for ORCA also to be
updated when any of the events requiring rerepresentation occur. These
requirements are in standard FAR provisions and clauses and are not
dependent on individual contracting officer direction.
Comment: One commenter states that the interim rule does not
utilize the authorities in SBA regulations, 13 CFR 121.1001, which give
SBA Government Contracting Area Directors and the Head of the SBA
Office of Government Contracting in Washington, DC the authority to
initiate size determinations for the purpose of cleaning up government-
wide databases. The commenter recommends that the interim rule be
modified to provide for notice and dual reporting to the SBA Area
Directors and/or the Office of Government Contracting on any
recertification requests.
Response: The Councils have not adopted this recommendation since
the SBA final rule published on November 15, 2006 did not amend 13 CFR
121.1001(b)(9). The rerepresentation rule does not affect SBA's
authority to initiate a formal size determination for purposes of
validating firms listed in the Central Contractor Registration.
Comment: One commenter states that the interim rule is ineffective
at
[[Page 11823]]
applying the anti-misrepresentation provisions of the Small Business
Act. The Small Business Act contains procedures for debarring companies
that misrepresent their size status. Recommend contracting officers
refer companies representing themselves as small businesses to the SBA
to determine size status and possible misrepresentation. Additionally,
the interim rule should permit referral to agency suspension and
debarment officials.
Response: The Councils do not concur. The FAR already addresses the
remedies for misrepresentation of size status. FAR 19.301-1(b) states,
``The contracting officer shall accept an offeror's representation in a
specific bid or proposal that it is a small business unless (1) another
offeror or interested party challenges the concern's small business
representation, or (2) the contracting officer has a reason to question
the representation.'' The interim rule provided at FAR 19.302(c)(1)
that a protest concerning a specific rerepresentation shall be referred
to the SBA. Nothing in this FAR rule precludes agencies from taking
actions that are otherwise justified and permitted under the FAR.
Comment: One commenter states that the purpose of the interim rule
is to promote consistency with the SBA Recertification Regulations.
However, these regulations are in conflict. Federal agencies will
follow the FAR only without any additional guidance. The commenter
recommends that the interim rule be modified to specifically direct
Contracting Officers to follow the SBA Recertification Regulations.
Response: The Councils do not agree. The stated purpose of the
interim rule is to improve the accuracy of small business size status
reporting, at the prime contract level, over the life of certain
contracts. Contracting officers under the Executive Branch are required
to follow the FAR. In cases where there are inconsistencies between
Title 13 (SBA regulations) and Title 48 (FAR) of the Code of Federal
Regulations, contracting officers follow the FAR.
Comment: One commenter states that the interim rule fails to
utilize existing authorities concerning non-responsibility, fraud and
misrepresentation in Government contracting. The interim rule does not
address penalties when there is a small business size and status
misrepresentation. As a result, the interim rule sends a message that
misconduct in small business programs is acceptable.
Response: The Councils do not agree that the interim rule sends a
message that misconduct in small business programs is acceptable. The
same penalties that are currently available when a misrepresentation
has occurred for initial award of a contract apply when a firm
rerepresents its size status. The contractor is required to provide its
rerepresentation in the Online Representations and Certifications
Application (ORCA). ORCA alerts the contractor that it may be subject
to penalties if information submitted in ORCA is not ``current,
accurate and complete.'' As part of the signatory process in ORCA, the
contractor is notified that, ``By submitting the representations and
certifications in ORCA, you are attesting to the accuracy of the
information and may be subject to penalties for misrepresentations.''
Comment: One commenter recommends amending the last sentence of FAR
19.301-2, paragraph (a), to read: ``or as authorized under another
appropriate authority.''
Response: The Councils do not concur. The Councils believe that the
language, as written, is sufficient and the recommended change could be
read as changing the meaning. The intent is that whatever authority is
used the period of performance will not be extended by more than six
months.
Comment: One commenter stated that FPDS-NG needs to allow an
effective date for a change to be entered, regardless of the
modification date.
Response: FAR 19.301-2(d) has been revised to state that agencies
should issue a modification to the contract capturing the
rerepresentation and report it to FPDS within 30 days after
notification of the rerepresentation. The modification date is the
effective date for changing status in FPDS.
Comment: One commenter stated that the requirements are unclear for
existing contracts. This commenter asked, under the rule, is a
contracting officer required to modify a contract awarded to a small
business that is other than long-term if the contract does not include
an option to exercise?
Response: No. There are two instances when the contracting officer
is required to modify contracts awarded to small business concerns
prior to June 30, 2007, to include the FAR clause at 52.219-28: 1) when
the contract is a long-term contract; and 2) when the contract is not a
long-term contract but the contract is being modified to exercise any
option as defined in FAR 2.101. If a contract that is not a long-term
contract does not include any options that have not yet been exercised,
then the contract would not be modified.
Comment: One commenter asked with regard to FAR 19.301-2(b)(1) and
(2): Do the words ``within 30 days after execution of a novation
agreement'' and ``within 30 days of a merger or acquisition'' assume
that FAR clause 52.219-28 is already in the contract? The language here
can be interpreted two different ways. One scenario is that the small
business must rerepresent upon three different sets of circumstances,
(1) after execution of a novation agreement, (2) after merger or
acquisition, or (3) after the FAR clause 52.219-28 is added to the
contract. In this scenario, if the clause is not already in the
contract, how would a small business rerepresent after execution of a
novation agreement or a merger/acquisition? The second scenario assumes
that the clause is already in the contract and upon execution of a
novation agreement or after a merger/acquisition, the small business
rerepresents itself.
Response: This rule addresses two circumstances with the same end
result: 1) contracts awarded on or after June 30, 2007, where the
clause is in the contract at time of award; and 2) contracts awarded
prior to June 30, 2007, where the clause is incorporated into the
contract through a contract modification. In the first circumstance,
the contractor must rerepresent its size status within 30 days after an
acquisition or merger, or within 30 days after execution of a novation
agreement. In the second circumstance, the contractor must rerepresent
its size status within 30 days of the contract being modified to
incorporate FAR clause 52.219-28, if a novation agreement was executed,
or a merger or acquisition occurred, prior to inclusion of the clause
in the contract. In either case, the clause would be in the contract
before the contractor is required to rerepresent its size status.
Comment: One commenter states that the rule appears to be focused
on (1) size classification issues; (2) statistical reporting; and (3)
unrestricted single-award contract scenarios. The commenter asked, how
does a contracting officer treat a former small business acquired by a
large business on a small business set-aside multiple-award indefinite-
delivery indefinite-quantity contract?
Response: The purpose of the rule is to improve the accuracy of
small business size status reporting, at the prime contract level, over
the life of certain contracts. As set forth at FAR 19.301-2(e), a
change in size status does not change the terms and conditions of the
contract. How a contracting officer treats a concern that has
rerepresented
[[Page 11824]]
that it is no longer a small business will depend on the terms and
conditions of the contract and will be case specific.
Comment: One commenter recommends changing ``the conditions'' to
``any of the conditions'' at FAR 4.1201(b)(2), 19.202-5(c), and 19.301-
3(a).
Response: The Councils concur that revising FAR 4.1201(b)(2) to
read ``any of the conditions'' would be more clear and have made this
change to the rule. However, the Councils do not agree that a change at
FAR 19.202-5(c) or 19.301-3(a) is necessary because clause 52.219-28,
which is referenced at 19.202-5(c) and 19.301(b), already states ``upon
the occurrence of any [emphasis added] of the following.'' FAR 19.301-
3(a) refers to 19.301(b).
Comment: One commenter recommends changing ``consider'' to ``take
into account'' in FAR 17.207(e)(2).
Response: Non-Concur. The term ``consider'' is used and understood
throughout the FAR. Making the recommended change would not add clarity
or improve understanding.
Comment: One commenter recommends changing ``small business'' to
``small business concern'' at FAR 19.202-5(c)(2), 19.301-2(b), and
19.301-3(b).
Response: Concur, for consistency within the FAR. The rule has been
revised accordingly.
Comment: One commenter recommends amending FAR 19.202-5 to include
the following to be consistent with 52.219-28(b), (f), and (g):
``Require a contractor that does not have representations and
certifications in ORCA, or that does not have a representation in ORCA
for the North American Industry Classification System code applicable
to the contract, to complete and submit the representation required by
paragraph (g) of clause 52.219-28, or. . .''
Response: The Councils do not concur. FAR 19.202-5(c) contains the
requirement to rerepresent. The various methods for rerepresenting are
contained in FAR clause 52.219-28. It is not necessary nor would it add
clarity to restate the methods for rerepresenting since they are
contained in FAR clause 52.219-28 to which 19.202-5(c) refers.
Comment: One commenter recommends amending FAR clause 52.219-28,
paragraph (a) ``Definitions'', ``Small Business Concern,'' to be
consistent with the definition in section 19.001. The commenter
recommends the following language, which appears to have been omitted
from FAR clause 52.219-28, be appended to paragraph (a): ``Such a
concern is `not dominant in its field of operation' when it does not
exercise a controlling or major influence on a national basis in a kind
of business activity in which a number of business concerns are
primarily engaged. In determining whether dominance exists,
consideration shall be given to all appropriate factors, including
volume of business, number of employees, financial resources,
competitive status or position, ownership or control of materials,
processes, patents, license agreements, facilities, sales territory,
and nature of business activity.''
Response: The Councils have included the recommended language in
FAR 52.219-28(a) for consistency. The definition which was in FAR
19.001 is now in 2.101.
Comment: One commenter recommends amending FAR 52.219-
28(2)(ii)(sic) to change the language from, ``Within 60 to 120 days
prior to the exercise date specified in the contract for any option
thereafter,'' to ``Within 60 to 120 days prior to the date specified in
the contract for exercising any option thereafter.''
Response: The Councils have revised the language at FAR 52.219-
28(b)(3)(ii) as recommended for overall ease of understanding.
Comment: One commenter recommends amending FAR 52.219-28(e) to read
as follows: ``to ensure that they reflect the Contractor's current
status.''
Response: The Councils have adopted the recommended change to FAR
52.219-28(e) for overall ease of understanding.
In addition to the changes made in the final rule in response to
public comments, the Councils made additional changes to make the rule
more clear.
In FAR paragraph 19.202-5(c), ``and the conditions in paragraph (b)
of the clause are met'' was changed to ``and the conditions in the
clause for rerepresenting are met.'' The reason for the change is that
paragraph 19.202-5(c)(2) refers to paragraph (f) of the clause which
was not specifically covered in the introductory language in FAR
19.202-5(c), which only referred to paragraph (b) of the clause. By
stating the conditions in the clause for rerepresenting are met, both
paragraphs (b) and (f) are clearly covered.
FAR paragraph 19.301-2(d) was replaced with, ``After a contractor
rerepresents it is other than small in accordance with 52.219-28, the
agency may no longer include the value of options exercised,
modifications issued, orders issued, or purchases made under blanket
purchase agreements on that contract in its small business prime
contracting goal achievements. Agencies must issue a modification to
the contract capturing the rerepresentation and report it to FPDS
within 30 days after notification of the rerepresentation.''
This change was made to make it clear that the rerepresentation
impacts all funding obligations under the contract, not just options
exercised and orders issued. The Councils believe that this was
implicit since the purpose of the rule is to improve the accuracy of
size status reporting, which would cover all funds that are reported.
However, the Councils have now made the language more clear by making
it more explicit. A thirty-day timeframe has been added for making the
change in FPDS. The Councils believe that it was understood that the
change to FPDS would be done expeditiously, this thirty-day timeframe
makes that more clear.
FAR paragraph 52.219-28(e) has been revised to read in part, ``The
contractor shall notify the contracting office in writing within the
time frames specified in paragraph (b) of this clause.''
The Councils believe that it was implicit in the former language
that the contractor must notify the Government within the time frames
established for rerepresentation. However, this change ensures that it
is clear. The phrase ``by e-mail or otherwise'' was deleted as
unnecessary since ``in writing'' covers all forms of written
submissions including e-mails.
This is a significant regulatory action and, therefore, was subject
to review under Executive Order 12866, Regulatory Planning and Review,
dated September 30, 1993. The rule is not a major rule under 5 U.S.C.
804.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to
this final rule. The Councils prepared a Final Regulatory Flexibility
Analysis (FRFA), and it is summarized as follows:
These changes may have a significant economic impact on a
substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The purpose of the
SBA's final rule, which this FAR rule implements, is to enable the
Government to report more accurate small business prime contracting
statistics. The rule provides for more accurate statistics through
rerepresentations on contracts and using the size status in effect
at the time of the rerepresentation.
Improving the accuracy of the statistics may benefit small
businesses. The premise of the SBA rule is that if agencies can no
longer take credit toward their small business goals for funds
obligated to contracts where, over the course of the contract, the
contractor has become other than small, agencies will need to make
up the shortfall in meeting their
[[Page 11825]]
goals by seeking new procurement opportunities with the present
universe of small businesses.
In the preamble to its rule, SBA estimated that potentially
2,300 concerns could be initially impacted by the requirement to
rerepresent on long-term contracts, and 250 concerns may be impacted
annually, thereafter. In addition, it is estimated that 300 concerns
may be affected annually by the requirement to rerepresent size
status as a result of novations, acquisitions, or mergers.
This rule will not impose any additional recordkeeping
requirements on small businesses because they are already required
to review and update their size status data, at a minimum, on an
annual basis.
Interested parties may obtain a copy of the FRFA from the FAR
Secretariat. The FAR Secretariat has submitted a copy of the FRFA to
the Chief Counsel for Advocacy of the Small Business Administration.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 104-13) applies because the
final rule contains information collection requirements. The FAR clause
at 52.219-28, Post-Award Small Business Program Rerepresentation
requires the contractor to rerepresent size status and then notify the
contracting office in writing that the data have been validated or
updated, and provide the date of the validation or update. Public
comments were solicited for the information collection at the interim
rule stage (72 FR 36852). No comments were received. Accordingly, the
FAR Secretariat will forward a request for approval of a new
information collection requirement concerning 9000-0163 to the Office
of Management and Budget under 44 U.S.C. Chapter 35. Public comments
concerning this request will be invited through a subsequent Federal
Register notice.
List of Subjects in 48 CFR Parts 1, 4, 19, and 52
Government procurement.
Dated: March 13, 2009.
Al Matera,
Director, Office of Acquisition Policy.
0
Accordingly, the interim rule published in the Federal Register at 72
FR 36852, July 5, 2007, is adopted as a final rule with the following
changes:
0
1. The authority citation for 48 CFR parts 1, 4, 19, and 52 continues
to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM
1.106 [Amended]
0
2. Amend section 1.106 by adding, in numerical sequence, FAR segment
``52.219-28'' and its corresponding OMB Control Number ``9000-0163''.
PART 4--ADMINISTRATIVE MATTERS
4.1201 [Amended]
0
3. Amend section 4.1201 by removing from paragraph (b)(2) ``When the''
and adding ``When any of the'' in its place.
PART 19--SMALL BUSINESS PROGRAMS
0
4. Amend section 19.202-5 by revising the introductory text of
paragraph (c); and removing from paragraphs (c)(1) and (c)(2)
``business'' and adding ``business concern'' in its place.
19.202-5 Data collection and reporting requirements.
* * * * *
(c) When the contract includes the clause at 52.219-28, Post Award
Small Business Program Rerepresentation, and the conditions in the
clause for rerepresenting are met--
* * * * *
0
5. Amend section 19.301-2 by revising the section heading as set forth
below; by removing from the introductory text of paragraph (b)
``business'' and adding ``business concern'' in its place; and by
revising paragraph (d) to read as follows:
19.301-2 Rerepresentation by a contractor that represented itself as a
small business concern.
* * * * *
(d) After a contractor rerepresents it is other than small in
accordance with 52.219-28, the agency may no longer include the value
of options exercised, modifications issued, orders issued, or purchases
made under blanket purchase agreements on that contract in its small
business prime contracting goal achievements. Agencies should issue a
modification to the contract capturing the rerepresentation and report
it to FPDS within 30 days after notification of the rerepresentation.
* * * * *
0
6. Amend section 19.301-3 by revising the section heading as set forth
below; and by removing from paragraph (b) ``business'' and adding
``business concern'' in its place. The revised text reads as follows:
19.301-3 Rerepresentation by a contractor that represented itself as
other than a small business concern.
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
7. Amend section 52.212-5 by revising the date of the clause and
paragraph (b)(16) to read as follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR
EXECUTIVE ORDERS--COMMERCIAL ITEMS (MAR 2009)
* * * * *
(b) * * *
(16) 52.219-28, Post Award Small Business Program
Rerepresentation (MAR 2009) (15 U.S.C. 632(a)(2)).
* * * * *
(End of Clause)
0
8. Amend section 52.219-28 by revising the date of the clause; by
adding in paragraph (a), in the definition ``Small business concern''
two new sentences to the end of the paragraph; and by revising
paragraphs (b)(3)(ii) and (e) to read as follows:
52.219-28 Post-Award Small Business Program Rerepresentation.
* * * * *
POST-AWARD SMALL BUSINESS PROGRAM REREPRESENTATION (MAR 2009)
(a) Definitions. * * *
Small business concern * * * Such a concern is ``not dominant in
its field of operation'' when it does not exercise a controlling or
major influence on a national basis in a kind of business activity
in which a number of business concerns are primarily engaged. In
determining whether dominance exists, consideration shall be given
to all appropriate factors, including volume of business, number of
employees, financial resources, competitive status or position,
ownership or control of materials, processes, patents, license
agreements, facilities, sales territory, and nature of business
activity.
(b) * * *
(3) * * *
(ii) Within 60 to 120 days prior to the date specified in the
contract for exercising any option thereafter.
* * * * *
(e) Except as provided in paragraph (g) of this clause, the
Contractor shall make the rerepresentation required by paragraph (b)
of this clause by validating or updating all its representations in
the Online Representations and Certifications Application and its
data in the Central Contractor Registration, as necessary, to ensure
that they reflect the Contractor's current status. The Contractor
shall notify the contracting office in writing within the timeframes
specified in paragraph (b) of this
[[Page 11826]]
clause that the data have been validated or updated, and provide the
date of the validation or update.
* * * * *
(End of clause)
[FR Doc. E9-5871 Filed 3-18-09; 8:45 am]
BILLING CODE 6820-EP-S
