Use of Federal Surplus Personal Property for Veteran-Owned Small Businesses and Small Businesses in Disaster Areas and Puerto Rico, 3273-3279 [2020-00442]

Agencies

• SMALL BUSINESS ADMINISTRATION

[Federal Register Volume 85, Number 13 (Tuesday, January 21, 2020)]
[Proposed Rules]
[Pages 3273-3279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00442]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 85, No. 13 / Tuesday, January 21, 2020 / 
Proposed Rules

[[Page 3273]]



SMALL BUSINESS ADMINISTRATION

13 CFR Parts 124, 125, and 129

RIN 3245-AH18


Use of Federal Surplus Personal Property for Veteran-Owned Small 
Businesses and Small Businesses in Disaster Areas and Puerto Rico

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: This rule is proposing to expand access for certain small 
business concerns in varying circumstances to the U.S. General Services 
Administration's (GSA) Federal Surplus Personal Property Donation 
Program in accordance with the Recovery Improvements for Small Entities 
After Disaster Act of 2015 (RISE Act), the Veterans Small Business 
Enhancement Act, and the John S. McCain National Defense Authorization 
Act for Fiscal Year 2019 (NDAA). The statutes provide that small 
businesses in disaster areas, veteran-owned small businesses, and small 
business concerns located in Puerto Rico, respectively, should be 
considered for surplus personal property distributions. SBA, in 
coordination with GSA, is proposing certain procedures for determining 
which firms may participate in GSA's existing surplus personal property 
Program, and under what conditions.

DATES: Comments must be received on or before March 23, 2020.

ADDRESSES: You may submit comments, identified by RIN 3245-AH18 by any 
of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     For Mail, Paper, Disk, or CD/ROM Submissions: Brenda 
Fernandez, U.S. Small Business Administration, Office of Policy, 
Planning and Liaison, 409 Third Street SW, 8th Floor, Washington, DC 
20416.
     Hand Delivery/Courier: Brenda Fernandez, U.S. Small 
Business Administration, Office of Policy, Planning and Liaison, 409 
Third Street SW, 8th Floor, Washington, DC 20416.
    SBA will post all comments on www.regulations.gov. If you wish to 
submit confidential business information (CBI) as defined in the User 
Notice at www.regulations.gov, please submit the information to Brenda 
Fernandez, U.S. Small Business Administration, Office of Policy, 
Planning and Liaison, 409 Third Street SW, 8th Floor, Washington, DC 
20416, or send an email to [email protected]. Highlight the 
information that you consider to be CBI and explain why you believe SBA 
should hold this information as confidential. SBA will review the 
information and make the final determination on whether it will publish 
the information.

FOR FURTHER INFORMATION CONTACT: Brenda Fernandez, Office of Policy, 
Planning and Liaison, 409 Third Street SW, Washington, DC 20416; (202) 
205-7337; [email protected].

SUPPLEMENTARY INFORMATION:

General Background

    SBA is proposing this rule to implement three new statutory 
programs regarding the transfer of surplus personal property to certain 
small businesses. The first, authorized by section 2105 of Public Law 
114-88 (Recovery Improvements for Small Entities After Disaster Act of 
2015 or the RISE After Disaster Act of 2015 (RISE After Disaster Act)), 
contains provisions authorizing the transfer of surplus personal 
property to small businesses under certain conditions in disaster 
areas. The second, authorized by Public Law 115-416 (Veterans Small 
Business Enhancement Act), contains provisions authorizing the transfer 
of surplus personal property to certain veteran-owned small businesses. 
The third, authorized by section 861 of Public Law 115-232 (John S. 
McCain National Defense Authorization Act for Fiscal Year 2019), 
authorizes small business concerns located in Puerto Rico to also 
receive federal surplus personal property under certain conditions. 
After discussions with GSA, SBA has modified the title of this proposed 
regulation to more clearly state that it covers the disposition of 
``personal'' not ``real'' property through GSA's programs. Therefore, 
the previous title for the proposed regulations, used in SBA's 
designation sheet (Use of Federal Surplus Property for Veteran Owned 
Small Businesses and Small Businesses in Disaster Areas and Puerto 
Rico), was changed to ``Use of Federal Surplus Personal Property for 
Veteran-Owned Small Businesses and Small Businesses in Disaster Areas 
and Puerto Rico''.
    GSA operates the Federal Surplus Personal Property Donation Program 
(Program) under the Federal Property and Administrative Services Act of 
1949, 63 Stat. 377, as amended, and other applicable laws, see 41 CFR 
102-37. Currently, eligible state and local government agencies and 
nonprofit organizations can obtain personal property that the federal 
government no longer needs through the Program. More information is 
available on the GSA website at https://www.gsa.gov/buying-selling/government-property-for-sale-or-disposal/personal-property-for-reuse-sale/for-state-agencies-and-public-organizations/.

The Veterans Small Business Enhancement Act

    The Veterans Small Business Enhancement Act, Public Law No: 115-416 
(1/3/19), codified in the Small Business Act at 15 U.S.C. 657b(g), 
provides that veteran-owned small business should have access to 
surplus government personal property. SBA is proposing to add a new 
subpart F to 13 CFR part 125 to implement these changes.
    SBA is proposing to add Sec.  125.100 to detail the requirements of 
this Program. The proposed language is similar in some respects to the 
surplus personal property regulations for SBA's 8(a) Business 
Development (BD) program (13 CFR 124.405 How does a Participant obtain 
Federal Government surplus property?), but does differ in some 
significant ways. There are certain statutory requirements that are 
unique to each program, and the differences in the regulations will 
reflect that. Key to the difference is that the 8(a) BD program is a 
business development program and the Small Business Act contains 
several provisions with regard to the transfer of surplus personal 
property that reflect this difference--specifically, that 8(a) BD 
participants must retain received surplus personal property for the 
duration of their time in the program and for one year after 
graduation. This means that 8(a) BD

[[Page 3274]]

participants are subject to additional compliance requirements that 
other parties that receive surplus personal property through GSA's 
Program are not. Thus, there are additional compliance requirements 
unique to the 8(a) program that are not necessary for veteran-owned 
small businesses. GSA and the State Agencies for Surplus Property 
(SASPs) already maintain a compliance and oversight role with regard 
the distribution of surplus personal property. As such, veteran-owned 
small business concerns that receive surplus personal property will 
generally follow the same guidelines and procedures as other recipients 
through GSA's Program. The proposed language in Sec.  125.100(a) 
references the regulations that govern the GSA Program, and the 
requirements that concerns will need to meet to use the Program.
    SBA is proposing to add Sec.  125.100(b)(1) to incorporate the 
requirement that concerns will need to be verified as a small business 
owned and controlled by veterans by the Department of Veteran Affairs 
in order to be eligible for this Program. 38 CFR part 74. This 
requirement is incorporated directly from the Small Business Act and 
can be found at 15 U.S.C. 657b(g)(2).
    SBA is proposing to add Sec.  125.100(c) to provide the 
requirements for the use of surplus personal property received, and 
repercussions for misuse of the surplus personal property. The proposed 
language references GSA and SASP guidelines for use of surplus personal 
property, because as mentioned above, veteran-owned small businesses 
will be treated similarly to other recipients with regard to use, 
maintenance, and retention of surplus personal property.
    SBA is proposing to add Sec.  125.100(d) to provide notice that 
there are costs associated with receiving the surplus personal 
property. As noted above, the costs will be calculated by the 
individual SASP pursuant to 41 CFR 102-37 appendix B (e) and the SASP's 
State Plan of Operation and veteran-owned small business concerns will 
be treated similarly to other recipients.
    SBA is proposing to add Sec.  125.100(e) to provide notice of the 
type of title that veteran-owned small business concerns will receive. 
They will not be receiving full title at the time of transfer. They 
will be receiving conditional title and full title will transfer when 
they have met all the requirements of GSA and the SASP. Once again as 
noted above, this procedure will have veteran-owned small business 
concerns treated in a similar manner to other recipients of surplus 
personal property through GSA's Program.

RISE After Disaster Act

    Section 2105 of the RISE After Disaster Act authorizes SBA to 
transfer technology or surplus personal property to small business 
concerns located in disaster areas. In order to implement the changes 
made by section 2105 of the RISE After Disaster Act, SBA is proposing 
to amend Sec.  124.405 and add a new subpart 129 to title 13 of the 
Code of Federal Regulations.
    Section 2105 of the RISE After Disaster Act, codified in the Small 
Business Act at 15 U.S.C. 636(j)(13)(F)(ii), provides that SBA may 
transfer technology or surplus personal property to a small business 
concern located in a disaster area if the small business meets the 
requirements for such a transfer, without regard to whether that small 
business is a participant in the 8(a) BD program. If the concern is an 
8(a) BD program Participant, the concern it should not have received 
surplus personal property based on its status as an 8(a) BD program 
Participant on or after the date of the disaster declaration. Section 
2105 provides that the requirements for transferring surplus personal 
property to a small business concern located in a disaster area shall 
generally be the same as those applicable to transfers to 8(a) BD 
program Participants. Section 2105 provides that a small business that 
receives surplus personal property as a small business concern located 
in a disaster area shall not subsequently receive surplus personal 
property as an 8(a) BD program Participant during the 2-year period 
beginning on the date on which the President declared the major 
disaster. A small business concern eligible for surplus personal 
property under a presidentially declared disaster may also be eligible 
for surplus personal property for a 2-year period under a subsequent 
presidentially declared disaster.
    In order to implement the changes made by section 2105, SBA 
proposes to amend Sec.  124.405 by updating the statutory reference 
contained in paragraph (a) and by adding a new paragraph (b)(6) to 
provide that 8(a) BD program Participants are not eligible to receive 
surplus personal property under Sec.  124.405 if they have received 
surplus personal property under proposed subpart A as a small business 
concern located in a disaster area during the 2-year period beginning 
on the date on which the President declared the applicable major 
disaster.
    In addition to the changes necessitated by section 2105, SBA is 
also proposing several other changes to Sec.  124.405.
    SBA is proposing to change the cross citation for the GSA and SASP 
procedures in Sec.  124.405(a)(1). The change is needed to update the 
cross reference because it has changed since publication. SBA is 
proposing to change the language in paragraph (a)(2) to remove the term 
``donable'' and in its place provide a more descriptive language, 
because ``donable'' is not a defined term in GSA's surplus personal 
property regulations.
    SBA is proposing to amend Sec.  124.405(b)(3) to add a reference to 
the nonprocurement debarment regulations contained in Title 2 of the 
Code of Federal Regulations.
    SBA is proposing to amend Sec.  124.405(c)(1) to provide clarity on 
how the Program has been historically administered. Specifically, the 
current regulations states that ``Participants may acquire surplus 
Federal Property located in any state.'' That statement is true but 
could be misleading as to an individual participant. The language was 
intended to convey that Participants throughout the country could take 
part, not that a Participant could acquire surplus personal property 
from any State at any time. Currently, a Participant may only acquire 
surplus personal property from the SASP in the state(s) where the 
Participant currently operates. This is not a new policy and has been 
clearly established by SBA's agreements with the SASPs. The new 
proposed language more clearly articulates the current policy and SBA 
believes will lead to less confusion now that there are additional 
programs.
    SBA is proposing to amend Sec.  124.405(d) to update the cross 
references to GSA's regulations.
    SBA is proposing to amend Sec.  124.405(f) to alter the method for 
transferring title. Currently title transfers to the participant when 
the agreement between the participant and the SASP is executed. SBA is 
proposing to change this to the participant being given conditional 
title to the surplus personal property pending the terms of the 
agreement being executed and the firm meeting all the additional 
requirements of this part. This change will align the 8(a) BD program 
participant title terms with the other programs SBA is implementing 
with this proposed rule, and with the general practice of GSA and the 
SASP with treatment of title with regard to other donees. SBA believes 
that aligning all these programs with similar title rules will simplify 
the process for all the parties involved.

[[Page 3275]]

    As noted above SBA is proposing to add a new subpart A to 13 CFR 
part 129 to incorporate the provisions of section 2105. Part 129, 
Contracts for Small Businesses Located in Disaster Areas, was recently 
added by SBA Final Rule: National Defense Authorization Acts of 2016 
and 2017, Recovery Improvements for Small Entities After Disaster Act 
of 2015, and Other Small Business Government Contracting, 84 FR 65647 
(Nov. 29, 2019). This proposed subpart to part 129 addresses how a 
small business concern located in a disaster area would be able to 
obtain surplus personal property. SBA is proposing to add Sec.  129.200 
which will have one definition for this subpart. It is a definition for 
``covered period''. This term is incorporated into SBA regulations as 
defined in the Small Business Act at 15 U.S.C. 
636(j)(f)(13)(F)(ii)(I)(aa).
    SBA is also proposing to add Sec.  129.201 to implement the program 
for transfer of surplus personal property. The provisions of proposed 
Sec.  129.201 are based on SBA's proposed regulations governing the 
transfer of surplus personal property to veteran-owned small business 
concerns addressed above and under the 8(a) BD program regulations, 
contained in 13 CFR 124.405.

John S. McCain National Defense Authorization Act for Fiscal Year 2019 
(NDAA)

    Section 861 of the John S. McCain National Defense Authorization 
Act for Fiscal Year 2019 (NDAA), Public Law 115-232 (8/13/18) codified 
in the Small Business Act at 15 U.S.C. 636(j)(13)(F)(iii), provides 
that SBA may transfer technology or surplus personal property to a 
small business concern located in Puerto Rico if the small business 
meets the requirements for such a transfer, without regard to whether 
that small business is a participant in the 8(a) BD program. SBA is 
proposing to add a subpart B to part 129 to incorporate these changes.
    SBA is proposing to add a new Sec.  129.300. This section will have 
two definitions. The first definition is an incorporation of ``covered 
period'', a defined term in the Small Business Act. Specifically, SBA 
is proposing to incorporate the term ``covered period'' as defined at 
15 U.S.C. 636(j)(13)(F)(iii)(I). SBA is proposing to adopt the 
statutory language as is without modification. It should be noted that 
this definition for covered period is different than the definition in 
proposed Sec.  129.200. The two terms are defined separately in the 
Small Business Act and therefore SBA is proposing to adopt the language 
from the Act, as is, for each program. While it may be confusing to 
have two definitions of the same term for similar programs, it would 
not be proper for SBA to modify the clearly defined terms of the Small 
Business Act.
    The second definition is for the term, ``located in Puerto Rico.'' 
The Small Business Act directs that SBA may transfer technology or 
surplus personal property to a ``Puerto Rico business'', but does not 
define what a Puerto Rico business is. SBA has proposed that to be 
eligible for a transfer a concern should be a small business and should 
be located in Puerto Rico. Therefore, SBA has proposed that in order to 
be considered located in Puerto Rico a firm should have a physical 
location in Puerto Rico and be organized under the laws of Puerto Rico. 
SBA believes that this requirement provides clear guidance for which 
firms are eligible.
    SBA is also proposing to add Sec.  129.301 to implement the program 
for transfer of surplus personal property. The provisions of proposed 
Sec.  129.301 are based on SBA's proposed regulations governing the 
transfer of surplus personal property to veteran-owned small business 
concerns addressed above and under the 8(a) BD program regulations, 
contained in 13 CFR 124.405.

Compliance With Executive Orders 12866, 13563, 12988, 13132, 13771, the 
Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
proposed rule is not a ``significant'' regulatory action for purposes 
of Executive Order 12866. This is not a major rule under the 
Congressional Review Act, 5 U.S.C. 801, et. seq.

Executive Order 13563

    This executive order directs agencies to, among other things: (a) 
Afford the public a meaningful opportunity to comment through the 
internet on proposed regulations, with a comment period that should 
generally consist of not less than 60 days; (b) provide for an ``open 
exchange'' of information among government officials, experts, 
stakeholders, and the public; and (c) seek the views of those who are 
likely to be affected by the rulemaking, even before issuing a notice 
of proposed rulemaking. As far as practicable or relevant, SBA 
considered these requirements in developing this rule, as discussed 
below.
    1. Did the agency use the best available techniques to quantify 
anticipated present and future costs when responding to E.O. 12866 
(e.g., identifying changing future compliance costs that might result 
from technological innovation or anticipated behavioral changes)?
    To the extent possible, the agency utilized the most recent data 
available in the Federal Procurement Data System--Next Generation, 
System for Award Management and Electronic Subcontracting Reporting 
System.
    2. Public participation: Did the agency: (a) Afford the public a 
meaningful opportunity to comment through the internet on any proposed 
regulation, with a comment period that should generally consist of not 
less than 60 days; (b) provide for an ``open exchange'' of information 
among government officials, experts, stakeholders, and the public; (c) 
provide timely online access to the rulemaking docket on 
Regulations.gov;and (d) seek the views of those who are likely to be 
affected by rulemaking, even before issuing a notice of proposed 
rulemaking?
    The proposed rule will have a 60 day comment period and will be 
posted on www.regulations.gov to allow the public to comment 
meaningfully on its provisions. In addition, the proposed rule was 
discussed with GSA, the Department of Veterans Affairs and with 
representatives of the National Association of State Agencies for 
Surplus Property.
    3. Flexibility: Did the agency identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public?
    Yes, the proposed rule implements statutory provisions and will 
provide clarification to rules that were requested by agencies and 
stakeholders. In addition, SBA is proposing changes that will allow 
potential small business participants to participate in the GSA Program 
in as similar a manner as other participants do without additional 
regulatory requirements.

Executive Order 12988

    This action meets applicable standards set forth set forth in 
section 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice 
Reform, to minimize litigation, eliminate ambiguity, and reduce burden. 
This action does not have any retroactive or preemptive effect.

Executive Order 13132

    A rule has implications for federalism under Executive Order 13132 
(Federalism), if it has a substantial

[[Page 3276]]

direct effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. This proposed 
rule would implement new policies allowing more small businesses to 
participate in the GSA Program administered by the SASPs. SBA has 
analyzed this proposed rule and have determined that it is consistent 
with the fundamental federalism principles and preemption requirements 
described in Executive Order 13132. We note that this rule would impose 
a reporting requirement specific to state agencies that participate in 
the Program to provide federal technology or surplus personal property 
to small business concerns located in disaster areas, designated as 
veteran-owned small businesses, and in Puerto Rico. However, given the 
potential for application and annual reporting burdens on the States 
and Territories, particularly Puerto Rico, SBA does solicit comments on 
the issue of whether this rule has implications for federalism.

Executive Order 13771

    This proposed rule is expected not to be subject to Executive Order 
13771 because the proposed rule is a transfer rule. The benefits to 
small businesses in disaster areas, veteran-owned small businesses, and 
small business concerns located in Puerto Rico produced by this rule 
are a transfer of benefits from other entities who may have received 
the surplus personal property in their place.

Paperwork Reduction Act, 44 U.S.C. Ch. 35

    For the purposes of the Paperwork Reduction Act, SBA has determined 
that this proposed rule would not impose new government-wide reporting 
requirements on small business concerns. SBA and GSA have discussed the 
possible implication of the new regulations, and do not believe that 
any new requirements are being added to GSA's Programs in a addition to 
the requirements already in place for recipients of surplus personal 
property. GSA has specific forms for its Surplus Property Program, but 
these proposed amendments will require no changes to those forms. See 
Standard Form 123, Transfer Order Surplus Personal Property, OMB 
Control Number 3090-0014 (expires 3/31/22). SBA welcomes comments on 
whether the proposed regulations would affect the already approved 
collections.
    However, this rule would does have a reporting requirement specific 
to state agencies that participate in the Program to provide federal 
technology or surplus personal property to small business concerns 
located in disaster areas, designated as veteran-owned small 
businesses, and in Puerto Rico. GSA already has a specific form to 
collect data from SASPs with regard to the surplus personal property 
donation Program. See GSA Form 3040, State Agency Monthly Donation 
Report of Surplus Property, OMB Control Number 3090-0112 (expires 3/31/
2022).
    Concerning the verification of veteran-owned small businesses, the 
Department of Veteran Affairs already has the authority to verify 
qualified small business concerns. 38 CFR part 74. The Department of 
Veterans Affairs is responsible to update its public database 
accordingly. https://www.va.gov/osdbu/verification/. SASPs will rely on 
the accurately updated information to make decisions. Concerning the 
designation of a ``disaster area'' the term is defined in the RISE Act 
as area for which the President has declared a major disaster during 
the covered period; namely, the 2-year period beginning on the date of 
the declaration of the applicable major disaster.
    SBA invites public comments on the proposed changes to the 
regulations requiring reporting from SASPs to the Federal Government. 
Comments must be received by the deadline stated in the DATES section 
of this rule. Refer to the ADDRESSES section for instructions on how 
and where to submit.

Regulatory Flexibility Act, 5 U.S.C. 601-612

    According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601, 
when an agency issues a rulemaking, it must ``prepare and make 
available for public comment an initial regulatory analysis'' which 
will ``describe the impact of the proposed rule on small entities.'' 
Section 605 of the RFA allows an agency to certify a rule, in lieu of 
preparing an analysis, if the proposed rulemaking is not expected to 
have a significant economic impact on a substantial number of small 
entities. Although the rulemaking will impact all veteran-owned small 
businesses and small business concerns in disaster areas and Puerto 
Rico, SBA does not believe the impact will be significant. After 
discussions with GSA, SBA believes that the proposed regulation will 
have an impact on a substantial number of entities, but that it will 
not have a significant economic impact. SBA reached this conclusion 
because the overall amount of donated personal property will not 
change. The proposed regulation will be implementing statutory changes 
with regard to the mix of how that property is distributed among the 
various eligible entities, but neither GSA or SBA believe that the 
overall impact on all relevant parties will be significant given that 
the regulation is not changing the total value of personal property 
distributed.
    The Federal Surplus Personal Property Donation Program enables 
certain nonfederal organizations to obtain personal property that the 
federal government no longer needs. SASPs maintain the list of eligible 
organizations and these generally include: Public agencies, nonprofit 
educational and public health agencies, nonprofit and public programs 
for the elderly, public airports, and educational agencies of special 
interest to the Armed Services. More information on the list of 
eligible entities can be found at https://www.nasasp.org/findmystate.html. In fiscal year 2018 GSA donated through this program 
personal property with original acquisition value of $418,158,102. It 
should be noted that this reflects the value of the property when it 
was acquired, not when it was donated. SBA does not have accurate data 
to reflect the value at time of donation, but does believe the value 
would be significantly less than the value at which the property was 
acquired.
    As noted above this proposed regulation will have an effect on a 
substantial number of entities. First, it will have an impact on all 
the entities currently entitled to receive surplus property. SBA does 
not have a number for all those entities, but that number does include 
approximately 4,400 participants in SBA's 8(a) BD program. In addition 
to the entities already eligible for GSA's Program, these proposed 
regulations will also have an impact on new entities that will be 
allowed to take part once these regulations go into effect. As of 
December 9, 2019, the Department of Veteran Affairs has a total of 
13,853 verified service-disabled-veteran owned small businesses and 
veteran-owned small businesses. Those businesses would be eligible to 
participate in GSA's Program under the proposed regulations. Further, 
as of November 2019, SBA used data from the federal procurement data 
system to identify approximately 3,400 small firms in Puerto Rico that 
are currently engaged in business with the federal government. Finally, 
according to the 2012 economic census there are approximately 7.7 
million small businesses in the United States with employees. Under the 
proposed

[[Page 3277]]

regulations any small business located in a major disaster area may be 
eligible for the Program. Under this proposed regulation it is possible 
that any small business in the United States could potentially be a 
participant, because a major disaster could happen anywhere and at any 
time. This is a variable that cannot be known with certainty at this 
time. Therefore, SBA is operating under the assumption that all small 
businesses could be affected at some point in the future.
    The provisions of this proposed regulation are implementing three 
distinct and new statutory provisions enacted by Congress and detailed 
above. Therefore, it is necessary for SBA to take some action in order 
to implement the new statutory requirements. SBA in conjunction with 
GSA has reviewed possible alternatives to this proposed regulation. One 
alternative discussed was for SBA and GSA to enter into one or several 
memorandums of understanding with regard to additional potential 
program participants. As noted above, participants in SBA's 8(a) BD 
program are currently able to participate in GSA's Program. 
Participation in the GSA Program by 8(a) BD participants is governed by 
both regulations issued by SBA and memorandums of understanding entered 
into by SBA, GSA, and the various SASPs. In implementing the new 
statutory provisions SBA believes that following the previous example 
of the 8(a) BD program is the best course of action and has therefore 
chosen to implement the statutes by regulation. Going through the 
formal regulation process allows SBA to craft the rules for the 
programs with direct input from the public, and to have a place within 
SBA's regulations that interested parties may go to review the 
requirements of the various programs. While SBA believes that the 
formal rule making process is the best alternative for implementation, 
SBA is still open to comments on the issue. If any possible impacted 
parties would like to provide comments on either the considered 
alternative or another alternative that SBA has not considered, please 
follow the instructions above to do so.
    SBA is also aware that the statutes implementing these programs and 
other programs for distribution of surplus personal property do not use 
the same language. SBA does not think that this proposed regulation, or 
the various statutes conflict with each other. SBA believes that these 
proposed regulations will help provide clarity around any issues or 
differences between the various statutes. That said, SBA welcomes 
comments from any impacted parties about whether the proposed 
regulations as written conflict with other statutes or regulations.
    There are no new compliance or other costs imposed by the proposed 
rule on small business concerns. The proposed rule expands the access 
to GSA's Program on to more small business concerns under varying 
circumstances, without significant costs. The benefits to small 
businesses in disaster areas, veteran-owned small businesses, and small 
business concerns located in Puerto Rico produced by this rule are a 
transfer of benefits from other entities who may have received the 
surplus personal property in their place. The firms must adhere to 
certain regulations regarding certification or status relevant to 
designation as a small business concern.
    For the reasons discussed, SBA certifies that this proposed rule 
would not have a significant economic impact on a substantial number of 
small business concerns.

List of Subjects

13 CFR Part 124

    Administrative practice and procedure, Government procurement, 
Hawaiian natives, Indians--business and finance, Minority businesses, 
Reporting and recordkeeping requirements, Technical assistance.

13 CFR Part 125

    Government contracts, Government procurement, Reporting and 
recordkeeping requirements, Small business, Technical assistance, 
Veterans.

13 CFR Part 129

    Administrative practice and procedure, Government contracts, 
Government procurement, Government property, Small businesses.

    Accordingly, for the reasons stated in the preamble, SBA proposes 
to amend 13 CFR parts 124, 125, and 129 as follows:

PART 124--8(a) BUSINESS DEVELOPMENT/ SMALL DISADVANTAGED BUSINESS 
STATUS DETERMINATIONS

0
1. The authority citation for part 124 continues to read as follows:

    Authority:  15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), 644 and 
Pub. L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L. 
101-574, section 8021, Pub. L. 108-87, and 42 U.S.C. 9815.

0
2. Amend Sec.  124.405 by:
0
a. Revising the second sentence of paragraph (a)(1) and paragraph 
(a)(2);
0
b. Revising paragraph (b)(3);
0
c. Adding paragraph (b)(6);
0
d. Revising the heading of paragraph (c) and paragraph (c)(1) 
introductory text;
0
e. Revising the heading of paragraph (d) and paragraph (d)(1); and
0
f. Revising paragraph (f).
    The revisions and addition read as follows:


Sec.  124.405   How does a Participant obtain Federal Government 
surplus property?

    (a) * * *
    (1) * * * The procedures set forth in 41 CFR part 102-37 and this 
section will be used to transfer surplus personal property to eligible 
Participants.
    (2) The surplus personal property which may be transferred to SASPs 
for further transfer to eligible Participants includes all personal 
property which has become available for donation pursuant to 41 CFR 
102-37.30.
    (b) * * *
    (3) Not be debarred, suspended, or declared ineligible under Title 
2 or Title 48 of the Code of Federal Regulations;
* * * * *
    (6) Not have received property under part 129 subpart B of this 
chapter, during the applicable period described in that subpart.
    (c) Use of acquired surplus personal property. (1) Eligible 
Participants may acquire Federal surplus personal property from the 
SASP in the State(s) where the Participant is located and operates, 
provided the Participant represents in writing:
* * * * *
    (d) Procedures for acquiring Federal Government surplus personal 
property. (1) Participants may participate in the GSA Federal Surplus 
Personal Property Donation Program administered by the SASPs. See 
generally 41 CFR 102-37 and/or Sec.  102-37.125.
* * * * *
    (f) Title. Upon execution of the SASP distribution document, the 
Participant has conditional title only to the surplus personal property 
during the applicable period of restriction. Full title to the surplus 
personal property will vest in the donee only after the donee has met 
all of the requirements of this part.
* * * * *

PART 125--GOVERNMENT CONTRACTING PROGRAMS

0
3. The authority citation for part 125 continues to read as follows:

    Authority:  15 U.S.C. 632(p), (q), 634(b)(6), 637, 644, 657b, 
657(f), and 657r.

0
4. Add subpart F to read as follows:

[[Page 3278]]

Subpart F--Surplus Personal Property for Veteran Owned Small 
Business Programs


Sec.  125.100   How does a small business concern owned and controlled 
by veterans, obtain Federal Surplus personal property?

    (a) General. (1) Pursuant to 15 U.S.C. 657b(g), eligible small 
business concerns owned and controlled by veterans may receive surplus 
Federal Government property from State Agencies for Surplus Property 
(SASPs). The procedures set forth in 41 CFR part 102-37 and this 
section will be used to transfer surplus personal property to such 
concerns.
    (2) The surplus personal property which may be transferred to SASPs 
for further transfer to eligible small business concerns owned and 
controlled by veterans includes all surplus personal property which has 
become available for donation pursuant to 41 CFR 102-37.30.
    (b) Eligibility to receive Federal surplus personal property. To be 
eligible to receive Federal surplus personal property, on the date of 
transfer a concern must:
    (1) Be a small business concern owned and controlled by veterans, 
that has been verified by the Secretary of Veterans Affairs under 
section 8127 of title 38, United States Code;
    (2) Not be debarred, suspended, or declared ineligible under Title 
2 or Title 48 of the Code of Federal Regulations; and
    (3) Be engaged or expect to be engaged in business activities 
making the item useful to it.
    (c) Use of acquired surplus personal property. (1) Eligible 
concerns may acquire Federal surplus personal property from the SASP in 
the State(s) where the concern located and operates, provided the 
concern represents and agrees in writing:
    (i) As to what the intended use of the surplus personal property is 
to be;
    (ii) That it will use the surplus personal property to be acquired 
in the normal conduct of its business activities or be liable for the 
fair rental value from the date of its receipt;
    (iii) That it will not sell or transfer the surplus personal 
property to be acquired to any party other than the Federal Government 
as required by GSA and SASP requirements and guidelines;
    (iv) That, at its own expense, it will return the surplus personal 
property to a SASP if directed to do so by SBA, including where the 
concern has not used the property as intended within one year of 
receipt;
    (v) That, should it breach its agreement not to sell or transfer 
the surplus personal property, it will be liable to the Federal 
Government for the established fair market value or the sale price, 
whichever is greater, of the property sold or transferred; and
    (vi) That it will give GSA and SASP access to inspect the surplus 
personal property and all records pertaining to it.
    (2) A concern receiving surplus personal property pursuant to this 
section assumes all liability associated with or stemming from the use 
of the property, and all costs associated with the use and maintenance 
of the property.
    (d) Costs. Concerns acquiring surplus personal property from a SASP 
may be required to pay a service fee to the SASP in accordance with 41 
CFR 102-37.280. In no instance will any SASP charge a concern more for 
any service than their established fees charged to other transferees.
    (e) Title. Upon execution of the SASP distribution document, the 
firm receiving the property has only conditional title to the property 
during the applicable period of restriction. Full title to the property 
will vest in the donee only after the donee has met all of the 
requirements of this part and the requirements of GSA and the SASP that 
it received the property from.

PART 129--CONTRACTS FOR SMALL BUSINESSES LOCATED IN DISASTER AREAS, 
AND SURPLUS PERSONAL PROPERTY FOR SMALL BUSINESSES LOCATED IN 
DISASTER AREAS AND PUERTO RICO

0
5. The authority citation for part 129 is revised to read as follows:

    Authority:  15 U.S.C. 636(j)(13)(F)(ii), (iii), and 644(f).

0
6. The heading of part 129 is revised to read as set forth above.
0
7. Redesignate Sec. Sec.  129.200, 129.300, 129.400, and 129.500, as 
129.101, 129.102, 129.103, and 129.104, respectively;
0
8. Redesignate Sec.  129.100 and newly redesignated Sec. Sec.  129.101, 
129.102, 129.103, and 129.104 as subpart A;
0
9. Add subpart A heading and subparts B and C to read as follows:
Subpart A--Contracts for Small Businesses Located in Disaster Areas
Subpart B--Surplus Personal Property for Small Businesses Located in 
Disaster Areas
Sec.
129.200 What definitions are important in this subpart?
129.201 How does a small business concern located in a disaster area 
obtain Federal surplus personal property?
Subpart C--Surplus Personal Property for Small Businesses Located in 
Puerto Rico
129.300 What definitions are important in this subpart?
129.301 How does a small business concern located in a Puerto Rico 
obtain Federal surplus personal property?

Subpart B--Surplus Personal Property for Small Businesses Located 
in Disaster Areas


Sec.  129.200   What definitions are important in this subpart?

    Covered period means the 2-year period beginning on the date on 
which the President declared the applicable major disaster.


Sec.  129.201   How does a small business concern located in a disaster 
area obtain Federal surplus personal property?

    (a) General. Pursuant to 15 U.S.C. 636(j)(13)(F)(ii) eligible small 
business concerns located in disaster areas may receive surplus Federal 
Government property from State Agencies for Surplus Property (SASPs). 
The procedures set forth in 41 CFR part 102-37 and this section will be 
used to transfer surplus personal property to eligible small business 
concerns.
    (2) The property which may be transferred to SASPs for further 
transfer to eligible small business concerns includes all personal 
property which has become available for donation pursuant to 41 CFR 
102-37.30.
    (b) Eligibility to receive Federal surplus personal property. To be 
eligible to receive Federal surplus personal property, on the date of 
transfer a concern must:
    (1) Be located in a disaster area and certify that it qualifies as 
a small business under its primary NAICS code;
    (2) Not be debarred, suspended, or declared ineligible under Title 
2 or Title 48 of the Code of Federal Regulations; and
    (3) Be engaged or expect to be engaged in business activities 
making the item useful to it; and
    (4) Not have received a transfer of property under Sec.  124.405 of 
this chapter during the covered period. The 2-year period of the 
presidentially declared disaster does not affect eligibility for 
additional technology transfers or surplus personal property to a small 
business concern located in a disaster area for a subsequent 
presidentially declared disaster occurring within the original 2-year 
period of a prior presidentially declared disaster.
    (c) Use of acquired surplus personal property. (1) Eligible 
concerns may acquire surplus Federal personal property from the SASP in 
the State(s) where the concern is located and

[[Page 3279]]

operates, provided the concern represents and agrees in writing:
    (i) As to what the intended use of the surplus personal property is 
to be;
    (ii) That it will use the property to be acquired in the normal 
conduct of its business activities or be liable for the fair rental 
value from the date of its receipt;
    (iii) That it will not sell or transfer the property to be acquired 
to any party other than the Federal Government as required by GSA and 
SASP requirements and guidelines;
    (iv) That, at its own expense, it will return the property to a 
SASP if directed to do so by SBA, including where the concern has not 
used the property as intended within one year of receipt;
    (v) That, should it breach its agreement not to sell or transfer 
the property, it will be liable to the Federal Government for the 
established fair market value or the sale price, whichever is greater, 
of the property sold or transferred; and
    (vi) That it will give GSA and SASP access to inspect the property 
and all records pertaining to it.
    (2) A concern receiving surplus personal property pursuant to this 
section assumes all liability associated with or stemming from the use 
of the property.
    (d) Costs. Concerns acquiring surplus personal property from a SASP 
must pay a service fee to the SASP in accordance with 41 CFR 102-
37.280. In no instance will any SASP charge a concern more for any 
service than their established fees charged to other transferees.
    (e) Title. Upon execution of the SASP distribution document, the 
firm receiving the surplus personal property has only conditional title 
only to the surplus personal property during the applicable period of 
restriction. Full title to the property will vest in the donee only 
after the donee has met all of the requirements of this part and the 
requirements of GSA and the SASP that it received the property from.

Subpart C--Surplus Personal Property for Small Businesses Located 
in Puerto Rico


Sec.  129.300   What definitions are important in this subpart?

    Covered period means the period beginning on August 13, 2018 and 
ending on the date which the Oversight Board established under section 
101 of the Puerto Rico Oversight, Management, and Economic Stability 
Act (48 U.S.C. 2121) terminates.
    Located in Puerto Rico means a concern with a physical location in 
Puerto Rico and organized under the laws of Puerto Rico.


Sec.  129.301   How does a small business concern located in a Puerto 
Rico obtain Federal surplus personal property?

    (a) General. Pursuant to 15 U.S.C. 636(j)(13)(F)(iii) eligible 
small business concerns located in Puerto Rico may receive surplus 
Federal Government property from the Puerto Rico State Agency for 
Surplus Property (SASPs). The procedures set forth in 41 CFR part 102-
37 and this section will be used to transfer surplus personal property 
to eligible small business concerns.
    (2) The property which may be transferred to SASPs for further 
transfer to eligible small business concerns includes all personal 
property which has become available for donation pursuant to 41 CFR 
102-37.30.
    (b) Eligibility to receive Federal surplus personal property. To be 
eligible to receive Federal surplus personal property, on the date of 
transfer a concern must:
    (1) Be located in Puerto Rico and certify that it qualifies as a 
small business under its primary NAICS code;
    (2) Not be debarred, suspended, or declared ineligible under Title 
2 or Title 48 of the Code of Federal Regulations; and
    (3) Be engaged or expect to be engaged in business activities 
making the item useful to it; and
    (c) Use of acquired surplus personal property. (1) Eligible 
concerns may acquire surplus Federal personal property from the Puerto 
Rico SASP, provided the concern represents and agrees in writing:
    (i) As to what the intended use of the surplus personal property is 
to be;
    (ii) That it will use the property to be acquired in the normal 
conduct of its business activities or be liable for the fair rental 
value from the date of its receipt;
    (iii) That it will not sell or transfer the property to be acquired 
to any party other than the Federal Government as required by GSA and 
SASP requirements and guidelines;
    (iv) That, at its own expense, it will return the property to a 
SASP if directed to do so by SBA, including where the concern has not 
used the property as intended within one year of receipt;
    (v) That, should it breach its agreement not to sell or transfer 
the property, it will be liable to the Federal Government for the 
established fair market value or the sale price, whichever is greater, 
of the property sold or transferred; and
    (vi) That it will give GSA, and SASPS access to inspect the 
property and all records pertaining to it.
    (2) A concern receiving surplus personal property pursuant to this 
section assumes all liability associated with or stemming from the use 
of the property.
    (d) Costs. Concerns acquiring surplus personal property from a SASP 
must pay a service fee to the SASP in accordance with 41 CFR 102-
37.280. In no instance will any SASP charge a concern more for any 
service than their established fees charged to other transferees.
    (f) Title. Upon execution of the SASP distribution document, the 
firm receiving the surplus personal property has only conditional title 
to the surplus personal property during the applicable period of 
restriction. Full title to the surplus personal property will vest in 
the donee only after the donee has met all of the requirements of this 
part.

    Dated: January 7, 2020.
Christopher M. Pilkerton,
Acting Administrator.
[FR Doc. 2020-00442 Filed 1-17-20; 8:45 am]
 BILLING CODE 8026-03-P