Federal Acquisition Regulation; Set-Asides Under Multiple-Award Contracts, 11746-11773 [2020-02028]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 85, Number 39 (Thursday, February 27, 2020)]
[Rules and Regulations]
[Pages 11746-11773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02028]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 4, 7, 8, 9, 10, 13, 15, 16, 19, 42, and 52

[FAC 2020-05; FAR Case 2014-002; Docket No. FAR-2014-0002; Sequence No. 
1]
RIN 9000-AM93


Federal Acquisition Regulation; Set-Asides Under Multiple-Award 
Contracts

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement regulatory changes 
made by the Small Business Administration, which provide Governmentwide 
policy for partial set-asides and reserves, and for set-asides of 
orders for small business concerns under multiple-award contracts.

DATES: Effective March 30, 2020.

[[Page 11747]]


FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement 
Analyst, at 703-605-2868 or by email at [email protected] for 
clarification of content. For information pertaining to status or 
publication schedules, contact the Regulatory Secretariat Division at 
202-501-4755. Please cite FAC 2020-05, FAR Case 2014-002.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 81 FR 88072 on December 6, 2016, to revise the FAR to 
implement regulatory changes made by the Small Business Administration 
(SBA) in its final rule at 78 FR 61114, dated October 2, 2013, 
regarding the use of small business partial set-asides, reserves, and 
set-asides of orders placed under multiple-award contracts. As part of 
the implementation of reserves of multiple-award contracts, the 
proposed rule removed the term ``reserve'' in the FAR where it is not 
related to reserves of multiple-award contracts. SBA's final rule 
implements the statutory requirements set forth at section 1331 of the 
Small Business Jobs Act of 2010 (Jobs Act) (15 U.S.C. 644(r)). This 
final FAR rule also finalizes the interim FAR rule published at 76 FR 
68032 on November 2, 2011, under FAR Case 2011-024.
    Fourteen respondents submitted comments on the proposed rule.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the public comments in the 
development of the final rule. A discussion of the comments received 
and any changes made to the rule as a result of the public comments are 
provided as follows:

A. Summary of Significant Changes

    This final rule makes the following significant changes from the 
proposed rule:
     Removal of the term ``HUBZone order.'' This term has been 
removed throughout the final rule.
     Requirement to assign a North American Industry 
Classification System (NAICS) code. The final rule clarifies that NAICS 
code(s) must be assigned to all solicitations, contracts, and task and 
delivery orders, and that the NAICS code assigned to a task or delivery 
order must be a NAICS code assigned to the multiple-award contract. 
This clarification appears at FAR 19.102, with cross references in 
8.404, 8.405-5, and 16.505.
     Requirement to assign more than one NAICS code and 
associated size standard for multiple-award contracts where a single 
NAICS code does not describe the principal purpose of both the contract 
and all orders to be issued under the contract. In the proposed rule, 
the date for implementation of this particular requirement was listed 
as January 31, 2017. For the final rule, this date has been extended to 
October 1, 2022. This is when Governmentwide systems are expected to 
accommodate the requirement. This date also allows time for Federal 
agencies to budget and plan for internal system updates across their 
multiple contracting systems to accommodate the requirement. Use of 
this date in the final rule means that the assignment of more than one 
NAICS code for multiple-award contracts is authorized only for 
solicitations issued after October 1, 2022. Before this date, agencies 
may continue awarding multiple-award contracts using any existing 
authorities, including any addressed in this rule, but shall continue 
to report one NAICS code and size standard which best describes the 
principal purpose of the supplies or services being acquired.
     Rerepresentation of size status for multiple-award 
contracts with more than one NAICS code. FAR 19.301-2 is revised to 
clarify that, for multiple-award contracts with more than one NAICS 
code assigned, a contractor must rerepresent its size status for each 
of those NAICS codes. A new Alternate I is added for the clause at 
52.219-28 to allow rerepresentations for multiple NAICS codes, and a 
prescription is added at 19.309(c). Alternate I will be included in 
solicitations that will result in multiple-award contracts with more 
than one NAICS code.
     Rerepresentation for orders under multiple-award 
contracts. The clause at 52.219-28 is revised to relocate the paragraph 
addressing rerepresentation for orders closer to the beginning of the 
clause and to renumber subsequent paragraphs.
     Representation of size and socioeconomic status. FAR 
19.301-1 is revised to clarify that, for orders under basic ordering 
agreements and FAR part 13 blanket purchase agreements (BPAs), offerors 
must be a small business concern identified at 19.000(a)(3) at the time 
of award of the order, and that a HUBZone small business concern is not 
required to represent twice for an award under the HUBZone Program. A 
HUBZone small business concern is required to represent at the time of 
its initial offer and be a HUBZone small business concern at time of 
contract award.
     Applicability of the limitations on subcontracting to 
orders issued directly to one small business under a reserve. The final 
rule clarifies that the limitations on subcontracting and the 
nonmanufacturer rule apply to orders issued directly to one small 
business concern under a multiple-award contract with reserves. This 
clarification appears in multiple locations in parts 19 and 52. The 
final rule also clarifies the limitations on subcontracting compliance 
period for orders issued directly, under multiple-award contracts with 
reserves, to small businesses who qualify for any of the socioeconomic 
programs. These clarifications appear in subparts 19.8, 19.13, 19.14, 
and 19.15, and in the clauses at 52.219-3, 52.219-14, 52.219-27, 
52.219-29, and 52.219-30.
     Compliance period for the limitations on subcontracting. 
The final rule revises the proposed text at sections 19.505, 19.809, 
19.1308, 19.1407, and 19.1507 to be consistent with the implementing 
clauses for those sections. The clauses reflect that the contracting 
officer has discretion on whether the compliance period for a set-aside 
contract is at the contract level or at the individual order level.
     Fair opportunity and orders issued directly to one small 
business under a reserve. The final rule addresses orders issued 
directly to one small business under a reserve at FAR 16.505.
     Conditions under which an order may be issued directly to 
an 8(a) contractor under a reserve. The final rule clarifies in 19.804-
6 the conditions under which an order can be issued directly to an 8(a) 
contractor on a multiple-award contract with a reserve.
     Set-asides of orders under multiple-award contracts. At 
FAR 19.507, the prescription for Alternate I of the clause at 52.219-13 
is revised to apply to any multiple-award contract under which orders 
will be set aside, regardless of whether the multiple-award contract 
contains a reserve.
     Consistent language for ``rule of two'' text. FAR 19.502-
3, 19.502-4, and 19.503 are revised for consistency with FAR 19.502-
2(a), which most closely matches the ``rule of two'' in the Small 
Business Act (15 U.S.C. 644(j)(1)).
     Documentation of compliance with limitations on 
subcontracting. The requirement for contracting officers to document 
contractor compliance with the limitations on subcontracting is removed 
from subparts 19.5, 19.8, 19.13, 19.14, and 19.15. FAR part 4 and 
subpart 42.15 already prescribe documentation of contractor compliance

[[Page 11748]]

with various contract terms and conditions, including the limitations 
on subcontracting. FAR subpart 42.15 is revised to clarify that 
performance assessments shall include, as applicable, a contractor's 
failure to comply with the limitations on subcontracting.
     Clarification of ``domestically produced or manufactured 
product.'' FAR 19.6 is revised to use the phrase ``end item produced or 
manufactured in the United States or its outlying areas'' instead of 
``domestically produced or manufactured product.''
     Subcontracting plans for multiple-award contracts with 
more than one NAICS code. FAR subpart 19.7 is revised to provide 
guidance to contracting officers on how to apply the requirement for 
small business subcontracting plans to multiple-award contracts 
assigned multiple NAICS codes. With the requirement to assign multiple 
NAICS codes, it will be possible for a contractor to be both a small 
business concern and an other than small business concern for a single 
contract.
     HUBZone price evaluation preference and reserves. FAR 
subpart 19.13 is revised to clarify that the HUBZone price evaluation 
preference shall not be used for the reserved portion of a solicitation 
for a multiple-award contract. The price evaluation preference shall be 
used in the portion of a solicitation for a multiple-award contract 
that is not reserved. In addition, the clause at 52.219-4 is revised to 
remove the proposed text that stated the HUBZone price evaluation 
preference did not apply to solicitations that have a reserve for 
HUBZone small business concerns, since that is not accurate.
     Performance by a HUBZone small business concern. FAR 
19.1308 is revised to specify performance by a HUBZone small business 
concern instead of performance in a HUBZone. The related changes that 
were proposed in the clause at 52.219-4, paragraph (d)(2), are not 
being adopted as they are no longer accurate.
     Separate provision for reserves and clause for orders 
issued directly under a reserve. The final rule provides a new 
solicitation provision at 52.219-31, Notice of Small Business Reserve, 
and prescription at 19.507 to address information and requirements that 
are related to reserves of multiple-award contracts and are appropriate 
for inclusion only in the solicitation. These requirements and 
information were proposed as part of the clause at 52.219-XX (now 
52.219-32); however, since they only apply prior to contract award, the 
final rule relocates them to a separate provision. The final rule also 
revises the clause at 52.219-32 to address only orders issued directly 
to one small business under a reserve. The title of the clause reflects 
the revised content.

B. Analysis of Public Comments

1. Support for the Rule
    Comment: Multiple respondents stated support for the changes in the 
proposed rule. More specifically, one respondent supported the overall 
changes and clarifications in the proposed rule. Three respondents 
supported the clarifications regarding the partial set-aside process; 
the guidance for the new concept of reserves; and the flexibility of 
contracting officers to establish terms that state that all task orders 
under a multiple-award contract will be set aside. Additionally, one 
respondent supported the clarifications regarding agencies taking 
credit following small business size and socioeconomic status 
rerepresentations.
    Response: The Councils acknowledge these areas of support.
2. Mandatory Set-Aside of Orders at or Below the Simplified Acquisition 
Threshold (15 U.S.C. 644(j))/Kingdomware Decision
    Comment: Two respondents, citing Kingdomware Techs., Inc. v. United 
States, 136 S. Ct. 1969 (2016), stated that because Congress used 
``shall'' at 15 U.S.C. 644(j) and ``may'' at 15 U.S.C. 644(r), 
statutory construction requires that small business set-asides and 
reserves described in section 1331 of the Jobs Act are mandatory, not 
discretionary. In addition, several respondents stated that if ``whole 
contracts'' under $150,000 are automatically reserved for small 
businesses, task orders within the same dollar value should also be 
reserved for small businesses. Further, one respondent commented that 
the FAR Council may not interpret 15 U.S.C. 644(j).
    Response: The Kingdomware decision focused on the Veterans 
Benefits, Health Care, and Information Technology Act of 2006 (VA 
statute), 38 U.S.C. 8127, not a requirement in the Small Business Act. 
The Kingdomware decision is silent on the construction of the Small 
Business Act. The VA statute and the Small Business Act are constructed 
differently, with the former statute applying only to acquisitions of 
the Department of Veterans Affairs. Further, the Councils agree that it 
is not within the scope of this FAR case to interpret 15 U.S.C. 644(j). 
The purpose of this case is to amend the FAR to incorporate regulatory 
changes made by SBA in its final rule at 78 FR 61114, dated October 2, 
2013. SBA's final rule implements discretionary use of order set-
asides, partial set-asides, and reserves of multiple-award contracts at 
13 CFR 125.2(e)(1)(ii), consistent with section 1331 of the Jobs Act 
(15 U.S.C. 644(r)). As a result, no revisions are made in the final 
rule in response to the comments.
    Comment: Several respondents stated that because the court in 
Kingdomware held that a task order was a contract, ``contract'' as 
written in 15 U.S.C. 644(j) includes task orders issued from multiple-
award contracts, making order set-asides on multiple-award contracts 
mandatory not discretionary when applying the ``rule of two.'' The 
``rule of two'' refers to the requirement in the Small Business Act (15 
U.S.C. 644(j)(1)) that mandates setting aside a contract with an 
anticipated value between the micro-purchase threshold and the 
simplified acquisition threshold for small business unless two or more 
small businesses are not expected to submit offers that are competitive 
in terms of price, quality, and delivery. Respondents also cited to 
Aldevra, B-406205, 2012 CPD ] 112 (Comp. Gen. Mar. 14, 2012), 
emphasizing that SBA clarified that orders under $150,000 shall be 
exclusively reserved for small business concerns, including Federal 
Supply Schedule (FSS) orders and commercially available off-the-shelf 
(COTS) items. Additionally, one respondent stated that an exclusive 
reservation of contracts at or below the simplified acquisition 
threshold for multiple-award contracts will increase economic 
opportunity for small business.
    Response: The ``rule of two'' described in Kingdomware refers to 
the VA statute, 38 U.S.C. 8127, not a requirement in the Small Business 
Act. The Kingdomware decision is silent on the construction of the 
Small Business Act. The VA statute and the Small Business Act are 
written differently, with the former statute applying only to 
acquisitions of the U.S. Department of Veterans Affairs. The VA statute 
only speaks to contracts and is silent on the handling of orders. 
Because of this silence, the Court concluded that the mandate 
applicable to contracts also applied to orders, since orders have the 
legal effect of contracts. By contrast, the Small Business Act has 
separate and distinct provisions addressing contracts and orders and 
addresses each in a different manner. Section 1331 of the Jobs Act (15 
U.S.C. 644(r)) addresses order set-asides and makes the application of 
the ``rule of two''

[[Page 11749]]

discretionary for orders placed under multiple-award contracts only. 15 
U.S.C. 644(j) applies to contracts and mandates application of the 
``rule of two'' for contracts valued at the simplified acquisition 
threshold or less.
    15 U.S.C. 644(r) is specific in that it only applies to multiple-
award contracts. Legislative history demonstrates that prior to 15 
U.S.C. 644(r), there was a mixed record of small business participation 
on multiple-award contracts. Congress was clear in section 1331 of the 
Jobs Act that under a multiple-award contract, agencies may, at their 
discretion, effectuate a partial set-aside or reserve of a multiple-
award contract or conduct a set-aside of orders under a multiple-award 
contract. As a result, no revisions are made in the final rule in 
response to the comments.
3. Conflicts Between FAR and SBA Regulations
a. Old Limitations on Subcontracting
    Comment: Multiple respondents commented that the text related to 
the limitations on subcontracting and the nonmanufacturer rule in the 
proposed rule does not align with SBA's final rule as stated in 81 FR 
34259 and in current 13 CFR 121.406 and 125.6. To address this 
conflict, respondents requested the related text in the FAR rule be 
revised to state the SBA current rules.
    Response: This FAR case was initiated prior to the publication of 
the SBA final rule (81 FR 34243, May 31, 2016), which updated the 
limitations on subcontracting and the nonmanufacturer rule to implement 
section 1651 of the National Defense Authorization Act for Fiscal Year 
2013. DoD, GSA, and NASA opened a separate FAR case (2016-011, Revision 
of Limitations on Subcontracting) to implement SBA's final rule. 
Therefore, this final FAR rule will not be revised to incorporate the 
May 31, 2016, SBA final rule.
b. Other Conflicts
    Comment: One respondent commented that the timeframe for protests 
under a Multiple Award Schedule established at FAR 19.302(d)(3) appears 
to contradict SBA's regulations on timeliness stated in 13 CFR 
121.1001(a)(3). The respondent quotes FAR 19.302(d), ``In order to 
affect a specific solicitation, a protest must be timely. SBA's 
regulations on timeliness are contained in 13 CFR 121.1004'' and 
follows this by stating, ``FAR 19.302(d)(3) is in conflict with SBA's 
timeliness regulations'' at 13 CFR 121.1004(a)(3).
    Response: The proposed rule did not amend FAR 19.302(d)(3). The 
Councils agree that the language should be clarified. However, the 
comment is not within the scope of this rule, and the Councils will 
address this issue in a separate FAR case.
4. Information Collections
a. Two Representations for HUBZone Small Business Concerns
    Comment: One respondent asserted that the rule is adding a new 
information collection requirement at FAR 19.301-1(c) by requiring a 
HUBZone small business concern to represent its size and socioeconomic 
status twice--first at the time of the initial offer and again at the 
time of contract award. Moreover, the respondent stated that there is 
no corresponding procedure in FAR part 19 requiring the contracting 
officer to obtain the representation at the time of contract award, nor 
is there a requirement in the provisions at FAR 52.212-3 or FAR 52.219-
1 for the offeror to make a second representation of size and 
socioeconomic status at the time of contract award.
    Response: The Councils did not intend to create a second 
representation requirement for HUBZone small business concerns. The 
text has been revised at proposed FAR 19.301-1(c) to reflect the 
existing requirement at FAR 19.1303(d).
b. Compliance Reporting for the Limitations on Subcontracting
    Comment: In reference to the requirement for the contracting 
officer to document a contractor's compliance with the limitations on 
subcontracting as part of their performance evaluation, one respondent 
asserted that the FAR rule does not include a corresponding 
recordkeeping or reporting requirement. As a result, the respondent 
stated that contracting officers will begin to impose their own unique 
recordkeeping and reporting requirements through the use of local 
clauses, which is the kind of uncoordinated information collection the 
Paperwork Reduction Act was designed to prevent. The respondent 
recommended that the rule obtain an OMB control number.
    Response: The requirement for contracting officers to document 
contractor compliance with various contract terms and conditions, 
including compliance with the limitations on subcontracting, is already 
prescribed in FAR part 4 and subpart 42.15. Therefore, the additional 
language requiring documentation related to compliance with the 
limitations on subcontracting has been removed from the final rule. For 
clarification, failure to comply with the limitations on subcontracting 
has been added as an example at section 42.1503.
5. North American Industry Classification System (NAICS) Codes
a. Burden and Impact on Small Business Participation
    Comment: One respondent commented that while the proposed rule is 
consistent with the guidance in SBA's regulations at 13 CFR 121.402, 
the proposed rule could increase administrative burden and workload for 
GSA Schedule contractors and contracting officers. The respondent 
stated the proposed rule could also possibly eliminate some small 
companies from participating in GSA schedule contracts. The respondent 
identified possible strategies for GSA to comply with the NAICS code 
assignment procedures proposed at FAR 19.102(b)(2)(ii) and the impacts 
associated with each strategy. The respondent urged GSA and SBA to work 
together to develop a more cost-efficient mechanism for assigning NAICS 
codes to Schedule contracts. In addition, the respondent commented that 
depending on the implementation strategy pursued, some Schedule 
contractors could lose their small business status under the Schedule 
contract.
    Response: As noted by the respondent, the proposed requirement at 
FAR 19.102(b)(2)(ii) is consistent with SBA's regulations at 13 CFR 
121.402. GSA, as the manager of the FSS/Multiple Award Schedule 
Program, is responsible for ensuring the solicitations and resultant 
contracts under that Program comply with FAR requirements regarding 
NAICS code assignment. GSA will take sufficient time to implement the 
requirement to ensure industry partners are aware of upcoming changes 
and are given an opportunity to provide feedback during the process, as 
appropriate. The Councils note that the basic premise of assigning 
NAICS codes to requirements is that the selected NAICS code best 
describes the principal purpose of the supply or service being 
acquired.
b. Application to Subcontracting Plans
    Comment: One respondent recommended changes to FAR subpart 19.7, 
The Small Business Subcontracting Program, to clarify whether or not a 
subcontracting plan is required if an offeror represents itself as 
other than small under any distinct portion or category of a multiple-
award contract for which it submits an offer in

[[Page 11750]]

accordance with proposed FAR 19.301-1(a)(1)(ii).
    Response: The Councils have revised FAR subpart 19.7 in the final 
rule to provide the recommended clarification. When an offeror 
represents itself as other than small for any portion or category of a 
solicitation for a multiple-award contract, that offeror may be 
required to submit a small business subcontracting plan either for that 
portion or category, or for the entirety of the contract, at the 
offeror's discretion. The estimated value for the distinct portion(s) 
or category(s) for which an offeror is considered other than small, and 
whether there are subcontracting opportunities, should be the basis for 
the decision to require a subcontracting plan.
c. Small Business Eligibility
    Comment: One respondent recommended that proposed FAR 19.301-
1(a)(1)(ii) be revised to address the current GSA Schedule contract 
practices and clarify that if an agency lists more than one NAICS under 
a Special Item Number (SIN) that the offeror is eligible as a small 
business if it meets the size standard of one or more NAICS under that 
SIN.
    Response: The practice of assigning more than one NAICS code to a 
particular SIN is not compliant with the proposed FAR 
19.102(b)(2)(ii)(B), which requires that a single NAICS code be 
assigned to each distinct portion or category of the solicitation 
(e.g., SIN). As such, the Councils have determined that no changes to 
FAR 19.301-1(a)(1)(ii) are necessary.
    Comment: One respondent recommended revisions to the proposed FAR 
19.301-2(d)(1) and (2) to clarify that an agency may not include in its 
contracting goal achievements the value of orders after the date of a 
former small business concern's rerepresentation as other than small.
    Response: The Councils did not adopt the suggested revision to 
proposed FAR 19.301-2(d)(1) since it is inconsistent with the existing 
text at FAR 19.301-2(d) that size status is revised in the Federal 
Procurement Data System (FPDS) for actions under a particular contract 
going forward from the point when the contracting officer modifies the 
contract to reflect the rerepresentation. FAR 19.301-2(d)(2) addresses 
a contractor's rerepresentation in response to a specific order, 
therefore the respondent's clarification is not applicable. The 
proposed FAR text already states that the value of the order cannot be 
included in the ordering agency's small business prime contracting goal 
achievements.
6. Contracting Officer Discretion
    Comment: A number of respondents stated support for the greater 
flexibility in the proposed rule but are concerned that agencies are 
inappropriately structuring large contracts that restrict competition 
for women-owned small businesses and HUBZone small businesses. In 
addition, one respondent stated that allowing the contracting officer 
discretion in selecting a partial set-aside or reserve for multiple-
award contracts will be in direct conflict to the stated goals of 
strengthening small business programs.
    Response: Section 1331 (15 U.S.C. 644(r)) provides discretion to 
the contracting officer in using an array of tools to enhance small 
business participation on multiple-award contracts. Additionally, the 
proposed rule included a documentation requirement for multiple-award 
contracts when contracting officers do not use at least one of the 
tools provided by section 1331.
7. Further Clarifications
a. When Is a Reserve Appropriate
    Comment: One respondent asserted that there is a conflict between 
the language at FAR 19.503 and FAR 19.504(c)(1) because the proposed 
regulation regarding reserves makes it appear that a reserve is 
appropriate when there is no expectation that there will be competition 
among small businesses but proposed 19.504(c) establishes a process for 
setting aside and competing orders under a reserve. The respondent 
recommended that either FAR 19.503 be clarified or that 19.504(c)(1) be 
deleted.
    Response: The language at FAR 19.503 addresses factors the 
contracting officer must consider at the contract level. Multiple-award 
solicitations with reserves may result in contract awards to more than 
one small business. FAR 19.504(c)(1) addresses procedures at the order 
level when more than one small business receives an award under a 
multiple-award solicitation with a reserve. Therefore, additional 
clarification is not required in the final rule.
b. Applicability of the Limitations on Subcontracting and the 
Nonmanufacturer Rule to Reserves
    Comment: One respondent pointed out that it appears in the proposed 
rule that the limitations on subcontracting and the nonmanufacturer 
rule will not apply to orders issued directly to a small business under 
a reserve. The respondent recommended the language should be clarified 
if that application is not the intent.
    Response: The final rule clarifies that the limitations on 
subcontracting and the nonmanufacturer rule apply to orders issued 
directly to a small business under a reserve.
    Comment: One respondent recommended adding clarification to FAR 
19.501(h) to be consistent with the language at FAR 19.503(d).
    Response: The Councils determined that additional clarification at 
FAR 19.501(h), now redesignated as 19.501(g), would be redundant. 
However, 19.501(h) is revised to remove duplicative text and refer the 
reader to FAR 19.505, which addresses the limitations on subcontracting 
and the nonmanufacturer rule.
c. Setting Aside Orders Against Set-Aside Multiple-Award Contracts
    Comment: One respondent suggested adding language to FAR 19.504(a) 
to clarify the ability to set aside orders for a socioeconomic business 
type under a multiple-award contract that has been set aside for small 
business.
    Response: The proposed FAR rule did not explicitly address whether 
orders can be set aside under a multiple-award contract that is itself 
set aside, but neither did it prohibit such an action. SBA's 
regulations at 13 CFR 125.2(e)(6) only address setting aside orders 
under ``full and open'' multiple-award contracts. FAR 19.504 is 
consistent with SBA's current regulations.
    SBA contemplated setting aside orders against set-aside multiple-
award contracts in their final rule published at 78 FR 61114. The 
concerns identified in that SBA final rule have since been addressed to 
enable fair and proper implementation of these set-aside orders. 
Specifically, the SBA final rule published at 81 FR 34243 standardized 
the limitations on subcontracting and the nonmanufacturer rule across 
the socioeconomic programs. In addition, some agencies have pursued the 
strategy of allowing set-aside orders against set-aside multiple-award 
contracts, including notification and incorporation of the clause at 
FAR 52.219-13, and have not encountered any industry concerns.
    Therefore, this final FAR rule cannot provide further clarity. The 
Councils note that SBA is exploring providing guidance on this issue 
through a separate rulemaking, and the Councils may pursue a separate 
FAR rule on the subject.

[[Page 11751]]

d. Sole Sourcing Under Multiple-Award Contracts
    Comment: One respondent recommended adding a sentence to the end of 
FAR 19.504(a) to clarify that set-asides are for competition and do not 
include sole source orders. The respondent also suggested a revision to 
FAR 19.504(c)(2) and FAR 52.219-XX(d) (now 52.219-32(b)) to clarify 
that orders issued directly to a small business concern under reserves 
should not be considered a sole source or a set-aside award.
    Response: The Councils agree that orders issued directly under a 
reserve are neither sole source awards nor set asides as identified in 
the FAR. Orders issued directly under a reserve have a distinct 
authority based on 15 U.S.C. 644(r)(2) and (3). The Councils do not 
consider it necessary to include the recommended sentence at FAR 
19.504(a), 19.504(c)(2), and 52.219-32.
    However, the title of the FAR 19.504 is retitled ``Orders under 
multiple-award contracts'' to more accurately describe the guidance 
provided. In addition, the final rule is amended to add language at FAR 
16.505(b)(1)(i)(B) to identify orders issued directly to a small 
business concern under a reserve as allowable. Such orders are 
permissible per section 1331 (15 U.S.C. 644(r)) and SBA's final rule at 
78 FR 61114, dated October 2, 2013.
    Comment: One respondent asserted that the language in FAR 6.302-
5(b)(4) provides sole source authority for all of the small business 
concerns identified in FAR 19.000(a)(3) except the small business 
category. The respondent recommended that small businesses be added to 
the ``list'' of sole source acquisition strategies at 6.302-5(b), since 
the proposed language at FAR 19.504(c)(2) provides that the contracting 
officer may issue orders directly to one small business concern for 
work that it can perform when there is only one contract award to any 
one type of small business concern identified in FAR 19.000(a)(3).
    Response: The sole source authorities identified in FAR 6.302-5(b) 
for women-owned small business, service-disabled veteran-owned small 
business, 8(a) participants, and HUBZone small business concerns apply 
to contracts, not orders. However, the Councils addressed the concern 
at the order level by adding language to FAR 16.505(b)(1)(i)(B) to 
identify orders issued directly to a small business concern under a 
reserve as allowable. Such orders are permissible per section 1331 (15 
U.S.C. 644(r)) and SBA's final rule at 78 FR 61114, dated October 2, 
2013.
e. Application of the HUBZone Price Evaluation Preference to Full and 
Open Multiple-Award Contracts
    Comment: One respondent wanted to ensure that the price evaluation 
preference (PEP) for HUBZone small business concerns may be used in 
acquisitions conducted using full and open competition for multiple-
award contracts.
    Response: FAR subpart 19.13 allows use of the PEP in acquisitions 
conducted using full and open competition for multiple-award contracts.
8. Multiple Award Schedule/FSS Issues
a. Compliance With Limitations on Subcontracting by End of Contract 
Period
    Comment: One respondent commented that, with regard to the proposed 
language in FAR 19.505(b), it is not clear why contracting officers on 
GSA schedules and multiple-award contracts are not given the option to 
require compliance with the limitations on subcontracting by the end of 
the base contract as with other contracts. The respondent stated that 
it would be reasonable to afford Schedules and other multiple-award 
contracts that option and recommended that the FAR rule remove the 
proposed text at FAR 19.505(b)(2), which specifies that for orders that 
are set aside, compliance with the limitations on subcontracting is 
required for the performance period of that order.
    Response: FAR 19.505(b) provides guidance on the compliance period 
for the limitations on subcontracting for all relevant scenarios: for 
contracts that have been set aside and for orders that have been set 
aside. Paragraph (b)(1) provides guidance for contracts that are set 
aside. The term ``contract'' includes Multiple Award Schedule contracts 
and other multiple-award contracts. Thus, contracting officers for 
those contract vehicles that are set aside have the option of requiring 
compliance with the limitations on subcontracting by the end of the 
performance period of the contract or by the performance period of each 
individual order under the contract. Paragraph (b)(2) provides guidance 
for orders that are set aside. When an order is set aside, compliance 
with the limitations on subcontracting must apply only to the 
performance period of that order because the multiple-award contract 
under which it is placed may not have been set aside. Therefore, FAR 
19.505(b)(2) remains in the final rule.
b. Nonmanufacturer Rule Application
    Comment: One respondent suggested clarification that the exception 
under $25,000 to the nonmanufacturer rule, which applies to orders set 
aside under a multiple-award contract, also applies to orders set aside 
under a ``Federal Supply Schedule'' contract.
    Response: The Councils believe it is unnecessary to clarify that a 
``multiple-award contract'' includes a FSS contract, given that FAR 
2.101 already defines the term ``multiple-award contract'' as including 
a ``Multiple Award Schedule contract issued by GSA,'' i.e., a FSS 
contract. Therefore, no clarification is made in the final rule.
c. Assigning NAICS Codes to FSS Orders
    Comment: One respondent stated that the proposed text at FAR 
19.102(b)(3)(i), which requires that orders under multiple-award 
contracts whose solicitations were issued on or before January 31, 
2017, be assigned the same NAICS code and corresponding size standard 
designated in the multiple-award contract under which they are placed, 
will be problematic for FSS orders and suggested removing the text. The 
respondent explained that under the FSS program, each contractor under 
the same Schedule may have a different NAICS code assigned to the FSS 
contract because NAICS codes are assigned based on the contractor's 
``primary'' SIN, and the primary SIN may differ across contractors 
under the same Schedule. As a result, the respondent questioned whether 
compliance with proposed 19.102(b)(3)(i) will result in FSS contractors 
being eliminated from competition for a given order if that contractor 
has a different primary SIN (and associated NAICS code) than the SIN 
under which an order is placed.
    Response: The Councils note that the proposed text at FAR 
19.102(b)(3)(i) is explaining the current practice for assigning NAICS 
codes to orders placed against FSS contracts prior to implementation of 
this FAR rule: Orders, including FSS orders, are assigned the same 
NAICS code as the parent, multiple-award contract. The Councils are not 
aware that FSS contractors are being eliminated from competition for 
FSS orders due to the NAICS code assigned to their FSS contract. Once 
the open and continuous FSS solicitations are amended and FSS contracts 
are modified in accordance with FAR 19.102(b)(2)(ii), FSS orders

[[Page 11752]]

will be required to comply with the proposed text at 
19.102(b)(3)(ii)(B).
9. Order-Level Rerepresentations of Small Business Status
    Comment: One respondent recommended against providing authority for 
a contracting officer to require rerepresentation of size and 
socioeconomic status prior to issuance of a task order. The respondent 
believes that small businesses should be allowed to grow larger without 
losing any small business opportunities.
    Response: Providing authority for the contracting officer to 
require rerepresentation of size and socioeconomic status for task 
orders is consistent with SBA's final rule implementing section 1331 of 
the Jobs Act. Therefore, the proposed text at FAR 19.301-2(b)(4) 
remains in the final rule, though it has been renumbered as 19.301-
2(b)(2).
10. Rule of Two Is Inconsistent Across Small Business Programs
    Comment: One respondent commented that the proposed rule is 
inconsistent regarding when a total set-aside, partial set-aside, or 
reserve is appropriate. Specifically, the respondent commented that FAR 
19.502-2(a), 19.502-3(a)(4), 19.502-4(a)(4), and 19.503 in the proposed 
rule each referred to the ``rule of two'' using different terminology 
(e.g., ``fair market price'', ``quality'', ``delivery''). The 
respondent recommended that the ``rule of two'' be referenced 
consistently across total set-asides, partial set-asides, and reserves.
    Response: The Councils reviewed the proposed language that was 
identified by the respondent as inconsistent and have amended the final 
rule at FAR 19.502-3(a)(4), 19.502-4(a)(4), and 19.503(a)(1) such that 
it is congruent with the ``rule of two'' terminology used at FAR 
19.502-2(a), which most closely matches the ``rule of two'' in the 
Small Business Act (15 U.S.C. 644(j)(1)).
11. Small Disadvantaged Business Set-Asides
    Comment: One respondent asked if the rule will address small 
disadvantaged business set-asides.
    Response: The rule will not address small disadvantaged business 
set asides. The Councils note that the FAR rule is consistent with 
SBA's regulation, which does not include a small disadvantaged business 
set-aside program. All small businesses who participate in SBA's 8(a) 
Business Development (BD) program are small disadvantaged businesses. 
Set-asides and reserves under the 8(a) BD program are addressed in this 
rule.
12. Technical Edits
a. Baseline Edits
    Comment: One respondent suggested revising the text at FAR 19.804-6 
to include updates made in FAC 2005-95, which was published January 13, 
2017 at 82 FR 4708.
    Response: This final rule has been updated to include all recently 
published changes to the FAR.
b. Conforming Edits
    Comment: One respondent pointed out that the provision at FAR 
52.212-3, Offeror Representations and Certifications--Commercial Items, 
was not changed to conform with changes made to the provision at FAR 
52.219-1, Small Business Program Representations. The respondent 
recommended the Councils make conforming changes to FAR 52.212-3.
    Response: The Councils agree that conforming changes are needed. 
Therefore, in the final rule, the provision at FAR 52.212-3 has been 
revised to allow for the use of multiple NAICS codes.
c. Edits Regarding Full and Open Multiple-Award Contracts
    Comment: One respondent suggested removing references to 8.405-5 
and 16.505(b)(2)(i)(F) throughout the text and replacing them with the 
phrase ``full and open multiple-award contract.'' The respondent 
considered this revision to be necessary because the proposed language 
assumed every multiple-award contract awarded under FAR subpart 16.5 
and FAR part 38 would be awarded on a full and open basis.
    Response: The Councils reviewed the areas of the rule identified by 
the respondent and found no evidence of an assumption that every 
multiple-award contract awarded under FAR subpart 16.5 and FAR part 38 
would be awarded on a full and open basis. Therefore, the suggested 
revisions have not been included in the final rule.
d. Revision to Definition of ``HUBZone order''
    Comment: One respondent suggested a revision to the proposed 
definition of ``HUBZone order'' at FAR 2.101 to remove the phrase, 
``which had been awarded under full and open competition.'' The 
respondent suggested the revision because a multiple-award contract can 
be set aside for small business at the contract level and can be 
awarded to small businesses that may also meet the requirements for 
various socioeconomic programs, including the HUBZone Program. The 
respondent requested clarification regarding whether the FAR Council 
intended to disallow set-asides of orders under such contracts for the 
HUBZone Program or other socioeconomic programs.
    Response: The Councils have determined that a definition of 
``HUBZone order'' is unnecessary for this rule and have deleted all use 
of the term ``HUBZone order'' from the rule.
e. Edit to FAR Subpart 16.5
    Comment: One respondent commented that the proposed rule changes 
the dollar value in the heading of FAR 16.505(b)(6) from ``$5.5 
million'' to ``$5 million.'' The respondent pointed out that there is 
no corresponding change to the text of FAR 16.505(b)(6). This paragraph 
instructs contracting officers to notify unsuccessful awardees when an 
order exceeds $5.5 million.
    Response: The Councils did not intend to change the dollar value in 
the heading of FAR 16.505(b)(6). This inadvertent change has been 
corrected in the final rule.
f. Edit Regarding Contracting Officer Discretion
    Comment: One respondent suggested adding the phrase ``at their 
discretion'' after ``contracting officers may'' at FAR 19.502-4(a). The 
rationale was that the phrase appears in the statute and in FAR 19.503.
    Response: The Councils have adopted the respondent's recommendation 
at 19.502-4(a) where the text cites section 1331. However, for the 
clause at 52.219-32, the Councils have removed ``at his or her 
discretion'' since there is no reference to section 1331 and the FAR 
already uses the word ``may'' to indicate a discretionary action, i.e., 
an action that contracting officers have the discretion to perform or 
not perform.
13. Federal Data Systems Concerns
    Comment: Two respondents voiced concerns with potential delays to 
the implementation of the rule due to necessary system upgrades to 
Federal data systems (e.g., Federal Procurement Data System (FPDS) and 
FedBizOpps (FBO)).
    Response: The only portion of the rule that is not expected to be 
implemented in time for publication of the rule is the requirement 
associated with assigning multiple NAICS codes to some multiple-award 
contracts. As a result, the rule has been revised to reflect that the 
requirement to assign multiple NAICS codes will apply after October 1, 
2022, which is when the Councils expect a Governmentwide system 
solution to capture and reflect this information.

[[Page 11753]]

14. Requiring Documentation for Partial Set-Aside
    Comment: One respondent recommended making it clear that the 
contracting officer must document the rationale for any part of a 
multiple-award contract that is not partially set aside or for any 
awards not reserved for small businesses. The respondent asserts that a 
literal reading of FAR 19.506(a)(2) could result in the interpretation 
that, as long as any part of a multiple-award contract is partially 
set-aside, no such documentation requirement exists for the remaining 
non-set aside parts of that contract.
    Response: The Councils reviewed the area of the rule identified by 
the respondent and made a clarification at 19.506(a)(1). When a 
contract is not totally set aside for small business in accordance with 
19.502-2, documentation of the rationale is required.

C. Other Changes

    This final rule contains editorial changes in order to (1) ensure 
the rule reflects revisions to the current version of the FAR; (2) 
provide greater clarity; and (3) conform to the significant changes 
made in the final rule. These changes include removal of the obsolete 
term ``performance of work requirements,'' clarification that 
``orders'' refers to ``task and delivery'' orders, deletion of a 
paragraph in section 19.501, as well as relocation of text within a 
section.

III. Applicability to Acquisitions not Greater Than the Simplified 
Acquisition Threshold, Commercial Items, and Commercially Available 
Off-the-Shelf Items

    The Federal Acquisition Regulatory Council has made determinations, 
in accordance with 41 U.S.C. 1905 and 41 U.S.C. 1906, that the rule 
will apply to acquisitions at or below the simplified acquisition 
threshold (SAT) and acquisitions of commercial items. Discussion of 
these determinations is set forth below.
    The rule will also apply to acquisitions for commercially available 
off-the-shelf (COTS) items. As explained below, no determination is 
necessary by the FAR Council in connection with applicability to COTS 
items, because 41 U.S.C. 1907 requires that a law be applied to the 
acquisition of COTS items if the law concerns authorities or 
responsibilities under 15 U.S.C. 644 (in the Small Business Act). The 
statute being implemented in this final rule involved a change to 15 
U.S.C. 644.

A. Applicability to Contracts at or Below the SAT

    41 U.S.C. 1905 governs the applicability of laws to contracts at or 
below the SAT. Section 1905 generally limits the applicability of new 
laws when agencies are making contracts at or below the SAT, but 
provides that such contracts will not be exempt from a provision of law 
if--
     The law contains criminal or civil penalties,
     The law specifically refers to 41 U.S.C. 1905 and states 
that the law applies to contracts and subcontracts in amounts not 
greater than the SAT, or
     The Federal Acquisition Regulatory Council (FAR Council) 
makes a written determination and finding that it would not be in the 
best interest of the Federal Government to exempt contracts and 
subcontracts in amounts not greater that the SAT from the provision of 
law.
    Section 1331 of the Jobs Act is silent on the applicability of the 
requirements set forth above to contracts at or below the SAT and does 
not provide for criminal or civil penalties. Therefore, under 41 U.S.C. 
1905, section 1331 does not apply to contracts at or below the SAT 
unless the FAR Council makes a written determination that such 
application is in the best interest of the Federal Government.
    The FAR Council has made a determination that applicability of the 
final rule to contracts not greater than the SAT is in the best 
interest of the Government for the following reasons. Contracts not 
greater than the SAT are often well suited for performance by small 
businesses. While few, if any, multiple-award contracts are likely to 
be in values at or below the SAT, a very significant portion of orders 
made under multiple-award contracts could fall at or below the SAT. In 
addition, as a result of current legal and regulatory requirements 
applicable to contracts other than multiple-award contracts that call 
for work at or below the SAT to be set aside for small businesses, most 
agency practices are already geared towards taking advantage of this 
important tool in connection with small dollar purchases to maximize 
small business participation.

B. Applicability to Contracts for the Acquisition of Commercial Items

    41 U.S.C. 1906 governs the applicability of laws to the acquisition 
of commercial items (other than COTS items). Section 1906 generally 
limits the applicability of new laws when agencies are acquiring 
commercial items, but provides that such acquisitions will not be 
exempt from a provision of law if--
     The law contains criminal or civil penalties;
     The law specifically refers to 41 U.S.C. 1906 and states 
that the law applies to the acquisition of commercial items; or
     The FAR Council makes a written determination that it is 
not in the best interest of the Federal Government to exempt the 
acquisition of commercial items from the provision of law.
    Section 1331 of the Jobs Act is silent on the applicability of its 
requirements to contracts for commercial items and does not provide for 
criminal or civil penalties. Therefore, under 41 U.S.C. 1906, section 
1331 does not apply to acquisitions for commercial items unless the FAR 
Council makes a written determination that such application is in the 
best interest of the Federal Government.
    In making its determination of whether application of section 1331 
to commercial items is in the best interest of the Federal Government, 
the FAR Council considered the following factors: (i) The benefits of 
the policy in furthering Administration goals, (ii) the extent to which 
the benefits of the policy would be reduced if an exemption is provided 
for commercial items, and (iii) the burden on contractors if the policy 
is applied to acquisitions for commercial items.
    With respect to the first factor, this Administration has 
recognized the important nexus between maximizing small business 
participation in Federal contracting and having effective tools to 
promote such participation under multiple-award contracts, including 
the Federal Supply Schedules, through which a significant portion of 
Federal contract spending flows. The Interagency Task Force on Small 
Business Contracting, created in 2010 to identify meaningful ways to 
strengthen small business contracting, recommended that rules on set-
asides for multiple-award contracts be clarified. In support of its 
recommendation, the Task Force noted that set-asides accounted for a 
substantial portion of all small business contract awards yet ``there 
has been no attempt to create a comprehensive policy for orders placed 
under either general task-and-delivery-order contracts or schedule 
contracts that rationalizes and appropriately balances the need for 
efficiency with the need to maximize opportunities for small 
businesses''. Shortly after the Task Force released its 
recommendations, the Jobs Act was enacted to protect the interests of 
small businesses and expand their opportunities in the Federal 
marketplace. In addition, as explained

[[Page 11754]]

in the Background section of this notice, DoD, GSA, and NASA published 
an interim rule, with SBA's concurrence, to provide general guidance 
ahead of SBA providing more specific guidance in its regulations. This 
action allowed agencies to begin taking advantage of these impactful 
tools instead of being required to wait until more detailed changes 
were promulgated. In short, the FAR Council believes these tools 
provide an important benefit in helping agencies to carry out the 
purposes of the Small Business Act and in helping the Government meet 
its small business contracting goals.
    With respect to the second factor (the impact of excluding 
commercial item acquisitions on the overall benefits of the underlying 
policy), the FAR Council thinks, based on an analysis of FPDS data, 
that a significant amount of spending on new contracts is for 
commercial item acquisitions and a substantial amount of these 
activities (including all the transactions through the Federal Supply 
Schedules) are for commercial items, many of which can be performed by 
small businesses. Denying agencies the ability to apply the authorities 
in section 1331 to commercial item acquisitions could result in many 
missed opportunities for capable small business contractors seeking 
work in the Federal marketplace. For these reasons, the FAR Council 
believes exclusion could have a material negative impact.
    With respect to the third factor, burden on contractors selling 
commercial items, there are no specific systems costs imposed by the 
rule and reporting costs are minimal (see discussion on the Paperwork 
Reduction Act under section VI).
    Accordingly, for the reasons set forth above, the FAR Council has 
made a determination that it is in the best interest of the Government 
to apply section 1331 to commercial item acquisitions.

C. Applicability to Contracts for the Acquisition of COTS Items

    41 U.S.C. 1907 governs the applicability of laws to the acquisition 
of COTS items. Section 1907 generally limits the applicability of new 
laws when agencies are acquiring COTS items, but provides that such 
acquisitions will not be exempt from a provision of law if--
     The law contains criminal or civil penalties;
     The law specifically refers to 41 U.S.C. 1907 and states 
that the law applies to the acquisition of COTS items;
     The law concerns authorities or responsibilities under 15 
U.S.C. 644 (in the Small Business Act) or bid procedures; or
     The Administrator for Federal Procurement Policy makes a 
written determination that it is not in the best interest of the 
Federal Government to exempt the acquisition of COTS items from the 
provision of law.
    Section 1331 amends section 15 of the Small Business Act (15 U.S.C. 
644) to address the use of partial set-asides, order set-asides, and 
reserves under multiple-award contracts. For this reason, the rule 
applies to acquisitions of COTS items.

IV. Expected Impact of the Rule

    This final rule is expected to benefit small business by providing 
contracting officers with additional guidance on tools with which to 
encourage small business participation in multiple-award contracts. 
Multiple-award contracts are commonly used in Federal procurement due 
to their inherent flexibility, competitive nature, and administrative 
efficiency. They have proven to be an effective means of contracting 
for large quantities of supplies and services for which the quantity 
and delivery requirements cannot be precisely determined at contract 
award. While the authority to use the tools described below has been in 
the FAR for several years, there was minimal guidance available for 
contracting officers on how to use the tools. This rule provides more 
guidance for contracting officers on how to--
    1. Set aside part or parts of multiple-award contracts for small 
business;
    2. Set aside orders under multiple-award contracts, notwithstanding 
the statutory requirement to provide contract holders fair opportunity 
to be considered; and
    3. Reserve one or more awards for small business on multiple-award 
contracts that are established through full and open competition (i.e., 
not totally or partially set aside).
    The use of reserves is expected to increase opportunities for small 
business. Reserves allow small business concerns to have a ``seat at 
the table'' for multiple-award contracts in the absence of other 
acquisition strategies (e.g., total or partial set-asides) that would 
have guaranteed opportunity for small business concerns.
    In addition, this rule is expected to benefit small business by 
removing the current requirement for small business offerors to submit 
an offer for both the set-aside and non-set-aside portions of a partial 
set-aside. That requirement was burdensome for small business concerns 
looking to perform only the set-aside portion(s). This final rule 
allows small business offerors to submit an offer for only the set-
aside portion if they are only interested in performing that portion. 
By allowing small business offerors to only submit an offer for the 
set-aside portion, the Government is expected to have fewer proposals 
to evaluate for the non-set-aside portion of the solicitation, which 
would result in a reduction in burden. However, there may be additional 
proposals received on the set-aside portion of the solicitation from 
offerors that previously did not submit a proposal for the requirement 
because they would have had to submit a proposal for all portions of 
the solicitation.
    When awarding task or delivery orders, contracting officers 
currently rely on a contractor's representation of size and 
socioeconomic status for the multiple-award contract. This rule gives 
contracting officers discretion to require rerepresentation of business 
size or socioeconomic status for an order under a multiple-award 
contract. There are costs involved when a small business concern is 
required to represent its small business size or socioeconomic status. 
However, rerepresentation for orders is expected to help ensure those 
orders are awarded to businesses that have the required size or 
socioeconomic status.
    Other impacts of this final rule include the following:
     The rule provides contracting officers with the authority 
to issue orders directly to a small business under a reserve, which 
will increase opportunities for small business concerns awarded a 
contract under a multiple-award contract reserve but will result in 
lost opportunity for the other contractors with awards on the multiple-
award contract.
     This rule removes the ability of interested parties to 
protest sole source awards under the service-disabled veteran-owned 
small business program. There is a potential lost benefit to the 
interested parties who lose the ability to protest, but there are 
benefits to the contractors who win these awards as they will no longer 
be required to expend resources defending challenges to the award.
     Currently contracting officers assign only one North 
American Industry Classification System (NAICS) code to a multiple-
award contract. This rule requires certain multiple-award contracts to 
be assigned more than one NAICS code. Some contractors may qualify as 
small under the size standards associated with one or more of the NAICS 
codes assigned to a

[[Page 11755]]

particular contract and also may qualify as other than small for other 
NAICS codes assigned to the same contract. Therefore, some contractors 
may need to negotiate and manage a small business subcontracting plan 
either for the portion of a multiple-award contract for which they are 
other than small, or for the entirety of the contract, at the 
contractor's discretion, while other contractors may no longer require 
a subcontracting plan because the value of the portion of the contract 
for which they are other than small is too small to require a 
subcontracting plan.
     Contracting officers currently verify compliance with the 
limitations on subcontracting at the contract level for multiple-award 
contracts that are set aside for a small business program. This rule 
requires contracting officers to specify the compliance period for the 
limitations on subcontracting at either the contract or order level. 
There is no data from which to estimate the number of contracts that 
would require compliance at the order level. Additionally it is unclear 
whether compliance at the contract level or the order level would 
benefit or burden industry. Public comments in response to SBA's 
proposed rule indicated small businesses did not support compliance at 
the order level because it is not always possible for every order and 
could reduce competition for orders that required compliance at the 
order level.
     This rule prohibits tiered evaluation of offers on 
multiple-award contracts unless the agency has statutory authority. 
Tiered evaluations allow the Government to evaluate offers at each tier 
(e.g., service-disabled veteran-owned small business) and only evaluate 
offers at the next tier (e.g., small business) if an award cannot be 
made at the previous tier; it reduces the number of offers that must be 
evaluated. There is no data available on the number of times 
contracting officers use tiered evaluations annually or whether these 
contracting officers are at agencies that have statutory authority to 
conduct tiered evaluations. Therefore, this change probably will result 
in an increased burden to the Government.
    These changes drive both costs and savings that are the result of 
the implementation of SBA's final rule in the FAR. Therefore, these 
costs and savings are attributable to the SBA final rule. The impacts 
of this final FAR rule that are attributable to the FAR are no more 
than de minimis. To access the full Regulatory Cost Analysis for this 
rule, go to the Federal eRulemaking Portal at www.regulations.gov, 
search for ``FAR Case 2014-002,'' click ``Open Docket,'' and view 
``Supporting Documents.''

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under Section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

VI. Executive Order 13771

    This rule is not subject to the requirements of E.O. 13771 because 
this rule results in no more than de minimis costs.

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The FRFA is summarized as follows:

    This final rule amends the FAR to provide uniform guidance 
consistent with SBA's final rule at 78 FR 61114, published on 
October 2, 2013, which implements section 1331 of the Small Business 
Jobs Act of 2010 (15 U.S.C. 644(r)). The objective of this rule is 
to provide regulatory guidance under which Federal agencies may--
    (1) Set aside part or parts of multiple-award contracts for 
small business;
    (2) Reserve one or more awards for small businesses on multiple-
award contracts that are established through full and open 
competition; and
    (3) Set aside orders under multiple-award contracts, 
notwithstanding the fair opportunity requirements.
    The rule seeks to ensure the increased consideration of small 
businesses in connection with the establishment and use of multiple-
award contracts. This rule provides a balance between the benefits 
associated with multiple-award contracts and maximizing 
opportunities for small businesses.
    There were no significant issues raised by the public in 
response to the Initial Regulatory Flexibility Analysis provided in 
the proposed rule.
    This rule may have a positive economic impact on any small 
business entity that wishes to participate in the Federal 
procurement arena. By providing clarification and additional 
guidance on the use of the section 1331 authorities, small 
businesses are expected to have greater access to multiple-award 
contracts, including orders issued against such contracts. Analysis 
of the System for Award Management (SAM) indicates there are over 
338,327 small business registrants that can potentially benefit from 
the implementation of this rule.
    This rule contains an information collection requirement. 
Contracting officers may, at their discretion, require contractors 
under a multiple-award contract to rerepresent their size and 
socioeconomic status on individual task or delivery orders. The 
reporting burden associated with OMB Control Number 9000-0163 was 
increased by 885 hours to account for this rule's information 
collection requirement. The burden calculations estimated that 590 
small business contractors would be required to rerepresent their 
size and status on orders annually.
    This rule does not impose any new recordkeeping or other 
compliance requirements.
    This rule is not expected to have a negative impact on any small 
business entity.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
SBA.

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The 
rule contains an information collection requirement. OMB has cleared 
this information collection requirement under OMB Control Number 9000-
0163, titled: Small Business Size Rerepresentation, in the amount of 
1,985 burden hours. No comments were received on the information 
collection requirement that was provided in the proposed rule; however, 
due to the use of more current data to calculate the burden, revisions 
were made to the burden estimate associated with the collection. The 
burden hours for 9000-0163 include both existing information collection 
requirements associated with rerepresentations, as well as the new 
information collection requirement in this rule.

List of Subjects in 48 CFR Parts 2, 4, 7, 8, 9, 10, 13, 15, 16, 19, 
42, and 52

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

Interim Rule Adopted as Final With Changes

    Accordingly, the interim rule amending 48 CFR parts 8, 12, 16, 19, 
38, and 52, which was published in the Federal Register at 76 FR 68032 
on

[[Page 11756]]

November 2, 2011, is adopted as final with the following changes:

0
1. The authority citation for 48 CFR parts 2, 4, 7, 8, 9, 10, 13, 15, 
16, 19, 42 and 52 continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 2--DEFINITIONS OF WORDS AND TERMS

0
2. Amend section 2.101 in paragraph (b)(2) by adding paragraph (4) to 
the definition ``HUBZone contract'' to read as follows:


2.101  Definitions.

* * * * *
    (b) * * *
    (2) * * *
    HUBZone contract * * *
    (4) Awards based on a reserve for HUBZone small business concerns 
in a solicitation for a multiple-award contract.
* * * * *

PART 4--ADMINISTRATIVE AND INFORMATION MATTERS


4.803  [Amended]

0
3. Amend section 4.803 in paragraph (a)(6) by removing ``decision'' and 
adding ``decision (see 19.506)'' in its place.

0
4. Amend section 4.1202 by revising paragraphs (a) introductory text 
and (a)(14) to read as follows:


4.1202  Solicitation provision and contract clause.

    (a) Insert the provision at 52.204-8, Annual Representations and 
Certifications, in solicitations, except for commercial item 
solicitations issued under FAR part 12. The contracting officer shall 
check the applicable provisions at 52.204-8(c)(2). Use the provision 
with its Alternate I in solicitations issued after October 1, 2022, 
that will result in a multiple-award contract with more than one North 
American Industry Classification System code assigned (see 19.102(b)). 
When the provision at 52.204-7, System for Award Management, is 
included in the solicitation, do not separately include the following 
representations and certifications:
* * * * *
    (14) 52.219-1, Small Business Program Representations (Basic, 
Alternates I, and II).
* * * * *

PART 7--ACQUISITION PLANNING


7.104  [Amended]

0
5. Amend section 7.104 by removing from the first sentence of paragraph 
(d) ``entirely reserved or'' and adding ``totally'' in its place.

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES


8.404  [Amended]

0
6. Amend section 8.404 in the first sentence in paragraph (a) by 
removing ``requirement at 19.202-1(e)(1)(iii))'' and adding 
``requirements at 19.102(b)(3) and 19.202-1(e)(1)(iii))'' in its place.

0
7. Amend section 8.405-5 in the first sentence of paragraph (b) by 
removing ``against'' and adding ``under'' in its place and revising the 
second and last sentences.
    The revisions read as follows:


8.405-5  Small business.

* * * * *
    (b) * * * For purposes of reporting an order placed with a small 
business schedule contractor, an ordering agency may only take credit 
if the awardee meets a size standard that corresponds to the North 
American Industry Classification System code assigned to the order in 
accordance with 19.102(b)(3). Ordering activities should rely on the 
small business representations made by schedule contractors at the 
contract level (but see section 19.301-2(b)(2) concerning 
rerepresentation for an order).
* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

0
8. Amend section 9.104-3 by revising paragraph (d)(2) to read as 
follows:


9.104-3  Application of standards.

* * * * *
    (d) * * *
    (2) A small business that is unable to comply with the limitations 
on subcontracting may be considered nonresponsible (see 52.219-3, 
Notice of HUBZone Set-Aside or Sole Source Award; 52.219-4, Notice of 
Price Evaluation Preference for HUBZone Small Business Concerns; 
52.219-14, Limitations on Subcontracting; 52.219-27, Notice of Service-
Disabled Veteran-Owned Small Business Set-Aside; 52.219-29, Notice of 
Set-Aside for, or Sole Source Award to, Economically Disadvantaged 
Women-Owned Small Business Concerns; and 52.219-30, Notice of Set-Aside 
for, or Sole Source Award to, Women-Owned Small Business Concerns 
Eligible Under the Women-Owned Small Business Program). A small 
business that has not agreed to comply with the limitations on 
subcontracting may be considered nonresponsive.

PART 10--MARKET RESEARCH

0
9. Amend section 10.001 by--
0
a. Removing from paragraph (a)(3)(vii) ``and'';
0
b. Redesignating paragraph (a)(3)(viii) as paragraph (a)(3)(ix);
0
c. Adding new paragraph (a)(3)(viii); and
0
d. Removing from newly designated paragraph (a)(3)(ix) ``Subpart 39.2'' 
and adding ``subpart 39.2'' in its place.
    The addition reads as follows:


10.001  Policy.

    (a) * * *
    (3) * * *
    (viii) Determine whether the acquisition should utilize any of the 
small business programs in accordance with part 19; and
* * * * *

0
10. Amend section 10.002 by revising paragraph (b)(1)(vii) and adding 
paragraph (b)(2)(ix) to read as follows:


10.002  Procedures.

* * * * *
    (b) * * *
    (1) * * *
    (vii) Whether the Government's needs can be met by small business 
concerns that will likely submit a competitive offer at fair market 
prices (see part 19).
    (2) * * *
    (ix) Reviewing systems such as the System for Award Management, the 
Federal Procurement Data System, and the Small Business 
Administration's Dynamic Small Business Search.
* * * * *

PART 13--SIMPLIFIED ACQUISITION PROCEDURES


13.003  [Amended]

0
11. Amend section 13.003 in paragraph (b)(1) by removing ``are reserved 
exclusively for small business concerns and'' and by removing ``shall 
be set aside'' and adding in its place ``shall be set aside for small 
business concerns''.

PART 15--CONTRACTING BY NEGOTIATION


15.101-3  [Added]

0
12. Add section 15.101-3 to read as follows:


15.101-3  Tiered evaluation of small business offers.

    An agency shall not create a tiered (or ``cascading'') evaluation 
of offers, as

[[Page 11757]]

described in 13 CFR 125.2, for multiple-award contracts unless an 
agency has statutory authority.

PART 16--TYPES OF CONTRACTS

0
13. Amend section 16.500 by adding paragraph (e) to read as follows:


16.500  Scope of subpart.

* * * * *
    (e) See subpart 19.5 for procedures to set aside part or parts of 
multiple-award contracts for small businesses; to reserve one or more 
awards for small business on multiple-award contracts; and to set aside 
orders for small businesses under multiple-award contracts.

0
14. Amend section 16.505 by--
0
a. Adding paragraphs (a)(7)(ix) and (a)(10)(iii);
0
b. Revising paragraphs (b)(1)(i) and (b)(4);
0
c. Adding a paragraph (b)(5) subject heading;
0
d. Revising the paragraph (b)(6) subject heading; and
0
e. Adding paragraph (b)(9).
    The revisions and additions read as follows:


16.505  Ordering.

    (a) * * *
    (7) * * *
    (ix) North American Industry Classification System code (see 
19.102(b)(3)).
* * * * *
    (10) * * *
    (iii) For protests of small business size status for set-aside 
orders, see 19.302.
* * * * *
    (b) * * *
    (1) * * *
    (i) The contracting officer must provide each awardee a fair 
opportunity to be considered for each order exceeding $3,500 issued 
under multiple delivery-order contracts or multiple task-order 
contracts, except--
    (A) As provided for in paragraph (b)(2) of this section; or
    (B) Orders issued under 19.504(c)(1)(ii).
* * * * *
    (4) Cost reimbursement orders. For additional requirements for 
cost-reimbursement orders, see 16.301-3.
    (5) Time-and-materials or labor-hour orders. * * *
    (6) Postaward notices and debriefing of awardees for orders 
exceeding $5.5 million. * * *
* * * * *
    (9) Small business. The contracting officer should rely on the 
small business representations at the contract level (but see section 
19.301-2(b)(2) for order rerepresentations).
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

0
15. Amend section 19.000 by--
0
a. Removing from paragraph (a)(3) ``aside'' and adding ``aside, in 
total or in part,'' in its place;
0
b. Removing from paragraph (a)(8) ``and'';
0
c. Removing the period at the end of paragraph (a)(9) and adding ``; 
and'' in its place; and
0
d. Adding paragraph (a)(10).
    The addition reads as follows:


19.000  Scope of part.

    (a) * * *
    (10) The use of reserves.
* * * * *

0
16. Amend section 19.001 by removing the definition ``Nonmanufacturer 
rule'' and adding in alphabetical order a definition for 
``Nonmanufacturer''.
    The addition reads as follows:


19.001  Definitions.

* * * * *
    Nonmanufacturer means a concern that furnishes a product it did not 
manufacture or produce (see 13 CFR 121.406).

0
17. Revise section 19.102 to read as follows:


19.102  Small business size standards and North American Industry 
Classification System codes.

    (a) Locating size standards and North American Industry 
Classification System codes. (1) SBA establishes small business size 
standards on an industry-by-industry basis. Small business size 
standards and corresponding North American Industry Classification 
System (NAICS) codes are provided at 13 CFR 121.201. They are also 
available at https://www.sba.gov/content/table-small-business-size-standards.
    (2) NAICS codes are updated by the Office of Management and Budget 
through its Economic Classification Policy Committee every five years. 
New NAICS codes are not available for use in Federal contracting until 
SBA publishes corresponding size standards. NAICS codes are available 
from the U.S. Census Bureau at https://www.census.gov/eos/www/naics/.
    (b) Determining the appropriate NAICS codes for the solicitation. 
(1) Unless required to do otherwise by paragraph (b)(2)(ii)(B) of this 
section, contracting officers shall assign one NAICS code and 
corresponding size standard to all solicitations, contracts, and task 
and delivery orders. The contracting officer shall determine the 
appropriate NAICS code by classifying the product or service being 
acquired in the one industry that best describes the principal purpose 
of the supply or service being acquired. Primary consideration is given 
to the industry descriptions in the U.S. NAICS Manual, the product or 
service descriptions in the solicitation, the relative value and 
importance of the components of the requirement making up the end item 
being procured, and the function of the goods or services being 
purchased. A procurement is usually classified according to the 
component that accounts for the greatest percentage of contract value.
    (2)(i) For solicitations issued on or before October 1, 2022, that 
will result in multiple-award contracts, the contracting officer shall 
assign a NAICS code in accordance with paragraph (b)(1) of this 
section.
    (ii) For solicitations issued after October 1, 2022, that will 
result in multiple-award contracts, the contracting officer shall--
    (A) Assign a single NAICS code (and corresponding size standard) 
that best describes the principal purpose of both the acquisition and 
each subsequent order; or
    (B) Divide the acquisition into distinct portions or categories 
(e.g., line item numbers, Special Item Numbers, sectors, functional 
areas, or equivalent) and assign each portion or category a single 
NAICS code and size standard that best describes the principal purpose 
of the supplies or services to be acquired under that distinct portion 
or category.
    (3)(i) When placing orders under multiple-award contracts with a 
single NAICS code, the contracting officer shall assign the order the 
same NAICS code and corresponding size standard designated in the 
contract.
    (ii) When placing orders under multiple-award contracts with more 
than one NAICS code, the contracting officer shall assign the order the 
NAICS code and corresponding size standard designated in the contract 
for the distinct portion or category against which the order is placed. 
If an order covers multiple portions or categories, select the NAICS 
code and corresponding size standard designated in the contract for the 
distinct portion or category that best represents the principal purpose 
of the order.
    (4) The contracting officer's designation is final unless appealed 
in accordance with the procedures in 19.103.
    (c) Application of small business size standards to solicitations. 
(1) The contracting officer shall apply the size

[[Page 11758]]

standard in effect on the date the solicitation is issued.
    (2) The contracting officer may amend the solicitation and use the 
new size standard if SBA amends the size standard and it becomes 
effective before the due date for receipt of initial offers.

0
18. Add section 19.103 to subpart 19.1 to read as follows:


19.103  Appealing the contracting officer's North American Industry 
Classification System code and size standard determination.

    (a) The contracting officer's determination is final unless 
appealed as follows:
    (1) An appeal of a contracting officer's NAICS code designation and 
the applicable size standard shall be served and filed within 10 
calendar days after the issuance of the initial solicitation or any 
amendment affecting the NAICS code or size standard. However, SBA may 
file a NAICS code appeal at any time before offers are due.
    (2) Appeals of a contracting officer's NAICS code designation or 
applicable size standard may be filed with SBA's Office of Hearings and 
Appeals (OHA) by--
    (i) Any person adversely affected by a NAICS code designation or 
applicable size standard. However, with respect to a particular sole 
source 8(a) contract, only the SBA Associate Administrator for Business 
Development may appeal a NAICS code designation; or
    (ii) The Associate or Assistant Director for the SBA program 
involved, through SBA's Office of General Counsel.
    (3) Contracting officers shall advise the public, by amendment to 
the solicitation, of the existence of a NAICS code appeal (see 
5.102(a)(1)). Such notices shall include the procedures and the 
deadline for interested parties to file and serve arguments concerning 
the appeal.
    (4) SBA's OHA will dismiss summarily an untimely NAICS code appeal.
    (5) NAICS code appeals are filed in accordance with 13 CFR 
121.1103.
    (6) Upon receipt of a NAICS code appeal, OHA will notify the 
contracting officer by a notice and order of the date OHA received the 
appeal, the docket number, and the Administrative Judge assigned to the 
case. The contracting officer's response to the appeal, if any, shall 
include argument and evidence (see 13 CFR part 134), and shall be 
received by OHA within 15 calendar days from the date of the docketing 
notice and order, unless otherwise specified by the Administrative 
Judge. Upon receipt of OHA's docketing notice and order, the 
contracting officer shall withhold award, unless withholding award is 
not in the best interests of the Government, and immediately send to 
OHA an electronic link to or a paper copy of both the original 
solicitation and all amendments relating to the NAICS code appeal. The 
contracting officer shall inform OHA of any amendments, actions, or 
developments concerning the procurement in question.
    (7) After close of record, OHA will issue a decision and inform the 
contracting officer. If OHA's decision is received by the contracting 
officer before the date the offers are due, the decision shall be final 
and the solicitation shall be amended to reflect the decision, if 
appropriate. OHA's decision received after the due date of the initial 
offers shall not apply to the pending solicitation but shall apply to 
future solicitations of the same products or services.
    (b) SBA's regulations concerning appeals of NAICS code designations 
are located at 13 CFR 121.1102 to 121.1103 and 13 CFR part 134.

0
19. Amend section 19.201 by--
0
a. Revising the second sentence of paragraph (c) introductory text;
0
 b. Removing from paragraph (c)(1) ``Director of'' and adding 
``Director of the Office of'' in its place, in two places; and
0
c. Revising paragraphs (c)(3) and (5) and (d).
    The revisions read as follows:


19.201  General policy.

* * * * *
    (c) * * * For the Department of Defense, in accordance with section 
904 of Public Law 109-163 (10 U.S.C. 144 note), the Office of Small and 
Disadvantaged Business Utilization has been redesignated as the Office 
of Small Business Programs.
* * * * *
    (3) Is responsible to and reports directly to the agency head or 
the deputy to the agency head (except that for the Department of 
Defense, the Director of the Office of Small Business Programs reports 
to the Secretary or the Secretary's designee);
* * * * *
    (5) Works with the SBA procurement center representative (PCR) (or, 
if a PCR is not assigned, see 19.402(a)) to identify proposed 
solicitations that involve bundling and work with the agency 
acquisition officials and SBA to revise the acquisition strategies for 
such proposed solicitations to increase the probability of 
participation by small businesses;
* * * * *
    (d) Small business specialists shall be appointed and act in 
accordance with agency regulations.
    (1) The contracting activity shall coordinate with the small 
business specialist as early in the acquisition planning process as 
practicable, but no later than 30 days before the issuance of a 
solicitation, or prior to placing an order without a solicitation when 
the acquisition meets the dollar thresholds set forth at 7.107-4(a)(1). 
See also 7.104(d).
    (2) The small business specialist shall notify the agency's 
Director of the Office of Small and Disadvantaged Business Utilization, 
and for the Department of Defense, the Director of the Office of Small 
Business Programs, when the criteria relating to substantial bundling 
at 7.107-4(a)(1) are met.
    (3) The small business specialist shall coordinate with the 
contracting activity and the SBA PCR on all determinations and findings 
required by 7.107 for consolidation or bundling of contract 
requirements.

0
20. Revise section 19.202 to read as follows:


19.202  Specific policies.

    In order to further the policy in 19.201(a), contracting officers 
shall comply with the specific policies listed in this section and 
shall consider recommendations of the agency Director of the Office of 
Small and Disadvantaged Business Utilization, or for the Department of 
Defense, the Director of the Office of Small Business Programs, or the 
Director's designee, as to whether a particular acquisition should be 
awarded under subpart 19.5, 19.8, 19.13, 19.14, or 19.15. Agencies 
shall establish procedures including dollar thresholds for review of 
acquisitions by the Director or the Director's designee for the purpose 
of making these recommendations. The contracting officer shall document 
the contract file whenever the Director's recommendations are not 
accepted, in accordance with 19.506.

0
21. Amend section 19.202-1 by revising paragraphs (e)(1) introductory 
text and (e)(4) to read as follows:


19.202-1  Encouraging small business participation in acquisitions.

* * * * *
    (e)(1) Provide a copy of the proposed acquisition package and other 
reasonably obtainable information related to the acquisition to the SBA 
PCR (or, if a PCR is not assigned, see 19.402(a)) at least 30 days 
prior to the issuance of the solicitation if--
* * * * *

[[Page 11759]]

    (4) If the contracting officer rejects the SBA PCR's recommendation 
made in accordance with 19.402(c)(2), document the basis for the 
rejection and notify the SBA PCR in accordance with 19.502-8.

0
22. Amend section 19.202-2 by removing from the introductory paragraph 
``must'' and adding ``shall'' in its place and revising paragraph (a).
    The revision reads as follows:


19.202-2  Locating small business sources.

* * * * *
    (a) Before issuing solicitations, make every reasonable effort to 
find additional small business concerns (see 10.002(b)(2)). This effort 
should include contacting the agency small business specialist and SBA 
PCR (or, if a PCR is not assigned, see 19.402(a)).
* * * * *


19.202-4  [Amended]

0
23. Amend section 19.202-4 in the introductory text by removing 
``must'' and adding ``shall'' in its place; and in paragraph (c) by 
removing ``bid sets and specifications'' and adding ``solicitations'' 
in its place.

0
24. Amend section 19.202-5 in the introductory text by removing 
``must'' and adding ``shall'' in its place and by revising paragraph 
(c)(1).
    The revision reads as follows:


19.202-5  Data collection and reporting requirements.

* * * * *
    (c) * * *
    (1) Require a contractor that represented itself as any of the 
small business concerns identified in 19.000(a)(3) prior to award of 
the contract to rerepresent its size and socioeconomic status (i.e., 
8(a), small disadvantaged business, HUBZone small business, service-
disabled veteran-owned small business, EDWOSB, or WOSB status); and
* * * * *


19.202-6  [Amended]

0
25. Amend section 19.202-6 in paragraph (a)(1) by removing ``set-
asides'' and adding ``set-asides, and reserves'' in its place.


19.203  [Amended]

0
26. Amend section 19.203 in paragraph (b) by removing ``exclusively 
reserve'' and adding ``set aside'' in its place.

Subpart 19.3--Determination of Small Business Size and Status for 
Small Business Programs

0
27. Revise the heading for subpart 19.3 to read as set forth above.

0
28. Amend section 19.301-1 by--
0
a. Revising paragraph (a);
0
b. Redesignating paragraphs (b) through (d) as paragraphs (f) through 
(h); and
0
c. Adding new paragraphs (b) through (d) and paragraph (e).
    The revision and additions read as follows:


19.301-1  Representation by the offeror.

    (a) To be eligible for award as a small business concern identified 
in 19.000(a)(3), an offeror is required to represent in good faith--
    (1)(i) That it meets the small business size standard corresponding 
to the North American Industry Classification System (NAICS) code 
identified in the solicitation; or
    (ii) For a multiple-award contract where there is more than one 
NAICS code assigned, that it meets the small business size standard for 
each distinct portion or category (e.g., line item numbers, Special 
Item Numbers (SINs), sectors, functional areas, or the equivalent) for 
which it submits an offer. If the small business concern submits an 
offer for the entire multiple-award contract, it must meet the size 
standard for each distinct portion or category (e.g., line item number, 
SIN, sector, functional area, or equivalent); and
    (2) The Small Business Administration (SBA) has not issued a 
written determination stating otherwise pursuant to 13 CFR 121.1009.
    (b) An offeror is required to represent its size and socioeconomic 
status in writing to the contracting officer at the time of initial 
offer, including offers for--
    (1) Basic ordering agreements (see 16.703); and
    (2) Blanket purchase agreements (BPAs) issued pursuant to part 13.
    (c) To be eligible for an award of an order under a basic ordering 
agreement or a BPA issued pursuant to part 13 as a small business 
concern identified in 19.000(a)(3), the offeror must be a small 
business concern identified in 19.000(a)(3) at the time of award of the 
order.
    (d) To be eligible for an award under the HUBZone Program (see 
subpart 19.13), a HUBZone small business concern must be a HUBZone 
small business concern both at the time of initial offer and at the 
time of contract award.
    (e) Multiple-award contract representations:
    (1) A business that represents as a small business concern at the 
time of its initial offer for the contract is considered a small 
business concern for each order issued under the contract (but see 
19.301-2 for rerepresentations).
    (2) A business that represents as a small business concern at the 
time of its initial offer for a distinct portion or category as set 
forth in paragraph (a)(1)(ii) is considered a small business concern 
for each order issued under that distinct portion or category (but see 
19.301-2 for rerepresentations).
* * * * *

0
29. Amend section 19.301-2 by revising paragraphs (b), (c), and (d) to 
read as follows:


19.301-2  Rerepresentation by a contractor that represented itself as a 
small business concern.

* * * * *
    (b) A contractor that represented itself as any of the small 
business concerns identified in 19.000(a)(3) before contract award is 
required to rerepresent its size and socioeconomic status--
    (1) For the NAICS code(s) in the contract--
    (i) Within 30 days after execution of a novation agreement or 
within 30 days after modification of the contract to include the clause 
at 52.219-28, Post-Award Small Business Program Rerepresentation, if 
the novation agreement was executed prior to inclusion of this clause 
in the contract;
    (ii) Within 30 days after a merger or acquisition (whether the 
contractor acquires or is acquired by another company) of the 
contractor that does not require novation or within 30 days after 
modification of the contract to include the clause at 52.219-28, Post-
Award Small Business Program Rerepresentation, if the merger or 
acquisition occurred prior to inclusion of this clause in the contract;
    (iii) For long-term contracts--
    (A) Within 60 to 120 days prior to the end of the fifth year of the 
contract; and
    (B) Within 60 to 120 days prior to the date specified in the 
contract for exercising any option thereafter; or
    (2) For the NAICS code assigned to an order under a multiple-award 
contract, if the contracting officer requires contractors to 
rerepresent their size and socioeconomic status for that order.
    (c) A contractor is required to rerepresent its size status in 
accordance with the size standard in effect at the time of its 
rerepresentation that corresponds to the NAICS code that was initially 
assigned to the contract. For multiple-award contracts where there is

[[Page 11760]]

more than one NAICS code assigned, the contractor is required to 
rerepresent its size status for each NAICS code assigned to the 
contract.
    (d)(1) Contract rerepresentation. After a contractor rerepresents 
for a contract that it no longer qualifies as a small business concern 
identified in 19.000(a)(3) 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 BPAs on that contract in its 
small business prime contracting goal achievements. When a contractor's 
rerepresentation for a contract qualifies it as a different small 
business concern identified in 19.000(a)(3) than what it represented 
for award, the agency may include the value of options exercised, 
modifications issued, orders issued, or purchases made under BPAs on 
that contract in its small business prime contracting goal 
achievements, consistent with the rerepresentation. Agencies should 
issue a modification to the contract capturing the rerepresentation and 
report it to FPDS within 30 days after notification of the 
rerepresentation.
    (2) Rerepresentation for a task or delivery order. (i) When a 
contractor rerepresents for an order that it no longer qualifies as a 
small business concern identified in 19.000(a)(3), the agency cannot 
include the value of the order in its small business prime contracting 
goal achievements. When a contractor's rerepresentation for an order 
qualifies it as a different small business concern identified in 
19.000(a)(3) than what it represented for contract award, the agency 
can include the value of the order in its small business prime 
contracting goal achievement, consistent with the rerepresentation.
    (ii) A rerepresentation for an order does not change the size or 
socioeconomic status representation for the contract.
* * * * *

0
30. Amend section 19.302 by revising paragraphs (a) and (b) to read as 
follows:


19.302  Protesting a small business representation or rerepresentation.

    (a)(1) The SBA regulations on small business size and size protests 
are found at 13 CFR part 121.
    (2) An offeror, the contracting officer, SBA, or another interested 
party may protest the small business representation of an offeror in a 
specific offer for a contract. However, for competitive 8(a) contracts, 
the filing of a protest is limited to an offeror, the contracting 
officer, or the SBA.
    (b) Any time after offers are received by the contracting officer, 
or in the case of bids, opened, the contracting officer may question 
the small business representation of any offeror in a specific offer by 
filing a contracting officer's protest (see paragraph (c) of this 
section).
* * * * *


19.303  [Removed and Reserved]

0
31. Remove and reserve section 19.303.

0
32. Amend section 19.307 by removing and reserving paragraph (a) and 
revising paragraph (b)(1).
    The revision reads as follows:


19.307  Protesting a firm's status as a service-disabled veteran-owned 
small business concern.

* * * * *
    (b)(1) For sole source acquisitions, the contracting officer or SBA 
may protest the apparently successful offeror's service-disabled 
veteran-owned small business status. For all other acquisitions, any 
interested party may protest the apparently successful offeror's 
service-disabled veteran-owned small business status.
* * * * *

0
33. Amend section 19.309 by adding paragraph (a)(3) and revising 
paragraph (c) to read as follows:


19.309  Solicitation provisions and contract clauses.

    (a) * * *
    (3) Use the provision with its Alternate II in solicitations that 
will result in a multiple-award contract with more than one NAICS code 
assigned. This is authorized for solicitations issued after October 1, 
2022 (see 19.102(b)).
* * * * *
    (c)(1) Insert the clause at 52.219-28, Post-Award Small Business 
Program Rerepresentation, in solicitations and contracts exceeding the 
micro-purchase threshold when the contract will be performed in the 
United States or its outlying areas.
    (2) Use the clause with its Alternate I in solicitations and the 
resulting multiple-award contracts with more than one NAICS code. This 
is authorized for solicitations issued after October 1, 2022 (see 
19.102(b)).

0
34. Amend section 19.401 by revising paragraph (b) to read as follows:


19.401  General.

* * * * *
    (b) The Director of the Office of Small and Disadvantaged Business 
Utilization serves as the agency focal point for interfacing with SBA. 
The Director of the Office of Small Business Programs is the agency 
focal point for the Department of Defense.

0
35. Amend section 19.402 by revising paragraphs (a), (b), and (c) 
introductory text to read as follows:


19.402  Small Business Administration procurement center 
representatives.

    (a)(1) The SBA may assign one or more procurement center 
representatives (PCRs) to any contracting activity or contract 
administration office to carry out SBA policies and programs. Assigned 
SBA PCRs are required to comply with the contracting agency's 
directives governing the conduct of contracting personnel and the 
release of contract information. The SBA must obtain for its PCRs 
security clearances required by the contracting agency.
    (2) If an SBA PCR is not assigned to the procuring activity or 
contract administration office, contact the SBA Office of Government 
Contracting Area Office serving the area in which the procuring 
activity is located for assistance in carrying out SBA policies and 
programs. See https://www.sba.gov/federal-contracting/counseling-help/procurement-center-representative-directory for the location of the SBA 
office servicing the activity.
    (b) Upon their request and subject to applicable acquisition and 
security regulations, contracting officers shall give SBA PCRs (or, if 
a PCR is not assigned, see paragraph (a) of this section) access to all 
reasonably obtainable contract information that is directly pertinent 
to their official duties.
    (c) The duties assigned by SBA to its PCR are set forth at 13 CFR 
125.2(b) and include but are not limited to the following:
* * * * *


19.403  [Amended]

0
36. Amend section 19.403 in paragraph (c)(8) by removing ``in 19.505'' 
and adding ``in 19.502-8'' in its place.

Subpart 19.5--Small Business Total Set-Asides, Partial Set-Asides, 
and Reserves

0
37. Revise the heading of subpart 19.5 to read as set forth above.

0
38. Revise section 19.501 to read as follows:


19.501  General.

    (a)(1) The purpose of small business set-asides is to award certain 
acquisitions exclusively to small business concerns. A ``set-aside for

[[Page 11761]]

small business'' is the limiting of an acquisition exclusively for 
participation by small business concerns. A small business set-aside 
may be open to any of the small business concerns identified at 
19.000(a)(3). A small business set-aside of a single acquisition or a 
class of acquisitions may be total or partial.
    (2) The purpose of small business reserves is to award one or more 
multiple-award contracts to any of the small business concerns 
identified at 19.000(a)(3), under a full and open competition. A small 
business reserve shall not be used when the acquisition can be set 
aside, in total or in part.
    (b) The contracting officer makes the determination to make a small 
business set-aside, in total or in part, or a reserve. The Small 
Business Administration (SBA) procurement center representative (PCR) 
(or, if a PCR is not assigned, see 19.402(a)) may make a recommendation 
to the contracting officer.
    (c) The contracting officer shall review acquisitions to determine 
if they can be set aside, in total or in part, or reserved for small 
business, giving consideration to the recommendations of agency 
personnel in the Office of Small and Disadvantaged Business 
Utilization, or for the Department of Defense, in the Office of Small 
Business Programs. Agencies may establish threshold levels for this 
review depending upon their needs.
    (d) At the request of an SBA PCR (or, if a PCR is not assigned, see 
19.402(a)), the contracting officer shall make available for review at 
the contracting office (to the extent of the SBA representative's 
security clearance) all proposed acquisitions in excess of the micro-
purchase threshold that have not been unilaterally set aside for small 
business.
    (e) All solicitations involving set-asides, in total or in part, or 
reserves shall specify the NAICS code(s) and corresponding size 
standard(s) (see 19.102).
    (f) Except as authorized by law, a contract may not be awarded as a 
result of a small business set-aside if the cost to the awarding agency 
exceeds the fair market price.
    (g) For the applicability of the limitations on subcontracting and 
the nonmanufacturer rule, see 19.505.

0
39. Amend section 19.502-1 by--
0
a. Removing from paragraph (a)(1) ``Nations'' and adding ``Nation's'' 
in its place;
0
b. Removing from paragraph (a)(2) ``category''; and
0
c. Revising paragraph (b).
    The revision reads as follows:


19.502-1  Requirements for setting aside acquisitions.

* * * * *
    (b) This requirement does not apply to purchases of $3,500 or less 
($20,000 or less for acquisitions as described in 13.201(g)(1)), or 
purchases from required sources under part 8 (e.g., Committee for 
Purchase From People Who are Blind or Severely Disabled).

0
40. Amend section 19.502-2 by revising paragraphs (a) and (b)(1) and 
(2) and removing paragraph (c).
    The revisions read as follows:


19.502-2  Total small business set-asides.

    (a) Before setting aside an acquisition under this paragraph, refer 
to 19.203(b). Each acquisition of supplies or services that has an 
anticipated dollar value exceeding $3,500 ($20,000 for acquisitions as 
described in 13.201(g)(1)), but not over $150,000 ($750,000 for 
acquisitions described in paragraph (1)(i) of the simplified 
acquisition threshold definition at 2.101), shall be set aside for 
small business unless the contracting officer determines there is not a 
reasonable expectation of obtaining offers from two or more responsible 
small business concerns that are competitive in terms of fair market 
prices, quality, and delivery. If the contracting officer receives only 
one acceptable offer from a responsible small business concern in 
response to a set-aside, the contracting officer should make an award 
to that firm. If the contracting officer receives no acceptable offers 
from responsible small business concerns, the set-aside shall be 
withdrawn and the requirement, if still valid, shall be resolicited on 
an unrestricted basis. The small business set-aside does not preclude 
the award of a contract as described in 19.203.
    (b) * * *
    (1) Offers will be obtained from at least two responsible small 
business concerns; and
    (2) Award will be made at fair market prices. Total small business 
set-asides shall not be made unless such a reasonable expectation 
exists (see 19.502-3 for partial set-asides). Although past acquisition 
history and market research of an item or similar items are always 
important, these are not the only factors to be considered in 
determining whether a reasonable expectation exists. In making research 
and development small business set-asides, there must also be a 
reasonable expectation of obtaining from small businesses the best 
scientific and technological sources consistent with the demands of the 
proposed acquisition for the best mix of cost, performances, and 
schedules.

0
41. Revise section 19.502-3 to read as follows:


19.502-3  Partial set-asides of contracts other than multiple-award 
contracts.

    (a) The contracting officer shall set aside a portion or portions 
of an acquisition, except for construction, for exclusive small 
business participation when--
    (1) Market research indicates that a total set-aside is not 
appropriate (see 19.502-2);
    (2) The requirement can be divided into distinct portions;
    (3) The acquisition is not subject to simplified acquisition 
procedures;
    (4) Two or more responsible small business concerns are reasonably 
expected to submit offers on the set-aside portion or portions of the 
acquisition that are competitive in terms of fair market prices, 
quality, and delivery;
    (5) The specific program eligibility requirements identified in 
this part apply; and
    (6) The solicitation will result in a contract other than a 
multiple-award contract (see 2.101 for definition of multiple-award 
contract).
    (b) When the contracting officer determines that a requirement is 
to be partially set aside, the solicitation shall identify which 
portion or portions are set aside and not set aside.
    (c) The contracting officer shall specify in the solicitation how 
offers shall be submitted with regard to the set-aside and non-set-
aside portions.
    (d) Offers received from concerns that do not qualify as small 
business concerns shall be considered nonresponsive and shall be 
rejected on the set-aside portion of partial set-asides. However, 
before rejecting an offer otherwise eligible for award because of 
questions concerning the size representation, an SBA determination must 
be obtained (see subpart 19.3).

0
42. Revise section 19.502-4 to read as follows:


19.502-4  Partial set-asides of multiple-award contracts.

    (a) In accordance with section 1331 of the Small Business Jobs Act 
of 2010 (15 U.S.C. 644(r)(1)), contracting officers may, at their 
discretion, set aside a portion or portions of a multiple-award 
contract, except for construction, for any of the small business 
concerns identified at 19.000(a)(3) when--
    (1) Market research indicates that a total set-aside is not 
appropriate (see 19.502-2);

[[Page 11762]]

    (2) The requirement can be divided into distinct portions;
    (3) The acquisition is not subject to simplified acquisition 
procedures;
    (4) Two or more responsible small business concerns are reasonably 
expected to submit an offer on the set-aside portion or portions of the 
acquisition that are competitive in terms of fair market prices, 
quality, and delivery; and
    (5) The specific program eligibility requirements identified in 
this part apply.
    (b) When the contracting officer determines that a requirement is 
to be partially set aside, the solicitation shall identify which 
portion or portions are set aside and not set aside.
    (c) The contracting officer shall specify in the solicitation how 
offers shall be submitted with regard to the set-aside and non-set-
aside portions.
    (d) Offers received from concerns that do not qualify as small 
business concerns shall be considered nonresponsive and shall be 
rejected on the set-aside portion of partial set-asides. However, 
before rejecting an offer otherwise eligible for award because of 
questions concerning the size representation, an SBA determination must 
be obtained (see subpart 19.3).


19.502-5  [Removed]

0
43. Remove section 19.502-5.


19.502-6  [Redesignated as 19.502-5]

0
44. Redesignate section 19.502-6 as section 19.502-5 and revise the 
heading to read as follows:


19.502-5  Insufficient reasons for not setting aside an acquisition.

* * * * *


19.503 thru 19.507  [Redesignated as 19.502-6 thru 19.502-10]

0
45. Redesignate sections 19.503 through 19.507 as sections 19.502-6 
through 19.502-10.


19.502-6  [Amended]

0
46. Amend newly designated section 19.502-6 by--
0
a. Removing from paragraph (c)(2) ``reserved for small business 
concerns'' and adding ``set aside'' in its place; and
0
b. Removing from paragraph (d) ``(see 19.506(a))'' and the two 
occurrences of ``procurement center representative'' and adding ``(see 
19.502-9(a))'' and ``PCR'' twice in their places.

0
47. Amend newly designated section 19.502-8 by--
0
a. Revising paragraph (a); and
0
b. Removing from paragraph (b) the two occurrences of ``procurement 
center representative'' and adding ``PCR'' in their places and removing 
the two occurrences of ``(or designee)''.
    The revision reads as follows:


19.502-8  Rejecting Small Business Administration recommendations.

    (a) If the contracting officer rejects a recommendation of the SBA, 
written notice shall be furnished to the appropriate SBA representative 
within 5 working days of the contracting officer's receipt of the 
recommendation.
* * * * *

0
48. Amend newly designated section 19.502-9 by revising paragraph (a) 
and removing from paragraph (b) ``SBA representative'' and 
``procurement center representative'' and adding ``SBA PCR'' and 
``PCR'' in their places, respectively. The revision reads as follows:


19.502-9  Withdrawing or modifying small business set-asides.

    (a) If, before award of a contract involving a total or partial 
small business set-aside, the contracting officer considers that award 
would be detrimental to the public interest (e.g., payment of more than 
a fair market price), the contracting officer may withdraw the small 
business set-aside, whether it was unilateral or joint. The contracting 
officer shall initiate a withdrawal of an individual total or partial 
small business set-aside, by giving written notice to the agency small 
business specialist and the SBA PCR (or, if a PCR is not assigned, see 
19.402(a)) stating the reasons. In a similar manner, the contracting 
officer may modify a unilateral or joint class small business set-aside 
to withdraw one or more individual acquisitions.
* * * * *

0
49. Add new section 19.503 to read as follows:


19.503  Reserves.

    (a) In accordance with section 1331 of the Small Business Jobs Act 
of 2010 (15 U.S.C. 644(r)(3)) and 13 CFR 125.2(e)(4), contracting 
officers may, at their discretion when conducting multiple-award 
procurements using full and open competition, reserve one or more 
contract awards for any of the small business concerns identified in 
19.000(a)(3), when market research indicates--
    (1) A total set-aside is not feasible because there is no 
reasonable expectation of receiving offers that are competitive in 
terms of fair market prices, quality, and delivery from at least two 
responsible small business concerns identified in 19.000(a)(3), that 
can perform the entire requirement; and
    (2) A partial set-aside is not feasible because--
    (i) The contracting officer is unable to divide the requirement 
into distinct portions; or
    (ii) There is no reasonable expectation that at least two 
responsible small business concerns identified in 19.000(a)(3) can 
perform any portion of the requirement competitively in terms of fair 
market price, quality, and delivery.
    (b) A reserve will result in one of the following:
    (1) One or more contract awards to any one or more types of small 
business concerns identified in 19.000(a)(3).
    (2) In the case of a solicitation of a bundled requirement that 
will result in a multiple-award contract, an award to one or more small 
businesses with a Small Business Teaming Arrangement.
    (c) The specific program eligibility requirements identified in 
this part apply.
    (d) The limitations on subcontracting and the nonmanufacturer rule 
(see 19.505) do not apply to reserves at the contract level, but shall 
apply to orders that are set aside or issued directly to one small 
business concern under 19.504(c)(1)(ii).

0
50. Add new section 19.504 to read as follows:


19.504  Orders under multiple-award contracts.

    (a) General. In accordance with section 1331 of the Small Business 
Jobs Act of 2010 (15 U.S.C. 644(r)(2)), contracting officers may, at 
their discretion, set aside orders placed under multiple-award 
contracts for any of the small business concerns identified in 
19.000(a)(3).
    (1) The contracting officer shall state in the solicitation and 
resulting contract whether order set-asides will be discretionary or 
mandatory when the conditions in 19.502-2 are met at the time of order 
set-aside, and the specific program eligibility requirements, as 
applicable, are also then met.
    (2) When setting aside an order at or below the simplified 
acquisition threshold, the contracting officer may set aside the order 
for any of the small business concerns identified in 19.000(a)(3).
    (3) When setting aside an order above the simplified acquisition 
threshold, the contracting officer shall first consider setting aside 
the order for the small business socioeconomic contracting programs 
(i.e., 8(a), HUBZone, service-disabled veteran-owned small business, 
and women-owned small business) before considering a small business 
set-aside.

[[Page 11763]]

    (4) The contracting officer shall comply with the specific program 
eligibility requirements identified in this part in addition to the 
ordering procedures for a multiple-award contract (for orders placed 
under the Federal Supply Schedules Program, see 8.405-5; for orders 
placed under all other multiple-award contracts, see 16.505).
    (b) Orders under partial set-aside contracts. (1) Only small 
business concerns awarded contracts for the portion(s) that were set 
aside under the solicitation for the multiple-award contract may 
compete for orders issued under those portion(s).
    (2) Small business awardees may compete against other than small 
business awardees for an order issued under the portion of the 
multiple-award contract that was not set aside, if the small business 
received a contract award for the non-set-aside portion.
    (c) Orders under reserves. (1) The contracting officer may--
    (i) Set aside orders for any of the small business concerns 
identified in 19.000(a)(3) when there are two or more contract awards 
for that type of small business concern; or
    (ii) Issue orders directly to one small business concern for work 
that it can perform when there is only one contract award to any one 
type of small business concern identified in 19.000(a)(3).
    (2) Small business awardees may compete against other than small 
business awardees for an order that is not set aside if the small 
business received a contract award for the supplies or services being 
ordered.

0
51. Add new section 19.505 to read as follows:


19.505  Limitations on subcontracting and nonmanufacturer rule.

    (a) Limitations on subcontracting. To be awarded a set-aside 
contract, an order under a set-aside, or an order in accordance with 
19.504(c)(1)(ii), the small business concern is required to perform as 
follows:
    (1) For services (except construction), at least 50 percent of the 
cost incurred for personnel with its own employees.
    (2) For supplies or products (other than a procurement from a 
nonmanufacturer of such supplies or products), at least 50 percent of 
the cost of manufacturing the supplies or products (not including the 
cost of materials).
    (3) For general construction, at least 15 percent of the cost (not 
including the cost of materials) with its own employees.
    (4) For construction by special trade contractors, at least 25 
percent of the cost (not including the cost of materials) with its own 
employees.
    (b) Compliance period. A small business contractor is required to 
comply with the limitations on subcontracting--
    (1) For a contract that has been set aside, either by the end of 
the base term and then by the end of each subsequent option period, or 
by the end of the performance period for each order issued under the 
contract, at the contracting officer's discretion; and
    (2) For an order set aside under a contract as described in 
19.504(a), (b), or (c)(1)(i) or an order issued in accordance with 
19.504(c)(1)(ii), by the end of the performance period for the order.
    (c) Nonmanufacturer rule. (1) To be awarded a set-aside contract or 
order, or an order issued in accordance with 19.504(c)(1)(ii), for 
supplies as a nonmanufacturer, a contractor is required to--
    (i) Provide the end item of a small business manufacturer, that has 
been manufactured or produced in the United States or its outlying 
areas (but see 19.1308(e)(1)(i) for contracts and orders awarded under 
the HUBZone Program);
    (ii) Not exceed 500 employees;
    (iii) Be primarily engaged in the retail or wholesale trade and 
normally sell the type of item being supplied; and
    (iv) Take ownership or possession of the item(s) with its 
personnel, equipment or facilities in a manner consistent with industry 
practice.
    (2) In addition to the requirements set forth in (c)(1) of this 
section, when the end item being acquired is a kit of supplies or other 
goods, 50 percent of the total value of the components of the kit shall 
be manufactured in the United States or its outlying areas by small 
business concerns. Where the Government has specified an item for the 
kit which is not produced by U.S. small business concerns, such items 
shall be excluded from the 50 percent calculation. See 13 CFR 
121.406(c) for further information regarding nonmanufacturer kit 
assemblers.
    (3) For size determination purposes, there can be only one 
manufacturer of the end product being acquired. For the purposes of the 
nonmanufacturer rule, the manufacturer of the end product being 
acquired is the concern that transforms raw materials and/or 
miscellaneous parts or components into the end product. Firms which 
only minimally alter the item being procured do not qualify as 
manufacturers of the end item, such as firms that add substances, 
parts, or components to an existing end item to modify its performance, 
will not be considered the end item manufacturer, where those identical 
modifications can be performed by and are available from the 
manufacturer of the existing end item. See 13 CFR 121.406 for further 
information regarding manufacturers.
    (4) Waiver of nonmanufacturer rule. (i) The SBA may grant an 
individual or a class waiver so that a nonmanufacturer does not have to 
furnish the product of a small business (but see 19.1308(e)(2)).
    (A) Class waiver. SBA may waive the nonmanufacturer rule when SBA 
has determined that there are no small business manufacturers or 
processors in the Federal market for a particular class of products. 
This type of waiver is known as a class waiver and would apply to an 
acquisition for a specific product (or a product in a class of 
products). Contracting officers and other interested parties may 
request that the SBA issue a waiver of the nonmanufacturer rule, for a 
particular class of products.
    (B) Individual waiver. The contracting officer may also request a 
waiver for an individual acquisition because no known domestic small 
business manufacturers or processors can reasonably be expected to 
offer a product meeting the requirements of the solicitation. This type 
of waiver is known as an individual waiver and would apply only to a 
specific acquisition.
    (ii) Requests for waivers shall be sent via email to 
[email protected] or by mail to the--Director for Government 
Contracting, United States Small Business Administration, Mail Code 
6700, 409 Third Street SW, Washington, DC 20416.
    (iii) For the most current listing of class waivers, contact the 
SBA Office of Government Contracting or go to https://www.sba.gov/content/class-waivers.
    (5) Exception to the nonmanufacturer rule. The SBA provides for an 
exception to the nonmanufacturer rule when--
    (i) The procurement of supplies or a manufactured end product--
    (A) Is processed under simplified acquisition procedures (see part 
13); or
    (B) Is for an order set aside for any of the small business 
concerns identified in 19.000(a)(3), placed under a multiple-award 
contract that was competed on a full and open basis;
    (ii) The cost is not anticipated to exceed $25,000; and
    (iii) The offeror supplies an end product that is manufactured or 
produced in the United States.

0
52. Add new section 19.506 to read as follows:

[[Page 11764]]

19.506  Documentation requirements.

    (a)(1) The contracting officer shall document the rationale when a 
contract is not totally set aside for small business in accordance with 
19.502-2.
    (2) The contracting officer shall document the rationale when a 
multiple-award contract is not partially set aside, not reserved, and 
does not allow for setting aside of orders, when these authorities 
could have been used.
    (b) If applicable, the documentation shall include the rationale 
for not accepting the recommendations made by the agency Director of 
the Office of Small and Disadvantaged Business Utilization, or, for the 
Department of Defense, the Director of the Office of Small Business 
Programs, or the Director's designee, as to whether a particular 
acquisition should be awarded under subparts 19.5, 19.8, 19.13, 19.14, 
or 19.15.
    (c) Documentation is not required if a contract award is 
anticipated to a small business under subpart 19.5, 19.8, 19.13, 19.14, 
or 19.15.


19.508  [Redesignated as 19.507]

0
53. Redesignate section 19.508 as section 19.507 and revise paragraphs 
(c) through (f) and add paragraphs (g) and (h).
    The revisions and additions read as follows:


19.507  Solicitation provisions and contract clauses.

* * * * *
    (c) The contracting officer shall insert the clause at 52.219-6, 
Notice of Total Small Business Set-Aside, in solicitations and 
contracts involving total small business set-asides. This includes 
multiple-award contracts when orders may be set aside for any of the 
small business concerns identified in 19.000(a)(3), as described in 
8.405-5 and 16.505(b)(2)(i)(F). Use the clause at 52.219-6 with its 
Alternate I when including FPI in the competition in accordance with 
19.502-7.
    (d) The contracting officer shall insert the clause at 52.219-7, 
Notice of Partial Small Business Set-Aside, in solicitations and 
contracts involving partial small business set-asides. This includes 
part or parts of multiple-award contracts, including those described in 
38.101. Use the clause at 52.219-7 with its Alternate I when including 
FPI in the competition in accordance with 19.502-7.
    (e) The contracting officer shall insert the clause at 52.219-14, 
Limitations on Subcontracting, in solicitations and contracts for 
supplies, services, and construction, if any portion of the requirement 
is to be set aside for small business and the contract amount is 
expected to exceed $150,000. This includes multiple-award contracts 
when orders may be set aside for small business concerns, as described 
in 8.405-5 and 16.505(b)(2)(i)(F), and when orders may be issued 
directly to a small business concern as described in 19.504(c)(1)(ii). 
For contracts that are set aside, the contracting officer shall 
indicate in paragraph (d) of the clause whether compliance with the 
limitations on subcontracting is required at the contract or order 
level.
    (f)(1) The contracting officer shall insert the clause at 52.219-
13, Notice of Set-Aside of Orders, in all solicitations for multiple-
award contracts under which orders may be set aside for any of the 
small business concerns identified in 19.000(a)(3), and all contracts 
awarded from such solicitations.
    (2) The contracting officer shall insert the clause at 52.219-13 
with its Alternate I in all full and open solicitations and contracts 
for multiple-award contracts under which orders will be set aside for 
any of the small business concerns identified in 19.000(a)(3) if the 
conditions in 19.502-2 are met at the time of order set-aside, and the 
specific program eligibility requirements, as applicable, are also then 
met.
    (g)(1) The contracting officer shall insert the provision at 
52.219-31, Notice of Small Business Reserve, in solicitations for 
multiple-award contracts that have reserves.
    (2) The contracting officer shall insert the clause at 52.219-32 
Orders Issued Directly Under Small Business Reserves, in solicitations 
and the resulting multiple-award contracts that have reserves.
    (h) The contracting officer shall insert the clause at 52.219-33, 
Nonmanufacturer Rule, in solicitations and contracts when the item 
being acquired has been assigned a manufacturing or supply NAICS code, 
and any portion of the requirement is set-aside for any of the small 
business concerns identified in 19.000(a)(3) including multiple-award 
contracts that provide for the set-aside of orders to small business 
concerns or for orders issued directly to one small business concern in 
accordance with 19.504(c)(1)(ii), or is awarded on a sole source basis 
in accordance with subpart 19.8, 19.13, 19.14, or 19.15. The clause 
shall not be used when the Small Business Administration has determined 
that there are no small business manufacturers of the product or end 
items and has waived the nonmanufacturer rule (see 19.505(c)(4)).

0
54. Amend section 19.601 by adding paragraph (f) to read as follows:


19.601  General.

* * * * *
    (f) For the purpose of receiving a COC on an unrestricted 
acquisition, a small business nonmanufacturer may furnish any end item 
produced or manufactured in the United States or its outlying areas.


19.602-3  [Amended]

0
55. Amend section 19.602-3 in paragraph (a)(2) by removing 
``Director,'' and ``(OSDBU)'' and adding ``Director of the'' and 
``(OSDBU) or, for the Department of Defense, the Director of the Office 
of Small Business Programs,'' in their places, respectively.

0
56. Amend section 19.602-4 by adding a sentence to the end of paragraph 
(b) to read as follows:


19.602-4  Awarding the contract.

* * * * *
    (b) * * * Where SBA issues a COC, the contracting officer may 
decide not to award to that offeror for reasons unrelated to 
responsibility.
* * * * *

0
57. Amend section 19.702 by revising paragraph (a) to read as follows:


19.702  Statutory requirements.

* * * * *
    (a)(1) Except as stated in paragraph (b) of this section, section 
8(d) of the Small Business Act (15 U.S.C. 637(d)) imposes the following 
requirements regarding subcontracting with small businesses and small 
business subcontracting plans:
    (i) In negotiated acquisitions, each solicitation of offers to 
perform a contract that is expected to exceed $700,000 ($1.5 million 
for construction) and that has subcontracting possibilities, shall 
require the apparently successful offeror to submit an acceptable 
subcontracting plan. If the apparently successful offeror fails to 
negotiate a subcontracting plan acceptable to the contracting officer 
within the time limit prescribed by the contracting officer, the 
offeror will be ineligible for award. For a multiple-award contract 
with more than one North American Industry Classification System 
(NAICS) code, see paragraph (a)(2)(i) of this section.
    (ii) In sealed bidding acquisitions, each invitation for bids to 
perform a contract that is expected to exceed $700,000 ($1.5 million 
for construction) and that has subcontracting possibilities, shall 
require the bidder selected for award to submit a subcontracting plan. 
If the selected

[[Page 11765]]

bidder fails to submit a plan within the time limit prescribed by the 
contracting officer, the bidder will be ineligible for award. For a 
multiple-award contract with more than one NAICS code, see paragraph 
(a)(2)(i) of this section.
    (iii) Each contract modification that causes the value of a 
contract without a subcontracting plan to exceed $700,000 ($1.5 million 
for construction), shall require the contractor to submit a 
subcontracting plan for the contract, if the contracting officer 
determines that subcontracting opportunities exist. For a multiple-
award contract with more than one NAICS code, see paragraph (a)(2)(ii) 
of this section.
    (2)(i) For a multiple-award contract with more than one NAICS code, 
the solicitation referenced in paragraphs (a)(1)(i) and (ii) of this 
section shall require the apparently successful offeror to submit an 
acceptable subcontracting plan for either the distinct portion(s) or 
category(ies) of their proposal for which the offeror is other than 
small or for the entirety of their proposal, at the offeror's 
discretion. When determining the need for a subcontracting plan, the 
contracting officer shall consider the cumulative dollar value of the 
portion(s) or category(ies) of the offeror's proposal for which the 
offeror is other than small.
    (ii) For a multiple-award contract with more than one NAICS code, 
the modification referenced in paragraph (a)(1)(iii) of this section 
shall require the contractor to submit an acceptable subcontracting 
plan for either the distinct portion(s) or category(ies) of the 
contract for which the contractor is other than small or for the 
entirety of their contract, at the contractor's discretion. When 
determining the need for a subcontracting plan, the contracting officer 
shall consider the cumulative dollar value of the portion(s) or 
category(ies) of the contract for which the contractor is other than 
small.
* * * * *


19.704  [Amended]

0
58. Amend section 19.704 in paragraph (a) introductory text by removing 
``19.702(a)(1), (2), and (3)'' and adding ``19.702(a)(1)(i), (ii), and 
(iii)'' in its place.


19.705-1  [Amended]

0
59. Amend section 19.705-1 in paragraph (b)(1) by removing 
``19.702(a)(1)'' and adding ``19.702(a)'' in its place.


19.705-2  [Amended]

0
60. Amend section 19.705-2 in paragraph (f) by removing 
``19.702(a)(3)'' and ``re-representation'' and adding 
``19.702(a)(1)(iii)'' and ``rerepresentation'' in their place, 
respectively.


19.705-5  [Amended]

0
61. Amend section 19.705-5 in paragraph (b) by removing ``19.702(a)(1) 
and (2)'' and adding ``19.702(a)(1)(i) and (ii)'' in its place.


19.707  [Amended]

0
62. Amend section 19.707 in paragraph (a)(2) by removing ``19.702(a)(1) 
or (2)'' and adding ``19.702(a)(1)(i) or (ii)'' in its place.


19.708  [Amended]

0
63. Amend section 19.708 in paragraph (b)(1))(iv) by removing 
``19.702(a)(3)'' and adding ``19.702(a)(1)(iii)'' in its place.

0
64. Amend section 19.804-2 by revising the first sentence of paragraph 
(a) to read as follows:


19.804-2  Agency offering.

    (a) After completing its evaluation, the contracting office shall 
notify the SBA of the extent of its plans to place 8(a) contracts with 
the SBA for specific quantities of items or work, including 8(a) 
contracts that are reserved in accordance with 19.503. * * *
* * * * *

0
65. Revise section 19.804-6 to read as follows:


19.804-6  Indefinite-delivery contracts.

    (a) Separate offers and acceptances are not required for individual 
orders under multiple-award contracts (including the Federal Supply 
Schedules managed by GSA, multi-agency contracts or Governmentwide 
acquisition contracts, or indefinite-delivery, indefinite-quantity 
(IDIQ) contracts) that have been set aside for exclusive competition 
among 8(a) contractors, and the individual order is to be competed 
among all 8(a) contract holders. SBA's acceptance of the original 
contract is valid for the term of the contract. Offers and acceptances 
are required for individual orders under multiple-award contracts that 
have not been set aside for exclusive competition among 8(a) 
contractors.
    (b) The contracting officer may issue an order on a sole source 
basis when--
    (1) The multiple-award contract was set aside for exclusive 
competition among 8(a) participants;
    (2) The order has an estimated value less than or equal to the 
dollar thresholds set forth at 19.805-1(a)(2); and
    (3) The offering and acceptance procedures at 19.804-2 and 19.804-3 
are followed.
    (c) The contracting officer may issue an order directly to one 8(a) 
contractor in accordance with 19.504(c)(1)(ii) when--
    (1) The multiple-award contract was reserved for 8(a) participants;
    (2) The order has an estimated value less than or equal to $7 
million for acquisitions assigned manufacturing NAICS codes and $4 
million for all other acquisitions; and
    (3) The offering and acceptance procedures at 19.804-2 and 19.804-3 
are followed.
    (d) An 8(a) contractor may continue to accept new orders under the 
contract, even if it exits the 8(a) program, or becomes other than 
small for the NAICS code(s) assigned to the contract.
    (e) Agencies may continue to take credit toward their prime 
contracting small disadvantaged business or small business goals for 
orders awarded to 8(a) contractors, even after the contractor's 8(a) 
program term expires, the contractor otherwise exits the 8(a) program, 
or the contractor becomes other than small for the NAICS code(s) 
assigned under the 8(a) contract. However, if an 8(a) contractor 
rerepresents that it is other than small for the NAICS code(s) assigned 
under the contract in accordance with 19.301-2 or, where ownership or 
control of the 8(a) contractor has changed and SBA has granted a waiver 
to allow the contractor to continue performance (see 13 CFR 124.515), 
the agency may not credit any subsequent orders awarded to the 
contractor towards its small disadvantaged business or small business 
goals.

0
66. Revise section 19.809 to read as follows:


19.809  Preaward considerations.


19.809-1  Preaward survey.

    The contracting officer should request a preaward survey of the 
8(a) participant whenever considered useful. If the results of the 
preaward survey or other information available to the contracting 
officer raise substantial doubt as to the participant's ability to 
perform, the contracting officer shall refer the matter to SBA for 
Certificate of Competency consideration under subpart 19.6.


19.809-2  Limitations on subcontracting and nonmanufacturer rule.

    (a) Limitations on subcontracting. To be awarded a contract or 
order under the 8(a) program, the 8(a) participant is required to 
perform--
    (1) For services (except construction), at least 50 percent of the 
cost incurred for personnel with its own employees;
    (2) For supplies or products (other than a procurement from a

[[Page 11766]]

nonmanufacturer of such supplies or products), at least 50 percent of 
the cost of manufacturing the supplies or products (not including the 
cost of materials);
    (3) For general construction, at least 15 percent of the cost with 
its own employees (not including the cost of materials); and
    (4) For construction by special trade contractors, at least 25 
percent of the cost with its own employees (not including the cost of 
materials).
    (b) Compliance period. An 8(a) contractor is required to comply 
with the limitations on subcontracting--
    (1) For a contract under the 8(a) program, either by the end of the 
base term and then by the end of each subsequent option period or by 
the end of the performance period for each order issued under the 
contract, at the contracting officer's discretion; and
    (2) For an order competed exclusively among contractors who are 
8(a) participants or for an order issued directly to one 8(a) 
contractor in accordance with 19.504(c)(1)(ii), by the end of the 
performance period for the order.
    (c) Waiver. The applicable SBA District Director may waive the 
provisions in paragraph (b)(1) requiring a participant to comply with 
the limitations on subcontracting for each period of performance or for 
each order. Instead, the SBA District Director may permit the 
participant to subcontract in excess of the limitations on 
subcontracting where the SBA District Director makes a written 
determination that larger amounts of subcontracting are essential 
during certain stages of performance.
    (1) The 8(a) participant is required to provide the SBA District 
Director written assurance that the participant will ultimately comply 
with the requirements of this section prior to contract completion. The 
contracting officer shall review the written assurance and inform the 
8(a) participant of their concurrence or nonconcurrence. The 8(a) 
participant can only submit the written assurance to the SBA District 
Director upon concurrence by the contracting officer.
    (2) The contracting officer does not have the authority to waive 
the provisions of this section requiring an 8(a) participant to comply 
with the limitations on subcontracting for each period of performance 
or order, even if the agency has a Partnership Agreement with SBA.
    (3) Where the 8(a) participant does not ultimately comply with the 
limitations on subcontracting by the end of the contract, SBA will not 
grant future waivers for the 8(a) participant.
    (d) Nonmanufacturer rule. See 19.505(c) for application of the 
nonmanufacturer rule, inclusive of waivers and exceptions to the 
nonmanufacturer rule.


19.810  [Amended]

0
67. Amend section 19.810 in paragraph (b)(1)(ii) by removing ``Director 
for Small'' and ``Director of'' and adding ``Director for the Office of 
Small'' and ``Director of the Office of'' in their places, 
respectively.

0
68. Amend section 19.811-3 by revising paragraphs (d) and (e) to read 
as follows:


19.811-3  Contract clauses.

* * * * *
    (d) The contracting officer shall insert the clause at 52.219-18, 
Notification of Competition Limited to Eligible 8(a) Participants, in 
competitive solicitations and contracts when the acquisition is 
accomplished using the procedures of 19.805. The clause at 52.219-18 
with its Alternate I shall be used when competition is to be limited to 
8(a) participants within one or more specific SBA districts pursuant to 
19.804-2.
    (e) For contracts or orders resulting from this subpart, see 
19.507(e) for use of 52.219-14, Limitations on Subcontracting, and 
19.507(h) for use of 52.219-33, Nonmanufacturer Rule.


19.1303  [Amended]

0
69. Amend section 19.1303 by removing paragraph (e).

0
70. Amend section 19.1307 by--
0
a. Removing from paragraph (a)(1) ``or'';
0
b. Removing the period from the end of paragraph (a)(2) and adding ``; 
or'' in its place; and
0
c. Adding paragraph (a)(3).
    The addition reads as follows:


19.1307  Price evaluation preference for HUBZone small business 
concerns.

    (a) * * *
    (3) For the reserved portion of a solicitation for a multiple-award 
contract (see 19.503).
* * * * *

0
71. Revise section 19.1308 to read as follows:


19.1308  Limitations on subcontracting and nonmanufacturer rule.

    (a) Definitions. See 13 CFR 125.1 for definitions of terms used in 
paragraph (b) of this section.
    (b) Limitations on subcontracting. To be awarded a contract or 
order under the HUBZone program, the HUBZone small business concern is 
required--
    (1) For services (except construction), to spend at least 50 
percent of the cost of performance incurred for personnel on its own 
employees or on the employees of other HUBZone small business concerns;
    (2) For supplies or products (other than a procurement from a 
nonmanufacturer of such supplies or products), to spend at least 50 
percent of the cost of manufacturing, excluding the cost of materials, 
performed by the concern or other HUBZone small business concerns;
    (3) For general construction--
    (i) To spend at least 15 percent of the cost of performance 
incurred for personnel on its own employees; and
    (ii) To spend at least 50 percent of the cost of performance 
incurred for personnel on its own employees or on a combination of its 
own employees and employees of HUBZone small business concern 
subcontractors; or
    (4) For construction by special trade contractors--
    (i) To spend at least 25 percent of the cost of contract 
performance incurred for personnel on its own employees; and
    (ii) To spend at least 50 percent of the cost of the contract 
incurred for personnel on its own employees or on a combination of its 
own employees and employees of HUBZone small business concern 
subcontractors.
    (c) Construction. Before issuing a solicitation for general 
construction or construction by special trade contractors, the 
contracting officer shall determine if at least two HUBZone small 
business concerns can spend at least 50 percent of the cost of contract 
performance to be incurred for personnel on their own employees or 
subcontract employees of other HUBZone small business concerns. If the 
contracting officer is unable to make this determination, the 
contracting officer may waive the 50 percent requirement; however, the 
HUBZone small business concern is still required to meet the cost 
incurred for personnel requirements in paragraphs (b)(3)(i) and 
(b)(4)(i).
    (d) Compliance period. A HUBZone small business contractor is 
required to comply with the limitations on subcontracting--
    (1) For a contract that has been set aside or awarded on a sole 
source basis to a HUBZone small business concern, either by the end of 
the base term and then by the end of each subsequent option period or 
by the end of the performance period for each order issued under the 
contract, at the contracting officer's discretion; and
    (2) For an order set aside for HUBZone small business concerns as

[[Page 11767]]

described in 8.405-5 and 16.505(b)(2)(i)(F) or for an order issued 
directly to a HUBZone small business contractor in accordance with 
19.504(c)(1)(ii), by the end of the performance period for the order.
    (e) Nonmanufacturer rule. (1) To be awarded a contract or order for 
supplies as a nonmanufacturer under this subpart, a contractor is 
required--
    (i) To provide the end item of a HUBZone small business 
manufacturer, that has been manufactured or produced in the United 
States or its outlying areas;
    (ii) Not to exceed 500 employees;
    (iii) To be primarily engaged in the retail or wholesale trade and 
normally sell the type of item being supplied; and
    (iv) To take ownership or possession of the item(s) with its 
personnel, equipment, or facilities in a manner consistent with 
industry practice.
    (2) There are no class waivers or waivers to the nonmanufacturer 
rule for individual solicitations for contracts and orders awarded 
under the HUBZone Program.
    (3) For contracts and orders awarded under the HUBZone Program at 
or below $25,000 in total value, a HUBZone small business concern may 
supply the end item of any manufacturer, including a large business, as 
long as the product acquired is manufactured or produced in the United 
States.

0
72. Revise section 19.1309 to read as follows:


19.1309  Contract clauses.

    (a)(1) The contracting officer shall insert the clause 52.219-3, 
Notice of HUBZone Set-Aside or Sole Source Award, in solicitations and 
contracts for acquisitions that are set aside or awarded on a sole 
source basis to, HUBZone small business concerns under 19.1305 or 
19.1306. This includes multiple-award contracts when orders may be set 
aside for HUBZone small business concerns as described in 8.405-5 and 
16.505(b)(2)(i)(F) or when orders may be issued directly to one HUBZone 
small business concern in accordance with 19.504(c)(1)(ii).
    (2) The contracting officer shall use the clause with its Alternate 
I to waive the 50 percent requirement if the conditions at 19.1308(c) 
apply.
    (b)(1) The contracting officer shall insert the clause at 52.219-4, 
Notice of Price Evaluation Preference for HUBZone Small Business 
Concerns, in solicitations and contracts for acquisitions conducted 
using full and open competition.
    (2) The contracting officer shall use the clause with its Alternate 
I to waive the 50 percent requirement if the conditions at 19.1308(c) 
apply.
    (c) For use of clause 52.219-33, Nonmanufacturer Rule, see the 
prescription at 19.507(h)(2).

0
73. Amend section 19.1403 by revising paragraph (d) to read as follows:


19.1403  Status as a service-disabled veteran-owned small business 
concern.

* * * * *
    (d) Any service-disabled veteran-owned small business concern 
(nonmanufacturer) is required to meet the requirements in 19.1407(c) to 
receive a benefit under this program.


19.1407  [Redesignated as 19.1408]

0
74. Redesignate section 19.1407 as section 19.1408.

0
75. Add new section 19.1407 to read as follows:


19.1407  Limitations on subcontracting and nonmanufacturer rule.

    (a) Limitations on subcontracting. To be awarded a contract or 
order under this subpart, the SDVOSB concern is required to--
    (1) For services (except construction), spend at least 50 percent 
of the cost incurred for personnel on its own employees or the 
employees of other SDVOSBs;
    (2) For supplies or products (other than a procurement from a 
nonmanufacturer of such supplies or products), spend at least 50 
percent of the cost of manufacturing the supplies or products (not 
including the cost of materials) on itself or by other SDVOSBs;
    (3) For general construction, spend at least 15 percent of the cost 
(not including the cost of materials) incurred for personnel on its own 
employees or the employees of other SDVOSBs; or
    (4) For construction by special trade contractors, spend at least 
25 percent of the cost (not including the cost of materials) incurred 
for personnel on its own employees or the employees of other SDVOSBs.
    (b) Compliance period. An SDVOSB contractor is required to comply 
with the limitations on subcontracting--
    (1) For a contract that has been set aside or awarded on a sole 
source basis to an SDVOSB concern, either by the end of the base term 
and then by the end of each subsequent option period or by the end of 
the performance period for each order issued under the contract, at the 
contracting officer's discretion; and
    (2) For an order set aside for SDVOSB contractors as described in 
8.405-5 and 16.505(b)(2)(i)(F) or for an order issued directly to an 
SDVOSB contractor in accordance with 19.504(c)(1)(ii), by the end of 
the performance period for the order.
    (c) Nonmanufacturer rule. See 19.505(c) for application of the 
nonmanufacturer rule, inclusive of waivers and exceptions to the 
nonmanufacturer rule.

0
76. Revise newly designated section 19.1408 to read as follows:


19.1408  Contract clause.

    The contracting officer shall insert the clause 52.219-27, Notice 
of Service-Disabled Veteran-Owned Small Business Set-Aside, in 
solicitations and contracts for acquisitions that are set aside or 
awarded on a sole source basis to, service-disabled veteran-owned small 
business concerns under 19.1405 and 19.1406. This includes multiple-
award contracts when orders may be set aside for service-disabled 
veteran-owned small business concerns as described in 8.405-5 and 
16.505(b)(2)(i)(F) or when orders may be issued directly to one 
service-disabled veteran-owned small business contractor in accordance 
with 19.504(c)(1)(ii). For contracts that are set aside, the 
contracting officer shall indicate in paragraph (e) of the clause 
whether compliance with the limitations on subcontracting is required 
at the contract level or order level.


19.1503  [Amended]

0
77. Amend section 19.1503 by removing paragraph (g).


19.1507  [Redesignated as 19.1508]

0
78. Redesignate section 19.1507 as section 19.1508.

0
79. Add new section 19.1507 to read as follows:


19.1507  Limitations on subcontracting and nonmanufacturer rule.

    (a) Limitations on subcontracting. To be awarded a contract or 
order under the WOSB Program, the contractor is required to perform--
    (1) For services (except construction), at least 50 percent of the 
cost incurred for personnel with its own employees;
    (2) For supplies or products (other than a procurement from a 
nonmanufacturer of such supplies or products), at least 50 percent of 
the cost of manufacturing the supplies or products (not including the 
cost of materials);
    (3) For general construction, at least 15 percent of the cost with 
its own employees (not including the cost of materials); or
    (4) For construction by special trade contractors, at least 25 
percent of the

[[Page 11768]]

cost with its own employees (not including the cost of materials).
    (b) Compliance period. An EDWOSB or WOSB contractor is required to 
comply with the limitation on subcontracting--
    (1) For a contract that has been set aside or awarded on a sole 
source basis, either by the end of the base term and then by the end of 
each subsequent option period or by the end of the performance period 
for each order issued under the contract, at the contracting officer's 
discretion; and
    (2) For an order set aside as described in 8.405-5 and 
16.505(b)(2)(i)(F) or for an order issued directly to an EDWOSB or WOSB 
contractor in accordance with 19.504(c)(1)(ii), by the end of the 
performance period for the order.
    (c) Nonmanufacturer rule. See 19.505(c) for application of the 
nonmanufacturer rule, inclusive of waivers and exceptions to the 
nonmanufacturer rule.

0
80. Amend newly designated section 19.1508 by--
0
a. Redesignating paragraph (a) as paragraph (a)(1);
0
b. Removing from the newly designated paragraph (a)(1) ``or reserved'';
0
 c. Revising the second sentence of newly designated paragraph (a)(1);
0
 d. Adding paragraph (a)(2); and
0
e. Revising paragraph (b).
    The revisions and addition read as follows:


19.1508  Contract clauses.

    (a)(1) * * * This includes multiple-award contracts when orders may 
be set aside for EDWOSB concerns as described in 8.405-5 and 
16.505(b)(2)(i)(F) or when orders may be issued directly to one EDWOSB 
contractor in accordance with 19.504(c)(1)(ii).
    (2) For contracts that are set aside, the contracting officer shall 
indicate in paragraph (e) of the clause whether compliance with the 
limitations on subcontracting is required at the contract level or 
order level.
    (b)(1) The contracting officer shall insert the clause 52.219-30, 
Notice of Set-Aside for, or Sole Source Award to, Women-Owned Small 
Business Concerns Eligible Under the Women-Owned Small Business 
Program, in solicitations and contracts for acquisitions that are set 
aside for, or awarded on a sole source basis to, WOSB concerns under 
19.1505(c) or 19.1506(b). This includes multiple-award contracts when 
orders may be set aside for WOSB concerns eligible under the WOSB 
program as described in 8.405-5 and 16.505(b)(2)(i)(F) or when orders 
may be issued directly to one WOSB contractor in accordance with 
19.504(c)(1)(ii).
    (2) For contracts that are set aside, the contracting officer shall 
indicate in paragraph (e) of the clause whether compliance with the 
limitations on subcontracting is required at the contract level or 
order level.

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
81. Amend section 42.1503 by revising paragraph (b)(2)(vi) to read as 
follows:


42.1503  Procedures.

* * * * *
    (b) * * *
    (2) * * *
    (vi) Other (as applicable) (e.g., trafficking violations, tax 
delinquency, failure to report in accordance with contract terms and 
conditions, defective cost or pricing data, terminations, suspension 
and debarments, and failure to comply with limitations on 
subcontracting).
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
82. Amend section 52.204-8 by--
0
a. Revising the date of the provision;
0
b. Revising paragraph (c)(1)(xii) introductory text;
0
 c. Adding paragraph (c)(1)(xii)(C); and
0
d. Adding Alternate I.
    The revision and additions read as follows:


52.204-8  Annual Representations and Certifications.

* * * * *

Annual Representations and Certifications (MAR 2020)

* * * * *
    (c)(1) * * *
    (xii) 52.219-1, Small Business Program Representations (Basic, 
Alternates I, and II). This provision applies to solicitations when 
the contract will be performed in the United States or its outlying 
areas.
* * * * *
    (C) The provision with its Alternate II applies to solicitations 
that will result in a multiple-award contract with more than one 
NAICS code assigned.
* * * * *
    Alternate I (MAR 2020). As prescribed in 4.1202(a), substitute 
the following paragraph (a) for paragraph (a) of the basic 
provision:
    (a)(1) The North American Industry Classification System (NAICS) 
codes and corresponding size standards for this acquisition are as 
follows; the categories or portions these NAICS codes are assigned 
to are specified elsewhere in the solicitation:

------------------------------------------------------------------------
             NAICS code                         Size standard
------------------------------------------------------------------------
_________                            _________
_________                            _________
_________                            _________
------------------------------------------------------------------------

    [Contracting Officer to insert NAICS codes and size standards].
    (2) The small business size standard for a concern which submits 
an offer in its own name, other than on a construction or service 
contract, but which proposes to furnish a product which it did not 
itself manufacture (i.e., nonmanufacturer), is 500 employees.

0
83. Amend section 52.212-1 by revising the date of the provision and 
paragraph (a) to read as follows:


52.212-1  Instructions to Offerors-Commercial Items.

* * * * *

Instructions to Offerors-Commercial Items (MAR 2020)

    (a) North American Industry Classification System (NAICS) code 
and small business size standard. The NAICS code(s) and small 
business size standard(s) for this acquisition appear elsewhere in 
the solicitation. However, the small business size standard for a 
concern which submits an offer in its own name, but which proposes 
to furnish an item which it did not itself manufacture, is 500 
employees.
* * * * *

0
84. Amend section 52.212-3 by--
0
 a. Revising the date of the provision; and
0
b. Removing from paragraph (b)(2) introductory text ``business size 
standard'' and ``NAICS code'' and adding ``business size standard(s)'' 
and ``NAICS code(s)'' in their place, respectively.
    The revision reads as follows:


52.212-3  Offeror Representations and Certifications--Commercial Items.

* * * * *

Offeror Representations and Certifications--Commercial Items (MAR 2020)

* * * * *

0
85. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
 b. Revising paragraphs (b)(11), (12), (14), (15), (17) through (19), 
and (21) through (24);
0
c. Redesignating paragraphs (b)(25) through (60) as paragraphs (b)(27) 
through (62), respectively; and
0
d. Adding new paragraphs (b)(25) and (26).
    The revisions and additions read as follows:


52.212-5  Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

[[Page 11769]]

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (MAR 2020)

* * * * *
    (b) * * *
    _ (11)(i) 52.219-3, Notice of HUBZone Set-Aside or Sole Source 
Award (MAR 2020) (15 U.S.C. 657a).
    _ (ii) Alternate I (MAR 2020) of 52.219-3.
    _ (12)(i) 52.219-4, Notice of Price Evaluation Preference for 
HUBZone Small Business Concerns (MAR 2020) (if the offeror elects to 
waive the preference, it shall so indicate in its offer) (15 U.S.C. 
657a).
    _ (ii) Alternate I (MAR 2020) of 52.219-4.
* * * * *
    _ (14)(i) 52.219-6, Notice of Total Small Business Set-Aside 
(MAR 2020) (15 U.S.C. 644).
    _ (ii) Alternate I (MAR 2020).
    _ (15)(i) 52.219-7, Notice of Partial Small Business Set-Aside 
(MAR 2020) (15 U.S.C. 644).
    _ (ii) Alternate I (MAR 2020) of 52.219-7.
* * * * *
    _ (17)(i) 52.219-9, Small Business Subcontracting Plan (MAR 
2020) (15 U.S.C. 637(d)(4)).
    _ (ii) * * *
    _ (iii) * * *
    _ (iv) Alternate III (MAR 2020) of 52.219-9.
    _ (v) * * *
    _ (18) 52.219-13, Notice of Set-Aside of Orders (MAR 2020) (15 
U.S.C. 644(r)).
    _ (19) 52.219-14, Limitations on Subcontracting (MAR 2020) (15 
U.S.C. 637(a)(14)).
* * * * *
    _ (21) 52.219-27, Notice of Service-Disabled Veteran-Owned Small 
Business Set-Aside (MAR 2020) (15 U.S.C. 657f).
    _ (22)(i) 52.219-28, Post-Award Small Business Program 
Rerepresentation (MAR 2020) (15 U.S.C. 632(a)(2)).
    _ (ii) Alternate I (MAR 2020) of 52.219-28.
    _ (23) 52.219-29, Notice of Set-Aside for, or Sole Source Award 
to, Economically Disadvantaged Women-Owned Small Business (EDWOSB) 
Concerns (MAR 2020) (15 U.S.C. 637(m)).
    _ (24) 52.219-30, Notice of Set-Aside for, or Sole Source Award 
to, Women-Owned Small Business Concerns Eligible Under the Women-
Owned Small Business Program (MAR 2020) (15 U.S.C. 637(m)).
    _ (25) 52.219-32, Orders Issued Directly Under Small Business 
Reserves (MAR 2020) (15 U.S.C. 644(r)).
    _ (26) 52.219-33, Nonmanufacturer Rule (MAR 2020) (15 U.S.C. 
637(a)(17)).
* * * * *

0
86. Amend section 52.219-1 by--
0
a. Revising the date of the clause and paragraph (b)(3);
0
b. Removing paragraph (d)(1);
0
c. Redesignating the paragraph (d)(2) introductory text as paragraph 
(d) introductory text;
0
d. Redesignating paragraphs (d)(2)(i) through (iii) as paragraphs 
(d)(1) through (3);
0
e. Adding Alternate II.
    The revision and addition read as follows:


52.219-1  Small Business Program Representations.

* * * * *

Small Business Program Representations (MAR 2020)

* * * * *
    (b) * * *
    (3) The small business size standard for a concern which submits 
an offer in its own name, other than on a construction or service 
contract, but which proposes to furnish a product which it did not 
itself manufacture (i.e., nonmanufacturer), is 500 employees.
* * * * *
    Alternate II (MAR 2020). As prescribed in 19.309(a)(3), 
substitute the following paragraphs (b) and (c)(1) for paragraphs 
(b) and (c)(1) of the basic provision:
    (b)(1) The North American Industry Classification System (NAICS) 
codes and corresponding size standards for this acquisition are as 
follows; the categories or portions these NAICS codes are assigned 
to are specified elsewhere in the solicitation:

------------------------------------------------------------------------
             NAICS code                         Size standard
------------------------------------------------------------------------
_________                            _________
_________                            _________
_________                            _________
------------------------------------------------------------------------

    [Contracting Officer to insert NAICS codes and size standards].
    (2) The small business size standard for a concern which submits 
an offer in its own name, other than on a construction or service 
contract, but which proposes to furnish a product which it did not 
itself manufacture (i.e., nonmanufacturer), is 500 employees.
    (c) Representations. (1) The Offeror shall represent its small 
business size status for each one of the NAICS codes assigned to 
this acquisition under which it is submitting an offer.

------------------------------------------------------------------------
             NAICS code               Small business  concern  (yes/no)
------------------------------------------------------------------------
_________                            _________
_________                            _________
_________                            _________
------------------------------------------------------------------------

    [Contracting Officer to insert NAICS codes.]

0
87. Amend section 52.219-3 by--
0
a. Revising the introductory text, the date of the clause, and 
paragraph (a);
0
b. Removing from paragraph (b)(1) ``or reserved for,'';
0
c. Removing from paragraph (b)(2) ``and'';
0
d. Removing the period from the end of paragraph (b)(3) and adding ``; 
and'' in its place;
0
e. Adding paragraph (b)(4);
0
f. Revising paragraph (d);
0
g. Removing paragraph (f);
0
h. Redesignating paragraph (e) as paragraph (f);
0
i. Adding new paragraph (e);
0
j. Removing from newly designated paragraph (f) ``will'' and adding 
``shall'' in its place; and
0
 d. Revising Alternate I.
    The revisions and additions read as follows:


52.219-3  Notice of HUBZone Set-Aside or Sole Source Award.

    As prescribed in 19.1309(a)(1), insert the following clause:

Notice of HUBZone Set-Aside or Sole Source Award (MAR 2020)

    (a) Definition. See 13 CFR 125.1 and 126.103 for definitions of 
terms used in the clause.
    (b) * * *
    (4) Orders issued directly to HUBZone small business concerns 
under multiple-award contracts as described in 19.504(c)(1)(ii).
* * * * *
    (d) Limitations on subcontracting. The Contractor shall spend--
    (1) For services (except construction), at least 50 percent of 
the cost of contract performance incurred for personnel on its own 
employees or employees of other HUBZone small business concerns;
    (2) For supplies (other than acquisition from a nonmanufacturer 
of the supplies), at least 50 percent of the cost of manufacturing, 
excluding the cost of materials, on the concern or other HUBZone 
small business concerns;
    (3) For general construction--
    (i) At least 15 percent of the cost of contract performance 
incurred for personnel on its own employees;
    (ii) At least 50 percent of the cost of the contract performance 
incurred for personnel on its own employees or on a combination of 
its own employees and employees of HUBZone small business concern 
subcontractors; and
    (iii) No more than 50 percent of the cost of contract 
performance incurred for personnel on concerns that are not HUBZone 
small business concerns; or
    (4) For construction by special trade contractors--
    (i) At least 25 percent of the cost of contract performance 
incurred for personnel on its own employees;
    (ii) At least 50 percent of the cost of the contract performance 
incurred for personnel on its own employees or on a combination of 
its own employees and employees of HUBZone small business concern 
subcontractors;
    (iii) No more than 50 percent of the cost of contract 
performance to be incurred for personnel on concerns that are not 
HUBZone small business concerns.
    (e) A HUBZone small business contractor shall comply with the 
limitations on subcontracting as follows:
    (1) For contracts, in accordance with paragraph (b)(1) or (2) of 
this clause--

[[Page 11770]]

    [Contracting Officer check as appropriate.]
    _ By the end of the base term of the contract and then by the 
end of each subsequent option period; or
    _ By the end of the performance period for each order issued 
under the contract.
    (2) For orders, in accordance with paragraph (b)(3) or (4) of 
this clause, by the end of the performance period for the order.
* * * * *
    Alternate I (MAR 2020). As prescribed in 19.1309(a)(2), 
substitute the following paragraphs (d)(3) and (d)(4) for paragraphs 
(d)(3) and (d)(4) of the basic clause:
    (3) For general construction, at least 15 percent of the cost of 
the contract performance to be incurred for personnel shall be spent 
on the concern's employees; or
    (4) For specialty trade construction, at least 25 percent of the 
cost of the contract performance to be incurred for personnel shall 
be spent on the concern's employees.


0
88. Amend section 52.219-4 by--
0
a. Revising the introductory text, clause date, and paragraph (a);
0
b. Revising paragraph (d);
0
c. Removing paragraph (f);
0
d. Redesignating paragraph (g) as paragraph (f); and
0
e. Revising Alternate I.
    The revised text reads as follows:


52.219-4  Notice of Price Evaluation Preference for HUBZone Small 
Business Concerns.

    As prescribed in 19.1309(b)(1), insert the following clause:

Notice of Price Evaluation Preference for HUBZone Small Business 
Concerns (MAR 2020)

    (a) Definition. See 13 CFR 126.103 for the definition of 
HUBZone.
* * * * *
    (d) Limitations on subcontracting. The Contractor shall spend--
    (1) For services (except construction), at least 50 percent of 
the cost of personnel for contract performance on its own employees 
or employees of other HUBZone small business concerns;
    (2) For supplies (other than procurement from a nonmanufacturer 
of such supplies), at least 50 percent of the cost of manufacturing, 
excluding the cost of materials, on the concern or other HUBZone 
small business concerns;
    (3) For general construction--
    (i) At least 15 percent of the cost of contract performance to 
be incurred for personnel on its own employees;
    (ii) At least 50 percent of the cost of the contract performance 
to be incurred for personnel on its own employees or on a 
combination of its own employees and employees of HUBZone small 
business concern subcontractors;
    (iii) No more than 50 percent of the cost of contract 
performance to be incurred for personnel on concerns that are not 
HUBZone small business concerns; or
    (4) For construction by special trade contractors--
    (i) At least 25 percent of the cost of contract performance to 
be incurred on its own employees;
    (ii) At least 50 percent of the cost of the contract performance 
to be incurred for personnel on its own employees or on a 
combination of its own employees and employees of HUBZone small 
business concern subcontractors;
    (iii) No more than 50 percent of the cost of contract 
performance to be incurred for personnel on concerns that are not 
HUBZone small business concerns.
* * * * *
    Alternate I (MAR 2020). As prescribed in 19.1309(b)(2), 
substitute the following paragraphs (d)(3) and (d)(4) for paragraphs 
(d)(3) and (d)(4) of the basic clause:
    (3) For general construction, at least 15 percent of the cost of 
the contract performance to be incurred for personnel on its own 
employees; or
    (4) For construction by special trade contractors, at least 25 
percent of the cost of the contract performance to be incurred for 
personnel on its own employees.
* * * * *

0
89. Amend section 52.219-6 by--
0
a. Revising the introductory text and the date of the clause;
0
b. Removing from paragraph (b)(1) ``or reserved'';
0
c. Removing paragraph (d) and Alternate I;
0
d. Redesignating Alternate II as Alternate I; and
0
e. Revising the date and the introductory text of the newly designated 
Alternate I.
    The revisions read as follows:


52.219-6  Notice of Total Small Business Set-Aside.

    As prescribed in 19.507(c), insert the following clause:

Notice of Total Business Set-Aside (MAR 2020)

* * * * *
    Alternate I (MAR 2020). As prescribed in 19.507(c), substitute 
the following paragraph (c) for paragraph (c) of the basic clause:
* * * * *

0
90. Amend section 52.219-7 by--
0
a. Revising the introductory text and the date of the clause;
0
b. Revising paragraphs (b) and (c);
0
c. Adding paragraphs (d) and (e);
0
d. Removing Alternate I; and
0
e. Redesignating Alternate II as Alternate I and revising it.
    The revisions and additions read as follows:



52.219-7  Notice of Partial Small Business Set-Aside.

    As prescribed in 19.507(d), insert the following clause:

Notice of Partial Small Business Set-Aside (MAR 2020)

* * * * *
    (b) Applicability. This clause applies only to contracts that 
have been partially set aside for small business concerns.
    (c) General. (1) A portion of this requirement, identified 
elsewhere in this solicitation, has been set aside for award to one 
or more small business concerns identified in 19.000(a)(3). Offers 
received from concerns that do not qualify as small business 
concerns shall be considered nonresponsive and shall be rejected on 
the set-aside portion of the requirement.
    (2) Small business concerns may submit offers and compete for 
the non-set-aside portion and the set-aside portion.
    (d) The Offeror shall--
    [Contracting Officer check as appropriate.]
    _ Submit a separate offer for each portion of the solicitation 
for which it wants to compete (i.e. set-aside portion, non-set-aside 
portion, or both); or
    _ Submit one offer to include all portions for which it wants to 
compete.
    (e) Partial set-asides of multiple-award contracts. (1) Small 
business concerns will not compete against other than small business 
concerns for any order issued under the part or parts of the 
multiple-award contract that are set aside.
    (2) Small business concerns may compete for orders issued under 
the part or parts of the multiple-award contract that are not set 
aside, if the small business concern received a contract award for 
the non-set-aside portion.


(End of Clause)

    Alternate I (MAR 2020). As prescribed in 19.507(d), add the 
following paragraph (f) to the basic clause:

    (f) Notwithstanding paragraph (c) of this clause, offers from 
Federal Prison Industries, Inc., will be solicited and considered 
for both the set-aside and non-set-aside portion of this 
requirement.


0
91. Amend section 52.219-9 by--
0
a. Revising the date of the clause;
0
b. Removing from paragraph (l)(1)(ii)(B)
    ``19.702(a)(3)'' and adding ``19.702(a)(1)(iii)'' in its place;
0
c. Revising the date of Alternate III; and
0
d. Removing from paragraph (l)(1)(ii)(B) of Alternate III 
``19.702(a)(3)'' and adding ``19.702(a)(1)(iii)'' in its place.
    The revisions read as follows:


52.219-9  Small Business Subcontracting Plan.

* * * * *

Small Business Subcontracting Plan (MAR 2020)

* * * * *
    Alternate III (MAR 2020) * * *
* * * * *

0
92. Amend section 52.219-13 by--
0
a. Revising the introductory text and the date of the clause;
0
b. Designating the undesignated paragraph as paragraph (b);

[[Page 11771]]

0
c. Adding paragraph (a); and
0
d. Adding Alternate I.
    The revision and additions read as follows:


52.219-13  Notice of Set-Aside of Orders.

    As prescribed in 19.507(f)(1), insert the following clause:

Notice of Set-Aside of Orders (MAR 2020)

    (a) The Contracting Officer may set aside orders for the small 
business concerns identified in 19.000(a)(3).
* * * * *
    Alternate I (MAR 2020). As prescribed in 19.507(f)(2), 
substitute the following paragraph (a) for paragraph (a) of the 
basic clause:
    (a) The Contracting Officer will set aside orders for the small 
business concerns identified in 19.000(a)(3) when the conditions of 
FAR 19.502-2 and the specific program eligibility requirements are 
met, as applicable.


0
93. Amend section 52.219-14 by--
0
a. Revising the introductory text and the date of the clause;
0
b. Removing from paragraph (b)(1) ``or reserved'';
0
c. Removing from paragraph (b)(2) ``and'';
0
d. Removing from paragraph (b)(3) ``small business'' and adding ``small 
business concerns'' in its place and removing the period at the end and 
adding ``; and'' in its place;
0
e. Adding paragraph (b)(4);
0
f. Revising paragraph (c) introductory text; and
0
g. Adding paragraph (d).
    The revisions and additions read as follows:


52.219-14  Limitations on Subcontracting.

    As prescribed in 19.507(e), insert the following clause:

Limitations on Subcontracting (MAR 2020)

* * * * *
    (b) * * *
    (4) Orders issued directly to small business concerns or 8(a) 
participants under multiple-award contracts as described in 
19.504(c)(1)(ii).
    (c) Limitations on subcontracting. By submission of an offer and 
execution of a contract, the Contractor agrees that in performance 
of the contract in the case of a contract for--
* * * * *
    (d) The Contractor shall comply with the limitations on 
subcontracting as follows:
    (1) For contracts, in accordance with paragraph (b)(1) and (2) 
of this clause--
    [Contracting Officer check as appropriate.]
    _ By the end of the base term of the contract and then by the 
end of each subsequent option period; or
    _ By the end of the performance period for each order issued 
under the contract.
    (2) For orders, in accordance with paragraphs (b)(3) and (4) of 
this clause, by the end of the performance period for the order.
* * * * *

0
94. Amend section 52.219-18 by revising the date of the clause and 
paragraph (d) and removing Alternate II.
    The revision reads as follows:


52.219-18  Notification of Competition Limited to Eligible 8(a) 
Participants.

* * * * *

Notification of Competition Limited to Eligible 8(a) Participants (MAR 
2020)

* * * * *
    (d) The _____ [insert name of SBA's contractor] shall notify the 
_____ [insert name of contracting agency] Contracting Officer in 
writing immediately upon entering an agreement (either oral or 
written) to transfer all or part of its stock.
* * * * *

0
95. Amend section 52.219-27 by--
0
a. Revising the introductory text and the date of the clause;
0
b. Removing from paragraph (b)(1) ``or reserved'';
0
c. Removing from paragraph (b)(2) ``and'';
0
d. Removing the period from the end of paragraph (b)(3) and adding ``; 
and'' in its place;
0
e. Adding paragraph (b)(4);
0
f. Revising the paragraph (d) subject heading;
0
g. Removing paragraph (f);
0
 h. Redesignating paragraph (e) as paragraph (f); and
0
i. Adding new paragraph (e).
    The revisions and additions read as follows:


52.219-27  Notice of Service-Disabled Veteran-Owned Small Business Set-
Aside.

    As prescribed in 19.1408, insert the following clause:

Notice of Service-Disabled Veteran-Owned Small Business Set-Aside (MAR 
2020)

* * * * *
    (b) * * *
    (4) Orders issued directly to service-disabled veteran-owned 
small business concerns under multiple-award contracts as described 
in 19.504(c)(1)(ii).
* * * * *
    (d) Limitations on subcontracting. * * *
* * * * *
    (e) A service-disabled veteran-owned small business concern 
shall comply with the limitations on subcontracting as follows:
    (1) For contracts, in accordance with paragraphs (b)(1) and (2) 
of this clause--
    [Contracting Officer check as appropriate.]
    _ By the end of the base term of the contract and then by the 
end of each subsequent option period; or
    _ By the end of the performance period for each order issued 
under the contract.
    (2) For orders, in accordance with paragraphs (b)(3) and (4) of 
this clause, by the end of the performance period for the order.
* * * * *

0
96. Amend section 52.219-28 by--
0
a. Revising the introductory text and the date of the clause;
0
b. Removing from the definition of ``Small business concern'' in 
paragraph (a) the phrase ``paragraph (c)'' and adding ``paragraph (d)'' 
in its place;
0
c. Revising paragraph (b) introductory text;
0
d. Designating paragraphs (c) through (g) as paragraphs (d) through 
(h);
0
e. Adding new paragraph (c);
0
f. Removing from newly designated paragraph (d) the two occurrences of 
``code'' and adding ``code(s)'' in their places;
0
g. Revising newly designated paragraph (f);
0
h. Removing from newly designated paragraph (g) ``paragraphs (e) or 
(g)'' and adding ``paragraphs (f) or (h)'' in its place;
0
i. Revising newly designated paragraph (h); and
0
j. Adding Alternate I.
    The revisions and additions read as follows:


52.219-28  Post-Award Small Business Program Rerepresentation.

    As prescribed in 19.309(c)(1), insert the following clause:

Post-Award Small Business Program Rerepresentation (MAR 2020)

* * * * *
    (b) If the Contractor represented that it was any of the small 
business concerns identified in 19.000(a)(3) prior to award of this 
contract, the Contractor shall rerepresent its size and 
socioeconomic status according to paragraph (f) of this clause or, 
if applicable, paragraph (h) of this clause, upon occurrence of any 
of the following:
* * * * *
    (c) If the Contractor represented that it was any of the small 
business concerns identified in 19.000(a)(3) prior to award of this 
contract, the Contractor shall rerepresent its size and 
socioeconomic status according to paragraph (f) of this clause or, 
if applicable, paragraph (h) of this clause, when the Contracting 
Officer explicitly requires it for an order issued under a multiple-
award contract.
* * * * *
    (f) Except as provided in paragraph (h) of this clause, the 
Contractor shall make the representation(s) required by paragraph 
(b) and (c) of this clause by validating or updating all its 
representations in the Representations and Certifications section of 
the System for Award Management (SAM) and its other data in SAM, 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 
clause, or with its offer for an order (see

[[Page 11772]]

paragraph (c) of this clause), that the data have been validated or 
updated, and provide the date of the validation or update.
* * * * *
    (h) If the Contractor does not have representations and 
certifications in SAM, or does not have a representation in SAM for 
the NAICS code applicable to this contract, the Contractor is 
required to complete the following rerepresentation and submit it to 
the contracting office, along with the contract number and the date 
on which the rerepresentation was completed:
    (1) The Contractor represents that it [squ] is, [squ] is not a 
small business concern under NAICS Code _____ assigned to contract 
number _____.
    (2) [Complete only if the Contractor represented itself as a 
small business concern in paragraph (h)(1) of this clause.] The 
Contractor represents that it [squ] is, [squ] is not, a small 
disadvantaged business concern as defined in 13 CFR 124.1002.
    (3) [Complete only if the Contractor represented itself as a 
small business concern in paragraph (h)(1) of this clause.] The 
Contractor represents that it [squ] is, [squ] is not a women-owned 
small business concern.
    (4) Women-owned small business (WOSB) concern eligible under the 
WOSB Program. [Complete only if the Contractor represented itself as 
a women-owned small business concern in paragraph (h)(3) of this 
clause.] The Contractor represents that--
    (i) It [squ] is, [squ] is not a WOSB concern eligible under the 
WOSB Program, has provided all the required documents to the WOSB 
Repository, and no change in circumstances or adverse decisions have 
been issued that affects its eligibility; and
    (ii) It [squ] is, [squ] is not a joint venture that complies 
with the requirements of 13 CFR part 127, and the representation in 
paragraph (h)(4)(i) of this clause is accurate for each WOSB concern 
eligible under the WOSB Program participating in the joint venture. 
[The Contractor shall enter the name or names of the WOSB concern 
eligible under the WOSB Program and other small businesses that are 
participating in the joint venture: _____.] Each WOSB concern 
eligible under the WOSB Program participating in the joint venture 
shall submit a separate signed copy of the WOSB representation.
    (5) Economically disadvantaged women-owned small business 
(EDWOSB) concern. [Complete only if the Contractor represented 
itself as a women-owned small business concern eligible under the 
WOSB Program in (h)(4) of this clause.] The Contractor represents 
that--
    (i) It [squ] is, [squ] is not an EDWOSB concern eligible under 
the WOSB Program, has provided all the required documents to the 
WOSB Repository, and no change in circumstances or adverse decisions 
have been issued that affects its eligibility; and
    (ii) It [squ] is, [squ] is not a joint venture that complies 
with the requirements of 13 CFR part 127, and the representation in 
paragraph (h)(5)(i) of this clause is accurate for each EDWOSB 
concern participating in the joint venture. [The Contractor shall 
enter the name or names of the EDWOSB concern and other small 
businesses that are participating in the joint venture: _____.] Each 
EDWOSB concern participating in the joint venture shall submit a 
separate signed copy of the EDWOSB representation.
    (6) [Complete only if the Contractor represented itself as a 
small business concern in paragraph (h)(1) of this clause.] The 
Contractor represents that it [squ] is, [squ] is not a veteran-owned 
small business concern.
    (7) [Complete only if the Contractor represented itself as a 
veteran-owned small business concern in paragraph (h)(6) of this 
clause.] The Contractor represents that it [squ] is, [squ] is not a 
service-disabled veteran-owned small business concern.
    (8) [Complete only if the Contractor represented itself as a 
small business concern in paragraph (h)(1) of this clause.] The 
Contractor represents that--
    (i) It [squ] is, [squ] is not a HUBZone small business concern 
listed, on the date of this representation, on the List of Qualified 
HUBZone Small Business Concerns maintained by the Small Business 
Administration, and no material changes in ownership and control, 
principal office, or HUBZone employee percentage have occurred since 
it was certified in accordance with 13 CFR part 126; and
    (ii) It [squ] is, [squ] is not a HUBZone joint venture that 
complies with the requirements of 13 CFR part 126, and the 
representation in paragraph (h)(8)(i) of this clause is accurate for 
each HUBZone small business concern participating in the HUBZone 
joint venture. [The Contractor shall enter the names of each of the 
HUBZone small business concerns participating in the HUBZone joint 
venture: _____.] Each HUBZone small business concern participating 
in the HUBZone joint venture shall submit a separate signed copy of 
the HUBZone representation.
    [Contractor to sign and date and insert authorized signer's name 
and title.]
* * * * *
    Alternate I (MAR 2020). As prescribed in 19.309(c)(2), 
substitute the following paragraph (h)(1) for paragraph (h)(1) of 
the basic clause:
    (h)(1) The Contractor represents its small business size status 
for each one of the NAICS codes assigned to this contract.

------------------------------------------------------------------------
             NAICS code               Small business  concern  (yes/no)
------------------------------------------------------------------------
_________                            _________
_________                            _________
_________                            _________
------------------------------------------------------------------------

    [Contracting Officer to insert NAICS codes.]


0
97. Amend section 52.219-29 by--
0
a. Revising the introductory text and the date of the clause;
0
b. Removing from paragraph (b)(1) ``or reserved'';
0
c. Removing from paragraph (b)(2) ``and'';
0
d. Removing from paragraph (b)(3) the period at the end and adding ``; 
and'' in its place;
0
e. Adding paragraph (b)(4);
0
f. Removing from paragraph (c)(1) ``apparent successful offeror'' and 
adding ``EDWOSB concerns'' in its place;
0
g. Removing from paragraph (c)(3) ``contracting officer'' and adding 
``Contracting Officer'' in its place;
0
h. Revising the paragraph (d) subject heading;
0
i. Removing paragraph (f);
0
j. Redesignating paragraph (e) as paragraph (f); and
0
k. Adding new paragraph (e).
    The revisions and additions read as follows:


52.219-29  Notice of Set-Aside for, or Sole Source Award to, 
Economically Disadvantaged Women-Owned Small Business Concerns.

    As prescribed in 19.1508(a), insert the following clause:

Notice of Set-Aside for, or Sole Source Award to, Economically 
Disadvantaged Women-Owned Small Business Concerns (MAR 2020)

* * * * *
    (b) * * *
    (4) Orders issued directly to EDWOSB concerns under multiple-
award contracts as described in 19.504(c)(1)(ii).
* * * * *
    (d) Limitations on subcontracting. * * *
* * * * *
    (e) An EDWOSB concern shall comply with the limitations on 
subcontracting as follows:
    (1) For contracts, in accordance with paragraphs (b)(1) and (2) 
of this clause--
    [Contracting Officer check as appropriate.]
    _ By the end of the base term of the contract and then by the 
end of each subsequent option period; or
    _ By the end of the performance period for each order issued 
under the contract.
    (2) For orders, in accordance with paragraphs (b)(3) and (4) of 
this clause, by the end of the performance period for the order.
* * * * *

0
98. Amend section 52.219-30 by--
0
a. Revising the introductory text and the date of the clause;
0
b. Removing from paragraph (b)(1) ``or reserved'';
0
c. Removing from paragraph (b)(2) ``and'';
0
d. Removing the period from the end of paragraph (b)(3) and adding ``; 
and'' in its place;
0
e. Adding paragraph (b)(4);
0
f. Revising the paragraph (d) subject heading;
0
g. Removing paragraph (f);
0
 h. Redesignating paragraph (e) as paragraph (f); and
0
i. Adding new paragraph (e).
    The revisions and additions read as follows:

[[Page 11773]]

52.219-30  Notice of Set-Aside for, or Sole Source Award to, Women-
Owned Small Business Concerns Eligible Under the Women-Owned Small 
Business Program.

    As prescribed in 19.1508(b), insert the following clause:

Notice of Set-Aside for, or Sole Source Award to, Women-Owned Small 
Business Concerns Eligible Under The Women-Owned Small Business Program 
(MAR 2020)

* * * * *
    (b) * * *
    (4) Orders issued directly to WOSB concerns eligible under the 
WOSB Program under multiple-award contracts as described in 
19.504(c)(1)(ii).
* * * * *
    (d) Limitations on subcontracting. * * *
* * * * *
    (e) A WOSB concern eligible under the WOSB Program shall comply 
with the limitations on subcontracting as follows:
    (1) For contracts, in accordance with paragraphs (b)(1) and (2) 
of this clause--
    [Contracting Officer check as appropriate.]
    _ By the end of the base term of the contract and then by the 
end of each subsequent option period; or
    _ By the end of the performance period for each order issued 
under the contract.
    (2) For orders, in accordance with paragraphs (b)(3) and (4) of 
this clause, by the end of the performance period for the order.
* * * * *

0
99. Add section 52.219-31 to read as follows:


52.219-31  Notice of Small Business Reserve.

    As prescribed in 19.507(g)(1), insert the following provision:

Notice of Small Business Reserve (MAR 2020)

    (a) This solicitation contains a reserve for one or more small 
business concerns identified at 19.000(a)(3). The small business 
program eligibility requirements apply.
    (b) The small business concern(s) eligible for participation in 
the reserve shall submit one offer that addresses each portion of 
the solicitation for which it wants to compete. Award of the 
contract will be based on criteria identified elsewhere in the 
solicitation.


(End of provision)

0
100. Add section 52.219-32 to read as follows:


52.219-32  Orders Issued Directly Under Small Business Reserves.

    As prescribed in 19.507(g)(2), insert the following clause:

Orders Issued Directly Under Small Business Reserves (MAR 2020)

    (a) Applicability. This clause applies only to contracts that 
were reserved for any of the small business concerns identified at 
19.000(a)(3).
    (b) If there is only one contract award to any one type of small 
business concern identified in 19.000(a)(3) as a result of the 
reserve, the Contracting Officer may issue an order or orders 
directly to the concern.


(End of clause)

0
101. Add section 52.219-33 to read as follows:


52.219-33  Nonmanufacturer Rule.

    As prescribed in 19.507(h), insert the following clause:

Nonmanufacturer Rule (MAR 2020)

    (a) This clause does not apply to the unrestricted portion of a 
partial set-aside.
    (b) Applicability. This clause applies to--
    (1) Contracts that have been set aside, in total or in part;
    (2) Orders under multiple-award contracts as described in 8.405-
5 and 16.505(b)(2)(i)(F) that have been set aside for any of the 
small business concerns identified in 19.000(a)(3); and
    (3) Orders issued directly to any of the small business concerns 
identified in 19.000(a)(3) under multiple-award contracts as 
described in 19.504(c)(1)(ii).
    (c)(1) The Contractor shall--
    (i)(A) Provide the end item of a small business manufacturer, or 
if set aside or awarded on a sole source basis to a HUBZone small 
business, provide the end item of a HUBZone small business 
manufacturer, that has been manufactured or produced in the United 
States or its outlying areas; or
    (B) If this procurement is an order as described in 8.405-5 or 
16.505(b)(2)(i)(F) or processed under simplified acquisition 
procedures (see part 13), and the total amount does not exceed 
$25,000, provide the end item of any domestic manufacturer;
    (ii) Not exceed 500 employees;
    (iii) Be primarily engaged in the retail or wholesale trade and 
normally sell the type of item being supplied; and
    (iv) Take ownership or possession of the item(s) with its 
personnel, equipment, or facilities in a manner consistent with 
industry practice.
    (2) In addition to the requirements set forth in paragraph 
(c)(1) of this clause, when the end item being acquired is a kit of 
supplies or other goods, 50 percent of the total value of the 
components of the kit shall be manufactured in the United States or 
its outlying areas by small business concerns. Where the Government 
has specified an item for the kit which is not produced by U.S. 
small business concerns, such items shall be excluded from the 50 
percent calculation. See 13 CFR 121.406(c) for further information 
regarding nonmanufacturers.
    (3) For size determination purposes, there can be only one 
manufacturer of the end product being acquired. For the purposes of 
the nonmanufacturer rule, the manufacturer of the end product being 
acquired is the concern that transforms raw materials and/or 
miscellaneous parts or components into the end product. Firms which 
only minimally alter the item being procured do not qualify as 
manufacturers of the end item, such as firms that add substances, 
parts, or components to an existing end item to modify its 
performance, will not be considered the end item manufacturer, where 
those identical modifications can be performed by and are available 
from the manufacturer of the existing end item. See 13 CFR 121.406 
for further information regarding manufacturers.


(End of clause)

[FR Doc. 2020-02028 Filed 2-26-20; 8:45 am]
BILLING CODE 6820-EP-P