Federal Acquisition Regulation: Small Business Program Amendments, 10327-10331 [2022-03105]
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Federal Register / Vol. 87, No. 37 / Thursday, February 24, 2022 / Proposed Rules
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[FR Doc. 2022–03987 Filed 2–23–22; 8:45 am]
BILLING CODE 6560–50–P
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 19, 49, and 52
[FAR Case 2019–008; Docket No. 2019–
0008, Sequence No. 1]
RIN 9000–AN91
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Federal Acquisition Regulation: Small
Business Program Amendments
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Proposed rule.
AGENCY:
DoD, GSA, and NASA are
proposing to amend the Federal
Acquisition Regulation (FAR) to
SUMMARY:
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implement several changes to the Small
Business Administration (SBA)
regulations.
DATES: Interested parties should submit
written comments to the Regulatory
Secretariat Division at the address
shown below on or before April 25,
2022 to be considered in the formation
of the final rule.
ADDRESSES: Submit comments in
response to FAR Case 2019–008 to the
Federal eRulemaking portal at https://
www.regulations.gov by searching for
‘‘FAR Case 2019–008’’. Select the link
‘‘Comment Now’’ that corresponds with
‘‘FAR Case 2019–008’’. Follow the
instructions provided on the ‘‘Comment
Now’’ screen. Please include your name,
company name (if any), and ‘‘FAR Case
2019–008’’ on your attached document.
If your comment cannot be submitted
using https://www.regulations.gov, call
or email the points of contact in the FOR
FURTHER INFORMATION CONTACT section of
this document for alternate instructions.
Instructions: Please submit comments
only and cite ‘‘FAR Case 2019–008’’ in
all correspondence related to this case.
Comments received generally will be
posted without change to https://
www.regulations.gov, including any
personal and/or business confidential
information provided. To confirm
receipt of your comment(s), please
check https://www.regulations.gov,
approximately two-to-three days after
submission to verify posting.
FOR FURTHER INFORMATION CONTACT: Ms.
Malissa Jones, Procurement Analyst, at
703–605–2815, or by email at
malissa.jones@gsa.gov, for clarification
of content. For information pertaining to
status or publication schedules, contact
the Regulatory Secretariat Division at
202–501–4755 or GSARegSec@gsa.gov.
Please cite FAR Case 2019–008.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA are proposing
to amend the FAR to implement several
revisions that the Small Business
Administration (SBA) made to its
regulations in its final rule published on
November 29, 2019, at 84 FR 65647.
SBA provided an explanation of the
changes in its final rule preamble. The
revisions address the following topics:
• The point in the procurement
process at which small business size
status is determined for offers for
multiple-award contracts.
• A new ground for a socioeconomic
status protest.
• The eligibility requirements for 8(a)
participants under long-term contracts
(i.e., contracts with a duration of more
than 5 years).
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• The small business size standard for
information technology value-added
resellers under North American
Industry Classification System (NAICS)
code 541519.
II. Discussion and Analysis
The proposed changes to the FAR are
summarized in the following
paragraphs.
A. Small Business Size Standards
Part 19 is proposed to be revised to
clarify SBA policy concerning size
standards in three areas. First, while
SBA generally determines small
business size standards at the time of
initial offer including price, for a
multiple-award contract that does not
require offers for the contract to include
price, SBA will determine size as of the
date of the initial offer for the multipleaward contract, whether or not the offer
includes price or the price is evaluated;
changes are made at FAR 19.102 and
19.301–1. This proposed rule merely
informs contracting officers of SBA’s
policy on determinations of size status;
it does not include guidance for
contracting officers regarding
solicitations that do not include price as
an evaluation factor for multiple-award
contracts. FAR case 2017–010,
Evaluation Factors for Multiple-Award
Contracts, and FAR case 2018–014,
Increasing Task-order Level
Competition, provide this guidance.
Second, an information technology
value-added reseller under NAICS code
541519, proposing to furnish an end
product it did not manufacture (i.e., a
‘‘nonmanufacturer’’), is a small business
if it has no more than 150 employees.
This size standard is implemented at
FAR 19.505; FAR 52.204–8, Annual
Representations and Certifications and
its Alternate I; FAR 52.212–1,
Instructions to Offerors—Commercial
Items; FAR 52.219–1, Small Business
Program Representations and its
Alternate II; and FAR 52.219–28, PostAward Small Business Program
Rerepresentation.
Third, adding new grounds for a
socioeconomic status protest based on
an allegation that a contractor is unduly
reliant on a small, non-similarly
situated entity subcontractor or if such
subcontractor performs the primary and
vital requirements of the contract (the
‘‘ostensible subcontractor rule’’).
Changes are made at FAR 19.306 to
19.308.
B. Setting Aside Orders Under MultipleAward Contracts That Were Set Aside
for Small Business
FAR 19.504 is proposed to be revised
to clarify that, if a multiple-award
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contract was totally set aside for small
business, contracting officers may set
aside orders under that contract for any
of the small business socioeconomic
programs. This subpart further clarifies
that for these orders to be set aside, the
rule of two and the specific
socioeconomic program eligibility
requirements must be met.
C. Determining Eligibility for the 8(a)
Program
Subpart 19.8 is proposed to be revised
to specify that SBA designates concerns
as 8(a) participants in the Dynamic
Small Business Search (DSBS) at
https://web.sba.gov/pro-net/search/dsp_
dsbs.cfm and that SBA’s designation
also appears in the System for Award
Management (SAM). In addition, for 8(a)
contracts exceeding 5 years, including
options, contracting officers are required
to verify in DSBS or SAM that the
concern is an SBA-certified 8(a)
participant no more than 120 days prior
to the end of the fifth year of the
contract. If the concern is not an SBAcertified 8(a) participant at that time,
contracting officers shall not exercise
the option.
III. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold (SAT) and for Commercial
Products (Including Commercially
Available Off-the-Shelf (COTS) Items),
or for Commercial Services
This rule proposes to amend several
clauses. However, this proposed rule
does not impose any new requirements
on contracts at or below the SAT, for
commercial products including
commercially available off-the-shelf
(COTS) items, or for commercial
services. The clauses continue to apply
to acquisitions at or below the SAT, to
acquisitions for commercial products
including commercially available offthe-shelf (COTS) items, and to
acquisitions for commercial services.
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IV. Expected Impact of the Rule
This proposed rule will impact the
operations of the Government and
contractors as described in this section.
This proposed rule will impact
contracting officers for long-term 8(a)
contracts. These contracting officers will
not be able to exercise options past the
fifth year of long-term 8(a) contracts if
the 8(a) contractor no longer qualifies
for the 8(a) program.
Contractors who are 8(a) participants
with long-term contracts may find that
the Government cannot exercise an
option on that contract, if the contractor
is no longer eligible for the 8(a)
program.
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Offerors who are information
technology value-added resellers should
be able to understand more easily the
size standard that applies to them.
This proposed rule is not expected to
result in any costs to contractors or
offerors.
The ‘‘ostensible subcontractor rule’’ is
implemented in this proposed rule as a
new ground for protest. Small business
contractors must not be overly reliant on
non-similarly situated small business
subcontractors or have such a
subcontractor perform primary and vital
requirements of the contract. This
means the contractor must have the
necessary expertise within its own
organization.
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 not a significant
regulatory action and, therefore, was not
subject to review under Section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993.
VI. Congressional Review Act
As required by the Congressional
Review Act (5 U.S.C. 801–808) before an
interim or final rule takes effect, DoD,
GSA, and NASA will send the rule and
the ‘‘Submission of Federal Rules Under
the Congressional Review Act’’ form to
each House of the Congress and to the
Comptroller General of the United
States. A major rule cannot take effect
until 60 days after it is published in the
Federal Register. This proposed rule is
not anticipated to be a major rule under
5 U.S.C. 804.
VII. Regulatory Flexibility Act
The change may have a significant
economic impact on a substantial
number of small entities within the
meaning of the Regulatory Flexibility
Act, 5 U.S.C. 601–612. The Initial
Regulatory Flexibility Analysis (IRFA) is
summarized as follows:
DoD, GSA, and NASA are proposing to
amend the Federal Acquisition Regulation
(FAR) to implement several revisions made
to the SBA regulations in SBA’s final rule
published on November 29, 2019 (84 FR
65647). The revisions address the point in
the procurement process at which small
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business size status is determined for offers
for multiple-award contracts. SBA generally
determines size status at the time of initial
offer including price. However, for a
solicitation for a multiple-award contract that
does not require offers to include price, SBA
will determine size as of the date of initial
offer, whether or not the offer includes price
or the price is evaluated. The revisions also
address the eligibility requirements for 8(a)
participants under long-term contracts (i.e.,
with a duration of more than five years
including option periods). For long-term 8(a)
contracts, contracting officers will be
required to verify in the Dynamic Small
Business Search (DSBS) or the System for
Award Management (SAM) that the
contractor is still an SBA-certified 8(a)
participant no more than 120 days prior to
the end of the fifth year of the contract. If the
contractor is no longer an SBA-certified 8(a)
participant, the contracting officer shall not
exercise the option. In addition, SBA’s
revisions specified that the size standard for
information technology value-added resellers
under North American Industry
Classification System (NAICS) code 541519
is 150 employees. The revisions also address
SBA’s new grounds for a socioeconomic
status protest based on an allegation that a
contractor is unduly reliant on a small, nonsimilarly situated entity subcontractor or if
such subcontractor performs the primary and
vital requirements of the contract (the
‘‘ostensible subcontractor rule’’). This
proposed FAR rule includes all of these
revisions.
The objective of this proposed rule is to
implement SBA’s regulatory revisions in the
FAR. The legal basis for this rule is 41 U.S.C.
1303 and the SBA regulatory changes at 13
CFR 121.103(h), 13 CFR 121.404, 13 CFR
121.406, 13 CFR 124.521(e), and 13 CFR
125.2(e).
This proposed rule will apply to small
entities that do business with the Federal
Government. According to the data in SAM,
320,622 of the active entity registrations are
for entities that are small business concerns
for at least one NAICS code. The proposed
FAR changes, regarding the point at which
SBA determines size status and SBA’s new
grounds for a socioeconomic protest, will
provide these entities with straightforward
guidance that will reduce confusion and
uncertainty.
The proposed changes regarding long-term
8(a) contracts will impact 8(a) participants
who are Federal contractors with contracts
that have a duration of more than five years,
including options. An analysis of the data in
the Federal Procurement Data System (FPDS)
indicates that, for fiscal years 2017 through
2019, an average of 257 long-term contracts
(greater than five years) were awarded to 227
unique entities each year under the 8(a)
program. The proposed change may serve to
reduce the number of long-term contracts
awarded to 8(a) participants by agencies that
are concerned about having a contract in
place beyond the fifth year. Contracts outside
the 8(a) program will not have such obstacles
to continued performance.
The proposed change regarding the size
standard for information technology valueadded resellers will affect such resellers who
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do business with the Federal Government.
An analysis of the data in FPDS shows that,
for fiscal years 2017 through 2019, an average
of 727 unique large business entities and
1,347 unique small business concerns were
awarded contracts each year under NAICS
code 541519.
This proposed rule does not include any
new reporting, recordkeeping, or other
compliance requirements for small entities.
This proposed rule does not duplicate,
overlap, or conflict with any other Federal
rules.
There are no known significant alternative
approaches that would accomplish the stated
objectives.
The Regulatory Secretariat Division
has submitted a copy of the IRFA to the
Chief Counsel for Advocacy of the Small
Business Administration. A copy of the
IRFA may be obtained from the
Regulatory Secretariat Division. DoD,
GSA, and NASA invite comments from
small business concerns and other
interested parties on the expected
impact of this rule on small entities.
DoD, GSA, and NASA will also
consider comments from small entities
concerning the existing regulations in
subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested
parties must submit such comments
separately and should cite 5 U.S.C. 610
(FAR Case 2019–008), in
correspondence.
VIII. Paperwork Reduction Act
This proposed rule does not contain
any information collection requirements
that require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
3501–3521).
List of Subjects in 48 CFR Parts 19, 49,
and 52
Government procurement.
William F. Clark,
Director, Office of Government-wide
Acquisition Policy, Office of Acquisition
Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA
propose to amend 48 CFR parts 19, 49,
and 52 as set forth below:
■ 1. The authority citation for 48 CFR
parts 19, 49, and 52 continues to read
as follows:
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Authority: 40 U.S.C. 121(c); 10 U.S.C.
chapter 137; and 51 U.S.C. 20113.
PART 19—SMALL BUSINESS
PROGRAMS
2. Amend section 19.102 by—
a. Revising the last sentence of
paragraph (a)(1); and
■ b. Adding paragraphs (a)(3) and (4).
The revision and additions read as
follows:
■
■
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19.102 Small business size standards and
North American Industry Classification
System codes.
(a) * * *
(1) * * * They are also available at
https://www.sba.gov/document/support-table-size-standards.
*
*
*
*
*
(3) SBA determines the size status of
a concern, including its affiliates, as of
the date the concern represents that it is
small to the contracting officer as part
of its initial offer, which includes price.
(4) When an agency uses a solicitation
for a multiple-award contract that does
not require offers for the contract to
include price, SBA determines size as of
the date of initial offer for the multipleaward contract, whether or not the offer
includes price or the price is evaluated.
(See 13 CFR 121.404(a)(1)(iv).)
*
*
*
*
*
19.301–1
[Amended]
3. Amend section 19.301–1 by—
a. Removing from paragraph (b)
introductory text the phrase ‘‘initial
offer’’ and adding ‘‘initial offer,
(whether or not the offer includes price
or the price is evaluated)’’ in its place;
and
■ b. Removing from paragraph (e)(1) the
phrase ‘‘offer for the contract’’ and
adding ‘‘offer for the contract (whether
or not the offer includes price or the
price is evaluated (see 13 CFR
121.404(a)(1)(iv)),’’ in its place.
■ 4. Amend section 19.306 by—
■ a. Removing from the end of
paragraph (d)(1)(ii) the word ‘‘or’’;
■ b. Removing from the end of
paragraph (d)(1)(iii) the period and
adding ‘‘; or’’ in its place; and
■ c. Adding paragraph (d)(1)(iv).
The addition reads as follows:
■
■
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disabled’’ and adding ‘‘service–
disabled’’ in its place;
■ b. Removing from paragraph (d)(1)(i)
the text ‘‘service disabled’’ and ‘‘125.8;
or’’ and adding ‘‘service-disabled’’ and
‘‘125.11;’’ in their places, respectively;
■ c. Removing from paragraph (d)(1)(ii)
the period at the end and adding ‘‘; or’’
in its place; and
■ d. Adding paragraph (d)(1)(iii).
The addition reads as follows:
19.307 Protesting a firm’s status as a
service-disabled veteran-owned small
business concern.
*
*
*
*
*
(d) * * *
(1) * * *
(iii) For set-aside or sole-source
service contract ostensible subcontractor
protests, the protester presents credible
evidence of the alleged undue reliance
on a small, non-similarly situated entity
subcontractor, or credible evidence that
the small non-similarly situated entity is
performing the primary and vital
requirements of the contract. For
allegations that the prime contractor is
unduly reliant on an other-than-small
subcontractor, see size protests at
19.302, and 13 CFR 121.103(h)(2),
which treats the pair as joint venturers
for size determination purposes (the
‘‘ostensible subcontractor rule’’).
*
*
*
*
*
■ 6. Amend section 19.308 by—
■ a. Removing from the end of
paragraph (d)(1)(i) the word ‘‘or’’;
■ b. Removing from the end of
paragraph (d)(1)(ii) the period and
adding ‘‘; or’’ in its place; and
■ c. Adding paragraph (d)(1)(iii).
The addition reads as follows:
19.306 Protesting a firm’s status as a
HUBZone small business concern.
19.308 Protesting a firm’s status as an
economically disadvantaged women-owned
small business concern or women-owned
small business concern eligible under the
Women-Owned Small Business Program.
*
*
*
*
*
*
(d) * * *
(1) * * *
(iv) For HUBZone set-aside or solesource service contracts, a HUBZone
prime contractor is unduly reliant on a
small, non-similarly situated entity
subcontractor or if such subcontractor
performs the primary and vital
requirements of the contract. For
allegations that the prime contractor is
unduly reliant on an other-than-small
subcontractor, see size protests at
19.302, and 13 CFR 121.103(h)(2),
which treats the pair as joint venturers
for size determination purposes (the
‘‘ostensible subcontractor rule’’).
*
*
*
*
*
■ 5. Amend section 19.307 by—
■ a. Removing from paragraph (d)(1)
introductory text the phrase ‘‘service
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*
*
*
*
(d) * * *
(1) * * *
(iii) For WOSB or EDWOSB set-aside
or sole-source service contracts, the
protest presents evidence that the prime
contractor is unusually reliant on a
small, non-similarly situated entity
subcontractor, as defined in 13 CFR
125.1, or a protest alleging that such
subcontractor is performing the primary
and vital requirements of a set-aside or
sole-source WOSB or EDWOSB contract.
For allegations that the prime contractor
is unduly reliant on an other-than-small
subcontractor, see size protests at
19.302, and 13 CFR 121.103(h)(2),
which treats the pair as joint venturers
for size determination purposes (the
‘‘ostensible subcontractor rule’’).
*
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7. Amend section 19.504 by—
a. Removing from paragraph (b)
heading the word ‘‘partial’’;
■ b. Redesignating paragraphs (b)(1) and
(b)(2) as paragraphs (b)(2)(i) and
(b)(2)(ii), respectively;
■ c. Adding a new paragraph (b)(1); and
■ d. Adding a heading for newly
redesignated paragraph (b)(2).
The additions read as follows:
■
■
19.504 Orders under multiple-award
contracts.
*
*
*
*
*
(b) * * *—(1) Orders under total setaside contracts. Under a total small
business set-aside, contracting officers
may at their discretion set aside orders
for any of the small business
socioeconomic concerns identified in
19.000(a)(3) provided that the
requirements at paragraph (a) of this
section, 19.502–2(b), and the specific
program eligibility requirements are
met.
(2) Orders under partial set-aside
contracts. * * *
*
*
*
*
*
19.505
[Amended]
8. Amend section 19.505 by removing
from paragraphs (c)(1)(ii) and (c)(2)(i)
the phrase ‘‘500 employees’’ and adding
‘‘500 employees, or 150 employees for
information technology value-added
resellers under NAICS code 541519’’ in
its place.
■ 9. Amend section 19.802 by adding
two sentences at the end to read as
follows:
■
19.802 Determining eligibility for the 8(a)
program.
* * * SBA designates the concern as
an 8(a) participant in the Dynamic
Small Business Search (DSBS) at
https://web.sba.gov/pro-net/search/dsp_
dsbs.cfm. SBA’s designation also
appears in the System for Award
Management (SAM).
■ 10. Amend section 19.804–1 by—
■ a. Removing from the end of
paragraph (a)(1) the word ‘‘and’’;
■ b. Redesignating paragraph (a)(2) as
paragraph (a)(3); and
■ c. Adding a new paragraph (a)(2).
The addition reads as follows:
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19.804–1
Agency evaluation.
(a) * * *
(2) Length of contract, including
option periods (see 19.812(d)); and
*
*
*
*
*
■ 11. Amend section 19.812 by—
■ a. Redesignating paragraph (d) as
paragraph (e); and
■ b. Adding a new paragraph (d).
The addition reads as follows:
19.812
*
*
Contract administration.
*
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*
49.402–3
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[Amended]
12. Amend section 49.402–3 by
removing from paragraph (e)(4) the
phrase ‘‘Small Business Administration
Regional’’ and adding ‘‘Small Business
Administration Area’’ in its place.
■
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
13. Amend section 52.204–8 by—
a. Revising the date of the provision;
b. Removing from paragraph (a)(3)
introductory text the phrase ‘‘500
employees’’ and adding ‘‘500
employees, or 150 employees for
information technology value-added
resellers under NAICS code 541519,’’ in
its place;
■ c. In Alternate I:
■ i. Revising the date of Alternate I; and
■ ii. Removing from paragraph (a)(2)
introductory text the phrase ‘‘500
employees’’ and adding ‘‘500
employees, or 150 employees for
information technology value-added
resellers under NAICS code 541519,’’ in
its place.
The revisions read as follows:
■
■
■
52.204–8 Annual Representations and
Certifications.
*
*
*
*
*
*
*
*
*
*
*
*
■ 13. Amend section 52.212–1 by—
■ a. Revising the date of the provision;
and
■ b. Removing from paragraph (a)
introductory text the phrase ‘‘500
employees’’ and adding ‘‘500
employees, or 150 employees for
information technology value-added
resellers under NAICS code 541519,’’ in
its place.
The revision reads as follows:
52.212–1 Instructions to Offerors—
Commercial Products and Commercial
Services.
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*
*
*
*
*
Contract Terms and Conditions
Required To Implement Statutes or
Executive Orders—Commercial
Products and Commercial Services
(DATE)
*
*
*
*
*
15. Amend section 52.219–1 by—
a. Revising the date of the provision;
b. Removing from paragraph (b)(3)
introductory text the phrase ‘‘500
employees’’ and adding ‘‘500
employees, or 150 employees for
information technology value-added
resellers under NAICS code 541519,’’ in
its place;
■ c. In Alternate II:
■ i. Revising the date of Alternate II; and
■ ii. Removing from paragraph (b)(2)
introductory text the phrase ‘‘500
employees’’ and adding ‘‘500
employees, or 150 employees for
information technology value-added
resellers under NAICS code 541519,’’ in
its place.
The revisions read as follows:
■
■
■
52.219–1 Small Business Program
Representations.
*
*
*
*
*
*
*
*
*
Alternate II (DATE) * * *
*
*
*
*
*
*
14. Amend section 52.212–5 by—
a. Revising the date of the provision;
and
■ b. Removing from paragraph (b)(22)(i)
the date ‘‘(SEP 2021)’’ and adding
‘‘(DATE)’’ in its place.
The revision reads as follows:
*
*
Alternate I (DATE). * * *
*
*
■
■
Small Business Program
Representations (DATE)
Annual Representations and
Certifications (DATE)
*
Instructions to Offerors—Commercial
Products and Commercial Services
(DATE)
52.212–5 Contract Terms and Conditions
Required To Implement Statutes or
Executive Orders—Commercial Products
and Commercial Services.
PART 49—TERMINATION OF
CONTRACTS
*
*
16:26 Feb 23, 2022
(d) For 8(a) contracts exceeding 5
years including options, the contracting
officer shall verify in DSBS or SAM that
the concern is an SBA-certified 8(a)
participant no more than 120 days prior
to the end of the fifth year of the
contract. If the concern is not an SBAcertified 8(a) participant, the contracting
officer shall not exercise the option (see
13 CFR 124.521(e)(2)).
*
*
*
*
*
*
*
*
*
*
16. Amend section 52.219–18 by—
a. Revising the date of Alternate I; and
b. Removing from paragraph (a)(3) of
Alternate I the phrase ‘‘Regional
Office(s)’’ and adding ‘‘Area Office(s)’’
in its place.
The revision reads as follows:
■
■
■
52.219–18 Notification of Competition
Limited to Eligible 8(a) Participants.
*
*
*
*
*
Alternate I (DATE) * * *
*
*
*
*
*
17. Amend section 52.219–28 by—
a. Revising the date of the provision;
and
■
■
E:\FR\FM\24FEP1.SGM
24FEP1
Federal Register / Vol. 87, No. 37 / Thursday, February 24, 2022 / Proposed Rules
b. Removing from paragraph (e)
introductory text the phrase ‘‘500
employees’’ and adding ‘‘500
employees, or 150 employees for
information technology value-added
■
resellers under NAICS code 541519,’’ in
its place.
The revision reads as follows:
Post-Award Small Business Program
Rerepresentation (DATE)
52.219–28 Post-Award Small Business
Program Rerepresentation.
[FR Doc. 2022–03105 Filed 2–23–22; 8:45 am]
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]]>Agencies
[Federal Register Volume 87, Number 37 (Thursday, February 24, 2022)]
[Proposed Rules]
[Pages 10327-10331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03105]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 19, 49, and 52
[FAR Case 2019-008; Docket No. 2019-0008, Sequence No. 1]
RIN 9000-AN91
Federal Acquisition Regulation: Small Business Program Amendments
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to implement several changes to the Small
Business Administration (SBA) regulations.
DATES: Interested parties should submit written comments to the
Regulatory Secretariat Division at the address shown below on or before
April 25, 2022 to be considered in the formation of the final rule.
ADDRESSES: Submit comments in response to FAR Case 2019-008 to the
Federal eRulemaking portal at https://www.regulations.gov by searching
for ``FAR Case 2019-008''. Select the link ``Comment Now'' that
corresponds with ``FAR Case 2019-008''. Follow the instructions
provided on the ``Comment Now'' screen. Please include your name,
company name (if any), and ``FAR Case 2019-008'' on your attached
document. If your comment cannot be submitted using https://www.regulations.gov, call or email the points of contact in the FOR
FURTHER INFORMATION CONTACT section of this document for alternate
instructions.
Instructions: Please submit comments only and cite ``FAR Case 2019-
008'' in all correspondence related to this case. Comments received
generally will be posted without change to https://www.regulations.gov,
including any personal and/or business confidential information
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two-to-three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: Ms. Malissa Jones, Procurement
Analyst, at 703-605-2815, 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 or [email protected]. Please cite FAR Case 2019-008.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA are proposing to amend the FAR to implement
several revisions that the Small Business Administration (SBA) made to
its regulations in its final rule published on November 29, 2019, at 84
FR 65647. SBA provided an explanation of the changes in its final rule
preamble. The revisions address the following topics:
The point in the procurement process at which small
business size status is determined for offers for multiple-award
contracts.
A new ground for a socioeconomic status protest.
The eligibility requirements for 8(a) participants under
long-term contracts (i.e., contracts with a duration of more than 5
years).
The small business size standard for information
technology value-added resellers under North American Industry
Classification System (NAICS) code 541519.
II. Discussion and Analysis
The proposed changes to the FAR are summarized in the following
paragraphs.
A. Small Business Size Standards
Part 19 is proposed to be revised to clarify SBA policy concerning
size standards in three areas. First, while SBA generally determines
small business size standards at the time of initial offer including
price, for a multiple-award contract that does not require offers for
the contract to include price, SBA will determine size as of the date
of the initial offer for the multiple-award contract, whether or not
the offer includes price or the price is evaluated; changes are made at
FAR 19.102 and 19.301-1. This proposed rule merely informs contracting
officers of SBA's policy on determinations of size status; it does not
include guidance for contracting officers regarding solicitations that
do not include price as an evaluation factor for multiple-award
contracts. FAR case 2017-010, Evaluation Factors for Multiple-Award
Contracts, and FAR case 2018-014, Increasing Task-order Level
Competition, provide this guidance.
Second, an information technology value-added reseller under NAICS
code 541519, proposing to furnish an end product it did not manufacture
(i.e., a ``nonmanufacturer''), is a small business if it has no more
than 150 employees. This size standard is implemented at FAR 19.505;
FAR 52.204-8, Annual Representations and Certifications and its
Alternate I; FAR 52.212-1, Instructions to Offerors--Commercial Items;
FAR 52.219-1, Small Business Program Representations and its Alternate
II; and FAR 52.219-28, Post-Award Small Business Program
Rerepresentation.
Third, adding new grounds for a socioeconomic status protest based
on an allegation that a contractor is unduly reliant on a small, non-
similarly situated entity subcontractor or if such subcontractor
performs the primary and vital requirements of the contract (the
``ostensible subcontractor rule''). Changes are made at FAR 19.306 to
19.308.
B. Setting Aside Orders Under Multiple-Award Contracts That Were Set
Aside for Small Business
FAR 19.504 is proposed to be revised to clarify that, if a
multiple-award
[[Page 10328]]
contract was totally set aside for small business, contracting officers
may set aside orders under that contract for any of the small business
socioeconomic programs. This subpart further clarifies that for these
orders to be set aside, the rule of two and the specific socioeconomic
program eligibility requirements must be met.
C. Determining Eligibility for the 8(a) Program
Subpart 19.8 is proposed to be revised to specify that SBA
designates concerns as 8(a) participants in the Dynamic Small Business
Search (DSBS) at https://web.sba.gov/pro-net/search/dsp_dsbs.cfm and
that SBA's designation also appears in the System for Award Management
(SAM). In addition, for 8(a) contracts exceeding 5 years, including
options, contracting officers are required to verify in DSBS or SAM
that the concern is an SBA-certified 8(a) participant no more than 120
days prior to the end of the fifth year of the contract. If the concern
is not an SBA-certified 8(a) participant at that time, contracting
officers shall not exercise the option.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Products (Including Commercially
Available Off-the-Shelf (COTS) Items), or for Commercial Services
This rule proposes to amend several clauses. However, this proposed
rule does not impose any new requirements on contracts at or below the
SAT, for commercial products including commercially available off-the-
shelf (COTS) items, or for commercial services. The clauses continue to
apply to acquisitions at or below the SAT, to acquisitions for
commercial products including commercially available off-the-shelf
(COTS) items, and to acquisitions for commercial services.
IV. Expected Impact of the Rule
This proposed rule will impact the operations of the Government and
contractors as described in this section.
This proposed rule will impact contracting officers for long-term
8(a) contracts. These contracting officers will not be able to exercise
options past the fifth year of long-term 8(a) contracts if the 8(a)
contractor no longer qualifies for the 8(a) program.
Contractors who are 8(a) participants with long-term contracts may
find that the Government cannot exercise an option on that contract, if
the contractor is no longer eligible for the 8(a) program.
Offerors who are information technology value-added resellers
should be able to understand more easily the size standard that applies
to them.
This proposed rule is not expected to result in any costs to
contractors or offerors.
The ``ostensible subcontractor rule'' is implemented in this
proposed rule as a new ground for protest. Small business contractors
must not be overly reliant on non-similarly situated small business
subcontractors or have such a subcontractor perform primary and vital
requirements of the contract. This means the contractor must have the
necessary expertise within its own organization.
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 not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD, GSA, and NASA will
send the rule and the ``Submission of Federal Rules Under the
Congressional Review Act'' form to each House of the Congress and to
the Comptroller General of the United States. A major rule cannot take
effect until 60 days after it is published in the Federal Register.
This proposed rule is not anticipated to be a major rule under 5 U.S.C.
804.
VII. Regulatory Flexibility Act
The change may have a significant economic impact on a substantial
number of small entities within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601-612. The Initial Regulatory Flexibility
Analysis (IRFA) is summarized as follows:
DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to implement several revisions made to
the SBA regulations in SBA's final rule published on November 29,
2019 (84 FR 65647). The revisions address the point in the
procurement process at which small business size status is
determined for offers for multiple-award contracts. SBA generally
determines size status at the time of initial offer including price.
However, for a solicitation for a multiple-award contract that does
not require offers to include price, SBA will determine size as of
the date of initial offer, whether or not the offer includes price
or the price is evaluated. The revisions also address the
eligibility requirements for 8(a) participants under long-term
contracts (i.e., with a duration of more than five years including
option periods). For long-term 8(a) contracts, contracting officers
will be required to verify in the Dynamic Small Business Search
(DSBS) or the System for Award Management (SAM) that the contractor
is still an SBA-certified 8(a) participant no more than 120 days
prior to the end of the fifth year of the contract. If the
contractor is no longer an SBA-certified 8(a) participant, the
contracting officer shall not exercise the option. In addition,
SBA's revisions specified that the size standard for information
technology value-added resellers under North American Industry
Classification System (NAICS) code 541519 is 150 employees. The
revisions also address SBA's new grounds for a socioeconomic status
protest based on an allegation that a contractor is unduly reliant
on a small, non-similarly situated entity subcontractor or if such
subcontractor performs the primary and vital requirements of the
contract (the ``ostensible subcontractor rule''). This proposed FAR
rule includes all of these revisions.
The objective of this proposed rule is to implement SBA's
regulatory revisions in the FAR. The legal basis for this rule is 41
U.S.C. 1303 and the SBA regulatory changes at 13 CFR 121.103(h), 13
CFR 121.404, 13 CFR 121.406, 13 CFR 124.521(e), and 13 CFR 125.2(e).
This proposed rule will apply to small entities that do business
with the Federal Government. According to the data in SAM, 320,622
of the active entity registrations are for entities that are small
business concerns for at least one NAICS code. The proposed FAR
changes, regarding the point at which SBA determines size status and
SBA's new grounds for a socioeconomic protest, will provide these
entities with straightforward guidance that will reduce confusion
and uncertainty.
The proposed changes regarding long-term 8(a) contracts will
impact 8(a) participants who are Federal contractors with contracts
that have a duration of more than five years, including options. An
analysis of the data in the Federal Procurement Data System (FPDS)
indicates that, for fiscal years 2017 through 2019, an average of
257 long-term contracts (greater than five years) were awarded to
227 unique entities each year under the 8(a) program. The proposed
change may serve to reduce the number of long-term contracts awarded
to 8(a) participants by agencies that are concerned about having a
contract in place beyond the fifth year. Contracts outside the 8(a)
program will not have such obstacles to continued performance.
The proposed change regarding the size standard for information
technology value-added resellers will affect such resellers who
[[Page 10329]]
do business with the Federal Government. An analysis of the data in
FPDS shows that, for fiscal years 2017 through 2019, an average of
727 unique large business entities and 1,347 unique small business
concerns were awarded contracts each year under NAICS code 541519.
This proposed rule does not include any new reporting,
recordkeeping, or other compliance requirements for small entities.
This proposed rule does not duplicate, overlap, or conflict with
any other Federal rules.
There are no known significant alternative approaches that would
accomplish the stated objectives.
The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. DoD, GSA, and NASA invite comments from small
business concerns and other interested parties on the expected impact
of this rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2019-008),
in correspondence.
VIII. Paperwork Reduction Act
This proposed rule does not contain any information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. 3501-3521).
List of Subjects in 48 CFR Parts 19, 49, and 52
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA propose to amend 48 CFR parts 19, 49,
and 52 as set forth below:
0
1. The authority citation for 48 CFR parts 19, 49, 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 19--SMALL BUSINESS PROGRAMS
0
2. Amend section 19.102 by--
0
a. Revising the last sentence of paragraph (a)(1); and
0
b. Adding paragraphs (a)(3) and (4).
The revision and additions read as follows:
19.102 Small business size standards and North American Industry
Classification System codes.
(a) * * *
(1) * * * They are also available at https://www.sba.gov/document/support--table-size-standards.
* * * * *
(3) SBA determines the size status of a concern, including its
affiliates, as of the date the concern represents that it is small to
the contracting officer as part of its initial offer, which includes
price.
(4) When an agency uses a solicitation for a multiple-award
contract that does not require offers for the contract to include
price, SBA determines size as of the date of initial offer for the
multiple-award contract, whether or not the offer includes price or the
price is evaluated. (See 13 CFR 121.404(a)(1)(iv).)
* * * * *
19.301-1 [Amended]
0
3. Amend section 19.301-1 by--
0
a. Removing from paragraph (b) introductory text the phrase ``initial
offer'' and adding ``initial offer, (whether or not the offer includes
price or the price is evaluated)'' in its place; and
0
b. Removing from paragraph (e)(1) the phrase ``offer for the contract''
and adding ``offer for the contract (whether or not the offer includes
price or the price is evaluated (see 13 CFR 121.404(a)(1)(iv)),'' in
its place.
0
4. Amend section 19.306 by--
0
a. Removing from the end of paragraph (d)(1)(ii) the word ``or'';
0
b. Removing from the end of paragraph (d)(1)(iii) the period and adding
``; or'' in its place; and
0
c. Adding paragraph (d)(1)(iv).
The addition reads as follows:
19.306 Protesting a firm's status as a HUBZone small business
concern.
* * * * *
(d) * * *
(1) * * *
(iv) For HUBZone set-aside or sole-source service contracts, a
HUBZone prime contractor is unduly reliant on a small, non-similarly
situated entity subcontractor or if such subcontractor performs the
primary and vital requirements of the contract. For allegations that
the prime contractor is unduly reliant on an other-than-small
subcontractor, see size protests at 19.302, and 13 CFR 121.103(h)(2),
which treats the pair as joint venturers for size determination
purposes (the ``ostensible subcontractor rule'').
* * * * *
0
5. Amend section 19.307 by--
0
a. Removing from paragraph (d)(1) introductory text the phrase
``service disabled'' and adding ``service-disabled'' in its place;
0
b. Removing from paragraph (d)(1)(i) the text ``service disabled'' and
``125.8; or'' and adding ``service-disabled'' and ``125.11;'' in their
places, respectively;
0
c. Removing from paragraph (d)(1)(ii) the period at the end and adding
``; or'' in its place; and
0
d. Adding paragraph (d)(1)(iii).
The addition reads as follows:
19.307 Protesting a firm's status as a service-disabled veteran-owned
small business concern.
* * * * *
(d) * * *
(1) * * *
(iii) For set-aside or sole-source service contract ostensible
subcontractor protests, the protester presents credible evidence of the
alleged undue reliance on a small, non-similarly situated entity
subcontractor, or credible evidence that the small non-similarly
situated entity is performing the primary and vital requirements of the
contract. For allegations that the prime contractor is unduly reliant
on an other-than-small subcontractor, see size protests at 19.302, and
13 CFR 121.103(h)(2), which treats the pair as joint venturers for size
determination purposes (the ``ostensible subcontractor rule'').
* * * * *
0
6. Amend section 19.308 by--
0
a. Removing from the end of paragraph (d)(1)(i) the word ``or'';
0
b. Removing from the end of paragraph (d)(1)(ii) the period and adding
``; or'' in its place; and
0
c. Adding paragraph (d)(1)(iii).
The addition reads as follows:
19.308 Protesting a firm's status as an economically disadvantaged
women-owned small business concern or women-owned small business
concern eligible under the Women-Owned Small Business Program.
* * * * *
(d) * * *
(1) * * *
(iii) For WOSB or EDWOSB set-aside or sole-source service
contracts, the protest presents evidence that the prime contractor is
unusually reliant on a small, non-similarly situated entity
subcontractor, as defined in 13 CFR 125.1, or a protest alleging that
such subcontractor is performing the primary and vital requirements of
a set-aside or sole-source WOSB or EDWOSB contract. For allegations
that the prime contractor is unduly reliant on an other-than-small
subcontractor, see size protests at 19.302, and 13 CFR 121.103(h)(2),
which treats the pair as joint venturers for size determination
purposes (the ``ostensible subcontractor rule'').
* * * * *
[[Page 10330]]
0
7. Amend section 19.504 by--
0
a. Removing from paragraph (b) heading the word ``partial'';
0
b. Redesignating paragraphs (b)(1) and (b)(2) as paragraphs (b)(2)(i)
and (b)(2)(ii), respectively;
0
c. Adding a new paragraph (b)(1); and
0
d. Adding a heading for newly redesignated paragraph (b)(2).
The additions read as follows:
19.504 Orders under multiple-award contracts.
* * * * *
(b) * * *--(1) Orders under total set-aside contracts. Under a
total small business set-aside, contracting officers may at their
discretion set aside orders for any of the small business socioeconomic
concerns identified in 19.000(a)(3) provided that the requirements at
paragraph (a) of this section, 19.502-2(b), and the specific program
eligibility requirements are met.
(2) Orders under partial set-aside contracts. * * *
* * * * *
19.505 [Amended]
0
8. Amend section 19.505 by removing from paragraphs (c)(1)(ii) and
(c)(2)(i) the phrase ``500 employees'' and adding ``500 employees, or
150 employees for information technology value-added resellers under
NAICS code 541519'' in its place.
0
9. Amend section 19.802 by adding two sentences at the end to read as
follows:
19.802 Determining eligibility for the 8(a) program.
* * * SBA designates the concern as an 8(a) participant in the
Dynamic Small Business Search (DSBS) at https://web.sba.gov/pro-net/search/dsp_dsbs.cfm. SBA's designation also appears in the System for
Award Management (SAM).
0
10. Amend section 19.804-1 by--
0
a. Removing from the end of paragraph (a)(1) the word ``and'';
0
b. Redesignating paragraph (a)(2) as paragraph (a)(3); and
0
c. Adding a new paragraph (a)(2).
The addition reads as follows:
19.804-1 Agency evaluation.
(a) * * *
(2) Length of contract, including option periods (see 19.812(d));
and
* * * * *
0
11. Amend section 19.812 by--
0
a. Redesignating paragraph (d) as paragraph (e); and
0
b. Adding a new paragraph (d).
The addition reads as follows:
19.812 Contract administration.
* * * * *
(d) For 8(a) contracts exceeding 5 years including options, the
contracting officer shall verify in DSBS or SAM that the concern is an
SBA-certified 8(a) participant no more than 120 days prior to the end
of the fifth year of the contract. If the concern is not an SBA-
certified 8(a) participant, the contracting officer shall not exercise
the option (see 13 CFR 124.521(e)(2)).
* * * * *
PART 49--TERMINATION OF CONTRACTS
49.402-3 [Amended]
0
12. Amend section 49.402-3 by removing from paragraph (e)(4) the phrase
``Small Business Administration Regional'' and adding ``Small Business
Administration Area'' in its place.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
13. Amend section 52.204-8 by--
0
a. Revising the date of the provision;
0
b. Removing from paragraph (a)(3) introductory text the phrase ``500
employees'' and adding ``500 employees, or 150 employees for
information technology value-added resellers under NAICS code 541519,''
in its place;
0
c. In Alternate I:
0
i. Revising the date of Alternate I; and
0
ii. Removing from paragraph (a)(2) introductory text the phrase ``500
employees'' and adding ``500 employees, or 150 employees for
information technology value-added resellers under NAICS code 541519,''
in its place.
The revisions read as follows:
52.204-8 Annual Representations and Certifications.
* * * * *
Annual Representations and Certifications (DATE)
* * * * *
Alternate I (DATE). * * *
* * * * *
0
13. Amend section 52.212-1 by--
0
a. Revising the date of the provision; and
0
b. Removing from paragraph (a) introductory text the phrase ``500
employees'' and adding ``500 employees, or 150 employees for
information technology value-added resellers under NAICS code 541519,''
in its place.
The revision reads as follows:
52.212-1 Instructions to Offerors--Commercial Products and Commercial
Services.
* * * * *
Instructions to Offerors--Commercial Products and Commercial Services
(DATE)
* * * * *
0
14. Amend section 52.212-5 by--
0
a. Revising the date of the provision; and
0
b. Removing from paragraph (b)(22)(i) the date ``(SEP 2021)'' and
adding ``(DATE)'' in its place.
The revision reads as follows:
52.212-5 Contract Terms and Conditions Required To Implement Statutes
or Executive Orders--Commercial Products and Commercial Services.
* * * * *
Contract Terms and Conditions Required To Implement Statutes or
Executive Orders--Commercial Products and Commercial Services (DATE)
* * * * *
0
15. Amend section 52.219-1 by--
0
a. Revising the date of the provision;
0
b. Removing from paragraph (b)(3) introductory text the phrase ``500
employees'' and adding ``500 employees, or 150 employees for
information technology value-added resellers under NAICS code 541519,''
in its place;
0
c. In Alternate II:
0
i. Revising the date of Alternate II; and
0
ii. Removing from paragraph (b)(2) introductory text the phrase ``500
employees'' and adding ``500 employees, or 150 employees for
information technology value-added resellers under NAICS code 541519,''
in its place.
The revisions read as follows:
52.219-1 Small Business Program Representations.
* * * * *
Small Business Program Representations (DATE)
* * * * *
Alternate II (DATE) * * *
* * * * *
0
16. Amend section 52.219-18 by--
0
a. Revising the date of Alternate I; and
0
b. Removing from paragraph (a)(3) of Alternate I the phrase ``Regional
Office(s)'' and adding ``Area Office(s)'' in its place.
The revision reads as follows:
52.219-18 Notification of Competition Limited to Eligible 8(a)
Participants.
* * * * *
Alternate I (DATE) * * *
* * * * *
0
17. Amend section 52.219-28 by--
0
a. Revising the date of the provision; and
[[Page 10331]]
0
b. Removing from paragraph (e) introductory text the phrase ``500
employees'' and adding ``500 employees, or 150 employees for
information technology value-added resellers under NAICS code 541519,''
in its place.
The revision reads as follows:
52.219-28 Post-Award Small Business Program Rerepresentation.
* * * * *
Post-Award Small Business Program Rerepresentation (DATE)
* * * * *
[FR Doc. 2022-03105 Filed 2-23-22; 8:45 am]
BILLING CODE 6820-EP-P
