[Federal Register Volume 72, Number 128 (Thursday, July 5, 2007)]
[Rules and Regulations]
[Pages 36852-36856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-3279]


-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 17, 19, and 52

[FAC 2005-18; FAR Case 2006-032; Item I; Docket 2007-001, Sequence 4]
RIN 9000-AK78


Federal Acquisition Regulation; FAR Case 2006-032, Small Business 
Size Rerepresentation

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

ACTION: Interim rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on an interim 
rule amending the Federal Acquisition Regulation (FAR) to implement the 
Small Business Administration's (SBA) final rule published on November 
15, 2006 (71 FR 66434), entitled ``Small Business Size Regulations; 
Size for Purposes of Government-wide Acquisition Contracts, Multiple 
Award Schedule Contracts and Other Long-Term Contracts; 8(a) Business 
Development/Small Disadvantaged Business; Business Status 
Determinations.'' The purpose of the SBA rule is to improve the 
accuracy of small business size status reporting over the life of 
certain contracts.

[[Page 36853]]


DATES: Effective Date: June 30, 2007. This rule applies to 
solicitations issued and contracts awarded on or after June 30, 2007. 
Applicability to contracts awarded prior to June 30, 2007: Contracting 
officers must modify existing long-term contracts, as defined in the 
interim rule at FAR 19.301-2(a), awarded to small businesses to include 
the clause at 52.219-28, Post-Award Small Business Program 
Rerepresentation. Contracting officers must also modify contracts 
awarded to small business concerns, other than long-term contracts, to 
include the clause at 52.219-28, at the time that an option is 
exercised.
    Comment Date: Interested parties should submit written comments to 
the FAR Secretariat on or before September 4, 2007 to be considered in 
the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-18, FAR case 2006-
032, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Search for any document by first selecting the proper document types 
and selecting ``Federal Acquisition Regulation'' as the agency of 
choice. At the ``Keyword'' prompt, type in the FAR case number (for 
example, FAR Case 2006-001) and click on the ``Submit'' button.
    You may also search for any document by clicking on the ``Advanced 
search/document search'' tab at the top of the screen, selecting from 
the agency field ``Federal Acquisition Regulation'', and typing the FAR 
case number in the keyword field. Select the ``Submit'' button. Please 
include any personal and/or business information inside the document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW., Room 4035, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite FAC 2005-18, FAR 
case 2006-032, in all correspondence related to this case. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal and/or business confidential information 
provided.

FOR FURTHER INFORMATION CONTACT: Ms. Rhonda Cundiff, Procurement 
Analyst, at (202) 501-0044 for clarification of content. For 
information pertaining to status or publication schedules, contact the 
FAR Secretariat at (202) 501-4755. Please cite FAC 2005-18, FAR case 
2006-032.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule implements the SBA final rule published on 
November 15, 2006 (71 FR 66434), entitled ``Small Business Size 
Regulations; Size for Purposes of Government-wide Acquisition 
Contracts, Multiple Award Schedule Contracts and Other Long-Term 
Contracts; 8(a) Business Development/Small Disadvantaged Business; 
Business Status Determinations.'' The purpose of the SBA rule is to 
improve the accuracy of small business size status reporting, at the 
prime contract level, over the life of certain contracts. It is 
intended to address situations where a concern was small at time of 
award but, over the course of the contract, has become other than 
small. Under current regulations, in these situations, funds obligated 
under the contract continue to be reported as awarded to small business 
for the life of the contract, regardless of whether the size status of 
the concern has changed.
    This interim rule requires a concern that represented it was a 
small business prior to award of a contract to represent its size 
status again for that existing contract (rerepresent) upon the 
occurrence of any of the following:
    (1) 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 that clause 
in the contract.
    (2) Within 30 days after a merger or acquisition that does not 
require a novation or within 30 days after modification of the contract 
to include the clause at 52.219-28, if the merger or acquisition 
occurred prior to inclusion of that clause in the contract.
    (3) For long-term contracts--
    (i) Within 60 to 120 days prior to the end of the fifth year of the 
contract; and
    (ii) Within 60 to 120 days prior to the exercise date specified in 
the contract for any option thereafter. If a concern represents that it 
is now other than small, the agency must ensure that updated size 
status is reflected in its reporting system, and, from that point 
forward, may no longer include the value of options exercised or orders 
issued against the contract in its small business prime contracting 
achievements.
    This interim rule also implements the portions of the SBA rule that 
state that a change in size status does not change the terms and 
conditions of the contract, and a contracting officer is not required 
to terminate the contract when, as a result of a protest, the concern 
is found to be other than small.
    Although not addressed in the SBA rule, this interim rule 
strengthens the requirement for a contracting officer to document in 
the contract file the date the contractor verified its representations 
in the Government's Online Representations and Certifications 
Application (ORCA), or include a paper copy of those representations in 
the contract file. The SBA requested this clarification to provide 
greater assurance that the contracting officer is documenting the ORCA 
certifications and representations of small business offerors.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The changes may have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq.
    The purpose of the SBA's final rule, which this FAR interim rule 
implements, is to enable the Government to report more accurate small 
business prime contracting statistics. The rule provides for more 
accurate statistics through rerepresentations on contracts and using 
the size status in effect at the time of the rerepresentation. An 
Initial Regulatory Flexibility Analysis (IRFA) has been prepared. The 
analysis is summarized as follows:
    Improving the accuracy of the statistics may benefit small 
businesses. If agencies can no longer take credit toward their small 
business goals for funds obligated to contracts where, over the 
course of the contract, the contractor has become other than small, 
agencies will need to make up the shortfall in meeting their goals 
by seeking new procurement opportunities with the present universe 
of small businesses.
    In the preamble to its rule, SBA estimated that potentially 
2,300 concerns could be initially impacted by the requirement to 
rerepresent on long-term contracts, and 250 concerns may be impacted 
annually, thereafter. In addition, it is estimated that 300 concerns 
may be affected annually by the requirement to rerepresent size 
status as a result of novations, acquisitions, or mergers.
    This rule will not impose any additional recordkeeping 
requirements on small businesses because they are already required 
to review and update their size status data, at a minimum, on an 
annual basis.
    The FAR Secretariat has submitted a copy of the Initial Regulatory 
Flexibility Analysis to the Chief Counsel for

[[Page 36854]]

Advocacy of the SBA. Interested parties may obtain a copy from the FAR 
Secretariat. The Councils will consider comments from small entities 
concerning the affected FAR Parts 4, 17, 19, and 52 in accordance with 
5 U.S.C. 610. Interested parties must submit such comments separately 
and should cite 5 U.S.C 601, et seq. (FAC 2005-18, FAR case 2006-032), 
in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies because 
the interim rule contains information collection requirements. 
Accordingly, the FAR Secretariat will submit a request for approval of 
a new information collection requirement concerning 9000-XXXX, Small 
Business Size Rerepresentation (FAR Case 2006-032), to the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.
    Public reporting burden for this collection of information is 
estimated to average .5 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The annual reporting burden is estimated as follows:
    Respondents: 10,000
    Responses per respondent: 1
    Total annual responses: 10,000
    Preparation hours per response: .5
    Total response burden hours: 5,000

D. Request for Comments Regarding Paperwork Burden

    Submit comments, including suggestions for reducing this burden, 
not later than September 4, 2007 to: FAR Desk Officer, OMB, Room 10102, 
NEOB, Washington, DC 20503, and a copy to the General Services 
Administration, FAR Secretariat (VIR), 1800 F Street, NW., Room 4035, 
Washington, DC 20405.
    Public comments are particularly invited on: whether this 
collection of information is necessary for the proper performance of 
functions of the FAR, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways in which we can minimize the burden of the 
collection of information on those who are to respond, through the use 
of appropriate technological collection techniques or other forms of 
information technology.
    Requester may obtain a copy of the justification from the General 
Services Administration, FAR Secretariat (VIR), Room 4035, Washington, 
DC 20405, telephone (202) 501-4755. Please cite OMB Control Number 
9000-XXXX in all correspondence.

E. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to publish an interim 
rule without prior opportunity for public comment. This action is 
necessary because this FAR interim rule implements an SBA final rule 
that becomes effective June 30, 2007.
    However, pursuant to Public Law 98-577 and FAR 1.501, the Councils 
will consider public comments received in response to this FAR interim 
rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 4, 17, 19, and 52

    Government procurement.

    Dated: June 29, 2007.
Michael Jackson,
Acting Director, Contract Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 4, 17, 19, and 52 as 
set forth below:
0
1. The authority citation for 48 CFR parts 4, 17, 19, and 52 continues 
to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 4--ADMINISTRATIVE MATTERS

0
2. Amend section 4.602 by adding a new paragraph (f) to read as 
follows:


4.602  Federal Procurement Data System.

* * * * *
    (f) When the contracting office receives written notification that 
a contractor has changed its size status in accordance with the clause 
at 52.219-28, Post-Award Small Business Program Rerepresentation, the 
contracting officer must submit a modification contract action report 
to ensure that the updated size status is entered in FPDS-NG.

0
3. Revise the heading of subpart 4.12 to read as follows:

Subpart 4.12--Representations and Certifications.

0
4. Revise the introductory text of section 4.1200 to read as follows:


4.1200  Scope.

    This subpart prescribes policies and procedures for requiring 
submission and maintenance of representations and certifications via 
the Online Representations and Certifications Application (ORCA) to--
* * * * *

0
5. Amend section 4.1201 by redesignating paragraph (b) as (b)(1) and 
adding a new (b)(2); and revising paragraph (c) to read as follows:


4.1201  Policy.

* * * * *
    (b)(1) * * *
    (2) When the conditions in paragraph (b) of the clause at 52.219-
28, Post-Award Small Business Program Rerepresentation, apply, 
contractors that represented they were small businesses prior to award 
of a contract must update the representations and certifications in 
ORCA as directed by the clause. Contractors that represented they were 
other than small businesses prior to award of a contract may update the 
representations and certifications in ORCA as directed by the clause, 
if their size status has changed since contract award.
    (c) Data in ORCA is archived and is electronically retrievable. 
Therefore, when a prospective contractor has completed representations 
and certifications electronically via ORCA, the contracting officer 
must reference the date of ORCA verification in the contract file, or 
include a paper copy of the electronically-submitted representations 
and certifications in the file. Either of these actions satisfies 
contract file documentation requirements of 4.803(a)(11). However, if 
an offeror identifies changes to ORCA data pursuant to the FAR 
provisions at 52.204-8(c) or 52.212-3(k), the contracting officer must 
include a copy of the changes in the contract file.

PART 17--SPECIAL CONTRACTING METHODS

0
6. Amend section 17.207 by revising paragraph (e) to read as follows:


17.207  Exercise of options.

* * * * *
    (e) The determination of other factors under paragraph (c)(3) of 
this section--
    (1) Should take into account the Government's need for continuity 
of operations and potential costs of disrupting operations; and
    (2) May consider the effect on small business.
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

0
7. Amend section 19.202-5 by adding a new paragraph (c) to read as 
follows:

[[Page 36855]]

19.202-5  Data collection and reporting requirements.

* * * * *
    (c) When the contract includes the clause at 52.219-28, Post Award 
Small Business Program Rerepresentation, and the conditions in 
paragraph (b) of the clause are met--
    (1) Require a contractor that represented itself as a small 
business prior to award of the contract to rerepresent its size status; 
and
    (2) Permit a contractor that represented itself as other than a 
small business prior to award to rerepresent its size status.

0
8. Amend section 19.301 by--
0
a. Redesignating section 19.301 as subsection 19.301-1;
0
b. Adding new section 19.301; and
0
c. Adding new subsections 19.301-2 and 19.301-3.
0
The revised and added text read as follows:


19.301  Representations and rerepresentations.


19.301-1  Representation by the offeror.

* * * * *


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

    (a) Definition. As used in this subsection--
    Long-term contract means a contract of more than five years in 
duration, including options. However, the term does not include 
contracts that exceed five years in duration because the period of 
performance has been extended for a cumulative period not to exceed six 
months under the clause at 52.217-8, Option to Extend Services, or 
other appropriate authority.
    (b) A contractor that represented itself as a small business before 
contract award must rerepresent its size status for the North American 
Industry Classification System (NAICS) code in the contract upon the 
occurrence of any of the following:
    (1) 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.
    (2) Within 30 days after a merger or acquisition 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.
     (3) For long-term contracts--
    (i) Within 60 to 120 days prior to the end of the fifth year of the 
contract; and
    (ii) Within 60 to 120 days prior to the date specified in the 
contract for exercising any option thereafter.
    (c) A contractor must 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.
    (d) If the contractor rerepresents that it is other than small, 
from that point forward, the agency may no longer include the value of 
options exercised or orders issued against the contract in its small 
business prime contracting goal achievements.
    (e) A change in size status does not change the terms and 
conditions of the contract.


19.301-3  Rerepresentation by a contractor that represented itself as 
other than a small business.

    A contractor that represented itself as other than small before 
contract award may, but is not required to, rerepresent its size status 
when--
    (a) The conditions in 19.301-2(b) apply; and
    (b) The contractor qualifies as a small business under the 
applicable size standard in effect at the time of its rerepresentation.

0
9. Amend section 19.302 by revising the section heading, paragraphs 
(c)(1), (f), and (g), and adding new paragraph (k) to read as follows:


19.302  Protesting a small business representation or rerepresentation.

* * * * *
    (c)(1) Any contracting officer who receives a protest, whether 
timely or not, or who, as the contracting officer, wishes to protest 
the small business representation of an offeror, or rerepresentation of 
a contractor, shall promptly forward the protest to the SBA Government 
Contracting Area Office for the geographical area where the principal 
office of the concern in question is located.
* * * * *
    (f) Within 3 business days after receiving a copy of the protest 
and the form, the challenged concern must file with the SBA a completed 
SBA Form 355 and a statement answering the allegations in the protest, 
and furnish evidence to support its position. If the concern does not 
submit the required material within the 3 business days or another 
period of time granted by the SBA, the SBA may assume that the 
disclosure would be contrary to the concern's interests.
    (g)(1) Within 10 business days after receiving a protest, the 
challenged concern's response, and other pertinent information, the SBA 
will determine the size status of the challenged concern and notify the 
contracting officer, the protester, and the challenged concern of its 
decision by certified mail, return receipt requested.
    (2) The SBA Government Contracting Area Director, or designee, will 
determine the small business status of the questioned concern and 
notify the contracting officer and the concern of the determination. 
Award may be made on the basis of that determination. This 
determination is final unless it is appealed in accordance with 
paragraph (i) of this section, and the contracting officer is notified 
of the appeal before award. If an award was made before the time the 
contracting officer received notice of the appeal, the contract shall 
be presumed to be valid.
* * * * *
    (k) When a concern is found to be other than small under a protest 
concerning a size status rerepresentation made in accordance with the 
clause at 52.219-28, Post-Award Small Business Program 
Rerepresentation, a contracting officer may permit contract performance 
to continue, issue orders, or exercise option(s), because the contract 
remains a valid contract.

0
10. Amend section 19.308 by revising the section heading and paragraph 
(a)(2); and adding a new paragraph (d) to read as follows:


19.308  Solicitation provisions and contract clauses.

    (a)(1) * * *
    (2) Use the provision with its Alternate I in solicitations issued 
by DoD, NASA, or the Coast Guard.
* * * * *
    (d) 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.

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


19.804-6  Indefinite delivery contracts.

    (a) Separate offers and acceptances must not be made for individual 
orders under multiple award, Federal Supply Schedule (FSS), multi-
agency contracts or Governmentwide acquisition contracts. SBA's 
acceptance of the original contract is valid for the term of the 
contract.
    (b) The requirements of 19.805-1 of this part do not apply to 
individual orders that exceed the competitive

[[Page 36856]]

threshold as long as the original contract was competed.
    (c) An 8(a) concern may continue to accept new orders under a 
multiple award, Federal Supply Schedule (FSS), multi-agency contract or 
Governmentwide acquisition contract even after a concern's program term 
expires, the concern otherwise exits the 8(a) Program, or the concern 
becomes other than small for the NAICS code assigned under the 
contract.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
12. Amend section 52.212-5 by--
0
a. Revising the date of the clause and paragraph (b)(14);
0
b. Redesignating paragraphs (b)(15) through (36) as paragraphs (b)(16) 
through (37) respectively; and
0
c. Adding a new paragraph (b)(15).
0
The revised and added text read as follows:


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

    CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR 
EXECUTIVE ORDERS--COMMERCIAL ITEMS (JUNE 2007)
* * * * *
    (b) * * *
    ---- (14) 52.219-27, Notice of Total Service-Disabled Veteran-Owned 
Small Business Set-Aside (May 2004)(15 U.S.C. 657 f).
    ---- (15) 52.219-28, Post Award Small Business Program 
Rerepresentation (JUNE 2007) (15 U.S.C. 632(a)(2)).
* * * * *

0
13. Add section 52.219-28 to read as follows:


52.219-28  Post-Award Small Business Program Rerepresentation.

    As prescribed in 19.308(d), insert the following clause:
    POST-AWARD SMALL BUSINESS PROGRAM REREPRESENTATION (JUNE 2007)
    (a) Definitions. As used in this clause--
    Long-term contract means a contract of more than five years in 
duration, including options. However, the term does not include 
contracts that exceed five years in duration because the period of 
performance has been extended for a cumulative period not to exceed 
six months under the clause at 52.217-8, Option to Extend Services, 
or other appropriate authority.
    Small business concern means a concern, including its 
affiliates, that is independently owned and operated, not dominant 
in the field of operation in which it is bidding on Government 
contracts, and qualified as a small business under the criteria in 
13 CFR part 121 and the size standard in paragraph (c) of this 
clause.
    (b) If the Contractor represented that it was a small business 
concern prior to award of this contract, the Contractor shall 
rerepresent its size status according to paragraph (e) of this 
clause or, if applicable, paragraph (g) of this clause, upon the 
occurrence of any of the following:
    (1) Within 30 days after execution of a novation agreement or 
within 30 days after modification of the contract to include this 
clause, if the novation agreement was executed prior to inclusion of 
this clause in the contract.
    (2) Within 30 days after a merger or acquisition that does not 
require a novation or within 30 days after modification of the 
contract to include this clause, if the merger or acquisition 
occurred prior to inclusion of this clause in the contract.
    (3) For long-term contracts--
    (i) Within 60 to 120 days prior to the end of the fifth year of 
the contract; and
    (ii) Within 60 to 120 days prior to the exercise date specified 
in the contract for any option thereafter.
    (c) The Contractor shall rerepresent its size status in 
accordance with the size standard in effect at the time of this 
rerepresentation that corresponds to the North American Industry 
Classification System (NAICS) code assigned to this contract. The 
small business size standard corresponding to this NAICS code can be 
found at http://www.sba.gov/services/contractingopportunities/sizestandardstopics/.
    (d) The small business size standard for a Contractor providing 
a product which it does not manufacture itself, for a contract other 
than a construction or service contract, is 500 employees.
    (e) Except as provided in paragraph (g) of this clause, the 
Contractor shall make the rerepresentation required by paragraph (b) 
of this clause by validating or updating all its representations in 
the Online Representations and Certifications Application and its 
data in the Central Contractor Registration, as necessary, to ensure 
they reflect current status. The Contractor shall notify the 
contracting office by e-mail, or otherwise in writing, that the data 
have been validated or updated, and provide the date of the 
validation or update.
    (f) If the Contractor represented that it was other than a small 
business concern prior to award of this contract, the Contractor 
may, but is not required to, take the actions required by paragraphs 
(e) or (g) of this clause.
    (g) If the Contractor does not have representations and 
certifications in ORCA, or does not have a representation in ORCA 
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:
    The Contractor represents that it [ballot] is, [ballot] is not a 
small business concern under NAICS Code -------------- assigned to 
contract number ------------------.
    [Contractor to sign and date and insert authorized signer's name 
and title].
    (End of clause)
[FR Doc. 07-3279 Filed 7-2-07; 11:18 am]
BILLING CODE 6820-EP-S