[Federal Register Volume 72, Number 139 (Friday, July 20, 2007)]
[Rules and Regulations]
[Pages 39727-39730]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-14035]



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 Rules and Regulations
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  Federal Register / Vol. 72, No. 139 / Friday, July 20, 2007 / Rules 
and Regulations  

[[Page 39727]]



SMALL BUSINESS ADMINISTRATION

2 CFR Part 2700

13 CFR Parts 134 and 145

RIN 3245-AF63


Small Business Administration Implementation of OMB Guidance on 
Nonprocurement Debarment and Suspension

AGENCY: U.S. Small Business Administration.

ACTION: Direct final rule.

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

SUMMARY: The U.S. Small Business Administration (SBA) is moving its 
regulations on nonprocurement debarment and suspension from their 
current location in title 13 of the Code of Federal Regulations (CFR) 
to title 2 of the CFR, and is adopting the format established by the 
Office of Management and Budget (OMB). This rule establishes a new 2 
CFR part 2700 that adopts OMB's final government-wide guidance on 
nonprocurement debarment and suspension and contains supplemental SBA 
nonprocurement debarment and suspension provisions. In addition, this 
rule removes the existing SBA nonprocurement debarment and suspension 
regulations and makes a conforming change and minor procedural 
clarifications. These changes constitute an administrative 
simplification that makes no substantive change in SBA policy or 
procedures for nonprocurement debarment and suspension. SBA is also 
amending a provision in its Rules of Procedure Governing Cases Before 
the Office of Hearings and Appeals (13 CFR 134.102(p)) to update the 
reference to SBA's nonprocurement debarment and suspension regulations.

DATES: Effective Date: This rule is effective September 18, 2007 
without further action.

FOR FURTHER INFORMATION CONTACT: Kevin Harber, Office of General 
Counsel, U.S. Small Business Administration, 409 Third St., SW., Ste. 
5700, Washington, DC 20416, telephone 202-619-1602 and e-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Introduction

    On May 11, 2004, OMB established title 2 of the CFR with two 
subtitles (69 FR 2627). Subtitle A, ``Government-wide Grants and 
Agreements,'' contains OMB policy guidance to Federal agencies on 
grants and agreements. Subtitle B, ``Federal Agency Regulations for 
Grants and Agreements,'' contains Federal agencies' regulations 
implementing the OMB guidance, as it applies to grants and other 
financial assistance agreements and nonprocurement transactions.
    On August 31, 2005, OMB published interim final guidance for 
government-wide nonprocurement debarment and suspension in the Federal 
Register (70 FR 51863). The guidance was located in title 2 of the CFR 
as new subtitle A, chapter 1, part 180. The interim final guidance 
updated previous OMB guidance that was issued pursuant to Executive 
Order 12549, ``Debarment and Suspension'' (February 18, 1986), which 
gave government-wide effect to each agency's nonprocurement debarment 
and suspension actions. Section 6 of the Executive Order authorized OMB 
to issue guidance to Executive agencies on nonprocurement debarment and 
suspension, including provisions prescribing government-wide criteria 
and minimum due process procedures. Section 3 directed Executive 
agencies to issue regulations implementing the Executive Order that are 
consistent with the OMB guidelines. The interim final guidance at 2 CFR 
part 180 conforms the OMB guidance with the Federal agencies' November 
26, 2003, update to the common rule on nonprocurement debarment and 
suspension (see 70 FR 51864). Although substantively the same as the 
common rule, OMB's interim final guidance was published in a form 
suitable for agency adoption, thus eliminating the need for each agency 
to repeat the full text of the OMB government-wide guidance in its 
implementing regulations. This new approach is intended to make it 
easier for recipients of covered transactions or respondents in 
suspension or debarment actions to discern agency-to-agency variations 
from the common rule language; reduce the volume of Federal regulations 
in the CFR; and streamline the process for updating the government-wide 
requirements on nonprocurement debarment and suspension (70 FR 51864). 
On November 15, 2006, OMB published a final rule adopting the interim 
final guidance with changes (71 FR 66431).
    This direct final rule places SBA's nonprocurement debarment and 
suspension regulations in subtitle B of title 2 of the CFR, along with 
other agencies' nonprocurement debarment and suspension rules. This 
action was required by the OMB interim final guidance, which was made 
final on November 15, 2006 (see 2 CFR 180.20, 180.25, 180.30 and 
180.35). The new CFR part 2700 adopts the OMB guidelines with additions 
and clarifications that SBA made to the common rule on nonprocurement 
debarment and suspension in the SBA rule published on November 26, 2003 
(68 FR 66544-70). The substance of SBA's nonprocurement debarment and 
suspension is unchanged. SBA is removing 13 CFR part 145, which was 
last revised as part of the November 2003 common rule.
    SBA is not soliciting public comment on this rule and is instead 
issuing this rule as a direct final rule. Under 5 U.S.C. 553(b)(3)(A) 
agencies are not required to undergo notice and comment procedure for 
``interpretative rules, general statements of policy, or rules of 
agency organization, procedure, or practice.'' Because this rule adopts 
OMB's published guidelines, which followed notice and comment 
procedures, and collocates SBA's specific nonprocurement suspension and 
debarment rules to title 2 of the CFR, we believe that it falls under 
the exception cited above.

Compliance With Executive Orders 13132, 12988 and 12866, the Regulatory 
Flexibility Act (5 U.S.C. 601-602), and the Paperwork Reduction Act (44 
U.S.C. Ch. 35)

    This regulation will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various

[[Page 39728]]

levels of government. Therefore, for the purposes of Executive Order 
13132, SBA determines that this rule has no federalism implications 
warranting preparation of a federalism assessment.
    OMB has determined this rule is not a ``significant regulatory 
action'' under Executive Order 12866.
    This action meets applicable standards set forth in sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.
    SBA has determined that this rule does not impose additional 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act, 44 U.S.C. Chapter 35.
    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires 
administrative agencies to consider the effect of their actions on 
small entities, small non-profit enterprises, and small local 
governments. Pursuant to the RFA, when an agency issues a rulemaking, 
the agency must prepare a regulatory flexibility analysis which 
describes the impact of the rule on small entities. However, section 
605 of the RFA allows an agency to certify a rule, in lieu of preparing 
an analysis, if the rulemaking is not expected to have a significant 
economic impact on a substantial number of small entities. Within the 
meaning of the RFA, SBA certifies that this rule will not have a 
significant economic impact on a substantial number of small entities 
because the rule imposes no direct requirements on small entities.

List of Subjects

2 CFR Part 2700

    Administrative practice and procedure, Debarment and suspension, 
Grant programs, Reporting and recordkeeping requirements.

13 CFR Part 134

    Administrative practice and procedure, Claims, Equal access to 
justice, Lawyers, Organizations and functions (Government agencies).

13 CFR Part 145

    Administrative practice and procedure, Government contracts, Grant 
programs, Loan programs, Reporting and recordkeeping requirements.

0
Accordingly, under the authority of 15 U.S.C. 634, SBA amends the Code 
of Federal Regulations, Title 2, Subtitle B, and Title 13, Chapter 1, 
as follows:

Title 2--Grants and Agreements

0
1. Add Chapter XXVII, consisting of Part 2700 to Subtitle B to read as 
follows:

Chapter XXVII--Small Business Administration

PART 2700--NONPROCUREMENT DEBARMENT AND SUSPENSION

Sec.
2700.10 What does this part do?
2700.20 Does this part apply to me?
2700.30 What policies and procedures must I follow?
Subpart A--General
2700.137 Who in the Small Business Administration may grant an 
exception to let an excluded person participate in a covered 
transaction?
Subpart B--Covered Transactions
2700.220 What contracts and subcontracts, in addition to those 
listed in 2 CFR 180.220, are covered transactions?
Subpart C--Responsibilities of Participants Regarding Transactions
2700.332 What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?
Subpart D--Responsibilities of Federal Agency Officials Regarding 
Transactions
2700.437 What method do I use to communicate to a participant the 
requirements described in the OMB guidance at 2 CFR 180.435?
Subpart E-F--[Reserved]
Subpart G--Suspension
2700.765 How may I appeal my suspension?
Subpart H--Debarment
2700.890 How may I appeal my debarment?
Subpart I--Definitions
2700.930 Debarring official
2700.995 Principal
2700.1010 Suspending official
Subpart J--[Reserved]

    Authority: Sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 U.S.C. 
6101 note); E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O. 12689 (3 
CFR, 1989, 1986 Comp., p. 235); 15 U.S.C. 634(b)(6).


Sec.  2700.10  What does this part do?

    This part adopts the Office of Management and Budget (OMB) guidance 
in subparts A through I of 2 CFR part 180, as supplemented by this 
part, as the SBA policies and procedures for nonprocurement debarment 
and suspension. It thereby gives regulatory effect for SBA to the OMB 
guidance as supplemented by this part. This part satisfies the 
requirements in section 3 of Executive Order 12549, ``Debarment and 
Suspension'' (3 CFR 1986 Comp., p. 189); Executive Order 12689, 
``Debarment and Suspension'' (3 CFR 1989 Comp., p. 235); and section 
2455 of the Federal Acquisition Streamlining Act of 1994, Pub. L. 103-
355 (31 U.S.C. 6101 note).


Sec.  2700.20  Does this part apply to me?

    This part and, through this part, pertinent portions of the OMB 
guidance in subparts A through I of 2 CFR part 180 (see table at 2 CFR 
180.100(b)) apply to you if you are a--
    (a) Participant or principal in a ``covered transaction'' (see 
subpart B of 2 CFR part 180 and the definition of ``nonprocurement 
transaction'' at 2 CFR 180.970);
    (b) Respondent in an SBA suspension or debarment action;
    (c) SBA debarment or suspension official; or
    (d) SBA grants officer, agreements officer, or other official 
authorized to enter into any type of nonprocurement transaction that is 
a covered transaction.


Sec.  2700.30  What policies and procedures must I follow?

    The SBA policies and procedures you must follow are the policies 
and procedures specified in each applicable section of the OMB guidance 
in subparts A through I of 2 CFR part 180, as that section is 
supplemented by the section in this part with the same section number. 
The contracts that are covered transactions, for example, are specified 
by section 220 of the OMB guidance (i.e., 2 CFR 180.220) as 
supplemented by section 220 of this part (i.e., Sec.  2700.220). For 
any section of OMB guidance in Subparts A through I of 2 CFR 180 that 
has no corresponding section in this part, SBA policies and procedures 
are those in the OMB guidance.

Subpart A--General


Sec.  2700.137  Who in the Small Business Administration may grant an 
exception to let an excluded person participate in a covered 
transaction?

    The Director of the Office of Lender Oversight may grant an 
exception permitting an excluded person to participate in a particular 
covered transaction under SBA's financial assistance programs. For all 
other Agency programs, the Director of the Office of Business 
Operations may grant such an exception.

Subpart B--Covered Transactions


Sec.  2700.220  What contracts and subcontracts, in addition to those 
listed in 2 CFR 180.220, are covered transactions?

    In addition to the contracts covered under 2 CFR 180.22(b) of the 
OMB

[[Page 39729]]

guidance, this part applies to any contract, regardless of tier, that 
is awarded by a contractor, subcontractor, supplier, consultant, or its 
agent or representative in any transaction, if the contract is to be 
funded or provided by the SBA under a covered nonprocurement 
transaction and the amount of the contract is expected to equal or 
exceed $25,000. This extends the coverage of the SBA nonprocurement 
suspension and debarment requirements to all lower tiers of 
subcontracts under covered nonprocurement transactions, as permitted 
under the OMB guidance at 2 CFR 180.200(c) (see optional lower tier 
coverage in the figure in the Appendix to 2 CFR part 180)

Subpart C--Responsibilities of Participants Regarding Transactions


Sec.  2700.332  What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?

    You, as a participant, must include a term or condition in lower-
tier transactions requiring lower-tier participants to comply with 
subpart C of the OMB guidance in 2 CFR part 180, as supplemented by 
this part.

Subpart D--Responsibilities of Federal Agency Officials Regarding 
Transactions


Sec.  2700.437  What method do I use to communicate to a participant 
the requirements described in the OMB guidance at 2 CFR 180.435?

    To communicate to a participant the requirements described in 2 CFR 
180.435 of the OMB guidance, you must include a term or condition in 
the transaction that requires the participant's compliance with subpart 
C of 2 CFR part 180, as supplemented by subpart C of this part, and 
requires the participant to include a similar term or condition in 
lower-tier covered transactions.

Subpart E-F--[Reserved]

Subpart G--Suspension


Sec.  2700.765  How may I appeal my suspension?

    (a) If the SBA suspending official issues a decision under Sec.  
180.755 to continue your suspension after you present information in 
opposition to that suspension under Sec.  180.720, you may ask for 
review of the suspending official's decision in two ways:
    (1) You may ask the suspending official to reconsider the decision 
for material errors of fact or law that you believe will change the 
outcome of the matter; or
    (2) You may request that the SBA Office of Hearings and Appeals 
(OHA) review the suspending official's decision to continue your 
suspension within 30 days of your receipt of the suspending official's 
decision under Sec.  180.755 or paragraph (a)(1) of this section. 
However, OHA may reverse the suspending official's decision only where 
OHA finds that the decision is based on a clear error of material fact 
or law, or where OHA finds that the suspending official's decision was 
arbitrary, capricious, or an abuse of discretion. You may appeal the 
suspending official's decision without requesting reconsideration, or 
you may appeal the decision of the suspending official on 
reconsideration. The procedures governing OHA appeals are set forth in 
13 CFR part 134.
    (b) A request for review under this section must be in writing; 
state the specific findings you believe to be in error; and include the 
reasons or legal bases for your position.
    (c) OHA, in its discretion, may stay the suspension pending review 
of the suspending official's decision.
    (d) The SBA suspending official and OHA must notify you of their 
decision under this section, in writing, using the notice procedures 
set forth at Sec. Sec.  180.615 and 180.975.

Subpart H--Debarment


Sec.  2700.890  How may I appeal my debarment?

    (a) If the SBA debarring official issues a decision under Sec.  
180.870 to debar you after you present information in opposition to a 
proposed debarment under Sec.  180.815, you may ask for review of the 
debarring official's decision in two ways:
    (1) You may ask the debarring official to reconsider the decision 
for material errors of fact or law that you believe will change the 
outcome of the matter; or
    (2) You may request that the SBA Office of Hearings and Appeals 
(OHA) review the debarring official's decision to debar you within 30 
days of your receipt of the debarring official's decision under Sec.  
180.870 or paragraph (a)(1) of this section. However, OHA may reverse 
the debarring official's decision only where OHA finds that the 
decision is based on a clear error of material fact or law, or where 
OHA finds that the debarring official's decision was arbitrary, 
capricious, or an abuse of discretion. You may appeal the debarring 
official's decision without requesting reconsideration, or you may 
appeal the decision of the debarring official on reconsideration. The 
procedures governing OHA appeals are set forth in 13 CFR part 134.
    (b) A request for review under this section must be in writing; 
state the specific findings you believe to be in error; and include the 
reasons or legal bases for your position.
    (c) OHA, in its discretion, may stay the debarment pending review 
of the debarring official's decision.
    (d) The SBA debarring official and OHA must notify you of their 
decision under this section, in writing, using the notice procedures 
set forth at Sec. Sec.  180.615 and 180.975.

Subpart I--Definitions


Sec.  2700.930  Debarring official (SBA supplement to government-wide 
definition at 2 CFR 180.930).

    For SBA, the debarring official for financial assistance programs 
is the Director of the Office of Lender Oversight; for all other 
programs, the debarring official is the Director of the Office of 
Business Operations.


Sec.  2700.995  Principal (SBA supplement to government-wide definition 
at 2 CFR 180.995).

    Principal means--
    (a) Other examples of individuals who are principals in SBA covered 
transactions include:
    (1) Principal investigators.
    (2) Securities brokers and dealers under the section 7(a) Loan, 
Certified Development Company (CDC) and Small Business Investment 
Company (SBIC) programs.
    (3) Applicant representatives under the section 7(a) Loan, CDC, 
SBIC, Small Business Development Center (SBDC), and section 7(j) 
programs.
    (4) Providers of professional services under the section 7(a) Loan, 
CDC, SBIC, SBDC, and section 7(j) programs.
    (5) Individuals that certify, authenticate or authorize billings.
    (b) [Reserved]


Sec.  2700.1010  Suspending official (SBA supplement to government-wide 
definition at 2 CFR 180.1010).

    For SBA, the suspending official for financial assistance programs 
is the Director of the Office of Lender Oversight; for all other 
programs, the suspending official is the Director of the Office of 
Business Operations.

[[Page 39730]]

Subpart J--[Reserved]

Title XIII--Business Credit and Assistance; Chapter I--Small Business 
Administration

PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF 
HEARINGS AND APPEALS

0
2. The authority citation for part 134 continues to read as follows:

    Authority: 5 U.S.C. 504; 15 U.S.C. 632, 634(b)(6), 637(a), 
648(l), 656(i), and 687(c); E.O. 12549, 51 FR 6370, 3 CFR, 1986 
Comp., p. 189.


Sec.  134.102  [Amended]

0
3. Section 134.102(p) of subpart B is amended by removing ``part 145 of 
this chapter'' and adding ``2 CFR parts 180 and 2700'' in its place.

PART 145--[REMOVED]

0
4. Under the authority of 15 U.S.C. 634, 13 CFR part 145 is removed.

    Dated: July 12, 2007.
Steven C. Preston,
Administrator.
[FR Doc. E7-14035 Filed 7-19-07; 8:45 am]
BILLING CODE 8025-01-P