[Federal Register Volume 76, Number 195 (Friday, October 7, 2011)]
[Proposed Rules]
[Pages 62313-62321]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-25656]


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 SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121, 124, 125, 126, 127

RIN 3245-AG23


Small Business Size and Status Integrity

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The U.S. Small Business Administration (SBA or Agency) is 
proposing to amend its regulations to implement provisions of the Small 
Business Jobs Act of 2010 (Jobs Act) pertaining to small business size 
and status integrity. SBA is proposing to amend its program regulations 
to implement statutory provisions establishing that there is a 
presumption of loss equal to the value of the contract or other 
instrument when a concern willfully seeks and receives an award by 
misrepresentation. SBA is proposing to amend its program regulations to 
implement statutory provisions that provide that the submission of an 
offer or application for an award intended for small business concerns 
will be deemed a size or status certification or representation in 
certain circumstances. SBA is proposing to amend its program 
regulations to implement statutory provisions that provide that an 
authorized official must sign in connection with a size or status 
certification or representation for a

[[Page 62314]]

contract or other instrument. SBA is proposing to amend its regulations 
to implement statutory provisions that provide that concerns that fail 
to update their size or status in the Online Representations and 
Certifications Application (ORCA) database (or any successor thereto) 
at least annually shall no longer be identified in the database as 
small or some other socioeconomic status, until the representation is 
updated. Finally, SBA is proposing to amend its regulations to clarify 
when size is determined for purposes of entry into the 8(a) Business 
Development and HUBZone programs.

DATES: Comments must be received on or before November 7, 2011.

ADDRESSES: You may submit comments, identified by RIN: 3245-AG23, by 
any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail, for paper, disk, or CD/ROM submissions: Dean Koppel, 
U.S. Small Business Administration, Office of Government Contracting, 
409 Third Street, SW., 8th Floor, Washington, DC 20416.
     Hand Delivery/Courier: Dean Koppel, U.S. Small Business 
Administration, Office of Government Contracting, 409 Third Street, 
SW., 8th Floor Washington, DC 20416.
    SBA will post all comments on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.Regulations.gov, please submit the 
information to Dean Koppel, U.S. Small Business Administration, Office 
of Government Contracting, 409 Third Street, SW., 8th Floor, 
Washington, DC 20416, or send an e-mail to [email protected]. 
Highlight the information that you consider to be CBI and explain why 
you believe SBA should hold this information as confidential. SBA will 
review the information and make the final determination on whether it 
will publish the information or not.

FOR FURTHER INFORMATION CONTACT: Dean Koppel, Office of Government 
Contracting, 409 Third Street SW., Washington, DC 20416; (202) 205-
9751; [email protected].

SUPPLEMENTARY INFORMATION: On September 27, 2010, Congress amended the 
Small Business Act to provide that if a concern willfully seeks and 
receives an award by misrepresenting its small business size or other 
socioeconomic status, there is a presumption of loss to the United 
States equal to the value of the contract, subcontract, cooperative 
agreement, cooperative research and development agreement or grant. The 
Senate Report indicates that this presumption is ``irrefutable.'' 
Senate Rep. No. 111-343, p. 8. The amendments also provide that certain 
actions, such as submitting an offer in response to a solicitation set 
aside for small business concerns, will be deemed a representation of 
small business size or status. The amendments require the signature of 
an authorized official of a concern making a small business size or 
status representation in connection with certain actions, such as 
submitting an offer. The amendments further provide that concerns must 
update their size and status certifications in ORCA at least annually, 
or the status will be lost until such time as the update is made. 
Finally, the amendments further provide that SBA must promulgate 
regulations to protect individuals and concerns from liability in cases 
of unintentional errors, technical malfunctions and other similar 
situations.
    In accordance with 15 U.S.C. 632(w), SBA is proposing to amend its 
Size (121.108, 121.411), 8(a) (124.521), Small Disadvantaged Business 
(SDB) (124.1015), Service-Disabled Veteran-Owned (SDVO) (125.29), 
HUBZone (126.900) and Women-Owned Small Business (WOSB) (127.700) 
regulations to notify firms participating in those programs about the 
statutory presumption of loss provisions; the statutory deemed 
certification provisions; the statutory signature requirement in 
connection with offers; and the statutory limitation of liability 
provisions. In addition, SBA is proposing to amend its Size, SDB, SDVO, 
HUBZone and WOSB regulations to notify firms participating in these 
programs of the additional penalties for misrepresentations set forth 
in 15 U.S.C. Sec.  645(d). SBA is not proposing to amend its 8(a) 
regulations to add this notice because 8(a) Participants are not 
mentioned in 15 U.S.C. 645(d).
    In accordance with 15 U.S.C. 632(x), SBA is also proposing to amend 
its regulations to add provisions (121.109, 124.1016, 125.30, 127.701) 
requiring a firm to update its size, small disadvantaged business, 
service-disabled veteran-owned or women-owned small business status 
certification in federal databases at least annually, and to require 
that a firm that fails to certify its size or status within one year of 
a prior certification will no longer be listed as a firm of that size 
or status, until the firm recertifies its status in connection with the 
specific relevant size standard or eligibility requirements. SBA is not 
proposing to add such a requirement for purposes of the 8(a) BD or 
HUBZone programs, because the Small Business Administration is 
responsible for providing these certification designations in federal 
procurement databases.
    SBA's regulations currently provide that a concern applying for 
certification into the 8(a) Business Development or HUBZone programs 
must be small for its primary industry at the time of application and 
``the date of certification by SBA.'' 13 CFR 121.404(b). If the SBA 
8(a) or HUBZone program office believes that an applicant is other than 
small, the SBA program office requests a formal size determination from 
the relevant SBA Office Government Contracting Area Office. However, 
SBA will not certify a firm into these programs if it believes the firm 
is other than small. Consequently, an issue in administrative 
litigation has arisen concerning what date to use to determine the 
firm's size as of the ``date of certification'' into the program. 
Obviously, SBA does not want to certify a firm into one of the 8(a) or 
HUBZone programs in the firm is other than small for the work for which 
it is primarily engaged. Consequently, we are proposing to amend the 
size regulations to provide that for purposes of entry into these 
programs, a firm must be small at the date of application and the date 
the program office requests a formal size determination in connection 
with a firm that is otherwise eligible for program certification.
    SBA is also proposing to update its size protest regulations to add 
additional methods for serving formal size determinations. The current 
regulation limits the notification method to certified mail, return 
receipt requested, or overnight delivery. In addition, SBA is proposing 
to remove the current requirement that SBA provide the formal size 
determination to all of the protested concern's affiliates, or alleged 
affiliates. A concern can have hundreds of affiliates or alleged 
affiliates, and it is impractical and costly to provide a decision to 
all of these entities.

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

Executive Orders 12866

    The Office of Management and Budget (OMB) has determined that this 
rule is a significant regulatory action for purposes of Executive Order 
12866. Accordingly, the next section contains SBA's Regulatory Impact 
Analysis. This is not a major rule, however, under the

[[Page 62315]]

Congressional Review Act, 5 U.S.C. 80, et seq.

Regulatory Impact Analysis

    1. Is there a need for the regulatory action? The proposed 
regulations would implement Sections 1341 and 1342 of the Small 
Business Jobs Act of 2010, Public Law 111-240, 124 Stat. 2504, 
September 27, 2010 (Jobs Act) which are codified at 15 U.S.C. 632(w), 
(x). Sections 1341 and 1342 of the Jobs Act require the Administrator 
to promulgate regulations implementing some of the provisions within 
one year of enactment.
    2. What are the potential benefits and costs of this regulatory 
action? It is the declared statutory policy of the United States that 
small business concerns receive their fair proportion of government 
contracts, to spur creativity and innovation, increase employment and 
strengthen the industrial base. Several recent Government 
Accountability Office reports indicate that ineligible concerns may be 
receiving benefits to which they are not entitled. This in turn harms 
legitimate small business concerns that not only do not receive the 
contracts, but may be deprived of future contracting opportunities 
because of the attention garnered by these bad actors. The presumption 
of loss, deemed certification and signature requirement will make it 
easier to prosecute, seek damages or suspend or debar concerns and 
individuals that willfully misrepresent their size and socioeconomic 
status in order to gain a contract, subcontract, grant or cooperative 
agreement. The rule proposes to force concerns to update their size or 
status in federal procurement databases at least annually, or else the 
firms will lose their status in those databases. Standard contracting 
and grant forms will have to be amended to allow an authorized official 
to sign on the same page as the size or status that the firm is 
claiming. The Online Certification and Representation (ORCA) database 
will have to be programmed to automatically change the size or 
socioeconomic status of firms that fail to update their size or 
socioeconomic status at least annually. SBA believes that the potential 
costs associated with these changes, which are required by statute, are 
relatively minor and are significantly outweighed by the benefits to 
the integrity of small business procurement, grant and research 
programs and the intended beneficiaries.
    3. What are the alternatives to this final rule? The proposed 
regulations are required to implement statutory provisions. The 
requirements are clear, and the Jobs Act requires promulgation of 
regulations implementing certain portions of the Jobs Act within one 
year.

Executive Order 13563

    The proposed regulations implement important statutory provisions 
intended to prevent and deter fraud and misrepresentation in small 
business government contracting and other programs. SBA proposes to 
amend all applicable parts of its regulations to put participants in 
those programs on notice of the penalties associated with 
misrepresentation, and to the extent practicable, utilize identical 
language in each Part. SBA is also proposing to include in each part 
other relevant applicable statutory provisions concerning the penalties 
for misrepresentation. The costs associated with these proposed rules, 
requiring a signature in connection with a size or status 
representation and requiring concerns to update online certifications 
annually, are minimal and required by statute. As part of its 
implementation of this executive order and consistent with its 
commitment to public participation in the rulemaking process, SBA held 
public meetings in 13 locations around the country to discuss 
implementation of the Jobs Act, and received public input from 
thousands of small business owners, contracting officials and large 
business representatives.

Executive Order 12988

    For purposes of Executive Order 12988, SBA has drafted this 
proposed rule, to the extent practicable, in accordance with the 
standards set forth in section 3(a) and 3(b)(2) of that Order, to 
minimize litigation, eliminate ambiguity, and reduce burden. This rule 
has no preemptive or retroactive effect.

Executive Order 13132

    This rule does not have federalism implications as defined in 
Executive Order 13132. It 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 layers of government, as specified in the order. As such it 
does not warrant the preparation of a Federalism Assessment.

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

    For the purpose of the Paperwork Reduction Act, 44 U.S.C. chapter 
35, SBA has determined that this rule, if adopted in final form, would 
not impose new reporting requirements and would not require new 
recordkeeping requirements. In accordance with Federal Acquisition 
Regulation (FAR) Sec. Sec.  4.1202, 52.204-8, 52.219-1 and 13 CFR 
121.404(a), 121.411, concerns must submit paper or electronic 
representations or certifications in connection with prime contracts 
and subcontracts. The Jobs Act requires that each offeror or applicant 
for a Federal contract, subcontract, or grant shall contain a 
certification concerning the small business size and status of a 
business concern seeking the Federal contract, subcontract or grant. 
The Jobs Act mandates that an authorized official must sign the 
certification on the same page containing the size and status claimed 
by the concern. Offerors are already required to sign their offers, 
bids or quotes (Standard Forms 18, 30, 33, 1449), so this provision 
does not create new reporting or recordkeeping requirements.

Regulatory Flexibility Act

    SBA has determined that this proposed rule, if adopted in final 
form, may have a significant economic impact on a substantial number of 
small entities within the meaning of the Regulatory Flexibility Act 
(RFA), 5 U.S.C. 601-612. Therefore, SBA has prepared an Initial 
Regulatory Flexibility Act (IRFA) analysis addressing the proposed 
regulation.

IRFA

    When preparing a Regulatory Flexibility Analysis, an agency shall 
address all of the following: a description of why the action by the 
agency is being considered; the objectives and legal basis of the rule; 
the estimated number of small entities to which the rule may apply; a 
description of the projected reporting, recordkeeping and other 
compliance requirements; identification of all Federal rules which may 
duplicate, overlap or conflict with the proposed rule; and a 
description of significant alternatives which minimize any significant 
economic impact on small entities. This IRFA considers these points and 
the impact the proposed regulation concerning small business size and 
status integrity may have on small entities.
(a) Need for, Objectives, and Legal Basis of the Rule
    The proposed regulatory amendments implement Sections 1341 and 1342 
of the Small Business Jobs Act of 2010, Public Law 111-240, 124 Stat. 
2504, September 27, 2010 (Jobs Act); 15 U.S.C. 632(w), (x). The purpose 
of the statute and implementing regulations is to prevent or deter 
firms from

[[Page 62316]]

misrepresenting their size or socioeconomic status.
(b) Estimate of the Number of Small Entities to Which the Rule May 
Apply
    The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of entities that may be affected by 
the proposed rules, if adopted. The RFA defines ``small entity'' to 
include ``small businesses,'' ``small organizations,'' and ``small 
governmental jurisdictions.'' SBA's programs do not apply to ``small 
organizations'' or ``small governmental jurisdictions'' because they 
are non-profit or governmental entities and do not generally qualify as 
``business concerns'' within the meaning of SBA's regulations. SBA's 
programs generally apply only to for-profit business concerns. 
Therefore, the proposed regulation will not impact small organizations 
or small governmental jurisdictions.
    In fiscal year 2010, there were approximately 3.35 million small 
business contract actions. The proposed regulations concerning 
presumption of loss will only impact small business concerns that 
misrepresent their size or status in connection with a contract, 
subcontract, cooperative agreement, cooperative research and 
development agreement or grant in such a way that criminal prosecution 
or other action is taken by the Government. In fiscal year 2010, SBA 
found approximately 200 firms to be ineligible for a contract (14 
HUBZone, 33 Service-Disabled Veteran-Owned, 151 size). Not all of these 
firms would be criminally prosecuted or have others actions taken 
against them. Thus, the proposed regulation concerning presumption of 
loss will impact very few concerns, and some of these concerns are not 
actually small.
    There are approximately 348,000 concerns listed as small business 
concerns in the Dynamic Small Business Search (DSBS) database. The 
proposed regulations concerning deemed certifications and the 
requirement for a signature would apply to all of these concerns, to 
the extent the concerns submit an offer for a prime contract that is 
set aside for small business concerns. In addition, there are small 
business concerns that are not registered in the DSBS database that 
submit offers or responses for grants, subcontracts, and other 
agreements. The annual certification requirement would apply to all of 
the 348,000 firms registered in the DSBS database.
(c) Projected Reporting, Recordkeeping and Other Compliance 
Requirements
    This proposed rule would not impose a new information collection, 
recordkeeping or compliance requirement on small businesses. A firm's 
size or socioeconomic status is generally based on records that it 
already possesses, such as payroll records and annual tax returns. 
Firms currently must represent their size or status in connection with 
contracts and subcontracts, either electronically or in paper form. FAR 
Sec. Sec.  4.1202, 52.204-8, 52.219-1 and 13 CFR 121.404(a), 121.411. 
The proposed rule requires an authorized official to sign on the page 
containing a concern's size or status representation. Offerors are 
generally required to sign their offers (e.g., Standard Forms 26, 33, 
1447, 1449), so the burden on small business concerns to also sign 
their size or status representation or certification will be minimal.
(d) Federal Rules Which May Duplicate, Overlap or Conflict With the 
Proposed Rule
    Although firms registered in ORCA are supposed to update their 
certifications and representations on an annual basis (FAR Sec.  
4.1201(b)(1)), Section 1342 of the Jobs Act requires that firms that 
fail to meet the annual certification or representation requirement 
shall lose their status as small or some other socioeconomic category 
in the database until such time as the firm updates its size or 
socioeconomic status. The requirement to have an authorized official 
sign in connection with the firm's size or status will be implemented 
in the Federal Acquisition Regulation and will have to be harmonized 
with current ORCA requirements as well as electronic commerce and 
electronic signature rules. However, firms currently must sign offers 
in many cases (e.g., Standard Forms 26, 33 1447, and 1449).
(e) Significant Alternatives to the Rule Which Could Minimize Impact on 
Small Entities
    The proposed regulations implement Sections 1341 and 1342 of the 
Jobs Act. The proposed regulations are directed at small business 
concerns seeking government contracts, subcontracts, grants, and 
cooperative agreements. The proposed rules are intended to prevent or 
deter firms from misrepresenting their size or socioeconomic status. 
The impact on firms that accurately represent their size or status will 
be minimal. An authorized official will have to sign an offer where the 
firm represents its size and status, but authorized officials already 
have to sign offers. Firms will have to update their size and 
socioeconomic status in ORCA at least annually, but that is already 
required. FAR Sec.  4.1201(b)(1). The proposed rule gives firms 
incentive to update their size or status in ORCA, and ensures that 
firms that do not update their size or status will no longer be listed 
as having small or socioeconomic status, unless or until the firms 
update their status.

List of Subjects

13 CFR Part 121

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, and Small Businesses.

13 CFR Part 124

    Administrative practice and procedure, Minority businesses, 
Reporting and recordkeeping requirements, and Technical assistance.

13 CFR Part 125

    Government contracts, Reporting and recordkeeping requirements, 
Small businesses, and Technical assistance.

13 CFR Part 126

    Administrative practice and procedure, Penalties, Reporting and 
recordkeeping requirements and Small businesses.

13 CFR Part 127

    Government procurement, Reporting and recordkeeping requirements, 
and Small businesses.

    For the reasons stated in the preamble, SBA proposes to amend parts 
121, 124, 125, 126 and 127 of title 13 of the Code of Federal 
Regulations as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

    1. The authority citation for part 121 is revised to read as 
follows:

     Authority:  15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644 and 
662(5); and Pub. L. 105-135, sec. 401 et. seq., 111 Stat. 2592.

    2. Amend Sec.  121.108 by revising section heading and adding 
paragraphs (a) through (e) to read as follows:


Sec.  121.108  What are the requirements for representing small 
business size status, and what are the penalties for misrepresentation?

    (a) Presumption of Loss Based on the Total Amount Expended. In 
every contract, subcontract, cooperative agreement, cooperative 
research and development agreement, or grant which is set aside, 
reserved, or otherwise

[[Page 62317]]

classified as intended for award to small business concerns, there 
shall be an irrefutable presumption of loss to the United States based 
on the total amount expended on the contract, subcontract, cooperative 
agreement, cooperative research and development agreement, or grant 
whenever it is established that a business concern other than a small 
business concern willfully sought and received the award by 
misrepresentation.
    (b) Deemed Certifications. The following actions shall be deemed 
affirmative, willful and intentional certifications of small business 
size and status:
    (1) Submission of a bid or proposal for a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement reserved, set aside, or otherwise classified as 
intended for award to small business concerns.
    (2) Submission of a bid proposal for a Federal grant, contract, 
subcontract, cooperative agreement or cooperative research and 
development agreement which in any way encourages a Federal agency to 
classify the bid or proposal, if awarded, as an award to a small 
business concern.
    (3) Registration on any Federal electronic database for the purpose 
of being considered for award of a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement, as a small business concern.
    (c) Signature Requirement. Each solicitation, bid, or application 
for a Federal contract, subcontract, or grant shall contain a 
certification concerning the small business size and status of a 
business concern seeking the Federal contract, subcontract or grant. An 
authorized official must sign the certification on the same page 
containing the size status claimed by the concern.
    (d) Limitation of Liability. Paragraphs (a)-(c) shall not apply in 
the case of unintentional errors or technical malfunctions that 
demonstrate that a misrepresentation of size was not affirmative, 
intentional or willful. Consideration shall be given to the firm's 
internal management procedures governing size representation or 
certification, the clarity or ambiguity of the representation or 
certification requirement, and the efforts made to correct an incorrect 
or invalid representation or certification in a timely manner. In no 
case shall an individual or firm be liable for erroneous 
representations or certifications made by Government personnel.
    (e) Additional Penalties for Misrepresentation
    (1) Suspension or debarment. The SBA debarring official or the 
agency debarring official may suspend or debar a person or concern for 
misrepresentation pursuant to the procedures set forth in 48 CFR 
subpart 9.4.
    (2) Civil Penalties. Persons or concerns are subject to severe 
penalties under the False Claims Act, 31 U.S.C. 3729-3733, and under 
the Program Fraud Civil Remedies Act, 331 U.S.C. 3801-3812, and any 
other applicable laws.
    (3) Persons or concerns are subject to severe criminal penalties 
for knowingly misrepresenting the small business size status of a 
concern in connection with procurement programs pursuant to section 
16(d) of the Small Business Act, 15 U.S.C. 645(d), as amended; 18 
U.S.C. 1001; and 31 U.S.C. 3729-3733. Persons or concern are subject to 
criminal penalties for knowingly making false statements or 
misrepresentations to SBA for the purpose of influencing any actions of 
SBA pursuant to section 16(a) of the Small Business Act, 15 U.S.C. 
645(a), as amended, including failure to correct ``continuing 
representations'' that are no longer true.
    3. Add new Sec.  121.109 to read as follows:


Sec.  121.109  What Must a Concern do in order to be Identified as a 
Small Business Concern in any Federal procurement databases?

    (a) In order to be identified as a small business concern in the 
Online Representations and Certifications Application (ORCA) database 
(or any successor thereto), a concern must certify its size in 
connection with specific size standards at least annually.
    (b) If a firm identified as a small business concern in ORCA fails 
to certify its size within one year of a size certification, the firm 
will not be listed as a small business concern in ORCA, unless and 
until the firm recertifies its size.
    4. Amend Sec.  121.404(b) by removing ``date of certification by 
SBA'' and adding in its place ``date the SBA program office requests a 
formal size determination in connection with a concern that is 
otherwise eligible for program certification.''
    5. Amend Sec.  121.411 by adding new paragraphs (d), through (i) to 
read as follows:


Sec.  121.411  What are the size procedures for SBA's section 8(d) 
Subcontracting Program?

* * * * *
    (d) Presumption of Loss Based on the Total Amount Expended. In 
every contract, subcontract, cooperative agreement, cooperative 
research and development agreement, or grant which is set aside, 
reserved, or otherwise classified as intended for award to small 
business concerns, there shall be an irrefutable presumption of loss to 
the United States based on the total amount expended on the contract, 
subcontract, cooperative agreement, cooperative research and 
development agreement, or grant whenever it is established that a 
business concern other than a small business concern willfully sought 
and received the award by misrepresentation.
    (e) Deemed Certifications. The following actions shall be deemed 
affirmative, willful and intentional certifications of small business 
size and status:
    (1) Submission of a bid or proposal for a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement reserved, set aside, or otherwise classified as 
intended for award to small business concerns.
    (2) Submission of a bid or proposal for a Federal grant, contract, 
subcontract, cooperative agreement or cooperative research and 
development agreement which in any way encourages a Federal agency to 
classify the bid or proposal, if awarded, as an award to a small 
business concern.
    (3) Registration on any Federal electronic database for the purpose 
of being considered for award of a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement, as a small business concern.
    (f) Signature Requirement. Each solicitation, bid, or application 
for a Federal contract, subcontract, or grant shall contain a 
certification concerning the small business size and status of a 
business concern seeking the Federal contract, subcontract or grant. An 
authorized official must sign the certification on the same page 
containing the size status claimed by the concern.
    (g) Limitation of Liability. Paragraphs (d)-(f) shall not apply in 
the case of unintentional errors or technical malfunctions that 
demonstrate that a misrepresentation of size was not affirmative, 
intentional or willful. Consideration shall be given to the firm's 
internal management procedures governing size representation or 
certification, the clarity or ambiguity of the representation or 
certification requirement, and the efforts made to correct an incorrect 
or invalid

[[Page 62318]]

representation or certification in a timely manner. In no case shall an 
individual or firm be liable for erroneous representations or 
certifications made by Government personnel.
    (h) Additional Penalties for Misrepresentation.
    (1) Suspension or debarment. The SBA debarring official or the 
agency debarring official may suspend or debar a person or concern for 
misrepresentation pursuant to the procedures set forth in 48 CFR 
subpart 9.4.
    (2) Civil Penalties. Persons or concerns are subject to severe 
penalties under the False Claims Act, 31 U.S.C. 3729-3733, and under 
the Program Fraud Civil Remedies Act, 331 U.S.C. 3801-3812, and any 
other applicable laws.
    (3) Persons or concerns are subject to severe criminal penalties 
for knowingly misrepresenting the small business size status of a 
concern in connection with procurement programs pursuant to section 
16(d) of the Small Business Act, 15 U.S.C. 645(d), as amended; 18 
U.S.C. 1001; and 31 U.S.C. 3729-3733. Persons or concern are subject to 
criminal penalties for knowingly making false statements or 
misrepresentations to SBA for the purpose of influencing any actions of 
SBA pursuant to section 16(a) of the Small Business Act, 15 U.S.C. 
645(a), as amended, including failure to correct ``continuing 
representations'' that are no longer true.
    6. Amend Sec.  121.1009 by revising paragraph (f) to read as 
follows:


Sec.  121.1009  What are the procedures for making size determinations?

* * * * *
    (f) Notification of determination. SBA will promptly notify the 
contracting officer, the protester, and the protested concern. SBA will 
send the notification by verifiable means, which may include facsimile, 
electronic mail, or overnight delivery service.
* * * * *

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

    7. The authority citation for part 124 is revised to read as 
follows:

    Authority:  15 U.S.C. 632, 15 U.S.C. 634(b)(6), 636(j), 637(a), 
637(d); and Pub. L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 100-
656, Pub. L. 101-37, Pub. L. 101-574, and 42 U.S.C. 9815.

    8. Add new Sec.  124.521 to read as follows:


Sec.  124.521  What are the requirements for representing 8(a) status, 
and what are the penalties for misrepresentation?

    (a) Presumption of Loss Based on the Total Amount Expended. In 
every contract, subcontract, cooperative agreement, cooperative 
research and development agreement, or grant which is set aside, 
reserved, or otherwise classified as intended for award to 8(a) 
Participants, there shall be an irrefutable presumption of loss to the 
United States based on the total amount expended on the contract, 
subcontract, cooperative agreement, cooperative research and 
development agreement, or grant whenever it is established that a 
business concern other than an 8(a) Participant willfully sought and 
received the award by misrepresentation.
    (b) Deemed Certifications. The following actions shall be deemed 
affirmative, willful and intentional certifications of 8(a) status:
    (1) Submission of a bid or proposal for a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement reserved, set aside, or otherwise classified as 
intended for award to 8(a) Participants.
    (2) Submission of a bid proposal for a Federal grant, contract, 
subcontract, cooperative agreement or cooperative research and 
development agreement which in any way encourages a Federal agency to 
classify the bid or proposal, if awarded, as an award to an 8(a) 
Participant.
    (3) Registration on any Federal electronic database for the purpose 
of being considered for award of a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement, as an 8(a) Participant.
    (c) Signature Requirement. Each solicitation, bid, or application 
for a Federal contract, subcontract, or grant shall contain a 
certification concerning the 8(a) status of a business concern seeking 
the Federal contract, subcontract or grant. An authorized official must 
sign the certification on the same page containing the 8(a) status 
claimed by the concern.
    (d) Limitation of Liability. Paragraphs (a)-(c) shall not apply in 
the case of unintentional errors or technical malfunctions that 
demonstrate that a misrepresentation of 8(a) status was not 
affirmative, intentional or willful. Consideration shall be given to 
the firm's internal management procedures governing 8(a) representation 
or certification, the clarity or ambiguity of the representation or 
certification requirement, and the efforts made to correct an incorrect 
or invalid representation or certification in a timely manner. In no 
case shall an individual or firm be liable for erroneous 
representations or certifications made by Government personnel.
    9. Add new Sec.  124.1015 to read as follows:


Sec.  124.1015  What are the requirements for representing small 
disadvantaged business status, and what are the penalties for 
misrepresentation?

    (a) Presumption of Loss Based on the Total Amount Expended. In 
every contract, subcontract, cooperative agreement, cooperative 
research and development agreement, or grant which is set aside, 
reserved, or otherwise classified as intended for award to small 
disadvantaged business concerns, there shall be an irrefutable 
presumption of loss to the United States based on the total amount 
expended on the contract, subcontract, cooperative agreement, 
cooperative research and development agreement, or grant whenever it is 
established that a business concern other than a small disadvantaged 
business concern willfully sought and received the award by 
misrepresentation.
    (b) Deemed Certifications. The following actions shall be deemed 
affirmative, willful and intentional certifications of small 
disadvantaged business status:
    (1) Submission of a bid or proposal for a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement reserved, set aside, or otherwise classified as 
intended for award to small disadvantaged business concerns.
    (2) Submission of a bid proposal for a Federal grant, contract, 
subcontract, cooperative agreement or cooperative research and 
development agreement which in any way encourages a Federal agency to 
classify the bid or proposal, if awarded, as an award to a small 
disadvantaged business concern.
    (3) Registration on any Federal electronic database for the purpose 
of being considered for award of a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement, as a small disadvantaged business concern.
    (c) Signature Requirement. Each solicitation, bid, or application 
for a Federal contract, subcontract, or grant shall contain a 
certification concerning the small disadvantaged business status of a 
business concern seeking the Federal contract, subcontract or grant. An 
authorized official must sign the certification on the same page

[[Page 62319]]

containing the small disadvantaged status claimed by the concern.
    (d) Limitation of Liability. Paragraphs (a)-(c) shall not apply in 
the case of unintentional errors or technical malfunctions that 
demonstrate that a misrepresentation of size was not affirmative, 
intentional or willful. Consideration shall be given to the firm's 
internal management procedures governing SDB representation or 
certification, the clarity or ambiguity of the representation or 
certification requirement, and the efforts made to correct an incorrect 
or invalid representation or certification in a timely manner. In no 
case shall an individual or firm be liable for erroneous 
representations or certifications made by Government personnel.
    (e) Additional Penalties for Misrepresentation.
    (1) Suspension or debarment. The SBA debarring official or the 
agency debarring official may suspend or debar a person or concern for 
misrepresentation pursuant to the procedures set forth in 48 CFR 
subpart 9.4.
    (2) Civil Penalties. Persons or concerns are subject to severe 
penalties under the False Claims Act, 31 U.S.C. 3729-3733, and under 
the Program Fraud Civil Remedies Act, 331 U.S.C. 3801-3812, and any 
other applicable laws.
    (3) Persons or concerns are subject to severe criminal penalties 
for knowingly misrepresenting the small disadvantaged business status 
of a concern in connection with procurement programs pursuant to 
section 16(d) of the Small Business Act, 15 U.S.C. 645(d), as amended; 
18 U.S.C. 1001; and 31 U.S.C. 3729-3733. Persons or concerns are 
subject to criminal penalties for knowingly making false statements or 
misrepresentations to SBA for the purpose of influencing any actions of 
SBA pursuant to section 16(a) of the Small Business Act, 15 U.S.C. 
645(a), as amended, including failure to correct ``continuing 
representations'' that are no longer true.
    10. Add new Sec.  124.1016 to read as follows:


Sec.  124.1016  What must a concern do in order to be Identified as a 
Small Disadvantaged Business Concern in any Federal procurement 
databases?

    (a) In order to be identified as a small disadvantaged business 
concern in the Online Representations and Certifications Application 
(ORCA) database, (or any successor thereto) a concern must certify its 
small disadvantaged business status in connection with specific 
eligibility requirements at least annually.
    (b) If a firm identified as a small disadvantaged business concern 
in ORCA fails to certify its status within one year of a status 
certification, the firm will not be listed as a small disadvantaged 
business concern in ORCA, unless and until the firm recertifies its 
small disadvantaged business status.

PART 125--GOVERNMENT CONTRACTING PROGRAMS

    11. The authority citation for part 125 is revised to read as 
follows:

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

    12. Amend Sec.  125.29 by
    a. Revising the section heading;
    b. Revising paragraphs (a) through (c); and
    c. Adding new paragraphs (d) through (e) to read as follows:


Sec.  125.29  What are the requirements for representing service-
disabled veteran-owned small business status, and what are the 
penalties for misrepresentation?

    (a) Presumption of Loss Based on the Total Amount Expended. In 
every contract, subcontract, cooperative agreement, cooperative 
research and development agreement, or grant which is set aside, 
reserved, or otherwise classified as intended for award to service-
disabled veteran-owned small business concerns, there shall be an 
irrefutable presumption of loss to the United States based on the total 
amount expended on the contract, subcontract, cooperative agreement, 
cooperative research and development agreement, or grant whenever it is 
established that a business concern other than a service-disabled 
veteran-owned small business concern willfully sought and received the 
award by misrepresentation.
    (b) Deemed Certifications. The following actions shall be deemed 
affirmative, willful and intentional certifications of service-disabled 
veteran-owned small business status:
    (1) Submission of a bid or proposal for a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement reserved, set aside, or otherwise classified as 
intended for award to service-disabled veteran-owned small business 
concerns.
    (2) Submission of a bid proposal for a Federal grant, contract, 
subcontract, cooperative agreement or cooperative research and 
development agreement which in any way encourages a Federal agency to 
classify the bid or proposal, if awarded, as an award to a service-
disabled veteran-owned small business concern.
    (3) Registration on any Federal electronic database for the purpose 
of being considered for award of a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement, as a small disadvantaged business concern.
    (c) Signature Requirement. Each solicitation, bid, or application 
for a Federal contract, subcontract, or grant shall contain a 
certification concerning the service-disabled veteran-owned small 
business status of a business concern seeking the Federal contract, 
subcontract or grant. An authorized official must sign the 
certification on the same page containing the service-disabled veteran-
owned small business status claimed by the concern.
    (d) Limitation of Liability. Paragraphs (a)--(c) shall not apply in 
the case of unintentional errors or technical malfunctions that 
demonstrate that a misrepresentation of service-disabled veteran-owned 
small business status was not affirmative, intentional or willful. 
Consideration shall be given to the firm's internal management 
procedures governing SDVO SBC representation or certification, the 
clarity or ambiguity of the representation or certification 
requirement, and the efforts made to correct an incorrect or invalid 
representation or certification in a timely manner. In no case shall an 
individual or firm be liable for erroneous representations or 
certifications made by Government personnel.
    (e) Additional Penalties for Misrepresentation.
    (1) Suspension or debarment. The SBA debarring official or the 
agency debarring official may suspend or debar a person or concern for 
misrepresentation pursuant to the procedures set forth in 48 CFR 
subpart 9.4.
    (2) Civil Penalties. Persons or concerns are subject to severe 
penalties under the False Claims Act, 31 U.S.C. 3729-3733, and under 
the Program Fraud Civil Remedies Act, 331 U.S.C. 3801-3812, and any 
other applicable laws.
    (3) Persons or concerns are subject to severe criminal penalties 
for knowingly misrepresenting the service-disabled veteran-owned status 
of a concern in connection with procurement programs pursuant to 
section 16(d) of the Small Business Act, 15 U.S.C. 645(d), as amended; 
18 U.S.C. 1001; and 31 U.S.C. 3729-3733. Persons or concerns are 
subject to criminal penalties for knowingly making false statements or

[[Page 62320]]

misrepresentations to SBA for the purpose of influencing any actions of 
SBA pursuant to section 16(a) of the Small Business Act, 15 U.S.C. 
645(a), as amended, including failure to correct ``continuing 
representations'' that are no longer true.
    13. Add new Sec.  125.30 to read as follows:


Sec.  125.30  What must a concern do in order to be identified as a 
Service-Disabled Veteran-Owned Small Business concern in any Federal 
procurement databases?

    (a) In order to be identified as a Service-Disabled Veteran-Owned 
business concern in the Online Representations and Certifications 
Application (ORCA) database (or any successor thereto) a concern must 
certify its Service-Disabled Veteran-Owned small business status in 
connection with specific eligibility requirements at least annually.
    (b) If a firm identified as a Service-Disabled Veteran-Owned small 
business concern in ORCA fails to certify its status within one year of 
a status certification, the firm will not be listed as a Service-
Disabled Veteran-Owned small business concern in ORCA, unless and until 
the firm recertifies its Service-Disabled Veteran-Owned status.

PART 126--HUBZONE PROGRAM

    14. The authority citation for part 126 is revised to read as 
follows:

    Authority:  15 U.S.C. 632 and 657(a).

    15. Amend Sec.  126.900 by:
    a. Revising the section heading;
    b. Revising paragraphs (a)-(c); and
    c. Adding new paragraphs (d)-(e) to read as follows:


Sec.  126.900  What are the requirements for representing HUBZone 
status, and what are the penalties for misrepresentation?

    (a) Presumption of Loss Based on the Total Amount Expended. In 
every contract, subcontract, cooperative agreement, cooperative 
research and development agreement, or grant which is set aside, 
reserved, or otherwise classified as intended for award to HUBZone 
small business concerns, there shall be an irrefutable presumption of 
loss to the United States based on the total amount expended on the 
contract, subcontract, cooperative agreement, cooperative research and 
development agreement, or grant whenever it is established that a 
business concern other than a HUBZone small business concern willfully 
sought and received the award by misrepresentation.
    (b) Deemed Certifications. The following actions shall be deemed 
affirmative, willful and intentional certifications of HUBZone small 
business status:
    (1) Submission of a bid or proposal for a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement reserved, set aside, or otherwise classified as 
intended for award to HUBZone small business concerns.
    (2) Submission of a bid proposal for a Federal grant, contract, 
subcontract, cooperative agreement or cooperative research and 
development agreement which in any way encourages a Federal agency to 
classify the bid or proposal, if awarded, as an award to a HUBZone 
small business concern.
    (3) Registration on any Federal electronic database for the purpose 
of being considered for award of a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement, as a HUBZone small business concern.
    (c) Signature Requirement. Each solicitation, bid, or application 
for a Federal contract, subcontract, or grant shall contain a 
certification concerning the HUBZone small business status of a 
business concern seeking the Federal contract, subcontract or grant. An 
authorized official must sign the certification on the same page 
containing the HUBZone status claimed by the concern.
    (d) Limitation of Liability. Paragraphs (a)-(c) shall not apply in 
the case of unintentional errors or technical malfunctions that 
demonstrate that a misrepresentation of HUBZone status was not 
affirmative, intentional or willful. Consideration shall be given to 
the firm's internal management procedures governing HUBZone SBC 
representation or certification, the clarity or ambiguity of the 
representation or certification requirement, and the efforts made to 
correct an incorrect or invalid representation or certification in a 
timely manner. In no case shall an individual or firm be liable for 
erroneous representations or certifications made by Government 
personnel.
    (e) Additional Penalties for Misrepresentation
    (1) Suspension or debarment. The SBA debarring official or the 
agency debarring official may suspend or debar a person or concern for 
misrepresentation pursuant to the procedures set forth in 48 CFR 
subpart 9.4.
    (2) Civil Penalties. Persons or concerns are subject to severe 
penalties under the False Claims Act, 31 U.S.C. 3729-3733, and under 
the Program Fraud Civil Remedies Act, 331 U.S.C. 3801-3812, and any 
other applicable laws.
    (3) Persons or concerns are subject to severe criminal penalties 
for knowingly misrepresenting the HUBZone status of a concern in 
connection with procurement programs pursuant to section 16(d) of the 
Small Business Act, 15 U.S.C. 645(d), as amended; 18 U.S.C. 1001; and 
31 U.S.C. 3729-3733. Persons or concerns are subject to criminal 
penalties for knowingly making false statements or misrepresentations 
to SBA for the purpose of influencing any actions of SBA pursuant to 
section 16(a) of the Small Business Act, 15 U.S.C. 645(a), as amended, 
including failure to correct ``continuing representations'' that are no 
longer true.

PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM

    16. The authority citation for part 127 is revised to read as 
follows:

    Authority:  15 U.S.C. 632, 634(b)(6), 637(m), and 644.

    17. Amend Sec.  127.700 by:
    a. Revising the section heading;
    b. Revising paragraphs (a)-(c); and
    c. Adding new paragraphs (d)-(e):


Sec.  127.700  What are the requirements for representing women-owned 
small business or economically disadvantaged women-owned small business 
status, and what are the penalties for misrepresentation?

    (a) Presumption of Loss Based on the Total Amount Expended. In 
every contract, subcontract, cooperative agreement, cooperative 
research and development agreement, or grant which is set aside, 
reserved, or otherwise classified as intended for award to women-owned 
small business concerns or economically disadvantaged women-owned small 
business concerns, there shall be an irrefutable presumption of loss to 
the United States based on the total amount expended on the contract, 
subcontract, cooperative agreement, cooperative research and 
development agreement, or grant whenever it is established that a 
business concern other than a women-owned small business concern or 
economically disadvantaged women-owned small business concern willfully 
sought and received the award by misrepresentation.
    (b) Deemed Certifications. The following actions shall be deemed 
affirmative, willful and intentional certifications of women-owned 
small business or economically disadvantaged women-owned small business 
status:
    (1) Submission of a bid or proposal for a Federal grant, contract, 
subcontract,

[[Page 62321]]

cooperative agreement, or cooperative research and development 
agreement reserved, set aside, or otherwise classified as intended for 
award to women-owned small business concerns or economically 
disadvantaged women-owned small business concerns.
    (2) Submission of a bid proposal for a Federal grant, contract, 
subcontract, cooperative agreement or cooperative research and 
development agreement which in any way encourages a Federal agency to 
classify the bid or proposal, if awarded, as an award to a women-owned 
small business concern or economically disadvantaged women-owned small 
business concern.
    (3) Registration on any Federal electronic database for the purpose 
of being considered for award of a Federal grant, contract, 
subcontract, cooperative agreement, or cooperative research and 
development agreement, as a women-owned small business concern or 
economically disadvantaged women-owned small business concern.
    (c) Signature Requirement. Each solicitation, bid, or application 
for a Federal contract, subcontract, or grant shall contain a 
certification concerning the women-owned small business or economically 
disadvantaged women-owned small business status of a business concern 
seeking the Federal contract, subcontract or grant. An authorized 
official must sign the certification on the same page containing the 
women-owned small business or economically disadvantaged women-owned 
small business status claimed by the concern.
    (d) Limitation of Liability. Paragraphs (a)-(c) shall not apply in 
the case of unintentional errors or technical malfunctions that 
demonstrate that a misrepresentation of women-owned small business or 
economically disadvantaged women-owned small business status was not 
affirmative, intentional or willful. Consideration shall be given to 
the firm's internal management procedures governing WOSB representation 
or certification, the clarity or ambiguity of the representation or 
certification requirement, and the efforts made to correct an incorrect 
or invalid representation or certification in a timely manner. In no 
case shall an individual or firm be liable for erroneous 
representations or certifications made by Government personnel.
    (e) Additional Penalties for Misrepresentation.
    (1) Suspension or debarment. The SBA debarring official or the 
agency debarring official may suspend or debar a person or concern for 
misrepresentation pursuant to the procedures set forth in 48 CFR 
subpart 9.4.
    (2) Civil Penalties. Persons or concerns are subject to severe 
penalties under the False Claims Act, 31 U.S.C. 3729-3733, and under 
the Program Fraud Civil Remedies Act, 331 U.S.C. 3801-3812, and any 
other applicable laws.
    (3) Persons or concerns are subject to severe criminal penalties 
for knowingly misrepresenting the women-owned status of a concern in 
connection with procurement programs pursuant to section 16(d) of the 
Small Business Act, 15 U.S.C. 645(d), as amended; 18 U.S.C. 1001; and 
31 U.S.C. 3729-3733. Persons or concern are subject to criminal 
penalties for knowingly making false statements or misrepresentations 
to SBA for the purpose of influencing any actions of SBA pursuant to 
section 16(a) of the Small Business Act, 15 U.S.C. 645(a), as amended, 
including failure to correct ``continuing representations'' that are no 
longer true.
    18. Add new Sec.  127.701 to read as follows:


Sec.  127.701  What must a concern do in order to be identified as a 
Women-Owned Small Business concern in any Federal procurement 
databases?

    (a) In order to be identified as a Women-Owned business concern in 
the Online Representations and Certifications Application (ORCA) 
database (or any successor thereto) a concern must certify its Women-
Owned small business status in connection with specific eligibility 
requirements at least annually.
    (b) If a firm identified as a Women-Owned small business concern in 
ORCA fails to certify its status within one year of a status 
certification, the firm will not be listed as a Women-Owned small 
business concern in ORCA, unless and until the firm recertifies its 
Women-Owned status.

    Dated: September 26, 2011.
Karen G. Mills,
Administrator.
[FR Doc. 2011-25656 Filed 10-6-11; 8:45 am]
BILLING CODE 8025-01-P