[Federal Register Volume 77, Number 155 (Friday, August 10, 2012)]
[Proposed Rules]
[Pages 47797-47799]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19628]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 19 and 35

[FAR Case 2012-015; Docket 2012-0015; Sequence 1]
RIN 9000-AM33


Federal Acquisition Regulation; Small Business Set Asides for 
Research and Development Contracts

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

ACTION: Proposed rule.

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

SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal 
Acquisition Regulation (FAR) to clarify that contracting officers shall 
set aside acquisitions for research and development, when there is also 
a reasonable expectation, as a result of market research, that there 
are small businesses capable of providing the best scientific and 
technological approaches.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat at one of the addressees shown below on or 
before October 9, 2012 to be considered in the formation of the final 
rule.

ADDRESSES: Submit comments in response to FAR Case 2012-015 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``FAR Case 
2012-015.'' Select the link ``Submit a Comment''

[[Page 47798]]

that corresponds with ``FAR Case 2012-015.'' Follow the instructions 
provided at the ``Submit a Comment'' screen. Please include your name, 
company name (if any), and ``FAR Case 2012-015'' on your attached 
document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (MVCB), ATTN: Hada Flowers, 1275 First Street, NE., 7th 
Floor, Washington, DC 20417.
    Instructions: Please submit comments only and cite FAR Case 2012-
015, 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: Mr. Karlos Morgan, Procurement 
Analyst, at 202-501-2364, for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAR Case 2012-015.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA are proposing to amend the Federal Acquisition 
Regulation (FAR) to revise paragraph (b)(2) of FAR 19.502-2, ``Total 
small business set-asides,'' to clarify that contracting officers shall 
set aside acquisitions for research and development (R&D) in excess of 
the simplified acquisition threshold when the market research conducted 
in accordance with FAR part 10 indicates there are small businesses 
capable of providing the best scientific and technological approaches. 
It is also proposed that FAR 35.004 be amended to include a reference 
to this FAR cite, because this area of the FAR addresses the steps 
Federal agencies may use to expand sources for R&D support.
    This proposed rule responds to a request from the Small Business 
Administration (SBA) to review the last sentence in FAR 19.502(b)(2) 
which reads: ``In making R&D small business set-asides, there must also 
be a reasonable expectation of obtaining from small businesses the best 
scientific and technological sources consistent with the demands of the 
proposed acquisition for the best mix of cost, performances, and 
schedules.'' The SBA advises that this language has been interpreted as 
an additional and unique condition that must be met before a 
contracting officer can proceed with a small business set-aside for 
research and development.
    FAR 19.502-2(b) establishes the general requirements for a total 
small business set-asides above the simplified acquisition threshold: 
(1) That offers will be obtained from at least two responsible small 
business concerns offering the products of different small business 
concerns; and (2) That the award from the set-aside will be made at 
fair market prices.
    This rule proposes to further clarify that the basis for the 
contracting officer's decision to set-aside or not to set-aside an 
acquisition for R&D support above the simplified acquisition threshold 
lies in the objective evidence obtained from the market research 
conducted. This clarification is intended to remove the potential 
barrier for small business previously noted by the SBA, as the 
requirement to conduct market research in advance of a small business 
set-aside is not a new or additional requirement, and applies to all 
small business set-asides.

II. Discussion and Analysis

    DoD, GSA, and NASA are proposing to amend FAR 19.502-2, ``Setting 
aside acquisitions'' by redesignating the last sentence in paragraph 
(b)(2) as a new paragraph (b)(3), to clarify that for R&D small 
business set-asides, there must be a reasonable expectation that, as a 
result of the market research performed, small businesses are capable 
of providing the best scientific and technological approaches. The 
additional statement ``consistent with the demands of the proposed 
acquisition for the best mix of cost, performance, and schedules'' has 
been removed.
    FAR 35.004 is also amended to add a new reference at the end of 
paragraph (b) to 19.502(b)(3), for guidance on R&D set-asides.

III. Executive Order 12866 and 13563

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

IV. Regulatory Flexibility Act

    The Department of Defense (DoD), the General Services 
Administration (GSA), and the National Aeronautics and Space 
Administration (NASA) do not expect this proposed rule to 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., because this change will not have a significant effect beyond the 
internal operating procedures of the Federal Government nor will it 
have a significant cost or administrative impact on contractors or 
offerors. Therefore, an Initial Regulatory Flexibility Analysis has not 
been performed. DoD, GSA, and NASA invite comments from small business 
concerns and other interested parties on the expected impact of this 
rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C 610 (FAR Case 2015-015), in 
correspondence.

V. Paperwork Reduction Act

    The proposed rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 19 and 35

    Government procurement.

    Dated: August 7, 2012.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of 
Acquisition Policy, Office of Governmentwide Policy.

    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 19 and 
35 as set forth below:

PART 19--SMALL BUSINESS PROGRAMS

    1. The authority citation for 48 CFR parts 19 and 35 is revised to 
read as follows:

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

    2. Amend section 19.502-2 by revising paragraph (b) to read as 
follows:


19.502-2  Total small business set-asides.

* * * * *
    (b) Before setting aside an acquisition under this paragraph, refer 
to 19.203(c). The contracting officer shall set aside

[[Page 47799]]

any acquisition over the simplified acquisition threshold for small 
business participation when there is a reasonable expectation--
    (1) That offers will be obtained from at least two responsible 
small business concerns offering the products of different small 
business concerns (see paragraph (c) of this section);
    (2) That award will be made at fair market prices. Total small 
business set-asides shall not be made unless such a reasonable 
expectation exists (see 19.502-3 as to partial set-asides). Although 
past acquisition history of an item or similar items is always 
important, it is not the only factor to be considered in determining 
whether a reasonable expectation exists; and
    (3) When considering research and development small business set-
asides, as a result of the market research performed in accordance with 
part 10, that there are small businesses capable of providing the best 
scientific and technological approaches.
* * * * *
    3. Amend section 35.004 by adding paragraph (c) to read as follows:


35.004  Publicizing requirements and expanding research and development 
sources.

* * * * *
    (c) See 19.502(b)(3) for information regarding set-asides of R&D 
requirements.

[FR Doc. 2012-19628 Filed 8-9-12; 8:45 am]
BILLING CODE 6820-14-P