[Federal Register Volume 78, Number 125 (Friday, June 28, 2013)]
[Rules and Regulations]
[Pages 38811-38821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-15418]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 121, 124, 125, 126, and 127
RIN 3245-AG23
Small Business Size and Status Integrity
AGENCY: Small Business Administration.
ACTION: Final rule.
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SUMMARY: This rule implements provisions of the Small Business Jobs Act
of 2010 (Jobs Act) pertaining to small business size and status
integrity. This rule amends the U.S. Small Business Administration's
(SBA or Agency) program regulations to implement statutory provisions
establishing that there 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. The rule implements 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; an
authorized official must sign in connection with a size or status
certification or representation for a contract or other instrument; and
concerns that fail to update their size or status in the Online
Representations and Certifications Application (ORCA) database or a
successor thereto (such as the System for Award Management (SAM)
database) at least annually shall no longer be identified in the
database as small or some other socioeconomic status, until the
representation is updated. The rule also amends SBA's regulations to
clarify when size is determined for purposes of entry into the 8(a)
Business Development, HUBZone and Small Disadvantaged Business (SDB)
programs.
DATES: This rule is effective August 27, 2013.
FOR FURTHER INFORMATION CONTACT: Dean R. Koppel, Office of Government
Contracting, 409 Third Street SW., Washington, DC 20416; (202) 205-
7322; [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 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 Small Business Act was
also amended to 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 Small Business Act was amended to provide that the
signature of an authorized official of a concern is required in making
a small business size or status representation in connection with
certain actions, such as submitting an offer. The Small Business Act
now provides that concerns must update their size and status
certifications in SAM at least annually, or the status will be lost
until such time as the update is made. Finally, the Small Business Act
provides that SBA must promulgate regulations to protect individuals
and concerns from liability in cases of unintentional errors, technical
malfunctions and other similar situations.
SBA published a proposed rule regarding these statutory provisions
in the Federal Register on October 7, 2011 (76 FR 62313), inviting the
public to submit comments on or before November 7, 2011. This comment
period was extended through December 8, 2011 by notice in the Federal
Register published on November 8, 2011 (76 FR 69154).
Summary of Comments and SBA's Responses
SBA received and considered twenty comments on the proposed rule.
Two commenters fully supported the rule as proposed. One comment
addressed the proposed Small Business Subcontracting Rule published at
76 FR 61626 on October 5, 2011. This comment was outside the scope of
this proposed rulemaking and was not
[[Page 38812]]
considered in adopting this final rule. The remaining comments, as well
as SBA's response to them, are discussed below.
Presumption of Loss
SBA received several comments regarding SBA's proposal that the
presumption of loss to the United States for a willful
misrepresentation of size or status be irrefutable. 13 CFR Sec. Sec.
121.108(a), 121.411(d), 124.521(a), 124.1015(a), 125.29(a), 126.900(a),
and 127.700(a). As noted in the proposed rule, SBA based its proposed
imposition of an irrefutable presumption of loss on Senate Report
language indicating that the presumption shall be ``irrefutable.''
Senate Rep. No. 111-343, p. 8, available at: http://www.gpo.gov.
One commenter suggested that SBA eliminate ``irrefutable'' from the
regulatory text. This commenter stressed that: (1) Irrefutable
presumptions deny due process of law; and (2) Senate Report language
does not possess statutory authority. Another commenter argued that the
cited Senate Report was not the Senate Report for the legislation in
question, but was instead a Senate Report for a prior piece of proposed
legislation. Upon additional reflection, SBA has decided to remove the
term ``irrefutable'' from the regulations, rendering the presumption
rebuttable. SBA notes that the presumption of loss provisions will be
utilized in civil and criminal Federal court proceedings, where due
process will be provided. Further, SBA's regulations limit liability in
the case of unintentional error, technical malfunction, or other
similar situations. 13 CFR Sec. Sec. 121.108(d), 121.411(g),
124.521(d), 124.1015(d), 125.29(d), 126.900(d), and 127.700(d). As
such, an ``irrefutable'' presumption would be inappropriate in these
instances.
Another commenter suggested that SBA ensure firms have sufficient
due process to contest a finding of willful misrepresentation before
penalties are imposed. This commenter made several suggestions as to
how SBA could ensure protection of business concerns' due process--
these suggestions included: (1) Provision of an agency level response
period; and (2) empowering SBA's Office of Hearings and Appeals (OHA)
to hear appeals of determinations under the proposed rule. As discussed
above, the statutory presumption of loss provisions will be applied in
Federal civil and criminal court proceedings where due process will be
provided and as explained above, in certain instances, SBA's
regulations limit liability. 13 CFR Sec. Sec. 121.108(d), 121.411(g),
124.521(d), 124.1015(d), 125.29(d), 126.900(d), and 127.700(d). As
such, SBA does not believe that this provision requires modification.
One commenter suggested that SBA impose a rebuttable presumption
where a size determination finds that a firm is small by itself (i.e.,
absent the firm's affiliates) that the firm did not willfully
misrepresent its size. Likewise, this commenter suggested that SBA
impose a rebuttable presumption that the firm willfully misrepresented
its size when a size determination finds the firm to be other than
small by itself (i.e., absent the firm's affiliates). As discussed
above, the rule now provides that the presumption is rebuttable. The
question of whether a firm has willfully misrepresented its size is a
factual determination best made by a judge, jury, or other decider of
fact. Given the fact-specific nature of such a finding, SBA declines to
impose a presumption as to an actor's intent.
Two commenters suggested clarification of the language in proposed
13 CFR Sec. Sec. 121.108(a), 121.411(d), 124.521(a), 124.1015(a),
125.29(a), 126.900(a), and 127.700(a) which provide that the
presumption of loss applies ``whenever it is established'' that a firm
willfully misrepresented its status. Specifically, the commenters
requested clarification of who makes the finding of willful
misrepresentation, how a firm is notified of such a finding, whether
the determination is appealable, and how a company may defend its
representation. Consistent with the intent of the Jobs Act, it is SBA's
intent that the presumption of loss shall be applied in all manner of
criminal, civil, administrative, contractual, common law, or other
actions, which the United States government may take to redress willful
misrepresentation. As such, the finder of fact, notice requirements,
and means of defense must depend on the specific action taken against a
business concern. SBA does not believe any changes to the proposed rule
or other clarification would be appropriate and adopts the proposed
provisions as final in this rule.
Another commenter requested clarification as to whether an adverse
size determination automatically leads to a presumption that the
relevant firm willfully misrepresented its size. SBA recognizes that an
unsophisticated firm or one new to the Federal government arena may
certify its status as a small business in good faith, but may
ultimately be found to be other than small. Similarly, a firm may
incorrectly apply an ownership or control requirement for the service-
disabled veteran-owned (SDVO) or women-owned small business (WOSB)
programs in good faith, and ultimately be found not to qualify as a
SDVO or WOSB small business. In either case, if the situation truly is
a good faith misinterpretation of SBA's rules, SBA does not believe
that action should be taken against the firm or its principals. Again,
the question of whether a firm submitted a misrepresentation in good
faith or intentionally (or recklessly) submitted a false size or status
representation or certification is a factual determination best made by
a judge, jury, or other decider of fact.
One commenter recommended that SBA amend the proposed rule to
include a provision requiring the government to ``prominently mark''
any solicitation set aside as contemplated by the proposed rule.
Currently, solicitations issued under the Federal Acquisition
Regulation (FAR) must contain specific clauses providing notice
regarding set-asides, reserves, partial set-asides, price evaluation
preferences, source selection factors, and other mechanisms which
somehow classify a solicitation as intended for award to specific
entities. 48 CFR Sec. Sec. 52.219-3, 52.219-4, 52.219-6, 52.219-7,
52.219-13, 52.219-18, 52.219-23, 52.219-27, 52.219-29, and 52.219-30.
Therefore, SBA does not believe any change to the rule is necessary.
One commenter requested clarification of situations where an offer
may be ``otherwise classified as intended for award to small business''
without being specifically identified as set aside for small business.
Consistent with the underlying statutory text, it is SBA's intent that
the rule be broadly inclusive of set-asides, reserves, partial set-
asides, price evaluation preferences, source selection factors, and any
other mechanisms which are not specifically addressed by the FAR. SBA
does not feel that additional clarification is necessary and has
adopted the proposed rule as final.
Deemed Certifications
One commenter expressed concern that proposed Sec. Sec.
121.108(b)(2), 121.411(e)(2), 124.521(b)(2), 124.1015(b)(2),
125.29(b)(2), 126.900(b)(2), and 127.700(b)(2) are too broad and could
permit attenuated acts or omissions to give rise to a deemed
certification. SBA disagrees. Federal agencies are statutorily required
to establish goals for the participation of small business concerns,
SDVO small business concerns, HUBZone small business concerns, small
disadvantaged business concerns, and WOSB concerns. 15 U.S.C. 644(g).
At the conclusion of each fiscal year, Federal agencies must
[[Page 38813]]
compile reports as to the agencies' performance in attaining their
contracting goals. 15 U.S.C. 644(h). It is SBA's intention that
Sec. Sec. 121.108(b)(2), 121.411(e)(2), 124.521(b)(2), 124.1015(b)(2),
125.29(b)(2), 126.900(b)(2), and 127.700(b)(2) shall be applied in
cases where a specific offer encourages the procuring agency to
classify the award as an award to a small business or other concern for
the purposes of the agencies' contracting goals. Under 48 CFR Sec.
4.1201, a Federal agency shall rely on a business concern's ORCA
representations and certifications in determining how to classify the
award. Accordingly, in most cases, it will be a firm's ORCA/SAM
representations and certifications which would encourage a Federal
agency to classify an award as having gone to a small business.
Therefore, SBA believes that in practice, proposed Sec. Sec.
121.108(b)(2), 121.411(e)(2), 124.521(b)(2), 124.1015(b)(2),
125.29(b)(2), 126.900(b)(2), and 127.700(b)(2) have a narrow
application and the provisions have been adopted as final in this rule.
Another commenter recommended that SBA eliminate proposed
Sec. Sec. 121.108(b)(3), 121.411(e)(3), 124.521(b)(3), 124.1015(b)(3),
125.29(b)(3), 126.900(b)(3), and 127.700(b)(3), which provide that
registration on any Federal electronic database for the purpose of
being considered for award shall be deemed an affirmative, willful, and
intentional certification as to the relevant concern's small business
size and status. This is a statutory requirement that SBA cannot
eliminate. The Jobs Act specifically deems registration on a Federal
electronic database as a willful certification as to size and status.
15 U.S.C. Sec. 632(w)(2)(C). As such, SBA is precluded by statute from
eliminating these provisions and they remain in this final rule.
Signature Requirement
SBA received two comments regarding proposed Sec. Sec. 121.108(c),
121.411(f), 124.521(c), 124.1015(c), 125.29(c), 126.900(c), 127.700(c),
which require an authorized official to sign the small business size
and status certification page of any solicitation, bid or proposal for
a Federal grant, contract, subcontract, cooperative agreement, or
cooperative research and development agreement reserved for small
business concerns. The first commenter suggested that the rule
specifically give electronic signatures the same effect as wet
signatures. For the purpose of Government contracts, such a provision
already exists at 48 CFR Sec. 4.502(d) which provides that agencies
may accept electronic signatures and records. However, SBA lacks the
statutory authority to enact such a rule and has not adopted this
comment.
The second commenter questioned whether the signature requirement
is superfluous given that a signature on an offer is meant to certify
all the offer's contents. SBA considered this comment, but has adopted
the proposed provisions as final in this rule. The Jobs Act
specifically requires that a certification as to a firm's small
business size or other status shall contain the signature of an
authorized official on the same page as the certification. 15 U.S.C.
632(w)(3)(B). As such, SBA is precluded by statute from eliminating the
signature requirement. Further, the Federal Acquisition Council will
implement the signature requirement in the Federal Acquisition
Regulation and associated clauses. SBA has made minor wording changes
in these provisions for clarity. The word ``solicitation'' has been
replaced by the words ``offer'' and ``proposal'' to clarify that it is
the offer that a contractor is signing, not the solicitation.
Limitation of Liability
Two commenters suggested that SBA amend proposed Sec. Sec.
121.108(d), 121.411(g), 124.521(d), 124.1015(d), 125.29(d), 126.900(d),
and 127.700(d) to adopt the statutory language which protects firms
from liability where misrepresentation was the result of
``unintentional errors, technical malfunctions, or other similar
situations.'' SBA feels that the addition of ``or other situations''
more accurately captures the breadth of situations in which liability
is to be limited and has therefore adopted this comment in the final
rule.
Two commenters suggested that SBA clarify the standard of care
required in making representations. Under proposed Sec. Sec.
121.108(a), 121.411(d), 124.521(a), 124.1015(a), 125.29(a), 126.900(a),
and 127.700(a), the presumption of loss applies only where a firm
willfully misrepresents its small business size or other status.
Sections 121.108(d), 121.411(g), 124.521(d), 124.1015(d), 125.29(d),
126.900(d), and 127.700(d) further provide that misrepresentations
which are the result of ``unintentional errors, technical malfunctions,
or other similar situations'' are not considered to be willful. In
addition, the statute and implementing regulations provide that certain
actions are deemed to be willful and require an official to sign on the
same page as size or status representation. As discussed above, whether
a representation is willful or should result in liability or criminal
penalty is a fact-based decision that will be made by a judge, jury or
other decider of fact. SBA has made minor wording changes in the
limitation of liability provisions to make clear that the question of
whether a misrepresentation is willful is a fact-based decision that
will be made, not by SBA, but by a judge, jury or other decider of
fact. To clarify that the limitation of liability provisions convey
discretion to the finder of fact, the phrase ``shall not apply'' has
been amended as ``may be determined not to apply.'' Further, the phrase
``consideration shall be given to'' has been changed to ``relevant
factors to consider in making this determination may include.''
One commenter asked if SBA would agree that thirty days is a
reasonable amount of time in which to correct an erroneous
representation. It is SBA's view that the question of whether an
erroneous representation was corrected in a timely manner is dependent
on the facts of a given case. SBA believes such a determination is best
made by a judge, jury, or other decider of fact.
Two commenters suggested that business concerns be protected from
liability when their misrepresentation resulted from ambiguity in SBA's
regulations. As discussed above, SBA believes that a good faith
misinterpretation of SBA's rules should not be considered a willful
misrepresentation of size or status. Whether a regulation is ambiguous
and whether a misinterpretation is reasonable and made in good faith is
a fact- specific determination that will be made by a judge, jury, or
other decider of fact.
Two commenters suggested that the list of mitigating factors set
forth in the proposed rule be clarified and expanded. It is not SBA's
intent that the list of mitigating factors included in the proposed
rule be exhaustive. Again, the question of whether a firm willfully
misrepresented its size or status is a factual determination best made
by a judge, jury, or other decider of fact. SBA does not believe any
additional changes or clarification is warranted.
Annual Recertification
One commenter argued that annual recertification is too burdensome.
SBA disagrees. This rule does not impose new reporting requirements--
concerns must certify their size and status annually in order to be
identified as a small business or other socioeconomic concern in ORCA
under existing regulations. 48 CFR Sec. 4.1201(b).
[[Page 38814]]
Moreover, annual certification of size and status is statutorily
required. 15 U.S.C. 632(x). In addition, a firm is expected to verify
its representation in SAM every time it submits an offer on a
government contract. SBA has, however, identified SAM as the current
successor to ORCA and has amended all references to ORCA in the
proposed rule to instead reference SAM. As such, SBA adopts the annual
SAM verification requirement in this final rule.
Two commenters recommended that firms awarded contracts longer than
five years be required to recertify only on the fifth year. SBA
considered this comment but has adopted the proposed provisions as
final. For purposes of establishing continuing eligibility for
previously awarded long term contracts, recertification is required
within 60 to 120 days prior to the end of the fifth year of the
contract. 48 CFR Sec. 52.219-28; 13 CFR Sec. 121.404(g)(3). However,
this requirement is distinct from the annual recertification
requirements in the proposed rule. The annual recertification
requirement contemplated in the proposed rule is for purposes of being
considered for award of future contracts. Such a requirement already
exists under 48 CFR Sec. 4.1201(b). Accordingly, SBA has not adopted
this comment in the Final rule.
One commenter suggested that SBA provide notification and an
opportunity for business concerns to comply with the annual
certification requirement. SBA does not believe such notification is
necessary given that concerns are already required to certify their
size and status annually under 48 CFR Sec. 4.1201(b). Further, SBA
lacks the statutory authority to implement such a notification system.
Accordingly, SBA has not adopted this comment in the Final rule.
Another commenter suggested that SBA issue additional guidance to
clarify the annual certification requirement as applied to business
concerns operating in industries with a revenue-based size standard.
This commenter expressed concern that an annual certification
requirement would not take into consideration revenue fluctuations
common to many small business concerns. SBA disagrees. At any given
time, a firm's size may be determined under a revenue-based size
standard by dividing the sum of firm's annual receipts from the past
three completed fiscal years by three. 13 CFR Sec. 121.104(c). This
method is specifically designed to account for revenue fluctuations and
SBA does not believe the annual recertification requirement has any
implications specific to those firms operating in industries with
revenue-based size standards.
Another commenter suggested that the annual recertification
requirement be applied to 8(a) Business Development and HUBZone program
participants. As noted in the proposed rule, SBA did not impose the
recertification requirement for these programs because SBA is
responsible for providing certification designations in federal
procurement databases for these programs. Therefore, SBA has not
adopted this comment in the final rule.
Other Comments
One commenter recommended that SBA provide clarification as to the
rule's application to misrepresentations by subcontractors. It is SBA's
intent that the presumption of loss shall apply to subcontractors who
willfully misrepresent their size or status in order to receive a
subcontract award. Accordingly, proposed Sec. Sec. 121.108(a),
121.411(d), 124.521(a), 124.1015(a), 125.29(a), 126.900(a), and
127.700(a) explicitly provided that a presumption of loss to the United
States shall be imposed whenever it is established that a business
concern willfully sought and received award of a subcontract by
misrepresentation. SBA does not believe any additional clarification is
necessary. The same commenter also requested clarification of the prime
contractor's liability when a subcontractor misrepresents its status to
the prime contractor. Pursuant to 48 CFR Sec. 19.703(b), a prime
contractor acting in good faith may rely on the written representation
of its subcontractor regarding the subcontractor's small business size
or status. When read in conjunction with the final rule, SBA believes
this insulates prime contractors acting in good faith from liability
for misrepresentations made by their subcontractors. In response to
this comment, SBA has clarified this point in the limitation of
liability sections of the Final rule.
One commenter suggested that SBA provide clarification as to a
contracting officer's duty to stop work on a contract if it becomes
clear that the awardee misrepresented its status before completion of
the contract. Under SBA's existing regulations, contracting officers
have the authority to file a size protest at any time, even after
award. 13 CFR Sec. Sec. 121.1004(b), 124.1010(c)(1)(iii),
125.25(d)(3), 126.801(d)(3), and 127.603(c)(3). SBA's regulations also
address the effect of a negative eligibility determination on the
procurement in question. 13 CFR Sec. Sec. 121.1009(g), 124.1013(h),
125.27(g), 126.803(d), and 127.604(f).
Another commenter suggested that SBA amend its regulations to
impose suspension and debarment only when misrepresentation resulted in
actual award. SBA does not believe that receipt of an award should be a
prerequisite for debarment, suspension or any other penalty outlined in
the Small Business Act or SBA's regulations. Firms have an obligation
to accurately represent their size and/or status. Any fraudulent
misrepresentation which inhibits the government's ability to rely on
future statements made by the contractor should be subject to possible
suspension and debarment actions. Accordingly this comment has not been
adopted in the final rule. However, for clarity and accuracy, the title
``debarring official'' has been changed to ``suspension and debarment
official'' in 13 CFR Sec. Sec. 121.108(e)(1), 121.411(h)(1),
124.1015(e)(1), 125.29(e)(1), 126.900(e)(1), and 127.700(e)(1).
One commenter recommended that ORCA/SAM be modified to require the
contractor to make an affirmative acknowledgment that the software
interface correctly determined the business's size. Proposed Sec. Sec.
121.108(c), 121.411(f), 124.521(c), 124.1015(c), 125.29(c), 126.900(c),
127.700(c) require an authorized official to sign the small business
size and status certification page of any solicitation. SBA does not
believe any additional clarification or changes to the proposed rule
are necessary and adopts the provisions in the Final rule as proposed.
Another commenter suggested that SBA address situations where a
firm claims to be small under its primary NAICS code and submits an
offer on a procurement issued under a different NAICS code with a more
restrictive size standard. SBA believes its regulations are clear on
this point. 13 CFR Sec. 121.402(a) provides that ``a concern must not
exceed the size standard for the NAICS code specified in the
solicitation,''and 13 CFR Sec. 121.405(a) further provides that ``a
concern must self-certify it is small under the size standard specified
in the solicitation.'' As such, SBA has not made additional changes to
the rule in response to this comment.
One commenter recommended the creation of an IRS portal through
which relevant parties may look up a business's tax returns for
purposes of determining size. Tax returns are not public documents and
SBA lacks the statutory authority to implement such a system.
One commenter proposed that footnote 18 to 13 CFR Sec. 121.201 be
applied to all value-added resellers. The proposed rule did not address
specific
[[Page 38815]]
size standards and, therefore, this comment is beyond the scope of the
proposed rulemaking.
Another commenter suggested that SBA eliminate all programs based
on sex, race or minority status. The proposed rule did not address the
elimination of any SBA programs and, therefore, this comment is beyond
the scope of the proposed rulemaking.
Compliance with Executive Orders 12866, 13563, 12988, 13132, 13272, the
Paperwork Reduction Act (44 U.S.C., Chapter 35) and the Regulatory
Flexibility Act (5 U.S.C. 601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
rule is a significant regulatory action for purposes of Executive Order
12866. In the proposed rule, SBA set forth its initial regulatory
impact analysis, which addressed the following: Necessity of the
regulation; the potential benefits and costs of the regulation; and
alternative approaches to the proposed rule. SBA did not receive any
comments which specifically addressed this regulatory impact analysis.
Therefore, SBA adopts as final its initial regulatory impact analysis.
Executive Order 13563
This final rule implements important statutory provisions intended
to prevent and deter fraud and misrepresentation in small business
government contracting and other programs. SBA has amended 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, utilized identical language in each
Part. SBA has also included in each Part other relevant applicable
statutory provisions concerning the penalties for misrepresentation.
The costs associated with these 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 forums around the country to
discuss implementation of the Jobs Act, including the provisions in
this rule.
Executive Order 12988
For the purpose of Executive Order 12988, this final rule meets
applicable standards set forth in section 3(a) and 3(b)(2) of Executive
Order 12988, Civil Justice Reform, to minimize litigation, eliminate
ambiguity, and reduce burden. This rule has no preemptive or
retroactive effect.
Executive Order 13132
This final 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., Ch. 35
For the purpose of the Paperwork Reduction Act, 44 U.S.C. Chapter
35, SBA has determined that this rule does not impose new reporting
requirements and does not require new recordkeeping requirements. In
accordance with 48 CFR Sec. Sec. 4.1202, 52.204-8, 52.219-1 and 13 CFR
Sec. Sec. 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, 33, and 1449), so this provision
does not create new reporting or recordkeeping requirements.
Regulatory Flexibility Act
SBA has determined that this rule 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. Accordingly,
SBA set forth an Initial Regulatory Flexibility Act (IRFA) analysis in
the proposed rule. The IRFA addressed the impact of the proposed rule
in accordance with 5 U.S.C. 603. The IRFA examined the objectives and
legal basis for the proposed rule; the kind and number of small
entities that may be affected; the projected recordkeeping, reporting,
and other requirements; whether there were any Federal rules that may
duplicate, overlap, or conflict with the proposed rule; and whether
there were any significant alternatives to the proposed rule. The
Agency's final regulatory flexibility analysis (FRFA) is set forth
below.
(a) Need for, Objectives, and Legal Basis of the Rule
These 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 misrepresenting their size or socioeconomic status.
(b) Estimate of the Number of Small Entities to Which the Rule Will
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 regulation will not impact small organizations or small
governmental jurisdictions.
In fiscal year 2010, there were approximately 1.6 million small
business contract actions (out of 3.36 million total small business
eligible contract actions). This final rule's 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 order to redress the misrepresentation. In fiscal year
2010, SBA found approximately 200 firms to be ineligible for a contract
(14 HUBZone, 33 Service-Disabled Veteran-Owned, 0 Women-Owned Small
Business, 151 size). Not all of these firms would be criminally
prosecuted or have others actions taken against them. Thus, the
regulations concerning presumption of loss will impact very few
concerns, and some of these concerns are not actually small.
There are in approximately 348,000 concerns listed as small
business concerns in the Dynamic Small Business Search (DSBS) database.
The regulations concerning deemed certifications and the requirement
for a
[[Page 38816]]
signature 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 DSBS that submit offers or responses for grants,
subcontracts, and other agreements. The annual certification
requirement applies to all of the 348,000 firms registered in DSBS.
(c) Projected Reporting, Recordkeeping and Other Compliance
Requirements
This final rule does 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. 48
CFR Sec. Sec. 4.1202, 52.204-8, 52.219-1 and 13 CFR Sec. Sec.
121.404(a), 121.411. The rule requires an authorized official to sign
on the page containing a concern's size or status representation.
Offerors are already required to sign their offers, so the burden on
small business concerns to also sign their size or status
representation or certification is minimal. Standard Forms 18, 33, 1447
and 1449.
(d) Federal Rules Which May Duplicate, Overlap or Conflict With the
Rule
Section 1342 of the Jobs Act requires that firms that fail to meet
the annual certification or representation requirement shall lose their
status in the database. Firms will not be able submit offers for small
business contracts based on their online representations or
certifications (48 CFR Sec. 4.1201(c)), but instead must have an
authorized official sign in connection with the firm's size or status.
Firms must already sign offers, so the impact will be negligible.
Standard Forms 18, 33, 1447 and 1449.
(e) Steps Taken To Minimize Impact on Small Entities
This final rule implements Sections 1341 and 1342 of the Jobs Act.
The final rule is directed at small business concerns seeking
government contracts, subcontracts, grants, and cooperative agreements.
The final rule is 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 are currently
required to sign offers. Firms will have to update their size and
socioeconomic status in ORCA/SAM at least annually, but that too is
already required. 48 CFR Sec. 4.1201(b)(1).
(f) Issues Raised by Public Comments in Response to the Initial
Regulatory Flexibility Analysis and the Agency's Assessment
The SBA received one comment that addressed the IRFA or the
subjects discussed in the IRFA. This commenter expressed concern
regarding a portion of the IRFA which read: ``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.'' Specifically, the
commenter felt that SBA's reference to ``other action'' requires
clarification. As noted above, it is SBA's intent that the presumption
of loss shall be applied in all manner of criminal, civil,
administrative, contractual, common law, or other actions, which the
United States government may take to redress willful misrepresentation.
In fiscal year 2010, SBA found approximately 200 firms to be ineligible
for a contract (14 HUBZone, 33 Service-Disabled Veteran-Owned, 0 Women-
Owned Small Business, 151 size). Not all of these firms willfully
misrepresented their size or status. Thus, SBA continues to believe
that the regulations concerning presumption of loss will impact very
few concerns, most of which will not qualify as small.
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 amends parts 121, 124,
125, 126 and 127 of title 13 of the Code of Federal Regulations as
follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for part 121 continues 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.
0
2. Revise Sec. 121.108 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 classified as intended for award to small
business concerns, there shall be a 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, proposal, application or offer 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, application or offer 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
[[Page 38817]]
development agreement, as a small business concern.
(c) Signature Requirement. Each offer, proposal, 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) through (c) of this
section may be determined not to apply in the case of unintentional
errors, technical malfunctions, and other similar situations that
demonstrate that a misrepresentation of size was not affirmative,
intentional, willful or actionable under the False Claims Act, 31
U.S.C. Sec. Sec. 3729, et seq. A prime contractor acting in good faith
should not be held liable for misrepresentations made by its
subcontractors regarding the subcontractors' size. Relevant factors to
consider in making this determination may include 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. An individual or
firm may not be held liable where government personnel have erroneously
identified a concern as small without any representation or
certification having been made by the concern and where such
identification is made without the knowledge of the individual or firm.
(e) Penalties for Misrepresentation.
(1) Suspension or debarment. The SBA suspension and debarment
official or the agency suspension and debarment official may suspend or
debar a person or concern for misrepresenting a firm's size status
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) Criminal Penalties. 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, 18 U.S.C. 287, and any other applicable
laws. 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.
0
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
System for Award Management (SAM) 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 SAM fails
to certify its size within one year of a size certification, the firm
will not be listed as a small business concern in SAM, unless and until
the firm recertifies its size.
Sec. 121.404 [Amended]
0
4. Amend Sec. 121.404(b) by removing ``and the date of certification
by SBA'' and adding in its place ``and, where applicable, the date the
SBA program office requests a formal size determination in connection
with a concern that otherwise appears eligible for program
certification.''
0
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 a 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, proposal, application or offer 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, application or offer 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 offer, proposal, 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) through (f) of this
section may be determined not to apply in the case of unintentional
errors, technical malfunctions, and other similar situations that
demonstrate that a misrepresentation of size was not affirmative,
intentional, willful or actionable under the False Claims Act, 31
U.S.C. Sec. Sec. 3729, et seq. A prime contractor acting in good faith
should not be held liable for misrepresentations made by its
subcontractors regarding the subcontractors' size. Relevant factors to
consider in making this determination may include 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. An individual or
firm may not be held liable where government personnel have erroneously
identified a concern as small without any representation or
certification having been made by the concern and where such
identification is made without the knowledge of the individual or firm.
[[Page 38818]]
(h) Penalties for Misrepresentation.
(1) Suspension or debarment. The SBA suspension and debarment
official or the agency suspension and debarment official may suspend or
debar a person or concern for misrepresenting a firm's size status
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) Criminal Penalties. 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, 18 U.S.C. 287, and any other applicable
laws. 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.
0
6. Revise paragraph (f) of Sec. 121.1009 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
0
7. The authority citation for part 124 continues to read as follows:
Authority: 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. 101-37, Pub. L. 101-
574, section 8021, Pub. L. 108-87, and 42 U.S.C. 9815.
0
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 a 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 an 8(a) sole source or
competitive contract.
(2) 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 (SDB).
(c) Signature Requirement. Each offer for an 8(a) contract shall
contain a certification concerning the 8(a) status of a business
concern seeking the contract. 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) of this section may
be determined not to apply in the case of unintentional errors,
technical malfunctions, and other similar situations that demonstrate
that a misrepresentation of 8(a) status was not affirmative,
intentional, willful or actionable under the False Claims Act, 31
U.S.C. 3729, et seq. A prime contractor acting in good faith should not
be held liable for misrepresentations made by its subcontractors
regarding the subcontractors' 8(a) status. Relevant factors to consider
in making this determination may include the firm's internal management
procedures governing representation or certification as an eligible
8(a) Participant, 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. An
individual or firm may not be held liable where government personnel
have erroneously identified a concern as an eligible 8(a) Participant
without any representation or certification having been made by the
concern and where such identification is made without the knowledge of
the individual or firm.
0
9. Add new Sec. 124.1015 to read as follows:
Sec. 124.1015 What are the requirements for representing SDB 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 SDB
concerns, there shall be a 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 SDB willfully sought and received the award by misrepresentation.
(b) Deemed Certifications. The following actions shall be deemed
affirmative, willful and intentional certifications of SDB status:
(1) Submission of a bid, proposal, application or offer 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 SDBs.
(2) Submission of a bid, proposal, application or offer 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 SDB.
(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 SDB.
(c) Signature Requirement. Each offer, proposal, bid, or
application for a Federal contract, subcontract, or grant shall contain
a certification concerning the SDB 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 SDB status
claimed by the concern.
(d) Limitation of Liability. Paragraphs (a) through (c) of this
section may be determined not to apply in the case of unintentional
errors, technical malfunctions, and other similar
[[Page 38819]]
situations that demonstrate that a misrepresentation of SDB status was
not affirmative, intentional, willful or actionable under the False
Claims Act, 31 U.S.C. 3729, et seq. A prime contractor acting in good
faith should not be held liable for misrepresentations made by its
subcontractors regarding the subcontractors' SDB status. Relevant
factors to consider in making this determination may include the firm's
internal management procedures governing SDB status 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. An
individual or firm may not be held liable where government personnel
have erroneously identified a concern as a SDB without any
representation or certification having been made by the concern and
where such identification is made without the knowledge of the
individual or firm.
(e) Penalties for Misrepresentation.
(1) Suspension or debarment. The SBA suspension and debarment
official or the agency suspension and debarment official may suspend or
debar a person or concern for misrepresenting a firm's status as a SDB
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) Criminal Penalties. Persons or concerns are subject to severe
criminal penalties for knowingly misrepresenting the SDB 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, 18 U.S.C. 287, and any other applicable laws. 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.
0
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
SDB in any Federal procurement database?
(a) In order to be identified as a SDB in the System for Award
Management (SAM) database (or any successor thereto), a concern must
certify its SDB status in connection with specific eligibility
requirements at least annually.
(b) If a firm identified as a SDB in SAM fails to certify its
status within one year of a status certification, the firm will not be
listed as a SDB in SAM, unless and until the firm recertifies its SDB
status.
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
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.
0
12. Revise Sec. 125.29 to read as follows:
Sec. 125.29 What are the requirements for representing SDVO SBC
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 SDVO SBCs,
there shall be a 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 SDVO
SBC willfully sought and received the award by misrepresentation.
(b) Deemed Certifications. The following actions shall be deemed
affirmative, willful and intentional certifications of SDVO SBC status:
(1) Submission of a bid, proposal, application or offer 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 SDVO SBCs.
(2) Submission of a bid, proposal, application or offer 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 SDVO SBC.
(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 SDVO SBC.
(c) Signature Requirement. Each offer, proposal, bid, or
application for a Federal contract, subcontract, or grant shall contain
a certification concerning the SDVO SBC 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
SDVO SBC status claimed by the concern.
(d) Limitation of Liability. Paragraphs (a) through (c) of this
section may be determined not to apply in the case of unintentional
errors, technical malfunctions, and other similar situations that
demonstrate that a misrepresentation of SDVO SBC status was not
affirmative, intentional, willful or actionable under the False Claims
Act, 31 U.S.C. Sec. Sec. 3729, et seq. A prime contractor acting in
good faith should not be held liable for misrepresentations made by its
subcontractors regarding the subcontractors' SDVO SBC status. Relevant
factors to consider in making this determination may include the firm's
internal management procedures governing SDVO SBC status
representations or certifications, 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. An individual or firm may not be held liable where
government personnel have erroneously identified a concern as a SDVO
SBC without any representation or certification having been made by the
concern and where such identification is made without the knowledge of
the individual or firm.
(e) Penalties for Misrepresentation.
(1) Suspension or debarment. The SBA suspension and debarment
official or the agency suspension and debarment official may suspend or
debar a person or concern for misrepresenting a firm's status as a SDVO
SBC 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) Criminal Penalties. Persons or concerns are subject to severe
criminal penalties for knowingly misrepresenting the SDVO SBC 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, 18 U.S.C. 287, and any other applicable laws. Persons or
concerns are subject to criminal penalties for knowingly making false
statements or misrepresentations to SBA
[[Page 38820]]
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.
0
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
SDVO SBC in any Federal procurement databases?
(a) In order to be identified as a SDVO SBC in the System for Award
Management (SAM) database (or any successor thereto), a concern must
certify its SDVO SBC status in connection with specific eligibility
requirements at least annually.
(b) If a firm identified as a SDVO SBC in SAM fails to certify its
status within one year of a status certification, the firm will not be
listed as a SDVO SBC in SAM, unless and until the firm recertifies its
SDVO SBC status.
PART 126--HUBZONE PROGRAM
0
14. The authority citation for part 126 continues to read as follows:
Authority: 15 U.S.C. 632(a), 632(j), 632(p) and 657a.
0
15. Revise Sec. 126.900 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
SBCs, there shall be a 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
SBC willfully sought and received the award by misrepresentation.
(b) Deemed Certifications. The following actions shall be deemed
affirmative, willful and intentional certifications of HUBZone SBC
status:
(1) Submission of a bid, proposal, application or offer 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 SBCs.
(2) Submission of a bid, proposal, application or offer 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 SBC.
(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 SBC.
(c) Signature Requirement. Each offer, proposal, bid, or
application for a Federal contract, subcontract, or grant shall contain
a certification concerning the HUBZone SBC 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) of this section may
be determined not to apply in the case of unintentional errors,
technical malfunctions, and other similar situations that demonstrate
that a misrepresentation of HUBZone status was not affirmative,
intentional, willful or actionable under the False Claims Act, 31
U.S.C. Sec. Sec. 3729, et seq. A prime contractor acting in good faith
should not be held liable for misrepresentations made by its
subcontractors regarding the subcontractors' HUBZone status. Relevant
factors to consider in making this determination may include the firm's
internal management procedures governing HUBZone status representations
or certifications, 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. An
individual or firm may not be held liable where government personnel
have erroneously identified a concern as a HUBZone SBC without any
representation or certification having been made by the concern and
where such identification is made without the knowledge of the
individual or firm.
(e) Penalties for Misrepresentation.
(1) Suspension or debarment. The SBA suspension and debarment
official or the agency suspension and debarment official may suspend or
debar a person or concern for misrepresenting a firm's status as a
HUBZone SBC 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) Criminal Penalties. 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, 18 U.S.C. 287, and any other applicable laws. 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
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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.
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17. Revise Sec. 127.700 to read as follows:
Sec. 127.700 What are the requirements for representing EDWOSB or
WOSB 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 EDWOSBs or
WOSBs, there shall be a 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 EDWOSB
or WOSB willfully sought and received the award by misrepresentation.
(b) Deemed Certifications. The following actions shall be deemed
affirmative, willful and intentional certifications of EDWOSB or WOSB
status:
(1) Submission of a bid, proposal, application or offer 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 EDWOSBs or WOSBs.
[[Page 38821]]
(2) Submission of a bid, proposal, application or offer 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 EDWOSB or WOSB.
(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 EDWOSB or WOSB.
(c) Signature Requirement. Each offer, proposal, bid, or
application for a Federal contract, subcontract, or grant shall contain
a certification concerning the EDWOSB or WOSB 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 EDWOSB or WOSB status claimed by the concern.
(d) Limitation of Liability. Paragraphs (a)-(c) of this section may
be determined not to apply in the case of unintentional errors,
technical malfunctions, and other similar situations that demonstrate
that a misrepresentation of EDWOSB or WOSB status was not affirmative,
intentional, willful or actionable under the False Claims Act, 31
U.S.C. Sec. Sec. 3729, et seq. A prime contractor acting in good faith
should not be held liable for misrepresentations made by its
subcontractors regarding the subcontractors' EDWOSB or WOSB status.
Relevant factors to consider in making this determination may include
the firm's internal management procedures governing EDWOSB or WOSB
status representations or certifications, 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. An individual or firm may not be held liable where
government personnel have erroneously identified a concern as an EDWOSB
or WOSB without any representation or certification having been made by
the concern and where such identification is made without the knowledge
of the individual or firm.
(e) Penalties for Misrepresentation.
(1) Suspension or debarment. The SBA suspension and debarment
official or the agency suspension and debarment official may suspend or
debar a person or concern for misrepresenting a firm's status as an
EDWOSB or WOSB 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) Criminal Penalties. Persons or concerns are subject to severe
criminal penalties for knowingly misrepresenting the EDWOSB or WOSB
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, 18 U.S.C. 287, and any other applicable laws. 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.
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18. Add new Sec. 127.701 to read as follows:
Sec. 127.701 What must a concern do in order to be identified as an
EDWOSB or WOSB in any Federal procurement databases?
(a) In order to be identified as an EDWOSB or WOSB in the System
for Award Management (SAM) database (or any successor thereto), a
concern must certify its EDWOSB or WOSB status in connection with
specific eligibility requirements at least annually.
(b) If a firm identified as an EDWOSB or WOSB in SAM fails to
certify its status within one year of a status certification, the firm
will not be listed as an EDWOSB or WOSB in SAM, unless and until the
firm recertifies its EDWOSB or WOSB status.
Karen G. Mills,
Administrator.
[FR Doc. 2013-15418 Filed 6-27-13; 8:45 am]
BILLING CODE 8025-01-P