[Federal Register Volume 81, Number 202 (Wednesday, October 19, 2016)]
[Rules and Regulations]
[Pages 71981-71983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25080]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121, 124, and 126

RIN 3245-AG24


Small Business Mentor Prot[eacute]g[eacute] Programs; Correction

AGENCY: U.S. Small Business Administration.

ACTION: Correcting amendments.

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SUMMARY: The U.S. Small Business Administration (SBA) published a final 
rule in the Federal Register on July 25, 2016 (81 FR 48557), amending 
its regulations to establish a new Government-wide mentor-
prot[eacute]g[eacute] program for all small business concerns, 
consistent with SBA's mentor-prot[eacute]g[eacute] program for 
Participants in SBA's 8(a) Business Development (BD) program. The rule 
also made several additional changes to current size, 8(a), Office of 
Hearings and Appeals, and HUBZone regulations, concerning among other 
things, ownership and control, changes in primary industry, economic 
disadvantage of a Native Hawaiian Organization (NHO), standards of 
review, and interested party status for some appeals. This document 
makes several technical corrections to that final rule, including 
correcting citations, eliminating a paragraph that conflicts with a new 
provision added by that final rule, and making conforming amendments.

DATES: Effective October 19, 2016.

FOR FURTHER INFORMATION CONTACT: Michael McLaughlin, Office of Policy, 
Planning & Liaison, U.S. Small Business Administration, 409 Third 
Street SW., Washington, DC 20416; 202-205-5353; 
[email protected].

SUPPLEMENTARY INFORMATION: The final rule published on July 25, 2016, 
at 81 FR 48557, contained several errors,

[[Page 71982]]

including inadvertent oversights and omissions that must be corrected 
in order to ensure consistency within the regulations and to avoid 
public uncertainty or confusion. First, a correction is needed because 
the amendment in instruction 5 on page 48579, column one, should have 
also applied to Sec.  121.702(b)(1)(i), not just paragraph (a)(1). 
Specifically, the instruction should have read: ``Amend Sec. Sec.  
121.702(a)(1)(i) and (b)(1)(i) by adding the words `an Indian tribe, 
ANC or NHO (or a wholly owned entity of such tribe, ANC or NHO),' 
before the words `or any combination of these.' '' The final rule 
amended the requirements for the Small Business Innovation Research 
(SBIR) Program to specifically recognize that a small business concern 
owned and controlled by an Indian tribe, Alaska Native Corporation 
(ANC) or a Native Hawaiian Organization (NHO) may be eligible to 
participate in the SBIR Program. Historically, the eligibility 
requirements for the SBIR Program have been consistent with those for 
SBA's Small Business Technology Transfer (STTR) Program. While the 
final rule amended the eligibility requirements for the SBIR Program in 
Sec.  124.702(a)(1)(i), it inadvertently did not make the same 
corresponding change to the STTR Program. As such, this correction is 
necessary to add that same clarifying language to the STTR eligibility 
requirements as that added to the SBIR requirements.
    Second, a correction is needed to delete Sec.  124.110(g)(2). After 
this correction, a corresponding correction to the numbering also needs 
to occur that would eliminate paragraph (g)(1) as a separate paragraph 
and move the substance of paragraph (g)(1) to the end of the 
introductory text of paragraph (g). In response to public comment, SBA 
changed the way in which SBA requires an applicant concern to 
demonstrate the economic disadvantage status of a NHO. See Sec.  
124.110(c) (81 FR 48580-48581). Section 124.110(g)(2) had meaning only 
with respect to the way SBA previously required an applicant concern to 
demonstrate the economic disadvantage status of an NHO. SBA mistakenly 
did not remove Sec.  124.110(g)(2) when it made the change to Sec.  
124.110(c). This correction is needed to remove the paragraph because 
it is now inconsistent with the July 25, 2016 final rule.
    Third, a correction is needed to make a conforming change to Sec.  
124.112. The final rule eliminated the requirement from Sec.  124.203 
that an applicant must submit IRS Form 4506T in every case, and 
clarified that SBA may request additional documentation during the 8(a) 
application process when necessary. However, the final rule did not 
make the conforming change that the IRS Form 4506T is not needed in 
every case for an annual review as well, but, rather, may be requested 
on a case-by-case basis during an annual review by SBA.
    Fourth, due to the change made to Sec.  121.103(h), which 
eliminated the ability of a joint venture to be populated with 
individuals intended to perform contracts awarded to the joint venture, 
a conforming correction is needed to Sec.  124.513(c), which references 
populated joint ventures. Specifically, Sec.  124.513(c)(4) provided 
that in the case of a populated separate legal entity joint venture, 
8(a) Participant(s) must receive profits from the joint venture 
commensurate with their ownership interests in the joint venture. 
Because SBA eliminated populated joint ventures, that provision is now 
superfluous and needs to be deleted.
    Fifth, a correction is needed to amend an incorrect cross 
reference. The final rule revised Sec.  126.615. That revised language 
referenced an exception contained in Sec.  126.618(d). There is no 
paragraph (d). Therefore, the cross reference contained in Sec.  
126.615 is revised to read Sec.  126.618.
    Sixth, a correction is needed to correct a mistaken instruction. 
Instruction 2 on page 48578 purported to revise the last two sentences 
of the introductory text of 13 CFR 121.103(h). However, on May 31, 
2016, SBA amended paragraph (h) by adding a new final sentence to the 
introductory text of paragraph (h). 81 FR 34243, 34258, instruction 
2.c. Consequently, a sentence that SBA intended to remove remains in 
paragraph (h), while a sentence that SBA added on May 31, 2016 was 
revised. Thus, SBA is revising the introductory text of paragraph (h) 
to read as intended under both rules.

List of Subjects

13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Individuals with disabilities, Loan programs--
business, Reporting and recordkeeping requirements, Small businesses.

13 CFR Part 124

    Administrative practice and procedures, Government procurement, 
Hawaiian natives, Indians--business and finance, Minority businesses, 
Reporting and recordkeeping requirements, Tribally-owned concerns, 
Technical assistance.

13 CFR Part 126

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

    Accordingly, 13 CFR parts 121,124, and 126 are corrected by making 
the following correcting amendments:

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), 662, and 694a(9).


0
2. Amend Sec.  121.103 by revising the introductory text of paragraph 
(h) to read as follows:


Sec.  121.103  How does SBA determine affiliation?

* * * * *
    (h) Affiliation based on joint ventures. A joint venture is an 
association of individuals and/or concerns with interests in any degree 
or proportion consorting to engage in and carry out no more than three 
specific or limited-purpose business ventures for joint profit over a 
two year period, for which purpose they combine their efforts, 
property, money, skill, or knowledge, but not on a continuing or 
permanent basis for conducting business generally. This means that a 
specific joint venture entity generally may not be awarded more than 
three contracts over a two year period, starting from the date of the 
award of the first contract, without the partners to the joint venture 
being deemed affiliated for all purposes. Once a joint venture receives 
one contract, SBA will determine compliance with the three awards in 
two years rule for future awards as of the date of initial offer 
including price. As such, an individual joint venture may be awarded 
more than three contracts without SBA finding general affiliation 
between the joint venture partners where the joint venture had received 
two or fewer contracts as of the date it submitted one or more 
additional offers which thereafter result in one or more additional 
contract awards. The same two (or more) entities may create additional 
joint ventures, and each new joint venture entity may be awarded up to 
three contracts in accordance with this section. At some point, 
however, such a longstanding inter-relationship or contractual 
dependence between the same joint venture partners will lead to a 
finding of general affiliation between and among them. For purposes of 
this provision and in order to facilitate tracking of the number of 
contract

[[Page 71983]]

awards made to a joint venture, a joint venture: Must be in writing and 
must do business under its own name; must be identified as a joint 
venture in the System for Award Management (SAM); may be in the form of 
a formal or informal partnership or exist as a separate limited 
liability company or other separate legal entity; and, if it exists as 
a formal separate legal entity, may not be populated with individuals 
intended to perform contracts awarded to the joint venture (i.e., the 
joint venture may have its own separate employees to perform 
administrative functions, but may not have its own separate employees 
to perform contracts awarded to the joint venture). SBA may also 
determine that the relationship between a prime contractor and its 
subcontractor is a joint venture, and that affiliation between the two 
exists, pursuant to paragraph (h)(5) of this section. For purposes of 
this paragraph (h), contract refers to prime contracts, and any 
subcontract in which the joint venture is treated as a similarly 
situated entity as the term is defined in part 125 of this chapter.
* * * * *


Sec.  121.702  [Amended]

0
3. Amend Sec.  121.702(b)(1)(i) by adding the words ``an Indian tribe, 
ANC or NHO (or a wholly owned business entity of such tribe, ANC or 
NHO),'' before the words ``or any combination of these''.

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

0
3. 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), 644 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
4. Amend Sec.  124.110 by revising paragraph (g) to read as follows:


Sec.  124.110  Do Native Hawaiian Organizations have any special rules 
for applying to the 8(a) BD program?

* * * * *
    (g) An NHO-owned firm's eligibility for 8(a) BD participation is 
separate and distinct from the individual eligibility of the NHO's 
members, directors, or managers. The eligibility of an NHO-owned 
concern is not affected by the former 8(a) BD participation of one or 
more of the NHO's individual members.
* * * * *


Sec.  124.112  [Amended]

0
5. Amend Sec.  124.112 by adding the word ``and'' at the end of 
paragraph (b)(8), removing paragraph (b)(9), and redesignating 
paragraph (b)(10) as paragraph (b)(9).

0
6. Amend Sec.  124.513 by revising paragraph (c)(4) to read as follows:


Sec.  124.513   Under what circumstances can a joint venture be awarded 
an 8(a) contract?

* * * * *
    (c) * * *
    (4) Stating that the 8(a) Participant(s) must receive profits from 
the joint venture commensurate with the work performed by the 8(a) 
Participant(s);
* * * * *

PART 126--HUBZONE PROGRAM

0
7. The authority citation for part 126 continues to read as follows:

    Authority: 15 U.S.C. 632(a), 632(j), 632(p), 644; and 657a; Pub. 
L. 111-240, 24 Stat. 2504.


Sec.  126.615  [Amended]

0
8. Amend Sec.  126.615 by removing ``Sec.  126.618(d)'' and adding in 
its place ``Sec.  126.618''.

A. John Shoraka,
Associate Administrator for Government Contracting and Business 
Development.
[FR Doc. 2016-25080 Filed 10-18-16; 8:45 am]
BILLING CODE 8205-01-P