[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]
[Rules and Regulations]
[Pages 4724-4731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31498]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 5, 6, 18, 19 and 52

[FAC 2005-95; FAR Case 2012-022; Item IV; Docket No. 2012-0022, 
Sequence No. 1]
RIN 9000-AM68


Federal Acquisition Regulation; Contracts Under the Small 
Business Administration 8(a) Program

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

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement regulatory 
clarifications made by the Small Business Administration regarding the 
8(a) program.

DATES: Effective: January 13, 2017.

FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement 
Analyst, at 703-605-2868, or by email at [email protected], for 
clarification of content. For information pertaining to status or 
publication schedules, contact the Regulatory Secretariat Division at 
202-501-4755. Please cite FAC 2005-95, FAR Case 2012-022.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 79 FR 6135 on February 3, 2014, soliciting public comments 
regarding the implementation of regulatory clarifications made by the 
Small Business Administration (SBA) under section 8(a) of the Small 
Business Act (15 U.S.C. 637(a)). The proposed rule provided additional 
guidance for the evaluation, offering, and acceptance process; 
procedures for releasing a requirement for non-8(a) procurement; and 
information on the effect exiting the 8(a) program will have on its 
current contractual obligations and the firm's ability to receive new 
8(a) requirements. Six respondents submitted comments on the proposed 
rule.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the comments in the 
development of the final rule. A discussion of the comments is 
provided.

A. Summary of Significant Changes

    The final rule contains revisions to the language at FAR 19.804-
6(a) to clarify that offers and acceptances are required for individual 
orders under multiple-award contracts that were not set aside for 
competition among 8(a) contractors. The final rule also revises the 
language at FAR 19.814(a) to indicate that the SBA Inspector General 
can request a formal size determination. In addition, the final rule 
revises the language at FAR 19.815 regarding the release of 
requirements from the 8(a) program. Language has been added to clarify 
that any follow-on 8(a) requirement shall remain in the 8(a) program 
unless there is a mandatory source for the requirement pursuant to FAR 
8.002 or 8.003 or SBA agrees to release the requirement for procurement 
outside the 8(a) program.

B. Analysis of Public Comments

1. Support Proposed Changes
    Comment: One respondent stated support for the changes made in the 
proposed rule.
    Response: The Councils acknowledge receipt of this comment.
2. Potential Conflict With Other Statutorily Mandated Socioeconomic 
Programs
    Comment: Two respondents expressed concern that the proposed 
language at FAR 19.815 appeared to be in conflict with other 
socioeconomic programs, such as the Javits-Wagner-O'Day (JWOD) Act (now 
codified at 41 U.S.C. chapter 85). The proposed rule at FAR section 
19.815, Release for non-8(a) procurement, implies that the SBA 
Associate Administrator for Business Development will only consider 
releasing requirements from the 8(a) program when there are assurances 
that the requirement will be procured under another small business 
program. However, the proposed rule does not mention that another 
reason a requirement must be released is when it can be procured under 
a statutory authority other than the Small Business Act. For example, 
if the requirement has been placed on the Procurement List by the 
Committee for Purchase from People Who are Blind or Severely Disabled 
(AbilityOne), it must, by law, be procured under JWOD, using the 
procedures at FAR subpart 8.7. These respondents asked for further 
clarification of this point in the FAR.
    Response: The purpose of FAR 19.815 is to clarify that the 
contracting officer must submit a formal request to the SBA Associate 
Administrator for the release of a requirement that is currently 
accepted into the 8(a) program, if he or she intends to procure the 
item from a non-8(a) source. It further clarifies the factors SBA will 
take into consideration when determining whether to release the 
requirement from the 8(a) program.
    This clarification does not conflict or eliminate an agency's 
obligation to follow the procedures at FAR 8.002, Priorities for use of 
mandatory Government sources, and FAR 8.003, Use of other mandatory 
sources. As stated in these sections of the FAR, an agency may consider 
satisfying its requirement(s) through a commercial source, such as a 
small business, only after it has exhausted the possibility of 
fulfilling its requirement through one of the mandatory sources 
identified in FAR 8.002 or 8.003. However, new language has been added 
at FAR 19.815(a) and (b), to clarify that a requirement accepted into 
the 8(a) program shall remain in the 8(a) program unless the 
requirement can be satisfied through one of the mandatory sources 
listed at FAR 8.002 or 8.003 or the SBA Associate Administrator for 
Business Development agrees to release it.

[[Page 4725]]

3. The Rule Gives Preference to 8(a)Program Participants Over Other 
Small Businesses or Other Small Business Socioeconomic Programs
    Comment: One respondent remarked that FAR 19.800(d) appears to give 
preferential treatment to 8(a) awards over other small business or 
other socioeconomic goals. FAR 19.800(d) of the proposed rule states 
the following: ``the contracting officer shall consider 8(a) set-asides 
or sole source awards before considering small business set-asides . . 
. .'' This respondent stated that each agency should have autonomy in 
achieving its own socioeconomic goals.
    Response: The language in question already existed in the FAR as 
19.800(e), but was renumbered as 19.800(d) by the proposed rule. The 
intent of the language at FAR 19.800(d) of the proposed rule is to 
further convey the policy established at FAR 19.203(c), i.e., for 
acquisitions above the simplified acquisition threshold (SAT), the 
contracting officer shall first consider small business socioeconomic 
contracting programs, such as the HUBZone program, the service-disabled 
veteran-owned small business (SDVOSB) program, the women-owned small 
business program (WOSB), and the 8(a) program, before considering a 
small business set-aside, thus allowing agencies to independently 
tailor acquisition strategies based on their small business and small 
business socioeconomic goaling achievements. Similar language appears 
in FAR subparts 19.13, 19.14, and 19.15, though it is adapted to suit 
the specific socioeconomic program under discussion, i.e., HUBZone, 
SDVOSB program, or the WOSB program. For further information on the 
socioeconomic parity rules within the small business programs, refer to 
the final rule for FAR case 2011-004, Socioeconomic Program Parity, 
published in the Federal Register at 77 FR 12930 on March 2, 2012.
4. Further Clarification of 8(a) Offer and Acceptance Procedures Is 
Needed
    Comment: A respondent recommended that the language at FAR 19.804-
3(c)(2), which discusses sole source awards where the contracting 
officer has not nominated a specific 8(a) participant, be amended to 
allow the contracting officer to have input in the selection process 
and the opportunity to concur with SBA's selection.
    Response: The guidance provided in the FAR for ``open'' sole source 
requirements is consistent with SBA's regulations at 13 CFR part 124. 
In open sole source requirements, the agency provides input into the 
selection through its offering letter, including such criteria as the 
special capabilities or disciplines needed for contract performance. 
Concurrence with SBA's selection is evidenced by the contracting 
officer's signature on the tripartite agreement or, where SBA has 
delegated 8(a) contract execution functions to an agency, the 
contracting officer's signature on the contract award document.
    Comment: One respondent requested additional guidance to clarify 
when the contracting office may assume SBA's acceptance of a 
requirement valued below the SAT that is not offered on behalf of a 
specific 8(a) participant. For acquisitions at or below the SAT, FAR 
19.804-3(a)(2) states that the contracting office may assume SBA's 
acceptance has occurred within two working days when the offer was made 
on behalf of a specific 8(a) participant; however, the FAR is silent 
regarding when the contracting officer may assume SBA's acceptance of a 
requirement that was not offered on behalf of a specific 8(a) 
participant.
    Response: Although the proposed rule contained minor editorial 
revisions in this paragraph, the basic guidance was not changed because 
it is consistent with SBA's regulations. In order for SBA to make the 
decision to accept an offer of a requirement into the 8(a) program, it 
must have reasonable assurance that an eligible 8(a) participant is 
available.
    In the case of a sole source requirement at or below the SAT, when 
the contracting officer has identified a specific 8(a) participant, SBA 
will normally respond within two working days. This quick turnaround is 
attributed to the fact that SBA will usually accept the requirement on 
behalf of the 8(a) program in support of the specific participant 
nominated in the offering letter. However, when a contracting officer 
submits an open requirement to SBA, i.e., does not identify a specific 
participant for the performance of the sole source requirement, the 
matching process is more complicated, and SBA will require variable 
amounts of time to pair the offered requirement with an 8(a) 
participant possessing the competencies needed for successful 
performance. For this reason, a definitive time frame for assuming 
SBA's acceptance of an open requirement below the SAT is not provided 
in the FAR.
5. Editorial Recommendations
    Comment: One respondent recommended the inclusion of a definitions 
section, rather than defining all the terms at FAR 19.800(a). This 
respondent suggested that the new Definitions section should define the 
terms ``offering letter'' and ``competitive threshold.''
    Response: The intent of the rule is to provide needed clarification 
of certain aspects of the 8(a) program relating to Federal procurement. 
In its present format, the definitions of certain terms such as 
``offering letter'' and ``competitive threshold'' occur in the FAR 
section where the phrase is introduced and the primary discussion of 
these subjects takes place. For example, the meaning of the term 
``offering letter'' is explained in FAR 19.804-2, Agency offering, 
which is the area where the subject matter is introduced and where the 
primary discussion of offering letters is located. Similarly, the 
discussion of ``competitive threshold'' occurs in two back-to-back 
sections of FAR subpart 19.8, where the term is defined and its primary 
discussion takes place.
    Comment: One respondent stated that the language at FAR 19.816(a) 
pertaining to an 8(a) contractor's eligibility to receive contracts 
after exiting the 8(a) program requires further explanation, since it 
appears to conflict with FAR 19.804-6 as well as section 19.816(c). 
This respondent suggested that the verbiage ``except as provided in FAR 
19.804-6 and paragraph 19.816(c) . . .'' be added to ensure these 
exceptions are made clear.
    Response: FAR 19.816(a) has been revised to add ``[e]xcept as 
provided in 19.816(c) . . . .'' However, FAR 19.804-6 addresses 
different subject matter. FAR 19.804-6 discusses the conditions by 
which an 8(a) prime contractor may continue to accept new orders under 
its existing multiple-award, indefinite-delivery, indefinite-quantity 
contract. On the other hand, FAR 19.816 discusses the contractual 
obligations upon exiting the 8(a) program.
    Comment: One respondent stated that the language at FAR 19.816(c) 
pertaining to a contractor's eligibility to receive contracts after 
exiting the program should be further clarified. Based on the 
assumption that an 8(a) contractor would necessarily have new North 
American Industry Classification System (NAICS) code applicability upon 
exiting the program, the respondent recommended that additional 
language be added to stipulate that the contractor must have been 
eligible for contract award in the specific NAICS code(s) identified in 
the contract on the initial date specified for receipt of offers.
    Response: The recommended change is unnecessary since 8(a) program

[[Page 4726]]

eligibility is already addressed in FAR sections 19.802, 19.803, and 
19.805 of the rule.
    Comment: Two respondents suggested a few minor editorial changes.
    Response: All suggested minor editorial changes have been 
incorporated.

III. Executive Orders 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 a significant regulatory action and, therefore, was subject to 
review under Section 6(b) of E.O. 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

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The FRFA is summarized as follows:

    This final rule amends the FAR to implement regulatory changes 
that SBA made to the 8(a) program. The final rule clarifies 
procedures and requirements used when agencies are contracting under 
the 8(a) Program. Among other issues, these changes include 
clarification of the evaluation, offering, and acceptance process; 
procedures for acquiring SBA's consent to procure an 8(a) 
requirement outside the 8(a) program; and the impact of exiting the 
8(a) program in terms of the firm's ability to receive future 8(a) 
requirements and its current contractual commitments. These 
revisions do not place any new requirements, financial or otherwise, 
on small entities, and serve mainly to provide more explicit 
guidance to Federal contracting officials.
    There were no significant issues raised by the public in 
response to the Initial Regulatory Flexibility Analysis provided in 
the proposed rule.
    Currently, the 8(a) Program has approximately 6,885 active 
Participants, and of these, approximately 1,289 are owned by Native 
Americans. These entities may be economically impacted by the 
changes addressed in this final rule.
    This rule does not impose any new information collection 
requirements on small businesses. The rule will have no direct 
negative impact on any small business concern, since it merely 
provides clarification of existing procedures and requirements used 
by agencies when contracting under the 8(a) Program.
    There are no alternative approaches that will accomplish the 
stated objectives of the rule.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

V. Paperwork Reduction Act

    The 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 5, 6, 18, 19 and 52.

    Government procurement.

    Dated: December 21, 2016.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 5, 6, 18, 19 and 
52 as set forth below:

0
1. The authority citation for 48 CFR parts 5, 6, 18, 19 and 52 
continues to read as follows:

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

PART 5--PUBLICIZING CONTRACT ACTIONS

0
2. Amend section 5.205 by revising paragraph (f) to read as follows:


5.205  Special situations.

* * * * *
    (f) Section 8(a) competitive acquisition. When a national buy 
requirement is being considered for competitive acquisition limited to 
eligible 8(a) participants under subpart 19.8, the contracting officer 
must transmit a synopsis of the proposed contract action to the GPE. 
The synopsis may be transmitted to the GPE concurrent with submission 
of the agency offering (see 19.804-2) to the Small Business 
Administration (SBA). The synopsis should also include information--
    (1) Advising that the acquisition is being offered for competition 
limited to eligible 8(a) participants;
    (2) Specifying the North American Industry Classification System 
(NAICS) code;
    (3) Advising that eligibility to participate may be restricted to 
8(a) participants in either the developmental stage or the 
developmental and transitional stages; and
    (4) Encouraging interested 8(a) participants to request a copy of 
the solicitation as expeditiously as possible since the solicitation 
will be issued without further notice upon SBA acceptance of the 
requirement for the section 8(a) program.
* * * * *

PART 6--COMPETITION REQUIREMENTS

0
3. Revise section 6.204 to read as follows:


6.204   Section 8(a) competition.

    (a) To fulfill statutory requirements relating to section 8(a) of 
the Small Business Act, as amended by Public Law 100-656, contracting 
officers may limit competition to eligible 8(a) participants (see 
subpart 19.8).
    (b) No separate justification or determination and findings is 
required under this part to limit competition to eligible 8(a) 
participants. (But see 6.302-5 and 6.303-1 for sole source 8(a) awards 
over $22 million.)

PART 18--EMERGENCY ACQUISITIONS


18.114  [Amended]

0
4. Amend section 18.114 by removing ``firms'' and adding 
``participants'' in its place.

PART 19--SMALL BUSINESS PROGRAMS


19.000   [Amended]

0
5. Amend section 19.000 by removing from paragraph (a)(3) ``business 
development''.

0
6. Revise section 19.800 to read as follows:


19.800  General.

    (a) Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) 
established a program that authorizes the Small Business Administration 
(SBA) to enter into all types of contracts with other agencies and 
award subcontracts for performing those contracts to firms eligible for 
program participation. This program is the ``8(a) Business Development 
Program,'' commonly referred to as the ``8(a) program.'' A small 
business that is accepted into the 8(a) program is known as a 
``participant.'' SBA's subcontractors are referred to as ``8(a) 
contractors.'' As used in this subpart, an 8(a) contractor is an 8(a) 
participant that is currently performing on a Federal contract or order 
that was set aside for 8(a) participants.

[[Page 4727]]

    (b) Contracts may be awarded to the SBA for performance by eligible 
8(a) participants on either a sole source or competitive basis.
    (c) Acting under the authority of the program, the SBA certifies to 
an agency that SBA is competent and responsible to perform a specific 
contract. The contracting officer has the discretion to award the 
contract to the SBA based upon mutually agreeable terms and conditions.
    (d) The contracting officer shall comply with 19.203 before 
deciding to offer an acquisition to a small business concern under the 
8(a) program. For acquisitions above the simplified acquisition 
threshold, the contracting officer shall consider 8(a) set-asides or 
sole source awards before considering small business set-asides.
    (e) When SBA has delegated its 8(a) program contract execution 
authority to an agency, the contracting officer must refer to its 
agency supplement or other policy directives for appropriate guidance.

0
7. Revise section 19.802 to read as follows:


19.802  Determining eligibility for the 8(a) program.

    Determining the eligibility of a small business to be a participant 
in the 8(a) program is the responsibility of the SBA. SBA's regulations 
on eligibility requirements for participation in the 8(a) program are 
found at 13 CFR 124.101 through 124.112.

0
8. Revise section 19.803 to read as follows:


19.803   Selecting acquisitions for the 8(a) program.

    Through their cooperative efforts, the SBA and an agency match the 
agency's requirements with the capabilities of 8(a) participants to 
establish a basis for the agency to contract with the SBA under the 
program. Selection is initiated in one of three ways:
    (a) The SBA advises the contracting activity of an 8(a) 
participant's capabilities through a search letter and requests the 
contracting activity to identify acquisitions to support the 
participant's business plans. In these instances, the SBA will provide 
at a minimum the following information in order to enable the 
contracting activity to match an acquisition to the participant's 
capabilities:
    (1) Identification of the participant and its owners.
    (2) Background information on the participant, including any and 
all information pertaining to the participant's technical ability and 
capacity to perform.
    (3) The participant's present production capacity and related 
facilities.
    (4) The extent to which contracting assistance is needed in the 
present and the future, described in terms that will enable the agency 
to relate the participant's plans to present and future agency 
requirements.
    (5) If construction is involved, the request shall also include the 
following:
    (i) A participant's capabilities in and qualifications for 
accomplishing various categories of construction work typically found 
in North American Industrial Category System subsector 236 
(construction of buildings), subsector 237 (heavy and civil engineering 
construction), or subsector 238 (specialty trade contractors).
    (ii) The participant's capacity in each construction category in 
terms of estimated dollar value (e.g., electrical, up to $100,000).
    (b) The SBA identifies a specific requirement for one or more 8(a) 
participant(s) and sends a requirements letter to the agency's Office 
of Small and Disadvantaged Business Utilization, or for the Department 
of Defense, Office of Small Business Programs, requesting the 
contracting office offer the acquisition to the 8(a) program. In these 
instances, in addition to the information in paragraph (a) of this 
section, the SBA will provide--
    (1) A clear identification of the acquisition sought; e.g., project 
name or number;
    (2) A statement as to how the required equipment and real property 
will be provided in order to ensure that the participant will be fully 
capable of satisfying the agency's requirements;
    (3) If construction, information as to the bonding capability of 
the participant(s); and
    (4) Either--
    (i) If a sole source request--
    (A) The reasons why the participant is considered suitable for this 
particular acquisition; e.g., previous contracts for the same or 
similar supply or service; and
    (B) A statement that the participant is eligible in terms of its 
small business size status relative to the assigned NAICS code, 
business support levels, and business activity targets; or
    (ii) If competitive, a statement that at least two 8(a) 
participants are considered capable of satisfying the agency's 
requirements and a statement that the participants are also eligible in 
terms of their small business size status relative to the assigned 
NAICS code, business support levels, and business activity targets. If 
requested by the contracting office, SBA will identify at least two 
such participants and provide information concerning the participants' 
capabilities.
    (c) Agencies may also review other proposed acquisitions for the 
purpose of identifying requirements which may be offered to the SBA. 
Where agencies independently, or through the self marketing efforts of 
an 8(a) participant, identify a requirement for the 8(a) program, they 
may offer on behalf of a specific 8(a) participant, for the 8(a) 
program in general, or for 8(a) competition.

0
9. Revise section 19.804-1 to read as follows:


19.804-1   Agency evaluation.

    In determining the extent to which a requirement should be offered 
in support of the 8(a) program, the agency should evaluate--
    (a) Current and future plans to acquire the specific items or work 
that 8(a) participants are seeking to provide, identified in terms of--
    (1) Estimated quantities of the supplies or services required or 
the estimated number of construction projects planned; and
    (2) Performance or delivery requirements, including--
    (i) Required monthly production rates, when applicable; and
    (ii) For construction, the geographical location where work is to 
be performed;
    (b) The impact of any delay in delivery;
    (c) Whether the items or work have previously been acquired using 
small business set-asides, and the date the items or work were 
acquired;
    (d) Problems encountered in previous acquisitions of the items or 
work from the 8(a) participants or other contractors; and
    (e) Any other pertinent information about known 8(a) participants, 
the items, or the work. This includes any information concerning the 
participants' products or capabilities. When necessary, the contracting 
agency shall make an independent review of the factors in 19.803(a) and 
other aspects of the participants' capabilities which would ensure the 
satisfactory performance of the requirement being considered for 
commitment to the 8(a) program.

0
10. Amend section 19.804-2 by--
0
a. Revising paragraphs (a) introductory text and (a)(10);
0
b. Redesignating paragraphs (a)(12) through (15) as paragraphs (a)(13) 
through (16), respectively;
0
c. Adding a new paragraph (a)(12);
0
d. Removing from the newly redesignated paragraph (a)(13)

[[Page 4728]]

``Program'' and adding ``program'' in its place;
0
e. Removing from paragraph (b)(3) ``firm'' and adding ``8(a) 
participant'' in its place (twice).
    The revisions and addition read as follows:


19.804-2   Agency offering.

    (a) After completing its evaluation, the contracting office shall 
notify the SBA of the extent of its plans to place 8(a) contracts with 
the SBA for specific quantities of items or work. The notification, 
referred to as an offering letter, shall identify the time frames 
within which resulting 8(a) awards must be completed in order for the 
agency to meet its responsibilities. The offering letter shall also 
contain the following information applicable to each prospective 
contract:
* * * * *
    (10) Identification of any particular 8(a) participant designated 
for consideration, including a brief justification, such as--
    (i) The 8(a) participant, through its own efforts, marketed the 
requirement and caused it to be reserved for the 8(a) program; or
    (ii) The acquisition is a follow-on or renewal contract and the 
nominated 8(a) participant is the incumbent.
* * * * *
    (12) Identification of all 8(a) participants which have expressed 
an interest in being considered for the acquisition.
* * * * *

0
11. Revise section 19.804-3 to read as follows:


19.804-3   SBA acceptance.

    (a) Upon receipt of the contracting office's offering letter, SBA 
will determine whether to accept the requirement for the 8(a) program. 
SBA's decision whether to accept the requirement will be transmitted to 
the contracting office in writing within 10 working days of receipt of 
the offer if the contract is likely to exceed the simplified 
acquisition threshold and within two working days of receipt if the 
contract is at or below the simplified acquisition threshold. The 
contracting office may grant an extension of these time periods, if 
requested by SBA.
    (1) For acquisitions exceeding the simplified acquisition 
threshold, if SBA does not respond to an offering letter within ten 
working days, the contracting office may seek SBA's acceptance through 
the Associate Administrator for Business Development. The contracting 
office may assume that SBA has accepted the requirement into the 8(a) 
program if it does not receive a reply from the Associate Administrator 
for Business Development within five calendar days of receipt of the 
contracting office's request.
    (2) For acquisitions not exceeding the simplified acquisition 
threshold, when the contracting office makes an offer to the 8(a) 
program on behalf of a specific 8(a) participant and does not receive a 
reply to its offering letter within two working days, the contracting 
office may assume the offer is accepted and proceed with award of an 
8(a) contract.
    (b) As part of the acceptance process, SBA will review the 
appropriateness of the NAICS code designation assigned to the 
requirement by the contracting officer.
    (1) SBA will not challenge the NAICS code assigned to the 
requirement by the contracting officer if it is reasonable, even though 
other NAICS codes may also be reasonable.
    (2) If SBA and the contracting officer are unable to agree on a 
NAICS code designation for the requirement, SBA may refuse to accept 
the requirement for the 8(a) program, appeal the contracting officer's 
determination to the head of the agency pursuant to 19.810, or appeal 
the NAICS code designation to the SBA Office of Hearings and Appeals 
under subpart C of 13 CFR part 134.
    (c) Sole source 8(a) awards. If an appropriate match exists, SBA 
will advise the contracting officer whether it will participate in 
contract negotiations or whether SBA will authorize the contracting 
officer to negotiate directly with the identified 8(a) participant. 
Where SBA has delegated its contract execution functions to a 
contracting agency, SBA will also identify that delegation in its 
acceptance letter.
    (1) Sole source award where the contracting officer nominates a 
specific 8(a) participant. SBA will determine whether an appropriate 
match exists where the contracting officer identifies a particular 
participant for a sole source award.
    (i) Once SBA determines that a procurement is suitable to be 
accepted as an 8(a) sole source contract, SBA will normally accept it 
on behalf of the 8(a) participant recommended by the contracting 
officer, provided that the 8(a) participant complies with the 
requirements of 13 CFR 124.503(c)(1).
    (ii) If an appropriate match does not exist, SBA will notify the 
8(a) participant and the contracting officer, and may then nominate an 
alternate 8(a) participant.
    (2) Sole source award where the contracting officer does not 
nominate a specific 8(a) participant. When a contracting officer does 
not nominate an 8(a) participant for performance of a sole source 8(a) 
contract, SBA will select an 8(a) participant for possible award from 
among two or more eligible and qualified 8(a) participants. The 
selection will be based upon relevant factors, including business 
development needs, compliance with competitive business mix 
requirements (if applicable), financial condition, management ability, 
technical capability, and whether award will promote the equitable 
distribution of 8(a) contracts. (For construction requirements see 13 
CFR 124.503(d)(1)).

0
12. Amend section 19.804-4--
0
a. Removing from the introductory text ``Program'' and adding 
``program'' in its place;
0
b. Revising paragraph (b); and
0
c. Removing from paragraph (d) ``Program'' and adding ``program'' in 
its place.
    The revision reads as follows:


19.804-4  Repetitive acquisitions.

* * * * *
    (b) A nominated 8(a) participant's eligibility, and whether or not 
it is the same 8(a) participant that performed the previous contract;
* * * * *

0
13. Amend section 19.804-5 by revising paragraphs (a) and (c) to read 
as follows:


19.804-5  Basic ordering agreements.

    (a) The contracting office shall submit an offering letter for, and 
SBA must accept, each order under a basic ordering agreement (BOA) in 
addition to the agency offering and SBA accepting the BOA itself.
* * * * *
    (c) Once an 8(a) participant's program term expires, the 
participant otherwise exits the 8(a) program, or becomes other than 
small for the NAICS code assigned under the BOA, SBA will not accept 
new orders for the participant.

0
14. Revise section 19.804-6 to read as follows:


19.804-6  Indefinite-delivery contracts.

    (a) Separate offers and acceptances are not required for individual 
orders under multiple-award contracts (including the Federal Supply 
Schedules managed by GSA, multi-agency contracts or Governmentwide 
acquisition contracts, or indefinite-delivery, indefinite-quantity 
(IDIQ) contracts) that have been set aside for exclusive competition 
among 8(a) contractors. SBA's acceptance of the original contract is 
valid for the term of the contract. Offers and acceptances are required 
for individual orders under multiple-award

[[Page 4729]]

contracts that have not been set aside for exclusive competition among 
8(a) contractors.
    (b) An 8(a) contractor may continue to accept new orders under the 
contract, even if it exits the 8(a) program, or becomes other than 
small for the NAICS code assigned to the contract.
    (c) Agencies may continue to take credit toward their prime 
contracting small disadvantaged business or small business goals for 
orders awarded to 8(a) participants, even after the contractor's 8(a) 
program term expires, the contractor otherwise exits the 8(a) program, 
or the contractor becomes other than small for the NAICS code assigned 
under the 8(a) contract. However, if an 8(a) contractor rerepresents 
that it is other than small for the NAICS code assigned under the 
contract in accordance with 19.301-2 or, where ownership or control of 
the 8(a) contractor has changed and SBA has granted a waiver to allow 
the contractor to continue performance (see 13 CFR 124.515), the agency 
may not credit any subsequent orders awarded to the contractor towards 
its small disadvantaged business or small business goals.

0
15. Amend section 19.805-1 by--
0
a. Revising paragraph (a) introductory text;
0
b. Removing from paragraph (a)(1) ``firms'' and adding ``participants'' 
in its place;
0
c. Revising paragraph (b) introductory text;
0
d. Removing from paragraph (b)(1) ``firms'' and adding ``participants'' 
in its place; and
0
e. Revising paragraph (d).
    The revisions read as follows:


19.805-1  General.

    (a) Except as provided in paragraph (b) of this section, an 
acquisition offered to the SBA under the 8(a) program shall be awarded 
on the basis of competition limited to eligible 8(a) participants 
when--
* * * * *
    (b) Where an acquisition exceeds the competitive threshold (see 
paragraph (a)(2) of this section), the SBA may accept the requirement 
for a sole source 8(a) award if--
* * * * *
    (d) The SBA Associate Administrator for Business Development may 
approve a contracting office's request for a competitive 8(a) award 
below the competitive thresholds. Such requests will be approved only 
on a limited basis and will be primarily granted where technical 
competitions are appropriate or where a large number of responsible 
8(a) participants are available for competition. In determining whether 
a request to compete below the threshold will be approved, the SBA 
Associate Administrator for Business Development will, in part, 
consider the extent to which the contracting activity is supporting the 
8(a) program on a noncompetitive basis. The agency may include 
recommendations for competition below the threshold in the offering 
letter or by separate correspondence to the SBA Associate Administrator 
for Business Development.

0
16. Revise section 19.805-2 to read as follows:


19.805-2  Procedures.

    (a) Offers shall be solicited from those sources identified in 
accordance with 19.804-3.
    (b) The SBA will determine the eligibility of the participants for 
award of the contract. Eligibility will be determined by the SBA as of 
the time of submission of initial offers which include price. 
Eligibility is based on Section 8(a) program criteria. An 8(a) 
participant must represent that it is a small business in accordance 
with the size standard corresponding to the NAICS code assigned to the 
contract.
    (1) In either negotiated or sealed bid competitive 8(a) 
acquisitions SBA will determine the eligibility of the apparent 
successful offeror and advise the contracting office within 5 working 
days after receipt of the contracting office's request for an 
eligibility determination.
    (i) If SBA determines that the apparent successful offeror is 
ineligible, the contracting office will then send to SBA the identity 
of the next highest evaluated offeror for an eligibility determination. 
The process is repeated until SBA determines that an identified offeror 
is eligible for award.
    (ii) If the contracting officer believes that the apparent 
successful offeror (or the offeror SBA has determined eligible for 
award) is not responsible to perform the contract, the contracting 
officer must refer the matter to SBA for Certificate of Competency 
consideration under subpart 19.6.
    (2) In any case in which an 8(a) participant is determined to be 
ineligible, SBA will notify the 8(a) participant of that determination.
    (c) Any party with information questioning the eligibility of an 
8(a) participant to continue participation in the 8(a) program or for 
the purposes of a specific 8(a) award may submit such information to 
the SBA in accordance with 13 CFR 124.112(c).

0
17. Amend section 19.808-1 by removing from paragraph (c) ``activity'' 
and ``contractor'' and adding ``officer'' and ``participant'' in their 
places, respectively, and adding paragraphs (d) and (e) to read as 
follows:


19.808-1  Sole source.

* * * * *
    (d) An 8(a) participant must represent that it is a small business 
in accordance with the size standard corresponding to the NAICS code 
assigned to the contract.
    (e) An 8(a) participant owned by an Alaska Native Corporation, 
Indian Tribe, Native Hawaiian Organization, or Community Development 
Corporation may not receive an 8(a) sole source award that is a follow-
on contract to an 8(a) contract, if the predecessor contract was 
performed by another 8(a) participant (or former 8(a) participant) 
owned by the same Alaska Native Corporation, Indian Tribe, Native 
Hawaiian Organization, or Community Development Corporation (See 13 CFR 
124.109 through 124.111).

0
18. Revise section 19.808-2 to read as follows.


19.808-2  Competitive.

    In competitive 8(a) acquisitions subject to part 15, the 
contracting officer conducts negotiations directly with the competing 
8(a) participants. Conducting competitive negotiations among 8(a) 
participants prior to SBA's formal acceptance of the acquisition for 
the 8(a) program may be grounds for SBA's not accepting the acquisition 
for the 8(a) program.

0
19. Revise section 19.809 to read as follows.


19.809  Preaward considerations.

    The contracting officer should request a preaward survey of the 
8(a) participant whenever considered useful. If the results of the 
preaward survey or other information available to the contracting 
officer raise substantial doubt as to the participant's ability to 
perform, the contracting officer must refer the matter to SBA for 
Certificate of Competency consideration under subpart 19.6.

0
20. Amend section 19.810 by--
0
a. Removing from paragraph (a)(2) ``firm'' and ``Program'' and adding 
``participant'' and ``program'' in their places, respectively;
0
b. Removing from paragraph (a)(3) ``activity's'' and adding 
``officer's'' in its place;
0
c. Revising paragraph (b); and
0
d. Removing from paragraph (c) ``firm'' and adding ``participant'' in 
its place.
    The revision reads as follows:

[[Page 4730]]

19.810  SBA appeals.

* * * * *
    (b)(1) Notification by SBA of an intent to appeal to the agency 
head--
    (i) Must be received by the contracting officer within 5 working 
days after SBA is formally notified of the contracting officer's 
decision; and
    (ii) Must be provided to the contracting agency Director for Small 
and Disadvantaged Business Utilization or, for the Department of 
Defense, the Director of Small Business Programs.
    (2) SBA must send the written appeal to the agency head within 15 
working days of SBA's notification of intent to appeal or the appeal 
may be considered withdrawn. Pending issuance of a decision by the 
agency head, the contracting officer shall suspend action on the 
acquisition. The contracting officer need not suspend action on the 
acquisition if the contracting officer makes a written determination 
that urgent and compelling circumstances that significantly affect the 
interests of the United States will not permit waiting for a decision.
* * * * *

0
21. Amend section 19.811-1 by revising paragraph (b) introductory text 
to read as follows:


19.811-1  Sole source.

* * * * *
    (b) The contracting officer shall prepare the contract that the SBA 
will award to the 8(a) participant in accordance with agency 
procedures, as if awarding the contract directly to the 8(a) 
participant, except for the following:
* * * * *


19.811-3  [Amended]

0
22. Amend section 19.811-3 by--
0
a. Removing from paragraph (d) introductory text ``Concerns'' and 
adding ``Participants'' in its place; and
0
b. Removing from paragraphs (d)(1) and (e) ``concerns'' and adding 
``participants'' in its place, respectively.

0
23. Amend section 19.812 by removing from paragraph (b) ``firm'' and 
adding ``8(a) contractor'' in its place and revising paragraph (d) to 
read as follows:


19.812  Contract administration.

* * * * *
    (d) An 8(a) contract, whether in the base or an option year, must 
be terminated for convenience if the 8(a) contractor to which it was 
awarded transfers ownership or control of the firm or if the contract 
is transferred or novated for any reason to another firm, unless the 
Administrator of the SBA waives the requirement for contract 
termination (13 CFR 124.515). The Administrator may waive the 
termination requirement only if certain conditions exist. Moreover, a 
waiver of the requirement for termination is permitted only if the 8(a) 
contractor's request for waiver is made to the SBA prior to the actual 
relinquishment of ownership or control, except in the case of death or 
incapacity where the waiver must be submitted within 60 calendar days 
after such an occurrence. The clauses in the contract entitled 
``Special 8(a) Contract Conditions'' and ``Special 8(a) Subcontract 
Conditions'' require the SBA and the 8(a) subcontractor to notify the 
contracting officer when ownership of the firm is being transferred. 
When the contracting officer receives information that an 8(a) 
contractor is planning to transfer ownership or control to another 
firm, the contracting officer shall take action immediately to preserve 
the option of waiving the termination requirement. The contracting 
officer shall determine the timing of the proposed transfer and its 
effect on contract performance and mission support. If the contracting 
officer determines that the SBA does not intend to waive the 
termination requirement, and termination of the contract would severely 
impair attainment of the agency's program objectives or mission, the 
contracting officer shall immediately notify the SBA in writing that 
the agency is requesting a waiver. Within 15 business days thereafter, 
or such longer period as agreed to by the agency and the SBA, the 
agency head must either confirm or withdraw the request for waiver. 
Unless a waiver is approved by the SBA, the contracting officer must 
terminate the contract for convenience upon receipt of a written 
request by the SBA. This requirement for a convenience termination does 
not affect the Government's right to terminate for default if the cause 
for termination of an 8(a) contract is other than the transfer of 
ownership or control.

0
24. Add sections 19.813 through 19.816 to read as follows:

Sec.
19.813 Protesting an 8(a) participant's eligibility or size status.
19.814 Requesting a formal size determination (8(a) sole source 
requirements).
19.815 Release for non-8(a) procurement.
19.816 Exiting the 8(a) program.
19.813 Protesting an 8(a) participant's eligibility or size status.

    (a) The eligibility of an 8(a) participant for a sole source or 
competitive 8(a) requirement may not be challenged by another 8(a) 
participant or any other party, either to SBA or any administrative 
forum as part of a bid or other contract protest (see 13 CFR 124.517).
    (b) The size status of an 8(a) participant nominated for an 8(a) 
sole source contract may not be protested by another 8(a) participant 
or any other party.
    (c) The size status of the apparent successful offeror for 
competitive 8(a) awards may be protested. The filing of a size status 
protest is limited to--
    (1) Any offeror whom the contracting officer has not eliminated for 
reasons unrelated to size;
    (2) The contracting officer; or
    (3) The SBA District Director in either the district office serving 
the geographical area in which the contracting activity is located or 
the district office that services the apparent successful offeror, or 
the Associate Administrator for Business Development.
    (d) Protests of competitive 8(a) awards shall follow the procedures 
at 19.302. For additional information, refer to 13 CFR 121.1001.


19.814  Requesting a formal size determination (8(a) sole source 
requirements).

    (a) If the size status of an 8(a) participant nominated for award 
of an 8(a) sole source contract is called into question, a request for 
a formal size determination may be submitted to SBA pursuant to 13 CFR 
121.1001(b)(2)(ii) by--
    (1) The 8(a) participant nominated for award of the particular sole 
source contract;
    (2) The contracting officer who has been delegated SBA's 8(a) 
contract execution functions, where applicable, or the SBA program 
official with authority to execute the 8(a) contract;
    (3) The SBA District Director in the district office that services 
the 8(a) participant or the Associate Administrator for Business 
Development; or
    (4) The SBA Inspector General.
    (b) SBA's Government Contracting Area Director will issue a formal 
size determination within 15 business days, if possible, after SBA 
receives the request for a formal size determination.
    (c) An appeal of an SBA size determination shall follow the 
procedures at 19.302.


19.815  Release for non-8(a) procurement.

    (a) Once a requirement has been accepted by SBA into the 8(a) 
program, any follow-on requirements shall remain in the 8(a) program 
unless there is a mandatory source (see 8.002 or

[[Page 4731]]

8.003) or SBA agrees to release the requirement from the 8(a) program 
in accordance with 13 CFR 124.504(d).
    (b) To obtain release of a requirement for a non-8(a) procurement 
(other than a mandatory source listed at 8.002 or 8.003), the 
contracting officer shall make a written request to, and receive 
concurrence from, the SBA Associate Administrator for Business 
Development.
    (c)(1) The written request to the SBA Associate Administrator for 
Business Development shall indicate--
    (i) Whether the agency has achieved its small disadvantaged 
business goal;
    (ii) Whether the agency has achieved its HUBZone, SDVOSB, WOSB, or 
small business goal(s); and
    (iii) Whether the requirement is critical to the business 
development of the 8(a) contractor that is currently performing the 
requirement.
    (2) Generally, a requirement that was previously accepted into the 
8(a) program will only be released for procurements outside the 8(a) 
program when the contracting activity agency agrees to set aside the 
requirement under the small business, HUBZone, SDVOSB, or WOSB 
programs.
    (3) The requirement that a follow-on procurement must be released 
from the 8(a) program in order for it to be fulfilled outside the 8(a) 
program does not apply to task or delivery orders offered to and 
accepted into the 8(a) program, where the basic contract was not 
accepted into the 8(a) program.


19.816  Exiting the 8(a) program.

    (a) Except as provided in paragraph (c) of this section, when a 
contractor exits the 8(a) program, it is no longer eligible to receive 
new 8(a) contracts. However, the contractor remains under contractual 
obligation to complete existing contracts, and any priced options that 
may be exercised.
    (b) If an 8(a) contractor is suspended from the program (see 13 CFR 
124.305), it may not receive any new 8(a) contracts unless the head of 
the contracting agency makes a determination that it is in the best 
interest of the Government to issue the award and SBA adopts that 
determination.
    (c) A contractor that has completed its term of participation in 
the 8(a) program may be awarded a competitive 8(a) contract if it was 
an 8(a) participant eligible for award of the contract on the initial 
date specified for receipt of offers contained in the solicitation, and 
if the contractor continues to meet all other applicable eligibility 
criteria.
    (d) SBA's regulations on exiting the 8(a) program are found at 13 
CFR 124.301 through 124.305, and 13 CFR 124.507(d).


19.1304  [Amended]

0
25. Amend section 19.1304 by removing from paragraph (d) ``Program'' 
and adding ``program'' in its place (twice).


19.1404  [Amended]

0
26. Amend section 19.1404 by removing from paragraph (d) ``Program'' 
and adding ``program'' in its place (twice).

0
27. Amend section 19.1504 by revising paragraph (a) to read as follows:


19.1504  Exclusions.

* * * * *
    (a) Requirements that an 8(a) contractor is currently performing 
under the 8(a) program or that SBA has accepted for performance under 
the authority of the 8(a) program, unless SBA has consented to release 
the requirements from the 8(a) program;
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
28. Amend section 52.212-5 by revising the date of the clause and 
paragraph (b)(19) to read as follows:


52.212-5  Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (JAN 2017)

* * * * *
    (b) * * *

(19) 52.219-14, Limitations on Subcontracting (JAN 2017) (15 U.S.C. 
637(a)(14)).

* * * * *

0
29. Amend section 52.219-11 by revising the date of the clause and 
removing from paragraph (c) ``and advance payments'' to read as 
follows:


52.219-11  Special 8(a) Contract Conditions.

* * * * *

Special 8(a) Contract Conditions (JAN 2017)

* * * * *

0
30. Amend section 52.219-12 by revising the date of the clause and 
paragraph (b)(2) to read as follows:


52.219-12  Special 8(a) Subcontract Conditions.

* * * * *

Special 8(a) Subcontract Conditions (JAN 2017)

* * * * *
    (b) * * *
    (2) That the SBA has delegated responsibility, except for 
novation agreements, for the administration of this subcontract to 
the _____ [insert name of contracting agency] with complete 
authority to take any action on behalf of the Government und_d 
conditions of this subcontract.
* * * * *

0
31. Amend section 52.219-14 by revising the date of the clause and 
removing from paragraphs (b)(1), (2), and (3) ``8(a) concerns'' and 
adding ``8(a) participants'' in its place to read as follows:


52.219-14  Limitations on Subcontracting.

* * * * *

Limitations on Subcontracting (JAN 2017)

* * * * *

0
32. Amend section 52.219-17 by revising the date of the clause and 
removing from paragraph (a)(2) ``and advance payments'' to read as 
follows:


52.219-17  Section 8(a) Award.

* * * * *

Section 8(a) Award (JAN 2017)

* * * * *

0
33. Amend section 52.219-18 by--
0
a. Revising the section and clause headings; and
0
b. In Alternate I, revising the date of the alternate and removing 
``concerns'' and adding ``participants'' in its place.
    The revisions read as follows:


52.219-18  Notification of Competition Limited to Eligible 8(a) 
Participants.

* * * * *

Notification of Competition Limited to Eligible 8(a) Participants (JAN 
2017)

* * * * *

Alternate I (JAN 2017) * * *

* * * * *
[FR Doc. 2016-31498 Filed 1-12-17; 8:45 am]
BILLING CODE 6820-EP-P