[Federal Register Volume 83, Number 58 (Monday, March 26, 2018)]
[Rules and Regulations]
[Pages 12849-12852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06033]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 83, No. 58 / Monday, March 26, 2018 / Rules
and Regulations
[[Page 12849]]
SMALL BUSINESS ADMINISTRATION
13 CFR Parts 121, 125, 126, and 127
RIN 3245-AH02
Conforming Statutory Amendments and Technical Corrections to
Small Business Government Contracting Regulations
AGENCY: U.S. Small Business Administration.
ACTION: Direct final rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: The U.S. Small Business Administration (SBA or Agency) is
amending its regulations to incorporate a provision of the National
Defense Authorization Act of 2018 (NDAA 2018) and to update and provide
several technical corrections to SBA's regulations. Specifically, the
NDAA 2018 amended the Small Business Act by replacing fixed dollar
amount thresholds with references to the micro-purchase and simplified
acquisition thresholds. SBA is updating its regulations to conform to
this new statutory language. SBA is also updating the sole source
dollar amounts for the Service-Disabled Veteran-Owned (SDVO) small
business and the Historically Underutilized Business Zone (HUBZone)
small business regulations. The thresholds for sole source contracting
are contained in the Small Business Act, SBA's regulations, and the
Federal Acquisition Regulations (FAR). These thresholds are updated in
the FAR for inflation periodically, and therefore, over time, SBA's
regulations and the FAR's numbers diverge. SBA is making this change to
conform the thresholds contained in SBA's regulations to those in the
FAR. This rule also allows indirect ownership by United States citizens
in the HUBZone program to more accurately align with the underlying
statutory authority. Finally, SBA is making several technical changes
to address mistakes and typos made in previous rulemakings. For
example, this final rule will update some cross-references that were
not updated when a previous rulemaking changed numbering. Other changes
made are for errors, grammar, syntax, and clarity.
DATES: This rule is effective on May 25, 2018 without further action,
unless significant adverse comment is received by April 25, 2018. If
significant adverse comment is received, SBA will publish a timely
withdrawal of the rule in the Federal Register.
ADDRESSES: You may submit comments, identified by RIN 3245-AH02, by any
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail, for paper, disk, or CD-ROM submissions: Kenneth
Dodds, Director, Office of Procurement Policy and Liaison, 409 Third
Street SW, Washington, DC 20416.
Hand Delivery/Courier: Kenneth Dodds, Director, Office of
Procurement Policy and Liaison, 409 Third Street SW, Washington, DC
20416.
SBA will post all comments on www.regulations.gov. If you wish to
submit confidential business information (CBI) as defined in the User
Notice at www.Regulations.gov, please submit the information to Brenda
Fernandez, Office of Procurement Policy and Liaison, 409 Third Street
SW, Washington, DC 20416, or send an email to [email protected].
Highlight the information that you consider CBI and explain why you
believe SBA should hold this information as confidential. SBA will
review the information and make the final determination of whether it
will publish the information or not.
FOR FURTHER INFORMATION CONTACT: Brenda Fernandez, Office of
Procurement Policy and Liaison, 409 Third Street SW, Washington, DC
20416, 202-205-7337, [email protected].
SUPPLEMENTARY INFORMATION: On December 12, 2017, President Trump signed
into law the National Defense Authorization Act for Fiscal Year 2018
(NDAA 2018), Public Law 115-91, 131 Stat. 1283. Section 1702 of NDAA
2018 amended section 15(j)(1) of the Small Business Act, 15 U.S.C.
644(j)(1), by removing the $2,500 and $100,000 thresholds found in the
Small Business Act and replacing them with references to the micro-
purchase threshold and the simplified acquisition threshold,
respectively. The Small Business Act previously required competition
reserved exclusively for small business concerns for procurements with
values falling between $2,500 and $100,000 (adjusted for inflation in
regulations to $150,000). SBA also uses dollar value thresholds for the
application of the limitations on subcontracting requirements and
nonmanufacturer rule to small business set-asides. This direct final
rule merely adopts the statutory change by replacing the dollar
thresholds with references to the micro-purchase and simplified
acquisition thresholds in an identical way that the Small Business Act
was amended.
SBA is also updating the sole source dollar amounts for the
Service-Disabled Veteran-Owned (SDVO) small business and the
Historically Underutilized Business Zone (HUBZone) small business
regulations. The thresholds for sole source contracting are contained
in the Small Business Act, SBA's regulations (Title 13 of the Code of
Federal Regulations), and the Federal Acquisition Regulations (FAR)
(Title 48 of the Code of Federal Regulations). These thresholds are
updated in the FAR for inflation periodically, and therefore over time,
SBA's regulations and the FAR's numbers diverge. The dollar thresholds
set forth in the FAR below which contracts may be awarded on a sole
source basis, as adjusted for inflation, are as follows: For the 8(a)
Business Development (BD) program (FAR 19.805-1), $7 million, including
options, for contracts assigned a manufacturing North American
Industrial Classification System (NAICS) code, and $4 million,
including options, for all other contracts; for the SDVO small business
program (FAR 19.1406) and Women-Owned Small Business (WOSB) program
(FAR 19.1506), $6.5 million, including options, for contracts assigned
a manufacturing NAICS code, and $4 million, including options, for all
other contracts; and for the HUBZone program (FAR 19.1306), $7 million,
including options, for contracts assigned a manufacturing NAICS code,
and $4 million, including options, for all other contracts. SBA's
regulations for the 8(a) BD and WOSB programs have previously been
updated in 13 CFR 124.506(a)(2) and 127.503(c)(2),
[[Page 12850]]
respectively, to synchronize those programs with the inflation
adjustments made by the FAR. The sole source thresholds for the SDVO
and HUBZone programs have not been similarly updated. This direct final
rule merely incorporates the inflation adjustments made by the FAR for
the SDVO and HUBZone programs into SBA's regulations.
The rule also amends the HUBZone regulations to allow indirect
ownership by United States citizens to more accurately align with the
underlying statutory authority. Direct ownership is not statutorily
mandated, and SBA believes that the purposes of the HUBZone program--
capital infusion in underutilized geographic areas and employment of
individuals living in those areas--may be achieved whether ownership by
U.S. citizens is direct or indirect. The regulations first implementing
the HUBZone program were largely based on those governing the Small
Disadvantaged Business (SDB) program, which is no longer in existence
and which served different goals than the HUBZone program. The SDB
program and SBA's other currently active socioeconomic programs
(including the 8(a) BD program, the WOSB small business program, and
the SDVO small business program) are intended to assist the business
development of small concerns owned and controlled by certain
individuals, so requiring direct ownership for these programs is
consistent with their purposes. The HUBZone program differs in that the
program's goals do not center on the socioeconomic status of the SBC
owner but rather the location of the business and the residence of its
employees. This direct final rule deletes the requirement that
ownership by United States citizens in the HUBZone program must be
direct, and instead it merely copies the statutory requirement that a
HUBZone small business concern must be at least 51% owned and
controlled by United States citizens.
Finally, SBA is making several technical changes to address
mistakes and typos made in previous rulemakings. For example, this
final rule will update some cross-references that were not updated when
a previous rulemaking changed numbering.
Section by Section Analysis
Section 121.103(h)(3)(ii)
This section deals with exceptions to SBA's general affiliations
rule for joint ventures. Specifically, the exception in subparagraph
(ii) is for joint ventures participating in SBA's mentor
prot[eacute]g[eacute] program. The rule is intended to classify a joint
venture between a small business and its SBA-approved mentor as small,
as long as the prot[eacute]g[eacute] qualifies as small for the size
standard corresponding to the NAICS code assigned to the contract and
meets SBA's general joint venture requirements for the type of contract
at issue. In other words, the joint venture can qualify as small for
any contract (8(a), small business set aside, WOSB, SDVO, or HUBZone)
provided it meets SBA's joint venture rules for the type of contract to
be performed. However, the current regulation is missing cross-
references to the joint venture requirements for 8(a) contracts and
small business set asides. These cross-references were inadvertently
left out. This change merely fixes that error.
Sections 121.404(g), 125.18(e)(1), 126.601(h)(1), and 127.503(h)(1)
SBA is making a technical correction to these sections. The
paragraphs in question deal with the identical issue, recertification
of size and/or status. The language and intent of each regulation is
the same; the only difference is that each section deals with a
separate socio-economic contracting program. It has been brought to
SBA's attention that as drafted, it is not clear which sentence or
clause the final sentence is referencing. It was SBA's intent, as made
clear in the proposed and final rule enacting this regulation, entitled
Acquisition Process: Task and Delivery Order Contracts, Bundling,
Consolidation, 78 FR 61114 (Oct. 2, 2013), that SBA wanted the sentence
and the referenced exceptions to be applied to the entirety of the
preceding paragraph. 78 FR 61114, 61119-20 (Oct. 2, 2013). Therefore,
SBA is adding additional language to clearly align the paragraph to the
intent of the regulation. This rule is not intended to make any
substantive change to the paragraphs. SBA is also changing the heading
to Sec. 126.601(h), the recertification paragraph for the HUBZone
program, in order to make it identical to the recertification
paragraphs relating to the other programs. There is no intended
difference regarding recertification between the programs, so there is
no need for the additional language in the HUBZone paragraph after the
word recertification.
Section 121.406(a)
SBA is making a correction to paragraph (a) of this section in
order to correct a missing word. With reference to the clause dealing
with SDVO SBC contracting, SBA left out the modifier ``sole'' before
``source contract'' in the final rule enacting this regulation,
entitled Small Business Government Contracting and National Defense
Authorization Act of 2013 Amendments, 81 FR 34243, 34259 (May 31,
2016).
Section 121.406(d)
SBA is making a change to paragraph (d) of this section. This
change removes the dollar value thresholds and replaces them with
references to the micro-purchase and simplified acquisition thresholds,
respectively. As explained above, the NDAA 2018 modified the Small
Business Act by changing the dollar thresholds to references to the
micro-purchase threshold and the simplified acquisition threshold. This
direct final rule merely conforms the regulation to the statutory
changes made by the NDAA 2018.
Section 125.3
This change removes the term ``$150,000'' in paragraphs
(c)(1)(viii) and (ix) and replaces it with a reference to the
simplified acquisition threshold. As explained above, the NDAA 2018
modified the Small Business Act by changing the dollar thresholds to
references to the micro-purchase threshold and the simplified
acquisition threshold. Thus, this direct final rule merely conforms the
regulation to the statutory changes made by the NDAA 2018 and does not
make any substantive change to the regulations.
Section 125.6
This change removes the dollar value thresholds and replaces them
with references to the micro-purchase and simplified acquisition
thresholds, respectively. As explained above, the NDAA 2018 modified
the Small Business Act by changing the dollar thresholds to references
to the micro-purchase threshold and the simplified acquisition
threshold. Thus, this direct final rule merely conforms the regulation
to the statutory changes made by the NDAA 2018 and does not make any
substantive change to the regulations.
Sections 125.22 and 125.23
This direct final rule changes Sec. Sec. 125.22 and 125.23 to
correct cross-reference citations that were not updated when SBA
renumbered its regulations. SBA is also amending the values authorized
for SDVO small business sole source awards in order to be consistent
with the current values set forth in FAR 19.1406, as adjusted for
inflation.
Section 126.200(b)(1)
As set forth above in more detail, this rule deletes the
requirement that
[[Page 12851]]
ownership by United States citizens in the HUBZone program must be
direct, and instead it merely copies the statutory requirement that a
HUBZone small business concern must be at least 51% owned and
controlled by United States citizens.
Section 126.612(b)(1) and (2)
SBA is amending these paragraphs to update the values authorized
for HUBZone sole source awards in order to be consistent with the
current values set forth in FAR 19.1306, as adjusted for inflation.
Section 126.616(d)(2)
SBA is amending this paragraph by replacing the word
prot[eacute]g[eacute] with the term SBC. The inclusion of the word
prot[eacute]g[eacute] was a mistake. The mistake could be interpreted
to mean the availability of the benefits of this provision were
available only to HUBZone SBCs partaking in the SBA's mentor-
prot[eacute]g[eacute] program. However, the clear intent of the final
rule entitled ``Small Business Mentor Prot[eacute]g[eacute] Programs,
81 FR 48557 (July 25, 2016), was for the joint venture benefits to be
available to all certified HUBZone SBCs. In this regard, the
supplementary information to the Small Business Mentor
Prot[eacute]g[eacute] Programs rule, in which this provision was
adopted, provided that ``the final rule revises the joint venture
provisions contained in Sec. 125.15(b) (for SDVO SBCs, which are now
contained in Sec. 125.18(b)), Sec. 126.616 (for HUBZone SBCs), and
Sec. 127.506 (for WOSB and Economically Disadvantaged Women-Owned
Small Business (EDWOSB) concerns) to more fully align those
requirements to the requirements of the 8(a) BD program.'' 81 FR 48557,
48558, 48559 (July 25, 2016) (Emphasis added). This direct final rule
merely conforms the HUBZone regulatory language to that of the other
programs, something that was specifically intended in the original
regulatory authority.
Compliance With Executive Orders 12866, 12988, 13132, and 13771, the
Paperwork Reduction Act (44 U.S.C. Ch. 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
direct final rule does not constitute a significant regulatory action
under Executive Order 12866. This rule is also not a major rule under
the Congressional Review Act, 5 U.S.C. 800.
Executive Order 12988
This action meets applicable standards set forth in Sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
Executive Order 13132
For the purposes of Executive Order 13132, SBA has determined that
this direct final rule 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 levels of government. Therefore, for the purpose of Executive
Order 13132, Federalism, SBA has determined that this direct final rule
has no federalism implications warranting preparation of a Federalism
assessment.
Executive Order 13771
This final rule is not an Executive Order 13771 regulatory action
because it is not significant under Executive Order 12866.
Paperwork Reduction Act, 44 U.S.C., Ch. 35
SBA has determined that this direct final rule does not impose
additional reporting or recordkeeping requirements under the Paperwork
Reduction Act, 44 U.S.C., Chapter 35.
Regulatory Flexibility Act, 5 U.S.C. 601-612
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires
administrative agencies to consider the effect of their actions on
small entities, small non-profit enterprises, and small local
governments. Pursuant to the RFA, when an agency issues a rulemaking,
the agency must prepare a regulatory flexibility analysis, which
describes the impact of the rule on small entities. However, section
605 of the RFA allows an agency to certify a rule, in lieu of preparing
an analysis, if the rulemaking is not expected to have a significant
economic impact on a substantial number of small entities. Within the
meaning of RFA, SBA certifies that this direct final rule will not have
a significant economic impact on a substantial number of small
entities.
List of Subjects
13 CFR Part 121
Government procurement, Government property, Grant programs--
business, Individuals with disabilities, Loan programs--business, Small
businesses.
13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small businesses, Technical assistance.
13 CFR Part 126
Administrative practice and procedure, Government procurement,
Penalties, Reporting and recordkeeping requirements, Small businesses.
13 CFR Part 127
Government contracts, Reporting and recordkeeping requirements,
Small businesses.
Accordingly, for the reasons stated in the preamble, SBA amends 13
CFR parts 121, 125, 126, and 127 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), 662 and 694a(9).
0
2. Amend Sec. 121.103 by revising paragraph (h)(3)(ii) to read as
follows:
Sec. 121.103 How does SBA determine affiliation?
* * * * *
(h) * * *
(3) * * *
(ii) Two firms approved by SBA to be a mentor and
prot[eacute]g[eacute] under Sec. 125.9 of this chapter may joint
venture as a small business for any Federal government prime contract
or subcontract, provided the prot[eacute]g[eacute] qualifies as small
for the size standard corresponding to the NAICS code assigned to the
procurement, and the joint venture meets the requirements of Sec. Sec.
124.513 (c) and (d), Sec. Sec. 125.8(b) and (c), Sec. Sec.
125.18(b)(2) and (3), Sec. Sec. 126.616(c) and (d), or Sec. Sec.
127.506(c) and (d) of this chapter, as appropriate.
* * * * *
0
3. Amend Sec. 121.404 by revising the last sentence of the
introductory text of paragraph (g) to read as follows:
Sec. 121.404 When is the size status of a business concern
determined?
* * * * *
(g) * * * However, the following exceptions apply to this paragraph
(g):
* * * * *
0
4. Amend Sec. 121.406 by:
0
a. Adding the word ``sole'' after the words ``veteran-owned small
business set-aside or'' and before the words ``source contract,'' in
paragraph (a); and
0
b. Revising paragraph (d) to read as follows:
[[Page 12852]]
Sec. 121.406 How does a small business concern qualify to provide
manufactured products or other supply items under a small business set-
aside, service-disabled veteran-owned small business, HUBZone, WOSB or
EDWOSB, or 8(a) contract?
* * * * *
(d) The performance requirements (limitations on subcontracting)
and the nonmanufacturer rule do not apply to small business set-aside
acquisitions with an estimated value between the micro-purchase
threshold and the simplified acquisition threshold (as both terms are
defined in the FAR at 48 CFR 2.101).
* * * * *
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
5. The authority citation for part 125 continues to read as follows:
Authority: 15 U.S.C. 632(p), (q); 634(b)(6); 637; 644; 657f;
657r.
Sec. 125.3 [Amended]
0
6. Amend Sec. 125.3 by removing the term ``$150,000'' and adding in
its place the phrase ``the simplified acquisition threshold (as defined
in the FAR at 48 CFR 2.101)'' in paragraphs (c)(1)(viii) and (ix).
0
7. Amend Sec. 125.6 by:
0
a. Removing the term ``$150,000'' and adding in its place the phrase
``the simplified acquisition threshold (as defined in the FAR at 48 CFR
2.101)'' in paragraph (a) introductory text; and
0
b. Revising paragraph (f)(1) to read as follows:
Sec. 125.6 What are the prime contractor's limitations on
subcontracting?
* * * * *
(f) * * *
(1) Small business set-aside contracts with a value that is greater
than the micro-purchase threshold but less than or equal to the
simplified acquisition threshold (as both terms are defined in the FAR
at 48 CFR 2.101); or
* * * * *
0
8. Amend Sec. 125.18 by revising the last sentence of paragraph (e)(1)
to read as follows:
Sec. 125.18 What requirements must an SDVO SBC meet to submit an
offer on a contract?
* * * * *
(e) * * * (1) * * * However, the following exceptions apply to this
paragraph (e)(1):
* * * * *
0
9. Amend Sec. 125.22 by revising paragraph (a) to read as follows:
Sec. 125.22 When may a contracting officer set-aside a procurement
for SDVO SBCs?
(a) The contracting officer first must review a requirement to
determine whether it is excluded from SDVO contracting pursuant to
Sec. 125.21.
* * * * *
0
10. Amend Sec. 125.23 by revising paragraphs (a), and (b)(1) and (2)
to read as follows:
Sec. 125.23 When may a contracting officer award sole source
contracts to SDVO SBCs?
* * * * *
(a) None of the provisions of Sec. Sec. 125.21 or 125.22 apply;
(b) * * *
(1) $6,500,000 for a contract assigned a manufacturing NAICS code,
or
(2) $4,000,000 for all other contracts;
* * * * *
PART 126--HUBZONE PROGRAM
0
11. 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.
Sec. 126.200 [Amended]
0
12. Amend Sec. 126.200 by removing the words ``unconditionally and
directly'' in paragraph (b)(1)(i).
0
13. Amend Sec. 126.601 by revising the heading of paragraph (h) and
the last sentence of the introductory text of paragraph (h)(1) to read
as follows:
Sec. 126.601 What additional requirements must a qualified HUBZone
SBC meet to bid on a contract?
* * * * *
(h) Recertification. (1) * * * However, the following exceptions
apply to this paragraph (h)(1):
* * * * *
0
14. Amend Sec. 126.612 by revising paragraphs (b)(1) and (2) to read
as follows:
Sec. 126.612 When may a CO award sole source contracts to qualified
HUBZone SBCs?
* * * * *
(b) * * *
(1) $7,000,000 for a contract assigned a manufacturing NAICS code,
or
(2) $4,000,000 for all other contracts.
* * * * *
Sec. 126.616 [Amended]
0
15. Amend Sec. 126.616 by removing the words ``HUBZone
prot[eacute]g[eacute]'' and adding in their place the words ``HUBZone
SBC'' in paragraph (d)(2).
PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM
0
16. The authority citation for part 127 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 637(m), 644 and 657r.
0
17. Amend Sec. 127.503 by revising the last sentence of the
introductory text of paragraph (h)(1) to read as follows:
Sec. 127.503 When is a contracting officer authorized to restrict
competition or award a sole source contract or order under this part?
* * * * *
(h) * * *
(1) * * * However, the following exceptions apply to this paragraph
(h)(1):
* * * * *
Dated: March 19, 2018.
Linda E. McMahon,
Administrator.
[FR Doc. 2018-06033 Filed 3-23-18; 8:45 am]
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