[Federal Register Volume 84, Number 175 (Tuesday, September 10, 2019)]
[Rules and Regulations]
[Pages 47862-47864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19361]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 19, and 52

[FAC 2019-06; FAR Case 2019-006; Item II; Docket No. FAR-2019-0006, 
Sequence No. 1]
RIN 9000-AN89


Federal Acquisition Regulation: Update of ``Affiliates'' and 
Section 8(a) Clauses

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 to amend the 
Federal Acquisition Regulation (FAR) to update the definition of 
``affiliates'' in the FAR, including references to that definition, and 
to delete an obsolete requirement for contractors who are 8(a) Program 
participants.

[[Page 47863]]


DATES: Effective October 10, 2019.

FOR FURTHER INFORMATION CONTACT: Ms. Marilyn E. Chambers, Procurement 
Analyst, at 202-285-7380 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite FAC 2019-06, FAR Case 
2019-006.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA are amending the FAR to revise the definition of 
``affiliates'' at FAR 19.101, as well as references to this definition 
at FAR 2.101, 19.001, 19.1303, 19.1403, and in the clause at FAR 
52.219-27, Notice of Service-Disabled Veteran-Owned Small Business Set-
Aside. The clauses at FAR 52.219-12, Special 8(a) Subcontract 
Conditions, and 52.219-17, Section 8(a) Award, currently require 
contractors who are 8(a) Program participants to obtain written 
approval from the Small Business Administration (SBA) and the 
contracting officer before subcontracting the performance of any 
contract requirements. SBA has removed this requirement from their 
regulations on the 8(a) Program at 13 CFR part 124. Therefore, DoD, 
GSA, and NASA are removing this obsolete requirement from the FAR.

II. Discussion and Analysis

    A. Definition of ``affiliates'' in parts 2 and 9.
    Subpart 2.1, Definitions, is amended to revise the definition of 
``affiliates'' to include references to the unique definitions of that 
term in 9.403 and 19.101.
    B. Definition of ``concern''. Section 19.001, Definitions, is 
amended to delete a reference to section 19.101 regarding affiliation 
and to replace it with a reference to SBA's regulations at 13 CFR 
121.105.
    C. Definition of ``affiliates'' in part 19. Subpart 19.1, Size 
Standards, is amended to revise the definition of ``affiliates'' by 
deleting existing language and replacing it with a reference to SBA's 
regulations on determining affiliation at 13 CFR 121.103. Editorial 
changes are made in 19.1303(c), 19.1403(c)(3), and paragraph (e)(3) of 
the clause at 52.219-27 to remove references to the definition of 
``affiliates'' in 19.101 and 52.219-27 and to replace them with 
references to the applicable SBA regulation.
    D. Removal of obsolete requirement for 8(a) contractors. The 
clauses at FAR 52.219-12 and 52.219-17 are amended to delete from each 
clause the paragraph requiring 8(a) contractors to obtain approval from 
SBA and the contracting officer prior to subcontracting the performance 
of any contract requirements. These paragraphs are obsolete.

III. Publication of This Final Rule for Public Comment Is Not Required 
by Statute

    The statute that applies to the publication of the FAR is the 
Office of Federal Procurement Policy statute (codified at title 41 of 
the United States Code). Specifically, 41 U.S.C. 1707(a)(1) requires 
that a procurement policy, regulation, procedure, or form (including an 
amendment or modification thereof) must be published for public comment 
if it relates to the expenditure of appropriated funds, and has either 
a significant effect beyond the internal operating procedures of the 
agency issuing the policy, regulation, procedure, or form, or has a 
significant cost or administrative impact on contractors or offerors. 
While this final rule relates to the expenditure of appropriated funds, 
it is not required to be published for public comment, because it does 
not have a significant effect or impose any requirements on contractors 
or offerors. The rule makes minor revisions to the definition of 
``affiliates'' that have no bearing on the meaning of the term and 
replaces FAR coverage that is redundant of SBA regulations with 
references to SBA's rules. Additionally, this rule eliminates a 
requirement that no longer exists in SBA's regulations on the 8(a) 
Business Development Program at 13 CFR part 124.

IV. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Items, Including Commercially 
Available Off-the-Shelf (COTS) Items

    This rule amends the FAR to update the definition of 
``affiliates,'' as well as a reference to this definition in the clause 
at 52.219-27, Notice of Service-Disabled Veteran-Owned Small Business 
Set-Aside. Additionally, this rule removes an obsolete requirement from 
the clauses at FAR 52.219-12, Special 8(a) Subcontract Conditions, and 
52.219-17, Section 8(a) Award, for contractors who are 8(a) Program 
participants to obtain written approval from SBA and the contracting 
officer before subcontracting the performance of any contract 
requirements. This rule does not change the applicability of these 
clauses, which currently apply to solicitations and contracts below the 
SAT and to the acquisition of commercial items, including COTS items.

V. Expected Cost Savings

    This rule impacts only 8(a) Program participants who do business 
with the Government. Currently, 8(a) Program participants who have 
Federal contracts must obtain written approval from SBA and the 
contracting officer before subcontracting the performance of any 
contract requirements in accordance with FAR clauses 52.219-12 and 
52.219-17. Removal of the requirement to obtain this approval is 
expected to result in savings for contractors who are 8(a) Program 
participants. The following is a summary of the estimated public and 
Government cost savings calculated in perpetuity in 2016 dollars at a 
7-percent discount rate:

----------------------------------------------------------------------------------------------------------------
                        Summary                                Public           Government           Total
----------------------------------------------------------------------------------------------------------------
Present Value..........................................       -$14,595,843        -$7,297,914       -$21,893,757
Annualized Costs.......................................         -1,021,709           -510,854         -1,532,563
Annualized Value Costs (as of 2016 if Year 1 is 2020)..           -799,457           -389,728         -1,189,185
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    To access the full Regulatory Cost Analysis for this rule, go to 
the Federal eRulemaking Portal at www.regulations.gov, search for ``FAR 
Case 2019-006'', click ``Open Docket,'' and view ``Supporting 
Documents''.

VI. 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 not a significant

[[Page 47864]]

regulatory action and, therefore, was not 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.

VII. Executive Order 13771

    This final rule is considered to be an E.O. 13771 deregulatory 
action. The total annualized value of the cost savings is $1,189,185. 
Details on the estimated cost savings can be found in section V. of 
this preamble.

VIII. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) does not 
apply to this rule, because a notice of proposed rulemaking and an 
opportunity for public comment are not required to be given for this 
rule under 41 U.S.C. 1707(a)(1) (see section III. of this preamble). 
Accordingly, no regulatory flexibility analysis is required and none 
has been prepared.

IX. 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 2, 19, and 52

    Government procurement.

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 2, 19, and 52 as 
set forth below:

0
1. The authority citation for parts 2, 9, 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 2--DEFINITIONS OF WORDS AND TERMS

0
2. Amend section 2.101, in paragraph (b)(2), by revising the definition 
of ``Affiliates'' to read as follows:


2.101  Definitions.

    (b) * * *
    (2) * * *
    Affiliates means associated business concerns or individuals if, 
directly or indirectly either one controls or can control the other; or 
third party controls or can control both, except as follows:
    (1) For the use in subpart 9.4, see the definition at 9.403.
    (2) For the use in subpart 19.1, see the definition at 19.101.
* * * * *

PART 19--SMALL BUSINESS PROGRAMS


19.001   [Amended]

0
3. Amend section 19.001, in the defined term ``Concern'' by removing 
the last sentence and adding ``For more information, see 13 CFR 
121.105.'' in its place.

0
4. Amend section 19.101 by revising the section heading and the 
definition of ``Affiliates'' to read as follows:


19.101  Definitions.

* * * * *
    Affiliates means business concerns, one of whom directly or 
indirectly controls or has the power to control the others, or a third 
party or parties control or have the power to control the others. In 
determining whether affiliation exists, consideration is given to all 
appropriate factors including common ownership, common management, and 
contractual relationships. SBA determines affiliation based on the 
factors set forth at 13 CFR 121.103.
* * * * *


19.1303   [Amended]

0
5. Amend section 19.1303, in paragraph (c) by removing ``the 
explanation of affiliates (see 19.101)'' and adding ``13 CFR 
121.103(h)'' in its place.


19.1403   [Amended]

0
6. Amend section 19.1403, in paragraph (c)(3), by removing ``of 
paragraph 7 of the explanation of Affiliates in 19.101'' and adding 
``in 13 CFR 121.103(h)'' in its place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Amend section 52.212-5 by revising the date of the clause and 
paragraph (b)(21) 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 Oct 2019)

* * * * *
    (b) * * *
    (21) 52.219-27, Notice of Service-Disabled Veteran-Owned Small 
Business Set-Aside (Oct 2019) (15 U.S.C. 657f).
* * * * *

0
8. Amend section 52.219-12 by--
0
 a. Revising the date of the clause;
0
b. Removing paragraph (b)(3);
0
 c. Redesignating paragraph (b)(4) as (b)(3); and
0
d. Removing from newly redesignated paragraph (b)(3) ``That is'' and 
adding ``That it'' in its place.
    The revision reads as follows:


52.219-12  Special 8(a) Subcontract Conditions.

* * * * *

Special 8(a) Subcontract Conditions (Oct 2019)

* * * * *

0
9. Amend section 52.219-17 by revising the date of the clause and 
paragraph (a)(2) and removing paragraph (c).
    The revisions read as follows:


52.219-17  Section 8(a) Award.

* * * * *

Section 8(a) Award (Oct 2019)

    (a) * * *
    (2) Except for novation agreements, delegates to the ___ [insert 
name of contracting activity] the responsibility for administering the 
contract with complete authority to take any action on behalf of the 
Government under the terms and conditions of the contract; provided, 
however that the contracting agency shall give advance notice to the 
SBA before it issues a final notice terminating the right of the 
subcontractor to proceed with further performance, either in whole or 
in part, under the contract.
* * * * *

0
10. Amend section 52.219-27 by revising the date of the clause and 
removing from paragraph (e)(3) ``paragraph 7 of the explanation of 
Affiliates in 19.101 of the Federal Acquisition Regulation'' and adding 
``13 CFR 121.103(h)'' in its place.
    The revision reads as follows:


52.219-27  Notice of Service-Disabled Veteran-Owned Small Business Set-
Aside.

* * * * *

Notice of Service-Disabled Veteran-Owned Small Business Set-Aside (Oct 
2019)

* * * * *
[FR Doc. 2019-19361 Filed 9-9-19; 8:45 am]
 BILLING CODE 6820-EP-P