[Federal Register Volume 85, Number 23 (Tuesday, February 4, 2020)]
[Proposed Rules]
[Pages 6106-6107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01990]



13 CFR Part 125

RIN 3245-AH14

Regulatory Reform Initiative: Government Contracting Programs

AGENCY: U.S. Small Business Administration (SBA).

ACTION: Proposed rule.


SUMMARY: The U.S. Small Business Administration (SBA) is proposing to 
remove from the Code of Federal Regulations (CFR) four regulations in 
the Service-Disabled Veteran-Owned (SDVO) Small Business Concern (SBC) 
Program that are no longer necessary because they are unnecessary or 
redundant. The removal of these regulations will assist the public by 
simplifying SBA's regulations in the CFR.

DATES: Comments must be received on or before April 6, 2020.

ADDRESSES: You may submit comments, identified by RIN: 3245-AH14, by 
any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail or Hand Delivery/Courier: Brenda Fernandez, Office of 
Policy, Planning and Liaison, Office of Government Contracting and 
Business Development, U.S. Small Business Administration, 409 Third 
Street SW, Washington, DC 20416.
    SBA will post all comments on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI), as defined in 
the User Notice at http://www.regulations.gov, please submit the 
information to Brenda Fernandez, Office of Policy, Planning and 
Liaison, Office of Government Contracting and Business Development, 409 
Third Street SW, Washington, DC 20416, or send an email to 
[email protected]. Highlight the information that you consider 
to be CBI and explain why you believe SBA should hold this information 
as confidential. SBA will review the information and make the final 
determination on whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: Khem Sharma, Chief, Office of Size 
Standards, (202) 205-7189 or [email protected].


I. Background Information

A. Service-Disabled Veteran-Owned Small Business Concern Program

    This program allows agencies to set aside contracts for SDVO SBCs. 
Under this program, Federal agencies may also award sole source 
contracts to SDVO SBCs so long as the award can be made at a fair and 
reasonable price and the anticipated total value of the contract, 
including any options, is below $4 million ($6.5 million for 
manufacturing contracts). For purposes of this program, veterans and 
service-related disabilities are defined as they are under the statutes 
governing veterans' affairs. In FY2017, the Federal Government awarded 
$18.2 billion to SDVO SBCs:
     $6.8 billion was awarded through SDVO SBC set-aside 
     $4.3 billion was awarded to SDVO SBCs in full-and-open 
competitions; and
     $7.1 billion was awarded through awards with another small 
business preference (set-asides or sole source awards for small 
businesses generally or awards reserved for HUBZone firms, 8(a) firms, 
and WOSBs).
    There are currently 21,750 active certified SDVO SBCs.
    SBA is proposing to remove from the Code of Federal Regulations 
(CFR) four regulations that are no longer necessary because they are 
unnecessary or are covered elsewhere in SBA's regulations. These four 
regulations govern SBA's SDVO SBC Program.

B. Executive Order 13771

    On January 30, 2017, the President signed Executive Order 13771, 
Reducing Regulation and Controlling Regulatory Costs, which, among 
other objectives, is intended to ensure that an agency's regulatory 
costs are prudently managed and controlled so as to minimize the 
compliance burden imposed on the public. For every new regulation an 
agency proposes to implement, unless prohibited by law, this Executive 
Order requires the agency to (i) identify at least two existing 
regulations that the agency can cancel; and (ii) use the cost savings 
from the cancelled regulations to offset the cost of the new 

C. Executive Order 13777

    On February 24, 2017, the President issued Executive Order 13777, 
Enforcing the Regulatory Reform Agenda, which further emphasized the 
goal of the Administration to alleviate the regulatory burdens placed 
on the public. Under Executive Order 13777, agencies must evaluate 
their existing regulations to determine which ones should be repealed, 
replaced, or modified. In doing so, agencies should focus on 
identifying regulations that, among other things: eliminate jobs or 
inhibit job creation; are outdated, unnecessary, or ineffective; impose 
costs that exceed benefits; create a serious inconsistency or otherwise 
interfere with regulatory reform initiatives and policies; or are 
associated with Executive Orders or other Presidential directives that 
have been rescinded or substantially modified. SBA has engaged in this 
process and has identified the regulations in this rulemaking as 
appropriate for removal in accordance with Executive Order 13777.

II. Section-by-Section Analysis

Section 125.15 May an SDVO SBC have affiliates?

    Section 125.15 provides that an SDVO SBC may have affiliates. This 
rule is redundant because whether an SDVO SBC can have an affiliate is 
addressed in 13 CFR 121.103, the general rules of affiliation.

Section 125.16 May 8(a) program participants, HUBZone SBCs, small and 
disadvantaged businesses, or women-owned small businesses qualify as 

    Section 125.16 states that an SDVO SBC may qualify for other SBA 
contracting programs. This regulation is unnecessary because the 
requirements for an SDVO SBC to qualify for other programs are 
addressed in the rules on eligibility for those specific programs.

Section 125.19 Does SDVO SBC status guarantee receipt of a contract?

    Section 125.19 states that an SDVO SBC is not guaranteed receipt of 
a contract. This provision is unnecessary because nothing in SBA's 
regulations indicates that qualification as an SDVO SBC entitles a firm 
to a contract.

Section 125.20 Who decides if a contract opportunity for SDVO 
competition exists?

    Section 125.20 is redundant because 13 CFR 125.22 and 125.23 
already provide that contracting officers make SDVO SBC competition 

[[Page 6107]]

III. Compliance With Executive Orders 12866, 13771, 12988, and 13132, 
the Paperwork Reduction Act (44 U.S.C., Ch. 35), and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

A. Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
rule does not constitute a significant regulatory action for purposes 
of Executive Order 12866 and is not a major rule under the 
Congressional Review Act, 5 U.S.C. 801, et seq.

B. Executive Order 13771

    This proposed rule is expected to be an Executive Order 13771 
deregulatory action with an annualized net savings of $29,731 and a net 
present value of $424,722, both in 2016 dollars.
    The four regulations in the SDVO program are either unnecessary or 
redundant. Their removal will assist the public by simplifying the 
SBA's regulations in the CFR and reduce the time spent reviewing them. 
The cost saving calculation assumes 2 percent of the 21,750 SDVO small 
businesses per year (or about 435) will save 30 minutes from not 
reading this removed information. This time is valued at a rate of 
$75.57 per hour--the wage of an attorney according to 2018 Bureau of 
Labor Statistics (BLS) data adding 30 percent more for benefits. This 
produces savings to SDVO small businesses per year of $16,436 in 
current dollars.
    The cost savings also includes a savings to the government, 
assuming that 2 percent of the 38,000 Federal contracting officers per 
year (or about 760) will save 30 minutes from not reading this removed 
information. This time is valued at a rate of $54.21--assuming the 
average Federal contracting officer is a GS-12 step 1 (DC locality) and 
adding 30 percent more for benefits, for savings of $20,600. This 
produces total savings per year of $37,036 in current dollars.
    In the first year, it is assumed that 5 percent of SDVO small 
businesses (about 1,088) and 5 percent of Federal contracting officers 
(about 1,900) would read this Federal Register proposed rule which is 
estimated to take 30 minutes per SDVO small business at $75.57 per hour 
and $54.21 per hour per Federal contracting officer, producing cost in 
the first year of $92,591 ($41,091 for SDVO small businesses and 
$51,500 for the Federal Government). This cost is not expected to 
continue in subsequent years.
    Table 1 displays the costs and savings of this rule over the first 
2 years it is published, with the savings and costs in the second year 
expected to continue into perpetuity. Table 2 presents the annualized 
net savings in 2016 dollars.

    Table 1--Schedule of Costs/(Savings) Over 2 Year Horizon, Current
                               Savings                    Costs
Year 1..............  598 hours...............  1,494 hours.
                      ($37,036)...............  $92,591.
Year 2..............  598 hours...............  0 hours.
                      ($37,036)...............  $0.

  Table 2--Annualized Savings in Perpetuity With 7% Discount Rate, 2016
Annualized Savings......................................       ($35,544)
Annualized Costs........................................           5,813
Annualized Net Savings..................................        (29,731)

C. Executive Order 12988

    This action meets applicable standards set forth in Sec. 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.

D. Executive Order 13132

    This rule does not have federalism implications as defined in 
Executive Order 13132. It will not have substantial direct effects on 
the States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in the Executive Order. As 
such, it does not warrant the preparation of a Federalism Assessment.

E. Paperwork Reduction Act, (5 U.S.C. 601-612)

    SBA has determined that this final rule does not affect any 
existing collection of information.

F. Regulatory Flexibility Act, 5 U.S.C. 601-612

    When an agency issues a rulemaking proposal, the Regulatory 
Flexibility Act (RFA) requires the agency to ``prepare and make 
available for public comment an initial regulatory flexibility 
analysis'' which will ``describe the impact of the proposed rule on 
small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA allows an 
agency to certify a rule, in lieu of preparing an analysis, if the 
proposed rulemaking is not expected to have a significant economic 
impact on a substantial number of small entities.
    There are approximately 21,750 SDVO small businesses and all can be 
affected by this rule. However, this rule would remove regulations that 
are unnecessary or redundant, saving these entities time in reading the 
regulations. The annualized net savings to SDVO small businesses is 
$13,748 in current dollars, or less than a dollar per SDVO small 
business, as detailed in the Executive Order 13771 discussion above.
    Accordingly, the Administrator of SBA hereby certifies that this 
rule will not have a significant economic impact on a substantial 
number of small entities. SBA invites comment from the public on this 

List of Subjects in 13 CFR Part 125

    Government contracts, Government procurement, Reporting and 
recordkeeping requirements, Small businesses, Technical assistance, 

    Accordingly, for the reasons stated in the preamble, SBA proposes 
to amend 13 CFR part 125 as follows:


 1. The authority citation for part 125 is revised to read as follows:

    Authority: 15 U.S.C. 632(p), (q), 634(b)(6), 637, 644, 657(f), 
657q, and 657s; 38 U.S.C. 501 and 8127.

Sec.  Sec.  125.15, 125.16, 125.19, and 125.20   [Removed and Reserved]

2. Remove and reserve Sec. Sec.  125.15, 125.16, 125.19, and 125.20.

    Dated: January 17, 2020.
Jovita Carranza,
[FR Doc. 2020-01990 Filed 2-3-20; 8:45 am]