[Federal Register Volume 85, Number 206 (Friday, October 23, 2020)]
[Rules and Regulations]
[Pages 67615-67617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21696]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 9, 19, and 52

[FAC 2021-02; FAR Case 2020-002; Item II; Docket No. FAR-2020-0002; 
Sequence No. 1]
RIN 9000-AO05


Federal Acquisition Regulation: Removal of Obsolete Definitions

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 remove the definitions of the 
terms ``annual receipts'' and ``number of employees'' in the 
regulations regarding small business programs and to move the 
definition of ``affiliates,'' as used with regard to small business 
size determination, to appropriate locations in the FAR.

DATES: Effective: November 23, 2020.

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 2021-02, FAR Case 2020-002.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA are amending the FAR to remove the definitions 
of ``annual receipts'' and ``number of employees'' at FAR 19.101. These 
definitions unnecessarily duplicate the Small Business Administration 
(SBA) regulation at 13 CFR part 121. In addition, these definitions in 
the FAR are outdated, following the publication of SBA's final rule at 
84 FR 66561 on December 5, 2019.
    SBA's final rule amended 13 CFR part 121 to implement Public Law 
115-324 (the ``Small Business Runway Extension Act of 2018''), which 
amended section 3(a)(2)(C)(ii)(II) of the Small Business Act (15 U.S.C. 
632(a)(2)(C)(ii)(II)) to modify the requirements for proposed small 
business size standards. SBA's final rule modifies its method for 
calculating average annual receipts used to prescribe size standards 
for small businesses by changing the calculation of average annual 
receipts for all of SBA's receipts-based size standards, and for other 
agencies' proposed receipts-based size standards, from a 3-year 
averaging period to a 5-year averaging period. SBA has independent 
statutory authority to issue size standards.
    While the definitions of ``annual receipts'' and ``number of 
employees'' are listed in part 19 of the FAR, they are not necessary 
for contracting officers, as SBA has sole responsibility for 
prescribing how these terms are used to determine small business size. 
The contracting officer's responsibility is to select the applicable 
North American Industry Classification Standards (NAICS) code and size 
standard for a given acquisition and to verify that a business concern 
has represented its business size for the acquisition. Therefore, DoD, 
GSA, and NASA are removing these redundant, obsolete definitions from 
the FAR.
    Currently, the term ``affiliates'' only appears in the definitions 
of ``annual receipts'' and ``number of employees'' in FAR 19.101; it is 
not used anywhere else in part 19. Upon the removal of those 
definitions from FAR 19.101, ``affiliates'' will no longer be used in 
FAR part 19. As such, the definition is no longer required in section 
19.101. However, since the term is used in multiple other locations in 
the FAR, the definition for ``affiliates,'' as used with regard to 
small business size determination, will be moved to these locations.

II. Discussion and Analysis

    Subpart 19.1, Size Standards, is amended to remove the definitions 
of ``annual receipts'' and ``number of employees.'' As explained in 
section I of this preamble, these definitions are not necessary for 
contracting officers since SBA determines small business size 
standards, as well as whether a specific business is small under those 
standards. Subpart 19.1 is also amended to remove the definition of 
``affiliates'' since the term will no longer be used in the subpart.
    Instead, the definition of ``affiliates'' is being incorporated 
into the definitions of ``small business concern'' at FAR part 2, FAR 
provisions 52.212-3 and 52.219-1, and FAR clauses 52.219-6, 52.219-7, 
and 52.219-28, which is where the term ``affiliates'' is used with 
regard to small business size determination.

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 removes

[[Page 67616]]

two definitions that unnecessarily duplicate SBA's regulation and moves 
another definition from one part of the FAR to other parts where the 
term being defined is actually used.

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 remove the definitions of ``annual 
receipts'' and ``number of employees'' at section 19.101, as well as 
moving the definition of ``affiliates,'' as used with regard to small 
business size determination, from 19.101 to other locations in the FAR 
where the term is actually used. This rule does not change the 
applicability or the text of any FAR solicitation provisions or 
contract clauses.

V. 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 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.

VI. Executive Order 13771

    This final rule is not subject to E.O. 13771, Reducing Regulation 
and Controlling Regulatory Costs, because this rule is not a 
significant regulatory action under E.O. 12866.

VII. 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.

VIII. 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, 9, 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, 9, 19, and 52 
as set forth below:

0
1. The authority citation for 48 CFR 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--
0
a. In the definition ``Affiliates'':
0
i. Removing from paragraph (1) ``For the use in subpart 9.4'' and 
adding ``For use in subpart 9.4'' in its place; and
0
ii. Revising paragraph (2); and
0
b. Revising the definition ``Small business concern''.
    The revisions read as follows:


2.101  Definitions.

* * * * *
    Affiliates * * *
    (2) For use of affiliates in size determinations, see the 
definition of ``small business concern'' in this section.
* * * * *
    Small business concern--
    (1) Means a concern, including its affiliates, that is 
independently owned and operated, not dominant in the field of 
operation in which it is bidding on Government contracts, and qualified 
as a small business under the criteria and size standards in 13 CFR 
part 121 (see 19.102). Such a concern is ``not dominant in its field of 
operation'' when it does not exercise a controlling or major influence 
on a national basis in a kind of business activity in which a number of 
business concerns are primarily engaged. In determining whether 
dominance exists, consideration must be given to all appropriate 
factors, including volume of business, number of employees, financial 
resources, competitive status or position, ownership or control of 
materials, processes, patents, license agreements, facilities, sales 
territory, and nature of business activity. (See 15 U.S.C. 632.)
    (2) Affiliates, as used in this definition, 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.
* * * * *

PART 9--CONTRACTOR QUALIFICATIONS


9.104-3  [Amended]

0
3. Amend section 9.104-3 by removing from the first sentence of 
paragraph (c) ``Affiliates in 19.101'' and adding ``Small business 
concern in 2.101'' in its place.

PART 19--SMALL BUSINESS PROGRAMS


19.101  [Removed and Reserved]

0
4. Remove and reserve section 19.101.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Amend section 52.212-3 by--
0
 a. Revising the date of the provision; and
0
b. In paragraph (a), revising the definition ``Small business 
concern''.
    The revisions read as follows:


52.212-3  Offeror Representations and Certifications--Commercial Items.

* * * * *

Offeror Representations and Certifications--Commercial Items (Nov 2020)

* * * * *
    (a) * * *
    Small business concern--
    (1) Means a concern, including its affiliates, that is 
independently owned and operated, not dominant in the field of 
operation in which it is bidding on Government contracts, and 
qualified as a small business under the criteria in 13 CFR part 121 
and size standards in this solicitation.
    (2) Affiliates, as used in this definition, 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.
* * * * *

0
6. Amend section 52.212-5 by--
0
a. Revising the date of the clause;

[[Page 67617]]

0
b. Removing from paragraph (b)(14)(i) ``(MAR 2020)'' and adding ``(NOV 
2020)'' in its place;
0
c. Removing from paragraph (b)(15)(i) ``(MAR 2020)'' and adding ``(NOV 
2020)'' in its place; and
0
d. Removing from paragraph (b)(22)(i) ``(MAY 2020)'' and adding ``(NOV 
2020)'' in its place.
    The revision reads 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 (Nov 2020)

* * * * *

0
7. Amend section 52.219-1 by--
0
a. Revising the date of the provision; and
0
b. In paragraph (a), revising the definition ``Small business 
concern''.
    The revisions read as follows:


52.219-1  Small Business Program Representations.

* * * * *

Small Business Program Representations (Nov 2020)

    (a) * * *
    Small business concern--
    (1) Means a concern, including its affiliates, that is 
independently owned and operated, not dominant in the field of 
operation in which it is bidding on Government contracts, and 
qualified as a small business under the criteria in 13 CFR part 121 
and the size standard in paragraph (b) of this provision.
    (2) Affiliates, as used in this definition, 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.
* * * * *

0
8. Amend section 52.219-6 by revising the date of the clause and 
paragraph (a) to read as follows:


52.219-6  Notice of Total Small Business Set-Aside.

* * * * *

Notice of Total Small Business Set-Aside (Nov 2020)

    (a) Definition. Small business concern, as used in this clause--
    (1) Means a concern, including its affiliates, that is 
independently owned and operated, not dominant in the field of 
operation in which it is bidding on Government contracts, and 
qualified as a small business under the size standards in this 
solicitation.
    (2) Affiliates, as used in paragraph (a)(1) of this clause, 
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.
* * * * *

0
9. Amend section 52.219-7 by revising the date of the clause and 
paragraph (a) to read as follows:


52.219-7  Notice of Partial Small Business Set-Aside.

* * * * *

Notice of Partial Small Business Set-Aside (Nov 2020)

    (a) Definition. Small business concern, as used in this clause--
    (1) Means a concern, including its affiliates, that is 
independently owned and operated, not dominant in the field of 
operation in which it is bidding on Government contracts, and 
qualified as a small business under the size standards in this 
solicitation.
    (2) Affiliates, as used in paragraph (a)(1) of this clause, 
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.
* * * * *

0
10. Amend section 52.219-28 by--
0
a. Revising the date of the clause; and
0
b. In paragraph (a), revising the definition ``Small business 
concern''.
    The revisions read as follow:


52.219-28  Post-Award Small Business Program Rerepresentation.

* * * * *

Post-Award Small Business Program Rerepresentation (Nov 2020)

    (a) * * *
    Small business concern--
    (1) Means a concern, including its affiliates, that is 
independently owned and operated, not dominant in the field of 
operation in which it is bidding on Government contracts, and 
qualified as a small business under the criteria in 13 CFR part 121 
and the size standard in paragraph (d) of this clause. Such a 
concern is ``not dominant in its field of operation'' when it does 
not exercise a controlling or major influence on a national basis in 
a kind of business activity in which a number of business concerns 
are primarily engaged. In determining whether dominance exists, 
consideration shall be given to all appropriate factors, including 
volume of business, number of employees, financial resources, 
competitive status or position, ownership or control of materials, 
processes, patents, license agreements, facilities, sales territory, 
and nature of business activity.
    (2) Affiliates, as used in this definition, 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.
* * * * *
[FR Doc. 2020-21696 Filed 10-22-20; 8:45 am]
 BILLING CODE 6820-EP-P