[Federal Register Volume 86, Number 9 (Thursday, January 14, 2021)]
[Rules and Regulations]
[Pages 2957-2960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00270]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121, 124, 125, 126, and 127

RIN 3245-AG94


Consolidation of Mentor-Prot[eacute]g[eacute] Programs and Other 
Government Contracting Amendments; Correction

AGENCY: U.S. Small Business Administration.

ACTION: Correcting amendments.

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SUMMARY: The U.S. Small Business Administration (SBA) is correcting 
regulations that published in the Federal Register on October 16, 2020. 
The rule merged the 8(a) Business Development (BD) Mentor-
Prot[eacute]g[eacute] Program and the All Small Mentor-
Prot[eacute]g[eacute] Program to eliminate confusion and remove 
unnecessary duplication of functions within SBA. This document is 
making several technical corrections to the regulations.

DATES: Effective January 14, 2021.

FOR FURTHER INFORMATION CONTACT: Mark Hagedorn, U.S. Small Business 
Administration, Office of General Counsel, 409 Third Street SW, 
Washington, DC 20416; (202) 205-7625; [email protected].

SUPPLEMENTARY INFORMATION: In response to the President's directive to 
simplify regulations, on October 16, 2020, SBA published a final rule 
revising the regulations pertaining to the 8(a) BD and size programs in 
order to further reduce unnecessary or excessive burdens on small 
businesses and to eliminate confusion or more clearly delineate SBA's 
intent in certain regulations. (85 FR 66146). This is the second set of 
corrections. The first set of corrections was published in the Federal 
Register on November 16, 2020. (85 FR 72916). This document augments 
those corrections.
    First, in amending Sec.  121.404(a) to provide clarification as to 
the time at which size is determined for multiple award contracts, SBA 
inadvertently deleted the general rule that size is determined as of 
the date of the concern submits a written self-certification that it is 
small to the procuring activity as part of its initial offer or 
response which includes price. In other words, in amending the 
exception to the general rule for multiple award contracts, the final 
rule inadvertently deleted the general rule itself. That was not SBA's 
intent and SBA did not intend to make any substantive changes to the 
general rule itself. This rule adds back the general rule language to 
Sec.  121.404(a).
    Second, the final rule eliminated the requirement that 8(a) 
Participants seeking to be awarded a competitive 8(a) contract as a 
joint venture submit the joint venture agreement to SBA for review and 
approval prior to contract award. The preamble to the final rule 
explained that such approval is no longer necessary because the size 
protest process has worked well to ensure that small business joint 
venture partners control performance on non-8(a) contracts with their 
large business mentors and could work similarly to monitor a joint 
venturing activity on competitive 8(a) contracts. To this end, where 
another offeror believes that a joint venture between a 
prot[eacute]g[eacute] and its large business mentor has not complied 
with the applicable control regulations, it may protest the size of the 
joint venture. The appropriate Area Office of SBA's Office of 
Government Contracting would then review the joint venture agreement to 
determine whether it meets the requirements of SBA's regulations. If 
that Office determines that the applicable regulations were not 
followed, the joint venture would lose its exclusion from affiliation, 
be found to be other than small, and, thus,

[[Page 2958]]

ineligible for an award as a small business. Because size protests are 
authorized for competitive 8(a) contracts, SBA reasoned that prior 
approval is no longer necessary for joint venture agreements seeking to 
be awarded such contracts.
    The final rule inadvertently did not adequately address how the 
Area Office will review certain joint venture agreements to perform 
8(a) contracts formed outside the Mentor-Prot[eacute]g[eacute] Program, 
such as a joint venture between an 8(a) Participant and one or more 
other small business concerns. Currently, an unsuccessful offeror, SBA, 
or a contracting officer may protest the status of the apparent 
successful offeror for a Service-Disabled Veteran Owned (SDVO), 
Historically Underutilized Business Zone (HUBZone), Women-Owned Small 
Business (WOSB), or Economically-Disadvantaged Women-Owned Small 
Business (EDWOSB) contract. In determining the status eligibility of a 
joint venture apparent awardee, SBA will review the joint venture 
agreement to assess whether it complies with the formal requirements to 
receive and perform the award as a joint venture. If the joint venture 
does not comply with these requirements, SBA will sustain the protest 
and deem the joint venture ineligible for award. However, there is no 
existing regulatory process for an unsuccessful offeror, SBA, or a 
contracting officer to challenge whether a joint venture meets the 
formal requirements to receive and perform a competitive 8(a) contract. 
To this end, the eligibility of a Participant for a sole source or 
competitive 8(a) requirement may not be challenged by a disappointed 
offeror or any other party because SBA reviews the apparent successful 
offeror's eligibility for award in connection with each 8(a) contract. 
In addition, prior to the final rule, where the apparent successful 
offeror was a joint venture, the joint venture had to be approved by 
SBA prior to or concurrent with the contract eligibility review. In 
eliminating SBA's role to review and approve joint ventures formed to 
perform competitive 8(a) contracts, it was not SBA's intent to allow 
8(a) contract benefits to flow to joint ventures that do not meet the 
applicable regulatory requirements. To the contrary, as noted above, 
SBA envisioned that the size protest process would work to ensure 
compliance with the formal 8(a) joint venture requirements. However, in 
the context of a joint venture between an 8(a) Participant and one or 
more other small business concerns, the current size protest procedures 
are not adequate. Under SBA's size regulations, a joint venture is 
small if each of the partners to the joint venture individually qualify 
as small. Thus, a joint venture that does not comply with the 
applicable requirements set forth in Sec.  124.513(c) and (d) could 
still qualify as small even though the 8(a) partner to the joint 
venture was not the lead or controlling partner. This rule amends Sec.  
121.103(h)(1)(i) to implement SBA's intent that a joint venture must 
meet the requirements of Sec.  124.513(c) and (d) in order to be 
eligible for a competitive 8(a) procurement and to make joint ventures 
in the 8(a) program consistent with those in the HUBZone, WOSB and SDVO 
programs. Additionally, SBA inadvertently left out conforming revisions 
in the final rule to remove references to SBA's now obsolete review and 
approval of joint ventures formed to receive and perform competitive 
8(a) contracts. Specifically, the final rule did not make corresponding 
changes to Sec.  124.513(a), (f), (g), (h), and (j), leaving 
inconsistency with respect to the requirement for SBA approval. This 
rule corrects this inconsistency by removing or clarifying references 
to joint venture approval in Sec.  124.513(a), (f), (g), (h), and (j).
    Third, the final rule added a new Sec.  124.501(k) to clearly make 
the bona fide office requirement applicable to both sole source and 
competitive 8(a) awards and better defined the geographical area in 
which an office needs to be in order to meet the bona fide place of 
business requirement. Although SBA intended to allow an office in the 
geographic area served by a contiguous SBA district office to meet the 
bona fide place of business requirement, the final regulatory provision 
did not make that clear. This rule corrects that ambiguity.
    Fourth, the final rule clarified a procuring activity's 
responsibilities when evaluating the past performance, experience, 
business systems and certifications of an entity submitting an offer 
for a small business contract as a joint venture. Specifically, the 
final rule amended Sec.  125.8(e) to provide that when evaluating such 
offers, the procuring activity should not require a small business 
prot[eacute]g[eacute] partner to the joint venture to individually meet 
any evaluation or responsibility criteria as those required of other 
offerors generally. SBA inadvertently left out conforming revisions in 
the final rule to Sec. Sec.  124.513, 125.18, 126.616, and 127.506 to 
address the evaluation of past performance, experience, business 
systems and certifications of a joint venture formed outside SBA's 
Mentor-Prot[eacute]g[eacute] Program to pursue a contract set-aside or 
reserved for 8(a) Participants, SDVO small business concerns, HUBZone 
small business concerns, WOSB concerns, or EDWOSB concerns. This rule 
corrects the inconsistency by revising Sec. Sec.  124.513, 125.18, 
126.616, and 127.506 to incorporate this clarification.

List of Subjects

13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Grant programs--business, Individuals with 
disabilities, Loan programs--business, Small businesses.

13 CFR Part 124

    Administrative practice and procedure, Government procurement, 
Government property, 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, 13 CFR parts 121, 124, 125, 126, and 127 are corrected 
by making the following correcting amendments:

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), 636(a)(36), 662, and 
694a(9); Pub. L. 116-136, Section 1114.


0
2. Amend Sec.  121.103 by adding a sentence to the end of paragraph 
(h)(1)(i) to read as follows:


Sec.  121.103   How does SBA determine affiliation?

* * * * *
    (h) * * *
    (1) * * *
    (i) * * * For a competitive 8(a) procurement, a joint venture 
between an 8(a) Participant and one or more other small business 
concerns (including two firms approved by SBA to be a mentor and 
prot[eacute]g[eacute] under Sec.  125.9 of this chapter) must also meet 
the requirements of Sec.  124.513(c) and (d) of

[[Page 2959]]

this chapter as of the date of the final proposal revision for 
negotiated acquisitions and final bid for sealed bidding in order to be 
eligible for award.
* * * * *

0
3. Amend Sec.  121.404 by adding introductory text to paragraph (a) to 
read as follows:


Sec.  121.404   When is the size status of a business concern 
determined?

    (a) Time of size. SBA determines the size status of a concern, 
including its affiliates, as of the date the concern submits a written 
self-certification that it is small to the procuring activity as part 
of its initial offer or response which includes price.
* * * * *

PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS 
STATUS DETERMINATIONS

0
4. The authority citation for part 124 continues to read as follows:

    Authority:  15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), 644 and 
Pub. L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L. 
101-574, section 8021, Pub. L. 108-87, Pub. L. 116-260, sec. 330, 
and 42 U.S.C. 9815.


0
5. Amend Sec.  124.501 by revising the introductory text to paragraph 
(k) to read as follows:


Sec.  124.501   What general provisions apply to the award of 8(a) 
contracts?

* * * * *
    (k) In order to be awarded a sole source or competitive 8(a) 
construction contract, a Participant must have a bona fide place of 
business within the applicable geographic location determined by SBA. 
This will generally be the geographic area serviced by the SBA district 
office, a Metropolitan Statistical Area (MSA), a contiguous county 
(whether in the same or different state), or the geographical area 
serviced by a contiguous SBA district office to where the work will be 
performed. SBA may determine that a Participant with a bona fide place 
of business anywhere within the state (if the state is serviced by more 
than one SBA district office), one or more other SBA district offices 
(in the same or another state), or another nearby area is eligible for 
the award of an 8(a) construction contract.
* * * * *

0
6. Amend Sec.  124.513 by revising paragraph (a)(1), the second 
sentence of paragraph (a)(2), and paragraphs (f), (g), (h), and (j) to 
read as follows:


Sec.  124.513   Under what circumstances can a joint venture be awarded 
an 8(a) contract?

    (a) * * *
    (1) A Participant may enter into a joint venture agreement with one 
or more other small business concerns, whether or not 8(a) 
Participants, for the purpose of performing one or more specific 8(a) 
contracts.
    (2) * * * However, where SBA concludes that an 8(a) Participant 
brings very little to the joint venture relationship in terms of 
resources and expertise other than its 8(a) status, SBA will not 
approve the joint venture to receive an 8(a) sole source contract award 
and will find the joint venture to be ineligible for a competitive 8(a) 
award if it is determined to be the apparent successful offeror.
* * * * *
    (f) Capabilities, past performance, and experience. When evaluating 
the capabilities, past performance, experience, business systems, and 
certifications of an entity submitting an offer for an 8(a) contract as 
a joint venture established pursuant to this section, a procuring 
activity must consider work done and qualifications held individually 
by each partner to the joint venture as well as any work done by the 
joint venture itself previously. A procuring activity may not require 
the 8(a) Participant to individually meet the same evaluation or 
responsibility criteria as that required of other offerors generally. 
The partners to the joint venture in the aggregate must demonstrate the 
past performance, experience, business systems, and certifications 
necessary to perform the contract.
    (g) Contract execution. Where an 8(a) award will be made to a joint 
venture, the procuring activity will execute an 8(a) contract in the 
name of the joint venture entity or the 8(a) Participant, but in either 
case will identify the award as one to an 8(a) joint venture or an 8(a) 
mentor-protege joint venture, as appropriate.
    (h) Amendments to joint venture agreement. Where SBA has approved a 
joint venture for a sole source 8(a) contract, all amendments to the 
joint venture agreement must be approved by SBA.
* * * * *
    (j) Certification of compliance. Prior to the performance of any 
8(a) contract by a joint venture, the 8(a) BD Participant to the joint 
venture must submit a written certification to the contracting officer 
and SBA, signed by an authorized official of each partner to the joint 
venture, stating as follows:
    (1) The parties have entered into a joint venture agreement that 
fully complies with paragraph (c) of this section; and
    (2) The parties will perform the contract in compliance with the 
joint venture agreement and with the performance of work requirements 
set forth in paragraph (d) of this section.
    (3) For a sole source 8(a) contract, the parties have obtained 
SBA's approval of the joint venture agreement and any addendum to that 
agreement and that there have been no modifications to the agreement 
that SBA has not approved.
* * * * *

PART 125--GOVERNMENT CONTRACTING PROGRAMS

0
7. 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, 
657q, 657r, and 657s; 38 U.S.C. 501 and 8127.


0
8. Revise Sec.  125.18(b)(5) to read as follows:


Sec.  125.18   What requirements must an SDVO SBC meet to submit an 
offer on a contract?

* * * * *
    (b) * * *
    (5) Capabilities, past performance, and experience. When evaluating 
the capabilities, past performance, experience, business systems, and 
certifications of an entity submitting an offer for an SDVO contract as 
a joint venture established pursuant to this section, a procuring 
activity must consider work done and qualifications held individually 
by each partner to the joint venture as well as any work done by the 
joint venture itself previously. A procuring activity may not require 
the SDVO SBC to individually meet the same evaluation or responsibility 
criteria as that required of other offerors generally. The partners to 
the joint venture in the aggregate must demonstrate the past 
performance, experience, business systems, and certifications necessary 
to perform the contract.
* * * * *

PART 126--HUBZONE PROGRAM

0
9. 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; Pub. 
L. 111-240, 24 Stat. 2504.

0
10. Revise Sec.  126.616(f) to read as follows:


Sec.  126.616   What requirements must a joint venture satisfy to 
submit an offer and be eligible to perform on a HUBZone contract?

* * * * *

[[Page 2960]]

    (f) Capabilities, past performance, and experience. When evaluating 
the capabilities, past performance, experience, business systems, and 
certifications of an entity submitting an offer for a HUBZone contract 
as a joint venture established pursuant to this section, a procuring 
activity must consider work done and qualifications held individually 
by each partner to the joint venture as well as any work done by the 
joint venture itself previously. A procuring activity may not require 
the HUBZone small business concern to individually meet the same 
evaluation or responsibility criteria as that required of other 
offerors generally. The partners to the joint venture in the aggregate 
must demonstrate the past performance, experience, business systems, 
and certifications necessary to perform the contract.
* * * * *

PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM

0
11. 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
12. Amend Sec.  127.506 by revising paragraph (f) to read as follows:


Sec.  127.506   May a joint venture submit an offer on an EDWOSB or 
WOSB requirement?

* * * * *
    (f) Capabilities, past performance, and experience. When evaluating 
the capabilities, past performance, experience, business systems, and 
certifications of an entity submitting an offer for an EDWOSB or WOSB 
contract as a joint venture established pursuant to this section, a 
procuring activity must consider work done and qualifications held 
individually by each partner to the joint venture as well as any work 
done by the joint venture itself previously. A procuring activity may 
not require the EDWOSB or WOSB small business concern to individually 
meet the same evaluation or responsibility criteria as that required of 
other offerors generally. The partners to the joint venture in the 
aggregate must demonstrate the past performance, experience, business 
systems, and certifications necessary to perform the contract.
* * * * *

Francis C. Spampinato,
Associate Administrator, Government Contracting and Business 
Development.
[FR Doc. 2021-00270 Filed 1-13-21; 8:45 am]
BILLING CODE 8026-03-P