[Federal Register Volume 88, Number 126 (Monday, July 3, 2023)]
[Rules and Regulations]
[Pages 42592-42593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13439]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 128 and 134

RIN 3245-AH69


Veteran-Owned Small Business and Service-Disabled, Veteran-Owned 
Small Business--Certification; Correction

AGENCY: U.S. Small Business Administration.

ACTION: Correcting amendments.

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SUMMARY: The U.S. Small Business Administration (SBA) is correcting a 
final rule that was published in the Federal Register on November 29, 
2022. The rule implemented a statutory requirement to certify Veteran-
Owned Small Business Concerns and Service-Disabled Veteran-Owned Small 
Business Concerns participating in the Veteran-Owned Small Business 
Federal Contracting Program. This document is making a correction to 
the final regulations.

DATES: This final rule is effective on July 3, 2023.

FOR FURTHER INFORMATION CONTACT: Ed Bender, U.S. Small Business 
Administration, Office of General Counsel, 409 Third Street SW, 
Washington, DC 20416; (202) 205-6455; [email protected].

SUPPLEMENTARY INFORMATION: On November 29, 2022, SBA amended its 
regulations to establish a certification program for Veteran-Owned 
Small Businesses (VOSB) and Service-Disabled Veteran-Owned Small 
Businesses (SDVOSB) to implement section 862 of the National Defense 
Authorization Act for Fiscal Year 2021, Public Law 116-283, 128 Stat. 
3292 (January 1, 2021). 87 FR 73400. This document is making the 
following corrections to the final regulations:
    In the final rule at Sec.  128.102, SBA incorrectly defined 
``Applicant'' and ``Service-disabled veteran.'' The definition of 
``Applicant'' is revised to reference Veteran Small Business 
Certification Program (VetCert) instead of the SBA's self-certification 
program and removes ``or a valid disability determination from the 
Department of Defense'' as proof of service-disabled veteran status 
from the definition of ``Service-disabled veteran.'' By law, SBA is 
required to verify the status of a veteran or service-disabled veteran 
with the Department of Veteran Affairs and cannot accept documentation 
from the Department of Defense as evidence of service-disabled veteran 
status.
    The final rule at Sec.  128.302(c) establishes that SBA may request 
additional documentation at any time during the eligibility 
determination process and that an applicant's failure to respond is 
grounds for denial. If SBA requests additional documentation which the 
applicant fails to submit in a timely manner or the information is 
incomplete, that applicant has not met its burden of proof. SBA 
inadvertently omitted the process by which SBA may deny certification. 
In such cases, SBA may make an adverse inference that missing 
information would result in a finding of ineligibility and may deny 
certification. While adverse inference is currently used by VetCert and 
SBA's other contracting certification programs, the final rule failed 
to adequately describe the process in Sec.  128.302(c).
    SBA amends Sec.  128.401(a) to clarify that a firm must be 
certified at the time of offer on a VOSB or SDVOSB contract. SBA also 
corrects internal citations in the joint venture regulations at Sec.  
128.402 including paragraph (c)(7); paragraph (e)(2)(i)(B); paragraph 
(i)(2); and paragraph (j)(1), (2), and (3). SBA also revises Sec.  
128.402(d)(2) to correct a formatting issue with the word 
``prot[eacute]g[eacute].''
    The final rule also amended part 134, subpart J, so that all VOSB 
and SDVOSB status protests are heard by SBA's Office of Hearing and 
Appeals (OHA). This correction makes several revisions to subpart J. 
First, Sec.  134.1005(a)(2) failed to include a sentence which 
addresses specificity requirements that is included in other SBA 
contracting programs and previously used by SBA's SDVOSB self-
certification program in part 125. This rule adds back that omitted 
sentence to Sec.  134.1005(a)(2). Second, the final rule inadvertently 
retained language from previous versions of Sec.  134.1007(j)(1) and 
(2). SBA corrects Sec.  134.1007(j)(1) to remove references to the 
outdated process for VOSB and SDVOSB status protests. SBA also amends 
the effects of a decision in Sec.  134.1007(j)(2) because the final 
rule included the previous approach used for OHA appeals of VA 
contracts. This approach is contrary to SBA's other contracting 
programs and inconsistent with SBA's intent for VetCert status protest. 
Accordingly, Sec.  134.1007(j)(2) is amended so that, when an 
ineligible firm has been awarded a contract, the agency shall terminate 
the contract unless the contracting officer has made a written 
determination that termination is not in the best interests of the 
Government.

List of Subjects

13 CFR Part 128

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

13 CFR Part 134

    Administrative practice and procedure.

    Accordingly, 13 CFR parts 128 and 134 are corrected by making the 
following correcting amendments:

PART 128--VETERAN SMALL BUSINESS CERTIFICATION PROGRAM

0
1. The authority citation for part 128 continues to read as follows:

    Authority:  15 U.S.C. 632(q), 634(b)(6), 644, 645, 657f, 657f-1.


0
2. Amend Sec.  128.102 by revising the definitions of ``Applicant'' and 
``Service-disabled veteran'' to read as follows:


Sec.  128.102  What definitions are important in the Veteran Small 
Business Certification Program?

    Applicant means a firm applying for certification in the Veteran 
Small Business Certification Program.
* * * * *
    Service-disabled veteran means a veteran who is registered in the 
Beneficiary Identification and Records Locator Subsystem or successor 
system, maintained by Department of Veterans Affairs' Veterans Benefits 
Administration as a service-disabled veteran.
* * * * *

0
3. Amend Sec.  128.302 by adding a sentence to the end of paragraph (c) 
to read as follows:


Sec.  128.302  How does SBA process applications for certification?

* * * * *
    (c) * * * If an Applicant does not provide requested information 
within the allotted time provided by SBA, or if it submits incomplete 
information, SBA may draw an adverse inference and presume that the 
information that the Applicant failed to provide would

[[Page 42593]]

demonstrate ineligibility and deny certification on this basis.
* * * * *

0
4. Amend Sec.  128.401 by revising paragraph (a) to read as follows:


Sec.  128.401  What requirements must a VOSB or SDVOSB meet to submit 
an offer on a contract?

    (a) Certification requirement. Only certified VOSBs and SDVOSBs are 
eligible to submit an offer on a specific VOSB or SDVOSB requirement. 
The concern must qualify as a small business concern under the size 
standard corresponding to the NAICS code assigned to the contract and 
be a certified VOSB or SDVOSB at the time of initial offer or response 
which includes price. Any small business concern that submits a 
complete certification application with to SBA on or before December 
31, 2023, shall be eligible to self-certify for SDVOSB sole source or 
set-aside contracts (other than VA contracts) until SBA declines or 
approves the concern's application. Any small business concern that 
does not submit to SBA a complete SDVOSB certification application to 
SBA on or before December 31, 2023, will no longer be eligible to self-
certify for SDVOSB sole source or set-aside contracts effective January 
1, 2024.
* * * * *

0
5. Amend Sec.  128.402 by revising the first sentence of paragraph 
(c)(7), the introductory text of paragraph (d)(2), and paragraphs 
(e)(2)(i)(B), (i)(2), and (j)(1) through (3) to read as follows:


Sec.  128.402  When may a joint venture submit an offer on a VOSB or 
SDVOSB contract?

* * * * *
    (c) * * *
    (7) Specifying the responsibilities of the parties with regard to 
negotiation of the contract, source of labor, and contract performance, 
including ways that the parties to the joint venture will ensure that 
the joint venture and the certified VOSB or SDVOSB partner(s) to the 
joint venture will meet the limitations on subcontracting requirements 
set forth in paragraph (d) of this section, where practical. * * *
* * * * *
    (d) * * *
    (2) The certified VOSB or SDVOSB partner(s) to the joint venture 
must perform at least 40% of the work performed by the joint venture, 
except that in the context of a joint venture between a 
prot[eacute]g[eacute] VOSB or SDVOSB and its SBA-approved mentor the 
VOSB or SDVOSB prot[eacute]g[eacute] must individually perform at least 
40% of the work performed by the joint venture.
* * * * *
    (e) * * *
    (2) * * *
    (i) * * *
    (B) The parties will perform the contract in compliance with the 
joint venture agreement and with the limitations on subcontracting 
requirements set forth in paragraph (d) of this section.
* * * * *
    (i) * * *
    (2) At the completion of every VOSB or SDVOSB contract awarded to a 
joint venture, the certified VOSB or SDVOSB partner to the joint 
venture must submit a report to the relevant contracting officer and to 
SBA, signed by an authorized official of each partner to the joint 
venture, explaining how and certifying that the performance of work 
requirements were met for the contract, and further certifying that the 
contract was performed in accordance with the provisions of the joint 
venture agreement that are required under paragraph (c) of this 
section.
* * * * *
    (j) * * *
    (1) Failure to enter a joint venture agreement that complies with 
paragraph (c) of this section;
    (2) Failure to perform a contract in accordance with the joint 
venture agreement or limitations on subcontracting requirements in 
paragraph (d) of this section; or
    (3) Failure to submit the certification required by paragraph (e) 
of this section or comply with paragraph (h) of this section.

PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF 
HEARINGS AND APPEALS

0
6. The authority citation for part 134 is revised to read as follows:

    Authority:  5 U.S.C. 504; 15 U.S.C. 632, 634(b)(6), 634(i), 
637(a), 648(l), 656(i), 657t and 687(c); E.O. 12549, 51 FR 6370, 3 
CFR, 1986 Comp., p. 189.
    Subpart J issued under 15 U.S.C. 657f.
    Subpart K issued under 15 U.S.C. 657f.
    Subpart L issued under 15 U.S.C. 636(a)(36); Pub. L. 116-136, 
134 Stat. 281; Pub. L. 116-139, 134 Stat. 620; Pub. L. 116-142, 134 
Stat. 641; and Pub. L. 116-147, 134 Stat. 660.
    Subpart M issued under 15 U.S.C. 657a; Pub. L. 117-81, 135 Stat. 
1541.

0
7. Amend Sec.  134.1005 in paragraph (a)(2) by removing the semicolon 
and adding a period in its place and by adding a sentence at the end to 
read as follows:


Sec.  134.1005  Contents of the VOSB or SDVOSB status protest.

    (a) * * *
    (2) * * * A protest merely asserting that the protested concern is 
not an eligible VOSB or SDVOSB, without setting forth specific facts or 
allegations, is insufficient;
* * * * *

0
8. Amend Sec.  134.1007 by revising paragraphs (j)(1) and (2) to read 
as follows:


Sec.  134.1007  Processing a VOSB or SDVOSB status protest.

* * * * *
    (j) * * *
    (1) A contracting officer may award a contract to a protested 
concern after the Judge has determined either that the protested 
concern is eligible for inclusion in SBA's certification database or 
has dismissed all protests against it.
    (2) A contracting officer shall not award a contract to a protested 
concern that the Judge has determined is not an eligible VOSB or 
SDVOSB. If the contract has already been awarded, the contracting 
officer shall terminate the contract, unless the contracting officer 
has made a written determination that termination is not in the best 
interests of the Government. However, the contracting officer shall not 
exercise any options or award further task or delivery orders.
* * * * *

Larry Stubblefield,
Deputy Associate Administrator, Government Contracting and Business 
Development.
[FR Doc. 2023-13439 Filed 6-30-23; 8:45 am]
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