60846 Federal Register / Vol. 84, No. 217 / Friday, November 8, 2019 / Proposed Rules

SMALL BUSINESS ADMINISTRATION • Federal eRulemaking Portal: http:// proposed rulemaking process, SBA also www.regulations.gov. Follow the held tribal consultations pursuant to 13 CFR Parts 121, 124, 125, 126, 127, instructions for submitting comments. Executive Order 13175, Tribal and 134 • Mail, for Paper, Disk, or CD/ROM Consultations, in Anchorage, AK, RIN 3245–AG94 Submissions: Brenda Fernandez, U.S. Albuquerque, NM and Oklahoma City, Small Business Administration, Office OK to provide interested tribal Consolidation of Mentor Prote´ge´ of Policy, Planning and Liaison, 409 representatives with an opportunity to Programs and Other Government Third Street SW, 8th Floor, Washington, discuss their views on various 8(a) BD- Contracting Amendments DC 20416. related issues. SBA considers tribal • Hand Delivery/Courier: Brenda consultation meetings a valuable AGENCY: U.S. Small Business Fernandez, U.S. Small Business component of its deliberations and Administration. Administration, Office of Policy, believes that these tribal consultation ACTION: Proposed rule. Planning and Liaison, 409 Third Street meetings allowed for constructive SUMMARY: In response to President SW, 8th Floor, Washington, DC 20416. dialogue with the Tribal community, Trump’s government-wide regulatory SBA will post all comments on http:// Tribal Leaders, Tribal Elders, elected reform initiative, the Small Business www.regulations.gov. If you wish to members of Alaska Native Villages or Administration (SBA) initiated a review submit confidential business their appointed representatives, and of its regulations to determine which information (CBI) as defined in the User principals of tribally-owned and Alaska might be revised or eliminated. As a Notice at http://www.regulations.gov, Native Corporation (ANC) owned firms result, SBA is proposing to merge the please submit the information to Brenda participating in the 8(a) BD Program. 8(a) Business Development (BD) Fernandez, U.S. Small Business SBA has taken these discussions into Mentor-Prote´ge´ Program and the All Administration, Office of Policy, account in drafting this proposed rule. Small Mentor-Prote´ge´ Program to Planning and Liaison, 409 Third Street SBA seeks to combine the 8(a) BD eliminate confusion and remove SW, 8th Floor, Washington, DC 20416, Mentor-Prote´ge´ Program and the All unnecessary duplication of functions or send an email to brenda.fernandez@ Small Mentor-Prote´ge´ Program at this within SBA. This rule proposes to sba.gov. Highlight the information that time in order to eliminate confusion eliminate the requirement that 8(a) you consider to be CBI and explain why regarding perceived differences between Participants seeking to be awarded an you believe SBA should hold this the two Programs, remove unnecessary 8(a) contract as a joint venture submit information as confidential. SBA will duplication of functions within SBA, the joint venture to SBA for review and review the information and make the and establish one, unified staff to better approval prior to contract award, revise final determination of whether it will coordinate and process mentor-prote´ge´ several 8(a) BD program regulations to publish the information. applications. SBA originally established reduce unnecessary or excessive FOR FURTHER INFORMATION CONTACT: a mentor-prote´ge´ program for 8(a) burdens on 8(a) Participants, and clarify Brenda Fernandez, U.S. Small Business Participants a little more than twenty other related regulatory provisions to Administration, Office of Policy, years ago. 63 FR 35726, 35764 (June 30, eliminate confusion among small Planning and Liaison, 409 Third Street 1998). The purpose of that program was businesses and procuring activities. In SW, Washington, DC 20416; (202) 205– to encourage approved mentors to addition, except for orders and Blanket 7337; [email protected]. provide various forms of business Purchase Agreements issued under the SUPPLEMENTARY INFORMATION: assistance to eligible 8(a) Participants to General Services Administration’s aid in their development. On September Federal Supply Schedule Program, the I. Background Information 27, 2010, the Small Business Jobs Act of rule proposes to require a business On January 30, 2017, President Trump 2010 (Jobs Act), Public Law 111–240 concern to recertify its size and/or issued Executive Order 13771, was enacted. The Jobs Act was designed socioeconomic status for all set-aside ‘‘Reducing Regulation and Controlling to protect the interests of small orders under unrestricted multiple Regulatory Costs’’, which is designed to businesses and increase opportunities in award contracts (MACs) The rule also reduce unnecessary and burdensome the Federal marketplace. The Jobs Act proposes to require a business concern regulations and to control costs was drafted by Congress in recognition to recertify its socioeconomic status for associated with regulations. In response of the fact that mentor-prote´ge´ programs all set-aside orders where the required to the President’s directive to simplify serve an important business socioeconomic status for the order regulations, SBA initiated a review of its development function for small differs from that of the underlying set- regulations to determine which might be businesses and therefore included aside MAC contract (e.g., HUBZone set- revised or eliminated. Based on this language authorizing SBA to establish aside order against a small business set- analysis, SBA has identified provisions separate mentor-prote´ge´ programs for aside MAC). Finally, except for orders in many areas of its regulations that can the Service-Disabled Veteran-Owned or Blanket Purchase Agreements issued be simplified or eliminated. Firstly, this Small Business Concern (SDVO SBC) under any Federal Supply Schedule proposed rule would merge the 8(a) BD Program, the HUBZone Program, and contract, the rule also allows for size Mentor-Prote´ge´ Program and the All the Women-Owned Small Business and/or socioeconomic protests at the Small Mentor-Prote´ge´ Program. This (WOSB) Program, each of which was order-level for set-aside orders issued rule also proposes to eliminate the modeled on SBA’s existing mentor- against unrestricted MACs, or for set- requirement that 8(a) Participants prote´ge´ program available to 8(a) aside orders based on a different seeking to be awarded an 8(a) contract Participants. See section 1347(b)(3) of socioeconomic status from the as a joint venture must submit the joint the Jobs Act. Thereafter, on January 2, underlying set-aside MAC. venture to SBA for review and approval 2013, the National Defense DATES: Comments must be received on prior to contract award. This rule also Authorization Act for Fiscal Year 2013 or before January 17, 2020. proposes to make several changes to the (NDAA 2013), Public Law 112–239 was ADDRESSES: You may submit comments, 8(a) BD Program to eliminate or reduce enacted. Section 1641 of the NDAA identified by RIN 3245–AG94 by any of unnecessary or excessive burdens on 2013 authorized SBA to establish a the following methods: 8(a) Participants. As part of this mentor-prote´ge´ program for all small

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business concerns. This section further approved by SBA through the All Small Section 121.103(g) provided that a small business mentor- Mentor-Prote´ge´ Program and be eligible The proposed rule would amend the prote´ge´ program must be identical to the for 8(a) contracts as a joint venture with newly organized concern rule contained 8(a) BD Mentor-Prote´ge´ Program, except its mentor once certified. in § 121.103(g) by clarifying that that SBA could modify each program to Because the benefits and purposes of affiliation may be found where both the extent necessary, given the types of the two programs are identical, SBA former and ‘‘current’’ officers, directors, small business concerns to be included principal stockholders, managing ´ ´ believes that having two separate as proteges. members, or key employees of one Subsequently, SBA published a Final mentor-prote´ge´ programs is unnecessary concern organize a new concern in the Rule in the Federal Register combining and causes needless confusion in the same or related industry or field of the authorities contained in the Jobs Act small business community. As such, operation, and serve as the new and the NDAA 2013 to create a mentor- this proposed rule would eliminate a concern’s officers, directors, principal prote´ge´ program for all small separate 8(a) BD Mentor-Prote´ge´ stockholders, managing members, or key businesses. 81 FR 48558 (July 25, 2016). Program and continue to allow any 8(a) Currently, the mentor-prote´ge´ Participant to enter a mentor-prote´ge´ employees. The rule would merely add program available to firms participating relationship through the All Small the word ‘‘current’’ to the regulatory text in the 8(a) BD Program (contained in 13 Mentor-Prote´ge´ Program. Specifically, to ensure that affiliation may arise CFR 124.520) is used as a business the proposed rule would revise where the key individuals are still associated with the first company. SBA development tool in which mentors § 124.520 to merely recognize that an believes that such a finding of affiliation provide diverse types of business 8(a) Participant, as any other small is authorized in the present regulations, assistance to eligible 8(a) BD prote´ge´s. business, may participate in SBA’s but merely seeks to clarify its intent to This assistance may include, among ´ ´ Small Business Mentor-Protege make sure there is no confusion. other things, technical and/or Program. In merging the 8(a) BD Mentor- management assistance; financial Prote´ge´ Program with the All Small Section 121.103(h) assistance in the form of equity Mentor-Prote´ge´ Program, the proposed investments and/or loans; subcontracts; The proposed rule would amend the rule would also make conforming introductory text to § 121.103(h) to and/or assistance in performing Federal amendments to SBA’s size regulations prime contracts through joint venture revise the requirements for joint (13 CFR part 121), the joint venture arrangements. The explicit purpose of ventures. SBA believes that a joint provisions (13 CFR 125.8), and the All the 8(a) BD Mentor-Prote´ge´ relationship venture is not an on-going business ´ ´ is to enhance the capabilities of prote´ge´s Small Mentor-Protege Program entity, but rather something that is and to improve their ability to regulations (13 CFR 125.9). formed for a limited purpose and successfully compete for both As stated previously, SBA has also duration. If two or more separate government and commercial contracts. taken this action partly in response to business entities seek to join together Similarly, the All Small Mentor-Prote´ge´ the President’s directive that each through another entity on a continuing, Program is designed to require approved agency review its regulations. Therefore, unlimited basis, SBA views that as a mentors to aid prote´ge´ firms so that they this rule also proposes to revise separate business concern with each may enhance their capabilities, meet regulations pertaining to the 8(a) BD and partner affiliated with each other. To capture SBA’s intent on limited scope their business goals, and improve their size programs in order to further reduce and duration, SBA’s current regulations ability to compete for contracts. The unnecessary or excessive burdens on provide that a joint venture is something purposes of the two programs are small businesses and to eliminate identical. In addition, the benefits that can be formed for no more than confusion or more clearly delineate three contracts over a two-year period. available under both programs are SBA’s intent in certain regulations. identical. Small businesses and 8(a) If the parties intend to jointly seek work Specifically, this rule proposes beyond three contracts or beyond two Program Participants receive valuable additional changes to the size and business development assistance and years from the date of the first award, socioeconomic status recertification any joint venture formed between a they must form a new joint venture requirements for orders issued against prote´ge´ firm and its SBA-approved entity. That new entity would then be MACs. A detailed discussion of these mentor receives an exclusion from able to perform an additional three affiliation, such that the joint venture proposed changes is contained below in contracts over two years from the date will qualify as a small business the Section-by-Section Analysis. of its first award. Several firms have provided the prote´ge´ individually II. Section-by-Section Analysis commented to SBA that the three- qualifies as small under the size contract limit unduly restricts small standard corresponding to the NAICS Section 121.103(b)(6) business and can disrupt normal code assigned to the procurement. A business operations. SBA does not seek prote´ge´ firm may enter a joint venture The proposed rule would amend the to impose unnecessary burdens on small ´ ´ with its SBA-approved mentor and be references to SBA’s mentor-protege businesses but continues to believe that eligible for any contract opportunity for programs in this provision, which a joint venture should be a limited which the prote´ge´ qualifies. If a prote´ge´ specifying that a prote´ge´ firm cannot be duration vehicle. In response to these firm is an 8(a) Program Participant, a considered affiliated with its mentor concerns, SBA proposes to eliminate the joint venture between the prote´ge´ and based solely on assistance received by three-contract limit for a joint venture, its mentor could seek any 8(a) contract, the prote´ge´ under the mentor-prote´ge´ but continue to prescribe that a joint regardless of whether the mentor- agreement. The proposed rule would venture cannot exceed two years from prote´ge´ agreement was approved eliminate the cross-reference to the the date of its first award. In addition, through the 8(a) BD Mentor-Prote´ge´ regulation regarding the 8(a) BD Mentor- the proposed rule would clarify SBA’s Program or the All Small Mentor- Prote´ge´ Program (13 CFR 124.520), current intent that a novation to the Prote´ge´ Program. Moreover, a firm could leaving only the reference to the joint venture would start the two-year be certified as an 8(a) Participant after regulation regarding the All Small period if that were the first award its mentor-prote´ge´ relationship has been Business Mentor-Prote´ge´ Program. received by the joint venture. The

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change removing the limit of three populated with individuals intended to Section 121.402 awards to any joint venture would perform contracts awarded to the joint This rule proposes to amend how relieve small businesses of the venture, the joint venture can directly NAICS codes are applied to task orders requirement of forming additional joint employ administrative personnel and to ensure that the NAICS codes assigned venture entities to perform a fourth such personnel may specifically include to specific procurement actions, and the contract within that two-year period. Facility Security Officers. corresponding size standards, are an The proposed rule attempts to lessen the It has also been brought to SBA’s accurate reflection of the contracts and burden on small businesses, while still attention that some procuring agencies orders being awarded and performed. preserving SBA’s belief that a joint will not award a contract requiring a Under the proposed rule, a contracting venture is not intended to be an on- facility security clearance to a joint officer would be required to assign a going business entity. venture if the joint venture itself does single NAICS code for each order issued In addition, SBA is interested in not have such clearance, even if both against a Multiple Award Contract comments regarding the exception to partners to the joint venture (MAC), and that NAICS code must be a affiliation for joint ventures composed individually have such clearance. SBA NAICS code that is included in the of multiple small businesses in which does not believe that such a restriction underlying MAC and represents the firms enter and leave the joint venture is appropriate and seeks comments on principal purpose of the order. SBA based on their size status. In this how best to address that in a final rule. believes that the NAICS code assigned scenario, in an effort to retain small SBA is considering a provision which to a task order must reflect the principal business status, joint venture partners would require either the joint venture purpose of that order. Currently, based expel firms that have exceeded the size itself or the lead small business partner on the business rules of the Federal standard and then possibly add firms to the joint venture to have the required Procurement Data System (FPDS), if a that qualify under the size standard. facility security clearance. If such a Generally, this should not be a problem MAC is assigned a service NAICS code, provision were finalized, a joint venture then that service NAICS code flows because joint ventures are limited in lacking its own separate facility security duration to two years and generally can down to each individual order under clearance could still be awarded a that MAC. SBA does not believe it is be awarded no more than three contract requiring such a clearance contracts during those two years. appropriate for a task order that is provided the lead small business nearly entirely for supplies to have a However, if the joint venture is awarded partner to the joint venture had the a Federal Supply Schedule (FSS) service NAICS code. In such a case, a required facility security clearance and firm being awarded such an order contract or any other multiple award committed to keep at its cleared facility contract vehicle, the awarding of the would not have to comply with the all records relating to the contract nonmanufacturer rule. In particular, set- multiple award contract itself counts awarded to the joint venture. against the limit of three contract aside orders should be assigned a Additionally, if it is established that the awards that a joint venture can receive, manufacturing/supply NAICS code, so security portion of the contract but individual orders do not count that the nonmanufacturer rule will requiring a facility security clearance is against the limit. As such, a joint apply to the order if it is awarded to a ancillary to the principal purpose of the venture that is awarded a multiple nonmanufacturer. Additionally, the procurement, SBA believes that the non- award contract could receive many current method for NAICS code lead partner to the joint venture (which orders beyond the two-year limitation assignment can also be problematic may include a large business mentor) for joint venture awards (since the where a MAC is assigned a NAICS code could possess such clearance. SBA contract was awarded within that two- for supplies but a particular order under specifically requests comments on this year period), and could remain small for that MAC is almost entirely for services. any order requiring recertification possible provision as well as other In such a case, firms that qualified as simply by exchanging one joint venture recommendations regarding how best to small for the larger employee-based size partner for another (i.e., a new small address this perceived problem. standard associated with a business for one that has grown to be The rule would also remove current manufacturing/supply NAICS code may other than small). SBA never intended § 121.103(h)(3)(iii), which provides that not qualify as small businesses under a for the composition of joint ventures to a joint venture between a prote´ge´ firm smaller receipts-based services size be fluid. The joint venture generally and its mentor that was approved standard. As such, because the order is should have the same partners through the 8(a) BD Mentor-Prote´ge´ assigned the manufacturing/supply throughout its lifetime, unless one of the Program is considered small provided NAICS code associated with the MAC, partners is acquired. SBA considers a the prote´ge´ qualifies as individually firms that should not qualify as small joint venture composed of different small. Because this proposed rule would for a particular procurement that is partners to be a different joint venture eliminate the 8(a) BD Mentor-Prote´ge´ predominantly for services may do so. than the original one. To reflect this Program as a separate program, this Thus, this proposed rule attempts to understanding, SBA could specify that provision is no longer needed. ensure that the NAICS codes assigned to the size of a joint venture outside of the The proposed rule also clarifies how specific procurement actions, and the mentor-prote´ge´ program will be to account for joint venture receipts and corresponding size standards, are an determined based on the current size employees during the process of accurate reflection of the contracts and status and affiliations of all past and determining size for a joint venture orders being awarded and performed. present joint venture partners, even if a partner. The joint venture partner must There will still be anomalies where a partner has left the joint venture. SBA include its percentage share of joint procuring agency seeks to award an invites comment on this proposal and venture receipts and employees in its order whose principal purpose is whether there are alternative ways to own receipts or employees. The different than the assigned NAICS code address this issue. appropriate percentage share is the same for the MAC until the Federal The rule also proposes to add percentage figure as the percentage Acquisition Regulation (FAR) and the clarifying language to the introductory figure corresponding to the joint venture FPDS is amended to include multiple text of § 121.103(h) to recognize that, partner’s share of work performed by NAICS codes at the contract level. SBA although a joint venture cannot be the joint venture. does not believe that the order should

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be assigned a NAICS code that does not procurement process, and would unrestricted MAC is awarded. It is only properly reflect its principal purpose. disincentivize contracting officers from when an order is restricted by size SBA believes that the better approach using small business set-asides. status that firms focus on their would be to fulfill such requirement SBA agrees that contract performance competitors’ size status. To allow a through a different contracting vehicle. by a concern that merges with, acquires, firm’s self-certification for the or is acquired by another business underlying MAC to control whether a Sections 121.404(a)(1), 124.503(i), concern and no longer qualifies as small firm is small at the time of an order 125.18(d), and 127.504(c) should not count towards small years after the MAC was awarded does Size Status business goals. However, SBA already not make sense to SBA. SBA has been criticized for allowing requires a concern to recertify its size SBA has considered several agencies to receive credit towards their status within 30 days of a merger, sale, alternative proposals. If an order under small business goals for awards made to or acquisition becoming final. See 13 an unrestricted MAC is set-aside firms that no longer qualify as small. CFR 121.404(g). Under the current exclusively for small business (i.e., SBA believes that much of this criticism regulation, if the contractor is other than small business set-aside, 8(a) small is misplaced. Where a small business small, the agency can no longer count business, service-disabled veteran- concern is awarded a small business set- the options or orders issued pursuant to owned small business, HUBZone small aside contract with a duration of not the contract, from that point forward, business, or women-owned small more than five years and grows to be towards its small business goals. Id. business), SBA considered requiring a SBA, believes, however, that there is concern to certify its size status and other than small during the performance a legitimate concern where a concern qualify as such at the time it submits its of the contract, some have criticized the self-certifies as small for an unrestricted initial offer, which includes price, for exercise of an option as an award to an MAC and at some point later in time the particular order under all other than small business. SBA when the concern no longer qualifies as unrestricted MACs. SBA has also disagrees with such a characterization. small the contracting officer seeks to considered exempting FSS contracts Small business set-aside contracts are award an order as a small business set- from any recertification requirement, restricted only to firms that qualify as aside and the firm uses its self- and instead applying it only to all other small as of the date of a firm’s offer for certification as a small business for the MACs. SBA does not seek to disrupt the the contract. A firm’s status as a small underlying unrestricted MAC. Under procurement process, but rather to business is relevant to its qualifying for the current process, size status for an ensure that small business set-aside the award of the contract. If a concern unrestricted MAC is generally awards are made to firms that qualify as qualifies as small for a contract with a determined as of the date a firm submits small at the time of the award. GSA is duration of not more than five years, it its offer for the MAC. If a concern self- concerned that requiring firms to certify is considered a small business certifies as small at the time of its offer their size status for an order that is set- throughout the life of that contract. Even for the underlying MAC, the concern is aside under a FSS would discourage for MACs that are set-aside for small generally considered to be small for firms from wanting to do business with business, once a concern is awarded a goaling purposes for each order issued the Government, would dissuade contract as a small business it is eligible against the contract, unless a contracting contracting officers from setting aside to receive orders under that contract and officer requests a new size certification orders, and that this will in turn hurt perform as a small business. Again, in in connection with a specific order. small businesses. such a case, size was relevant to the Therefore, when a contracting officer In considering the issue, SBA looked initial award of the contract. Any seeks to set-aside an order for small at the data for orders that were awarded competitor small business concern business off an unrestricted MAC, the as small business set-asides off could protest the size status of an firm’s size relates back to its self- unrestricted base multiple award apparent successful offeror for a small certification for the underlying MAC. As vehicles in FY 2018. In total, 8,666 business set-aside contract (whether such, orders may be set-aside for small orders were awarded as small business single award or multiple award), and businesses and a concern may be set-asides off unrestricted MACs in FY render a concern ineligible for award awarded one or more orders as a small 2018. Of those set-aside orders, 10% are where SBA finds that the concern does business even though it does not estimated to have been awarded to firms not qualify as small under the size currently qualify as small and may not that no longer qualified as small under standard corresponding to the NAICS have qualified as small for several years. the NAICS code size standard at the code assigned to the contract. SBA agrees that this situation needs to time of the order award. Although the Furthermore, firms awarded a long-term be addressed. A firm’s status as a small vast majority of set-aside orders under contract must recertify their size status business does not generally affect unrestricted MACs were awarded off of at five years and every option thereafter. whether the firm does or does not FSS contracts. Further, it is estimated Firms are eligible to receive orders qualify for the award of an unrestricted that only 7.1% of small business set- under that contract and perform as a MAC contract. As such, competitors are aside orders off the FSS were awarded small business so long as they continue very unlikely to protest the size of a to firms that no longer qualified as small to recertify as small at the required concern that self-certifies as small for an under the NAICS code size standard at times (e.g., at five years and every unrestricted MAC. In SBA’s view, where the time of the order (510 out of 7,266 option thereafter). Not allowing a a contracting officer sets aside an order orders). That amounted to 12.1% of the concern that legitimately qualified at for small business under an unrestricted dollars set-aside for small business off award and/or recertified later as small to MAC, the order is the first time size the FSS ($129.6 million to firms that no receive orders and continue status is important. That is the first time longer qualified as small out of a total performance as a small business during that some firms will be eligible to of $1.0723 billion in small business set- the base and option periods, even if it compete for the order while others will aside orders). Whereas, it is estimated has naturally grown to be other than be excluded from competition because that 49.4% of small business set-aside small, would discourage firms from of their size status. As noted above, no orders off of government-wide wanting to do business with the one is considering protesting the size or acquisition contracts (GWACs) were Government, would be disruptive to the status of a firm at the time an awarded to firms that no longer

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qualified as small under the NAICS other than small businesses are more Socioeconomic Status code size standard at the time of the significant at 11.6–49.4%. However, the order (261 out of 528 orders). That data shows that discretionary set-asides Where the required status for an order amounted to 67% of the dollars set- under the FSS programs have proven differs from that of the underlying aside for small business off of GWACs effective in making awards to small contract (e.g., the MAC is a small ($119.6 million to firms that no longer business under the schedules program. business set-aside award, and the procuring agency seeks to restrict qualified as small out of a total of $178.6 The data also shows that the percent of competition on the order to only million in small business set-aside dollars going to other than small certified HUBZone small business orders). SBA then considered the business off of FSS set-asides is limited. concerns), SBA believes that a firm must number and dollar value of new orders Thus, SBA is considering exempting qualify for the socioeconomic status of that were awarded as small business set- FSS contracts from the recertification a set-aside order at the time it submits asides off unrestricted base multiple requirement as it may not be efficient. an offer for that order. Although size award vehicles in FY 2018 using the SBA determined that the added burden may flow down from the underlying size standard ‘‘exceptions’’ that apply in to the public and Government to contract, status in this case cannot. some of SBA’s size standards (e.g., the implement additional control measures Similar to where a procuring agency IT Value-Added Reseller exception to and the potential effect on small seeks to compete an order on an NAICS 541519). Taking into account all business participation in Government unrestricted procurement as a small current size standards exceptions, contracting outweighed any potential business set-aside and SBA would which allow a firm to qualify under an benefits from trying to mitigate the require offerors to qualify as small with alternative size standard for certain limited risk. As such, this rule proposes respect to that order (except for orders types of contracts, it is estimated that to exempt the FSS contracts from the under FSS contracts), SBA believes that 6.5% of small business set-aside orders rule. where the socioeconomic status is first off the FSS were awarded to firms that SBA believes that a contracting required at the order level, an offeror no longer qualified as small at the time vehicle that intends to award to small seeking that order must qualify for the of the order (468 out of 7,266 orders). businesses but instead permits as much socioeconomic status of the set-aside That amounted to 11.3% of the dollars as 49.4% of its orders and between order when it submits its offer for the set-aside for small business off the FSS 39.5% and 67% of its dollars to be order. ($120.7 million to firms that no longer awarded to firms that do not qualify as qualified as small out of a total of Under current policy and regulations, small is the appropriate area to address. where a contracting officer seeks to $1.0723 billion in small business set- As such, pursuant to this proposed rule, aside orders). Considering exceptions restrict competition of an order off an except for orders or Blanket Purchase unrestricted MAC to eligible 8(a) for set-aside orders off of GWACs, it is Agreements issued under any FSS estimated that 11.6% were awarded to Participants only, the contracting officer contract, if an order under an must offer the order to SBA to be firms that no longer qualified as small unrestricted MAC is set-aside at the time of the order (61 out of 528 awarded through the 8(a) program, and exclusively for small business (i.e., SBA must accept the order for the 8(a) orders). That amounted to 39.5% of the small business set-aside, 8(a) small dollars set-aside for small business off of program. In determining whether a business, service-disabled veteran- GWACs ($70.5 million to firms that no concern is eligible for such an 8(a) owned small business, HUBZone small longer qualified as small out of a total order, SBA would apply the provisions business, or women-owned small of $178.6 million in small business set- of the Small Business Act and its business), a concern must recertify its aside orders). It is not possible to tell current regulations which require a firm size status and qualify as such at the from FPDS whether the ‘‘exception’’ to be an eligible Program Participant as time it submits its initial offer, which size standard applied to the contract or of the date set forth in the solicitation includes price, for the particular order. whether the agency applied the general for the initial receipt of offers for the A firm whose size certification in SAM size standard for the identified NAICS order. SBA requests comments on the is current and accurate will not need to code. Thus, all that can be said with alternative approaches considered as submit a new certification or additional certainty is that for small business set- well as any other approaches that would aside orders off of the FSS, between documentation. reduce the set-aside awards to firms that 11.3% and 12.1% of the order dollars For a MAC that is set aside for small do not qualify as small or qualify for the set-aside for small business were business (i.e., small business set-aside, socioeconomic status of a set-aside awarded to firms that no longer 8(a) small business, SDVO small order while at the same time not qualified as small. This amounted to business, HUBZone small business, or disrupting the procurement process or somewhere between $120.7 million and WOSB), the proposed rule would imposing unnecessary burdens on small $129.6 that were awarded to firms that generally set size statusas of the date of businesses or contracting officers. no longer qualified as small. For the offer for the underlying MAC itself. The rule proposes to make these GWACs, the percentage of orders and A concern that is small at the time of its changes in § 121.404(a)(1) for size, order dollars being awarded to firms offer for the MAC would be considered § 124.503(i) for 8(a) BD eligibility, that no longer qualify as small is small for each order issued against the § 125.18(d) for SDVO eligibility, and significantly greater. Between 39.5% contract, unless a contracting officer § 127.504(c) for WOSB eligibility. and 67.0% of the order dollars set-aside requests a size recertification in Section 121.404 for small business off GWACs were connection with a specific order. As is awarded to firms that no longer currently the case, a contracting officer In addition to the revision to qualified as small. This amounted to has the discretion to request § 121.404(a)(1) identified above, the rule somewhere between $70.5 million and recertification of size status on MAC proposes to make several other changes $119.6 million that were awarded to orders. If that occurs, size status would or clarifications to § 121.404. In order to firms that no longer qualified as small. be determined at the time of the order. make this section easier to use and So, set-aside orders off of GWACs, for That would not be a change from the understand, the proposed rule would example, that may potentially go to current regulations. add headings to each subsection, which

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would identify the subject matter of the small (unless one was an SBA-approved contract. SBA believes that this subsection. mentor of the other). If since the date of authority exists within the current The rule proposes to amend the award the 75% partner has naturally regulatory language but is merely § 121.404(b), which requires a firm grown to exceed the size standard articulating it more clearly in this rule. applying to SBA’s programs to qualify assigned to the contract and the 25% Section 121.406 as a small business for its primary partner has been acquired by another industry classification as of the date of small business, the joint venture could The proposed rule would merely its application. The rule would not recertify as small if both partners correct a typographical error by eliminate references to SBA’s small had to recertify their individual size replacing the word ‘‘provided’’ with the disadvantaged business (SDB) program status even if the 25% partner still word ‘‘provide.’’ as obsolete, and add a reference to the qualified as small after its acquisition. WOSB program. SBA does not believe that would be fair Section 121.702 The proposed rule would also amend to the 75% partner or to the procuring The proposed rule would clarify the § 121.404(d) to clarify that size status for activity, which could no longer count size requirements applicable to joint purposes of compliance with the the contract as an award to small ventures in the Small Business nonmanufacturer rule, the ostensible business. Just as SBA allows, under Innovation Research (SBIR) program. subcontractor rule and joint venture certain conditions, a contract to Although the current regulation agreement requirements is determined continue to count as an award to small authorizes joint ventures in the SBIR as of the date of the final proposal business if a concern awarded the program and recognizes the exclusion revision for negotiated acquisitions and contract has grown to exceed the from affiliation afforded to joint final bid for sealed bidding. Currently, applicable size standard after award, so ventures between a prote´ge´ firm and its only compliance with the too should a contract to a joint venture SBA-approved mentor, it does not nonmanufacturer rule is specifically continue to count as an award to small specifically apply SBA’s general size addressed in this paragraph, but SBA’s business if the non-affected partner has requirements for joint ventures to the policy has been to apply the same rule grown to be other than small and the SBIR program. The proposed rule would to determine size with respect to the partner that has been acquired merely apply the general size rule for ostensible subcontractor rule and joint continues to be small after the joint ventures to the SBIR program. In venture agreement requirements. This acquisition. Thus, the proposed rule other words, a joint venture for an SBIR would not be a change in policy, but clarifies that only the partner to the joint award would be considered a small rather a clarification of existing policy. venture that has been acquired, is business provided each partner to the The proposed rule would also add a acquiring, or has merged with another clarifying sentence to § 121.404(e) that joint venture, including its affiliates, business entity must recertify its size meets the applicable size standard. In would recognize that prime contractors status in order for the joint venture to may rely on the self-certifications of the case of the SBIR program, this recertify its size. means that each partner does not have their subcontractors provided they do Additionally, the proposed rule more than 500 employees. not have a reason to doubt any specific clarifies that if a merger or acquisition self-certification. SBA believes that this causes a firm to recertify as an other Section 121.1001 has always been the case, but has added than small business concern between this clarifying sentence, nevertheless, at time of offer and award, then the The rule proposes to provide the request of many prime contractors. recertified firm is not considered a small authority to SBA’s Associate General The proposed rule would make business for the solicitation. Under this Counsel for Procurement Law to several revisions to the size proposed rule, SBA would accept size independently initiate or file a size recertification provisions in protests with specific facts showing that protest, where appropriate. § 121.404(g). First, the recertification an apparent awardee of a set-aside has Sections 121.1004, 125.28, 126.801, and rule pertaining to a joint venture that recertified or should have recertified as 127.603 had previously received a contract as a other than small due to a merger or small business was not clear. If a partner acquisition before award. The proposed rule would add to the joint venture has been acquired, The proposed rule would also clarify clarifying language to § 121.1004, is acquiring or has merged with another that recertification is not required when § 125.28, § 126.801, and § 127.603 business entity, the joint venture must the ownership of a concern that is at regarding size and/or socioeconomic recertify its size status. In order to least 51% owned by an entity (i.e., tribe, status protests in connection with remain small, however, it was not clear ANC, or Community Development orders issued against a MAC. Currently, whether only the partner which has Corporation (CDC)) changes to or from the provisions authorize a size protest been acquired, is acquiring or has a wholly-owned business concern of the where an order is issued against a MAC merged with another business entity same entity, as long as the ultimate if the contracting officer requested a needed to recertify its size status or owner remains that entity. When the recertification in connection with that whether all partners to the joint venture small business continues to be owned to order. The proposed rule specifically had to do so. SBA believes that the the same extent by the tribe, ANC or authorizes a size protest relating to an intent of the regulation was to require CDC, SBA does not believe that the real order issued against a MAC where the size recertification only for the affected ownership of the concern has changed, order is set-aside for small business and partner. To do otherwise could unfairly and, therefore that recertification is not the underlying MAC was awarded on an prejudice the joint venture and the needed. The proposed rule would make unrestricted basis, except for orders or procuring activity. For example, assume this same change to § 121.603 for 8(a) Blanket Purchase Agreements issued that a joint venture has two partners, a contracts as well. under any FSS contract. The proposed 75% managing partner and a 25% non- Finally, the proposed rule would rule also specifically authorizes a managing partner. In order to have amend § 121.404(g)(3) to specifically socioeconomic protest relating to set- initially been awarded a contract as a permit a contracting officer to request aside orders based on a different small business, both partners to the joint size recertification as he or she deems socioeconomic status from the venture had to individually qualify as appropriate at any point in a long-term underlying set-aside MAC.

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Section 121.1103 procuring agencies and entity-owned which is a problem, but, rather, the An explanation of the change is firms to circumvent the intent of release, involvement in the applicant firm of the provided with the explanation for sister company restriction, and adverse family member that previously § 134.318. impact rules. participated in the program. The current For example, a procuring agency may regulatory language requires an Section 124.3 argue that two procurement applicant firm to demonstrate that ‘‘no In response to concerns raised to SBA requirements that were previously connection exists’’ between the by several Program Participants, the awarded as individual 8(a) contracts can applicant and the other current or proposed rule would add a definition of be removed from the 8(a) program former Participant. SBA believes that what a follow-on requirement or without requesting release from SBA requiring no connections is a bit contract is. Whether a procurement because the value of the combined extreme. If two brothers own two totally requirement may be considered a requirement would be at least 25 separate businesses, one as a general follow-on procurement is important in percent more than the value of either of construction contractor and one as a several contexts related to the 8(a) BD the two previously awarded individual specialty trade construction contractor, program. First, SBA’s regulations 8(a) contracts, and thus would be in normal circumstances it would be considered a new requirement. This provide that where a procurement is completely reasonable for the brother of application of the new requirement awarded as an 8(a) contract, its follow- the general construction firm to hire his definition would permit an agency to on or renewable acquisition must brother’s specialty trade construction remove two requirements from the 8(a) remain in the 8(a) BD program unless firm to perform work on contracts that BD program without requesting and SBA agrees to release it for non-8(a) the general construction firm was doing. receiving SBA’s permission for release competition. 13 CFR 124.504(d)(1). Unfortunately, if either firm was a from the program. We believe that SBA’s regulations also require SBA to current or former Participant, SBA’s would be inappropriate and that a conduct an adverse impact analysis current regulations would prohibit SBA procuring agency must seek SBA’s when accepting requirements into the from certifying the second firm for approval to release the two 8(a) BD program. However, an adverse participation in the program, even if the procurements previously awarded general construction firm would pay the impact analysis is not required for through the 8(a) BD program. Likewise, follow-on 8(a) acquisitions or new specialty trade firm the exact same rate if an entity-owned 8(a) Participant that it would have to pay to any other requirements. 13 CFR 124.504(c). previously performed two sole source Finally, SBA’s regulations provide that specialty trade construction firm. SBA 8(a) contracts and a procuring agency does not believe that makes sense. An once an applicant is admitted to the 8(a) sought to offer a sole source requirement BD program, it may not receive an 8(a) individual should not be required to to the 8(a) BD program on behalf of avoid all contact with the business of an sole source contract that is a follow-on another Participant owned by the same procurement to an 8(a) contract that was immediate family member. He or she entity (tribe, ANC, NHO, or CDC) that, should merely have to demonstrate that performed immediately previously by in effect, was a consolidation of the two another Participant (or former the two businesses are truly separate previously awarded 8(a) procurements, and distinct entities. Participant) owned by the same tribe, we believe it would be inappropriate for ANC, Native Hawaiian Organization SBA to accept the offer on behalf of the To this end, the rule proposes that an (NHO), or CDC. 13 CFR 124.109(c)(3)(ii), sister company. Similarly, if a small individual would not be able to use his 124.110(e) and 124.111(d). business concern previously performed or her disadvantaged status to qualify a In order to properly assess what each two requirements outside the 8(a) concern for participation in the 8(a) BD of these regulations requires, the rule program and a procuring agency wanted program if that individual has an proposes to define the term ‘‘follow-on to combine those two requirements into immediate family member who is using requirement or contract’’. The definition a larger requirement to be offered to the or has used his or her disadvantaged provides the determination 8(a) program, SBA should perform an status to qualify another concern for the considerations for whether a particular adverse impact analysis with respect to 8(a) BD program and the concerns are procurement is a follow-on requirement that small business even though the connected by any common ownership or contract: (1) Whether the scope has combined requirement had a value that or management, regardless of amount or changed significantly, requiring was greater than 25 percent of either of position, or the concerns have a meaningful different types of work or the previously awarded contracts. contractual relationship that was not different capabilities; (2) whether the conducted at arm’s length. In the first magnitude or value of the requirement Section 124.105 instance, if one of the two family has changed by at least 25 percent; and The proposed rule would amend members (or business entities owned by (3) whether the end user of the § 124.105(g) to provide more clarity the family member) owned any portion requirement has changed. As a general regarding situations in which an of the business owned by the other guide, if the procurement satisfies at applicant has an immediate family family member, the second in time least one of these three conditions, it member that has used his or her family member could not qualify his or may be considered a new requirement. disadvantaged status to qualify another her business for the 8(a) BD program. Conversely, if the procurement satisfies current or former Participant. The Similarly, if one of the two family none of these conditions, it is purpose of the immediate family members had any role as a director, considered a follow-on procurement. member restriction is to ensure that one officer or key employee in the business However, with respect to a change in individual does not unduly benefit from owned by the other family member, the the value or magnitude of the the 8(a) BD program by participating in second in time family member could not requirement, SBA intends the 25% the program beyond nine years, albeit qualify his or her business for the 8(a) amount to be a guide, and not through a second firm. This most often BD program. In the second instance, the necessarily dispositive of whether a happens when a second family member second in time family member could not requirement qualifies as ‘‘new.’’ in the same or similar line of business qualify his or her business for the 8(a) Applying the 25 percent rule contained seeks 8(a) BD certification. However, it BD program if it received or gave work in this definition rigidly could permit is not necessarily the type of business to the business owned by the other

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family member at other than fair market contemplated by the proposed rule, to revenues for the past three years are in value. With these changes, SBA believes ensure that the transfer was fair and a NAICS code other than the one that the proposed rule more accurately equitable to the disadvantaged identified as its primary NAICS code. In captures SBA’s intent not to permit one individual(s) (or entity) and has not such a case, SBA has determined that in individual from unduly benefitting from unduly benefited non-disadvantaged effect the second NAICS code really has the program, while at the same time parties to the transaction. Where SBA been the Participant’s primary NAICS permitting normal business relations has determined that a change in code for the past three years. SBA’s between two firms. SBA specifically ownership does not meet such rules have historically provided that a requests comments on this provision. requirements, the Agency may, in its Tribe or ANC may not own 51% or more The proposed rule would also amend discretion, require remedial action or of another firm which, either at the time the 8(a) BD change of ownership initiate an appropriate adverse action, of application or within the previous requirements in § 124.105(i). First, the such as program suspension or two years, has been operating in the 8(a) proposed rule would lessen the burden termination. program under the same primary NAICS on 8(a) Participants seeking minor Section 124.109 code as the applicant. Thus, this changes in ownership by providing that proposed rule will clarify that when prior SBA approval is not needed where In order to eliminate confusion, the SBA has changed the primary NAICS a previous owner held less than a 20 proposed rule would clarify several code change for a Participant, SBA has percent interest in the concern both provisions relating to tribally-owned determined that first NAICS code was before and after the transaction. This 8(a) applicants and Participants. First, not the Participant’s primary NAICS would be a change from the current SBA proposes to amend § 124.109(a)(7) code for the last two years, and the requirement which allows a Participant and § 124.109(c)(3)(iv) to clarify that a tribe/ANC would be permitted to have to change its ownership without SBA’s Participant owned by an ANC or tribe another of its firms apply to and be prior approval where the previous need not request a change of ownership admitted to the 8(a) BD program under owner held less than a 10 percent from SBA where the ANC or tribe the former primary NAICS code of the interest. This change from 10 percent to merely reorganizes its ownership of a sister company. 20 percent would permit Participants to Participant in the 8(a) BD program by Finally, the proposed rule would make minor changes in ownership more inserting or removing a wholly-owned clarify the 8(a) BD program admission frequently without requiring them to business entity between the ANC/tribe requirements governing how a tribally- wait for SBA approval. It would also be and the Participant. SBA believes that a consistent with other changes SBA has tribe or ANC should be able to replace owned applicant may demonstrate that made to reduce burdens on 8(a) one wholly-owned intermediary it possesses the necessary potential for applicants and Participants. For company with another without going success. SBA’s regulations currently example, in 2016, SBA changed the through the change of ownership permit the tribe to make a firm written percentage amount related to the process and obtaining prior SBA commitment to support the operations requirement that individuals owning a approval. In each of these cases, SBA of the applicant concern to demonstrate certain percent of the business concern believes that the underlying ownership a tribally-owned firm’s potential for must demonstrate good character from of the Participant is not changing success. Due to the increased trend of 10 percent to 20 percent (see 81 FR substantively and that requiring a tribes establishing tribally-owned 48580). This proposed revision would Participant to request approval from economic development corporations to be consistent with that change and SBA is unnecessary. The oversee tribally owned businesses, SBA would also eliminate additional burdens recommendation and approval process recognizes that in some circumstances it on an 8(a) applicant or Participant for a change of ownership can take may be adequate to accept a letter of relating to owners holding between 10 several months, so this change would support from the tribally-owned and 20 percent interest. relieve Participants owned by tribes and economic development company rather In addition, the proposed rule would ANCs from this unnecessary burden and than the tribal leadership. SBA also also eliminate the requirement that all allow them to proactively conduct recognizes that in most cases, tribes are changes of ownership affecting the normal business operations without not establishing these economic disadvantaged individual or entity must interruption. development corporations as Section 17 receive SBA prior approval before they Second, the proposed rule would corporations, which SBA has previously can occur. Specifically, proposed amend § 124.109(c)(3)(ii) to clarify the determined should be treated as an arm revisions to § 124.105(i)(2) would rules pertaining to a tribe/ANC owning of the tribe and thus, the tribe itself for provide that prior SBA approval is not more than one Participant in the 8(a) BD purposes of the 8(a) BD regulations. needed where the disadvantaged program. The proposed rule would add Rather, these corporations are often individual (or entity) in control of the two subparagraphs and an example to tribally owned holding companies that Participant will increase the percentage § 124.109(c)(3)(ii) for ease of use and have been delegated authority to oversee of his or her (its) ownership interest. understanding. In addition, SBA would tribal economic development and tribal SBA believes that prior approval is not clarify that if the primary NAICS code business ventures. In response, this needed in such a case because there of a tribally-owned Participant is proposed rule would permit a tribally- could be no question as to whether the changed pursuant to § 124.112(e), the owned applicant to satisfy the potential Participant continues to meet the tribe could then submit an application for success requirements by submitting program’s ownership and control to qualify another of its firms for a letter of support from a tribally-owned requirements. Again, this proposed participation in the 8(a) BD program economic development corporation or change would decrease the amount of under the primary NAICS code that was other relevant tribally-owned holding times and the time spent by Participant previously held by the Participant company. In order for a letter of support firms seeking SBA approval of a change whose primary NAICS code was from the tribally owned holding in ownership. SBA would nevertheless changed. A change in a primary NAICS company to be sufficient, there must be continue to review all changes in code under § 124.112(e) should occur sufficient evidence that the tribally- ownership for which prior approval is only where SBA has determined that the owned holding company has the not required, including those greatest portion of a Participant’s financial resources to support the

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applicant and that the tribally-owned increase the distribution to the tribe, has the right to request any applicant to company is controlled by the tribe. ANC, NHO or CDC, and thus increase submit specific information that may be the benefits flowing back to the needed in connection with a specific Section 124.110 community, SBA believes this serves application. As long as SBA’s The proposed rule would make some the purposes of the program. The rule regulations clearly provide that SBA of the same changes to § 124.110 for also proposes, however, that SBA could may request any additional documents applicants and Participants owned and deem the distributions excessive if SBA SBA deems necessary to determine controlled by NHOs as it would to determines that they would adversely whether a specific applicant is eligible § 124.109 for tribally-owned applicants affect the business development of the to participate in the 8(a) BD program, and Participants. Specifically, the Participant. SBA will be able to request that a proposed rule would subdivide In 2016, SBA amended § 124.112(e) to particular firm submit IRS Form 4506T § 124.110(e) for ease of use and implement procedures to allow SBA to where SBA believes it to be appropriate. understanding and would clarify that if change the primary NAICS code of a This proposed rule would amend the primary NAICS code of an NHO- Participant where SBA determined that § 124.203 to add back the requirement owned Participant is changed pursuant the greatest portion of the Participant’s that every applicant to the 8(a) BD to § 124.112(e), the NHO could submit total revenues during a three-year program submit IRS Form 4506T (or an application and qualify another firm period have evolved from one NAICS when available, IRS Form 4506C). SBA owned by the NHO for participation in code to another. 81 FR 48558, 48581 believes that not having that Form the 8(a) BD program under the NAICS (July 25, 2016). The procedures require readily available when needed has code that was the previous primary SBA to notify the Participant of its unduly delayed the application process NAICS code of the Participant whose intent to change the Participant’s for those affected applicants. In primary NAICS code was changed. primary industry classification and addition, SBA believes that requiring Section 124.111 afford the Participant the opportunity to Form 4506T in every case will serve as submit information explaining why a deterrent to firms that may think it is The proposed rule would make the such a change would be inappropriate. not necessary to fully disclose all same change for CDCs and CDC-owned Several individuals have asked SBA to necessary financial information. firms as for tribes and ANCs mentioned permit an appeal process, whereby a Although SBA does not often use IRS above. It would clarify that a Participant Participant whose primary NAICS code Form 4506T to verify an applicant’s owned by a CDC need not request a was changed by its servicing district information, SBA believes that this change of ownership from SBA where office could seek further review of that additional requirement imposes a the CDC merely reorganizes its determination at a different level. After minimal burden on 8(a) BD program ownership of a Participant in the 8(a) hearing this concern repeated several applicants. Additionally, SBA believes BD program by inserting or removing a times at the tribal consultations that the collection of Form 4506T will wholly-owned business entity between conducted by SBA, this proposed rule help to maintain the integrity of the the CDC and the Participant. It would would authorize such an appeal program. also subdivide the current subparagraph process. (d) into three smaller paragraphs for Section 124.204 ease of use and understanding, and Section 124.201 SBA proposes to suspend the time to would clarify that if the primary NAICS This proposed rule does not amend process an 8(a) application where SBA code of a CDC-owned Participant is § 124.201. However, SBA is considering requests clarifying, revised or other changed pursuant to § 124.112(e), the adding a provision that would require a information from the applicant. While CDC could submit an application and small business concern that seeks to SBA is waiting on the applicant to qualify another firm owned by the CDC apply for participation in the 8(a) BD provide clarifying or responsive for participation in the 8(a) BD program program to first take an SBA-sponsored information, the Agency is not under the NAICS code that was the preparatory course regarding the continuing to process the application. previous primary NAICS code of the requirements and expectations of the Section 124.207 Participant whose primary NAICS code 8(a) BD program. SBA specifically was changed. requests comments on such a The proposed rule would amend requirement. § 124.207 to allow a concern that has Section 124.112 been declined for 8(a) BD program SBA proposes to amend Section 124.203 participation to submit a new § 124.112(d)(5) regarding excessive Section 124.203 requires applicants to application 90 days after the date of the withdrawals in connection with entity- the 8(a) BD program to submit certain Agency’s final decision to decline. This owned 8(a) Participants. There has been specified supporting documentation, would change the current rule which some confusion as to whether an 8(a) including financial statements, copies of requires a concern to wait 12 months Participant that is owned at least 51% signed Federal personal and business from the date of the final agency by a tribe, ANC, NHO or CDC can make tax returns and individual and business decision to reapply, and would make a distribution to a non-disadvantaged bank statements. In 2016, SBA removed the 8(a) BD program consistent with the individual that exceeds the applicable the requirement that an applicant must HUBZone program. See 13 CFR 126.309. excessive withdrawal limitation dollar submit a signed Internal Revenue SBA believes that this change would amount if it is made as part of a pro rata Service (IRS) Form 4506T, Request for reduce the number of appeals to SBA’s distribution to all shareholders. SBA Copy or Transcript of Tax Form, in all Office of Hearings and Appeals (OHA) believes that it generally should be able cases. 81 FR 48558, 48569 (July 25, and greatly reduce the costs associated to do so. Through a pro rata 2016). At that time, SBA agreed with a with appeals borne by disappointed distribution, the only way that an entity- commenter to the proposed rule that applicants. If a firm can correct the owned firm can increase its distribution questioned the need for every applicant deficiencies in its initial application and to the tribe, ANC, NHO or CDC is if it to submit IRS Form 4506T. In reapply within 90 days, it may be much also increases the distribution to the eliminating that requirement for every more likely to forego appealing to OHA, non-entity owner. Since the intent is to applicant, SBA reasoned that it always where the process can take 90 days or

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more for resolution. Because a firm that to terminate or early graduate a Program be awarded one or more 8(a) contracts. is declined could submit a new Participant. Under SBA’s current Instead, the proposed rule would application 90 days after the decline procedures, once the AA/BD renders a provide that SBA would suspend a decision, SBA requests comments on decision to early graduate or terminate Participant from receiving 8(a) BD whether the current reconsideration a Participant from the 8(a) BD program, program benefits if it has not submitted process should be eliminated. the affected Participant has 45 days to its business plan to the servicing district appeal that decision to SBA’s OHA. If office and received SBA’s approval Section 124.300 and 124.301 no appeal is made, the AA/BD’s within 60 days after program admission. The proposed rule would redesignate decision becomes the final agency SBA believes that firms coming into the the current § 124.301 (which discusses decision after that 45-day period. If the 8(a) BD program possessing the the various ways a business may leave Participant appeals to OHA, the final potential for success required for the 8(a) BD program) as § 124.300 and agency decision will be the decision of program entry would most likely have add a new § 124.301 to specifically the administrative law judge at OHA. business plans in place and should be enunciate the voluntary withdrawal and There has been some confusion as to able to have their business plans early graduation procedures. The rule what the effect of the AA/BD decision approved by SBA within 60 days of would set forth SBA’s current policy is pending the decision becoming the program admission. If that cannot that a Participant may voluntarily final agency decision. The proposed happen within 60 days, SBA would withdraw from the 8(a) BD program at rule clarifies that where the AA/BD suspend the Participant’s business plan any time prior to the expiration of its issues a decision terminating or early under the proposed changes to program term. In addition, where a graduating a Participant, SBA would § 124.305(h). This would freeze a firm’s Participant believes it has substantially treat the firm as being suspended. SBA program term, and a firm would not lose achieved the goals and objectives set does not believe that it would not make any time in the program. forth in its business plan, SBA would sense to allow a Participant to continue The proposed rule would also correct allow the Participant to elect to to receive program benefits after the a typographical error contained in voluntarily early graduate from the 8(a) AA/BD has terminated or early § 124.305(h)(1)(ii). Under BD program. That too is SBA’s current graduated the firm from the program. If § 124.305(h)(1)(ii), an 8(a) Participant policy, and the proposed rule merely OHA ultimately overrules the AA/BD can elect to be suspended from the 8(a) captures it in SBA’s regulations. decision, the suspension would be lifted program where a disadvantaged The proposed rule would, however, and the length of the suspension would individual who is involved in change the level at which voluntary be added to the Participant’s program controlling the day-to-day management withdrawal and voluntary early term. and control of the Participant is called graduation could be finalized by SBA. to active military duty by the United Currently, a firm submits its request to Sections 124.305 and 124.402 States. Currently, the regulation states voluntarily withdraw or early graduate Section 124.402 requires each firm that the Participant may elect to be to its servicing SBA district office. Once admitted to the 8(a) BD program to suspended where the individual’s the district office concurs, the request is develop a comprehensive business plan participation in the firm’s management sent to the Associate Administrator for and to submit that business plan to and daily business operations is critical Business Development (AA/BD) for final SBA. Currently, § 124.402(b) provides to the firm’s continued eligibility, and approval. SBA believes that requiring that a newly admitted Participant must the Participant elects not to designate a several layers of review to permit a submit its business plan to SBA as soon non-disadvantaged individual to control concern to voluntarily exit the 8(a) BD as possible after program admission and the concern during the call-up period. program is unnecessary. Because an that the Participant will not be eligible That should read where the Participant entity cannot have a second firm for 8(a) BD benefits, including 8(a) elects not to designate another admitted to the 8(a) BD program with contracts, until SBA approves its disadvantaged individual to control the the same primary NAICS code as a sister business plan. Several firms have concern during the call-up period. It company for a period of two years from complained that they missed contract was not SBA’s intent to allow a non- the date that the sister company left the opportunities because SBA did not disadvantaged individual to control the program, requiring firms to wait a approve their business plans before firm during the call-up period and potentially significant amount of time procuring agencies sought to award permit the firm to continue to be eligible for several layers of SBA reviewers to contracts to fulfill certain requirements. for the program. approve a voluntary withdrawal or While SBA continues to believe that it Sections 124.501 and 124.507 voluntary early graduation action could is important for a newly admitted adversely impact the overall business Participant to submit its business plan Section 124.501 is entitled ‘‘What operations of the entity and other to SBA as expeditiously as possible, general provisions apply to the award of concerns owned by the entity. Thus, the SBA also understands the adverse 8(a) contracts?’’ SBA must determine rule proposes that a Participant must consequences that can ensue if a firm that a Participant is eligible for the still request voluntary withdrawal or loses an opportunity that it has lined up award of both competitive and sole voluntary early graduation from its because its business plan is not source 8(a) contracts. However, the servicing district office, but the action approved prior to the time that a requirement that SBA determine would be complete once the District procuring agency seeks to fulfill a eligibility is currently contained Director recognizes the voluntary particular procurement requirement. In specifically only in the 8(a) competitive withdrawal or voluntary early response, the proposed rule would procedures at § 124.507(b)(2). Although graduation. SBA believes this would amend § 124.402(b) to eliminate the SBA determines eligibility for sole eliminate unnecessary delay in provision that a Participant cannot source 8(a) awards at the time it accepts processing these actions. receive any 8(a) BD benefits until SBA a requirement for the 8(a) BD program, has approved its business plan. A firm that process is not specifically stated in Section 124.304 coming in to the 8(a) BD program with the regulations. The proposed rule The proposed rule would clarify the commitments from one or more would move the eligibility effect of a decision made by the AA/BD procuring agencies could immediately determination procedures for

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competitive 8(a) contracts from received a response from SBA before the of the requirement. SBA believes that § 124.507(b)(2) to the general provisions date offers are due. In other words, the restriction as written is overly harsh of § 124.501 and would specifically should a Participant that has requested and burdensome to procuring agencies. address eligibility determinations for the recognition of a bona fide place of Several contracting officers have not sole source 8(a) contracts. To business beyond the time limits set forth offered a follow-on procurement to the accomplish this, the proposed rule in this proposed rule be able to presume 8(a) program prior to conducting a would revise current § 124.501(g). approval and submit an offer as an competition restricted to eligible 8(a) Similarly, SBA believes that the eligible Participant? SBA does not want Participants because they believed that provisions requiring a bona fide place of to harm Participants that truly have set as a follow-on it must be procured business within a particular geographic up bona fide places of business, but at through the 8(a) program. They issued area for 8(a) construction awards should the same time does not want to give solicitations identifying them as also appear in the general provisions eligibility to firms that have not met the competitive 8(a) procurements, selected applying to 8(a) contracts set forth in requirements necessary to establish a an apparent successful offeror and then § 124.501. Section 8(a)(11) of the Small bona fide place of business. sought SBA’s eligibility determination Business Act, 15 U.S.C. 637(a)(11), Section 124.503 prior to making an award. A strict requires that to the maximum extent interpretation of the current regulatory practicable 8(a) construction contracts Currently, § 124.503(g) provides that a language would prohibit SBA from ‘‘shall be awarded within the county or Basic Ordering Agreement (BOA) is not accepting such a requirement. Such an State where the work is to be a contract under the FAR. Rather, each interpretation could seriously adversely performed.’’ SBA has implemented this order to be issued under the BOA is an affect an agency’s procurement strategy statutory provision by requiring a individual contract. As such, a by unduly delaying the award of a Participant to have a bona fide place of procuring activity must offer, and SBA contract. That was never SBA’s intent. business within a specific geographic must accept, each task order under a As long as a procuring agency clearly location. Currently, the bona fide place BOA in addition to offering and identified a requirement as a of business rules appear only in the accepting the BOA itself. Once a competitive 8(a) procurement and the procedures applying to competitive 8(a) Participant leaves the 8(a) BD program public fully understood it to be procurements in § 124.507(c)(2). The or otherwise becomes ineligible for restricted only to eligible 8(a) proposed rule would move those future 8(a) contracts (e.g., becomes other Participants, SBA should be able to procedures to a new § 124.501(k), which than small under the size standard accept that requirement regardless of would clearly make them applicable to assigned to a particular contract) it when the offering occurred. both sole source and competitive 8(a) cannot receive further 8(a) orders under awards. Based on the statutory language, a BOA. Similarly, a blanket purchase The rule would clarify SBA’s intent SBA believes that the requirement to agreement (BPA) is also not a contract. regarding the requirement that a have a bona fide place of business in a A BPA (whether a BPA under part 13 of procuring agency must seek and obtain particular geographic area currently the Federal Acquisition Regulation SBA’s concurrence to release any applies to both sole source and (FAR) or a BPA under subpart 8.4 of the follow-on procurement from the 8(a) BD competitive 8(a) procurements, but FAR)) is not a contract because it program. This is not a change in policy, moving the requirement to the general neither obligates funds nor requires but rather a clarification of SBA’s applicability section would remove any placement of any orders against it. current policy and the position SBA has doubt or confusion. Instead, it is an understanding between taken in several protests before the In response to concerns raised by an ordering agency and a contractor that General Accountability Office. Some Participants, the proposed rule would allows the agency to place future orders agencies have attempted to remove a also impose time limits within which more quickly by identifying terms and follow-on procurement from the 8(a) SBA district offices should process conditions applying to those orders, a program and reprocure the requirement requests to add a bona fide place of description of the supplies or services to through a MAC or Government-wide business. SBA has heard that several be provided, and methods for issuing Acquisition Contract (GWAC) that is not Participants missed out on 8(a) and pricing each order. The government an 8(a) contract without seeking release procurement opportunities because is not obligated to place any orders, and by saying that they intend to issue a their requests for SBA to verify their either party may cancel a BPA at any competitive 8(a) order off the MAC or bona fide places of business were not time. GWAC. In other words, because the timely processed. In order to alleviate Although current § 124.503(g) order off the MAC or GWAC would be this perceived problem, the proposed addresses BOAs, it does not specifically offered to and accepted for award rule would provide that in connection mention BPAs. The proposed rule through the 8(a) BD program and the with a specific 8(a) competitive would amend § 124.503 to merely follow-on work would be performed solicitation, the reviewing office will specifically recognize that BPAs are also through the 8(a) BD program, some make a determination whether or not not contracts and should be afforded the procuring agencies believe that release the Participant has a bona fide place of same treatment as BOAs. is not needed. SBA does not agree. In business in its geographical boundaries such a case, the underlying contract is within 5 working days of a site visit or Section 124.504 not an 8(a) contract. The procuring within 15 working days of its receipt of This rule also proposes to make agency is attempting to remove a the request from the servicing district several changes to § 124.504. requirement from the 8(a) program to a office if a site visit is not practical in The proposed rule would amend contract that is not an 8(a) contract. That that timeframe. SBA requests comments § 124.504(b) to alter the provision is precisely what release is intended to on whether a Participant that has filed prohibiting SBA from accepting a apply to. Moreover, because a request to have a bona fide place of requirement into the 8(a) BD program § 124.504(d)(4) provides that the business recognized by SBA in time for where a procuring activity competed a requirement to seek release of an 8(a) a particular 8(a) construction requirement among 8(a) Participants requirement from SBA does not apply to procurement may submit an offer for prior to offering the requirement to SBA orders offered to and accepted for the that procurement where it has not and receiving SBA’s formal acceptance 8(a) program where the underlying MAC

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or GWAC is not itself an 8(a) contract, to and receive the concurrence of SBA receiving further sole source 8(a) allowing a procuring agency to move an to do so. In such a case, the proposed contracts, but an agency does because it 8(a) contract to an 8(a) order off a non- rule would require a procuring agency believes that the award of a sole source 8(a) contract vehicle would allow the to notify SBA that it will take a follow- contract to the identified Participant is procuring agency to then remove the on procurement out of the 8(a) needed to achieve significant interests next follow-on to the 8(a) order out of procurement because of a mandatory of the Government, the SBA the 8(a) program entirely without any source. Such notification would be Administrator must currently make that input from SBA. A procuring agency required at least 30 days before the end determination. Requiring such a request could take an 8(a) contract with a base of the contract period to give the 8(a) to be processed by several levels of SBA year and four one-year option periods, Participant the opportunity to make reviewers and then by the Administrator turn it into a one-year 8(a) order off a alternative plans. slows down the processing. If a non-8(a) contract vehicle, and then In addition, SBA does not typically procuring agency truly needs something remove it from the 8(a) program entirely consider the value of a bridge contract quickly, it could be harmed by the after that one-year performance period. when determining whether an offered processing time. The proposed rule That was certainly not the intent of procurement is a new requirement. A would change the Administrator from SBA’s regulations. As such, this rule bridge contract is meant to be a making these determinations to SBA. clarifies that the request for and granting temporary stop-gap measure intended to This should allow these requests to be of a release of a follow-on procurement ensure the continuation of service while processed more quickly. an agency finalizes a long-term from the 8(a) BD program is required Section 124.513 when the procurement will be moved procurement approach. As such, SBA out of the 8(a) BD program as an does not typically consider a bridge Currently, § 124.513(e) provides that independent contract into a MAC or contract as part of the new requirement SBA must approve a joint venture GWAC. SBA has received additional analysis, unless there is some basis to agreement prior to the award of an 8(a) comments recommending that release believe that the agency is altering the contract on behalf of the joint venture. should also apply even if the underlying duration of the option periods to avoid This requirement applies to both pre-existing MAC or GWAC to which a particular regulatory requirements. competitive and sole source 8(a) procuring agency seeks to move a Whether to consider the bridge contract procurements. SBA does not approve follow-on requirement is itself an 8(a) is determined on a case-by-case basis joint venture agreements in any other context, including a joint venture contract. These commenters argue that given the facts of the procurement at between an 8(a) Participant and its SBA- an 8(a) incumbent contractor may be issue. SBA seeks comments as to approved mentor (which may be other seriously hurt by moving a procurement whether this long-standing policy than small) in connection with a non- from a general 8(a) competitive should also be incorporated into the 8(a) contract (i.e., small business set- procurement to an 8(a) MAC or GWAC regulations. aside, HUBZone, SDVO small business, to which the incumbent is not a contract Section 124.509 or WOSB contract). In order to be holder. In such a case, the incumbent The proposed rule would revise considered an award to a small would have no opportunity to win the § 124.509(e), regarding how a disadvantaged business (SDB) for a non- award for the follow-on contract, and, Participant can obtain a waiver to the 8(a) contract, a joint venture between an without the release process, would have requirement prohibiting it from 8(a) Participant and a non-8(a) no opportunity to demonstrate that it receiving further sole source 8(a) Participant must be controlled by the would be adversely impacted or to try contracts where the Participant does not 8(a) partner to the joint venture and to dissuade SBA from agreeing to meet its applicable non-8(a) business otherwise meet the provisions of release the procurement. In response, activity target. Currently, the regulations § 124.513(c) and (d). If the non-8(a) the proposed rule would provide that require the AA/BD to process a partner to the joint venture is also a SBA must agree to release any follow- Participant’s request for a waiver in small business under the size standard on requirement where a procuring every case. The proposed rule would corresponding to the NAICS code agency seeks to reprocure that substitute SBA for the AA/BD to allow assigned to the procurement, the joint requirement through a limited flexibility to SBA to determine the level venture could qualify as small if the contracting vehicle which is not of processing in a standard operating provisions of § 124.513(c) and (d) were available to all 8(a) BD Program procedure outside the regulations. SBA not met (see § 121.103(h)(3)(i), where a Participants (e.g., any multiple award or believes that at least at some level, the joint venture can qualify as small as Governmentwide acquisition contract, district office should be able to process long as each party to the joint venture whether or not the underlying MAC or such requests for waiver. That correct individually qualifies as small), but the GWAC is itself an 8(a) contract). If an level could be any requirement below joint venture could not qualify as an agency seeks to reprocure a current 8(a) the Simplified Acquisition Threshold award to an SDB in such case. If the requirement as a competitive 8(a) award (SAT), or maybe some other specific joint venture were between an 8(a) for a new 8(a) MAC or GWAC vehicle, dollar value. Putting such a requirement Participant and its large business SBA’s concurrence would not be in an SOP, instead of the regulations, mentor, the joint venture could not required because such a competition however, would give flexibility to SBA qualify as small if the provisions of would be available to all 8(a) BD to adjust the requirement as necessary, § 124.513(c) and (d) were not met. The Program Participants. and allow more straightforward requests size of a joint venture between a small The proposed rule would also clarify to be processed more expeditiously. business prote´ge´ and its large business that in all cases where a procuring The current regulation also requires mentor is determined without looking at agency seeks to fulfill a follow-on the SBA Administrator on a non- the size of the mentor only when the requirement outside of the 8(a) BD delegable bases to decide requests for joint venture complies with SBA’s program, except where it is statutorily waiver from a procuring agency. In regulations regarding control of the joint or otherwise required to use a other words, if the Participant itself venture. Where another offeror believes mandatory source (see FAR subpart 8.6 does not request a waiver to the that a joint venture between a prote´ge´ and 8.7), it must make a written request requirement prohibiting it from and its large business mentor has not

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complied with the applicable control Section 124.519 award contracts valued above a certain regulations, it may protest the size of the Section 124.519 limits the ability of dollar amount that corresponds to the joint venture. The applicable Area 8(a) Participants to obtain additional agency’s substantial bundling threshold Office of SBA’s Office of Government sole source 8(a) contracts once they (15 U.S.C. 644(q)(1)(B)). Following the Contracting would then look at the joint have reached a certain dollar level of statutory provisions, the proposed rule venture agreement to determine if the overall 8(a) contracts. Currently, for a requires a contracting officer to consider small business is in control of the joint firm having a receipts-based size the past performance and experience of venture within the meaning of SBA’s standard corresponding to its primary first tier subcontractors in those two regulations. If that Office determines NAICS code, the limit above which a categories of contracts. The proposed that the applicable regulations were not Participant can no longer receive sole rule would not require a contracting officer to consider the past performance, followed, the joint venture would lose source 8(a) contracts is five times the capabilities and experience of each first its exclusion from affiliation, be found size standard corresponding to its tier subcontractor as the capabilities and to be other than small, and, thus, primary NAICS code, or $100,000,000, past performance of the small business whichever is less. For a firm having an ineligible for an award as a small prime contractor in other instances. employee-based size standard business. This size protest process has Instead, it would provide discretion to corresponding to its primary NAICS worked well in ensuring that small contracting officers to consider such code, the limit is $100,000,000. In order business joint venture partners do in past performance, capabilities and to simplify this requirement, this fact control non-8(a) contracts with their experience of each first tier proposed rule would provide that a large business mentors. Because size subcontractor where appropriate. SBA protests are authorized for competitive Participant may not receive sole source specifically requests comments as to 8(a) contracts, SBA and believes that the 8(a) contract awards where it has whether as a policy matter such size protest process could work received a combined total of consideration should be required in all similarly for competitive 8(a) contracts. competitive and sole source 8(a) cases, or limited only to the statutorily As such, this proposed rule would contracts in excess of $100,000,000 required instances as proposed. eliminate the need for 8(a) Participants during its participation in the 8(a) BD Section 125.3 to seek and receive approval from SBA program, regardless of its primary of every joint venture for competitive NAICS code. In addition, the rule would The Small Business Act explicitly clarify that in determining whether a 8(a) contracts. SBA believes that this prohibits the Government from Participant has reached the limit would significantly lessen the burden requiring small businesses to submit identified in paragraph (a) of this imposed on 8(a) small business subcontracting plans. 15 U.S.C. section, SBA would look at the 8(a) 637(d)(8). This prohibition is set forth in Participants. Participants would not be revenues a Participant has actually required to submit additional § 125.3(b) of SBA’s regulations and in received, not projected 8(a) revenues FAR 19.702(b)(1). Under the Alaska paperwork to SBA and would not have that a Participant might receive through Native Claims Settlement Act (ANCSA), to wait for SBA approval in order to an indefinite delivery or indefinite a contractor receives credit towards the seek competitive 8(a) awards. quantity contract, a multiple award satisfaction of its small or small However, the proposed rule would contract, or options or modifications. disadvantaged business subcontracting not eliminate the requirement that SBA Finally, the proposed rule would amend goals when contracting with an ANC- must approve joint ventures in what types of small dollar value 8(a) owned firm. 43 U.S.C. 1626(e)(4)(B). connection with sole source 8(a) contracts should not be considered in There has been some confusion as to awards. Because size protests from other determining whether a Participant has whether an ANC-owned firm that does Participants are not permitted with reached the 8(a) revenue limit. not individually qualify as small but respect to sole source 8(a) Currently, SBA does not consider 8(a) counts as a small business or a small procurements, there would be no way to contracts awarded under $100,000 in disadvantaged business for ensure that a joint venture for an 8(a) determining whether a Participant has subcontracting goaling purposes under sole source contract between an 8(a) reached the ‘1 8(a) revenue limit. The 43 U.S.C. 1626(e)(4)(B) must itself Participant and its large business proposed rule would replace the submit a subcontracting plan. SBA mentor is controlled by the 8(a) $100,000 amount with a reference to the believes that such a firm is not currently Participant and otherwise meets SBA’s SAT. SBA has delegated to procuring required to submit a subcontracting joint venture requirements if SBA did agencies the ability to award sole source plan, but proposes to add clarifying not continue to look at joint ventures in 8(a) contracts without offer and language to § 125.3(b) to clear up any acceptance for contracts valued at or that context. SBA believes that it is confusion. The proposed rule would below the SAT. Because SBA does not important to ensure that the joint make clear that all firms considered to accept such procurements into the 8(a) be small businesses, whether the firm venture rules would continue to be BD program, it is difficult for SBA to qualifies as a small business concern for followed, and without any other monitor these awards. The proposed the size standard corresponding to the enforcement mechanism, SBA must rule would merely align the 8(a) NAICS code assigned to the contract or continue to approve joint ventures for revenue limit with that authority. is deemed to be treated as a small 8(a) sole source contracts. The only business concern by statute, would not Section 125.2 other alternative approach would be to be required to submit subcontracting allow size protests in connection with The proposed rule would add a new plans. sole source 8(a) contracts, but SBA paragraph (g) requiring contracting believes that is not appropriate because officers to consider the past Section 125.5 other Participants are not really performance and experience of first tier The proposed rule clarifies that SBA interested parties with respect to a sole subcontractors in certain instances. This does not use the certificate of source 8(a) procurement offered to the consideration is statutorily required for competency (COC) procedures for 8(a) 8(a) program on behalf of another bundled or consolidated contracts (15 sole source contracts. This has long Participant. U.S.C. 644(e)(4)(B)(i)) and for multiple been SBA’s policy. See 62 FR 43584,

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43592 (Aug. 14, 1997). Instead of using order to qualify as a small business under the proposed mentor-prote´ge´ SBA COC procedures, an agency that nonmanufacturer, at least 50% of the agreement; does not appear on the finds a potential 8(a) sole source value of the contract must come from Federal list of debarred or suspended awardee to be non-responsible should either small business manufacturers or contractors; and can impart value to a proceed through the substitution or from any businesses for items which prote´ge´ firm. Instead of requiring SBA to withdrawal procedures in the proposed have been granted a waiver (or that look at and determine that a proposed § 124.503(e). The proposed rule also small business manufacturers plus mentor possesses good character in changes the threshold for COC appeals waiver must equal at least 50%). In every case, the proposed rule would from $100,000 to the simplified other words, in the above example, amend this provision to specify that acquisition threshold. $500,000 (50% of the value of the SBA will decline an application if SBA contract) must come from small determines that the mentor does not Section 125.6 business manufacturers or be subject to possess good character. The proposed Section 125.6(b) provides guidance on a waiver. If items totaling $10,000 are rule would also clarify that a mentor which limitation on subcontracting subject to a waiver, then only $490,000 that has more than one prote´ge´ cannot requirement applies to a ‘‘mixed worth of items must come from small submit competing offers in response to contract.’’ The section currently refers to business manufacturers; requiring a solicitation for a specific procurement a mixed contract as one that combines $5,000 less from small business through separate joint ventures with both services and supplies. SBA manufacturers. SBA is considering different prote´ge´s. That has always been inadvertently did not include the changing this in the final rule, but seeks SBA’s intent (the current rule specifies possibility that a mixed contact could comments on whether this approach that a second mentor-prote´ge´ include construction work, although in makes sense. The current approach relationship cannot be a competitor of practice SBA has applied this section to provides added incentives for small the first), but SBA wants to make this a contract requiring, for example, both business manufacturers. The clear in response to questions SBA has services and construction work. The recommended approach might cause received regarding this issue. proposed revision would merely more requirements to be set aside for SBA is also considering whether to recognize that a mixed contract is one small business, but SBA questions limit mentors only to those firms having that integrates any combination of whether this would truly benefit small average annual revenues of less than services, supplies, or construction. A business if small business manufactures $100 million. Currently, any concern contracting officer would then select the are not ultimately providing the that demonstrates a commitment and appropriate NAICS code, and that products. the ability to assist small business NAICS code is determinative as to concerns may act as a mentor. This which limitation on subcontracting and Section 125.8 includes large businesses of any size. performance requirement applies. The proposed rule would make SBA has received several suggestions SBA also asks for comments regarding conforming changes to § 125.8 in order from ‘‘mid-size’’ companies (i.e., those how the nonmanufacturer rule should to take into account merging the 8(a) BD that no longer qualify as small under be applied in multiple item Mentor-Prote´ge´ Program with the All their primary NAICS codes, but believe procurements (reference Small Mentor-Prote´ge´ Program. that they cannot adequately compete § 125.6(a)(2)(ii)). Currently, for a Proposed § 125.8(b)(2)(iv) would against the much larger companies) that multiple item procurement where a permit the parties to a joint venture to a mentor-prote´ge´ program that excluded nonmanufacturer waiver is granted for agree to distribute profits from the joint very large businesses would be one or more items, compliance with the venture so that the small business beneficial to the mid-size firms and limitation on subcontracting participant(s) receive profits from the allow them to more effectively compete. requirement will not consider the value joint venture that exceed the percentage SBA’s focus in the mentor-prote´ge´ of items subject to a waiver. As such, commensurate with the work performed program is the prote´ge´ firm, what more than 50% of the value of the by them. Normally, profits would be business development assistance a products to be supplied by the distributed commensurate with the proposed mentor can provide to a nonmanufacturer that are not subject to work performed. However, several small prote´ge´ to enable that firm to more a waiver must be the products of one or businesses have asked SBA to allow the effectively compete on its own in the more domestic small business parties to agree to pay a small business future. Whether a mentor is $1,000 over manufacturers or processors. The more if they would like to do so. Of the size standard corresponding to its regulation gives an example where a course, SBA would not permit any primary NAICS code or many millions contract is for $1,000,000 and calls for agreement that would pay a small of dollars over has not been a concern the acquisition of 10 items. Market business less than that corresponding to to SBA. SBA seeks a program that will research shows that nine of the items the work it performed. But, if the parties provide the most effective business can be sourced from small business would like to distribute the profits to development assistance to small manufacturers and one item is subject to further benefit a small business, SBA business prote´ge´ firms. SBA requests an SBA class waiver. The projected would not want to prohibit that. comments on whether the size of a value of the item that is waived is mentor should be restricted in the Section 125.9 $10,000. Under the current regulatory regulations, and whether small language, at least 50% of the value of The proposed rule would first businesses would be better or worse the items not subject to a waiver, or reorganize some of the current served by such a restriction. $495,000 (50% of $990,000), must be provisions in § 125.9 for ease of use and The proposed rule would implement supplied by one or more domestic small understanding. Paragraph 125.9(b) Section 861 of the National Defense business manufacturers, and the prime would be reorganized and clarified. The Authorization Act (NDAA) of 2019, small business nonmanufacturer may proposed rule clarifies that in order to Public Law 115–232, to make three act as a manufacturer for one or more qualify as a mentor, SBA will look at changes to the mentor-prote´ge´ program items. Several small business three things, whether the proposed in order to benefit Puerto Rican small nonmanufacturers have disagreed with mentor: Is capable of carrying out its businesses. First, the proposed rule this provision. They believe that in responsibilities to assist the prote´ge´ firm would amend § 125.9(b) regarding the

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number of prote´ge´ firms that one mentor simply because it qualified as small in it has the financial ability to do so. In can have at any one time. Currently, the that other NAICS code. SBA believes these limited instances, where a new regulation provides that under no that such a situation (i.e., having a entity-owned 8(a) Participant seeks to circumstances can a mentor have more prote´ge´ with no experience in a form a mentor-prote´ge´ relationship, it than three prote´ge´s at one time. Section secondary NAICS code) could lead to may not have any expertise in its 861 of the NDAA provides that the abuse of the program. It would be hard identified primary NAICS code. The 8(a) restriction on the number of prote´ge´ for a firm with no experience in a BD Mentor-Prote´ge´ Program has allowed firms a mentor can have shall not apply secondary NAICS code to be the lead on mentor-prote´ge´ relationships in these to up to two mentor-protege a joint venture with its mentor. circumstances. Because the 8(a) BD relationships if such relationships are Similarly, a mentor with all the Mentor-Prote´ge´ Program is being merged with a small business that has its experience could easily take control of with the All Small Mentor-Prote´ge´ principal office located in the a joint venture and perform all of the Program, it follows that SBA would Commonwealth of Puerto Rico. As such, work required of the joint venture. The continue to allow such mentor-prote´ge´ proposed § 125.9(b)(3)(ii) would provide current regulation, however, has caused relationships. that a mentor generally cannot have some confusion. It states that where a The proposed rule would also more than three prote´ge´s at one time, firm is other than small in its primary respond to concerns raised by small but that the first two mentor-prote´ge´ NAICS code, the firm can qualify as a businesses regarding the regulatory limit relationships between a specific mentor prote´ge´ in a secondary NAICS code if it of permitting only two mentor-prote´ge´ and a small business that has its is small in that secondary NAICS code relationships even where the small principal office located in the and has prior experience or previously business prote´ge´ receives no or limited Commonwealth of Puerto Rico would performed work in that secondary assistance from its mentor through a not count against the limit of three NAICS code. Some have read this particular mentor-prote´ge´ agreement. proteges that a mentor can have at one provision as permitting a mentor- SBA has informally permitted a mentor- time. Thus, if a mentor did have two prote´ge´ relationship in a secondary prote´ge´ relationship not to count against prote´ge´s that had their principal offices NAICS code only where the firm is the limit of two such relationships in in Puerto Rico, it could have an other than small in its primary NAICS total where the prote´ge´ can demonstrate additional three prote´ge´s, or a total of code. That was not SBA’s intent. In that it has not received any assistance five prote´ge´s, and comply with SBA’s addition, others have read this provision from its mentor under the mentor- requirements. The proposed rule would as requiring prior experience in a prote´ge´ relationship. SBA believes that also add a new § 125.9(d)(6) to secondary NAICS code only where the a relationship that provides no business implement a provision of Section 861 of firm is other than small in its primary development assistance or contracting NDAA 2019, which authorizes NAICS code, but not where it qualifies opportunities to a prote´ge´ should not be contracting incentives to mentors that as small in its primary NAICS code. counted against the firm, or that the firm subcontract to prote´ge´ firms that are This too was not SBA’s intent. The should not be restricted to having only ´ ´ Puerto Rico businesses. Specifically, proposed rule clarifies that a firm may one additional mentor-protege proposed § 125.9(d)(6) would provide seek to be a prote´ge´ in any NAICS code relationship in such a case. SBA that a mentor that provides a for which it qualifies as small and can considered implementing in this proposed rule a provision which would subcontract to a prote´ge´ that has its form a mentor-prote´ge´ relationship in a formalize its previous policy—i.e., to principal office located in Puerto Rico secondary NAICS code if it qualifies as not count a mentor-prote´ge´ relationship may (i) receive positive consideration small and has prior experience or where the prote´ge´ can demonstrate that for the mentor’s past performance previously performed work in that it received no assistance from the evaluation, and (ii) apply costs incurred NAICS code. relationship. In order to eliminate any for providing training to such prote´ge´ In addition, although SBA does not disagreements as to whether a firm did toward the subcontracting goals believe that a regulatory change is or did not receive any assistance under contained in the subcontracting plan of needed, SBA would like to clarify SBA’s its mentor-prote´ge´ agreement, this rule the mentor. SBA requests comments as position on what experience a prote´ge´ proposes to establish an easily to whether the term ‘‘positive firm must have if it seeks a mentor- understandable and objective basis for consideration’’ can be better defined. prote´ge´ relationship in its primary counting or not counting a mentor- Section 861 specifically authorizes these NAICS code. As noted above, SBA’s prote´ge´ relationship. Specifically, the two incentives, but suggests that other regulations require a firm seeking to be rule proposes to amend § 125.9(e)(6) to incentives may also be appropriate. SBA a prote´ge´ in a secondary NAICS code to not count any mentor-prote´ge´ also seeks comments as to whether any demonstrate that it has prior experience relationship toward a firm’s two other contracting incentives could be in that secondary NAICS code. The permitted lifetime mentor-prote´ge´ feasible. regulation is silent with respect to a firm relationships where the mentor-prote´ge´ The proposed rule would clarify the having experience in its primary NAICS agreement is terminated within 18 requirements for a firm seeking to form code. Generally, a firm would have months from the date SBA approved the a mentor-prote´ge´ relationship in a performed some work in its primary agreement. NAICS code that is not the firm’s NAICS code—normally, that is how This rule also proposes to eliminate primary NAICS code (§ 125.9(c)(1)(ii)). SBA determines what the firm’s primary the reconsideration process for declined SBA intended that a firm could be a NAICS code is (i.e., the code in which mentor-prote´ge´ agreements in § 125.9(f) prote´ge´ in a secondary NAICS code for it has received the majority of its as unnecessary. Currently, if SBA which it qualifies as small if it has done revenues). However, a firm owned by an declines a mentor-prote´ge´ agreement, work previously in that secondary entity (i.e., tribe, ANC, NHO or CDC), the prospective small business prote´ge´ NAICS code. SBA did not want a firm can be admitted to the 8(a) BD without may make changes to its agreement and that had grown to be other than small much experience in its self-identified seek reconsideration from SBA within in its primary NAICS codes to form a primary NAICS code if the entity has 45 days of SBA’s decision to decline the mentor-prote´ge´ relationship in a NAICS made a firm commitment to support the mentor-prote´ge´ relationship. The code in which it had no experience operations of the applicant concern and current regulations also allow the small

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business to submit a new (or revised) relationship prematurely ends. In such decision does not apply to the pending mentor-prote´ge´ agreement to SBA at any a case, if the mentor was an other than procurement, but will apply only to point after 60 days from the date of small business and the joint venture future solicitations for the same SBA’s final decision declining a mentor- could not recertify as small, the supplies or services. If the solicitation is prote´ge´ relationship. SBA believes that procuring agency could no longer count stayed, as required by this ability to submit a new or revised the contract as an award to small § 121.1103(c)(1)(i), the contracting mentor-prote´ge´ agreement after 60 days business. SBA specifically requests officer will always receive OHA’s is sufficient. comments on this alternative and seeks decision before the date offers are due. Finally, the proposed rule would add comments on other possible alternatives As such, this rule proposes to simply clarifying language regarding the annual to remedy this perceived problem. require that the contracting officer must review of mentor-prote´ge´ relationships. amend the solicitation to reflect the new Section 125.18 It is important that SBA receive an NAICS code whenever OHA changes a honest assessment from the prote´ge´ of In addition to the revision to NAICS code in response to a NAICS how the mentor-prote´ge´ relationship is § 125.18(c) identified above, the rule code appeal. In addition, for clarity working, whether the prote´ge´ has proposes to amend the language in purposes, the proposed rule would received the agreed-upon business § 125.18(a) to clarify what revise § 121.1103(c)(1)(i) to provide that development assistance, and whether representations and certifications a a contracting officer must stay the date the prote´ge´ would recommend the business concern seeking to be awarded of the closing of the receipt of offers mentor to be a mentor for another small a SDVO contract must submit as part of instead of requiring that he or she must business in the future. SBA needs to its offer. stay the solicitation. SBA is not revising know if the mentor is not providing the Sections 126.616 and 126.618 these regulations to reflect a change in agreed-upon business development policy, but merely to more precisely assistance to the prote´ge´. This would The proposed rule would make minor capture what actually is being stayed. affect that firm’s ability to be a mentor revisions to §§ 126.616 and 126.618 by in the future. The rule would also merely deleting references to the 8(a) BD III. Compliance With Executive Orders provide that if a prote´ge´ does not Mentor-Prote´ge´ Program, since that 12866, 12988, 13132, 13175, 13563, provide information relating to the program would no longer exist as a 13771, the Paperwork Reduction Act mentor-prote´ge´ relationship, thereby separate program. (44 U.S.C. Ch. 35) and the Regulatory hindering SBA’s ability to properly Flexibility Act (5 U.S.C. 601–612) Sections 127.503(h) and 127.504 evaluate the relationship, SBA may Executive Order 12866 decide not to approve continuation of In addition to the revision to the mentor-prote´ge´ relationship. § 127.504(c) identified above, the rule The Office of Management and Budget SBA has also received several proposed to make other changes or (OMB) has determined that this complaints from small business prote´ge´s clarifications to § 127.504. The proposed proposed rule is a significant regulatory whose mentor-prote´ge´ relationships rule would rename and revise § 127.504 action for the purposes of Executive were terminated by the mentor soon for better understanding and ease of use. Order 12866. Accordingly, the next after a joint venture between the prote´ge´ The section heading would be changed section contains SBA’s Regulatory and mentor received a Government to ‘‘What requirements must an Impact Analysis. This is not a major contract as a small business. SBA EDWOSB or WOSB meet to be eligible rule, however, under the Congressional considered adding additional for an EDWOSB or WOSB contract?’’. Review Act. ´ ´ protections for protege firms, but is not The text would then more clearly define Regulatory Impact Analysis certain how best to remedy this those requirements and, as identified situation. Current § 125.9(h) provides above, add language similar to that 1. Is there a need for the regulatory consequences for when a mentor does contained in the regulations governing action? not provide to the prote´ge´ firm the the other socio-economic programs. In combining the 8(a) BD Mentor- business development assistance set The proposed rule would move the Prote´ge´ Program and the All Small forth in its mentor-prote´ge´ agreement. recertification procedures for WOSBs Mentor-Prote´ge´ Program, SBA seeks to Under the current regulations, where from § 127.503(h) to § 127.504(e). eliminate confusion regarding perceived that occurs, the firm will be ineligible to differences between the two Programs, Sections 134.318 and 121.1103 again act as a mentor for a period of two remove unnecessary duplication of years from the date SBA terminates the The proposed rule would amend functions within SBA, and establish mentor-prote´ge´ agreement, SBA may § 134.318 to make it consistent with one, unified staff to better coordinate recommend to the relevant procuring SBA’s size regulations. In this regard, and process mentor-prote´ge´ agency to issue a stop work order for § 121.1103(c)(1)(i) of SBA’s size applications. In addition, eliminating each Federal contract for which the regulations provides that upon receipt the requirement that SBA approve every mentor and prote´ge´ are performing as a of the service copy of a NAICS code joint venture in connection with an 8(a) small business joint venture, and SBA appeal, the contracting officer must contract will greatly reduce the time may seek to substitute the prote´ge´ firm ‘‘stay the solicitation.’’ However, when required for 8(a) BD Participants to for the joint venture if the prote´ge´ firm that rule was implemented, a come into and SBA to ensure is able to independently complete corresponding change was not made to compliance with SBA’s joint venture performance of any joint venture the procedural rules for SBA’s OHA requirements. contract without the mentor. SBA contained in part 134. Section SBA is also proposing to make several believes that provision should be 134.318(b) provides that if OHA changes changes to clarify its regulations. sufficient to dissuade mentors from a NAICS code in response to a NAICS Through the years, SBA has spoken early terminating mentor-prote´ge´ code appeal, and the contracting officer with small business and representatives agreements. SBA also considered adding must amend the solicitation to reflect and has determined that several a provision requiring a joint venture the new NAICS code if ‘‘the contracting regulations need further refinement so between a prote´ge´ and its mentor to officer receives OHA’s decision by the that they are easier to understand and recertify its size if the mentor-prote´ge´ date offers are due.’’ Otherwise, OHA’s implement. The proposed rule would

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make several changes to ensure that the application system. 8(a) Participants 8(a) BD program. Conversely, the rules pertaining to SBA’s various small seeking SBA’s approval of a mentor- average time it takes to approve a business procurement programs are prote´ge´ relationship through the 8(a) BD mentor-prote´ge´ relationship through the consistent. SBA believes that making program do not apply through an on- All Small Mentor-Prote´ge´ Program is the programs as consistent and similar line, electronic system, but rather apply about 20 working days. To firms seeking as possible, where practicable, will manually through their servicing SBA to submit offers through a joint venture make it easier for small businesses to district office. In SBA’s best professional with their mentors, this difference is understand what is expected of them judgment, the additional cost for significant. Such joint ventures are only and to comply with those requirements. submitting a manual mentor-prote´ge´ eligible for the regulatory exclusion 2. What is the baseline, and the agreement to SBA for review and from affiliation if they are formed after incremental benefits and costs of this approval and responding manually to SBA approves the underlying mentor- regulatory action? questions regarding that submission is prote´ge´ relationship. It follows that The proposed regulations seek to estimated at two hours. SBA receives firms applying through the 8(a) BD address or clarify several issues, which approximately 150 applications for 8(a) Mentor-Prote´ge´ Program could miss out will provide clarity to small businesses mentor-prote´ge´ relationships annually, on contract opportunities waiting for and contracting personnel. Further, SBA which equates to an annual savings to their mentor-prote´ge´ relationships to be is proposing to eliminate the burden prospective prote´ge´ firms of about 300 approved. These contract opportunity that 8(a) Participants seeking to be hours. At an estimated rate of $44.06 per costs are inherently difficult to measure, awarded an 8(a) contract as a joint hour, the annual savings in costs related so SBA is requesting comments to better venture must submit the joint venture to to the reduced time for mentor-prote´ge´ inform our understanding of the costs to SBA for review and approval prior to applications through the All Small the small business community. contract award. There are currently Mentor Prote´ge´ process is about $13,000 However, in SBA’s best judgment, faster approximately 4500 8(a) BD Participants per year. approval timeframes will mitigate such in the portfolio. Of those, about 10% or Moreover, eliminating the 8(a) BD costs by giving program participants roughly 450 Participants have entered a Mentor-Prote´ge´ Program as a separate more certainty in planning their joint venture agreement to seek the program and merging it with the All proposal strategies. award of an 8(a) contract. Under the Small Mentor-Prote´ge´ Program will This rule also proposes to eliminate current rules, SBA must approve the eliminate confusion firms seeking a the requirement that any specific joint initial joint venture agreement itself and mentor-prote´ge´ relationship have venture can be awarded no more than each addendum to the joint venture between the two programs. When SBA three contracts over a two year period, agreement—identifying the type of work first implemented the All Small Mentor- but would instead permit a joint venture and what percentage each partner to the Prote´ge´ Program, it intended to establish to be awarded an unlimited number of joint venture would perform of a a program substantively identical to the contracts over a two year period. The specific 8(a) procurement—prior to 8(a) BD mentor-prote´ge´ program, as change removing the limit of three contract award. SBA reviews the terms required by Section 1641 of the NDAA awards to any joint venture would of the joint venture agreement for of 2013. Nevertheless, feedback from the reduce the burden of small businesses regulatory compliance and must also small business community reveals a being required to form additional joint assess the 8(a) BD Participant’s capacity widespread misconception that the two venture entities to perform a fourth and whether the agreement is fair and programs offer different benefits. By contract within that two-year period. equitable and will be of substantial merging the 8(a) BD Mentor-Prote´ge´ SBA has observed that joint ventures are benefit to the 8(a) concern. It is difficult Program into the All Small-Mentor often established as separate legal to calculate the costs associated with Prote´ge´ Program, firms will not have to entities—specifically as limited liability submitting a joint venture agreement to read the requirements for both programs corporations—based on considerations SBA because the review process is and try to decipher any perceived related to individual venture liability, highly fact-intensive and typically differences. SBA estimates that having tax liability, regulatory requirements, requires that 8(a) firms provide one combined program will eliminate and exit strategies. Under the current additional information and clarification. about one hour of preparation time for rule joint venture partners must form a However, in the Agency’s best each firm seeking a mentor-prote´ge´ new joint venture entity after receiving professional judgment, it is estimated relationship. Based on approximately three contracts lest they be deemed that an 8(a) Participant currently spends 600 mentor-prote´ge´ applications each affiliated for all purposes. The proposed approximately three hours submitting a year (about 450 for the All Small rule which allows a joint venture to joint venture agreement to SBA and Mentor-Prote´ge´ Program and about 150 continue to seek and be awarded responding to questions regarding that for the 8(a) BD Mentor-Prote´ge´ contracts without requiring the partners submission. That equates to Program), this would equate to an to form a new joint venture entity after approximately 1,350 hours at an annual cost savings to prospective receiving its third contract would save estimated rate of $44.06 per hour—the prote´ge´ firms of about 600 hours. At an small businesses significant legal costs median wage plus benefits for estimated rate of $44.06 per hour, the in establishing new joint ventures and accountants and auditors according to annual savings in costs related to the ensuring that those entities meet all 2018 data from the Bureau of Labor elimination of confusion caused by applicable regulatory requirements. Statistics—for an annual total cost having two separate programs is about The proposed rule would also make savings to 8(a) Participants of about $26,500. several changes to reduce the burden of $59,500. Thus, in total, the merger of the 8(a) recertifying small business status In addition, merging the 8(a) BD BD mentor-prote´ge´ program into the All generally and requesting changes of Mentor-Prote´ge´ Program into the All Small Business Mentor-Prote´ge´ Program ownership in the 8(a) BD program. Small Mentor-Prote´ge´ Program would would provide a cost savings of about Specifically, the proposed rule would also provide cost savings. Firms seeking $39,500 per year. clarify that a concern that is at least a mentor-prote´ge´ relationship through In addition, it generally takes between 51% owned by an entity (i.e., tribe, the All Small Mentor-Prote´ge´ Program 60 and 90 days for SBA to approve a ANC, or Community Development apply through an on-line, electronic mentor-prote´ge´ relationship through the Corporation (CDC)) need not recertify its

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status as a small business when the veteran-owned small business, As reflected in the calculation, SBA ownership of the concern changes to or HUBZone small business, or women- believes that being presently qualified from a wholly-owned business concern owned small business) under for the required size or socioeconomic of the same entity, as long as the unrestricted MACs, except for orders or status on an order, where required, ultimate owner remains that entity. In Blanket Purchase Agreements issued would impose a burden on small addition, the proposed rule would also under any FSS contracts. Additionally, businesses. A concern already is provide that a Participant in SBA’s 8(a) the proposed rule would require a required by law to update its size and BD program that is owned by an ANC concern to submit a recertification or status certifications in SAM at least or tribe need not request a change of confirm its socioeconomic status for all annually. As such, the added burden to ownership from SBA where the ANC or set-aside orders where the required industry is limited to confirming that tribe merely reorganizes its ownership socioeconomic status for the order the firm’s certification is current and of a Participant in the 8(a) BD program differs from that of the underlying set accurate. by inserting or removing a wholly- aside MAC. If the firm’s size and status The added burden to ordering owned business entity between the in SAM is current and accurate when agencies includes the act of checking a ANC/tribe and the Participant. Both of the firm submits its offer, the concern firm’s size and status certification in these changes would save entity-owned would not need to submit a new SAM at the time of order award. Since small business concerns a significant certification or submit any additional ordering agencies are already familiar amount of time and money. Similarly, documentation with its offer. SBA with checking SAM information, such the proposed rule would provide that recognizes that confirming accurate size as to ensure that an order awardee is not prior SBA approval is not needed where and socioeconomic status imposes a debarred, suspended, or proposed for the disadvantaged individual (or entity) burden on a small business contract debarment, this verification is de in control of a Participant in the 8(a) BD holder, but the burden is minimal. SBA minimis. Further, checking SAM at time program will increase the percentage of intends that confirmation of size and of order award replaces the check of the his or her (its) ownership interest. status under this rule would be satisfied offeror’s contract level certification. The proposed rule would also allow by confirming that the firm’s size and SBA recognizes, however, that an a concern that has been declined for 8(a) status in SAM is currently accurate and agency’s market research for the order BD program participation to submit a qualifies the firm for award. level may be impacted where the agency new application 90 days after the date FPDS–NG indicates that, in Fiscal intends to issue a set-aside order off an unrestricted vehicle (or a socioeconomic of the Agency’s final decision to Year 2018, agencies set aside about decline. This would change the current set-aside off a small business set-aside 1,400 orders per year off unrestricted rule which requires a concern to wait 12 vehicle). The ordering agency may need MACs, excluding orders under FSS months from the date of the final agency to identify MAC-eligible vendors and contracts. SBA adopts the assumption decision to reapply. This would allow then find their status in SAM. This is from FAR Case 2014–002 that on firms that have been declined from particularly the case where the agency average there are three offers per set- participating in the 8(a) BD program the is applying the Rule of Two and aside order. The annual cost of requiring opportunity to correct deficiencies, verifying that there are at least two present size and socioeconomic status come into compliance with program small businesses or small businesses on set-aside orders under unrestricted eligibility requirements, reapply and be with the required status sufficient to set MACs, excluding FSS orders, therefore admitted to the program and receive the aside the order. SBA does not believe is calculated as 1,400 orders × 3 offers benefits of the program much more × × that conducting SAM research is quickly. SBA understands that by per order 15 minutes per offer onerous; however, because this rule reducing the re-application waiting $44.06 cost per hour. This amounts to does not cover the FSS and does not period there is the potential to strain the an annual public burden of about cover orders set aside within the same agency’s resources with higher $46,250. category as the contract, agencies have application volumes. Because these FPDS–NG indicates that, in Fiscal readily available alternatives to avoid potential costs are difficult to quantify, Year 2018, agencies set aside about 400 using SAM. SBA is seeking comments to further orders per year off set-aside MACs, Using the same set-aside order data, examine this proposal. However, in the other than the FSS, in the categories the annual cost of additional market Agency’s best judgment, any costs covered by this rule. These categories research efforts for applicable set-aside associated with the increase in are WOSB or EDWOSB set-aside/sole- orders under MACs, is calculated as application volume would be source orders off small business set- 2,400 orders (1,400 + 1,000) × 10 outweighed by the potential benefit of aside MACs; SDVOSB set-aside/sole- minutes per order × $44.06 cost per providing business development source orders off small business set- hour. This amounts to an annual assistance and contracting benefits aside MACs; WOSB or EDWOSB set- government burden of about $17,600. sooner to eligible firms. aside/sole-source orders off any small The annual cost is partially offset by This rule also proposes to clarify business program MAC (8(a), HUBZone, the cost savings that result from other SBA’s position with respect to size and WOSB/EDWOSB, and SDVOSB); and changes in this rule. This proposed socioeconomic status certifications on SDVOSB set-aside/sole-source order off change goes more to accountability and task orders under MACs. Currently, size 8 any small business program MAC ensuring that small business contracting certifications at the order level are not (8(a), HUBZone, WOSB/EDWOSB, and vehicles truly benefit small business required unless the contracting officer, SDVOSB). Following the same concerns. Nevertheless, SBA is in his or her discretion, requests a calculations, the annual cost of requesting comments to further assess recertification in connection with a requiring present socioeconomic status potential incremental costs. specific order. The proposed rule would on set-aside orders under set-aside 3. What are the alternatives to this require a concern to submit a MACs, is calculated as 400 orders × 3 proposed rule? recertification or confirm its size and/or offers per order × 15 minutes per offer As noted above, this rule proposes to socioeconomic status for all set-aside × $44.06 cost per hour. This amounts to make a number of changes intended to orders (i.e., small business set-aside, an annual public burden of about reduce unnecessary or excessive 8(a) small business, service-disabled $13,200. burdens on small businesses, and to

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clarify other regulatory provisions to business, or women-owned small concern’s socioeconomic status (e.g., eliminate confusion among small business), or the order is set aside in a HUBZone, WOSB, etc.), such that they businesses and procuring activities. different category than was the set-aside would no longer qualify for set-aside SBA has also considered other MAC, a concern must be qualified for orders. The contracting agency would alternative proposals to achieve these the required size and socioeconomic then be required to issue a contract ends. Concerning SBA’s role in status at the time it submits its initial modification within 30 days, and from approving 8(a) joint venture agreements, offer, which includes price, for the that point forward, ordering agencies the Agency could also eliminate the particular order. In SBA’s view, the would no longer be able to count requirement that SBA must approve order is the first time size or options or orders issued pursuant to the joint ventures in connection with sole socioeconomic status is important contract for small business goaling source 8(a) awards. However, as noted where the underlying MAC is purposes. This could be less above, SBA believes that such approval unrestricted or set aside in a different burdensome than recertification of is an important enforcement mechanism category than the set-aside MAC, and socioeconomic status for each set-aside to ensure that the joint venture rules are therefore, that is the date at which order. SBA invites comments on followed. With respect to the eligibility should be examined. SBA consideration of this approach. requirement that a concern must wait 90 considered maintaining the status quo; days to re-apply to the 8(a) BD program allowing a one-time certification as to Summary of Costs and Cost Savings after the date of the Agency’s final size and socioeconomic status (i.e., at decline decision, SBA could instead the time of the initial offer for the Table 1: Summary of Incremental eliminate the application waiting period underlying contract) to control all Costs and Cost Savings, below, sets out altogether. This would allow a concern orders under the contract, unless one of the estimated net incremental cost/(cost to re-apply as soon as it reasonably recertification requirements applies (see saving) associated with this proposed believed it had overcome the grounds 121.404(g)). SBA believes the current rule. Table 2: Detailed Breakdown of for decline. However, SBA believes that policy does not properly promote the Incremental Costs and Cost Savings, such an alternative would encompass interests of small business. Long-term below, provides a detailed explanation significant administrative burden on contracting vehicles that reward firms of the annual cost/(cost saving) SBA. that once were, but no longer qualify as, estimates associated with this proposed Under the proposed rule, if an order small or a particular socioeconomic rule. This proposed rule is expected to under an unrestricted MAC is set-aside status adversely affect truly small or be an E.O. 13771 deregulatory action. exclusively for small business (i.e., otherwise eligible businesses. The annualized cost savings of this rule small business set-aside, 8(a) small Another alternative is to require is expected to be $21,065 in 2016 business, service-disabled veteran- business concerns to notify contracting dollars with a net present value of owned small business, HUBZone small agencies when there is a change to a $300,935 over perpetuity.

TABLE 1—SUMMARY OF INCREMENTAL COSTS AND COST SAVINGS

Annual cost/ Item No. Regulatory action item (cost saving) estimate

1 ...... Eliminating SBA approval of joint venture agreements to perform competitive 8(a) contracts ...... ($59,500) 2 ...... Merging the 8(a) BD Mentor-Prote´ge´ Program into the All Small Mentor-Prote´ge´ Program—Elimination of (13,000) manual application process. 3 ...... Merging the 8(a) BD Mentor-Prote´ge´ Program into the All Small Mentor-Prote´ge´ Program—Elimination of con- (26,500) fusion among firms seeking a mentor-prote´ge´ relationship. 4 ...... Requiring recertification for set-aside orders issued off unrestricted Multiple Award Contracts ...... 46,250 5 ...... Requiring recertification for set-aside orders issued off set-aside Multiple Award Contracts ...... 13,200 6 ...... Additional Government detailed market research to identify qualified sources for set-aside orders ...... 17,600

TABLE 2—DETAILED BREAKDOWN OF INCREMENTAL COSTS AND COST SAVINGS

Annual cost/ (cost saving) Item No. Regulatory action item details estimate breakdown

1 ...... Proposed regulatory change: SBA is proposing to eliminate the burden that 8(a) Participants seeking to be awarded an 8(a) contract as a joint venture must submit the joint venture to SBA for review and approval prior to contract award. Estimated number of impacted entities: There are currently approximately 4500 8(a) BD Participants in the 450 entities. portfolio. Of those, about 10% or roughly 450 Participants have entered a joint venture agreement to seek the award of an 8(a) contract. Estimated average impact * (labor hour): SBA estimates that an 8(a) BD Participant currently spends approxi- 3 hours mately three hours submitting a joint venture agreement to SBA and responding to questions regarding that submission. 2017 Median Pay ** (per hour): Most 8(a) firms use an accountant or someone with similar skills for this task $44.06. Estimated Cost/(Cost Saving) ...... ($59,500) 2 ...... Proposed regulatory change: SBA is proposing to merge the 8(a) BD Mentor-Prote´ge´ Program into the All Small Mentor-Prote´ge´ Program. This will reduce the burden on 8(a) Participants seeking a mentor-prote´ge´. Estimated number of impacted entities: SBA receives approximately 150 applications for 8(a) mentor-prote´ge´ 150 entities. relationships annually.

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TABLE 2—DETAILED BREAKDOWN OF INCREMENTAL COSTS AND COST SAVINGS—Continued

Annual cost/ (cost saving) Item No. Regulatory action item details estimate breakdown

Estimated average impact * (labor hour): In SBA’s best professional judgment, the additional cost for submit- 2 hours. ting a manual mentor-prote´ge´ agreement to SBA for review and approval and responding manually to ques- tions regarding that submission is estimated at two hours. 2017 Median Pay ** (per hour): Most 8(a) firms use an accountant or someone with similar skills for this task $44.06. Estimated Cost/(Cost Saving) ...... ($13,000) 3 ...... Proposed regulatory change: SBA is proposing to merge the 8(a) BD Mentor-Prote´ge´ Program into the All Small Mentor-Prote´ge´ Program. In doing so, firms will not have to read the requirements for both programs and try to decipher any perceived differences.. Estimated number of impacted entities: SBA receives approximately 600 mentor-prote´ge´ applications each 600 entities. year—about 450 for the All Small Mentor-Prote´ge´ Program and about 150 for the 8(a) BD Mentor-Prote´ge´ Program). Estimated average impact * (labor hour): SBA estimates that having one combined program will eliminate 1 hour. about one hour of preparation time for each firm seeking a mentor-prote´ge´ relationship. 2017 Median Pay ** (per hour): Most small business concerns use an accountant or someone with similar $44.06. skills for this task. Estimated Cost/(Cost Saving) ...... ($26,500) 4 ...... Proposed regulatory change: SBA is proposing to require that a firm be accurately certified and presently qualified as to size and/or status for set-aside orders issued off Multiple Award Contracts that were not set aside or set aside in a separate category, except for the Federal Supply Schedule. Estimated number of impacted entities: Approximately 1,400 set-aside orders are issued annually on Multiple 4,200 offers. Award Contracts that are not set aside in the same category, other than on the Federal Supply Schedule. SBA estimates that three offers are submitted for each order. Estimated average impact * (labor hour): SBA estimates that a small business will spend an average of 15 0.25 hours. minutes confirming that size and status is accurate prior to submitting an offer. 2017 Median Pay ** (per hour): Most small business concerns use an accountant or someone with similar $44.06 skills for this task. Estimated Cost/(Cost Saving) ...... $46,250. 5 ...... Proposed regulatory change: SBA is proposing to require that a firm be accurately certified and presently qualified as to socioeconomic status for set-aside orders issued off Multiple Award Contracts that were set aside in a separate category, except for the Federal Supply Schedule contracts. Estimated number of impacted entities: Approximately 400 set-aside orders are issued annually on Multiple 1,200 offers. Award Contracts that are not set aside in the same category, other than on the Federal Supply Schedule, are affected by this rule. SBA estimates that three offers are submitted for each order. Estimated average impact * (labor hour): SBA estimates that a small business will spend an average of 15 0.25 hours. minutes confirming that size and status is accurate prior to submitting an offer. 2017 Median Pay ** (per hour): Most small business concerns use an accountant or someone with similar $44.06. skills for this task. Estimated Cost/(Cost Saving) ...... $13,200. 6 ...... Proposed regulatory change: SBA is proposing to require that firms be accurately certified and presently quali- fied as to size and socioeconomic status for certain set-aside orders issued off Multiple Award Contracts, except for the Federal Supply Schedule contracts. This change impacts the market research required by or- dering activities to determine if a set-aside order for small business or for any of the socioeconomic pro- grams may be pursued. Estimated number of impacted entities: Approximately 2,400 set-aside orders are issued annually as de- 2,400 orders. scribed in the proposed rule on Multiple Award Contracts, other than on the Federal Supply Schedule. 33000. Estimated average impact * (labor hour): SBA estimates that ordering activities applying the Rule of Two will 0.16 hours. spend an average of 10 additional minutes to locate contractors awarded MACs and looking up the current business size for each of the contractors in SAM to determine if a set-aside order can be pursued. 2017 Median Pay ** (per hour): Contracting officers typically perform the market research for the acquisition $44.06. plan. Estimated Cost/(Cost Saving) ...... $17,600. * This estimate is based on SBA’s best professional judgment. ** Source: Bureau of Labor Statistics, Accountants and Auditors.

Executive Order 12988 Executive Order 13132 purpose of Executive Order 13132, Federalism, SBA has determined that This action meets applicable For the purposes of Executive Order this proposed rule has no federalism standards set forth in Sections 3(a) and 13132, SBA has determined that this implications warranting preparation of a 3(b)(2) of Executive Order 12988, Civil proposed rule will not have substantial, federalism assessment. Justice Reform, to minimize litigation, direct effects on the States, on the eliminate ambiguity, and reduce relationship between the national Executive Order 13175 burden. The action does not have government and the States, or on the As part of this proposed rulemaking retroactive or preemptive effect. distribution of power and process SBA held tribal consultations responsibilities among the various pursuant to Executive Order 13175, levels of government. Therefore, for the Tribal Consultations, in Anchorage, AK

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(see 83 FR 17626), Albuquerque, NM anticipated present and future costs burden for this collection of information (see 83 FR 24684), and Oklahoma City, when responding to E.O. 12866 (e.g., is estimated to be 1,800 total hours OK (see 83 FR 24684). This executive identifying changing future compliance ($79,300), including the time for order reaffirms the Federal costs that might result from reviewing instructions, searching Government’s commitment to tribal technological innovation or anticipated existing data sources, gathering and sovereignty and requires Federal behavioral changes)? maintaining the data needed, and agencies to consult with Indian tribal To the extent possible, the agency completing information reporting. governments when developing policies utilized the most recent data available Respondents: 7,200. that would impact the tribal in the Federal Procurement Data Responses per respondent: 1. community. The purpose of the above- System—Next Generation (FPDS–NG), Total annual responses: 7,200. referenced tribal consultation meetings Dynamic Small Business Search (DSBS) Preparation hours per response: 0.25 was to provide interested parties with and System for Award Management (15 min). an opportunity to discuss their views on (SAM). Total response burden hours: 1,800. the issues, and for SBA to obtain the 2. Public participation: Did the Cost per hour: $44.06. views of SBA’s stakeholders on agency: (a) Afford the public a Estimated cost burden to the public: approaches to the 8(a) BD program meaningful opportunity to comment $79,300. regulations. SBA has always considered through the internet on any proposed This added information collection tribal consultation meetings a valuable regulation, with a comment period that burden will be officially reflected component of its deliberations and should generally consist of not less than through OMB Control Number 9000– believes that these tribal consultation 60 days; (b) provide for an ‘‘open 0163 if the rule is implemented. meetings allow for constructive dialogue exchange’’ of information among SBA invites comments, particularly with the Tribal community, Tribal government officials, experts, on: Whether this collection of Leaders, Tribal Elders, elected members stakeholders, and the public; (c) provide information is necessary; whether it will of Alaska Native Villages or their timely online access to the rulemaking have practical utility; whether our appointed representatives, and docket on Regulations.gov; and (d) seek estimate of the public burden of this principals of tribally-owned and ANC- the views of those who are likely to be collection of information is accurate, owned firms participating in the 8(a) BD affected by rulemaking, even before and based on valid assumptions and program. issuing a notice of proposed methodology; ways to enhance the In general, tribal stakeholders were rulemaking? quality, utility, and clarity of the supportive of SBA’s intent to implement The proposed rule will have a 60-day information to be collected; and ways in changes that will make it easier for comment period and will be posted on which we can minimize the burden of small business concerns to understand www.regulations.gov to allow the public the collection of information on those and comply with the regulations to comment meaningfully on its who are to respond, through the use of governing the 8(a) BD program, and provisions. In addition, SBA submitted appropriate technological collection agreed that this rulemaking will make the proposed rule to the Office of techniques or other forms of information the program more effective and Management and Budget for interagency technology. accessible to the small business review. Regulatory Flexibility Act, 5 U.S.C. 601– community. SBA received significant 3. Flexibility: Did the agency identify 612 comments on its approaches to the and consider regulatory approaches that proposed regulatory changes, as well as reduce burdens and maintain flexibility The Regulatory Flexibility Act (RFA) several recommendations regarding the and freedom of choice for the public? requires administrative agencies to 8(a) BD program not initially Yes, the proposed rule is intended to consider the effect of their actions on contemplated by this planned reduce unnecessary or excessive small entities, small non-profit rulemaking. SBA has taken these burdens on 8(a) Participants, and clarify enterprises, and small local discussions into account in drafting this other regulatory related provisions to governments. Pursuant to the RFA, proposed rule. SBA intends to hold eliminate confusion among small when an agency issues a rulemaking, additional tribal consultations before businesses and procuring activities. the agency must prepare a regulatory issuing a final rule. flexibility analysis which describes the Executive Order 13771 impact of the rule on small entities. Executive Order 13563 This proposed rule is expected to be However, section 605 of the RFA allows This executive order directs agencies an E.O. 13771 deregulatory action. The an agency to certify a rule, in lieu of to, among other things: (a) Afford the annualized cost savings of this rule is preparing an analysis, if the rulemaking public a meaningful opportunity to expected to be $21,065 in 2016 dollars is not expected to have a significant comment through the internet on with a net present value of $300,935 economic impact on a substantial proposed regulations, with a comment over perpetuity. A detailed discussion number of small entities. The RFA period that should generally consist of of the estimated cost of this proposed defines ‘‘small entity’’ to include ‘‘small not less than 60 days; (b) provide for an rule can be found in the above businesses,’’ ‘‘small organizations,’’ and ‘‘open exchange’’ of information among Regulatory Impact Analysis. ‘‘small governmental jurisdictions.’’ government officials, experts, This proposed rule concerns various stakeholders, and the public; and (c) Paperwork Reduction Act, 44 U.S.C. Ch. aspects of SBA’s 8(a) BD program, as seek the views of those who are likely 35 such the rule relates to small business to be affected by the rulemaking, even This proposed rule does impose concerns but would not affect ‘‘small before issuing a notice of proposed additional reporting or recordkeeping organizations’’ or ‘‘small governmental rulemaking. As far as practicable or requirements under the Paperwork jurisdictions’’ because those programs relevant, SBA considered these Reduction Act, 44 U.S.C. Chapter 35. generally apply only to ‘‘business requirements in developing this rule, as The rule provides a number of size and/ concerns’’ as defined by SBA discussed below. or socioeconomic status recertification regulations, in other words, to small 1. Did the agency use the best requirements for set-aside orders under businesses organized for profit. ‘‘Small available techniques to quantify MACs. The annual total public reporting organizations’’ or ‘‘small governmental

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jurisdictions’’ are non-profits or have no affect at all on those small about 236,000 new orders were awarded governmental entities and do not businesses that currently have or on off MACs per year from FY 2014 to FY generally qualify as ‘‘business concerns’’ those that seek to have an SBA- 2018. Around 199,000, or 84.3 percent, within the meaning of SBA’s approved mentor-prote´ge´ relationship. were awarded off MACs established regulations. The proposed rule would eliminate without a small business set aside. For There are currently approximately confusion regarding perceived this analysis, small business set asides 4500 8(a) BD Participants in the differences between the two Programs, include all total or partial small portfolio. Most of the proposed changes remove unnecessary duplication of business set asides; and all 8(a), WOSB, are clarification of current policy or functions within SBA, and establish SDVOSB, and HUBZone awards. There designed to reduce unnecessary or one, unified staff to better coordinate were about 9,000 new orders awarded excessive burdens on 8(a) BD and process mentor-prote´ge´ annually with a small business set aside Participants and therefore should not applications. The benefits of the two impact many of these concerns. There programs are identical, and will not off MACs established without a small are about 385 Participants with 8(a) BD change under the proposed rule. business set aside. These orders were mentor-prote´ge´ agreements and about SBA is also proposing to require a issued to approximately 2,600 firms. another 850 small businesses that have business to be qualified for the required The 9,000 new orders awarded with a SBA-approved mentor-prote´ge´ size and status when under small business set aside off a MAC agreements through the All Small consideration for a set-aside order off a without a small business set aside were Mentor-Prote´ge´ Program. The MAC that was awarded outside of the 4.0 percent of the 236,000 new orders consolidation of SBA’s two mentor- same set-aside category. Pursuant to the off MACs in a year (Table 3). In FY prote´ge´ programs into one program will Small Business Goaling Report (SBGR) 2018, only 1,400 for these set-aside not have a significant economic impact Federal Procurement Data System— orders used MACs other than the FSS on small businesses. In fact, it should Next Generation (FPDS–NG) records, Program.

TABLE 3—0.47% OF NEW MAC ORDERS INAFY ARE NON-FSS ORDERS SET ASIDE FOR SMALL BUSINESS WHERE UNDERLYING BASE CONTRACT NOT SET ASIDE FOR SMALL BUSINESS

FY 014 FY 015 FY 016 FY 017 FY 018 AVG

Total new modification 0 orders off MACs in FY ...... 244,664 231,694 245,978 234,304 223,861 236,100 Orders awarded with SB set aside with- out MAC IDV SB set aside ...... 10,089 9,347 9,729 9,198 8,666 9,406 Non-FSS orders awarded with SB set aside without MAC IDV SB set aside .. 902 780 1,019 1,422 1,400 1,105 Percent ...... 0.37% 0.34% 0.41% 0.61% 0.63% 0.47%

If all firms receiving a non-FSS small List of Subjects 13 CFR Part 134 business set aside order off a MAC that 13 CFR Part 121 Administrative practice and was not itself set aside for small procedure, Claims, Equal employment business were adversely affected by the Administrative practice and opportunity, Lawyers, Organization and proposed rule (i.e., every such firm procedure, Government procurement, functions (Government agencies). receiving an award as a small business Government property, Grant programs— Accordingly, for the reasons stated in had grown to be other than a small business, Individuals with disabilities, the preamble, SBA proposes to amend business or no longer qualified as 8(a), Loan programs—business, Small businesses. 13 CFR parts 121, 124, 125, 126, 127, WOSB, SDVO, or HUBZone), the rule and 134 as follows: requiring a business to be certified as 13 CFR Part 124 small for a non-FSS small business set PART 121—SMALL BUSINESS SIZE aside orders off MACs not set aside for Administrative practice and REGULATIONS small business would impact only 0.47 procedure, Government procurement, percent of annual new MAC orders. As Government property, Small businesses. ■ 1. The authority citation for part 121 such, SBA certifies that this proposed 13 CFR Part 125 continues to read as follows: rule will not have a significant Authority: 15 U.S.C. 632, 634(b)(6), 662 Government contracts, Government economic impact on a substantial and 694a(9). procurement, Reporting and number of small entities. Nevertheless, recordkeeping requirements, Small ■ 2. Amend § 121.103 by: throughout the supplementary businesses, Technical assistance. ■ a. Revising the first sentence of information to this proposed rule, SBA paragraphs (b)(6) and (9); has identified the reasons why the 13 CFR Part 126 ■ b. Revising paragraph (f)(2)(i); proposed changes are being considered, Administrative practice and ■ c. Revising the first sentence of the objectives and basis for the proposed procedure, Government procurement, paragraph (g); rule, a description of the number of Penalties, Reporting and recordkeeping ■ d. Revising paragraph (h) introductory small entities to which the proposed requirements, Small businesses. text and example 1 to paragraph (h) rule will apply, and a description of introductory text; 13 CFR Part 127 alternatives considered. ■ e. Adding two sentences to the end of Government contracts, Reporting and paragraph (h)(3)(ii); recordkeeping requirements, Small ■ f. Removing paragraph (h)(3)(iii); and businesses. ■ g. Revising paragraph (h)(5).

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The revisions and addition read as two year period, for which purpose they situated entity as the term is defined in follows: combine their efforts, property, money, part 125 of this chapter. skill, or knowledge, but not on a § 121.103 How does SBA determine Example 1 to paragraph (h) introductory affiliation? continuing or permanent basis for text. Joint Venture AB receives a contract on conducting business generally. This April 2, year 1. Joint Venture AB may receive * * * * * means that a specific joint venture additional contracts through April 2, year 3. (b) * * * entity generally may not be awarded On June 6, year 2, Joint Venture AB submits (6) A firm that has an SBA-approved contracts beyond a two-year period, an offer for Solicitation 1. On July 13, year mentor-prote´ge´ agreement authorized starting from the date of the award of 2, Joint Venture AB submits an offer for under § 125.9 of this chapter is not Solicitation 2. In May, year 3, Joint Venture the first contract, without the partners to affiliated with its mentor or prote´ge´ firm AB is found to be the apparent successful the joint venture being deemed affiliated solely because the prote´ge´ firm receives offeror for Solicitation 1. In June, year 3, Joint assistance from the mentor under the for the joint venture. Once a joint Venture AB is found to be the apparent agreement. * * * venture receives a contract, it may successful offeror for Solicitation 2. Even submit additional offers for a period of though the award of the two contracts * * * * * two years from the date of that first emanating from Solicitations 1 and 2 would (9) In the case of a solicitation for a award. An individual joint venture may occur after April 2, year 3, Joint Venture AB bundled contract or a Multiple Award may receive those awards without causing be awarded one or more contracts after Contract with a value in excess of the general affiliation between its joint venture that two-year period as long as it agency’s substantial bundling threshold, partners because the offers occurred prior to submitted an offer including price prior a small business contractor may enter the expiration of the two-year period. to the end of that two-year period. SBA into a Small Business Teaming * * * * * will find joint venture partners to be Arrangement with one or more small (3) * * * affiliated, and thus will aggregate their business subcontractors and submit an (ii) * * * Except for sole source 8(a) receipts and/or employees in offer as a small business without regard awards, the joint venture must meet the determining the size of the joint venture to affiliation, so long as each team requirements of § 124.513(c) and (d), for all small business programs, where member is small for the size standard § 125.8(b) and (c), § 125.18(b)(2) and (3), the joint venture submits an offer after assigned to the contract or § 126.616(c) and (d), or § 127.506(c) and two years from the date of the first subcontract. * * * (d) of this chapter, as appropriate, at the award. The same two (or more) entities * * * * * time it submits its initial offer including may create additional joint ventures, (f) * * * price. For a sole source 8(a) award, the and each new joint venture entity may (2) * * * joint venture must demonstrate that it (i) This presumption may be rebutted submit offers for a period of two years meets the requirements of § 124.513(c) by a showing that despite the from the date of the first contract to the and (d) prior to the award of the contractual relations with another joint venture without the partners to the contract. joint venture being deemed affiliates. At concern, the concern at issue is not * * * * * some point, however, such a solely dependent on that other concern, (5) For size purposes, a concern must such as where the concern has been in longstanding inter-relationship or contractual dependence between the include in its receipts its proportionate business for a short amount of time and share of joint venture receipts, unless has only been able to secure a limited same joint venture partners will lead to a finding of general affiliation between the proportionate share already is number of contracts or where the accounted for in receipts reflecting and among them. A joint venture: Must contractual relations do not restrict the transactions between the concern and be in writing; must do business under concern in question from selling the its joint ventures (e.g., subcontracts from its own name and be identified as a joint same type of products or services to a joint venture entity to joint venture venture in the System for Award another purchaser. partners). In determining the number of Management (SAM) for the award of a * * * * * employees, a concern must include in (g) Affiliation based on the newly prime contract; may be in the form of a its total number of employees its organized concern rule. Affiliation may formal or informal partnership or exist proportionate share of joint venture arise where former or current officers, as a separate limited liability company employees. For both the calculation of directors, principal stockholders, or other separate legal entity; and, if it receipts and of employees, the managing members, or key employees of exists as a formal separate legal entity, appropriate proportionate share is the one concern organize a new concern in may not be populated with individuals same percentage of receipts or the same or related industry or field of intended to perform contracts awarded employees as the joint venture partner’s operation, and serve as the new to the joint venture (i.e., the joint percentage share of the work performed concern’s officers, directors, principal venture may have its own separate by the joint venture. stockholders, managing members, or key employees to perform administrative functions, including one or more Example 1 to paragraph (h)(5). Joint employees, and the one concern is Venture AB is awarded a contract for $10M. furnishing or will furnish the new Facility Security Officer(s), but may not The joint venture will perform 50% of the concern with contracts, financial or have its own separate employees to work, with A performing $2M (40% of the technical assistance, indemnification on perform contracts awarded to the joint 50%, or 20% of the total value of the bid or performance bonds, and/or other venture). SBA may also determine that contract) and B performing $3M (60% of the facilities, whether for a fee or the relationship between a prime 50% or 30% of the total value of the otherwise. * * * contractor and its subcontractor is a contract). Since A will perform 40% of the (h) Affiliation based on joint ventures. joint venture pursuant to paragraph work done by the joint venture, its share of (h)(4) of this section. For purposes of the revenues for the entire contract is 40%, A joint venture is an association of which means that the receipts from the individuals and/or concerns with this paragraph (h), contract refers to contract awarded to Joint Venture AB that interests in any degree or proportion prime contracts, novations of prime must be included in A’s receipts for size consorting to engage in and carry out contracts, and any subcontract in which purposes are $4M. A must add $4M to its business ventures for joint profit over a the joint venture is treated as a similarly receipts for size purposes, unless its receipts

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already account for the $4M in transactions ■ d. Revise paragraph (d); veteran-owned small business, between A and Joint Venture AB. ■ e. Add a subject heading to paragraph HUBZone small business, or women- * * * * * (e) and a sentence at the end of owned small business), if a business ■ 3. Amend § 121.402 by: paragraph (e); concern is small at the time of offer and ■ a. Revising the first sentence of ■ f. Add a subject heading to paragraph contract-level recertification for the paragraph (b)(2); (f); Multiple Award Contract, it is small for ■ b. Revising paragraph (c)(1)(i); ■ g. Amend paragraph (g) by: each order or Blanket Purchase ■ c. Redesignating paragraph (c)(2)(ii) as ■ i. Revising paragraph (g) introductory Agreement issued against the contract, paragraph (c)(2)(iii); and text and paragraphs (g)(2)(ii)(C) and (D); unless a contracting officer requests a ■ d. Adding a new paragraph (c)(2)(ii). ■ ii. Adding paragraph (g)(2)(iii) and a size recertification for a specific order or The revisions and addition read as new second sentence to paragraph (g)(3) Blanket Purchase Agreement. follows: introductory text; and (ii) Multiple NAICS. If multiple ■ h. Add a subject heading to paragraph NAICS codes are assigned as set forth in § 121.402 What size standards are (h). applicable to Federal Government § 121.402(c)(1)(ii), SBA determines size Contracting programs? The additions and revisions read as status at the time of initial offer (or other follows: formal response to a solicitation), which * * * * * includes price, for a Multiple Award (b) * * * § 121.404 When is the size status of a Contract based upon the size standard (2) A procurement is generally business concern determined? set forth for each discrete category (e.g., classified according to the component (a) Time of size—(1) Multiple award CLIN, SIN, Sector, FA or equivalent) for which accounts for the greatest contracts. With respect to Multiple which a business concern submits an percentage of contract value. * * * Award Contracts, orders issued against offer and represents it is small for the (c) * * * a Multiple Award Contract, and Blanket Multiple Award Contract, unless the (1) * * * Purchase Agreements issued against a (i) Assign the solicitation a single firm was required to recertify under Multiple Award Contract: paragraph (g)(1), (2), or (3). If the NAICS code and corresponding size (i) Single NAICS. If a single NAICS standard which best describes the business concern submits an offer for code is assigned as set forth in the entire Multiple Award Contract, principal purpose of the acquisition as § 121.402(c)(1)(i), SBA determines size SBA will determine whether it meets set forth in paragraph (b) of this section, status for the underlying Multiple the size standard for each discrete only if the NAICS code will also best Award Contract at the time of initial category (CLIN, SIN, Sector, FA or describe the principal purpose of each offer (or other formal response to a equivalent). order to be placed under the Multiple solicitation), which includes price, (A) Unrestricted Multiple Award Award Contract; or based upon the size standard set forth Contracts. For an unrestricted Multiple * * * * * in the solicitation for the Multiple Award Contract, if a business concern is (2) * * * Award Contract, unless the concern was small at the time of offer and contract- (ii) The contracting officer must required to recertify under paragraph level recertification for discrete assign a single NAICS code for each (g)(1), (2), or (3). categories on the Multiple Award order issued against a Multiple Award (A) Unrestricted Multiple Award Contract, it is small for goaling purposes Contract. The NAICS code assigned to Contracts. For an unrestricted Multiple for each order issued against any of an order must be a NAICS code Award Contract, if a business concern is those categories, unless a contracting included in the underlying Multiple small at the time of offer and contract- officer requests a size recertification for Award Contract. When placing an order level recertification for the Multiple a specific order or Blanket Purchase under a Multiple Award Contract with Award Contract, it is small for goaling Agreement. However, except for orders multiple NAICS codes, the contracting purposes for each order issued against or Blanket Purchase Agreements issued officer must assign the NAICS code and the contract, unless a contracting officer under any Federal Supply Schedule corresponding size standard that best requests a size recertification for a contract, if an order or Blanket Purchase describes the principal purpose of each specific order or Blanket Purchase Agreement for a discrete category under order. In cases like the GSA Schedule, Agreement. However, except for orders an unrestricted Multiple Award where an agency can issue an order and Blanket Purchase Agreements Contract is set-aside exclusively for against multiple SINs with different issued under any Federal Supply small business (i.e., small business set, NAICS codes, the contracting officer Schedule contract, if an order or a 8(a) small business, service-disabled must select the single NAICS code that Blanket Purchase Agreement under an veteran-owned small business, best represents the acquisition. If the unrestricted Multiple Award Contract is HUBZone small business, or women- base contract has not been assigned a set-aside exclusively for small business owned small business), a concern must NAICS code that reflects the principal (i.e., small business set-aside, 8(a) small recertify its size status and qualify as a purpose of the order, the contracting business, service-disabled veteran- small business at the time it submits its officer shall select a new NAICS code owned small business, HUBZone small initial offer, which includes price, for and corresponding size standard for the business, or women-owned small the particular order or Agreement. order. business), a concern must recertify its (B) Set-aside Multiple Award * * * * * size status and qualify as a small Contracts. For a Multiple Award ■ 4. In § 121.404: business at the time it submits its initial Contract that is set aside for small ■ a. Amend paragraph (a) by: offer, which includes price, for the business (i.e., small business set, 8(a) ■ i. Revising paragraphs (a) introductory particular order or Blanket Purchase small business, service-disabled text and (a)(1); and Agreement. veteran-owned small business, ■ ii. Adding a subject heading to (B) Set-aside Multiple Award HUBZone small business, or women- paragraph (a)(2); Contracts. For a Multiple Award owned small business), if a business is ■ b. Revise paragraph (b); Contract that is set aside for small small at the time of offer and contract- ■ c. Add a subject heading to paragraph business (i.e., small business set, 8(a) level recertification for discrete (c); small business, service-disabled categories on the Multiple Award

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Contract, it is small for each order or paragraph (g)(1), (2), or (3) of this long as the ultimate owner remains that Agreement issued against any of those section changes the firm’s status for entity. categories, unless a contracting officer future options and orders. The following * * * * * requests a size recertification for a exceptions apply to this paragraph (g): ■ 7. Amend § 121.702 by revising specific order or Blanket Purchase. * * * * * paragraph (c)(6) to read as follows: (iii) SBA will determine size at the (2) * * * time of initial offer (or other formal (ii) * * * § 121.702 What size and eligibility response to a solicitation), which standards are applicable to the SBIR and (C) In the context of a joint venture STTR programs? includes price, for an order or that has been awarded a contract or Agreement issued against a Multiple order as a small business, from any * * * * * Award Contract if the contracting officer partner to the joint venture that has (c) * * * requests a new size certification for the been acquired, is acquiring, or has (6) Size requirement for joint ventures. order or Agreement. merged with another business entity. Two or more small business concerns (2) Agreements. *** (D) If the merger, sale or acquisition may submit an application as a joint (b) Eligibility for SBA programs. A occurs after offer but prior to award, the venture. The joint venture will qualify concern applying to be certified as a offeror must recertify its size to the as small as long as each concern is small Participant in SBA’s 8(a) Business contracting officer prior to award. If the under the size standard for the SBIR Development program (under part 124, offeror is unable to recertify as small, it program, found at § 121.702(c), or the subpart A, of this chapter), as a will not be eligible as a small business joint venture meets the exception at HUBZone small business (under part for the award of the contract. § 121.103(h)(3)(ii) for two firms 126 of this chapter), or as a women- (iii) Recertification is not required approved to be a mentor and prote´ge´ owned small business concern (under when the ownership of a concern that under SBA’s All Small Mentor-Prote´ge´ part 127 of this chapter) must qualify as is at least 51% owned by an entity (i.e., Program. a small business for its primary industry tribe, Alaska Native Corporation, or * * * * * classification as of the date of its Community Development Corporation) ■ 8. Amend § 121.1001 by revising application and, where applicable, the changes to or from a wholly-owned paragraphs (a)(1)(iii), (a)(2)(iii), date the SBA program office requests a business concern of the same entity, as (a)(3)(iv), (a)(4)(iii), (a)(6)(iv), (a)(7)(iii), formal size determination in connection long as the ultimate owner remains that (a)(8)(iv), and (a)(9)(iv) to read as with a concern that otherwise appears entity. follows: eligible for program certification. (c) Certificates of competency. *** Example 1 to paragraph (g)(2)(iii). Indian § 121.1001 Who may initiate a size protest (d) Nonmanufacturer rule, ostensible Tribe X owns 100% of small business ABC. or request a formal size determination? subcontractor rule, and joint venture ABC wins an award for a small business set- (a) * * * aside contract. In year two of contract agreements. Size status is determined as (1) * * * of the date of the final proposal revision performance, X changes the ownership of ABC so that X owns 100% of a holding (iii) The SBA Government Contracting for negotiated acquisitions and final bid company XYZ, Inc., which in turn owns Area Director having responsibility for for sealed bidding for the following 100% of ABC. This restructuring does not the area in which the headquarters of purposes: compliance with the require ABC to recertify its status as a small the protested offeror is located, nonmanufacturer rule set forth in business because it continues to be 100% regardless of the location of a parent § 121.406(b)(1), the ostensible owned (indirectly rather than directly) by company or affiliates, the Director, subcontractor rule set forth in Indian Tribe X. Office of Government Contracting, or § 121.103(h)(4), and the joint venture (3) * * * A contracting officer may the Associate General Counsel for agreement requirements in § 124.513(c) also request size recertification, as he or Procurement Law; and and (d), § 125.8(b) and (c), § 125.18(b)(2) she deems appropriate, prior to the 120- * * * * * and (3), § 126.616(c) and (d), or day point in the fifth year of a long-term (2) * * * § 127.506(c) and (d) of this chapter, as contract. * * * (iii) The SBA District Director, or appropriate. * * * * * designee, in either the district office (e) Subcontracting. * * * A prime (h) Follow-on contracts. *** serving the geographical area in which contractor may rely on the self- the procuring activity is located or the certification of subcontractor provided it § 121.406 [Amended] district office that services the apparent does not have a reason to doubt the ■ 5. Amend § 121.406 by removing the successful offeror, the Associate concern’s self-certification. word ‘‘provided’’ and adding in its Administrator for Business (f) Two-step procurements. *** place the word ‘‘provide’’ in paragraph (g) Effect of size certification and Development, or the Associate General (a) introductory text. Counsel for Procurement Law. recertification. A concern that ■ 6. Amend § 121.603 by adding * * * * * represents itself as a small business and paragraph (c)(3) to read as follows: qualifies as small at the time of its (3) * * * initial offer (or other formal response to § 121.603 How does SBA determine (iv) The responsible SBA Government a solicitation), which includes price, whether a Participant is small for a Contracting Area Director or the and after a required recertification particular 8(a) BD subcontract? Director, Office of Government under paragraph (g)(1), (2), or (3) of this * * * * * Contracting, or the SBA’s Associate section is generally considered to be a (c) * * * General Counsel for Procurement Law; small business throughout the life of (3) Recertification is not required and that contract. Where a concern grows to when the ownership of a concern that * * * * * be other than small, the procuring is at least 51% owned by an entity (i.e., (4) * * * agency may exercise options and still tribe, Alaska Native Corporation, or (iii) The responsible SBA Government count the award as an award to a small Community Development Corporation) Contracting Area Director; the Director, business, except that a required changes to or from a wholly-owned Office of Government Contracting; the recertification as other than small under business concern of the same entity, as Associate Administrator, Investment

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Division, or the Associate General PART 124—8(a) BUSINESS Example 1 to paragraph (g)(1). X applies to Counsel for Procurement Law. DEVELOPMENT/SMALL the 8(a) BD program. X is 95% owned by A DISADVANTAGED BUSINESS STATUS and 5% by B, A’s father and the majority * * * * * owner in a former 8(a) Participant. Even (6) * * * DETERMINATIONS though B has no involvement in X, X would (iv) The SBA Director, Office of ■ 11. The authority citation for part 124 be ineligible for the program. Example 2 to paragraph (g)(1). Y applies to HUBZone, or designee, or the SBA continues to read as follows: Associate General Counsel for the 8(a) BD program. C owns 100% of Y. Authority: 15 U.S.C. 634(b)(6), 636(j), However, D, C’s sister and the majority Procurement Law. 637(a), 637(d), 644 and Pub. L. 99–661, Pub. owner in a former 8(a) Participant, is acting * * * * * L. 100–656, sec. 1207, Pub. L. 101–37, Pub. as a Vice President in Y. Y would be (7) * * * L. 101–574, section 8021, Pub. L. 108–87, ineligible for the program. and 42 U.S.C. 9815. Example 3 to paragraph (g)(1). X seeks to (iii) The responsible SBA Government apply to the 8(a) BD program with a primary ■ Contracting Area Director, the Director, 12. Amend § 124.3 by adding in NAICS code in plumbing. X is 100% owned Office of Government Contracting, the alphabetical order a definition for by A. Z, a former 8(a) participant with a Associate Administrator for Business ‘‘Follow-on requirement or contract’’ to primary industry in general construction, is Development, or the Associate General read as follows: owned 100% by B, A’s brother. For general Counsel for Procurement Law. construction jobs, Z has subcontracted § 124.3 What definitions are important in plumbing work to X in the past at normal * * * * * the 8(a) BD program? commercial rates. Subcontracting work at (8) * * * * * * * * normal commercial rates would not preclude (iv) The Director, Office of Follow-on requirement or contract. X from being admitted to the 8(a) BD Government Contracting, or designee, or The determination of whether a program. X would be eligible for the program. the Associate General Counsel for particular procurement is a follow-on (2) If the AA/BD approves an Procurement Law. includes the following considerations: application under paragraph (g)(1) of * * * * * (1) Whether the scope has changed this section, SBA will, as part of its (9) * * * significantly, requiring meaningful annual review, assess whether the firm continues to operate independently of (iv) The Director, Office of different types of work or different the other current or former 8(a) concern Government Contracting, or designee, or capabilities; of an immediate family member. SBA the Associate General Counsel for (2) Whether the magnitude or value of may initiate proceedings to terminate a Procurement Law. the requirement has changed by at least 25 percent; and firm from further participation in the * * * * * (3) Whether the end user of the 8(a) BD program if it is apparent that ■ 9. Amend § 121.1004 by revising requirement has changed. As a general there are connections between the two paragraph (a)(2)(ii) and adding guide, if the procurement satisfies at firms that were not disclosed to the AA/ paragraph (a)(2)(iii) to read as follows: least one of these three conditions, it BD at the time of application or that § 121.1004 What time limits apply to size may be considered a new requirement. came into existence after program protests? Conversely, if the procurement satisfies admittance. none of these conditions, it is * * * * * (a) * * * considered a follow-on procurement. (i) * * * (2) * * * The 25 percent rule, however, cannot be (2) Prior approval by the AA/BD is not (ii) An order issued against a Multiple applied rigidly in all cases because by needed where all non-disadvantaged Award Contract if the contracting officer doing so could encourage a result that individual (or entity) owners involved requested a size recertification in is inconsistent with the intent of in the change of ownership own no connection with that order; or another provision in this part. more than a 20 percent interest in the (iii) Except for orders or Blanket * * * * * concern both before and after the Purchase Agreements issued under any ■ 13. Amend § 124.105 by revising transaction, the transfer results from the Federal Supply Schedule contract, an paragraphs (g) and (i)(2) and (4) to read death or incapacity due to a serious, order or Blanket Purchase Agreement as follows: long-term illness or injury of a set-aside for small business (i.e., small disadvantaged principal, or the business set-aside, 8(a) small business, § 124.105 What does it mean to be disadvantaged individual or entity in unconditionally owned by one or more control of the Participant will increase service-disabled veteran-owned small disadvantaged individuals? business, HUBZone small business, or the percentage of its ownership interest. women-owned small business) where * * * * * The concern must notify SBA within 60 the underlying Multiple Award Contract (g) Ownership of another current or days of such a change in ownership. was awarded on an unrestricted basis. former Participant by an immediate family member. (1) An individual may Example 1 to paragraph (i)(2). * * * * * Disadvantaged individual A owns 90% of not use his or her disadvantaged status 8(a) Participant X; non-disadvantaged ■ 10. Amend § 121.1103 by revising to qualify a concern if that individual paragraph (c)(1)(i) to read as follows: individual B owns 10% of X. In order to raise has an immediate family member who additional capital, X seeks to change its § 121.1103 What are the procedures for is using or has used his or her ownership structure such that A would own appealing a NAICS code or size standard disadvantaged status to qualify another 80%, B would own 10% and C would own designation? concern for the 8(a) BD program and any 10%. X can accomplish this change in ownership without prior SBA approval. Non- * * * * * of the following circumstances exist: (i) The concerns are connected by any disadvantaged owner B is not involved in the (c) * * * transaction and non-disadvantaged common ownership or management, (1) * * * individual C owns less than 20% of X both regardless of amount or position; or before and after the transaction. (i) Stay the date for the closing of (ii) The concerns have a contractual Example 2 to paragraph (i)(2). receipt of offers; relationship that was not conducted at Disadvantaged individual C owns 60% of * * * * * arm’s length. 8(a) Participant Y; non-disadvantaged

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individual D owns 30% of Y; and non- Participant need not request a change of (4) * * * disadvantaged individual E owns 10% of Y. ownership from SBA. The Participant (iii) * * * C seeks to transfer 5% of Y to E. Prior SBA must, however, notify SBA of the (C) Because an individual may be approval is not needed. Although non- change within 30 days of the transfer. responsible for the management and disadvantaged individual D owns more than daily business operations of two 20% of Y, D is not involved in the transfer. * * * * * Because the only non-disadvantaged (c) * * * tribally-owned concerns, the full-time individual involved in the transfer, E, owns (3) * * * devotion requirement does not apply to less than 20% of Y both before and after the (ii) A Tribe may not own 51% or more tribally-owned applicants and transaction, prior approval is not needed. of another firm which, either at the time Participants. Example 3 to paragraph (i)(2). of application or within the previous * * * * * Disadvantaged individual A owns 85% of two years, has been operating in the 8(a) (6) * * * 8(a) Participant X; non-disadvantaged program under the same primary NAICS (iii) The Tribe, a tribally-owned individual B owns 15% of X. A seeks to economic development corporation, or transfer 15% of X to B. Prior SBA approval code as the applicant. A Tribe may, is needed. Although B, the non- however, own a Participant or other other relevant tribally-owned holding disadvantaged owner of X, owns less than applicant that conducts or will conduct company vested with the authority to 20% of X prior to the transaction, prior secondary business in the 8(a) BD oversee tribal economic development or approval is needed because B would own program under the NAICS code which business ventures has made a firm more than 20% after the transaction. is the primary NAICS code of the written commitment to support the Example 4 to paragraph (i)(2). ANC A applicant concern. operations of the applicant concern and owns 60% of 8(a) Participant X; non- (A) Once an applicant is admitted to it has the financial ability to do so. disadvantaged individual B owns 40% of X. the 8(a) BD program, it may not receive (7) * * * X seeks to transfer 15% to A. Prior SBA an 8(a) sole source contract that is a (ii) The officers, directors, and all approval is not needed. Although a non- shareholders owning an interest of 20% disadvantaged individual who is involved in follow-on contract to an 8(a) contract the transaction, B, owns more than 20% of that was performed immediately or more (other than the tribe itself) of a X both before and after the transaction, SBA previously by another Participant (or tribally-owned applicant or Participant approval is not needed because the change former Participant) owned by the same must demonstrate good character (see only increases the percentage of A’s Tribe. For purposes of this paragraph, § 124.108(a)) and cannot fail to pay ownership interest in X. the same primary NAICS code means significant Federal obligations owed to * * * * * the six-digit NAICS code having the the Federal Government (see (4) Where a Participant requests a same corresponding size standard. § 124.108(e)). change of ownership or business (B) If the primary NAICS code of a ■ 15. Amend § 124.110 by revising the structure, and proceeds with the change tribally-owned Participant is changed section heading and paragraph (e) to prior to receiving SBA approval (or pursuant to § 124.112(e), the tribe can read as follows: where a change of ownership results submit an application and qualify § 124.110 Do Native Hawaiian from the death or incapacity of a another firm owned by the tribe for Organizations (NHOs) have any special disadvantaged individual for which a participation in the 8(a) BD program rules for applying to and remaining eligible request prior to the change in ownership under the NAICS code that was the for the 8(a) BD program? could not occur), SBA may suspend the previous primary NAICS code of the * * * * * Participant from program benefits Participant whose primary NAICS code (e) An NHO cannot own 51% or more pending resolution of the request. If the was changed. of another firm which, either at the time change is approved, the length of the Example 1 to paragraph (c)(3)(ii)(B). Tribe of application or within the previous suspension will be restored to the X owns 100% of 8(a) Participant A. A entered two years, has been operating in the 8(a) Participant’s program term in the case of the 8(a) BD program with a primary NAICS program under the same primary NAICS death or incapacity, or if the firm code of 236115, New Single-Family Housing code as the applicant. An NHO may, requested prior approval and waited 60 Construction (except For-Sale Builders). however, own a Participant or an days for SBA approval. After four years in the program, SBA noticed applicant that conducts or will conduct that the vast majority of A’s revenues were * * * * * secondary business in the 8(a) BD ■ 14. Amend § 124.109 by: in NAICS Code 237310, Highway, Street, and Bridge Construction, and notified A that SBA program under the same NAICS code ■ a. Revising the section heading; that a current Participant owned by the ■ intended to change its primary NAICS code b. Adding paragraph (a)(7); pursuant to § 124.112(e). A agreed to change NHO operates in the 8(a) BD program as ■ c. Revising paragraph (c)(3)(ii); its primary NAICS Code to 237310. Once the its primary NAICS code. ■ d. Adding paragraphs (c)(3)(iv) and change is finalized, Tribe X can immediately (1) Once an applicant is admitted to (c)(4)(iii)(C); and submit a new application to qualify another the 8(a) BD program, it may not receive ■ e. Revising paragraphs (c)(6)(iii) and firm that it owns for participation in the 8(a) an 8(a) sole source contract that is a (c)(7)(ii). BD program with a primary NAICS Code of follow-on contract to an 8(a) contract The revisions and additions to read as 236115. that was performed immediately follows: * * * * * previously by another Participant (or § 124.109 Do Indian tribes and Alaska (iv) Notwithstanding § 124.105(i), former Participant) owned by the same Native Corporations have any special rules where a Tribe merely reorganizes its NHO. For purposes of this paragraph, for applying to and remaining eligible for ownership of a Participant in the 8(a) the same primary NAICS code means the 8(a) BD program? BD program by inserting or removing a the six-digit NAICS code having the (a) * * * wholly-owned business entity between same corresponding size standard. (7) Notwithstanding § 124.105(i), the Tribe and the Participant, the (2) If the primary NAICS code of a where an ANC merely reorganizes its Participant need not request a change of Participant owned by an NHO is ownership of a Participant in the 8(a) ownership from SBA. The Participant changed pursuant to § 124.112(e), the BD program by inserting or removing a must, however, notify SBA of the NHO can submit an application and wholly-owned business entity between change within 30 days of the transfer. qualify another firm owned by the NHO the ANC and the Participant, the * * * * * for participation in the 8(a) BD program

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under the NAICS code that was the § 124.112 What criteria must a business § 124.203 What must a concern submit to previous primary NAICS code of the meet to remain eligible to participate in the apply to the 8(a) BD program? Participant whose primary NAICS code 8(a) BD program? Each 8(a) BD applicant concern must was changed. * * * * * submit information and supporting * * * * * (d) * * * documents required by SBA when ■ 16. Amend § 124.111 by revising the (5) The excessive withdrawal analysis applying for admission to the 8(a) BD section heading, adding paragraph does not apply to Participants owned by program. This information may include, (c)(3), and revising paragraph (d) to read Tribes, ANCs, NHOs, or CDCs where a but not be limited to, financial data and as follows: withdrawal is made for the benefit of statements, copies of filed Federal the Tribe, ANC, NHO, CDC or the native personal and business tax returns, § 124.111 Do Community Development individual and business bank Corporations (CDCs) have any special rules or shareholder community. It does, however, apply to withdrawals from a statements, personal history statements, for applying to and remaining eligible for and any additional information or the 8(a) BD program? firm owned by a Tribe, ANC, NHO, or documents SBA deems necessary to * * * * * CDC that do not benefit the relevant entity or community. Thus, if funds or determine eligibility. Each individual (c) * * * claiming disadvantaged status must also (3) Notwithstanding § 124.105(i), assets are withdrawn from an entity- owned Participant for the benefit of a submit a signed IRS Form 4506T, where a CDC merely reorganizes its Request for Copy or Transcript of TAX ownership of a Participant in the 8(a) non-disadvantaged manager or owner that exceed the withdrawal thresholds, Form, to SBA. * * * BD program by inserting or removing a ■ 19. Amend § 124.204 by adding a wholly-owned business entity between SBA may find that withdrawal to be excessive. However, a non- sentence to the end of paragraph (a) to the CDC and the Participant, the read as follows: Participant need not request a change of disadvantaged minority owner may ownership from SBA. The Participant receive a payout in excess of the § 124.204 How does SBA process must, however, notify SBA of the excessive withdrawal amount if it is a applications for 8(a) BD program change within 30 days of the transfer. pro rata distribution paid to all admission? (d) A CDC cannot own 51% or more shareholders (i.e., the only way to (a) * * * Where during its review of another firm which, either at the time increase the distribution to the Tribe, SBA requests clarifying, revised or other of application or within the previous ANC, NHO or CDC is to increase the information from the applicant, SBA’s two years, has been operating in the 8(a) distribution to all shareholders) and it processing time for the application will program under the same primary NAICS does not adversely affect the business be suspended pending the receipt of code as the applicant. A CDC may, development of the Participant. such information. however, own a Participant or an Example 1 to paragraph (d)(5). Tribally- * * * * * applicant that conducts or will conduct owned Participant X pays $1,000,000 to a ■ 20. Revise § 124.207 to read as secondary business in the 8(a) BD non-disadvantaged manager. That would be follows: program under the same NAICS code deemed an excessive withdrawal. Example 2 to paragraph (d)(5). ANC- that a current Participant owned by the § 124.207 Can an applicant reapply for owned Participant Y seeks to distribute admission to the 8(a) BD program? CDC operates in the 8(a) BD program as $550,000 to the ANC and $450,000 to non- A concern which has been declined its primary SIC code. disadvantaged individual A based on their (1) Once an applicant is admitted to 55%/45% ownership interests. Because the for 8(a) BD program participation may the 8(a) BD program, it may not receive distribution is based on the pro rata share of submit a new application for admission an 8(a) sole source contract that is a ownership, this would not be prohibited as to the program at any time after 90 days follow-on contract to an 8(a) contract an excessive withdrawal unless SBA from the date of the Agency’s final that was performed immediately determined that Y would be adversely decision to decline. affected. previously by another Participant (or § 124.301 [Redesignated as § 124.300] former Participant) owned by the same (e) * * * ■ 21. Redesignate § 124.301 as CDC. For purposes of this paragraph, the (2) * * * § 124.300. same primary NAICS code means the ■ six-digit NAICS code having the same (iv) A Participant may appeal a 22. Add new § 124.301 to read as corresponding size standard. district office’s decision to change its follows: (2) If the primary NAICS code of a primary NAICS code to SBA’s Associate § 124.301 Voluntary withdrawal or Participant owned by a CDC is changed General Counsel for Procurement Law voluntary early graduation. (AGC/PL) within 10 business days of pursuant to § 124.112(e), the CDC can (a) A Participant may voluntarily receiving the district office’s final submit an application and qualify withdraw from the 8(a) BD program at determination. The AGC/PL will another firm owned by the CDC for any time prior to the expiration of its examine the record, including all participation in the 8(a) BD program program term. Where a Participant has information submitted by the under the NAICS code that was the substantially achieved the goals and Participant in support of its position as previous primary NAICS code of the objectives set forth in its business plan, to why the primary NAICS code Participant whose primary NAICS code it may elect to voluntarily early graduate contained in its business plan continues was changed. from the 8(a) BD program. to be appropriate despite performing * * * * * (b) To initiate withdrawal or early more work in another NAICS code, and ■ 17. Amend § 124.112 by revising graduation from the 8(a) BD program, a issue a final agency decision within 15 paragraph (d)(5), redesignating Participant must notify its servicing business days of receiving the appeal. paragraph (e)(2)(iv) as paragraph SBA district office of its intent to do so (e)(2)(v), and adding a new paragraph * * * * * in writing. Once the SBA servicing (e)(2)(iv). ■ 18. Amend § 124.203 by revising the district office processes the request and The revision and addition read as first two sentences and adding a new the District Director recognizes the follows: third sentence to read as follows: withdrawal or early graduation, the

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Participant is no longer eligible to § 124.402 How does a Participant develop contract, a Participant must have a bona receive any 8(a) BD program assistance. a business plan? fide place of business within the ■ 23. Amend § 124.304 by revising the * * * * * applicable geographic location paragraph (d) subject heading and (b) Submission of initial business determined by SBA. This will generally adding a sentence at the end of plan. Each Participant must submit a be the geographic area serviced by the paragraph (d) to read as follows: business plan to its SBA servicing office SBA district office in which the work as soon as possible after program will be performed. SBA may determine § 124.304 What are the procedures for admission. SBA will suspend a that a Participant with a bona fide place early graduation and termination? Participant from receiving 8(a) BD of business within the entire state (if the * * * * * program benefits, including 8(a) state is serviced by more than one SBA (d) Notice requirements and effect of contracts, if it has not submitted its district office), a contiguous SBA decision. * * * Once the AA/BD issues business plan to the servicing district district office (in the same or another a decision to early graduate or terminate office within 60 days after program state), or another nearby area is eligible a Participant, the Participant will be admission. for the award of an 8(a) construction immediately suspended from receiving * * * * * contract. further program assistance until the ■ 26. Amend § 124.501 by redesignating (1) A Participant may have bona fide places of business in more than one determination becomes the final agency paragraphs (g) through (i) as paragraphs location. decision. (h) through (j), respectively, and by (2) In order for a Participant to * * * * * adding new paragraphs (g) and (k) to read as follows: establish a bona fide place of business ■ 24. Amend § 124.305 by revising in a particular geographic location, the paragraphs (h)(1)(ii) and (iv), and § 124.501 What general provisions apply SBA district office serving the adding paragraph (h)(1)(v) to read as to the award of 8(a) contracts? geographic area of that location must follows: * * * * * determine if that location in fact (g) Before a Participant may be qualifies as a bona fide place of business § 124.305 What is suspension and how is awarded either a sole source or under SBA’s requirements. a Participant suspended from the 8(a) BD (i) A Participant must submit a program? competitive 8(a) contract, SBA must determine that the Participant is eligible request for a bona fide business * * * * * for award. SBA will determine determination to the SBA district office (h) * * * eligibility at the time of its acceptance servicing it. Such request may, but need (1) * * * of the underlying requirement into the not, relate to a specific 8(a) requirement. 8(a) BD program for a sole source 8(a) In order to apply to a specific (ii) A disadvantaged individual who competitive 8(a) solicitation, such is involved in controlling the day-to-day contract, and after the apparent successful offeror is identified for a request must be submitted at least 20 management and control of the working days before initial offers that Participant is called to active military competitive 8(a) contract. Eligibility is based on 8(a) BD program criteria, include price are due. duty by the United States, his or her (ii) The servicing district office will participation in the firm’s management including whether the Participant: (1) Qualifies as a small business under immediately forward the request to the and daily business operations is critical the size standard corresponding to the SBA district office serving the to the firm’s continued eligibility, the NAICS code assigned to the geographic area of the particular Participant does not designate another requirement; location for processing. Within 10 disadvantaged individual to control the (2) Is in compliance with any working days of receipt of the concern during the call-up period, and applicable competitive business mix submission, the reviewing district office the Participant requests to be suspended targets established or remedial measure will conduct a site visit, if practicable. during the call-up period; imposed by § 124.509 that does not If not practicable, the reviewing district * * * * * include the denial of future sole source office will contact the Participant within (iv) Federal appropriations for one or 8(a) contracts or 8(a) contracts generally, such 10-day period to inform the more Federal departments or agencies as applicable; Participant that the reviewing office has have lapsed, a Participant would lose an (3) Complies with the continued received the request and may ask for 8(a) sole source award due to the lapse eligibility reporting requirements set additional documentation to support the in appropriations (e.g., SBA has forth in § 124.112(b); request. previously accepted an offer for a sole (4) Has a bona fide place of business (iii) In connection with a specific source 8(a) award on behalf of the in the applicable geographic area if the competitive solicitation, the reviewing Participant or an agency could not offer procurement is for construction; office will make a determination a sole source 8(a) requirement to the (5) Has not received 8(a) contracts in whether or not the Participant has a program on behalf of the Participant due excess of the dollar limits set forth in bona fide place of business in its to the lapse in appropriations, and the § 124.519 for a sole source 8(a) geographical area within 5 working days Participant’s program term would end procurement; of a site visit or within 15 working days during the lapse), and the Participant (6) Has complied with the provisions of its receipt of the request from the elects to suspend its participation in the of § 124.513(c) and (d) if it is seeking a servicing district office if a site visit is 8(a) BD program during the lapse in sole source 8(a) award through a joint not practical in that timeframe. If the Federal appropriations; or venture; and request is not related to a specific (7) Can demonstrate that it, together procurement, the reviewing office will (v) A Participant has not submitted a with any similarly situated entity, will make a determination within 30 business plan to its SBA servicing office meet the limitations on subcontracting working days of its receipt of the request within 60 days after program admission. provisions set forth in § 124.510. from the servicing district office, if * * * * * * * * * * practicable. ■ 25. Amend § 124.402 by revising (k) In order to be awarded a sole (3) The effective date of a bona fide paragraph (b) to read as follows: source or competitive 8(a) construction place of business is the date that the

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evidence (paperwork) shows that the identified Participant. The procuring initial date specified for the receipt of business in fact regularly maintained its agency must inform SBA of its concerns offers contained in the order business at the new geographic location. regarding the originally identified solicitation, or at the date of award of (4) In order for a Participant to be Participant and identify whether it the order if there is no solicitation. eligible to submit an offer for an 8(a) believes another Participant could fulfill (iv) * * * To be eligible for the award procurement limited to a specific its needs. of a sole source order, a concern must geographic area, it must receive from (1) If the procuring agency and SBA be a current Participant in the 8(a) BD SBA a determination that it has a bona agree that another Participant can fulfill program at the time of award. fide place of business within that area its needs, the procuring agency will (2) * * * prior to submitting its offer for the withdraw the original offering and (iv) SBA must verify that a concern is procurement. reoffer the requirement on behalf of an eligible 8(a) Participant in (5) Once a Participant has established another 8(a) Participant. SBA will then accordance with § 124.501(g) as of the a bona fide place of business, the accept the requirement on behalf of the initial date specified for the receipt of Participant may change the location of newly identified Participant and offers contained in the order the recognized office without prior SBA authorize the procuring agency to solicitation, or at the date of award of approval. However, the Participant must negotiate directly with that Participant. the order if there is no solicitation. If a notify SBA and provide documentation (2) If the procuring agency and SBA concern has exited the 8(a) BD program demonstrating an office at that new agree that another Participant cannot prior to that date, it will be ineligible for location within 30 days after the move. fulfill its needs, the procuring agency the award of the order. Failure to timely notify SBA will render will withdraw the original offering letter * * * * * the Participant ineligible for new 8(a) and fulfill its needs outside the 8(a) BD ■ 28. Amend § 124.504 by: construction procurements limited to program. ■ a. Revising the section heading and that geographic area. (3) If the procuring agency believes paragraph (b); ■ 27. Amend § 124.503 by: that another Participant cannot fulfill its ■ b. Removing the term ‘‘Simplified ■ a. Removing the phrase ‘‘in needs, but SBA does not agree, SBA Acquisition Procedures’’ and adding in § 124.507(b)(2)’’ and adding in its place may appeal that decision to the head of its place the phrase ‘‘the simplified the phrase ‘‘in § 124.501(g)’’ in the procuring agency pursuant to acquisition threshold (as defined in the paragraph (a)(1); § 124.505(a)(2). FAR at 48 CFR 2.101)’’ in paragraph (c) ■ b. Redesignating paragraphs (e) * * * * * introductory text; through (j) as paragraphs (f) through (k), (h) Basic Ordering Agreements (BOAs) ■ c. Removing the word ‘‘will’’ and respectively; and Blanket Purchase Agreements adding in its place the word ‘‘may’’ in ■ c. Adding a new paragraph (e); (BPAs). Neither a Basic Ordering paragraph (c)(1)(ii)(C); ■ ■ d. Revising the introductory text of the Agreement (BOA) nor a Blanket d. Revising the subject heading for newly redesignated paragraph (h); Purchase Agreement (BPA) is a contract paragraph (d) and paragraphs (d)(1) ■ e. Adding the phrase ‘‘or BPA’’ after under the FAR. See 48 CFR 16.703(a). introductory text and (d)(4). the phrase ‘‘BOA’’, wherever it appears, Each order to be issued under a BOA or The revisions read as follows: in the newly redesignated paragraphs BPA is an individual contract. As such, § 124.504 What circumstances limit SBA’s (h)(1) through (4); the procuring activity must offer, and ability to accept a procurement for award as ■ f. Revising newly redesignated SBA must accept, each task order under an 8(a) contract, and when can a paragraph (i)(1)(iii); a BOA or BPA in addition to offering requirement be released from the 8(a) BD ■ g. Adding a sentence at the end of and accepting the BOA or BPA itself. program? newly redesignated paragraph (i)(1)(iv); * * * * * * * * * * and (b) Competition prior to offer and ■ (i) h. Revising newly redesignated acceptance. The procuring activity paragraph (i)(2)(iv). (1) * * * (iii) A concern awarded a task or competed a requirement among 8(a) The additions and revisions read as Participants prior to offering the follows: delivery order contract or Multiple Award Contract that was set-aside requirement to SBA and did not clearly § 124.503 How does SBA accept a exclusively for 8(a) Program evidence its intent to conduct an 8(a) procurement for award through the 8(a) BD Participants, partially set-aside for 8(a) competitive acquisition. program? Program Participants or reserved solely * * * * * * * * * * for 8(a) Program Participants may (d) Release for non-8(a) or limited 8(a) (e) Withdrawal/substitution of offered generally continue to receive new orders competition. (1) Except as set forth in requirement or Participant. After SBA even if it has grown to be other than paragraph (d)(4) of this section, where a has accepted a requirement for award as small or has exited the 8(a) BD program, procurement is awarded as an 8(a) a sole source 8(a) contract on behalf of and agencies may continue to take SDB contract, its follow-on requirement must a specific Participant (whether credit toward their prime contracting remain in the 8(a) BD program unless nominated by the procuring agency or goals for orders awarded to 8(a) SBA agrees to release it for non-8(a) identified by SBA for an open Participants. However, a firm will be competition. Additionally, SBA must requirement), if the procuring agency ineligible for the award of an order if the agree to release any follow-on believes that the identified Participant is procuring agency asks contract holders requirement where a procuring agency not a good match for the procurement— to recertify their 8(a) BD status in seeks to reprocure that requirement including for such reasons as the connection with a specific order and the through a pre-existing limited procuring agency finding the Participant firm is unable to do so. Where a contracting vehicle which is not non-responsible or the negotiations contracting officer asks contract holders available to all 8(a) BD Program between the procuring agency and the to recertify their 8(a) BD status in Participants (e.g., any multiple award or Participant otherwise failing—the connection with a specific order, a firm Governmentwide acquisition contract, procuring agency may seek to substitute must be an eligible Participant in whether or not the underlying MAC or another Participant for the originally accordance with § 124.501(g) as of the GWAC is itself an 8(a) contract), and the

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previous/current 8(a) award was not so requirement should be competed among waiver can apply to those multiple limited. If a procuring agency would only those Participants having a bona contract opportunities. like to fulfill a follow-on requirement fide place of business within the ■ 32. Amend § 124.513 by revising outside of the 8(a) BD program, it must geographical boundaries of one or more paragraphs (c)(4) and (e) to read as make a written request to and receive SBA district offices, within a state, or follows: the concurrence of the AA/BD to do so. within the state and nearby areas. Only § 124.513 Under what circumstances can a In determining whether to release a those Participants with bona fide places joint venture be awarded an 8(a) contract? requirement from the 8(a) BD program, of business within the appropriate SBA will consider: geographical boundaries are eligible to * * * * * submit offers. (c) * * * * * * * * (4) Stating that the 8(a) Participant(s) (4) The requirement that a follow-on * * * * * must receive profits from the joint procurement must be released from the ■ 31. Amend § 124.509 by: venture commensurate with the work 8(a) BD program in order for it to be ■ a. Removing the word ‘‘maximum’’ performed by the 8(a) Participant(s), or fulfilled outside the 8(a) BD program and adding in its place the words ‘‘good a percentage agreed to by the parties to does not apply: faith’’ in paragraph (a)(1); the joint venture whereby the 8(a) (i) Where previous orders were ■ b. Removing the words ‘‘substantial Participant(s) receive profits from the offered to and accepted for the 8(a) BD and sustained’’ and adding in their joint venture that exceed the percentage program pursuant to § 124.503(i)(2); or place the words ‘‘good faith’’ in commensurate with the work performed (ii) Where a procuring agency will use paragraph (a)(2); and by the 8(a) Participant(s); a mandatory source (see FAR Subparts ■ c. Revising paragraph (e). 8.6 and 8.7). In such a case, the * * * * * The revision reads as follows: (e) Prior approval by SBA. (1) When procuring agency must notify SBA at a joint venture between one or more 8(a) least 30 days prior to the end of the § 124.509 What are non-8(a) business Participants seeks a sole source 8(a) contract or order. activity targets? ■ 29. Amend § 124.505 by: * * * * * award, SBA must approve the joint venture prior to the award of the sole ■ a. Removing the word ‘‘and’’ at the (e) Waiver of sole source prohibition. source 8(a) contract. SBA will not end of paragraph (a)(2); (1) SBA may waive the requirement approve joint ventures in connection ■ b. Redesignating paragraph (a)(3) as prohibiting a Participant from receiving with competitive 8(a) awards. paragraph (a)(4); and further sole source 8(a) contracts when (2) Where a joint venture has been ■ c. Adding new paragraph (a)(3). a Participant does not meet its non-8(a) established for one 8(a) contract, the The addition reads as follows: business activity target where a denial joint venture may receive additional 8(a) of a sole source contract would cause § 124.505 When will SBA appeal the terms contracts provided the parties create an severe economic hardship on the or conditions of a particular 8(a) contract or addendum to the joint venture Participant so that the Participant’s a procuring activity decision not to use the agreement setting forth the performance survival may be jeopardized, or where 8(a) BD program? requirements for each additional award extenuating circumstances beyond the (a) * * * (and provided any contract is awarded Participant’s control caused the (3) A decision by a contracting officer within two years of the first award as set Participant not to meet its non-8(a) that a particular procurement is a new forth in § 121.103(h)). If an additional business activity target. requirement that is not subject to the 8(a) contract is a sole source award, SBA (2) SBA may waive the requirement release requirements set forth in must also approve the addendum prior prohibiting a Participant from receiving § 124.504(d); and to contract award. further sole source 8(a) contracts when * * * * * the Participant does not meet its non- * * * * * ■ 30. Amend § 124.507 by: ■ 8(a) business activity target where the 33. Amend § 124.515 by revising ■ a. Revising paragraph (b)(2); paragraph (d) to read as follows: ■ b. Removing paragraph (b)(3); head of a procuring activity represents ■ c. Redesignating paragraphs (b)(4) to the SBA that award of a sole source § 124.515 Can a Participant change its through (6) as paragraphs (b)(3) through 8(a) contract to the Participant is needed ownership or control and continue to (5), respectively; to achieve significant interests of the perform an 8(a) contract, and can it transfer ■ d. Removing paragraph (c)(1); Government. performance to another firm? ■ e. Redesignating paragraphs (c)(2) and (3) The decision to grant or deny a * * * * * (3) as paragraphs (c)(1) and (2), request for a waiver is at SBA’s (d) SBA determines the eligibility of respectively; and discretion, and no appeal may be taken an acquiring Participant under ■ f. Revising newly redesignated with respect to that decision. paragraph (b)(2) of this section by paragraph (c)(1). (4) A waiver generally applies to a referring to the items identified in The revisions read as follows: specific sole source opportunity. If SBA § 124.501(g) and deciding whether at the grants a waiver with respect to a specific time of the request for waiver (and prior § 124.507 What procedures apply to procurement, the firm will be able to to the transaction) the acquiring competitive 8(a) procurements? self-market its capabilities to the Participant is an eligible concern with * * * * * applicable procuring activity with respect to each contract for which a (b) * * * respect to that procurement. If the waiver is sought. As part of the waiver (2) SBA determines a Participant’s Participant seeks an additional sole request, the acquiring concern must eligibility pursuant to § 124.501(g). source opportunity, it must request a certify that it is a small business for the * * * * * waiver with respect to that specific size standard corresponding to the (c) * * * opportunity. Where, however, a NAICS code assigned to each contract (1) Construction competitions. Based Participant can demonstrate that the for which a waiver is sought. SBA will on its knowledge of the 8(a) BD same extenuating circumstances beyond not grant a waiver for any contract if the portfolio, SBA will determine whether a its control affect its ability to receive work to be performed under the contract competitive 8(a) construction specific multiple 8(a) contracts, one is not similar to the type of work

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previously performed by the acquiring § 125.2 What are SBA’s and the procuring (1) * * * The COC Program is concern. agency’s responsibilities when providing applicable to all Government contracting assistance to small procurement actions, with the exception * * * * * businesses? ■ 34. Amend § 124.519 by: of 8(a) sole source awards but including * * * * * Multiple Award Contracts and orders ■ a. Revising paragraph (a); (g) Past performance and experience. ■ placed against Multiple Award b. Removing paragraph (c); (1) In the case of a solicitation for a Contracts, where the contracting officer ■ c. Redesignating paragraph (b) as bundled contract, a consolidated has used any issues of capacity or credit paragraph (c); and contract, or a multiple award contract (responsibility) to determine suitability ■ d. Adding a new paragraph (b). above the substantial bundling for an award. * * * threshold of the Federal agency, the The revision and addition read as * * * * * head of the agency must consider the follows: ■ 40. Amend § 125.6 by revising the past performance, capabilities and paragraph (b) introductory text and § 124.519 Are there any dollar limits on the experience of each first tier adding example 3 to paragraph (b) to amount of 8(a) contracts that a Participant subcontractor that is part of the team as read as follows: may receive? the capabilities and past performance of (a) A Participant (other than one the small business prime contractor § 125.6 What are the prime contractor’s owned by an Indian Tribe, ANC, NHO, when evaluating an offer of a small limitations on subcontracting? or CDC) may not receive sole source 8(a) business prime contractor that includes * * * * * contract awards where it has received a a proposed team of small business (b) Mixed contracts. Where a contract combined total of competitive and sole subcontractors. integrates any combination of services, source 8(a) contracts in excess of (2) For other solicitations, based on supplies, or construction, the $100,000,000 during its participation in the circumstances of the procurement, contracting officer shall select the the 8(a) BD program. the agency may consider the past appropriate NAICS code as prescribed (b) In determining whether a performance, capabilities and in § 121.402(b) of this chapter. The Participant has reached the limit experience of each first tier contracting officer’s selection of the identified in paragraph (a) of this subcontractor that is part of the team as applicable NAICS code is determinative section, SBA: the capabilities and past performance of as to which limitation on subcontracting (1) Looks at the 8(a) revenues a the small business prime contractor. and performance requirement applies. ■ Participant has actually received, not 38. Amend § 125.3 by adding a Based on the NAICS code selected, the projected 8(a) revenues that a sentence to the end of paragraph (b)(2) relevant limitation on subcontracting Participant might receive through an to read as follows: requirement identified in paragraphs indefinite delivery or indefinite quantity § 125.3 What types of subcontracting (a)(1) through (4) of this section will contract, a multiple award contract, or assistance are available to small apply only to that portion of the options or modifications; and businesses? contract award amount. In no case shall (2) Will not consider 8(a) contracts * * * * * more than one limitation on awarded under the Simplified (b) * * * subcontracting requirement apply to the Acquisition Threshold. (2) * * * This applies whether the same contract. * * * * * firm qualifies as a small business * * * * * ■ concern for the size standard Example 3 to paragraph (b). A procuring 35. Revise § 124.520 to read as activity is acquiring both services and general follows: corresponding to the NAICS code assigned to the contract, or is deemed to construction through a small business set- § 124.520 Can 8(a) BD Program be treated as a small business concern aside. The total value of the requirement is $10,000,000, with the construction portion Participants participate in SBA’s Mentor- by statute (see e.g., 43 U.S.C. Prote´ge´ program? comprising $8,000,000, and the services 1626(e)(4)(B)). portion comprising $2,000,000. The (a) An 8(a) BD Program Participant, as * * * * * contracting officer appropriately assigns a any other small business, may ■ 39. Amend § 125.5 by: construction NAICS code to the requirement. participate in SBA’s All Small Mentor- ■ a. Revising the third sentence of The 85% limitation on subcontracting Prote´ge´ Program authorized under paragraph (a)(1); identified in paragraph (a)(3) would apply to § 125.9 of this chapter. ■ b. Removing the phrase ‘‘$100,000 or this procurement. Because the services less, or in accordance with Simplified portion of the contract is excluded from (b) In order for a joint venture consideration, the relevant amount for between a prote´ge´ and its SBA-approved Acquisition Threshold procedures’’ and purposes of calculating the limitation on mentor to receive the exclusion from adding in its place the phrase ‘‘Less subcontracting requirement is $8,000,000. As affiliation with respect to a sole source than the Simplified Acquisition such, the prime contractor cannot or competitive 8(a) contract, the joint Threshold’’ in paragraph (g); subcontract more than $6,800,000 to non- venture must meet the requirements set ■ c. Removing the phrase ‘‘Between similarly situated entities, and the prime forth in § 124.513(c) and (d). $100,000 and $25 million’’ and adding and/or similarly situated entities must in its place the phrase ‘‘Between the perform at least $1,200,000. PART 125—GOVERNMENT Simplified Acquisition Threshold and * * * * * CONTRACTING PROGRAMS $25 million’’ in paragraph (g); ■ 41. Amend § 125.8 by revising ■ d. Removing the term ‘‘$100,000’’ and paragraphs (b)(2)(iv), (xi), and (xii), (e), ■ 36. The authority citation for part 125 adding in its place ‘‘the simplified and (h)(2) to read as follows: continues to read as follows: acquisition threshold’’ in paragraphs (h) § 125.8 What requirements must a joint Authority: 15 U.S.C. 632(p), (q); 634(b)(6); and (i). The revision reads as follows: venture satisfy to submit an offer for a 637; 644; 657(f); 657q; and 657s; 38 U.S.C. procurement or sale set aside or reserved 501 and 8127. § 125.5 What is the Certificate of for small business? ■ 37. Amend § 125.2 by adding Competency Program? * * * * * paragraph (g) to read as follows: (a) * * * (b) * * *

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(2) * * * ■ e. Removing ‘‘(e.g., management and/ assistance provided under the (iv) Stating that the small business or technical assistance, loans and/or agreement. participant(s) must receive profits from equity investments, cooperation on joint (3) In order for SBA to agree to allow the joint venture commensurate with venture projects, or subcontracts under a mentor to have more than one prote´ge´ the work performed by them, or a prime contracts being performed by the at time, the mentor and proposed percentage agreed to by the parties to mentor)’’ and adding in its place ‘‘(e.g., additional prote´ge´ must demonstrate the joint venture whereby the small management and or technical that the added mentor-prote´ge´ business participant(s) receive profits assistance; loans and/or equity relationship will not adversely affect the from the joint venture that exceed the investments; bonding; use of equipment; development of either prote´ge´ firm (e.g., percentage commensurate with the work export assistance; assistance as a the second firm may not be a competitor performed by them; subcontractor under prime contracts of the first firm). * * * * * being performed by the prote´ge´; (i) A mentor that has more than one (xi) Stating that annual performance- cooperation on joint venture projects; or prote´ge´ cannot submit competing offers of-work statements required by subcontracts under prime contracts in response to a solicitation for a paragraph (h)(1) must be submitted to being performed by the mentor)’’ in specific procurement through separate SBA and the relevant contracting officer paragraph (e)(1) introductory text. joint ventures with different prote´ge´s. not later than 45 days after each ■ f. Revising paragraph (e)(1)(i); (ii) A mentor generally cannot have ■ operating year of the joint venture; and g. Removing the first sentence and more than three prote´ge´s at one time. (xii) Stating that the project-end revising the new first sentence of However, the first two mentor-prote´ge´ performance-of-work required by paragraph (e)(5); relationships approved by SBA between ■ paragraph (h)(2) must be submitted to h. Redesignating paragraphs (e)(6) a specific mentor and a small business SBA and the relevant contracting officer through (8) as paragraphs (e)(7) through that has its principal office located in (9), respectively; the Commonwealth of Puerto Rico do no later than 90 days after completion ■ of the contract. i. Adding new paragraph (e)(6); not count against the limit of three ■ j. Revising paragraph (f); proteges that a mentor can have at one * * * * * ■ k. Adding paragraph (g) introductory time. (e) Past performance and experience. text; and (c) * * * When evaluating the past performance, ■ l. Revising paragraph (g)(4). (1) * * * experience, business systems and The revisions and additions to read as (ii) Where a small business seeks to certifications of an entity submitting an follows: qualify as a prote´ge´ in a secondary offer for a contract set aside or reserved § 125.9 What are the rules governing NAICS code, the firm must demonstrate for small business as a joint venture how the mentor-prote´ge´ relationship established pursuant to this section, a SBA’s small business mentor-prote´ge´ program? will help the firm further develop or procuring activity must consider work expand its current capabilities in that done and qualifications held * * * * * (b) Mentors. Any concern that secondary NAICS code. SBA will not individually by each partner to the joint approve a mentor-prote´ge´ relationship venture as well as any work done by the demonstrates a commitment and the ability to assist small business concerns in a secondary NAICS code in which the joint venture itself previously. firm has no prior experience. * * * * * may act as a mentor and receive benefits as set forth in this section. This includes (2) A prote´ge´ firm may generally have (h) * * * other than small businesses. only one mentor at a time. SBA may (2) At the completion of every (1) In order to qualify as a mentor, a approve a second mentor for a particular contract set aside or reserved for small concern must demonstrate that it: prote´ge´ firm where the second business that is awarded to a joint (i) Is capable of carrying out its relationship will not compete or ´ ´ venture between a protege small responsibilities to assist the prote´ge´ firm otherwise conflict with the first mentor- business and a mentor authorized by under the proposed mentor-prote´ge´ prote´ge´ relationship, and: § 125.9, and upon request by the SBA or agreement; * * * * * the relevant contracting officer, the (ii) Does not appear on the Federal list (d) * * * small business partner to the joint of debarred or suspended contractors; (1) * * * venture must submit a report to the and (iii) Once a prote´ge´ firm no longer relevant contracting officer and to the (iii) Can impart value to a prote´ge´ firm qualifies as a small business for the size SBA, signed by an authorized official of due to lessons learned and practical standard corresponding to the NAICS each partner to the joint venture, experience gained or through its code under which SBA approved its explaining how and certifying that the knowledge of general business mentor-prote´ge´ relationship, any joint performance of work requirements were operations and government contracting. venture between the prote´ge´ and its met for the contract, and further (2) SBA will decline an application if mentor will not continue to receive the certifying that the contract was SBA determines that the mentor does exclusion from affiliation authorized by performed in accordance with the not possess good character or a paragraph (a) of this section. However, provisions of the joint venture favorable financial position, employs or a change in the prote´ge´’s size status agreement that are required under otherwise controls the managers of the does not generally affect contracts paragraph (b) of this section. prote´ge´, or is otherwise affiliated with previously awarded to a joint venture * * * * * the prote´ge´. Once approved, SBA may between the prote´ge´ and its mentor. ■ 42. Amend § 125.9 by: terminate the mentor-prote´ge´ agreement (A) * * * ■ a. Revising paragraphs (b), (c)(1)(ii), if the mentor does not possess good (B) For contracts with durations of and (c)(2) introductory text; character or a favorable financial more than five years (including ■ b. Removing paragraph (c)(4); position, was affiliated with the prote´ge´ options), where size re-certification is ■ c. Revising paragraphs (d)(1)(iii) at time of application, or is affiliated required under § 121.404(g)(3) of this introductory text and (d)(1)(iii)(B); with the prote´ge´ for reasons other than chapter no more than 120 days prior to ■ d. Adding paragraph (d)(6); the mentor-prote´ge´ agreement or the end of the fifth year of the contract

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and no more than 120 days prior to concern may, however, submit another (3) There has been no material change exercising any option thereafter, once proposed mentor-prote´ge´ agreement in any of its circumstances affecting its the prote´ge´ no longer qualifies as small with a different proposed mentor at any SDVO SBC eligibility. for the size standard corresponding to time after the SBA’s final decline * * * * * the NAICS code assigned to the decision. (d) Multiple Award Contracts—(1) contract, the joint venture will not be (g) Evaluating the mentor-prote´ge´ SDVO status. With respect to Multiple able re-certify itself to be a small relationship. SBA will review the Award Contracts, orders issued against business for that contract. The rules set mentor-prote´ge´ relationship annually. a Multiple Award Contract, and Blanket forth in § 121.404(g)(3) of this chapter SBA will ask the prote´ge´ for its Purchase Agreements issued against a apply in such circumstances. assessment of how the mentor-prote´ge´ Multiple Award Contract: relationship is working, whether or not * * * * * (i) SBA determines SDVO small the prote´ge´ received the agreed upon (6) A mentor that provides a business eligibility for the underlying ´ ´ business development assistance, and subcontract to a protege that has its Multiple Award Contract as of the date whether the prote´ge´ would recommend principal office located in the a business concern certifies its status as the mentor to be a mentor for another Commonwealth of Puerto Rico may (i) an SDVO small business concern as part small business in the future. receive positive consideration for the of its initial offer (or other formal mentor’s past performance evaluation, * * * * * response to a solicitation), which and (ii) apply costs incurred for (4) SBA may decide not to approve includes price, unless the firm was providing training to such protege continuation of a mentor-prote´ge´ required to recertify under paragraph (e) toward the subcontracting goals agreement where: of this section. contained in the subcontracting plan of (i) SBA finds that the mentor has not the mentor. (A) Unrestricted Multiple Award provided the assistance set forth in the (e) * * * Contracts or Set-Aside Multiple Award ´ ´ (1) * * * mentor-protege agreement; Contracts for Other than SDVO. For an (i) Specifically identify the business (ii) SBA finds that the assistance unrestricted Multiple Award Contract or development assistance to be provided provided by the mentor has not resulted other Multiple Award Contract not and address how the assistance will in any material benefits or specifically set aside for SDVO, if a help the prote´ge´ enhance its growth developmental gains to the prote´ge´; or business concern is an SDVO small and/or foster or acquire needed (iii) A prote´ge´ does not provide business concern at the time of offer and capabilities; information relating to the mentor- contract-level recertification for the * * * * * prote´ge´ relationship, as set forth in Multiple Award Contract, it is an SDVO (5) Unless rescinded in writing as a paragraph (g). small business concern for goaling result of an SBA review, the mentor- * * * * * purposes for each order issued against prote´ge´ relationship will automatically ■ 43. Amend § 125.18 by: the contract, unless a contracting officer requests recertification as an SDVO renew without additional written notice ■ a. Revising paragraph (a); of continuation or extension to the small business for a specific order or ■ b. Removing ‘‘(see §§ 125.9 and Blanket Purchase Agreement. However, prote´ge´ firm. * * * 124.520 of this chapter)’’ and adding in ´ ´ except for orders and Blanket Purchase (6) A protege may generally have a its place ‘‘(see § 125.9 of this chapter)’’ total of two mentor-prote´ge´ agreements Agreements issued off any Federal in paragraph (b)(1)(ii); Supply Schedule contract, if an order or with different mentors. ■ (i) Each mentor-prote´ge´ agreement c. Removing ‘‘§ 124.520 or’’ in a Blanket Purchase Agreement under an may be for an initial period of three paragraph (b)(2) introductory text; unrestricted Multiple Award Contract is years and may be extended an ■ d. Removing ‘‘or § 124.520’’ in set-aside exclusively for SDVO small additional three years provided the paragraph (b)(3)(i); business, a concern must recertify that prote´ge´ has received the agreed-upon ■ e. Redesignating paragraphs (d)(1) it qualifies as an SDVO small business business development assistance and through (4) as paragraphs (d)(2) through at the time it submits its initial offer, will continue to receive additional (5), respectively; and which includes price, for the particular assistance through the extended mentor- ■ f. Adding a new paragraph (d)(1). order or Blanket Purchase Agreement. prote´ge´ agreement. The revision and addition read as (B) SDVO Set-Aside Multiple Award (ii) If a mentor-prote´ge´ agreement is follows: Contracts. For a Multiple Award terminated within a year from the date Contract that is specifically set aside for SBA approved the agreement, that § 125.18 What requirements must an SDVO small business, if a business mentor-prote´ge´ relationship will not SDVO SBC meet to submit an offer on a concern is an SDVO small business at count as one of the two mentor-prote´ge´ contract? the time of offer and contract-level relationships that a small business may (a) General. In order for a business recertification for the Multiple Award enter as a prote´ge´. concern to submit an offer and be Contract, it is an SDVO small business * * * * * eligible for the award of a specific SDVO for each order issued against the (f) Decision to decline mentor-prote´ge´ contract, the concern must submit the contract, unless a contracting officer relationship. Where SBA declines to appropriate representations and requests recertification as an SDVO approve a specific mentor-prote´ge´ certifications at the time it submits its small business for a specific order or agreement, SBA will issue a written initial offer which includes price (or Blanket Purchase Agreement. decision setting forth its reason(s) for other formal response to a solicitation) (ii) SBA will determine SDVO small the decline. The small business concern to the contracting officer, including, but business status at the time of initial offer seeking to be a prote´ge´ cannot attempt not limited to, the fact that: (or other formal response to a to enter into another mentor-prote´ge´ (1) It is small under the size standard solicitation), which includes price, for relationship with the same mentor for a corresponding to the NAICS code(s) an order or an Agreement issued against period of 60 calendar days from the date assigned to the contract; a Multiple Award Contract if the of the final decision. The small business (2) It is an SDVO SBC; and contracting officer requests a new SDVO

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small business certification for the order recertification of such status), an (i) Unrestricted Multiple Award or Agreement. interested party must submit its protest Contracts or Set-Aside Multiple Award * * * * * challenging the HUBZone status of a Contracts for Other than EDWOSB or ■ 44. Amend § 125.28 by revising the concern for the order or Agreement by WOSB. For an unrestricted Multiple section heading and adding a sentence close of business on the fifth business Award Contract or other Multiple to the end of paragraph (d)(1) to read as day after notification by the contracting Award Contract not set aside follows: officer of the intended awardee of the specifically for EDWOSB or WOSB, if a order or Agreement. business concern is an EDWOSB or § 125.28 What are the requirements for * * * * * WOSB at the time of offer and contract- filing a service-disabled veteran-owned level recertification for the Multiple status protest? PART 127—WOMEN-OWNED SMALL Award Contract, it is an EDWOSB or * * * * * BUSINESS FEDERAL CONTRACT WOSB for goaling purposes for each (d) * * * PROGRAM order issued against the contract, unless (1) * * * Except for an order or a contracting officer requests ■ 49. The authority citation for part 127 Blanket Purchase Agreement issued recertification as an EDWOSB or WOSB under any Federal Supply Schedule continues to read as follows: fora specific order or Blanket Purchase contract, an order or a Blanket Purchase Authority: 15 U.S.C. 632, 634(b)(6), Agreement. However, except for orders Agreement that is set-aside or reserved 637(m), 644 and 657r. and Blanket Purchase Agreements for SDVO small business off a Multiple § 127.503 [Amended] issued under any Federal Supply Award Contract that is not itself set Schedule contract, if an order or a ■ 50. Amend § 127.503 by removing aside for SDVO small business (or any Blanket Purchase Agreement under an SDVO order where the contracting paragraph (h). ■ unrestricted Multiple Award Contract is officer has requested recertification of 51. Revise § 127.504 to read as follows: set-aside exclusively for EDWOSB or SDVO status), an interested party must WOSB, a concern must recertify it submit its protest challenging the SDVO § 127.504 What requirements must an qualifies as an EDWOSB or WOSB at the status of a concern for the order or EDWOSB or WOSB meet to be eligible for time it submits its initial offer, which Agreement by close of business on the an EDWOSB or WOSB contract? includes price, for the particular order fifth business day after notification by (a) General. In order for a business or Agreement. the contracting officer of the apparent concern to submit an offer and be (ii) EDWOSB or WOSB Set-Aside successful offeror. eligible for the award of a specific Multiple Award Contracts. For a * * * * * EDWOSB or WOSB contract, the Multiple Award Contract that is set concern must submit the appropriate aside specifically for EDWOSB or PART 126—HUBZONE PROGRAM representations and certifications at the WOSB, if a business concern is an EDWOSB or WOSB at the time of offer ■ 45. The authority citation for part 126 time it submits its initial offer which and contract-level recertification for the continues to read as follows: includes price (or other formal response to a solicitation) to the contracting Multiple Award Contract, it is an Authority: 15 U.S.C. 632(a), 632(j), 632(p), officer, including, but not limited to, the EDWOSB or WOSB for each order 644 and 657a. fact that: issued against the contract, unless a § 126.616 [Amended] (1) It is small under the size standard contracting officer requests recertification as an EDWOSB or WOSB ■ 46. Amend § 126.616 by removing corresponding to the NAICS code(s) fora specific order or Blanket Purchase ‘‘(or, if also an 8(a) BD Participant, with assigned to the contract; (2) It is listed in SAM (or any Agreement. an approved mentor authorized by successor system) as a WOSB or (2) SBA will determine EDWOSB or § 124.520 of this chapter)’’ in paragraph EDWOSB; and WOSB status at the time of initial offer (a). (3) There has been no material change (or other formal response to a § 126.618 [Amended] in any of its circumstances affecting its solicitation), which includes price, for ■ 47. Amend § 126.618 by removing EDWOSB or WOSB eligibility. an order or an Agreement issued against ‘‘(or, if also an 8(a) BD Participant, (b) Joint ventures. A business concern a Multiple Award Contract if the under § 124.520 of this chapter)’’ in seeking an EDWOSB or WOSB contract contracting officer requests a new paragraph (a). as a joint venture may submit an offer EDWOSB or WOSB certification for the ■ 48. Amend § 126.801 by adding a if the joint venture meets the order or Agreement. sentence to the end of paragraph (d)(1) requirements as set forth in § 127.506. (d) Limitations on subcontracting. A to read as follows: (c) Multiple Award Contracts. With business concern seeking an EDWOSB respect to Multiple Award Contracts, or WOSB contract must also meet the § 126.801 How does an interested party file orders issued against a Multiple Award applicable limitations on subcontracting a HUBZone status protest? Contract, and Blanket Purchase requirements as set forth in § 125.6 of * * * * * Agreements issued against a Multiple this chapter for the performance of (d) * * * Award Contract: contracts totally set aside for EDWOSB (1) * * * In connection with an order (1) SBA determines EDWOSB or or WOSB, the performance of the set- or an Agreement that is set-aside or WOSB eligibility for the underlying aside portion of a partial set-aside reserved for a certified HUBZone small Multiple Award Contract as of the date contract, or the performance of orders business concern off a Multiple Award a concern certifies its status as an set-aside for EDWOSB or WOSB. Contract that is not itself set aside for EDWOSB or WOSB as part of its initial However, EDWOSB or WOSB concerns certified HUBZone small business offer (or other formal response to a will not have to comply with the concerns, except for an order or Blanket solicitation), which includes price, limitations on subcontracting provisions Purchase Agreement issued under any unless the concern was required to for any order issued against an Federal Supply Schedule contact, (or recertify its status as a WOSB or unrestricted Multiple Award Contract if any HUBZone set-aside order where the EDWOSB under paragraph (f) of this the order is competed amongst contracting officer has requested section. EDWOSB or WOSB concerns and at

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least one other-than-small business recertify its EDWOSB or WOSB status for EDWOSB or WOSB small business concern. no more than 120 days prior to the end under a Multiple Award Contract that is (e) Non-manufacturers. An EDWOSB of the fifth year of the contract, and no not itself set aside for EDWOSB or or WOSB that is a non-manufacturer, as more than 120 days prior to exercising WOSB small business (or any EDWOSB defined in § 121.406(b) of this chapter, any option. If the concern is unable to or WOSB order where the contracting may submit an offer on an EDWOSB or recertify its status as an EDWOSB or officer has requested recertification of WOSB contract for supplies, if it meets WOSB, the agency must modify the such status), an interested party must the requirements under the non- contract to reflect the new status, and submit its protest challenging the manufacturer rule set forth in may not count the options or orders EDWOSB or WOSB status of a concern § 121.406(b) of this chapter. issued pursuant to the contract, from for the order or Blanket Purchase (f) Recertification. (1) Where a that point forward, towards its women- Agreement by close of business on the contract being performed by an owned small business goals. fifth business day after notification by EDWOSB or WOSB is novated to (4) A business concern that did not the contracting officer of the apparent another business concern, the concern certify as an EDWOSB or WOSB, either successful offeror. that will continue performance on the initially or prior to an option being * * * * * contract must recertify its status as an exercised, may recertify as an EDWOSB EDWOSB or WOSB to the procuring or WOSB for a subsequent option period PART 134—RULES OF PROCEDURE agency, or inform the procuring agency if it meets the eligibility requirements at GOVERNING CASES BEFORE THE that it does not qualify as an EDWOSB that time. The agency must modify the OFFICE OF HEARINGS AND APPEALS or WOSB, within 30 days of the contract to reflect the new status, and novation approval. If the concern cannot may count the options or orders issued ■ 54. The authority citation for part 134 recertify its status as an EDWOSB or pursuant to the contract, from that point continues to read as follows: WOSB, the agency must modify the forward, towards its women-owned small business goals. Authority: 5 U.S.C. 504; 15 U.S.C. 632, contract to reflect the new status, and 634(b)(6), 634(i), 637(a), 648(l), 656(i), and may not count the options or orders (5) Recertification does not change the 687(c); 38 U.S.C. 8127(f); E.O. 12549, 51 FR issued pursuant to the contract, from terms and conditions of the contract. 6370, 3 CFR, 1986 Comp., p. 189. that point forward, towards its women- The limitations on subcontracting, Subpart J issued under 38 U.S.C. owned small business goals. nonmanufacturer and subcontracting 8127(f)(8)(B). (2) Where an EDWOSB or WOSB plan requirements in effect at the time Subpart K issued under 38 U.S.C. concern that is performing a contract of contract award remain in effect 8127(f)(8)(A). acquires, is acquired by, or merges with throughout the life of the contract. ■ another concern and contract novation (6) A concern’s status will be 55. Amend § 134.318 by adding a is not required, the concern must, determined at the time of a response to subject heading to paragraph (a) and within 30 days of the transaction a solicitation for an Agreement and each revising paragraph (b) to read as follows: becoming final, recertify its EDWOSB or order issued pursuant to the Agreement. § 134.318 NAICS Appeals. WOSB status to the procuring agency, or § 127.505 [Removed and Reserved] inform the procuring agency that it no (a) General. *** ■ 52. Remove and reserve § 127.505. longer qualifies as an EDWOSB or ■ 53. Amend § 127.603 by revising the (b) Effect of OHA’s decision. If OHA WOSB. If the concern is unable to section heading and adding a sentence grants the appeal (changes the NAICS recertify its status as an EDWOSB or to the end of paragraph (c)(1) to read as code), the contracting officer must WOSB, the agency must modify the follows: amend the solicitation to reflect the new contract to reflect the new status, and NAICS code. The decision will also may not count the options or orders § 127.603 What are the requirements for apply to future solicitations for the same issued pursuant to the contract, from filing an EDWOSB or WOSB status protest? supplies or services. that point forward, towards its women- * * * * * * * * * * owned small business goals. (c) * * * (3) For purposes of contracts (1) * * * Except for an order or Dated: October 16, 2019. (including Multiple Award Contracts) Blanket Purchase Agreement issued Christopher Pilkerton, with durations of more than five years under any Federal Supply Schedule Acting Administrator. (including options), a contracting officer contact, an order or a Blanket Purchase [FR Doc. 2019–23141 Filed 11–7–19; 8:45 am] must request that a business concern Agreement that is set-aside or reserved BILLING CODE P

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