[Federal Register Volume 70, Number 55 (Wednesday, March 23, 2005)]
[Rules and Regulations]
[Pages 14523-14529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-5466]
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Rules and Regulations
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Federal Register / Vol. 70, No. 55 / Wednesday, March 23, 2005 /
Rules and Regulations
[[Page 14523]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 125
RIN 3245-AF16
Government Contracting Programs
AGENCY: Small Business Administration.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the interim final regulations governing
the Service-Disabled Veteran Owned Small Business Concern (SDVO SBC)
Program. In particular, this rule clarifies several regulations,
specifically those concerning protest procedures.
DATES: This rule is effective March 23, 2005.
FOR FURTHER INFORMATION CONTACT: Dean Koppel, Assistant Administrator,
Office of Policy and Research, (202) 205-7322 or at
[email protected].
SUPPLEMENTARY INFORMATION: On May 5, 2004, the U.S. Small Business
Administration (SBA or Agency) published in the Federal Register, 69 FR
25261, an interim final rule, with request for comments, to implement
that section of the Veterans Benefits Act of 2003 (VBA), which
addressed procurement programs for SBCs owned and controlled by
service-disabled veterans. Specifically, the interim final rule defined
the term service-disabled veterans, explained when competition may be
restricted to SDVO SBCs, and established procedures for protesting the
status of an SDVO SBC.
Discussion of Comments on the Interim Final Rule
The comment period for the interim final rule closed on July 6,
2004. SBA received 45 comments. The majority of the commenters fully
supported the regulatory amendments. Twenty-seven of the 45 commenters
provided substantive comments. The following is a synopsis of those
substantive comments.
Section-by-Section Analysis of Comments
In the interim final rule, SBA amended Sec. 121.401 by adding the
phrase ``the Service-Disabled Veteran-Owned Small Business Concern
Program (SDVO SBC Program)'' to state that the SDVO SBC Program is
subject to size determinations. SBA received three comments on this
section. The commenters stated that by SBA imposing size restrictions,
SDVO SBCs will be excluded from certain industries, especially those
industries where few employees or affiliation are needed. Consequently,
these commenters believed that agencies will not be able to reach their
3% SDVO SBC goal.
In response to these comments, SBA notes that the VBA specifically
applies to SBCs. Thus, to be eligible for a SDVO SBC contract, the
business concern must meet the small business size standard for the
applicable North American Industry Classification System code contained
in the contract, in accordance with SBA's size regulations contained in
13 CFR part 121. Therefore, SBA did not adopt this comment and has not
amended the rule.
SBA received one comment on Sec. 125.6, which added subcontracting
limitations for SDVO SBCs so that all subcontracting limitations would
be centrally located and easy for SBCs and contracting officials to
locate. The commenter stated that SBA should amend the subcontracting
rules so that if a SDVO SBC subcontracts work to another company, the
amount of the subcontract would be excluded from the total revenues of
the SDVO SBC when calculating size. We note that Sec. 121.104 of SBA's
size regulations defines the term receipts and does not exclude
subcontracting costs from its definition. In fact, SBA includes
subcontracting costs as a factor when developing the size standards.
Consequently, SBA believes that this comment is outside the scope of
this rulemaking and therefore, SBA has not adopted the commenter's
recommendation.
SBA notes that it has clarified Sec. 125.6 to state that the SDVO
SBC joint venture must perform the applicable percentage of work. This
same requirement is also set forth in Sec. 125.15(b)(3); however, SBA
believes it would be helpful to set forth this requirement in Sec.
125.6 as well.
SBA has also clarified the definition of service-disabled veteran
with permanent and severe disability in Sec. 125.8 to explain that it
is relying on written documentation from the U.S. Department of
Veterans Affairs (VA) that the veteran has a service-connected,
permanent and total disability, as set forth in the VA's regulations.
In addition, SBA has corrected a typographical error in the
definition of the term spouse. The definition refers readers to the
correct cite--38 U.S.C. 101(31)--for that definition.
SBA defined who owns and controls an SDVO SBC in Subpart B, Sec.
125.9 and Sec. 125.10. SBA received two comments on these sections.
One commenter stated that SDVO SBCs should be allowed to own and
control holding companies for the purpose of program participation. One
commenter stated that SBA should allow a surviving spouse to own and
control a SDVO SBC following the death of the service-disabled veteran.
Further, one commenter stated that all veterans should be considered,
not just service-disabled veterans.
In response to these comments, SBA notes that the VBA and Small
Business Act (Act) set forth specific criteria for program eligibility.
For example, the Act states that in the case of a publicly-owned
business, not less than 51% of the stock must be owned by one or more
service-disabled veterans. Thus, we believe that the statute expresses
a clear intent for direct ownership of the SBC by service-disabled
veterans. SBA has created an exception for certain trusts because SBA
believes that living trusts may be treated as the functional equivalent
of ownership by service-disabled veterans where the trust is revocable,
and the service-disabled veterans are, at all times, the grantors,
trustees, and the current beneficiaries of the trust.
Further, the statute does not provide for ownership by surviving
spouses of service-disabled veterans or for ownership by a veteran that
is not service-disabled. Therefore, SBA has not amended the interim
final rule to allow for ownership by holding companies, surviving
spouses or veterans that are not service-disabled.
SBA is correcting a typographical error at the heading for Subpart
C to change ``gurantee'' to ``guarantee.''
[[Page 14524]]
SBA received six comments regarding the eligibility requirements
set forth in Sec. 125.15, including the joint venture and
nonmanufacturer requirements. Four commenters stated that this program
should not allow self-representation on a contract and to avoid a
firm's misrepresentation as a SDVO SBC, SBA should require proof of
status. SBA notes that it did consider proposing a certification
program, similar to others administered by the Agency, which would have
required proof of eligibility prior to certification on a particular
contract. However, SBA did not believe such a certification program was
necessary to implement the VBA or was required by the VBA. In addition,
SBA believes that allowing other SDVO SBCs to protest the self-
representation made on an offer is a self-policing process and will
prevent business concerns from misrepresenting their status. This
procedure--allowing self-representation on an offer and then a protest
on the self-representation--is the same procedure used for small
business set-asides, which SBA believes has worked well in the past and
continues to work well.
With respect to the joint venture requirements set forth in Sec.
125.15, one commenter stated that SBA's established joint venture
process is unduly restrictive and recommended that SBA allow SDVO SBCs
to participate in joint ventures with small and large businesses. This
commenter believed that SBA should increase the number of permitted
joint ventures for SDVO SBCs. In response to this comment, SBA notes
that the joint venture requirements are similar to those for SBA's
other programs, including 8(a) and HUBZone. Further, SBA believes that
it would not meet the purpose and intent of the VBA--to assist service-
disabled veteran-owned SBCs through government contracting
preferences--if such concerns were allowed to joint venture with an
other-than-small business and together exceed the size requirements of
the contract. In such instances, SBA believes the benefits would likely
flow to the large business, and not the SDVO SBC and this does not
serve the purpose of the VBA.
In addition, with respect to Sec. 125.15(c), one commenter stated
that SDVO SBC distributors should be allowed to supply the product of
any business, large or small, above and below $25,000. This commenter
believes that the nonmanufacturer rule and the waiver process is
tedious and onerous for the SBC. First, SBA would like to clarify that
waivers to the nonmanufacturers rule are not requested by a SBC as the
result of a published Federal requirement. Rather, contracting officers
can request a waiver to the rule when: (1) Market research indicates
that no small business manufacturer or processor reasonably can be
expected to offer a product meeting the specifications (including
period for performance) required by a particular solicitation; or (2)
SBA determines that no small business manufacturer or processor of the
product or class of products is available to participate in the Federal
procurement market. Section 121.406(b)(3) of SBA's size regulations
further defines the guidelines for contracting officers to request a
waiver. Waiver requests are processed after the contracting officer
conducts market research and prior to the issuance of a Federal
requirement by the contracting officer and are not a burden to a SBC.
In this way, SBC non-manufacturers can compete in restricted
procurements.
Second, SBA believes that the nonmanufacturer rule is necessary to
maintain the small business industrial base. Further, the rule applies
to all of SBA's programs. Thus, SBA has not amended the interim final
rule to adopt this comment.
SBA received three comments on Sec. 125.18, which addresses what
requirements are not available for SDVO SBC contracts. The commenters
recommended that only requirements made through the Federal Prison
Industries, Inc. and Javits-Wagner-O'Day Programs be excluded from the
SDVO SBC Program. The commenters stated that procurements under the
8(a) Business Development (BD) Program should be released for possible
award under the SDVO SBC Program. In response to this comment, SBA
notes that this regulation is necessary to ensure the integrity of the
business development aspects of the 8(a) BD program. Generally, the
requirement will be retained for exclusive 8(a) participation, but may
be released by SBA as indicated in the regulation. Thus, SBA has not
amended the interim final rule to adopt this comment.
Six commenters stated that SBA should change ``may'' to ``shall''
in Sec. 125.19 and Sec. 125.20. In other words, these commenters
believe that a CO should be required to award set-aside and sole source
contracts to SDVO SBCs and the program should therefore be mandatory
rather than discretionary. In response, SBA notes that the VBA
specifically states that the contracting officer of a procuring agency
``may'' award a sole source or set-aside contract to a SDVO SBC, if
certain conditions are met. Thus, SBA's regulations are following the
statutory mandate and therefore the interim final rule has not been
changed.
Seven commenters recommended changes to the regulations regarding
the sole source provisions for SDVO SBCs set forth in 125.20. Two
commenters recommended that the $3 million threshold for contract
opportunities, other than manufacturing, be clarified to read $3
million annually. SBA cannot make that change. The statute specifically
provides that a contracting officer may award a sole source contract to
a SDVO SBC if the anticipated award price of the contract (including
options) will not exceed $3 million for contract opportunities other
than manufacturing. Thus, the $3 million is based upon the contract
price, including options, and not the annual cost of the contract.
Five commenters stated that SDVO SBC Program sole source
procurements should be equivalent to sole source procurements under the
8(a) BD Program. For example, in the 8(a) BD Program, a contracting
officer may award a sole source contract to an 8(a) BD SBC even if
there is a reasonable expectation that two or more 8(a) SBCs can
perform the requirement. In contrast, a contracting officer may only
award a sole source SDVO SBC contract if he or she does not have a
reasonable expectation that two or more SDVO SBCs will submit offers on
the requirements (and other criteria are met). In response to this
comment, SBA notes that both sole source requirements, for the 8(a) BD
Program and the SDVO SBC Program, are set forth in statute. SBA's
regulations follow the statutory mandate for each program and
therefore, SBA's regulation regarding SDVO SBC sole source contracts
remains unchanged.
SBA also received three comments recommending that SDVO SBCs be
given a 10% price evaluation preference similar to the SDB or the
HUBZone Program. In response to this comment, SBA notes that the SDB
and HUBZone price evaluation preferences are statutory mandates. There
is no statutory mandate for SDVO SBCs to receive such a price
evaluation preference. Therefore, SBA has not amended the regulation to
provide for one.
Similarly, SBA received three comments recommending that the SDVO
SBC Program be given program parity with the other socio-economic
programs, in particular, the 8(a) BD Program. SBA notes that in Sec.
125.19, regarding set-asides for SDVO SBCs, it states that contracting
officers should consider setting aside the requirement for SDVO SBCs,
8(a) SBCs and
[[Page 14525]]
HUBZone SBCs before considering setting aside the requirement for SBCs
in general. SBA believes that this regulation does provide parity for
SDVO SBCs with SBA's other programs, to the extent the VBA and other
sections of the Small Business Act, as implemented in the Federal
Acquisition Regulations, permits such parity.
SBA has amended Sec. 125.25 to clarify, with an example, an
insufficient protest allegation. In addition, SBA has amended Sec.
125.25(e), referrals to SBA of protests from the contracting officer.
In Sec. 125.25(e), SBA is also requesting the contracting officer
inform SBA the date the protested concern submitted its offer and when
the protester received notification about the apparent successful
offeror. This information is necessary for SBA to determine whether the
protest has been submitted on time and the date SBA must look at to
determine eligibility.
SBA has amended Sec. 125.26 based upon information it has received
concerning service-disabled veteran status documents. SBA has learned
that as a result of a fire sometime ago, many of these records were
destroyed. Thus, the affected veterans would have to contact the U.S.
National Archives and Records Administration (NARA) for documents
evidencing their status as a service-disabled veteran. Consequently,
SBA has amended Sec. 125.26 to state that a protest must present
specific allegations supporting the contention that the owner(s) cannot
provide documentation from the VA, U.S. Department of Defense (DoD), or
NARA to show that they meet the definition of service-disabled veteran
or service-disabled veteran with a permanent and severe disability as
set forth in Sec. 125.8.
SBA has amended the timeline for which a protested SDVO SBC concern
must submit information in response to a protest. According to Sec.
125.27(c)(1), the protested concern was required to submit information
responding to the protest within five business days of receipt of the
protest. SBA has amended this to state that the protested concern must
submit information responding to the protest within ten business days
of receipt of the protest. SBA notes that it has done extensive
research on veteran records. SBA has learned that it could take a
service-disabled veteran up to ten days to receive information from
NARA (a repository for official government documents), and perhaps
longer from the different services, about their service-disabled
veteran status. Thus, SBA has amended Sec. 125.27 to take this into
account, despite the fact SBA believes that each SDVO SBC certifying as
such for a Federal procurement should have all of the necessary
documents prior to making the representation.
SBA notes that copies of most military personnel and medical
records are on file at the National Personnel Records Center in St
Louis, MO; however some military personnel records are maintained by
the Military Services depending on when the veteran was discharged.
Veterans who filed or are filing a medical claim should contact the VA
regional office in their state in order to determine if their medical
record and claim for service connected disability is already on file.
To request military personnel records, the below contact information is
provided:
Table 1.--Contact Information To Request Military Personnel Records
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Branch of service Discharge date Information Address
----------------------------------------------------------------------------------------------------------------
1. Air Force...................... Discharged or retired Full name, Social Security National Personnel
since September 25, Number and/or Service Records Center, 9700
1947. Number (both when Page Avenue, St. Louis,
available), enlistment MO 63132-5100, (314) 801-
and discharge dates, date 0800, http://
of birth and place of vetrecs.archives.gov.
birth (city and state),
rank upon discharge or
release, address where
record is to be mailed,
and signature.
2. Army........................... Discharged or retired Full name, Social Security National Personnel
between November 1, Number and/or Service Records Center, 9700
1912-September 30, Number (both when Page Avenue, St. Louis,
2002. available), enlistment MO 63132-5100, (314) 801-
and discharge dates, date 0800, http://
of birth and place of vetrecs.archives.gov.
birth (city and state),
rank upon discharge or
release, address where
record is to be mailed,
and signature.
Discharged or retired Full name, Social Security U.S. Army Human Resources
since October 1, Number, enlistment and Command, ATTN: AHRC-PAV-
2002. discharge dates, date of V, 1 Reserve Way, St.
birth and place of birth Louis, MO 63132-5200,
(city and state), rank (314) 592-0521.
upon discharge or
release, address where
record is to be mailed,
and signature.
3. Marine Corps................... Discharged or retired Full name, Social Security National Personnel
between 1905-Dec 31, Number and/or Service Records Center, 9700
1998. Number (both when Page Avenue, St. Louis,
available), enlistment MO 63132-5100, (314) 801-
and discharge dates, date 0800, http://
of birth and place of vetrecs.archives.gov.
birth (city and state),
rank upon discharge or
release, address where
record is to be mailed,
and signature.
Discharged or retired Full name, Social Security Commandant of the Marine
since 1999. Number, date discharged Corps, Headquarters,
from Marine Corps USMC (MMSB-10), 2008
service, address where Elliot Road, Quantico,
record is to be mailed, VA 22134-5030.
and signature of member.
4. Navy........................... Discharged or retired Full name, Social Security National Personnel
between 1885-Dec 31, Number and/or Service Records Center, 9700
1994. Number (both when Page Avenue, St. Louis,
available), enlistment MO 63132-5100, (314) 801-
and discharge dates, date 0800, http://
of birth and place of vetrecs.archives.gov.
birth (city and state),
rank/rate upon discharge
or release, address where
record is to be mailed,
and signature.
Discharged or retired Full name, Social Security Navy Personnel Command,
since 1995. Number, date discharged PERS-312E, 5720
from Naval service, Integrity Drive,
address where record is Millington, TN 38055-
to be mailed, and 3120, DSN: 882-4885 or
signature of member. COM: 901-874-4885.
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[[Page 14526]]
All requests for records and information must be in writing. Generally,
there is no charge for military personnel and health record information
provided to veterans. With respect to records regarding the status of a
veteran with a permanent and severe disability, the VA has informed SBA
that the veteran can request a document that specifically states that
the veteran has a permanent and total disability for purposes of 38 CFR
3.340.
SBA has also clarified the stay provisions in Sec. 125.27. In the
interim final rule, SBA explained that the CO may award the contract if
SBA does not issue its protest determination within the 15-day period
required by the regulations. SBA has added a new paragraph (e) to allow
the CO to award the contract after receipt of a protest if the CO
determines in writing that an award must be made to protect the public
interest. This provision has two purposes. First, it reinforces that
the CO should stay the procurement until the protest and appeal process
is completed. Second, SBA understands that in certain situations, the
CO may be unable to wait until the process is completed. In those
cases, the CO must make the determination in writing.
In response to one commenter, SBA has also amended Sec. Sec.
125.27(g) and 125.28 to clarify the effects of a protest or appeal
determination. With respect to both a protest and an appeal, if the
contract has already been awarded and the protest is sustained, or on
appeal the Office of Hearings and Appeals (OHA) Judge affirms that the
SDVO SBC does not meet a status or ownership and control requirement
set forth in these regulations, then the procuring agency cannot count
the award as an award to a SDVO SBC. If a contract has not yet been
awarded and the protest is sustained, or on appeal the OHA Judge
affirms that the protested concern does not meet a status or ownership
and control requirement set forth in these regulations, then the
protested concern is ineligible for an SDVO SBC contract award. There
is a statutory basis for this clarification. According to the VBA, sole
source and set-aside contracts can only be awarded to SDVO SBCs as
defined by statute and as implemented in SBA's regulations. If the
concern is not an SDVO SBC, then it is not an award pursuant to the VBA
to a SDVO SBC and should not be counted as such.
SBA received one comment asking for a clarification of the appeal
procedures discussed in part 134. SBA has reviewed the OHA appeal
procedures set forth in the interim final rule and agrees that further
clarification is necessary. Consequently, SBA has amended the rule to
include a separate subpart in 13 CFR part 134 to specifically address
appeals of SDVO SBC protests. SBA has issued those changes in a
separate rule, however, and has requested further comment on the OHA
appeal procedures in that rule.
In addition, SBA received several comments on the general nature of
the SDVO SBC Program. For example, three commenters recommended that
provisions be made for mentor-prot[eacute]g[eacute] relationships in
the SDVO SBC Program. SBA has reviewed this issue thoroughly and
believes that the SDVO SBC Program, unlike the 8(a) BD Program, is not
developmental in nature. Rather, it is the result of a recognized need
to increase the participation of ``established'' SDVO SBCs in the
Federal marketplace. The first attempt, Public Law 106-50, instituted
the 3% goal for SDVO SBCs. When data indicated that the desired results
were not being achieved, Public Law 108-183 was enacted. Public Law
108-183 established tools (a restricted competition and sole source
authority) for contracting officers to use to reach that segment of the
small business population. Although there is no prohibition against SBA
establishing an SDVO SBC Mentor-Prot[eacute]g[eacute] Program, at this
juncture, SBA prefers to wait and see if implementation of the
procurement tools in Public Law 108-183 will allow contracting
activities to reach their SDVO SBC goals. SBA notes that there is no
prohibition for SDVO SBCs, when eligible, to participate in the Mentor-
Prot[eacute]g[eacute] Programs of other agencies.
One commenter recommended that Small Business Innovation and
Research (SBIR) contracts be available under the SDVO SBC Program. SBA
notes that the SBIR Program was established by the Small Business
Innovation Development Act of 1982, codified at 15 U.S.C. 638. The
statutory purpose of the SBIR Program is to strengthen the role of
innovative SBCs in Federally-funded research and research and
development (R/R&D). The SBIR Program is a phased process, uniform
throughout the Federal Government, of soliciting proposals and awarding
funding agreements for R/R&D to meet stated agency needs or missions.
SBA believes that as a result of the nature and purpose of the program
and the way it is structured, it would not be beneficial to allow for
set-aside or sole source SBIR awards to a SBC simply because they are a
SDVO SBC (or any other type of SBC such as a HUBZone or 8(a) BD
concern). However, SBA can request agencies to conduct outreach efforts
to find and place innovative SDVO SBCs in the SBIR Program information
system and encourage such business concerns to participate in the
program. In addition, agencies may count SBIR contract awards to SDVO
SBCs towards their small business goals.
One commenter stated that the Central Contractor Registration (CCR)
should be more efficient at providing marketing assistance to SDVO
SBCs. SBA believes that this comment is outside the scope of this
rulemaking and therefore, SBA will take no further action on it.
Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork
Reduction Act (44 U.S.C. Ch. 35), and the Regulatory Flexibility Act (5
U.S.C. 601-612)
SBA has determined that this final rule does not impose additional
reporting or recordkeeping requirements under the Paperwork Reduction
Act, 44 U.S.C., chapter 35.
This action meets applicable standards set forth in Sec. Sec. 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
This regulation will not have substantial direct effects on the
States, on the relationship between the Federal government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, for the purposes of Executive
Order 13132, SBA determines that this final rule has no federalism
implications warranting preparation of a federalism assessment.
Because the rule was initially issued as an interim final rule,
there was no requirement for SBA to prepare an Initial Regulatory
Flexibility Act analysis. Therefore, there is no requirement for SBA to
issue a final Regulatory Flexibility Act analysis. However, because OMB
has determined that this rule constitutes a ``significant regulatory
action'' under Executive Order 12866, SBA reported a Regulatory Impact
Analysis (RIA) in the interim final rule. The Agency believes that this
RIA is still accurate, and accordingly, sets forth a final RIA below.
Regulatory Impact Analysis
In June 2004, SBA's Office of Advocacy issued a report entitled
``Characteristics of Federal Government Procurement Spending with
Veteran-Owned Businesses FY2000-FY2003 (3Q),'' stating that Agencies
have made little use of veteran-owned businesses (http://www.sba.gov/advo/research/#procurement). As stated in the preamble above, SBA
believes there is a
[[Page 14527]]
significant need for this regulatory action and implementing the
changes in this rule would provide considerable benefits, including
attracting more SDVO SBCs to the Federal procurement arena and
assisting Agencies in achieving the statutorily mandated 3% government-
wide goal for procurement from SDVO SBCs.
Congress found that agencies were falling far short of reaching
this goal. Consequently, the legislative history specifically states
that Congress urges SBA and the Office of Federal Procurement Policy to
expeditiously and transparently implement the Service-Disabled Veteran-
Owned Small Business Concern is program. SBA is implementing this
program through regulations because there are no other viable
alternatives.
SBA cannot accurately determine how many concerns will be competing
for SDVO SBC contract awards because there is insufficient data on SDVO
SBCs to support a reasonable estimate of the cost or benefit. The
Federal Government has only been collecting procurement statistics on
veteran-owned businesses since FY 2000. These statistics do not
demarcate SDVO SBCs. According to the VA, there were 2.5 million
veterans with a service connected disability. (See http://www.va.gov/vetdata/demographics/index.htm). This does not mean that each of those
veterans own a SBC or own a business concern that would qualify for the
program.
SBA reviewed information contained in DoD's CCR database (http://www.ccr.gov). Currently, there are 4,825 SDVO SBCs registered in CCR.
This represents a small portion, 15.9%, of the 30,434 veteran-owned
businesses registered in CCR. Again, it is not known what percentage of
the service-disabled veterans based their representation on the
``service-connected'' disability as defined by 38 U.S.C. 101.
SBA also reviewed data from the Federal Procurement Data System
(http://www.fpds.gov). In FY 2001, there were 9,142 contract actions
awarded to SDVO SBCs in the amount of $554,167,000. This represented
.25% of all Federal contracts awarded. In FY 2002, 7,131 contract
actions were awarded to SDVO SBCs in the amount of $298,901,000. This
represented .13% of all Federal contracts awarded. SBA believes that
the number of contracts awarded to SDVO SBCs will increase as a result
of this regulation implementing the VBA. Few contracts were awarded to
SDVO SBCs in the Federal or State arena. This number could increase as
a result of the implementation of the VBA through this regulation.
Although there are over 2 million service-disabled veterans, only a
small portion own small businesses. However, it is assumed that the
establishment of a sole source and set-aside procurement vehicle for
SDVO SBCs will attract more of these entities to the Federal
procurement arena.
This rule will potentially benefit all SDVO SBCs. However, SBA
believes currently eligible SDVO SBCs will benefit immediately since
they are ready and able to tender an offer for a Federal procurement.
Nonetheless, SBA notes that because of the relatively small percentage
of SDVO SBCs (2.4%) registered in the CCR (4,852), as compared to the
total number of SBCs (201,742), SBA believes that this rule will not
have a major impact on other SBCs in the Federal procurement arena.
Federal Government agencies will also benefit from this regulation
because they will be able to tap the resources of SDVO SBCs using a
sole source or set-aside mechanism and therefore have more
opportunities to achieve their SDVO SBC goals, including meeting their
Federally-mandated goal to award contracts to SDVO SBCs.
SBA estimates that the Federal government will require no
additional appropriations for agencies to implement this program. The
awards would come from existing appropriated funds and current agency
procurement needs and therefore there would be no increase in the cost
to the Government.
SBA estimates that implementation of this regulation for SDVO SBCs
will require no additional proposal costs under this program as
compared to submitting proposals under any other small business set-
aside program. In addition, SDVO SBCs currently represent their status
for purposes of data collecting in small business goaling in accordance
with 15 U.S.C. 644(g).
List of Subjects in 13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small businesses, Technical assistance.
0
For the reasons set forth in the preamble, amend part 125 of title 13
of the Code of Federal Regulations as follows:
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
1. The authority citation for 13 CFR part 125 continues to read as
follows:
Authority: 15 U.S.C. 634(b)(6), 637, 644, and 657f; 31 U.S.C.
9701, 9702.
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2. In Sec. 125.6, add a new paragraph (b)(5) to read as follows:
Sec. 125.6 Prime contractor performance requirements (limitations on
subcontracting).
* * * * *
(b) * * *
(5) In accordance with Sec. 125.15(b)(3), the SDVO SBC joint
venture must perform the applicable percentage of work.
* * * * *
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3. Amend Sec. 125.8 to revise paragraphs (c), (d) and (h) to read as
follows:
Sec. 125.8 What definitions are important in the Service-Disabled
Veteran-Owned (SDVO) Small Business Concern (SBC) Program?
* * * * *
(c) Permanent caregiver is the spouse, or an individual, 18 years
of age or older, who is legally designated, in writing, to undertake
responsibility for managing the well-being of the service-disabled
veteran with a permanent and severe disability, to include housing,
health and safety. A permanent caregiver may, but does not need to,
reside in the same household as the service-disabled veteran with a
permanent and severe disability. In the case of a service-disabled
veteran with a permanent and severe disability lacking legal capacity,
the permanent caregiver shall be a parent, guardian, or person having
legal custody. There may be no more than one permanent caregiver per
service-disabled veteran with a permanent and severe disability.
(d) Service-Disabled Veteran with a Permanent and Severe Disability
means a veteran with a service-connected disability that has been
determined by the VA, in writing, to have a permanent and total
service-connected disability as set forth in 38 CFR 3.340 for purposes
of receiving disability compensation or a disability pension.
* * * * *
(h) Spouse has the meaning given the term in section 101(31) of
Title 38, United States Code.
* * * * *
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4. Correct the term ``gurantee'' in the Table of Contents in Subpart C
to read ``guarantee.''
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5. Revise paragraph (a) introductory text of Sec. 125.15 to read as
follows:
Sec. 125.15 What requirements must an SDVO SBC meet to submit an
offer on a contract?
(a) Representation of SDVO SBC status. An SDVO SBC must submit the
following representations with its initial offer (which includes price)
on a specific contract:
* * * * *
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6. Revise paragraphs (a), (b), and (e) of Sec. 125.25 to read as
follows:
[[Page 14528]]
Sec. 125.25 How does one file a service disabled veteran-owned status
protest?
(a) General. The protest procedures described in this part are
separate from those governing size protests and appeals. All protests
relating to whether an eligible SDVO SBC is a ``small'' business for
purposes of any Federal program are subject to part 121 of this chapter
and must be filed in accordance with that part. If a protester protests
both the size of the SDVO SBC and whether the concern meets the SDVO
SBC requirements set forth in Sec. 125.15(a), SBA will process each
protest concurrently, under the procedures set forth in part 121 of
this chapter and this part. SBA does not review issues concerning the
administration of an SDVO contract.
(b) Format. Protests must be in writing and must specify all the
grounds upon which the protest is based. A protest merely asserting
that the protested concern is not an eligible SDVO SBC, without setting
forth specific facts or allegations is insufficient. Example: A
protester submits a protest stating that the awardee's owner is not a
service-disabled veteran. The protest does not state any basis for this
assertion. The protest allegation is insufficient.
* * * * *
(e) Referral to SBA. The contracting officer must forward to SBA
any non-premature protest received, notwithstanding whether he or she
believes it is sufficiently specific or timely. The contracting officer
must send all protests, along with a referral letter, directly to the
Associate Administrator for Government Contracting, U.S. Small Business
Administration, 409 Third Street, SW., Washington, DC 20416 or by fax
to (202) 205-6390, marked Attn: Service-Disabled Veteran Status
Protest. The CO's referral letter must include information pertaining
to the solicitation that may be necessary for SBA to determine
timeliness and standing, including: the solicitation number; the name,
address, telephone number and facsimile number of the CO; whether the
contract was sole source or set-aside; whether the protester submitted
an offer; whether the protested concern was the apparent successful
offeror; when the protested concern submitted its offer (i.e., made the
self-representation that it was a SDVO SBC); whether the procurement
was conducted using sealed bid or negotiated procedures; the bid
opening date, if applicable; when the protest was submitted to the CO;
when the protester received notification about the apparent successful
offeror, if applicable; and whether a contract has been awarded.
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7. Revise Sec. 125.26 to read as follows:
Sec. 125.26 What are the grounds for filing an SDVO SBC protest?
(a) Status. In cases where the protest is based on service-
connected disability, permanent and severe disability, or veteran
status, the Associate Administrator for Government Contracting will
only consider a protest that presents specific allegations supporting
the contention that the owner(s) cannot provide documentation from the
VA, DoD, or the U.S. National Archives and Records Administration to
show that they meet the definition of service-disabled veteran or
service disabled veteran with a permanent and severe disability as set
forth in Sec. 125.8.
(b) Ownership and control. In cases where the protest is based on
ownership and control, the Associate Administrator for Government
Contracting will consider a protest only if the protester presents
credible evidence that the concern is not 51% owned and controlled by
one or more service-disabled veterans. In the case of a veteran with a
permanent and severe disability, the protester must present credible
evidence that the concern is not controlled by the veteran, spouse or
permanent caregiver of such veteran.
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8. Revise Sec. 125.27 to read as follows:
Sec. 125.27 How will SBA process an SDVO protest?
(a) Notice of receipt of protest. Upon receipt of the protest, SBA
will notify the contracting officer and the protester of the date SBA
received the protest and whether SBA will process the protest or
dismiss it under paragraph (b) of this section.
(b) Dismissal of protest. If SBA determines that the protest is
premature, untimely, nonspecific, or is based on non-protestable
allegations, SBA will dismiss the protest and will send the contracting
officer and the protester a notice of dismissal, citing the reason(s)
for the dismissal. The dismissal notice must also advise the protester
of his/her right to appeal the dismissal to SBA's Office of Hearings
and Appeals (OHA) in accordance with part 134 of this chapter.
(c) Notice to protested concern. If SBA determines that the protest
is timely, sufficiently specific and is based upon protestable
allegations, SBA will:
(1) Notify the protested concern of the protest and of its right to
submit information responding to the protest within ten business days
from the date of the notice; and
(2) Forward a copy of the protest to the protested concern, with a
copy to the contracting officer if one has not already been made
available.
(d) Time period for determination. SBA will determine the SDVO SBC
status of the protested concern within 15 business days after receipt
of the protest, or within any extension of that time which the
contracting officer may grant SBA. If SBA does not issue its
determination within the 15-day period, the contracting officer may
award the contract, unless the contracting officer has granted SBA an
extension.
(e) Award of contract. The CO may award the contract after receipt
of a protest if the contracting officer determines in writing that an
award must be made to protect the public interest.
(f) Notification of determination. SBA will notify the contracting
officer, the protester, and the protested concern in writing of its
determination.
(g) Effect of determination. SBA's determination is effective
immediately and is final unless overturned by OHA on appeal. If SBA
sustains the protest, and the contract has not yet been awarded, then
the protested concern is ineligible for an SDVO SBC contract award. If
a contract has already been awarded, and SBA sustains the protest, then
the contracting officer cannot count the award as an award to an SDVO
SBC and the concern cannot submit another offer as an SDVO SBC on a
future SDVO SBC procurement unless it overcomes the reasons for the
protest (e.g., it changes its ownership to satisfy the definition of an
SDVO SBC set forth in Sec. 125.8).
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9. Revise Sec. 125.28 to read as follows:
Sec. 125.28 What are the procedures for appealing an SDVO status
protest?
The protested concern, the protester, or the contracting officer
may file an appeal of an SDVO status protest determination with OHA in
accordance with part 134 of this chapter. If the contract has already
been awarded and on appeal, the OHA Judge affirms that the SDVO SBC
does not meet a status or ownership and control requirement set forth
in these regulations, then the procuring agency cannot count the award
as an award to a SDVO SBC. In addition, the protested concern cannot
self-represent its status for another procurement until it has cured
the eligibility issue. If a contract has not yet been awarded and on
appeal the OHA Judge affirms that the protested concern does not meet
the status or ownership and control requirement set forth in this part,
then the protested concern is
[[Page 14529]]
ineligible for an SDVO SBC contract award.
Dated: December 1, 2005.
Hector V. Barreto,
Administrator.
[FR Doc. 05-5466 Filed 3-22-05; 8:45 am]
BILLING CODE 8025-01-P