[Federal Register Volume 73, Number 193 (Friday, October 3, 2008)]
[Rules and Regulations]
[Pages 57490-57495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23472]
=======================================================================
-----------------------------------------------------------------------
SMALL BUSINESS ADMINISTRATION
13 CFR Part 124
RIN 3245-AF79
Small Disadvantaged Business Program
AGENCY: U.S. Small Business Administration.
ACTION: Interim final rule, with request for comments.
-----------------------------------------------------------------------
SUMMARY: This rule changes the requirements relating to which firms may
certify their status as small disadvantaged businesses (SDBs) for
purposes of federal prime contracts and subcontracts. Currently, only
those firms that have applied to and been certified as SDBs by SBA may
certify themselves to be SDBs for federal prime and subcontracts. This
rule allows firms to self-represent their status for subcontracting
purposes without first receiving any SDB certification. It also
recognizes that the benefits of being an SDB for federal prime
contracts has been greatly diminished over the past years, and shifts
the responsibility of identifying firms as SDBs for federal prime
contracts to those limited agencies that have authority and chose to
use price evaluation adjustments to SDBs.
DATES: Effective Date: This rule is effective October 3, 2008.
Comment Date: Comments must be received on or before November 3,
2008.
ADDRESSES: You may submit comments, identified by RIN: 3245-AF79, by
any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail, for paper, disk, or CD/ROM submissions: Joseph
Loddo, Associate Administrator, Office of Business Development, 409
Third Street, SW., Mail Code, Washington, DC 20416.
Hand Delivery/Courier: Joseph Loddo, Associate
Administrator, Office of Business Development, 409 Third Street, SW.,
Washington, DC 20416.
SBA will post all comments on www.regulations.gov. If you wish to
submit confidential business information (CBI) as defined in the User
Notice at www.regulations.gov, please submit the information to LeAnn
Delaney, Deputy Director, Office of Business Development, 409 Third
Street, SW., Washington, DC 20416, or send an e-mail to
[email protected]. Highlight the information that you consider to
be CBI and explain why you believe SBA should hold this information as
confidential. SBA will review the information and make the final
determination of whether it will publish the information or not.
FOR FURTHER INFORMATION CONTACT: LeAnn Delaney, Deputy Director, Office
of Business Development, at (202) 205-5852, or [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Section 1207 of the 1987 Defense Authorization Act (Pub. L. 99-661,
codified in 10 U.S.C. 2323) for the first time established a 5 percent
goal for all Department of Defense (DOD) contracts to be awarded to
SDBs. To achieve the 5 percent SDB goal, the statute authorized the
award of contracts to SDBs using less than full and open competitive
procedures. Specifically, DOD developed through regulation a practice
known as the ``rule of two'' for SDBs. Pursuant to the ``rule of two,''
whenever a contracting officer identified two or more SDBs that it
believed could perform a specific procurement at a fair and reasonable
price, the contracting officer was required to set the contract aside
for bidding exclusively among SDBs. In addition, SDBs would receive a
10% price evaluation adjustment in the evaluation of offers in an
unrestricted or full and open competition. The DOD's SDB program was a
self-certification program. SBA established eligibility criteria, but
firms certified their SDB status for particular procurements. SBA
[[Page 57491]]
did, however, process protests and appeals relating to SDB status in
connection with individual procurements.
In 1994, Congress extended the authority granted to DOD by 10
U.S.C. 2323 to all agencies of the Federal Government through enactment
of the Federal Acquisition Streamlining Act (FASA), Public Law 103-355.
However, as a result of the Supreme Court's decision in Adarand
Constructors, Inc. v. Pe[ntilde]a, 515 U.S. 200 (1995), President
Clinton ordered the Department of Justice (DOJ) to work with Federal
agencies to conduct a review of all race and gender conscious Federal
contracting programs and implement necessary regulatory reforms to
comply with the Court's ruling. Regulations to implement FASA were
delayed until the completion of this review.
In 1996, DOJ completed its review and, on May 23, 1996, published
in the Federal Register proposed reforms to these Federal preferential
contracting programs. 61 FR 26042-6063. The ``rule of two'' and the
corresponding SDB set-aside authority were put on hold pending further
review. This left the price evaluation adjustment for SDBs on
unrestricted or full and open competitions as the primary benefit for
SDB contractors. The Department of Commerce was tasked with the
responsibility to determine those industries in which a price
evaluation adjustment could be used in Federal procurements. This
included developing the methodology for determining the benchmark
limitation and developing the methodology for calculating the size of
the price evaluation adjustments for eligible industries.
DOJ also proposed governmental SDB certification for all firms
seeking to submit offers as SDBs for Federal prime contracts and
subcontracts. DOJ believed that a governmental certification would
ensure that those who were receiving SDB benefits were truly SDB
qualified in accordance with the standards established by SBA, and
would readily meet the Adarand strict scrutiny test. The proposal
included language that allowed procuring agencies to certify concerns
as eligible for the SDB program, or ``In the alternative, an agency may
enter into an agreement with SBA to have SBA make all determinations,
including the initial determination of eligibility.'' Id. at 26044.
Because of SBA's long-term experience in determining social and
economic disadvantage for the 8(a) program and in connection with SDB
protests, agencies were strongly encouraged to enter into an agreement
with SBA. In August 1997 and June 1998, SBA published regulations,
including standards and procedures, governing the SDB certification
process.
On December 9, 2004, Congress allowed the price evaluation
adjustment authority for SDBs to expire for the majority of Federal
procuring agencies. Nevertheless, it remains in effect through 2009 for
DOD, the National Aeronautics and Space Administration (NASA), and the
Coast Guard. However, Section 801 of the Strom Thurmond National
Defense Authorization Act for Fiscal Year 1999, Public Law, 105-261,
amended 10 U.S.C. Sec. 2323(e) to prohibit DOD from using the SDB
price evaluation preference if the Secretary determines at the
beginning of the fiscal year that DOD achieved the SDB 5% goal in the
most recent fiscal year for which data are available. DOD has met the
5% goal each year since. As such, DOD has not used the SDB price
evaluation preference in DOD prime contracts since 1999. Data in the
Federal Procurement Data System indicates that NASA and the Coast Guard
rarely use the price evaluation adjustment.
Thus, at this point, only two agencies (NASA and the Coast Guard)
are currently able to use the SDB price evaluation preference, and
their use is minimal. Considering this, having SBA certify SDBs
Government-wide for prime contracts is no longer the most efficient or
effective way to certify firms. This rule removes SBA from the SDB
certification process. In terms of prime contracts, the rule will have
those procuring agencies that have an SDB prime contracts program
certify firms as SDBs where the need to do so arises. In other words,
if an agency uses the Price Evaluation Adjustment, then they should
develop procedures for certifying SDBs. But in all other cases,
agencies can rely on self-certification of SDBs. The rule recognizes
that the approximately 9,545 firms currently participating in the 8(a)
Business Development (BD) program are deemed certified SDB firms during
their tenure in the 8(a) BD program. In addition, the approximately
2,814 SBA-certified SDB firms will remain as SDB certified firms for a
period of three years from the date of their certifications where they
continue to meet all applicable requirements. Finally, the rule gives
procuring agencies that have an SDB prime contracts program the
authority to accept SDB certifications made by private certifying
entities and state and local governments where the procuring agencies
believe that it is appropriate to do so. For all of these reasons, SBA
does not believe that there will be a great burden on these procuring
agencies to certify firms as SDBs for their programs.
The rule's effect of having procuring agencies make SDB
certifications is consistent with one of the alternatives set forth in
the 1996 DOJ SDB proposal. In order to make the transition smoother,
SBA will conduct training seminars designed to instruct personnel from
other agencies on the procedures for making eligibility determinations.
This training component is also consistent with the DOJ proposal.
Moreover, as noted above, any firm seeking to represent itself as a
SDB for a subcontract on a federal prime contract must currently also
be certified as an SDB by SBA. Requiring certification for subcontracts
is not required by law, and may contradict the express language of the
Small Business Act. In this regard, Sec. 8(d)(3)(F) of the Small
Business Act, 15 U.S.C. 637(d)(3)(F), states: ``Contractors acting in
good faith may rely on written representations by their subcontractors
regarding their status as * * * a small business concern owned and
controlled by socially and economically disadvantaged individuals * *
*'' (Emphasis added). This language clearly suggests that Congress
intended to allow large business prime contractors to rely on the self
representations of subcontractors claiming to be SDBs.
SBA believes that the clear language of the Small Business Act
should be adhered to. As such, SBA's regulatory change permits firms to
self-represent their status as SDBs for subcontracts.
Specific Regulatory Changes
Section 124.1001 is amended to eliminate references to SBA
performing SDB certifications. It also changes the provisions regarding
which firms can certify their status as SDBs for both federal prime
contracts and subcontracts on federal prime contracts. The rule
eliminates the requirement that a firm must have received an SDB
certification from SBA before it can represent itself to be an SDB. In
order for a concern to represent that it is an SDB in order to receive
a benefit as a prime contractor on a Federal Government procurement,
the rule states that a firm must: (1) Be a current Participant in SBA's
8(a) BD program; (2) have been certified by SBA as an SDB within three
years of the date it seeks to certify as an SDB; (3) have received
certification from the procuring agency that it qualifies as an SDB; or
(4) have submitted an application for SDB certification to the
procuring agency and must not have received a negative determination
regarding that application. For subcontracts, the rule permits a firm
to represent that it
[[Page 57492]]
qualifies as an SDB if it believes in good faith that it is owned and
controlled by one or more socially and economically disadvantaged
individuals.
The rule eliminates current Sec. Sec. 124.1003 through 124.1007
relating to Private Certifiers. When SBA first promulgated regulations
implementing the Government-wide SDB program, SBA anticipated having
entities called ``Private Certifiers'' to assist in processing SDB
applications. The Private Certifier aspect of the SDB program never
materialized. As such, there do not need to be regulations pertaining
to them.
The rule moves the content of current Sec. 124.1008, regarding how
a firm becomes certified as an SDB, to Sec. 124.1003. It also removes
the elaborate procedures for applying to SBA (or a Private Certifier)
to become certified as an SDB. While the procedures are eliminated from
SBA's regulations, SBA expects that some of the substance would be
preserved in any procedures developed by procuring agencies. For
example, the provision requiring individuals who are not members of
groups presumed to be socially disadvantaged to submit statements
identifying personally how their entry into or advancement in the
business world has been impaired due to their having one or more
distinguishing features would be required by individual procuring
agencies that process applications for SDB certification.
Section 124.1004 pertains to misrepresentations of SDB status, and
evolves from current Sec. 124.1011. On a prime contract, a firm that
represents that it is an SDB will be deemed to have misrepresented its
status as an SDB if it (1) is not currently a Participant in the 8(a)
BD program; (2) did not receive an SBA SDB certification within three
years of its representation; (3) has not received an SDB certification
from the procuring agency, or has not applied to the procuring agency
for SDB certification; or (4) has received a negative determination.
For a subcontract, a misrepresentation will occur where there is not a
good faith belief that the firm is owned and controlled by one or more
socially and economically disadvantaged individuals. Any certification
by a firm that SBA found not to qualify as an SDB in connection with an
SDB protest or otherwise will be deemed a misrepresentation of SDB
status if the firm has not overcome the reason(s) for the negative
determination.
The rule also removes current sections 124.1012 and 124.1013.
Because SBA will no longer certify firms as SDBs, provisions relating
to firms reapplying to SBA after receiving a negative determination
similarly will no longer be needed. In addition, other than its list of
certified 8(a) firms, SBA will no longer maintain a list of certified
SDB firms. As such, any references to such a list will be eliminated.
The substance of current Sec. Sec. 124.1014 and 124.1016 is moved
to Sec. Sec. 124.1005 and 124.1006, respectively. Current Sec.
124.1015 is removed as unnecessary.
Finally, under this rule, SBA continues to handle protests and
appeals of SDB status in the same manner as it does currently. The
protest procedures are similar to applying to SBA for SDB
certification. SBA requires the same information and whatever forms or
supporting materials deemed relevant. Current Sec. Sec. 124.1017
through 124.1024 are redesignated as Sec. Sec. 124.1007 through
124.1014, respectively. SBA's final decision in an SDB protest or
appeal is binding on all interested parties. If for example a procuring
agency had found a firm to qualify as an SDB and SBA, through an SDB
protest or appeal, ruled that the firm did not qualify as an SDB, SBA's
decision would overrule the procuring agency determination. In
addition, if in connection with a protest SBA finds that a firm does
not qualify as a SDB for a contract that has been awarded, the
procuring agency cannot take SDB goaling credit for that contract.
II. Justification for Publication as Interim Final Status Rule
In general, SBA publishes a rule for public comment before issuing
a final rule, in accordance with the Administrative Procedure Act and
SBA regulations. 5 U.S.C. 553 and 13 CFR 101.108. The Administrative
Procedure Act provides an exception to this standard rulemaking
process, however, where an agency finds good cause to adopt a rule
without prior public participation. 5 U.S.C. 553(b)(3)(B). The good
cause requirement is satisfied when prior public participation is
impracticable, unnecessary, or contrary to the public interest. Under
such circumstances, an agency may publish an interim final rule without
soliciting public comment.
In enacting the good cause exception to standard rulemaking
procedures, Congress recognized that emergency situations arise where
an agency must issue a rule without public participation. SBA must
cease performing SDB certifications as of September 30, 2008. If this
rule is not effective before that date, SBA might risk a violation of
the Anti-Deficiency Act. SBA does not receive any Congressional funding
for processing applications for SDB certification, but instead seeks
re-imbursement from those Federal Agencies that utilize SBA's
certification in making SDB awards under the Economy Act, (31 U.S.C.
1535). Some of these top 20 procuring agencies have notified SBA that
they will cease reimbursement for the SDB certification services as of
September 30, 2008. The SDB Program is a statutory requirement for only
two agencies, the Coast Guard and the NASA. Other Agencies have
benefited from the SDB price evaluation preference in the past, but
that law expired for most agencies in 2004. In order for an Agency to
order and reimburse for services under the Economy Act, it must receive
a benefit from those services. The benefit most procuring Agencies
receive from the SDB certification services is minimal in their view,
and some have notified SBA that they will not continue reimbursements
in Fiscal Year 2009. Basically, the main residual benefit is for the
procuring agencies to track their SDB goaling requirement in 15 U.S.C.
644(g)(1) (the SDB goal is 5 percent of all prime contract and
subcontract awards for each fiscal year). The loss of so many paying
agencies and the inability of SBA to use its own appropriations to make
up for shortfalls, results in a lack of funding for a viable SDB
certification program. SBA is unable to use its own funds to make up
any shortfall because the SDB Program is not an SBA program; the SDB
program is a government wide service that SBA agreed to provide under
Economy Act through interagency shared funding in 1996. Therefore, SBA
cannot provide these SDB certification services beyond the end of
Fiscal Year 2008 using SBA appropriations.
SBA has 2,814 SDB firms other than 8(a) participants as eligible
solely for SDB status. Without this Interim Final Rule, which will
allow them to self-represent their SDB status in good faith to
Agencies, there will be no way, after SBA ceases certification
services, for Agencies to continue to meet their annual SDB goaling
requirements or for any SDBs that are not certified to be considered
for SDB procurements. It is critical that this rule be issued so these
affected businesses can prepare for the self-representation process.
Accordingly, SBA finds that good cause exists to publish this rule
as an interim final rule in light of the urgent need. Advance
solicitation of comments for this rulemaking would be impracticable and
contrary to the public interest, as it would harm those small
businesses seeking SDB procurements.
[[Page 57493]]
Any such delay would be extremely prejudicial to the affected
businesses.
Although this rule is being published as an interim final rule,
comments are hereby solicited from interested members of the public.
These comments must be received on or before November 3, 2008. SBA may
then consider these comments in making any necessary revisions to these
regulations.
III. Justification for Immediate Effective Date of Interim Final Rule
The APA requires that ``publication or service of a substantive
rule shall be made not less than 30 days before its effective date,
except * * * as otherwise provided by the agency for good cause found
and published with the rule.'' 5 U.S.C. 553(d)(3). SBA finds that good
cause exists to make this final rule effective the same day it is
published in the Federal Register.
The purpose of the APA provision is to provide interested and
affected members of the public sufficient time to adjust their behavior
before the rule takes effect. For the reasons set forth above in II,
Justification of Publication of Interim Final Status Rule, SBA finds
that good cause exists for making this interim final rule effective
immediately, instead of observing the 30-day period between publication
and effective date.
SBA is aware of many entities that will be assisted by the
immediate adoption of this rule.
Compliance with Executive Orders 12866, 12988, 13175, and 13132, the
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork
Reduction Act (44 U.S.C., Ch. 35)
Executive Order 12866
OMB has determined that this rule is significant regulatory action
for purposes of Executive Order 12866. OMB has also determined that
this rule is not major under the Congressional Review Act.
Because this rule is a significant regulatory action, a Regulatory
Impact Analysis, discussing the need, cost, benefits and alternatives
to the rule is required.
1. Is there a need for this regulatory action?
Yes, there is a need for this regulatory action. Under the existing
regulation, SBA is required to perform SDB certification services for
other Agencies. 13 CFR s. 124.1001(c). In addition, the FAR defines an
SDB as a small business that has received certification from SBA as a
SDB consistent with 13 CFR 124, Subpart B. This Interim Final Rule is
necessary since SBA must cease performing SDB certifications as of the
end of Fiscal Year 2008 due to a lack of funding. By the time this
Interim Final Rule has been published, SBA will have initiated a FAR
case to make the conforming changes to the FAR. These changes will
ensure that eligible SDBs will be able to continue to compete for SDB
procurements that Agencies use to meet their SDB statutory goals, as
well as use the SDB price evaluation preference for NASA and Coast
Guard, by self-representing their SDB status. It may also open up other
Agencies using either private SDB certifiers or establishing Agency-
specific SDB programs. In addition, it will allow these SDBs to
continue to participate in the Department of Transportation's (DOTs)
Disadvantaged Business Enterprise Program, 49 CFR 26.5, which has
relied upon the SBA and FAR SDBs status. Moreover, the SBA Office of
Inspector General early on recognized that the current funding
structure for the SDB Program is unreliable and unpredictable and that
there was no legal basis that assured the other Agencies would continue
funding the SDB Program. SBA OIG Audit Report No. 00-19, SDB
Certification Program Obligations and Expenditures. Without continued
interagency funding, SBA is unable to continue to support the existing
rule process by certifying SDBs for the entire Federal Government.
2. What are the potential benefits and costs of this regulatory action?
Currently, SBA has certified only 2,814 firms other than 8(a)
participants as eligible solely for SDB status. From FY 98 through FY
07 SBA has been reimbursed by procuring agencies over $27.5 million for
these SDB certifications. The procuring agencies are obligated to
reimburse SBA another $1.2 million in FY 2008, so total reimbursements
from procuring agencies will exceed $28.7 million since FY 1998.
The SDB procurement goal achievement calculation includes 8(a)
certified firms (9,994) and SDB certified firms (2,814). Firms
certified as 8(a) are also considered to be SDB for statistical
purposes. In FY 2005 Federal agencies reported SDB contracts awarded to
SDBs totaling $21.7 billion. When 8(a) contract award dollars are
subtracted, the contracts awarded to SDBs in dollars totaled $11.2
billion, of which DoD awarded $7.4 billion or 66%. DoD was successful
in awarding this amount without the use of the SDB price evaluation
adjustment. Based on conversations with the other Federal agencies,
virtually all of the remaining SDB dollars, $3.8 billion, were awarded
under full and open competition without the use of the SDB price
evaluation adjustment. During this same period, the Federal Government
exceeded the SDB 5% goal, reaching 6.92%.
The SDB certification process is time consuming and costly for many
small businesses. During the past five years, the Federal Government
has exceeded the statutory 5% SDB goal without the use of the SDB price
evaluation adjustment. Eliminating SDB certification would have little
negative impact on the SDB community as long as self-representation is
allowed. Presently, there is minimal use of the SDB price evaluation
adjustment at the Federal prime contract level. Specifically, Congress
allowed the SDB price evaluation adjustment authority to expire on
December 9, 2004 for all but two agencies. Authority for the two
remaining agencies was reauthorized for another three years to 2009.
However, for the most part these agencies are not using the price
evaluation preference to meet the 5% SDB goal. Therefore, at the prime
contract level, there is little or no benefit for a firm to expend
substantial time and expense to obtain SDB certification.
Therefore, continuation of the existing SDB certification process
is costly, time consuming and burdensome. As opposed to this, self-
representation by firms of their status in good faith is cheaper,
quicker and less burdensome. SBA will continue to provide an appeal
process for contract protests and SDB status. Allowing firms to self
represent at the subcontracting level appears to be consistent with
Congressional intent.
3. What are the alternatives to this rule?
SBA has identified three separate alternatives to this rule: (1)
Self-representation; (2) private certification, and (3) agency specific
SDB certification programs.
We believe self-representation is supported by the relevant
statute. In terms of subcontracting, Sec. 8(d)(3)(F) of the Small
Business Act, 15 U.S.C. 637(d)(3)(F), states: ``Contractors acting in
good faith may rely on written representations by their subcontractors
regarding their status as * * * a small business concern owned and
controlled by socially and economically disadvantaged individuals, * *
* '' (Emphasis added). This language suggests that Congress intended to
allow large business prime contractors to rely on self certifications
by companies claiming to be SDBs. Small business concerns would make
the self-representation as an SDB in good faith and the determination
would be subject
[[Page 57494]]
to SBA SDB protest and appeal procedures.
Private certifiers were contemplated under the existing SBA SDB
regulations, but none were ever approved. 13 CFR 124.1003-.1009.
However, the Private Certifier structure is available if an Agency
wanted to go replicate or approximate those regulations and proceed
with that option. Since a Private Certifier must be compensated by the
Agency hiring them under contract, this option does require a
procurement action and Agency funding and oversight.
Agency-specific SDB certification programs could also be
established by interested Agencies. We believe this would require
rulemaking and the commitment of Agency resources to creation and
maintenance of each Agency's SDB program. SBA will also provide
training and educational assistance on how to implement and administer
a SDB certification program to any interested Agency.
Executive Order 12988
This action meets applicable standards set forth in Sections 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.
Executive Order 13132
For purposes of E.O. 13132, the SBA has determined that the rule
will not have substantial, direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. Therefore, for the purpose of Executive Order 13132,
Federalism, SBA determines that this Interim Final Rule has no
federalism implications warranting preparation of a federalism
assessment.
Executive Order 13175, Tribal Summary Impact Statement
For the purposes of Executive Order 13175, Consultation and
Coordination with Indian Tribal Governments, SBA has determined that
this Interim Final Rule will not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian Tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes.
Paperwork Reduction Act, 44 U.S.C. Ch. 35
SBA has determined that this proposed rule does not impose
additional reporting or recordkeeping requirements under the Paperwork
Reduction Act, 44 U.S.C., Chapter 35.
Regulatory Flexibility Act, 5 U.S.C. 601-612
Because the rule is an interim final rule, there is no requirement
for SBA to prepare an Initial Regulatory Flexibility Act (IRFA)
analysis. The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires
administrative agencies to consider the effect of their actions on
small entities, small non-profit businesses, and small local
governments. Pursuant to the RFA, when an agency issues a rule, the
agency must prepare an IRFA which describes whether the impact of the
rule will have a significant economic impact on a substantial number of
small entities. However, the RFA requires analysis of a rule only where
notice and comment rulemaking are required. Rules are exempt from
Administrative Procedure Act (APA) notice and comment requirements and
therefore from the RFA requirements when the agency for good cause
finds (and incorporates the finding and a brief statement of reasons in
the rules issued) that notice and public procedure thereon is
impracticable, unnecessary, or contrary to the public interest. In this
case it would be contrary to the public interest to delay the
promulgation of the rule.
List of Subjects in 13 CFR Part 124
Administrative practice and procedure, Government procurement,
Hawaiian Natives, Indians--business and finance, Minority businesses,
Reporting and recordkeeping requirements, Technical assistance.
0
For the reasons stated in the preamble, the Small Business
Administration amends title 13 CFR part 124 as follows:
PART 124--8(A) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS
STATUS DETERMINATIONS
Subpart B--Eligibility and Protests Relating to Federal Small
Disadvantaged Business Programs
0
1. The authority citation for part 124 continues to read as follows:
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d) and
Public Law 99-661, Public Law 100-656, sec. 1207, Public Law 101-37,
Public Law 101-574, section 8021, Public Law 108-87, and 42 U.S.C.
9815.
0
2. Revise Sec. 124.1001 to read as follows:
Sec. 124.1001 General applicability.
(a) This subpart defines a Small Disadvantaged Business (SDB). It
also establishes procedures by which SBA determines whether a
particular concern qualifies as an SDB in response to a protest
challenging the concern's status as disadvantaged. Unless specifically
stated otherwise, the phrase ``socially and economically disadvantaged
individuals'' in this subpart includes, Indian tribes, ANCs, CDCs, and
NHOs.
(b) In order for a concern to represent that it is an SDB in order
to receive a benefit as a prime contractor on a Federal Government
procurement, it must:
(1) Be a current Participant, as defined in Sec. 124.3 of this
part, in SBA's 8(a) BD as described in Sec. 124.1 of this part,
program;
(2) Have been certified by SBA as an SDB within three years of the
date it seeks to certify as an SDB;
(3) Have received certification from the procuring agency that it
qualifies as an SDB; or
(4) Have submitted an application for SDB certification to the
procuring agency and must not have received a negative determination
regarding that application.
(c) A firm may represent that it qualifies as an SDB for any
Federal subcontracting program if it believes in good faith that it is
owned and controlled by one or more socially and economically
disadvantaged individuals.
0
3. Revise Sec. Sec. 124.1003 through 124.1006 to read as follows:
Sec. 124.1003 How does a firm become certified as an SDB?
(a) All firms that are current Participants in SBA's 8(a) BD
program are automatically deemed to be certified SDBs.
(b) Any firm seeking to be certified as an SDB in order to
represent that it qualifies and is eligible to obtain a benefit on a
federal prime contract as an SDB may apply to the procuring agency for
such certification.
(c) A procuring agency may accept a certification from another
entity (e.g., a private certifying entity, or a state or local
government) that a firm qualifies as an SDB if the agency deems it
appropriate.
Sec. 124.1004 What is a misrepresentation of SDB status?
(a) Any person or entity that misrepresents a firm's status as a
``small business concern owned and controlled by socially and
economically disadvantaged individuals'' (``SDB status'') in order to
obtain an 8(d) or
[[Page 57495]]
SDB contracting opportunity or preference will be subject to the
penalties imposed by section 16(d) of the Small Business Act, 15 U.S.C.
645(d), as well as any other penalty authorized by law.
(b)(1) A representation of SDB status on a federal prime contract
will be deemed a misrepresentation of SDB status if the firm does not
meet the requirements of Sec. 124.1001(b).
(2) A representation of SDB status on a subcontract to a federal
prime contract will be deemed a misrepresentation of SDB status if the
firm does not have a good faith belief that it is owned and controlled
by one or more socially and economically disadvantaged individuals. Any
certification by a firm that SBA found not to qualify as an SDB in
connection with an SDB protest or otherwise will be deemed a
misrepresentation of SDB status if the firm has not overcome the
reason(s) for the negative determination.
(3) Any representation of SDB status by a firm that SBA has found
not to qualify as an SDB in connection with a protest or SBA-initiated
SDB determination will be deemed a misrepresentation of SDB status if
the firm has not overcome the reason(s) set forth in SBA's written
decision.
Sec. 124.1005 How long does an SDB certification last?
(a) A firm that is certified to be an SDB will generally be
certified for a period of three years from the date of the
certification.
(b) A firm's SDB certification will extend beyond three years where
SBA finds the firm to be an SDB:
(1) In connection with a protest challenging the firm's SDB status
(see Sec. 124.1013(h)(2));
(2) In connection with an SBA-initiated SDB determination (see
Sec. 124.1006); or
(3) As part of an 8(a) BD annual review.
(c) A firm that completes its nine-year program term in the 8(a) BD
program will continue to be deemed a certified SDB firm for a period of
three years from the date of its last 8(a) annual review.
Sec. 124.1006 Can SBA initiate a review of the SDB status of a firm
claiming to be an SDB?
SBA may initiate an SDB determination on any firm that has been
certified to be an SDB by a procuring agency or that has represented
itself to be an SDB on a subcontract to a federal prime contract
whenever it receives credible information calling into question the SDB
status of the firm. Upon its completion of an SDB determination, SBA
will issue a written decision regarding the SDB status of the
questioned firm. If SBA finds that the firm continues to qualify as an
SDB, the determination remains in effect for three years from the date
of the decision.
0
3. Remove Sec. Sec. 124.1007 through 124.1016 and redesignate
Sec. Sec. 124.1017 through 124.1024 as Sec. Sec. 124.1007 through
124.1014, respectively.
Sandy K. Baruah,
Acting Administrator.
[FR Doc. E8-23472 Filed 10-2-08; 8:45 am]
BILLING CODE 8025-01-P