Federal Register, Volume 74 Issue 139 (Wednesday, July 22, 2009)

[Federal Register Volume 74, Number 139 (Wednesday, July 22, 2009)]
[Rules and Regulations]
[Pages 36106-36111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-17323]

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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 115 and 121

RIN 3245-AF94

American Recovery and Reinvestment Act: Surety Bond Guarantees;
Size Standards

AGENCY: U.S. Small Business Administration.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule implements provisions of the American
Recovery and Reinvestment Act of 2009 that pertain to the Surety Bond
Guaranty (SBG) Program. Until September 30, 2010, the U.S. Small
Business Administration (SBA) is authorized to guarantee bonds on
Contracts of up to $5,000,000 (or up to $10 million based upon the
certification of a Federal contracting officer). SBA is further
authorized, until September 30, 2010, to partially deny liability under
its bond guarantee, but cannot deny liability in whole or even in part
on the basis of material facts disclosed to SBA in a guarantee
application submitted under the Prior Approval Program. In addition to
implementing these authorities, this rule also revises the size
standard for participation in the SBG Program, and makes several
changes primarily for clarification purposes.

DATES: This rule is effective July 22, 2009.
Comment Date: Comments must be received on or before August 21,
2009.

ADDRESSES: You may submit comments, identified by RIN: 3245-AF94, by
any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Office of Surety Guarantees, Suite 8600, 409 Third
Street, SW., Washington, DC 20416.
Hand Delivery/Courier: Office of Surety Guarantees, 409
Third Street, SW., Washington, DC 20416.

SBA will post all comments on http://www.regulations.gov. If you wish
to submit confidential business information (CBI) as defined in the
User Notice at http://www.regulations.gov, please submit the
information to Office of Surety Guarantees, 409 Third Street, SW.,
Washington, DC 20416 or send an email to Office of Surety Guarantees.
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 whether it will
publish the information.

FOR FURTHER INFORMATION CONTACT: Barbara J. Brannan, Office of Surety
Guarantees, 202-205-6545.

SUPPLEMENTARY INFORMATION:

I. Background Information.

The American Recovery and Reinvestment Act of 2009 (Recovery Act),
Public Law 111-5, was enacted on February 17, 2009 to, among other
things, promote economic activity by preserving and creating jobs and
assisting those most impacted by the severe economic conditions facing
the nation. The U.S. Small Business Administration is one of several
agencies that will play a role in achieving these goals. As part of its
recovery efforts, SBA will make several changes to the Agency's SBG
program, which will provide an enhanced level of benefits to the small
business contractors and Surety companies that participate in the
program. Under the SBG program SBA guarantees bid, payment and
performance bonds for small contractors who cannot obtain bonds through
regular commercial channels. SBA's guarantee gives Surety Companies an
incentive to provide bonding for small businesses, and thereby assists
small businesses in gaining greater access to contracting
opportunities.
The various modifications to the SBG program as a result of the
Recovery Act are temporary in nature and will expire on September 30,
2010. These modifications include an increase in the amount of the
Contract or Order for which SBA is authorized to guarantee bonds; and
revised standards for denial of liability on claims, and determining
whether the small business contractor qualifies for a Recovery Act
guaranteed bond. This interim final rule implements these changes and
others as described in the following section-by-section analysis.

II. Section-by-Section Analysis

A new defined term, ``Applicable Statutory Limit'', has been added
to Sec. 115.10. Currently, Sec. Sec. 115.12(e)(1) and (3), 115.19(a),
115.31(d) and 115.68 all state that ``$2,000,000'' is the maximum
dollar amount of a Contract for which SBA is authorized to guarantee
bonds. Substitution of ``Applicable Statutory Limit'' for
``$2,000,000'' in each of these provisions will make future amendments
unnecessary each time the statutory limit is revised.
The definition of ``Applicable Statutory Limit'' also makes it
clear that for any particular bond the Applicable Statutory Limit is
the statutory limit in effect at the time a Prior Approval Surety's
request for a bond guarantee is approved by SBA or a Preferred Surety
executes a bond, without regard to any subsequent changes in that
limit. However, if SBA guaranteed a Bid Bond, the Applicable Statutory
Limit for the related Final Bonds, including Ancillary Bonds, is the
one in effect when SBA guaranteed the Bid Bond.
The Recovery Act temporarily raises the Applicable Statutory Limit
from $2,000,000 to $5,000,000 and further authorizes SBA to guarantee
bonds on Federal Contracts in excess of $5,000,000 (up to $10,000,000)
if a Federal contracting officer certifies the need for the guarantee;
but SBA's authority to guarantee bonds on any Contract in excess of
$2,000,000 is scheduled to expire on September 30, 2010. Restrictions
on bond guarantees for Contracts in excess of $2,000,000 are

[[Page 36107]]

described below under the revisions to section 115.12(e) (3).
In addition, a new definition, ``Order'' has been added to Sec.
115.10 in order to make it clear that SBA is authorized to guarantee
bonds on indefinite delivery Contracts (definite quantity, indefinite
quantity, or requirement Contracts), and that task orders or delivery
orders issued under such Contracts will be subject to the same rules as
all other Contracts, except where otherwise stated. This term is also
added to the present definition of ``Contract.''
Section 115.12(b) is revised to remove the reference to the address
of Surety Association of America, which is no longer current. Removal
will make it unnecessary to revise the regulation each time the
Association moves.
Section 115.12(e) is revised to include the new defined term
``Order'' and to address issues involving the determination of the
amount of the Contract. In particular, section 115.12(e)(1) now
clarifies how to determine the Contract amount for fixed price,
requirements, and indefinite quantity Contracts. For fixed price
contracts, the amount of the contract is the price excluding any
options. The amount of the contract, for requirements contracts, is the
price of the total estimated quantity to be ordered. For an indefinite
quantity Contract, the amount of the Contract is the price of the
specified minimum quantity to be ordered and, separately, for each
Order under the indefinite quantity Contract, the price of the Order.
Section 115.12(e)(2) addresses the question of when construction
Contracts and/or Orders for supplies and services should be aggregated
for purposes of determining whether the Principal's total obligation
exceeds the Applicable Statutory Limit.
Regardless of the penal sum of the bond in question, SBA has no
authority to guarantee bonds on any Contract that exceeds the
Applicable Statutory Limit at the time of bond execution. For the
purpose of determining whether SBA's guarantee of a particular bond
would exceed its authority, ``Contract'' means in this context the
Principal's total duty to the Obligee in connection with a single
project, regardless of the number of formally separate contracts,
bonded or not, that set forth the respective obligations of the
Principal and Obligee. Section 115.12(e)(2) addresses this question.
Section 115.12(e)(2)(i) restates SBA's long-standing rule with
respect to construction Contracts in which substantially all the
elements of the respective obligations of the Principal and Obligee--
the project--are known and set forth in considerable detail before the
bonds are executed. If the stated compensation due the Principal does
not then exceed the Applicable Statutory Limit, subsequent
modifications that increase the Contract price will not, as such,
invalidate SBA's guarantee obligation; even modifications that take the
bonded Contract's price over the Applicable Statutory Limit will do no
more than reduce SBA's guarantee percentage. However, if for any reason
the Principal and Obligee choose before the bond is executed to set
forth their respective total obligation in two or more separate
documents, SBA must determine whether they are truly separate Contracts
or parts of the same project. Section 115.12(e)(2)(i) sets forth the
standards governing this determination.
In the case of service or supply Contracts and/or Orders, two or
more separate Contracts or Orders will be aggregated only if it is
determined, following SBA discussion with the contracting official
awarding the Contracts or Orders, that a single Contract or Order could
reasonably have satisfied the Obligee's requirement. Such discussion
with the contracting official might be prompted by the simultaneous
award of two or more Contracts or Orders for the same services or
supplies to the same Principal, multiple awards for the same services
or supplies to the same Principal within a very short timeframe, or a
pattern of such awards to the same Principal over an extended period.
Section 115.12(e)(3) is revised to delete the current text because
the relationship between separate Orders under an indefinite (multi-
year) Contract and the Applicable Statutory Limit is now addressed in
section 115.12(e)(2) and because the relationship between the Contract
or Order Amount and the penal sum of the bond is addressed in Sec.
115.19(a).
SBA has added a new paragraph (3), Contracts or Orders in excess of
$2,000,000, that implements the restrictions on the use of Recovery Act
funds under Section 1604 of the Recovery Act, Public Law 111-5,
February 17, 2009. Section 1604 provides that none of the funds
appropriated or otherwise made available under the Recovery Act may be
used by any State or local government, or any private entity, for any
casino or other gambling establishment, aquarium, zoo, golf course, or
swimming pool. Guidance issued by the Office of Management and Budget
provides that ``[i]n exercising their available discretion to commit,
obligate or expend funds under the Recovery Act for grants and other
forms of Federal financial assistance, executive departments and
agencies, to the extent permitted by law, shall not approve or
otherwise support funding for projects that are similar to those
described in section 1604 of Division A of the Recovery Act.''
(Memorandum for the Heads of Executive Departments and Agencies, March
20, 2009, p. 2. available at http://www.whitehouse.gov/the_press_office/Memorandum-for-the-Heads-of-Executive-Departments-and-Agencies-3-20-09/) Accordingly, SBA bond guarantees that are funded with
Recovery Act funds (i.e., bond guarantees for Contracts greater than $2
million) may not be extended if the Obligee is an entity primarily
engaged in these activities or the work required by the Contract is
part of a project for the construction, renovation, or improvement of
any casino or other gambling establishment, aquarium, zoo, golf course,
or swimming pool.
SBA also has added a new paragraph (4), Federal Contracts or Orders
in excess of $5,000,000, that establishes the process for guarantees of
bonds on such Contracts.
SBA has revised section 115.19 to reflect the Recovery Act's
temporary provisions regarding SBA's authority to deny liability under
its guarantee. The introductory language to section 115.19 is revised
to include SBA's temporarily-granted discretion to deny liability in
part. Under prior law, SBA had no discretion to accept partial
liability. SBA was completely discharged from all liability in the
event of certain circumstances set forth in the Small Business Act, the
regulations or in the general law of contracts and suretyship,
regardless of the circumstances of any particular case. In the case of
a bond guaranteed by SBA between February 17, 2009 and September 30,
2010, inclusive, SBA has discretion to accept liability in part under
circumstances that would previously discharge SBA completely.
Part 121 is revised at section 121.301(d) to incorporate the
Recovery Act provision specifying, for the period starting February 17,
2009 and ending on September 30, 2010, that a concern is small only if
it, together with its affiliates, meets the size standard corresponding
to the NAICS code for the primary industry in which such business
concern together with its affiliates is engaged. Section 508 of the
Recovery Act amended Section 410 of the Small Business Investment Act
by adding a new, but temporary, size standard for this program,
prefaced by the words ``Notwithstanding any other provision of law or
any rule, regulation,

[[Page 36108]]

or order of the Administration * * *.'' Accordingly, subparagraphs
(d)(1), (2) and (3) are temporarily superseded.

III. Justification for Publication as Interim Final Rule.

In general, before issuing a final rule, SBA publishes the rule for
public comment in accordance with the Administrative Procedure Act
(APA), 5 U.S.C. 553. The APA provides an exception from the general
rule where the agency finds good cause to omit public participation. 5
U.S.C. 553(c)(3)(B). The good cause requirement is satisfied when prior
public participation can be shown to be impracticable, unnecessary, or
contrary to the public interest. Under such circumstances, an agency
may publish an interim final rule without first 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. The current
turmoil in the financial markets is having a negative effect on the
availability of financing for small business, including diminished
access to the commercial surety bond market. The bonding capacity of
surety companies is substantially reduced, making them more risk-
averse; and small concerns that were formerly acceptable risks are now
seen as questionable. To enable these small concerns to continue to
obtain the bonding they formerly obtained in the commercial market
Congress has temporarily expanded the surety bond guarantee program.
The beneficial effects of this expansion on these small concerns and on
the sureties that will bond them are obvious. Less obviously, but no
less significantly, the parties that will contract with them for goods
and services will benefit because they will be obtaining these goods
and services at the lowest price.
SBA finds that good cause exists to publish this rule as an interim
final rule in light of the urgent need to help small businesses sustain
and survive during this economic downturn. Advance solicitation of
comments for this rulemaking would be impracticable and contrary to the
public interest.
Although this rule is being published as an interim final rule,
comments are solicited from interested members of the public. These
comments must be submitted on or before August 21, 2009. SBA will
consider these comments and the need for making any amendments as a
result of these comments.

IV. Justification for Immediate Effective Date

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). The purpose of this
provision is to provide interested and affected members of the public
sufficient time to adjust their behavior before the rule takes effect.
SBA finds that there is good cause for making this rule effective
immediately instead of observing the 30-day period between publication
and effective date. The provisions of this rule relating to SBA's
authority to guarantee bonds on Contracts in excess of $2,000,000, its
authority to accept partial liability on its guarantee, and its
authority to deny liability when a Prior Approval Surety's applications
has set forth the material facts upon which a denial would be based,
will expire on September 30, 2010. The statutory authority for the size
standard this rule establishes will also expire on September 30, 2010.
These provisions do not require any adjustment to the public's
behavior; moreover, delaying implementation of the rule could have
serious impact on the nation's small businesses 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).

Executive Order 12866

The Office of Management and Budget (OMB) has determined that this
rule constitutes a significant regulatory action for purposes of
Executive Order 12866.

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. This rule has no
preemptive effect and is retroactive only to the extent that certain of
the changes required by the Recovery Act will apply to bond guarantees
issued on or after February 17, 2009--before the effective date of this
interim final rule.

Executive Order 13132

This rule does not have federalism implications as defined in
Executive Order 13132. It 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 layers of government, as specified in the Executive Order. As
such it does not warrant the preparation of a Federalism Assessment.

Paperwork Reduction Act

SBA has determined that this rule imposes additional reporting and
recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C.
Chapter 35, which require amendment to an existing information
collection, Surety Bond Guarantee Assistance, OMB Control
3245-0007. This information collection is currently used to
gather information necessary for processing applications for bond
guarantees and requests for claim reimbursement. As a result of the
Recovery Act changes to the SBG program, this information collection
will be modified to collect additional information that will enable SBA
to determine whether Recovery Act funds can be used for cost of bond
guarantees, and also to track the use of those funds to meet reporting
requirements under the Recovery Act. The information collection
currently consists of 6 forms. These forms are available in paper and
electronic formats. SBA will modify 3 of these forms and add a new form
to the collection:
(1) Form 990, Surety Bond Guarantee Agreement and Form will be
modified to add language to the certification portion of the form. This
language is intended to ensure that the bond guarantee is not approved
for a small business that is performing work for an obligee or on a
contract that is related to the restricted uses of funds included in
the Recovery Act, including casinos or other gambling establishments,
aquariums, zoos, golf courses, or swimming pools.
(2) On Form 994, Application for Surety Bond Guarantee Assistance,
the small business's DUNS number is now being collected in Part I
(Business Information) to provide data necessary for Federal Funding
Accountability and Transparency Act reporting; the contract NAICS code,
number of employees and number of jobs created and retained is being
added to Part III (Contract Information) to provide statistical data
that would enable SBA to report clearly on Recovery Act bonds versus
non Recovery Act bonds; and language in Parts II (Principal
Information) and V (Applicant's Certification) is being modified for
clarification purposes.
(3) Form 994H, Default Report, Claim Reimbursement and Record of
Administrative Action, is also being modified to add a certification
regarding the Surety's compliance with SBG

[[Page 36109]]

program regulations and other requirements, including the Recovery Act
requirements.
(4) A new form, 994R, Application for Surety Bond Guarantee--Under
the Recovery and Reinvestment Act--is also being added to the
collection. This form is essentially a rider to Form 994, and will be
completed only if the bond is related to the Recovery Act, determined
if the original contract amount is over $2 million. The additional
information collected on this rider is needed to fulfill reporting
requirements on the outcomes and metrics related to the Recovery Act.
The information that will be collected on this rider includes a
disclosure about contract amounts in excess of $5 million, and whether
certification has been obtained from the applicable Contracting Officer
regarding such contract amounts. The rider also requires the small
business applicant to assert whether contract involves construction,
renovation, or operation of a casino or other gambling establishment,
golf course, zoo, aquarium or swimming pool.
SBA has submitted this information collection to the Office of
Management and Budget (OMB) for review and approval under the emergency
processing procedures in 5 CFR 1320.13. If OMB approves the request for
emergency approval, SBA will submit this information collection for
standard review following the emergency approval period. Any comments
received as a result of this publication will be addressed at that
time.
The title, description and number of respondents, estimated annual
cost and hour burdens imposed on the respondents as a result of this
collection of information are outlined below. SBA invites comments on:
(1) Whether the changes to the described collection of information are
necessary for the proper performance of SBA's operation of the Surety
Bond program, including whether the information will have practical
utility; (2) the accuracy of SBA's estimate of the burden of the
collection of information; (3) ways to enhance the quality, utility and
clarity of the information to be collected; and (4) ways to minimize
the burden of the collection of information on respondents, including
through the use of automated techniques, when appropriate, and other
forms of information technology.
Please send comments by the closing date for this interim final
rule to SBA Desk Officer, Office of Management and Budget, Office of
Information and Regulatory Affairs, 725 17th Street, NW., Washington,
DC 20503, and to Barbara J. Brannan, Office of Surety Guarantees, Small
Business Administration, 409 Third Street, SW., Washington, DC 20416.
Title: Surety Bond Guarantee Assistance.
OMB Control Number: 3245-0007.
Form Numbers--SBA Forms, 990, 991, 994, 994B, 994F and 994H,
[Current] and Form 994R [New].
Description of Respondents: (i) The small business contractor
completes Forms 991, 994, 994F, and 994--Rider; (ii) The Surety Agent
completes Forms 990, 994B, and 994H.
Total Estimated Number of Respondents for all forms: 1,050: (Small
businesses--700; Surety Agents--350).
Frequency of Responses: On occasion--per application for guarantee
on surety bond, or for claim reimbursement.
Total Estimated Number of Responses for all forms: 17,965. This
estimate reflects an increase of 49 bonds using Recovery Act funds
(i.e., bonds for Contracts or Orders in excess of $2M and up to $10M).
Total Estimated Hour Burden: 2,001. This total reflects an
estimated increase of 42 hours due to the changes pursuant to the
Recovery Act.

Regulatory Flexibility Act

Because this rule is an interim final rule, there is no requirement
for SBA to prepare a Regulatory Flexibility Act (RFA) analysis. The RFA
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 analysis that describes whether the impact of the
rule will have a significant impact on a substantial number of small
entities. However, the RFA requires such analysis only where notice and
comment rulemaking is required.

List of Subjects

13 CFR Part 115

Claims, Guarantee authority, Surety bond guarantees.

13 CFR Part 121

Size eligibility provisions and standards.

0
For the reasons stated in the preamble, SBA amends 13 CFR parts 115 and
121 as follows:

PART 115--SURETY BOND GUARANTEE

0
1. The authority citation for 13 CFR part 115 is revised to read as
follows:

Authority: 5 U.S.C. app. 3, 15 U.S.C. 687b, 687c, 694a, 694b,
694b note, Pub. L. 106-554; and Pub. L. 108-447, Div. K, Sec. 203.

0
2. Amend Sec. 115.10 as follows:
0
(a) Revise the first sentence of the definition of the word
``Contract''; and
0
(b) Add new definitions of ``Applicable Statutory Limit'' and ``Order''
in alphabetical order.

Sec. 115.10 Definitions.

* * * * *
Applicable Statutory Limit means the maximum amount of any
Contract, or Order, for which Section 411(a) of the Small Business
Investment Act, as amended from time to time, authorizes the SBA to
guarantee, or commit to guarantee, a Bid Bond, Payment Bond,
Performance Bond, or Ancillary Bond. The Applicable Statutory Limit
from February 17, 2009 through September 30, 2010, is $5,000,000;
provided, however, that during this period the Applicable Statutory
Limit is $10,000,000 for a particular Contract or Order if a
contracting officer of a Federal agency certifies in writing that a
guarantee in excess of $5,000,000 is necessary.
* * * * *
Contract means a written obligation of the Principal, including an
Order, requiring the furnishing of services, supplies, labor,
materials, machinery, equipment, or construction. * * *
* * * * *
Order means a task order for services or delivery order for
supplies issued under an indefinite delivery Contract (definite
quantity, indefinite quantity, or requirements).
* * * * *

0
3. Amend Sec. 115.12 by revising paragraphs (b) and (e), to read as
follows:

Sec. 115.12 General program policies and provisions.

* * * * *
(b) Eligibility of bonds. Bid Bonds and Final Bonds are eligible
for an SBA guarantee if they are executed in connection with an
eligible Contract, as defined in Sec. 115.10, Definitions, and are of
a type listed in the ``Contract Bonds'' section of the most recent
Manual of Rules, Procedures, Classifications of the Surety Association
of America. Ancillary Bonds may also be eligible for SBA's guarantee. A
performance bond must not prohibit a Surety from performing the
Contract upon default of the Principal.
* * * * *
(e) Amount of Contract--(1) Determination of Amount of Contract.
For a fixed price Contract, the amount

[[Page 36110]]

of the Contract is the price excluding any options. For a requirements
Contract, the amount of the Contract is the price of the total
estimated quantity to be ordered under the Contract. For an indefinite
quantity Contract, the amount of the Contract is the price of the
specified minimum quantity to be ordered under the Contract and, for
each Order issued under such Contract, the price of each such Order.
The amount of the Contract or Order to be bonded must not exceed the
Applicable Statutory Limit as of the date:
(i) SBA approves a Prior Approval Surety's request for a Bid Bond
guarantee;
(ii) A Preferred Surety Executes a Bid Bond; or
(iii) The date Final Bonds (and any Ancillary Bonds) unrelated to
an SBA-guaranteed Bid Bond are Executed by a Preferred Surety or by a
Prior Approval Surety following SBA's approval of its request for a
guarantee of Final Bonds.
(2) Aggregation of Contract and Order amounts. (i) The amounts of
two or more formally separate Contracts for a single construction
project are aggregated to determine the Contract amount unless the
Contracts are to be performed in phases and the prior bond is released
before the beginning of each succeeding phase. A bond may be considered
released even if the warranty period it is covering has not yet
expired. For purposes of this paragraph, a ``single construction
project'' means one represented by two or more Contracts of one
Principal or its Affiliates with one Obligee or its Affiliates for
performance at the same location, regardless of job title or nature of
the work to be performed.
(ii) The amounts of two or more Contracts or Orders for supplies
and services awarded to the same Principal or its Affiliates are
aggregated to determine the Contract or Order amount if SBA determines,
after discussion with the contracting official responsible for the
award of the contract, that award of a single Contract or Order could
reasonably have satisfied the supply or service requirement at the time
of issuance.
(3) Contracts or Orders in excess of $2,000,000. SBA is not
authorized to guarantee bonds on Contracts or Orders in excess of
$2,000,000 if the statement of work involves, directly or indirectly,
construction, operation, renovation or improvement of a casino or other
gambling establishment, aquarium, zoo, golf course or swimming pool, or
the Contract Obligee has one of the following NAICS codes:
(i) 713210--``Casinos (Except Casino Hotels)'';
(ii) 721120--``Casino Hotels'';
(iii) 713290--``Other Gambling Industries'';
(iv) 713910--``Golf Courses and Country Clubs'';
(v) 712130--``Zoos and Botanical Gardens''; or
(vi) 713940--``Fitness and Recreational Sports Centers'' if SBA
determines the business is a swimming pool.
(4) Federal Contracts or Orders in excess of $5,000,000. Through
September 30, 2010, SBA is authorized to guarantee bonds on Federal
Contracts or Orders greater than $5,000,000, and up to $10,000,000,
upon a signed certification of a Federal contracting officer. The
contracting officer's certification must include a statement that the
small business is experiencing difficulty obtaining a bond and that an
SBA bond guarantee would be in the best interests of the Government.
The certification must be express mailed to SBA, Office of Surety
Guarantees, 409 Third Street, SW., Suite 8600, Washington, DC 20416, or
faxed to the Office of Surety Guarantees at 202-481-0390, with a copy
provided to the small business, and must include the following
additional information:
(i) Name, address and telephone number of the small business;
(ii) Offer or Contract number and brief description of the
contract; and
(iii) Estimated Contract value and date of anticipated award
determination.
* * * * *

0
4. Amend Sec. 115.19 by revising the introductory text and paragraph
(a) to read as follows:

Sec. 115.19 Denial of liability.

Except for bonds executed on or after February 17, 2009 and before
October 1, 2010, in addition to equitable and legal defenses and
remedies under contract law, the Act, and the regulations in this part,
SBA is relieved of liability if any of the circumstances in paragraphs
(a) through (h) of this section exist. For bonds executed on or after
February 17, 2009 and before October 1, 2010, SBA is relieved of
liability in whole or in part within its discretion under those
circumstances, except that SBA shall not deny liability on Prior
Approval bonds executed during such timeframe based solely upon
material information that was provided as part of the guarantee
application.
(a) Excess Contract or bond amount. The total Contract or Order
amount at the time of Execution of the bond exceeds the Applicable
Statutory Limit (see Sec. 115.10) or the bond amount at any time
exceeds the total Contract or Order amount.
* * * * *

0
5. Amend Sec. 115.31 by revising the heading and first sentence of
paragraph (d), and revising paragraph (e), to read as follows:

Sec. 115.31 Guarantee percentage.

* * * * *
(d) Contract or Order increases exceed Applicable Statutory Limit.
If the Contract or Order amount is increased above the Applicable
Statutory Limit after Execution of the bond, SBA's share of the Loss is
limited to that percentage of the increased Contract or Order amount
that the Applicable Statutory Limit represents multiplied by the
guarantee percentage approved by SBA. * * *
(e) Contract or Order decrease to $100,000 or less. If the Contract
or Order amount decreases to $100,000, or less, after Execution of the
bond, SBA's guarantee percentage increases to 90% if the Surety
provides SBA with evidence supporting the decrease and any other
information or documents requested.

0
6. Section 115.68 is revised to read as follows:

Sec. 115.68 Guarantee percentage.

SBA reimburses a PSB Surety in an amount not to exceed 70% of the
Loss incurred and paid. Where the total Contract or Order amount
increases beyond the Applicable Statutory Limit after Execution of the
bond, SBA's share of the Loss is limited to that percentage of the
increased Contract or Order amount which the statutory limit
represents, multiplied by the guarantee percentage approved by SBA. For
an example, see Sec. 115.31(d).

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for 13 CFR Part 121 is revised to read as
follows:

Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, 662(5)
and 694a; and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.

0
2. Amend Sec. 121.301 by adding a new paragraph (d)(4) to read as
follows:

Sec. 121.301 What size standards are applicable to financial
assistance programs?

* * * * *
(4) Notwithstanding paragraphs (d) (1), (2) and (3) of this
section, from February 17, 2009 through September 30, 2010, a concern
is small only if it is a business concern that, combined with its
affiliates, does not exceed the size standard designated for the
primary

[[Page 36111]]

industry of the business concern combined with its affiliates.
* * * * *

Dated: July 16, 2009.
Karen Gordon Mills,
Administrator.
[FR Doc. E9-17323 Filed 7-17-09; 11:15 am]
BILLING CODE 8025-01-P