[Federal Register Volume 79, Number 122 (Wednesday, June 25, 2014)]
[Proposed Rules]
[Pages 35963-35966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14337]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AG59
Advisory Small Business Size Decisions
AGENCY: Small Business Administration.
ACTION: Proposed rule.
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SUMMARY: This rule proposes to implement provisions of the National
Defense Authorization Act of 2013 (NDAA) pertaining to small business
size. Specifically, the rule proposes to amend the Small Business
Administration's (SBA or Agency) program regulations to implement
statutory provisions establishing a safe harbor from fraud penalties
for individuals or firms that misrepresent business concerns as being
small for purposes of Federal procurement opportunities if they acted
in good faith reliance upon small business status advisory opinions
received from Small Business Development Centers (SBDCs) or Procurement
Technical Assistance Centers (PTACs). The rule also proposes to amend
SBA's regulations to establish the criteria small business status
advisory opinions must meet in order to be deemed adequate and specify
the review process for such opinions. Finally, the proposed rule would
amend SBA's regulations to update the circumstances under which SBA may
initiate a formal size determination.
DATES: Comments must be received on or before August 25, 2014.
ADDRESSES: You may submit comments, identified by RIN: 3245-AG59,
[Docket Number: SBA-2014-0007] by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail or Hand Delivery/Courier: Dean R. Koppel, Assistant
Director, Office of Policy and Research, Office of Government
Contracting, U.S. Small Business Administration, 409 3rd Street SW.,
8th Floor, Washington, DC 20416.
All comments will be posted 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 Dean R.
Koppel, Assistant Director, Office of Policy and Research, Office of
Government Contracting, U.S. Small Business Administration, 409 3rd
Street SW., 8th floor, Washington, DC 20416, or send an email to
[email protected]. Highlight the information that you consider to be
CBI and explain why
[[Page 35964]]
you believe SBA should hold this information as confidential. SBA will
review the information and make the final determination whether it will
make the information public.
FOR FURTHER INFORMATION CONTACT: Dean R. Koppel, Assistant Director,
Office of Policy and Research, Office of Government Contracting, U.S.
Small Business Administration, 409 3rd Street SW., 8th Floor,
Washington, DC 20416; (202) 205-7322; [email protected].
SUPPLEMENTARY INFORMATION: On January 2, 2013, Congress amended the
Small Business Act to provide that the penalties created under 15
U.S.C. 645(a) for misrepresentation of a firm as a small business
concern do not apply to individuals or firms that act in good faith
reliance upon small business status advisory opinions they receive from
SBDCs or PTACs. Additionally, the Small Business Act was amended to
give responsibility for reviewing, accepting, or rejecting these small
business status advisory opinions to SBA's Office of General Counsel.
Finally, the Small Business Act was further amended to require that SBA
promulgate regulations to implement this safe harbor provision no later
than 270 days after the date of passage of the statutory amendment.
This rule proposes to make a number of changes to SBA's size
regulations. Some of the changes involve technical issues. Other
changes are more substantive and result from SBA's experience in
implementing the current regulations.
The following three specific changes are being proposed to SBA's
size regulations.
Exemption From Penalties for Misrepresentation of Size Status
Section 1681 of the NDAA requires that SBA create an exemption to
the penalties imposed under 15 U.S.C. 645(a) for misrepresentation of
small business status in cases where the person or concern making the
misrepresentation acted in good faith reliance on a written advisory
opinion from an SBDC or PTAC. SBA's first proposed change is to
implement the statutory requirement at section 1681 of the NDAA by
changing SBA's small business size regulations.
Small Business Status Advisory Opinions
The second proposed change to the small business size rules is to
define what constitutes an adequate small business status advisory
opinion.
Circumstances in Which SBA May Request a Formal Size Determination
The third proposed change to the size rules pertains to the
circumstances under which SBA officials may request formal size
determinations. Current Sec. 121.1001(b)(9) references the Central
Contractor Registry, a procurement related federal government database
that has been replaced by the System for Award Management. The proposed
change clarifies the stated purpose of this provision and updates it to
refer to the System for Award Management.
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
The Office of Management and Budget (OMB) has determined that this
proposed rule does not constitute a significant regulatory action under
Executive Order 12866, and as a result a regulatory impact analysis is
not required.
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 Executive Order 13132, SBA has determined that this
proposed 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 proposed rule has no
federalism implications warranting preparation of federal assessment.
Executive Order 13175
For purposes of Executive Order 12175, SBA has determined that this
proposed rule will not have substantial direct effects 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. Therefore, for the
purpose of Executive Order 13175, Consultation and Coordination with
Indian Tribal Governments, SBA determines that this proposed rule does
not require consultations with tribal officials or warrant the
publication of a Tribal Summary Impact Statement.
Executive Order 13563
As part of its ongoing efforts to engage stakeholders in the
development of its regulations, SBA consulted with representatives from
both industry and the general public to review the intent of the
proposed rule and various components related to it. No concerns were
raised during those calls and no comments were raised that needed to be
addressed in this proposed rule.
Initial Regulatory Flexibility Analysis, 5 U.S.C. 601-612
This rule, if finalized, may have a significant impact on a
substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601-612. In accordance with 5
U.S.C. 603(b), SBA sets forth an initial regulatory flexibility
analysis (IRFA) of this proposed rule addressing the following topics:
(1) The legal basis, need for, and objective of the rule; (2) a
description and estimate of the number of small entities to which the
rule will apply; (3) the projected reporting, record keeping, and other
compliance requirements of the rule; (4) the relevant Federal rules
which may duplicate, overlap or conflict with the rule; and (5) any
significant alternatives that would allow the Agency to accomplish its
regulatory objectives while minimizing the impact on small entities.
1. What is the legal basis, need for, and objective of the rule?
Pursuant to section 1681 of Public Law 112-239, SBA is statutorily
required to publish a regulation granting an exemption from the
misrepresentation penalties imposed under 15 U.S.C. 645(a) in cases
where a party's erroneous claim to small business status stems from its
good faith reliance upon an advisory opinion issued by an SBDC or PTAC.
SBA is also obligated under section 1681 to define via regulation what
constitutes an adequate advisory opinion and to review and accept or
reject all advisory opinions issued by SBDCs and PTACs. In addition to
giving effect to these statutory mandates, the proposed rule also
establishes the procedures and timeline by which SBA will review
advisory opinions.
2. What is SBA's description and estimate of the number of small
entities to which the rule will apply? Because SBA's programs do not
apply to small governmental jurisdictions or small organizations, only
small businesses will be affected by this proposed rule.
[[Page 35965]]
Additionally, the proposed rule will not apply to all small businesses
generally, but only to those firms that represent themselves as being
small for purposes of federal procurement opportunities.
The safe harbor provision of the proposed rule will only affect
those firms that incorrectly claim status as small business concerns
after obtaining small business status advisory opinions from SBDCs or
PTACs. In Fiscal Year 2010, SBA determined that approximately 150 firms
that had represented themselves as being small for purposes of federal
procurement opportunities were not small. Most of these cases did not
involve fraud, but instead were the result of errors or
misunderstandings of the size regulations. To date, SBA is unaware of
any firms being penalized under 15 U.S.C. 645(a) for fraudulently
misrepresenting themselves as small business concerns. Therefore, SBA
anticipates that the safe harbor provision of the proposed rule will
impact very few concerns.
With regard to the small business status advisory opinion provision
of the proposed rule, SBA notes that neither SBDCs nor PTACs are
required to provide such opinions under the language of the statute. It
is currently unknown how many SBDCs and PTACs will elect to provide
such services, particularly given that no additional funding will be
awarded to them to cover the cost of these services. Moreover, it is
unclear how much demand there will be for such services from those
SBDCs and PTACs that offer them. While it is thus impossible to gauge
the number of small businesses that will obtain these services, SBA
anticipates that very few concerns will be affected by the small
business status advisory opinion provision of the proposed rule.
3. What are the projected reporting, record keeping, and other
compliance requirements of the rule and an estimate of the classes of
small entities which will be subject to the requirements? There would
be no additional reporting or recordkeeping requirements imposed by the
rule, but there would be certain minor compliance requirements.
Businesses that believe themselves to be small and that wish to receive
advisory opinions to that effect from SBDCs or PTACs would be required
to provide information documenting the basis for that belief to SBDCs
or PTACs and attest to its accuracy.
4. What are the relevant Federal rules which may duplicate, overlap
or conflict with the rule? The Federal Acquisition Regulation (FAR)
defers to and incorporates the substance of the provisions set forth in
SBA's regulations for issues pertaining to business size. To the extent
the FAR is inconsistent with size rules implemented by SBA, the FAR
would need to be changed to be consistent.
5. Are there any significant alternatives that would allow the
Agency to accomplish its regulatory objectives while minimizing the
impact on small entities? SBA has considered a number of alternatives
to the proposed rule. One alternative SBA has considered would have
permitted firms to simply self-certify to SBDCs or PTACs that they are
small. Another alternative SBA considered would have had the General
Counsel review the SBDC or PTAC advisory opinions rather than the
Associate General Counsel, Office of Procurement Law. SBA has not
proposed the first alternative because it would render any advisory
opinion pro forma and would not provide the Agency with any basis for
accepting or rejecting the opinion. With regard to the second
alternative, SBA did not propose it given the substantial time demands
already placed upon the General Counsel. SBA believes that delegating
this responsibility to the Associate General Counsel, Office of
Procurement Law would permit the Agency to provide a quicker turnaround
time for reviewing advisory opinions and would take advantage of the
established subject matter expertise of that official. SBA is very
interested in comments from the public on these issues.
Paperwork Reduction Act, 44 U.S.C. Ch. 35
SBA has determined that this proposed rule imposes no additional
reporting or recordkeeping requirements under the Paperwork Reduction
Act, 44 U.S.C., Chapter 35.
List of Subjects in 13 CFR Part 121
Administrative practice and procedure, Reporting and recordkeeping
requirements, Small businesses.
For the reasons set forth in the preamble, SBA proposes to amend 13
CFR part 121 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for part 121 is revised to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644 and
662(5); and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.
0
2. Amend Sec. 121.108 by revising the section heading and adding
paragraph (e)(4) to read as follows:
Sec. 121.108 What are the penalties for misrepresentation of size
status?
* * * * *
(e) * * *
(4) Limitation of Liability. An individual or business concern will
not be subject to the penalties imposed under 15 U.S.C. 645(a) where it
acted in good faith reliance on a small business status advisory
opinion accepted by SBA under Sec. 121.109.
Sec. 121.109 [Redesignated as Sec. 121.110]
0
3. Redesignate Sec. 121.109 as Sec. 121.110.
0
4. Add new Sec. 121.109 to read as follows:
Sec. 121.109 What is a small business status advisory opinion?
(a) Defined. A small business status advisory opinion is a written
opinion issued by either a Small Business Development Center (SBDC)
operating under part 130 of this chapter or a Procurement Technical
Assistance Center (PTAC) operating under 10 U.S.C. Chapter 142 which
concludes that a firm is entitled to represent itself as a small
business concern for purposes of federal government procurement
opportunities.
(b) Submission. An SBDC or PTAC must submit a copy of each small
business status advisory opinion it issues to the following Agency
official for review: Associate General Counsel, Office of Procurement
Law, U.S. Small Business Administration, 409 Third Street SW.,
Washington, DC 20416 or by fax to (202) 205-6390 marked Attn: Small
Business Status Advisory Opinion. A small business status advisory
opinion must:
(1) Include the name, address, Employer Identification Number or
Dun & Bradstreet Number, and one or more principals of the covered
concern.
(2) Identify the individual NAICS code(s) and accompanying size
standard(s) to which the advisory opinion applies.
(3) A determination that the covered concern does not exceed the
size standard(s) dated and signed by a counselor or similarly qualified
employee of an SBDC or PTAC.
(4) Include, as an attachment, copies of the evidence provided by
the covered concern to the SBDC or PTAC clearly documenting its annual
receipts and/or number of employees as those terms are defined by
Sec. Sec. 121.104 and 121.106.
(5) Include, as an attachment, a written statement signed by at
least one principal of the concern affirming that all the information
provided to the SBDC or PTAC for the purpose of obtaining the small
business status advisory opinion is, to the best of his/
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her knowledge, true, accurate, and complete.
(c) Review. Unless a referral is made under paragraph (e) of this
section, SBA will decide within 10 business days of receiving a small
business status advisory opinion to accept or reject it based on its
consistency with this part. SBA will provide written notification of
that decision to the SBDC or PTAC that issued the small business status
advisory opinion as well as to the covered concern.
(d) Reliance. A concern that receives a small business status
advisory opinion holding that it does not exceed the applicable size
standard(s) may rely upon that determination for purposes of responding
to federal procurement opportunities from the date it is issued unless
and until that advisory opinion is rejected by SBA in accordance with
paragraph (c) of this section or Sec. 121.1009.
(e) Referral for Size Determination. Nothing in this section
precludes SBA from requesting a formal size determination for a concern
that is the subject of a small business status advisory opinion
pursuant to Sec. 121.1001(b)(9).
0
5. Amend Sec. 121.1001 by revising paragraph (b)(9) to read as
follows:
Sec. 121.1001 Who may initiate a size protest or request a formal
size determination?
* * * * *
(b) * * *
(9) For other purposes related to protecting the integrity of the
Federal procurement process, including validating that firms listed in
the System for Award Management database are small and firms can rely
upon advisory size status opinions, the Government Contracting Area
Director or the Director, Office of Government Contracting may initiate
a formal size determination when sufficient information exists that
calls into question a firm's small business status. The current date
will be used to determine size, and SBA will initiate the process to
remove from the database the small business designation of any firm
found to be other than small.
* * * * *
Maria Contreras-Sweet,
Administrator.
[FR Doc. 2014-14337 Filed 6-24-14; 8:45 am]
BILLING CODE 8025-01-P