[Federal Register Volume 77, Number 75 (Wednesday, April 18, 2012)]
[Rules and Regulations]
[Pages 23369-23370]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-9204]
[[Page 23369]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 6, 15, and 19
[FAC 2005-58; FAR Case 2009-038; Item III; Docket 2010-0095, Sequence
1]
RIN 9000-AL55
Federal Acquisition Regulation; Justification and Approval of
Sole-Source 8(a) Contracts
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: DoD, GSA, and NASA are adopting as final, without change, an
interim rule amending the Federal Acquisition Regulation (FAR) to
implement a section of the National Defense Authorization Act for
Fiscal Year 2010. This section requires the head of an agency to
execute and make public prior to award, the justification for an 8(a)
sole-source contract in an amount exceeding $20 million.
DATES: Effective Date: April 18, 2012.
FOR FURTHER INFORMATION CONTACT: Mr. Karlos Morgan, Procurement
Analyst, at 202-501-2364, for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at 202-501-4755. Please cite FAC 2005-58, FAR Case 2009-
038.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published an interim rule in the Federal
Register at 76 FR 14559 on March 16, 2011, to implement section 811 of
the National Defense Authorization Act for Fiscal Year 2010 (NDAA for
FY 2010) (Pub. L. 111-84). Section 811 prohibits the award of a sole-
source contract in an amount over $20 million under the 8(a) Business
Development Program authority (15 U.S.C. 637(a)) without first
obtaining a written Justification and Approval (J&A) approved by an
appropriate official and making public the J&A and related information.
Section 811 does not institute any requirement for J&As for sole-source
8(a) contracts less than or equal to $20 million. Nine respondents
submitted comments on the interim rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule. A discussion of the comments is provided
as follows:
A. Summary of Significant Changes
There were no changes made to the FAR as a result of the public
comments received.
B. Analysis of Public Comments
1. General Support for the Rule as Written
Comment: A majority of the respondents were supportive of the rule
as written and recommended there be no substantial changes to the
interim rule.
Response: The Councils acknowledge receipt of these comments in
support of the rule.
2. Statutory Basis for the Rule
Comment: A number of respondents commented that there is no
statutory basis for the new language at FAR 19.808-1(a), which states
that the Small Business Administration (SBA) may not accept a sole-
source 8(a) contract in excess of $20 million for negotiation, unless
the requesting agency has completed a J&A in accordance with FAR 6.303.
The respondents recommended amending this language in the final rule to
clarify that the J&A is only required to be developed and executed
prior to award and after coordinating and negotiating with the SBA (or
the 8(a) participant where SBA has delegated its authority to the
procuring agency).
Response: The law stipulates that the head of the agency may not
award a sole-source contract that exceeds $20 million under the 8(a)
program unless the contracting officer justifies the use of a sole-
source contract in writing and the justification is approved by the
appropriate official. However, the law does not specify the precise
stage in the contract award process when the J&A must be executed. The
language that was added to FAR 19.808-1 ensures that the J&A is
executed prior to contract negotiation, a critical juncture in the
contract award continuum. Contract negotiation, with rare exception,
occurs before the contract is awarded; therefore there is no conflict
with the law.
Execution of the J&A prior to the SBA's initiation of contract
negotiations adheres to the established procedures in the FAR that
require (1) at FAR 6.303-1, the contracting officer to justify the use
of a sole-source contract in writing prior to negotiations; and (2) at
FAR 19.804-2, the agency, if appropriate, to request in its offering
letter to the SBA, that a requirement with a contract value over the
applicable competitive threshold be awarded as a sole-source contract
under the 8(a) program. The language that was added at FAR 19.808-1
does not pre-empt the obligation of agencies to cooperate with the SBA
in determining the extent to which a requirement should be offered in
support of the 8(a) program, nor does it impact SBA's acceptance of the
requirement into the 8(a) program. It does not affect the timing of
SBA's eligibility determination.
3. Including the Value of Options in Contract Value
Comment: Several respondents recommended that the $20 million
threshold be applicable to the base year only, rather than including
options in the total contract value.
Response: The standard contract action valuation practice is
outlined in FAR 1.108(c), which provides that the final anticipated
dollar value of an action include the dollar value of all options.
Section 811 does not provide a basis to diverge from this standard.
4. Cross Reference at FAR 6.204(b)
Comment: One respondent recommended striking the parenthetical text
at FAR 6.204(b), which references the requirements for a separate
justification to support the use of 8(a) sole-source awards in FAR
subpart 6.3, because it was unnecessary and potentially confusing.
Response: The Councils considered the comment, but find that the
cross reference adds clarity to the FAR text.
5. Content of Justification
Comment: A number of respondents recommended that the language at
FAR 6.303-2(d)(5) be amended in the final rule to clarify the other
matters the head of the agency should consider when justifying and
approving the award of a sole-source 8(a) contract in excess of $20
million. These considerations should include Native American economic
development and meeting agency small business goals.
Response: FAR 6.303-2(d)(5), as currently written, requires agency
heads to address ``Such other matters as the head of the agency
concerned shall specify for purposes of this section.'' This gives
agency heads the discretion to consider Native American economic
development and meeting agency small business goals, as well as other
relevant
[[Page 23370]]
matters when justifying and approving the award of a sole-source 8(a)
contract.
6. Potential Impact on Native American-Owned Firms
Comment: Several respondents expressed concern regarding the
possible impact facing Native American-owned enterprises. The
respondents pointed out that the 8(a) program has undergone
considerable reform over the last two years and has experienced
overwhelming success in achieving its goals. The respondents also
emphasized that the vast majority of Native American-owned enterprises
have consistently provided high value support to their Government
customers. In view of these considerations, the respondents requested
that each executive agency send a policy directive to their contracting
officers to outline the benefits of the SBA 8(a) program and the
positive impact this program has had for Native participants.
Response: The benefits of SBA's 8(a) program and the positive
impact this program has had for Native participants are promoted by SBA
and the Office of Small and Disadvantaged Business Utilization (OSDBU)
on a consistent basis throughout the Government. Each Federal agency
with contracting authority has established an OSDBU. The OSDBU
advocates for small, small disadvantaged (including the 8(a) program),
veteran, service-disabled veteran-owned, HUBZone, and women-owned
businesses. The OSDBU is charged with promoting increased access for
small businesses to procurement opportunities, conducting outreach
efforts, and providing liaison support for small and disadvantaged
businesses. In addition, the OSDBU works closely with program officers
and contracting officers to assist in the accomplishment of the annual
Governmentwide 5 percent procurement goals for small disadvantaged
businesses.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
IV. Regulatory Flexibility Act
The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not have a significant economic impact on a substantial
number of small entities within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., because the rule does not
impose any additional requirements on the majority of small businesses.
The rule implements the statutory requirements mandated by section 811,
Justification and Approval of Sole-Source Contracts, of the National
Defense Authorization Act for Fiscal Year 2010. It is recognized that a
very small number of businesses that have been awarded 8(a) contracts
over the $20 million threshold may be impacted. However, the rule does
not limit the number of contracts or dollars awarded to these
businesses. The rule may also indirectly benefit the 8,833 currently
certified section 8(a) firms by improving their likelihood of a
contract award through increased competition, but this impact is
similarly considered not significant.
V. Paperwork Reduction Act
The final rule does not contain any information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 6, 15, and 19
Government procurement.
Dated: April 11, 2012.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of
Acquisition Policy, Office of Governmentwide Policy.
Interim Rule Adopted as Final Without Change
0
Accordingly, the interim rule amending 48 CFR parts 6, 15, and 19,
which was published in the Federal Register at 76 FR 14559 on March 16,
2011, is adopted as a final rule without change.
[FR Doc. 2012-9204 Filed 4-17-12; 8:45 am]
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