14566 Federal Register / Vol. 76, No. 51 / Wednesday, March 16, 2011 / Rules and Regulations 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 13 and 19 

[FAC 2005–50; FAR Case 2011–004; Item 

V; Docket 2011–0004, Sequence 1] 

RIN 9000–AL88 

Federal Acquisition Regulation; 

Socioeconomic Program Parity 

AGENCY: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Interim rule. 

SUMMARY: DoD, GSA, and NASA are 

issuing an interim rule amending the 

Federal Acquisition Regulation (FAR) to 

implement section 1347 of the ‘‘Small 

Business Jobs Act of 2010.’’ Section 1347 

clarifies the contracting officer’s ability 

to use discretion when determining 

whether an acquisition will be restricted 

to small businesses participating in the 

8(a), HUBZone, or service-disabled 

veteran-owned small business 

(SDVOSB) programs. There is no order 

of priority among small businesses in 

the 8(a) Business Development Program, 

the HUBZone Program, or the SDVOSB 

Program. 

DATES: Effective Date: March 16, 2011. 

Comment Date: Interested parties 

should submit written comments to the 

Regulatory Secretariat on or before May 

16, 2011 to be considered in the 

formulation of a final rule. 

ADDRESSES: Submit comments 

identified by FAC 2005–50, FAR Case 

2011–004, by any of the following 

methods: 

• Regulations.gov: http:// 

www.regulations.gov. 

Submit comments via the Federal 

eRulemaking portal by inputting ‘‘FAR 

Case 2011–004’’ under the heading 

‘‘Enter Keyword or ID’’ and selecting 

‘‘Search.’’ Select the link ‘‘Submit a 

Comment’’ that corresponds with ‘‘FAR 

Case 2011–004.’’ Follow the instructions 

provided at the ‘‘Submit a Comment’’ 

screen. Please include your name, 

company name (if any), and ‘‘FAR Case 

2011–004’’ on your attached document. 

• Fax: (202) 501–4067. 

• Mail: General Services 

Administration, Regulatory Secretariat 

(MVCB), ATTN: Hada Flowers, 1275 

First Street, NE., 7th Floor, Washington, 

DC 20417. 

Instructions: Please submit comments 

only and cite FAC 2005–50, FAR Case 

2011–004, in all correspondence related 

to this case. All comments received will 

be posted without change to http:// 

www.regulations.gov, including any 

personal and/or business confidential 

information provided. 

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 2005–50, FAR 

Case 2011–004. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD, GSA, and NASA are issuing an 

interim rule amending the FAR, to 

implement section 1347 of the Small 

Business Jobs Act of 2010 (Pub. L. 111– 

240). Section 1347 changed the word 

‘‘shall’’ to ‘‘may’’ at section 31(b)(2)(B) of 

the Small Business Act (15 U.S.C. 

657a(b)(2)(B)). This interim rule makes 

similar changes to the FAR, ensuring 

that the FAR clearly reflects the 

statutory relationship among the small 

business programs and eliminates any 

confusion on the part of contracting 

officers or others. 

DoD, GSA, and NASA published a 

proposed rule under FAR Case 2006– 

034 in the Federal Register at 73 FR 

12699, March 10, 2008, which would 

have amended the FAR to clearly reflect 

the Small Business Administration’s 

(SBA) interpretation of the Small 

Business Act and its agency regulations 

that no order of precedence applies 

when the contracting officer considers 

satisfying a requirement through an 

award to a HUBZone small business 

concern, a SDVOSB concern, or a small 

business participating in the 8(a) 

Program. The proposed rule was closed 

due to the Government Accountability 

Office’s and the Court of Federal Claims’ 

interpretation of the Small Business Act 

to require acquisitions to be set aside for 

HUBZone small businesses before 

setting aside acquisitions for other small 

business programs. See Mission Critical 

Solutions v. U.S., 91 Fed. Cl. 386 (2010), 

and B–401057. 

This rule does not address the 

women-owned small businesses and 

their relationship to the other small 

business programs. FAR Case 2010–015, 

Women-Owned Small Business 

Program, will be published as an 

interim rule with request for comments 

to implement the SBA’s Women-owned 

Small Business (WOSB) Federal 

Contract Program final rule, (75 FR 

62258, October 7, 2010), which became 

effective on February 4, 2011. SBA’s 

rule provides parity for WOSBs with 

SBA’s other small business contracting 

programs. 

II. Discussion and Analysis 

Section 1347 amended the language 

concerning HUBZone set asides by 

deleting the ‘‘shall’’ set aside in the 

statute and replacing that term with 

‘‘may’’ set aside. This clarifies that 

contracting officers can exercise 

discretion when determining whether a 

requirement will be restricted to small 

business concerns under the 8(a), 

HUBZone or SDVOSB programs. 

This interim rule is intended to 

address the recent statutory clarification 

and make clear that— 

1. There is no order of precedence 

among the 8(a), HUBZone, or SDVOSB 

programs. However, if a requirement has 

been accepted by SBA under the 8(a) 

Program, it must remain in the 8(a) 

program unless SBA agrees to its release 

in accordance with 13 CFR 124, 125 and 

126; 

2. For acquisitions exceeding the 

simplified acquisition threshold, the 

contracting officer must consider a setaside or sole source acquisition to a 

small business under the 8(a), 

HUBZone, or SDVOSB programs before 

the contracting officer proceeds with a 

small business set-aside. See FAR 

19.203(c) and 19.502–2(b); and 

3. The small business set-aside 

requirement of FAR 19.502–2(a) does 

not preclude award of a contract to a 

qualified 8(a) Program participant, 

HUBZone small business concern, or 

SDVOSB concern, because the SBA’s 

regulations give the contracting officer 

discretionary authority to use the 8(a), 

HUBZone, or SDVOSB, at dollar levels 

above the micro-purchase threshold and 

at or below the simplified acquisition 

threshold. 

III. Executive Order 12866 

This is a significant regulatory action 

and, therefore, was subject to review 

under Section 6(b) of Executive Order 

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 change may 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 this 

rule revises the FAR to implement 

Section 1347 of the Small Business Jobs 

Act of 2010 governing specific 

contracting and business assistance 

programs which include the 8(a), 

HUBZone, and the SDVOSB programs. 

The Regulatory Secretariat will be 

submitting a copy of the Interim 


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Regulatory Flexibility Analysis (IRFA) 

to the Chief Counsel for Advocacy of the 

Small Business Administration. A copy 

of the IRFA may be obtained from the 

Regulatory Secretariat. DoD, GSA, and 

NASA invite comments from small 

business concerns and other interested 

parties on the expected impact of this 

rule on small entities. 

DoD, GSA, and NASA will also 

consider comments from small entities 

concerning the existing regulations in 

subparts affected by this rule in 

accordance with 5 U.S.C. 610. Interested 

parties must submit such comments 

separately and should cite 5 U.S.C. 610 

(FAC 2005–50, FAR Case 2011–004) in 

correspondence. 

The analysis is summarized as 

follows: 

The purpose of this rule is to ensure that 

the FAR clearly reflects section 1347 of the 

Small Business Jobs Act of 2010 (Pub. L. 

111–240) and to incorporate the SBA’s 

interpretation of the Small Business Act and 

regulations promulgated thereunder. 

Following recent interpretations of the Small 

Business Act by the Government 

Accountability Office and the Court of 

Federal Claims, some in the acquisition 

community have been confused about 

whether there is an order of precedence that 

applies when deciding whether to satisfy a 

requirement through an award to a small 

business, a small business participating in 

the 8(a) Business Development Program, a 

HUBZone small business, or a SDVOSB. 

Section 1347 clarified that there is parity, 

rather than an order of precedence, and the 

purpose of this interim rule is to ensure that 

the FAR removes any uncertainty on the part 

of the contracting officer, small businesses, 

and others. 

Small businesses that participate in 

Federal Government contracting are the 

entities that may be impacted by the rule. 

There should be no negative impact on small 

businesses as a whole. The number of 

contracts awarded overall to small businesses 

should not decrease as a result of this rule. 

However, it is possible that the clarity the 

rule provides could result in a difference in 

the number of contracts awarded to any 

particular category of small businesses. 

Generally, all current and potential 

Government contractors must register in the 

Central Contractor Registration (CCR) 

database to be eligible for contract award and 

payment. There are approximately 349,992 

small business firms; 9,303 HUBZone firms; 

9,234 8(a) firms and 18,213 SDVOSB firms 

currently registered in CCR that may be 

affected by this final rule. 

There are no significant alternatives that 

would reduce the impact on small 

businesses. This FAR rule is implementing 

section 1347 of the Small Business Jobs Act 

of 2010 (Pub. L. 111–240). 

V. Paperwork Reduction Act 

The interim 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). 

V. Determination To Issue an Interim 

Rule 

A determination has been made under 

the authority of the Secretary of Defense 

(DoD), the Administrator of General 

Services (GSA), and the Administrator 

of the National Aeronautics and Space 

Administration (NASA) that urgent and 

compelling reasons exist to promulgate 

this interim rule without prior 

opportunity for public comment. This 

action is necessary because the 

enactment of the Small Business Jobs 

Act of 2010 requires the implementation 

of section 1347. The statute was enacted 

on September 27, 2010. However, 

pursuant to 41 U.S.C. 1707 and FAR 

1.501–3(b), DoD, GSA, and NASA will 

consider public comments received in 

response to this interim rule in the 

formation of the final rule. 

List of Subjects in 48 CFR Parts 13 and 

19 

Government procurement. 

Dated: March 4, 2011. 

Millisa Gary, 

Acting Director, Office of Governmentwide 

Acquisition Policy. 

Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 13 and 19 as set 

forth below: 

■ 1. The authority citation for 48 CFR 

parts 13 and 19 continues to read as 

follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 42 U.S.C. 2473(c). 

PART 13—SIMPLIFIED ACQUISITIONS 

PROCEDURES 

■ 2. Amend section 13.003 by removing 

from paragraph (b)(1) ‘‘see 19.000’’ and 

adding ‘‘see 19.000, 19.203,’’ in its place; 

and by revising paragraph (b)(2) to read 

as follows: 

13.003 Policy. 

* * * * * 

(b) * * * 

(2) The contracting officer may make 

an award to a small business under the 

8(a) Program (see subpart 19.8), or set 

aside for HUBZone small business 

concerns (see 19.1305) or servicedisabled veteran-owned small business 

concerns (see 19.1405) an acquisition of 

supplies or services that has an 

anticipated dollar value exceeding the 

micro-purchase threshold and at or 

below the simplified acquisition 

threshold. The following contracting 

officer’s decisions for acquisitions at or 

below the simplified acquisition 

threshold are not subject to review 

under subpart 19.4: 

(i) A decision not to make an award 

under the 8(a) Program (see subpart 

19.8). 

(ii) A decision not to set aside an 

acquisition for HUBZone small business 

or service-disabled veteran-owned small 

business concerns participation. 

* * * * * 

PART 19—SMALL BUSINESS 

PROGRAMS 

19.202 [Amended] 

■ 3. Amend section 19.202 by removing 

‘‘Subpart 19.5, 19.8, or 19.13’’ and 

adding ‘‘subpart 19.5, 19.8, 19.13, or 

19.14’’ in its place. 

■ 4. Add section 19.203 to read as 

follows: 

19.203 Relationship among small 

business programs. 

(a) There is no order of precedence 

among the 8(a) Program (subpart 19.8), 

HUBZone Program (subpart 19.13), or 

Service-Disabled Veteran-Owned Small 

Business (SDVOSB) Procurement 

Program (subpart 19.14). 

(b) At or below the simplified 

acquisition threshold. The requirement 

to exclusively reserve acquisitions for 

small business concerns at 19.502–2(a) 

does not preclude the contracting officer 

from awarding a contract to a small 

business under the 8(a) Program, 

HUBZone Program, or SDVOSB 

Program. If the contracting officer does 

not proceed with a small business setaside and purchases on an unrestricted 

basis, the contracting officer shall 

include in the contract file the reason 

for this unrestricted purchase. 

(c) Above the simplified acquisition 

threshold. The contracting officer shall 

first consider an acquisition for the 8(a), 

HUBZone, or SDVOSB programs before 

using a small business set-aside (see 

19.502–2(b)). However, if a requirement 

has been accepted by the SBA under the 

8(a) Program, it must remain in the 8(a) 

Program unless SBA agrees to its release 

in accordance with 13 CFR parts 124, 

125 and 126. 

(d) Small business set-asides have 

priority over acquisitions using full and 

open competition. See requirements for 

establishing a small business set-aside at 

subpart 19.5. 

■ 5. Amend section 19.501 by removing 

paragraphs (c) and (d); redesignating 

paragraphs (e) through (i) as paragraphs 

(c) through (g), respectively; and 

revising the newly redesignated 

paragraph (c) to read as follows: 

19.501 General. 

* * * * * 


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14568 Federal Register / Vol. 76, No. 51 / Wednesday, March 16, 2011 / Rules and Regulations 

(c) The contracting officer shall 

review acquisitions to determine if they 

can be set aside for small business, 

giving consideration to the 

recommendations of agency personnel 

having cognizance of the agency’s small 

business programs. The contracting 

officer shall perform market research 

and document why a small business setaside is inappropriate when an 

acquisition is not set aside for small 

business, unless an award is anticipated 

to a small business under the 8(a), 

HUBZone, or service-disabled veteranowned programs. If the acquisition is set 

aside for small business based on this 

review, it is a unilateral set-aside by the 

contracting officer. Agencies may 

establish threshold levels for this review 

depending upon their needs. 

* * * * * 

■ 6. Amend section 19.502–2 by adding 

a new first sentence and revising the last 

sentence of paragraph (a); and by 

revising the first sentence in paragraph 

(b) to read as follows: 

19.502–2 Total small business set-asides. 

(a) Before setting aside an acquisition 

under this paragraph, refer to 19.203(b). 

* * * The small business reservation 

does not preclude the award of a 

contract as described in 19.203. 

(b) Before setting aside an acquisition 

under this paragraph, refer to 

19.203(c). * * * 

* * * * * 

■ 7. Amend section 19.800 by revising 

paragraph (e) to read as follows: 

19.800 General. 

* * * * * 

(e) Before deciding to set aside an 

acquisition in accordance with subpart 

19.5, the contracting officer may 

consider offering the acquisition to a 

small business under the 8(a) Program 

in accordance with 19.203. 

* * * * * 

19.804–2 [Amended] 

■ 8. Amend section 19.804–2 by 

removing paragraph (a)(12); and 

redesignating paragraphs (a)(13) through 

(a)(16) as paragraphs (a)(12) through 

(a)(15), respectively. 

■ 9. Amend section 19.1305 by— 

■ a. Revising paragraph (a); 

■ b. Removing paragraph (c); 

■ c. Redesignating paragraphs (d) and 

(e) as paragraphs (c) and (d), 

respectively; and 

■ d. Removing from the newly 

redesignated paragraph (c) ‘‘(see subpart 

19.5)’’ and adding ‘‘(see 19.203)’’ in its 

place. 

The revised text reads as follows: 

19.1305 HUBZone set-aside procedures. 

(a) The contracting officer— 

(1) May set aside acquisitions 

exceeding the micro-purchase threshold 

for competition restricted to HUBZone 

small business concerns when the 

requirements of paragraph (b) of this 

section can be satisfied (see 19.203); and 

(2) Shall consider HUBZone set-asides 

before considering HUBZone sole 

source awards (see 19.1306) or small 

business set-asides (see subpart 19.5). 

* * * * * 

■ 10. Amend section 19.1306 by 

revising the introductory text of 

paragraph (a) to read as follows: 

19.1306 HUBZone sole source awards. 

(a) A contracting officer may award 

contracts to HUBZone small business 

concerns on a sole source basis (see 

6.302–5(b)(5)) before considering small 

business set-asides (see 19.203 and 

subpart 19.5), provided none of the 

exclusions at 19.1304 apply; and— 

* * * * * 

■ 11. Amend section 19.1405 by 

revising paragraph (a); and removing 

from paragraph (c) ‘‘(see Subpart 19.5)’’ 

and adding ‘‘(see 19.203)’’ in its place. 

The revised text reads as follows: 

19.1405 Service-disabled veteran-owned 

small business set-aside procedures. 

(a) The contracting officer— 

(1) May set-aside acquisitions 

exceeding the micro-purchase threshold 

for competition restricted to servicedisabled veteran-owned small business 

concerns when the requirements of 

paragraph (b) of this section can be 

satisfied (see 19.203); and 

(2) Shall consider service-disabled 

veteran-owned small business set-asides 

before considering service-disabled 

veteran-owned small business sole 

source awards (see 19.1406) or small 

business set-asides (see subpart 19.5). 

* * * * * 

■ 12. Amend section 19.1406 by 

revising the introductory text of 

paragraph (a) to read as follows: 

19.1406 Sole source awards to servicedisabled veteran-owned small business 

concerns. 

(a) A contracting officer may award 

contracts to service-disabled veteranowned small business concerns on a 

sole source basis (see 6.302–5(b)(6)), 

before considering small business setasides (see 19.203 and subpart 19.5) 

provided none of the exclusions of 

19.1404 apply and— 

* * * * * 

[FR Doc. 2011–5556 Filed 3–15–11; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Part 15 

[FAC 2005–50; FAR Case 2008–034; Item 

VI; Docket 2009–0035, Sequence 1] 

RIN 9000–AL44 

Federal Acquisition Regulation; Use of 

Commercial Services Item Authority 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: DoD, GSA, and NASA have 

adopted as final, without change, an 

interim rule amending the Federal 

Acquisition Regulation (FAR) to 

implement section 868 of the Duncan 

Hunter National Defense Authorization 

Act for Fiscal Year 2009. Section 868 

provides that the FAR shall be amended 

with respect to the procurement of 

commercial services, specifically 

services that are not offered and sold 

competitively in substantial quantities 

in the commercial marketplace, but are 

of a type offered and sold competitively 

in substantial quantities in the 

commercial marketplace. These services 

may be considered commercial items 

only if the contracting officer has 

determined in writing that the offeror 

has submitted sufficient information to 

evaluate, through price analysis, the 

reasonableness of the price for such 

services. The rule details the 

information the contracting officer may 

consider in order to make this 

determination. 

DATES: Effective Date: March 16, 2011. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Edward N. Chambers, Procurement 

Analyst, at (202) 501–3221 for 

clarification of content. For information 

pertaining to status or publication 

schedules, contact the Regulatory 

Secretariat at (202) 501–4755. Please 

cite FAC 2005–50, FAR Case 2008–034. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD, GSA, and NASA published an 

interim rule in the Federal Register at 

74 FR 52852 on October 14, 2009, to 

implement section 868 of the Duncan 

Hunter National Defense Authorization 

Act for Fiscal Year 2009. The comment 

period closed on December 14, 2009. 


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