This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

27287 

Vol. 85, No. 90 

Friday, May 8, 2020 

SMALL BUSINESS ADMINISTRATION 

13 CFR Parts 113 and 120 

[Docket Number SBA–2020–0024] 

RIN 3245–AH40 

Business Loan Program Temporary 

Changes; Paycheck Protection 

Program—Nondiscrimination and 

Additional Eligibility Criteria 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Interim final rule. 

SUMMARY: On April 2, 2020, the U.S. 

Small Business Administration (SBA) 

posted an interim final rule announcing 

the implementation of the Coronavirus 

Aid, Relief, and Economic Security Act 

(CARES Act). The CARES Act 

temporarily adds a new program, titled 

the ‘‘Paycheck Protection Program,’’ to 

the SBA’s 7(a) Loan Program. The 

CARES Act also provides for forgiveness 

of up to the full principal amount of 

qualifying loans guaranteed under the 

Paycheck Protection Program (PPP). The 

PPP is intended to provide economic 

relief to small businesses nationwide 

adversely impacted by the Coronavirus 

Disease 2019 (COVID–19). SBA posted 

additional interim final rules on April 3, 

2020, April 14, 2020, April 24, 2020, 

April 28, 2020, and April 30, 2020 and 

the Department of the Treasury posted 

an additional interim final rule on April 

28, 2020. This interim final rule 

supplements the previously posted 

interim final rules by providing 

guidance on nondiscrimination 

obligations and additional eligibility 

requirements, and requests public 

comment. 

DATES: 

Effective date: This rule is effective 

May 8, 2020. 

Applicability date: This interim final 

rule applies to applications submitted 

under the Paycheck Protection Program 

through June 30, 2020, or until funds 

made available for this purpose are 

exhausted. 

Comment date: Comments must be 

received on or before June 8, 2020. 

ADDRESSES: You may submit comments, 

identified by number SBA–2020–0024 

through the Federal eRulemaking Portal: 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

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 

send an email to ppp-ifr@sba.gov. 

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: A 

Call Center Representative at 833–572– 

0502, or the local SBA Field Office; the 

list of offices can be found at https://

www.sba.gov/tools/local-assistance/ 

districtoffices. 

SUPPLEMENTARY INFORMATION: 

I. Background Information 

On March 13, 2020, President Trump 

declared the ongoing Coronavirus 

Disease 2019 (COVID–19) pandemic of 

sufficient severity and magnitude to 

warrant an emergency declaration for all 

States, territories, and the District of 

Columbia. With the COVID–19 

emergency, many small businesses 

nationwide are experiencing economic 

hardship as a direct result of the 

Federal, State, tribal, and local public 

health measures that are being taken to 

minimize the public’s exposure to the 

virus. These measures, some of which 

are government-mandated, are being 

implemented nationwide and include 

the closures of restaurants, bars, and 

gyms. In addition, based on the advice 

of public health officials, other 

measures, such as keeping a safe 

distance from others or even stay-athome orders, are being implemented, 

resulting in a dramatic decrease in 

economic activity as the public avoids 

malls, retail stores, and other 

businesses. 

On March 27, 2020, the President 

signed the Coronavirus Aid, Relief, and 

Economic Security Act (the CARES Act) 

(Pub. L. 116–136) to provide emergency 

assistance and health care response for 

individuals, families, and businesses 

affected by the coronavirus pandemic. 

The Small Business Administration 

(SBA) received funding and authority 

through the CARES Act to modify 

existing loan programs and establish a 

new loan program to assist small 

businesses nationwide adversely 

impacted by the COVID–19 emergency. 

Section 1102 of the CARES Act 

temporarily permits SBA to guarantee 

100 percent of 7(a) loans under a new 

program titled the ‘‘Paycheck Protection 

Program.’’ Section 1106 of the CARES 

Act provides for forgiveness of up to the 

full principal amount of qualifying 

loans guaranteed under the Paycheck 

Protection Program (PPP). On April 24, 

2020, the President signed the Paycheck 

Protection Program and Health Care 

Enhancement Act (Pub. L. 116–139), 

which provided additional funding and 

authority for the PPP. 

Prior to the CARES Act, nonprofit 

organizations were not eligible to 

participate in SBA’s 7(a) Loan Program 

(15 U.S.C. 636(a)). Section 1102 of the 

CARES Act expanded eligibility, limited 

to PPP, to include certain nonprofit 

organizations, among other 

organizations. 

SBA regulations at 13 CFR part 113 

impose regulatory requirements ‘‘to 

reflect to the fullest extent possible the 

nondiscrimination policies of the 

Federal Government as expressed in the 

several statutes, Executive Orders, and 

messages of the President dealing with 

civil rights and equality of 

opportunity.’’ 13 CFR 113.1(a). But 

because SBA’s loan programs previously 

served business entities, these 

regulations did not restate certain 

limitations and exemptions under 

federal law primarily pertinent to 

certain faith-based or nonprofit 

organizations. In particular, Title IX of 

the Education Amendments of 1972 

permits single-sex admissions practices 

by preschools, non-vocational 

elementary or secondary schools, and 

private undergraduate higher education 

institutions. See 20 U.S.C. 1681(a)(1). 

Additionally, the Fair Housing Act of 

1968 allows religious organizations to 

reserve housing for coreligionists, see 42 

U.S.C. 3607, and allows for single-sex 

emergency shelters that provide refuge 

to abused women (or abused men), see 

24 CFR 5.106; see also Johnson v. Dixon, 

786 F. Supp. 1, 4 (D.D.C. 1991) (‘‘It is 

. . . doubtful [that] ‘emergency 

27288 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Rules and Regulations 

1The Department of Education’s Federal WorkStudy Programs described at 34 CFR part 675 are 

overnight shelter,’ . . . can be 

characterized as a ‘dwelling’ within the 

meaning of the [Fair Housing] Act.’’). 

Finally, the Indian Child Welfare Act of 

1978 requires certain placement 

preferences in the foster care and 

adoptions of Indian children. See 25 

U.S.C. 1915. The broadly worded SBA 

regulations do not articulate these 

limitations on the application of the 

relevant nondiscrimination provisions. 

In addition, there is a technical 

discrepancy between SBA’s religious 

employer exemption at 13 CFR 113.3– 

1(h) and Title VII of the Civil Rights Act, 

which allows religious employers to 

make hiring decisions according to their 

religious beliefs with respect to all 

‘‘activities,’’ not just ‘‘religious 

activities.’’ See An Act to further 

promote equal employment 

opportunities for American workers, 

Public Law 92–261, 86 Stat. 103, 104 

(1972), codified at 42 U.S.C. 2000e–1(a). 

Given these various discrepancies, 

organizations have accordingly faced 

uncertainty about whether their 

participation in the PPP program would 

require them to substantially change 

their operations for a short period of 

months. These types of changes are 

impossible for some organizations, and 

impractical for many. This uncertainty 

risks frustrating the purpose of the 

CARES Act, which was to afford swift 

stopgap relief to Americans who might 

otherwise lose their jobs or businesses 

because of the economic hardships 

wrought by the response to the COVID– 

19 public health emergency. To provide 

certainty to applicants and recipients of 

loans and loan forgiveness under the 

PPP, and to address the large-scale 

burdens that SBA regulations may 

impose on recipients participating only 

on a short-term basis, this interim final 

rule provides guidance that for purposes 

of the PPP, nonprofits must meet their 

nondiscrimination obligations under 

existing Federal laws and Executive 

Orders. This interim final rule also 

provides guidance with respect to the 

religious employer exemption to ensure 

harmony with Section 702 of Title VII. 

In addition, as described below, to 

enable certain eligible small educational 

institutions to participate in PPP, this 

interim final rule provides that 

institutions of higher education shall 

exclude work study students when 

determining the number of employees 

for purposes of PPP loan eligibility. 

II. Comments and Immediate Effective 

Date 

The intent of the Act is that SBA 

provide relief to America’s small 

businesses expeditiously. This intent, 

along with the dramatic decrease in 

economic activity nationwide, provides 

good cause for SBA to dispense with the 

30-day delayed effective date provided 

in the Administrative Procedure Act. 

Specifically, it is critical to meet 

lenders’ and borrowers’ need for clarity 

concerning program requirements as 

rapidly as possible because the last day 

eligible borrowers can apply for and 

receive a loan is June 30, 2020. 

This interim final rule supplements 

previous regulations and guidance on 

certain important, discrete issues. The 

immediate effective date of this interim 

final rule will benefit lenders so that 

they can swiftly close and disburse 

loans to small businesses. This interim 

final rule is effective without advance 

notice and public comment because 

section 1114 of the Act authorizes SBA 

to issue regulations to implement Title 

I of the Act without regard to notice 

requirements. In addition, SBA has 

determined that there is good cause for 

dispensing with advance public notice 

and comment on the ground that it 

would be contrary to the public interest. 

Specifically, SBA has determined that 

advance public notice and comment 

would delay the ability of certain 

organizations to implement their 

nondiscrimination obligations in a 

manner consistent with the limitations 

contained in existing Federal laws, and 

potentially force such organizations to 

change their operations until SBA 

adopted a final or interim final rule. 

Rather than change their operations, the 

affected organizations could elect not to 

apply for PPP loans and lay off 

employees, which would defeat the 

paycheck protection purposes of the 

PPP. This rule is being issued to allow 

for immediate implementation of this 

program. Although this interim final 

rule is effective immediately, comments 

are solicited from interested members of 

the public on all aspects of the interim 

final rule, including section III below. 

These comments must be submitted on 

or before June 8, 2020. SBA will 

consider these comments and the need 

for making any revisions as a result of 

these comments. 

III. Paycheck Protection Program 

Nondiscrimination and Additional 

Eligibility Criteria 

Overview 

The CARES Act was enacted to 

provide immediate assistance to 

individuals, families, and organizations 

affected by the COVID–19 emergency. 

Among the provisions contained in the 

CARES Act are provisions authorizing 

SBA to temporarily guarantee loans 

under the PPP. Loans under the PPP 

will be 100 percent guaranteed by SBA, 

and the full principal amount of the 

loans and any accrued interest may 

qualify for loan forgiveness. Additional 

information about the PPP is available 

in interim final rules published by SBA 

and the Department of the Treasury in 

the Federal Register (85 FR 20811, 85 

FR 20817, 85 FR 21747, 85 FR 23450, 

85 FR 23917, 85 FR 26321 and 85 FR 

26324) (collectively, the PPP Interim 

Final Rules). 

1. Non-Discrimination 

Are recipients of PPP loans entitled to 

exemptions on the grounds provided in 

Federal nondiscrimination laws for sexspecific admissions practices, sexspecific domestic violence shelters, 

coreligionist housing, or Indian tribal 

preferences in connection with adoption 

or foster care practices? 

Yes. With respect to any loan or loan 

forgiveness under the PPP, the 

nondiscrimination provisions in the 

applicable SBA regulations incorporate 

the limitations and exemptions 

provided in corresponding Federal 

statutory or regulatory 

nondiscrimination provisions for sexspecific admissions practices at 

preschools, non-vocational elementary 

or secondary schools, and private 

undergraduate higher education 

institutions under Title IX of the 

Education Amendments of 1972 (20 

U.S.C. 1681 et seq.), for sex-specific 

emergency shelters and coreligionist 

housing under the Fair Housing Act of 

1968 (42 U.S.C. 3601 et seq.), and for 

adoption or foster care practices giving 

child placement preferences to Indian 

tribes under the Indian Child Welfare 

Act of 1978 (25 U.S.C. 1901 et seq.). 

In addition, for purposes of the PPP, 

SBA regulations do not bar a religious 

nonprofit entity from making decisions 

with respect to the membership or the 

employment of individuals of a 

particular religion to perform work 

connected with the carrying on by such 

nonprofit of its activities. 

2. Student Workers and PPP Loan 

Eligibility 

Do student workers count when 

determining the number of employees 

for PPP loan eligibility? 

Yes, student workers generally count 

as employees, unless (a) the applicant is 

an institution of higher education, as 

defined in the Department of 

Education’s Federal Work-Study 

regulations, 34 675.2, and (b) the 

student worker’s services are performed 

as part of a Federal Work-Study Program 

(as defined in those regulations 1) or a 

Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Rules and Regulations 27289 

(1) the Federal Work-Study Program, (2) the Job 

Location and Development Program, and (3) Work 

Colleges Program. 

2 26 CFR 54.4980H–1(a)(24) (‘‘Hour of service 

. . . (ii) Excluded hours . . . (B) Work-study 

program. The term hour of service does not include 

any hour for services to the extent those services 

are performed as part of a Federal Work-Study 

Program as defined under 34 CFR 675 or a 

substantially similar program of a State or political 

subdivision thereof.’’). 

3 79 FR 8544, 8550 (Feb. 12, 2014). 

4 Internal Revenue Code Section 3121(b)(10) 

excepts from FICA tax ‘‘service performed in the 

employ of—(A) a school, college, university . . . if 

such service is performed by a student who is 

enrolled and regularly attending classes at such 

school, college, university.’’ Student workers, who 

are not full time, are excepted where the services 

are ‘‘incident to and for the purposes of pursuing 

a course of study.’’ 26 CFR 31.3121(b)(10)–2(d)(3)(i). 

substantially similar program of a State 

or political subdivision thereof. 

Institutions of higher education must 

exclude work study students when 

determining the number of employees 

for PPP loan eligibility, and must also 

exclude payroll costs for work study 

students from the calculation of payroll 

costs used to determine their PPP loan 

amount. 

The Administrator, in consultation 

with the Secretary, has determined that 

this is a reasonable interpretation of 

section 1102(a) of the CARES Act’s 

reference to ‘‘individuals employed on a 

full-time, part-time, or other basis.’’ 

Such programs generally provide parttime jobs for students with financial 

need, and their services are incident to 

and for the purpose of pursuing a course 

of study. Work study students are 

excluded from the definition of 

employees in other areas of federal law. 

For example, in the regulations 

implementing the Affordable Care Act, 

Treasury defined an employee’s ‘‘hours 

of service’’ to exclude work study 

hours.2 Explaining this exclusion, the 

regulation’s preamble states that ‘‘[t]he 

federal work study program, as a 

federally subsidized financial aid 

program, is distinct from traditional 

employment in that its primary purpose 

is to advance education.’’ 3 Similarly, 

student work is generally exempt from 

Federal Insurance Contribution Act 

(FICA) and Federal Unemployment 

taxes.4

For similar reasons, the 

Administrator, in consultation with the 

Secretary of the Treasury, has 

determined that a limited exception for 

work study is appropriate here. In 

particular, the Administrator recognizes 

that requiring institutions of higher 

education to count work study students 

towards employee headcount would 

result in an anomalous outcome in two 

respects. First, it would prevent some 

small educational institutions from 

receiving PPP loans due solely to their 

provision of financial aid to students in 

the form of work study. Second, it 

would result in the exclusion of small 

educational institutions whose part-time 

work study headcount dwarfs their fulltime faculty and staff headcounts. 

Educational institutions that filed loan 

applications prior to the issuance of the 

regulation are not bound by this 

interpretation but may rely on it. 

Lenders may continue to rely on 

borrower certifications as part of their 

good faith review process. 

3. Additional Information

SBA may provide further guidance, if

needed, through SBA notices that will 

be posted on SBA’s website at 

www.sba.gov. Questions on the 

Paycheck Protection Program may be 

directed to the Lender Relations 

Specialist in the local SBA Field Office. 

The local SBA Field Office may be 

found at https://www.sba.gov/tools/ 

local-assistance/districtoffices. 

Compliance With Executive Orders 

12866, 12988, 13132, 13563, and 13771, 

the Paperwork Reduction Act (44 U.S.C. 

Ch. 35), and the Regulatory Flexibility 

Act (5 U.S.C. 601–612). 

Executive Orders 12866, 13563, and 

13771 

This interim final rule is 

economically significant for the 

purposes of Executive Orders 12866 and 

13563, and is considered a major rule 

under the Congressional Review Act. 

SBA, however, is proceeding under the 

emergency provision at Executive Order 

12866 Section 6(a)(3)(D) based on the 

need to move expeditiously to mitigate 

the current economic conditions arising 

from the COVID–19 emergency. This 

rule’s designation under Executive 

Order 13771 will be informed by public 

comment. 

Executive Order 12988 

SBA has drafted this rule, to the 

extent practicable, in accordance with 

the standards set forth in section 3(a) 

and 3(b)(2) of Executive Order 12988, to 

minimize litigation, eliminate 

ambiguity, and reduce burden. The rule 

has no preemptive or retroactive effect. 

Executive Order 13132 

SBA has determined that this 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 layers of government. Therefore, 

SBA has determined that this rule has 

no federalism implications warranting 

preparation of a federalism assessment. 

Paperwork Reduction Act, 44 U.S.C. 

Chapter 35 

SBA has determined that this rule 

will not impose new or modify existing 

recordkeeping or reporting requirements 

under the Paperwork Reduction Act. 

Regulatory Flexibility Act (RFA) 

The Regulatory Flexibility Act (RFA) 

generally requires that when an agency 

issues a proposed rule, or a final rule 

pursuant to section 553(b) of the APA or 

another law, the agency must prepare a 

regulatory flexibility analysis that meets 

the requirements of the RFA and 

publish such analysis in the Federal 

Register. 5 U.S.C. 603, 604. Specifically, 

the RFA normally requires agencies to 

describe the impact of a rulemaking on 

small entities by providing a regulatory 

impact analysis. Such analysis must 

address the consideration of regulatory 

options that would lessen the economic 

effect of the rule on small entities. The 

RFA defines a ‘‘small entity’’ as (1) a 

proprietary firm meeting the size 

standards of the Small Business 

Administration (SBA); (2) a nonprofit 

organization that is not dominant in its 

field; or (3) a small government 

jurisdiction with a population of less 

than 50,000. 5 U.S.C. 601(3)–(6). Except 

for such small government jurisdictions, 

neither State nor local governments are 

‘‘small entities.’’ Similarly, for purposes 

of the RFA, individual persons are not 

small entities. The requirement to 

conduct a regulatory impact analysis 

does not apply if the head of the agency 

‘‘certifies that the rule will not, if 

promulgated, have a significant 

economic impact on a substantial 

number of small entities.’’ 5 U.S.C. 

605(b). The agency must, however, 

publish the certification in the Federal 

Register at the time of publication of the 

rule, ‘‘along with a statement providing 

the factual basis for such certification.’’ 

If the agency head has not waived the 

requirements for a regulatory flexibility 

analysis in accordance with the RFA’s 

waiver provision, and no other RFA 

exception applies, the agency must 

prepare the regulatory flexibility 

analysis and publish it in the Federal 

Register at the time of promulgation or, 

if the rule is promulgated in response to 

an emergency that makes timely 

compliance impracticable, within 180 

days of publication of the final rule. 5 

U.S.C. 604(a), 608(b). Rules that are 

exempt from notice and comment are 

also exempt from the RFA requirements, 

including conducting a regulatory 

flexibility analysis, when among other 

things the agency for good cause finds 

that notice and public procedure are 

impracticable, unnecessary, or contrary 

27290 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Rules and Regulations 

to the public interest. SBA Office of 

Advocacy guide: How to Comply with 

the Regulatory Flexibility Act, Ch.1. p.9. 

Accordingly, SBA is not required to 

conduct a regulatory flexibility analysis. 

Jovita Carranza, 

Administrator. 

[FR Doc. 2020–09963 Filed 5–7–20; 8:45 am] 

BILLING CODE 8026–03–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 124 

RIN 3245–AH13 

Regulatory Reform Initiative: Small 

Disadvantaged Businesses 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Direct final rule. 

SUMMARY: The U.S. Small Business 

Administration (SBA) is removing from 

the Code of Federal Regulations (CFR) 

16 regulations that are no longer 

necessary because they are either 

redundant or obsolete. This action will 

assist the public by simplifying SBA’s 

regulations. 

DATES: This rule is effective on August 

6, 2020 without further action, unless 

significant adverse comment is received 

by July 7, 2020. If significant adverse 

comment is received, SBA will publish 

a timely withdrawal of the rule in the 

Federal Register. 

ADDRESSES: You may submit comments, 

identified by RIN 3245–AH13 by any of 

the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail or Hand Delivery/Courier: 

Brenda Fernandez, U.S. Small Business 

Administration, Office of Policy, 

Planning and Liaison, 409 Third Street 

SW, 8th Floor, 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 Brenda 

Fernandez, U.S. Small Business 

Administration, Office of Policy, 

Planning and Liaison, 409 Third Street 

SW, 8th Floor, Washington, DC 20416, 

or send an email to brenda.fernandez@

sba.gov. 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 on whether it will 

publish the information. 

FOR FURTHER INFORMATION CONTACT: 

Brenda Fernandez, U.S. Small Business 

Administration, Office of Policy, 

Planning and Liaison, 409 Third Street 

SW, Washington, DC 20416; (202) 205– 

7337; brenda.fernandez@sba.gov. 

SUPPLEMENTARY INFORMATION: 

Small Disadvantaged Business Program 

The government promotes contracting 

and subcontracting with small 

disadvantaged businesses (SDBs) by 

setting government-wide and agencyspecific goals for the percentage of 

Federal contract and subcontract dollars 

awarded to SDBs each fiscal year. The 

government-wide goal is that not less 

than 5 percent of the total value of all 

prime contract and subcontract awards 

be made to SDBs. At one time, SDBs had 

to be certified by the SBA, or by a 

private certifying entity acting in 

compliance with SBA regulations, to 

qualify for certain Federal programs as 

prime contractors. However, all Federal 

programs for SDB prime contractors 

have been discontinued, with only the 

government-wide and agency-specific 

goals for the percentage of Federal 

contract and/or subcontract dollars 

awarded to SDBs each year remaining. 

Pursuant to the SDB subcontracting 

program, Federal agencies must 

negotiate subcontracting plans with the 

apparent successful bidder or offeror on 

qualifying prime contracts prior to 

awarding the contract. Subcontracting 

plans set goals for the percentage of 

subcontract dollars to be awarded to 

SDBs, among others, and describe 

efforts that will be made to ensure that 

SDBs have an equitable opportunity to 

compete for subcontracts. Federal 

agencies may also consider the extent of 

subcontracting with SDBs in 

determining to whom to award a 

contract or whether to give contractors 

monetary incentives to subcontract with 

SDBs. 

Firms do not need to be certified 

SDBs to qualify for Federal programs for 

subcontractors. Rather, 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. In addition, 8(a) 

Participants are deemed to be SBDs for 

Federal contracting purposes. As of 

August 8, 2019, the SBA’s Dynamic 

Small Business Search database 

included 125,616 self-certified SDBs. 

Background Information 

On February 24, 2017, President 

Trump issued Executive Order 13777, 

Enforcing the Regulatory Reform 

Agenda, which further emphasized the 

goal of the Administration to alleviate 

the regulatory burdens placed on the 

public. Under Executive Order 13777, 

agencies must evaluate their existing 

regulations to determine which ones 

should be repealed, replaced, or 

modified. In doing so, agencies should 

focus on identifying regulations that, 

among other things: Eliminate jobs or 

inhibit job creation; are outdated, 

unnecessary or ineffective; impose costs 

that exceed benefits; create a serious 

inconsistency or otherwise interfere 

with regulatory reform initiatives and 

policies; or are associated with 

Executive Orders or other Presidential 

directives that have been rescinded or 

substantially modified. 

In response to the President’s 

directive, SBA initiated a review of its 

regulations to determine which might be 

revised or eliminated. Based on this 

analysis, SBA has identified 

unnecessary provisions that can be 

removed from the CFR. First, this rule 

removes 13 CFR 124.516—which states 

that the procuring activity decides all 

contract disputes arising between an 

8(a) Participant and a procuring activity 

contracting officer after the award of an 

8(a) contract—because this provision is 

redundant. 13 CFR 124.512 already 

delegates 8(a) contract administration 

functions to procuring agencies and 

contract dispute resolution is an 

element of contract administration. 

Second, this rule removes 13 CFR 

124.1002 through 124.1016. As 

discussed below, these provisions 

pertain to the Small Disadvantaged 

Business Program, which is no longer a 

viable program. Section 1207 of the 

1987 Defense Authorization Act (Pub. L. 

99–661, codified in 10 U.S.C. 2323) 

established a statutory 5 percent goal for 

all Department of Defense (DOD) 

contracts to be awarded to small 

disadvantaged businesses (SDBs). To 

this end, the statute authorized the 

award of contracts to SDBs using less 

than full and open competitive 

procedures. Specifically, DOD 

implemented regulations requiring a 

contracting officer to set-aside a 

procurement for exclusive competition 

among SDBs whenever market research 

identified two or more SDBs that could 

perform the contract at a fair and 

reasonable price. In addition, SDBs 

would receive a 10 percent price 

evaluation adjustment for offers 

submitted in an unrestricted or full and 

open competition. DOD’s SDB program 

was initially a self-certification program. 

SBA established eligibility criteria, but 

firms self-certified their SDB status for 

particular procurements. However, SBA 

was responsible for processing SDB