Federal Register / Vol. 77, No. 75 / Wednesday, April 18, 2012 / Rules and Regulations 23369 

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 SoleSource 8(a) Contracts 

AGENCY: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

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 

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23370 Federal Register / Vol. 77, No. 75 / Wednesday, April 18, 2012 / Rules and Regulations 

matters when justifying and approving 

the award of a sole-source 8(a) contract. 

6. Potential Impact on Native AmericanOwned Firms 

Comment: Several respondents 

expressed concern regarding the 

possible impact facing Native Americanowned 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 womenowned 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 

■ 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] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 1 and 52 

[FAC 2005–58; Item IV; Docket 2012–0079; 

Sequence 2] 

Federal Acquisition Regulation; 

Technical Amendments 

AGENCY: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: This document makes 

amendments to the Federal Acquisition 

Regulation (FAR) in order to make 

editorial changes. 

DATES: Effective Date: April 18, 2012. 

FOR FURTHER INFORMATION CONTACT: The 

Regulatory Secretariat, 1275 First Street 

NE., 7th Floor, Washington, DC 20417, 

202–501–4755, for information 

pertaining to status or publication 

schedules. Please cite FAC 2005–58, 

Technical Amendments. 

SUPPLEMENTARY INFORMATION: In order to 

update certain elements in 48 CFR parts 

1 and 52, this document makes editorial 

changes to the FAR. 

List of Subjects in 48 CFR Parts 1 and 

52 

Government procurement. 

Dated: April 11, 2012. 

Laura Auletta, 

Director, Office of Governmentwide 

Acquisition Policy, Office of Acquisition 

Policy, Office of Governmentwide Policy. 

Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 1 and 52 as set 

forth below: 

■ 1. The authority citation for 48 CFR 

parts 1 and 52 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 1—FEDERAL ACQUISITION 

REGULATIONS SYSTEM 

■ 2. Amend section 1.201–1 by revising 

paragraph (c) to read as follows: 

1.201–1 The two councils. 

* * * * * 

(c) The Director of the DAR Council 

shall be the representative of the 

Secretary of Defense. The operation of 

the DAR Council will be as prescribed 

by the Secretary of Defense. 

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