This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

85072 

Vol. 89, No. 207 

Friday, October 25, 2024 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 125 

RIN 3245–AH95 

Small Business Contracting: 

Increasing Small Business 

Participation on Multiple Award 

Contracts 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

apply the Rule of Two to multipleaward contract task and delivery orders, 

with some exceptions. Under the Rule 

of Two, unless an exception applies, an 

agency must set aside the award for 

small businesses where there is a 

reasonable expectation of receiving 

offers from two or more small-business 

contract holders under the multipleaward contract that are competitive in 

terms of price, quality, and delivery. 

Documentation requirements apply 

where the agency decides not to move 

forward with a set-aside order. 

DATES: Comments must be received on 

or before December 24, 2024. 

ADDRESSES: You may submit comments, 

identified by RIN 3245–AH95, and/or 

Docket Number SBA–2024–0002 by any 

of the following methods: 

• Federal eRulemaking Portal: 

https://www.regulations.gov and follow 

the instructions for submitting 

comments. 

• Mail (for paper, disk, or CD–ROM 

submissions): Donna Fudge, Lead 

Procurement Policy Analyst, Office of 

Policy Planning and Liaison, U.S. Small 

Business Administration, 409 Third 

Street SW, Washington, DC 20416. 

Instructions: All submissions received 

must include the agency name and 

docket number or Regulatory 

Information Number (RIN) for this 

rulemaking. All comments received will 

be posted on https://

www.regulations.gov. If you wish to 

submit confidential business 

information (CBI) as defined in the User 

Notice at https://www.regulations.gov, 

please submit the comments to Donna 

Fudge and highlight the information 

that you consider to be CBI and explain 

why you believe this information 

should be held confidential. 

FOR FURTHER INFORMATION CONTACT: 

Donna Fudge, Lead Procurement Policy 

Analyst, Office of Policy Planning and 

Liaison, Small Business Administration, 

at donna.fudge@sba.gov, (202) 205– 

6363. 

SUPPLEMENTARY INFORMATION: This 

proposed rule would expand the use of 

the small-business Rule of Two in 

multiple-award contracting and make 

other regulatory revisions to encourage 

the use of small businesses when 

creating new multiple-award contracts. 

In issuing this proposed rule, SBA 

implements recommendations of the 

Office of Federal Procurement Policy 

(OFPP) in its memorandum titled 

‘‘Increasing Small Business 

Participation on Multiple-Award 

Contracts,’’ dated January 25, 2024. 

Section 15(a)(1)(C) of the Small 

Business Act, 15 U.S.C. 644(a)(1)(C), 

provides that the Small Business 

Administration (SBA) shall ‘‘assur[e] 

that a fair proportion of the total 

purchases and contracts for goods and 

services of the Government in each 

industry category . . . are awarded to 

small business concerns.’’ To further 

this statutory provision, SBA’s 

regulations and the Federal Acquisition 

Regulation (FAR) provide that an 

acquisition shall be set aside for small 

business concerns whenever there is 

reasonable expectation that offers will 

be obtained from at least two 

responsible small business concerns 

that are competitive in terms of fair 

market prices, quality, and delivery (13 

CFR 125.2(f); 48 CFR 19.502–2). This 

provision in SBA’s regulations and the 

FAR is commonly referred to as the Rule 

of Two. 

The Rule of Two dates back to 1964, 

when the Department of Navy first 

adopted it. Additional agencies 

implemented the rule afterward, and the 

FAR extended the Rule of Two for 

governmentwide application in 1984. 

The Rule of Two is the cornerstone of 

the Federal Government’s support for 

small-business prime contracting. In 

Fiscal Year (FY) 2023, set-aside awards 

accounted for 65% of contracting 

dollars awarded to small businesses, the 

highest percentage since data became 

available in 2010. Those set-aside 

dollars pushed the government’s 

spending with small business prime 

contractors to $178 billion in FY23, or 

28.4%. Prior to the government-wide 

application of the Rule of Two in 1984, 

the Federal Government spent just 21% 

of its procurement dollars with small 

businesses. 

This proposed rule would clarify the 

applicability of the Rule of Two to 

multiple-award contracts by directing 

that an agency set aside an order under 

a multiple-award contract for small 

business contract holders when the 

contracting officer determines there is a 

reasonable expectation of obtaining 

offers from two or more small business 

contract holders under the multipleaward contract that are competitive in 

terms of market prices, quality, and 

delivery. Like the OFPP memorandum, 

the proposed rule provides several 

exceptions, such as orders under the 

Federal Supply Schedule, or where an 

exception to fair opportunity or an 

agency-specific exception applies. 

When an agency is unable to set aside 

an order over the micro-purchase 

threshold and an exception does not 

apply, the contracting officer must 

document their rationale and provide 

the documentation to the agency’s small 

business specialist or the Office of Small 

and Disadvantaged Business Utilization 

(OSDBU) or, for the Department of 

Defense, the Office of Small Business 

Programs (OSBP). An SBA procurement 

center representative (PCR) can review 

the documentation and may submit 

recommendations to increase small 

business opportunities. 

These proposed changes result from 

an interagency negotiation among SBA, 

the FAR Council, and other agencies. 

SBA initiated this negotiation for three 

reasons. 

First, the Small Business Act specifies 

that a fair proportion of the total 

‘‘purchase and contracts’’ for goods and 

services shall be awarded to small 

business concerns. The statute does not 

limit the fair proportion language only 

to contracts. Rather, it applies it to both 

‘‘purchase[s] and contracts.’’ The 

Federal Government is directed to 

assure that a fair proportion of 

purchases and contracts are awarded to 

small businesses. SBA believes that the 

use of the words ‘‘purchase and’’ means 

that the Rule of Two should not apply 

only when an agency is considering the 


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award of a contract. It should also apply 

to all purchases of goods and services, 

as well. As such, SBA believes that it 

makes sense to apply the Rule of Two 

to orders issued under multiple-award 

contracts. Again, it should apply to all 

‘‘purchases,’’ not just to all new 

contracts. 

Second, the proposed rule would 

provide certainty on how to apply the 

Rule of Two to task and delivery orders 

under multiple-award contracts and 

eliminate confusion created by an 

unresolved question in dispute between 

the Court of Federal Claims and the 

Government Accountability Office 

(GAO). The Court of Federal Claims 

agreed with the small-business plaintiffs 

in Tolliver Group that ‘‘an agency must 

apply the Rule of Two before an agency 

can even identify the possible universe 

of procurement vehicles which may be 

utilized for a particular scope of work.’’ 

151 Fed. Cl. at 104. In a GAO protest 

decided after the court’s ruling, GAO 

maintained its longstanding 

interpretation, which differs from the 

Court’s position, that, in 15 U.S.C. 

644(r), Congress intended to clearly 

delineate a distinction between a 

procuring agency’s mandatory set-aside 

obligations when establishing a 

contract, and an agency’s discretion 

with respect to setting aside task or 

delivery orders under a multiple-award 

contracts, i.e., indefinite delivery 

indefinite quantity (IDIQ) contracts. 

Itility, LLC, B–419167, Dec. 23, 2020, 

2020 CPD P412 at 18. The proposed 

change to require application of the 

Rule of Two to task and delivery orders 

under multiple-award contracts, with 

certain exceptions, should eliminate 

lingering confusion. 

Third, for similar reasons as those 

described in the OFPP memorandum, 

the proposed rule advances equity in 

Federal procurement practices. This 

rule is expected to create more contract 

opportunities for small businesses, 

particularly small disadvantaged 

businesses (SDBs). Executive Order 

14091 established a government-wide 

goal of awarding 15 percent of Federal 

contract spending to SDBs in FY 2025, 

and this proposed rule would put the 

government in a better position to 

achieve that goal. 

This proposed rule rests on the 

authority in the Small Business Jobs Act 

of 2010, Public Law 111–240, sec. 1331, 

codified at 15 U.S.C. 644(r), for SBA and 

the FAR Council to establish guidance 

under which Federal agencies may, at 

their discretion and notwithstanding 

fair opportunity requirements, set aside 

orders placed against multiple-award 

contracts for small business concerns. 

Under this proposal, agencies are 

required to document their decisions 

not to set aside an order for small 

businesses. Such a decision might be 

based on one of the exceptions in the 

regulation, or because the Rule of Two 

is not satisfied—i.e., where there are 

zero small businesses or only one small 

business that are responsible, available, 

and reasonably priced. 

The OFPP memorandum, footnote 4, 

stated that Federal Supply Schedule 

orders are not covered by the term 

‘‘multiple-award contract’’ as used in 

the memorandum. The memorandum 

stated that Schedules are continually 

open to new entrants and highly 

accessible to small businesses. 

Similarly, this proposed rule would not 

cover the Federal Supply Schedule. 

This also mirrors the treatment of the 

Federal Supply Schedule by the Court 

of Federal Claims, which exempted the 

Schedule from the Rule of Two in 

VSolvit, LLC v. United States, 151 Fed. 

Cl. 678 (2020), because of specific 

language providing so in FAR subpart 

8.4. 

Severability 

SBA intends for the provisions of this 

proposed rule, if finalized, to be 

severable from each other such that if a 

court were to hold that any provision is 

invalid or unenforceable as to a 

particular person or circumstance, the 

rule would remain in effect as to any 

other person or circumstance. 

Section-by-Section Analysis 

13 CFR 125.2(c)(1)(i) 

The proposed rule adopts the updated 

terminology of ‘‘certified servicedisabled veteran-owned small 

businesses concerns,’’ given that SBA 

now certifies service-disabled veteranowned small businesses. 

13 CFR 125.2(c)(2) 

The proposed rule would add a new 

§ 125.2(c)(2) with new documentation 

and coordination requirements when an 

agency plans to establish a multiple 

award contract without an order setaside provision. The current 

§ 125.2(c)(3) only requires notification at 

least 30 days prior to the solicitation’s 

issuance when an agency would issue a 

bundled requirement or one that would 

be unlikely for award to a small 

business. SBA believes that 30 days is 

not enough time to intervene in a large 

procurement when, oftentimes, the 

agency has been planning the 

procurement for over a year. The 

proposed rule would require small 

business specialists to notify the PCR as 

early in the acquisition planning 

process as possible where the multipleaward contract exceeds the substantial 

bundling threshold (even if the contract 

is not bundled), and the number of 

small business awardees is expected to 

be less than 30 percent of the total 

number of awardees. With the 

notification, the contracting officer must 

include market research and 

documentation explaining why the 

multiple-award contract is not set-aside 

or reserved with an expectation of at 

least 30 percent for small businesses. In 

the future, if this proposed rule is 

finalized, small business should make 

up at least 30 percent of new multipleaward contract holders and that should 

make the Rule of Two more effective on 

orders issued under those multiple 

award contracts. 

The 30-percent threshold is based on 

the current proportion of multipleaward contract dollars going to small 

business, and agencies can reach that 

threshold by using contract reserves. 

Contract reserves are a procurement 

strategy available only for multipleaward contracts in which the agency 

sets aside some of the contract awards 

for small businesses (or a small business 

program such as 8(a) or HUBZone), and 

then competes orders only among those 

set-aside awardees. 

13 CFR 125.2(c)(4) 

The proposed rule incorporates the 

OFPP memorandum’s recommendation 

that agencies share with small-business 

specialists documentation of the basis 

for not setting aside orders over the 

micro-purchase threshold, unless an 

exception applies. Small business 

specialists are agency staff, typically 

working with the agency’s OSDBU or 

OSBP. Small business specialists play a 

vital role in ensuring that the agency 

prioritizes small-business participation 

when planning acquisitions. Under the 

proposed rule, the agency would also 

document, and share with its small 

business specialist, the decision to place 

an order under a multiple-award 

contract with only one or no small 

business contract holders. 

13 CFR 125.2(e)(6) 

The proposed rule would revise the 

regulation on setting aside orders, 

§ 125.2(e)(6)(i), to require the set-aside 

of orders over the micro-purchase 

threshold where the Rule of Two is 

satisfied with respect to small-business 

contract holders. The only exceptions to 

applying the Rule of Two are for orders 

under Federal Supply Schedule 

contracts, when an exception to fair 

opportunity applies, or where agency 

procedures reflect an appropriate 

exception. When one of these three 

exceptions does not apply, the agency 


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would be required to document its 

determination not to issue a set-aside 

and coordinate that documentation with 

the small business specialist. If the 

agency chooses to issue an order under 

a multiple award contract that has one 

or no small business contract holders, 

the agency must document the rationale 

for that decision, including the market 

research conducted by the agency, 

coordinate that documentation with the 

small business specialist, and ensure 

that the small business specialist has a 

reasonable opportunity to respond. This 

requirement would not apply to orders 

under the Federal Supply Schedule, 

where an exception to fair opportunity 

applies, or an agency-specific exception 

applies. 

Through this proposed rule, SBA 

seeks to expand small-business 

participation on multiple-award 

contracts. Unlike the Tolliver decision, 

this proposed rule does not require the 

application of the Rule of Two prior to 

choosing a particular multiple-award 

contract vehicle. Thus, although the 

proposed rule would permit an agency 

to use existing multiple award vehicles, 

agencies would be required to conduct 

the Rule of Two analysis on the selected 

multiple-award contract before issuing 

an order (unless an exception applies). 

Agencies are not expected to amend 

ordering procedures of existing 

multiple-award contracts that did not 

provide for order set-asides, but they 

could choose to do so if there is 

adequate time remaining on the contract 

(i.e., more than one year), to permit 

small business concerns to fully perform 

or deliver under an order. 

Exceptions to the application of the 

mandatory Rule of Two would apply for 

orders under the Federal Supply 

Schedule, where an exception to fair 

opportunity applies (such as there being 

only one responsible source), and 

agency-specific exceptions. For 

example, agencies may use an agencyspecific exception to address supply 

chain and national security risks, to 

address goods or services that no small 

businesses provide and would not 

provide in the future, or to respond to 

a major disaster or emergency. The 

proposed rule would require that agency 

exceptions be developed in consultation 

with both the agency OSDBU or OSBP 

and SBA, and made public before they 

are used. The exception procedures 

must have an appropriate mechanism to 

ensure responsible use. 

Compliance With Executive Orders 

12866, 12988, 13132, 13563, the 

Paperwork Reduction Act (44 U.S.C. 

Ch. 35), and the Regulatory Flexibility 

Act (5 U.S.C. 601–612) 

Executive Order 12866 

The Office of Management and Budget 

(OMB) anticipates that this rulemaking 

will be a significant regulatory action 

and, therefore, is subject to review 

under section 6(b) of Executive Order 

12866, Regulatory Planning and Review, 

dated September 30, 1993. Accordingly, 

the next section contains SBA’s 

Regulatory Impact Analysis. 

Regulatory Impact Analysis: 

1. Is there a need for the regulatory 

action? 

This action implements 

recommendations made in OFPP’s 

memorandum titled ‘‘Increasing Small 

Business Participation on MultipleAward Contracts’’. It also addresses 

confusion from the contradictory 

decisions between the Court of Federal 

Claims and the Government 

Accountability Office (GAO). The Court 

of Federal Claims agreed with the smallbusiness plaintiffs in Tolliver Group that 

‘‘an agency must apply the Rule of Two 

before an agency can even identify the 

possible universe of procurement 

vehicles which may be utilized for a 

particular scope of work.’’ 151 Fed. Cl. 

at 104. In a GAO protest decided after 

the court’s ruling, GAO ruled that 

agencies may set aside orders even if the 

underlying multiple-award contract 

does not notify contract holders to 

future set-asides. Itility, LLC, B–419167, 

Dec. 23, 2020, 2020 CPD P412 at 18. 

GAO has ruled agencies may set aside 

orders even if the underlying does not 

notify contract holders to future setasides. Marine Hydraulics Int’l LLC, B– 

420562, May 25, 2022, 2022 CPD P122 

at 10. This rulemaking is intended to 

eliminate any confusion and ensure that 

the policy is consistently implemented 

across all agencies. The proposed rule 

also supports Administration efforts to 

develop a competitive small-business 

contracting base and increase spending 

with small disadvantaged businesses 

(SDBs). 

2. What is the baseline, and the 

incremental benefits and costs of this 

regulatory action? 

Based on SBA’s analysis of FY 2019 

to FY 2023 data, as shown in the table 

below, this change could add up to $6 

billion per year in small business 

contract spending. The table below 

shows the dollar gap between smallbusiness spending on non-set-aside 

multiple-award task and delivery order 

contracts, and that same spending 

government wide, when the 

governmentwide numbers are adjusted 

to use the same NAICS-code 

distribution present in the non-set-aside 

multiple-award task-order contracts: 

Dollars and potential dollars in 

multiple-award contracts FY 

Total 

dollars on 

MACs 

($B) 

Small 

business 

dollars on 

MACs 

(not set aside) 

($B) 

MAC small 

business % 

Overall small 

business % 

(NAICS adjusted) 

Potential 

MAC small 

business 

dollars 

($B) 

Gap between 

actual and 

potential SB 

dollars 

($B) 

2019 ................................................... $75.5 $14.2 18.8 24.8 $18.8 $4.5 

2020 ................................................... 92.5 16.9 18.3 25.2 23.3 6.4 

2021 ................................................... 78.5 16.6 21.2 25.7 20.1 3.5 

2022 ................................................... 84.4 17.0 20.2 24.3 20.6 3.5 

2023 ................................................... 100.7 19.2 19.1 25.1 25.3 6.1 

In the table above, the fifth column 

(Overall Small Business % (NAICS 

adjusted)) is multiplied by total dollars 

(second column) to determine the 

numbers in the sixth column (Potential 

MAC Small Business Dollars ($B)). SBA 

presumes that applying the Rule of Two 

to task and delivery orders would close 

the dollar gap between small-business 

spending on non-set-aside multipleaward contracts and small-business 

spending, governmentwide, as adjusted. 

The action could add up to $6 billion to 

small-business contract spending. With 

contract spending exceeding $600 

billion annually, this equates to less 

than 1 percent of all Federal contract 

spending. 

This rulemaking will impose costs to 

the acquisition workforce to comply 

with the market-research, 

documentation, and coordination 

requirements when the Rule of Two is 

not applied, as specified in the 

rulemaking. Although some agencies 

currently apply the Rule of Two when 

ordering under a multiple-award 


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1As performed by a GS–13 Step 5 (DC locality in 

2024 of $62.17 with 100% added for benefits and 

overhead). 

contract vehicle and may have 

documentation and coordination 

procedures, SBA will assume for the 

purpose of calculating the potential cost 

that no agencies currently require the 

application of the Rule of Two. 

In FY23, agencies awarded 130,246 

orders to other-than-small businesses off 

multiple-award contracts, not including 

the Federal Supply Schedule. Many of 

those orders went repeatedly from the 

same agency to the same other-thansmall contractors. The proposed rule 

allows agencies to use market research 

conducted within the past 18 months, 

so if an agency were ordering to the 

same other-than-small contractor 

repeatedly under the same multipleaward contract, the agency would, most 

likely, reuse market research from prior 

awards. After eliminating orders that 

went to the same other-than-small 

contractor on a single vehicle from the 

same agency, only 5,513 orders remain 

that would require new small-business 

market research annually. The actual 

number of affected orders is likely less 

because the 5,513 orders presume 

annual market research (i.e., every 12 

months), but the proposed rule allows 

for market research to be used from up 

to 18 months prior. 

Contracting officers must base a 

decision on sufficient facts, considering 

market research, to demonstrate a 

reasonable assessment of the availability 

of small businesses on the selected 

multiple-award contract. Market 

research may include but is not limited 

to a review of procurement history, 

search of databases such as SBA’s 

Dynamic Small Business Search (DSBS), 

consultation with SBA Procurement 

Center, or internet searches. Because of 

the variety of market research methods, 

SBA estimates that the time required for 

justification of a decision ranges from a 

half-hour to search relevant databases to 

several hours for more extensive openmarket research, with the distribution of 

methods skewed toward database 

searches rather than intensive market 

research. SBA therefore estimates that 

the mean time required for justification 

is 60 minutes for an estimated annual 

number of 5,500 affected contracts, 

resulting in an estimated annual burden 

to the government for market research of 

$683,870.1

Additionally, agency small-business 

specialists would review documentation 

for orders not set-aside above the 

micropurchase threshold. FAR section 

7.104(d) currently requires such a 

review for orders not set-aside above the 

substantial bundling threshold. The 

number of additional orders to be 

reviewed annually (excluding those 

going from the same agency to the same 

contractor for the reasons explained in 

the last paragraph) is 3,700. SBA 

estimates that the time required for a 

small-business specialist to review this 

order documentation is 60 minutes. 

This considers that the orders are 

relatively low-dollar. SBA therefore 

estimates the annual burden to the 

government for small-business specialist 

review to be $460,000. 

3. What are the alternatives to this 

rulemaking? 

SBA considered a rule that would 

require the agency to assess the Rule of 

Two prior to choosing an existing 

contracting vehicle. That approach 

could increase consideration of small 

businesses that may not presently be on 

a multiple-award contract, but fails to 

recognize that the capabilities and 

capacity of many qualified small 

businesses already on multiple-award 

contracts are not being fully leveraged 

by agencies. SBA’s research suggests 

that the changes proposed by this 

rulemaking to increase opportunities for 

small business contract holders on 

multiple-award contracts could advance 

diversity and resilience by adding up to 

$6 billion per year in contract awards to 

small businesses. Requiring application 

of the Rule of Two prior to selecting an 

existing contracting vehicle would, in 

many cases, duplicate the small 

business market research that agencies 

have conducted when establishing the 

multiple-award contract and could 

undermine important benefits that these 

vehicles were designed to create, 

including the ability to meet mission 

needs in a timely manner at lower cost 

and the ability to implement 

Governmentwide priorities. 

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. While 

this rulemaking will have no effect on 

task and delivery orders already 

awarded, it will apply to all new 

multiple-award contracts, the orders 

placed under those contracts, and a new 

order entered into on existing multipleaward contracts where ordering 

procedures allow for the set aside of the 

order. 

Executive Order 13132 

For the purposes of Executive Order 

13132, SBA has determined that this 

rulemaking will not have substantial, 

direct effect 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 has determined that 

this rulemaking has no federalism 

implications warranting preparation of a 

federalism assessment. 

Executive Order 13563 

Executive Order 13563, Improving 

Regulation and Regulatory Review, 

directs agencies to, among other things: 

(a) afford the public a meaningful 

opportunity to comment through the 

internet on proposed regulations, with a 

comment period that should generally 

consist of not less than 60 days; (b) 

provide for an ‘‘open exchange’’ of 

information among government 

officials, experts, stakeholders, and the 

public; and (c) seek the views of those 

who are likely to be affected by the 

rulemaking, even before issuing a notice 

of proposed rulemaking. As far as 

practicable or relevant, SBA considered 

these requirements in developing this 

proposed rule, as discussed below. 

Did the agency use the best available 

techniques to quantify anticipated 

present and future costs when 

responding to Executive Order 12866 

(e.g., identifying changing future 

compliance costs that might result from 

technological innovation or anticipated 

behavioral changes)? 

To the extent possible, the agency 

utilized the most recent data available 

in the Federal Procurement Data 

System—Next Generation, DSBS, and 

SAM. 

Public participation: Did the agency: 

(a) afford the public a meaningful 

opportunity to comment through the 

internet on any proposed regulation, 

with a comment period that should 

generally consist of not less than 60 

days; (b) provide for an ‘‘open 

exchange’’ of information among 

government officials, experts, 

stakeholders, and the public; (c) provide 

timely online access to the rulemaking 

docket on Regulations.gov; and (d) seek 

the views of those who are likely to be 

affected by rulemaking, even before 

issuing a notice of proposed 

rulemaking? 

The proposed rule will have a 60-day 

comment period and will be posted on 

www.regulations.gov to allow the public 

to comment meaningfully on its 

provisions. SBA has also discussed 

some of the proposals in this 

rulemaking with stakeholders at various 


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small business on-line and in-person 

procurement conferences. 

Flexibility: Did the agency identify 

and consider regulatory approaches that 

reduce burdens and maintain flexibility 

and freedom of choice for the public? 

The proposed rule is intended to 

eliminate confusion in the small 

business acquisition community arising 

due to contradictory decisions of the 

Court of Federal Claims and the GAO, 

and increase procurement opportunities 

for small businesses. 

Paperwork Reduction Act, 44 U.S.C. Ch. 

35 

This rulemaking does not impose 

additional reporting or recordkeeping 

requirements under the Paperwork 

Reduction Act, 44 U.S.C. chapter 35. 

Regulatory Flexibility Act, 5 U.S.C. 601– 

612 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601, requires administrative 

agencies to consider the effect of their 

actions on small entities, small 

nonprofit enterprises, and small local 

governments. Pursuant to the RFA, 

when an agency issues a rulemaking, 

the agency must prepare a regulatory 

flexibility analysis which describes the 

impact of the rule on small entities. 

However, section 605 of the RFA allows 

an agency to certify a rule, in lieu of 

preparing an analysis if the rulemaking 

is not expected to have a significant 

economic impact on a substantial 

number of small entities. 

This proposed rule implements an 

OFPP memorandum and seeks to 

resolve confusion created by differing 

interpretations of the Rule of Two by the 

Court of Federal Claims (Tolliver Group, 

151 Fed. Cl. 70) and the GAO (iTility, 

B–419167). It does not impose any costs 

on small business, but rather increases 

procurement opportunities for small 

business. Therefore, SBA does not 

believe the rulemaking would have a 

disparate impact on small entities or 

would impose any additional significant 

costs on them. For the reasons 

discussed, SBA certifies that this 

proposed rule does not have a 

significant economic impact on a 

substantial number of small entities. 

List of Subjects in 13 CFR Part 125 

Government contracts, Government 

procurement, Reporting and 

recordkeeping requirements, Small 

businesses, Technical assistance. 

For the reasons discussed in the 

preamble, the Small Business 

Administration proposes to amend 13 

CFR part 125 as follows: 

PART 125—GOVERNMENT 

CONTRACTING PROGRAMS 

■ 1. The authority citation for part 125 

continues to read as follows: 

Authority: 15 U.S.C. 632(p), (q), 634(b)(6), 

637, 644, 657f, 657q, 657r, and 657s; 38 

U.S.C. 501 and 8127. 

■ 2. Amend § 125.2 by: 

■ a. In paragraph (c)(1)(i), removing the 

words ‘‘small business concerns owned 

and controlled by service-disabled 

veterans’’ and adding, in their place, the 

words ‘‘certified service-disabled 

veteran-owned small business 

concerns’’; 

■ b. Redesignating paragraphs (c)(2) 

through (6) as (c)(3) through (7), 

respectively; 

■ c. Adding new paragraph (c)(2); 

■ d. Adding new paragraphs (c)(5)(iv) 

and (v); 

■ e. Removing paragraphs (e)(6)(ii) and 

(iii); 

■ f. Redesignating paragraphs (e)(6)(i), 

(iv), and (v) as (e)(6)(iii), (v), and (vi), 

respectively; 

■ g. Adding new paragraphs (e)(6)(i) and 

(ii); 

■ h. Removing the first sentence of 

newly redesignated paragraph (e)(6)(iii); 

and 

■ i. Adding new paragraph (e)(6)(iv). 

The additions and revisions read as 

follows: 

§ 125.2 What are SBA’s and the procuring 

agency’s responsibilities when providing 

contracting assistance to small 

businesses? 

* * * * * 

(c) * * * 

(2) PCR notification and early 

coordination on certain Multiple-award 

Contracts. (i) The agency’s small 

business specialist must notify SBA’s 

Procurement Center Representative 

during the development of the 

acquisition plan as early in the planning 

process as possible if: 

(A) The dollar value of the Multipleaward Contract exceeds the agency’s 

threshold for substantial bundling, 

though this requirement is not limited 

to bundled requirements; and 

(B) the number of small business 

contract holders is expected to be under 

30 percent of all expected holders. 

(ii) When the number of small 

business contract holders on a multipleaward contract exceeding the 

substantial-bundling threshold is 

expected to be under 30 percent of all 

expected holders, the agency must 

document the acquisition plan with the 

rationale, including market research 

conducted, for not setting aside or 

reserving the contract for small 

business. The explanation should be 

reviewed by the agency’s small business 

specialist. 

* * * * * 

(5) * * * 

(iv) When placing an order valued 

over the micro purchase threshold 

under a multiple-award contract that 

has no or only one small business 

contract awardee, agencies must 

document and provide to its small 

business specialist: 

(A) How the market research of small 

business contract holders, including 

small businesses that are not contract 

holders on the multiple award contract 

against which the order would be 

placed, and mission needs informed the 

agency’s decision for selecting the 

multiple award contract to fulfill its 

needs 

(B) The market research the agency 

conducted within the past 18 months 

regarding the multiple award contract. 

(C) The requirement of this paragraph 

(c)(5)(iv) does not apply to orders under 

the Federal Supply Schedule, where an 

exception to fair opportunity applies, 

when an agency exception applies, or to 

repetitive orders, including orders 

placed using automated ordering 

procedures, issued by an agency when 

a prior order was documented and 

coordinated within the prior 18 months. 

(v) When placing an order valued over 

the micro-purchase threshold under a 

multiple award contract that has two or 

more small business contract awardees 

but the agency does not set-aside the 

order for small business, agencies must 

document and provide to its small 

business specialist the basis for not 

setting aside the order, and ensure the 

specialist has an opportunity to 

respond. The agency small business 

specialist must notify the SBA PCR 

when the value of such an order exceeds 

a dollar amount negotiated between the 

agency and the PCR. This 

documentation and coordination 

requirement does not apply to orders 

placed under the Federal Supply 

Schedule, citing an exception to fair 

opportunity, or using an agency-specific 

exception. 

(e) * * * 

(6) * * * 

(i) Notwithstanding the fair 

opportunity requirements set forth in 10 

U.S.C. 3406(c) and 41 U.S.C. 4106(c), 

and unless the order is under a Federal 

Supply Schedule or an agency 

exception in accordance with agency 

procedures applies, a contracting officer 

shall set aside orders valued over the 

micro-purchase threshold (MPT) for 

small business contract holders when 

the contracting officer determines there 

is a reasonable expectation of obtaining 


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Federal Register / Vol. 89, No. 207 / Friday, October 25, 2024 / Proposed Rules 85077 

offers from two or more small business 

contract holders under the multipleaward contract that are competitive in 

terms of fair market price, quality, and 

delivery. 

(ii) When placing an order valued 

over the MPT under a multiple award 

contract, and the contracting officer 

does not set-aside the order for small 

business, the contracting officer must 

document and provide to its small 

business specialist the basis for not 

setting aside the order, in accordance 

with paragraph (c)(4)(v) of this section. 

* * * * * 

(iv) Agencies may develop procedures 

for the use of agency-specific 

exceptions. Exception procedures must 

be developed in consultation with both 

the agency small business director and 

SBA, and made available to the public. 

Exception procedures must have an 

appropriate mechanism to ensure 

responsible use. 

* * * * * 

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2024–24716 Filed 10–24–24; 8:45 am] 

BILLING CODE 8026–09–P 

CONSUMER PRODUCT SAFETY 

COMMISSION 

16 CFR Parts 1220 and 1221 

[Docket No. CPSC–2024–0034] 

Revision to the Voluntary Standard for 

Non-Full-Size Baby Cribs and Play 

Yards 

AGENCY: Consumer Product Safety 

Commission. 

ACTION: Notice of revised standard; 

request for comments. 

SUMMARY: Two of the U.S. Consumer 

Product Safety Commission’s 

(Commission or CPSC) mandatory rules, 

Safety Standard for Non-Full-Size Baby 

Cribs and Safety Standard for Play 

Yards, incorporate by reference the 

same voluntary standard, ASTM F406, 

Standard Consumer Safety 

Specification for Non-Full-Size Baby 

Cribs/Play Yards. The Safety Standard 

for Non-Full-Size Baby Cribs 

incorporates the 2022 version of ASTM 

F406, and the Safety Standard for Play 

Yards incorporates the 2019 version of 

ASTM F406. ASTM notified the 

Commission that it has revised ASTM 

F406 and published ASTM F406–2024. 

CPSC seeks comment on whether 

adopting the revised voluntary standard 

would improve the safety of non-fullsize cribs and/or play yards. 

DATES: Comments must be received by 

November 8, 2024. 

ADDRESSES: You can submit comments, 

identified by Docket No. CPSC–2024– 

0034, by any of the following methods: 

Electronic Submissions: Submit 

electronic comments to the Federal 

eRulemaking Portal at: https://

www.regulations.gov. Follow the 

instructions for submitting comments. 

Do not submit through this website: 

confidential business information, trade 

secret information, or other sensitive or 

protected information that you do not 

want to be available to the public. CPSC 

typically does not accept comments 

submitted by email, except as described 

below. 

Mail/Hand Delivery/Courier/ 

Confidential Written Submissions: CPSC 

encourages you to submit electronic 

comments by using the Federal 

eRulemaking Portal. You may, however, 

submit comments by mail, hand 

delivery, or courier to: Office of the 

Secretary, Consumer Product Safety 

Commission, 4330 East-West Highway, 

Bethesda, MD 20814; telephone: (301) 

504–7479. If you wish to submit 

confidential business information, trade 

secret information, or other sensitive or 

protected information that you do not 

want to be available to the public, you 

may submit such comments by mail, 

hand delivery, or courier, or you may 

email them to: cpsc-os@cpsc.gov. 

Instructions: All submissions must 

include the agency name and docket 

number. CPSC may post all comments 

without change, including any personal 

identifiers, contact information, or other 

personal information provided, to: 

https://www.regulations.gov. Do not 

submit to this website: confidential 

business information, trade secret 

information, or other sensitive or 

protected information that you do not 

want to be available to the public. If you 

wish to submit such information, please 

submit it according to the instructions 

for mail/hand delivery/courier/ 

confidential written submissions. 

Docket: For access to the docket to 

read background documents or 

comments received, go to: https://

www.regulations.gov, and insert the 

docket number, CPSC–2024–0034, into 

the ‘‘Search’’ box, and follow the 

prompts. 

FOR FURTHER INFORMATION CONTACT: 

Frederick DeGrano, Project Manager, 

Division of Mechanical and Combustion 

Engineering, U.S. Consumer Product 

Safety Commission, 5 Research Place, 

Rockville, MD 20850; telephone: (301) 

987–2711; email: fdegrano@cpsc.gov. 

SUPPLEMENTARY INFORMATION: Section 

104(b) of the Consumer Product Safety 

Improvement Act of 2008 (CPSIA) 

requires the Commission to adopt 

mandatory standards for durable infant 

or toddler products. 15 U.S.C. 

2056a(b)(1). Mandatory standards must 

be ‘‘substantially the same as’’ voluntary 

standards, or they may be ‘‘more 

stringent’’ than the applicable voluntary 

standards, if the Commission 

determines that more stringent 

requirements would further reduce the 

risk of injury associated with the 

products. Id. Mandatory standards may 

be based, in whole or in part, on a 

voluntary standard. 

Section 104(b)(4)(B) of the CPSIA 

specifies the process for when a 

voluntary standards organization revises 

a standard that the Commission 

incorporated by reference under section 

104(b)(1). First, the voluntary standards 

organization must notify the 

Commission of the revision. Once the 

Commission receives this notification, 

the Commission may reject or accept the 

revised standard. To reject a revised 

standard, the Commission must notify 

the voluntary standards organization 

within 90 days of receiving the notice of 

revision that the Commission has 

determined that the revised standard 

does not improve the safety of the 

consumer product and that CPSC is 

retaining the existing standard. If the 

Commission does not take this action, 

the revised voluntary standard will be 

considered a consumer product safety 

standard issued under section 9 of the 

Consumer Product Safety Act (15 U.S.C. 

2058), effective 180 days after the 

Commission received notification of the 

revision (or a later date specified by the 

Commission in the Federal Register). 15 

U.S.C. 2056a(b)(4)(B). 

Under this authority, the Commission 

issued two mandatory safety rules that 

incorporate by reference applicable 

provisions of ASTM F406: Safety 

Standard for Non-Full-Size Baby Cribs, 

codified at 16 CFR part 1220 (75 FR 

81787, Dec. 28, 2010), and Safety 

Standard for Play Yards, codified at 16 

CFR part 1221 (77 FR 52228, Aug. 29, 

2012). These mandatory standards 

include performance requirements and 

test methods, as well as requirements 

for warning labels and instructions, to 

address hazards to children. After the 

Commission’s promulgation of these 

final rules, ASTM published several 

revisions to ASTM F406 that the 

Commission considered for 

incorporation by reference in the 

mandatory rules, parts 1220 and 1221. 

Most recently, in 2023, the Commission 

revised the non-full-size (NFS) cribs 

mandatory standard to incorporate by 

reference ASTM F406–2022, but 

rejected ASTM F406–2022 as it applied 


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