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[Federal Register Volume 89, Number 241 (Monday, December 16, 2024)]
[Rules and Regulations]
[Pages 101828-101831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29374]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 6, 9, 18, 19, and 52

[FAC 2025-02; FAR Case 2022-009, Item II; Docket No. FAR-2022-0009; 
Sequence No. 1]
RIN 9000-AO46

Federal Acquisition Regulation: Certification of Service-Disabled 
Veteran-Owned Small Businesses

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA have adopted as final, without change, an 
interim rule amending the Federal Acquisition Regulation (FAR) to 
implement the final rules published by the Small Business 
Administration to implement sections of the National Defense 
Authorization Acts for Fiscal Years 2021 and 2022.

DATES: Effective December 16, 2024.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Ms. Carrie Moore, Procurement Analyst, at 571-300-5917, or by email at 
[email protected]. For information pertaining to status or 
publication schedules contact the Regulatory Secretariat Division at 
202-501-4755 or [email protected]. Please cite FAC 2025-02, FAR Case 
2022-009.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA published an interim rule at 89 FR 13950 on 
February 23, 2024, to implement regulatory changes made by the Small 
Business Administration (SBA) in its final rules published on November 
29, 2022, at 87 FR 73400 and at 88 FR 42592 on July 3, 2023, to 
implement section 862 of the William M. (Mac) Thornberry National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 
116-283; 15 U.S.C. 657f). This final rule also partially implements 
section 863 of the NDAA for FY 2022 (Pub. L. 117-81; 15 U.S.C. 634(i)), 
as implemented by SBA in its final rule published on April 27, 2023, at 
88 FR 26164. For further details please see the interim rule. Three 
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 and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    There are no significant changes from the interim rule.

B. Analysis of Public Comments

1. Exceptions to Implementation
    Comment: One respondent recommended the grace period for 
certification be extended to allow businesses additional time to comply 
with the new requirements.
    Response: This rule implements section 862 of the NDAA for FY 2021. 
Section 862 provides for a one-year grace period after the transfer 
date of January 1, 2023, for service-disabled veteran-owned small 
businesses (SDVOSBs) to submit an application for certification to SBA.
    Therefore, since the grace period is statutory, it cannot be 
extended by the Councils.
    Comment: One respondent recommended that SBA expand its outreach 
and support services to ensure that all interested businesses are able 
to successfully navigate the certification process.
    Response: To implement SDVOSB certification, SBA established a 
website at https://veterans.certify.sba.gov. This website streamlines 
and facilitates the SDVOSB certification process and provides links for 
SDVOSBs to obtain assistance, including both online and telephonic 
support.
2. Outside the Scope of the Rule.
    Comment: One respondent submitted a comment that is unrelated to 
this case.
    Response: This comment is outside of the scope of this rule.
    Comment: One respondent took exception to the certification 
requirements for SDVOSBs and took exception to the three-year 
certification period for SDVOSBs, indicating that it is too long and 
may result in fraud.
    Response: This rule implements regulatory changes made by the SBA 
in its final rules published on November 29, 2022, at 87 FR 73400 and 
at 88 FR 42592 on July 3, 2023. SBA regulations regarding the Veteran 
Small Business Certification Program, including SDVOSB certification 
requirements, are addressed at 13 CFR part 128. SBA's regulations 
regarding recertification requirements are implemented at 13 CFR 
128.306. This rule simply implements SBA's regulations; therefore, this 
comment is outside the scope of this rule.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT), for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items), or for Commercial Services

    This rule amends the following provisions and clauses at FAR: 
52.212-3, Offeror Representations and Certifications--Commercial 
Products and Commercial Services; 52.212-5, Contract Terms and 
Conditions Required To Implement Statutes or Executive Orders--
Commercial Products and Commercial Services; 52.213-4, Terms and 
Conditions-

[[Page 101829]]

Simplified Acquisitions (Other Than Commercial Products and Commercial 
Services); 52.219-1, Small Business Program Representations; 52.219-8, 
Utilization of Small Business Concerns; 52.219-27, Notice of Set-Aside 
for, or Sole-Source Award to, Service-Disabled Veteran-Owned Small 
Business (SDVOSB) Concerns Eligible Under the SDVOSB Program; 52.219-
28, Post-Award Small Business Program Rerepresentation; and 52.244-6, 
Subcontracts for Commercial Products and Commercial Services. These 
provisions and clauses continue to apply to acquisitions at or below 
the SAT and to acquisitions for commercial products, including COTS 
items, and commercial services.
    This rule applies section 862 of the NDAA for FY 2021 and section 
863 of the NDAA for FY 2022, as implemented by this rule, to contracts 
at or below the SAT and to commercial services and commercial products, 
including COTS items.

A. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold

    41 U.S.C. 1905 governs the applicability of laws to acquisitions at 
or below the SAT. Section 1905 generally limits the applicability of 
new laws when agencies are making acquisitions at or below the SAT, but 
provides that such acquisitions will not be exempt from a provision of 
law under certain circumstances, including when the Federal Acquisition 
Regulatory Council (FAR Council) makes a written determination and 
finding that it would not be in the best interest of the Federal 
Government to exempt contracts and subcontracts in amounts not greater 
than the SAT from the provision of law. The FAR Council has made a 
determination to apply this statute to acquisitions at or below the 
SAT.

B. Applicability to Contracts for the Acquisition of Commercial 
Products and Commercial Services, Including Commercially Available Off-
the-Shelf (COTS) Items

    41 U.S.C. 1906 governs the applicability of laws to contracts for 
the acquisition of commercial products and commercial services, and is 
intended to limit the applicability of laws to contracts for the 
acquisition of commercial products and commercial services. Section 
1906 provides that if the FAR Council makes a written determination 
that it is not in the best interest of the Federal Government to exempt 
commercial contracts, the provision of law will apply to contracts for 
the acquisition of commercial products and commercial services.
    41 U.S.C. 1907 states that acquisitions of COTS items will be 
exempt from certain provisions of law unless the Administrator for 
Federal Procurement Policy makes a written determination and finds that 
it would not be in the best interest of the Federal Government to 
exempt contracts for the procurement of COTS items.
    The FAR Council has made a determination to apply this statute to 
acquisitions for commercial products and commercial services. The 
Administrator for Federal Procurement Policy has made a determination 
to apply this statute to acquisitions for COTS items.

IV. Expected Impact of the Rule

    This rule is expected to impact Government and contractor 
operations.
    As of January 1, 2024, contracting officers are required to check 
the System for Award Management (SAM) to verify that a concern is 
designated as an SDVOSB certified by SBA for sole-source or set-aside 
awards under the SDVOSB Program. If the concern is not designated in 
SAM as a certified SDVOSB, the contracting officer will be required to 
check SBA's Veteran Small Business Certification Program database to 
determine if the concern submitted an application for certification to 
SBA on or before December 31, 2023. If a concern submitted an 
application for certification to SBA on or before December 31, 2023, 
and represented its status as an SDVOSB concern in SAM, contracting 
officers may rely on a concern's representation in SAM.
    As of January 1, 2024, a small business concern that pursues a 
sole-source or set-aside award under the SDVOSB Program is required to 
be certified by SBA, or the concern must have both submitted a complete 
application for certification to SBA on or before December 31, 2023, 
and represented its status as an SDVOSB concern in SAM. A small 
business concern that submitted a complete application for 
certification to SBA on or before December 31, 2023, may continue to 
represent its status as an SDVOSB in SAM until SBA makes its final 
eligibility determination. This rule will not impact previous 
participants in the Department of Veterans Affairs (VA) VIP 
Verification Program as the requirements for the new SBA certification 
program are nearly identical to those of the VA. The only change that 
will impact small businesses is the certification requirement for 
SDVOSB concerns. As indicated in SBA's final rule, SBA does not 
anticipate the requirement for SBA certification to significantly 
impact small business concerns seeking SDVOSB certification. To 
minimize the potential impact on small businesses, SDVOSB concerns 
previously certified by the VA are reflected as certified in the SBA 
Veteran Small Business Certification Program database during the time 
that remains in the firm's three-year term of eligibility. To 
facilitate the transition of those firms already verified by the VA 
prior to the transfer date that have an eligibility period that expires 
in the first year of the Program, SBA extended the eligibility of those 
verified firms for an additional period of one year. The one-year grace 
period allows concerns that are not yet certified by the SBA to 
continue to represent their status as an SDVOSB in SAM while preparing 
their applications for SDVOSB certification. Furthermore, SBA did not 
change the documentation requirements for certification. Additionally, 
firms that represent their status in SAM likely have the documentation 
necessary for certification as that documentation is necessary to be 
able to represent their status as an SDVOSB in SAM. Therefore, concerns 
will only have to enter the information already in hand to apply to be 
included in SBA's Veteran Small Business Certification Program 
database.
    The public cost associated with obtaining SDVOSB certification is 
accounted for under SBA's final rule implementing the certification 
requirements (87 FR 73400). SBA's final rule advises concerns that 
effective January 1, 2024, only a certified SDVOSB or a concern that 
has submitted a complete application for certification to SBA on or 
before December 31, 2023, may seek a set-aside or sole-source award 
under the SDVOSB Program. SBA estimates it will take a concern 
approximately one hour to complete the application process.
    Small business concerns are also required to update SAM within two 
days of an SBA determination of ineligibility. Small business concerns 
are already required to update representations in SAM at least annually 
and ensure that representations are current, accurate, and complete. 
SBA's final rule published on April 27, 2023, at 88 FR 26164, advised 
small business concerns of the requirement to remove their designation 
from SAM within two days of an SBA decision regarding ineligibility.
    Given SBA's notice to small business concerns, the cost to the 
public associated with the FAR implementation of SBA's final rules is

[[Page 101830]]

de minimis and is limited to the cost of regulatory familiarization.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 (as amended by E.O. 14094) and 13563 
direct agencies to assess the 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 not a significant 
regulatory action and, therefore, was not subject to review under 
section 6(b) of E.O. 12866, Regulatory Planning and Review, dated 
September 30, 1993.

VI. Congressional Review Act

    Pursuant to the Congressional Review Act, DoD, GSA, and NASA will 
send this rule to each House of the Congress and to the Comptroller 
General of the United States. The Office of Information and Regulatory 
Affairs (OIRA) in the Office of Management and Budget has determined 
that this rule does not meet the definition in 5 U.S.C. 804(2).

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601-612. The FRFA is summarized as follows:

    DoD, GSA, and NASA are adopting, without change, an interim rule 
published on February 23, 2024 (89 FR 13950), that amended the 
Federal Acquisition Regulation (FAR) to implement regulatory changes 
made by the Small Business Administration (SBA) in its final rules 
published on November 29, 2022, at 87 FR 73400, and on July 3, 2023, 
at 88 FR 42592, to implement section 862 of the William M. (Mac) 
Thornberry National Defense Authorization Act (NDAA) for Fiscal Year 
(FY) 2021 (Pub. L. 116-283; 15 U.S.C. 657f) and to partially 
implement section 863 of the NDAA for FY 2022 (Pub. L. 117-81; 15 
U.S.C. 634(i)), as implemented by SBA in its final rule published 
April 27, 2023, at 88 FR 26164.
    The objective of this rule is to finalize the FAR implementation 
of SBA's Governmentwide certification program for SDVOSB concerns, 
update SDVOSB protest procedures, and to require an SDVOSB concern 
determined ineligible by SBA to update its status in the System for 
Award Management (SAM) within two days of the eligibility 
determination.
    There were no significant issues raised by the public comments 
in response to the initial regulatory flexibility analysis.
    This rule impacts small business concerns that seek a sole-
source or set-aside award under the SDVOSB Program. Effective 
January 1, 2024, an SDVOSB concern must be certified as an SDVOSB 
concern by SBA, or have both represented that it is an SDVOSB 
concern in SAM and submitted a complete application for 
certification to SBA on or before December 31, 2023, in order to be 
eligible for these types of awards. SBA has minimized the impact on 
SDVOSB concerns by accepting verifications of eligibility already 
determined by the Department of Veterans Affairs (VA). SBA granted a 
one-year extension on certification for VA verified firms and by 
providing firms that represent their status in SAM a one-year grace 
period to apply for certification. In addition, this rule impacts 
SDVOSB concerns that SBA determines are not eligible for SDVOSB 
certification, as these concerns will be ineligible for set-aside 
and sole-source awards under the SDVOSB Program. A concern 
determined ineligible for SDVOSB certification, however, may 
continue to represent its SDVOSB status in SAM and be eligible for 
set-aside and sole-source awards outside of the SDVOSB Program.
    The cost to concerns seeking SDVOSB certification should be de 
minimis because the eligibility documentation requirements currently 
exist under the VA's VIP Verification Program. In addition, the 
initial application, program examination, and recertification 
requirement will remain the same under SBA's management of the 
program. Firms likely have the documentation required for 
application, examination, and recertification through the 
transferred program because either such documentation was already 
required for certification through the VA's VIP Verification 
Program, or such documentation is likely needed for a firm to 
represent its status as an SDVOSB in SAM. Further, SBA anticipates 
that the application process should only require one hour of the 
concern's time. The cost to concerns to update their status in SAM 
is de minimis as concerns are already responsible for maintaining 
their representations in SAM to ensure that they are current, 
accurate, and complete.
    According to SAM, there are 32,284 concerns registered as 
SDVOSBs. Of the 32,284 SDVOSB concerns registered in SAM, 10,635 are 
already verified SDVOSBs in VA's verification program, which leaves 
21,649 SDVOSB concerns that represent their socioeconomic status in 
SAM. Of the 21,649 that represent their socioeconomic status as an 
SDVOSB in SAM, 181 are veteran-owned small business concerns that 
are SDVOSB certified in the VA's certification database. Therefore, 
there are 21,468 SDVOSBs that represent their status in SAM that are 
not currently in the VA's verification program and that may submit 
an application for certification to SBA. However, the number of 
SDVOSB concerns that will submit applications for certification is 
unknown as is the number of potential new SDVOSB entrants; 
therefore, the number of small business entities impacted by this 
rule may be greater than or less than the 21,468 SDVOSBs that 
currently represent their status in SAM.
    As of January 1, 2024, this rule requires small business 
concerns that submit an offer for a set-aside or sole-source 
requirement under the SDVOSB Program to either be certified by SBA, 
or have both submitted an application for certification to SBA on or 
before December 31, 2023, and represented their SDVOSB status in 
SAM. Concerns found ineligible to be a certified SDVOSB by SBA must 
update their status in SAM within two days of the eligibility 
determination. SDVOSB protests will be decided by OHA instead of 
SBA's Director of Government Contracting.
    SBA implemented a certification and information collection 
platform that replicates the VA's Center for Verification and 
Evaluation currently approved information collection and 
recordkeeping requirements under OMB Control Number 2900-0675.
    There are no known significant alternative approaches to this 
rule that would accomplish the stated objectives of the applicable 
statutes and which would minimize any significant economic impact of 
this interim rule on small entities, as the economic impact is not 
anticipated to be significant.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

VIII. Paperwork Reduction Act

    This 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. 3501-3521). These changes to the 
FAR do not impose additional information collection requirements to the 
associated paperwork burdens previously approved under Office of 
Management and Budget (OMB) Control Numbers 2900-0675, VETBIZ Vendor 
Information Pages Verification Program; 9000-0136, Commercial 
Acquisitions; FAR Sections Affected: 52.212-3(b)(2); 9000-0034, 
Examination of Records by Comptroller General and Contract Audit: FAR 
Section(s) Affected: 52.212-5(d), 52.214-26, 52.215-2; and 9000-0163, 
Small Business Size Rerepresentation; FAR Sections Affected 19.301 and 
52.219-28.

List of Subjects in 48 CFR Parts 2, 6, 9, 18, 19, and 52

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

Interim Rule Adopted as Final Without Change

    Accordingly, the interim rule amending 48 CFR parts 2, 6, 9, 18, 
19,

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and 52 which was published in the Federal Register at 89 FR 13950 on 
February 23, 2024, is adopted as a final rule without change.

[FR Doc. 2024-29374 Filed 12-13-24; 8:45 am]
 BILLING CODE 6820-EP-P
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