[Federal Register Volume 74, Number 139 (Wednesday, July 22, 2009)]
[Rules and Regulations]
[Pages 36106-36111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-17323]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 115 and 121

RIN 3245-AF94


American Recovery and Reinvestment Act: Surety Bond Guarantees; 
Size Standards

AGENCY: U.S. Small Business Administration.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule implements provisions of the American 
Recovery and Reinvestment Act of 2009 that pertain to the Surety Bond 
Guaranty (SBG) Program. Until September 30, 2010, the U.S. Small 
Business Administration (SBA) is authorized to guarantee bonds on 
Contracts of up to $5,000,000 (or up to $10 million based upon the 
certification of a Federal contracting officer). SBA is further 
authorized, until September 30, 2010, to partially deny liability under 
its bond guarantee, but cannot deny liability in whole or even in part 
on the basis of material facts disclosed to SBA in a guarantee 
application submitted under the Prior Approval Program. In addition to 
implementing these authorities, this rule also revises the size 
standard for participation in the SBG Program, and makes several 
changes primarily for clarification purposes.

DATES: This rule is effective July 22, 2009.
    Comment Date: Comments must be received on or before August 21, 
2009.

ADDRESSES: You may submit comments, identified by RIN: 3245-AF94, by 
any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Mail: Office of Surety Guarantees, Suite 8600, 409 Third 
Street, SW., Washington, DC 20416.
    <bullet> Hand Delivery/Courier: Office of Surety Guarantees, 409 
Third Street, SW., 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 Office of Surety Guarantees, 409 Third Street, SW., 
Washington, DC 20416 or send an email to Office of Surety Guarantees. 
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: Barbara J. Brannan, Office of Surety 
Guarantees, 202-205-6545.

SUPPLEMENTARY INFORMATION: 

I. Background Information.

    The American Recovery and Reinvestment Act of 2009 (Recovery Act), 
Public Law 111-5, was enacted on February 17, 2009 to, among other 
things, promote economic activity by preserving and creating jobs and 
assisting those most impacted by the severe economic conditions facing 
the nation. The U.S. Small Business Administration is one of several 
agencies that will play a role in achieving these goals. As part of its 
recovery efforts, SBA will make several changes to the Agency's SBG 
program, which will provide an enhanced level of benefits to the small 
business contractors and Surety companies that participate in the 
program. Under the SBG program SBA guarantees bid, payment and 
performance bonds for small contractors who cannot obtain bonds through 
regular commercial channels. SBA's guarantee gives Surety Companies an 
incentive to provide bonding for small businesses, and thereby assists 
small businesses in gaining greater access to contracting 
opportunities.
    The various modifications to the SBG program as a result of the 
Recovery Act are temporary in nature and will expire on September 30, 
2010. These modifications include an increase in the amount of the 
Contract or Order for which SBA is authorized to guarantee bonds; and 
revised standards for denial of liability on claims, and determining 
whether the small business contractor qualifies for a Recovery Act 
guaranteed bond. This interim final rule implements these changes and 
others as described in the following section-by-section analysis.

II. Section-by-Section Analysis

    A new defined term, ``Applicable Statutory Limit'', has been added 
to Sec.  115.10. Currently, Sec. Sec.  115.12(e)(1) and (3), 115.19(a), 
115.31(d) and 115.68 all state that ``$2,000,000'' is the maximum 
dollar amount of a Contract for which SBA is authorized to guarantee 
bonds. Substitution of ``Applicable Statutory Limit'' for 
``$2,000,000'' in each of these provisions will make future amendments 
unnecessary each time the statutory limit is revised.
    The definition of ``Applicable Statutory Limit'' also makes it 
clear that for any particular bond the Applicable Statutory Limit is 
the statutory limit in effect at the time a Prior Approval Surety's 
request for a bond guarantee is approved by SBA or a Preferred Surety 
executes a bond, without regard to any subsequent changes in that 
limit. However, if SBA guaranteed a Bid Bond, the Applicable Statutory 
Limit for the related Final Bonds, including Ancillary Bonds, is the 
one in effect when SBA guaranteed the Bid Bond.
    The Recovery Act temporarily raises the Applicable Statutory Limit 
from $2,000,000 to $5,000,000 and further authorizes SBA to guarantee 
bonds on Federal Contracts in excess of $5,000,000 (up to $10,000,000) 
if a Federal contracting officer certifies the need for the guarantee; 
but SBA's authority to guarantee bonds on any Contract in excess of 
$2,000,000 is scheduled to expire on September 30, 2010. Restrictions 
on bond guarantees for Contracts in excess of $2,000,000 are

[[Page 36107]]

described below under the revisions to section 115.12(e) (3).
    In addition, a new definition, ``Order'' has been added to Sec.  
115.10 in order to make it clear that SBA is authorized to guarantee 
bonds on indefinite delivery Contracts (definite quantity, indefinite 
quantity, or requirement Contracts), and that task orders or delivery 
orders issued under such Contracts will be subject to the same rules as 
all other Contracts, except where otherwise stated. This term is also 
added to the present definition of ``Contract.''
    Section 115.12(b) is revised to remove the reference to the address 
of Surety Association of America, which is no longer current. Removal 
will make it unnecessary to revise the regulation each time the 
Association moves.
    Section 115.12(e) is revised to include the new defined term 
``Order'' and to address issues involving the determination of the 
amount of the Contract. In particular, section 115.12(e)(1) now 
clarifies how to determine the Contract amount for fixed price, 
requirements, and indefinite quantity Contracts. For fixed price 
contracts, the amount of the contract is the price excluding any 
options. The amount of the contract, for requirements contracts, is the 
price of the total estimated quantity to be ordered. For an indefinite 
quantity Contract, the amount of the Contract is the price of the 
specified minimum quantity to be ordered and, separately, for each 
Order under the indefinite quantity Contract, the price of the Order.
    Section 115.12(e)(2) addresses the question of when construction 
Contracts and/or Orders for supplies and services should be aggregated 
for purposes of determining whether the Principal's total obligation 
exceeds the Applicable Statutory Limit.
    Regardless of the penal sum of the bond in question, SBA has no 
authority to guarantee bonds on any Contract that exceeds the 
Applicable Statutory Limit at the time of bond execution. For the 
purpose of determining whether SBA's guarantee of a particular bond 
would exceed its authority, ``Contract'' means in this context the 
Principal's total duty to the Obligee in connection with a single 
project, regardless of the number of formally separate contracts, 
bonded or not, that set forth the respective obligations of the 
Principal and Obligee. Section 115.12(e)(2) addresses this question.
    Section 115.12(e)(2)(i) restates SBA's long-standing rule with 
respect to construction Contracts in which substantially all the 
elements of the respective obligations of the Principal and Obligee--
the project--are known and set forth in considerable detail before the 
bonds are executed. If the stated compensation due the Principal does 
not then exceed the Applicable Statutory Limit, subsequent 
modifications that increase the Contract price will not, as such, 
invalidate SBA's guarantee obligation; even modifications that take the 
bonded Contract's price over the Applicable Statutory Limit will do no 
more than reduce SBA's guarantee percentage. However, if for any reason 
the Principal and Obligee choose before the bond is executed to set 
forth their respective total obligation in two or more separate 
documents, SBA must determine whether they are truly separate Contracts 
or parts of the same project. Section 115.12(e)(2)(i) sets forth the 
standards governing this determination.
    In the case of service or supply Contracts and/or Orders, two or 
more separate Contracts or Orders will be aggregated only if it is 
determined, following SBA discussion with the contracting official 
awarding the Contracts or Orders, that a single Contract or Order could 
reasonably have satisfied the Obligee's requirement. Such discussion 
with the contracting official might be prompted by the simultaneous 
award of two or more Contracts or Orders for the same services or 
supplies to the same Principal, multiple awards for the same services 
or supplies to the same Principal within a very short timeframe, or a 
pattern of such awards to the same Principal over an extended period.
    Section 115.12(e)(3) is revised to delete the current text because 
the relationship between separate Orders under an indefinite (multi-
year) Contract and the Applicable Statutory Limit is now addressed in 
section 115.12(e)(2) and because the relationship between the Contract 
or Order Amount and the penal sum of the bond is addressed in Sec.  
115.19(a).
    SBA has added a new paragraph (3), Contracts or Orders in excess of 
$2,000,000, that implements the restrictions on the use of Recovery Act 
funds under Section 1604 of the Recovery Act, Public Law 111-5, 
February 17, 2009. Section 1604 provides that none of the funds 
appropriated or otherwise made available under the Recovery Act may be 
used by any State or local government, or any private entity, for any 
casino or other gambling establishment, aquarium, zoo, golf course, or 
swimming pool. Guidance issued by the Office of Management and Budget 
provides that ``[i]n exercising their available discretion to commit, 
obligate or expend funds under the Recovery Act for grants and other 
forms of Federal financial assistance, executive departments and 
agencies, to the extent permitted by law, shall not approve or 
otherwise support funding for projects that are similar to those 
described in section 1604 of Division A of the Recovery Act.'' 
(Memorandum for the Heads of Executive Departments and Agencies, March 
20, 2009, p. 2. available at http://www.whitehouse.gov/the_press_office/Memorandum-for-the-Heads-of-Executive-Departments-and-Agencies-3-20-09/) Accordingly, SBA bond guarantees that are funded with 
Recovery Act funds (i.e., bond guarantees for Contracts greater than $2 
million) may not be extended if the Obligee is an entity primarily 
engaged in these activities or the work required by the Contract is 
part of a project for the construction, renovation, or improvement of 
any casino or other gambling establishment, aquarium, zoo, golf course, 
or swimming pool.
    SBA also has added a new paragraph (4), Federal Contracts or Orders 
in excess of $5,000,000, that establishes the process for guarantees of 
bonds on such Contracts.
    SBA has revised section 115.19 to reflect the Recovery Act's 
temporary provisions regarding SBA's authority to deny liability under 
its guarantee. The introductory language to section 115.19 is revised 
to include SBA's temporarily-granted discretion to deny liability in 
part. Under prior law, SBA had no discretion to accept partial 
liability. SBA was completely discharged from all liability in the 
event of certain circumstances set forth in the Small Business Act, the 
regulations or in the general law of contracts and suretyship, 
regardless of the circumstances of any particular case. In the case of 
a bond guaranteed by SBA between February 17, 2009 and September 30, 
2010, inclusive, SBA has discretion to accept liability in part under 
circumstances that would previously discharge SBA completely.
    Part 121 is revised at section 121.301(d) to incorporate the 
Recovery Act provision specifying, for the period starting February 17, 
2009 and ending on September 30, 2010, that a concern is small only if 
it, together with its affiliates, meets the size standard corresponding 
to the NAICS code for the primary industry in which such business 
concern together with its affiliates is engaged. Section 508 of the 
Recovery Act amended Section 410 of the Small Business Investment Act 
by adding a new, but temporary, size standard for this program, 
prefaced by the words ``Notwithstanding any other provision of law or 
any rule, regulation,

[[Page 36108]]

or order of the Administration * * *.'' Accordingly, subparagraphs 
(d)(1), (2) and (3) are temporarily superseded.

III. Justification for Publication as Interim Final Rule.

    In general, before issuing a final rule, SBA publishes the rule for 
public comment in accordance with the Administrative Procedure Act 
(APA), 5 U.S.C. 553. The APA provides an exception from the general 
rule where the agency finds good cause to omit public participation. 5 
U.S.C. 553(c)(3)(B). The good cause requirement is satisfied when prior 
public participation can be shown to be impracticable, unnecessary, or 
contrary to the public interest. Under such circumstances, an agency 
may publish an interim final rule without first soliciting public 
comment.
    In enacting the good cause exception to standard rulemaking 
procedures, Congress recognized that emergency situations arise where 
an agency must issue a rule without public participation. The current 
turmoil in the financial markets is having a negative effect on the 
availability of financing for small business, including diminished 
access to the commercial surety bond market. The bonding capacity of 
surety companies is substantially reduced, making them more risk-
averse; and small concerns that were formerly acceptable risks are now 
seen as questionable. To enable these small concerns to continue to 
obtain the bonding they formerly obtained in the commercial market 
Congress has temporarily expanded the surety bond guarantee program. 
The beneficial effects of this expansion on these small concerns and on 
the sureties that will bond them are obvious. Less obviously, but no 
less significantly, the parties that will contract with them for goods 
and services will benefit because they will be obtaining these goods 
and services at the lowest price.
    SBA finds that good cause exists to publish this rule as an interim 
final rule in light of the urgent need to help small businesses sustain 
and survive during this economic downturn. Advance solicitation of 
comments for this rulemaking would be impracticable and contrary to the 
public interest.
    Although this rule is being published as an interim final rule, 
comments are solicited from interested members of the public. These 
comments must be submitted on or before August 21, 2009. SBA will 
consider these comments and the need for making any amendments as a 
result of these comments.

IV. Justification for Immediate Effective Date

    The APA requires that ``publication or service of a substantive 
rule shall be made not less than 30 days before its effective date, 
except * * * as otherwise provided by the agency for good cause found 
and published with the rule.'' 5 U.S.C. 553(d)(3). The purpose of this 
provision is to provide interested and affected members of the public 
sufficient time to adjust their behavior before the rule takes effect. 
SBA finds that there is good cause for making this rule effective 
immediately instead of observing the 30-day period between publication 
and effective date. The provisions of this rule relating to SBA's 
authority to guarantee bonds on Contracts in excess of $2,000,000, its 
authority to accept partial liability on its guarantee, and its 
authority to deny liability when a Prior Approval Surety's applications 
has set forth the material facts upon which a denial would be based, 
will expire on September 30, 2010. The statutory authority for the size 
standard this rule establishes will also expire on September 30, 2010. 
These provisions do not require any adjustment to the public's 
behavior; moreover, delaying implementation of the rule could have 
serious impact on the nation's small businesses Compliance with 
Executive Orders 12866, 12988, and 13132, 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) has determined that this 
rule constitutes a significant regulatory action for purposes of 
Executive Order 12866.

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. This rule has no 
preemptive effect and is retroactive only to the extent that certain of 
the changes required by the Recovery Act will apply to bond guarantees 
issued on or after February 17, 2009--before the effective date of this 
interim final rule.

Executive Order 13132

    This rule does not have federalism implications as defined in 
Executive Order 13132. It 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, as specified in the Executive Order. As 
such it does not warrant the preparation of a Federalism Assessment.

Paperwork Reduction Act

    SBA has determined that this rule imposes additional reporting and 
recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C. 
Chapter 35, which require amendment to an existing information 
collection, Surety Bond Guarantee Assistance, OMB Control 
<greek-i>3245-0007. This information collection is currently used to 
gather information necessary for processing applications for bond 
guarantees and requests for claim reimbursement. As a result of the 
Recovery Act changes to the SBG program, this information collection 
will be modified to collect additional information that will enable SBA 
to determine whether Recovery Act funds can be used for cost of bond 
guarantees, and also to track the use of those funds to meet reporting 
requirements under the Recovery Act. The information collection 
currently consists of 6 forms. These forms are available in paper and 
electronic formats. SBA will modify 3 of these forms and add a new form 
to the collection:
    (1) Form 990, Surety Bond Guarantee Agreement and Form will be 
modified to add language to the certification portion of the form. This 
language is intended to ensure that the bond guarantee is not approved 
for a small business that is performing work for an obligee or on a 
contract that is related to the restricted uses of funds included in 
the Recovery Act, including casinos or other gambling establishments, 
aquariums, zoos, golf courses, or swimming pools.
    (2) On Form 994, Application for Surety Bond Guarantee Assistance, 
the small business's DUNS number is now being collected in Part I 
(Business Information) to provide data necessary for Federal Funding 
Accountability and Transparency Act reporting; the contract NAICS code, 
number of employees and number of jobs created and retained is being 
added to Part III (Contract Information) to provide statistical data 
that would enable SBA to report clearly on Recovery Act bonds versus 
non Recovery Act bonds; and language in Parts II (Principal 
Information) and V (Applicant's Certification) is being modified for 
clarification purposes.
    (3) Form 994H, Default Report, Claim Reimbursement and Record of 
Administrative Action, is also being modified to add a certification 
regarding the Surety's compliance with SBG

[[Page 36109]]

program regulations and other requirements, including the Recovery Act 
requirements.
    (4) A new form, 994R, Application for Surety Bond Guarantee--Under 
the Recovery and Reinvestment Act--is also being added to the 
collection. This form is essentially a rider to Form 994, and will be 
completed only if the bond is related to the Recovery Act, determined 
if the original contract amount is over $2 million. The additional 
information collected on this rider is needed to fulfill reporting 
requirements on the outcomes and metrics related to the Recovery Act. 
The information that will be collected on this rider includes a 
disclosure about contract amounts in excess of $5 million, and whether 
certification has been obtained from the applicable Contracting Officer 
regarding such contract amounts. The rider also requires the small 
business applicant to assert whether contract involves construction, 
renovation, or operation of a casino or other gambling establishment, 
golf course, zoo, aquarium or swimming pool.
    SBA has submitted this information collection to the Office of 
Management and Budget (OMB) for review and approval under the emergency 
processing procedures in 5 CFR 1320.13. If OMB approves the request for 
emergency approval, SBA will submit this information collection for 
standard review following the emergency approval period. Any comments 
received as a result of this publication will be addressed at that 
time.
    The title, description and number of respondents, estimated annual 
cost and hour burdens imposed on the respondents as a result of this 
collection of information are outlined below. SBA invites comments on: 
(1) Whether the changes to the described collection of information are 
necessary for the proper performance of SBA's operation of the Surety 
Bond program, including whether the information will have practical 
utility; (2) the accuracy of SBA's estimate of the burden of the 
collection of information; (3) ways to enhance the quality, utility and 
clarity of the information to be collected; and (4) ways to minimize 
the burden of the collection of information on respondents, including 
through the use of automated techniques, when appropriate, and other 
forms of information technology.
    Please send comments by the closing date for this interim final 
rule to SBA Desk Officer, Office of Management and Budget, Office of 
Information and Regulatory Affairs, 725 17th Street, NW., Washington, 
DC 20503, and to Barbara J. Brannan, Office of Surety Guarantees, Small 
Business Administration, 409 Third Street, SW., Washington, DC 20416.
    Title: Surety Bond Guarantee Assistance.
    OMB Control Number: 3245-0007.
    Form Numbers--SBA Forms, 990, 991, 994, 994B, 994F and 994H, 
[Current] and Form 994R [New].
    Description of Respondents: (i) The small business contractor 
completes Forms 991, 994, 994F, and 994--Rider; (ii) The Surety Agent 
completes Forms 990, 994B, and 994H.
    Total Estimated Number of Respondents for all forms: 1,050: (Small 
businesses--700; Surety Agents--350).
    Frequency of Responses: On occasion--per application for guarantee 
on surety bond, or for claim reimbursement.
    Total Estimated Number of Responses for all forms: 17,965. This 
estimate reflects an increase of 49 bonds using Recovery Act funds 
(i.e., bonds for Contracts or Orders in excess of $2M and up to $10M).
    Total Estimated Hour Burden: 2,001. This total reflects an 
estimated increase of 42 hours due to the changes pursuant to the 
Recovery Act.

Regulatory Flexibility Act

    Because this rule is an interim final rule, there is no requirement 
for SBA to prepare a Regulatory Flexibility Act (RFA) analysis. The RFA 
requires administrative agencies to consider the effect of their 
actions on small entities, small non-profit businesses, and small local 
governments. Pursuant to the RFA, when an agency issues a rule, the 
agency must prepare analysis that describes whether the impact of the 
rule will have a significant impact on a substantial number of small 
entities. However, the RFA requires such analysis only where notice and 
comment rulemaking is required.

List of Subjects

13 CFR Part 115

    Claims, Guarantee authority, Surety bond guarantees.

13 CFR Part 121

    Size eligibility provisions and standards.

0
For the reasons stated in the preamble, SBA amends 13 CFR parts 115 and 
121 as follows:

PART 115--SURETY BOND GUARANTEE

0
1. The authority citation for 13 CFR part 115 is revised to read as 
follows:

    Authority:  5 U.S.C. app. 3, 15 U.S.C. 687b, 687c, 694a, 694b, 
694b note, Pub. L. 106-554; and Pub. L. 108-447, Div. K, Sec. 203.


0
2. Amend Sec.  115.10 as follows:
0
(a) Revise the first sentence of the definition of the word 
``Contract''; and
0
(b) Add new definitions of ``Applicable Statutory Limit'' and ``Order'' 
in alphabetical order.


Sec.  115.10  Definitions.

* * * * *
    Applicable Statutory Limit means the maximum amount of any 
Contract, or Order, for which Section 411(a) of the Small Business 
Investment Act, as amended from time to time, authorizes the SBA to 
guarantee, or commit to guarantee, a Bid Bond, Payment Bond, 
Performance Bond, or Ancillary Bond. The Applicable Statutory Limit 
from February 17, 2009 through September 30, 2010, is $5,000,000; 
provided, however, that during this period the Applicable Statutory 
Limit is $10,000,000 for a particular Contract or Order if a 
contracting officer of a Federal agency certifies in writing that a 
guarantee in excess of $5,000,000 is necessary.
* * * * *
    Contract means a written obligation of the Principal, including an 
Order, requiring the furnishing of services, supplies, labor, 
materials, machinery, equipment, or construction. * * *
* * * * *
    Order means a task order for services or delivery order for 
supplies issued under an indefinite delivery Contract (definite 
quantity, indefinite quantity, or requirements).
* * * * *

0
3. Amend Sec.  115.12 by revising paragraphs (b) and (e), to read as 
follows:


Sec.  115.12  General program policies and provisions.

* * * * *
    (b) Eligibility of bonds. Bid Bonds and Final Bonds are eligible 
for an SBA guarantee if they are executed in connection with an 
eligible Contract, as defined in Sec.  115.10, Definitions, and are of 
a type listed in the ``Contract Bonds'' section of the most recent 
Manual of Rules, Procedures, Classifications of the Surety Association 
of America. Ancillary Bonds may also be eligible for SBA's guarantee. A 
performance bond must not prohibit a Surety from performing the 
Contract upon default of the Principal.
* * * * *
    (e) Amount of Contract--(1) Determination of Amount of Contract. 
For a fixed price Contract, the amount

[[Page 36110]]

of the Contract is the price excluding any options. For a requirements 
Contract, the amount of the Contract is the price of the total 
estimated quantity to be ordered under the Contract. For an indefinite 
quantity Contract, the amount of the Contract is the price of the 
specified minimum quantity to be ordered under the Contract and, for 
each Order issued under such Contract, the price of each such Order. 
The amount of the Contract or Order to be bonded must not exceed the 
Applicable Statutory Limit as of the date:
    (i) SBA approves a Prior Approval Surety's request for a Bid Bond 
guarantee;
    (ii) A Preferred Surety Executes a Bid Bond; or
    (iii) The date Final Bonds (and any Ancillary Bonds) unrelated to 
an SBA-guaranteed Bid Bond are Executed by a Preferred Surety or by a 
Prior Approval Surety following SBA's approval of its request for a 
guarantee of Final Bonds.
    (2) Aggregation of Contract and Order amounts. (i) The amounts of 
two or more formally separate Contracts for a single construction 
project are aggregated to determine the Contract amount unless the 
Contracts are to be performed in phases and the prior bond is released 
before the beginning of each succeeding phase. A bond may be considered 
released even if the warranty period it is covering has not yet 
expired. For purposes of this paragraph, a ``single construction 
project'' means one represented by two or more Contracts of one 
Principal or its Affiliates with one Obligee or its Affiliates for 
performance at the same location, regardless of job title or nature of 
the work to be performed.
    (ii) The amounts of two or more Contracts or Orders for supplies 
and services awarded to the same Principal or its Affiliates are 
aggregated to determine the Contract or Order amount if SBA determines, 
after discussion with the contracting official responsible for the 
award of the contract, that award of a single Contract or Order could 
reasonably have satisfied the supply or service requirement at the time 
of issuance.
    (3) Contracts or Orders in excess of $2,000,000. SBA is not 
authorized to guarantee bonds on Contracts or Orders in excess of 
$2,000,000 if the statement of work involves, directly or indirectly, 
construction, operation, renovation or improvement of a casino or other 
gambling establishment, aquarium, zoo, golf course or swimming pool, or 
the Contract Obligee has one of the following NAICS codes:
    (i) 713210--``Casinos (Except Casino Hotels)'';
    (ii) 721120--``Casino Hotels'';
    (iii) 713290--``Other Gambling Industries'';
    (iv) 713910--``Golf Courses and Country Clubs'';
    (v) 712130--``Zoos and Botanical Gardens''; or
    (vi) 713940--``Fitness and Recreational Sports Centers'' if SBA 
determines the business is a swimming pool.
    (4) Federal Contracts or Orders in excess of $5,000,000. Through 
September 30, 2010, SBA is authorized to guarantee bonds on Federal 
Contracts or Orders greater than $5,000,000, and up to $10,000,000, 
upon a signed certification of a Federal contracting officer. The 
contracting officer's certification must include a statement that the 
small business is experiencing difficulty obtaining a bond and that an 
SBA bond guarantee would be in the best interests of the Government. 
The certification must be express mailed to SBA, Office of Surety 
Guarantees, 409 Third Street, SW., Suite 8600, Washington, DC 20416, or 
faxed to the Office of Surety Guarantees at 202-481-0390, with a copy 
provided to the small business, and must include the following 
additional information:
    (i) Name, address and telephone number of the small business;
    (ii) Offer or Contract number and brief description of the 
contract; and
    (iii) Estimated Contract value and date of anticipated award 
determination.
* * * * *

0
4. Amend Sec.  115.19 by revising the introductory text and paragraph 
(a) to read as follows:


Sec.  115.19  Denial of liability.

    Except for bonds executed on or after February 17, 2009 and before 
October 1, 2010, in addition to equitable and legal defenses and 
remedies under contract law, the Act, and the regulations in this part, 
SBA is relieved of liability if any of the circumstances in paragraphs 
(a) through (h) of this section exist. For bonds executed on or after 
February 17, 2009 and before October 1, 2010, SBA is relieved of 
liability in whole or in part within its discretion under those 
circumstances, except that SBA shall not deny liability on Prior 
Approval bonds executed during such timeframe based solely upon 
material information that was provided as part of the guarantee 
application.
    (a) Excess Contract or bond amount. The total Contract or Order 
amount at the time of Execution of the bond exceeds the Applicable 
Statutory Limit (see Sec.  115.10) or the bond amount at any time 
exceeds the total Contract or Order amount.
* * * * *

0
5. Amend Sec.  115.31 by revising the heading and first sentence of 
paragraph (d), and revising paragraph (e), to read as follows:


Sec.  115.31  Guarantee percentage.

* * * * *
    (d) Contract or Order increases exceed Applicable Statutory Limit. 
If the Contract or Order amount is increased above the Applicable 
Statutory Limit after Execution of the bond, SBA's share of the Loss is 
limited to that percentage of the increased Contract or Order amount 
that the Applicable Statutory Limit represents multiplied by the 
guarantee percentage approved by SBA. * * *
    (e) Contract or Order decrease to $100,000 or less. If the Contract 
or Order amount decreases to $100,000, or less, after Execution of the 
bond, SBA's guarantee percentage increases to 90% if the Surety 
provides SBA with evidence supporting the decrease and any other 
information or documents requested.

0
6. Section 115.68 is revised to read as follows:


Sec.  115.68  Guarantee percentage.

    SBA reimburses a PSB Surety in an amount not to exceed 70% of the 
Loss incurred and paid. Where the total Contract or Order amount 
increases beyond the Applicable Statutory Limit after Execution of the 
bond, SBA's share of the Loss is limited to that percentage of the 
increased Contract or Order amount which the statutory limit 
represents, multiplied by the guarantee percentage approved by SBA. For 
an example, see Sec.  115.31(d).

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for 13 CFR Part 121 is revised to read as 
follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, 662(5) 
and 694a; and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.


0
2. Amend Sec.  121.301 by adding a new paragraph (d)(4) to read as 
follows:


Sec.  121.301  What size standards are applicable to financial 
assistance programs?

* * * * *
    (4) Notwithstanding paragraphs (d) (1), (2) and (3) of this 
section, from February 17, 2009 through September 30, 2010, a concern 
is small only if it is a business concern that, combined with its 
affiliates, does not exceed the size standard designated for the 
primary

[[Page 36111]]

industry of the business concern combined with its affiliates.
* * * * *

    Dated: July 16, 2009.
Karen Gordon Mills,
Administrator.
[FR Doc. E9-17323 Filed 7-17-09; 11:15 am]
BILLING CODE 8025-01-P