Federal Acquisition Regulation: Subcontracting to Puerto Rican and Covered Territory Small Businesses

DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION <CFR>48 CFR Parts 2, 19, 42, and 52</CFR> <DEPDOC>[FAR Case 2023-001; Docket No. FAR-2023-0001; Sequence No. 1]</DEPDOC> <RIN>RIN 9000-AO50</RIN> <SUBJECT>Federal Acquisition Regulation: Subcontracting to Puerto Rican and Covered Territory Small Businesses</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to implement regulatory changes made by the Small Business Administration to add incentives for certain United States territories under the Small Business Administration mentor-protégé program. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Interested parties should submit written comments to the Regulatory Secretariat Division at the address shown below on or before August 6, 2024 to be considered in the formation of the final rule. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Submit comments in response to FAR Case 2023-001 to the Federal eRulemaking portal at <E T="03">https://www.regulations.gov</E> by searching for “FAR Case 2023-001”. Select the link “Comment Now” that corresponds with “FAR Case 2023-001”. Follow the instructions provided on the “Comment Now” screen. Please include your name, company name (if any), and “FAR Case 2023-001” on your attached document. If your comment cannot be submitted using <E T="03">https://www.regulations.gov,</E> call or email the points of contact in the <E T="02">FOR FURTHER INFORMATION CONTACT</E> section of this document for alternate instructions. <E T="03">Instructions:</E> Please submit comments only and cite “FAR Case 2023-001” in all correspondence related to this case. Comments received generally will be posted without change to <E T="03"> https:// www.regulations.gov, </E> including any personal and/or business confidential information provided. Public comments may be submitted as an individual, as an organization, or anonymously (see frequently asked questions at <E T="03">https://www.regulations.gov/faq</E> ). To confirm receipt of your comment(s), please check <E T="03">https://www.regulations.gov,</E> approximately two to three days after submission to verify posting. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For clarification of content, contact Ms. Carrie Moore, Procurement Analyst, at 571-300-5917, or by email at <E T="03">carrie.moore@gsa.gov.</E> For information pertaining to status, publication schedules, or alternate instructions for submitting comments if <E T="03">https://www.regulations.gov</E> cannot be used, contact the Regulatory Secretariat Division at 202-501-4755 or <E T="03">GSARegSec@gsa.gov.</E> Please cite FAR Case 2023-001. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> DoD, GSA, and NASA are proposing to amend the FAR to implement regulatory changes made by the Small Business Administration (SBA) in its final rule published on October 16, 2020, at 85 FR 66146, to implement paragraphs (a) and (d) of section 861 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232). Paragraphs (a) and (d) of section 861 amended 15 U.S.C. 632(ee) and 15 U.S.C. 657r(a) to add Puerto Rico to the list of territories from which small businesses are eligible for preferential treatment under the SBA mentor-protégé program. In addition, this rule implements SBA's final rule published on August 19, 2022, at 87 FR 50925, to implement-paragraphs (a) and (c) of section 866 of the NDAA for FY 2021 (Pub. L. 116-283). Paragraphs (a) and (c) of section 866 amended 15 U.S.C. 632(ff) and 15 U.S.C. 657r(a) to add the U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands (CNMI) to the list of territories from which small businesses are eligible for preferential treatment under the SBA mentor-protégé programs. Section 866 also defines a “covered territory business” as a small business concern that has its principal office located in one of the following: (1) the U.S. Virgin Islands; (2) American Samoa; (3) Guam; and (4) CNMI. Sections 861 and 866 created two new incentives for SBA's small business mentor-protégé Program for mentor-protégé pairs in which the protégé has its principal office located in the Commonwealth of Puerto Rico or is a covered territory business. Specifically, such a mentor that subcontracts to its protégé is able to receive positive consideration for the mentor's past performance evaluation and is able to apply costs incurred for training provided to its protégé to its subcontracting plan goals. In addition, this rule implements changes SBA made to its regulations to clarify that subcontracting plans are not required from firms owned by an Alaska Native Corporation (ANC) because they are treated as small business concerns according to statute; and to clarify that prime contractors may rely on a subcontractor's representations of its size and socioeconomic status unless the prime contractor has reason to doubt the representations. <HD SOURCE="HD1">II. Discussion and Analysis</HD> The proposed changes to the FAR and the rationale are summarized as follows: <FP SOURCE="FP-1">—Modify FAR 19.702, 42.1501, and FAR clause 52.219-9, Small Business Subcontracting Plan, to implement SBA's regulations at 13 CFR 125.9(d)(6) to provide two new incentives for SBA's mentor-protégé program as follows: A mentor that subcontracts to its protégé that has its principal office located in Puerto Rico or that is a covered territory business may receive positive consideration for the mentor's past performance evaluation, and the mentor may apply costs incurred for training provided to its protégé toward the mentor's subcontracting plan goals. This rule also proposes to modify FAR 2.101 to add a definition of covered territory business to implement SBA's regulations at 13 CFR 125.1.</FP> <FP SOURCE="FP-1">—Modify FAR 19.702 to implement SBA's regulations at 13 CFR 125.3(b)(2) to clarify that subcontracting plans are not required from entities that are treated as small business concerns by statute, such as ANCs.</FP> <FP SOURCE="FP-1">—Modify FAR 19.703 and FAR clauses 52.219-8, Utilization of Small Business Concerns, and 52.219-9 to implement SBA's regulations at 13 CFR 121.404(e) to clarify that a contractor may rely upon a subcontractor's representations of its size and socioeconomic status unless the contractor has reason to question the representations.</FP> <HD SOURCE="HD1">III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT) and for Commercial Products (Including Commercially Available Off-the-Shelf (COTS) Items) or for Commercial Services</HD> This rule amends the clauses at FAR 52.212-5, 52.213-4, 52.219-8, and 52.219-9. However, this rule does not change the applicability of these clauses, which continue to apply to contracts valued at or below the SAT, or on contracts for commercial products, including COTS items, or commercial services. This rule proposes to apply paragraphs (a) and (d) of section 861 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232), and paragraphs (a) and (c) of section 866 of the NDAA for FY 2021 (Pub. L. 116-283), to acquisitions at or below the SAT and to acquisitions for commercial products, including COTS items, and commercial services, as the two new incentives for SBA's mentor-protégé program are available to all contractors in the program, regardless of the dollar value of the contract awarded or the commercial nature of the products and services procured. <HD SOURCE="HD2">A. Applicability to Contracts at or Below the Simplified Acquisition Threshold</HD> 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 intends to make a determination to apply this statute to acquisitions at or below the SAT. <HD SOURCE="HD2">B. Applicability to Contracts for the Acquisition of Commercial Products and Commercial Services, Including Commercially Available Off-the-Shelf (COTS) Items</HD> 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 intends to make a determination to apply this statute to acquisitions for commercial products a ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 29k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━