Proposed Rule2021-25002
Past Performance Ratings for Small Business Joint Venture Members and Small Business First-Tier Subcontractors
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Published
November 18, 2021
Issuing agencies
Small Business Administration
Abstract
The Small Business Administration is proposing to amend its regulations to implement new provisions of the National Defense Authorization Act (NDAA) Fiscal Year 2021 (FY 2021). The proposed rule would provide new methods for small business government contractors to obtain past performance ratings to be used with offers on prime contracts with the Federal Government. A small business contractor may use a past performance rating for work performed as a member of a joint venture or for work performed as a first-tier subcontractor. This proposed rule updates the requirements for small business subcontracting plans to add a requirement for prime contractors to report past performance to a first-tier, small business subcontractor when requested by the small business that was a first-tier subcontractor.
Full Text
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<title>Federal Register, Volume 86 Issue 220 (Thursday, November 18, 2021)</title>
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[Federal Register Volume 86, Number 220 (Thursday, November 18, 2021)]
[Proposed Rules]
[Pages 64410-64416]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-25002]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 125
RIN 3245-AH71
Past Performance Ratings for Small Business Joint Venture Members
and Small Business First-Tier Subcontractors
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
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SUMMARY: The Small Business Administration is proposing to amend its
regulations to implement new provisions of the National Defense
Authorization Act (NDAA) Fiscal Year 2021 (FY 2021). The proposed rule
would provide new methods for small business government contractors to
obtain past performance ratings to be used with offers on prime
contracts with the Federal Government. A small business contractor may
use a past performance rating for work performed as a member of a joint
venture or for work performed as a first-tier subcontractor. This
proposed rule updates the requirements for small business
subcontracting plans to add a requirement for prime contractors to
report past performance to a first-tier, small business subcontractor
when requested by the small business that was a first-tier
subcontractor.
DATES: Comments must be received on or before January 18, 2022.
ADDRESSES: You may submit comments, identified by RIN: 3245-AH71, by
any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments.
<bullet> Email: Donna Fudge, Procurement Analyst, Office of Policy
Planning and Liaison, Small Business Administration, at
<a href="/cdn-cgi/l/email-protection#f2b69d9c9c93dcb487969597b2819093dc959d84"><span class="__cf_email__" data-cfemail="1e5a7170707f30586b7a797b5e6d7c7f30797168">[email protected]</span></a>.
SBA will post all comments on <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If you
wish to submit confidential business information (CBI), as defined in
the User Notice at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, please submit the
information to Donna Fudge, Small Business Administration at
<a href="/cdn-cgi/l/email-protection#0b4f6465656a254d7e6f6c6e4b78696a256c647d"><span class="__cf_email__" data-cfemail="185c77767679365e6d7c7f7d586b7a79367f776e">[email protected]</span></a>. 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 on whether it will publish the information.
FOR FURTHER INFORMATION CONTACT: Donna Fudge, Procurement Analyst,
Office of Policy Planning and Liaison, Small Business Administration,
at <a href="/cdn-cgi/l/email-protection#8cc8e3e2e2eda2caf9e8ebe9ccffeeeda2ebe3fa"><span class="__cf_email__" data-cfemail="9bdff4f5f5fab5ddeefffcfedbe8f9fab5fcf4ed">[email protected]</span></a>, (202) 205-6363.
[[Page 64411]]
SUPPLEMENTARY INFORMATION:
I. Background Information
Section 868 of NDAA FY21, Public Law 116-283, addresses a common
obstacle that small businesses may face when competing for prime
Federal Government contracts: Possessing qualifying past performance.
The proposed rule implements section 868 by providing small businesses
with two new methods for obtaining qualifying past performance. First,
a small business may use the past performance of a joint venture of
which it is a member, provided that the small business worked on the
joint venture's contract or contracts. Second, a small business may use
past performance it obtained as a first-tier subcontractor on a prime
contract with a subcontracting plan. For this latter method, section
868 authorizes the small business to seek a past performance rating
from the prime contractor and submit the rating with the small
business' offer on a new prime contract.
Section 868 added a new section 15(e)(5) to the Small Business Act,
15 U.S.C. 644(e)(5), to address past performance ratings of joint
ventures for small business concerns. A small business concern that
previously participated in a joint venture with another business
concern (whether or not the other concern was small) may use the past
performance of the joint venture with the small business' offer on a
prime contract. Section 15(e)(5) directs SBA to establish regulations
to allow the small business to elect to use the joint venture's past
performance if the small business has no relevant past performance of
its own. The small business must: (i) Identify to the contracting
officer the joint venture of which the small business was a member;
(ii) the contract(s) of the joint venture the small business elects to
use; and (iii) inform the contracting officer what duties and
responsibilities the small business carried out as part of the joint
venture. In turn, the contracting officer shall consider the past
performance of the joint venture when evaluating the past performance
of the small business concern, giving due consideration to the
information submitted about the duties and responsibilities that the
small business carried out.
To address first-tier small business subcontractors, section 868
amended section 8(d)(17) of the Small Business Act, 15 U.S.C.
637(d)(17), which previously discussed a pilot program to provide past
performance ratings for other small business subcontractors. Under the
section 868 program, small business concerns may obtain past
performance ratings for performance as a first-tier subcontractor on a
prime contract that included a subcontracting plan. The proposed rule
would require the prime contractor on the prime contract to provide a
rating of the small business's past performance with respect to that
prime contract to the small business within 15 days of the request. If
the small business elects to use the past performance rating, the
contracting officer shall consider the past performance rating when
evaluating the small business's offer on a prime contract.
Because section 868 replaced the prior pilot program in section
8(d)(17), SBA will no longer pursue the pilot program as described in
83 FR 17583. This proposed rule creates a separate mechanism for first-
tier subcontractors to obtain past performance ratings. The Federal
Acquisition Regulation (FAR) rule implementing this requirement will
account for the information collection, and clearance for the
information collection will be obtained by the FAR Council.
SBA requests comments on whether small business subcontractors have
been negatively impacted in competing for prime contracts due to not
having a past performance rating(s).
SBA also seeks comment on whether to prescribe a time frame within
which the subcontractor must make a request to the prime contractor for
a rating under this proposed rule. If the prime contractor is currently
in the period of performance for its contract, the prime contractor
would be bound by its subcontracting plan to respond to the
subcontractor's request. After the period of performance, however, the
prime contractor would not necessarily be required to respond, because
the contract would have ended. SBA seeks comment on whether to
recommend that a subcontractor submit its request for a rating within
the period of performance of the prime contractor's contract. If there
might be a reasonable period of time after the physical completion of
the prime contractor's contract in which the subcontractor should or
must submit its request, SBA seeks comment on how to implement that
time period into the prime contractor's Federal contract and what the
time period might be. SBA also seeks comment on if the prime contractor
and subcontractor might negotiate time periods and procedures by which
the subcontractor can request a rating, and, if so, how to recognize
that ability to negotiate in this regulatory prescription. In
particular, should SBA recommend that the subcontractor negotiate the
procedures for submitting a request and the time frames?
II. Section-by-Section Analysis
13 CFR 125.3
This proposed rule would add a requirement to prime contractors'
subcontracting plans. The subcontracting plan will require the prime
contractor to provide a rating of a first-tier subcontractor's past
performance within 15 days of the first-tier subcontractor's request.
The requested rating would be prepared to include, at a minimum, the
following evaluation factors in the requested rating: (a) Technical
(quality of product or service); (b) Cost control (not applicable for
firm-fixed-price or fixed-price with economic price adjustment
arrangements); (c) Schedule/timeliness; (d) Management or business
relations; and (e) Other (as applicable).
13 CFR 125.11
This proposed rule renumbers 13 CFR 125.11 and subsequent sections
to create a new Sec. 125.11. New Sec. 125.11(a) provides general
guidance to require agencies to consider the past performance of
certain small business offerors that have been members of joint
ventures or first-tier subcontractors. The remainder of this proposed
rule addresses the two scenarios from NDAA 2021.
First, a small business concern may receive past performance
consideration for the past performance of a joint venture of which the
small business was a member. To receive past performance consideration,
where the small business does not independently demonstrate past
performance necessary for award, the small business may elect to use
the joint venture's past performance and the contracting officer shall
consider the joint venture past performance that the small business has
elected to use. In its offer for a prime contract, the small business
must identify: (i) The joint venture; (ii) the contract(s) of the joint
venture that the small business elects to use; and (iii) describe to
the agency what duties or responsibilities the small business carried
out as a joint venture member. The small business cannot, however,
claim past performance credit for work performed exclusively by other
partners to the joint venture.
As required by NDAA 2021, the contracting officer shall consider
the information that the small business provided about its duties and
responsibilities carried out as part of the joint venture. Where the
small business does not independently demonstrate past performance
necessary for award,
[[Page 64412]]
agencies shall consider a small business' successful rating of past
performance through a joint venture. For example, a solicitation might
require three past performance examples. This proposed rule would
authorize the small business offeror to submit two examples from
performance in its own name and one example from performance of a joint
venture of which it was a member if the small business cannot
independently provide the third example of past performance on its own.
This proposed rule provides that the joint venture's past performance
may supplement the relevant past performance of the small business when
the small business cannot independently demonstrate the past
performance on its own.
Second, a small business concern may receive past performance
consideration for performance as a first-tier subcontractor. NDAA FY21
directs that this mechanism is limited to small businesses that
performed as first-tier subcontractors on contracts that include
subcontracting plans. The small business may request a rating of its
subcontractor past performance from the prime contractor. Under the
proposed rule, the prime contractor must provide a rating to the
requesting small business withinwith 15 days of the request.
Under this proposed rule, the requested rating would be prepared to
include, at a minimum, the following evaluation factors in the
requested rating: (a) Technical (quality of product or service); (b)
Cost control (not applicable for firm-fixed-price or fixed-price with
economic price adjustment arrangements); (c) Schedule/timeliness; (d)
Management or business relations; and (e) Other (as applicable). The
proposed rule clarifies that one scenario where this applies is where
the small business lacks a rating in the Contractor Performance
Assessment Reporting System (CPARS). In that case, the agency shall
consider the small business's subcontractor past performance rating as
being equivalent to a CPARS rating.
This proposed rule clarifies that a joint venture composed of small
businesses may receive past performance consideration for work that the
joint venture performed as a first-tier subcontractor. A small business
member of the joint venture subcontractor may request a past
performance rating from the prime contractor for a contract that
included a subcontracting plan. The prime contractor must provide the
requested rating to the joint venture member within 15 days of the
request. The requested rating would be prepared to include, at a
minimum, the following evaluation factors in the requested record: (a)
Technical (quality of product or service); (b) Cost control (not
applicable for firm-fixed-price or fixed-price with economic price
adjustment arrangements); (c) Schedule/timeliness; (d) Management or
business relations; (e) Other (as applicable). The small business could
then use that rating to establish its past performance in accordance
with the prior provision on submitting joint venture past performance.
13 CFR 125.28
SBA is proposing to change the reference from Sec. 125.15(a) to
Sec. 125.18(a) everywhere it appears in this section due to
renumbering of sections. Section 125.18(a) provides the requirements
for representation of service-disabled veteran-owned (SDVO) small
business status.
13 CFR 125.29
SBA is proposed to change the reference from Sec. 125.8 to Sec.
125.12 everywhere it appears in this section due to renumbering of
sections. Section 125.12 provides the definitions that are important in
the Service-Disabled Veteran-Owned (SDVO) Small Business Concern (SBC)
program.
13 CFR 125.30
SBA is proposing to change the reference from Sec. 125.8 to Sec.
125.12 everywhere it appears in this section due to renumbering of
sections. Section 125.12 provides the definitions that are important in
the SDVO SBC program.
III. Compliance With Executive Orders 12866, 12988, 13132, 13175,
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) has determined that this
rule is a significant regulatory action for the purposes of Executive
Order 12866. Accordingly, the next section contains SBA's Regulatory
Impact Analysis.
1. Regulatory Impact Analysis: Is there a need for the regulatory
action?
This rule is necessary to satisfy statutory requirements to
implement section 868 of National Defense Authorization Act of Fiscal
Year 2021 (NDAA FY21). Section 868 (e) requires the Administrator to
issue rules to carry out the section.
Absence of past performance has been a limitation for small
businesses when pursuing procurement opportunities that evaluate past
performance. Small businesses often have past performance through work
performed as a joint venture partner or as a subcontractor, but this
experience and past performance is often not acknowledged or credited
to the relevant small business in the evaluation process. This proposed
rule is necessary to address that shortcoming in the evaluation of past
performance and experience.
The FAR states that ``past performance, except as set forth in
paragraph (c)(3)(iii) of this section, shall be evaluated in all source
selections for negotiated competitive acquisitions expected to exceed
the simplified acquisition threshold.'' See FAR 15.304(c)(3). Past
performance is ``one indicator of an offeror's ability to perform the
contract successfully.'' See FAR 15.305(a)(2). FAR 15.302(a)(2)(iv)
provides that, in the case of an offeror without a record of relevant
past performance or for whom information on past performance is not
available, the offeror may not be evaluated favorably or unfavorably on
past performance. Because past performance may be considered a
responsibility factor or because past performance affects an offeror's
evaluation as compared to other offerors, the ability of small
businesses that have been first-tier subcontractors or participated in
joint ventures to demonstrate past performance increases their
competitiveness in Federal contracting.
2. What is the baseline, and the incremental benefits and costs of
this regulatory action?
OMB directs agencies to establish an appropriate baseline to
evaluate any benefits, costs, or transfer impacts of regulatory actions
and alternative approaches considered. The baseline should represent
the agency's best assessment of what the world would look like absent
the regulatory action. For a regulatory action that modifies or
replaces an existing regulation, a baseline assuming no change to the
regulation generally provides an appropriate benchmark for evaluating
benefits, costs, or transfer impacts of proposed regulatory changes and
their alternatives. This proposed rule would implement the changes, by
modifying and expanding, the rating procedures of the unimplemented
pilot program in 8(d)(17) of the Small Business Act (15 U.S.C.
637(d)(17)), which was added by section 1822 of the National Defense
Authorization Act of 2017.
NDAA FY21 amended Section 8(d)(17) of the Act to allow small
businesses that performed as first tier subcontractors to request a
past performance rating from the prime contractor. The prime contractor
must provide a rating of the small business past performance with
respect to that prime contract to the small business
[[Page 64413]]
within 15 days of the request. The requested rating would be prepared
to include, at a minimum, the following evaluation factors in the
requested rating: (a) Technical (quality of product or service); (b)
Cost control (not applicable for firm-fixed price or fixed-price with
economic price adjustment arrangements); (c) Schedule/timeliness; (d)
Management or business relations; (e) Other (as applicable). This
proposed rule would modify the pilot program, in which a small business
that had not performed as a prime contractor could request a past
performance rating in the Contractor Performance Assessment Reporting
System (CPARS), if the small business is a first tier subcontractor
under a covered Federal Government contract requiring a subcontracting
plan. Section 868(a) amends Section 15(e) of the Small Business Act to
direct the establishment of regulations that allow the use of past
performance in joint ventures in Federal contracting offers. This
amendment expands the opportunities for past performance consideration
by including consideration of the past performance of a joint venture
of which the small business was a member.
The baseline is that which exists without implementation of the
pilot program in section 8(d)(17) of the Small Business Act. In this
environment, when a Federal agency creates a procurement opportunity
requiring an offeror to provide examples of past performance, a newer
small business concern may forego the opportunity because it
individually lacks the required number of examples and then opt to join
an established prime contractor's team as a subcontractor.
The most significant benefit of this proposed rule to small
businesses is that it would enhance of the small businesses' ability to
compete in Federal contracting opportunities. The FAR states that
``past performance, except as set forth in paragraph (c)(3)(iii) of
this section, shall be evaluated in all source selections for
negotiated competitive acquisitions expected to exceed the simplified
acquisition threshold.'' See FAR 15.304(c)(3)(i). FAR 15.302(a)(2)(iv)
provides that, in the case of an offeror without a record of relevant
past performance or for whom information on past performance is not
available, the offeror may not be evaluated favorably or unfavorably on
past performance. Nevertheless, small businesses without past
experience as prime contractors may forego seeking some Federal
contracting opportunities. This enhancement of Federal contracting
opportunities is consistent with the amendment of the Small Business
Act, which states that ``procurement strategies used by a Federal
department or agency having contract authority shall facilitate the
maximum participation of small business concerns as prime contractors,
subcontractors, and suppliers.'' 15 U.S.C. 644(e)(1).
With more small businesses able to demonstrate past performance,
agencies will have a larger pool of small businesses competing for
contracting opportunities. This added competition may result in lower
prices to the Government. SBA cannot quantify this impact before
proposal of applicable FAR rules.
Costs of this proposed rule to the private sector include the prime
contractor's provision, upon request to provide a past performance
rating. The time burden of this requirement to the prime contractor is
similar to that of the pilot program's past performance rating
requirement. SBA estimates the fulfillment of a past performance
request to require about 30 minutes of time. Assuming that a
compilation of a rating of past performance involves 30 minutes of work
by an employee of the prime contractor and valuing the time at $93.44
per hour,\1\ SBA estimates that each rating request costs a prime
contractor $46.72 in labor plus de minimis costs of transmission of the
rating. There were approximately 34,000 individual subcontracting plans
with 24,000 at the prime contract level in fiscal year 2015 (81 FR
94249), but it is not known how many small businesses were involved in
these subcontracting plans or how many small businesses were involved
in multiple subcontracting plans. SBA notes that 1,461 small businesses
have active SBA-approved Mentor-Prot[eacute]g[eacute] agreements.\2\
SBA also notes that in FY2019, the Electronic Subcontracting Reporting
System (eSRS) listed 2,082 commercial plans with small businesses.
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\1\ The median hourly wage for construction managers is $46.72,
according to 2020 Bureau of Labor Statistics (BLS) data, and the
hourly rate of $93.44 includes 100 percent more for benefits and
overhead. Source for hourly rate: <a href="https://www.bls.gov/ooh/management/construction-managers.htm">https://www.bls.gov/ooh/management/construction-managers.htm</a>. Retrieved June 8, 2021.
\2\ One of the goals of the SBA's Mentor-Prot[eacute]g[eacute]
program is to promote the ability of small prot[eacute]g[eacute]
businesses to successfully compete for government contracting
opportunities. Prot[eacute]g[eacute] small businesses often form
joint ventures with their mentors to pursue specific procurement
requirements in order to gain experience and be able independently
perform similar requirements in the future.
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Assuming that half, or 731, of the small businesses with active
agreements in the Mentor-Prot[eacute]g[eacute] program request a rating
of past performance each year, the annual cost to the private sector of
fulfilling these requests for past performance ratings would be $34,152
plus de minimis costs. Assuming that small businesses with 10 percent
of 24,000 subcontracting plans at the prime contract level, in addition
to those in the Mentor-Prot[eacute]g[eacute] program, request a rating
of past performance each year, the annual cost to the private sector of
fulfilling these requests is $112,128. Assuming each of the 2,082
commercial plans has two to four subcontracts, and half of the total
subcontracts represents small business that would request a past
performance rating each year, then the annual cost to the private
sector of fulfilling these requests would be $145,907 plus de minimis
costs. With these assumptions, total annual costs to the private sector
of fulfilling requests is $292,187 plus de minimis costs.
The requirement of small business offerors that have been members
of joint ventures to identify the joint venture, identify the
contract(s) of the joint venture, and describe duties or
responsibilities as a joint venture member in order to receive
consideration of past performance involves a resource cost to the small
business offerors that compile the specified information. SBA notes
that this cost would be voluntarily incurred by small businesses that
assess the enhancement of Federal contracting opportunities from
consideration of past performance to be of greater value than the
incremental costs incurred.
If more small businesses meet past performance standards and then
submit proposals to contracting agencies, administrative costs to the
Government may increase when a contracting agency reviews an increased
number of proposals and past performance ratings. SBA cannot quantify
these costs and notes that increased competition may offset these costs
to the Government.
The ability of more small businesses to demonstrate past
performance may redistribute some Federal contracts from businesses
that can demonstrate past performance in the baseline scenario that
exists with no implementation of the pilot program. This redistribution
would not affect overall economic activity. This proposed rule and its
effects do not change the amount of dollars in all available Federal
contracts. SBA cannot quantify the actual outcome of the gains and
losses from the redistribution of contracts among different groups of
small businesses that would result from an increased number of small
businesses with the ability to demonstrate their experience and past
performance, but it expects that competition from small businesses with
newly established past performance
[[Page 64414]]
ratings may displace some small businesses that had established ratings
in Federal contracting opportunities. A partial offset of this transfer
impact among small businesses may occur with increased numbers of
contracts set aside for small businesses through the Rule of Two, which
states there is a reasonable expectation that the contracting officer
will obtain offers from at least two small businesses and award will be
made at fair market price.
3. What are the alternatives to this rule?
This proposed rule would implement specific statutory provisions in
Section 868 of the NDAA FY21. There are no alternatives that would meet
the statutory requirements.
Executive Order 12988
This proposed rule 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.
Executive Order 13132
This proposed 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 levels of government, as specified in the Executive order.
As such it does not warrant the preparation of a Federalism Assessment.
Executive Order 13175
This proposed rule does not have tribal implications under
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments, because it would not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes.
Executive Order 13563
This Executive order 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
considers these requirements in developing this rule, as discussed
below.
1. Did the agency use the best available techniques to quantify
anticipated present and future costs when responding to E.O. 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,
System for Award Management, and Electronic Subcontracting Reporting
System.
2. 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
<a href="http://Regulations.gov">Regulations.gov</a>; 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 <a href="http://www.regulations.gov">www.regulations.gov</a> to allow the public to comment
meaningfully on its provisions.
3. Flexibility: Did the agency identify and consider regulatory
approaches that reduce burdens and maintain flexibility and freedom of
choice for the public?
Yes, the proposed rule implements statutory provisions that provide
new methods for small business government contractors to obtain past
performance ratings to be used with offers on prime contracts with the
Federal Government. The proposed rule would update the requirements for
small business subcontracting plans to add a requirement for prime
contractors to report past performance to a small business, first-tier
subcontractor when requested by the small business first-tier
subcontractor. The proposed rule will enhance the small business'
ability to compete for Federal Government prime contracting
opportunities.
Paperwork Reduction Act
This rule, if adopted in final form, would update the requirements
for small business subcontracting plans to add a requirement for prime
contractors to report past performance to a small business, first-tier
subcontractor when requested by the small business first-tier
subcontractor. The FAR rule implementing this requirement will account
for this information collection, and clearance for the information
collection will be obtained by the FAR Council.
In this proposed rule, SBA also proposes that a small business
concern may receive past performance consideration for the past
performance of a joint venture of which the small business was a
member. This does not require a new information collection because the
Government contracting officer rates the joint venture entity.
Regulatory Flexibility Act
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. The RFA
defines ``small entity'' to include ``small businesses,'' ``small
organization,'' and ``small governmental jurisdictions.''
This proposed rule provides new methods for small business
contractors to obtain past performance ratings to be used with offers
on prime contracts, as such the rule relates to small business concerns
but would not affect ``small organizations'' or ``small governmental
jurisdictions'' because those programs generally apply only to
``business concerns'' as defined by SBA regulations, in other words, to
small businesses organized for profit. ``Small organizations'' or
``small governmental jurisdictions'' are non-profits or governmental
entities and do not generally qualify as ``business concerns'' within
the meaning of SBA's regulations.
There are approximately 1,431 active SBA-approved Mentor-
Prot[eacute]g[eacute] agreements and SBA estimates that half, or 731,
small businesses with active agreements would request a past
performance rating from its prime contractor in a year. Of the 24,000
subcontracting plans at the prime contract level in fiscal year 2015,
SBA assumes for this analysis that up to 2,400 that are not in the
Mentor-Prot[eacute]g[eacute] program may request a past performance
rating each year. Additionally, in FY2019 there were 2,082 commercial
[[Page 64415]]
plans with small businesses. Assuming two to four subcontracts for each
commercial plan, and half of them request a past performance rating,
SBA estimates that up to 3,123 small businesses involved in commercial
plans may request a past performance rating each year. The proposed
changes allow small business contractors to request a past performance
rating from a prime contractor for whom they performed work as a first-
tier subcontractor or as a member of a joint venture. In addition, the
proposed rule updates the requirements for small business
subcontracting plans to add a responsibility for prime contractors to
report past performance of the first-tier when requested by that first-
tier subcontractor.
As a result, SBA does not believe the proposed rule would have a
disparate impact on small businesses or would impose any additional
significant costs. For the reasons discussed, SBA certifies that this
proposed rule would not have a significant economic impact on a
substantial number of small business concerns.
List of Subjects in 13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small businesses, Small business
subcontracting.
For the reasons stated in the preamble, SBA proposes to amend 13
CFR part 125 as follows:
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
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.
0
2. Amend Sec. 125.3 by:
0
a. Removing the word ``and'' at the ends of pargarphs (c)(1)(ix) and
(x);
0
b. Removing the period at the end of paragraph (c)(1)(xi) and adding
``; and'' in its place; and
0
c. Adding paragraph (c)(1)(xii).
The addition reads as follows:
Sec. 125.3 What types of subcontracting assistance are available to
small businesses?
* * * * *
(c) * * *
(1) * * *
(xii)(A) The prime contractor, upon request from a first-tier small
business subcontractor, shall provide the subcontractor with a rating
of the subcontractor's past performance. The prime contractor must
provide the small business subcontractor the requested rating within 15
days of the request. If the subcontractor will use the rating for an
offer on a prime contract it must include, at a minimum, the following
evaluation factors in the requested rating:
(1) Technical (quality of product or service);
(2) Cost control (not applicable for firm-fixed-price or fixed-
price with economic price adjustment arrangements);
(3) Schedule/timeliness;
(4) Management or business relations; and
(5) Other (as applicable).
(B) The requirement in paragraph (c)(1)(xii)(A) of this section is
not subject to the flowdown in paragraph (c)(1)(x) of this section.
* * * * *
Sec. Sec. 125.11 through 125.14 [Redesignated as Sec. Sec. 125.12
through 125.15]
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3. Redesignate Sec. Sec. 125.11 through 125.14 as Sec. Sec. 125.12
through 125.15.4. Add new Sec. 125.11 before subpart A to read as
follows:
Sec. 125.11 Past performance ratings for certain small business
concerns.
(a) General. In accordance with sections 15(e)(5) and 8(d)(17) of
the Small Business Act, agencies are required to consider the past
performance of certain small business offerors that have been members
of joint ventures or have been first-tier subcontractors. The agencies
shall consider the small business' past performance for the completion
of the performance of the evaluated contract or order.
(b) Small business concerns that have been members of joint
ventures--(1) Joint venture past performance. (i) When submitting an
offer for a prime contract, a small business concern that has been a
member of a joint venture may elect to use the experience and past
performance of the joint venture (whether or not the other joint
venture partners were small business concerns) where the small business
does not independently demonstrate past performance necessary for
award. The small business concern, when making such an election, shall:
(A) Identify to the contracting officer the joint venture of which
the small business concern is or was a member;
(B) Identify the contract or contracts of the joint venture that
the small business elects to use for its experience and past
performance for the prime contract offer; and,
(C) Inform the contracting officer what duties and responsibilities
the concern carried out or is carrying out as part of the joint
venture.
(ii) A small business cannot identify and use as its own experience
and past performance work that was performed exclusively by other
partners to the joint venture.
(2) Evaluation. When evaluating the past performance of a small
business concern that has submitted an offer on a prime contract, the
contracting officer shall consider the joint venture past performance
that the concern elected to use under paragraph (b)(1) of this section,
giving due consideration to the information provided under paragraph
(b)(1)(i)(C) of this section for the performance of the evaluated
contract or order. This includes where the small business concern lacks
a past performance rating as a prime contractor in the Contractor
Performance Assessment Reporting System, or successor system used by
the Federal Government to monitor or rate contractor past performance.
(c) Small business concerns that have performed as first-tier
subcontractors--(1) Responsibility of prime contractors. A small
business concern may request a rating of its subcontractor past
performance from the prime contractor for a contract on which the
concern was a first-tier subcontractor and which included a
subcontracting plan. The prime contractor shall provide the rating to
the small business concern within 15 days of the request. The prime
contractor must include, at a minimum, the following evaluation factors
in the requested rating:
(i) Technical (quality of product or service);
(ii) Cost control (not applicable for firm-fixed-price or fixed-
price with economic price adjustment arrangements);
(iii) Schedule/timeliness;
(iv) Management or business relations; and
(v) Other (as applicable).
(2) Joint ventures that performed as first-tier subcontractors. A
small business member of a joint venture may request a past performance
rating under pararaph (c)(1) of this section, where a joint venture
performed as a first-tier subcontractor. The joint venture member may
then submit the subcontractor past performance rating to a procuring
agency in accordance with paragraph (b) of this section.
(3) Evaluation. When evaluating the past performance of a small
business concern that elected to use a rating for its offer on a prime
contract, a contracting officer shall consider the concern's experience
and rating of past performance as a first-tier subcontractor
[[Page 64416]]
and that is within three years (six for construction and architect-
engineering) of the completion of performance of the evaluated contract
or order. This includes where the small business concern lacks a past
performance rating as a prime contractor in the Contractor Performance
Assessment Reporting System, or successor system used by the Federal
Government to monitor or rate contractor past performance.
Sec. 125.28 [Amended]
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5. Amend Sec. 125.28(a) by removing ``Sec. 125.15(a)'' and adding
``Sec. 125.18(a)'' in its place.
Sec. Sec. 125.29 and 125.30 [Amended]
0
6. In addition to the amendments set forth above, in 13 CFR part 125,
remove ``Sec. 125.8'' and add ``Sec. 125.12'' in its place in the
following places:
0
a. Sec. 125.29(a); and
0
b. Sec. 125.30(g)(4).
Isabella Casillas Guzman,
Administrator.
[FR Doc. 2021-25002 Filed 11-17-21; 8:45 am]
BILLING CODE 8026-03-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.