Rule2021-28256
Consolidation of Mentor-Protégé Programs and Other Government Contracting Amendments; Correction
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 5, 2022
Effective
January 5, 2022
Issuing agencies
Small Business Administration
Abstract
The U.S. Small Business Administration (SBA) is correcting a final rule that was published in the Federal Register on October 16, 2020. The rule merged the 8(a) Business Development (BD) Mentor- Prot[eacute]g[eacute] Program and the All Small Mentor- Prot[eacute]g[eacute] Program to eliminate confusion and remove unnecessary duplication of functions within SBA. This document is making a correction to the final regulations.
Full Text
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<title>Federal Register, Volume 87 Issue 3 (Wednesday, January 5, 2022)</title>
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[Federal Register Volume 87, Number 3 (Wednesday, January 5, 2022)]
[Rules and Regulations]
[Pages 380-381]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28256]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AG94
Consolidation of Mentor-Prot[eacute]g[eacute] Programs and Other
Government Contracting Amendments; Correction
AGENCY: U.S. Small Business Administration.
ACTION: Correcting amendment.
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SUMMARY: The U.S. Small Business Administration (SBA) is correcting a
final rule that was published in the Federal Register on October 16,
2020. The rule merged the 8(a) Business Development (BD) Mentor-
Prot[eacute]g[eacute] Program and the All Small Mentor-
Prot[eacute]g[eacute] Program to eliminate confusion and remove
unnecessary duplication of functions within SBA. This document is
making a correction to the final regulations.
DATES: Effective January 5, 2022.
FOR FURTHER INFORMATION CONTACT: Mark Hagedorn, U.S. Small Business
Administration, Office of General Counsel, 409 Third Street SW,
Washington, DC 20416; (202) 205-7625; <a href="/cdn-cgi/l/email-protection#ef828e9d84c1878e888a8b809d81af9c8d8ec1888099"><span class="__cf_email__" data-cfemail="264b47544d084e474143424954486655444708414950">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: On October 16, 2020, SBA published a final
rule revising the regulations pertaining to the 8(a) BD and size
programs in order to further reduce unnecessary or excessive burdens on
small businesses and to more clearly delineate SBA's
[[Page 381]]
intent in certain regulations (85 FR 66146). This is the fifth set of
corrections. The first set of corrections was published in the Federal
Register on November 16, 2020 (85 FR 72916). The second set of
corrections was published in the Federal Register on January 14, 2021
(86 FR 2957). The third set of corrections was published in the Federal
Register on February 23, 2021 (86 FR 10732). The fourth set of
corrections was published in the Federal Register on July 22, 2021 (86
FR 38538). This document augments those corrections.
It is well established that business concerns are not affiliates of
joint ventures of which they are members for size purposes. However,
SBA regulations have long provided that when determining a concern's
size SBA will consider all revenue in whatever form received or accrued
from whatever source. Therefore, since 2004 SBA regulations have
required a joint venture partner to include its proportionate share of
joint venture receipts and employees in its own receipts and employee
count, respectively. (69 FR 29192). The final rule of October 16, 2020,
revised Sec. 121.103(h) to clarify how a joint venture partner must
calculate its proportionate share of joint venture receipts and
employees for purposes of determining its own size status.
Specifically, the final rule provided that the joint venture partner
must include its percentage share of joint venture receipts and
employees in its own receipts or employees. The appropriate percentage
share is the same percentage figure as the percentage figure
corresponding to the joint venture partner's share of work performed by
the joint venture. For employee-based size standards, the appropriate
way to apportion individuals employed by the joint venture is the same
percentage of employees as the joint venture partner's percentage
ownership share in the joint venture, after first subtracting any joint
venture employee already accounted for in the employee count of one of
the partners.
It has come to SBA's attention that some have misinterpreted the
intent of the final rule. Specifically, because the regulations no
longer allow joint ventures to be populated with individuals intended
to perform small business set-aside contracts awarded to the joint
venture, some have reasoned that a joint venture populated with its own
separate contracting-performing employees does not qualify as a joint
venture for all SBA program purposes. From this logic it ostensibly
follows that a joint venture partner need not include in its own
receipts its proportionate share of receipts and employees from
populated joint ventures. This was not SBA's intent.
When SBA revised its regulations to 2016 to prohibit populated
joint ventures on small business contracts, it did so in response to
programmatic concerns that allowing populated joint ventures between a
mentor and its prot[eacute]g[eacute] would not ensure that the
prot[eacute]g[eacute] firm and its employees benefit by developing new
expertise, experience, and past performance. (81 FR 48558). As SBA
explained, if the individuals hired by the joint venture to perform the
work under the contract did not come from the prot[eacute]g[eacute]
firm, there is no guarantee that they would ultimately end up working
for the prot[eacute]g[eacute] firm after the contract is completed. In
such a case, the prot[eacute]g[eacute] firm would have gained nothing
out of that contract. The prot[eacute]g[eacute] itself did not perform
work under the contract and the individual employees who performed work
did not at any point work for the prot[eacute]g[eacute] firm.
Additionally, SBA believed that requiring joint ventures to be
unpopulated ensures that the lead small business partner to the joint
venture will meet its performance of work requirements and will
actually benefit from the joint venture arrangement. This is especially
important for joint ventures between a mentor and its
prot[eacute]g[eacute] as well as joint ventures to perform socio-
economic set-aside contracts, where the lead joint venture partner has
the necessary size or socio-economic status and the non-lead partner
does not. Nothing, however, in the final rule or the 2016 rulemaking
signaled a change in policy concerning the treatment of receipts and
employees from populated joint ventures for purposes of determining a
joint venture partner's size. SBA never intended to change how revenues
earned by a joint venture should be counted for size purposes. As noted
above, a joint venture partner of any kind must include its
proportionate share of joint venture receipts and employees in its own
receipts and employee count to ensure that all its revenues and
employees are properly considered in determining that partner's size.
In this context it is irrelevant whether the joint venture partner's
proportionate share of receipts and employees are from populated or
unpopulated joint ventures. Thus, while populated joint ventures are no
longer eligible to submit offers for small business contracts, receipts
and employees from populated joint ventures are still attributable to
the underlying joint venture partners for size purposes. This rule
corrects the above misconception by clarifying that a concern must
include in its receipts and employee count its proportionate share of
joint venture receipts and joint venture employees, respectively,
regardless of whether the joint venture is populated or unpopulated.
List of Subjects in 13 CFR Part 121
Administrative practice and procedure, Government procurement,
Government property, Grant programs--business, Individuals with
disabilities, Loan programs--business, Small businesses.
Accordingly, 13 CFR part 121 is corrected by making the following
correcting amendment:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for part 121 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(a)(36), 662, and
694a(9); Pub. L. 116-136, Section 1114.
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2. Amend Sec. 121.103 by revising the paragraph heading and the first
and second sentences of paragraph (h) introductory text to read as
follows:
Sec. 121.103 How does SBA determine affiliation?
* * * * *
(h) Receipts/employees attributable to joint venture partners. For
size purposes, a concern must include in its receipts its proportionate
share of joint venture receipts (whether that joint venture is
populated or unpopulated), unless the proportionate share already is
accounted for in receipts reflecting transactions between the concern
and its joint ventures (e.g., subcontracts from a joint venture entity
to joint venture partners). In determining the number of employees, a
concern must include in its total number of employees its proportionate
share of joint venture employees (whether the joint venture is
populated or unpopulated). * * *
* * * * *
Antonio Doss,
Deputy Associate Administrator, Office of Government Contracting and
Business Development.
[FR Doc. 2021-28256 Filed 1-4-22; 8:45 am]
BILLING CODE 8026-03-P
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