Rule2024-12252
Eliminating Self-Certification for Service-Disabled Veteran-Owned Small Businesses
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
June 6, 2024
Effective
August 5, 2024
Issuing agencies
Small Business Administration
Abstract
This direct final rule contains amendments to the regulations governing the U.S. Small Business Administration's (SBA) Veteran Small Business Certification (VetCert) Program. The SBA is revising its regulations to implement a provision in the National Defense Authorization Act for Fiscal Year 2024 (NDAA 2024), which eliminates self-certification for service-disabled veteran-owned small businesses that are awarded Federal Government contracts or subcontracts that count towards agency or subcontracting goals This direct final rule amends SBA's regulations to carry out the changes made by NDAA 2024.
Full Text
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<title>Federal Register, Volume 89 Issue 110 (Thursday, June 6, 2024)</title>
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[Federal Register Volume 89, Number 110 (Thursday, June 6, 2024)]
[Rules and Regulations]
[Pages 48266-48269]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-12252]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 125 and 128
RIN 3245-AI10
Eliminating Self-Certification for Service-Disabled Veteran-Owned
Small Businesses
AGENCY: U.S. Small Business Administration.
ACTION: Direct final rule.
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[[Page 48267]]
SUMMARY: This direct final rule contains amendments to the regulations
governing the U.S. Small Business Administration's (SBA) Veteran Small
Business Certification (VetCert) Program. The SBA is revising its
regulations to implement a provision in the National Defense
Authorization Act for Fiscal Year 2024 (NDAA 2024), which eliminates
self-certification for service-disabled veteran-owned small businesses
that are awarded Federal Government contracts or subcontracts that
count towards agency or subcontracting goals This direct final rule
amends SBA's regulations to carry out the changes made by NDAA 2024.
DATES: This rule is effective August 5, 2024 without further action,
unless adverse comment is received no later than July 8, 2024. If
significant adverse comment is received, SBA will publish a timely
withdrawal of the rule in the Federal Register.
ADDRESSES: You may submit comments, identified by RIN 3245-AI10 or
Docket No. SBA-2024-0003, by any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>
and follow the instructions for submitting comments.
<bullet> Mail (for paper, disk, or CD-ROM submissions): Donna
Fudge, Office of Government Contracting and Business Development, U.S.
Small Business Administration, 409 Third Street SW, Washington, DC
20416.
Instructions: All submissions received must include the agency name
and docket number or Regulatory Information Number (RIN) for this
rulemaking. All comments received will be posted 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 comments to Donna Fudge and
highlight the information that you consider to be CBI and explain why
you believe this information should be held confidential.
FOR FURTHER INFORMATION CONTACT: Donna Fudge, U.S. Small Business
Administration, Office of Government Contracting and Business
Development, 409 Third Street SW, 8th Floor, Washington, DC 20416;
(202) 205-6353; <a href="/cdn-cgi/l/email-protection#6a2e0504040b442c1f0e0d0f2a19080b440d051c"><span class="__cf_email__" data-cfemail="9bdff4f5f5fab5ddeefffcfedbe8f9fab5fcf4ed">[email protected]</span></a>. This phone number may also be
reached by individuals who are deaf or hard of hearing, or who have
speech disabilities, through the Federal Communications Commission's
TTY-Based Telecommunications Relay Service teletype service at 711.
SUPPLEMENTARY INFORMATION:
I. Background
In order to be awarded a Service-Disabled Veteran-Owned Small
Businesses (SDVOSB) set-aside or sole source contract, firms must be
certified by SBA through the Veteran Small Business Certification
(VetCert) Program. Currently, firms that do not seek SDVOSB set-aside
or sole source contracts but that meet the VetCert Program eligibility
requirements may self-certify their SDVOSB status, receive prime
contract or subcontract awards that are not SDVOSB set-aside or sole
source contracts, and be counted toward an agency's SDVOSB small
business goals or a prime contractor's subcontracting goal for SDVOSB
awards.
Section 864 of the National Defense Authorization Act for Fiscal
Year 2024 (Pub. L. 118-31) (December 22, 2023) amends the SDVOSB
requirements so that, effective October 1, 2024, each prime contract
award and subcontract award counted for the purpose of meeting the
goals for participation by SDVOSBs in procurement contracts for Federal
agencies or Federal prime contractors shall be entered into with firms
certified by VetCert under section 36 of the Small Business Act (15
U.S.C. 657f). Section 864 also creates a grace period so that firms
that file an application for certification with SBA by December 22,
2024, may continue to self-certify for such Federal Government
contracts and subcontracts until SBA makes a final decision. SDVOSBs
that do not file an application for certification with SBA by December
22, 2024, or are not certified by SBA's VetCert program and do not file
an application by the deadline, will not be eligible to self-certify
for such Federal Government contracts or subcontracts after December
22, 2024. NDAA 2024 requires SBA to promulgate regulations implementing
this change within 180 days of enactment.
With this direct final rule, SBA amends the introductory sentence
of 13 CFR 125.3(a) to require SDVOSB certification for subcontracting
assistance. This rule also corrects the existing text to remove
``certified'' from ``certified small business concerns owned and
controlled by socially and economically disadvantaged individuals.''
The Small Disadvantaged Businesses designation is self-certification
and ``certified'' was included in error. To implement the statutory
language of section 864 of the NDAA 2024, SBA is amending parts 125 and
128 of its regulations to eliminate self-certification in the VetCert
program for SDVOSB concerns seeking a Federal Government contract or
subcontract that will count towards an agency's SDVOSB goals or a prime
contractor's SDVOSB subcontracting goals.
II. Justification for Direct Final Rule
In general, SBA publishes a rule for public comment before issuing
a final rule in accordance with the Administrative Procedure Act. 5
U.S.C. 553. The Administrative Procedure Act provides an exception to
this standard rulemaking process, however, where an agency finds good
cause to adopt a rule without prior public participation. 5 U.S.C.
553(b)(B). The good cause requirement is satisfied when prior public
participation is impracticable, unnecessary, or contrary to the public
interest.
SBA is publishing this rule as a direct final rule because public
participation is unnecessary. SBA views this as a non-controversial
administrative action that is limited to implementing the provisions of
NDAA 2024 eliminating self-certification for SDVOSBs. These provisions
are mandated by statute, and SBA does not have the authority to alter
them in response to comment. Additionally, a 60-day notice and comment
period would jeopardize SBA's obligation to meet section 864's deadline
to promulgate regulations within 180 days of enactment.
This rule will be effective on the date shown in the DATES section
unless SBA receives significant adverse comment on or before the
deadline for comments. Significant adverse comments are comments that
provide strong justifications for why the rule should not be adopted or
for changing the rule. SBA does not expect to receive any significant
adverse comments because it is adopting mandatory statutory changes. If
SBA receives any significant adverse comments, it will publish a
document in the Federal Register withdrawing this rule before the
effective date. If SBA receives no significant adverse comments, the
rule will be effective 60 days after publication without further
notice.
As such, this rule is being implemented as a direct final rule.
III. Compliance With Executive Orders 12866, 13563, 12988, 13132, and
13175, 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
direct final rule is not a significant regulatory action for the
purposes of Executive Order 12866. This direct final rule
[[Page 48268]]
implements specific statutory provisions in section 864 of the NDAA
2024.
Expected Impact
Under the existing system, the burden of SDVOSB compliance for
goaling purposes is placed upon the awarding contracting officer. Under
this direct final rule, this burden is placed upon SBA. The contracting
officer's responsibilities would be reduced to confirming that the
applying firm is, in fact, a certified SDVOSB in SBA's certification
database. This reduced responsibility to verify eligibility at contract
award may result in a minor cost savings to the contracting agencies.
While current participants in the VetCert Program would have no
additional costs associated with this direct final rule, SBA
anticipates costs associated with self-certified SDVOSBs currently
seeking prime contracts or subcontracting with the Federal Government.
SBA estimates that as many as 20,408 self-certified SDVOSBs could apply
for certification. To obtain this estimate, SBA reviewed firms actively
registered as SDVOSBs in SAM but not already certified by VetCert. SBA
believes that the number of firms listed in SAM is the most recent and
reliable data to estimate participation and total costs for the
purposes of this regulatory impact study. While it is not anticipated
that every firm self-certified in SAM will apply for certification, SAM
self-certification serves as what SBA would consider the maximum number
of firms that would likely seek certification. SBA anticipates that
only 70% of those firms will apply for certification, or 14,285 firms.
SBA estimates that an applicant's cost burden to apply for
eligibility for this program would require 2 total hours at a cost
burden of $250.96 per applicant. Hourly cost to the participant is
based on the estimated manager's salary of $125.48/hour (based on the
median hourly wage of $62.74 for construction managers, according to
the BLS 2023 Occupational Outlook Handbook, plus 100% for benefits and
overhead). Based on an estimate of 2 hours to complete an application
and an hourly cost of $125.48, the initial total cost burden will be
$3,584,963. Applicants would be required to apply for recertification
at the end of the three-year eligibility period. SBA estimates that
applicants will incur an additional 1 hour or $125.48 to complete
recertification. Assuming all firms that apply for initial
certification also apply for recertification at the end of each three-
year eligibility period, the total cost burden would increase by
$1,792,481 every three years. SBA does not expect that all firms will
recertify but includes this estimate as an abundance of caution.
This regulation benefits the SDVOSB community by reducing the
ambiguity and uncertainty for contracting officers in the process of
Federal contract goaling and subcontracting that previously relied on
self-certification. As SBA is implementing statutorily mandated
requirements, there are no alternatives to this rulemaking.
Executive Order 13563
Executive Order 13563, Improving Regulation and Regulatory Review
(January 18, 2011), requires agencies to adopt regulations through a
process that involves public participation, and to the extent feasible,
base regulations on the open exchange of information and perspectives
from affected stakeholders and the public as a whole. SBA has developed
this rule in a manner consistent with these requirements, and the
public will have the opportunity to provide comments following the
publication of this rule.
Executive Order 12988
This direct final 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 direct final 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 direct final rule does not have Tribal implications under
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments, because it does 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.
Congressional Review Act (5 U.S.C. 801-808)
Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of 1996, also known as the Congressional Review Act, 5 U.S.C. 801
et seq., provides that before a rule may take effect, the agency
promulgating the rule must submit a rule report, which includes a copy
of the rule, to each House of the Congress and to the Comptroller
General of the United States. SBA will submit a report containing this
rulemaking and other required information to the U.S. Senate, the U.S.
House of Representatives, and the Comptroller General of the United
States. This rulemaking has been reviewed and determined not to meet
the criteria set forth in 5 U.S.C. 804(2).
Paperwork Reduction Act, 44 U.S.C. Ch. 35
To carry out its statutory mandate to certify SDVOSB firms, SBA
collects information from SDVOSB applicants or participants through an
online application system. This collection of information will require
submission or retention of documents that support the applicant's
certification and continued eligibility.
As discussed above, this direct final rule will implement the
statutory requirement for small business concerns to be certified by
SBA in order to be counted toward an agency's or prime contractor's
goal for SDVOSB awards. As a result of these changes, the direct final
rule eliminates SDVOSB self-certification. SBA anticipates that these
changes will impact self-certified firms; however, SBA believes that
this impact will be minimal as the information to be collected is
already held by applicants during the ordinary course of business, was
previously required for self-certification, and would require minimum
preparation prior to submission. SBA will seek approval of this updated
information collection separately from this rulemaking.
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, the RFA
requires such analysis only where notice and comment rulemaking is
required. As discussed above, SBA has found good
[[Page 48269]]
cause that notice and public comment are impracticable, unnecessary, or
contrary to the public interest. Accordingly, SBA is not required to
conduct a regulatory flexibility analysis and is publishing this rule
as a direct final rule without advance notice and public comment to
implement NDAA 2024.
List of Subjects
13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small businesses, Technical assistance.
13 CFR Part 128
Government contracts, Government procurement, Reporting and
recordkeeping, requirements, Small businesses, Technical assistance,
Veterans.
Accordingly, for the reasons stated in the preamble, SBA amends 13
CFR parts 125 and 128 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 revising the first sentence of the introductory
text of paragraph (a) and paragraph (c)(1)(xi) to read as follows:
Sec. 125.3 What types of subcontracting assistance are available to
small businesses?
(a) General. The purpose of the subcontracting assistance program
is to provide the maximum practicable subcontracting opportunities for
small business concerns, including small business concerns owned and
controlled by veterans, certified small business concerns owned and
controlled by service-disabled veterans, certified HUBZone small
business concerns, small business concerns owned and controlled by
socially and economically disadvantaged individuals, and small business
concerns owned and controlled by women. * * *
* * * * *
(c) * * *
(1) * * *
(xi) The prime contractor must provide a written statement of the
types of records it will maintain to demonstrate procedures which have
been adopted to ensure subcontractors at all tiers comply with the
requirements and goals set forth in the subcontracting plan established
in accordance with paragraph (c)(1)(x) of this section, including the
establishment of source lists of small business concerns, small
business concerns owned and controlled by veterans, certified small
business concerns owned and controlled by service-disabled veterans,
certified HUBZone small business concerns, small business concerns
owned and controlled by socially and economically disadvantaged
individuals, and small business concerns owned and controlled by women;
the efforts to identify and award subcontracts to such small business
concerns; and size or socioeconomic certifications or representations
received in connection with each subcontract;
* * * * *
PART 128--VETERAN SMALL BUSINESS CERTIFICATION PROGRAM
0
3. The authority citation for part 128 continues to read as follows:
Authority: 15 U.S.C. 632(q), 634(b)(6), 644, 645, 657f, 657f-1.
0
4. Amend Sec. 128.200 by revising paragraph (c)(2) to read as follows:
Sec. 128.200 What are the requirements a concern must meet to qualify
as a VOSB or SDVOSB?
* * * * *
(c) * * *
(2) A concern must be certified pursuant to Sec. 128.300 to
receive a prime contract that is to be counted by a Federal agency for
the purposes of meeting participation goals for SDVOSBs or to receive a
subcontract from a Federal prime contractor for the purpose of meeting
subcontracting goals for SBVOSBs in Federal procurement contracts. Any
small business concern that submits a complete certification
application to SBA on or before December 22, 2024, shall be eligible to
self-certify for a Federal prime or subcontract that counts towards
SDVOSB goaling purposes or SDVOSB subcontracting goals, respectively,
until SBA declines or approves the concern's application. Any small
business concern that does not submit a complete SDVOSB certification
application to SBA on or before December 22, 2024, will no longer be
eligible to self-certify for a Federal prime or subcontract that counts
towards SDVOSB goaling purposes or SDVOSB subcontracting goals,
respectively.
Isabella Casillas Guzman,
Administrator.
[FR Doc. 2024-12252 Filed 6-5-24; 8:45 am]
BILLING CODE 8026-09-P
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