Proposed Rule2025-00615
Federal Acquisition Regulation: Small Business Participation on Certain Multiple-Award Contracts
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 15, 2025
Issuing agencies
Defense DepartmentGeneral Services AdministrationNational Aeronautics and Space Administration
Abstract
DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to issue policy on small business participation on certain multiple-award contracts.
Full Text
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<title>Federal Register, Volume 90 Issue 9 (Wednesday, January 15, 2025)</title>
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[Federal Register Volume 90, Number 9 (Wednesday, January 15, 2025)]
[Proposed Rules]
[Pages 3753-3761]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-00615]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 7, 12, 16, 19, and 52
[FAR Case 2023-011, Docket No. FAR-2023-0011, Sequence No. 1]
RIN 9000-AO59
Federal Acquisition Regulation: Small Business Participation on
Certain Multiple-Award Contracts
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to issue policy on small business
participation on certain multiple-award contracts.
DATES: Interested parties should submit written comments to the
Regulatory Secretariat Division at the address shown below on or before
March 17, 2025, to be considered in the formation of the final rule.
ADDRESSES: Submit comments in response to FAR Case 2023-011 to the
Federal eRulemaking portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by searching
for ``FAR Case 2023-011''. Select the link ``Comment Now'' that
corresponds with ``FAR Case 2023-011''. Follow the instructions
provided on the ``Comment Now'' screen. Please include your name,
company name (if any), and ``FAR Case 2023-011'' on your attached
document. If your comment cannot be submitted using <a href="https://www.regulations.gov">https://www.regulations.gov</a>, call or email the points of contact in the FOR
FURTHER INFORMATION CONTACT section of this document for alternate
instructions.
Instructions: Please submit comments only and cite ``FAR Case 2023-
011'' in all correspondence related to this case. Comments received
generally will be posted without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
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 <a href="https://www.regulations.gov/faq">https://www.regulations.gov/faq</a>). To confirm receipt of your comment(s),
please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>, approximately two to three
days after submission to verify posting.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
Ms. Carrie Moore, Procurement Analyst, at 571-300-5917 or by email at
<a href="/cdn-cgi/l/email-protection#13707261617a763d7e7c7c6176537460723d747c65"><span class="__cf_email__" data-cfemail="13707261617a763d7e7c7c6176537460723d747c65">[email protected]</span></a>. For information pertaining to status, publication
schedules, or alternate instructions for submitting comments if <a href="https://www.regulations.gov">https://www.regulations.gov</a> cannot be used, contact the Regulatory Secretariat
Division at 202-501-4755 or <a href="/cdn-cgi/l/email-protection#bff8ecfeeddad8ecdadcffd8ccde91d8d0c9"><span class="__cf_email__" data-cfemail="20677361724547734543604753410e474f56">[email protected]</span></a>. Please cite FAR Case
2023-011.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA are proposing to revise the FAR to issue policy
to update market research, acquisition planning, small business
specialist coordination, and the use of set-asides during the award of,
and placement of orders against, certain multiple-award contracts. This
proposed rule implements recommendations of the Office of Federal
Procurement Policy (OFPP) in its memorandum entitled, Increasing Small
Business Participation on Multiple Award Contracts, dated January 25,
2024.
This policy would expand the use of small business set-asides for
orders against multiple-award contracts; increase coordination with the
cognizant small business specialist and the Small Business
Administration (SBA) procurement center representative (PCR) during
acquisition planning for multiple-award contracts and when placing
orders against multiple-award contracts, and provide additional
criteria to consider or address in documentation provided to the
cognizant small business specialist and PCR. This proposed rule is
being published in conjunction with an SBA proposed rule regarding,
``Assuring a Fair Proportion of Government Purchases are Awarded to
Small Business Concerns,'' to help the public and the acquisition
workforce better understand how the two rules will implement the
policy. This proposed rule would impact both acquisition planning and
order placement, as discussed below.
A. Acquisition Planning
To increase small business opportunities when developing
acquisition strategies for multiple-award contracts, this proposed rule
would increase and enhance small business documentation requirements
and facilitate greater coordination and communication between agencies
and their cognizant small business specialists during the acquisition
planning process. Currently, agencies coordinate acquisitions with
their respective Office of Small and Disadvantaged Business Utilization
(OSDBU), or the Office of Small Business Programs (OSBP), for
recommendations as to whether the acquisition should be set aside or
reserved for small business concerns, in accordance with agency
procedures. This proposed rule is intended to increase OSDBU and OSBP
insight into acquisition planning for multiple-award contracts by
requiring agencies, when contemplating the issuance of such a contract,
to consider totally or partially setting aside the acquisition for
small business or including a small business reserve. If a set-aside or
reserve for small business is not planned, the agency would be required
to document the reason, including any pertinent market research, for
this decision in its acquisition strategy or plan, and coordinate the
reason with the agency's cognizant small business specialist. (See FAR
7.105(b)(1)(iii)(A)).
In addition, when an acquisition is anticipated to meet or exceed
the dollar threshold for substantial bundling at FAR 7.107-4(a)(1), the
acquisition planner is currently required at FAR 7.104(d) to coordinate
the acquisition with the agency's cognizant small business specialist.
This coordination provides the specialist with insight into any
decision to not set aside the acquisition for small business concerns,
as well as an opportunity to ensure the acquisition is structured to
maximize small business competition and award opportunities. This
proposed rule would incorporate a higher level of
[[Page 3754]]
coordination into the current process by requiring the agency's
cognizant small business specialist to notify the PCR, if the
acquisition plan involves a multiple-award contract that meets or
exceeds the agency's respective threshold for substantial bundling and
the number of small business contract awardees is anticipated to be
less than 30 percent of all contract awardees. This higher-level
coordination is proposed to reinforce careful consideration of small
business equities on multiple-award contracts and increase the
probability of participation by small business.
Finally, this proposed rule would also require agencies to consider
the use of on-ramps when planning for the award of a long-term,
multiple-award contract. On-ramps are a tool used with multiple-award
contracts to permit large and small businesses to be added as awardees
during the period of performance of the contract. To encourage the
continued participation of small business concerns on long-term (i.e.,
more than five years in duration, including options, see 19.301-2(a))
multiple-award contracts, this proposed rule would require acquisition
planners to discuss the use of on-ramps for these contracts in the
acquisition plan. (See 7.105 (b)(1)(iii)(B)). If no on-ramps are
planned for the contract but small businesses are expected to enter the
market after the award of the contract, and the work anticipated under
the contract is sufficient to provide meaningful opportunities for
additional contract awardees, the planner would be required to explain
in the acquisition plan why on-ramps will not be included in the
contract.
B. Orders Against Multiple-Award Contracts
In accordance with 15 U.S.C. 644(r), contracting officers have the
discretion to decide whether to set aside an order against a multiple-
award contract. To increase small business opportunities and maximize
their participation under multiple-award contracts, this proposed rule
would require contracting officers to exercise their discretion to set
aside an order for small business if the contracting officer determines
that, under an applicable multiple-award contract, there is a
reasonable expectation of obtaining offers from two or more responsible
small business contract awardees that are competitive in terms of fair
market price, quality, capability, ability to comply with the delivery
or performance schedule, and past performance. (See FAR
16.505(b)(1)(i)(C).) This set-aside requirement for the contracting
officer to exercise their discretion would not apply to orders against
the Federal Supply Schedule (FSS), or when an exception to fair
opportunity or an agency-specific exception applies to the order (See
FAR 16.505(a)(14)).
This proposed rule would permit agencies to establish procedures
for contracting officers to exercise agency-specific exceptions.
However, agencies must coordinate their procedures for granting those
exceptions with their OSDBU or OSBP, as well as SBA, and make the
procedures publicly available. The establishment of these procedures
and their coordination with SBA and the agency OSDU or OSBP is not a
requirement for their review and approval, as approval remains entirely
within the discretion of the agency establishing the procedures. This
proposed rule would also clarify that the set-aside requirement applies
to existing contracts only to the extent that doing so is consistent
with the ordering procedures of the contract and there is adequate time
remaining on the contract to permit a small business concern to fully
perform or deliver under the contract (See FAR 16.505(b)(1)(i)(C)(2)).
If an order is not set aside when there is a reasonable expectation
of obtaining competitive offers from two or more responsible small
business contract awardees under the multiple-award contract, the
contracting officer would be required to document the reason for that
decision and coordinate it with the agency's cognizant small business
specialist. This proposed rule would require the small business
specialist to coordinate the decision with the PCR when the order
exceeds a dollar value threshold negotiated between SBA and the agency.
Alternatively, when an order is to be placed against a multiple-
award contract with only one or no small business contract awardees,
this proposed rule at FAR 16.505(a)(13) would require contracting
officers to document the reason for choosing the contract, coordinate
it with the agency's cognizant small business specialist, and provide
the specialist with a reasonable opportunity to respond. This would not
be a requirement for approval from the cognizant small business
specialist. The documentation would need to discuss the following: how
the market research of small business contract awardees, including
small businesses that are not contract awardees, on the multiple-award
contract against which the order will be placed, and how mission needs
informed the agency's reason for selecting the multiple-award contract
to fulfill its needs; and the market research the agency conducted
within the past 18 months to support the decision, which may include
the market research supporting the strategy to establish a multiple-
award contract or deciding to use another agency's multiple-award
contract on a repetitive basis. This documentation and coordination
requirement will would not apply when placing an order against the FSS,
an exception to fair opportunity applies, or to repetitive orders,
including orders placed using automated procedures, issued by that
agency (i.e., when an order was issued by that agency under the same
contract and that order was documented in accordance with FAR
16.505(a)(13) and coordinated within the prior 18 months).
II. Discussion and Analysis
The proposed changes to the FAR and the rationale are summarized as
follows:
<bullet> Revise part 1 to emphasize that the small business
community is part of the acquisition team;
<bullet> Revise part 7 to: require agencies to document and
coordinate the decision to not include a set-aside or reserve for small
business when planning for the award of multiple-award contract;
identify the agency cognizant small business specialist's
responsibility for coordination when reviewing acquisition plans or
strategies for certain multiple-award contracts; and specify the
additional considerations the agency acquisition planner must make and
document in an acquisition plan or strategy when contemplating the
award of a long-term, multiple-award contract.
<bullet> Revise part 12 to focus text that refers to the
contracting officer's discretion to set aside orders.
<bullet> Revise part 16 to: require contracting officers to use
their discretionary authority to set aside orders against certain
multiple-award contracts and to incorporate set-asides in the ordering
procedures of any new multiple-award contracts; specify the criteria to
be considered when making a set-aside determination and when the set-
aside requirement may not apply; identify the documentation and
coordination requirements when the order is not set aside, and when
placing an order against certain multiple-award contracts that have
only one or no small business contract awardees; discuss how the set-
aside requirement will apply to existing contracts; and remove the
contracting officer's discretion to set aside an order from the list of
exceptions to fair opportunity.
<bullet> Revise part 19 to: reiterate the requirement to set aside
orders for small business contract awardees against certain multiple-
award contracts; remove the discretionary authority for set-asides from
the list of exclusions to
[[Page 3755]]
fair opportunity; clarify that the contracting officer may provide the
PCR with a proposed acquisition package more than 30 days in advance of
the solicitation, upon agreement between the PCR and the agency; and
revise the prescriptions for applicable clauses to ensure proper
incorporation into contracts as a result of this rule.
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
This rule proposes to amend the prescriptions at FAR 19.507(c),
19.507(e)(1), 19.507(h)(1), 19.1309(a), 19.1408(a), and 19.1508(a) and
(b). This rule also proposes to amend the following clauses: 52.212-5,
Contract Terms and Conditions Required To Implement Statutes or
Executive Orders--Commercial Products and Commercial Services; 52.219-
3, Notice of HUBZone Set-Aside or Sole-Source Award; 52.219-6, Notice
of Total Small Business Set-Aside; 52.219-14, Limitations on
Subcontracting; 52.219-27, Notice of Set-Aside for, or Sole-Source
Award to, Service-Disabled Veteran-Owned Small Business (SDVOSB)
Concerns Eligible Under the SDVOSB Program; 52.219-29, Notice of Set-
Aside for, or Sole-Source Award to, Economically Disadvantaged Women-
Owned Small Business Concerns; 52.219-30, Notice of Set-Aside for, or
Sole-Source Award to, Women-Owned Small Business Concerns Eligible
Under the Women-Owned Small Business Program; and 52.219-33,
Nonmanufacturer Rule.
However, this rule would not impose any new requirements on
contracts at or below the SAT, for commercial products (including COTS
items), or for commercial services. The clauses would continue to apply
to acquisitions at or below the SAT, acquisitions for commercial
products (including COTS items), and commercial services.
IV. Expected Impact of the Rule
This proposed rule supports Governmentwide efforts to leverage the
small business growth occurring in the nation's supply chains that
support agency missions, reverse the decline of small business
participation in the Federal supplier base, and increase contracting
opportunities for small business concerns. In its January 25, 2024
memo, OFPP identified several actions to strengthen small business
participation on multiple-award contracts, including: earlier
involvement of SBA PCRs and the agency small business specialists in
the development of multiple-award contracts; express consideration
during acquisition planning of on-ramps and the relative proportion of
anticipated small business contract awardees on multiple-award
contracts; and new requirements for order set-asides against multiple-
award contracts.
A. Benefits
Competitive small businesses that can participate on multiple-award
contracts may find it easier to compete for work under the reduced
administrative burden and simpler evaluation procedures used to support
order competitions rather than pursuing competitions on the open
market. Additionally, this proposed rule may result in an increased
number of multiple-award contracts being set aside exclusively for
small business concerns, and since small business concerns often grow
to become large businesses, this rule may result in an increase in
competition in unrestricted multiple-award contracts and further build
the economic strength of the country.
B. Estimated Costs
1. Public Costs
This rule affects the internal operating procedures of the
Government when performing acquisition planning. This rule does not
directly impose any burden on the public. This proposed rule may result
in a greater percentage of orders being awarded to small business
contract awardees under certain multiple-award contracts. The costs and
benefits of this rule have not been realized yet; therefore, there is
no data with which to quantify these impacts. Instead, this proposed
rule has the potential to impact existing and future contract awardees
under certain multiple-award contracts, depending on several factors,
including the following: the primary industry of the entity; the
Government's future needs for supplies and services; the entity's
submission of proposals and offers for multiple-award contracts and the
orders to be placed under those contracts; and agency budget.
2. Government Costs
The total estimated Government costs associated with this FAR
proposed rule, if finalized, in millions, over a ten-year period, are
as follows:
------------------------------------------------------------------------
Government cost Undiscounted 2 Percent
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Present Value.............................. $117 $105
Annualized................................. 11.7 10.5
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Undiscounted Government costs (in millions) by year over a ten-year
period are summarized as follows:
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Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
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$11.7................................................ $11.7 $11.7 $11.7 $11.7 $11.7 $11.7 $11.7 $11.7 $11.7
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i. Acquisition Planning. First, this rule proposes to require
agencies to document the reason a set-aside or reserve for small
business is not planned for in the solicitation of a new multiple-award
contract at any dollar value. Agencies would also be required to
coordinate the documentation with the agency's cognizant small business
specialist. The cost accounts for the time it takes an acquisition
planner to document the reason for not including a set-aside or reserve
for small business in the solicitation and the results of small
business market research to support that decision and discuss the
documentation with the agency's cognizant small business specialist.
According to data from the Federal Procurement Data System (FPDS) for
Fiscal Years (FYs) 2021 to 2023, the Government awards an average of
approximately 3,700 multiple-award contracts that do not contain a set-
aside or reserve for small business concerns annually. The Government
does not collect data on each solicitation issued and, therefore,
assumes that an average of 3 contracts are awarded from a solicitation
for a multiple-award contract. This accounts for an average of 1,233
solicitations (3,700 contracts/3 contracts awarded per solicitation)
for multiple-award contracts issued by the Government each year. It is
estimated that it will take one GS-14, step 5, Government employee, on
average, 1.5 hours to document and coordinate the rationale. Based on
the Office of Personnel Management (OPM) 2024 General Schedule (GS) 14/
step 5 salary for the rest of the United States ($66.36 per hour), a
fringe rate of 36.25 percent (OMB memorandum M-08-13 for use in public-
private competition), and an overhead rate of 12% (A-76 revised
supplemental handbook), the average loaded wage rate for a GS-14, step
5
[[Page 3756]]
employee is $101 (rounded to the nearest dollar). As a result, the
total annual estimated cost for the Government to document and
coordinate the reason for not including a set-aside or reserve for
small business in a multiple-award contract is $186,800 (1,233
solicitations * 1.5 hours * $101). The Government acknowledges that
this cost could be slightly increased by those solicitations that are
issued but cancelled prior to award, or slightly decreased when more
than 3 contracts are awarded from a single solicitation.
Second, this rule proposes to require the cognizant small business
specialist to coordinate with the PCR, if an acquisition plan or
strategy involves a multiple-award contract that meets or exceeds the
thresholds for substantial bundling and the number of small business
contract awardees is anticipated to be less than 30 percent of all
contract awardees. The cost accounts for the time it takes the agency's
cognizant small business specialist to contact and discuss the
acquisition with the SBA PCR. According to data from FPDS for FYs 2021
to 2023, the Government awards an average of approximately 2,900
multiple-award contracts that exceed an agency's respective substantial
bundling threshold, and do not contain a set-aside or reserve for small
business concerns. The Government estimates that approximately 50
percent, or 1,450 (2,900 * .50), of these contracts anticipate the
number of small business contract awardees to be less than 30 percent
of all contract awardees. The Government further assumes that one
solicitation yielded two multiple-award contracts meeting the
respective substantial bundling threshold. This accounts for an average
of 725 solicitations (1,450 contracts/2 contracts awarded per
solicitation) for multiple-award contracts valued over the substantial
bundling threshold issued by the Government each year. It is estimated
that it would take one GS-14, step 5, Government employee, on average,
0.5 hour to coordinate and discuss the acquisition plan or strategy
with the SBA PCR. Using the average loaded wage rate for a GS-14, step
5, employee, the total annual estimated cost for the Government to
coordinate the acquisition plan or strategy with the PCR is $36,613
(725 solicitations * .5 hour * $101).
Finally, this rule proposes to require acquisition planners to
document the use of on-ramps in long-term, multiple-award contracts, or
the rationale for not including on-ramps in such contracts when small
businesses are expected to enter the market after the award of the
contract and the work anticipated under the contract is sufficient to
provide meaningful opportunities for additional contract awardees. The
cost accounts for the time it takes an acquisition planner to research
and document the rationale behind including or not including on-ramps
in the acquisition. Based on the discussion above, the Government
issues an average of 1,233 solicitations for multiple-award contracts
each year. The Government estimates that approximately 5 percent, or
62, of those solicitations are for long-term contracts. It is estimated
that it would take one GS-14, step 5, Government employee, on average,
1 hour to research and document the rationale. Using the average loaded
wage rate for a GS-14, step 5, employee, the total annual estimated
cost for the Government to document and coordinate the reason for not
including an on-ramp in a multiple-award contract is $6,262 (62
solicitations * 1 hour * $101). The Government acknowledges that this
cost could be slightly increased by those solicitations that are issued
but cancelled prior to award, or slightly decreased when more than 3
contracts are awarded from a single solicitation.
ii. Orders against multiple-award contracts. First, this rule
proposes to require contracting officers to set aside an order for
small business if they determine that, under an applicable multiple-
award contract, there is a reasonable expectation of obtaining offers
from two or more responsible small business contract awardees that are
competitive in terms of fair market price, quality, capability, ability
to comply with the delivery or performance schedule, and past
performance. The cost accounts for the time it takes a contracting
officer to research the specific criteria for each small business
contract awardee under the selected contract. According to data from
FPDS for FYs 2021 to 2023, the Government awards an average of 63,700
task orders or delivery orders against multiple-award contracts,
excluding FSS, that are awarded to two or more small businesses
annually. It is estimated that it would take one GS-14, step 5,
Government employee, on average, 1 hour to research and document the
criteria for each small business contract awardee. Using the average
loaded wage rate for a GS-14, step 5, employee, the total annual
estimated cost for the Government to research and document the criteria
for each small business contract awardee is $6,433,700 (63,700 orders *
1 hour * $101).
Second, when an order is not set aside, this rule proposes to
require the contracting officer to document the reason for such a
decision and coordinate it with the agency's cognizant small business
specialist. The cost accounts for the time it takes a contracting
officer to document and coordinate the reason for not setting aside an
order. Based on the discussion above, the Government awards
approximately 63,700 task orders or delivery orders against multiple-
award contracts, excluding FSS, awarded to two or more small businesses
annually. Of those 63,700 task orders and delivery orders,
approximately 14,900 of them are awarded to large businesses each year.
It is estimated that approximately half, or 7,450 (14,900 task orders
and delivery orders * .5), of these orders were competed amongst all
contract awardees, although a set-aside may have been available. It is
estimated that it will take one GS-14, step 5, Government employee, on
average, 1.5 hours to document and coordinate the reason for not
setting aside the order. Using the average loaded wage rate for a GS-
14, step 5, employee, the total annual estimated cost for the
Government to document and coordinate the reason for not setting aside
an order is $1,128,675 (7,450 orders * 1.5 hours * $101).
This proposed rule would also require that the small business
specialist coordinate the decision with the PCR when the order exceeds
a dollar value threshold negotiated between SBA and the agency. While
these thresholds have not been negotiated, the Government assumes that
30 percent, or 2,235 (7,450 * .3), of the orders not set aside when a
set-aside is available may need to be coordinated with the PCR. The
cost accounts for the time it takes a small business specialist to
coordinate and discuss the reason for not setting aside an order, when
doing so is possible. It is estimated that it would take one GS-14,
step 5, Government employee, on average, .5 hour to coordinate with the
SBA PCR the reason for not setting aside the order. Using the average
loaded wage rate for a GS-14, step 5, employee, the total annual
estimated cost for the Government to coordinate the reason with the SBA
PCR is $112,868 (2,235 orders * .5 hour * $101).
Finally, when an order is to be placed against a multiple-award
contract with only one or no small business contract awardees, this
rule proposes to require contracting officers to document the reason
for choosing the contract, coordinate it with the agency's cognizant
small business specialist, and provide the specialist with a reasonable
opportunity to respond. The cost accounts for the time it takes a
contracting officer to research and
[[Page 3757]]
document the rationale behind choosing the contract and reach out and
discuss the reason with the specialist. According to data from FPDS for
FYs 2021 to 2023, the Government awards an average of 15,000 task
orders or delivery orders against multiple-award contracts that were
awarded to one or no small business awardees annually. It is estimated
that it would take one GS-14, step 5, Government employee, on average,
2.5 hours to research, document, and coordinate the rationale. Using
the average loaded wage rate for a GS-14, step 5, employee, the total
annual estimated cost for the Government to document and coordinate the
reason for choosing a multiple-award contract with only one or no small
business contract awardees is $3,787,500 (15,000 solicitations * 2.5
hours * $101).
C. Alternatives
Several alternatives were considered in the drafting of this
proposed rule, including requiring set-asides for small business prior
to selecting a contract vehicle, requiring set-asides for agencies that
do not meet their annual small business contracting goals, and
maintaining contracting officer discretion to set aside an order for a
small business contract awardee. However, each of these alternatives
misses some portion of the small business community that may be able to
compete for such requirements and therefore, do not provide the maximum
opportunity for small business participation under certain multiple-
award contracts.
V. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 (as amended by E.O. 14094) and 13563
direct agencies to assess the costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). E.O. 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. This is a significant regulatory
action under section 3(f)(1) of E.O. 12866 and, therefore, was subject
to review under Section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993.
VI. Regulatory Flexibility Act
DoD, GSA, and NASA do not expect this proposed rule, if finalized,
to have a significant economic impact on a substantial number of small
entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C.
601-612. This rule only revises the internal operating procedures of
the Government. However, an Initial Regulatory Flexibility Analysis
(IRFA) has been performed and is summarized as follows:
DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to update and clarify policy on market
research, acquisition planning, small business specialist
coordination, and the use of set asides during the award of and
orders placed against certain multiple-award contracts.
The objective of this rule is to support Governmentwide efforts
to leverage the small business growth occurring in the nation's
supply chains that support agency missions, reverse the decline of
small business participation in the Federal supplier base, and
increase contracting opportunities for small business concerns.
Promulgation of FAR regulations is authorized by 40 U.S.C. 121(c);
10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see
10 U.S.C. 3016); and 51 U.S.C. 20113.
This proposed rule would impact small business contract awardees
under certain existing multiple-award contracts, as well as small
business concerns that anticipate becoming a contract awardee under
certain multiple-award contracts. The impacts of this rule have not
been realized yet; therefore, there is no data with which to
accurately reflect the number of small entities to which this rule
would apply. Instead, this rule has the potential to benefit any
small entity looking to do business with the Government under
certain multiple-award contracts. According to data from the System
for Award Management (SAM), there are approximately 384,100 small
entities currently registered in SAM to do business with the
Government. This proposed rule has the potential to impact any
number of these small entities, depending on several factors,
including the following: the primary industry of the entity, the
Government's future needs for products and services, and the
entity's submission of proposals and offers for multiple-award
contracts and the orders to be placed against those contracts.
The proposed rule would not impose any new reporting,
recordkeeping, or other compliance requirements for small entities.
The proposed rule does not duplicate, overlap, or conflict with any
other Federal rules.
There are no known significant alternative approaches to the
proposed rule that would accomplish the stated objectives of the
rule and further minimize any significant economic impact of this
proposed rule on small entities, as the economic impact is not
anticipated to be significant.
The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. DoD, GSA, and NASA invite comments from small
business concerns and other interested parties on the expected impact
of this proposed rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2023-011),
in correspondence.
VII. Paperwork Reduction Act
This rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget under
the Paperwork Reduction Act (44 U.S.C. 3501-3521).
List of Subjects in 48 CFR Parts 1, 7, 12, 16, 19, and 52
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 1, 7,
12, 16, 19, and 52 as set forth below:
0
1. The authority citation for 48 CFR parts 1, 7, 12, 16, 19, and 52
continues to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C.
chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C.
20113.
PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM
1.102 [Amended]
0
2. Amend section 1.102 in paragraph (c) by removing ``and procurement''
and adding ``procurement, and small business'' in its place.
PART 7--ACQUISITION PLANNING
0
3. Amend section 7.104 by revising paragraph (d) to read as follows:
7.104 General procedures.
* * * * *
(d)(1) The planner shall coordinate the acquisition plan or
strategy with the cognizant small business specialist when the strategy
contemplates an acquisition meeting the thresholds in 7.107-4 for
substantial bundling unless the contract or task order or delivery
order is totally set aside for small business under part 19.
(2) The small business specialist shall notify--
(i) The agency Office of Small and Disadvantaged Business
Utilization or
[[Page 3758]]
the Office of Small Business Programs if the strategy involves--
(A) Bundling that is unnecessary or unjustified; or
(B) Bundled or consolidated requirements not identified as such by
the agency (see 7.107); and
(ii) The Small Business Administration (SBA) procurement center
representative (or if one is not assigned, see 19.402(a)), early in the
acquisition process, if the strategy involves a multiple-award contract
that meets the thresholds in 7.107-4 for substantial bundling, and the
number of small business contract awardees is anticipated to be under
30 percent of all contract awardees.
* * * * *
0
4. Amend section 7.105 by adding paragraphs (b)(1)(iii)(A) and (B) to
read as follows:
7.105 Contents of written acquisition plans.
* * * * *
(b) * * *
(1) * * *
(iii) * * *
(A) When a multiple-award contract will not be totally or partially
set aside for small business concerns or will not include a small
business reserve (see 19.501(a)), the agency shall document the reason
for this decision, including a description of the market research
conducted. The agency shall coordinate the acquisition plan or strategy
with the cognizant small business specialist.
(B) When contemplating the award of a multiple-award contract that
is a long-term contract, as defined at 19.301-2(a), discuss the use of
on-ramps during the period of performance of the contract (i.e.,
permitting small and large business concerns to become contract holders
during the period of performance of the contract). If small businesses
are expected to enter the market after the award of the contract, and
the work anticipated to be performed under the contract is sufficient
to provide meaningful opportunities for additional contract holders,
the plan or strategy shall explain why on-ramps will not be included in
the contract. If on-ramps are included in the contract, agencies are
discouraged from using off-ramps to remove a contract awardee from a
contract that was set aside for small business concerns because of a
change in the awardee's size status, except where the awardee's size
status changes because of a merger or acquisition.
* * * * *
PART 12--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL SERVICES
0
5. Amend section 12.207 by revising paragraph (b)(1)(i)(C) to read as
follows:
12.207 Contract type.
* * * * *
(b)(1) * * *
(i) * * *
(C) The fair opportunity procedures in 16.505 (including small
business set-asides under 16.505(b)(1)(i)(C)), if placing an order
under a multiple-award delivery-order contract; and
* * * * *
PART 16--TYPES OF CONTRACTS
0
6. Amend section 16.505 by--
0
a. Adding paragraphs (a)(13) and (14);
0
b. In paragraph (b)(1)(i)(A), removing ``or'';
0
c. In paragraph (b)(1)(i)(B), removing the period at the end of the
sentence and adding ``; or'' in its place;
0
d. Adding paragraph (b)(1)(i)(C);
0
e. Revising paragraph (b)(1)(ii)(A);
0
f. Removing paragraph (b)(2)(i)(F), and redesignating paragraph
(b)(2)(i)(G) as paragraph (b)(2)(i)(F);
0
g. Revising paragraphs (b)(2)(ii) introductory text and
(b)(2)(ii)(D)(5).
The additions and revisions read as follows:
16.505 Ordering.
(a) * * *
(13)(i) When placing an order against a multiple-award contract
that has no or only one small business contract awardee, the
contracting officer shall document--
(A) How the market research of small business contract awardees and
small businesses, that are not contract holders on the multiple-award
contract against which the order would be placed, and mission needs
(e.g., price, schedule, technical and/or past performance of potential
sources) informed the agency's basis for selecting the multiple-award
contract to fulfill its needs; and
(B) The market research the agency conducted within the past 18
months, which may include the market research supporting the
acquisition plan or strategy to establish a multiple-award contract or
deciding to use another agency's multiple-award contract on a
repetitive basis.
(ii) Contracting officers shall provide a copy of the documentation
(see paragraph (a)(13)(i) of this section) to the cognizant small
business specialist, in accordance with agency procedures, and ensure
the specialist has a reasonable opportunity to respond.
(iii) The requirements of paragraph (a)(13) of this section do not
apply--
(A) To orders under the Federal Supply Schedule;
(B) When an exception to fair opportunity applies;
(C) When an agency exception applies; or
(D) To repetitive orders, including orders placed using automated
procedures, issued by an agency (i.e., when an order was issued by that
agency under the same contract and that order was documented and
coordinated within the prior 18 months in accordance with paragraph
(a)(13) of this section).
(14) Agencies may establish procedures to allow contracting
officers to exercise exceptions to paragraph (a)(13) or (b)(1)(i)(C) of
this section. Agencies shall coordinate their procedures for granting
exceptions with the Office of Small and Disadvantaged Business
Utilization, or for the Department of Defense, the Director of the
Office of Small Business Programs, and the Small Business
Administration and make the procedures publicly available.
* * * * *
(b) * * *
(1) * * *
(i) * * *
(C) In accordance with section 1331 of Public Law 111-240 (15
U.S.C. 644(r)), contracting officers may, at their discretion, set
aside an order for any of the small business concerns identified in
19.000(a)(3). When exercising this discretion, the contracting officer
shall determine if there is a reasonable expectation of obtaining
offers from two or more responsible small business contract awardees
under the multiple-award contract that are competitive in terms of fair
market price, quality, capability, ability to comply with the delivery
or performance schedule, and past performance. If the contracting
officer determines at least two small business contract awardees meet
the criteria in this paragraph, the contracting officer shall set aside
the order, unless the contracting officer determines that an exception
applies (see paragraphs (a)(14) and (b)(2)(i) of this section).
(1) Unless an exception applies, contracting officers shall
document the reason for not setting aside an order and provide it to
the cognizant small business specialist in accordance with agency
procedures. The small business specialist shall notify the SBA
procurement center representative (PCR) (or if one is not assigned, see
19.402(a)) when the value of the order exceeds the dollar threshold
negotiated between the agency and the PCR and reflected in agency
procedures.
[[Page 3759]]
(2) Paragraph (b)(1)(i)(C) of this section shall also apply to
existing multiple-award contracts awarded before [EFFECTIVE DATE OF
FINAL RULE], to the extent that setting aside an order is consistent
with the order placement procedures of the multiple-award contract and
there is adequate time remaining on the multiple-award contract to
permit small business contract awardees to fully perform or deliver
under the contract.
(ii) * * *
(A) Develop placement procedures that will--
(1) Provide each awardee a fair opportunity to be considered for
each order and that reflect the requirement and other aspects of the
contracting environment; and
(2) Except for FSS contracts, allow for orders to be set aside for
small business awardees when the conditions of paragraph (b)(1)(i)(C)
of this section are met, (unless an exception applies in accordance
with paragraph (a)(14) or (b)(2)(i) of this section).
* * * * *
(2) * * *
(ii) The justification for an exception to fair opportunity shall
be in writing as specified in paragraph (b)(2)(ii)(A) or (B) of this
section.
* * * * *
(D) * * *
(5) The posting requirement of this section does not apply when
disclosure would compromise the national security (e.g., would result
in disclosure of classified information) or create other security
risks.
* * * * *
PART 19--SMALL BUSINESS PROGRAMS
0
7. Amend section 19.202-1 by revising paragraph (e)(1) introductory
text to read as follows:
19.202-1 Encouraging small business participation in acquisitions.
* * * * *
(e)(1) Provide a copy of the proposed acquisition package and other
reasonably obtainable information related to the acquisition to the SBA
PCR (or, if a PCR is not assigned, see 19.402(a)) at least 30 days (or
earlier as agreed upon by the agency and the SBA PCR) prior to the
issuance of the solicitation if--
* * * * *
0
8. Amend section 19.504 by revising paragraphs (a) introductory text
and (a)(1) to read as follows:
19.504 Orders under multiple-award contracts.
(a) General. Contracting officers shall use their discretion under
15 U.S.C. 644(r) to set aside orders under multiple-award contracts for
any of the small business concerns identified in 19.000(a)(3) when the
circumstances at 16.505(b)(1)(i)(C) are met, except as provided in
8.405-5, when placing an order outside the United States and its
outlying areas (19.000(b)(1)(ii)), or where an exception applies in
accordance with 16.505(a)(14) or (b)(2)(i). In accordance with section
1331 of the Small Business Jobs Act of 2010 (15 U.S.C. 644(r)(2)),
contracting officers may, at their discretion, set aside orders under
the Federal Supply Schedule (see subpart 8.4) for any of the small
business concerns identified in 19.000(a)(3).
(1) The contracting officer shall state in the solicitation and
resulting contract that order set-asides will be mandatory when the
conditions in 19.502-2 and 16.505(b)(1)(i)(C) are met at the time of
order set-aside, and the specific program eligibility requirements, as
applicable, are also then met.
* * * * *
19.505 [Amended]
0
9. Amend section 19.505 in paragraph (a)(2)(iii) by removing ``and
16.505(b)(2)(i)(F)'' and adding ``and 16.505(b)(1)(i)(C)'' in its
place.
19.506 [Amended]
0
10. Amend section 19.506 in paragraph (a)(2) by removing ``been used''
and adding ``been used (see 7.105(b)(1)(iii)(A))'' in its place.
0
11. Amend section 19.507 by revising paragraphs (c) and (e)(1) and
paragraph (h)(1) introductory text to read as follows:
19.507 Solicitation provisions and contract clauses.
* * * * *
(c) The contracting officer shall insert the clause at 52.219-6,
Notice of Total Small Business Set-Aside, in solicitations and
contracts involving total small business set-asides. This includes
multiple-award contracts when orders will be set aside for contract
awardees that are any of the small business concerns identified in
19.000(a)(3), as described in 16.505(b)(1)(i)(C), and when orders may
be set aside as described in 8.405-5. Use the clause at 52.219-6 with
its Alternate I when including FPI in the competition in accordance
with 19.502-7.
* * * * *
(e) * * *
(1) For supplies, services, and construction, if any portion of the
requirement is to be set aside for small business and the contract
amount is expected to exceed the simplified acquisition threshold, and
in any solicitations and contracts that are set aside or awarded on a
sole-source basis in accordance with subpart 19.8, 19.13, 19.14, or
19.15, regardless of dollar value. This includes multiple-award
contracts when orders will be set aside for small business contract
awardees, as described in 16.505(b)(1)(i)(C), and when orders may be
set aside as described in 8.405-5, and when orders may be issued
directly to a small business concern as described in 19.504(c)(1)(ii).
For contracts that are set aside, the contracting officer shall
indicate in paragraph (f) of the clause whether compliance with the
limitations on subcontracting is required at the contract or order
level;
* * * * *
(h)(1) The contracting officer shall insert the clause at 52.219-
33, Nonmanufacturer Rule, in solicitations and contracts, including
multiple-award contracts, when orders will be set aside for small
business contract awardees as described in 16.505(b)(1)(i)(C), and when
orders may be set aside as described in 8.405-5, and when orders may be
issued directly to a small business concern as described in
19.504(c)(1)(ii), when--
* * * * *
19.1304 [Amended]
0
12. Amend section 19.1304 in paragraph (b) by removing
``16.505(b)(2)(i)(F) for discretionary'' and adding
``16.505(b)(1)(i)(C) for'' in its place.
0
13. Amend section 19.1309 by revising paragraph (a) to read as follows:
19.1309 Contract clauses.
(a) The contracting officer shall insert the clause at 52.219-3,
Notice of HUBZone Set-Aside or Sole-Source Award, in solicitations and
contracts for acquisitions that are set aside or awarded on a sole-
source basis to, HUBZone small business concerns under 19.1305 or
19.1306. This includes multiple-award contracts when orders will be set
aside for contract awardees that are HUBZone small business concerns as
described in 16.505(b)(1)(i)(C), when orders may be set aside as
described in 8.405-5, or when orders may be issued directly to one
HUBZone small business concern in accordance with 19.504(c)(1)(ii).
* * * * *
[[Page 3760]]
19.1404 [Amended]
0
14. Amend section 19.1404 in paragraph (b) by removing
``16.505(b)(2)(i)(F) for discretionary'' and adding
``16.505(b)(1)(i)(C) for'' in its place.
0
15. Amend section 19.1408 by revising paragraph (a) to read as follows:
19.1408 Contract clauses.
(a) The contracting officer shall insert the clause at 52.219-27,
Notice of Set-Aside for, or Sole-Source Award to, Service-Disabled
Veteran-Owned Small Business (SDVOSB) Concerns Eligible Under the
SDVOSB Program, in solicitations and contracts for acquisitions that
are set aside or awarded on a sole-source basis to, service-disabled
veteran-owned small business concerns under 19.1405 and 19.1406. This
includes multiple-award contracts when orders will be set aside for
contract awardees that are service-disabled veteran-owned small
business concerns as described in 16.505(b)(1)(i)(C), when orders may
be set aside as described in 8.405-5, or when orders may be issued
directly to one service-disabled veteran-owned small business
contractor in accordance with 19.504(c)(1)(ii).
* * * * *
19.1504 [Amended]
0
16. Amend section 19.1504 in paragraph (c) by removing
``16.505(b)(2)(i)(F) for discretionary'' and adding
``16.505(b)(1)(i)(C) for'' in its place.
0
17. Amend section 19.1508 by revising paragraphs (a) and (b) to read as
follows:
19.1508 Contract clauses.
(a) The contracting officer shall insert the clause at 52.219-29,
Notice of Set-Aside for, or Sole-Source Award to, Economically
Disadvantaged Women-owned Small Business Concerns, in solicitations and
contracts for acquisitions that are set aside or awarded on a sole-
source basis to, EDWOSB concerns under 19.1505(b) or 19.1506(a). This
includes multiple-award contracts when orders will be set aside for
contract awardees that are EDWOSB concerns as described in
16.505(b)(1)(i)(C), when orders may be set aside as described in 8.405-
5, or when orders may be issued directly to one EDWOSB contractor in
accordance with 19.504(c)(1)(ii).
(b) The contracting officer shall insert the clause at 52.219-30,
Notice of Set-Aside for, or Sole-Source Award to, Women-Owned Small
Business Concerns Eligible Under the Women-Owned Small Business
Program, in solicitations and contracts for acquisitions that are set
aside or awarded on a sole-source basis to WOSB concerns under
19.1505(c) or 19.1506(b). This includes multiple-award contracts when
orders will be set aside for contract awardees that are WOSB concerns
eligible under the WOSB Program as described in 16.505(b)(1)(i)(C),
when orders may be set aside as described in 8.405-5, or when orders
may be issued directly to one WOSB contractor in accordance with
19.504(c)(1)(ii).
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
18. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Removing from paragraph (b)(15) ``OCT 2022'' and adding ``DATE'' in
its place;
0
c. Removing from paragraph (b)(18)(i) ``NOV 2020'' and adding ``DATE''
in its place;
0
d. Removing from paragraph (b)(23) ``OCT 2022'' and adding ``DATE'' in
its place;
0
e. Removing from paragraph (b)(25) ``FEB 2024'' and adding ``DATE'' in
its place;
0
f. Removing from paragraphs (b)(27) and (28) ``OCT 2022'' and adding
``DATE'' in their places, respectively; and
0
g. Removing from paragraph (b)(30) ``SEP 2021'' and adding ``DATE'' in
its place.
The revision reads as follows:
52.212-5 Contract Terms and Conditions Required To Implement Statutes
or Executive Orders--Commercial Products and Commercial Services.
* * * * *
Contract Terms and Conditions Required To Implement Statutes or
Executive Orders--Commercial Products and Commercial Services (DATE)
* * * * *
0
19. Amend section 52.219-3 by revising the date of the clause and
paragraph (b)(3) to read as follows:
52.219-3 Notice of HUBZone Set-Aside or Sole-Source Award.
* * * * *
Notice of HUBZone Set-Aside or Sole-Source Award (DATE)
* * * * *
(b) * * *
(3) Orders set aside for contract awardees that are HUBZone small
business concerns under multiple-award contracts as described in 8.405-
5 and 16.505(b)(1)(i)(C); and
* * * * *
0
20. Amend section 52.219-6 by revising the date of the clause and
paragraph (b)(2) to read as follows:
52.219-6 Notice of Total Small Business Set-Aside.
* * * * *
Notice of Total Small Business Set-Aside (DATE)
* * * * *
(b) * * *
(2) Orders set aside for contract awardees that are small business
concerns under multiple-award contracts as described in 8.405-5 and
16.505(b)(1)(i)(C).
* * * * *
0
21. Amend section 52.219-14 by--
0
a. Revising the date of the clause and paragraph (c)(4)(i); and
0
b. In paragraph (c)(5)(i) removing ``16.505(b)(2)(i)(F)'' and adding
``16.505(b)(1)(i)(C)'' in its place.
The revisions read as follows:
52.219-14 Limitations on Subcontracting.
* * * * *
Limitations on Subcontracting (DATE)
* * * * *
(c) * * *
(4) * * *
(i) Set aside for contract awardees that are small business
concerns under multiple-award contracts, as described in 8.405-5 and
16.505(b)(1)(i)(C); or
* * * * *
0
22. Amend section 52.219-27 by revising the date of clause and
paragraph (b)(3) to read as follows:
52.219-27 Notice of Set-Aside for, or Sole-Source Award to, Service-
Disabled Veteran-Owned Small Business (SDVOSB) Concerns Eligible Under
the SDVOSB Program.
* * * * *
Notice of Set-Aside for, or Sole-Source Award to, Service-Disabled
Veteran-Owned Small Business (SDVOSB) Concerns Eligible Under the
SDVOSB Program (DATE)
* * * * *
(b) * * *
(3) Orders set aside for contract awardees that are SDVOSB concerns
eligible under the SDVOSB Program, under multiple-award contracts as
described in 8.405-5 and 16.505(b)(1)(i)(C); and
* * * * *
0
23. Amend section 52.219-29 by revising the date of clause and
paragraph (b)(3) to read as follows:
52.219-29 Notice of Set-Aside for, or Sole-Source Award to,
Economically Disadvantaged Women-Owned Small Business Concerns.
* * * * *
[[Page 3761]]
Notice of Set-Aside for, or Sole-Source Award to, Economically
Disadvantaged Women-Owned Small Business Concerns (DATE)
* * * * *
(b) * * *
(3) Orders set aside for contract awardees that are EDWOSB concerns
under multiple-award contracts as described in 8.405-5 and
16.505(b)(1)(i)(C); and
* * * * *
0
24. Amend section 52.219-30 by revising the date of clause and
paragraph (b)(3) to read as follows:
52.219-30 Notice of Set-Aside for, or Sole-Source Award to, Women-
Owned Small Business Concerns Eligible Under the Women-Owned Small
Business Program.
* * * * *
Notice of Set-Aside for, or Sole-Source Award to, Women-Owned Small
Business Concerns Eligible Under the Women-Owned Small Business Program
(DATE)
* * * * *
(b) * * *
(3) Orders set aside for contract awardees that are WOSB concerns
eligible under the WOSB Program, under multiple-award contracts as
described in 8.405-5 and 16.505(b)(1)(i)(C); and
* * * * *
0
25. Amend section 52.219-33 by--
0
a. Revising the date of the clause and paragraph (b)(2)(iii)(A); and
0
b. In paragraph (b)(2)(iv)(A) removing ``16.505(b)(2)(i)(F)'' and
adding ``16.505(b)(1)(i)(C)'' in its place.
The revisions read as follows:
52.219-33 Nonmanufacturer Rule.
* * * * *
Nonmanufacturer Rule (DATE)
* * * * *
(b) * * *
(2) * * *
(iii) * * *
(A) Set aside for contract awardees that are small business
concerns under multiple-award contracts, as described in 8.405-5 and
16.505(b)(1)(i)(C); or
* * * * *
[FR Doc. 2025-00615 Filed 1-14-25; 8:45 am]
BILLING CODE 6820-EP-P
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