97-1308. Small Business Size Regulations and Government Contracting Assistance Regulations; Very Small Business Concern  

  • [Federal Register Volume 62, Number 13 (Tuesday, January 21, 1997)]
    [Proposed Rules]
    [Pages 2979-2981]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-1308]
    
    
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    Proposed Rules
                                                    Federal Register
    ________________________________________________________________________
    
    This section of the FEDERAL REGISTER contains notices to the public of 
    the proposed issuance of rules and regulations. The purpose of these 
    notices is to give interested persons an opportunity to participate in 
    the rule making prior to the adoption of the final rules.
    
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    Federal Register / Vol. 62, No. 13 / Tuesday, January 21, 1997 / 
    Proposed Rules
    
    [[Page 2979]]
    
    
    
    SMALL BUSINESS ADMINISTRATION
    
    13 CFR Parts 121 and 125
    
    
    Small Business Size Regulations and Government Contracting 
    Assistance Regulations; Very Small Business Concern
    
    AGENCY: Small Business Administration.
    
    ACTION: Proposed rule.
    
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    SUMMARY: Small Business Administration (SBA) proposes to amend its size 
    and government contracting assistance regulations to incorporate the 
    Very Small Business Program together with a definition of a very small 
    business concern for purposes of the SBA's small business set-aside 
    program. Section 304 of the Small Business Administration 
    Reauthorization and Amendments Act of 1994 (Pub. L. 103-403) authorized 
    the SBA Administrator to establish and carry out a pilot program for 
    very small business concerns. The Act defines a very small business 
    concern as one that has 15 or fewer employees together with average 
    annual receipts that do not exceed $1 million. The Act establishes 
    September 30, 1998, as the expiration date for this pilot.
    
    DATES: Comments must be submitted on or before March 24, 1997.
    
    ADDRESSES: Send comments to: Nancyellen Gentile, Office of Prime 
    Contracts, U.S. Small Business Administration, 409 Third Street, SW., 
    Mail Code 6250, Washington, DC 20416.
    
    FOR FURTHER INFORMATION CONTACT: Nancyellen Gentile, Office of 
    Government Contracting, (202) 205-6471, or Carl J. Jordan, Office of 
    Size Standards, (202) 205-6618.
    
    SUPPLEMENTARY INFORMATION: The Small Business Administration 
    Reauthorization and Amendments Act of 1994 (Act) authorized the SBA to 
    establish a pilot program for very small business concerns. (See Pub. 
    L. 103-403, Section 304) The purpose of this pilot program is to 
    improve access to Federal contract opportunities for concerns that are 
    substantially below SBA's size standards by reserving certain 
    procurements for competition among very small business concerns. Very 
    small business concerns that receive a very small business set-aside 
    contract are eligible for loan application support and assistance under 
    the very small business prequalification component of this pilot 
    program. This pilot program will expire on September 30, 1998, unless 
    extended through legislation.
        The Very Small Business Program is being established in Sec. 125.7 
    of these regulations and the definition of a very small business 
    concern is being established in Sec. 121.413. Under section 304(j)(4) 
    of the Act, a very small business concern is one that has no more than 
    15 employees and average annual receipts that total no more than $1 
    million. The size standard requirements applicable to small business 
    concerns contained in Part 121 of this chapter, such as the definitions 
    and calculation of average annual receipts and number of employees, 
    self-certification, and size status protests, also will apply to very 
    small business concerns. Section 125.7 also describes the types of 
    procurements which will be eligible for the pilot program.
        Under this pilot, the SBA proposes that procurements of $50,000 or 
    less that could be set-aside for small business will be reserved for 
    concerns meeting the statutory definition of a very small business. 
    Currently, the simplified acquisition procedures apply to all 
    requirements less than $100,000. The SBA has elected $50,000 as the 
    very small business set-aside threshold for the following reasons. The 
    nature of requirements ranging in value between $2,500 and $50,000 is 
    that of standard off-the-shelf products and services which typically 
    lend themselves to performance by very small businesses. The SBA 
    analyzed the fiscal year 1995 Federal procurement activity within the 
    Small Business Competitiveness Demonstration Program and determined 
    that the average dollar value of a contract action awarded to an 
    emerging small business (a small business concern whose size is no 
    greater than 50 percent of the numerical size standard applicable to 
    the standard industrial classification code assigned to a contracting 
    opportunity) was $51,842. Further analysis of this data shows that the 
    average dollar value of a contract action awarded to an emerging small 
    business in the architectural and engineering services industry was 
    $31,317. Smaller requirements will develop the ability of very small 
    business concerns to do business in the federal marketplace at a 
    gradual pace. The dollar size of this requirement will enable a very 
    small business concern to take on the requirement without greatly 
    disrupting operations. It will also allow the very small business 
    concern to take advantage of multiple opportunities. A review of fiscal 
    year 1995 federal procurement data shows that awards of $50,000 or less 
    totaled $544,212,000. This represents 1.3 percent of the total awards 
    received by small business concerns. Therefore, this threshold for very 
    small business set-aside requirements will minimize any adverse impact 
    on existing procurement assistance programs for larger small business 
    concerns. Requirements above the $50,000 threshold will continue to be 
    reserved for small businesses where appropriate. (Note: Procurements of 
    $2,500 and below are processed under new micro-purchase procedures 
    contained in FASA and are not reserved for small business competition. 
    Thus, the proposed rule would not apply.)
        The SBA is proposing that to qualify for an award under this 
    program a firm must be an eligible small business concern under 13 CFR 
    part 121 as well as one that has 15 or fewer employees and average 
    annual receipts that do not exceed $1 million. Also, due to the limited 
    number of, and geographical distance between the designated SBA 
    districts, the SBA believes that eligible firms should be those whose 
    headquarters are located within a geographical area serviced by a 
    designated SBA district office where the procurement is offered, as 
    opposed to all very small businesses in the country. This will also 
    serve to ensure that SBA and participating federal agencies are 
    familiar with potential very small business sources. Since very small 
    businesses receiving contract awards are entitled to prequalification 
    financial assistance under this program, the SBA believes that 
    eligibility should be limited to firms located within those SBA 
    districts that offer a prequalification loan program to ensure 
    consistent and efficient administration of both programs.
    
    [[Page 2980]]
    
        The Act authorizes administration of this pilot program in not less 
    than five (5) nor more than ten (10) SBA districts. The Act permits SBA 
    to determine the operating details of the program. For informational 
    purposes, the following are the SBA districts where this pilot program 
    will be implemented:
    
    Albuquerque, NM
    Boston, MA
    Columbus, OH
    Detroit, MI
    El Paso, TX
    Los Angeles, CA
    Louisville, KY
    New Orleans, LA
    Philadelphia, PA
    Santa Ana, CA
    
    These SBA districts have the required available resources to implement 
    and administer the pilot. A prequalification loan pilot program is 
    available in each of these designated districts to provide loan 
    application support and assistance. Also, SBA will achieve nationwide 
    geographical coverage by designating at least one pilot site within 
    broad regional areas of the country. Each site will have a procurement 
    center representative to work with the various procuring activities to 
    implement the program. SBA may, from time to time, through notice in 
    the Federal Register, find it necessary to make modifications to this 
    list, provided, however, the total number of participating districts 
    will remain within the legislated number.
        Federal agencies will implement this program, working with SBA 
    procurement center representatives to identify opportunities 
    appropriate to be set aside for very small businesses. The SBA district 
    offices and procurement center representatives will assist the buying 
    activities in identifying very small business concerns likely to 
    compete. The contracting officer will advertise very small business 
    set-aside opportunities. The contracting officer will rely on the 
    offeror's self-certification in a specific bid or proposal. If the 
    self-certification of a very small business concern is protested on a 
    very small business set-aside, the size determination will be made 
    using the statutorily imposed size standard of 15 or fewer employees 
    and average annual receipts of $1 million or less. If there are not two 
    or more very small business concerns eligible to compete on a specific 
    procurement, then the very small business program will not apply to 
    that contract.
        The Act establishes April 30, 1997, as the date by which the 
    Administrator of SBA will report the results of this pilot program to 
    the Congress. Before that date, SBA will obtain from participating 
    agencies a record of all contract awards under this program, after 
    advising them of the manner and frequency of such reporting. At a 
    minimum, reports will include the date of solicitation, the date of an 
    award, the contractor's name and address, the standard industrial 
    classification code or a brief description of the product or service, 
    and the dollar value of the agency's purchase.
    
    Compliance With Executive Orders 12612, 12788 and 12866, the Regulatory 
    Flexibility Act (5 U.S.C. 601 et seq.), and the Paperwork Reduction Act 
    (44 U.S.C. Chapter 3501 et seq.)
    
        The SBA certifies that this rule, if adopted in final form, would 
    not be a significant rule within the meaning of Executive Order 12866. 
    The value of procurements awarded under the Very Small Business Program 
    is expected to be less than $100 million since the program is being 
    implemented as a pilot program in only eight locations and is targeted 
    to businesses that have historically experienced limited participation 
    in the federal market. This rule does not impose costs upon the 
    businesses which might be affected by it. The rule would have no effect 
    on the amount or dollar value of any contract requirement or the number 
    of requirements reserved for the small business set-aside program, 
    since it is administered within the small business set-aside program. 
    Therefore, it would not have an annual economic effect of $100 million 
    or more, result in a major increase in costs or prices, or have a 
    significant adverse effect on competition or the United States economy.
        As required by the Regulatory Flexibility Act, 5 U.S.C. 601-612, 
    the SBA has prepared a regulatory flexibility analysis of this proposed 
    rule. This analysis has been submitted to the Chief Counsel for 
    Advocacy of the Small Business Administration, and is available upon 
    request.
        For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, 
    SBA certifies that this rule would not impose new reporting or record 
    keeping requirements, other than those required of SBA.
        For purposes of Executive Order 12612, SBA certifies that this rule 
    does not have any federalism implications warranting the preparation of 
    a Federalism Assessment.
        For purposes of Executive Order 12778, the SBA certifies that this 
    rule is drafted, to the extent practicable, in accordance with the 
    standards set forth in section 2 of this order.
        For the reasons set forth above, Title 13, Code of Federal 
    Regulations (CFR) is amended as set forth below.
    
    List of Subjects in 13 CFR Part 121
    
        Government procurement; Government property; Grant programs--
    business; Loan programs--business; Small businesses.
    
    13 CFR Part 125
    
        Government contracts, Government procurement, Reporting and record 
    keeping requirements, Small businesses, Technical assistance.
    
    PART 121--[AMENDED]
    
        1. The authority citation for 13 CFR part 121 is revised to read as 
    follows:
    
        Authority: 15 U.S.C. 632(a), 634(b)(6), 637(a), and 644(c); Pub. 
    L. 102-486, 106 Stat. 2776, 3133; and Sec. 304, Pub. L. 103-403, 108 
    Stat. 4175, 4188.
    
        2. Section 121.401 is revised to read as follows:
    
    
    Sec. 121.401  What procurement programs are subject to size 
    determinations?
    
        The requirements set forth in Secs. 121.401 through 121.413 cover 
    all procurement programs for which status as a small business is 
    required, including the small business set-aside program, SBA's 
    Certificate of Competency program, SBA's Minority Enterprise 
    Development program, the Small Business Subcontracting program 
    authorized under section 8(d) of the Small Business Act, the Federal 
    Small Disadvantaged Business programs, and the Very Small Business 
    program.
        3. The following new Sec. 121.413 is added after Sec. 121.412 to 
    read as follows:
    
    
    Sec. 121.413  What size firm is eligible for the Very Small Business 
    Program?
    
        A concern eligible for the very small business program, as 
    established in Sec. 125.7, is one that, together with its affiliates, 
    has no more than 15 employees and has average annual receipts that do 
    not exceed $1 million.
    
    PART 125--[AMENDED]
    
        1. The authority citation for 13 CFR part 125 is revised to read as 
    follows:
    
        Authority: 15 U.S.C. 634(b)(6), 637, and 644; 31 U.S.C. 9701, 
    9702; and Sec. 304, Pub. L. 103-403, 108 Stat. 4175, 4188.
    
        2. The following new Sec. 125.7 is added after Sec. 125.6 to read 
    as follows:
    
    
    Sec. 125.7  What is the Very Small Business Program?
    
        (a) The Very Small Business Program is an extension of the small 
    business set-aside program, administered by the SBA as a pilot to 
    increase opportunities for very small business concerns. The program is 
    limited to contracts of $50,000 or less that could be set aside for 
    small business, and to concerns that
    
    [[Page 2981]]
    
    meet the very small business size standard defined in Sec. 121.413.
        (b) If there are not two or more very small business concerns 
    eligible to compete on a specific procurement, then the very small 
    business program will not apply to that contract.
        (c) This pilot program will be implemented in the following SBA 
    districts: Albuquerque, NM; Los Angeles, CA; Boston, MA; Louisville, 
    KY; Columbus, OH; New Orleans, LA; Detroit, MI; Philadelphia, PA; El 
    Paso, TX; Santa Ana, CA. Only very small businesses whose headquarters 
    are located within the geographical area serviced by a designated SBA 
    district office where the procurement is offered are eligible for award 
    of a contract under this pilot program.
        (d) This pilot program terminates on September 30, 1998.
    
        Dated: January 14, 1997.
    Philip Lader,
    Administrator.
    [FR Doc. 97-1308 Filed 1-17-97; 8:45 am]
    BILLING CODE 8025-01-P
    
    
    

Document Information

Published:
01/21/1997
Department:
Small Business Administration
Entry Type:
Proposed Rule
Action:
Proposed rule.
Document Number:
97-1308
Dates:
Comments must be submitted on or before March 24, 1997.
Pages:
2979-2981 (3 pages)
PDF File:
97-1308.pdf
CFR: (3)
13 CFR 121.401
13 CFR 121.413
13 CFR 125.7