06-3672. Small Business Size Standards; Correction

AGENCY:

U.S. Small Business Administration.

ACTION:

Correcting amendment.

SUMMARY:

This document contains a correction to the final regulations which were published in the Federal Register of Friday, May 21, 2004 (69 FR 29192). The regulations amended several definitions and made procedural and technical amendments to cover several of the U.S. Small Business Administration's (SBA's or Agency's) programs.

DATES:

Effective April 18, 2006.

FOR FURTHER INFORMATION CONTACT:

Gary Jackson, Assistant Administrator, Office of Size Standards, [phone], or [e-mail].

SUPPLEMENTARY INFORMATION:

Background

On May 21, 2004 the SBA published a final rule amending its size regulations (69 FR 29192). These regulations are used to determine eligibility for all SBA and Federal programs that require an entity to be a small business concern. Section 121.404 was amended to address the treatment of the acquisition of a small business concern by another concern during contract performance. Specifically, the final regulation states that the new entity must submit a written self-certification that it is small to the procuring agency so that the agency can count the award, options or orders issued pursuant to the contract towards its small business goals. In the preamble to the final rule, however, the SBA explained that the

amended regulations now state that the new entity must submit a written self-certification that it is small to the procuring agency so that the agency can count the award options, or orders issued pursuant to that contract, towards its small business goals.

69 FR 29192, 29198 (May 21, 2004). According to the preamble, it is clear that the self-certifications for novations and change-of-name agreements affected the subsequent options and orders, but not the original contract award or any option or order executed before the novation or change-of-name agreement.

Need for Correction

The final regulatory text, however, contained an error that has caused some confusion. The SBA misplaced a comma in the final rule, which has caused many readers to interpret section 121.404 to require concerns to submit a self-certification as a small business at the time of a novation or change-of-name so that the procuring agency can count the original contract award towards its small business goals. This interpretation is incorrect, however, as the procuring agency was already given credit towards its small business goals for the original contract award. Section 121.404 is only meant to address whether the procuring agency can count any future award options or orders issued pursuant to the contract toward the agency's small business goals, if there has been a novation or change-of-name during contract performance. Therefore, the removal of the comma after the word award will eliminate any doubt as to the SBA's intent regarding this provision.

List of Subjects in 13 CFR Part 121

• Administrative practice and procedure
• Government procurement
• Government property
• Grant programs—business
• Loan programs—business
• Small businesses

Accordingly, 13 CFR part 121 is corrected by making the following correcting amendment:

PART 121—SMALL BUSINESS SIZE REGULATIONS

1. The authority citation for part 121 continues to read as follows:

Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, and 662(5); and Pub.L. 105-135, sec. 401 et seq., 111 Stat. 2592.

2. Revise paragraph (i) of § 121.404 to read as follows:

§ 121.404

When does SBA determine the size status of a business concern?

* * * * *

(i) At the time a novation or change-of-name agreement has been executed pursuant to FAR subject 42.12, the new entity must submit a written self-certification that it is small to the procuring agency so that the agency can count the award options, or orders issued pursuant to the contract, towards its small business goals.

* * * * *

Dated: March 14, 2006.

Anthony Martoccia,

Associate Deputy Administrator for Government Contracting and Business Development.