[Federal Register Volume 63, Number 125 (Tuesday, June 30, 1998)]
[Rules and Regulations]
[Pages 35767-35780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17195]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 124
8(a) Business Development/Small Disadvantaged Business Status
Determinations
AGENCY: Small Business Administration.
ACTION: Final rule.
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SUMMARY: In response to the Department of Justice's review of Federal
procurement affirmative action programs and amendments to the Federal
Acquisition Regulation to implement a government-wide small
disadvantaged business (SDB) program, the Small Business Administration
(SBA) issues this final rule establishing the procedural framework for
certifying firms as SDBs and for processing protests challenging the
disadvantaged status of a firm claiming to be an SDB.
DATES: Effectove Dates. The amendments made by this rule to subpart A
of 13 CFR part 124 are effective on June 30, 1998. Sections 124.1001
through 124.1016 of subpart B of 13 CFR part 124 are effective on
August 24, 1998. With the exeptions of Secs. 124.1017(b) and
124.1020(c)(2), Secs. 124.1017 through 124.1024 of subpart B of 13 CFR
part 124 are effective on October 1, 1998. Sections 124.1017(b) and
124.1020(c)(2) of subpart B of 13 CFR part 124 are effective on January
1, 1999.
Compliance Dates. SBA will begin to accept and process applications
for SDB certifications as of August 24, 1998.
FOR FURTHER INFORMATION CONTACT: Calvin Jenkins, Deputy Associate
Deputy Administrator for Government Contracting and Minority Enterprise
Development, at (202) 205-6459.
SUPPLEMENTARY INFORMATION: On May 9, 1997, the Department of Defense
(DOD), the General Services Administration (GSA), and the National
Aeronautics and Space Administration (NASA) proposed amendments to the
Federal Acquisition Regulation (FAR) concerning programs for small
disadvantaged business concerns. 62 FR 25786. The amendments were
intended to conform to a Department of Justice (DOJ) proposal to reform
affirmative action in Federal procurement (see 61 FR 26042) and to
comply with the constitutional standards established by the Supreme
Court in Adarand Constructors, Inc. v. Pena, 115 S.Ct. 2097 (1995). The
proposed amendments to the FAR included procedures by which a firm
claiming to be owned and controlled by one or more disadvantaged
individuals could certify its status as a small disadvantaged business
(SDB) concern for purposes of receiving a benefit as an SDB in
connection with a Federal procurement. The proposed FAR change also
contained procedures by which an interested party may protest a small
business concern's disadvantaged status to the Small Business
Administration (SBA). In response to and in conjunction with the DOJ
and FAR reform proposals, on August 14, 1997, SBA published in the
Federal Register, 62 FR 43584, a proposed rule to amend 13 CFR part
124. Subpart A of the proposed part 124 dealt with changes pertaining
to the 8(a) Business Development (8(a) BD) program which is authorized
by sections 7(j)(10) and 8(a) of the Small Business Act, 15 U.S.C.
636(j)(10), 637(a). Subpart B of proposed
[[Page 35768]]
part 124 dealt with SBA's role in the certification and protest of
small disadvantaged businesses, as contemplated by the DOJ and FAR
proposals. SBA is finalizing the vast majority of subpart A of 13 CFR
part 124 as a separate rulemaking action. This rule finalizes subpart B
of 13 CFR part 124, discussing fully all substantive comments received
regarding subpart B in response to the August 14, 1997 proposed rule.
This rule also makes four changes to subpart A of 13 CFR part 124 in
order to take into account the effect that benchmark achievement,
explained below, may have on the 8(a) BD program.
As recommended in the DOJ review of Federal affirmative action
procurement programs, subpart B of part 124 as set forth in this rule
describes standards and procedures by which a firm can apply to be
recognized as a small disadvantaged business (SDB). Under the rule,
SBA, or, where SBA deems it appropriate, SBA-approved state agencies,
private sector organizations or business concerns (called Private
Certifiers), will determine whether a firm is owned and controlled by
specified individuals claiming to be disadvantaged. Where a Private
Certifier determines ownership and control, the Private Certifier will
issue a written decision as to whether the applicant is actually owned
and controlled by the individuals identified as claiming disadvantaged
status, and will forward the application along with a copy of its
decision to SBA for further processing as to the other aspects of SDB
eligibility. Where the Private Certifier finds that the applicant is
not owned and controlled by the individuals claiming disadvantaged
status, its decision will state the specific reasons for the finding,
and inform the applicant of its right to appeal the decision to SBA's
Office of Hearings and Appeals (OHA). Where SBA determines ownership
and control, SBA will first determine whether the applicant is owned
and controlled by the individual(s) claiming to be disadvantaged. If
SBA determines that the applicant is not owned and controlled by the
individual(s) claiming disadvantaged status, SBA will issue a written
decision addressing only the ownership and control issues. If SBA
determines that the applicant is owned and controlled by the
individual(s) claiming disadvantaged status, SBA will issue a single
written decision as to whether the applicant qualifies as an SDB. Such
a decision will include the ownership and control of the firm, the size
status of the firm, and the disadvantaged status of those individuals
claiming to be disadvantaged. An applicant may appeal SBA's
determination that it is not owned and controlled by those individuals
claiming disadvantaged status, or its decision that one or more of the
individuals claiming disadvantaged status are not actually
disadvantaged to OHA. An applicant may also request a formal size
determination with the applicable SBA Government Contracting Area
Office.
Individuals who are members of certain designated groups are
presumed to be socially and economically disadvantaged. SBA will
consider evidence presented to it which is contrary to the
presumptions, and may seek further information from the applicant
individuals. Other individuals must submit a narrative statement
identifying personally how their entry into or advancement in the
business world has been impaired because of their individual social
disadvantage, and how their ability to compete in the free enterprise
system has been impaired due to diminished capital and credit
opportunities. These procedures are completely separate from the 8(a)
BD requirements. The rule describes procedures for listing and removing
firms from an SBA-maintained on-line register of certified SDBs. With
respect to the 8(a) BD program, the rule also provides regulatory
authority for SBA, in its discretion, to limit program entry,
accelerate program graduation, and limit the numbers of 8(a) contracts
available when the benchmarks referred to in the FAR are achieved in
particular industries.
SBA has attempted to write the regulations in plain English.
Discussion of Public Comment
SBA received several comments concerning the application of
benchmarks to the 8(a) BD program. Some comments questioned the
methodology of establishing benchmarks. Neither the proposed rule nor
this final rule addresses the way in which benchmarks will be
developed. As such, those comments are not relevant to this rulemaking,
and SBA makes no changes in response to them. A few comments expressed
concern about the actions SBA may take when the benchmark is exceeded
in a particular industry (i.e., SBA may decide not to accept an
application for the 8(a) BD program from a concern in that industry
(Sec. 124.108(f)); SBA may accelerate graduation of Participants
(Sec. 124.302(d)); or SBA may elect not to accept a requirement as an
8(a) contract (Sec. 124.504(d)). While the regulations give SBA
discretion to take any of those actions in appropriate circumstances,
they do not mandate that such actions be taken in any case. In
considering whether to take action under these provisions, the SBA
Administrator will weigh the business development purposes of the
program in every case.
Part 124, subpart B: Subpart B of the August 14, 1997 proposed rule
defined what an SDB is and set forth the procedures by which a firm can
be recognized as an SDB. Each of the significant comments received
regarding subpart B and the changes made to subpart B are identified
below.
Proposed Sec. 124.1001 defined an SDB as a business which is owned
and controlled by one or more disadvantaged individuals. One commenter
noted that this omitted references to certain entities which are
considered disadvantaged. SBA agrees with this comment, and this final
rule changes Sec. 124.1001 to make clear that firms owned and
controlled by the following entities, i.e., Alaska Native Corporations
(ANCs), Community Development Corporations (CDCs), Indian tribes
(tribes) or Native Hawaiian Organizations (NHOs), are considered
disadvantaged.
Proposed Sec. 124.1002(d) would have required SBA to consider the
``character'' of each individual claiming disadvantaged status in
determining whether a firm qualified as an SDB. Upon further
reflection, SBA does not believe that SBA should look at the character
of the firm or individuals claiming disadvantaged status as part of its
SDB determination. The requirement that a firm and its principals
possess ``good character'' should be a responsibility issue to be
determined by the contracting officer in connection with each contract
for which the firm is the apparent successful offeror, and should have
no bearing on whether a firm should be classified as an SDB. As such,
SBA has deleted that requirement from this final rule.
Proposed Sec. 124.1002(b)(4) listed as a requirement for SDB status
(relating to DOD, NASA and Coast Guard procurements) the additional
requirement that a majority of the SDB's earnings accrue directly to
the disadvantaged individuals. One commenter questioned why this
restriction applied only to DOD, NASA and the Coast Guard. The reason
for the limited applicability is that the restriction appears in the
authorizing legislation for the SDB program applying to DOD, NASA and
Coast Guard (see section 1207 of the Defense Acquisition Improvement
Act of 1986, Public Law 99-661), but not in the authorizing legislation
for the
[[Page 35769]]
Government-wide SDB program (see section 7102 of the Federal
Acquisition Streamlining Act of 1994, Public Law 103-355). This rule is
consistent with this statutory distinction.
Proposed Sec. 124.1002(f)(4) required that a majority of a joint
venture's earnings must accrue directly to disadvantaged individuals
and entities. One commenter noted that this provision could be read to
impose an additional requirement on ANCs that would be contrary to 43
U.S.C. 1626(e). SBA does not believe this to be true because the
provision was meant to apply to SDBs owned by disadvantaged individuals
and not to those owned by tribes, ANCs, CDCs or NHOs. Nevertheless, SBA
has deleted this provision from the final rule because it is contract
specific and should not affect whether a firm should be considered an
SDB generally.
The final rule deletes proposed Sec. 124.1002(g), the requirement
that an SDB must perform certain specified percentages of work with its
own employees. Upon further deliberation, SBA believes that this
requirement is a contract specific requirement and does not belong in
the regulations defining what an SDB is. SBA has added a new paragraph
(g) clarifying that the ownership restrictions contained in
Secs. 124.105(g) and (h) do not apply to SDB eligibility. Those
restrictions apply to the 8(a) BD program because it is a business
development program.
Proposed Secs. 124.1003 through 124.1009 set forth various
requirements relating to Private Certifiers. The proposed rule stated
that Private Certifiers would perform determinations of ownership and
control and that SBA would perform such determinations where ``a
Private Certifier is not reasonably available.'' SBA received several
comments on the proposed use of Private Certifiers. One commenter
stated that the use of Private Certifiers provided a quick and cost
effective certification process. Several commenters were concerned
about the required qualifications, if any, of the Private Certifiers,
the procedures to be used by them in the certification process, and the
monitoring of the Private Certifiers. One commenter strongly disagreed
with the use of Private Certifiers to determine ownership and control
in any case, and believed that SBA was better suited for this
responsibility.
Upon further deliberation, SBA does not believe it is prudent to
limit its ability to perform ownership and control determinations only
to situations where Private Certifiers are not available. The final
rule still authorizes SBA to approve Private Certifiers and for Private
Certifiers to perform ownership and control determinations in
appropriate circumstances. However, it will be within SBA's discretion
as to when and to what extent Private Certifiers will be utilized in
the SDB certification process. A firm seeking to be certified as an SDB
should contact its local SBA field office to learn whether to submit
its SDB application to SBA or to a Private Certifier. SBA's Homepage on
the Internet will also identify this information.
In addition, in response to concerns about SBA's monitoring Private
Certifiers, the final rule (Sec. 124.1003) provides that SBA will
establish standards regarding qualifications, monitoring, procedures
and use, if any, of Private Certifiers. SBA will establish these
standards in the document approving an organization or concern as a
Private Certifier.
Proposed Sec. 124.1004 described how an organization or business
concern becomes a Private Certifier. The SBA received five comments
regarding this proposed section. One commenter stated that training
should be mandatory. While SBA believes that training will be necessary
in many cases, it may not be needed in every case. As such, SBA has
retained its flexibility to require training where appropriate. A
second commenter stated that a monitoring system should be developed.
SBA agrees and has provided for SBA monitoring in Sec. 124.1003. A
third commenter stated that the Private Certifiers should be nonprofit
organizations or governmental agencies and not private sector
organizations. SBA considered this comment, but has decided not to
restrict Private Certifiers in this way. Nonprofit organizations and
state and local governmental agencies may apply and be granted status
as Private Certifiers. However, SBA does not believe that those are the
only entities reasonably capable of providing this service. Such a
restriction is unnecessary and would be contrary to policies that
generally encourage competition.
Proposed Sec. 124.1004(f) prohibited a Private Certifier from
certifying any company with which it has other business dealings, but
did not specify a timeframe for limiting such dealings or what types of
activities SBA was in fact attempting to limit. Upon further
deliberation, SBA believes that this regulation should provide the
general authority for SBA to prohibit conflicts of interest between a
Private Certifier and those firms that come to it seeking an ownership
and control determination and protect the integrity of the Private
Certifier decision-making process. SBA believes that the document
(e.g., contract) that authorizes an entity to act as a Private
Certifier should detail the specific conditions or limitations on other
business transactions between the Private Certifier and those firms for
which it performs an ownership and control determination. These
restrictions may pertain to past relationships (so that a Private
Certifier could not process an SDB application for a firm with which it
had certain business dealings in the past) or to future transactions
(so that the Private Certifier could not engage in certain business
relationships with a firm for a specified period of time after
processing the firm's SDB application). SBA does not intend to preclude
a Private Certifier from making a determination with respect to a
firm's SDB status for both federal and state/local SDB programs. That
is not the type of ``other business transactions'' that this regulation
is intended to prohibit.
Proposed Sec. 124.1005 allowed Private Certifiers to charge a
reasonable fee to process the firm's determination of ownership and
control. There were two comments on this section. The first commenter
noted that the language was confusing. SBA revised the language in the
first sentence in response to this comment. The second commenter, a
Federal agency, stated that the fee should be the same whether or not
the applicant receives SDB certification. SBA agrees and has adopted
this language in the final regulation. In addition, SBA has amended
this section to provide that SBA may charge a fee to process ownership
and control determinations where SBA performs ownership and control
determinations. From time to time, SBA will publish a Notice in the
Federal Register identifying any fee that SBA decides to charge to
process a firm's determination of ownership and control. Any funds
received by SBA to make these determinations will be remitted promptly
to the Treasury of the United States as miscellaneous receipts.
Proposed Sec. 124.1008 explained the process to become certified as
an SDB. SBA received several comments on this proposed section. Three
comments supported the proposed language, and stated that this section
would improve the efficiency of the process and reduce paperwork. A few
comments addressed the need for a method of monitoring the Private
Certifiers and their fees. As noted above, Sec. 124.1003 of the final
rule provides authority for SBA to include specific monitoring
provisions in the
[[Page 35770]]
document approving an organization or concern to be a Private
Certifier.
One commenter questioned the automatic inclusion of current 8(a) BD
Participants as SDBs. SBA continues to believe that such inclusion is
proper. An 8(a) BD concern's continuing eligibility as an SDB will be
reviewed as part of the concern's annual review for the 8(a) BD
program.
The final rule also removes all references in Sec. 124.1008 to
procuring agencies as certifiers. All SDB certifications will be made
by SBA and its Private Certifiers.
One commenter specifically requested that an ANC-owned firm be
permitted to apply for SDB status through the SBA Anchorage Office. To
address this concern, SBA has added language to Sec. 124.1008(a)(1)
allowing SBA flexibility to direct where applications should be made.
Proposed Sec. 124.1008(b) listed the required forms and documents
to be submitted by the applicant for SDB certification. One commenter,
noted that the required ``small business self certification'' should be
included in this section. SBA does not adopt this comment. SBA
concluded that it was not necessary to detail every form or piece of
information that SBA might request from an SDB applicant. Instead, the
final rule condenses Sec. 124.1008(b) to provide that an SDB applicant
must submit the same forms and attachments required by SBA when
applying to the 8(a) BD program. This change gives SBA the flexibility
to request whatever information is needed to make an informed decision.
SBA has clarified throughout this section that ownership and
control determinations may be made by either SBA, or where SBA deems it
appropriate, by Private Certifiers. SBA has added a new
Sec. 124.1008(d)(3) giving SBA the discretion in any case to analyze
and determine whether a firm is owned and controlled by one or more
individuals claiming disadvantage. SBA believes that this paragraph
provides needed flexibility to the regulation to ensure that the SDB
certification process runs smoothly in all circumstances. The final
rule also adds a new Sec. 124.1008(d)(4) which authorizes SBA's program
office to re-evaluate an ownership and control decision by a Private
Certifier where SBA receives credible evidence that the Private
Certifier has substantially disregarded the applicable eligibility
criteria. This provision provides to SBA the authority to quickly
correct a determination that it believes to be clearly contrary to the
eligibility requirements, and should promote more consistent decisions.
Proposed Sec. 124.1008(e) was originally entitled ``SDB
Certification.'' A commenter stated that this was misleading in light
of the fact that subsection (e) dealt with disadvantaged status. SBA
agrees and has renamed subsection (e) ``Disadvantaged determination.''
Proposed Sec. 124.1008(e)(1) stated that those claiming
disadvantaged status who are members of a designated group are presumed
to be socially and economically disadvantaged. A Federal agency
commenter suggested deleting the phrase ``and economically
disadvantaged,'' contained in Sec. 124.1008(e)(1) as inconsistent with
proposed Sec. 124.1002(c), which requires a net worth of less than
$750,000. SBA does not agree that the language contained in
Sec. 124.1008(e)(1) conflicts with the monetary requirement of
Sec. 124.1002(c), and believes that eliminating the presumption for
economic disadvantage would be contrary to the underlying statutory
authority. The presumption of disadvantage for Federal SDB programs is
based on the authority set forth in section 8(d) of the Small Business
Act, 15 U.S.C. Sec. 637(d). Section 8(d)(3)(C)(ii) clearly authorizes a
presumption of both social and economic disadvantaged for members of
certain designated groups. When members of the designated groups
represent to SBA that they are disadvantaged, as part of a firm's
application for SDB status, they represent that they meet the $750,000
net worth requirement for economic disadvantage. Absent credible
evidence to the contrary, SBA will accept this representation because
of the statutory presumption. Accordingly, SBA did not change the
presumption in the final rule.
The final rule adds a new Sec. 124.1008(e)(2)(ii). This provision
states the obligations of the Private Certifier in the application
process concerning individuals who are not members of a designated
group. Proposed Secs. 124.1008(e)(2) (ii) through (f) have been
renumbered for easier understanding and subsection (f) has been renamed
``SDB Determination.''
Proposed Sec. 124.1008(e)(2)(ii) stated that if one or more of the
individuals upon whose status the Private Certifier relied in making
its ownership and control decision is not disadvantaged, the Private
Certifier would reject the firm's application for SDB status. One
commenter stated that this language should be clarified to state that
the firm would be rejected only if the disadvantaged status of that
individual was needed to establish ownership and control. SBA agrees,
and has amended renumbered Sec. 124.1008(f)(2) to include this
language.
The final rule also adds a new Sec. 124.1008(i). This new paragraph
provides that if a firm applying for SDB certification has a current,
valid certification as a disadvantaged business enterprise (DBE) from a
Department of Transportation (DOT) recipient, SBA may adopt the DBE
certification as an SDB certification when determined to be
appropriate.
Proposed Sec. 124.1009 did not provide a procedure to remand an
application back to a Private Certifier. A Federal agency commenter
expressed concern that there was no such procedure in place when OHA
overruled the Private Certifier's decision regarding ownership and
control by those claiming disadvantaged status. SBA has revised
Sec. 124.1009 to remedy this omission. SBA has also expanded and
clarified the procedures that will apply to an appeal of a decision of
a Private Certifier in Sec. 124.1009, and those relating to an appeal
of an SBA decision in Sec. 124.1008(f).
Proposed Sec. 124.1010 provided that a firm could not represent
itself as an SDB concern for purposes of receiving procurement
preferences if it was not on the SBA-maintained list of qualified SDBs.
SBA has amended this section to coincide with the final version of the
FAR to provide that a firm may represent itself as an SDB if it has
submitted an application for certification and that application is
pending either at SBA or with a Private Certifier. The final rule
further provides that SBA will make a determination on SDB status
within 15 days where an SDB applicant is determined to be the
successful offeror on a contract. In the event that SBA fails to make a
determination within 15 days, the firm will not be eligible for award,
and the procuring activity will award to another offeror.
Proposed Sec. 124.1012 stated that a firm may reapply for
certification 12 months after the date of the final SBA decision to
decline the application. One commenter requested that the period for
reapplication begin from the date of submission of the application,
rather than denial. SBA does not agree with this suggestion, and has
made no change.
Proposed Sec. 124.1013 listed the criteria SBA would use to delete
names on the SDB register. A Federal agency commenter noted that recent
graduates of the 8(a) BD program are reviewed for social and economic
disadvantage each year, through their final year of participation and,
therefore, it is unnecessarily burdensome to require
[[Page 35771]]
them to apply for SDB certification immediately. SBA agreed and adopted
this suggestion by adding a new Sec. 124.1014, which clarifies how long
an SDB certification lasts, and specifically allows a firm that has
graduated from the 8(a) BD program to remain on the SBA-maintained list
of qualified SDBs for a period of three years from the date of its last
annual review in the 8(a) BD program.
Proposed Sec. 124.1014 (Sec. 124.1015 in the final rule) addressed
the effect of receiving an SDB certification. Proposed Sec. 124.1014(d)
stated that a firm must submit a new application every three years to
remain on the SDB register. One commenter noted that a contract award
that is not successfully challenged (i.e., the SDB status is upheld)
should obviate the need for applying for a new certification. SBA
agreed with this comment and has incorporated it in the new
Sec. 124.1014, dealing with how long an SDB certification lasts. The
final rule provides that SDB status will run three years from the date
SBA determines a firm to be disadvantaged in connection with a protest
challenging its SDB status. This extension of SDB status applies only
where SBA determines a firm to be an SDB on the merits. A firm's SDB
status will not be extended where SBA merely dismisses a protest
against it for some procedural reason (e.g., lack of timeliness or
specificity). In addition, SBA added a new paragraph to clarify that
8(a) BD graduated firms will remain on the qualified list of SDBs for a
period of three years from the date of their last annual review in the
8(a) BD program.
The final rule adds a new Sec. 124.1016, authorizing SBA, in the
absence of a protest, to re-evaluate the SDB status of a firm that is
certified as an SDB where SBA receives credible evidence calling into
question a firm's eligibility as an SDB. SBA added this section in
response to a comment that was concerned about the possibility of a
firm remaining on the list of qualified SDBs where it was clear that it
no longer qualified as an SDB because no one had protested its SDB
status. This section also provides that an SDB firm has an affirmative
obligation to report any changes in ownership or control or any other
circumstances that could adversely affect the firm's eligibility for
SDB status to SBA.
The final rule adds a new Sec. 124.1021(c) to clarify that SBA will
consider a protest against a previously certified SDB which is an
apparent successful offeror only where the protest presents credible
evidence that the firm's circumstances have materially changed since
SBA certified it as an SDB, or credible evidence that the firm's SDB
application contained false or misleading information. SBA believes
that this change is needed to give value to the SDB certification
process. Without such a change, a firm's status as ``disadvantaged''
could be repeatedly challenged despite SBA ruling in its favor on one
protest and despite its ownership and control remaining unchanged. Such
challenges would impose a significant and costly burden on a firm
having to defend its SDB status, as well as on SBA, and serve no useful
purpose. SBA has also made conforming amendments to Secs. 124.1015(c)
and 124.1018(d) to recognize the limited right to protest the SDB
status of a concern that has received an SDB certification from SBA.
Compliance With Executive Orders 12612, 12778, and 12866, the
Regulatory Flexibility Act (5 U.S.C. 601, et seq.), and the
Paperwork Reduction Act (44 U.S.C. Ch. 35)
SBA has determined that this rule is not a major rule as defined by
Executive Order 12866 in that it is not likely to have an annual
economic effect of $100 million or more on the economy, result in a
major increase in costs or prices, or have a significant adverse effect
on competition or the United States economy. SBA has determined that
this rule may 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, et seq. A summary of the Regulatory
Flexibility Analysis follows. For a copy of the complete analysis,
contact Calvin Jenkins, Deputy Associate Deputy Administrator for
Government Contracting and Minority Enterprise Development, at (202)
205-6459.
Executive Order 12866
On May 9, 1997, the Department of Defense, the General Services
Administration, and the National Aeronautics and Space Administration
proposed amendments to the Federal Acquisition Regulation (FAR)
concerning programs for small disadvantaged business concerns. 62 FR
25786. The amendments were intended to conform to a Department of
Justice (DOJ) proposal to reform affirmative action in Federal
procurement (see 61 FR 26042) and to comply with the constitutional
standards established by the Supreme Court in Adarand Constructors,
Inc. v. Pena, 115 S.Ct. 2097 (1995). The DOJ proposal addresses federal
contracting with SDBs. Full implementation of the DOJ proposal requires
revisions to the FAR, as well as regulatory changes by SBA and the
Department of Commerce. For a full economic analysis of the changes to
be made by the implementation of a government-wide SDB program, please
refer to the analysis published with the FAR rule.
This final rule addresses only SBA's responsibilities under the SDB
program. In brief summary, this rule requires SBA to (1) certify SDB
concerns, including those owned by non-designated group members, and
establish and maintain an updated list of qualified SDBs; and (2)
resolve protests made challenging the eligibility of firms as SDBs for
Federal procurement requirements. It also authorizes SBA to establish
and oversee a national network of private entities to determine, where
SBA deems it appropriate, whether firms seeking to be certified as SDBs
are owned and controlled by individuals claiming to be socially and
economically disadvantaged.
SBA's determination that this rule is not a major rule within the
meaning of Executive Order 12866 is based on its analysis of the costs
of implementing its responsibilities under the government-wide SDB
program.
SBA has examined current information on procurement patterns,
including the bidding behavior of small and small disadvantaged
businesses to estimate the number of firms that will seek to be
certified for the SDB program. In the first year, SBA estimates that
about 30,000 firms will seek to be certified as SDBs. Current 8(a)
firms (approximately 6,000 in number) meet all the tests for qualifying
as SDBs, and will automatically be certified as SDBs.
Where SBA approves and authorizes a Private Certifier to make
ownership and control determinations of firms seeking SDB
certification, a Private Certifier may charge a reasonable fee for
screening applications for completeness and for processing the
ownership and control portion of applications. At the present time, it
is uncertain to what extent Private Certifiers will be approved or used
to make ownership and control determinations. SBA will make those
determinations initially. The regulations authorize SBA to charge a fee
in the future following a notice in the Federal Register. Should SBA
elect to charge a fee, the notice will provide information as to the
amount and when it will be charged.
SBA projects the impact of this program, based on this analysis, on
those small businesses seeking to become certified SDBs, will be less
than $15 million. This analysis is an estimate of costs for the first
year of the program. Absent material changes or a successful protest, a
certification of SDB status will
[[Page 35772]]
last three years. Firms claiming to be SDBs will certify that they
continue to meet all applicable eligibility criteria for any federal
contract during the three-year period.
Summary of the Analysis Prepared Pursuant to the Regulatory
Flexibility Act
SBA believes that this rule may have a significant impact on a
substantial number of small businesses. In fiscal year 1996, the
federal government spent $197.6 billion on the procurement of goods and
services. Small businesses were awarded $41.1 billion in prime
contracts, representing approximately a 21 percent share of the total
federal contract dollars. SDBs were awarded $10.3 billion in federal
contracts, about 5 percent of all federal contract dollars. In
addition, the federal contract dollars that went to SDBs was about 25
percent of all federal dollars that went to small businesses for the
same period.
There are approximately 180,000 small firms registered on PRO-Net,
SBA's database of small businesses actively seeking federal government
contracts. SBA estimates that 30,000 small businesses will apply to be
certified as SDBs in the first year of the program. This is a
substantial number of small disadvantaged businesses interested in
bidding on federal government contracts. In the proposed rule issued on
August 14, 1998 (62 FR 43584-43628), SBA stated its intent to use
Private Certifiers to determine ``ownership and control'' for purposes
of the small and disadvantaged business program. We received no
comments from the public concerning the economic impact of using
Private Certifiers on small business. Although it is uncertain whether
SBA will use Private Certifiers, SBA estimates, based on the fees
charged by Private Certifiers for similar services, that the cost of a
certification would range from $500 to $1,000. Similarly, if SBA elects
to charge fees for certification, the fees would be equivalent to the
fees charged by Private Certifiers. We have no estimates of the size of
the small businesses that will apply to be certified or the value of
the contracts that these small businesses will receive. Therefore, we
cannot determine precisely the significance of the economic impact on
small businesses.
For purposes of the Paperwork Reduction Act of 1995 (Public Law
104-13), this rule imposes new reporting or recordkeeping requirements
on firms applying to be certified as SDBS. The rule requires such firms
to submit evidence that they are owned and controlled by one or more
disadvantaged individuals. It further requires the individuals claiming
to be disadvantaged to submit representations of group membership and
disadvantaged status or evidence of disadvantaged status to SBA. Once
certified as an SDB, this rule does not require an SDB to report any
other information to SBA or to maintain additional records.
For purposes of Executive Order 12612, SBA certifies that this rule
has no federalism implications warranting the preparation of a
Federalism Assessment.
For purposes of Executive Order 12778, SBA certifies that this rule
is drafted, to the extent practicable, in accordance with the standards
set forth in Section 2 of that Order.
List of Subjects in 13 CFR Part 124
Government procurement, Hawaiian Natives, Minority businesses,
Reporting and recordkeeping requirements, Technical assistance,
Tribally-owned concerns.
Accordingly, for the reasons set forth above, SBA amends Title 13,
Code of Federal Regulations (CFR), as follows:
PART 124--[AMENDED]
1. The authority citation for 13 CFR part 124 continues to read as
follows:
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d) and Pub.
L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L. 101-
574, and 42 U.S.C. 9815.
2. Section 124.108 is amended by adding the following paragraph
(f):
Sec. 124.108 What other eligibility requirements apply for individuals
or businesses?
* * * * *
(f) Achievement of benchmarks. Where actual participation by
disadvantaged businesses in a particular SIC Major Group exceeds the
benchmark limitations established by the Department of Commerce, SBA,
in its discretion, may decide not to accept an application for 8(a) BD
participation from a concern whose primary industry classification
falls within that Major Group.
3. Section 124.302 is amended by adding the following paragraph
(d):
Sec. 124.302 What is early graduation?
* * * * *
(d) Benchmark achievement. SBA may graduate a Participant prior to
the expiration of its program term where the Participant has
substantially achieved the targets, objectives and goals of its
business plan as adjusted under Sec. 124.403(d) and its primary
industry classification falls within a SIC Major Group in which the
benchmarks described in Sec. 124.403(d) have been achieved.
4. Section 124.403 is amended by adding paragraph (d) to read as
follows:
Sec. 124.403 How is a business plan updated and modified?
* * * * *
(d) Benchmark achievement. Where actual participation by
disadvantaged businesses in a particular SIC Major Group exceeds the
benchmark limitations established by the Department of Commerce for
that Major Group, SBA may adjust the targets, objectives and goals
contained in the business plans of Participants whose primary industry
classification falls within that Major Group. Any adjustment will take
into account projected decreases in 8(a) and SDB contracting
opportunities.
5. Section 124.504 is amended by redesignating paragraph (d) as
paragraph (e), and by adding a new paragraph (d) to read as follows:
Sec. 124.504 What circumstances limit SBA's ability to accept a
procurement for award as an 8(a) contract?
* * * * *
(d) Benchmark achievement. Where actual participation by
disadvantaged businesses in a SIC Major Group exceeds the benchmark
limitations established by the Department of Commerce for that Major
Group, SBA may elect not to accept a requirement having a SIC code
within the Major Group that is offered to SBA for award as an 8(a)
contract. In determining whether to accept a requirement in such a
case, SBA will consider the developmental needs of Participants and
other anticipated contracting opportunities available to them.
* * * * *
6. Subpart B to part 124 is revised to read as follows:
Subpart B--Eligibility, Certification, and Protests Relating to
Federal Small Disadvantaged Business Programs
124.1001 General applicability.
124.1002 What is a Small Disadvantaged Business (SDB)?
124.1003 What is a Private Certifier?
124.1004 How does an organization or business concern become a
Private Certifier?
124.1005 Can a fee be charged to a firm to process the firm's
application for SDB certification?
124.1006 Is there a list of Private Certifiers?
124.1007 How long may an organization or business concern be a
Private Certifier?
124.1008 How does a firm become certified as an SDB?
[[Page 35773]]
124.1009 How does a firm appeal a decision of a Private Certifier?
124.1010 Can a firm represent itself to be an SDB if it has not yet
been certified as an SDB?
124.1011 What is a misrepresentation of SDB status?
124.1012 Can a firm reapply for SDB certification?
124.1013 Is there a list of certified SDBs?
124.1014 How long does an SDB certification last?
124.1015 What is the effect of receiving an SDB certification?
124.1016 Can SBA re-evaluate the SDB status of a firm after SBA
certifies it to be SDB?
124.1017 Who may protest the disadvantaged status of a concern?
124.1018 When will SBA not decide an SDB protest?
124.1019 Who decides disadvantaged status protests?
124.1020 What procedures apply to disadvantaged status protests?
124.1021 What format, degree of specificity, and basis does SBA
require to consider an SDB protest?
124.1022 What will SBA do when it receives an SDB protest?
124.1023 How does SBA make disadvantaged status determinations in
considering an SDB protest?
124.1024 Appeals of disadvantaged status determinations.
Subpart B--Eligibility, Certification, and Protests Relating to
Federal Small Disadvantaged Business Programs
Sec. 124.1001 General applicability.
(a) This subpart defines a Small Disadvantaged Business (SDB). It
also sets forth procedures by which a firm can apply to be recognized
as an SDB, including procedures to be used by private sector entities
approved by SBA for determining whether a particular concern is owned
and controlled by one or more disadvantaged individuals or Alaska
Native Corporations (ANCs), Community Development Corporations (CDCs),
Indian tribes (tribes) or Native Hawaiian Organizations (NHOs).
Finally, this subpart establishes procedures by which SBA determines
whether a particular concern qualifies as an SDB in response to a
protest challenging the concern's status as disadvantaged. Unless
specifically stated otherwise, the phrase ``socially and economically
disadvantaged individuals'' in this subpart includes tribes, ANCs,
CDCs, and NHOs.
(b) Only small firms that are owned and controlled by socially and
economically disadvantaged individuals are eligible to participate in
Federal SDB price evaluation adjustment, evaluation factor or
subfactor, monetary subcontracting incentive, or set-aside programs, or
SBA's section 8(d) subcontracting program.
(c) In order for a concern to represent that it is an SDB as a
prime contractor for purposes of a Federal Government procurement, it
must have:
(1) Received a certification from SBA that it qualifies as an SDB;
or
(2) Submitted an application for SDB certification to SBA or a
Private Certifier, and must not have received a negative determination
regarding that application from SBA or the Private Certifier.
(d) A firm cannot represent itself to be an SDB concern in order to
receive a preference as an SDB for any Federal subcontracting program
if it is not on the SBA-maintained list of qualified SDBs.
Sec. 124.1002 What is a Small Disadvantaged Business (SDB)?
(a) Reliance on 8(a) criteria. In determining whether a firm
qualifies as an SDB, the criteria of social and economic disadvantage
and other eligibility requirements established in subpart A of this
part apply, including the requirements of ownership and control and
disadvantaged status, unless otherwise provided in this subpart.
Qualified Private Certifiers must use the 8(a) criteria applicable to
ownership and control in determining whether a particular firm is
actually owned and controlled by one or more individuals claiming
disadvantaged status.
(b) SDB eligibility criteria. A small disadvantaged business (SDB)
is a concern:
(1) Which qualifies as small under part 121 of this title for the
size standard corresponding to the applicable four digit Standard
Industrial Classification (SIC) code.
(i) For purposes of SDB certification, the applicable SIC code is
that which relates to the primary business activity of the concern;
(ii) For purposes related to a specific Federal Government
contract, the applicable SIC code is that assigned by the contracting
officer to the procurement at issue;
(2) Which is at least 51 percent unconditionally owned by one or
more socially and economically disadvantaged individuals as set forth
in Sec. 124.105. For the requirements relating to tribes and ANCs,
NHOs, or CDCs, see Secs. 124.109, 124.110, and 124.111, respectively.
(3) Except for tribes, ANCs, NHOs, and CDCs, whose management and
daily business operations are controlled by one or more socially and
economically disadvantaged individuals. For the requirements relating
to tribes and ANCs, NHOs, or CDCs, see Secs. 124.109, 124.110, and
124.111, respectively.
(4) Which, for purposes of SDB procurement mechanisms authorized by
10 U.S.C. 2323 (such as price evaluation adjustments, evaluation
factors or subfactors, monetary subcontracting incentives, or SDB set-
asides) relating to the Department of Defense, NASA and the Coast Guard
only, has the majority of its earnings accruing directly to the
socially and economically disadvantaged individuals.
(c) Disadvantaged status. In assessing the personal financial
condition of an individual claiming economic disadvantage, his or her
net worth must be less than $750,000 after taking into account the
exclusions set forth in Sec. 124.104(c)(2).
(d) Additional eligibility criteria. Except for tribes, ANCs, CDCs
and NHOs, each individual claiming disadvantaged status must be a
citizen of the United States.
(e) Potential for success not required. The potential for success
requirement set forth in Sec. 124.107 does not apply as an eligibility
requirement for an SDB.
(f) Joint ventures. Joint ventures are permitted for SDB
procurement mechanisms (such as price evaluation adjustments,
evaluation factors or subfactors, monetary subcontracting incentives,
or SDB set-asides), provided that the requirements set forth in this
paragraph are met.
(1) The disadvantaged participant(s) to the joint venture must
have:
(i) Received an SDB certification from SBA; or
(ii) Submitted an application for SDB certification to SBA or a
Private Certifier, and must not have received a negative determination
regarding that application.
(2) For purposes of this paragraph, the term joint venture means
two or more concerns forming an association to engage in and carry out
a single, specific business venture for joint profit. Two or more
concerns that form an ongoing relationship to conduct business would
not be considered ``joint venturers'' within the meaning of this
paragraph, and would also not be eligible to be certified as an SDB.
The entity created by such a relationship would not be owned and
controlled by one or more socially and economically disadvantaged
individuals. Each contract for which a joint venture submits an offer
will be evaluated on a case by case basis.
(3) Except as set forth in 13 CFR 121.103(f)(3), a concern that is
owned and controlled by one or more socially and economically
disadvantaged
[[Page 35774]]
individuals entering into a joint venture agreement with one or more
other business concerns is considered to be affiliated with such other
concern(s) for size purposes. If the exception does not apply, the
combined annual receipts or employees of the concerns entering into the
joint venture must meet the applicable size standard corresponding to
the SIC code designated for the contract.
(4) An SDB must be the managing venturer of the joint venture, and
an employee of the managing venturer must be the project manager
responsible for performance of the contract.
(5) The joint venture must perform any applicable percentage of
work required of SDB offerors, and the SDB joint venturer(s) must
perform a significant portion of the contract.
(g) Ownership restrictions for non-disadvantaged individuals. The
ownership restrictions set forth in Sec. 124.105 (g) and (h) for non-
disadvantaged individuals and concerns do not apply for purposes of
determining SDB eligibility.
Sec. 124.1003 What is a Private Certifier?
A Private Certifier is an organization or business concern approved
by SBA to determine whether firms are owned and controlled by one or
more individuals claiming disadvantaged status. SBA may elect to
arrange for one or more Private Certifiers to perform certain functions
in the SDB Certification process. When that election is made, the
provisions of Secs. 124.1004 through 124.1007 will apply. SBA will
establish more detailed standards regarding qualifications, monitoring,
procedures and use, if any, of Private Certifiers in specific contracts
or agreements between SBA and the Private Certifiers.
Sec. 124.1004 How does an organization or business concern become a
Private Certifier?
(a) SBA may execute contracts or agreements with organizations or
business concerns seeking to become Private Certifiers. Any such
contract or agreement will include provisions for the oversight,
monitoring, and evaluation of all certification activities by SBA.
(b) The organization or business concern must demonstrate a
knowledge of SBA's regulations regarding ownership and control, as well
as business organizations and the legal principles affecting their
ownership and control generally, including stock issuances, voting
rights, convertability of debt to equity, options, and powers and
responsibilities of officers and directors, general and limited
partners, and limited liability members.
(c) The organization or concern must also, along with its
principals, demonstrate good character. Good character does not exist
for these purposes if the organization or concern or any of its
principals:
(1) Is debarred or suspended under any Federal procurement or non-
procurement debarment and suspension regulations; or
(2) Has been indicted or convicted for any criminal offense or
suffered a civil judgment indicating a lack of business integrity.
(d) As a condition of approval, SBA may require that appropriate
officers and/or key employees of the concern attend a training session
on SBA's rules and requirements.
(e) An organization or concern seeking to become a Private
Certifier must agree to provide access to SBA of its books and records
when requested, including records pertaining to its certification
activities. Once SBA approves the organization or concern to be a
Private Certifier, SBA may review this information, as well as the
decisions of the Private Certifier, in determining whether it will
renew or extend the term of the Private Certifier, or terminate the
Private Certifier for cause.
(f) SBA will include in any contract or agreement document
authorizing an entity to act as a Private Certifier appropriate
conditions to prohibit conflicts of interests between the Private
Certifier and the firms for which it processes SDB applications and to
protect the integrity of the decision-making process.
Sec. 124.1005 Can a fee be charged to a firm to process the firm's
application for SDB certification?
(a) With SBA's approval, a Private Certifier may charge a
reasonable fee to a firm in order to screen the firm's application for
completeness and to process a determination of ownership and control.
The fee must be for actual services rendered and must not be related to
whether or not the business concern is found to be owned and controlled
by one or more individuals or entities claiming disadvantaged status.
(b) Where SBA makes the determination of ownership and control, SBA
may collect a fee comparable to that which would be charged by a
Private Certifier. From time to time, SBA will publish a Notice in the
Federal Register identifying any fee that SBA will charge to process a
firm's determination of ownership and control. SBA will promptly remit
any funds received pursuant to this section to the Treasury of the
United States as miscellaneous receipts.
Sec. 124.1006 Is there a list of Private Certifiers?
SBA will maintain a list of approved Private Certifiers on SBA's
Home Page on the Internet. Any interested person may also obtain a copy
of the list from the local SBA district office.
Sec. 124.1007 How long may an organization or business concern be a
Private Certifier?
(a) SBA's approval document will specify how long the organization
or concern may be a Private Certifier. The initial contract or
agreement will have a base period of one year, and may include option
years or renewal provisions.
(b) SBA may terminate a contract or agreement with an organization
or business concern which is a Private Certifier for the convenience of
the Government at any time, and may terminate the contract or agreement
for default where appropriate. Specific grounds for termination for
default include, but are not limited to:
(1) Charging improper, unreasonable or contingent fees in violation
of Sec. 124.1005;
(2) Engaging in prohibited business transactions with the firms for
which it processes SDB applications in violation of Sec. 124.1004(f);
or
(3) A demonstrated record of ownership and control determinations
that are overturned on appeal by SBA's Office of Hearings and Appeals
(OHA) or by SBA as part of an SDB protest.
Sec. 124.1008 How does a firm become certified as an SDB?
Any firm may apply to be certified as an SDB. SBA's field offices
will provide further information and required application forms to any
firm interested in SDB certification. In order to become certified as
an SDB, a firm must apply to SBA or, if directed by SBA, to a Private
Certifier. The application must include evidence demonstrating that the
firm is owned and controlled by one or more individuals claiming
disadvantaged status, along with certifications or narratives regarding
the disadvantaged status of such individuals. See paragraph (e)(1) of
this section. The firm also must submit information necessary for a
size determination. See Sec. 121.1008. Current 8(a) BD Participants do
not need to submit applications for SDB status. These concerns
automatically qualify as SDBs by virtue of their status as 8(a) BD
concerns. An 8(a) Participant's continuing eligibility as an SDB will
be
[[Page 35775]]
reviewed as part of the concern's 8(a) annual review.
(a) Filing an SDB application. (1) An interested firm must first
submit a complete application to SBA's Assistant Administrator for
Small Disadvantaged Business Certification and Eligibility (AA/SDBCE),
Small Business Administration, 409 3rd Street, SW, Washington, DC
20416, or to a specific SBA field office or an approved Private
Certifier if directed by SBA.
(2) The firm must identify which individual(s) or entities are
claiming disadvantaged status.
(b) Required forms. Each firm seeking to be certified as an SDB
must submit those forms and attachments required by SBA when applying
for admission to the 8(a) BD program. These forms and attachments may
include, but not be limited to, financial statements, Federal personal
and business tax returns and personal history statements. The
application package may be in the form of an electronic application.
(c) Application processing. (1) SBA or a Private Certifier will
advise each applicant generally within 15 days after the receipt of an
application whether the application is complete and suitable for
evaluation and, if not, what additional information or clarification is
required. If the application is not complete, SBA or the Private
Certifier will return the application to the firm, and will notify the
firm that it may reapply when its application is complete.
(2) The burden is on the applicant to demonstrate that those
individuals claiming disadvantaged status own and control the concern.
(d) Ownership and control decision. SBA or a Private Certifier will
determine whether those individuals claiming disadvantaged status own
and control the applicant firm within 30 days of receipt of a complete
application package, whenever practicable..
(1) Where a Private Certifier determines ownership and control, the
Private Certifier will issue a written decision as to whether the
applicant is owned and controlled by the individuals identified as
claiming disadvantaged status.
(i) If the Private Certifier finds that the applicant is owned and
controlled by the individuals claiming disadvantaged status, the
Private Certifier will forward the application to SBA along with a copy
of its ownership and control determination and the information required
by paragraph (e)(2)(ii) of this section, where appropriate.
(ii) If the Private Certifier finds that the applicant is not owned
and controlled by the individuals claiming disadvantaged status, its
decision must state the specific reasons for the finding, and inform
the applicant of its right to appeal the decision to SBA pursuant to
Sec. 124.1009.
(2) Where SBA determines ownership and control, SBA will first
determine whether the applicant is owned and controlled by the
individual(s) claiming to be disadvantaged. If SBA determines that the
applicant is not owned and controlled by the individual(s) claiming
disadvantaged status, SBA will issue a written decision addressing only
the ownership and control issues. If SBA determines that the applicant
is owned and controlled by the individual(s) claiming disadvantaged
status, SBA will issue a single written decision as to whether the
applicant qualifies as an SDB. Such a determination will include the
ownership and control of the firm, the size status of the firm, and the
disadvantaged status of those individuals claiming to be disadvantaged.
(3) In its sole discretion, SBA may analyze and determine whether a
firm is owned and controlled by one or more individuals claiming
disadvantaged status notwithstanding the availability of a Private
Certifier to make such a decision.
(4) SBA reserves the right to re-evaluate an approved decision on
ownership and control by a Private Certifier in a case where it has
credible evidence that the Private Certifier has substantially
disregarded the eligibility criteria.
(e) Disadvantaged determination. Once a concern receives a decision
finding that it is owned and controlled by those individuals or
entities claiming disadvantaged status (either through an initial
determination or on appeal), SBA will determine whether the other
eligibility criteria are met, and, if so, will include the SDB on the
SBA-maintained list of qualified SDBs. SBA will make this determination
within 30 days of receiving an SDB application, if practicable.
(1) Members of designated groups. (i) Those individuals claiming
disadvantaged status that are members of the same designated groups
that are presumed to be socially disadvantaged for purposes of SBA's
8(a) BD program (see Sec. 124.103(b)) are presumed to be socially and
economically disadvantaged for purposes of SDB certification. These
individuals must represent that they are members of one of the
designated groups, that they are identified as a member of one of the
designated groups, that their net worth is less than $750,000 after
taking into account the exclusions set forth in Sec. 124.104(c)(2), and
that they are citizens of the United States.
(ii) Absent credible evidence to the contrary, SBA may accept these
representations as true and certify the firm as an SDB.
(2) Individuals not members of designated groups. (i) Each
individual claiming disadvantaged status who is not a member of one of
the designated groups must submit a statement identifying personally
how his or her entry into or advancement in the business world has been
impaired because of personally specific factors (see Sec. 124.103(c)),
and how his or her ability to compete in the free enterprise system has
been impaired due to diminished capital and credit opportunities (see
Secs. 124.103(c) and 124.104).
(ii) Where a Private Certifier determines ownership and control,
the Private Certifier must also review the disadvantaged status
submission and any other required information, and send to SBA the
following:
(A) An executive summary and analysis of the disadvantaged status
submission;
(B) The application and all supporting documentation; and
(C) A certification that the application is complete and suitable
for evaluation.
(3) Concerns owned by tribes, ANCs, CDCs, or NHOs: SBA will process
SDB applications from concerns owned and controlled by tribes, ANCs,
CDCs, or NHOs in the same way as those from concerns owned by
individuals who are members of designated groups.
(f) SDB Determination. (1) If SBA's AA/SDBCE determines that the
individual(s) claiming disadvantage are disadvantaged and other
eligibility criteria are met, he or she will certify the firm as an
SDB.
(2) If SBA's AA/SDBCE determines that one or more of the
individuals claiming to be disadvantaged is not disadvantaged and their
disadvantaged status is required to establish disadvantaged ownership
and control of the applicant, or any of the other eligibility criteria
are not met, he or she will reject the firm's application for SDB
certification. The AA/SDBCE will issue a written decision setting forth
SBA's reasons for decline.
(3) Pursuant to part 134 of this title, a firm may appeal to OHA
the AA/SDBCE's decision that one or more of the individuals claiming
disadvantaged status is not disadvantaged, or, where SBA determines
ownership and control, that those claiming disadvantaged status do not
own and control the applicant. (See Sec. 124.1009 for appeals from
decisions by Private Certifiers.)
[[Page 35776]]
(i) The firm must serve SBA's Associate General Counsel for General
Law with a copy of the appeal.
(ii) OHA will determine whether SBA's decision in either case was
arbitrary, capricious, or contrary to law. OHA's review is limited to
the facts that were before SBA at the time of its decision and any
arguments submitted in or in response to the appeal. OHA will not
consider any facts beyond those that were already presented to SBA
unless the administrative judge determines that manifest injustice
would occur if the appeal were limited to the record.
(4) A firm may also request a formal size determination pursuant to
part 121 of this title where SBA finds that the firm is not small.
(g) Current 8(a) BD program participants. Any firm that is
currently a Participant in SBA's 8(a) BD program need not seek an
ownership and control determination or apply to SBA for a separate
certification as an SDB. SBA will certify current 8(a) BD Participants
as SDBs, and automatically include them on the list of qualified SDBs.
(h) 8(a) BD graduates. SBA will automatically certify a firm that
has graduated from the SBA's 8(a) BD program to be an SDB, provided SBA
determined that the firm continued to be eligible for the 8(a) BD
program as part of an annual review within the last three years. (See
Sec. 124.1014(b)).
(i) Certification by DOT recipient. If a firm applying for SDB
certification has a current, valid certification as a disadvantaged
business enterprise (DBE) from a Department of Transportation (DOT)
recipient, SBA may adopt the DBE certification as an SDB certification
when determined by the AA/SDBCE or designee to be appropriate.
Sec. 124.1009 How does a firm appeal a decision of a Private
Certifier?
Where a Private Certifier performs an ownership and control
determination and finds that a firm is not owned and controlled by the
individual(s) claiming disadvantaged status, the firm may appeal that
decision to OHA pursuant to part 134 of this title. The firm must serve
SBA's Associate General Counsel for General Law and the applicable
Private Certifier with a copy of the appeal.
(a) The Private Certifier must submit to OHA the full record upon
which its decision was based within two days of receiving notification
that an appeal has been filed.
(b) The Private Certifier and SBA may each elect to appear or not
appear in an appeal proceeding.
(c) OHA's review is limited to the facts that were before the
Private Certifier at the time of its final decision and any arguments
submitted in or in response to the appeal. OHA will not consider any
facts beyond those that were already presented to the Private Certifier
unless the administrative judge determines that manifest injustice
would occur if the appeal were limited to the record.
(d) OHA will decide whether it believes that the facts support by a
preponderance of the evidence the Private Certifier's determination
regarding ownership and control.
(e) Where the facts presented in the record leave significant doubt
as to whether the petitioner is or is not owned and controlled by one
or more individuals claiming to be disadvantaged, the administrative
judge may remand the case to the Private Certifier for reconsideration
in accord with his or her remand order.
(f) If OHA finds that the firm is owned and controlled by the
individual(s) claiming disadvantaged status, OHA will refer the
application to SBA for further processing. If OHA finds that the firm
is not owned and controlled by such individual(s), the administrative
judge will state the reasons for that decision, which will be the final
decision of the Agency.
Sec. 124.1010 Can a firm represent itself to be an SDB if it has not
yet been certified as an SDB?
(a) General rule. Except as set forth in paragraph (d) of this
section, a firm may represent itself to be an SDB concern in order to
receive a preference as an SDB for any Federal procurement program if
it has submitted a complete application for SDB certification to SBA or
a Private Certifier and it has not received a negative determination
regarding that application from SBA or the Private Certifier. A firm
that has received a negative determination of ownership and control or
a negative determination regarding its disadvantaged status and is
awaiting the resolution of its appeal of that determination may not
represent itself to be an SDB.
(b) Where applicant becomes successful offeror. If a concern
becomes the apparent successful offeror on a contract for which it
would receive a benefit for being an SDB while its application for SDB
certification is pending, either at SBA or a Private Certifier, the
contracting officer for the particular contract must immediately inform
SBA's AA/SDBCE. SBA will then prioritize the firm's SDB application and
make a determination regarding the firm's status as an SDB within 15
days from the date that SBA received the contracting officer's
notification.
(1) Where the apparent successful offeror's completed application
is pending an ownership and control determination with a Private
Certifier, the concern must inform SBA which Private Certifier has its
application. SBA will immediately contact the Private Certifier to
require the Private Certifier to complete its ownership and control
determination within 5 days of SBA's notification. In appropriate
circumstances, SBA may undertake to make the determination itself, and
may recoup the cost of the determination from the Private Certifier.
(2) If requested to do so by the procuring activity contracting
officer, SBA will determine whether other offerors are SDBs where they
have represented that their completed applications for SDB status are
pending at SBA or a Private Certifier and they could receive the award
if SBA determines that the apparently successful offeror is not an SDB.
(3) If the contracting officer does not receive an SBA
determination within 15 calendar days after the SBA's receipt of the
notification, the contracting officer will presume that the apparently
successful offeror, and any other offerors referred to SBA in
connection with the same procurement by the contracting officer, are
not disadvantaged, and will make award accordingly, unless the
contracting officer grants an extension to the 15-day response period.
(c) Representation as SDB for statistical purposes. A firm may
represent itself as an SDB concern for general statistical purposes
without regard to any application for SDB certification or its
inclusion on the SBA-maintained list of qualified SDB's.
(d) Subcontracting programs. Only firms that are on the SBA-
maintained list of qualified SDBs may represent themselves as SDB
concerns in order to receive a preference as an SDB for any Federal
subcontracting program.
Sec. 124.1011 What is a misrepresentation of SDB status?
(a) Any person or entity that misrepresents a firm's status as a
``small business concern owned and controlled by socially and
economically disadvantaged individuals'' (``SDB status'') in order to
obtain an 8(d) or SDB contracting opportunity or preference will be
subject to the penalties imposed by section 16(d) of the Small Business
Act, 15 U.S.C. 645(d), as well as any other penalty authorized by law.
[[Page 35777]]
(b) A representation of SDB status by any firm that SBA has found
not to be an SDB (either in connection with an SDB application or
protest) will be deemed a misrepresentation of SDB status, unless and
until the firm reapplies for and obtains SDB certification.
Sec. 124.1012 Can a firm reapply for SDB certification?
(a) A concern which has been denied SDB certification may reapply
for certification at any time 12 months or more after the date of the
most recent final decision of SBA to decline its application (either on
appeal of an ownership and control determination, or a negative finding
of disadvantaged status).
(b) A concern which received a decision that it was not owned and
controlled by the individual(s) claiming disadvantaged status from a
Private Certifier and does not appeal that decision to OHA may apply
for a new ownership and control determination at any time.
Sec. 124.1013 Is there a list of certified SDBs?
(a) If SBA certifies a firm to be an SDB, SBA will enter the name
of the firm into an SBA-maintained central on-line register, such as
PRO-Net.
(b) The register of SDBs will contain the names of all firms that
are currently certified to be SDBs, including the names of all firms
currently participating in SBA's 8(a) BD program.
(c) On a continuing basis, SBA will delete from the on-line
register those firms that have:
(1) Graduated or been terminated from SBA's 8(a) BD program for any
reason and have not otherwise received SDB certification (see,
Secs. 124.1008(h) and 124.1014(b) for treatment of 8(a) graduates);
(2) Been determined not to be an SDB in response to an SDB protest
brought under Sec. 124.1017; or
(3) Other than current 8(a) Participants, not received a renewed
SDB certification after being on the register for three years (see
Sec. 124.1014(c)).
Sec. 124.1014 How long does an SDB certification last?
(a) Once SBA certifies a firm to be an SDB by placing it on the
list of qualified SDBs, the firm will generally remain on the SBA-
maintained list of certified SDBs for a period of three years from the
date of its certification.
(1) A firm's SDB certification will extend beyond three years where
SBA finds the firm to be an SDB:
(i) On the merits in connection with a particular protest (see
Sec. 124.1023(h)(2));
(ii) In connection with an SBA-initiated SDB determination (see
Sec. 124.1016(a)(2)); or
(iii) As part of an 8(a) BD annual review.
(2) Where SBA finds a firm not to be an SDB in connection with an
SDB protest, an SBA-initiated SDB determination, or an 8(a) BD annual
review, SBA will immediately decertify the firm as an SDB and remove it
from the qualified list of SDBs.
(b) A firm that graduates from the 8(a) BD program will remain on
the list of certified SDBs for a period of three years from the date of
its last annual review.
(c) To remain on the SDB register after three years, a firm whose
status as an SDB has not been upheld in connection with a protest or an
SBA-initiated SDB determination, or has not been certified as an
eligible 8(a) Participant as part of an annual review, must submit a
new application and receive a new certification.
Sec. 124.1015 What is the effect of receiving an SDB certification?
(a) A firm that is certified to be an SDB may represent itself as
an SDB for such purposes as Federal price evaluation adjustments,
evaluation factors or subfactors, monetary subcontracting incentive
programs, section 8(d) subcontracts, SDB set-asides, or any other
programs which accept an SBA certification. A contracting officer may
award a contract based on a firm's representation that it is a
certified SDB absent a protest that the protested concern's
circumstances have materially changed since SBA certified it as an SDB,
or that the protested concern's SDB application contained false or
misleading information (see Sec. 124.1018(d)).
(b) For purposes of a particular Federal procurement, the firm must
represent that it is both disadvantaged and small at the time it
submits its initial offer including price (see part 121 of this title).
At the same time, the firm must also represent that no material change
has occurred in its SDB status since its SDB certification, or from the
date of its application for SDB certification if its application has
not yet been processed, and must specifically represent that the net
worth of the disadvantaged individuals (not including concerns owned by
tribes, ANCs, CDCs, or NHOs) upon whom the SDB certification was based
still does not exceed $750,000.
(c) A firm's status as ``disadvantaged'' or ``small'' may be
protested pursuant to Secs. 124.1017 through 124.1021 and
Secs. 121.1001 through 121.1005, respectively, despite the presence of
the firm on the SDB register, provided the protest contains specific
allegations that the firm's circumstances have materially changed since
SBA certified it as an SDB, or that the firm's SDB application
contained false or misleading information.
Sec. 124.1016 Can SBA re-evaluate the SDB status of a firm after SBA
certifies it to be SDB?
(a) SBA may initiate an SDB determination whenever it receives
credible information calling into the question a firm's eligibility as
an SDB, including an adverse determination from a DOT recipient of the
firm's status as a DBE. Upon its completion of an SDB determination,
SBA will issue a written decision regarding the SDB status of the
questioned firm.
(1) If SBA finds that the firm does not qualify as an SDB, SBA will
decertify the firm as an SDB, and immediately remove the firm from the
list of qualified SDBs. The firm may appeal SBA's decision to OHA
consistent with the provisions of Sec. 124.1008(f) and part 134 of this
chapter.
(2) If SBA finds that the firm continues to qualify as an SDB, the
determination remains in effect for three years from the date of the
decision under the same conditions as if the concern had been granted
SDB certification under Sec. 124.1008.
(b) An SDB firm must report within 10 days to the AA/SDBCE any
changes in ownership and control or any other circumstances which could
adversely affect its eligibility as an SDB.
Sec. 124.1017 Who may protest the disadvantaged status of a concern?
(a) In connection with a requirement for which the apparent
successful offeror has invoked an SDB evaluation adjustment or an SDB
set-aside, the following entities may protest the disadvantaged status
of the apparent successful offeror:
(1) Any other concern which submitted an offer for that
requirement, unless the contracting officer has found the concern to be
non-responsive or outside the competitive range, or SBA has previously
found the protesting concern to be ineligible for the requirement at
issue;
(2) The procuring activity contracting officer; or
(3) SBA.
(b) In connection with an 8(d) subcontract, or a requirement for
which the apparent successful offeror received an evaluation adjustment
for proposing
[[Page 35778]]
one or more SDB subcontractors, the procuring activity contracting
officer or SBA may protest the disadvantaged status of a proposed
subcontractor. Other interested parties may submit information to the
contracting officer or SBA in an effort to persuade the contracting
officer or SBA to initiate a protest.
(c) An interested party seeking to protest both the disadvantaged
status and size of an apparent successful SDB offeror must submit two
separate protests, one as to disadvantaged status pursuant to this
subpart, and one as to size pursuant to part 121 of this title. An
interested party seeking to protest only size of an apparent successful
SDB offeror must submit a size protest to the contracting officer
pursuant to part 121.
Sec. 124.1018 When will SBA not decide an SDB protest?
(a) SBA will not decide a protest as to disadvantaged status of any
concern other than the apparent successful offeror.
(b) SBA will not normally consider a post award protest. SBA may
consider a post award protest in its discretion where it determines
that a protest decision after award would have a practical effect
(e.g., where the contracting officer agrees to terminate the contract
if the protest is sustained).
(c) SBA will not decide an untimely protest (see Sec. 124.1020(c)).
(d) SBA will not decide a non-specific protest or one that does not
present credible evidence that the protested concern's circumstances
have materially changed since SBA certified it as an SDB, or that the
protested concern's SDB application contained false or misleading
information (see Sec. 124.1021).
(e) An interested party may appeal SBA's dismissal of a protest for
lack of specificity, timeliness, or a basis upon which SBA will
consider a protest to SBA's Deputy Associate Deputy Administrator for
Government Contracting and Minority Enterprise Development (DADA/
GC&MED) pursuant to Sec. 124.1024.
Sec. 124.1019 Who decides disadvantaged status protests?
In response to a protest challenging the disadvantaged status of a
concern, the SBA's AA/SDBCE will determine whether the concern is
disadvantaged.
Sec. 124.1020 What procedures apply to disadvantaged status protests?
(a) General. The protest procedures described in this section are
separate and distinct from those governing size protests and appeals.
All protests relating to whether a concern is a ``small'' business for
purposes of any Federal program, including SDB set-asides and SDB
evaluation adjustments, must be filed and processed pursuant to part
121 of this title.
(b) Filing. (1) All protests challenging the disadvantaged status
of a concern with respect to a particular Federal procurement
requirement must be submitted in writing to the procuring activity
contracting officer, except in cases where the contracting officer or
SBA initiates a protest.
(2) Any contracting officer who initiates a protest must submit the
protest in writing to SBA in accord with paragraph (c) of this section.
(3) In cases where SBA initiates a protest, the protest must be
submitted in writing to the AA/SDBCE and notification provided in
accord with Sec. 124.1022(a).
(c) Timeliness of protest. (1) SDB evaluation adjustment and set-
aside protests. (i) General. In order for a protest to be timely, it
must be received by the contracting officer prior to the close of
business on the fifth day, exclusive of Saturdays, Sundays and legal
holidays, after the bid opening date for sealed bids, or after the
receipt from the contracting officer of notification of the identity of
the prospective awardee in negotiated acquisitions.
(ii) Oral protests. An oral protest relating to an SDB set-aside or
SDB evaluation adjustment made to the contracting officer within the
allotted 5-day period will be considered a timely protest only if the
contracting officer receives a confirming letter postmarked, FAXed, or
delivered no later than one calendar day after the date of such oral
protest.
(iii) Protests of contracting officers or SBA. The time limitations
in paragraph (c)(1)(i) of this section do not apply to contracting
officers or SBA, and they may file protests before or after awards,
except to the extent set forth in paragraph (c)(3) of this section.
(iv) Untimely protests. A protest received after the time limits
set forth in this paragraph (c)(1) will be dismissed by SBA.
(2) Section 8(d) protests. In connection with an 8(d) subcontract,
the contracting officer or SBA must submit a protest to the AA/SDBCE
prior to the completion of performance by the intended 8(d)
subcontractor.
(3) Premature protests. A protest in connection with any
procurement which is submitted by any person, including the contracting
officer, before bid opening or notification of intended award,
whichever applies, will be considered premature, and will be returned
to the protestor without action. A contracting officer that receives a
premature protest must return it to the protestor without submitting it
to the SBA.
(d) Referral to SBA. (1) Any contracting officer who receives a
protest that is not premature must promptly forward it to the SBA's AA/
SDBCE, 409 3rd Street, SW, Washington, DC 20416.
(2) A contracting officer's referral of a protest to SBA must
contain the following:
(i) The written protest and any accompanying materials;
(ii) The date on which the protest was received by the contracting
officer;
(iii) A copy of the protested concern's selfrepresentation as an
SDB, and the date of such self-representation; and
(iv) The date of bid opening or the date on which notification of
the apparent successful offeror was sent to all unsuccessful offerors,
as applicable.
Sec. 124.1021 What format, degree of specificity, and basis does SBA
require to consider an SDB protest?
(a) Format. An SDB protest need not be in any specific format in
order for SBA to consider it.
(b) Specificity. A protest must be sufficiently specific to provide
reasonable notice as to all grounds upon which the protested concern's
disadvantaged status is challenged.
(1) SBA will dismiss a protest that merely asserts that the
protested concern is not disadvantaged, without setting forth specific
facts or allegations.
(2) The contracting officer must forward to SBA any non-premature
protest received, notwithstanding whether he or she believes it is
sufficiently specific or timely.
(c) Basis. SBA will consider a protest challenging whether the
apparent successful offeror is owned and controlled by one or more
socially and economically disadvantaged individuals, including whether
one or more of the individuals claiming disadvantaged status is in fact
socially or economically disadvantaged, only if the protest presents
credible evidence that the firm's circumstances have materially changed
since SBA certified it as an SDB, or that the firm's SDB application
contained false or misleading information.
Sec. 124.1022 What will SBA do when it receives an SDB protest?
(a) Upon receipt of a protest challenging the disadvantaged status
of a concern, the AA/SDBCE, or designee, will immediately notify the
protestor and the contracting officer of the date the protest was
received and whether it
[[Page 35779]]
will be processed or dismissed for lack of timeliness or specificity.
(b) In cases where the protest is timely and sufficiently specific,
the AA/SDBCE, or designee, will also immediately advise the protested
concern of the protest and forward a copy of it to the protested
concern.
(1) The AA/SDBCE, or designee, is authorized to ask the protested
concern to provide any or all of the following information and
documentation, completed so as to show the circumstances existing on
the date of self-representation: SBA Form 1010A, ``Statement of
Personal Eligibility'' for each individual claiming disadvantaged
status; SBA Form 1010B, ``Statement of Business Eligibility;'' SBA Form
413, ``Personal Financial Statement,'' for each individual claiming
disadvantaged status; information as to whether the protested concern,
or any of its owners, officers or directors, have applied for admission
to or participated in the SBA's 8(a) BD program and if so, the name of
the company which applied or participated and the date of the
application or entry into the program; business tax returns for the
last two completed fiscal years prior to the date of self-
representation; personal tax returns for the last two years prior to
the date of self-representation for all individuals claiming
disadvantaged status, all officers, all directors and for any
individual owning at least 10% of the business entity; annual business
financial statements for the last two completed fiscal years prior to
the date of self-representation; a current monthly or quarterly
business financial statement no older than 90 days; articles of
incorporation; corporate by-laws; partnership agreements; limited
liability company articles of organization; and any other relevant
information as to whether the protested concern is disadvantaged.
(2) SBA's disadvantaged status determination need not be limited to
consideration only of the issues raised in the protest. SBA may
consider other applicable criteria.
(3) Unless the protest presents specific credible information which
calls into question the veracity of application or other documents
previously submitted to SBA by a current Participant in SBA's 8(a) BD
program, SBA will allow the Participant to submit, in lieu of the
information specified in paragraph (b)(1) of this section, a sworn
affidavit or declaration that circumstances concerning the ownership
and control of the business and the disadvantaged status of its
principals have not changed since its application or entry into the
program or its most recent annual review, and a copy of its most
recently completed annual review.
(i) If the ownership or control of the business or the
disadvantaged status of any principals have changed, the protested
concern must comply with paragraph (b)(1) of this section.
(ii) An affidavit or declaration may be allowed only if SBA
admitted the protested concern to the 8(a) BD program, or conducted an
annual review of the protested concern, during the 12month period
preceding the date on which SBA receives the protest, and if
proceedings to suspend, terminate or early graduate the concern from
the 8(a) BD program are not pending.
(c) Within 10 working days of the date that notification of the
protest was received from the AA/SDBCE or designee, the protested
concern must submit to the AA/SDBCE or designee, by personal delivery,
FAX, or mail, the information and documentation requested pursuant to
paragraph (b)(1) of this section or the affidavit permitted by
paragraph (b)(2) of this section. Materials submitted must be received
by the close of business on the 10th working day.
(1) SBA will consider only materials submitted timely, and the late
or non-submission of materials needed to make a disadvantaged status
determination may result in sustaining the protest.
(2) The burden is on the protested concern to demonstrate its
disadvantaged status, whether or not it is currently shown on the list
of qualified SDBs.
(3) The protested concern must timely submit to SBA any information
it deems relevant to a determination of its disadvantaged status.
Sec. 124.1023 How does SBA make disadvantaged status determinations in
considering an SDB protest?
(a) General. The AA/SDBCE, or designee, will determine a protested
concern's disadvantaged status within 15 working days after receipt of
a protest. If the procuring activity contracting officer does not
receive an SBA determination within 15 working days after the SBA's
receipt of the protest, the contracting officer may presume that the
challenged offeror is disadvantaged, unless the SBA requests and the
contracting officer grants an extension to the 15-day response period.
(b) Award after protest. (1) After receiving a protest involving an
offeror being considered for award, the contracting officer shall not
award the contract until:
(i) The SBA has made an SDB determination, or
(ii) 15 working days have expired since SBA's receipt of a protest
and the contracting officer has not agreed to an extension of the 15-
day response period.
(2) Notwithstanding paragraph (b)(1) of this section, the
contracting officer may award a contract after the receipt of an SDB
protest where he or she determines in writing that an award must be
made to protect the public interest.
(c) Withdrawal of protest. If a protest is withdrawn, SBA will not
complete a new disadvantaged status determination, and a previous SDB
certification will stand.
(d) Basis for determination. (1) Except with respect to a concern
which is a current Participant in SBA's 8(a) BD program and is
authorized under Sec. 124.1022(b)(3) to submit an affidavit concerning
its disadvantaged status, the disadvantaged status determination will
be based on the protest record, including reasonable inferences
therefrom, as supplied by the protestor, protested concern, SBA or
others.
(2) SBA may in its discretion make a part of the protest record
information already in its files, and information submitted by the
protestor, the protested concern, the contracting officer, or other
persons contacted for additional specific information.
(e) Disadvantaged status. In evaluating the social and economic
disadvantage of individuals claiming disadvantaged status, SBA will
consider the same information and factors set forth in Secs. 124.103
and 124.104. As provided in Sec. 124.1002(c), individuals claiming
disadvantaged status must have a net worth that is less than $750,000,
after taking into account the exclusions set forth in
Sec. 124.104(c)(2).
(f) Disadvantaged status determination. SBA will render a written
determination including the basis for its findings and conclusions.
(g) Notification of determination. After making its disadvantaged
status determination, the SBA will immediately notify the contracting
officer, the protestor, and the protested concern of its determination.
SBA will promptly provide by certified mail, return receipt requested,
a copy of its written determination to the same entities, consistent
with law.
(h) Results of an SBA disadvantaged status determination. A
disadvantaged status determination becomes effective immediately.
(1) If the concern is found not to be disadvantaged, the
determination remains in full force and effect unless reversed upon
appeal by SBA's DADA/GC&MED, or designee, pursuant to Sec. 124.1024, or
the concern is certified to
[[Page 35780]]
be an SDB under Sec. 124.1008. The concern is precluded from applying
for SDB certification for 12 months from the date of the final agency
decision (whether by the AA/SDBCE, or designee, without an appeal, or
by the DADA/GC&MED, or designee, on appeal).
(2) If the concern is found to be disadvantaged, the determination
remains in full force and effect unless and until reversed upon appeal
by SBA's DADA/GC&MED, or designee, pursuant to Sec. 124.1024. A final
Agency decision (whether by the AA/SDBCE, or designee, without an
appeal, or by the DADA/GC&MED, or designee, on appeal) finding the
protested concern to be an SDB remains in effect for three years from
the date of the decision under the same conditions as if the concern
had been granted SDB certification under Sec. 124.1008.
Sec. 124.1024 Appeals of disadvantaged status determinations.
(a) Who may appeal. Appeals of protest determinations may be filed
with the SBA's DADA/GC&MED by the protested concern, the protestor, or
the contracting officer.
(b) Timeliness of appeal. An appeal must be in writing and must be
received by the DADA/GC&MED no later than 5 working days after the date
of receipt of the protest determination. SBA will dismiss any appeal
received after the five-day time period.
(c) Notice of appeal. Notice of the appeal must be provided by the
party bringing an appeal to the procuring activity contracting officer
and either the protested concern or original protestor, as appropriate.
(d) Grounds for appeal. SBA will reexamine a protest determination
only if there was a clear and significant error in the processing of
the protest, or if the AA/SDBCE, or designee, failed to consider a
significant material fact contained within the information supplied by
the protestor or the protested concern. SBA will not consider protest
determination appeals based on additional information or changed
circumstances which were not disclosed at the time of the decision of
the AA/SDBCE or designee, or which are based on disagreement with the
findings and conclusions contained in the determination.
(e) Contents of appeal. No specific format is required for the
appeal. However, the appeal must identify the protest determination
which is appealed, and set forth a full and specific statement as to
why the determination is erroneous under paragraph (c) of this section.
(f) Completion of appeal after award. An appeal may proceed to
completion even though an award of the SDB acquisition or other
procurement requirement which prompted the protest has been made, if so
desired by the protested concern, or where SBA determines that a
decision on appeal would have a material impact on contracting
decisions, such as where the contracting officer agrees:
(1) In the case where an award is made to a concern other than the
protested concern, to terminate the contract and award to the protested
concern if the appeal finds that the protested concern is
disadvantaged; or
(2) In the case where an award is made to the protested concern, to
terminate the contract if the appeal finds that the protested concern
is not disadvantaged.
(g) The appeal will be decided by the DADA/GC&MED, within 5 working
days of its receipt, if practicable.
(h) The appeal decision will be based only on the information and
documentation in the protest record as supplemented by the appeal. SBA
will provide a copy of the decision to the contracting officer, the
protestor, and the protested concern, consistent with law.
(i) The decision of the DADA/GC&MED, is the final decision of the
SBA, and cannot be further appealed to OHA.
Dated: March 6, 1998.
Aida Alvarez,
Administrator.
[FR Doc. 98-17195 Filed 6-26-98; 8:45 am]
BILLING CODE 8025-01-P
