Federal Acquisition Regulation; FAR Case 2006-032, Small Business Size Rerepresentation

Mar 19, 2009 (Defense Department Documents and Publications/ContentWorks via COMTEX) -- SBCO | Quote | Chart | News | PowerRating -- SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed on a final rule amending the Federal Acquisition Regulation (FAR) to implement the Small Business Administration's (SBA) final rule published on November 15, 2006 (71 FR 66434) entitled, Small Business Size Regulations; Size for Purposes of Governmentwide Acquisition Contracts, Multiple Award Schedule Contracts and Other Long-Term Contracts; 8(a) Business Development/Small Disadvantaged Business; Business Status Determinations. The purpose of the SBA rule is to improve the accuracy of small business size status reporting over the life of certain contracts.

EFFECTIVE DATE: Effective Date: April 20, 2009.

Applicability date: This rule applies to solicitations issued and contracts awarded on or after April 20, 2009. All long-term contracts as defined in this rule, awarded to small business concerns prior to June 30, 2007, that have not yet been modified to include FAR 52.219-28, must be modified to include FAR 52.219-28 within 90 days after the effective date of this final rule.

FOR FURTHER INFORMATION CONTACT: Ms. Rhonda Cundiff, Procurement Analyst, at (202) 501-0044 for clarification of content. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755. Please cite FAC 2005-31, FAR case 2006-032.

SUPPLEMENTARY INFORMATION: DoD, GSA, and NASA published an interim rule in the Federal Register at 72 FR 36852 on July 5, 2007, to implement the Small Business Administration's (SBA) final rule published on November 15, 2006 (71 FR 66434) entitled, Small Business Size Regulations; Size for Purposes of Governmentwide Acquisition Contracts, Multiple Award Schedule Contracts and Other Long-Term Contracts; 8(a) Business Development/Small Disadvantaged Business; Business Status Determinations.

Four commenters submitted comments on the interim rule. The comments recommend substantive changes to the rule, request clarification, and recommend editorial changes to the language for clarity and consistency. A discussion of these comments and the changes made to the rule as a result of them is provided below:

Comment: One commenter states that the interim rule is ineffective at preventing ongoing misrepresentation and miscoding on individual contracts because it does not impose a time limit on when existing contracts have to be modified in order to incorporate the small business rerepresentation requirements. This time period could easily be several years, until the time that the base period runs out and the agency must face the choice to exercise options. The commenter recommends that the rule be modified to impose a reasonable period of 30-90 days requiring all contracts to be modified for inclusion of the rerepresentation requirements, and further provide that these requirements will be included by operation of law regardless of whether the contracts were modified.

Response: The interim rule was effective on June 30, 2007. The Councils' expectation was that the process of modifying long-term contracts awarded to small businesses prior to June 30, 2007, to include the FAR clause at 52.219-28, Post-Award Small Business Program Rerepresentation, would begin immediately and would be completed within a reasonable period of time. It was also expected that other contracts awarded prior to June 30, 2007, to small businesses, would be modified to include the clause at the time an option is exercised. To make the Councils' expectation more clear, the preamble to this Federal Register notice states that all long-term contracts awarded to small businesses prior to June 30, 2007, that have not yet been modified to include FAR 52.219-28, must be modified within 90 days after the effective date of this final rule.

The Councils do not concur with the recommendation to add language to the final rule stating that the rerepresentation requirements will be included by operation of law regardless of whether the contracts were modified. This is a matter to be determined by the courts and not addressed by the Councils.

Comment: One commenter states that the interim rule does not make it clear that companies that have been acquired by large businesses must recertify their small business status (or lack thereof) within 30 days as well as in connection with individual task orders.

Response: The Councils believe the interim rule is clear and changes are not necessary. Contractors are required to complete rerepresentation of their size status at the prime contract level in accordance with FAR 19.301-2 and 52.219-28 within 30 days after execution of a novation agreement, or within 30 days after a merger or acquisition that does not require a novation agreement. Further, as set forth at FAR 19.301-2(d) of the final rule, after a contractor rerepresents it is other than small, and the contracting officer modifies the contract to reflect the rerepresentation, the agency no longer includes the value of options exercised, modifications issued, orders issued, or purchases made under blanket purchase agreements on that contract in its small business prime contracting goal achievements.

Comment: One commenter recommends that the interim rule be modified to clearly require certification by merged or acquired firms for purposes of bidding on task orders.

Response: The Councils do not concur. The purpose of the rule is to improve the accuracy of size status reporting over the life of certain contracts. Under this FAR rule, a rerepresentation at the contract level that the contractor is no longer small, results in the task orders being reported as awarded to a concern that is not small. FAR clause 52.219-28 requires that contractors rerepresent size status by updating their representations and certifications at the prime contract level in the Online Representations and Certifications Application (ORCA). The contractor must notify the contracting office that it has made the required rerepresentation. In accordance with FAR 19.301-2(d) of the final rule, after a contractor rerepresents it is other than small, and the contracting officer modifies the contract to reflect the rerepresentation, the agency no longer includes the value of options exercised, modifications issued, orders issued, or purchases made under blanket purchase agreements on that contract in its small business prime contracting goal achievements.

The Councils do not agree that rerepresentation for purposes of competing for task orders should be required. This FAR rule at paragraph 19.301-2(e), and the SBA regulation that it implements, state that a change in size status does not change the terms and conditions of the contract.

Comment: One commenter states the purpose of the interim rule is to improve the accuracy of size status representations in the Central Contractor Registration (CCR) and the Online Representations and Certifications Applications (ORCA) databases. The rule does not do this because it does not require contractors to recertify their status in these databases unless and until directed to by individual contracting officers. The integrity of these databases and future competitions is then at the mercy of individual contracting officers and their agencies who may have a vested interest in doing business with a large business under a contract vehicle with a small business.

Response: As stated in the interim rule, the primary purpose of this rule is to improve the accuracy of size status reporting over the life of certain contracts. This is done by revising the size status in the reporting database, Federal Procurement Data System (FPDS). Size status is revised in FPDS for actions under a particular contract from the point when the contracting officer modifies the contract to reflect the rerepresentation, forward. Although the rule does improve the accuracy of CCR and ORCA by keeping the information more current for future competitions, that is not its primary purpose. Further, the accuracy of the data in these Government-wide databases is not dependent on the actions of an individual contracting officer.

The FAR already requires contractors to update the information in CCR at least annually to ensure that it is current, accurate and complete. This rule adds a requirement for contractors to additionally update the information in CCR and ORCA when any of the events requiring rerepresentation occur. This means that the contractor may now be updating the information more often than annually. Neither the annual nor the rerepresentation update is dependent on an individual contracting officer directing it.

When a contractor is submitting a bid or proposal in response to a solicitation, the contractor is required by a FAR provision in the solicitation to verify that the representations and certifications in ORCA, including those related to the size standard applicable to the solicitation, have been updated within the last 12 months, are current, accurate, and complete. Therefore, there is already a requirement in the FAR for representations to be accurate, complete and current for future competitions. This rule adds a requirement for ORCA also to be updated when any of the events requiring rerepresentation occur. These requirements are in standard FAR provisions and clauses and are not dependent on individual contracting officer direction.

Comment: One commenter states that the interim rule does not utilize the authorities in SBA regulations, 13 CFR 121.1001, which give SBA Government Contracting Area Directors and the Head of the SBA Office of Government Contracting in Washington, DC the authority to initiate size determinations for the purpose of cleaning up government-wide databases. The commenter recommends that the interim rule be modified to provide for notice and dual reporting to the SBA Area Directors and/or the Office of Government Contracting on any recertification requests.

--This is a summary of a Federal Register article originally published on the page number listed below--

Final rule.

CFR Part: "48 CFR Parts 1, 4, 17, 19, and 52"

RIN Number: "RIN 9000-AK78"

Citation: "74 FR 11821"

Document Number: "FAC 2005-31; FAR Case 2006-032; Item I; Docket 2007-0002; Sequence 11"

Federal Register Page Number: "11821"

"Rules and Regulations"

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