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On February 24, 2022, the Department of Defense, General Services Administration, and the National Aeronautics and Space Administration proposed to amend the Federal Acquisition Regulation (FAR) to account for changes made by the Small Business Administration (SBA) in its regulations in late 2019 to implement several provisions of the National Defense Authorization Acts of 2016 and 2017 and the Recovery Improvements for Small Entities After Disaster Act of 2015.

This proposed rule would conform FAR Part 19 with those updates to the SBA’s regulations in the following ways (among others):

First, the rule proposes to amend FAR 19.102 and 19.301-1 to address when size is determined for a multiple-award contract that does not require offers for the contract to include price.  The rule as to when SBA measures size has long been that “SBA generally determines small business size standards at the time of initial offer including price.”  By this proposed change, the FAR will make clear that for a multiple-award contract that does not require offers for the contract to include price, SBA will nonetheless determine size as of the date of the initial offer for the multiple-award contract—regardless of whether the offer includes price or the price is evaluated.

Second, multiple FAR provisions and clauses (including FAR 52.219-1, Small Business Program Representations and its Alternate II and FAR 52.219-28, Post-Award Small Business Program Representation) would be updated to reflect that an information technology value-added reseller under NAICS code 541519, proposing to furnish an end product it did not manufacture (i.e., a “nonmanufacturer”), is a small business if it has no more than 150 employees.  This change is meant to ensure that information technology value-added resellers can more easily understand the size standard that applies to them.

Third, this rule would amend FAR 19.504 to clarify that, if a multiple-award contract was totally set aside for small business. the contracting officer may—at his or her discretion—set aside orders for any of the small business socioeconomic concerns so long as doing so satisfies the Rule of Two and the specific socioeconomic program eligibility requirements are met.

Fourth, this rule would amend FAR 19.812 to provide that for 8(a) contracts exceeding 5 years (including options), contracting officers are required to verify in DSBS or SAM that the concern is an SBA-certified 8(a) participant no more than 120 days prior to the end of the fifth year of the contract.  Further, the clause would be amended to provide that if the concern is not an SBA-certified 8(a) participant at that time, contracting officers will not exercise the option.

The commentary discusses the impact that this change is expected to have—noting that FPDS data shows that for fiscal years 2017 through 2019, an average of 257 long-term contracts (greater than five years) were awarded to 227 unique entities each year under the 8(a) program.  The commentary also concedes that this proposed change may serve to reduce the number of long-term contracts awarded to 8(a) participants by agencies that are concerned about having a contract in place beyond the fifth year.

Fifth, the ostensible subcontractor rule will be added as a basis to protest the status of HUBZones (FAR 19.306), SDVOSBs (FAR 19.307), and WOSBs (FAR 19.308).  Each of these FAR clauses will add new grounds for a socioeconomic status protest based on an allegation that a contractor is unduly reliant on a small, non-similarly situated entity subcontractor or if such subcontractor performs the primary and vital requirements of the contract.

Comments are due on or before April 25, 2022.