8(a) Business Development/Small Disadvantaged Business Status Determinations

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