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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Rules and Regulations
this clause applies to contracts using the HUBZone price evaluation preference to award to a HUBZone small business concern unless the concern waived the evaluation preference. Additionally, to provide clarification on calculating the 50 percent limitation for contracts that include both services and supplies i.e., mixed contracts, paragraph e1 of the clause at FAR 52.21914 is revised to specify that when a contract is assigned a NAICS code for services, the 50 percent limitation shall only apply to the services portion of the contract.
Paragraph e2 is revised to specify that when a contract is assigned a NAICS code for supplies, the 50 percent limitation shall only apply to the supply portion of the contract.
Nonmanufacturer Rule. FAR clause 52.21933, Nonmanufacturer Rule, is revised to clarify the clause applies to contracts using the HUBZone price evaluation preference to award to a HUBZone small business concern unless the concern waived the evaluation preference. Paragraph c2
is revised to remove text concerning an item for a kit that is not produced by small business concerns in the United States or its outlying areas.
Revisions to include recent FAR
changes. Prior to publication of this final rule, FAR part 19 and its associated provisions and clauses were substantially revised as a result of FAC
202005 published February 27, 2020, and effective March 30, 2020. As a result, some revisions in the proposed rule are no longer included in this final rule, because the revisions have already been made to the FAR in FAC 202005.
Other revisions appear in a different location due to the changed landscape of FAR part 19. The final rule also contains revisions that were not in the proposed rule due to changes made in FAC 202005. For example, prior to March 30, 2020, the FAR did not include coverage of the limitations on subcontracting and nonmanufacturer rule in subparts 19.8, 19.13, 19.14, and 19.15; FAC 202005 added coverage tailored for each of those subparts. Due to the standardization of the limitations on subcontracting and nonmanufacturer rule, this final rule removes the coverage from those subparts and consolidates the coverage in subpart 19.5. In addition, as of March 30, 2020, FAR part 19 includes coverage for orders issued directly to one small business under a reserve. This final rule provides guidance on the applicability of the limitations on subcontracting and nonmanufacturer rule for this new topic.

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B. Analysis of Public Comments 1. Support for the Rule Comment: Several respondents expressed support for the rule.
Response: The Councils acknowledge the expressions of support.
2. Faster Implementation Comment: Several respondents expressed disappointment at the time it took to publish the proposed rule. More specifically, two respondents noted that it had taken over 2 years to publish the proposed rule. One respondent requested immediate implementation of the rule by means of a class deviation for the civilian agencies or an interim final rule, noting that it is burdensome for small businesses if one agency has a class deviation in place while others do not. Another respondent also requested issuance of an interim final rule and recommended that the FAR
Council coordinate with SBA on SBAs pending rulemaking and issue its own final rule that matches SBAs final rule.
Response: The Councils acknowledge the length of time between the opening of FAR case 2016011 and publication of the proposed rule. More time was required to publish the proposed rule due to changes in the rulemaking process that occurred in 2017 to more fully consider the regulatory or deregulatory impact of the rulemaking.
The Councils have taken steps to try to shorten the time required to implement SBAs rules in the FAR. Beginning in 2019, the Councils started working on proposed FAR rules after SBA publishes a proposed rule, instead of waiting for a final rule from SBA. This approach should allow more timely publication of FAR rules implementing SBA rules.
3. Simplified Acquisition Threshold vs.
Dollar Value Comment: Several respondents recommended changing all references to $150,000 to the simplified acquisition threshold SAT.
Furthermore, two respondents highlighted the fact that SBA updated its regulation at 13 CFR 121.406d to reference the term the simplified acquisition threshold and that the FAR
at 48 CFR 2.101 contains the definition of the SAT.
Response: This final rule has been revised to include recent amendments to the FAR, including the removal of many of the references to the dollar value $150,000 reference FAC 2020
05.
4. Other Pending FAR Rules Comment: Two respondents pointed out that the proposed text for FAR

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52.2194e does not account for the joint venture options afforded to HUBZone small business concerns under SBAs regulations and requires further revisions to bring the clause into alignment with SBAs limitations on subcontracting rules for HUBZone joint ventures. Specifically, the respondents are concerned the SBAs requirement that a HUBZone joint venture partner perform 40 percent of the joint ventures work, is not being addressed.
Response: A separate FAR case, 2017
019, Policy on Joint Ventures, will address the respondents concern. The final rule will address the policy that a HUBZone joint venture partner must perform 40 percent of the joint ventures work.
5. HUBZone Price Evaluation Preference Comment: One respondent stated that the clause at FAR 52.2194 places HUBZone distributors at a significant disadvantage by effectively preventing them from taking advantage of the HUBZone price evaluation preference, because it is not possible for a HUBZone nonmanufacturer to obtain a waiver of the nonmanufacturer rule from SBA for a full-and-open contract. The respondent also stated that the HUBZone nonmanufacturer should be permitted to supply a product of any business when utilizing the HUBZone price evaluation preference. The respondent further stated that if the clause at FAR 52.2194 continues to require full compliance with the nonmanufacturer rule for HUBZone distributors, then the waiver rules must be modified to permit SBA to issue a waiver of the nonmanufacturer rule, upon request of a HUBZone firm, for a full and open contract when the price evaluation preference is utilized. The respondent further stated that if HUBZone distributors are not permitted to supply products of any size business, the clause at FAR 52.2194 should be modified to permit HUBZone distributors to provide products of any type of small business rather than the current requirement to supply products made by other HUBZone small businesses.
Response: This final rule is implementing SBAs final rule published in the Federal Register at 81
FR 34243 on May 31, 2016, and the changes requested by the respondent would not be consistent with that SBA
rule. An award made using the HUBZone price evaluation preference is considered a HUBZone contract see 13
CFR 126.600c and FAR 2.101. SBAs regulations regarding the limitations on subcontracting and the nonmanufacturer rule apply to
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