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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Rules and Regulations 11. Orders Under Multiple Award Contracts Comment: One respondent stated that clarification should be provided for orders set aside for small business under multiple-award contracts regarding whether, for the purpose of applying the limitations on subcontracting and the nonmanufacturer rule, the value is determined at the contract level or at the order level. The respondent further expressed a preference for having the value determined at the individual order level, so that the nonmanufacturer rule would only apply to orders above the simplified acquisition threshold.
Response: The prescriptions for the clauses at FAR 52.21914, Limitations on Subcontracting, and 52.21933, Nonmanufacturer Rule, specify use of the clauses when any portion of the requirement is set aside for small business and is expected to exceed the simplified acquisition threshold. The prescriptions also specify use of the clauses in multiple-award contracts when orders may be set aside for small business because the clauses apply to orders that are set aside for small business under multiple-award contracts. The applicability of the limitations on subcontracting and the nonmanufacturer rule is determined partly by whether the contract or the order is being set aside for small business. If an order is set aside for small business, the clause applies to the order if it exceeds the simplified acquisition threshold see 52.219
14c4 and 52.21933b2iii.
Alternatively, if a multiple-award contract is set aside for small business, the clause applies to the contract if it exceeds the simplified acquisition threshold.

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12a. Additional SBA RuleHazardous Waste Industry Comment: Six respondents stated the hazardous waste industry should be excluded from the limitations on subcontracting as disposal facilities and transportation costs are prohibitively expensive for small businesses to own and operate. Therefore, small businesses subcontract out these services, which would cause them to exceed the limitations on subcontracting.
Two respondents stated environmental remediation requires the purchase of significant materials, which is similar to construction. The respondents requested these materials be excluded from the limitations on subcontracting.
Response: These changes are included in SBAs final rule at 13 CFR 125.6a, published in the Federal Register on
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November 29, 2019 84 FR 65647.
SBAs rule updates the limitations on subcontracting. A new FAR case would have to be opened to implement the additional changes, which require public comment under 41 U.S.C. 1707
prior to implementation in the FAR.
Therefore, the suggested changes are not incorporated in this final rule.
12b. Additional SBA Rule Independent Contractors Comment: Two respondents suggested additional language be added to the proposed rule to define an independent contractor. One respondent requested that the term independent contractor be removed from the rule. One respondent recommended that independent contractors should not be subject to FAR 44.2011, Consent requirements.
Response: SBA made clarifications regarding independent contractors in its final rule, published in the Federal Register on November 29, 2019 84 FR
65647, which updates the limitations on subcontracting. Those changes are beyond the scope of this FAR case. A
new FAR case would have to be opened to implement additional changes in the FAR, including publication for notice and comment if necessary. The suggested changes are not consistent with the SBAs regulations which are being implemented in this final FAR
rule, and therefore will not be included in this final FAR rule.
12c. Additional SBA RuleExclusion of Materials and Other Direct Costs From the Limitation on Subcontracting for Services Comment: Four respondents stated the cost of materials and other direct costs for services should be excluded from the limitations on subcontracting, which would treat these contracts the same as supply contracts.
Response: This rule implements SBAs final rule published in the Federal Register at 81 FR 34243 on May 31, 2016, which does not provide an exclusion for the cost of materials or other direct costs. These changes are in SBAs final rule, published in the Federal Register on November 29, 2019
84 FR 65647, which updates the limitations on subcontracting. A new FAR case would have to be opened to implement the additional changes.
12d. Additional SBA Rule Inconsistencies Between FAR and SBA
Comment: Two respondents stated that because of SBAs proposed rule published December 4, 2018, 83 FR
62516, the FAR will be inconsistent with SBAs regulations once again,
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which will create new confusion. They requested the FAR Council issue an interim final rule.
Response: SBAs final rule published November 29, 2019, 84 FR 6564, made updates to the limitations on subcontracting. A new FAR case would have to be opened to implement the SBAs November 29, 2019 changes. The FAR Council may issue an interim rule without first publishing a proposed rule only when urgent and compelling circumstances exist, which justify changing the FAR prior to seeking public comment.
13. Information Technology Value Added Resellers Comment: One respondent requested a clarification of whether the nonmanufacturer rule applies to Information Technology Value Added Resellers ITVAR, NAICS code 541519.
Response: An ITVAR provides a total solution to information technology acquisitions by providing multi-vendor hardware and software along with significant value added services. SBAs regulation at footnote 18 within 13 CFR
121.201 states that the nonmanufacturer rule applies to an ITVAR procurement unless SBA has issued a class or contract-specific waiver of the nonmanufacturer rule.
14. Out of Scope Comment: One respondent stated DoD
Class Deviation 2019O0003, Limitations on Subcontracting for Small Business, contains a requirement stating, if the contract falls below the SAT, it is not a complete waiver of the nonmanufacturer rule because the small business must still provide the end item of any domestic firm. The respondent noted this same requirement is not present in the current SBA regulations, nor in the current proposed rule change and encourages the Councils to proceed with issuing a final rule that does not include this restriction. A second respondent recommended that clear definitions of subcontract and subcontractor should be provided to regulate the use of independent contractors consultants and ancillary services, as well as to formulate policies and mechanisms with respect to consent to subcontract, flow down of contract provisions, and other FAR
requirements. A third respondent asked if the proposed regulation would take precedence over a specified agencys clause.
Response: These comments are beyond the scope of this rule. SBAs waiver of the nonmanufacturer rule 13
CFR 121.406b7 has no effect on requirements external to the Small
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