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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Rules and Regulations specific awarded Federal contract. The respondent further reiterated the original intent of the subcontracting law was to encourage large business primes to work and subcontract with small businesses in support of the Federal contract awarded and not to receive credit for unrelated work. Another respondent acknowledged the importance of prime contractors making a good faith effort to comply with SBAs small business subcontracting plan. The respondent further stated that the country is in the midst of a deadly pandemic and offered additional political commentary irrelevant to the subject FAR case.
Response: The comments are outside the scope of this rule. The intent of this rule is to provide guidance on evaluating whether a prime contractor made a good faith effort to comply with its small business subcontracting plan and to provide a list of examples of activities reflective of a failure to make a good faith effort. Additionally, this rule is amending the FAR to require that all indirect costs, minus certain exceptions, are included in both commercial plans and summary subcontract reports.

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III. Applicability to Contracts at or Below the Simplified Acquisition Threshold SAT and for Commercial Items, Including Commercially Available Off-the-Shelf COTS Items This rule implements a statutory requirement to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan. The Federal Acquisition Regulatory Council FAR
Council does not intend to apply the requirements of section 1821 of the NDAA for FY 2017 Pub. L. 114328; 15
U.S.C 637 note to contracts at or below the SAT, but intends to apply those requirements to contracts for the acquisition of commercial items, including COTS items. The clauses at FAR 52.2199 and 52.21916 are revised by this rule.
A. Applicability to Contracts at or Below the SAT
Pursuant to 41 U.S.C. 1905, a provision of law is not applicable to acquisitions at or below the SAT unless the law i contains criminal or civil penalties; ii specifically refers to 41
U.S.C. 1905 and states that the law applies to acquisitions at or below the SAT; or iii the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT. If
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none of these conditions are met, the FAR is required to include the statutory requirements on a list of provisions of law that are inapplicable to acquisitions at or below the SAT.
The purpose of this rule is to implement section 1821 of the NDAA
for FY 2017. Section 1821 requires SBA
to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan.
The FAR Council does not intend to apply this rule to acquisitions at or below the SAT.
B. Applicability to Contracts for the Acquisition of Commercial Items Pursuant to 41 U.S.C. 1906, acquisitions of commercial items other than acquisitions of COTS items, which are addressed in 41 U.S.C. 1907 are exempt from a provision of law unless the law i contains criminal or civil penalties; ii specifically refers to 41
U.S.C. 1906 and states that the law applies to acquisitions of commercial items; or iii the FAR Council makes a written determination and finding that it would not be in the best interest of the Federal Government to exempt contracts for the procurement of commercial items from the provision of law. If none of these conditions are met, the FAR is required to include the statutory requirements on a list of provisions of law that are inapplicable to the acquisition of commercial items.
The purpose of this rule is to implement section 1821 of the NDAA
for FY 2017 and SBAs implementing regulations. Section 1821 requires SBA
to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan.
Both the FAR and SBAs regulations require contractors with small business subcontracting plansincluding commercial plansto make a good faith effort to comply with the plans. SBAs final rule did not exempt the acquisition of commercial items.
Section 1821 furthers the Administrations goal of supporting small business. It advances the interests of small business subcontractors by promoting good faith efforts by large prime contractors to find and use small business concerns as subcontractors, thereby providing valuable opportunities for small business concerns.
For these reasons, it is in the best interest of the Federal Government to apply the requirements of this rule to the acquisition of commercial items.

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C. Applicability to Contracts for the Acquisition of COTS Items Pursuant to 41 U.S.C. 1907, acquisitions of COTS items will be exempt from a provision of law unless the law i contains criminal or civil penalties; ii specifically refers to 41
U.S.C. 1907 and states that the law applies to acquisitions of COTS items;
iii concerns authorities or responsibilities under the Small Business Act 15 U.S.C. 644 or bid protest procedures developed under the authority of 31 U.S.C. 3551 et seq., 10
U.S.C. 2305e and f, or 41 U.S.C. 3706
and 3707; or iv the Administrator for Federal Procurement Policy makes a written determination and finding that it would not be in the best interest of the Federal Government to exempt contracts for the procurement of COTS items from the provision of law. If none of these conditions are met, the FAR is required to include the statutory requirements on a list of provisions of law that are inapplicable to the acquisition of COTS
items.
The purpose of this rule is to implement section 1821 of the NDAA
for FY 2017 and SBAs implementing regulations. Section 1821 requires SBA
to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan.
Both the FAR and SBAs regulations require contractors with small business subcontracting plansincluding commercial plansto make a good faith effort to comply with the plans. SBAs final rule did not exempt the acquisition of COTS items.
Section 1821 furthers the Administrations goal of supporting small business. It advances the interests of small business subcontractors by promoting good faith efforts by large prime contractors to find and use small business concerns as subcontractors, thereby providing valuable opportunities for small business concerns.
For these reasons, it is in the best interest of the Federal Government to apply the requirements of this rule to the acquisition of COTS items.
IV. Expected Impact of the Rule This rule provides examples of activities that contracting officers may consider when evaluating whether the prime contractor made a good faith effort to comply with its small business subcontracting plan. The contracting officers also have consistent and uniform examples to identify and hold large prime contractors accountable for failing to make a good faith effort to
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