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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Rules and Regulations
comply with their subcontracting plans.
Encouraging large prime contractors to meet their subcontracting goals may have a positive economic impact on any small business entity that wishes to participate in Federal procurement as a subcontractor.
The final rule also requires prime contractors with commercial subcontracting plans to include indirect costs, with certain exceptions, in their subcontracting goals. This will ensure that the data reported in the summary subcontract report is consistent with the goals in the commercial subcontracting plan.
V. Executive Orders 12866 and 13563
Executive Orders E.O.s 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits including potential economic, environmental, public health and safety effects, distributive impacts, and equity. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6b of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.
VI. Congressional Review Act As required by the Congressional Review Act 5 U.S.C. 801808 before an interim or final rule takes effect, DoD, GSA, and NASA will send the rule and the Submission of Federal Rules Under the Congressional Review Act form to each House of the Congress and to the Comptroller General of the United States. A major rule cannot take effect until 60 days after it is published in the Federal Register. The Office of Information and Regulatory Affairs OIRA in the Office of Management and Budget has determined that this is not a major rule under 5 U.S.C. 804.
VII. Regulatory Flexibility Act
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DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis FRFA consistent with the Regulatory Flexibility Act, 5 U.S.C. 601612. The FRFA is summarized as follows:
The objective of this final rule is to implement section 1821 of the NDAA for FY
2017 and SBAs implementing regulations, which provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan. SBA amended 13 CFR
125.3d3 to provide guidance on evaluating whether the prime contractor made a good
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faith effort to comply with its small business subcontracting plan and a list of examples of activities reflective of a failure to make a good faith effort.
Additionally, SBA amended 13 CFR
125.3c1iv to require that large prime contractors with commercial subcontracting plans include indirect costs in the commercial subcontracting plan goals. Large prime contractors that have a commercial subcontracting plan report on performance through a Summary Subcontract Report SSR in the Electronic Subcontracting Reporting System eSRS. The FAR currently requiresas SBAs regulations required prior to publication of SBAs final rulethat a contractor using a commercial subcontracting plan include all indirect costs in its SSR.
However, these regulations did not require contractors to include indirect costs in their commercial subcontracting plan goals, which leads to inconsistencies when comparing the data reported in the SSR to the goals in the commercial subcontracting plan.
There were no significant issues raised by the public comments in response to the initial regulatory flexibility analysis.
This rule may have a positive economic impact on any small entity that wishes to participate in Federal procurement as a subcontractor.
DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities. This rule provides guidance to the contracting officer on evaluating whether the prime contractor made a good faith effort to comply with its small business subcontracting plan and a list of examples of activities reflective of a failure to make a good faith effort.
By providing examples of a failure to make a good faith effort to comply with small business subcontracting plans, the FAR will enable contracting officers to determine more easily whether large prime contractors have made a good faith effort to comply with their subcontracting plans and to hold large prime contractors accountable for failing to make a good faith effort to comply with their subcontracting plans. More diligence in developing and meeting subcontracting goals on the part of large prime contractors could have a positive impact of giving small business concerns more opportunities to subcontract on Federal contracts.
Data from the Federal Procurement Data System for fiscal years 2018 through 2020
indicate that there were 7,656 entities with 30,414 new awards that required subcontracting plans. Of the 30,414 new awards, 18 percent or 5,399 required commercial subcontracting plans.
Additionally, 31 percent or 2,318 of the 7,656
unique awardees required commercial subcontracting plans. According to the Federal Funding Accountability and Transparency Act Subaward Reporting System FSRS, there are 19,596 unique entities who are subcontractors.
Approximately 80 percent of the entities registered in the System for Award Management are small entities. Therefore, we estimate that 80 percent 15,677 of the subcontractors in FSRS are small entities.
These small entities may benefit from this rule.

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This final rule requires a large prime contractor with a commercial subcontracting plan to include indirect costs in its subcontracting goals. The benefit of requiring that indirect costs be included in subcontracting goals in commercial subcontracting plans is that it will increase the small business subcontracting goal and thus, increase the amount of funds the prime contractor will subcontract to small business concerns, providing more opportunities for subcontract awards to small business concerns.
This final rule does not include any new reporting, recordkeeping, or other compliance requirements for small entities.
There are no known significant alternative approaches that would accomplish the stated objectives of the applicable statute.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.
VIII. Paperwork Reduction Act The Paperwork Reduction Act 44
U.S.C. 35013521 applies to this rule;
however, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 90000007, Subcontracting Plans.
List of Subjects in 48 CFR Parts 19, 42, and 52
Government procurement.
William F. Clark, Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy.

Therefore, DoD, GSA, and NASA
amend 48 CFR parts 19, 42, and 52 as set forth below:
1. The authority citation for 48 CFR
parts 19, 42, and 52 continues to read as follows:
Authority: 40 U.S.C. 121c; 10 U.S.C.
chapter 137; and 51 U.S.C. 20113.

PART 19SMALL BUSINESS
PROGRAMS
2. Amend section 19.704 by a. In paragraph a6 removing the phrase subcontracting goals and adding the phrase subcontracting goals for commercial plans, see paragraph d of this section in its place;
b. Revising paragraph d introductory text; and c. In paragraph d4 removing the phrase one SSR and adding the phrase one SSR that includes all indirect costs, except as described in paragraph d of this section, in its place.

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