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Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Proposed Rules proposing, in accordance with 41 U.S.C.
1905, 41 U.S.C. 1906, and 41 U.S.C.
1907, to apply the rule to contracts at or below the SAT and acquisitions of commercial items, including acquisitions for COTS items. The FAR
Council will consider public feedback before making a final determination on the scope of the final rule.

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A. Applicability to Contracts at or Below the Simplified Acquisition Threshold 41 U.S.C. 1905 governs the applicability of laws to acquisitions at or below the SAT. Section 1905
generally limits the applicability of new laws when agencies are making acquisitions at or below the SAT, but provides that such acquisitions will not be exempt from a provision of law under certain circumstances, including when 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 and subcontracts in amounts not greater than the SAT from the provision of law.
The FAR Council intends to make a determination to apply this statute to acquisitions at or below the SAT. These accelerated payments provide benefits to contractors that are small businesses, to contractors that subcontract with small businesses, and to small business subcontractors by accelerating payments to their prime contractors, without adding any reporting or recordkeeping requirements. Approximately 96 percent of Federal contracts are in amounts at or below the SAT. An exception for contracts and subcontracts at or below the SAT would exclude contracts and subcontracts intended to be covered by the law, thereby undermining the overarching public policy purpose of the law.
B. Applicability to Contracts for the Acquisition of Commercial Items, Including Commercially Available OffThe-Shelf COTS Items 41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial items and is intended to limit the applicability of laws to contracts for the acquisition of commercial items. Section 1906
provides that if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt commercial item contracts, the provision of law will apply to contracts for the acquisition of commercial items.
41 U.S.C. 1907 states that acquisitions of COTS items will be exempt from certain provisions of law unless the Administrator for Federal Procurement Policy makes a written determination
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and finds that it would not be in the best interest of the Federal Government to exempt contracts for the procurement of COTS items.
The FAR Council intends to make a determination to apply this statute to acquisitions for commercial items. The Administrator for Federal Procurement Policy intends to make a determination to apply this statute to acquisitions for COTS items. These accelerated payments provide benefits to contractors that are small businesses, to contractors that subcontract with small businesses, and to small business subcontractors by accelerating payments to their prime contractors, without adding any reporting or recordkeeping requirements. Over 50 percent of Federal contracts are awarded using commercial item procedures. An exception for commercial items, including COTS items, contracts and subcontracts would exclude contracts and subcontracts intended to be covered by the law, thereby undermining the overarching public policy purpose of the law.
IV. 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.
V. 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. This rule is not anticipated to be a major rule under 5
U.S.C. 804.
VI. Regulatory Flexibility Act DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the
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Regulatory Flexibility Act, 5 U.S.C. 601
612, because the rule is not implementing any requirements with which small entities must comply.
However, an Initial Regulatory Flexibility Analysis IRFA has been performed and is summarized as follows:
DoD, GSA, and NASA are proposing to amend the FAR to provide for accelerated payments to contractors that are small businesses and to small business subcontractors by accelerating payments to their prime contractors. Specifically, section 873 of the NDAA for FY 2020 requires agencies, to the fullest extent permitted by law, to establish an accelerated payment date for small business contractors, with a goal of 15 days after receipt of a proper invoice, if a specific payment date is not established by contract. For contractors that subcontract with small businesses, section 873 requires the FAR, to the fullest extent permitted by law, to establish an accelerated payment date, with a goal of 15 days after receipt of a proper invoice, if a A specific payment date is not established by contract; and b The contractor agrees to make accelerated payments to the subcontractor without any further consideration from, or fees charged to, the subcontractor.
The objective is to implement section 873
of the NDAA for FY 2020 Pub. L. 11692, which amends 31 U.S.C. 3903a. The rule also implements 10 U.S.C. 2307, which applies the same requirements to the Department of Defense. The legal basis for this rule is 40 U.S.C. 121c, 10 U.S.C.
chapter 137, and 51 U.S.C. 20113.
This rule applies to small businesses that are prime contractors and to small businesses that are subcontractors on Federal prime contracts. Based on data obtained from the Federal Procurement Data System, 129,450
unique entities including 84,468 small businesses were awarded contracts for FY
2019. DoD, GSA, and NASA do not have data as to how many subcontracts are awarded to small businesses. Regarding the impact of the prohibition on fees or other consideration in return for accelerated payments, it is not possible to estimate how many of these small business subcontractors may have been required to provide consideration or pay fees to the prime contractor in order to receive accelerated payments.
The proposed rule does not include additional reporting or record keeping requirements. The rule does not duplicate, overlap, or conflict with any other Federal rules. There are no available alternatives to the proposed rule to accomplish the desired objective of the statute.
Although this proposed rule may have a positive impact on small businesses, the rule is not expected to have a significant economic impact on a substantial number of small entities.

The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the
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