Public Contract Law Section Comments on Proposed Rule Changes

From time to time, the Public Contract Law Section prepares and submits comments on proposed changes to the federal procurement regulations. Led by the Section’s Legislative and Regulatory Coordinating Committee, the Section’s comments compile varying perspectives and insights, recommending holistic (not partisan) improvements to the FAR and related procurement regulations.

In 2023, the Section submitted four separate comments on proposed rules. As a new recurring feature for The Procurement Lawyer, and in an attempt to keep everyone better informed of what the Section is publicly saying, we offer the following summaries of the public comments submitted in 2023. Copies of these latest materials, as well as historic comments submitted by the Section, are available on the Section’s site.

Disclosing Greenhouse Gas Emissions and Climate-Related Financial Risk

Submitted on February 13, 2023, the Section provided comments on FAR Case 2021-015, Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk. This proposed rule implements section 5(b)(i) of Executive Order 14,030, Climate-Related Financial Risk, issued on May 20, 2021 by President Biden, which directed the FAR Council to consider amending the FAR to “require major Federal suppliers to publicly disclose greenhouse gas emissions and climate-related financial risk and to set science-based reduction targets.” The proposed rule would add (i) certain contractor qualification requirements to FAR Part 9, (ii) new disclosure requirements under FAR Part 23 (including creating a new Subpart 32.XX), and (iii) new representation and certification language to FAR Part 52.

The Section’s comments on the proposed rule asked the FAR Council to consider several key issues:

1. The FAR Council should consider all additional implementation costs and impacts before finalizing any rule, recommending that the FAR Council carefully quantify the reporting burden and acknowledge that the increased reporting costs will likely be passed on to the federal government, resulting in higher procurement costs.
2. The FAR Council should reconsider the dollar thresholds for the two categories of companies required to comply with the rule, defined as “Significant Contractors” and “Major Contractors”—based on whether a contractor receives at least $7.5 million or $50 million, respectively, in federal contract obligations in the prior federal fiscal year.
3. The FAR Council should reconsider the delegation of regulatory authority to private, international bodies, namely the Corporate Accounting and Reporting Standard for greenhouse gas reporting, the Carbon Disclosure Project (CDP), the international Task Force on Climate-Related Financial Disclosures (TCFD), and (especially) the global Science Based Targets Initiative (SBTi).
4. The FAR Council should reconsider the proposed rule’s impact on commercial and nontraditional contractors, particularly small business commercial contractors.
5. The FAR Council should revise the proposed rule after considering its effects on subcontractors, particularly small business subcontractors.
6. The FAR Council should consider the False Claims Act risks attendant to the proposed rule, particularly where inadvertent noncompliance could expose contractors to significant liability under the False Claims Act.
7. The FAR Council should consider whether the president has the authority to require such disclosures, noting that the Executive Order does not identify the source of its authority and that current case law is unsettled on the scope of the president’s authority to enact regulations that may affect the procurement system.

SBIR and STTR Programs

Submitted on May 23, 2023, the Section provided comments on FAR Case 2020-010, Small Business Innovation Research and Technology Transfer Programs. This proposed rule implements (a) changes related to data rights in the Small Business Administration’s (SBA) April 2019 Policy Directive for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs, and (b) competition requirements unique to Phase III awards under the SBIR and STTR Programs. The proposed rule would (i) update definitions in FAR 2.101 and FAR Part 27, (ii) update government requirements for maintaining contract files at FAR 4.805, (iii) add new language to FAR Part 6 regarding competition requirements, (iv) update language at FAR Part 27 relating to the SBIR and STTR Programs, and (v) make corresponding revisions to contract clauses at FAR Part 52, especially FAR 52.227-20.

The Section’s comments on the proposed rule recommended that the FAR Council consider five key issues:

1. The FAR Council should consider aligning the definitions in the FAR and the SBA Policy Directive with other definitions in the DFARS, noting that the FAR and DFARS use different terms to define the government’s rights but that the definitions should be aligned.
2. The FAR Council should consider revising the new definition of “SBIR/STTR computer software rights” in FAR 52.227-20 to clarify how computer software can be used by the government.
3. The FAR Council should align the proposed rule with a separate proposed DFARS rule allowing negotiation of different data rights’ protection periods.
4. The FAR Council should modify the proposed rule to require FAR 52.227-20 be flowed down to subcontractors, aligning the proposed rule with the proposed DFARS rule.
5. The FAR Council should resolve other inconsistencies between the proposed rule and the proposed DFARS rule.

Protesting Orders Set Aside for Small Businesses

Submitted on November 20, 2023, the Section provided comments on FAR Case 2021-009, Protests of Orders Set Aside for Small Business. This proposed rule implements (a) the requirements in a recent SBA final rule regarding size protests on set-aside orders under multiple-award contracts that were not set aside at the contract level, (b) socioeconomic status protests on set-aside orders where the required status differs from that of the underlying multiple-award contract, and (c) the authority for SBA’s Associate General Counsel for Procurement Law to initiate a size protest. The proposed rule would amend various sections in FAR Part 19.

Beyond lauding most of the proposed changes, the Section’s comments recommended one key change to the FAR Council. Specifically, the FAR Council should modify FAR 19.302, 19.306, 19.307, and 19.308 to clarify the timing for filing specific size protests for partial set-asides and reserves of multiple-award contracts and orders, as well as orders that are set aside under an unrestricted multiple-award contract. Where the typical five-day protest deadline hinges off the date of award, adding clarity so that individuals can know what specific date triggers the filing deadline will improve administration of size protests.

Representing Size and Socioeconomic Status

Submitted on November 28, 2023, the Section provided comments on FAR Case 2020-016, Rerepresentation of Size and Socioeconomic Status. This proposed rule implements the requirement in an updated SBA rule regarding re-representing size and socioeconomic status for orders under multiple-award contracts. The proposed rule would amend FAR 19.301-2 and 52.219-28, Postaward Small Business Program Representation.

Beyond expressing appreciation for most of the proposed changes (and proposing a correction to a potential typographical error), the Section’s comments recommended a handful of changes to the FAR Council:

1. The FAR Council should modify FAR 19.301-2(b) to remove an exemption to the recertification requirement if a contractor’s socioeconomic status is not certified by SBA, as is the case with 8(a) companies, woman-owned small businesses (WOSBs), service-disabled veteran-owned small businesses (SDVOSBs), and Historically Underutilized Business Zone (HUBZone) companies. This modification would better conform with the SBA regulations.
2. The FAR Council should clarify the recertification requirements in FAR 19.301-2(b)(2) for orders issued under the Federal Supply Schedule (if requested by the contracting officer).
3. The FAR Council should modify FAR 19.301-2(b)(2)(i) to clarify that recertification is not required for orders issued under the reserved portion of a multiple-award contract with reserves.
4. The FAR Council should clarify that FAR 19.301-2(b)(2) ensures that orders set aside for a specific socioeconomic category do not differ from the set-aside type for the master multiple-award contract.
5. The FAR Council should include a new subsection clarifying that it is the SBA’s responsibility to determine eligibility for 8(a) sole-source orders.

Conclusion

We thank the Section members who contributed to these public comments for their time and attention. When it comes to public contracting, regulations are inevitable. But improving the quality of these regulations relies on the careful consideration of individuals in the FAR Council and members of this Section. If you are interested in joining the Legislative and Regulatory Coordinating Committee and helping with future public comments, please contact Co-chairs Mitchell Bashur, Eric Crusius, or George Petel.