Federal Rulemaking Process for Significant Regulatory Actions Michael McLaughlin, Director Office of Policy and Research Office of Government Contracting

SBA Rulemaking To Help Small Business Receive Federal Contract Awards The SBA is required to make rules in order to carry out its responsibility to level the playing field and help Small Business concerns receive a fair share of government contracts. It is a simple process but it is shaped by numerous statutory and regulatory requirements. This presentation presents that process in 13 steps for rules determined to be significant rulemaking. Nonsignificant rulemakings do not require OMB interagency review.

SBA Rulemaking To Help Small Business Receive Federal Contract Awards SBA Coordinates with OIRA Congress Passes Statute, President Enacts Statute SBA Develops Draft Proposed Rule Internal Agency Clearance: Review/Approval of Draft Proposed Rule within SBA OMB Review of Draft Proposed Rule Publication of Notice of Proposed Rulemaking Public Comments Response to Comments/Development of Draft Final Rule Internal Agency Clearance Review/Approval of Draft Final Rule OMB Review of Draft Final Rule Publication of Final Rule Implement Rule through FAR Change (if Necessary) Rule Takes Effect

SBA Rulemaking To Help Small Business Receive Federal Contract Awards The Administrative Procedure Act of 1946 defines a rule as “the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy.” The Federal rulemaking process consists of a set of procedures that federal agencies are required to follow when writing regulations. These procedures reflect various statutes as well as Executive Orders. This presentation provides an overview of the steps in that process. The first step in the process that initiates rulemaking is the statutory requirement. The Federal rulemaking process begins when Congress passes and the President enacts a statute that either requires or authorizes an agency to write and issue regulations. For SBA the Small Business Act is the primary statute that initiates the need for issuance of a rule. Other legislation may cause issuance of a rule when it requires a change to a procurement factor that impacts the Small Business community. Examples of other legislation includes the Small Business Jobs Act of 2010 and various annual National Defense Authorization Acts that impact procurement and Small Business programs. Unanticipated changes in technology, decisions from appeals and protests, or other regulation may require SBA to revise previously issued rules. Congress Passes Statute, President Enacts Statute

SBA Rulemaking To Help Small Business Receive Federal Contract Awards SBA Coordinates with OIRA SBA must submit significant rules to the Office of Information and Regulatory Affairs (OIRA). OIRA determines if the proposed draft rule is a significant regulatory action requiring a Regulatory Impact Analysis for purposes of Executive Order 12866 or rises to the level of a major rule under the Congressional Review Act. Many SBA rules rise to the level of a significant regulatory action. Also, OIRA determines if the proposed draft rule appropriately reflects the statutory requirements. In addition, OIRA assures compliance with Executive Orders for: Public Comment Open Exchange of Information Consultation with Stakeholders Civil Justice Reform Federalism Implications Paperwork Reduction Act Regulatory Flexibility Act When OIRA concludes their review and concurs with the significance and approach, SBA proceeds with the proposed draft rule.

SBA Rulemaking To Help Small Business Receive Federal Contract Awards SBA Develops Draft Proposed Rule SBA drafts proposed rules to amend or change existing rules contained in the Code of Federal Regulations. These rules implement the Small Business Act and are intended to provide Small Business concerns a fair opportunity to receive government contracts. These rules may impact all Small Businesses or provide rules for a specific Small Business program such as sole source awards for Woman Owned Small Business, Price Evaluation Preference for HUBZone Small Business, Set Aside procurements for Service Disabled Veteran Owned Small Business, Mentor Protégé Programs, and the 8(a) Business Development Program. These rules also establish the procurement authorities and responsibilities that help the SBA and the 24 Chief Financial Officer Agencies meet the government-wide prime contracting goal (23% of all eligible contract awards) as well as individual socio-economic goals for Small Disadvantaged Business (5%), Historically Underutilized Business Zone (3%), Service Disabled Veteran Owned Small Business (3%) and Woman Owned Small Business (5%) concerns.

SBA Rulemaking To Help Small Business Receive Federal Contract Awards Internal Agency Clearance: Review/Approval of Draft Proposed Rule within SBA Within SBA, the draft proposed rule undergoes a review and approval process where all stakeholders have an opportunity to address their functional equities. For example, the Office of Government Contracting and Business Development would receive comment from internal components such as the HUBZone Program Office, Office of Government Contracting , Woman Owned Small Business program, Office of Business Development, and the All Small Mentor Protégé Program Office. Additional clearances would include the Office of General Counsel, Office of Advocacy, and other organizational elements. Once all comments and concerns are addressed, the draft proposed rule would be revised and sent to the next step of the process. When the rule is a significant regulatory action, SBA must identify two existing regulatory actions to eliminate and fully offset the incremental cost associated with new regulatory actions.

SBA Rulemaking To Help Small Business Receive Federal Contract Awards OMB Review of Draft Proposed Rule The Office of Management and Budget (OMB) provides review of SBA’s rulemaking on behalf of the President. OMB provides government-wide interagency review of SBA’s proposed draft rule. If any issues are raised in the interagency review, OMB provides a forum for resolution. The rule may be returned for further consideration and reconciliation of any issues. After resolution, OMB may conclude their review and SBA may then proceed to publish it as a draft proposed rule.

SBA Rulemaking To Help Small Business Receive Federal Contract Awards The Administrative Procedure Act (APA) sets forth requirements for Federal rulemaking. The APA generally requires notice and comment in the Federal Register for proposed rulemaking. The Proposed Rule includes regulatory text, the legal authority, and a preamble explaining the rule provisions, regulatory compliance information, and other information of interest to the public. The proposed draft rule also provides an opportunity for interested persons to comment on the proposed rulemaking.  

SBA Rulemaking To Help Small Business Receive Federal Contract Awards Public Comments Generally an agency will provide a minimum of 60 days for public comment. In the proposed rule, SBA provides a number of means for the public to provide comment on proposed rulemaking: - On-Line: Federal eRulemaking Portal: http://www.regulations.gov - By Mail or Hand Delivery/Courier: paper, disk, or CD/ROM submissions to: U.S. Small Business Administration Office of Policy, Planning and Liaison 409 Third Street, SW 8th Floor Washington, DC 20416 All public comments are posted on www.regulations.gov

SBA Rulemaking To Help Small Business Receive Federal Contract Awards Response to Comments/Development of Draft Final Rule After the SBA considers all public comments received and may use the comments, in whole or in part, to revise the proposed rulemaking. All public comments are posted on www.regulations.gov together with other supporting materials (e.g., Size Standards, regulatory studies) that comprise a rulemaking docket for public inspection. Internal Agency Clearance Review/Approval of Draft Final Rule within SBA After consideration of public comment and revision (if needed) of the proposed rulemaking, SBA begins the process of publishing the final rule. SBA conducts an internal agency clearance for approval within SBA of the draft final rule.

SBA Rulemaking To Help Small Business Receive Federal Contract Awards OMB/OIRA Review of Draft Final Rule After internal clearance and approval of the draft final rule, SBA submits it to Office of Management and Budget (OMB) for review. OMB provides review of SBA’s rulemaking on behalf of the President and assures compliance with Executive Orders. OMB provides governmentwide interagency review of SBA’s proposed final rule. OMB also reviews rules support and analysis, resolves interagency conflicts, and makes sure the rule is in accord with Administation policies. If any issues are raised in the interagency review, OMB provides a forum for resolution. The rule may be returned for further consideration and reconciliation of any issues. After resolution, OMB may conclude their review and SBA may then proceed to publish it as a final rule.

SBA Rulemaking To Help Small Business Receive Federal Contract Awards Publication of Final Rule After receiving approval from OMB, SBA proceeds to publish the final rule in the Federal Register. Rule Takes Effect The publication of the final rule provides an effective date. Generally, a final rule takes effect in 30 days, unless an exception applies. SBA may also provide a longer period as a compliance date or applicability date or extend an effective date for various reasons such as the beginning of the next Fiscal Year.

SBA Rulemaking To Help Small Business Receive Federal Contract Awards Implement Rule through FAR Change Once a final rule is published, if the rule requires Federal Acquisition Regulation (FAR) implementation, a business case is opened with the Civilian Agency Acquisition Council (CAAC) to implement the rule through the FAR. Not all SBA rules require FAR implementation. For example, new and revised size standards are effective without FAR implementation. Although the final rule may be in effect, it may not be available until its provisions are implemented through the FAR provisions. The civilian agencies, and the Department of Defense, participate in the CAAC process to revise the FAR and publish their proposed revisions in the Federal Register following the same general process for rulemaking. To determine status of open FAR cases: https://www.acq.osd.mil/dpap/dars/opencases/farcasenum/far.pdf