V.  Regulatory Flexibility Act

DoD, GSA, and NASA prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with 5 U.S.C. 604, et seq. The FRFA is summarized as follows:

The Transparency Act was enacted to reduce "wasteful and unnecessary spending" by requiring that OMB establish a free, public, online database containing full disclosure of all Federal contract award information. The objective of the rule is to empower the American taxpayer with information that may be used to demand greater fiscal discipline from both executive and legislative branches of Government. According to the sponsors of the Transparency Act, the new database will deter "wasteful and unnecessary" spending, since Government officials will be less likely to earmark funds for special projects if they know the public could identify how much money was awarded to which organizations, and for what purposes.

Comments were received that indicated the rule would impact small businesses. The comments covered a number of issues including: The rule disproportionately damages the competitive position of small and medium-sized contractors, and the increased general, administrative, overhead costs could make it difficult for smaller businesses to vie for Government contracts. Other issues are cited in this preamble.

The responses in the preamble point out a number of aspects of the rule that may lessen the impact of the rule on small businesses, including: The lessons learned from issuance of FAR case 2006-029, familiarization from the Recovery Act reporting rule, the exceptions in the rule that exclude some contractors, the revisions to the rule listed in section III. of this preamble, and pre-population of data in FSRS from other Government systems.

The rule applies to all contracts and subcontracts, of $25,000 or more. The clause does not require the disclosure of classified information. The rule requires contractors to report first-tier subcontract award information and annually report the contractor's and first-tier subcontractors' five most highly compensated executives for the contractor and subcontractor's preceding completed fiscal year. To arrive at an estimate of the number of small businesses to which the rule would apply, the Councils queried the FDPS for FY 10 contract award information. DoD, NASA and GSA believe 233,623 is a reasonable estimate of the total number of small businesses, both as prime and first-tier subcontractors to whom the rule will apply.

The rule applies to all, regardless of business size or ownership. The professional skills necessary for the preparation of the report would probably be a company officer or division manager or a company subcontract administrator.

DoD, NASA and GSA considered a number of alternatives that may have lessened the impact on small businesses, but the alternatives would have prevented the full disclosure of all Federal award information for awards of $25,000 or more, as required by the Transparency Act. One alternative of excluding small businesses entirely from the rule would not be feasible, given the objectives of the rule.

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.