G. Regulatory Flexibility Analysis

Comment: Three respondents commented on the potential impact of the regulation on small businesses. However, several of the comments related to aspects of the rule that have been eliminated from this more focused final rule.

One respondent recommended adding language into the regulation that would exempt from OCI restrictions small businesses that are not involved in hardware or major software developments. In addition, the same respondent recommended imposing the OCI restrictions on prime contractors and large subcontractors, and allowing small subcontractors (those with less than 10 percent of total award) and small businesses to continue to provide both development and contract efforts with approved OCI plans.

Response: DoD notes that the rule, per the statute, requires that a SETA contract for a major defense acquisition program contain a provision prohibiting the contractor or any affiliate of the contractor from participating as a prime contractor or a major subcontractor in the development or construction of a weapon system under the program. Therefore, "small," i.e., other than major, subcontractors are exempted. The statute, however, does not provide for a specific exemption for small businesses. In addition, the rule does allow offerors, whether large or small, to continue to provide both development and contract efforts with approved OCI plans and an appropriate determination by the head of the contracting activity in accordance with 209.571-7(b).