Comment on FR Doc # 2026-11765

SBA MUST DISCLOSE WHO SUPPORTS THIS RULE—AND WHO BENEFITS FROM IT Before SBA characterizes the public-comment record as broadly supportive of the proposed rule, it should answer one direct question: How many commenters support the rule because they will be required to comply with it, and how many support it because they are expressly excluded from its new burdens? The rule applies only to individually owned applicants and, by SBA’s estimate, may affect approximately 4,190 applicants annually. Entity-owned concerns including those owned by Tribes, Alaska Native Corporations, Native Hawaiian Organizations, and Community Development Corporations remain outside the rule. SBA nevertheless concludes that the economic effect will be de minimis. That conclusion requires evidence. Of course, entities protected from the rule are likely to support it. The remarkable development would be if they did not. Their comments are not invalid, but they are not neutral evidence that the rule is fair to the firms required to satisfy the revised standard. A favorable comment from an independently owned applicant accepting a burden it will bear is materially different from a favorable comment submitted by an entity-owned contractor excluded from that burden. The Administrative Procedure Act requires SBA to consider the relevant matters presented and to explain the basis and purpose of the final rule. 5 U.S.C. § 553(c). Comments are evidence and argument, not ballots. Under 5 U.S.C. § 706(2)(A), agency action must not be arbitrary or capricious. SBA must examine relevant data and articulate a rational connection between the facts found and the policy selected. Motor Vehicle Manufacturers Association v. State Farm, 463 U.S. 29, 43 (1983). SBA must also address significant comments that cast doubt on its reasoning. Katmai Government Services illustrates the issue. Katmai supports preserving the separate statutory treatment available to entity-owned concerns. Katmai may defend the structure under which it operates, but SBA should not treat that support as independent proof that the rule is fair to individually owned firms. Katmai is not being subjected to the revised test; it is defending a framework that leaves its own eligibility structure untouched. Public contracting-platform data reportedly attributes approximately $825.6 million in prime and subcontract award activity to Katmai Government Services and approximately $173.8 million to Katmai Information Technologies. Those figures approach $1 billion before other affiliates are considered. The amounts should be verified, de-duplicated, and separated among ceilings, obligations, prime awards, and subawards. Even so, the scale of the reported activity makes Katmai’s economic interest impossible to ignore. The Small Business Act requires SBA to aid and protect small-business concerns, preserve free competitive enterprise, and ensure that a fair proportion of federal contracts reaches small businesses. 15 U.S.C. § 631(a). Entity-owned firms may possess distinct statutory authorities under 15 U.S.C. § 637(a), but statutory recognition is not regulatory immunity. SBA must still examine competition, affiliation, subcontracting, pass-through risk, and fair access for individually owned firms. The Regulatory Flexibility Act requires a factual basis for SBA’s certification that the rule will not significantly affect a substantial number of small entities. 5 U.S.C. § 605(b). The burden is not limited to typing a narrative. It may include obtaining records, documenting material harm, securing professional assistance, responding to SBA, facing delay, and losing time-sensitive contracting opportunities. Comments from firms exempt from the new standard do not establish that those burdens are insignificant. SBA should disclose how many supportive comments came from individually owned firms that will bear the revised burden; how many came from entity-owned firms that remain exempt; how many came from affiliates sharing a common parent; and how many supportive commenters currently or historically benefit from 8(a) awards. SBA should also distinguish docket submissions from independent economic interests. Multiple comments from subsidiaries, affiliates, joint ventures, associations, consultants, or law firms connected to the same protected structure should not be portrayed as unrelated evidence of broad support. The agency should not ask only how many comments favor the rule. It must ask who favors it, why they favor it, whether they will be subjected to it, and what economic interest they possess in the provisions being preserved. A beneficiary’s support proves that the benefit is valuable to the beneficiary. It does not prove that the rule is fair to everyone else. SBA should answer plainly: How many commenters support this rule because they will be required to comply with it, and how many support it precisely because they will not?