Alert 11.14.19
SBA Proposes Far-Reaching Rule to Revise and Clarify Many of Its Small Business Regulations
The proposed rule seeks to overhaul and update dozens of provisions in the SBA’s small business regulations.
Alert
Alert
10.19.20
On October 16, 2020, the U.S. Small Business Administration (SBA) issued an extensive final rule that makes numerous revisions to its small business regulations, including the size status certification rules for orders issued under multiple award contracts, the Mentor Protégé (MP) Programs, and the economic dependence rule. Nearly all of the final rule’s revisions take effect on November 16, 2020. We previously discussed several of these changes when the SBA first proposed them in November 2019. In this final rule, SBA adopted most of its proposed regulations. This client alert addresses some of the major changes implemented in the final rule.
Most notably, the final rule requires small businesses to recertify their size status when bidding on set-aside task orders issued under unrestricted multiple award contracts (MAC) and government-wide acquisition contracts (GWAC), with the notable exception of task orders issued under Federal Supply Schedule contracts. An offeror’s size status for orders awarded under an unrestricted MAC or GWAC generally has been determined as of the date a firm submits its proposal for that contract. If a firm self-certified as small at the time of its offer for the underlying MAC or GWAC, the firm was considered to be small for each order issued against that contract for the first five years. Now, contractors will have to recertify their size with each proposal for a set-aside task order. This recertification rule will impact many successful small businesses who have outgrown their size standard.
In support of the new recertification requirement, SBA estimated that in fiscal year 2018, 10 percent of orders awarded to small business set-asides under unrestricted MACs had been awarded to firms that were no longer small at the time of the order award. The SBA also estimated that almost 12 percent of small business set-aside orders under GWACs were awarded to firms that were no longer small at the time of the order.
This rule also announced the consolidation of the 8(a) MP Program and the All Small MP Program. The SBA explained that the benefits and purposes of the two programs were identical and, thus, it believed that having two separate MP programs was unnecessary and caused confusion in the small business community. An MP relationship already approved by SBA through the 8(a) MP Program will continue to operate as an SBA-approved MP relationship under the All Small MP Program. Further, the SBA no longer requires prior approval for MP Joint Venture agreements for competitive acquisitions. Finally, the SBA decided not to limit mentors to firms that have average annual revenues of less than $100 million.
The SBA also made revisions and clarifications to its joint venture rules. The SBA eliminates the three-contract limitation for joint ventures, while maintaining the two-year duration restriction. The SBA also addresses the allocation of joint venture revenues and solicitation requirements for facility clearances and past performance.
This rule also codifies current SBA practices and interpretations, clarifies existing provisions, and empowers the SBA District Offices to make more decisions in an effort to reduce delay caused by multiple layers of SBA administrative review. Small business contractors should not rely on their past recollection of the SBA regulations, as the final rule—totaling over 50 pages—makes extensive changes to these regulations.