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SBA Proposes New Rules Revising Small Business Contracting

November 4, 2009
U.S. Small Business Administration on October 28, 2009 announced a notice of proposed rulemaking that would substantially revise contracting rules for firms benefiting from the 8(a) Business Development program . The proposed changes are the result of the first comprehensive review of the 8(a) program in several years. The rules cover a variety of areas of the program, ranging from providing further clarification on determining economic disadvantage to requirements on Joint Ventures and the Mentor-Protégé program. The public comment period on the proposed changes is open for 60 days. The 8(a) program is a nine-year business development program for small businesses that fit the SBA's criteria of being socially and economically disadvantaged. The intent of the 8(a) program is to help these firms develop their business and provides them with access to government contracting opportunities, allowing them to become solid competitors in the federal marketplace. It also provides specialized business training, counseling, marketing assistance and high-level executive development to its participants. In FY08, small businesses received $16.1 billion in 8(a) contracts. Some of the components of the 8(a) program that the proposed changes will affect include:
  • Joint Ventures - qualifying that 8(a) firms are required to perform a significant portion of the work to ensure that these companies are able to build capacity;
  • Economic Disadvantage - providing more clarification on economic disadvantage as it relates to total assets, gross income, retirement accounts and a spouse of an 8(a) company owner in determining the owner's access to capital and credit;
  • Mentor-Protégé Program - requiring that assistance provided through the Mentor-Protégé relationship is directly tied to the protégé firm's business plan;
  • Ownership and Control Requirements - providing flexibility in admitting individuals of immediate family members of current and former 8(a) participants;
  • Tribally-Owned Firms - seeking public comments on the best way to determine whether a tribe meets the criteria of being economically disadvantaged for the 8(a) program;
  • Excessive Withdrawals - amending regulations on what is considered excessive as a basis for termination or early graduation from the 8(a) program; and
  • Business Size for Primary Industry - requiring that a firm's size status remain small for its primary industry code during its participation in the 8(a) program.
AGC is currently reviewing the proposed rule and will prepare formal comments to the SBA. In addition, AGC will work with SBA and Small Business Congressional Leaders on Capitol Hill to continue advocating common-sense contracting reforms that will benefit contracting for the construction industry.   Comments to this proposed rule are due on or before Dec. 28, 2009 and may be submitted to www.regulations.gov, where they will be posted or mailing them to 409 3rd St. SW, Mail Code: 6610, Washington, DC 20416 or via e-mail at: 8aBD2@sba.gov.
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