On September 9, 2022, the U.S. Small Business Administration (SBA) issued a notice of proposed rulemaking regarding “Ownership and Control and Contractual Assistance Requirements for the 8(a) Business Development Program.” While many of the proposed changes and new regulations appear to be clarification of existing regulations and/or SBA policy and practice, SBA is proposing, or considering, new regulations addressing (1) the “community benefits” provided by entity-owned 8(a) businesses, including potentially mandating that such entities provide specific amounts or types of “benefits” to their communities; (2) the bona fide place of business rule for 8(a) construction companies, and (3) engaging in “good faith” efforts to meet 8(a) business activity targets. Comments are due November 8, 2022.

The following is a summary of the proposed regulations and the requests for comment:

Community Benefits Plan. The proposed regulations include a requirement that entity-owned 8(a)s submit a “Community Benefits Plan” regarding the “community benefits” to be provided by entity-owned 8(a)s.

• Each entity having one or more Participant(s) in the 8(a) business development (BD) program would have to establish a Community Benefits Plan that outlines the anticipated approach it expects to deliver to strengthen its Native or underserved community over the next three to five years. “The SBA would expect some commitment in areas relating to health, education, housing, infrastructure, cultural preservation, and economic development, as appropriate.”
• 8(a) entities would need to submit to SBA information showing how the Tribe, Alaska Native Corporations (ANC), Native Hawaiian Organization (NHO), or Community Development Corporation (CDC) has provided benefits to the Tribal or Native members and/or the Tribal, Native, or other community due to the Tribe’s/ANC’s/NHO’s/CDC’s participation in the 8(a) BD program through one or more firm(s), whether the benefits provided meet the benefits target set forth in the Community Benefits Plan, and how the benefits provided directly impacted the Native or underserved community.

SBA is also requesting comments on

• whether the Community Benefits Plan should be its own, separate plan or included in the business plan submission with updates required as part of the annual review process,
• the period the Community Benefits Plan should cover,
• whether specific monetary targets should be established for providing support to the Native or disadvantaged communities, and if that amount should change based upon the length of time that an entity-owned 8(a) is participating in the 8(a) BD program and depending upon the number of Participants an entity owns that are operating in the program,
• whether there should be consequences to an entity or an entity-owned Participant that does not meet or does not make good faith efforts to meet the commitments that it made in its initial application to provide benefits to its Native or underserved community, and
• how best to implement proposed changes for benefits reporting.

The specific proposed regulations are as follows:

§ 124.604 Report of benefits for firms owned by Tribes, ANCs, NHOs, and CDCs.

1. Each entity having one or more Participant(s) in the 8(a) BD program must establish a Community Benefits Plan that outlines the anticipated approach it expects to deliver to strengthen its Native or underserved community.
2. As part of its annual review submission (see § 124.602), each Participant owned by a Tribe, ANC, NHO, or CDC must submit to SBA information showing how the Tribe, ANC, NHO, or CDC has provided benefits to the Tribal or Native members and/or the Tribal, Native, or other community due to the Tribe’s/ANC’s/NHO’s/CDC’s participation in the 8(a) BD program through one or more firm(s), whether the benefits provided meet the benefits target set forth in the Community Benefits Plan, and how the benefits provided directly impacted the Native or underserved community. This data includes information relating to funding cultural programs, employment assistance, jobs, scholarships, internships, subsistence activities, and other services provided by the Tribe, ANC, NHO, or CDC to the affected community.

Bona Fide Place of Business Rule (pages 29-31 and 98-99). The notice of proposed regulations states that SBA will continue to apply the bona fide place of business requirement to both sole source and competitive 8(a) construction procurements unless SBA determines that it is not “practicable” to do so, while noting that SBA has extended the moratorium on the bona fide place of business rule under September 30, 2023. The proposed revisions to the bona fide place of business regulations provide that:

• A Participant with a bona fide place of business anywhere in a particular state should be deemed eligible for a construction contract throughout that entire state (even if the state is serviced by more than one SBA district office).
• Where a Participant is currently performing a contract in a specific state, it would qualify as having a bona fide place of business in that state for one or more additional contract(s).
• A Participant cannot use contract performance in one state to allow it to be eligible for an 8(a) contract in a contiguous state unless it officially establishes a bona fide place of business in the location in which it is currently performing a contract.
• A Participant could establish a bona fide place of business through a full-time employee in a home office and that an individual designated as the full-time employee of the Participant seeking to establish a bona fide place of business in a specific geographic location need not be a resident of the state where he/she is conducting business. SBA notes that “A Participant should be able to rotate employees in and out of a specific location as it sees fit, and as long as one individual (but not necessarily the same individual) remains at that location, that location can be considered a bona fide place of business.”
• For a single award 8(a) construction contract requiring work in multiple locations, the proposed regulations provide that a Participant is eligible if it has a bona fide place of business where a majority of the work is to be performed. For a multiple award 8(a) construction contract, the proposed rule would require a Participant to have a bona fide place of business in any location where work is to be performed.

The specific proposed regulations are as follows:

§ 124.501 What general provisions apply to the award of 8(a) contracts?

(k) In order to be awarded a sole source or competitive 8(a) construction contract, a Participant must have a bona fide place of business within the applicable geographic location determined by SBA. This will generally be the geographic area serviced by the SBA district office, a Metropolitan Statistical Area (MSA), a contiguous county (whether in the same or different state), or the geographical area serviced by a contiguous SBA district office to where the work will be performed. A Participant with a bona fide place of business within a state will be deemed eligible for a construction contract anywhere in that state (even if that state is serviced by more than one SBA district office). SBA may also determine that a Participant with a bona fide place of business in the geographic area served by one of several SBA district offices or another nearby area is eligible for the award of an 8(a) construction contract.

* * * * *

(4) If a Participant is currently performing a contract in a specific state, it qualifies as having a bona fide place of business in that state for one or more additional contract(s). The Participant may not use contract performance in one state to allow it to be eligible for an 8(a) contract in a contiguous state unless it officially establishes a bona fide place of business in the location in which it is currently performing a contract.

(5) A Participant may establish a bona fide place of business through a full-time employee in a home office.

(6) An individual designated as the full-time employee of the Participant seeking to establish a bona fide place of business in a specific geographic location need not be a resident of the state where he/she is conducting business.

* * * * *

(9) For an 8(a) construction contract requiring work in multiple locations, a Participant is eligible if:

(i) For a single award contract, the Participant has a bona fide place of business where a majority of the work is to be performed; and

(ii) For a multiple award contract, the Participant has a bona fide place of business in any location where work is be performed.

Guidance on what constitutes “good faith” efforts to meet 8(a) business activity targets (pages 41 and 105). The proposed regulations include “guidance” on what constitutes a good faith effort to comply with 8(a) business activity targets. Those efforts could be:

• Demonstrating to SBA that the Participant submitted offers for one or more non-8(a) procurement(s) which, if awarded, would have given the Participant sufficient revenues to achieve the applicable non-8(a) business activity target during its just-completed program year, or
• Explaining that there were extenuating circumstances that adversely impacted its efforts to obtain non-8(a) revenues. Extenuating circumstances could include:
  • reduction in government funding,
  • continuing resolutions and budget uncertainties,
  • increased competition driving prices down, or
  • having one or more prime contractor(s) award less work to the Participant than originally contemplated.

The specific proposed regulations are as follows:

§ 124.509 What are non-8(a) business activity targets?

(d)(1)(i) SBA will determine whether the Participant made good faith efforts to attain the targeted non-8(a) revenues during the just completed program year. A Participant may establish that it made good faith efforts by demonstrating to SBA that:

(A) It submitted offers for one or more non-8(a) procurement(s) which, if awarded, would have given the Participant sufficient revenues to achieve the applicable non-8(a) business activity target during its just completed program year. In such a case, the Participant must provide copies of offers submitted in response to solicitations and documentary evidence of its projected revenues under these missed contract opportunities; or

(B) Individual extenuating circumstances adversely impacted its efforts to obtain non- 8(a) revenues, including but not limited to: a reduction in government funding, continuing resolutions and budget uncertainties, increased competition driving prices down, or having one or more prime contractor(s) award less work to the Participant than originally contemplated. Where available, supporting information and documentation must be included to show how such extenuating circumstances specifically prevented the Participant from attaining its targeted non- 8(a) revenues during the just completed program year.

(ii) The Participant bears the burden of establishing that it made good faith efforts to meet its non-8(a) business activity target. SBA’s determination as to whether a Participant made good faith efforts is final and no appeal may be taken with respect to that decision.

8(a) Sole Source Follow-on Contracts to Entity-Owned 8(a)s (pages 39-40). SBA also requests comments on whether a specific provision should be added to the regulations that require SBA to consider the effect that losing an opportunity to compete for a follow-on contract would have on an incumbent Participant’s business development. SBA explained that “SBA is concerned about the business development aspects of the program for an incumbent Participant. In other words, where a Participant was previously awarded a competitive 8(a) contract, is still an eligible Participant at the completion of the contract, and is hoping to compete again for the follow-on procurement to the contract it previously performed, SBA may take that into account in its decision whether to accept a follow-on procurement on a sole source basis on behalf of an entity-owned Participant if the contract is critical to the incumbent Participant’s overall business development.”

The specific proposed regulations are as follows:

§ 124.506 At what dollar threshold must an 8(a) procurement be competed among eligible Participants?

(b)(3) There is no requirement that a procurement must be competed whenever possible before it can be accepted on a sole source basis for a Tribally-owned or ANC-owned concern, or a concern owned by an NHO for Department of Defense (DoD) contracts. However, a current procurement requirement may not be removed from competition and awarded to a Tribally-owned, ANC-owned, or NHO-owned concern on a sole source basis (i.e., a procuring agency may not evidence its intent to fulfill a requirement as a competitive 8(a) procurement, through the issuance of a competitive 8(a) solicitation or otherwise, cancel the solicitation or change its public intent, and then procure the requirement as a sole source 8(a) procurement to an entity-owned Participant). A follow-on requirement to one that was previously awarded as a competitive 8(a) procurement may be offered, accepted and awarded on a sole source basis to a Tribally-owned or ANC-owned concern, or a concern owned by an NHO for DoD contracts.

Reporting on Business Activity Targets (pages 41-42). SBA is also requesting comments as to how firms believe it would be easiest for them to meet the program year information requirements, given that a program year may not match the fiscal or calendar year.

• One approach that SBA is considering is to capture program year data based on the Participant’s interim financial statements. This would require a Participant to submit monthly, quarterly, or semi-annual financial statements, as appropriate, to SBA where the close of its fiscal year and its program anniversary date are separated by more than 90 calendar days.
• SBA gave the following example: “For example, Participant A’s fiscal year closes on December 31, and its program anniversary date is May 9. In connection with its annual review, Participant A would submit quarterly financial statements for the periods of April 1-June 30, July 1-September 30, and October 1-December 31, from its most recently completed fiscal year, and the period of January 1-March 31 in its current fiscal year. SBA could then determine Participant A’s compliance with the applicable business activity target based on the breakdown of 8(a) and non-8(a) sales during the 12-month period covered by these quarterly financial statements.”

The remaining proposed regulations, and changes to existing regulations, are briefly summarized below.

Joint Ventures

• Clarifying that joint ventures may be awarded a contract more than two years after the first contract awarded to that joint venture, provided that the offer, including price, was submitted prior to the end of the two-year period. This is not a change to current rules, but a clarification to “clear up any confusion” according to SBA.
• Clarifying that the joint venture rules requiring the joint venture to be unpopulated only applies to contracts set aside or reserved for small business—i.e., small business set-aside, 8(a), women-owned small business (WOSB), HUBZone, and service-disabled veteran-owned small business (SDVOSB) contracts.
• Revising rules regarding joint ventures to clarify, for populated joint ventures, how to account for receipts (for purposes of determining size) when a joint venture hires individuals to perform one or more specific contract(s). The proposed rule provides that revenues must be divided according to the same percentage as the joint venture partner’s percentage ownership share in the joint venture.
• Clarifying that where a joint venture is the apparent successful offeror in connection with a competitive 8(a) procurement, SBA will determine whether the 8(a) partner to the joint venture is eligible for award, but will not review the joint venture agreement to determine compliance with § 124.513.
• Proposing a rule barring a Program Participant from being a joint venture partner on more than one joint venture that submits an offer for a specific 8(a), HUBZone, WOSB, or SDVOSB multiple award contract. SBA is also requesting comments if this prohibition should apply to all 8(a)/HUBZone/WOSB/SDVOSB contracts, and not just multiple award contracts.
• Clarifying that a prime contractor cannot count an award to a joint venture in which it is a partner as subcontracting credit.

Updating Small Business Status in SAM.gov

• Adopt rules implementing the 2022 National Defense Authorization Act’s requirement that a small business’s status in SAM.gov be updated not later than two days after a final determination by SBA that the concern does not meet the size or socioeconomic status requirements that it certified to be.

8(a) Applications and Eligibility for the 8(a) Program

• Providing that if an 8(a) applicant is denied admission to the 8(a) program solely due to their size, and that applicant successfully obtains a formal size determination that they are small, the Associate Administrator for Business Development can immediately certify the firm as eligible for the 8(a) BD program without requiring them to reapply.
• Revising the rules regarding showing economic disadvantage, necessitating an individual to provide retirement account information only upon request by SBA and deleting a duplicative regulation that excluded income from an applicant or Participant that is an S corporation, a limited liability company, or a partnership where the income was reinvested in the firm or used to pay taxes that arose in the normal course of operations of the firm.
• Clarifying that the mentor of an 8(a) applicant, who has a mentor-protégé agreement with the 8(a) applicant, can own up to 40% of the protégé.
• Provide that SBA will aggregate the interests of all immediate family members in determining whether a non-disadvantaged individual involved in a change of ownership has more than a 20% interest in the concern.
• Add language clarifying that an applicant need not an demonstrate that it has specifically performed work in the private sector prior to applying to participate in the 8(a) program, and that successful performance of state, local or federal government contracts is eligible to participate in the 8(a) program.
• Clarifying that where the applicant or the affected principals can demonstrate that the financial obligations have been settled and discharged/forgiven by the Federal Government, the applicant would be eligible for the program.
• Amending the regulation to provide that the requirement the articles of incorporation, partnership agreement or limited liability company articles of organization of a tribally-owned applicant or Participant must contain express sovereign immunity waiver language to apply only to federally recognized tribes, as tribes that are only recognized by a state do not have sovereign immunity.
• For entities that are organized under tribal law and may not have articles of incorporation, partnership agreements or limited liability company articles of organization, clarifying that those tribally-owned concerns can demonstrate their waiver of sovereign immunity by using documents authorized under tribal law that are similar to articles of incorporation, partnership agreements or limited liability company articles of organization.
• Adding a provision allowing a tribally-owned applicant to submit financial statements demonstrating that it has been in business for at least two years with operating revenues in the primary industry in which it seeks 8(a) BD certification, where the tribally owned entity does not have tax returns because they do not pay federal taxes.
• Eliminating the requirement that a concern compare its financial condition to non-8(a) BD business concerns in the same or similar line of business for purposes of determining if the firm is still economically disadvantaged. SBA explained that it viewed this requirement as not being consistent with the statutory authority which requires only that an applicant or concern be owned and controlled by one or more individual(s) who is/are economically disadvantaged, not that the concern itself be economically disadvantaged.

SBA Approval of 8(a) Business Plans

• Clarifying that SBA must approve a Participant’s business plan before the firm is eligible to receive 8(a) contracts, but also prioritize business plan approval for any firm that is offered a sole source 8(a) requirement or is the apparent successful offeror for a competitive 8(a) requirement. Specifically, the proposed rule would provide that where a sole source 8(a) requirement is offered to SBA on behalf of a Participant or a Participant is the apparent successful offeror for a competitive 8(a) requirement and SBA has not yet approved the Participant’s business plan, SBA will approve the Participant’s business plan as part of its eligibility determination prior to contract award.
• Clarifying that a Participant must submit a new or modified business plan only if its business plan has changed from the previous year.

8(a) Procurements – Acceptance by SBA of A Procurement Into the 8(a) Program

• Clarifying that any 8(a) competition must be made available to all eligible Program Participants, and prohibiting SBA from accepting a requirement for the 8(a) BD program that seeks to limit an 8(a) competition only to certain types of 8(a) Participants, rather than allowing competition among all eligible Participants.
• Confirming that an agency may award an 8(a) sole source order against a multiple award contract that was not set aside for competition only among 8(a) Participants.
• Providing that SBA will decide whether to accept a requirement offered to the 8(a) BD program within 5 working days, as opposed to the current 10, of receipt of a written offering letter if the contract value exceeds the Simplified Acquisition Threshold (SAT). This proposed rule would clarify that the ten-day acceptance timeframe under § 124.503(a) applies only to 8(a) offers made outside the 8(a) Partnership Agreement authority.
• Clarifying that SBA has discretion in any decision to release a requirement from the 8(a) program where the procuring activity agrees to procure the requirement as a small business, HUBZone, SDVOSB, or WOSB set-aside.

Awards of Sole Source 8(a) Contracts

• Clarifying that a determination of 8(a) eligibility must be made by SBA even for sole source contracts where the value is at or below the SAT and SBA has delegated its 8(a) contract execution functions to the agency.
• Clarifying that an agency must notify SBA where it seeks to issue an order under an 8(a) multiple award contract that contains work that was previously performed through another 8(a) contract. Where that work is critical to the business development of a current Participant that previously performed the work through another 8(a) contract and that Participant is not a contract holder of the 8(a) multiple award contract, SBA may request that the procuring agency fulfill the requirement through a competition available to all 8(a) BD Program Participants.
• Clarifying that compliance with the § 124.509 business activity target requirements will be considered before SBA will accept a sole source 8(a) order on behalf of a specific 8(a) Participant multiple award contract holder.
• Where an agency seeks to issue a sole source order to a joint venture, the proposed rule clarifies that SBA will review and determine whether the lead 8(a) partner to the joint venture is currently an eligible Program Participant and in compliance with any applicable competitive business mix target established or remedial measure imposed by § 124.509.
• Clarify that the two-year restriction on awards to joint ventures does not apply to a sole source 8(a) order under an 8(a) multiple award contract. In other words, the sole source order can be issued more than two years after the date the joint venture received its first contract award.
• Provide that SBA would not review and approve a joint venture where the joint venture had already been awarded a competitive 8(a) multiple award contract and is seeking a sole source 8(a) order under that multiple award contract at some point during the performance period of the contract.
• Providing that an order can be issued under the Federal Supply Schedule (FSS) as an 8(a) award if the procedures set forth in § 124.503(i)(2) are followed. An agency need not open the order up to competition among all FSS contract holders claiming 8(a) status. However, an agency must consider the quote from any FSS contract holder claiming 8(a) status who submits one.
• Clarifying that that an agency may award an 8(a) sole source order under a multiple award contract that was awarded under full and open competition or as a small business set-aside where the identified 8(a) Participant is a contract holder of the multiple award contract.
• Noting that there is no prohibition on an agency awarding a follow-on contract as a sole source 8(a) award, and clarifying that SBA only prohibits an agency from issuing a competitive 8(a) solicitation, canceling the solicitation, and then procuring the requirement as a sole source 8(a) award.
• Clarifying that an individually-owned 8(a) Participant could receive a sole source award in excess of the $4.5M and $7M competitive threshold amounts set forth in § 124.506(a)(2) where a procuring agency has determined that a FAR (Federal Acquisition Regulation) 6.302 exception to full and open competition exists. SBA explained: “For example, if a procuring agency has determined that there exists an unusual and compelling urgency and has identified an individually-owned 8(a) Participant that is capable of fulfilling its needs, it can offer that requirement to SBA as a sole source award on behalf of the identified Participant even if the requirement exceeds the applicable competitive threshold. The Agency would be free to use its FAR 6.302 authority to award a sole source contract outside the 8(a) BD program. SBA believes that it only makes sense to allow the agency to make an award as a sole source contract within the 8(a) BD program if it chooses to do so.” A justification would be required for sole source awards over $25M for civilian agencies or $100M for DoD agencies.

Ostensible Subcontractor Rule

• Clarifying how the ostensible subcontractor rule applies to general construction contracts by providing that the ostensible subcontractor rule for general construction contracts should be applied to the management and oversight of the project, not to the actual construction or specialty trade construction work performed. SBA recognizes that subcontractors often perform the field work and that managing, scheduling the work, including coordinating the work of various subcontractors, are the “primary and vital requirements of a general construction contract.”
• Revising the ostensible subcontractor regulations to adopt two of four factors that SBA’s Office of Hearing and Appeals has used to determine if the ostensible subcontractor rule is violated: the reliance on incumbent management and the reliance on the subcontractor’s experience.

Timing of Required Size Recertifications

• Clarifying that recertification of size when there is a sale of stock is only required when the sale or acquisition results in a change in control or negative control of the concern. Recertification would not be required where small sales or acquisitions of stock occur that do not appear to affect the control of the selling or acquiring of the firm.
• Adding a new regulation to “clarify” that a joint venture can recertify its status as a small business where all parties to the joint venture qualify as small at the time of recertification, or the protégé small business in a still active mentor-protégé joint venture qualifies as small at the time of recertification. This recertification is not a contract award and so could occur more than two years after initial award of a contract to the joint venture.
• For sole source 8(a) orders issued under a multiple award contract set-aside for exclusive competition among 8(a) Participants, the new regulations would make it clear that the 8(a) entity receiving the sole source award must be small at the time of the award of the sole source order, and not just small at the time of the award of the multiple award contract.

Multiple Award Contracts

• Revising the rules governing when size is determined for a multiple award contract. The revisions would provide that orders issued pursuant to such a multiple award contract that do not include price are treated similarly to orders under multiple award contracts generally.

Franchise and Licensing Agreements

• Adding back in regulations regarding affiliation based on franchise and licensing agreements. The regulations were inadvertently deleted by SBA in October 2020 and they are being returned.

Size and Status Protests

• Revising the language in the regulations regarding size protests to be uniform between the different small business programs by providing that any offeror that the contracting officer has not eliminated from consideration for any procurement-related reason could initiate a size protest in each of those programs.
• Permitting a firm determined to be ineligible for a competitive 8(a) award based on size to request a formal size determination.
• Clarifying the time line for protesting size to specifically provide that where the identified low bidder is determined to be ineligible for award, a protest of any other identified low bidder would be deemed timely if received within five business days after the contracting officer has notified the protestor of the identity of that new low bidder.
• Clarifying that that size protests may be filed only against an apparent successful offeror (or offerors) or an offeror in line to receive an award.
• Authorizing reviews and protests of Small Disadvantaged Business status in connection with prime contracts and subcontracts to a federal prime contract.
• Providing that if a protest is pending before the Government Accountability Office (GAO), the SBA Area Office will suspend the size determination case. Once GAO issues a decision, the Area Office will recommence the size determination process and issue a formal size determination within 15 business days of the GAO decision, if possible.
• Clarifying that any protests relating to whether a non-similarly situated subcontractor will perform primary and vital aspects of the contract will be reviewed by the SBA Government Contracting Area Office serving the geographic area in which the principal office of the SDVOSB/HUBZone/WOSB/EDWOSB business is located.

Notification to Unsuccessful Small Business Offerors

• Revising the regulations to require prime contractors to notify unsuccessful small business offerors of the apparent successful offeror on subcontracts only for contracts over the simplified acquisition threshold.

Small Business Timber Set-Aside Program

• The Small Business Timber Set-Aside Program establishes small business set-aside sales of saw-timber from the federal forests managed by the U.S. Department of Agriculture’s Forest Service and the U.S. Department of the Interior’s Bureau of Land Management. Current regulations require that a small business concern cannot resell or exchange more than 30% of the saw-timber volume to “other than small” businesses. SBA regulations do not address situations where a small business concern is unable to meet the 30% requirement due to circumstances outside of their control. SBA is proposing regulations permitting a waiver of that 30% requirement.

Joint Ventures and SBIR/STTR

• Clarifying that when an SBIR/STTR offeror is determined to be a joint venturer with its ostensible subcontractor, all rules applicable to joint ventures would apply. This means that SBA will apply § 121.702(a)(1)(iii) or (b)(1)(ii), which contains the ownership and control requirements for SBIR/STTR joint ventures.

Waivers of the Non-Manufacturer Rule

• Revising the rules governing waivers of the non-manufacturer rule in multiple item procurement by clarifying that for a multiple item procurement, a contracting officer must specifically identify each item for which a waiver is sought and prohibiting contract-specific waivers for contracts with a duration of longer than five years, including options.

NHOs and Management of 8(a) Entities

• Allow the individuals responsible for the management and daily operations of an NHO-owned concern to manage two Program Participants.

Changes in Control

• Clarifying the rules for permitting an 8(a) participant to continue to perform an 8(a) contract after a change in ownership or control.

Consolidation and Bundling

• Including blanket purchase agreements (BPAs) in the list of contracting vehicles that are covered by the definitions of consolidation and bundling and requesting comments as to whether this should apply to both types of BPAs, the FSS, and FAR 13.303, and whether it should apply to both single-award and multiple-award BPAs.
• Clarifying that an analysis comparing the cumulative total value of all separate smaller contracts with the estimated cumulative total value of the bundled procurement is required as part of the analysis of whether bundling is necessary and justified.

Subcontracting Limits

• Measure limitations on subcontracting applicable to prime contractors for contracts and orders set-aside or reserved for small business based on order by each ordering agency, in the case of multi-agency set-aside contracts.
• Barring a contracting officer from giving a satisfactory/positive past performance evaluation for the appropriate evaluation factor or sub-factor to a contractor that the contracting officer determined did not meet the applicable limitation on subcontracting requirement at the conclusion of contract performance.

Mentor-Protégé Relationships

• Permitting a mentor to take on the mentor-protégé relationships of a firm that it purchased even where its total number of mentor-protégé relationships would exceed three. In such a case, the entity could not add another protégé until it fell below three in total.

HUBZone, WOSB/EDWOSB Eligibility Determinations

• Add language to both processes to provide that where SBA is unable to determine a concern’s compliance with any of the HUBZone or WOSB/EDWOSB (economically-disadvantaged women-owned small business) eligibility requirements due to inconsistent information contained in the application, SBA will decline the concern’s application. In addition, this proposed rule would add language providing that if, during the processing of an application, SBA determines that an applicant has knowingly submitted false information, regardless of whether correct information would cause SBA to deny the application, and regardless of whether correct information was given to SBA in accompanying documents, SBA will deny the application.

HUBZone

• Clarifying that where a subcontractor that is not a certified HUBZone small business will perform the primary and vital requirements of a HUBZone contract, or where a HUBZone prime contractor is unduly reliant on one or more small business(es) that is/are not HUBZone-certified to perform the HUBZone contract, the prime contractor would not be eligible for award of that HUBZone contract.
• Clarifying that a HUBZone joint venture should be registered in the System for Award Management (SAM) (or successor system) and identified as a HUBZone joint venture, with the HUBZone-certified joint venture partner identified.
• Revising protest procedures related to HUBZone contracts.

WOSB/EDWOSB

• For WOSB and EDWOSB entities, clarifying that that the applicant must demonstrate that it qualifies as small under the size standard corresponding to any NAICS (North American Classification System) code under which it currently conducts business activities.
• Removing the requirement that a woman or an economically-disadvantaged woman cannot have outside employment and instead only prohibit them from engaging in outside activities that prevent her from devoting sufficient time and attention to the business concern to control its management and daily operations. Where a woman claiming to control a business concern devotes fewer hours to the business than its normal hours of operation, the proposed rule would impose a rebuttable presumption that she does not control the business concern.
• Providing for program examinations for WOSB and EDWOSB every three years, as opposed to annually.

We are continuing to analyze and will have updates in the future.

Related article: SBA Proposes Rules that Could Have Significant Impact on ANCs

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact the author of this article.