Extension of 8(a) status for a year

Interim rule went into effect on Jan. 13

      Congress was so determined to extend 8(a) Business Development Program terms for an additional year due to the pandemic that they included provisions to that effect in two new laws: the Consolidated Appropriations Act and the 2021 National Defense Authorization Act.

      However, both of the new laws apparently left out an important detail regarding the period of time in which 8(a) firms needed to be enrolled in 8(a) in order to be eligible for the additional year.

      SBA addressed the dates of eligibility issues in an interim rule that went into effect Jan. 13.

The new laws and interim rule

      The two new laws both stated that 8(a) participants enrolled “on or before Sept. 9, 2020” were eligible. However, that broad language appeared to leave open the possibility of 8(a) participants from many years ago being eligible.

      The Small Business Administration acknowledged the issue in its interim rule that took effect on Jan. 13. “There is no further clarifying language as to what ‘before’ September 9, 2020 is intended to encompass,” the SBA’s interim rule states.

      Seeking to clarify the eligibility issues, SBA said it believes Congress intended the extension to assist current 8(a)s affected by the pandemic, and therefore any firms participating as of March 13, when the pandemic was declared, are eligible for the additional year extension.

      SBA further clarified that firms that graduated from, or otherwise left, the 8(a) BD program prior to March 13, 2020, or were admitted after Sept. 9, 2020 are ineligible for the extension.

What it means for 8(a) firms:

      The bottom line for 8(a) firms is that you are eligible for the additional year if you qualify within either of two scenarios, according to an analysis by PilieroMazza PLLC:

• You are eligible for the one-year extension if you have been in the 8(a) program as of March 13, 2020; or
• You are eligible for the one-year extension if you have been in the 8(a) program as of Sept. 9, 2020; and
• You are not eligible for the additional year if you were in the 8(a) program at any point between March 13, 2020, and Sept. 9, 2020, but were terminated, early graduated or voluntarily withdrew from the program in lieu of being terminated or early graduated.

Automatic extensions/readmissions

      If you have been an 8(a) participant continuously from March 13, 2020 to Jan. 13, 2021 then the extension is automatic, unless your company declines it.

     Additional rules apply for recent 8(a) graduates seeking to be readmitted for a year.

More Information:
Interim rule: https://bit.ly/3a8WEFc
PilieroMazza Client Alert: https://bit.ly/3iKfW7z

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