SBA suspends business location rule for 8(a) construction companies

Rule lifted until Sept. 30, 2022 to ease COVID burden

      The Small Business Administration announced it is suspending for 13 months its rule that 8(a) participants awarded a federal construction contract must maintain a “bona fide place of business” in the geographic location of the contract.

      The rule is intended to reduce the burdens of doing business during the ongoing COVID-19 pandemic for 8(a) Business Development participants.

      The suspension became effective Aug. 25 and applies to all 8(a) construction contracts offered to the 8(a) program between Aug. 25 and Sept. 30, 2022.

      Under SBA regulations, 8(a) participants must set up a bona fide place of business--where regular work is maintained by at least one full-time employee--within a specific geographic area to be eligible for a construction contract through the 8(a) program. Construction trailers do not qualify.

      “The suspension of this cumbersome requirement–even temporarily–will certainly make it easier for many 8(a) contractors to meet the eligibility requirements for 8(a) construction contracts,” Bibi Hidalgo, SBA’s associate administrator for government contracting, said in a news release.

      Birch Horton attorneys called the suspension “a temporary fix” and noted that no other SBA small business program has a similar requirement and no large business is held to that standard.

      Birch Horton lawyers also said that while the SBA rule on geographic office locations has been suspended, a solicitation may include its own geographic location rules.

      The 8(a) bona fide business geographic location requirement “is unique to 8(a) construction contracts and is statutorily mandated by the Small Business Act. While SBA cannot remove this requirement from its regulations without direction from Congress, SBA is suspending this requirement in light of the pandemic and to make it ‘easier and less costly’ for small disadvantaged businesses,” PilieroMazza attorneys wrote in a client alert on Aug. 25.

More information:
SBA announcement: https://bit.ly/3kE2bZu
Birch Horton: https://bit.ly/3DB85mN
PilieroMazza: https://bit.ly/3zQx0AJ

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