House Panel Favors 8(a), Service-Disabled Vets Firms The House Small Business Committee has voted to raise the limits on sole source contracts and make it easier to award sole source work to service-disabled veterans. The Small Business Contracting Program Improvements Act, H.R. 3867, would also order immediate implementation of the set-aside for woman-owned businesses that has been delayed for nearly seven years. The committee approved the bill Oct. 18 on a 21-4 vote, with four Republicans joining Democrats in favor. Chairwoman Nydia Velazquez, D-NY, said many small business organizations and veterans’ groups also support it. However, Ron Newlan, chairman of the HUBZone Contractors National Council, described the bill as “the HUBZone decimation act of 2007.” The bill’s provisions generally favor 8(a) and service-disabled veteran-owned companies at the expense of HUBZones. The committee’s ranking Republican, Steve Chabot of Ohio, said, “Instead of pitting various small business owners against each other, we should expand opportunities for all small businesses on an equal basis.” Sole Source Contracts The bill would increase the limits on sole source awards to $5.1 million, up from $3 million, and $5.5 million for manufacturing, from $5 million. It would eliminate the “rule of two” for SDV companies; they could receive sole source awards without regard to whether a second SDV business is capable of doing the work. That brings SDV firms to parity with 8(a) companies “at the top of the list for receiving federal contracts,” Velazquez said. Women’s Set-Aside The bill orders immediate implementation of the set-aside program for woman-owned businesses that was signed into law in 2000. SBA has not implemented the program. After a series of studies, SBA’s proposed rule is now being reviewed by other agencies. Administrator Steven Preston has said that review will not be completed until after the first of the year. 8(a) Program The bill raises the net-worth limit for new 8(a) business owners to $550,000, from the current $250,000. Velazquez had originally proposed a $750,000 limit. SBA Administrator Preston said $550,000 would be an adequate adjustment for inflation in the years since the limit was set in 1988. The bill abolishes the current $750,000 net-worth limit for business owners to remain in the 8(a) program. No new limit was set. Rep. Roscoe Bartlett, R-MD, commented, “If you have assets of $550,000, plus a home, plus a business, you’re a millionaire…We now are defining a millionaire who is disadvantaged and needs protection in the marketplace.” Bartlett voted against the bill. It extends the time for participation in the 8(a) program to 10 years, from the current nine. HUBZone Program The bill places new restrictions on HUBZone businesses. Contracting officers would no longer be required to set aside an award if two HUBZone companies were able to do the work; instead, the contracting officer “may” set it aside. By making HUBZone a discretionary program, the bill moves those companies to the back of the line for set-asides. The bill also requires SBA to conduct a site visit to a HUBZone firm before it receives its second set-aside contract. It restricts HUBZone construction companies to work within 150 miles of their home office. Newlan, of the HUBZone contractors group, said the provisions would cripple the program. Velazquez said new controls were needed because two investigations by SBA’s inspector general have found widespread evidence that many HUBZone companies were ineligible. But Rep. Bartlett said no HUBZone firm has been prosecuted for fraud since the program was enacted nine years ago. HUBZone was a Republican creation and is a predictable target for attacks by the new Democratic majority in Congress. But the program has many defenders among Senate Republicans, and Newlan held out hope that they would block any restrictions. Protests The bill would give any small business the right to protest an award in any category. For example, an 8(a) company could protest a HUBZone award, and vice versa. The House passed legislation in May that would increase the governmentwide small business procurement goal to 30%, from 23%. It would also require businesses to recertify their size status annually, rather than every five years, as SBA now requires. The Senate Small Business Committee has not yet moved contracting legislation.