Column: SBA Publishes Important Proposed Rule Changes to 8(a) and Mentor-Protégé Programs

     (Editor’s Note: Set-Aside Alert published a story on the SBA proposed rule on page 1 in the Nov. 15 issue)

      The Small Business Administration has published a proposed rule to merge its mentor-protégé programs and amend many of its rules governing the 8(a) program and small businesses. The proposed rule would have significant implications for the government contracting community. Comments are due by January 17.

      Below are our highlights.

Mentor-Protégé Programs

      The proposed rule would:

• Merge the 8(a) Mentor-Protégé Program into the All Small Mentor-Protégé Program;
• Clarify eligibility criteria for proposed mentors and request comments on whether mentors should be restricted to mid-sized firms;
• Provide flexibility for mentors with protégés with principle places of business in Puerto Rico;
• Provide relief from the two mentors over the life of a protégé rule; and
• Provide generally that protégés should be performing work under the North American Industry Classification System (NAICS) code used to qualify for the program.

Joint Ventures

      The proposed rule would:

• Eliminate joint venture approval requirements for competitive 8(a) contracts, but not sole source awards;
• Eliminate the “three in two” rule;
• Disallow substitution of joint venture partners who exceed the size standard for long-term contracts prior to recertification; and
• Allow joint ventures to be populated with Facility Security Officers and provide guidance to agencies on when to allow joint ventures to bid on contracts requiring a clearance.

Multiple-Award Contracts (MACs)

      The proposed rule would:

• Require contracting officers to assign the most appropriate single NAICS code to each order under an MAC, whether for a supply or a service to ensure compliance with the non-manufacturer rule, requiring that each NAICS code be included in the underlying MAC;
• Require an offeror to certify as to size and status in order to qualify at the time it submits its initial offer including price for an order under an UNRESTRICTED MAC, except for orders or BPAs issued under an FSS contract;
• Require that, where the socio-economic status is first required at the order level, firms must qualify at that time; and
• Permit size and status protests where the underlying MAC was unrestricted, except for BPAs and orders issued under an FSS schedule.

Certification & Recertification

• The proposed rule would allow a prime to rely on the self-certification of its subcontractor, provided the prime does not have a reason to doubt the certification.
• If a party to a joint venture becomes acquired or merges, only that partner (and not the non-affected partner) must recertify in order to qualify the joint venture to recertify;
• A firm that mergers between proposal submission and award does not qualify for award if it could not or did not recertify, though size protests are permitted; and
• Tribal entities are not required to recertify where ownership changes but the firm is owned to the same extent (i.e. 51%) by the ultimate entity.

8(a) Program

      The proposed rule would:

• Define “follow on contract” for purposes of retaining requirements in the program;
• Loosen the prohibition on immediate family members owning 8(a) firms;
• Allow for certain changes of ownership to occur without prior SBA approval;
• Clarify SBA policy on voluntary withdrawals and early graduations from the program; and
• Under some extenuating circumstances, allow firms to seek and obtain a multiple contract waiver from the sole-source restrictions for failure to comply with the business activity targets.

Tribally-Owned

      The proposed rule would require:

• Where a tribe, ANC, NHO, or CDC is reorganizing but ultimate ownership does not change, no prior SBA approval is required;
• If SBA changes the primary NAICS code of a program participant because the participant has not been operating in its designated primary code for the past three years, another tribal entity may be immediately qualified to apply using that code;
• Appeals be authorized where SBA has changed a firm’s primary NAICS code;
• Potential for success be satisfied by a letter from a Section 17 corporation or some other economic development corporation or tribally owned holding company, so long as it can show financial strength;
• Tribal entities would not be required to submit small business subcontracting plans, if they are small for the NAICS code assigned to the contract; and
• The excessive withdrawal rule generally would not be applied to entities at least 51% owned by a tribe, ANC, NHO, or CDC.

Small Business Rules

      The proposed rule would:

• Require that contracting officers consider past performance of first-tier subcontractors for certain bundled or consolidated contracts and for MACs over a certain dollar threshold;
• Request comments on how the non-manufacturer rule should be applied to multiple item procurements where one or more of the items are subject to a class waiver.

Pamela J. Mazza is the Managing Partner of PilieroMazza. This post has been republished from the PilieroMazza Legal Minute Blog. Visit www.pilieromazza.com.

New rule allows Opp Zones to be designated as HUBZones too

House OKs SDVOSB bills

Dispute over ‘delayed action’ in vendor suspension/debarments

CR extended to Dec. 20

HUBZone rule in effect Jan. 1

FBO transition not so smooth

Anti-Collusion Strike Force

Column: SBA Publishes Important Proposed Rule Changes to 8(a) and Mentor-Protégé Programs

Washington Insider: