SBA Proposed Rules — Still Time for Industry Input

Small Business Regulations Under Review

      On November 8, 2019, the Small Business Administration issued an extensive list of proposed changes to the regulations governing small business programs. The changes would overhaul several SBA programs and their respective requirements. Some of the major proposed changes and comment areas proposed by the SBA include:

• Consolidate the 8(a) Business Development and the All Small Business Mentor-Protégé Programs to create a uniform system of rules and characteristics.
• Limit mentors only to those firms having $100 million or less in average annual revenue.
• Eliminate the three-contract maximum limit in two years for joint ventures (the “3 in 2” rule). However, SBA plans to continue to impose the two-year time limitation.
• Remove the requirement for an 8(a) JV to be approved by the SBA prior to award for competed 8(a) contracts; however, SBA JV preapproval would still be required for 8(a) sole source awards.
• Revisions to facility security clearance requirements for joint ventures.

Positive Impact of the Proposed Changes

      The proposed rule changes seek to reform the SBA regulations to eliminate ambiguities and remove unnecessary duplication of functions within the SBA. The changes are intended to benefit the small business community by making SBA programs more efficient and effective. In addition, while the proposed rules reduce regulatory burdens imposed on small business concerns, the modifications may also be beneficial to any large business considering entering into a JV agreement or mentor-protégé agreement with an 8(a) Participant.

Extension of Comment Period

The SBA originally scheduled the comment period to close on January 17, 2020. SBA recently announced that they are extending the comment period an additional 21 days, however, in response to the significant level of interest generated by the proposed rule and requests from multiple stakeholders for an extension. This indicates that the SBA is honestly seeking industry input to assist them in implementing practical changes to help reduce excessive burdens on 8(a) Participants. The new deadline for comments is February 7, 2020.

      The SBA specifically requests industry comments and recommendations on a few key areas. SBA is interested in comments on the revised mentor-protégé relationship such as the $100 million size restriction of a mentor, or other recommendations to better serve the small business protégé. Input is also being sought on joint ventures, their preapproval, and whether the JV must have its own facility security clearance. Comments may be submitted to the SBA through the Federal eRulemaking Portal at http://www.regulations.gov.

Additional Information

If you have questions regarding the SBA proposed rules and their impact, would like assistance drafting comments, or other federal government contract issues, contact the professionals at Williamson Law Group at (301) 788-8198 for confidential assistance and counsel, or e-mail info@williamsonlawgroup.com.

This Contract Compliance Update is to keep readers current on government contract matters and is not intended to be legal advice. If you have any questions, please contact Williamson Law Group for legal advice regarding your particular case.