Government Contracts Alert: Small Business Administration Proposes Rule Changes, Seeks Small Business Community Input

December 4, 2019

The Small Business Administration (SBA) recently announced that it has completed its review of regulations to identify those that may be revised or eliminated pursuant to President Trump’s Executive Order 13771, issued Jan. 30, 2017, and titled “Reducing Regulation and Controlling Regulatory Costs.” Based on that review, the SBA is proposing important revisions, some of which are summarized below.

Among other areas, the SBA’s proposed changes are likely to impact a large number of small businesses as they pertain to recertification rules related to multiple award contracts (MACs), for which the new rule proposes modification of 13 C.F.R. §121.404. Currently under this regulation as applied to MACs, the SBA determines the size of a business at the “time of initial offer.” In other words, if a business is small at the time of its offer for the MAC, the business is considered small for each order issued against the MAC, “unless a contracting officer requests a new size certification in connection with a specific order.” Under the proposed rule, business concerns would be required to recertify their size and/or socioeconomic status for all set-aside orders under unrestricted MACs.

Second, the proposed rule would require a business concern to recertify its socioeconomic status for all set-aside orders if the required socioeconomic status for the order is different than the classification of the associated MAC. The proposed rule provides, as an example, a recertification for a HUBZone set-aside order on a small business MAC.

Third, the proposed rule would also expand the scope of allowable size and/or socioeconomic, order-level bid protests. This proposed change would apply to unrestricted MACs and set-aside orders based on a socioeconomic status that differs from the underlying set-aside MAC classification.

Fourth, the proposed rule would merge the 8(a) Business Development Mentor-Protégé Program (13 C.F.R. § 124.520) with the “All Small” Mentor-Protégé Program (13 C.F.R. § 125.9). The SBA explains that this revision would eliminate confusion and reduce SBA duplication of functions. One impact of this program merger would be to eliminate the requirement that 8(a) participants gain SBA approval of joint ventures prior to contract award.

The proposed rule may be found in its entirety in the Nov. 8, 2019, Federal Register.

The SBA has requested comments on the proposed rule on or before Jan. 17, 2020. Please contact the authors if you have any questions about the proposed rule, its potential impact, or providing commentary to the SBA under the notice and comment process.

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