SBA’s Implementation of HUBZone Changes

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This is a guest post by Sam Finnerty of PilieroMazza PLLC, highlighting some upcoming changes to the SBA’s HUBZone program, a program that limits competition for certain contracts to businesses in historically underutilized business zones.

These changes were designed to keep investment flowing into HUBZones and make sure they don’t lose their HUBZone status just because things got better. We don’t want making things better to stop the investment train.

As always, consult an attorney about how these changes might apply to your business.

On November 12-13, 2019, the U.S. Small Business Administration (SBA) hosted its 5th Annual Mentor Protégé Conference where SBA’s John Klein, Associate General Counsel for Procurement Law, answered questions from the audience regarding various mentor-protégé issues. Mr. Klein provided some key insights regarding recent and upcoming SBA rulemakings that will have a significant impact on small business government contractors.

On November 13, 2019,SBA sent a final rule to the Federal Register for publication that will implement comprehensive revisions to the regulations governing the Historically Underutilized Business Zone (HUBZone) Program. These revisions, as proposed in October 2018, are available here. A couple of the key changes are:

(1) an individual will continue to be treated as a HUBZone resident if that individual worked for the firm and resided in a HUBZone at the time the concern was certified or recertified as a HUBZone—even if the area where the individual lives no longer qualifies as a HUBZone or the individual has moved to a non-HUBZone area; 

(2) HUBZone firms will only be required to certify on an annual basis, meaning such concerns will no longer be required to expressly qualify as a HUBZone at the time of each offer for a HUBZone contract and award.

In addition to the revisions proposed in October 2018, the final HUBZone rule will also implement a significant change to the regulations that was proposed during public comment. Specifically, the final rule will indicate that when a company buys an office located in a HUBZone or enters into a long-term, 10-year lease for such office space, intending the space to be its principal office, the concern will be able to meet the principal office HUBZone criterion for a period of at least 10 years—even if at some point after the property is purchased or leased, the office location no longer qualifies as a HUBZone. The idea behind this rule is that the HUBZone program should incentivize and reward companies that invest in HUBZones.

For more information on this and other topics impacting government contractors, please contact a member of PilieroMazza’s Government Contracts Group.

Samuel Finnerty, the author of this Client Alert, is a member of the Firm’s Government Contracts, Small Business Programs & Advisory Services, and Government Contracts Claims and Appeals practice groups.

This post originally appeared on the PilieroMazza blog at https://www.pilieromazza.com/this-just-in-sbas-implementation-of-hubzone-changes-and-small-business-runway-extension-act-coming-soon and was adapted and reprinted with permission.


SBA Adopts Five-Year Receipts Calculation

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This is a guest post by PilieroMazza Partner Megan Connor and PilieroMazza Associate Anna Wright, members of PilieroMazza’s Government Contracts and Small Business Programs & Advisory Services practice groups.

Effective January 6, 2020, SBA will change the period of measurement for receipts-based size calculations from three years to five years. This change is the result of the Small Business Runway Extension Act of 2018 and SBA’s final rulemaking on December 5, 2019. This is a long-awaited change and will have far-reaching impacts for government contractors.

Importantly, SBA is adopting a two-year transition period, until January 6, 2022, during which firms may choose to use either the current three-year calculation or the new five-year calculation. After January 6, 2022, all companies must use the five-year period of measurement in determining their size under a receipts-based calculation. PilieroMazza strongly advocated for a transition period before Congress and in its comments to SBA’s rulemaking.

This shift from using a three-year period to a five-year period for the average annual receipts calculation will affect all of SBA’s receipts-based size standards, though the change in calculation will not yet apply to the SBA Business Loan and Disaster Loan Programs, which will be handled in a separate rulemaking. SBA did not address in its rulemaking how SBA would view contractors that have been using the five-year period of measurement since the Runway Extension Act became law nearly a year ago.

If you would like to know more about these changes and their potential impact on your company, please contact a member of PilieroMazza’s Government Contracts Group.


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

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This is a guest post by Pamela J. Mazza, Managing Partner, PilieroMazza, PLLC.

On November 8, 2019, SBA 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, 2020, and PilieroMazza’s highlights are below.

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 FSOs and provide guidance to agencies on when to allow joint ventures to bid on contracts requiring a clearance.

Multiple-Award Contracts (MAC)

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

Self-certification

  • 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.

Recertification

The proposed rule would that:

  • 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 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 where certain extenuating circumstances exist that apply to multiple contracts.

Tribally-Owned Applicants and Participants

The proposed rule would require that:

  • 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 be immediately qualified to apply using that code: although the program participant stated that code as its primary NAICS code, it really was not the primary NAICS code, so that code is now available for another 8(a) applicant;
  • 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 not be required to submit small business subcontracting plans, as long as they are small for the NAICS code assigned to the contract; and
  • The excessive withdrawal rule generally 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 mixed contracts include any combination of services, supplies, or construction, though construction was inadvertently omitted from the proposed rule;
  • 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;
  • Clarify that affiliation may be found under the newly organized concern rule where both former and current officers, directors, principal stockholders, managing members, or key employees of one company organize a new company in the same or a related industry; and
  • 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.

This post was originally published on the PilieroMazza blog at https://www.pilieromazza.com/blog-sba-publishes-important-proposed-rule-changes-to-8a-and-mentorprotg-programs and was reprinted with permission.

Note from Bill: The goal here is to make the rules consistent for everybody, and this is a very good thing. As a matter of speculation, it is possible we are also heading towards some kind of consolidation between the service-disabled veteran-owned small business program and the 8(a program), which are not exactly the same but probably could be treated the same. It looks like the SBA is moving in that direction, however that is not official yet by any means.


NDAA FY 2020 Section 806 – Fixed-Price Contracting

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Section 806 of the FY2020 NDAA directs the Under Secretary of Defense for Acquisition and Sustainment to review how the  Department of Defense uses fixed-price contracts.

This is a topic that comes up periodically. To the uninitiated, it would seem that a fixed-price contract will result in larger profits, but that is not always the case.

We first have to understand that while it seems that fixed-price contracts have the potential for higher profits, they also have the potential for substantial losses. Assuming that there are no changes made, you will be obligated to deliver some set of things or services or things with services, at a fixed price, and it just isn’t necessarily clear when you go into this arrangement that the arrangement will be profitable.

It is true that you’ve priced it as a contractor to be profitable, however, circumstances change and the project can be different than you anticipated. Yet you’re still obligated to deliver that same set of things or services or things with services, for that same fixed price.

For example, let’s say I’m obligated to deliver 100 people throughout the country at various locations to do some clerical work. I’m required for those workers to have a certain level of skills, and a certain type of clearance. Well, I actually might deliver fewer people for a short period of time, because some people are in transit, or some have quit and not yet been replaced, but I’m still getting paid as if all 100 workers are still in place.

That’s good for me because I’ve getting paid a fixed price for 100 people and there’s only 95 on the job. Of course this is assuming that the number of people I’m not delivering doesn’t upset the client or cause me to miss deadlines or create problems that threaten my contract.

On the risk side, let’s say we’re in a very low unemployment rate, with correspondingly upward pressure on wages and skillsets. While I’ve told my client I’d deliver those 100 people for $65,000 each, now I’ve got to pay my employees $70,000 in order to get the required level of skill and so forth. Then my current people see what the new people are making and they want more money as well. Wages are up, which is good for people in general, but as a contractor I have to pay more and can’t charge the client more because we have a fixed-price contract.

So the reason fixed-price contracts are often won with a lesser value is because the risk is higher and therefore the margin that I pitch is higher. Often we build in contingencies as well, which might mean I think I can hire at $60,000, so I pitch at $65,000. But I could still end up having have to hire some at $68,000 or $70,000 so now I’m starting to lose money on those people.

This provision brings us into the study phase. The 2020 NDAA directs the Defense Department to look at the circumstances in which fixed-price contracts are used and awarded, and the experience from the government’s perspective.

Understand that the legislators are including many different forms of contracting that include the words fixed price that aren’t necessarily completely fixed, which has muddied the waters a little bit. They’ve included cost plus fixed fee, another form of fixed-priced contracting, and fixed labor rates. This will all come out in the wash.

They set a pretty aggressive deadline of February 2020 for the Under Secretary to brief the congressional defense committees on the findings of the review. If you have any comments once the NDAA is approved, let us know and we should be able to put our oar in the water through the Mid-Tier Advocacy group.


Comparing Commercial and DoD/Federal Market Sector Business Environments

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This is a guest post by R.J. Kolton, SVP of Data Systems Analysts (DSA), Inc. and VP of Mid-Tier Advocacy, Inc.

The 17-person 809 panel was tasked with finding ways to streamline and improve the defense acquisition process. I met with the 809 Panel in February 2017 and I found it important to speak about the challenges facing mid-tier companies.

Another question the panel asked me to address was what are the differences between contracting with the Department of Defense and a commercial sector.

New entrants, such as “Silicon Valley” companies, entering via OTAs and other mechanisms will eventually confront the same challenges as traditional players in the defense sector. This is particularly the case as they achieve success, become established, and play by the same rules as traditional government contractors.

These new entrants must prepare to operate in a defense contracting business environment. Described below are key differences between the commercial and DoD business environments, which impact directly on the business models companies operating in those environments adopt:

1) Commercial Environment:

  • Customer/company commercial contractual practices reflect the need to adhere to general legal contractual requirements as defined by local, State, and federal government and are far less complex and formal than the practices encountered when working with DoD and to comply with the FAR/DFAR.
  • Commercial marketplace involves rapid customer decision making and compressed timelines.
  • Commercial marketplace includes flexible contractual arrangements that foster rapid business deals.
  • In general, there is no requirement to meet specific socio-economic/small business targets in contracting.
  • Customers have more flexibility to develop and establish criteria for selecting venders.
  • Awarded work often involves rapid delivery of products and services.
  • Companies focus on rapidly closing deals, maintaining continuous cash flow, and minimizing peaks and valleys in revenue/profit streams.
  • Companies maintain robust sales and marketing capacity to continuously sustain and grow business.
  • Commercial companies offering products/services relevant to DoD market sector stress continuous R&D and product scaling and improvement in order to sustain competitive position.
  • Losing companies in commercial transactions have little recourse to protest customer’s decision.

2) DoD Contracting Environment:

  • Contractual practices are guided by FAR and DFAR, unless waived, such as OTAs; procedures are formal and time intensive.
  • Customer procurement strategies, criteria, and practices reflect guidelines provided by Executive Branch, Congress, DoD, and DoD agencies, which leads to complex customer requirements.
  • Customer decision making involves multiple layers of leaders; all must adhere to specified procedures, which is time intensive.
  • Contractual arrangements promote adherence to intent and letter of the law rather than focusing on rapid award of contracts.
  • DoD agencies must stress adherence to socio-economic/small business targets.
  • DoD agencies allocate significant time and resources to develop criteria, specifications, and requirements for contractual competitions; companies operating in the defense market space establish business model that are influenced by those government characteristics.
  • Companies focus on obtaining access to contract vehicles, winning task orders or full & open competitions, and protecting incumbent work.
  • Awarded work often involves multi-year contracts; this reduces the challenges associated with short duration commercial work.
  • Companies address continuous cash flow and minimizing peaks and valleys in revenue/profit streams by sustaining numerous concurrent contracts.
  • Successful defense-oriented companies maintain BD teams that focus on account management/business intelligence, capture, and proposal development.
  • While many defense companies by their nature focus on R&D and building new capacity to remain competitive, they are influenced in their investments by the need to invest in activities required to meet DoD certifications and requirements (e.g.,  financial and security compliance, ISO-standards, CMMI-standards, etc.).
  • DoD is generally unwilling to compensate companies for being innovative; viewed as a value-added trait.
  • Companies operating in the defense market sector must obtain and sustain key certifications to remain competitive, such as ISO 9001:2008/2015, ISO 20000, ISO 27001, CMMI-3 & 4, NIST compliance, etc. This involves major internal investments.
  • Losing companies in DoD transactions can protest large procurements; this impacts government procurement strategies and timelines.

Companies must design their organizations to optimize performance relative to the customers they serve, and as I’ve shown, the commercial market is very different form the Government market.

Given this, the DoD will be challenged in enticing non-traditional companies to enter the DoD market sector. While the DoD can offer short-term relief to the various barriers to entry, non-traditional players in that market sector will eventually have to adapt business models that support congressional and DoD policy requirements.

Randy J. (“RJ”) Kolton is VP of Mid-Tier Advocacy Group, and Senior Vice President (SVP), Business Development for Data Systems Analysts (DSA), Inc., a mid-sized, employee-owned company that is a leader in delivering business driven information technology and consulting solutions and services to the Federal Government and industry. Building on experience spanning more than five decades, DSA has deep expertise and comprehensive understanding of the operational, security, collaboration, and identity management challenges our customers must address.


7 Ways that Mid-Tier Companies Are Being Squeezed Out of DoD Contracts

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This is a guest post by R.J. Kolton, SVP of Data Systems Analysts (DSA), Inc. and VP of Mid-Tier Advocacy, Inc.

The 17-person 809 panel, created in Section 809 of the FY 2016 National Defense Authorization Act (NDAA), was tasked with finding ways to streamline and improve the defense acquisition process. The panel had two years to develop recommendations for changes in the regulation and associated statute to achieve those ends.

As part of its review, the Section 809 Panel reviewed the DoD small business program. The panel ultimately developed several specific recommendations designed to improve how the DoD small business program supports DoD initiatives. One of the major areas of interest was determining how to promote the entry of non-traditional DoD companies who offered advanced technology and innovative solutions to DoD challenges.

I met with the 809 Panel in February 2017. I found it important to note that mid-tier companies performing in the DoD market sector play a major role in generating jobs and enhancing overall economic growth for the Nation and that mid-tier companies, defined as companies earning $25M-$500M annually, are being squeezed by small businesses on one side and by large businesses on the other.

In that context, I offered seven points, which also generally apply to small businesses, innovating companies developing new technologies, and companies that are new entrants into the defense market space.

  1. First, mid-tier companies cannot grow effectively if they are primarily subcontractors to large businesses since subcontractors are unable to obtain significant workshare.  Large businesses have little motivation to offer mid-tier companies significant work since DoD acquisition policies encourage them to award subcontracts to small businesses. 
  2. Second, the primary pathway for growth for mid-tier companies is to win large multiple award, indefinite delivery/indefinite quantity (IDIQ) contracts as primes so they can compete for agency task orders. However, to win these IDIQs, mid-tier companies must surmount major challenges:
    • Mid-tiers are often locked out of large multiple award IDIQs owing to significant past performance criteria.
    • The tendency of DoD agencies to consolidate contracts to reduce administrative burdens and costs, which favors large businesses. Such IDIQ consolidation reduces opportunities for mid-tier companies to penetrate and support customer agencies, which constrains future growth. Consolidation also poses risk to growth owing to long period of performance of awarded IDIQs; mid-tier companies often have to wait a decade before they can compete again as an IDIQ prime if they miss out on the near-term opportunity.
  3. Third, mid-tier companies must contend with ever rising costs that increase their indirect rates and make it more difficult to compete against large businesses. These cost increases are the result of several factors, chief among them are supporting employee benefits under newly enacted national healthcare polices, responding to current and emerging cyber security requirements, maintaining sophisticated auditable financial systems, and obtaining certifications and appraisals, such as ISO-9001:2008/20015, ISO 20000, ISO 27001 and CMMI-3/4, which DoD agencies increasingly require of companies seeking to pursue and perform work.
  4. Fourth, while mid-tier companies are capable of providing the same or better level of service and customer relations as large businesses, their competiveness is hampered by higher overhead costs relative to large businesses because they lack the scale to absorb those indirect costs. These higher costs, combined with the lowest price technically acceptable and low price competition environment we are experiencing in the defense sector, hinder mid-tier companies in achieving success as they compete against large business on full and open competitions. 
  5. Fifth, North American Industry Classification System (NAICS) codes used to classify DoD work and define company size standards offer little support for mid-tier companies. While some NAICS codes, such as 541712/5, Research and Development, reflect a size standard of 1000 employees, up from 500 employees in Feb 2016, DoD agency contracting officials tend to strictly interpret the type of work performed and the size standard offers little benefit to mid-tier companies. Hence, there are no contracting tools to benefit or promote mid-tier company growth.
  6. Sixth, graduating small businesses confront major challenges as they evolve into mid-tier companies and must compete as newly minted large businesses. While seeking a merger or acquisition may represent a potential exit strategy, in many cases, successful small businesses owe their growth to small business contract awards, which are of little value to large business acquirers. Hence, the businesses are at great risk of failing shortly after graduating from small business status: they are too big to be small and too small to be effective as large businesses. While the Congress and DoD have done an excellent job in establishing policies that promote small business growth, particularly for socio-economic challenged groups, they have failed to establish an effective strategy to promote business health and growth across the total business life cycle, from start-up/small business through mid-tier to large business.
  7. Seventh, and my final point, small business officials in DoD agencies generally sympathize with the challenges mid-tier companies confront, however they state they can do little to help without congressional and/or department involvement and legislation. Their focus is on accomplishing their duties by promoting the various small business classifications.

The US lacks a strategic approach to promoting growth of US businesses supporting the DoD. The current government programs that promote the interests of small businesses fail to account for their eventual growth into being mid-tier companies. At that point, such companies must compete against small businesses, other mid-tier companies, and very large companies. This poses great challenges to rising small businesses. I believe Congress and DoD should seek avenues to promote the lifecycle growth of companies by accounting for those mid-tier company challenges.

Randy J. (“RJ”) Kolton is VP of Mid-Tier Advocacy Group, and Senior Vice President (SVP), Business Development for Data Systems Analysts (DSA), Inc., a mid-sized, employee-owned company that is a leader in delivering business driven information technology and consulting solutions and services to the Federal Government and industry. Building on experience spanning more than five decades, DSA has deep expertise and comprehensive understanding of the operational, security, collaboration, and identity management challenges our customers must address.


OMB Acquisition Reform Proposal 6 – Removal of Recovered Materials Certification Requirement

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We’ve been discussing the Office of Management and Budget (OMB)’s six proposals for streamlining the acquisition process and improving the acquisition environment, part of the FY 2020 National Defense Authorization Act (NDAA), and we’ve reached the final post in the series.

This proposal would revise 42 U.S.C. 6962(c)(3)(A), which requires certification by Federal contractors to estimate the percentage of the total recovered material content for U.S. Environmental Protection Agency (EPA)-designated item(s) delivered and/or used in contract performance, and to submit a certified report to their contracting officer. 

This proposal has to do with the administration’s move to reduce “regulatory burdens.” It is part of a general overall trend, and here at TAPE we are unrelentingly in favor of reducing any kind of administrative burden. In this case there was a duplication where things had to be reported both to the EPA and to the contracting officer, who really wasn’t going to do anything about it because it’s the EPA who needs to keep track of recovered products.

For example, if you’re removing asbestos from a building, you have to report that it’s there, and how you’re going to dispose of it by taking it to the right place, getting it recycled, etc. Since that is an EPA requirement, not a FAR requirement, it makes good sense to leave it out of FAR. There’s still a burden, you still have to report it, but you only have to do it once.

Don’t we love the OMB?


Proposed Rule to Align the 8(a) BD and EDWOSB Program Requirements

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In a previous post we discussed the SBA’s proposed rule about the certification processes for women-owned small businesses (WOSBs) and economically disadvantaged women owned small businesses (EDWOSBs).

This proposed rule, posted in May 2019, also looks to make the economic disadvantage requirements for the 8(a) Business Development (BD) program consistent to the economic disadvantage requirements for women-owned firms seeking EDWOSB status. This proposed change would eliminate the distinction in the 8(a) BD program for initial entry into and continued eligibility for the program.

Under the current system, the economic disadvantage criteria for EDWOSBs are the same as the continuing eligibility criteria for the 8(a) BD program, however an entity that applies for EDWOSB and 8(a) status at the same time, might be found to be economically disadvantaged for EDWOSB purposes, but denied the eligibility for the 8(a) BD program based on not being economically disadvantaged.

The new rule looks to make economic disadvantage for the 8(a) BD program consistent to that of an entity seeking to qualify as economically disadvantaged for the EDWOSB program.

The SBA specifically asked for comments (comments were closed on July 15, 2019) on the net worth standard that would be used for the EDWOSB and 8(a) programs. A 2017-18 study that the SBA conducted supported a $375,000 adjusted net worth for initial eligibility, in comparison to the current threshold of $250,000.

The SBA considered applying a $375,000 net worth standard to both the 8(a) BD and EDWOSB programs, however the study did not take into consideration differences in economic disadvantage between businesses applying to the 8(a) BD program and those continuing in the program once admitted.

The new rule proposes to use the $750,000 net worth continuing eligibility standard for all economic disadvantage determinations in the 8(a) BD program.

SBA specifically requested comments on whether the $375,000 net worth standard or the $750,000 net worth standard should be used for the 8(a) BD and EDWOSB programs, as well as how the different standards would affect small business owners participating in the federal marketplace.


SBA Proposed Rule to Amend WOSB and EDWOSB Regulations

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The main goal of the U.S. Small Business Administration’s (SBA) proposed rule (May 14, 2019) to amend regulations on the Women-Owned Small Business program is to put in place a statutory requirement to certify women-owned small businesses (WOSBs) and economically disadvantaged women owned small businesses (EDWOSBs), which can make them eligible for set-aside and sole source awards.

This proposed rule would allow an entity to be eligible to receive awards under the Women-Owned Small Business program, as long as its application is pending.

If that entity were to be selected for the award, its application would be prioritized by the SBA, which would lead to a determination within 15 days. The SBA would provide a free electronic application process to the entities looking to get WOSB and EDWOSB certified.

The provision also acknowledges that SBA may have difficulty processing all the potential applications in a timely manner, as there are approximately 10,000 firms currently in the WOSB repository.

The anticipated increase of applications from firms could possibly overwhelm the SBA, which typically processes around 3,000 applications per year for 8(a) status, and about 1,500 a year for HUBZone status.

The SBA asked for comments on possible solutions to avoid the potential bottleneck. Comments were accepted until July 2019 and they received more than 300 comments.

It’s important to note that if or when the rule is finalized, the certification requirement will apply only to those entities that wish to compete for set-aside or sole source contracts under the WOSB Contract program.

WOSBs that are not certified will not be eligible to compete on set asides for the program. However, women-owned small businesses that do not  participate in the program may continue to self-certify their status, receive contract awards outside the program as     WOSBs, and count toward an agency’s goal for awards to WOSBs.

Contracting officers would be able to accept self-certifications without verification for subcontracts, full-and-open awards, and small business set-asides.

The SBA believes that the proposed rule will bolster the number of federal contract awards to WOSB and EDWOSB-certified businesses, as well as better help agencies reach the 5% federal contracting goal for women-owned small businesses.

Under the current system, contracting officers must review a contract awardee’s documentation to verify an applicant’s WOSB and EDWOSB eligibility.

From the SBA press release: “By establishing a transparent, centralized, and free certification process, the SBA aims to provide contracting officers with reassurance that firms participating in the WOSB program are eligible for awards and encourage them to set aside contracts for women-owned small businesses.”


OMB Acquisition Reform Proposal 5 – Task and Delivery Order Protest Threshold

Business creative concept. People in crisis with banners protesting.
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This proposal seeks to standardize the task and delivery order protest dollar threshold for defense and civilian agencies by raising the civilian agency threshold from $10 million to equal the defense agency threshold at $25 million.

So while this is a straightforward action, it does have extensive implications. Currently, the task and delivery order protest threshold are those things that apply to multiple-award IDIQ-type contracts.

Let’s say, for example, you’re on a contract vehicle like GSA Aliant and you lose a task order. Currently, you can only lodge a protest if the dollar value of the contract exceeds $10 million, however the same situation on the defense side has a threshold of $25 million before you can protest.

If this OMB proposal goes into effect, then everyone would be subject to the higher $25 million limit, below which a protest would not be allowed on task and delivery order contracts.

This will have the effect of reducing the number and likelihood of protests in the civil sector. Things that were formally protestable between $10 million and $25 million will no longer be protestable.

From the government’s standpoint, it is certainly sensible for both sides to have the same rules. By taking on the larger standard, however, it will reduce the protestasbility of a large number of task orders. This is likely to be more of a problem for small businesses then for large businesses.

The government is attempting to streamline and reduce the activities that are different between civil and defense section and in the long run, and that’s a good thing. On the other hand, the reason the rules are different is there is less money in the civil sector and the jobs are smaller in size, and that’s the way it’s always been. Ultimately this is not good news for the small businesses who now cannot protest.


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