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Sequestration is Bad for Business

Impact of SBA Size Standard Changes on Small IT Businesses

The 2012 Small Business Congress – Get Your Seat for this Pivotal Event

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Bill Jaffe
October 24, 2012
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To resolve the United States debt-ceiling crisis, the Budget Control Act of 2011 was signed into law by President Obama on August 2, 2011.

The President had asked the Congress to extend the debt ceiling, but they couldn’t come to a decision about how to do that. So they decided that they would go ahead and extend the debt ceiling anyway, so that we could legally afford the debt that we needed to issue.

To force themselves to eventually make a deal, they chose two huge amounts of money to be “sequestered” (removed) from their budgets if they failed to come to agreement – a Sword of Damocles, of sorts. $550 billion would be taken from the Defense budget (something very important to the Republicans – and to many federal contractors) and $550 billion would be taken from the Medicare budget (something very important to the Democrats), and these amounts would be used for eventual debt reduction.

Unfortunately, they still haven’t come to an agreement, and so these cuts are scheduled to go into effect as of January 2nd, 2013. There is hope that a special session after the November 6th election might, just might, lead to a decision. But can it wait?

According to the WARN Act (Worker Adjustment and Retraining Notification Act), employers with 100 or more employees are required to give 60 days notice of impending job loss. That means that contractors who might lose contracts as a result of the budget cuts will have to notify their employees by November 3rd, 2012, only a few days before the election.

There has been a lot of controversy over a memo issued by President Obama at the end of September, instructing Federal contractors not to warn their employees of potential layoffs that might result from sequestration.

The problem for us as contractors is that we simply do not know what’s going to happen. Will the cuts go into effect? Which programs will be affected? How will this issue be resolved?

Many agencies are responding by simply no longer committing to anything new or even to renewing existing contracts, until they see the color of the money – or a commitment to an agreement after the election.

Furthermore, the uncertainty affects contract hiring, longevity of projects and contracts, marketing and business decisions, etc. Uncertainty is definitely bad for business, and this time, it’s a bit worse, because the looming election just compounds the uncertainty.

Related posts:

  1. H.R. 3893: Subcontracting Transparency and Reliability (STAR) Act of 2012
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The All-Small Mentor-Protégé Program

SBA had a well-established mentor-protégé program (MPP) for SBA 8(a) certified firms but lacked an MPP program for other small business concerns and specifically, one for specialized certified concerns such as WOSB, EDWOSB, SDVOSB, & HubZone. The 2010 Jobs Act and 2013 NDAA gave SBA the authorization to address this by establishing an all-encompassing mentor-protégé program. Ms. Sandi Clifford, deputy director of the All Small Mentor-Protégé Program (ASMPP), visited the Mid-Tier Advocacy (MTA) earlier this year to discuss the program. Here are some of the highlights of this candid and informative discussion: As Ms. Clifford explained, mentor services to protégés include: • Management and technical assistance (internal business management systems) • Financial assistance (in the form of equity investments and/or loans) • Contracting assistance (contracting processes, capabilities acquisitions and performance) • International trade education (learn how to export, international trade business plan, finding markets) • Business development assistance (strategy, finding contracting and partnership opportunities) • General and/or administrative assistance (business processes and support) As administrators of the program, SBA provides: • Central HQ as opposed to 8(a) distributive model • Online application – certify.sba.gov • Online course tutorial requirement • Annual review and evaluation • Template agreements, i.e., MPA (Mentor-Protégé Agreement) Other All-Small Mentor-Protégé Program (ASMPP) details: • A protégé may generally only have one mentor at a time; SBA may approve a second (two is the maximum) where no competition exists, or if the protégé registers under a new NAICS or otherwise requires new mentor skills.  • Both protégé and mentor must be for-profit (with exception of protégé being an agriculture cooperative). • A mentor may have no more than three protégés at same time (no lifetime limit). • A participant can be both a protégé and mentor at the same time, if there is no competition or conflict. • The ASMPP is self-certifying and is open to businesses who qualify as small in their primary NAICS code, or who are seeking business development assistance in a secondary NAICs where they also qualify as small.  • SBA will not authorize MPAs in second NAICS in which firm has never performed any work; or where firm would only bring “small” status to Mentor and nothing else. • Existing 8(a) firms in last 6 months of the 8(a) program may transfer their MPA to the ASMPP via the online application process. Coordinate with 8(a) office to fine tune the process but there is no reapplication required. • Application requirements include upload of business plan, but no financial statements or tax returns. • JV agreements: ASMPP will not review and approve joint venture agreements. How to apply for the ASMPP: • Applicants are required to register in the System for Award Management (SAM) prior to submitting their mentor/protégé application. • Complete your business profile in certify.SBA.gov. • Evaluate and select your mentor prior to applying. This is not a matching program. SBA will not find a mentor for you. • Begin the ASMPP application process. • Protégés and mentors must complete the online tutorial and have their certificate of completion and all other required documents ready for upload Thank you to Sandi Clifford, Deputy Director, All Small Mentor-Protégé Program, for this helpful overview. TAPE has mentored several small businesses over it’s life as a large business (we’re large in some NAICS codes, though still small in others) and it has been gratifying, satisfying, and integral to our success. As protégés ourselves, we have benefitted from working with some really classy large businesses, and have also had the experience of being a protégé and really getting no tangible benefits. We are currently working with two small businesses, and negotiating ASMPP agreements. You can learn more about the ASMPP on the SBA site. To join MTA and attend future events like this one, please visit www.midtier.org.
Bill Jaffe
August 23, 2017
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