In early November, the U.S. Small Business Administration (SBA) announced a number of proposed changes to its regulations in a lengthy release published in the Federal Register. Among the rule changes proposed by SBA in this release are the following:

• Merge the existing 8(a) Mentor Protégé Program and All Small Mentor Protégé Program by eliminating the separate 8(a) Mentor Protégé Program and continuing to allow 8(a) BD Program Participants to participate through the All Small Mentor Protégé Program.
  Rationale: SBA recognizes that the benefits and purposes of the two programs are identical and believes that having two separate mentor-protégé programs is “unnecessary and causes needless confusion in the small business community.” SBA is also considering whether to limit mentors only to those firms having average annual revenues of less than $100 million.

• Eliminate the requirement that 8(a) participants seeking a competitively awarded 8(a) set-aside contract through a joint venture must first submit the joint venture agreement to SBA for review and approval, prior to contract award.
  Rationale: The SBA essentially argues that such review and approval is unnecessary, and that any issues can be identified and eliminated through existing bid protest and size protest processes. Note that the proposed change only applies to competitively awarded 8(a) contract opportunities and that SBA review and approval will still be required prior to 8(a) sole source contract awards to 8(a) joint ventures.

• Establish a new re-certification requirement of size and/or socioeconomic status for all set-aside orders under multiple awarded contracts (MACs) that were awarded as unrestricted (except for orders or BPAs issued under GSA Federal Supply Schedule contracts).
  Rationale: The SBA believes it is unfair to allow contractors awarded a MAC on an unrestricted basis to rely on their size and/or socioeconomic status at the time of the award of such MAC in order to obtain orders that have been set-aside for a specific category of small business contractors that the contractor no longer qualifies for. Re-certification is not required for firms whose size and socioeconomic certifications in SAM are current and correct.

• Change the “3 in 2” rule for joint ventures to eliminate the cap on the number of contract awards that a JV can receive within a two year period.
  Rationale: Joint ventures will still be subject to the two year time limitation. But SBA reasons that the current rule is unduly burdensome to parties to a joint venture that receives multiple awards because they are already allowed to form a new joint venture entity once the 3 contract limit is reached. In other words, the revised rule will continue to prohibit joint ventures from receiving new contract awards later than two years beyond the date of its first award.

• Modify the SBA approval requirements for changes of ownership in 8(a) participant firms to eliminate SBA approval for ownership changes of less than 20% or any changes in ownership that only result in an increase of the ownership percentage of the 8(a) participant.
  Rationale: The existing rule requires SBA approval for any changes in ownership of 10% or more in an 8(a) participant firm. SBA believes that the more stringent existing requirements are unnecessary, and these changes will help make the agency more productive.

• Permit 8(a) applicants whose applications are rejected to re-apply after 90 days (rather than after one year as mandated by the current rule).
  Rationale: SBA expects this change will eliminate many of the challenges that are filed by rejected 8(a) applicants with SBA’s Office of Hearings and Appeals.
  Other issues/topics addressed in this set of regulatory changes are minor adjustments to SBA’s non-manufacturer and limitations on subcontracting rules and a revamping of the rules for SBA approvals needed for follow on contracts moved outside of the 8(a) program.

SBA is accepting public comments on all of these newly proposed regulatory changes until January 17, 2020. Comments can be submitted here.

For more information, contact MWL Partner Peter Fish.