As noted in a prior blog posting, the U.S. Small Business Administration (SBA) proposed a number of significant changes to its regulations back in November 2019.

Now, almost a year later, the SBA has released the final version of the regulations that will go into effect on November 16, 2020.

Summarized below are the some of the most significant rule changes and how they differ (if at all) with the proposed versions:

• Consolidation of the SBA’s existing Mentor Protégé Programs into a single program. The final rules consolidating the SBA’s existing 8(a) Mentor Protégé Program with and into the SBA’s All Small Mentor Protégé Program are largely consistent with last year’s proposal. However, SBA decided against implementing any restriction on the size of mentors allowed to participate in the new consolidated program. A possible restriction that would have limited mentors only to those firms having average annual revenues of less than $100 million was included for consideration in the release of the proposed rules. The SBA also decided against eliminating the lifetime cap on the number of mentor protégé relationships a small business may enter into as a protégé.
• Elimination of requirement for SBA prior approval of joint ventures seeking competitively awarded 8(a) set-aside contracts prior to contract award. This change came through in the final rules as proposed. The SBA noted that it expects that compliance can be sufficiently policed through size protests. However, this change only applies to competitively awarded 8(a) contract opportunities. SBA review and approval of the joint venture will still be required prior to any 8(a) sole source contract awards.
• New recertification 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). Here, the SBA did add an exception to the final rule. In the event the underlying unrestricted MAC has been awarded to a pool of concerns for which small business status is required, if an order or a BPA under that MAC is set-aside exclusively for concerns in the small business pool, concerns need not recertify their status (unless a contracting officer requests recertification with respect to an order or BPA).
• Elimination of former cap on the number of contract awards that a JV can receive within two years after its first award. It is official. The former “3 in 2” rule is gone. After November 16, 2020, there will be no limit on the number of contracts that can be awarded to a joint venture within the two year window following its first contract award. However, the SBA warns in the final rule release that participants in joint ventures that continue to submit proposals more than two years beyond the date of the JV’s first contract award will be deemed to be affiliated.
• Threshold requirement for SBA approval of changes of ownership in 8(a) participants raised to only those ownership changes of 20% or more. This rule change was adopted as proposed. The new rule also clarifies that SBA approval is not required for any changes in ownership that simply increase the ownership of the disadvantaged participant.
• 8(a) applicants whose applications are rejected may re-apply after 90 days (rather than one year). This rule was also adopted as proposed. The new rule also eliminates the existing reconsideration process for rejected applicants.

For more information about the final rules and possible implications for your business, contact MWL Partner Peter Fish.