Approximately 600 small contractors will lose their set-aside status in 2015 — and might not know it
March 5, 2015 by cs
Nearly 600 small businesses will lose a set-aside status in 2015 — and the Small Business Administration isn’t so sure they even realize it yet.
That was among the findings from a report released by the Government Accountability Office Feb. 13 assessing the SBA’s contracting program for small businesses located in designated, highly underutilized business zones, or HUBZones.
Areas are designated as HUBZones based on demographic data including unemployment and poverty rates. The problem, according to the GAO, is the SBA lacks an effective way to communicate program changes to small businesses that participate in the program, which allows them to bid on contracts set aside for small businesses located in HUBZones. And because areas can lose their qualifying status due to changes in economic conditions, resulting in a three-year transition period before the status is stripped entirely, communication with participating small businesses is crucial.
February 6, 2015 by cs
On February 5, 2015, the Small Business Administration (SBA) published a proposed rule in the Federal Register for the purpose of amending existing regulations in order to implement provisions of the Small Business Jobs Act of 2010 and the FY13 National Defense Authorization Act.
Based on these two statutes, SBA is proposing a Governmentwide mentor-protégé program for all small business concerns, consistent with SBA’s existing mentor-protégé program for Participants in the 8(a) Business Development (BD) program. The proposed rule also would make minor changes to the mentor protégé provisions for the 8(a) BD program in order to make the mentor-protégé rules consistent across agency boundaries.
Similarly, SBA is also proposing to amend current joint venture provisions to clarify the conditions for creating and operating joint venture partnerships, including the effect of such partnerships on any mentor-protégé relationships. Finally, SBA’s proposed rule would make several additional changes to current size, 8(a) Office of Hearings and Appeals, or HUBZone regulations, concerning ownership and control, changes in primary industry designations, standards of review, interested party status, and other matters.
Comments on the proposed rule are due on April 6, 2015.
The proposed rule can be seen here: Federal Register Vol. 80 No. 24 Part III Feb. 5 2015
An analysis of the proposed rule can be found here: Analysis of SBA’s Proposed Rule to Create a New Mentor-Protege Program for All Small Businesses – 02.06.2015
February 4, 2015 by cs
The Small Business Administration (SBA) has introduced a new website where visitors can review samples of HUBZone-related protest decisions.
Examining these samples can help you learn about how allegations of non-compliance are analyzed by the SBA.
The website also has a link to a mini-primer to help you better understand the HUBZone protest process.
The award of a HUBZone contract may be protested by an offeror, the contracting officer, or the SBA. There are three possible outcomes of a HUBZone status protest:
- Dismissed: the protest was not evaluated by the SBA because it was untimely, not submitted by an interested party, or not specific enough. In some cases when a protest is dismissed because it was not submitted on time, but the information presented was specific, SBA may file its own protest.
- Sustained: SBA found the protested company to be ineligible for the award and/or ineligible for (and therefore decertified from) the program.
- Denied: SBA found the protested company to be eligible for the award and for the program.
Past HUBZone protest decisions can be found at: https://www.sba.gov/content/protest-case-highlights.
The SBA’s mini-primer on Understanding HUBZone Protests can be located at: https://www.sba.gov/tools/sba-learning-center/training/hubzone-mini-primer-3
January 30, 2015 by cs
Small businesses interested in learning about the Small Business Administration’s eligibility requirements for becoming 8(a) or HUBZone certified will be interested in a workshop on that subject to be held on Feb. 11, 2015, from 10:00 a.m. to noon.
The workshop will be held at 233 Peachtree St. NE, Ste. 1900, Harris Tower, Atlanta, GA, 30303.
Advance registration is required and may be accomplished by visiting: http://events.sba.gov/eventmanagement/EventRegistration.aspx?id=b73797b8-cba0-e411-8f7e-02bfa56e2a24.
January 5, 2015 by cs
The Small Business Administration (SBA) has announced changes to the geographic HUBZone designations, effective January 1, 2015.
The SBA says the changes reflect several new data sources. These data sources include:
- American Community Survey 2009-2013 five year estimates,
- 2013 OMB metropolitan area delineations, and
- 2015 lists of Difficult Development Areas and Qualified Census Tracts, released by HUD in October 2014.
The changes reflect:
- eight newly qualified counties,
- 47 counties that have been re-designated until January 2018,
- 1,479 newly qualified census tracts, and
- 1,319 census tracts that have been re-designated until January 2018.
All current HUBZone designated areas can be found by downloading this document: HUBZone Designations – effective 01.01.2015
Please note that these new changes have not been incorporated into SBA’s interactive HUBZone map yet. SBA says it will make another announcement about revisions to the map when it is updated.
For more information about the HUBZone program, please see: https://www.sba.gov/content/understanding-hubzone-program
December 24, 2014 by cs
The United States has filed a complaint against Orlando, Florida, based Air Ideal Inc. and its owner, Kim Amkraut, for allegedly making false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company.
Under the federal HUBZone program, companies that maintain their principal office in a designated HUBZone and meet certain other requirements can apply to the SBA for certification as a HUBZone small business company. HUBZone companies can then use this certification when bidding on government contracts. In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.
The complaint alleges that Air Ideal and Kim Amkraut originally applied to the HUBZone program in 2010 by claiming that Air Ideal’s principal office was located in a designated HUBZone. The complaint further alleges that, in fact, this location was a “virtual office” where no Air Ideal employees worked and Air Ideal was actually located in a non-HUBZone location. Allegedly, the defendants not only misrepresented the location of Air Ideal’s principal office to the SBA, but also submitted to the SBA a fabricated lease agreement for its purported HUBZone office.
The complaint alleges that Air Ideal used its fraudulently-procured HUBZone certification to obtain contracts from the U.S. Coast Guard, U.S. Army, U.S. Army Corps of Engineers and the U.S. Department of Interior that were worth millions of dollars. Each of those contracts had been set aside for qualified HUBZone companies. The complaint asserts claims against Air Ideal and Kim Amkraut under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
The United States filed its complaint in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act. Under the act, a private citizen can sue on behalf of the United States and share in any recovery. The United States is entitled to intervene in the lawsuit, as it has done here.
The case is U.S. ex rel. Hopson v. Air Ideal, Inc. and Kim Amkraut, No. 6:13-cv-775-Orl-37GJK (M.D. Fla.).
The claims asserted against Air Ideal and Kim Amkraut are allegations only, and there has been no determination of liability.
December 12, 2014 by cs
The Office of Inspector General of the U.S. Small Business Administration (SBA) has issued its semi-annual report focusing on the most critical risks facing the SBA, including several aspects of government procurement.
Covering the period April through September 2014, the OIG’s report covers key SBA programs and operations, including financial assistance, government contracting and business development, financial management and information technology, disaster assistance, management challenges, and security operations.
Of particular interest to the government contracting community are findings such as:
- Over $400 million in federal contracts that were awarded to ineligible firms, which may have contributed to the overstatement of small business goaling dollars for the Small Disadvantaged Business and the HUBZone Business Preference Programs in FY 2013.
- The owner of a Colorado real estate firm and 5 family members were charged in a 37-count indictment by a state grand jury in connection with a $2,323,000 SBA-guaranteed loan to refinance an office building and other existing debt.
- Sixteen cases of contract-related bribery and/or fraud were identified in connection with contracts or subcontracts set-aside for 8(a), HUBZone, veterans, or other categories of small business.
- The OIG was unable to determine if the SBA appropriately issued waivers to the non-manufacturer rule because of a lack of established procedures, missing files, and other deficiencies.
The OIG’s full report can be downloaded here: SBA OIG Semi-Annual Report to Congress – Fall 2014
November 13, 2014 by cs
The Office of the Inspector General (IG) of the U.S. Small Business Administration reports on 11 weaknesses in a range of SBA programs. Two of the “challenges” identified in the Oct. 17, 2014 report pertain directly to small business participation in federal contracting:
- Procurement flaws allow large firms to obtain small business awards, and allow agencies to count contracts performed by large firms towards their small business goals.
- The SBA needs to modify the Section 8(a) Business Development Program so more firms receive business development assistance, standards for determining economic disadvantage are justifiable, and the SBA ensures that firms follow 8(a) regulations when completing contracts.
The IG’s full document, entitled “Report on the Most Serious Management and Performance Challenges Facing the Small Business Administration In Fiscal Year 2015″ can be downloaded here, but the text of the IG’s finding on the two point just cited appears below.
The Small Business Act established a Government-wide goal that 23 percent of the total value of all prime contracts be awarded to small businesses each fiscal year. As the advocate for small business, the SBA should strive to ensure that only small firms obtain and perform small business awards. Further, the SBA should ensure that procuring agencies accurately report contracts awarded to small businesses when representing their progress in meeting small business contracting goals.
In September 2014, we issued a report that identified over $400 million in FY 2013 contract actions that may
have been awarded to ineligible firms. We also identified over $1.5 billion dollars in contract actions for
which the firms were in the 8(a) or HUBZone programs at the time of contract award, but were no longer in
these programs in FY 2013. Previous OIG audits and other Government studies have shown widespread
misreporting by procuring agencies, since many contract awards that were reported as having gone to small
firms have actually been performed by larger companies. While some contractors may misrepresent or
erroneously calculate their size, most of the incorrect reporting results from errors made by Government
contracting personnel, including misapplication of small business contracting rules. In addition, contracting
officers do not always review the on-line certifications that contractors enter into Government databases
prior to awarding contracts. The SBA should ensure that procuring agencies accurately report contracts
awarded to small businesses when representing their progress in meeting small business contracting goals,
and that contracting personnel are reviewing on-line certifications prior to awarding contracts.
The SBA revised its regulations to require firms to meet the size standard for each specific order to address a
loophole within General Services Administration Multiple Awards Schedule (MAS) contracts, which contain
multiple industrial codes that determine the size of the company. Previously, a company awarded an MAS
contract could identify itself as a small business on individual task orders awarded under that contract, even
though it did not meet the size criteria for the applicable task. Thus, agencies received small business credit
for using a firm classified as small, when the firm was not small for specific orders under the MAS contract. In
addition, the SBA submitted a final rule to the Federal Acquisition Regulations (FAR) Council to implement the
changes made to its regulations in the FAR. The SBA also updated its standard operating procedure (SOP) to
ensure consistency in conducting its surveillance reviews to assess Federal agencies’ management of their
small business programs and compliance with regulations and applicable procedures.
While the SBA has made substantial progress on this challenge, we are working with the Agency to verify that
the surveillance reviews were conducted in a thorough and consistent manner.
The SBA’s 8(a) Business Development (BD) Program was created to assist eligible small disadvantaged
business concerns to compete in the American economy through business development. Previously, the
SBA did not place adequate emphasis on business development to enhance the ability of 8(a) firms to
compete, and did not adequately ensure that only 8(a) firms with economically disadvantaged owners in
need of business development remained in the program. Companies that were “business successes”
were allowed to remain in the program and continue to receive 8(a) contracts, causing fewer companies
to receive most of the 8(a) contract dollars and many to receive none.
The SBA has made progress towards addressing issues that hinder its ability to deliver an effective 8(a)
BD Program. For example, the SBA expanded its ability to provide assistance to program participants
through its resource partners—small business development centers, service corps of retired executives,
and procurement technical assistance centers. In addition, the SBA has taken steps to ensure business
opportunity specialists assess program participants’ business development needs during site visits. The
SBA also revised its regulations, effective March 2011, to ensure that companies deemed “business
successes” graduate from the program. These regulations also establish additional standards to address
the definition of “economic disadvantage.” Agency officials stated that the rule-making process served
as an adequate proxy to objectively and reasonably determine effective measures for economic
disadvantage, and were not aware of any reliable sources of data to determine economic disadvantage.
However, for the second consecutive year, the SBA has not completed updating its SOP for the 8(a) BD
Program to reflect the March 2011 regulatory changes. In addition, we continue to maintain that the
SBA’s standards for determining economic disadvantage are not justified or objective based on the
absence of economic analysis. In December 2011, the SBA awarded a contract to develop and deploy a
new IT system by December 2012 to assist the SBA in monitoring 8(a) program participants. However,
the new system has not been deployed, and its delivery date and capabilities are undetermined at this
November 6, 2014 by cs
The Georgia District Office of the Small Business Administration (SBA) is conducting a workshop on Wednesday, Nov. 12, 2014 for small businesses interested in learning about the eligibility requirements associated with the SBA’s 8(a) Business Development and Historically Underutilized Business Zone (HUBZone) programs.
The workshop will be held at 233 Peachtree St. NE, Ste. 1900, Harris Tower, Peachtree Center Mall, Atlanta, GA, 30303, from 10:00am until noon.
In order to attend, pre-registration is required. To register, click on this link: http://events.sba.gov/eventmanagement/EventRegistration.aspx?id=838a3859-3c5d-e311-9914-02bfa56e2a24.
September 29, 2014 by cs
On September 24, 2014, the Small Business Administration’s Office of Inspector General (OIG) issued Evaluation Report 14-18, Agencies are Overstating Small Disadvantaged Business and HUBZone Goaling Credit by Including Contracts Performed by Eligible Firms. This report presents the results of an evaluation of select Section 8(a) Business Development Program and Historically Underutilized Business Zones (HUBZone) contract awards.
The OIG identified over $400 million in contract actions that were awarded to ineligible firms, which may have contributed to the overstatement of small business goaling dollars for the Small Disadvantaged Business and the HUBZone Business preference programs in FY 2013. Besides reporting inaccurate information in Federal Procurement Data System-Next Generation (FPDS-NG), procuring agencies may have limited contracting opportunities for firms currently participating in the 8(a) or HUBZone programs.
Further, the OIG found that HUBZone and 8(a) certification information is not consistently transmitted to the Dynamic Small Business Search (DSBS) and the System for Award Management (SAM). As a result, the affected small businesses are not getting the visibility in the DSBS database, especially the HUBZone firms, and as a result, may impact federal agencies in meeting their HUBZone procurement goals.
Additionally, the OIG also identified over $1.5 billion dollars in contract actions for which the firms were in the programs at the time of contract award, but in FY 2013 were no longer in the 8(a) or HUBZone programs. Specifically, SBA regulations permit procuring agencies to claim Small Disadvantaged Business and HUBZone goaling credit on certain contract actions even after firms have left the program. In the opinion of the OIG, the amount of dollars the SBA reports to Congress and the public as being performed by 8(a) and HUBZone firms in the Small Business Goaling Report is significantly impacted by the inclusion of contract actions performed by former program participants.
The OIG made two recommendations to SBA’s Associate Administrator for Government Contracting and Business Development intended to strengthen controls between SBA databases on certification data of 8(a) and HUBZone firms and information reported in FPDS-NG. The recommendations are:
- In coordination with the Office of Federal Procurement Policy and the General Services Administration, the SBA should strengthen controls between the SBA’s Dynamic Small Business Search Database and the System for Award Management to ensure accuracy of 8(a) and HUBZone certification data in FPDS-NG.
- The SBA should modify DSBS so that a firm’s profile and certification information for HUBZone and 8(a) status remains visible and accurate to agency contracting officers, or develop an alternate list to verify a firm’s status.
The OIG reports that SBA’s management has agreed to pursue both recommendations.