Georgia Tech Procurement Assistance Center

SBA hosting conversations with contracting officers forum Feb. 25th

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Have you always wanted to meet a Contracting Officer to ask questions as a small business owner interested in federal opportunities, but could hardly ever reach one?  Would you like to learn helpful tips from Contracting Officers who make the final decisions in awarding a contract?  And successful lessons learned in winning a contract?  Well, this forum is for you!

The SBA Georgia District Office is hosting the “Conversations with Contracting Officers Forum” on Feb. 25th.

Here are the details:

Date and time:  Thursday, Feb. 25th, 2021, 9 a.m. – 11 a.m. EST

Cost: FREE

Location: Online

Where to register:  CLICK HERE

Congressional Research Service publishes updated report on SBA’s 8(a) program

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The 8(a) Business Development Program—commonly known as the “8(a) Program”—provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-aside and sole-source awards.  A set-aside award is a contract in which only certain contractors may compete, whereas a sole-source award is a contract awarded, or proposed for award, without competition.  In FY2019, 8(a) firms were awarded $30.4 billion in federal contracts, including $8.6 billion in 8(a) set-aside awards and $9.9 billion in 8(a) sole-source awards.  Other programs provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone, and service-disabled veteran-owned).

8(a) Program eligibility is generally limited to small businesses “unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States” that demonstrate “potential for success.”

Members of certain racial and ethnic groups are presumed to be socially disadvantaged, although individuals who do not belong to these groups may prove they are also socially disadvantaged.  To be economically disadvantaged, an individual must have a net worth of less than $750,000 at the time of entry into the program and less than $750,000 for continuing eligibility.  In determining whether an applicant has good character, the SBA takes into account any criminal conduct, violations of SBA regulations, or debarment or suspension from federal contracting.  For a firm to demonstrate potential for success, it generally must have been in business in its primary industry classification for two years immediately prior to applying to the program.  However, small businesses owned by Alaska Native Corporations, Community Development Corporations, Indian tribes, and Native Hawaiian Organizations are eligible to participate in the 8(a) Program under somewhat different terms.  Each of these terms is further defined by the Small Business Act, Small Business Administration (SBA) regulations, and judicial and administrative decisions.

This report examines the 8(a) Program’s historical development, key requirements, administrative structures and operations, and the SBA’s oversight of 8(a) firms.  It also discusses two SBA programs designed to support 8(a) firms, the 7(j) Management and Technical Assistance Program and the All Small Mentor-Protégé Program, and provides various program statistics.  It concludes with an analysis of the following current 8(a) Program issues:

  • The SBA’s decision to address recent declines in the number of program participants by revising and streamlining the program’s application process, an action which the SBA’s Office of Inspector General (SBA OIG) reports “may erode core safeguards that prevented questionable firms from entering the 8(a) Program.”
  • Reported variation in 8(a) Program service delivery.
  • Reported deficiencies in the oversight of 8(a) Program participant’s continuing eligibility.
  • Disagreements concerning the financial thresholds used to determine economic disadvantage, including the SBA’s decision to exclude equity in a primary residence from the calculation of an individual’s net worth.
  • The adequacy of the performance measures used to evaluate the program’s effectiveness in meeting its statutory goals.

Read the full report here:  https://crsreports.congress.gov/product/pdf/R/R44844

Congressional Research Service publishes new report on SBA’s HUBZone program

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The Historically Underutilized Business Zone Empowerment Contracting (HUBZone) program provides participating small businesses located in areas with low income, high poverty, or high unemployment with contracting opportunities in the form of set-asides, sole-source awards, and price-evaluation preferences.  Its primary objectives are job creation and increased capital investment in distressed communities.  Firms must be certified by the SBA to participate in the program.  As of February 9, 2021, the SBA’s Dynamic Small Business Search database included 7,720 firms with active HUBZone certifications.

In FY2019, the federal government awarded $11.5 billion to HUBZone-certified businesses.  About $2.0 billion of that amount was awarded with a HUBZone preference ($1.9 billion through a HUBZone set-aside, $95.0 million through a HUBZone sole-source award, and $72.5 million through a HUBZone price-evaluation preference).  About $2.8 billion was awarded to HUBZone certified businesses in open competition with other firms.  The remaining $6.7 billion was awarded with another small business preference (e.g., for small businesses generally or for 8(a), women-owned, and service-disabled veteran-owned small businesses).

The HUBZone program’s administrative cost is about $11.7 million annually.  It received an appropriation of $3.0 million for FY2021, with the additional cost of administering the program provided by the SBA’s appropriation for salaries and general administrative expenses.

Congressional interest in the HUBZone program has increased in recent years, primarily because the program has had difficulty reaching its 3% contracting goal.

This report examines arguments both for and against targeting assistance to geographic areas with specified characteristics as opposed to providing assistance to people or businesses with specified characteristics.  It then assesses the arguments both for and against the program’s continuation.

The report also discusses the HUBZone program’s structure and operation, focusing on the definition of HUBZone areas and HUBZone small businesses and the program’s performance relative to federal contracting goals.  It includes an analysis of the SBA’s administration of the program and the SBA’s performance measures.

This report also examines HUBZone-related legislation, including P.L. 115-91, the National Defense Authorization Act for Fiscal Year 2018, which, among other provisions, allows small businesses that have HUBZone status on or before December 31, 2019, to retain that status until the SBA prepares an updated online tool depicting HUBZone qualified areas based on the 2020 Census (anticipated by the SBA to take place in December 2021).  Once operational, the new online tool (currently called the HUBZone map) must be updated every five years for qualified census tracts and nonmetropolitan counties and when a change in status takes place for other HUBZone types (e.g., when an area becomes or ceases to be a redesignated area or a base closure area).  Also, governors, starting on January 1, 2020, may petition the SBA each year to designate areas located in nonurban areas, with a population of 50,000 or fewer, and an average unemployment rate at least 120% of the national or state average, whichever is lower, as HUBZones.  The SBA is also required, not later than one year after enactment, to publish performance metrics measuring the HUBZone program’s success in promoting economic development in economically distressed areas.

Read the full report here:  https://crsreports.congress.gov/product/pdf/R/R41268

Changes to the evaluation of small business joint ventures

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As we’ve stressed about the mentor-protégé program, the Small Business Administration’s (SBA) primary concern is that the program benefits the small business protégés.

Past performance is a particularly delicate topic for small businesses, presenting something of a what-came-first-the-chicken-or-the-egg question.  Past performance is not strictly required in order to win prime federal contracts, and its weighting and restrictions can vary greatly by procurement.  For example, FAR 15.305 prohibits an offeror without a record of relevant past performance from being evaluated favorably or unfavorably under past performance.  Nonetheless, many small businesses find it exceedingly difficult to break into the federal market without a record of past performance.

Of concern when SBA initially established the All-Small Mentor-Protégé Program was how past performance would be treated for small business joint ventures authorized under 13 C.F.R. § 125.9.  SBA initially required procuring agencies to consider not only the past performance and experience of the joint venture but also of the joint venture members.  In the recent rulemaking, SBA broadened the regulation to provide for contracting agencies to consider not only past performance and experience but also the capabilities, of the joint venture members.

Continue reading at:  Crowell & Moring

Minority-owned small business government contracting guides

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The blog Government Contracts Insights has published a series of posts (4 total) specific to federal government contracting as a minority-owned small business.  You can find links to the four posts below:

  1. Roadblocks inherent to the public procurement process for minority-owned businesses
  2. Overview of SBA contracting assistance programs
  3. Guide to the 8(a) and HUBZone programs
  4. Access to capital opportunities for minority-owned businesses

SBA final rule ensures small businesses can utilize teaming arrangements and subcontractor experience

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Late last year, the U.S. Small Business Administration (SBA) issued a lengthy final rule that made changes to various SBA regulations.  While the SBA highlighted its changes to the Mentor-Protégé program, the rule will have wide-ranging impacts on small business contracting, including the treatment of a small business offeror’s capabilities, past performance, and experience.

Continue reading at:  Federal Construction Contracting Blog

SBA eliminates the three-in-two rule for joint ventures

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As part of the outgoing administration’s effort to eliminate and simplify regulations, the SBA issued a final rule – effective November 16, 2020 – to merge “the 8(a) Business Development (BD) Mentor Protégé Program and the All Small Mentor-Protégé Program to eliminate confusion and remove unnecessary duplication of functions within SBA.”  What many small business contractors may not realize is that this rule also eliminated the three-in-two rule for joint ventures, meaning that there is now no limit on the number of contracts a joint venture can enter into during its existence.  However, that existence is now limited to two years.

Continue reading at:  GovCon Examiner

The end of an area: planning now for potential loss of HUBZone status

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2021 is an important year for the many HUBZone firms located in redesignated areas that will lose HUBZone status after 12/31/21.  For these firms, the time is now to plan for maintaining HUBZone status in 2022 and beyond.  Here’s what you need to know.

If you are located in a redesignated area that loses HUBZone eligibility after this year, you could make plans this year to move your office to a new location that will still be HUBZone eligible after the end of the year.  Before going that route, however, you should evaluate whether you can qualify your current principal office location to remain HUBZone eligible for at least 10 years under a new rule SBA implemented about one year ago.  According to this rule, if a firm owns its office or enters into a long-term lease (i.e., of at least 10 years) for its office in an area that qualifies as HUBZone at the time of the firm’s initial certification or an annual recertification, SBA will deem the firm’s principal office to be located in a HUBZone for at least 10 years from the date of the certification, as long as the firm maintains the long-term lease or continues to own the property.

Continue reading at:  Piliero Mazza

SBA interim final rule allows certain 8(a) program participants to extend participation for one year

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On January 13, 2021, the U.S. Small Business Administration (SBA) issued an interim final rule (effective immediately) to allow certain 8(a) Business Development (BD) program (the “program”) participants to extend their program term by a period of one year.  The interim rule implements a provision in the Consolidated Appropriations Act of 2021 and the National Defense Authorization Act for Fiscal Year 2021, which permits businesses that were in the program on or before September 9, 2020, to extend their participation in the program for a period of one year.

Continue reading at:  Pillsbury

See also related article at Bradley’s Buildsmart blog.

Small business subcontracting for cloud computing gets easier

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In response to widespread interest in allowing more small business participation in opportunities involving cloud computing, the Small Business Administration (“SBA”) has decided to exclude cloud computing from the limitation on subcontracting rule calculation, in certain circumstances.  Thus, beginning December 30, 2019, small businesses are no longer limited in their ability to subcontract out cloud computing services to larger companies, in connection with performing a Government contract set aside for small businesses, where the small business will perform other services that are the primary purpose of the acquisition.

The limitation on subcontracting rule provides that a small business may not subcontract more than 50% of the prime contract amount, under a services contract, to businesses that are other than small. 13 C.F.R. 125.6; 48 C.F.R. 52.219-14.  In the cloud computing context, this limitation has had the effect of reducing small business participation in IT service contracts with a substantial cloud computing component.  Typically, a small business is not able to commit to a procurement in which it (together with other small businesses, if needed) will provide more than 50% of the services under these contracts.  Certainly not where the cloud computing market is currently dominated by juggernauts who are far larger than “small.”

Continue reading at:  Government Contracts and Investigations Blog

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