Georgia Tech Procurement Assistance Center

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

Top Priorities from SBA Administrator Jovita Carranza

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On January 7, 2020, the Senate confirmed U.S. Treasurer Jovita Carranza as the 26th Administrator of the Small Business Administration (SBA).  During her testimony before the Senate Committee on Small Business and Entrepreneurship, Carranza listed a number of priorities she will bring to her role at SBA.  Below are notable priorities that may impact small businesses and/or government contractors.

Provide Better Resources to Small Businesses in Disadvantaged Communities

Carranza mentioned that connecting small businesses from disadvantaged communities with SBA support services is the key to helping them win profitable government contracts.  Some disadvantaged businesses she noted in particular were African-American or Latino-owned businesses, as well as veteran-owned companies.

She stated that her recent stint as U.S. Treasurer gave her experience in assisting disadvantaged communities.  Most notably, she served as an advisor to U.S. Treasury Secretary Steven Mnuchin, helping with the implementation of the “opportunity zones” program created by the Tax Cuts and Jobs Act of 2017 to encourage investment in economically distressed communities.

Continue reading at:  Piliero Mazza

Jovita Carranza begins as SBA’s 26th Administrator

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On January 14, 2020, Jovita Carranza began serving as the 26th Administrator of the U.S. Small Business Administration.  The President nominated Administrator Carranza to lead the SBA while she was serving as the 44th Treasurer of the United States and the U.S. House of Representatives and U.S. Senate confirmed her with overwhelmingly bipartisan support on December 19, 2019, and January 7, 2020, respectively.  Administrator Carranza, an Illinois native, becomes the highest-ranking Latina in the federal government with this Cabinet-level position.

“I want to thank the President for his confidence in me to be an advocate in the Cabinet for our country’s 30 million small businesses, and I want to express my sincere gratitude to the U.S. Senate for confirming me in a bipartisan fashion,” Administrator Carranza said.  “I look forward to helping elevate female entrepreneurs and our military veterans, expanding access to SBA resources among entrepreneurs in disadvantaged communities, and continuing to prioritize disaster relief.”

“I would like to thank former Administrator Linda McMahon for her leadership at the SBA, and the dedicated professionals at the Agency during this transition,” she continued.

Continue reading at: SBA website

You may have a choice in how to calculate your size

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Being a small business can have its advantages.  Federal procurement rules provide that certain contracting opportunities may be set-aside for small business competition.  Small businesses also may be exempt from certain procurement provisions, such as subcontracting plan requirements and coverage under Federal Cost Accounting Standards (CAS).  Prime and higher-tier subcontractors also are incentivized to use small businesses to meet their small business subcontracting goals under their required subcontracting plans.

However, small businesses only remain small to the extent that they are considered small under applicable North American Industrial Classification Standards (NAICS).  Generally, size is calculated based on the size standard applicable to the business’s industry code – average annual gross receipts or average annual number of employees.

Continue reading at:  Government Contracting Matters blog

Multi-faceted SBA final rule clarifies existing regulations and brings long-awaited changes

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WHAT:  The U.S. Small Business Administration (SBA) published a sweeping final rule implementing several provisions of the National Defense Authorization Acts of 2016 and 2017 and the Recovery Improvements for Small Entities After Disaster Act of 2015 (RISE Act), as well as clarifying existing regulations.  The new rule addresses contracting preferences for small businesses in disaster areas; SBA Procurement Center Representative (PCR) reviews; contracting officer oversight of subcontracting restrictions; limitations on subcontracting exclusions; indirect costs in commercial subcontracting plans; material breach of subcontracting plans; size and status recertifications; and the kit assembly exclusion to the non-manufacturer rule (NMR).

WHEN:  The SBA published the rule on November 29, 2019, effective December 30, 2019.

WHAT DOES IT MEAN FOR INDUSTRY:  SBA’s new rule touches on many different areas, from oversight to contract administration.  While some of these changes will have minimal direct effect on contractors, others could significantly impact the way small and large businesses seek opportunities and structure their agreements and proposals.

Continue reading at:  Wiley Rein

SBA proposes combining 8(a) Mentor-Protégé Program with the All Small Mentor-Protégé Program

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On November 8, 2019, the Small Business Administration published a proposed rule to combine the 8(a) Business Development (BD) Mentor-Protégé Program with the All Small Mentor-Protégé Program.  84 Fed. Reg. 60,846 (Nov. 8, 2019) . The far-reaching SBA proposal also includes changes to the mentor-protégé programs, changes affecting joint ventures, changes for certain details in the 8(a) Program, and new requirements for certain multiple-award contracts, among others. Comments on the proposed rule are due January 17, 2020.

Combining the 8(a) BD and All Small Mentor-Protégé Programs

Although the 8(a) Mentor-Protégé Program seems to have been around forever, SBA started it relatively recently, in 1998.  The purpose of the program is to enhance the ability of the minority-owned protégé to compete for government and commercial contracts, through business assistance for the protégé, such as technical or management training, financial assistance in either equity investments or loans, and subcontracts.  But it also proved popular because it enabled large firms to form joint ventures with 8(a) protégés, which were then eligible to compete for any opportunity for which the protégé qualified.

In 2010 and 2013, in two separate legislative enactments, Congress created a similar mentor-protégé program, first for the other socioeconomic preference programs – the Service-Disabled Veteran-Owned Small Business Concern (SDVOSB) Program, the HUBZone Program, and the Women-Owned Small Business (WOSB) Program – and subsequently expanding it to cover all small businesses (the “All Small Mentor-Protégé Program”).

Since the purposes and benefits of the two programs are identical, SBA now proposes to eliminate the 8(a) Mentor-Protégé Program and allow 8(a) companies to continue to form mentor-protégé joint ventures through the All Small Mentor-Protégé Program.

Continue reading at:  Miles & Stockbridge

Runway extended: SBA issues final rule implementing five-year period of measurement for receipts-based size standards

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After a year of uncertainty, the U.S. Small Business Administration (SBA) has issued its long-awaited final rule implementing the Small Business Runway Extension Act of 2018.  The final rule, which becomes effective on January 6, 2020, amends SBA’s receipts-based size standard for its procurement programs to adopt a five-year averaging period for calculating annual revenues of firms and their affiliates in all industries that are subject to SBA’s receipts-based size standards.  In addition, to help firms with declining revenues who might be adversely impacted by five-year period of measurement, SBA’s final rule includes a transition period until January 6, 2022, allowing firms to choose either a three-year averaging period or a five-year averaging period for calculating average annual receipts for size standards purposes.  For our discussion of the proposed rule issued in July 2019, please read the article here.

As SBA explained, a five-year averaging period should “allow more small firms to benefit from SBA’s small business assistance programs by extending their small business status for a longer period.”  It also may result in more large business contracts being set aside for small businesses under the “Rule of Two” because “[w]ith an expanded pool of small businesses, the Federal Government will have more qualified small businesses to choose from.”

Continue reading at:  Holland & Knight

OIG report: SBA’s all small mentor-protégé program falling short

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The Small Business Administration (SBA) Office of Inspector General (OIG) recently issued a public report on the SBA’s All Small Mentor-Protégé Program (ASMPP), in which the SBA OIG found certain shortcomings in the SBA’s administration of the program.  As discussed below, the report also provides a series of recommendations, most of which the SBA has accepted.

What is the ASMPP?

The SBA began accepting applications for the ASMPP in 2016 and has seen a surge in applications each subsequent year.  Under the ASMPP, any small business – including 8(a) small businesses, Historically Underutilized Business Zone small businesses, veteran-owned and service-disabled veteran-owned small businesses, woman-owned and economically disadvantaged woman-owned small businesses – may enter into an agreement with a large business under which the large business will provide mentorship and assistance.  In return, the large and small businesses are permitted to joint venture to perform federal small business set-aside contracts.

Continue reading at:  Buildsmart blog

SBA adjusts monetary-based size standards for inflation

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Effective August 19, 2019, the Small Business Administration (“SBA”) has updated and increased the monetary-based size standards (i.e. receipts-based and assets-based size standards).  The SBA announced this change back in July, and explained that the standards were being changed solely to account for inflation.  Pursuant to the Small Business Jobs Act of 2010, the SBA reviews the size standards every five years and makes any necessary inflation-based adjustments.  The SBA also has the power to revise the size standards to account for changes in industry structure and federal market conditions.

Continue reading at:  Obermayer, Rebmann, Maxwell & Hippel LLP

SBA OHA decides 3-year receipts calculation period still applies

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Since being passed by Congress in late 2018, the Runway Extension Act has been the source of great confusion among small business contractors: would size under receipts-based NAICS codes be calculated under the 3-year calculation period set out in the SBA’s regulations, or under the new 5-year calculation period mandated by Congress?

In a decision just publicly released, the SBA Office of Hearings and Appeals has weighed in.  As of now, the SBA will still calculate size under the 3-year calculation period.

The applicability of the Runway Extension Act was debated in Cypher Analytics, Inc. dba Crown Point Systems, SBA No. SIZ-6022 (Aug. 27, 2019).  In that case, Cypher Analytics was found to be other than small under NAICS code 541611 after the SBA applied a 3-year calculation period.

Cypher Analytics appealed to the OHA, arguing that the SBA erred by not applying the 5-year calculation period required under the Runway Extension Act.  Despite several arguments raised on appeal, OHA was unpersuaded that the 5-year calculation period should apply.

To understand the reasoning behind OHA’s decision, visit:  SmallGovCon

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