Last month, Senator Marco Rubio, Chairman of the Senate Committee on Small Business and Entrepreneurship, released the Chairman’s mark to the Small Business Administration (SBA) Reauthorization and Improvement Act of 2019 (the “SBA Reauthorization Act”). This legislation aims to modernize and streamline SBA programs, and would be the first comprehensive reauthorization of the Small Business Act in nearly twenty years. Although the legislation appears stalled, it is likely that many of these initiatives will find their way into future policy initiatives. Here are a few potential changes to track in the SBA Reauthorization Act:
- Creation of a Centralized Certification Office. With a few exceptions, small business programs are based on self-certification by each firm. This legislation would create a centralized certification office for firms wishing to participate in the SBA’s Socially and Economically Disadvantaged Business Development Program (8(a)), Women-Owned Small Business Program (WOSB), Service-Disabled Veteran-Owned Small Business Program (SDVOSB), and Historically Underutilized Business Zone Program (HUBZone). This would increase certainty for Government officials relying on size representations and reduce the number of speculative size and status protests. However, it may also create logistical and funding complications for the SBA due to the sheer volume of applications.
- Increased Sole Source Authority. To increase the use of sole source awards for small businesses, the legislation would increase the contract-value limit on sole-source awards for the HUBZone, WOSB, and SDVOSB programs – from $6.5 and $7 million to $10 million for manufacturing contracts, and $4 million to $8 million for all other contracts.
- Increased Venture Capital Investment in WOSBs. The legislation would allow women-owned and minority-owned firms to accept venture capital and equity investments that would exceed 50 percent ownership of the firm, so long as those venture capital and equity investment firms are themselves women-owned or minority-owned. This would allow WOSB and 8(a) entities to accept needed investments and still maintain their program status.
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