The first comprehensive revision to the Section 8(a) Business Development Program regulations in over ten years will go into effect today, March 14, 2011. The Section 8(a) Program, governed by the Small Business Act, is designed to help small or disadvantaged businesses compete in the federal marketplace and gain access to federal procurement opportunities. The purpose of the revised regulations, as stated by the Small Business Administration, is to prevent fraud, waste and abuse.
The revision includes changes that are both technical and substantive in nature. Some of the more noteworthy changes include the following:
- Eligibility Criteria. New criteria will be used to determine economic disadvantage based on: adjusted net worth (must not exceed $250,000, averaged over three years, for initial eligibility or $750,000 for continued eligibility), personal income ($250,000 for initial eligibility, $350,000 for continued eligibility), and total assets ($4 million for initial eligibility and $6 million continued eligibility).
- Military Duty. Owners of firms called to active duty may suspend participation in the program in order to benefit from the full nine-year term.
- Requirements for Joint Ventures.
— The 8(a) partner to the Joint Venture (“JV”) must perform at least 40% of the work performed by the JV. This change replaces the “significant portion” language of the previous regulations.
— The JV may not be awarded more than three contracts over a two-year period without a finding of general affiliation. The same two entities may form additional JVs and each may be awarded up to three contracts over two years.
— A joint venture awarded an 8(a) contract cannot subcontract work to any non-8(a) joint venture partner, including a large business mentor.
— Each 8(a) firm that performs an 8(a) contract through a joint venture must report to SBA how the performance of the work requirements were met on the contract. In particular, the firm must show the joint venture performed at least 50% of the work under the contract and that the 8(a) participant to the joint venture performed at least 40% of the work done by the joint venture.
- Mentor/Protégé. The assistance to be provided by the Mentor must be tied to the Protégé’s SBA-approved business plan. In addition, the Mentor/Protégé Agreement must be approved by SBA before the firms can submit a joint venture offer on a procurement as a small business.
- SBA Powers. The SBA is now authorized to “early graduate” a firm whose size exceeds size standard for three successive program years. Related to this, the SBA Inspector General is now authorized to request a formal size determination.
For help in determining your eligibility for the Section 8(a) Program, or for any other questions regarding the revised regulations, contact the Government Contract attorneys at Eckland & Blando LLP.