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Business Law: SBA Makes Changes to the 8(a) Business Development Program

On March 14, 2011, revisions to the U.S. Small Business Administration 8(a) Business Development Program become effective, marking the first time in 10 years that comprehensive changes will be made. The revisions include technical and substantive changes to ensure small businesses can properly compete and win federal government contracts.

The revisions encompass changes to numerous areas of the program, including providing additional clarifications on determining economic disadvantage, requires on Joint Ventures and the Mentor-Protégé program, and requirements on a firm’s size state during participation in the 8(a) program. The SBA identified some of the major components of the 8(a) program that will be changed in a press release dated February 11, 2001. These revisions include the following:

  • Joint Ventures – requiring that the 8(a) firm must perform 40 percent of the work of each 8(a) joint venture contract that is awarded, including those awarded under a Mentor/Protégé agreement, to ensure that these companies are able to build capacity;
  • Economic Disadvantage – providing more clarification on factors that determine economic disadvantage as it relates to total assets, gross income, retirement accounts and a spouse of an 8(a) company owner when determining the owner’s ability to access capital and credit;
  • Mentor-Protégé Program – adding consequences for a mentor who does not provide assistance to their protégé, ranging from stop-work orders to debarment
  • Ownership and Control Requirements – providing flexibility on whether to admit 8(a) program companies owned by individuals with immediate family members who are owners of current and former 8(a) participants;
  • Tribally-Owned Firms – requiring firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations and Community Development Corporations to report benefits flowing back to their respective communities;
  • Excessive Withdrawals – amending regulations on what amount is considered excessive as a basis for termination or early graduation from the 8(a) program; and
  • Business Size for Primary Industry – requiring that a firm’s size status remain small for its primary industry code during its participation in the 8(a) program.

The 8(a) program seeks to assist small businesses, where the owners fall within the SBA’s criteria of being socially and economically disadvantaged, properly compete and win federal government contracts. The program seeks to assist these firms develop government contract opportunities by allowing collaboration with other companies for the purposes of submission and awarding of a bid.

For additional questions related to the SBA’s 8(a) Business Development Program for Small Business or other government contracting questions, contact Michael W. Siri at Siri@bowie-jensen.com.

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