Friday, December 3, 2010

Recent Developments in Small Business Government Contracting

Recent Developments in Small Business Government Contracting

The past few months have seen a flurry of federal activity with regard to small business government
contracting – from Congress, SBA and other federal agencies, and even a special Presidential Task Force.

Following is a brief recap of some of these measures:

SBA Finalizes New Size Standards

On October 6, 2010, the U.S. Small Business Administration published revised size definitions for three
broad commercial sectors affecting businesses in retail trades, accommodations and food services, and other services.

Originally proposed in October 2009, the changes will broaden small business eligibility and help an estimated 17,000 additional firms gain access to SBA’s financial assistance, contracting and other programs. Before this comprehensive review, the last overall review of size standards occurred more than 25 years ago.

The three final rules will affect the following industries:

Sector 44-45 - Retail Trade: A change in the new car dealer industry plus increased size standards in 48 other retail trade industries are estimated to result in 14,400 additional retail firms being classified as small businesses.

Sector 72 – Accommodation and Food Services: Size standards were increased for five industries with an estimated 2,050 additional firms becoming eligible for small business programs.

Sector 81 – Other Services: Size standards were increased for 18 industries, resulting in an estimated 1,400 additional firms falling under the small business classification.

Increase in Small Business Set-Aside Thresholds

On October 1, 2010, Small Business set aside thresholds changed from $100K to $150K and from $250K to $300K for operations defined in FAR 2.101 under Simplified Acquisition Threshold.

The new inflationary thresholds became effective 1 October 2010. Specifically FAR Part 19 changed as follows:

- Subcontracting dollar amounts changed from “550,000” to $650,000” (“$1 million” to “$1.5 million” for construction).

- The total value of contracts for 8(a) and HUBZone sole source awards changed from "$5.5million" to "$6.5 million" for manufacturing and "$3.5 million" to "$4 million" for all other acquisitions.

- The total value of contracts for SDVOSB changed from “$5.5 million” to $6 million” for manufacturing and “$3 million” to “$3.5 million” for all other NAICS.

- The requirement to evaluate SDB performance for negotiated acquisitions changed from greater than "$550,000" to "$650,000" and from "$1 million" to "$1.5 million" for construction.

A Final Rule for SBA’s Women-Owned Small Business Program

The U.S. Small Business Administration (SBA) expects to have a federal contracting women-owned small
business (WOSB) program up and running February 4, 2011, per publication of its final rule on October 7, 2010.

The new rule identifies 83 industries in which WOSBs are under-represented or substantially underrepresented in the federal contract marketplace, a major increase from the 4 industries identified in an
 earlier rule. These industries were identified based upon the combination of both a “share of contracting dollars” analysis, as well as a “share of number of contracts awarded” analysis. (The earlier rule was based solely on a “share of contracting dollars” analysis). In addition to opening up more opportunities for WOSBs, the rule is another tool to help achieve the statutory goal that 5 percent of federal contracting dollars go to women-owned small businesses.

The SBA, in conjunction with the Federal Acquisition Regulatory Council, has now begun a 120-day implementation period, including building the technology and program infrastructure to support the certification process and ongoing oversight. With implementation expected to take several months, the SBA expects agencies to start making contracts available to WOSBs under the program in early 2011.

Components of the Women-Owned Small Business rule include:

Firms must be 51 percent owned and controlled by one or more women, and primarily managed by one
or more women. The women must be U.S. citizens. The firm must be “small” in its primary industry in accordance with SBA’s size standards for that industry. In order for a WOSB to be deemed“economically disadvantaged,” its owners must demonstrate economic disadvantage in accordance with the requirements set forth in the final rule.

The final rule authorizes a set-aside of federal contracts for WOSBs where the anticipated contract price does not exceed $3 million - or $5 million in the case of manufacturing contracts. Contracts with values in excess of these limits are not subject to set-aside under this program. The final rule removes the requirement, set forth in a prior proposed version, that each federal agency certify that it had engaged in discrimination against women-owned small businesses in order for the program to apply to contracting by that agency.
• The proposed rule allows women-owned small businesses to self-certify as “WOSBs” or to be certified by third-party certifiers (such as the National Women Business Owners Con?? ), including government entities and private certification groups.

o The final rule requires WOSBs which self-certify to submit a robust certification verification, to complete the certifications at the federal Online Representation and Certification Application (“ORCA”) Web site, and also to submit a core set of eligibility-related documents to an online “document repository” to be maintained by the SBA. Each agency’s contracting officers will have full access to this repository.

o The SBA intends to engage in a significant number of program examinations to confirm eligibility of individual WOSBs.

o In the event of a contract protest or program review, the SBA has the authority to request substantial additional documentation from the WOSB to establish eligibility.

o SBA intends to pursue vigorously punitive action against ineligible firms which seek to take advantage of this program and in so doing to deny its benefits to the intended legitimate WOSBs.

A Compliance Guide for the Women Owned Small Business Program was published in the Federal Register on October 27, 2010.