Tag Archives: SBA

NDAA Makes Changes to the SDVOSB Programs and Authorizes GAO Jurisdiction to Hear Task Order Protests

Congress often includes provisions dealing with small business programs in its annual National Defense Authorization Act. 2016 was no exception.

This year, In Section 1832, Congress has attempted to provide some uniformity to the Veterans Administration and the Small Business Administration programs for our veteran-owned small businesses. Here are the highlights:

Uniformity in Service-Disabled Veteran Definitions

  • Defines “small business concern owned and controlled by service-disabled veterans” in the small business act and makes the definition universal for both the SBA and VA SDVOSB Program (8127 of title 38)
  • Requires VA to use the SBA regulations to verify the status of a concern as a small business and the ownership and control of such a concern, for purposes of the VA’s SDVOSB program
  • States that the VA may not issue regulations related to the status of a concern as a small business or the ownership/control of such a business
  • Of note: both SBA and VA now allow a company owned by a spouse of a veteran who was 100% disabled at the time of his death or died as a result of a service-connected disability, and who acquires the ownership interest of the veteran after his death, to qualify as an SDVOSB (previously VA allowed this, but SBA did not)

Appeals of inclusion in database

  • Can appeal VA’s denial of verification to OHA

As always, implementing these changes will require some regulatory changes by both agencies and we will keep you posted on that progress.

Separately, the General Accountability Office’s jurisdiction to hear some task order protests had expired by Congress and has now permanently granted GAO jurisdiction to hear protests of civilian task orders valued at $10 million or more and protests of defense agency task orders of $25 million or more.

About the Author: Pam Mazza is the managing partner of PilieroMazza. She may be reached at pmazza@pilieromazza.com.

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Recent Clarifications to SBA’s Definition of Receipts

Over the summer, SBA published a final rule and size policy statement elucidating what is included in “receipts” for purposes of a size calculation. While SBA made clear that “all income” is to be included in receipts, it also clarified an important receipts exclusion for small businesses.

Specifically, SBA amended 13 C.F.R. § 121.104 to clarify that receipts “include all income,” and the only exclusions from income are the ones specifically listed in paragraph (a) of that regulation. Small Business Government Contracting and National Defense Authorization Act of 2013 Amendments, 81 Fed. Reg. 34,243, 34,253 (May 31, 2016). This clarification was motivated by apparent confusion among contractors: “It was always SBA’s intent to include all income, except for the listed exclusions; however, SBA has found that some business concerns misinterpreted the current definition of receipts to exclude passive income.” The amended regulation states: “Receipts means all revenue in whatever form received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances.” 13 C.F.R. § 121.104(a) (emphasis added).

The four discrete exclusions from receipts that the regulation provides are:

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SBA Releases Long Anticipated Final Rule Establishing Government-wide Mentor-Protégé Program for All Small Business Concerns

On July 25, 2016, SBA published the eagerly anticipated Final Rule establishing a government-wide mentor-protégé program for all small business concerns. While there are a few departures from the details outlined in the Proposed Rule released nearly a year and half ago, the Final Rule generally adheres to the plan outlined in the Proposed Rule, which was modeled on the existing 8(a) mentor-protégé program. The Final Rule also contains changes in other areas of SBA’s regulations, such as the rules applying to the 8(a) and HUBZone programs.

The Final Rule becomes effective on August 24, 2016. In order to help you understand how the final rule changes the existing regulations, we have prepared a chart of the major regulatory changes announced in the new rule. Click here if you would like to download this entire report with the chart.

Chart PM

While the Final Rule does not specify the date on which SBA will start accepting applications for the new small business mentor-protégé program, SBA officials have signaled that it will begin accepting applications on October 1, 2016.

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Breaking News: New Limitations on Subcontracting Final Rules

Originally posted by PilieroMazza on May 31, 2016

Today, SBA issued its final rule to implement provisions of the National Defense Authorization Act of 2013, which pertains to the limitations on subcontracting (“LOS”) applicable to small business set-aside contracts, socioeconomic program set-aside contracts, and small business subcontracting. SBA issued this rule after considering all comments provided in the rulemaking and, while we are still reviewing the rule in more detail, we are pleased that the rule accounts for concerns raised during the rulemaking process and is not as onerous as the proposed rule. Here are some of the highlights from the final rule:

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Update on SBA’s New ITVAR Size Rule

By Jon Williams, PilieroMazza

On February 15, 2016, my colleague, Cy Alba, wrote an article for our blog, The PM Legal Minute, “SBA Closes the Door on Resellers of Major Commercial Software,” directed at IT value-added resellers (ITVARs) and discussed the major ramifications of the new rule. The rule requires ITVARs to comply with the nonmanufacturer rule when reselling IT products to the federal government under NAICS code 541519, footnote 18, which has a size standard of 150 employees. This was a 180-degree turnaround from SBA’s prior position on ITVARs, which were not previously required to comply with the nonmanufacturer rule. The upshot of the new rule is that ITVARs performing small business set-aside prime contracts will now have to supply products made by small businesses, or obtain a waiver from SBA to supply products made by large businesses. SBA’s new ITVAR size rule went into effect on February 26. Over the last few weeks, we have been studying the rule closely and have talked with many ITVARs and others in the industry about the implications and implementation of the new rule. There are still many unanswered questions, but the following thoughts and policy issues have crystalized so far:

  • The rule should only apply prospectively, meaning it would cover procurements issued after February 26, 2016 under the ITVAR NAICS code, but would not apply retroactively to ITVAR procurements issued before February 26.
  • The nonmanufacturer rule has a 500-employee size standard. By requiring ITVARs to comply with the nonmanufacturer rule under NAICS code 541519, there is confusion about whether the 150-employee size standard found in NAICS code 541519, footnote 18 is trumped by the nonmanufacturer rule’s 500-employee size standard.  We do not believe this was SBA’s intent. Therefore, SBA should clarify that, to qualify as a small business using the nonmanufacturer rule under NAICS code 541519, a firm must have less than 150 employees.
  • In a pending SBA rulemaking related to the limitations on subcontracting, SBA indicated its intent to confirm that the nonmanufacturer rule does not apply to small business set-aside procurements between $3,000 and $150,000. SBA should finalize this intention, and should go a step further to make clear that this exception to the nonmanufacturer rule includes multiple-award contract orders between $3,000 and $150,000.
  • In the same pending SBA rulemaking, SBA signaled the understanding that it needs to facilitate class waivers for name brand IT products, such as software. As part of this rulemaking, the current class waiver rules should be revamped to make it easier and faster to obtain class waivers for name brand items. That way, when an agency desires only name brand items, or when only name brand items will do, it would not be necessary for the agency to go through the individual waiver process.
  • SBA needs to clarify that class waivers tied to a particular manufacturing NAICS code will be applicable whenever that item is supplied under a procurement using NAICS code 541519. Because NAICS code 541519 is a services code, it is unlikely that a class waiver could be issued for this code. That is why it is necessary for existing class waivers under manufacturing codes to apply when the waived products are supplied under NAICS code 541519.

There was a recent GAO protest ruling that heightens our concern over how these policy issues will be resolved.  The GAO ruling, Manus Medical LLC, B-412331 (Jan. 21, 2016), found that an agency was not required to set aside a procurement for small businesses because, while there may have been at least two small business distributors of the products sought, there were not at least two small business manufacturers. GAO also found that the agency was not required to pursue an individual waiver for the contract because the decision to seek a waiver is discretionary.

Based on Manus Medical, and the new ITVAR size rule, we are concerned that there will be less small business set asides for ITVARs.  One way to mitigate this concern would be to implement more class waivers for IT products, the existence of which an agency presumably would have to consider in determining whether to set aside a procurement for IT products.

Because this is such an important issue for the ITVAR community, we plan to continue monitoring this rule closely and will push the key policy issues with SBA and others. We held a webinar on April 12, 2016, to help resellers understand the impact of SBA’s new ITVAR size rule and we gained feedback to submit to SBA. We invite you to send us your thoughts, concerns, and suggestions about this new rule to Cy Alba at ialba@pilieromazza.com and me, Jon Williams, at jwilliams@pilieromaza.com. You can watch the webinar in its entirety on our YouTube Channel at www.youtube.com/pilieromazza.

About the Author: Jon Williams is a partner with PilieroMazza and a member of the Government Contracts Group. He also works with the Business & Corporate and Labor & Employment Groups. He may be reached at jwilliams@pilieromazza.com.

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