SBA Changes Rules for Small Biz Contractors
Small Business Administration rule changes will boost small firms’ bidding opportunities on a wider variety of contracts, while toughening penalties for companies misrepresenting themselves as small businesses.
The changes were detailed last week by John Klein, SBA’s associate general counsel for procurement, at a TPP briefing co-sponsored with the Chesapeake Bay Chapter of the National Contract Management Association (NCMA).
The Patuxent Partnership’s Bonnie Green, SBA’s John Klein, and Emily Harman of the Chesapeake Bay chapter, National Contract Management Association.
Among the most significant changes, triggered by the 2010 Small Business Jobs Act and the 2013 National Defense Authorization Act, are:
— Modifying the rule about “similarly situated” contractors makes it easier for small contractors to team up on a contract.
— Refinements to the “mentor-protégé” model for joint ventures will also enhance opportunities for small businesses. At the same time, Mr. Klein said, they must demonstrate they are performing a significant portion of the work, not simply bringing their small business status to the contract.
— The “presumed loss” rule affects contractors who succeed in obtaining a contract using fraudulent information about their status as small businesses. When such misrepresentation is discovered, the government will be able to keep the work or project completed and still recover the value of the work or project from the contractor. This rule, with its deep hit to a contractor’s pocketbook, has the effect of “a hammer,” Mr. Klein said.
— Providing recourse to a small business on a contract with a larger business which does not receive the level of participation implied in the proposal. Stiffing small businesses in this way “will adversely affect primes in the future,” Mr. Klein said. Large business prime contractors now are required to notify the contracting officer in writing if they fail to utilize a small business included in their bid or proposal or make late or reduced payments to a small business subcontractor.
— Another rule amends the SBA’s regulations to establish policies and procedures for setting aside, partially setting aside and reserving Multiple Award Contracts for small business concerns. It also addresses how the SBA determines size under certain agreements and when re-certification of size status will be required.
Mr. Klein’s slide presentation further detailing the rules changes can be viewed here.
“We were fortunate to have John Klein educate our membership on recent legislation impacting small businesses,” said Emily Harman, president of NCMA’s Chesapeake Bay chapter. “These changes should increase opportunities for small businesses to participate as prime and subcontractors on government contracts. Government and industry personnel will need training on these changes as they are complicated and can be confusing. Our chapter wants to help educate personnel about issues relating to the contracting profession.
“We offer opportunities for the open exchange of ideas in neutral forums and look forward to co-hosting more events with The Patuxent Partnership in 2014.”
