A year after its original proposed rulemaking, the U.S. Small Business Administration today published a package of final rules that will revise regulations to strengthen its 8(a) Business Development program to better ensure that the benefits flow to the intended recipients and help prevent waste, fraud and abuse. The rules were published February 11, 2011, in the Federal Register and will become effective on March 14, 2011.
The revisions are the first comprehensive overhaul of the 8(a) program in more than 10 years.聽 The regulations incorporate technical changes and substantive changes that mirror existing or new legislation enacted since the last revision in June 1998. The rules cover a variety of areas of the program, ranging from clarifications on determining economic disadvantage to requirements on Joint Ventures and the Mentor-Prot茅g茅 program. Some of the components of the 8(a) program that the revised regulations will affect include:
- Joint Ventures 鈥 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聽 a Mentor/Prot茅g茅 agreement, to ensure that these companies are able to build capacity;
- Economic Disadvantage 鈥 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鈥檚 ability to access capital and credit;
- Mentor-Prot茅g茅 Program 鈥 adding consequences for a mentor who does not provide assistance to their prot茅g茅, ranging from stop-work orders to debarment
- Ownership and Control Requirements 鈥 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 鈥 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 鈥 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 鈥 requiring that a firm鈥檚 size status remain small for its primary industry code during its participation in the 8(a) program.