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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: May 23, 2000

FROM: Barry McVay, CPCM

SUBJECT: Small Business Administration; 8(a) Business Development/Small Disadvantaged Business Status Determinations

SOURCE: Federal Register, May 23, 2000, Vol. 65, No. 100, page 33249

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rule

SYNOPSIS: SBA is amending its regulations to grant applicants seeking certification as a small disadvantaged business (SDB) a 45-day period to request reconsideration of an SBA decision that the applicant is ineligible for SDB certification.

EDITOR'S NOTE: The SBA's regulations being amended are in Title 13 of the Code of Federal Regulations (CFR); Part 124, 8(a) Business Development/Small Disadvantaged Business Status Determinations; Subpart B, Eligibility, Certification, and Protests Relating to Small Disadvantaged Business Programs.

For more on the notice of proposed rulemaking, see the March 10, 2000, FEDERAL CONTRACTS DISPATCH "Small Business Administration; 8(a) Business Development/Small Disadvantaged Business Status Determinations."

EFFECTIVE DATE: May 23, 2000.

FOR FURTHER INFORMATION CONTACT: Terri Dickerson, Acting Assistant Administrator, Office of Small Disadvantaged Business Certification and Eligibility, 202-619-1727.

SUPPLEMENTAL INFORMATION: Under the SBA's regulations, firms seeking SDB certification must meet certain citizenship, size, ownership, control, and social and economic disadvantaged status requirements. While SBA is responsible for determining an applicant's eligibility for SDB certification, SBA may have approved "Private Certifiers" perform certain functions in the SDB certification process.

If a private certifier determines that an applicant is not eligible for SDB certification, the firm may appeal to the private certifier at any time (13 CFR 124.1009, How does a firm appeal a decision of a Private Certifier?). In a number of instances, applicants that have been denied SDB certification by private certifiers have been permitted to correct deficiencies or defects in their application and have subsequently become SDB certified.

However, when an applicant submitted an SDB application to SBA, SBA's Assistant Administrator for Small Disadvantaged Business Certification and Eligibility (AA/SDBCE) made the determination, and SBA's regulations did not grant SDB applicants the right to request that the AA/SDBCE reconsider his or her negative determination of SDB eligibility. Instead, applicants declined SDB certification by SBA's AA/SDBCE had to appeal the denial to the Office of Hearings and Appeals (OHA). (EDITOR'S NOTE: The OHA's procedures are in 13 CFR Part 134, Rules of Procedure Governing Cases Before the Office of Hearings and Appeals.)

In addition, once SBA issues a final decision that the applicant is ineligible, the applicant is not permitted to reapply for 12 months after the date of the final SBA decision (paragraph (a) of 13 CFR 124.1012, Can a firm reapply for SDB certification?). In contrast, paragraph (b) of 13 CFR 124.1012 states that, if a private certifier finds that the applicant is ineligible, the applicant may reapply at any time as long as it has not appealed the adverse decision to SBA's OHA (an adverse decision by OHA is SBA's final decision, and the applicant may not reapply for 12 months).

Since firms found to be ineligible by the SBA did not have an opportunity to obtain a reconsideration except through appeals to the OHA (unlike with private certifiers), and unsuccessful appellants are barred for 12 months from reapplying for SDB certification, SBA proposed on March 10, 2000, to amend 13 CFR 124.1008, How does a firm become certified as an SDB? to add a paragraph (f)(3) that would permit an applicant to request that the AA/SDBCE reconsider his or her denial of SDB certification within 45 days of the decision, and provide the AA/SDBCE 30 days after receipt of the applicant's request for reconsideration to issue a written decision. If the AA/SDBCE again declines the application, but does so "solely on issues not raised in the initial decline, the applicant may request another reconsideration as if it were an initial decline. If the AA/SDBCE declines the application for one or more of the same reasons as addressed in the initial decline, the applicant is not entitled to a second reconsideration."

SBA received one comment concerning the proposed rule, and it requested SBA to clarify whether the reconsideration process would apply to pending SDB applications. Therefore, SBA adopts the proposed rule as final without changes, but states in the introductory material to the final rule that "this rule applies to all applications for SDB certification submitted on or after the effective date of this rule, to all SDB applications pending before a Private Certifier or the AA/SDBCE as of the rule's effective date, to any declined application where no appeal was filed at the Office of Hearings and Appeals (OHA) and applications that are pending appeals at OHA."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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