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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: November 8, 2000

FROM: Barry McVay, CPCM

SUBJECT: Small Business Administration (SBA); Acceptance of 8(a) Business Development Requirements

SOURCE: Federal Register, November 8, 2000, Vol. 65, No. 217, page 66938

AGENCIES: Small Business Administration (SBA)

ACTION: Proposed Rule

SYNOPSIS: The SBA is proposing to amend its 8(a) regulations to permit the delegation to procuring agencies of its authority to accept requirements for the 8(a) program.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations. The SBA 8(a) regulations are in Chapter 1, Small Business Administration; Part 124, 8(a) Business Development/Small Disadvantaged Business Status Determination. Also see Federal Acquisition Regulation (FAR) Subpart 19.8, Contracting with the Small Business Administration (The 8(a) Program).

For more on a recent executive order intended to increase contracting opportunities to 8(a) firms and other small disadvantaged businesses, see the October 12, 2000, FEDERAL CONTRACTS DISPATCH "Executive Order 13170, Increasing Opportunities and Access for Disadvantaged Businesses."

DATES: Comments must be submitted on or before January 8, 2001.

ADDRESSES: Address comments to Linda Williams, Associate Administrator for Policy, Planning, and Liaison, 409 Third Street, SW., Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Delorice Ford, Associate Administrator for 8(a) Business Development, 202-205-6416.

SUPPLEMENTAL INFORMATION: Until a few years ago, the 8(a) program was considered one of the most effective methods for expediting purchases because contracts reserved for the 8(a) program did not have to competitively solicited unless the proposed contract exceeded $5,000,000 for manufacturing and $3,000,000 for services and construction. However, the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355) authorized the government to use (or encouraged the greater use of) other methods to "streamline" acquisitions, and some of these methods are quicker and easier to use than the 8(a) program: for example, indefinite-delivery/indefinite-quantity (IDIQ) contracts, multiple award contracts, governmentwide acquisition contracts (GWACs), federal supply schedules, credit card purchases, and the use of simplified procedures to acquire commercial items up to $5,000,000 (see FAR Subpart 13.5, Test Program for Certain Commercial Items). Because the 8(a) regulations did not keep pace, there were fewer contract opportunities for 8(a) firms.

On May 6, 1999, SBA announced that it would allow agencies to contract directly with 8(a) firms without having to go through the SBA, thus saving weeks in the execution of 8(a) contracts. But this was not enough to make the 8(a) program as attractive as it had been. Therefore, SBA is proposing to amend its regulations so that agencies will be able to be accept requirements for the 8(a) program themselves without obtaining prior SBA approval. SBA says in the proposed rule that it believes "this change would make the 8(a) program more attractive by reducing the 8(a) procurement leadtime by up to twelve days." Also, the proposed rule would allow agencies authorized to accept 8(a) requirements to rely on SBA's designation of a firm's eligibility to receive contracts under the 8(a) program in its PRO-Net database (http://pro-net.sba.gov).

"SBA would continue to determine eligibility for the award of 8(a) contracts, but would do so on an annual rather than on a contract-by-contract basis," SBA writes in the introductory material to the proposed rule. "In addition, SBA would require Program Participants to notify SBA of any changes in ownership, control, social disadvantage or economic disadvantage in order to ensure that PRO-Net is kept current regarding any firm's continued eligibility for 8(a) awards."

The proposed changes would be in Section 124.502, How does an agency offer a procurement to SBA for award through the 8(a) BD [business development] program?, and Section 124.503, How does SBA accept a procurement for award through the 8(a) BD program? In Section 124.502, a paragraph (d) would be added which would exempt agencies delegated authority to accept 8(a) requirements from the need to send an offering letter to SBA. In Section 124.503, paragraph (i) would be revised to state that SBA may delegate to procuring activities its authority to accept requirements into the 8(a) program, and that agencies delegated this authority may rely on the PRO-Net database to determine whether a firm is eligible to receive 8(a) contracts.

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

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