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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: March 10, 2000

FROM: Barry McVay, CPCM

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

SOURCE: Federal Register, March 10, 2000, Vol. 65, No. 48, page 12955

AGENCIES: Small Business Administration (SBA)

ACTION: Notice of Proposed Rulemaking

SYNOPSIS: SBA is proposing to amend 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.

DATES: Submit comments on or before April 10, 2000.

ADDRESSES: Written comments should be addressed to Linda Williams, Deputy Associate Deputy Administrator for Government Contracting and Minority Enterprise Development, U.S. Small Business Administration, 409 Third Street, SW., Washington, DC 20416.

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

SUPPLEMENTAL INFORMATION: Under the SBA's regulations in Title 13 of the Code of Federal Regulations (CFR), Part 124, Subpart B, Eligibility, Certification, and Protests Relating to Small Disadvantaged Business Programs, firms seeking SDB certification must meet certain citizenship, size, ownership, control, and social and economic disadvantaged status requirements. Although SBA is responsible for determining an applicant's eligibility for SDB certification, SBA has approved certain organizations (called "Private Certifiers") to perform ownership and control determinations.

If a private certifier determines that an applicant is not eligible for SDB certification, it may appeal to the private certifier at any time (13 CFR 124.1009, How does a firm appeal a decision of a Private Certifier?). However, when an applicant submits an SDB application to SBA, SBA's Assistant Administrator for Small Disadvantaged Business Certification and Eligibility (AA/SDBCE) makes the determination, and the current regulations do not grant SDB applicants a 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 must appeal the denial to the Office of Hearings and Appeals (13 CFR Part 134).

Also, 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?). However, 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).

SBA has decided that the absence of an opportunity for firms to obtain a reconsideration, coupled with the one year bar on reapplications for SDB certification following a final SBA decision, deprives applicants of a formal mechanism to correct deficiencies in their applications.

Therefore, SBA is proposing to amend 13 CFR 124.1008, How does a firm become certified as an SDB?, to add a paragraph (f)(3) that would provide the following (current paragraphs (f)(3) and (f)(4) would be redesignated as (f)(4) and (f)(5)):

The proposed rule would not affect an applicant's right to appeal the AA/SDBCE's denial to OHA. Rather, the applicant would have the option of requesting the AA/SDBCE to reconsider, or to forego the reconsideration process and appeal the AA/SDBCE's decision to OHA. Even if the applicant requested that the AA/SDBCE reconsider and the AA/SDBCE denied the application a second time, the applicant would have the right to appeal the AA/SDBCE's reconsideration decision to OHA.

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

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