Contracting Legislation Affects Large and Small Businesses

Legislative changes are happening right now that affect large and small businesses serving as federal contractors.

There SBA’s Mentor-Protégé Program has, in the past, only included the 8(a) Program certified companies. The Small Business Jobs Act of 2013 allowed the SBA to establish Mentor-Protégé Programs for companies participating in the HUBZone, SDVOSB and WOSB Programs. While the change was mandated in 2013, it has taken this long to filter through the required legal process and take effect.

Not every government contracting officer will know how to use the new SBA program. Once the new regulations are formally released to, the process of educating contracting and acquisitions professionals will begin.

Right now the SBA is also considering a dramatic change in subcontracting in Public Law 1651 which was published in the Federal Register on Dec. 29, 2014. This includes new limitations subcontracts on for service contracts. Essentially, the proposed subcontract calculations are based on the total amount paid to the small business, not on the current process of calculating costs of the contract incurred for personnel. It also states that the contract may meet performance requirements by subcontracting to other “similarly situated” small businesses.

This proposed rule has a dramatic impact on service contracts, and especially construction contracts. Public comments are open until February 27, 2015. The public comment period is open for all interested parties to weigh in on the benefits or risks to business before the rule is finalized.

Recent changes signed into legislation through the National Defense Authorization Act (NDAA) of 2015 included additional key provisions for government contractors.

For instance, as mentioned in last month’s column, the FY 2015 NDAA Section 825 creates, for the first time, sole source authority for small business concerns owned and controlled by women (WOSBs).  However, these WOSBs will not see the impact immediately because the Small Business Administration (SBA) will need to promulgate rules to implement the law. Then the Federal Acquisitions Regulations (FAR) Council will need to approve the changes and finally, government acquisition officials will need to learn about the changes in order to write sole source contracts with WOSBs.

Another update regarding the WOSB Program actually happened in 2012 but few people realize it. This change eliminated the $6.5 manufacturing and $4 million (all other contracts) caps on the size of WOSB set-aside contracts. This means that now WOSB set-aside contracts can be awarded for any amount, similar to all other small business set-aside programs.

Fraud update: for those companies intending to say they are a WOSB but in fact are not, consider the resulting risk of fines, debarment and even jail time. One risks the same penalties if claiming to be a service disabled veteran owned small business (SDVOSB) and is not.

For additional information regarding these changes search for NDAA 2013, NDAA 2015, and the Small Business Jobs Act of 2010 or contact the author.

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