Government contractors who are members of a tribal nation should be aware of the meetings listed below and a listening session the Small Business Administration (SBA) is hosting regarding important developments within the SBA. These developments could affect HUBZone contract eligibility and federal funding and support programs for tribal nations, as well as prohibit Mentor-Protégé Joint Ventures from competing for Multiple Award Contracts. PilieroMazza explains in more detail below.
New Proposed Rule
The SBA seeks to discuss a proposed rule it intends to issue for notice and comment rulemaking. This proposed rule seeks to clarify and improve several regulatory provisions, including provisions governing HUBZone contract eligibility. In an effort to reduce confusion while ensuring consistent application of the size and status recertification requirements, the rule also seeks to consolidate and redesignate the separate recertification requirements for SBA’s size, 8(a) Business Development, HUBZone, Woman-Owned Small Business, and Service-Disabled Veteran-Owned Small Business programs into a new section. While this proposed rule should only change the location—not the substance—of these size and status recertification requirements, concerned businesses are encouraged to register and voice their concerns at the below-mentioned meetings. The SBA anticipates that this rule will be published prior to the meetings.
Implementation of Executive Order 14112
The SBA also wants to encourage discussion of how the SBA should “best implement” Executive Order 14112. This executive order requires agencies to carry out policy reforms that promote accessible, equitable, and flexible administration of federal funding and support programs for tribal nations. The SBA is specifically seeking comments on how the SBA can improve (1) the current requirements for personal guarantees, (2) a waiver of sovereign immunity for 7(a) loans to tribally-owned business concerns, and (3) the match-funding requirement applicable to grants awarded by Native-serving entrepreneurship organizations. Finally, the SBA would like feedback on its recent restructuring that now requires the SBA’s Assistant Administrator for Native American Affairs to report directly to the SBA Administrator rather than to the Administrator for the Office of Entrepreneurial Development.
Potential Over-Effectiveness of the Mentor-Protégé Joint Venture Program
Finally, and perhaps the most substantively impactful topic the SBA requests comments on is the current state of the Mentor-Protégé Joint Venture Program.
First, the SBA is cognizant of a perception that mentor-protégé joint ventures are winning an “inordinate” number of orders under small business multiple award contracts and asks for feedback on current ideas to incentivize a more competitive marketplace for small businesses not in a mentor-protégé joint venture. Specifically, the SBA would like comments on two potential remedies.
- The first potential remedy is for the SBA to “eliminat[e] the exception to affiliation between an SBA-approved mentor and its protégé for multiple award contracts.” This would “allow joint ventures to seek and be awarded single award small business contracts but would make joint ventures ineligible for multiple award contracts.” This change is inspired by a perceived need to alleviate the concern that small businesses are entering joint ventures for multiple award contract awards “because procuring agency past performance and experience requirements make it difficult for many small businesses to qualify for the awards individually.”
- The second potential remedy is for the SBA to place a limit on the type of contracts these mentor-protégé joint ventures could hold by limiting the exclusion from affiliation to “contracts or orders that do not exceed five years.” Therefore, if a joint venture is submitting an offer on a contract that would last beyond five years, standard affiliation rules would apply. This remedy is inspired by SBA’s belief that a joint venture entity should be limited in duration.
As both remedies attempt to address the same issue, the SBA seeks comments on which method is preferred, if either.
Lastly, the SBA would like feedback on a potential change to the mentor-protégé program with respect to HUBZone participants. Currently, the HUBZone price evaluation preference requires that for unrestricted procurements a HUBZone small business concern’s proposed price be deemed lower than a large business’s proposed price if the HUBZone participant’s price is not more than 10% more than the large business’s price. However, the SBA would like comments on whether it is “appropriate for a HUBZone mentor-protégé joint venture to benefit from the HUBZone price evaluation preference when the joint venture is already benefitting from its large business mentor’s lower cost structures and pricing.” The SBA’s current proposed fix is to simply (1) remove this evaluation preference for all HUBZone participants who are members of a mentor-protégé joint venture agreement; or, alternatively, (2) remove this evaluation preference for only HUBZone participants who are members of a mentor-protégé joint venture agreement if the mentor exceeds the contract-specific NAICS size standard. The SBA seeks comments on which method is preferred, if either.
Conclusion
The SBA plans to have meetings to get constructive feedback on the above topics for use in future proposed rules. If any of these changes seem like they will impact your business, PilieroMazza advises you to testify at or attend one of the following meetings:
- Albuquerque, New Mexico, on August 19, 2024, at 9:00 a.m. (MDT);
- Oklahoma City, Oklahoma, on August 21, 2024, at 9:00 a.m. (CDT);
- Anchorage, Alaska, on August 27, 2024, at 9:00 a.m. (AKDT).
Additionally, the SBA will host a Listening Session in Honolulu, Hawaii on September 17, 2024, at 8:30 a.m. (HST).
Individuals who wish to testify must register by contacting Chequita Carter of the SBA’s Office of Native American Affairs, in writing, at Chequita.Carter@sba.gov or by Facsimile at (202) 481–2177. The deadline to register for each meeting is as follows:
- Albuquerque: August 12, 2024;
- Oklahoma City: August 14, 2024;
- Anchorage: August 20, 2024;
- Honolulu: September 10, 2024.
Please visit this link to see the official notification from SBA.
PilieroMazza attorneys are well-versed in all aspects of the SBA’s small business programs and are here to help. If you have questions regarding this client alert, please contact Cy Alba, Katie Burrows, or another member of the Firm’s Government Contracts and Native American Law & Tribal Advocacy practice groups.
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