Final Rules Strives To Strengthen Business Development Program For Small Businesses and Reduce Waste, Fraud and Abuse
February 11, 2011
(SitNews) - The U.S. Small Business Administration today published a package of final rules that will revise regulations to strengthen its 8(a) Business Development program which it says will better ensure that the benefits flow to the intended recipients and help prevent waste, fraud and abuse.
The rules were published today in The Federal Register and will become effective in 30 days on March 14, 2011.
The revisions are the first comprehensive overhaul of the 8(a) program in more than 10 years. The regulations incorporate technical changes and substantive changes that mirror existing or new legislation enacted since the last revision in June 1998.
“The 8(a) Business Development Program is an effective tool for providing small businesses with support to help them compete for and win federal government contracts, and in turn put them in the best possible position to drive economic growth and create jobs,” SBA Administrator Karen Mills said. “Through public meetings held in cities throughout the country, SBA gained valuable input from members of the small business community on ways to strengthen the program to provide the best opportunities for eligible firms, while also stepping up efforts to combat waste, fraud and abuse.”
U.S. Senator Lisa Murkowski said in a prepared statement, "The SBA’s revision of its regulations governing the 8(a) Business Development program, the first significant revision of these rules in a decade, is thoughtful and comprehensive. It bears noting that the final rule characterizes the 8(a) program as ‘a much-needed and beneficial program,’ adding that ‘the tribal and Alaska Native Corporation component of the program serves a valuable economic and community development purpose in addition to its business development purpose.’"
Murkowksi said, “The regulations make great strides to ensure that 8(a) businesses are not further victimized by unscrupulous business partners and advisors, that 8(a) businesses perform a significant portion of the contracted work and that benefits to Native Corporation shareholders and tribal members are chronicled and tracked. I agree with the Small Business Administration's conclusion that the Alaska Native Corporation component of the program serves the public interest. The Small Business Administration's mission is to help 8(a) participants succeed in business, and I look forward to working with the SBA on additional steps that can be taken to ensure that the 8(a) program is mutually beneficial to the government and to the 8(a) participants.”
U.S. Senator Mark Begich (D-AK) also commented on the final regulations announced today. Begich said, “During this process I have said that the most important part of reform is thorough consultation with impacted communities and I have been pleased by the SBA’s work to gather the thoughts of all of the participants in the program and not just focusing on our tribal participants and Alaska Native Corporations.”
“There is no doubt that some members of the Senate who want to end or severely limit participation in the 8(a) program will say that these reforms do not go far enough, but the story of SBA 8(a) Business Development in Alaska is one of success and I will continue to defend this strong and sustainable program," said Begich.
Begich said he intends to use his posts on the Senate Armed Services Committee and Committee on Homeland Security and Government Oversight, which oversees government contracting, to make sure the successes of the those 8(a) participants are fairly represented and not targeted by members who don’t understand the program.
The rules cover a variety of areas of the program, ranging from clarifications on determining economic disadvantage to requirements on Joint Ventures and the Mentor-Protégé program. Some of the components of the 8(a) program that the revised regulations will affect include:
Joint Ventures – requiring that the 8(a) firm must perform 40 percent of the work of each 8(a) joint venture contract that is awarded, including those awarded under a Mentor/Protégé agreement, to ensure that these companies are able to build capacity;
Mentor-Protégé Program – adding consequences for a mentor who does not provide assistance to their protégé, ranging from stop-work orders to debarment
Ownership and Control Requirements – providing flexibility on whether to admit 8(a) program companies owned by individuals with immediate family members who are owners of current and former 8(a) participants;
Tribally-Owned Firms – requiring firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations and Community Development Corporations to report benefits flowing back to their respective communities;
Excessive Withdrawals – amending regulations on what amount is considered excessive as a basis for termination or early graduation from the 8(a) program; and
Business Size for Primary Industry – requiring that a firm’s size status remain small for its primary industry code during its participation in the 8(a) program.
The SBA initially published the proposed rule on Oct. 28, 2009 and provided a 60-day comment period for the public to submit their comments. Many businesses requested more time, so the SBA extended the comment period an additional 30 days, allowing the public to submit their comments by Jan. 28, 2010. In addition to requesting written comments from the public, the SBA also embarked on a “Listening Tour” and hosted public meetings between December 2009 and January 2010 in 10 cities around the country: Albuquerque, N.M., Atlanta, Ga., Boston, Mass., Chicago, Ill., Dallas, Texas, Los Angeles, Calif., Miami, Fla., New York, N.Y., Seattle, Wash. and Washington, D.C.
The SBA also conducted tribal consultations to gain further public input to the revisions in Albuquerque, Fairbanks and Anchorage, Alaska, and Seattle. In total, the SBA received more than 2,500 individual comments from the public.
The 8(a) program is a nine-year business development program for small businesses where the owner(s) fits the SBA’s criteria of being socially and economically disadvantaged and the same owners control the firm. The 8(a) program helps these firms develop their business and provides them with access to government contracting opportunities, allowing them to become solid competitors in the federal marketplace. It also provides specialized business training, counseling, marketing assistance and high-level executive development to its participants. In FY09, small businesses received $18.6 billion in 8(a) contract dollars.
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