U.S. Small Business Administration published a package of final rules revising regulations to strengthen its 8(a) Business Development program to better ensure that the benefits flow to the intended recipients and help prevent waste, fraud and abuse.

The rules cover a variety of areas of the program, ranging from clarifications on determining economic disadvantage to requirements on Joint Ventures (JV) and the Mentor-Protégé (M-P) program. Some of the key elements with added clarity for the JV and M-P programs of the 8(a) program that the revised regulations 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

• With the new 8(a) regulations, we also have new regulations for Joint Ventures under 13 C.F.R. 121.103(h) that affect 8(a) as well as non-8(a) small business set-aside procurements:
• THE PRIOR RULE: "3 in 2 Rule" - stated that two firms are limited to pursuing three contract opportunities under one JV over two years. To "pursue" means to submit an offer.
• THE NEW RULE: The "3 in 2" limitation has changed from three "offers" to three contract "awards" under one JV within two years.
• The 2 years begins at the date of award of the first contract
• JV can actually be awarded more than 3 contracts so long as the 4th (or subsequent) offer occurred during the 2-year period and the offer was made before the 3rd contract was awarded

• Economic Disadvantage - providing more clarification on factors that determine economic disadvantage as it relates to total assets, gross income, retirement accounts and a spouse of an 8(a) company owner when determining the owner's ability to access capital and credit;

• Mentor-Protégé Program - adding consequences for a mentor who does not provide assistance to their protégé, ranging from stop-work orders to debarment

• With the 8(a) Mentor Protégé program, the new regulations (13 C.F.R. 121.103(h)(3)(iii)) make clear that any JV seeking to use 8(a) Mentor Protégé status as a basis for an exception to affiliation - regardless of whether the procurement is set aside for 8(a) - must follow the 8(a) JV rules set forth in 13 C.F.R. 124.513(c)(d) which include, among other requirements, approval of the JV Agreement by SBA

•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;

•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.

Every business which is 8(a) certified or considering applying for this certification needs to be knowledgeable and familiar with all the rule changes.

Detailed briefings on this topic and links to the final rule changes can be found on www.govtips.biz.