GovCon Voices: Buying, Building and Selling in the Small Business Government Contracting Space

by Erin Andrew

One of the biggest mistakes small business owners make is planning their exit strategy too soon. Whether a contractor wants to enter, grow, or exit the market, a small business owner must understand how buying or selling their business can play a large role in their success. Below are some tips for all three phases:

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The Large Business Runway Extension Act: For Some Contractors, New Five-Year Size Period Will Backfire

The House and Senate have passed the “Small Business Runway Extension Act of 2018,” which appears poised to become law in the coming days.  As my colleague Matt Moriarty has written, the bill would amend the SBA’s small business size rules to use a five-year average, instead of a three-year average, in calculations using receipts-based size standards.

The purpose of the bill is to help contractors avoid becoming “other than small” following a period of quick growth, but not all companies will benefit.  For companies with declining revenues, the bill may backfire, causing those companies to be stuck as large businesses longer.

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HUBZone Joint Ventures: FAR Council Gets It Wrong

The FAR Council’s proposed update to the limitations on subcontracting, and the DoD’s subsequent FAR deviation, have been met with widespread approval by small contractors.

But for HUBZone Program participants, the proposed rule and DoD deviation contain a glaring problem: a requirement that the HUBZone member of a joint venture take sole responsibility for meeting the applicable limitations on subcontracting.  This requirement, which doesn’t apply to joint venturers in other socioeconomic programs, is unfair to HUBZones, and at odds with SBA regulations.

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Limitations on Subcontracting: DoD Issues Comprehensive FAR Deviation

Earlier this week, the FAR Council issued a proposed rule to conform the FAR to the SBA’s regulation governing limitations on subcontracting.  But the DoD isn’t waiting around while the FAR Council finishes the process.

The DoD has issued a comprehensive FAR deviation, effective immediately.  The DoD’s FAR deviation will, effectively, temporarily conform the DoD’s use of the FAR to the SBA’s regulation while the FAR Council works on a final rule.

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Limitations on Subcontracting: FAR Council Finally Proposes Rule Change

For small government contractors, the disconnect between the SBA’s updated limitations on subcontracting rule and the FAR’s outdated rules has been very confusing.  For more than two years, the FAR and SBA regulation have used different formulas to determine compliance, and the SBA rule–but not the FAR–allows the use of “similarly situated entities” on small business set-asides and 8(a) contracts.

This has created major headaches for small businesses, who have had no definitive answer to what should be a simple question: “which rule do I follow?”  Now, finally, there is some important progress to report in clearing up this discrepancy: yesterday, the FAR Council issued a proposed rule to update the FAR’s limitations on subcontracting provisions and conform them to the SBA’s rule.

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Government-Wide SDVOSB Certification: More Details on New Bill

I’ve long predicted that Congress would eventually adopt a formal, Government-wide SDVOSB certification program (or “verification” program, if you prefer).  Maybe my crystal ball is finally right.  As my colleague Matt Schoonover wrote last week, a new bill introduced in the House of Representatives would do just that.

The full text of the bill has now been published.  Here are some of the key details of the Government-wide SDVOSB certification proposal.

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The Mysterious Case of the Missing SBA Women-Owned Small Business Certification Program

On December 19, 2014, then-President Obama signed the 2015 National Defense Authorization Act into law.  The 2015 NDAA eliminated the statutory basis for federal agencies to award women-owned small business set-aside contracts to self-certified companies.  In essence, then, the 2015 NDAA effectively eliminated WOSB self-certification.

Flash forward almost four years, and the SBA has not yet implemented a WOSB certification program.  In fact, the SBA hasn’t even proposed rules to implement such a program.  Instead, although the SBA continues to license a few third-party certifiers, the SBA also continues to say that WOSBs “can self-certify directly at certify.sba.gov by answering questions and uploading documents.”

So where the heck is the mysteriously missing SBA WOSB certification program?  And is it even legal for the SBA to continue allowing WOSB self-certification?

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