In the Market for Freeze-Dried Ice Cream? SBA’s Proposed Rule on Surplus Property May Be For You!

This month, the SBA proposed a new rule to expand access to Federal surplus personal property for veteran-owned small businesses, 8(a) Program Participants, and more.

The GSA maintains the Federal Surplus Personal Property Donation Program. Currently, the Program allows state and local government agencies to “obtain personal property that the federal government no longer needs” or, put simply, allows the federal government to give its hand-me-downs to qualifying entities. Some non-profits also qualify to obtain excess personal property.

Federal surplus personal property is listed on can include almost anything, from NASA’s leftover freeze-dried astronaut food to an old-school “30’ TV with VHS Player” (listed on the GSAXcess home page at the time this post was written). Personal property means no “land or other real property” (i.e. real estate), “certain naval vessels,” and federal records. More information about the current program is located on GSA’s website here (and you can check out the current list of surplus property at GSA’s GSAXcess website).

Now, SBA’s proposed rule would implement three new programs for the transfer of federal surplus property to eligible small businesses. Congress has already authorized the creation of each programs through laws passed in 2015 (the RISE After Disaster Act) and in 2019 (the Veterans Small Business Enhancement Act and Section 861 of the 2019 NDAA).

The first program would allow SBA to transfer technology or surplus personal property to a small business concern located in a disaster area if the small business meets the requirements for such a transfer[.]” While there are currently regulations governing a substantially similar program for 8(a) companies (i.e. 13 C.F.R. 124.405) the proposed program would alter the current one in significant ways. Importantly, eligible small businesses under the new program would not have to be 8(a) participants, so the SBA has proposed adding an additional subpart to the regulations governing contracts for small businesses located in disaster areas (which we discussed in depth here). There are a number of additional amendments proposed in light of this new program to clarify the language, update cross references, and more.

The second program would allow certified veteran-owned small businesses and 8(a) Business Development Program participants access to federal surplus property along with currently eligible state and local governments and non-profits. While the program would operate similarly for each category of eligible businesses, 8(a) participants would be required to meet additional compliance requirements. SBA proposes implementing the program through additions to current SDVOSB/VOSB and 8(a) regulations (located at 13 CFR 124 and 125).  

Finally, the third program would allow the SBA to transfer surplus personal property to small businesses in Puerto Rico—even if they are not 8(a) participants. This program would be limited exclusively to businesses physically located in and organized under the laws of Puerto Rico.

Overall, these programs would open up opportunities for eligible small businesses to get their hands on surplus goods. Public Comments on the proposed rule are due on or before March 23 of this year and can be submitted here if you have thoughts on the new rules. You can also call us with questions about the latest proposed rules and regulations impacting Federal small business contractors!