SBA Takes Action Following OIG Investigation of Suspension and Debarment Process

On September 18, 2019, SBA’s Office of Inspector General released an Audit Report summarizing a recent audit of SBA’s Suspension and Debarment Process. The purpose of the audit was to determine whether SBA “had sufficient controls in place to prevent suspended or debarred entities from receiving federal contracts through SBA’s preference contracting programs and small business loans.” Through its investigation, OIG discovered SBA lent and awarded millions of dollars to businesses otherwise ineligible to receive these funds under SBA’s suspension and debarment guidelines. While SBA disagreed with some of OIG’s findings, SBA did agree to take some steps to address OIG’s findings and recommendations.

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The 8(a) Program: Our New Handbook is Available

The 8(a) program can be a powerful accelerator for those small businesses eligible to participate; however, these benefits come with substantial strings attached. As such, the fourth volume of the Koprince Law LLC GovCon Handbooks discusses this unique and heavily regulated program.

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Years after Expiration of Mentor-Protégé Agreement, Joint Venture Still Small Based on Status as of Proposal Date

SBA regulations say that size is determined as of the date an offeror submits its initial proposal, with price. On its face, this rule seems pretty straight forward. But what happens if the initial proposal was filed six years ago? And what if the joint venture that submitted the proposal has since expired? Following OHA’s recent logic, the proposal-date rule stands even in these unique circumstances.

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SBA Denies 8(a) Status Based on Applicant’s Ability to Successfully Overcome Gender-Based Discrimination in Her Field

OHA recently affirmed the 8(a) status denial of a 100% woman-owned small business performing in the historically male-dominated renewable energy field. The applicant—who SBA called an “advocate” and “mentor” to women in the industry—detailed specific instances of gender-based-discrimination that plagued her education, employment, and career. But SBA was unmoved, instead focusing its analysis on the applicant’s triumph over these obstacles—apparently an indication that she was not socially disadvantaged in the first place. Unfortunately, this perplexing holding does fall in line with many past SBA denials of women-owned companies for 8(a) status.

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Why Does the 8(a) Program Penalize Older Business Owners?

The 8(a) Program can offer incredible opportunities: sole source contracts, set-aside competitions, mentor-protege relationships, SBA business training and much more.

But for business owners older than 59 1/2, getting admitted to the 8(a) Program can be very difficult: unlike their younger counterparts, funds these owners have saved in traditional retirement accounts will likely count against the 8(a) Program’s $250,000 adjusted net worth cap.

How is this fair? (Spoiler alert: in my opinion, it ain’t).

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SBA OIG Recommends Improved Oversight of 8(a) Continuing Eligibility

Last year, we wrote about the SBA’s Office of Inspector General’s concerns with the SBA’s review of potential 8(a) participants’ eligibility. In this report, the OIG made three recommendations aimed at improving to verify applicants’ eligibility.

Just last week, the OIG released a new report analyzing the 8(a) Program. This report picks up where the earlier report left off—it addressed several issues in the SBA’s evaluation of participants’ continuing eligibility.

The results of this report are rather alarming: based on its review, the OIG identified almost $127 million in 8(a) set-aside awards to ineligible firms.

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8(a) Program: Participant Terminated for Not Paying Subcontractor

An 8(a) Program participant was terminated from the 8(a) Program for failing to pay a subcontractor.

According to the SBA, the non-payment reflected poorly on the 8(a) company’s character–and “good character” is a prerequisite for 8(a) Program participation.

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