8(a) Rule Update: Agencies Can’t Limit 8(a) Competition to Participants with Additional Certifications, SBA Clarifies Bona Fide Place of Business for Construction Contracts

A few months ago, we explored SBA’s new rule that made changes to the 8(a) program, the limitations on subcontracting rules, and the ostensible subcontractor rule. There was another aspect of that new rule that also makes some needed clarification on how contracting officers can limit 8(a) competitions, and we want to briefly explore that here.

Multiple-Certifications Rule

Prior to the new rule, there was a fair bit of uncertainty on whether the regulations and statutes permitted contracting officers to limit an 8(a) competition to 8(a) participants that also have one or more other certifications (for example, an 8(a) participant that is also in the HUBZone program). While 13 C.F.R. § 125.2(e)(6)(i) already contains a rule prohibiting such in the context of orders under multiple-award contracts, this still left a gap for regular contracts and task orders under single IDIQs.

For its part, SBA has historically prohibited such multiple-certification requirements for 8(a) contracts. That said, the regulations governing the 8(a) program, 13 C.F.R. part 124, were silent on the matter. As such, 13 C.F.R. § 124.501 has been amended to reflect this. It now reads in relevant part:

“A procuring activity cannot restrict an 8(a) competition (for either a contract or order) to require SBA socioeconomic certifications other than 8(a) certification (i.e., a competition cannot be limited only to business concerns that are both 8(a) and HUBZone, 8(a) and WOSB, or 8(a) and SDVOSB) or give evaluation preferences to firms having one or more other certifications.”

Similar provisions were inserted into 13 C.F.R. § 126.609 for the HUBZone program, 13 C.F.R. § 127.503 for the WOSB program, and 13 C.F.R. § 128.404 for the SDVOSB Program.

It’s also worth noting now that 13 C.F.R. § 124.501(b) allows an agency to award an 8(a) sole source order against a multiple award contract that was not itself set aside for the 8(a) Program:

“8(a) contracts may either be sole source awards or awards won through competition with other Participants. In addition, for multiple award contracts not set aside for the 8(a) BD program, a procuring agency may award an 8(a) sole source order or set aside one or more specific orders to be competed only among eligible 8(a) Participants. Such an order may be awarded as an 8(a) award where the order was offered to and accepted by SBA as an 8(a) award and the order specifies that the performance of work and/or non-manufacturer rule requirements apply as appropriate.”

Bona Fide Place of Business Requirement

On top of all this, SBA examined the current moratorium on the “bona fide place of business requirement” under 13 C.F.R. § 124.501(k) that states that “[i]n order to be awarded a sole source or competitive 8(a) construction contract, a Participant must have a bona fide place of business within the applicable geographic location determined by SBA.” Presently, there is a moratorium on the enforcement of this rule from the COVID pandemic, which ends September 30, 2023. SBA is still debating what to do about that moratorium. Several commenters suggested the elimination of the rule, but SBA disagrees with this as it is required by the Small Business Act.

That said, SBA did make some changes. First, it clarified that if an 8(a) participant has a bona fide place of business in a state, it is eligible for a construction contract anywhere in that entire state. 13 C.F.R. § 124.501(k). The old text only noted that such a participant “may” be eligible. Furthermore, where a participant is currently performing a contract in a state, it is considered to have a bona fide place of business in that state for additional contracts. 13 C.F.R. § 124.501(k)(4). SBA also added a provision that states:

“A Participant may establish a bona fide place of business through a full-time employee in a home office. An individual designated as the full-time employee of the Participant seeking to establish a bona fide place of business in a specific geographic location need not be a resident of the state where he/she is conducting business.” 13 C.F.R. § 124.501(k)(5)-(6). Finally, although this was already how SBA interpreted the rule would apply, it decided to put it expressly in the regulation:

“For an 8(a) construction contract requiring work in multiple locations, a Participant is eligible if:

(i) For a single award contract, the Participant has a bona fide place of business where a majority of the work (as identified by the dollar value of the work) is anticipated to be performed; and

(ii) For a multiple award contract, the Participant has a bona fide place of business in any location where work is to be performed.” 13 C.F.R. § 124.501(k)(9).


These changes from SBA, mostly put into place what was already being practiced, but nonetheless help by making the practice an express requirement. The bona fide place of business rule, in particular, has caused problems for some 8(a) firms, so it’s nice to see a little more flexibility in that rule. We think these changes are appropriate but likely shouldn’t change too much in terms of how 8(a) contracts are governed.

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