SBA Suspends Bona Fide Place of Business Requirement for 8(a) Construction Contracts

SBA’s requirement that 8(a) participants maintain a bona fide place of business in the geographic location of any 8(a) construction contracts has been an encumbrance for many federal contractors–even prior to the global pandemic. But fortunately, SBA has recently recognized the additional challenges that COVID-19 has caused for 8(a) contractors seeking to comply with this rule. And as such, SBA has suspended this requirement in an effort to help our nation’s small disadvantaged businesses during these arduous times.

Under SBA’s current 8(a) Business Development Program regulations, an 8(a) participant must have “a bona fide place of business in the applicable geographic area” to be awarded a contract “if the procurement is for construction[.]” SBA defines “bona fide place of business” as “a location where a Participant regularly maintains an office which employs at least one full-time individual within the appropriate geographical boundary.” You can read more about SBA’s bona fide place of business requirements here.

On August 25, 2021, SBA “announced a moratorium on the requirement that participants in SBA’s 8(a) Business Development Program must establish a bona fide place of business in a specific geographic area in order to be awarded any construction contract through the 8(a) Program due to the ongoing challenges of COVID-19.” SBA’s suspension of this requirement is effective August 25 “and applies to all 8(a) construction contracts offered to the 8(a) Program between August 25, 2021, and September 30, 2022.”

While the bona fide place of business requirement is suspended, 8(a) participants will no longer be required to establish or have a bona fide place of business in any specific geographic location in order to receive seeking 8(a) construction contracts on a sole source or competitive basis.

The Associate Administrator for SBA’s Office of Government Contracting and Business Development, Bibi Hidalgo, explained:

The SBA is committed to finding innovative ways to assist small businesses, particularly small disadvantaged businesses that have been historically underserved[.] This change to the SBA’s 8(a) program — our flagship contracting program born out of the Civil Rights movement — will help small businesses continue to drive our economic recovery and position themselves at the forefront of our nation’s reimagined economy.

The suspension of this cumbersome requirement–even temporarily–will certainly make it easier for many 8(a) contractors to meet the eligibility requirements for 8(a) construction contracts. With increased opportunities to compete for these awards, we can only hope to see further development of our nation’s small disadvantaged businesses.

SBA has also encouraged any 8(a) participants with questions about this moratorium to email or reach out to their local servicing District Office or to visit the 8(a) Business Development Program website.