As you likely know, there are some major changes going on in the SBA’s 8(a) Business Development Program. And like many, I am sure you have a lot of questions—given the fact that these changes are being implemented right now without a published final rule explaining the details, limitations, and new requirements. While we may not have a rule, we have been closely following any and all SBA guidance on the matter as it has released. And as usual, we are here to pass that valuable information along to you.
On August 17, SBA counsel John Klein provided an important update as part of the National 8(a) Association’s regular update series. The recording will be available soon, so check back on their website if you missed it. A key takeaway is that the SBA will require social disadvantage narratives for all individually-owned entities to establish social disadvantage. But there were some other updates as well.
Key Update: Based on an August 17 update from SBA counsel John Klein, SBA will no longer allow a presumption of social disadvantage for individually-owned 8(a) companies.
If you have questions on those narratives, please see our blog posts and other guidance on the topic. If you have questions about writing your social disadvantage narrative, this video from Nicole Pottroff has great information about what SBA is looking for. Please check it out and contact our firm if you may need additional help.
No effect on entity-owned firms. This change will not affect entity owned firms, such as ANCs. Those firms don’t require a finding of social disadvantage. For instance, the rule governing tribal entities states that for “social disadvantage,“ a tribal entity “as defined in § 124.3 is considered to be socially disadvantaged.” There is no presumption involved, unlike the language for individually owned entities.
Already did a social disadvantage narrative? This change will not affect companies that already demonstrated social disadvantage by SBA reviewing the social disadvantage narrative as part of the 8(a) Program application process. But for individually owned firms that did not already do so, they will need to work on their social disadvantage narrative as soon as possible to be accepted and remain in the 8(a) Program, and to receive 8(a) awards.
Pending 8(a) Award. If you have a pending 8(a) award for which SBA action is needed for approval, you may have as little as 5 days (SBA’s time period to approve an 8(a) award) to have your social disadvantage narrative approved by SBA. So get cracking.
For contracting actions where SBA approval is not needed, such as priced options or in-scope modifications for existing contracts, SBA review of social disadvantage is generally not necessary. Other situations, such as novations, do require SBA review of 8(a) eligibility, so you would need an approved social disadvantage narrative.
New Instructions. SBA will be updating the questions for new applicants to provide guidance on the social disadvantage narrative requirements. Once the application site is reopened, those questions will guide applicants. But existing 8(a) Participants that don’t have a social disadvantage narrative should start working on those now. While SBA will prioritize companies with pending 8(a) contracting awards, other companies should consider getting their social disadvantage narrative together so that SBA can review over the next few weeks and months–no one wants an offer for 8(a) award denied on this basis (so, be proactive).
Need assistance with your social disadvantage narrative or other 8(a) or federal contracting matters? Questions about this post? Email us. Need legal assistance? call at 785-200-8919.