Category Archives: 8(a) Program

Posts dealing with the 8(a) business development program, including 8(a) admissions and eligiblity, requests for reconsideration, ongoing eligibility and compliance, and related matters.

Federal Court: 8(a) Program Is Constitutional–Kind Of

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The good news for 8(a) Program participants (and applicants) is that the United States District Court for the District of Columbia ruled earlier this month that the 8(a) program is constitutional as a whole.  The bad news is that the same court found the 8(a) Program unconstitutional as applied to the plaintiff’s specific industry, military simulation and training.

For disadvantaged companies in the military simulation and training industry, the court’s decision in Dynalantic Corporation v. United States, No. 95-2301 (2012) is a major setback.  Already, the DoD has apparently suspended 8(a) contract awards under the Simulation, Training and Instrumentation Acquisition Center in the wake of the court’s ruling.  For 8(a) companies in other industries, the critical question now is what impact–if any–Dynalantic will have on 8(a) awards in other industries.

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DoD Suspends 8(a) Simulation Training Awards

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The Department of Defense has apparently suspended all 8(a) contract awards under the Simulation, Training and Instrumentation Acquisition Center in the wake of a federal court decision issued earlier this month.

In a press release, leaders of the Native American Contractors Association and the United States Hispanic Chamber of Commerce blasted the DoD for overreaching in response to Dynalantic Corporation v. United States, No. 95-2301 (2012), in which the United States Court of Appeals for the District of Columbia upheld the constitutionality of the 8(a) Program as a general matter, but found that the 8(a) Program was unconstitutional as applied to the plaintiff’s specific industry, military simulation and training.

I’ll have much more on Dynatlantic and the fallout from the court’s decision after the Labor Day weekend.  Unfortunately, for 8(a) companies–especially those doing business with DoD– the holiday weekend begins on a very ominous note.

8(a) Program: SBA OHA Holds Applicant May Work Second Full-Time Job

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The 8(a) program regulations require the disadvantaged individual upon whom 8(a) program eligibility is based to manage the firm on a full-time basis, during normal working hours of firms in the same or similar line of business.  When 8(a) program applicants learn about 8(a) program’s “full time devotion” requirement, many ask: “can I work a second job?”

Maybe.  As seen in a recent decision of the SBA Office of Hearings and Appeals, an 8(a) program applicant may be able to engage in outside employment–even a second full-time job–so long as the applicant can demonstrate that the outside employment will not interfere with the applicant’s ability to manage the 8(a) firm full-time during normal working hours.

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8(a) Sole Source Contracts: Little Explanation Necessary

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Agencies have broad discretion when it comes to issuing 8(a) sole source contract awards.  Although a procuring agency must provide the SBA with some justification as to why it selected a particular 8(a) company for a sole source contract, that justification can be very brief.  And, as the GAO held in a recent bid protest decision, an 8(a) sole source contract justification need not explain why the 8(a) awardee was superior to another 8(a) company interested in the same contract.

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8(a) Mentor-Protege Joint Venture Shielded From “Three-In-Two” Rule Affiliation

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According to the SBA Office of Hearings and Appeals, an 8(a) mentor-protege joint venture may be entitled to an affiliation “shield,” even if the joint venture violates the so-called “three-in-two” rule by receiving more than three contracts over a two-year period.

SBA OHA’s decision in Size Appeal of Magnum Opus Technologies, Inc., SBA No. SIZ-5372 (2012), should reassure 8(a) proteges and their mentors that if the SBA District Office has approved a contract award to an 8(a) mentor-protege joint venture, the joint venturers are very unlikely to be found affiliated as a result of that contract award.

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8(a) Contractor Fraudulently Evades 8(a) Sole Source Threshold–With Procuring Agency’s Knowledge

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A soon-to-graduate 8(a) contractor submitted a fraudulent proposal designed to evade the 8(a) Program’s sole source limits, with the full knowledge of the procuring agency in question, according to a decision issued by the U.S. Court of Federal Claims.

As described in Veridyne Corporation v. United States, No. 06-150C (Fed.Cl. 2012),Veridyne Corporation greatly underestimated the cost of a contract in order to slip it under the 8(a) Program’s sole source threshold, but the scheme eventually collapsed, leaving Veridyne liable for false claims and procurement fraud–and leaving the procuring agency in question with egg on its face and a lot of explaining to do.

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8(a) Joint Ventures and SBA Size Protests: SBA OHA Narrows The Scope of Review

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When the SBA Area Office reviews a SBA size protest against a SBA-approved 8(a) joint venture, the SBA Area Office must confine itself strictly to size issues.  According to a recent decision of the SBA Office of Hearings and Appeals, in conducting its review of a SBA size protest, the SBA Area Office cannot examine whether the joint venture complies with the 8(a) program’s regulations.

Although the distinction between size and 8(a) issues may sound like a technicality, it can make the difference between a sustained SBA size protest and an unsuccessful one.  As a result, this SBA OHA decision provides an extra layer of protection to SBA-approved 8(a) joint ventures–any makes filing a successful SBA size protest against an approved 8(a) joint venture that much more difficult.

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