On Deck for SBA Regulations in 2023: Affiliation and WOSB Rule Changes

SBA, like other agencies, publishes a semiannual Regulatory Agenda to provide an update on the various rules it has coming up as well as a timeline for when they will be published or become final. While SBA doesn’t have to meet these timeframes, it’s always good to check in on what SBA has been working on when the final rules will come out. This agenda includes an update on increased size standards, along with some other important rules. Here is a summary of the upcoming rules and what we think could most impact federal contractors. Be sure to comment on these rules if you have an opinions on them.

Here are highlights from the agenda, along with a summary.

Proposed Rules

  • Affiliation in Small Business Procurement Programs; Women-Owned Small Business Program: SBA will be amending its affiliation rules and Women-Owned Small Business program rules to match up with the 8(a) Program and SDVOSB rules more closely. “These revisions will ensure consistent requirements for ownership and control across SBA’s procurement programs.” The proposed rule is expected September 2023.
  • Small Business Size Standards: Adjustment of Alternative Size Standard for SBA’s Loan Programs for Inflation: This only impacts small business loans, not procurement. But for the small business loan programs (EIDL and 7(a)), SBA will an alternative size standard for loan applicants that do not meet the small business size standards for their industries. The proposed rule is expected August 2023

Final Rule Stage

  • National Defense Authorization Act of 2020, Credit for Lower Tier Subcontracting and Other Amendments. The SBA will be issuing a final rule, mainly impacting 13 CFR 125.3, to address how the 2020 NDAA required “SBA to alter the method and means of accounting for lower tier small business subcontracting.” This is a fairly limited change for subcontracting plan credit and SBA expects the final rule to come out in September 2023. The proposed rule was released in December 2022. It set a $750,000 threshold above which a subcontracting plan is required. Also note that “commercial plans and comprehensive subcontracting plans therefore are not eligible to use lower-tier subcontracting credit” and can only rely on first-tier subcontracts. Also, “prime contractors are required to maintain records of the procedures used to substantiate the credit they elect to receive for lower-tier subcontracting.”
  • Small Business Size Standards: Adjustment of Monetary Based Size Standards, Disadvantage Thresholds, and 8(a) Eligibility Thresholds for Inflation: SBA has listed this in its regulatory agenda, even though the interim rule changing these standards was effective December 2022 and the final rule was released in June 2023. Regardless, it’s good to see that SBA increased standards for receipts-based size standards, and economic thresholds for the 8(a) and EDWOSB programs. We discussed this rule on the blog here.

There are a number of important changes summarized here that are going to have proposed rules issued or scheduled to go into effect over the next few months. The big takeaway is that there are not that many rules on the horizon. However, with the recent court decision impacting the rebuttable presumption for the 8(a) Program, as we discussed, SBA may be coming up with some new regulations for the 8(a) Program and issuing those soon.

We’ll keep you updated on SmallGovCon once the final versions of these rules are released, so stay tuned.

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