By Debbie Gregory.
As the new year was ushered in, so were two major rules and three proposed rules that may have an effect on how government contractors and other veteran owned companies operate in 2019.
The first rule is the DFARS Deviation 2019-O0003 – Limitations on Subcontracting. This rule was signed by the Department of Defense (DoD) on December 3, 2018 and effectively implements the SBA’s Limitations on Subcontracting regulations for DoD procurements. The updated small business regulations allow small prime contractors to include work subcontracted to “similarly situated entities” when calculating their compliance with limitations on subcontracting.
The second rule is the Small Business Runway Extension Act of 2018, passed on December 17, 2018, adjusted the previous measure of a company’s size by using the average annual receipts from the previous five years, up from three years. The change was designed to reduce the impact of rapid-growth years and resulting spikes in revenue that could prematurely eject a small business out of a size standard. It was also designed to allow small businesses to have more time to grow and develop their competitiveness and infrastructure.
In previous regulatory iterations, the percentage of work that small business contractors could subcontract on contracts set aside for small businesses was limited to essentially 50% for supplies and services, 85% for general construction and 75% for specialty construction. These limitations have created a hardship for many small businesses. The class deviation addressed the nonmanufacturer rule and clarifies that those small businesses who are in a joint venture may aggregate work performed by all members of the joint venture to reach the minimum percentage.
The three proposed rules are the End to Self-Certification for SDVOSB, the FAR Rule, and the HUBZone Program Changes.
The Proposed End to Self-Certification for SDVOSB- The purpose of this new legislation is to facilitate the transfer of responsibility for verifying small business concerns owned and controlled by veterans to the Small Business Administration (SBA). While this proposed legislation will serve to consolidate the separate SBA and U.S. Department of Veterans Affairs (VA) certification standards, it will also put an end to the current SBA policy of self-certification and will require many small and large businesses to revise policies, procedures, and certification programs.
The FAR Rule – Limitations on Subcontracting proposes to update the FAR to match the SBA regulations on limitations on subcontracting. This again includes language to include a prime’s subcontracted work to “similarly situated entities” in its calculations towards its limitations on subcontracting.
Proposed HUBZone Program Changes- The SBA recently proposed new regulations to make it easier for small businesses to understand and comply with the Historically Underutilized Business Zone (HUBZone) Program’s requirements. These proposed changes will make the program a more attractive avenue for procuring agencies. While the 8(a) Business Development Program has been an integral part of SBA’s history, the HUBZone Program has the potential to be just as popular. The problem with existing HUBZone rules and regulations is that compliance is often difficult to achieve and maintain and can change almost without warning, thereby rendering a company ineligible due to no fault of the business owner.
Veteran and Military Business Owners Association, VAMBOA,
