Construction Law Toolbox
SBA Final Rule Makes Important Changes to Size Regulations, 8(a) Business Development/Small Disadvantaged Business Status Determinations
Effective March 14, 2011, a final rule by the Small Business Administrations implements important changes to various regulations affecting size status and eligibility for the 8(a) Business Development Program/SDB Status Determinations. Substantive changes include the rule on affiliation among joint ventures, calculation of net worth, and new requirements for 8(a) joint venture agreements.
Prior to this new final rule, entities were not affiliated as joint venturers provided they only joint ventured to submit no more than 3 offers on Federal projects over a 2-year period. Under the new rule, joint ventures can be awarded 3 projects over a 2-year period and not be considered affiliates based on their joint venture activities. Joint venturers can now re-constitute their joint venture and be awarded 3 additional projects over subsequent 2-year periods.
Other changes affect the determination of who is economically disadvantaged. In determining one’s net worth, "[f]unds invested in an Individual Retirement Account or other official retirement account that are unavailable to an individual until retirement age without a significant penalty will not be considered in determining an individual’s net worth." Personal income averages for initial and continuing 8(a) program eligibility have also been established by the SBA.
The required contents of 8(a) joint venture agreements will also change effective March 14, 2011. To the extent other SBA contracting-assistance programs rely on the regulation for proper 8(a) joint venture agreements, those other programs will be affected by these changes, as well.
This final rule is extensive and includes other substantive and technical changes. Click here to view the Final Rule.