On February 11, 2015, the U.S. Small Business Administration issued its final rule implementing statutory revisions that encourage use of small business status advisory opinions from Small Business Development Centers (SBDCs) or Procurement Technical Assistance Centers (PTACs).  Specifically, the new rule implements provisions of the National Defense Authorization Act of 2013 that establish limitations of liability from fraud penalties under 15 U.S.C. § 645(a) for individuals or companies that misrepresent business concerns as “small” based upon good faith reliance upon advisory opinions from SBDCs or PTACs.  The rule also specifies the review process for these advisory opinions.

This new rule provides a safe harbor for fraud liability arising under 15 U.S.C. § 645(a), which governs “false statements” to the Small Business Administration.  Under § 645(a), anyone who “makes any statement knowing it to be false . . . for the purpose of influencing in any way the action of the Administration, or for the purpose of obtaining money, property, or anything of value” to a fine and possible imprisonment.  This safe harbor applies only to false statements made in connection with misrepresentation of status as a small business concern.  The rule specifically notes that a business concern’s size status may still be subject to a size protest in connection with specific procurements.

The statute is clear that there is no obligation for SBDCs or PTACs to issue these opinions, and the SBA noted in response to comments on the proposed rulemaking that it does not have authority to mandate these opinions, particularly in light of the fact that PTACs are administered by the Department of Defense.  In addition, the advisory opinions are subject to review by the SBA’s Office of Procurement Law, which has 10 business days to accept or reject the advisory opinion.  Despite these limitations, the new rule still offers a potential solution for business concerns faced with questions regarding eligibility for small business status set-asides.

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Photo of Scott A. Freling Scott A. Freling

Scott is sought after for his regulatory expertise and his ability to apply that knowledge to the transactional environment. Scott has deep experience leading classified and unclassified due diligence reviews of government contractors, negotiating transaction documents, and assisting with integration and other post-closing…

Scott is sought after for his regulatory expertise and his ability to apply that knowledge to the transactional environment. Scott has deep experience leading classified and unclassified due diligence reviews of government contractors, negotiating transaction documents, and assisting with integration and other post-closing activities. He has been the lead government contracts lawyer in dozens of M&A deals, with a combined value of more than $76 billion. This has included Advent’s acquisition of Maxar Technologies for $6.4 billion, Aptiv’s acquisition of Wind River for $3.5 billion, Veritas Capital’s sale of Alion Science and Technology to Huntington Ingalls for $1.65 billion, and Peraton’s acquisition of Perspecta for $7.1 billion.

Scott also represents contractors at all stages of the procurement process and in their dealings with federal, state, and local government customers. He handles a wide range of government contracts matters, including compliance counseling, claims, disputes, audits, and investigations. In addition, Scott counsels clients on risk mitigation strategies, including obtaining SAFETY Act liability protection for anti-terrorism technologies.

Scott has been recognized by Law360 as a MVP in government contracts. He is a past co-chair of the Mergers and Acquisitions Committee of the ABA’s Public Contract Law Section.

Photo of Nooree Lee Nooree Lee

Nooree advises government contractors and financial investors regarding the regulatory aspects of corporate transactions and restructurings. His experience includes preparing businesses for sale, negotiating deal documents, coordinating large-scale diligence processes, and navigating pre- and post-closing regulatory approvals and integration. He has advised on…

Nooree advises government contractors and financial investors regarding the regulatory aspects of corporate transactions and restructurings. His experience includes preparing businesses for sale, negotiating deal documents, coordinating large-scale diligence processes, and navigating pre- and post-closing regulatory approvals and integration. He has advised on 35+ M&A deals involving government contractors totaling over $30 billion in combined value. This includes Veritas Capital’s acquisition of Cubic Corp. for $2.8 billion; the acquisition of Perspecta Inc. by Veritas Capital portfolio company Peraton for $7.1 billion; and Cameco Corporation’s strategic partnership with Brookfield Renewable Partners to acquire Westinghouse Electric Company for $7.8+ billion.

Nooree also counsels clients navigating the Foreign Military Sales (FMS) program and Foreign Military Financing (FMF) arrangements. Nooree has advised both U.S. and ex-U.S. companies in connection with defense sales to numerous foreign defense ministries, including those of Australia, Israel, Singapore, South Korea, and Taiwan.

Recently, Nooree’s practice has expanded to include advising on the intersection of government procurement and artificial intelligence. Nooree counsels clients on the negotiation of AI-focused procurement and non-procurement agreements with the U.S. government and the rollout of procurement regulations and policy stemming from the Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence.

Nooree maintains an active pro bono practice focusing on appeals of denied industrial security clearance applications and public housing and housing discrimination matters. In addition to his work within the firm, Nooree is an active member of the American Bar Association’s Section of Public Contract Law and has served on the Section Council and the Section’s Diversity Committee. He also served as the firm’s Fellow for the Leadership Council on Legal Diversity program in 2023.