Size Protest

Last Friday, September 29, the FAR Council published a proposed rule that would update the Federal Acquisition Regulation (FAR) to implement the Small Business Administration’s (SBA) 2020 changes to rules on when small businesses must recertify their status in connection with orders under multiple-award contracts.

The SBA size and socioeconomic recertification rules are convoluted — especially in situations where a small business becomes a large business by virtue of an M&A transaction and wants to continue bidding on orders under a multiple-award contract.  The proposed changes seek to provide greater clarity in the FAR on the situations in which small businesses must recertify their size status in connection with certain orders and take a much-needed step towards aligning the FAR small business requirements and clauses with SBA’s regulations.  As is true with respect to small business representations more generally, contractors should pay attention to the situation-specific recertification requirements to avoid being inadvertently tripped up.…

Continue Reading Updates to FAR Small Business Recertification Requirements:  More Clarity, More Complexity

The Small Business Administration (“SBA”) has released a final rule revising many small business size and contracting program regulations found in 13 C.F.R. Parts 121, 124-127, effective on June 30, 2016.  The revisions, which implement reforms required by the FY2013 National Defense Authorization Act, include the following:…
Continue Reading Final Rule Revises Many SBA Regulations

Recent decisions by the Small Business Administration (“SBA”) Office of Hearings and Appeals (“OHA”) and the Court of Federal Claims offer important advice to anyone in the process of drafting and negotiating a mentor/protégé joint venture agreement:  Be specific.  Those agreements, in many cases, are the crown jewel of the mentor-protégé program enabling mentors and protégés to work together on set-aside opportunities that they would not otherwise have been eligible.  And like anything of great value, it should not be taken for granted.  Instead, as a matter of meeting both regulatory requirements and best practice, mentor/protégé joint venture agreements should specifically list all resources, equipment and facilities (and their estimated values) that each party will provide and detail how work will be shared between the joint venture members.
Continue Reading OHA and COFC Agree: Mentor/Protégé JV Agreements Must Be Specific to Avoid Affiliation

In Size Appeal of NMC/Wollard Inc., SBA No. SIZ-5668, the Small Business Administration Office of Hearings and Appeals (“OHA”) clarified the three factor test used to determine whether a small business qualifies as a manufacturer of the end item being procured.  The decision confirmed that no single factor has greater weight than the others, and that a small business can be a manufacturer despite contributing a small percentage of the value of the end item if the contribution was essential to the end item’s function.

Under applicable SBA regulations, a small business manufacturer “is the concern which, with its own facilities, performs the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being acquired.”  13 C.F.R. § 121.406(b)(2).  The regulations set forth a three factor test to determine whether a small business is the manufacturer of the end item:

  1. The proportion of total value in the end item added by the efforts of the concern, excluding costs of overhead, testing, quality control, and profit;
  2. The importance of the elements added by the concern to the function of the end item, regardless of their relative value; and
  3. The concern’s technical capabilities; plant, facilities and equipment; production or assembly line processes; packaging and boxing operations; labeling of products; and product warranties.

13 C.F.R. § 121.406(b)(2)(i)(A)-(C).…

Continue Reading SBA OHA: In Three-Factor Test to Determine Small Business Manufacturers, No Single Factor is Determinative