On Oct. 7, ABC submitted comments on the U.S. Small Business Administration’s proposed rule on the Historically Underutilized Business Zone program. In addition to revisions to the HUBZone program, the proposal also makes a number of significant changes to a wide range of SBA programs utilized by federal contractors, including joint ventures, the mentor-protege program and recertification requirements under multiple award contracts.

Key changes to SBA programs include:

• Changing the definition of “employee” for HUBZone purposes from 40 hours per month to 80 hours per month
• Requiring firms to certify HUBZone residency by providing a principal lease that commenced at least 30 days prior SBA review and ending at least 60 days after the date of the SBA’s review
• Firms that recertify as no longer having small business status required for a multiple award contract would be ineligible to receive new options or orders set aside for small businesses on the contract
• Firms involved in mergers, sales or acquisitions after submitting an offer but before award must recertify size or status with contracting officer
• Firms that recertify as no longer having small business status within 180 days of offer submission and before award would become ineligible for award under small business set-asides
• New restrictions on mentor firms acquiring other mentor firms
• Changes addressing ownership and control by nondisadvantaged individuals of firms under the 8(a) Business Development program

ABC’s comments recommend that the SBA reconsider aspects of the proposal that would increase the difficulty for small businesses to access HUBZone and other programs. The comments urge the SBA to balance the agency’s valid interest in ensuring that firms accessing these programs meet the appropriate statutory requirements against the potential for unintentionally discouraging small business participation.

For more information, see law firm Wiley Rein’s article.