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SBA Considering 8(a), HUBZone Changes

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Koprince Law LLC

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The SBA is considering making changes to improve its socioeconomic programs–particularly the 8(a) and HUBZone Programs.

In a talk yesterday at the 2017 Navy Gold Coast Procurement Conference, Robb Wong, the SBA’s recently-appointed Associate Administrator, Office of Government Contracting and Business Development, discussed some of the big changes the SBA is considering.  And to my ears, at least, a lot of what Mr. Wong said makes good sense.

Mr. Wong made clear that few decisions have been made at this point; most of the potential changes are only in the discussion phase for now.  That said, here are some of the changes the SBA is considering–and why.

First, SBA is considering how to better focus on what the VA would call “procurement readiness.”  Mr. Wong pointed out that many small businesses think that getting a socioeconomic certification is the hard part, and that the contracts come easily once a company is certified.

Of course, that’s not the case.  Many certified companies aren’t truly ready to do business with the government.  That, in turn, can hurt the reputations of the socioeconomic certifications themselves.  It may be unfair, but some procuring officials can become gun shy about using a socioeconomic class after a bad experience with an unready company.

So what can the SBA do about the “procurement readiness” problem?  According to Mr. Wong, here are some ideas under consideration:

  • Require training before a company can be certified.  This might include training on business development, capture, and execution.  Business development is, of course, an integral part of the 8(a) program, but it’s not currently a required component of the SDVOSB, HUBZone, or WOSB programs.
  • Allow a remedial training period for unsuccessful 8(a) firms.  I’ve probably heard it a hundred times in my career: an company gets 8(a)-certified, but has no clue what to do with that certification until four or five years into its program term.  Finally,the company figures out how to win 8(a) contracts, but the nine-year program term is already halfway gone.  To address this issue, the SBA is considering allowing active 8(a) participants to temporarily put the nine-year term on hold while the leadership gets remedial business development training.
  • Help companies win contracts and subcontracts.  It shouldn’t be entirely up to socioeconomic firms to find contracts, Mr. Wong says–it’s not enough to say “here is a fishing pole, it’s a tool, go use it.”  Instead, the SBA wants to be more active in assisting good, qualified small businesses in obtaining prime contracts and subcontracts.

Second, Mr. Wong acknowledges that the procurement world is trending in the direction of consolidation and larger contracts.  While this may ultimately mean more total dollars are awarded, it also means that there may be fewer prime contract awards to go around.  The SBA is considering ways to help small businesses navigate these macro-level changes in contracting.  Some ideas under consideration include:

  • Calling on procuring agencies to reserve a certain percentage of contract awards (not just contract dollars) for small businesses.
  • Promoting ways for small businesses to work with one another, and with larger partners, including joint ventures and the new All Small Mentor-Protege Program.
  • Focusing more on working to obtain subcontracts for small businesses.

Mr.  Wong also said that a few specific ideas are under consideration to improve the 8(a) and HUBZone Programs:

  • Increasing the 8(a) sole source threshold.  This is one way, Mr. Wong said, that the SBA could “make 8(a) special again.”
  • Making HUBZone compliance easier.  Mr. Wong lamented the fact that because of the HUBZone Program’s unique requirements (especially the 35% employee residency requirement), some HUBZones “spend more time maintaining compliance than pursuing new contracts.”  The SBA is looking for ways to make ongoing compliance simpler.
  • Addressing HUBZone map changes.  The SBA is concerned that HUBZone companies can end up with the short end of the stick when a HUBZone tract is redesignated as non-HUBZone.  The SBA is considering how to address this problem.
  • Updating the 8(a) economic disadvantage rules.  The 8(a) net worth threshold (currently $250,000 for initial admission) is old–and may need to be updated.

Only time will tell what becomes of these big picture thoughts, but it’s very heartening to see the SBA thinking about how to improve and modernize its programs–and encouraging to see the SBA discuss these ideas in public and solicit feedback from small businesses and other stakeholders.

I’ll keep you posted.


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