[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR124]
[Page 361-422]
TITLE 13--BUSINESS CREDIT AND ASSISTANCE
CHAPTER I--SMALL BUSINESS ADMINISTRATION
PART 124_8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS STATUS
DETERMINATIONS
Subpart A_8(a) Business Development
Provisions of General Applicability
Sec.
124.1 What is the purpose of the 8(a) Business Development program?
124.2 What length of time may a business participate in the 8(a) BD
program?
124.3 What definitions are important in the 8(a) BD program?
Eligibility Requirements for Participation in the 8(a) Business
Development Program
124.101 What are the basic requirements a concern must meet for the 8(a)
BD program?
124.102 What size business is eligible to participate in the 8(a) BD
program?
124.103 Who is socially disadvantaged?
124.104 Who is economically disadvantaged?
124.105 What does it mean to be unconditionally owned by one or more
disadvantaged individuals?
124.106 When do disadvantaged individuals control an applicant or
Participant?
124.107 What is potential for success?
124.108 What other eligibility requirements apply for individuals or
businesses?
124.109 Do Indian tribes and Alaska Native Corporations have any special
rules for applying to the 8(a) BD program?
124.110 Do Native Hawaiian Organizations have any special rules for
applying to the 8(a) BD program?
124.111 Do Community Development Corporations (CDCs) have any special
rules for applying to the 8(a) BD program?
124.112 What criteria must a business meet to remain eligible to
participate in the 8(a) BD program?
Applying to the 8(a) BD Program
124.201 May any business submit an application?
124.202 Where must an application be filed?
124.203 What must a concern submit to apply to the 8(a) BD program?
124.204 How does SBA process applications for 8(a) BD program admission?
124.205 Can an applicant ask SBA to reconsider SBA's initial decision to
decline its application?
124.206 What appeal rights are available to an applicant that has been
denied admission?
124.207 Can an applicant reapply for admission to the 8(a) BD program?
Exiting the 8(a) BD Program
124.301 What are the ways a business may leave the 8(a) BD program?
124.302 What is early graduation?
124.303 What is termination?
124.304 What are the procedures for early graduation and termination?
124.305 What is suspension and how is a Participant suspended from the
8(a) BD program?
Business Development
124.401 Which SBA field office services a Participant?
[[Page 362]]
124.402 How does a Participant develop a business plan?
124.403 How is a business plan updated and modified?
124.404 What business development assistance is available to
Participants during the two stages of participation in the
8(a) BD program?
124.405 How does a Participant obtain Federal Government surplus
property?
Contractual Assistance
124.501 What general provisions apply to the award of 8(a) contracts?
124.502 How does an agency offer a procurement to SBA for award through
the 8(a) BD program?
124.503 How does SBA accept a procurement for award through the 8(a) BD
program?
124.504 What circumstances limit SBA's ability to accept a procurement
for award as an 8(a) contract?
124.505 When will SBA appeal the terms or conditions of a particular
8(a) contract or a procuring activity decision not to reserve
a requirement for the 8(a) BD program?
124.506 At what dollar threshold must an 8(a) procurement be competed
among eligible Participants?
124.507 What procedures apply to competitive 8(a) procurements?
124.508 How is an 8(a) contract executed?
124.509 What are non-8(a) business activity targets?
124.510 What percentage of work must a Participant perform on an 8(a)
contract?
124.511 How is fair market price determined for an 8(a) contract?
124.512 Delegation of contract administration to procuring agencies.
124.513 Under what circumstances can a joint venture be awarded an 8(a)
contract?
124.514 Exercise of 8(a) options and modifications.
124.515 Can a Participant change its ownership or control and continue
to perform an 8(a) contract, and can it transfer performance
to another firm?
124.516 Who decides contract disputes arising between a Participant and
a procuring activity after the award of an 8(a) contract?
124.517 Can the eligibility or size of a Participant for award of an
8(a) contract be questioned?
124.518 How can an 8(a) contract be terminated before performance is
completed?
124.519 Are there any dollar limits on the amount of 8(a) contracts that
a Participant may receive?
124.520 Mentor/Protege program.
Miscellaneous Reporting Requirements
124.601 What reports does SBA require concerning parties who assist
Participants in obtaining federal contracts?
124.602 What kind of annual financial statement must a Participant
submit to SBA?
124.603 What reports regarding the continued business operations of
former Participants does SBA require?
Management and Technical Assistance Program
124.701 What is the purpose of the 7(j) management and technical
assistance program?
124.702 What types of assistance are available through the 7(j) program?
124.703 Who is eligible to receive 7(j) assistance?
124.704 What additional management and technical assistance is reserved
exclusively for concerns eligible to receive 8(a) contracts?
Subpart B_Eligibility, Certification, and Protests Relating to Federal
Small Disadvantaged Business Programs
124.1001 General applicability.
124.1002 What is a Small Disadvantaged Business (SDB)?
124.1003 What is a Private Certifier?
124.1004 How does an organization or business concern become a Private
Certifier?
124.1005 Can a fee be charged to a firm to process the firm's
application for SDB certification?
124.1006 Is there a list of Private Certifiers?
124.1007 How long may an organization or business concern be a Private
Certifier?
124.1008 How does a firm become certified as an SDB?
124.1009 How does a firm appeal a decision of a Private Certifier?
124.1010 Can a firm represent itself to be an SDB if it has not yet been
certified as an SDB?
124.1011 What is a misrepresentation of SDB status?
124.1012 Can a firm reapply for SDB certification?
124.1013 Is there a list of certified SDBs?
124.1014 How long does an SDB certification last?
124.1015 What is the effect of receiving an SDB certification?
124.1016 Can SBA re-evaluate the SDB status of a firm after SBA
certifies it to be SDB?
124.1017 Who may protest the disadvantaged status of a concern?
124.1018 When will SBA not decide an SDB protest?
124.1019 Who decides disadvantaged status protests?
[[Page 363]]
124.1020 What procedures apply to disadvantaged status protests?
124.1021 What format, degree of specificity, and basis does SBA require
to consider an SDB protest?
124.1022 What will SBA do when it receives an SDB protest?
124.1023 How does SBA make disadvantaged status determinations in
considering an SDB protest?
124.1024 Appeals of disadvantaged status determinations.
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d) and Pub. L.
99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L. 101-574, and
42 U.S.C. 9815.
Subpart A_8(a) Business Development
Source: 63 FR 35739, June 30, 1998, unless otherwise noted.
Provisions of General Applicability
Sec. 124.1 What is the purpose of the 8(a) Business Development
program?
Sections 8(a) and 7(j) of the Small Business Act authorize a
Minority Small Business and Capital Ownership Development program
(designated the 8(a) Business Development or ``8(a) BD'' program for
purposes of the regulations in this part). The purpose of the 8(a) BD
program is to assist eligible small disadvantaged business concerns
compete in the American economy through business development.
Sec. 124.2 What length of time may a business participate in the 8(a)
BD program?
A Participant receives a program term of nine years from the date of
SBA's approval letter certifying the concern's admission to the program.
The Participant must maintain its program eligibility during its tenure
in the program and must inform SBA of any changes that would adversely
affect its program eligibility. A firm that completes its nine year term
of participation in the 8(a) BD program is deemed to graduate from the
program. The nine year program term may be shortened only by
termination, early graduation or voluntary graduation as provided for in
this subpart.
Sec. 124.3 What definitions are important in the 8(a) BD program?
Alaska Native means a citizen of the United States who is a person
of one-fourth degree or more Alaskan Indian (including Tsimshian Indians
not enrolled in the Metlaktla Indian Community), Eskimo, or Aleut blood,
or a combination of those bloodlines. The term includes, in the absence
of proof of a minimum blood quantum, any citizen whom a Native village
or Native group regards as an Alaska Native if their father or mother is
regarded as an Alaska Native.
Alaska Native Corporation or ANC means any Regional Corporation,
Village Corporation, Urban Corporation, or Group Corporation organized
under the laws of the State of Alaska in accordance with the Alaska
Native Claims Settlement Act, as amended (43 U.S.C. 1601, et seq.)
Bona fide place of business, for purposes of 8(a) construction
procurements, means a location where a Participant regularly maintains
an office which employs at least one full-time individual within the
appropriate geographical boundary. The term does not include
construction trailers or other temporary construction sites.
Community Development Corporation or CDC means a nonprofit
organization responsible to residents of the area it serves which has
received financial assistance under 42 U.S.C. 9805, et seq.
Concern is defined in part 121 of this title.
Days means calendar days unless otherwise specified.
Day-to-day operations of a firm means the marketing, production,
sales, and administrative functions of the firm.
Immediate family member means father, mother, husband, wife, son,
daughter, brother, sister, grandfather, grandmother, grandson,
granddaughter, father-in-law, and mother-in-law.
Indian tribe means any Indian tribe, band, nation, or other
organized group or community of Indians, including any ANC, which is
recognized as eligible for the special programs and services provided by
the United States to Indians because of their status as Indians, or is
recognized as such by the State in which the tribe, band, nation,
[[Page 364]]
group, or community resides. See definition of ``tribally-owned
concern.''
Native Hawaiian means any individual whose ancestors were natives,
prior to 1778, of the area which now comprises the State of Hawaii.
Native Hawaiian Organization means any community service
organization serving Native Hawaiians in the State of Hawaii which is a
not-for-profit organization chartered by the State of Hawaii, is
controlled by Native Hawaiians, and whose business activities will
principally benefit such Native Hawaiians.
Negative control is defined in part 121 of this title.
Non-disadvantaged individual means any individual who does not claim
disadvantaged status, does not qualify as disadvantaged, or upon whose
disadvantaged status an applicant or Participant does not rely in
qualifying for 8(a) BD program participation.
Participant means a small business concern admitted to participate
in the 8(a) BD program.
Primary industry classification means the four digit Standard
Industrial Classification (SIC) code designation which best describes
the primary business activity of the 8(a) BD applicant or Participant.
The SIC code designations are described in the Standard Industrial
Classification Manual published by the U.S. Office of Management and
Budget.
Principal place of business means the business location where the
individuals who manage the concern's day-to-day operations spend most
working hours and where top management's business records are kept. If
the offices from which management is directed and where the business
records are kept are in different locations, SBA will determine the
principal place of business for program purposes.
Program year means a 12-month period of an 8(a) BD Participant's
program participation. The first program year begins on the date that
the concern is certified to participate in the 8(a) BD program and ends
one year later. Each subsequent program year begins on the Participant's
anniversary of program certification and runs for one 12-month period.
Same or similar line of business means business activities within
the same two-digit ``Major Group'' of the SIC Manual as the primary
industry classification of the applicant or Participant. The phrase
``same business area'' is synonymous with this definition.
Self-marketing of a requirement occurs when a Participant identifies
a requirement that has not been committed to the 8(a) BD program and,
through its marketing efforts, causes the procuring activity to offer
that specific requirement to the 8(a) BD program on the Participant's
behalf. A firm which identifies and markets a requirement which is
subsequently offered to the 8(a) BD program as an open requirement or on
behalf of another Participant has not ``self-marketed'' the requirement
within the meaning of this part.
Tribally-owned concern means any concern at least 51 percent owned
by an Indian tribe as defined in this section.
Unconditional ownership means ownership that is not subject to
conditions precedent, conditions subsequent, executory agreements,
voting trusts, restrictions on or assignments of voting rights, or other
arrangements causing or potentially causing ownership benefits to go to
another (other than after death or incapacity). The pledge or
encumbrance of stock or other ownership interest as collateral,
including seller-financed transactions, does not affect the
unconditional nature of ownership if the terms follow normal commercial
practices and the owner retains control absent violations of the terms.
Eligibility Requirements for Participation in the 8(a) Business
Development Program
Sec. 124.101 What are the basic requirements a concern must meet for
the 8(a) BD program?
Generally, a concern meets the basic requirements for admission to
the 8(a) BD program if it is a small business which is unconditionally
owned and controlled by one or more socially and economically
disadvantaged individuals who are of good character and citizens of the
United States, and which demonstrates potential for success.
[[Page 365]]
Sec. 124.102 What size business is eligible to participate in the 8(a)
BD program?
(a) An applicant concern must qualify as a small business concern as
defined in part 121 of this title. The applicable size standard is the
one for its primary industry classification. The rules for calculating
the size of a tribally-owned concern, a concern owned by an Alaska
Native Corporation, a concern owned by a Native Hawaiian Organization,
or a concern owned by a Community Development Corporation are
additionally affected by Sec. Sec. 124.109, 124.110, and 124.111,
respectively.
(b) If 8(a) BD program officials determine that a concern may not
qualify as small, they may deny an application for 8(a) BD program
admission or may request a formal size determination under part 121 of
this title.
(c) A concern whose application is denied due to size by 8(a) BD
program officials may request a formal size determination under part 121
of this title. A favorable determination will enable the firm to
immediately submit a new 8(a) BD application without waiting one year.
Sec. 124.103 Who is socially disadvantaged?
(a) General. Socially disadvantaged individuals are those who have
been subjected to racial or ethnic prejudice or cultural bias within
American society because of their identities as members of groups and
without regard to their individual qualities. The social disadvantage
must stem from circumstances beyond their control.
(b) Members of designated groups. (1) There is a rebuttable
presumption that the following individuals are socially disadvantaged:
Black Americans; Hispanic Americans; Native Americans (American Indians,
Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans (persons
with origins from Burma, Thailand, Malaysia, Indonesia, Singapore,
Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia
(Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust Territory of
the Pacific Islands (Republic of Palau), Republic of the Marshall
Islands, Federated States of Micronesia, the Commonwealth of the
Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati,
Tuvalu, or Nauru); Subcontinent Asian Americans (persons with origins
from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives
Islands or Nepal); and members of other groups designated from time to
time by SBA according to procedures set forth at paragraph (d) of this
section. Being born in a country does not, by itself, suffice to make
the birth country an individual's country of origin for purposes of
being included within a designated group.
(2) An individual must demonstrate that he or she has held himself
or herself out, and is currently identified by others, as a member of a
designated group if SBA requires it.
(3) The presumption of social disadvantage may be overcome with
credible evidence to the contrary. Individuals possessing or knowing of
such evidence should submit the information in writing to the Associate
Administrator for 8(a) BD (AA/8(a)BD) for consideration.
(c) Individuals not members of designated groups. (1) An individual
who is not a member of one of the groups presumed to be socially
disadvantaged in paragraph (b)(1) of this section must establish
individual social disadvantage by a preponderance of the evidence.
(2) Evidence of individual social disadvantage must include the
following elements:
(i) At least one objective distinguishing feature that has
contributed to social disadvantage, such as race, ethnic origin, gender,
physical handicap, long-term residence in an environment isolated from
the mainstream of American society, or other similar causes not common
to individuals who are not socially disadvantaged;
(ii) Personal experiences of substantial and chronic social
disadvantage in American society, not in other countries; and
(iii) Negative impact on entry into or advancement in the business
world because of the disadvantage. SBA will consider any relevant
evidence in assessing this element. In every case, however, SBA will
consider education, employment and business history, where applicable,
to see if the totality
[[Page 366]]
of circumstances shows disadvantage in entering into or advancing in the
business world.
(A) Education. SBA considers such factors as denial of equal access
to institutions of higher education, exclusion from social and
professional association with students or teachers, denial of
educational honors rightfully earned, and social patterns or pressures
which discouraged the individual from pursuing a professional or
business education.
(B) Employment. SBA considers such factors as unequal treatment in
hiring, promotions and other aspects of professional advancement, pay
and fringe benefits, and other terms and conditions of employment;
retaliatory or discriminatory behavior by an employer; and social
patterns or pressures which have channelled the individual into
nonprofessional or non-business fields.
(C) Business history. SBA considers such factors as unequal access
to credit or capital, acquisition of credit or capital under
commercially unfavorable circumstances, unequal treatment in
opportunities for government contracts or other work, unequal treatment
by potential customers and business associates, and exclusion from
business or professional organizations.
(d) Socially disadvantaged group inclusion--(1) General.
Representatives of an identifiable group whose members believe that the
group has suffered chronic racial or ethnic prejudice or cultural bias
may petition SBA to be included as a presumptively socially
disadvantaged group under paragraph (b)(1) of this section. Upon
presentation of substantial evidence that members of the group have been
subjected to racial or ethnic prejudice or cultural bias because of
their identity as group members and without regard to their individual
qualities, SBA will publish a notice in the Federal Register that it has
received and is considering such a request, and that it will consider
public comments.
(2) Standards to be applied. In determining whether a group has made
an adequate showing that it has suffered chronic racial or ethnic
prejudice or cultural bias for the purposes of this section, SBA must
determine that:
(i) The group has suffered prejudice, bias, or discriminatory
practices;
(ii) Those conditions have resulted in economic deprivation for the
group of the type which Congress has found exists for the groups named
in the Small Business Act; and
(iii) Those conditions have produced impediments in the business
world for members of the group over which they have no control and which
are not common to small business owners generally.
(3) Procedure. The notice published under paragraph (d)(1) of this
section will authorize a specified period for the receipt of public
comments supporting or opposing the petition for socially disadvantaged
group status. If appropriate, SBA may hold hearings. SBA may also
conduct its own research relative to the group's petition.
(4) Decision. In making a final decision that a group should be
considered presumptively disadvantaged, SBA must find that a
preponderance of the evidence demonstrates that the group has met the
standards set forth in paragraph (d)(2) of this section based on SBA's
consideration of the group petition, the comments from the public, and
any independent research it performs. SBA will advise the petitioners of
its final decision in writing, and publish its conclusion as a notice in
the Federal Register. If appropriate, SBA will amend paragraph (b)(1) of
this section to include a new group.
Sec. 124.104 Who is economically disadvantaged?
(a) General. Economically disadvantaged individuals are socially
disadvantaged individuals whose ability to compete in the free
enterprise system has been impaired due to diminished capital and credit
opportunities as compared to others in the same or similar line of
business who are not socially disadvantaged.
(b) Submission of narrative and financial information. (1) Each
individual claiming economic disadvantage must describe it in a
narrative statement, and must submit personal financial information.
(2) When married, an individual claiming economic disadvantage also
[[Page 367]]
must submit separate financial information for his or her spouse, unless
the individual and the spouse are legally separated.
(c) Factors to be considered. In considering diminished capital and
credit opportunities, SBA will examine factors relating to the personal
financial condition of any individual claiming disadvantaged status,
including personal income for the past two years (including bonuses and
the value of company stock given in lieu of cash), personal net worth,
and the fair market value of all assets, whether encumbered or not. SBA
will also consider the financial condition of the applicant compared to
the financial profiles of small businesses in the same primary industry
classification, or, if not available, in similar lines of business,
which are not owned and controlled by socially and economically
disadvantaged individuals in evaluating the individual's access to
credit and capital. The financial profiles that SBA compares include
total assets, net sales, pre tax profit, sales/working capital ratio,
and net worth.
(1) Transfers within two years. (i) Except as set forth in paragraph
(c)(1)(ii) of this section, SBA will attribute to an individual claiming
disadvantaged status any assets which that individual has transferred to
an immediate family member, or to a trust a beneficiary of which is an
immediate family member, for less than fair market value, within two
years prior to a concern's application for participation in the 8(a) BD
program or within two years of a Participant's annual program review,
unless the individual claiming disadvantaged status can demonstrate that
the transfer is to or on behalf of an immediate family member for that
individual's education, medical expenses, or some other form of
essential support.
(ii) SBA will not attribute to an individual claiming disadvantaged
status any assets transferred by that individual to an immediate family
member that are consistent with the customary recognition of special
occasions, such as birthdays, graduations, anniversaries, and
retirements.
(iii) In determining an individual's access to capital and credit,
SBA may consider any assets that the individual transferred within such
two-year period described by paragraph (c)(1)(i) of this section that
SBA does not consider in evaluating the individual's assets and net
worth (e.g., transfers to charities).
(2) Net worth. For initial 8(a) BD eligibility, the net worth of an
individual claiming disadvantage must be less than $250,000. For
continued 8(a) BD eligibility after admission to the program, net worth
must be less than $750,000. In determining such net worth, SBA will
exclude the ownership interest in the applicant or Participant and the
equity in the primary personal residence (except any portion of such
equity which is attributable to excessive withdrawals from the applicant
or Participant). Exclusions for net worth purposes are not exclusions
for asset valuation or access to capital and credit purposes.
(i) A contingent liability does not reduce an individual's net
worth.
(ii) The personal net worth of an individual claiming to be an
Alaska Native will include assets and income from sources other than an
Alaska Native Corporation and exclude any of the following which the
individual receives from any Alaska Native Corporation: cash (including
cash dividends on stock received from an ANC) to the extent that it does
not, in the aggregate, exceed $2,000 per individual per annum; stock
(including stock issued or distributed by an ANC as a dividend or
distribution on stock); a partnership interest; land or an interest in
land (including land or an interest in land received from an ANC as a
dividend or distribution on stock); and an interest in a settlement
trust.
Sec. 124.105 What does it mean to be unconditionally owned by one or
more disadvantaged individuals?
An applicant or Participant must be at least 51 percent
unconditionally and directly owned by one or more socially and
economically disadvantaged individuals who are citizens of the United
States, except for concerns owned by Indian tribes, Alaska Native
Corporations, Native Hawaiian Organizations, or Community Development
Corporations (CDCs). See Sec. 124.3 for definition of unconditional
ownership; and Sec. Sec. 124.109,
[[Page 368]]
124.110, and 124.111, respectively, for special ownership requirements
for concerns owned by Indian tribes, ANCs, Native Hawaiian
Organizations, and CDCs.
(a) Ownership must be direct. Ownership by one or more disadvantaged
individuals must be direct ownership. An applicant or Participant owned
principally by another business entity or by a trust (including employee
stock ownership trusts) that is in turn owned and controlled by one or
more disadvantaged individuals does not meet this requirement. However,
ownership by a trust, such as a living trust, may be treated as the
functional equivalent of ownership by a disadvantaged individual where
the trust is revocable, and the disadvantaged individual is the grantor,
a trustee, and the sole current beneficiary of the trust.
(b) Ownership of a partnership. In the case of a concern which is a
partnership, at least 51 percent of every class of partnership interest
must be unconditionally owned by one or more individuals determined by
SBA to be socially and economically disadvantaged. The ownership must be
reflected in the concern's partnership agreement.
(c) Ownership of a limited liability company. In the case of a
concern which is a limited liability company, at least 51 percent of
each class of member interest must be unconditionally owned by one or
more individuals determined by SBA to be socially and economically
disadvantaged.
(d) Ownership of a corporation. In the case of a concern which is a
corporation, at least 51 percent of each class of voting stock
outstanding and 51 percent of the aggregate of all stock outstanding
must be unconditionally owned by one or more individuals determined by
SBA to be socially and economically disadvantaged.
(e) Stock options' effect on ownership. In determining unconditional
ownership, SBA will disregard any unexercised stock options or similar
agreements held by disadvantaged individuals. However, any unexercised
stock options or similar agreements (including rights to convert non-
voting stock or debentures into voting stock) held by non-disadvantaged
individuals will be treated as exercised, except for any ownership
interests which are held by investment companies licensed under the
Small Business Investment Act of 1958.
(f) Dividends and distributions. One or more disadvantaged
individuals must be entitled to receive:
(1) At least 51 percent of the annual distribution of dividends paid
on the stock of a corporate applicant concern;
(2) 100 percent of the value of each share of stock owned by them in
the event that the stock is sold; and
(3) At least 51 percent of the retained earnings of the concern and
100 percent of the unencumbered value of each share of stock owned in
the event of dissolution of the corporation.
(g) Ownership of another Participant. The individuals determined to
be disadvantaged for purposes of one Participant, their immediate family
members, and the Participant itself, may not hold, in the aggregate,
more than a 20 percent equity ownership interest in any other single
Participant.
(h) Ownership restrictions for non-disadvantaged individuals and
concerns. (1) A non-disadvantaged individual (in the aggregate with all
immediate family members) or a non-Participant concern that is a general
partner or stockholder with at least a 10 percent ownership interest in
one Participant may not own more than a 10 percent interest in another
Participant that is in the developmental stage or more than a 20 percent
interest in another Participant in the transitional stage of the
program. This restriction does not apply to financial institutions
licensed or chartered by Federal, state or local government, including
investment companies which are licensed under the Small Business
Investment Act of 1958.
(2) A non-Participant concern in the same or similar line of
business may not own more than a 10 percent interest in a Participant
that is in the developmental stage or more than a 20 percent interest in
a Participant in a transitional stage of the program, except that a
former Participant or a principal of a former Participant (except those
that have been terminated from 8(a) BD program participation pursuant to
Sec. Sec. 124.303 and 124.304) may have an equity ownership interest of
up to 20 percent in a current Participant
[[Page 369]]
in the developmental stage of the program or up to 30 percent in a
transitional stage Participant, in the same or similar line of business.
(i) Change of ownership. A Participant may change its ownership or
business structure so long as one or more disadvantaged individuals own
and control it after the change and SBA approves the transaction in
writing prior to the change. The decision to approve or deny a
Participant's request for a change in ownership or business structure
will be made and communicated to the firm by the AA/8(a)BD. The decision
of the AA/8(a)BD is the final decision of the Agency. The AA/8(a)BD will
issue a decision within 60 days from receipt of a request containing all
necessary documentation, or as soon thereafter as possible. If 60 days
lapse without a decision from SBA, the Participant cannot presume that
it can complete the change without written approval from SBA. A decision
to deny a request for change of ownership or business structure may be
grounds for program termination where the change is made nevertheless.
(1) Any Participant that was awarded one or more 8(a) contracts may
substitute one disadvantaged individual for another disadvantaged
individual without requiring the termination of those contracts or a
request for waiver under Sec. 124.515, as long as it receives SBA's
approval prior to the change.
(2) Where the previous owner held less than a 10 percent interest in
the concern, or the transfer results from the death or incapacity due to
a serious, long-term illness or injury of a disadvantaged principal,
prior approval is not required, but the concern must notify SBA within
60 days.
(3) Continued participation of the Participant with new ownership
and the award of any new 8(a) contracts requires SBA's determination
that all eligibility requirements are met by the concern and the new
owners.
(4) Where a Participant requests a change of ownership or business
structure, and proceeds with the change prior to receiving SBA approval
(or where a change of ownership results from the death or incapacity of
a disadvantaged individual for which a request prior to the change in
ownership could not occur), SBA will suspend the Participant from
program benefits pending resolution of the request. If the change is
approved, the length of the suspension will be restored to the
Participant's program term in the case of death or incapacity, or if the
firm requested prior approval and waited 60 days for SBA approval.
(5) A change in ownership does not provide the new owner(s) with a
new 8(a) BD program term. For example, if a concern has been in the 8(a)
BD program for five years when a change in ownership occurs, the new
owner will have four years remaining until program graduation.
(j) Public offering. A Participant's request for SBA's approval for
the issuance of a public offering will be treated as a request for a
change of ownership. Such request will cause SBA to examine the
concern's continued need for access to the business development
resources of the 8(a) BD program.
(k) Community property laws given effect. In determining ownership
interests when an owner resides in any of the community property states
or territories of the United States (Arizona, California, Idaho,
Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington and
Wisconsin), SBA considers applicable state community property laws. If
only one spouse claims disadvantaged status, that spouse's ownership
interest will be considered unconditionally held only to the extent it
is vested by the community property laws. A transfer or relinquishment
of interest by the non-disadvantaged spouse may be necessary in some
cases to establish eligibility.
Sec. 124.106 When do disadvantaged individuals control an applicant or
Participant?
Control is not the same as ownership, although both may reside in
the same person. SBA regards control as including both the strategic
policy setting exercised by boards of directors and the day-to-day
management and administration of business operations. An applicant or
Participant's management and daily business operations must be conducted
by one or more disadvantaged individuals, except for concerns
[[Page 370]]
owned by Indian tribes, ANCs, Native Hawaiian Organizations, or
Community Development Corporations (CDCs). (See Sec. Sec. 124.109,
124.110, and 124.111, respectively, for the requirements for concerns
owned by Indian tribes or ANCs, for concerns owned by Native Hawaiian
Organizations, and for CDC-owned concerns.) Disadvantaged individuals
managing the concern must have managerial experience of the extent and
complexity needed to run the concern. A disadvantaged individual need
not have the technical expertise or possess a required license to be
found to control an applicant or Participant if he or she can
demonstrate that he or she has ultimate managerial and supervisory
control over those who possess the required licenses or technical
expertise. However, where a critical license is held by a non-
disadvantaged individual having an equity interest in the applicant or
Participant firm, the non-disadvantaged individual may be found to
control the firm.
(a)(1) An applicant or Participant must be managed on a full-time
basis by one or more disadvantaged individuals who possess requisite
management capabilities.
(2) A disadvantaged full-time manager must hold the highest officer
position (usually President or Chief Executive Officer) in the applicant
or Participant.
(3) One or more disadvantaged individuals who manage the applicant
or Participant must devote full-time to the business during the normal
working hours of firms in the same or similar line of business. Work in
a wholly-owned subsidiary of the applicant or participant may be
considered to meet the requirement of full-time devotion. This applies
only to a subsidiary owned by the 8(a) firm, and not to firms in which
the disadvantaged individual has an ownership interest.
(4) Any disadvantaged manager who wishes to engage in outside
employment must notify SBA of the nature and anticipated duration of the
outside employment and obtain the prior written approval of SBA. SBA
will deny a request for outside employment which could conflict with the
management of the firm or could hinder it in achieving the objectives of
its business development plan.
(5) Except as provided in paragraph (d)(1) of this section, a
disadvantaged owner's unexercised right to cause a change in the control
or management of the applicant concern does not in itself constitute
disadvantaged control and management, regardless of how quickly or
easily the right could be exercised.
(b) In the case of a partnership, one or more disadvantaged
individuals must serve as general partners, with control over all
partnership decisions. A partnership in which no disadvantaged
individual is a general partner will be ineligible for participation.
(c) In the case of a limited liability company, one or more
disadvantaged individuals must serve as management members, with control
over all decisions of the limited liability company.
(d) One or more disadvantaged individuals must control the Board of
Directors of a corporate applicant or Participant.
(1) SBA will deem disadvantaged individuals to control the Board of
Directors where:
(i) A single disadvantaged individual owns 100% of all voting stock
of an applicant or Participant concern;
(ii) A single disadvantaged individual owns at least 51% of all
voting stock of an applicant or Participant concern, the individual is
on the Board of Directors and no super majority voting requirements
exist for shareholders to approve corporation actions. Where super
majority voting requirements are provided for in the concern's articles
of incorporation, its by-laws, or by state law, the disadvantaged
individual must own at least the percent of the voting stock needed to
overcome any such super majority voting requirements; or
(iii) More than one disadvantaged shareholder seeks to qualify the
concern (i.e., no one individual owns 51%), each such individual is on
the Board of Directors, together they own at least 51% of all voting
stock of the concern, no super majority voting requirements exist, and
the disadvantaged shareholders can demonstrate that they have made
enforceable arrangements to permit one of them to vote the stock of all
as a block without a shareholder
[[Page 371]]
meeting. Where the concern has super majority voting requirements, the
disadvantaged shareholders must own at least that percentage of voting
stock needed to overcome any such super majority ownership requirements.
(2) Where an applicant or Participant does not meet the requirements
set forth in paragraph (d)(1) of this section, the disadvantaged
individual(s) upon whom eligibility is based must control the Board of
Directors through actual numbers of voting directors or, where permitted
by state law, through weighted voting (e.g., in a concern having a two-
person Board of Directors where one individual on the Board is
disadvantaged and one is not, the disadvantaged vote must be weighted--
worth more than one vote--in order for the concern to be eligible for
8(a) participation). Where a concern seeks to comply with this
paragraph:
(i) Provisions for the establishment of a quorum cannot permit non-
disadvantaged Directors to control the Board of Directors, directly or
indirectly;
(ii) Any Executive Committee of Directors must be controlled by
disadvantaged directors unless the Executive Committee can only make
recommendations to and cannot independently exercise the authority of
the Board of Directors.
(3) An applicant must inform SBA of any super majority voting
requirements provided for in its articles of incorporation, its by-laws,
by state law, or otherwise. Similarly, after being admitted to the
program, a Participant must inform SBA of changes regarding super
majority voting requirements.
(4) Non-voting, advisory, or honorary Directors may be appointed
without affecting disadvantaged individuals' control of the Board of
Directors.
(5) Arrangements regarding the structure and voting rights of the
Board of Directors must comply with applicable state law.
(e) Non-disadvantaged individuals may be involved in the management
of an applicant or Participant, and may be stockholders, partners,
limited liability members, officers, and/or directors of the applicant
or Participant. However, no such non-disadvantaged individual or
immediate family member may:
(1) Exercise actual control or have the power to control the
applicant or Participant;
(2) Be a former employer or a principal of a former employer of any
disadvantaged owner of the applicant or Participant, unless it is
determined by the AA/8(a)BD that the relationship between the former
employer or principal and the disadvantaged individual or applicant
concern does not give the former employer actual control or the
potential to control the applicant or Participant and such relationship
is in the best interests of the 8(a) BD firm; or
(3) Receive compensation from the applicant or Participant in any
form as directors, officers or employees, including dividends, that
exceeds the compensation to be received by the highest officer (usually
CEO or President). The highest ranking officer may elect to take a lower
salary than a non-disadvantaged individual only upon demonstrating that
it helps the applicant or Participant. In the case of a Participant, the
Participant must also obtain the prior written consent of the AA/8(a)BD
or designee before changing the compensation paid to the highest ranking
officer to be below that paid to a non-disadvantaged individual.
(f) Non-disadvantaged individuals who transfer majority stock
ownership or control of the firm to an immediate family member within
two years prior to the application and remain involved in the firm as a
stockholder, officer, director, or key employee of the firm are presumed
to control the firm. The presumption may be rebutted by showing that the
transferee has independent management experience necessary to control
the operation of the firm.
(g) Non-disadvantaged individuals or entities may be found to
control or have the power to control in any of the following
circumstances, which are illustrative only and not all inclusive:
(1) In circumstances where an applicant or Participant seeks to
establish disadvantaged control of the Board of Directors through
paragraph (d)(2) of this section, non-disadvantaged individuals control
the Board of Directors of the applicant or Participant, either
[[Page 372]]
directly through majority voting membership, or indirectly, where the
by-laws allow non-disadvantaged individuals effectively to prevent a
quorum or block actions proposed by the disadvantaged individuals.
(2) A non-disadvantaged individual or entity, having an equity
interest in the applicant or participant, provides critical financial or
bonding support or a critical license to the applicant or Participant
which directly or indirectly allows the non-disadvantaged individual
significantly to influence business decisions of the Participant.
(3) A non-disadvantaged individual or entity controls the applicant
or Participant or an individual disadvantaged owner through loan
arrangements. Providing a loan guaranty on commercially reasonable terms
does not, by itself, give a non-disadvantaged individual or entity the
power to control a firm.
(4) Business relationships exist with non-disadvantaged individuals
or entities which cause such dependence that the applicant or
Participant cannot exercise independent business judgment without great
economic risk.
Sec. 124.107 What is potential for success?
The applicant concern must possess reasonable prospects for success
in competing in the private sector if admitted to the 8(a) BD program.
To do so, it must be in business in its primary industry classification
for at least two full years immediately prior to the date of its 8(a) BD
application, unless a waiver for this requirement is granted pursuant to
paragraph (b) of this section.
(a) Income tax returns for each of the two previous tax years must
show operating revenues in the primary industry in which the applicant
is seeking 8(a) BD certification.
(b)(1) SBA may waive the two years in business requirement if each
of the following five conditions are met:
(i) The individual or individuals upon whom eligibility is based
have substantial business management experience;
(ii) The applicant has demonstrated technical experience to carry
out its business plan with a substantial likelihood for success if
admitted to the 8(a) BD program;
(iii) The applicant has adequate capital to sustain its operations
and carry out its business plan as a Participant;
(iv) The applicant has a record of successful performance on
contracts from governmental or nongovernmental sources in its primary
industry category; and
(v) The applicant has, or can demonstrate its ability to timely
obtain, the personnel, facilities, equipment, and any other requirements
needed to perform contracts as a Participant.
(2) The concern seeking a waiver under paragraph (b) must provide
information on governmental and nongovernmental contracts in progress
and completed (including letters of reference) in order to establish
successful contract performance, and must demonstrate how it otherwise
meets the five conditions for waiver. SBA considers an applicant's
performance on both government and private sector contracts in
determining whether the firm has an overall successful performance
record. If, however, the applicant has performed only government
contracts or only private sector contracts, SBA will review its
performance on those contracts alone to determine whether the applicant
possesses a record of successful performance.
(c) In assessing potential for success, SBA considers the concern's
access to credit and capital, including, but not limited to, access to
long-term financing, access to working capital financing, equipment
trade credit, access to raw materials and supplier trade credit, and
bonding capability.
(d) In assessing potential for success, SBA will also consider the
technical and managerial experience of the applicant concern's managers,
the operating history of the concern, the concern's record of
performance on previous Federal and private sector contracts in the
primary industry in which the concern is seeking 8(a) BD certification,
and its financial capacity. The applicant concern as a whole must
demonstrate both technical knowledge in its primary industry category
and management experience sufficient to run its day-to-day operations.
(e) The Participant or individuals employed by the Participant must
hold all requisite licenses if the concern is
[[Page 373]]
engaged in an industry requiring professional licensing (e.g., public
accountancy, law, professional engineering).
(f) An applicant will not be denied admission into the 8(a) BD
program due solely to a determination that potential 8(a) contract
opportunities are unavailable to assist in the development of the
concern unless:
(1) The Government has not previously procured and is unlikely to
procure the types of products or services offered by the concern; or
(2) The purchase of such products or services by the Federal
Government will not be in quantities sufficient to support the
developmental needs of the applicant and other Participants providing
the same or similar items or services.
Sec. 124.108 What other eligibility requirements apply for individuals
or businesses?
(a) Good character. The applicant or Participant and all its
principals must have good character.
(1) If, during the processing of an application, adverse information
is obtained from the applicant or a credible source regarding possible
criminal conduct by the applicant or any of its principals, no further
action will be taken on the application until SBA's Inspector General
has collected relevant information and has advised the AA/8(a)BD of his
or her findings. The AA/8(a)BD will consider those findings when
evaluating the application.
(2) Violations of any of SBA's regulations may result in denial of
participation in the 8(a) BD program. The AA/8(a)BD will consider the
nature and severity of the violation in making an eligibility
determination.
(3) Debarred or suspended concerns or concerns owned by debarred or
suspended persons are ineligible for admission to the 8(a) BD program.
(4) An applicant is ineligible for admission to the 8(a) BD program
if the applicant concern or a proprietor, partner, limited liability
member, director, officer, or holder of at least 10 percent of its
stock, or another person (including key employees) with significant
authority over the concern:
(i) Lacks business integrity as demonstrated by information related
to an indictment or guilty plea, conviction, civil judgment, or
settlement; or
(ii) Is currently incarcerated, or on parole or probation pursuant
to a pre-trial diversion or following conviction for a felony or any
crime involving business integrity.
(5) If, during the processing of an application, SBA determines that
an applicant has knowingly submitted false information, regardless of
whether correct information would cause SBA to deny the application, and
regardless of whether correct information was given to SBA in
accompanying documents, SBA will deny the application. If, after
admission to the program, SBA discovers that false information has been
knowingly submitted by a firm, SBA will initiate termination proceedings
and suspend the firm under Sec. Sec. 124.304 and 124.305. Whenever SBA
determines that the applicant submitted false information, the matter
will be referred to SBA's Office of Inspector General for review.
(b) One-time eligibility. Once a concern or disadvantaged individual
upon whom eligibility was based has participated in the 8(a) BD program,
neither the concern nor that individual will be eligible again.
(1) An individual who claims disadvantage and completes the
appropriate SBA forms to qualify an applicant has participated in the
8(a) BD program if SBA approves the application.
(2) Use of eligibility will take effect on the date of the concern's
approval for admission into the program.
(3) An individual who uses his or her one-time eligibility to
qualify a concern for the 8(a) BD program will be considered a non-
disadvantaged individual for ownership or control purposes of another
applicant or Participant. The criteria restricting participation by non-
disadvantaged individuals will apply to such an individual. See
Sec. Sec. 124.105 and 124.106.
(4) When at least 50% of the assets of a concern are the same as
those of a former Participant, the concern will not be eligible for
entry into the program.
[[Page 374]]
(5) Participants which change their form of business organization
and transfer their assets and liabilities to the new organization may do
so without affecting the eligibility of the new organization provided
the previous business is dissolved and all other eligibility criteria
are met. In such a case, the new organization may complete the remaining
program term of the previous organization. A request for a change in
business form will be treated as a change of ownership under Sec.
124.105(i).
(c) Wholesalers. An applicant concern seeking admission to the 8(a)
BD program as a wholesaler need not demonstrate that it is capable of
meeting the requirements of the nonmanufacturer rule for its primary
industry classification.
(d) Brokers. Brokers are ineligible to participate in the 8(a) BD
program. A broker is a concern that adds no material value to an item
being supplied to a procuring activity or which does not take ownership
or possession of or handle the item being procured with its own
equipment or facilities.
(e) Federal financial obligations. Neither a firm nor any of its
principals that fails to pay significant financial obligations owed to
the Federal Government, including unresolved tax liens and defaults on
Federal loans or other Federally assisted financing, is eligible for
admission to or participation in the 8(a) BD program.
(f) Achievement of benchmarks. Where actual participation by
disadvantaged businesses in a particular SIC Major Group exceeds the
benchmark limitations established by the Department of Commerce, SBA, in
its discretion, may decide not to accept an application for 8(a) BD
participation from a concern whose primary industry classification falls
within that Major Group.
[63 FR 35739, 35772, June 30, 1998]
Sec. 124.109 Do Indian tribes and Alaska Native Corporations have any
special rules for applying to the 8(a) BD program?
(a) Special rules for ANCs. Small business concerns owned and
controlled by ANCs are eligible for participation in the 8(a) program
and must meet the eligibility criteria set forth in Sec. 124.112 to the
extent the criteria are not inconsistent with this section. ANC-owned
concerns are subject to the same conditions that apply to tribally-owned
concerns, as described in paragraphs (b) and (c) of this section, except
that the following provisions and exceptions apply only to ANC-owned
concerns:
(1) Alaska Natives and descendants of Natives must own a majority of
both the total equity of the ANC and the total voting powers to elect
directors of the ANC through their holdings of settlement common stock.
Settlement common stock means stock of an ANC issued pursuant to 43
U.S.C. 1606(g)(1), which is subject to the rights and restrictions
listed in 43 U.S.C. 1606(h)(1).
(2) An ANC that meets the requirements set forth in paragraph (a)(1)
of this section is deemed economically disadvantaged under 43 U.S.C.
1626(e), and need not establish economic disadvantage as required by
paragraph (b)(2) of this section.
(3) Even though an ANC can be either for profit or non-profit, a
small business concern owned and controlled by an ANC must be for profit
to be eligible for the 8(a) program. The concern will be deemed owned
and controlled by the ANC where both the majority of stock or other
ownership interest and total voting power are held by the ANC and
holders of its settlement common stock.
(4) The Alaska Native Claims Settlement Act provides that a concern
which is majority owned by an ANC shall be deemed to be both owned and
controlled by Alaska Natives and an economically disadvantaged business.
Therefore, an individual responsible for control and management of an
ANC-owned applicant or Participant need not establish personal social
and economic disadvantage.
(5) Paragraphs (b)(3)(i), (ii) and (iv) of this section are not
applicable to an ANC, provided its status as an ANC is clearly shown in
its articles of incorporation.
(6) Paragraph (c)(1) of this section is not applicable to an ANC-
owned concern to the extent it requires an express waiver of sovereign
immunity or a ``sue and be sued'' clause.
[[Page 375]]
(b) Tribal eligibility. In order to qualify a concern which it owns
and controls for participation in the 8(a) BD program, an Indian tribe
must establish its own economic disadvantaged status under paragraph
(b)(2) of this section. Thereafter, it need not reestablish such status
in order to have other businesses that it owns certified for 8(a) BD
program participation, unless specifically required to do so by the AA/
8(a)BD or designee. Each tribally-owned concern seeking to be certified
for 8(a) BD participation must comply with the provisions of paragraph
(c) of this section.
(1) Social disadvantage. An Indian tribe as defined in Sec. 124.3
is considered to be socially disadvantaged.
(2) Economic disadvantage. In order to be eligible to participate in
the 8(a) BD program, the Indian tribe must demonstrate to SBA that the
tribe itself is economically disadvantaged. This must involve the
consideration of available data showing the tribe's economic condition,
including but not limited to, the following information:
(i) The number of tribal members.
(ii) The present tribal unemployment rate.
(iii) The per capita income of tribal members, excluding judgment
awards.
(iv) The percentage of the local Indian population below the poverty
level.
(v) The tribe's access to capital.
(vi) The tribal assets as disclosed in a current tribal financial
statement. The statement must list all assets including those which are
encumbered or held in trust, but the status of those encumbered or in
trust must be clearly delineated.
(vii) A list of all wholly or partially owned tribal enterprises or
affiliates and the primary industry classification of each. The list
must also specify the members of the tribe who manage or control such
enterprises by serving as officers or directors.
(3) Forms and documents required to be submitted. Except as
otherwise provided in this section, the Indian tribe generally must
submit the forms and documents required of 8(a) BD applicants as well as
the following material:
(i) A copy of all governing documents such as the tribe's
constitution or business charter.
(ii) Evidence of its recognition as a tribe eligible for the special
programs and services provided by the United States or by its state of
residence.
(iii) Copies of its articles of incorporation and bylaws as filed
with the organizing or chartering authority, or similar documents needed
to establish and govern a non-corporate legal entity.
(iv) Documents or materials needed to show the tribe's economically
disadvantaged status as described in paragraph (b)(2) of this section.
(c) Business eligibility. In order to be eligible to participate in
the 8(a) BD program, a concern which is owned by an eligible Indian
tribe (or wholly owned business entities of such tribe) must meet the
conditions set forth in paragraphs (c)(1) through (c)(7) of this
section.
(1) Legal business entity organized for profit and susceptible to
suit. The applicant or participating concern must be a separate and
distinct legal entity organized or chartered by the tribe, or Federal or
state authorities. The concern's articles of incorporation, partnership
agreement or limited liability company articles of organization must
contain express sovereign immunity waiver language, or a ``sue and be
sued'' clause which designates United States Federal Courts to be among
the courts of competent jurisdiction for all matters relating to SBA's
programs including, but not limited to, 8(a) BD program participation,
loans, and contract performance. Also, the concern must be organized for
profit, and the tribe must possess economic development powers in the
tribe's governing documents.
(2) Size. (i) A tribally-owned applicant concern must qualify as a
small business concern as defined for purposes of Federal Government
procurement in part 121 of this title. The particular size standard to
be applied is based on the primary industry classification of the
applicant concern.
(ii) A tribally-owned Participant must certify to SBA that it is a
small business pursuant to the provisions of part 121 of this title for
the purpose of
[[Page 376]]
performing each individual contract which it is awarded.
(iii) In determining the size of a small business concern owned by a
socially and economically disadvantaged Indian tribe (or a wholly owned
business entity of such tribe) for either 8(a) BD program entry or
contract award, the firm's size shall be determined independently
without regard to its affiliation with the tribe, any entity of the
tribal government, or any other business enterprise owned by the tribe,
unless the Administrator determines that one or more such tribally-owned
business concerns have obtained, or are likely to obtain, a substantial
unfair competitive advantage within an industry category.
(3) Ownership. (i) For corporate entities, a tribe must own at least
51 percent of the voting stock and at least 51 percent of the aggregate
of all classes of stock. For non-corporate entities, a tribe must own at
least a 51 percent interest.
(ii) A tribe cannot own 51% or more of another firm which, either at
the time of application or within the previous two years, has been
operating in the 8(a) program under the same primary SIC code as the
applicant. A tribe may, however, own a Participant or an applicant that
conducts or will conduct secondary business in the 8(a) BD program under
the same SIC code that a current Participant owned by the tribe operates
in the 8(a) BD program as its primary SIC code.
(iii) The restrictions of Sec. 124.105(h) do not apply to tribes;
they do, however, apply to non disadvantaged individuals or other
business concerns that are partial owners of a tribally-owned concern.
(4) Control and management. (i) The management and daily business
operations of a tribally-owned concern must be controlled by the tribe,
through one or more disadvantaged individual members who possess
sufficient management experience of an extent and complexity needed to
run the concern, or through management as follows:
(A) Management may be provided by committees, teams, or Boards of
Directors which are controlled by one or more members of an economically
disadvantaged tribe, or
(B) Management may be provided by non-tribal members if SBA
determines that such management is required to assist the concern's
development, that the tribe will retain control of all management
decisions common to boards of directors, including strategic planning,
budget approval, and the employment and compensation of officers, and
that a written management development plan exists which shows how
disadvantaged tribal members will develop managerial skills sufficient
to manage the concern or similar tribally-owned concerns in the future.
(ii) Members of the management team, business committee members,
officers, and directors are precluded from engaging in any outside
employment or other business interests which conflict with the
management of the concern or prevent the concern from achieving the
objectives set forth in its business development plan. This is not
intended to preclude participation in tribal or other activities which
do not interfere with such individual's responsibilities in the
operation of the applicant concern.
(5) Individual eligibility limitation. SBA does not deem an
individual involved in the management or daily business operations of a
tribally-owned concern to have used his or her individual eligibility
within the meaning of Sec. 124.108(b).
(6) Potential for success. (i) A tribally-owned applicant concern
must be in business for at least two years, as evidenced by income tax
returns for each of the two previous tax years showing operating
revenues in the primary industry in which the applicant is seeking 8(a)
BD certification, or demonstrate potential for success as set forth in
paragraph (c)(6)(ii) of this section.
(ii) In determining whether a tribally-owned concern has the
potential for success, SBA will look at a number of factors including,
but not limited to:
(A) The technical and managerial experience and competency of the
individual(s) who will manage and control the daily operation of the
concern;
(B) The financial capacity of the concern; and
[[Page 377]]
(C) The concern's record of performance on any previous Federal or
private sector contracts in the primary industry in which the concern is
seeking 8(a) certification.
(7) Other eligibility criteria. (i) As with other 8(a) applicants, a
tribally-owned applicant concern shall not be denied admission into the
8(a) program due solely to a determination that specific contract
opportunities are unavailable to assist the development of the concern
unless:
(A) The Government has not previously procured and is unlikely to
procure the types of products or services offered by the concern; or
(B) The purchase of such products or services by the Federal
Government will not be in quantities sufficient to support the
developmental needs of the applicant and other program participants
providing the same or similar items or services.
(ii) Except for the tribe itself, the concern's officers, directors,
and all shareholders owning an interest of 20% or more must demonstrate
good character. See Sec. 124.108(a).
Sec. 124.110 Do Native Hawaiian Organizations have any special rules
for applying to the 8(a) BD program?
(a) Concerns owned by economically disadvantaged Native Hawaiian
Organizations, as defined in Sec. 124.3, are eligible for participation
in the 8(a) program and other federal programs requiring SBA to
determine social and economic disadvantage as a condition of
eligibility. Such concerns must meet all eligibility criteria set forth
in Sec. Sec. 124.101 through 124.108 and Sec. 124.112 to the extent
that they are not inconsistent with this section.
(b) A concern owned by a Native Hawaiian Organization must qualify
as a small business concern as defined in part 121 of this title. The
size standard corresponding to the primary industry classification of
the applicant concern applies for determining size. SBA will determine
the concern's size independently, without regard to its affiliation with
the Native Hawaiian Organization or any other business enterprise owned
by the Native Hawaiian Organization, unless the Administrator determines
that one or more such concerns owned by the Native Hawaiian Organization
have obtained, or are likely to obtain, a substantial unfair competitive
advantage within an industry category.
(c) A Native Hawaiian Organization cannot own 51% or more of another
firm which, either at the time of application or within the previous two
years, has been operating in the 8(a) program under the same primary SIC
code as the applicant. A Native Hawaiian Organization may, however, own
a Participant or an applicant that conducts or will conduct secondary
business in the 8(a) BD program under the same SIC code that a current
Participant owned by the Native Hawaiian Organization operates in the
8(a) BD program as its primary SIC code.
(d) SBA does not deem an individual involved in the management or
daily business operations of a Participant owned by a Native Hawaiian
Organization to have used his or her individual eligibility within the
meaning of Sec. 124.108(b).
(e)(1) An applicant concern owned by a Native Hawaiian Organization
must be in business for at least two years, as evidenced by income tax
returns for each of the two previous tax years showing operating
revenues in the primary industry in which the applicant is seeking 8(a)
BD certification, or demonstrate potential for success as set forth in
paragraph (e)(2) of this section.
(2) In determining whether a concern owned by a Native Hawaiian
Organization has the potential for success, SBA will look at a number of
factors including, but not limited to:
(i) The technical and managerial experience and competence of the
individual(s) who will manage and control the daily operation of the
concern.
(ii) The financial capacity of the concern; and
(iii) The concern's record of performance on any previous Federal or
private sector contracts in the primary industry in which the concern is
seeking 8(a) certification.
[[Page 378]]
Sec. 124.111 Do Community Development Corporations (CDCs) have any
special rules for applying to the 8(a) BD program?
(a) Concerns owned at least 51 percent by CDCs (or a wholly owned
business entity of a CDC) are eligible for participation in the 8(a) BD
program and other federal programs requiring SBA to determine social and
economic disadvantage as a condition of eligibility. These concerns must
meet all eligibility criteria set forth in Sec. 124.101 through Sec.
124.108 and Sec. 124.112 to the extent that they are not inconsistent
with this section.
(b) A concern that is at least 51 percent owned by a CDC (or a
wholly owned business entity of a CDC) is considered to be controlled by
such CDC and eligible for participation in the 8(a) BD program, provided
it meets all eligibility criteria set forth or referred to in this
section and its management and daily business operations are conducted
by one or more individuals determined to have managerial experience of
an extent and complexity needed to run the concern.
(c) A concern that is at least 51 percent owned by a CDC (or a
wholly owned business entity of a CDC) must qualify as a small business
concern as defined in part 121 of this title. The size standard
corresponding to the primary industry classification of the applicant
concern applies for determining size. SBA will determine the concern's
size independently, without regard to its affiliation with the CDC or
any other business enterprise owned by the CDC, unless the Administrator
determines that one or more such concerns owned by the CDC have
obtained, or are likely to obtain, a substantial unfair competitive
advantage within an industry category.
(d) A CDC cannot own 51% or more of another firm which, either at
the time of application or within the previous two years, has been
operating in the 8(a) program under the same primary SIC code as the
applicant. A CDC may, however, own a Participant or an applicant that
conducts or will conduct secondary business in the 8(a) BD program under
the same SIC code that a current Participant owned by the CDC operates
in the 8(a) BD program as its primary SIC code.
(e) SBA does not deem an individual involved in the management or
daily business operations of a CDC-owned concern to have used his or her
individual eligibility within the meaning of Sec. 124.108(b).
(f)(1) A CDC-owned applicant concern must be in business for at
least two years, as evidenced by income tax returns for each of the two
previous tax years showing operating revenues in the primary industry in
which the applicant is seeking 8(a) BD certification, or demonstrate
potential for success as set forth in paragraph (e)(2) of this section.
(2) In determining whether a CDC-owned concern has the potential for
success, SBA will look at a number of factors including, but not limited
to:
(i) The technical and managerial experience and competence of the
individual(s) who will manage and control the daily operation of the
concern;
(ii) The financial capacity of the concern; and
(iii) The concern's record of performance on any previous Federal or
private sector contracts in the primary industry in which the concern is
seeking 8(a) certification.
(g) A CDC-owned applicant and all of its principals must have good
character as set forth in Sec. 124.108(a).
Sec. 124.112 What criteria must a business meet to remain eligible to
participate in the 8(a) BD program?
(a) Standards. In order for a concern (except those owned by Indian
tribes, ANCs, Native Hawaiian Organizations or CDCs) to remain eligible
for 8(a) BD program participation, it must continue to meet all
eligibility criteria contained in Sec. 124.101 through Sec. 124.108.
For concerns owned by Indian tribes, ANCs, Native Hawaiian Organizations
or CDCs to remain eligible, they must meet the criteria set forth in
this Sec. 124.112 to the extent that they are not inconsistent with
Sec. 124.109, Sec. 124.110 and Sec. 124.111, respectively. The
concern must inform SBA in writing of any changes in circumstances which
would adversely affect its program eligibility, especially economic
disadvantage and ownership and control. Any concern
[[Page 379]]
that fails to meet the eligibility requirements after being admitted to
the program will be subject to termination or early graduation under
Sec. Sec. 124.302 through 124.304, as appropriate.
(b) Submissions supporting continued eligibility. As part of an
annual review, each Participant must annually submit to the servicing
district office the following:
(1) A certification that it meets the 8(a) BD program eligibility
requirements as set forth in Sec. 124.101 through Sec. 124.108 and
paragraph (a) of this section;
(2) A certification that there have been no changed circumstances
which could adversely affect the Participant's program eligibility. If
the Participant is unable to provide such certification, the Participant
must inform SBA of any changes and provide relevant supporting
documentation.
(3) Personal financial information for each disadvantaged owner;
(4) A record from each individual claiming disadvantaged status
regarding the transfer of assets for less than fair market value to any
immediate family member, or to a trust any beneficiary of which is an
immediate family member, within two years of the date of the annual
review. The record must provide the name of the recipient(s) and family
relationship, and the difference between the fair market value of the
asset transferred and the value received by the disadvantaged
individual.
(5) A record of all payments, compensation, and distributions
(including loans, advances, salaries and dividends) made by the
Participant to each of its owners, officers or directors, or to any
person or entity affiliated with such individuals;
(6) If it is an approved protege, a narrative report detailing the
contacts it has had with its mentor and benefits it has received from
the mentor/protege relationship. See Sec. 124.520(b)(4) for additional
annual requirements;
(7) IRS Form 4506, Request for Copy or Transcript of Tax Form; and
(8) Such other information as SBA may deem necessary. For other
required annual submissions, see Sec. Sec. 124.601 through 124.603.
(c) Eligibility reviews. (1) Upon receipt of specific and credible
information alleging that a Participant no longer meets the eligibility
requirements for continued program eligibility, SBA will review the
concern's eligibility for continued participation in the program.
(2) Sufficient reasons for SBA to conclude that a socially
disadvantaged individual is no longer economically disadvantaged
include, but are not limited to, excessive withdrawals of funds or other
assets withdrawn from the concern by its owners, or substantial personal
assets, income or net worth of any disadvantaged owner. SBA may also
consider access by the Participant firm to a significant new source of
capital or loans since the financial condition of the Participant is
considered in evaluating the disadvantaged individual's economic status.
(d) Excessive withdrawals. (1) The term withdrawal includes, but is
not limited to, the following: officer's salary; cash dividends;
distributions in excess of amounts needed to pay S Corporation taxes;
cash and property withdrawals; bonuses; loans; advances; payments to
immediate family members; investments on behalf of an owner, officer, or
key employee; acquisition of a business not merged with the 8(a)
Participant; charitable contributions; and speculative ventures.
(2) If SBA determines that excessive funds or other assets have been
withdrawn from the Participant, SBA may:
(i) Initiate termination proceedings under Sec. Sec. 124.303 and
124.304 where the withdrawals detrimentally affect the achievement of
the Participant's targets, objectives and goals set forth in its
business plan, or its overall business development;
(ii) Initiate early graduation proceedings under Sec. Sec. 124.302
and 124.303 where the withdrawals do not adversely affect the
Participant's business development; or
(iii) Require an appropriate reinvestment of funds or other assets,
as well as any other actions SBA deems necessary to counteract the
detrimental effects of the withdrawals, as a condition of the
Participant maintaining program eligibility.
[[Page 380]]
(3) Withdrawals are excessive if during any fiscal year of the
Participant they exceed (i) $150,000 for firms with sales up to
$1,000,000; (ii) $200,000 for firms with sales between $1,000,000 and
$2,000,000; and (iii) $300,000 for firms with sales over $2,000,000.
(4) The fact that a concern's net worth has increased despite
withdrawals that are deemed excessive will not preclude SBA from
determining that such withdrawals were detrimental to the attainment of
the concern's business objectives or to its overall business
development.
Applying to the 8(a) BD Program
Sec. 124.201 May any business submit an application?
Any concern or any individual on behalf of a business has the right
to apply for 8(a) BD program participation whether or not there is an
appearance of eligibility.
Sec. 124.202 Where must an application be filed?
An application for 8(a) BD program admission must be filed in the
SBA Division of Program Certification and Eligibility (DPCE) field
office serving the territory in which the principal place of business is
located. The SBA district office will provide an applicant concern with
information regarding the 8(a) BD program and with all required
application forms.
Sec. 124.203 What must a concern submit to apply to the 8(a) BD
program?
Each 8(a) BD applicant concern must submit those forms and
attachments required by SBA when applying for admission to the 8(a) BD
program. These forms and attachments will include, but not be limited
to, financial statements, Federal personal and business tax returns, and
personal history statements. An applicant must also submit IRS Form
4506, Request for Copy or Transcript of Tax Form, to SBA. The
application package may be in the form of an electronic application.
Sec. 124.204 How does SBA process applications for 8(a) BD program
admission?
(a) The AA/8(a)BD is authorized to approve or decline applications
for admission to the 8(a) BD program. The appropriate DPCE field office
will receive, review and evaluate all 8(a) BD applications except those
from ANC-owned applicants. SBA's Anchorage District Office will receive
all applications from ANC-owned applicants and review them for
completeness before sending them to the AA/8(a)BD for further
processing. The appropriate field office will advise each program
applicant within 15 days after the receipt of an application whether the
application is complete and suitable for evaluation and, if not, what
additional information or clarification is required to complete the
application. SBA will process an application for 8(a) BD program
participation within 90 days of receipt of a complete application
package by the DPCE field office. Incomplete application packages will
not be processed.
(b) SBA, in its sole discretion, may request clarification of
information contained in the application at any time in the application
process. SBA will take into account any clarifications made by an
applicant in response to a request for such by SBA.
(c) An applicant concern's eligibility will be based on
circumstances existing on the date of application, except where
clarification is made pursuant to paragraph (b) of this section or as
provided in paragraph (d) of this section.
(d) Changed circumstances for an applicant concern occurring
subsequent to its application and which adversely affect eligibility
will be considered and may constitute grounds for decline. The applicant
must inform SBA of any changed circumstances that could adversely affect
its eligibility for the program (particularly economic disadvantage and
ownership and control) during its application review. Failure to inform
SBA of any such changed circumstances constitutes good cause for which
SBA may terminate the Participant if non-compliance is discovered after
admittance.
(e) The decision of the AA/8(a)BD to approve or deny an application
will be in writing. A decision to deny admission will state the specific
reasons for denial, and will inform the applicant of any appeal rights.
[[Page 381]]
(f) If the AA/8(a)BD approves the application, the date of the
approval letter is the date of program certification for purposes of
determining the concern's program term.
Sec. 124.205 Can an applicant ask SBA to reconsider SBA's initial
decision to decline its application?
(a) An applicant may request the AA/8(a)BD to reconsider his or her
initial decline decision by filing a request for reconsideration with
the SBA field office that originally processed its application. Filing
means submission by personal delivery, first-class mail, express mail,
fascimile transmission followed by first-class mail, or commercial
delivery service. The applicant must submit its request for
reconsideration within 45 days of receiving notice that its application
was declined. The applicant must provide any additional information and
documentation pertinent to overcoming the reason(s) for the initial
decline.
(b) The AA/8(a)BD will issue a written decision within 45 days of
the regional DPCE's receipt of the applicant's request. The AA/8(a)BD
may either approve the application, deny it on the same grounds as the
original decision, or deny it on other grounds. If denied, the AA/8(a)BD
will explain why the applicant is not eligible for admission to the 8(a)
BD program and give specific reasons for the decline.
(c) If the AA/8(a)BD declines the application solely on issues not
raised in the initial decline, the applicant can ask for reconsideration
as if it were an initial decline.
Sec. 124.206 What appeal rights are available to an applicant that has
been denied admission?
(a) An applicant may appeal a denial of program admission to SBA's
Office of Hearings and Appeals (OHA), if it is based solely on a
negative finding of social disadvantage, economic disadvantage,
ownership, control, or any combination of these four criteria. A denial
decision that is based at least in part on the failure to meet any other
eligibility criterion is not appealable and is the final decision of
SBA.
(b) The applicant may appeal an initial decision of the AA/8(a)BD
without requesting reconsideration, or may appeal the decision of the
AA/8(a)BD on reconsideration.
(c) The applicant may initiate an appeal by filing a petition in
accordance with part 134 of this chapter with OHA within 45 days after
the applicant receives the Agency decision.
(d) If an appeal is filed with OHA, the written decision of the
Administrative Law Judge is the final Agency decision. If an appealable
decision is not appealed, the decision of the AA/8(a)BD is the final
Agency decision.
[63 FR 35739, June 30, 1998, as amended at 67 FR 47246, July 18, 2002]
Sec. 124.207 Can an applicant reapply for admission to the 8(a) BD
program?
A concern which has been declined for 8(a) BD program admission may
submit a new application for admission to the program 12 months after
the date of the final Agency decision to decline.
Exiting the 8(a) BD Program
Sec. 124.301 What are the ways a business may leave the 8(a) BD
program?
A concern participating in the 8(a) BD program may leave the program
by any of the following means:
(a) Graduation upon the expiration of the program term established
pursuant to Sec. 124.2;
(b) Voluntary early graduation;
(c) Early graduation pursuant to the provisions of Sec. Sec.
124.302 and 124.304; or
(d) Termination pursuant to the provisions of Sec. Sec. 124.303 and
124.304.
Sec. 124.302 What is early graduation?
(a) General. SBA may graduate a firm from the 8(a) BD program prior
to the expiration of its Program Term where SBA determines that:
(1) The concern has successfully completed the 8(a) BD program by
substantially achieving the targets, objectives, and goals set forth in
its business plan prior to the expiration of its program term, and has
demonstrated the ability to compete in the marketplace without
assistance under the 8(a) BD program; or
(2) One or more of the disadvantaged owners upon whom the
Participant's
[[Page 382]]
eligibility is based are no longer economically disadvantaged.
(b) Criteria for determining whether a Participant has met its goals
and objectives. In determining whether a Participant has substantially
achieved the targets, objectives and goals of its business plan and in
assessing the overall competitive strength and viability of a
Participant, SBA considers the totality of circumstances, including the
following factors:
(1) Degree of sustained profitability;
(2) Sales trends, including improved ratio of non-8(a) sales to 8(a)
sales since program entry;
(3) Business net worth, financial ratios, working capital,
capitalization, and access to credit and capital;
(4) Current ability to obtain bonding;
(5) A comparison of the Participant's business and financial
profiles with profiles of non-8(a) BD businesses having the same primary
four-digit SIC code as the Participant;
(6) Strength of management experience, capability, and expertise;
and
(7) Ability to operate successfully without 8(a) contracts.
(c) Excessive withdrawals. SBA may graduate a Participant prior to
the expiration of its program term where excessive funds or other assets
have been withdrawn from the Participant (see Sec. 124.112(d)(3)),
causing SBA to determine that the Participant has demonstrated the
ability to compete in the marketplace without assistance under the 8(a)
BD program.
(d) Benchmark achievement. SBA may graduate a Participant prior to
the expiration of its program term where the Participant has
substantially achieved the targets, objectives and goals of its business
plan as adjusted under Sec. 124.403(d) and its primary industry
classification falls within a SIC Major Group in which the benchmarks
described in Sec. 124.403(d) have been achieved.
[63 FR 35739, 35772, June 30, 1998]
Sec. 124.303 What is termination?
(a) SBA may terminate the participation of a concern in the 8(a) BD
program prior to the expiration of the concern's Program Term for good
cause. Examples of good cause include, but are not limited to, the
following:
(1) Submission of false information in the concern's 8(a) BD
application, regardless of whether correct information would have caused
the concern to be denied admission to the program, and regardless of
whether correct information was given to SBA in accompanying documents
or by other means.
(2) Failure by the concern to maintain its eligibility for program
participation.
(3) Failure by the concern for any reason, including the death of an
individual upon whom eligibility was based, to maintain ownership, full-
time day-to-day management, and control by disadvantaged individuals.
(4) Failure by the concern to obtain prior written approval from SBA
for any changes in ownership or business structure, management or
control pursuant to Sec. Sec. 124.105 and 124.106.
(5) Failure by the concern to disclose to SBA the extent to which
non-disadvantaged persons or firms participate in the management of the
Participant business concern.
(6) Failure by the concern or one or more of the concern's
principals to maintain good character.
(7) A pattern of failure to make required submissions or responses
to SBA in a timely manner, including a failure to provide required
financial statements, requested tax returns, reports, updated business
plans, information requested by SBA's Office of Inspector General, or
other requested information or data within 30 days of the date of
request.
(8) Cessation of business operations by the concern.
(9) Failure by the concern to pursue competitive and commercial
business in accordance with its business plan, or failure in other ways
to make reasonable efforts to develop and achieve competitive viability.
(10) A pattern of inadequate performance by the concern of awarded
section 8(a) contracts.
(11) Failure by the concern to pay or repay significant financial
obligations owed to the Federal Government.
(12) Failure by the concern to obtain and keep current any and all
required permits, licenses, and charters, including suspension or
revocation of any
[[Page 383]]
professional license required to operate the business.
(13) Excessive withdrawals, including transfers of funds or other
business assets, from the concern for the personal benefit of any of its
owners or any person or entity affiliated with the owners that hinder
the development of the concern (see Sec. 124.112(d).
(14) Unauthorized use of SBA direct or guaranteed loan proceeds or
violation of an SBA loan agreement.
(15) Submission by or on behalf of a Participant of false
information to SBA, including false certification of compliance with
non-8(a) business activity targets under Sec. 124.507 or failure to
report changes that adversely affect the program eligibility of an
applicant or program participant under Sec. 124.204 and Sec. 124.112,
where responsible officials of the 8(a) BD Participant knew or should
have known the submission to be false.
(16) Debarment, suspension, voluntary exclusion, or ineligibility of
the concern or its principals pursuant to part 145 of this title or FAR
subpart 9.4 (48 CFR part 9, subpart 9.4).
(17) Conduct by the concern, or any of its principals, indicating a
lack of business integrity. Such conduct may be demonstrated by
information related to a criminal indictment or guilty plea, a criminal
conviction, or a judgment or settlement in a civil case.
(18) Willful failure by the Participant business concern to comply
with applicable labor standards and obligations.
(19) Material breach of any terms and conditions of the 8(a) BD
Program Participation Agreement.
(20) Willful violation by a concern, or any of its principals, of
any SBA regulation pertaining to material issues.
(b) The examples of good cause listed in paragraph (a) of this
section are intended to be illustrative only. Other grounds for
terminating a Participant from the 8(a) BD program for cause may exist
and may be used by SBA.
Sec. 124.304 What are the procedures for early graduation and
termination?
(a) General. The same procedures apply to both early graduation and
termination of Participants from the 8(a) BD program.
(b) Letter of Intent to Terminate or Graduate Early. When SBA
believes that a Participant should be terminated or graduated prior to
the expiration of its program term, SBA will notify the concern in
writing. The Letter of Intent to Terminate or Graduate Early will set
forth the specific facts and reasons for SBA's findings, and will notify
the concern that it has 30 days from the date it receives the letter to
submit a written response to SBA explaining why the proposed ground(s)
should not justify termination or early graduation.
(c) Recommendation and decision. Following the 30-day response
period, the Assistant Administrator for DPCE (AA/DPCE) or designee will
consider the proposed early graduation or termination and any
information submitted in response by the concern. Upon determining that
early graduation or termination is not warranted, the AA/DPCE or
designee will notify the Participant in writing. If early graduation or
termination appears warranted, the AA/DPCE will make such a
recommendation to the AA/8(a)BD, who will then make a decision whether
to early graduate or terminate the concern. SBA will act in a timely
manner in processing early graduation and termination actions.
(d) Notice requirements. Upon deciding that early graduation or
termination is warranted, the AA/8(a)BD will issue a Notice of Early
Graduation or Termination. The Notice will set forth the specific facts
and reasons for the decision, and will advise the concern that it may
appeal the decision in accordance with the provisions of part 134 of
this title.
(e) Appeal to OHA. Procedures governing appeals of early graduation
or termination to SBA's OHA are set forth in part 134. If a Participant
does not appeal a Notification of Early Graduation or Termination within
45 days after the Participant receives the Notification, the decision of
the AA/8(a)BD is the final agency decision effective on the date the
appeal right expired.
(f) Effect of early graduation or termination. After the effective
date of early graduation or termination, a Participant is no longer
eligible to receive any
[[Page 384]]
8(a) BD program assistance. However, such concern is obligated to
complete previously awarded 8(a) contracts, including any priced options
which may be exercised.
[63 FR 35739, June 30, 1998, as amended at 67 FR 47246, July 18, 2002]
Sec. 124.305 What is suspension and how is a Participant suspended
from the 8(a) BD program?
(a) At any time after SBA issues a Letter of Intent to Terminate
pursuant to Sec. 124.304, the AA/8(a)BD may suspend 8(a) contract
support and all other forms of 8(a) BD program assistance to that
concern until the issue of the concern's termination from the program is
finally decided. The AA/8(a)BD may suspend a Participant when he or she
determines that suspension is needed to protect the interests of the
Federal Government, such as where information showing a clear lack of
program eligibility or conduct indicating a lack of business integrity
exists, including where the concern or one of its principals submitted
false statements to the Federal Government. SBA will suspend a
Participant where SBA determines that the Participant submitted false
information in its 8(a) BD application.
(b) SBA will issue a Notice of Suspension to the Participant's last
known address by certified mail, return receipt requested. Suspension is
effective as of the date of the issuance of the Notice. The Notice will
provide the following information:
(1) The basis for the suspension;
(2) A statement that the suspension will continue pending the
completion of further investigation, a final program termination
determination, or some other specified period of time;
(3) A statement that awards of competitive and non-competitive 8(a)
contracts, including those which have been ``self-marketed'' by a
Participant, will not be made during the pendency of the suspension
unless it is determined by the head of the relevant procuring agency or
an authorized representative to be in the best interest of the
Government to do so, and SBA adopts that determination;
(4) A statement that the concern is obligated to complete previously
awarded section 8(a) contracts;
(5) A statement that the suspension is effective nationally
throughout SBA;
(6) A statement that a request for a hearing on the suspension will
be considered by an Administrative Law Judge at OHA, and granted or
denied as a matter of discretion.
(7) A statement that the firm's participation in the program is
suspended effective on the date the Notice is served, and that the
program term will resume only if the suspension is lifted or the firm is
not terminated.
(c) The Participant may appeal a Notice of Suspension by filing a
petition in accordance with part 134 of this chapter with OHA within 45
days after the concern receives the Notice of Suspension pursuant to
paragraph (b) of this section. It is contemplated that in most cases a
hearing on the issue of the suspension will be afforded if the
Participant requests one, but authority to grant a hearing is within the
discretion of the Administrative Law Judge in OHA. A suspension remains
in effect pending the result of its appeal.
(d) SBA has the burden of showing that adequate evidence exists that
protection of the Federal Government's interest requires suspension
before OHA or the AA/8(a)BD makes a final determination regarding the
termination action.
(1) The term ``adequate evidence'' means information contained in
the record before the AA/8(a)BD at the time of his or her suspension
decision that is sufficient to support the reasonable belief that the
Government's interests need to be protected.
(2) SBA need not demonstrate that an act or omission actually
occurred in order for OHA to uphold a suspension. SBA's burden in a
suspension proceeding is limited to demonstrating that it had a
reasonable belief that a particular act or omission occurred, and that
that act or omission requires suspension to protect the interests of the
Government.
(3) Unless the Administrative Law Judge consolidates the suspension
and termination proceedings, OHA's review is limited to determining
whether the
[[Page 385]]
Government's interests need to be protected, and will not consider the
merits of the termination action.
(e) If there is a timely appeal, the decision of the Administrative
Law Judge is the final SBA decision. If there is not a timely appeal,
the decision of the AA/8(a)BD is the final Agency decision.
(f) Upon the request of SBA, OHA may consolidate suspension and
termination proceedings when the issues presented are identical.
(g) Any program suspension which occurs under this section is
effective until such time as SBA lifts the suspension or the
Participant's participation in the program is fully terminated. If the
concern is ultimately not terminated from the 8(a) BD program, the
suspension will be lifted and the length of the suspension will be added
to the concern's program term.
(h) SBA may suspend a Participant from program benefits where a
change of ownership or business structure has been requested if
ownership or control of the participant changed prior to SBA's approval
pending resolution of the request to change its ownership or control. If
the change of ownership is approved, the length of the suspension will
be added to the firm's program term where the change in ownership
results from the death or incapacity of a disadvantaged individual or
where the firm requested prior approval and waited 60 days for SBA
approval before making the change. The suspension will be commenced by
the issuance of a notice similar to that required for termination-
related suspensions under paragraph (b) of this section, except that a
change of ownership suspension is not appealable.
(i) SBA does not recognize the concept of de facto suspension.
Adding time to the end of a Participant's program term equal to the
length of a suspension will occur only where a concern's program
participation has been formally suspended in accordance with the
procedures set forth in this section.
(j) A suspension from 8(a) BD participation under this section has
no effect on a concern's eligibility for non-8(a) Federal Government
contracts. However, a debarment or suspension under the Federal
Acquisition Regulation (48 CFR, chapter 1) will disqualify a concern
from receiving all Federal Government contracts, including 8(a)
contracts.
[63 FR 35739, June 30, 1998, as amended at 67 FR 47246, July 18, 2002]
Business Development
Sec. 124.401 Which SBA field office services a Participant?
The SBA district office which serves the geographical territory
where a Participant's principal place of business is located normally
will service the concern during its participation in the 8(a) BD
program.
Sec. 124.402 How does a Participant develop a business plan?
(a) General. In order to assist the SBA servicing office in
determining the business development needs of its portfolio
Participants, each Participant must develop a comprehensive business
plan setting forth its business targets, objectives, and goals.
(b) Submission of initial business plan. Each Participant must
submit a business plan to its SBA servicing office as soon as possible
after program admission. The Participant will not be eligible for 8(a)
BD program benefits, including 8(a) contracts, until SBA approves its
business plan.
(c) Contents of business plan. The business plan must contain at
least the following:
(1) A detailed description of any products currently being produced
and any services currently being performed by the concern, as well as
any future plans to enter into one or more new markets;
(2) The applicant's designation of its primary industry
classification, as defined in Sec. 124.3;
(3) An analysis of market potential, competitive environment, and
the concern's prospects for profitable operations during and after its
participation in the 8(a) BD program;
(4) An analysis of the concern's strengths and weaknesses, with
particular attention on ways to correct any financial, managerial,
technical, or work force conditions which could impede the concern from
receiving and performing non-8(a) contracts;
[[Page 386]]
(5) Specific targets, objectives, and goals for the business
development of the concern during the next two years;
(6) Estimates of both 8(a) and non-8(a) contract awards that will be
needed to meet its targets, objectives and goals; and
(7) Such other information as SBA may require.
Sec. 124.403 How is a business plan updated and modified?
(a) Annual review. Each Participant must annually review its
business plan with its assigned Business Opportunity Specialist (BOS),
and modify the plan as appropriate. The Participant must submit a
modified plan and updated information to its BOS within thirty (30) days
after the close of each program year. It also must submit a capability
statement describing its current contract performance capabilities as
part of its updated business plan.
(b) Contract forecast. As part of the annual review of its business
plan, each Participant must annually forecast in writing its needs for
contract awards for the next program year. The forecast must include:
(1) The aggregate dollar value of 8(a) contracts to be sought,
broken down by sole source and competitive opportunities where possible;
(2) The aggregate dollar value of non-8(a) contracts to be sought;
(3) The types of contract opportunities to be sought, identified by
product or service; and
(4) Such other information as SBA may request to aid in providing
effective business development assistance to the Participant.
(c) Transition management strategy. Beginning in the first year of
the transitional stage of program participation, each Participant must
annually submit a transition management strategy to be incorporated into
its business plan. The transition management strategy must describe:
(1) How the Participant intends to meet the applicable non-8(a)
business activity target imposed by Sec. 124.507 during the
transitional stage of participation; and
(2) The specific steps the Participant intends to take to continue
its business growth and promote profitable business operations after the
expiration of its program term.
(d) Benchmark achievement. Where actual participation by
disadvantaged businesses in a particular SIC Major Group exceeds the
benchmark limitations established by the Department of Commerce for that
Major Group, SBA may adjust the targets, objectives and goals contained
in the business plans of Participants whose primary industry
classification falls within that Major Group. Any adjustment will take
into account projected decreases in 8(a) and SDB contracting
opportunities.
[63 FR 35739, 35772, June 30, 1998]
Sec. 124.404 What business development assistance is available to
Participants during the two stages of participation in the
8(a) BD program?
(a) General. Participation in the 8(a) BD program is divided into
two stages, a developmental stage and a transitional stage. The
developmental stage will last four years, and the transitional stage
will last five years, unless the concern has exited the program by one
of the means set forth in Sec. 124.301 prior to the expiration of its
program term.
(b) Developmental stage of program participation. A Participant, if
otherwise eligible, may receive the following assistance during the
developmental stage of program participation:
(1) Sole source and competitive 8(a) contract support;
(2) Financial assistance pursuant to Sec. 120.375 of this title;
(3) The transfer of technology or surplus property owned by the
United States pursuant to Sec. 124.405; and
(4) Training to aid in developing business principles and strategies
to enhance their ability to compete successfully for both 8(a) and non-
8(a) contracts.
(c) Transitional stage of program participation. A Participant, if
otherwise eligible, may receive the following assistance during the
transitional stage of program participation:
(1) The same assistance as that provided to Participants in the
developmental stage;
[[Page 387]]
(2) Assistance from procuring agencies (in cooperation with SBA) in
forming joint ventures, leader-follower arrangements, and teaming
agreements between the concern and other Participants or other business
concerns with respect to contracting opportunities outside the 8(a) BD
program for research, development, or full scale engineering or
production of major systems (these arrangements must comply with all
relevant statutes and regulations, including applicable size standard
requirements); and
(3) Training and technical assistance in transitional business
planning.
Sec. 124.405 How does a Participant obtain Federal Government surplus
property?
(a) General. (1) Pursuant to 15 U.S.C. 636(j)(13)(F), eligible
Participants may receive surplus Federal Government property from State
Agencies for Surplus Property (SASPs). The procedures set forth in 41
CFR Part 101-44 and this section will be used to transfer surplus
property to eligible Participants.
(2) The property which may be transferred to SASPs for further
transfer to eligible Participants includes all personal property which
has been determined to be ``donable'' as defined in 41 CFR 101-44.001-3.
(b) Eligibility to receive Federal surplus property. To be eligible
to receive Federal surplus property, on the date of transfer a concern
must:
(1) Be in the 8(a) BD program;
(2) Be in compliance with all program requirements, including any
reporting requirements;
(3) Not be debarred, suspended, or declared ineligible under part 9,
subpart 9.4 of the Federal Acquisition Regulations, Title 48 of the Code
of Federal Regulations;
(4) Not be under a pending 8(a) BD program suspension, termination
or early graduation proceeding; and
(5) Be engaged or expect to be engaged in business activities making
the item useful to it.
(c) Use of acquired surplus property. (1) Eligible Participants may
acquire surplus Federal property from any SASP located in any state,
provided the concern represents and agrees in writing:
(i) As to what the intended use of the surplus property is to be and
that this use is consistent with the objectives of the concern's 8(a)
business plan;
(ii) That it will use the property to be acquired in the normal
conduct of its business activities or be liable for the fair rental
value from the date of its receipt;
(iii) That it will not sell or transfer the property to be acquired
to any party other than the Federal Government during its term of
participation in the 8(a) program and for one year after it leaves the
program;
(iv) That, at its own expense, it will return the property to a SASP
or transfer it to another Participant if directed to do so by SBA
because it has not used the property as intended within one year of
receipt;
(v) That, should it breach its agreement not to sell or transfer the
property, it will be liable to the Government for the established fair
market value or the sale price, whichever is greater, of the property
sold or transferred; and
(vi) That it will give SBA access to inspect the property and all
records pertaining to it.
(2) A firm receiving surplus property pursuant to this section
assumes all liability associated with or stemming from the use of the
property.
(3) If the property is not placed in use for the purposes for which
it was intended within one year of its receipt, SBA may direct the
concern to deliver the property to another Participant or to the SASP
from which it was acquired.
(4) Failure to comply with any of the commitments made under
paragraph (c)(1) of this section constitutes a basis for termination
from the 8(a) program.
(d) Procedures for acquiring Federal Government surplus property.
(1) Participants may participate in the surplus property distribution
program administered by the SASPs to the same extent, but with no
special priority over, other authorized transferees. See 41 CFR subpart
101-44.2.
(2) Each Participant seeking to acquire Federal Government surplus
property from a SASP must:
[[Page 388]]
(i) Certify in writing to the SASP that it is eligible to receive
the property pursuant to paragraph (b) of this section;
(ii) Make the written representations and agreement required by
paragraph (c)(1) of this section; and
(iii) Identify to the SASP its servicing SBA field office.
(3) Upon receipt of the required certification, representations,
agreement, and information set forth in paragraph (d)(2) of this
section, the SASP must contact the appropriate SBA field office and
obtain SBA's verification that the concern seeking to acquire the
surplus property is eligible, and that the identified use of the
property is consistent with the concern's business activities. SASPs may
not release property to a Participant without this verification.
(4) The SASP and the Participant must agree on and record the fair
market value of the surplus property at the time of the transfer to the
Participant. The SASP must provide to SBA a written record, including
the agreed upon fair market value, of each transaction to a Participant
when any property has been transferred.
(e) Costs. Participants acquiring surplus property from a SASP must
pay a service fee to the SASP which is equal to the SASP's direct costs
of locating, inspecting, and transporting the surplus property. If a
Participant elects to incur the responsibility and the expense for
transporting the acquired property, the concern may do so and no
transportation costs will be charged by the SASP. In addition, the SASP
may charge a reasonable fee to cover its costs of administering the
program. In no instance will any SASP charge a Participant more for any
service than their established fees charged to other transferees.
(f) Title. The title to surplus property acquired from a SASP will
pass to the Participant when the Participant executes the applicable
SASP distribution documents and takes possession of the property.
(g) Compliance. (1) SBA will periodically review whether
Participants that have received surplus property have used and
maintained the property as agreed. This review may include site visits
to visually inspect the property to ensure that it is being used in a
manner consistent with the terms of its transfer.
(2) Participants must provide SBA with access to all relevant
records upon request.
(3) Where SBA receives credible information that transferred surplus
property may have been disposed of or otherwise used in a manner that is
not consistent with the terms of the transfer, SBA may investigate such
claim to determine its validity.
(4) SBA may take any action to correct any noncompliance involving
the use of transferred property still in possession of the Participant
or to enforce any terms, conditions, reservations, or restrictions
imposed on the property by the distribution document. Actions to enforce
compliance, or which may be taken as a result of noncompliance, include
the following:
(i) Requiring that the property be placed in proper use within a
specified time;
(ii) Requiring that the property be transferred to another
Participant having a need and use for the property, returned to the SASP
serving the area where the property is located for distribution to
another eligible transferee or to another SASP, or transferred through
GSA to another Federal agency;
(iii) Recovery of the fair rental value of the property from the
date of its receipt by the Participant; and
(iv) Initiation of proceedings to terminate the Participant from the
8(a) BD program.
(5) Where SBA finds that a recipient has sold or otherwise disposed
of the acquired surplus property in violation of the agreement covering
sale and disposal, the Participant is liable for the agreed upon fair
market value of the property at the time of the transfer, or the sale
price, whichever is greater. However, a Participant need not repay any
amount where it can demonstrate to SBA's satisfaction that the property
is no longer useful for the purpose for which it was transferred and
receives SBA's prior written consent to transfer the property. For
example, if a piece of equipment breaks down beyond repair, it may be
disposed of without being
[[Page 389]]
subject to the repayment provision, so long as the concern receives
SBA's prior consent.
(6) Any funds received by SBA in enforcement of this section will be
remitted promptly to the Treasury of the United States as miscellaneous
receipts.
Contractual Assistance
Sec. 124.501 What general provisions apply to the award of 8(a)
contracts?
(a) Pursuant to section 8(a) of the Small Business Act, SBA is
authorized to enter into all types of contracts with other Federal
agencies, including contracts to furnish equipment, supplies, services,
leased real property, or materials to them or to perform construction
work for them, and to contract the performance of these contracts to
qualified Participants. Where practicable, simplified acquisition
procedures should be used for 8(a) contracts at or below the simplified
acquisition threshold. Where appropriate, SBA will delegate the contract
execution function to procuring activities. In order to receive and
retain a delegation of SBA's contract execution and review functions, a
procuring activity must report all 8(a) contract awards, modifications,
and options to SBA.
(b) 8(a) contracts may either be sole source awards or awards won
through competition with other Participants.
(c) Admission into the 8(a) BD program does not guarantee that a
Participant will receive 8(a) contracts.
(d) A requirement for possible award may be identified by SBA, a
particular Participant or the procuring activity itself. SBA will submit
the capability statements provided to SBA annually under Sec. 124.403
to appropriate procuring activities for the purpose of matching
requirements with Participants.
(e) Participants should market their capabilities to appropriate
procuring activities to increase their prospects of receiving sole
source 8(a) contracts.
(f) An 8(a) participant that identifies a requirement that appears
suitable for award through the 8(a) BD program may request SBA to
contact the procuring activity to request that the requirement be
offered to the 8(a) BD program.
(g) A concern must be a current Participant in the 8(a) BD program
at the time of award, except as provided in Sec. 124.507(d).
(h) A Participant must certify that it is a small business under the
size standard corresponding to the SIC code assigned to each 8(a)
contract. 8(a) BD program personnel will verify size prior to award of
an 8(a) contract. If the Participant is not verified as small, it may
request a formal size determination from the appropriate General
Contracting Area Office under part 121 of this title.
(i) Any person or entity that misrepresents its status as a ``small
business concern owned and controlled by socially and economically
disadvantaged individuals'' in order to obtain any 8(a) contracting
opportunity will be subject to possible criminal, civil and
administrative penalties, including those imposed by section 16(d) of
the Small Business Act, 15 U.S.C. 645(d).
Sec. 124.502 How does an agency offer a procurement to SBA for award
through the 8(a) BD program?
(a) A procuring activity contracting officer indicates his or her
formal intent to award a procurement requirement as an 8(a) contract by
submitting a written offering letter to SBA. The procuring activity may
transmit the offering letter to SBA by electronic mail, if available, or
by facsimile transmission, as well as by mail or commercial delivery
service.
(b) Contracting officers must submit offering letters to the
following locations:
(1) For competitive 8(a) requirements and those sole source
requirements for which no specific Participant is nominated (i.e., open
requirements) other than construction requirements, to the SBA district
office serving the geographical area in which the procuring activity is
located;
(2) For competitive and open construction requirements, to the SBA
district office serving the geographical area in which the work is to be
performed or, in the case of such contracts to be performed overseas, to
the Office of 8(a) BD located in SBA Headquarters;
[[Page 390]]
(3) For sole source requirements offered on behalf of a specific
Participant, to the SBA district office servicing that concern.
(c) An offering letter must contain the following information:
(1) A description of the work to be performed;
(2) The estimated period of performance;
(3) The SIC code that applies to the principal nature of the
acquisition;
(4) The anticipated dollar value of the requirement, including
options, if any;
(5) Any special restrictions or geographical limitations on the
requirement;
(6) The location of the work to be performed for construction
procurements;
(7) Any special capabilities or disciplines needed for contract
performance;
(8) The type of contract to be awarded, such as firm fixed price,
cost reimbursement, or time and materials;
(9) The acquisition history, if any, of the requirement;
(10) The names and addresses of any small business contractors which
have performed on this requirement during the previous 24 months;
(11) A statement that prior to the offering no solicitation for the
specific acquisition has been issued as a small business set-aside, or
as a small disadvantaged business set-aside if applicable, and that no
other public communication (such as a notice in the Commerce Business
Daily) has been made showing the procuring activity's clear intent to
use any of these means of procurement;
(12) Identification of any specific Participant that the procuring
activity contracting officer nominates for award of a sole source 8(a)
contract, if appropriate, including a brief justification for the
nomination, such as one of the following:
(i) The Participant, through its own efforts, marketed the
requirement and caused it to be reserved for the 8(a) BD program; or
(ii) The acquisition is a follow-on or renewal contract and the
nominated concern is the incumbent;
(13) Bonding requirements, if applicable;
(14) Identification of all Participants which have expressed an
interest in being considered for the acquisition;
(15) Identification of all SBA field offices which have requested
that the requirement be awarded through the 8(a) BD program;
(16) A request, if appropriate, that a requirement whose estimated
contract value is under the applicable competitive threshold be awarded
as an 8(a) competitive contract; and
(17) Any other information that the procuring activity deems
relevant or which SBA requests.
Sec. 124.503 How does SBA accept a procurement for award through the
8(a) BD program?
(a) Acceptance of the requirement. Upon receipt of the procuring
activity's offer of a procurement requirement, SBA will determine
whether it will accept the requirement for the 8(a) BD program. SBA's
decision whether to accept the requirement will be sent to the procuring
activity in writing within 10 working days of receipt of the written
offering letter if the contract is valued at more than the simplified
acquisition threshold, and within two days of receipt of the offering
letter if the contract is valued at or below the simplified acquisition
threshold, unless SBA requests, and the procuring activity grants, an
extension. SBA is not required to accept any particular procurement
offered to the 8(a) BD program.
(1) Where SBA decides to accept an offering of a sole source 8(a)
procurement, SBA will accept the offer both on behalf of the 8(a) BD
program and in support of a specific Participant.
(2) Where SBA decides to accept an offering of a competitive 8(a)
procurement, SBA will accept the offer on behalf of the 8(a) BD program.
(3) Where SBA has delegated its contract execution functions to a
procuring activity, the procuring activity may assume that SBA accepts
its offer for the 8(a) program if the procuring activity does not
receive a reply to its offer within five days.
[[Page 391]]
(4) In the case of procurement requirements valued at or below the
Simplified Acquisition Procedures threshold:
(i) Where a procuring activity makes an offer to the 8(a) program on
behalf of a specific Program Participant and does not receive a reply to
its offer within two days, the procuring activity may assume the offer
is accepted and proceed with award of an 8(a) contract;
(ii) Where SBA has delegated its 8(a) contract execution functions
to an agency, SBA may authorize the procuring activity to award an 8(a)
contract without requiring an offer and acceptance of the requirement
for the 8(a) program. In such a case, the procuring activity must notify
SBA of all 8(a) awards made under this authority.
(5) Where SBA does not respond to an offering letter within the
normal 10-day time period, the procuring activity may seek SBA's
acceptance through the AA/8(a)BD. The procuring activity may assume that
SBA accepts its offer for the 8(a) program if it does not receive a
reply from the AA/8(a)BD within 5 days of his or her receipt of the
procuring activity request.
(b) Verification of SIC code. As part of the acceptance process, SBA
will verify the appropriateness of the SIC code designation assigned to
the requirement by the procuring activity contracting officer.
(1) SBA will accept the SIC code assigned to the requirement by the
procuring activity contracting officer as long as it is reasonable, even
though other SIC codes may also be reasonable.
(2) If SBA and the procuring activity are unable to agree as to the
proper SIC code designation for the requirement, SBA may either refuse
to accept the requirement for the 8(a) BD program, appeal the
contracting officer's determination to the head of the agency pursuant
to Sec. 124.505, or appeal the SIC code designation to OHA under part
134 of this title.
(c) Sole source award where procuring activity nominates a specific
Participant. SBA will determine whether an appropriate match exists
where the procuring activity identifies a particular Participant for a
sole source award.
(1) Once SBA determines that a procurement is suitable to be
accepted as an 8(a) sole source contract, SBA will normally accept it on
behalf of the Participant recommended by the procuring activity,
provided that:
(i) The procurement is consistent with the Participant's business
plan;
(ii) The Participant complies with its applicable non-8(a) business
activity target imposed by Sec. 124.509(d);
(iii) The Participant is small for the size standard corresponding
to the SIC code assigned to the requirement by the procuring activity
contracting officer; and
(iv) The Participant has submitted required financial statements to
SBA.
(2) If an appropriate match exists, SBA will advise the procuring
activity whether SBA will participate in contract negotiations or
whether SBA will authorize the procuring activity to negotiate directly
with the identified Participant. Where SBA has delegated its contract
execution functions to a procuring activity, SBA will also identify that
delegation in its acceptance letter.
(3) If an appropriate match does not exist, SBA will notify the
Participant and the procuring activity, and may then nominate an
alternate Participant.
(d) Open requirements. When a procuring activity does not nominate a
particular concern for performance of a sole source 8(a) contract (open
requirement), the following additional procedures will apply:
(1) If the procurement is a construction requirement, SBA will
examine the portfolio of Participants that have a bona fide place of
business within the geographical boundaries served by the SBA district
office where the work is to be performed to select a qualified
Participant. If none is found to be qualified or a match for a concern
in that district is determined to be impossible or inappropriate, SBA
may nominate a Participant with a bona fide place of business within the
geographical boundaries served by another district office within the
same state, or may nominate a Participant having a bona fide place of
business out of state but within a reasonable proximity to
[[Page 392]]
the work site. SBA's decision will ensure that the nominated Participant
is close enough to the work site to keep costs of performance
reasonable.
(2) If the procurement is not a construction requirement, SBA may
select any eligible, responsible Participant nationally to perform the
contract.
(3) In cases in which SBA selects a Participant for possible award
from among two or more eligible and qualified Participants, the
selection will be based upon relevant factors, including business
development needs, compliance with competitive business mix requirements
(if applicable), financial condition, management ability, technical
capability, and whether award will promote the equitable distribution of
8(a) contracts.
(e) Formal technical evaluations. Except for requirements for
architectural and engineering services, SBA will not authorize formal
technical evaluations for sole source 8(a) requirements. A procuring
activity:
(1) Must request that a procurement be a competitive 8(a) award if
it requires formal technical evaluations of more than one Participant
for a requirement below the applicable competitive threshold amount; and
(2) May conduct informal assessments of several Participants'
capabilities to perform a specific requirement, so long as the statement
of work for the requirement is not released to any of the Participants
being assessed.
(f) Repetitive acquisitions. A procuring activity contracting
officer must submit a new offering letter to SBA where he or she intends
to award a follow-on or repetitive contract as an 8(a) award. This
enables SBA to determine:
(1) Whether the requirement should be a competitive 8(a) award;
(2) A nominated firm's eligibility, whether or not it is the same
firm that performed the previous contract;
(3) The affect that contract award would have on the equitable
distribution of 8(a) contracts; and
(4) Whether the requirement should continue under the 8(a) BD
program.
(g) Basic Ordering Agreements (BOAs). A Basic Ordering Agreement
(BOA) is not a contract under the FAR. See 48 CFR 16.703(a). Each order
to be issued under the BOA is an individual contract. As such, the
procuring activity must offer, and SBA must accept, each task order
under a BOA in addition to offering and accepting the BOA itself.
(1) SBA will not accept for award on a sole source basis any task
order under a BOA that would cause the total dollar amount of task
orders issued to exceed the applicable competitive threshold amount set
forth in Sec. 124.506(a).
(2) Where a procuring activity believes that task orders to be
issued under a proposed BOA will exceed the applicable competitive
threshold amount set forth in Sec. 124.506(a), the procuring activity
must offer the requirement to the program to be competed among eligible
Participants.
(3) Once a concern's program term expires, the concern otherwise
exits the 8(a) BD program, or becomes other than small for the SIC code
assigned under the BOA, new orders will not be accepted for the concern.
(h) Multiple Award and Federal Supply Schedule Contracts. Unlike
Basic Ordering Agreements, Multiple Award and Federal Supply Schedule
contracts are contracts. Orders issued under these contracts are not
considered separate contracts. As such, SBA's acceptance of the original
Multiple Award or Federal Supply Schedule contract is valid for the
duration of the contract. Separate offers and acceptances will not be
made for individual task orders under these contracts.
(1) Task orders are not required to be competed where the value of
the task order will exceed the competitive threshold as long as the
original contract was competed.
(2) A concern may continue to accept new orders under a Multiple
Award or Federal Supply Schedule contract even where a concern's program
term expires, the concern otherwise exits the 8(a) BD program, or the
concern becomes other than small for the SIC code assigned under the
contract subsequent to award of the contract.
(i) Requirements where SBA has delegated contract execution
authority. Except as provided in paragraph (a)(4)(i) of this section,
where SBA has delegated its 8(a) contract execution authority to the
procuring activity, the procuring activity must still offer
[[Page 393]]
and SBA must still accept all requirements intended to be awarded as
8(a) contracts.
(j) The contracting officer should consider setting aside the
requirement for HUBZone, 8(a) or SDVO SBC participation before
considering to set aside the requirement as a small business set-aside.
[63 FR 35739, June 30, 1998, as amended at 70 FR 51248, Aug. 30, 2005]
Sec. 124.504 What circumstances limit SBA's ability to accept a
procurement for award as an 8(a) contract?
SBA will not accept a procurement for award as an 8(a) contract if
the circumstances identified in paragraphs (a) through (d) of this
section exist.
(a) Reservation as small business or SDB set-aside. The procuring
activity issued a solicitation for or otherwise expressed publicly a
clear intent to reserve the procurement as a small business or small
disadvantaged business (SDB) set-aside prior to offering the requirement
to SBA for award as an 8(a) contract. The AA/8(a)BD may permit the
acceptance of the requirement, however, under extraordinary
circumstances.
Example to paragraph (a). SBA may accept a requirement where a
procuring activity made a decision to offer the requirement to the 8(a)
BD program before the solicitation was sent out and the procuring
activity acknowledges and documents that the solicitation was in error.
(b) Competition prior to offer and acceptance. The procuring
activity competed a requirement among Participants prior to offering the
requirement to SBA and receiving SBA's formal acceptance of the
requirement.
(1) Any competition conducted without first obtaining SBA's formal
acceptance of the procurement for the 8(a) BD program will not be
considered an 8(a) competitive requirement.
(2) SBA may accept the requirement for the 8(a) BD program as a
competitive 8(a) requirement, but only if the procuring activity agrees
to resolicit the requirement using appropriate competitive 8(a)
procedures.
(c) Adverse impact. SBA has made a written determination that
acceptance of the procurement for 8(a) award would have an adverse
impact on an individual small business, a group of small businesses
located in a specific geographical location, or other small business
programs. The adverse impact concept is designed to protect small
business concerns which are performing Government contracts awarded
outside the 8(a) BD program, and does not apply to follow-on or renewal
8(a) acquisitions. SBA will not consider adverse impact with respect to
any requirement offered to the 8(a) program under Simplified Acquisition
Procedures.
(1) In determining whether the acceptance of a requirement would
have an adverse impact on an individual small business, SBA will
consider all relevant factors.
(i) In connection with a specific small business, SBA presumes
adverse impact to exist where:
(A) The small business concern has performed the specific
requirement for at least 24 months;
(B) The small business is performing the requirement at the time it
is offered to the 8(a) BD program, or its performance of the requirement
ended within 30 days of the procuring activity's offer of the
requirement to the 8(a) BD program; and
(C) The dollar value of the requirement that the small business is
or was performing is 25 percent or more of its most recent annual gross
sales (including those of its affiliates). For a multi-year requirement,
the dollar value of the last 12 months of the requirement will be used
to determine whether a small business would be adversely affected by
SBA's acceptance.
(ii) Except as provided in paragraph (c)(2) of this section, adverse
impact does not apply to ``new'' requirements. A new requirement is one
which has not been previously procured by the relevant procuring
activity.
(A) Where a requirement is new, no small business could have
previously performed the requirement and, thus, SBA's acceptance of the
requirement for the 8(a) BD program will not adversely impact any small
business.
(B) Construction contracts, by their very nature (e.g., the building
of a specific structure), are deemed new requirements.
[[Page 394]]
(C) The expansion or modification of an existing requirement will be
considered a new requirement where the magnitude of change is
significant enough to cause a price adjustment of at least 25 percent
(adjusted for inflation) or to require significant additional or
different types of capabilities or work.
(D) SBA need not perform an impact determination where a new
requirement is offered to the 8(a) BD program.
(2) In determining whether the acceptance of a requirement would
have an adverse impact on a group of small businesses, SBA will consider
the effects of combining or consolidating various requirements being
performed by two or more small business concerns into a single contract
which would be considered a ``new'' requirement as compared to any of
the previous smaller requirements. SBA may find adverse impact to exist
if one of the existing small business contractors meets the presumption
set forth in paragraph (c)(1)(i) of this section.
(3) In determining whether the acceptance of a requirement would
have an adverse impact on other small business programs, SBA will
consider all relevant factors, including but not limited to, the number
and value of contracts in the subject industry reserved for the 8(a) BD
program as compared with other small business programs.
(d) Benchmark achievement. Where actual participation by
disadvantaged businesses in a SIC Major Group exceeds the benchmark
limitations established by the Department of Commerce for that Major
Group, SBA may elect not to accept a requirement having a SIC code
within the Major Group that is offered to SBA for award as an 8(a)
contract. In determining whether to accept a requirement in such a case,
SBA will consider the developmental needs of Participants and other
anticipated contracting opportunities available to them.
(e) Release for non-8(a) competition. In limited instances, SBA may
decline to accept the offer of a follow-on or renewal 8(a) acquisition
to give a concern previously awarded the contract that is leaving or has
left the 8(a) BD program the opportunity to compete for the requirement
outside the 8(a) BD program.
(1) SBA will consider release only where:
(i) The procurement awarded through the 8(a) BD program is being or
was performed by either a Participant whose program term will expire
prior to contract completion, or, by a former Participant whose program
term expired within one year of the date of the offering letter;
(ii) The concern requests in writing that SBA decline to accept the
offer prior to SBA's acceptance of the requirement for award as an 8(a)
contract; and
(iii) The concern qualifies as a small business for the requirement
now offered to the 8(a) BD program.
(2) In considering release, SBA will balance the importance of the
requirement to the concern's business development needs against the
business development needs of other Participants that are qualified to
perform the requirement. This determination will include consideration
of whether rejection of the requirement would seriously reduce the pool
of similar types of contracts available for award as 8(a) contracts. SBA
will seek the views of the procuring activity.
(3) If SBA declines to accept the offer and releases the
requirement, it will recommend to the procuring activity that the
requirement be procured as a small business or, if authorized, an SDB
set-aside.
[63 FR 35739, 35772, June 30, 1998]
Sec. 124.505 When will SBA appeal the terms or conditions of a
particular 8(a) contract or a procuring activity decision not
to reserve a requirement for the 8(a) BD program?
(a) What SBA may appeal. The Administrator of SBA may appeal the
following matters to the head of the procuring agency:
(1) A contracting officer's decision not to make a particular
procurement available for award as an 8(a) contract;
(2) A contracting officer's decision to reject a specific
Participant for award of an 8(a) contract after SBA's acceptance of the
requirement for the 8(a) BD program; and
[[Page 395]]
(3) The terms and conditions of a proposed 8(a) contract, including
the procuring activity's SIC code designation and estimate of the fair
market price.
(b) Procedures for appeal. (1) SBA must notify the contracting
officer of the SBA Administrator's intent to appeal an adverse decision
within 5 working days of SBA's receipt of the decision.
(2) Upon receipt of the notice of intent to appeal, the procuring
activity must suspend further action regarding the procurement until the
head of the procuring agency issues a written decision on the appeal,
unless the head of the procuring agency makes a written determination
that urgent and compelling circumstances which significantly affect
interests of the United States will not permit waiting for a
consideration of the appeal.
(3) The SBA Administrator must send a written appeal of the adverse
decision to the head of the procuring agency within 15 working days of
SBA's notification of intent to appeal or the appeal may be considered
withdrawn.
(4) By statute (15 U.S.C. 637(a)(1)(A)), the procuring agency head
must specify in writing the reasons for a denial of an appeal brought by
the Administrator under this section.
Sec. 124.506 At what dollar threshold must an 8(a) procurement be
competed among eligible Participants?
(a) Competitive thresholds. (1) A procurement offered and accepted
for the 8(a) BD program must be competed among eligible Participants if:
(i) There is a reasonable expectation that at least two eligible
Participants will submit offers at a fair market price;
(ii) The anticipated award price of the contract, including options,
will exceed $5,000,000 for contracts assigned manufacturing SIC codes
and $3,000,000 for all other contracts; and
(iii) The requirement has not been accepted by SBA for award as a
sole source 8(a) procurement on behalf of a tribally-owned or ANC-owned
concern.
(2) For all types of contracts, the applicable competitive threshold
amounts will be applied to the procuring activity estimate of the total
value of the contract, including all options. For indefinite delivery or
indefinite quantity type contracts, the thresholds are applied to the
maximum order amount authorized.
(3) Where the estimate of the total value of a proposed 8(a)
contract is less than the applicable competitive threshold amount and
the requirement is accepted as a sole source requirement on that basis,
award may be made even though the contract price arrived at through
negotiations exceeds the competitive threshold, provided that the
contract price is not more than ten percent greater than the competitive
threshold amount.
Example to paragraph (a)(3). If the anticipated award price for a
professional services requirement is determined to be $2.7 million and
it is accepted as a sole source 8(a) requirement on that basis, a sole
source award will be valid even if the contract price arrived at after
negotiation is $3.1 million.
(4) A proposed 8(a) requirement with an estimated value exceeding
the applicable competitive threshold amount may not be divided into
several separate procurement actions for lesser amounts in order to use
8(a) sole source procedures to award to a single contractor.
(b) Exemption from competitive thresholds for Participants owned by
Indian tribes. SBA may award a sole source 8(a) contract to a
Participant concern owned and controlled by an Indian tribe or an ANC
where the anticipated value of the procurement exceeds the applicable
competitive threshold if SBA has not accepted the requirement into the
8(a) BD program as a competitive procurement. There is no requirement
that a procurement must be competed whenever possible before it can be
accepted on a sole source basis for a tribally-owned or ANC-owned
concern, but a procurement may not be removed from competition to award
it to a tribally-owned or ANC-owned concern on a sole source basis.
(c) Competition below thresholds. The AA/8(a)BD, on a nondelegable
basis, may approve a request from a procuring activity to compete a
requirement that is below the applicable competitive threshold amount
among eligible Participants.
(1) This authority will be used primarily when technical
competitions
[[Page 396]]
are appropriate or when a large number of potential awardees exist.
(2) The AA/8(a)BD may consider whether the procuring activity has
made and will continue to make available a significant number of its
contracts to the 8(a) BD program on a noncompetitive basis.
(3) The AA/8(a)BD may deny a request if the procuring activity
previously offered the requirement to the 8(a) BD program on a
noncompetitive basis and the request is made following the inability of
the procuring activity and the potential sole source awardee to reach an
agreement on price or some other material term or condition.
(d) Sole source above thresholds. Where a contract opportunity
exceeds the applicable threshold amount and there is not a reasonable
expectation that at least two eligible 8(a) Participants will submit
offers at a fair price, the AA/8(a)BD may accept the requirement for a
sole source 8(a) award if he or she determines that an eligible
Participant in the 8(a) portfolio is capable of performing the
requirement at a fair price.
Sec. 124.507 What procedures apply to competitive 8(a) procurements?
(a) FAR procedures. Procuring activities will conduct competitions
among and evaluate offers received from Participants in accordance with
the Federal Acquisition Regulation (48 CFR, chapter 1).
(b) Eligibility determination by SBA. In either a negotiated or
sealed bid competitive 8(a) acquisition, the procuring activity will
request that the SBA district office servicing the apparent successful
offeror determine that firm's eligibility for award.
(1) Within 5 working days after receipt of a procuring activity's
request for an eligibility determination, SBA will determine whether the
firm identified by the procuring activity is eligible for award.
(2) Eligibility is based on 8(a) BD program criteria, including
whether the Participant is:
(i) A small business under the SIC code assigned to the requirement;
(ii) In compliance with any applicable competitive business mix
target established or remedial measure imposed by Sec. 124.509 that
does not include the denial of future 8(a) contracts;
(iii) In the developmental stage of program participation if the
solicitation restricts offerors to the developmental stage of
participation; and
(iv) A concern with a bona fide place of business in the applicable
geographic area if the procurement is for construction.
(3) If SBA determines that the apparent successful offeror is
ineligible, SBA will notify the procuring activity. The procuring
activity will then send to SBA the identity of the next highest
evaluated firm for an eligibility determination. The process is repeated
until SBA determines that an identified offeror is eligible for award.
(4) Except to the extent set forth in paragraph (d) of this section,
SBA determines whether a Participant is eligible for a specific 8(a)
competitive requirement as of the date that the Participant submitted
its initial offer which includes price.
(5) If the procuring activity contracting officer believes that the
apparent successful offeror is not responsible to perform the contract,
he or she must refer the concern to SBA for a possible Certificate of
Competency in accord with Sec. 125.5 of this title.
(c) Restricted competition--(1) Competition within stages of program
participation. SBA may accept a competitive 8(a) requirement that is
limited to Participants in the developmental stage of program
participation, or may accept a requirement to be competed among firms
both in the developmental and transitional stages of program
participation.
(2) Construction competitions. Based on its knowledge of the 8(a) BD
portfolio, SBA will determine whether a competitive 8(a) construction
requirement should be competed among only those Participants having a
bona fide place of business within the geographical boundaries of one or
more SBA district offices, within a state, or within the state and
nearby areas. Only those Participants with bona fide places of business
within the appropriate geographical boundaries are eligible to submit
offers.
(3) Competition for all non-construction requirements. Except for
construction
[[Page 397]]
requirements, all eligible Participants regardless of location may
submit offers in response to competitive 8(a) solicitations. The only
geographic restrictions pertaining to 8(a) competitive requirements,
other than those for construction requirements, are any imposed by the
solicitations themselves.
(d) Award to firms whose program terms have expired. A concern that
has completed its term of participation in the 8(a) BD program may be
awarded a competitive 8(a) contract if it was a Participant eligible for
award of the contract on the initial date specified for receipt of
offers contained in the contract solicitation, and if it continues to
meet all other applicable eligibility criteria.
(1) Amendments to the solicitation extending the date for
submissions of offers will be disregarded.
(2) For a negotiated procurement, a Participant may submit revised
offers, including a best and final offer, and be awarded a competitive
8(a) contract if it was eligible as of the initial date specified for
the receipt of offers in the solicitation, even though its program term
may expire after that date.
Sec. 124.508 How is an 8(a) contract executed?
(a) An 8(a) contract can be awarded in the following ways:
(1) As a tripartite agreement in which the procuring activity, SBA
and the Participant all sign the appropriate contract documents. There
may be separate prime and subcontract documents (i.e., a prime contract
between the procuring activity and SBA and a subcontract between SBA and
the selected 8(a) concern) or a combined contract document representing
both the prime and subcontract relationships; or
(2) Where SBA has delegated contract execution authority to the
procuring activity, directly by the procuring activity through a
contract between the procuring activity and the Participant.
(b) Where SBA receives a contract for signature valued at or below
the simplified acquisition threshold, it will sign the contract and
return it to the procuring activity within three (3) days of receipt.
(c) In order to be eligible to receive a sole source 8(a) contract,
a firm must be a current Participant on the date of award. (See Sec.
124.507(d) for competitive 8(a) awards.)
Sec. 124.509 What are non-8(a) business activity targets?
(a) General. (1) To ensure that Participants do not develop an
unreasonable reliance on 8(a) awards, and to ease their transition into
the competitive marketplace after graduating from the 8(a) BD program,
Participants must make maximum efforts to obtain business outside the
8(a) BD program.
(2) During both the developmental and transitional stages of the
8(a) BD program, a Participant must make substantial and sustained
efforts, including following a reasonable marketing strategy, to attain
the targeted dollar levels of non-8(a) revenue established in its
business plan. It must attempt to use the 8(a) BD program as a resource
to strengthen the firm for economic viability when program benefits are
no longer available.
(b) Required non-8(a) business activity targets during transitional
stage--(1) General. During the transitional stage of the 8(a) BD
program, a Participant must achieve certain targets of non-8(a) contract
revenue (i.e., revenue from other than sole source or competitive 8(a)
contracts). These targets are called non-8(a) business activity targets
and are expressed as a percentage of total revenue. The targets call for
an increase in non-8(a) revenue over time.
(2) Non-8(a) business activity targets. During their transitional
stage of program participation, Participants must meet the following
non-8(a) business activity targets each year:
------------------------------------------------------------------------
Non-8(a) business
activity targets
(required minimum
Participant's year in the transitional stage non-8(a) revenue
as a percentage
of total revenue)
------------------------------------------------------------------------
1.................................................... 15
2.................................................... 25
3.................................................... 35
4.................................................... 45
5.................................................... 55
------------------------------------------------------------------------
(3) Compliance with non-8(a) business activity targets. SBA will
measure the Participant's compliance with the applicable non-8(a)
business activity target at the end of each program year in
[[Page 398]]
the transitional stage based on the Participant's latest fiscal year-end
total revenue. Thus, at the end of the first year in the transitional
stage of program participation, SBA will compare the Participant's non-
8(a) revenue to its total revenue during that first year. If
appropriate, SBA will require remedial measures during the subsequent
program year. Thus, for example, non-compliance with the required non-
8(a) business activity target in year one of the transitional stage
would cause SBA to initiate remedial measures under paragraph (d) of
this section for year two in the transitional stage.
(4) Certification of compliance. A Participant must certify as part
of its offer that it complies with the applicable non-8(a) business
activity target or with the measures imposed by SBA under paragraph (d)
of this section before it can receive any 8(a) contract during the
transitional stage of the 8(a) BD program.
(c) Reporting and verification of business activity. (1) Once
admitted to the 8(a) BD program, a Participant must provide to SBA as
part of its annual review:
(i) Annual financial statements with a breakdown of 8(a) and non-
8(a) revenue in accord with Sec. 124.602; and
(ii) An annual report within 30 days from the end of the program
year of all non-8(a) contracts, options, and modifications affecting
price executed during the program year.
(2) At the end of each year of participation in the transitional
stage, the BOS assigned to work with the Participant will review the
Participant's total revenues to determine whether the non-8(a) revenues
have met the applicable target. In determining compliance, SBA will
compare all 8(a) revenues received during the year, including those from
options and modifications, to all non-8(a) revenues received during the
year.
(d) Consequences of not meeting competitive business mix targets.
(1) Except as set forth in paragraph (e) of this section, beginning at
the end of the first year in the transitional stage (the fifth year of
participation in the 8(a) BD program), any firm that does not meet its
applicable competitive business mix target for the just completed
program year will be ineligible for sole source 8(a) contracts in the
current program year, unless and until the Participant corrects the
situation as described in paragraph (d)(2) of this section.
(2) If SBA determines that an 8(a) Participant has failed to meet
its applicable competitive business mix target during any program year
in the transitional stage of program participation, SBA may increase its
monitoring of the Participant's contracting activity during the ensuing
program year. SBA will also notify the Participant in writing that the
Participant will not be eligible for further 8(a) sole source contract
awards until it has demonstrated to SBA that it has complied with its
non-8(a) business activity requirements as described in paragraphs
(d)(2)(i) and (d)(2)(ii) of this section. In order for a Participant to
come into compliance with the non-8(a) business activity target and be
eligible for further 8(a) sole source contracts, it may:
(i) Wait until the end of the current program year and demonstrate
to SBA as part of the normal annual review process that it has met the
revised non-8(a) business activity target; or
(ii) At its option, submit information regarding its non-8(a)
revenue to SBA quarterly throughout the current program year in an
attempt to come into compliance before the end of the current program
year. If the Participant satisfies the requirements of paragraphs
(d)(2)(ii)(A) or (d)(2)(ii)(B) of this section, SBA will reinstate the
Participant's ability to get sole source 8(a) contracts prior to its
annual review.
(A) To qualify for reinstatement during the first six months of the
current program year (i.e., at either the first or second quarterly
review), the Participant must demonstrate that it has received non-8(a)
revenue and new non-8(a) contract awards that are equal to or greater
than the dollar amount by which it failed to meet its non-8(a) business
activity target for the just completed program year. For this purpose,
SBA will not count options on existing non-8(a) contracts in determining
whether a Participant has received new non-8(a) contract awards.
[[Page 399]]
(B) To qualify for reinstatement during the last six months of the
current program year (i.e., at either the nine-month or one year
review), the Participant must demonstrate that it has achieved its non-
8(a) business activity target as of that point in the current program
year.
Example 1 to paragraph (d)(2). Firm A had $10 million in total
revenue during year 2 in the transitional stage (year 6 in the program),
but failed to meet the minimum non-8(a) business activity target of 25
percent. It had 8(a) revenues of $8.5 million and non-8(a) revenues of
$1.5 million (15 percent). Based on total revenues of $10 million, Firm
A should have had at least $2.5 million in non-8(a) revenues. Thus, Firm
A missed its target by $1 million (its target ($2.5 million) minus its
actual non-8(a) revenues ($1.5 million)). Because Firm A did not achieve
its non-8(a) business activity target, it cannot receive 8(a) sole
source awards until correcting that situation. The firm may wait until
the next annual review to establish that it has met the revised target,
or it can choose to report contract awards and other non-8(a) revenue to
SBA quarterly. Firm A elects to submit information to SBA quarterly in
year 3 of the transitional stage (year 7 in the program). In order to be
eligible for sole source 8(a) contracts after either its 3 month or 6
month review, Firm A must show that it has received non-8(a) revenue
and/or been awarded new non-8(a) contracts totaling $1 million (the
amount by which it missed its target in year 2 of the transitional
stage).
Example 2 to paragraph (d)(2). Firm B had $10 million in total
revenue during year 2 in the transitional stage (year 6 in the program),
of which $8.5 million were 8(a) revenues and $1.5 million were non-8(a)
revenues. At its first two quarterly reviews during year 3 of the
transitional stage (year 7 in the program), Firm B could not demonstrate
that it had received at least $1 million in non-8(a) revenue and new
non-8(a) awards. In order to be eligible for sole source 8(a) contracts
after its 9 month or 1 year review, Firm B must show that at least 35%
(the non-8(a) business activity target for year 3 in the transitional
stage) of all revenues received during year 3 in the transitional stage
as of that point are from non-8(a) sources.
(3) In determining whether a Participant has achieved its required
non-8(a) business activity target at the end of any program year in the
transitional stage, or whether a Participant that failed to meet the
target for the previous program year has achieved the required level of
non-8(a) business at its nine-month review, SBA will measure 8(a)
support by adding the base year value of all 8(a) contracts awarded
during the applicable program year to the value of all options and
modifications executed during that year.
(4) As a condition of eligibility for new 8(a) contracts, SBA may
also impose other requirements on a Participant that fails to achieve
the non-8(a) business activity targets. These include requiring the
Participant to obtain management assistance, technical assistance, and/
or counseling, and/or attend seminars relating to management assistance,
business development, financing, marketing, accounting, or proposal
preparation.
(5) SBA may initiate proceedings to terminate a Participant from the
8(a) BD program where the firm makes no good faith efforts to obtain
non-8(a) revenues.
(e) Waiver of sole source prohibition. (1) The AA/8(a)BD, or his or
her designee, may waive the requirement prohibiting a Participant from
receiving further sole source 8(a) contracts when a Participant does not
meet its non-8(a) business activity target where a denial of a sole
source contract would cause severe economic hardship on the Participant
so that the Participant's survival may be jeopardized, or where
extenuating circumstances beyond the Participant's control caused the
Participant not to meet its non-8(a) business activity target. The
decision to grant or deny a request for a waiver is at SBA's discretion,
and no appeal may be taken with respect to that decision.
(2) The SBA Administrator on a non-delegable basis may waive the
requirement prohibiting a Participant from receiving further sole source
8(a) contracts when the Participant does not meet its non-8(a) business
activity target where the head of a procuring activity represents to the
SBA Administrator that award of a sole source 8(a) contract to the
Participant is needed to achieve significant interests of the
Government.
Sec. 124.510 What percentage of work must a Participant perform on an
8(a) contract?
(a) To assist the business development of Participants in the 8(a)
BD
[[Page 400]]
program, an 8(a) contractor must perform certain percentages of work
with its own employees. These percentages and the requirements relating
to them are the same as those established for small business set-aside
prime contractors, and are set forth in Sec. 125.6 of this title.
(b) A Participant must certify in its offer that it will meet the
applicable percentage of work requirement. SBA will determine whether
the firm will be in compliance as of the date of award of the contract
for both sealed bid and negotiated procurements.
(c) Indefinite quantity contracts. (1) In order to ensure that the
required percentage of costs on an indefinite quantity 8(a) award is
performed by the Participant, the Participant must demonstrate
semiannually that it has performed the required percentage to that date.
For a service or supply contract, this does not mean that the
Participant must perform 50 percent of the applicable costs for each
task order with its own force, or that a Participant must have performed
50 percent of the applicable costs at any point in time during the
contract's life. Rather, the Participant must perform 50 percent of the
applicable costs for the combined total of all task orders issued to
date at six month intervals.
Example to paragraph (c)(1). Two task orders are issued under an
8(a) indefinite quantity service contract during the first six months of
the contract. If $100,000 in personnel costs are incurred on the first
task order, 90% of those costs ($90,000) are incurred for performance by
the Participant's own work force, and the second task order also
requires $100,000 in personnel costs, the Participant would have to
perform only 10 percent of the personnel costs on the second task order
because it would still have performed 50% of the total personnel costs
at the end of the six-month period ($100,000 out of $200,000).
(2) Where there is a guaranteed minimum condition in an indefinite
quantity 8(a) award, the required performance of work percentage need
not be met on task orders issued during the first six months of the
contract. In such a case, however, the percentage of work that a
Participant may further contract to other concerns during the first six
months of the contract may not exceed 50 percent of the total guaranteed
minimum dollar value to be provided by the contract. Once the guaranteed
minimum amount is met, the general rule for indefinite quantity
contracts set forth in paragraph (c)(1) of this section applies.
Example to paragraph (c)(2). Where a contract guarantees a minimum
of $100,000 in professional services and the first task order is for
$60,000 in such services, the Participant may perform as little as
$10,000 of the personnel costs for that order. In such a case, however,
the Participant must perform all of the next task order(s) up to $40,000
to ensure that it performs 50% of the $100,000 guaranteed minimum
($10,000 + $40,000 = $50,000 or 50% of the $100,000).
(3) The applicable SBA District Director may waive the provisions in
paragraphs (c)(1) and (c)(2) of this section requiring a Participant to
meet the applicable performance of work requirement at the end of any
six-month period where he or she makes a written determination that
larger amounts of subcontracting are essential during certain stages of
performance, provided that there are written assurances from both the
Participant and the procuring activity that the contract will ultimately
comply with the requirements of this section. Where SBA authorizes a
Participant to exceed the subcontracting limitations and the Participant
does not ultimately comply with the performance of work requirements by
the end of the contract, SBA will not grant future waivers for the
Participant.
Sec. 124.511 How is fair market price determined for an 8(a) contract?
(a) The procuring activity determines what constitutes a ``fair
market price'' for an 8(a) contract.
(1) The procuring activity must derive the estimate of a current
fair market price for a new requirement, or a requirement that does not
have a satisfactory procurement history, from a price or cost analysis.
This analysis may take into account prevailing market conditions,
commercial prices for similar products or services, or data obtained
from any other agency. The analysis must also consider any cost or
pricing data that is timely submitted by SBA.
[[Page 401]]
(2) The procuring activity must base the estimate of a current fair
market price for a requirement that has a satisfactory procurement
history on recent award prices adjusted to ensure comparability.
Adjustments will take into account differences in quantities,
performance, times, plans, specifications, transportation costs,
packaging and packing costs, labor and material costs, overhead costs,
and any other additional costs which may be appropriate.
(b) Upon the request of SBA, a procuring activity will provide to
SBA a written statement detailing the method it has used to estimate the
current fair market price for the 8(a) requirement. This statement must
be submitted within 10 working days of SBA's request. The procuring
activity must identify the information, studies, analyses, and other
data it used in making its estimate.
(c) The procuring activity's estimate of fair market price and any
supporting data may not be disclosed by SBA to any Participant or
potential contractor.
(d) The concern selected to perform an 8(a) contract may request SBA
to protest the procuring activity's estimate of current fair market
price to the Secretary of the Department or head of the agency in
accordance with Sec. 124.505.
Sec. 124.512 Delegation of contract administration to procuring
agencies.
(a) SBA may delegate, by the use of special clauses in the 8(a)
contract documents or by a separate agreement with the procuring
activity, all responsibilities for administering an 8(a) contract to the
procuring activity except the approval of novation agreements under 48
CFR 42.302(a)(25).
(b) This delegation of contract administration authorizes a
contracting officer to execute any priced option or in scope
modification without SBA's concurrence. The contracting officer must,
however, notify SBA of all modifications and options exercised.
Sec. 124.513 Under what circumstances can a joint venture be awarded
an 8(a) contract?
(a) General. (1) If approved by SBA, a Participant may enter into a
joint venture agreement with one or more other small business concerns,
whether or not 8(a) Participants, for the purpose of performing one or
more specific 8(a) contracts.
(2) A joint venture agreement is permissible only where an 8(a)
concern lacks the necessary capacity to perform the contract on its own,
and the agreement is fair and equitable and will be of substantial
benefit to the 8(a) concern. However, where SBA concludes that an 8(a)
concern brings very little to the joint venture relationship in terms of
resources and expertise other than its 8(a) status, SBA will not approve
the joint venture arrangement.
(b) Size of concerns to an 8(a) joint venture. (1) A joint venture
of at least one 8(a) Participant and one or more other business concerns
may submit an offer as a small business for a competitive 8(a)
procurement so long as each concern is small under the size standard
corresponding to the SIC code assigned to the contract, provided:
(i) The size of at least one 8(a) Participant to the joint venture
is less than one half the size standard corresponding to the SIC code
assigned to the contract; and
(ii)(A) For a procurement having a revenue-based size standard, the
procurement exceeds half the size standard corresponding to the SIC code
assigned to the contract; or
(B) For a procurement having an employee-based size standard, the
procurement exceeds $10 million;
(2) For sole source and competitive 8(a) procurements that do not
exceed the dollar levels identified in paragraph (b)(1) of this section,
an 8(a) Participant entering into a joint venture agreement with another
concern is considered to be affiliated for size purposes with the other
concern with respect to performance of the 8(a) contract. The combined
annual receipts or employees of the concerns entering into the joint
venture must meet the size standard for the SIC code assigned to the
8(a) contract.
[[Page 402]]
(3) Notwithstanding the provisions of paragraphs (b)(1) and (b)(2)
of this section, a joint venture between a protege firm and its approved
mentor (see Sec. 124.520) will be deemed small provided the protege
qualifies as small for the size standard corresponding to the SIC code
assigned to the procurement and has not reached the dollar limit set
forth in Sec. 124.519.
(c) Contents of joint venture agreement. Every joint venture
agreement to perform an 8(a) contract, including those between mentors
and proteges authorized by Sec. 124.520, must contain a provision:
(1) Setting forth the purpose of the joint venture;
(2) Designating an 8(a) Participant as the managing venturer of the
joint venture, and an employee of the managing venturer as the project
manager responsible for performance of the 8(a) contract;
(3) Stating that not less than 51 percent of the net profits earned
by the joint venture will be distributed to the 8(a) Participant(s);
(4) Providing for the establishment and administration of a special
bank account in the name of the joint venture. This account must require
the signature of all parties to the joint venture or designees for
withdrawal purposes. All payments due the joint venture for performance
on an 8(a) contract will be deposited in the special account; all
expenses incurred under the contract will be paid from the account as
well;
(5) Itemizing all major equipment, facilities, and other resources
to be furnished by each party to the joint venture, with a detailed
schedule of cost or value of each;
(6) Specifying the responsibilities of the parties with regard to
contract performance, source of labor and negotiation of the 8(a)
contract;
(7) Obligating all parties to the joint venture to ensure
performance of the 8(a) contract and to complete performance despite the
withdrawal of any member;
(8) Designating that accounting and other administrative records
relating to the joint venture be kept in the office of the managing
venturer, unless approval to keep them elsewhere is granted by the
District Director or his/her designee upon written request;
(9) Requiring the final original records be retained by the managing
venturer upon completion of the 8(a) contract performed by the joint
venture;
(10) Stating that quarterly financial statements showing cumulative
contract receipts and expenditures (including salaries of the joint
venture's principals) must be submitted to SBA not later than 45 days
after each operating quarter of the joint venture; and
(11) Stating that a project-end profit and loss statement, including
a statement of final profit distribution, must be submitted to SBA no
later than 90 days after completion of the contract.
(d) Performance of work. For any 8(a) contract, including those
between mentors and proteges authorized by Sec. 124.520, the joint
venture must perform the applicable percentage of work required by Sec.
124.510, and the 8(a) partner(s) to the joint venture must perform a
significant portion of the contract.
(e) Prior approval by SBA. SBA must approve a joint venture
agreement prior to the award of an 8(a) contract on behalf of the joint
venture.
(f) Contract execution. Where SBA has approved a joint venture, the
procuring activity will execute an 8(a) contract in the name of the
joint venture entity.
(g) Amendments to joint venture agreement. All amendments to the
joint venture agreement must be approved by SBA.
(h) Inspection of records. SBA may inspect the records of the joint
venture without notice at any time deemed necessary.
[63 FR 35739, June 30, 1998, as amended at 69 FR 29208, May 21, 2004]
Sec. 124.514 Exercise of 8(a) options and modifications.
(a) Unpriced options. The exercise of an unpriced option is
considered to be a new contracting action.
(1) If a concern has graduated or been terminated from the 8(a) BD
program or is no longer small under the size standard corresponding to
the SIC code for the requirement, negotiations to price the option
cannot be entered into and the option cannot be exercised.
[[Page 403]]
(2) If the concern is still a Participant and otherwise eligible for
the requirement on a sole source basis, the procuring activity
contracting officer may negotiate price and exercise the option provided
the option, considered a new contracting action, meets all regulatory
requirements, including the procuring activity's offering and SBA's
acceptance of the requirement for the 8(a) BD program.
(3) If the estimated fair market price of the option exceeds the
applicable threshold amount set forth in Sec. 124.506, the requirement
must be competed as a new contract among eligible Participants.
(b) Priced options. The procuring activity contracting officer may
exercise a priced option to an 8(a) contract whether the concern that
received the award has graduated or been terminated from the 8(a) BD
program or is no longer eligible if to do so is in the best interests of
the Government.
(c) Modifications beyond the scope. A modification beyond the scope
of the initial 8(a) contract award is considered to be a new contracting
action. It will be treated the same as an unpriced option as described
in paragraph (a) of this section.
(d) Modifications within the scope. The procuring activity
contracting officer may exercise a modification within the scope of the
initial 8(a) contract whether the concern that received the award has
graduated or been terminated from the 8(a) BD program or is no longer
eligible if to do so is in the best interests of the Government.
Sec. 124.515 Can a Participant change its ownership or control and
continue to perform an 8(a) contract, and can it transfer
performance to another firm?
(a) An 8(a) contract must be performed by the Participant that
initially received it unless a waiver is granted under paragraph (b) of
this section.
(1) An 8(a) contract, whether in the base or an option year, must be
terminated for the convenience of the Government if:
(i) One or more of the individuals upon whom eligibility for the
8(a) BD program was based relinquishes or enters into any agreement to
relinquish ownership or control of the Participant such that the
Participant would no longer be controlled or at least 51% owned by
disadvantaged individuals; or
(ii) The contract is transferred or novated for any reason to
another firm.
(2) The procuring activity may not assess repurchase costs or other
damages against the Participant due solely to the provisions of this
section.
(b) The SBA Administrator may waive the requirements of paragraph
(a)(1) of this section if requested to do so by the 8(a) contractor
when:
(1) It is necessary for the owners of the concern to surrender
partial control of such concern on a temporary basis in order to obtain
equity financing;
(2) Ownership and control of the concern that is performing the 8(a)
contract will pass to another Participant, but only if the acquiring
firm would otherwise be eligible to receive the award directly as an
8(a) contract;
(3) Any individual upon whom eligibility was based is no longer able
to exercise control of the concern due to physical or mental incapacity
or death;
(4) The head of the procuring agency, or an official with delegated
authority from the agency head, certifies that termination of the
contract would severely impair attainment of the agency's program
objectives or missions; or
(5) It is necessary for the disadvantaged owners of the initial 8(a)
awardee to relinquish ownership of a majority of the voting stock of the
concern in order to raise equity capital, but only if--
(i) The concern has graduated from the 8(a) BD program;
(ii) The disadvantaged owners will maintain ownership of the largest
single outstanding block of voting stock (including stock held by
affiliated parties); and
(iii) The disadvantaged owners will maintain control of the daily
business operations of the concern.
(c) The 8(a) contractor must request a waiver in writing prior to
the change of ownership and control except in the case of death or
incapacity. A request for waiver due to incapacity or death must be
submitted within 60 days after such occurrence. The Participant seeking
to change ownership or control
[[Page 404]]
must specify the grounds upon which it requests a waiver, and must
demonstrate that the proposed transaction would meet such grounds.
(d) SBA determines the eligibility of an acquiring Participant under
paragraph (b)(2) of this section by referring to the items identified in
Sec. 124.507(b)(2) and deciding whether at the time of the request for
waiver (and prior to the transaction) the acquiring Participant is a
responsible and eligible concern with respect to each contract for which
a waiver is sought. As part of the waiver request, the acquiring firm
must certify that it is a small business for the size standard
corresponding to the SIC code assigned to each contract for which a
waiver is sought.
(e) Anyone other than a procuring agency head who submits a
certification regarding the impairment of the agency's objectives under
paragraph (b)(4) of this section, must also certify delegated authority
to make the certification.
(f) In processing a request for a waiver under paragraph (b)(2) of
this section, SBA will treat a transfer of all a Participant's operating
assets to another Participant the same as the transfer of an ownership
interest, provided the Participant that transfers its assets to another
eligible Participant:
(1) Voluntarily graduates from the 8(a) BD program; and
(2) Ceases its business operations, or presents a plan to SBA for
its orderly dissolution.
(g) A concern performing an 8(a) contract must notify SBA in writing
immediately upon entering into an agreement or agreement in principle
(either oral or written) to transfer all or part of its stock or other
ownership interest or assets to any other party. Such an agreement could
include an oral agreement to enter into a transaction to transfer
interests in the future.
(h) The Administrator has discretion to decline a request for waiver
even though legal authority exists to grant the waiver.
(i) The 8(a) contractor may appeal SBA's denial of a waiver request
by filing a petition with OHA pursuant to part 134 of this chapter
within 45 days after the contractor receives the Administrator's
decision.
[63 FR 35739, June 30, 1998, as amended at 67 FR 47246, July 18, 2002]
Sec. 124.516 Who decides contract disputes arising between a
Participant and a procuring activity after the award of an
8(a) contract?
For purposes of the Disputes Clause of a specific 8(a) contract, the
contracting officer is that of the procuring activity. A dispute arising
between an 8(a) contractor and the procuring activity contracting
officer will be decided by the procuring activity, and appeals may be
taken by the 8(a) contractor without SBA involvement.
Sec. 124.517 Can the eligibility or size of a Participant for award of
an 8(a) contract be questioned?
(a) The eligibility of a Participant for a sole source or
competitive 8(a) requirement may not be challenged by another
Participant or any other party, either to SBA or any administrative
forum as part of a bid or other contract protest.
(b) The size status of the apparent successful offeror for a
competitive 8(a) procurement may be protested pursuant to Sec.
121.1001(a)(2) of this chapter. The size status of a nominated
Participant for a sole source 8(a) procurement may not be protested by
another Participant or any other party.
(c) A Participant cannot appeal SBA's determination not to award it
a specific 8(a) contract because the concern lacks an element of
responsibility or is ineligible for the contract, other than the right
set forth in Sec. 124.501(h) to request a formal size determination
where SBA cannot verify it to be small.
(d)(1) The SIC code assigned to a sole source 8(a) requirement may
not be challenged by another Participant or any other party either to
SBA or any administrative forum as part of a bid or contract protest.
Only the AA/8(a)BD may appeal a SIC code designation with respect to a
sole source 8(a) requirement.
(2) In connection with a competitive 8(a) procurement, any
interested party who has been adversely affected by a SIC code
designation may appeal the
[[Page 405]]
designation to SBA's OHA pursuant to Sec. 121.1103 of this title.
(e) Anyone with information questioning the eligibility of a
Participant to continue participation in the 8(a) BD program or for
purposes of a specific 8(a) contract may submit such information to SBA
under Sec. 124.112(c).
Sec. 124.518 How can an 8(a) contract be terminated before performance
is completed?
(a) Termination for default. A decision to terminate a specific 8(a)
contract for default can be made by the procuring activity contracting
officer after consulting with SBA. The contracting officer must advise
SBA of any intent to terminate an 8(a) contract for default in writing
before doing so. SBA may provide to the Participant any program benefits
reasonably available in order to assist it in avoiding termination for
default. SBA will advise the contracting officer of this effort. Any
procuring activity contracting officer who believes grounds for
termination continue to exist may terminate the 8(a) contract for
default, in accordance with the Federal Acquisition Regulations (48 CFR
chapter 1). SBA will have no liability for termination costs or
reprocurement costs.
(b) Termination for convenience. After consulting with SBA, the
procuring activity contracting officer may terminate an 8(a) contract
for convenience when it is in the best interests of the Government to do
so. A termination for convenience is appropriate if any disadvantaged
owner of the Participant performing the contract relinquishes ownership
or control of such concern, or enters into any agreement to relinquish
such ownership or control, unless a waiver is granted pursuant to Sec.
124.515.
(c) Substitution of one 8(a) contractor for another. Where a
procuring activity contracting officer demonstrates to SBA that an 8(a)
contract will otherwise be terminated for default, SBA may authorize
another Participant to complete performance and, in conjunction with the
procuring activity, permit novation of the contract without invoking the
termination for convenience or waiver provisions of Sec. 124.515.
Sec. 124.519 Are there any dollar limits on the amount of 8(a)
contracts that a Participant may receive?
(a) A Participant (other than one owned by an Indian tribe or an
ANC) may not receive sole source 8(a) contract awards where it has
received a combined total of competitive and sole source 8(a) contracts
in excess of the dollar amount set forth in this section during its
participation in the 8(a) BD program.
(1) For a firm having a revenue-based primary SIC code at time of
program entry, the limit above which it can no longer receive sole
source 8(a) contracts is five times the size standard corresponding to
that SIC code as of the date of SBA's acceptance of the requirement for
the 8(a) BD program or $100,000,000, whichever is less.
(2) For a firm having an employee-based primary SIC code at time of
program entry, the limit above which it can no longer receive sole
source 8(a) contracts is $100,000,000.
(3) SBA will not consider 8(a) contracts awarded under $100,000 in
determining whether a Participant has reached the limit identified in
paragraphs (a)(1) and (a)(2) of this section.
(b) Once the limit is reached, a firm may not receive any more 8(a)
sole source contracts, but may remain eligible for competitive 8(a)
awards.
(c) The limitation set forth in paragraph (a) of this section will
not apply for firms that are current Participants in the 8(a) BD program
as of December 31, 1997.
(d) SBA includes the dollar value of 8(a) options and modifications
in determining whether a Participant has reached the limit identified in
paragraph (a) of this section. If an option is not exercised or the
contract value is reduced by modification, SBA will deduct those values.
(e) A Participant's eligibility for a sole source award in terms of
whether it has exceeded the dollar limit for 8(a) contracts is measured
as of the date that the requirement is accepted for the 8(a) program
without taking into account whether the value of that award will cause
the limit to be exceeded.
[[Page 406]]
(f) The SBA Administrator on a non-delegable basis may waive the
requirement prohibiting a Participant from receiving sole source 8(a)
contracts in excess of the dollar amount set forth in this section where
the head of a procuring activity represents to the SBA Administrator
that award of a sole source 8(a) contract to the Participant is needed
to achieve significant interests of the Government.
Sec. 124.520 Mentor/protege program.
(a) General. The mentor/protege program is designed to encourage
approved mentors to provide various forms of assistance to eligible
Participants. This assistance may include technical and/or management
assistance; financial assistance in the form of equity investments and/
or loans; subcontracts; and/or assistance in performing prime contracts
with the Government in the form of joint venture arrangements. The
purpose of the mentor/protege relationship is to enhance the
capabilities of the protege and to improve its ability to successfully
compete for contracts.
(b) Mentors. Any concern that demonstrates a commitment and the
ability to assist developing 8(a) Participants may act as a mentor and
receive benefits as set forth in this section. This includes businesses
that have graduated from the 8(a) BD program, firms that are in the
transitional stage of program participation, other small businesses, and
large businesses.
(1) In order to qualify as a mentor, a concern must demonstrate that
it:
(i) Possesses favorable financial health, including profitability
for at least the last two years;
(ii) Possesses good character;
(iii) Does not appear on the federal list of debarred or suspended
contractors; and
(iv) Can impart value to a protege firm due to lessons learned and
practical experience gained because of the 8(a) BD program, or through
its general knowledge of government contracting.
(2) Generally, a mentor will have no more than one protege at a
time. However, the AA/8(a)BD may authorize a concern to mentor more than
one protege at a time where the concern can demonstrate that the
additional mentor/protege relationship will not adversely affect the
development of either protege firm (e.g., the second firm cannot be a
competitor of the first firm).
(3) In order to demonstrate its favorable financial health, a firm
seeking to be a mentor must submit its federal tax returns for the last
two years to SBA for review.
(4) Once approved, a mentor must annually certify that it continues
to possess good character and a favorable financial position.
(c) Proteges. (1) In order to initially qualify as a protege firm, a
Participant must:
(i) Be in the developmental stage of program participation;
(ii) Have never received an 8(a) contract; or
(ii) Have a size that is less than half the size standard
corresponding to its primary SIC code.
(2) Only firms that are in good standing in the 8(a) BD program
(e.g., firms that do not have termination or suspension proceedings
against them, and are up to date with all reporting requirements) may
qualify as a protege.
(3) A protege firm may have only one mentor at a time.
(d) Benefits. (1) A mentor and prot[eacute]g[eacute] may joint
venture as a small business for any government procurement, including
procurements with a dollar value less than half the size standard
corresponding to the assigned NAICS code and 8(a) sole source contracts,
provided the prot[eacute]g[eacute] qualifies as small for the
procurement and, for purposes of 8(a) sole source requirements, the
prot[eacute]g[eacute] has not reached the dollar limit set forth in
Sec. 124.519.
(2) Notwithstanding the requirements set forth in Sec. Sec.
124.105(g) and (h), in order to raise capital for the protege firm, the
mentor may own an equity interest of up to 40% in the protege firm.
(3) Notwithstanding the mentor/protege relationship, a protege firm
may qualify for other assistance as a small business, including SBA
financial assistance.
(4) No determination of affiliation or control may be found between
a protege firm and its mentor based on the
[[Page 407]]
mentor/protege agreement or any assistance provided pursuant to the
agreement.
(e) Written agreement. (1) The mentor and protege firms must enter a
written agreement setting forth an assessment of the protege's needs and
describing the assistance the mentor commits to provide to address those
needs (e.g., management and/or technical assistance, loans and/or equity
investments, cooperation on joint venture projects, or subcontracts
under prime contracts being performed by the mentor). The agreement must
also provide that the mentor will provide such assistance to the protege
firm for at least one year.
(2) The written agreement must be approved by the AA/8(a)BD. The
agreement will not be approved if SBA determines that the assistance to
be provided is not sufficient to promote any real developmental gains to
the protege, or if SBA determines that the agreement is merely a vehicle
to enable a non-8(a) participant to receive 8(a) contracts.
(3) The agreement must provide that either the protege or the mentor
may terminate the agreement with 30 days advance notice to the other
party to the mentor/protege relationship and to SBA.
(4) SBA will review the mentor/protege relationship annually to
determine whether to approve its continuation for another year.
(5) SBA must approve all changes to a mentor/protege agreement in
advance.
(f) Evaluating the mentor/protege relationship. (1) In its annual
business plan update required by Sec. 124.403(a,) the protege must
report to SBA for the protege's preceding program year:
(i) All technical and/or management assistance provided by the
mentor to the protege;
(ii) All loans to and/or equity investments made by the mentor in
the protege;
(iii) All subcontracts awarded to the protege by the mentor, and the
value of each subcontract;
(iv) All federal contracts awarded to the mentor/protege
relationship as a joint venture (designating each as an 8(a), small
business set aside, or unrestricted procurement), the value of each
contract, and the percentage of the contract performed and the
percentage of revenue accruing to each party to the joint venture; and
(v) A narrative describing the success such assistance has had in
addressing the developmental needs of the protege and addressing any
problems encountered.
(2) The protege must annually certify to SBA whether there has been
any change in the terms of the agreement.
(3) SBA will review the protege's report on the mentor/protege
relationship as part of its annual review of the firm's business plan
pursuant to Sec. 124.403. SBA may decide not to approve continuation of
the agreement if it finds that the mentor has not provided the
assistance set forth in the mentor/protege agreement or that the
assistance has not resulted in any material benefits or developmental
gains to the protege.
[63 FR 35739, June 30, 1998, as amended at 69 FR 29208, May 21, 2004]
Miscellaneous Reporting Requirements
Sec. 124.601 What reports does SBA require concerning parties who
assist Participants in obtaining federal contracts?
(a) Each Participant must submit annually a written report to its
assigned BOS that includes a listing of any agents, representatives,
attorneys, accountants, consultants and other parties (other than
employees) receiving fees, commissions, or compensation of any kind to
assist such participant in obtaining a Federal contract. The listing
must indicate the amount of compensation paid and a description of the
activities performed for such compensation.
(b) Failure to submit the report is good cause for the initiation of
a termination proceeding pursuant to Sec. Sec. 124.303 and 124.304.
Sec. 124.602 What kind of annual financial statement must a
Participant submit to SBA?
(a) Participants with gross annual receipts of more than $5,000,000
must submit to SBA audited annual financial
[[Page 408]]
statements prepared by a licensed independent public accountant within
120 days after the close of the concern's fiscal year.
(1) The servicing SBA District Director may waive the requirement
for audited financial statements for good cause shown by the
Participant.
(2) Circumstances where waivers of audited financial statements may
be granted include, but are not limited to, the following:
(i) The concern has an unexpected increase in sales towards the end
of its fiscal year that creates an unforeseen requirement for audited
statements;
(ii) The concern unexpectedly experiences severe financial
difficulties which would make the cost of audited financial statements a
particular burden; and
(iii) The concern has been a Participant less than 12 months.
(b) Participants with gross annual receipts between $1,000,000 and
$5,000,000 must submit to SBA reviewed annual financial statements
prepared by a licensed independent public accountant within 90 days
after the close of the concern's fiscal year.
(c) Participants with gross annual receipts of less than $1,000,000
must submit to SBA an annual statement prepared in-house or a
compilation statement prepared by a licensed independent public
accountant, verified as to accuracy by an authorized officer, partner,
limited liability member, or sole proprietor of the Participant,
including signature and date, within 90 days after the close of the
concern's fiscal year.
(d) Any audited or reviewed financial statements submitted to SBA
pursuant to paragraphs (a) or (b) of this section must be prepared in
accordance with Generally Accepted Accounting Principles.
(e) While financial statements need not be submitted until 90 or 120
days after the close of a Participant's fiscal year, depending on the
receipts of the concern, a Participant seeking to be awarded an 8(a)
contract between the close of its fiscal year and such 90 or 120-day
time period must submit a final sales report signed by the CEO or
President to SBA in order for SBA to determine the concern's eligibility
for the 8(a) contract. This report must show a breakdown of 8(a) and
non-8(a) sales.
(f) Notwithstanding the amount of a Participant's gross annual
receipts, SBA may require audited or reviewed statements whenever they
are needed to obtain more complete information as to a concern's assets,
liabilities, income or expenses, such as when the concern's capacity to
perform a specific 8(a) contract must be determined, or when they are
needed to determine continued program eligibility.
Sec. 124.603 What reports regarding the continued business operations
of former Participants does SBA require?
Former Participants must provide such information as SBA may request
concerning the former Participant's continued business operations,
contracts, and financial condition for a period of three years following
the date on which the concern graduates or is terminated from the
program. Failure to provide such information when requested will
constitute a violation of the regulations set forth in this part, and
may result in the nonexercise of options on or termination of contracts
awarded through the 8(a) BD program, debarment, or other legal recourse.
Management and Technical Assistance Program
Sec. 124.701 What is the purpose of the 7(j) management and technical
assistance program?
Section 7(j)(1) of the Small Business Act, 15 U.S.C. 636(j)(1),
authorizes SBA to enter into grants, cooperative agreements, or
contracts with public or private organizations to pay all or part of the
cost of technical or management assistance for individuals or concerns
eligible for assistance under sections 7(a)(11), 7(j)(10), or 8(a) of
the Small Business Act.
Sec. 124.702 What types of assistance are available through the 7(j)
program?
Through its private sector service providers, SBA may provide a wide
variety of management and technical assistance to eligible individuals
or concerns to meet their specific needs, including:
[[Page 409]]
(a) Counseling and training in the areas of financing, management,
accounting, bookkeeping, marketing, and operation of small business
concerns; and
(b) The identification and development of new business
opportunities.
Sec. 124.703 Who is eligible to receive 7(j) assistance?
The following businesses are eligible to receive assistance from SBA
through its service providers:
(a) Businesses which qualify as small under part 121 of this title,
and which are located in urban or rural areas with a high proportion of
unemployed or low-income individuals, or which are owned by such low-
income individuals; and
(b) Businesses eligible to receive 8(a) contracts.
Sec. 124.704 What additional management and technical assistance is
reserved exclusively for concerns eligible to receive 8(a)
contracts?
In addition to the management and technical assistance available
under Sec. 124.702, Section 7(j)(10) of the Small Business Act
authorizes SBA to provide additional management and technical assistance
through its service providers exclusively to small business concerns
eligible to receive 8(a) contracts, including:
(a) Assistance to develop comprehensive business plans with specific
business targets, objectives, and goals;
(b) Other nonfinancial services necessary for a Participant's growth
and development, including loan packaging; and
(c) Assistance in obtaining equity and debt financing.
Subpart B_Eligibility, Certification, and Protests Relating to Federal
Small Disadvantaged Business Programs
Source: 63 FR 35772, June 30, 1998, unless otherwise noted.
Sec. 124.1001 General applicability.
(a) This subpart defines a Small Disadvantaged Business (SDB). It
also sets forth procedures by which a firm can apply to be recognized as
an SDB, including procedures to be used by private sector entities
approved by SBA for determining whether a particular concern is owned
and controlled by one or more disadvantaged individuals or Alaska Native
Corporations (ANCs), Community Development Corporations (CDCs), Indian
tribes (tribes) or Native Hawaiian Organizations (NHOs). Finally, this
subpart establishes procedures by which SBA determines whether a
particular concern qualifies as an SDB in response to a protest
challenging the concern's status as disadvantaged. Unless specifically
stated otherwise, the phrase ``socially and economically disadvantaged
individuals'' in this subpart includes tribes, ANCs, CDCs, and NHOs.
(b) Only small firms that are owned and controlled by socially and
economically disadvantaged individuals are eligible to participate in
Federal SDB price evaluation adjustment, evaluation factor or subfactor,
monetary subcontracting incentive, or set-aside programs, or SBA's
section 8(d) subcontracting program.
(c) In order for a concern to represent that it is an SDB as a prime
contractor for purposes of a Federal Government procurement, it must
have:
(1) Received a certification from SBA that it qualifies as an SDB;
or
(2) Submitted an application for SDB certification to SBA or a
Private Certifier, and must not have received a negative determination
regarding that application from SBA or the Private Certifier.
(d) A firm cannot represent itself to be an SDB concern in order to
receive a preference as an SDB for any Federal subcontracting program if
it is not on the SBA-maintained list of qualified SDBs.
Sec. 124.1002 What is a Small Disadvantaged Business (SDB)?
(a) Reliance on 8(a) criteria. In determining whether a firm
qualifies as an SDB, the criteria of social and economic disadvantage
and other eligibility requirements established in subpart A of this part
apply, including the requirements of ownership and control and
disadvantaged status, unless otherwise provided in this subpart.
Qualified
[[Page 410]]
Private Certifiers must use the 8(a) criteria applicable to ownership
and control in determining whether a particular firm is actually owned
and controlled by one or more individuals claiming disadvantaged status.
(b) SDB eligibility criteria. A small disadvantaged business (SDB)
is a concern:
(1) Which qualifies as small under part 121 of this title for the
size standard corresponding to the applicable four digit Standard
Industrial Classification (SIC) code.
(i) For purposes of SDB certification, the applicable SIC code is
that which relates to the primary business activity of the concern;
(ii) For purposes related to a specific Federal Government contract,
the applicable SIC code is that assigned by the contracting officer to
the procurement at issue;
(2) Which is at least 51 percent unconditionally owned by one or
more socially and economically disadvantaged individuals as set forth in
Sec. 124.105. For the requirements relating to tribes and ANCs, NHOs,
or CDCs, see Sec. Sec. 124.109, 124.110, and 124.111, respectively.
(3) Except for tribes, ANCs, NHOs, and CDCs, whose management and
daily business operations are controlled by one or more socially and
economically disadvantaged individuals. For the requirements relating to
tribes and ANCs, NHOs, or CDCs, see Sec. Sec. 124.109, 124.110, and
124.111, respectively.
(4) Which, for purposes of SDB procurement mechanisms authorized by
10 U.S.C. 2323 (such as price evaluation adjustments, evaluation factors
or subfactors, monetary subcontracting incentives, or SDB set-asides)
relating to the Department of Defense, NASA and the Coast Guard only,
has the majority of its earnings accruing directly to the socially and
economically disadvantaged individuals.
(c) Disadvantaged status. In assessing the personal financial
condition of an individual claiming economic disadvantage, his or her
net worth must be less than $750,000 after taking into account the
exclusions set forth in Sec. 124.104(c)(2).
(d) Additional eligibility criteria. Except for tribes, ANCs, CDCs
and NHOs, each individual claiming disadvantaged status must be a
citizen of the United States.
(e) Potential for success not required. The potential for success
requirement set forth in Sec. 124.107 does not apply as an eligibility
requirement for an SDB.
(f) Joint ventures. Joint ventures are permitted for SDB procurement
mechanisms (such as price evaluation adjustments, evaluation factors or
subfactors, monetary subcontracting incentives, or SDB set-asides),
provided that the requirements set forth in this paragraph are met.
(1) The disadvantaged participant(s) to the joint venture must have:
(i) Received an SDB certification from SBA; or
(ii) Submitted an application for SDB certification to SBA or a
Private Certifier, and must not have received a negative determination
regarding that application.
(2) For purposes of this paragraph, the term joint venture means two
or more concerns forming an association to engage in and carry out a
single, specific business venture for joint profit. Two or more concerns
that form an ongoing relationship to conduct business would not be
considered ``joint venturers'' within the meaning of this paragraph, and
would also not be eligible to be certified as an SDB. The entity created
by such a relationship would not be owned and controlled by one or more
socially and economically disadvantaged individuals. Each contract for
which a joint venture submits an offer will be evaluated on a case by
case basis.
(3) Except as set forth in 13 CFR 121.103(h)(3), a concern that is
owned and controlled by one or more socially and economically
disadvantaged individuals entering into a joint venture agreement with
one or more other business concerns is considered to be affiliated with
such other concern(s) for size purposes. If the exception does not
apply, the combined annual receipts or employees of the concerns
entering into the joint venture must meet the applicable size standard
corresponding to the SIC code designated for the contract.
(4) An SDB must be the managing venturer of the joint venture, and
an employee of the managing venturer
[[Page 411]]
must be the project manager responsible for performance of the contract.
(5) The joint venture must perform any applicable percentage of work
required of SDB offerors, and the SDB joint venturer(s) must perform a
significant portion of the contract.
(g) Ownership restrictions for non-disadvantaged individuals. The
ownership restrictions set forth in Sec. 124.105 (g) and (h) for non-
disadvantaged individuals and concerns do not apply for purposes of
determining SDB eligibility.
[63 FR 35772, June 30, 1998, as amended at 69 FR 29208, May 21, 2004]
Sec. 124.1003 What is a Private Certifier?
A Private Certifier is an organization or business concern approved
by SBA to determine whether firms are owned and controlled by one or
more individuals claiming disadvantaged status. SBA may elect to arrange
for one or more Private Certifiers to perform certain functions in the
SDB Certification process. When that election is made, the provisions of
Sec. Sec. 124.1004 through 124.1007 will apply. SBA will establish more
detailed standards regarding qualifications, monitoring, procedures and
use, if any, of Private Certifiers in specific contracts or agreements
between SBA and the Private Certifiers.
Sec. 124.1004 How does an organization or business concern become a
Private Certifier?
(a) SBA may execute contracts or agreements with organizations or
business concerns seeking to become Private Certifiers. Any such
contract or agreement will include provisions for the oversight,
monitoring, and evaluation of all certification activities by SBA.
(b) The organization or business concern must demonstrate a
knowledge of SBA's regulations regarding ownership and control, as well
as business organizations and the legal principles affecting their
ownership and control generally, including stock issuances, voting
rights, convertability of debt to equity, options, and powers and
responsibilities of officers and directors, general and limited
partners, and limited liability members.
(c) The organization or concern must also, along with its
principals, demonstrate good character. Good character does not exist
for these purposes if the organization or concern or any of its
principals:
(1) Is debarred or suspended under any Federal procurement or non-
procurement debarment and suspension regulations; or
(2) Has been indicted or convicted for any criminal offense or
suffered a civil judgment indicating a lack of business integrity.
(d) As a condition of approval, SBA may require that appropriate
officers and/or key employees of the concern attend a training session
on SBA's rules and requirements.
(e) An organization or concern seeking to become a Private Certifier
must agree to provide access to SBA of its books and records when
requested, including records pertaining to its certification activities.
Once SBA approves the organization or concern to be a Private Certifier,
SBA may review this information, as well as the decisions of the Private
Certifier, in determining whether it will renew or extend the term of
the Private Certifier, or terminate the Private Certifier for cause.
(f) SBA will include in any contract or agreement document
authorizing an entity to act as a Private Certifier appropriate
conditions to prohibit conflicts of interests between the Private
Certifier and the firms for which it processes SDB applications and to
protect the integrity of the decision-making process.
Sec. 124.1005 Can a fee be charged to a firm to process the firm's
application for SDB certification?
(a) With SBA's approval, a Private Certifier may charge a reasonable
fee to a firm in order to screen the firm's application for completeness
and to process a determination of ownership and control. The fee must be
for actual services rendered and must not be related to whether or not
the business concern is found to be owned and controlled by one or more
individuals or entities claiming disadvantaged status.
(b) Where SBA makes the determination of ownership and control, SBA
may collect a fee comparable to that which would be charged by a Private
[[Page 412]]
Certifier. From time to time, SBA will publish a Notice in the Federal
Register identifying any fee that SBA will charge to process a firm's
determination of ownership and control. SBA will promptly remit any
funds received pursuant to this section to the Treasury of the United
States as miscellaneous receipts.
Sec. 124.1006 Is there a list of Private Certifiers?
SBA will maintain a list of approved Private Certifiers on SBA's
Home Page on the Internet. Any interested person may also obtain a copy
of the list from the local SBA district office.
Sec. 124.1007 How long may an organization or business concern be a
Private Certifier?
(a) SBA's approval document will specify how long the organization
or concern may be a Private Certifier. The initial contract or agreement
will have a base period of one year, and may include option years or
renewal provisions.
(b) SBA may terminate a contract or agreement with an organization
or business concern which is a Private Certifier for the convenience of
the Government at any time, and may terminate the contract or agreement
for default where appropriate. Specific grounds for termination for
default include, but are not limited to:
(1) Charging improper, unreasonable or contingent fees in violation
of Sec. 124.1005;
(2) Engaging in prohibited business transactions with the firms for
which it processes SDB applications in violation of Sec. 124.1004(f);
or
(3) A demonstrated record of ownership and control determinations
that are overturned on appeal by SBA's Office of Hearings and Appeals
(OHA) or by SBA as part of an SDB protest.
Sec. 124.1008 How does a firm become certified as an SDB?
Any firm may apply to be certified as an SDB. SBA's field offices
will provide further information and required application forms to any
firm interested in SDB certification. In order to become certified as an
SDB, a firm must apply to SBA or, if directed by SBA, to a Private
Certifier. The application must include evidence demonstrating that the
firm is owned and controlled by one or more individuals claiming
disadvantaged status, along with certifications or narratives regarding
the disadvantaged status of such individuals. See paragraph (e)(1) of
this section. The firm also must submit information necessary for a size
determination. See Sec. 121.1008. Current 8(a) BD Participants do not
need to submit applications for SDB status. These concerns automatically
qualify as SDBs by virtue of their status as 8(a) BD concerns. An 8(a)
Participant's continuing eligibility as an SDB will be reviewed as part
of the concern's 8(a) annual review.
(a) Filing an SDB application. (1) An interested firm must first
submit a complete application to SBA's Assistant Administrator for Small
Disadvantaged Business Certification and Eligibility (AA/SDBCE), Small
Business Administration, 409 3rd Street, SW, Washington, DC 20416, or to
a specific SBA field office or an approved Private Certifier if directed
by SBA.
(2) The firm must identify which individual(s) or entities are
claiming disadvantaged status.
(b) Required forms. Each firm seeking to be certified as an SDB must
submit those forms and attachments required by SBA when applying for
admission to the 8(a) BD program. These forms and attachments may
include, but not be limited to, financial statements, Federal personal
and business tax returns and personal history statements. The
application package may be in the form of an electronic application.
(c) Application processing. (1) SBA or a Private Certifier will
advise each applicant generally within 15 days after the receipt of an
application whether the application is complete and suitable for
evaluation and, if not, what additional information or clarification is
required. If the application is not complete, SBA or the Private
Certifier will return the application to the firm, and will notify the
firm that it may reapply when its application is complete.
(2) The burden is on the applicant to demonstrate that those
individuals claiming disadvantaged status own and control the concern.
[[Page 413]]
(d) Ownership and control decision. SBA or a Private Certifier will
determine whether those individuals claiming disadvantaged status own
and control the applicant firm within 30 days of receipt of a complete
application package, whenever practicable.
(1) Where a Private Certifier determines ownership and control, the
Private Certifier will issue a written decision as to whether the
applicant is owned and controlled by the individuals identified as
claiming disadvantaged status.
(i) If the Private Certifier finds that the applicant is owned and
controlled by the individuals claiming disadvantaged status, the Private
Certifier will forward the application to SBA along with a copy of its
ownership and control determination and the information required by
paragraph (e)(2)(ii) of this section, where appropriate.
(ii) If the Private Certifier finds that the applicant is not owned
and controlled by the individuals claiming disadvantaged status, its
decision must state the specific reasons for the finding, and inform the
applicant of its right to appeal the decision to SBA pursuant to Sec.
124.1009.
(2) Where SBA determines ownership and control, SBA will first
determine whether the applicant is owned and controlled by the
individual(s) claiming to be disadvantaged. If SBA determines that the
applicant is not owned and controlled by the individual(s) claiming
disadvantaged status, SBA will issue a written decision addressing only
the ownership and control issues. If SBA determines that the applicant
is owned and controlled by the individual(s) claiming disadvantaged
status, SBA will issue a single written decision as to whether the
applicant qualifies as an SDB. Such a determination will include the
ownership and control of the firm, the size status of the firm, and the
disadvantaged status of those individuals claiming to be disadvantaged.
(3) In its sole discretion, SBA may analyze and determine whether a
firm is owned and controlled by one or more individuals claiming
disadvantaged status notwithstanding the availability of a Private
Certifier to make such a decision.
(4) SBA reserves the right to re-evaluate an approved decision on
ownership and control by a Private Certifier in a case where it has
credible evidence that the Private Certifier has substantially
disregarded the eligibility criteria.
(e) Disadvantaged determination. Once a concern receives a decision
finding that it is owned and controlled by those individuals or entities
claiming disadvantaged status (either through an initial determination
or on appeal), SBA will determine whether the other eligibility criteria
are met, and, if so, will include the SDB on the SBA-maintained list of
qualified SDBs. SBA will make this determination within 30 days of
receiving an SDB application, if practicable.
(1) Members of designated groups. (i) Those individuals claiming
disadvantaged status that are members of the same designated groups that
are presumed to be socially disadvantaged for purposes of SBA's 8(a) BD
program (see Sec. 124.103(b)) are presumed to be socially and
economically disadvantaged for purposes of SDB certification. These
individuals must represent that they are members of one of the
designated groups, that they are identified as a member of one of the
designated groups, that their net worth is less than $750,000 after
taking into account the exclusions set forth in Sec. 124.104(c)(2), and
that they are citizens of the United States.
(ii) Absent credible evidence to the contrary, SBA may accept these
representations as true and certify the firm as an SDB.
(2) Individuals not members of designated groups. (i) Each
individual claiming disadvantaged status who is not a member of one of
the designated groups must submit a statement identifying personally how
his or her entry into or advancement in the business world has been
impaired because of personally specific factors (see Sec. 124.103(c)),
and how his or her ability to compete in the free enterprise system has
been impaired due to diminished capital and credit opportunities (see
Sec. Sec. 124.103(c) and 124.104).
[[Page 414]]
(ii) Where a Private Certifier determines ownership and control, the
Private Certifier must also review the disadvantaged status submission
and any other required information, and send to SBA the following:
(A) An executive summary and analysis of the disadvantaged status
submission;
(B) The application and all supporting documentation; and
(C) A certification that the application is complete and suitable
for evaluation.
(3) Concerns owned by tribes, ANCs, CDCs, or NHOs: SBA will process
SDB applications from concerns owned and controlled by tribes, ANCs,
CDCs, or NHOs in the same way as those from concerns owned by
individuals who are members of designated groups.
(f) SDB Determination. (1) If SBA's AA/SDBCE determines that the
individual(s) claiming disadvantage are disadvantaged and other
eligibility criteria are met, he or she will certify the firm as an SDB.
(2) If SBA's AA/SDBCE determines that one or more of the individuals
claiming to be disadvantaged is not disadvantaged and their
disadvantaged status is required to establish disadvantaged ownership
and control of the applicant, or any of the other eligibility criteria
are not met, he or she will reject the firm's application for SDB
certification. The AA/SDBCE will issue a written decision setting forth
SBA's reasons for decline.
(3)(i) If the AA/SDBCE declines the firm's application for SDB
certification, the firm may request that the AA/SDBCE reconsider his or
her initial decline by submitting a written request to the AA/SDBCE
within 45 days of the date of the AA/SDBCE's decision. The applicant may
provide any additional information and documentation pertinent to
overcoming the reason(s) for the initial decline.
(ii) The AA/SDBCE will issue a written decision within 30 days of
receiving the applicant's request for reconsideration, if practicable.
The AA/SDBCE may either approve the application, deny it on one or more
of the same grounds as the initial decision, or deny it on other
grounds. If the application is denied, the AA/SDBCE will explain why the
applicant is not eligible for SDB certification and give specific
reasons for the decline. If the AA/SDBCE declines the application solely
on issues not raised in the initial decline, the applicant may request
another reconsideration as if it were an initial decline. If the AA/
SDBCE declines the application for one or more of the same reasons as
addressed in the initial decline, the applicant is not entitled to a
second reconsideration.
(4) Pursuant to part 134 of this title, a firm may appeal to OHA the
AA/SDBCE's decision that one or more of the individuals claiming
disadvantaged status is not disadvantaged, or, where SBA determines
ownership and control, that those claiming disadvantaged status do not
own and control the applicant. (See Sec. 124.1009 for appeals from
decisions by Private Certifiers.)
(i) The firm must serve SBA's Associate General Counsel for
Procurement Law with a copy of the appeal.
(ii) OHA will determine whether SBA's decision in either case was
arbitrary, capricious, or contrary to law. OHA's review is limited to
the facts that were before SBA at the time of its decision and any
arguments submitted in or in response to the appeal. OHA will not
consider any facts beyond those that were already presented to SBA
unless the administrative judge determines that manifest injustice would
occur if the appeal were limited to the record.
(5) A firm may also request a formal size determination pursuant to
part 121 of this title where SBA finds that the firm is not small.
(g) Current 8(a) BD program participants. Any firm that is currently
a Participant in SBA's 8(a) BD program need not seek an ownership and
control determination or apply to SBA for a separate certification as an
SDB. SBA will certify current 8(a) BD Participants as SDBs, and
automatically include them on the list of qualified SDBs.
(h) 8(a) BD graduates. SBA will automatically certify a firm that
has graduated from the SBA's 8(a) BD program to be an SDB, provided SBA
determined that the firm continued to be eligible for the 8(a) BD
program as part of an annual review within the last three years. (See
Sec. 124.1014(b)).
[[Page 415]]
(i) Certification by DOT recipient. If a firm applying for SDB
certification has a current, valid certification as a disadvantaged
business enterprise (DBE) from a Department of Transportation (DOT)
recipient, SBA may adopt the DBE certification as an SDB certification
when determined by the AA/SDBCE or designee to be appropriate.
[63 FR 35772, June 30, 1998, as amended at 65 FR 33250, May 23, 2000; 65
FR 57542, Sept. 25, 2000]
Sec. 124.1009 How does a firm appeal a decision of a Private
Certifier?
Where a Private Certifier performs an ownership and control
determination and finds that a firm is not owned and controlled by the
individual(s) claiming disadvantaged status, the firm may appeal that
decision to OHA pursuant to part 134 of this title. The firm must serve
SBA's Associate General Counsel for Procurement Law and the applicable
Private Certifier with a copy of the appeal.
(a) The Private Certifier must submit to OHA the full record upon
which its decision was based within two days of receiving notification
that an appeal has been filed.
(b) The Private Certifier and SBA may each elect to appear or not
appear in an appeal proceeding.
(c) OHA's review is limited to the facts that were before the
Private Certifier at the time of its final decision and any arguments
submitted in or in response to the appeal. OHA will not consider any
facts beyond those that were already presented to the Private Certifier
unless the administrative judge determines that manifest injustice would
occur if the appeal were limited to the record.
(d) OHA will decide whether it believes that the facts are supported
by a preponderance of the evidence the Private Certifier's determination
regarding ownership and control.
(e) Where the facts presented in the record leave significant doubt
as to whether the petitioner is or is not owned and controlled by one or
more individuals claiming to be disadvantaged, the administrative judge
may remand the case to the Private Certifier for reconsideration in
accord with his or her remand order.
(f) If OHA finds that the firm is owned and controlled by the
individual(s) claiming disadvantaged status, OHA will refer the
application to SBA for further processing. If OHA finds that the firm is
not owned and controlled by such individual(s), the administrative judge
will state the reasons for that decision, which will be the final
decision of the Agency.
[63 FR 35772, June 30, 1998, as amended at 65 FR 57542, Sept. 25, 2000]
Sec. 124.1010 Can a firm represent itself to be an SDB if it has not
yet been certified as an SDB?
(a) General rule. Except as set forth in paragraph (d) of this
section, a firm may represent itself to be an SDB concern in order to
receive a preference as an SDB for any Federal procurement program if it
has submitted a complete application for SDB certification to SBA or a
Private Certifier and it has not received a negative determination
regarding that application from SBA or the Private Certifier. A firm
that has received a negative determination of ownership and control or a
negative determination regarding its disadvantaged status and is
awaiting the resolution of its appeal of that determination may not
represent itself to be an SDB.
(b) Where applicant becomes successful offeror. If a concern becomes
the apparent successful offeror on a contract for which it would receive
a benefit for being an SDB while its application for SDB certification
is pending, either at SBA or a Private Certifier, the contracting
officer for the particular contract must immediately inform SBA's AA/
SDBCE. SBA will then prioritize the firm's SDB application and make a
determination regarding the firm's status as an SDB within 15 days from
the date that SBA received the contracting officer's notification.
(1) Where the apparent successful offeror's completed application is
pending an ownership and control determination with a Private Certifier,
the concern must inform SBA which Private Certifier has its application.
SBA will immediately contact the Private Certifier to require the
Private Certifier to complete its ownership and control determination
within 5 days of
[[Page 416]]
SBA's notification. In appropriate circumstances, SBA may undertake to
make the determination itself, and may recoup the cost of the
determination from the Private Certifier.
(2) If requested to do so by the procuring activity contracting
officer, SBA will determine whether other offerors are SDBs where they
have represented that their completed applications for SDB status are
pending at SBA or a Private Certifier and they could receive the award
if SBA determines that the apparently successful offeror is not an SDB.
(3) If the contracting officer does not receive an SBA determination
within 15 calendar days after the SBA's receipt of the notification, the
contracting officer will presume that the apparently successful offeror,
and any other offerors referred to SBA in connection with the same
procurement by the contracting officer, are not disadvantaged, and will
make award accordingly, unless the contracting officer grants an
extension to the 15-day response period.
(c) Representation as SDB for statistical purposes. A firm may
represent itself as an SDB concern for general statistical purposes
without regard to any application for SDB certification or its inclusion
on the SBA-maintained list of qualified SDB's.
(d) Subcontracting programs. Only firms that are on the SBA-
maintained list of qualified SDBs may represent themselves as SDB
concerns in order to receive a preference as an SDB for any Federal
subcontracting program.
Sec. 124.1011 What is a misrepresentation of SDB status?
(a) Any person or entity that misrepresents a firm's status as a
``small business concern owned and controlled by socially and
economically disadvantaged individuals'' (``SDB status'') in order to
obtain an 8(d) or SDB contracting opportunity or preference will be
subject to the penalties imposed by section 16(d) of the Small Business
Act, 15 U.S.C. 645(d), as well as any other penalty authorized by law.
(b) A representation of SDB status by any firm that SBA has found
not to be an SDB (either in connection with an SDB application or
protest) will be deemed a misrepresentation of SDB status, unless and
until the firm reapplies for and obtains SDB certification.
Sec. 124.1012 Can a firm reapply for SDB certification?
(a) A concern which has been denied SDB certification may reapply
for certification at any time 12 months or more after the date of the
most recent final decision of SBA to decline its application (either on
appeal of an ownership and control determination, or a negative finding
of disadvantaged status).
(b) A concern which received a decision that it was not owned and
controlled by the individual(s) claiming disadvantaged status from a
Private Certifier and does not appeal that decision to OHA may apply for
a new ownership and control determination at any time.
Sec. 124.1013 Is there a list of certified SDBs?
(a) If SBA certifies a firm to be an SDB, SBA will enter the name of
the firm into an SBA-maintained central on-line register, such as PRO-
Net.
(b) The register of SDBs will contain the names of all firms that
are currently certified to be SDBs, including the names of all firms
currently participating in SBA's 8(a) BD program.
(c) On a continuing basis, SBA will delete from the on-line register
those firms that have:
(1) Graduated or been terminated from SBA's 8(a) BD program for any
reason and have not otherwise received SDB certification (see,
Sec. Sec. 124.1008(h) and 124.1014(b) for treatment of 8(a) graduates);
(2) Been determined not to be an SDB in response to an SDB protest
brought under Sec. 124.1017; or
(3) Other than current 8(a) Participants, not received a renewed SDB
certification after being on the register for three years (see Sec.
124.1014(c)).
Sec. 124.1014 How long does an SDB certification last?
(a) Once SBA certifies a firm to be an SDB by placing it on the list
of qualified SDBs, the firm will generally remain on the SBA-maintained
list of
[[Page 417]]
certified SDBs for a period of three years from the date of its
certification.
(1) A firm's SDB certification will extend beyond three years where
SBA finds the firm to be an SDB:
(i) On the merits in connection with a particular protest (see Sec.
124.1023(h)(2));
(ii) In connection with an SBA-initiated SDB determination (see
Sec. 124.1016(a)(2)); or
(iii) As part of an 8(a) BD annual review.
(2) Where SBA finds a firm not to be an SDB in connection with an
SDB protest, an SBA-initiated SDB determination, or an 8(a) BD annual
review, SBA will immediately decertify the firm as an SDB and remove it
from the qualified list of SDBs.
(b) A firm that graduates from the 8(a) BD program will remain on
the list of certified SDBs for a period of three years from the date of
its last annual review.
(c) To remain on the SDB register after three years, a firm whose
status as an SDB has not been upheld in connection with a protest or an
SBA-initiated SDB determination, or has not been certified as an
eligible 8(a) Participant as part of an annual review, must submit a new
application and receive a new certification.
Sec. 124.1015 What is the effect of receiving an SDB certification?
(a) A firm that is certified to be an SDB may represent itself as an
SDB for such purposes as Federal price evaluation adjustments,
evaluation factors or subfactors, monetary subcontracting incentive
programs, section 8(d) subcontracts, SDB set-asides, or any other
programs which accept an SBA certification. A contracting officer may
award a contract based on a firm's representation that it is a certified
SDB absent a protest that the protested concern's circumstances have
materially changed since SBA certified it as an SDB, or that the
protested concern's SDB application contained false or misleading
information (see Sec. 124.1018(d)).
(b) For purposes of a particular Federal procurement, the firm must
represent that it is both disadvantaged and small at the time it submits
its initial offer including price (see part 121 of this title). At the
same time, the firm must also represent that no material change has
occurred in its SDB status since its SDB certification, or from the date
of its application for SDB certification if its application has not yet
been processed, and must specifically represent that the net worth of
the disadvantaged individuals (not including concerns owned by tribes,
ANCs, CDCs, or NHOs) upon whom the SDB certification was based still
does not exceed $750,000.
(c) A firm's status as ``disadvantaged'' or ``small'' may be
protested pursuant to Sec. Sec. 124.1017 through 124.1021 and
Sec. Sec. 121.1001 through 121.1005, respectively, despite the presence
of the firm on the SDB register, provided the protest contains specific
allegations that the firm's circumstances have materially changed since
SBA certified it as an SDB, or that the firm's SDB application contained
false or misleading information.
Sec. 124.1016 Can SBA re-evaluate the SDB status of a firm after SBA
certifies it to be SDB?
(a) SBA may initiate an SDB determination whenever it receives
credible information calling into the question a firm's eligibility as
an SDB, including an adverse determination from a DOT recipient of the
firm's status as a DBE. Upon its completion of an SDB determination, SBA
will issue a written decision regarding the SDB status of the questioned
firm.
(1) If SBA finds that the firm does not qualify as an SDB, SBA will
decertify the firm as an SDB, and immediately remove the firm from the
list of qualified SDBs. The firm may appeal SBA's decision to OHA
consistent with the provisions of Sec. 124.1008(f) and part 134 of this
chapter.
(2) If SBA finds that the firm continues to qualify as an SDB, the
determination remains in effect for three years from the date of the
decision under the same conditions as if the concern had been granted
SDB certification under Sec. 124.1008.
(b) An SDB firm must report within 10 days to the AA/SDBCE any
changes in ownership and control or any other circumstances which could
adversely affect its eligibility as an SDB.
[[Page 418]]
Sec. 124.1017 Who may protest the disadvantaged status of a concern?
(a) In connection with a requirement for which the apparent
successful offeror has invoked an SDB evaluation adjustment or an SDB
set-aside, the following entities may protest the disadvantaged status
of the apparent successful offeror:
(1) Any other concern which submitted an offer for that requirement,
unless the contracting officer has found the concern to be non-
responsive or outside the competitive range, or SBA has previously found
the protesting concern to be ineligible for the requirement at issue;
(2) The procuring activity contracting officer; or
(3) SBA.
(b) In connection with an 8(d) subcontract, or a requirement for
which the apparent successful offeror received an evaluation adjustment
for proposing one or more SDB subcontractors, the procuring activity
contracting officer or SBA may protest the disadvantaged status of a
proposed subcontractor. Other interested parties may submit information
to the contracting officer or SBA in an effort to persuade the
contracting officer or SBA to initiate a protest.
(c) An interested party seeking to protest both the disadvantaged
status and size of an apparent successful SDB offeror must submit two
separate protests, one as to disadvantaged status pursuant to this
subpart, and one as to size pursuant to part 121 of this title. An
interested party seeking to protest only size of an apparent successful
SDB offeror must submit a size protest to the contracting officer
pursuant to part 121.
Sec. 124.1018 When will SBA not decide an SDB protest?
(a) SBA will not decide a protest as to disadvantaged status of any
concern other than the apparent successful offeror.
(b) SBA will not normally consider a post award protest. SBA may
consider a post award protest in its discretion where it determines that
a protest decision after award would have a practical effect (e.g.,
where the contracting officer agrees to terminate the contract if the
protest is sustained).
(c) SBA will not decide an untimely protest (see Sec. 124.1020(c)).
(d) SBA will not decide a non-specific protest or one that does not
present credible evidence that the protested concern's circumstances
have materially changed since SBA certified it as an SDB, or that the
protested concern's SDB application contained false or misleading
information (see Sec. 124.1021).
(e) An interested party may appeal SBA's dismissal of a protest for
lack of specificity, timeliness, or a basis upon which SBA will consider
a protest to SBA's Deputy Associate Deputy Administrator for Government
Contracting and Minority Enterprise Development (DADA/GC&MED) pursuant
to Sec. 124.1024.
Sec. 124.1019 Who decides disadvantaged status protests?
In response to a protest challenging the disadvantaged status of a
concern, the SBA's AA/SDBCE will determine whether the concern is
disadvantaged.
Sec. 124.1020 What procedures apply to disadvantaged status protests?
(a) General. The protest procedures described in this section are
separate and distinct from those governing size protests and appeals.
All protests relating to whether a concern is a ``small'' business for
purposes of any Federal program, including SDB set-asides and SDB
evaluation adjustments, must be filed and processed pursuant to part 121
of this title.
(b) Filing. (1) All protests challenging the disadvantaged status of
a concern with respect to a particular Federal procurement requirement
must be submitted in writing to the procuring activity contracting
officer, except in cases where the contracting officer or SBA initiates
a protest.
(2) Any contracting officer who initiates a protest must submit the
protest in writing to SBA in accord with paragraph (c) of this section.
(3) In cases where SBA initiates a protest, the protest must be
submitted in writing to the AA/SDBCE and notification provided in accord
with Sec. 124.1022(a).
[[Page 419]]
(c) Timeliness of protest--(1) SDB evaluation adjustment and set-
aside protests--(i) General. In order for a protest to be timely, it
must be received by the contracting officer prior to the close of
business on the fifth day, exclusive of Saturdays, Sundays and legal
holidays, after the bid opening date for sealed bids, or after the
receipt from the contracting officer of notification of the identity of
the prospective awardee in negotiated acquisitions.
(ii) Oral protests. An oral protest relating to an SDB set-aside or
SDB evaluation adjustment made to the contracting officer within the
allotted 5-day period will be considered a timely protest only if the
contracting officer receives a confirming letter postmarked, FAXed, or
delivered no later than one calendar day after the date of such oral
protest.
(iii) Protests of contracting officers or SBA. The time limitations
in paragraph (c)(1)(i) of this section do not apply to contracting
officers or SBA, and they may file protests before or after awards,
except to the extent set forth in paragraph (c)(3) of this section.
(iv) Untimely protests. A protest received after the time limits set
forth in this paragraph (c)(1) will be dismissed by SBA.
(2) Section 8(d) protests. In connection with an 8(d) subcontract,
the contracting officer or SBA must submit a protest to the AA/SDBCE
prior to the completion of performance by the intended 8(d)
subcontractor.
(3) Premature protests. A protest in connection with any procurement
which is submitted by any person, including the contracting officer,
before bid opening or notification of intended award, whichever applies,
will be considered premature, and will be returned to the protestor
without action. A contracting officer that receives a premature protest
must return it to the protestor without submitting it to the SBA.
(d) Referral to SBA. (1) Any contracting officer who receives a
protest that is not premature must promptly forward it to the SBA's AA/
SDBCE, 409 3rd Street, SW, Washington, DC 20416.
(2) A contracting officer's referral of a protest to SBA must
contain the following:
(i) The written protest and any accompanying materials;
(ii) The date on which the protest was received by the contracting
officer;
(iii) A copy of the protested concern's selfrepresentation as an
SDB, and the date of such self-representation; and
(iv) The date of bid opening or the date on which notification of
the apparent successful offeror was sent to all unsuccessful offerors,
as applicable.
Sec. 124.1021 What format, degree of specificity, and basis does SBA
require to consider an SDB protest?
(a) Format. An SDB protest need not be in any specific format in
order for SBA to consider it.
(b) Specificity. A protest must be sufficiently specific to provide
reasonable notice as to all grounds upon which the protested concern's
disadvantaged status is challenged.
(1) SBA will dismiss a protest that merely asserts that the
protested concern is not disadvantaged, without setting forth specific
facts or allegations.
(2) The contracting officer must forward to SBA any non-premature
protest received, notwithstanding whether he or she believes it is
sufficiently specific or timely.
(c) Basis. SBA will consider a protest challenging whether the
apparent successful offeror is owned and controlled by one or more
socially and economically disadvantaged individuals, including whether
one or more of the individuals claiming disadvantaged status is in fact
socially or economically disadvantaged, only if the protest presents
credible evidence that the firm's circumstances have materially changed
since SBA certified it as an SDB, or that the firm's SDB application
contained false or misleading information.
Sec. 124.1022 What will SBA do when it receives an SDB protest?
(a) Upon receipt of a protest challenging the disadvantaged status
of a concern, the AA/SDBCE, or designee, will immediately notify the
protestor and the contracting officer of the date the protest was
received and whether it will be processed or dismissed for lack of
timeliness or specificity.
[[Page 420]]
(b) In cases where the protest is timely and sufficiently specific,
the AA/SDBCE, or designee, will also immediately advise the protested
concern of the protest and forward a copy of it to the protested
concern.
(1) The AA/SDBCE, or designee, is authorized to ask the protested
concern to provide any or all of the following information and
documentation, completed so as to show the circumstances existing on the
date of self-representation: SBA Form 1010A, ``Statement of Personal
Eligibility'' for each individual claiming disadvantaged status; SBA
Form 1010B, ``Statement of Business Eligibility;'' SBA Form 413,
``Personal Financial Statement,'' for each individual claiming
disadvantaged status; information as to whether the protested concern,
or any of its owners, officers or directors, have applied for admission
to or participated in the SBA's 8(a) BD program and if so, the name of
the company which applied or participated and the date of the
application or entry into the program; business tax returns for the last
two completed fiscal years prior to the date of self-representation;
personal tax returns for the last two years prior to the date of self-
representation for all individuals claiming disadvantaged status, all
officers, all directors and for any individual owning at least 10% of
the business entity; annual business financial statements for the last
two completed fiscal years prior to the date of self-representation; a
current monthly or quarterly business financial statement no older than
90 days; articles of incorporation; corporate by-laws; partnership
agreements; limited liability company articles of organization; and any
other relevant information as to whether the protested concern is
disadvantaged.
(2) SBA's disadvantaged status determination need not be limited to
consideration only of the issues raised in the protest. SBA may consider
other applicable criteria.
(3) Unless the protest presents specific credible information which
calls into question the veracity of application or other documents
previously submitted to SBA by a current Participant in SBA's 8(a) BD
program, SBA will allow the Participant to submit, in lieu of the
information specified in paragraph (b)(1) of this section, a sworn
affidavit or declaration that circumstances concerning the ownership and
control of the business and the disadvantaged status of its principals
have not changed since its application or entry into the program or its
most recent annual review, and a copy of its most recently completed
annual review.
(i) If the ownership or control of the business or the disadvantaged
status of any principals have changed, the protested concern must comply
with paragraph (b)(1) of this section.
(ii) An affidavit or declaration may be allowed only if SBA admitted
the protested concern to the 8(a) BD program, or conducted an annual
review of the protested concern, during the 12month period preceding the
date on which SBA receives the protest, and if proceedings to suspend,
terminate or early graduate the concern from the 8(a) BD program are not
pending.
(c) Within 10 working days of the date that notification of the
protest was received from the AA/SDBCE or designee, the protested
concern must submit to the AA/SDBCE or designee, by personal delivery,
FAX, or mail, the information and documentation requested pursuant to
paragraph (b)(1) of this section or the affidavit permitted by paragraph
(b)(2) of this section. Materials submitted must be received by the
close of business on the 10th working day.
(1) SBA will consider only materials submitted timely, and the late
or non-submission of materials needed to make a disadvantaged status
determination may result in sustaining the protest.
(2) The burden is on the protested concern to demonstrate its
disadvantaged status, whether or not it is currently shown on the list
of qualified SDBs.
(3) The protested concern must timely submit to SBA any information
it deems relevant to a determination of its disadvantaged status.
[[Page 421]]
Sec. 124.1023 How does SBA make disadvantaged status determinations in
considering an SDB protest?
(a) General. The AA/SDBCE, or designee, will determine a protested
concern's disadvantaged status within 15 working days after receipt of a
protest. If the procuring activity contracting officer does not receive
an SBA determination within 15 working days after the SBA's receipt of
the protest, the contracting officer may presume that the challenged
offeror is disadvantaged, unless the SBA requests and the contracting
officer grants an extension to the 15-day response period.
(b) Award after protest. (1) After receiving a protest involving an
offeror being considered for award, the contracting officer shall not
award the contract until:
(i) The SBA has made an SDB determination, or
(ii) 15 working days have expired since SBA's receipt of a protest
and the contracting officer has not agreed to an extension of the 15-day
response period.
(2) Notwithstanding paragraph (b)(1) of this section, the
contracting officer may award a contract after the receipt of an SDB
protest where he or she determines in writing that an award must be made
to protect the public interest.
(c) Withdrawal of protest. If a protest is withdrawn, SBA will not
complete a new disadvantaged status determination, and a previous SDB
certification will stand.
(d) Basis for determination. (1) Except with respect to a concern
which is a current Participant in SBA's 8(a) BD program and is
authorized under Sec. 124.1022(b)(3) to submit an affidavit concerning
its disadvantaged status, the disadvantaged status determination will be
based on the protest record, including reasonable inferences therefrom,
as supplied by the protestor, protested concern, SBA or others.
(2) SBA may in its discretion make a part of the protest record
information already in its files, and information submitted by the
protestor, the protested concern, the contracting officer, or other
persons contacted for additional specific information.
(e) Disadvantaged status. In evaluating the social and economic
disadvantage of individuals claiming disadvantaged status, SBA will
consider the same information and factors set forth in Sec. Sec.
124.103 and 124.104. As provided in Sec. 124.1002(c), individuals
claiming disadvantaged status must have a net worth that is less than
$750,000, after taking into account the exclusions set forth in Sec.
124.104(c)(2).
(f) Disadvantaged status determination. SBA will render a written
determination including the basis for its findings and conclusions.
(g) Notification of determination. After making its disadvantaged
status determination, the SBA will immediately notify the contracting
officer, the protestor, and the protested concern of its determination.
SBA will promptly provide by certified mail, return receipt requested, a
copy of its written determination to the same entities, consistent with
law.
(h) Results of an SBA disadvantaged status determination. A
disadvantaged status determination becomes effective immediately.
(1) If the concern is found not to be disadvantaged, the
determination remains in full force and effect unless reversed upon
appeal by SBA's DADA/GC&MED, or designee, pursuant to Sec. 124.1024, or
the concern is certified to be an SDB under Sec. 124.1008. The concern
is precluded from applying for SDB certification for 12 months from the
date of the final agency decision (whether by the AA/SDBCE, or designee,
without an appeal, or by the DADA/GC&MED, or designee, on appeal).
(2) If the concern is found to be disadvantaged, the determination
remains in full force and effect unless and until reversed upon appeal
by SBA's DADA/GC&MED, or designee, pursuant to Sec. 124.1024. A final
Agency decision (whether by the AA/SDBCE, or designee, without an
appeal, or by the DADA/GC&MED, or designee, on appeal) finding the
protested concern to be an SDB remains in effect for three years from
the date of the decision under the same conditions as if the concern had
been granted SDB certification under Sec. 124.1008.
[[Page 422]]
Sec. 124.1024 Appeals of disadvantaged status determinations.
(a) Who may appeal. Appeals of protest determinations may be filed
with the SBA's DADA/GC&MED by the protested concern, the protestor, or
the contracting officer.
(b) Timeliness of appeal. An appeal must be in writing and must be
received by the DADA/GC&MED no later than 5 working days after the date
of receipt of the protest determination. SBA will dismiss any appeal
received after the five-day time period.
(c) Notice of appeal. Notice of the appeal must be provided by the
party bringing an appeal to the procuring activity contracting officer
and either the protested concern or original protestor, as appropriate.
(d) Grounds for appeal. SBA will reexamine a protest determination
only if there was a clear and significant error in the processing of the
protest, or if the AA/SDBCE, or designee, failed to consider a
significant material fact contained within the information supplied by
the protestor or the protested concern. SBA will not consider protest
determination appeals based on additional information or changed
circumstances which were not disclosed at the time of the decision of
the AA/SDBCE or designee, or which are based on disagreement with the
findings and conclusions contained in the determination.
(e) Contents of appeal. No specific format is required for the
appeal. However, the appeal must identify the protest determination
which is appealed, and set forth a full and specific statement as to why
the determination is erroneous under paragraph (c) of this section.
(f) Completion of appeal after award. An appeal may proceed to
completion even though an award of the SDB acquisition or other
procurement requirement which prompted the protest has been made, if so
desired by the protested concern, or where SBA determines that a
decision on appeal would have a material impact on contracting
decisions, such as where the contracting officer agrees:
(1) In the case where an award is made to a concern other than the
protested concern, to terminate the contract and award to the protested
concern if the appeal finds that the protested concern is disadvantaged;
or
(2) In the case where an award is made to the protested concern, to
terminate the contract if the appeal finds that the protested concern is
not disadvantaged.
(g) The appeal will be decided by the DADA/GC&MED, within 5 working
days of its receipt, if practicable.
(h) The appeal decision will be based only on the information and
documentation in the protest record as supplemented by the appeal. SBA
will provide a copy of the decision to the contracting officer, the
protestor, and the protested concern, consistent with law.
(i) The decision of the DADA/GC&MED, is the final decision of the
SBA, and cannot be further appealed to OHA.