Andrew Mitton

Here’s a quick take on the Small Busi­ness Administration’s pro­posed changes to its reg­u­la­tions as they per­tain to Alaska Native Cor­po­ra­tions, Native Hawai­ian Orga­ni­za­tions, and Indian Tribes.  The pri­mary NAICS takes more sig­nif­i­cance.  Joint ven­tures get tighter.  The mentor/protege pro­gram gets a lot of lit­tle changes.  And there’s some more report­ing requirements.

1. The most impor­tant state­ment: “SBA believes that the 8(a) BD pro­gram is a much-needed and ben­e­fi­cial pro­gram, and that the tribal and ANC com­po­nent of the pro­gram serves a valu­able eco­nomic and com­mu­nity devel­op­ment pur­pose in addi­tion to its busi­ness devel­op­ment pur­pose.  It is not SBA’s intent to shut down any com­po­nent of the 8(a) pro­gram that truly assists the devel­op­ment of any small dis­ad­van­taged business.”
2. The biggest pro­posed change is to NAICS code require­ments.  If an 8(a) exceeds its pri­mary NAICS size for two con­sec­u­tive years, it will be kicked out of the pro­gram.  The 8(a) can’t get a con­tract in the pri­mary NAICS code of a sis­ter com­pany for the first two years of its life.
3. The 8(a) must per­form 40% of the work in a joint ven­ture and report to the SBA that it has met this require­ment.  The joint ven­ture can only get three con­tracts in a two year period.  If the joint ven­ture is a sep­a­rate legal entity, the legal entity must have its own employ­ees.  The SBA must receive an adden­dum to the joint ven­ture with each con­sec­u­tive con­tract.  The men­tor can­not be a sub­con­trac­tor under the joint venture.
4. There’s a bunch of changes to the mentor/protege rules, but noth­ing earth-shattering.
5. The SBA’s Office of Inspec­tor Gen­eral may ask for a for­mal size determination.
6. The SBA is look­ing for advice on how to deter­mine that Indian Tribes are eco­nom­i­cally dis­ad­van­taged.  Their solu­tion will prob­a­bly make it eas­ier for Indian Tribes to cer­tify 8(a) companies.
7. More report­ing require­ments.  ANCs must annu­ally sub­mit infor­ma­tion to the SBA relat­ing to fund­ing cul­tural pro­grams, employ­ment assis­tance, jobs, schol­ar­ships, intern­ships, sub­sis­tence activ­i­ties, and other ser­vices to the affected community.
8. The San Fran­cisco office will process all ANC 8(a) applications.
9. The SBA made a state­ment that ANCs, NHOs, and Indian Tribes must be treated consistently.
10. NHOs have been exempt from the dol­lar thresh­old require­ment for DOD con­tracts.  The pro­posed reg­u­la­tions make this explicit.