In today’s competitive landscape, where small businesses are increasingly vying for a slice of the vast government pie, staying up to date with regulatory changes is not just beneficial—it’s necessary.
In a recent webinar, GovSpend’s Head of Federal, Public Sector Archisha Mehan partnered with government contract attorney Maria Panichelli to shed light on recent regulatory changes affecting the eligibility of small businesses under federal law. Maria Panichelli is a partner at McCarter & English, LLP, and a thought leader in federal government contracts. Her expertise in aiding clients through the procurement process is coupled with an adeptness at navigating the labyrinth of federal regulations.
The webinar covered the Small Business Administration (SBA)’s 2022 rulemaking consolidating the VA’s SDVOSB and VOSB programs with the SBA’s other similar programs; highlights of the SBA’s final rule issued in April 2023 which affected subcontractors, affiliates, joint ventures, mentor/protege relationships, and status protest rules; and finally the changes in 8(a) eligibility brought about by a July 2023 court case in Tennessee.
In this post, we’ll summarize the key takeaways from the webinar, providing small businesses with the knowledge needed to navigate the shifting sands of federal contracting.
A Look at the Federal Contracting Landscape
Archisha kicked off the webinar with an overview of federal contracts awarded in FY’23, amounting to $775 billion in awards across more than 109,000 companies. Of that sum, approximately 23%, or ~$172 billion, was awarded to small businesses, which underscores the federal government’s commitment to supporting these enterprises. Archisha then turned the presentation over to Maria for her insightful presentation.
VOSB Program Consolidation
The first rule discussed was the consolidation of programs governing the eligibility of veteran-owned small businesses (VOSB). Previously, two different programs were operated – one by the Department of Veterans Affairs and one by the SBA. The SBA issued a rule in November 2022 creating a single, streamlined program under the SBA for Veteran-Owned Small Businesses (VOSB) and Service-Disabled Veteran-Owned Small Businesses (SDVOSB) programs.
A significant change as a result of the consolidation is that service-disabled veteran-owned businesses may no longer “self-certify” to be eligible for VA set-asides but must apply for certification with the SBA. The SBA has taken over responsibility from the VA for certifying all VOSBs and SDVOSBs. The SBA also loosened requirements for the size of VOSBs and SDVOSBs as well as eased the requirements to establish control over the businesses, making it easier for these companies to qualify for set-asides. Maria detailed several other regulations that are part of the new rules for veteran-owned small businesses.
Changes to Small Business Categories
The webinar next covered the SBA’s final rule issued in April 2023, which covered “a whole host of changes” across small business categories and ran 53 pages long. Maria discussed the major changes in the final rule, with the caveat that listeners should also meet with their legal teams or ask her follow-up questions, given the breadth of the new rule.
First discussed was the ostensible subcontractor rule which provided needed clarification of how the rule applies to general construction work, in which subcontracts play a major role. The rule also provided guidance on how the court case DoverStaffing affects whether a subcontractor is an “ostensible subcontractor”. Lastly, the rule “adds teeth” to the requirement that prime contractors limit their subcontracts to a certain percentage of the total contract award, with the exact percentage based on the NAICS code of the contract.
Also in the April 2023 final rule, a myriad of clarifications were made governing affiliations, joint ventures, and mentor/protege relationships. Additionally, the SBA streamlined the process for status and size protests lodged with the agency.
8(a) Program Eligibility
Finally, the webinar delved into the July 2023 injunction in Ultima Services Corp. v. U.S. Dept. of Agriculture affecting the 8(a) program. The landmark decision challenged the presumption of disadvantage based solely on race or ethnicity. Small business owners now must craft a narrative showing they were socially disadvantaged – the owner’s race alone will not suffice as proof.
In one example, she was able to see who was the preferred vendor for EV charging stations and which agencies they were doing business with, enabling her to identify agencies focused on green projects. In another example prompted by the audience, she was able to see which agencies were likely preparing for the FIFA World Cup with crowd control equipment like barricades.
The webinar wasn’t just a rundown of changes and legalities. Maria offered practical advice, stressing the importance of thorough compliance reviews and legal consultations to navigate the complexities of government contracting. Her insights into the potential impacts of these regulatory changes on small businesses were invaluable, providing attendees with a clearer understanding of the path forward.
In one example, she was able to see who was the preferred vendor for EV charging stations and which agencies they were doing business with, enabling her to identify agencies focused on green projects. In another example prompted by the audience, she was able to see which agencies were likely preparing for the FIFA World Cup with crowd control equipment like barricades.
Maria’s expert guidance through these changes was not just informative but empowering, offering small businesses the tools they need to adapt, comply, and thrive in the competitive arena of government contracts.
For those who missed the webinar, the recording is here along with other new and on-demand webinars.
About the Author: GovSpend
