Small Business to Benefit From New Federal Rules

Agencies and Prime Contractors to pay more attention to Small Business Subcontractors.

The U. S, Small Business Administration (SBA) is amending its regulations governing small business subcontracting to implement provisions of the Small Business Jobs Act of 2010. The new rules include: Prime Contractors are required to issue notices to contracting officers specifically when they are late in making payments to small business sub-contractors; Prime Contractors must notify contracting officers in writing if they do not use the contractor originally referenced in the submitted bid or proposal; Agency Contracting Officers must monitor the small business sub-contractors' plan performance more closely; Clarifications as to which subcontracts should be included or excluded in data reporting (specifically, Prime Contractors record should be limited to awards made to immediate next-tier subcontractors; credit cannot be taken for awards made beyond the immediate next-tier); Changes subcontracting plan thresholds and updates to the use of the electronic subcontracting reporting system (eSRS); The new rule will be effective August 15, 2013.

SBA Increases Size Standards for 70 Additional NAICS Sectors

More small businesses will have access to SBA's small business programs and government contracts.

The U. S, Small Business Administration (SBA) recently released the latest changes to small business size standards. Under the Small Business Jobs Act of 2010, SBA is conducting a comprehensive review of all size standards, a process that will continue for the next several years. In the lastest review, SBA has issued four final rules in the Federal Registry increasing size standards for firms in four North American Industry Classification System (NAICS) Sectors and one Subsector: Agriculture, Forestry, Fishing and Hunting (Sector 11) Finance an dInsurance (Sector 52) Management of Companies and Enterprises (Sector 55) Arts, Entertainment, and Recreations (Sector 71) Support Services for Mining (Subsector 213) Size standards define the maximum size a firm can be and still be considered a small business. The new size standards will enable more businesses to retain small business status allowing them to bid on more federal contracts and make them eligible for small business loans through the SBA loan programs and to receive technical assistance from SBA resource partners, such as the Orange County Small Business Development Center. SBA increased size standards for businesses in 11 industries in the Agriculture, Forestry, Fishing and Hunting Sector. More than 7,800 additional firms will qualify as small under these new size standards. SBA also increased size standards for 36 industries for firms in the Finance and Insurance Sector and two industries in the Management of Companies and Enterprises Sector. SBA changed the basis for measuring size from assets to annual revenues for the International Trade Financing industry and deleted the Real Estate Investment Trusts from its table of size standards. More than 7,400 additional businesses will qualify as small under the new size standards. . Size standards for 17 industries were also increased for firms in the Arts, Entertainment and Recreation Sector. More than 1,450 additional firms will qualify as small under these new size standards. SBA also increased size standards for three of the four industries for firms in the Support Activities for Mining Subsector within the Mining, Quarrying and Oil and Gas Extraction Sector (Sector 21). Subsector 213 is the only subsector within Sector 21 which has revenues-based size standards. The remaining industries within Sector 21 have employee-based size standards, which SBA will review in the near future. More than 475 additional firms will qualify as small under the new size standards. The four final rules will be effective July 22, 2013. To review the rules and public comments, go to visit.... Each sector has a separate RIN number: Agriculture, Forestry, Fishing and Hunting - (RIN 3245-AG43). Finance and Insurance & Management of Companies and Enterprises - (RIN 3245-AG45). Arts, Entertainment, and Recreation - (RIN 3245-AG36). Support Activities for Mining - (RIN 3245-AG44). The SBA is reviewing all size standards, and takes into account the structural characteristics of individual industries, including average firm size, the degree of competition, and federal government contracting trends. This ensures that small business size definitions reflect current economic conditions in those industries.

SBA Finalizes Rule Adopting Changes to Contracting Program for Women-Owned Small Business

Women-owned businesses will have greater access to federal contracts.

A press released issued by the U. S. Small Business Administration (SBA) announced that an interim final rule has been published in the Federal Register and is effective immediately. The rule will amend regulations to the SBA's Women-Owned Small Business Federal Contract Program allowing for greater access to federal contracting opportunities for women-owned businesses as a result of the National Defense Authorization Act of 2012 (NDAA) signed in January 2013. The interim rule removes the anticipated award price of the contract thresholds for women-owned small businesses (WOSB) and economically disadvantaged women-owned small business (EDWOSB) to allow them greater access to federal contracting opportunities without limitations to the size of the contract. The rule can be accessed at: http://www.gpo.gov/fdsys/pkg/FR-2013-05-07/html/2013-10841.htm. As a result of this rule change, contracting officers will be able to set aside specific contracts for certified WOSBs and EDWOSBs at any dollar level which will help the federal agencies achieve the existing statutory goal of 5% of federal contracting dollars being awarded to WOSBs. SBA is currently working on the changes to the Federal Acquisition Regulations (FAR). Prior to the rule change, the anticipated award price of the contract for women-owned and economically disadvantaged women-owned small businesses could not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts. Any firm that wishes to participate in the WOSB program must meet the eligibility requirements and either self-certify or obtain third party certification. There are four approved third-party certifies that perform eligibility exams: El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U. S. Women's Chamber of Commerce, and the Women's Business Enterprise National Council. Additional information and links about approved third-party certifiers are available at www.sba.gov/wosb. To qualify as a WOSB, a firm must be at least 51% owned and controlled by one or more women, and primarily managed by one or more women. The women must be U. S. citizens and the firm must be considered small according to SBA size standards. To be deemed "economically disadvantaged," a firm's owners must meet specific financial requirements set forth in the program regulations. The WOSB Program identifies 83 four-digit North American Industry Classifications Systems (NAICS) codes where WOSBs are underrepresented or substantially underrepresented. Contracting officers may set aside contracts in these industries if the contract can be awarded at a fair and reasonable price and the contracting officer has a reasonable expectation that two or more WOSBs or EDWOSBs will submit offers for the contract.

SAM.GOV Identifies Security Vulnerability

Software patch closes security breach.

Recently, U.S. GSA officials identified a security vulnerability in the System for Award Management (SAM), which could allow some existing users in the system to view certain registration information of other users. The System for Award Management is a federal government-wide procurement system that acts as a data source for vendor, contract award and reporting information.   Immediately after the vulnerability was identified, GSA implemented a software patch to close this exposure. GSA is undertaking a full review of the system and investigating any potential additional impacts to registrants in SAM. The security breach happened over two days. The security of this information is a top priority for GSA as well as SBA and will continue to ensure the system remains secure. It is unclear how many businesses were affected, but as a precaution, GSA is offering the users at higher risk, access to credit monitoring services. The most vulnerable users are those that use a Social Security Numbers as a Taxpayer Identification Number and that “opted in” to public search. All registered SAM users were made aware of the situation, but no foreseeable potential harm was identified from the vulnerability. No one's data could be edited. At this time, GSA is undertaking a full review of the system and investigating any potential additional impacts to registrants in SAM. SBA officials are in close contact with GSA staff to determine next steps. For more information, please visit http://www.gsa.gov/portal/content/167855 and starting Monday, March 18, at 8 a.m., people may call the FedInfo hotline at 1-800-FED-INFO for immediate support.

Confused About Bonding?

Here is a quick overview of bonding.

Bonding a contract has been a requirement for most construction related government contracts. However, more and more service contracts and occasionally supply contracts are requiring surety bonds for both public and private projects. Also more prime contractors are requiring their sub-contractors to bond, as well. Exactly what is a "surety bond?" It is a three-party arrangement between the surety, the owner of the project, and the contractor. The surety guarantees that the contractor will complete the project in accordance with the contract documents issued by the owner. Surety companies are usually subsidiaries of insurance companies, but unlike traditional insurance which compensate for unforeseen events or losses, surety is designed to prevent a loss. Typically there are three types of bonds required for public and some private contracts. There are: 1)Bid Bond - Ensures that the bidder has submitted the bid in good faith and will enter into the contract at the price quoted and is capable of providing the required performance and payment bonds. 2)Performance Bond - Ensures that the contractor will complete the contract per the terms and conditions sited in the contract. The bond protects the owner from financial loss should the contractor not satisfactorily meet the requirements of the contract. 3)Payment Bond - Ensures that all suppliers, subcontractors, and labor associated with the contract are paid. Traditionally bonding can be difficult to obtain for a small business, especially when they are first starting to compete in the public and private sector. There is some hope, though. The U S Small Business Administration oversees a Surety Bond Guarantee Program that assists small businesses obtain bonding. (See the following article to learn more about recent changes to the program.) Also, there are companies that have recognized the difficulties that small businesses have when trying to secure bonding and are creating programs that are based on experience and character rather than on financial profile. The Orange County SBDC can help you through the bonding process to identify a program that is right for your business. In addition, we can assist you to access your financial resources to perform on a specific contract and if needed, assist you to secure working capital for that project. If you are an experienced business owner currently pursuing publiv and private contracts, call 714.564.5200 to learn more about our bonding and financing assistance.

SBA Announces Revisions to Surety Bond Guarantee Program

More small businesses will have access to larger contracts.

U. S. Small Business Administration (SBA) recently announced a major revision to their Surety Bond Guarantee (SBG) Program. The new provision more than triples the eligible contract amount from $2 million to $6.5 million that the Agency will guarantee on surety bonds for both public and private contracts. These new higher limits will help small business construction and service providers to have greater access to larger contracts. "These new contact ceilings are one more way we can help small businesses, particularly in the construction and service sectors, compete for and win critical contacting opportunities that help them grow their businesses and create jobs," SBA Administrator Karen Mills said. "Additionally, these changes, which are enthusiastically supported across the surety industry and small business community, will help spur economic growth and recovery in areas that have been hard hit by disasters, bringing jobs and economic activity to regions at a time when it is needed most."   The revisions are a result of the Fiscal 2013 National Defense Authorizations Act and are expected to increase surety bond agents and brokers and their surety companies to increase participation in the SBG Program. In addition, the changes increases the government contact value up to $10 million that SBA can guarantee if a contracting officer of a federal agency certifies that the guarantee is necessary for the small business to obtain bonding and if it is in the best interest of the government. SBA partners with the surety industry to help small businesses that are not able to obtain bonding in the commercial marketplace. Under the partnership, SBA provides a guarantee to the participating surety company of between 70 to 90 percent of the bond amount if the contractor was to default or fails to perform.

Innovated Online Contracting System Launched

Limited Number of Low-Dollar Contracts Now Available Through Online Marketplace.

The U. S. Small Business Administration, in conjunction with the White House's Presidential Innovation Fellows, has launched a "beta" version of RFP-EZ. This new system is an online marketplace designed to streamline the government contracting process by making it easier for small businesses to find and bid on low-dollar contracts from federal agencies. The new program allows the government to source low-cost, high-impact solutions from innovative tech companies. A limited number of contracts through RFP-EZ are now available at http://rfpez.sba.gov. If the programs is successful, the pilot will be expanded to include more contracts for a broader group of innovative start-ups. The streamlined process helps save significant amounts of time for all types of businesses, especially high-growth startups. A company can simply create a company profile on the site which will allow them to search and bid for contracts relevant to the business. The company can easily search for an opportunity, see a scope of work, and bid all within the RFP-EZ interface. The Presidential Innovation Fellows program launched in August 2012. The program pairs top innovators from the private sector, non-profits, and academia with top innovators in government to collaborate on solutions that aim to deliver significant results. RFP-EZ is the first of five high-impact projects aimed at supporting entrepreneurs, small businesses, and the economy, which significantly improving how the Federal Government serves the American people. The other Presidential Innovation Fellow projects include:MyGov, Open Data Initiatives, Blue Button for America, and the 20% Initiative. To learn more about the fellowship and the projects, visit http://www.whitehouse.gov/innovationfellows. BusinessUSA is a Presidential initiative designed to make it easier for small businesses and entrepreneurs to access federal services and other resources. To learn more visit http://business.usa.gov.

SBA Increase Size Standards

The U. S. Small Business Administration (SBA) has published in the Federal Register two final rules revising size definitions for small businesses in two broad industry categories and has proposed for comment another rule affecting businesses in a third category. The industry sectors affected by the two final rules are Sector 51 Information and Sector 56 Administrative and Support and Waste Management and Remediation Services. The industries covered by the proposed rule are Mining, Quarrying, and Oil and Gas Extraction. SBA increased the revenue-based size standards for 15 industries and retained the current revenue-based size standards for five industries in the North American Industry Classification System (NAICS) Sector 51: Information. SBA will review the employee-based size standards within this sector at a later date. Up to 500 additional firms will become eligible for SBA’s loan and federal procurement programs as a result of these revisions. This final rule can be accessed at: www.regulations.gov.   Final Rule: Small Business Size Standards; Administrative and Support, Waste Management and Remediation Services (RIN 3245-AG27). SBA also proposed increasing three revenue-based size standards and retaining one current revenue-based size standard in NAICS Sector 21: Mining, Quarrying, and Oil and Gas Extraction. SBA evaluated four industries in this sector to determine whether their size standards should be revised or retained. SBA will review the employee-based size standards within this sector at a later date. Up to 475 more firms in this sector would become eligible for SBA’s loan and federal procurement programs under the proposed revenue-based size standards, if adopted. Comments can be submitted on this proposed rule on or before February 4, 2013, at www.regulations.gov, identified by the following RIN number: Proposed Rule: Small Business Size Standards; Support Activities for Mining (RIN 3245-AG44). You may also mail comments to Khem R. Sharma, Chief, Office of Size Standards, 409 3rd St., SW, Mail Code 6530, Washington, DC 20416. Increases to size standards will enable some growing small businesses in these sectors to retain their small business status; will give federal agencies a larger pool of small businesses to choose from for small business procurement opportunities, and will help eligible small businesses benefit from SBA’s loan programs. As part of an ongoing review of all size standards, SBA takes into account the structural characteristics of individual industries, including average firm size, startup cost and entry barriers, the degree of competition, and small business share of federal government contracting dollars. This ensures that small business size definitions reflect current economic conditions and federal marketplace in those industries. Under the Small Business Jobs Act of 2010, SBA will continue its comprehensive review of all size standards for the next several years.

SBA Proposed Additional Changes to Size Definitions for Small Business

The U.S. Small Business Administration is seeking comment on three proposed rules published in The Federal Register that would revise the size definitions for small businesses in the Utilities; Construction; and Arts, Entertainment and Recreation sectors.  The proposed revisions reflect changes in marketplace conditions. 

The proposed rule for the Utilities sector will revise the size standard for nine industries.   The rule proposes changing six of the industries dealing with electric power generation, distribution and transmission from revenue-based size standards to an employee based size standard of 500 employees.

It would also increase the size standards for the remaining three industries in the Utilities sector from $7 million to $25.5 million for water supply and irrigation systems, $7 million to $19 million for sewage treatment facilities, and $12.5 million to $14 million for steam and air conditioning supply.   SBA estimates as many as 400 additional firms in this sector would become eligible for SBA programs as a result of these revisions.

SBA also proposed increases in size standards for one industry and one sub-industry in the Construction sector.  Specifically, SBA proposed to increase the size standard for Land Subdivision from $7 million to $25 million and from $20 million to $30 million for businesses engaged in Dredging and Surface Cleanup activities.  SBA estimates that more than 400 additional firms will become eligible for SBA’s programs and services, if adopted.   

The SBA’s third proposed rule would increase the small business size standards for 17 industries in the Arts, Entertainment and Recreation sector.   As many as 1,450 additional firms could become eligible for SBA’s programs and services if the proposed increases are adopted. 

Comments can be submitted on these proposed rules on or before September 17, 2012, at www.regulations.gov, identified by the following RIN numbers: 

1.         Proposed Rule:  Small Business Size Standards; Utilities (NAICS Sector 22) (RIN 3245-AG25)

2.         Proposed Rule:  Small Business Size Standards; Arts, Entertainment, and Recreation (NAICS Sector 71) (RIN 3245-AG36)

3.         Proposed Rule:  Small Business Size Standards; Construction (NAICS Sector 23) (RIN 3245-AG37)

You may also mail comments to Khem R. Sharma, Chief, Size Standards Division, 409 3rd St., SW, Mail Code 6530, Washington, DC  20416.

As part of an ongoing review of all size standards, the SBA takes into account the structural characteristics within individual industries, including average firm size, the degree of competition, and federal government contracting trends to ensure that small business size definitions reflect current economic conditions within those industries.  Under provisions in the Small Business Jobs Act of 2010, SBA will continue its comprehensive review of all size standards for the next several years. 

The revisions to the size standards in these sectors will enable more small businesses to retain their small business status; will give federal agencies a larger pool of small businesses to choose from for small business procurement opportunities and help eligible small businesses benefit from SBA’s loan programs. 

From SBA News Release on July 18, 2012.