The Small Business Administration (“SBA”) has had a very busy week. First, on May 24, 2016, the agency issued “Statement of General Policy No. 3” (“the Statement”) clarifying the hotly debated inter-affiliate sales exclusion (an issue relating to the counting of annual receipts for purposes of determining size). Then, yesterday, the agency published a lengthy final rule, which implements the long-awaited small business regulation changes mandated by the National Defense Authorization Act (“NDAA”) of 2013. Collectively, the Statement and the rule make a number of very important changes affecting Federal contractors. Some of the most important changes are:
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Changes regarding small business self-performance requirements and limitations on subcontracting pursuant to 13 C.F.R. § 125.6 (which we previously wrote about when the SBA issued its proposed rule, in December of 2014, and blogged about all the way back when the 2013 NDAA was enacted);
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Expansion of exception to affiliation for all joint ventures where both concerns are individually “small” in connection with 13 C.F.R. § 121.103(h);
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Clarification regarding what types of familial relationships will result in a rebuttable presumption of “identify of interest” affiliation pursuant to 13 C.F.R. § 121.103(f) (previously discussed here);
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Addition of a rebuttable presumption of “identify of interest” affiliation pursuant to 13 C.F.R. § 121.103(f) based on 70% economic dependence between companies (previously discussed here);
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Clarification regarding the calculation of annual receipts pursuant to 13 C.F.R. § 121.104, and, specifically, the exclusion from that calculation of inter-affiliate sales from a broader variety of affiliates;
Unfortunately, the expansion of the Mentor-Protégé program – which everyone has anxiously been awaiting since the proposed rule was issued back in February, 2015 – was not addressed. In a March 4th interview, SBA’s Associate Administrator of Government indicated that the mentor-protégé final rule should be issued this summer, with a pilot program to start in the fall.
Over the next week or so, we will be publishing a series of blogs explaining each of the above-listed changes in more detail. Stay tuned!