Good news for 8(a) firms: your participation in the 8(a) Business Development Program (“the Program”) may be extended by one year to help mitigate COVID-19’s adverse effects on business activity.
What is happening?
The Small Business Administration has released an interim final rule which implements a provision in the Consolidated Appropriations Act 2021 and the National Defense Authorization Act for Fiscal Year 2021. These provisions authorized certain 8(a) participants to extend their 8(a) program term by a period of one year. This interim final rule amends the 8(a) Program regulations to carry out the changes made by the Acts.
Why is it happening?
The 8(a) Business Development Program is a one-time, nine-year program designed to level the playing field for small businesses owned by socially and economically disadvantaged people or entities. A significant focus of this program is to foster business development activities, including participation in in-person meetings, industry days, and matchmaking events. As a result of the pandemic, in-person activities were cancelled and procedures around contracting were disrupted by a mass-migration to working from home. These disruptions mean that 8(a) participants have missed out on vital pieces of the 8(a) Program. This extension of program participation is designed to provide additional time to 8(a) companies that were adversely affected by these occurrences.
Who qualifies for additional time? And what do I need to do to get it?
There are three sets of 8(a) companies that can benefit:
- Returners: Companies that were in the 8(a) program as of March 13, 2020 but left the program between March 13, 2020 and Jan 13, 2021, with a few exceptions.
- Newbies: Companies that were admitted to the 8(a) program prior to September 9, 2020 and are still participating.
- Tribally Owned Participants: These can be Returners or Newbies, similar to their individually owned counterparts, but there’s an extra benefit detailed below for Tribes that have a Returner.
For the Returners, if your reason for exiting the program was due to the natural expiration of your nine-year term or you withdrew for certain reasons, you can get back into the program from the date of your departure for an additional year. There are a few reasons for exiting the program that will keep participants from taking advantage of this extension. These are listed below. Returners must notify the SBA to receive the extension of time by March 15, 2021. Returners can also decline such an extension if it is not wanted. See below for how to notify SBA about your desire to take advantage of the extension or decline.
For the Newbies, many have already received notification from their Business Opportunity Specialist (BOS) to confirm their eligibility for the extension. It’s essentially automatic. If you haven’t yet received such a notification, you should ask your BOS as soon as possible to understand the impact on your program participation.
For the Tribally Owned Participants, if you have a company that can qualify under the Returner provisions above, you may be concerned about the timing for admitting subsequent participants in the same primary NAICS code. SBA has clarified that the two year waiting period before the admission of a new company under the same primary NAICS will not reset to the new program end date. You can still continue to develop that company and submit its application to the program based on the original graduation date of the exiting participant.
Exceptions: who cannot take advantage of this extension?
- If your company left the program prior to March 13, 2020, you cannot gain additional time.
- If your company was admitted to the program after September 9, 2020, you cannot gain additional time.
- If your company left the 8(a) program between March 13, 2020 and September 9, 2020 due to early graduation, program termination, or a withdrawal from the program in lieu of early graduation or program termination, you are not eligible.
What is the impact of this?
The one-year extension will allow 8(a) firms an opportunity to compensate for a loss of business development support during the pandemic. Nascent 8(a) firms were more severely impacted by the pandemic, as newer entrants to the 8(a) program didn’t have an opportunity to develop networks, or backlogs and pipelines of contracting opportunities. These firms should use the extra year to solidify their business networks for support and growth, and deepen their resources. They may want to consider entering into a mentor-protege relationship as a way to leverage the mentor’s resources, networks, qualifications, and capabilities for business development and growth. GovContractPros can provide assistance in establishing win-win mentor-protege relationships.
How does a Returner accept or decline the additional time?
If you’re a Returner, you have to send a letter requesting the extension or declining the extension:
Associate Administrator, Office of Business Development, Small Business Administration, 409 Third Street SW, Washington, DC 20416, or email it to 8aQuestions@sba.gov.
I’m upset my company doesn’t qualify. What do I do?
If you do not qualify for this extension, there is an open comment period to make your voice heard to SBA about reasons why the dates should be changed. The comment period is open until March 15, 2021 and can be submitted here.