SBA increases transparency requirements

Friday - 2/11/2011, 7:18pm EST

By John Buckner
Federal News Radio

The Small Business Administration announced changes to its 8(a) program requiring increased transparency and enforcing stricter penalties on the businesses that violate the rules of the program.

The new regulations come one day after Rep. Bennie G. Thompson (D-Miss.) proposed legislation to level the playing field for all minority owned businesses.

Thompson's bill takes aim at the advantages Alaska Native Corporations (ANCs) receive, such as securing un-capped, no-bid contracts that reduce competition.

Thompson's legislation is the companion bill to the one Sen. Claire McCaskill (D-Mo.) introduced in 2010. Her bill also called for changes in the way ANCs are favored under 8(a).

SBA's changes to the program will require all tribally-owned businesses, such as ANCs, to report benefits their communities are receiving.

Other regulations include improving joint ventures on contracts, enforcing strict penalties on mentor businesses and providing improved clarification on what defines an economically-disadvantaged business.

Some of the major changes to the regulations include:

  • Mentor-Protégé Program - adding consequences for a mentor who does not provide assistance to their protégé, ranging from stop-work orders to debarment.

  • Joint ventures - requiring that the 8(a) firm must perform 40 percent of the work of each contract that is awarded, including those under a Mentor-Protégé agreement, to ensure that these companies are able to build capacity.

  • Ownership and control requirements - providing flexibility on whether to admit companies owned by individuals with immediate family members who are owners of current and former 8(a) participants.

  • Tribally-owned firms - requiring firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations and Community Development Corporations to report benefits flowing back to their respective communities.

SBA published these changes Friday and they will take effect March 14.

SBA took into account all legislative changes to the program that lawmakers made since June 1998 in updating the 8(a) program.

John Buckner is an intern with Federal News Radio.

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