In late August, the SBA issued a proposed rule related to changes to the HUBZone program that also included various changes to the recertification requirements for all small-business contractors. As part of seeking input on this proposed rule, the SBA announced it would hold tribal consultation meetings across the country and was seeking input into whether mentor-protégé joint ventures were obtaining an inordinate number of small business multiple award contracts. The announcement further stated the SBA was considering whether to eliminate the exception to affiliation between mentors and protégés for multiple-award contracts to address the concern that such joint ventures were creating an uneven playing field for individual small businesses.

On September 19, 2024, the SBA issued a clarification to the proposed rule to confirm the pending rule change titled "HUBZone Program Updates and Clarifications, and Clarifications to Other Small Business Programs" does not address the exclusion from affiliation question raised in the announcement. Despite this clarification of the proposed rule, the SBA's announcement does confirm the SBA is evaluating changing the rules to limit or prevent mentor-protégé joint ventures from bidding on small business multiple award contracts. The SBA is also considering less drastic options such as altering the past performance requirements on such contracts to allow individual small businesses to be more competitive when competing against a joint venture that may include large businesses with more extensive past performance.

One of the main changes addressed in the proposed rule seeks to streamline the recertification requirements for all small businesses for all multiple-award contracts, including Federal Supply Schedule contracts. Under the new rule, if a company recertifies and is other than small (or otherwise fails to meet the small-business status required for the contract) it may continue to perform the current period of performance. But the company would generally not be eligible for new options or orders under the contract.

The SBA's tribal consultation roadshow also sought input on how to best implement Executive Order 14112, which addresses the promotion of Tribal Self-Determination and, as described by the SBA, "directs agencies to increase the accessibility, equity, flexibility, and utility of federal funding and support programs for Tribal Nations."

Comments on the proposed rule were due by October 7, 2024, but comments related to the mentor-protégé joint venture program, as well as comments related to Executive Order 14112, may be submitted to the SBA at any time.

Please contact DWT's construction and government contracts team questions or comments.