SBA to Amend Business Eligibility Rules and NAICS Code Procedures

In a move to prevent large businesses from claiming set-asides meant for small businesses, the Small Business Administration (SBA) is changing a number of its regulations. The changes include:

  • Clarifying the effect of eligibility decisions on procurements
  • Increasing the amount of time the SBA has to issue formal business size determinations and file North American Industry Classification System (NAICS) code appeals
  • Requiring the SBA Office of Hearings and Appeals (OHA) to issue size appeal decisions within 60 calendar days of the close of the record
  • Changing NAICS code appeal procedures to comply with a federal court decision
  • Require contracting officers to reflect final agency eligibility decisions in federal procurement databases and goal statistics
  • Making other changes to size status protest and appeal rules

The Office of Management and Budget (OMB) decided that the new SBA rules constitute a “significant regulatory action;” this means that the SBA must perform a regulatory impact analysis. The analysis is interesting and straightforward reading: it explains the need for the changes, who and what the changes affect and the benefits of the new rules.

The SBA says the changes won’t increase reporting or paperwork requirements. However, they could have significant effects on “a substantial number of small entities.” The SBA prepared a final regulatory flexibility analysis (FRFA) that explains the effects on these entities, including small businesses, organizations and government jurisdictions.

The FRFA claims that the “rule will have no direct negative impact on any small business concern, since it is aimed at preventing other than small concerns from receiving or performing contracts set aside for small business concerns. The final rule will indirectly benefit small business concerns by preventing awards to ineligible concerns, or shortening the length of time other than small concerns perform small business set-aside contracts.”

Last year’s comment period on the changes only garnered four comments. The new rules will go into effect on March 4, 2011.

Authored by Lindley Ashline on GovWin

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