Some members of the small business community have a new avenue to explore as it continues to seek relief from the pandemic, as the Small Business Administration (SBA) has suspended the bona fide place of business requirement for 8(a) construction contracts.
The move means that the SBA, which cannot remove this requirement from its regulations without direction from Congress, will temporarily suspend the requirement for all 8(a) construction firms.
It will keep the temporary policy in place through at least September 2022.
This news came just one month after Rep. Don Young introduced H.R. 4697 to eliminate the bona fide office rule.
The bill proposes to eliminate the “requirement relating to award of construction subcontracts within county or state of performance.”
Presently, the Small Business Act requires that, to the “maximum extent practicable, construction subcontracts awarded by the administration pursuant to this subsection shall be awarded within the county or state where the work is to be performed.”
Thus, the SBA requires 8(a) participants seeking to perform on 8(a) set-aside construction contracts to have an SBA-approved “bona fide place of business” – or a “location where a participant regularly maintains an office which employs at least one full-time individual within the appropriate geographical boundary.”
While this requirement was historically applied to 8(a) competitive procurements, the SBA clarified (as part of its final rule that went into effect in November 2020) that it “believes that the requirement to have a bona fide place of business in a particular geographic area currently applies to both sole source and competitive 8(a) procurement.”
SBA HUBZone Updates
The SBA has again updated its Frequently Asked Questions (FAQs) regarding HUBZones, this time with welcome changes for firms with principal offices located in Redesignated Areas (RA) and/or Qualified Disaster Areas (QDA).
A notable change in the FAQs confirms that SBA will now allow a firm located in a QDA or home office to use the long-term investment rule, as long as the firm demonstrates that it made a long-term investment in its principal office between Dec. 26, 2019, and June 30, 2021, in reliance on SBA’s final rule and prior guidance.
The SBA will grandfather in HUBZone firms that recertified between those bookend dates and claimed legacy HUBZone employees who resided in RAs and/or QDAs during the 360-day period. That’s necessary to qualify as a legacy HUBZone employee.
The SBA is providing a grace period to count legacy employees until Dec. 31, 2021.
This allows HUBZone firms to utilize legacy HUBZone employees, even if the firm’s principal office is located in an RA and/or QDA.
Also, until Dec. 31, 2021, the SBA will allow firms to count legacy HUBZone employees based on an annual certification date prior to Dec. 26, 2019.
Regarding the HUBZone maps, the SBA recently extended the freeze through June 30, 2023.
Thus, no Qualified Census Tracts, Qualified Non-Metropolitan Counties or Redesignated Areas may be added to or removed from the HUBZone Map, giving HUBZone companies solid timeline to pursue federal contracts.
Additionally, all Qualified Base Closure Areas currently expiring on Dec. 31, 2021, will now expire on June 30, 2023.
With these updates, many counties previously considered to be RAs are now full-fledged HUBZone areas. On that note, the SBA has now designated more than 400 new counties throughout the entire U.S. as Qualified HUBZones considerably increasing business opportunities.
Gloria Larkin is president and CEO of TargetGov.