On December 11, the Senate passed in an 84-13 vote the FY 2021 National Defense Authorization Act (NDAA), and the bill has now passed both the House and the Senate. The FY21 NDAA includes a number of provisions that impact government contractors, including those below that are of particular interest to small businesses. Although President Trump has threatened to veto the bill for reasons unrelated to the provisions below, the vote in both chambers exceeded the number that would be required to override a possible veto by the President. While it remains to be seen what happens if President Trump does veto the bill, it is unlikely that any changes would impact the provisions below and that ultimately, these changes will be signed into law.
Centralization of Verification of VOSBs and SDVOSBs with the SBA
Currently, the government has two programs for Service-Disabled Veteran-Owned Small Businesses (SDVSOBs) – one administered by the Department of Veterans Affairs (VA) and one by the Small Business Administration (SBA). The VA’s program requires certification through the Center for Verification and Evaluation (CVE) and the SBA’s program currently allows businesses to self-certify as an SDVOSB. Section 862 of the NDAA seeks to consolidate these two programs and centralize them all under the SBA, by transferring responsibility for verifying Veteran-Owned Small Business (VOSB) and SDVOSB status from the VA to the SBA, requiring all SDVOSBs to be certified through the SBA, and consolidating the VA’s database with SBA’s own database. These changes will not happen overnight, but rather will be implemented over the next few years.
Employee-Based Size Standards for Small Business Concerns
As many small business contractors know, the SBA implemented the Small Business Runway Extension Act, which extended the time period used to qualify as a small business under revenue-based NAICS codes from three to five years. This year, Section 863 of the NDAA extends the time period for businesses that operate under employee-based size standards from 12 months to 24 months. SBA has a year to implement this change in regulations, which would allow a company to certify as small if the average number of its employees for each pay period over the preceding 24 months is below the applicable size standard.
Allowing Small Businesses to Use Joint Venture Past Performance in Certain Circumstances
Section 868 provides small business offerors with no relevant past performance of their own to elect to use its past performance as a member of a joint venture. In doing so, the small business must identify the joint venture and inform the contracting officer what duties and responsibilities it carried out as part of the joint venture. The contracting officer would then be required to consider the past performance of the joint venture, giving due consideration to the duties and responsibilities carried out by the small business, when evaluating the past performance of the small business concern. This change would allow new companies who gain valuable experience as part of a joint venture to leverage the benefit of that experience when competing for government contracts as a prime contractor when they do not yet have relevant individual past performance.
Extending 8(a) Program Participation to 10 Years
Section 869 of the NDAA directs the SBA to allow any 8(a) certified firm that was in the program on or before September 9, 2020 to extend its participation in the 8(a) program by an extra year from 9 years to 10. The SBA is directed to issue new regulations implementing this change within 15 days of the enactment of the NDAA.
Stephanie Wilson is a Partner and Co-Director of Government Contracts at Berenzweig Leonard. She can be reached at swilson@berenzweiglaw.com.