8(a) Contractors Risk Losing Status if the Annual Review Is Ignored
by
Merritt Green on Jul. 17, 2015
Government Government Contract
Summary: Being successfully certified by SBA as an 8(a) Business Development company can be an arduous and paper-intensive task.
Written by Marci Love Thomas, who just joined GCPC’s GovCon Legal Team after spending 8 years as an Army JAG Officer and then 9 years as an attorney at the SBA. Marci is a great addition to our team and will be a tremendous advocate for our clients.
Being successfully certified by SBA as an 8(a) Business Development company can be an arduous and paper-intensive task. Therefore, it is astonishing—that once a business overcomes the initial paper hurdle to be one of the 6,641 current 8(a) BD companies—that one of the most common grounds for being terminated from the 8(a) BD program is failing to submit required documents to the SBA in a timely manner.
Under the Small Business Act, SBA has an affirmative responsibility to ensure that only eligible business concerns are admitted into—and remain in— the 8(a) BD program. In order to insure that the benefits of the 8(a) BD program are limited to those small businesses owned, controlled, and managed by socially and economically disadvantaged individuals, 8(a) BD participants are required to annually provide SBA with a certification of continued eligibility and submit certain documents, such as a personal financial statement, tax returns, and fiscal, year-end financial statements. The submission of this business information is necessary to maintain 8(a) BD program eligibility, but the documents required are the basic business documents any company would want to have to be a productive business successfully performing federal contracts.
Moreover, the 8(a) BD submission requirements are not a surprise, but are annual review updates, and should be as rote for a business as filing taxes. Yet, 8(a) BD businesses are regularly terminated for a pattern of failure to make the required submissions to SBA within 30 days of the date of request. The oversight, or lack of follow through, by 8(a) BD businesses is egregious because companies often receive multiple annual review update reminders before SBA initiates the termination process. Failure to submit annual review documents as part of the 8(a) BD program, followed by subsequent failures to respond to requests for such documents, is well established as good cause for termination from the 8(a) BD program.
As we head into the final quarter of the federal government’s fiscal year, when many 8(a) BD contracts are awarded, 8(a) BD businesses should insure business documents are in order and promptly respond to SBA requests for documentation. Orderly financial documents and professional responsiveness will help to insure that a business enjoys the advantages of the 8(a) BD program for its entire nine-year 8(a) BD program term.
If you have any questions about the Small Business Act or about 8(a) BD submission requirements,contact General Counsel, P.C.’s Government Contracts group.
