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What You Need To Know About the New Small Business Law

It’s tough to make a living out there these days…

And for small businesses, it’s especially hard…

They face challenges from bigger companies with deeper pockets and often fight for the same business…

But don’t feel like the deck is completely stacked against you.  In September, President Obama signed into law the Small Business Jobs and Credit Act that could impact your small business if you bid on government contracts. 

If you have ever thought about bidding on government contracts, here are a few things you need to know:

The Small Business Jobs and Credit Act makes changes to a number of policies specifically affecting small business procurement:

  1. Bundling – When governmental agencies combine several smaller projects or procurements into one big contract, they call it “bundling”.  Bundling makes it easier for the particular agency’s employees to manage the project because there are fewer actual contracts to manage.  This often put these contracts out of reach for small businesses. The new law limits government-wide bundling to $2 million, down from a $10 million limit. 

The interagency task force has recommended that officials tighten regulations to prevent the unjustified bundling of contracts.  If there is absolutely no way around a bundled contract, they have to find other ways to bring small businesses into the mix.

  1. Getting Bundled Contracts – The new law establishes a five year Small Business Teaming Pilot Program to help companies form teams or joint ventures so they are better able to compete against larger companies for bundled contracts.  Check with us or your local Small Business Administration office to find out what you need to do to participate in this new program.  

 

  1. Subcontracting – The new law requires companies working under government contracts to use subcontractors as they describe in the subcontracting plan they submitted as part of their bid.  If they fail to use subcontractors as they agreed, they better have a really good reason.  If they don’t have a good explanation for the change in their subcontractor policy, they receive a low grade on their performance evaluation and that could kill any chance they have of future awards for new projects. 
  1. Contract Parity – This provision makes it clear that no competitive contracting program has priority over any other contracting program. This puts all programs on equal footing.
  1. Standards for Size – This provision requires the Small Business Administration to review and update small business size standards every five years to keep up with industry trends.  
  1. Fraud – If a business misrepresents that it meets the criteria for bidding on a small business contract and it is later determined that it is not a small business, they will be charged with theft from the government.

Greater Focus on Efficiency

Government agencies are working with tighter budgets, just like everyone else.  They are spending less money while working to get just as much out of their contractors as they always have.  That means everyone needs to operate more efficiently.

Historically, cutting people has not gotten the message across to the government contractors that they are going to be held to a higher standard in the contract services they provide for the government.  Under the new law, they will be hit where it hurts – in the bank account.

HUBZone Equality

HUBZones or Historically Underutilized Business Zones used to have priority over other types of businesses because the law required the government to use businesses in HUBZones.

The new law ended the long battle over one small business program having an advantage over other small business programs for set-aside contracts.  It puts all Small Business Administration small business programs on a level playing field.  A government agency that wants to set aside a contract may now choose which category of small businesses to use.

If you’ve never considered bidding on a government contract, this may be a good time to start thinking about it.  Leave no stone unturned in looking for new income opportunities for your business.  There are many contracts available and the change in the law makes it easier for small businesses to compete for and win projects.  Get in touch with your local Small Business Administration office to find out what contracts are available, what the criteria are for bidding and what you need to do to qualify. 

Then call us to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit and let’s talk about a review of the material you receive from the Small Business Administration, making sure you legally meet the requirements and determine if you are eligible to apply. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.