SBA Proposes Higher Surety Bond Guarantees to Help Small Businesses Secure Larger Contracts in Disaster Areas

This morning, the U.S. Small Business Administration announced that it has proposed changes -- including higher surety bond guarantee limits -- that will help construction and service-sector firms secure larger contracts for work in areas impacted by disasters; e.g, BP's Gulf Coast oil-spill disaster.

The proposed changes, which were published as part of a Proposed Rule in the Federal Register on April 26, include:

* For a non-federal contract or order up to $5 million, a bond guarantee may be issued if the products will be manufactured, or the services are performed, in the disaster area.

* For a federal contract or order up to $5 million, the performance site can be outside the disaster area if the contract or order will directly assist the disaster-recovery efforts.

* For a federal contract or order, the amount of the guarantee can be as much as $10 million at the request of the head of an agency that is involved in reconstruction efforts.

"These proposed changes are one more way we can help small businesses -- particularly in the construction and service sectors -- compete for and win critical contracting opportunities that help them grow their business and create jobs," said SBA Administrator Karen Mills [pictured]. "Additionally, these proposals would help spur economic growth and recovery in areas that have been hard-hit by disasters, bringing jobs and economic activity to a region at a time when it is needed most."

The proposed changes are related to the Small Business Disaster Response and Loan Improvements Act of 2008, which increases the eligible amount for contracts or orders related to a major disaster area. These proposals build on increases to surety bond guarantees made possible under the American Recovery and Reinvestment Act of 2009. The major disaster areas are identified on the Federal Emergency Management Agency website: http://www.fema.gov/.

Generally, the increased amounts would apply during the 12 months following the disaster declaration, unless SBA provides for an extension related to a particular disaster.

In addition to the disaster-related proposals, the Proposed Rule clarifies SBA’s position that it does not cover any costs related to insurance or indemnification requirements that may be contained in the bonded contract. It specifically excludes from the losses covered by SBA any costs that arise from the principal’s failure to secure and maintain insurance that result from any claims or judgments that exceed the amount of insurance coverage, and that arise from an agreement by the principal to indemnify the contractor or any other persons.

SBA partners with the surety industry to help small businesses that would otherwise be unable to obtain bonding in the traditional commercial marketplace. Under the partnership, SBA provides a guarantee to the participating surety company of between 70 and 90 percent of the bond amount.

Through its Surety Bond Guarantee Program, SBA also helps owners by guaranteeing bid, payment and performance bonds to protect the project owner against financial loss if a contractor defaults or fails to perform.

The Proposed Rule is available for public inspection at the Federal Register: http://bit.ly/ProposedRuleDisasters.

Comments on these proposed changes must be received on or before May 26, 2010, and can be submitted at http://www.regulations.gov/, or mailed or hand-delivered to Office of Surety Guarantees, Suite 8600, 409 Third Street SW, Washington, DC 20416. SBA will post all comments on http://www.regulations.gov/.

SBA assistance in locating a participating surety company or agent, and completing application forms, is available online. For more information on SBA’s Surety Bond Guarantee Program, including Surety Office contacts, go online to http://www.sba.gov/osg/, or call 1-800-U-ASK-SBA.

SOURCES: Library of Congress, U.S. Small Business Administration
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SBA Announces Changes to Small Business Procurement Scorecard Format

The U.S. Small Business Administration [SBA] just announced that it is revising the format of the annual Small Business Procurement Scorecard to provide more clarity and transparency on the federal government’s performance in meeting its small-business contracting goals. The revised scorecard will be based on an A through F letter grade system, as opposed to the previous red, yellow and green ratings.

"This revision to the Scorecard will provide greater clarity and transparency on how well each agency is doing in meeting its small-business prime contracting goals," said SBA Administrator Karen Mills [pictured]. "Federal contracts provide critical opportunities for small businesses to grow and create jobs. This revision builds on our ongoing efforts to strengthen the integrity of the overall process for small-business contracting, while also expanding opportunities for small businesses to compete for, and win, federal contracts.”

The revisions will appear when SBA issues its report later this year for federal contracting in fiscal year 2009. Over the past year, SBA has worked collaboratively with contracting and small-business officials to develop the new system. The revised methodology better reflects the unique needs of individual agencies, while maintaining a focus on achieving the statutory small-business contracting goals.

The overall small-business prime contracting goals have been established by Congress to ensure that small businesses get their fair share of federal contracts. The government-wide goal for prime contracts to small businesses is 23 percent of total qualified contract dollars -- with additional goals of five percent for small disadvantaged businesses [SDBs]; five percent for women-owned businesses [WOSBs]; three percent for HUBZone small businesses; and three percent for service-disabled veteran-owned small businesses [SDVOSBs].

SBA negotiates individual goals for each agency, while ensuring that, when combined, they meet the overall statutory goals for the federal government. SBA’s small-business procurement goal, for example, is 67.05 percent. While Scorecards will measure subcontracting activity, that information is not factored into the determination of whether the federal government meets the statutory small-business prime contracting goals.

The new Scorecard holistically assesses an agency’s entire small-business procurement performance. An agency’s overall grade will be comprised of three quantitative measures: prime contracts [80 percent], subcontracts [10 percent], and its progress plan for meeting goals [10 percent].

The letter grades for prime contracting and subcontracting will show an A+ for agencies that meet or exceed 120 percent of their goals; an A for those between 100 percent and 119 percent; a B for 90 to 99 percent; a C for 80 to 89 percent; a D for 70 to 79 percent; and an F for less than 70 percent.

In last year’s Scorecard rating performance for the FY 2008 contracting year, small businesses won 21.5 percent of contract dollars, or about $93.3 billion out of a small-business-eligible base of about $434 billion. More than half of all agencies met their individual goals. The small-business-eligible base for FY2009 was about $437 billion.

An example of the new Scorecard format can be accessed at http://bit.ly/NewProcurementScorecard.

About SBA
The U.S. Small Business Administration [SBA] was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small-business concerns, to preserve free competitive enterprise, and to maintain and strengthen the overall economy of our nation.

SBA recognizes that small business is critical to our economic recovery and strength -- to building America's future, and to helping the United States compete in today's global marketplace.

GoodBiz113's Take
Kudos to Administrator Mills and her team for overhauling SBA's Small Business Procurement Scorecard. From all appearances, the new system delivers more meaningful, at-a-glance information, and is infinitely superior to that used by the Bush administration -- which, despite its lip service to small businesses, was far more intent on awarding multibillion-dollar bundled contracts to its corporate buddies [e.g., Halliburton] than in helping small-business owners and entrepreneurs grow the U.S. economy.

Indeed, we've come a long way since Jan. 20, 2009. And things just keep getting better...

SOURCES: Acquisition Central, U.S. Small Business Administration
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SBA Proposes New Women's Procurement Rule; Landrieu Says 'It's a Step in the Right Direction'

The U.S. Small Business Administration today released a proposed rule aimed at expanding federal contracting opportunities for women-owned small businesses [WOSBs]. The proposed rule is available for public comment for 60 days.

The proposed rule is part of the Obama administration’s overall commitment to expanding opportunities for small businesses to compete for federal contracts -- in particular, those owned by women, minorities and veterans. This proposed rule identifies 83 industries in which WOSBs are under-represented or substantially under-represented in the federal contracting marketplace. This rule is aimed at providing greater opportunities for WOSBs to compete for federal contracts, while achieving the existing statutory goal that five percent of federal contracting dollars go to women-owned small businesses.

"Women-owned small businesses are one of the fastest-growing segments of our economy, yet they continue to be under-represented when it comes to federal contracting," said SBA Administrator Karen Mills [pictured]. "Across the country, women are leading strong, innovative companies, and we know that securing federal contracts can be the opportunity that helps them take their businesses to the next level, expand their volume, and create good-paying jobs. This proposed rule is a step forward in helping ensure greater access for women-owned small businesses in the federal marketplace.”

The creation of a rule to increase federal contracting opportunities for WOSBs was authorized by Congress in 2000. Since that time, SBA took a number of steps to study and analyze the market, including looking at participation bywomen-owned small businesses across all industries. Various draft rules were made available for public comment in prior years, but the Obama administration chose last year to draft a new, comprehensive rule, based on the analysis of the prior studies and on all the questions and comments previously received.

Some of the components of the proposed Women-Owned Small-Business Rule include:

* To be eligible, a firm must be 51 percent owned and controlled by one or more women, and primarily managed by one or more women. The women mus tbe U.S. citizens. The firm must be "small" in its primary industry, in accordance with SBA’s size standards for that industry. In order for a WOSB to be deemed "economically disadvantaged," its owners must demonstrate economic disadvantage in accordance with the requirements set forth in the proposed rule.

* Based upon the analysis in a study commissioned by the SBA from the Kauffman-RAND Institute for Entrepreneurship Public Policy, the proposed rule identifies 83 industries [identified by NAICS codes] in which women-owned small businesses are under-represented or substantially under-represented.

==> The SBA has identified eligible industries based upon the combination of both the "share of contracting dollars" analysis, as well as the "share of number of contracts awarded" analysis used in the RAND study. This differs from an earlier proposed version of the rule which identified only four industries in which women-owned small businesses were under-represented. This earlier version proposed to identify eligible industries based solely on the "share of contracting dollars" analysis used in the RAND study.

* In accordance with the statute, the proposed rule authorizes a set-aside of federal contracts for WOSBs, where the anticipated contract price does not exceed $5 million in the case of manufacturing contracts, and $3 million in the case of other contracts. Contracts with values in excess of these limits are not subject to set-aside under this program.

* The proposed rule removes the requirement, set forth in a prior proposed version, that each federal agency certify that it had engaged in discrimination against women-owned small businesses in order for the program to apply to contracting by that agency.

* The proposed rule allows women-owned small businesses to self-certify as "WOSBs" or to be certified by third-party certifiers, including government entities and private certification groups.

==> The proposed rule requires WOSBs which self-certify to submit a robust certification at the federal ORCA website, and also to submit a core set of eligibility-related documents to an online "document repository" to be maintained by the SBA. Each agency’s contracting officers will have full access to this repository.

==> The SBA intends to engage in a significant number of program examinations to confirm eligibility of individual WOSBs.

==> In the event of a contract protest or program review, the SBA will be entitled to request substantial additional documentation from the WOSB to establish eligibility.

==> SBA intends vigorously to pursue ineligible firms which seek to take advantage of this program and, in so doing, to deny its benefits to the intended legitimate WOSBs.

Landrieu Comments on Changes to Women-Owned Small-Business Contracting Rule
United States Senator Mary L. Landrieu [D-La.], chair of the Senate Committee on Small Business and Entrepreneurship, today made the following comment on the Obama administrations changes to the Women-Owned Small Business [WOSB] Rule:

"The proposed changes to the Women-Owned Small-Business Contracting Rule is a step in the right direction for small businesses looking to compete for, and win, federal contracts, especially those women-owned small businesses," said Sen. Landrieu.

"By law, five percent of all federal contracts should be awarded to women-owned small businesses," Landrieu noted. "This proposed rule specifically targets 83 industries that WOSB’s are under-represented in federal procurement -- up from the four industries that were proposed during the Bush administration. Our goal is to far exceed this requirement, and the new rule clears the way for that to happen. This rule gives WOSBs greater access to federal contracts and allows them to increase their competitiveness in the global economy."

The public may submit comments to this proposed rule up until close of business on May 3, 2010, to http://www.regulations.gov/, where they will be posted. Or, comments may be mailed to Dean Koppel, Assistant Director, Office of Policy and Research, Office of Government Contracting, U.S. Small Business Administration, 409 3rd St. SW, Washington, DC 20416. Please reference RIN 3245-AG06 when submitting comments.

SOURCES: U.S. Senate Committee on Small Business and Entrepreneurship, U.S. Small Business Administration
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Obama Administration Announces Efforts to Increase Access to Contracting Opportunities for Minority-Owned, Small Businesses

The Obama Administration today reaffirmed its commitment to ensuring that minority-owned and small businesses -- including women- and veteran-owned businesses -- have greater access to federal government contracting opportunities.

Commerce Secretary Gary Locke [pictured] and SBA Administrator Karen Mills announced a government-wide plan that includes federal agency procurement officials holding or participating in more than 200 events over the next 90 days to share information on government contracting opportunities -- including those available under the American Recovery and Reinvestment Act.

"Small and minority-owned businesses must play a significant role in our efforts to restore economic growth," said President Barack Obama. "Small businesses employ half of the nation’s private-sector workforce; create a large share of the nation’s new jobs; and introduce many groundbreaking ideas into the marketplace. It is essential that we provide our nation’s small businesses with maximum practicable opportunity to participate in federal government contracting.

"In order for the federal government to better meet or exceed the goal of 23 percent of prime contracts for small businesses, Vice President Biden and I have tasked Small Business Administrator Karen Mills and Commerce Secretary Gary Locke with leading a federal government-wide initiative to increase outreach. Over the course of the next 90 days, agency officials will take an important step forward by holding or participating in more than 200 events focused on sharing information on government contracting opportunities."

Vice President Joe Biden noted that Recovery Act funding will play a significant role in fueling this far-reaching initiative. "In these tough economic times, the Recovery Act is providing billions of dollars in opportunity and incentives to help businesses grow -- and the President and I are committed to ensuring that small and minority-owned businesses are part of our economic recovery every step of the way," he said. "By taking advantage of the expertise of an array of companies, we are going to be able to build a stronger, more secure foundation for long-term economic growth."

As part of the Commerce-SBA initiative, over the next 90 days:

* Federal agency procurement officials will hold or participate in more than 200 events to share information on government contracting opportunities, including those available under the American Recovery and Reinvestment Act.

* SBA and Commerce will expand their outreach to fellow contracting officials across the federal government, passing along best practices for outreach and education to every agency, to ensure they have the tools they need to meet their annual contracting goals.

* Locke and Mills will promote small-business contracting opportunities in remarks, special events and discussions with small-business groups across the country -- including minority, women and veteran groups.

"It has been a priority from Day 1 of this Administration to ensure that small and minority-owned businesses are aware of, and have access to, federal contracts and funding opportunities," said Locke. "Over the past 40 years, minority-owned businesses have grown from 300,000 to nearly 4 million today. Their success, and the success of small American businesses, are vital to our economic recovery."

Beyond the next 90 days, Commerce and SBA will support, monitor and track the impact of these efforts going forward, to help ensure the Administration is maximizing opportunities for small businesses.

Administrator Mills beamed at the potential of this initiative to harness entrepreneurs' innovative energy, ideas and expertise. "Government contracts can play a key role in helping small businesses turn the corner, in terms of expansion and job creation," Mills said. "But, make no mistake, the benefits the government receives are equally as impressive. Working with small businesses allows the federal government to work with some of the most innovative companies in America -- with direct line to CEO."

Small-business owners can find out about federal contracting opportunities by visiting http://www.fedbizopps.gov/. Commerce and SBA officials are also available in local offices across the country to assist small businesses interested in contracting opportunities. Contact information for local offices can be found at http://www.commerce.gov/ and http://www.sba.gov/.

SOURCES: Recovery.gov, U.S. Department of Commerce, U.S. Small Business Administration, The White House
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SBA Offers $10 Million Surety Bond Guarantee; Aids Recovery in Construction and Service Sectors

Building on Recovery Act provisions implemented earlier this year, the U.S. Small Business Administration [SBA] announced today that it can now provide surety bond guarantees on federal contracts valued at up to $10 million -- if the contracting officer certifies that the guarantee is in the best interests of the government. An interim final rule is available for public inspection at The Federal Register.

Currently, under a related provision of the Recovery Act that was implemented in March, SBA can provide bond guarantees up to $5 million through September 2010 on all public and private contracts, and subcontracts. SBA partners with the surety industry to help small businesses that would otherwise be unable to obtain bonding in the traditional commercial marketplace. Under the partnership, SBA provides a guarantee to the participating surety company of between 70 and 90 percent of the bond amount.

"Raising the surety bond limit is a critical step in making sure that small businesses in the construction and service sectors have access to federal contracting opportunities that will help drive economic recovery," SBA Administrator Karen Mills [pictured] said. "These changes support small and emerging businesses nationwide -- particularly construction contractors who have seen their markets hurt by a poor economy and lagging construction."

Additional program enhancements published in the rule include:

* A new small-business size standard for this program;

* Authorization for SBA to exercise discretion in deciding bond liability issues; and

* A definition of "order" issued under an indefinite-delivery contract.

The new size standard [which will be in effect until Sept. 30, 2010] temporarily replaces the current size standard for the surety bond guarantee program. It states that a business is small if the business, combined with its affiliates, does not exceed the size standard designated for the primary industry of the business combined with its affiliates. The North American Industry Classification System [NAICS] Codes contained in 13 CFR Part 121 establishes size standards for all industries.

Through its Surety Bond Guarantee Program, SBA will also help by guaranteeing bid, payment and performance bonds to protect the project owner against financial loss if a contractor defaults or fails to perform.

Finally, the rule adds a definition for an "order" issued under an indefinite-delivery contract to clarify that SBA bond guarantees apply to individual orders, as well as contracts.

SBA assistance in locating a participating surety company or agent, and completing application forms, is available online.

For more information on SBA’s Surety Bond Guarantee Program, including surety office contacts, go to http://www.sba.gov/osg/; or, call 1-800-U-ASK-SBA.

SOURCES: Recovery.gov, U.S. Small Business Administration
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