On January 13, 2021, the Small Business Administration (SBA) issued an interim final rule to, among other things, amend § 124.2 of its regulations to incorporate the optional program term extension for small business concerns participating in the 8(a) Business Development (BD) program on March 13, 2020. Specifically, revised § 124.2 provides that, for a firm participating in the 8(a) BD program as of March 13, 2020, and through January 13, 2021, SBA will automatically extend its program term by one year unless the concern declines such extension.

A firm that was participating in the 8(a) BD program as of March 13, 2020, but has since graduated or otherwise left the program before January 13, 2021, must notify SBA of its intent to be readmitted for a period of one year from the date it completed its program term. Any such notification must be received by SBA no later than March 15, 2021. In addition, a firm seeking to be readmitted must certify that it continues to meet the applicable eligibility requirements as set forth in §§ 124.101 through 124.111.

Background

On December 27, 2020, President Trump signed into law the Appropriations Act, Public Law 116–260, Div. N, title III, sec. 330 (Dec. 27, 2020), to, among other things, make appropriations for the 2021 fiscal year and to provide coronavirus emergency response and relief. Section 330 of the Appropriations Act mandates that SBA must ensure that any small business concern participating in the 8(a) BD program on or before September 9, 2020, has the option to extend such participation for a period of one year from the end of its program term, regardless of whether the concern previously elected to voluntarily suspend its program participation in connection with the president’s nationwide coronavirus emergency disaster declaration on March 13, 2020.

Section 869 of the National Defense Authorization Act for Fiscal Year 2021, Public Law 116–283, title VIII, sec. 869 (Jan. 1, 2021) (NDAA 2021), also contained the same language authorizing business concerns participating in the 8(a) BD program on or before September 9, 2020, to extend their participation in the program for a period of one year from the end of their program terms. The statutory language of both the Appropriations Act and NDAA 2021 authorizes an extension for firms participating in the program ‘‘on or before September 9, 2020.’’

As SBA points out in its interim final rule, there is no further clarifying language as to what “before” September 9, 2020 is intended to encompass. Thus, as SBA explains, it “is SBA’s understanding that Congress extended the term of participation in the 8(a) BD program because it believed that the pandemic has adversely affected 8(a) concerns and their ability to participate in and receive the full benefits of the program.” As such, SBA “believes it is reasonable to conclude that any firms participating in the program as of the date the national disaster was declared due to the pandemic (i.e., March 13, 2020) should receive the program term extension authorized by Congress.”

Notably, this extension authority does not extend to business concerns that graduated from or otherwise left the 8(a) BD program prior to March 13, 2020, or to business concerns that were admitted to the 8(a) BD program after September 9, 2020.

In addition, this rule clarifies that the extension will not apply to business concerns that were participants in the 8(a) BD program at any point between March 13, 2020, and September 9, 2020, but were terminated, early graduated or voluntarily withdrew from the program in lieu of being terminated or early graduated. SBA has already determined that such business concerns are no longer eligible to participate in the 8(a) BD program.

As noted, to implement the statutory language of section 330 of the Appropriations Act and section 869 of the NDAA 2021, SBA is amending § 124.2 of its regulations to incorporate the optional program term extension for small business concerns participating in the 8(a) BD program on March 13, 2020. More specifically, revised § 124.2 provides that, for a firm participating in the 8(a) BD program as of March 13, 2020, and through January 13, 2021, SBA will extend its program term by one year unless the concern declines such extension.

As also noted above, however, the interim final rule states that a firm that was participating in the 8(a) BD program as of March 13, 2020, but has since graduated or otherwise left the program before January 13, 2021, must notify SBA of its intent to be readmitted for a period of one year from the date it completed its program term. Any such notification must be received by SBA no later than March 15, 2021. Further, a firm seeking to be readmitted must certify that it continues to meet the applicable eligibility requirements as set forth in §§ 124.101 through 124.111.

In addition to the foregoing changes, the interim final rule is revising § 124.2 to clarify that any period of extension of the act will be added to a participant’s transitional stage of participation in the 8(a) BD program. As part of this revision, SBA is also making conforming amendments to § 124.404 to clarify the respective terms of the developmental and transitional stages of program participation.

Lastly, SBA is revising § 124.509 of its regulations to clarify how an extension of participation under the act will impact an 8(a) participant’s requirement to attain the targeted dollar levels of non-8(a) revenue in its extended program term.

Effective Date

This interim final rule is effective immediately, without advance notice and public comment because section 330(b) of the Appropriations Act and section 869(b) of the NDAA 2021 authorize SBA to issue implementing regulations without regard to notice requirements under 5 U.S.C. 553(b). However, SBA is providing a 60-day comment period for the public to comment on this interim final rule.