Key Small Business Provisions in the National Defense Authorization Act for FY 2013

Section 1641 – Small Business Mentor-Protégé Program

• Authorizes SBA to establish a Mentor-Protégé Program for small businesses
• Small business Mentor-Protgege Program should be “identical” to 8(a) Mentor-Protégé Program
• Agencies other than SBA cannot establish a Mentor-Protégé Program unless the agency first submits a plan for approval by SBA (exception for DoD Mentor-Protégé Program/SBIR/SBTT)
• SBA to issue regulations ensuring consistency among various agency Mentor-Protégé Programs
• Agencies with existing Mentor-Protégé Programs may continue with those programs until one year following the day on which SBA issues regulations described above
• Existing Mentor-Protégé relationships not affected; the parties may continue to operate in accordance with their Mentor-Protégé Agreement until such time as the agreement expires and/or terminates
• SBA must propose regulations regarding the small business and other agency Mentor-Protégé Programs within 270 days after enactment, which will be subject to the notice and comment process
• Note:  Congress provided SBA with the authority to establish Mentor-Protégé Programs for its SDVOSB, WOSB and HUBZone Programs in the Small Business Jobs Act of 2010.  SBA has yet to propose regulations regarding these new programs.

• Provides that, in the case of services contracts, the small business prime contractor must perform more than 50% of the amount paid the contractor under the contract (as opposed to 50% of the “cost of contract performance incurred for personnel”)
• Provides that, in the case of supply contracts, the small business prime contractor must perform more than 50% of the amount (less the cost of materials) paid the small business prime contractor (as opposed to the “cost of manufacturing”)
• Did not address construction contracts but allowed SBA to promulgate, through rulemaking, provisions similar to those for services and supply contracts
• Exemption provided for “similarly situated” entities; the 50% restriction does not apply if the subcontractor is small and of the same type as the prime (8(a), WOSB, etc.)
• Establishes penalties for failure to comply with the limitations on subcontracting requirement

• If a prime contractor identifies a small business in its bid or proposal or subcontracting plan the prime must notify the small business that it has done so
• Agencies must establish a “reporting mechanism”  by which subcontractors can report “fraudulent” activity or “bad faith” by prime contractors with respect to implementing their subcontracting plans
•  A prime’s failure to meet the subcontracting goals set forth in its subcontracting plan may be considered in the prime’s past performance evaluation

• When SBA establishes or revises size standards, it now must make publicly available the information considered and analysis supporting the size standard or changes thereto
• SBA may establish a “common size standard” – a single size standard for a grouping of 4-digit NAICS codes, only if SBA publicizes a justification demonstrating the selected size standard is appropriate for each individual industry classification in the group

• Limits the liability of a small business for misrepresentation of its size or status if it relies in good faith on an “advisory opinion” issued by a Small Business Development Center or a Procurement Technical Assistance Center
• The SBDC or the PTAC does not have to issue the opinion
• The SBDC or the PTAC must send copy of opinion to SBA and if SBA disagrees with opinion, the small business cannot rely on it
• Smalls businesses may be suspended or debarred for misrepresentation as to size or status without regard to whether they are “presently responsible” as provided in FAR Part 9

• Removes the $6.5 million (manufacturing) and $4 million (all other contracts) caps on setting aside procurements for competition among WOSBs/EDWOSBs

• Base closure/realignment areas will continue to be part of the definition of a HUBZone for another five years

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