Final Rule Makes Host Of Changes To SBA Regulations

On April 27, the Small Business Administration (SBA) issued a final rule which, effective May 30, will make a number of changes to the SBA regulations impacting small businesses. The regulations, finalizing the proposed rule issued on September 9, 2022, provide new penalties for noncompliance with the limitations on subcontracting rule, updated joint venture (JV) and size requirements, and changes to the ostensible subcontractor rule. This post dissects the regulations and highlights a few noteworthy changes below.

Penalties for Noncompliance with Subcontracting Limitations for Small Businesses

13 CFR 125.6 places certain limitations on how much work small business set aside contracts over the simplified acquisition level can be subcontracted to third parties. The percentage of "subcontract-able" work depends on the type of prime contract. For example, most small business prime contractors (or similarly situated contractors) must perform 50% of supply and service