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Focus on Regulation

Congressional Report Highlights Recent Legislative Efforts Affecting Small Business Contractors, Amid New Proposed Regulations

Highlighting the continuing attention that Congress is giving to small business programs,  the Congressional Research Service recently issued a report on “Federal Contracting and Subcontracting with Small Businesses: Issues in the 112th Congress” describing relevant actions taken by Members of the 112th Congress in this area.  According to legislative attorneys Kate M. Manuel and Erika K. Lunder, the proposed legislative actions cover various topics, including : (1) standards to measure a firm’s size; (2) new federal goals for contracting and subcontracting with small businesses; and (3) eligibility for particular types of small business set-aside programs.

With regard to the size standards, Members of Congress introduced bills this term that would require the SBA to replace the current North American Industrial Classification System or “NAICS” code system, repeal the non-manufacturer rule, 13 C.F.R. § 121.406 (permitting firms with less than 500 employees to supply products produced by other small businesses), and exclude firms that are publicly traded or have 50 percent or more of their stock/shares held, directly or indirectly, by non-U.S. citizens from SBA programs. 

Members of Congress have also proposed legislation that would change the eligibility standards for the SBA’s Section 8(a) Program, although there does not appear to be general consensus whether the program should be expanded or further restricted. 

This report comes just as the Small Business Administration has proposed new regulations to implement the last major Congressional action on the issue, the Small Business Jobs Act of 2010.  The proposed rule appeared in yesterday’s edition of the Federal Register.  A post on the proposed rule will follow shortly.

This post was written by Agnes P. Dover and C. Peter Dungan.  Agnes Dover is a Partner and Director of Hogan Lovells’ Government Contracts practice.  Pete Dungan is an Associate with Hogan Lovells’ Government Contracts practice.  Edward C. Eich, a former associate of Hogan Lovells, contributed to this post.