 Hey, GovCon Giants family, Eric Coffey here, bringing you another exciting episode of the GovCon Giants podcast. I do apologize, Megan did not know to turn her camera on today. She said she wasn't prepared. So this is an audio only version. However, if you wanna go to your favorite listening station for your podcast, you can listen to it. But I did wanna post it here on YouTube. And the reason why is because it is super important the information, and I wanna make sure that my followers, my listeners that are on YouTube and not necessarily on the podcast have access to this all important information. Today we're discussing the effective immediately, August the 25th, the new 8A construction bonafide office requirements have been suspended. And so now moving forward as an 8A construction company, you can essentially get sole source contracts any state, regardless of whether or not you have an office in that location. And so this is great for small businesses. And we're gonna get into that in today's upcoming episode. But not only is it affecting 8A companies, there's some other rules in place like joint ventures that the SBA did some clarifications on back in November that Megan brings up all of these things, benefit and serve to help small businesses and the small business community. So definitely stay tuned for this episode with Megan Lehman from Polaro Mazza. Hello, my name is Megan Lehman. I'm an attorney with the law firm of Polaro Mazza. We are based in Washington, DC. We're a full service business law firm specializing in government contracts. Excellent, excellent. And the reason why we invited you to come on today was you sent out a notification that was entitled SBA to suspend bonafide place of business requirements for 8A construction contracts effective immediately. So tell us about the rule. So before this announcement went into effect, at the end of August, previously, and as mandated through the Small Business Act, many 8A construction requirements had what's called essentially a bonafide place of business requirement or a location requirement. So 8A companies would have to have a SBA approved bonafide office in a particular location in order to pursue certain contracts. The reason that this rule has gotten a lot of attention somewhat recently is because previously, this rule was not frequently applied in the context of 8A sole source contracts or directed award contracts. SBA clarified through its revised regulations last November of 2020 that the bonafide place of business requirement applied both to 8A sole source and competitive contracts. And that had started to cause a little bit of a hiccup, especially for companies who have been working remote in times of COVID to establish a bonafide place of business. So that's interesting. I don't know if you know this, but I actually do a lot of 8A sole source work and competitive work. And we did see all of a sudden like all the requirements start changing to having requiring a bonafide office within 350 miles of the location. So is that what happened in November? I mean, is that kind of what happened with the landscape? Because I mean, it literally went overnight from I'd never seen these requirements before to every requirement that came out had them written inside. Yeah, the Small Business Act requires to the maximum extent practicable that 8A construction contracts will be awarded to companies that have offices in the state or county or maybe the 350 mile radius. It's up to SBA to determine what that radius and what that geographic location is. But it wasn't clear in SBA's regulations prior to November of 2020 that this requirement applied both to 8A sole source and 8A construction contracts. So once the policy was clarified through SBA's revised regulations back in November, the SBA district offices who are the ones implementing this and who ultimately has to sign off on 8A contract was starting to increase the use of the bonafide place of business requirement, particularly for 8A sole source contracts. So it is something that maybe was used at one point or another, but wasn't specifically in the sole source regulations. So it was clarified last November that applies to both and that's kind of when everyone started learning about the rule. So now let me ask you this, because I'm kind of, like I said, this does apply to me personally. Who clarified it? Where did it come from? Is that SBA or who clarified the rule? Yeah, SBA clarified it as part of their rulemaking and revisions last November. All right, now in the past, and this may be outside of your prayer view. You know how they discuss rules and then like, for example, they'll make a rule but it's not implemented. It has to go through Congress or something. You know what I'm talking about? For example, the rule that changes the average size of small business from three years to five years. Yep. And so someone told me that, yes, they made the rule but it's not incorporating it far or something to that effect. You know what I mean? So what had happened with that particular rule, the Runway Extension Act? SBA position, yeah, SBA position was that Congress had modified a provision of the Small Business Act that did not apply to SBA. So SBA has since the Small Business Act revised its regulations to include that five-year requirement in terms of calculation of three or five years. So it is currently in SBA's regulations but it did take a couple of years before. Right, yeah, it didn't come not immediately. It was a notification. Okay, got you. So in this particular case, the bona fide office has always been in place, the rule. Correct. Right. So it just became clarified in November, 2020. That it applies to both sole source and competitive aid. Okay, got you. Right, got you. Okay. It's funny, I actually, I used to not like talking to lawyers but now I like talking to lawyers because you get it right. And I wanted this to happen. I was like, oh my gosh, they're so... Now you know what? I'm happy because you are... This, for me, this is great because now let me ask you this and the reason why... So now they started implementing the rule, they clarified it in November. I start personally seeing it in all of my upcoming IDIQs. I had never saw it before. It starts coming out on all of my IDIQs. In fact, they held up some of my sole source rewards because of this new rule. So I was impacted personally by this rule myself as a small business contractor. Now, midway, I'm actually, and in fact, this week, I'm submitting on an 8A MAC contract that has the bona fide office rule in place because it was solicited prior to this announcement on August the 25th. And I'm sure you've heard this one before, right? So now, what's happening? So tell us what's happening. Yeah, so as they clarify about it, while the moratorium is an effect that this bona fide place of business requirement essentially no longer exists through at least September of 2022, it only applies to procurements that were offered to SBA after the effective date. So August 25th of 2021. So any contracts that had previously been offered to SBA as an 8A construction contract prior to August 25th will still have that bona fide place of business requirement. So it didn't have any retroactive type effects on preexisting procurements, but going forward, there should be no bona fide place of business requirement on future procurements. Okay, all right, okay, fair enough. Now, why is it, and maybe you don't know this, why do we even have a bona fide place requirement for construction contracts? Yeah, I mean, I think the basic concept of the rule is to encourage local funding and have contracts performed in local area. Okay, okay, but they only selectively chose construction. They didn't choose IT, they didn't choose janitorial. Does that make sense? Right, mm-hmm. Yeah, and it's interesting because it does, it only applies, it's not just any construction contract, it applies only to a construction contract. So it is pretty specific in its application, even if it, when it was in effect, because it is a very small area of government contracts that it applies to. You're totally right, just 8A construction contracts. I mean, that's the idea because, and again, I agree, just so like me personally, I work with the companies out of Rhode Island and I did some numbers for them and they literally, like less than 1% of all their federal contracts went to local companies. And so I agree with the rule, but if it only applies to a slither of all of the work, I don't see how that makes sense, but. Well, and the trick, the interesting part too is, I mean, 8A companies obviously are by definition small disadvantaged businesses. Yes. So having this additional office requirement actually compose an initial, or an additional restriction rather than, you know, helps them get contracts. And it was causing agencies to maybe look outside of the 8A program because of the additional administrative hurdles, and especially in construction contracts where the self-performance requirement is relatively low and where most, you know, 8A general construction firms are already subcontracting out work to local companies. The rule kind of has, I think it's done its purpose, but SBA is recognizing, as well as Congress, the potential need to maybe, you know, completely deal away with this rule. You actually just brought up a really good point. The companies are gonna be working with local folks because you can't haul materials and people and labor across the country. Yep, exactly. Okay, we need you up there arguing this fact. To SBA, Megan. Okay, we need you to testify in front of Congress on this. No, that's a really, really valid argument. In fact, I think construction out of all industries probably, like you said, the one where, because that's my space, that we're most likely to hire local people as opposed to IT or any other people where they can form out the workers remotely. Right, mm-hmm, yeah. I like it, I like it. Let me ask you something, where, like, if I want to look up, for example, this, the thing that you mentioned in November 2020, where would I find that? Like, what their state did that clarification? Where does that information post? Sure. That someone could do their research. So SBA publishes, yeah, SBA publishes all of their proposed and final rules in the federal register. Okay. Whenever SBA issues any proposed rule and it requests comments on, here's what we're thinking. You know, let us know if you agree, if you disagree, if you have any additional comments, insights, whatnot. That gets published in the federal register. It's official, you know, public notice and comment rulemaking. And then once SBA receives all the comments, they look at them and then they implement their final rule. So the easiest way probably to find it is to kind of Google just federal register SBA, mentor protege 2020. And see, because the title of the rule largely related to consolidation of the mentor protege program, where SBA eliminated the 8A mentor protege program and essentially merged and consolidated with the all small. But it also included a significant number of other government contracting amendments. So the discussion, SBA's discussion around the bona fide place of business requirement and their clarification is in that particular final rule that was published on October 16th of 2020 with an effective date of November 16th. Now, what do you think is gonna happen come next year, 2022? I think, I mean, it's obviously, you know, I guess in game hard to say, but there is presently a proposed rule in the house to essentially eliminate this requirement. So what may happen next year going forward largely probably depends on how this bill operates and moves through the house, the Senate, things like that. Okay, okay. Now, I understand that your firm, they do a whole gamut, right? Bid protests, business transactions, success planning, intellectual property, labor and employment. Your specific area that you focus on is it small business? It is, yeah. Okay, okay. And the reason why I ask is, are there any rules that are affecting small businesses that are coming up like what you talked about here that's being proposed now? Are there any other rules? There isn't currently, I mean, the biggest kind of proposed rules that are out there right now from SBA is that SBA has been reviewing the size standards that are applicable to all of the NAICS codes and there has been proposed revisions to revise some of those size standards. So those are not, it's still proposed, still reviewing comments, nothing's been finalized yet, but hopefully at some point early next year the size standards will be revised. So that could potentially help a significant number of small businesses, if the small business size standard is increasing. So that's currently proposed, but in terms of other rules, I mean, SBA did a pretty big overhaul last November that included this clarification on the bona fide place of business requirement, but SBA is really looking to try to increase the qualifications for small businesses, what agencies are required to look at, whether they're, do you look at qualifications from a first tier small business subcontractor, how can you joint venture? There's a number of things that have been recently implemented to help small businesses become more competitive. And that was in the November? Finally? It was. Yeah. Okay. I'd love to talk about that stuff. One of the things that you mentioned was looking at their first tier subcontractor. Yeah. So SBA clarified in its regulations that where you have a small business bidding on a satisfied contract, if they individually cannot meet the capabilities, past performance and experience qualifications, but it's going to utilize a small business first tier subcontractor than the agency is required to look at the qualifications of that small business first tier subcontractor. Is that different than similar situated entity? It could potentially be yes, because if you're an A-day company, you're still a small business, bidding on a satisfied contract, but maybe you're only subcontracting to a small business, not an A-day. So in that case, the company would not be considered a similarly situated, but they would still be a small business first tier sub. I like that rule. Me too. Yeah. No, I do. I like that. I can see the benefit to that rule serving so many people because when you're getting started, you don't have necessarily all the past performance that you need. Exactly. Okay. Oh, this is good stuff. What else? What are they called? What's the name of that rule? It's just one of, it's a sub-set. I mean, I can give you the regulation if you want. Well, let me tell you why. Yeah, tell me the regulation. Sure, I'll take the regulation. Okay. It's 13 CFR, 125.2 G. And I'll tell you why because what if the person that's making the decision doesn't know that rule? You know, what I find, for me, for my personal experiences, a lot of times, like again, you got, this is your space, right? But the contracting folks, I don't know if they're up on all these rules. Yeah. And a big part is actually what we do and what I do personally is advocacy and discussions with contracting officers or agency counsel on, here's what your solicitation or draft solicitation says. Here's what SBA regulations say. We respectfully request that you revise this. Otherwise, agencies can be subject to protest. In fact, I mean, SBA recently sustained a protest for on the basis of solicitation terms where the solicitation required a, members of a, a mentor protege joint venture to have the same level of experience. So essentially the protege in order to have a relevant level of experience had to meet the same criteria as its mentor. And as part of again, that November, 2020 rulemaking SBA clarified that agencies could not do that. So we weren't involved in this protest, but GAO issued the decision a few months ago finding that the solicitation violated SBA's regulation because of the language in the solicitation. And it ran contrary to the requirement that agencies essentially have to, in so many words, reduce the relevancy requirements for protege. So I mean, SBA regulations are changing kind of frequently and you're right, it is difficult for agencies to keep up. So it's important to advocate and to educate on what the regulations currently say. And if necessary to file a pre-award bid protest. Oh, interesting. Now that one went over my head kind of fast. They, the requirement was that the, the mentee has to have the same past performance requirements as the mentor. It didn't specifically say that. I believe what the solicitation said was if you're bidding as a joint venture, you have to submit a reference from each party to the joint venture, which they can do, but SBA had clarified that a agency cannot require a protege firm to individually meet the same evaluation or responsibility criteria as that of other offer wards. So essentially it's, sorry. That's a good one. I like that one also. Right. Yeah. I mean, there's been a lot of good stuff and already some bid protests and other decisions related to these, you know, regulations that were revised just in November. Obviously the implementation of, you know, in interpretation sometimes of the regulations takes time, but like I said, SBA is frequently evolving their regulations to try to help the small businesses. So I think that rule was very helpful and a company filed a protest saying that the solicitation didn't, you know, comply with this revised reg and Jerry sustained it. Wow. Okay. And that's all under the 13 CFR 125.2. So the one in the 125.2 relates to the small business first-tier subcontractor consideration, but then SBA has different part within 13 CFR to that discuss each of like various types of set aside. So for example, 125.8 discusses small business joint ventures, but there's other regulations that discuss day-to-day joint ventures, SWSC joint ventures, WSC joint ventures and Hudson joint ventures. And they all contain that language that requires agencies to look at the capabilities of both companies and then that they cannot require the protege firm to individually meet the same criteria. So it's always in that 13 CFR part, but then there's various, you know, subsets within the 13 CFR that relate to each socioeconomic program. You mentioned that you do advocacy. So if someone was listening to this and they want it to reach out to you, what would be the best way to reach out? Email or phone, but, you know, everyone's working remotely in the world of COVID. So email is definitely the best way to reach me. And what's the email address you wanna give it out so people can have it? Sure, it's Mleman. So M-L-E-E-M-O-N at PolaroMazza.com P-I-L-I-E-R-O-M-A-Z-Z-A.com No, that's great. I like all this stuff, everything. In fact, I got more than I bargained for. So I'm so happy you decided to come back on again. I learned a lot. I actually need to go dig up some of these rules, pull them down and then get you back on here so we could discuss this. You know, we have a lot of people from the SBA listening to our podcast, we have a lot of contracting officers listening to our podcast. And I would imagine that, you know, again, no one wants to get in trouble, right? And aren't protests up like 50 or 60% now? I mean, protests are always relatively high, but if you can avoid it, which is a lot of that pre-protest type letter to the contracting officer, agency council explaining, you know, this is what the rule says, this is what your solicitation says, please revise it. I'm not sure if you bid on CRS24, but you probably had heard through the grapevine of a lot of, you know, protests and letters and things on that because of some of the requirements that were in the solicitation, maybe ran contrary to SBA's regulations. So, I mean, protests are unfortunately sometimes... It's part of it. It has to be done, but they're very useful. No, no, I agree. But, yeah, I mean, but the success rate of a protest, you know, you don't, not every protest and many protests do not go through to a decision, you know, granted or denied. A lot of it, the agencies will take what's called corrective action and revise whatever terms, you know, previously were at issue. Okay, well, that makes sense. That makes sense. No, no, no, I like it. I like it. Anything else that's some good stuff that you know of? We can take it. I mean, I can talk about this all day, but... What? I can talk about this all day too, trust me. I don't know if you looked me up, but I've got 600 videos on YouTube talking about small business contracting. So, I can talk about it for hours myself. I mean, that's what I do. Yeah, I focus primarily on, you know, compliance with small business programs, but then also, you know, just general small business regulations and things like that. So, I mean, those are definitely the big points for now. Things are always kind of changing and we'll see, but it's good to know that you can, there's probably a regulation out there case that, you know, can maybe help you. So, it's good to understand what the regulations are, what the requirements are, but then also how to use those, you know, to your advantage. No, man, that's what we want and that's what we want to share. Things that are actionable that people can do, they can go up, look this stuff up, call someone, reach out, ask questions, and then like you said, find someone who wants to advocate on their behalf. So, if someone, let's say, again, you know, if there was like a small business event or conference, would that be a good thing to invite you to, to speak on that? Yeah, of course we do it pretty frequently. Okay, all right. No, yeah, I, no, again, and I know the name, I've seen you the name, but also I'm in some other places where I think people could use this information. So I definitely want to be able to just share it around, you know, and, but I did want to ask permission first. Yeah, of course, no, I appreciate that. Thank you very much. All right, Megan, well, listen, thank you so much for coming on today. I really appreciate all of these nuggets. I'm going to go do my own homework and research and learn up on this stuff because I only got the headlines that was sent out, all these other things. I kind of missed it. And now that the fiscal year is coming to an end, I've got some time, you know, the bidding kind of will wind down. I've got a couple more things to submit so I can dig in and read up on some of these requirements and get prepared for the new upcoming fiscal year. So I do want to thank you for that. Yeah, and our firm, yeah, and our firm sends out, we send out weekly, sometimes daily, depending on the task at hand updates on a lot of these rules. So our newsletter, Plurimaz's newsletter is a pretty, you know, we've heard, we get a lot of great feedback from people at conferences, you know, or any other speaking engagements that we do give out a lot of information. We try to stay up to date on, you know, all the small business stuff, but a wider way of other topics as well. Okay, no, so that means make sure everyone subscribes to the newsletter as well. And I will do that myself since we hang up today. So thank you so much. Any final words for small businesses out there? Just keep doing what you're doing. I love it, I love it. Listen, thank you so much for coming on today. Thank you so much for having me, I appreciate it. Okay, bye now. Bye-bye.