SBA Proposed Rules On Business Integrity and Subcontracting Plans Will Significantly Affect Government Contractors


The Small Business Administration recently issued two proposed rules implementing key elements of the Small Business Jobs Act of 2010. See Venable’s GVC Update of September 2010 (summarizing the requirements of the Act). These rules will have a significant impact on both small and large Government contractors. It is important that your business understand these new rules and how they will impact your business decisions.

Small Business Size and Integrity (76 FR 62313): On October 7, 2011, the SBA issued its proposed rule implementing the Small Business Jobs Act’s business integrity requirements, including the new statutory presumption of loss equal to the value of a small business contract if the contract was awarded based on false information or material misrepresentations. This rule will have a significant impact on contractors and substantially increases the severity of inaccurate small business size representations. Specific elements of the proposed rule include:

* There will be an “irrefutable presumption of loss to the United States based on the total amount expended” whenever it is determined that a concern “willfully sought and received” the contract, subcontract, cooperative agreement, or grant reserved for small businesses (or other classifications, such as 8(a), service-disabled veteran-owned, HUBZone, and woman-owned small businesses) by misrepresentation. A contractor’s liability for this loss is in addition to the severe monetary penalties under the False Claims Act and Program Fraud Civil Remedies Act, and related criminal penalties.

Please see article below for more information.

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Published In: Government Contracting Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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