Page 42 - FCW, August 2021

Acquisition
“THE SBA 8(A) PROGRAM AT ITS CORE IS A CONTRACTING PROGRAM. IT OPERATES AS AN INTERMEDIARY, AND
THERE’S A RIGORO“
US REVIEW PROCESS.
— Alan Chvotkin, a partner at Nichols Liu
“is nothing new under the sun,” he said. He cited several examples of misused mentor-protégé programs during his tenure at the Coalition for Government Procurement and added that some large contractors may view the latest initia- tive for SDBs as simply a challenge that requires a workaround.
“We’ve seen a lot of pass-through work where the small business is the window front, the storefront, and \[the small companies\] get the contract awarded based on their status,” he said. The SDB “may do little if any work, and the large business is the one that does all the work. SBA has done a very good job on that front to prevent pass- throughs from happening, but the fact of the matter is if the government says they want to spend more money some- where, there will be a line of people waiting, not all of whom have the best of intentions.”
In a statement, SBA said it “remains focused on preventing abuse across all government contracting programs” and has established risk-mitigation proce- dures while continuing “to refine the program to preserve the foundational principle that the mentor-protégé pro- gram is for the benefit of small busi- nesses.” In addition, SBA revised its regulations in November 2020 to include a mechanism that encourages protégé firms to report suspected abuses and allows the protégé to ask SBA to inter- vene on its behalf. “Where SBA deter- mines adverse impact, SBA will termi-
nate the relationship,” according to the agency’s statement.
Furthermore, SBA conducts an annual review of mentor-protégé rela- tionships for all active program partici- pants and has maintained a cap of three protégés per mentor. The agency said it will continue carefully analyzing mentor- protégé agreements before approval to ensure the integrity of the program.
A more effective intermediary
between agencies and SDBs?
If implemented as written, the Biden administration’s initiative “would pro- vide meaningful benefit to all SDB qualified entities and their communi- ties,” said Guy Timberlake, co-founder of the government contracting group GovCon Club. However, he also said “the administration will need to close loopholes \[to\] ensure the dollars reach their intended destinations.”
Several former federal officials said the government already has an effective vehicle for such efforts: SBA’s 8(a) pro- gram. It helps companies that are major- ity-owned by socially and economically disadvantaged individuals gain access to federal contracting opportunities, and it has been successful in building partnerships between federal agencies and SDBs.
“If the intention \[of Biden’s proposal\] is to truly direct funding to restore a semblance of Black Wall Street, then using the Small Business Administra- tion’s well-regulated 8(a) program may
be a more effective option,” Cureton said. “If funding is set aside for SDBs, I doubt that we will see a meaningful increase in minority business. The best way to get money in the hands of those minority businesses would be through the 8(a) program.”
Alan Chvotkin, a partner at Nichols Liu who previously served as executive vice president and counsel at the Pro- fessional Services Council, agreed that SBA’s existing program was a more logi- cal choice for reaching SDBs. “The SBA 8(a) program at its core is a contract- ing program,” he said. “It operates as an intermediary, and there’s a rigorous review process.”
Still, he added, “it’s going to be a heavy lift to be certain.” For the admin- istration to have a decent chance of success in meeting its goal in the next five years, Chvotkin said it was critical to pass an infrastructure spending bill and continue investing in rebuilding the economy.
“We’re not going to have the same growth between 2021 and 2025 that we saw in 2020 and 2021,” he added, when the government provided money to companies during the COVID-19 pan- demic. Some of those companies were new SDBs that produced personal pro- tective equipment and supported critical infrastructure.
“Study after study shows the biggest need in the SDB community is access to capital,” Chvotkin said. “That’s where the critical shortfall exists.” ■
40 August 2021 FCW.COM