Whether ’tis nobler in the mind to suffer the slings and arrows of outrageous 2020, or to sit this year out and to hope next year brings less than a sea of troubles?
That’s the question 8(a) companies must ask themselves as they navigate the national economic impact of COVID-19.
The SBA’s 8(a) Business Development Program is tremendously beneficial for participants who may receive enhanced contracting opportunities, be it through competitive or sole source awards.
But the program does not last forever. Participation lasts nine years, strictly enforced. That means, if you’re lucky enough to become a participant in the Program, you have to make each year count.
Many participants, facing the uncertainty caused by the pandemic and associated economic downturn, might be wondering whether 2020 has been such a lost cause that they should voluntarily suspend their participation in the 8(a) Program in the hopes of saving a year or at least a portion of it. The government has recognized that for at least some 8(a) concerns—particularly those that cannot work remotely—2020 may not be their year.
For that reason, the SBA has been emailing 8(a) companies to remind them that the majority of 2020 and some of 2021 need not necessarily count against them.
That’s because during the early days of the pandemic in March 2020, the president signed a proclamation declaring a national emergency. The emergency proclamation did not necessarily have anything to do with the 8(a) program, but the SBA thereafter determined that it met the requirements of the SBA regulation that speaks to suspension.
According to 13 C.F.R. § 124.305(h)(1)(iii), an 8(a) company in a “federally declared disaster area” can elect to suspend its participation in the program for up to a year from the disaster declaration “to allow the firm to recover from the disaster and take full advantage of the program.”
The SBA’s Office of General Counsel determined that the proclamation meant that the entire country is a federally declared disaster area. So, as of March 2020 every 8(a) participant has had the option of suspending their participation, if they so choose.
A suspension, of course, could be a bit of a mixed blessing: though a company will be able to preserve its time in the program as it waits for hopefully, the coronavirus to abate, it cannot receive any new 8(a) awards while under suspension. They can, however, continue to perform on current contracts (in fact, they must) and lift the suspension at any time—it is voluntary, afterall.
For more information about whether your business might qualify for a voluntary suspension, you should check with your 8(a) Business Opportunity Specialist. And, of course, Schoonover & Moriarty is happy to discuss any eligibility issues.