Notable Small Business Provisions in the National Defense Authorization Act for 2016

By: Christine V. Williams on 12/22/2015

This is a brief summary of some of the provisions of the National Defense Authorization Act (NDAA) that will affect small businesses. Definitely a nutshell version of the NDAA, which is published online, and a tad more expansive than the press release for the Small Business Committee, which considered the Act a victory for small businesses in several respects. It will be interesting to see how this law interacts with the proposed regulations of the SBA when they become final.

  • Bundling or Consolidating Contracts.
    Implements provisions to ensure that agencies are properly identifying, justifying, and mitigating decisions to bundle or consolidate contracts in order to defend opportunities for small business participation and competition.

    • Practice Pointer: Recall, that bundling or consolidating contracts can hurt small businesses.  It is also worthwhile to note that the old regulations and the proposed SBA regulations have a position in the SBA offices (Procurement Center Representatives-or PCRs) that can and should advocate against such bundling or consolidation.
  • Publishing the justification.
    Requires that bundling or consolidation justifications be published so that a small business may challenge the agency that are “unfairly taking away opportunities for small businesses.”
  • Clarification on Services/Non-Manufacturer Rule. Prevents agencies and courts from applying the non-manufacturer rule to small service contractors, so that service contractors may continue to provide incidental items as part of the procurement.
    • This likely is in response to an odd case that held if one item fell under the non-manufacturer rule, the entire contract did as well.   This case encompassed even incidental items and was contrary to the NAICS Code assigned by the contracting officer.
  • Joint Ventures/Teaming and Past Performances.  Allows small business teams and joint ventures to rely upon the past performance and qualifications of the team members/jv partners when pursuing large contracts.
    • This will be interesting to watch in regards to “teams” when the proposed regulations come out regarding the small business subcontracting plans and similarly situated entities.  One to keep in mind when those regulations come out.
  • Formally-statutorily establishes/expands the Office of Hearings and Appeals (OHA) for the SBA. Reinforces the power of OHA to hear challenges to size standards as well as allowing OHA to review the process by which the SBA decides industry specific size standards.
  • Including subcontracting goals as agency responsibility.
    The use of small subcontractors is falling and this hold agency executives accountable for meeting their small business subcontracting goals.

    • This will likely play well with the similarly situated entity allowance counting towards mandatory performance in SBA’s proposed regulations.  That is, similarly (i.e., 8(a) to 8(a)) situated small businesses who work as subcontractors may count towards mandatory performance and one would think count towards subcontracting goals as well.  Another one to watch as the proposed regulations become final.
    • Recall, currently senior officials are not held accountable for this metric.
  • Expanded HUBZone eligibility.
    Areas impacted by a base closure or qualified disaster will have expended HUBZone eligibility.