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Small Business

PPP Payback?

Last week, the Small Business Administration (SBA) launched a second round of the Paycheck Protection Program. PPP allows banks to “forgive” government-guaranteed loans to small businesses struggling due to the pandemic. Unfortunately, government guidance on necessary documentation/calculations to ensure forgiveness is sorely lacking.

Many small business owners expect their loans to ultimately be forgiven “but it is not that simple,” according to Paul Merski, of the Independent Community Bankers of America. He advises that everyone keep “their information and paperwork in order.”(Reuters, May 1, 2020)

The PPP regulation states the following:

  • Borrowers must spend 75 percent of the loan on payroll costs like salaries, tips, leave, severance pay, and health insurance, within the first two months.
  • Borrowers must spend the remaining 25 percent on other “running” costs, such as utilities and rent.

All money spent on non-qualifying expenses must be repaid within two years at a one percent annual interest rate. (ibid)

Confusion and uncertainty surround the re-payment or forgiveness process itself. Who certifies that borrowers actually meet the 75 percent threshold and using borrowed funds as required? Will SBA will issue standard guidelines for forgiveness? Small business owners need to know which documents to maintain and records to keep. EZGSA, like all of you, await some clarity on next steps.

Are you unclear on your Small Business loan payback? We will let you know as soon as we do. In the mean time, feel free to give us a call.

Bye Bye Self Certify

Certification changes for Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged WOSBs (EDWOSBs) will occur this summer. The Small Business Administration (SBA) expects the updated regulation to be published on 30 June 2020, and to go into effect 30 days after. (U.S. Small Business Administration)

Info we have so far includes:

  • Self-certification as a WOSB or EDWOSB will end
  • Certification, going forward, will be accomplished through an approved third-party entity or through SBA’s free online certification at certify.sba.gov. (ibid)

To assist in awarding women-owned business contracts, the government limits competition, by including just those businesses participating in the women’s contracting program. The goal of the government is to award the contracts to women-owned businesses in industries where WOSBs are underrepresented. Some contracts are restricted even further to include economically disadvantaged women-owned small businesses (EDWOSBs) only. The SBA keeps a current list of those eligible industries. (ibid)

Eligibility for the women’s contracting program:

  • Qualify as a small business
  • Company at least 51% owned and controlled by women who are U.S. citizens
  • A company with the day-to-day management of operations and long-term decisions controlled by women

Eligibility for the economically disadvantaged business within the women’s contracting program:

  • Meet all requirements of the women’s contracting program
  • Business is owned/controlled by one or more women, each with a personal net worth less than $750,000
  • Business is owned/controlled by one or more women, each with $350,000 or less in adjusted gross income averaged over the previous three years
  • Business is owned/controlled by one or more women, each $6 million or less in personal assets

The eligibility requirements are spelled out in Title 13 Part 127 Subpart B of the Code of Federal Regulations (CFR). (ibid)

To participate in the women’s contracting program, you must be certified as a women-owned business. First the company must have a profile on SAM.gov, and then go through the aforemention process at certify.SBA.gov. The SBA has approved the following four organizations to provide third-party certifications:

Updating certification information annually through both SAM.gov and certify.SBA.gov will maintain your status within the program as well as make contracting officers aware that your business meets the eligibility requirements to compete under the WOSB or EDWOSB umbrella.

Questions about self-certification, third-party certification, or the women-owned business contracting arena? Give us a call.

 

Emergency Rules

Government ontractors and small businesses should be aware of increased opportunities during the current COVID-19 national emergency. The government is permitted, during a national emergency, to set aside solicitations to allow awards “only to offerors residing or doing business primarily in the area affected by …[a] major disaster or emergency.” Contractors can verify if they fall into this category by reviewing Federal Acquisition Regulation 52.226-3(d). (Law360.com, April 13, 2020)

A national emergency declaration allows the government to (restrict) certain solicitations to small businesses in certain areas. These solicitations are either a set-aside or an evaluation preference is given to small businesses. (ibid)

During national emergencies, large contractors should look to team with small businesses, or to current teaming agreements already in place. In addition, contractors who are at the ready to produce/provide goods or services may be called on to contract with agencies to battle COVID-19. (ibid)

Micro purchase thresholds are another acquisition procedure government agencies may use during a national emergency. These allow for a simplified acquisition methodology for specific items or services required under emergency situations, such as the COVID-19 national emergency. (ibid)

State and local governments may also procure under the Stafford Act, wherein state governors request financial relief via federal grants that allow procurement under their own procedures. The Stafford Act authorizes federal contracts for “debris clearance, distribution of supplies, reconstruction, and other major disaster or emergency assistance activities.” In 2006 the Local Community Recovery Act amended the Stafford Act mandating local organizations to be given preference when using full and open competition. The FAR was also amended to align with the Local Community Recovery Act. Under the act, if a contractor does not meet all of the Recovery Act stipulations there are other factors that may be considered. (Contractors may self-certify that they are local.) (ibid)

Other streamlining acquisition procedures are available under federal supply schedule contracts, multi-agency blanket purchase agreements, and multi-agency indefinite-delivery contracts. Additionally, there is an easing of the requirement that a contractor be registered in SAM.gov at the time an offer is submitted to the government. (ibid)

The emergency declaration allows state and local governments to purchase from all GSA schedules. It also encourages accelerated payments to small business contractors.  (ibid)

Additional modified procedures to facilitate swift responses are:

  • Relaxation of qualifications requirements
  • Use of sole-source contracts
  • Use of oral requests for proposals
  • Use of letter contracts
  • Interagency acquisitions
  • Awards to small disadvantaged businesses
  • Retroactive overtime approvals
  • Waivers of bid guarantees when an emergency exists
  • Use of protest overrides where necessary for a contracting process to continue

In order to track procurements related to COVID-19, GSA added a National Interest Action (NIA) code to SAM.gov. To find information on the site, simply type COVID-19 2020 in the search bar. (ibid) Contractors can register with SAM.gov under the disaster response registry, and be sure to monitor the portals most closely aligned to the goods or services you provide.

Have questions about the many opportunities available under the current national emergency? Give us a call.

Subcontract Reporting Extension

Due to the current National Emergency, the Small Business Administration (SBA) has announced an extension of time for filing Individual Subcontracting Reports (ISR). (U.S. Small Business Administration, April 2, 2020)

The time for filing semi-annual Individual Subcontracting Reports (ISR) has been extended until 30 June 2020. SBA is also extending the deadline to that date for filing ISRs of contracts completed between 13 March  and 31 May 2020. (ibid)

Because most states and the District of Columbia are following quarantine guidelines for residents, many records necessary for meeting these reporting requirements are unavailable. Therefore, the SBA will consider any of these ISRs submitted by 30 June 2020, to be timely. (ibid)

Questions about your ISR and when it is due? Give us a call.

Agency Spending During the Pandemic

Government contractors are experiencing difficulties as they work through obstacles and uncertainties during the COVID-19 pandemic. However, if you thought spending would slow, think again.

In response to the emergency, spending likely exceeded $100 billion for the month of March, according to a webcast hosted by George Mason University’s Center for Government Contracting (GMU). Because of a standard 90-day reporting lag, that figure is likely to be even higher. (Washington Technology, March 31, 2020)

The department of Health and Human Services is responsible for the bulk of non-defense contracting activity with commitments of approximately $748.5 million under research and development. Eric Lofgren, a GMU research fellow, feels the majority of that is going toward “Other Transaction” contracts, designed for speed of fielding capabilities as they fall outside of traditional acquisition regulations. (ibid)

Orders are also being solicited and placed for Personal Protective Equipment (PPE) as well as services such as testing and cleaning. Orders of this nature could very well rise to over $100 billion in response to the COVID-19 emergency. Non-defense spending, as of 27 March, totaled $15 billion, which is on track for spending during the same timeframe in 2019. However, the recently passed CARES Act stimulus package frees up $2 trillion so agencies have funds available for immediate use. (ibid)

The Department of Defense is looking at how the commercial industry is designing solutions. In March, DoD requested white papers from the academic community and private industry for prototype solutions to prevent, contain, treat, and detect coronavirus as well as other possible bio-threats. Many believe this is just the start as DoD begins to support the federal government’s pandemic response. (ibid)

Jerry McGinn, executive director of the GMU GovCon Center and former head of DoD’s manufacturing and industrial base policy office said, “Initially a lot of industry was in the sources sought phase of solicitations, now you’re starting to see they’re just going straight to solicitations…. They’re publishing notices on one day and requiring responses the next, and this is just going to accelerate.”

Questions about these solicitations and how your company might provide solutions? Give us a call.