Contractor Responsibility Rules Examined.

• Author: Stone, Ben
• Position: Brief Article

In one of its last regulatory actions, the Clinton administration issued the final rules expanding contractor responsibility determination requirements and cost principle limitations. The new rules became effective January 19. NDIA strongly opposed the rules from the outset and has called on the new administration to delay enforcement of the new rules because federal procurement officials oppose them, they are arbitrary and capricious, lack standards and they effectively amend public law through administrative rule-making, thus abrogating Congress' role to legislate such matters. NDIA seeks complete overturn of the new rules.

Small Business Update

The Omnibus Appropriations bill for fiscal year 2001 includes a boost for the Small Business Administration (SBA). The bill authorizes $14.5 billion for 7(a) loans for fiscal 2001, which grows to $16 billion in fiscal 2003. Loans directed towards specific public policy items--504 loans--such as minority owned business, will see an increase of $1 billion over the next three years, from $4 billion in fiscal 2001 to $5 billion in fiscal 2003. Additionally, the HUBZone program will receive $10 billion per fiscal year for the next three years.

For the first time since 1988, the maximum guaranteed loan amount for 7(a) and 504 loans has been increased to $1 million from $750,000. NDIA supports the increase, designed to incorporate over 10 years of inflation, as it allows greater flexibility and purchasing power for qualified small businesses. NDIA endorses the addition of women-owned businesses to the permanent list of public policy lending goals for the SBA. This list currently includes minority-owned businesses and low income and rural areas.

A new rule that went into effect on February 20, 2001, clarifies the definition of "principle office," decreases eligibility restrictions for affiliations of HUBZone small business concerns (SBC) and eases procurement restrictions for qualified HUBZone SBCs that operate as non-manufacturers. Under the new rule, the "principle office" regulation will no longer apply to those businesses whose primary industry is service or construction, for the nature of these industries requires workers to perform the majority of their work at different job-site locations. The SBA predicts that the final rule, released January, 17, 2001, will affect a large number of the 30,000-plus SBCs that are currently eligible or will become eligible. NDIA believes this flexibility will enable...