In a recent notice for Tribal consultation and request for comments, as well as a published proposed rule, the SBA seems to be signaling an increase in oversight of Native or Tribally-owned entities who are 8(a) Participants. SBA has an apparent goal of enforcing more stringent repercussions for not fully adhering to some stipulations that exclusively pertain to Native or Tribally-Owned participants in the 8(a) Business Development Program. While not final yet, the SBA has placed these potential consequences, the reasoning behind them, and the proposed rule out in the public for discussion. As these actions may present some rather drastic changes for some 8(a) Participants, I have done a quick breakdown of them here.
As many of our readers may well know, an 8(a) Program participating business that is owned and operated by Tribes, NHOs (Native Hawaiian Organizations), or ANCs (Alaskan Native Corporations), typically has some requirements for participation that will differ from other 8(a) Participants, as well as some additional benefits that other 8(a) Participants don’t receive. One of these requirements is that any 8(a) company that is owned by a Tribe, NHO, or ANC, must in its annual report to the SBA show how it “has provided benefits to the Tribal or Native members and/or the Tribal, Native or other community” through its participation in the 8(a) Program. 13 C.F.R. § 124.604. It is the actions taken by 8(a) Participants related to this requirement that the SBA seems to be focusing in on in its recent publications…
As promised by the SBA in their notice of consultation, on September 9, 2022, the SBA released a proposed rule to update the 8(a) regulations, that among many other revisions, proposed changes to 13 C.F.R. §§ 124.108, and 124.604. The SBA through this proposed rule is stating that they would change the subject regulations to require:
- Each Tribal entity having one or more participant in the 8(a) Program must establish a Community Benefits Plan that outlines the anticipated approach it expects to deliver and strengthen its Native or underserved community over the next three or five years. Each entity would decide how to best serve and meet the needs of its community, though SBA expects commitments related to health, education, housing, infrastructure, cultural preservation, and economic development, as much as is possible.
- Each 8(a) Participant owned by a NHO, ANC, or Tribal organization must submit to the SBA information showing how the Tribe, ANC, NHO or CDC has provided benefits to the Tribal community or other community, whether the benefits provided meet the goals set forth in the “Community Benefits Plan”, and how the benefits directly impacted the Native or underserved community…
