[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR124.515]

[Page 383-384]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 124--8(A) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS STATUS DETERMINATIONS--Table of Contents
 
                  Subpart A--8(a) Business Development
 
Sec. 124.515  Can a Participant change its ownership or control and continue to perform an 8(a) contract, and can it transfer performance to another firm?

    (a) An 8(a) contract must be performed by the Participant that 
initially received it unless a waiver is granted under paragraph (b) of 
this section.
    (1) An 8(a) contract, whether in the base or an option year, must be 
terminated for the convenience of the Government if:
    (i) One or more of the individuals upon whom eligibility for the 
8(a) BD program was based relinquishes or enters into any agreement to 
relinquish ownership or control of the Participant such that the 
Participant would no longer be controlled or at least 51% owned by 
disadvantaged individuals; or

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    (ii) The contract is transferred or novated for any reason to 
another firm.
    (2) The procuring activity may not assess repurchase costs or other 
damages against the Participant due solely to the provisions of this 
section.
    (b) The SBA Administrator may waive the requirements of paragraph 
(a)(1) of this section if requested to do so by the 8(a) contractor 
when:
    (1) It is necessary for the owners of the concern to surrender 
partial control of such concern on a temporary basis in order to obtain 
equity financing;
    (2) Ownership and control of the concern that is performing the 8(a) 
contract will pass to another Participant, but only if the acquiring 
firm would otherwise be eligible to receive the award directly as an 
8(a) contract;
    (3) Any individual upon whom eligibility was based is no longer able 
to exercise control of the concern due to physical or mental incapacity 
or death;
    (4) The head of the procuring agency, or an official with delegated 
authority from the agency head, certifies that termination of the 
contract would severely impair attainment of the agency's program 
objectives or missions; or
    (5) It is necessary for the disadvantaged owners of the initial 8(a) 
awardee to relinquish ownership of a majority of the voting stock of the 
concern in order to raise equity capital, but only if--
    (i) The concern has graduated from the 8(a) BD program;
    (ii) The disadvantaged owners will maintain ownership of the largest 
single outstanding block of voting stock (including stock held by 
affiliated parties); and
    (iii) The disadvantaged owners will maintain control of the daily 
business operations of the concern.
    (c) The 8(a) contractor must request a waiver in writing prior to 
the change of ownership and control except in the case of death or 
incapacity. A request for waiver due to incapacity or death must be 
submitted within 60 days after such occurrence. The Participant seeking 
to change ownership or control must specify the grounds upon which it 
requests a waiver, and must demonstrate that the proposed transaction 
would meet such grounds.
    (d) SBA determines the eligibility of an acquiring Participant under 
paragraph (b)(2) of this section by referring to the items identified in 
Sec. 124.507(b)(2) and deciding whether at the time of the request for 
waiver (and prior to the transaction) the acquiring Participant is a 
responsible and eligible concern with respect to each contract for which 
a waiver is sought. As part of the waiver request, the acquiring firm 
must certify that it is a small business for the size standard 
corresponding to the SIC code assigned to each contract for which a 
waiver is sought.
    (e) Anyone other than a procuring agency head who submits a 
certification regarding the impairment of the agency's objectives under 
paragraph (b)(4) of this section, must also certify delegated authority 
to make the certification.
    (f) In processing a request for a waiver under paragraph (b)(2) of 
this section, SBA will treat a transfer of all a Participant's operating 
assets to another Participant the same as the transfer of an ownership 
interest, provided the Participant that transfers its assets to another 
eligible Participant:
    (1) Voluntarily graduates from the 8(a) BD program; and
    (2) Ceases its business operations, or presents a plan to SBA for 
its orderly dissolution.
    (g) A concern performing an 8(a) contract must notify SBA in writing 
immediately upon entering into an agreement or agreement in principle 
(either oral or written) to transfer all or part of its stock or other 
ownership interest or assets to any other party. Such an agreement could 
include an oral agreement to enter into a transaction to transfer 
interests in the future.
    (h) The Administrator has discretion to decline a request for waiver 
even though legal authority exists to grant the waiver.
    (i) The 8(a) contractor may appeal SBA's denial of a waiver request 
by filing a petition with OHA pursuant to part 134 of this chapter 
within 45 days after the contractor receives the Administrator's 
decision.

[63 FR 35739, June 30, 1998, as amended at 67 FR 47246, July 18, 2002]

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