[Code of Federal Regulations]

[Title 13, Volume 1]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 13CFR124.515]



[Page 403-404]

 

                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

    (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



[[Page 404]]



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]