[Federal Register Volume 86, Number 8 (Wednesday, January 13, 2021)]
[Rules and Regulations]
[Pages 2529-2533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00602]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 124

RIN 3245-AH64


Extension of Participation in 8(a) Business Development Program

AGENCY: U.S. Small Business Administration.

ACTION: Interim final rule.

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SUMMARY: This interim final rule contains amendments to the regulations 
governing the 8(a) Business Development (BD) program. The U.S. Small 
Business Administration (SBA) is revising its regulations to implement 
a provision in the Consolidated Appropriations Act, 2021 
(Appropriations Act), and the National Defense Authorization Act for 
Fiscal Year 2021 (NDAA 2021), which authorized certain 8(a) 
Participants to extend their 8(a) BD program term by a period of one 
year. This interim final rule amends the 8(a) BD program regulations to 
carry out the changes made by the Act.

[[Page 2530]]


DATES: 
    Effective date: This interim final rule is effective on January 13, 
2021.
    Comment date: Comments must be received no later than March 15, 
2021.

ADDRESSES: You may submit comments, identified by RIN: 3245-AH64 by any 
of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Email: Van Tran, Deputy Associate Administrator, Office of 
Business Development, Small Business Administration, at 
<a href="/cdn-cgi/l/email-protection#3e065f6f4b5b4d4a5751504d7e4d5c5f10595148"><span class="__cf_email__" data-cfemail="6a520b3b1f0f191e030504192a19080b440d051c">[email protected]</span></a>.
    SBA will post all comments on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI), as defined in 
the User Notice at http://www.regulations.gov, please submit the 
information to Van Tran, Deputy Associate Administrator, Office of 
Business Development, Small Business Administration at 
<a href="/cdn-cgi/l/email-protection#80b8e1d1f5e5f3f4e9efeef3c0f3e2e1aee7eff6"><span class="__cf_email__" data-cfemail="90a8f1c1e5f5e3e4f9fffee3d0e3f2f1bef7ffe6">[email protected]</span></a>. Highlight the information that you consider to be 
CBI and explain why you believe SBA should hold this information as 
confidential. SBA will review the information and make the final 
determination on whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: Van Tran, Deputy Associate 
Administrator, Office of Business Development, Office of Government 
Contracting and Business Development, at <a href="/cdn-cgi/l/email-protection#1d257c4c68786e697472736e5d6e7f7c337a726b"><span class="__cf_email__" data-cfemail="dbe3ba8aaebea8afb2b4b5a89ba8b9baf5bcb4ad">[email protected]</span></a>, or SBA's 
8(a) BD information line at (415) 744-0328.

SUPPLEMENTARY INFORMATION:

I. Background Information

    On December 27, 2020, President Trump signed into law the 
Appropriations Act, Public Law 116-260, Div. N, title III, sec. 330 
(Dec. 27, 2020), to, among other things, make appropriations for the 
2021 fiscal year and to provide coronavirus emergency response and 
relief. Section 330 of the Appropriations Act mandates that SBA must 
ensure that any small business concern participating in the 8(a) BD 
program on or before September 9, 2020 has the option to extend such 
participation for a period of one year from the end of its program 
term, regardless of whether the concern previously elected to 
voluntarily suspend its program participation in connection with the 
President's nationwide coronavirus emergency disaster declaration on 
March 13, 2020. (Presidential Disaster Declaration on Declaring a 
National Emergency Concerning the Novel Coronavirus Disease (COVID-19) 
Outbreak (March 13, 2020) (https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak).
    Section 869 of the National Defense Authorization Act for Fiscal 
Year 2021, Public Law 116-283, title VIII, sec. 869 (January 1, 2021) 
(NDAA 2021) also contained the same language authorizing business 
concerns participating in the 8(a) BD program on or before September 9, 
2020 to extend their participation in the program for a period of one 
year from the end of their program terms. The statutory language of 
both the Appropriations Act and NDAA 2021 authorizes an extension for 
firms participating in the program ``on or before September 9, 2020.'' 
There is no further clarifying language as to what ``before'' September 
9, 2020 is intended to encompass. It is SBA's understanding that 
Congress extended the term of participation in the 8(a) BD program 
because it believed that the pandemic has adversely affected 8(a) 
concerns and their ability to participate in and receive the full 
benefits of the program. Thus, SBA believes it is reasonable to 
conclude that any firms participating in the program as of the date the 
national disaster was declared due to the pandemic (i.e., March 13, 
2020) should receive the program term extension authorized by Congress.
    This extension authority does not extend to business concerns that 
graduated from or otherwise left the 8(a) BD program prior to March 13, 
2020, or to business concerns that were admitted to the 8(a) BD program 
after September 9, 2020. In addition, this rule clarifies that the 
extension will not apply to business concerns that were Participants in 
the 8(a) BD program at any point between March 13, 2020, and September 
9, 2020, but were terminated, early graduated or voluntarily withdrew 
from the program in lieu of being terminated or early graduated. SBA 
has already determined that such business concerns are no longer 
eligible to participate in the 8(a) BD program.
    In addition, both the Appropriations Act and the NDAA 2021 provide 
that SBA shall issue regulations implementing the provision not later 
than 15 days after the date of enactment, and that the regulations 
shall be issued without regard to the notice requirements under section 
553(b) of title 5, United States Code. As such, this rule is being 
implemented as an interim final rule with an immediate effective date.
    In order to implement the statutory language of section 330 of the 
Appropriations Act and section 869 of the NDAA 2021, SBA is amending 
Sec.  124.2 of its regulations to incorporate the optional program term 
extension for small business concerns participating in the 8(a) BD 
program on March 13, 2020. Specifically, revised Sec.  124.2 provides 
that for a firm participating in the 8(a) BD program as of March 13, 
2020 and through January 13, 2021, SBA will extend its program term by 
one year unless the concern declines such extension. A firm that was 
participating in the 8(a) BD program as of March 13, 2020, but has 
since graduated or otherwise left the program before January 13, 2021 
must notify SBA of its intent to be readmitted for a period of one year 
from the date it completed its program term. Any such notification must 
be received by SBA no later than March 15, 2021. In addition, a firm 
seeking to be readmitted must certify that it continues to meet the 
applicable eligibility requirements as set forth in Sec. Sec.  124.101 
through 124.111.
    SBA is also revising Sec.  124.2 to clarify that any period of 
extension under the Act will be added to a Participant's transitional 
stage of participation in the 8(a) BD program. SBA has selected this 
approach for two reasons. First, in authorizing an extension of 8(a) BD 
program participation, Congress clearly intended to give certain 8(a) 
Participants the opportunity to recover and take full advantage of the 
program's business development assistance, including the additional 
assistance available to firms in the transitional stage as set forth in 
Sec.  124.404(c). Second, it would be administratively burdensome and 
illogical to place a Participant that has already entered the 
transitional stage (or completed its program term) back in the 
development stage during its period of extension.
    As part of this revision, SBA is also making conforming amendments 
to Sec.  124.404 to clarify the respective terms of the developmental 
and transitional stages of program participation.
    Lastly, SBA is revising Sec.  124.509 of its regulations to clarify 
how an extension of participation under the Act will impact an 8(a) 
Participant's requirement to attain the targeted dollar levels of non-
8(a) revenue in its extended program term. Currently, under SBA's 
regulations, a Participant in the transitional stage of the 8(a) BD 
program (i.e., years five through nine) must generally achieve certain 
targets of revenue derived from sources other than sole source or 
competitive 8(a) contracts. The purpose of these targets is to ensure 
that Participants do not develop an unreasonable reliance on 8(a) 
awards, and to ease their transition into the competitive marketplace 
after

[[Page 2531]]

leaving the 8(a) BD program. As such, the targets increase 
incrementally during the transitional stage of the program. Where a 
Participant fails to meet its applicable competitive business activity 
target for the just completed program year and SBA determines that the 
Participant did not make good faith efforts to obtain the requisite 
non-8(a) revenue, that Participant will be ineligible for sole source 
8(a) contracts in the current program year unless a waiver is granted 
by SBA.
    Currently, a Participant in the ninth year of its program term must 
derive at least 50 percent of its revenues from sources other than sole 
source or competitive 8(a) contracts. As noted above, the statutory 
language contained in section 330 of the Appropriations Act and section 
869 of the NDAA 2021 was added because Congress believed that firms 
participating in the 8(a) BD program may not have been able to 
experience the full benefits of the program due to complications caused 
by the pandemic. Thus, it is our view that firms that were in program 
year nine as of March 13, 2020 should not be subject to a higher 
business activity target for the time added on to the end of their 
program terms by section 330 and section 869. As such, the same 50 
percent business activity target that applies to program year nine will 
also apply to the extended program term. In order to receive sole 
source 8(a) contracts during the extended program term a Participant 
must meet (or have met) the applicable 50 percent non-8(a) business 
activity target or have made good faith efforts to obtain the requisite 
non-8(a) revenue in the ninth program year (or fifth year of the 
transitional stage). Because the period of extension for firms that 
were participating as of March 13, 2020 but have since graduated or 
otherwise left the program may be less than a full year, SBA 
understands that it may be more difficult to meet the 50 percent non-
8(a) business activity target for the extended program term. However, 
SBA encourages Participants to make good faith efforts to obtain at 
least 50 percent of their revenue from non-8(a) sources during the 
extension period in order to ease the transition to the competitive 
marketplace after graduating from the 8(a) BD program. As a point of 
clarification, SBA notes that this interim final rule does not revise 
the schedule of the transitional stage or the corresponding business 
activity target requirements for current 8(a) Participants in years one 
through five of the transitional stage of the program. In other words, 
for purposes of the business activity target requirements any such 
Participant that elects to extend its participation in the program 
under the Act will not repeat a year in the transitional stage or 
revert back to a prior year in the transitional stage as a result of 
the program extension.

II. Comments and Immediate Effective Date

    This interim final rule is effective without advance notice and 
public comment because section 330(b) of the Appropriations Act and 
section 869(b) of the NDAA 2021 authorize SBA to issue implementing 
regulations without regard to notice requirements under 5 U.S.C. 
553(b). However, SBA is providing a 60-day comment period for the 
public to comment on this Interim Final Rule. SBA's justification for 
the use of an interim final rule and immediate effective date follow.

III. Justification for Interim Final Rule

    In general, SBA publishes a rule for public comment before issuing 
a final rule, in accordance with the Administrative Procedure Act, 5 
U.S.C. 553. The Administrative Procedure Act provides an exception to 
this standard rulemaking process, however, where an agency finds good 
cause to adopt a rule without prior public participation. 5 U.S.C. 
553(b)(3)(B). The good cause requirement is satisfied when prior public 
participation is impracticable, unnecessary, or contrary to the public 
interest. Under such circumstances, an agency may publish an interim 
final rule without soliciting public comment.
    SBA has determined that there is good cause for dispensing with 
advance public notice and comment on the grounds that that it would be 
contrary to the public interest. Specifically, advance public notice 
and comment would delay the delivery of critical business development 
assistance Congress sought to extend to firms that are presently not 
eligible for the program's assistance because they have already 
graduated or otherwise left the 8(a) BD program. As explained above, 
such firms will need to notify SBA that they would like to be 
readmitted to the program as soon as possible in order to take full 
advantage of the extension period.
    In addition, both the Appropriations Act and the NDAA provisions 
cited provide specific authority for SBA to proceed with this rule. 
Section 330(b) of the Appropriation Act provides: ``(b). Emergency 
Rulemaking Authority--Not later than 15 days after the date of 
enactment of this Act, the Administrator shall issue regulations to 
carry out this section without regard to the notice requirements under 
section 553(b) of title 5, United States Code.'' Similarly, section 
869(b) of the NDAA 21 provides: ``(b) Emergency Rulemaking Authority.--
Not later than 15 days after the date of enactment of this section, the 
Administrator shall issue regulations to carry out this section without 
regard to the notice requirements under section 553(b) of title 5, 
United States Code.''
    Although this interim final rule is effective immediately, comments 
are solicited from interested members of the public on all aspects of 
the interim final rule. These comments must be received on or before 
the close of the comment period noted in the DATES section of this 
interim final rule. SBA will then consider these comments in making any 
necessary revisions to these regulations.

IV. Justification for Immediate Effective Date

    The APA requires that ``publication or service of a substantive 
rule shall be made not less than 30 days before its effective date, 
except as--otherwise provided by the agency for good cause found and 
published with the rule.'' 5 U.S.C. 553(d)(3). The purpose of this 
provision is to provide interested and affected member of the public 
sufficient time to adjust their behavior before the rule takes effect.
    In light of the urgent need to assist 8(a) small business concerns 
during the pandemic, SBA finds that there is good cause for making this 
rule effective immediately instead of observing the 30-day period 
between publication and effective date. While this interim final rule 
is effective immediately upon publication, SBA is inviting public 
comment on the rule during a 60-day period and will consider the 
comments in developing a final rule. SBA has included an applicability 
date to make clear that the rule is applicable for eligible 8(a) 
companies to either retain or regain their 8(a) status as quickly as 
possible.

V. Compliance With Executive Orders 12866, 13771, 12988, 13132, and 
13175, the Paperwork Reduction Act (44 U.S.C., Ch. 35), and the 
Regulatory Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

    The Office of Information and Regulatory Affairs has determined 
that this interim final rule is not significant for the purposes of 
Executive Order 12866 and is not considered a major rule under the 
Congressional Review Act.
    This interim final rule is necessary to implement section 330 of 
the Appropriations act and section 869 of

[[Page 2532]]

the NDAA 2021 in order to provide relief to 8(a) firms adversely 
impacted by the March 13, 2020, emergency declaration. SBA anticipates 
that this rule will substantially benefit such 8(a) firms, their 
employees, and the communities they serve. The rule will allow 8(a) 
firms to continue to be eligible to be awarded both competitive and 
sole source 8(a) contracts for an extended period in the program. In FY 
2019, 8(a) firms were awarded 5.15% of federal contract dollars 
amounting to $30.39 billion with $8.62 billion awarded through set 
asides, $9.90 billion awarded as sole-source, and $11.87 billion 
awarded though open competition or with another preference (e.g., 
HUBZone) applied.\1\ In the past five years (FY 2016-FY 2020) the 
average total contract awards per 8(a) firm ranged from $3.15 million 
in FY 2018 to $4.45 million in FY 2016.
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    \1\ Congressional Research Service, SBA's ``8(a) Program'': 
Overview, History, and Current Issues, Page 36-37, https://crsreports.congress.gov/product/pdf/R/R44844.
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    An addition of one year to the term of 8(a) firms will increase the 
pool of firms participating in the program by up to 400 to 600 8(a) 
firms each year for the next ten years, which reflects the amount of 
firms that have graduated from the 8(a) program annually in the past 
five years, on average. Approximately 4,150 8(a) firms would be 
eligible to receive benefits for an additional year in the 8(a) program 
during the course of the next ten years based on the number of firms 
within the current 8(a) portfolio and including those firms that 
graduated since March 13, 2020. While more firms will be eligible to 
participate in the 8(a) program each year, the impact on 8(a) contract 
dollars awarded is anticipated to be non-substantive.
    SBA will also need to account for costs associated with the 
management of an additional year of eligibility for 8(a) firms, which 
includes business development assistance and compliance oversight. In 
FY 2019, with nearly 5,200 8(a) firms in the program, SBA expended 
approximately $12,150 per 8(a) Program Participant based on a total 
program cost of $63.17 million; this figure includes overhead costs 
\2\. An additional year of eligibility would likely increase total 
program costs stemming from program services. However, some of these 
costs (e.g., overhead) would be redistributed across the 8(a) program 
and other SBA programs or reduced due to economies of scale. SBA is 
unable to estimate the marginal costs associated with an additional 
year at the end of a firm's term in the 8(a) program, but anticipates 
that it would not exceed SBA's annual costs for an 8(a) Participant.
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    \2\ SBA's FY 2021 Congressional Justification and Annual 
Performance Report, Table 10, Page 16, https://www.sba.gov/cj.
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Executive Order 13771

    This rule is not an E.O. 13771 regulatory action because this rule 
is not significant under E.O. 12866.

Executive Order 12988

    This action meets applicable standards set forth in sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    This rule does not have federalism implications as defined in 
Executive Order 13132. It will not have substantial direct effects on 
the States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in the Executive Order. As 
such it does not warrant the preparation of a Federalism Assessment.

Executive Order 13175

    This rule does not have tribal implications under Executive Order 
13175, Consultation and Coordination with Indian Tribal Governments, 
because it would not have a substantial direct effect on one or more 
Indian tribes, on the relationship between the Federal Government and 
Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.

Paperwork Reduction Act

    The SBA has determined that this rule does not affect any existing 
collection of information. The rule does require a concern seeking to 
be readmitted to the 8(a) BD program to notify SBA of its intent to be 
readmitted and make a certification that it continues to meet the 
applicable 8(a) BD program eligibility requirements as set forth in 
Sec. Sec.  124.101 through 124.111 of title 13 of the Code of Federal 
Regulations. SBA is not seeking to collect information through any 
required form, but rather is anticipating a simple email from the 
business concern to SBA notifying SBA of its intent to be readmitted to 
the 8(a) BD program. There are 346 business concerns whose program 
terms have expired since March 13, 2020. Those are the only business 
concerns who would be subject to the notification requirement.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires 
administrative agencies to consider the effect of their actions on 
small entities, small nonprofit enterprises, and small local 
governments. Pursuant to the RFA, when an agency issues a rulemaking, 
the agency must prepare a regulatory flexibility analysis which 
describes the impact of the rule on small entities. However, rules that 
are exempt from notice and comment are exempt from the RFA requirements 
when the agency for good cause finds that notice and public procedure 
are impracticable, unnecessary, or contrary to the public interest. 
Small Business Administration's Office of Advocacy guide: How to Comply 
with the Regulatory Flexibility Ac. Ch.1. p.9. Accordingly, SBA is not 
required to conduct a regulatory flexibility analysis.

List of Subjects in 13 CFR Part 124

    Administrative practice and procedure, Government procurement, 
Government property, Small businesses.

    Accordingly, for the reasons stated in the preamble, SBA is 
amending 13 CFR part 124 as follows:

PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS 
STATUS DETERMINATIONS

0
1. The authority citation for part 124 is revised to read as follows:

    Authority:  15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), 644 and 
Pub. L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L. 
101-574, section 8021, Pub. L. 108-87, Pub. L. 116-260, sec. 330, 
and 42 U.S.C. 9815.


0
2. Revise Sec.  124.2 to read as follows:


Sec.  124.2  What length of time may a business participate in the 8(a) 
BD program?

    (a) Except as set forth in paragraph (b) of this section, a 
Participant receives a program term of nine years from the date of 
SBA's approval letter certifying the concern's admission to the 
program. The Participant must maintain its program eligibility during 
its tenure in the program and must inform SBA of any changes that would 
adversely affect its program eligibility. The nine-year program term 
may be shortened only by termination, early graduation (including 
voluntary early graduation) or voluntary withdrawal as provided for in 
this subpart.
    (b) Pursuant to section 330 of the Consolidated Appropriations Act, 
2021,

[[Page 2533]]

and section 869 of the National Defense Authorization Act for Fiscal 
Year 2021, a small business concern participating the 8(a) BD program 
on March 13, 2020, may elect to extend such participation by a period 
of one year from the end of its program term, regardless of whether it 
previously elected to suspend participation in the program under the 
procedures set forth in Sec.  124.305(h)(1)(iii).
    (1) Unless expressly declined in writing, SBA will extend a 
Participant's program term by one year if the concern was a Participant 
in the 8(a) BD program on March 13, 2020, and continued its 
participation through January 13, 2021. Declines of such extension must 
be submitted to: Deputy Associate Administrator, Office of Business 
Development, Small Business Administration, 409 Third Street SW, 
Washington, DC 20416, or email to <a href="/cdn-cgi/l/email-protection#0139605074647275686e6f72417263602f666e77"><span class="__cf_email__" data-cfemail="2119407054445255484e4f52615243400f464e57">[email protected]</span></a>.
    (2) Except as set forth in paragraph (b)(2)(iii) of this section 
any concern that was a Participant in the 8(a) BD program on March 13, 
2020, but graduated or otherwise left the program before January 13, 
2021 may elect to be readmitted to the 8(a) BD program for the period 
of time equal to one year from the date of the original expiration of 
the concern's program term. A concern seeking to be readmitted to the 
8(a) BD program must notify SBA of its intent to be readmitted no later 
than March 15, 2021.
    Example 1 to paragraph (b)(2) introductory text. Business Concern A 
was a Participant in the 8(a) BD program on September 9, 2020, and its 
program term expired on November 25, 2020. On January 28, 2021, 
Business Concern A notified SBA of its election to be readmitted to the 
8(a) BD program under the process outlined in this paragraph (b)(2). 
Business Concern A would be eligible to participate in the 8(a) BD 
program until November 25, 2021.
    (i) All requests for readmittance must be submitted to: Associate 
Administrator, Office of Business Development, Small Business 
Administration, 409 Third Street SW, Washington, DC 20416, or email to 
<a href="/cdn-cgi/l/email-protection#f0c891a185958384999f9e83b0839291de979f86"><span class="__cf_email__" data-cfemail="5e663f0f2b3b2d2a3731302d1e2d3c3f70393128">[email protected]</span></a>.
    (ii) As part of a concern's notification to SBA of its intent to be 
readmitted to the 8(a) BD program, the concern must certify that it 
continues to meet the applicable 8(a) BD program eligibility 
requirements as set forth in Sec. Sec.  124.101 through 124.111. SBA 
may, in its discretion, request information or documentation to assess 
whether the concern meets the eligibility criteria for readmittance.
    (iii) Business concerns that were Participants in the 8(a) BD 
program on March 13, 2020, but were terminated or early graduated by 
SBA or elected to voluntarily withdraw or early graduate in lieu of 
termination are not eligible to extend their program terms.
    (iv) The readmittance of a business concern owned and controlled by 
a tribe, ANC, NHO, or CDC to the 8(a) BD program under this paragraph 
(b)(2) will be disregarded for purposes of the ownership restrictions 
applicable to Participants owned by a tribe, ANC, NHO, or CDC as set 
forth in Sec. Sec.  124.109(c)(3)(ii), 124.110(e), and 124.111(d). The 
date to commence the two-year waiting period for the tribe, ANC, NHO, 
or CDC to own another business concern in the 8(a) BD program with the 
same primary NAICS code as the readmitted concern will not be 
readjusted with the firm's readmittance.

0
3. Amend Sec.  124.404 by revising the second sentence of paragraph (a) 
to read as follows:


Sec.  124.404  What business development assistance is available to 
Participants during the two stages of participation in the 8(a) BD 
program?

    (a) * * * The developmental stage will last four years, and the 
transitional stage will last five years, unless the concern has exited 
the program by one of the means set forth in Sec.  124.301 prior to the 
expiration of its program term or has elected to extend its 
participation pursuant to Sec.  124.2(b).
* * * * *

0
4. Amend Sec.  124.509 by revising paragraph (b)(2) and adding an 
example to paragraph (d)(4) to read as follows:


Sec.  124.509  What are non-8(a) business activity targets?

* * * * *
    (b) * * *
    (2) Non-8(a) business activity targets.--(i) During their 
transitional stage of program participation, Participants must meet the 
following non-8(a) business activity targets each year:

                     Table 1 to Paragraph (b)(2)(i)
------------------------------------------------------------------------
                                                      Non-8(a) business
                                                       activity targets
                                                      (required minimum
    Participant's year in the transitional stage     non-8(a) revenue as
                                                       a percentage of
                                                        total revenue)
------------------------------------------------------------------------
1..................................................                   15
2..................................................                   25
3..................................................                   30
4..................................................                   40
5..................................................                   50
------------------------------------------------------------------------

    (ii) Any Participant that extended its program term pursuant to 
Sec.  124.2(b) of this chapter must meet the business activity target 
for year 5 or meet the applicable requirements of paragraph (d) or (e) 
of this section in order to preserve its eligibility for sole source 
8(a) contracts during the extended program period. The applicable 
business activity target for the extended program period will be the 
same as that for year 5 of the transitional stage (i.e., 50% non-8(a) 
revenue).
* * * * *
    (d) * * *
    (4) * * *
    Example 3 to paragraph (d)(4): Firm C elected to extend its 
participation in the 8(a) BD program as set forth in Sec.  124.2 of 
this chapter. Firm C had $10 million in total revenue during year 5 in 
the transitional stage (year 9 in the program), of which $8.5 million 
were 8(a) revenues and $1.5 million were non-8(a) revenues, and SBA 
determined that Firm C did not make good faith efforts to meet its non-
8(a) business activity target. In order to be eligible for sole source 
8(a) contracts during year 6 of the transitional stage (year 10 in the 
program), Firm C must demonstrate at its first or second quarterly 
review that it had received at least $3.5 million in non-8(a) revenue 
and new non-8(a) awards (the amount by which it failed to meet the 50% 
non-8(a) business activity target for year 5 in the transitional 
stage). If, at its first two quarterly reviews during year 6 of the 
transitional stage (year 10 in the program), Firm C could not 
demonstrate that it had received at least $3.5 million in non-8(a) 
revenue and new non-8(a) awards, Firm C would not be eligible for sole 
source 8(a) contracts for the remainder of its program term.
* * * * *

Jovita Carranza,
Administrator.
[FR Doc. 2021-00602 Filed 1-12-21; 8:45 am]
BILLING CODE 8026-03-P


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