Regulation

§ 124.702

13 CFR Ch. I (1–1–12 Edition)

to enter into grants, cooperative agreements, or contracts with public or private organizations to pay all or part of
the cost of technical or management
assistance for individuals or concerns
eligible for assistance under sections
7(a)(11), 7(j)(10), or 8(a) of the Small
Business Act.
§ 124.702 What types of assistance are
available through the 7(j) program?
Through its private sector service
providers, SBA may provide a wide variety of management and technical assistance to eligible individuals or concerns to meet their specific needs, including:
(a) Counseling and training in the
areas of financing, management, accounting, bookkeeping, marketing, and
operation of small business concerns;
and
(b) The identification and development of new business opportunities.
§ 124.703 Who is eligible to receive 7(j)
assistance?
The following businesses are eligible
to receive assistance from SBA
through its service providers:
(a) Businesses which qualify as small
under part 121 of this title, and which
are located in urban or rural areas with
a high proportion of unemployed or
low-income individuals, or which are
owned by such low-income individuals;
and
(b) Businesses eligible to receive 8(a)
contracts.
§ 124.704 What additional management
and technical assistance is reserved
exclusively for concerns eligible to
receive 8(a) contracts?
In addition to the management and
technical assistance available under
§ 124.702, Section 7(j)(10) of the Small
Business Act authorizes SBA to provide additional management and technical assistance through its service
providers exclusively to small business
concerns eligible to receive 8(a) contracts, including:
(a) Assistance to develop comprehensive business plans with specific business targets, objectives, and goals;
(b) Other nonfinancial services necessary for a Participant’s growth and

development, including loan packaging; and
(c) Assistance in obtaining equity
and debt financing.

Subpart B—Eligibility, Certification,
and Protests Relating to Federal Small Disadvantaged
Business Programs
SOURCE: 63 FR 35772, June 30, 1998, unless
otherwise noted.

§ 124.1001

General applicability.

(a) This subpart defines a Small Disadvantaged Business (SDB). It also establishes procedures by which SBA determines whether a particular concern
qualifies as an SDB in response to a
protest challenging the concern’s status as disadvantaged. Unless specifically stated otherwise, the phrase ‘‘socially and economically disadvantaged
individuals’’ in this subpart includes,
Indian tribes, ANCs, CDCs, and NHOs.
(b) In order for a concern to represent
that it is an SDB in order to receive a
benefit as a prime contractor on a Federal Government procurement, it must:
(1) Be a current Participant, as defined in § 124.3 of this part, in SBA’s
8(a) BD as described in § 124.1 of this
part, program;
(2) Have been certified by SBA as an
SDB within three years of the date it
seeks to certify as an SDB;
(3) Have received certification from
the procuring agency that it qualifies
as an SDB; or
(4) Have submitted an application for
SDB certification to the procuring
agency and must not have received a
negative determination regarding that
application.
(c) A firm may represent that it
qualifies as an SDB for any Federal
subcontracting program if it believes
in good faith that it is owned and controlled by one or more socially and economically disadvantaged individuals.
[73 FR 57494, Oct. 3, 2008]

§ 124.1002 What is a Small Disadvantaged Business (SDB)?
(a) Reliance on 8(a) criteria. In determining whether a firm qualifies as an

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Small Business Administration

§ 124.1002

SDB, the criteria of social and economic disadvantage and other eligibility requirements established in subpart A of this part apply, including the
requirements of ownership and control
and disadvantaged status, unless otherwise provided in this subpart. Qualified
Private Certifiers must use the 8(a) criteria applicable to ownership and control in determining whether a particular firm is actually owned and controlled by one or more individuals
claiming disadvantaged status.
(b) SDB eligibility criteria. A small disadvantaged business (SDB) is a concern:
(1) Which qualifies as small under
part 121 of this title for the size standard corresponding to the applicable
four digit North American Industry
Classification System (NAICS) code.
(i) For purposes of SDB certification,
the applicable NAICS code is that
which relates to the primary business
activity of the concern;
(ii) For purposes related to a specific
Federal Government contract, the applicable NAICS code is that assigned by
the contracting officer to the procurement at issue;
(2) Which is at least 51 percent unconditionally owned by one or more socially and economically disadvantaged
individuals as set forth in § 124.105. For
the requirements relating to tribes and
ANCs, NHOs, or CDCs, see §§ 124.109,
124.110, and 124.111, respectively.
(3) Except for tribes, ANCs, NHOs,
and CDCs, whose management and
daily business operations are controlled by one or more socially and economically disadvantaged individuals.
For the requirements relating to tribes
and ANCs, NHOs, or CDCs, see §§ 124.109,
124.110, and 124.111, respectively.
(4) Which, for purposes of SDB procurement mechanisms authorized by 10
U.S.C. 2323 (such as price evaluation
adjustments, evaluation factors or subfactors, monetary subcontracting incentives, or SDB set-asides) relating to
the Department of Defense, NASA and
the Coast Guard only, has the majority
of its earnings accruing directly to the
socially and economically disadvantaged individuals.
(c) Disadvantaged status. In assessing
the personal financial condition of an
individual claiming economic dis-

advantage, his or her net worth must
be less than $750,000 after taking into
account the exclusions set forth in
§ 124.104(c)(2).
(d) Additional eligibility criteria. (1) Except for Tribes, ANCs, CDCs, and NHOs,
each individual claiming disadvantaged
status must be a citizen of the United
States.
(2) The other eligibility requirements
set forth in § 124.108 for 8(a) BD program participation do not apply to
SDB eligibility.
(e) Potential for success not required.
The potential for success requirement
set forth in § 124.107 does not apply as
an eligibility requirement for an SDB.
(f) Joint ventures. Joint ventures are
permitted for SDB procurement mechanisms (such as price evaluation adjustments, evaluation factors or subfactors, monetary subcontracting incentives, or SDB set-asides), provided
that the requirements set forth in this
paragraph are met.
(1) The disadvantaged participant(s)
to the joint venture must have:
(i) Received an SDB certification
from SBA; or
(ii) Submitted an application for SDB
certification to SBA or a Private Certifier, and must not have received a
negative determination regarding that
application.
(2) For purposes of this paragraph,
the term joint venture means two or
more concerns forming an association
to engage in and carry out a single,
specific business venture for joint profit. Two or more concerns that form an
ongoing relationship to conduct business would not be considered ‘‘joint
venturers’’ within the meaning of this
paragraph, and would also not be eligible to be certified as an SDB. The entity created by such a relationship would
not be owned and controlled by one or
more socially and economically disadvantaged individuals. Each contract
for which a joint venture submits an
offer will be evaluated on a case by
case basis.
(3) Except as set forth in 13 CFR
121.103(h)(3), a concern that is owned
and controlled by one or more socially
and economically disadvantaged individuals entering into a joint venture
agreement with one or more other
business concerns is considered to be

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§ 124.1003

13 CFR Ch. I (1–1–12 Edition)

affiliated with such other concern(s)
for size purposes. If the exception does
not apply, the combined annual receipts or employees of the concerns entering into the joint venture must
meet the applicable size standard corresponding to the NAICS code designated for the contract.
(4) An SDB must be the managing
venturer of the joint venture, and an
employee of the managing venturer
must be the project manager responsible for performance of the contract.
(5) The joint venture must perform
any applicable percentage of work required of SDB offerors, and the SDB
joint venturer(s) must perform a significant portion of the contract.
(g) Ownership restrictions for non-disadvantaged individuals. The ownership
restrictions set forth in § 124.105 (g) and
(h) for non-disadvantaged individuals
and concerns do not apply for purposes
of determining SDB eligibility.
(h) Full-time requirement for SDB purposes. An SDB is considered to be managed on a full-time basis by a disadvantaged individual if such individual
works for the concern during all of the
hours the concern operates. For example, if a concern operates 20 hours per
week and the disadvantaged manager
works for the firm during those twenty
hours, that individual will be considered as working full time for the firm.
[63 FR 35772, June 30, 1998, as amended at 69
FR 29208, May 21, 2004; 76 FR 8264, Feb. 11,
2011]

§ 124.1003 How does a firm become
certified as an SDB?
(a) All firms that are current Participants in SBA’s 8(a) BD program are
automatically deemed to be certified
SDBs.
(b) Any firm seeking to be certified
as an SDB in order to represent that it
qualifies and is eligible to obtain a benefit on a federal prime contract as an
SDB may apply to the procuring agency for such certification.
(c) A procuring agency may accept a
certification from another entity (e.g.,
a private certifying entity, or a state
or local government) that a firm qualifies as an SDB if the agency deems it
appropriate.
[73 FR 57494, Oct. 3, 2008]

§ 124.1004 What is a misrepresentation
of SDB status?
(a) Any person or entity that misrepresents a firm’s status as a ‘‘small
business concern owned and controlled
by socially and economically disadvantaged individuals’’ (‘‘SDB status’’) in
order to obtain an 8(d) or SDB contracting opportunity or preference will
be subject to the penalties imposed by
section 16(d) of the Small Business Act,
15 U.S.C. 645(d), as well as any other
penalty authorized by law.
(b)(1) A representation of SDB status
on a federal prime contract will be
deemed a misrepresentation of SDB
status if the firm does not meet the requirements of § 124.1001(b).
(2) A representation of SDB status on
a subcontract to a federal prime contract will be deemed a misrepresentation of SDB status if the firm does not
have a good faith belief that it is
owned and controlled by one or more
socially and economically disadvantaged individuals. Any certification by
a firm that SBA found not to qualify as
an SDB in connection with an SDB protest or otherwise will be deemed a misrepresentation of SDB status if the
firm has not overcome the reason(s) for
the negative determination.
(3) Any representation of SDB status
by a firm that SBA has found not to
qualify as an SDB in connection with a
protest or SBA-initiated SDB determination will be deemed a misrepresentation of SDB status if the firm has
not overcome the reason(s) set forth in
SBA’s written decision.
[73 FR 57494, Oct. 3, 2008]

§ 124.1005 How long does an SDB certification last?
(a) A firm that is certified to be an
SDB will generally be certified for a
period of three years from the date of
the certification.
(b) A firm’s SDB certification will extend beyond three years where SBA
finds the firm to be an SDB:
(1) In connection with a protest challenging the firm’s SDB status (see
§ 124.1013(h)(2));
(2) In connection with an SBA-initiated SDB determination (see § 124.1006);
or

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