SBA Extends Moratorium on Bona Fide Place of Business Rule

By Christopher Slottee of Schwabe, Williamson & Wyatt, P.C.
Originally published June 14, 2024

On June 11, the Small Business Administration announced that it was extending the moratorium on the application of the bona fide place of business rule for 8(a) construction contracts to September 30, 2025.

The bona fide place of business requirement was adopted by the SBA in 1998 and applies to 8(a) entities engaged in construction work for the federal government. The rule generally requires an 8(a) construction firm to have a “bona fide place of business” in the area in which it performs a federal construction project. The SBA adopted this requirement to implement Section 8(a)(11) of the Small Business Act, 15 U.S.C. 637(a)(11), which states that “[t]o the maximum extent practicable, construction subcontracts awarded by the Administration pursuant to this subsection shall be awarded within the county or State where the work is to be performed.” The bona fide place of business rule applies to both sole-source and competitive 8(a) construction contracts.

The SBA had previously issued a moratorium on the application of the rule due to the impact of COVID-19. That moratorium was set to expire on September 30, 2024. The SBA has now extended it one year, to September 30, 2025. The agency explained that:

We recognize that small businesses continue to pivot and adapt to changing workforce trends in the marketplace. As we make progress on achieving President Biden’s goal of awarding 15% of federal contracts to small disadvantaged businesses by 2025, extending the moratorium on the Bona Fide Place of Business requirement will enable SDBs to continue focusing on expanding their business and capturing more revenue.

According to the SBA, “[d]uring the moratorium, any 8(a) Program participant seeking an 8(a) construction contract (either on a sole source or competitive basis) will not be required to have or establish a bona fide place of business in any specific geographic location.”

Christopher Slottee is Industry Group Leader at Schwabe. He has over fifteen years of experience handling complex ‎commercial, corporate, and litigation matters, ‎specifically working with Alaska native corporations, ‎Alaska native corporation settlement trusts, and tribal ‎governments. Slottee is well-‎versed in issues of corporate governance, legal and risk ‎management, government contracting, bid protests, ‎corporate transactions, and mergers and acquisitions.‎ He can be reached at cslotee@schwabe.com or 907.339.7130.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.