D.C. Making Changes to Its Small Business Preference Rules

On February 26, 2015, the District of Columbia’s Department of State and Local Business Development (DSLBD) made an announcement requesting public comments on recent changes made last fall to the D.C. local law concerning contract preferences for small businesses and other “Certified Business Enterprises” (CBEs).

These changes were made by the Small and Certified Business Enterprise Development and Assistance Amendment Act of 2014, which became applicable October 1, 2014, amending the previous statute on the subject. As the DSLBD pointed out, in its announcement, the new law affects all District agencies, departments, offices, boards, commissions, authorities, or other instrumentalities of the District government, as well as Certified Business Enterprises and private developers.  So a good deal is at stake here for companies that want to do business with the D.C. government. The DSLBD says all comments must be submitted by March 13, 2015, to dslbd.legislation@dc.gov.

In a series of blog posts, we will discuss various key aspects of these changes so that local businesses can be fully aware of the changes and be capable of taking proper advantage of the new rules to help them succeed as contractors.

It is important to note that the new law, for the first time, spells out how CBEs, which are disadvantaged business enterprises or others entitled to contract preferences or set-asides, can enter into joint ventures with businesses that don’t qualify as CBEs, presumably because they are not small businesses and not disadvantaged.

According to the announcement, the DSLBD has the authority to certify joint ventures for public, private, and public-private projects. A joint venture is eligible for certification if it has a member, with either a majority or a minority interest, that is a CBE. If the DSLBD determines that a CBE owns a majority interest in the joint venture, the venture will receive the same preference points or price reductions that the CBE would have received on its own.

If the DSLBD determines that the CBE owns a minority interest in the joint venture, the venture can receive preference points and price reductions, but not more than 50 percent of the points and reductions that the CBE would have received on its own.

These new provisions are somewhat similar to the “mentor-protégé” rules that the Small Business Administration has established for federal contracts. They encourage small and disadvantaged businesses to partner with established businesses so that they can take advantage of the established businesses’ expertise without losing their status as small and disadvantaged businesses.

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