AAPD 23-01: Small Disadvantaged Business Threshold

AAPDs provide information of significance to all agency personnel and partners involved in the Acquisition and Assistance process. Information includes (but is not limited to): advance notification of changes in acquisition or assistance regulations; reminders; procedures; and general information. Also, AAPDs may be used to implement new requirements on short-notice, pending formal amendment of acquisition or assistance regulations.

Subject Category: Acquisition Management

I. Purpose: The purpose of this AAPD is to provide guidance and instructions to Contracting Officers (COs) to use a revised small disadvantaged business (SDB) threshold and associated deviated FAR clauses in applicable solicitations and contracts. Specifically, Class Deviation No. M-OAA-DEV-FAR-23-01c allows COs to use the Small Business Administration’s (SBA) revised definition of SDB at 13 CFR 124.104(c)(2), which increased the net worth threshold for an individual to be eligible as an economically disadvantaged small business concern from $750,000 to $850,000.

The deviated FAR part 2 definition of “small disadvantaged business” and the amended text of deviated FAR clauses 52.212-3(a), 52.219-1(a), and 52.219-8(a) can be found in Attachment 1.

This AAPD is effective as of the issuance date on the cover page and continues in effect until rescinded or FAR rulemaking is finalized, whichever occurs first.

II. Required Actions

  • For new solicitations and contracts, COs must insert the deviated FAR language, as applicable. The deviated FAR clauses are available in GLAAS.
  • For open solicitations, especially those for full or partial small business set-asides, or when the solicitation contains the FAR clauses 52.212-3, 52.219-1, and 52.219-8, COs should consider issuing an amendment incorporating the deviated FAR clauses. When determining whether to amend an open solicitation, COs should consider the impact of applying the exception on the participation in, or outcome of, the procurement at both the prime and subcontractor levels.

III. Background: SBA’s final rule published on November 17, 2022, at 87 FR 69118, adjusts monetary thresholds primarily used in the 8(a) Business Development and the Economically Disadvantaged Women-Owned Small Business (EDWOSB) programs to determine eligibility of applicants and current participants as economically disadvantaged business concerns. These monetary thresholds have not previously been adjusted for inflation. SBA’s adjustment will permit small businesses to retain or reinstate their eligibility as economically disadvantaged business concerns, despite recent increases in inflation. Specifically, SBA’s final rule, effective December 19, 2022, amended 13 CFR 124.104(c)(2) to increase the net worth threshold that is used to determine eligibility for 2 AAPD 23-01 Small Disadvantaged Business Threshold SDBs from $750,000 to $850,000 for inflation. The FAR Council has opened FAR Case 2023-004 (“Small Disadvantaged Business Threshold”) to implement the increase in the SDB threshold in the FAR. USAID has approved a class deviation to allow the use of this threshold increase until formal rulemaking to amend the FAR is finalized.

Date Issued: January 31, 2023