1. Regulatory Update Update on SBA’s Proposed Rules RE: FY13 NDAA & Mentor Protégé Program December 29, 2014 February 5, 2015 © Birch Horton Bittner & Cherot, P.C. 2016 | www.birchhorton.com Jon DeVore Birch Horton Bittner & Cherot 202.659.5800 JDeVore@dc.bhb.com Christine V. Williams Davis Wright Tremaine christinewilliams@dwt.com Presented by John Klein Small Business Administration john.klein@sba.gov

2. SBA’s Proposed Rules (1 of 2): Implementing FY2013 NDAA Proposed December 29, 2014 Impactful changes include:  Limitations on Subcontracting/Performance of Work Requirements  New Standard (based on contract amount paid, not labor)  New Exclusion for “Similarly Situated” Subcontractors  New Compliance and Enforcement of Subcontracting Plans provisions  Penalties for Non-Compliance with Subcontracting Limitations  Affiliation.  Identity of Interests - clarifies which relationships create presumption of affiliation.  Ostensible Subcontractor – similarly situated exclusion.  Joint Ventures – simplified qualifications for JV affiliation exception for small businesses.  Economic Dependency – rebuttable presumption 70% revenue from another firm over last FY.  Non-Manufacturer Rule (“NMR”) – several changes, including clarifications for applying NMR, and new ability to obtain waivers after solicitation issued.  Construction Contract Requirements & Adverse Impact Analysis - Generally, the building of a specific structure is a new requirement, but that recurring IDIQs for construction are not new requirements and therefore would require an adverse impact analysis. Case-by-case decision. Birch Horton Bittner & Cherot, P.C. 2015 | www.birchhorton.com 2 Regulatory Update

3. SBA’s Proposed Rules (1 of 2): Implementing FY2013 NDAA (cont’d) Joint Venture Size: JV is small if each partner is small under the contract NAICS code, eliminating restrictions on the type of contract. Calculation of Annual Receipts: The rule clarifies that the annual receipts calculation to determine size includes all income, including passive income, and the only exclusions are those listed in 13 CFR 121.104(a). Recertification of Size Is Required Following Merger/Acquisition of a firm that submitted an offer as a small business concern. NAICS Code Appeal Timeline: SBA sought comment on the appropriate timeline for filing a NAICS code appeal. Size Protest Process is clarified regarding who can file a size status protest. Certificates of Competency (“COC”) & Financial Capacity Birch Horton Bittner & Cherot, P.C. 2015 | www.birchhorton.com 3 Regulatory Update

4. SBA’s Proposed Rules (1 of 2): Implementing FY2013 NDAA (cont’d) Proposed December 29, 2014 After an extension, the comment period closed April 6, 2015  216 comments filed STATUS: SBA review finished, and rule making its way through OMB review Final Rule expected later this year Birch Horton Bittner & Cherot, P.C. 2015 | www.birchhorton.com 4 Regulatory Update

5. Proposed Rule to implement 8(a) Program Changes & Mentor-Protégé Program Expansion (2of 2) Proposed February 5, 2015 Changes to Size Regulations & Generally Applicable Regulations  “Rule of Two” Will Apply “Regardless of the Place of Performance”  Size: Affiliation Exemption for Common Administrative Services Expanded  “Rule of Two” Applies to Reverse Auctions  SBA May File Requests for Reconsideration of OHA Decisions Changes to the 8(a) Program  8(a) Contracts Authorized Regardless of the Place of Performance  SBA May Now Unilaterally Change an 8(a) Firm’s Primary NAICS Code  Burden of Establishing Social Disadvantage is on the Applicant  Substantial Unfair Competitive Advantage Uses a National Scale, but Compares Firm’s Industry Share Relative to Overall Small Business Participation in Industry Nationwide  New Circumstances When a Firm May Elect to Suspend 8(a) Participation  Other Changes/Clarifications to 8(a) Program  Individuals May Not Manage More Than Two Tribally-Owned or ANC-Owned 8(a) Program Participants at Once  Benefits Reporting Requirement Timing Changed for Entity-Owned Firms  Administrative Record in 8(a) Appeals  Change in Good Character Definition Birch Horton Bittner & Cherot, P.C. 2015 | www.birchhorton.com 5 Regulatory Update

6. Small Business Program-Specific Changes and Clarifications  NHOs: Clarification on Eligibility for Native Hawaiian Organizations  HUBZone: Updates to HUBZone Certification Application Process SBA Mentor-Protégé Programs: Changes to the 8(a) Mentor-Protégé Program & New Small Business Mentor-Protégé Program  Changes to the 8(a) Mentor-Protégé Program  Non-Profits Can No Longer Be Mentors  Expanded Definition for Firms that Can Be Protégés  Clarification for Continuing Mentor-Protégé Relationship when Control of Mentor Changes  Ability to Transfer an 8(a) Mentor-Protégé Relationship & JV to General Mentor-Protégé Program Following 8(a) Graduation  SBA May Terminate a Mentor-Protégé Agreement  Certification of Compliance & Basis for Suspension or Debarment  SBA Creates One New Mentor-Protégé Program for All Small Businesses  SBA Must Approve Mentor-Protégé Programs of Other Agencies Proposed Rule to implement 8(a) Program Changes & Mentor-Protégé Program Expansion (2of 2) Birch Horton Bittner & Cherot, P.C. 2015 | www.birchhorton.com 6 Regulatory Update

7. Changes to Joint Venture (JV) Regulations  Changes Affecting Small Business Joint Ventures Generally  Amended Definition of Joint Venture for All SBA Programs  Joint Ventures Between Small Business Protégés and Their SBA-Approved Mentors  Inspection of Records – SBA Access to ALL Records of Joint Venture Partners  Ability to Report Information re: JV Compliance with Performance of Work Requirements  Other Changes/Clarifications to Joint Ventures  JV Past Performance Evaluation Must Consider Work Done Individually by Each JV Partner  JV Certifications and Performance of Work Reports  Tracking JV Awards  Changes to 8(a)-Specific Joint Venture Program Regulations  No Change to 8(a) JV Size Standards  Streamlined Performance of Work Requirements for 8(a) JVs  Prior Approval by SBA Permitted for 8(a) JV Agreements  Size of 8(a) JV is Protestable  Contract Execution Can be in Name of 8(a) JV or 8(a) Participant  Certification of Compliance & Basis for Suspension or Debarment  SBA May Inspect Records of ALL JV Partners  Changes to HUBZone and other JV Regulations Proposed Rule to implement 8(a) Program Changes & Mentor-Protégé Program Expansion (2of 2) Birch Horton Bittner & Cherot, P.C. 2015 | www.birchhorton.com 7 Regulatory Update

8. Proposed February 5, 2015 Tribal Consultation held in Washington, D.C. on February 26, 2015 After an extension, the comment period closed May 6, 2015  117 comments filed STATUS: Still in SBA internal review and revision process Final rule expected in mid-2016 Proposed Rule to implement 8(a) Program Changes & Mentor-Protégé Program Expansion (2of 2) Birch Horton Bittner & Cherot, P.C. 2015 | www.birchhorton.com 8 Regulatory Update