SBA intends to recertify small businesses annually

The Small Business Administration has issued a proposed rule that will require small businesses receiving schedule or multiple-award contracts to certify annually that they still meet SBA's size standard for a small business.

The proposed rule, published in the April 25 Federal Register, follows a comparable policy set by the White House in February. That policy directed agencies managing governmentwide acquisition contracts to require vendors to recertify their size and type of business annually (Click here for GCN recent coverage)

Agencies had to add the recertification clause to contracts by April 1. To assure that agencies require the annual certifications, OMB said its Office of Federal Procurement Policy would not renew agencies' executive GWAC designations if they failed to bring their contracts into compliance with the new policy.

'We had been working on this rule before OFPP put its memo out. This rule is consistent with what they are trying to do under the GWACs,' said Linda Williams, SBA's associate administrator for government contracting.

The administration has said it has two objectives: close a loophole in the buying rules that gives highly successful companies an advantage they no longer deserve and improve accounting of agencies' awards to small businesses.

OMB wants 23 percent of prime-contract dollars to go to small businesses each year. But small businesses have complained that agencies are counting orders toward small-business contracting goals when the companies receiving those orders no longer meet SBA size limits.

Currently, SBA determines the size of a business when a vendor certifies it is small to an agency as part of a bid. The result: A vendor is considered small for the length of a contract, which could run five, 10 or 20 years, even if the company grows large during that time.

The practice 'has led to skewed and, in SBA's view, misleading results,' the agency's statement in the Federal Register noted.

For example, SBA reviewed four technology companies that received contracts as small businesses under MAS but had since grown beyond the small-business size standards, Williams said. In 2000, the companies collectively received more than $190 million in orders that were counted as awards to small businesses; in 2001, they received more than $200 million. Williams did not name the companies.

Comments on the proposed rule are due by June 24 and can be sent via e-mail to Linda.Williams@sba.gov or submitted online at www.regulations.gov.

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