Sizing up small biz laws

The Federal Supply Schedule contract program maintained by the General Services Administration is an important source of information technology resources for federal agencies. During the past four years alone, agencies' use of the schedule program to obtain IT resources has nearly quadrupled, to approximately $11 billion per year.

Many factors have contributed to the rapid growth of the program. One of the most important of these was an agreement between GSA and the Small Business Administration to allow federal agencies to count their purchases through the schedule program against their statutory goal of awarding at least 23 percent of their contracts, by value, to small businesses.

This factor became even more significant in the context of a separate SBA rule governing the date on which a company's size status is determined. Under this rule, SBA generally determines a company's size status for any particular contract on the date that the company self-certifies its size status to the procuring agency, as part of its initial proposal. With this contract-specific approach, the same company may be considered small under some contracts and large under others.

This is especially important in the context of the GSA schedule program. Starting about 1990, GSA initiated an "Evergreen" contract program under which new schedule contracts would be awarded for a base period of five years, plus three five-year option periods, and pre-existing schedule contracts would be modified to incorporate similar terms.

This has allowed agencies to receive credit for contracting with small businesses through the schedule for many years after those companies were no longer otherwise considered small.

Recently, however, the General Accounting Office put a significant crimp in this arrangement in answering a protest by CMS Information Services Inc. involving a Missile Defense Agency (MDA) procurement of automated information systems support services. MDA limited participation in the procurement to small businesses holding GSA schedule contracts. As part of its request for quotations, MDA required each company to certify its current size status.

In the company's protest, CMS officials argued that CMS had properly self- certified its size status as small in 1997 as part of its initial proposal to GSA, entitling it to claim a status of small for the entire 20 or so years that it is likely to hold that contract.

GAO rejected CMS' position entirely. According to GAO, MDA's size certification requirement was perfectly reasonable, saying the agency's requirement was more consistent with the applicable law than merely relying on the contractor's initial certification.

GAO's decision in this case makes perfect sense. A GSA schedule contract should not be turned into a 20-year franchise for large businesses to exploit a program intended to help small companies.

Peckinpaugh is corporate counsel for DynCorp in Reston, Va. This column represents his personal views.