Small biz recertification rule posted

Proposed rule published in the Federal Register

The Small Business Administration has published a long-awaited proposed rule that, if finalized, will require small businesses to recertify their size and status once a year if they are on a multiple-award contract.

The rule is intended to prevent a company continuing to receive benefits, such as small-business set-asides, if it outgrows its eligibility. Also, ensure that a large company does not get credit for subcontracting to a "small" business that is no longer small.

Under the proposed rule, small companies that are awarded multiple-award contracts, including the General Services Administration's schedule system and governmentwide acquisition contracts (GWACS), must recertify their small-business status annually on the anniversary date of the contract award.

Under the current system, companies only have to certify their status when they initially get the contract award.

"Such contracts may have terms of five, 10 or 20 years. . . . Orders to concerns receiving such contracts would be considered to be awards to small business even though a firm had grown to be large (either through natural growth or by merger or acquisition) during the term of the contract," the SBA wrote in the proposal.

In a stop-gap measure prior to the April 25 publication of the proposed rule, Office of Federal Procurement Policy Administrator Angela Styles sent letters to the four agencies that manage GWACs — GSA, NASA, the Commerce Department and the National Institutes of Health — telling them to begin working on plans to recertify small companies on the GWACs by April 1. The letters went out in mid-February.

The agencies have until May 31 to submit an action plan for carrying out the directive.

The absence of a clear rule has made it difficult for the agencies to choose the best path, said Victor Powers, director of the National Institutes of Health's Information Technology Acquisition and Assessment Center.

"They will give guidance and consistent application throughout the federal government," he said of the recertification rules.

Powers said NIH has sent letters to all the small businesses on Electronic Commodity Store III, explaining the new policy. "We'll be coming back to them probably by November to get their documentation," Powers said.