Small biz recertification required

Agencies that use governmentwide contracts (GWACs) will have to recertify small businesses annually beginning April 1.

The Office of Management and Budget's Office of Federal Procurement Policy (OFPP) is imposing the requirement via letters to the agencies that use GWACs.

OMB also will publish proposed changes to the Federal Acquisition Regulation and Small Business Administration (SBA) regulations to make the change permanent for all multiple-award vehicles, including General Services Administration schedules, an OMB spokesman said.

The change has been talked about for years. Small businesses generally are not required to recertify their size for the contract's duration, so a company might win work under a small-business set-aside and then outgrow its eligibility.

GSA developed a new rule last fall requiring small businesses to recertify after the initial five-year contract term, said Boyd Rutherford, who was associate administrator at GSA's Office of Small Business Utilization until he left last month to become secretary of general services for Maryland.

The GSA rule took effect last month. Now, schedule-holders have to recertify their size and class at each one-year option period after the first five years.

"We went to SBA and OFPP—I had a very good discussion with [OFPP Administrator] Angela Styles about this—and decided that we would initiate a policy that on renewal of a contract, all businesses would have to recertify size," Rutherford said. "Rulemaking can take a year or more. This was something GSA could do right away."

The measure was an effort to lessen the problem while a more permanent fix could be established, he said. Under the old system, "a business could stay 'small' for 20 years," he said. "Twenty years ago, Cisco Systems [Inc.] might have been a small business."

The new rules are needed, said Hope Lane, director of GSA schedule services at Aronson and Co., a consulting firm in Rockville, Md.

"We've been warning our clients for some time that it would be required at least every five years, if not every year," she said. "A lot of our small-business clients hate the idea. They feel like they're just starting to get some momentum and have the rug pulled out from under them. But five years is too long. Businesses can change substantially in two years."

As the changes become effective, they will alter the business landscape, she said. "We're going to see a lot of companies changing [status]," she said. "It could be an added benefit for companies that remain small because all of a sudden, a lot of purchasing is going to change hands."