The Small Business Administration issued a long-awaited rule last week that gives small businesses a new timetable for recertifying their size status. The agency has struggled for years to revise a rule that allowed some companies to continue earning small-business dollars — and be counted toward agencies’ small-business goals — long after they had grown too large to remain in the small-business category.
SBA and the Office of Federal Procurement Policy, which announced the new rule, said small businesses will be required to recertify their size status on long-term contracts under three different scenarios: whenever a contract option is exercised, whenever a small business is purchased by or merged with another business, or whenever the first five years of a contract are completed.
Agencies have increased the practice of claiming credit toward their small-business goals by citing multiple-award contracts with terms extending far beyond the typical five-year government contract.
“This regulation will go a long way toward ensuring that contract awards get in the hands of small-business owners, federal agencies get the proper credit toward their small-business contracting goals and small-business contract awards are fairly and accurately reported,” said Steven Preston, SBA’s administrator.
The U.S. Chamber of Commerce said it welcomed the new SBA regulation, calling it an important step toward leveling the playing field for small-business owners.
“Accurate accounting of small-business contracts and a measure of how federal agencies meet their goals are two of our members’ biggest concerns,” said Giovanni Coratolo, executive director of the chamber’s Council on Small Business.
Not all small-business groups approve, however. Lloyd Chapman, president of the American Small Business League, said the new policy will help the government continue to give contracts to larger companies.
ASBL favors annual recertification to get more businesses out of the small-business program when they grow, Chapman said. Some other small businesses and advocacy groups, however, say that having to recertify every year would be a burden on small companies.
Todd McCracken, president of the National Small Business Association, called the new rule “a step in the right direction if it’s implemented in the way they’ve designed it.”
McCracken said the association has been concerned that companies could lose their small-business status if they grew too large during the life of a contract. “This [rule] doesn’t do that,” he said. “We don’t want to punish small companies for growing.”
The new rule, published in the Nov. 15 Federal Register, takes effect June 30, 2007.
