The U.S. Small Business Administration is now requiring that small businesses recertify their size status to remain eligible for federal contracts for all contracts with durations of more than five years.
The regulation was implemented because, under past regulations, companies that represented their size status as small at the time they submitted their offer were permitted to retain that status throughout the life of long-term contracts–even if they merged with or became acquired by anther firm. Recertification must now be done before or at the time a renewal option is exercised on a long-term contract or if a company is acquired or merged.
Prior to these changes, agencies were improperly receiving credit toward the congressionally mandated goal that 23% of all government contracts be allocated to undersized businesses and often lacked incentives to present small businesses with new opportunities.
According to Frank Ukoh, owner of IIU Consulting Institute Inc., a SBA-certified construction service and operational management business based in Washington, D.C., the new regulation may have a negative effect on some minority entrepreneurs. “A lot of contracts for more than $100,000 require bonding, he says. “As a result, certified companies are forced to merge with larger firms” to get bonding approval, thus making them ineligible for small-business contracts under the new SBA guidelines.
However, Nicole Copeland, former certification manager for the District of Columbia Department of Small and Local Business Development, says the revised structure “may give new small businesses a better chance to compete for work, which goes with the notion of [contracting] being more inclusive” of minorities.
The SBA is also implementing a new Quick Market Search tool that will allow contracting officers to identify vendor pools under each of the socioeconomic preference programs, including women-owned, 8(a), disadvantaged, HUBZone, and veteran-owned