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SBA changes the rules for smalls seeking federal contracts

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The Small Business Administration has announced new regulations and measures intended to help small businesses secure more federal government contracts while improving transparency and accountability.

The most significant of the measures: a new regulation requiring small businesses to recertify their size status when a long-term contract option is exercised, the business is bought by or merged with another business or upon completion of the first five years of the contract.

SBA also announced a “Small-Business Procurement Scorecard,” which would allow more aggressive tracking and monitoring of small business goal achievement at 24 government agencies.

SBA will hire additional procurement personnel to help identify government contracting opportunities for small businesses and work with the administration’s Integrated Acquisition Environment initiative to cover federal buying activities more effectively.

The new rules take effect June 30, 2007.

“These actions … underscore the fact that the SBA is committed to creating an environment where small businesses can enter the federal marketplace as equal competitors,” SBA Administrator Steven Preston said in a statement announcing the new measures.

“This environment is created when agencies reduce contract bundling, consider small business as part of their overall procurement strategy and ensure all agency reporting is accurate and reliable.”

SBA has often drawn criticism for allowing large businesses to win contracts that should’ve gone to smalls. In part, the problem stemmed from the fact that businesses were certified only at the beginning of the contract and retained that certification for the life of the contract.

Given that some long-term contracts can last for years — even decades — a company that was small at the time it won the contract may have grown into a big business before the contract is complete.

“We need accurate data on business size,” said Paul Denett, administrator for the Office of Management and Budget’s Office of Federal Procurement Policy. “However, small businesses must be given fair opportunity to grow as they perform federal contracts. This rule is intended to strike the right balance between fostering growth and accurate data gathering.”

The new rules, which have been in development since 2003, would not require that a contract be terminated because of a change in size status, but would require changes to the contract terms and conditions.

“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 Preston. “It is a win/win situation for everyone.”

Excerpted with permission from

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