SBA moves to close small biz loophole

The Small Business Administration is taking several steps to ensure that small business contracts remain with small businesses.

The steps include regulatory changes that will require a company that wins contracts as a small business to recertify that it is still a small business when options are exercised on contracts that last longer than five years. The new regulations take effect June 30, 2007.

Small businesses that are acquired by another company also will be required to recertify that they are still small.

All small businesses will be required to recertify that they are still small at the end of the first five years of a 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," SBA Administrator Steven C. Preston said in a statement.

The Office of Management and Budget's Office of Federal Procurement Policy helped develop the policy.

The policy change has risen out of complaints that companies, though small when they win a contract, outgrow that designation or are acquired by a larger company. Agencies still count work going toward these companies as small business contracts, though the companies are no longer small businesses.

SBA also is launching Small Business Procurement Scorecards for 24 federal agencies. The scorecards are modeled after the President's Management Agenda and will help track the status of each agency's small business goals.

"This scorecard is intended to increase transparency and accountability in the small business procurement arena," Preston said.