White House closing small business loophole

"This may take more work, but you can't have a system that people believe in or hold accountable unless someone that is designated a small business is a small business," says Angela Styles

The Office of Federal Procurement Policy is closing a loophole that lets agencies receive credit for awarding contracts to small businesses under governmentwide acquisition contracts without knowing if they truly are small.

Angela Styles, OFPP administrator, this week will be sending out letters to the four agencies that run GWACs?The Commerce Department, General Services Administration, NASA and National Institutes of Health?requiring them to include a clause that will make small businesses recertify their size and type of business annually.

Agencies must add the clause to their contracts by April 1 for OFPP to renew their executive GWAC designation, which lets other agencies use the vehicle.

OFPP also is working on a proposed rule that would change the Small Business Administration's regulations and the Federal Acquisition Regulations to require this yearly recertification for all multiple award contracts, including GSA Federal Supply Service schedules, Styles said.

"Accuracy requires us to look at this annually," Styles said. "This may take more work, but you can't have a system that people believe in or hold accountable unless someone that is designated a small business is a small business."

Previously, small firms were not required to recertify during the length of the contract. GSA plans to implement a class deviation that would require small firms to restate their size every five years, but Styles said OFPP's FAR change would supersede that.

The move was in part prompted by the Energy Department's recent $400 million award to RS Information Systems Inc. of McLean. Va., through Commerce's COMMITS GWAC. The contract was a small-business set-aside awarded to RSIS, which had qualified as a small business when COMMITS was awarded in 1999. RSIS has since outgrown the small-business parameters but remained eligible because companies have not been required to recertify. Styles agreed that neither Energy nor RSIS had done anything wrong in the contract process, but that the result was troubling.

"We've heard repeated problems with long-term contracts," Styles said. "We decided to take action about 6 or 8 weeks ago."

The proposed rule would affect only new task orders under a GWAC not existing ones, Styles said. That means if a company won a spot on a GWAC when they were legitimately small and won a task order, they would not have to recertify every year to renew the task order. The firm would have to recertify to win new task orders annually.

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