SBA enacts new federal contract reporting policy

According to an SBA news release, the new policy requires that a business recertify itself as small for federal contracts transferred to it from another business if the contract is to continue being counted as a small-business contract. The policy also will assist small businesses in obtaining contracts as federal agencies seek out new small businesses for contracting opportunities.

The policy, effective Dec. 21, was introduced in a final rule that amended the SBA’s size regulations and appeal procedures for size determinations as a result of comments and regulations.

The policy recognizes that a business can be legitimately small when it is awarded a federal contract, but become a large business by merging with or being acquired by another company.

Under the previous policy, it was not necessary for companies with federal contracts to recertify themselves as small businesses if contracts were transferred to the new, larger entity.

“This new policy will improve upon the accuracy of the federal government’s reporting of small-business achievements by requiring small businesses to reaffirm their small-business status to contracting officers once it has been acquired by another business,” said SBA Administrator Hector V. Barreto, in the news release.

Once a small business has been acquired by means of a purchase or merger, the contract is rewritten to reflect the transfer of ownership and the small-business owner must submit a written self-certification statement to the contracting officer of the procuring agency.

Once the small-business status has been established by the new owner, the contracting officer can count the contract toward the agency’s small-business contracting goals.

When a small business becomes part of a large business through purchase or merger, federal contracts that are transferred to a large acquiring business need to be properly counted as contracts now held by large businesses.

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