Recertification controversy

SBA called recert. rule a ‘technical correction’

      The Small Business Administration inserted a possibly significant new rule on small business recertifications for government contracts into a package of “technical corrections” a year ago, and now the rule is becoming controversial.

      The recertification rule went mostly unnoticed for months. It was labeled a technical correction, which is supposed to be an uncontroversial matter.

      But government contracting specialists are calling it a potentially significant rule that attempts to overturn a 2018 decision of the SBA’s Office of Hearing and Appeals (OHA).

      In that decision, regarding Analytic Strategies Inc., the OHA judged that a service-disabled veteran-owned small firm that was no longer small due to a merger or acquisition still would be eligible for set-aside task orders in an IDIQ contract, unless the contracting officer requested a recertification. The agency would no longer get small business credit. The SBA disagreed with that interpretation.

      In March 2018, the SBA issued the recertification rule change that appeared to reverse, in some cases, the OHA’s guidance. The SBA’s rule suggested that a small business that is no longer small after a merger or acquisition may no longer be eligible for set-asides. The rule was issued on March 2018 and went into effect on May 25, 2018.

      However, OHA issued a related decision in December 2018 that further addressed circumstances in which such a firm might still be eligible.

      Contracting attorneys consider the SBA rule to be significant and not a typical technical correction. “Reversing a binding OHA interpretation is certainly a substantive change,” Morrison & Foerster lawyers wrote.

      More recently, Samuel S. Finnerty, attorney with Piliero Mazza PLLC, wrote that the new rule “has significant implications” and is causing “confusion.” See the PilieroMazza attorney’s full comments on in this issue's column.

      SBA officials were not immediately available.

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Column: Does SBA’s New Recertification Rule Apply to My Contract?

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