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dmuir

SB time of written representation

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Per FAR 19.301-1, if a company is small business at time of proposal (ie time of written representation) the work can be awarded as small, essentially until a recertification event is triggered.

For a 5 year IDIQ, 13 CRF 121.404 triggers a recertification event at the 60 month point at the IDIQ level. 

Is there any case law that allows a Task Order proposal that was submitted (but not awarded) prior to the recertification and exercise of the next IDIQ option period be allowed to be issued to the company as small AFTER the recertification as "other than small"?  It seems clear that at the IDIQ level, new awards would be  "other than small" after recertification, and awards prior would still be small, but there's this "gray" area where things were started one way and could be considered "grandfathered".

 

Not sure where to look for this information. Thank you! D

 

 

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dmuir, you cited 13 CFR 121.404.  Paragraph (g)(3) of that section states "If the contractor certifies that it is other than small, the agency can no longer count the options or orders issued pursuant to the contract towards its small business prime contracting goals."

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But if the proposal is submitted when we are small, we are NOT certifying that we are other than small at the time of proposal submission.  So I would like to find some citation that would allow the proposal submission size certification (as allowed under FAR 19.301-1) to allow for the award as small in the next IDIQ Option Period.  I'm not sure it exists but that's what I'm looking for.  We definitely understand that proposals submitted after the recertification date are not grandfathered.  It's the middle ground that we are hoping might be.  That's why I thought maybe case law would have more clarification than the CFR or FAR.

 

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The language I quoted is not related to when a proposal is submitted.  It relates to the five year recertification requirement.  Under that language, if you recertify that you are other than small, you cannot be considered small in regard to any orders that are awarded after that date, regardless of when the proposal for the order was submitted.

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A re-representation as NOT SMALL has no effect on the awarded contract.  The contractor is still eligible to participate in the fair opportunity consideration process and receive task order awards for the life of the contract, both for offers submitted before the re-representation and offers submitted after the re-representation.

Here are the only two differences when a formerly small business multiple-award contract holder re-represents as a large business:

(1) If the task order contracting officer decides, at his or her own discretion, to set aside a task order for a small business category, then the contractor will not be considered for that task order.

(2) Orders issued after re-representation do not count towards the agency's small business goal achievements.  The order may be issued to the formerly-small-now-large-business, no problem, even if the parent IDIQ contract was awarded as a small business set-aside, except in the case of (1) above -- but the order doesn't count towards the agency's goal achievement.

At least, this is how I understand it.

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ji, you are correct in your interpretation.  A contractor can still receive an order after recertifying as other than small, but the order is not considered to be an order to a small business concern.

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This is an important topic -- too many contracting personnel believe the contractor is ineligible for further task (or delivery) order awards after re-representation.

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Keep an eye on open FAR Case 2014-002, Set-Asides Under Multiple-Award Contracts.

Take a look at 78 FR 61113 to see SBA's discussion of its regulatory implementation of the Small Business Jobs Act of 2010.

There is a section devoted to recertification, reproduced below. Note the discussion of exceptions to the general rule: "The exceptions for mergers, acquisitions, long-term contracts, and requests for recertification at the discretion of the contracting officer would apply for multiple award contracts as they do for all other contracts."

https://www.federalregister.gov/documents/2013/10/02/2013-22064/acquisition-process-task-and-delivery-order-contracts-bundling-consolidation

 

 

QUOTATION:

SBA also proposed to amend § 121.404, which addresses when the size status of a small business concern is determined. In order to provide certainty in the procurement process, SBA's regulations require that size will generally be determined at one specific point in time—the date a business concern self-certifies its size status as part of its initial offer including price. When a business represents that it is small, it is then considered small for the life of that specific contract. The concern is not required to again certify that it qualifies as small for that contract unless it has been awarded a long term contract (i.e., the contract exceeds five years) or there is a merger, acquisition, or novation. If the contract is greater than five years, then the contractor must recertify its small business size status no more than 120 days prior to the end of the fifth year of the contract or prior to exercising any option thereafter.

SBA proposed to clarify only two issues that have been raised over the past few years relating to this recertification rule, which has been in effect for several years. First, while the regulations clearly required a business that was acquired by another entity to recertify its size status after the acquisition, such a requirement was not as clear where a business that had previously certified itself to be small acquired another business. SBA proposed that re-certification should be required in either case since the acquisition may render the concern other than small for the particular contract. Second, SBA proposed to clarify that recertification is required when a participant in a joint venture is involved in a merger or acquisition, regardless of whether the participant is the acquired concern or the acquiring concern.

One respondent believed that a business should not have to recertify if it is acquired by or merges with another business because it will hurt the market value of the small business. This respondent believes that SBA should allow two small businesses to merge and should create a new size standard for those two merged businesses. Another respondent did not believe a business should have to recertify if it has been acquired because that company would have eventually grown to be large and been allowed to keep the contract and not recertify. This Start Printed Page 61119respondent notes that a business is essentially penalized when it has been acquired but not when it grows “naturally”. One respondent believes that a large business should not be allowed to purchase a small business and keep the contract award. One respondent supported recertification if there is an acquisition or merger by one party to a joint venture, but questioned how the recertification rule would apply to a large business in a mentor-protégé relationship.

SBA believes that if a business is acquired or merges, or acquires another company, then it should recertify its size because when such events occur, there is an increased likelihood that the business is other than small. SBA does not believe it should create a new size standard for these types of acquisitions or mergers. If, after the acquisition, the business meets the size standard corresponding to the NAICS code assigned to the contract, then it is small. Finally, this could impact a mentor-protégé joint venture if the small business protégé becomes other than small. In that case, the mentor-protégé joint venture would not be considered small from that point forward or for that order.

In addition, SBA proposed that, in general, all of the same rules concerning when size is determined apply to multiple award contracts. For multiple award contracts, SBA will determine size at the time of initial offer submitted in response to the solicitation for the contract, based upon the size standard set forth in the solicitation for that contract. If the contract is divided into categories (CLINs, SINs, FAs, sectors or the equivalent), then each such category will have a NAICS code and corresponding size standard. A business will have to represent its size status for each of those NAICS codes at the time of initial offer for the multiple award contract. When the agency places an order against the contract, it must assign to the order a NAICS code with the corresponding size standard, using one of the NAICS codes assigned to the contract which best describes the principal purpose of the good or service being acquired under the order. If the business concern represented it was small for that NAICS code at the time of contract award, then it will be considered small for that order with the same NAICS code. SBA also stated in the proposed rule that a contracting officer may always, on his or her own initiative, require a business concern to recertify its size status at the time of each order, but the regulations do not require that in every instance.

SBA had also considered requiring businesses to recertify their size for long-term orders (i.e., orders greater than five years). SBA was concerned that if an agency issues a long-term order just prior to a business recertifying its status as other-than-small on a multiple award contract, then the long-term order will be counted as an award to a small business for an indefinite amount of time. However, SBA was unsure how often this situation occurs and requested comments specifically on whether small businesses should be required to recertify their size and status for long-term orders.

SBA received several comments on these proposals. One respondent stated that contracting officers should not be permitted to request recertification on every order since it could create confusion; rather, the contracting officer should rely on the contractor's status at the time of submission of the offer for the Blanket Purchase Agreement (BPA) or contract. Another respondent thought that small businesses should be required to recertify their size only on long-term orders, but not on every order issued against a multiple award contract because it would be too cumbersome. In contrast, two respondents believed that businesses that are no longer small, for any reason, should be required to immediately recertify and any order should not be counted as an award to a small business.

In addition, three respondents believed that businesses should be required to recertify their size for each order and if the company is large, the order should not be counted as an award to a small business. These respondents stated that at this time, they do not believe agencies follow SBA's current recertification rule. They believed that requiring recertification for each order is not unduly burdensome.

One respondent represented a group of small businesses that had mixed opinions on this issue. Some of its members believe that size should be determined at the time of offer for each order and the contracting officer should be allowed to award the contract if the business is not small (but the award would not count toward the agency's small business goals). The respondent's other members believe that size should be determined at the time of submission of the offer for a contract, since that has always been SBA's policy, and SBA should continue to allow contracting officers the discretion to request recertification on the order.

SBA has reviewed all of these comments and believes that requiring a business to certify its size at the time of offer for a multiple award contract, and not for each order issued against the contract, strikes the right balance and is consistent with SBA's current policy. If the contract were not a multiple award contract, then the business would represent its size at the time of offer and if it were small, it would be considered small for the life of the contract up to and including the fifth year. This policy should be the same for multiple award contracts. If a business is small for a size standard assigned to a NAICS code at the time of offer for a multiple award contract, then it is small for all orders with that same NAICS code and size standard for the life of the contract up to and including the fifth year of the multiple award contract. The exceptions for mergers, acquisitions, long-term contracts, and requests for recertification at the discretion of the contracting officer would apply for multiple award contracts as they do for all other contracts. Although some did not agree that contracting officers should have the discretion to request recertification at the order level, SBA notes that this is currently permitted in the regulations and has been upheld by SBA's Office of Hearings and Appeals (see Size Appeal of Quantum Professional Services, Inc., SBA No. SIZ-5207 (2011), available at www.oha.gov (“[A]pplicable regulations permit a size protest to be filed either upon award of an ID/IQ base contract, or upon award of an individual task order if the procuring agency requires recertification of size status for that order.”). SBA does not have a basis to change this current policy. However, recertification for an order applies only to the size or socioeconomic status for the order, and does not apply to the firm's overall size or socioeconomic status for the underlying contract.

With respect to the respondents that believe agencies are not following these requirements, SBA notes that it works with the procuring agencies on these issues. SBA can initiate a size protest at any time, so information can be submitted to SBA for possible action (see 13 CFR 121.1004(b), 121.1001). In addition, SBA can notify procuring agencies of errors or anomalies in the data that procuring agencies submit to SBA for purposes of the goaling report.

One respondent believed that SBA deleted an important requirement concerning recertification—the requirement that where a concern grows to be other than small, the procuring agency may exercise the options and still count the award as an award to small business unless certain exceptions apply. SBA did not delete this sentence. Since we were not changing that Start Printed Page 61120sentence, SBA did not need to put it in the Federal Register proposed rule. However, to avoid any confusion, SBA has added the sentence in the final rule below.

Finally, one respondent noted that SBA's regulations use the term “recertification” and the FAR uses the term “rerepresentation.” The respondent believes the two should be consistent. SBA agrees that there appears to be a disconnect between the two terms as used in the FAR and SBA's regulations. SBA is looking into the issue and will work closely with the FAR Council to ensure that the intent of this final rule is clear.

END QUOTATION

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