Washington Management Group

Update Small Business Size Standards

Practical Advice on GSA Schedule Contracting
By: Carolyn Alston, General Counsel, Washington Management Group

April 2012

Last month's Carolyn's Corner covered some bright spots for small business contractors on the GSA Schedule. Notably, the Small Business Administration (SBA) doubled the size standard applicable to Special Item Numbers on five high volume GSA Schedules. It turns out that the news is not quite so bright. Although the revised size standards were published in the Federal Register to be applicable on March 12, GSA has taken the position that the size standards will not become effective immediately in schedule contracts. According to GSA, contractors that previously certified as other than small and who are now small under the new standards:

1. May not recertify their size status until the solicitations are refreshed and current contracts are modified to reflect the new size standards.

2. Even after a solicitation is refreshed a contractor will only be able to recertify as small:

  • Prior to exercise of an option
  • After execution of a novation
  • After a merger or acquisition of the contractor that does not require novation.

If GSA maintains this position, most current contractors that became small will not be able to recertify their size status until it is time to exercise the option. For contractors awarded at the beginning of the calendar year, that's nearly 5 years.

GSA relies on FAR 19.301-3 to support its position. We do not believe that the FAR must be read in such a restrictive manner. FAR was not written to address situations where the government changes its standards thereby affecting a company's size status. Such a narrow reading of the FAR leads to various unintended and undesirable consequences. For example, companies that are now small by SBA's size standards:

  • May be required to monitor small business subcontracting plans, a requirement that applies exclusively to large businesses
  • Will be precluded from participating in small business set asides under the GSA schedule
  • Will be considered large on GSA Schedule buys, but small on other government acquisitions

These results appear to put certain small contractors at a disadvantage compared to their competitors of similar size on the GSA schedule. GSA is typically very friendly to small business concerns; more than 30% of GSA Schedule contractors are small. WMG continues to make GSA aware of the impact of its decision on certain Schedule contractors. We are hopeful that WMG and SBA will work together to find an equitable and expeditious way of implementing the new size standards.

Changes coming to Carolyn's Corner. Carolyn's Corner will broaden its focus to reflect the broad diversity of resources available to commercial contractors from Deltek/Washington Management Group. Watch this space in future months for WMG's Acquisition Update.

Do you have a government contracting question? Please email it to me at CarolynsCorner@washmg.com.

About Carolyn:

Carolyn Alston is General Counsel of Washington Management Group. She provides legal counsel to WMG's federal acquisition consulting operation, focusing on Multiple Award Schedule contract award, compliance, and audit procedures.

Prior to joining WMG, Carolyn had a distinguished career with the U.S. General Services Administration. Her experience as a senior attorney in the GSA's Office of General Counsel led to her role as the lead in developing and writing GSA's Multiple Award Schedule policy. Her GSA career culminated in running the agency's successful GSA Schedule program as Assistant Commissioner for Acquisition at GSA.

Carolyn holds a BA from Cornell University and a JD from Georgetown Law Center. Carolyn is a member of the bar in Maryland and the District of Columbia.



DISCLAIMER

WMG offers the information provided on this web site for informational purposes only.

WMG is a well recognized expert in GSA Schedule contracting, with more than 30 years of corporate experience. The information provided on this site is based on our substantial acquisition expertise, particularly with respect to commercial item contracting. Nothing on this site should be interpreted as legal advice.

As you recognize, most decisions regarding your GSA Schedule contract are highly dependent upon the facts of your particular circumstances. You should not rely on this site to make specific decisions about your contract. If you are considering taking specific actions on a matter affecting your GSA Schedule contract, we highly recommend that you contact WMG regarding a proposal for individual acquisition consulting services or that you seek advice from legal counsel with expertise in GSA Schedule contracting.

   

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