SBA Asks for Feedback on New Rules on Contracts

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Jan. 18, 2005 -- Following on the heels of a report that found that the government has been shortchanging small businesses when doling out federal contracts, the Small Business Association announced last week that it is taking public comments through February 1 to help firm up a new policy that helps define what a small business is.

"Our goal is to seek advanced comments before making our decision - which is not something that have done often," said Mike Stamler, an SBA spokesperson. "When we do sit down to the write the rule, it will be the best one for all small businesses and not just a particular sector."

The SBA's Office of Advocacy announced in early January that roughly $2 billion in federal contracting money that was believed to have gone to small businesses actually went to large companies in fiscal year 2002. The reason: Larger companies like Titan, Raytheon, General Dynamics and Hewlett-Packard bought the small businesses that originally received the contracts.

Since the government strives to award 23 percent of all prime-contract dollars to small businesses, the SBA has proposed implementing a new monitoring system that will force companies to re-certify their small business status if they take part in an acquisition.

"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 Hector V. Barreto, head of the administration.

The rule change would have special importance because federal contracts issued through agencies like the General Services Administration and the Department of Defense may last as long as twenty years -- counting against the wrong side of the small business ledger for that entire time period.

Visit the SBA's Office of Advocacy at its website to learn more about this issue and offer comments on the SBA's decision.