Companies awarded federal contracts as small businesses will now have to recertify their size every five years, according to new oversight measures that went into effect on June 30.

In addition, small-business federal contract holders that merge or are acquired by another company will be immediately reassessed for size, as will those with existing contracts of five years or more.

The new measures are aimed at ensuring large corporations are not awarded federal contracts meant for small businesses. Government agencies have a legislated target of awarding 23 percent of all federal contracts in a given year to small businesses. In 2005, the Small Business Administration reported that small businesses were awarded 25.4 percent, or $80 billion, of total federal contracting dollars. Critics say the figure was closer 21 percent, as a result of contracts misallocated to large corporations.

Under the new regulations, companies that no longer qualify as small businesses according to SBA size standards may retain their contracts, though these won't count towards government contracting goals. Previously, contractors could retain their small-business designation for up to 20 years, even after being acquired by a larger corporation.

SBA officials plan to send a letter to the CEOs of large federal contractors to ask for their assistance in complying with the new regulations.

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Published on: Jul 3, 2007