GSA closes loophole to the benefit of small business

GSA’s FAR Deviation Closes Small Business Contracting Loophole Policy to Require Size, Status Certification Before Option Periods Are Exercised

WASHINGTON, DC – Businesses holding government contracts will soon be required to certify their size and status each time an option period is exercised under the terms of a new policy announced today by the U.S. General Services Administration.

“We found that some GSA Schedules contract holders that were small when originally awarded a Schedules contract, are now large, and in some cases may have been purchased by larger companies but are still listed as small on GSA contracts,” said Boyd Rutherford, GSA Associate Administrator for Enterprise Development. “This is not how the small business programs were intended to function and results in lost opportunities for those businesses intended to be help by these programs.”

This new policy is intended to address a loophole in Federal contracting that has allowed businesses to retain their status as “small” (and all the sub-categories) even after they no longer meet the requirements for being classified as small.

Previously, GSA and the Small Business Administration interpreted language from the Federal Acquisition Regulation (FAR) to mean that vendors kept their status as a small business for the five-year term of a GSA Schedules contract. At the end of the initial term, vendors would be able to retain that small business status into each of the three, five-year option periods.

Now GSA has approved a class deviation from the FAR intended to ensure that federal contracts intended for small businesses are available to contractors with legitimate small business status. David Drabkin, GSA’s Senior Procurement Executive, issued the deviation on October 10, 2002.

The change means that contractors operating under the Multiple Award Schedules in GSA’s Federal Supply Service, or under any other multiple award contracts, such as the FAST program in GSA’s Federal Technology Service, will have to recertify that they qualify as a small business each time their contract or contracts are open for renewal. Failure to recertify could lead to exclusion from federal contracting.

GSA is a centralized federal procurement and property agency in Washington, D.C., that provides office space, supplies and services for the federal government. The agency, created in 1949 to increase government efficiency operates and manages 1,800 government-owned buildings and 6,500 leased buildings. It provides workspace for more than one million federal employees in more than 1,600 American communities.

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