To address a growing outcry about abuse of small business contracting programs, the Office of Federal Procurement Policy issued a new rule on February 12 to agencies operating government wide acquisition contracts, or GWACs for information technology.  The new rule directs GWAC administrators at GSA, NIH, NASA, and Commerce to modify their IT GWACs  to  require that small business contractors annually re-certify their eligibility as a small business.

     OFPP has directed agencies to make this change as part of a process of renewing their GWAC designations, which must be done by April 1, 2003.

     Some small business holding GWACs may have difficulty re-certifying their size.  As is more and more often the case, a small business may have grown substantially during the time it holds the GWAC.  These contracts often last five years and are sometimes longer.

     The new OFPP guidance does not make clear what happens to a small business GWAC holder that is unable to re-certify its eligibility after April 1.  This is a matter which will have to be worked out in the implementation process. 

     This new guidance applies only to GWACs.  However, OFPP has announced it intends to seek a change to the Federal Acquisition Regulations, which may make the new re-certification requirement apply to other multi-year contracts, including task and delivery order contracts.

     Small businesses which are likely to exceed the applicable size standard in the future should begin developing strategies now if they wish to remain small.  SBA regulations, although restrictive, do permit some alternatives. We regularly counsel small businesses on their options.   Contact Joseph Petrillo or Karen Powell to discuss your specific situation.

Joseph J. Petrillo 202_887_0405 jp@petrillopowell.com

Karen D. Powell 202_887_4827 kdp@petrillopowell.com

© 2003, Petrillo & Powell, PLLC