The FAR Council recently published a final rule dealing with small business certification issues, effective on January 17, 2025. This final rule came about to ensure that certain parts of the FAR and SBA rules are consistent. The change? Adding additional circumstances that require an awardee to rerepresent its size and/or socioeconomic status for orders placed under a multiple-award contract (MAC) per FAR 52.219-28(c) Postaward Small Business Program Rerepresentation.
However, this FAR rule updates the regulation to match the SBA rule that had been issued in 2020, back when SBA consolidated its Mentor-Protégé Program. In the mean time, SBA had updated its recertification rules as discussed in this post outlining the new recertification rules. Under the recent regulation, SBA will be implementing its strategy to include new 13 C.F.R. § 125.12, which sets forth disqualifying size and status events, which would render a business “ineligible for future set-aside or reserved awards, including awards of set-aside or reserved orders against pre-existing unrestricted or set-aside multiple award contracts” if it causes the business to be other than small. In addition, “for a multiple award small business set-aside or reserve, a concern that recertified as other than small or other than the required small business program would be ineligible to receive options.
Unfortunately, the FAR rule will have to be updated again to deal with SBA’s January 2025 rule. Until then, below is what the FAR rule contains. Contractors must be aware of both rules to stay on top of their small business recertification requirements. And contractors may need to inform agencies about what the new SBA rules state.
With this revision, a contractor that represented its status before contract award, will be required to rerepresent its size and/or socioeconomic status for an order placed under a MAC, in circumstances where rerepresentation was not previously required, to ensure that orders set aside for small businesses are awarded to qualified small businesses. This means that an entity that no longer qualifies as small under the applicable NAICS code associated with an order, or that no longer qualifies for a particular socioeconomic category, will not be eligible for orders placed under certain multiple-award contracts where the MAC was not originally restricted to the same small business certification as the order.
The prior language of FAR 52.219-28(c) only required rerepresentation of size and/or socioeconomic status when the contracting officer requested it for task orders under MACs set aside for any of the SBA’s programs mentioned in FAR 19.000(a)(3). FAR 52.219-28(c) will now state the following:
If the Contractor represented its status as any of the small business concerns identified at 19.000(a)(3) prior to award of this contract, the Contractor shall rerepresent its size and socioeconomic status according to paragraph (f) of this clause or, if applicable, paragraph (h) of this clause, for the NAICS code assigned to an order (except that paragraphs (c)(1) through (3) of this clause do not apply to an order issued under a Federal Supply Schedule contract at subpart 8.4)—
(1) Set aside exclusively for a small business concern identified at 19.000(a)(3) that is issued under an unrestricted multiple-award contract, unless the order is issued under the reserved portion of an unrestricted multiple-award contract ( e.g., an order set aside for a woman-owned small business under a multiple-award contract that is not set-aside, unless the order is issued under the reserved portion of the multiple-award contract);
(2) Issued under a multiple-award contract set aside for small businesses that is further set aside for a specific socioeconomic category that differs from the underlying multiple-award contract ( e.g., an order set aside for a HUBZone small business concern under a multiple-award contract that is set aside for small businesses);
(3) Issued under the part of the multiple-award contract that is set aside for small businesses that is further set aside for a specific socioeconomic category that differs from the underlying set-aside part of the multiple-award contract ( e.g., an order set aside for a WOSB concern under the part of the multiple-award contract that is partially set aside for small businesses); and
(4) When the Contracting Officer explicitly requires it for an order issued under a multiple-award contract, including for an order issued under a Federal Supply Schedule contract (see 8.405-5(b) and 19.301-2(b)(2)).
Due to this change, contracting officers will be required to verify the size and/or socioeconomic status of a small business concern prior to issuing an order under multiple-award contracts, but only in those specific situations subject to this rule. However, this will not affect the common scenario where the order and the MAC have the same small business set-aside, such as where both are SDVOSB. And, notably, the agencies will no longer be able to continue counting awards of task orders on MACs towards their small business or socioeconomic contracting goals when awarded to an awardee that does not meet the size and/or socioeconomic status at the time of offer submission for the task order.
This change has the potential to cause contracting officers to set-aside contracts to look further into the future when choosing awardees. For example, there may be a negative impact on awarding contracts to participants that are nearing completion of their time in the 8(a) Program, because the agency would no longer be able to count the award to an 8(a) Program participant after the awardee graduates from the 8(a) program. This could also affect awards to contractors that are close to the size limit on the contract, because any order awarded after the awardee exceeds the size limit of the contract would not count towards the agency’s small business subcontracting goal.
Items of note:
- This revision expands rerepresentation requirements to acquisitions at or below the simplified acquisition threshold ($250k), acquisitions for commercial products (including commercially available off-the-shelf items), and acquisitions for commercial services.
- This revision only applies to solicitations for contracts issued on or after the effective date of the final rule. That means, awardees of any solicitation that is issued prior to January 17, 2025 for a MAC will not be required to rerepresent their size and/or status.
- Exceeding the size limit, or losing a socio-economic status after initial awards of the MAC will not disqualify an offeror from award of an order except in the specific scenarios outlined above. “A small business concern awarded a multiple-award contract that was set aside for small businesses may continue to perform under such a contract as a small business concern throughout for the life of those contracts (e.g., for the base period and up to four additional option years).”
- Contracting officers will still have the discretion to require verification of size and/or socioeconomic status on orders for MACs that fall outside of this rule.
- This will apply to competitive acquisitions set aside under and of the SBA’s programs, including small business, 8(a) Program participants, HUBZone small businesses, SDVOSBs, WOSBs, and EDWOSBs. It does not apply to GSA Schedules, as the rule states: “except for an order issued under a Federal Supply Schedule contract.”
- This rule has no impact on sole-source awards.
It will be interesting to see if this amendment causes any changes in the way that MACs are awarded, whether for an initial award or for orders. There is certainly potential for a negative affect on offerors close to size limits, or in danger of losing their socioeconomic status. But there is also great potential for this to ensure that awards set aside for small businesses or any socioeconomic status go to businesses that meet those requirements. It will also be interesting to see how long it takes for the updated SBA rule from January 2025 to make its way into the FAR (Will it be over 4 years like this one?). What are your thoughts?
Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919.
Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.