If, as the result of a size protest or appeal, the SBA makes a final determination that a company is not a small business, the company will be required to update SAM within two days to reflect that it is no longer small. And if the company doesn’t recertify within two days, the SBA will do the honors and update the company’s SAM profile.

This tough new requirement is part of the compromise version 2022 National Defense Authorization Act, which is likely to be signed into law in the coming weeks, although it is unclear when the SBA’s regulations will be revised to implement the change.

Section 863 of the 2022 NDAA amends the Small Business Act to include the following language:

(4) DETERMINATIONS REGARDING STATUS OF CONCERNS. –

(A) IN GENERAL. – Not later than 2 days after the date on which a final determination that a business concern does not meet the requirements of the status such concern claims to hold is made, such concern or the the Administrator, as applicable, shall update the status of such concern in the System for Award Management (or any successor system).

(B) ADMINISTRATOR UPDATES. – If such concern fails to update the status of such concern as described in subparagraph (A), not later than 2 days after such failure the Administrator shall make such update.

This is a significant change from existing law, which merely states that “after an adverse size determination, a concern cannot self-certify as small under the same or lower size standard unless it is first recertified as small by SBA.” Under existing law, then, a small business need only change its SAM to reflect an adverse size determination when the company is using SAM to certify its size–such as with respect to a new bid, or potentially with a required annual SAM update.

Section 863 also requires notification to contracting officers for pending proposals:

(C) NOTIFICATION. – A concern requires to make an update described in subparagraph (A) shall notify a contracting officer for each contract with respect to which such concern has an offer or bid pending of the determination made under subparagraph (A), if the concern finds, in good faith, that such determination affects the eligibility of the concern to perform such contract.

Unlike the two-day rule, the notification provision is not a major change from existing law. Current SBA regulations state that when a company receives an adverse size determination, “[i]f the concern has already certified itself as small on a pending procurement or on an application for SBA assistance, the concern must immediately inform the officials responsible for the pending procurement or requested assistance of the adverse size determination.”

As mentioned previously, Section 863 has not yet become law, but that appears very likely to happen in the near future. However, Congress has not given the SBA a specific deadline for implementing this new requirement, so it is unclear when the SBA will begin to enforce it.

As always, we will keep the government contracting community posted.

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