SBA and the FAR contain rules governing a situation where a small business is purchased by another entity and becomes a large business. SBA has recently updated those rules in a new regulation found at 13 C.F.R. § 125.12. In particular, there is a special scenario where a small business has submitted an offer on a small-business procurement and then is acquired within 180 days after that offer. But how does SBA define an “offer”? A recent SBA decision answers that question.
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SBA Confirms that Size Status Relates Back to Time of Offer, Even After Sale of Small Business
Over the years, SBA size regulations have included the general rule that the size status of a business generally relates back the time of initial offer on a contract. Therefore, a small business generally stays small for the duration of a federal contract, with some exceptions. However, there was also language in the rule that required small businesses to recertify their size status after being acquired or going through similar transactions. The effect of this recertification requirement was always a little unclear. If you recertify as large, does that have any effect on your small business status for orders under contracts awarded when the business was small? Now, OHA has answered that concern.
Continue readingSmall Business Being Acquired by a Large Business? For Multiple Award Contracts, the 180-Day Rule Doesn’t Apply to Task Orders, says GAO
You may recall a post of ours back in April 2021, where we discussed a little-known change to SBA’s size determination rules that occurred in October 2020. SBA created an exception, at 13 C.F.R. § 121.404(g)(2)(iii), to the usual “size is determined at offer date” rule. Now, prior to award, when a small business is part of a merger or acquisition after it makes an offer on a solicitation, the business has to recertify its size, and depending on when that acquisition occurred, if the business is now large, it may lose its award.
However, the rule is for better or worse not that straightforward, as a small business learned in a recent GAO decision. Because a part of the rule says that task order awards in such cases may not be treated as small business awards, GAO concluded that such awards are still allowed.
Continue readingCOFC Examines Small Business Size Recertification After Merger or Sale
A recent Court of Federal Claims decision examined the impact on the award to a small business when that small business is acquired, after proposal submission but before award, by a large business. In doing so, the court looked very closely at the FAR clauses incorporated into the solicitation by reference, versus those that are incorporated in full text.
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