Overview
This section prescribes the policies and procedures for business concerns to represent their size and socioeconomic status at the time of initial offer and to "rerepresent" that status following specific triggering events, such as mergers, acquisitions, or the passage of time on long-term contracts. It ensures that government small business contracting goals are based on accurate, up-to-date data throughout the life of a contract.
Key Rules
- Initial Representation: To be eligible for award, an offeror must represent in good faith that it meets the NAICS size standard at the time of its initial offer (including offers for BPAs and Basic Ordering Agreements).
- Joint Ventures: A joint venture qualifies as small if every party is small, or if it is an SBA-approved mentor-protégé joint venture where the protégé is small.
- Multiple-Award Contracts (MACs): Generally, a concern that is small at the time of the initial contract offer is considered small for every order issued under that contract, unless a specific rerepresentation is required at the order level.
- Mandatory Rerepresentation Triggers: Contractors must update their status in the following scenarios:
- Within 30 days of an executed novation agreement.
- Within 30 days of a merger or acquisition that does not require novation.
- For long-term contracts (over 5 years): within 60 to 120 days prior to the end of the fifth year and prior to the exercise of any subsequent option.
- Order-Level Rerepresentation: Required for orders set aside for a specific socioeconomic category under an unrestricted MAC, or if specifically requested by the Contracting Officer for a particular order.
- Impact on Agency Goals: If a contractor rerepresents as "other than small," the agency can no longer count the value of future options or orders toward its small business prime contracting goals.
Practical Implications
- M&A Due Diligence: Small businesses engaging in mergers or acquisitions must be prepared to rerepresent their status within 30 days, as "growing" into a large business will immediately stop the buying agency from receiving small business credit for that contract.
- Compliance Burden: While a change to "other than small" status typically does not terminate the contract, it may trigger a new requirement for the contractor to submit a formal Small Business Subcontracting Plan under FAR 52.219-9.