Overview
FAR Subpart 19.3 prescribes the policies and procedures for determining whether an offeror qualifies as a small business or a specific socioeconomic concern (e.g., HUBZone, SDB, WOSB). It establishes the framework for offeror self-certification, mandatory rerepresentation during contract performance, and the formal process for protesting a firm’s size or status through the Small Business Administration (SBA).
Key Rules
- Good Faith Representation: To be eligible for award, an offeror must represent in good faith that it meets the size standard corresponding to the NAICS code in the solicitation.
- Timing of Status: For most programs, size status is determined at the time of the initial offer. However, HUBZone status must exist both at the time of the initial offer and at award for certain types of contracts.
- Mandatory Rerepresentation: Contractors must rerepresent their size and status:
- Within 30 days of a novation agreement or a merger/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 exercising any subsequent option.
- Protest Timelines: An interested party must protest the small business representation of an apparent successful offeror within five business days after bid opening (sealed bidding) or notification of the successful offeror (negotiated procurement).
- SBA Authority: The SBA has the final authority to determine a concern's size and status. A Contracting Officer must accept an offeror’s representation unless it is challenged or there is a reason to question it.
- Impact of Status Change: If a contractor rerepresents as "other than small," the agency can no longer count the value of options or new orders toward its small business prime contracting goals, though the contract remains valid.
Responsibilities
- Offerors/Contractors:
- Must represent size and socioeconomic status in writing at the time of initial offer.
- Must rerepresent status in the System for Award Management (SAM) and notify the CO following mergers, acquisitions, or at specific contract milestones.
- Contracting Officers (CO):
- Assign the appropriate NAICS code and size standard to the solicitation.
- Accept representations unless challenged or objectively questionable.
- Refer protests to the SBA Government Contracting Area Director promptly.
- Withhold award for 15 business days following an SBA protest, unless "public interest" or "urgent need" justifications are documented in writing.
- Update the Federal Procurement Data System (FPDS) within 30 days of a contractor's rerepresentation.
- Small Business Administration (SBA):
- Conducts formal size determinations and status reviews.
- Determines the timeliness and standing of protests.
- The SBA Office of Hearings and Appeals (OHA) adjudicates appeals of size determinations.
Practical Implications
- M&A Strategy: For small businesses, an acquisition by a large firm has immediate regulatory consequences. The requirement to rerepresent within 30 days of a merger means the buying entity must realize that the target’s existing contracts may lose their "small business" value for the government agency, potentially cooling the agency's interest in exercising future options.
- The "Five-Day" Rule: The window to protest is extremely narrow. Government contractors must have a "protest readiness" plan to immediately evaluate the size/status of competitors once a notice of intent to award is issued.
- Goal Achievement Cracks: Since agencies lose the ability to count "graduated" small businesses toward their annual goals, COs may be less likely to exercise options on long-term contracts if a firm has grown into a large business, instead preferring to re-compete the requirement to find a new small business partner.
- Joint Venture Nuance: Small businesses entering JVs must ensure their agreements strictly comply with 13 CFR 121.103 to avoid being found "affiliated" with their partner, which would aggregate their sizes and potentially disqualify them from small business set-asides.