SmallGovCon: Small 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.

Here’s the necessary background. In December 2020, GSA issued a solicitation under its One Acquisition Solution for Integrated Services (OASIS) small business pool contract for a fixed-price task order for engineering, program management, and technical support services for the Rocket Systems Launch Program at the Space and Missile Systems Center at Kirtland Air Force Base, which is undoubtedly one of the coolest solicitations I’ve ever seen. In any event, GSA received 5 proposals by the closing date. One was from Millennium Engineering and Integration Company (“Millennium”), and another was from Odyssey Systems Consulting Group, Ltd. (“Odyssey”). GSA eventually awarded the task order to Millennium…”

“Millennium was acquired only 38 days after it submitted its proposal. Therefore, Odyssey reasoned, Millennium must recertify and, because it would not recertify as small, Millennium would be ineligible for award.

However, GSA noted that the above rule only applies to recertification under the ‘master contract’ (in this case, the original OASIS contract). 13 C.F.R. § 121.404(g)(4) provides:

The requirements in paragraphs (g)(1), (2), and (3) of this section apply to Multiple Award Contracts.  However, if the Multiple Award Contract was set-aside for small businesses, . . . then in the case of a contract novation, or merger or acquisition where no novation is required, where the resulting contractor is now other than small, the agency cannot count any new orders issued pursuant to the contract, from that point forward, towards its small business goals…” Read the full article here.

Source: Small Business Being Acquired by a Large Business? For Multiple Award Contracts, the 180-Day Rule Doesn’t Apply to Task Orders, says GAO – By John Holtz, September 13, 2021. SmallGovCon.


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