Small business certification a thorny issue.

• Author: Stafford, John G.
• Position: Ethics Corner

The ever-evolving small business government contracting landscape presents myriad ethical quandaries for small businesses seeking set-aside and sole source contracts.

Rules governing eligibility for various small business programs are becoming more complex with amendments and case law interpretation. Hence, whether a film is eligible for a particular small business program or procurement often presents a thorny question.

Small business government contracting programs generally rely upon a contractor's self-certification. To compete, a company usually only needs to certify--with no government verification--that it meets a small business program's requirements.

Notable exceptions include the Small Business Administration's 8(a) business development program and Historically Underutilized Business Zone (HUBZone) program and the Department of Veterans Affairs' Veterans First contracting program for Veteran-Owned and Service-Disabled Veteran-Owned Small Businesses.

The 8(a) and HUBZone programs require eligibility certification by the Small Business Administration before the business can bid on any 8(a) or HUBZone set-aside contract with any agency.

The Veterans First program requires a veteran-owned or service disabled status to be verified by Veterans Affairs before the company is eligible to bid on the VA's set-aside contracts.

In any event, under the self-certification regime, enforcement of the criteria for small business programs only occurs after the fact, when either a competitor or the contracting officer submits protests to the SBA to determine whether eligibility criteria have been met.

Under self-certification, enforcement of the criteria for small business programs only occurs after the fact, when either a competitor or the contracting officer submits protests to the SBA to determine whether eligibility criteria have been met.

It often is unclear, on the front end, whether a company meets small business set-aside criteria, creating a dilemma as to whether self-certification is justified. More to the point, the evolving eligibility rules, and how those rules are interpreted, actually encourage small businesses to take aggressive positions concerning eligibility criteria and, in effect, "roll the dice" as to the outcome of any subsequent protest.

Two small business eligibility rules, which seem especially susceptible to such aggressive interpretations, are the ostensible subcontractor rule and rules requiring ownership and control by a...