At the end of 2024 the Small Business Administration (SBA) implemented significant updates to its recertification rules, impacting small businesses and larger firms involved in mergers and acquisitions (M&A). These changes clarify certification status, refine timing for size determinations, and introduce new requirements for multiple-award contracts (MACs) and recertification events.
The terminology defining qualifying vs. disqualifying recertification changed to the following:
- Qualifying recertification confirms a business remains eligible for set-aside contracts. This allows participation in set-aside orders for up to five years unless a disqualifying event occurs.
- Disqualifying recertification occurs when a contractor certifies it is no longer small or eligible for a specific SBA program, impacting its ability to receive new set-aside orders.
The timing of business size has been determined that it is established at proposal submission phase and not at contract award. For most unrestricted MACs, size is determined at proposal submission for each order. However, under the Federal Supply Schedule (FSS), size is based on the latest recertification. Further, businesses must recertify their size in the following situations:
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- Mergers, acquisitions, or novations: Recertification is required within 30 days.
- Long-term contracts (exceeding five years): Recertification must occur before the fifth year and at each option period.
- Upon request: Contracting officers can request recertification for specific orders or agreements.
The impact on set aside Multiple Award Contracts has been determined that after a disqualifying recertification, agencies cannot award new set-aside task orders or options under MACs. This rule will take effect on January 17, 2026, allowing businesses time to adapt.
Regarding transactions between small businesses constitutes that if a merger or acquisition involves two small businesses, the newly combined entity remains eligible for set-aside awards, though contract terms may impose additional restrictions. Finally, SBA will now allow size protests for recertifications under MACs, enabling other contractors to challenge a competitor’s small business status.
Small businesses must carefully track size status and prepare for mandatory recertifications, particularly when involved in M&A or holding long-term contracts. Larger firms acquiring small businesses should anticipate how recertification affects contract eligibility. The new ability to challenge size status introduces additional competition risks. Overall, these changes enhance clarity in size determinations while tightening enforcement on set-aside eligibility. Businesses should review their contracts, assess future risks, and ensure compliance with SBA recertification requirements.
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