A new revenue
ceiling proposed by the Small Business Association (SBA) could
significantly alter the landscape for IT resellers by excluding a large number
of small businesses from the federal IT reseller market, according to the E-Commerce Times.
The SBA is proposing revisions to the size standards affecting VARs and other
IT solutions providers who provide hardware, software, or both as part of
projects that also involve installation, systems integration, or other
IT-related services for federal agencies. The change means that companies with
more than $27.5 million in annual revenue no longer qualify for small business
“This proposed change is a terrible mistake
that would have extreme adverse consequences for many small businesses,” The E-Commerce Times quoted
Lars Anderson, an attorney with Venable,
in comments to the SBA on behalf of Wildflower International, a small
woman-owned IT reseller.
“We are looking here at some highly
professional, qualified firms that provide efficient IT support to the
government with proven track records in terms of federal contract performance —
but they just operate with well under 150 employees, unlike the really big
players,” Anderson told the E-Commerce
Meanwhile, the SBA is defending the proposal,
stating that the changes are necessary since the existing size standards that
involve references to both revenue and employees have created inconsistencies,
confusion, and misuse. Further, the SBA explained, contracting officers are not
able to identify size elements in a government data base, which leads to
misunderstandings about set-aside goals. Therefore, the use of employee counts
instead of revenues may have negatively affected some small businesses,
according to the administration.
Since SBA issued the proposed rule
in September, more than 200
people have responded, mostly in opposition to anticipated change.
One leading expert on federal contracting law, Professor Charles Tiefer, has joined
with the American Small Business League (ASBL) President Lloyd Chapman in
opposing the new policies, stating that they will be “devastating to thousands
of small businesses,” according to a
The release explains that the policy was
derived from Congress’s
intent in the Small Business Jobs Act of 2010, which was “to allow
small businesses to compete in the current federal marketplace.” However,
Tiefer contends, the proposed rule accomplishes exactly the
opposite by “eliminating” the higher size standard of 150-employees
and using the lower size standard of $27.5 million in receipts.
“If the SBA actually adopts a final rule
eliminating IT-VAR, this will have precisely the effect Congress did not want.
The final rule will decrease small business size standards in the ‘solutions’
sub-industry. Businesses that qualified, below the 150 employee standard, no
longer will,” Tiefer argues in the release.
According to Tiefer, if the SBA adopts the
final rule, “small businesses will be squeezed out of the federal marketplace.”
“Eliminating the 150 employee ceiling puts the
‘high-employee-level’ type of contractor out of business, because it cannot get
down under $27.5 million without a kind of radical chopping it cannot handle —
i.e., switching to a business model of fewer employees, and, laying off a third
(50) or more employees,” states Tiefer.
“Only IT-VAR is being eliminated. This
unfairly and inconsistently punishes the ‘IT Solutions’ industry,” Tiefer
To view full article, click here: http://www.bsminfo.com/doc/sba-set-aside-policy-proposal-could-change-which-vars-are-eligible-0001