Winning the competition is not the last hurdle before award. The contracting officer must also decide that the apparent winner is responsible, a term of art meaning the firm is capable of performing the contract and worthy of the government’s trust. For small businesses, a negative answer is not necessarily final, because the SBA has the authority to take a second look through the Certificate of Competency program. Here is how both pieces work.
What responsibility means
The FAR directs that purchases be made only from responsible prospective contractors and lists the general standards a firm must meet. A prospective contractor must have adequate financial resources to perform, or the ability to obtain them; be able to comply with the required delivery or performance schedule, taking other commitments into account; have a satisfactory performance record and a satisfactory record of integrity and business ethics; have the necessary organization, experience, accounting and operational controls, and technical skills, or the ability to obtain them; have the necessary equipment and facilities, or the ability to obtain them; and be otherwise qualified and eligible under applicable laws. Solicitations may add special standards for particular requirements.
The determination is made at the time of award, based on information the contracting officer has or obtains. Sources include the firm’s SAM.gov record and exclusions status, past performance databases, financial statements, pre-award surveys and the firm’s own responses to questions. A contracting officer who lacks information sufficient to find a firm responsible must find it nonresponsible.
How a small business can lose on responsibility
New and small firms are more exposed here than established ones. A thin financial statement, no federal track record, a small staff or limited facilities can all raise questions. A contracting officer may also be concerned about a firm’s ability to perform a contract much larger than anything it has done before. The firm may never learn that these doubts exist until the award goes elsewhere, which is one reason it pays to present financial capacity, references and operational depth clearly in every proposal.
The Certificate of Competency
When a contracting officer determines that a small business that would otherwise receive an award is nonresponsible, the FAR requires the matter to be referred to the SBA. The SBA notifies the firm and gives it an opportunity to apply for a Certificate of Competency. SBA staff then conduct their own review of the firm’s capability, credit, integrity, perseverance and tenacity, typically including a site visit and a review of financial and technical information. If the SBA issues the certificate, it is conclusive on the elements of responsibility it covers, and the contracting officer must award the contract to the firm. If the SBA declines, the contracting officer’s determination stands.
The program exists because Congress recognized that contracting officers, judging from a distance, might underestimate small firms. It applies to responsibility findings, not to technical evaluations or price; a small business that lost on merit has no COC remedy.
Preparing for both
- Keep current financial statements and be ready to show a line of credit or other means of financing performance
- Maintain a clean SAM.gov record and address any past performance issues in the government’s databases
- Document your quality, accounting and project management systems in a form you can share quickly
- Respond to a contracting officer’s responsibility questions fully and fast; delays can be read as evasiveness
- If referred to the SBA, apply for the certificate promptly and treat the review as seriously as the proposal
Responsibility is the government’s assurance that it is awarding to a firm that can deliver. For small businesses, the Certificate of Competency is the assurance that this judgment will be made fairly, by an agency whose mission is to understand small firms. Current procedures are available at sba.gov.