SBA’s Certificate of Competency

If a contracting officer determines that a small business offeror is not qualified to perform under a given solicitation, that typically means the offeror’s proposal will be rejected. But when the rejection deals with responsibility, the offeror may get a second bite at the apple through the SBA’s Certificate of Competency (“COC”) program. Whether this is news to you, or something you simply wish to understand a bit better, let’s take a look at the basics of the SBA’s COC Program, rules, and procedures.

Which laws establish and govern the COC program?

The Small Business Act or the “Act” (specifically 15 U.S.C. § 637(b)(7)) introduces us to the COC program. Contracting officers are required to provide small business concerns with reasoning for why they are denied award of a contract. The contracting officer must also refer small business concerns to the SBA if the concern is denied award specifically due to their “capability, competency, capacity, credit, integrity, perseverance, [or] tenacity[.]”

The COC process is easiest to understand by reviewing SBA’s own implementing regulations. They establish the regulatory framework for the SBA’s application of the COC program. They also cover offeror eligibility for a COC, review of a COC application, appeals of a COC determination, and effects of a COC. Don’t worry, we dive into most of these a bit deeper below.

But the Act and SBA’s regulations are not the only areas of federal law that speak to COCs, so does the FAR, in a subpart titled “Responsible Prospective Contractors.

” The FAR instructs contracting officers to make “an affirmative determination of responsibility” prior to any purchase or award. Other sections of this FAR subpart set forth the standards for determining responsibility–which include a review of, among other things, past performance, financial resources, and organizational skills. In the event a purchase or award involves a small business, the contracting officer and small business offeror must also comply with another FAR subpart, covering “Certificates of Competency and Determinations of Responsibility“–which largely mirrors, and in fact defers to, the SBA’s method of managing the COC program.

What are the offeror’s responsibilities during the COC review?

When the SBA receives a COC referral from the contracting officer, it notifies the offeror and asks whether it wishes to apply for a COC. If the offeror wishes to apply for a COC, it must show the SBA that it is competent. While each case is different, the SBA generally requires the following documents from the offeror: SBA various  Forms / Application for Certificate of Competency, Monthly cash flow, and any other specific data identified by the SBA.

As part of its review, the SBA may, among other things, visit an offeror’s worksites and/or contact an offeror’s suppliers, financial institutions, or other relevant third-parties directly to verify any part of the contracting officers determination of nonresponsibility.

Throughout the process, the offeror should respond to any communications from the SBA in a timely fashion.

Failure to do so may result in the SBA closing its investigation and denying the COC.

For contracts valued between $100,000 and $25 million, the Area Director’s decision to deny a COC is final. 

There are no rights to appeal. If the Area Director approves a COC, the contracting officer has a few options.

First, the contracting officer may accept the decision to issue the COC and award the contract to the concern.

Second, the contracting officer may ask the Area Director to suspend the case to allow for a review period or so the contracting officer may appeal the decision.

Third, the contracting officer may appeal the decision to SBA Headquarters.