The Small Business Administration's new federal contracting recertification rules took effect recently. Starting June 30, the government began requiring that all businesses with federal contracts coded as "small businesses" be recertified every five years or when acquired or merged with another company. Previously, businesses could go up to 20 years after they received a small-business contract without getting recertified, the SBA says. Some groups, including the American Small Business League, complained a huge portion of small-business contracting dollars were going to large companies. One possible reason: Small businesses tend to grow large after they get federal contracts or acquired by much larger companies.

The SBA says businesses won't lose their federal contracts if they're no longer classified as small due to recertification, but that the new recertification rules will lead to better record-keeping and help the government maintain its small-business contracting goals. In 2003, Congress directed that at least 23% of all prime and subprime government contract dollars should go to small businesses.

"Under these rules, most large businesses credited with small contracts will no longer be counted as small, effective June 30," the SBA says in a release. "Nearly all the remaining large businesses will be scrubbed from the database within a year."

Some groups don't think the new recertification procedures do enough to prevent large businesses from getting small-business contracts. The American Small Business League and the SBA's own inspector general previously called for small-business contracts to be recertified every year. SBA officials say their feedback on that proposal suggested that annual recertification would be too burdensome. The League also says that the five-year certification rule would now allow many large businesses with small-business contracts to keep those contracts until 2012. "The new five-year grandfathering/five-year re-certification policy will now allow the SBA to officially report the miscoded contracts and thousands of other government contracts to Fortune 1000 firms and other large businesses as small-business awards for at least five more years," the League says in a July 2 release