The chairmanof the House Small Business Committee warned the Small Business Administrationthat its proposal to change rules governingsmall IT reseller contractors will likely land the agency in court.

The proposedchanges, announced by the SBA inAugust, would take away an exemption for Information Technology Value AddedResellers (ITVAR) under North American Industry Classification System rule541519. Under the proposed change, IT businesses with annual sales of more than$27.5 million would be considered large, and thus ineligible for small businesspreferences.

In a 12-pageletter sent to the SBA on Nov. 10, Rep. Sam Graves (R-Mo.) said the agency'sreasoning for the changes ignores fundamental differences in how the federalgovernment treats IT purchasing. IT, he wrote, "is the only category ofgoods and services to have its own regulatory framework for purchases -- theTechFAR -- since the purchases of technology involves commercial itemprocurements, commercial services procurements, noncommercial procurements,procurements involving sensitive and classified information, data rights issuesand numerous other legislative and regulatory anomalies."

Graves urgedSBA to withdraw the proposed rules, and wrote that it "is legallyinsufficient and subjects the SBA to substantial litigation risk." Gravesalso warned that Congress would consider "appropriate legislative action"if the SBA went ahead with the rulemaking.

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