"Presumed Loss" Rule: Size Misrepresentations Now Even More Costly

78 Fed. Reg. 38811, which became effective on August 27, 2013, implements certain provisions of the Small Business Jobs Act of 2010. Most notably, the new regulation states that "there is a presumption of loss equal to the value of the contract or other instrument when a concern willfully seeks and receives an award by misrepresentation." In other words, a size misrepresentation to the SBA can result in damages in the full amount of the fraudulently obtained contract; a significant departure from the previous rule. The new rule also provides that: (1) submission of an offeror application for an award intended for small business concerns will be deemed a size or status certification or representation in some circumstances; (2) an authorized official must sign the certification; and (3) concerns are required to update their size or status in ORCA (or a successor database) at least annually.