Recently, the Small Business Administration (SBA) raised the size standards for 58 industries. The increased standards, which will take effect on October 24th, are in three North American Industry Classification System (NAICS) codes sectors. Those sectors are real estate, rental and leasing, educational services, health care, and social assistance.
It is reported that the size standards for hundreds of other industries will likely be increased in the next few months as well; however they will take effect and different times. The reason for this increase is because roughly 23% of all federal contracting dollars are intended to go to “small” businesses, and the SBA is where small businesses can obtain access to these U.S. Government contracting dollars.

Currently, the “small” business threshold is measured in average annual revenue over the last three years. This amount is going to increase from $7 million to $25.5 million for companies that lease buildings or land to the federal government, and the size standard for medical laboratories will grow from $13.5 million to $30 million.

It is critical for potential bidders to know whether they in fact qualify as “small” for their principle industries. The reason for this is because federal solicitations are required to state both the applicable NAICS code and size standard so that those making offers can correctly represent themselves. Companies should check the Census Bureau website to identify the appropriate NAICS codes, and then also check the SBA website to find the size standards that are applicable to their core lines of business.

Identifying current size standards can be difficult without consulting the proper mediums. The Office of Management and Budget (OMB) reviews all NAICS codes for potential revisions every five years to determine whether the codes are consistent with changes in the industry, and the 2007 NAICS codes were revised late last year. In addition, the SBA conducts periodic reviews of NAICS codes to set the applicable size standards on an industry-by-industry basis. However, as reported by the Federal Acquisition Regulation Council recently, the OMB and SBA reviews are not performed simultaneously.

The Small Business Association will continue its review over the next several years, so it is important that potential bidders check to make sure whether they qualify as “small” under the current standards, before submitting bids or proposals.

Reference:

Hoffman, Ira E. “Is your company a ‘small business’ under new SBA rules?” 10/22/12 (10/23/12)