New Year’s Resolution #7: I will take advantage of the SBA’s increased size standards
January 13, 2023
At a glance
- Only firms meeting the definition of ‘small business’ may take advantage of the government’s small business preference programs.
- However, the Small Business Administration (SBA) recently revised its size standards in a way that may allow large businesses to qualify as ‘small.’
- Aprio recommends that small business contractors periodically review the size standards, to avoid missing potential set-aside opportunities.
The full story:
The government offers a variety of small business preference programs that enable small businesses to participate in government contracting. However, only firms that meet the definition of a small business can take advantage of the preferences, which primarily consist of certain contracts being set-aside for small business.
What must a business do to be considered ‘small’?
One of the principal requirements is that to be considered small, a contractor cannot exceed the size standards set by the Small Business Administration. The size standards differ by industry and are based on either number of employees or annual revenue.
While the size standards are periodically increased, due to the recent inflation, the size standards for many industries have recently been increased. Some have been increased dramatically.
Could your business qualify as ‘small’ now?
For instance, the most common size standards for information technology-related contracts now range from $30 to $32.5 million dollars of average annual revenue. Those ceilings, combined with the ability to use a 5-year average instead of the previous 3-year average, means that some fairly large businesses may now be able to qualify as small.
The increase may also benefit large businesses as more subcontractors will qualify as
small for the purpose of the small business subcontracting plan.
The bottom line
Aprio recommends that small business contractors periodically review the size standards,
which can be found here, to ensure you are not missing potential set-aside opportunities.