Government contracting programs for small businesses have been the subject of much discussion lately, both in the news and here at the Fed Marketing Blog. The long-awaited revision of the U.S. Small Business Administration’s 8(a) Business Development Program, one of the most significant small business aid initiatives, has stirred this topic into focus. As you may recall from last week’s blog entry, New SBA Final Rule Tightens 8a Contracting Restrictions, small business programs are stepping up efforts to eliminate abuse. The SBA, who creates and monitors most of these efforts, maintains strict eligibility requirements.
As we have discussed in the past, the most significant restriction on 8(a) and other SBA program eligibility is the industry-specific size requirement. The SBA’s overall purpose is to help smaller firms successfully compete for business against large corporations. It is imperative then, that they have some fair means of distinguishing one class of company from the other. The SBA analyzes market history, authority opinions, research data, estimations, and industry structure evaluations to select appropriate cutoffs. A full disclosure of these criteria can be found in their “Size Standards Methodology White Paper.” SBA administrators use this analysis to establish industry-by-industry thresholds, which can change over time, to identify their intended beneficiaries.
So, what are the current SBA small business size requirements?
Official small business size standards were last updated in October 2010. The requirements are expressed in terms of average annual receipts and total number of employees. As general rules, firms in manufacturing and mining industries employing fewer than 500 employees, and firms in non-manufacturing industries averaging less than $7 million in annual receipts qualify as small businesses. The following industry specific exceptions and elaborations better define these two rules:
- General building and heavy construction contractors: $33.5 million
- Special trade construction contractors: $14 million
- Land subdivision: $7 million
- Dredging: $20 million
- About 75 percent of the manufacturing industries: 500 employee
- Some industries: 1,500 employees
- The balance: either 750 or 1,000 employees
- Computer programming, data processing and systems design: $25 million
- Engineering and architectural services and a few other industries have different size standards
- $35.5 million max for any industry
- Research, development, and environmental remediation services standards are stated in terms of employees.
-For small business federal contracts: 100 employees, and the firm must deliver the product of a small domestic manufacturer, as set forth in the SBA’s non-manufacturer rule, unless waived by the SBA for a particular class of product.
-For procurements made under the Simplified Acquisition Procedures of the FAR, and where the purchase does not exceed $25,000, the non-manufacturer may deliver the goods of any domestic manufacturer.
Advantage Small Business
The advantages afforded small businesses through SBA programs are significant, not least of which is the priority treatment qualified firms enjoy in government contracting. If your small firm qualifies under the definitions of your industry, initiatives like the SBA’s 8(a) Business Development Program will maximize your growth potential by providing the resources necessary to compete with big companies. To learn more about the steps your small business should be taking read our recent blog article titled “GSA Schedule Contracts for Certified Small Businesses,” visit sba.gov, or contact me directly.