FAQs
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Q. What are small business size standards? A. The term "size standard" describes the numerical definition of a small business. In other words, a business is considered "small" if it meets or is below an established "size standard."
Q. How does the SBA define a small business? A. A small business is an concern that is organized for profit, with a place of business in the United States, and which operates primarily within the United States or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor. Further, the concern cannot be dominant in its field, on a national basis. Finally, the concern must meet the numerical small business size standard for its industry. SBA has established a size standard for most industries in the U.S. economy. The most common size standards are as follow:
About one-fourth of industries have a size standard that is different from these levels. They vary from $0.75 million to $33.5 million for size standards based on average annual revenues and from 100 to 1500 employees for size standards based on number of employees. Several SBA programs have either alternative or unique size standards, such as the Small Business Investment Company Program.
Q. How does SBA develop or revise a size standard? A. At SBA, only the Administrator can approve creating or changing size standards. Before this can happen, the Office of Size Standards (OSS) makes recommendations to the the Administrator. Both establishing and modifying size standards involve the examination and analysis of industry structural characteristics and the relative position of firms within an industry in terms of size. Before OSS makes any recommendation to the Administrator, it completes economic studies of the various industry structures, prepares issue papers, and makes preliminary or interim presentations to the Board. In general, we consider these factors in establishing or reviewing size standards:
We also take into account all other factors that may distinguish a small business in an industry.
Q. Does SBA keep lists of eligible small businesses or issue certificates for firms to qualify as small businesses? A. SBA does not issue certificates or maintain lists establishing the eligibility of firms as small businesses. For Federal procurements, the firm self-certifies its small business status in Online Representations and Certifications Application when it submits its initial offer, based on the size standard specified in the solicitation. However, SBA maintains lists of small disadvantaged businesses and HUBZone businesses.
Q. My firm desires to team with another firm to bid on a Government contract. We both are below the size standard individually, but not when combined. Are we eligible to bid as a small business? A. Only for certain procurements could this joint venture qualify as a small business. In a joint venture both firms share, in some proportion, the responsibility and the profits or loss on a contract. They are considered affiliated for the purpose of that contract. Normally, the revenues or the employees of both firms are added together to determine the size of a joint venture. However, on certain large Federal procurements, a joint venture comprised of only small businesses would qualify as a small business joint venture. This is limited to procurements that exceed $10 million in value that are classified with an NAICS industry having an employee-based size standard, or that exceeds one-half of the size standard for procurements classified with an NAICS industry having a revenue-based size standard. Also, certain 8(a) firms may joint venture with other firms without being considered affiliates (see 13 CFR §§ 121.103 and 124.513 for more information).
Q. How can I restructure my firm or firms so I still maintain ownership, but become eligible as a small business? I am not now a small business. A. Restructuring your firm for the primary purpose of becoming small under a size standard would not change your size status.
Q. A Federal agency wishes to grant regulatory relief for small business entities. Must it use SBA's size standards to define small business? A. Generally, federal agencies use the SBA’s size standards, which are defined in the Regulatory Flexibility Act. However, if another small business definition is more appropriate to its needs, that agency may consult with SBA's Office of Size Standards to determine if it should request a more suitable small business definition from the SBA Administrator. See 13 CFR §§121.901 thru 904.
Q. How do Federal Agencies use the SBA size standards? A. With few exceptions, all Federal Agencies use the size standards established by SBA. In addition, many other political entities, such as state and local governments, adopt SBA size standards. Most Federal Agencies reserve all or some of their programs for small businesses. For instance, the SBA has a number of loan programs for qualified small businesses. Most Agencies set aside a share of their procurement activity exclusively for small businesses.
Q. Can a Federal agency making a small business set-aside procurement use, at its discretion, a size standard other than what SBA has designated? A. No. Under law, an agency must use the SBA's size standards on small business set-aside procurements. An agency has no authority to establish size standards different from the SBA's size standards on set-aside procurements. You will find additional discussion on set-aside procurements in SBA's Guide to Size Standards.
Q. My business operates under a franchise. Am I affiliated with the franchiser or with similar franchisees? A. A franchisee operating under its own ownership, own management, and for its own profit (or loss) would generally not be affiliated with the franchiser or other franchisees through the franchise arrangements, except under unusual circumstance. You will find additional discussion on affiliation in SBA's Guide to Size Standards.
Q. I am a member of an agricultural cooperative. Does that mean that I am affiliated with the cooperative? Am I still a small business? A. You are not considered an affiliate of the agricultural cooperative by virtue of your membership in the cooperative. If you meet the small business size standard for your agricultural enterprise, you are a small business. You will find additional discussion on adffiliation in SBA's Guide to Size Standards.
Q. What about the cooperative? Can it qualify as a small business? A. So long as the agricultural cooperative meets the size standard for the agricultural industry involved, it can qualify as a small business. Businesses that do not meet the size standard for their industries cannot be members of the agricultural cooperative if it intends to be considered a small agricultural cooperative. That is, each individual lmember of the agricultural cooperative must be a small business concern.
Q. A solicitation was issued under an NAICS code with a $6.5 million size standard. In my opinion, a different NAICS with a $13 million size standard should have been used. How can I correct this? A. You have the right to appeal the contracting officer's NAICS designation to SBA's Office of Hearings and Appeals (OHA) usually no later than 10 working days before bid opening or deadline for proposal submission. Please note that in some cases OHA accepts appeals no later than five working days from the bid opening. Specific procedures are contained in 13 CFR § 121. Informal discussions with the contracting officer to change the designation voluntarily may be an alternative solution. You will find additional discussion on filing appeals of NAICS designations in SBA's Guide to Size Standards.
Q. I am convinced a firm which bid in competition with me on a Federal set-aside procurement is not a small business. How can I prevent it from receiving the award? A. If you are a small business bidder, you are an interested party in this procurement. Once the apparently successful offeror has been identified on a Request for Proposals or at a bid opening, you may challenge your competitor's small business self- certification. Notify the contracting officer of the matter according to the procedures set forth in 13 CFR §§ 121.1001-1103. Your challenge must be timely and set forth specific alleged grounds. The contracting officer is required to forward the challenge to SBA for a size determination. You will find additional discussion on set-aside procurements in SBA's Guide to Size Standards.
Q. How do I find out what my NAICS code is? A. Go to the Bureau of the Census Web Site, and use the "NAICS Search" button. Alternatively, on the same page, if you know your SIC code, you can use the "NAICS to SIC/SIC to NAICS " button on that site. You can also search for "SIC xxxx" (no quotes, where "xxxxx" represents the SIC code number), or follow these instructions.
Q. How do I find the size standard for my NAICS code? A. Go to the table of Size Standards matched to the NAICS codes on SBA's Web site, and select one of the tables, in the format you prefer, to find your NAICS code with its matching size standard.
Q. Where can I find more information about size standards? A. Go to SBA's Web site about Size Standards. You can also email SBA's Office of Size standards at sizestandards@sba.gov, or call us at (202) 205-6618.
Q. Where can I find more information about NAICS? A. Go to the Bureau of the Census Web site |