Small Business Size Standards

SBA-established thresholds that determine whether a business qualifies as small for a given NAICS code, based on annual revenue or number of employees depending on industry.

Small business size standards are numerical thresholds established by the Small Business Administration that define whether a company qualifies as a small business for federal contracting purposes. The standard depends on the NAICS code assigned to the specific contract, and is measured either by average annual receipts over the prior three to five fiscal years or by average number of employees over the prior twelve months, depending on the industry.

How Size Standards Work

Each NAICS code has a specific size standard. For professional services and most non-manufacturing industries, the standard is an annual revenue threshold, typically between $8 million and $47 million depending on the code. For manufacturing industries, the standard is an employee count, typically between 500 and 1,500 employees. A business must meet the size standard for the NAICS code of the specific contract it is pursuing, not just its primary NAICS code.

Self-Certification and Protests

When a contractor certifies as a small business on a proposal, it is making a legally binding representation. Competitors who believe a certified small business is actually large may file a size protest with the SBA. Size protests are resolved by SBA's Office of Size Standards through formal adjudication. A successful size protest can disqualify the apparently winning offeror.

Affiliation Rules

SBA's affiliation rules are one of the most complex aspects of small business size determinations. Two companies are affiliated when one controls or has the power to control the other, or when a third party controls or has the power to control both. Affiliation can be triggered by common ownership, common management, long-term exclusive teaming relationships, and other factors. Affiliated entities' revenues or employees are combined when determining size, which can cause a technically small company to exceed the threshold once affiliates are counted.

Size Recertification

Contractors must recertify their size at contract award, at option exercise, and when a novation or change of ownership occurs. Growing beyond a size standard during contract performance does not automatically disqualify a contractor from continuing to perform, but may affect eligibility for future awards and set-aside opportunities.