Many new companies seek to work in the Federal market; however, they often lack sufficient understanding of the size standards, which is a critical element to determining a firm’s qualification to bid and win business within with the federal government.
The size standard is the largest size a firm can be, based on a 3-year average revenue, and still qualify as a small business to bid on federal government programs. The Small Business Administration (SBA) uses the NAICS (North American Industry Classification System), pronounced ‘nakes’, Code to determine the size standard.
All Federal solicitations are issued with a NAICS Code to classify the type of work required within the solicitation. The NAICS Code is comprised of a sector, subsector, title, the size standard in millions of dollars and in number of employees; as an example, Sector 54 is Professional, Scientific, and Technical Services, with a Subsector 541 with the same name, which includes 48 different NAICS along with the size standards for each, to see the chart click here. All companies must determine and select their NAICS as part of their representations and certifications within the System for Award Management (SAM).
In this example, the size standard for a firm to be considered a small business is anywhere from $7.5 million to $38.5 million and the number of employees is anywhere from 100 to 1,500 employees. This means a company with one or more of these NAICS listed within their SAM registration with a 3-year annual revenue of less than the dollar value or number of employees is eligible to bid as a small business.
For example: If ACME Technologies has NAICS 541430, 541511, and 541713 listed within their SAM registration, has a 3-year average revenue of $30 million, and 500 employees, they would only be considered a small business under NAICS 541713 based on their number of employees. Since their 3-year average revenue exceeds the dollar value threshold in NAICS 541430 and 541511 to be considered a small business.
Since the Federal market has only small and large business size classifications, it is important for small businesses to be aware of these size standards early on and strategically plan for their growth, that is if they intend to grow. Strategic planning is critical as many small businesses experience their desired growth but often fail when required to compete in the large business size category.
The TargetGov KickStart Program™ is a 12-week, individually customized program, designed to propel businesses into the Federal market and position the organization for success. One of the fourteen key topics covered within the KickStart Program™ includes “Size Standards.” For more information about the TargetGov KickStart Program™ and how it might support your firm’s growth in the federal market, contact us today!