Is your company the definition of a “small business”—at least according to the U.S. Small Business Administration?
The answer, of course, can make the difference between a shot at billions of dollars of government contracting dollars—and being barred access. That’s because some 23 percent of all federal contracting dollars are earmarked for so-called “small businesses,” and it’s the SBA that defines what qualifies in each industry.
Small is BiggerThe SBA recently raised the size standards for 58 industries; the new definitions take effect Oct. 24. The changes are in three code sectors: real estate, rental and leasing; educational services; and health care and social services. (Click here to check whether your business fits the new definition.)
The changes are significant, allowing hundreds and possibly thousands of businesses to qualify. For companies that lease buildings or land to the federal government, the “small” business threshold, measured in average annual revenue over the past three years, will leap from $7 million to $25.5 million. For medical laboratories, the figure will rise from $13.5 million to $30 million.
The size standards for hundreds of other industries are also likely to change in the next few months, but the changes will take effect at different times.
Why the Change?The current round of changes—the first time the SBA has changed its descriptions in a quarter century—is the latest in work SBA has been doing on new standards since 2007.
In February, the SBA spelled out in The Federal Register the new size definitions of small businesses, increasing 37 of the revenue-based size standards in 34 industries in the "Professional, Scientific and Technical Services" sector. They also increase one size standard in what the SNA calls the "Other Services" sector. These changes took effect March 12.
Factors considered in making the changes included inflation and current economic conditions, plus federal contracting trends, average firm size and the degree of competition within individual industries. Part of the impetus for the change was the Small Business Jobs Act of 2010, which requires the SBA to review size standards.
Could this affect your business? Tells us below in the comments.