If your company participates in any small business, federal government procurement program, or certain state procurement programs such as the Federal Disadvantaged Business Enterprise (DBE) Program, the 8(a) Program of the Small Business Administration (SBA), or Washington State’s Minority or Women-Owned Business Enterprise (M/WBE) Programs, your size status may have changed on July 14, 2014, as a result of an update to the SBA’s small business standards. The majority of these small business procurement programs utilize SBA’s “Table of Small Business Standards” to define the government’s limits for what constitutes a small business. As the definition of “small” varies by industry and scope of work, this Table is based on the 2012 North American Industry Classification System (NAICS), which assigns six-digit codes to businesses based on their primary activity. In turn, each NAICS code is assigned either a revenue limit (based on average annual receipts) or average employment (number of employees). For example, for the past few years (since 2008), the NAICS code for framing contractors is 238130, and provided for a $14.1 million average revenue limit. Thus, any framing business with an average revenue (over the past three years) of less than $14.1 million met the definition of a “small business.”
On June 12, 2014, the SBA issued an interim rule which, among other things, adjusted the monetary-based industry size standards to account for inflation occurring since 2008. These changes went into effect on July 14, 2014, but the SBA encourages feedback to the interim rule. Any comments or feedback must have been provided by August 11, 2014.
Most pertinent to our readers is the Construction Industry size increases. The new size limits for Sector 23 (Construction) are as follows:
This increase provides a little more breathing room for those firms already in the various programs but who may be brushing up against the “small business” ceiling. Also, it may provide for more opportunities for firms to apply for the DBE or 8(a) Program that fall within these standards. Please keep in mind, however, that in addition to the SBA size standards, the DBE Program includes an overall cap at $22.41 million (on average for the past three years) for all entities in the DBE Program, meaning that even if the SBA’s NAICS code size standard for that firm’s primary activity was adjusted to $36.5 million, a DBE firm’s average revenue must still fall under $22.41 million to remain eligible for the DBE Program. If you have any questions about how your firm is impacted by these changes or whether you are eligible for one of these small business procurement programs, please do not hesitate to contact Lindsay Taft at ltaft@ac-lawyers.com.