United States: What You Should Know About the SBA's New Size Standards

Next week, increased size standards for small business concerns will take effect across hundreds of industries, enabling some businesses to now qualify as small and become eligible for a number of federal procurement programs.

The new size standards, which go into effect on February 26, 2016, apply to nearly 300 industries across multiple North American Industry Classification System (NAICS) sectors. Although the vast majority of the changes result in an increase in the employee-based size standards, the final rule also decreases the size standards for a few mining related NAICS codes. For example, the U.S. Small Business Association (SBA) increased small business size standards for 209 industries in NAICS Sector 31-33, Manufacturing, which the SBA estimates will result in about 1,250 additional firms qualifying as small. The SBA also recently finalized an interim rule published in July 2014 that increased for inflation the monetary-based size standards by 8.73 percent—the only such increase since 2008.

Businesses potentially subject to a size status change as a result of these increased size standards should review the changes implemented by the SBA and update their System for Award Management (SAM) registrations to ensure that all information is current, accurate, and complete. This also provides businesses with an opportunity to verify the number of employees and annual receipts they are reporting in SAM, taking into account the SBA's regulations on how to calculate and report these figures, including ensuring that the numbers reflect the total employees and annual receipts of the business and all of its "affiliates" (as defined in the SBA regulations). These changes will help ensure that a business is correctly classified as small or large once the NAICS codes link to the new size standards.

Specific details on the new size standards are available on the SBA's website and in the Federal Register at 81 FR 4435; 81 FR 4469; 81 FR 3941; and 81 FR 3949.

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