On March 31, 2022, the U.S. Small Business Administration (SBA) issued four final rules that increase the receipts-based size standards for an array of industries. When a federal procurement is set aside for small businesses, the contracting officer must assign a North American Industry Classification (NAICS) code to the solicitation. Each NAICS code corresponds to either a receipts-based or an employee-based size standard. To qualify as a small business for a given procurement, an offeror must satisfy the applicable size standard. For a receipts-based size standard, that means the offeror’s average annual receipts from the prior five years must not exceed the applicable size standard. The final rules are effective May 2, 2022.
The four final rules are summarized below, and a hyperlink is provided for each rule.
Professional, Scientific and Technical Services; Management of Companies and Enterprises; Administrative and Support and Waste Management and Remediation Services. The final rule for these sectors increases the size standards for 46 industries, including 27 industries in Professional, Scientific, and Technical Services; 2 in Management of Companies and Enterprises; and 17 in Administrative and Support and Waste Management and Remediation Services.
Transportation and Warehousing; Information; Finance and Insurance; Real Estate and Rental and Leasing. SBA is increasing the size standards for a total of 45 industries in these sectors, including 18 in Transportation and Warehousing; 8 in Information; 10 in Finance and Insurance; and 9 in Real Estate and Rental and Leasing.
Education Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; Other Services. The final rule for these sectors increases the size standard for 70 industries, including 14 industries in Education Services; 18 in Health Care and Social Assistance; 11 in Arts, Entertainment, and Recreation; 4 in Accommodation and Food Services; and 23 in Other Services.
Agriculture, Forestry, Fishing and Hunting; Mining, Quarrying, and Oil and Gas Extraction; Utilities; Construction. SBA is increasing size standards for 68 industries in these sectors, including 58 industries and 2 subindustries in Agriculture, Forestry, Fishing, and Hunting; 3 industries in Quarrying, and Oil and Gas Extraction; 3 industries in Utilities; and one industry and one subindustry in Construction.
If a company is on the verge of exceeding the size standard for its primary NAICS code, increasing the applicable size standard will often allow the company to continue to compete for set-aside contracts for years to come.
If you have questions about size standards or small business contracting, please reach out to the Government Contracts group.