NAICS codes and SBA size standards: are you small for this contract?

"Small business" is not a single label a company carries everywhere. Under 13 CFR Part 121, SBA sets a size standard for each NAICS code, and the contracting officer assigns one NAICS code to each solicitation (FAR 19.102). That code's size standard decides whether you can compete for a small business set-aside, whether you count as small on a subcontract, and whether you are a similarly situated partner for someone else's set-aside. A company can be small under one code and other than small under the next.

How size standards are measured#

Most size standards use one of two measures. SBA's table of size standards (13 CFR 121.201) lists the measure and the limit for every NAICS code.

In both cases you count your affiliates too. Some codes also carry footnoted exceptions, such as special standards for IT value-added resellers or environmental remediation work, so read the footnotes in SBA's table rather than the headline number alone.

Affiliation: why your size includes others#

SBA treats businesses as affiliates when one controls or has the power to control the other, or a third party controls both (13 CFR 121.103). Control can come from ownership, common management, identity of interest such as close family relationships or economic dependence, and certain joint ventures. Two teaming situations deserve special attention:

• The ostensible subcontractor rule. When a subcontractor performs the primary and vital requirements of a set-aside contract, or the prime is unusually reliant on it, SBA can treat the two as joint venturers and therefore affiliated (13 CFR 121.103(h)). A large subcontractor doing the core work can make a small prime other than small for that contract.
• SBA mentor-protégé relationships. Assistance provided under an SBA-approved mentor-protégé agreement does not by itself create affiliation. See the SBA Mentor-Protégé Program.

When size is decided#

You self-certify your size in SAM.gov and in each offer. Size is generally determined as of the date you submit your initial offer that includes price (13 CFR 121.404). Growing larger after that date does not usually cost you the award, but several events require you to recertify (13 CFR 121.404(g)):

• After a merger, acquisition or novation, within the period the rule sets
• On long-term contracts, at the points the rule specifies before options are exercised
• When a contracting officer requests recertification for an order under a multiple-award contract

If you recertify as other than small, you can generally keep performing, but the agency can no longer count your later options and orders toward its small business goals. Expect that to affect how the customer approaches the recompete.

Where the NAICS code comes from#

The contracting officer picks the code that best describes the principal purpose of what is being bought (13 CFR 121.402). Multiple-award contracts can assign codes to individual orders or pools. On subcontracts, the prime assigns the NAICS code that best describes the subcontracted work (13 CFR 121.410), and that code decides whether the subcontractor is small for subcontracting goals and for similarly situated entity purposes.

If you believe the solicitation's code is wrong, you can appeal it to SBA's Office of Hearings and Appeals under 13 CFR 121.1101 to 121.1103. The window is short and opens when the solicitation (or an amendment changing the code) is issued, so raise it immediately. Once the deadline passes, the code stands for that procurement.

Keeping SAM.gov accurate#

Your SAM.gov registration lists the NAICS codes you work in, and SAM calculates "small" or "other than small" for each one from the size information you enter. Those representations feed FAR 52.204-8 and FAR 52.219-1 in every solicitation you answer, so they must be current, accurate and complete. Update the registration after a strong revenue year, an acquisition, or a change in ownership, not only at your annual renewal. Knowingly misrepresenting size can carry serious penalties (13 CFR 121.108). For registration basics, see SAM.gov registration and your UEI.

Competitors, the contracting officer and SBA can file a size protest against an apparent awardee (13 CFR 121.1001 to 121.1009). Protest deadlines are short, so a sloppy size representation can surface just as you win.

Size check before every bid#

Common pitfalls#

• Assuming "small" carries over. Being small under 541512 says nothing about 336413. Check the code in each solicitation.
• Forgetting affiliates. Receipts and employees of companies under common ownership or control count, including some you may not think of as related.
• Letting a large partner do the core work. Even when Limitations on Subcontracting math works, a subcontractor performing the primary and vital requirements can trigger affiliation.
• Updating SAM.gov only at renewal. Stale size representations are a protest waiting to happen.

How TeamingIndex helps#

• Find partners SAM.gov reports as small under a specific code, for example small under NAICS 541512.
• Browse NAICS industry pages to see which companies work in each code and how they are registered.
• The Team Builder uses each member's SAM.gov small business NAICS list in its Limitations on Subcontracting check, so size questions surface before you commit workshare.