Frequently Asked Questions

Does SBA keep lists of eligible small businesses or issue certificates for firms to qualify as small businesses?

SBA does not now issue certificates or maintain lists establishing the eligibility of firms as small businesses. For Federal procurements, the fiom self-certifies its small business status as of the time its bid is submitted, based on the size standard specified in the solicitation.

My firm wants to team with another firm to bid on a Government contract. We both are below the size standard individually, but not when combined. Are we eligible to bid as a small business?

Only for certain procurements could this joint venture qualify as a small business. In a joint venture both firms share, in some proportion, the responsibility and the profits or loss on a contract. They are considered affiliated for the purpose of that contract. Normally, the revenues or the employees of both firms are added together to determine the size of a joint venture. However, on certain large Federal procurements, a joint venture comprised of only small businesses would qualify as a small business joint venture.

This is limited to procurements that exceed $10 million in value that are classified with an NAICS industry having an employee-based size standard, or that exceeds one-half of the size standard for procurements classified with an NAICS industry having a revenue-based size standard. Also, certain 8(a) firms may joint venture with other firms without being considered affiliates (see 13 CFR 121.103 and 124.513 for more information).

How can I restructure my firm or firms so I still maintain ownership, but become eligible as a small business? I am not now a small business.

Restructuring your firm for the primary purpose of becoming small under a size standard would not change your size status.

Another Federal agency wishes to grant regulatory relief for small business entities. Must it use SBA's size standards to define small business?

The Regulatory Flexibility Act defines a small according to SBA's definition; however, a different size standard may be adopted. Generally, Federal agencies may use the SBA's size standards. If some other small business definition is more appropriate to their needs, that agency may consult with SBA's Office of Advocacy to find a more suitable small business definition.

Can a Federal agency making a small business set-aside procurement use, at its discretion, a size standard other than what SBA has designated?

No. Under law, an agency must use the SBA's size standards on small business set-aside procurements. Unlike the use of size standards for regulatory analyses discussed in the previous question, an agency has no authority to establish different size standards from the SBA's size standards on set-aside procurements.

My business operates under a franchise. Am I affiliated with the franchisor or with similar franchisees?

A franchisee operating under its own ownership, own management, and for its own profit (or loss) would generally not be affiliated with the franchisor or other franchisees through the franchise arrangements, except under unusual circumstance.

A solicitation was issued under an NAICS code with a $6 million size standard. In my opinion a different NAICS with a $12 million size standard should have been used. How do I get this corrected?

You have the right to appeal the contracting officerýs NAICS designation to SBA's Office of Hearings and Appeals usually no later than 10 working days before bid opening or deadline for submitting proposal.(In some cases, appeals are accepted not later than five working days from bid opening.) Specific procedures are contained in 13 CFR - 121. Informal discussions with the contracting officer to change the designation voluntarily may be an alternative solution.

I am convinced a firm which bid in competition with me on a Federal set-aside procurement is not a small business. How can I prevent it from getting the award?

If you are a small business bidder, you are an interested party in this procurement and you may challenge your competitor's small business self-certification. Notify the contracting officer of the matter according to the procedures set forth in 13 CFR - 121.1101-1103. Your challenge must be timely an set forth specific alleged grounds. The contracting officer is required to forward the challenge to SBA for a size determination.

What is NAICS?

NAICS is the North American Industry Classification System. It replaced the Standard Industrial Classification (SIC) system. Federal Government agencies that collect establishment based statistics are now required to use NAICS instead of SIC.

When did NAICS replace SIC?

NAICS replaced SIC on January 1, 1997.

What about small business size standards?

SBA has issued a new table of small business size standards for industries as they are described in NAICS. The new standards took effect on October 1, 2000. SBA increased the size standards based on inflation effective February 22, 2002.

Where can I find the new table of size standards based on NAICS?

SBA has posted the Table of Small Business Size Standards matched to NAICS on its Website.

Why did SBA issue a new table of size standards?

NAICS describes how industries do business in today's economy better than SIC does. SBA had always established size standards for industries as they are described in SIC. Size standards based on NAICS industries will provide more opportunities for small businesses to participate in Federal programs that give preference to small businesses.

Why does SBA think that NAICS is better than SIC?

NAICS, first of all, classifies over 350 more industries than SIC does -- that's 15% more. Most of these new industries are in the Services Sectors.

NAICS identifies industries that SIC does not, industries that are more relevant to todayýs economy. For example, NAICS includes industries that manufacture semiconductor machinery and fiber optic cable, reproduce software, provide satellite telecommunications, paging, cellular and other wireless telecommunications. Warehouse clubs and superstores, telemarketing bureaus, hazardous waste collection and casinos are also new in NAICS. NAICS is more consistent than SIC. Businesses that use similar production processes are grouped together. NAICS gives special attention to new and emerging industries, service industries in general, and industries that produce advanced technology. The SIC system, which was last revised in 1987, does not include many of these industries, or at least does not describe them well, and it will never be updated or changed.

Since this is a new table, do any size standards change? What about my size standard?

Some size standards that are assigned to SIC codes do change. However, their number is small. Most likely you will continue as a small business eligible for federal small business programs under NAICS size standards. You need to identify the NAICS code for your business and check its size standard

How do I find out what my NAICS code is?

Use SBA's Search Tool for locating NAICS and SIC codes and their size standards ("Frequently Requested Items" on http://www.sba.gov). Or you can go to the Bureau of Census Web Site (http://www.census.gov/naics), and use the "NAICS Search" button. As an alternative while on that page, if you know your SIC code, you can use the "NAICS to SIC/SIC to NAICS" button on that site.

How do I find the size standard for my NAICS code?

Go to the table of Size Standards matched to the NAICS codes on SBAs Website, and select one of the tables, in the format you prefer, to find your NAICS code with its matching size standard.

How will this change affect federal contracting opportunities for small businesses?

Federal procuring agencies, since October 1, 2000, must use the proper NAICS codes and size standards in their procurement solicitations. They must use the NAICS code, instead of the SIC code, that best describes the principal purpose of the product or service they intend to acquire.

Where can I find more information about size standards?

Go to SBA's Website about Size Standards. You can also email SBA's Office of Size Standards at sizestandards@sba.gov, or call us at (202) 205-6618.

Where can I find more information about NAICS?

Go to the Bureau of Census Website.

Can I find more information about small business size standards and NAICS together?

Go to Small Business Size Standards and the NAICS on SBA's Website.

ADVISORY NOTICE
As stated above in the Introduction, this guidance paper is advisory only and summarizes in simplified form the most basic provisions of the complete regulations.
Last Updated on 02.22.2002,
By Office of Size Standards
Email: sizestandards@sba.gov