Do You Meet SBA Size Standards?
Small business size standards imposed and regulated by the Small Business Administration (SBA) is the standard that all small government contractors should be aware of. This is the most important part of doing business with the federal government. SBA Size standards (industry classification system NAICS) are critical because any violation of the regulations can cause a company to lose the awarded federal contract.
Whether or not you meet the federal business size standards becomes an issue when your competition files a small business size protest at the SBA. You are then left to defend yourself and show proof annual receipts in addition to providing numerous business contracts and documents requested by the SBA.
Having an SBA size standards lawyer that understands affiliation and the Ostensible Subcontractor Rule is critical to protecting your company’s rights to lucrative government contracts.
Causes to Violations of SBA Small Business Size Standards
The most common cause of violating the SBA small business size standards is relying to heavily on a proposed teaming partner or subcontractor when you submit a government contract bid.
Many companies may not be aware of the underlying rules. However, having a reliable and experienced government contract small business attorney can be helpful and save tens of thousands in litigation costs.
Other causes to violations of SBA small business size standards include:
- Third party individual having to much control over the business
- Having one client where you get a substantial amount of your revenues from
- Hiring incumbent management personnel.
- Failure to have an approved mentor protégé agreement
- There are others
How Does SBA Calculate Annual Receipts
Your small business can be either evaluated by the amount of annual receipt or by the number of employees your company has. Your size is related to each NAICS code. To qualify as small, calculating the number of employees can be relatively simple. Companies get into legal trouble due to calculation of annual receipts. Therefore, you could be a small business for one NAICS code while being large for another. According to the Legal Information Institute, the SBA considers the following, among other things when calculating Annual receipts.
(1) The Federal income tax return and any amendments filed with the IRS on or before the date of self-certification must be used to determine the size status of a concern. SBA will not use tax returns or amendments filed with the IRS after the initiation of a size determination.
(2) When a concern has not filed a Federal income tax return with the IRS for a fiscal year which must be included in the period of measurement, SBA will calculate the concern’s annual receipts for that year using any other available information, such as the concern’s regular books of account, audited financial statements, or information contained in an affidavit by a person with personal knowledge of the facts.
SBA Size Standards Bid Protest
At the end of the day, you want to make it a priority to take proactive measures and make sure that your company meets the SBA small business size standard. When you are bidding on federal government contracts, you can be very exposed to the havoc of facing an SBA size bid protest. At Watson & Associates, we offer experienced government contracts and SBA size standards bid protest lawyers. We help you to:
- Prepare and defend against SBA size protests
- Appeal adverse SBA size determinations to SBA OHA
- Serve as intervenor attorney when you are the contract awardee.
SBA Size Determination Appeals
When the SBA issues an unfavorable ruling, you can file a size appeal to the SBA Office of Hearings and Appeal within 15 days of the decision. The legal standard is to show that SBA committed a factual or legal error or simply violated procurement law and or regulations. These are matters that our government contract law attorneys can help you with.
Nationwide Help – Free Initial Consultation
To avoid the most costly legal mistakes of not complying with the SBA size standards or if you are in need of legal counsel regarding a small business size standard protest or establishing size standards, call Watson & Associates, LLC lawyers at 1-866-601-5518.