Am I a Small Business? and Other Considerations With Government Contracts
Published on by Matt Rosen, Jessica Doremus, in Construction, Manufacturing, Advisory
Securing a federal contract can create important opportunities for small businesses, providing steady revenue and potential for growth. Before you can pursue this work, your business must meet several key requirements established by the U.S. Small Business Administration (SBA). Understanding these basics will help you prepare and position your company for success.
Meet SBA size standards
To qualify for federal contracts reserved for small businesses, your company must meet the SBA’s size standards. The size standards can be employee or revenue based. While many recognize 500 employees as the threshold for manufacturing companies or $7.5 million in annual receipts for non-manufacturing companies, these can vary by industry, and some industries may have significantly higher (or lower) thresholds.
There are resources from the SBA detailing the exceptions by industry, you can view these in SBA’s table of small business size standards. To determine if your business qualifies as small, use the SBA’s Size Standards Tool.
Some industry exceptions are the following:
- Aluminum Sheet, Plate and Foil Manufacturing (NAICS Code 331315): 1,400 employees.
- Hardware Manufacturing (NAICS Code 332510): 750 employees.
- Support Activities for Oil and Gas Operations (NAICS Code 213112): Average annual receipts under $47 million.
- Commercial and Institutional Building Construction (NAICS Code 236220): Average annual receipts under $45 million.
Get the right registrations and IDs
The first step toward eligibility is registration. Every business working with the federal government must have a Unique Entity Identifier (UEI), a 12-character alphanumeric code assigned automatically when you register through SAM.gov. The UEI replaces the older DUNS number and makes the identification process simpler.
In addition, you will need a NAICS code (North American Industry Classification System) that matches the products or services you provide. Most companies have a primary NAICS code, but you may have more than one if your offerings span multiple areas. These codes help agencies identify the right contractors for their needs.
Register with SAM.gov
The System for Award Management (SAM) is the federal government’s central contractor database. Your SAM profile functions much like a business résumé, so it should be accurate, detailed, and professional. A strong profile helps agencies find you when they are looking for potential contractors.
Within SAM, you can also self-certify for SBA contracting programs such as women-owned, veteran-owned, disadvantaged, or HUBZone businesses. These certifications may expand your access to specific opportunities.
Focus on compliance
Working with the federal government also means following strict compliance standards. Contractors must adhere to the Federal Acquisition Regulation (FAR) as well as rules specific to small businesses outlined in 13 CFR 125. If you are working with the Department of Defense (DoD), you will also need to meet cybersecurity requirements through the Cybersecurity Maturity Model Certification (CMMC).
To assist small businesses, the DoD developed Project Spectrum, a free resource that provides training, risk management education, and tools to help improve cybersecurity and prepare for certification.
Next steps
Need help preparing your business for federal contracting? From registrations and size standards to compliance and beyond, our team of experienced professionals is, as always, here to help. Contact us today for a free consultation and start positioning your business for success in the federal marketplace.
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