Current SBA size standards currently pose a risk to many small businesses operating in the federal space. These small businesses will find themselves at a crossroads and only have two options: sell off part of their business or find a small business to team with; Teaming usually results in retaining only 49% of the contracts a business has worked to earn. Losing small business status can lead to massive lay-offs for small businesses as well. If a small business instead graduates from the small status the jump from operating in the small business space to competing with the large contractors like the Booz Allen and Lockheed Martins of the world is far too great and many businesses just can’t survive. Adjusting size standards is the best option for small businesses to stay operational as well as maintain their employee base, helping them to earn a sustainable living.
Bigger small businesses that are about to graduate from the set-aside world need time to recruit talented employees, develop their intellectual property and build infrastructure to compete at the next level. Small businesses face enormous infrastructure hurdles especially if they grow very quickly or win larger federal contracts with big task orders. Some refer to this as the Powerball effect, leaving businesses scrambling to stay ahead of the demands of their growth and simultaneously trying to compete on the open market. Small firms can’t compete with the large federal contractors overnight. Government contractors experience a unique pattern in their growth which is causing a “midsize” business crisis. This pattern of sudden growth is increasingly common because of the government’s more frequent use of large indefinite delivery, indefinite quantity (IDIQ) contract vehicles, under which contractors can be awarded huge task orders.
Another hurdle to overcome with SBA size standards comes with the varying size standards across NAICS codes. For example, in the staffing industry, contracts won under NAICS 561110 – Office Administrative Services, has a $12.5 million size standard, whereas NAICS code 561320, has a size standard of $34 million. Wide disparity in NAICS codes presents an issue for small businesses to go after new opportunities.
The Small Business Jobs Act of 2010 requires SBA to review all small business size standards every 5 years and to make adjustments to ensure they reflect current industry and market conditions. The government contracting community broadly agrees that the SBA should look at industries more holistically and seek additional engagement through forums with businesses such as roundtables. This will help the agency with a more accurate picture of how federal buying is impacting small businesses in the market, instead of just using a mathematical formula and having limited engagement with businesses.
A leader in providing strategic support solutions to the federal government, Contemporaries was founded in 1991 and continues to provide streamlined and expert services to federal agencies. As a Woman-Owned Small Business, we consistently leverage our experience and expertise to anticipate our clients needs and advance their critical programs, realizing the maximum productivity and peak performance for every individual and project. At Contemporaries, every employee, contractor, and client is a part of the family, and for us, family comes first. To learn more, visit www.contemps.com.
