SBA changes to the NAICS size standards

As part of the normal 5 year update, the U.S. Small Business Administration (SBA) has changed some North American Industry Classification System (NAICS) size standards. This year, the update has been listed as part of President Biden’s efforts to expand the ability of small business firms to obtain and perform federal government contracts (FGC). The newly published 2022 size standards became effective on July 14, 2022, with anticipated full implementation on or before October 1, 2022. But what does this mean for your business?

The size standard assigned to each NAICS code is used by the SBA for eligibility determination under the following socioeconomic programs: 8(a), HUBZone, WOSB, EDWOSB, SDVOSB, and VOSB. Size standards are assigned to each NAICS and it is expressed either in dollars of revenue or the number of employees. To qualify for these socioeconomic programs, your company must be eligible under the revised size standards. Each FGC has a NAICS code assigned by the Contracting Officer. The majority of small business firms have their size evaluated and calculated on a “rolling time fame” of 5 years.  If the business remains under the revised size standards using the rolling time frame calculation, then the firm is still classified as a small business and can operate as such. If you are projected to exceed that size standard, the firm is then classified as a large business.  

Example for Revenue Size Standard:  541512, Computer Systems Design Services, $30 Million.  

Example for Employee Size Standard:  562910, Environmental Remediation Services, 750 Employees.

See 48 Federal Register 42240, updated 8-10-2022 for guidance on special situations related to business organizations.

Now the question is what effect does this have on small business firms? We expect these changes to have a positive change on the small business community. A higher size standard allows a firm to be classified as small and benefit from the SBA programs for a longer period of time. A high size standard also allows small businesses to expand their capacity while still receiving the benefits of being a small business, which can often be a point of hesitation.

If you have any questions or concerns, please contact your Norcal PTAC counselor for assistance or apply for services today.

Written by: 

Joseph D. Moore, CPCM,  Norcal PTAC Procurement Specialist