Make Sure that Your Company Meets the Small Business Administration SBA certification requirements for small business status representation Or Else You Risk Losing Your Government Contracts Award in a Small Business Size Protest.
Meeting the SBA small business certification requirements requires an understanding of compliance laws and penalties for misrepresenting your company as a small business.
As small business owners, understanding what SBA small business size standard rules you have to follow for purposes of bidding on government contracts definitely has its advantages.
As compared to State and Local certification programs, meeting the SBA definition of what is a small business is relatively easy. However, companies that have a home-based business model should seriously think about restructuring. Although the IRS may allow deductions for having a business at home, the impact of potential affiliation on government contracting should be more of a consideration.
For example, if you are awarded a government contract where the procurement required the offeror to have adequate facilities and equipment, it might be difficult for a home-based business owner to escape having to rely on a teaming partner or subcontractor to gain access to the required facilities or equipment.
What is a Small Business? SBA Small Business Status Definition
Many companies understand that voluntary certification is available. However, many are not clear on the question “What is a small business?” by the SBA small business definition. The registration process can be pretty time-consuming. However, self-certification is available for many federally-recognized categories except for service-disabled veterans, 8a Certification, and HUBZone Certification.
The SBA is the final decision maker for your small business status. Once you comply with the applicable size standards, you must also ensure that for the past 12 months, your business:
- Is a for-profit organization
- Has a place of business in the United States;
- Operates primarily within the United States or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor;
- Is independently owned and operated; and
- Is not dominant in its field on a national basis.
To meet SBA small business certification requirements, and for purposes of doing business with the federal government, you must register at the System for Awards Management (SAM).
Here, you will be prompted to get your DUNS number and enter certain entity-specific information about the business. You will be asked to certify your business as small. Here is where the SBA small business definition can get tricky.
For all NAICS codes, you must consult with the SBA Size standard regulations to see if you are considered small for each code. Some codes look at the annual revenues while others consider the amount of your employees.
- You have to assess each code on its own merits
This is critical when you decide to bid on government contracts because you then have to actually certify that you are a small business.
What Happens If You Do Not Meet SBA Small Business Certification Requirements?
When you fail to meet the SBA’s small business status requirements, and you have been awarded a federal government contract, the contracting agency will revoke the contract award. Normally, the issue arises when another bid files an SBA small business bid protest. Your company will then be scrutinized by the SBA. There are various ways that the SBA can find that your company is not a small business under the regulations. Having an experienced small business size status attorney on your team can be of benefit to your team. See SBA size protest requirements.
SBA Certification Requirements for Various Federal Programs
Avoid the common myth that you have to be a minority-owned certified small business to get government contracts. In federal procurement, there are numerous awards to small businesses without any special designation for federal contracting programs.
Why is this? Because Congress derives its revenues from small businesses in general. Therefore, there would be all the reasons to make SBA small business certification requirements very easy to meet. See SBA Sets Record Straight On DOD & SBA Mentor Protege Programs.
However, Congress does further the interest of certain SBA certifications. They are overseen by the SBA and you will have to go through a formal application.
- SBA 8(a) Business Development Program: This level of certification is a nine-year program designed to give socially and economically disadvantaged businesses special rights when acquiring government contracts. For example, if you are 8(a) certified, you can get sole-sourced government contracts. You can also bid just only against other 8(a) businesses.
- Historically Underutilized Business Zones (HUBZone Small Business): This level of business certification helps companies in urban and rural communities to gain preferential access to federal contracting opportunities.
- Like the 8(a) Program, you have to go through a formal application process with the SBA.
Do SBA Small Business Certified Companies Have to Perform Large Contracts by Themselves?
One of the biggest challenges facing government small businesses in procurement is the ability to secure larger contracts. There are various strategies to overcome this hurdle. For example, with your 8a status, you can take advantage of teaming agreements and joint venture relationships when submitting your proposal. See information about similarly situated entities.
Tip: SBA small business certification participants must notify the SBA before entering into a teaming or joint venture relationship. This is especially true for 8(a) and HUBZone companies.
As you become certified in SAMS or you recently have been admitted into one of the SBA Programs, there are certain proven strategies to improve your chances of getting revenues as a small business.
As compared to state and local minority-owned business certifications, the federal marketplace tends to reward companies more. Remember that congress implements SBA small business definition rules and SBA certification requirements to generate more revenues through payment of taxes which come from business owners and their employees.
To Make Sure Your Company Meets the Legal Federal Definition of Small Business For Federal Contracts Call us at 1-866-601-5518.