Do I Qualify as A Small Business to Compete for Government Contracts?

Being qualified and recognized as a small business by the Small Business Administration (SBA) gives you a big advantage in some contracts at both the federal and state & local levels. The federal government and state & local government agencies are required by law to have procurement set-asides for small businesses.

This means that some competitive and non-competitive procurement in certain categories use set-asides so that the agency meets their small business contracting goals. The Small Business Administration determines the set-aside requirements for federal procurement, while state and local governments have their own jurisdiction.

So, you may be thinking “how do I know if I can be recognized as a small business to qualify for set-asides?” There are some differences depending on if you are doing business at the state or federal level. For example, in California, businesses must have a maximum of 100 employees and $16 million in average gross receipts within the last 3 years. So, you may have to check with the state or local agency for their own size standards.

At the federal level, the SBA has implemented size standards that we are going to talk about in this article.

Small Business Runway Extension Act of 2018

In December 2018, Congress passed the Small Business Runway Extension Act of 2018 amending certain requirements in calculating the annual gross revenue of businesses to qualify as a small business. And in January 2020, the SBA implemented the rule.

In this rule, the SBA is going to calculate the average annual revenue from 3 tax years to 5 tax years. This change is an advantage to some small businesses as they can remain small for a longer period of time – unless their business revenue increases each year.

To illustrate, in order to qualify for NAICS Code 237310 - Highway, Street, and Bridge Construction which has a maximum threshold of $39.5 million, your business’ average annual revenue must be under $39.5 million.

Aside from the revenue standpoint, the number of employees also comes into play. You can verify your eligibility with the SBA.

What If My Business Is Earning More Than the Threshold?

It is great to hear that your business is growing! Even with your growing revenue, you may still be able to qualify for other certifications that are under federal programs and other state-level preferences. We recommend exploring other DBE certification opportunities that may exist for your business at the federal, state, and local government levels. Some of these DBE’s include:

• Minority-owned business enterprise (MBE)
• Veteran-owned or service-disabled veteran-owned businesses (SDVOBs)
• Locally-owned business – mostly preferred by local government agencies

It is highly recommended to check out your state and local government procurement office to see what other programs they have for small and minority businesses. You can also refer to our guide on why MBE certification matters in this competitive landscape.

Finding Opportunities for My Business

Whether you are a small business or minority-owned, Bidnet Direct can help you find bid opportunities for your business. Bidnet Direct partners with exclusive government buyers that publish bid opportunities directly to our platform. They can also see your certifications and eligibility and invite you to bid on their open solicitations. This gives you the advantage of staying ahead of the competition.

You can register with Bidnet Direct for free and explore open bid opportunities for your business. Grow your business with government contracts!