Our team gets a lot of questions from small business owners (and minority-owned ones) if it’s a good idea for them to do business with the government and compete with the “big guys”. And we always have one answer – Yes! Working with the government either locally, statewide, or federally, there’s a growth potential for your business.
Government agencies set small business contracting goals every fiscal year called set-aside contracts. 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 requirement for federal procurement and state and local governments have their jurisdiction.
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.
If you want to do business with your local or state government, you can check their procurement policy. At the federal level, the SBA implemented size standards that we will discuss in this blog.
You are probably wondering “How do I know if I can be recognized as a small business to qualify for set-aside?”. There are two standards that the SBA looks for: 1.) Average Annual Gross Receipts 2.) Number of Employees. The SBA guidance on the size standard of each NAICS code is your best go-to. You can verify your eligibility with the SBA.
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 to remain small for a longer period – unless their business revenue increases each year.
To illustrate, to qualify for NAICS Code 237310 - Highway, Street, and Bridge Construction which has a maximum threshold of $39.5 million, your business's average annual revenue must be under $39.5 million. Aside from the revenue standpoint, the number of employees also comes to play.
That’s good news that you are growing! You may still be able to qualify for other certifications that are under federal programs and other state-level preferences. Some of these DBEs include:
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.
If you are wondering if your small business can compete for government contracts dominated by big businesses. Don’t worry! There are tons of opportunities for growth even for your small business. There are hundreds of thousands of government agencies across the country. Even federal agencies have been extending contracts to small and minority-owned businesses.
At Periscope S2G, we can help find you the most relevant opportunities for your small business. We provide robust tools such as bid notifications, bid relevancy reports, and access to thousands of bid opportunities. You can try out our tools for free. Start looking for opportunities and grow your business!
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