In SAM (System for Award Management), a business’s size is determined based on its annual revenue, number of employees, and the industry in which it operates. The size standards are established by the U.S. Small Business Administration (SBA) and are used to categorize businesses as either small or large for federal procurement and grant purposes. Here’s how a business’s size is determined in SAM:
- Industry Code (NAICS Code): Each business is classified under one or more North American Industry Classification System (NAICS) codes, which define the primary industry or industries in which the business operates. NAICS codes are used to group similar businesses together.
- Annual Revenue: The size standard for a business’s annual revenue varies depending on its industry, as determined by the applicable NAICS code. Each NAICS code has an associated size standard, which specifies the maximum annual revenue a business can have to qualify as small.
- Number of Employees: Some industries are also categorized based on the number of employees a business has. The size standard may specify a maximum number of employees to qualify as small.
- Average Annual Receipts: In certain industries, businesses may be categorized based on their average annual receipts over a specified period. The size standard defines the maximum average annual receipts allowed for a business to be considered small.
- Primary Industry: SAM uses the primary industry code and size standard to determine a business’s size. If the business’s annual revenue, number of employees, or average annual receipts fall within the specified limits for its primary industry, it is classified as a small business.
- Affiliation Rules: SAM also considers the concept of affiliation, which means that the size of a business may be determined not only by its own metrics but also by the metrics of its affiliated companies. Affiliation rules are in place to prevent businesses from artificially segmenting into smaller entities to qualify for small business status.
- Self-Certification: Businesses self-certify their small business status when registering in SAM. They must accurately represent their size based on the applicable NAICS code and corresponding size standard.
- Periodic Recertification: Businesses are required to periodically recertify their size status in SAM, especially when they pursue federal contracts or grants. This ensures that their size status is up-to-date.
It’s important for businesses to accurately determine their size according to the applicable industry and size standard. Misrepresenting a business’s size can have legal and financial consequences, including the potential loss of federal contracting opportunities.
SAM also provides tools and guidance to help businesses determine their size, including resources for finding the appropriate NAICS code and size standard for their primary industry. Consulting with the SBA or a Procurement Technical Assistance Center (PTAC) can be beneficial for businesses seeking assistance in determining their small business status and navigating the federal procurement landscape.
Contact the FPR Help Desk through the following methods:
- Phone: 1-866-717-5267 (toll-free)
- Email: email@example.com
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