Contractors that Grow Out of the NAICS Size Standard

Many small business contractors have, over the years, been unaware that contract(s) they have been awarded, can cause them to eventually exceed the applicable small business size standard for the NAICS code (North American Industry Classification System) identified in the solicitation and/or contract. Indeed, some contractors don't even have a clue that they've exceeded the size standard until a potential competitor pulls a size challenge on them.

Now there is a new DFARS (DoD FAR Supplement) provision that warns small business contractors that entering into a covered contract is an acknowledgement that doing so may cause it to eventually exceed the small business size standard identified in the solicitation and contract.

A covered contract includes solicitations using FAR part 12 procedures for acquisition of commercial items, when the estimated annual value of the contract is expected to exceed the small business size standard where the size standard is expressed in dollars or $70 million where the size standard is expressed in number of employees.

The provision reads:

The offeror acknowledges by submission of its offer that by acceptance of the contact resulting from this solicitation, the offeror may exceed the applicable small business size of the NAICS code assigned to the contract and would no longer qualify as a small business concern for that NAICS code. The offieror is therefore encouraged to develop the capabilities and characteristics typically desired in contractors that are competitive as other-than-small contractors in this industry.

We guess that now, contractors won't be able to plead ignorance when they graduate from being a small business.