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Small Business

ACON 077

DAU GLOSSARY DEFINITION

A program that includes the Mentor-Protégé Program, Women-Owned Small Business (WOSB), Indian Incentive Programs, Small Business Innovation Research and Small Business Technology Transfer (SBIR/SBTT) Programs, Service-Disabled Veteran-Owned Small Business Program, Historically Black Colleges and Universities/Minority Institutions Technical Assistance Program (HBCU/MI), Comprehensive Subcontracting Plan (CSP) Test Program, and Historically Underutilized Business Zones (HUBZone) Program.

Alternate Definition

FAR 2.101 "Small Business Concern" means a concern, including its affiliates, that is independently owned and operated, not dominant in the field of operation in which it is bidding on Government contracts, and qualified as a small business under the criteria and size standards in 13 CFR Part 121 - Small Business Size Regulations (see FAR 19.102 - Small business size standards and North American Industry Classification System codes ). Such a concern is "not dominant in its field of operation" when it does not exercise a controlling or major influence on a national basis in a kind of business activity in which a number of business concerns are primarily engaged. In determining whether dominance exists, consideration must be given to all appropriate factors, including volume of business, number of employees, financial resources, competitive status or position, ownership or control of materials, processes, patents, license agreements, facilities, sales territory, and nature of business activity. (See 15 U.S.C. § 632 - Definitions)

General Information

Small Business Administration

The Small Business Act defines a small business as a concern that is organized for profit; has a place of business in the U.S.; operates primarily within the U.S. 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. The business may be a sole proprietorship, partnership, corporation, or any other legal form. In determining what constitutes a small business, the definition will vary to reflect industry differences.

Small Businesses are defined by the application of the North American Industry Classification System (NAICS) code based primarily on either average annual receipts or the number of employees, (however the Small Business Administration’s (SBA) Table of Small Business Size Standards further defines size standards for unique business in the endnotes). Size standards based on annual receipts are determined by the concern's five most recently completed fiscal years. Annual receipts of a concern which has been in business for less than 5 complete fiscal years means the total receipts for the period the concern has been in business divided by the number of weeks in business, multiplied by 52. Size standards based on number of employees are determined by the concern's number of employees (including the employees of its domestic and foreign affiliates) for each of the pay periods for the preceding completed 24 calendar months. If a concern has not been in business for 24 months, the average number of employees is used for each of the pay periods during which it has been in business. Typically, a business with over 500 employees is considered large by the SBA.

What is the relationship between NAICS codes and the SBA size standards? NAICS was developed to classify business establishments within the United States, Canada, and Mexico for statistical purposes. If a company has both domestic and foreign locations, only the domestic locations would be assigned NAICS codes for statistical purposes.  NAICS categories do not distinguish between small and large business, or between for-profit and non-profit. The SBA developed size standards for each NAICS category. To find more information about the SBA size standards, visit the SBA Size standards webpage. You may also contact SBA's Office of Size Standards at (202) 205-6618 or via email to [email protected]. NAICS was developed for use in the collection, tabulation, analysis, and dissemination of statistical data that show the economic status of the United States. The NAICS categories and definitions were not developed to meet the needs of procurement or regulatory applications. However, other Federal agencies, trade associations, and regulation boards have adopted NAICS to use for procurement and regulatory purposes even though it is not well suited to meet their specific needs. The U.S. Census Bureau has no formal role as an arbitrator of classification decisions outside of Census Bureau programs. For questions regarding other agencies' uses of the NAICS system, contact the specific agency.