Assess your business
Basic requirements
Size standards
Is your business SBA certified?
Government agencies reserve contracts for small businesses that are certified in SBA’s contracting programs.
Assess your business
Evaluate your small business to see if it has what it takes to win a government contract.
In order to bid on and win government contracts, you’ll have to sell products or services that the government buys — and at a competitive price. Use the resources below to see if there’s a market for your product or service, determine how big the market is, and find potential buyers.
Federal Procurement Data System
Federal Procurement Data System – Next Generation is the repository of all federal contracting data for contracts over $25,000. With this system, you can see which agencies have contracts and with who, what agencies buy, and which contractors have contracts.
USASpending.gov
USASpending.gov tracks government spending through the contracts it awards. This searchable database contains information for each federal contract. You can use this information to help identify government purchasing trends.
Federal agency procurement forecasts
Each government agency releases a procurement forecast that includes contracting opportunities for small businesses. You can review these Agency Recurring Procurement Forecasts to find out if there are agencies that are buying what you sell.
The government prefers to work with established, reliable businesses. Do you have a track record of delivering quality goods and services on time and within budget? Is your reputation within your industry strong?
Not only can it take a long time to win your first government contract, but it can also take a significant amount of money. Some businesses spend between $80,000 and $130,000 to earn their first contract.
Also, it could take up to two years to start making a return on your investment. You’ll need to have enough cash flow to sustain your business. Maintaining a diverse list of private-sector clients can help offset any potential initial losses.
Being e-commerce savvy is very important in government contracting. For example, if you want to work with the Department of Defense, you must be able to invoice and receive payments electronically.
Need help?
SBA can help small businesses that are new to government contracting.
Basic requirements
Your small business must meet some basic requirements before you can compete for government contracts.
In order to sell goods and services to the government, you’ll have to register your small business.
Unique Entity Identifier
Before you can bid on government proposals, you need to get a Unique Entity Identifier (UEI). A UEI is a unique 12-character, alpha-numeric value.
You will receive a UEI when you register with SAM at SAM.gov. Entities doing business with the federal government must use the UEI created by the system.
Businesses no longer have to go to a third-party website to obtain their identifier (DUNS number). This transition allows the government to streamline the entity identification and validation process, making it easier and less burdensome to do business with the federal government.
If your entity is already registered with SAM, your UEI has already been assigned to you. Learn how to view your UEI within SAM at the Federal Service Desk.
Refer to the Guide to Getting a UEI if you want to get a UEI for your organization without having to complete a full entity registration. If you only conduct certain types of transactions, such as reporting as a sub-awardee, you may not need to complete an entity registration. Your entity may only need a UEI.
NAICS code
You’ll also need to match your products and services to a North American Industry Classification System (NAICS) code. NAICS codes classify businesses based on the particular product or service they supply. A business will generally have a primary NAICS code, but it can also have multiple NAICS codes if it sells multiple products and services.
To find your NAICS code, view the NAICS code list at the U.S. Census Bureau.
To be eligible for government contracts reserved for small businesses, your business must meet size requirements set by SBA. These size standards define the maximum size that a business — and its affiliates — can be to qualify as a small business for a particular contract.
SBA assigns a size standard to each NAICS code. Most manufacturing companies with 500 employees or fewer, and most non-manufacturing businesses with average annual receipts under $7.5 million, will qualify as a small business.
However, there are exceptions by industry. You can view these in Title 13 Part 121.201 of the Code of Federal Regulations (CFR) or in SBA’s table of small business size standards.
To determine if your business qualifies as “small” for government contracting purposes, use SBA’s Size Standards Tool.
To participate in government contracting, you must register your business in the federal government’s System for Award Management (SAM). SAM is a database that government agencies search to find contractors.
Using SAM, you’ll be able to certify that your business is eligible for contracts that are reserved for small businesses. You’ll also be able to represent if your business is eligible for contracts under an SBA contracting program because it is women-owned, veteran-owned, or located in an underutilized area.
Your small business’ profile in SAM is like a résumé. Creating a profile that’s accurate and appealing is important to winning a government contract. Make sure to use accurate, descriptive terms about your business so that contracting officials will be able to find you in search results.
In order to participate in government contracting, you must comply with all laws and regulations. The federal government’s purchasing process is governed by the Federal Acquisition Regulation.
Regulations covering government contracting programs for small businesses are listed in 13 CFR 125.
Small businesses looking to contract with the U.S. Department of Defense (DoD) will have to show the ability to safeguard their systems and data. Each DoD request for proposal will list a Cybersecurity Maturity Model Certification (CMMC) level required to bid the work.
To help small businesses with the tools and training to meet this standard, DoD developed Project Spectrum, a free platform that:
- Assists in CMMC certification
- Provides tools and training for cybersecurity awareness
- Educates users on risk management
- Helps small businesses install or boost cybersecurity hygiene
Visit Project Spectrum to sign up, learn about what you need to get certified, or to complete a self-assessment of your company’s cyber readiness.
Size standards
SBA’s size standards determine whether or not your business qualifies as small.
Size standards define the largest size a business can be to participate in government contracting programs and compete for contracts reserved or set aside for small businesses. Size standards vary by industry and are generally based on the number of employees or the amount of annual receipts the business has.
You can find small business size regulations in Title 13 Part 121 of the Electronic Code of Federal Regulations (eCFR).
Common terms
There are some common terms you should be familiar with to help you ensure that a business is classified correctly as small.
- Affiliates: You must include the employees or receipts of all affiliates when determining the size of a business. Affiliation with another business is based on the power to control, whether exercised or not. The power to control exists when an external party has 50% or more ownership. It may also exist with considerably less than 50% ownership by contractual arrangement, or when one or more parties own a large share compared to other parties. Check SBA’s compliance guide for size and affiliation for more detailed information.
SBA determines affiliation in accordance with 13 CFR 121.103. - Annual receipts: This is the “total income” (or “gross income”) plus the “cost of goods sold.” These numbers can normally be found on the business’s IRS tax return forms. For purposes of Federal contracting, receipts are averaged over a business’s latest five complete fiscal years. Applicants to SBA’s Business Loan and Disaster Loan Programs, as well as the Surety Bond and Small Business Investment Company (SBIC) Programs, may use either three or five years to determine average annual receipts. If a business hasn’t been in business for five years, multiply its average weekly revenue by 52 to determine its average annual receipts.
SBA calculates annual receipts in accordance with 13 CFR 121.104. - Employee calculation: This is the average number of people employed for each pay period over the business’s latest 24 calendar months. Any person on the payroll must be included as one employee, regardless of hours worked or temporary status. The number of employees of a concern in business less than 24 months is the average for each pay period that it has been in business.
SBA calculates the number of employees in accordance with 13 CFR 121.106.
You can find the full definitions of these terms, and others, in 48 CFR 19.
Numerical requirements
Qualifying as small is one of the basic requirements your business needs to meet before you can compete for government contracts that are set aside for small businesses.
You can find out if your business qualifies as small by using the size standards tool, or by referencing SBA’s table of small business size standards. Both the tool and the table help you find the small business classification requirements according to individual NAICS codes.
When you calculate the size of your business, you must include the annual receipts and the employees of your affiliates. When another person or business can control your business, they are an affiliate. This is true even if they don’t exercise their control.
General requirements
In addition to meeting the numerical standards for small, your business must:
- Be a for-profit business of any legal structure
- Be independently owned and operated
- Not be nationally dominant in its field
- Be physically located and operate in the U.S. or its territories
Businesses outside the U.S. may still be counted as small if they have an operation in the U.S. that makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials, or labor.
Size standards are established by SBA’s Administrator. The Office of Size Standards makes recommendations to the Administrator for establishing or revising size standards, according to changes in industries and the economy. When making these recommendations, the office uses the most recent data and NAICS codes available.
The Size Standards Methodology Whitepaper explains SBA’s process for establishing, reviewing, and modifying size standards.
You can follow announcements about updating size standards from the Office of Size Standards.
How you can comment on size standards
Size standards are reviewed every five years. When SBA considers revising size standards, it issues a notice of proposed rules. SBA takes comments from the public into consideration before finalizing proposed rules on size standards. SBA welcomes suggestions on alternative methodologies, factors, datasets, effects on competition, and approaches that make sense in the current economic environment.
Any interested party can protest a winning bidder’s small business size status.
Size protests
To file a protest, send the specific reasons for why you believe the winning business is not small to the contracting officer for that procurement. The procedures for making a size protest are outlined in 13 CFR 121.1001-1010.
There are severe criminal penalties for knowingly misrepresenting the size of a business for a federal contract. The penalties are defined in 13 CFR 121.108.
NAICS code appeals
Contracting officers must designate a NAICS code for a contract according to 13 CFR 121.402. However, you can appeal the NAICS code designation of any contract.
You must send any NAICS code appeal to SBA’s Office of Hearings and Appeals (OHA) within 10 days of the publication of the solicitation. Follow the procedures in 13 CFR 121.1102-1103 and 134 Subpart C.
Need help?
- For questions on size standards and affiliation rules for participating in government contracts, please reach out to sizestandards@sba.gov.
- For questions about Economic Injury Disaster Loans (EIDL) and the application process, please reach out to SBA’s disaster assistance customer service center at 800-659-2955 or e-mail disastercustomerservice@sba.gov. If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services.
Additional contact information
Office of Size Standards
409 3rd St., SW
Mail code 6530, Eighth floor
Washington, DC 20416
Phone: 202-205-6618
Email: sizestandards@sba.gov
Are you small enough?
Size standards vary by industry. Use the Size Standards Tool to see if your business qualifies as “small” for government contracting.