Being a small business can have its advantages. Federal procurement rules provide that certain contracting opportunities may be set-aside for small business competition. Small businesses also may be exempt from certain procurement provisions, such as subcontracting plan requirements and coverage under Federal Cost Accounting Standards (CAS). Prime and higher-tier subcontractors also are incentivized to use small businesses to meet their small business subcontracting goals under their required subcontracting plans.
However, small businesses only remain small to the extent that they are considered small under applicable North American Industrial Classification Standards (NAICS). Generally, size is calculated based on the size standard applicable to the business’s industry code – average annual gross receipts or average annual number of employees.
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