Updated November 2026 · VG CPA PC advisors
How size is measured
Each NAICS code has a size standard, either average annual receipts or average number of employees. Receipts-based standards generally use the average of the last five completed fiscal years; employee-based standards use the average over the preceding 24 months.
Size is determined as of the date you submit your initial offer including price, using the NAICS code assigned to the solicitation.
Affiliation
Affiliated companies' receipts or employees are added to yours. Affiliation can arise from common ownership, control by the same people, common management, identity of interest such as close family relationships with shared business dealings, or contractual relationships where one firm depends on another.
Joint ventures and mentor-protégé relationships approved by SBA have special exceptions, which can let small firms team without losing small status.
Recertification and protests
After a merger, acquisition or novation, you must recertify size, and you may no longer count as small on existing contracts for future option periods and orders. Competitors can file size protests after an award, so keep documentation of size calculations.
The ostensible subcontractor rule can also find affiliation when a small prime relies on a large subcontractor to perform the primary and vital requirements of a contract.