The Basics About Calculating Small GovCon Business Size

So you want to become a government contractor? Calculating the size of your small GovCon business is a crucial step in government contracting. The U.S. government has established size standards to define what qualifies as a small business, and these standards can vary based on the industry. The size of your business is important because it determines your eligibility for various government contracting opportunities and programs. 

Basics About Calculating the Size of Your Business and Why it Matters

Small Business Size Standards 

The U.S. Small Business Administration (SBA) sets size standards based on either the number of employees a business has or its average annual revenue. These standards vary by industry and are measured in terms of either the average number of employees over a period or the average annual revenue over a specific time frame.

Eligibility for Set-Aside Contracts

Many government contracts are “set aside” for small businesses, meaning that only businesses that meet the size criteria can bid on these contracts. These set-aside contracts give small businesses a better chance of winning contracts, as they won’t be competing directly with larger corporations.

Programs for Small Businesses

Small businesses can participate in various government programs designed to help them compete in the federal marketplace. For example, the 8(a) Business Development Program helps small businesses owned by socially and economically disadvantaged individuals gain access to government contracts.

Size Protests 

Accurately determining your business size is crucial to avoid size protests. If a competitor or other interested party believes that your business is inaccurately claiming small business status, they can file a size protest. If the protest is successful, it could lead to your company losing the contract or facing other consequences.

Affiliation Rules 

The SBA’s affiliation rules are designed to prevent companies from artificially inflating their size by combining resources with other companies. These rules consider factors like ownership, management, and control to determine if multiple companies should be treated as one when assessing size.


In some cases, you might need to recertify your business size during the contract performance period. This is especially true for long-term contracts, as your business’s size could change over time.

Accurate Reporting

Misrepresenting your business size intentionally or unintentionally can lead to legal issues and potentially disqualify you from future contracts. It’s crucial to provide accurate and transparent information about your business’s size.

In conclusion, understanding and accurately determining the size of your business is a critical step in government contracting. It not only impacts your eligibility for contracts and programs but also ensures fair competition within the federal marketplace. If you’re unsure about how to calculate your business size or which standards apply to your industry, it’s advisable to consult with experts in government contracting or the Small Business Administration for guidance.

Are you a Government Contractor? Virtual CFO provides GovCon-centric strategic accounting for small businesses providing services in technology, architecture, engineering, aerospace, and project management industries. 

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