Overview
This section prescribes the process for selecting and applying North American Industry Classification System (NAICS) codes and small business size standards to federal acquisitions. It defines the responsibilities of the contracting officer in classifying requirements and establishes the specific timeline for determining a firm's size status.
Key Rules
- Source Authority: Small business size standards are established by the SBA on an industry-by-industry basis (found at 13 CFR 121.201) and are updated every five years.
- Timing of Size Determination: A concern's size status is generally determined as of the date it submits its initial offer including price; for Multiple-Award Contracts (MACs) not requiring price, it is the date of the initial offer.
- Principal Purpose Rule: The Contracting Officer (CO) must assign the single NAICS code that best describes the principal purpose of the acquisition, typically the component accounting for the greatest percentage of contract value.
- Multiple-Award Contract (MAC) Exception: For solicitations issued after October 1, 2028, COs may divide a MAC into distinct portions or categories (e.g., CLINs or SINs) and assign different NAICS codes to each.
- Order-Level Requirements: Orders placed under MACs must use a NAICS code already designated in the underlying contract.
- Solicitation Date: The CO must apply the size standard in effect on the date the solicitation is issued, though they may amend it if the SBA changes standards before the initial offer due date.
Practical Implications
- Contractors must be "small" on the specific date they submit their initial proposal, as that date "freezes" their size status for the duration of the procurement.
- The upcoming 2028 rule change will allow for more granular competition on large, complex contracts, enabling a firm to be considered "small" for one portion of a contract even if they are "other than small" for another portion.