Size Standard Question
Started by obinnae · Jul 22, 2010 · 1 replies
- oOriginal post
obinnae
Jul 22, 2010 · 15y ago
Long time reader, first time poster. I appreciate all of the insight and guidance given out here. I have a question regarding the size standard for a small business. Assuming a small business is the prime contractor, and is backed by a large business, does the entire revenue of the contract count for the small business, or only the portion that they actually work?
For example - a small business holds a $5m/year contract as a prime. It has a large business sub that performs 40% of the actual work - or $2m/year. When invoicing the government, the small business invoices a total of $5m/year, but essentially pays $2m/year directly out to its subcontractor.
What amount is considered the "revenue" of the small business? $5m or the $3m that the small business actually worked?
Thanks in advance for any guidance!
- G
Guest Vern Edwards
Jul 22, 2010 · 15y ago
The operative term is "receipts," not "revenue." See 13 CFR 121.104, How does the SBA calculate annual receipts? Subcontractor costs are included.
For size determination purposes, the only exclusions from receipts are those specifically provided for in this paragraph. All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer's request, and employee-based costs such as payroll taxes, may not be excluded from receipts.