Businesses certified with set aside status have a growing number of government opportunities.  Recently, the Small Business Administration (SBA) issued their final rule updating the penalties for businesses who commit contract fraud by misrepresenting their business size.

From the Federal Register:

“Amended the Small Business Act to provide that if a concern willfully seeks and receives an award by misrepresenting its small business size or status, there is a presumption of loss to the United States equal to the value of the contract, sub-contract, cooperative agreement, cooperative research”


“The Small Business Act was also amended to provide that certain actions, such as submitting an offer in response to a solicitation set aside for small business concerns, will be deemed a representation of small business size or status.”

Contractors must update their System for Award Management (SAM) at least annually, and follow the Small Business designations outlined by the SBA.

Criteria to Determine your Business Size.

In determining your businesses size you must consider the following criteria about your company:

  1. NAICS size standards – average number of employees over the past 12 months or average annual receipts over the past three years
  2. Is organized for profit;
  3. Has a place of business in the US;
  4. Operates primarily within the U.S. or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor;
  5. Is independently owned and operated; and
  6. Is not dominant in its field on a national basis.

If you company is an 8(a) Business, Service Disabled Veteran Owned Small Business (SDVOSB), Economically Disadvantaged Women Owned Small Business (EDWOSB), or HUBZone Business more certifications are required.

The final rule lists the following penalties for misrepresentation:

  • Suspension or debarment
  • Civil Penalties
  • Criminal Penalties
  • Repayment to the government of the total value of the Federal Procurement award.

This final rule issued by the SBA on June 28, 2013 are found at 78 Federal Register 38811 (6/28/13) (

Contact Coley if you have questions on the size standard. We also offer help updating SAM profile and other government databases.

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