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Federal Market Intelligence for Small Business |
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Set-Aside Alert exclusive research:Court impacts SBA small biz size standardsThe U.S. District Court for the District of Columbia recently issued a potentially far-reaching decision (Bid Solve Inc. v. CWS Marketing Group Inc.) affecting how federal contractors determine whether they qualify as “small.” The court interpreted how vendors must calculate and report their average annual “receipts” to meet the Small Business Administration’s size standards for a small business. The plaintiff alleged that CWS had falsely certified its average annual receipts as being under $7.5 million. The court ruled against CWS, finding that the company had wrongly deducted “flowthrough income”—which is reimbursement for expenses incurred on behalf of customers— when calculating the company’s receipts. However, attorneys are warning that this ruling could have a severe impact as it apparently penalized a vendor who was following SBA guidance. “The court’s decision in this case has potentially far-reaching and drastic implications for small business federal contractors,” Bradley law firm attorneys wrote in a recent blog. The attorneys say many contractors likely are currently calculating their average annual receipts contrary to the court’s ruling. The issue is likely to be raised in future protests and should be addressed by SBA, the attorneys wrote. The court’s decision may force SBA to redo its guidance, adds Larry Allen, small business consultant.
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