Business growth is something that should be celebrated, yet if you’re a small business whose customer is the federal government, your growth can have a noticeable downside. Once you grow larger than size standard of your industry area (according to the NAICS code(s) you selected when you registered your business), you will no longer be eligible for small business set-asides and you will be forced to compete with the giants of the industry.
The Mid-Tier Advocacy group (MTA) was formed specifically to combat this downside risk, and to take advantage of the current small business-friendly environment to create some legislative and regulatory alternative pathways. In fact, MTA has been involved in many new small business bills that were recently introduced in the House. We were able to influence the SBA to modify their Sector 54 proposed size standards, and continuously participated in legislative drafting of a mid-tier pilot program.
We’re a small group that’s had a big impact, and I’m proud to be a member of MTA’s CEO Council. Right now we’re expanding our CEO Council to focus on having an even greater impact. Our February 7th sponsored luncheon at the Capitol on Small Business Sustainability was sold out (in fact, standing room only), and speakers included folks from Industry, Senate, House and Agencies. We are definitely looking at an expanded set of opportunities to influence the actual content of legislation, and to make a real impact.
We have identified four key barriers to growth and sustainability for mature small businesses, and these are the issues we will be focusing on.
1. Issue: Out-Dated Size Standards of NAICS Codes
Size standards were meant to level the playing field by setting aside a portion of government contracts for exclusive competition among small businesses within specified industrial classifications. Mid-tier businesses are not recognized in the present NAICS size standard system, even though it is a significant fact that small and mid-tier businesses expand the economy by providing more jobs at a faster rate than large business.
2. Issue: Limitations on Joint Venture Capability and Mentoring
On March 31, 2011, the U.S. Small Business Administration’s (“SBA”) Office of Hearings and Appeals (“OHA”) issued a decision of great significance for service-disabled veteran-owned (“SDVO”) firms. OHA’s ruling, which granted an appeal filed by PilieroMazza, permits SDVO firms to form joint ventures as limited liability companies (“LLCs”) and corporations when bidding on SDVO set-aside contracts.
3. Issue: Insourcing
For small and mid-tier businesses, government insourcing means significant loss of revenue. The MTA will seek to find opportunities to testify before congress on this and other issues that disproportionately affect the entire small business community.
4. Issue: Contract Bundling Un-Fairly Favors Large Businesses over Mid-Size Companies
The MTA started laying the groundwork in 2010, by working successfully with Congress, the Administration and other agencies. As the voice for mid-tier businesses, MTA will continue to educate policy makers, testify before Congress on out-dated size standards and weakened policies with loopholes for large businesses and a lack of overall protection for the sub-contractors who are “too big to be small and too small to be big.”