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Scrap NAICS? Budget passage, subcontracting and more rank much higher for small businesses.

Posted By Guy Timberlake, The American Small Business Coalition, LLC, Sunday, September 25, 2011
The headline in a recent Washington Technology article reads:

Lawmaker wants to scrap small-business classification system

Senator Claire McCaskill (D-Mo.) has introduced the Fairness for Small Businesses in Federal Contracting Act (S. 1590), which includes language that would do away with the current system based on the North American Industry Classification System (NAICS), which replaced the Standard Industrial Classification (SIC) codes. Under her plan, the new replacement system could have no more than 20 industries classified in it.

So does that mean there would be no more than twenty classifications to get all of the business of the government done? I don't see it.

The NAICS is based on twenty industry sectors which as most folks know, drills down into hundreds of more specific descriptions based on the industry in which you do business. Would those top level industry sector descriptors (or similar) be the extent of her descriptions? Hmm.

In the article, the Senator indicates the new system would make it easier for small businesses who want to be contractors. What about the small companies that are already contractors and have adapted to the current system? If you are going to create a new system for small businesses, this means agencies and prime contractors will have to learn a new system, potentially creating an even larger obstacle than what already exists for small businesses.

Additionally, what about the size standards? Under the current plan, companies doing business under the 54 sector (Professionals, Scientific and Technical Services) can be as small as $4.5M (three year average revenues) and up to $27.0M or as small as 150 employees and as many as 1,500 employees. Is she saying the entire 54 industry sector could end up with one size standard? That would be interesting.

Not only could this be a potential nightmare, it does nothing to resolve other more pressing issues such as small business subcontracting, agencies achieving their respective goals for set-asides, bundled contracts, etc.

In full disclosure, I am typically a fan of this Senator's activities when it comes to federal contracting. While I am a fan of closing the non-manufacturer loophole, this act has me scratching my head.

Sort of like the memo issued by OMB to have agencies accelerate payments to small government contractors, it's a nice gesture, but it too falls way short of the real mark.

By the way, there's also this budget thing...


The Chief Visionary

"The person who says it cannot be done should not interrupt the person doing it."

Tags:  addressed  be  classification  first  items  more  naics  new  other  pressing  scrap  should  system 

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Comments on this post...

Steven Mackie, SSI says...
Posted Monday, September 26, 2011
I don't see what problem needs to be solved and why scrapping the NAICS system would help. As the owner of a small business, I've had no trouble with the current NAICS system and found it providesa both the Gov't and Contractors the ability to be flexible and specific in designating contracts to firms with specific capabilities. I'm afraid the good Senator has not spent any serious effort examining the direct, secondary, and tertiary costs involved in scrapping the current NAICS system. The Federal Government contracting market is not the only market that depends upon the NAICS system currently. The timing for this initiative doesn't exactly convey the Senator has a grasp of the big picture considering the U.S. Government and economy is facing the potential of a ship wreck level event. When your ship's heading toward the rocks in gail force winds with one engine out is a bad time to decide to renumber all of the ships compartments just because....
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