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

Friday, November 25, 2011   (0 Comments)
Posted by: Chief Visionary Blog
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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."

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