It seems that "small," at least in the context of the Small Business Administration (SBA), doesn't always mean what it says.
Sen. John Kerry, chair of the Senate Committee on Small Business and Entrepreneurship, made the point during a hearing on "Increasing Government Accountability and Ensuring Fairness in Small Business [Government] Contracting" in July.
Bottom Line Impact
"If a small business loses its designation, it's no longer eligible for certain special competitive preferences when the government awards contracts," Rector says. "Suddenly a small business that has merged has to compete in the deep end with all the other big fish."
Although loss of small business status does not require termination of existing contracts, it does jeopardize future revenues. "The bottom line is that when a business can no longer certify that it is small, the contracting officer must decide whether or not to exercise the next option under the contract," Hickey says. "But because the agency will not get small business credit toward its SBA quota, option exercise is less likely, thus impacting revenues and valuation for small businesses."