Handyman Insurance, What is Affiliation?
Affiliation is a big deal, because it can impact whether a business qualifies as “small.” To determine if a contractor qualifies as a “small business” for the purposes of a given contract, the contractor must locate the North American Industry Classification System (“NAICS”) code assigned to that contract (usually found in the solicitation itself), and refer to the “size standard” associated with that code. A size standard is measured either in revenue or employees. To qualify as “small,” a concern must not exceed the dollar threshold or number of employees designated for a particular code. When two companies are found to be “affiliated,” their respective sizes (determined by either revenue or number of employees) are added together. The total is what is evaluated when determining whether the company is actually “small” based upon the SBA’s “size standards.” If the sizes of the two businesses, added together, exceed the applicable size standard, neither can be considered “small.” Accordingly, a finding of “affiliation” is something small businesses generally want to avoid.