The federal district court for the District of Columbia just threw a major wrench into how some companies determine whether or not they are small based on their annual revenue.  The decision, in Bid Solve, Inc., 2023 WL 3521616, not only complicates size determinations when based on annual sales but may likely expand a small firm’s False Claims Act exposure.  In short, Small Business Administration (SBA) guidance typically directs a company doing business under a NAIC’s code using an annual receipts size determination to rely on revenue reported on its tax returns.  Companies are supposed to take a multi-year average, now typically five years, and then attest to whether or not they meet the small business test per their primary NAIC’s code.  The district court, however, said that companies should use all revenue, including “flow through” revenue, when making such determinations.  While the SBA relied upon language in the relevant regulation that seemed to limit revenue determinations to tax return information, the court looked at a different part of the rule which stated “all revenue in whatever form received or accrued from whatever source” should be the relevant standard.  This reading puts companies in danger of suddenly not finding themselves small, even if they properly followed SBA guidance.  This not only jeopardizes work conducted under set-aside contracts but exposes firms to False Claims Act allegations if a whistleblower can successfully claim that the company misled the government about its size standard and was awarded business based on that false statement.    The court’s decision could require the SBA to redo its guidance and result in many businesses losing their small business classification.  This is a case that small firms should take very seriously.  It is one that should result in firm’s setting aside some specific time to review and discuss with outside counsel to ensure that they understand the potential ramifications for their federal business.