[Federal Register Volume 67, Number 142 (Wednesday, July 24, 2002)]
[Proposed Rules]
[Pages 48419-48424]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18766]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register/Vol. 67, No. 142/Wednesday, July 24, 2002/Proposed
Rules
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AE80
Small Business Size Standards; Information Technology Value Added
Resellers
AGENCY: Small Business Administration (SBA).
ACTION: Proposed rule.
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SUMMARY: The Small Business Administration (SBA) proposes to establish
a new industry category and size standard of 500 employees for
Information Technology Value Added Resellers under Other Computer
Related Services, North American Industry Classification System (NAICS)
541519. This industry category and size standard is being established
to better apply small business eligibility requirements under Federal
contracts that combine substantial services with the acquisition of
computer hardware and software. SBA is requesting public comments on
establishing this industry category and size standard.
DATES: Comments must be received on or before August 23, 2002.
ADDRESSES: Send comments to Linda G. Williams, Associate Administrator
for Policy, Planning, and Liaison, Office of Government Contracting and
Business Development, U.S. Small Business Administration, 409 Third
St., SW, Mail Code 6510, Washington, DC 20416; or, via e-mail to
[email protected]. Upon request, SBA will make all public comments
available.
FOR FURTHER INFORMATION CONTACT: Gary Jackson, Assistant Administrator
for Size Standards, at (202) 205-6464.
SUPPLEMENTARY INFORMATION: Information technology (IT) is one of the
largest areas of Federal contracting today. The Federal government
spent approximately $19 billion in contracting for computer hardware,
software, programming, and other related services during fiscal year
2000. Within this area of contracting, many Federal agencies, as well
as private sector organizations, look for contractors that provide
solutions to their IT needs. In this regard, they seek a contractor,
such as a Value Added Reseller or Solution Provider, who can provide a
range of services that assist and support the acquisition of computer
hardware and software. These contractors provide services such as
advising an organization on what types of computer equipment, systems,
and technologies will fit its needs; designing and integrating systems;
purchasing and installing IT equipment; customizing hardware and
software configurations; and providing technical services, maintenance,
warranty service, and user support. The customer benefits from these
types of contracts by having a single contractor coordinate their IT
acquisition needs. These value added services are vitally important in
a rapidly changing environment where new products and technologies are
continually being introduced.
SBA's size standards and program eligibility requirements do not
specifically address the classification of Federal contracts that
combine services with the acquisition of supplies. As a result, Federal
agencies have had difficulty using small business preference programs
for these types of contracts, especially for IT. Under SBA's current
policies, such contracts are almost always viewed as a manufacturing or
supply contract since the dollar value of the largest component of the
contract will be associated with the acquisition of supplies. For
supply contracts that are set aside for small business or for SBA's
8(a) and HUBZone programs, an eligible small business must be a small
manufacturer of the end item being procured or, if not the actual
manufacturer of the end item, must supply the product of a small
business manufacturer (referred to as the ``nonmanufacturer rule'')
unless SBA grants a waiver of the nonmanufacturer rule for that
specific item (13 CFR 121.406). For most supply contracts, this
distinction is workable: either a company has made the product or is
supplying it along with distribution related value added services. SBA,
however, has found that the manufacturer/nonmanufacturer distinction
does not adequately address Federal IT contracting that combine
supplies and services into a single contract.
The acquisition of IT equipment has several aspects that lead SBA
to believe that it should establish special small business eligibility
requirements for IT Value Added Resellers that are similar to those for
a service contractor. First, as discussed above, many Federal agencies
prefer to go to a single source to obtain IT equipment and supporting
services. In doing so, a contractor often provides advisory and other
support services. Second, most acquisitions are for numerous IT
products that make it unrealistic to expect one manufacturer to produce
all of the required items. In many cases, the agency and contractor
agree in advance to equipment prices and delivery timeframes. Third, IT
contracts often require the contractor to customize computer hardware
or install specialized software to meet an individual user's needs.
Although these activities usually do not constitute manufacturing, they
are beyond the traditional wholesale-distribution function.
To address these types of IT contracts, SBA proposes establishing a
category of IT Value Added Resellers under NAICS code 541519, Other
Computer Related Services. An IT Value Added Resellers industry
category will allow Federal IT contracts that combine supply and
services activities to be classified in an industry that reflects the
purpose and scope of the contract and for SBA to apply a reasonable
size standard and other eligibility requirements to IT Value Added
Resellers that generally perform these combined functions. This new
industry category will enable Federal agencies to better utilize small
business preference programs for their IT acquisitions.
SBA recognizes that establishing a category of IT Value Added
Resellers as a service activity is a departure from the North American
Industry Classification System (NAICS). Under NAICS, Value Added
Resellers are classified in the Wholesale Trade sector along with
merchant wholesalers, distributors, drop shippers, brokers, and agents.
These latter types of establishments arrange the delivery of
manufactured products to their customers and provide value added
services associated with distribution, such as billing or inventory
management. While providing
[[Page 48420]]
manufactured products, IT Value Added Resellers also offer services
beyond those associated with the distribution function. SBA believes
that for Federal small business procurement preference programs in
particular, IT Value Added Resellers need to be treated in a different
manner than wholesale trade firms (or nonmanufacturers) on supply
contracts. Specifically, the service activities performed by IT Value
Added Resellers warrants greater consideration than NAICS affords other
Value Added Resellers.
Definition of Information Technology Value Added Resellers
An IT Value Added Reseller provides a total solution to IT
acquisitions by providing multi-vendor hardware and software along with
significant pre-sale and post-sale services. Significant value added
services consist of, but are not limited to, configuration consulting
and design, systems integration, installation of multi-vendor computer
equipment, customization of hardware or software, training, product
technical support, maintenance, and end user support.
This proposed rule requires that a Federal IT procurement be
classified under this industry category if it consists of at least 15
percent but not more than 50 percent of value added services as
measured by the total price less the cost of IT hardware, computer
software, and profit. This requirement ensures that the contractor
provides a meaningful amount of substantive computer-related services.
For example, if a procurement consists of $750,000 for personal
computers, printers, and application software; $250,000 for
installation of hardware, maintenance, and technical support; and
$50,000 profit, then it satisfies the criteria to be classified as an
IT Value Added Resellers procurement. In this example, 23.8 percent of
the value of the procurement is for value added computer services.
(Percent of value added services = value of computer services / total
price. 23.8% = $250,000 / $1,050,000.)
However, an IT procurement consisting of value added services less
than 15 percent or greater than 50 percent must be classified under a
different NAICS industry. If a Federal procurement is comprised of less
than 15 percent of value added services, then it must be classified
under a manufacturing industry and incorporate the applicable
manufacturer size standard and nonmanufacturer size standard. For
example, on a procurement to provide 100 personal computers without any
additional services or with only incidental services is classified
under NAICS 334111, Electronic Computer Manufacturing. For this type of
procurement reserved for small businesses or under the 8(a) and HUBZone
Programs, the nonmanufacturer rule requires that a small business
nonmanufacturer supply personal computers manufactured by a small
manufacturer. In limited cases, SBA may waive this nonmanufacturer rule
for a specific procurement or class of products allowing the
nonmanufacturer to supply the product of any domestic manufacturer.
(See 13 CFR 121.406.)
Conversely, if the IT procurement consists of more than 50 percent
of value added computer-related services, it must be classified under
the computer services industry that best describes the predominate
service of the procurement. For example, a procurement to write a
custom computer program that includes providing several personal
computers and printers accounting for 25 percent of the value of the
procurement is classified under NAICS 541511, Custom Computer
Programming Services, since 75 percent of the work is for computer
programming services. The size standard applicable to this procurement
is $21 million in average annual receipts.
Size Standard and Eligibility Requirement for IT Value Added Resellers
SBA proposes to adopt the nonmanufacturer size standard of 500-
employees, but is also seeking comments on alternatives to this size
standard. A large proportion of the value of a contract will be for
hardware and software with 20 percent to 30 percent generally for value
added services. In addition, IT Value Added Resellers have obtained
Federal supply contracts as nonmanufacturers under a 500-employee size
standard. Applying that size standard to IT Value Added Resellers would
maintain the same size standard under which many of these businesses
currently qualify as small. In recognition that a substantial amount of
the dollar value of the contract will be for hardware and software
sales, an employee size standard is considered an appropriate size
standard to measure the magnitude of operations of IT Value Added
Resellers. To ensure consistent size eligibility requirements for other
SBA programs outside of Federal procurement, the 500-employee size
standard would be applicable to businesses whose primary activities
match the IT Value Added Resellers description.
SBA considered three other size standards for IT Valued Added
Resellers. These alternative size standards relate to existing size
standards for computer services and wholesale trade.
First, SBA considered proposing the same $21 million size standard
that applies to the computer services industries (NAICS codes 541510 -
541519). If IT Value Added Resellers are viewed as part of computer
services, then the same size standard may be appropriate. As mentioned
above, SBA believes an employee size standard is a better measure of
the operations of an IT Value Added Reseller and decided not to propose
this or another receipts size standard.
Second, SBA considered a 150-employee size standard that represents
the employee-equivalent of the $21 million computer services size
standard. On average, computer services businesses generate $142,500
sales per employee. Sales in the amount of $21 million translate to
approximately 150-employees ($21,000,000 / $142,500 = 147.4). This 150-
employee size standard results in a size standard consistent with that
of the computer services receipts size standard without being skewed by
the value of hardware and software products provided by an IT Value
Added Reseller. SBA did not propose this size standard since it is
lower than the size standard that now applies to nonmanufacturers.
Without specific industry data by which to assess the impact of a 150-
employee size standard on small businesses, SBA is reluctant to adopt
that size standard without first seeking comments.
Third, SBA also considered applying the 100-employee size standard
for wholesale trade industries to IT Value Added Resellers. SBA adopted
a 500-employee size standard for nonmanufacturers in part because of
the competition among both distributors and manufacturers on Federal
supply contracts. Federal customers seeking IT value added services
will almost always find computer services firms and distributors with
services capabilities competing for those contracts. With a limited
presence of manufacturer competitors, the need for a 500-employee size
standard for IT Value Added Services may not exist. For the same
reasons as not proposing a 150 employee size standard, SBA has decided
to seek comment on this alternative before considering it for adoption.
SBA invites comments on these three alternative size standards, or
other alternatives that may more appropriately define a small IT Value
Added Reseller. The comments should explain why the alternative is a
more
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appropriate size standard than 500 employees. These comments should
also discuss the impact of the 500 employee size standard and
alternative size standard on small businesses and how they effectively
assists small businesses. In addition, commenters are requested to
identify data sources on IT Value Added Resellers that SBA may be able
to use to more definitely evaluate the size standard.
The classification of Federal contracts under the proposed IT Value
Added Resellers industry would alter how two other SBA regulations are
applied when such contracts are set aside for small businesses or under
the 8(a) and HUBZone Programs. First, an IT Value Added Reseller would
be required to meet performance requirements (or limitations on
subcontracting) as required on other service contracts. Under 13 CFR
125.6, a service contractor is required to perform at least 50 percent
of the cost of the contract incurred for personnel with its own
employees. Second, IT Value Added Resellers would not be subject to the
nonmanufacturer rule (13 CFR 121.406). As discussed above, SBA views an
IT Value Added Resellers contract as a service rather than a supply
contract since its purpose is to assist and provide supporting services
to an agency in the acquisition of information technology equipment.
SBA seeks the public's comment on this proposed rule. In addition
to comments on alternative size standards, SBA specifically desires
comments on the following issues:
(1) To what extent do Federal agencies expect contractors providing
information technology equipment to also provide value added services?
(2) Are the activities included in the definition of IT Value Added
Reseller appropriate?
(3) Should SBA require a different minimum and maximum percentage
of total contract value for services? If so, state what percentages and
describe the basis for those percentages?
(4) Should SBA calculate the percent of services on IT Value Added
Reseller contracts based on total price or some other baseline?
Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork
Reduction Act (44 U.S.C. Ch. 35), and the Regulatory Flexibility Act (5
U.S.C. 601-612)
The Office of Management and Budget (OMB) has determined that the
proposed rule is a ``significant'' regulatory action for purposes of
Executive Order 12866. Size standards determine which businesses are
eligible for Federal small business programs. This is not a major rule
under the Congressional Review Act, 5 U.S.C. 800.
Regulatory Impact Analysis
i. Is There a Need for the Regulatory Action?
SBA is chartered to aid and assist small businesses through a
variety of financial, procurement, business development, and advocacy
programs. To effectively assist intended beneficiaries of these
programs, SBA must establish distinct definitions of which businesses
are deemed small. The Small Business Act (15 U.S.C. 632(a)) delegates
to the SBA Administrator the responsibility for establishing small
business definitions. It also requires that small business definitions
vary to reflect industry differences. The preamble of this rule
explains the reasons for establishing an industry category and size
standard for IT Value Added Resellers.
ii. What Are the Potential Benefits and Costs of This Regulatory
Action?
The most significant benefit to businesses obtaining small business
status as a result of this rule is eligibility for Federal small
business assistance programs. These include SBA's financial assistance
programs and Federal procurement preference programs for small
businesses, 8(a) firms, small disadvantaged businesses, and small
businesses located in Historically Underutilized Business Zones
(HUBZone), as well as those awarded through full and open competition
after application of the HUBZone or small disadvantaged business price
evaluation preference or adjustment.
Through the assistance of these programs, small businesses may
benefit by becoming more knowledgeable, stable, and competitive
businesses. The benefits of a new industry category and size standard
would accrue to three groups. First, businesses that benefit by gaining
small business status from the proposed size standards and use small
business assistance programs. Second, growing small businesses that may
exceed the current size standards in the near future and who will
retain small business status from the proposed size standards. Third,
Federal agencies that award contracts under procurement programs that
require small business status.
Newly defined small businesses would benefit from the SBA's
financial programs, in particular its 7(a) Guaranteed Loan Program. IT
Value Added Resellers qualify for these loans if they have 100 or fewer
employees. Since over the last two years only one loan was guaranteed
to a firm with more than 50 employees, it is unlikely that this rule
would expand the use of the 7(a) Program.
Newly defined small businesses would also benefit from SBA's
economic injury disaster loan program. Since this program is contingent
upon the occurrence and severity of a disaster, no meaningful estimate
of benefits can be projected.
In the absence of specific data on IT Value Added Resellers, there
is no definitive estimate of the number of additional businesses that
would become qualified as small businesses for Federal small business
procurement preference programs. The benefits of the rule in Federal
contracting will be more in terms of clarifying requirements on Federal
contracts combining IT supplies and services than increasing the actual
number of new small businesses. This rule is likely to increase
opportunities for small businesses, but it is uncertain how many
Federal contracts may be affected.
Federal agencies may benefit from the new industry category and
size standard if more small businesses compete for set-aside
procurements. The larger base of small businesses would likely increase
competition and lower the prices on set-aside procurements. A large
base of active small businesses may create an incentive for Federal
agencies to set aside more procurements, thus creating greater
opportunities for all small businesses. No estimate of cost savings
from these contracting decisions can be made since data are not
available to directly measure price or competitive trends on Federal
contracts.
This rule is not expected to increase administrative costs to the
Federal government associated with additional bidders for Federal small
business procurement programs, additional firms seeking SBA guaranteed
lending programs, and additional firms eligible for enrollment in SBA's
PRO-Net data base program. If the number of businesses seeking SBA
assistance increases, there will be some additional costs associated
with compliance and verification of small business status and protests
of small business status. These costs are likely to generate minimal
incremental costs since mechanisms are currently in place to handle
these administrative requirements.
The costs to the Federal government may be higher on some Federal
contracts as a result of this rule. With a more appropriate contract
requirement for IT value added service, Federal
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agencies may choose to set aside more contracts for competition among
small businesses rather than using full and open competition. The
movement from unrestricted to set aside is likely to result in
competition among fewer bidders for a contract. Also, higher costs may
result if additional full and open contracts are awarded to HUBZone and
SDB businesses as a result of a price evaluation preference. The
additional costs associated with fewer bidders, however, are likely to
be minor since, as a matter of policy, procurements may be set aside
for small businesses or under the 8(a), and HUBZone Programs only if
awards are expected to be made at fair and reasonable prices.
The proposed size standard may have distributional effects among
large and small businesses. Although the actual outcome of the gains
and loses among small and large businesses cannot be estimated with
certainty, several trends are likely to emerge. First, a transfer of
some Federal contracts to small businesses from large businesses. Large
businesses may have fewer Federal contract opportunities as Federal
agencies decide to set aside more Federal procurements for small
businesses. Also, some Federal contracts may be awarded to HUBZone or
small disadvantaged businesses instead of large businesses since those
two categories of small businesses are eligible for price evaluation
preferences for contracts competed on a full and open basis. Similarly,
currently defined small businesses may obtain fewer Federal contacts
due to the increased competition from more businesses defined as small.
This transfer may be offset by a greater number of Federal procurements
set aside for all small businesses. The potential distributional
impacts of these transfers cannot be estimated with any degree of
precision since the data on the size of businesses receiving a Federal
contract are limited to identifying small or other-than-small
businesses.
The creation of an IT Value Added Resellers industry category and
size standard is consistent with SBA's statutory mandate to assist
small businesses. This regulatory action promotes the Administration's
objectives. One of SBA's goals in support of the Administration's
objectives is to help individual small businesses succeed through fair
and equitable access to capital and credit, government contracts, and
management and technical assistance. Reviewing and modifying size
standards when appropriate ensures that intended beneficiaries have
access to small business programs designed to assist them. Size
standards do not interfere with State, local, and tribal governments in
the exercise of their government functions. In a few cases, State and
local governments have voluntarily adopted SBA's size standards for
their programs to eliminate the need to establish an administrative
mechanism for developing their own size standards.
Initial Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act (RFA), this rule may have a
significant impact on a substantial number of small entities.
Immediately below, SBA sets forth an initial regulatory flexibility
analysis (IRFA) of this proposed rule addressing the reasons and
objectives of the rule; SBA's description and estimate of the number of
small entities to which the rule will apply; the projected reporting,
record keeping, and other compliance requirements of the rule; the
relevant Federal rules which may duplicate overlap or conflict with the
proposed rule; and alternatives considered by SBA.
(1) What Is Reason for This Action?
As discussed in the supplemental information, the purpose of this
proposal is to establish more reasonable size standard and eligibility
requirements for Federal information technology contracts that combine
the acquisition of computer equipment and services. The proposed
changes will better assist small IT Value Added Resellers in obtaining
Federal contracts.
(2) What Is the Objective and Legal Basis for the Rule?
Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) gives SBA
the authority to establish and change size standards. Size standards
are developed on an industry basis and vary by industry to reflect
differing characteristics of firms in an industry or other appropriate
factors regarding an industry. This rule proposes to establish an
industry category of IT Value Added Resellers that SBA believes is
necessary to appropriately apply its small business assistance program
to small businesses in this category.
(3) What Is SBA's Description and Estimate of the Number of Small
Entities to Which the Rule Will Apply?
SBA estimates that approximately 1,100 small businesses could
receive assistance as a result of this proposed rule. In SBA's PRO-Net
data base, 1,100 small businesses indicated that they are wholesalers
of IT equipment and are capable of providing some other services. It
cannot be determined how many could actually meet the requirements of
the proposed IT Value Added Resellers definition. Thus, the actual
number of affected businesses is likely to be smaller. A few small
computer manufacturers could be adversely affected by this rule since
small business set-aside, 8(a), or HUBZone contracts classified under
the IT Value Added Resellers industry would not apply the
nonmanufacturer rule. However, SBA believes the impact would be minimal
since the IT Value Added Reseller contracts are most likely not
currently being awarded to small manufacturers under these programs.
Description of Potential Benefits of the Rule: The most significant
benefit to businesses obtaining small business status as a result of
this rule is their eligibility for Federal small business assistance
programs. These include SBA's financial assistance programs and Federal
procurement preference programs for small businesses, 8(a) firms, small
disadvantaged businesses, and small businesses located in Historically
Underutilized Business Zones (HUBZones).
SBA estimates that approximately $118 million of additional Federal
contracts could be awarded to small firms under the proposed IT Value
Added Resellers size standard. In FY 2000, $2 billion were awarded for
ADPE systems configuration supply contracts. Only 3.3 percent of
computer supply contracts were awarded as small business set aside and
8(a) contracts. SBA assumes that Federal agencies will be able to
increase their small business set-aside and 8(a) awards for ADPE
systems configuration to the same level as for computer services
contracts. In FY 2000, 9.2 percent of the computer services contracts
were awarded as a small business set-aside or 8(a) contract. If SBA's
assumption is correct, an additional 5.9 percent, or $118 million, in
small business contract awards for ADPE systems configuration could
result. Most of these contracts would consist of a potential transfer
from large businesses to small IT Value Added Resellers. This does not
represent the creation of new contracting activity by the Federal
government, merely a possible reallocation or transfer to different
sized firms.
SBA does not believe any additional loans would be made under its
7(a) Guaranteed Loan Program and Certified Development Company (504)
Program as a result of changes the SBA is proposing in this rulemaking.
IT Value Added Resellers are currently eligible for these programs if
they have 100 or fewer employees. In the last two years, only one 7(a)
loan was made to a small business with more than 50 employees.
[[Page 48423]]
In the 504 Program, the alternative size standards of $2 million net
income and $6 million net worth most likely already qualify IT Value
Added Resellers with 100 to 500 employees.
Description of Potential Costs of the Rule: The changes in size
standards as they affect Federal procurement are not expected to add
any significant costs to the Federal Government. As a matter of policy,
procurements may be set aside for small businesses or under the 8(a)
and HUBZone Programs only if awards are expected to be made at
reasonable prices. Similarly, the rule should not result in any added
costs associated with the 7(a) and 504 loan programs. The amount of
lending authority SBA can make or guarantee is established by
appropriation.
The competitive effects of size standard revisions differ from
those normally associated with other regulations which typically burden
smaller firms to a greater degree than larger firms in areas such as
prices, costs, profits, growth, innovation and mergers. A change to a
size standard is not anticipated to have any appreciable effect on any
of these factors, although small businesses, 8(a) firms, or small
disadvantaged businesses much smaller than the size standard for their
industry may be less successful in competing for some Federal
procurement opportunities due to the presence of larger, newly defined
small businesses. On the other hand, with more larger small businesses
competing for small business set-aside and 8(a) procurements, Federal
agencies are likely to increase the overall number of contracting
opportunities available under these programs, and this could result in
greater opportunities for businesses much smaller than the size
standard.
(4) Will This Rule Impose Any Additional Reporting or Record Keeping
Requirements on Small Businesses?
This proposed rule does not impose any new information collection
requirements which require OMB approval under the Paperwork Reduction
Act of 1980, 44 U.S.C. 3501-3520. A new size standard does not impose
any additional reporting, record keeping or compliance requirements on
small entities. Increasing size standards expands access to SBA
programs that assist small businesses, but does not impose a regulatory
burden as they neither regulate nor control business behavior.
(5) What Are the Relevant Federal Rules Which May Duplicate, Overlap or
Conflict With the Proposed Rule?
This proposed rule overlaps rules of other Federal agencies that
use
SBA's size standards to define a small business. Under
Sec. 3(a)(2)(c) of the Small Business Act, unless specifically
authorized by statute, Federal agencies must use SBA's size standards
to define a small business. In 1995, SBA published in the Federal
Register a list of statutory and regulatory size standards that
identified the application of SBA's size standards as well as other
size standards used by Federal agencies (60 FR 57988-57991, dated
November 24, 1995). SBA is not aware of any Federal rule that would
duplicate or conflict with establishing size standards.
SBA cannot estimate the impact of a size standard change on each
and every Federal program that uses its size standards. In cases where
an SBA size standard is not appropriate, the Small Business Act and
SBA's regulations allow Federal agencies to develop different size
standards with the approval of the SBA Administrator (13 CFR 121.902).
For purposes of a regulatory flexibility analysis, agencies must
consult with SBA's Office of Advocacy when developing different size
standards for their programs.
(6) What Alternatives Did SBA Consider?
SBA considered revising its definition of a manufacturer. On April
1, 1999, SBA published in the Federal Register a ``Request for
Comments'' asking for comments on a modern definition of the term
manufacturer and a new definition for ``Remanufacturer'' (64 FR 15708,
dated April 1, 1999). SBA received only six comments on this issue,
none of which provided sufficient information to support a revision to
SBA's current manufacturer definition. After further review, SBA now
believes that establishing an IT Value Added Resellers industry
category is a more effective approach to addressing the size
eligibility requirements of nonmanufacturers providing substantial
services along with IT products on Federal contracts.
For purposes of Executive Order 12988, SBA has determined that this
proposed rule is drafted, to the extent practicable, in accordance with
the standards set forth in section 3 of that Order.
This regulation will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibility among the
various levels of government. Therefore, under Executive Order 13132,
SBA determines that this proposed rule does not have sufficient
federalism implications warranting the preparation of a Federalism
Assessment.
This proposed rule does not impose any new information collection
requirements from SBA which require the approval by OMB under the
Paperwork Reduction Act of 1980, 44 U.S.C. 3501-3520.
List of Subjects in 13 CFR Part 121
Administrative practice and procedure, Government procurement,
Government property, Grant programs--business. Loan programs--business,
Small businesses.
Accordingly, for the reasons stated in the preamble, part 121 of 13
CFR is proposed to be amended as follows:
PART 121--[AMENDED]
Subpart A--Size Eligibility Provisions and Standards
1. The authority citation of part 121 continues to read as follows:
Authority: 15 U.S.C. 632(a), 634(b)(6), 637(a), 644(c) and
662(5) and Sec. 304, Pub. L. 103-403, 108 Stat. 4175, 4188.
Sec. 121.201 [Amended]
2. In Sec. 121.201, in the table ``Small Business Size Standards by
NAICS Industry,'' under the heading Subsector 541-Professional,
Scientific, and Technical Services, revise the entry for 541519 to read
as follows:
Sec. 121.201 What size standards has SBA identified by North American
Industry Classification System codes?
[[Page 48424]]
* * * * *
Small Business Size Standards by NAICS Industry
------------------------------------------------------------------------
Size standards in
number of
NAICS codes NAICS industry employees or
descriptions millions of
dollars
------------------------------------------------------------------------
* * * *
* * *
Subsector 54--Professional, Scientific and Technical Services
* * * *
* * *
541519.................... Other Computer Related $18.0
Services.
EXCEPT.................... Information Technology \16\500
Value Added Resellers.
* * * *
* * *
------------------------------------------------------------------------
3. In Sec. 121.201, add footnote 16 at the end of the footnote
section, under the table to read as follows:
Footnotes
* * * * *
16. NAICS code 541519--An Information Technology Value Added
Reseller provides a total solution to information technology
acquisitions by providing multi-vendor hardware and software along
with significant services. Significant value added services consist
of, but are not limited to, configuration consulting and design,
systems integration, installation of multi-vendor computer
equipment, customization of hardware or software, training, product
technical support, maintenance, and end user support. For purposes
of Government procurement, an information technology procurement
classified under this industry category must consist of at least 15
percent and not more than 50 percent of value added services as
measured by the total price less the cost of information technology
hardware, computer software, and profit. If less than 15 percent of
value added services, then it must be classified under a NAICS
manufacturing industry. If the contract consists of more than 50
percent of value added services, it must be classified under the
NAICS industry that best describes the predominate service of the
procurement. For SBA assistance as a small business concern as an
Information Technology Value Added Reseller, other than for
Government procurement, a concern must be primarily engaged in
providing information technology equipment and computer software and
provides value added services which account for at least 15 percent
of its receipts but not more than 50 percent of its receipts.
Dated: May 7, 2002.
Hector V. Barreto,
Administrator.
[FR Doc. 02-18766 Filed 7-23-02; 8:45 am]
BILLING CODE 8025-01-P