[Federal Register Volume 71, Number 126 (Friday, June 30, 2006)]
[Rules and Regulations]
[Pages 37490-37492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-5894]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AF28


Small Business Size Standards; Security Guards and Patrol 
Services Industry

AGENCY: Small Business Administration (SBA).

ACTION: Final rule.

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SUMMARY: The U.S. Small Business Administration (SBA) is increasing the 
small business size standard for Security Guards and Patrol Services 
(North American Industry Classification System (NAICS) 561612), from 
$11.5 million in average annual receipts to $17.0 million. This revised 
size standard better defines the size of a small business in this 
industry based on a review of the latest available data on industry 
characteristics and other relevant information.

DATES: This rule is effective July 31, 2006.

FOR FURTHER INFORMATION CONTACT: Carl J. Jordan, Office of Size 
Standards, (202) 205-6618, or [email protected].

SUPPLEMENTARY INFORMATION: On November 10, 2005, SBA proposed in the 
Federal Register (70 FR 68368) a 47.6 percent increase to the small 
business size standard for Security Guards and Patrol Services, NAICS 
561612, from $10.5 million in average annual receipts to $15.5 million. 
SBA later issued an interim final rule on December 6, 2005 (70 FR 
72577), increasing all receipts-based small business size standards to 
account for inflation that had occurred since its last increase for 
inflation on February 22, 2002. That interim final rule, which became 
effective on December 6, 2005, including an inflationary adjustment 
increase in the Security Guards and Patrol Services size standard from 
$10.5 million to $11.5 million.
    In this final rule, SBA is adopting the same 47.6 percent increase 
in the Security Guards and Patrol Services size standard that it 
proposed on November 10, 2005. As applied to the current inflation-
adjusted size standard of $11.5 million, the new size standard under 
this final rule is $17 million ($11,500,000 x 1.476 = $16,978,000, 
rounded to the nearest $500,000 increment, or $17,000,000). Based on 
SBA's evaluation of the one public comment it received in response to 
its November 10, 2005 proposed rule (see discussion below) and on SBA's 
analysis described in the proposed rule, SBA believes that this 47.6 
percent increase is appropriate under the methodology SBA uses in 
evaluating size standards. As described in the proposed rule, SBA 
evaluates an industry's size standard by comparing that industry's 
characteristics to the characteristics and size standards established 
for other industries. Applying the proposed 47.6 percent increase to 
the current inflation-adjusted size standard maintains the relative 
relationship between the Security Guards and Patrol Services Industry 
size standard and the size standards of other industries as supported 
by the proposed rule's analysis.

Evaluation of Comments

    In response to its November 10, 2005, proposed rule, SBA received 
one comment from a business concern in the Security Guards and Patrol 
Services Industry. The commenter recommended a size standard double 
that of SBA's proposal. In support of that recommendation, the 
commenter pointed out that there are increased security needs on 
various facilities, especially those of the Federal Government. SBA 
considered that issue as part of its decision to propose a 47.6 percent 
increase to the standard. SBA also examined newly available data on 
Federal contracting for Security Guards and Patrol Services. While some 
Federal contracts may be expanding in scope in response to heightened 
security concerns, the data do not show that the apparent increase in 
the size of Security Guards and Patrol Services contracts has 
necessarily diminished small business opportunities, so as to require 
an increase in the size standard beyond the amount SBA is implementing 
in this final rule. Accordingly, SBA declines to adopt the comment.

Compliance With Executive Orders 12866, 12988, and 13132, the 
Regulatory Flexibility Act (5 U.S.C. 601-612) and the Paperwork 
Reduction Act (44 U.S.C. Ch. 35)

    The Office of Management and Budget has determined that this rule 
is not a significant regulatory action for purposes of Executive Order 
12866. This final rule meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice 
Reform, to minimize litigation, eliminate ambiguities and reduce burden 
to the extent practicable. The final rule does not have a retroactive 
or preemptive effect. This final rule will not have a substantial 
direct affect on the States or the distribution of power and 
responsibilities among various levels of government. Therefore, for 
purposes of Executive Order 13132, SBA has determined that this final 
rule does not have any Federalism implications warranting the 
preparation of a federalism assessment. For the purposes of the 
Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA has determined that this 
rule does not impose new reporting or recordkeeping requirements.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act, this rule may have a 
significant impact on a substantial number of small entities

[[Page 37491]]

engaged in the Security Guards and Patrol Services Industry. SBA 
described in the proposed rule the possible effects on business 
concerns seeking SBA 7(a) and 504 Guaranteed Loan Programs, and SBA's 
Economic Injury Disaster Loans. In addition, it affects those concerns 
that participate in Federal procurement programs for small businesses. 
The amended size standard may also affect small businesses 
participating in programs of other agencies that use SBA size 
standards. As a practical matter, SBA cannot estimate the impact of a 
revised size standard on every Federal program that uses its size 
standards. Nevertheless, SBA did not receive any comments raising 
concerns about the use of the proposed size standard on other Federal 
programs or regulations.
    Immediately below, SBA sets forth its Final Regulatory Flexibility 
Analysis for this rule on the Security Guards and Patrol Services 
Industry addressing the following: (1) The need for and objective of 
the rule; (2) significant issues the public raised in its comments; (3) 
SBA's description and estimate of the number of small entities to which 
the rule will apply; (4) the projected reporting, recordkeeping, and 
other compliance requirements of the rule, and SBA's estimate of the 
classes of small entities that will be subject to the requirements; 
and, (5) steps SBA took to minimize the significant economic impact on 
small entities.

1. Need for and Objective of the Rule

    The revised size standard for the Security Guards and Patrol 
Services Industry better defines the size of a small business in this 
industry that should be eligible for Federal small business assistance 
programs. Before SBA proposed increasing the size standard for this 
industry, it reviewed the structure of this industry using five factors 
that were compared with averages for two groups of comparable 
industries. A review of the latest available industry and program data 
supports the adopted increase to the current size standard.

2. Significant Issues the Public Raised in Its Comments

    SBA received one comment from a business concern in the Security 
Guards and Patrol Services Industry. The commenter supported a size 
standard double that of SBA's proposal, because of increased security 
needs on various facilities, especially those of the Federal 
Government. SBA considered this issue in its analysis supporting the 
proposed size standard and in its review of Federal contracting data 
that became available after the publication of the proposed rule. SBA's 
analyses of that data do not provide a basis for increasing the size 
standard beyond the 47.6 percent that SBA originally proposed. 
Therefore, SBA is not making any change in the amount of proposed 
increase, other than applying it to the current inflation-adjusted size 
standard of $11.5 million, resulting in a new size standard of $17 
million. SBA received no comments regarding its Initial Regulatory 
Flexibility Analysis.
3. SBA's Description and Estimate of the Number of Small Entities To 
Which the Rule Will Apply
    SBA estimates that 55 additional firms out of 4,853 firms in this 
industry [i.e., 2.1 percent of total firms] would be considered small 
as a result of this final rule. These firms will be eligible to seek 
available SBA assistance if they meet other program requirements. The 
estimated number of firms becoming eligible for SBA assistance because 
of this rule cumulatively generate $950 million in this industry out of 
a total of $13.6 billion in annual receipts. The small business 
coverage in this industry will increase by 7.0 percent of total 
receipts. In addition, SBA estimates that approximately 65 small 
businesses that are within 20 percent of the existing size standard 
could grow and retain their small business status under the $17 million 
size standard.

4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements of the Rule, and SBA's Estimate of the Classes of Small 
Entities That Will Be Subject to the Requirements

    A new size standard does not impose any additional reporting, 
recordkeeping or compliance requirements on small entities. Increasing 
size standards expands access to SBA programs that assist small 
businesses, and does not impose a regulatory burden because it neither 
regulates nor controls business behavior.

5. Steps SBA Took To Minimize the Significant Economic Impact on Small 
Entities

    SBA considered an alternative size standard based on average number 
of employees instead of average annual receipts. It also considered a 
range of size standards as part of the assessment of each evaluation 
factor. Because of the large proportion of part-time employees in this 
industry, an employee size standard could unintentionally influence 
decisions of some firms to alter the use of part-time employees and 
subcontractors to remain as small businesses. SBA believes that a 
moderate increase to the size standard will assist businesses that 
should be included as small businesses and small businesses that are 
growing. In adopting a $17 million size standard, currently defined 
small businesses will not be competitively disadvantaged as compared to 
a much higher size standard. SBA did not receive any comments raising 
concerns about an adverse impact on currently defined small businesses 
of a higher size standard.

List of Subjects in 13 CFR Part 121

    Government procurement, Government property, Loan programs 
``business, Small businesses.''


0
For the reasons stated in the preamble, the Small Business 
Administration amends 13 CFR part 121 as follows.

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
The authority citation for part 121 continues to read as follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637, and 662(5); 
and Public Law 105-135, sec 401, et. seq, 111 Stat. 2592.


0
In Sec.  121.201, in the table ``Small Business Size Standards by NAICS 
Industry,'' under the heading Subsector 561--Administrative and Support 
Services, revise the entry for 561612 to read as follows:


Sec.  121.201  What size standards has SBA identified by North American 
Industry Classification System codes?

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                                 Small Business Size Standards by NAICS Industry
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                                  NAICS U.S. industry    Size standards in millions  Size standards in number of
          NAICS codes                    title                   of dollars                   employees
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                                                  * * * * * * *
                                Subsector 561 Administrative and Support Services
 

[[Page 37492]]

 
                                                  * * * * * * *
561612........................  Security Guards and     $17.0......................
                                 Patrol Services.
 
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    Dated: June 23, 2006.
Hector V. Barreto,
Administrator.
[FR Doc. 06-5894 Filed 6-29-06; 8:45 am]
BILLING CODE 8025-01-P