[Federal Register Volume 76, Number 197 (Wednesday, October 12, 2011)]
[Proposed Rules]
[Pages 63510-63525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-26207]



[[Page 63509]]

Vol. 76

Wednesday,

No. 197

October 12, 2011

Part VI





Small Business Administration





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13 CFR Part 121





Small Business Size Standards: Administrative and Support, Waste 
Management and Remediation Services; Proposed Rule

  Federal Register / Vol. 76 , No. 197 / Wednesday, October 12, 2011 / 
Proposed Rules  

[[Page 63510]]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG27


Small Business Size Standards: Administrative and Support, Waste 
Management and Remediation Services

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The U.S. Small Business Administration (SBA) proposes to 
increase small business size standards for 37 industries in North 
American Industry Classification System (NAICS) Sector 56, 
Administrative and Support, Waste Management and Remediation Services. 
As part of its ongoing comprehensive review of all size standards, SBA 
has evaluated all receipts based standards in NAICS Sector 56 to 
determine whether the existing size standards should be retained or 
revised. This proposed rule is one of a series of proposals that will 
examine size standards of industries grouped by an NAICS Sector. SBA 
issued a White Paper entitled ``Size Standards Methodology'' and 
published a notice in the October 21, 2009 issue of the Federal 
Register that ``Size Standards Methodology'' is available on its Web 
site at http://www.sba.gov/size for public review and comments. The 
``Size Standards Methodology'' White Paper explains how SBA 
establishes, reviews and modifies its receipts based and employee based 
small business size standards. In this proposed rule, SBA has applied 
its methodology that pertains to establishing, reviewing, and modifying 
a receipts based size standard.

DATES: SBA must receive comments to this proposed rule on or before 
December 12, 2011.

ADDRESSES: You may submit comments, identified by RIN 3245-AF27 by one 
of the following methods: (1) Federal eRulemaking Portal: http://www.regulations.gov, following the instructions for submitting 
comments; or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, PhD, 
Chief, Size Standards Division, 409 Third Street, SW., Mail Code 6530, 
Washington, DC 20416. SBA will not accept comments to this proposed 
rule submitted by e-mail.
    SBA will post all comments to this proposed rule on http://www.regulations.gov. If you wish to submit confidential business 
information (CBI) as defined in the User Notice at http://www.regulations.gov, you must submit such information to U.S. Small 
Business Administration, Khem R. Sharma, PhD, Chief, Size Standards 
Division, 409 Third Street, SW., Mail Code 6530, Washington, DC 20416, 
or send an e-mail to [email protected]. You should highlight the 
information that you consider to be CBI and explain why you believe SBA 
should hold this information as confidential. SBA will review your 
information and determine whether it will make the information public 
or not.

FOR FURTHER INFORMATION CONTACT: Khem R. Sharma, PhD, Chief, Size 
Standards Division, (202) 205-6618 or [email protected].

SUPPLEMENTARY INFORMATION: To determine eligibility for Federal small 
business assistance, SBA establishes small business definitions 
(referred to as size standards) for private sector industries in the 
United States. SBA uses two primary measures of business size: average 
annual receipts and average number of employees. SBA uses financial 
assets, electric output, and refining capacity to measure the size of a 
few specialized industries. In addition, SBA's Small Business 
Investment Company (SBIC), Certified Development Company (504) and 7(a) 
Loan Programs use either the industry based size standards or net worth 
and net income based alternative size standards to determine 
eligibility for those programs. At the start of the current 
comprehensive size standards review, there were 41 different size 
standards, covering 1,141 NAICS industries and 18 sub-industry 
activities (``exceptions'' in SBA's table of size standards). Thirty-
one of these size levels were based on average annual receipts, seven 
were based on average number of employees, and three were based on 
other measures. In addition, SBA has established 11 other size 
standards for its financial and procurement programs.
    Over the years, SBA has received comments that its size standards 
have not kept up with changes in the economy, in particular the changes 
in the Federal contracting marketplace and industry structure. The last 
time SBA conducted a comprehensive review of all size standards was 
during the late 1970s and early 1980s. Since then, most reviews of size 
standards were limited to in-depth analyses of specific industries in 
response to requests from the public and Federal agencies. SBA also 
makes periodic inflation adjustments to its monetary based size 
standards. The SBA's latest inflation adjustment to size standards was 
published in the Federal Register on July 18, 2008 (73 FR 41237).
    Because of changes in the Federal marketplace and industry 
structure since the last overall review, SBA recognizes that current 
data may no longer support some of its existing size standards. 
Accordingly, in 2007, SBA began a comprehensive review of all size 
standards to determine if they are consistent with current data and to 
adjust them when necessary. In addition, on September 27, 2010, the 
President of the United States signed the Small Business Jobs Act of 
2010 (Jobs Act). The Jobs Act directs SBA to conduct a detailed review 
of all size standards and to make appropriate adjustments to reflect 
market conditions. Specifically, the Jobs Act requires SBA to conduct a 
detailed review of at least one-third of all size standards during 
every 18-month period from the date of its enactment. In addition, the 
Jobs Act requires that SBA do a complete review of all size standards 
not less frequently than once every five years thereafter. Reviewing 
existing small business size standards and making appropriate 
adjustments based on current data are also consistent with Executive 
Order 13563 on improving regulation and regulatory review.
    Rather than review all size standards at one time, SBA has adopted 
a more manageable approach of reviewing a group of industries within an 
NAICS Sector. An NAICS Sector generally consists of 25 to 75 
industries, except for the manufacturing sector, which has considerably 
more. Once SBA completes its review of size standards for industries in 
an NAICS Sector, it will issue a proposed rule to revise size standards 
for those industries for which currently available data and other 
relevant factors support doing so.
    Below is a discussion of SBA's size standards methodology for 
establishing receipts based size standards, which SBA applied to this 
proposed rule, including analyses of industry structure, Federal 
procurement trends and other factors for industries reviewed in this 
proposed rule, the impact of the proposed revisions to size standards 
on Federal small business assistance, and the evaluation of whether a 
revised size standard would exclude dominant firms from being 
considered small.

Size Standards Methodology

    SBA has recently developed a ``Size Standards Methodology'' for 
developing, reviewing, and modifying size standards when necessary. SBA 
has published the document on its Web site at http://www.sba.gov/size 
for public

[[Page 63511]]

review and comments and included it, as a supporting document, in the 
electronic docket of this proposed rule at http://www.regulations.gov. 
SBA does not apply all features of its ``Size Standards Methodology'' 
to all industries because not all are appropriate. For example, since 
this proposed rule covers all industries with receipts based standards 
in NAICS Sector 56, the methodology described here applies to 
establishing receipts based standards. However, SBA makes the 
methodology available in its entirety for parties who have an interest 
in SBA's overall approach to establishing, evaluating and modifying 
small business size standards. SBA always explains its analysis in 
individual proposed and final rules relating to size standards for 
specific industries.
    SBA welcomes comments from the public on a number of issues 
concerning its ``Size Standards Methodology,'' such as suggestions on 
alternative approaches to establishing and modifying size standards; 
whether there are alternative or additional factors that SBA should 
consider; whether SBA's approach to small business size standards makes 
sense in the current economic environment; whether SBA's use of anchor 
size standards is appropriate in the current economy; whether there are 
gaps in SBA's methodology because of the lack of comprehensive data; 
and whether there are other facts or issues that SBA should consider. 
Comments on the SBA's methodology should be submitted via (1) the 
Federal eRulemaking Portal: http://www.regulations.gov; the docket 
number is SBA-2009-0008, following the instructions for submitting 
comments; or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D., 
Chief, Size Standards Division, 409 Third Street, SW, Mail Code 6530, 
Washington, DC 20416. As with comments received to this and other 
proposed rules, SBA will post all comments on its methodology on http://www.regulations.gov. As of October 12, 2011, SBA has received seven 
comments to its ``Size Standards Methodology.'' The comments are 
available to the public at http://www.regulations.gov. SBA continues to 
welcome comments on its methodology from interested parties.
    Congress granted SBA's Administrator discretion to establish 
detailed small business size standards. 15 U.S.C. 632(a)(2). Section 
3(a)(3) of the Small Business Act (15 U.S.C. 632(a)(3)) requires that 
``* * * the [SBA] Administrator shall ensure that the size standard 
varies from industry to industry to the extent necessary to reflect the 
differing characteristics of the various industries and consider other 
factors deemed to be relevant by the Administrator.'' Accordingly, the 
economic structure of an industry is the basis for developing and 
modifying small business size standards. SBA identifies the small 
business segment of an industry by examining data on the economic 
characteristics defining the industry structure itself (as described 
below). In addition to analyzing an industry's structure, SBA considers 
current economic conditions, together with its own mission, program 
objectives, and the Administration's current policies, suggestions from 
industry groups and Federal agencies, and public comments on the 
proposed rule, when it establishes small business size standards. SBA 
also examines whether a size standard based on industry and other 
relevant data successfully excludes businesses that are dominant in the 
industry.
    This proposed rule includes information regarding the factors SBA 
evaluated and the criteria it used to propose any adjustments to size 
standards in NAICS Sector 56. The rule also explains why SBA has 
proposed to adjust some size standards in Sector 56 but not others. 
This proposed rule affords the public an opportunity to review and 
comment on SBA's proposals to revise size standards in NAICS Sector 56 
as well as on the data and methodology it uses to evaluate and revise a 
size standard.

Industry Analysis

    For the current comprehensive size standards review, SBA has 
established three ``base'' or ``anchor'' size standards: $7.0 million 
in average annual receipts for industries that have receipts based size 
standards, 500 employees for manufacturing and other industries that 
have employee based size standards (except for Wholesale Trade), and 
100 employees for industries in the Wholesale Trade Sector. SBA 
established 500 employees as the anchor size standard for manufacturing 
industries at its inception in 1953. Shortly thereafter, SBA 
established $1 million in average annual receipts as the anchor size 
standard for nonmanufacturing industries. SBA has periodically 
increased the receipts based anchor size standard for inflation, and it 
stands today at $7 million. Since 1986, the size standard for all 
industries in the Wholesale Trade Sector for SBA financial assistance 
and for most Federal programs has been 100 employees. However, NAICS 
codes for Wholesale Trade Industries (NAICS Sector 42) and their 100 
employee size standards do not apply to Federal procurement programs. 
Rather, for Federal procurement, the size standard for all industries 
in Wholesale Trade and for all industries in Retail Trade (NAICS Sector 
44-45) is 500 employees under SBA's nonmanufacturer rule (13 CFR 
121.406(b)).
    These long-standing anchor size standards have stood the test of 
time and gained legitimacy through practice and general public 
acceptance. An anchor size standard is neither a minimum nor a maximum. 
It is a common size standard for a large number of industries that have 
similar economic characteristics and serves as a reference point in 
evaluating size standards for individual industries. SBA uses the 
anchor in lieu of trying to establish precise small business size 
standards for each industry. Otherwise, theoretically, the number of 
size standards might be as high as the number of industries for which 
SBA establishes size standards (1,141). Furthermore, the data SBA 
analyzes are static, but the U.S. economy is not. Hence, absolute 
precision is impossible. Therefore, SBA presumes an anchor size 
standard is appropriate for a particular industry unless that industry 
displays economic characteristics that are considerably different from 
others with the same anchor size standard.
    When evaluating a size standard, SBA compares the economic 
characteristics of the specific industry under review to the average 
characteristics of industries with one of the three anchor size 
standards (referred to as the ``anchor comparison group''). This allows 
SBA to assess the industry structure and to determine whether the 
industry is appreciably different from the other industries in the 
anchor comparison group. If the characteristics of a specific industry 
under review are similar to the average characteristics of the anchor 
comparison group, the anchor size standard is considered appropriate 
for that industry. SBA may consider adopting a size standard below the 
anchor when (1) all or most of the industry characteristics are 
significantly smaller than the average characteristics of the anchor 
comparison group, or (2) other industry considerations strongly suggest 
that the anchor size standard would be an unreasonably high size 
standard for the industry.
    If the specific industry's characteristics are significantly higher 
than are those of the anchor comparison group, then a size standard 
higher than the anchor size standard may be appropriate. The larger the 
differences are between the characteristics of the industry under 
review and those of the

[[Page 63512]]

anchor comparison group, the larger will be the difference between the 
appropriate industry size standard and the anchor size standard. To 
determine a size standard above the anchor size standard, SBA analyzes 
the characteristics of a second comparison group. For industries with 
receipts based size standards, including those in NAICS Sector 56 that 
are reviewed in this proposed rule, SBA has developed a second 
comparison group consisting of industries with the highest levels of 
receipts based size standards. To determine the level of a size 
standard above the anchor size standard, SBA analyzes the 
characteristics of this second comparison group. The size standards for 
this group of industries range from $23 million to $35.5 million in 
average annual receipts, with the weighted average size standard for 
the group being $29 million. SBA refers to this comparison group as the 
``higher level receipts based size standard group.''
    The primary factors that SBA evaluates when analyzing the 
structural characteristics of an industry include average firm size, 
startup costs and entry barriers, industry competition, and 
distribution of firms by size. SBA also evaluates, as an additional 
primary factor, the possible impact that revising size standards might 
have on Federal contracting assistance to small businesses. These are, 
generally, the five most important factors SBA examines when 
establishing or revising a size standard for an industry. However, SBA 
will also consider and evaluate other information that it believes is 
relevant to a particular industry (such as technological changes, 
growth trends, SBA financial assistance, other program factors, etc.). 
SBA also considers possible impacts of size standard revisions on 
eligibility for Federal small business assistance, current economic 
conditions, the Administration's policies, and suggestions from 
industry groups and Federal agencies. Public comments on a proposed 
rule also provide important additional information. SBA thoroughly 
reviews all public comments before making a final decision on its 
proposed size standard. Below are brief descriptions of each of the 
five primary factors that SBA has evaluated in each industry in NAICS 
Sector 56 being reviewed in this proposed rule. A more detailed 
description of this analysis is provided in the SBA ``SBA Size 
Standards Methodology,'' available at http://www.sba.gov/size.
    1. Average firm size. SBA computes two measures of average firm 
size: simple average and weighted average. For industries with receipts 
based size standards, the simple average is the total receipts of the 
industry divided by the total number of firms in the industry. The 
weighted average firm size is the sum of weighted simple averages in 
different receipts size classes, where weights are the shares of total 
industry receipts for respective size classes. The simple average 
weighs all firms within an industry equally, regardless of their size. 
The weighted average overcomes that limitation by giving more weight to 
larger firms.
    If the average firm size of an industry under review is 
significantly higher than the average firm size of industries in the 
anchor comparison industry group, this will generally support a size 
standard higher than the anchor size standard. Conversely, if the 
industry's average firm size is similar to or significantly lower than 
that of the anchor comparison industry group, it will be a basis to 
adopt the anchor size standard, or, in rare cases, a standard lower 
than the anchor.
    2. Startup costs and entry barriers. Startup costs reflect a firm's 
initial size in an industry. New entrants to an industry must have 
sufficient capital and other assets to start and maintain a viable 
business. If new firms entering a particular industry have greater 
capital requirements than firms in industries in the anchor comparison 
group, this can be a basis for establishing a size standard higher than 
the anchor standard. In lieu of data on actual startup costs, SBA uses 
average assets as a proxy measure to assess the levels of capital 
requirements for new entrants to an industry.
    To calculate average assets, SBA begins with the sales to total 
assets ratio for an industry from the Risk Management Association's 
Annual Statement Studies. SBA then applies these ratios to the average 
receipts of firms in that industry. An industry with a significantly 
higher level of average assets than that of the anchor comparison group 
is likely to have higher startup costs; this in turn will support a 
size standard higher than the anchor. Conversely, if the industry has a 
significantly smaller average assets compared to the anchor comparison 
group, the anchor size standard, or, in rare cases, one lower than the 
anchor, may be appropriate.
    3. Industry competition. Industry competition is generally measured 
by the share of total industry receipts generated by the largest firms 
in an industry. SBA generally evaluates the share of industry receipts 
generated by the four largest firms in each industry. This is referred 
to as the ``four-firm concentration ratio,'' a commonly used economic 
measure of market competition. SBA compares the four-firm concentration 
ratio for an industry under review to the average four-firm 
concentration ratio for industries in the anchor comparison group. If a 
significant share of economic activity within the industry is 
concentrated among a few relatively large companies, all else being 
equal, SBA will establish a size standard higher than the anchor size 
standard. SBA does not consider the four-firm concentration ratio as an 
important factor in assessing a size standard if its value for an 
industry under review is less than 40 percent. For industries in which 
the four-firm concentration ratio is 40 percent or more, SBA examines 
the average size of the four largest firms in determining a size 
standard.
    4. Distribution of firms by size. SBA examines the shares of 
industry total receipts accounted for by firms of different receipts 
and employment size classes in an industry. This is an additional 
factor SBA evaluates in assessing competition within an industry. If 
most of an industry's economic activity is attributable to smaller 
firms, this would indicate that small businesses are competitive in 
that industry. This would support adopting the anchor size standard. If 
most of an industry's economic activity is attributable to larger 
firms, this indicates that small businesses are not competitive in that 
industry. This would support adopting a size standard above the anchor.
    Concentration among firms is a measure of inequality of 
distribution. To evaluate the degree of inequality of distribution 
within an industry, SBA computes the Gini coefficient by constructing 
the Lorenz curve. The Lorenz curve presents the cumulative percentages 
of units (firms) along the horizontal axis and the cumulative 
percentages of receipts (or other measures of size) along the vertical 
axis. (For further detail, please refer to SBA's ``Size Standards 
Methodology'' on its Web site at http://www.sba.gov/size.) Gini 
coefficient values vary from zero to one. If receipts are distributed 
equally among all the firms in an industry, the value of the Gini 
coefficient will equal zero. If an industry's total receipts are 
attributed to a single firm, the Gini coefficient will equal one.
    SBA compares the Gini coefficient value for an industry under 
review with that for industries in the anchor comparison group. If an 
industry shows a higher Gini coefficient value than industries in the 
anchor comparison industry group, this may, all else being

[[Page 63513]]

equal, warrant a higher size standard than the anchor. Conversely, if 
an industry's Gini coefficient is similar or lower than that for the 
anchor group, the anchor standard, or in some cases a standard lower 
than the anchor, may be adopted.
    5. Impact on Federal contracting and SBA loan programs. SBA 
examines the possible impact a size standard change may have on Federal 
small business assistance. This most often focuses on the share of 
Federal contracting dollars awarded to small businesses in the industry 
in question. In general, if the small business share of Federal 
contracting in an industry with significant Federal contracting is 
appreciably less than the small business share of the industry's total 
receipts, there is justification for considering a size standard higher 
than the existing size standard. The disparity between the small 
business Federal market share and industry-wide share may be due to 
various factors, such as extensive administrative and compliance 
requirements associated with Federal contracts, the different skill set 
required by Federal contracts as compared to typical commercial 
contracting work, and the size of Federal contracts. These, as well as 
other factors, are likely to influence the type of firms within an 
industry that compete for Federal contracts. By comparing the small 
business Federal contracting share with the industry-wide small 
business share, SBA includes in its size standards analysis the latest 
Federal contracting trends. This analysis may indicate a size standard 
larger than the current standard.
    SBA considers Federal contracting trends in the size standards 
analysis only if (1) the small business share of Federal contracting 
dollars is at least 10 percent lower than the small business share of 
total industry receipts, and (2) the amount of total Federal 
contracting averages $100 million or more during the latest three 
fiscal years. These thresholds reflect a significant level of 
contracting where a revision to a size standard may have an impact on 
contracting opportunities to small businesses.
    Besides the impact on small business Federal contracting, SBA 
evaluates the influence of a proposed size standard on SBA's loan 
programs. For this, SBA examines the volume and number of SBA 
guaranteed loans within an industry and the size of firms obtaining 
those loans. This allows SBA to assess whether the existing or proposed 
size standard for a particular industry may restrict the level of 
financial assistance to small firms. If the analysis shows that the 
current size standards have impeded financial assistance to small 
businesses, higher size standards may be supportable. However, if small 
businesses under current size standards have been receiving significant 
amounts of financial assistance through SBA's loan programs, or if the 
financial assistance has been provided mainly to businesses that are 
much smaller than the existing size standard, this factor is not 
considered for determining the size standard.

Sources of Industry and Program Data

    SBA's primary source of industry data used in this proposed rule is 
a special tabulation of the data from the 2007 Economic Census (see 
http://www.census.gov/econ/census07/) prepared by the U.S. Bureau of 
the Census (Census Bureau) for SBA. The special tabulation provides SBA 
with industry-specific data on the number of firms, number of 
establishments, number of employees, and annual receipts of companies 
by the size of firm based on the 2007 Economic Census. The data reflect 
the size classes of the company's overall enterprise size; however, the 
data by NAICS industry within the particular size class represent the 
company's total values for a specific industry only. The special 
tabulation enables SBA to evaluate average firm size, the four-firm 
concentration ratio, and distribution of firms by various receipts and 
employment size classes.
    In some cases, where data were not available due to disclosure 
prohibitions in the Census Bureau's tabulation, SBA either estimated 
missing values using available relevant data or examined data at a 
higher level of industry aggregation, such as at the NAICS 2-digit 
(Sector), 3-digit (Subsector), or 4-digit (Industry Group) level. In 
some instances, SBA had to base its analysis only on those factors for 
which data were available or on estimates of missing values were 
possible.
    To calculate average assets SBA used sales to total assets ratios 
from the Risk Management Association's Annual Statement Studies, 2007-
2009.
    To evaluate Federal contracting trends, SBA examined data on 
Federal contract awards for fiscal years 2007 to 2009. These data are 
available from the U.S. General Service Administration's Federal 
Procurement Data System--Next Generation (FPDS-NG).
    To assess the impact on financial assistance to small businesses, 
SBA examined data on its own guaranteed loan programs for fiscal years 
2008 to 2010.
    Data sources and estimation procedures SBA uses in its size 
standards analysis are documented in detail in the SBA's ``Size 
Standards Methodology'' White Paper, which is available at http://www.sba.gov/size.

Dominance in Field of Operation

    Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) defines a 
small business concern as one that is (1) independently owned and 
operated, (2) not dominant in its field of operation, and (3) within a 
specific small business definition or size standard established by the 
SBA Administrator. SBA considers as part of its evaluation whether a 
business concern at a proposed size standard would be dominant in its 
field of operation. For this, SBA generally examines the industry's 
market share of firms at the proposed standard. Market share and other 
factors may indicate whether a firm can exercise a major controlling 
influence on a national basis in an industry where a significant number 
of business concerns are engaged. If a contemplated size standard would 
include a dominant firm, SBA would consider a lower size standard to 
exclude the dominant firm from being defined as small.

Selection of Size Standards

    To simplify size standards, for the ongoing comprehensive review of 
receipts based size standards, SBA has proposed to select size 
standards for industries from a limited number of levels. For many 
years, SBA has been concerned about the complexity of determining small 
business status caused by a large number of varying receipts based size 
standards (see 69 FR 13130 (March 4, 2004) and 57 FR 62515 (December 
31, 1992)). At the start of the current comprehensive size standards 
review, there were 31 different levels of receipts based size 
standards. They ranged from $0.75 million to $35.5 million, and many of 
them applied to one or only a few industries. SBA believes that size 
standards with such a large number of small variations among them are 
both unnecessary and difficult to justify analytically. To simplify 
managing and using size standards, SBA proposes that there be fewer 
size standard levels. This will produce more common size standards for 
businesses operating in related industries. This will also result in 
greater consistency among the size standards for industries that have 
similar economic characteristics.
    The SBA proposes, therefore, to apply one of eight receipts based 
size standards to each industry in NAICS Sector 56 that has a receipts 
based standard. In NAICS Sector 56, all size standards are based on 
annual receipts,

[[Page 63514]]

except for Environmental Remediation Services, which is an 
``exception'' to NAICS 562910. In 1994, SBA established a 500 employee 
size standard for Federal contracts for Environmental Remediation 
Services, provided they meet certain specific criteria (see 59 FR 47236 
(September 15, 1994)). In this proposed rule, SBA has not reviewed this 
employee based size standard for Environmental Remediation Services and 
the current standard will remain in effect until SBA reviews industries 
with employee based size standards. The eight ``fixed'' receipts based 
size standard levels are $5 million, $7 million, $10 million, $14 
million, $19 million, $25.5 million, $30.0 million, and $35.5 million. 
To establish these eight receipts based size standard levels SBA 
considered the current minimum, the current maximum, and the most 
commonly used current receipts based size standards. At the start of 
this comprehensive size standards review, the most commonly used 
receipts based size standards clustered around the following: $2.5 
million to $4.5 million, $7 million, $9.0 million to $10 million, $12.5 
million to $14.0 million, $25.0 million to $25.5 million, and $33.5 
million to $35.5 million. SBA selected $7 million as one of eight fixed 
levels of receipts based size standards because it is also an anchor 
standard for receipts based standards. The lowest or minimum receipts 
based size level will be $5 million. Other than the standards for 
agriculture and those based on commissions (such as real estate brokers 
and travel agents), $5 million include those industries with the lowest 
receipts based standards, which range from $2.0 million to $4.5 
million, at the start of this comprehensive review. Among the higher 
level size clusters, SBA selected four fixed levels: $10 million, $14 
million, $25.5 million, and $35.5 million. Because there are large 
intervals between the two of the fixed levels, SBA also established two 
intermediate levels: $19 million between $14 million and $25.5 million, 
and $30 million between $25.5 million and $35.5 million. These two 
intermediate levels reflect roughly the same proportional differences 
as between the other two successive levels.
    To simplify size standards further, SBA may propose a common size 
standard for closely related industries. Although the size standard 
analysis may support a specific size standard level for each industry, 
SBA believes that establishing different size standards for closely 
related industries may not always be appropriate. For example, in cases 
where many of the same businesses operate in the same multiple 
industries, establishing a common size standard for those industries 
might better reflect the Federal marketplace. This might also make size 
standards among related industries more consistent than establishing 
separate size standards for each of those industries. This led SBA to 
establish a common size standard for the information technology (IT) 
services (NAICS 541511, NAICS 541112, NAICS 541513, and NAICS 541519), 
even though the industry data might support a distinct size standard 
for each industry (see 57 FR 27906 (June 23, 1992)). Within NAICS 
Sector 56, all industries in NAICS Industry Group 5614, Business 
Support Services, and all industries in NAICS Industry Group 5619, 
Other Support Services, have a common $7.0 million size standard. 
Similarly, eight industries in NAICS Subsector 562, Waste Management 
and Remediation Services, have a common $12.5 million size standard. In 
this rule, SBA proposes to retain common size standards for those 
industries and establish common size standards for similar industries 
in other NAICS Industry Groups as well. Whenever SBA proposes a common 
size standard for closely related industries, it will provide a 
justification for that in the proposed rule.

Evaluation of Industry Structure

    SBA evaluated the structure of the 44 industries in NAICS Sector 
56, Administrative and Support, Waste Management and Remediation 
Services, to assess the appropriateness of the current receipts based 
size standards. As described above, SBA compared data on the economic 
characteristics of each industry (except for the Environmental 
Remediation Services exception to NAICS 562910) to the average 
characteristics of industries in two comparison groups. The first 
comparison group consists of all industries with $7.0 million size 
standards and is referred to as the ``receipts based anchor comparison 
group.'' Because the goal of SBA's size standards review is to assess 
whether a specific industry's size standard should be the same as or 
different from the anchor size standard, this is the most logical group 
of industries to analyze. In addition, this group includes a sufficient 
number of firms to provide a meaningful assessment and comparison of 
industry characteristics.
    If the characteristics of an industry under review are similar to 
the average characteristics of industries in the anchor comparison 
group, the anchor size standard is generally considered appropriate for 
that industry. If an industry's structure is significantly different 
from industries in the anchor group, a size standard lower or higher 
than the anchor size standard might be appropriate. The level of the 
new size standard is based on the difference between the 
characteristics of the anchor comparison group and a second industry 
comparison group. As described above, the second comparison group for 
receipts based standards consists of industries with the highest 
receipts based size standards, ranging from $23 million to $35.5 
million. The average size standard for this group is $29 million. SBA 
refers to this group of industries as the ``higher level receipts based 
size standard comparison group.'' SBA determines differences in 
industry structure between an industry under review and the industries 
in the two comparison groups by comparing data on each of the industry 
factors, including average firm size, average assets size, the four-
firm concentration ratio, and the Gini coefficient of distribution of 
firms by size. Table 1 shows two measures of the average firm size 
(simple and weighted), average assets size, the four-firm concentration 
ratio, average receipts of the four largest firms, and the Gini 
coefficient for both anchor level and higher level comparison groups 
for receipts based size standards.

                      Table 1--Average Characteristics of Receipts Based Comparison Groups
----------------------------------------------------------------------------------------------------------------
                                      Avg. Firm size ($                                     Avg.
                                          million)                                      receipts of
                                 -------------------------- Avg. Assets    Four-firm        four
 Receipts based comparison group                              size  ($   concentration    largest        Gini
                                     Simple      Weighted     million)     ratio (%)     firms  ($   coefficient
                                    average      average                                  million)
                                                                                            \*\
----------------------------------------------------------------------------------------------------------------
Anchor Level....................         1.32        19.63         0.84          16.6         196.4        0.693

[[Page 63515]]

 
Higher Level....................         5.07       116.84         3.20          32.1       1,376.0        0.830
----------------------------------------------------------------------------------------------------------------
* To be used for industries with a four-firm concentration ratio of 40% or greater.

Derivation of Size Standards Based on Industry Factors

    For each industry factor in Table 1, SBA derives a separate size 
standard based on the differences between the values for an industry 
under review and the values for the two comparison groups. If the 
industry value for a particular factor is near the corresponding factor 
for the anchor comparison group, SBA will consider the $7.0 million 
anchor size standard appropriate for that factor.
    An industry factor with a value significantly above or below the 
anchor comparison group will generally warrant, a size standard above 
or below the $7.0 million anchor. The new size standard in these cases 
is based on the proportional difference between the industry value and 
the values for the two comparison groups.
    For example, if an industry's simple average receipts are $3.3 
million, that would support a $19 million size standard. The $3.3 
million level is 52.8 percent between the average firm size of $1.32 
million for the anchor comparison group and $5.07 million for the 
higher level comparison group (($3.30 million-$1.32 million) / ($5.07 
million-$1.32 million) = 0.528 or 52.8%). This proportional difference 
is applied to the difference between the $7.0 million anchor size 
standard and average size standard of $29 million for the higher level 
size standard group and then added to $7.0 million to estimate a size 
standard of $18.616 million ({$29.0 million-$7.0 million{time}  * 
0.528] + $7.0 million = $18.616 million). The final step is to round 
the estimated $18.616 million size standard to the nearest fixed size 
standard level, which in this example is $19 million.
    SBA applies the above calculation to derive a size standard for 
each industry factor. Detailed formulas involved in these calculations 
are presented in the SBA's ``Size Standards Methodology,'' which is 
available at http://www.sba.gov/size. (However, it should be noted that 
figures in the ``SBA Size Standards Methodology'' White Paper are based 
on 2002 Economic Census data and are different from those presented in 
this proposed rule. That is because when SBA prepared its ``Size 
Standards Methodology,'' the 2007 Economic Census data were not yet 
available). Table 2 (below) shows ranges of values for each industry 
factor and the levels of size standards supported by those values.

                        Table 2--Values of Industry Factors and Supported Size Standards
----------------------------------------------------------------------------------------------------------------
                                                                      Or if avg.
                                Or if Weighted      Or if avg.       receipts of                      Then size
 If Simple avg. receipts size   avg.  receipts    assets size  ($    largest four      Or if gini    standard is
         ($ million)           size ($ million)      million)         firms  ($       coefficient    ($ million)
                                                                       million)
----------------------------------------------------------------------------------------------------------------
< 1.15.......................  < 15.22.........  < 0.73..........  < 142.8........  < 0.686........          5.0
1.15 to 1.57.................  15.22 to 26.26..  0.73 to 1.00....  142.8 to 276.9.  0.686 to 0.702.          7.0
1.58 to 2.17.................  26.27 to 41.73..  1.01 to 1.37....  277.0 to 464.5.  0.703 to 0.724.         10.0
2.18 to 2.94.................  41.74 to 61.61..  1.38 to 1.86....  464.6 to 705.8.  0.725 to 0.752.         14.0
2.95 to 3.92.................  61.62 to 87.02..  1.87 to 2.48....  705.9 to         0.753 to 0.788.         19.0
                                                                    1,014.1.
3.93 to 4.86.................  87.03 to 111.32.  2.49 to 3.07....  1,014.2 to       0.789 to 0.822.         25.5
                                                                    1,309.0.
4.87 to 5.71.................  111.33 to 133.41  3.08 to 3.61....  1,309.1 to       0.823 to 0.853.         30.0
                                                                    1,577.1.
> 5.71.......................  > 133.41........  > 3.61..........  > 1,577.1......  > 0.853........         35.5
----------------------------------------------------------------------------------------------------------------

Derivation of Size Standard Based on Federal Contracting Factor

    Besides industry structure, SBA also evaluates Federal contracting 
data to assess how successful small businesses are in getting Federal 
contracts under current size standards. For the current comprehensive 
size standards review, SBA has decided to designate a size standard at 
one level higher than the current size standard for industries where 
the small business share of total Federal contracting dollars is 
between 10 and 30 percentage points lower than the small business share 
of total industry receipts, and at two levels higher than the current 
size standard where the difference is more than 30 percentage points.
    Because of the complex relationships among several variables 
affecting small business participation in the Federal marketplace, SBA 
has chosen not to designate a size standard for the Federal contracting 
factor alone that is higher than two levels above the current size 
standard. SBA believes that a larger adjustment to size standards based 
on Federal contracting activity should be based on a more detailed 
analysis of the impact of any subsequent revision to the current size 
standard. In limited situations, however, SBA may conduct a more 
extensive examination of Federal contracting experience. This may 
enable SBA to support a different size standard than indicated by this 
general rule and take into consideration significant and unique aspects 
of small business competitiveness in the Federal contract market. SBA 
welcomes comments on its methodology of incorporating the Federal 
contracting factor in the size standard analysis and suggestions for 
alternative methods and other relevant information on small business 
experience in the Federal contract market.
    Of the 44 industries reviewed in this proposed rule, 15 industries 
averaged $100 million or more annually in Federal contracting during 
fiscal years 2007 to 2009. The Federal contracting factor was 
significant (i.e., the difference between the small business share of 
total industry receipts and the small business share of Federal 
contracting

[[Page 63516]]

dollars was 10 percentage points or more) in six of those 15 
industries, and a separate size standard was derived for that factor 
for each of them.

New Size Standards Based on Industry and Federal Contracting Factors

    Table 3 shows the results of analyses of industry and Federal 
contracting factors for each industry covered by this proposed rule. 
Many of the NAICS industries in columns 2, 3, 4, 6, 7, and 8 show two 
numbers. The upper number is the value for the industry or federal 
contracting factor shown on the top of the column, and the lower number 
is the size standard supported by that factor. For the four-firm 
concentration ratio, SBA estimates a size standard if its value is 40 
percent or more. If the four-firm concentration ratio for an industry 
is less than 40 percent, there is no estimated size standard for that 
factor. If the four-firm concentration ratio is more than 40 percent, 
SBA indicates in column 6 the average size of the industry's top four 
firms together with a size standard based on that average. Column 9 
shows a calculated new size standard for each industry. This is the 
average of the size standards supported by each factor and rounded to 
the nearest fixed size level. Analytical details involved in the 
averaging procedure are described in the SBA's ``Size Standard 
Methodology.'' For comparison with the new standards, the current size 
standards are in column 10 of Table 3.

                                                    Table 3--Size Standards Supported by Each Factor for Each Industry (millions of dollars)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    (5)                                                     (9)          (10)
                                                                       (2) Simple     (3) Weighted   (4) Average   Four-    (6) Four-firm                  (8) Federal   Calculated    Current
               (1) NAICS code/ NAICS  industry title                  average firm    average firm      assets      firm    average size    (7) Gini  Co-    contract       size         size
                                                                        size  ($        size  ($       size  ($    ratio     ($ million)      efficient     factor (%)    standard     standard
                                                                        million)        million)       million)     (%)                                                 ($ million)  ($ million)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
561110 Office Administrative Services..............................       $1.4, 7.0       $7.0, 5.0    $0.6, 5.0      2.3          $225.8     0.694, $7.0      -10.1%,         $7.0         $7.0
                                                                                                                                                                 $10.0
561210 Facilities Support Services.................................      13.8, 35.5      98.7, 25.5    4.5, 35.5     27.6         1,777.3    0.835, $30.0        -2.8%         30.0         35.5
561311 Employment Placement Agencies...............................        1.5, 7.0       23.6, 7.0  ...........     22.1           652.4    0.759, $19.0  ...........         14.0          7.0
561312 Executive Search Services...................................        1.0, 5.0      28.8, 10.0  ...........     20.7           362.5     0.693, $7.0  ...........          7.0          7.0
561320 Temporary Help Services.....................................       7.6, 35.5     152.6, 35.5    1.4, 10.0     15.6         4,122.2    0.857, $35.5        43.8%         25.5         13.5
561330 Professional Employer Organizations.........................      21.4, 35.5     288.8, 35.5    3.0, 25.5     33.8         7,203.7    0.882, $35.5  ...........         30.0         13.5
561410 Document Preparation Services...............................        0.7, 5.0       10.0, 5.0  ...........     22.3           189.7     0.697, $7.0  ...........          7.0          7.0
561421 Telephone Answering Services................................        1.4, 7.0        9.1, 5.0  ...........     15.1            86.6     0.690, $7.0      -35.5%,         10.0          7.0
                                                                                                                                                                 $14.0
561422 Telemarketing Bureaus and Other contact Centers.............       5.6, 30.0      35.5, 10.0  ...........     24.8           910.6    0.807, $25.5  ...........         25.5          7.0
561431 Private Mail Centers........................................        0.4, 5.0        2.9, 5.0  ...........      4.7            25.2     0.289, $5.0  ...........          5.0          7.0
561439 Other Business Service Centers (including Copy Shops).......       2.6, 14.0      95.9, 25.5    1.0, 10.0     54.5   1,119.2, 25.5    0.832, $30.0  ...........         19.0          7.0
561440 Collection Agencies.........................................       2.7, 14.0       25.3, 7.0    1.0, 10.0     14.9           457.6    0.792, $25.5  ...........         14.0          7.0
561450 Credit Bureaus..............................................      15.3, 35.5     379.2, 35.5  ...........     64.3   1,316.5, 30.0    0.935, $35.5  ...........         35.5          7.0
561491 Repossession Services.......................................        0.8, 5.0        4.3, 5.0  ...........     10.0            18.0     0.520, $5.0  ...........          5.0          7.0
561492 Court Reporting and Stenotype Services......................        0.7, 5.0       16.5, 7.0  ...........     19.7           110.5     0.653, $5.0  ...........          7.0          7.0
561499 All Other Business Support Services.........................       2.5, 14.0       21.2, 7.0     1.0, 7.0     29.7           607.4    0.805, $25.5      -13.4%,         14.0          7.0
                                                                                                                                                                 $10.0
561510 Travel Agencies \1\.........................................        1.4, 7.0     109.9, 25.5     0.5, 5.0     48.7   2,105.8, 35.5    0.806, $25.5  ...........         19.0          3.5
561520 Tour Operators..............................................        1.6, 7.0       18.1, 7.0     0.6, 5.0     16.2           178.6    0.735, $14.0  ...........         10.0          7.0
561591 Convention and Visitors Bureaus.............................        1.3, 7.0        8.3, 5.0  ...........     13.2            49.6     0.674, $5.0  ...........          7.0          7.0
561599 All Other Travel Arrangement and Reservation Services.......       9.9, 35.5     150.5, 35.5    6.9, 35.5     42.2   1,468.2, 30.0    0.898, $35.5  ...........         35.5          7.0
561611 Investigation Services......................................        0.8, 5.0       23.9, 7.0  ...........     27.0           261.9    0.719, $10.0      -27.6%,         14.0         12.5
                                                                                                                                                                 $19.0
561612 Security Guards and Patrol Services.........................       3.2, 19.0      88.4, 25.5     0.7, 5.0     30.6         1,439.8    0.865, $35.5        -6.3%         19.0         18.5
561613 Armored Car Services........................................      16.7, 35.5     253.3, 35.5  ...........     88.9     494.6, 14.0    0.906, $35.5  ...........         30.0         12.5
561621 Security Systems Services (except Locksmiths)...............       2.6, 14.0     108.2, 25.5     1.0, 7.0     34.4         1,233.3    0.819, $25.5          7.8         19.0         12.5
561622 Locksmiths..................................................        0.4, 5.0        2.6, 5.0  ...........      5.9            24.1     0.377, $5.0  ...........          5.0          7.0
561710 Exterminating and Pest Control Services.....................        0.8, 5.0     112.7, 30.0     0.2, 5.0     27.3           592.5     0.681, $5.0  ...........         10.0          7.0
561720 Janitorial Services.........................................        0.6, 5.0      31.7, 10.0     0.2, 5.0     10.5           868.3    0.704, $10.0         -9.0          7.0         16.5
561730 Landscaping Services........................................        0.6, 5.0       22.6, 7.0     0.2, 5.0      8.6         1,160.6     0.571, $5.0          0.7          5.0          7.0
561740 Carpet and Upholstery Cleaning Services.....................        0.4, 5.0        9.4, 5.0     0.1, 5.0     10.4            76.9     0.419, $5.0  ...........          5.0          4.5

[[Page 63517]]

 
561790 Other Services to Buildings and Dwellings...................        0.4, 5.0        5.4, 5.0    0.1, $5.0     11.2           133.7      0.479, 5.0       -38.5,          7.0          7.0
                                                                                                                                                                 $14.0
561910 Packaging and Labeling Services.............................       2.8, 14.0       15.0, 5.0    1.2, 10.0     11.2           141.1    0.741, $14.0  ...........         10.0          7.0
561920 Convention and Trade Show Organizers........................       2.6, 14.0      38.2, 10.0  ...........     19.8           555.5    0.802, $25.5  ...........         19.0          7.0
561990 All Other Support Services..................................       1.6, 10.0       21.4, 7.0     0.7, 5.0     11.3           590.3    0.767, $19.0       -21.9,         10.0          7.0
                                                                                                                                                                 $10.0
562111 Solid Waste Collection......................................       5.4, 30.0     307.3, 35.5    3.1, 25.5     50.0   4,628.5, 35.5    0.878, $35.5         36.3         35.5         12.5
562112 Hazardous Waste Collection..................................       5.0, 30.0      37.7, 10.0  ...........     45.8      212.8, 7.0    0.775, $19.0  ...........         14.0         12.5
562119 Other Waste Collection......................................       1.9, 10.0      40.4, 10.0    1.2, 10.0     39.7           159.4    0.776, $19.0  ...........         14.0         12.5
562211 Hazardous Waste Treatment and Disposal......................      13.4, 35.5     101.9, 25.5    7.5, 35.5     44.6     653.6, 14.0    0.834, $30.0        -4.9%         25.5         12.5
562212 Solid Waste Landfill........................................       6.6, 35.5      85.5, 19.0    4.6, 35.5     56.1     791.8, 19.0    0.854, $35.5  ...........         30.0         12.5
562213 Solid Waste Combustors and Incinerators.....................      36.5, 35.5     270.0, 35.5  ...........     92.4     480.8, 14.0    0.856, $35.5  ...........         30.0         12.5
562219 Other Nonhazardous Waste Treatment and Disposal.............       3.8, 19.0       15.8, 7.0  ...........     34.7            58.2     0.689, $7.0  ...........         10.0         12.5
562910 Remediation Services........................................       4.1, 25.5      29.3, 10.0    1.7, 14.0     14.7           455.1    0.770, $19.0        -4.4%         19.0         14.0
562920 Materials Recovery Facilities...............................       4.4, 25.5      26.7, 10.0   2.0, $19.0     33.3           338.8    0.749, $14.0  ...........         19.0         12.5
562991 Septic Tank and Related Services............................        0.8, 5.0        8.9, 5.0  ...........     13.2            84.3     0.556, $5.0  ...........          5.0          7.0
562998 All Other Miscellaneous Waste Management Services...........        1.5, 7.0       14.2, 5.0     0.6, 5.0     27.8            98.3     0.679, $5.0  ...........          5.0          7.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Common Size Standards

    When many of the same businesses operate in multiple industries, 
SBA believes that a common size standard can be appropriate for these 
industries even if the industry and relevant program data support 
different size standards. For instance, in past rules, SBA has 
established a common size standard for Computer Systems Design and 
Related Services industries (NAICS 541511, NAICS 541112, NAICS 541513, 
NAICS 541519 (excluding the ``exception''), and NAICS 811212). Another 
example is the common size standard for certain Architectural and 
Engineering (A&E) and Related Services industries. These include NAICS 
541310, NAICS 541330 (excluding the ``exceptions''), Map Drafting 
(which is identified as ``exception'' under NAICS 541340), NAICS 
541360, and NAICS 541370 (see 64 FR 28275 (May 25, 1999)). More 
recently, SBA established a common size standard for some of the 
industries in NAICS Sector 44-45, Retail Trade as well (see 75 FR 61597 
(October 6, 2010)). Size standards for NAICS Sector 44-45 do not apply 
to Federal Government contracting, but they do apply to all other 
Federal Government programs that provide benefits for being a small 
business concern.
    In this rule, SBA proposes, as an alternative to a separate size 
standard for each industry, common size standards for industries under 
several NAICS Industry Groups as shown in Table 4. SBA evaluated 
industry and Federal contracting factors and derived a common size 
standard for each Industry Group using the same method as described 
above. The results are in Table 5, which immediately follows Table 4, 
below.

           Table 4--Industry Groups for Common Size Standards
------------------------------------------------------------------------
                                    Industry group      Industries: 6-
   Industry group: NAICS codes           title         digit NAICS codes
------------------------------------------------------------------------
5613............................  Employment          561311, 561312,
                                   Services.           561320, 561330
5614............................  Business Support    561410, 561421,
                                   Services.           561422, 561431,
                                                       561439, 561440,
                                                       561450, 561491,
                                                       561492, 561499
5615............................  Travel Arrangement  561510, 561520,
                                   and Reservation     561591, 561599
                                   Services.
5616............................  Investigation and   561611, 561612,
                                   Security Services.  561613, 561621,
                                                       561622
5619............................  Other Support       561910, 561920,
                                   Services.           591990
5621............................  Waste Collection..  562111, 562112,
                                                       562119
5622............................  Waste Treatment     562211, 562212,
                                   and Disposal.       562213, 562219
------------------------------------------------------------------------


[[Page 63518]]


                                        Table 5 --Size Standards Supported by Each Factor for Each Industry Group
                                                                  [millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  (3)                     (5)                                                    (9)
                                                 (2)  Simple    Weighted       (4)       Four-    (6)  Four-    (7)  Gini     (8)  Federal    Calculated
         (1)  NAICS Code/industry title            average      average      Average      firm   firm average      co-      contract factor      size
                                                  firm size    firm size   assets size   ratio      size ($     efficient         (%)        standard ($
                                                 ($ million)  ($ million)  ($ million)    (%)      million)                                    million)
--------------------------------------------------------------------------------------------------------------------------------------------------------
5613 Employment Services.......................   $6.5, 35.5      $198.8,   $1.2, 10.0     14.8      $7,751.2       0.891,            15.8%        $25.5
                                                                     35.5                                            $35.5
5614 Business Support Services.................    2.1, 10.0   40.8, 10.0     0.8, 7.0     12.2       1,896.1       0.824,    -11.7%, $10.0         14.0
                                                                                                                     $30.0
5615 Travel Arrangement and Reservation            2.2, 10.0  123.3, 30.0     0.9, 7.0     33.6       3,115.5       0.850,  ...............         19.0
 Services......................................                                                                      $30.0
5616 Investigation and Security Services.......    2.1, 10.0   94.4, 25.5     0.6, 5.0     22.9       2,343.2       0.834,             2.4%         19.0
                                                                                                                     $30.0
5619 Other support Services....................    2.0, 10.0    23.7, 7.0     0.8, 7.0      8.6         795.1       0.781,    -15.9%, $10.0         10.0
                                                                                                                     $19.0
5621 Waste Collection..........................    5.0, 30.0  254.2, 35.5    2.9, 25.5     46.7      4,726.6,       0.872,            29.5%         35.5
                                                                                                        $35.5        $35.5
5622 Waste Treatment and Disposal..............    9.5, 35.5  123.0, 30.0    5.9, 35.5     37.0       1,319.2       0.869,            -5.9%         33.5
                                                                                                                     $35.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

Special Considerations

Environmental Remediation Services

    The current size standard for Federal contracts for Environmental 
Remediation Services (the ``exception'' to NAICS code 562910) is 500 
employees. This size standard only applies to certain Federal 
contracting opportunities that meet specific criteria. In short, the 
contract must be for the remediation of a contaminated environment and 
it must include at least three separate types of contract work. Each of 
those contract activities must be identifiable by a different NAICS 
code; however, no one of the activities may constitute 50 percent or 
more of the total anticipated cost of the contract. The criteria that 
constitute an Environmental Remediation Services contract or company 
are detailed in 59 FR 47236 (September 15, 1994) and in Footnote 14 to 
SBA's table of size standards (13 CFR 121.201).
    In this proposed rule, SBA has not reviewed this employee based 
size standard for Environmental Remediation Services and the current 
standard will remain in effect until SBA reviews industries with 
employee based size standards.

Evaluation of SBA Loan Data

    Before deciding on an industry's size standard, SBA also considers 
the impact of new or revised standards on SBA's loan programs. 
Accordingly, SBA examined its 7(a) and 504 Loan Program data for fiscal 
years 2008-2010 to assess whether the existing or proposed size 
standards need further adjustments to ensure credit opportunities for 
small businesses through those programs. For the industries reviewed in 
this rule, the data show that it is mostly businesses much smaller than 
the size standards that use the SBA's 7(a) and 504 loans. Therefore, no 
size standard in NAICS Sector 56, Administrative and Support, Waste 
Management and Remediation Services, needs an adjustment based on this 
factor.

Proposed Changes to Size Standards

    Table 6, below, summarizes the results of SBA analyses of industry 
specific size standards from Table 3 and the results for common size 
standards from Table 5. In terms of industry specific size standards, 
the results in Table 3 support increases in size standards for 29 
industries, decreases for nine industries, and no changes for six 
industries. Similarly, based on common size standards for certain NAICS 
Industry Groups, the results in Table 5 appear to support increases for 
37 industries, decreases for five industries, and no changes for two 
industries.
    However, lowering small business size standards is not in the best 
interest of small businesses in the current economic environment. The 
U.S. economy was in recession from December 2007 to June 2009, the 
longest and deepest of any recessions since World War II. The economy 
lost more than eight million non-farm jobs during 2008-2009. In 
response, Congress passed and the President signed into law the 
American Recovery and Reinvestment Act of 2009 (Recovery Act) to 
promote economic recovery and to preserve and create jobs. Although the 
recession officially ended in June 2009, the unemployment rate was 9.4 
percent or higher from May 2009 to December 2010. It moderated to 8.8 
percent in March 2011, but it increased again to 9.2 percent in June 
2011. The unemployment rate is forecast to remain around this elevated 
level at least through the end of 2011. More recently, Congress passed 
and the President signed the Jobs Act to promote small business job 
creation. The Jobs Act puts more capital into the hands of 
entrepreneurs and small business owners; strengthens small businesses' 
ability to compete for contracts; includes recommendations from the 
President's Task Force on Federal Contracting Opportunities for Small 
Business; creates a better playing field for small businesses; promotes 
small business exporting, building on the President's National Export 
Initiative; expands training and counseling; and provides $12 billion 
in tax relief to help small businesses invest in their firms and create 
jobs.

[[Page 63519]]



                                   Table 6--Summary of Size Standards Analysis
----------------------------------------------------------------------------------------------------------------
                                                                    Calculated
                                                                     industry       Calculated     Current size
              NAICS Codes                 NAICS Industry title     specific size    common size     standard ($
                                                                    standard ($     standard ($      million)
                                                                     million)        million)
----------------------------------------------------------------------------------------------------------------
561110................................  Office Administrative               $7.0  ..............            $7.0
                                         Services.
561210................................  Facilities Support                  30.0  ..............            35.5
                                         Services.
561311................................  Employment Placement                14.0           $25.5             7.0
                                         Agencies.
561312................................  Executive Search                     7.0            25.5             7.0
                                         Services.
561320................................  Temporary Help Services.            25.5            25.5            13.5
561330................................  Professional Employer               30.0            25.5            13.5
                                         Organizations.
561410................................  Document Preparation                 7.0            14.0             7.0
                                         Services.
561421................................  Telephone Answering                 10.0            14.0             7.0
                                         Services.
561422................................  Telemarketing Bureaus               25.5            14.0             7.0
                                         and Other contact
                                         Centers.
561431................................  Private Mail Centers....             5.0            14.0             7.0
561439................................  Other Business Service              19.0            14.0             7.0
                                         Centers (including Copy
                                         Shops).
561440................................  Collection Agencies.....            14.0            14.0             7.0
561450................................  Credit Bureaus..........            35.5            14.0             7.0
561491................................  Repossession Services...             5.0            14.0             7.0
561492................................  Court Reporting and                  7.0            14.0             7.0
                                         Stenotype Services.
561499................................  All Other Business                  14.0            14.0             7.0
                                         Support Services.
561510................................  Travel Agencies\10\.....            19.0            19.0             3.5
561520................................  Tour Operators\10\......            10.0            19.0             7.0
561591................................  Convention and Visitors              7.0            19.0             7.0
                                         Bureaus.
561599................................  All Other Travel                    35.5            19.0             7.0
                                         Arrangement and
                                         Reservation Services.
561611................................  Investigation Services..            14.0            19.0            12.5
561612................................  Security Guards and                 19.0            19.0            18.5
                                         Patrol Services.
561613................................  Armored Car Services....            30.0            19.0            12.5
561621................................  Security Systems                    19.0            19.0            12.5
                                         Services (except
                                         Locksmiths).
561622................................  Locksmiths..............             5.0            19.0             7.0
561710................................  Exterminating and Pest              10.0  ..............             7.0
                                         Control Services.
561720................................  Janitorial Services.....             7.0  ..............            16.5
561730................................  Landscaping Services....             5.0  ..............             7.0
561740................................  Carpet and Upholstery                5.0  ..............             4.5
                                         Cleaning Services.
561790................................  Other Services to                    7.0  ..............             7.0
                                         Buildings and Dwellings.
561910................................  Packaging and Labeling              10.0            10.0             7.0
                                         Services.
561920................................  Convention and Trade                19.0            10.0             7.0
                                         Show Organizers\10\.
561990................................  All Other Support                   10.0            10.0             7.0
                                         Services.
562111................................  Solid Waste Collection..            35.5            35.5            12.5
562112................................  Hazardous Waste                     14.0            35.5            12.5
                                         Collection.
562119................................  Other Waste Collection..            14.0            35.5            12.5
562211................................  Hazardous Waste                     25.5            35.5            12.5
                                         Treatment and Disposal.
562212................................  Solid Waste Landfill....            30.0            35.5            12.5
562213................................  Solid Waste Combustors              30.0            35.5            12.5
                                         and Incinerators.
562219................................  Other Nonhazardous Waste            10.0            35.5            12.5
                                         Treatment and Disposal.
562910................................  Remediation Services....            19.0  ..............            14.0
562920................................  Materials Recovery                  19.0  ..............            12.5
                                         Facilities.
562991................................  Septic Tank and Related              5.0  ..............             7.0
                                         Services.
562998................................  All Other Miscellaneous              5.0  ..............             7.0
                                         Waste Management
                                         Services.
----------------------------------------------------------------------------------------------------------------

    Lowering size standards would decrease the number of firms that can 
participate in Federal financial and procurement assistance for small 
businesses. Furthermore, size standards based solely on analytical 
results without any other considerations would cut off more than 800 
currently eligible small firms from those programs. That would run 
counter to what SBA and the Federal government are doing to help small 
businesses. Reducing size eligibility for Federal procurement 
opportunities, especially under current economic conditions, would not 
preserve or create more jobs; rather, it would have the opposite 
effect. Therefore, in this proposed rule, SBA does not propose to 
reduce size standards for any industries. For industries where analyses 
might seem to support lowering size standards, SBA proposes to retain 
the current size standards. As stated previously, the Small Business 
Act requires the Administrator to ``* * * consider other factors deemed 
to be relevant * * *'' to establishing small business size standards. 
The current economic conditions and the impact on job creation are 
quite relevant to establishing small business size standards. SBA 
nevertheless invites comments and suggestions on whether it should 
lower size standards as suggested by analyses of industry and program 
data or retain the current standards for those industries in view of 
current economic conditions.
    Based on comparisons between industry specific size standards and 
common size standards within each Industry Group, SBA finds that for 
some industries common size standards are more appropriate for several 
reasons. First, analyzing industries at a more aggregated Industry 
Group level simplifies size standards analysis and the results are 
likely to be more consistent among related industries. Second, in most 
cases, industries within each Industry Group currently have the same 
size standards and SBA believes it is better to keep the revised size

[[Page 63520]]

standards also the same. Third, within each Industry Group many of the 
same businesses tend to operate in the same multiple industries. SBA 
believes that common size standards reflect the Federal marketplace in 
those industries better than do different size standards for each 
industry. Fourth, for the majority of industries for which SBA has 
proposed common size standards, industry specific size standards and 
common size standards are within a reasonably close range.
    For industries where both industry specific size standards and 
common size standards have been calculated, for the above reasons, SBA 
proposes to apply common size standards. For industries where common 
size standards have not been estimated, SBA proposes to apply industry 
specific size standards.
    As discussed above, SBA has decided that lowering small business 
size standards would be inconsistent with what the Federal government 
is doing to stimulate the economy and encourage job growth through the 
Recovery Act and Jobs Act. Therefore, for those industries for which 
its analyses suggested decreasing their size standards, SBA proposes to 
retain the current size standards. Thus, of the 44 industries in NAICS 
Sector 56 that SBA reviewed for this proposed rule, the Agency proposes 
to increase size standards for 37 industries and retain the current 
standards for seven industries. Industries for which SBA has proposed 
to increase their size standards and proposed standards are in Table 7 
(below).
    In addition, not lowering size standards is consistent with SBA's 
prior actions for NAICS Sector 44-45 (Retail Trade), NAICS Sector 72 
(Accommodation and Food Services), and NAICS Sector 81 (Other Services) 
that the Agency proposed and adopted in its final rules (75 FR 61597, 
75 FR 61604, and 75 FR 61591, (October 6, 2009)). It is also consistent 
with the Agency's recently proposed rules for NAICS Sector 54, 
Professional, Technical, and Scientific Services (76 FR 14323 (March 
16, 2011)), NAICS Sector 48-49, Transportation and Warehousing (76 FR 
27935 (May 13, 2011)), and NAICS Sector 51, Information, that is being 
published elsewhere in this issue of the Federal Register. In each of 
those final and proposed rules, SBA opted not to reduce small business 
size standards for the same reasons it has provided above in this 
proposed rule.

                              Table 7--Summary of Proposed Size Standard Revisions
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed size   Current size
                  NAICS Codes                         NAICS Industry title          standard ($     standard ($
                                                                                     million)        million)
----------------------------------------------------------------------------------------------------------------
561311........................................  Employment Placement Agencies...           $25.5            $7.0
561312........................................  Executive Search Services.......            25.5             7.0
561320........................................  Temporary Help Services.........            25.5            13.5
561330........................................  Professional Employer                       25.5            13.5
                                                 Organizations.
561410........................................  Document Preparation Services...            14.0             7.0
561421........................................  Telephone Answering Services....            14.0             7.0
561422........................................  Telemarketing Bureaus and Other             14.0             7.0
                                                 contact Centers.
561431........................................  Private Mail Centers............            14.0             7.0
561439........................................  Other Business Service Centers              14.0             7.0
                                                 (including Copy Shops).
561440........................................  Collection Agencies.............            14.0             7.0
561450........................................  Credit Bureaus..................            14.0             7.0
561491........................................  Repossession Services...........            14.0             7.0
561492........................................  Court Reporting and Stenotype               14.0             7.0
                                                 Services.
561499........................................  All Other Business Support                  14.0             7.0
                                                 Services.
561510........................................  Travel Agencies \10\............       \10\ 19.0        \10\ 3.5
561520........................................  Tour Operators \10\.............       \10\ 19.0        \10\ 7.0
561591........................................  Convention and Visitors Bureaus.            19.0             7.0
561599........................................  All Other Travel Arrangement and            19.0             7.0
                                                 Reservation Services.
561611........................................  Investigation Services..........            19.0            12.5
561612........................................  Security Guards and Patrol                  19.0            18.5
                                                 Services.
561613........................................  Armored Car Services............            19.0            12.5
561621........................................  Security Systems Services                   19.0            12.5
                                                 (except Locksmiths).
561622........................................  Locksmiths......................            19.0             7.0
561710........................................  Exterminating and Pest Control              10.0             7.0
                                                 Services.
561740........................................  Carpet and Upholstery Cleaning               5.0             4.5
                                                 Services.
561910........................................  Packaging and Labeling Services.            10.0             7.0
561920........................................  Convention and Trade Show              \10\ 10.0        \10\ 7.0
                                                 Organizers \10\.
561990........................................  All Other Support Services......            10.0             7.0
562111........................................  Solid Waste Collection..........            35.5            12.5
562112........................................  Hazardous Waste Collection......            35.5            12.5
562119........................................  Other Waste Collection..........            35.5            12.5
562211........................................  Hazardous Waste Treatment and               35.5            12.5
                                                 Disposal.
562212........................................  Solid Waste Landfill............            35.5            12.5
562213........................................  Solid Waste Combustors and                  35.5            12.5
                                                 Incinerators.
562219........................................  Other Nonhazardous Waste                    35.5            12.5
                                                 Treatment and Disposal.
562910........................................  Remediation Services............            19.0            14.0
562920........................................  Materials Recovery Facilities...            19.0            12.5
----------------------------------------------------------------------------------------------------------------

    Footnote 10 to SBA's table of size standards states the following: 
``As measured by total revenues, but excluding funds received in trust 
for an unaffiliated third party, such as bookings or sales subject to 
commissions. The commissions received are included as revenue.'' The 
SBA does not propose to modify the calculation of receipts for these 
industries.

[[Page 63521]]

Evaluation of Dominance in Field of Operation

    SBA has determined that for the industries in NAICS Sector 56, 
Administrative and Support, Waste Management and Remediation Services, 
for which it has proposed to increase size standards, no firm at or 
below the proposed size standard will be large enough to dominate its 
field of operation. At the proposed size standards, if adopted, small 
business shares of total industry receipts among those industries vary 
from less than 0.1 percent to 5.3 percent, with an average of 0.6 
percent. These levels of market share effectively preclude a firm at or 
below the proposed size standards from exerting control on this 
industry.

Request for Comments

    SBA invites public comments on the proposed rule, especially on the 
following issues.
    1. To simplify size standards, SBA proposes eight fixed size levels 
for receipts based size standards: $5.0 million, $7.0 million, $10.0 
million, $14.0 million, $19.0 million, $25.5 million, $30.0 million and 
$35.5 million. SBA invites comments on whether simplification of size 
standards in this way is necessary and if these proposed fixed size 
levels are appropriate. SBA welcomes suggestions on alternative 
approaches to simplifying small business size standards.
    2. SBA seeks feedback on whether the proposed levels of size 
standards are appropriate given the economic characteristics of each 
industry. SBA also seeks feedback and suggestions on alternative 
standards, if they would be more appropriate, including whether an 
employee based standard for certain industries is a more suitable 
measure of size and if so, what that employee level should be.
    3. SBA proposes that each of seven 4-digit NAICS Industry Groups 
(see Table 4, above) have common size standards for the Industries that 
make up their groups. SBA invites comments or suggestions along with 
supporting information with respect to the following:
    a. Whether SBA should adopt common size standards for those 
industries or establish a separate size standard for each industry.
    b. Whether the proposed common size standards for those industries 
are at the correct levels, and if not, what are more appropriate size 
standards.
    4. SBA's proposed size standards are based on its evaluation of 
five primary factors: Average firm size, average assets size (as a 
proxy for startup costs and entry barriers), four-firm concentration 
ratio, distribution of firms by size, and the level and small business 
share of Federal contracting dollars. SBA welcomes comments on these 
factors and/or suggestions on other factors that it should consider for 
assessing industry characteristics when evaluating or revising size 
standards. SBA also seeks information on relevant data sources, if 
available.
    5. SBA gives equal weight to each of the five primary factors in 
all industries. SBA seeks feedback on whether it should continue giving 
equal weight to each factor or whether it should give more weight to 
one or more factors for certain industries. Recommendations to weigh 
some factors more than others should include suggestions on specific 
weights for each factor for those industries, along with supporting 
information.
    6. For some industries, based on analysis of industry and program 
data, SBA proposes to increase the existing size standards by a large 
amount (such as NAICS 561311, NAICS 561312, and NAICS Industry Groups 
5615, 5621 and 5622), while for others the proposed increases are 
modest. SBA seeks feedback on whether it should, as a policy, limit the 
increase to a size standard and/or whether it should, as a policy, 
establish minimum or maximum values for its size standards. SBA seeks 
suggestions on appropriate levels of changes to size standards and on 
their minimum or maximum levels.
    7. Based on the analysis of industry and program data and common 
size standards, SBA has proposed to increase the size standards for 
NAICS 561510 (Travel Agencies) from $3.5 million to $19 million and for 
NAICS 561520 (Tour Operators) from $7.0 million to $19.0 million. SBA 
requests comments on the proposed size standards for these two 
industries because to determine if a company meets the size standard 
for either of these industries, firms may exclude ``* * * funds 
received in trust for an unaffiliated third party, such as bookings or 
sales subject to commissions. The commissions received are included as 
revenue'' (see Footnote 10 to SBA's table of size standards). SBA seeks 
feedback on whether it should continue or terminate the exclusion of 
funds received in trust for an unaffiliated third party from receipts 
if it adopts its proposed standard or any other standard considerably 
higher than the existing standards for these industries. SBA also 
welcomes information and data on how businesses in these industries 
collect and report income for Federal Income Tax Returns, and what they 
recognize as business receipts (see 13 CFR 121.104 for SBA's definition 
of ``receipts'').
    8. For analytical simplicity and efficiency, in this proposed rule, 
SBA has refined its size standard methodology to obtain a single value 
as a proposed size standard instead of a range of values, as seen in 
its past size regulations. SBA welcomes any comments on this procedure 
and suggestions on alternative methods.
    Public comments on the above issues are very valuable to SBA for 
validating its size standard methodology and proposed revisions to size 
standards in this proposed rule. This will help SBA to move forward 
with its review of size standards for other NAICS Sectors. Commenters 
addressing size standards for a specific industry or a group of 
industries should include relevant data and/or other information 
supporting their comments. If comments relate to using size standards 
for Federal procurement programs, SBA suggests that commenters provide 
information on the size of contracts awarded, the size of businesses 
that can undertake the contracts, start-up costs, equipment and other 
asset requirements, the amount of subcontracting, other direct and 
indirect costs associated with the contracts, the use of mandatory 
sources of supply for products and services and the degree to which 
contractors can mark up those costs.

Compliance With Executive Orders 12866, 13563, 12988 and 13132, the 
Paperwork Reduction Act (44 U.S.C. Ch. 35) and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
proposed rule is a ``significant'' regulatory action for purposes of 
Executive Order 12866. Accordingly, the next section contains SBA's 
Regulatory Impact Analysis. This is not a major rule, however, under 
the Congressional Review Act, 5 U.S.C. 800.

Regulatory Impact Analysis

1. Is there a need for the regulatory action?

    SBA believes that proposed size standards revisions for a number of 
industries in NAICS Sector 56, Administrative and Support, Waste 
Management and Remediation Services, will better reflect the economic 
characteristics of small businesses and the Federal government 
marketplace. SBA's mission is to aid and assist small businesses 
through a variety of financial, procurement, business development, and 
advocacy programs.

[[Page 63522]]

To assist the intended beneficiaries of these programs, SBA must 
establish distinct definitions of which businesses are deemed small 
businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to 
SBA's Administrator the responsibility for establishing small business 
definitions. The Act also requires that small business definitions vary 
to reflect industry differences. The recently enacted Small Business 
Jobs Act also requires SBA to review all size standards and make 
necessary adjustments to reflect market conditions. The supplementary 
information section of this proposed rule explains SBA's methodology 
for analyzing a size standard for a particular industry.

2. What are the potential benefits and costs of this regulatory action?

    The most significant benefit to businesses obtaining small business 
status because of this rule is gaining eligibility for Federal small 
business assistance programs. These include SBA's financial assistance 
programs, economic injury disaster loans, and Federal procurement 
programs intended for small businesses. Federal procurement programs 
provide targeted opportunities for small businesses under SBA's 
business development programs, such as 8(a), Small Disadvantaged 
Businesses (SDB), small businesses located in Historically 
Underutilized Business Zones (HUBZone), women-owned small businesses 
(WOSB), and service-disabled veteran-owned small business concerns 
(SDVO SBC). Federal agencies may also use SBA size standards for a 
variety of other regulatory and program purposes. These programs assist 
small businesses to become more knowledgeable, stable, and competitive. 
In 37 industries for which SBA has proposed increasing size standards, 
SBA estimates that about 2,700 additional firms will obtain small 
business status and become eligible for these programs. That number is 
nearly 1.0 percent of the total number of firms that are classified as 
small under the current standards in all industries within NAICS Sector 
56. If adopted as proposed, this would increase the small business 
share of total industry receipts in those industries from about 32 
percent under the current size standards to nearly 37 percent.
    Three groups will benefit from these proposed size standards, if 
they are adopted as proposed: (1) Some businesses that are above the 
current size standards may gain small business status under the higher 
size standards, thereby enabling them to participate in Federal small 
business assistance programs; (2) growing small businesses that are 
close to exceeding the current size standards will be able to retain 
their small business status under the higher size standards, thereby 
enabling them to continue their participation in the programs; and (3) 
Federal agencies will have larger pools of small businesses from which 
to draw for their small business procurement programs.
    During fiscal years 2007 to 2009, 35 percent of Federal contracting 
dollars spent in industries reviewed in this proposed rule were 
accounted for by the 37 industries for which SBA has proposed to 
increase size standards. SBA estimates that additional firms gaining 
small business status in those industries under the proposed size 
standards could potentially obtain Federal contracts totaling up to $60 
million to $75 million annually under SBA's small business, 8(a), SDB, 
HUBZone, WOSB, and SDVO SBC Programs, and other unrestricted 
procurements. The added competition for many of these procurements 
could also result in lower prices to the Government for procurements 
reserved for small businesses, although SBA cannot quantify this 
benefit.
    Under SBA's 7(a) Business Loan and 504 Programs, based on the 2008-
2010 data, SBA estimates that about 20 to 30 additional loans totaling 
about $3 million to $5 million in Federal loan guarantees could be made 
to these newly defined small businesses under the proposed standards. 
Increasing the size standards will likely result in more small business 
guaranteed loans to businesses in these industries, but it would be 
impractical to try to estimate exactly the extent of their number and 
the total amount loaned. Under the Jobs Act, SBA can now guarantee 
substantially larger loans than in the past. In addition, the Jobs Act 
established an alternative size standard ($15 million in tangible net 
worth and $5 million in net income after income taxes) for business 
concerns that do not meet the size standards for their industry. 
Therefore, SBA finds it similarly difficult to quantify the impact of 
these proposed standards on its 7(a) and 504 Loan Programs.
    Newly defined small businesses will also benefit from SBA's 
Economic Injury Disaster Loan (EIDL) Program. Since this program is 
contingent on the occurrence and severity of a disaster, SBA cannot 
make a meaningful estimate of benefits for future disasters.
    To the extent that 2,700 newly defined additional small firms could 
become active in Federal procurement programs, the proposed changes, if 
adopted, may entail some additional administrative costs to the Federal 
Government, including those associated with additional bidders for 
Federal small business procurement opportunities, additional firms 
seeking SBA guaranteed lending programs, additional firms eligible for 
enrollment in the Central Contractor Registration's (CCR) Dynamic Small 
Business Search database, and additional firms seeking certification as 
8(a) or HUBZone firms or qualifying for small business, WOSB, SDVO SBC, 
and SDB status. Among those newly defined small businesses seeking SBA 
assistance, there could be some additional costs associated with 
compliance and verification of small business status and protests of 
small business status. These added costs will be minimal because 
mechanisms are already in place to handle these administrative 
requirements.
    Additionally, the costs to the Federal Government may be higher on 
some Federal contracts. With a greater number of businesses defined as 
small, Federal 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 small business set-aside 
contracting might result in competition among fewer total bidders, 
although there will be more small businesses eligible to submit offers. 
In addition, higher costs may result when more full and open contracts 
are awarded to HUBZone and SDB businesses that receive price evaluation 
preferences. However, the additional costs associated with fewer 
bidders are expected to be minor since, as a matter of law, 
procurements may be set aside for small businesses or reserved for the 
8(a), HUBZone, WOSB, or SDVO SBC Programs only if awards are expected 
to be made at fair and reasonable prices. In addition, higher costs may 
result when more full and open contracts are awarded to HUBZone and SDB 
businesses that receive price evaluation preferences.
    The proposed size standards may have distributional effects among 
large and small businesses. Although SBA cannot estimate with certainty 
the actual outcome of the gains and losses among small and large 
businesses, it can identify several probable impacts. There may be 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 
contracts for small businesses. In addition, some Federal contracts may 
be awarded to HUBZone or SDB concerns instead of large

[[Page 63523]]

businesses since those two categories of small businesses may be 
eligible for an evaluation adjustment for contracts when they compete 
on a full and open basis. Similarly, currently defined small businesses 
may obtain fewer Federal contracts 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 number of newly defined and expanding small businesses 
that are willing and able to sell to the Federal Government will limit 
the potential transfer of contracts away from large and currently 
defined small businesses. SBA cannot estimate the potential 
distributional impacts of these transfers with any degree of precision 
because FPDS-NG data only identify the size of businesses receiving 
Federal contracts as ``small business'' or ``other than small 
business''; FPDS-NG does not provide the exact size of the businesses.
    The proposed revisions to the existing size standards for 
Industries in NAICS Sector 56, Administrative and Support, Waste 
Management and Remediation Services, are consistent with SBA's 
statutory mandate to assist small business. 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.

Executive Order 13563

    A description of the need for this regulatory action and the 
benefits and costs associated with this action, including possible 
distributional impacts that relate to Executive Order 13563, are 
included above in the Regulatory Impact Analysis under Executive Order 
12866.
    In an effort to engage interested parties in this action, SBA has 
presented its methodology (discussed above under Supplementary 
Information) to various industry associations and trade groups. SBA 
also met with various industry groups to obtain their feedback on its 
methodology and other size standards issues. SBA also presented its 
size standards methodology to businesses in 13 cities in the U.S. and 
sought their input as part of the Jobs Act tours.
    Additionally, SBA sent letters to the Directors of the Offices of 
Small and Disadvantaged Business Utilization (OSDBU) at several Federal 
agencies with considerable procurement responsibilities requesting 
their feedback on how the agencies use SBA size standards and whether 
current standards meet their programmatic needs (both procurement and 
non-procurement). SBA gave appropriate consideration to all input, 
suggestions, recommendations, and relevant information obtained from 
industry groups, individual businesses, and Federal agencies in 
preparing this proposed rule.
    The review of size standards in NAICS Sector 56, Administrative and 
Support, Waste Management and Remediation Services, is consistent with 
EO 13563, Sec. 6, calling for retrospective analyses of existing rules. 
As discussed previously, the last overall review of size standards 
occurred during the late 1970s and early 1980s. Since then, except for 
periodic adjustments for monetary based size standards, most reviews of 
size standards were limited to a few specific industries in response to 
requests from the public and Federal agencies. SBA recognizes that 
changes in industry structure and the Federal marketplace over time 
have rendered existing size standards for some industries no longer 
supportable by current data. Accordingly, SBA has begun a comprehensive 
review of its size standards to ensure that existing size standards 
have supportable bases and to revise them when necessary. In addition, 
on September 27, 2010 the President of the United States signed the 
Jobs Act. The Jobs Act directs SBA to conduct a detailed review of all 
size standards and to make appropriate adjustments to reflect market 
conditions. Specifically, the Jobs Act requires SBA to conduct a 
detailed review of at least one-third of all size standards during 
every 18-month period from the date of its enactment and do a complete 
review of all size standards not less frequently than once every five 
years thereafter.

Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    For purposes of Executive Order 13132, SBA has determined that this 
proposed rule 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 responsibilities among the various 
levels of government. Therefore, SBA has determined that this proposed 
rule has no federalism implications warranting preparation of a 
federalism assessment.

Paperwork Reduction Act

    For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, 
SBA has determined that this rule would not impose any new reporting or 
record keeping requirements.

Initial Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this rule, if 
finalized, may have a significant impact on a substantial number of 
small businesses in NAICS Sector 56, Administrative and Support, Waste 
Management and Remediation Services. As described above, this rule may 
affect small businesses seeking Federal contracts, loans under SBA's 
(7a), 504 Guaranteed Loan and Economic Injury Disaster Loan Programs, 
and assistance under other Federal small business programs.
    Immediately below, SBA sets forth an initial regulatory flexibility 
analysis (IRFA) of this proposed rule addressing the following 
questions: (1) What are the need for and objective of the rule? (2) 
What are SBA's description and estimate of the number of small entities 
to which the rule will apply? (3) What are the projected reporting, 
record keeping, and other compliance requirements of the rule? (4) What 
are the relevant Federal rules that may duplicate, overlap, or conflict 
with the rule?, and (5) What alternatives will allow the Agency to 
accomplish its regulatory objectives while minimizing the impact on 
small entities?

1. What are the need for and objective of the rule?

    Most of the size standards in NAICS Sector 56, Administrative and 
Support, Remediation and Support Services, have not been reviewed since 
the early 1980s. Technology, productivity growth, international 
competition, mergers and acquisitions, and updated industry definitions 
may have changed the structure of many industries in the Sector. Such 
changes can be sufficient to support revisions to current size 
standards for some industries. Based on its analysis of the latest data 
available, SBA believes that the revised standards in this proposed 
rule more appropriately reflect the size of

[[Page 63524]]

businesses in those industries that need Federal assistance. The 
recently enacted Small Business Jobs Act also requires SBA to review 
all size standards and make necessary adjustments to reflect market 
conditions.

2. What is SBA's description and estimate of the number of small 
entities to which the rule will apply?

    If the proposed rule is adopted in its present form, SBA estimates 
that about 2,700 additional firms will become small because of 
increases in size standards in 37 industries and one sub-industry. That 
represents about 1.0 percent of total firms that are small under 
current size standards in all industries within NAICS Sector 56. This 
will result in an increase in the small business share of total 
industry receipts for this Sector from about 32 percent under the 
current size standard to nearly 37 percent under the proposed 
standards. SBA does not anticipate a significant competitive impact on 
smaller businesses in these industries because businesses in this 
Sector have been requesting SBA to increase these standards. The 
proposed standards, if adopted, will enable more small businesses to 
retain their small business status for a longer period. Many have lost 
their eligibility and find it difficult to compete at such low levels 
with companies that are significantly larger than they are. SBA 
believes the competitive impact will be positive for existing small 
businesses and for those that exceed the size standards but are on the 
very low end of those that are not small. They might otherwise be 
called or referred to as mid-sized businesses, although SBA only 
defines what is small; other entities are other than small.

3. What are the projected reporting, record keeping and other 
compliance requirements of the rule and an estimate of the classes of 
small entities, which will be subject to the requirements?

    Proposed size standards changes do not impose any additional 
reporting or record keeping requirements on small entities. However, 
qualifying for Federal procurement and a number of other programs 
requires that entities register in the CCR database and certify at 
least annually that they are small in the Online Representations and 
Certifications Application (ORCA). Therefore, businesses opting to 
participate in those programs must comply with CCR and ORCA 
requirements. There are no costs associated with either CCR 
registration or ORCA certification. Changing size standards alters the 
access to SBA programs that assist small businesses but does not impose 
a regulatory burden as they neither regulate nor control business 
behavior.

4. What are the relevant Federal rules, which may duplicate, overlap, 
or conflict with the rule?

    Under Sec.  3(a)(2)(C) of the Small Business Act, 15 U.S.C. 
632(a)(2)(c), Federal agencies must use SBA's size standards to define 
a small business, unless specifically authorized by statute to do 
otherwise. 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 (November 24, 1995)). SBA is not aware of any 
Federal rule that would duplicate or conflict with establishing size 
standards.
    However, the Small Business Act and SBA's regulations allow Federal 
agencies to develop different size standards if they believe that SBA's 
size standards are not appropriate for their programs, with the 
approval of SBA's Administrator (13 CFR 121.903). The Regulatory 
Flexibility Act authorizes an Agency to establish an alternative small 
business definition after consultation with the Office of Advocacy of 
the U.S. Small Business Administration (5 U.S.C. 601(3)).

5. What alternatives will allow the Agency to accomplish its regulatory 
objectives while minimizing the impact on small entities?

    By law, SBA is required to develop numerical size standards for 
establishing eligibility for Federal small business assistance 
programs. Other than varying size standards by industry and changing 
the size measures, no practical alternative exists to the systems of 
numerical size standards.

List of Subjects in 13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Grant programs--business, Individuals with 
disabilities, Loan programs--business, Reporting and recordkeeping 
requirements, Small businesses.

    For the reasons set forth in the preamble, SBA proposes to amend 
part 13 CFR Part 121 as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

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

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644 and 
662(5); and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.

    2. In Sec.  121.201, in the table, revise the entries for 
``561311,'' ``561312,'' ``561320,'' ``561330,'' ``561410,'' ``561421,'' 
``561422,'' ``561431,'' ``561439,'' ``561440,'' ``561450,'' ``561491,'' 
``561492,'' ``561499,'' ``561510,'' ``561520,'' ``561591,'' ``561599,'' 
``561611,'' ``561612,'' ``561613,'' ``561621,'' ``561622,'' ``561710,'' 
``561740,'' ``561910,'' ``561920,'' ``561990,'' ``562111,'' ``562112,'' 
``562119,'' ``562211,'' ``562212,'' ``562213,'' ``562219,'' 
``562910,''and ``562920'' to read as follows:


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

* * * * *

----------------------------------------------------------------------------------------------------------------
                                                                                  Size standards  Size standards
                  NAICS Codes                       NAICS U.S. industry title     in millions of   in number of
                                                                                      dollars        employees
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
561311........................................  Employment Placement Agencies...           $25.5
561312........................................  Executive Search Services.......            25.5
561320........................................  Temporary Help Services.........            25.5
561330........................................  Professional Employer                       25.5
                                                 Organizations.
561410........................................  Document Preparation Services...            14.0
561421........................................  Telephone Answering Services....            14.0
561422........................................  Telemarketing Bureaus and Other             14.0
                                                 Contact Centers.
561431........................................  Private Mail Centers............            14.0
561439........................................  Other Business Service Centers              14.0
                                                 (including Copy Shops).
561440........................................  Collection Agencies.............            14.0

[[Page 63525]]

 
561450........................................  Credit Bureaus..................            14.0
561491........................................  Repossession Services...........            14.0
561492........................................  Court Reporting and Stenotype               14.0
                                                 Services.
561499........................................  All Other Business Support                  14.0
                                                 Services.
561510........................................  Travel Agencies \10\............       \10\ 19.0
561520........................................  Tour Operators \10\.............       \10\ 19.0
561591........................................  Convention and Visitors Bureaus.            19.0
561599........................................  All Other Travel Arrangement and            19.0
                                                 Reservation Services.
561611........................................  Investigation Services..........            19.0
561612........................................  Security Guards and Patrol                  19.0
                                                 Services.
561613........................................  Armored Car Services............            19.0
561621........................................  Security Systems Services                   19.0
                                                 (except Locksmiths).
561622........................................  Locksmiths......................            19.0
561710........................................  Exterminating and Pest Control              10.0
                                                 Services.
 
                                                  * * * * * * *
561740........................................  Carpet and Upholstery Cleaning               5.0
                                                 Services.
 
                                                  * * * * * * *
561910........................................  Packaging and Labeling Services.            10.0
561920........................................  Convention and Trade Show              \10\ 10.0
                                                 Organizers\10\.
561990........................................  All Other Support Services......            10.0
 
                                                  * * * * * * *
562111........................................  Solid Waste Collection..........            35.5
562112........................................  Hazardous Waste Collection......            35.5
562119........................................  Other Waste Collection..........            35.5
562211........................................  Hazardous Waste Treatment and               35.5
                                                 Disposal.
562212........................................  Solid Waste Landfill............            35.5
562213........................................  Solid Waste Combustors and                  35.5
                                                 Incinerators.
562219........................................  Other Nonhazardous Waste                    35.5
                                                 Treatment and Disposal.
562910........................................  Remediation Services............            19.0
 
                                                  * * * * * * *
562920........................................  Materials Recovery Facilities...            19.0
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------


    Dated: July 22, 2011.
Karen G. Mills,
Administrator.
[FR Doc. 2011-26207 Filed 10-11-11; 8:45 am]
BILLING CODE 8025-01-P