[Federal Register Volume 77, Number 235 (Thursday, December 6, 2012)]
[Rules and Regulations]
[Pages 72691-72702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29349]


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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: Final rule.

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SUMMARY: The United States Small Business Administration (SBA) is 
increasing the small business size standards for 37 industries and 
retaining the current size standards for the remaining seven 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 size standards for industries in NAICS 
Sector 56 to determine whether they should be retained or revised. SBA 
did not review the employee-based size standard for Environmental 
Remediation Services, an ``exception'' under NAICS 562910, Remediation 
Services, in NAICS Sector 56, but will do so at a later date with other 
employee-based size standards.

DATES: This rule is effective January 7, 2013

FOR FURTHER INFORMATION CONTACT: Jon Haitsuka, Program Analyst, Size 
Standards Division, (202) 205-6618 or [email protected].

SUPPLEMENTARY INFORMATION: 
    To determine eligibility for Federal small business assistance 
programs, SBA establishes small business size definitions (referred to 
as size standards) for private sector industries in the United States. 
SBA's existing size standards use two primary measures of business 
size--average annual receipts and number of employees. Financial 
assets, electric output and refining capacity are used as size measures 
for a few specialized industries. In addition, SBA's Small Business 
Investment Company (SBIC), 7(a), and Certified Development Company (CDC 
or 504) Loan Programs determine small business eligibility using either 
the industry based size standards or alternative net worth and net 
income size based standards. SBA is currently in the process of 
comprehensively reviewing all of its small business size standards. At 
the start of this comprehensive review, there were 41

[[Page 72692]]

different size standards levels, covering 1,141 NAICS industries and 18 
sub-industry activities (i.e., ``exceptions'' in SBA's Table of Size 
Standards). Of these size standards levels, 31 were based on average 
annual receipts, seven based on number of employees, and three based on 
other measures.
    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. SBA last 
conducted a comprehensive review of size standards during the late 
1970s and early 1980s. Since then, most reviews of size standards have 
been limited to a few specific industries in response to requests from 
the public and Federal agencies. SBA also makes periodic inflation 
adjustments to its receipts-based size standards. The latest inflation 
adjustment to size standards was published in the Federal Register on 
July 18, 2008 (73 FR 41237).
    SBA recognizes that changes in industry structure and Federal 
marketplace since the last overall review have rendered existing size 
standards for some industries no longer supportable by current data. 
Accordingly, in 2007, SBA began a comprehensive review of its size 
standards to determine whether existing size standards have supportable 
bases relative to the current data, and to revise them, where 
necessary.
    In addition, on September 27, 2010, the President of the United 
States signed the Small Business Jobs Act of 2010 (Jobs Act), Public 
Law 111-240. 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 review at 
least one-third of all size standards during every 18-month period from 
the date of its enactment and review all size standards not less 
frequently than once every 5 years thereafter. Reviewing existing small 
business size standards and making appropriate adjustments based on 
current data is also consistent with Executive Order 13563 on improving 
regulation and regulatory review.
    SBA has chosen not to review all size standards at one time. 
Rather, it is reviewing groups of related industries on a Sector by 
Sector basis.
    As part of SBA's comprehensive review of size standards, the Agency 
reviewed all receipts-based size standards in NAICS Sector 56, 
Administrative and Support, Waste Management and Remediation Services, 
to determine whether the existing size standards should be retained or 
revised. On October 12, 2011, SBA published a proposed rule in the 
Federal Register (76 FR 63510) seeking public comment on its proposal 
to increase the size standards for 37 industries and retain current 
size standards for 15 industries in NAICS Sector 56. The rule was one 
of a series of proposed rules that examines industries grouped by NAICS 
Sector.
    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 www.sba.gov/size for 
public review and comment and also included it as a supporting document 
in the electronic docket of the October 12, 2011 proposed rule at 
www.regulations.gov.
    In evaluating an industry's size standard, SBA examines its 
characteristics (such as average firm size, startup costs and entry 
barriers, industry competition and distribution of firms by size) and 
the level and small business share of Federal contract dollars in that 
industry. SBA also examines the potential impact a size standard 
revision might have on its financial assistance programs and whether a 
business concern under a revised size standard would be dominant in its 
industry. SBA analyzed the characteristics of each industry in NAICS 
Sector 56 that has a receipts-based size standard, mostly using a 
special tabulation obtained from the U.S. Bureau of the Census based on 
its 2007 Economic Census (the latest available). SBA also evaluated the 
level and small business share of Federal contracts in each of those 
industries using the data from the Federal Procurement Data System--
Next Generation (FPDS-NG) for fiscal years 2008 to 2010. To evaluate 
the impact of changes to size standards on its loan programs, SBA 
analyzed internal data on its 7(a) and 504 Loan Programs for fiscal 
years 2008 to 2010.
    SBA's ``Size Standards Methodology'' provides a detailed 
description of its analyses of various industry and program factors and 
data sources, and how the Agency used the results to derive size 
standards. In the proposed rule, SBA detailed how it applied its ``Size 
Standards Methodology'' to review and modify, where necessary, the 
existing receipts-based size standards for industries in NAICS Sector 
56. SBA sought comments from the public on a number of issues 
concerning its ``Size Standards Methodology,'' such as whether there 
are alternative methodologies that SBA should consider; whether there 
are alternative or additional factors or data sources that SBA should 
evaluate; whether SBA's approach to establishing small business size 
standards makes sense in the current economic environment; whether 
SBA's applications of anchor size standards are 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.
    SBA also sought comments on its proposal to increase receipts-based 
size standards for 37 industries and retain the existing receipts-based 
size standards for seven industries in NAICS Sector 56. Specifically, 
SBA requested comments on whether the size standards should be revised 
as proposed and whether the proposed revisions are appropriate. SBA 
also invited comments on whether its proposed eight fixed size standard 
levels are appropriate and whether it should adopt common size 
standards for several Subsectors and Industry Groups in NAICS Sector 
56.
    SBA's analyses of industry and program data could support lowering 
existing receipts based standards for five industries and keeping 
current receipts based size standards for two industries. However, as 
SBA pointed out in the proposed rule, lowering size standards would not 
serve the interest of small businesses under the current economic 
environment because it would reduce the number of firms eligible to 
participate in Federal small business assistance programs. In addition, 
this would also run counter to what the Federal government and the 
Agency are doing to help small businesses and create jobs. Therefore, 
SBA proposed to retain the current size standards for those five 
industries and requested comments on whether the Agency should lower 
size standards for those industries for which its analyses might 
support lowering them.

Summary of Comments

    SBA received 21 comments from individuals, small businesses, and 
trade groups on its proposal to increase receipts-based size standards 
for 37 industries and retain current receipts-based size standards for 
seven industries in NAICS Sector 56 and its size standards methodology.
    Of the 21 comments, 18 commented on proposed size standards changes 
for specific NAICS codes and three provided general comments, mostly 
relating to the SBA's size standards methodology. The NAICS codes that 
received the most comments (six)

[[Page 72693]]

included NAICS 562910, Remediation Services (including ``exception,'' 
Environmental Remediation Services), followed by NAICS 561210, 
Facilities Support Services (four comments), and NAICS 561612, Security 
Guards and Patrol Services (two comments). Other NAICS codes 561320, 
Temporary Help Services; 561422, Telemarketing Bureaus and Other 
Contact Centers; 561440, Collection Agencies; 561510, Travel Agencies; 
561520, Tour Operators; 561730, Landscaping Services; and 561920, 
Conventions and Trade Shows Organizers received one comment each.
    Commenters generally supported SBA's effort to review small 
business size standards for NAICS Sector 56 and its size standards 
methodology. Comments also generally supported SBA's proposal to 
increase size standards, but for a number of industries they 
recommended larger increases. Below is a discussion of the issues and 
concerns raised in each of those comments and SBA's responses.

NAICS Code 561210--Facilities Support Services

    SBA received four comments (including two from the same individual) 
on NAICS Code 561210, Facilities Support Services. One commenter agreed 
with SBA's proposal to keep the size standard for this industry at the 
current $35.5 million level, but recommended that SBA apply the same 
$35.5 million size standard for all NAICS industries that could be part 
of a solicitation for Facilities Support Services. SBA does not adopt 
this suggestion because doing so would allow otherwise large businesses 
to become small in some industries, thereby hurting truly small 
businesses to compete for Federal procurements in those industries. For 
example, the current size standard for all industries under specialty 
trade contractors, which could be part of procurements under Facilities 
Support Services (see Footnote 12, 13 CFR 121.201), is $14 million. If 
it were raised to $35.5 million, many large businesses that exceed the 
current size standard for specialty trade contractors would become 
small. In addition, SBA continues to believe that these industries are 
distinct and deserve separate analyses.
    Two other commenters expressed concern that SBA did not propose to 
increase the size standard for this NAICS Code, which is currently 
$35.5 million. One of them offered a detailed response, including the 
data on his firm's total revenue and revenue from contract work with 
the Centers for Disease Control (CDC) for years from 1999 to 2010 and 
projected revenues for 2011 and 2012. He argued that U.S. Department of 
Labor's (DOL) mandated 8.5 percent labor cost increase to CDC's 
contracts in 2006 largely contributed to inflationary growth in his 
company's total revenue since then, pushing its three-year average 
annual revenue above $35.5 million in 2010. As a result, as the 
commenter stated, his company is currently a large business and has 
been ineligible to re-compete as a small business for its four follow-
on contracts with CDC. The commenter anticipates another DOL's labor 
cost adjustment soon. The commenter argued that if SBA adjusted its 
size standard for inflation and DOL's labor cost increases in 2012, the 
size standard for NAICS Code 561210 would increase to $37 million to 
$38 million, thereby making his company eligible to again compete for 
its follow-on contract with CDC that is expected to be re-competed in 
2012 or 2013.
    SBA is required to review all size standards for inflation not less 
frequently than every five years. Accordingly, the latest inflation 
adjustment for all receipts-based size standards, including that for 
NAICS Code 561210, was completed in July 2008. In this comprehensive 
size standards review, SBA's revisions to size standards are primarily 
based on the Agency's evaluation of industry and Federal procurement 
factors. SBA plans to adjust all monetary size standards together for 
inflation soon after it completes its review of all receipts-based size 
standards. SBA is reviewing size standards on a Sector by Sector basis, 
and this can take several years to complete all of them. If SBA were to 
make additional adjustments for inflation on a Sector by Sector basis, 
the result would be inconsistent size standards across industries.
    The next commenter objected to SBA's proposal to keep the size 
standard for NAICS Code 561210 at the current $35.5 million level. The 
commenter criticized the SBA's analysis as being flawed because the 
2007 Economic Census tabulation that the Agency used to examine 
characteristics of industries is limited to businesses operating 
primarily in that industry. The commenter argued that the size standard 
would be much higher than $35.5 million had SBA included in its 
analyses some of the largest companies receiving the Federal contracts 
under that NAICS code, whose primary industry is not NAICS Code 561210. 
SBA is aware that there are some problems with the Economic Census 
tabulation for some industries; therefore it also evaluates Central 
Contractor Registration and FPDS-NG data for those industries when 
evaluating a size standard. For example, to assess small business 
participation in Federal contracting in NAICS Code 561210, SBA 
evaluated FPDS-NG data for fiscal years 2008 to 2010. The FPDS-NG data 
for a particular NAICS code include all businesses receiving contracts 
regardless of whether that industry is their primary industry. Thus, 
although the Economic Census tabulation may not include all 
establishments receiving contracts under NAICS Code 561210, FPDS-NG 
includes them all. Based on the fiscal years 2008-2010 FPDS-NG data, 
SBA found the small business share of total industry receipts to be 
very similar to small business share of total Federal contracts in 
NAICS Code 561210.
    The commenter contended further that since procurements for NAICS 
Code 561210 are very large and include a substantial mix of various 
services from various industries, most small businesses under the 
current size standard cannot handle Federal contracts for Facilities 
Support Services. The commenter included an epipeline summary report of 
the Federal procurement activities under NAICS Code 561210 for the 
period from 2004-2008. The report, although somewhat outdated, showed 
that the majority of Federal contracts awarded by the Federal agencies 
under NAICS Code 561210 went to larger businesses. This commenter 
recommended a larger than $35.5 million size standard for this industry 
because it, as the commenter stated, would increase the number of 
capable small businesses and offer more competition in the Federal 
market that is currently dominated by very large companies.
    SBA has not adopted this recommendation for several reasons. First, 
although SBA recognizes the challenges small businesses face in the 
Federal market, the Agency is also very concerned that ``smaller'' 
small businesses may not be able to compete effectively with ``larger'' 
small businesses for Federal small business contracts if a size 
standard is set too large. Second, SBA's analysis of industry and 
program data suggested a lower $30 million size standard for this 
industry. However, for the reasons explained in the proposed rule and 
also stated above in this rule, SBA has decided not to lower any of its 
current size standards although the analytical results might support 
lowering some of them. Thus, SBA proposed to retain the current $35.5 
million size standard for NAICS Code 561210 even if its analysis

[[Page 72694]]

supported a lower $30 million. Third, to be consistent with SBA's size 
standards methodology and with proposed and final rules for other NAICS 
Sectors that SBA has issued to date, $35.5 million is the highest 
receipts based size standards that SBA will propose or adopt. Thus, SBA 
is adopting $35.5 million as the size standard for NAICS Code 561210, 
Facilities Support Services, as proposed.

NAICS Code 561320--Temporary Help Services

    There was one comment on SBA's proposed change to the size standard 
for this NAICS code. The commenter disagreed with SBA's proposal to 
increase the size standard for that industry from the current $13.5 
million to $25.5 million. Rather, he recommended that it should be 
increased to $35.5 million. The basis for his suggestion was the 
breakdown of cost for each employee and the benefits not calculated by 
the Federal government for a business under this NAICS code. He argued 
that expenses and profits contemplated from Federal contracts did not 
cover other expenses, such as general and administrative expenses. He 
neither challenged the industry and program data or methodology SBA 
used to arrive at the proposed $25.5 million size standard nor did he 
provide alternative industry data and analysis supporting his 
recommendation to increase it to $35.5 million. Thus, SBA has not 
adopted this recommendation and is adopting $25.5 million, as proposed.

NAICS Code 561422--Telemarketing Bureaus and Other Contact Centers and 
NAICS Code 561920--Convention and Trade Show Organizers

    SBA received one comment on both NAICS Code 561422 and NAICS Code 
561920. SBA had proposed to increase the size standard for NAICS Code 
561422 from $7 million to $14 million. The commenter suggested SBA to 
reevaluate its proposal and recommended that the size standard for 
NAICS Code 561422 be increased to at least $25 million. He argued that 
the proposed $14 million is low compared to size standards for other 
industries, such as NAICS Code 541511 (Custom Computer and Programming 
Services) that has a size standard of $25 million and NAICS Code 511199 
(All Other Publishers) that has a size standard of 500 employees. The 
commenter did not explain the rationale for choosing these industries 
for comparison, nor did he provide any explanation why NAICS Code 
561422 should have the same size standard as those other industries. As 
such, SBA is not convinced that a higher increase is warranted. Thus, 
SBA has not adopted the commenter's recommendation and is adopting the 
$14 million size standard for NAICS Code 561422, as proposed.
    This commenter also urged SBA to re-assess its proposal to increase 
the size standard for NAICS Code 561920, Convention and Trade Show 
Organizers, from $7 million to $10 million and recommended that it 
should be increased further to at least $14 million, or preferably to 
$19 million. The commenter argued that it requires specialized labor 
categories and hence higher labor costs to perform work in this 
industry, warranting a larger increase to its size standard. However, 
the comment did not explain why the proposed $10 million size standard 
was not appropriate in view of higher labor costs. Therefore, SBA has 
not adopted the recommendation and is adopting $10 million, as 
proposed.

NAICS Code 561440--Collection Agencies

    SBA received one comment that fully supported its proposal to 
increase the size standard for NAICS Code 561440, Collection Agencies, 
from $7 million to $14 million. The commenter stated that the proposed 
size standard accurately reflects current economic conditions and that 
the higher $14 million size standard would help small businesses to 
remain competitive in Federal procurements. Thus, SBA is adopting $14 
million, as proposed.

NAICS Code 561510--Travel Agencies, and NAICS Code 561520--Tour 
Operators

    SBA received one comment on behalf of two trade associations, one 
representing Travel Agencies and the other representing Tour Operators. 
The comment fully supported the SBA's proposal to increase the size 
standard for NAICS Code 561510 (Travel Agencies) from $3.5 million to 
$19 million and to increase the size standard for NAICS Code 561520 
(Tour Operators) from $7 million to $19 million. The comment also 
supported SBA's current method of measuring revenues in these 
industries in terms of commissions and other earnings, excluding funds 
collected for a third party (such as bookings and sales subject to 
commissions). The trade associations also confirmed that the proposed 
size standards are consistent with the data collected from their 
members and that 73 percent of their members surveyed supported SBA's 
efforts to increase size standard for those two industries. Thus, SBA 
is adopting the proposed size standards.

NAICS Code 561612--Security Guards and Patrol Services

    SBA received two comments on its proposal to increase the size 
standard for NAICS Code 561612 (Security Guards and Patrol Services) 
from $18.5 million to $19 million. The first commenter argued for a 
higher size standard than SBA's proposed $19 million size standard for 
this NAIC code. Citing industry data and the methodology that SBA used 
to derive the proposed size standard, the commenter contended that 
SBA's proposal to increase it by only $500,000.00 (from its existing 
$18.5 million) could not be justified. The commenter alleged that the 
proposed increase from $18.5 million to $19 million failed to account 
for inflation. The commenter argued that simply by updating the $18.5 
million for inflation since the last inflation adjustment in 2008, the 
size standard should be increased to $19.5 million.
    As stated elsewhere with respect to a comment on another NAICS 
code, SBA is required to review all size standards for inflation not 
less frequently than every five years. In this review, SBA's revisions 
to size standards are primarily based on the Agency's evaluation of 
industry and Federal procurement factors. The Agency plans to adjust 
all monetary size standards for inflation after it completes its 
current review of all receipts based size standards. As SBA is 
reviewing size standards on a Sector by Sector basis, making additional 
adjustments for inflation for a particular size standard would result 
in inconsistent size standards across sectors and industries.
    The same commenter also expressed concern that the proposed 
$500,000 increase does not ameliorate the growing problem in recent 
years that small but growing small businesses have to compete with a 
small number of industry ``giants'' in the Federal market. He also 
noted that due to increased security risks agencies often look for 
brand recognition and because most contracts for security services are 
``best value'' procurements where the cost is not a determining factor, 
Federal agencies often select large, expensive firms. The commenter 
added that the security industry is dominated by very large firms and 
aggressive acquisition by large firms has contributed to further market 
consolidation and dominance by fewer and fewer firms. As a result, as 
the commenter explained, very small businesses benefit from the current 
$18.5 million size standard, while mid-tiered companies that have 
exceeded the size standard are forced to compete with

[[Page 72695]]

the largest and most dominant firms in the Federal market place. To 
address this problem, the commenter suggested of a size standard of $50 
million to $75 million. To be consistent with SBA's size standards 
methodology and with proposed and final rules for other NAICS Sectors 
that SBA has issued to date, $35.5 million is the highest receipts 
based size standards that SBA will propose or adopt. Thus, SBA is 
adopting $35.5 million as the size standard for NAICS Code 561612, 
Security Guards and Patrol Services.
    The next commenter stated that raising the size standard by a mere 
$500,000 was insufficient compared to what SBA is doing in other 
industries. The commenter recommended that the size standard for NAICS 
Code 561612 should be at least $23 million and an even higher $30 
million for Service Disable Veteran Owned Small Businesses (SDVOSBs). 
The commenter noted that a size standard higher than the proposed $19 
million size standard is needed to meet the statutorily required 3 
percent small business contracting goal for SDVOSB's program. All 
increases to size standards SBA proposed or adopted in other industries 
were supported by the analyses of industry and Federal procurement 
Factors using the same methodology and data sources. The analysis only 
supported a $500,000 increase to the size standard for NAICS Code 
561612. SBA evaluates the level and small business share of Federal 
contracts for each industry as one of the primary factors in 
establishing or reviewing a size standard, but whether the Federal 
agencies are meeting their small business contracting goals or not is 
not important to deciding a size standard. SBA does not establish 
separate size standards for individual small business procurement 
programs. SBA establishes only one set of small business size standards 
for all small business procurement programs, such as SDVOSB, 8(a), 
businesses located in Historically Underutilized Business Zones 
(HUBZone), and Woman-Owned Small Business Programs (WOSB). Thus, SBA 
has not adopted the commenter's recommendation and is adopting the $19 
million size standard for NAICS Code 561622, as proposed.

NAICS Code 561730--Landscaping Services

    SBA received one comment on NAICS Code 561730, Landscaping 
Services, for which SBA had proposed to retain the current size 
standard of $7 million. The commenter expressed concern that his 
business' average annual revenue has exceeded the $7 million size 
standard for NAICS Code 561730. The commenter felt that the $7 million 
size standard is too low for this industry and it should be much 
higher. The commenter stated that his company also does irrigation work 
under NAICS Code 238910 (Site Preparation Contractors) which has a size 
standard of $13 million and recommended that NAICS Codes 561730 and 
238910 have the same size standard of at least $13 million. The comment 
argued further that 80-85 percent of actual costs of contracts 
performed under NAICS Code 561730 is for landscaping and the remainder 
for other services, warranting a higher size standard. SBA is not 
adopting the commenter's recommendation for several reasons. First, 
SBA's analyses of industry and program data actually supported lowering 
the size standard for that industry to $5 million. However, for the 
reasons provided in the proposed rule, SBA proposed not to reduce any 
size standard, even if the data appeared to support reducing it. 
Second, irrigation falls under NAICS Code 221310 (not NAICS Code 238910 
as the commenter argued) and it currently has the same size standard of 
$7 million as for NAICS Code 561730. Third, the commenter did not 
provide any explanation or analysis of similarities between NAICS Codes 
238910 and 561730 for them to have the same size standard. Therefore, 
SBA has not adopted the commenter's recommendation and is adopting $7 
million as the size standard for NAICS Code 561730, as proposed.

NAICS Code 562910--Remediation Services

    Six commenters offered data, analysis and suggestions regarding the 
proposed change to the size standard for this NAICS code. SBA had 
proposed to increase the size standard for NAICS Code 562910, 
Remediation Services, from $14 million to $19 million. In the October 
12, 2011 proposed rule, SBA had stated that it did not review the 500-
employee size standard for the ``exception'' to NAICS Code 562910, 
Environmental Remediation Services, and that the 500-employee size 
standard will remain effective until the Agency reviewed it with all 
employee-based size standards at a later date.
    Of the six comments, two pertained to the receipts based size 
standard for NAICS Code 562910, Remediation Services, and four 
pertained to the ``exception,'' Environmental Remediation Services, 
that has a 500-employee size standard.
    One commenter supported SBA's proposal to increase the receipts-
based size standard for NAICS Code 562910 from $14 million to $19 
million, but suggested further increase to $30 million. The commenter 
noted that a higher size standard will allow procuring agencies to have 
more discretion in using the receipts-based size standard for specific 
procurements. He added that historically the receipts-based size 
standard has not been used much in comparison to the 500-employee size 
standard. It should be noted that the 500-employee size standard 
applies only to very specific types of procurements, as described in 
Footnote 14 in 13 CFR 121.201, and contracting officers cannot apply 
the employee-based size standard to all contracts under NAICS Code 
562910 if they do not meet the requirements under the footnote. The 
Small Business Size Regulations require Federal agencies to designate 
the proper NAICS code and size standard in a solicitation, selecting 
the NAICS code which best describes the principal purpose of the 
product or service being acquired. See 13 CFR 121.402(b). The 
regulations also provide that any interested party adversely affected 
by a NAICS code designation may appeal the designation to the Office of 
Hearings and Appeals. See 13 CFR 121.1102-1103. Because the commenter 
did not provide any data or analysis supporting why a higher $30 
million higher size standard he suggested was more appropriate than the 
SBA's proposed $19 million, SBA is adopting the proposed $19 million.
    Another commenter supported the application of the receipts-based 
size standard to NAICS Code 562910, Remediation Services, but expressed 
concern with the 500-employee size standard and its impact on 
businesses with less than 100 employees or $50 million in revenue. The 
commenter argued that there exist significant similarities in terms of 
labor and equipment utilized between remediation activities and some of 
the construction activities under NAICS Subsector 237, Heavy and Civil 
Engineering Construction, and yet the size standard for construction 
activities is $33.5 million without an employee-based size standard. 
The commenter noted that under the 500-employee size standard companies 
with hundreds of millions of dollars in revenue qualify for small 
business set-asides and that it is easy for companies to remain 
permanently below 500 employees by subcontracting out their non-core 
activities to others. He alleged that procurement personnel have 
applied the NAICS Code 561290, Remediation Services, for procurements 
where NAICS Code 541620, Environmental

[[Page 72696]]

Consulting Services would been more appropriate, thereby causing an 
adverse impact on much smaller businesses. He expressed disappointment 
that SBA deferred the review of the 500-employee size standard for 
NAICS Code 562910, thereby allowing this situation to continue. Given 
these concerns, he urged SBA to remove the 500-employee size standard 
and instead increase the revenue based size standard to $33.5 million 
in par with the construction industries.
    In 1994, based on its analyses of businesses involved in 
environmental remediation work and the nature of Federal marketplace, 
SBA created an ``Environmental Remediation Services'' sub-industry 
category (see 59 FR 47237, (September 15, 1994)). The SBA's analyses 
showed that environmental remediation work involved services from 
multiple industries and that businesses involved in environmental 
remediation work tended to be much larger than those doing general 
remediation work. SBA also found that Federal contracts for 
environmental remediation work to be of much more sophisticated, 
multidisciplinary, and large-scale nature than general remediation 
work. SBA determined that relatively large companies will be necessary 
to perform environmental remediation procurements. Based on these 
factors, SBA established a 500-employee based size standard for 
Environmental Remediation Services and also specified requirements to 
classify a procurement as Environmental Remediation Services and to 
apply the 500-employee size standard. A large percentage of commenters 
on the 1993 proposed rule (58 FR52452, (October 8, 1993)) also had 
supported the creation of Environmental Remediation Services sub-
industry and recommended an employee-based size standard for it instead 
of a revenue-based size standard. Several commenters on this proposed 
rule, as discussed below, also recommended the continuation of the 
employee-based size standard for Environmental Remediation Services 
exception to NAICS Code 562910, Remediation Services. SBA is concerned 
that replacing the 500-employee size standard with a receipts-based 
size standard of $33.5 million, as recommended by the commenter above, 
would cause several currently eligible small businesses to lose their 
eligibility for Federal assistance, which is not in the interest of 
small businesses under the current economic environment, as stated 
elsewhere in this final rule. At $33.5 million, small businesses may 
not have adequate capabilities to meet the scope and size requirements 
of Federal procurements for Environmental Remediation Services and it 
may hamper the government critical environmental remediation programs. 
In addition, at $33.5 million, given the large size of most 
environmental remediation contracts, even with one or two contracts 
small businesses will quickly exceed the size standard and they will be 
forced to compete with much larger companies in the Federal market, 
which is, according to several commenters to this proposed rule, 
already dominated by very large businesses. Therefore, SBA is not 
adopting the recommendation. Instead it is adopting the proposed $19 
million size standard for NAICS Code 562910, Remediation Services and 
retaining its Environmental Remediation Services exception and the 500-
employee based size standard.
    In response to the previous two comments, SBA believes it should 
clarify why there are two size standards under NAICS Code 562910, one 
for Remediation Services and the other for Environmental Remediation 
Services. When SBA converted its table of size standards from Standard 
Industrial Classification (SIC) codes to NAICS in 2000, it underlined 
the difference between the two. SBA stated in its September 5, 2000 
final rule (65 FR 53533) that the distinction `` * * * lies in the 
extent and complexity of work to be performed on a specific Federal 
government contract. `Environmental Consulting Services' is one 
activity, and * * * often conducted in conjunction with an 
environmental remediation contract. However, `Environmental Remediation 
Services' requires that (1) the purpose of the procurement be the 
restoration of a contaminated environment, i.e., environmental 
remediation; and (2) the procurement be composed of activities in three 
or more separate industries, none of which constitutes 50 percent or 
more of the contract value, and each of which would, if it were a 
separate contract, be a different NAICS (formerly SIC) code. Footnote 
14 more fully details when 500 employees is the appropriate size 
standard for an Environmental Remediation Services contract.''
    Although SBA did not review the 500-employee based size standard 
for Environmental Remediation Services exception under NAICS Code 
562910 in the October 12, 2011 proposed rule, the Agency received four 
comments on this size standard. All four commenters recommended that 
SBA retain the employee-based size standard for Environmental 
Remediation Services and felt that the current 500-employee size 
standard is too low and needs to be increased. Three suggested that it 
should be increased to 1,000 employees and one recommended 1,500 
employees. They provided several reasons for their recommendations: (1) 
There have been significant mergers and acquisitions and industry 
consolidation since 1994, resulting in dominance of the Federal market 
place by several larger firms; (2) the 500-employee size standard has 
been a barrier for small businesses to acquire financial and technical 
ability to be able to perform tasks under environmental remediation 
procurements that are getting increasingly complex and large; (3) it 
limits ability to grow as a small business, thereby forcing small 
businesses to compete with mega firms with thousands of employees and 
billions in revenues once they exceed the size standard; and (4) more 
mid-sized businesses will retain or regain small business status under 
a higher size standard, thereby providing agencies with a large 
selection of capable small business to choose from for their critical 
small business procurements. SBA recognizes the challenges mid-sized 
businesses face in Federal marketplace for environmental remediation 
services, but as stated in the proposed rule, the Agency has decided to 
retain the current 500-employee size standard for Environmental 
Remediation Service until it reviews that size standard with other 
employee based size standards at a later date. SBA will consider the 
comments identified here when it reviews the 500-employee Environmental 
Remediation Service size standard at a later date.

Comments on SBA's Size Standards Methodology and Other Issues

    SBA received three comments that did not directly refer to any 
particular NAICS codes, but offered general comments on the SBA's size 
standards methodology for evaluating size standards.
    The first commenter alleged that proposed size standards are still 
too low and suggested that they should start at $50 million in total 
sales. He added that when contracts are valued at $250 million or more, 
even a company with $50 million in sales cannot compete. He suggested 
that SBA take into account the costs of materials and labor and 
establish size standards in terms of gross profit instead of total 
receipts. SBA doesn't accept this recommendation for three reasons. 
First, under SBA's current size standards methodology, the maximum 
receipts based size standard

[[Page 72697]]

the Agency can adopt or propose for any industry is $35.5 million. 
Second, if a size standard were set at $50 million in average annual 
receipts, SBA is concerned that it would adversely affect the ability 
of truly small businesses to compete for Federal small business 
opportunities. Third, for most industries, SBA uses either average 
annual receipts or number of employees to establish size standards. If 
a size standard were established in terms of gross profit, as suggested 
by the commenter, a company with hundreds of millions of revenues and 
thousands of employees can qualify as small under a profit-based size 
standard. It is not unusual for very lager companies to have little or 
negative profit over the course of business cycles, for instance 
General Motors during the recent recession. Such a firm would clearly 
be ``dominant'' in the industry and, thus, not a small business under 
the statutory requirement that a small business is one that is 
independently owned and operated and not dominant in its field of 
operation. Moreover, a firm's profit can be manipulated and, thus, 
would be an inconsistent and misleading guide to firm's size.
    The next commenter generally supported SBA's effort to increase 
several size standards and also agreed with the Agency's position that 
lowering size standards under current economic conditions is not in the 
best interests of small business. However, he felt that increasing size 
standards by 180 percent to over 300 percent at one time is also not in 
the best interests of small business, although he did not explain why. 
He urged that size standards should be raised between 50-75 percent 
immediately across all NAICS codes within NAICS Sector 56. He argued 
that this will enable truly small businesses to seek SBA's assistance 
and foster positive competition in Federal contracting and more 
accurately reflect today's economic environment where some businesses 
are still suffering the effects of recent recession. The commenter also 
recommended a full review of SBA's loan data, small business 
participation in Federal contracting, and other relevant factors within 
2-3 years to determine if another increase is appropriate. Finally, he 
suggested that some of the sole-sourced 8(a) contracts should be 
competed among small businesses, but this issue is beyond the scope of 
this rule.
    SBA's agrees that the proposed increases to size standards in NAICS 
Sector 56 are quite significant for some industries and the Agency had 
sought comments in this proposed rule as well as in proposed rules for 
other Sectors, if the increases to size standards should be limited to 
certain amounts. Comments have generally supported SBA's size standards 
methodology, industry and program data it evaluated and its proposed 
increases to size standards. SBA believes that the changes in industry 
structure since the last comprehensive review of size standards nearly 
30 years ago may have resulted in large increases to size standards for 
some industries. The Jobs Act requires SBA to review all size standards 
at least once every five years and make adjustments to reflect market 
conditions. Prior to the next review, SBA will assess the impact of 
size standards revisions adopted in the current review.
    This last commenter disagreed with SBA's proposed changes to size 
standards because, as he stated, it will create more competition for 
real small businesses. He stated that more than two-thirds of 
businesses that are registered in CCR have less than 20 employees, and 
argued that those are the companies that need support. He maintained 
that businesses with 10-20 employees hire new people when they receive 
new contracts, while those with 40 employees can do additional work 
with existing workers and have no need to hire new people. For 
industries selling commodities, he suggested that businesses with less 
than 20 employees should be classified as ``small business'' and 
contracts valued at $150,000 or less should be set-aside for those 
businesses. Similarly, according to the commenter, businesses with 40 
employees should be classified as ``medium sized small business'' and 
contracts between $150,000 and $500,000 should be reserved for those 
businesses. For services industries, he suggested less than $100,000 in 
sales as ``small business,'' $300,000 as ``medium small business'' and 
$500,000 as ``large small business.''
    SBA does not adopt these suggestions for several reasons. First, 
SBA is concerned that very small size standards, such as those 
suggested by the commenter, may not adequately capture the small 
business segment in an industry that small business programs are 
intended to assist. The size standards should be such that small 
businesses are able to grow and develop to an economically viable size 
while remaining eligible for Federal assistance. If size standards were 
set too low, small businesses will quickly outgrow the size standards 
and be forced to compete with significantly larger businesses for 
Federal contracts on a full and open basis. However, as stated 
elsewhere in this rule, SBA is also equally concerned about setting 
size standards too high, as doing so could put smaller businesses at a 
disadvantage in competing for Federal opportunities. Second, SBA 
believes that such tiered size standards would add significant 
complexity to size standards, which many believe are already too 
complex, which would run counter to SBA's ongoing effort to simplify 
them. More importantly, the Small Business Act requires SBA to 
establish one definition of what is a small business concern, not what 
is small, medium, and so forth.

Further Increases for Inflation

    A number of commenters suggested that SBA adopt size standards 
higher than what it proposed based on industry and Federal contracting 
factors, to account for inflation since its last inflation adjustment 
in 2008. As stated elsewhere in this rule, for the current 
comprehensive size standards review, SBA is not considering the 
inflation factor for the following reasons.
    SBA will, as required by the regulations, increase all monetary 
based size standards for inflation soon after it completes the review 
of all receipts based size standards. If SBA were to increase size 
standards for inflation in this Sector, it would need to re-adjust all 
of previously revised receipts based size standards for other Sectors 
to make them consistent across sectors and equitable among small 
businesses from different industries. For inflation adjustment, as 
described in the SBA's ``Size Standards Methodology'' Whitepaper, SBA 
establishes a starting (base) period and an ending period and 
calculates the inflation rate during the period covered. For example, 
SBA's latest adjustment covered inflation that occurred from the third 
quarter of 2001 through the fourth quarter of 2006 (73 FR 41237). Since 
we are reviewing size standards on a Sector by Sector basis and 
different Sectors are at different stages of rulemaking process, it is 
not practicable to adjust size standards for inflation as part of the 
current review. Moreover, because of the long time lag from the start 
of the proposed rule to the publication of the final rule, unless SBA 
were to re-adjust the proposed standards at the final rule stage, any 
inflationary increases would already be outdated.
    Therefore, SBA is not adopting the recommendation to make 
additional adjustment for inflation to proposed revisions to size 
standards based on industry and federal procurement factors. As stated 
above, after SBA completes the review of all receipts based size 
standards it will adjust them

[[Page 72698]]

across the board for inflation that has occurred since its last 
increase.
    All comments to the proposed rule are available for public review 
at http://www.regulations.gov.

Conclusion

    Based on SBA's analyses of relevant industry and program data and 
the public comments it received on the proposed rule, SBA has decided 
to increase the small business size standards for the 37 industries in 
NAICS Sector 56 to the levels it proposed. Those industries and their 
revised size standards are shown in the following table, Table-1, 
Summary of Proposed Size Standard Revisions.

          Table 1--Summary of Proposed Size Standard Revisions
------------------------------------------------------------------------
                                           Current size    Proposed size
    NAICS Codes     NAICS Industry title   standard  ($    standard  ($
                                             million)        million)
------------------------------------------------------------------------
561311............  Employment Placement            $7.0           $25.5
                     Agencies.
561312............  Executive Search                 7.0            25.5
                     Services.
561320............  Temporary Help                  13.5            25.5
                     Services.
561330............  Professional                    13.5            25.5
                     Employer
                     Organizations.
561410............  Document Preparation             7.0            14.0
                     Services.
561421............  Telephone Answering              7.0            14.0
                     Services.
561422............  Telemarketing                    7.0            14.0
                     Bureaus and Other
                     contact Centers.
561431............  Private Mail Centers             7.0            14.0
561439............  Other Business                   7.0            14.0
                     Service Centers
                     (including Copy
                     Shops).
561440............  Collection Agencies.             7.0            14.0
561450............  Credit Bureaus......             7.0            14.0
561491............  Repossession                     7.0            14.0
                     Services.
561492............  Court Reporting and              7.0            14.0
                     Stenotype Services.
561499............  All Other Business               7.0            14.0
                     Support Services.
561510............  Travel Agencies.....             3.5            19.0
561520............  Tour Operators......             7.0            19.0
561591............  Convention and                   7.0            19.0
                     Visitors Bureaus.
561599............  All Other Travel                 7.0            19.0
                     Arrangement and
                     Reservation
                     Services.
561611............  Investigation                   12.5            19.0
                     Services.
561612............  Security Guards and             18.5            19.0
                     Patrol Services.
561613............  Armored Car Services            12.5            19.0
561621............  Security Systems                19.0            12.5
                     Services (except
                     Locksmiths).
561622............  Locksmiths..........             7.0            19.0
561710............  Exterminating and                7.0            10.0
                     Pest Control
                     Services.
561740............  Carpet and                       4.5             5.0
                     Upholstery Cleaning
                     Services.
561910............  Packaging and                    7.0            10.0
                     Labeling Services.
561920............  Convention and Trade             7.0            10.0
                     Show Organizers.
561990............  All Other Support                7.0            10.0
                     Services.
562111............  Solid Waste                     12.5            35.5
                     Collection.
562112............  Hazardous Waste                 12.5            35.5
                     Collection.
562119............  Other Waste                     12.5            35.5
                     Collection.
562211............  Hazardous Waste                 12.5            35.5
                     Treatment and
                     Disposal.
562212............  Solid Waste Landfill            12.5            35.5
562213............  Solid Waste                     12.5            35.5
                     Combustors and
                     Incinerators.
562219............  Other Nonhazardous              12.5            35.5
                     Waste Treatment and
                     Disposal.
562910............  Remediation Services            14.0            19.0
562920............  Materials Recovery              12.5            19.0
                     Facilities.
------------------------------------------------------------------------

    For the reasons stated above in this rule and in the proposed rule, 
SBA will retain the current receipts-based size standards for seven 
industries in this Sector. SBA's analysis of industry and program data 
had suggested that it could reduce standards for five of those seven 
industries. However, lowering size standards in NAICS Sector 56 is not 
consistent with SBA's recent final rules on NAICS Sector 44-45, Retail 
Trade (75 FR 61597, (October 6, 2010)); NAICS Sector 72, Accommodation 
and Food Services (75 FR 61604,) (October 6, 2010)); and NAICS Sector 
81, Other Services (75 FR 61591,) (October 6, 2010)). In each of those 
final rules, SBA adopted its proposal not to reduce small business size 
standards for the same reasons. SBA is also retaining the existing 
receipts-based size standards for two industries for which the results 
supported their current levels. Accordingly, SBA has retained the 
existing receipts-based size standards for seven industries in NAICS 
Subsector 561 (Administrative and Support Services) and Subsector 562 
(Waste Management and Remediation Services).
    SBA did not review the 500-employee size standard for Environmental 
Remediation Services, which is an exception under NAICS Code 562910, 
Remediation Services. SBA will retain that size standard until later 
when the Agency reviews it with other employee based size standards.

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 
final 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 the 
revised changes to small business size standards for 37 industries in 
NAICS Sector 56,

[[Page 72699]]

Administrative and Support, Waste Management and Remediation Services, 
reflect changes in economic characteristics of small businesses in 
those industries and the Federal procurement market. SBA's mission is 
to aid and assist small businesses through a variety of financial, 
procurement, business development, and advocacy programs. To assist the 
intended beneficiaries of these programs effectively, SBA establishes 
distinct definitions to determine 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 definitions for 
small business. The Act also requires that small business definitions 
vary to reflect industry differences. The recently enacted Jobs Act 
requires SBA to review at least one-third of all size standards within 
each 18-month period from the date of its enactment and to review all 
size standards at least every five years thereafter. The Supplementary 
Information Sections of the October 12, 2011 proposed rule and this 
final rule explain the 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 as a result of this rule is gaining eligibility for 
Federal small business assistance programs, including SBA's financial 
assistance programs, economic injury disaster loans, and Federal 
procurement opportunities intended for small businesses. Federal small 
business programs provide targeted opportunities for small businesses 
under SBA's various business development and contracting programs. 
These include the 8(a) Business Development program and programs 
benefiting small businesses located in Historically Underutilized 
Business Zones (HUBZone), women owned small businesses (WOSB), and 
service-disabled veteran-owned small businesses (SDVOSB). Other Federal 
agencies also may use SBA's size standards for a variety of regulatory 
and program purposes. These programs help small businesses become more 
knowledgeable, stable, and competitive. In the 37 industries in NAICS 
Sector 56 for which SBA is increasing size standards, SBA estimates 
that about 2,700 additional firms will gain small business status and 
become eligible for these programs. That number is nearly 1.0 percent 
of the total number of firms in industries in NAICS Sector 56 that have 
receipts-based size standards. SBA estimates that this would increase 
the small business share of total industry receipts in those industries 
from 32 percent under the current size standards to 37 percent.
    The benefits of increasing size standards to a more appropriate 
level will accrue to three groups in the following ways: (1) Some 
businesses that are above the current size standards will 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 a 
larger pool of small businesses from which to draw for their small 
business procurement programs.
    Based on the data for fiscal years 2008 to 2010, more than two-
thirds of total Federal contracting dollars spent in industries 
reviewed in this proposed rule were accounted for by the 37 industries 
for which SBA is increasing size standards. SBA estimates that 
additional firms gaining small business status in those industries 
under the revised size standards could potentially obtain Federal 
contracts totaling up to $60-75 million per year through SBA's small 
business, 8(a), HUBZone, WOSB, and SDVOSB programs and through other, 
unrestricted procurements. The added competition for many of these 
procurements may 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) and 504 Loan Programs, based on the 2008 to 2010 
data, SBA estimates that approximately 20-30 additional loans totaling 
$3 million to $5 million in new Federal loan guarantees could be made 
to the newly defined small businesses under the revised size standards. 
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 for SBA's 7(a) and 504 Loan Programs for those applicants 
that do not meet the size standards for their industries. That is, 
under the Jobs Act, if a firm applies for a 7(a) or 504 loan but does 
not meet the size standard for its industry, it might still qualify if, 
including its affiliates, it has tangible net worth that does not 
exceed $15 million and also has average net income after Federal income 
taxes (excluding any carry-over losses) for its preceding two completed 
fiscal years that does not exceed $5.0 million. Thus, increasing the 
size standards may result in an increase in small business guaranteed 
loans to small businesses in these industries, but it would be 
impractical to try to estimate the extent of their number and the total 
amount loaned.
    Newly defined small businesses will also benefit from SBA's 
Economic Injury Disaster Loan (EIDL) Program. Since the EIDL program is 
contingent on the occurrence and severity of one or more disasters, SBA 
cannot make a meaningful estimate of benefits for businesses impacted 
by those disasters.
    If all of the estimated 2,700 newly defined small firms under the 
revised size standards could become active in Federal procurement 
programs, there may be added administrative costs to the Federal 
Government associated with additional bidders for Federal small 
business procurement opportunities. There may be new firms seeking SBA 
guaranteed loans, more eligible for enrollment in the Central 
Contractor Registration's Dynamic Small Business Search database, and 
others seeking certification in SBA's 8(a) or HUBZone Programs. More 
firms may also qualify for WOSB, SDVOSB, and SDB status. Among 
businesses in this group 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 are likely to be minimal because mechanisms are already in place 
to handle these administrative requirements.
    The costs to the Federal Government may be higher on some Federal 
contracts under the higher revised size standards. 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 
set-aside contracting will likely 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 additional 
full and open contracts are awarded to HUBZone businesses because of 
price evaluation preferences. The additional costs associated with 
fewer bidders, however, will likely 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 SDVOSB Programs only if awards are expected to 
be made at fair and reasonable prices.
    The revised size standards may have some distributional effects 
among large

[[Page 72700]]

and small businesses. Although SBA cannot estimate with certainty the 
actual outcome of gains and losses among small and large businesses, 
there are several likely impacts. There may be a transfer of some 
Federal contracts from large businesses to small 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 agencies may award more Federal contracts 
to HUBZone concerns instead of large businesses since HUBZone concerns 
may be eligible for price evaluation adjustments when they compete on 
full and open bidding opportunities. Similarly, currently defined small 
businesses may obtain fewer Federal contracts due to the increased 
competition from more businesses defined as small under the revised 
size standards. This transfer may be offset by more 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 small businesses under the existing size 
standards. The SBA cannot estimate with precision the potential 
distributional impacts of these transfers.
    The revisions to the existing size standards for Administrative and 
Support, Waste Management and Remediation Services industries 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 benefits 
and costs associated with this action including possible distributions 
impacts that relate to Executive Order 13563 is 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. In addition, SBA 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. The presentation 
included information on the status of the comprehensive size standards 
review at that time, SBA's anticipated schedule for reviewing other 
Sectors, and how interested parties can provide SBA with input and 
feedback on size standards review.
    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 final rule.
    The review of size standards in NAICS Sector 56, Administrative and 
Support, Waste Management and Remediation Services, is consistent with 
E.O. 13563 Sec, 6 calling for retrospective analyses of existing rules. 
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, in 2007, SBA began a comprehensive review of all 
size standards to ensure that existing size standards have supportable 
bases and to revise them when necessary. In addition, 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 5 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 
final 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 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 final rule would not impose any new 
reporting or record keeping requirements.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this final rule may 
have a significant impact on a substantial number of small entities in 
NAICS Sector 56, Administrative and Support, Waste Management and 
Remediation Services. As described above, this rule may affect small 
entities seeking Federal contracts, SBA's 7(a) and 504 Guaranteed 
Loans, SBA's Economic Injury Disaster Loans, and various small business 
benefits under other Federal programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis of this final 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 which 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 SBA's size standards for the industries in Sector 56, 
Administrative and Support, Waste Management and Remediation Services, 
had not been reviewed since the 1980s. Technological changes, 
productivity growth,

[[Page 72701]]

international competition, mergers and acquisitions and updated 
industry definitions may have changed the structure of many industries 
in that Sector. Such changes can be sufficient to support a revision to 
size standards for some industries. Based on the analysis of the latest 
industry and program data available, SBA believes that the revised 
standards in this rule more appropriately reflect the size of 
businesses in those industries that need Federal small business 
assistance. Additionally, the Jobs Act requires SBA to review all size 
standards and make appropriate adjustments to reflect current data and 
market conditions.
    (2) What are SBA's description and estimate of the number of small 
entities to which the rule will apply?
    SBA estimates that approximately 2,700 additional firms will become 
small because of increases in size standards in 37 industries in NAICS 
Sector 56. That represents about 1.0 percent of total firms in 
industries in that Sector that have receipts-based size standards. The 
small business share of total industry receipts in those industries 
will increase from about 32 percent under the current size standards to 
nearly 37 percent under the proposed standards. SBA does not anticipate 
a significant competitive impact on smaller businesses in these 
industries. The revised size standards will enable more small 
businesses to retain their small business status for a longer period. 
Under current size standards, many small businesses may have lost their 
eligibility or found it difficult to compete with companies that are 
significantly larger than they are and this final rule attempts to 
correct that impact. SBA believes these changes will have a positive 
impact for existing small businesses and for those that have either 
exceeded or are about to exceed current size standards.
    (3) What are the projected reporting, record keeping, and other 
compliance requirements of the rule?
    Revising size standards does not impose any additional reporting or 
record keeping requirements on small entities. However, qualifying for 
Federal procurement and a number of other Federal programs requires 
that entities register in the Central Contractor Registration (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. Revising size 
standards alters the access to SBA programs that are designed to 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. 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 or revising 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 existing 
system of numerical size standards. The possible alternative size 
standards considered for the individual NAICS Code industries within 
NAICS Sector 56 are discussed in the supplementary information to the 
proposed rule and this final rule.

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 reasons set forth in the preamble, SBA amends 13 CFR part 121 
as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

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

    Authority:  15 U.S.C. 632, 634(b)(6), 636(b), 662, 694a(9).


0
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,'' ``562920'' 
to read as follows:


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

* * * * *

             Small Business Size Standards by NAICS Industry
------------------------------------------------------------------------
                                          Size standards  Size standards
    NAICS Codes      NAICS U.S. industry  in millions of   in number of
                            title             dollars        employees
------------------------------------------------------------------------
 
                              * * * * * * *
561311............  Employment Placement           $25.5
                     Agencies.
561312............  Executive Search                25.5
                     Services.
561320............  Temporary Help                  25.5
                     Services.
561330............  Professional                    25.5
                     Employer
                     Organizations.
561410............  Document Preparation            14.0
                     Services.
561421............  Telephone Answering             14.0
                     Services.

[[Page 72702]]

 
561422............  Telemarketing                   14.0
                     Bureaus and Other
                     contact Centers.
561431............  Private Mail Centers            14.0
561439............  Other Business                  14.0
                     Service Centers
                     (including Copy
                     Shops).
561440............  Collection Agencies.            14.0
561450............  Credit Bureaus......            14.0
561491............  Repossession                    14.0
                     Services.
561492............  Court Reporting and             14.0
                     Stenotype Services.
561499............  All Other Business              14.0
                     Support Services.
561510............  Travel Agencies \10\       \10\ 19.0
561520............  Tour Operators \10\.       \10\ 19.0
561591............  Convention and                  19.0
                     Visitors Bureaus.
561599............  All Other Travel                19.0
                     Arrangement and
                     Reservation
                     Services.
561611............  Investigation                   19.0
                     Services.
561612............  Security Guards and             19.0
                     Patrol Services.
561613............  Armored Car Services            19.0
561621............  Security Systems                19.0
                     Services (except
                     Locksmiths).
561622............  Locksmiths..........            19.0
561710............  Exterminating and               10.0
                     Pest Control
                     Services.
 
                              * * * * * * *
561740............  Carpet and                       5.0
                     Upholstery Cleaning
                     Services.
 
                              * * * * * * *
561910............  Packaging and                   10.0
                     Labeling Services.
561920............  Convention and Trade       \10\ 10.0
                     Show Organizers
                     \10\.
561990............  All Other Support               10.0
                     Services.
 
                              * * * * * * *
562111............  Solid Waste                     35.5
                     Collection.
562112............  Hazardous Waste                 35.5
                     Collection.
562119............  Other Waste                     35.5
                     Collection.
562211............  Hazardous Waste                 35.5
                     Treatment and
                     Disposal.
562212............  Solid Waste Landfill            35.5
562213............  Solid Waste                     35.5
                     Combustors and
                     Incinerators.
562219............  Other Nonhazardous              35.5
                     Waste Treatment and
                     Disposal.
562910............  Remediation Services            19.0
 
                              * * * * * * *
562920............  Materials Recovery              19.0
                     Facilities.
 
                              * * * * * * *
------------------------------------------------------------------------
 * * * * * * *
\10\ NAICS codes 488510 (part) 531210, 541810, 561510, 561520, and
  561920--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
  revenues.

* * * * *

    Dated: April 25, 2012.
Karen G. Mills,
Administrator.

    Editorial Note: This document was received at the Office of the 
Federal Register on November 30, 2012.
[FR Doc. 2012-29349 Filed 12-5-12; 8:45 am]
BILLING CODE 8025-01-P